Discontinued Operations

6 Months Ended

Jun. 28, 2020

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued OperationsOn February 28, 2018, the Company entered into a Stock Purchase Agreement to sell the operations of Kratos Public Safety & Security Solutions, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“PSS”), to Securitas

Electronic Security, Inc., a Delaware corporation (“Buyer”). On June 11, 2018, the Company completed the sale of all of the issued and outstanding capital stock of PSS to Buyer for a purchase price of $69 million in cash, subject to a closing net working capital adjustment (the “Transaction”). The Company and the Buyer are currently in a dispute regarding the closing net working capital adjustment. The amount in dispute is approximately $8 million.

To date, the Company has collected approximately $6.3 million of the retained net working capital. The Company currently expects that the remaining net working capital retained by the Company will be collected during 2020 once certain legacy projects are completed and the project close-out process has been completed. The Company currently expects to recognize a net approximate break-even on the sale of the PSS business once the aggregate net proceeds described above have been collected, excluding the impact of the final settlement and determination of the closing net working capital adjustment. Any changes or adjustments to the expected net proceeds will be reflected in future periods.

The following table presents the results of discontinued operations (in millions):

	Three Months Ended				Six Months Ended
	June 28, 2020		June 30, 2019		June 28, 2020		June 30, 2019
Revenue	$	—	$	—	$	—	$	0.1
Cost of sales	—		0.2		0.1		0.7
Selling, general and administrative expenses	0.4		0.5		0.7		0.6
Other income	—		(3.6)		—		(3.6)
Income (loss) from discontinued operations before income taxes	(0.4)		2.9		(0.8)		2.4
Income tax benefit	0.2		0.1		0.2		—
Income (loss) from discontinued operations	$	(0.2)	$	3.0	$	(0.6)	$	2.4

Revenue and operating results for the three and six months ended June 28, 2020 and June 30, 2019 reflected the performance on contracts related to the working capital retained by the Company and legal expenses incurred related to the ongoing working capital dispute with the buyer.

        The following is a summary of the assets and liabilities of discontinued operations in the accompanying condensed consolidated balance sheets as of June 28, 2020 and December 29, 2019 (in millions):

	June 28, 2020		December 29, 2019
Accounts receivable, net	$	0.5	$	3.3
Current assets of discontinued operations	$	0.5	$	3.3
Accounts payable	$	0.2	$	0.2
Accrued expenses	0.1		0.3
Other current liabilities	2.7		2.8
Current liabilities of discontinued operations	$	3.0	$	3.3
Other long-term liabilities of discontinued operations	$	2.6	$	2.8