Commission
File Number
|
|
Exact Name of Registrant as Specified in its Charter,
Address of Principal Executive Offices and Telephone Number
|
|
State or jurisdiction of
Incorporation
|
|
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
|
|
|
|
|
Title of each class
|
|
Name of each exchange on which registered
|
Leidos Holdings, Inc. Common Stock, Par Value $.0001 Per Share
|
|
New York Stock Exchange
|
Leidos Holdings, Inc.
|
74,124,812 shares of common stock ($.0001 par value per share)
|
Leidos, Inc.
|
5,000 shares of common stock ($.01 par value per share) held by Leidos Holdings, Inc.
|
|
|
Page
|
|
|
|
|
|
|
Item 1.
|
||
|
|
|
Item 1A.
|
||
|
|
|
Item 1B.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Item 5.
|
||
|
|
|
Item 6.
|
||
|
|
|
Item 7.
|
||
|
|
|
Item 7A.
|
||
|
|
|
Item 8.
|
||
|
|
|
Item 9.
|
||
|
|
|
Item 9A.
|
||
|
|
|
Item 9B.
|
||
|
|
|
|
|
|
|
|
|
Item 10.
|
||
|
|
|
Item 11.
|
||
|
|
|
Item 12.
|
||
|
|
|
Item 13.
|
||
|
|
|
Item 14.
|
||
|
|
|
|
|
|
|
|
|
Item 15.
|
||
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Technology -
We have a history of successfully delivering a wide range of technology capabilities rapidly. We provide solutions for the arms control and the intelligence agencies and the DoD service arms, including the Defense Advanced Research Projects Agency ("DARPA"). This group focuses largely on distributed autonomous capabilities and systems, tying software and data capabilities together. We were an early developer of the first full spectrum Intelligence, Surveillance, and Reconnaissance ("ISR") capability and placed it in theater during recent conflicts.
|
•
|
Intelligence -
We offer intelligence services and solutions and are deeply embedded in our customer's most important missions. We provide systems development and operations support around the globe. We have over a decade of experience dealing with large data ingest, structured and unstructured data, modern cloud processing tools and agile development. We are supporting the army's migration of intelligence applications and infrastructure into the cloud and are providing cloud computing architectures to the intelligence and the defense communities.
|
•
|
Cybersecurity -
We offer cybersecurity solutions that detect and manage the most sophisticated cyber threats. Our solutions include key management systems to protect transmitted data, development tools to exploit cyber intelligence, and programs to build comprehensive situational awareness on our nation's military and intelligence networks.
|
•
|
Federal Health -
We developed, fielded and currently maintain a full end-to-end EHR system and numerous behavior health services - healthcare beyond the clinic - for the DoD. Within the DoD, we serve the Defense Health Agency, which provides healthcare to active duty and retired military personnel and their
|
|
|
|
•
|
Commercial Health -
We implement and optimize Electronic Health Record ("EHR") systems at commercial hospitals. In addition, we provide consulting services and operational support focused on high-level initiatives including health care legislation for Meaningful Use and ICD-10 transition, IT strategy, revenue cycle management, accountable care transformation, risk management, technology infrastructure, and project management. Our teams are staffed with clinical subject matter experts who draw upon their deep experience and knowledge of healthcare and IT systems.
|
•
|
Life Sciences -
We provide Life Science research and development support to the National Institute of Health, Center for Disease Control, Army Medical Research community, commercial biotech companies and the Frederick National Laboratory for Cancer Research where we employ about 1,800 scientists, technicians, administrators, and support staff. Our professionals operate a wide range of leading-edge research and development laboratories in the areas of genetics and genomics, proteins and proteomics, advanced biomedical computing and information technology, biopharmaceutical development and manufacturing, nanotechnology characterization, and clinical trials management.
|
•
|
Process Industries Engineering -
We provide process industries engineering services and solutions to a large US market for capital improvement programs for key clients across a number of industries, including mid-tier refineries and large industrial companies. We exploit use of Building Information Modeling as a design tool and to manage the complexities of the systems we design and build. Our leadership in the use of these tools allows us to manage and design complex process systems as efficiently as possible.
|
•
|
Security Products -
We provide security products, services and solutions that leverage our design, integration and process engineering technologies to build small footprint, minimally-intrusive secure commerce systems for our customers. Our VACIS systems enable the rapid scanning of vehicles and cargo using patented technology that produces a high-quality image using a low radiation dose while using less space and processing higher volumes of cars and trucks than other scanning systems. Our Reveal line of explosive detection systems for checked airline baggage pioneered the “reduced size” segment of this market, with small, flexible systems that can be installed at airport check-in counters. We also have a line of radiation detection systems, which are used today at ports, border crossings, and industrial facilities around the world - including most ports and border crossings in the United States.
|
•
|
Power Grid Engineering -
We provide power grid engineering services and solutions to a broad customer set and have unique offerings including a Smart Grid as a Service ("SGS") solution. We are working with energy companies to develop analytical products that fully exploit the data enabled by smart grid technology. We provide engineering and consulting to electric utilities and transmission companies. Our focus is on engineering design of the grid from distribution through transmission, and significant substation design and upgrade work. We provide physical and cybersecurity for our utility customers as part of our substantive offerings. We also administer energy efficiency programs for states and utilities and provide an array of consulting services for utilities.
|
|
|
|
•
|
Federal Environmental and Engineering -
We provide consulting and engineering, primarily for the DoD. We support the requirements of the National Environmental Policy Act ("NEPA") as well as other permitting activities. We also have specialty consulting associated with specific environmental issues, such as underwater environmental issues, radiologic clean up, risk assessment training ranges and other specific needs. We support site cleanup and remediation efforts. The other portion of this business is engineering design and build, where we design high-content facilities such as unique testing facilities and training centers.
|
•
|
Transaction and Valuation Consulting -
We provide transaction and asset valuation services for the power industry. Our primary customers are the large lending institutions that require a comprehensive assessment of proposed projects for financing. Our analysts study technologies, designs, operational plans, fuel needs and financial trends in power markets to evaluate the viability of projects. We also provide oversight work at projects site on behalf of lenders or owners.
|
•
|
In fiscal 2014, we gained 100% control of a special purpose limited liability company, Plainfield Renewable Energy LLC ("Plainfield"), formed to create a renewable energy project. The Plainfield Renewable Energy Project involves the design, construction, and financing of a 37.5 megawatt biomass-fueled power plant in Plainfield, Connecticut. The acquisition was effected by a consensual foreclosure agreement pursuant to which the project owners agreed to transfer to us all of their equity interest in Plainfield in full satisfaction of certain secured obligations owed by the project owner to us. The foreclosure agreement constituted a change in control and was accounted for as a business combination.
|
•
|
In fiscal 2013, we acquired maxIT Healthcare Holdings, Inc. ("maxIT"), a provider of clinical, business and information technology services primarily to commercial hospital groups and other medical delivery organizations. This acquisition by our Health and Engineering segment expanded our commercial consulting practice in Electronic Health Record ("EHR") implementation and optimization and strengthened our capabilities to provide these services to our federal healthcare customers as those customers migrate to commercial off-the-shelf EHR applications.
|
•
|
In fiscal 2012, we acquired Vitalize Consulting Solutions, Inc. ("Vitalize"), a provider of clinical, business and information technology services for healthcare enterprises. This acquisition by our Health and Engineering segment expanded our capabilities in both federal and commercial markets to help customers address EHR implementation and optimization demand.
|
|
|
|
•
|
In fiscal 2011, we acquired Reveal Imaging Technologies, Inc. ("Reveal"), a provider of threat detection products and services. This acquisition by our Health and Engineering segment enhanced our homeland security solutions portfolio by adding U.S. Transportation Security Administration certified explosive detection systems for checked baggage screening to our passenger and cargo inspections systems product offerings.
|
•
|
In fiscal 2014, we committed to plans to dispose of Cloudshield, which was historically included in our National Security Solutions segment, primarily focused on producing a suite of cybersecurity hardware and associated software and services. The sale transaction was completed in February 2015.
|
•
|
In fiscal 2013, we completed the sale of certain components of our business, which were historically included in our Health and Engineering segment, primarily focused on providing operational test and evaluation services to U.S. Government customers.
|
•
|
In fiscal 2012, we completed the sale of certain components of our business which were historically included in our Health and Engineering segment, primarily focused on providing information technology services to international oil and gas companies.
|
|
Year Ended
|
|||||||
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
|||
U.S. Government
|
79
|
%
|
|
78
|
%
|
|
81
|
%
|
U.S. DoD
|
67
|
%
|
|
68
|
%
|
|
70
|
%
|
U.S. Army
|
16
|
%
|
|
19
|
%
|
|
23
|
%
|
Maryland Procurement Office
|
10
|
%
|
|
8
|
%
|
|
8
|
%
|
|
|
|
•
|
Employees are inspired to make a difference. We solve the world’s toughest problems; connect cross-enterprise knowledge and technology; and unlock creativity and innovation by embracing differences.
|
•
|
Employees are passionate about customer success. We make customer needs our own; create market-leading solutions; and deliver superior results.
|
•
|
Employees are united as a team. We behave with ethics and integrity; trust one another; collaborate and share ideas; and create value for our employees, shareholders and communities.
|
|
|
|
•
|
the engineering and technical services divisions of large defense contractors that provide U.S. Government IT services in addition to other hardware systems and products, including companies such as The Boeing Company, General Dynamics Corporation, Lockheed Martin Corporation, Northrop Grumman Corporation, BAE Systems plc, L-3 Communications Corporation and Raytheon Company;
|
•
|
contractors focused principally on technical services, including U.S. Government IT services, such as Booz Allen Hamilton Inc., Engility Holdings, Inc., CACI International Inc, ManTech International Corporation, Serco Group plc, SRA International, Inc. and MITRE Corporation;
|
•
|
diversified commercial and U.S. Government IT providers, such as Accenture plc, Computer Sciences Corporation ("CSC"), HP Enterprise Services, International Business Machines Corporation ("IBM") and Unisys Corporation;
|
•
|
contractors that provide engineering, consulting, design and construction services, such as Jacobs Engineering Group, URS Corporation, KBR, Inc. and CH2M Hill Companies Ltd.;
|
•
|
contractors focused on supplying homeland security product solutions, including American Science and Engineering, Inc., OSI Systems, Inc., L-3 Communications Corporation, General Electric Company and Smiths Group plc;
|
•
|
contractors providing supply chain management and other logistics services, including Agility Logistics Corp.; and
|
•
|
companies focused on providing health solutions and services to the U.S. Government and hospitals, including Accenture, IBM, CSC, Cerner Corporation, Epic Systems and Allscripts.
|
|
|
|
•
|
Single Award Contracts. U.S. Government agencies may procure services and products through single award contracts which specify the scope of services or products purchased and identify the contractor that will provide the specified services or products. When an agency has a requirement, the agency will issue a solicitation or request for proposal to which interested contractors can submit a proposal. The process of issuing solicitations or request for proposals and evaluating contractor bids requires the agency to maintain a large, professional procurement staff and the bidding and selection process can take a year or more to complete. For the contractor, this method of contracting may provide greater certainty of the timing and amounts to be received at the time of contract award because it generally results in the customer contracting for a specific scope of services or products from the single successful awardee.
|
•
|
Indefinite Delivery/Indefinite Quantity ("IDIQ") Contracts. The U.S. Government uses IDIQ contracts to obtain commitments from contractors to provide certain services or products on pre-established terms and conditions. The U.S. Government then issues task orders under the IDIQ contracts to purchase the specific services or products it needs. IDIQ contracts are awarded to one or more contractors following a competitive procurement process. Under a single-award IDIQ contract, all task orders under that contract are awarded to one pre-selected contractor. Under a multiple-award IDIQ contract, task orders can be awarded to any of the pre-selected contractors, which can result in further limited competition for the award of task orders. Multiple-award IDIQ contracts that are open for any government agency to use for procurement are commonly referred to as “government-wide acquisition contracts”. IDIQ contracts often have multi-year terms and unfunded ceiling amounts, therefore enabling, but not committing, the U.S. Government to purchase substantial amounts of services or products from one or more contractors. At the time an IDIQ contract is awarded (prior to the award of any task orders), a contractor may have limited or no visibility as to the ultimate amount of services or products that the U.S. Government will purchase under the contract, and in the case of a multiple-award IDIQ, the contractor from which such purchases may be made.
|
•
|
U.S. General Services Administration ("GSA") Schedule Contracts. The GSA maintains listings of approved suppliers of services and products with agreed-upon prices for use throughout the U.S. Government. In order for a company to provide services under a GSA Schedule contract, a company must be pre-qualified and awarded a contract by the GSA. When an agency uses a GSA Schedule contract to meet its requirements, the agency, or the GSA on behalf of the agency, conducts the procurement. The user agency, or the GSA on its behalf, evaluates the user agency’s requirements and initiates a competition limited to GSA Schedule qualified contractors. GSA Schedule contracts are designed to provide the user agency with reduced procurement time and lower procurement costs. Similar to IDIQ contracts, at the time a GSA Schedule contract is awarded, a contractor may have limited or no visibility as to the ultimate amount of services or products that the U.S. Government will purchase under the contract.
|
|
|
|
•
|
Cost-reimbursement contracts provide for reimbursement of our direct contract costs and allocable indirect costs, plus a fee. This type of contract is generally used when uncertainties involved in contract performance do not permit costs to be estimated with sufficient accuracy to use a fixed-price contract. Cost-reimbursement contracts generally subject us to lower risk, but generally require us to use our best efforts to accomplish the scope of the work within a specified time and amount of costs.
|
•
|
Time-and-materials ("T&M") contracts typically provide for negotiated fixed hourly rates for specified categories of direct labor plus reimbursement of other direct costs. This type of contract is generally used when there is uncertainty of the extent or duration of the work to be performed by the contractor at the time of contract award or it is not possible to anticipate costs with any reasonable degree of confidence. On T&M contracts, we assume the risk of providing appropriately qualified staff to perform these contracts at the hourly rates set forth in the contracts over the period of performance of the contracts.
|
•
|
Fixed-price-level-of-effort ("FP-LOE") contracts are substantially similar to T&M contracts except they require a specified level of effort over a stated period of time on work that can be stated only in general terms. This type of contract is generally used when the contractor is required to perform an investigation or study in a specific research and development area and to provide a report showing the results achieved based on the level of effort. Payment is based on the effort expended rather than the results achieved.
|
•
|
Firm-fixed-price ("FFP") contracts provide for a fixed price for specified products, systems and/or services. This type of contract is generally used when the government acquires products and services on the basis of reasonably definitive specifications and which have a determinable fair and reasonable price. These contracts offer us potential increased profits if we can complete the work at lower costs than planned. While FFP contracts allow us to benefit from cost savings, these contracts also increase our exposure to the risk of cost overruns.
|
|
|
|
•
|
require certification and disclosure of all cost and pricing data in connection with certain contract negotiations;
|
•
|
define allowable and unallowable costs and otherwise govern our right to reimbursement under various cost-based U.S. Government contracts;
|
•
|
require compliance with U.S. Government Cost Accounting Standards ("CAS");
|
•
|
require reviews by the Defense Contract Audit Agency ("DCAA"), Defense Contract Management Agency ("DCMA") and other U.S. Government agencies of compliance with government standards for a contractor’s business systems;
|
•
|
restrict the use and dissemination of information classified for national security purposes and the export of certain products and technical data; and
|
•
|
require us not to compete for work if an organizational conflict of interest, as defined by these laws and regulations, related to such work exists and/or cannot be appropriately mitigated.
|
|
|
|
|
|
|
|
|
|
•
|
the FAR and supplements, which regulate the formation, administration and performance of U.S. Government contracts;
|
•
|
the Truth in Negotiations Act, which requires certification and disclosure of cost and pricing data in connection with certain contract negotiations;
|
•
|
the Procurement Integrity Act, which regulates access to competitor bid and proposal information and government source selection information and our ability to provide compensation to certain former government officials;
|
•
|
the Civil False Claims Act, which provides for substantial civil penalties for violations, including for submission of a false or fraudulent claim to the U.S. Government for payment or approval; and
|
•
|
the U.S. Government Cost Accounting Standards, which impose accounting requirements that govern our right to reimbursement under certain cost-based U.S. Government contracts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
we may not be able to identify, compete effectively for or complete suitable acquisitions and investments at prices we consider attractive;
|
•
|
we may not be able to accurately estimate the financial effect of acquisitions and investments on our business and we may not realize anticipated synergies or acquisitions may not result in improved operating performance;
|
•
|
we may encounter performance problems with acquired technologies, capabilities and products, particularly with respect to those that are still in development when acquired;
|
•
|
we may have trouble retaining key employees and customers of an acquired business or otherwise integrating such businesses, such as incompatible accounting, information management, or other control systems, which could result in unforeseen difficulties;
|
•
|
we may assume material liabilities that were not identified as part of our due diligence or for which we are unable to receive a purchase price adjustment or reimbursement through indemnification;
|
•
|
we may assume legal or regulatory risks, particularly with respect to smaller businesses that have immature business processes and compliance programs;
|
•
|
acquired entities or joint ventures may not operate profitably, which could adversely affect our operating income or operating margins and we may be unable to recover investments in any such acquisitions;
|
•
|
acquisitions, investments and joint ventures may require us to spend a significant amount of cash or to issue capital stock, resulting in dilution of ownership; and
|
•
|
we may not be able to effectively influence the operations of our joint ventures or we may be exposed to certain liabilities if our joint venture partners do not fulfill their obligations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
Our certificate of incorporation provides that our bylaws and certain provisions of our certificate of incorporation may be amended by only two-thirds or more voting power of all of the outstanding shares entitled to vote. These supermajority voting requirements could impede our stockholders’ ability to make changes to our certificate of incorporation and bylaws.
|
•
|
Our certificate of incorporation contains certain supermajority voting provisions, which generally provide that mergers and certain other business combinations between us and a related person be approved by the holders of securities having at least 80% of our outstanding voting power, as well as by the holders of a majority of the voting power of such securities that are not owned by the related person.
|
•
|
Our stockholders may not act by written consent. As a result, a holder, or holders, controlling a majority of our capital stock are limited in their ability to take certain actions other than in connection with its annual stockholders’ meeting or a special meeting called at the request of qualified stockholders as provided in our certificate of incorporation and bylaws.
|
•
|
Our board of directors may issue, without stockholder approval, shares of undesignated preferred stock. The ability to authorize undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us.
