0001069258-22-000031 | 10-Q | XBRL Viewer | Kratos Defense Security Solutions INC

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COVER - shares	3 Months Ended
COVER - shares	Mar. 27, 2022	Apr. 29, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 27, 2022
Document Transition Report	false
Entity File Number	001-34460
Entity Registrant Name	KRATOS DEFENSE & SECURITY SOLUTIONS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	13-3818604
Entity Address, Address Line One	1 Chisholm Trail
Entity Address, Address Line Two	Suite 3200
Entity Address, City or Town	Round Rock
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	78681
City Area Code	512
Local Phone Number	238-9840
Title of 12(b) Security	Common Stock, $0.001 par value
Trading Symbol	KTOS
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		124,997,920
Entity Central Index Key	0001069258
Current Fiscal Year End Date	--12-25
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Amendment Flag	false

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Mar. 27, 2022	Dec. 26, 2021
Current assets:
Cash and cash equivalents	$ 254.4	$ 349.4
Accounts receivable, net	65.9	93.9
Unbilled receivables, net	214.8	190.8
Inventoried costs	107.1	91.7
Prepaid expenses	11.1	9.8
Other current assets	34.6	22.5
Total current assets	687.9	758.1
Property, plant and equipment, net	173.5	168.3
Operating lease right-of-use assets	39.6	38.5
Goodwill	522.9	493.9
Intangible assets, net	51.5	43.2
Other assets	90.1	87.5
Total assets	1,565.5	1,589.5
Current liabilities:
Accounts payable	51.7	50.4
Accrued expenses	34.2	27.2
Accrued compensation	56.7	47.3
Accrued interest	0.2	1.5
Billings in excess of costs and earnings on uncompleted contracts	49.7	58.1
Current portion of operating lease liabilities	10.5	10.1
Other current liabilities	9.2	25.7
Current liabilities of discontinued operations	1.1	0.8
Total current liabilities	213.3	221.1
Long-term debt, net of current portion	295.0	296.7
Operating lease liabilities, net of current portion	33.3	32.7
Other long-term liabilities	73.9	76.2
Long-term liabilities of discontinued operations	2.5	2.5
Total liabilities	618.0	629.2
Commitments and contingencies
Redeemable noncontrolling interest	15.2	15.2
Stockholders’ equity:
Preferred stock, $0.001 par value, 5,000,000 shares authorized, 0 shares outstanding at March 27, 2022 and December 26, 2021	0.0	0.0
Common stock, $0.001 par value, 195,000,000 shares authorized; 124,825,355 and 123,987,424 shares issued and outstanding at March 27, 2022 and December 26, 2021, respectively	0.0	0.0
Additional paid-in capital	1,582.0	1,578.9
Accumulated other comprehensive income	0.6	0.6
Accumulated deficit	(650.3)	(634.4)
Total stockholders’ equity	932.3	945.1
Total liabilities and stockholders’ equity	$ 1,565.5	$ 1,589.5

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 27, 2022	Dec. 26, 2021
Preferred Stock:
Par value (in dollars per share)	$ 0.001	$ 0.001
Shares authorized (in shares)	5,000,000	5,000,000
Shares outstanding (in shares)	0	0
Common Stock:
Par value (in dollars per share)	$ 0.001	$ 0.001
Shares authorized (in shares)	195,000,000	195,000,000
Shares issued (in shares)	124,825,355	123,987,424
Shares outstanding (in shares)	124,825,355	123,987,424

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Mar. 27, 2022	Mar. 28, 2021
Total revenues	$ 196.2	$ 194.2
Total costs	144.3	143.2
Gross profit	51.9	51.0
Selling, general and administrative expenses	43.3	37.9
Merger and acquisition expenses	0.3	0.2
Research and development expenses	9.2	8.0
Restructuring expenses and other	0.3	0.0
Operating income (loss)	(1.2)	4.9
Other expense:
Interest expense, net	(5.9)	(5.9)
Loss on extinguishment of debt	(13.0)	0.0
Other income, net	0.1	0.2
Total other expense, net	(18.8)	(5.7)
Loss from continuing operations before income taxes	(20.0)	(0.8)
Benefit for income taxes from continuing operations	(4.3)	(2.7)
Income (loss) from continuing operations	(15.7)	1.9
Loss from discontinued operations before income taxes	(0.3)	0.0
Income tax benefit	0.1	0.0
Loss from discontinued operations	(0.2)	0.0
Net income (loss)	(15.9)	1.9
Less: Net income attributable to noncontrolling interest	0.0	0.0
Net income (loss) attributable to Kratos	$ (15.9)	$ 1.9
Basic income (loss) per common share attributable to Kratos:
Income (loss) from continuing operations (in dollars per share)	$ (0.12)	$ 0.02
Loss from discontinued operations (in dollars per share)	0	0
Net income (loss) per common share (in dollars per share)	(0.12)	0.02
Diluted income (loss) per common share attributable to Kratos:
Income (loss) from continuing operations (in dollars per share)	(0.12)	0.01
Loss from discontinued operations (in dollars per share)	0	0
Net income (loss) per common share (in dollars per share)	$ (0.12)	$ 0.01
Weighted average common shares outstanding:
Basic (in shares)	125.9	124.1
Diluted (in shares)	125.9	127.7
Service revenues
Total revenues	$ 67.9	$ 57.3
Total costs	49.9	42.5
Product sales
Total revenues	128.3	136.9
Total costs	$ 94.4	$ 100.7

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions	3 Months Ended
	Mar. 27, 2022	Mar. 28, 2021
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ (15.9)	$ 1.9
Change in cumulative translation adjustment	0.0	0.2
Comprehensive income (loss)	(15.9)	2.1
Less: Comprehensive income attributable to noncontrolling interest	0.0	0.0
Comprehensive income (loss) attributable to Kratos	$ (15.9)	$ 2.1

- Definition

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income (loss) and other comprehensive income (loss), attributable to noncontrolling interests. Excludes changes in equity resulting from investments by owners and distributions to owners.

+ References + Details

- Definition

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income and other comprehensive income. Excludes changes in equity resulting from investments by owners and distributions to owners.

+ References + Details

- Definition

The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

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+ Details

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - USD ($) $ in Millions	Total	Redeemable Noncontrolling Interest	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Income	Accumulated Deficit
Balance, beginning of period at Dec. 27, 2020		$ 14.8
Balance, end of period at Mar. 28, 2021		14.8
Balance, beginning of period (in shares) at Dec. 27, 2020			123,000,000.0
Balance, beginning of period at Dec. 27, 2020	$ 925.3		$ 0.0	$ 1,556.3	$ 1.4	$ (632.4)
Increase (Decrease) in Stockholders' Equity
Stock-based compensation	6.2			6.2
Issuance of common stock for employee stock purchase plan and stock options (in shares)			200,000
Issuance of common stock for employee stock purchase plan and stock options	2.5			2.5
Restricted stock issued and related taxes (in shares)			500,000
Restricted stock issued and related taxes	(7.1)			(7.1)
Net income (loss)	1.9					1.9
Other comprehensive income, net of tax	0.2				0.2
Balance, end of period (in shares) at Mar. 28, 2021			123,700,000
Balance, end of period at Mar. 28, 2021	$ 929.0		$ 0.0	1,557.9	1.6	(630.5)
Balance, beginning of period at Dec. 26, 2021		15.2
Balance, end of period at Mar. 27, 2022		$ 15.2
Balance, beginning of period (in shares) at Dec. 26, 2021	123,987,424		124,000,000.0
Balance, beginning of period at Dec. 26, 2021	$ 945.1		$ 0.0	1,578.9	0.6	(634.4)
Increase (Decrease) in Stockholders' Equity
Stock-based compensation	7.0			7.0
Issuance of common stock for employee stock purchase plan and stock options (in shares)			200,000
Issuance of common stock for employee stock purchase plan and stock options	2.9			2.9
Restricted stock issued and related taxes (in shares)			600,000
Restricted stock issued and related taxes	(6.8)			(6.8)
Net income (loss)	(15.9)					(15.9)
Other comprehensive income, net of tax	$ 0.0
Balance, end of period (in shares) at Mar. 27, 2022	124,825,355		124,800,000
Balance, end of period at Mar. 27, 2022	$ 932.3		$ 0.0	$ 1,582.0	$ 0.6	$ (650.3)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	3 Months Ended
	Mar. 27, 2022	Mar. 28, 2021
Operating activities:
Net income (loss)	$ (15.9)	$ 1.9
Loss from discontinued operations	(0.2)	0.0
Income (loss) from continuing operations	(15.7)	1.9
Adjustments to reconcile income (loss) from continuing operations to net cash provided by (used in) operating activities from continuing operations:
Depreciation and amortization	7.0	6.3
Deferred income taxes	0.0	0.1
Amortization of lease right-of-use assets	2.6	2.2
Stock-based compensation	7.0	6.2
Amortization of deferred financing costs	0.3	0.2
Loss on extinguishment of debt	13.0	0.0
Recovery of doubtful accounts	0.0	(0.1)
Changes in assets and liabilities, net of acquisitions:
Accounts receivable	31.9	9.8
Unbilled receivables	(19.8)	(1.8)
Inventoried costs	(15.3)	(4.2)
Prepaid expenses and other assets	(9.5)	(2.0)
Operating lease liabilities	(2.7)	(2.2)
Accounts payable	1.3	(2.0)
Accrued expenses	6.1	(2.7)
Accrued compensation	5.6	6.2
Accrued interest	(1.3)	4.9
Billings in excess of costs and earnings on uncompleted contracts	(8.3)	7.1
Income tax receivable and payable	(4.9)	(2.2)
Other liabilities	(5.2)	(5.0)
Net cash provided by (used in) operating activities from continuing operations	(7.9)	22.7
Investing activities:
Cash paid for acquisitions, net of cash acquired	(58.5)	(5.1)
Capital expenditures	(10.8)	(9.6)
Net cash used in investing activities from continuing operations	(69.3)	(14.7)
Financing activities:
Proceeds from the issuance of long-term debt	200.0	0.0
Debt issuance costs	(3.2)	0.0
Credit agreement borrowings	100.0	0.0
Repayment of debt	(309.8)	0.0
Payments under finance leases	(0.3)	(0.2)
Payments of employee taxes withheld from share-based awards	(6.8)	(7.1)
Proceeds from shares issued under equity plans	2.9	2.5
Net cash used in financing activities from continuing operations	(17.2)	(4.8)
Net cash provided by (used in) continuing operations	(94.4)	3.2
Net operating cash flows of discontinued operations	0.1	(0.5)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(0.7)	(0.6)
Net increase (decrease) in cash, cash equivalents and restricted cash	(95.0)	2.1
Cash, cash equivalents and restricted cash at beginning of period	349.4	381.5
Cash, cash equivalents and restricted cash at end of period	$ 254.4	$ 383.6

