Kratos Defense & Security Solutions, Inc. operates as a mid-tier government contractor at the forefront of the U.S. Department of Defense’s (the DoD) Third Offset Strategy. The company is a major technology, intellectual property and proprietary product and solution company focused on the U.S. and its allies’ national security. The company’s primary focus areas are unmanned systems, satellite communications, microwave electronics, cyber security/warfare, missile defense and combat systems. Segments The company operates in three segments: Kratos Government Solutions (KGS), Unmanned Systems (US) and Public Safety & Security (PSS). The KGS segment is comprised of an aggregation of KGS operating segments, including its microwave electronic products, satellite communications, modular systems and defense and rocket support operating segments. The US segment consists of the company’s unmanned aerial, ground, seaborne and command, control and communications system business. The PSS segment designs, engineers, deploys, operates, integrates into command and control infrastructure, maintains and operates security and surveillance solutions for homeland security, public safety, critical infrastructure, government and commercial customers. The PSS segment’s customers include those in the critical infrastructure, power generation, power transport, nuclear energy, financial, IT, healthcare, education, transportation and petro-chemical industries, as well as certain government and military customers. Strategy The company’s strategy is to grow its business as a proprietary product and intellectual property focused national security company, focused on Command, Control, Communications, Computing, Combat Systems, Intelligence, Surveillance and Reconnaissance (‘C5ISR’), providing differentiated technology, products, solutions and services in its core areas of focus. Customers The company’s primary end customers are U.S. Government agencies, including the DoD, classified agencies, intelligence agencies, other national security agencies and homeland security related agencies. It also conducts business with local, state and foreign governments, and domestic and international commercial customers. In the year ended December 27, 2015, the company generated 61% of its total revenues from contracts with the U.S. Government (including all branches of the U.S. military), either as a prime contractor or a subcontractor. A representative list of the company’s customers in its KGS and US segments during 2015 included the U.S. Air Force, U.S. Army, U.S. Navy, U.S. Marines, Missile Defense Agency, the Department of Homeland Security, the National Aeronautics and Space Administration, Foreign Military Sales, the U.S. Southern Command, U.S. intelligence community and certain classified customers. In 2015, representative customers in the PSS segment included Metropolitan Transportation Authority of New York, Prince George’s County Public Schools, Children’s Hospital of Philadelphia, Alamo Colleges, University of New Hampshire, City of Galveston, Texas Orthopedic Hospital, Port Authority of New York & New Jersey, Prudential, New York University, Fidelity, Scripps Clinic, PNC Bank, Halliburton, AT&T, Chevron, Mellon Bank, Calpine Power Plants, Capital Health, DuPont Fabros, BP America, University of Houston, Meridian Health and Memorial Hermann Hospital System. Discontinued Operations In 2015, the company completed the sale of the U.S. and U.K. operations of its Electronic Products division to Ultra Electronics Holdings plc. Competition Competition in the KGS and US segments include tier one, the U.S. Government contractors, such as Northrop Grumman, Lockheed Martin, General Dynamics, SAIC, Leidos, Engility, ITT Systems, CSRA, Raytheon, BAE Systems, L3, Orbital/ATK, Boeing, and CACI. Tier two competitors include smaller government contractors, such as AeroVironment Inc., API Technologies Corp., iRobot Corp., and AAR Corp. Competition in the PSS segment includes Siemens Building Technology, Johnson Controls, and Convergint Technologies, among others. Research and Development The company’s research and development expenses were $16.2 million in 2015. Government Regulation The company is subject to various government regulations, including various U.S. Government regulations as a contractor and subcontractor to the agencies of the U.S. Government. Among the most significant U.S. Government regulations affecting the company’s business are the Federal Acquisition Regulations and supplemental agency regulations; the Truth in Negotiations Act; the Cost Accounting Standards; the Foreign Corrupt Practices Act; and the False Claims Act and the False Statements Act. History Kratos Defense & Security Solutions, Inc. was founded in 1994. The company was incorporated in the state of New York in 1994. It was reincorporated in the state of Delaware in 1998.
kratos defense & security
Bridge Pointe Corporate Centre
4820 Eastgate Mall
San Diego, CA 92121
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