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Commission File Number: 001-33072
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Leidos Holdings, Inc.
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(Exact name of registrant as specified in its charter)
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Delaware
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20-3562868
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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11951 Freedom Drive, Reston, Virginia
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20190
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(Address of principal executive office)
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(Zip Code)
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(571) 526-6000
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(Registrant's 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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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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Item 16.
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Form 10-K Summary
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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 U.S. 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 Research 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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Integrated Systems -
We offer extensive software development capabilities for intelligence and information systems and deliver solutions to the U.S. Intelligence Community, DoD, military services, DHS and the U.K. Ministry of Defense ("U.K. 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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Global Services -
We provide high-end services to the U.S. 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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Enterprise IT Services -
We deliver enterprise operations; network services and communications; application management and optimization; data center operations, migration and consolidation; and data storage. We apply these solutions to physical, virtualized cloud, and hybrid form networks and provide the services and oversight clients require for IT infrastructure transformation, implementation and operations.
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Software Development and Integrated Systems -
We offer extensive software development capabilities for intelligence and information systems and deliver solutions to the U.S. Intelligence Community, DoD, military services, DHS and the U.K. MoD. Software and integrated systems offerings include development of small and large scale information technology applications, embedded systems, and mobile applications. We deliver expertise across an extensive list of programming languages applicable to traditional, cloud, mobile and embedded applications and employ additional and agile development methods depending on the application.
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Cybersecurity -
We provide cybersecurity solutions with deep technical, analytic, and cyber mission experience that help clients anticipate threats to their networks and their data, ensure their cyber approach is executed with established best practices and enable them to respond to cyber events. Our cybersecurity solutions detect and manage the most sophisticated cyber threats. We design, develop, deploy and support information-centric software systems for complex, data-driven national security challenges and have a significant cybersecurity business based on its military and intelligence work with the federal government.
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Data Analytics -
Our data analytics services provide clients with the resources to make informed decisions to maximize performance by leveraging a wide range of problem-solving techniques including simulation, mathematical optimization, queuing theory, and machine learning to improve decision-making and efficiency.
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Air Traffic Management -
We deliver air traffic management systems and expertise and deploy some of the world’s most advanced and cost-effective systems to provide air traffic management solutions to U.S. and international customers. Solutions include the En Route Automation Modernization system for the Federal Aviation Administration’s Next Generation Air Transportation System; air traffic optimization, including Time Based Flow Management, enabling air traffic controllers to manage aircraft in congested airspace more efficiently; and Flight Services supporting pre-flight, inflight, operational and special services, en route communications, search and rescue services and aeronautical and meteorological information analytics.
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Health Management Services -
We manage critical data and infrastructure for some of the largest federal agencies in the U.S. healthcare system. We provide customers with the ability to integrate technology, people and processes into efficient, secure and scalable operations to secure patient information and support better healthcare outcomes through data management; security; interoperability capabilities for next generation data centers; health IT system modernization; and big data analytics.
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Energy Management and Operations -
We provide environmental services and solutions to the U.S. Government and commercial customers both directly and through joint ventures that perform management and operations (“M&O”) services at U.S. Government sites. These services and solutions include M&O services at the U.S. Government’s former nuclear fuel production site in Hanford, Washington and M&O services at the Y-12 national security site in Oak Ridge, Tennessee and the Pantex site in Amarillo, Texas; critical infrastructure for nuclear operations and national nuclear materials tracking, engineering systems; and national environmental emergency response.
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Acquisition, Program Management and Logistics -
Our acquisition, program management, and logistics capabilities help clients design, implement and deliver a wide range of operational programs, including those related to acquisition and contracts, supplier and budget management. Services delivered include strategy development, policy support, logistics management, staff development and deployment, modeling and simulation, testing and validation, information assurance and data management. Solutions include mission critical 24x7 M&O services, development and engineering support, complex logistics and infrastructure support in some of the harshest environments in the world; and human capital and training solutions.
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Federal Health -
We developed, fielded and currently maintain a full end-to-end Electronic Health Record ("EHR") system 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. We provide information technology solutions, scientific support and behavioral health services to the Veterans Administration, National Institutes of Health, DoD and other government customers. Within the DoD, we serve the Defense Health Agency, which provides healthcare to active duty and retired military personnel and their dependents. We strive to improve the availability, quality and cost effectiveness of healthcare for our military service members and their families.
