ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Commission
File Number
|
|
Exact Name of Registrant as Specified in its Charter,
Address of Principal Executive Offices and Telephone Number
|
|
State or other jurisdiction of
incorporation or organization
|
|
I.R.S. Employer
Identification No.
|
001-33072
|
|
Leidos Holdings, Inc.
|
|
Delaware
|
|
20-3562868
|
|
|
11951 Freedom Drive, Reston, Virginia 20190
|
|
|
|
|
|
|
(571) 526-6000
|
|
|
|
|
000-12771
|
|
Leidos, Inc.
|
|
Delaware
|
|
95-3630868
|
|
|
11951 Freedom Drive, Reston, Virginia 20190
|
|
|
|
|
|
|
(571) 526-6000
|
|
|
|
|
Leidos Holdings, Inc.
|
Yes
x
No
o
|
Leidos, Inc.
|
Yes
x
No
o
|
Leidos Holdings, Inc.
|
Yes
x
No
o
|
Leidos, Inc.
|
Yes
x
No
o
|
Leidos Holdings, Inc.
|
Large accelerated filer
|
ý
|
Accelerated filer
|
¨
|
Non-accelerated filer
|
¨
|
Smaller reporting company
|
¨
|
|
|
|
|
|
|
|
|
|
Leidos, Inc.
|
Large accelerated filer
|
¨
|
Accelerated filer
|
¨
|
Non-accelerated filer
|
ý
|
Smaller reporting company
|
¨
|
Leidos Holdings, Inc.
|
Yes
o
No
x
|
Leidos, Inc.
|
Yes
o
No
x
|
Leidos Holdings, Inc.
|
85,627,012 shares of common stock ($.0001 par value per share)
|
Leidos, Inc.
|
5,000 shares of common stock ($.01 par value per share) held by Leidos Holdings, Inc.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
November 1,
2013 |
|
October 31,
2012 |
|
November 1,
2013 |
|
October 31,
2012 |
||||||||
|
(in millions, except per share amounts)
|
||||||||||||||
Revenues
|
$
|
1,420
|
|
|
$
|
1,673
|
|
|
$
|
4,486
|
|
|
$
|
4,899
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of revenues
|
1,224
|
|
|
1,434
|
|
|
3,903
|
|
|
4,218
|
|
||||
Selling, general and administrative expenses
|
116
|
|
|
139
|
|
|
360
|
|
|
367
|
|
||||
Bad debt expense
|
43
|
|
|
—
|
|
|
45
|
|
|
—
|
|
||||
Intangible asset impairment losses
|
19
|
|
|
—
|
|
|
51
|
|
|
—
|
|
||||
Separation transaction and restructuring expenses
|
25
|
|
|
—
|
|
|
58
|
|
|
—
|
|
||||
Operating (loss) income
|
(7
|
)
|
|
100
|
|
|
69
|
|
|
314
|
|
||||
Non-operating income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest income
|
5
|
|
|
1
|
|
|
15
|
|
|
5
|
|
||||
Interest expense
|
(21
|
)
|
|
(20
|
)
|
|
(59
|
)
|
|
(73
|
)
|
||||
Other income, net
|
2
|
|
|
2
|
|
|
3
|
|
|
8
|
|
||||
(Loss) income from continuing operations before income taxes
|
(21
|
)
|
|
83
|
|
|
28
|
|
|
254
|
|
||||
Income tax benefit (expense)
|
12
|
|
|
(28
|
)
|
|
1
|
|
|
(89
|
)
|
||||
(Loss) income from continuing operations
|
(9
|
)
|
|
55
|
|
|
29
|
|
|
165
|
|
||||
Discontinued operations (Note 2):
|
|
|
|
|
|
|
|
||||||||
Income from discontinued operations before income taxes
|
21
|
|
|
94
|
|
|
158
|
|
|
279
|
|
||||
Income tax expense
|
(15
|
)
|
|
(37
|
)
|
|
(67
|
)
|
|
(105
|
)
|
||||
Income from discontinued operations
|
6
|
|
|
57
|
|
|
91
|
|
|
174
|
|
||||
Net (loss) income
|
$
|
(3
|
)
|
|
$
|
112
|
|
|
$
|
120
|
|
|
$
|
339
|
|
Earnings per share (Note 4):
|
|
|
|
|
|
|
|
||||||||
Basic:
|
|
|
|
|
|
|
|
||||||||
(Loss) income from continuing operations
|
$
|
(0.11
|
)
|
|
$
|
0.66
|
|
|
$
|
0.31
|
|
|
$
|
1.95
|
|
Income from discontinued operations
|
0.07
|
|
|
0.66
|
|
|
1.08
|
|
|
2.05
|
|
||||
|
$
|
(0.04
|
)
|
|
$
|
1.32
|
|
|
$
|
1.39
|
|
|
$
|
4.00
|
|
Diluted:
|
|
|
|
|
|
|
|
||||||||
(Loss) income from continuing operations
|
$
|
(0.11
|
)
|
|
$
|
0.66
|
|
|
$
|
0.31
|
|
|
$
|
1.95
|
|
Income from discontinued operations
|
0.07
|
|
|
0.66
|
|
|
1.08
|
|
|
2.05
|
|
||||
|
$
|
(0.04
|
)
|
|
$
|
1.32
|
|
|
$
|
1.39
|
|
|
$
|
4.00
|
|
Cash dividends declared per share
|
$
|
0.32
|
|
|
$
|
0.48
|
|
|
$
|
5.28
|
|
|
$
|
1.44
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
November 1,
2013 |
|
October 31, 2012
|
|
November 1,
2013 |
|
October 31,
2012 |
||||||||
|
(in millions)
|
||||||||||||||
Net (loss) income
|
$
|
(3
|
)
|
|
$
|
112
|
|
|
$
|
120
|
|
|
$
|
339
|
|
Other comprehensive income, net of tax:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||
Deferred taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Foreign currency translation adjustments, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Pension liability adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
||||
Deferred taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
||||
Pension liability adjustments, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
||||
Total other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
||||
Comprehensive income
|
$
|
(3
|
)
|
|
$
|
112
|
|
|
$
|
120
|
|
|
$
|
349
|
|
|
November 1, 2013
|
|
January 31,
2013 |
||||
|
(in millions)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
814
|
|
|
$
|
735
|
|
Receivables, net
|
1,161
|
|
|
1,168
|
|
||
Inventory, prepaid expenses and other current assets
|
298
|
|
|
342
|
|
||
Assets of discontinued operations
|
13
|
|
|
1,371
|
|
||
Total current assets
|
2,286
|
|
|
3,616
|
|
||
Property, plant and equipment (less accumulated depreciation and amortization of $340 million and $391 million at November 1, 2013 and January 31, 2013, respectively)
|
473
|
|
|
288
|
|
||
Intangible assets, net
|
100
|
|
|
178
|
|
||
Goodwill
|
1,704
|
|
|
1,704
|
|
||
Deferred income taxes
|
10
|
|
|
12
|
|
||
Other assets
|
62
|
|
|
77
|
|
||
|
4,635
|
|
|
5,875
|
|
||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued liabilities
|
$
|
782
|
|
|
$
|
787
|
|
Accrued payroll and employee benefits
|
307
|
|
|
357
|
|
||
Notes payable and long-term debt, current portion
|
151
|
|
|
—
|
|
||
Liabilities of discontinued operations
|
—
|
|
|
648
|
|
||
Total current liabilities
|
1,240
|
|
|
1,792
|
|
||
Notes payable and long-term debt, net of current portion
|
1,330
|
|
|
1,295
|
|
||
Other long-term liabilities
|
182
|
|
|
170
|
|
||
Commitments and contingencies (Notes 11 and 12)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $.0001 par value, 500 million shares authorized, 86 million shares issued and outstanding at November 1, 2013 and January 31, 2013, respectively
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
