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Leidos Holdings, Inc.
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Leidos, Inc.
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(Exact names of registrants as specified in their charters)
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Delaware
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20-3562868 and 95-3630868
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification Nos.)
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11951 Freedom Drive, Reston, Virginia
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20190
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(Address of principal executive offices)
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(Zip Code)
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(571) 526-6000
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(Registrants' telephone number, including area code)
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Title of each class
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Name of each exchange on which registered
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Leidos Holdings, Inc. Common Stock, Par Value $.0001 Per Share
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New York Stock Exchange
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Leidos Holdings, Inc.
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72,164,921 shares of common stock ($.0001 par value per share)
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Leidos, Inc.
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5,000 shares of common stock ($.01 par value per share) held by Leidos Holdings, Inc.
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Page
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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•
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Surveillance and Reconnaissance -
We offer a wide range of technologies in multiple domains that address the Nation’s most critical threats and deliver solutions to the intelligence community, DoD and military services. A primary focus is on the DoD’s technology organizations, which include the Defense Advanced Research Projects Agency, Army Research Lab, Air Force Release Lab and Navy Research Lab. Our market concentration is on airborne, maritime and command and control. We provide multi-spectral, airborne, ground and maritime intelligence surveillance and reconnaissance ("ISR") collection and processing systems, advanced sensor design, command and control solutions and training systems.
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•
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Integrated Systems -
We offer extensive software development capabilities for intelligence and information systems and deliver solutions to the intelligence community, DoD, military services, DHS and the UK Ministry of Defense ("UK MoD"). Our markets include cybersecurity, data analytics and logistics. Our cybersecurity solutions detect and manage the most sophisticated cyber threats. We are highly skilled in data analytics, and we design, develop, deploy and support information-centric software systems for complex, data-driven national security challenges. Our logistics offerings include enterprise platforms that speed the supply chain of highly complex systems.
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•
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Global Services -
We provide high-end services to the intelligence community, DoD and federal civilian agencies. Operating around the world daily, we provide intelligence analysis, operational support, security, linguistics and training. In addition, we deliver tailored IT services and solutions to our customers across the globe.
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•
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Federal Health -
We developed, fielded and currently maintain a full end-to-end Electronic Health Record ("EHR") system and numerous behavior health services—healthcare beyond the clinic—for the DoD. We are currently working on developing the next generation EHR system that will be deployed to DoD hospitals and other sites worldwide. Within the DoD, we serve the Defense Health Agency, which provides healthcare to active duty and retired military personnel and their dependents. We also provide information technology solutions, scientific support and behavioral health services to the Veterans Administration, National Institutes of Health and other government customers. We strive to improve the availability, quality and cost effectiveness of healthcare for our military service members and their families.
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•
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Commercial Health -
We implement and optimize EHR systems at commercial hospitals. In addition, we provide consulting services and operational support focused on addressing 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.
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•
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Life Sciences -
We provide life science research and development support to the National Institutes 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
1,900
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.
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•
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Process Industries Engineering -
We provide process industries engineering services and solutions to a large U.S. 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.
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•
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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 Vehicle and Cargo Inspection System ("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.
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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.
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Federal Environmental and Engineering -
We provide environmental consulting and engineering, primarily for the DoD. We support the requirements of the National Environmental Policy Act ("NEPA") as well as other supporting 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.
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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 project sites on behalf of lenders or owners.
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11 Months Ended
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12 Months Ended
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January 1,
2016 |
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January 30,
2015 |
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January 31,
2014 |
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U.S. Government
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76
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%
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79
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%
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78
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%
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U.S. DoD
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64
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%
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67
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%
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68
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%
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U.S. Army
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14
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%
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16
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%
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19
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%
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Maryland Procurement Office
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10
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%
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10
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%
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8
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%
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•
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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;
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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 and MITRE Corporation;
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diversified commercial and U.S. Government IT providers, such as Accenture plc, CSRA, Inc., HP Enterprise Services, International Business Machines Corporation ("IBM") and Unisys Corporation;
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contractors that provide engineering, consulting, design and construction services, such as Jacobs Engineering Group, AECOM, KBR, Inc. and CH2M Hill Companies Ltd.;
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contractors focused on supplying homeland security product solutions, including American Science and Engineering, Inc., OSI Systems, Inc., L-3 Communications Corporation, Morpho (Safran) and Smiths Group plc;
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contractors providing supply chain management and other logistics services, including Agility Logistics Corp.; and
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companies focused on providing health solutions and services to the U.S. Government and hospitals, including Accenture plc, IBM, CSRA, Inc., Lockheed Martin Corporation, Epic Systems and Medical Information Technology, Inc. ("Meditech").
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Definitive Award Contracts. U.S. Government agencies may procure services and products through single definitive 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 definitive successful awardee.
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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-established contractor. Under a multiple-award IDIQ contract, task orders can be awarded to any of the pre-established 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.
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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.
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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.
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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.
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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.
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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.
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require certification and disclosure of all cost and pricing data in connection with certain contract negotiations;
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define allowable and unallowable costs and otherwise govern our right to reimbursement under various cost-type U.S. Government contracts;
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require compliance with U.S. Government Cost Accounting Standards ("CAS");
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require reviews by the Defense Contract Audit Agency ("DCAA"), Defense Contract Management Agency ("DCMA") and other U.S. Government agencies of compliance with government requirements for a contractor’s business systems;
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restrict the use and dissemination of unclassified contract-related information and information classified for national security purposes and the export of certain products and technical data; and
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require us not to compete for work if an actual or potential organizational conflict of interest, as defined by these laws and regulations, related to such work exists and/or cannot be appropriately mitigated, neutralized or avoided.
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the FAR and supplements, which regulate the formation, administration and performance of U.S. Government contracts;
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the Truth in Negotiations Act, which requires certification and disclosure of cost and pricing data in connection with certain contract negotiations;
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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;
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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
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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.
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we may not be able to identify, compete effectively for or complete suitable acquisitions and investments at prices we consider attractive;
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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;
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we may encounter performance problems with acquired technologies, capabilities and products, particularly with respect to those that are still in development when acquired;
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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;
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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;
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we may assume legal or regulatory risks, particularly with respect to smaller businesses that have immature business processes and compliance programs;
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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;
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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
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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.
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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.
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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.
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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.
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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.
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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;
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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;
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changes in U.S. Government procurement rules, regulations, and practices;
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our compliance with various U.S. Government and other government procurement rules and regulations;
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governmental reviews, audits and investigations of our company;
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our ability to effectively compete and win contracts with the U.S. Government and other customers;
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our reliance on information technology spending by hospitals/health care organizations;
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our reliance on infrastructure investments by industrial and natural resources organizations;
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energy efficiency and alternative energy sourcing investments;
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investments by U.S. Government and commercial organizations in environment impact and remediation projects;
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our ability to attract, train and retain skilled employees, including our management team, and to obtain security clearances for our employees;
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our ability to accurately estimate costs associated with our firm-fixed-price and other contracts;
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resolution of legal and other disputes with our customers and others or legal or regulatory compliance issues;
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cybersecurity, data security or other security threats, system failures or other disruptions of our business;
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our ability to effectively acquire businesses and make investments;
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our ability to maintain relationships with prime contractors, subcontractors and joint venture partners;
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our ability to manage performance and other risks related to customer contracts, including complex engineering or design build projects;
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the failure of our inspection or detection systems to detect threats;
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the adequacy of our insurance programs designed to protect us from significant product or other liability claims;
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our ability to manage risks associated with our international business;
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factors relating to the satisfaction of the conditions to the proposed transaction with Lockheed Martin, including regulatory approvals and the required approvals of our stockholders;
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our and Lockheed Martin's ability to meet expectations regarding the timing, completion and accounting and tax treatments of the transaction with Lockheed Martin;
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the possibility that we may be unable to achieve expected synergies and operating efficiencies in connection with the transaction with Lockheed Martin within the expected time-frames or at all;
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the integration of the Information Systems & Global Solutions business being acquired from Lockheed Martin being more difficult, time-consuming or costly than expected;
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the effect of any changes resulting from the proposed transaction in customer, supplier and other business relationships;
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general market perception of the proposed transaction with Lockheed Martin;
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exposure to lawsuits and contingencies associated with Lockheed Martin’s Information Systems & Global Solutions business;
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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;
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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;
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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
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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.
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Location
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Number of
buildings |
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Square
footage |
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Acreage
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San Diego, California
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2
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262,000
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13.5
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Columbia, Maryland
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1
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95,000
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7.3
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Colorado Springs, Colorado
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1
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86,000
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14.1
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Orlando, Florida
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1
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85,000
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8.5
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Oak Ridge, Tennessee
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1
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83,000
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8.4
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Reston, Virginia
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1
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62,000
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2.6
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Name of officer
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Age
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Position(s) with the company and prior business experience
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Sarah K. Allen
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57
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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.
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S. Gulu Gambhir
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47
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Chief Technology Officer and Executive 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.
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Roger A. Krone
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59
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Chief Executive Officer since July 2014, Mr. Krone is also Chairman of the Board. He brings more than 36 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 a member of the Georgia Tech Foundation Board of Trustees 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. He is also a member of the Executive Council of the Aerospace Industries Association (AIA) and a member of the AOPA Foundation's Board of Visitors.
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Michael E. Leiter
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46
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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.
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Vincent A. Maffeo
|
|
65
|
|
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.
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James C. Reagan
|
|
57
|
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Executive Vice President, Chief Financial Officer since July 2015 and Principal Accounting Officer since January 2016. Prior to joining Leidos, from 2012 to 2015, Mr. Reagan was with Vencore, Inc. (formerly The SI Organization, Inc.), a provider of information solutions, and engineering and analysis services to the U.S. Intelligence Community, Department of Defense, and federal and civilian agencies, where he served as Senior Vice President and Chief Financial Officer. From 2011 to 2012, Mr. Reagan was Executive Vice President and Chief Financial Officer of PAE, Inc., a provider of mission support services to the U.S. Government. Mr. Reagan is a Certified Public Accountant.
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Jonathan W. Scholl
|
|
54
|
|
President, Health and Engineering Sector since June 2015. Prior to joining Leidos, Mr. Scholl served for five years as the Chief Strategy Officer for Texas Health Resources, one of the largest nonprofit health care delivery systems in the country. Prior to that, he spent 15 years with The Boston Consulting group and served as Head of their North American Healthcare Provider Practice and leader of their Lean Six Sigma initiative for hospitals. He also served as vice president for applications development for the TenFold HealthCare Group in Dallas. Mr. Scholl served five years in the U.S. Navy as a nuclear submarine officer and nuclear power plant instructor.
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|
11 Months Ended
|
||||||
|
January 1, 2016
|
||||||
Fiscal Quarter
|
High
|
|
Low
|
||||
1st quarter (January 31, 2015 to April 3, 2015)
(1)
|
$
|
46.76
|
|
|
$
|
41.30
|
|
2nd quarter (April 4, 2015 to July 3, 2015)
|
$
|
43.20
|
|
|
$
|
39.63
|
|
3rd quarter (July 4, 2015 to October 2, 2015)
|
$
|
45.03
|
|
|
$
|
38.05
|
|
4th quarter (October 3, 2015 to January 1, 2016)
|
$
|
59.05
|
|
|
$
|
43.42
|
|
(1)
|
The first quarter of the 11-month period ended January 1, 2016, included only two months as a result of the change in our fiscal year-end.
|
|
12 Months Ended
|
||||||
|
January 30, 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
|
|
Period
|
(a)
Total Number of Shares (or Units) Purchased (1) |
|
(b)
Average Price Paid per Share (or Unit) |
|
(c)
Total Number of Shares (or Units) Purchased as Part of Publicly Announced Repurchase Plans or Programs (2) |
|
(d)
Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (2) |
|||||
October 3, 2015 - October 31, 2015
|
19,503
|
|
|
$
|
50.23
|
|
|
—
|
|
|
5,718,172
|
|
November 1, 2015 - November 30, 2015
|
20,307
|
|
|
54.31
|
|
|
—
|
|
|
5,718,172
|
|
|
December 1, 2015 - December 31, 2015
|
4,160
|
|
|
56.40
|
|
|
—
|
|
|
5,718,172
|
|
|
As of January 1, 2016
|
—
|
|
|
—
|
|
|
—
|
|
|
5,718,172
|
|
|
Total
|
43,970
|
|
|
$
|
52.70
|
|
|
—
|
|
|
|
(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.