Summary of Significant Accounting Policies	3 Months Ended
Summary of Significant Accounting Policies	Mar. 27, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Summary of Significant Accounting Policies	Summary of Significant Accounting Policies All references to the “Company” and “Kratos” refer to Kratos Defense & Security Solutions, Inc., a Delaware corporation, and its subsidiaries. (a) Basis of Presentation The information as of March 27, 2022 and for the three months ended March 27, 2022 and March 28, 2021 is unaudited. The condensed consolidated balance sheet as of December 26, 2021 was derived from the Company’s audited consolidated financial statements at that date. In the opinion of management, these unaudited condensed consolidated 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 periods presented. The results have been prepared in accordance with the instructions to Form 10-Q 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 consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes included in the Company’s audited annual consolidated financial statements for the fiscal year ended December 26, 2021, included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 22, 2022 (the “Form 10-K”). Interim operating results are not necessarily indicative of operating results expected in subsequent periods or for the year as a whole. (b) Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company, its 100% owned subsidiaries and its majority owned subsidiary, KTT Core, which is 80.1% owned by the Company. All inter-company transactions have been eliminated in consolidation. Noncontrolling interest consists of the remaining 19.9% interest in KTT Core. See Note 12 for further information related to the redeemable noncontrolling interest. (c) Fiscal Year The Company has a 52/53 week fiscal year ending on the last Sunday of the calendar year. The three month periods ended March 27, 2022 and March 28, 2021 consisted of 13-week periods. There are 52 calendar weeks in the fiscal years ending on December 25, 2022 and December 26, 2021. (d) Accounting Estimates There have been no significant changes in the Company’s accounting estimates for the three months ended March 27, 2022 as compared to the accounting estimates described in the Annual Report on Form 10-K. (e) Accounting Standards Updates In October 2021, the FASB issued ASU 2021-08 (“ASU 2021-08”), Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 2014-09, Revenue from Contracts with Customers (Topic 606). The update will generally result in an entity recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date rather than at fair value. The new standard is effective on a prospective basis for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company has adopted the new standard effective December 26, 2021. The adoption of the new standard did not have an impact on the Company’s consolidated financial statements. (f) Fair Value of Financial Instruments The carrying amounts and the related estimated fair values of the Company’s long-term debt financial instruments not measured at fair value on a recurring basis at March 27, 2022 and December 26, 2021 are presented in Note 10. The carrying value of all other financial instruments, including cash equivalents, accounts receivable, unbilled receivables, accounts payable, accrued expenses, billings in excess of cost and earnings on uncompleted contracts, income taxes payable and short-term debt, approximated their estimated fair values at March 27, 2022 and December 26, 2021 due to the short-term nature of these instruments.

Acquisitions

3 Months Ended

Mar. 27, 2022

Business Combination and Asset Acquisition [Abstract]

Acquisitions

CTT Inc.

On December 10, 2021, the Company acquired CTT Inc. (“CTT”), a company that designs, develops, and manufactures microwave application components and equipment primarily for customers in the defense industry. The purchase price was $22.0 million in cash, subject to adjustments for transaction expenses, indebtedness, cash on hand, and post-closing working capital adjustments. Approximately $6.3 million of the purchase price was paid on December 10, 2021, with the remaining $15.2 million of the purchase price paid on December 30, 2021. 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 amount of net sales and earnings of CTT included in the condensed consolidated statement of operations for the year ended December 26, 2021 are not material. Had the acquisition occurred as of December 28, 2020, net sales, net income from consolidated operations, net income attributable to Kratos, and basic and diluted net income per share attributable to Kratos on a pro forma basis for the year ended December 26, 2021 would not have been materially different than the reported amounts. CTT is included in the Kratos Government Solutions (KGS) segment.

Cosmic Advanced Engineered Solutions, Inc.

On December 27, 2021, Kratos Integral Holdings, LLC entered into a Stock Purchase Agreement to acquire Cosmic Advanced Engineered Solutions, Inc. (“Cosmic”) from the Carol L. Zanmiller Living Trust and the John G. Hutchens Living Trust for $37.5 million in cash, subject to adjustments for transaction expenses, indebtedness, cash on hand, and working capital adjustments. Cosmic focuses on radio frequency, terrestrial, and space-based communication solutions, including digital signals processing and geolocation analysis. In addition, Cosmic provides overhead persistent infrared for missile defense systems and embedded cyber solutions to U.S. government agencies. On December 27, 2021, the acquisition was completed following the satisfaction of all closing conditions, including receipt of regulatory approval from all required government authorities. 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. Cosmic is included in the KGS segment.

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 Cosmic’s existing 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. The 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 allocation of the purchase price over the estimated fair values of the major assets acquired and liabilities assumed (in millions):


Accounts receivable	$	3.8
Unbilled receivables	4.0
Other current assets	0.1
Property and equipment	1.3
Intangible assets	10.0
Total identifiable net assets acquired	19.2
Total identifiable net liabilities assumed	(9.6)
Goodwill	28.6
Net assets acquired, excluding cash	$	38.2

Based on the Company’s estimate of fair value, as of December 27, 2021, net liabilities included $6.7 million of current liabilities. The identifiable intangible assets include trade names of $1.5 million with a remaining useful life of 5 years, backlog of $3.0 million with an estimated useful life of 2 years, customer relationships of $2.5 million with remaining useful lives of 10 years, and developed technology of $3.0 million with a remaining useful life of 10 years. The Company also established a deferred tax liability of $2.9 million for the difference between the financial statement basis and tax basis of the acquired assets of Cosmic and a corresponding increase in goodwill. The goodwill recorded in this transaction is not expected to be tax-deductible.

The amounts of revenue and operating loss of Cosmic included in the Company’s condensed consolidated statement of operations for the three months ended March 27, 2022 were $12.7 million and $0.2 million, respectively.

A summary of the consideration paid for the acquired ownership in Cosmic is as follows:


Cash paid	$	39.5
Less: Cash acquired	(1.3)
Total consideration	$	38.2

Southern Research Engineering Division

On March 9, 2022, the Company executed an Asset Purchase Agreement to acquire the assets of the Engineering Division of Southern Research Institute (SRI), an Alabama non-profit corporation, for a purchase price of approximately $80.0 million, comprised of $75.0 million in cash, subject to any working capital adjustments, and $5.0 million in Kratos common stock. Southern Research’s Engineering Division (SRE) is the market leader in assisting customers in the development, modeling, and deployment of advanced materials for extreme environments, including hypersonic, space, missile, missile defense, strategic deterrence, propulsion systems, and energy applications. SRE also specializes in Intelligence Surveillance and Reconnaissance (ISR) sensor development, electromechanical systems design and integration, aerospace engineering, materials engineering, artificial intelligence and machine learning, directed energy, RF systems design and integration, advanced manufacturing, and computational sciences. The acquisition will establish Kratos SRE, a new business unit within Kratos’ Defense and Rocket Support Services Division. Closing is subject to certain conditions, which are expected to be satisfied during the second quarter of 2022.

Revenue Recognition

3 Months Ended

Mar. 27, 2022

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Effective January 1, 2018, the Company adopted the FASB ASU 2014-09, Revenue from Contracts with Customers, and the related amendments, which are codified into Accounting Standards Codification (“ASC”) 606 (“ASC 606”).

To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in each contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. Once the

contract is identified and determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract, determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. The majority of the Company’s contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation based on the relative standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is the expected-cost-plus-margin approach, under which the Company forecasts the expected costs of satisfying a performance obligation and then adds an appropriate margin for that distinct good or service.

For the majority of contracts, the Company satisfies the underlying performance obligations over time as the customer obtains control or receives benefits as work is performed on the contract. The Company generally recognizes revenue over time as work is performed on long-term contracts because of continuous transfer of control to the customer. For U.S. government contracts, this continuous transfer of control to the customer is supported by clauses in the contract that allow the customer to unilaterally terminate the contract for convenience, pay for costs incurred plus a reasonable profit and take control of any work in process. Similarly, for non-U.S. government contracts, the customer typically controls the work in process as evidenced either by contractual termination clauses or by our rights to payment of the transaction price associated with work performed to date on products or services that do not have an alternative use to the Company. As a result, under ASC 606 revenue is recognized over time using the cost-to-cost method (cost incurred relative to total estimated cost at completion). As a result, under ASC 606, revenue is recognized over a time using the cost-to-cost method (cost incurred relative to total estimated cost at completion).

Remaining Performance Obligations

The Company calculates revenues from remaining performance obligations as the dollar value of the remaining performance obligations on executed contracts. On March 27, 2022, the Company had approximately $982.1 million of remaining performance obligations. The Company expects to recognize approximately 50% of the remaining performance obligations as revenue in fiscal year 2022, an additional 20% in fiscal year 2023, and the balance thereafter.

Contract Estimates

Due to the nature of the work required to be performed on many performance obligations, the estimation of total revenue and cost at completion is complex, subject to many variables, and requires significant judgment. On a quarterly basis, the Company conducts its contract cost Estimate at Completion (“EAC”) process by reviewing the progress and execution of outstanding performance obligations within its contracts. As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion and the related program schedule, identified risks and opportunities and the related changes in estimates of revenues and costs. The risks and opportunities include management’s judgment about the ability and cost to achieve the schedule (e.g., the number and type of milestone events), technical requirements (e.g., a newly-developed product versus a mature product) and other contract requirements. Management must make assumptions and estimates regarding labor productivity and availability, the complexity of the work to be performed, the availability of materials, the length of time to complete the performance obligation (e.g., to estimate increases in wages and prices for materials and related support cost allocations), execution by subcontractors, the availability and timing of funding from customers and overhead cost rates, among other variables.

In addition, certain of the Company’s long-term contracts contain award fees, incentive fees, or other provisions that can either increase or decrease the transaction price. These variable amounts generally are awarded upon achievement of certain performance metrics, program milestones, or cost targets and can be based upon customer discretion. Variable consideration is estimated at the most likely amount to which the Company is expected to be entitled. Estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the Company’s anticipated performance and all information (historical, current, and forecasted) that is reasonably available.

Contracts are often modified to account for changes in contract specifications and requirements. Contract modifications are considered to exist when the modification either creates new or changes the existing enforceable rights and

obligations. Most of the Company’s contract modifications are for goods or services that are not distinct from the existing contract due to the significant integration service provided in the context of the contract and are accounted for as if they were part of that existing contract. The effect of a contract modification on the transaction price, and the measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis.

As a result of the EAC process, any quarterly adjustments to revenues, cost of sales, and the related impact to operating income are recognized as necessary in the period they become known. These adjustments may result from positive program performance, and may result in an increase in operating income during the performance of individual performance obligations, if it is determined the Company will be successful in mitigating risks surrounding the technical, schedule and cost aspects of those performance obligations or realizing related opportunities. Likewise, these adjustments may result in a decrease in operating income if it is determined the Company will not be successful in mitigating these risks or realizing related opportunities. Changes in estimates of net sales, cost of sales, and the related impact to operating income are recognized quarterly on a cumulative catch-up basis, which recognizes in the current period the cumulative effect of the changes on current and prior periods. A significant change in one or more of these estimates could affect the profitability of one or more of the Company’s contracts. When estimates of total costs to be incurred on a performance obligation exceed total estimates of revenue to be earned, a provision for the entire loss on the performance obligation is recognized in the period the loss is determined. No cumulative catch-up adjustment on any one contract was material to the Company’s unaudited condensed consolidated financial statements for the three-month periods ended March 27, 2022, and March 28, 2021. Likewise, total cumulative catch-up adjustments were not material for the three-month periods ended March 27, 2022, and March 28, 2021.