|
•
|
developments in the U.S. Government defense budget, including budget reductions, sequestration, implementation of spending limits or changes in budgetary priorities, or delays in the U.S. Government budget process or approval of raising the debt ceiling;
|
|
|
|
•
|
delays in the U.S. Government contract procurement process or the award of contracts and delays or loss of contracts as a result of competitor protests;
|
•
|
changes in U.S. Government procurement rules, regulations, and practices;
|
•
|
our compliance with various U.S. Government and other government procurement rules and regulations;
|
•
|
governmental reviews, audits and investigations of our company;
|
•
|
our ability to effectively compete and win contracts with the U.S. Government and other customers;
|
•
|
our reliance on information technology spending by hospitals/health care organizations;
|
•
|
our reliance on infrastructure investments by industrial and natural resources organizations;
|
•
|
energy efficiency and alternative energy sourcing investments;
|
•
|
investments by U.S. Government and commercial organizations in environment impact and remediation projects;
|
•
|
our ability to attract, train and retain skilled employees, including our management team, and to obtain security clearances for our employees;
|
•
|
our ability to accurately estimate costs associated with our firm-fixed-price and other contracts;
|
•
|
our ability to comply with certain agreements entered into in connection with the CityTime matter;
|
•
|
resolution of legal and other disputes with our customers and others or legal or regulatory compliance issues;
|
•
|
cybersecurity, data security or other security threats, system failures or other disruptions of our business;
|
•
|
our ability to effectively acquire businesses and make investments;
|
•
|
our ability to maintain relationships with prime contractors, subcontractors and joint venture partners;
|
•
|
our ability to manage performance and other risks related to customer contracts, including complex engineering or design build projects;
|
•
|
the failure of our inspection or detection systems to detect threats;
|
•
|
the adequacy of our insurance programs designed to protect us from significant product or other liability claims;
|
•
|
our ability to manage risks associated with our international business;
|
•
|
our ability to declare future dividends based on our earnings, financial condition, capital requirements and other factors, including compliance with applicable law and our agreements;
|
•
|
risks associated with the spin-off of our technical, engineering and enterprise information technology services business, such as unknown liabilities and risks associated with joint performance;
|
•
|
our ability to grow our commercial health and engineering businesses, which could be negatively affected by budgetary constraints faced by hospitals and by developers of energy and infrastructure projects; and
|
•
|
our ability to execute our business plan and long-term management initiatives effectively and to overcome these and other known and unknown risks that we face.
|
|
|
|
Location
|
Number of
buildings
|
|
Square
footage
|
|
Acreage
|
|||
McLean, Virginia
|
1
|
|
|
287,000
|
|
|
15.1
|
|
San Diego, California
|
2
|
|
|
262,000
|
|
|
6.2
|
|
Virginia Beach, Virginia
|
2
|
|
|
159,000
|
|
|
22.5
|
|
Columbia, Maryland
|
1
|
|
|
95,000
|
|
|
7.3
|
|
Colorado Springs, Colorado
|
1
|
|
|
86,000
|
|
|
5.8
|
|
Orlando, Florida
|
1
|
|
|
85,000
|
|
|
18.0
|
|
Oak Ridge, Tennessee
|
1
|
|
|
83,000
|
|
|
12.5
|
|
Reston, Virginia
|
1
|
|
|
62,000
|
|
|
2.6
|
|
|
|
|
Name of officer
|
|
Age
|
|
Position(s) with the company and prior business experience
|
Sarah Allen*
|
|
56
|
|
Executive Vice President and Chief Human Resources Officer since 2013. Prior to joining Leidos in September 2008, Ms. Allen served as the Director of Human Resources in the TASC Business Unit of Northrop Grumman Corporation. Earlier in her career, she held positions with TRW Environmental Safety Systems, Honeywell and Hewlett-Packard Company.
|
S. Gulu Gambhir
|
|
46
|
|
Chief Technology Officer and Senior Vice President since 2013. Prior to that time, Mr. Gambhir served as National Security Sector Chief Technology Officer and Senior Vice President since 2009. Before joining Leidos
Mr. Gambhir served as director of Northrop Grumman's Science and Technology Operating Unit of TASC, holding a variety of technical and managerial roles since 1991. Previously, he worked at Space Applications Corporation and COMSAT Laboratories.
|
Roger A. Krone*
|
|
58
|
|
Chief Executive Officer since July 2014, succeeding John P. Jumper. Mr. Krone also sits on the Leidos Board of Directors. He brings nearly 35 years of operational, strategic, and financial execution experience for some of the nation’s most prominent names in aerospace. Mr. Krone has held senior program management and finance positions at The Boeing Company, McDonnell Douglas Corp., and General Dynamics. Mr. Krone is currently director on the board for the United Launch Alliance, a member of the advisory board at Georgia Tech, and a member of the board of WETA Public Television and Radio in Washington, D.C. He is a long-time supporter of the Urban League, and currently serves on the board of the Greater Washington chapter.
|
Theodore W. Lay II
|
|
65
|
|
Senior Vice President, Ethics Compliance, Policy and Governance since September 2013. Mr. Lay joined the Ethics and Compliance Office in January 2011 as the Director of Employee Ethics & Chair of the Employee Ethics Council. He has served as an account manager and an operations manager at Leidos since joining the company in 2005. Mr. Lay joined the Employee Ethics Committee in 2009 while serving as Director of Account Management & Business Resources for the Analysis, Simulations, Systems Engineering, & Training Business Unit. Before transitioning to the civilian sector, he was Deputy Director of NATO’s Joint Warfare Centre in Stavanger, Norway. Mr. Lay retired as a USAF Major General with 33 years of experience.
|
Michael E. Leiter*
|
|
45
|
|
Executive Vice President for Business Development and Strategy since November 2014. Prior to joining Leidos, Mr. Leiter served as Head of Global Government & Commercial Cyber Operations, and Senior Counselor to the Chief Executive Officer, of Palantir Technologies from 2011 to 2014. Before entering the private sector, he served as the Director of the National Counterterrorism Center (NCTC) from 2007 until 2011.
|
Vincent A. Maffeo*
|
|
64
|
|
Executive Vice President and General Counsel since June 2010. Prior to joining Leidos, from 1977 to 2009, Mr. Maffeo was with ITT Corporation, a high-technology engineering and manufacturing company, where he served as Senior Vice President and General Counsel from 1995 until 2009. He held various other increasingly responsible legal positions at ITT Corporation in the telecommunications, defense and automotive businesses, and at the European Headquarters of ITT Europe, before becoming General Counsel.
|
|
|
|
Name of officer
|
|
Age
|
|
Position(s) with the company and prior business experience
|
Ken Sharp*
|
|
44
|
|
Senior Vice President, Chief Accounting Officer and Corporate Controller since 2013. Prior to joining Leidos, Mr. Sharp was with with Computer Sciences Corporation, most recently as Vice President Finance and Administration and Chief Financial Officer of its largest business unit. Prior to that, he served as a senior manager at Ernst & Young LLP. Mr. Sharp served in the United States Marine Corps. In addition, Mr. Sharp is a Certified Public Accountant.
|
Mark W. Sopp*
|
|
49
|
|
Executive Vice President and Chief Financial Officer since 2005. Prior to joining Leidos, Mr. Sopp served as Senior Vice President, Chief Financial Officer and Treasurer of Titan Corporation, a defense and intelligence contractor, from April 2001 to July 2005 and Vice President and Chief Financial Officer of Titan Systems Corporation, a subsidiary of Titan Corporation, from 1998 to 2001.
|
Lou Von Thaer*
|
|
54
|
|
President, National Security Solutions since 2013. Prior to joining Leidos, Mr. Von Thaer was President of General Dynamics Advanced Information Systems, and Corporate Vice President of General Dynamics. He also previously served as Senior Vice President of Operations for General Dynamics Advanced Information Systems, and Senior Vice President for Advanced Technology Systems, a division of Lucent Technologies. Mr. Von Thaer is a Member of IEEE and the Optical Society of America, and has previously held advisory or board positions for the International Engineering Consortium, International Council on Systems Engineering, and the Intelligence and National Security Alliance (INSA).
|
|
|
|
|
Fiscal 2015
|
||||||
Fiscal Quarter
|
High
|
|
Low
|
||||
1st quarter (February 1, 2014 to May 2, 2014)
|
$
|
46.07
|
|
|
$
|
34.64
|
|
2nd quarter (May 3, 2014 to August 1, 2014)
|
$
|
40.72
|
|
|
$
|
36.66
|
|
3rd quarter (August 2, 2014 to October 31, 2014)
|
$
|
38.20
|
|
|
$
|
33.21
|
|
4th quarter (November 1, 2014 to January 30, 2015)
|
$
|
44.41
|
|
|
$
|
36.64
|
|
|
Fiscal 2014
|
||||||
Fiscal Quarter
|
High
|
|
Low
|
||||
(Pre-spin Prices)
|
|
|
|
||||
1st quarter (February 1, 2013 to May 3, 2013)
|
$
|
59.76
|
|
|
$
|
45.28
|
|
2nd quarter (May 4, 2013 to August 2, 2013)
|
$
|
62.60
|
|
|
$
|
51.68
|
|
3rd quarter (August 3, 2013 to September 27, 2013)
|
$
|
64.12
|
|
|
$
|
57.32
|
|
(Post-spin Prices)
|
|
|
|
||||
3rd quarter (September 28, 2013 to November 1, 2013)
|
$
|
47.51
|
|
|
$
|
45.30
|
|
4th quarter (November 2, 2013 to January 31, 2014)
|
$
|
49.02
|
|
|
$
|
40.60
|
|
|
|
|
|
|
|
Period
|
Total Number
of Shares (or Units) Purchased
(1)
|
|
Average Price
Paid per Share
(or Unit)
|
|
Total Number of
Shares (or
Units) Purchased as
Part of Publicly
Announced
Repurchase
Plans or Programs
(2)
|
|
Maximum Number (or Approximate Dollar Value) of Shares
(or Units) that May
Yet Be Purchased Under the
Plans or Programs
(2)
|
|||||
November 1, 2014 – November 30, 2014
|
2,012
|
|
|
$
|
39.97
|
|
|
—
|
|
|
8,113,674
|
|
December 1, 2014 – December 31, 2014
|
15,566
|
|
|
$
|
37.18
|
|
|
—
|
|
|
8,113,674
|
|
January 1, 2015 – January 30, 2015
|
397
|
|
|
$
|
43.01
|
|
|
—
|
|
|
8,113,674
|
|
Total
|
17,975
|
|
|
$
|
37.62
|
|
|
—
|
|
|
|
(1)
|
The total number of shares purchased includes: (i) shares surrendered to satisfy statutory tax withholdings obligations related to vesting of restricted stock awards; and (ii) shares surrendered in payment of the exercise price of non-qualified stock options and/or to satisfy statutory tax withholdings obligations.
|
(2)
|
We may repurchase up to 20 million shares of Leidos common stock under the 2013 Stock Repurchase Program, which was publicly announced in December 2013.
|
|
|
|
|
Year Ended
(1)
|
||||||||||||||||||
|
January 30, 2015
(2)
|
|
January 31, 2014
(3)
|
|
January 31,
2013 |
|
January 31, 2012
(4)
|
|
January 31,
2011 |
||||||||||
|
(in millions, except for per share amounts)
|
||||||||||||||||||
Consolidated Statement of Income Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Leidos Holdings, Inc.:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
5,063
|
|
|
$
|
5,755
|
|
|
$
|
6,449
|
|
|
$
|
5,804
|
|
|
$
|
5,973
|
|
Operating (loss) income
|
(214
|
)
|
|
163
|
|
|
421
|
|
|
(64
|
)
|
|
555
|
|
|||||
(Loss) income from continuing operations
|
(330
|
)
|
|
84
|
|
|
323
|
|
|
(239
|
)
|
|
311
|
|
|||||
Income from discontinued operations, net of tax
|
7
|
|
|
80
|
|
|
202
|
|
|
298
|
|
|
308
|
|
|||||
Net (loss) income
|
$
|
(323
|
)
|
|
$
|
164
|
|
|
$
|
525
|
|
|
$
|
59
|
|
|
$
|
619
|
|
(Loss) earnings per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic:
|
|
|
|
|
|
|
|
|
|
||||||||||
(Loss) income from continuing operations
|
$
|
(4.46
|
)
|
|
$
|
0.98
|
|
|
$
|
3.81
|
|
|
$
|
(2.85
|
)
|
|
$
|
3.31
|
|
Income from discontinued operations
|
0.10
|
|
|
0.96
|
|
|
2.38
|
|
|
3.53
|
|
|
3.27
|
|
|||||
|
$
|
(4.36
|
)
|
|
$
|
1.94
|
|
|
$
|
6.19
|
|
|
$
|
0.68
|
|
|
$
|
6.58
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
||||||||||
(Loss) income from continuing operations
|
$
|
(4.46
|
)
|
|
$
|
0.98
|
|
|
$
|
3.81
|
|
|
$
|
(2.85
|
)
|
|
$
|
3.27
|
|
Income from discontinued operations
|
0.10
|
|
|
0.96
|
|
|
2.38
|
|
|
3.53
|
|
|
3.24
|
|
|||||
|
$
|
(4.36
|
)
|
|
$
|
1.94
|
|
|
$
|
6.19
|
|
|
$
|
0.68
|
|
|
$
|
6.51
|
|
Cash dividend per common share
|
$
|
1.28
|
|
|
$
|
5.60
|
|
|
$
|
1.92
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Leidos, Inc.:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
5,063
|
|
|
$
|
5,755
|
|
|
$
|
6,449
|
|
|
$
|
5,804
|
|
|
$
|
5,973
|
|
Operating (loss) income
|
(214
|
)
|
|
163
|
|
|
421
|
|
|
(64
|
)
|
|
555
|
|
|||||
(Loss) income from continuing operations
|
(324
|
)
|
|
86
|
|
|
324
|
|
|
(242
|
)
|
|
303
|
|
|||||
Income from discontinued operations
|
7
|
|
|
80
|
|
|
202
|
|
|
298
|
|
|
308
|
|
|||||
Net (loss) income
|
$
|
(317
|
)
|
|
$
|
166
|
|
|
$
|
526
|
|
|
$
|
56
|
|
|
$
|
611
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
|
January 31,
2012 |
|
January 31,
2011 |
||||||||||
|
(in millions)
|
||||||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Leidos Holdings, Inc.:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
$
|
3,281
|
|
|
$
|
4,162
|
|
|
$
|
5,875
|
|
|
$
|
6,667
|
|
|
$
|
6,223
|
|
Notes payable and long-term debt, including current portion
|
$
|
1,166
|
|
|
$
|
1,333
|
|
|
$
|
1,295
|
|
|
$
|
1,845
|
|
|
$
|
1,844
|
|
Other long-term liabilities
|
$
|
168
|
|
|
$
|
227
|
|
|
$
|
170
|
|
|
$
|
158
|
|
|
$
|
126
|
|
(1)
|
References to financial data are to the Company's continuing operations, unless otherwise noted. The operating results of the spin-off of New SAIC are included in discontinued operations.
|
(2)
|
Fiscal 2015 results include goodwill impairment charges of
$486 million
, intangible asset impairment charges of
$41 million
and a tangible asset impairment charge of
$40 million
. For further information see,
Note 4 "Goodwill and Intangible assets" and Note 3 "Acquisitions"
of the combined notes to the consolidated financial statements contained within this Annual Report on Form 10-K.
|
(3)
|
Fiscal 2014 results include charges related to intangible asset impairments (
$51 million
), bad debt expense (
$44 million
), and separation transaction and restructuring expenses (
$65 million
). For further information see, Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
.
|
(4)
|
Fiscal 2012 results include a $540 million loss provision recorded in connection with resolution of the CityTime matter described in Note 19
"Legal Proceedings"
of the combined notes to consolidated financial statements contained within this Annual Report on Form 10-K.
|
|
|
|
|
|
|
•
|
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 while retaining an appropriate amount of financial leverage, through internal growth initiatives, stock repurchases, dividends, strategic acquisitions, debt level management and other uses to achieve our goals.
|
•
|
Revenues for fiscal 2015 decreased
12%
from the prior year. The revenue contraction for the year was due to a decrease in National Security Solutions segment revenues of
11%
and Health and Engineering segment revenues of
14%
.
|
•
|
Operating loss from continuing operations was
$214 million
for fiscal 2015 as compared to an operating income from continuing operations of
$163 million
for fiscal 2014. The operating loss from continuing operations in fiscal 2015 included
$486 million
of goodwill impairment charges,
$41 million
of intangible asset impairment charges and
$40 million
of a tangible asset impairment charge. The operating income from continuing operations in fiscal 2014 included
$65 million
of separation transaction and restructuring expenses,
$51 million
of intangible asset impairment charges,
$44 million
of bad debt expense primarily related to receivables for two energy design-build construction projects, and $35 million of infrastructure costs to establish two stand-alone companies.
|
•
|
Diluted loss per share from continuing operations for fiscal 2015 was
$4.46
as compared to diluted earnings per share from continuing operations of
$0.98
in fiscal 2014 primarily due to the aforementioned reductions in operating income from continuing operations of
$377 million
. In addition, there was a decrease in the diluted weighted average number of shares outstanding of
9 million
shares, or
11%
, primarily due to shares repurchased under our accelerated stock repurchase programs.
|
•
|
Cash and cash equivalents increased
$13 million
during fiscal 2015 primarily due to cash provided by operations of
$396 million
and
$80 million
proceeds from the U.S. Treasury cash grant, partially offset by debt repurchase payments of
$175 million
, stock repurchases of
$215 million
, and dividend payments of
$95 million
.
|
•
|
Net bookings (as defined in “Key Performance Measures—Bookings and Backlog”) were approximately
$3.6 billion
for fiscal 2015, as compared to
$4.9 billion
in the prior year. Total backlog was
$7.8 billion
and
$9.3 billion
at January 30, 2015 and January 31, 2014, respectively.
|
|
|
|
|
|
|
|
Year Ended
|
||||||||||
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
||||||
|
(in millions)
|
||||||||||
Revenues
|
$
|
68
|
|
|
$
|
2,745
|
|
|
$
|
4,780
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
||||
Cost of revenues
|
60
|
|
|
2,480
|
|
|
4,311
|
|
|||
Selling, general and administrative expenses (including impairment charges of $9 million for the fiscal year ended January 30, 2015)
|
29
|
|
|
67
|
|
|
117
|
|
|||
Bad debt expense
|
—
|
|
|
—
|
|
|
2
|
|
|||
Intangible asset impairment charges
|
3
|
|
|
2
|
|
|
6
|
|
|||
Separation transaction and restructuring expenses
|
—
|
|
|
55
|
|
|
28
|
|
|||
Operating (loss) income
|
$
|
(24
|
)
|
|
$
|
141
|
|
|
$
|
316
|
|
Non-operating income (expense)
|
$
|
11
|
|
|
$
|
(1
|
)
|
|
$
|
14
|
|
(Loss) income from discontinued operations before income taxes
|
$
|
(13
|
)
|
|
$
|
140
|
|
|
$
|
330
|
|
|
|
|
|
|
|
•
|
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 and commercial customers 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 revenue 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 future potential task orders expected to be awarded under IDIQ, GSA Schedule, or other master agreement contract vehicles.