|
|
11 Months Ended
(1)
|
|
12 Months Ended
(1)
|
||||||||||||||||
|
January 1, 2016
(2)
|
|
January 30, 2015
(3)
|
|
January 31, 2014
(4)
|
|
January 31,
2013 |
|
January 31, 2012
(5)
|
||||||||||
|
(in millions, except for per share amounts)
|
||||||||||||||||||
Consolidated Statement of Income Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Leidos Holdings, Inc.:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
4,712
|
|
|
$
|
5,063
|
|
|
$
|
5,755
|
|
|
$
|
6,449
|
|
|
$
|
5,804
|
|
Operating income (loss)
|
320
|
|
|
(214
|
)
|
|
163
|
|
|
421
|
|
|
(64
|
)
|
|||||
Income (loss) from continuing operations
|
243
|
|
|
(330
|
)
|
|
84
|
|
|
323
|
|
|
(239
|
)
|
|||||
(Loss) income from discontinued operations, net of tax
|
(1
|
)
|
|
7
|
|
|
80
|
|
|
202
|
|
|
298
|
|
|||||
Net income (loss)
|
$
|
242
|
|
|
$
|
(323
|
)
|
|
$
|
164
|
|
|
$
|
525
|
|
|
$
|
59
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) from continuing operations
|
$
|
3.33
|
|
|
$
|
(4.46
|
)
|
|
$
|
0.98
|
|
|
$
|
3.81
|
|
|
$
|
(2.85
|
)
|
(Loss) income from discontinued operations
|
(0.01
|
)
|
|
0.10
|
|
|
0.96
|
|
|
2.38
|
|
|
3.53
|
|
|||||
|
$
|
3.32
|
|
|
$
|
(4.36
|
)
|
|
$
|
1.94
|
|
|
$
|
6.19
|
|
|
$
|
0.68
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) from continuing operations
|
$
|
3.28
|
|
|
$
|
(4.46
|
)
|
|
$
|
0.98
|
|
|
$
|
3.81
|
|
|
$
|
(2.85
|
)
|
(Loss) income from discontinued operations
|
(0.01
|
)
|
|
0.10
|
|
|
0.96
|
|
|
2.38
|
|
|
3.53
|
|
|||||
|
$
|
3.27
|
|
|
$
|
(4.36
|
)
|
|
$
|
1.94
|
|
|
$
|
6.19
|
|
|
$
|
0.68
|
|
Cash dividend per common share
|
$
|
1.28
|
|
|
$
|
1.28
|
|
|
$
|
5.60
|
|
|
$
|
1.92
|
|
|
$
|
—
|
|
Leidos, Inc.:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
4,712
|
|
|
$
|
5,063
|
|
|
$
|
5,755
|
|
|
$
|
6,449
|
|
|
$
|
5,804
|
|
Operating income (loss)
|
320
|
|
|
(214
|
)
|
|
163
|
|
|
421
|
|
|
(64
|
)
|
|||||
Income (loss) from continuing operations
|
249
|
|
|
(324
|
)
|
|
86
|
|
|
324
|
|
|
(242
|
)
|
|||||
(Loss) income from discontinued operations
|
(1
|
)
|
|
7
|
|
|
80
|
|
|
202
|
|
|
298
|
|
|||||
Net income (loss)
|
$
|
248
|
|
|
$
|
(317
|
)
|
|
$
|
166
|
|
|
$
|
526
|
|
|
$
|
56
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
January 1,
2016 |
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
|
January 31,
2012 |
||||||||||
|
(in millions)
|
||||||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Leidos Holdings, Inc.:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
$
|
3,377
|
|
|
$
|
3,281
|
|
|
$
|
4,162
|
|
|
$
|
5,875
|
|
|
$
|
6,667
|
|
Notes payable and long-term debt, including current portion
|
$
|
1,088
|
|
|
$
|
1,166
|
|
|
$
|
1,333
|
|
|
$
|
1,295
|
|
|
$
|
1,845
|
|
Other long-term liabilities
|
$
|
183
|
|
|
$
|
168
|
|
|
$
|
227
|
|
|
$
|
170
|
|
|
$
|
158
|
|
(1)
|
References to financial data are to the Company's continuing operations, unless otherwise noted. During the year ended January 31, 2014, the Company completed the spin-off of New SAIC. The operating results of New SAIC are included in discontinued operations.
|
(2)
|
Reflects the 11-month period of January 31, 2015, through January 1, 2016 as a result of the change in our fiscal year end. All other periods presented include twelve months as originally reported. For further information see, Note 1 "
Summary of Significant Accounting Policies—Reporting Periods"
of the combined notes to the consolidated financial statements contained within this Transition Report on Form 10-K. The 11-month period ended January 1, 2016, results include a gain on a real estate sale of
$82 million
, tangible asset impairment charges of $
29 million
, intangible asset impairment charges of $
4 million
and bad debt expense of
$8 million
. For further information see, Note 16
"Leases—Sale and Leaseback Agreement",
Note 3
"Acquisitions",
Note 4
"Goodwill and Intangible Assets" and
Note 5
"Receivables"
of the combined notes to the consolidated financial statements contained within this Transition Report on Form 10-K.
|
(3)
|
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 Transition Report on Form 10-K.
|
(4)
|
Fiscal 2014 results include intangible asset impairment charges of
$51 million
, bad debt expense of
$44 million
, and separation transaction and restructuring expenses of
$65 million
. For further information see, Note 4
"Goodwill and Intangible Assets",
Note 5
"Receivables"
and Note 1
"Summary of Significant Accounting Policies—Separation Transaction and Restructuring Expenses"
of the combined notes to the consolidated financial statements contained within this Transition Report on Form 10-K.
|
(5)
|
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 Transition 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;
|
•
|
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; and
|
•
|
the proposed transaction with Lockheed Martin in which Lockheed Martin will divest and merge its Information Systems & Global Solutions business ("IS&GS") with a wholly-owned subsidiary of Leidos as discussed in section below–"Lockheed Martin Transaction." Completion of the transaction is anticipated to occur in 2016. During 2016, we expect to incur significant integration and transaction costs in connection with the Lockheed Martin Transaction and related transactions.
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||
|
January 1,
2016 |
|
January 30,
2015 |
|
January 31,
2014 |
||||||
|
(in millions)
|
||||||||||
Revenues
|
$
|
17
|
|
|
$
|
68
|
|
|
$
|
2,745
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
||||
Cost of revenues
|
17
|
|
|
60
|
|
|
2,480
|
|
|||
Selling, general and administrative expenses (including impairment charges of $9 million for the fiscal year ended January 30, 2015)
|
2
|
|
|
29
|
|
|
67
|
|
|||
Intangible asset impairment charges
|
—
|
|
|
3
|
|
|
2
|
|
|||
Separation transaction and restructuring expenses
|
—
|
|
|
—
|
|
|
55
|
|
|||
Operating (loss) income
|
$
|
(2
|
)
|
|
$
|
(24
|
)
|
|
$
|
141
|
|
Non-operating income (expense)
|
$
|
1
|
|
|
$
|
11
|
|
|
$
|
(1
|
)
|
(Loss) income from discontinued operations before income taxes
|
$
|
(1
|
)
|
|
$
|
(13
|
)
|
|
$
|
140
|
|
•
|
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 1,
2016 |
|
January 30,
2015 |
||||
|
(in millions)
|
||||||
National Security Solutions:
|
|
|
|
||||
Funded backlog
|
$
|
1,472
|
|
|
$
|
1,596
|
|
Negotiated unfunded backlog
|
6,554
|
|
|
4,491
|
|
||
Total National Security Solutions backlog
|
$
|
8,026
|
|
|
$
|
6,087
|
|
Health and Engineering:
|
|
|
|
||||
Funded backlog
|
$
|
1,049
|
|
|
$
|
1,061
|
|
Negotiated unfunded backlog
|
820
|
|
|
645
|
|
||
Total Health and Engineering backlog
|
$
|
1,869
|
|
|
$
|
1,706
|
|
Total:
|
|
|
|
||||
Funded backlog
|
$
|
2,521
|
|
|
$
|
2,657
|
|
Negotiated unfunded backlog
|
7,374
|
|
|
5,136
|
|
||
Total backlog
|
$
|
9,895
|
|
|
$
|
7,793
|
|
|
11 Months Ended
|
|
12 Months Ended
|
|||||
|
January 1,
2016 |
|
January 30,
2015 |
|
January 31,
2014 |
|||
Cost-reimbursement
|
51
|
%
|
|
48
|
%
|
|
47
|
%
|
Time and materials (T&M) and fixed-price-level-of-effort (FP-LOE)
|
22
|
|
|
25
|
|
|
26
|
|
Firm-fixed-price (FFP)
|
27
|
|
|
27
|
|
|
27
|
|
Total
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||||||||||||||||||||
|
January 1,
2016 |
|
January 2,
2015 |
|
Dollar change
|
|
Percent
change |
|
January 30,
2015 |
|
January 31,
2014 |
|
Dollar change
|
|
Percent
change |
||||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||||||||||
Revenues
|
$
|
4,712
|
|
|
$
|
4,690
|
|
|
$
|
22
|
|
|
—
|
%
|
|
$
|
5,063
|
|
|
$
|
5,755
|
|
|
$
|
(692
|
)
|
|
(12
|
)%
|
Cost of revenues
|
4,146
|
|
|
4,069
|
|
|
77
|
|
|
2
|
%
|
|
4,392
|
|
|
4,992
|
|
|
(600
|
)
|
|
(12
|
)%
|
||||||
Selling, general and administrative expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
General and administrative (G&A)
|
105
|
|
|
182
|
|
|
(77
|
)
|
|
(42
|
)%
|
|
205
|
|
|
325
|
|
|
(120
|
)
|
|
(37
|
)%
|
||||||
Bid and proposal (B&P)
|
67
|
|
|
64
|
|
|
3
|
|
|
5
|
%
|
|
68
|
|
|
70
|
|
|
(2
|
)
|
|
(3
|
)%
|
||||||
Internal research and development (IR&D)
|
29
|
|
|
34
|
|
|
(5
|
)
|
|
(15
|
)%
|
|
37
|
|
|
45
|
|
|
(8
|
)
|
|
(18
|
)%
|
||||||
Bad debt expense
|
8
|
|
|
4
|
|
|
4
|
|
|
100
|
%
|
|
5
|
|
|
44
|
|
|
(39
|
)
|
|
(89
|
)%
|
||||||
Goodwill impairment charges
|
—
|
|
|
486
|
|
|
(486
|
)
|
|
(100
|
)%
|
|
486
|
|
|
—
|
|
|
486
|
|
|
100
|
%
|
||||||
Asset impairment charges
|
33
|
|
|
41
|
|
|
(8
|
)
|
|
(20
|
)%
|
|
81
|
|
|
51
|
|
|
30
|
|
|
59
|
%
|
||||||
Separation transaction and restructuring expenses
|
4
|
|
|
1
|
|
|
3
|
|
|
NM
|
|
|
3
|
|
|
65
|
|
|
(62
|
)
|
|
(95
|
)%
|
||||||
Operating income (loss)
|
320
|
|
|
(191
|
)
|
|
511
|
|
|
NM
|
|
|
(214
|
)
|
|
163
|
|
|
(377
|
)
|
|
NM
|
|
||||||
Operating income (loss) margin
|
6.8
|
%
|
|
(4.1
|
)%
|
|
|
|
|
|
(4.2
|
)%
|
|
2.8
|
%
|
|
|
|
|
||||||||||
Non-operating income (expense), net
|
35
|
|
|
(65
|
)
|
|
100
|
|
|
154
|
%
|
|
(69
|
)
|
|
(75
|
)
|
|
6
|
|
|
8
|
%
|
||||||
Income (loss) from continuing operations before income taxes
|
355
|
|
|
(256
|
)
|
|
611
|
|
|
NM
|
|
|
(283
|
)
|
|
88
|
|
|
(371
|
)
|
|
NM
|
|
||||||
Income tax expense
|
(112
|
)
|
|
(67
|
)
|
|
(45
|
)
|
|
67
|
%
|
|
(47
|
)
|
|
(4
|
)
|
|
(43
|
)
|
|
NM
|
|
||||||
Income (loss) from continuing operations
|
243
|
|
|
(323
|
)
|
|
566
|
|
|
175
|
%
|
|
(330
|
)
|
|
84
|
|
|
(414
|
)
|
|
NM
|
|
||||||
(Loss) income from discontinued operations, net of tax
|
(1
|
)
|
|
(11
|
)
|
|
10
|
|
|
91
|
%
|
|
7
|
|
|
80
|
|
|
(73
|
)
|
|
(91
|
)%
|
||||||
Net income (loss)
|
$
|
242
|
|
|
$
|
(334
|
)
|
|
$
|
576
|
|
|
172
|
%
|
|
$
|
(323
|
)
|
|
$
|
164
|
|
|
$
|
(487
|
)
|
|
NM
|
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||||||||||||||||||
National Security Solutions
|
January 1,
2016 |
|
January 2,
2015 |
|
Dollar change
|
Percent
change |
|
January 30,
2015 |
|
January 31,
2014 |
|
Dollar change
|
Percent
change |
||||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||||||||
Revenues
|
$
|
3,210
|
|
|
$
|
3,337
|
|
|
$
|
(127
|
)
|
(4
|
)%
|
|
$
|
3,594
|
|
|
$
|
4,049
|
|
|
$
|
(455
|
)
|
(11
|
)%
|
Operating income
|
263
|
|
|
270
|
|
|
(7
|
)
|
(3
|
)%
|
|
286
|
|
|
292
|
|
|
(6
|
)
|
(2
|
)%
|
||||||
Operating income margin
|
8.2
|
%
|
|
8.1
|
%
|
|
|
|
|
|
8.0
|
%
|
|
7.2
|
%
|
|
|
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||||||||||||||||||
Health and Engineering
|
January 1,
2016 |
|
January 2,
2015 |
|
Dollar change
|
Percent
change |
|
January 30,
2015 |
|
January 31,
2014 |
|
Dollar change
|
Percent
change |
||||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||||||||
Revenues
|
$
|
1,496
|
|
|
$
|
1,366
|
|
|
$
|
130
|
|
10
|
%
|
|
$
|
1,485
|
|
|
$
|
1,718
|
|
|
$
|
(233
|
)
|
(14
|
)%
|
Operating income (loss)
|
76
|
|
|
(442
|
)
|
|
518
|
|
117
|
%
|
|
(472
|
)
|
|
20
|
|
|
(492
|
)
|
NM
|
|
||||||
Operating income (loss) margin
|
5.1
|
%
|
|
(32.4
|
)%
|
|
|
|
|
(31.8
|
)%
|
|
1.2
|
%
|
|
|
|
||||||||||
NM - Not meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||||||||||||||||||
Corporate and Other
|
January 1,
2016 |
|
January 2,
2015 |
|
Dollar change
|
Percent
change |
|
January 30,
2015 |
|
January 31,
2014 |
|
Dollar change
|
Percent
change |
||||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||||||||
Operating loss
|
$
|
(19
|
)
|
|
$
|
(19
|
)
|
|
$
|
—
|
|
—
|
%
|
|
$
|
(28
|
)
|
|
$
|
(149
|
)
|
|
$
|
121
|
|
81
|
%
|
•
|
an
$82 million
gain on sale of the remaining building, parcels of land that surround the building, and the multi-level surface parking garage associated with our former headquarters; and
|
•
|
a decrease in interest expense of
$18 million
, of which
$14 million
was due to the repurchase of
$37 million
of outstanding debt and due to interest expense reductions from the swap agreements.
