Kratos Executes Definitive Agreement to Sell Public Safety & Security Division to Securitas Electronic Security

Kratos Defense & Security Solutions, Inc. (Nasdaq:KTOS), a leading National Security Solutions provider, announced today that it has signed a definitive agreement to divest its Public Safety & Security System Integration Business (PSS) for $69 million in cash to Securitas Electronic Security, Inc., subject to a customary net working capital adjustment at closing. Kratos expects to ultimately receive approximately $70 million of net cash proceeds from the transaction, after taking into account amounts to be paid by Kratos pursuant to a negotiated transaction services agreement between the two companies, receipt by Kratos of approximately $7 million in estimated net working capital to be retained by Kratos, and associated transaction fees and expenses.  The transaction is expected to close in the next 90 days, subject to normal and customary closing conditions and regulatory approvals.  The sale of PSS, which will be reflected as a discontinued operation in Kratos' consolidated financial statements going forward and related comparative historical periods, is expected to significantly improve Kratos' overall financial position, flexibility and liquidity, reduce Kratos' net leverage, and improve the Company's future financial matrices including growth rates, margin and Adjusted EBITDA rates.

Eric DeMarco, Kratos President and CEO, said, "The sale of PSS virtually completes the successful execution of Kratos' strategy to be a pure play defense high technology, product and systems provider.  This divestiture will allow us even greater focus on our high growth core businesses including unmanned aerial drones, satellite communications, missile defense, training systems and microwave electronics."

Canaccord Genuity is serving as exclusive financial advisor to Kratos in connection with the transaction and Paul Hastings LLP is serving as legal counsel.