Contract Assets and Liabilities

For each of the Company’s contracts, the timing of revenue recognition, customer billings, and cash collections results in a net contract asset or liability at the end of each reporting period. Fixed-price contracts are typically billed to the customer either using progress payments, whereby amounts are billed monthly as costs are incurred or work is completed, or performance based payments, which are based upon the achievement of specific, measurable events or accomplishments defined and valued at contract inception. Cost-type contracts are typically billed to the customer on a monthly or semi-monthly basis.

Contract assets consist of unbilled receivables, primarily related to long-term contracts where revenue recognized under the cost-to-cost method exceeds amounts billed to customers. Unbilled receivables are classified as current assets and, in accordance with industry practice, include amounts that may be billed and collected beyond one year due to the long-term nature of many of the Company’s contracts. Accumulated contract costs in unbilled receivables include direct production costs, factory and engineering overhead, production tooling costs, and, for government contracts, recovery of allowable general and administrative expenses. Unbilled receivables also include certain estimates of variable consideration described above. The Company’s contracts that give rise to contract assets are not considered to include a significant financing component as the payment terms are intended to protect the customer in the event the Company does not perform on its obligations under the contract.

Contract liabilities include advance payments and billings in excess of revenue recognized. Certain customers make advance payments prior to the satisfaction of the Company’s performance obligations on the contract. These amounts are recorded as contract liabilities until such performance obligations are satisfied, either over time as costs are incurred or at a point in time when deliveries are made. The Company’s contracts that give rise to contract liabilities do not include a significant financing component as the underlying advance payments received are generally utilized to pay for contract costs within a one-year period or are used to ensure the customer meets contractual requirements.

Net contract assets and liabilities are as follows (in millions):


	March 27, 2022		December 26, 2021		Net Change
Contract assets	$	214.8	$	190.8	$	24.0
Contract liabilities	$	49.7	$	58.1	$	(8.4)
Net contract assets	$	165.1	$	132.7	$	32.4

Contract assets increased $24.0 million during the three months ended March 27, 2022, primarily due to the recognition of revenue related to the satisfaction or partial satisfaction of performance obligations for which the Company has not yet billed the customers. There were no significant impairment losses related to any receivables or contract assets arising from the Company’s contracts with customers during the three months ended March 27, 2022. Contract liabilities decreased $8.4 million during the three months ended March 27, 2022, primarily due to revenue recognized in excess of payments

received on these performance obligations. For the three months ended March 27, 2022 the Company recognized revenue of $21.2 million that was previously included in the contract liabilities that existed at December 26, 2021. For the three months ended March 28, 2021 the Company recognized revenue of $17.0 million that was previously included in the contract liabilities that existed at December 27, 2020.

In November 2019, a large training solutions program was terminated for convenience (“T for C”) by the customer. Under a T for C, a contractor is entitled to seek specified costs through a termination settlement process including (1) the contract price for completed supplies and services accepted by the government but not previously paid for; (2) the cost incurred in the performance of work terminated plus a reasonable profit on those costs; and (3) its costs incurred in settling with subcontractors and preparing and settling the termination proposal. Under a T for C, the Company would not be able to collect the total withheld amounts until the settlement terms of the T for C have been negotiated and agreed to with the customer. At March 27, 2022, approximately $10.8 million in unbilled receivables remained outstanding on this project. In March 2022, the Company and the customer agreed to a settlement of $6.0 million for a portion of the amounts outstanding on this project, which is expected to be collected in the third quarter of 2022. The remaining unbilled balance of $4.8 million is subject to negotiation and settlement with the customer. In addition, the Company is currently in dispute with an international customer in the Unmanned Systems (US) segment over approximately $10.0 million in unbilled receivables outstanding as of March 27, 2022. The dispute with the international customer concerns the completion of certain system requirements and certain contractual milestones. The Company alleges breach of contract, as well as other claims against the customer, and seeks damages and other equitable relief. The customer has asserted counterclaims seeking liquidated damages and additional relief. Management has evaluated the present facts of the matters and performed a reassessment of the contractual amounts due and has determined that no adjustment to previously recognized revenue, or the corresponding unbilled receivables, is necessary at March 27, 2022.

Disaggregation of Revenue

The following series of tables presents the Company’s revenue disaggregated by several categories. For the majority of contracts, revenue is recognized over time as work is performed on the contract. Revenue by contract type was as follows (in millions):


	Three Months Ended
	March 27, 2022		March 28, 2021
Kratos Government Solutions
Fixed price	$	101.3	$	99.5
Cost plus fee	32.3		28.6
Time and materials	10.0		10.2
Total Kratos Government Solutions	143.6		138.3
Unmanned Systems
Fixed price	31.5		37.2
Cost plus fee	20.4		17.9
Time and materials	0.7		0.8
Total Unmanned Systems	52.6		55.9
Total Revenues	$	196.2	$	194.2

Revenue by customer was as follows (in millions):


	Three Months Ended
	March 27, 2022		March 28, 2021
Kratos Government Solutions
U.S. Government (1)	$	89.5	$	92.6
International (2)	34.7		31.7
U.S. Commercial and other customers	19.4		14.0
Total Kratos Government Solutions	143.6		138.3
Unmanned Systems
U.S. Government (1)	50.1		49.6
International (2)	1.8		6.3
U.S. Commercial and other customers	0.7		—
Total Unmanned Systems	52.6		55.9
Total Revenues	$	196.2	$	194.2

(1) Sales to the U.S. Government include sales from contracts for which the Company is the prime contractor, as well as those for which the

Company is a subcontractor and the ultimate customer is the U.S. Government. Each of the Company’s segments derives substantial revenue

from the U.S. Government. These sales include foreign military sales contracted through the U.S. Government.

(2) International sales include sales from contracts for which the Company is the prime contractor, as well as those for which the Company is a

subcontractor and the ultimate customer is an international customer. These sales include direct sales with governments outside the U.S. and

commercial sales with customers outside the U.S.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

+ Details

Discontinued Operations	3 Months Ended
Discontinued Operations	Mar. 27, 2022
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”). To date, the Company has received approximately $68.7 million of aggregate net cash proceeds from the Transaction, after taking into account amounts that were paid by the Company pursuant to a negotiated transaction services agreement between the Company and the Buyer, receipt of approximately $7.3 million in net working capital retained by the Company, and associated transaction fees and expenses, including the impact of the final settlement and determination of the closing net working capital adjustment and litigation which was settled with the Buyer in the fourth quarter of 2021 and first quarter of 2022, respectively.

Goodwill and Intangible Assets

3 Months Ended

Mar. 27, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

(a) Goodwill

The carrying amounts of goodwill as of March 27, 2022 and December 26, 2021 by reportable segment are as follows (in millions):


	As of March 27, 2022
	KGS		US		Total
Gross value	$	648.3	$	127.9	$	776.2
Less accumulated impairment	239.5		13.8		253.3
Net	$	408.8	$	114.1	$	522.9


	As of December 26, 2021
	KGS		US		Total
Gross value	$	619.3	$	127.9	$	747.2
Less accumulated impairment	239.5		13.8		253.3
Net	$	379.8	$	114.1	$	493.9

(b) Purchased Intangible Assets

The following table sets forth information for finite-lived and indefinite-lived intangible assets (in millions):


	As of March 27, 2022						As of December 26, 2021
	Gross Value		Accumulated Amortization		Net Value		Gross Value		Accumulated Amortization		Net Value
Acquired finite-lived intangible assets:
Customer relationships	$	79.0	$	(58.2)	$	20.8	$	76.5	$	(57.6)	$	18.9
Contracts and backlog	37.9		(33.8)		4.1		34.9		(33.1)		1.8
Developed technology and technical know-how	34.4		(26.1)		8.3		31.4		(25.8)		5.6
Trade names	4.2		(2.1)		2.1		2.7		(2.0)		0.7
In-process research and development	9.5		(0.2)		9.3		9.5		(0.2)		9.3

Total finite-lived intangible assets	165.0		(120.4)		44.6		155.0		(118.7)		36.3
Indefinite-lived trade names	6.9		—		6.9		6.9		—		6.9
Total intangible assets	$	171.9	$	(120.4)	$	51.5	$	161.9	$	(118.7)	$	43.2

Consolidated amortization expense related to intangible assets subject to amortization was $1.7 million and $1.4 million for the three months ended March 27, 2022 and March 28, 2021, respectively

Inventoried Costs

3 Months Ended

Mar. 27, 2022

Inventory Disclosure [Abstract]

Inventoried Costs

Inventoried costs, consisted of the following components (in millions):


	March 27, 2022		December 26, 2021
Raw materials	$	66.6	$	58.5
Work in process	34.9		28.5
Finished goods	5.6		4.7



Total inventoried costs	$	107.1	$	91.7

Net Income (Loss) per Common Share	3 Months Ended
Net Income (Loss) per Common Share	Mar. 27, 2022
Earnings Per Share [Abstract]
Net Income (Loss) per Common Share	Net Income (Loss) per Common Share The Company calculates net income (loss) per share in accordance with FASB ASC Topic 260, Earnings per Share (Topic 260). Under Topic 260, basic net income (loss) per common share attributable to the Kratos shareholders is calculated by dividing net income (loss) attributable to Kratos by the weighted-average number of common shares outstanding during the reporting period. Diluted net income (loss) per common share reflects the effects of potentially dilutive securities. Shares from stock options and awards, excluded from the calculation of diluted net loss per share because their inclusion would have been anti-dilutive, were 1.2 million for the three months ended March 27, 2022.

Leases

3 Months Ended

Mar. 27, 2022

Leases [Abstract]

Leases

LeasesThe Company leases certain facilities, office space, vehicles and equipment. Lease assets and lease liabilities are recognized at the commencement of an arrangement where it is determined at inception that a lease exists. Lease assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. These assets and liabilities are initially recognized based on the present value of lease

payments over the lease term calculated using an incremental borrowing rate generally applicable to the location of the lease asset, unless the implicit rate is readily determinable. Lease assets also include any upfront lease payments made and exclude lease incentives. Lease terms include options to extend or terminate the lease when it is reasonably certain that those options will be exercised. The Company has operating lease arrangements with lease and non-lease components. The non-lease components in these arrangements are not significant when compared to the lease components. For all operating leases, the Company accounts for the lease and non-lease components as a single component.

Variable lease payments are generally expensed as incurred. Leases with an initial term of 12 months or less are not recorded on the balance sheet, and the expense for these short-term leases is recognized on a straight-line basis over the lease term.

