Segment Information

12 Months Ended

Dec. 30, 2012

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company operates in two principal business segments: Kratos Government Solutions and Public Safety & Security. The KGS segment provides products, solutions and services primarily for mission critical national security priorities. KGS customers primarily include national security related agencies, the DoD, intelligence agencies and classified agencies. The PSS segment provides independent integrated solutions for advanced homeland security, public safety, critical infrastructure, and security and surveillance systems for government and commercial applications. PSS customers are in the critical infrastructure, power generation, power transport, nuclear energy, financial, IT, healthcare, education, transportation and petro-chemical industries, as well as certain government and military customers.

The Company organizes its business segments based on the nature of the products and services offered. Transactions between segments are generally negotiated and accounted for under terms and conditions similar to other government and commercial contracts. This presentation is consistent with the Company's operating structure. In the following table, total operating income of the business segments is reconciled to the corresponding consolidated amount. The reconciling item “corporate activities” includes costs for certain stock-based compensation programs (including stock-based compensation costs for stock options, employee stock purchase plan and restricted stock units), the effects of items not considered part of management's evaluation of segment operating performance, merger and acquisition expenses, corporate costs not allocated to the operating segments, and other miscellaneous corporate activities.

Revenues, operating income (loss) and assets disclosed below provided by the Company's segments for the years ended December 26, 2010, December 25, 2011, and December 30, 2012, are as follows (in millions):

	2010			2011			2012
Revenues:
Kratos Government Solutions
Service revenues	$	248.5		$	238.8		$	264.0
Product sales	123.7			362.9			519.2
Total Kratos Government Solutions	372.2			601.7			783.2
Public Safety & Security
Service revenues	36.3			112.2			186.0
Product sales	—			—			—
Total Public Safety & Security	36.3			112.2			186.0
Total revenues	$	408.5		$	713.9		$	969.2
Depreciation and amortization:
Kratos Government Solutions	$	12.3		$	45.7		$	54.5
Public Safety & Security	0.6			2.3			3.5
Total depreciation and amortization	$	12.9		$	48.0		$	58.0
Operating income (loss) from continuing operations:
Kratos Government Solutions	$	25.1		$	35.4		$	(41.5	)
Public Safety & Security	1.8			9.9			(2.5		)
Corporate activities	(3.8		)	(15.8		)	(5.7		)
Total operating income (loss) from continuing operations	$	23.1		$	29.5		$	(49.7	)

Revenues from foreign customers were approximately $54.3 million or 8% and $116.2 million or 12% of total revenue for the years ended December 25, 2011 and December 30, 2012, respectively. There were no revenues from foreign customers for the year ended December 26, 2010.

Amounts related to corporate activities were impacted by the following items in 2010, 2011 and 2012.

In 2010, the Company reached a settlement with one of its directors' and officers' insurance carriers to cover costs related to its completed stock options and DOJ investigations. The settlement received, net of legal expenses, was a $1.4 million benefit.

In 2012, the Company recorded an impairment of goodwill and intangible assets of $83.7 million related to the KGS segment and an impairment of intangible assets of $12.9 million related to the PSS segment. See Note 2.

In 2010 and 2011, the Company had merger and acquisition expenses of approximately $3.1 million and $12.5 million, respectively, and in 2012 had a benefit from merger related items of $2.7 million due to a reduction in contingent consideration, settlement of a dispute on fees, and a change in estimate of indemnity obligations related to former directors and officers of Integral.

Segment assets are as follows (in millions):

	December 25, 2011		December 30, 2012
Assets:
Kratos Government Solutions	$	1,028.8	$	1,104.0
Public Safety & Security	88.6		106.8
Discontinued operations	12.1		7.5
Corporate activities	86.5		65.7
Total assets	$	1,216.0	$	1,284.0

The increases in the assets in the KGS and PSS segments are primarily attributable to the acquisitions of CEI on July 2, 2012 and the Critical Infrastructure Business on December 30, 2011. Assets of foreign subsidiaries were $47.2 million and $90.0 million as of December 25, 2011 and December 30, 2012, respectively.