|
|
January 30,
2015 |
|
January 31,
2014 |
||||
|
(in millions)
|
||||||
National Security Solutions:
|
|
|
|
||||
Funded backlog
|
$
|
1,596
|
|
|
$
|
1,854
|
|
Negotiated unfunded backlog
|
4,491
|
|
|
5,604
|
|
||
Total National Security Solutions backlog
|
$
|
6,087
|
|
|
$
|
7,458
|
|
Health and Engineering:
|
|
|
|
||||
Funded backlog
|
$
|
1,061
|
|
|
$
|
1,144
|
|
Negotiated unfunded backlog
|
645
|
|
|
694
|
|
||
Total Health and Engineering backlog
|
$
|
1,706
|
|
|
$
|
1,838
|
|
Total:
|
|
|
|
||||
Funded backlog
|
$
|
2,657
|
|
|
$
|
2,998
|
|
Negotiated unfunded backlog
|
5,136
|
|
|
6,298
|
|
||
Total backlog
|
$
|
7,793
|
|
|
$
|
9,296
|
|
|
|
|
|
Year Ended
|
|||||||
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
|||
Cost-reimbursement
|
48
|
%
|
|
47
|
%
|
|
46
|
%
|
Time and materials (T&M) and fixed-price-level-of-effort (FP-LOE)
|
25
|
|
|
26
|
|
|
28
|
|
Firm-fixed-price (FFP)
|
27
|
|
|
27
|
|
|
26
|
|
Total
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
Year Ended
|
||||||||||||||||
|
January 30,
2015 |
|
Percent change
|
|
January 31,
2014 |
|
Percent
change |
|
January 31,
2013 |
||||||||
|
(dollars in millions)
|
||||||||||||||||
Labor-related revenues
|
$
|
2,989
|
|
|
(14
|
)%
|
|
$
|
3,478
|
|
|
(11
|
)%
|
|
$
|
3,927
|
|
As a percentage of revenues
|
59
|
%
|
|
|
|
60
|
%
|
|
|
|
61
|
%
|
|||||
M&S revenues
|
2,074
|
|
|
(9
|
)%
|
|
2,277
|
|
|
(10
|
)%
|
|
2,522
|
|
|||
As a percentage of revenues
|
41
|
%
|
|
|
|
40
|
%
|
|
|
|
39
|
%
|
|
|
|
|
Year Ended
|
|
2015 to 2014
|
|
2014 to 2013
|
||||||||||||||||||
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
|
Dollar change
|
Percent
change |
|
Dollar change
|
Percent
change |
||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||||
Revenues
|
$
|
5,063
|
|
|
$
|
5,755
|
|
|
$
|
6,449
|
|
|
$
|
(692
|
)
|
(12
|
)%
|
|
$
|
(694
|
)
|
(11
|
)%
|
Cost of revenues
|
4,392
|
|
|
4,992
|
|
|
5,548
|
|
|
(600
|
)
|
(12
|
)%
|
|
(556
|
)
|
(10
|
)%
|
|||||
Selling, general and administrative expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
General and administrative (G&A)
|
205
|
|
|
325
|
|
|
311
|
|
|
(120
|
)
|
(37
|
)%
|
|
14
|
|
5
|
%
|
|||||
Bid and proposal (B&P)
|
68
|
|
|
70
|
|
|
109
|
|
|
(2
|
)
|
(3
|
)%
|
|
(39
|
)
|
(36
|
)%
|
|||||
Internal research and development (IR&D)
|
37
|
|
|
45
|
|
|
47
|
|
|
(8
|
)
|
(18
|
)%
|
|
(2
|
)
|
(4
|
)%
|
|||||
Bad debt expense
|
5
|
|
|
44
|
|
|
2
|
|
|
(39
|
)
|
(89
|
)%
|
|
42
|
|
NM
|
|
|||||
Goodwill impairment charges
|
486
|
|
|
—
|
|
|
—
|
|
|
486
|
|
100
|
%
|
|
—
|
|
—
|
%
|
|||||
Asset impairment charges
|
81
|
|
|
51
|
|
|
—
|
|
|
30
|
|
59
|
%
|
|
51
|
|
100
|
%
|
|||||
Separation transaction and restructuring expenses
|
3
|
|
|
65
|
|
|
11
|
|
|
(62
|
)
|
(95
|
)%
|
|
54
|
|
NM
|
|
|||||
Operating (loss) income
|
(214
|
)
|
|
163
|
|
|
421
|
|
|
(377
|
)
|
NM
|
|
|
(258
|
)
|
(61
|
)%
|
|||||
Operating (loss) income margin
|
(4.2
|
)%
|
|
2.8
|
%
|
|
6.5
|
%
|
|
|
|
|
|
|
|||||||||
Non-operating expense, net
|
(69
|
)
|
|
(75
|
)
|
|
(76
|
)
|
|
6
|
|
8
|
%
|
|
1
|
|
1
|
%
|
|||||
(Loss) income from continuing operations before income taxes
|
(283
|
)
|
|
88
|
|
|
345
|
|
|
(371
|
)
|
NM
|
|
|
(257
|
)
|
(74
|
)%
|
|||||
Income tax expense
|
(47
|
)
|
|
(4
|
)
|
|
(22
|
)
|
|
(43
|
)
|
NM
|
|
|
18
|
|
(82
|
)%
|
|||||
(Loss) income from continuing operations
|
(330
|
)
|
|
84
|
|
|
323
|
|
|
(414
|
)
|
NM
|
|
|
(239
|
)
|
(74
|
)%
|
|||||
Income from discontinued operations, net of tax
|
7
|
|
|
80
|
|
|
202
|
|
|
(73
|
)
|
(91
|
)%
|
|
(122
|
)
|
(60
|
)%
|
|||||
Net (loss) income
|
$
|
(323
|
)
|
|
$
|
164
|
|
|
$
|
525
|
|
|
$
|
(487
|
)
|
NM
|
|
|
$
|
(361
|
)
|
(69
|
)%
|
|
|
|
|
Year Ended
|
|
2015 to 2014
|
|
2014 to 2013
|
||||||||||||||||||
National Security Solutions
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
|
Dollar change
|
Percent
change |
|
Dollar change
|
Percent
change |
||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||||
Revenues
|
$
|
3,594
|
|
|
$
|
4,049
|
|
|
$
|
4,650
|
|
|
$
|
(455
|
)
|
(11
|
)%
|
|
$
|
(601
|
)
|
(13
|
)%
|
Operating income
|
286
|
|
|
292
|
|
|
360
|
|
|
(6
|
)
|
(2
|
)%
|
|
(68
|
)
|
(19
|
)%
|
|||||
Operating income margin
|
8.0
|
%
|
|
7.2
|
%
|
|
7.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
2015 to 2014
|
|
2014 to 2013
|
||||||||||||||||||
Health and Engineering
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
|
Dollar change
|
Percent
change |
|
Dollar change
|
Percent
change |
||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||||
Revenues
|
$
|
1,485
|
|
|
$
|
1,718
|
|
|
$
|
1,805
|
|
|
$
|
(233
|
)
|
(14
|
)%
|
|
$
|
(87
|
)
|
(5
|
)%
|
Operating (loss) income
|
(472
|
)
|
|
20
|
|
|
138
|
|
|
(492
|
)
|
NM
|
|
|
(118
|
)
|
(86
|
)%
|
|||||
Operating (loss) income margin
|
(31.8
|
)%
|
|
1.2
|
%
|
|
7.6
|
%
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
NM - Not meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
2015 to 2014
|
|
2014 to 2013
|
||||||||||||||||||
Corporate and Other
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
|
Dollar change
|
Percent
change |
|
Dollar change
|
Percent
change |
||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||||
Operating loss
|
$
|
(28
|
)
|
|
$
|
(149
|
)
|
|
$
|
(77
|
)
|
|
$
|
121
|
|
81
|
%
|
|
$
|
(72
|
)
|
(94
|
)%
|
|
|
|
|
|
|
|
Year Ended
|
||||||||||
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
||||||
|
(in millions)
|
||||||||||
Cash provided by operating activities of continuing operations
|
$
|
396
|
|
|
$
|
191
|
|
|
$
|
24
|
|
Cash provided by (used in) investing activities of continuing operations
|
51
|
|
|
297
|
|
|
(519
|
)
|
|||
Cash used in financing activities of continuing operations
|
(478
|
)
|
|
(894
|
)
|
|
(718
|
)
|
|||
Cash provided by operating activities of discontinued operations
|
15
|
|
|
118
|
|
|
320
|
|
|||
Cash provided by (used in) investing activities of discontinued operations
|
29
|
|
|
(17
|
)
|
|
42
|
|
|||
Cash used in financing activities of discontinued operations
|
—
|
|
|
—
|
|
|
(4
|
)
|
|||
Total increase (decrease) in cash and cash equivalents
|
$
|
13
|
|
|
$
|
(305
|
)
|
|
$
|
(855
|
)
|
|
|
|
|
|
|
|
|
|
|
Stated
interest rate |
|
Effective
interest rate |
|
January 30,
2015 |
|
January 31,
2014 |
||||||
|
(dollars in millions)
|
||||||||||||
Leidos Holdings, Inc. senior unsecured notes:
|
|
|
|
|
|
|
|
||||||
$450 million notes issued in fiscal 2011, which mature in December 2020
(1)
|
4.45
|
%
|
|
4.53
|
%
|
|
$
|
466
|
|
|
$
|
449
|
|
$300 million notes issued in fiscal 2011, which mature in December 2040
|
5.95
|
%
|
|
6.03
|
%
|
|
232
|
|
|
300
|
|
||
Leidos, Inc. senior unsecured notes:
|
|
|
|
|
|
|
|
||||||
$250 million notes issued in fiscal 2003, which mature in July 2032
|
7.13
|
%
|
|
7.43
|
%
|
|
248
|
|
|
248
|
|
||
$300 million notes issued in fiscal 2004, which mature in July 2033
|
5.50
|
%
|
|
5.85
|
%
|
|
182
|
|
|
296
|
|
||
Capital leases and other notes payable due on various dates through fiscal 2021
|
0%-3.7%
|
|
|
Various
|
|
|
38
|
|
|
40
|
|
||
Total notes payable and long-term debt
|
|
|
|
|
1,166
|
|
|
1,333
|
|
||||
Less current portion
|
|
|
|
|
2
|
|
|
2
|
|
||||
Total notes payable and long-term debt, net of current portion
|
|
|
|
|
$
|
1,164
|
|
|
$
|
1,331
|
|
||
Fair value of notes payable and long-term debt
|
|
|
|
|
$
|
1,152
|
|
|
$
|
1,350
|
|
(1)
|
As a result of executing the interest rate swap agreements, the carrying value of
$466 million
includes a fair value adjustment of
$17 million
attributable to changes in the benchmark interest rate, the six-month LIBOR rate, from the inception of the interest rate swap agreements to January 30, 2015.
|
|
|
|
|
|
|
|
Payments Due by Fiscal Year
|
||||||||||||||||||||||||||
|
Total
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021 & Thereafter
|
||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||
Contractual obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Long-term debt (including current portion)
(1)
|
$
|
2,154
|
|
|
$
|
65
|
|
|
$
|
65
|
|
|
$
|
65
|
|
|
$
|
65
|
|
|
$
|
65
|
|
|
$
|
1,829
|
|
Operating lease obligations
|
396
|
|
|
88
|
|
|
76
|
|
|
66
|
|
|
55
|
|
|
41
|
|
|
70
|
|
|||||||
Capital lease obligations
|
2
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Other long-term liabilities
(2)
|
47
|
|
|
11
|
|
|
11
|
|
|
7
|
|
|
7
|
|
|
2
|
|
|
9
|
|
|||||||
Total contractual obligations
|
$
|
2,599
|
|
|
$
|
165
|
|
|
$
|
153
|
|
|
$
|
138
|
|
|
$
|
127
|
|
|
$
|
108
|
|
|
$
|
1,908
|
|
(1)
|
Includes total interest payments on our outstanding debt of $63 million in fiscal 2016 through 2020 and $670 million in fiscal 2021 and thereafter. The total interest payments on our outstanding debt are calculated based on the stated fixed rates of the senior unsecured notes and do not reflect the variable interest component due to the interest rate swap agreements.
|
(2)
|
Other long-term liabilities were allocated by fiscal year as follows: a liability for our foreign defined benefit pension plan is based upon the expected near-term contributions to the plan (for a discussion of potential changes in these pension obligations, see Note 15 of the combined notes to consolidated financial statements contained within this Annual Report on Form 10-K); liabilities under deferred compensation arrangements are based upon the average annual payments in prior years upon termination of employment by participants; and other liabilities are based on the fiscal year that the liabilities are expected to be realized. The table above does not include income tax liabilities for uncertain tax positions of
$6 million
and $4 million of additional tax liabilities, as we are not able to reasonably estimate the timing of payments in individual years due to uncertainties in the timing of audit outcomes and when settlements will become due.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
||||||||||
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
||||||
|
(dollars in millions)
|
||||||||||
National Security Solutions:
|
|
|
|
|
|
|
|
||||
Prior fiscal year’s revenues, as reported
|
$
|
4,049
|
|
|
$
|
4,650
|
|
|
$
|
4,618
|
|
Revenues of acquired businesses for the comparable prior year period
|
—
|
|
|
—
|
|
|
—
|
|
|||
Prior fiscal year’s revenues, as adjusted
|
$
|
4,049
|
|
|
$
|
4,650
|
|
|
$
|
4,618
|
|
Current fiscal year’s revenues, as reported
|
3,594
|
|
|
4,049
|
|
|
4,650
|
|
|||
Internal revenue (contraction) growth
|
$
|
(455
|
)
|
|
$
|
(601
|
)
|
|
$
|
32
|
|
Internal revenue (contraction) growth percentage
|
(11
|
)%
|
|
(13
|
)%
|
|
1
|
%
|
|||
Health and Engineering:
|
|
|
|
|
|
||||||
Prior fiscal year’s revenues, as reported
|
$
|
1,718
|
|
|
$
|
1,805
|
|
|
$
|
1,580
|
|
Revenues of acquired businesses for the comparable prior year period
|
—
|
|
|
145
|
|
|
177
|
|
|||
Prior fiscal year’s revenues, as adjusted
|
$
|
1,718
|
|
|
$
|
1,950
|
|
|
$
|
1,757
|
|
Current fiscal year’s revenues, as reported
|
1,485
|
|
|
1,718
|
|
|
1,805
|
|
|||
Internal revenue (contraction) growth
|
$
|
(233
|
)
|
|
$
|
(232
|
)
|
|
$
|
48
|
|
Internal revenue (contraction) growth percentage
|
(14
|
)%
|
|
(12
|
)%
|
|
3
|
%
|
|||
Total*:
|
|
|
|
|
|
|
|
||||
Prior fiscal year’s revenues, as reported
|
$
|
5,755
|
|
|
$
|
6,449
|
|
|
$
|
5,804
|
|
Revenues of acquired businesses for the comparable prior year period
|
—
|
|
|
145
|
|
|
177
|
|
|||
Prior fiscal year’s revenues, as adjusted
|
$
|
5,755
|
|
|
$
|
6,594
|
|
|
$
|
5,981
|
|
Current fiscal year’s revenues, as reported
|
5,063
|
|
|
5,755
|
|
|
6,449
|
|
|||
Internal revenue (contraction) growth
|
$
|
(692
|
)
|
|
$
|
(839
|
)
|
|
$
|
468
|
|
Internal revenue (contraction) growth percentage
|
(12
|
)%
|
|
(13
|
)%
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Category
|
(a)
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
|
|
(b)
Weighted-average
exercise price of
outstanding
options, warrants
and rights
|
|
(c)
Number of securities
remaining available
for future issuance
under equity
compensation
plans (excluding
securities reflected
in column (a))
|
|
||||
Equity compensation plans approved by security holders
(1)
|
6,298,370
|
|
(2)
|
$
|
38.50
|
|
(3)
|
16,270,926
|
|
(4)
|
Equity compensation plans not approved by security holders
(5)
|
—
|
|
|
—
|
|
|
—
|
|
(5)
|
|
Total
|
6,298,370
|
|
|
$
|
—
|
|
(3)
|
16,270,926
|
|
|
(1)
|
The following equity compensation plans approved by security holders are included in this plan category: the 2006 Equity Incentive Plan and the 2006 Employee Stock Purchase Plan.
|
(2)
|
Represents (i) 2,429,467 shares of Leidos common stock reserved for future issuance for performance-based awards assuming achievement of the target level of performance for unearned performance-based awards (does not include an additional 63,531 shares if the maximum level of performance is achieved) and other stock awards under the 2006 Equity Incentive Plan, (ii) 287,687 shares of Leidos common stock issuable pursuant to dividend equivalent rights and (iii) 3,581,216 shares of Leidos common stock reserved for future issuance upon the exercise of outstanding options awarded under the 2006 Equity Incentive Plan. Does not include shares to be issued pursuant to purchase rights under the 2006 Employee Stock Purchase Plan.
|
(3)
|
Does not include shares to be issued for performance-based and other stock awards and shares of stock issuable pursuant to dividend equivalent rights, which will not require any payment upon issuance of those shares.
|
(4)
|
Represents 12,488,011 shares of Leidos common stock under the 2006 Employee Stock Purchase Plan and 3,782,915 shares of Leidos common stock under the 2006 Equity Incentive Plan. The maximum number of shares initially available for issuance under the 2006 Employee Stock Purchase Plan was 2.3 million. The 2006 Employee Stock Purchase Plan provides for an automatic increase to the share reserve on the first day of each fiscal year beginning on February 1, 2007 in an amount equal to the lesser of (i) 2.3 million shares, (ii) two percent of the number of shares of Leidos common stock outstanding on the last day of the immediately preceding fiscal year or (iii) a number determined by the compensation committee of the board of directors. The 2006 Equity Incentive Plan was amended in June 2012 to provide that the maximum number of shares available for issuance thereunder is 12.5 million. Those shares (i) that are issued under the 2006 Equity Incentive Plan that are forfeited or repurchased at the original purchase price or less or that are issuable upon exercise of awards granted under the plan that expire or become unexercisable for any reason after their grant date without having been exercised in full, (ii) that are withheld from an option or stock award pursuant to a Company-approved net exercise provision, or (iii) that are not delivered to or are award shares surrendered by a holder in consideration for applicable tax withholding will continue to be available for issuance under the plan.
|
(5)
|
The Stock Compensation Plan and the Management Stock Compensation Plan have not been approved by security holders and are included in this plan category. These plans do not provide for a maximum number of shares available for future issuance.
|
|
|
|
|
|
|
Exhibit
Number |
Description of Exhibit
|
2.1
|
Distribution Agreement dated September 25, 2013. Incorporated by referenced 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
|
Amended and Restated Bylaws of Leidos Holdings, Inc.
|
|
|
3.3
|
Amended and Restated Certificate of Incorporation of Leidos, Inc. Incorporated by reference to Exhibit 3.3 to our Current Report on From 8-K filed with the SEC on October 1, 2013.
