0001069258-23-000008 | 10-K | XBRL Viewer | Kratos Defense Security Solutions INC

Income Taxes

12 Months Ended

Dec. 25, 2022

The components of income (loss) from continuing operations before income taxes are comprised of the following (in millions):


	December 25, 2022		December 26, 2021		December 27, 2020
Domestic	$	(48.4)	$	(6.7)	$	(1.6)
Foreign	15.7		11.1		8.4
Total	$	(32.7)	$	4.4	$	6.8

The provision (benefit) for income taxes from continuing operations are comprised of the following (in millions):


	Year Ended
	December 25, 2022		December 26, 2021		December 27, 2020
Federal income taxes:
Current	$	—	$	—	$	—
Deferred	(4.5)		(0.1)		(68.2)
Total Federal	(4.5)		(0.1)		(68.2)
State and local income taxes:
Current	0.6		1.5		0.5
Deferred	1.9		0.5		(9.4)
Total State and local	2.5		2.0		(8.9)
Foreign income taxes:
Current	3.9		2.9		4.2
Deferred	(0.5)		(0.9)		(0.6)
Total Foreign	3.4		2.0		3.6
Total	$	1.4	$	3.9	$	(73.5)

A reconciliation of the total income tax provision (benefit) to the amount computed by applying the statutory federal income tax rate of 21% to the income from continuing operations before income taxes for the years ended December 25, 2022, December 26, 2021 and December 27, 2020 is as follows (in millions):


	Year Ended
	December 25, 2022		December 26, 2021		December 27, 2020
Income tax (benefit) at federal statutory rate	$	(6.9)	$	0.9	$	1.4
State taxes (benefit), net of federal tax benefit and valuation allowance	(0.3)		0.5		0.6
Difference in tax rates between U.S. and foreign	(0.2)		(0.5)		1.3
Increase (decrease) in valuation allowance	4.9		1.2		(80.1)
Nondeductible expense	0.5		0.8		0.4
Increase in reserve for uncertain tax positions	0.3		0.9		3.0

Other	0.2		0.1		0.8
Officer’s compensation 162(m) limitation	1.0		0.9		0.6


Release of valuation allowance due to acquisitions	—		—		(1.3)
R&D tax credit	(0.9)		(0.9)		(0.9)
Stock-based compensation	2.8		—		0.7

Total	$	1.4	$	3.9	$	(73.5)

On August 16, 2022, the President signed into law the Inflation Reduction Act of 2022 which contained provisions effective January 1, 2023, including a 15% corporate minimum tax and a 1% excise tax on stock buybacks, both of which we expect to be immaterial to our financial results, financial position and cash flows.

The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities are as follows (in millions):


	December 25, 2022		December 26, 2021
Deferred tax assets:
Stock-based compensation	$	9.4	$	9.7
Payroll related accruals	6.7		9.2
Lease accruals	25.7		21.8
Net operating loss carryforwards	55.1		58.1
Tax credit carryforwards	11.3		13.1
Deferred expenses	14.1		10.8
Other	19.4		16.5
	141.7		139.2
Valuation allowance	(14.6)		(9.0)
Total deferred tax assets, net of valuation allowance	127.1		130.2
Deferred tax liabilities:
Unearned revenue	(3.3)		(4.3)
Operating lease right-of-use assets	(23.2)		(19.6)
Other intangibles	(23.1)		(28.0)
Property and equipment, principally due to differences in depreciation	(5.6)		(7.1)
Other	(1.6)		(1.6)
Total deferred tax liabilities	(56.8)		(60.6)
Net deferred tax asset	$	70.3	$	69.6

During the fourth quarter of 2022, the Company evaluated all available evidence, both positive and negative, to determine whether based on the weight of that evidence, a valuation allowance for deferred tax assets was needed. Evidence evaluated by the Company included but was not limited to, its three-year cumulative results, and its forecast of taxable income. As a result, the Company determined that the majority of the Company’s U.S. deferred tax assets were more likely than not to be realized and that a valuation allowance with respect to a majority of the Company’s deferred tax assets was not required. The remaining valuation allowance on the Company’s U.S. deferred tax assets as of December 25, 2022 relates primarily to state net operating loss carryforwards, capital loss carryforwards and research & development tax credit carryforwards the Company estimates it may not be able to utilize in future periods. During fiscal 2022, the Company recorded a net increase in its valuation allowance of $5.6 million.

At December 25, 2022, the Company had federal tax loss carryforwards of $211.2 million and various state tax loss carryforwards of $233.7 million. The federal tax loss carryforwards will begin to expire in 2031 and state tax loss carryforwards will begin to expire in 2023 in certain states. Additionally, the state capital loss carryforward generated in 2018 will begin to expire in 2023.

At December 25, 2022, the Company had federal tax credit carryforwards of $13.3 million and various state tax credit carryforwards of $0.9 million. The federal tax credit carryforwards will begin to expire in 2024 and the state tax credit carryforwards do not have an expiration.

Federal and state income tax laws impose restrictions on the utilization of net operating losses (“NOLs”) and tax credit carryforwards in the event that an “ownership change” occurs for tax purposes, as defined by Section 382 of the Internal Revenue Code of 1986, as amended (“Section 382”). In general, an ownership change occurs when shareholders owning 5% or more of a “loss corporation” (a corporation entitled to use NOLs or other loss carryovers) have increased their ownership of stock in such corporation by more than 50 percentage points during any 3-year period. The annual base Section 382 limitation is calculated by multiplying the loss corporation’s value at the time of the ownership change by the greater of the long-term tax-exempt rate determined by the Internal Revenue Service in the month of the ownership change or the two preceding months. This base limitation is subject to adjustments, including an increase for built-in gains recognized in the five year period after the ownership change.

In tax years 2010 and 2011 the Company experienced a Section 382 “ownership change” that will limit the utilization of NOL carryforwards. Additionally, in prior years the Company acquired corporations with NOL carryforwards at the date of

acquisition (“Acquired NOLs”). The Acquired NOLs are subject to separate limitations that may further restrict the use of Acquired NOLs. For the year ended December 25, 2022, there was no impact of such Section 382 limitations on the income tax provision since the amount of taxable income did not exceed the annual limitation amount. However, future equity offerings or acquisitions that have equity as a component of the purchase price could also cause an “ownership change.” If and when any other “ownership change” occurs, utilization of the NOLs or other tax attributes may be further limited.

As of December 31, 2017, all accumulated undistributed earnings of our foreign subsidiaries were subject to the one-time transition tax on foreign earnings required by the 2017 Tax Cuts and Jobs Act. It is the Company’s intention to permanently reinvest undistributed earnings of its foreign subsidiaries. As such, the Company has not provided deferred U.S. income taxes or foreign withholding taxes of approximately $6.1 million on temporary differences relating to the outside basis in its investment in foreign subsidiaries. As of December 25, 2022, the Company has $18.9 million of cash and cash equivalents available for distribution.

The Company is subject to taxation in the U.S., various state tax jurisdictions and various foreign tax jurisdictions. The Company’s tax years for 2002 and later are subject to examination by the U.S. and state tax authorities due to the existence of NOL carryforwards. Generally, the Company’s tax years for 2017 and later are subject to examination by various foreign tax authorities as well.

The following table summarizes the activity related to the Company’s unrecognized tax benefits (in millions):


Balance as of December 29, 2019	$	24.0
Increases related to prior periods	0.2
Increases related to current year tax positions	1.5
Expiration of applicable statutes of limitations	(0.3)



Balance as of December 27, 2020	25.4
Increases related to prior periods	0.1
Increases related to current year tax positions	0.5
Expiration of applicable statutes of limitations	(0.2)
Increases related to acquisitions	0.1


Balance as of December 26, 2021	25.9
Decreases related to prior periods	(0.7)
Increases related to current year tax positions	0.2
Expiration of applicable statutes of limitations	(0.4)


Balance as of December 25, 2022	$	25.0

Included in the balance of unrecognized tax benefits at December 25, 2022, are $25.0 million of tax benefits that, if recognized, would affect the effective tax rate. Included in this amount is $11.1 million that would become a deferred tax asset if the tax benefit were recognized. As such, this benefit may be impacted by a corresponding valuation allowance depending upon the Company’s assessment of the realizability of the deferred tax asset at the time the benefits are recognized.

The Company recognizes interest and penalties related to unrecognized tax benefits in its provision for income taxes. For the years ended December 25, 2022, December 26, 2021 and December 27, 2020, the Company recorded $0.3 million, $0.6 million, and $1.9 million, respectively, in interest or penalty expenses. These amounts are netted by a benefit for interest and penalties related to the reversal of prior positions of $0.2 million, $0.1 million, and $0.2 million for the years ended December 25, 2022, December 26, 2021, and December 27, 2020, respectively. As of December 25, 2022, December 26, 2021, and December 27, 2020, the Company had accrued total interest and penalties of $5.1 million, $5.0 million and $4.5 million, respectively.

- 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.

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+ Details

Derivative Financial Instruments	12 Months Ended
Derivative Financial Instruments	Dec. 25, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Derivative Financial Instruments	Derivative Financial Instruments The Company’s derivative portfolio consists of forward exchange contracts. Derivative financial instruments are recognized on the Condensed Consolidated Balance Sheets as either assets or liabilities and are measured at fair value. Changes in the fair values of derivatives are recorded each period in earnings. As of December 25, 2022, the Company did not use hedge accounting. The Company did not have any forward exchange contracts at December 26, 2021. The notional value of the Company’s foreign currency forward contracts at December 25, 2022, was $10.2 million. At December 25, 2022, the fair value amounts of the forward exchange contracts were a $0.1 million asset and a $0.3 million liability. The net loss from these derivative instruments of $0.2 million is included in other income (expense) for the year ended December 25, 2022.

Net Income (Loss) Per Common Share

12 Months Ended

Dec. 25, 2022

Earnings Per Share [Abstract]

Net Income (Loss) Per Common Share

The Company calculates net income (loss) per common share in accordance with FASB ASC Topic 260, Earnings per Share (“Topic 260”). Under Topic 260, basic net income (loss) per common share is calculated by dividing net income (loss) 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.

The following shares were excluded from the calculation of diluted income (loss) per common share because their inclusion would have been anti-dilutive (in millions):

Year Ended

December 25, 2022

December 26, 2021

December 27, 2020

Shares from stock options and awards

1.5

0.1

0.5

Stockholders' Equity - Restricted Stock Unit Activity (Details) - RSUs shares in Thousands	12 Months Ended
	Dec. 25, 2022 $ / shares shares
Restricted Stock Units
Nonvested balance at beginning of period (in shares) \| shares	4,878
Granted (in shares) \| shares	1,577
Vested (in shares) \| shares	(1,716)
Forfeitured or expired (in shares) \| shares	(80)
Nonvested balance at end of period (in shares) \| shares	4,659
Weighted-Average Grant Date Fair Value
Nonvested balance at beginning of period, weighted-average grant date fair value (in dollars per share) \| $ / shares	$ 12.74
Granted, weighted average grant date fair value (in dollars per share) \| $ / shares	18.85
Vested, weighted-average grant date fair value (in dollars per share) \| $ / shares	17.75
Forfeitured or expired, weighted-average grant date fair value (in dollars per share) \| $ / shares	17.61
Nonvested balance at end of period, weighted average grant fair value (in dollars per share) \| $ / shares	$ 12.88

Significant Customers - Narrative (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 25, 2022	Dec. 26, 2021	Dec. 27, 2020
Revenue, Major Customer [Line Items]
Revenue	$ 898.3	$ 811.5	$ 747.7
KGS
Revenue, Major Customer [Line Items]
Revenue	676.6	579.6
U.S. Government \| KGS
Revenue, Major Customer [Line Items]
Revenue	$ 623.7	$ 571.1	$ 546.4
U.S. Government \| KGS \| Revenue benchmark \| Customer concentration risk
Revenue, Major Customer [Line Items]
Sales to the U.S. Government, percentage of total revenue (percent)	69.00%	70.00%	73.00%

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

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+ Details

Goodwill and Other Intangible Assets

12 Months Ended

Dec. 25, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

(a) Goodwill

The Company performs its annual impairment test for goodwill in accordance with Topic 350 as of the last day of its fiscal October or when evidence of potential impairment exists.

The Company assesses goodwill for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment, referred to as a component. The Company determines its reporting units by first identifying its operating segments, and then assessing whether any components of these segments constitute a business for which discrete financial information is available and where segment management regularly reviews the operating results of that component. The Company aggregates components within an operating segment that have similar economic characteristics.

The KGS reportable segment has five operating businesses: Defense Rocket Support Services (“DRSS”), Microwave Electronics (“ME”), Space, Training and Cybersecurity Solutions (“ST&C”), C5ISR/Modular Systems (“MS”), and Kratos Turbine Technologies (“KTT”). All of the KGS operating segments provide technology based defense solutions, involving products and services, primarily for mission critical U.S. National Security priorities, with the primary focus relating to the nation’s C5ISR requirements. The US reportable segment consists of its unmanned aerial system, unmanned ground, and unmanned seaborne system products.

The Company identified its reporting units to be the DRSS, ME, ST&C, MS, KTT and US operating segments. The Company tests goodwill for impairment by first performing a qualitative assessment. If, based on its qualitative assessment management determines it is not more likely than not that the fair value of the reporting unit exceeds its carrying value, a quantitative assessment is then performed. For operations where a quantitative assessment is performed, the identification and measurement of impairment involves the estimation of the fair value of reporting units. If the fair value is determined to be less than the carrying value, a charge to operations is recorded for the amount that the carrying value exceeds fair value. As part of its quantitative assessment, the Company estimates the fair value of each of the reporting units based on a comparison and weighting of the income approach, specifically the discounted cash flow method and the market approach, which estimates the fair value of the reporting units based upon comparable market prices and recent transactions and also validates the reasonableness of the implied multiples from the income approach.

In determining the fair value for the reporting units, where a quantitative assessment is performed, there are key assumptions relating to future expected cash flows, terminal growth rates, appropriate discount rates, market multiples, and the control premium a controlling shareholder could be expected to pay.

The carrying amounts of goodwill as of December 25, 2022 and December 26, 2021 by reportable segment are as follows (in millions):


	As of December 25, 2022
	US		KGS		Total
Gross value	$	127.9	$	683.6	$	811.5
Less accumulated impairment	13.8		239.5		253.3
Net	$	114.1	$	444.1	$	558.2




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

(b) Purchased Intangible Assets

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


	As of December 25, 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	$	80.9	$	(60.1)	$	20.8	$	76.5	$	(57.6)	$	18.9
Contracts and backlog	39.1		(36.3)		2.8		34.9		(33.1)		1.8
Developed technology and technical know-how	33.7		(27.0)		6.7		31.4		(25.8)		5.6
Trade names	3.8		(2.3)		1.5		2.7		(2.0)		0.7
In-process research and development	16.8		(0.3)		16.5		9.5		(0.2)		9.3
Total finite-lived intangible assets	174.3		(126.0)		48.3		155.0		(118.7)		36.3
Indefinite-lived trade names	6.9		—		6.9		6.9		—		6.9
Total intangible assets	$	181.2	$	(126.0)	$	55.2	$	161.9	$	(118.7)	$	43.2

The aggregate amortization expense for finite-lived intangible assets was $7.4 million, $4.7 million and $6.8 million, for the years ended December 25, 2022, December 26, 2021, and December 27, 2020, respectively. The Company records all amortization expense in selling, general and administrative expenses.

The estimated future amortization expense of acquired intangible assets with finite lives as of December 25, 2022 is as follows (in millions):


Fiscal Year	Amount
2023	6.8
2024	5.9
2025	6.2
2026	5.6
2027	4.7
Thereafter	19.1
Total	$	48.3

Debt - New Credit Facility (Details) - USD ($)				12 Months Ended
Debt - New Credit Facility (Details) - USD ($)	Mar. 14, 2022	Feb. 18, 2022	Jun. 23, 2020	Dec. 25, 2022	Dec. 26, 2021	Dec. 27, 2020	Nov. 30, 2017
Debt Instrument [Line Items]
Carrying amount					$ 296,700,000
Net proceeds used to pay-off debt			$ 240,400,000
Principal					300,000,000.0
Borrowing under credit facility				$ 100,000,000.0	0	$ 0
Loss on extinguishment of debt				(13,000,000.0)	$ 0	$ 0
SOFR
Debt Instrument [Line Items]
Basis spread on variable rate (percent)		1.00%
SOFR \| Minimum
Debt Instrument [Line Items]
Basis spread on variable rate (percent)		1.25%
SOFR \| Maximum
Debt Instrument [Line Items]
Basis spread on variable rate (percent)		2.25%
Base rate \| Minimum
Debt Instrument [Line Items]
Basis spread on variable rate (percent)		0.25%
Base rate \| Maximum
Debt Instrument [Line Items]
Basis spread on variable rate (percent)		1.25%
Senior notes
Debt Instrument [Line Items]
Premium	$ 9,800,000
Write off of deferred debt issuance cost	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
Redemption percentage	103.25%
Revolving credit facility
Debt Instrument [Line Items]
Outstanding borrowings		$ 90,000,000
Maximum borrowing capacity		$ 200,000,000
Basis spread on variable rate (percent)		0.50%
Revolving credit facility \| New Revolving Credit Facility
Debt Instrument [Line Items]
Debt instrument, term		5 years
Principal		$ 200,000,000		60,000,000
Remaining borrowing capacity				140,000,000
Letters of credit outstanding, amount				10,000,000
Revolving credit facility \| Term Loan Payment on June 30, 2022
Debt Instrument [Line Items]
Repayments of lines of credit				$ 2,500,000
Revolving credit facility \| New Credit Facility
Debt Instrument [Line Items]
Borrowing under credit facility		$ 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]
Amortization percentage		2.50%
Secured debt \| Term Loan A \| Third, fourth and fifth year
Debt Instrument [Line Items]
Amortization percentage		5.00%
Swing line loan \| New Revolving Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 10,000,000
Letter of credit
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 50,000,000

Stockholders' Equity - Employee Stock Purchase Plan (Details) - Employee Stock Purchase Plan - $ / shares	12 Months Ended
	Dec. 25, 2022	Dec. 26, 2021	Dec. 27, 2020
Assumptions and resulting fair values of options granted
Expected term (in years)	6 months	6 months	6 months
Risk-free interest rate, lower range (percent)	0.19%	0.06%	0.18%
Risk-free interest rate, upper range (percent)	2.51%	0.09%	1.60%
Expected volatility, lower range (percent)	40.52%	41.40%	44.14%
Expected volatility, upper range (percent)	60.79%	45.93%	82.75%
Expected dividend yield (percent)	0.00%	0.00%	0.00%
Weighted average grant-date fair value per share (in dollars per share)	$ 4.80	$ 7.60	$ 5.43

Stockholders' Equity - Stock Options Roll Forward (Details) - USD ($)		12 Months Ended
	Apr. 01, 2014	Dec. 25, 2022	Dec. 26, 2021
Number of Shares Under Option
Options outstanding at beginning of period, number of options (in shares)		42,000
Granted, number of options (in shares)	0	0
Exercised, number of options (in shares)		(24,000)
Forfeited or expired, number of options (in shares)		0
Options outstanding at end of period, number of options (in shares)		18,000	42,000
Options exercisable at the end of period, number of options (in shares)		18,000
Weighted-Average Exercise Price per Share
Options outstanding at beginning of period, weighted-average exercise price per share (in dollars per share)		$ 4.98
Granted, weighted-average exercise price per share (in dollars per share)		0
Exercised, weighted-average exercise price per share (in dollars per share)		4.98
Forfeited or expired, weighted average exercise price per share (in dollars per share)		0
Options outstanding at end of period, weighted-average exercise price per share(in dollars per share)		4.98	$ 4.98
Options exercisable, weighted average exercise price per share (in dollars per share)		$ 4.98
Weighted- Average Remaining Contractual Term and Aggregate Intrinsic Value
Options outstanding, weighted average remaining contractual term		0 years	1 year
Options exercisable, weighted average remaining contractual term		0 years
Options outstanding, aggregate intrinsic value		$ 79,900	$ 622,900
Options exercisable, aggregate intrinsic value		$ 79,900

Debt

12 Months Ended

Dec. 25, 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 due November 2025 (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 $3.3 million associated with the New Credit Facility. During the year ended December 25, 2022, the Company made $2.5 million of principal payments on Term Loan A. The Company has net amounts outstanding of approximately $60 million under the new Revolving Credit Facility, with approximately $140 million remaining in borrowing capacity, less approximately $10.0 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 Senior Secured Notes 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”), dated February 18, 2022, by and among the Company, the lenders from time to time party thereto (the “Lenders”), the Issuing Banks party thereto (as defined in the Credit Agreement) and Truist Bank, in its capacity as administrative agent for the Lenders, and as an issuing bank and as the swingline lender which established a five-year senior secured credit facility which is comprised of a $200 million revolving credit facility (the “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 a $200 million term loan (the “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 (as defined in the Credit Agreement) 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 at 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 December 25, 2022.

Term Loan and Revolving Credit Debt

Term loan and revolving credit debt and the current period interest rates are as follows (in millions):


	December 25, 2022
Term Loan A	$	197.5
Revolving credit facility	60.0
Total debt	257.5
Less current portion	6.3
Total long-term debt, less current portion	251.2
Less long-term unamortized debt issuance costs - term loans	1.0
Total long-term debt, net of unamortized debt issuance costs - term loans	$	250.2
Unamortized debt issuance costs - revolving credit facility	$	1.0
Current period interest rate	6.4		%

Future long-term debt principal payments at December 25, 2022 were as follows (in millions):


2023	$	6.3
2024	$	8.7
2025	$	10.0
2026	$	10.0
2027	$	222.5
	$	257.5

(b) 6.5% Senior Secured Notes due 2025

In November 2017, the Company issued and sold $300 million aggregate principal amount of 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 (as amended, the “Credit and Security Agreement”) which establishes a five year senior secured revolving credit facility in the aggregate principal amount of $90.0 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.

