Segment Information

12 Months Ended

Dec. 29, 2013

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company operates in two reportable 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 reportable 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 reportable 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 segments, and other miscellaneous corporate activities.

Revenues, operating income (loss) and assets disclosed below provided by the Company's reportable segments for the years ended December 25, 2011, December 30, 2012, and December 29, 2013, are as follows (in millions):

	2011			2012			2013
Revenues:
Kratos Government Solutions
Service revenues	$	238.8		$	264.0		$	233.9
Product sales	362.9			519.2			507.0
Total Kratos Government Solutions	601.7			783.2			740.9
Public Safety & Security
Service revenues	112.2			186.0			209.7
Product sales	—			—			—
Total Public Safety & Security	112.2			186.0			209.7
Total revenues	$	713.9		$	969.2		$	950.6
Depreciation and amortization:
Kratos Government Solutions	$	45.7		$	54.5		$	49.9
Public Safety & Security	2.3			3.5			3.5
Total depreciation and amortization	$	48.0		$	58.0		$	53.4
Operating income (loss) from continuing operations:
Kratos Government Solutions	$	35.4		$	(41.5	)	$	26.4
Public Safety & Security	9.9			(2.5		)	8.3
Corporate activities	(15.8		)	(5.7		)	(2.9		)
Total operating income (loss) from continuing operations	$	29.5		$	(49.7	)	$	31.8

Revenues from foreign customers were approximately $54.3 million or 8%, $116.2 million or 12% and $100.9 million or 11% of total revenue for the years ended December 25, 2011, December 30, 2012, and December 29, 2013, respectively.

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

In 2011 the Company had corporate merger and acquisition expenses of approximately $12.5 million, 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. A corporate benefit of $2.0 million for the year ended December 29, 2013, was due to the reduction in a $3.1 million liability as a result of the final settlement of the indemnity obligations related to former directors and officers of Integral on July 1, 2013, partially offset by other merger expenses and legal fees related to prior acquisitions.

Reportable segment assets are as follows (in millions):

	December 30, 2012		December 29, 2013
Assets:
Kratos Government Solutions	$	1,103.9	$	1,025.6
Public Safety & Security	106.8		122.6
Discontinued operations	7.5		—
Corporate activities	65.7		68.4
Total assets	$	1,283.9	$	1,216.6

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 $90.0 million and $95.9 million as of December 30, 2012 and December 29, 2013, respectively.