|
|
|
3.4
|
Amended and Restated Bylaws of Leidos, Inc.
|
|
|
4.1
|
Indenture dated June 28, 2002 between Leidos, Inc. and JPMorgan Chase Bank, as trustee. Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K as filed on July 3, 2002 with the SEC. (SEC File No. 000-12771)
|
|
|
4.2
|
First Supplemental Indenture, dated October 13, 2006, by and among Leidos, Inc., Leidos Holdings, Inc. and The Bank of New York Trust Company, N.A., as successor trustee to JPMorgan Chase Bank, N.A. Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K as filed on October 17, 2006 with the SEC. (SEC File No. 001-33072)
|
|
|
4.3
|
Indenture dated as of December 20, 2010, among Leidos Holdings, Inc., Leidos, Inc., and The Bank of New York Mellon Trust Company, N.A. as Trustee. Incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K as filed on December 22, 2010 with the SEC.
|
|
|
10.1*
|
Leidos Holdings, Inc.’s 2006 Equity Incentive Plan. Incorporated by reference to Exhibit 10.1 to our Annual Report on Form 10-K as filed with the SEC on March 27, 2014.
|
|
|
10.2*
|
Leidos, Inc. Stock Compensation Plan. Incorporated by reference to Exhibits 10.2 to our Annual Report on Form 10-K as filed with the SEC on March 27, 2014.
|
|
|
10.3*
|
Leidos, Inc.’s Management Stock Compensation Plan. Incorporated by reference to Exhibit 10.3 to our Annual Report on Form 10-K as filed with the SEC on March 27, 2014.
|
|
|
10.4*
|
Leidos, Inc.'s Keystaff Deferral Plan. Incorporated by reference to Exhibit 10.4 to our Annual Report on Form 10-K as filed with the SEC on March 27, 2014.
|
|
|
10.5*
|
Leidos, Inc.’s Key Executive Stock Deferral Plan. Incorporated by reference to Exhibit 10.5 to our Annual Report on Form-10K as filed with the SEC on March 27, 2014.
|
|
|
10.6*
|
Leidos Holdings, Inc.’s 2006 Employee Stock Purchase Plan. Incorporated by reference to Exhibit 10.6 to our Annual Report on Form 10-K as filed with the SEC on March 27, 2014.
|
|
|
|
|
|
Exhibit
Number |
Description of Exhibit
|
10.7*
|
Leidos, Inc.’s 401(k) Excess Deferral Plan. Incorporated by reference to Exhibit 10.7 to our Annual Report on Form 10-K as filed with the SEC on March 27, 2014.
|
|
|
10.8*
|
Form of Stock Award Agreement of Leidos Holdings, Inc.’s 2006 Equity Incentive Plan. Incorporated by reference to Exhibit 10.5 to our Quarterly Report on Form 10-Q for the quarterly period ended October 31, 2009 as filed on December 9, 2009 with the SEC.
|
|
|
10.9*
|
Form of Stock Award Agreement (Non-Employee Directors) of Leidos Holdings, Inc.’s 2006 Equity Incentive Plan. Incorporated by reference to Exhibit 10.7 to our Quarterly Report on Form 10-Q for the quarterly period ended October 31, 2009 as filed on December 9, 2009 with the SEC.
|
|
|
10.10*
|
Form of Nonstatutory Stock Option Agreement of Leidos Holdings, Inc.’s 2006 Equity Incentive Plan. Incorporated by reference to Exhibit 10.10 to our Annual Report on Form 10-K as filed with the SEC on March 27, 2014.
|
|
|
10.11*
|
Form of Nonstatutory Stock Option Agreement (Non-Employee Directors) of Leidos Holdings, Inc.’s 2006 Equity Incentive Plan. Incorporated by reference to Exhibit 10.11 to our Annual Report on Form 10-K as filed with the SEC on March 27, 2014.
|
|
|
10.12*
|
Form of Performance Share Award Agreement of Leidos Holdings, Inc.’s 2006 Equity Incentive Plan. Incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarterly period ended April 30, 2011 as filed on June 3 2011 with the SEC.
|
|
|
10.13*
|
Form of Amendment to Performance Share Award Agreement of Leidos Holdings, Inc.’s 2006 Equity Incentive Plan (for Performance Share Award Agreements entered into prior to March 22, 2012). Incorporated by reference to Exhibit 10.10 to our Quarterly Report on Form 10-Q for the quarterly period ended April 30, 2012 as filed on June 1, 2012 with the SEC.
|
|
|
10.14*
|
Form of Restricted Stock Unit Award Agreement of Leidos Holdings, Inc.’s 2006 Equity Incentive Plan. Incorporated by reference to Exhibit 10.14 to our Annual Report on Form 10-K as filed with the SEC on March 27, 2014.
|
|
|
10.15*
|
Form of Restricted Stock Unit Award Agreement (Non-Employee Directors) of Leidos Holdings, Inc.’s 2006 Equity Incentive Plan. Incorporated by reference to Exhibit 10.15 to our Annual Report on Form 10-K as filed with the SEC on March 27, 2014.
|
|
|
10.16*
|
Form of Restricted Unit Award Agreement (Management) of Leidos Holdings, Inc.’s 2006 Equity Incentive Plan. Incorporated by reference to Exhibit 10.16 to our Annual Report on Form 10-K filed as with the SEC on March 27, 2014.
|
|
|
10.17*
|
Form of Recoupment Policy and Non-Solicitation Acknowledgment and Agreement. Incorporated by reference to Exhibit 10.1 to Leidos Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended April 30, 2010 as filed on June 4, 2010 with the SEC.
|
|
|
10.18
|
Amended and Restated Four Year Credit Agreement, dated March 11, 2011, among Leidos Holdings, Inc., as borrower, Leidos, Inc., as guarantor, Citibank, N.A., as administrative agent, Bank of America, N.A., as syndication agent, Morgan Stanley Bank, N.A., The Bank of Nova Scotia and Wells Fargo Bank, National Association, as co-documentation agents, and the other lenders party thereto. Incorporated by reference to Exhibit 10.1 to Leidos Holdings, Inc.’s Current Report on Form 8-K as filed on March 15, 2011 with the SEC.
|
|
|
10.19*
|
Form of Indemnification Agreement.
|
|
|
10.20*
|
Form of Severance Protection Agreement. Incorporated by reference to Exhibit 10.20 to our Annual Report on Form 10-K filed with the SEC on March 27, 2014.
|
|
|
10.21*
|
Employment Letter Agreement dated February 29, 2012, to John P. Jumper. Incorporated by reference to Exhibit 10.1 to Leidos Holdings, Inc.’s Current Report on Form 8-K/A as filed on March 2, 2012 with the SEC.
|
|
|
|
|
|
Exhibit
Number |
Description of Exhibit
|
10.22*
|
Stock Offer Letter dated February 29, 2012 to John P. Jumper. Incorporated by reference to Exhibit 10.2 to Leidos Holdings, Inc.’s Current Report on Form 8-K/A as filed on March 2, 2012 with the SEC.
|
|
|
10.23
|
Deferred Prosecution Agreement between Leidos, Inc. and the U.S. Attorney’s Office for the Southern District of New York effective March 14, 2012. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on March 14, 2012 with the SEC.
|
|
|
10.24
|
Administrative Agreement between Leidos, Inc. and the United States Army on behalf of the U.S. Government, dated August 21, 2012. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on August 21, 2012 with the SEC.
|
|
|
10.25
|
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.
|
|
|
10.26
|
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.
|
|
|
10.27
|
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.
|
|
|
10.28
|
Agreement, dated October 11, 2013, by and among Leidos Renewable Energy, LLC, Plainfield Renewable Energy Owner, LLC and Plainfield Renewable Energy Holdings, LLC. Incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q filed with the SEC on December 10, 2013.
|
|
|
10.29††
|
Confirmation, dated December 13, 2013, regarding Issuer Forward Repurchase Transaction to between Leidos Holdings, Inc. and Bank of America, N.A. Incorporated by reference to Exhibit 10.29 our Annual Report on Form 10-K filed with the SEC on March 27, 2014.
|
|
|
10.30*
|
Executive Employment Agreement dated June 30, 2014. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on July, 2, 2014.
|
|
|
10.31
|
Amendment No. 2 to the Amended and Restated Four Year Credit Agreement dated as of March 11, 2011, as amended by Amendment No. 1 dated April 19, 2013, among Leidos Holdings, Inc., as borrower, and Leidos, Inc., as guarantor, Citibank, N.A., as administrative agent and the other lending institutions party thereto. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on October 20, 2014.
|
|
|
10.32*
|
Transition Agreement, dated January 23, 2015, between Leidos Holdings, Inc. and Mark W. Sopp. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on January, 29, 2015.
|
|
|
10.33*
|
Form of Performance Share Award Agreement of Leidos Holdings, Inc.'s 2006 Equity Incentive Plan (for Performance Share Award Agreements entered into on or after April 3, 2015).
|
|
|
10.34*
|
Memorandum of Understanding, executed on March 24, 2014, between the Company and K. Stuart Shea. Incorporated by reference to Exhibit 10.5 to our Quarterly Report on Form 10-Q filed with the SEC on June 4, 2014.
|
|
|
21
|
Subsidiaries of Registrants.
|
|
|
23.1
|
Consent of Independent Registered Public Accounting Firm, Deloitte & Touche LLP.
|
|
|
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.
|
|
|
|
|
|
Exhibit
Number |
Description of Exhibit
|
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.
|
|
|
99.1
|
Patent License and Assignment Agreement dated as of August 12, 2005 between Leidos, Inc. and VirnetX, Inc. Incorporated by reference to Exhibit 99.1 to Leidos Holdings, Inc.’s Annual Report on Form 10-K as filed on April 1, 2010 with the SEC.
|
|
|
99.2†
|
Amendment No. 1 dated as of November 2, 2006 to Patent License and Assignment Agreement between Leidos, Inc. and VirnetX, Inc. Incorporated by reference to Exhibit 99.2 to Leidos Holdings, Inc.’s Annual Report on Form 10-K as filed on April 1, 2010 with the SEC.
|
|
|
99.3
|
Amendment No. 2 dated as of March 12, 2008 to Patent License and Assignment Agreement between Leidos, Inc. and VirnetX, Inc. Incorporated by reference to Exhibit 99.3 to Leidos Holdings, Inc.’s Annual Report on Form 10-K as filed on April 1, 2010 with the SEC.
|
|
|
99.4†
|
Professional Services Contract effective September 7, 1999 between Leidos, Inc. and In-Q-Tel, Inc. (f/k/a In-Q-It, Inc.). Incorporated by reference to Exhibit 99.4 to Leidos Holdings, Inc.’s Annual Report on Form 10-K as filed on April 1, 2010 with the SEC.
|
|
|
101
|
Interactive Data File.
|
*
|
Executive Compensation Plans and Arrangements
|
†
|
Confidential treatment has been granted with respect to certain portions of these exhibits.
|
††
|
Confidential treatment has been requested with respect to certain portions of this exhibit.
|
Leidos Holdings, Inc.
|
|
|
|
By
|
/s/ Mark W. Sopp
|
|
Mark W. Sopp
Executive Vice President and Chief Financial Officer
|
Leidos, Inc.
|
|
|
|
By
|
/s/ Mark W. Sopp
|
|
Mark W. Sopp
Executive Vice President and Chief Financial Officer
|
Signature
|
Title
|
Date
|
|
|
|
/s/ Roger A. Krone
|
Principal Executive Officer
|
March 25, 2015
|
Roger A. Krone
|
||
|
|
|
/s/ Mark W. Sopp
|
Principal Financial Officer
|
March 25, 2015
|
Mark W. Sopp
|
||
|
|
|
/s/ Kenneth P. Sharp
|
Principal Accounting Officer
|
March 25, 2015
|
Kenneth P. Sharp
|
||
|
|
|
/s/ David G. Fubini
|
Director
|
March 25, 2015
|
David G. Fubini
|
||
|
|
|
/s/ John J. Hamre
|
Director
|
March 25, 2015
|
John J. Hamre
|
||
|
|
|
/s/ Miriam E. John
|
Director
|
March 25, 2015
|
Miriam E. John
|
||
|
|
|
/s/ John P. Jumper
|
Director
|
March 25, 2015
|
John P. Jumper
|
||
|
|
|
/s/ Harry M. J. Kraemer, Jr.
|
Director
|
March 25, 2015
|
Harry M. J. Kraemer, Jr.
|
||
|
|
|
/s/ Gary S. May
|
Director
|
March 25, 2015
|
Gary S. May
|
||
|
|
|
/s/ Lawrence C. Nussdorf
|
Director
|
March 25, 2015
|
Lawrence C. Nussdorf
|
||
|
|
|
/s/ Robert S. Shapard
|
Director
|
March 25, 2015
|
Robert S. Shapard
|
||
|
|
|
/s/ Noel B. Williams
|
Director
|
March 25, 2015
|
Noel B. Williams
|
|
Page
|
CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
Leidos Holdings, Inc.
|
|
|
|
|
|
Consolidated Balance Sheets as of January 30, 2015 and January 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
Leidos, Inc.
|
|
|
|
|
|
Consolidated Balance Sheets as of January 30, 2015 and January 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
Leidos Holdings, Inc. and Leidos, Inc.