|
•
|
a decrease in interest expense of
$7 million
, which decreased due to interest expense reductions from the swap agreements and due to the repurchase of
$183 million
of outstanding debt;
|
•
|
an increase in other income of
$13 million
, primarily due to an early termination fee and write-offs in fiscal 2014 associated with the early payoff of the notes acquired as part of the Plainfield Renewable Energy Project of $8 million and a gain on extinguishment of debt in fiscal 2015 of
$5 million
, offset by; and
|
•
|
a decrease in interest income of
$14 million
, primarily due to the collection or forgiveness of deferred receivables for commercial customers related to certain construction contracts in fiscal 2014.
|
|
11 Months Ended
|
12 Months Ended
|
|||||||||
|
January 1,
2016 |
|
January 30,
2015 |
|
January 31,
2014 |
||||||
|
(in millions)
|
||||||||||
Cash provided by operating activities of continuing operations
|
$
|
399
|
|
|
$
|
396
|
|
|
$
|
191
|
|
Cash provided by investing activities of continuing operations
|
64
|
|
|
51
|
|
|
297
|
|
|||
Cash used in financing activities of continuing operations
|
(249
|
)
|
|
(478
|
)
|
|
(894
|
)
|
|||
Cash (used in) provided by operating activities of discontinued operations
|
(7
|
)
|
|
15
|
|
|
118
|
|
|||
Cash provided by (used in) investing activities of discontinued operations
|
6
|
|
|
29
|
|
|
(17
|
)
|
|||
Total increase (decrease) in cash and cash equivalents
|
$
|
213
|
|
|
$
|
13
|
|
|
$
|
(305
|
)
|
|
Stated
interest rate |
|
Effective
interest rate |
|
January 1,
2016 |
|
January 30,
2015 |
||||||
|
(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
|
%
|
|
$
|
457
|
|
|
$
|
466
|
|
$300 million notes issued in fiscal 2011, which mature in December 2040
|
5.95
|
%
|
|
6.03
|
%
|
|
218
|
|
|
232
|
|
||
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
|
%
|
|
5.88
|
%
|
|
159
|
|
|
182
|
|
||
Capital leases and other notes payable due on various dates through fiscal 2020
|
0%-5.55%
|
|
|
Various
|
|
|
6
|
|
|
38
|
|
||
Total notes payable and long-term debt
|
|
|
|
|
1,088
|
|
|
1,166
|
|
||||
Less current portion
|
|
|
|
|
2
|
|
|
2
|
|
||||
Total notes payable and long-term debt, net of current portion
|
|
|
|
|
$
|
1,086
|
|
|
$
|
1,164
|
|
||
Fair value of notes payable and long-term debt
|
|
|
|
|
$
|
1,060
|
|
|
$
|
1,152
|
|
(1)
|
As a result of executing the interest rate swap agreements, the carrying values of
$457 million
and
$466 million
include fair value adjustments of
$9 million
and
$17 million
, respectively, attributable to changes in the benchmark interest rate, the six-month LIBOR rate, for the 11-month period ended January 1, 2016, and the fiscal year ended January 30, 2015, respectively.
|
|
Payments Due by Fiscal Year
|
||||||||||||||||||||||||||
|
Total
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021 & Thereafter
|
||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||
Contractual obligations
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Long-term debt (including current portion)
(2)
|
$
|
1,974
|
|
|
$
|
60
|
|
|
$
|
60
|
|
|
$
|
59
|
|
|
$
|
60
|
|
|
$
|
59
|
|
|
$
|
1,676
|
|
Operating lease obligations
|
349
|
|
|
84
|
|
|
69
|
|
|
58
|
|
|
45
|
|
|
31
|
|
|
62
|
|
|||||||
Capital lease obligations
|
6
|
|
|
2
|
|
|
2
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|||||||
Other long-term liabilities
(3)
|
41
|
|
|
6
|
|
|
6
|
|
|
6
|
|
|
6
|
|
|
6
|
|
|
11
|
|
|||||||
Total contractual obligations
|
$
|
2,370
|
|
|
$
|
152
|
|
|
$
|
137
|
|
|
$
|
124
|
|
|
$
|
112
|
|
|
$
|
96
|
|
|
$
|
1,749
|
|
(1)
|
We have excluded purchase orders for services or products to be delivered pursuant to U.S. Government contracts for which we are entitled to full recourse under normal contract termination clauses.
|
(2)
|
Includes total interest payments on our outstanding debt. Interest payments represent the entire balance for fiscal 2016-2020 and
$589 million
of our obligations 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.
|
(3)
|
Other long-term liabilities were allocated by fiscal year as follows: 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
$5 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. There is no obligation included for our foreign defined benefit pension plan, as the plan is overfunded by
$2 million
as of January 1, 2016. For a discussion of potential changes in these pension obligations, see Note 15 of the combined notes to consolidated financial statements contained within this Transition Report on Form 10-K.
|
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)
|
4,944,548
|
|
(2)
|
$
|
38.21
|
|
(3)
|
18,488,827
|
|
(4)
|
Equity compensation plans not approved by security holders
(5)
|
—
|
|
|
—
|
|
|
—
|
|
(5)
|
|
Total
|
4,944,548
|
|
|
$
|
—
|
|
(3)
|
18,488,827
|
|
|
(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)
2,302,550
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
103,490
shares if the maximum level of performance is achieved) and other stock awards under the 2006 Equity Incentive Plan, (ii)
246,716
shares of Leidos common stock issuable pursuant to dividend equivalent rights and (iii)
2,395,282
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
13,830,850
shares of Leidos common stock under the 2006 Employee Stock Purchase Plan and
4,657,976
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 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 reference to Exhibit 2.1 to our Current Report on Form 8-K filed with the SEC on October 1, 2013.
|
|
|
2.2
|
Agreement and Plan of Merger, dated January 26, 2016, among Leidos Holdings, Inc., Lockheed Martin Corporation, Abacus Innovations Corporation, and Lion Merger Co. Incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed with the SEC on January 28, 2016.
|
|
|
2.3
|
Separation Agreement, dated January 26, 2016, between Lockheed Martin Corporation and Abacus Innovations Corporation. Incorporated by reference to Exhibit 2.2 to our Current Report on Form 8-K filed with the SEC on January 28, 2016.
|
|
|
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. Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed with the SEC on March 25, 2015.
|
|
|
3.3
|
Amended and Restated Certificate of Incorporation of Leidos, Inc. Incorporated by reference to Exhibit 3.3 to our Current Report on Form 8-K filed with the SEC on October 1, 2013.
|
|
|
3.4
|
Amended and Restated Bylaws of Leidos, Inc. Incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed with the SEC on March 25, 2015.
|
|
|
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*
|
Amended and Restated Leidos, Inc.'s Keystaff Deferral Plan.
|
|
|
10.5*
|
Amended and Restated Leidos, Inc.’s Key Executive Stock Deferral Plan.
|
|
|
Exhibit
Number |
Description of Exhibit
|
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.
|
|
|
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. Incorporated by reference to Exhibit 10.19 to our Annual Report on Form 10-K filed with the SEC on March 25, 2015.
|
|
|
10.20*
|
Form of Severance Protection Agreement.
|
|
|
10.21
|
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.
|
|
|
Exhibit
Number |
Description of Exhibit
|
10.22
|
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.
|
|
|
10.23
|
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.
|
|
|
10.24
|
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.
|
|
|
10.25
|
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.
|
|
|
10.26
|
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.
|
|
|
10.27††
|
Confirmation, dated December 13, 2013, regarding Issuer Forward Repurchase Transaction between Leidos Holdings, Inc. and Bank of America, N.A. Incorporated by reference to Exhibit 10.29 to our Annual Report on Form 10-K filed with the SEC on March 27, 2014.
|
|
|
10.28*
|
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.
|
|
|
10.29
|
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.
|
|
|
10.30*
|
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.
|
|
|
10.31*
|
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). Incorporated by reference to Exhibit 10.19 to our Annual Report on Form 10-K filed with the SEC on March 25, 2015.
|
|
|
10.32*
|
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.
|
|
|
10.33
|
Membership Interest Purchase Agreement by and among Leidos Engineering, LLC, Greenleaf Power Consolidated, LLC and Plainfield Renewable Energy, LLC dated March 24, 2015. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on March 25, 2015.
|
|
|
10.34*
|
Employment Offer Letter dated June 9, 2015. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on June 15, 2015.
|
|
|
10.35
|
Amendment to Membership Interest Purchase Agreement by and among Leidos Engineering, LLC, Greenleaf Power Consolidated, LLC and Plainfield Renewable Energy, LLC dated July 17, 2015. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on July 23, 2015.
|
|
|
10.36
|
Fourth Amendment to Purchase and Sale Agreement dated August 31, 2015. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on September 8, 2015.
|
|
|
10.37
|
Amendment No. 3 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, and Amendment No. 2 dated as of October 17, 2014, 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 January 28, 2016.
|
|
|
18
|
Preferability Letter.
|
Exhibit
Number |
Description of Exhibit
|
|
|
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.
|
|
|
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/ James C. Reagan
|
|
James C. Reagan
Executive Vice President and Chief Financial Officer
|
Leidos, Inc.
|
|
|
|
By
|
/s/ James C. Reagan
|
|
James C. Reagan
Executive Vice President and Chief Financial Officer
|
Signature
|
Title
|
Date
|
|
|
|
/s/ Roger A. Krone
|
Principal Executive Officer
|
February 26, 2016
|
Roger A. Krone
|
||
|
|
|
/s/ James C. Reagan
|
Principal Financial Officer and Principal Accounting Officer
|
February 26, 2016
|
James C. Reagan
|
||
|
|
|
/s/ David G. Fubini
|
Director
|
February 26, 2016
|
David G. Fubini
|
||
|
|
|
/s/ John J. Hamre
|
Director
|
February 26, 2016
|
John J. Hamre
|
||
|
|
|
/s/ Miriam E. John
|
Director
|
February 26, 2016
|
Miriam E. John
|
||
|
|
|
/s/ John P. Jumper
|
Director
|
February 26, 2016
|
John P. Jumper
|
||
|
|
|
/s/ Harry M. J. Kraemer, Jr.
|
Director
|
February 26, 2016
|
Harry M. J. Kraemer, Jr.
|
||
|
|
|
/s/ Gary S. May
|
Director
|
February 26, 2016
|
Gary S. May
|
||
|
|
|
/s/ Lawrence C. Nussdorf
|
Director
|
February 26, 2016
|
Lawrence C. Nussdorf
|
||
|
|
|
/s/ Robert S. Shapard
|
Director
|
February 26, 2016
|
Robert S. Shapard
|
||
|
|
|
/s/ Noel B. Williams
|
Director
|
February 26, 2016
|
Noel B. Williams
|
|
Page
|
CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
Leidos Holdings, Inc.
|
|
|
|
|
|
Consolidated Balance Sheets as of January 1, 2016 and January 30, 2015
|
|
|
|
Consolidated Statements of Income for
the 11-month periods ended January 1, 2016 and January 2, 2015 (unaudited) and the fiscal years ended January 30, 2015 and January 31, 2014
|
|
|
|
Consolidated Statements of Comprehensive Income for
the 11-month periods ended January 1, 2016 and January 2, 2015 (unaudited) and the fiscal years ended January 30, 2015 and January 31, 2014
|
|
|
|
Consolidated Statements of Stockholders’ Equity for
the 11-month period ended January 1, 2016 and the fiscal years ended January 30, 2015 and January 31, 2014
|
|
|
|
Consolidated Statements of Cash Flows for
the 11-month periods ended January 1, 2016 and January 2, 2015 (unaudited) and the fiscal years ended January 30, 2015 and January 31, 2014
|
|
|
|
Leidos, Inc.