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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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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 services, 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 services 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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12 Months Ended
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11 Months Ended
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12 Months Ended
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December 30,
2016 |
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January 1,
2016 |
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January 30,
2015 |
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U.S. Government
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81
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%
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76
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%
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79
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%
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U.S. DoD
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56
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%
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64
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%
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67
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%
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U.S. Army
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14
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%
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14
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%
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16
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%
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Maryland Procurement Office
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7
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%
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10
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%
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10
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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, SAIC, Vencore and KeyW;
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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"), Dell, Amazon Web Services, AT&T, RSA, Verizon and Unisys Corporation;
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contractors focused on supplying homeland security product solutions, including 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., PAE and Vectrus; 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., LHI, Maximus, 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 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 include cost-plus-fixed-fee, award-fee and incentive
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fee contracts. These contracts provide for reimbursement of our direct contract costs and allocable indirect costs, plus a fee. These contracts are 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 budget. Award and incentive fees are generally based on performance criteria such as cost, schedule, quality and/or technical performance. Award fees are determined and earned based on customer evaluation of the company's performance against contractual criteria. Incentive fees that are based on cost provide for an initially negotiated fee to be adjusted later, typically using a formula to measure performance against the associated criteria, based on the relationship of total allowable costs to total target costs.
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Fixed-price-incentive fee (“FP-IF”) contracts are substantially similar to cost plus incentive fee contracts except they require specified targets for cost and profit, price ceiling (but not a profit ceiling or floor) and profit adjustment formula. Under a FP-IF contract, the allowable costs incurred are eligible for reimbursement but are subject to a cost-share arrangement, which affects profitability. Generally, if our costs exceed the contract target cost or are not allowable under the applicable regulations, we may not be able to obtain reimbursement for all costs and may have our fees reduced or eliminated.
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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 about 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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integrating the Splitco Business while carrying on the ongoing operations of our business;
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managing a significantly larger company than before the consummation of the Transactions;
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the possibility of faulty assumptions underlying our expectations regarding the integration process;
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coordinating a greater number of diverse businesses located in a greater number of geographic locations;
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operating in geographic markets or industry sectors in which we may have little or no experience;
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complying with laws of new jurisdictions in which we have not previously operated;
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integrating business systems and models;
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attracting and retaining the necessary personnel associated with the Splitco Business following the consummation of the Transactions;
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creating and implementing uniform standards, controls, procedures, policies and information systems and controlling the costs associated with such matters; and
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integrating information technology, purchasing, accounting, finance, sales, billing, payroll and regulatory compliance systems, and meeting external reporting requirements following the consummation of the Transactions.
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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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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 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 Transactions in customer, supplier and other business relationships;
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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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our ability to grow our commercial health and infrastructure 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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Gaithersburg, Maryland
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1
|
|
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542,000
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44.8
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San Diego, California
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2
|
|
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262,000
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|
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13.5
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Columbia, Maryland
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1
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|
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95,000
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|
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7.3
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Colorado Springs, Colorado
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1
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|
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86,000
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|
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14.2
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Orlando, Florida
|
|
1
|
|
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85,000
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|
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8.5
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Oak Ridge, Tennessee
|
|
1
|
|
|
83,000
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|
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8.4
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Reston, Virginia
|
|
1
|
|
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62,000
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|
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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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Roger A. Krone
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60
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Mr. Krone has served as 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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James C. Reagan
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|
58
|
|
Mr. Reagan has served as Executive Vice President, Chief Financial Officer since July 2015. 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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John J. Fratamico, Jr.
|
|
59
|
|
Mr. Fratamico served as President, National Security Solutions - Surveillance and Reconnaissance Group. As of November 2016 he has served as President, Technology Group and Chief Technology Officer. Before joining Leidos, Mr. Fratamico served as Chief Scientist at McDonnell Douglas Technologies Incorporated.
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Mary S. Craft
|
|
58
|
|
Ms. Craft served as President, National Security Solutions - Global Services Group. As of August 2016 she has served as Chief Administrative Officer. Before joining Leidos, Ms. Craft held positions with QinetiQ North America, General Dynamics and Raytheon.
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Jonathan W. Scholl
|
|
55
|
|
Mr. Scholl served as President, Health and Infrastructure group. As of August 2016, he has served as President, Health Group. 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.
|
Vincent A. Maffeo
|
|
66
|
|
Mr. Maffeo has served as 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.
|
Gerald A. Fasano
|
|
51
|
|
Mr. Fasano has served as Chief of Business Development & Strategy since August 2016 when he joined Leidos. Prior to joining Leidos, Mr. Fasano served Lockheed Martin Corporation over 30 years in several capacities, most recently as a Vice President and General Manager of their former Information Systems & Global Solutions business.