|
|
|
|
|
January 30,
2015 |
|
January 31,
2014 |
||||
|
(in millions)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
443
|
|
|
$
|
430
|
|
Receivables, net
|
896
|
|
|
1,082
|
|
||
Inventory, prepaid expenses and other current assets
|
273
|
|
|
256
|
|
||
Assets of discontinued operations
|
6
|
|
|
39
|
|
||
Total current assets
|
1,618
|
|
|
1,807
|
|
||
Property, plant and equipment, net
|
308
|
|
|
482
|
|
||
Intangible assets, net
|
37
|
|
|
93
|
|
||
Goodwill
|
1,207
|
|
|
1,693
|
|
||
Deferred income taxes
|
14
|
|
|
15
|
|
||
Other assets
|
97
|
|
|
72
|
|
||
|
$
|
3,281
|
|
|
$
|
4,162
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued liabilities
|
$
|
675
|
|
|
$
|
716
|
|
Accrued payroll and employee benefits
|
264
|
|
|
285
|
|
||
Notes payable and long-term debt, current portion
|
2
|
|
|
2
|
|
||
Liabilities of discontinued operations
|
10
|
|
|
6
|
|
||
Total current liabilities
|
951
|
|
|
1,009
|
|
||
Notes payable and long-term debt, net of current portion
|
1,164
|
|
|
1,331
|
|
||
Other long-term liabilities
|
168
|
|
|
227
|
|
||
Commitments and contingencies (Notes 16, 19 and 20)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $.0001 par value,10 million shares authorized and no shares issued and outstanding at January 30, 2015 and January 31, 2014
|
—
|
|
|
—
|
|
||
Common stock, $.0001 par value, 500 million shares authorized, 74 million and 80 million shares issued and outstanding at January 30, 2015 and January 31, 2014, respectively
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
1,433
|
|
|
1,576
|
|
||
Accumulated (deficit) earnings
|
(424
|
)
|
|
25
|
|
||
Accumulated other comprehensive loss
|
(11
|
)
|
|
(6
|
)
|
||
Total stockholders’ equity
|
998
|
|
|
1,595
|
|
||
|
$
|
3,281
|
|
|
$
|
4,162
|
|
|
Year Ended
|
||||||||||
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
||||||
|
(in millions, except per
share amounts) |
||||||||||
Revenues
|
$
|
5,063
|
|
|
$
|
5,755
|
|
|
$
|
6,449
|
|
Costs and expenses:
|
|
|
|
|
|
||||||
Cost of revenues
|
4,392
|
|
|
4,992
|
|
|
5,548
|
|
|||
Selling, general and administrative expenses
|
310
|
|
|
440
|
|
|
467
|
|
|||
Bad debt expense
|
5
|
|
|
44
|
|
|
2
|
|
|||
Goodwill impairment charges
|
486
|
|
|
—
|
|
|
—
|
|
|||
Asset impairment charges
|
81
|
|
|
51
|
|
|
—
|
|
|||
Separation transaction and restructuring expenses
|
3
|
|
|
65
|
|
|
11
|
|
|||
Operating (loss) income
|
(214
|
)
|
|
163
|
|
|
421
|
|
|||
Non-operating income (expense):
|
|
|
|
|
|
||||||
Interest income
|
1
|
|
|
15
|
|
|
9
|
|
|||
Interest expense
|
(75
|
)
|
|
(82
|
)
|
|
(93
|
)
|
|||
Other income (expense), net
|
5
|
|
|
(8
|
)
|
|
8
|
|
|||
(Loss) income from continuing operations before income taxes
|
(283
|
)
|
|
88
|
|
|
345
|
|
|||
Income tax expense
|
(47
|
)
|
|
(4
|
)
|
|
(22
|
)
|
|||
(Loss) income from continuing operations
|
(330
|
)
|
|
84
|
|
|
323
|
|
|||
Discontinued operations (Note 2):
|
|
|
|
|
|
||||||
(Loss) income from discontinued operations before income taxes
|
(13
|
)
|
|
140
|
|
|
330
|
|
|||
Income tax benefit (expense)
|
20
|
|
|
(60
|
)
|
|
(128
|
)
|
|||
Income from discontinued operations
|
7
|
|
|
80
|
|
|
202
|
|
|||
Net (loss) income
|
$
|
(323
|
)
|
|
$
|
164
|
|
|
$
|
525
|
|
(Loss) earnings per share (Note 12):
|
|
|
|
|
|
||||||
Basic:
|
|
|
|
|
|
||||||
(Loss) income from continuing operations
|
$
|
(4.46
|
)
|
|
$
|
0.98
|
|
|
$
|
3.81
|
|
Income from discontinued operations
|
0.10
|
|
|
0.96
|
|
|
2.38
|
|
|||
|
$
|
(4.36
|
)
|
|
$
|
1.94
|
|
|
$
|
6.19
|
|
Diluted:
|
|
|
|
|
|
||||||
(Loss) income from continuing operations
|
$
|
(4.46
|
)
|
|
$
|
0.98
|
|
|
$
|
3.81
|
|
Income from discontinued operations
|
0.10
|
|
|
0.96
|
|
|
2.38
|
|
|||
|
$
|
(4.36
|
)
|
|
$
|
1.94
|
|
|
$
|
6.19
|
|
|
Year Ended
|
||||||||||
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
||||||
|
(in millions)
|
||||||||||
Net (loss) income
|
$
|
(323
|
)
|
|
$
|
164
|
|
|
$
|
525
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
(2
|
)
|
|
—
|
|
|
(1
|
)
|
|||
Deferred taxes
|
1
|
|
|
—
|
|
|
1
|
|
|||
Foreign currency translation adjustments, net of tax
|
(1
|
)
|
|
—
|
|
|
—
|
|
|||
Reclassification of realized loss on settled derivative instruments to net income
|
—
|
|
|
—
|
|
|
—
|
|
|||
Deferred taxes
|
—
|
|
|
—
|
|
|
—
|
|
|||
Reclassification of realized loss on settled derivative instruments to net income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|||
Pension liability adjustments
|
(7
|
)
|
|
(6
|
)
|
|
14
|
|
|||
Deferred taxes
|
3
|
|
|
2
|
|
|
(5
|
)
|
|||
Pension liability adjustments, net of tax
|
(4
|
)
|
|
(4
|
)
|
|
9
|
|
|||
Total other comprehensive (loss) income, net of tax
|
(5
|
)
|
|
(4
|
)
|
|
9
|
|
|||
Comprehensive (loss) income
|
$
|
(328
|
)
|
|
$
|
160
|
|
|
$
|
534
|
|
|
Shares
|
|
Additional
paid-in capital |
|
Accumulated earnings (deficit)
|
|
Accumulated
other comprehensive loss |
|
Total
|
||||||||||||
|
Common
stock |
|
Preferred
stock |
|
|||||||||||||||||
|
(in millions, except for per share amounts)
|
||||||||||||||||||||
Balance at January 31, 2012
|
85
|
|
|
—
|
|
|
$
|
2,028
|
|
|
$
|
164
|
|
|
$
|
(11
|
)
|
|
$
|
2,181
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
525
|
|
|
—
|
|
|
525
|
|
||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
9
|
|
||||
Issuances of stock (less forfeitures)
|
1
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
24
|
|
||||
Shares repurchased or retired or withheld for tax withholdings on vesting of restricted stock
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
(12
|
)
|
|
—
|
|
|
(22
|
)
|
||||
Dividends of $1.92 per common share
|
—
|
|
|
—
|
|
|
—
|
|
|
(167
|
)
|
|
—
|
|
|
(167
|
)
|
||||
Adjustments for income tax benefits from stock-based compensation
|
—
|
|
|
—
|
|
|
(16
|
)
|
|
—
|
|
|
—
|
|
|
(16
|
)
|
||||
Stock-based compensation (including discontinued operations of $31 million)
|
—
|
|
|
—
|
|
|
84
|
|
|
—
|
|
|
—
|
|
|
84
|
|
||||
Balance at January 31, 2013
|
86
|
|
|
—
|
|
|
2,110
|
|
|
510
|
|
|
(2
|
)
|
|
2,618
|
|
||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
164
|
|
|
—
|
|
|
164
|
|
||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
||||
Issuances of stock (less forfeitures)
|
—
|
|
|
—
|
|
|
33
|
|
|
—
|
|
|
—
|
|
|
33
|
|
||||
Shares repurchased or retired or withheld for tax withholdings on vesting of restricted stock
|
(6
|
)
|
|
—
|
|
|
(165
|
)
|
|
(154
|
)
|
|
—
|
|
|
(319
|
)
|
||||
Dividends of $1.60 per common share
|
—
|
|
|
—
|
|
|
—
|
|
|
(139
|
)
|
|
—
|
|
|
(139
|
)
|
||||
Special cash dividend of $4.00 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
(356
|
)
|
|
—
|
|
|
(356
|
)
|
||||
Adjustments for income tax benefits from stock-based compensation
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
||||
Stock-based compensation (including discontinued operations of $21 million)
|
—
|
|
|
—
|
|
|
76
|
|
|
—
|
|
|
—
|
|
|
76
|
|
||||
Dividend received, net of contribution paid, from the spin-off of New SAIC
|
—
|
|
|
—
|
|
|
269
|
|
|
—
|
|
|
—
|
|
|
269
|
|
||||
Spin-off of New SAIC
|
—
|
|
|
—
|
|
|
(736
|
)
|
|
—
|
|
|
—
|
|
|
(736
|
)
|
||||
Balance at January 31, 2014
|
80
|
|
|
—
|
|
|
1,576
|
|
|
25
|
|
|
(6
|
)
|
|
1,595
|
|
||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(323
|
)
|
|
—
|
|
|
(323
|
)
|
||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
||||
Issuances of stock (less forfeitures)
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Shares repurchased or retired or withheld for tax withholdings on equity awards
|
(7
|
)
|
|
—
|
|
|
(178
|
)
|
|
(37
|
)
|
|
—
|
|
|
(215
|
)
|
||||
Dividends of $1.28 per common share
|
—
|
|
|
—
|
|
|
—
|
|
|
(89
|
)
|
|
—
|
|
|
(89
|
)
|
||||
Adjustments for income tax benefits from stock-based compensation
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
42
|
|
|
—
|
|
|
—
|
|
|
42
|
|
||||
Other
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||
Balance at January 30, 2015
|
74
|
|
|
—
|
|
|
$
|
1,433
|
|
|
$
|
(424
|
)
|
|
$
|
(11
|
)
|
|
$
|
998
|
|
|
Year Ended
|
||||||||||
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
||||||
|
(in millions)
|
||||||||||
Cash flows from operating activities of continuing operations:
|
|
|
|
|
|
||||||
Net (loss) income
|
$
|
(323
|
)
|
|
$
|
164
|
|
|
$
|
525
|
|
Income from discontinued operations
|
(7
|
)
|
|
(80
|
)
|
|
(202
|
)
|
|||
Adjustments to reconcile net (loss) income to net cash provided by continuing operations:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
62
|
|
|
80
|
|
|
90
|
|
|||
Stock-based compensation
|
42
|
|
|
55
|
|
|
53
|
|
|||
Goodwill impairment charges
|
486
|
|
|
—
|
|
|
—
|
|
|||
Asset impairment charges
|
81
|
|
|
51
|
|
|
—
|
|
|||
Bad debt expense
|
5
|
|
|
44
|
|
|
2
|
|
|||
Restructuring charges, net
|
3
|
|
|
17
|
|
|
2
|
|
|||
Other
|
—
|
|
|
2
|
|
|
(2
|
)
|
|||
Change in assets and liabilities, net of effects of acquisitions and dispositions:
|
|
|
|
|
|
|
|
||||
Receivables
|
162
|
|
|
(69
|
)
|
|
218
|
|
|||
Inventory, prepaid expenses and other current assets
|
(12
|
)
|
|
44
|
|
|
5
|
|
|||
Income taxes receivable/payable
|
(87
|
)
|
|
54
|
|
|
(58
|
)
|
|||
Deferred income taxes
|
56
|
|
|
(38
|
)
|
|
67
|
|
|||
Other assets
|
2
|
|
|
18
|
|
|
(9
|
)
|
|||
Accounts payable and accrued liabilities
|
(43
|
)
|
|
(87
|
)
|
|
(694
|
)
|
|||
Accrued payroll and employee benefits
|
(21
|
)
|
|
(66
|
)
|
|
27
|
|
|||
Other long-term liabilities
|
(10
|
)
|
|
2
|
|
|
—
|
|
|||
Total cash flows provided by operating activities of continuing operations
|
396
|
|
|
191
|
|
|
24
|
|
|||
Cash flows from investing activities of continuing operations:
|
|
|
|
|
|
||||||
Expenditures for property, plant and equipment
|
(29
|
)
|
|
(53
|
)
|
|
(39
|
)
|
|||
Acquisitions of businesses, net of cash acquired of $9 million in fiscal 2013
|
—
|
|
|
(3
|
)
|
|
(483
|
)
|
|||
Net proceeds for purchase price adjustments related to prior year acquisitions
|
—
|
|
|
—
|
|
|
1
|
|
|||
Proceeds from sale of assets
|
—
|
|
|
65
|
|
|
2
|
|
|||
Proceeds from U.S. Treasury cash grant
|
80
|
|
|
—
|
|
|
—
|
|
|||
Net proceeds 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
|
—
|
|
|
7
|
|
|
—
|
|
|||
Total cash flows provided by (used in) investing activities of continuing operations
|
51
|
|
|
297
|
|
|
(519
|
)
|
|
Year Ended
|
||||||||||
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
||||||
|
(in millions)
|
||||||||||
Cash flows from financing activities of continuing operations:
|
|
|
|
|
|
||||||
Payments on notes payable and long-term debt
|
(177
|
)
|
|
(152
|
)
|
|
(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
|
7
|
|
|
13
|
|
|
19
|
|
|||
Repurchases of stock
|
(215
|
)
|
|
(319
|
)
|
|
(22
|
)
|
|||
Dividend payments
|
(95
|
)
|
|
(477
|
)
|
|
(165
|
)
|
|||
Other
|
2
|
|
|
3
|
|
|
—
|
|
|||
Total cash flows used in financing activities of continuing operations
|
(478
|
)
|
|
(894
|
)
|
|
(718
|
)
|
|||
Decrease in cash and cash equivalents from continuing operations
|
(31
|
)
|
|
(406
|
)
|
|
(1,213
|
)
|
|||
Cash flows from discontinued operations:
|
|
|
|
|
|
||||||
Cash provided by operating activities of discontinued operations
|
15
|
|
|
118
|
|
|
320
|
|
|||
Cash provided by (used in) investing activities of discontinued operations
|
29
|
|
|
(17
|
)
|
|
42
|
|
|||
Cash used in financing activities of discontinued operations
|
—
|
|
|
—
|
|
|
(4
|
)
|
|||
Increase in cash and cash equivalents from discontinued operations
|
44
|
|
|
101
|
|
|
358
|
|
|||
Total increase (decrease) in cash and cash equivalents
|
13
|
|
|
(305
|
)
|
|
(855
|
)
|
|||
Cash and cash equivalents at beginning of year
|
430
|
|
|
735
|
|
|
1,590
|
|
|||
Cash and cash equivalents at end of year
|
$
|
443
|
|
|
$
|
430
|
|
|
$
|
735
|
|
|
January 30,
2015 |
|
January 31,
2014 |
||||
|
(in millions)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
443
|
|
|
$
|
430
|
|
Receivables, net
|
896
|
|
|
1,082
|
|
||
Inventory, prepaid expenses and other current assets
|
273
|
|
|
256
|
|
||
Assets of discontinued operations
|
6
|
|
|
39
|
|
||
Total current assets
|
1,618
|
|
|
1,807
|
|
||
Property, plant and equipment, net
|
308
|
|
|
482
|
|
||
Intangible assets, net
|
37
|
|
|
93
|
|
||
Goodwill
|
1,207
|
|
|
1,693
|
|
||
Deferred income taxes
|
14
|
|
|
15
|
|
||
Other assets
|
97
|
|
|
72
|
|
||
Note receivable from Leidos Holdings, Inc. (Note 10)
|
1,412
|
|
|
1,137
|
|
||
|
$
|
4,693
|
|
|
$
|
5,299
|
|
LIABILITIES AND STOCKHOLDER’S EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued liabilities
|
$
|
675
|
|
|
$
|
716
|
|
Accrued payroll and employee benefits
|
264
|
|
|
285
|
|
||
Notes payable and long-term debt, current portion
|
2
|
|
|
2
|
|
||
Liabilities of discontinued operations
|
10
|
|
|
6
|
|
||
Total current liabilities
|
951
|
|
|
1,009
|
|
||
Notes payable and long-term debt, net of current portion
|
1,164
|
|
|
1,331
|
|
||
Other long-term liabilities
|
168
|
|
|
227
|
|
||
Commitments and contingencies (Notes 16, 19 and 20)
|
|
|
|
||||
Stockholders' equity:
|
|
|
|
||||
Common stock, $.01 par value, 10,000 shares authorized, 5,000 shares issued and outstanding at January 30, 2015 and January 31, 2014
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
207
|
|
|
207
|
|
||
Accumulated earnings
|
2,214
|
|
|
2,531
|
|
||
Accumulated other comprehensive loss
|
(11
|
)
|
|
(6
|
)
|
||
Total stockholder's equity
|
2,410
|
|
|
2,732
|
|
||
|
$
|
4,693
|
|
|
$
|
5,299
|
|
|
Year Ended
|
||||||||||
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
||||||
|
(in millions)
|
||||||||||
Revenues
|
$
|
5,063
|
|
|
$
|
5,755
|
|
|
$
|
6,449
|
|
Costs and expenses:
|
|
|
|
|
|
||||||
Cost of revenues
|
4,392
|
|
|
4,992
|
|
|
5,548
|
|
|||
Selling, general and administrative expenses
|
310
|
|
|
440
|
|
|
467
|
|
|||
Bad debt expense
|
5
|
|
|
44
|
|
|
2
|
|
|||
Goodwill impairment charges
|
486
|
|
|
—
|
|
|
—
|
|
|||
Asset impairment charges
|
81
|
|
|
51
|
|
|
—
|
|
|||
Separation transaction and restructuring expenses
|
3
|
|
|
65
|
|
|
11
|
|
|||
Operating (loss) income
|
(214
|
)
|
|
163
|
|
|
421
|
|
|||
Non-operating income (expense):
|
|
|
|
|
|
||||||
Interest income
|
11
|
|
|
19
|
|
|
10
|
|
|||
Interest expense
|
(75
|
)
|
|
(82
|
)
|
|
(93
|
)
|
|||
Other income (expense), net
|
5
|
|
|
(8
|
)
|
|
8
|
|
|||
(Loss) income from continuing operations before income taxes
|
(273
|
)
|
|
92
|
|
|
346
|
|
|||
Income tax expense
|
(51
|
)
|
|
(6
|
)
|
|
(22
|
)
|
|||
(Loss) income from continuing operations
|
(324
|
)
|
|
86
|
|
|
324
|
|
|||
Discontinued operations (Note 2):
|
|
|
|
|
|
||||||
(Loss) income from discontinued operations before income taxes
|
(13
|
)
|
|
140
|
|
|
330
|
|
|||
Income tax benefit (expense)
|
20
|
|
|
(60
|
)
|
|
(128
|
)
|
|||
Income from discontinued operations
|
7
|
|
|
80
|
|
|
202
|
|
|||
Net (loss) income
|
$
|
(317
|
)
|
|
$
|
166
|
|
|
$
|
526
|
|
|
Year Ended
|
||||||||||
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
||||||
|
(in millions)
|
||||||||||
Net (loss) income
|
$
|
(317
|
)
|
|
$
|
166
|
|
|
$
|
526
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
(2
|
)
|
|
—
|
|
|
(1
|
)
|
|||
Deferred taxes
|
1
|
|
|
—
|
|
|
1
|
|
|||
Foreign currency translation adjustments, net of tax
|
(1
|
)
|
|
—
|
|
|
—
|
|
|||
Reclassification of realized loss on settled derivative instruments to net income
|
—
|
|
|
—
|
|
|
—
|
|
|||
Deferred taxes
|
—
|
|
|
—
|
|
|
—
|
|
|||
Reclassification of realized loss on settled derivative instruments to net income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|||
Pension liability adjustments
|
(7
|
)
|
|
(6
|
)
|
|
14
|
|
|||
Deferred taxes
|
3
|
|
|
2
|
|
|
(5
|
)
|
|||
Pension liability adjustments, net of tax
|
(4
|
)
|
|
(4
|
)
|
|
9
|
|
|||
Total other comprehensive (loss) income, net of tax
|
(5
|
)
|
|
(4
|
)
|
|
9
|
|
|||
Comprehensive (loss) income
|
$
|
(322
|
)
|
|
$
|
162
|
|
|
$
|
535
|
|
|
Shares of
common stock |
|
Additional
paid-in capital |
|
Accumulated
earnings |
|
Accumulated
other comprehensive loss |
|
Total
|
|||||||||
|
(in millions, except for share amounts)
|
|||||||||||||||||
Balance at January 31, 2012
|
5,000
|
|
|
$
|
233
|
|
|
$
|
1,839
|
|
|
$
|
(11
|
)
|
|
$
|
2,061
|
|
Net income
|
—
|
|
|
—
|
|
|
526
|
|
|
—
|
|
|
526
|
|
||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
9
|
|
||||
Balance at January 31, 2013
|
5,000
|
|
|
233
|
|
|
2,365
|
|
|
(2
|
)
|
|
2,596
|
|
||||
Net income
|
—
|
|
|
—
|
|
|
166
|
|
|
—
|
|
|
166
|
|
||||
Contribution paid related to the spin-off of New SAIC
|
—
|
|
|
(26
|
)
|
|
—
|
|
|
—
|
|
|
(26
|
)
|
||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
||||
Balance at January 31, 2014
|
5,000
|
|
|
207
|
|
|
2,531
|
|
|
(6
|
)
|
|
2,732
|
|
||||
Net loss
|
—
|
|
|
—
|
|
|
(317
|
)
|
|
—
|
|
|
(317
|
)
|
||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
||||
Balance at January 30, 2015
|
5,000
|
|
|
$
|
207
|
|
|
$
|
2,214
|
|
|
$
|
(11
|
)
|
|
$
|
2,410
|
|
|
Year Ended
|
||||||||||
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
||||||
|
(in millions)
|
||||||||||
Cash flows from operating activities of continuing operations:
|
|
|
|
|
|
||||||
Net (loss) income
|
$
|
(317
|
)
|
|
$
|
166
|
|
|
$
|
526
|
|
Income from discontinued operations
|
(7
|
)
|
|
(80
|
)
|
|
(202
|
)
|
|||
Adjustments to reconcile net (loss) income to net cash provided by continuing operations:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
62
|
|
|
80
|
|
|
90
|
|
|||
Stock-based compensation
|
42
|
|
|
55
|
|
|
53
|
|
|||
Goodwill impairment charges
|
486
|
|
|
—
|
|
|
—
|
|
|||
Asset impairment charges
|
81
|
|
|
51
|
|
|
—
|
|
|||
Bad debt expense
|
5
|
|
|
44
|
|
|
2
|
|
|||
Restructuring charges, net
|
3
|
|
|
17
|
|
|
2
|
|
|||
Other
|
(6
|
)
|
|
—
|
|
|
(3
|
)
|
|||
Change in assets and liabilities, net of effects of acquisitions and dispositions:
|
|
|
|
|
|
|
|
||||
Receivables
|
162
|
|
|
(69
|
)
|
|
218
|
|
|||
Inventory, prepaid expenses and other current assets
|
(12
|
)
|
|
44
|
|
|
5
|
|
|||
Income taxes receivable/payable
|
(87
|
)
|
|
54
|
|
|
(58
|
)
|
|||
Deferred income taxes
|
56
|
|
|
(38
|
)
|
|
67
|
|
|||
Other assets
|
2
|
|
|
18
|
|
|
(9
|
)
|
|||
Accounts payable and accrued liabilities
|
(43
|
)
|
|
(87
|
)
|
|
(694
|
)
|
|||
Accrued payroll and employee benefits
|
(21
|
)
|
|
(66
|
)
|
|
27
|
|
|||
Other long-term liabilities
|
(10
|
)
|
|
2
|
|
|
—
|
|
|||
Total cash flows provided by operating activities of continuing operations
|
396
|
|
|
191
|
|
|
24
|
|
|||
Cash flows from investing activities of continuing operations:
|
|
|
|
|
|
||||||
Proceeds on obligations of Leidos Holdings, Inc.