The depreciable life of lease assets and leasehold improvements is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

The components of lease expense were as follows (in millions):


	Three Months Ended
	March 27, 2022		March 28, 2021
Amortization of right of use assets - finance leases	$	0.7	$	0.5
Interest on lease liabilities - finance leases	0.7		0.6
Operating lease cost	3.3		2.9
Short-term lease cost	0.2		0.2
Variable lease cost (cost excluded from lease payments)	—		—
Sublease income	—		—
Total lease cost	$	4.9	$	4.2

The components of leases on the balance sheet were as follows (in millions):


	March 27, 2022		December 26, 2021
Operating Leases:
Operating lease right-of-use assets	$	39.6	$	38.5
Current portion of operating lease liabilities	$	10.5	$	10.1
Operating lease liabilities, net of current portion	$	33.3	$	32.7
Finance leases:
Property, plant and equipment, net	$	38.3	$	39.0
Other current liabilities	$	1.2	$	1.2
Other long-term liabilities	$	42.9	$	43.2

Cash paid for amounts included in the measurement of lease liabilities was as follows (in millions):



	Three Months Ended
	March 27, 2022		March 28, 2021
Finance lease - cash paid for interest	$	0.7	$	0.6
Finance lease - financing cash flows	$	0.3	$	0.2
Operating lease - operating cash flows (fixed payments)	$	3.4	$	2.8

Other supplemental noncash information (in millions):


	Three Months Ended
		March 27, 2022			March 28, 2021
Operating lease liabilities arising from obtaining right-of-use assets		$	3.7		$	0.2
Finance lease liabilities arising from obtaining right-of-use assets		$	—		$	—

		March 27, 2022			March 28, 2021
Weighted-average remaining lease term (in years):
Operating leases		4.50			5.28
Finance leases		15.91			17.44

Weighted-average discount rate:
Operating leases		6.48		%	6.50		%
Finance leases		6.51		%	6.52		%

The maturity of lease liabilities is (in millions):


	Operating Leases		Finance Leases
2022 (1)	$	9.8	$	3.0
2023	12.4		4.1
2024	9.8		4.2
2025	8.3		4.2
2026	4.9		4.3
Thereafter	5.3		52.8
Total lease payments	50.5		72.6
Less: imputed interest	(6.7)		(28.5)
Total present value of lease liabilities	$	43.8	$	44.1
(1) Excludes the three months ended March 27, 2022.

Leases

The depreciable life of lease assets and leasehold improvements is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

The components of lease expense were as follows (in millions):


	Three Months Ended
	March 27, 2022		March 28, 2021
Amortization of right of use assets - finance leases	$	0.7	$	0.5
Interest on lease liabilities - finance leases	0.7		0.6
Operating lease cost	3.3		2.9
Short-term lease cost	0.2		0.2
Variable lease cost (cost excluded from lease payments)	—		—
Sublease income	—		—
Total lease cost	$	4.9	$	4.2

The components of leases on the balance sheet were as follows (in millions):


	March 27, 2022		December 26, 2021
Operating Leases:
Operating lease right-of-use assets	$	39.6	$	38.5
Current portion of operating lease liabilities	$	10.5	$	10.1
Operating lease liabilities, net of current portion	$	33.3	$	32.7
Finance leases:
Property, plant and equipment, net	$	38.3	$	39.0
Other current liabilities	$	1.2	$	1.2
Other long-term liabilities	$	42.9	$	43.2

Cash paid for amounts included in the measurement of lease liabilities was as follows (in millions):



	Three Months Ended
	March 27, 2022		March 28, 2021
Finance lease - cash paid for interest	$	0.7	$	0.6
Finance lease - financing cash flows	$	0.3	$	0.2
Operating lease - operating cash flows (fixed payments)	$	3.4	$	2.8

Other supplemental noncash information (in millions):


	Three Months Ended
		March 27, 2022			March 28, 2021
Operating lease liabilities arising from obtaining right-of-use assets		$	3.7		$	0.2
Finance lease liabilities arising from obtaining right-of-use assets		$	—		$	—

		March 27, 2022			March 28, 2021
Weighted-average remaining lease term (in years):
Operating leases		4.50			5.28
Finance leases		15.91			17.44

Weighted-average discount rate:
Operating leases		6.48		%	6.50		%
Finance leases		6.51		%	6.52		%

The maturity of lease liabilities is (in millions):


	Operating Leases		Finance Leases
2022 (1)	$	9.8	$	3.0
2023	12.4		4.1
2024	9.8		4.2
2025	8.3		4.2
2026	4.9		4.3
Thereafter	5.3		52.8
Total lease payments	50.5		72.6
Less: imputed interest	(6.7)		(28.5)
Total present value of lease liabilities	$	43.8	$	44.1
(1) Excludes the three months ended March 27, 2022.

Income Taxes

3 Months Ended

Mar. 27, 2022

Income Tax Disclosure [Abstract]

Income Taxes

A reconciliation of the total income tax provision (benefit) to the amount computed by applying the statutory federal income tax rate of 21% to income from continuing operations before income taxes for the three months ended March 27, 2022 and March 28, 2021 is as follows (in millions):


	For the Three Months Ended
	March 27, 2022		March 28, 2021
Income tax benefit at federal statutory rate	$	(4.2)	$	(0.2)



Nondeductible expenses and other	1.0		(0.2)


Stock compensation - excess tax benefits	(0.9)		(2.4)
Federal impact of research & development tax credits	(0.2)		0.1

Benefit for income taxes from continuing operations	$	(4.3)	$	(2.7)

The Company calculates its interim income tax provision in accordance with ASC Topic 270, “Interim Reporting,” and ASC Topic 740, “Accounting for Income Taxes.” Historically, the Company calculated the provision for income taxes during the interim reporting periods by applying an estimate of the annual effective tax rate for the full fiscal year to “ordinary” income or loss (pretax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. The Company determined that since small changes in estimated “ordinary” income would result in significant changes in the

estimated annual effective tax rate, the historical method would not provide a reliable estimate for the three ended March 27, 2022. Therefore, a discrete effective tax rate method was used to calculate taxes for the three months ended March 27, 2022.

As of December 26, 2021, the Company had $25.9 million of unrecognized tax benefits that, if recognized, would impact the Company’s effective income tax rate. During the three months ended March 27, 2022 unrecognized tax benefits increased by $0.1 million relating to various current year tax positions.

The Company recognizes interest and penalties related to unrecognized tax benefits in its provision for income taxes. For each of the three months ended March 27, 2022 and March 28, 2021, the Company recorded an expense for interest and penalties of $0.1 million. For the three months ended March 27, 2022 and March 28, 2021, there was no material benefit recorded related to the removal of interest and penalties. The Company believes that it is reasonably possible that as much as $0.5 million of the liabilities for uncertain tax positions will expire within the next twelve months due to the expiration of various applicable statutes of limitations.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Paragraph 21
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+ Details

Debt

3 Months Ended

Mar. 27, 2022

Debt Disclosure [Abstract]

Debt

(a) New Credit Facility

On February 18, 2022, the Company completed the refinancing of its outstanding $90 million revolving credit facility and $300 million 6.5% Senior Secured Notes (the “Senior Secured Notes”), with a new 5-year $200 million Revolving Credit Facility and 5-year $200 million Term Loan A (collectively, the “New Credit Facility”). The Company incurred debt issuance costs of $3.2 million associated with the New Credit Facility. The Company has drawn approximately $200 million under the Term Loan A and $100 million on the new Revolving Credit Facility, with $100 million remaining in borrowing capacity, less approximately $13.2 million of letters of credit outstanding.

On February 18, 2022, the proceeds of $300 million from the New Credit Facility, along with cash funded by the Company for the 3.25% call premium to redeem the Company’s outstanding Senior Secured Notes, plus accrued interest, was distributed to the trustee for redemption of the Senior Secured Notes. The redemption of the Company’s outstanding $300 million 6.5% Senior Secured Notes due November 2025 closed on March 14, 2022, for an amount of cash equal to 103.25% of the principal amount thereof plus accrued and unpaid interest thereon. The Company incurred a loss on the extinguishment of debt of $9.8 million related to the call premium on the Senior Secured Notes and the write-off of $3.2 million of unamortized debt issuance costs, resulting in a total loss on extinguishment of debt of $13.0 million.

The New Credit Facility is governed by a Credit Agreement (the “Credit Agreement”), which establishes the 5-year senior secured credit facility which is comprised of the $200 million Revolving Credit Facility (which includes sub-facilities for the incurrence of up to $10.0 million of swingline loans and the issuance of up to $50.0 million of Letters of Credit) and the $200 million Term Loan A. The Credit Agreement contemplates uncommitted incremental credit facilities of up to $200 million (which amount would be reduced by the aggregate amount of any and all incremental credit facilities actually established under the Credit Agreement) plus additional uncommitted incremental capacity subject to a limitation based on the Company’s pro forma total net leverage ratio (including any such additional uncommitted incremental capacity).

Borrowings under the revolving credit facility and the term loan credit facility may take the form of base rate loans or Secured Overnight Financing Rate (“SOFR”) loans. Base rate loans under the Credit Agreement will bear interest at a rate per annum equal to the sum of the Applicable Margin (as defined in the Credit Agreement) from time to time in effect plus the highest of (i) the Agent’s prime lending rate, as in effect at such time, (ii) the Federal Funds Rate (as defined in the Credit Agreement), as in effect at such time, plus 0.50%, (iii) the Adjusted Term SOFR (as defined in the Credit Agreement) for a one-month tenor in effect on such day, plus 1.00% and (iv) 1.00%. SOFR loans will bear interest a rate per annum equal to the sum of the Applicable Margin from time to time in effect plus the Adjusted Term SOFR for an Interest Period (as defined in the Credit Agreement) selected by the Company of one, three or six months. The Applicable Margin varies between 1.25% and 2.25% per annum for SOFR loans and between 0.25% and 1.25% per annum for base rate loans, and is based on the Company’s total net leverage ratio from time to time.

Mandatory amortization on the Term Loan A is 2.5% in each of the first and second years and 5.0% in each of the third, fourth and fifth years, with the remaining outstanding balance due at maturity. The Credit Agreement contains certain covenants, which include, but are not limited to, restrictions on indebtedness, liens, fundamental changes, restricted payments, asset sales, and investments, and places limits on various other payments. The Company was in compliance with the covenants contained in the Credit Agreement as of March 27, 2022.

(b) 6.5% Senior Secured Notes due 2025

In November 2017, the Company issued and sold $300 million aggregate principal amount of 6.5% Senior Secured Notes due 2025, or the Senior Secured Notes, in a private placement conducted pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The Company incurred debt issuance costs of $6.6 million associated with the Senior Secured Notes. The Senior Secured Notes were redeemed on March 14, 2022.

Credit and Security Agreement

On November 20, 2017, the Company entered into an amended and restated credit and security agreement (the “Credit and Security Agreement”), which established a five-year senior secured revolving credit facility in the aggregate principal amount of $90.0 million (subject to a potential increase of the aggregate principal amount to $115.0 million, subject to the agent’s and applicable lenders’ approval), consisting of a subline for letters of credit in an amount not to exceed $50.0 million, as well as a swingline loan in an aggregate principal amount at any time outstanding not to exceed $10.0 million. The Credit and Security Agreement was replaced by the New Credit Facility on February 18, 2022.

Fair Value of Long-term Debt

Carrying amounts and the related estimated fair values of the Company’s Senior Secured Notes not measured at fair value on a recurring basis at December 26, 2021 are presented in the following table:


	As of December 26, 2021
$ in millions	Principal		Carrying Amount		Fair Value
Total long-term debt including current portion	$	300.0	$	296.7	$	308.3

The fair value of the Company’s Senior Secured Notes was based upon actual trading activity (Level 1, Observable inputs -quoted prices in active markets).

As of December 26, 2021, the difference between the carrying amount of $296.7 million and the principal amount of $300.0 million presented in the above table is the unamortized debt issuance costs of $3.3 million, which were being accreted to interest expense over the term of the related debt. The Senior Secured Notes were redeemed on March 14, 2022.