Israel Debt

During August 2020, the Company entered into two 5-year term loans with two banks in Israel representing an aggregate principal amount of approximately $5.1 million. These loans were subsidized by the State of Israel as part of a COVID-19 relief package with interest at Israeli NIS prime interest, plus a margin of 1.5%. The first year of interest was paid by the State of Israel with subsequent interest and principal payments due monthly commencing in August 2021. The Company repaid all amounts outstanding under this debt in the third quarter of fiscal year 2021.

5-D Systems Loan

In connection with the acquisition of 5-D Systems, the Company assumed a loan in the amount of approximately $0.5 million with an interest rate of 1.0% that had been obtained under the Small Business Administration Paycheck Protection Program as part of a COVID-19 relief package. Payment of interest and principal was due monthly with the balance due in April 2022. The sellers of 5-D Systems applied for forgiveness of this loan, the application was accepted and the loan was forgiven in July 2021.

Fair Value of Long-term Debt

Long-term debt under our New Credit Facility is measured at fair value on December 25, 2022. 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 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 long-term debt 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 previous 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.

- 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

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Topic 470
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Paragraph 1
-Subparagraph (SX 210.4-08(c))
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

+ Details

Goodwill and Other Intangible Assets - Goodwill (Details) - USD ($) $ in Millions	Dec. 25, 2022	Dec. 26, 2021
Goodwill [Line Items]
Gross value	$ 811.5	$ 747.2
Less accumulated impairment	253.3	253.3
Net	558.2	493.9
US
Goodwill [Line Items]
Gross value	127.9	127.9
Less accumulated impairment	13.8	13.8
Net	114.1	114.1
KGS
Goodwill [Line Items]
Gross value	683.6	619.3
Less accumulated impairment	239.5	239.5
Net	$ 444.1	$ 379.8

- Definition

Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

+ References + Details

Organization and Summary of Significant Accounting Policies (Policies)	12 Months Ended
	Dec. 25, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Principles of Consolidation	Principles of Consolidation and Basis of PresentationThe consolidated financial statements include the accounts of Kratos and its majority owned subsidiaries, for which all intercompany transactions have been eliminated in consolidation.
Basis of Presentation	Principles of Consolidation and Basis of PresentationThe consolidated financial statements include the accounts of Kratos and its majority owned subsidiaries, for which all intercompany transactions have been eliminated in consolidation.
Fiscal Year	Fiscal Year The Company has a 52/53 week fiscal year ending on the last Sunday of the calendar year, with interim fiscal periods ending on the last Sunday of each calendar quarter. There were 52 calendar weeks in the fiscal years ending on December 25, 2022 and December 26, 2021 and December 27, 2020.
Use of Estimates	Use of EstimatesThe preparation of consolidated financial statements in conformity with accounting principles generally accepted in the U.S. (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include revenue recognition, valuation of long-lived assets including identifiable intangibles and goodwill, accounting for income taxes including the related valuation allowance on the deferred tax asset and uncertain tax positions, contingencies and litigation, contingent acquisition consideration, and stock-based compensation. In the future, the Company may realize actual results that differ from the current reported estimates and if the estimates that the Company has used change in the future, such changes could have a material impact on the Company’s consolidated financial position, results of operations and cash flows.
Revenue Recognition	Revenue Recognition Effective January 1, 2018, the Company adopted the Financial Accounting Standards Board (“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 obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) 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 and 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 under 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 using the best estimate of the 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). Remaining Performance Obligations Revenues from remaining performance obligations are calculated as the dollar value of the remaining performance obligations on executed contracts. On December 25, 2022, the Company had approximately $1,112.4 million of remaining performance obligations. The Company expects to recognize approximately 56.0% of the remaining performance obligations as revenue in 2023, an additional 13.0% in 2024, 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 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. For the year ended December 26, 2021 the Company recorded a $6.9 million favorable EAC adjustment on one of its long-term government contracts. No other cumulative catch-up adjustment on any one contract was material to the Company’s consolidated financial statements for the years ended December 25, 2022, December 26, 2021 and December 27, 2020. Likewise, other than the impact of the adjustment for the one contract in the year ended December 26, 2021, total cumulative catch-up adjustments were not material for the years ended December 25, 2022, December 26, 2021 and December 27, 2020. As of December 25, 2022 and December 26, 2021, accrued expenses included the accrual for losses on contracts of $1.2 million and $2.8 million, respectively. 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. For federal contracts, the Company follows U.S. Government procurement and accounting standards in assessing the allowability and the allocability of costs to contracts. Recurring evaluations of contract cost, scheduling and technical matters are performed by management. Costs incurred and allocated to contracts with the U.S. Government are scrutinized for compliance with regulatory standards by the Company’s personnel, and are subject to audit by the Defense Contract Audit Agency (“DCAA”). From time to time, the Company may proceed with work based on customer direction prior to the completion and signing of formal contract documents. The Company has a formal review process for approving any such work. Revenue associated with such work is recognized only when the criteria to establish a contract under ASC 606 are met and the obligations under the contract are legally enforceable. As of December 25, 2022 and December 26, 2021, approximately $12.2 million and $2.9 million, respectively, of the Company’s unbilled accounts receivable balance were under an authorization to proceed or work order from its customers where a formal purchase order had not yet been received.
Inventoried Costs	Inventoried costs Inventoried costs are stated at the lower of cost or estimated net realizable value. Cost is determined using the average cost or first-in, first-out methods and the applicable method is applied consistently within an operating entity. The Company capitalizes labor, material, subcontractor and overhead costs as work-in-process for contracts where control has not yet passed to the customer. In addition, the Company capitalizes costs incurred to fulfill a contract in advance of contract award in inventories as work-in-process if it is determined that contract award is probable. Pursuant to contract provisions of U.S. Government contracts, such customers may have title to, or a security interest in inventories related to such contracts as a result of advances, performance-based payments, and progress payments. The Company regularly reviews inventory quantities on hand, future purchase commitments with its suppliers, and the estimated utility of its inventory. If the Company’s review indicates a reduction in utility below carrying value, it reduces its inventory to a new cost basis.
Research and Development	Research and DevelopmentCosts incurred in research and development activities are expensed as incurred in accordance with FASB ASC Topic 730, Research and Development.
Income Taxes	Income Taxes The Company records deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company maintains a valuation allowance on the deferred tax assets for which it is more likely than not that the Company will not realize the benefits of these tax assets in future tax periods. The valuation allowance is based on estimates of future taxable income by tax jurisdiction in which the Company operates, the number of years over which the deferred tax assets will be recoverable, and scheduled reversals of deferred tax liabilities.
Income Taxes - Uncertain Tax Positions	In accordance with the recognition standards established by ASC Topic 740, Income Taxes (“Topic 740”), the Company makes a comprehensive review of its portfolio of uncertain tax positions regularly. In this regard, an uncertain tax position represents the Company’s expected treatment of a tax position taken in a filed tax return, or planned to be taken in a future tax return or claim, which has not been reflected in measuring income tax expense for financial reporting purposes. Until these positions are sustained by the taxing authorities, the Company has not recognized the tax benefits resulting from such positions and reports the tax effects as a liability for uncertain tax positions in its consolidated balance sheets.
Stock-Based Compensation	Stock-Based CompensationThe Company accounts for stock-based compensation in accordance with ASC Topic 718, Compensation-Stock Compensation (“Topic 718”). All of the Company’s stock-based compensation plans are considered equity plans under Topic 718, and compensation expense recognized is net of estimated forfeitures over the vesting period. The Company issues stock options and stock awards under its existing plans. The fair value of stock options is estimated on the date of grant using a Black-Scholes option-pricing model or a trinomial lattice options pricing model and is expensed on a straight-line basis over the remaining vesting period of the options, which is generally six or less years. The fair value of stock awards is determined based on the closing market price of the Company’s common stock on the grant date and is adjusted at each reporting date based on the amount of shares ultimately expected to vest. Compensation expense for stock awards is expensed over the vesting period, usually five to ten years. Compensation expense for stock issued under the Company’s employee stock purchase plan is estimated at the beginning date of the offering period using a Black-Scholes option-pricing model and is expensed on a straight-line basis over the period of the offering, which is generally six months.
Allowance for Doubtful Accounts	Allowance for Doubtful AccountsThe Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments, which results in bad debt expense. Management determines the adequacy of this allowance by periodically evaluating the comprehensive risk profiles of all individual customer receivable balances including, but not limited to, the customer’s financial condition, credit agency reports, financial statements and overall current economic conditions. Additionally, on certain contracts whereby the Company performs services for a prime/general contractor, a specified percentage of the invoiced trade accounts receivable may be retained by the customer until the project is completed. The Company periodically reviews all retainages for collectability and records allowances for doubtful accounts when deemed appropriate, based on its assessment of the associated credit risks. Changes to estimates of contract value are recorded as adjustments to revenue and not as a component of the allowance for doubtful accounts. Individual accounts receivable are written off to the allowance for doubtful accounts when the Company becomes aware of a specific customer’s inability to meet its financial obligation, and all collection efforts are exhausted.
Cash and Cash Equivalents	Cash and Cash EquivalentsThe Company’s cash equivalents consist of its highly liquid investments with an original maturity of three months or less when purchased by the Company.
Property and Equipment, Net	Property and Equipment, NetProperty and equipment, net owned by the Company is depreciated over the estimated useful lives of individual assets. Equipment acquired under capital leases are amortized over the shorter of the lease term or the estimated useful life of the asset. Improvements, which significantly improve and extend the useful life of an asset, are capitalized and depreciated over the shorter of the lease period or the estimated useful life. Expenditures for maintenance and repairs are charged to operations as incurred.
Leases	Leases The 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.in the calculation of the lease asset and corresponding liability. 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. See Note 6 for additional disclosures related to the Company’s lease obligations.
Goodwill and Other Intangible Assets, Net	Goodwill and Other Intangible Assets, Net In accordance with the provisions of ASC Topic 350, Intangibles-Goodwill and Other (“Topic 350”), the Company performs impairment tests for goodwill and indefinite lived intangibles as of the last day of its fiscal October, or when evidence of potential impairment exists. When it is determined that impairment has occurred, a charge to operations is recorded. Goodwill and other purchased intangible asset balances are included in the identifiable assets of the operating segment to which they have been assigned. Any goodwill impairment, as well as the amortization of other purchased intangible assets, is charged against the respective segments’ operating income. In accordance with Topic 350, the Company classifies intangible assets into two categories: (1) intangible assets with finite lives subject to amortization and (2) intangible assets with indefinite lives not subject to amortization. Separately, the Company tests intangible assets with finite lives for impairment if conditions exist that indicate the carrying value may not be recoverable. Such conditions may include an economic downturn in a geographic market or a change in the assessment of future operations. The Company records an impairment charge when the carrying value of the finite lived intangible asset is not recoverable by the cash flows generated from the use of the asset. The Company determines the useful lives of identifiable intangible assets after considering the specific facts and circumstances related to each intangible asset. Factors considered when determining useful lives include the contractual term of any agreement, the history of the asset, the Company’s long-term strategy for the use of the asset, any laws or other local regulations that could impact the useful life of the asset, and other economic factors, including competition and specific market conditions. Intangible assets that are deemed to have finite lives are amortized, generally on a straight-line basis, over their useful lives, ranging from one to 15 years.
Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of	Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed OfLong-lived assets are reviewed for impairment in accordance with ASC Topic 360, Property, Plant, and Equipment, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to future net cash flows (undiscounted and without interest) expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.
Fair Value of Financial Instruments	Fair Value of Financial Instruments ASC Topic 825, Financial Instruments, requires that fair values be disclosed for the Company’s financial instruments. The carrying amounts of cash equivalents, accounts receivable, accounts payable, accrued expenses, billings in excess of costs and earnings on uncompleted contracts, and income taxes payable, approximate fair value due to the short-term nature of these instruments. The fair value of the Company’s long-term debt outstanding at December 25, 2022 is recorded at fair value. The fair value of the Company’s Senior Secured Notes (as defined below in Note 5), which were redeemed on March 14, 2022, is based upon quoted market prices. The Company uses forward exchange contracts to manage foreign currency risks associated with certain transactions, specifically forecasted materials and salaries paid in foreign currencies. These derivative instruments are measured at fair value using observable market inputs such as forward rates. Based on these inputs, the derivative instruments are classified within Level 2 of the valuation hierarchy. At December 25, 2022, the derivative instruments were included in other current assets and other current liabilities on the Company's Condensed Consolidated Balance Sheets. The carrying amounts and the related fair values of the Company’s derivative instruments measured at fair value on a recurring basis at December 25, 2022, are presented in Note 15. There were no derivative instruments for forward exchange contracts at December 26, 2021.
Concentrations and Uncertainties	Concentrations and Uncertainties The Company maintains cash balances at various financial institutions and such balances commonly exceed the $250,000 insured amount by the Federal Deposit Insurance Corporation. The Company has not experienced any losses in such accounts and management believes that the Company is not exposed to any significant credit risk with respect to such cash and cash equivalents. Financial instruments, which subject the Company to potential concentrations of credit risk, consist principally of the Company’s billed and unbilled accounts receivable. The Company’s accounts receivable result from sales to customers within the U.S. Government, state and local agencies and with commercial customers in various industries. The Company performs ongoing credit evaluations of its commercial customers. Credit is extended based on evaluation of the customer’s financial condition and collateral is not required. Accounts receivable are recorded at the invoiced amount and do not bear interest. See Note 13 for a discussion of the Company’s significant customers.
Debt Issuance Costs	Debt Issuance CostsFees paid to obtain debt financing and revolving credit facilities or amendments under such debt financing and revolving credit facilities are treated as debt issuance costs and are capitalized and amortized over the expected term of the related debt or revolving credit facility and are shown as a financing activity in the consolidated statements of cash flows. Issuance costs related to debt are presented in the consolidated balance sheets as a direct deduction from the carrying amount of the associated debt liability. Issuance costs related to a revolving credit facility are included in other assets in the consolidated balance sheets.
Foreign Currency	Foreign CurrencyFor operations outside the U.S. that prepare financial statements in currencies other than the U.S. dollar, results of operations and cash flows are translated at average exchange rates during the period, and assets and liabilities are generally translated at end-of-period exchange rates. Translation adjustments are included as a separate component of accumulated other comprehensive loss.The Company transacts with foreign customers in currencies other than the U.S. dollar. It experiences realized and unrealized foreign currency gains or losses on foreign denominated receivables. In addition, certain intercompany transactions give rise to realized and unrealized foreign currency gains or losses. Also, any other transactions between the Company or its subsidiaries and a third-party, denominated in a currency different from the functional currency, are foreign currency transactions.
Recent Accounting Pronouncements	Recent Accounting PronouncementsAccounting standards updates adopted and/or issued, but not effective until after December 25, 2022, are not expected to have a material effect on the Company’s consolidated financial position, annual results of operations and/or cash flows.
Goodwill	Goodwill The Company performs its annual impairment test for goodwill in accordance with Topic 350 as of the last day of its fiscal October or when evidence of potential impairment exists. The Company assesses goodwill for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment, referred to as a component. The Company determines its reporting units by first identifying its operating segments, and then assessing whether any components of these segments constitute a business for which discrete financial information is available and where segment management regularly reviews the operating results of that component. The Company aggregates components within an operating segment that have similar economic characteristics. The KGS reportable segment has five operating businesses: Defense Rocket Support Services (“DRSS”), Microwave Electronics (“ME”), Space, Training and Cybersecurity Solutions (“ST&C”), C5ISR/Modular Systems (“MS”), and Kratos Turbine Technologies (“KTT”). All of the KGS operating segments provide technology based defense solutions, involving products and services, primarily for mission critical U.S. National Security priorities, with the primary focus relating to the nation’s C5ISR requirements. The US reportable segment consists of its unmanned aerial system, unmanned ground, and unmanned seaborne system products. The Company identified its reporting units to be the DRSS, ME, ST&C, MS, KTT and US operating segments. The Company tests goodwill for impairment by first performing a qualitative assessment. If, based on its qualitative assessment management determines it is not more likely than not that the fair value of the reporting unit exceeds its carrying value, a quantitative assessment is then performed. For operations where a quantitative assessment is performed, the identification and measurement of impairment involves the estimation of the fair value of reporting units. If the fair value is determined to be less than the carrying value, a charge to operations is recorded for the amount that the carrying value exceeds fair value. As part of its quantitative assessment, the Company estimates the fair value of each of the reporting units based on a comparison and weighting of the income approach, specifically the discounted cash flow method and the market approach, which estimates the fair value of the reporting units based upon comparable market prices and recent transactions and also validates the reasonableness of the implied multiples from the income approach.
Fair Value Measurement	Fair Value Measurement ASC Topic 820, Fair Value Measurement, establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

Organization and Summary of Significant Accounting Policies - Allowance for Doubtful Accounts (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 25, 2022	Dec. 26, 2021	Dec. 27, 2020
Allowance for Doubtful Accounts
Provisions	$ 0.0	$ 0.2	$ 0.0
Allowance for Doubtful Accounts
Allowance for Doubtful Accounts
Balance at Beginning of Year	0.4	1.8	1.9
Provisions	0.0	(0.2)	0.0
Write-offs/ Recoveries	0.0	(1.2)	(0.1)
Balance at End of Year	$ 0.4	$ 0.4	$ 1.8

Significant Customers	12 Months Ended
Significant Customers	Dec. 25, 2022
Segment Reporting [Abstract]
Significant Customers	Significant Customers Revenue from the U.S. Government (which includes Foreign Military Sales) 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 $623.7 million, $571.1 million, and $546.4 million or 69%, 70%, and 73%, of total revenue for the years ended December 25, 2022, December 26, 2021, and December 27, 2020, respectively.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions	12 Months Ended
	Dec. 25, 2022	Dec. 26, 2021	Dec. 27, 2020
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ (33.2)	$ (1.6)	$ 79.4
Other comprehensive income (loss):
Change in cumulative translation adjustment	(2.3)	(0.8)	2.0
Postretirement benefit reserve adjustment net of tax expense (income)	0.9	0.0	(0.2)
Other comprehensive income (loss), net of tax	(1.4)	(0.8)	1.8
Comprehensive income (loss)	(34.6)	(2.4)	81.2
Less: Comprehensive income (loss) attributable to noncontrolling interest	3.7	0.4	(0.2)
Comprehensive income (loss) attributable to Kratos	$ (38.3)	$ (2.8)	$ 81.4

- 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.

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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.

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Amount after tax and reclassification adjustments of other comprehensive income (loss).

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-Paragraph 4K
-URI https://asc.fasb.org/extlink&oid=120409616&loc=SL4591552-111686

Reference 33: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 8
-URI https://asc.fasb.org/extlink&oid=124431687&loc=d3e22658-107794

+ Details

Income Taxes - Schedule of Income before Income Tax, Domestic and Foreign (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 25, 2022	Dec. 26, 2021	Dec. 27, 2020
Components of income (loss) from continuing operations before income taxes
Domestic	$ (48.4)	$ (6.7)	$ (1.6)
Foreign	15.7	11.1	8.4
Income (loss) from continuing operations before income taxes	$ (32.7)	$ 4.4	$ 6.8

- Definition

Amount of income (loss) from continuing operations, including income (loss) from equity method investments, before deduction of income tax expense (benefit), and income (loss) attributable to noncontrolling interest.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8906-108599

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (f)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 940
-SubTopic 20
-Section 25
-Paragraph 1
-URI https://asc.fasb.org/extlink&oid=126941158&loc=d3e41242-110953

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SX 210.5-03(10))
-URI https://asc.fasb.org/extlink&oid=126953954&loc=SL114868664-224227

Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 220
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-04(8))
-URI https://asc.fasb.org/extlink&oid=120400993&loc=SL114874131-224263

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 235
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-05(b)(2))
-URI https://asc.fasb.org/extlink&oid=120399901&loc=d3e537907-122884

Reference 9: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 220
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-04(15))
-URI https://asc.fasb.org/extlink&oid=120399700&loc=SL114874048-224260

+ Details

Net Income (Loss) Per Common Share - Antidilutive Securities (Details) - shares shares in Millions	12 Months Ended
	Dec. 25, 2022	Dec. 26, 2021	Dec. 27, 2020
Shares from stock options and awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of EPS (in shares)	1.5	0.1	0.5

Commitments and Contingencies	12 Months Ended
Commitments and Contingencies	Dec. 25, 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 consolidated financial statements. An estimated loss contingency is accrued in the Company’s 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 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 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. Costs incurred and allocated to contracts with the U.S. Government are regularly scrutinized for compliance with regulatory standards by the Company’s personnel. 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 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 its financial condition, results of operations or cash flows.