|
|
|
|
|
|
Consolidated Balance Sheets as of January 1, 2016 and January 30, 2015
|
|
|
|
Consolidated Statements of Income for the 11-month periods ended January 1, 2016 and January 2, 2015 (unaudited) and the fiscal years ended January 30, 2015 and January 31, 2014
|
|
|
|
Consolidated Statements of Comprehensive Income for the 11-month periods ended January 1, 2016 and January 2, 2015 (unaudited) and the fiscal years ended January 30, 2015 and January 31, 2014
|
|
|
|
Consolidated Statements of Stockholder’s Equity for
the 11-month period ended January 1, 2016 and the fiscal years ended January 30, 2015 and January 31, 2014
|
|
|
|
Consolidated Statements of Cash Flows for the 11-month periods ended January 1, 2016 and January 2, 2015 (unaudited) and the fiscal years ended January 30, 2015 and January 31, 2014
|
|
|
|
Leidos Holdings, Inc. and Leidos, Inc.
|
|
|
|
|
January 1,
2016 |
|
January 30,
2015 |
||||
|
(in millions)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
656
|
|
|
$
|
443
|
|
Receivables, net
|
921
|
|
|
896
|
|
||
Inventory, prepaid expenses and other current assets
|
216
|
|
|
273
|
|
||
Assets of discontinued operations
|
—
|
|
|
6
|
|
||
Total current assets
|
1,793
|
|
|
1,618
|
|
||
Property, plant and equipment, net
|
142
|
|
|
308
|
|
||
Goodwill and intangible assets, net
|
1,232
|
|
|
1,244
|
|
||
Deferred income taxes
|
8
|
|
|
14
|
|
||
Other assets
|
202
|
|
|
97
|
|
||
|
$
|
3,377
|
|
|
$
|
3,281
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued liabilities
|
$
|
769
|
|
|
$
|
675
|
|
Accrued payroll and employee benefits
|
268
|
|
|
264
|
|
||
Notes payable and long-term debt, current portion
|
2
|
|
|
2
|
|
||
Liabilities of discontinued operations
|
1
|
|
|
10
|
|
||
Total current liabilities
|
1,040
|
|
|
951
|
|
||
Notes payable and long-term debt, net of current portion
|
1,086
|
|
|
1,164
|
|
||
Other long-term liabilities
|
183
|
|
|
168
|
|
||
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 1, 2016 and January 30, 2015
|
—
|
|
|
—
|
|
||
Common stock, $.0001 par value, 500 million shares authorized, 72 million and 74 million shares issued and outstanding at January 1, 2016 and January 30, 2015, respectively
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
1,353
|
|
|
1,433
|
|
||
Accumulated deficit
|
(277
|
)
|
|
(424
|
)
|
||
Accumulated other comprehensive loss
|
(8
|
)
|
|
(11
|
)
|
||
Total stockholders’ equity
|
1,068
|
|
|
998
|
|
||
|
$
|
3,377
|
|
|
$
|
3,281
|
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||||||
|
January 1,
2016 |
|
January 2,
2015 |
|
January 30,
2015 |
|
January 31,
2014 |
||||||||
|
|
|
(unaudited)
|
|
|
|
|
||||||||
|
(in millions, except per share amounts)
|
||||||||||||||
Revenues
|
$
|
4,712
|
|
|
$
|
4,690
|
|
|
$
|
5,063
|
|
|
$
|
5,755
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of revenues
|
4,146
|
|
|
4,069
|
|
|
4,392
|
|
|
4,992
|
|
||||
Selling, general and administrative expenses
|
201
|
|
|
280
|
|
|
310
|
|
|
440
|
|
||||
Bad debt expense
|
8
|
|
|
4
|
|
|
5
|
|
|
44
|
|
||||
Goodwill impairment charges
|
—
|
|
|
486
|
|
|
486
|
|
|
—
|
|
||||
Asset impairment charges
|
33
|
|
|
41
|
|
|
81
|
|
|
51
|
|
||||
Separation transaction and restructuring expenses
|
4
|
|
|
1
|
|
|
3
|
|
|
65
|
|
||||
Operating income (loss)
|
320
|
|
|
(191
|
)
|
|
(214
|
)
|
|
163
|
|
||||
Non-operating income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest income
|
4
|
|
|
1
|
|
|
1
|
|
|
15
|
|
||||
Interest expense
|
(53
|
)
|
|
(71
|
)
|
|
(75
|
)
|
|
(82
|
)
|
||||
Other income (expense), net
|
84
|
|
|
5
|
|
|
5
|
|
|
(8
|
)
|
||||
Income (loss) from continuing operations before income taxes
|
355
|
|
|
(256
|
)
|
|
(283
|
)
|
|
88
|
|
||||
Income tax expense
|
(112
|
)
|
|
(67
|
)
|
|
(47
|
)
|
|
(4
|
)
|
||||
Income (loss) from continuing operations
|
243
|
|
|
(323
|
)
|
|
(330
|
)
|
|
84
|
|
||||
Discontinued operations (Note 2):
|
|
|
|
|
|
|
|
||||||||
(Loss) income from discontinued operations before income taxes
|
(1
|
)
|
|
(14
|
)
|
|
(13
|
)
|
|
140
|
|
||||
Income tax benefit (expense)
|
—
|
|
|
3
|
|
|
20
|
|
|
(60
|
)
|
||||
(Loss) income from discontinued operations
|
(1
|
)
|
|
(11
|
)
|
|
7
|
|
|
80
|
|
||||
Net income (loss)
|
$
|
242
|
|
|
$
|
(334
|
)
|
|
$
|
(323
|
)
|
|
$
|
164
|
|
Earnings (loss) per share (Note 12):
|
|
|
|
|
|
|
|
||||||||
Basic:
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations
|
$
|
3.33
|
|
|
$
|
(4.36
|
)
|
|
$
|
(4.46
|
)
|
|
$
|
0.98
|
|
(Loss) income from discontinued operations
|
(0.01
|
)
|
|
(0.15
|
)
|
|
0.10
|
|
|
0.96
|
|
||||
|
$
|
3.32
|
|
|
$
|
(4.51
|
)
|
|
$
|
(4.36
|
)
|
|
$
|
1.94
|
|
Diluted:
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations
|
$
|
3.28
|
|
|
$
|
(4.36
|
)
|
|
$
|
(4.46
|
)
|
|
$
|
0.98
|
|
(Loss) income from discontinued operations
|
(0.01
|
)
|
|
(0.15
|
)
|
|
0.10
|
|
|
0.96
|
|
||||
|
$
|
3.27
|
|
|
$
|
(4.51
|
)
|
|
$
|
(4.36
|
)
|
|
$
|
1.94
|
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||||||
|
January 1,
2016 |
|
January 2,
2015 |
|
January 30,
2015 |
|
January 31,
2014 |
||||||||
|
|
|
(unaudited)
|
|
|
|
|
||||||||
|
(in millions)
|
||||||||||||||
Net income (loss)
|
$
|
242
|
|
|
$
|
(334
|
)
|
|
$
|
(323
|
)
|
|
$
|
164
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
(1
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|
—
|
|
||||
Deferred taxes
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Foreign currency translation adjustments, net of tax
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
||||
Reclassification of realized loss on settled derivative instruments to net income
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
Deferred taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Reclassification of realized loss on settled derivative instruments to net income, net of tax
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
Pension liability adjustments
|
5
|
|
|
(6
|
)
|
|
(7
|
)
|
|
(6
|
)
|
||||
Deferred taxes
|
(2
|
)
|
|
2
|
|
|
3
|
|
|
2
|
|
||||
Pension liability adjustments, net of tax
|
3
|
|
|
(4
|
)
|
|
(4
|
)
|
|
(4
|
)
|
||||
Total other comprehensive income (loss), net of tax
|
3
|
|
|
(4
|
)
|
|
(5
|
)
|
|
(4
|
)
|
||||
Comprehensive income (loss)
|
$
|
245
|
|
|
$
|
(338
|
)
|
|
$
|
(328
|
)
|
|
$
|
160
|
|
|
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, 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
|
|
||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
242
|
|
|
|
|
|
242
|
|
||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
||||
Issuances of stock (less forfeitures)
|
1
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
||||
Shares repurchased or retired or withheld for tax withholdings on equity awards
|
(3
|
)
|
|
—
|
|
|
(118
|
)
|
|
—
|
|
|
—
|
|
|
(118
|
)
|
||||
Dividends of $1.28 per common share
|
—
|
|
|
—
|
|
|
—
|
|
|
(95
|
)
|
|
—
|
|
|
(95
|
)
|
||||
Adjustments for income tax benefits from stock-based compensation
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|
—
|
|
|
30
|
|
||||
Balance at January 1, 2016
|
72
|
|
|
—
|
|
|
$
|
1,353
|
|
|
$
|
(277
|
)
|
|
$
|
(8
|
)
|
|
$
|
1,068
|
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||||||
|
January 1,
2016 |
|
January 2,
2015 |
|
January 30,
2015 |
|
January 31,
2014 |
||||||||
|
|
|
(unaudited)
|
|
|
|
|
||||||||
|
(in millions)
|
||||||||||||||
Cash flows from operating activities of continuing operations:
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
242
|
|
|
$
|
(334
|
)
|
|
$
|
(323
|
)
|
|
$
|
164
|
|
Loss (income) from discontinued operations
|
1
|
|
|
11
|
|
|
(7
|
)
|
|
(80
|
)
|
||||
Adjustments to reconcile net income (loss) to net cash provided by continuing operations:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
41
|
|
|
58
|
|
|
62
|
|
|
80
|
|
||||
Stock-based compensation
|
30
|
|
|
40
|
|
|
42
|
|
|
55
|
|
||||
Goodwill impairment charges
|
—
|
|
|
486
|
|
|
486
|
|
|
—
|
|
||||
Asset impairment charges
|
33
|
|
|
41
|
|
|
81
|
|
|
51
|
|
||||
Restructuring charges
|
3
|
|
|
1
|
|
|
3
|
|
|
17
|
|
||||
(Gain) loss on a real estate sale
|
(82
|
)
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Bad debt expense and other
|
3
|
|
|
3
|
|
|
5
|
|
|
44
|
|
||||
Change in assets and liabilities, net of effects of acquisitions and dispositions:
|
|
|
|
|
|
|
|
|
|
||||||
Receivables
|
(19
|
)
|
|
68
|
|
|
162
|
|
|
(69
|
)
|
||||
Inventory, prepaid expenses and other current assets
|
3
|
|
|
6
|
|
|
(12
|
)
|
|
44
|
|
||||
Income taxes receivable/payable
|
55
|
|
|
4
|
|
|
(87
|
)
|
|
54
|
|
||||
Deferred income taxes
|
26
|
|
|
33
|
|
|
56
|
|
|
(38
|
)
|
||||
Other assets
|
(46
|
)
|
|
—
|
|
|
2
|
|
|
18
|
|
||||
Accounts payable and accrued liabilities
|
102
|
|
|
(41
|
)
|
|
(43
|
)
|
|
(87
|
)
|
||||
Accrued payroll and employee benefits
|
5
|
|
|
10
|
|
|
(21
|
)
|
|
(66
|
)
|
||||
Other long-term liabilities
|
2
|
|
|
(1
|
)
|
|
(10
|
)
|
|
2
|
|
||||
Total cash flows provided by operating activities of continuing operations
|
399
|
|
|
385
|
|
|
396
|
|
|
191
|
|
||||
Cash flows from investing activities of continuing operations:
|
|
|
|
|
|
|
|
||||||||
Expenditures for property, plant and equipment
|
(27
|
)
|
|
(29
|
)
|
|
(29
|
)
|
|
(53
|
)
|
||||
Acquisitions of businesses, net of cash acquired
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
||||
Payments on accrued purchase price related to prior acquisition
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net proceeds from sale of assets
|
79
|
|
|
—
|
|
|
—
|
|
|
65
|
|
||||
Proceeds from disposition of business, net of cash sold of $2 million
|
27
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Proceeds from U.S. Treasury cash grant
