Segment Information

9 Months Ended

Sep. 28, 2014

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company operates in two principal reportable business segments: Kratos Government Solutions ("KGS") and Public Safety & Security ("PSS"). The Company organizes its reportable business segments based on the nature of the products, solutions and services offered, the nature of the production processes, the type or class of customer for their products and services, the methods used to distribute their products or provide their services, and the nature of the regulatory environment. The KGS reportable business segment has five operating segments: Defense Rocket Support Services, Electronic Products, Technical and Training Solutions, Modular Systems, and Unmanned Systems. All of the KGS operating divisions provide technology based defense solutions, involving products and services, primarily for mission critical United States National Security priorities, with the primary focus relating to the nation’s C5ISR requirements. The PSS reportable business segment provides integrated solutions for advanced homeland security, public safety, critical infrastructure security, and security and surveillance systems for government, industrial and commercial customers.

Revenues, depreciation and amortization, and operating income generated by the Company’s reportable segments for the three and nine month periods ended September 29, 2013 and September 28, 2014 are as follows (in millions):

	Three Months Ended						Nine Months Ended
	September 29, 2013			September 28, 2014			September 29, 2013			September 28, 2014
Revenues:
Kratos Government Solutions
Service revenues	$	57.0		$	54.3		$	180.9		$	157.2
Product sales	117.6			120.0			379.9			334.0
Total Kratos Government Solutions	174.6			174.3			560.8			491.2
Public Safety & Security
Service revenues	51.8			42.8			154.1			142.3
Product sales	—			—			—			13.0
Total Public Safety & Security	51.8			42.8			154.1			155.3
Total revenues	$	226.4		$	217.1		$	714.9		$	646.5
Depreciation & amortization:
Kratos Government Solutions	$	12.1		$	9.4		$	38.0		$	27.7
Public Safety & Security	0.8			0.5			2.7			1.5
Total depreciation and amortization	$	12.9		$	9.9		$	40.7		$	29.2
Operating income:
Kratos Government Solutions	$	6.4		$	8.2		$	23.8		$	17.6
Public Safety & Security	1.8			(4.1		)	5.7			(0.1		)
Unallocated corporate expense, net	(2.1		)	(2.9		)	(3.1		)	(8.3		)
Total operating income	$	6.1		$	1.2		$	26.4		$	9.2

Total operating income of the reportable business segments is reconciled to the corresponding consolidated amount. The reconciling item “Unallocated corporate expense, net” includes costs for certain stock-based compensation programs, 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. Transactions between segments are generally negotiated and accounted for under terms and conditions similar to other government and commercial contracts.