Organization and Summary of Significant Accounting Policies - Stock-Based Compensation (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 25, 2022	Dec. 26, 2021	Dec. 27, 2020
Selling, general and administrative expenses
Significant Accounting Policies Disclosure [Line Items]
Stock-based compensation expense, amount recognized in the consolidated financial statements	$ 26.3	$ 25.8	$ 21.0
Total cost of employee stock-based compensation included in operating income (loss) from continuing operations
Significant Accounting Policies Disclosure [Line Items]
Stock-based compensation expense, amount recognized in the consolidated financial statements	$ 26.3	$ 25.8	$ 21.0

Debt - Other Indebtedness (Details)			1 Months Ended
Debt - Other Indebtedness (Details)	Feb. 18, 2022 USD ($)	Nov. 20, 2017 USD ($)	Aug. 31, 2020 USD ($) loan bank	Dec. 25, 2022 USD ($)	Dec. 26, 2021 USD ($)
Line of Credit Facility [Line Items]
Principal					$ 300,000,000.0
Carrying amount					296,700,000
Unamortized debt issuance costs					$ 3,300,000
Base rate \| Minimum
Line of Credit Facility [Line Items]
Basis spread on variable rate (percent)	0.25%
Base rate \| Maximum
Line of Credit Facility [Line Items]
Basis spread on variable rate (percent)	1.25%
Israel Debt \| Term loan
Line of Credit Facility [Line Items]
Debt term			5 years
Number (in loans) \| loan			2
Number (in banks) \| bank			2
Principal			$ 5,100,000
Israel Debt \| Israeli NIS prime interest \| Term loan
Line of Credit Facility [Line Items]
Basis spread on variable rate (percent)			1.50%
5-D Systems, Inc \| Term loan
Line of Credit Facility [Line Items]
Principal				$ 500,000
Stated interest rate				1.00%
Revolving credit facility
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 200,000,000
Basis spread on variable rate (percent)	0.50%
Outstanding borrowings	$ 90,000,000
Revolving credit facility \| Amendment Credit Agreement
Line of Credit Facility [Line Items]
Debt term		5 years
Maximum borrowing capacity		$ 90,000,000
Letter of credit
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 50,000,000
Swing line loan \| Amendment Credit Agreement
Line of Credit Facility [Line Items]
Maximum borrowing capacity		$ 10,000,000

Net Income (Loss) Per Common Share (Tables)

12 Months Ended

Dec. 25, 2022

Earnings Per Share [Abstract]

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following shares were excluded from the calculation of diluted income (loss) per common share because their inclusion would have been anti-dilutive (in millions):

Year Ended

December 25, 2022

December 26, 2021

December 27, 2020

Shares from stock options and awards

1.5

0.1

0.5

Segment Information (Tables)

12 Months Ended

Dec. 25, 2022

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

Revenues, operating income (loss) and assets disclosed below provided by the Company’s reportable segments for the years ended December 25, 2022, December 26, 2021, and December 27, 2020, are as follows (in millions):


	2022		2021		2020
Revenues:
Kratos Government Solutions
Service revenues	$	320.0	$	214.5	$	248.7
Product sales	356.6		365.1		312.0
Total Kratos Government Solutions	676.6		579.6		560.7




Unmanned Systems
Service revenues	5.2		4.9		—
Product sales	216.5		227.0		187.0
Total Unmanned Systems	221.7		231.9		187.0
Total revenues	$	898.3	$	811.5	$	747.7
Depreciation and amortization:
Kratos Government Solutions	$	22.7	$	17.4	$	17.9

Unmanned Systems	7.8		8.3		6.7
Total depreciation and amortization	$	30.5	$	25.7	$	24.6
Operating income (loss):
Kratos Government Solutions	$	27.2	$	42.3	$	43.6

Unmanned Systems	(2.8)		13.2		8.7
Corporate activities	(27.0)		(27.6)		(23.0)
Total operating income (loss)	$	(2.6)	$	27.9	$	29.3

Reportable segment assets are as follows (in millions):


	December 25, 2022		December 26, 2021		December 27, 2020
Assets:
Kratos Government Solutions	$	1,105.1	$	907.6	$	877.2
Unmanned Systems	349.7		327.1		292.4

Discontinued operations	—		—		—
Corporate activities	96.7		354.8		393.2
Total assets	$	1,551.5	$	1,589.5	$	1,562.8

Stockholders' Equity - Common Stock (Details) - USD ($) $ / shares in Units, $ in Millions		12 Months Ended
	Jun. 23, 2020	Dec. 27, 2020
Class of Stock [Line Items]
Net proceeds used to pay-off debt	$ 240.4
Common Stock
Class of Stock [Line Items]
Common stock sold (in shares)	15,525,000	15,800,000
Purchase price of common stock sold (in dollars per share)	$ 16.25
Gross proceeds from sell of stock	$ 252.3

Organization and Summary of Significant Accounting Policies - Remaining Performance Obligations (Details) $ in Millions	Dec. 25, 2022 USD ($)
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Remaining performance obligation	$ 1,112.4
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-12-26
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, percentage	56.00%
Revenue, remaining performance obligation, expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, percentage	13.00%
Revenue, remaining performance obligation, expected timing of satisfaction, period	1 year

Fair Value Measurement	12 Months Ended
Fair Value Measurement	Dec. 25, 2022
Fair Value Disclosures [Abstract]
Fair Value Measurement	Fair Value Measurement ASC Topic 820, Fair Value Measurement, establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Acquisitions

12 Months Ended

Dec. 25, 2022

Business Combination and Asset Acquisition [Abstract]

Acquisitions

Technical Directions, Inc.

On February 24, 2020, the Company acquired Technical Directions, Inc. (“TDI”), a turbine technology company focused on tactical unmanned aerial drones, missile and other systems for approximately $10.5 million in cash, subject to adjustments for transaction expenses, indebtedness, cash on hand, and post-closing working capital adjustments. Working capital adjustments of $0.3 million were settled in the third quarter of 2020. 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 TDI included in the condensed consolidated statement of operations for the year ended December 27, 2020 are not material. Had the acquisition occurred as of December 29, 2019, 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 27, 2020 would not have been materially different than the reported amounts. TDI is included in the Kratos US segment.

Optimized Performance Machining, Inc.

On April 17, 2020, the Company acquired Optimized Performance Machining, Inc.(“OPM”), a company that primarily operates in the industrial machinery and equipment repair business industry for approximately $1.8 million in cash, subject to adjustments for transaction expenses, indebtedness, cash on hand, and post-closing working capital adjustments. Working capital adjustments of $0.03 million were settled in the third quarter of 2020. 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 OPM included in the condensed consolidated statement of operations for the year ended December 27, 2020 are not material. Had the acquisition occurred as of December 29, 2019, 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 27, 2020 would not have been materially different than the reported amounts. OPM is included in the Kratos US segment.

CPI ASC Signal Division, Inc.

On June 15, 2020, Kratos Integral Holdings, LLC entered into a Stock Purchase Agreement to acquire CPI ASC Signal Division, Inc. (“ASC Signal”) from Communications & Power Industries LLC for approximately $35 million in cash, subject to adjustments for transaction expenses, indebtedness, cash on hand, and working capital adjustments. The adjustments for transaction expenses, indebtedness, cash on hand and working capital were settled by the parties in January 2021, resulting in a net payment due to the Company of approximately $1.4 million. ASC Signal is a manufacturer of high-performance, highly engineered antenna systems for satellite communications, radar, electronic warfare, and high frequency applications. On June 30, 2020, the acquisition was completed following the satisfaction of all closing conditions, including receipt of regulatory approval from all required government authorities. ASC Signal is included in the KSTC Division of the Company’s 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 ASC Signal’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 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	$	5.7
Unbilled receivables	0.9
Inventoried costs	10.4
Other current assets	1.8
Property and equipment	10.0
Intangible assets	4.3
Goodwill	10.8
Total identifiable net assets acquired	43.9
Total identifiable net liabilities assumed	(11.0)
Net assets acquired, excluding cash	$	32.9

Based on the Company’s preliminary estimate of fair value, as of June 30, 2020, net liabilities included $9.1 million of current liabilities. The identifiable intangible assets include trade names of $0.1 million with a remaining useful life of 1 year, customer relationships of $2.0 million with remaining useful lives of 5 years, and developed technology of $2.2 million with a remaining useful life of 7 years. The Company also established a deferred tax liability of $1.1 million for the difference between the financial statement basis and tax basis of the acquired assets of ASC Signal 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 income of ASC Signal included in the Company's condensed consolidated statement of operations for the year ended December 27, 2020 were $21.9 million and $1.1 million, respectively. Included in

Merger and acquisition expenses for the year ended December 27, 2020 were transaction expenses of $1.1 million, related to the acquisition of ASC Signal.

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


Cash paid	$	34.9
Less: Cash acquired	(2.0)
Total consideration	$	32.9

Pro Forma Financial Information (Unaudited)

The following tables summarize the supplemental condensed consolidated statements of operations information on an unaudited pro forma basis as if the acquisition of ASC Signal occurred on December 30, 2019 and include adjustments that were directly attributable to the foregoing transactions. There are no material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings (loss). The pro forma results are for illustrative purposes only for the applicable period and do not purport to be indicative of the actual results that would have occurred had the transaction been completed as of the beginning of the period, nor are they indicative of results of operations that may occur in the future.

For the year ended December 27, 2020 (all amounts, except per share amounts, are in millions):


Pro forma revenues	$	766.0
Pro forma net income before tax	$	2.6
Pro forma net income	$	74.5

Basic pro forma income per share	$	0.65
Diluted pro forma income per share	$	0.63

5-D Systems, Inc.

On November 18, 2020, the Company acquired 5-D Systems, Inc. (“5-D Systems”), a leading National Security Solutions provider and industry-leading provider of high-performance, jet-powered unmanned aerial systems for an aggregate of approximately $10.0 million. The purchase price was $5.0 million in cash, subject to adjustments for transaction expenses, indebtedness, cash on hand, and post-closing working capital adjustments, and 250,374 shares of common stock (with a value of approximately $5.0 million). 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 5-D Systems included in the condensed consolidated statement of operations for the year ended December 27, 2020 are not material. Had the acquisition occurred as of December 29, 2019, 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 27, 2020 would not have been materially different than the reported amounts. 5-D Systems is included in the Kratos US segment.

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 approximately $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, $15.2 million of the purchase price was paid on December 30, 2021, and the remainder of the purchase price was paid during the three months ended June 26, 2022. 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 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 approximately $37.5 million in cash (not including a $0.4 million holdback to be paid at a later date). Cosmic focuses on radio frequency (RF), 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 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	4.1
Other current assets	0.1
Property and equipment	1.3
Intangible assets	8.5
Total identifiable net assets acquired	17.8
Total identifiable net liabilities assumed	(9.1)
Goodwill	29.2
Net assets acquired, excluding cash	$	37.9

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 $0.6 million with a remaining useful life of 5 years, backlog of $1.7 million with an estimated useful life of 1 year, customer relationships of $4.4 million with a remaining useful life of 10 years, and developed technology of $1.8 million with a remaining useful life of 5 years. The Company also established a deferred tax liability of $2.4 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 value of customer relationships was estimated using the multi-period excess earnings method (“MPEEM”), an income approach (Level 3), which converts projected revenues and costs into cash flows. To reflect the fact that certain other assets contribute to the cash flows generated, the returns for these contributory assets were removed to arrive at estimated cash flows solely attributable to the acquired customer relationships, which were discounted at a rate of 11% to determine the fair value. The value of backlog was also valued using MPEEM. The value of developed technology was estimated using the relief-from-royalty method, an income approach (Level 3), which estimates the cost savings that accrue to the owner of the intangible asset that would otherwise be payable as royalties or license fees on revenues earned through the use of the asset. A royalty rate of 11% was applied to the projected revenues associated with the intangible asset to determine the amount of savings in order to determine the fair value.

The amounts of revenue and operating loss of Cosmic included in the Company’s condensed consolidated statement of operations for the year ended December 25, 2022 were $59.9 million and $0.4 million, respectively.

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


Cash paid	$	39.0
Holdback to be paid at later date	0.4
Less: Cash acquired	(1.5)
Total consideration	$	37.9

Pro Forma Financial Information (Unaudited)

The following tables summarize the supplemental condensed consolidated statements of operations information on an unaudited pro forma basis as if the acquisition of Cosmic occurred on December 28, 2020 and include adjustments that were directly attributable to the foregoing transactions. There are no material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and income (loss). The pro forma results are for illustrative purposes only for the applicable period and do not purport to be indicative of the actual results that would have occurred had the transaction been completed as of the beginning of the period, nor are they indicative of results of operations that may occur in the future.

For the year ended December 26, 2021 (all amounts, except per share amounts, are in millions):


Pro forma revenues	$	855.2
Pro forma net loss before tax	$	(0.8)
Pro forma net loss	$	(2.9)

Basic pro forma loss per share	$	(0.03)
Diluted pro forma loss per share	$	(0.03)

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 $79.4 million, comprised of $74.4 million in cash, subject to adjustments for working capital, potential earn-out consideration tied to revenue from certain in-development products, indebtedness and transaction expenses, and $5.0 million in Kratos common stock. SRI’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 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 established Kratos SRE, Inc., a new business within Kratos’ Defense and Rocket Support Services Division.

On May 23, 2022, the acquisition was completed following the satisfaction of all closing conditions, including receipt of necessary approval from all required government authorities. The operating results of the acquisition have been included in the Company’s results of operations from the effective acquisition date.

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 SRE’s existing business with Kratos’ related products and customers.

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


Accounts receivable	$	2.9
Unbilled receivables	11.1
Inventory	0.5
Other current assets	0.2
Property and equipment	22.8
Other assets	0.2
Intangible assets	10.8
Total identifiable net assets acquired	48.5
Total identifiable net liabilities assumed	(3.4)
Goodwill	34.3
Net assets acquired, excluding cash	$	79.4

Based on the Company’s preliminary estimate of fair value, as of May 23, 2022, net liabilities included $2.5 million of current liabilities. The identifiable intangible assets include trade names of $0.5 million with a remaining useful life of 5 years, backlog of $2.5 million with an estimated useful life of 3 years, in-process research and development of $7.3 million that will commence amortization at the completion of the development, and developed technology of $0.5 million with a remaining useful life of 3 years. The Company also established a deferred tax asset of $0.2 million for the difference between the financial statement basis and tax basis of the acquired assets of SRE and a corresponding decrease in goodwill. The goodwill recorded in this transaction is expected to be tax-deductible.

The value of backlog was estimated using the multi-period excess earnings method (“MPEEM”), an income approach (Level 3), which converts projected revenues and costs into cash flows. To reflect the fact that certain other assets contribute to the cash flows generated, the returns for these contributory assets were removed to arrive at estimated cash flows solely attributable to the acquired backlog, which were discounted at a rate of 6.4% to determine the fair value. The value of developed technology was estimated using the relief-from-royalty method, an income approach (Level 3), which estimates the cost savings that accrue to the owner of the intangible asset that would otherwise be payable as royalties or license fees on revenues earned through the use of the asset. A royalty rate was applied to the projected revenues associated with the intangible asset to determine the amount of savings, which was at a rate of 11% to determine the fair value. The value of in-process research and development was also estimated using the relief-from-royalty method. A royalty rate of 12% was applied to the projected revenues associated with the intangible asset to determine the amount of savings in order to determine the fair value.

The amounts of revenue and operating income of SRE included in the Company’s condensed consolidated statement of operations for the year end December 25, 2022 were $26.8 million and $2.9 million, respectively.

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


Cash paid	$	74.4
Common stock issued	5.0
Total consideration	$	79.4

Pro Forma Financial Information (Unaudited)

The following tables summarize the supplemental condensed consolidated statements of operations information on an unaudited pro forma basis as if the acquisition of SRE occurred on December 28, 2020 and include adjustments that were directly attributable to the foregoing transactions. There are no material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and income (loss). The pro forma results are for illustrative purposes only for the applicable period and do not purport to be indicative of the actual results that would have occurred had the transaction been completed as of the beginning of the period, nor are they indicative of results of operations that may occur in the future.

For the years ended December 25, 2022 and December 26, 2021 (all amounts, except per share amounts, are in millions):


		2022		2021
Pro forma revenues	$	915.3	$	850.7
Pro forma net income (loss) before tax	$	(31.6)	$	3.8
Pro forma net income ( loss)	$	(35.8)	$	1.3

Basic pro forma income (loss) per share	$	(0.28)	$	0.01
Diluted pro forma income (loss) per share	$	(0.28)	$	0.01

Derivative Financial Instruments (Details) - Foreign exchange contract - Designated as hedging instrument - USD ($)	12 Months Ended
	Dec. 25, 2022	Dec. 26, 2021
Derivatives, Fair Value [Line Items]
Derivative notional amount	$ 10,200,000	$ 0
Derivative asset	100,000
Derivative liability	300,000
Derivative, net loss	$ 200,000

Discontinued Operations

12 Months Ended

Dec. 25, 2022

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

On 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 and including the impact of the final settlement and determination of the closing net working capital adjustment which was settled with the Buyer in the fourth quarter of 2021. Included in the year ended December 26, 2021 is approximately $1.1 million of loss from discontinued operations related to the final working capital settlement. Included in the year ended December 25, 2022 is an approximate $0.9 million gain as a result of the release of an indemnification liability following the lapse of the statute of limitations associated with a potential tax liability that was recorded in 2019 as part of the sale of PSS.

In accordance with ASC 360-10-45-9, Property, Plant, and Equipment (Topic 360) and ASC 205-20-45-3 Presentation of Financial Statements (Topic 205), PSS and its subsidiaries have been reported in discontinued operations in the accompanying consolidated financial statements for all periods presented.

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


	Year ended December 25, 2022		Year ended December 26, 2021		Year ended December 27, 2020
Revenue	$	—	$	0.1	$	—
Cost of sales	—		—		0.2
Selling, general and administrative expenses	0.3		2.4		1.0


Loss from discontinued operations before income taxes	(0.3)		(2.3)		(1.2)
Gain on disposal of discontinued operations before income taxes	—		—		—
Total loss of discontinued operations before income taxes	(0.3)		(2.3)		(1.2)
Income tax benefit	(1.2)		(0.2)		(0.3)
Income (loss) from discontinued operations	$	0.9	$	(2.1)	$	(0.9)

Revenue and operating results for the year ended December 26, 2021 reflect the final settlement of the working capital dispute with the Buyer which resulted in expenses of approximately $1.1 million, and related legal fees as well as performance on the contracts and working capital retained by the Company.

The following is a summary of the assets and liabilities of discontinued operations as of December 25, 2022 and December 26, 2021 (in millions):


	December 25, 2022		December 26, 2021














Other current liabilities	0.9		0.8
Current liabilities of discontinued operations	$	0.9	$	0.8
Other long-term liabilities of discontinued operations	$	1.4	$	2.5

Retirement Plans - Narrative (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 25, 2022	Dec. 26, 2021	Dec. 27, 2020
Retirement Benefits [Abstract]
Company's contributions to defined-contribution plans	$ 8.1	$ 6.4	$ 5.7

Balance Sheet Details - Narrative (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 25, 2022	Dec. 26, 2021	Dec. 27, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Cash and cash equivalents	$ 81.3	$ 349.4
Depreciation expense	$ 23.1	$ 21.0	$ 17.8

Income Taxes (Tables)

12 Months Ended

Dec. 25, 2022

Income Tax Disclosure [Abstract]

Schedule of Income (Loss) before Income Tax, Domestic and Foreign

The components of income (loss) from continuing operations before income taxes are comprised of the following (in millions):


	December 25, 2022		December 26, 2021		December 27, 2020
Domestic	$	(48.4)	$	(6.7)	$	(1.6)
Foreign	15.7		11.1		8.4
Total	$	(32.7)	$	4.4	$	6.8

Schedule of Components of Income Tax Expense (Benefit)

The provision (benefit) for income taxes from continuing operations are comprised of the following (in millions):


	Year Ended
	December 25, 2022		December 26, 2021		December 27, 2020
Federal income taxes:
Current	$	—	$	—	$	—
Deferred	(4.5)		(0.1)		(68.2)
Total Federal	(4.5)		(0.1)		(68.2)
State and local income taxes:
Current	0.6		1.5		0.5
Deferred	1.9		0.5		(9.4)
Total State and local	2.5		2.0		(8.9)
Foreign income taxes:
Current	3.9		2.9		4.2
Deferred	(0.5)		(0.9)		(0.6)
Total Foreign	3.4		2.0		3.6
Total	$	1.4	$	3.9	$	(73.5)

Schedule of Income Tax Reconciliation


	Year Ended
	December 25, 2022		December 26, 2021		December 27, 2020
Income tax (benefit) at federal statutory rate	$	(6.9)	$	0.9	$	1.4
State taxes (benefit), net of federal tax benefit and valuation allowance	(0.3)		0.5		0.6
Difference in tax rates between U.S. and foreign	(0.2)		(0.5)		1.3
Increase (decrease) in valuation allowance	4.9		1.2		(80.1)
Nondeductible expense	0.5		0.8		0.4
Increase in reserve for uncertain tax positions	0.3		0.9		3.0

Other	0.2		0.1		0.8
Officer’s compensation 162(m) limitation	1.0		0.9		0.6


Release of valuation allowance due to acquisitions	—		—		(1.3)
R&D tax credit	(0.9)		(0.9)		(0.9)
Stock-based compensation	2.8		—		0.7

Total	$	1.4	$	3.9	$	(73.5)

Schedule of Deferred Tax Assets and Liabilities

The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities are as follows (in millions):


	December 25, 2022		December 26, 2021
Deferred tax assets:
Stock-based compensation	$	9.4	$	9.7
Payroll related accruals	6.7		9.2
Lease accruals	25.7		21.8
Net operating loss carryforwards	55.1		58.1
Tax credit carryforwards	11.3		13.1
Deferred expenses	14.1		10.8
Other	19.4		16.5
	141.7		139.2
Valuation allowance	(14.6)		(9.0)
Total deferred tax assets, net of valuation allowance	127.1		130.2
Deferred tax liabilities:
Unearned revenue	(3.3)		(4.3)
Operating lease right-of-use assets	(23.2)		(19.6)
Other intangibles	(23.1)		(28.0)
Property and equipment, principally due to differences in depreciation	(5.6)		(7.1)
Other	(1.6)		(1.6)
Total deferred tax liabilities	(56.8)		(60.6)
Net deferred tax asset	$	70.3	$	69.6

Schedule of Unrecognized Tax Benefits Roll Forward

The following table summarizes the activity related to the Company’s unrecognized tax benefits (in millions):


Balance as of December 29, 2019	$	24.0
Increases related to prior periods	0.2
Increases related to current year tax positions	1.5
Expiration of applicable statutes of limitations	(0.3)



Balance as of December 27, 2020	25.4
Increases related to prior periods	0.1
Increases related to current year tax positions	0.5
Expiration of applicable statutes of limitations	(0.2)
Increases related to acquisitions	0.1


Balance as of December 26, 2021	25.9
Decreases related to prior periods	(0.7)
Increases related to current year tax positions	0.2
Expiration of applicable statutes of limitations	(0.4)


Balance as of December 25, 2022	$	25.0

Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 25, 2022	Dec. 26, 2021	Dec. 27, 2020
Unrecognized Tax Benefits
Balance at the beginning of period	$ 25.9	$ 25.4	$ 24.0
Increases related to prior periods		0.1	0.2
Increases related to current year tax positions	0.2	0.5	1.5
Expiration of applicable statutes of limitations	(0.4)	(0.2)	(0.3)
Increases related to acquisitions		0.1
Decreases related to prior periods	(0.7)
Balance at the end of period	$ 25.0	$ 25.9	$ 25.4

Discontinued Operations - Summary of Assets and Liabilities of Discontinued Operations (Details) - USD ($) $ in Millions	Dec. 25, 2022	Dec. 26, 2021
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Current liabilities of discontinued operations	$ 0.9	$ 0.8
Herley \| Discontinued operations, disposed of by sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Other current liabilities	0.9	0.8
Current liabilities of discontinued operations	0.9	0.8
Other long-term liabilities of discontinued operations	$ 1.4	$ 2.5

- Definition

Amount classified as liabilities attributable to disposal group held for sale or disposed of, expected to be disposed of within one year or the normal operating cycle, if longer.