|
—
|
|
|
80
|
|
|
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 investing activities of continuing operations
|
64
|
|
|
51
|
|
|
51
|
|
|
297
|
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||||||
|
January 1,
2016 |
|
January 2,
2015 |
|
January 30,
2015 |
|
January 31,
2014 |
||||||||
|
|
|
(unaudited)
|
|
|
|
|
||||||||
|
(in millions)
|
||||||||||||||
Cash flows from financing activities of continuing operations:
|
|
|
|
|
|
|
|
||||||||
Payments on notes payable and long-term debt
|
(39
|
)
|
|
(154
|
)
|
|
(177
|
)
|
|
(152
|
)
|
||||
Payments for deferred financing costs
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
||||
Payment from New SAIC for deferred financing costs
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
||||
Proceeds from real estate financing transaction
|
—
|
|
|
—
|
|
|
—
|
|
|
38
|
|
||||
Payments on real estate financing transaction
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Proceeds from debt issuance
|
—
|
|
|
—
|
|
|
—
|
|
|
500
|
|
||||
Distribution of debt to New SAIC
|
—
|
|
|
—
|
|
|
—
|
|
|
(500
|
)
|
||||
Sales of stock and exercises of stock options
|
6
|
|
|
7
|
|
|
7
|
|
|
13
|
|
||||
Repurchases of stock and stock received for tax withholdings
|
(118
|
)
|
|
(213
|
)
|
|
(215
|
)
|
|
(319
|
)
|
||||
Dividend payments
|
(93
|
)
|
|
(72
|
)
|
|
(95
|
)
|
|
(477
|
)
|
||||
Other
|
3
|
|
|
1
|
|
|
2
|
|
|
3
|
|
||||
Total cash flows used in financing activities of continuing operations
|
(249
|
)
|
|
(431
|
)
|
|
(478
|
)
|
|
(894
|
)
|
||||
Increase (decrease) in cash and cash equivalents from continuing operations
|
214
|
|
|
5
|
|
|
(31
|
)
|
|
(406
|
)
|
||||
Cash flows from discontinued operations:
|
|
|
|
|
|
|
|
||||||||
Cash (used in) provided by operating activities of discontinued operations
|
(7
|
)
|
|
(5
|
)
|
|
15
|
|
|
118
|
|
||||
Cash provided by (used in) investing activities of discontinued operations
|
6
|
|
|
29
|
|
|
29
|
|
|
(17
|
)
|
||||
(Decrease) increase in cash and cash equivalents from discontinued operations
|
(1
|
)
|
|
24
|
|
|
44
|
|
|
101
|
|
||||
Total increase (decrease) in cash and cash equivalents
|
213
|
|
|
29
|
|
|
13
|
|
|
(305
|
)
|
||||
Cash and cash equivalents at beginning of year
|
443
|
|
|
430
|
|
|
430
|
|
|
735
|
|
||||
Cash and cash equivalents at end of year
|
$
|
656
|
|
|
$
|
459
|
|
|
$
|
443
|
|
|
$
|
430
|
|
|
January 1,
2016 |
|
January 30,
2015 |
||||
|
(in millions)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
656
|
|
|
$
|
443
|
|
Receivables, net
|
921
|
|
|
896
|
|
||
Inventory, prepaid expenses and other current assets
|
216
|
|
|
273
|
|
||
Assets of discontinued operations
|
—
|
|
|
6
|
|
||
Total current assets
|
1,793
|
|
|
1,618
|
|
||
Property, plant and equipment, net
|
142
|
|
|
308
|
|
||
Goodwill and intangible assets, net
|
1,232
|
|
|
1,244
|
|
||
Deferred income taxes
|
8
|
|
|
14
|
|
||
Other assets
|
202
|
|
|
97
|
|
||
Note receivable from Leidos Holdings, Inc. (Note 10)
|
1,593
|
|
|
1,412
|
|
||
|
$
|
4,970
|
|
|
$
|
4,693
|
|
LIABILITIES AND STOCKHOLDER’S EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued liabilities
|
$
|
769
|
|
|
$
|
675
|
|
Accrued payroll and employee benefits
|
268
|
|
|
264
|
|
||
Notes payable and long-term debt, current portion
|
2
|
|
|
2
|
|
||
Liabilities of discontinued operations
|
1
|
|
|
10
|
|
||
Total current liabilities
|
1,040
|
|
|
951
|
|
||
Notes payable and long-term debt, net of current portion
|
1,086
|
|
|
1,164
|
|
||
Other long-term liabilities
|
183
|
|
|
168
|
|
||
Commitments and contingencies (Notes 16,19 and 20)
|
|
|
|
||||
Stockholder's equity:
|
|
|
|
||||
Common stock, $.01 par value, 10,000 shares authorized, 5,000 shares issued and outstanding at January 1, 2016 and January 30, 2015
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
207
|
|
|
207
|
|
||
Accumulated earnings
|
2,462
|
|
|
2,214
|
|
||
Accumulated other comprehensive loss
|
(8
|
)
|
|
(11
|
)
|
||
Total stockholder's equity
|
2,661
|
|
|
2,410
|
|
||
|
$
|
4,970
|
|
|
$
|
4,693
|
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||||||
|
January 1,
2016 |
|
January 2,
2015 |
|
January 30,
2015 |
|
January 31,
2014 |
||||||||
|
|
|
(unaudited)
|
|
|
|
|
||||||||
|
(in millions)
|
||||||||||||||
Revenues
|
$
|
4,712
|
|
|
$
|
4,690
|
|
|
$
|
5,063
|
|
|
$
|
5,755
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of revenues
|
4,146
|
|
|
4,069
|
|
|
4,392
|
|
|
4,992
|
|
||||
Selling, general and administrative expenses
|
201
|
|
|
280
|
|
|
310
|
|
|
440
|
|
||||
Bad debt expense
|
8
|
|
|
4
|
|
|
5
|
|
|
44
|
|
||||
Goodwill impairment charges
|
—
|
|
|
486
|
|
|
486
|
|
|
—
|
|
||||
Asset impairment charges
|
33
|
|
|
41
|
|
|
81
|
|
|
51
|
|
||||
Separation transaction and restructuring expenses
|
4
|
|
|
1
|
|
|
3
|
|
|
65
|
|
||||
Operating income (loss)
|
320
|
|
|
(191
|
)
|
|
(214
|
)
|
|
163
|
|
||||
Non-operating income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest income
|
13
|
|
|
11
|
|
|
11
|
|
|
19
|
|
||||
Interest expense
|
(53
|
)
|
|
(71
|
)
|
|
(75
|
)
|
|
(82
|
)
|
||||
Other income (expense), net
|
84
|
|
|
5
|
|
|
5
|
|
|
(8
|
)
|
||||
Income (loss) from continuing operations before income taxes
|
364
|
|
|
(246
|
)
|
|
(273
|
)
|
|
92
|
|
||||
Income tax expense
|
(115
|
)
|
|
(71
|
)
|
|
(51
|
)
|
|
(6
|
)
|
||||
Income (loss) from continuing operations
|
249
|
|
|
(317
|
)
|
|
(324
|
)
|
|
86
|
|
||||
Discontinued operations (Note 2):
|
|
|
|
|
|
|
|
||||||||
(Loss) income from discontinued operations before income taxes
|
(1
|
)
|
|
(14
|
)
|
|
(13
|
)
|
|
140
|
|
||||
Income tax benefit (expense)
|
—
|
|
|
3
|
|
|
20
|
|
|
(60
|
)
|
||||
(Loss) income from discontinued operations
|
(1
|
)
|
|
(11
|
)
|
|
7
|
|
|
80
|
|
||||
Net income (loss)
|
$
|
248
|
|
|
$
|
(328
|
)
|
|
$
|
(317
|
)
|
|
$
|
166
|
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||||||
|
January 1,
2016 |
|
January 2,
2015 |
|
January 30,
2015 |
|
January 31,
2014 |
||||||||
|
|
|
(unaudited)
|
|
|
|
|
||||||||
|
(in millions)
|
||||||||||||||
Net income (loss)
|
$
|
248
|
|
|
$
|
(328
|
)
|
|
$
|
(317
|
)
|
|
$
|
166
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
(1
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|
—
|
|
||||
Deferred taxes
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Foreign currency translation adjustments, net of tax
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
||||
Reclassification of realized loss on settled derivative instruments to net income
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
Deferred taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Reclassification of realized loss on settled derivative instruments to net income, net of tax
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
Pension liability adjustments
|
5
|
|
|
(6
|
)
|
|
(7
|
)
|
|
(6
|
)
|
||||
Deferred taxes
|
(2
|
)
|
|
2
|
|
|
3
|
|
|
2
|
|
||||
Pension liability adjustments, net of tax
|
3
|
|
|
(4
|
)
|
|
(4
|
)
|
|
(4
|
)
|
||||
Total other comprehensive income (loss), net of tax
|
3
|
|
|
(4
|
)
|
|
(5
|
)
|
|
(4
|
)
|
||||
Comprehensive income (loss)
|
$
|
251
|
|
|
$
|
(332
|
)
|
|
$
|
(322
|
)
|
|
$
|
162
|
|
|
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, 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
|
|
||||
Net income
|
—
|
|
|
—
|
|
|
248
|
|
|
—
|
|
|
248
|
|
||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
||||
Balance at January 1, 2016
|
5,000
|
|
|
$
|
207
|
|
|
$
|
2,462
|
|
|
$
|
(8
|
)
|
|
$
|
2,661
|
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||||||
|
January 1,
2016 |
|
January 2,
2015 |
|
January 30,
2015 |
|
January 31,
2014 |
||||||||
|
|
|
(unaudited)
|
|
|
|
|
||||||||
|
(in millions)
|
||||||||||||||
Cash flows from operating activities of continuing operations:
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
248
|
|
|
$
|
(328
|
)
|
|
$
|
(317
|
)
|
|
$
|
166
|
|
Loss (income) from discontinued operations
|
1
|
|
|
11
|
|
|
(7
|
)
|
|
(80
|
)
|
||||
Adjustments to reconcile net income (loss) to net cash provided by continuing operations:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
41
|
|
|
58
|
|
|
62
|
|
|
80
|
|
||||
Stock-based compensation
|
30
|
|
|
40
|
|
|
42
|
|
|
55
|
|
||||
Goodwill impairment charges
|
—
|
|
|
486
|
|
|
486
|
|
|
—
|
|
||||
Asset impairment charges
|
33
|
|
|
41
|
|
|
81
|
|
|
51
|
|
||||
Restructuring charges
|
3
|
|
|
1
|
|
|
3
|
|
|
17
|
|
||||
(Gain) loss on a real estate sale
|
(82
|
)
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Bad debt expense and other
|
(3
|
)
|
|
(3
|
)
|
|
(1
|
)
|
|
42
|
|
||||
Change in assets and liabilities, net of effects of acquisitions and dispositions:
|
|
|
|
|
|
|
|
|
|
||||||
Receivables
|
(19
|
)
|
|
68
|
|
|
162
|
|
|
(69
|
)
|
||||
Inventory, prepaid expenses and other current assets
|
3
|
|
|
6
|
|
|
(12
|
)
|
|
44
|
|
||||
Income taxes receivable/payable
|
55
|
|
|
4
|
|
|
(87
|
)
|
|
54
|
|
||||
Deferred income taxes
|
26
|
|
|
33
|
|
|
56
|
|
|
(38
|
)
|
||||
Other assets
|
(46
|
)
|
|
—
|
|
|
2
|
|
|
18
|
|
||||
Accounts payable and accrued liabilities
|
102
|
|
|
(41
|
)
|
|
(43
|
)
|
|
(87
|
)
|
||||
Accrued payroll and employee benefits
|
5
|
|
|
10
|
|
|
(21
|
)
|
|
(66
|
)
|
||||
Other long-term liabilities
|
2
|
|
|
(1
|
)
|
|
(10
|
)
|
|
2
|
|
||||
Total cash flows provided by operating activities of continuing operations
|
399
|
|
|
385
|
|
|
396
|
|
|
191
|
|
||||
Cash flows from investing activities of continuing operations:
|
|
|
|
|
|
|
|
||||||||
Proceeds on obligations of Leidos Holdings, Inc.
|
9
|
|
|
142
|
|
|
156
|
|
|
13
|
|
||||
Payments on obligations of Leidos Holdings, Inc.
