UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported): July 2, 2012

KRATOS DEFENSE & SECURITY SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

4820 Eastgate Mall, Suite 200, San Diego, CA  92121

(Address of Principal Executive Offices) (Zip Code)

(858) 812-7300

(Registrant’s telephone number, including area code)

N/A

(Former name, or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

EXPLANATORY NOTE

This Amendment No. 2 (this “Amendment”)  on Form 8-K/A amends the Current Report on Form 8-K/A filed with the Securities and Exchange Commission (the “SEC”) on July 27, 2012 ( “Amendment No.1”) by Kratos Defense & Security Solutions, Inc., a Delaware corporation (the “Company”), to provide additional financial statements and exhibits in connection with the Company’s acquisition of Composite Engineering, Inc., a California corporation (“CEI”), on July 2, 2012.

Amendment No. 1 provided historical information of CEI and the Company’s unaudited pro forma financial information relating to the effects of the acquisition to include the unaudited pro forma condensed combined balance sheet as of March 25, 2012 and the unaudited pro forma combined and condensed combined statement of operations for the year ended December 25, 2011 and the three months ended March 25, 2012. This Amendment amends Item 9.01(a) and Item 9.01(b) of Amendment No. 1 to provide certain historical financial information of CEI and the Company’s unaudited pro forma financial information relating to the effects of the acquisition, including the unaudited pro forma condensed combined balance sheet as of June 24, 2012 and the unaudited pro forma condensed combined statement of operations for the six months ended June 24, 2012. In addition, the Company has revised its consolidated financial statements in accordance with FASB ASC Topic 205, Presentation of Financial Statements (“Topic 205”) to reflect the discontinuation of certain non-core businesses in June 2012 which were not reflected in Amendment No. 1. Accordingly this Amendment updates the unaudited pro forma combined statement of operations for the year ended December 25, 2011 to reflect this change.

Item 9.01.                Financial Statements and Exhibits.

(a)  Financial Statements of Businesses Acquired.

The (i) audited historical financial information of CEI (including the notes thereto) as of January 1, 2011 and December 31, 2011 and for the fiscal years ended December 26, 2009, January 1, 2011 and December 31, 2011, and (ii) unaudited historical financial information of CEI as of and for the three months ended March 31, 2011 and 2012 were filed as Exhibits 99.3 and 99.4, respectively, to the Current Report on Form 8-K filed by the Company with the SEC on May 8, 2012 and are incorporated herein by reference.  The unaudited historical financial information of CEI (including the notes thereto) as of and for the six months ended June 30, 2012 and July 2, 2011 is attached hereto as Exhibit 99.1.

(b)  Pro Forma Financial Statements.

The unaudited pro forma condensed combined balance sheet as of June 24, 2012, the unaudited pro forma condensed combined statement of operations for the six months ended June 24, 2012, and the unaudited pro forma combined statement of operations for the year ended December 25, 2011 are attached hereto as Exhibit 99.2.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

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Exhibit 99.1

Financial Statements

Composite Engineering, Inc.

CONTENTS

COMPOSITE ENGINEERING, INC.

CONDENSED BALANCE SHEETS

The accompanying notes are an integral part of these condensed financial statements

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COMPOSITE ENGINEERING, INC.

CONDENSED STATEMENTS OF INCOME (UNAUDITED)

The accompanying notes are an integral part of these condensed financial statements

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COMPOSITE ENGINEERING, INC.

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

The accompanying notes are an integral part of these condensed financial statements

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COMPOSITE ENGINEERING, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 —SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES

Basis of presentation — The information as of June 30, 2012 and July 2, 2011 is unaudited. In the opinion of management, these unaudited condensed financial statements include all adjustments, consisting of normal recurring adjustments necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows for the interim period presented. The results have been prepared in accordance with the requirement of Regulation S-X and do not necessarily include all information and footnotes necessary for presentation in accordance with accounting principles generally accepted in the U.S. (“GAAP”). These unaudited condensed financial statements should be read in conjunction with the financial statements and the related notes included in the Company’s audited annual financial statements for the fiscal year ended December 31, 2011. Interim operating results are not necessarily indicative of operating results expected in subsequent periods or for the year as a whole.

Reporting period — The Company operates on a 12 period fiscal year that includes 52 or 53 weeks depending on the year.