|
156
|
|
|
13
|
|
|
—
|
|
|||
Payments on obligations of Leidos Holdings, Inc.
|
(457
|
)
|
|
(501
|
)
|
|
—
|
|
|||
Expenditures for property, plant and equipment
|
(29
|
)
|
|
(53
|
)
|
|
(39
|
)
|
|||
Acquisitions of businesses, net of cash acquired of $9 million in fiscal 2013
|
—
|
|
|
(3
|
)
|
|
(483
|
)
|
|||
Net proceeds for purchase price adjustments related to prior year acquisitions
|
—
|
|
|
—
|
|
|
1
|
|
|||
Proceeds from sale of assets
|
—
|
|
|
65
|
|
|
2
|
|
|||
Proceeds from U.S. Treasury cash grant
|
80
|
|
|
—
|
|
|
—
|
|
|||
Net proceeds of cost method investments
|
—
|
|
|
12
|
|
|
—
|
|
|||
Contribution paid related to the separation of New SAIC
|
—
|
|
|
(26
|
)
|
|
—
|
|
|||
Other
|
—
|
|
|
7
|
|
|
—
|
|
|||
Total cash flows used in investing activities of continuing operations
|
(250
|
)
|
|
(486
|
)
|
|
(519
|
)
|
|
Year Ended
|
||||||||||
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
||||||
|
(in millions)
|
||||||||||
Cash flows from financing activities of continuing operations:
|
|
|
|
|
|
||||||
Proceeds on obligations of Leidos Holdings, Inc.
|
—
|
|
|
—
|
|
|
244
|
|
|||
Payments on obligations of Leidos Holdings, Inc.
|
—
|
|
|
—
|
|
|
(411
|
)
|
|||
Payments on notes payable and long-term debt
|
(177
|
)
|
|
(152
|
)
|
|
(550
|
)
|
|||
Payments for deferred financing costs
|
—
|
|
|
(5
|
)
|
|
—
|
|
|||
Payment from New SAIC for deferred financing costs
|
—
|
|
|
5
|
|
|
—
|
|
|||
Proceeds from real estate financing transaction
|
—
|
|
|
38
|
|
|
—
|
|
|||
Dividend payments
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Other
|
—
|
|
|
3
|
|
|
—
|
|
|||
Total cash flows used in financing activities of continuing operations
|
(177
|
)
|
|
(111
|
)
|
|
(718
|
)
|
|||
Decrease in cash and cash equivalents from continuing operations
|
(31
|
)
|
|
(406
|
)
|
|
(1,213
|
)
|
|||
Cash flows from discontinued operations:
|
|
|
|
|
|
||||||
Cash provided by operating activities of discontinued operations
|
15
|
|
|
118
|
|
|
320
|
|
|||
Cash provided by (used in) investing activities of discontinued operations
|
29
|
|
|
(17
|
)
|
|
42
|
|
|||
Cash used in financing activities of discontinued operations
|
—
|
|
|
—
|
|
|
(4
|
)
|
|||
Increase in cash and cash equivalents from discontinued operations
|
44
|
|
|
101
|
|
|
358
|
|
|||
Total increase (decrease) in cash and cash equivalents
|
13
|
|
|
(305
|
)
|
|
(855
|
)
|
|||
Cash and cash equivalents at beginning of year
|
430
|
|
|
735
|
|
|
1,590
|
|
|||
Cash and cash equivalents at end of year
|
$
|
443
|
|
|
$
|
430
|
|
|
$
|
735
|
|
|
|
|
|
Year Ended
|
||||||||||
|
January 30,
2015 |
|
January 31, 2014
|
|
January 31, 2013
|
||||||
|
(in millions)
|
||||||||||
Strategic advisory services
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
1
|
|
Legal and accounting services
|
—
|
|
|
2
|
|
|
—
|
|
|||
Lease termination and facility consolidation expenses
|
3
|
|
|
46
|
|
|
2
|
|
|||
Severance costs
|
—
|
|
|
10
|
|
|
8
|
|
|||
Separation transaction and restructuring expenses in operating (loss) income
|
3
|
|
|
65
|
|
|
11
|
|
|||
Less: income tax benefit
|
(1
|
)
|
|
(25
|
)
|
|
(4
|
)
|
|||
Separation transaction and restructuring expenses, net of tax
|
$
|
2
|
|
|
$
|
40
|
|
|
$
|
7
|
|
|
|
|
|
Severance Costs
|
|
Lease Termination and Facility Consolidation Expenses
|
|
Total
|
||||||
|
(in millions)
|
||||||||||
Balance as of January 31, 2013
|
$
|
8
|
|
|
$
|
2
|
|
|
$
|
10
|
|
Charges
|
10
|
|
|
41
|
|
|
51
|
|
|||
Cash payments
|
(17
|
)
|
|
(23
|
)
|
|
(40
|
)
|
|||
Balance as of January 31, 2014
|
$
|
1
|
|
|
$
|
20
|
|
|
$
|
21
|
|
Charges
|
—
|
|
|
3
|
|
|
3
|
|
|||
Cash payments
|
(1
|
)
|
|
(12
|
)
|
|
(13
|
)
|
|||
Balance as of January 30, 2015
|
$
|
—
|
|
|
$
|
11
|
|
|
$
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation method
|
|
Estimated useful lives (in years)
|
Computers and other equipment
|
Straight-line or declining-balance
|
|
2-10
|
Buildings
|
Straight-line
|
|
30-40
|
Building improvements and leasehold improvements
|
Straight-line
|
|
Shorter of lease term or 25
|
Office furniture
|
Straight-line or declining-balance
|
|
6-9
|
Electric generation facility
|
Straight-line
|
|
25
|
|
|
|
|
|
|
|
Estimated useful lives (in years)
|
Customer relationships
|
5-10
|
Software and technology
|
9-15
|
Other
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
||||||||||
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
||||||
|
(in millions)
|
||||||||||
Revenues
|
$
|
39
|
|
|
$
|
2,712
|
|
|
$
|
4,683
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|||
Cost of revenues
|
39
|
|
|
2,447
|
|
|
4,230
|
|
|||
Selling, general and administrative expenses
|
—
|
|
|
42
|
|
|
65
|
|
|||
Bad debt expense
|
—
|
|
|
—
|
|
|
2
|
|
|||
Separation transaction and restructuring expenses
|
—
|
|
|
55
|
|
|
28
|
|
|||
Operating income
|
$
|
—
|
|
|
$
|
168
|
|
|
$
|
358
|
|
|
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
|
|
|
|
|
|
Year Ended
|
||||||||||
|
January 30,
2015 |
|
January 31, 2014
|
|
January 31, 2013
|
||||||
|
(in millions)
|
||||||||||
Revenues
|
$
|
29
|
|
|
$
|
33
|
|
|
$
|
97
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|||
Cost of revenues
|
21
|
|
|
33
|
|
|
81
|
|
|||
Selling, general and administrative expenses (including impairment charges of $9 million for the fiscal year ended January 30, 2015)
|
29
|
|
|
25
|
|
|
52
|
|
|||
Intangible asset impairment charges
|
3
|
|
|
2
|
|
|
6
|
|
|||
Operating loss
|
$
|
(24
|
)
|
|
$
|
(27
|
)
|
|
$
|
(42
|
)
|
Non-operating income (expense)
|
$
|
11
|
|
|
$
|
(1
|
)
|
|
$
|
14
|
|
Loss from discontinued operations before income taxes
|
$
|
(13
|
)
|
|
$
|
(28
|
)
|
|
$
|
(28
|
)
|
|
|
|
|
Year Ended
|
||||||
|
January 31,
2014 |
|
January 31,
2013 |
||||
|
($ in millions)
|
||||||
Number of acquisitions
|
1
|
|
|
1
|
|
||
Purchase consideration (paid and accrued)
|
$
|
111
|
|
|
$
|
505
|
|
|
2014
|
|
2013
|
||||
|
($ in millions)
|
||||||
Goodwill:
|
|
|
|
||||
Tax deductible goodwill
|
$
|
—
|
|
|
$
|
—
|
|
Non-tax deductible goodwill
|
—
|
|
|
395
|
|
||
Identifiable intangible assets:
|
|
|
|
||||
Customer relationships (finite-lived)
|
$
|
—
|
|
|
$
|
62
|
|
Other (finite-lived)
|
3
|
|
|
10
|
|
||
Weighted average lives of finite-lived intangibles:
|
|
|
|
||||
Customer relationships
|
—
|
|
|
5 years
|
|
||
Other
|
12 years
|
|
|
1 year
|
|
||
All finite-lived intangible assets
|
12 years
|
|
|
4 years
|
|
|
|
|
Forgiveness of accounts receivable (net of $32 million bad debt expense)
|
$
|
105
|
|
Contingent consideration
|
6
|
|
|
Total 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 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
|
|
|
NSS
|
|
HES
|
|
Total
|
||||||
|
(in millions)
|
||||||||||
Balance at January 31, 2013
|
$
|
719
|
|
|
$
|
974
|
|
|
$
|
1,693
|
|
Corporate reorganizations
|
69
|
|
|
(69
|
)
|
|
—
|
|
|||
Balance at January 31, 2014
|
$
|
788
|
|
|
$
|
905
|
|
|
$
|
1,693
|
|
Goodwill impairment
|
—
|
|
|
(486
|
)
|
|
(486
|
)
|
|||
Balance at January 30, 2015
|
$
|
788
|
|
|
$
|
419
|
|
|
$
|
1,207
|
|
|
|
|
|
|
|
|
January 30, 2015
|
|
January 31, 2014
|
||||||||||||||||||||
|
Gross
carrying
value
|
|
Accumulated
amortization
|
|
Net
carrying
value
|
|
Gross
carrying
value
|
|
Accumulated
amortization
|
|
Net
carrying
value
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
$
|
70
|
|
|
$
|
(57
|
)
|
|
$
|
13
|
|
|
$
|
94
|
|
|
$
|
(47
|
)
|
|
$
|
47
|
|
Software and technology
|
52
|
|
|
(41
|
)
|
|
11
|
|
|
65
|
|
|
(36
|
)
|
|
29
|
|
||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
(1
|
)
|
|
3
|
|
||||||
Total finite-lived intangible assets
|
122
|
|
|
(98
|
)
|
|
24
|
|
|
163
|
|
|
(84
|
)
|
|
79
|
|
||||||
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
In-process research and development
|
9
|
|
|
—
|
|
|
9
|
|
|
10
|
|
|
—
|
|
|
10
|
|
||||||
Trade names
|
4
|
|
|
—
|
|
|
4
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||||
Total indefinite-lived intangible assets
|
13
|
|
|
—
|
|
|
13
|
|
|
14
|
|
|
—
|
|
|
14
|
|
||||||
Total intangible assets
|
$
|
135
|
|
|
$
|
(98
|
)
|
|
$
|
37
|
|
|
$
|
177
|
|
|
$
|
(84
|
)
|
|
$
|
93
|
|
|
|
|
Year Ending January 30
|
|
||
|
(in millions)
|
||
2016
|
$
|
8
|
|
2017
|
7
|
|
|
2018
|
5
|
|
|
2019
|
3
|
|
|
2020
|
1
|
|
|
2021 and thereafter
|
—
|
|
|
|
$
|
24
|
|
|
|
|
|
January 30,
2015 |
|
January 31,
2014 |
||||
|
(in millions)
|
||||||
Billed and billable receivables
|
$
|
655
|
|
|
$
|
794
|
|
Unbilled receivables:
|
|
|
|
|
|
||
Amounts billable
|
230
|
|
|
288
|
|
||
Contract retentions
|
21
|
|
|
15
|
|
||
Allowance for doubtful accounts
|
(10
|
)
|
|
(15
|
)
|
||
|
$
|
896
|
|
|
$
|
1,082
|
|
|
|
|
|
January 30,
2015 |
|
January 31,
2014 |
||||
|
(in millions)
|
||||||
Electric generation facility
|
$
|
127
|
|
|
$
|
269
|
|
Computers and other equipment
|
166
|
|
|
204
|
|
||
Leasehold improvements
|
156
|
|
|
167
|
|
||
Buildings and improvements
|
107
|
|
|
113
|
|
||
Office furniture and fixtures
|
37
|
|
|
43
|
|
||
Land
|
26
|
|
|
27
|
|
||
Construction in progress
|
2
|
|
|
—
|
|
||
|
621
|
|
|
823
|
|
||
Less accumulated depreciation and amortization
|
(313
|
)
|
|
(341
|
)
|
||
|
$
|
308
|
|
|
$
|
482
|
|
|
|
|
|
January 30,
2015 |
|
January 31,
2014 |
||||
|
(in millions)
|
||||||
Inventory, prepaid expenses and other current assets:
|
|
|
|
||||
Prepaid income taxes and tax refunds receivable
|
$
|
102
|
|
|
$
|
24
|
|
Inventories
|
70
|
|
|
59
|
|
||
Restricted cash
|
30
|
|
|
18
|
|
||
Prepaid expenses
|
28
|
|
|
34
|
|
||
Deferred income taxes
|
12
|
|
|
89
|
|
||
Other
|
31
|
|
|
32
|
|
||
|
$
|
273
|
|
|
$
|
256
|
|
Accounts payable and accrued liabilities:
|
|
|
|
||||
Accrued liabilities
|
$
|
327
|
|
|
$
|
395
|
|
Accounts payable
|
244
|
|
|
218
|
|
||
Collections in excess of revenues on uncompleted contracts and deferred revenue
|
104
|
|
|
103
|
|
||
|
$
|
675
|
|
|
$
|
716
|
|
Accrued payroll and employee benefits:
|
|
|
|
||||
Salaries, bonuses and amounts withheld from employees’ compensation
|
$
|
138
|
|
|
$
|
152
|
|
Accrued vacation
|
123
|
|
|
128
|
|
||
Accrued contributions to employee benefit plans
|
3
|
|
|
5
|
|
||
|
$
|
264
|
|
|
$
|
285
|
|
Other long-term liabilities:
|
|
|
|
||||
Deferred compensation
|
$
|
39
|
|
|
$
|
38
|
|
Lease related obligations
|
31
|
|
|
33
|
|
||
Deferred tax liabilities
|
21
|
|
|
66
|
|
||
Accrued pension liabilities
|
8
|
|
|
9
|
|
||
Liabilities for uncertain tax positions
|
6
|
|
|
12
|
|
||
Other
|
63
|
|
|
69
|
|
||
|
$
|
168
|
|
|
$
|
227
|
|
|
|
|
Interest rate swaps
|
|
Hedged items
|
||||||||||||
Balance sheet line item
|
January 30,
2015 |
January 31,
2014 |
|
Balance sheet line item
|
January 30,
2015 |
January 31,
2014 |
||||||||
(in millions)
|
||||||||||||||
Other assets
|
$
|
17
|
|
$
|
—
|
|
|
Notes payable and long-term debt, net of current portion
|
$
|
17
|
|
$
|
—
|
|
|
|
|
|
Stated
interest rate |
|
Effective
interest rate |
|
January 30,
2015 |
|
January 31,
2014 |
||||||
|
(dollars in millions)
|
||||||||||||
Leidos Holdings, Inc. senior unsecured notes:
|
|
|
|
|
|
|
|
||||||
$450 million notes issued in fiscal 2011, which mature in December 2020
(1)
|
4.45
|
%
|
|
4.53
|
%
|
|
$
|
466
|
|
|
$
|
449
|
|
$300 million notes issued in fiscal 2011, which mature in December 2040
|
5.95
|
%
|
|
6.03
|
%
|
|
232
|
|
|
300
|
|
||
Leidos, Inc. senior unsecured notes:
|
|
|
|
|
|
|
|
||||||
$250 million notes issued in fiscal 2003, which mature in July 2032
|
7.13
|
%
|
|
7.43
|
%
|
|
248
|
|
|
248
|
|
||
$300 million notes issued in fiscal 2004, which mature in July 2033
|
5.50
|
%
|
|
5.85
|
%
|
|
182
|
|
|
296
|
|
||
Capital leases and other notes payable due on various dates through fiscal 2021
|
0%-3.7%
|
|
|
Various
|
|
|
38
|
|
|
40
|
|
||
Total notes payable and long-term debt
|
|
|
|
|
1,166
|
|
|
1,333
|
|
||||
Less current portion
|
|
|
|
|
2
|
|
|
2
|
|
||||
Total notes payable and long-term debt, net of current portion
|
|
|
|
|
$
|
1,164
|
|
|
$
|
1,331
|
|
||
Fair value of notes payable and long-term debt
|
|
|
|
|
$
|
1,152
|
|
|
$
|
1,350
|
|
(1)
|
As a result of executing the interest rate swap agreements, the carrying value of
$466 million
includes a fair value adjustment of
$17 million
attributable to changes in the benchmark interest rate, the six-month LIBOR rate, from the inception of the interest rate swap agreements to January 30, 2015.