1,735
|
|
|
2,110
|
|
||
Retained earnings
|
150
|
|
|
510
|
|
||
Accumulated other comprehensive loss
|
(2
|
)
|
|
(2
|
)
|
||
Total stockholders’ equity
|
1,883
|
|
|
2,618
|
|
||
|
$
|
4,635
|
|
|
$
|
5,875
|
|
|
Shares of
common stock |
|
Additional
paid-in capital |
|
Retained
earnings |
|
Accumulated
other comprehensive loss |
|
Total
|
|||||||||
|
(in millions, except for share amounts)
|
|||||||||||||||||
Balance at January 31, 2013
|
86
|
|
|
$
|
2,110
|
|
|
$
|
510
|
|
|
$
|
(2
|
)
|
|
$
|
2,618
|
|
Net income
|
—
|
|
|
—
|
|
|
120
|
|
|
—
|
|
|
120
|
|
||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Issuances of stock
|
—
|
|
|
30
|
|
|
—
|
|
|
—
|
|
|
30
|
|
||||
Shares repurchased and retired or withheld for tax withholdings on vesting of restricted stock
|
—
|
|
|
(6
|
)
|
|
(11
|
)
|
|
—
|
|
|
(17
|
)
|
||||
Cash dividends of $1.28 per share
|
—
|
|
|
—
|
|
|
(113
|
)
|
|
—
|
|
|
(113
|
)
|
||||
Special cash dividend of $4.00 per share
|
—
|
|
|
—
|
|
|
(356
|
)
|
|
—
|
|
|
(356
|
)
|
||||
Adjustments for income tax benefits from stock-based compensation
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
||||
Stock-based compensation (including discontinued operations of $21 million)
|
—
|
|
|
64
|
|
|
—
|
|
|
—
|
|
|
64
|
|
||||
Dividend received, net of contribution paid, from the separation of New SAIC
|
—
|
|
|
269
|
|
|
—
|
|
|
—
|
|
|
269
|
|
||||
Separation of New SAIC
|
—
|
|
|
(722
|
)
|
|
—
|
|
|
—
|
|
|
(722
|
)
|
||||
Balance at November 1, 2013
|
86
|
|
|
$
|
1,735
|
|
|
$
|
150
|
|
|
$
|
(2
|
)
|
|
$
|
1,883
|
|
|
Nine Months Ended
|
||||||
|
November 1,
2013 |
|
October 31,
2012 |
||||
|
(in millions)
|
||||||
Cash flows from operations:
|
|
|
|
||||
Net income
|
$
|
120
|
|
|
$
|
339
|
|
Income from discontinued operations
|
(91
|
)
|
|
(174
|
)
|
||
Adjustments to reconcile net income to net cash provided by operations:
|
|
|
|
|
|||
Depreciation and amortization
|
66
|
|
|
73
|
|
||
Stock-based compensation
|
43
|
|
|
42
|
|
||
Intangible asset impairment losses
|
51
|
|
|
—
|
|
||
Inventory write-down
|
3
|
|
|
—
|
|
||
Bad debt expense
|
45
|
|
|
—
|
|
||
Net gain on sales and disposals of assets
|
(9
|
)
|
|
(7
|
)
|
||
Other
|
3
|
|
|
3
|
|
||
Increase (decrease) in cash and cash equivalents, net of effects of acquisitions and dispositions, resulting from changes in:
|
|
|
|
|
|
||
Receivables
|
(139
|
)
|
|
211
|
|
||
Inventory, prepaid expenses and other current assets
|
30
|
|
|
(73
|
)
|
||
Deferred income taxes
|
20
|
|
|
(4
|
)
|
||
Other assets
|
3
|
|
|
(2
|
)
|
||
Accounts payable and accrued liabilities
|
9
|
|
|
(671
|
)
|
||
Accrued payroll and employee benefits
|
(48
|
)
|
|
74
|
|
||
Income taxes receivable/payable
|
(14
|
)
|
|
35
|
|
||
Other long-term liabilities
|
(14
|
)
|
|
3
|
|
||
Total cash flows provided by (used in) operating activities of continuing operations
|
78
|
|
|
(151
|
)
|
||
Cash flows from investing activities:
|
|
|
|
|
|
||
Expenditures for property, plant and equipment
|
(31
|
)
|
|
(31
|
)
|
||
Acquisitions of businesses, net of cash acquired of $9 million in fiscal 2013
|
(1
|
)
|
|
(478
|
)
|
||
Proceeds from sale of assets
|
65
|
|
|
2
|
|
||
Net proceeds (purchases) of cost method investments
|
12
|
|
|
—
|
|
||
Dividend received from the separation of New SAIC
|
295
|
|
|
—
|
|
||
Contribution paid related to the separation of New SAIC
|
(26
|
)
|
|
—
|
|
||
Other
|
(2
|
)
|
|
1
|
|
||
Total cash flows provided by (used in) investing activities of continuing operations
|
312
|
|
|
(506
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
|
||
Payments on notes payable and long-term debt
|
(1
|
)
|
|
(550
|
)
|
||
Payments for deferred financing costs
|
(5
|
)
|
|
—
|
|
||
Payment from New SAIC for deferred financing costs
|
5
|
|
|
—
|
|
||
Proceeds from real estate financing transaction
|
38
|
|
|
—
|
|
||
Proceeds from debt issuance
|
500
|
|
|
—
|
|
||
Distribution of debt to New SAIC
|
(500
|
)
|
|
—
|
|
||
Sales of stock and exercises of stock options
|
11
|
|
|
15
|
|
||
Repurchases of stock
|
(17
|
)
|
|
(21
|
)
|
||
Dividend payments
|
(452
|
)
|
|
(124
|
)
|
||
Other
|
2
|
|
|
—
|
|
||
Total cash flows used in financing activities of continuing operations
|
(419
|
)
|
|
(680
|
)
|
Decrease in cash and cash equivalents from continuing operations
|
(29
|
)
|
|
(1,337
|
)
|
||
Cash flows from discontinued operations:
|
|
|
|
|
|
||
Cash provided by operating activities of discontinued operations
|
125
|
|
|
285
|
|
||
Cash used in investing activities of discontinued operations
|
(17
|
)
|
|
(6
|
)
|
||
Cash used in financing activities of discontinued operations
|
—
|
|
|
(3
|
)
|
||
Increase in cash and cash equivalents from discontinued operations
|
108
|
|
|
276
|
|
||
Total increase (decrease) in cash and cash equivalents
|
79
|
|
|
(1,061
|
)
|
||
Cash and cash equivalents at beginning of period
|
735
|
|
|
1,592
|
|
||
Cash and cash equivalents at end of period
|
$
|
814
|
|
|
$
|
531
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
November 1,
2013 |
|
October 31,
2012 |
|
November 1,
2013 |
|
October 31,
2012 |
||||||||
|
(in millions)
|
||||||||||||||
Revenues
|
$
|
1,420
|
|
|
$
|
1,673
|
|
|
$
|
4,486
|
|
|
$
|
4,899
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of revenues
|
1,224
|
|
|
1,434
|
|
|
3,903
|
|
|
4,218
|
|
||||
Selling, general and administrative expenses
|
116
|
|
|
139
|
|
|
360
|
|
|
367
|
|
||||
Bad debt expense
|
43
|
|
|
—
|
|
|
45
|
|
|
—
|
|
||||
Intangible asset impairment losses
|
19
|
|
|
—
|
|
|
51
|
|
|
—
|
|
||||
Separation transaction and restructuring expenses
|
25
|
|
|
—
|
|
|
58
|
|
|
—
|
|
||||
Operating (loss) income
|
(7
|
)
|
|
100
|
|
|
69
|
|
|
314
|
|
||||
Non-operating income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest income
|
5
|
|
|
1
|
|
|
15
|
|
|
5
|
|
||||
Interest expense
|
(21
|
)
|
|
(20
|
)
|
|
(59
|
)
|
|
(73
|
)
|
||||
Other income, net
|
2
|
|
|
2
|
|
|
3
|
|
|
8
|
|
||||