|
Name of officer
|
|
Age
|
|
Position(s) with the company and prior business experience
|
Ann Addison
|
|
55
|
|
Ms. Addison has served as Executive Vice President and Chief Human Resources Officer since August 2016 when she joined Leidos. Prior to joining Leidos, Ms. Addison served Lockheed Martin Corporation in several capacities, most recently as the Vice President of Human Resources for their former Information Systems & Global Solutions business. Earlier in her career she held positions with Global eXchange Services and General Electric.
|
Timothy J. Reardon
|
|
52
|
|
Mr. Reardon has served as President, Defense & Intelligence Group since January 2017 and before that, as President, Intelligence & Homeland Security Group. Prior to joining Leidos in August 2016, Mr. Reardon served as a Vice President and General Manager of Lockheed Martin Corporation's former Information Systems & Global Solutions business. Prior to joining Lockheed Martin Corporation, Mr. Reardon served as an officer with the Central Intelligence Agency for 10 years.
|
Angela L. Heise
|
|
42
|
|
Ms. Heise has served as President, Civil Group since August 2016 when she joined Leidos. Prior to joining Leidos, Ms. Heise served as Vice President of Enterprise Information Technology for Lockheed Martin Corporation.
|
|
|
12 Months Ended
|
||||||
|
|
December 30, 2016
|
||||||
Fiscal Quarter
|
|
High
|
|
Low
|
||||
1st quarter (January 2, 2016 to April 1, 2016)
|
|
$
|
56.19
|
|
|
$
|
40.79
|
|
2nd quarter (April 2, 2016 to July 1, 2016)
|
|
$
|
52.32
|
|
|
$
|
45.71
|
|
3rd quarter (July 2, 2016 to September 30, 2016)
|
|
$
|
52.33
|
|
|
$
|
38.50
|
|
4th quarter (October 1, 2016 to December 30, 2016)
|
|
$
|
52.38
|
|
|
$
|
41.18
|
|
|
|
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.
|
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 of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (2) |
|||||
October 1, 2016 - October 31, 2016
|
|
706
|
|
|
$
|
43.04
|
|
|
—
|
|
|
5,718,172
|
|
November 1, 2016 - November 30, 2016
|
|
28,645
|
|
|
42.27
|
|
|
—
|
|
|
5,718,172
|
|
|
December 1, 2016 - December 30, 2016
|
|
2,621
|
|
|
51.26
|
|
|
—
|
|
|
5,718,172
|
|
|
Total
|
|
31,972
|
|
|
$
|
43.03
|
|
|
—
|
|
|
|
(1)
|
The total number of shares purchased includes: (i) shares surrendered to satisfy statutory tax withholdings obligations related to vesting of restricted stock units; and (ii) shares purchased upon surrender by stockholders of previously owned shares in payment of the exercise price of non-qualified stock options and/or to satisfy statutory tax withholdings obligations.
|
(2)
|
Number of shares outstanding that can yet be repurchased out of the maximum 20 million shares authorized by our Board of Directors, under the 2013 Stock Repurchase Program announced in December 2013.
|
|
|
12 Months Ended
(1)
|
|
11 Months Ended
(1)
|
|
12 Months Ended
(1)
|
||||||||||||||
|
|
December 30, 2016
(2)
|
|
January 1, 2016
(3)
|
|
January 30, 2015
(4)
|
|
January31, 2014
(5)
|
|
January 31,
2013 |
||||||||||
|
|
(in millions, except for per share amounts)
|
||||||||||||||||||
Consolidated Statement of Income (Loss) Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
7,043
|
|
|
$
|
4,712
|
|
|
$
|
5,063
|
|
|
$
|
5,755
|
|
|
$
|
6,449
|
|
Operating income (loss)
|
|
417
|
|
|
320
|
|
|
(214
|
)
|
|
163
|
|
|
421
|
|
|||||
Income (loss) from continuing operations
|
|
246
|
|
|
243
|
|
|
(330
|
)
|
|
84
|
|
|
323
|
|
|||||
(Loss) income from discontinued operations, net of taxes
|
|
—
|
|
|
(1
|
)
|
|
7
|
|
|
80
|
|
|
202
|
|
|||||
Net income (loss)
|
|
246
|
|
|
242
|
|
|
(323
|
)
|
|
164
|
|
|
525
|
|
|||||
Less: net income attributable to non-controlling interest, net of taxes
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income (loss) attributable to Leidos Holdings, Inc.