Term Loan and Revolving Credit Debt

Long-term debt and the current period interest rates were as follows (in millions):


	Three Months Ended
	March 27, 2022
Term Loan A	$	200.0
Revolving credit facility	100.0
Total debt	300.0
Less current portion	(3.7)
Total long-term debt, less current portion	296.3
Less long-term unamortized debt issuance costs - term loans	(1.3)
Total long-term debt, net of unamortized debt issuance costs - term loans	$	295.0
Unamortized debt issuance costs - revolving credit facility	$	1.5
Current period interest rate	2.2		%

Future long-term debt principal payments at March 27, 2022 were as follows (in millions):


2022	$	3.7
2023	5.0
2024	8.8
2025	10.0
2026	10.0
2027	162.5
	$	200.0

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

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+ Details

Segment Information

3 Months Ended

Mar. 27, 2022

Segment Reporting [Abstract]

Segment Information

The Company operates in two reportable segments. The KGS reportable segment is comprised of an aggregation of KGS operating business units, including the Company’s microwave electronic products, space and satellite communications, training and cybersecurity, C5ISR/modular systems, turbine technologies and defense and rocket support services operating segments. 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 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 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 from continuing operations of the reportable business segments is reconciled to the corresponding consolidated amount. The reconciling item Corporate activities 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.

Revenues, depreciation and amortization, and operating income generated by the Company’s reportable segments for the three month periods ended March 27, 2022 and March 28, 2021 are as follows (in millions):


	Three Months Ended
	March 27, 2022		March 28, 2021
Revenues:
Kratos Government Solutions
Service revenues	$	66.8	$	56.1
Product sales	76.8		82.2
Total Kratos Government Solutions	143.6		138.3




Unmanned Systems
Service revenues	1.1		1.2
Product sales	51.5		54.7
Total Unmanned Systems	52.6		55.9
Total revenues	$	196.2	$	194.2
Depreciation and amortization:
Kratos Government Solutions	$	5.1	$	4.4

Unmanned Systems	1.9		1.9
Total depreciation and amortization	$	7.0	$	6.3
Operating income (loss) from continuing operations:
Kratos Government Solutions	$	5.6	$	7.1

Unmanned Systems	0.5		4.2

Corporate activities	(7.3)		(6.4)
Total operating income (loss) from continuing operations	$	(1.2)	$	4.9

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

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+ Details

Redeemable Noncontrolling Interest	3 Months Ended
Redeemable Noncontrolling Interest	Mar. 27, 2022
Noncontrolling Interest [Abstract]
Redeemable Noncontrolling Interest	Redeemable Noncontrolling InterestOn February 27, 2019, the Company acquired 80.1% of the issued and outstanding shares of capital stock of Florida Turbine Technologies Inc., a Florida corporation (“FTT Inc.”), and 80.1% of the membership interests in KTT CORE, LLC, a Delaware limited liability company (“KTT Core”), for an aggregate purchase price of approximately $60 million. On February 18, 2022, the capital stock of FTT Inc. was conveyed to KTT Core for organizational purposes such that FTT Inc is now a wholly owned subsidiary of KTT Core. In connection with the Company’s acquisition of FTT Inc. and KTT Core, (i) beginning in January 2024, the holders (the “Holders”) of the minority interests in KTT Core (the “Minority Interests”) will have an annual right (the “Put Right”) to sell all of the Minority Interests to the Company at a purchase price based on a specified multiple of the trailing 12 months EBITDA of KTT Core and its subsidiaries (the “Acquired Companies”), subject to adjustment as set forth in the Exchange Agreement entered into by and among the Company, the Acquired Companies and the Holders, as amended on February 18, 2022 (the “Exchange Agreement”) (provided, however, that following certain events, including a change of control, the Put Right will be accelerated and the Minority Interest Purchase Price (as defined in the Exchange Agreement) will be a specified increased multiple of the trailing 12 months EBITDA of the Acquired Companies); and (ii) beginning in January 2025, the Company will have an annual right to purchase all of the Minority Interests from the Holders at the Minority Interest Purchase Price. The Company adjusts the carrying value of such redeemable noncontrolling interest based on an allocation of subsidiary earnings based on ownership interest. Redeemable noncontrolling interest is recorded outside of permanent equity at the higher of its carrying value or management’s estimate of the amount (the “Redemption Amount”) that the Company could be required to pay in connection with the Put Right. Adjustments to the Redemption Amount will have a corresponding effect on net income per share attributable to Kratos shareholders. As of March 27, 2022, no adjustment of the carrying value of the redeemable noncontrolling interest was required.

Significant Customers	3 Months Ended
Significant Customers	Mar. 27, 2022
Risks and Uncertainties [Abstract]
Significant Customers	Significant Customers Revenue from the U.S. Government, which includes foreign military sales contracted through the U.S. Government, includes revenue from contracts for which the Company is the prime contractor as well as those for which the Company is a subcontractor and the ultimate customer is the U.S. Government. The KGS and US segments have substantial revenue from the U.S. Government. Sales to the U.S. Government amounted to approximately $139.6 million and $142.2 million, or 71% and 73% of total Kratos revenue, for the three months ended March 27, 2022 and March 28, 2021, respectively.

Commitments and Contingencies	3 Months Ended
Commitments and Contingencies	Mar. 27, 2022
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies In addition to commitments and obligations in the ordinary course of business, the Company is subject to various claims, pending and potential legal actions for damages, investigations relating to governmental laws and regulations and other matters arising out of the normal conduct of the Company’s business. The Company assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in its unaudited condensed consolidated financial statements. An estimated loss contingency is accrued in the unaudited condensed consolidated financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Because litigation is inherently unpredictable and unfavorable resolutions could occur, assessing litigation contingencies is highly subjective and requires judgments about future events. When evaluating contingencies, the Company may be unable to provide a meaningful estimate due to a number of factors, including but not limited to the procedural status of the matter in question, the presence of complex or novel legal theories, and the ongoing discovery and development of information important to the matters. In addition, damage amounts claimed in litigation against it may be unsupported, exaggerated or unrelated to possible outcomes and, as such, are not meaningful indicators of its potential liability. The Company regularly reviews contingencies to determine the adequacy of its accruals and related disclosures. The amount of ultimate loss may differ from these estimates. It is possible that cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of one or more of these contingencies. Whether any losses finally determined in any claim, action, investigation or proceeding could reasonably have a material effect on the Company’s business, financial condition, results of operations or cash flows will depend on a number of variables, including the timing and amount of such losses; the structure and type of any remedies; the monetary significance any such losses, damages or remedies may have on the condensed consolidated financial statements; and the unique facts and circumstances of the particular matter that may give rise to additional factors. Legal and Regulatory Matters U.S. Government Cost Claims The Company’s contracts with the DoD are subject to audit by the Defense Contract Audit Agency (“DCAA”). As a result of these audits, from time to time the Company is advised of claims concerning potential disallowed, overstated or disputed costs. For example, during the course of recent audits of the Company’s contracts, the DCAA is closely examining and questioning certain of the established and disclosed practices that it had previously audited and accepted. The Company’s personnel regularly scrutinizes costs incurred and allocated to contracts with the U.S. Government for compliance with regulatory standards. For those Company subsidiaries and fiscal years which have not yet been audited by the DCAA or for those audits which are in process which have not been completed by the DCAA, the Company cannot reasonably estimate the range of loss, if any, that may result from audits and reviews in which it is currently involved given the inherent difficulty in predicting regulatory action, fines and penalties, if any, and the various remedies and levels of judicial review available to the Company in the event of an adverse finding. As a result, the Company has not recorded any liability related to these matters. Other Litigation Matters The Company is subject to normal and routine litigation arising from the ordinary course and conduct of business and, at times, as a result of mergers, acquisitions and dispositions. Such disputes include, for example, commercial, employment, intellectual property, environmental, and securities matters. The aggregate amounts accrued related to these matters are not material to the total liabilities of the Company. The Company intends to defend itself in any such matters and does not currently believe that the outcome of any such matters will have a material adverse impact on the Company’s financial condition, results of operations or cash flows.

Summary of Significant Accounting Policies (Policies)	3 Months Ended
Summary of Significant Accounting Policies (Policies)	Mar. 27, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	Basis of Presentation The information as of March 27, 2022 and for the three months ended March 27, 2022 and March 28, 2021 is unaudited. The condensed consolidated balance sheet as of December 26, 2021 was derived from the Company’s audited consolidated financial statements at that date. In the opinion of management, these unaudited condensed consolidated 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 periods presented. The results have been prepared in accordance with the instructions to Form 10-Q 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 consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes included in the Company’s audited annual consolidated financial statements for the fiscal year ended December 26, 2021, included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 22, 2022 (the “Form 10-K”). Interim operating results are not necessarily indicative of operating results expected in subsequent periods or for the year as a whole.
Principles of Consolidation	Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company, its 100% owned subsidiaries and its majority owned subsidiary, KTT Core, which is 80.1% owned by the Company. All inter-company transactions have been eliminated in consolidation. Noncontrolling interest consists of the remaining 19.9% interest in KTT Core. See Note 12 for further information related to the redeemable noncontrolling interest.
Fiscal Year	Fiscal Year The Company has a 52/53 week fiscal year ending on the last Sunday of the calendar year. The three month periods ended March 27, 2022 and March 28, 2021 consisted of 13-week periods. There are 52 calendar weeks in the fiscal years ending on December 25, 2022 and December 26, 2021.
Accounting Estimates	Accounting EstimatesThere have been no significant changes in the Company’s accounting estimates for the three months ended March 27, 2022 as compared to the accounting estimates described in the Annual Report on Form 10-K.
Accounting Standards Updates	Accounting Standards UpdatesIn October 2021, the FASB issued ASU 2021-08 (“ASU 2021-08”), Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 2014-09, Revenue from Contracts with Customers (Topic 606). The update will generally result in an entity recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date rather than at fair value. The new standard is effective on a prospective basis for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company has adopted the new standard effective December 26, 2021. The adoption of the new standard did not have an impact on the Company’s consolidated financial statements.
Fair Value of Financial Instruments	Fair Value of Financial Instruments The carrying amounts and the related estimated fair values of the Company’s long-term debt financial instruments not measured at fair value on a recurring basis at March 27, 2022 and December 26, 2021 are presented in Note 10. The carrying value of all other financial instruments, including cash equivalents, accounts receivable, unbilled receivables, accounts payable, accrued expenses, billings in excess of cost and earnings on uncompleted contracts, income taxes payable and short-term debt, approximated their estimated fair values at March 27, 2022 and December 26, 2021 due to the short-term nature of these instruments.
Net Income (Loss) per Common Share	Net Income (Loss) per Common Share The Company calculates net income (loss) per share in accordance with FASB ASC Topic 260, Earnings per Share (Topic 260). Under Topic 260, basic net income (loss) per common share attributable to the Kratos shareholders is calculated by dividing net income (loss) attributable to Kratos by the weighted-average number of common shares outstanding during the reporting period. Diluted net income (loss) per common share reflects the effects of potentially dilutive securities.