+ References + Details

Discontinued Operations - Results of Discontinued Operations (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 25, 2022	Dec. 26, 2021	Dec. 27, 2020
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Total loss of discontinued operations before income taxes	$ (0.3)	$ (2.3)	$ (1.2)
Income tax benefit	(1.2)	(0.2)	(0.3)
Income (loss) from discontinued operations	0.9	(2.1)	(0.9)
Herley \| Discontinued operations, disposed of by sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Revenue	0.0	0.1	0.0
Cost of sales	0.0	0.0	0.2
Selling, general and administrative expenses	0.3	2.4	1.0
Loss from discontinued operations before income taxes	(0.3)	(2.3)	(1.2)
Gain on disposal of discontinued operations before income taxes	0.0	0.0	0.0
Total loss of discontinued operations before income taxes	(0.3)	(2.3)	(1.2)
Income tax benefit	(1.2)	(0.2)	(0.3)
Income (loss) from discontinued operations	$ 0.9	$ (2.1)	$ (0.9)

Stockholders' Equity (Tables)

12 Months Ended

Dec. 25, 2022

Share-Based Payment Arrangement [Abstract]

Schedule of Stock Options Roll Forward

A summary of the status of the Company’s stock option plan as of December 25, 2022, and changes in options outstanding under the plan for the year ended December 25, 2022, is as follows:


	Number of Shares Under Option	Weighted-Average Exercise Price per Share		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
	(000’s)				(000’s)
Options outstanding at December 26, 2021	42	$	4.98	1.0	$	622.9
Granted	—	$	—
Exercised	(24)	$	4.98
Forfeited or expired	—	$	—
Options outstanding at December 25, 2022	18	$	4.98	0.0	$	79.9
Options exercisable at December 25, 2022	18	$	4.98	0.0	$	79.9

Schedule of Grants and Exercises Under the Company's Option Plans

During the years ended December 25, 2022, December 26, 2021, and December 27, 2020, the following values relate to the exercises under the Company’s option plans:


	2022		2021		2020
Total intrinsic value of options exercised (in thousands)	$	163.0	$	—	$	1,446.4

Schedule of Restricted Stock Units Activity

The following table summarizes the Company’s Restricted Stock Unit activity:


	Restricted Stock Units (000’s)	Weighted-Average Grant Date Fair Value
Nonvested balance at December 26, 2021	4,878	$	12.74
Granted	1,577	$	18.85
Vested	(1,716)	$	17.75
Forfeited or expired	(80)	$	17.61

Nonvested balance at December 25, 2022	4,659	$	12.88

Schedule of Assumptions and Resulting Fair Values of Options Granted

The assumptions and resulting fair values of options granted for 2022, 2021 and 2020 were as follows:


	Offering Periods January 1 to December 31 2022	Offering Periods January 1 to December 31 2021	Offering Periods January 1 to December 31, 2020
Expected term (in years)(1)	0.5	0.5	0.5
Risk-free interest rate(2)	0.19% - 2.51%	0.06% - 0.09%	0.18% - 1.60%
Expected volatility(3)	40.52% - 60.79%	41.40% - 45.93%	44.14% - 82.75%
Expected dividend yield(4)	—%	—%	—%
Weighted average grant-date fair value per share	$4.80	$7.60	$5.43

(1) The expected term is equivalent to the offering period.

(2) The risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant with a term equal to the expected term.

(3) The Company estimated implied volatility based upon trailing volatility.

(4) The Company has no history or expectation of paying dividends on its common stock.

Leases - Cash Paid (Details) - USD ($) $ in Millions	12 Months Ended
Leases - Cash Paid (Details) - USD ($) $ in Millions	Dec. 25, 2022	Dec. 26, 2021	Dec. 27, 2020
Leases [Abstract]
Finance lease - cash paid for interest	$ 3.0	$ 2.7
Finance lease - financing cash flows	1.4	1.0	$ 0.6
Operating lease - operating cash flows (fixed payments)	$ 13.3	$ 11.8

Leases - Weighted Average (Details) - USD ($) $ in Millions	12 Months Ended
Leases - Weighted Average (Details) - USD ($) $ in Millions	Dec. 25, 2022	Dec. 26, 2021	Dec. 27, 2020
Leases [Abstract]
Operating lease liabilities arising from obtaining right-of-use assets	$ 20.1	$ 3.8
Finance lease liabilities arising from obtaining right-of-use assets	$ 9.1	$ 5.8	$ 0.9
Weighted-average remaining lease term (in years):
Operating leases	5 years 1 month 20 days	4 years 6 months 25 days
Finance leases	15 years 2 months 12 days	16 years 1 month 20 days
Weighted-average discount rate:
Operating leases	4.92%	6.50%
Finance leases	6.02%	6.51%

Balance Sheet Details (Tables)

12 Months Ended

Dec. 25, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable

Receivables including amounts due under long-term contracts are summarized as follows (in millions):


	December 25, 2022		December 26, 2021
Billed, current	$	105.9	$	94.2
Unbilled, current	223.0		190.9
Total current accounts receivable	328.9		285.1
Allowance for doubtful accounts	(0.4)		(0.4)
Total accounts receivable and unbilled receivables, net	$	328.5	$	284.7

U.S. Government contract receivables where the Company is the prime contractor included in accounts receivable, net (in millions):


	December 25, 2022		December 26, 2021
Billed	$	15.9	$	11.3
Unbilled	87.4		93.6
Total U.S. Government contract receivables	$	103.3	$	104.9

Schedule of Inventory

Inventoried costs (in millions):


	December 25, 2022		December 26, 2021
Raw materials	$	73.6	$	58.5
Work in process	50.8		28.5
Finished goods	1.1		4.7



Total inventoried costs	$	125.5	$	91.7

Schedule of Property, Plant and Equipment

Assets are depreciated predominately using the straight-line method, with the following lives:


			Years
Buildings and improvements			15 – 39
Machinery and equipment			3 – 20
Computer equipment and software			1 – 10
Vehicles, furniture, and office equipment			5
Leasehold improvements			Shorter of useful life or length of lease

Property, plant and equipment, net (in millions)


	December 25, 2022		December 26, 2021
Finance lease right of use assets	$	54.9	$	46.4
Land and buildings	38.4		19.8
Computer equipment and software	45.7		40.0
Machinery and equipment	129.9		109.1
Furniture and office equipment	7.6		7.6
Leasehold improvements	22.9		16.9
Construction in progress	51.0		45.3
Property and equipment	350.4		285.1
Accumulated depreciation and amortization	(137.3)		(116.8)
Total property and equipment, net	$	213.1	$	168.3

Income Taxes - Reconciliation of Income Tax Provision (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 25, 2022	Dec. 26, 2021	Dec. 27, 2020
Income Tax Disclosure [Abstract]
Income tax (benefit) at federal statutory rate	$ (6.9)	$ 0.9	$ 1.4
State taxes (benefit), net of federal tax benefit and valuation allowance	(0.3)	0.5	0.6
Difference in tax rates between U.S. and foreign	(0.2)	(0.5)	1.3
Increase (decrease) in valuation allowance	4.9	1.2	(80.1)
Nondeductible expense	0.5	0.8	0.4
Increase in reserve for uncertain tax positions	0.3	0.9	3.0
Other	0.2	0.1	0.8
Officer’s compensation 162(m) limitation	1.0	0.9	0.6
Release of valuation allowance due to acquisitions	0.0	0.0	(1.3)
R&D tax credit	(0.9)	(0.9)	(0.9)
Stock-based compensation	2.8	0.0	0.7
Total	$ 1.4	$ 3.9	$ (73.5)

Acquisitions - Consideration Paid (Details) - USD ($) $ in Millions	May 23, 2022	Dec. 27, 2021	Jun. 15, 2020
CPI ASC Signal Division, Inc.
Business Acquisition [Line Items]
Cash paid			$ 34.9
Less: Cash acquired			(2.0)
Total consideration			$ 32.9
Cosmic Advanced Engineering Solutions, Inc.
Business Acquisition [Line Items]
Cash paid	$ 74.4	$ 39.0
Less: Cash acquired		(1.5)
Holdback to be paid at later date		0.4
Common stock issued	5.0
Total consideration	$ 79.4	$ 37.9

Balance Sheet Details

12 Months Ended

Dec. 25, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Balance Sheet Details

The detail of certain assets in the consolidated balance sheets consists of the following:

Cash and cash equivalents

The Company’s cash equivalents consist of overnight cash sweep accounts that are invested on a daily basis. Cash and cash equivalents at December 25, 2022 and December 26, 2021 were $81.3 million and $349.4 million, respectively, and approximated their fair value.

Accounts receivable, net and Unbilled receivables, net

Receivables including amounts due under long-term contracts are summarized as follows (in millions):


	December 25, 2022		December 26, 2021
Billed, current	$	105.9	$	94.2
Unbilled, current	223.0		190.9
Total current accounts receivable	328.9		285.1
Allowance for doubtful accounts	(0.4)		(0.4)
Total accounts receivable and unbilled receivables, net	$	328.5	$	284.7

Substantially all accounts receivable at December 25, 2022, are expected to be collected in 2023. The Company does not believe it has significant exposure to credit risk, as accounts receivable and the related unbilled amounts are primarily from contracts associated with the U.S. Government.

U.S. Government contract receivables where the Company is the prime contractor included in accounts receivable, net (in millions):


	December 25, 2022		December 26, 2021
Billed	$	15.9	$	11.3
Unbilled	87.4		93.6
Total U.S. Government contract receivables	$	103.3	$	104.9

Inventoried costs (in millions):


	December 25, 2022		December 26, 2021
Raw materials	$	73.6	$	58.5
Work in process	50.8		28.5
Finished goods	1.1		4.7



Total inventoried costs	$	125.5	$	91.7

Property, plant and equipment, net (in millions)


	December 25, 2022		December 26, 2021
Finance lease right of use assets	$	54.9	$	46.4
Land and buildings	38.4		19.8
Computer equipment and software	45.7		40.0
Machinery and equipment	129.9		109.1
Furniture and office equipment	7.6		7.6
Leasehold improvements	22.9		16.9
Construction in progress	51.0		45.3
Property and equipment	350.4		285.1
Accumulated depreciation and amortization	(137.3)		(116.8)
Total property and equipment, net	$	213.1	$	168.3

Depreciation expense was $23.1 million, $21.0 million and $17.8 million for the years ended December 25, 2022, December 26, 2021, and December 27, 2020, respectively.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Millions	Total	Redeemable Noncontrolling Interest	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit
Balance, beginning of period at Dec. 29, 2019		$ 15.0
Redeemable Noncontrolling Interest
Net income (loss)		(0.2)
Balance, end of period at Dec. 27, 2020		14.8
Balance, beginning of period (in shares) at Dec. 29, 2019			106,600,000
Balance, beginning of period at Dec. 29, 2019	$ 574.1		$ 0.0	$ 1,286.5	$ (0.4)	$ (712.0)
Increase (Decrease) in Stockholders' Equity
Stock-based compensation	21.0			21.0
Issuance of common stock for employee stock purchase plan, options and warrants (in shares)			400,000
Issuance of common stock for employee stock purchase plan, options and warrants	4.8			4.8
Restricted stock issued and related taxes (in shares)			200,000
Restricted stock issued and related taxes	(1.4)			(1.4)
Issuance of common stock (in shares)			15,800,000
Issuance of common stock	245.4			245.4
Net income (loss)	79.6					79.6
Other comprehensive income (loss), net of tax	1.8				1.8
Balance, end of period (in shares) at Dec. 27, 2020			123,000,000.0
Balance, end of period at Dec. 27, 2020	925.3		$ 0.0	1,556.3	1.4	(632.4)
Redeemable Noncontrolling Interest
Net income (loss)		0.4
Balance, end of period at Dec. 26, 2021		15.2
Increase (Decrease) in Stockholders' Equity
Stock-based compensation	25.8			25.8
Issuance of common stock for employee stock purchase plan, options and warrants (in shares)			400,000
Issuance of common stock for employee stock purchase plan, options and warrants	5.9			5.9
Restricted stock issued and related taxes (in shares)			600,000
Restricted stock issued and related taxes	(9.1)			(9.1)
Net income (loss)	(2.0)					(2.0)
Other comprehensive income (loss), net of tax	$ (0.8)				(0.8)
Balance, end of period (in shares) at Dec. 26, 2021	123,987,424		124,000,000.0
Balance, end of period at Dec. 26, 2021	$ 945.1		$ 0.0	1,578.9	0.6	(634.4)
Redeemable Noncontrolling Interest
Net income (loss)		3.7
Changes in noncontrolling interest	4.5	(7.7)		4.5
Balance, end of period at Dec. 25, 2022		11.2
Increase (Decrease) in Stockholders' Equity
Stock-based compensation	26.3			26.3
Issuance of common stock for employee stock purchase plan, options and warrants (in shares)			500,000
Issuance of common stock for employee stock purchase plan, options and warrants	6.2			6.2
Restricted stock issued and related taxes (in shares)			1,000,000.0
Restricted stock issued and related taxes	(12.5)			(12.5)
Issuance of common stock for acquisitions (in shares)			300,000
Issuance of common stock for acquisitions	5.0			5.0
Net income (loss)	(36.9)					(36.9)
Other comprehensive income (loss), net of tax	(1.4)				(1.4)
Acquisition of noncontrolling interest (in shares)			200,000
Acquisition of noncontrolling interest	$ 4.5	$ (7.7)		4.5
Balance, end of period (in shares) at Dec. 25, 2022	125,985,306		126,000,000.0
Balance, end of period at Dec. 25, 2022	$ 936.3		$ 0.0	$ 1,608.4	$ (0.8)	$ (671.3)

Organization and Summary of Significant Accounting Policies - Description of Business (Details)	12 Months Ended
	Dec. 25, 2022 segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of reportable (in segments)	2

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Dec. 25, 2022	Dec. 26, 2021
Current assets:
Cash and cash equivalents	$ 81.3	$ 349.4
Accounts receivable, net	105.7	93.9
Unbilled receivables, net	222.8	190.8
Inventoried costs	125.5	91.7
Prepaid expenses	11.9	9.8
Other current assets	35.4	22.5
Total current assets	582.6	758.1
Property, plant and equipment, net	213.1	168.3
Operating lease right-of-use assets	47.4	38.5
Goodwill	558.2	493.9
Intangible assets, net	55.2	43.2
Other assets	95.0	87.5
Total assets	1,551.5	1,589.5
Current liabilities:
Accounts payable	57.3	50.4
Accrued expenses	33.8	27.2
Accrued compensation	52.2	47.3
Accrued interest	1.5	1.5
Billings in excess of costs and earnings on uncompleted contracts	62.1	58.1
Current portion of operating lease liabilities	10.8	10.1
Other current liabilities	15.6	25.7
Current liabilities of discontinued operations	0.9	0.8
Total current liabilities	234.2	221.1
Long-term debt	250.2	296.7
Operating lease liabilities, net of current portion	40.8	32.7
Other long-term liabilities	77.4	76.2
Long-term liabilities of discontinued operations	1.4	2.5
Total liabilities	604.0	629.2
Commitments and contingencies
Redeemable noncontrolling interest	11.2	15.2
Stockholders’ equity:
Preferred stock, $0.001 par value, 5,000,000 authorized, 0 shares outstanding at December 25, 2022 and December 26, 2021	0.0	0.0
Common stock, $0.001 par value, 195,000,000 shares authorized; 125,985,306 and 123,987,424 shares issued and outstanding at December 25, 2022 and December 26, 2021, respectively	0.0	0.0
Additional paid-in capital	1,608.4	1,578.9
Accumulated other comprehensive income (loss)	(0.8)	0.6
Accumulated deficit	(671.3)	(634.4)
Total stockholders’ equity	936.3	945.1
Total liabilities and stockholders’ equity	$ 1,551.5	$ 1,589.5

Segment Information

12 Months Ended

Dec. 25, 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 segments, including DRSS, ME, ST&C, MS, and KTT. The US reportable segment consists of the Company’s unmanned aerial, unmanned ground, unmanned seaborne and command, control and communications system products. The KGS and US segments provide products, solutions and services for mission critical National Security programs. KGS and US customers primarily include National Security related agencies, the DoD, intelligence agencies and classified agencies, and to a lesser degree, international government agencies and domestic and international commercial customers.

The Company organizes its reportable segments based on the nature of the products, solutions and services offered. Transactions between segments are generally negotiated and accounted for under terms and conditions similar to other government and commercial contracts. In the following table total operating income (loss) from continuing operations of the

reportable business segments is reconciled to the corresponding consolidated amount. “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.


	2022		2021		2020
Revenues:
Kratos Government Solutions
Service revenues	$	320.0	$	214.5	$	248.7
Product sales	356.6		365.1		312.0
Total Kratos Government Solutions	676.6		579.6		560.7




Unmanned Systems
Service revenues	5.2		4.9		—
Product sales	216.5		227.0		187.0
Total Unmanned Systems	221.7		231.9		187.0
Total revenues	$	898.3	$	811.5	$	747.7
Depreciation and amortization:
Kratos Government Solutions	$	22.7	$	17.4	$	17.9

Unmanned Systems	7.8		8.3		6.7
Total depreciation and amortization	$	30.5	$	25.7	$	24.6
Operating income (loss):
Kratos Government Solutions	$	27.2	$	42.3	$	43.6

Unmanned Systems	(2.8)		13.2		8.7
Corporate activities	(27.0)		(27.6)		(23.0)
Total operating income (loss)	$	(2.6)	$	27.9	$	29.3

The US Operating loss for the year ended December 25, 2022 includes a $5.5 million litigation settlement charge related to the resolution of a dispute with an international customer, for which the contractual arrangement was entered into in March 2011, prior to Kratos’ acquisition of Composite Engineering Inc.. The KGS Operating income for the year ended December 25, 2022 includes $6.4 million of expenses related to certain non-recoverable costs, including rate and cost growth items, resulting from the inability to hire the required planned direct labor base both internally and by the Company’s subcontractors to execute on its backlog, due to the continued challenges in both hiring and retaining skilled manufacturing personnel, including approximately $3.4 million in expenses in the Company’s C5ISR business, and non-recoverable indirect cost rate growth resulting from a smaller than planned direct labor base due to delays in customer program execution and awards in the Company’s Training Solutions business of approximately $3.0 million. Revenues from foreign customers were approximately $173.1 million or 19%, $169.8 million or 21% and $139.5 million or 19% of total revenue for the years ended December 25, 2022, December 26, 2021, and December 27, 2020, respectively.

Reportable segment assets are as follows (in millions):


	December 25, 2022		December 26, 2021		December 27, 2020
Assets:
Kratos Government Solutions	$	1,105.1	$	907.6	$	877.2
Unmanned Systems	349.7		327.1		292.4

Discontinued operations	—		—		—
Corporate activities	96.7		354.8		393.2
Total assets	$	1,551.5	$	1,589.5	$	1,562.8

Assets of foreign subsidiaries in the KGS segment were $178.3 million, $166.2 million and $148.2 million as of December 25, 2022, December 26, 2021 and December 27, 2020, respectively.

- 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.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Organization and Summary of Significant Accounting Policies - Contract Assets and Liabilities - Narrative (Details) - USD ($) $ in Millions	1 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 25, 2022	Dec. 26, 2021	Dec. 27, 2020
Significant Accounting Policies Disclosure [Line Items]
Contract assets, net change		$ 32.0
Contract liabilities, net change		4.0
Revenue recognized		47.5	$ 27.1
Contract assets		222.8	190.8
Litigation settlement charges		5.5	$ 0.0	$ 0.0
Payments for legal settlements		3.7
T for C \| Unbilled
Significant Accounting Policies Disclosure [Line Items]
Contract assets		4.8
Amount agreed to settlement	$ 6.0
Negotiation and settlement with the customer		$ 4.8

Organization and Summary of Significant Accounting Policies

12 Months Ended

Dec. 25, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Summary of Significant Accounting Policies

(a) Description of Business

Kratos is a technology company addressing the defense, National Security and commercial markets. Kratos is recognized as a leading technology, intellectual property, proprietary product and system company and a recognized industry leader in the rapid development, demonstration and fielding of disruptive, transformative and high technology systems and products at an affordable cost. At Kratos, affordability is a technology and Kratos’ focus areas include unmanned systems, space and satellite communications, microwave electronics, cybersecurity/warfare, rocket, hypersonic and missile defense systems, turbine and engine propulsion technologies, and Command, Control, Communication, Computing, Combat, Intelligence Surveillance and Reconnaissance (“C5ISR”) Systems and training systems. The Company believes that by being “first to market” and its technology, intellectual property, proprietary products, reputation and designed-in positions on its customers’ programs, platforms and systems, and the ability to rapidly develop, demonstrate and field affordable leading technology systems is a competitive advantage. The Company believes that its past performance qualifications and demonstrated ability to meet or exceed its customers’ demanding requirements creates a high barrier to entry to the markets in which it operates. The Company’s work force is primarily engineering and technically oriented, highly skilled with a significant number holding National Security clearances. The Company’s entire organization is focused on executing its strategy of being the leading technology and intellectual property based product and system company and being “first to market” in each of its industry leading core competency areas.