Cash and cash equivalents — The Company considers all highly liquid instruments with original maturity of three months or less to be cash equivalents.

Concentration of credit risk — The Company maintains cash balances that at times exceed federally insured amounts.

Five customers represent approximately 88% of the billed contracts receivable balance as of June 30, 2012. Four customers represent approximately 68% of the billed contracts receivable balance as of December 31, 2011. One customer represents approximately 62% of the unbilled contracts receivable balance as of June 30, 2012.  Three customers represent approximately 95% of the unbilled contracts receivable balance as of December 31, 2011.  Revenue from three of the Company’s customers accounted for approximately 76% and 81% of contract revenues earned for the six months ended June 30, 2012 and July 2, 2011, respectively.. These customers are either U.S. government entities or contractors to the U.S. government.

Billed contracts receivable — Billed contracts receivable are carried at the original invoice amount and are written off to expense in the period in which they are determined to be uncollectible. Management determines the uncollectability of accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history, and current economic conditions. Recoveries of receivables previously written off are recorded as income when received. Management’s evaluation resulted in no allowance for doubtful accounts as of June 30, 2012 and December 31, 2011.

Inventory — Inventories, other than inventoried costs relating to long-term contracts and programs, are stated at the lower of cost (determined on the first-in, first-out method) or market.

Inventoried costs relating to long-term contracts and programs are stated at the actual production cost, including factory overhead, initial tooling, and other related non-recurring costs. Inventoried costs relating to long-term contracts and programs are reduced by charging amounts relieved from inventory to cost of contract revenues when the Company starts the target assembly process and the inventory item is released to the production floor.

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COMPOSITE ENGINEERING, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 —SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES (CONTINUED)

Revenue recognition — Contract revenues earned under long-term contracts are recorded under the percentage-of-completion method. Costs and estimated gross margins are recorded as contract revenues earned as work is performed based on the percentage that incurred costs bear to estimated total costs utilizing the most recent estimates of costs and funding. Cost estimates include costs such as labor, material, and overhead. Some contracts contain incentive provisions based upon performance in relation to established targets, which are recognized in the contract estimates when deemed realizable. Contract change orders and claims are included in contract revenues earned when they can be reliably estimated and realization is probable. Since many contracts extend over a long period of time, revisions in cost and funding estimates during the progress of work have the effect of adjusting earnings applicable to performance in prior periods in the current period. When the current contract estimate indicates a loss, a provision is made for the total anticipated loss in the current period.

The asset “Unbilled contracts receivable” represents revenues recognized in excess of amounts billed on long-term contracts in progress. The liability “Unearned income” represents billings in excess of revenues recognized on long-term contracts in progress.

The estimated contract value of performance under government fixed-price contracts in process is recognized under the percentage of completion method of accounting where the estimated contract revenue earned is determined on the basis of completion to date (the total contract amount multiplied by percent of performance to date less contract revenues earned recognized in previous periods) and costs (including general and administrative, except as described below) are expensed as incurred.

Contract revenues earned under cost-reimbursement contracts are recorded as costs are incurred and include estimated earned fees in the proportion that costs incurred to date bear to total estimated costs. The fees under certain government contracts may be increased or decreased in accordance with cost or performance incentive provisions, which measure actual performance against established targets or other criteria. Such fee adjustments are included in contract revenues earned at the time the amounts can be determined reasonably.

Warranty reserve — Included in accrued expenses is $1,075,705 and $935,440 of accrued warranty costs at June 30, 2012 and December 31, 2011, respectively. This represents estimated costs associated with product warranties in conjunction with certain contracts. These costs are expensed as incurred. Contracts are generally covered by a 12-month warranty but may extend to a 36-month warranty period and cover systems, accessories, equipment, parts, and software manufactured by the Company to certain contractual specifications. Warranties cover factors such as non-conformance to specification and defects in material and workmanship.

Income taxes — The Company elected S — Corporation status for both federal and state purposes. Under S-Corporation tax provisions, the Company does not pay federal corporate income taxes on its taxable income. Instead, the stockholders are liable for individual federal and state income taxes on their respective shares of the Company’s taxable income.