|
|
$
|
244
|
|
|
$
|
242
|
|
|
$
|
(323
|
)
|
|
$
|
164
|
|
|
$
|
525
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) from continuing operations attributable to Leidos common stockholders
|
|
$
|
2.39
|
|
|
$
|
3.33
|
|
|
$
|
(4.46
|
)
|
|
$
|
0.98
|
|
|
$
|
3.81
|
|
(Loss) income from discontinued operations, net of taxes
|
|
—
|
|
|
(0.01
|
)
|
|
0.10
|
|
|
0.96
|
|
|
2.38
|
|
|||||
Net income (loss) attributable to Leidos common stockholders
|
|
$
|
2.39
|
|
|
$
|
3.32
|
|
|
$
|
(4.36
|
)
|
|
$
|
1.94
|
|
|
$
|
6.19
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) from continuing operations attributable to Leidos common stockholders
|
|
$
|
2.35
|
|
|
$
|
3.28
|
|
|
$
|
(4.46
|
)
|
|
$
|
0.98
|
|
|
$
|
3.81
|
|
(Loss) income from discontinued operations, net of taxes
|
|
—
|
|
|
(0.01
|
)
|
|
0.10
|
|
|
0.96
|
|
|
2.38
|
|
|||||
Net income (loss) attributable to Leidos common stockholders
|
|
$
|
2.35
|
|
|
$
|
3.27
|
|
|
$
|
(4.36
|
)
|
|
$
|
1.94
|
|
|
$
|
6.19
|
|
Cash dividend per common share
|
|
$
|
14.92
|
|
|
$
|
1.28
|
|
|
$
|
1.28
|
|
|
$
|
5.60
|
|
|
$
|
1.92
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
December 30,
2016 |
|
January 1,
2016 |
|
January 30,
2015 |
|
January 31,
2014 |
|
January 31,
2013 |
||||||||||
|
|
(in millions)
|
||||||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
|
$
|
9,132
|
|
|
$
|
3,370
|
|
|
$
|
3,281
|
|
|
$
|
4,162
|
|
|
$
|
5,875
|
|
Notes payable and long-term debt, including current portion
|
|
$
|
3,287
|
|
|
$
|
1,081
|
|
|
$
|
1,158
|
|
|
$
|
1,323
|
|
|
$
|
1,284
|
|
Other long-term liabilities
(6)
|
|
$
|
204
|
|
|
$
|
149
|
|
|
$
|
147
|
|
|
$
|
161
|
|
|
$
|
138
|
|
(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)
|
Fiscal 2016 includes the results of the IS&GS Business acquired on August 16, 2016. Additionally, the results include acquisition and integration costs of
$90 million
and restructuring expenses of
$14 million
. For further information, see "Note 2—Acquisitions" and Note 4—Restructuring Expenses" of the notes to the consolidated financial statements contained within this Annual Report on Form 10-K.
|
(3)
|
Reflects the 11-month period of January 31, 2015, through January 1, 2016, as a result of the change in our fiscal year end. For further information see, "Note 1—Summary of Significant Accounting Policies–Reporting Periods"
of the notes to the consolidated financial statements contained within this Annual 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 17—"Leases–Sale and Leaseback Agreement," "Note 2—Acquisitions," "Note 6–Intangible Assets" and "Note 7–Receivables" of the notes to the consolidated financial statements contained within this Annual Report on Form 10-K.
|
(4)
|
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 5–Goodwill," "Note 6–Intangible Assets"
and
"Note 2—Acquisitions"
of the notes to the consolidated financial statements contained within this Annual Report on Form 10-K.
|
(5)
|
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 6–Intangible Assets,"
"Note 7–Receivables"
and "Note 4—Restructuring Expenses"
of the notes to the consolidated financial statements contained within this Annual Report on Form 10-K.
|
(6)
|
For fiscal 2016, the Company has separately disclosed "Deferred tax liabilities," which was previously aggregated within "Other long-term liabilities" within the consolidated balance sheets. Deferred tax liabilities for fiscal 2016, the 11-month period ended January 1, 2016, fiscal 2015, fiscal 2014 and fiscal 2013 were
$540 million
,
$34 million
,
$21 million
,
$66 million
and
$32 million
, respectively.
|
•
|
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 IT systems infrastructure and related business processes for greater effectiveness and efficiency across all business functions; and
|
•
|
disciplined deployment of our cash resources and use of our capital structure to enhance shareholder value while retaining an appropriate amount of financial leverage, through internal growth initiatives, stock repurchases, dividends, strategic acquisitions, debt level management and other uses to achieve our goals.