|
(211
|
)
|
|
(419
|
)
|
|
(457
|
)
|
|
(501
|
)
|
||||
Expenditures for property, plant and equipment
|
(27
|
)
|
|
(29
|
)
|
|
(29
|
)
|
|
(53
|
)
|
||||
Acquisitions of businesses, net of cash acquired
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
||||
Payments on accrued purchase price related to prior acquisition
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net proceeds from sale of assets
|
79
|
|
|
—
|
|
|
—
|
|
|
65
|
|
||||
Proceeds from disposition of business, net of cash sold of $2 million
|
27
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Proceeds from U.S. Treasury cash grant
|
—
|
|
|
80
|
|
|
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
|
(138
|
)
|
|
(226
|
)
|
|
(250
|
)
|
|
(486
|
)
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||||||
|
January 1,
2016 |
|
January 2,
2015 |
|
January 30,
2015 |
|
January 31,
2014 |
||||||||
|
|
|
(unaudited)
|
|
|
|
|
||||||||
|
(in millions)
|
||||||||||||||
Cash flows from financing activities of continuing operations:
|
|
|
|
|
|
|
|
||||||||
Payments on notes payable and long-term debt
|
(39
|
)
|
|
(154
|
)
|
|
(177
|
)
|
|
(152
|
)
|
||||
Payments for deferred financing costs
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
||||
Payment from New SAIC for deferred financing costs
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
||||
Proceeds from real estate financing transaction
|
—
|
|
|
—
|
|
|
—
|
|
|
38
|
|
||||
Payments on real estate financing transaction
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
Total cash flows used in financing activities of continuing operations
|
(47
|
)
|
|
(154
|
)
|
|
(177
|
)
|
|
(111
|
)
|
||||
Increase (decrease) in cash and cash equivalents from continuing operations
|
214
|
|
|
5
|
|
|
(31
|
)
|
|
(406
|
)
|
||||
Cash flows from discontinued operations:
|
|
|
|
|
|
|
|
||||||||
Cash (used in) provided by operating activities of discontinued operations
|
(7
|
)
|
|
(5
|
)
|
|
15
|
|
|
118
|
|
||||
Cash provided by (used in) investing activities of discontinued operations
|
6
|
|
|
29
|
|
|
29
|
|
|
(17
|
)
|
||||
(Decrease) increase in cash and cash equivalents from discontinued operations
|
(1
|
)
|
|
24
|
|
|
44
|
|
|
101
|
|
||||
Total increase (decrease) in cash and cash equivalents
|
213
|
|
|
29
|
|
|
13
|
|
|
(305
|
)
|
||||
Cash and cash equivalents at beginning of year
|
443
|
|
|
430
|
|
|
430
|
|
|
735
|
|
||||
Cash and cash equivalents at end of year
|
$
|
656
|
|
|
$
|
459
|
|
|
$
|
443
|
|
|
$
|
430
|
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||
|
January 1,
2016 |
|
January 30,
2015 |
|
January 31,
2014 |
||||||
|
(in millions)
|
||||||||||
Strategic advisory services
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7
|
|
Legal and accounting services
|
—
|
|
|
—
|
|
|
2
|
|
|||
Lease termination and facility consolidation expenses
|
4
|
|
|
3
|
|
|
46
|
|
|||
Severance costs
|
—
|
|
|
—
|
|
|
10
|
|
|||
Separation transaction and restructuring expenses in operating income (loss)
|
4
|
|
|
3
|
|
|
65
|
|
|||
Less: income tax benefit
|
(2
|
)
|
|
(1
|
)
|
|
(25
|
)
|
|||
Separation transaction and restructuring expenses, net of tax
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
40
|
|
|
Severance Costs
|
|
Lease Termination and Facility Consolidation Expenses
|
|
Total
|
||||||
|
(in millions)
|
||||||||||
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
|
|
Charges
|
—
|
|
|
1
|
|
|
1
|
|
|||
Cash payments
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
|||
Balance as of January 1, 2016
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
7
|
|
|
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
|
|
Estimated useful lives (in years)
|
Customer relationships
|
8-10
|
Software and technology
|
9-15
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||
|
January 1,
2016 |
|
January 30,
2015 |
|
January 31,
2014 |
||||||
|
(in millions)
|
||||||||||
Revenues
|
$
|
17
|
|
|
$
|
39
|
|
|
$
|
2,712
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|||
Cost of revenues
|
17
|
|
|
39
|
|
|
2,447
|
|
|||
Selling, general and administrative expenses
|
—
|
|
|
—
|
|
|
42
|
|
|||
Separation transaction and restructuring expenses
|
—
|
|
|
—
|
|
|
55
|
|
|||
Operating income
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
168
|
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||
|
January 1,
2016 |
|
January 30,
2015 |
|
January 31,
2014 |
||||||
|
(in millions)
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
29
|
|
|
$
|
33
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|||
Cost of revenues
|
—
|
|
|
21
|
|
|
33
|
|
|||
Selling, general and administrative expenses (including impairment charges of $9 million for the fiscal year ended January 30, 2015)
|
2
|
|
|
29
|
|
|
25
|
|
|||
Intangible asset impairment charges
|
—
|
|
|
3
|
|
|
2
|
|
|||
Operating loss
|
$
|
(2
|
)
|
|
$
|
(24
|
)
|
|
$
|
(27
|
)
|
Non-operating income (expense)
|
$
|
1
|
|
|
$
|
11
|
|
|
$
|
(1
|
)
|
Loss from discontinued operations before income taxes
|
$
|
(1
|
)
|
|
$
|
(13
|
)
|
|
$
|
(28
|
)
|
|
January 31,
2014 |
||
|
($ in millions)
|
||
Identifiable intangible assets:
|
|
||
Customer relationships (finite-lived)
|
$
|
—
|
|
Other (finite-lived)
|
3
|
|
|
Weighted average lives of finite-lived intangibles:
|
|
||
Customer relationships
|
—
|
|
|
Other
|
12 years
|
|
|
All finite-lived intangible assets
|
12 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
|
|
|
NSS
|
|
HES
|
|
Total
|
||||||
|
(in millions)
|
||||||||||
Balance at January 31, 2014
|
$
|
788
|
|
|
$
|
905
|
|
|
$
|
1,693
|
|
Goodwill impairment
|
—
|
|
|
(486
|
)
|
|
(486
|
)
|
|||
Balance at January 30, 2015
|
$
|
788
|
|
|
$
|
419
|
|
|
$
|
1,207
|
|
Adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balance at January 1, 2016
|
$
|
788
|
|
|
$
|
419
|
|
|
$
|
1,207
|
|
|
January 1, 2016
|
|
January 30, 2015
|
||||||||||||||||||||
|
Gross
carrying
value
|
|
Accumulated
amortization
|
|
Net
carrying
value
|
|
Gross
carrying
value
|
|
Accumulated
amortization
|
|
Net
carrying
value
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
$
|
20
|
|
|
$
|
(16
|
)
|
|
$
|
4
|
|
|
$
|
70
|
|
|
$
|
(57
|
)
|
|
$
|
13
|
|
Software and technology
|
61
|
|
|
(44
|
)
|
|
17
|
|
|
52
|
|
|
(41
|
)
|
|
11
|
|
||||||
Total finite-lived intangible assets
|
81
|
|
|
(60
|
)
|
|
21
|
|
|
122
|
|
|
(98
|
)
|
|
24
|
|
||||||
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
In-process research and development
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
9
|
|
||||||
Trade names
|
4
|
|
|
—
|
|
|
4
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||||
Total indefinite-lived intangible assets
|
4
|
|
|
—
|
|
|
4
|
|
|
13
|
|
|
—
|
|
|
13
|
|
||||||
Total intangible assets
|
$
|
85
|
|
|
$
|
(60
|
)
|
|
$
|
25
|
|
|
$
|
135
|
|
|
$
|
(98
|
)
|
|
$
|
37
|
|
Fiscal Year Ending
|
|
||
|
(in millions)
|
||
2016
|
$
|
6
|
|
2017
|
5
|
|
|
2018
|
4
|
|
|
2019
|
2
|
|
|
2020
|
1
|
|
|
2021 and thereafter
|
3
|
|
|
|
$
|
21
|
|
|
January 1,
2016 |
|
January 30,
2015 |
||||
|
(in millions)
|
||||||
Billed and billable receivables
|
$
|
715
|
|
|
$
|
655
|
|
Unbilled receivables:
|
|
|
|
|
|
||
Amounts billable
|
187
|
|
|
230
|
|
||
Contract retentions
|
29
|
|
|
21
|
|
||
Allowance for doubtful accounts
|
(10
|
)
|
|
(10
|
)
|
||
|
$
|
921
|
|
|
$
|
896
|
|
|
January 1,
2016 |
|
January 30,
2015 |
||||
|
(in millions)
|
||||||
Electric generation facility
|
$
|
—
|
|
|
$
|
127
|
|
Computers and other equipment
|
161
|
|
|
166
|
|
||
Leasehold improvements
|
149
|
|
|
156
|
|
||
Buildings and improvements
|
57
|
|
|
107
|
|
||
Office furniture and fixtures
|
30
|
|
|
37
|
|
||
Land
|
15
|
|
|
26
|
|
||
Construction in progress
|
2
|
|
|
2
|
|
||
|
414
|
|
|
621
|
|
||
Less accumulated depreciation and amortization
|
(272
|
)
|
|
(313
|
)
|
||
|
$
|
142
|
|
|
$
|
308
|
|
|
January 1,
2016 |
|
January 30,
2015 |
||||
|
(in millions)
|
||||||
Inventory, prepaid expenses and other current assets:
|
|
|
|
||||
Prepaid income taxes and tax refunds receivable
|
$
|
56
|
|
|
$
|
102
|
|
Inventories
|
70
|
|
|
70
|
|
||
Restricted cash
|
17
|
|
|
30
|
|
||
Prepaid expenses
|
26
|
|
|
28
|
|
||
Deferred income taxes
|
—
|
|
|
12
|
|
||
Other
|
47
|
|
|
31
|
|
||
|
$
|
216
|
|
|
$
|
273
|
|
Accounts payable and accrued liabilities:
|
|
|
|
||||
Accrued liabilities
|
$
|
322
|
|
|
$
|
327
|
|
Accounts payable
|
314
|
|
|
244
|
|
||
Collections in excess of revenues on uncompleted contracts and deferred revenue
|
133
|
|
|
104
|
|
||
|
$
|
769
|
|
|
$
|
675
|
|
Accrued payroll and employee benefits:
|
|
|
|
||||
Salaries, bonuses and amounts withheld from employees’ compensation
|
$
|
142
|
|
|
$
|
138
|
|
Accrued vacation
|
121
|
|
|
123
|
|
||
Accrued contributions to employee benefit plans
|
5
|
|
|
3
|
|
||
|
$
|
268
|
|
|
$
|
264
|
|
Other long-term liabilities:
|
|
|
|
||||
Deferred compensation
|
$
|
41
|
|
|
$
|
39
|
|
Lease related obligations
|
35
|
|
|
31
|
|
||
Deferred tax liabilities
|
34
|
|
|
21
|
|
||
Accrued pension liabilities
|
—
|
|
|
8
|
|
||
Liabilities for uncertain tax positions
|
5
|
|
|
6
|
|
||
Other
|
68
|
|
|
63
|
|
||
|
$
|
183
|
|
|
$
|
168
|
|
|
January 1,
2016 |
|
January 30,
2015 |
|
January 31,
2014 |
||||||
|
(in millions)
|
||||||||||
Other income (expense), net
|
|
|
|
|
|
||||||
Gain on sale of former headquarters
|
$
|
82
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other income (expense), net
|
2
|
|
|
5
|
|
|
(8
|
)
|
|||
|
$
|
84
|
|
|
$
|
5
|
|
|
$
|
(8
|
)
|
Interest rate swaps
|
|
Hedged items
|
||||||||||||
Balance sheet line item
|
January 1,
2016 |
January 30,
2015 |
|
Balance sheet line item
|
January 1,
2016 |
January 30,
2015 |
||||||||
(in millions)
|
||||||||||||||
Other assets
|
$
|
8
|
|
$
|
17
|
|
|
Notes payable and long-term debt, net of current portion
|
$
|
8
|
|
$
|
17
|
|
|
Stated
interest rate |
|
Effective
interest rate |
|
January 1,
2016 |
|
January 30,
2015 |
||||||
|
(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
|
%
|
|
$
|
457
|
|
|
$
|
466
|
|
$300 million notes issued in fiscal 2011, which mature in December 2040
|
5.95
|
%
|
|
6.03
|
%
|
|
218
|
|
|
232
|
|
||
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
|
%
|
|
5.88
|
%
|
|
159
|
|
|
182
|
|
||
Capital leases and other notes payable due on various dates through fiscal 2020
|
0%-5.55%
|
|
|
Various
|
|
|
6
|
|
|
38
|
|
||
Total notes payable and long-term debt
|
|
|
|
|
1,088
|
|
|
1,166
|
|
||||
Less current portion
|
|
|
|
|
2
|
|
|
2
|
|
||||
Total notes payable and long-term debt, net of current portion
|
|
|
|
|
$
|
1,086
|
|
|
$
|
1,164
|
|
||
Fair value of notes payable and long-term debt
|
|
|
|
|
$
|
1,060
|
|
|
$
|
1,152
|
|
Fiscal Year Ending
|
|
||
|
(in millions)
|
||
2016
|
$
|
2
|
|
2017
|
2
|
|
|
2018
|
1
|
|
|
2019
|
1
|
|
|
2020
|
—
|
|
|
2021 and thereafter
|
1,087
|
|
|
Total principal payments
|
1,093
|
|
|
Less unamortized discount
|
5
|
|
|
|
$
|
1,088
|
|
|
January 1,
2016 |
|
January 30,
2015 |
||||
|
(in millions)