The Company conducts most of its business with the U.S. Government (which includes foreign military sales) and performs work as the prime contractor, subcontractor, or preferred supplier. The Company also conducts business with local, state, and foreign governments and domestic and international commercial customers.

The Company operates in two reportable segments. The Kratos Government Solutions (“KGS”) reportable segment is comprised of an aggregation of KGS operating segments, including its microwave electronic products, space, satellite, training and cybersecurity, C5ISR/modular systems, turbine technologies and defense and rocket support services operating segments. The Unmanned Systems (“US”) reportable segment consists of its unmanned aerial system and unmanned ground and seaborne system products. The Public Safety & Security (“PSS”) reportable segment (which was divested in June 2018 and has been classified as discontinued operations - see Note 9 of these Notes to Consolidated Financial Statements) previously provided independent integrated solutions for advanced homeland security, public safety, critical infrastructure, and security and surveillance systems for government and commercial applications.

The Company organizes its operating segments based primarily on the nature of the products, solutions and services offered. Transactions between segments are negotiated and accounted for under terms and conditions similar to other government and commercial contracts, and these intercompany transactions are eliminated in consolidation. For additional information regarding the Company’s operating segments, see Note 14 of these Notes to Consolidated Financial Statements.

(b) Principles of Consolidation and Basis of Presentation

The consolidated financial statements include the accounts of Kratos and its majority owned subsidiaries, for which all intercompany transactions have been eliminated in consolidation.

The Company has a 52/53 week fiscal year ending on the last Sunday of the calendar year, with interim fiscal periods ending on the last Sunday of each calendar quarter. There were 52 calendar weeks in the fiscal years ending on December 25, 2022 and December 26, 2021 and December 27, 2020.

(d) Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the U.S. (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates include revenue recognition, valuation of long-lived assets including identifiable intangibles and goodwill, accounting for income taxes including the related valuation allowance on the deferred tax asset and uncertain tax positions, contingencies and litigation, contingent acquisition

consideration, and stock-based compensation. In the future, the Company may realize actual results that differ from the current reported estimates and if the estimates that the Company has used change in the future, such changes could have a material impact on the Company’s consolidated financial position, results of operations and cash flows.

(e) Revenue Recognition

Effective January 1, 2018, the Company adopted the Financial Accounting Standards Board (“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 obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) 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 and 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 under 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 using the best estimate of the 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).

Remaining Performance Obligations

Revenues from remaining performance obligations are calculated as the dollar value of the remaining performance obligations on executed contracts. On December 25, 2022, the Company had approximately $1,112.4 million of remaining performance obligations. The Company expects to recognize approximately 56.0% of the remaining performance obligations as revenue in 2023, an additional 13.0% in 2024, 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 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. For the year ended December 26, 2021 the Company recorded a $6.9 million favorable EAC adjustment on one of its long-term government contracts. No other cumulative catch-up adjustment on any one contract was material to the Company’s consolidated financial statements for the years ended December 25, 2022, December 26, 2021 and December 27, 2020. Likewise, other than the impact of the adjustment for the one contract in the year ended December 26, 2021, total cumulative catch-up adjustments were not material for the years ended December 25, 2022, December 26, 2021 and December 27, 2020. As of December 25, 2022 and December 26, 2021, accrued expenses included the accrual for losses on contracts of $1.2 million and $2.8 million, respectively.

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):


	December 25, 2022		December 26, 2021		Net Change
Contract assets	$	222.8	$	190.8	$	32.0
Contract liabilities	$	62.1	$	58.1	$	4.0
Net contract assets	$	160.7	$	132.7	$	28.0

The change in the balances of the Company’s contract assets and liabilities primarily results from timing differences between revenue recognition and customer billings and/or payments. Contract assets increased $32.0 million during the year ended December 25, 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 and the impact of the acquisitions of Cosmic and SRE. There were no significant impairment losses related to any receivables or contract assets arising from the Company’s contracts with customers during the year ended December 25, 2022. Contract liabilities increased $4.0 million during the year ended December 25, 2022, primarily due to payments received in excess of revenue recognized on these performance obligations. For the years ended December 25, 2022 and December 26, 2021, the Company recognized revenue of $47.5 million and $27.1 million, respectively, that was previously included in the beginning balance of contract liabilities.

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. 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 was collected in July 2022. At December 25, 2022, approximately $4.8 million in unbilled receivables is outstanding on this project. The remaining unbilled balance of $4.8 million is subject to negotiation and settlement with the customer.

The Company was also in dispute with an international customer in the Unmanned Systems (US) segment concerning the completion of certain system requirements and certain contractual milestones related to a contract the Company acquired with the acquisition of CEi in 2012. On June 30, 2022, the parties entered into a settlement agreement to resolve their dispute and to settle all claims and counterclaims, and are currently in the process of implementing the terms of the settlement agreement. The Company has recorded a $5.5 million litigation settlement charge included in restructuring expenses and other in the year ended December 25, 2022. In the year ended December 25, 2022, the Company paid approximately $3.7 million related to the settlement agreement.

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):


	Year Ended December 25, 2022		Year Ended December 26, 2021
Kratos Government Solutions
Fixed price	$	476.1	$	447.3
Cost plus fee	158.4		96.9
Time and materials	42.1		35.4
Total Kratos Government Solutions	676.6		579.6
Unmanned Systems
Fixed price	156.6		151.4
Cost plus fee	59.1		78.1
Time and materials	6.0		2.4
Total Unmanned Systems	221.7		231.9
Total Revenues	$	898.3	$	811.5

Revenue by customer was as follows (in millions):


	Year Ended December 25, 2022		Year Ended December 26, 2021
Kratos Government Solutions
U.S. Government (1)	$	420.4	$	359.7
International (2)	157.5		151.5
U.S. Commercial and other customers	98.7		68.4
Total Kratos Government Solutions	676.6		579.6
Unmanned Systems
U.S. Government (1)	203.3		211.4
International (2)	15.6		18.3
U.S. Commercial and other customers	2.8		2.2
Total Unmanned Systems	221.7		231.9
Total Revenues	$	898.3	$	811.5

(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.

For federal contracts, the Company follows U.S. Government procurement and accounting standards in assessing the allowability and the allocability of costs to contracts. Recurring evaluations of contract cost, scheduling and technical matters are performed by management. Costs incurred and allocated to contracts with the U.S. Government are scrutinized for compliance with regulatory standards by the Company’s personnel, and are subject to audit by the Defense Contract Audit Agency (“DCAA”).

From time to time, the Company may proceed with work based on customer direction prior to the completion and signing of formal contract documents. The Company has a formal review process for approving any such work. Revenue associated with such work is recognized only when the criteria to establish a contract under ASC 606 are met and the obligations under the contract are legally enforceable. As of December 25, 2022 and December 26, 2021, approximately

$12.2 million and $2.9 million, respectively, of the Company’s unbilled accounts receivable balance were under an authorization to proceed or work order from its customers where a formal purchase order had not yet been received.

(f) Inventoried costs

Inventoried costs are stated at the lower of cost or estimated net realizable value. Cost is determined using the average cost or first-in, first-out methods and the applicable method is applied consistently within an operating entity. The Company capitalizes labor, material, subcontractor and overhead costs as work-in-process for contracts where control has not yet passed to the customer. In addition, the Company capitalizes costs incurred to fulfill a contract in advance of contract award in inventories as work-in-process if it is determined that contract award is probable. Pursuant to contract provisions of U.S. Government contracts, such customers may have title to, or a security interest in inventories related to such contracts as a result of advances, performance-based payments, and progress payments.

The Company regularly reviews inventory quantities on hand, future purchase commitments with its suppliers, and the estimated utility of its inventory. If the Company’s review indicates a reduction in utility below carrying value, it reduces its inventory to a new cost basis.

(g) Research and Development

Costs incurred in research and development activities are expensed as incurred in accordance with FASB ASC Topic 730, Research and Development.

(h) Income Taxes

The Company records deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company maintains a valuation allowance on the deferred tax assets for which it is more likely than not that the Company will not realize the benefits of these tax assets in future tax periods. The valuation allowance is based on estimates of future taxable income by tax jurisdiction in which the Company operates, the number of years over which the deferred tax assets will be recoverable, and scheduled reversals of deferred tax liabilities.

In accordance with the recognition standards established by ASC Topic 740, Income Taxes (“Topic 740”), the Company makes a comprehensive review of its portfolio of uncertain tax positions regularly. In this regard, an uncertain tax position represents the Company’s expected treatment of a tax position taken in a filed tax return, or planned to be taken in a future tax return or claim, which has not been reflected in measuring income tax expense for financial reporting purposes. Until these positions are sustained by the taxing authorities, the Company has not recognized the tax benefits resulting from such positions and reports the tax effects as a liability for uncertain tax positions in its consolidated balance sheets.

(i) Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC Topic 718, Compensation-Stock Compensation (“Topic 718”). All of the Company’s stock-based compensation plans are considered equity plans under Topic 718, and compensation expense recognized is net of estimated forfeitures over the vesting period. The Company issues stock options and stock awards under its existing plans. The fair value of stock options is estimated on the date of grant using a Black-Scholes option-pricing model or a trinomial lattice options pricing model and is expensed on a straight-line basis over the remaining vesting period of the options, which is generally six or less years. The fair value of stock awards is determined based on the closing market price of the Company’s common stock on the grant date and is adjusted at each reporting date based on the amount of shares ultimately expected to vest. Compensation expense for stock awards is expensed over the vesting period, usually five to ten years. Compensation expense for stock issued under the Company’s employee stock purchase plan is estimated at the beginning date of the offering period using a Black-Scholes option-pricing model and is expensed on a straight-line basis over the period of the offering, which is generally six months.

When tax deductions from stock options and awards are greater than the cumulative book compensation expense, the tax effect of the resulting difference is a windfall. For the year ended December 25, 2022, an income tax benefit of $0.7 million was recorded for windfalls generated from stock options and awards exercised in 2022. For the year ended December 26, 2021,

an income tax benefit of $2.4 million was recorded for windfalls generated from stock options and awards exercised in 2021. For the tax year ended December 27, 2020, an income tax benefit of $1.0 million was recorded for windfalls generated from stock options and awards exercised in 2020.

The following table shows the amounts recognized in the consolidated financial statements for stock-based compensation expense related to stock options, stock awards and stock offered under the Company’s employee stock purchase plan (in millions).


	Year ended December 25, 2022		Year ended December 26, 2021		Year ended December 27, 2020
Selling, general and administrative expenses	$	26.3	$	25.8	$	21.0
Total cost of employee stock-based compensation included in operating income (loss) from continuing operations	$	26.3	$	25.8	$	21.0

(j) Allowance for Doubtful Accounts

The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments, which results in bad debt expense. Management determines the adequacy of this allowance by periodically evaluating the comprehensive risk profiles of all individual customer receivable balances including, but not limited to, the customer’s financial condition, credit agency reports, financial statements and overall current economic conditions. Additionally, on certain contracts whereby the Company performs services for a prime/general contractor, a specified percentage of the invoiced trade accounts receivable may be retained by the customer until the project is completed. The Company periodically reviews all retainages for collectability and records allowances for doubtful accounts when deemed appropriate, based on its assessment of the associated credit risks. Changes to estimates of contract value are recorded as adjustments to revenue and not as a component of the allowance for doubtful accounts. Individual accounts receivable are written off to the allowance for doubtful accounts when the Company becomes aware of a specific customer’s inability to meet its financial obligation, and all collection efforts are exhausted.

The following table outlines the balance of the Company’s allowance for doubtful accounts for 2022, 2021 and 2020. The table identifies the additional provisions each year as well as the write-offs that utilized the allowance (in millions).


Allowance for Doubtful Accounts	Balance at Beginning of Year		Provisions		Write-offs/ Recoveries		Balance at End of Year
Year ended December 27, 2020	$	1.9	$	—	$	(0.1)	$	1.8
Year ended December 26, 2021	$	1.8	$	(0.2)	$	(1.2)	$	0.4
Year ended December 25, 2022	$	0.4	$	—	$	—	$	0.4

(k) Cash and Cash Equivalents

The Company’s cash equivalents consist of its highly liquid investments with an original maturity of three months or less when purchased by the Company.

(l) Property and Equipment, Net

Property and equipment, net owned by the Company is depreciated over the estimated useful lives of individual assets. Equipment acquired under capital leases are amortized over the shorter of the lease term or the estimated useful life of the asset. Improvements, which significantly improve and extend the useful life of an asset, are capitalized and depreciated over the shorter of the lease period or the estimated useful life. Expenditures for maintenance and repairs are charged to operations as incurred.

Assets are depreciated predominately using the straight-line method, with the following lives:


			Years
Buildings and improvements			15 – 39
Machinery and equipment			3 – 20
Computer equipment and software			1 – 10
Vehicles, furniture, and office equipment			5
Leasehold improvements			Shorter of useful life or length of lease

(m) Leases

The 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.in the calculation of the lease asset and corresponding liability.

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.

See Note 6 for additional disclosures related to the Company’s lease obligations.

(n) Goodwill and Other Intangible Assets, Net

In accordance with the provisions of ASC Topic 350, Intangibles-Goodwill and Other (“Topic 350”), the Company performs impairment tests for goodwill and indefinite lived intangibles as of the last day of its fiscal October, or when evidence of potential impairment exists. When it is determined that impairment has occurred, a charge to operations is recorded. Goodwill and other purchased intangible asset balances are included in the identifiable assets of the operating segment to which they have been assigned. Any goodwill impairment, as well as the amortization of other purchased intangible assets, is charged against the respective segments’ operating income.

In accordance with Topic 350, the Company classifies intangible assets into two categories: (1) intangible assets with finite lives subject to amortization and (2) intangible assets with indefinite lives not subject to amortization. Separately, the Company tests intangible assets with finite lives for impairment if conditions exist that indicate the carrying value may not be recoverable. Such conditions may include an economic downturn in a geographic market or a change in the assessment of future operations. The Company records an impairment charge when the carrying value of the finite lived intangible asset is not recoverable by the cash flows generated from the use of the asset.

The Company determines the useful lives of identifiable intangible assets after considering the specific facts and circumstances related to each intangible asset. Factors considered when determining useful lives include the contractual term of any agreement, the history of the asset, the Company’s long-term strategy for the use of the asset, any laws or other local regulations that could impact the useful life of the asset, and other economic factors, including competition and specific market conditions. Intangible assets that are deemed to have finite lives are amortized, generally on a straight-line basis, over their useful lives, ranging from one to 15 years.

(o) Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of

Long-lived assets are reviewed for impairment in accordance with ASC Topic 360, Property, Plant, and Equipment, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to future net cash flows (undiscounted and without interest) expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

(p) Fair Value of Financial Instruments

ASC Topic 825, Financial Instruments, requires that fair values be disclosed for the Company’s financial instruments. The carrying amounts of cash equivalents, accounts receivable, accounts payable, accrued expenses, billings in excess of costs and earnings on uncompleted contracts, and income taxes payable, approximate fair value due to the short-term nature of these instruments. The fair value of the Company’s long-term debt outstanding at December 25, 2022 is recorded at fair value. The fair value of the Company’s Senior Secured Notes (as defined below in Note 5), which were redeemed on March 14, 2022, is based upon quoted market prices.

The Company uses forward exchange contracts to manage foreign currency risks associated with certain transactions,

specifically forecasted materials and salaries paid in foreign currencies. These derivative instruments are measured at fair value

using observable market inputs such as forward rates. Based on these inputs, the derivative instruments are classified within

Level 2 of the valuation hierarchy. At December 25, 2022, the derivative instruments were included in other current assets and

other current liabilities on the Company's Condensed Consolidated Balance Sheets. The carrying amounts and the related fair

values of the Company’s derivative instruments measured at fair value on a recurring basis at December 25, 2022, are

presented in Note 15. There were no derivative instruments for forward exchange contracts at December 26, 2021.

(q) Concentrations and Uncertainties

The Company maintains cash balances at various financial institutions and such balances commonly exceed the $250,000 insured amount by the Federal Deposit Insurance Corporation. The Company has not experienced any losses in such accounts and management believes that the Company is not exposed to any significant credit risk with respect to such cash and cash equivalents.

Financial instruments, which subject the Company to potential concentrations of credit risk, consist principally of the Company’s billed and unbilled accounts receivable. The Company’s accounts receivable result from sales to customers within the U.S. Government, state and local agencies and with commercial customers in various industries. The Company performs ongoing credit evaluations of its commercial customers. Credit is extended based on evaluation of the customer’s financial condition and collateral is not required. Accounts receivable are recorded at the invoiced amount and do not bear interest. See Note 13 for a discussion of the Company’s significant customers.

(r) Debt Issuance Costs

Fees paid to obtain debt financing and revolving credit facilities or amendments under such debt financing and revolving credit facilities are treated as debt issuance costs and are capitalized and amortized over the expected term of the related debt or revolving credit facility and are shown as a financing activity in the consolidated statements of cash flows. Issuance costs related to debt are presented in the consolidated balance sheets as a direct deduction from the carrying amount of the associated debt liability. Issuance costs related to a revolving credit facility are included in other assets in the consolidated balance sheets.

(s) Interest Expense, Net

Interest expense, net is summarized in the following table (in millions):


	Year ended December 25, 2022		Year ended December 26, 2021		Year ended December 27, 2020
Interest expense incurred primarily on indebtedness	$	(18.3)	$	(23.7)	$	(23.6)
Miscellaneous interest income	0.6		0.3		0.8
Interest expense, net	$	(17.7)	$	(23.4)	$	(22.8)

(t) Foreign Currency

For operations outside the U.S. that prepare financial statements in currencies other than the U.S. dollar, results of operations and cash flows are translated at average exchange rates during the period, and assets and liabilities are generally translated at end-of-period exchange rates. Translation adjustments are included as a separate component of accumulated other comprehensive loss.

The Company transacts with foreign customers in currencies other than the U.S. dollar. It experiences realized and unrealized foreign currency gains or losses on foreign denominated receivables. In addition, certain intercompany transactions give rise to realized and unrealized foreign currency gains or losses. Also, any other transactions between the Company or its subsidiaries and a third-party, denominated in a currency different from the functional currency, are foreign currency transactions.

The aggregate foreign currency transaction gain (loss) included in determining net income (loss) for the years ended December 25, 2022, December 26, 2021, and December 27, 2020 was approximately $(0.1) million, $(0.8) million, and $0.0 million, respectively, which is included in other income (expense), net on the accompanying consolidated statements of operations and comprehensive income (loss).

(u) Recent Accounting Pronouncements

Accounting standards updates adopted and/or issued, but not effective until after December 25, 2022, are not expected to have a material effect on the Company’s consolidated financial position, annual results of operations and/or cash flows.