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COMPOSITE ENGINEERING, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 —SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES (CONTINUED)

Subsequent events — Subsequent events are events or transactions that occur after the balance sheet date but before financial statements are available to be issued. The Company recognizes in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the condensed balance sheet, including the estimates inherent in the process of preparing the condensed financial statements. The Company’s condensed financial statements do not recognize subsequent events that provide evidence about conditions that did not exist at the date of the condensed balance sheet but arose after the condensed balance sheet date and before the condensed financial statements are available to be issued. The Company has evaluated subsequent events through July 22, 2013, which is the date the condensed financial statements were available to be issued as approved by management.

NOTE 2 — INVENTORY

Inventory consists of the following at:

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COMPOSITE ENGINEERING, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

NOTE 3 — EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Equipment and leasehold improvements consist of the following at:

NOTE 4 — ACCRUED EXPENSES

Accrued expenses consist of the following at:

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COMPOSITE ENGINEERING, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

NOTE 5 — LINE OF CREDIT AND LONG-TERM DEBT

Line of credit — The Company has a $10,000,000 line of credit with its bank that expired on November 13, 2012 (see Note 6). It is secured by equipment, inventory, and contracts receivable and is personally guaranteed by the major stockholders. The line of credit balance bears interest at the lender’s internal prime rate per annum (4% at June 30, 2012), payable monthly. The line of credit contains certain restrictive financial covenants.

The balance on the line of credit at June 30, 2012 and December 31, 2011 was $0 and $4,800,000, respectively.

Long-term debt — The Company has a long-term note with its bank maturing in April 2015 with $1,465,716 and $1,666,667 principal balances at June 30, 2012 and December 31, 2011, respectively. The note bears interest at the greater of 5.5% or prime plus 1.0%, with interest and fixed principal payable in monthly installments through maturity, at which time all outstanding amounts are due. This note is collateralized by substantially all the assets of the Company.

The Company has a long-term note with its bank maturing in December 2017 with $388,695 and $0 principal balances at June 30, 2012 and December 31, 2011, respectively. Monthly interest-only payments at a variable rate of prime plus 0.5% are due on December 31, 2012. At December 31, 2012, the 60-month term portion of the note begins with monthly interest and fixed principal payments due until maturity. This note is collateralized by substantially all the assets of the Company.

NOTE 6 — SUBSEQUENT EVENTS

In July 2012, the Company was acquired by Kratos Defense and Security Solutions, Inc. Professional fees incurred for the six-month period ended on June 30, 2012 related to the acquisition were $153,530.

Subsequent to period end, the Company paid off its long-term debt and the line of credit expired and was not renewed.

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Exhibit 99.2

UNAUDITED PRO FORMA CONDENSED COMBINED AND COMBINED FINANCIAL DATA

The following unaudited pro forma condensed combined and combined financial data is intended to show how the acquisitions of Composite Engineering, Inc. (“CEI”), Herley Industries, Inc. (“Herley”) and Integral Systems, Inc. (“Integral”) might have affected historical financial statements of Kratos Defense & Security Solutions, Inc. (“Kratos” or the “Company”) if such acquisitions (collectively, the “Transactions”) had been completed at an earlier time and was prepared based on the historical financial results reported by Kratos, CEI, Herley and Integral. The following should be read in connection with the (i) historical financial statements of Kratos included in Kratos’ Annual Report on Form 10-K for the year ended December 30, 2012 and its quarterly report on Form 10-Q for the six months ended June 24, 2012; and (ii) audited and unaudited historical financial information of (a) Herley included as Annex B of the Company’s Prospectus Supplement to the Company’s Registration Statement on Form S-3 (File No. 333-161340), filed with the Securities and Exchange Commission (“SEC”) on February 8, 2011, and as Exhibit 99.1 to the Company’s Registration Statement on Form S-3 (File No. 333-173099), filed with the SEC on March 25, 2011, respectively; (b) Integral included in Kratos’ Current Report on Form 8-K/A, filed with the SEC on October 11, 2011; and (c) CEI included in Kratos’ Current Report on Form 8-K/A filed with the SEC on July 27, 2012 as Exhibit 99.1, respectively, to Kratos’ Current Report on Form 8-K, filed with the SEC on May 8, 2012.

The unaudited pro forma condensed combined and combined financial statements were prepared in accordance with the regulations of the SEC. The pro forma adjustments reflecting the completion of the acquisition of CEI are based upon the acquisition method of accounting in accordance with U.S. generally accepted accounting principles (“GAAP”) and upon the assumptions set forth in the notes to the unaudited pro forma condensed combined and combined financial statements.