|
||||||
Foreign currency translation adjustments, net of taxes of $0 million as of January 1, 2016 and January 30, 2015, respectively
|
$
|
—
|
|
|
$
|
1
|
|
Unrecognized net loss on settled derivative instruments associated with outstanding debt, net of taxes of $3 million as of January 1, 2016 and January 30, 2015, respectively
|
(4
|
)
|
|
(5
|
)
|
||
Unrecognized net loss on defined benefit plan, net of taxes of $3 million and $5 million as of January 1, 2016 and January 30, 2015, respectively
|
(4
|
)
|
|
(7
|
)
|
||
Total accumulated other comprehensive loss, net of taxes of $6 million and $8 million as of January 1, 2016 and January 30, 2015, respectively
|
$
|
(8
|
)
|
|
$
|
(11
|
)
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||
|
January 1,
2016 |
|
January 2,
2015 |
|
January 30,
2015 |
|
January 31,
2014 |
||||
|
|
|
(unaudited)
|
|
|
|
|
||||
|
(in millions)
|
||||||||||
Basic weighted average number of shares outstanding
|
73
|
|
|
74
|
|
|
74
|
|
|
83
|
|
Dilutive common share equivalents—stock options and other stock awards
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Diluted weighted average number of shares outstanding
|
74
|
|
|
74
|
|
|
74
|
|
|
83
|
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||||||
|
January 1,
2016 |
|
January 2,
2015 |
|
January 30,
2015 |
|
January 31,
2014 |
||||||||
|
|
|
(unaudited)
|
|
|
|
|
||||||||
Basic:
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations
|
$
|
3.33
|
|
|
$
|
(4.36
|
)
|
|
$
|
(4.46
|
)
|
|
$
|
0.98
|
|
(Loss) income from discontinued operations
|
(0.01
|
)
|
|
(0.15
|
)
|
|
0.10
|
|
|
0.96
|
|
||||
|
$
|
3.32
|
|
|
$
|
(4.51
|
)
|
|
$
|
(4.36
|
)
|
|
$
|
1.94
|
|
Diluted:
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations
|
$
|
3.28
|
|
|
$
|
(4.36
|
)
|
|
$
|
(4.46
|
)
|
|
$
|
0.98
|
|
(Loss) income from discontinued operations
|
(0.01
|
)
|
|
(0.15
|
)
|
|
0.10
|
|
|
0.96
|
|
||||
|
$
|
3.27
|
|
|
$
|
(4.51
|
)
|
|
$
|
(4.36
|
)
|
|
$
|
1.94
|
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||
|
January 1,
2016 |
|
January 2,
2015 |
|
January 30,
2015 |
|
January 31,
2014 |
||||
|
|
|
(unaudited)
|
|
|
|
|
||||
|
(in millions)
|
||||||||||
Stock options excluded
|
1
|
|
|
4
|
|
|
4
|
|
|
5
|
|
Vesting stock awards excluded
|
—
|
|
|
3
|
|
|
3
|
|
|
3
|
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||
|
January 1,
2016 |
|
January 30,
2015 |
|
January 31,
2014 |
||||||
|
(in millions)
|
||||||||||
Stock-based compensation expense:
|
|
|
|
|
|
||||||
Stock options
|
$
|
3
|
|
|
$
|
5
|
|
|
$
|
10
|
|
Vesting stock awards
|
27
|
|
|
35
|
|
|
46
|
|
|||
Vested stock awards
|
—
|
|
|
2
|
|
|
—
|
|
|||
Total stock-based compensation expense recorded in continuing operations
|
$
|
30
|
|
|
$
|
42
|
|
|
$
|
56
|
|
Total stock-based compensation expense recorded in discontinued operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21
|
|
Tax benefits recognized from stock-based compensation
|
$
|
12
|
|
|
$
|
16
|
|
|
$
|
22
|
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||||||
|
January 1,
2016 |
|
January 30,
2015 |
|
January 31, 2014 (Grants After Spin)
|
|
January 31, 2014 (Grants Before Spin)
|
||||||||
Weighted average grant-date fair value
|
$
|
6.72
|
|
|
$
|
6.15
|
|
|
$
|
9.04
|
|
|
$
|
9.48
|
|
Expected term (in years)
|
4.7
|
|
|
4.7
|
|
|
4.8
|
|
|
5.0
|
|
||||
Expected volatility
|
24.5
|
%
|
|
25.1
|
%
|
|
29.5
|
%
|
|
30.0
|
%
|
||||
Risk-free interest rate
|
1.4
|
%
|
|
1.6
|
%
|
|
1.4
|
%
|
|
1.4
|
%
|
||||
Dividend yield
|
2.9
|
%
|
|
2.9
|
%
|
|
2.4
|
%
|
|
2.8
|
%
|
|
Shares of
stock under
stock options
|
|
Weighted
average
exercise price
|
|
Weighted
average
remaining
contractual
term
|
|
Aggregate
intrinsic value
|
|||||
|
(in millions)
|
|
|
|
(in years)
|
|
(in millions)
|
|||||
Outstanding at January 31, 2013
|
4.9
|
|
|
$
|
67.24
|
|
|
3.0
|
|
—
|
|
|
Options granted
|
1.4
|
|
|
54.86
|
|
|
|
|
|
|||
Special dividend adjustments
|
0.4
|
|
|
|
|
|
|
|
||||
Options forfeited or expired
|
(1.3
|
)
|
|
71.80
|
|
|
|
|
|
|||
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
|
|
Options granted
|
0.6
|
|
|
42.64
|
|
|
|
|
|
|||
Options forfeited or expired
|
(0.9
|
)
|
|
42.03
|
|
|
|
|
|
|||
Options exercised
|
(0.9
|
)
|
|
38.53
|
|
|
|
|
9
|
|
||
Outstanding at January 1, 2016
|
2.4
|
|
|
$
|
38.21
|
|
|
4.5
|
|
$
|
43
|
|
Exercisable at January 1, 2016
|
0.8
|
|
|
$
|
38.39
|
|
|
3.6
|
|
$
|
15
|
|
Vested and expected to vest in the future as of January 1, 2016
|
2.3
|
|
|
$
|
38.11
|
|
|
4.5
|
|
$
|
41
|
|
|
Shares of stock
under stock
awards
|
|
Weighted
average grant-
date fair value
|
|
|||
|
(in millions)
|
|
|
|
|
||
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
|
|
|
Awards granted
|
0.5
|
|
|
42.95
|
|
|
|
Awards forfeited
|
(0.4
|
)
|
|
40.10
|
|
|
|
Awards vested
|
(0.8
|
)
|
|
40.05
|
|
|
|
Unvested stock awards at January 1, 2016
|
2.3
|
|
|
$
|
38.97
|
|
|
|
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
|
|
|
Awards granted
|
0.2
|
|
|
44.30
|
|
|
|
Awards forfeited
|
(0.1
|
)
|
|
43.49
|
|
|
|
Unvested at January 1, 2016
|
0.2
|
|
|
$
|
43.35
|
|
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||
|
January 1,
2016 |
|
January 30,
2015 |
|
January 31,
2014 |
||||||
|
(in millions)
|
||||||||||
Current:
|
|
|
|
|
|
||||||
Federal and foreign
|
$
|
71
|
|
|
$
|
16
|
|
|
$
|
32
|
|
State
|
14
|
|
|
(6
|
)
|
|
13
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal and foreign
|
20
|
|
|
26
|
|
|
(28
|
)
|
|||
State
|
7
|
|
|
11
|
|
|
(13
|
)
|
|||
Total
|
$
|
112
|
|
|
$
|
47
|
|
|
$
|
4
|
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||
|
January 1,
2016 |
|
January 30,
2015 |
|
January 31,
2014 |
||||||
|
(dollars in millions)
|
||||||||||
Amount computed at the statutory federal income tax rate (35%)
|
$
|
124
|
|
|
$
|
(99
|
)
|
|
$
|
31
|
|
State income taxes, net of federal tax benefit
|
14
|
|
|
3
|
|
|
—
|
|
|||
Taxable conversion of subsidiary
|
—
|
|
|
(116
|
)
|
|
—
|
|
|||
Change in valuation allowance for deferred tax assets
|
(21
|
)
|
|
105
|
|
|
—
|
|
|||
Change in accruals for uncertain tax positions
|
(4
|
)
|
|
2
|
|
|
(5
|
)
|
|||
Research and development credits
|
(4
|
)
|
|
(4
|
)
|
|
(3
|
)
|
|||
Dividends paid to employee stock ownership plan
|
(3
|
)
|
|
(4
|
)
|
|
(22
|
)
|
|||
U.S. manufacturing activity benefit
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||
Non-deductible penalties
|
—
|
|
|
—
|
|
|
4
|
|
|||
Non-deductible goodwill
|
—
|
|
|
156
|
|
|
—
|
|
|||
Other
|
6
|
|
|
4
|
|
|
2
|
|
|||
Total
|
$
|
112
|
|
|
$
|
47
|
|
|
$
|
4
|
|
Effective income tax rate
|
31.5
|
%
|
|
(16.6
|
)%
|
|
4.5
|
%
|
|
January 1,
2016 |
|
January 30,
2015 |
||||
|
(in millions)
|
||||||
Accrued vacation and bonuses
|
$
|
45
|
|
|
$
|
44
|
|
Investments
|
3
|
|
|
3
|
|
||
Deferred compensation
|
39
|
|
|
39
|
|
||
Vesting stock awards
|
21
|
|
|
28
|
|
||
Credits and net operating losses carryovers
|
15
|
|
|
9
|
|
||
Employee benefit contributions
|
—
|
|
|
4
|
|
||
Capital loss carryover
|
91
|
|
|
113
|
|
||
Reserves
|
31
|
|
|
41
|
|
||
Deferred rent and tenant allowances
|
14
|
|
|
15
|
|
||
Other
|
13
|
|
|
15
|
|
||
Total deferred tax assets
|
272
|
|
|
311
|
|
||
Valuation allowance
|
(102
|
)
|
|
(120
|
)
|
||
Deferred tax assets, net of valuation allowance
|
170
|
|
|
191
|
|
||
|
|
|
|
||||
Deferred revenue
|
(36
|
)
|
|
(47
|
)
|
||
Fixed asset basis differences
|
(1
|
)
|
|
—
|
|
||
Purchased intangible assets
|
(138
|
)
|
|
(121
|
)
|
||
Partnership interest
|
(11
|
)
|
|
(10
|
)
|
||
Employee benefit contributions
|
(1
|
)
|
|
—
|
|
||
Other
|
(9
|
)
|
|
(8
|
)
|
||
Total deferred tax liabilities
|
(196
|
)
|
|
(186
|
)
|
||
Net deferred tax (liabilities) assets
|
$
|
(26
|
)
|
|
$
|
5
|
|
|
January 1,
2016 |
|
January 30,
2015 |
||||
|
(in millions)
|
||||||
Net current deferred tax assets
|
$
|
—
|
|
|
$
|
12
|
|
Net non-current deferred tax assets
|
8
|
|
|
14
|
|
||
Net non-current deferred tax liabilities
|
(34
|
)
|
|
(21
|
)
|
||
Total net deferred tax (liabilities) assets
|
$
|
(26
|
)
|
|
$
|
5
|
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||
|
January 1,
2016 |
|
January 30,
2015 |
|
January 31,
2014 |
||||||
|
(in millions)
|
||||||||||
Unrecognized tax benefits at beginning of year
|
$
|
17
|
|
|
$
|
14
|
|
|
$
|
21
|
|
Additions for tax positions related to current year
|
5
|
|
|
2
|
|
|
—
|
|
|||
Additions for tax positions related to prior years
|
4
|
|
|
11
|
|
|
2
|
|
|||
Reductions for tax positions related to prior years
|
(15
|
)
|
|
(5
|
)
|
|
—
|
|
|||
Settlements with taxing authorities
|
—
|
|
|
(1
|
)
|
|
—
|
|
|||
Lapse of statute of limitations
|
—
|
|
|
(4
|
)
|
|
(9
|
)
|
|||
Unrecognized tax benefits at end of year
|
$
|
11
|
|
|
$
|
17
|
|
|
$
|
14
|
|
Unrecognized tax benefits that, if recognized, would affect the effective income tax rate
|
$
|
7
|
|
|
$
|
5
|
|
|
$
|
6
|
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||
|
January 1,
2016 |
|
January 30,
2015 |
|
January 31,
2014 |
||||||
|
(in millions)
|
||||||||||
Gross rental expense
|
$
|
83
|
|
|
$
|
107
|
|
|
$
|
181
|
|
Less sublease income
|
(8
|
)
|
|
(9
|
)
|
|
(6
|
)
|
|||
Net rental expense
|
$
|
75
|
|
|
$
|
98
|
|
|
$
|
175
|
|
Fiscal Year Ending
|
Operating lease
commitment |
|
Sublease
receipts |
||||
|
(in millions)
|
||||||
2016
|
$
|
84
|
|
|
$
|
4
|
|
2017
|
69
|
|
|
2
|
|
||
2018
|
58
|
|
|
2
|
|
||
2019
|
45
|
|
|
1
|
|
||
2020
|
31
|
|
|
1
|
|
||
2021 and thereafter
|
62
|
|
|
2
|
|
||
Total
|
$
|
349
|
|
|
$
|
12
|
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||||||
|
January 1,
2016 |
|
January 2,
2015 |
|
January 30,
2015 |
|
January 31,
2014 |
||||||||
|
|
|
(unaudited)
|
|
|
|
|
||||||||
|
(in millions)
|
||||||||||||||
Vested stock issued as settlement of annual bonus accruals
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
2
|
|
Stock issued in lieu of cash dividends
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
18
|
|
Accrued dividends declared
|
$
|
2
|
|
|
$
|
25
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Capital lease obligations
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Promissory note, net received for disposition of business
|
$
|
72
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Promissory note, net received from a real estate sale
|
$
|
20
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Fair value of assets acquired in acquisitions
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
259
|
|
Cash paid in acquisitions
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
Forgiveness of accounts receivable to acquire equity interest in business combination
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(105
|
)
|
Accrued liability for acquisition of business
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
Liabilities assumed in acquisitions
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
148
|
|
Cash paid for interest (including discontinued operations)
|
$
|
50
|
|
|
$
|
74
|
|
|
$
|
74
|
|
|