Organization and Summary of Significant Accounting Policies - Foreign Currency (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 25, 2022	Dec. 26, 2021	Dec. 27, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Foreign currency transaction gain (loss)	$ (0.1)	$ (0.8)	$ 0.0

Cover - USD ($) $ in Billions	12 Months Ended
Cover - USD ($) $ in Billions	Dec. 25, 2022	Feb. 17, 2023	Jun. 24, 2022
Cover [Abstract]
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 25, 2022
Current Fiscal Year End Date	--12-25
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 300
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 Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
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
ICFR Auditor Attestation Flag	true
Entity Shell Company	false
Entity Public Float			$ 1.8
Entity Common Stock, Shares Outstanding		126,659,953
Documents Incorporated by Reference	Items 10, 11, 12, 13 and 14 of Part III of this annual report on Form 10-K incorporate information by reference from the registrant’s definitive proxy statement to be filed pursuant to Regulation 14A in connection with the registrant’s 2023 Annual Meeting of Stockholders or an amendment to this annual report on Form 10-K to be filed with the Securities and Exchange Commission within 120 days after the close of the fiscal year covered by this annual report on Form 10-K.
Entity Central Index Key	0001069258
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	FY
Amendment Flag	false

Goodwill and Other Intangible Assets - Narrative (Details) $ in Millions	12 Months Ended
	Dec. 25, 2022 USD ($) segment	Dec. 26, 2021 USD ($)	Dec. 27, 2020 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
Number of operating (in segments) \| segment	5
Amortization of intangible assets \| $	$ 7.4	$ 4.7	$ 6.8

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions	12 Months Ended
	Dec. 25, 2022	Dec. 26, 2021	Dec. 27, 2020
Total revenues	$ 898.3	$ 811.5	$ 747.7
Total costs	672.3	586.4	544.5
Gross profit	226.0	225.1	203.2
Selling, general and administrative expenses	182.5	160.2	144.5
Merger and acquisition related items	0.7	1.8	1.7
Research and development expenses	38.6	35.2	27.0
Restructuring expenses and other	6.8	0.0	0.7
Operating income (loss)	(2.6)	27.9	29.3
Other expense:
Interest expense, net	(17.7)	(23.4)	(22.8)
Loss on extinguishment of debt	(13.0)	0.0	0.0
Other income (expense), net	0.6	(0.1)	0.3
Total other expense, net	(30.1)	(23.5)	(22.5)
Income (loss) from continuing operations before income taxes	(32.7)	4.4	6.8
Provision (benefit) for income taxes from continuing operations	1.4	3.9	(73.5)
Income (loss) from continuing operations	(34.1)	0.5	80.3
Loss from operations of discontinued component	(0.3)	(2.3)	(1.2)
Income tax benefit	(1.2)	(0.2)	(0.3)
Income (loss) from discontinued operations	0.9	(2.1)	(0.9)
Net income (loss)	(33.2)	(1.6)	79.4
Less: Net income (loss) attributable to noncontrolling interest	3.7	0.4	(0.2)
Net income (loss) attributable to Kratos	$ (36.9)	$ (2.0)	$ 79.6
Basic income (loss) per common share attributable to Kratos:
Income (loss) from continuing operations (in dollars per share)	$ (0.30)	$ 0.00	$ 0.70
Income (loss) from discontinued operations (in dollars per share)	0.01	(0.02)	(0.01)
Net income (loss) per common share (in dollars per share)	(0.29)	(0.02)	0.69
Diluted income (loss) per common share attributable to Kratos:
Income (loss) from continuing operations (in dollars per share)	(0.30)	0.00	0.68
Income (loss) from discontinued operations (in dollars per share)	0.01	(0.02)	(0.01)
Net income (loss) per common share (in dollars per share)	$ (0.29)	$ (0.02)	$ 0.67
Weighted average common shares outstanding:
Basic (in shares)	126.7	124.6	115.5
Diluted (in shares)	126.7	128.0	118.7
Service revenues
Total revenues	$ 325.2	$ 219.4	$ 248.7
Total costs	239.0	156.2	182.5
Product sales
Total revenues	573.1	592.1	499.0
Total costs	$ 433.3	$ 430.2	$ 362.0

Organization and Summary of Significant Accounting Policies - Stock-Based Compensation - Narrative (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 25, 2022	Dec. 26, 2021	Dec. 27, 2020
Significant Accounting Policies Disclosure [Line Items]
ESPP offering & expense recognition period	6 months
Deferred tax benefit from stock options exercised	$ 0.7	$ 2.4	$ 1.0
Maximum
Significant Accounting Policies Disclosure [Line Items]
Share-based incentive award vesting period	10 years
Maximum \| Stock options
Significant Accounting Policies Disclosure [Line Items]
Share-based incentive award vesting period	6 years
Minimum
Significant Accounting Policies Disclosure [Line Items]
Share-based incentive award vesting period	5 years

Redeemable Noncontrolling Interest	12 Months Ended
Redeemable Noncontrolling Interest	Dec. 25, 2022
Noncontrolling Interest [Abstract]
Redeemable Noncontrolling Interest	Redeemable Noncontrolling Interest On 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, a Delaware limited liability company, 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. On June 13, 2022, the Company entered into an Equity Purchase Agreement (the “Equity Purchase Agreement”) to acquire an additional 9.95% (the “Purchased Shares”) of the issued and outstanding shares of capital stock of KTT Core (together with its wholly-owned subsidiaries including FTT Inc.), a majority owned subsidiary of the Company, for an aggregate estimated purchase price of approximately $6.4 million, to be paid in shares of Kratos common stock. Pursuant to the Equity Purchase Agreement, the Company paid consideration of $2.7 million, paid in 190,258 shares of its common stock, based upon Kratos’ trading price on the date of distribution, representing half of the aggregate estimated purchase price to be paid by the Company for the Purchased Shares. Following the closing of the transactions contemplated by the Equity Purchase Agreement, the Company owned 90.05% of KTT Core. The unpaid portion of the aggregate estimated purchase price for the Purchased Shares is expected to be paid in shares of Kratos common stock in March 2023, subject to certain adjustments. The Put Right and annual purchase right of the Holders and the Company, respectively, remain available under the Exchange Agreement as to the remaining 9.95% minority interest in KTT Core. 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 Rights. Adjustments to the Redemption Amount will have a corresponding effect on net income per share attributable to Kratos shareholders. As of December 25, 2022, the estimated Redemption Amount of the redeemable noncontrolling interest was $11.2 million. For the year ended December 25, 2022, the Company recorded an adjustment of $3.1 million to increase the carrying value of the redeemable noncontrolling interest to the estimated Redemption Amount.. No adjustment of the carrying value of the redeemable noncontrolling interest was required for the year ended December 26, 2021.

Acquisitions - Pro Forma Financial Information (Details) - USD ($) $ / shares in Units, $ in Millions	12 Months Ended
	Dec. 25, 2022	Dec. 26, 2021	Dec. 27, 2020
FTT Inc
Business Acquisition [Line Items]
Pro forma revenues	$ 915.3	$ 850.7
Pro forma net income (loss) before tax	(31.6)	3.8
Pro forma net income ( loss)	$ (35.8)	$ 1.3
Basic pro format income (loss) per share (in dollars per share)	$ (0.28)	$ 0.01
Diluted pro forma income (loss) per share (in dollars per share)	$ (0.28)	$ 0.01
CPI ASC Signal Division, Inc.
Business Acquisition [Line Items]
Pro forma revenues		$ 855.2	$ 766.0
Pro forma net income (loss) before tax		(0.8)	2.6
Pro forma net income ( loss)		$ (2.9)	$ 74.5
Basic pro format income (loss) per share (in dollars per share)		$ (0.03)	$ 0.65
Diluted pro forma income (loss) per share (in dollars per share)		$ (0.03)	$ 0.63

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

- Definition

Amount, excluding unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

Redeemable Noncontrolling Interest (Details) - USD ($) $ in Millions			12 Months Ended
	Jun. 13, 2022	Feb. 27, 2019	Dec. 25, 2022	Dec. 26, 2021
Noncontrolling Interest [Line Items]
Noncontrolling interest, change in redemption value			$ 3.1
Redeemable noncontrolling interest			$ 11.2	$ 15.2
Florida Turbine Technologies, Inc.
Noncontrolling Interest [Line Items]
Percentage of voting interests acquired		80.10%
Aggregate purchase price	$ 6.4
KTT CORE, LLC
Noncontrolling Interest [Line Items]
Percentage of voting interests acquired	9.95%	80.10%
Aggregate purchase price		$ 60.0
Common stock issued	$ 2.7
KTT CORE, LLC \| Common Stock
Noncontrolling Interest [Line Items]
Number of shares issued (in shares)	190,258
KTT CORE, LLC \| KTT CORE, LLC
Noncontrolling Interest [Line Items]
Noncontrolling interest owned (as a percent)	90.05%
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners	9.95%

Goodwill and Other Intangible Assets - Intangible Asset Amortization (Details) - USD ($) $ in Millions	Dec. 25, 2022	Dec. 26, 2021
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2023	$ 6.8
2024	5.9
2025	6.2
2026	5.6
2027	4.7
Thereafter	19.1
Total	$ 48.3	$ 36.3

Stockholders' Equity - Amended and Restated Employee Stock Purchase Plan (Details) - $ / shares	12 Months Ended
	Dec. 25, 2022	May 31, 2017	Mar. 28, 2014	Mar. 27, 2014	Aug. 31, 1999
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for future issuance (in shares)			1,550,000	2,306,256
Number of shares issued under the plan (in shares)	448,000
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized (in shares)		3,000,000			5,200,000
Minimum weekly employment threshold to qualify for ESPP	20 hours
Minimum annual employment threshold to qualify for ESPP	5 months
Maximum percentage of employee compensation eligible to purchase shares under ESPP (percent)	15.00%
Purchase price of common stock as a percent of fair market value (percent)	85.00%
Cumulative number of shares issued under ESPP (in shares)	6,700,000
Number of shares available for future issuance (in shares)	1,500,000
Average share price of shares issued under the plan (in dollars per share)	$ 13.62

Income Taxes - Narrative (Details) - USD ($) $ in Millions	12 Months Ended
Income Taxes - Narrative (Details) - USD ($) $ in Millions	Dec. 25, 2022	Dec. 26, 2021	Dec. 27, 2020	Dec. 31, 2017
Operating Loss Carryforwards [Line Items]
Deferred tax asset	$ 5.6
Unrecognized deferred income taxes or foreign withholding taxes				$ 6.1
Unrecognized deferred income taxes or foreign withholding taxes, cash and cash equivalents available for distribution	18.9
Unrecognized tax benefits that if recognized would affect effective tax rate	25.0
Amount that would become a deferred tax asset included in unrecognized tax benefits that would impact the effective tax rate	11.1
Income tax penalties and interest expense	0.3	$ 0.6	$ 1.9
Benefit for income tax penalties and interest related to reversal of prior positions	0.2	0.1	0.2
Total interest and penalties accrued	5.1	$ 5.0	$ 4.5
Federal
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	211.2
Tax credit carryforward, amount	13.3
State
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	233.7
Tax credit carryforward, amount	$ 0.9

Balance Sheet Details - Inventory (Details) - USD ($) $ in Millions	Dec. 25, 2022	Dec. 26, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Raw materials	$ 73.6	$ 58.5
Work in process	50.8	28.5
Finished goods	1.1	4.7
Inventoried costs	$ 125.5	$ 91.7

Goodwill and Other Intangible Assets - Purchased Intangible Assets (Details) - USD ($) $ in Millions	Dec. 25, 2022	Dec. 26, 2021
Acquired finite-lived intangible assets:
Gross Value	$ 174.3	$ 155.0
Accumulated Amortization	(126.0)	(118.7)
Total	48.3	36.3
Total intangible assets, Gross Value	181.2	161.9
Total intangible assets, Net Value	55.2	43.2
Trade names
Acquired finite-lived intangible assets:
Indefinite-lived trade names	6.9	6.9
Customer relationships
Acquired finite-lived intangible assets:
Gross Value	80.9	76.5
Accumulated Amortization	(60.1)	(57.6)
Total	20.8	18.9
Contracts and backlog
Acquired finite-lived intangible assets:
Gross Value	39.1	34.9
Accumulated Amortization	(36.3)	(33.1)
Total	2.8	1.8
Developed technology and technical know-how
Acquired finite-lived intangible assets:
Gross Value	33.7	31.4
Accumulated Amortization	(27.0)	(25.8)
Total	6.7	5.6
Trade names
Acquired finite-lived intangible assets:
Gross Value	3.8	2.7
Accumulated Amortization	(2.3)	(2.0)
Total	1.5	0.7
In-process research and development
Acquired finite-lived intangible assets:
Gross Value	16.8	9.5
Accumulated Amortization	(0.3)	(0.2)
Total	$ 16.5	$ 9.3

Organization and Summary of Significant Accounting Policies - Disaggregation of Revenue - Narrative (Details) - USD ($) $ in Millions	Dec. 25, 2022	Dec. 26, 2021
Unbilled
Disaggregation of Revenue [Line Items]
Accounts receivable	$ 12.2	$ 2.9

Discontinued Operations (Tables)

12 Months Ended

Dec. 25, 2022

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures

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


	Year ended December 25, 2022		Year ended December 26, 2021		Year ended December 27, 2020
Revenue	$	—	$	0.1	$	—
Cost of sales	—		—		0.2
Selling, general and administrative expenses	0.3		2.4		1.0


Loss from discontinued operations before income taxes	(0.3)		(2.3)		(1.2)
Gain on disposal of discontinued operations before income taxes	—		—		—
Total loss of discontinued operations before income taxes	(0.3)		(2.3)		(1.2)
Income tax benefit	(1.2)		(0.2)		(0.3)
Income (loss) from discontinued operations	$	0.9	$	(2.1)	$	(0.9)

The following is a summary of the assets and liabilities of discontinued operations as of December 25, 2022 and December 26, 2021 (in millions):


	December 25, 2022		December 26, 2021














Other current liabilities	0.9		0.8
Current liabilities of discontinued operations	$	0.9	$	0.8
Other long-term liabilities of discontinued operations	$	1.4	$	2.5

- Definition

Tabular disclosure of information related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 360
-SubTopic 10
-Section 50
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Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
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-Name Accounting Standards Codification
-Topic 205
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-URI https://asc.fasb.org/extlink&oid=109222650&loc=d3e1474-107760

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
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-URI https://asc.fasb.org/extlink&oid=109222650&loc=SL51721677-107760

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 13: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
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-URI https://asc.fasb.org/extlink&oid=109222650&loc=SL51721663-107760

+ Details

Leases

12 Months Ended

Dec. 25, 2022

Leases [Abstract]

Leases

The components of lease expense for the years ended December 25, 2022, and December 26, 2021 were as follows (in millions):


	December 25, 2022		December 26, 2021
Amortization of right of use assets - finance leases	$	2.9	$	2.4
Interest expense on lease liabilities - finance leases	3.0		2.7
Operating lease cost (expense resulting from amortization of total lease payments)	12.9		11.2
Short-term lease cost	0.8		0.8
Variable lease cost (cost excluded from lease payments)	0.1		0.1
Sublease income	—		(0.2)
Total lease cost	$	19.7	$	17.0

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


	December 25, 2022		December 26, 2021
Operating Leases:
Operating lease right-of-use assets	$	47.4	$	38.5
Current portion of operating lease liabilities	$	10.8	$	10.1
Operating lease liabilities, net of current portion	$	40.8	$	32.7
Finance leases:
Property, plant and equipment, net	$	45.8	$	39.0
Other current liabilities	$	1.7	$	1.2
Other long-term liabilities	$	49.9	$	43.2

Cash paid for amounts included in the measurement of lease liabilities for the years ended December 25, 2022, and December 26, 2021 were as follows (in millions):


	December 25, 2022			December 26, 2021
Finance lease - cash paid for interest		$	3.0		$	2.7
Finance lease - financing cash flows		$	1.4		$	1.0
Operating lease - operating cash flows (fixed payments)		$	13.3		$	11.8

Other supplemental noncash information (in millions):


	December 25, 2022			December 26, 2021
Operating lease liabilities arising from obtaining right-of-use assets	$	20.1		$	3.8
Finance lease liabilities arising from obtaining right-of-use assets	$	9.1		$	5.8

Weighted-average remaining lease term (in years):
Operating leases	5.14			4.57
Finance leases	15.20			16.14

Weighted-average discount rate:
Operating leases	4.92		%	6.50		%
Finance leases	6.02		%	6.51		%

The maturity of lease liabilities is (in millions):


	Operating Leases		Finance Leases
2023	$	12.9	$	4.6
2024	11.8		4.7
2025	10.1		4.8
2026	8.7		4.9
2027	7.6		4.9
Thereafter	7.0		56.2
Total lease payments	58.1		80.1
Less: imputed interest	(6.5)		(28.5)
Total present value of lease liabilities	$	51.6	$	51.6

Leases

The components of lease expense for the years ended December 25, 2022, and December 26, 2021 were as follows (in millions):


	December 25, 2022		December 26, 2021
Amortization of right of use assets - finance leases	$	2.9	$	2.4
Interest expense on lease liabilities - finance leases	3.0		2.7
Operating lease cost (expense resulting from amortization of total lease payments)	12.9		11.2
Short-term lease cost	0.8		0.8
Variable lease cost (cost excluded from lease payments)	0.1		0.1
Sublease income	—		(0.2)
Total lease cost	$	19.7	$	17.0

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


	December 25, 2022		December 26, 2021
Operating Leases:
Operating lease right-of-use assets	$	47.4	$	38.5
Current portion of operating lease liabilities	$	10.8	$	10.1
Operating lease liabilities, net of current portion	$	40.8	$	32.7
Finance leases:
Property, plant and equipment, net	$	45.8	$	39.0
Other current liabilities	$	1.7	$	1.2
Other long-term liabilities	$	49.9	$	43.2

Cash paid for amounts included in the measurement of lease liabilities for the years ended December 25, 2022, and December 26, 2021 were as follows (in millions):


	December 25, 2022			December 26, 2021
Finance lease - cash paid for interest		$	3.0		$	2.7
Finance lease - financing cash flows		$	1.4		$	1.0
Operating lease - operating cash flows (fixed payments)		$	13.3		$	11.8

Other supplemental noncash information (in millions):


	December 25, 2022			December 26, 2021
Operating lease liabilities arising from obtaining right-of-use assets	$	20.1		$	3.8
Finance lease liabilities arising from obtaining right-of-use assets	$	9.1		$	5.8

Weighted-average remaining lease term (in years):
Operating leases	5.14			4.57
Finance leases	15.20			16.14

Weighted-average discount rate:
Operating leases	4.92		%	6.50		%
Finance leases	6.02		%	6.51		%

The maturity of lease liabilities is (in millions):


	Operating Leases		Finance Leases
2023	$	12.9	$	4.6
2024	11.8		4.7
2025	10.1		4.8
2026	8.7		4.9
2027	7.6		4.9
Thereafter	7.0		56.2
Total lease payments	58.1		80.1
Less: imputed interest	(6.5)		(28.5)
Total present value of lease liabilities	$	51.6	$	51.6

Balance Sheet Details - Accounts Receivable and Unbilled Receivables (Details) - USD ($) $ in Millions	Dec. 25, 2022	Dec. 26, 2021
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total current accounts receivable	$ 328.9	$ 285.1
Allowance for doubtful accounts	(0.4)	(0.4)
Total accounts receivable and unbilled receivables, net	328.5	284.7
U.S. Government
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total U.S. Government contract receivables	103.3	104.9
Billed
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total current accounts receivable	105.9	94.2
Billed \| U.S. Government
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total U.S. Government contract receivables	15.9	11.3
Unbilled
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total current accounts receivable	223.0	190.9
Unbilled \| U.S. Government
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total U.S. Government contract receivables	$ 87.4	$ 93.6

Discontinued Operations - Narrative (Details) - USD ($) $ in Millions		12 Months Ended			54 Months Ended
	Feb. 18, 2022	Dec. 25, 2022	Dec. 26, 2021	Dec. 27, 2020	Dec. 25, 2022	Jun. 11, 2018
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Final working capital settlement			$ 1.1
Final working capital settlement related expenses			1.1
Debt issuance costs		$ (3.3)	0.0	$ 0.0
Revolving credit facility \| New Revolving Credit Facility
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Debt term	5 years
Public Safety & Security \| Discontinued operations, disposed of by sale
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 adjustments			$ 7.3
Potential tax liability		$ 0.9

Segment Information - Narrative (Details) $ in Millions	12 Months Ended
Segment Information - Narrative (Details) $ in Millions	Dec. 25, 2022 USD ($) segment	Dec. 26, 2021 USD ($)	Dec. 27, 2020 USD ($)
Segment Reporting Information [Line Items]
Number of reportable (in segments) \| segment	2
Operating income	$ (2.6)	$ 27.9	$ 29.3
Litigation settlement charges	5.5	0.0	0.0
Total revenues	$ 898.3	$ 811.5	$ 747.7
Percentage of foreign revenue to total revenue (percent)	19.00%	21.00%	19.00%
Company's C5ISR
Segment Reporting Information [Line Items]
Litigation settlement charges	$ 3.4
Company's Training Solutions
Segment Reporting Information [Line Items]
Litigation settlement charges	3.0
Kratos Government Solutions
Segment Reporting Information [Line Items]
Operating income	6.4
Litigation settlement charges	5.5
Total revenues	676.6	$ 579.6
Assets of foreign subsidiaries	178.3	166.2	$ 148.2
Non-US
Segment Reporting Information [Line Items]
Total revenues	$ 173.1	$ 169.8	$ 139.5

Leases - Supplemental Balance Sheet (Details) - USD ($) $ in Millions	Dec. 25, 2022	Dec. 26, 2021
Operating Leases:
Operating lease right-of-use assets	$ 47.4	$ 38.5
Current portion of operating lease liabilities	10.8	10.1
Operating lease liabilities, net of current portion	40.8	32.7
Finance leases:
Property, plant and equipment, net	45.8	39.0
Other current liabilities	1.7	1.2
Other long-term liabilities	$ 49.9	$ 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

Stockholders' Equity - Stock Option Plans and Restricted Stock Units Plans (Details) - USD ($) $ in Millions		12 Months Ended
	Apr. 01, 2014	Dec. 25, 2022	Dec. 26, 2021	Dec. 27, 2020	Jun. 30, 2020	May 31, 2017	Mar. 28, 2014	Mar. 27, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards granted (in shares)	0	0
Number of shares available for issuance (in shares)							1,550,000	2,306,256
Total number of awards outstanding (in shares)								5,511,322
RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized stock-based compensation expense related to nonvested restricted stock units		$ 36.1
Unrecognized stock-based compensation expense, period for recognition		1 year 8 months 12 days
Fair value of vested awards		$ 30.5	$ 24.7	$ 4.6
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based incentive award vesting period		10 years
Maximum \| Stock Options and Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based incentive award vesting period		10 years
Maximum \| Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based incentive award vesting period		6 years
Award term or expiration period		10 years
2014 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for issuance (in shares)		3,213,722			4,700,000	2,500,000
Total number of awards outstanding (in shares)								5,511,322

Goodwill and Other Intangible Assets (Tables)

12 Months Ended

Dec. 25, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

The carrying amounts of goodwill as of December 25, 2022 and December 26, 2021 by reportable segment are as follows (in millions):


	As of December 25, 2022
	US		KGS		Total
Gross value	$	127.9	$	683.6	$	811.5
Less accumulated impairment	13.8		239.5		253.3
Net	$	114.1	$	444.1	$	558.2




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

Schedule of Acquired Finite-Lived Intangible Assets

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


	As of December 25, 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	$	80.9	$	(60.1)	$	20.8	$	76.5	$	(57.6)	$	18.9
Contracts and backlog	39.1		(36.3)		2.8		34.9		(33.1)		1.8
Developed technology and technical know-how	33.7		(27.0)		6.7		31.4		(25.8)		5.6
Trade names	3.8		(2.3)		1.5		2.7		(2.0)		0.7
In-process research and development	16.8		(0.3)		16.5		9.5		(0.2)		9.3
Total finite-lived intangible assets	174.3		(126.0)		48.3		155.0		(118.7)		36.3
Indefinite-lived trade names	6.9		—		6.9		6.9		—		6.9
Total intangible assets	$	181.2	$	(126.0)	$	55.2	$	161.9	$	(118.7)	$	43.2

Schedule of Acquired Indefinite-Lived Intangible Assets

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


	As of December 25, 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	$	80.9	$	(60.1)	$	20.8	$	76.5	$	(57.6)	$	18.9
Contracts and backlog	39.1		(36.3)		2.8		34.9		(33.1)		1.8
Developed technology and technical know-how	33.7		(27.0)		6.7		31.4		(25.8)		5.6
Trade names	3.8		(2.3)		1.5		2.7		(2.0)		0.7
In-process research and development	16.8		(0.3)		16.5		9.5		(0.2)		9.3
Total finite-lived intangible assets	174.3		(126.0)		48.3		155.0		(118.7)		36.3
Indefinite-lived trade names	6.9		—		6.9		6.9		—		6.9
Total intangible assets	$	181.2	$	(126.0)	$	55.2	$	161.9	$	(118.7)	$	43.2

Schedule of Future Amortization Expense of Finite-Lived Intangible Assets

The estimated future amortization expense of acquired intangible assets with finite lives as of December 25, 2022 is as follows (in millions):


Fiscal Year	Amount
2023	6.8
2024	5.9
2025	6.2
2026	5.6
2027	4.7
Thereafter	19.1
Total	$	48.3

- Definition

Tabular disclosure of goodwill by reportable segment and in total which includes a rollforward schedule.