(Loss) income from continuing operations before income taxes
|
(21
|
)
|
|
83
|
|
|
28
|
|
|
254
|
|
||||
Income tax benefit (expense)
|
12
|
|
|
(28
|
)
|
|
1
|
|
|
(89
|
)
|
||||
(Loss) income from continuing operations
|
(9
|
)
|
|
55
|
|
|
29
|
|
|
165
|
|
||||
Discontinued operations (Note 2):
|
|
|
|
|
|
|
|
||||||||
Income from discontinued operations before income taxes
|
21
|
|
|
94
|
|
|
158
|
|
|
279
|
|
||||
Income tax expense
|
(15
|
)
|
|
(37
|
)
|
|
(67
|
)
|
|
(105
|
)
|
||||
Income from discontinued operations
|
6
|
|
|
57
|
|
|
91
|
|
|
174
|
|
||||
Net (loss) income
|
$
|
(3
|
)
|
|
$
|
112
|
|
|
$
|
120
|
|
|
$
|
339
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
November 1, 2013
|
|
October 31, 2012
|
|
November 1,
2013 |
|
October 31,
2012 |
||||||||
|
(in millions)
|
||||||||||||||
Net (loss) income
|
$
|
(3
|
)
|
|
$
|
112
|
|
|
$
|
120
|
|
|
$
|
339
|
|
Other comprehensive income, net of tax:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||
Deferred taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Foreign currency translation adjustments, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Pension liability adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
||||
Deferred taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
||||
Pension liability adjustments, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
||||
Total other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
||||
Comprehensive income
|
$
|
(3
|
)
|
|
$
|
112
|
|
|
$
|
120
|
|
|
$
|
349
|
|
|
November 1, 2013
|
|
January 31,
2013 |
||||
|
(in millions)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
546
|
|
|
$
|
735
|
|
Receivables, net
|
1,161
|
|
|
1,168
|
|
||
Inventory, prepaid expenses and other current assets
|
298
|
|
|
342
|
|
||
Assets of discontinued operations
|
13
|
|
|
1,371
|
|
||
Total current assets
|
2,018
|
|
|
3,616
|
|
||
Property, plant and equipment (less accumulated depreciation and amortization of $340 million and $391 million at November 1, 2013 and January 31, 2013, respectively)
|
473
|
|
|
288
|
|
||
Intangible assets, net
|
100
|
|
|
178
|
|
||
Goodwill
|
1,704
|
|
|
1,704
|
|
||
Deferred income taxes
|
10
|
|
|
12
|
|
||
Other assets
|
62
|
|
|
77
|
|
||
Note receivable from Leidos Holdings, Inc. (Note 8)
|
1,075
|
|
|
—
|
|
||
|
$
|
5,442
|
|
|
$
|
5,875
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued liabilities
|
$
|
782
|
|
|
$
|
787
|
|
Accrued payroll and employee benefits
|
307
|
|
|
357
|
|
||
Notes payable and long-term debt, current portion
|
151
|
|
|
—
|
|
||
Liabilities of discontinued operations
|
—
|
|
|
648
|
|
||
Total current liabilities
|
1,240
|
|
|
1,792
|
|
||
Notes payable and long-term debt, net of current portion
|
1,330
|
|
|
1,295
|
|
||
Note payable to Leidos Holdings, Inc. (Note 8)
|
—
|
|
|
22
|
|
||
Other long-term liabilities
|
182
|
|
|
170
|
|
||
Commitments and contingencies (Notes 11 and 12)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $.01 par value, 10,000 shares authorized, 5,000 shares issued and outstanding at November 1, 2013 and January 31, 2013
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
207
|
|
|
233
|
|
||
Retained earnings
|
2,485
|
|
|
2,365
|
|
||
Accumulated other comprehensive loss
|
(2
|
)
|
|
(2
|
)
|
||
Total stockholders’ equity
|
2,690
|
|
|
2,596
|
|
||
|
$
|
5,442
|
|
|
$
|
5,875
|
|
|
Shares of
common stock |
|
Additional
paid-in capital |
|
Retained
earnings |
|
Accumulated
other comprehensive loss |
|
Total
|
|||||||||
|
(in millions, except for share amounts)
|
|||||||||||||||||
Balance at January 31, 2013
|
5,000
|
|
|
$
|
233
|
|
|
$
|
2,365
|
|
|
$
|
(2
|
)
|
|
$
|
2,596
|
|
Net income
|
—
|
|
|
—
|
|
|
120
|
|
|
—
|
|
|
120
|
|
||||
Contribution paid related to the separation of New SAIC
|
—
|
|
|
(26
|
)
|
|
—
|
|
|
—
|
|
|
(26
|
)
|
||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Balance at November 1, 2013
|
5,000
|
|
|
$
|
207
|
|
|
$
|
2,485
|
|
|
$
|
(2
|
)
|
|
$
|
2,690
|
|
|
Nine Months Ended
|
||||||
|
November 1,
2013 |
|
October 31,
2012 |
||||
|
(in millions)
|
||||||
Cash flows from operations:
|
|
|
|
||||
Net income
|
$
|
120
|
|
|
$
|
339
|
|
Income from discontinued operations
|
(91
|
)
|
|
(174
|
)
|
||
Adjustments to reconcile net income to net cash provided by operations:
|
|
|
|
||||
Depreciation and amortization
|
66
|
|
|
73
|
|
||
Stock-based compensation
|
43
|
|
|
42
|
|
||
Intangible asset impairment losses
|
51
|
|
|
—
|
|
||
Inventory write-down
|
3
|
|
|
—
|
|
||
Bad debt expense
|
45
|
|
|
—
|
|
||
Net gain on sales and disposals of assets
|
(9
|
)
|
|
(7
|
)
|
||
Other
|
3
|
|
|
3
|
|
||
Increase (decrease) in cash and cash equivalents, net of effects of acquisitions and dispositions, resulting from changes in:
|
|
|
|
||||
Receivables
|
(139
|
)
|
|
211
|
|
||
Inventory, prepaid expenses and other current assets
|
30
|
|
|
(73
|
)
|
||
Deferred income taxes
|
20
|
|
|
(4
|
)
|
||
Other assets
|
3
|
|
|
(2
|
)
|
||
Accounts payable and accrued liabilities
|
9
|
|
|
(671
|
)
|
||
Accrued payroll and employee benefits
|
(48
|
)
|
|
74
|
|
||
Income taxes receivable/payable
|
(14
|
)
|
|
35
|
|
||
Other long-term liabilities
|
(14
|
)
|
|
3
|
|
||
Total cash flows provided by (used in) operating activities of continuing operations
|
78
|
|
|
(151
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Expenditures for property, plant and equipment
|
(31
|
)
|
|
(31
|
)
|
||
Acquisitions of businesses, net of cash acquired of $9 million in fiscal 2013
|
(1
|
)
|
|
(478
|
)
|
||
Proceeds from sale of assets
|
65
|
|
|
2
|
|
||
Net proceeds (purchases) of cost method investments
|
12
|
|
|
—
|
|
||
Contribution paid related to the separation of New SAIC
|
(26
|
)
|
|
—
|
|
||
Other
|
(2
|
)
|
|
1
|
|
||
Total cash flows provided by (used in) investing activities of continuing operations
|
17
|
|
|
(506
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from note payable to Leidos Holdings, Inc.
|
11
|
|
|
40
|
|
||
Payments on note payable to Leidos Holdings, Inc.