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||
|
|
December 30,
2016 |
|
January 1,
2016 |
|
January 30,
2015 |
||||||
|
|
(in millions)
|
||||||||||
Revenues
|
|
$
|
14
|
|
|
$
|
17
|
|
|
$
|
68
|
|
Cost of revenues
|
|
14
|
|
|
17
|
|
|
60
|
|
|||
Selling, general and administrative expenses (including impairment charges of $9 million for the fiscal year ended January 30, 2015)
|
|
—
|
|
|
2
|
|
|
29
|
|
|||
Intangible asset impairment charges
|
|
—
|
|
|
—
|
|
|
3
|
|
|||
Operating loss
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
(24
|
)
|
Non-operating income
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
11
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|
|
|
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||||||||||||||||
|
|
December 30,
2016 |
|
January 1,
2016 |
|
Dollar change
|
|
Percent
change |
|
January 1,
2016 |
|
January 2,
2015 |
|
Dollar change
|
|
Percent
change |
|
January 30,
2015 |
||||||||||||||||
|
|
(dollars in millions)
|
||||||||||||||||||||||||||||||||
Revenues
|
|
$
|
7,043
|
|
|
$
|
4,712
|
|
|
$
|
2,331
|
|
|
49
|
%
|
|
$
|
4,712
|
|
|
$
|
4,690
|
|
|
$
|
22
|
|
|
—
|
%
|
|
$
|
5,063
|
|
Cost of revenues
|
|
6,191
|
|
|
4,146
|
|
|
2,045
|
|
|
49
|
%
|
|
4,146
|
|
|
4,069
|
|
|
77
|
|
|
2
|
%
|
|
4,392
|
|
|||||||
Selling, general and administrative expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
General and administrative
|
|
201
|
|
|
105
|
|
|
96
|
|
|
91
|
%
|
|
105
|
|
|
182
|
|
|
(77
|
)
|
|
(42
|
)%
|
|
205
|
|
|||||||
Bid and proposal
|
|
89
|
|
|
67
|
|
|
22
|
|
|
33
|
%
|
|
67
|
|
|
64
|
|
|
3
|
|
|
5
|
%
|
|
68
|
|
|||||||
Internal research and development
|
|
44
|
|
|
29
|
|
|
15
|
|
|
52
|
%
|
|
29
|
|
|
34
|
|
|
(5
|
)
|
|
(15
|
)%
|
|
37
|
|
|||||||
Bad debt expense
|
|
3
|
|
|
8
|
|
|
(5
|
)
|
|
(63
|
)%
|
|
8
|
|
|
4
|
|
|
4
|
|
|
100
|
%
|
|
5
|
|
|||||||
Goodwill impairment charges
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
486
|
|
|
(486
|
)
|
|
(100
|
)%
|
|
486
|
|
|||||||
Asset impairment charges
|
|
4
|
|
|
33
|
|
|
(29
|
)
|
|
(88
|
)%
|
|
33
|
|
|
41
|
|
|
(8
|
)
|
|
(20
|
)%
|
|
81
|
|
|||||||
Acquisition and integration costs
|
|
90
|
|
|
—
|
|
|
90
|
|
|
100
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|||||||
Restructuring expenses
|
|
14
|
|
|
4
|
|
|
10
|
|
|
NM
|
|
|
4
|
|
|
1
|
|
|
3
|
|
|
NM
|
|
|
3
|
|
|||||||
Equity earnings of non-consolidated subsidiaries
|
|
(10
|
)
|
|
—
|
|
|
(10
|
)
|
|
100
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|||||||
Operating income (loss)
|
|
417
|
|
|
320
|
|
|
97
|
|
|
30
|
%
|
|
320
|
|
|
(191
|
)
|
|
511
|
|
|
NM
|
|
|
(214
|
)
|
|||||||
Non-operating (expense) income, net
|
|
(99
|
)
|
|
35
|
|
|
(134
|
)
|
|
NM
|
|
|
35
|
|
|
(65
|
)
|
|
100
|
|
|
154
|
%
|
|
(69
|
)
|
|||||||
Income (loss) from continuing operations before income taxes
|
|
318
|
|
|
355
|
|
|
(37
|
)
|
|
(10
|
)%
|
|
355
|
|
|
(256
|
)
|
|
611
|
|
|
NM
|
|
|
(283
|
)
|
|||||||
Income tax expense
|
|
(72
|
)
|
|
(112
|
)
|
|
40
|
|
|
(36
|
)%
|
|
(112
|
)
|
|
(67
|
)
|
|
(45
|
)
|
|
67
|
%
|
|
(47
|
)
|
|||||||
Income (loss) from continuing operations
|
|
246
|
|
|
243
|
|
|
3
|
|
|
1
|
%
|
|
243
|
|
|
(323
|
)
|
|
566
|
|
|
175
|
%
|
|
(330
|
)
|
|||||||
Loss (income) from discontinued operations, net of taxes
|
|
—
|
|
|
(1
|
)
|
|
1
|
|
|
100
|
%
|
|
(1
|
)
|
|
(11
|
)
|
|
10
|
|
|
91
|
%
|
|
7
|
|
|||||||
Net income (loss)
|
|
246
|
|
|
242
|
|
|
4
|
|
|
2
|
%
|
|
242
|
|
|
(334
|
)
|
|
576
|
|
|
172
|
%
|
|
(323
|
)
|
|||||||
Less: net income attributable to non-controlling interest, net of taxes
|
|
2
|
|
|
—
|
|
|
2
|
|
|
100
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|||||||
Net income (loss) attributable to Leidos Holdings, Inc.