Acquisitions (Tables)

3 Months Ended

Mar. 27, 2022

Business Combination and Asset Acquisition [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

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


Accounts receivable	$	3.8
Unbilled receivables	4.0
Other current assets	0.1
Property and equipment	1.3
Intangible assets	10.0
Total identifiable net assets acquired	19.2
Total identifiable net liabilities assumed	(9.6)
Goodwill	28.6
Net assets acquired, excluding cash	$	38.2

Schedule of Business Acquisitions by Acquisition, Contingent Consideration

A summary of the consideration paid for the acquired ownership in Cosmic is as follows:


Cash paid	$	39.5
Less: Cash acquired	(1.3)
Total consideration	$	38.2

Revenue Recognition (Tables)

3 Months Ended

Mar. 27, 2022

Revenue from Contract with Customer [Abstract]

Schedule of net contract assets (liabilities)

Net contract assets and liabilities are as follows (in millions):


	March 27, 2022		December 26, 2021		Net Change
Contract assets	$	214.8	$	190.8	$	24.0
Contract liabilities	$	49.7	$	58.1	$	(8.4)
Net contract assets	$	165.1	$	132.7	$	32.4

Schedule of disaggregation of revenue


	Three Months Ended
	March 27, 2022		March 28, 2021
Kratos Government Solutions
Fixed price	$	101.3	$	99.5
Cost plus fee	32.3		28.6
Time and materials	10.0		10.2
Total Kratos Government Solutions	143.6		138.3
Unmanned Systems
Fixed price	31.5		37.2
Cost plus fee	20.4		17.9
Time and materials	0.7		0.8
Total Unmanned Systems	52.6		55.9
Total Revenues	$	196.2	$	194.2

Revenue by customer was as follows (in millions):


	Three Months Ended
	March 27, 2022		March 28, 2021
Kratos Government Solutions
U.S. Government (1)	$	89.5	$	92.6
International (2)	34.7		31.7
U.S. Commercial and other customers	19.4		14.0
Total Kratos Government Solutions	143.6		138.3
Unmanned Systems
U.S. Government (1)	50.1		49.6
International (2)	1.8		6.3
U.S. Commercial and other customers	0.7		—
Total Unmanned Systems	52.6		55.9
Total Revenues	$	196.2	$	194.2

(1) Sales to the U.S. Government include sales from contracts for which the Company is the prime contractor, as well as those for which the

Company is a subcontractor and the ultimate customer is the U.S. Government. Each of the Company’s segments derives substantial revenue

from the U.S. Government. These sales include foreign military sales contracted through the U.S. Government.

(2) International sales include sales from contracts for which the Company is the prime contractor, as well as those for which the Company is a

subcontractor and the ultimate customer is an international customer. These sales include direct sales with governments outside the U.S. and

commercial sales with customers outside the U.S.

Goodwill and Intangible Assets (Tables)

3 Months Ended

Mar. 27, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of goodwill

The carrying amounts of goodwill as of March 27, 2022 and December 26, 2021 by reportable segment are as follows (in millions):


	As of March 27, 2022
	KGS		US		Total
Gross value	$	648.3	$	127.9	$	776.2
Less accumulated impairment	239.5		13.8		253.3
Net	$	408.8	$	114.1	$	522.9


	As of December 26, 2021
	KGS		US		Total
Gross value	$	619.3	$	127.9	$	747.2
Less accumulated impairment	239.5		13.8		253.3
Net	$	379.8	$	114.1	$	493.9

Schedule of intangible assets (finite-lived)

The following table sets forth information for finite-lived and indefinite-lived intangible assets (in millions):


	As of March 27, 2022						As of December 26, 2021
	Gross Value		Accumulated Amortization		Net Value		Gross Value		Accumulated Amortization		Net Value
Acquired finite-lived intangible assets:
Customer relationships	$	79.0	$	(58.2)	$	20.8	$	76.5	$	(57.6)	$	18.9
Contracts and backlog	37.9		(33.8)		4.1		34.9		(33.1)		1.8
Developed technology and technical know-how	34.4		(26.1)		8.3		31.4		(25.8)		5.6
Trade names	4.2		(2.1)		2.1		2.7		(2.0)		0.7
In-process research and development	9.5		(0.2)		9.3		9.5		(0.2)		9.3

Total finite-lived intangible assets	165.0		(120.4)		44.6		155.0		(118.7)		36.3
Indefinite-lived trade names	6.9		—		6.9		6.9		—		6.9
Total intangible assets	$	171.9	$	(120.4)	$	51.5	$	161.9	$	(118.7)	$	43.2

Schedule of intangible assets (indefinite-lived)

The following table sets forth information for finite-lived and indefinite-lived intangible assets (in millions):


	As of March 27, 2022						As of December 26, 2021
	Gross Value		Accumulated Amortization		Net Value		Gross Value		Accumulated Amortization		Net Value
Acquired finite-lived intangible assets:
Customer relationships	$	79.0	$	(58.2)	$	20.8	$	76.5	$	(57.6)	$	18.9
Contracts and backlog	37.9		(33.8)		4.1		34.9		(33.1)		1.8
Developed technology and technical know-how	34.4		(26.1)		8.3		31.4		(25.8)		5.6
Trade names	4.2		(2.1)		2.1		2.7		(2.0)		0.7
In-process research and development	9.5		(0.2)		9.3		9.5		(0.2)		9.3

Total finite-lived intangible assets	165.0		(120.4)		44.6		155.0		(118.7)		36.3
Indefinite-lived trade names	6.9		—		6.9		6.9		—		6.9
Total intangible assets	$	171.9	$	(120.4)	$	51.5	$	161.9	$	(118.7)	$	43.2

Inventoried Costs (Tables)

3 Months Ended

Mar. 27, 2022

Inventory Disclosure [Abstract]

Schedule of inventoried costs

Inventoried costs, consisted of the following components (in millions):


	March 27, 2022		December 26, 2021
Raw materials	$	66.6	$	58.5
Work in process	34.9		28.5
Finished goods	5.6		4.7



Total inventoried costs	$	107.1	$	91.7

Leases (Tables)

3 Months Ended

Mar. 27, 2022

Leases [Abstract]

Lease cost

The components of lease expense were as follows (in millions):


	Three Months Ended
	March 27, 2022		March 28, 2021
Amortization of right of use assets - finance leases	$	0.7	$	0.5
Interest on lease liabilities - finance leases	0.7		0.6
Operating lease cost	3.3		2.9
Short-term lease cost	0.2		0.2
Variable lease cost (cost excluded from lease payments)	—		—
Sublease income	—		—
Total lease cost	$	4.9	$	4.2

Cash paid for amounts included in the measurement of lease liabilities was as follows (in millions):



	Three Months Ended
	March 27, 2022		March 28, 2021
Finance lease - cash paid for interest	$	0.7	$	0.6
Finance lease - financing cash flows	$	0.3	$	0.2
Operating lease - operating cash flows (fixed payments)	$	3.4	$	2.8

Other supplemental noncash information (in millions):


	Three Months Ended
		March 27, 2022			March 28, 2021
Operating lease liabilities arising from obtaining right-of-use assets		$	3.7		$	0.2
Finance lease liabilities arising from obtaining right-of-use assets		$	—		$	—

		March 27, 2022			March 28, 2021
Weighted-average remaining lease term (in years):
Operating leases		4.50			5.28
Finance leases		15.91			17.44

Weighted-average discount rate:
Operating leases		6.48		%	6.50		%
Finance leases		6.51		%	6.52		%

Balance sheet information

The components of leases on the balance sheet were as follows (in millions):


	March 27, 2022		December 26, 2021
Operating Leases:
Operating lease right-of-use assets	$	39.6	$	38.5
Current portion of operating lease liabilities	$	10.5	$	10.1
Operating lease liabilities, net of current portion	$	33.3	$	32.7
Finance leases:
Property, plant and equipment, net	$	38.3	$	39.0
Other current liabilities	$	1.2	$	1.2
Other long-term liabilities	$	42.9	$	43.2

Maturities of operating lease liabilities

The maturity of lease liabilities is (in millions):


	Operating Leases		Finance Leases
2022 (1)	$	9.8	$	3.0
2023	12.4		4.1
2024	9.8		4.2
2025	8.3		4.2
2026	4.9		4.3
Thereafter	5.3		52.8
Total lease payments	50.5		72.6
Less: imputed interest	(6.7)		(28.5)
Total present value of lease liabilities	$	43.8	$	44.1
(1) Excludes the three months ended March 27, 2022.

Maturities of financing lease liabilities

The maturity of lease liabilities is (in millions):


	Operating Leases		Finance Leases
2022 (1)	$	9.8	$	3.0
2023	12.4		4.1
2024	9.8		4.2
2025	8.3		4.2
2026	4.9		4.3
Thereafter	5.3		52.8
Total lease payments	50.5		72.6
Less: imputed interest	(6.7)		(28.5)
Total present value of lease liabilities	$	43.8	$	44.1
(1) Excludes the three months ended March 27, 2022.

Income Taxes (Tables)

3 Months Ended

Mar. 27, 2022

Income Tax Disclosure [Abstract]

Reconciliation of income tax benefit at statutory rate to income tax provision


	For the Three Months Ended
	March 27, 2022		March 28, 2021
Income tax benefit at federal statutory rate	$	(4.2)	$	(0.2)



Nondeductible expenses and other	1.0		(0.2)


Stock compensation - excess tax benefits	(0.9)		(2.4)
Federal impact of research & development tax credits	(0.2)		0.1

Benefit for income taxes from continuing operations	$	(4.3)	$	(2.7)

Debt (Tables)

3 Months Ended

Mar. 27, 2022

Debt Disclosure [Abstract]

Carrying amounts and estimated fair value of long-term debt


	As of December 26, 2021
$ in millions	Principal		Carrying Amount		Fair Value
Total long-term debt including current portion	$	300.0	$	296.7	$	308.3

Long-term debt and the current period interest rates

Long-term debt and the current period interest rates were as follows (in millions):


	Three Months Ended
	March 27, 2022
Term Loan A	$	200.0
Revolving credit facility	100.0
Total debt	300.0
Less current portion	(3.7)
Total long-term debt, less current portion	296.3
Less long-term unamortized debt issuance costs - term loans	(1.3)
Total long-term debt, net of unamortized debt issuance costs - term loans	$	295.0
Unamortized debt issuance costs - revolving credit facility	$	1.5
Current period interest rate	2.2		%

Future long-term debt principal payments

Future long-term debt principal payments at March 27, 2022 were as follows (in millions):


2022	$	3.7
2023	5.0
2024	8.8
2025	10.0
2026	10.0
2027	162.5
	$	200.0

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

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-Section 55
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=114775985&loc=d3e28878-108400

Reference 12: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=123467817&loc=d3e21475-112644

+ Details

Segment Information (Tables)

3 Months Ended

Mar. 27, 2022

Segment Reporting [Abstract]

Schedule of segment revenues, depreciation and amortization, and operating income (loss)


	Three Months Ended
	March 27, 2022		March 28, 2021
Revenues:
Kratos Government Solutions
Service revenues	$	66.8	$	56.1
Product sales	76.8		82.2
Total Kratos Government Solutions	143.6		138.3




Unmanned Systems
Service revenues	1.1		1.2
Product sales	51.5		54.7
Total Unmanned Systems	52.6		55.9
Total revenues	$	196.2	$	194.2
Depreciation and amortization:
Kratos Government Solutions	$	5.1	$	4.4

Unmanned Systems	1.9		1.9
Total depreciation and amortization	$	7.0	$	6.3
Operating income (loss) from continuing operations:
Kratos Government Solutions	$	5.6	$	7.1