|
(442
|
)
|
|
(369
|
)
|
||
Payments on notes payable and long-term debt
|
(1
|
)
|
|
(550
|
)
|
||
Payments for deferred financing costs
|
(5
|
)
|
|
(1
|
)
|
||
Payment from New SAIC for deferred financing costs
|
5
|
|
|
—
|
|
||
Proceeds from real estate financing transaction
|
38
|
|
|
—
|
|
||
Other
|
2
|
|
|
—
|
|
||
Total cash flows used in financing activities of continuing operations
|
(392
|
)
|
|
(880
|
)
|
Decrease in cash and cash equivalents from continuing operations
|
(297
|
)
|
|
(1,537
|
)
|
||
Cash flows from discontinued operations:
|
|
|
|
||||
Cash provided by operating activities of discontinued operations
|
125
|
|
|
285
|
|
||
Cash used in investing activities of discontinued operations
|
(17
|
)
|
|
(6
|
)
|
||
Cash used in financing activities of discontinued operations
|
—
|
|
|
(3
|
)
|
||
Increase in cash and cash equivalents from discontinued operations
|
108
|
|
|
276
|
|
||
Total decrease in cash and cash equivalents
|
(189
|
)
|
|
(1,261
|
)
|
||
Cash and cash equivalents at beginning of period
|
735
|
|
|
1,592
|
|
||
Cash and cash equivalents at end of period
|
$
|
546
|
|
|
$
|
331
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
||
|
November 1, 2013
|
|
November 1, 2013
|
||||
|
(in millions)
|
||||||
Strategic advisory services
|
$
|
5
|
|
|
$
|
7
|
|
Legal and accounting services
|
1
|
|
|
1
|
|
||
Lease termination and facility consolidation expenses
|
17
|
|
|
40
|
|
||
Severance costs
|
2
|
|
|
10
|
|
||
Separation transaction and restructuring expenses in operating income
|
25
|
|
|
58
|
|
||
Less: income tax benefit
|
(10
|
)
|
|
(23
|
)
|
||
Separation transaction and restructuring expenses, net of tax
|
$
|
15
|
|
|
$
|
35
|
|
|
|
|
|
Severance Costs
|
|
Lease Termination and Facility Consolidation Expenses
|
|
Total
|
|
|||
|
(in millions)
|
||||||||
Balance as of January 31, 2013
|
$
|
8
|
|
$
|
2
|
|
$
|
10
|
|
Charges
|
10
|
|
36
|
|
46
|
|
|||
Cash payments
|
(14
|
)
|
(16
|
)
|
(30
|
)
|
|||
Balance as of November 1, 2013
|
$
|
4
|
|
$
|
22
|
|
$
|
26
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
||||||
|
November 1,
2013 |
|
October 31,
2012 |
||||
|
(in millions)
|
||||||
Vested stock issued as settlement of annual bonus accruals
|
$
|
2
|
|
|
$
|
2
|
|
Stock issued in lieu of cash dividend
|
$
|
17
|
|
|
$
|
2
|
|
Fair value of assets acquired in acquisitions (See Note 3 - Acquisitions)
|
$
|
259
|
|
|
$
|
541
|
|
Less: cash paid in acquisitions, net of cash acquired of $9 million in fiscal 2013
|
$
|
(1
|
)
|
|
$
|
(478
|
)
|
Forgiveness of accounts receivable to acquire equity interest in business combination
|
$
|
(105
|
)
|
|
$
|
—
|
|
Liabilities assumed in acquisitions, including accrued acquisition payments
|
$
|
(148
|
)
|
|
$
|
63
|
|
Accrued liability for acquisition of business
|
$
|
(5
|
)
|
|
$
|
—
|
|
Cash paid for interest (including discontinued operations)
|
$
|
37
|
|
|
$
|
53
|
|
Cash paid for income taxes (including discontinued operations)
|
$
|
62
|
|
|
$
|
126
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
November 1,
2013 |
|
October 31,
2012 |
|
November 1,
2013 |
|
October 31,
2012 |
||||||||
|
(in millions)
|
||||||||||||||
Revenues
|
$
|
598
|
|
|
$
|
1,195
|
|
|
$
|
2,712
|
|
|
$
|
3,558
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of revenues
|
533
|
|
|
1,073
|
|
|
2,446
|
|
|
3,205
|
|
||||
Selling, general and administrative expenses
|
22
|
|
|
14
|
|
|
42
|
|
|
52
|
|
||||
Separation transaction and restructuring expenses
|
20
|
|
|
11
|
|
|
55
|
|
|
15
|
|
||||
Operating income
|
$
|
23
|
|
|
$
|
97
|
|
|
$
|
169
|
|
|
$
|
286
|
|
|
|
|
|
January 31,
2013 |
||
|
(in millions)
|
||
Cash and cash equivalents
|
$
|
1
|
|
Receivables, net
|
717
|
|
|
Inventory, prepaid expenses and other current assets
|
101
|
|
|
Total current assets
|
819
|
|
|
Property, plant and equipment, net
|
29
|
|
|
Intangible assets, net
|
6
|
|
|
Goodwill
|
491
|
|
|
Deferred income taxes
|
2
|
|
|
Other assets
|
1
|
|
|
Total assets
|
1,348
|
|
|
Accounts payable and accrued liabilities
|
461
|
|
|
Accrued payroll and employee benefits
|
185
|
|
|
Notes payable and long-term debt
|
1
|
|
|
Total current liabilities
|
647
|
|
|
Non-current liabilities
|
—
|
|
|
Total liabilities
|
$
|
647
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
November 1,
2013 |
|
October 31,
2012 |
|
November 1,
2013 |
|
October 31,
2012 |
||||||||
|
(in millions)
|
||||||||||||||
Revenues
|
$
|
1
|
|
|
$
|
19
|
|
|
$
|
3
|
|
|
$
|
60
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of revenues
|
6
|
|
|
18
|
|
|
9
|
|
|
54
|
|
||||
Selling, general and administrative expenses
|
(3
|
)
|
|
4
|
|
|
5
|
|
|
13
|
|
||||
Operating income
|
$
|
(2
|
)
|
|
$
|
(3
|
)
|
|
$
|
(11
|
)
|
|
$
|
(7
|
)
|
|
|
|
Forgiveness of accounts receivable (net of $33 million bad debt expense)
|
$
|
105
|
|
Contingent consideration
|
6
|
|
|
Total preliminary purchase consideration
|
$
|
111
|
|
Property, plant and equipment
|
$
|
248
|
|
Other assets
|
8
|
|
|
Notes payable assumed (net of debt discount)
|
(148
|
)
|
|
Total identifiable net assets acquired
|
108
|
|
|
Intangible assets
|
3
|
|
|
Total preliminary purchase consideration
|
$
|
111
|
|
Cash
|
$
|
9
|
|
Receivables
|
50
|
|
|
Other assets
|
24
|
|
|
Accounts payable, accrued liabilities and accrued payroll and employee benefits
|
(21
|
)
|
|
Deferred tax liabilities, net
|
(24
|
)
|
|
Total identifiable net assets acquired
|
38
|
|
|
Goodwill
|
395
|
|
|
Intangible assets
|
72
|
|
|
Total purchase price
|
$
|
505
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
November 1,
2013 |
|
October 31,
2012 |
|
November 1,
2013 |
|
October 31,
2012 |
||||||||
|
(in millions)
|
||||||||||||||
Basic EPS:
|
|
|
|
|
|
|
|
||||||||
(Loss) income from continuing operations, as reported
|
$
|
(9
|
)
|
|
$
|
55
|
|
|
$
|
29
|
|
|
$
|
165
|
|
Less: allocation of distributed and undistributed earnings to participating securities
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
||||
(Loss) income from continuing operations, for computing
basic EPS
|
$
|
(9
|
)
|
|
$
|
55
|
|
|
$
|
26
|
|
|
$
|
162
|
|
Net income, as reported
|
$
|
(3
|
)
|
|
$
|
112
|
|
|
$
|
120
|
|
|
$
|
339
|
|
Less: allocation of distributed and undistributed earnings to participating securities
|
—
|
|
|
(2
|
)
|
|
(3
|
)
|
|
(7
|
)
|
||||
Net income, for computing basic EPS
|
$
|
(3
|
)
|
|
$
|
110
|
|
|
$
|
117
|
|
|
$
|
332
|
|
Diluted EPS:
|
|
|
|
|
|
|
|
|
|
|
|
||||
(Loss) income from continuing operations, as reported
|
(9
|
)
|
|
55
|
|
|
29
|
|
|
165
|
|
||||
Less: allocation of distributed and undistributed earnings to participating securities
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
||||
(Loss) income from continuing operations, for computing
diluted EPS
|
$
|
(9
|
)
|
|
$
|
55
|
|
|
$
|
26
|
|
|
$
|
162
|
|
Net income, as reported
|
$
|
(3
|
)
|
|
$
|
112
|
|
|
$
|
120
|
|
|
$
|
339
|
|
Less: allocation of distributed and undistributed earnings to participating securities
|
—
|
|
|
(2
|
)
|
|
(3
|
)
|
|
(7
|
)
|
||||
Net income, for computing diluted EPS
|
$
|
(3
|
)
|
|
$
|
110
|
|
|
$
|
117
|
|
|
$
|
332
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
November 1,
2013 |
|
October 31,
2012 |
|
November 1,
2013 |
|
October 31,
2012 |
||||
|
(in millions)
|
||||||||||
Basic weighted average number of shares outstanding
|
84
|
|
|
83
|
|
|
84
|
|
|
83
|
|
Dilutive common share equivalents—stock options and
other stock awards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Diluted weighted average number of shares outstanding
|
84
|
|
|
83
|
|
|
84
|
|
|
83
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
November 1,
2013 |
|
October 31,
2012 |
|
November 1,
2013 |
|
October 31,
2012 |
||||
|
(in millions)
|
||||||||||
Stock options
|
5
|
|
|
5
|
|
|
5
|
|
|
5
|
|
Vesting stock awards
|
4
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
November 1,
2013 |
|
October 31,
2012 |
|
November 1,
2013 |
|
October 31,
2012 |
||||||||
|
(in millions)
|
||||||||||||||
Stock options
|
$
|
4
|
|
|
$
|
1
|
|
|
$
|
9
|
|
|
$
|
5
|
|
Vesting stock awards
|
10
|
|
|
13
|
|
|
35
|
|
|
37
|
|
||||
Total stock-based compensation expense
|
$
|
14
|
|
|
$
|
14