|
|
$
|
244
|
|
|
$
|
242
|
|
|
$
|
2
|
|
|
1
|
%
|
|
$
|
242
|
|
|
$
|
(334
|
)
|
|
$
|
576
|
|
|
172
|
%
|
|
$
|
(323
|
)
|
Operating income (loss) margin
|
|
5.9
|
%
|
|
6.8
|
%
|
|
|
|
|
|
6.8
|
%
|
|
(4.1
|
)%
|
|
|
|
|
|
(4.2
|
)%
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|
|
|
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||||||||||||||||
|
|
December 30,
2016 |
|
January 1,
2016 |
|
Dollar change
|
|
Percent
change |
|
January 1,
2016 |
|
January 2,
2015 |
|
Dollar change
|
|
Percent
change |
|
January 30,
2015 |
||||||||||||||||
|
|
(dollars in millions)
|
||||||||||||||||||||||||||||||||
Revenues
|
|
$
|
3,610
|
|
|
$
|
3,210
|
|
|
$
|
400
|
|
|
12
|
%
|
|
$
|
3,210
|
|
|
$
|
3,337
|
|
|
$
|
(127
|
)
|
|
(4
|
)%
|
|
$
|
3,594
|
|
Operating income
|
|
292
|
|
|
263
|
|
|
29
|
|
|
11
|
%
|
|
263
|
|
|
270
|
|
|
(7
|
)
|
|
(3
|
)%
|
|
286
|
|
|||||||
Operating income margin
|
|
8.1
|
%
|
|
8.2
|
%
|
|
|
|
|
|
8.2
|
%
|
|
8.1
|
%
|
|
|
|
|
|
8.0
|
%
|
|
|
12 Months Ended
|
||
|
|
December 30,
2016 |
||
|
|
(dollars in millions)
|
||
Revenues
|
|
$
|
1,971
|
|
Operating income
|
|
114
|
|
|
Operating income margin
|
|
5.8
|
%
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|
|
|
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||||||||||||||||
|
|
December 30,
2016 |
|
January 1,
2016 |
|
Dollar change
|
|
Percent
change |
|
January 1,
2016 |
|
January 2,
2015 |
|
Dollar change
|
|
Percent
change |
|
January 30,
2015 |
||||||||||||||||
|
|
(dollars in millions)
|
||||||||||||||||||||||||||||||||
Revenues
|
|
$
|
1,463
|
|
|
$
|
1,496
|
|
|
$
|
(33
|
)
|
|
(2
|
)%
|
|
$
|
1,496
|
|
|
$
|
1,366
|
|
|
$
|
130
|
|
|
10
|
%
|
|
$
|
1,485
|
|
Operating income (loss)
|
|
162
|
|
|
76
|
|
|
86
|
|
|
113
|
%
|
|
76
|
|
|
(442
|
)
|
|
518
|
|
|
117
|
%
|
|
(472
|
)
|
|||||||
Operating income (loss) margin
|
|
11.1
|
%
|
|
5.1
|
%
|
|
|
|
|
|
5.1
|
%
|
|
(32.4
|
)%
|
|
|
|
|
|
(31.8
|
)%
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|
|
|
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||||||||||||||||
|
|
December 30,
2016 |
|
January 1,
2016 |
|
Dollar change
|
|
Percent
change |
|
January 1,
2016 |
|
January 2,
2015 |
|
Dollar change
|
|
Percent
change |
|
January 30,
2015 |
||||||||||||||||
|
|
(dollars in millions)
|
||||||||||||||||||||||||||||||||
Revenues
|
|
$
|
(1
|
)
|
|
$
|
6
|
|
|
$
|
(7
|
)
|
|
(117
|
)%
|
|
$
|
6
|
|
|
$
|
(13
|
)
|
|
$
|
19
|
|
|
146
|
%
|
|
$
|
(16
|
)
|
Operating loss
|
|
(151
|
)
|
|
(19
|
)
|
|
(132
|
)
|
|
NM
|
|
|
(19
|
)
|
|
(19
|
)
|
|
—
|
|
|
—
|
%
|
|
(28
|
)
|
•
|
$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 during the 11-month period ended January 1, 2016 that did not recur in fiscal 2016;
|
•
|
$35 million
of higher interest expense recognized on the new
$2.5 billion
term loans secured in connection with the Transactions; and
|
•
|
an
$18 million
increase in foreign currency exchange losses, mostly due to the movement in exchange rates between the British pound and U.S. dollar.