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (h)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
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-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

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-Name Accounting Standards Codification
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-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

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-Name Accounting Standards Codification
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-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

Reference 7: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1A
-URI https://asc.fasb.org/extlink&oid=121556970&loc=SL108378252-109267

Reference 8: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (f)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

Reference 9: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

Reference 10: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 2
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13854-109267

Reference 11: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 55
-Paragraph 24
-URI https://asc.fasb.org/extlink&oid=122137925&loc=d3e14258-109268

Reference 12: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

+ Details

Organization and Summary of Significant Accounting Policies - Contract Estimates (Details) - USD ($) $ in Millions	Dec. 25, 2022	Dec. 26, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Long-term government contracts		$ 6.9
Provision for loss on contracts	$ 1.2	$ 2.8

Acquisitions - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions	Dec. 25, 2022	May 23, 2022	Dec. 27, 2021	Dec. 26, 2021	Jun. 15, 2020
Business Acquisition [Line Items]
Goodwill	$ 558.2			$ 493.9
CPI ASC Signal Division, Inc.
Business Acquisition [Line Items]
Accounts receivable					$ 5.7
Unbilled receivables					0.9
Inventoried costs					10.4
Other current assets					1.8
Property and equipment					10.0
Intangible assets					4.3
Goodwill					10.8
Total identifiable net assets acquired					43.9
Total identifiable net liabilities assumed					(11.0)
Net assets acquired, excluding cash					$ 32.9
Cosmic Advanced Engineering Solutions, Inc.
Business Acquisition [Line Items]
Accounts receivable		$ 2.9	$ 3.8
Unbilled receivables		11.1	4.1
Inventoried costs		0.5
Other current assets		0.2	0.1
Property and equipment		22.8	1.3
Other assets		0.2
Intangible assets		10.8	8.5
Goodwill		34.3	29.2
Total identifiable net assets acquired		48.5	17.8
Total identifiable net liabilities assumed		(3.4)	(9.1)
Net assets acquired, excluding cash		$ 79.4	$ 37.9

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	12 Months Ended
	Dec. 25, 2022	Dec. 26, 2021	Dec. 27, 2020
Operating activities:
Net income (loss)	$ (33.2)	$ (1.6)	$ 79.4
Income (loss) from discontinued operations	0.9	(2.1)	(0.9)
Income (loss) from continuing operations	(34.1)	0.5	80.3
Adjustments to reconcile income (loss) from continuing operations to net cash provided by (used in) operating activities from continuing operations:
Depreciation and amortization	30.5	25.7	24.6
Deferred income taxes	(3.1)	(0.4)	(78.2)
Amortization of lease right-of-use assets	10.4	9.0	9.4
Stock-based compensation	26.3	25.8	21.0
Loss on extinguishment of debt	13.0	0.0	0.0
Amortization of deferred financing costs	0.8	1.0	1.0
Recovery of doubtful accounts	0.0	(0.2)	0.0
Litigation settlement charges	5.5	0.0	0.0
Changes in assets and liabilities, net of acquisitions:
Accounts receivable	(4.9)	2.6	(3.7)
Unbilled receivables	(22.4)	(15.7)	3.6
Inventoried costs	(23.8)	(5.3)	(5.3)
Prepaid expenses	(1.9)	2.4	(2.1)
Other assets	(18.7)	(6.9)	(8.7)
Operating lease liabilities	(10.5)	(9.3)	(10.2)
Accounts payable	4.5	(5.3)	(2.4)
Accrued expenses	5.6	(7.4)	1.0
Accrued compensation	0.8	(1.3)	8.5
Accrued interest	0.1	(0.1)	(0.1)
Billings in excess of costs and earnings on uncompleted contracts	2.7	24.1	(5.0)
Income tax receivable and payable	0.1	1.4	(1.1)
Other liabilities	(6.5)	(5.3)	12.1
Net cash provided by (used in) operating activities from continuing operations	(25.6)	35.3	44.7
Investing activities:
Cash paid for acquisitions, net of cash acquired	(132.2)	(12.3)	(51.5)
Proceeds from sale of assets	0.2	2.2	0.1
Proceeds from insurance	0.0	4.5	0.0
Capital expenditures	(45.4)	(46.5)	(35.9)
Net cash used in investing activities from continuing operations	(177.4)	(52.1)	(87.3)
Financing activities:
Proceeds from the issuance of long-term debt	200.0	0.0	5.1
Proceeds from the issuance of common stock	0.0	0.0	240.4
Borrowing under credit facility	100.0	0.0	0.0
Redemption of Senior Secured Notes	(309.8)	0.0	0.0
Repayment under credit facility, term loan and other debt	(42.5)	(5.1)	(0.6)
Payments of employee taxes withheld from share-based awards	(12.5)	(9.1)	(1.4)
Debt issuance costs	(3.3)	0.0	0.0
Payments under finance leases	(1.4)	(1.0)	(0.6)
Proceeds from shares issued under equity plans	6.2	5.9	4.8
Net cash provided (used in) by financing activities from continuing operations	(63.3)	(9.3)	247.7
Net cash flows provided by (used in) continuing operations	(266.3)	(26.1)	205.1
Net operating cash flows of discontinued operations	(0.1)	(4.5)	1.9
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(1.7)	(1.5)	1.9
Net increase (decrease) in cash, cash equivalents and restricted cash	(268.1)	(32.1)	208.9
Cash, cash equivalents and restricted cash at beginning of year	349.4	381.5	172.6
Cash, cash equivalents and restricted cash at end of year	81.3	349.4	381.5
Supplemental disclosure of cash flow information:
Cash paid during the year for interest	13.7	19.9	19.9
Net cash paid during the year for income taxes	4.4	2.0	2.5
Non-cash financing and investing activities:
Financing lease obligation incurred	9.1	5.8	0.9
Capital expenditures included in accounts payable and accrued expenses	2.7	3.0	2.9
Common stock issuance for purchase of noncontrolling interests	2.7	0.0	0.0
Common stock issuance for acquisition	$ 5.0	$ 0.0	$ 5.0

Stockholders' Equity - Grants and Exercises Under Option Plans (Details) - USD ($)	12 Months Ended
	Dec. 25, 2022	Dec. 26, 2021	Dec. 27, 2020
Share-Based Payment Arrangement [Abstract]
Total intrinsic value of options exercised	$ 163,000.0	$ 0	$ 1,446,400

Segment Information - Revenues, Operating Income (Loss) and Assets by Reportable Segments (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 25, 2022	Dec. 26, 2021	Dec. 27, 2020
Segment Reporting Information [Line Items]
Total revenues	$ 898.3	$ 811.5	$ 747.7
Depreciation and amortization	30.5	25.7	24.6
Total operating income (loss)	(2.6)	27.9	29.3
Total assets	1,551.5	1,589.5	1,562.8
Discontinued operations
Segment Reporting Information [Line Items]
Total assets	0.0	0.0	0.0
Kratos Government Solutions
Segment Reporting Information [Line Items]
Total revenues	676.6	579.6
Total operating income (loss)	6.4
Unmanned Systems
Segment Reporting Information [Line Items]
Total revenues	221.7	231.9
Operating segments \| Kratos Government Solutions
Segment Reporting Information [Line Items]
Total revenues	676.6	579.6	560.7
Depreciation and amortization	22.7	17.4	17.9
Total operating income (loss)	27.2	42.3	43.6
Total assets	1,105.1	907.6	877.2
Operating segments \| Unmanned Systems
Segment Reporting Information [Line Items]
Total revenues	221.7	231.9	187.0
Depreciation and amortization	7.8	8.3	6.7
Total operating income (loss)	(2.8)	13.2	8.7
Total assets	349.7	327.1	292.4
Corporate activities
Segment Reporting Information [Line Items]
Total operating income (loss)	(27.0)	(27.6)	(23.0)
Total assets	96.7	354.8	393.2
Service revenues
Segment Reporting Information [Line Items]
Total revenues	325.2	219.4	248.7
Service revenues \| Operating segments \| Kratos Government Solutions
Segment Reporting Information [Line Items]
Total revenues	320.0	214.5	248.7
Service revenues \| Operating segments \| Unmanned Systems
Segment Reporting Information [Line Items]
Total revenues	5.2	4.9	0.0
Product sales
Segment Reporting Information [Line Items]
Total revenues	573.1	592.1	499.0
Product sales \| Operating segments \| Kratos Government Solutions
Segment Reporting Information [Line Items]
Total revenues	356.6	365.1	312.0
Product sales \| Operating segments \| Unmanned Systems
Segment Reporting Information [Line Items]
Total revenues	$ 216.5	$ 227.0	$ 187.0

Leases - Lease Expense (Details) - USD ($) $ in Millions	12 Months Ended
Leases - Lease Expense (Details) - USD ($) $ in Millions	Dec. 25, 2022	Dec. 26, 2021
Leases [Abstract]
Amortization of right of use assets - finance leases	$ 2.9	$ 2.4
Interest expense on lease liabilities - finance leases	3.0	2.7
Operating lease cost (expense resulting from amortization of total lease payments)	12.9	11.2
Short-term lease cost	0.8	0.8
Variable lease cost (cost excluded from lease payments)	0.1	0.1
Sublease income	0.0	(0.2)
Total lease cost	$ 19.7	$ 17.0

Acquisitions (Tables)

12 Months Ended

Dec. 25, 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	$	5.7
Unbilled receivables	0.9
Inventoried costs	10.4
Other current assets	1.8
Property and equipment	10.0
Intangible assets	4.3
Goodwill	10.8
Total identifiable net assets acquired	43.9
Total identifiable net liabilities assumed	(11.0)
Net assets acquired, excluding cash	$	32.9

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	4.1
Other current assets	0.1
Property and equipment	1.3
Intangible assets	8.5
Total identifiable net assets acquired	17.8
Total identifiable net liabilities assumed	(9.1)
Goodwill	29.2
Net assets acquired, excluding cash	$	37.9

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


Accounts receivable	$	2.9
Unbilled receivables	11.1
Inventory	0.5
Other current assets	0.2
Property and equipment	22.8
Other assets	0.2
Intangible assets	10.8
Total identifiable net assets acquired	48.5
Total identifiable net liabilities assumed	(3.4)
Goodwill	34.3
Net assets acquired, excluding cash	$	79.4

Schedule of Business Acquisitions by Acquisition, Contingent Consideration

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


Cash paid	$	34.9
Less: Cash acquired	(2.0)
Total consideration	$	32.9

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


Cash paid	$	39.0
Holdback to be paid at later date	0.4
Less: Cash acquired	(1.5)
Total consideration	$	37.9

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


Cash paid	$	74.4
Common stock issued	5.0
Total consideration	$	79.4

Schedule of Business Acquisition, Pro Forma Information

For the year ended December 27, 2020 (all amounts, except per share amounts, are in millions):


Pro forma revenues	$	766.0
Pro forma net income before tax	$	2.6
Pro forma net income	$	74.5

Basic pro forma income per share	$	0.65
Diluted pro forma income per share	$	0.63

For the year ended December 26, 2021 (all amounts, except per share amounts, are in millions):


Pro forma revenues	$	855.2
Pro forma net loss before tax	$	(0.8)
Pro forma net loss	$	(2.9)

Basic pro forma loss per share	$	(0.03)
Diluted pro forma loss per share	$	(0.03)

For the years ended December 25, 2022 and December 26, 2021 (all amounts, except per share amounts, are in millions):


		2022		2021
Pro forma revenues	$	915.3	$	850.7
Pro forma net income (loss) before tax	$	(31.6)	$	3.8
Pro forma net income ( loss)	$	(35.8)	$	1.3

Basic pro forma income (loss) per share	$	(0.28)	$	0.01
Diluted pro forma income (loss) per share	$	(0.28)	$	0.01

Income Taxes - Components of Income Taxes (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 25, 2022	Dec. 26, 2021	Dec. 27, 2020
Federal income taxes:
Current	$ 0.0	$ 0.0	$ 0.0
Deferred	(4.5)	(0.1)	(68.2)
Total Federal	(4.5)	(0.1)	(68.2)
State and local income taxes:
Current	0.6	1.5	0.5
Deferred	1.9	0.5	(9.4)
Total State and local	2.5	2.0	(8.9)
Foreign income taxes:
Current	3.9	2.9	4.2
Deferred	(0.5)	(0.9)	(0.6)
Total Foreign	3.4	2.0	3.6
Total	$ 1.4	$ 3.9	$ (73.5)

Organization and Summary of Significant Accounting Policies - Goodwill and Other Intangible Assets, Net (Details)	12 Months Ended
	Dec. 25, 2022
Minimum
Significant Accounting Policies Disclosure [Line Items]
Finite-lived intangible asset, useful life	1 year
Maximum
Significant Accounting Policies Disclosure [Line Items]
Finite-lived intangible asset, useful life	15 years

Leases (Tables)

12 Months Ended

Dec. 25, 2022

Leases [Abstract]

Schedule of Lease Cost

The components of lease expense for the years ended December 25, 2022, and December 26, 2021 were as follows (in millions):


	December 25, 2022		December 26, 2021
Amortization of right of use assets - finance leases	$	2.9	$	2.4
Interest expense on lease liabilities - finance leases	3.0		2.7
Operating lease cost (expense resulting from amortization of total lease payments)	12.9		11.2
Short-term lease cost	0.8		0.8
Variable lease cost (cost excluded from lease payments)	0.1		0.1
Sublease income	—		(0.2)
Total lease cost	$	19.7	$	17.0

Cash paid for amounts included in the measurement of lease liabilities for the years ended December 25, 2022, and December 26, 2021 were as follows (in millions):


	December 25, 2022			December 26, 2021
Finance lease - cash paid for interest		$	3.0		$	2.7
Finance lease - financing cash flows		$	1.4		$	1.0
Operating lease - operating cash flows (fixed payments)		$	13.3		$	11.8

Other supplemental noncash information (in millions):


	December 25, 2022			December 26, 2021
Operating lease liabilities arising from obtaining right-of-use assets	$	20.1		$	3.8
Finance lease liabilities arising from obtaining right-of-use assets	$	9.1		$	5.8

Weighted-average remaining lease term (in years):
Operating leases	5.14			4.57
Finance leases	15.20			16.14

Weighted-average discount rate:
Operating leases	4.92		%	6.50		%
Finance leases	6.02		%	6.51		%

Schedule of Balance Sheet Information

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


	December 25, 2022		December 26, 2021
Operating Leases:
Operating lease right-of-use assets	$	47.4	$	38.5
Current portion of operating lease liabilities	$	10.8	$	10.1
Operating lease liabilities, net of current portion	$	40.8	$	32.7
Finance leases:
Property, plant and equipment, net	$	45.8	$	39.0
Other current liabilities	$	1.7	$	1.2
Other long-term liabilities	$	49.9	$	43.2

Schedule of Maturities of Operating Lease Liabilities

The maturity of lease liabilities is (in millions):


	Operating Leases		Finance Leases
2023	$	12.9	$	4.6
2024	11.8		4.7
2025	10.1		4.8
2026	8.7		4.9
2027	7.6		4.9
Thereafter	7.0		56.2
Total lease payments	58.1		80.1
Less: imputed interest	(6.5)		(28.5)
Total present value of lease liabilities	$	51.6	$	51.6

Schedule of Maturities of Financing Lease Liabilities

The maturity of lease liabilities is (in millions):


	Operating Leases		Finance Leases
2023	$	12.9	$	4.6
2024	11.8		4.7
2025	10.1		4.8
2026	8.7		4.9
2027	7.6		4.9
Thereafter	7.0		56.2
Total lease payments	58.1		80.1
Less: imputed interest	(6.5)		(28.5)
Total present value of lease liabilities	$	51.6	$	51.6

Debt - Issuance of 6.5% Senior Secured Notes due 2025 (Details) - USD ($)	Mar. 14, 2022	Feb. 18, 2022	Dec. 26, 2021	Nov. 30, 2017
Debt Instrument [Line Items]
Debt Instrument, face amount			$ 300,000,000.0
Senior notes
Debt Instrument [Line Items]
Premium	$ 9,800,000
Senior notes \| 6.5% Notes
Debt Instrument [Line Items]
Stated interest rate		6.50%		6.50%
Debt Instrument, face amount				$ 300,000,000
Debt issuance costs				$ 6,600,000

Stockholders' Equity

12 Months Ended

Dec. 25, 2022

Share-Based Payment Arrangement [Abstract]

Stockholders' Equity

Stockholders’ Equity

(a) Common Stock

On June 23, 2020, the Company sold 15,525,000 shares of common stock at a purchase price of $16.25 per share in an underwritten public offering. The Company received gross proceeds of approximately $252.3 million. After deducting underwriting fees and other offering expenses, the Company received approximately $240.4 million in net proceeds. The

Company expects to use the net proceeds for general corporate purposes, including for potential strategic “tuck-in” acquisitions, to further position the Company for projected growth from new and anticipated increased production and to facilitate its long-term strategy.

(b) Stock Option Plans and Restricted Stock Unit Plans

In March 2014, the Company’s board of directors (the “Board”) approved the 2014 Equity Incentive Plan (the “2014 Plan”). The 2014 Plan is the successor to the Kratos Defense & Security Solutions, Inc. 2011 Equity Incentive Plan, the Kratos Defense & Security Solutions, Inc. Amended and Restated 2005 Equity Incentive Plan, the Kratos Defense & Security Solutions, Inc. 2000 Nonstatutory Stock Option Plan, the Kratos Defense & Security Solutions, Inc. 1999 Equity Incentive Plan, the Amended and Restated Integral Systems, Inc. 2008 Stock Incentive Plan, the Amended and Restated Herley Industries, Inc. 2010 Stock Plan, the Herley Industries, Inc. 2003 Stock Option Plan, the Henry Bros. Electronics, Inc. 2007 Stock Option Plan, the Henry Bros. Electronics, Inc. 2006 Stock Option Plan, the Amended and Restated 2005 Digital Fusion, Inc. Equity Incentive Plan, the 2000 Digital Fusion, Inc. Stock Option Plan, the 1999 Digital Fusion, Inc. Stock Option Plan, and the 1998 Digital Fusion, Inc. Stock Option Plan (collectively, the “Prior Plans”).

The 2014 Plan became effective May 14, 2014 and no additional stock awards will be granted under the Prior Plans as of April 1, 2014. All outstanding stock awards granted subject to the terms of the Prior Plans will continue to be subject to the terms and conditions as set forth in the agreements evidencing such stock awards and the terms of the respective Prior Plans. Any shares subject to outstanding stock awards granted under the Prior Plans or granted outside of a Prior Plan that, at any time after March 27, 2014, (i) expire or terminate for any reason prior to exercise or settlement; (ii) are forfeited, canceled or otherwise returned to the Company because of the failure to meet a contingency or condition required to vest such shares; or (iii) are reacquired, withheld (or not issued) to satisfy a tax withholding obligation in connection with an award or to satisfy the purchase price or exercise price of a stock award (collectively, the “Returning Shares”) will immediately be added to the share reserve of the 2014 Plan and become available for issuance pursuant to stock awards granted under the 2014 Plan.

As of March 27, 2014, there were 2,306,256 shares remaining available for issuance under the Prior Plans. The total number of awards outstanding under all of the Prior Plans and outside of any Prior Plan was 5,511,322 as of March 27, 2014. The 2014 Plan decreased the number of shares remaining available for issuance under its equity compensation plans from 2,306,256 to 1,550,000, although, per the 2014 Plan, up to 5,511,322 shares subject to outstanding awards under the Prior Plans and non-plan grants could potentially become Returning Shares available for issuance under the 2014 Plan. In May 2017, the Company’s shareholders approved an amendment to the 2014 Plan to increase the aggregate number of shares that may be issued under the plan by 2,500,000 shares. In June 2020, the Company’s shareholders approved an amendment to the 2014 Plan to increase the aggregate number of shares that may be issued under the plan by 4,700,000 shares.

The Board may grant equity-based awards to selected employees, directors and consultants of the Company pursuant to its 2014 Plan. As of December 25, 2022, there were 3,213,722 shares reserved for issuance for future grant under the 2014 Plan. The Board may amend or terminate the 2014 Plan at any time. Certain amendments, including an increase in the share reserve, require stockholder approval. Generally, options and restricted stock units outstanding vest over periods not exceeding ten years. When the Company grants stock options, they are granted with a per share exercise price not less than the fair market value of the Company’s common stock on the date of grant, and generally would be exercisable for up to ten years from the grant date. The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model or a trinomial lattice options pricing model with the weighted average assumptions (annualized percentages). There were no stock options granted or related expenses for stock options in 2020, 2021 or 2022.

A summary of the status of the Company’s stock option plan as of December 25, 2022, and changes in options outstanding under the plan for the year ended December 25, 2022, is as follows:


	Number of Shares Under Option	Weighted-Average Exercise Price per Share		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
	(000’s)				(000’s)
Options outstanding at December 26, 2021	42	$	4.98	1.0	$	622.9
Granted	—	$	—
Exercised	(24)	$	4.98
Forfeited or expired	—	$	—
Options outstanding at December 25, 2022	18	$	4.98	0.0	$	79.9
Options exercisable at December 25, 2022	18	$	4.98	0.0	$	79.9

Upon exercise of an option, the Company issues new shares of common stock.