|
|
|
$
|
44
|
|
|
$
|
42
|
|
|
|
|
|
Nine Months Ended
|
|
||||||||||
|
October 2013 Grants
|
|
2013 Grants Before Spin |
|
October 31, 2012
|
|
||||||
Weighted average grant-date fair value**
|
$
|
9.48
|
|
|
$
|
6.96
|
|
**
|
$
|
6.75
|
|
**
|
Expected term (in years)
|
5.0
|
|
|
5.0
|
|
|
5.0
|
|
|
|||
Expected volatility
|
30.0
|
%
|
|
25.0
|
%
|
|
24.5
|
%
|
|
|||
Risk-free interest rate
|
1.4
|
%
|
|
0.8
|
%
|
|
1.0
|
%
|
|
|||
Dividend yield
|
2.8
|
%
|
|
3.8
|
%
|
|
3.7
|
%
|
|
|
|
|
|
Shares of stock under stock options
|
|
Weighted average exercise price
|
|
Weighted average remaining contractual term
|
|
Aggregate intrinsic value
|
|||||
|
(in millions)
|
|
|
|
(in years)
|
|
(in millions)
|
|||||
Outstanding at January 31, 2013
|
4.9
|
|
|
$
|
67.24
|
|
|
3.0
|
|
$
|
—
|
|
Options granted
|
1.4
|
|
|
54.86
|
|
|
|
|
|
|
||
Special dividend adjustments
|
0.4
|
|
|
|
|
|
|
|
|
|
||
Options forfeited or expired
|
(1.3
|
)
|
|
71.80
|
|
|
|
|
|
|
||
Separation Adjustment
|
(1.9
|
)
|
|
57.85
|
|
|
|
|
|
|
||
Outstanding at September 27, 2013
|
3.5
|
|
|
59.25
|
|
|
3.9
|
|
24.0
|
|
||
Exercisable at September 27, 2013
|
1.5
|
|
|
64.17
|
|
|
2.0
|
|
4.0
|
|
|
Shares of stock under stock options
|
|
Weighted average exercise price
|
|
Weighted average remaining contractual term
|
|
Aggregate intrinsic value
|
|||||
|
(in millions)
|
|
|
|
(in years)
|
|
(in millions)
|
|||||
Outstanding at September 28, 2013
|
4.9
|
|
**
|
$
|
40.20
|
|
**
|
3.9
|
|
$
|
24.0
|
|
Options granted
|
0.1
|
|
|
46.19
|
|
|
|
|
|
|
||
Options forfeited or expired
|
(0.1
|
)
|
|
42.84
|
|
|
|
|
|
|
||
Outstanding at November 1, 2013
|
4.9
|
|
|
40.31
|
|
|
4.0
|
|
35.0
|
|
||
Exercisable at November 1, 2013
|
2.0
|
|
|
44.30
|
|
|
2.0
|
|
6.0
|
|
|
Shares of stock under stock awards
|
|
Weighted average grant- date fair value
|
|||
|
(in millions)
|
|
|
|||
Unvested stock awards at January 31, 2013
|
3.1
|
|
|
$
|
60.78
|
|
Awards granted
|
2.1
|
|
|
53.51
|
|
|
Awards forfeited
|
(0.4
|
)
|
|
58.28
|
|
|
Awards vested
|
(0.9
|
)
|
|
64.76
|
|
|
Separation Adjustment
|
(1.5
|
)
|
|
57.04
|
|
|
Unvested stock awards at September 27, 2013
|
2.4
|
|
|
59.98
|
|
|
|
|
|
Shares of stock under stock awards
|
|
Weighted average grant- date fair value
|
|
|||
|
(in millions)
|
|
|
|
|||
Unvested stock awards at September 28, 2013
|
3.5
|
|
**
|
$
|
42.98
|
|
**
|
Awards granted
|
0.4
|
|
*
|
33.44
|
|
*
|
|
Unvested stock awards at November 1, 2013
|
3.9
|
|
|
42.37
|
|
|
|
Expected number of shares of stock to be issued under performance-based stock awards
|
|
Weighted average grant-date fair value
|
|
|||
|
(in millions)
|
|
|
|
|||
Outstanding at January 31, 2013
|
0.3
|
|
|
$
|
52.96
|
|
|
Awards canceled
|
(0.2
|
)
|
*
|
53.23
|
|
*
|
|
Outstanding at November 1, 2013
|
0.1
|
|
**
|
36.59
|
|
**
|
|
|
|
|
HES
|
|
NSS
|
|
Total
|
||||||
|
(in millions)
|
||||||||||
Goodwill at January 31, 2013
|
$
|
985
|
|
|
$
|
719
|
|
|
$
|
1,704
|
|
Corporate reorganizations
|
(69
|
)
|
|
69
|
|
|
—
|
|
|||
Goodwill at November 1, 2013
|
$
|
916
|
|
|
$
|
788
|
|
|
$
|
1,704
|
|
|
November 1, 2013
|
|
January 31, 2013
|
||||||||||||||||||||
|
Gross carrying value
|
|
Accumulated amortization
|
|
Net carrying value
|
|
Gross carrying value
|
|
Accumulated amortization
|
|
Net carrying value
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
$
|
116
|
|
|
$
|
(64
|
)
|
|
$
|
52
|
|
|
$
|
154
|
|
|
$
|
(57
|
)
|
|
$
|
97
|
|
Software and technology
|
66
|
|
|
(35
|
)
|
|
31
|
|
|
97
|
|
|
(30
|
)
|
|
67
|
|
||||||
Other
|
4
|
|
|
(1
|
)
|
|
3
|
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
||||||
Total finite-lived intangible assets
|
186
|
|
|
(100
|
)
|
|
86
|
|
|
252
|
|
|
(88
|
)
|
|
164
|
|
||||||
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
In-process research and development
|
10
|
|
|
—
|
|
|
10
|
|
|
10
|
|
|
—
|
|
|
10
|
|
||||||
Trade names
|
4
|
|
|
—
|
|
|
4
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||||
Total indefinite-lived intangible assets
|
14
|
|
|
—
|
|
|
14
|
|
|
14
|
|
|
—
|
|
|
14
|
|
||||||
Total intangible assets
|
$
|
200
|
|
|
$
|
(100
|
)
|
|
$
|
100
|
|
|
$
|
266
|
|
|
$
|
(88
|
)
|
|
$
|
178
|
|
|
|
|
Fiscal Year Ending January 31
|
|
||
|
(in millions)
|
||
2014 (remainder of the fiscal year)
|
$
|
6
|
|
2015
|
22
|
|
|
2016
|
20
|
|
|
2017
|
17
|
|
|
2018
|
11
|
|
|
2019 and thereafter
|
10
|
|
|
|
$
|
86
|
|
|
|
|
|
|
|
|
Stated interest rate
|
|
Effective interest rate
|
|
November 1, 2013
|
|
January 31, 2013
|
||||||
|
(dollars in millions)
|
||||||||||||
Leidos Holdings, Inc. senior unsecured notes:
|
|
|
|
|
|
|
|
||||||
$450 million notes, which mature in December 2020
|
4.45
|
%
|
|
4.53
|
%
|
|
$
|
449
|
|
|
$
|
449
|
|
$300 million notes, which mature in December 2040
|
5.95
|
%
|
|
6.03
|
%
|
|
300
|
|
|
300
|
|
||
Leidos, Inc. senior unsecured notes:
|
|
|
|
|
|
|
|
|
|
||||
$250 million notes, which mature in July 2032
|
7.13
|
%
|
|
7.43
|
%
|
|
248
|
|
|
248
|
|
||
$300 million notes, which mature in July 2033
|
5.5
|
%
|
|
5.78
|
%
|
|
296
|
|
|
296
|
|
||
Plainfield construction note, which matures February 2014
|
17.5
|
%
|
|
17.5
|
%
|
|
81
|
|
|
—
|
|
||
Plainfield cash grant note, which matures April 2014
|
17.5
|
%
|
|
17.5
|
%
|
|
68
|
|
|
—
|
|
||
Capital leases and other notes payable due on various dates through fiscal 2021
|
0%-3.7%
|
|
|
Various
|
|
39
|
|
|
2
|
|
|||
Total notes payable and long-term debt
|
|
|
|
|
1,481
|
|
|
1,295
|
|
||||
Less current portion
|
|
|
|
|
151
|
|
|
—
|
|
||||
Total notes payable and long-term debt, net of current portion
|
|
|
|
|
$
|
1,330
|
|
|
$
|
1,295
|
|
||
Fair value of notes payable and long-term debt
|
|
|
|
|
$
|
1,469
|
|
|
$
|
1,390
|
|
|
|
|
|
November 1, 2013
|
|
January 31, 2013
|
||||
|
(in millions)
|
||||||
Foreign currency translation adjustments, net of taxes of $(1) million as of November 1, 2013 and January 31, 2013
|
$
|
2
|
|
|
$
|
2
|
|
Unrecognized net loss on settled derivative instruments associated with outstanding debt, net of taxes of $3 million as of November 1, 2013 and January 31, 2013
|
(5
|
)
|
|
(5
|
)
|
||
Unrecognized net gain on defined benefit plan, net of taxes of $0 million as of November 1, 2013 and January 31, 2013
|
1
|
|
|
1
|
|
||
Total accumulated other comprehensive loss, net of taxes of $2 million as of November 1, 2013 and January 31, 2013
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
November 1,
2013 |
|
October 31,
2012 |
|
November 1,
2013 |
|
October 31,
2012 |
||||||||
|
(in millions)
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Health and Engineering
|
$
|
408
|
|
|
$
|
508
|
|
|
$
|
1,380
|
|
|
$
|
1,341
|
|
National Security Solutions
|
1,014
|
|
|
1,166
|
|
|
3,117
|
|
|
3,563
|
|
||||
Corporate and Other
|
(1
|
)
|
|
—
|
|
|
(8
|
)
|
|
(1
|
)
|
||||
Intersegment elimination
|
(1
|
)
|
|
(1
|
)
|
|
(3
|
)
|
|
(4
|
)
|
||||
Total revenues
|
$
|
1,420
|
|
|
$
|
1,673
|
|
|
$
|
4,486
|
|
|
$
|
4,899
|
|
|
|
|
|
|
|
|
|
||||||||
Operating income (loss):
|
|
|
|
|
|
|
|
||||||||
Health and Engineering
|
$
|
(30
|
)
|
|
$
|
46
|
|
|
$
|
2
|
|
|
$
|
107
|
|
National Security Solutions
|
63
|
|
|
79
|
|
|
195
|
|
|
260
|
|
||||
Corporate and Other
|
(40
|
)
|
|
(25
|
)
|
|
(128
|
)
|
|
(53
|
)
|
||||
Total operating income
|
$
|
(7
|
)
|
|
$
|
100
|
|
|
$
|
69
|
|
|
$
|
314
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Achieving internal, or non-acquisition related, annual revenue growth through internal collaboration and better leveraging of key differentiators across our company and the deployment of resources and investments into higher growth markets;
|
•
|
Increasing the growth of our operating profits through improving the quality of our revenues and contract profitability, continued improvement in our information technology (IT) systems infrastructure and related business processes for greater effectiveness and efficiency across all business functions; and
|
•
|
Disciplined deployment of our cash resources and use of our capital structure to enhance shareholder value through internal growth initiatives, stock repurchases, dividends, strategic acquisitions and other uses as conditions warrant.
