Segment Information

The Company operates in two reportable segments. The KGS reportable segment is comprised of an aggregation of KGS operating segments, including DRSS, ME, TTS, and MS. The US reportable segment consists of the Company’s unmanned aerial, unmanned ground, unmanned 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 DoD, intelligence agencies and classified agencies, and to a lesser degree, international government agencies and domestic and international commercial 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. 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 “Discontinued Operations” in Note 8 of these notes to consolidated financial statements, the Company began reporting the PSS business as discontinued operations effective in the first quarter of fiscal 2018. Prior to the decision to sell the PSS business, the Company reported their financial results in a separate PSS reportable segment.

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

Revenues, operating income (loss) and assets disclosed below provided by the Company’s reportable segments for the years ended December 30, 2018, December 31, 2017, and December 25, 2016, are as follows (in millions):



	2018			2017			2016
Revenues:
Kratos Government Solutions
Service revenues	$	200.7		$	197.8		$	221.3
Product sales	284.4			283.8			244.8
Total Kratos Government Solutions	485.1			481.6			466.1
Unmanned Systems
Service revenues	—			—			—
Product sales	132.9			121.7			75.8
Total Unmanned Systems	132.9			121.7			75.8
Total revenues	$	618.0		$	603.3		$	541.9
Depreciation and amortization:
Kratos Government Solutions	$	13.2		$	14.4		$	15.0
Unmanned Systems	4.7			7.8			7.5
Total depreciation and amortization	$	17.9		$	22.2		$	22.5
Operating income (loss) from continuing operations:
Kratos Government Solutions	$	35.5		$	(0.1	)	$	15.5
Unmanned Systems	5.1			(3.6		)	(28.3		)
Corporate activities	(10.1		)	(8.3		)	(5.2		)
Total operating income (loss) from continuing operations	$	30.5		$	(12.0	)	$	(18.0	)

Revenues from foreign customers were approximately $114.3 million or 19%, $84.7 million or 14% and $80.1 million or 15% of total revenue for the years ended December 30, 2018, December 31, 2017, and December 25, 2016, respectively.

Included in the 2016 operating losses for the US reportable segment is an $18.7 million loss accrual recorded on the Air Force Research Laboratory (“AFRL”) Low-Cost Attritable Strike UAS Demonstration (“LCASD”) cost share contract awarded in July 2016.

Included in the 2017 operating loss for the KGS reportable segment is a $24.2 million impairment of the carrying value of the goodwill of the DRSS business within the KGS segment.

Included in the 2016 operating income for the KGS reportable segment is a $9.2 million charge that was recorded in the Company’s MS business as a result of the closure of one of its manufacturing facilities, and the exit from certain lower margin product business lines.

Reportable segment assets are as follows (in millions):



	December 30, 2018		December 31, 2017		December 25, 2016
Assets:
Kratos Government Solutions	$	602.8	$	597.9	$	609.8
Unmanned Systems	220.9		201.9		172.1
Discontinued operations	8.3		97.4		92.0
Corporate activities	178.1		126.8		74.7
Total assets	$	1,010.1	$	1,024.0	$	948.6

Assets of foreign subsidiaries in the KGS segment were $126.7 million, $116.7 million and $113.7 million as of December 30, 2018, December 31, 2017 and December 25, 2016, respectively.