Segment Information

9 Months Ended

Sep. 27, 2015

Segment Reporting [Abstract]

Segment Information

Segment Information

The KGS reportable segment is comprised of an aggregation of KGS operating segments, including our microwave electronic products, satellite communications, modular systems and defense and rocket support operating segments. The US reportable segment consists of our unmanned aerial, ground, seaborne and command, control and communications system business. The KGS and US segments provide products, solutions and services for mission critical national security programs. KGS and US customers primarily include national security related agencies, the U.S. Department of Defense (the “DoD”), intelligence agencies and classified agencies, and to a lesser degree, international government agencies and domestic and international commercial customers. The PSS segment designs, engineers, deploys, operates, integrates into command and control infrastructure, maintains and operates security and surveillance solutions for homeland security, public safety, critical infrastructure, government and commercial customers. PSS customers include those 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 segments based on the nature of the products, solutions 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 (loss) from continuing operations 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 (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.

As discussed in Note 2 - Discontinued Operations, the Company began reporting the Herley Entities as discontinued operations effective in the second quarter of fiscal 2015.   Prior to the decision to sell the Herley Entities, the Company reported their financial results in the KGS reportable segment. Accordingly, segment results have been recast for all periods presented to reflect the disposition of the Herley Entities as discontinued operations.

As certain overhead type costs previously allocated to the Herley Entities are not allocable to discontinued operations, prior period corporate costs have been reallocated amongst the continuing reportable segments.

 Revenues, depreciation and amortization, and operating income (loss) generated by the Company’s reportable segments for the three and nine month periods ended September 28, 2014 and September 27, 2015 are as follows (in millions):

	Three Months Ended						Nine Months Ended
	September 28, 2014			September 27, 2015			September 28, 2014			September 27, 2015
Revenues:
Kratos Government Solutions
Service revenues	$	54.3		$	54.3		$	157.2		$	157.4
Product sales	70.8			54.4			198.0			165.8
Total Kratos Government Solutions	125.1			108.7			355.2			323.2
Public Safety & Security
Service revenues	42.8			33.1			142.3			106.1
Product sales	—			—			13.0			—
Total Public Safety & Security	42.8			33.1			155.3			106.1
Unmanned Systems
Service revenues	—			—			—			—
Product sales	22.9			19.9			60.4			50.3
Total Unmanned Systems	22.9			19.9			60.4			50.3
Total revenues	$	190.8		$	161.7		$	570.9		$	479.6
Depreciation & amortization:
Kratos Government Solutions	$	5.9		$	4.2		$	17.6		$	14.3
Public Safety & Security	0.5			0.1			1.5			0.4
Unmanned Systems	2.0			1.6			5.1			4.8
Total depreciation and amortization	$	8.4		$	5.9		$	24.2		$	19.5
Operating income (loss) from continuing operations:
Kratos Government Solutions	$	7.4		$	3.7		$	15.4		$	6.3
Public Safety & Security	(4.2		)	0.4			(0.5		)	1.0
Unmanned Systems	(3.3		)	(0.6		)	(6.9		)	(7.3		)
Unallocated corporate expense, net	(2.9		)	(1.9		)	(8.3		)	(6.0		)
Total operating income (loss) from continuing operations	$	(3.0	)	$	1.6		$	(0.3	)	$	(6.0	)

Segment assets are as follows (in millions):

	December 28, 2014		September 27, 2015
Assets:
Kratos Government Solutions	$	618.9	$	595.9
Public Safety & Security	100.2		94.4
Unmanned Systems	166.1		166.0
Discontinued operations	190.8		—
Corporate activities	62.8		65.2
Total assets	$	1,138.8	$	921.5