|
•
|
Revenues for the three months ended November 1, 2013 decreased 15% over the corresponding period in the prior year. Revenue contraction for the quarter would have been 14% without the negative impact of $21 million in revenues for the one less working day as compared to the third quarter of fiscal 2013. Revenue contraction was partially due to a decrease in our revenues from our National Security Solutions segment of $152 million due to the ramp down of certain contracts, drawdowns of overseas U.S. military and the reduction of the U.S. Government budget and sequestration. There was also a decrease in our revenues from our Health and Engineering segment of $100 million due to a decline in engineering services primarily related to energy design-build construction programs, as well as a decline in our health business driven by program completions, lower new program starts and hospital budgets that have experienced reductions in reimbursements from U.S. Government funding, including reductions in Medicare reimbursements which in turn impact hospital IT spending trends.
|
•
|
Operating loss from continuing operations for the three months ended November 1, 2013 was $7 million as compared to operating income from continuing operations of $
100 million
(6% as a percentage of revenues) for the corresponding period in the prior year. The decrease in operating income for the three months ended November 1, 2013, was primarily attributable to $43 million of bad debt expense primarily related to receivables for two energy design-build construction projects, $25 million of separation transaction and restructuring expenses, $19 million for an intangible asset impairment charge and $15 million related to the reduction in revenues.
|
•
|
Diluted loss per share from continuing operations for the three months ended November 1, 2013 was $0.11 as compared to diluted income per share from continuing operations of $0.66 in corresponding period in the prior year primarily due to the aforementioned operating income reductions which translated to a reduction in income from continuing operations of $64 million.
|
•
|
Cash and cash equivalents increased $352 million during the three months ended November 1, 2013, primarily due to a dividend received from New SAIC of $269 million, net of contribution paid, for the separation, cash flows provided by operations of $49 million and cash provided by discontinued operations of $52 million, partially offset by dividend payments of $28 million.
|
•
|
Net bookings (as defined in “Key Financial Metrics—Bookings and Backlog”) were approximately $2.4 billion for the three months ended November 1, 2013. Total backlog was $
10 billion
at November 1, 2013 as compared to $
9 billion
at August 2, 2013.
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
November 1,
2013 |
|
October 31,
2012 |
|
November 1,
2013 |
|
October 31,
2012 |
||||||||
|
(in millions)
|
||||||||||||||
Revenues
|
$
|
599
|
|
|
$
|
1,214
|
|
|
$
|
2,715
|
|
|
$
|
3,618
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of revenues
|
539
|
|
|
1,091
|
|
|
2,455
|
|
|
3,259
|
|
||||
Selling, general and administrative expenses
|
19
|
|
|
18
|
|
|
47
|
|
|
65
|
|
||||
Separation transaction and restructuring expenses
|
20
|
|
|
11
|
|
|
55
|
|
|
15
|
|
||||
Operating income
|
$
|
21
|
|
|
$
|
94
|
|
|
$
|
158
|
|
|
$
|
279
|
|
|
|
|
•
|
Funded Backlog.
Funded backlog for contracts with government agencies primarily represents contracts for which funding is appropriated less revenues previously recognized on these contracts, and does not include the unfunded portion of contracts where funding is incrementally appropriated or authorized on a quarterly or annual basis by the U.S. Government and other customers, even though the contract may call for performance over a number of years. Funded backlog for contracts with non-government agencies represents the estimated value on contracts, which may cover multiple future years, under which we are obligated to perform, less revenues previously recognized on these contracts.
|
|
|
|
•
|
Negotiated Unfunded Backlog.
Negotiated unfunded backlog represents estimated amounts of revenues to be earned in the future from (1) negotiated contracts for which funding has not been appropriated or otherwise authorized and (2) unexercised priced contract options. Negotiated unfunded backlog does not include any estimate of future potential task orders expected to be awarded under IDIQ, GSA Schedule, or other master agreement contract vehicles.