During the years ended December 25, 2022, December 26, 2021, and December 27, 2020, the following values relate to the exercises under the Company’s option plans:


	2022		2021		2020
Total intrinsic value of options exercised (in thousands)	$	163.0	$	—	$	1,446.4

The following table summarizes the Company’s Restricted Stock Unit activity:


	Restricted Stock Units (000’s)	Weighted-Average Grant Date Fair Value
Nonvested balance at December 26, 2021	4,878	$	12.74
Granted	1,577	$	18.85
Vested	(1,716)	$	17.75
Forfeited or expired	(80)	$	17.61

Nonvested balance at December 25, 2022	4,659	$	12.88

As of December 25, 2022, there was $36.1 million of total unrecognized stock-based compensation expense related to nonvested restricted stock units which is expected to be recognized over a remaining weighted-average vesting period of 1.7 years. The fair value of restricted stock unit awards that vested in 2022, 2021, and 2020 was $30.5 million, $24.7 million, and $4.6 million, respectively.

In August 1999, the Board approved the 1999 Employee Stock Purchase Plan (as amended from time to time, the “Purchase Plan”). A total of 5,200,000 shares of common stock had been previously approved for reservation of the Company’s common stock for purchase by employees under the Purchase Plan. In May 2017, the Company’s shareholders approved an amendment to the Purchase Plan to increase the maximum number of shares of common stock that may be issued under the Purchase Plan by 3,000,000 shares. The Purchase Plan qualifies as an employee stock purchase plan within the meaning of Section 423 of the Internal Revenue Service Code. Unless otherwise determined by the Compensation Committee of the Board, all employees are eligible to participate in the Purchase Plan, so long as they are employed by the Company (or a subsidiary designated by the Board) for at least 20 hours per week and were customarily employed by the Company (or a subsidiary designated by the Board) for at least 5 months per calendar year.

Employees who actively participate in the Purchase Plan are eligible to have up to 15% of their earnings for each purchase period withheld pursuant to the Purchase Plan. The amount that is withheld is used at various purchase dates within the offering period to purchase shares of common stock. The price paid for common stock at each such purchase date is equal to

the lower of 85% of the fair market value of the common stock at the commencement date of that offering period or 85% of the fair market value of the common stock on the relevant purchase date. Employees are also able to end their participation in the offering at any time during the offering period, and participation ends automatically upon termination of employment. From the Purchase Plan’s inception through December 25, 2022, the cumulative number of shares of common stock that have been issued under the Purchase Plan is 6.7 million and approximately 1.5 million shares are available for future issuance. During fiscal 2022, approximately 448,000 shares were issued under the plan at an average price of $13.62.

The fair value of Kratos’ Purchase Plan shares for 2022 was estimated using the Black-Scholes option pricing model. The assumptions and resulting fair values of options granted for 2022, 2021 and 2020 were as follows:


	Offering Periods January 1 to December 31 2022	Offering Periods January 1 to December 31 2021	Offering Periods January 1 to December 31, 2020
Expected term (in years)(1)	0.5	0.5	0.5
Risk-free interest rate(2)	0.19% - 2.51%	0.06% - 0.09%	0.18% - 1.60%
Expected volatility(3)	40.52% - 60.79%	41.40% - 45.93%	44.14% - 82.75%
Expected dividend yield(4)	—%	—%	—%
Weighted average grant-date fair value per share	$4.80	$7.60	$5.43

(1) The expected term is equivalent to the offering period.

(2) The risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant with a term equal to the expected term.

(3) The Company estimated implied volatility based upon trailing volatility.

(4) The Company has no history or expectation of paying dividends on its common stock.

As of December 25, 2022, there was no material unrecognized compensation expense related to the Purchase Plan.

Audit Information	12 Months Ended
Audit Information	Dec. 25, 2022
Audit Information [Abstract]
Auditor Name	Deloitte & Touche LLP
Auditor Firm ID	34
Auditor Location	San Diego, California

Debt - Long-Term Debt and the Current Period Interest Rates (Details) - USD ($) $ in Millions	Dec. 25, 2022	Dec. 26, 2021
Line of Credit Facility [Line Items]
Total long-term debt, net of unamortized debt issuance costs - term loans		$ 296.7
Line of credit
Line of Credit Facility [Line Items]
Total debt	$ 257.5
Less current portion	6.3
Total long-term debt, less current portion	$ 251.2
Current period interest rate	6.40%
Secured debt \| Line of credit
Line of Credit Facility [Line Items]
Total debt	$ 197.5
Unamortized debt issuance costs	1.0
Total long-term debt, net of unamortized debt issuance costs - term loans	250.2
Revolving credit facility \| Line of credit
Line of Credit Facility [Line Items]
Total debt	60.0
Unamortized debt issuance costs	$ 1.0

Leases - Maturities of Operating and Financing Lease Liabilities (Details) $ in Millions	Dec. 25, 2022 USD ($)
Operating Leases
2023	$ 12.9
2024	11.8
2025	10.1
2026	8.7
2027	7.6
Thereafter	7.0
Total lease payments	58.1
Less: imputed interest	(6.5)
Total present value of lease liabilities	51.6
Finance Leases
2023	4.6
2024	4.7
2025	4.8
2026	4.9
2027	4.9
Thereafter	56.2
Total lease payments	80.1
Less: imputed interest	(28.5)
Total present value of lease liabilities	$ 51.6

Debt (Tables)

12 Months Ended

Dec. 25, 2022

Debt Disclosure [Abstract]

Schedule of Long-Term Debt and the Current Period Interest Rates

Term loan and revolving credit debt and the current period interest rates are as follows (in millions):


	December 25, 2022
Term Loan A	$	197.5
Revolving credit facility	60.0
Total debt	257.5
Less current portion	6.3
Total long-term debt, less current portion	251.2
Less long-term unamortized debt issuance costs - term loans	1.0
Total long-term debt, net of unamortized debt issuance costs - term loans	$	250.2
Unamortized debt issuance costs - revolving credit facility	$	1.0
Current period interest rate	6.4		%

Schedule of Future Long-Term Debt Principal Payments

Future long-term debt principal payments at December 25, 2022 were as follows (in millions):


2023	$	6.3
2024	$	8.7
2025	$	10.0
2026	$	10.0
2027	$	222.5
	$	257.5

Schedule of Carrying Amounts and Estimated Fair Value of Long-Term Debt

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 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

- 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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+ Details

Balance Sheet Details - Property, Plant and Equipment (Details) - USD ($) $ in Millions	Dec. 25, 2022	Dec. 26, 2021
Property, Plant and Equipment [Line Items]
Finance lease right of use assets	$ 54.9	$ 46.4
Property and equipment	350.4	285.1
Accumulated depreciation and amortization	(137.3)	(116.8)
Total property and equipment, net	213.1	168.3
Land and buildings
Property, Plant and Equipment [Line Items]
Property and equipment	38.4	19.8
Computer equipment and software
Property, Plant and Equipment [Line Items]
Property and equipment	45.7	40.0
Machinery and equipment
Property, Plant and Equipment [Line Items]
Property and equipment	129.9	109.1
Furniture and office equipment
Property, Plant and Equipment [Line Items]
Property and equipment	7.6	7.6
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment	22.9	16.9
Construction in progress
Property, Plant and Equipment [Line Items]
Property and equipment	$ 51.0	$ 45.3

Organization and Summary of Significant Accounting Policies - Property and Equipment, Net (Details)	12 Months Ended
	Dec. 25, 2022
Vehicles, furniture, and office equipment
Significant Accounting Policies Disclosure [Line Items]
Useful life of property and equipment	5 years
Minimum \| Buildings and improvements
Significant Accounting Policies Disclosure [Line Items]
Useful life of property and equipment	15 years
Minimum \| Machinery and equipment
Significant Accounting Policies Disclosure [Line Items]
Useful life of property and equipment	3 years
Minimum \| Computer equipment and software
Significant Accounting Policies Disclosure [Line Items]
Useful life of property and equipment	1 year
Maximum \| Buildings and improvements
Significant Accounting Policies Disclosure [Line Items]
Useful life of property and equipment	39 years
Maximum \| Machinery and equipment
Significant Accounting Policies Disclosure [Line Items]
Useful life of property and equipment	20 years
Maximum \| Computer equipment and software
Significant Accounting Policies Disclosure [Line Items]
Useful life of property and equipment	10 years

Retirement Plans	12 Months Ended
Retirement Plans	Dec. 25, 2022
Retirement Benefits [Abstract]
Retirement Plans	Retirement Plans The Company provides eligible employees the opportunity to participate in defined-contribution savings plans (commonly known as 401(k) plans), which permit contributions on a before-tax basis. Generally, salaried employees and certain hourly employees are eligible to participate in the plans. Under most plans, the employee may contribute to various investment alternatives. In certain plans, the Company matches a portion of the employees’ contributions. The Company’s matching contributions to these defined-contribution savings plans totaled $8.1 million in 2022, $6.4 million in 2021, and $5.7 million in 2020.

- Definition

The entire disclosure for retirement benefits.

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+ Details

Organization and Summary of Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 25, 2022	Dec. 26, 2021	Dec. 27, 2020
Disaggregation of Revenue [Line Items]
Total revenues	$ 898.3	$ 811.5	$ 747.7
Kratos Government Solutions
Disaggregation of Revenue [Line Items]
Total revenues	676.6	579.6
Kratos Government Solutions \| U.S. Government
Disaggregation of Revenue [Line Items]
Total revenues	420.4	359.7
Kratos Government Solutions \| International
Disaggregation of Revenue [Line Items]
Total revenues	157.5	151.5
Kratos Government Solutions \| U.S. Commercial and other customers
Disaggregation of Revenue [Line Items]
Total revenues	98.7	68.4
Kratos Government Solutions \| Fixed price
Disaggregation of Revenue [Line Items]
Total revenues	476.1	447.3
Kratos Government Solutions \| Cost plus fee
Disaggregation of Revenue [Line Items]
Total revenues	158.4	96.9
Kratos Government Solutions \| Time and materials
Disaggregation of Revenue [Line Items]
Total revenues	42.1	35.4
Unmanned Systems
Disaggregation of Revenue [Line Items]
Total revenues	221.7	231.9
Unmanned Systems \| U.S. Government
Disaggregation of Revenue [Line Items]
Total revenues	203.3	211.4
Unmanned Systems \| International
Disaggregation of Revenue [Line Items]
Total revenues	15.6	18.3
Unmanned Systems \| U.S. Commercial and other customers
Disaggregation of Revenue [Line Items]
Total revenues	2.8	2.2
Unmanned Systems \| Fixed price
Disaggregation of Revenue [Line Items]
Total revenues	156.6	151.4
Unmanned Systems \| Cost plus fee
Disaggregation of Revenue [Line Items]
Total revenues	59.1	78.1
Unmanned Systems \| Time and materials
Disaggregation of Revenue [Line Items]
Total revenues	$ 6.0	$ 2.4

Income Taxes - Deferred Taxes (Details) - USD ($) $ in Millions	Dec. 25, 2022	Dec. 26, 2021
Deferred tax assets:
Stock-based compensation	$ 9.4	$ 9.7
Payroll related accruals	6.7	9.2
Lease accruals	25.7	21.8
Net operating loss carryforwards	55.1	58.1
Tax credit carryforwards	11.3	13.1
Deferred expenses	14.1	10.8
Other	19.4	16.5
Gross deferred tax assets	141.7	139.2
Valuation allowance	(14.6)	(9.0)
Total deferred tax assets, net of valuation allowance	127.1	130.2
Deferred tax liabilities:
Unearned revenue	(3.3)	(4.3)
Operating lease right-of-use assets	(23.2)	(19.6)
Other intangibles	(23.1)	(28.0)
Property and equipment, principally due to differences in depreciation	(5.6)	(7.1)
Other	(1.6)	(1.6)
Total deferred tax liabilities	(56.8)	(60.6)
Net deferred tax asset	$ 70.3	$ 69.6

Organization and Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 25, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Net Contract Assets and Liabilities

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


	December 25, 2022		December 26, 2021		Net Change
Contract assets	$	222.8	$	190.8	$	32.0
Contract liabilities	$	62.1	$	58.1	$	4.0
Net contract assets	$	160.7	$	132.7	$	28.0

Schedule of Disaggregation of Revenue


	Year Ended December 25, 2022		Year Ended December 26, 2021
Kratos Government Solutions
Fixed price	$	476.1	$	447.3
Cost plus fee	158.4		96.9
Time and materials	42.1		35.4
Total Kratos Government Solutions	676.6		579.6
Unmanned Systems
Fixed price	156.6		151.4
Cost plus fee	59.1		78.1
Time and materials	6.0		2.4
Total Unmanned Systems	221.7		231.9
Total Revenues	$	898.3	$	811.5

Revenue by customer was as follows (in millions):


	Year Ended December 25, 2022		Year Ended December 26, 2021
Kratos Government Solutions
U.S. Government (1)	$	420.4	$	359.7
International (2)	157.5		151.5
U.S. Commercial and other customers	98.7		68.4
Total Kratos Government Solutions	676.6		579.6
Unmanned Systems
U.S. Government (1)	203.3		211.4
International (2)	15.6		18.3
U.S. Commercial and other customers	2.8		2.2
Total Unmanned Systems	221.7		231.9
Total Revenues	$	898.3	$	811.5

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs


	Year ended December 25, 2022		Year ended December 26, 2021		Year ended December 27, 2020
Selling, general and administrative expenses	$	26.3	$	25.8	$	21.0
Total cost of employee stock-based compensation included in operating income (loss) from continuing operations	$	26.3	$	25.8	$	21.0

Schedule of Valuation and Qualifying Accounts Disclosure


Allowance for Doubtful Accounts	Balance at Beginning of Year		Provisions		Write-offs/ Recoveries		Balance at End of Year
Year ended December 27, 2020	$	1.9	$	—	$	(0.1)	$	1.8
Year ended December 26, 2021	$	1.8	$	(0.2)	$	(1.2)	$	0.4
Year ended December 25, 2022	$	0.4	$	—	$	—	$	0.4

Schedule of Property, Plant and Equipment

Assets are depreciated predominately using the straight-line method, with the following lives:


			Years
Buildings and improvements			15 – 39
Machinery and equipment			3 – 20
Computer equipment and software			1 – 10
Vehicles, furniture, and office equipment			5
Leasehold improvements			Shorter of useful life or length of lease

Property, plant and equipment, net (in millions)


	December 25, 2022		December 26, 2021
Finance lease right of use assets	$	54.9	$	46.4
Land and buildings	38.4		19.8
Computer equipment and software	45.7		40.0
Machinery and equipment	129.9		109.1
Furniture and office equipment	7.6		7.6
Leasehold improvements	22.9		16.9
Construction in progress	51.0		45.3
Property and equipment	350.4		285.1
Accumulated depreciation and amortization	(137.3)		(116.8)
Total property and equipment, net	$	213.1	$	168.3

Schedule of Interest Expense, Net

Interest expense, net is summarized in the following table (in millions):


	Year ended December 25, 2022		Year ended December 26, 2021		Year ended December 27, 2020
Interest expense incurred primarily on indebtedness	$	(18.3)	$	(23.7)	$	(23.6)
Miscellaneous interest income	0.6		0.3		0.8
Interest expense, net	$	(17.7)	$	(23.4)	$	(22.8)

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 25, 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)	125,985,306	123,987,424
Shares outstanding (in shares)	125,985,306	123,987,424

Debt - Future Long-Term Debt Principal Payments (Details) - Line of credit - Secured debt $ in Millions	Dec. 25, 2022 USD ($)
Debt Instrument [Line Items]
2023	$ 6.3
2024	8.7
2025	10.0
2026	10.0
2027	222.5
Total debt	$ 257.5

Organization and Summary of Significant Accounting Policies - Interest Expense, Net (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 25, 2022	Dec. 26, 2021	Dec. 27, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Interest expense incurred primarily on indebtedness	$ (18.3)	$ (23.7)	$ (23.6)
Miscellaneous interest income	0.6	0.3	0.8
Interest expense, net	$ (17.7)	$ (23.4)	$ (22.8)

Organization and Summary of Significant Accounting Policies - Contract Assets and Liabilities (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 25, 2022	Dec. 26, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Contract assets	$ 222.8	$ 190.8
Contract assets, net change	32.0
Contract liabilities	62.1	58.1
Contract liabilities, net change	4.0
Net contract assets	160.7	$ 132.7
Net contract assets, net change	$ 28.0

Acquisitions - Narrative (Details) $ in Thousands											1 Months Ended	3 Months Ended	12 Months Ended
Acquisitions - Narrative (Details) $ in Thousands	May 23, 2022 USD ($)	Mar. 09, 2022 USD ($)	Dec. 30, 2021 USD ($)	Dec. 27, 2021 USD ($)	Dec. 10, 2021 USD ($)	Nov. 18, 2020 USD ($) shares	Jun. 30, 2020 USD ($)	Jun. 15, 2020 USD ($)	Apr. 17, 2020 USD ($)	Feb. 24, 2020 USD ($)	Dec. 30, 2021 USD ($)	Sep. 27, 2020 USD ($)	Dec. 25, 2022 USD ($)	Dec. 26, 2021 USD ($)	Dec. 27, 2020 USD ($)
Business Acquisition [Line Items]
Merger and acquisition related items													$ 700	$ 1,800	$ 1,700
Deferred tax assets, net													$ 70,300	$ 69,600
Level 3 \| Discount Rate \| Income Approach
Business Acquisition [Line Items]
Discount rate	0.064												0.11
Level 3 \| Royalty Rate \| Income Approach
Business Acquisition [Line Items]
Discount rate													0.11
Level 3 \| Royalty Rate \| Income Approach \| Minimum
Business Acquisition [Line Items]
Discount rate	0.11
Level 3 \| Royalty Rate \| Income Approach \| Maximum
Business Acquisition [Line Items]
Discount rate	0.12
Technical Directions, Inc.
Business Acquisition [Line Items]
Cash paid										$ 10,500
Working capital adjustments												$ 300
Optimized Performance Machining, Inc. (OPM)
Business Acquisition [Line Items]
Cash paid									$ 1,800
Working capital adjustments												$ 30
CPI ASC Signal Division, Inc.
Business Acquisition [Line Items]
Cash paid								$ 34,900
Net payment								1,400
Aggregate purchase price								$ 32,900
Net liabilities							$ 9,100
Deferred tax liabilities, net							1,100
Business combination, pro forma information, revenue of acquiree since acquisition date, actual															21,900
Business combination, pro forma information, earnings or loss of acquiree since acquisition date, actual															1,100
Merger and acquisition related items															$ 1,100
CPI ASC Signal Division, Inc. \| Customer relationships
Business Acquisition [Line Items]
Intangible assets							$ 2,000
Acquired finite-lived intangible assets, weighted average useful life							5 years
CPI ASC Signal Division, Inc. \| Trade names
Business Acquisition [Line Items]
Intangible assets							$ 100
Acquired finite-lived intangible assets, weighted average useful life							1 year
CPI ASC Signal Division, Inc. \| Developed technology and technical know-how
Business Acquisition [Line Items]
Intangible assets							$ 2,200
Acquired finite-lived intangible assets, weighted average useful life							7 years
5-D Systems, Inc
Business Acquisition [Line Items]
Cash paid						$ 5,000
Aggregate purchase price						$ 10,000
Number of shares issued (in shares) \| shares						250,374
Business acquisition, equity interest issued or issuable, value assigned						$ 5,000
CTT, Inc.
Business Acquisition [Line Items]
Cash paid			$ 15,200		$ 6,300						$ 22,000
Cosmic Advanced Engineering Solutions, Inc.
Business Acquisition [Line Items]
Cash paid	$ 74,400			$ 39,000
Aggregate purchase price	79,400			37,900
Net liabilities	2,500			6,700
Deferred tax liabilities, net				2,400
Business combination, pro forma information, revenue of acquiree since acquisition date, actual													$ 59,900
Business combination, pro forma information, earnings or loss of acquiree since acquisition date, actual													400
Payments to acquire business, subject to adjustments				37,500
Payments to acquire businesses, amount not included holdback paid at later				$ 400
Common stock issued	5,000
Deferred tax assets, net	200
Cosmic Advanced Engineering Solutions, Inc. \| Customer relationships
Business Acquisition [Line Items]
Acquired finite-lived intangible assets, weighted average useful life				10 years
Finite-lived intangible assets acquired				$ 4,400
Cosmic Advanced Engineering Solutions, Inc. \| In orocess research and development
Business Acquisition [Line Items]
Finite-lived intangible assets acquired	$ 7,300
Cosmic Advanced Engineering Solutions, Inc. \| Contracts and backlog
Business Acquisition [Line Items]
Acquired finite-lived intangible assets, weighted average useful life	3 years			1 year
Finite-lived intangible assets acquired	$ 2,500			$ 1,700
Cosmic Advanced Engineering Solutions, Inc. \| Trade names
Business Acquisition [Line Items]
Acquired finite-lived intangible assets, weighted average useful life	5 years			5 years
Finite-lived intangible assets acquired	$ 500			$ 600
Cosmic Advanced Engineering Solutions, Inc. \| Developed technology and technical know-how
Business Acquisition [Line Items]
Acquired finite-lived intangible assets, weighted average useful life	3 years			5 years
Finite-lived intangible assets acquired	$ 500			$ 1,800
Southern Research Engineering Division
Business Acquisition [Line Items]
Cash paid		$ 74,400
Aggregate purchase price		79,400
Business combination, pro forma information, revenue of acquiree since acquisition date, actual													26,800
Business combination, pro forma information, earnings or loss of acquiree since acquisition date, actual													$ 2,900
Common stock issued		$ 5,000