{
  "docId": "019dd923-622c-750b-8b98-64474d65435b",
  "docSlug": "68bd393edc75",
  "documentTitle": "Kratos Defense & Security Solutions (KTOS)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Ben Axler",
  "documentKindSlug": "activist-deck",
  "documentKindLabel": "Activist deck",
  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2018-03-16 00:00:00",
  "orientation": "landscape",
  "aspectRatio": 1.3333334,
  "pageNumber": 40,
  "pageCount": 49,
  "prevPage": 39,
  "nextPage": 41,
  "slideType": "expose_contradiction",
  "function": "expose_contradiction",
  "density": "dense",
  "nDataPoints": 24,
  "notes": "Uses a red box and arrow to draw attention to the lack of depreciation for the 'Corporate activities' segment.",
  "elementsJson": [
    "headline_text",
    "paragraph",
    "data_table",
    "callout_box"
  ],
  "metadataConfidence": 1,
  "imagePath": null,
  "slideHref": "/slides/019dd923-622c-750b-8b98-64474d65435b/40",
  "deckHref": "/decks/019dd923-622c-750b-8b98-64474d65435b",
  "deckJsonHref": "/decks/019dd923-622c-750b-8b98-64474d65435b.json",
  "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-64474d65435b#slide-40",
  "components": [
    {
      "bbox": {
        "h": 0.07,
        "w": 0.32,
        "x": 0.13,
        "y": 0.645
      },
      "kind": "callout",
      "text": "Why are \"Corporate Activity\" assets up 236% in 3yrs, the fastest growing segment without any depreciation?",
      "attrs": null,
      "subkind": "primary",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "fcd41ed3-f3ed-42b1-af19-63a05921d06c",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": null,
      "kind": "metric",
      "text": "depreciation and amortization: 236%",
      "attrs": null,
      "subkind": "primary",
      "toolName": "Quantification",
      "toolSlug": "quantification",
      "confidence": null,
      "componentId": "019dd953-0935-737e-8dc3-3c4266b71ebf",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.13,
        "w": 0.92,
        "x": 0.04,
        "y": 0.18
      },
      "kind": "paragraph",
      "text": "Spruce Point has concerns about Kratos' accounting methods. For example, the Company reports assets, but not Capex, by business segment. However, when allocating depreciation and amortization it conveniently fails to attribute any portion to corporate activities, its fastest growing segment. Management cannot be ignorant on this issue, as the CEO and CFO came from Titan Corp, where they disclosed Capex and corporate depreciation and amortization (1). How can any investor have confidence in Kratos' segment margins, when costs are clearly not being allocated correctly.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "4da24511-20a8-4ec6-99bc-46cc7a1d84f2",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.02,
        "w": 0.2,
        "x": 0.01,
        "y": 0.97
      },
      "kind": "source-note",
      "text": "1) Source: Titan 2002 10-K, Note 6",
      "attrs": null,
      "subkind": null,
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "55eba297-c2e6-4211-8e8f-49539798f644",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.55,
        "w": 0.92,
        "x": 0.04,
        "y": 0.37
      },
      "kind": "table",
      "text": "Financial table showing Assets and Depreciation/Amortization by segment for 2015-2017.",
      "attrs": null,
      "subkind": "data",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "d0380104-76df-4ebb-9347-990f43e503db",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.08,
        "w": 0.65,
        "x": 0.31,
        "y": 0.03
      },
      "kind": "title",
      "text": "Questionable Accounting Could Enable Segment Margin Misstatement",
      "attrs": null,
      "subkind": "headline",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "4a01e068-bf6d-4de5-87a1-dee6e83fd9f1",
      "frameworkName": null,
      "frameworkSlug": null
    }
  ],
  "metrics": [],
  "tools": [],
  "frameworks": [
    {
      "name": "fraud-exposure",
      "slug": null,
      "matchId": "1320cee3-aa1e-472c-90e0-d9ef16b5f4ab",
      "evidence": "The slide explicitly calls out 'Questionable Accounting' and 'Misstatement' to build a case against management's integrity.",
      "confidence": 0.9
    }
  ],
  "arcBeats": [
    {
      "to": 49,
      "from": 32,
      "beatId": "c8c5750b-e949-493d-b2c9-6a5df35ee395",
      "arcName": "Problem-Agitate-Solution",
      "arcSlug": "problem-agitate-solution",
      "beatName": "Solution",
      "beatSlug": "problem-agitate-solution-solution-provide-relief",
      "evidence": "The deck presents Spruce Point's solution, a strong sell rating with 40-70% downside risk.",
      "position": 2,
      "confidence": 0.8,
      "parentBeatName": "Resolution",
      "parentBeatSlug": "resolution"
    }
  ],
  "loops": [],
  "imagePathAlt": null,
  "thumbSrc": null,
  "thumbSrcAlt": null,
  "locked": true
}