|
|
November 1,
2013 |
|
August 2,
2013 |
|
May 3,
2013 |
|
January 31,
2013 |
||||||||
|
(in millions)
|
||||||||||||||
Health and Engineering:
|
|
|
|
|
|
|
|
||||||||
Funded backlog
|
$
|
1,040
|
|
|
$
|
996
|
|
|
$
|
1,094
|
|
|
$
|
1,295
|
|
Negotiated unfunded backlog
|
816
|
|
|
669
|
|
|
664
|
|
|
676
|
|
||||
Total Health and Engineering backlog
|
$
|
1,856
|
|
|
$
|
1,665
|
|
|
$
|
1,758
|
|
|
$
|
1,971
|
|
National Security Solutions:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Funded backlog
|
$
|
1,958
|
|
|
$
|
1,900
|
|
|
$
|
1,877
|
|
|
$
|
2,119
|
|
Negotiated unfunded backlog
|
6,166
|
|
|
5,442
|
|
|
5,737
|
|
|
6,037
|
|
||||
Total National Security Solutions backlog
|
$
|
8,124
|
|
|
$
|
7,342
|
|
|
$
|
7,614
|
|
|
$
|
8,156
|
|
Total:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Funded backlog
|
$
|
2,998
|
|
|
$
|
2,896
|
|
|
$
|
2,971
|
|
|
$
|
3,414
|
|
Negotiated unfunded backlog
|
6,982
|
|
|
6,111
|
|
|
6,401
|
|
|
6,713
|
|
||||
Total backlog
|
$
|
9,980
|
|
|
$
|
9,007
|
|
|
$
|
9,372
|
|
|
$
|
10,127
|
|
|
Nine Months Ended
|
||||
|
November 1,
2013 |
|
October 31,
2012 |
||
Cost-reimbursement
|
47
|
%
|
|
45
|
%
|
Time and materials (T&M) and fixed-price-level-of-effort (FP-LOE)
|
27
|
|
|
29
|
|
Firm-fixed price (FFP)
|
26
|
|
|
26
|
|
Total
|
100
|
%
|
|
100
|
%
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||
|
November 1, 2013
|
|
Percent change
|
|
October 31 2012
|
|
November 1, 2013
|
|
Percent change
|
|
October 31, 2012
|
||||||||
|
(dollars in millions)
|
||||||||||||||||||
Labor-related revenues
|
$
|
867
|
|
|
(17)%
|
|
$
|
1,049
|
|
|
$
|
2,763
|
|
|
(8)%
|
|
$
|
3,014
|
|
As a percentage of revenues
|
61
|
%
|
|
|
|
63
|
%
|
|
62
|
%
|
|
|
|
62
|
%
|
||||
M&S revenues
|
553
|
|
|
(11)%
|
|
624
|
|
|
1,723
|
|
|
(9)%
|
|
1,885
|
|
||||
As a percentage of revenues
|
39
|
%
|
|
|
|
37
|
%
|
|
38
|
%
|
|
|
|
38
|
%
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||
|
November 1, 2013
|
|
Percent change
|
|
October 31, 2012
|
|
November 1, 2013
|
|
Percent change
|
|
October 31, 2012
|
||||||||||
|
(dollars in millions)
|
||||||||||||||||||||
Revenues
|
$
|
1,420
|
|
|
(15
|
)%
|
|
$
|
1,673
|
|
|
$
|
4,486
|
|
|
(8
|
)%
|
|
$
|
4,899
|
|
Cost of revenues
|
1,224
|
|
|
(15
|
)%
|
|
1,434
|
|
|
3,903
|
|
|
(7
|
)%
|
|
4,218
|
|
||||
Selling, general and administrative expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
General and administrative
|
88
|
|
|
(10
|
)%
|
|
98
|
|
|
264
|
|
|
15
|
%
|
|
229
|
|
||||
Bid and proposal
|
13
|
|
|
(48
|
)%
|
|
25
|
|
|
54
|
|
|
(41
|
)%
|
|
92
|
|
||||
Internal research and development
|
15
|
|
|
(6
|
)%
|
|
16
|
|
|
42
|
|
|
(9
|
)%
|
|
46
|
|
||||
Bad debt expense
|
43
|
|
|
—
|
|
|
—
|
|
|
45
|
|
|
—
|
|
|
—
|
|
||||
Intangible asset impairment losses
|
19
|
|
|
—
|
|
|
—
|
|
|
51
|
|
|
—
|
|
|
—
|
|
||||
Separation transaction and restructuring expenses
|
25
|
|
|
—
|
|
|
—
|
|
|
58
|
|
|
—
|
|
|
—
|
|
||||
Operating (loss) income
|
(7
|
)
|
|
(107
|
)%
|
|
100
|
|
|
69
|
|
|
(78
|
)%
|
|
314
|
|
||||
Operating (loss) income margin
|
—
|
|
|
|
|
6
|
%
|
|
2
|
%
|
|
|
|
6
|
%
|
||||||
Non-operating expense, net
|
(14
|
)
|
|
|
|
(17
|
)
|
|
(41
|
)
|
|
|
|
(60
|
)
|
||||||
(Loss) income from continuing operations before income taxes
|
(21
|
)
|
|
(125
|
)%
|
|
83
|
|
|
28
|
|
|
(89
|
)%
|
|
254
|
|
||||
Income tax benefit (expense)
|
12
|
|
|
(143
|
)%
|
|
(28
|
)
|
|
1
|
|
|
(101
|
)%
|
|
(89
|
)
|
||||
(Loss) income from continuing operations
|
(9
|
)
|
|
(116
|
)%
|
|
55
|
|
|
29
|
|
|
(82
|
)%
|
|
165
|
|
||||
Income from discontinued operations, net of tax
|
6
|
|
|
|
|
57
|
|
|
91
|
|
|
|
|
174
|
|
||||||
Net income
|
$
|
(3
|
)
|
|
(103
|
)%
|
|
$
|
112
|
|
|
$
|
120
|
|
|
(65
|
)%
|
|
$
|
339
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||
Health and Engineering
|
November 1, 2013
|
|
Percent change
|
|
October 31, 2012
|
|
November 1, 2013
|
|
Percent change
|
|
October 31, 2012
|
||||||||||
|
(dollars in millions)
|
||||||||||||||||||||
Revenues
|
$
|
408
|
|
|
(20
|
)%
|
|
$
|
508
|
|
|
$
|
1,380
|
|
|
3
|
%
|
|
$
|
1,341
|
|
Operating (loss) income
|
$
|
(30
|
)
|
|
(165
|
)%
|
|
$
|
46
|
|
|
$
|
2
|
|
|
(98
|
)%
|
|
$
|
107
|
|
Operating (loss) income margin
|
(7
|
)%
|
|
|
|
9
|
%
|
|
—
|
|
|
|
|
8
|
%
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||
National Security Solutions
|
November 1, 2013
|
|
Percent change
|
|
October 31, 2012
|
|
November 1, 2013
|
|
Percent change
|
|
October 31, 2012
|
||||||||||
|
(dollars in millions)
|
||||||||||||||||||||
Revenues
|
$
|
1,014
|
|
|
(13
|
)%
|
|
$
|
1,166
|
|
|
$
|
3,117
|
|
|
(13
|
)%
|
|
$
|
3,563
|
|
Operating income
|
63
|
|
|
(20
|
)%
|
|
79
|
|
|
195
|
|
|
(25
|
)%
|
|
260
|
|
||||
Operating income margin
|
6
|
%
|
|
|
|
7
|
%
|
|
6
|
%
|
|
|
|
7
|
%
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
Corporate and Other
|
November 1,
2013 |
|
October 31,
2012 |
|
November 1,
2013 |
|
October 31,
2012 |
||||||||
|
(in millions)
|
||||||||||||||
Operating loss
|
$
|
(40
|
)
|
|
$
|
(25
|
)
|
|
$
|
(128
|
)
|
|
$
|
(53
|
)
|
|
|
|
|
Nine Months Ended
|
||||||
|
November 1,
2013 |
|
October 31,
2012 |
||||
|
(in millions)
|
||||||
Cash provided by (used in) operating activities of continuing operations
|
$
|
78
|
|
|
$
|
(151
|
)
|
Cash provided by (used in) investing activities of continuing operations
|
312
|
|
|
(506
|
)
|
||
Cash used in financing activities of continuing operations
|
(419
|
)
|
|
(680
|
)
|
||
Cash provided by operating activities of discontinued operations
|
125
|
|
|
285
|
|
||
Cash used in investing activities of discontinued operations
|
(17
|
)
|
|
(6
|
)
|
||
Cash used in financing activities of discontinued operations
|
—
|
|
|
(3
|
)
|
||
Total increase (decrease) in cash and cash equivalents
|
$
|
79
|
|
|
$
|
(1,061
|
)
|
|
|
|
|
|
|
|
Stated interest rate
|
|
Effective interest rate
|
|
November 1, 2013
|
|
January 31, 2013
|
||||||
|
(dollars in millions)
|
||||||||||||
Leidos Holdings, Inc. senior unsecured notes:
|
|
|
|
|
|
|
|
||||||
$450 million notes, which mature in December 2020
|
4.45
|
%
|
|
4.53
|
%
|
|
$
|
449
|
|
|
$
|
449
|
|
$300 million notes, which mature in December 2040
|
5.95
|
%
|
|
6.03
|
%
|
|
300
|
|
|
300
|
|
||
Leidos, Inc. senior unsecured notes:
|
|
|
|
|
|
|
|
|
|
||||
$250 million notes, which mature in July 2032
|
7.13
|
%
|
|
7.43
|
%
|
|
248
|
|
|
248
|
|
||
$300 million notes, which mature in July 2033
|
5.5
|
%
|
|
5.78
|
%
|
|
296
|
|
|
296
|
|
||
Plainfield construction note, which matures February 2014
|
17.5
|
%
|
|
17.5
|
%
|
|
81
|
|
|
—
|
|
||
Plainfield cash grant note, which matures April 2014
|
17.5
|
%
|
|
17.5
|
%
|
|
68
|
|
|
—
|
|
||
Capital leases and other notes payable due on various dates through fiscal 2021
|
0%-3.7%
|
|
|
Various
|
|
39
|
|
|
2
|
|
|||
Total notes payable and long-term debt
|
|
|
|
|
1,481
|
|
|
1,295
|
|
||||
Less current portion
|
|
|
|
|
151
|
|
|
—
|
|
||||
Total notes payable and long-term debt, net of current portion
|
|
|
|
|
$
|
1,330
|
|
|
$
|
1,295
|
|
||
Fair value of notes payable and long-term debt
|
|
|
|
|
$
|
1,469
|
|
|
$
|
1,390
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||
|
November 1, 2013
|
|
November 1, 2013
|
||||
|
(dollars in millions)
|
||||||
Health and Engineering:
|
|
|
|
||||
Prior year period’s revenues, as reported
|
$
|
508
|
|
|
$
|
1,341
|
|
Revenues of acquired businesses for the comparable prior year period
|
10
|
|
|
145
|
|
||
Prior year period’s revenues, as adjusted
|
$
|
518
|
|
|
$
|
1,486
|
|
Current year period’s revenues, as reported
|
408
|
|
|
1,380
|
|
||
Internal revenue contraction
|
$
|
(110
|
)
|
|
$
|
(106
|
)
|
Internal revenue contraction percentage
|
(21
|
)%
|
|
(7
|
)%
|
||
|
|
|
|||||
National Security Solutions:
|
|
|
|
||||
Prior year period’s revenues, as reported
|
$
|
1,166
|
|
|
$
|
3,563
|
|
Revenues of acquired businesses for the comparable prior year period
|
—
|
|
|
—
|
|
||
Prior year period’s revenues, as adjusted
|
$
|
1,166
|
|
|
$
|
3,563
|
|
Current year period’s revenues, as reported
