Kratos Closes $625 Million 7% Senior Secured Notes Offering and Refinancing

Kratos Closes $625 Million 7% Senior Secured Notes Offering and Refinancing

        Cash Paid Interest Expense Reduced by $18.75 Million Annually

            Corporation's Free Cash Flow to Substantially Increase

SAN DIEGO, May 15, 2014 (GLOBE NEWSWIRE) -- Kratos Defense & Security
Solutions, Inc. (Nasdaq:KTOS), a leading National Security Solutions provider,
announced today that the refinancing of its $625 million 10% senior secured
notes due in 2017 has been completed, with newly issued $625 million 7% senior
secured notes due in 2019. The issuance of the 7% senior secured notes and
refinancing will reduce the Company's annual cash paid interest expense by
$18.75 million per year for the next three years, the remaining term of the
previously outstanding 10% senior secured notes. Additionally, an important
feature of the new 7% senior secured notes provides the Company the ability to
redeem, on a one-time basis, 10% of the principal at 103% in the first two
years of the term. Kratos also announced today that it has replaced its
existing $110 million revolving line of credit with a new $110 million
revolving line of credit. SunTrust Robinson Humphrey, Inc. was sole book
running manager for Kratos in the successful execution of this important
strategic transaction and the lead arranger for Kratos' new revolving line of

Eric DeMarco, President & CEO of Kratos, said, "The refinancing of our 10%
notes at 7% and the resultant annual cash savings of $18.75 million is
incredibly important to our Company and our stakeholders. Investors were
interested in our Company's long-term growth potential and prospects,
particularly in our unmanned aerial systems and electronic products business
areas, where we are currently making sizable internal investments in research
and development related to several new, large program opportunities.
Additionally, Kratos' investors and the rating agencies recognized that the
Company is positioned on what are expected to be well funded and high-priority
areas of U.S. National Security and the improved clarity regarding U.S.
defense spending that has occurred in recent months."

Mr. DeMarco added, "The success of this transaction was also a result of
SunTrust's flawless execution, and numerous of our existing debt holders and
new investors to Kratos have commented on the defense industry knowledge,
professionalism and expertise of SunTrust. SunTrust's execution was the best
of any of Kratos' previous financing transactions, and I am confident no other
institution could have achieved such an outstanding result for our Company.
SunTrust is an important strategic partner of Kratos, and we look forward to
working together for many years in the future."

Mr. DeMarco continued, "In late 2013, we explored a potential opportunistic
refinancing of our senior secured notes, and we made the decision not to move
forward as the financial and other terms and conditions available to our
Company did not make sense at that time. Clearly, we made the correct decision
not to execute the transaction in the fall. By waiting to refinance, we
avoided an approximate $45 million cash make whole payment, and we now have an
interest rate and total cost of capital below what was available to us
previously and the ability to pay down some debt, a top priority of the

Mr. DeMarco concluded, "We remain focused internally -- on executing our
strategic plan of building a leading intellectual property, technology and
product based national security business and executing on several new and
major program opportunities."

As a result of the refinancing transaction of the Company's existing 10%
senior notes and existing Asset Based Loan (ABL) revolving line of credit, the
Company currently expects to record one-time charges of approximately $30 -
$35 million in its fiscal second quarter, comprised of the 5% call premium and
the write-off of the existing issuance premium and deferred financing costs of
the original financing transactions.

The 7% senior secured notes due 2019 described in this press release were
offered only to "qualified institutional buyers" in reliance on the exemption
from registration pursuant to Rule 144A under the Securities Act and to
persons outside of the United States in compliance with Regulation S under the
Securities Act. The notes have not been registered under the Securities Act,
or the securities laws of any state or other jurisdiction, and may not be
offered or sold in the United States without registration or an applicable
exemption from the Securities Act and applicable state securities or blue sky
laws and foreign securities laws.

This press release is for informational purposes only and shall not constitute
an offer to sell or the solicitation of an offer to buy the notes or any other
securities. The offering of notes was not made to any person in any
jurisdiction in which the offer, solicitation or sale is unlawful. Any offers
of the notes were made only by means of a private offering memorandum. This
press release should not be construed as a notice of redemption, offer or
solicitation with respect to Kratos' outstanding 10% senior secured notes due

AboutKratos Defense & Security Solutions

Kratos Defense & Security Solutions, Inc.(Nasdaq:KTOS) is a specialized
National Security technology Company providing mission critical products,
solutions and services for United States National Security.Kratos'core
capabilities are sophisticated engineering, manufacturing and system
integration offerings for National Security platforms and
programs.Kratos'areas of expertise include Command, Control, Communications,
Computing, Combat Systems, Intelligence, Surveillance and Reconnaissance
(C5ISR), satellite communication systems, electronic warfare, unmanned
systems, missile defense, cyber warfare, cybersecurity, information assurance,
and critical infrastructure security.Kratoshas primarily an engineering and
technically oriented work force of approximately 3,700. Substantially all
ofKratos'work is performed on a military base, in a secure facility or at a
critical infrastructure location.Kratos'primary end customers are National
Security related agencies. News and information are available

Notice Regarding Forward-Looking Statements

Certain statements in this press release may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements are made on the basis of the current
beliefs, expectations and assumptions of the management ofKratosand are
subject to significant risks and uncertainty, including risks related to
product failure, general economic conditions, cutbacks in spending, Kratos'
ability to achieve the interest expense savings expected to arise from the
refinancing of its outstanding 10% senior secured notes due 2017, and the
amount of the one-time accounting charges expected to be recorded by Kratos in
connection with such refinancing. Investors are cautioned not to place undue
reliance on any such forward-looking statements. All such forward-looking
statements speak only as of the date they are made, andKratosundertakes no
obligation to update or revise these statements, whether as a result of new
information, future events or otherwise. For a further discussion of risks and
uncertainties that could cause actual results to differ from those expressed
in these forward-looking statements, as well as risks relating to the business
ofKratosin general, see the risk disclosures in the Annual Report on Form
10-K ofKratosfor the year endedDecember 29, 2013, and in subsequent reports
on Forms 10-Q and 8-K and other filings made with theSECbyKratos.

CONTACT: Press Contact:
         Yolanda White
         858-812-7302 Direct
         Investor Information:

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