|
•
|
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.
|
•
|
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.
|
|
|
December 30,
2016 |
|
January 1,
2016 |
||||
|
|
(in millions)
|
||||||
National Security Solutions
|
|
|
|
|
||||
Funded backlog
|
|
$
|
1,436
|
|
|
$
|
1,472
|
|
Negotiated unfunded backlog
|
|
6,131
|
|
|
6,554
|
|
||
Total National Security Solutions backlog
|
|
$
|
7,567
|
|
|
$
|
8,026
|
|
Information Systems & Global Solutions
|
|
|
|
|
||||
Funded backlog
|
|
$
|
3,572
|
|
|
$
|
—
|
|
Negotiated unfunded backlog
|
|
4,793
|
|
|
—
|
|
||
Total Information Systems & Global Solutions backlog
|
|
$
|
8,365
|
|
|
$
|
—
|
|
Health and Infrastructure
|
|
|
|
|
||||
Funded backlog
|
|
$
|
967
|
|
|
$
|
1,049
|
|
Negotiated unfunded backlog
|
|
837
|
|
|
820
|
|
||
Total Health and Infrastructure backlog
|
|
$
|
1,804
|
|
|
$
|
1,869
|
|
Total
|
|
|
|
|
||||
Funded backlog
|
|
$
|
5,975
|
|
|
$
|
2,521
|
|
Negotiated unfunded backlog
|
|
11,761
|
|
|
7,374
|
|
||
Total backlog
|
|
$
|
17,736
|
|
|
$
|
9,895
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|
12 Months Ended
|
|||
|
|
December 30,
2016 |
|
January 1,
2016 |
|
January 30,
2015 |
|||
Cost-reimbursement and fixed price-incentive fee (FP-IF)
|
|
51
|
%
|
|
51
|
%
|
|
48
|
%
|
Time and materials (T&M) and fixed-price-level-of-effort (FP-LOE)
|
|
19
|
|
|
22
|
|
|
25
|
|
Firm-fixed-price (FFP)
|
|
30
|
|
|
27
|
|
|
27
|
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||
|
|
December 30,
2016 |
|
January 1,
2016 |
|
January 30,
2015 |
||||||
|
|
(in millions)
|
||||||||||
Cash provided by operating activities of continuing operations
|
|
$
|
446
|
|
|
$
|
399
|
|
|
$
|
396
|
|
Cash provided by investing activities of continuing operations
|
|
26
|
|
|
64
|
|
|
51
|
|
|||
Cash used in financing activities of continuing operations
|
|
(751
|
)
|
|
(249
|
)
|
|
(478
|
)
|
|||
Cash (used in) provided by operating activities of discontinued operations
|
|
—
|
|
|
(7
|
)
|
|
15
|
|
|||
Cash (used in) provided by investing activities of discontinued operations
|
|
(1
|
)
|
|
6
|
|
|
29
|
|
|||
Total (decrease) increase in cash and cash equivalents
|
|
$
|
(280
|
)
|
|
$
|
213
|
|
|
$
|
13
|
|
|
|
Total
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022 & Thereafter
|
||||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||||||
Contractual obligations
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Long-term debt (including current portion)
(2)
|
|
$
|
4,536
|
|
|
$
|
185
|
|
|
$
|
209
|
|
|
$
|
313
|
|
|
$
|
717
|
|
|
$
|
800
|
|
|
$
|
2,312
|
|
Operating lease obligations
|
|
522
|
|
|
142
|
|
|
106
|
|
|
83
|
|
|
58
|
|
|
41
|
|
|
92
|
|
|||||||
Capital lease obligations
|
|
3
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Other long-term liabilities
(3)
|
|
60
|
|
|
9
|
|
|
8
|
|
|
5
|
|
|
15
|
|
|
5
|
|
|
18
|
|
|||||||
Total contractual obligations
|
|
$
|
5,121
|
|
|
$
|
337
|
|
|
$
|
324
|
|
|
$
|
402
|
|
|
$
|
790
|
|
|
$
|
846
|
|
|
$
|
2,422
|
|
(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
$124 million
,
$128 million
,
$124 million
,
$124 million
and
$89 million
of the balance for fiscal 2017, fiscal 2018, fiscal 2019, fiscal 2020 and fiscal 2021, respectively, and
$608 million
for fiscal 2022 and thereafter. The total interest payments on our outstanding term loan debt are calculated based on the stated variable rates of the notes as of December 30, 2016. The total interest payments on our outstanding senior fixed rate secured and unsecured notes are calculated based on the stated fixed rates 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: a liability for our foreign defined benefit pension plan is based upon the expected near-term contributions to the plan (for a discussion of potential changes in these pension obligations, see "Note 16–Retirement Plans" of the notes to consolidated financial statements contained within this Annual Report on Form 10-K), liabilities under deferred compensation arrangements are based upon the average annual payments in prior years upon termination of employment by participants and other liabilities are based on the fiscal year that the liabilities are expected to be realized. The table above does not include income tax liabilities for uncertain tax positions of
$5 million
and
$34 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.