|
1,014
|
|
|
3,117
|
|
||
Internal revenue contraction
|
$
|
(152
|
)
|
|
$
|
(446
|
)
|
Internal revenue contraction percentage
|
(13
|
)%
|
|
(13
|
)%
|
||
|
|
|
|||||
Total*:
|
|
|
|
||||
Prior year period’s revenues, as reported
|
$
|
1,673
|
|
|
$
|
4,899
|
|
Revenues of acquired businesses for the comparable prior year period
|
10
|
|
|
145
|
|
||
Prior year period’s revenues, as adjusted
|
$
|
1,683
|
|
|
$
|
5,044
|
|
Current year period’s revenues, as reported
|
1,420
|
|
|
4,486
|
|
||
Internal revenue contraction
|
$
|
(263
|
)
|
|
$
|
(558
|
)
|
Internal revenue contraction percentage
|
(16
|
)%
|
|
(11
|
)%
|
|
|
|
|
|
|
|
|
|
(c)
|
Purchases of Equity Securities by the Company
|
Period
|
(a)
Total Number of Shares (or Units) Purchased (1) |
|
(b)
Average Price Paid per Share (or Unit) |
|
|
(d)
Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (2) |
||||||
August 3, 2013 - August 31, 2013
|
1,096
|
|
|
$
|
62.15
|
|
|
—
|
|
|
10,000,000
|
|
September 1, 2013 - September 30, 2013
|
16,312
|
|
|
56.66
|
|
|
—
|
|
|
10,000,000
|
|
|
October 1, 2013 - October 31, 2013
|
843
|
|
|
46.76
|
|
|
—
|
|
|
10,000,000
|
|
|
Total
|
18,251
|
|
|
56.53
|
|
|
—
|
|
|
|
|
(1)
|
Includes shares purchased as follows:
|
|
August
|
|
September
|
|
October
|
|
November
|
Upon surrender by stockholders of previously owned shares to satisfy statutory tax withholding obligations related to vesting of stock awards
|
1,096
|
|
16,312
|
|
843
|
|
—
|
(2)
|
The 2012 Repurchase Program, publicly announced in March 2012, authorized the repurchase up to 10
million shares of Leidos common stock. In December 2013, the Company
’
s board of directors terminated the 2012 Repurchase Program and authorized a new program for the repurchase of up to 20 million shares of Leidos common stock, which was publicly announced in December 2013.
|
|
|
|
Exhibit
Number |
Description of Exhibit
|
|
|
|
|
2.1
|
|
Distribution Agreement dated September 25, 2013. Incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed with the SEC on October 1, 2013.
|
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation of Leidos Holdings, Inc. Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed with the SEC on October 1, 2013.
|
|
|
|
3.2
|
|
Restated Bylaws of Leidos Holdings, Inc. Incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed with the SEC on October 1, 2013.
|
|
|
|
3.3
|
|
Amended and Restated Certificate of Incorporation of Leidos, Inc. Incorporated by reference to Exhibit 3.3 to our Current Report on Form 8-K filed with the SEC on October 1, 2013.
|
|
|
|
3.4
|
|
Restated Bylaws of Leidos, Inc. Incorporated by reference to Exhibit 3.4 to our Current Report on Form 8-K filed with the SEC on October 1, 2013.
|
|
|
|
10.1
|
|
Employee Matters Agreement dated September 25, 2013. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on October 1, 2013.
|
|
|
|
10.2
|
|
Tax Matters Agreement dated September 25, 2013. Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed with the SEC on October 1, 2013.
|
|
|
|
10.3
|
|
Transition Services Agreement dated September 25, 2013. Incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K filed with the SEC on October 1, 2013.
|
|
|
|
10.4
|
|
Agreement, dated October 11, 2013, by and among Leidos Renewable Energy, LLC, Plainfield Renewable Energy Owner, LLC and Plainfield Renewable Energy Holdings, LLC.
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.2
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101
|
|
Interactive Data File.
|
|
|
|
Leidos Holdings, Inc.
|
|
/s/ Mark W. Sopp
|
Mark W. Sopp
Executive Vice President and Chief Financial Officer and
as a duly authorized officer
|
Leidos, Inc.
|
|
/s/ Mark W. Sopp
|
Mark W. Sopp
Executive Vice President and Chief Financial Officer and
as a duly authorized officer
|
|
|
|
Exhibit
Number
|
Description of Exhibit
|
|
|
|
|
2.1
|
|
Distribution Agreement dated September 25, 2013. Incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed with the SEC on October 1, 2013.
|
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation of Leidos Holdings, Inc. Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed with the SEC on October 1, 2013.
|
|
|
|
3.2
|
|
Restated Bylaws of Leidos Holdings, Inc. Incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed with the SEC on October 1, 2013.
|
|
|
|
3.3
|
|
Amended and Restated Certificate of Incorporation of Leidos, Inc. Incorporated by reference to Exhibit 3.3 to our Current Report on Form 8-K filed with the SEC on October 1, 2013.
|
|
|
|
3.4
|
|
Restated Bylaws of Leidos, Inc. Incorporated by reference to Exhibit 3.4 to our Current Report on Form 8-K filed with the SEC on October 1, 2013.
|
|
|
|
10.1
|
|
Employee Matters Agreement dated September 25, 2013. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on October 1, 2013.
|
|
|
|
10.2
|
|
Tax Matters Agreement dated September 25, 2013. Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed with the SEC on October 1, 2013.
|
|
|
|
10.3
|
|
Transition Services Agreement dated September 25, 2013. Incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K filed with the SEC on October 1, 2013.
|
|
|
|
10.4
|
|
Agreement, dated October 11, 2013, by and among Leidos Renewable Energy, LLC, Plainfield Renewable Energy Owner, LLC and Plainfield Renewable Energy Holdings, LLC.
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.2
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101
|
|
Interactive Data File.
|
Re:
|
Proposal and Agreement With Respect to Acceptance of Certain
Collateral Pursuant to Section 9-620 of the UCC (“Instrument ”) |
1.
|
I have reviewed this quarterly report on Form 10-Q for the period ended
November 1, 2013
of Leidos Holdings, Inc. and Leidos, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrants as of, and for, the periods presented in this report;
|
4.
|
The registrants’ other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrants and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrants, including each registrants’ consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrants’ disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrants’ internal control over financial reporting that occurred during the registrants’ most recent fiscal quarter (the registrants’ fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants’ internal control over financial reporting; and
|
5.
|
The registrants’ other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants’ auditors and the audit committee of the registrants’ board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants’ ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants’ internal control over financial reporting.
|
/s/ John P. Jumper
|
John P. Jumper
Chairman and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the period ended
November 1, 2013
of Leidos Holdings, Inc. and Leidos, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrants as of, and for, the periods presented in this report;
|
4.
|
The registrants’ other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrants and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrants, including each registrants’ consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrants’ disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrants’ internal control over financial reporting that occurred during the registrants’ most recent fiscal quarter (the registrants’ fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants’ internal control over financial reporting; and
|
5.
|
The registrants’ other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants’ auditors and the audit committee of the registrants’ board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants’ ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants’ internal control over financial reporting.
|
/s/ Mark W. Sopp
|
Mark W. Sopp
Chief Financial Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ John P. Jumper
|
John P. Jumper
Chairman and Chief Executive Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Mark W. Sopp
|
Mark W. Sopp
Chief Financial Officer
|