Unmanned Systems	0.5		4.2

Corporate activities	(7.3)		(6.4)
Total operating income (loss) from continuing operations	$	(1.2)	$	4.9

Summary of Significant Accounting Policies (Details) - KTT CORE, LLC	Mar. 27, 2022
Business Acquisition [Line Items]
Subsidiary percent owned	80.10%
Noncontrolling interest owned	19.90%

Acquisitions - Narrative (Details) - USD ($) $ in Millions						1 Months Ended	3 Months Ended
Acquisitions - Narrative (Details) - USD ($) $ in Millions	Mar. 09, 2022	Dec. 30, 2021	Dec. 27, 2021	Dec. 10, 2021	Feb. 27, 2019	Dec. 30, 2021	Mar. 27, 2022
CTT Inc.
Business Acquisition [Line Items]
Cash paid		$ 15.2		$ 6.3		$ 22.0
Cosmic Advanced Engineering Solutions, Inc.
Business Acquisition [Line Items]
Cash paid			$ 39.5
Payments to acquire business, subject to adjustments			37.5
Current liabilities			6.7
Deferred tax liabilities			2.9
Revenue							$ 12.7
Operating income							$ 0.2
Aggregate purchase price			38.2
Cosmic Advanced Engineering Solutions, Inc. \| Trade names
Business Acquisition [Line Items]
Intangible assets acquired			$ 1.5
Useful life			5 years
Cosmic Advanced Engineering Solutions, Inc. \| Contracts and backlog
Business Acquisition [Line Items]
Intangible assets acquired					$ 3.0
Useful life			2 years
Cosmic Advanced Engineering Solutions, Inc. \| Customer relationships
Business Acquisition [Line Items]
Intangible assets acquired					2.5
Useful life			10 years
Cosmic Advanced Engineering Solutions, Inc. \| Developed technology
Business Acquisition [Line Items]
Intangible assets acquired					$ 3.0
Useful life			10 years
Southern Research Engineering Division
Business Acquisition [Line Items]
Cash paid	$ 75.0
Aggregate purchase price	80.0
Common stock consideration	$ 5.0

Acquisitions - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions	Mar. 27, 2022	Dec. 27, 2021	Dec. 26, 2021
Business Acquisition [Line Items]
Goodwill	$ 522.9		$ 493.9
Cosmic Advanced Engineering Solutions, Inc.
Business Acquisition [Line Items]
Accounts receivable		$ 3.8
Unbilled receivables		4.0
Other current assets		0.1
Property and equipment		1.3
Intangible assets		10.0
Total identifiable net assets acquired		19.2
Total identifiable net liabilities assumed		(9.6)
Goodwill		28.6
Net assets acquired, excluding cash		$ 38.2

Acquisitions - Consideration Paid (Details) - Cosmic Advanced Engineering Solutions, Inc. $ in Millions	Dec. 27, 2021 USD ($)
Business Acquisition [Line Items]
Cash paid	$ 39.5
Less: Cash acquired	(1.3)
Total consideration	$ 38.2

Revenue Recognition - Remaining Performance Obligations (Details) $ in Millions	Mar. 27, 2022 USD ($)
Revenue from Contract with Customer [Abstract]
Remaining performance obligation	$ 982.1
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-03-28
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Expected timing of satisfaction, percentage	50.00%
Expected timing of satisfaction, period	9 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-12-26
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Expected timing of satisfaction, percentage	20.00%
Expected timing of satisfaction, period	1 year

Revenue Recognition - Contract Assets and Liabilities (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 27, 2022	Dec. 26, 2021
Revenue from Contract with Customer [Abstract]
Contract assets	$ 214.8	$ 190.8
Contract assets, net change	24.0
Contract liabilities	49.7	58.1
Contract liabilities, net change	(8.4)
Net contract assets	165.1	$ 132.7
Net contract assets, net change	$ 32.4

Revenue Recognition - Narrative (Details) - USD ($) $ in Millions	1 Months Ended	3 Months Ended
	Mar. 27, 2022	Mar. 27, 2022	Mar. 28, 2021	Dec. 26, 2021
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]
Contract assets, net change		$ 24.0
Contract liabilities, net change		(8.4)
Revenue recognized		21.2	$ 17.0
Contract assets	$ 214.8	214.8		$ 190.8
Unbilled Revenues \| T for C
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]
Contract assets	10.8	10.8
Amount agreed to settlement	6.0
Negotiation and settlement with the customer	4.8	4.8
Unbilled Revenues \| International Customer
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]
Contract assets	$ 10.0	$ 10.0

Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 27, 2022	Mar. 28, 2021
Disaggregation of Revenue [Line Items]
Total Revenues	$ 196.2	$ 194.2
Kratos Government Solutions
Disaggregation of Revenue [Line Items]
Total Revenues	143.6	138.3
Kratos Government Solutions \| U.S. Government
Disaggregation of Revenue [Line Items]
Total Revenues	89.5	92.6
Kratos Government Solutions \| International
Disaggregation of Revenue [Line Items]
Total Revenues	34.7	31.7
Kratos Government Solutions \| U.S. Commercial and other customers
Disaggregation of Revenue [Line Items]
Total Revenues	19.4	14.0
Kratos Government Solutions \| Fixed price
Disaggregation of Revenue [Line Items]
Total Revenues	101.3	99.5
Kratos Government Solutions \| Cost plus fee
Disaggregation of Revenue [Line Items]
Total Revenues	32.3	28.6
Kratos Government Solutions \| Time and materials
Disaggregation of Revenue [Line Items]
Total Revenues	10.0	10.2
Unmanned Systems
Disaggregation of Revenue [Line Items]
Total Revenues	52.6	55.9
Unmanned Systems \| U.S. Government
Disaggregation of Revenue [Line Items]
Total Revenues	50.1	49.6
Unmanned Systems \| International
Disaggregation of Revenue [Line Items]
Total Revenues	1.8	6.3
Unmanned Systems \| U.S. Commercial and other customers
Disaggregation of Revenue [Line Items]
Total Revenues	0.7	0.0
Unmanned Systems \| Fixed price
Disaggregation of Revenue [Line Items]
Total Revenues	31.5	37.2
Unmanned Systems \| Cost plus fee
Disaggregation of Revenue [Line Items]
Total Revenues	20.4	17.9
Unmanned Systems \| Time and materials
Disaggregation of Revenue [Line Items]
Total Revenues	$ 0.7	$ 0.8

Discontinued Operations (Details) - Public Safety & Security - Disposed of by Sale - USD ($) $ in Millions	3 Months Ended	46 Months Ended
	Mar. 27, 2022	Mar. 27, 2022	Jun. 11, 2018
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Purchase price, in cash			$ 69.0
Sale of discontinued operations		$ 68.7
Working capital adjustment	$ 7.3

Goodwill and Intangible Assets - Goodwill (Details) - USD ($) $ in Millions	Mar. 27, 2022	Dec. 26, 2021
Goodwill [Line Items]
Gross value	$ 776.2	$ 747.2
Less accumulated impairment	253.3	253.3
Net	522.9	493.9
KGS
Goodwill [Line Items]
Gross value	648.3	619.3
Less accumulated impairment	239.5	239.5
Net	408.8	379.8
US
Goodwill [Line Items]
Gross value	127.9	127.9
Less accumulated impairment	13.8	13.8
Net	$ 114.1	$ 114.1

Goodwill and Intangible Assets - Purchased Intangible Assets (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 27, 2022	Mar. 28, 2021	Dec. 26, 2021
Acquired finite-lived intangible assets:
Gross Value	$ 165.0		$ 155.0
Accumulated Amortization	(120.4)		(118.7)
Net Value	44.6		36.3
Total intangible assets: gross value	171.9		161.9
Total intangible assets: net value	51.5		43.2
Aggregate amortization expense for finite-lived intangible assets	1.7	$ 1.4
Trade names
Acquired finite-lived intangible assets:
Indefinite-lived trade names	6.9		6.9
Customer relationships
Acquired finite-lived intangible assets:
Gross Value	79.0		76.5
Accumulated Amortization	(58.2)		(57.6)
Net Value	20.8		18.9
Contracts and backlog
Acquired finite-lived intangible assets:
Gross Value	37.9		34.9
Accumulated Amortization	(33.8)		(33.1)
Net Value	4.1		1.8
Developed technology and technical know-how
Acquired finite-lived intangible assets:
Gross Value	34.4		31.4
Accumulated Amortization	(26.1)		(25.8)
Net Value	8.3		5.6
Trade names
Acquired finite-lived intangible assets:
Gross Value	4.2		2.7
Accumulated Amortization	(2.1)		(2.0)
Net Value	2.1		0.7
In-process research and development
Acquired finite-lived intangible assets:
Gross Value	9.5		9.5
Accumulated Amortization	(0.2)		(0.2)
Net Value	$ 9.3		$ 9.3

Inventoried Costs (Details) - USD ($) $ in Millions	Mar. 27, 2022	Dec. 26, 2021
Inventory Disclosure [Abstract]
Raw materials	$ 66.6	$ 58.5
Work in process	34.9	28.5
Finished goods	5.6	4.7
Inventoried costs	$ 107.1	$ 91.7

Net Income (Loss) per Common Share (Details) shares in Millions	3 Months Ended
	Mar. 27, 2022 shares
Stock options and awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of EPS (in shares)	1.2

Leases - Lease Expense (Details) - USD ($) $ in Millions	3 Months Ended
Leases - Lease Expense (Details) - USD ($) $ in Millions	Mar. 27, 2022	Mar. 28, 2021
Leases [Abstract]
Amortization of right of use assets - finance leases	$ 0.7	$ 0.5
Interest on lease liabilities - finance leases	0.7	0.6
Operating lease cost	3.3	2.9
Short-term lease cost	0.2	0.2
Variable lease cost (cost excluded from lease payments)	0.0	0.0
Sublease income	0.0	0.0
Total lease cost	$ 4.9	$ 4.2

Leases - Supplemental Balance Sheet (Details) - USD ($) $ in Millions	Mar. 27, 2022	Dec. 26, 2021
Operating Leases:
Operating lease right-of-use assets	$ 39.6	$ 38.5
Current portion of operating lease liabilities	10.5	10.1
Operating lease liabilities, net of current portion	33.3	32.7
Finance leases:
Property, plant and equipment, net	38.3	39.0
Other current liabilities	1.2	1.2
Other long-term liabilities	$ 42.9	$ 43.2
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	Property, plant and equipment, net	Property, plant and equipment, net
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List]	Other current liabilities	Other current liabilities
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	Other long-term liabilities	Other long-term liabilities

Leases - Cash Paid (Details) - USD ($) $ in Millions	3 Months Ended
Leases - Cash Paid (Details) - USD ($) $ in Millions	Mar. 27, 2022	Mar. 28, 2021
Leases [Abstract]
Finance lease - cash paid for interest	$ 0.7	$ 0.6
Finance lease - financing cash flows	0.3	0.2
Operating lease - operating cash flows (fixed payments)	$ 3.4	$ 2.8

