We expect the net proceeds from this offering to be approximately $97.0 million
(or $111.6 million if the underwriter exercises its option to purchase
additional shares in full), after deducting underwriting discounts and
commissions and estimated offering expenses payable by us. We intend to use the
net proceeds from this offering to fund the cash consideration payable to the
stockholders of CEI in connection with our proposed acquisition thereof. In
the event that the acquisition is not consummated, we intend to use the net
proceeds from this offering for general corporate purposes, including the
acquisition of or investment in other businesses, services and technologies
that are complementary to our own and other general corporate expenses.
As of the date of this prospectus supplement, we cannot specify with certainty
all of the particular uses of the proceeds from this offering. Accordingly, we
will retain broad discretion over the use of such proceeds. Pending the use of
the net proceeds from this offering as described above, we intend to invest the
net proceeds in short-term, investment-grade securities.
We operate in highly competitive markets and generally encounter intense
competition to win contracts from many other firms, including mid-tier federal
contractors with specialized capabilities and large defense and IT services
providers. Competition in our markets may increase as a result of a number of
factors, such as the entrance of new or larger competitors, including those
formed through alliances or consolidation. These competitors may have greater
financial, technical, marketing and public relations resources, larger client
bases and greater brand or name recognition than we do. These competitors
could, among other things:
• divert sales from us by winning very large-scale government contracts, a risk
that is enhanced by the recent trend in government procurement practices to
bundle services into larger contracts;
• force us to charge lower prices; or
• adversely affect our relationships with current clients, including our
ability to continue to win competitively awarded engagements in which we are
the incumbent.
If we lose business to our competitors or are forced to lower our prices, our
revenue and our operating profits could decline. In addition, we may face
competition from our subcontractors who, from time-to-time, seek to obtain
prime contractor status on contracts for which they currently serve as a
subcontractor to us. If one or more of our current subcontractors are awarded
prime contractor status on such contracts in the future, it could divert sales
from us or could force us to charge lower prices, which could cause our margins
to suffer.
Company Description
Kratos is a specialized national security technology business providing
mission-critical products, services and solutions for U.S. national security
priorities. Our core capabilities are sophisticated engineering, manufacturing,
system integration and test and evaluation offerings for national
security
platforms and programs. Our principal products and services are related to
Command, Control, Communications, Computing, Combat Systems, Intelligence,
Surveillance and Reconnaissance ("C5ISR"). We offer our customers products,
solutions, services and expertise to support their mission-critical needs by
leveraging our skills across our core offering areas in C5ISR.
We manufacture and design specialized electronic defense components subsystems
and systems for electronic attack, electronic warfare and missile system
platforms; integrated technology solutions for satellite communications;
products and solutions for unmanned systems; products and services related to
cybersecurity and cyberwarfare; products and solutions for ballistic missile
defense; weapons systems trainers; advanced network engineering and information
technology ("IT") services; weapons systems lifecycle support and sustainment;
military weapon range operations and technical services; and public safety,
critical infrastructure security and surveillance systems. We believe our
stable client base, strong client relationships, broad array of contract
vehicles, large employee base possessing national security clearances,
extensive list of past performance qualifications, and significant management
and operational capabilities position us for continued growth.
Prior to 2008, we were also an independent provider of outsourced engineering
and network deployment services, security systems engineering and integration
services and other technical services for the wireless communications industry,
the U.S. Government and enterprise customers. In 2006 and 2007, we undertook a
transformation strategy whereby we divested our commercial wireless-related
businesses and chose to pursue business with the U.S. Government, primarily the
U.S. Department of Defense ("DoD"), through strategic acquisitions. On
September 12, 2007, we changed our name from Wireless Facilities, Inc. to
Kratos Defense & Security Solutions, Inc. Our new name reflects our revised
focus as a defense contractor and security systems integrator for the U.S.
Government, state and local agencies and commercial customers. In connection
with our name change, we changed our NASDAQ Global Select Market trading symbol
to "KTOS".
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We were initially incorporated in the state of New York in 1994, commenced
operations in 1995 and were reincorporated in Delaware in 1998. On September
12, 2007, we changed our name from Wireless Facilities, Inc. to Kratos Defense
& Security Solutions, Inc.
Our executive offices are located at 4820 Eastgate Mall, Suite 200, San Diego,
California 92121, and our telephone number is (858) 812-7300. We maintain an
Internet website at www.kratosdefense.com.