During 2011, Kratos acquired Herley, Integral and SecureInfo Corporation (“SecureInfo”). The acquisitions of Herley, Integral and SecureInfo were completed on March 25, 2011, July 27, 2011, and November 15, 2011, respectively.

The unaudited pro forma condensed combined balance sheet as of June 24, 2012 combines the historical condensed consolidated balance sheets of Kratos as of June 24, 2012 and CEI as of June 30, 2012.

The unaudited pro forma condensed combined statements of operations for the six months ended June 24, 2012 combine the historical condensed consolidated statements of operations of Kratos and CEI for their respective six months ended June 24, 2012 and June 30, 2012. The unaudited pro forma combined statements of operations for the year ended December 25, 2011 combine the historical consolidated statements of operations of Kratos and CEI for their respective twelve months ended December 25, 2011 and December 31, 2011, respectively, of Herley for the three-month period ended January 30, 2011, and of Integral for the six-month period ended July 1, 2011 and gives effect to the Transactions as if they had occurred on December 27, 2010. The pro forma results do not include the acquisition made of the critical infrastructure business in January 2012, SecureInfo operating results from December 27, 2010 to November 15, 2011, Herley operating results from January 31, 2011 to March 25, 2011, and Integral operating results from July 2, 2011 to July 27, 2011.

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The historical consolidated financial data has been adjusted to give effect to pro forma events that are (i) directly attributable to the acquisition of each of Herley, Integral and CEI, (ii) factually supportable, and (iii) with respect to the statement of operations, expected to have a continuing impact on the combined results. The pro forma adjustments are based on management’s estimates of the fair value and useful lives of the assets acquired and liabilities assumed and have been prepared to illustrate the estimated effect of the acquisitions and certain other adjustments. The unaudited pro forma condensed combined and combined financial statements do not reflect revenue opportunities, synergies or cost savings that the Company expects to realize after the acquisitions. No assurance can be given with respect to the estimated revenue opportunities and operating cost savings that are expected to be realized as a result of the acquisitions. The unaudited pro forma condensed combined and combined financial statements also do not reflect non-recurring charges related to integration activities or exit costs that may be incurred by Kratos, Herley or Integral in connection with the acquisitions thereof. There were no material transactions between Kratos, Herley or Integral during the periods presented in the unaudited pro forma condensed combined and combined financial statements that would need to be eliminated.

The unaudited pro forma condensed combined and combined financial data is presented for illustrative purposes only and is not necessarily indicative of the financial condition or results of operations of future periods or the financial condition or results of operations that actually would have been realized had the entities been combined during the periods presented. The unaudited pro forma condensed combined and combined financial statements do not give effect to the potential impact of current financial conditions, regulatory matters or any anticipated synergies, operating efficiencies or cost savings that may be associated with the acquisition of CEI. These financial statements also do not include any integration costs, synergies or estimated future transaction costs, except for fixed contractual transaction costs, that the companies may incur as a result of the acquisition of CEI.  CEI is a historical customer of Kratos and Herley. The pro forma adjustments record the elimination of a receivable from CEI and a corresponding payable by CEI to the Company at June 24, 2012 and the elimination of revenue and related cost of goods sold by Kratos to CEI for the six months ended June 24, 2012 and the twelve months ended December 25, 2011.

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KRATOS DEFENSE & SECURITY SOLUTIONS, INC.

Unaudited Pro Forma Condensed Combined Balance Sheet

(in millions, except par value and number of shares)

* See Note 6 for an explanation of the preliminary pro forma adjustments.

See accompanying notes to unaudited pro forma condensed combined financial information.

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KRATOS DEFENSE & SECURITY SOLUTIONS, INC.

Unaudited Pro Forma Condensed Combined Statement of Operations

(in millions, except per share data)

* See Note 7 for an explanation of the preliminary pro forma adjustments.

See accompanying notes to unaudited pro forma condensed combined financial information.

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KRATOS DEFENSE & SECURITY SOLUTIONS, INC.

Unaudited Pro Forma Combined Statement of Operations

(in millions, except per share data)

* See Note 7 for an explanation of the preliminary  pro forma adjustments.

See accompanying notes to unaudited pro forma combined financial information.

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Kratos Defense & Security Solutions, Inc.