Leases - Weighted Average (Details) - USD ($) $ in Millions	3 Months Ended
Leases - Weighted Average (Details) - USD ($) $ in Millions	Mar. 27, 2022	Mar. 28, 2021
Leases [Abstract]
Operating lease liabilities arising from obtaining right-of-use assets	$ 3.7	$ 0.2
Finance lease liabilities arising from obtaining right-of-use assets	$ 0.0	$ 0.0
Weighted-average remaining lease term (in years):
Operating leases	4 years 6 months	5 years 3 months 10 days
Finance leases	15 years 10 months 28 days	17 years 5 months 8 days
Weighted-average discount rate:
Operating leases	6.48%	6.50%
Finance leases	6.51%	6.52%

Leases - Maturities of Operating and Financing Lease Liabilities (Details) $ in Millions	Mar. 27, 2022 USD ($)
Operating Leases
2022	$ 9.8
2023	12.4
2024	9.8
2025	8.3
2026	4.9
Thereafter	5.3
Total lease payments	50.5
Less: imputed interest	(6.7)
Total present value of lease liabilities	43.8
Finance Leases
2022	3.0
2023	4.1
2024	4.2
2025	4.2
2026	4.3
Thereafter	52.8
Total lease payments	72.6
Less: imputed interest	(28.5)
Total present value of lease liabilities	$ 44.1

Income Taxes - Income Tax Provision Reconciliation (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 27, 2022	Mar. 28, 2021
Income Tax Disclosure [Abstract]
Income tax benefit at federal statutory rate	$ (4.2)	$ (0.2)
Nondeductible expenses and other	1.0	(0.2)
Stock compensation - excess tax benefits	(0.9)	(2.4)
Federal impact of research & development tax credits	(0.2)	0.1
Benefit for income taxes from continuing operations	$ (4.3)	$ (2.7)

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Income Taxes - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
Income Taxes - Narrative (Details) - USD ($) $ in Millions	Mar. 27, 2022	Dec. 26, 2021
Income Tax Disclosure [Abstract]
Unrecognized tax benefits that if recognized would impact the effective tax rate for continuing operations		$ 25.9
Decrease resulting from current period tax positions	$ 0.1
Expense for interest and penalties	0.1
Liabilities for uncertain tax positions believed to be reasonably possible to expire within twelve months	$ 0.5

Debt - New Credit Facility (Details) - USD ($)			3 Months Ended
Debt - New Credit Facility (Details) - USD ($)	Mar. 14, 2022	Feb. 18, 2022	Mar. 27, 2022	Mar. 28, 2021	Dec. 26, 2021	Nov. 30, 2017	Nov. 20, 2017
Debt Instrument [Line Items]
Carrying amount					$ 296,700,000
Principal					$ 300,000,000.0
Loss on extinguishment of debt			$ (13,000,000.0)	$ 0
SOFR
Debt Instrument [Line Items]
Basis spread on variable rate		1.00%
Minimum \| SOFR
Debt Instrument [Line Items]
Basis spread on variable rate		1.25%
Minimum \| Base Rate
Debt Instrument [Line Items]
Basis spread on variable rate		0.25%
Maximum \| SOFR
Debt Instrument [Line Items]
Basis spread on variable rate		2.25%
Maximum \| Base Rate
Debt Instrument [Line Items]
Basis spread on variable rate		1.25%
Senior notes
Debt Instrument [Line Items]
Premium	$ 9,800,000
Write-off	3,200,000
Loss on extinguishment of debt	13,000,000
6.5% Notes \| Senior notes
Debt Instrument [Line Items]
Carrying amount		$ 300,000,000
Current period interest rate		6.50%				6.50%
Principal						$ 300,000,000
Debt issuance costs						$ 6,600,000
Repayments of Secured Debt	$ 300,000,000
Redemption percentage	103.25%
Revolving Credit Facility
Debt Instrument [Line Items]
Outstanding borrowings		$ 90,000,000
Revolving credit facility							$ 90,000,000
Basis spread on variable rate		50.00%
Revolving Credit Facility \| New Revolving Credit Facility
Debt Instrument [Line Items]
Debt instrument, term		5 years
Principal		$ 200,000,000
Debt issuance costs		3,200,000
Proceeds from Lines of Credit		100,000,000
Remaining borrowing capacity		100,000,000
Letters of credit outstanding		13,200,000
Revolving Credit Facility \| Term Loan A
Debt Instrument [Line Items]
Proceeds from Lines of Credit		200,000,000
Revolving Credit Facility \| New Credit Facility
Debt Instrument [Line Items]
Proceeds from Lines of Credit		$ 300,000,000
Premium redemption price percentage		3.25%
Secured Debt \| Term Loan A
Debt Instrument [Line Items]
Debt instrument, term		5 years
Principal		$ 200,000,000
Secured Debt \| Term Loan A \| First And Second Year
Debt Instrument [Line Items]
Line of credit amortization percentage		2.50%
Secured Debt \| Term Loan A \| Third, Fourth and Fifth Year
Debt Instrument [Line Items]
Line of credit amortization percentage		5.00%
Swing Line Loan
Debt Instrument [Line Items]
Revolving credit facility							10,000,000
Swing Line Loan \| New Revolving Credit Facility
Debt Instrument [Line Items]
Revolving credit facility		$ 10,000,000
Letter of Credit
Debt Instrument [Line Items]
Revolving credit facility		$ 50,000,000					$ 50,000,000

Debt - Issuance of 6.5% Senior Secured Notes due 2025 (Details) - USD ($)	Feb. 18, 2022	Dec. 26, 2021	Nov. 30, 2017
Debt Instrument [Line Items]
Principal		$ 300,000,000.0
Senior notes \| 6.5% Notes
Debt Instrument [Line Items]
Current period interest rate	6.50%		6.50%
Principal			$ 300,000,000
Debt issuance costs			$ 6,600,000

Debt - Other Indebtedness (Details) - USD ($)	Nov. 20, 2017	Feb. 18, 2022	Dec. 26, 2021
Line of Credit Facility [Line Items]
Principal			$ 300,000,000.0
Total debt			296,700,000
Unamortized debt issuance costs			$ 3,300,000
Revolving Credit Facility
Line of Credit Facility [Line Items]
Maturity period	5 years
Revolving credit facility	$ 90,000,000
Potential maximum borrowing capacity, subject to lender approval	115,000,000
Letter of Credit
Line of Credit Facility [Line Items]
Revolving credit facility	50,000,000	$ 50,000,000
Swing Line Loan
Line of Credit Facility [Line Items]
Revolving credit facility	$ 10,000,000

Debt - Fair Value of Long-term Debt (Details)	Dec. 26, 2021 USD ($)
Debt Disclosure [Abstract]
Principal	$ 300,000,000.0
Total debt	296,700,000
Fair Value	$ 308,300,000

- Definition

Amount, after unamortized (discount) premium and debt issuance costs, of long-term debt. Includes, but not limited to, notes payable, bonds payable, debentures, mortgage loans and commercial paper. Excludes capital lease obligations.

+ References + Details

Debt - Long-Term Debt and the Current Period Interest Rates (Details) - USD ($) $ in Millions	Mar. 27, 2022	Dec. 26, 2021
Line of Credit Facility [Line Items]
Total debt		$ 296.7
Line of Credit
Line of Credit Facility [Line Items]
Total debt	$ 300.0
Less current portion	(3.7)
Long-term debt, net of current portion	$ 296.3
Current period interest rate	2.20%
Secured Debt \| Line of Credit
Line of Credit Facility [Line Items]
Total debt	$ 200.0
Unamortized debt issuance costs	1.3
Total debt	295.0
Revolving Credit Facility \| Line of Credit
Line of Credit Facility [Line Items]
Total debt	100.0
Unamortized debt issuance costs	$ 1.5

Debt - Future Long-Term Debt Principal Payments (Details) - Secured Debt - Line of Credit $ in Millions	Mar. 27, 2022 USD ($)
Debt Instrument [Line Items]
2022	$ 3.7
2023	5.0
2024	8.8
2025	10.0
2026	10.0
2027	162.5
Total debt	$ 200.0

Segment Information - Narrative (Details)	3 Months Ended
Segment Information - Narrative (Details)	Mar. 27, 2022 segment
Segment Reporting [Abstract]
Number of reportable segments	2

Segment Information - Schedule of Segment Revenues, Depreciation and Amortization, and Operating (Loss) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 27, 2022	Mar. 28, 2021
Segment Reporting Information [Line Items]
Total revenues	$ 196.2	$ 194.2
Depreciation and amortization:
Total depreciation and amortization	7.0	6.3
Operating income (loss) from continuing operations:
Total operating income (loss) from continuing operations	(1.2)	4.9
Corporate activities
Operating income (loss) from continuing operations:
Total operating income (loss) from continuing operations	(7.3)	(6.4)
Kratos Government Solutions
Segment Reporting Information [Line Items]
Total revenues	143.6	138.3
Depreciation and amortization:
Total depreciation and amortization	5.1	4.4
Kratos Government Solutions \| Reportable Segments
Operating income (loss) from continuing operations:
Total operating income (loss) from continuing operations	5.6	7.1
Unmanned Systems
Segment Reporting Information [Line Items]
Total revenues	52.6	55.9
Depreciation and amortization:
Total depreciation and amortization	1.9	1.9
Unmanned Systems \| Reportable Segments
Operating income (loss) from continuing operations:
Total operating income (loss) from continuing operations	0.5	4.2
Service revenues
Segment Reporting Information [Line Items]
Total revenues	67.9	57.3
Service revenues \| Kratos Government Solutions
Segment Reporting Information [Line Items]
Total revenues	66.8	56.1
Service revenues \| Unmanned Systems
Segment Reporting Information [Line Items]
Total revenues	1.1	1.2
Product sales
Segment Reporting Information [Line Items]
Total revenues	128.3	136.9
Product sales \| Kratos Government Solutions
Segment Reporting Information [Line Items]
Total revenues	76.8	82.2
Product sales \| Unmanned Systems
Segment Reporting Information [Line Items]
Total revenues	$ 51.5	$ 54.7

Redeemable Noncontrolling Interest (Details) $ in Millions	Feb. 27, 2019 USD ($)
FTT Inc
Noncontrolling Interest [Line Items]
Percentage of voting interests acquired	80.10%
KTT CORE, LLC
Noncontrolling Interest [Line Items]
Percentage of voting interests acquired	80.10%
Aggregate purchase price	$ 60

Significant Customers (Details) - U.S. Government - USD ($) $ in Millions	3 Months Ended
	Mar. 27, 2022	Mar. 28, 2021
Revenue, Major Customer [Line Items]
Sales to the U.S. Government, amount	$ 139.6	$ 142.2
Government contracts \| Revenue
Revenue, Major Customer [Line Items]
Sales to the U.S. Government, percentage of total revenue (percent)	71.00%	73.00%

- Definition

Amount of revenue recognized from goods sold, services rendered, insurance premiums, or other activities that constitute an earning process. Includes, but is not limited to, investment and interest income before deduction of interest expense when recognized as a component of revenue, and sales and trading gain (loss).

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8736-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 323
-SubTopic 10
-Section 50
-Paragraph 3
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=114001798&loc=d3e33918-111571

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 28
-Subparagraph (f)
-URI http://asc.fasb.org/extlink&oid=123596393&loc=d3e14064-108612

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iv))
-URI http://asc.fasb.org/extlink&oid=124359900&loc=SL124442552-122756

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8736-108599

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
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