Acquisitions

3 Months Ended

Mar. 30, 2025

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

Norden Millimeter, Inc.

On January 27, 2025, the Company and Kratos Microwave, Inc., a subsidiary of the Company (“Kratos Microwave”), entered into an Asset Purchase Agreement (the “Purchase Agreement”) to acquire certain of the assets (the “Purchased Assets”) of Norden Millimeter, Inc. (“Norden”) and assume certain liabilities (the “Assumed Liabilities”) of Norden. Norden focuses on microwave and millimeter wave products. Pursuant to the Purchase Agreement, on February 4, 2025, the asset acquisition was completed following the satisfaction of all closing conditions and (a) the Company issued 1,095,674 shares of its common stock, with a deemed value of $32.2 million, to Norden in a private placement, (b) the Company agreed to issue up to $6 million worth of additional shares of its common stock to Norden in the future upon release of certain holdback amounts, and (c) Kratos Microwave agreed to assume the Assumed Liabilities, in each case, in exchange for the Purchased Assets. Kratos granted Norden certain registration rights under the Asset Purchase Agreement and registered the 1,095,674 shares with the SEC on February 7, 2025. The Purchased Assets and Assumed Liabilities are included in the KGS segment.

The allocation of the total consideration for this acquisition to the tangible and identifiable intangible assets acquired and liabilities assumed is preliminary until the Company obtains final information regarding their fair values. However, the Company does not expect any adjustment to such allocations to be material to the Company's consolidated financial statements.The operating results of the acquisition have been included in the Company’s results of operations from the effective

acquisition date. The Company has determined that pro forma revenue and earnings information is incomplete for the periods prior to the acquisition and that it is impracticable to present such prior periods until the Company obtains final information regarding such prior period revenues and earnings.

The excess of the purchase price over the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed in the acquisition was allocated to goodwill. The goodwill represents the value the Company expects to be created by integrating the acquired Norden business with Kratos’ related products and customers.

The transaction has been accounted for using the acquisition method of accounting, which requires, among other things, that the identifiable assets acquired and the liabilities assumed be recognized at their fair values as of the acquisition date. These preliminary fair value measurements are based primarily on significant inputs not observable in the marketplace and thus represent Level 3 measurements.

The following table summarizes the preliminary allocation of the purchase price over the estimated fair values of the Norden assets acquired and liabilities assumed (in millions):


Accounts receivable	$	1.5
Inventory	8.3
Other current assets	0.1
Property and equipment	1.7
Intangible assets	10.0
Total identifiable net assets acquired	21.6
Total identifiable net liabilities assumed	(13.1)
Goodwill	28.5
Net assets acquired, excluding cash	$	37.0

Based on the Company’s preliminary estimate of fair value, as of February 4, 2025, net liabilities included $7.6 million of current liabilities. The identifiable intangible assets include customer relationships of $2.5 million with a remaining useful life of 7 years, trade names of $2.0 million with a remaining useful life of 7 years, contracts and backlog of $3.0 million with an estimated useful life of 5 years, developed technology of $2.0 million with a remaining useful life of 7 years, and a non-compete agreement valued at $0.5 million with a remaining useful life of 5 years. The goodwill recorded in this transaction is expected to be tax-deductible.

The amounts of revenue and operating income of the acquired Norden business included in the Company’s consolidated statement of operations for the three months ended March 30, 2025 were $4.8 million and $2.2 million, respectively.

A summary of the consideration paid for the acquired assets is as follows (in millions):


Common stock issued	$	32.2
Holdback that may be issued at later date	6.0
Less: estimated purchase price adjustment	(1.2)
Total consideration	$	37.0