|
|
|
|
|
|
||
Year Ending January 30
|
|
||
|
(in millions)
|
||
2016
|
$
|
3
|
|
2017
|
3
|
|
|
2018
|
2
|
|
|
2019
|
2
|
|
|
2020
|
2
|
|
|
2021 and thereafter
|
1,159
|
|
|
Total principal payments
|
1,171
|
|
|
Less unamortized discount
|
5
|
|
|
|
$
|
1,166
|
|
|
|
|
|
January 30,
2015 |
|
January 31,
2014 |
||||
|
(in millions)
|
||||||
Foreign currency translation adjustments, net of taxes of $0 million and $(1) million as of January 30, 2015 and January 31, 2014, respectively
|
$
|
1
|
|
|
$
|
2
|
|
Unrecognized net loss on settled derivative instruments associated with outstanding debt, net of taxes of $3 million as of January 30, 2015 and January 31, 2014, respectively
|
(5
|
)
|
|
(5
|
)
|
||
Unrecognized loss on defined benefit plan, net of taxes of $5 million and $2 million as of January 30, 2015 and January 31, 2014, respectively
|
(7
|
)
|
|
(3
|
)
|
||
Total accumulated other comprehensive loss, net of taxes of $8 million and $4 million as of January 30, 2015 and January 31, 2014, respectively
|
$
|
(11
|
)
|
|
$
|
(6
|
)
|
|
|
|
|
Year Ended
|
||||||||||
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
||||||
|
(in millions)
|
||||||||||
Basic EPS:
|
|
|
|
|
|
||||||
(Loss) income from continuing operations, as reported
|
$
|
(330
|
)
|
|
$
|
84
|
|
|
$
|
323
|
|
Less: allocation of distributed and undistributed earnings to participating securities
|
—
|
|
|
(3
|
)
|
|
(7
|
)
|
|||
(Loss) income from continuing operations, for computing basic EPS
|
$
|
(330
|
)
|
|
$
|
81
|
|
|
$
|
316
|
|
Net (loss) income, as reported
|
$
|
(323
|
)
|
|
$
|
164
|
|
|
$
|
525
|
|
Less: allocation of distributed and undistributed earnings to participating securities
|
—
|
|
|
(3
|
)
|
|
(11
|
)
|
|||
Net (loss) income, for computing basic EPS
|
$
|
(323
|
)
|
|
$
|
161
|
|
|
$
|
514
|
|
Diluted EPS:
|
|
|
|
|
|
||||||
(Loss) income from continuing operations, as reported
|
$
|
(330
|
)
|
|
$
|
84
|
|
|
$
|
323
|
|
Less: allocation of distributed and undistributed earnings to participating securities
|
—
|
|
|
(3
|
)
|
|
(7
|
)
|
|||
(Loss) income from continuing operations, for computing diluted EPS
|
$
|
(330
|
)
|
|
$
|
81
|
|
|
$
|
316
|
|
Net (loss) income, as reported
|
$
|
(323
|
)
|
|
$
|
164
|
|
|
$
|
525
|
|
Less: allocation of distributed and undistributed earnings to participating securities
|
—
|
|
|
(3
|
)
|
|
(11
|
)
|
|||
Net (loss) income, for computing diluted EPS
|
$
|
(323
|
)
|
|
$
|
161
|
|
|
$
|
514
|
|
|
Year Ended
|
|||||||
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
|||
|
(in millions)
|
|||||||
Basic weighted average number of shares outstanding
|
74
|
|
|
83
|
|
|
83
|
|
Dilutive common share equivalents—stock options and other stock awards
|
—
|
|
|
—
|
|
|
—
|
|
Diluted weighted average number of shares outstanding
|
74
|
|
|
83
|
|
|
83
|
|
|
|
|
|
Year Ended
|
||||||||||
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
||||||
Basic:
|
|
|
|
|
|
||||||
(Loss) income from continuing operations
|
$
|
(4.46
|
)
|
|
$
|
0.98
|
|
|
$
|
3.81
|
|
Income from discontinued operations
|
0.10
|
|
|
0.96
|
|
|
2.38
|
|
|||
|
$
|
(4.36
|
)
|
|
$
|
1.94
|
|
|
$
|
6.19
|
|
Diluted:
|
|
|
|
|
|
||||||
(Loss) income from continuing operations
|
$
|
(4.46
|
)
|
|
$
|
0.98
|
|
|
$
|
3.81
|
|
Income from discontinued operations
|
0.10
|
|
|
0.96
|
|
|
2.38
|
|
|||
|
$
|
(4.36
|
)
|
|
$
|
1.94
|
|
|
$
|
6.19
|
|
|
Year Ended
|
|||||||
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
|||
|
(in millions)
|
|||||||
Stock options excluded
|
4
|
|
|
5
|
|
|
5
|
|
Vesting stock awards excluded
|
3
|
|
|
3
|
|
|
—
|
|
|
|
|
|
|
|
|
Year Ended
|
||||||||||
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
||||||
|
(in millions)
|
||||||||||
Stock-based compensation expense:
|
|
|
|
|
|
||||||
Stock options
|
$
|
5
|
|
|
$
|
10
|
|
|
$
|
9
|
|
Vesting stock awards
|
35
|
|
|
46
|
|
|
44
|
|
|||
Vested stock awards
|
2
|
|
|
—
|
|
|
—
|
|
|||
Total stock-based compensation expense recorded in continuing operations
|
$
|
42
|
|
|
$
|
56
|
|
|
$
|
53
|
|
Total stock-based compensation expense recorded in discontinued operations
|
$
|
—
|
|
|
$
|
21
|
|
|
$
|
31
|
|
Tax benefits recognized from stock-based compensation
|
$
|
16
|
|
|
$
|
22
|
|
|
$
|
21
|
|
|
|
|
|
Year Ended
|
|||||||||||||||
|
January 30,
2015 |
|
January 31, 2014 (Grants After Spin)
|
|
January 31, 2014 (Grants Before Spin)
|
|
January 31,
2013 |
|
||||||||
Weighted average grant-date fair value
|
$
|
6.15
|
|
|
$
|
9.04
|
|
|
$
|
9.48
|
|
|
$
|
6.76
|
|
**
|
Expected term (in years)
|
4.7
|
|
|
4.8
|
|
|
5.0
|
|
|
5.0
|
|
|
||||
Expected volatility
|
25.1
|
%
|
|
29.5
|
%
|
|
30.0
|
%
|
|
24.5
|
%
|
|
||||
Risk-free interest rate
|
1.6
|
%
|
|
1.4
|
%
|
|
1.4
|
%
|
|
1.0
|
%
|
|
||||
Dividend yield
|
2.9
|
%
|
|
2.4
|
%
|
|
2.8
|
%
|
|
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, 2012
|
5.2
|
|
|
$
|
71.60
|
|
|
2.5
|
|
$
|
—
|
|
Options granted
|
1.3
|
|
|
52.79
|
|
|
|
|
|
|||
Options forfeited or expired
|
(1.6
|
)
|
|
70.17
|
|
|
|
|
|
|||
Options exercised
|
—
|
|
|
—
|
|
|
|
|
—
|
|
||
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
|
|
|
|
|
|
|||
Spin-off Adjustment
|
(1.9
|
)
|
|
57.85
|
|
|
|
|
|
|
||
Outstanding at September 27, 2013 (before spin)
|
3.5
|
|
|
$
|
59.25
|
|
|
3.9
|
|
$
|
24
|
|
Outstanding at September 28, 2013 (after spin)
|
4.9
|
|
**
|
$
|
40.20
|
|
**
|
3.9
|
|
$
|
24
|
|
Options granted
|
0.2
|
|
|
45.16
|
|
|
|
|
|
|||
Options forfeited or expired
|
(0.4
|
)
|
|
39.43
|
|
|
|
|
|
|||
Options exercised
|
(0.2
|
)
|
|
43.10
|
|
|
|
|
1
|
|
||
Outstanding at January 31, 2014
|
4.5
|
|
|
$
|
40.32
|
|
|
3.8
|
|
$
|
25
|
|
Options granted
|
0.7
|
|
|
37.25
|
|
|
|
|
|
|||
Options forfeited or expired
|
(1.5
|
)
|
|
43.90
|
|
|
|
|
|
|||
Options exercised
|
(0.1
|
)
|
|
34.89
|
|
|
|
|
1
|
|
||
Outstanding at January 30, 2015
|
3.6
|
|
|
$
|
38.50
|
|
|
4.0
|
|
$
|
14
|
|
Exercisable at January 30, 2015
|
1.5
|
|
|
$
|
40.90
|
|
|
2.4
|
|
$
|
4
|
|
Vested and expected to vest in the future as of January 30, 2015
|
3.5
|
|
|
$
|
38.57
|
|
|
3.9
|
|
$
|
13
|
|
|
|
|
|
Shares of stock
under stock
awards
|
|
Weighted
average grant-
date fair value
|
|
|||
|
(in millions)
|
|
|
|
|
||
Unvested at January 31, 2012
|
3.0
|
|
|
$
|
70.00
|
|
|
Awards granted
|
1.7
|
|
|
52.48
|
|
|
|
Awards forfeited
|
(0.4
|
)
|
|
62.84
|
|
|
|
Awards vested
|
(1.2
|
)
|
|
71.28
|
|
|
|
Unvested 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
|
|
|
|
Spin-off Adjustment
|
(1.5
|
)
|
|
57.04
|
|
|
|
Unvested at September 27, 2013 (before spin)
|
2.4
|
|
|
$
|
59.98
|
|
|
Unvested stock awards at September 28, 2013 (after spin)
|
3.5
|
|
**
|
$
|
41.54
|
|
**
|
Awards granted
|
0.4
|
|
*
|
45.41
|
|
*
|
|
Awards forfeited
|
(0.2
|
)
|
|
39.75
|
|
|
|
Unvested stock awards at January 31, 2014
|
3.7
|
|
|
$
|
39.58
|
|
|
Awards granted
|
0.8
|
|
|
37.06
|
|
|
|
Awards forfeited
|
(0.5
|
)
|
|
39.05
|
|
|
|
Awards vested
|
(1.0
|
)
|
|
41.08
|
|
|
|
Unvested stock awards at January 30, 2015
|
3.0
|
|
|
$
|
38.51
|
|
|
|
|
|
|
Expected number
of shares of stock
to be issued under
performance-based
stock awards
|
|
Weighted
average grant-
date fair value
|
|
|||
|
(in millions)
|
|
|
|
|||
Unvested at January 31, 2013
|
0.3
|
|
|
$
|
52.96
|
|
|
Awards canceled
|
(0.2
|
)
|
*
|
53.11
|
|
*
|
|
Unvested at January 31, 2014
|
0.1
|
|
**
|
$
|
36.65
|
|
**
|
Awards granted
|
0.1
|
|
|
37.64
|
|
|
|
Awards vested
|
(0.1
|
)
|
|
36.69
|
|
|
|
Unvested at January 30, 2015
|
0.1
|
|
|
$
|
37.70
|
|
|
|
|
|
|
Year Ended
|
||||||||||
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
||||||
|
(in millions)
|
||||||||||
Current:
|
|
|
|
|
|
||||||
Federal and foreign
|
$
|
16
|
|
|
$
|
32
|
|
|
$
|
(52
|
)
|
State
|
(6
|
)
|
|
13
|
|
|
9
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal and foreign
|
26
|
|
|
(28
|
)
|
|
55
|
|
|||
State
|
11
|
|
|
(13
|
)
|
|
10
|
|
|||
Total
|
$
|
47
|
|
|
$
|
4
|
|
|
$
|
22
|
|
|
Year Ended
|
||||||||||
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
||||||
|
(dollars in millions)
|
||||||||||
Amount computed at the statutory federal income tax rate (35%)
|
$
|
(99
|
)
|
|
$
|
31
|
|
|
$
|
121
|
|
State income taxes, net of federal tax benefit
|
3
|
|
|
—
|
|
|
10
|
|
|||
Taxable conversion of subsidiary
|
(116
|
)
|
|
—
|
|
|
—
|
|
|||
Change in valuation allowance for deferred tax assets
|
105
|
|
|
—
|
|
|
—
|
|
|||
Change in accruals for uncertain tax positions
|
2
|
|
|
(5
|
)
|
|
(1
|
)
|
|||
CityTime uncertain tax liability
|
—
|
|
|
—
|
|
|
(96
|
)
|
|||
Research and development credits
|
(4
|
)
|
|
(3
|
)
|
|
(5
|
)
|
|||
Dividends paid to employee stock ownership plan
|
(4
|
)
|
|
(22
|
)
|
|
(9
|
)
|
|||
U.S. manufacturing activity benefit
|
—
|
|
|
(3
|
)
|
|
(1
|
)
|
|||
Non-deductible penalties
|
—
|
|
|
4
|
|
|
—
|
|
|||
Non-deductible goodwill
|
156
|
|
|
—
|
|
|
—
|
|
|||
Other
|
4
|
|
|
2
|
|
|
3
|
|
|||
Total
|
$
|
47
|
|
|
$
|
4
|
|
|
$
|
22
|
|
Effective income tax rate
|
(16.6
|
)%
|
|
4.5
|
%
|
|
6.4
|
%
|
|
|
|
|
|
|
|
Year Ended
|
||||||
|
January 30,
2015 |
|
January 31,
2014 |
||||
|
(in millions)
|
||||||
Accrued vacation and bonuses
|
$
|
44
|
|
|
$
|
62
|
|
Investments
|
3
|
|
|
3
|
|
||
Deferred compensation
|
39
|
|
|
38
|
|
||
Vesting stock awards
|
28
|
|
|
34
|
|
||
Credits and net operating losses carryovers
|
9
|
|
|
27
|
|
||
Employee benefit contributions
|
4
|
|
|
3
|
|
||
Capital loss carryover
|
113
|
|
|
—
|
|
||
Reserves
|
41
|
|
|
51
|
|
||
Deferred rent and tenant allowances
|
15
|
|
|
14
|
|
||
Other
|
15
|
|
|
9
|
|
||
Total deferred tax assets
|
311
|
|
|
241
|
|
||
Valuation allowance
|
(120
|
)
|
|
(7
|
)
|
||
Deferred tax assets, net of valuation allowance
|
191
|
|
|
234
|
|
||
|
|
|
|
||||
Deferred revenue
|
(47
|
)
|
|
(31
|
)
|
||
Fixed asset basis differences
|
—
|
|
|
(27
|
)
|
||
Purchased intangible assets
|
(121
|
)
|
|
(138
|
)
|
||
Partnership interest
|
(10
|
)
|
|
—
|
|
||
Other
|
(8
|
)
|
|
—
|
|
||
Total deferred tax liabilities
|
(186
|
)
|
|
(196
|
)
|
||
Net deferred tax assets
|
$
|
5
|
|
|
$
|
38
|
|
|
Year Ended
|
||||||
|
January 30,
2015 |
|
January 31,
2014 |
||||
|
(in millions)
|
||||||
Net current deferred tax assets
|
$
|
12
|
|
|
$
|
89
|
|
Net non-current deferred tax assets
|
14
|
|
|
15
|
|
||
Net non-current deferred tax liabilities
|
(21
|
)
|
|
(66
|
)
|
||
Total net deferred tax assets
|
$
|
5
|
|
|
$
|
38
|
|
|
|
|
|
Year Ended
|
||||||||||
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
||||||
|
(in millions)
|
||||||||||
Unrecognized tax benefits at beginning of year
|
$
|
14
|
|
|
$
|
21
|
|
|
$
|
129
|
|
Additions for tax positions related to current year
|
2
|
|
|
—
|
|
|
—
|
|
|||
Additions for tax positions related to prior years
|
11
|
|
|
2
|
|
|
2
|
|
|||
Reductions for tax positions related to prior years
|
(5
|
)
|
|
—
|
|
|
(107
|
)
|
|||
Settlements with taxing authorities
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||
Lapse of statute of limitations
|
(4
|
)
|
|
(9
|
)
|
|
(2
|
)
|
|||
Unrecognized tax benefits at end of year
|
$
|
17
|
|
|
$
|
14
|
|
|
$
|
21
|
|
Unrecognized tax benefits that, if recognized, would affect the effective income tax rate
|
$
|
5
|
|
|
$
|
6
|
|
|
$
|
10
|
|
|
|
|
|
|
|
|
Year Ended
|
||||||||||
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
||||||
|
(in millions)
|
||||||||||
Gross rental expense
|
$
|
107
|
|
|
$
|
181
|
|
|
$
|
154
|
|
Less sublease income
|
(9
|
)
|
|
(6
|
)
|
|
(4
|
)
|
|||
Net rental expense
|
$
|
98
|
|
|
$
|
175
|
|
|
$
|
150
|
|
|
|
|
Year Ending January 30
|
Operating lease
commitment |
|
Sublease
receipts |
||||
|
(in millions)
|
||||||
2016
|
$
|
88
|
|
|
$
|
7
|
|
2017
|
76
|
|
|
7
|
|
||
2018
|
66
|
|
|
5
|
|
||
2019
|
55
|
|
|
4
|
|
||
2020
|
41
|
|
|
3
|
|
||
2021 and thereafter
|
70
|
|
|
9
|
|
||
Total
|
$
|
396
|
|
|
$
|
35
|
|
|
|
|
|
Year Ended
|
||||||||||
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
||||||
|
(in millions)
|
||||||||||
Vested stock issued as settlement of annual bonus accruals
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Stock issued in lieu of cash dividends
|
$
|
3
|
|
|
$
|
18
|
|
|
$
|
3
|
|
Capital lease obligations
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
Fair value of assets acquired in acquisitions
|
$
|
—
|
|
|
$
|
259
|
|
|
$
|
541
|
|
Cash paid in acquisitions, net of cash acquired of $9 million in fiscal 2013
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
$
|
(483
|
)
|
Forgiveness of accounts receivable to acquire equity interest in business combination
|
$
|
—
|
|
|
$
|
(105
|
)
|
|
$
|
—
|
|
Accrued liability for acquisition of business
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
$
|
(13
|
)
|
Liabilities assumed in acquisitions
|
$
|
—
|
|
|
$
|
148
|
|
|
$
|
45
|
|
Cash paid for interest (including discontinued operations)
|
$
|
74
|
|
|
$
|
82
|
|
|
$
|
92
|
|
Cash paid for income taxes (including discontinued operations)
|
$
|
55
|
|
|
$
|
63
|
|
|
$
|
128
|
|
|
|
|
|
Year Ended
|
||||||||||
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
||||||
|
(in millions)
|
||||||||||
Revenues:
|
|
|
|
|
|
||||||
National Security Solutions
|
$
|
3,594
|
|
|
$
|
4,049
|
|
|
$
|
4,650
|
|
Health and Engineering
|
1,485
|
|
|
1,718
|
|
|
1,805
|
|
|||
Corporate and Other
|
(16
|
)
|
|
(9
|
)
|
|
(1
|
)
|
|||
Intersegment elimination
|
—
|
|
|
(3
|
)
|
|
(5
|
)
|
|||
Total revenues
|
$
|
5,063
|
|
|
$
|
5,755
|
|
|
$
|
6,449
|
|
Operating income (loss):
|
|
|
|
|
|
||||||
National Security Solutions
|
$
|
286
|
|
|
$
|
292
|
|
|
$
|
360
|
|
Health and Engineering
|
(472
|
)
|
|
20
|
|
|
138
|
|
|||
Corporate and Other
|
(28
|
)
|
|
(149
|
)
|
|
(77
|
)
|
|||
Total operating (loss) income
|
$
|
(214
|
)
|
|
$
|
163
|
|
|
$
|
421
|
|
Amortization of intangible assets:
|
|
|
|
|
|
||||||
National Security Solutions
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
5
|
|
Health and Engineering
|
15
|
|
|
32
|
|
|
30
|
|
|||
Total amortization of intangible assets
|
$
|
15
|
|
|
$
|
35
|
|
|
$
|
35
|
|
|
Year Ended
|
|||||||
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
|||
U.S. Government
|
79
|
%
|
|
78
|
%
|
|
81
|
%
|
U.S. DoD
|
67
|
%
|
|
68
|
%
|
|
70
|
%
|
U.S. Army
|
16
|
%
|
|
19
|
%
|
|
23
|
%
|
Maryland Procurement Office
|
10
|
%
|
|
8
|
%
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
|
(in millions, except per share amounts)
|
||||||||||||||
Fiscal 2015
(3)
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
1,312
|
|
|
$
|
1,306
|
|
|
$
|
1,276
|
|
|
$
|
1,169
|
|
Operating income (loss)
|
$
|
87
|
|
|
$
|
(410
|
)
|
|
$
|
72
|
|
|
$
|
37
|
|
Income (loss) from continuing operations
(1)
|
$
|
45
|
|
|
$
|
(439
|
)
|
|
$
|
38
|
|
|
$
|
26
|
|
(Loss) income from discontinued operations
|
$
|
(8
|
)
|
|
$
|
1
|
|
|
$
|
(4
|
)
|
|
$
|
18
|
|
Net income (loss)
(1)
|
$
|
37
|
|
|
$
|
(438
|
)
|
|
$
|
34
|
|
|
$
|
44
|
|
Basic earnings (loss) per share
(2)
|
$
|
0.58
|
|
|
$
|
(5.93
|
)
|
|
$
|
0.52
|
|
|
$
|
0.36
|
|
Diluted earnings (loss) per share
(2)
|
$
|
0.58
|
|
|
$
|
(5.93
|
)
|
|
$
|
0.51
|
|
|
$
|
0.35
|
|
Fiscal 2014
(4)
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
1,593
|
|
|
$
|
1,457
|
|
|
$
|
1,414
|
|
|
$
|
1,291
|
|
Operating income (loss)
|
$
|
77
|
|
|
$
|
10
|
|
|
$
|
(5
|
)
|
|
$
|
81
|
|
Income (loss) from continuing operations
(1)
|
$
|
41
|
|
|
$
|
4
|
|
|
$
|
(8
|
)
|
|
$
|
47
|
|
Income (loss) from discontinued operations
|
$
|
40
|
|
|
$
|
38
|
|
|
$
|
5
|
|
|
$
|
(3
|
)
|
Net income (loss)
(1)
|
$
|
81
|
|
|
$
|
42
|
|
|
$
|
(3
|
)
|
|
$
|
44
|
|
Basic earnings (loss) per share
(2)
|
$
|
0.44
|
|
|
$
|
0.05
|
|
|
$
|
(0.10
|
)
|
|
$
|
0.57
|
|
Diluted earnings (loss) per share
(2)
|
$
|
0.44
|
|
|
$
|
0.05
|
|
|
$
|
(0.10
|
)
|
|
$
|
0.56
|
|
(1)
|
Income (loss) from continuing operations and net income relate to Leidos Holdings, Inc. only. See Leidos, Inc.'s amounts detailed below
|
(2)
|
Earnings (loss) per share from continuing operations are computed independently for each of the quarters presented and therefore may not sum to the total for the fiscal year.
