Kratos Acquires Aerial Drone and Targets Provider Composite Engineering, Inc.

Kratos Defense & Security Solutions, Inc., a leading National Security Solutions provider, has announced that it has completed its acquisition of aerial drone and targets provider Composite Engineering, Inc. (CEI). Kratos provides electronics and avionics that are on board CEI aircraft, and Kratos also provides ground flight control stations and electronics for the command and control of CEI aerial systems. CEI aircraft are made from composite materials and are designed to replicate some of the most lethal threats facing this nation’s Warfighters and strategic assets.

Kratos also announced today that it has completed an internal reorganization of its business to better align Kratos’ resources for enhanced focus on the corporation’s strategic priority areas of unmanned systems, electronic warfare, satellite communications, cyber security & warfare, tactical & ballistic missile systems, intelligence, surveillance & reconnaissance and critical infrastructure security.

Virtually all of Kratos’ business today supports mission critical C5ISR related National Security programs. With the reorganization, Kratos has five operating divisions: (1) Unmanned Systems Solutions, led by Richard Selvaggio, where all of Kratos’ unmanned systems related products business is contained, including CEI; (2) Electronic Products, led by Rich Poirier, focused on electronic warfare, electronic attack, ISR and tactical and strategic missile systems; (3) Defense & Rocket Support Services, led by Dave Carter, focused on ballistic missile defense & defense program related services; (4) Technology & Training Solutions, led by Phil Carrai, focused on satellite communication system related products & solutions, cyber security related products & solutions and specialized training products & solutions; and (5) Kratos’ Public Safety & Security Division, led by Ben Goodwin, focused on strategic asset and critical infrastructure security solutions.

Kratos’ President and CEO Eric DeMarco said, “Consistent with our stated strategy, we are building a specialized technology and products based company that is almost entirely C5ISR based across the entire corporation, and aligned with certain of our country’s most important National Security priority areas. The reorganization we announced today will allow Kratos to focus its business development, engineering, IR&D, management and financial resources on our stated strategic priority areas as we execute our business plan. Additionally, this reorganization is also consistent with our intended divestiture of certain noncore and nonstrategic business lines we acquired along with Integral Systems, as we discussed in detail at the end of last quarter, so that we can reallocate Kratos’ resources from these to be divested noncore business lines and toward our focus areas. We will be providing the details on the small business lines we intend to divest when we report our second quarter results, and these planned divestitures are not anticipated to adversely impact Kratos’ operating profitability or cash flow once completed.”

Mr. DeMarco continued, “I want to welcome the entire CEI team to Kratos, where we believe we are truly building one of the most dynamic, entrepreneurial and technology based businesses in the National Security industry today. With the merger of the CEI and Kratos organizations, we believe that that there will be significantly enhanced opportunities for the combined enterprise in the aerial target, aerial drone and unmanned aerial systems areas.”