$
|
82
|
|
Cash paid for income taxes, net of refunds (including discontinued operations)
|
$
|
31
|
|
|
$
|
22
|
|
|
$
|
55
|
|
|
$
|
63
|
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||
|
January 1,
2016 |
|
January 30,
2015 |
|
January 31,
2014 |
||||||
|
(in millions)
|
||||||||||
Revenues:
|
|
|
|
|
|
||||||
National Security Solutions
|
$
|
3,210
|
|
|
$
|
3,594
|
|
|
$
|
4,049
|
|
Health and Engineering
|
1,496
|
|
|
1,485
|
|
|
1,718
|
|
|||
Corporate and Other
|
6
|
|
|
(16
|
)
|
|
(9
|
)
|
|||
Intersegment elimination
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||
Total revenues
|
$
|
4,712
|
|
|
$
|
5,063
|
|
|
$
|
5,755
|
|
Operating income (loss):
|
|
|
|
|
|
||||||
National Security Solutions
|
$
|
263
|
|
|
$
|
286
|
|
|
$
|
292
|
|
Health and Engineering
|
76
|
|
|
(472
|
)
|
|
20
|
|
|||
Corporate and Other
|
(19
|
)
|
|
(28
|
)
|
|
(149
|
)
|
|||
Total operating income (loss)
|
$
|
320
|
|
|
$
|
(214
|
)
|
|
$
|
163
|
|
Amortization of intangible assets:
|
|
|
|
|
|
||||||
National Security Solutions
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3
|
|
Health and Engineering
|
8
|
|
|
15
|
|
|
32
|
|
|||
Total amortization of intangible assets
|
$
|
8
|
|
|
$
|
15
|
|
|
$
|
35
|
|
|
11 Months Ended
|
|
12 Months Ended
|
|||||
|
January 1,
2016 |
|
January 30,
2015 |
|
January 31,
2014 |
|||
U.S. Government
|
76
|
%
|
|
79
|
%
|
|
78
|
%
|
U.S. DoD
|
64
|
%
|
|
67
|
%
|
|
68
|
%
|
U.S. Army
|
14
|
%
|
|
16
|
%
|
|
19
|
%
|
Maryland Procurement Office
|
10
|
%
|
|
10
|
%
|
|
8
|
%
|
|
Three Months Ended
|
||||||||||||||
|
April 3,
2015 |
|
July 3,
2015 |
|
October 2,
2015 |
|
January 1,
2016 |
||||||||
|
(in millions, except per share amounts)
|
||||||||||||||
Calendar 2015
(1)(4)
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
1,246
|
|
|
$
|
1,257
|
|
|
$
|
1,302
|
|
|
$
|
1,281
|
|
Operating income
|
$
|
38
|
|
|
$
|
64
|
|
|
$
|
94
|
|
|
$
|
102
|
|
Income from continuing operations
(2)
|
$
|
23
|
|
|
$
|
37
|
|
|
$
|
49
|
|
|
$
|
127
|
|
Income from discontinued operations
|
$
|
18
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Net income
(2)
|
$
|
41
|
|
|
$
|
37
|
|
|
$
|
49
|
|
|
$
|
127
|
|
Basic earnings per share
(3)
|
$
|
0.32
|
|
|
$
|
0.51
|
|
|
$
|
0.68
|
|
|
$
|
1.76
|
|
Diluted earnings per share
(3)
|
$
|
0.31
|
|
|
$
|
0.50
|
|
|
$
|
0.67
|
|
|
$
|
1.72
|
|
|
Three Months Ended
|
||||||||||||||
|
May 2,
2014 |
|
August 1,
2014 |
|
October 31,
2014 |
|
January 30,
2015 |
||||||||
|
(in millions, except per share amounts)
|
||||||||||||||
Fiscal 2015
(5)
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
1,312
|
|
|
$
|
1,306
|
|
|
$
|
1,276
|
|
|
$
|
1,169
|
|
Operating income (loss)
|
$
|
87
|
|
|
$
|
(410
|
)
|
|
$
|
72
|
|
|
$
|
37
|
|
Income (loss) from continuing operations
(2)
|
$
|
45
|
|
|
$
|
(439
|
)
|
|
$
|
38
|
|
|
$
|
26
|
|
(Loss) income from discontinued operations
|
$
|
(8
|
)
|
|
$
|
1
|
|
|
$
|
(4
|
)
|
|
$
|
18
|
|
Net income (loss)
(2)
|
$
|
37
|
|
|
$
|
(438
|
)
|
|
$
|
34
|
|
|
$
|
44
|
|
Basic earnings (loss) per share
(3)
|
$
|
0.58
|
|
|
$
|
(5.93
|
)
|
|
$
|
0.52
|
|
|
$
|
0.36
|
|
Diluted earnings (loss) per share
(3)
|
$
|
0.58
|
|
|
$
|
(5.93
|
)
|
|
$
|
0.51
|
|
|
$
|
0.35
|
|
(1)
|
On March 20, 2015, the Board of Directors approved the amendment and restatement of the bylaws of Leidos and Leidos, Inc. to change both Leidos' and Leidos, Inc.'s year end from the Friday nearest the end of January to the Friday nearest the end of December. In the first quarter of calendar 2015, the Company began reporting financial results on the basis of the new fiscal year end. The results for the month of January 2015, which are included in the audited results for fiscal 2015, were also included in the reported first quarter of calendar 2015. However, the results for the month of January 2015 are not included in the results for the 11-month period ended January 1, 2016. As a result, the four quarters of calendar 2015 are not additive to the 11-month period ended January 1, 2016.
|
(2)
|
Income (loss) from continuing operations and net income (loss) relate to Leidos Holdings, Inc. only. See Leidos, Inc.'s amounts detailed below.
|
(3)
|
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 calendar 2015 and fiscal 2015.
|
(4)
|
Calendar 2015 quarterly results include tangible asset impairment charges of
$40 million
and
$29 million
in the first and second quarter, respectively, intangible asset impairment charges of
$4 million
in the third quarter and an
$82 million
gain on a real estate sale in the fourth quarter. The first quarter impairment charge occurred during January 2015 and is included in both the first quarter of calendar 2015 and the fourth quarter of fiscal 2015 results. For further information, see Note 3 - Acquisitions, Note 4 - Goodwill and Intangible Assets and Note 16 - Leases.
|
(5)
|
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.
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
|
(in millions)
|
||||||||||||||
Calendar 2015
(1)
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
25
|
|
|
$
|
39
|
|
|
$
|
51
|
|
|
$
|
128
|
|
Net income
|
$
|
43
|
|
|
$
|
39
|
|
|
$
|
51
|
|
|
$
|
127
|
|
Fiscal 2015
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations
|
$
|
46
|
|
|
$
|
(437
|
)
|
|
$
|
40
|
|
|
$
|
27
|
|
Net income (loss)
|
$
|
38
|
|
|
$
|
(436
|
)
|
|
$
|
36
|
|
|
$
|
45
|
|
(1)
|
Refer to footnote 1 of the previous table for further detail regarding the periods being presented for calendar 2015.
|
1.
Purpose
|
1
|
|
2.
Definitions
|
1
|
|
3.
Eligibility
|
5
|
|
4.
Deferrals
|
6
|
|
5.
Participant Accounts and Investments
|
7
|
|
6.
Payout of Participants’ Accounts Attributable to Deferrals with respect to Plan Years commencing prior to January 1, 2015
|
8
|
|
7.
Payout of Participants’ Accounts Attributable to Deferrals with respect to Plan Years commencing on or after January 1, 2015
|
11
|
|
8.
Beneficiary Designation
|
13
|
|
9.
Hardship and Acceleration Provisions
|
14
|
|
10.
Amendment and Termination of Plan; Change in Control
|
15
|
|
11.
Nature of Accounts
|
16
|
|
12.
Committee
|
17
|
|
13.
Limitation on Rights of Participants
|
20
|
|
14.
Non-Transferability
|
20
|
|
15.
Restriction Against Assignment
|
20
|
|
16.
Forfeiture
|
20
|
|
17.
Mailing of Payments
|
21
|
|
18.
Governing Law
|
21
|
|
19.
Illegality of Particular Provision
|
21
|
|
20.
Interpretation
|
21
|
|
21.
Tax Effects
|
21
|
|
22.
Receipt or Release
|
21
|
|
23.
Records
|
22
|
|
24.
Arbitration
|
22
|
|
25.
Recoupment of Awards
|
22
|
|
6.
|
Payout of Participants’ Accounts Attributable to Deferrals with respect to Plan Years commencing prior to January 1, 2015
|
LEIDOS, INC.
|
|
|
|
By:
|
|
|
/s/ Sarah K Allen
|
|
Name: Sarah K. Allen
|
|
Title: Chief Human Resource Officer
|
5
|
|
|
5
|
|
|
8
|
|
|
3.1.
Designation by Deferral Authority
|
8
|
|
3.2.
Deferral Elections.
|
9
|
|
3.3.
Amounts Subject to Deferral
|
10
|
|
3.4.
Deferral Election Irrevocable
|
10
|
|
3.5
Deferrals May be Held in Trust
|
11
|
|
11
|
|
|
4.1.
Trust Fund Established
|
11
|
|
4.2.
Company, Board, Deferral Authority, Committee and Trustee Not Responsible for Adequacy of Trust Fund
|
11
|
|
4.3.
Invasion of Trust by Creditors
|
12
|
|
4.4.
Trust Expenses
|
12
|
|
12
|
|
|
5.1.
Committee to Maintain Accounts
|
12
|
|
5.2.
Additional Accounting Procedures
|
12
|
|
5.3.
Limitation on Benefits.
|
12
|
|
5.4.
Vesting of Account Balances
|
13
|
|
5.5.
Ordinary Dividend Equivalents
|
13
|
|
14
|
|
|
6.1.
Power to Vote Stock Rests With Trustee
|
14
|
|
6.2.
Tender Offers
|
14
|
|
6.3.
Dividends
|
14
|
|
14
|
|
|
7.1.
Time of Commencement of Distribution
|
14
|
|
7.2.
Form of Distribution
|
14
|
|
7.3.
Methods of Distribution
|
15
|
|
17
|
|
|
8.1.
Distribution of Retirement/Termination Account
|
17
|
|
8.2.
Distribution of Specified Date Account.
|
18
|
|
8.3.
Modifications to Distribution Elections
|
18
|
|
8.4.
Effect of Vesting on Distributions
|
19
|
|
20
|
|
|
9.1.
Change in Control
|
20
|
|
9.2.
Hardship
|
20
|
|
9.3.
Beneficiary Designation.
|
21
|
|
9.4.
Distribution to Guardian
|
22
|
|
9.5.
Withholding of Taxes
|
22
|
|
9.6.
Small Balance Cashouts.
|
22
|
|
22
|
|
10.1.
No Direct Interest in Trust Assets
|
23
|
|
23
|
|
|
11.1.
Termination and Amendments
|
23
|
|
23
|
|
|
12.1.
Committee
|
23
|
|
12.2.
Committee Powers
|
23
|
|
12.3.
Plan Expenses
|
25
|
|
12.4.
Reliance Upon Documents and Opinions
|
25
|
|
12.5.
Requirement of Proof
|
25
|
|
12.6.
Reliance on Committee Memorandum
|
25
|
|
12.7.
Limitation on Liability
|
25
|
|
12.8.
Indemnification
|
26
|
|
26
|
|
|
13.1.
Restrictions on Plan Interest
|
26
|
|
13.2.
No Enlargement of Employee Rights
|
27
|
|
13.3.
Rights of Repurchase and First Refusal for the Company
|
27
|
|
13.4.
Mailing of Payments
|
28
|
|
13.5.
Inability to Locate Participant or Beneficiary
|
28
|
|
13.6.
Governing Law
|
28
|
|
13.7.
Illegality of Particular Provision
|
28
|
|
13.8.
Interpretation
|
28
|
|
13.9.
Tax Effects
|
28
|
|
13.10.
Receipt or Release
|
29
|
|
13.11.
Records
|
29
|
|
13.12.
Arbitration
|
29
|
|
13.13.
Recoupment of Awards
|
29
|
|
3.5
|
Deferrals May be Held in Trust
.
|
LEIDOS, INC.
|
|
|
|
By:
|
|
|
/s/ Sarah K. Allen
|
|
Name: Sarah K. Allen
|
|
Title: Chief Human Resource Officer
|
|
Leidos Holdings, Inc.
|
|
|
[Executive Name]
|
«Executive_Name»
Employee Number: «emp_no»
|
|
|
Signature
|
A.
|
_________ acknowledges that [he/she] has read and understands the terms of this Agreement.
|
B.
|
__________ acknowledges that [he/she] has been advised in writing to consult with an attorney, if desired, concerning this Agreement and has received all advice [he/she] deems necessary concerning this Agreement.
|
C.
|
__________ acknowledges that [he/she] has been given twenty-one (21) days to consider whether or not to enter into this Agreement, has taken as much of this time as necessary to consider whether to enter into this Agreement, and has chosen to enter into this Agreement freely, knowingly and voluntarily.
|
D.
|
For a seven day period following the execution of this Agreement, _________ may revoke this Agreement by delivering a written revocation to at the Company. This Agreement shall not become effective and enforceable until the revocation period has expired.
|
|
Dated: ____________________, 20__
|
|
[Signature]
|
|
[Print Name]
|
Leidos Holdings, Inc.
|
|
By:
|
Name:
|
Its:
|
|
|
|
[Signature]
|
Subsidiaries of Leidos Holdings, Inc.
|
Jurisdiction of Incorporation
|
Leidos, Inc.
|
Delaware
|
Lion Merger Co.
|
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
|
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 Services, Inc.
|
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 Transition 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 Transition 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/ James C. Reagan
|
James C. Reagan
|
Chief Financial Officer
|
/s/ Roger A. Krone
|
Roger A. Krone
|
Chief Executive Officer
|
/s/ James C. Reagan
|
James C. Reagan
|
Chief Financial Officer
|