|
(3)
|
Fiscal 2015 quarterly results include goodwill impairment charges of
$486 million
in the second quarter, intangible asset impairment charges of
$24 million
and
$17 million
in the second and third quarter, respectively, and a tangible asset impairment charge of
$40 million
in the fourth quarter. For further information see, Note 3 - Acquisitions and Note 4 - Goodwill and Intangible Assets.
|
(4)
|
Fiscal 2014 quarterly results include the following charges: 1) intangible asset impairment charges of
$30 million
and
$19 million
in the second and third quarter, respectively; 2) bad debt expense for certain receivables related to two energy design-build construction projects of
$42 million
in the third quarter; and 3) separation transaction and restructuring expenses in each of the quarters of approximately
$14 million
,
$19 million
,
$25 million
, and
$7 million
, respectively. For further information see, Note 1 - Summary of Significant Accounting Policies and Note 4 - Goodwill and Intangible Assets.
|
|
|
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
|
(in millions)
|
||||||||||||||
Fiscal 2015
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations
|
$
|
46
|
|
|
$
|
(437
|
)
|
|
$
|
40
|
|
|
$
|
27
|
|
Net income (loss)
|
$
|
38
|
|
|
$
|
(436
|
)
|
|
$
|
36
|
|
|
$
|
45
|
|
Fiscal 2014
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations
|
$
|
41
|
|
|
$
|
4
|
|
|
$
|
(8
|
)
|
|
$
|
49
|
|
Net income (loss)
|
$
|
81
|
|
|
$
|
42
|
|
|
$
|
(3
|
)
|
|
$
|
46
|
|
March 20, 2015
|
|
|
March 20, 2015
|
i
|
|
March 20, 2015
|
ii
|
|
March 20, 2015
|
1
|
|
March 20, 2015
|
2
|
|
March 20, 2015
|
3
|
|
March 20, 2015
|
4
|
|
March 20, 2015
|
5
|
|
March 20, 2015
|
6
|
|
March 20, 2015
|
7
|
|
March 20, 2015
|
8
|
|
March 20, 2015
|
9
|
|
March 20, 2015
|
10
|
|
March 20, 2015
|
11
|
|
March 20, 2015
|
12
|
|
March 20, 2015
|
13
|
|
March 20, 2015
|
14
|
|
March 20, 2015
|
|
|
March 20, 2015
|
|
|
March 20, 2015
|
3
|
|
March 20, 2015
|
4
|
|
March 20, 2015
|
5
|
|
March 20, 2015
|
6
|
|
March 20, 2015
|
7
|
|
March 20, 2015
|
8
|
|
March 20, 2015
|
9
|
|
March 20, 2015
|
10
|
|
a)
|
Performance Goals
. Following the end of the Performance Period, the Committee shall determine whether and the extent to which each of the Performance Goals have been achieved for the entire Performance Period and shall determine the number of
|
b)
|
Committee Discretion to Reduce Performance Share Award
. Notwithstanding satisfaction, achievement or completion of the Performance Goals set forth in the Award Goal Notice (or any adjustments thereto as provided below), the number of Shares issuable hereunder may be reduced by the Committee on the basis of such further considerations as the Committee in its sole discretion shall determine.
|
c)
|
Adjustment of Performance Goals
. To the extent it is intended that this Performance Share Award comply with the performance-based exception to Section 162(m) of the Code, the Committee shall make no adjustment to the Performance Goals set forth in the Award Goal Notice with respect to a “covered employee” within the meaning of Section 162(m) of the Code, including the performance targets or the method of calculating the actual performance achieved relative to the Performance Goals, except to exclude the impact of (i) changes in accounting standards or adoption of any new accounting standards in accordance with generally accepted accounting principles in the United States, (ii) changes in federal statutory corporate tax rates, and (iii) extraordinary or unusual gains or losses, events or circumstances over which the Company has no or limited control, including the occurrence of any disaster, act of God or any other force majeure event.
|
d)
|
Section 162(m)
. To the extent the Committee has determined that this Performance Share Award is intended to comply with the performance-based exception to Section 162(m) of the Code and the Recipient is a “covered employee” within the meaning of Section 162(m) of the Code, all actions taken hereunder (including without limitation any adjustments of Performance Goals or determination of whether a Fundamental Transaction has occurred) shall be made in a manner which would comply with Section 162(m) of the Code.
|
a)
|
Shares
. Shares shall be issued, if and to the extent earned based on the achievement of the Performance Goals as determined by the Committee, on (or as promptly as administratively practicable following) the Determination Date, and in no event later than ninety (90) days following the end of the Performance Period.
|
b)
|
Accrued Dividends
. If the Company pays any cash dividends on its common stock, Recipient will be entitled to receive an amount in cash (less any required withholding for taxes) equal in value to the cash dividends that would have been paid on Shares earned and issued under this Agreement assuming that such Shares had been outstanding as of the record date for such dividends declared on or after the Grant Date and prior to the issuance date of the Shares (“Accrued Dividends”). Such Accrued Dividends will be retained by the Company (without interest) and paid in cash when, and if, and to the extent that Shares are earned and issued based on the achievement of the Performance Goals. To the extent that Recipient has elected to defer receipt of the Shares in accordance with the terms of the applicable non-qualified deferral plan, payment of Accrued Dividends with respect to such Shares will be subject to the terms and conditions of such plan. The right to receive Dividend will cease and be forfeited upon the forfeiture and cancellation of this Performance Share Award.
|
c)
|
Taxes, Deferrals and Other Matters
. As a condition to the issuance of Shares hereunder, Recipient must have satisfied his or her tax withholding obligations as specified in this Agreement and must have completed, signed and returned any documents and taken any additional action that the Company deems appropriate to enable it to accomplish the delivery of the Shares. In no event will the Company be obligated to issue a fractional share. Notwithstanding the foregoing, (i) the Company shall not be obligated to deliver any Shares during any period when the Company determines that the issuance or the delivery of Shares hereunder would violate any federal, state or other applicable laws and/or may issue Shares subject to any restrictive legends that, as determined by the Company, is necessary to comply with securities or other regulatory requirements, and (ii) the date on which Shares are issued may include a delay (but not later than the next December 31
st
after the end of the Performance Period) in order to provide the Company such time as it determines appropriate to address tax withholding and other administrative matters. If eligible, Recipient shall be given the opportunity to elect to defer receipt of the Shares. Such deferral election shall be in accordance with the terms of the applicable non-qualified deferral plan of the Company or an Affiliate and the requirements of Section 409A and subject to such additional terms and conditions as are set by the Committee.
|
a)
|
Disability, Special Retirement, Involuntary Termination Without Cause or Transfer to an Ineligible Position
.
|
(i)
|
If Recipient ceases to be employed by the Company or an Affiliate as a result of Recipient’s Permanent Disability, Special Retirement or Involuntary Termination Without Cause and Recipient is not in an Ineligible Position at the time of such event, Recipient shall remain eligible to receive, on (or as promptly as administratively practicable following) the Determination Date,
|
(ii)
|
If Recipient is transferred to an Ineligible Position and either (i) remains employed by the Company or an Affiliate through the end of the Performance Period or, if applicable, through the time of consummation of a Fundamental Transaction as set forth in Section 5(c) below, or (ii) ceases to be employed by the Company or an Affiliate at any time prior to the end of the Performance Period as a result of Recipient’s Permanent Disability, Special Retirement or Involuntary Termination Without Cause, Recipient shall remain eligible to receive, on (or as promptly as administratively practicable following) the Determination Date, a prorated portion of the Shares that would otherwise be issuable to Recipient under the Performance Share Award in the absence of such transfer to an Ineligible Position based on the actual achievement of the Performance Goals for the portion of the Performance Period in which Recipient remained employed by the Company and not in an Ineligible Position;
provided
that the prorated amount shall be determined based on the ratio of (x) the number of days elapsed from the beginning of the Performance Period to the date of transfer to an Ineligible Position over (y) the number of days in the entire Performance Period (and not reflecting any shortening of the Performance Period as a result of a Fundamental Transaction as described below).
|
(iii)
|
Notwithstanding the foregoing, Recipient shall not be entitled to any Shares under the Performance Share Award if Recipient: (i) fails to execute and deliver, no later than ninety (90) days following the end of the Performance Period, a general release of claims if requested by, and in a form satisfactory to, the Company or an Affiliate, (ii) violates the terms of his or her inventions, copyright and confidentiality agreement with the Company or an Affiliate, or (iii) breaches his or her other contractual or legal obligations to the Company or an Affiliate, including the non-solicitation obligations set forth in Section 13 of this Agreement.
|
b)
|
Death
. If Recipient’s employment with the Company and its Affiliates terminates due to the death of Recipient, then Recipient’s estate shall receive, promptly after the date of death, a prorated portion of the Shares that Recipient would have been issued pursuant to the Performance Share Award based on the formula set forth in
|
c)
|
Change in Control of Company
. If a Fundamental Transaction (as defined in the Plan) occurs prior to the end of the Performance Period while Recipient is employed by the Company or an Affiliate or remains entitled to receive Shares pursuant to Section 5(a) above, the Performance Period shall be terminated and Recipient shall be entitled to receive, immediately prior to the consummation of such Fundamental Transaction, the following number of Shares (the “
CIC Earned Shares
”):
|
(i)
|
If the Fundamental Transaction occurs on or prior to 50% of the Performance Period elapsing, a prorated number of Target Shares based on the portion of the Performance Period that has elapsed; plus
|
(ii)
|
If the Fundamental Transaction occurs following at least 50% of the Performance Period elapsing, a number of Shares based on the achievement of the Performance Goals at the time of consummation of the Fundamental Transaction as determined by the Committee and prorated to reflect the portion of the Performance Period that has elapsed through the date of consummation of the Fundamental Transaction (or, if Recipient earlier transfers to an Ineligible Position, through the date of such transfer).
|
a)
|
Tax Withholding.
If the Company or an Affiliate is required to withhold any federal, state, local or other taxes upon the vesting or any acceleration of vesting of the RSUs, or any issuance of Common Stock or otherwise under this Agreement, Recipient authorizes the Company to withhold a sufficient number of shares of Common Stock issuable upon settlement of the RSUs at the then current Fair Market Value (as defined in the Plan) to meet the withholding obligation based on the minimum rates as required and/or permitted by law. Recipient further authorizes the Company, in the Company’s sole discretion, to sell a sufficient number of shares of Common Stock on behalf of Recipient to satisfy such obligations, accept payment to satisfy such obligations in the form of cash or delivery to the Company of shares of Company stock already owned by Recipient, withhold amounts from Recipient’s compensation, or any combination of the foregoing or other actions as may be
|
b)
|
Section 409A
.
|
a)
|
Recipient’s employment or affiliation with the Company or an Affiliate is not for any specified term and may be terminated by Recipient or by the Company or an Affiliate at any time, for any reason, with or without cause and with or without notice. Nothing in this Agreement, the Plan or any covenant of good faith and fair dealing that may be found implicit in this Agreement or the Plan shall: (i) confer upon Recipient any right to continue in the employ of, or affiliation with, the Company or an Affiliate; (ii) constitute any promise or commitment by the Company or an Affiliate regarding the fact or nature of future positions, future work assignments, future compensation or any other term or condition of employment or affiliation; (iii) confer any right or benefit under this Agreement or the Plan unless such right or benefit has specifically accrued under the terms of this Agreement or Plan; or (iv) deprive the Company of the right to terminate Recipient at will and without regard to any future vesting opportunity that Recipient may have.
|
b)
|
Recipient acknowledges and agrees that the right to receive Shares pursuant to this Agreement is earned, among other requirements, only by continuing as an employee at the will of the Company (not through the act of being hired, being granted the Performance Share Award or any other award or benefit) and that the Company has the right to reorganize, sell, spin-out or otherwise restructure one or more of its businesses or Affiliates at any time or from time to time, as it deems appropriate (a “reorganization”). Recipient acknowledges and agrees that such a reorganization could result in the termination of Recipient’s relationship as an employee to the Company or an Affiliate, or the termination of Affiliate status of Recipient’s employer and the loss of benefits available to Recipient under this Agreement, including but not limited to, the termination of the right to receive Shares under this Agreement. Recipient further acknowledges that if the Performance Goals are not met, it is possible that no Shares will be issued hereunder.
|
a)
|
Solicitation of Employees
. Recipient agrees that, both while employed by the Company or an Affiliate and for one year afterward, Recipient will not solicit or attempt to solicit any employee of the Company or an Affiliate to leave his or her employment or to violate the terms of any agreement or understanding that employee may have with the Company or an Affiliate. The foregoing obligations apply to both the Recipient’s direct and indirect actions, and apply to actions intended to benefit Recipient or any other person, business or entity.
|
b)
|
Solicitation of Customers
. Recipient agrees that, for one year after termination of employment with the Company or an Affiliate, Recipient will not participate in any solicitation of any customer or prospective customer of the Company or an Affiliate concerning any business that:
|
(i)
|
involves the same programs or projects for that customer in which Recipient was personally and substantially involved during the 12 months prior to termination of employment; or
|
(ii)
|
has been, at any time during the 12 months prior to termination of employment, the subject of any bid, offer or proposal activity by the Company or an Affiliate in respect of that customer or prospective customer, or any negotiations or discussions about the possible performance of services by the Company or an Affiliate to that customer or potential customer, in which Recipient was personally and substantially involved.
|
c)
|
Remedies
. Recipient acknowledges and agrees that a breach of any of the promises or agreements contained in this Section 13 will result in immediate, irreparable and continuing damage to the Company for which there is no adequate remedy at law, and the Company or an Affiliate will be entitled to injunctive relief, a decree for specific performance, and other relief as may be proper, including money damages.
|
Subsidiaries of Leidos Holdings, Inc.
|
Jurisdiction of Incorporation
|
Leidos, Inc.
|
Delaware
|
|
|
Subsidiaries of Leidos, Inc.
|
Jurisdiction of Incorporation
|
ABI Architects, Inc.
|
Florida
|
Benham/Ellerbe Becket, LLC
|
Oklahoma
|
Benham Military Communities, LLC
|
Oklahoma
|
Calanais Pension Trustee Co. Ltd.
|
United Kingdom
|
Cloudshield Technologies, Inc.
|
Delaware
|
Cloudshield Technologies GmbH
|
Germany
|
Cloudshield UK Limited
|
United Kingdom
|
InQuirion Pty Limited
|
Australia
|
JMD Development Corporation
|
California
|
Leidos Arabia Company Limited
|
Saudi Arabia
|
Leidos Biomedical Research, Inc.
|
Delaware
|
SAIC Calanais Limited
|
United Kingdom
|
Leidos Canada, Inc.
|
Canada
|
Leidos – CDM Solutions, LLC (95% ownership)
|
Delaware
|
Leidos Constructors, LLC
|
Oklahoma
|
Leidos Consulting Engineers, Inc.
|
California
|
Leidos DB, Inc.
|
Oklahoma
|
Leidos Engineering, LLC
|
Delaware
|
Leidos Engineering of North Carolina, Inc.
|
North Carolina
|
Leidos Engineering of Ohio, Inc.
|
Ohio
|
Leidos Europe, Limited
|
United Kingdom
|
Leidos Germany GmbH
|
Germany
|
Leidos Global Technology Corporation
|
Delaware
|
Leidos Health Holdings, LLC
|
Delaware
|
Leidos Health, LLC
|
Delaware
|
Leidos Limited
|
United Kingdom
|
Leidos of Michigan, Inc.
|
Michigan
|
Leidos Pty Limited
|
Australia
|
Leidos Realty, LLC
|
California
|
Leidos Supply, Limited
|
United Kingdom
|
Leidos Renewable Energy, LLC
|
Delaware
|
Leidos Services, Inc.
|
Delaware
|
Plainfield Renewable Energy, LLC
|
Delaware
|
Plainfield Renewable Energy Holdings, LLC
|
Delaware
|
R.W. Beck Group, Inc.
|
Washington
|
Reveal Imaging Technologies, Inc.
|
Delaware
|
Science, Engineering, and Technology Associates Corporation
|
Delaware
|
Spectrum San Diego
|
California
|
The Benham Group, Inc.
|
Oklahoma
|
The Benham Group of Nevada, Inc.
|
Nevada
|
Varec Holdings, Inc.
|
Delaware
|
Varec, Inc.
|
Georgia
|
1.
|
I have reviewed this Annual Report on Form 10-K 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/ Roger A. Krone
|
Roger A. Krone
|
Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K 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
|
/s/ Roger A. Krone
|
Roger A. Krone
|
Chief Executive Officer
|
/s/ Mark W. Sopp
|
Mark W. Sopp
|
Chief Financial Officer
|