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||
|
|
December 30,
2016 |
|
January 1,
2016 |
|
January 30,
2015 |
||||||
|
|
(in millions, except for per share amounts)
|
||||||||||
Net favorable impact to income (loss) from continuing operations before taxes
|
|
$
|
37
|
|
|
$
|
18
|
|
|
$
|
24
|
|
Impact on diluted EPS from continuing operations attributable to Leidos common stockholders
|
|
$
|
0.22
|
|
|
$
|
0.14
|
|
|
$
|
0.20
|
|
Plan Category
|
|
(a)
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
|
|
(b)
Weighted-average
exercise price of
outstanding
options, warrants
and rights
|
|
(c)
Number of securities
remaining available
for future issuance
under equity
compensation
plans (excluding
securities reflected
in column (a))
|
|
||||
Equity compensation plans approved by security holders
(1)
|
|
6,120,946
|
|
(2)
|
$
|
29.77
|
|
(3)
|
2,502,109
|
|
(4) (5)
|
Equity compensation plans not approved by security holders
(6)
|
|
—
|
|
|
—
|
|
|
—
|
|
(6)
|
|
Total
|
|
6,120,946
|
|
|
$
|
29.77
|
|
(3)
|
2,502,109
|
|
|
(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, as amended.
|
(2)
|
Represents (i)
2,502,676
shares of Leidos common stock reserved for future issuance for performance and market-based awards assuming achievement of the target level of performance for unearned performance and market-based awards (does not include an additional
171,267
shares if the maximum level of performance is achieved) and other stock awards under the 2006 Equity Incentive Plan, (ii)
359,090
shares of Leidos common stock issuable pursuant to dividend equivalent rights and (iii)
3,259,180
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)
|
Entire amount represents shares of Leidos common stock under the 2006 Equity Incentive Plan. 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)
|
Does not include
5.0 million
shares under our Amended and Restated 2006 Employee Stock Purchase Plan, which is subject to stockholder approval at our 2017 annual meeting of stockholders.
|
(6)
|
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.
|
|
|
|
2.4
|
|
Amendment to Agreement and Plan of Merger, dated as of June 27, 2016, among Lockheed Martin Corporation, Leidos Holdings, Inc., Abacus Innovations Corporation and Lion Merger Co. Incorporated by reference to Exhibit 2.7 to our Registrant Statement on Form S-4 with the SEC on June 28, 2016.
|
|
|
|
2.5
|
|
Amendment to Separation Agreement, dated as of June 27, 2016, between Lockheed Martin Corporation and Abacus Innovations Corporation. Incorporated by reference to Exhibit 2.8 to our Registration Statement on Form S-4 filed with the SEC on June 29, 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 3.2 to our Current Report on Form 8-K filed with the SEC on April 13, 2016.
|
|
|
|
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 filed with the SEC on July 3, 2002. (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 filed with the SEC on October 17, 2006. (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 with the SEC on December 22, 2010.
|
|
|
|
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 filed with the SEC on March 27, 2014.
|
|
|
|
10.2*
|
|
Leidos, Inc. Stock Compensation Plan. Incorporated by reference to Exhibit 10.2 to our Annual Report on Form 10-K 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 filed with the SEC on March 27, 2014.
|
|
|
|
Exhibit
Number |
|
Description of Exhibit
|
10.4*
|
|
Amended and Restated Leidos, Inc.'s Keystaff Deferral Plan. Incorporated by reference to Exhibit 10.4 to our Transition Report on Form 10-K filed with the SEC on February 26, 2016.
|
|
|
|
10.5*
|
|
Amended and Restated Leidos, Inc.’s Key Executive Stock Deferral Plan. Incorporated by reference to Exhibit 10.4 to our Transition Report on Form 10-K filed with the SEC on February 26, 2016.
|
|
|
|
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 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 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 filed with the SEC on December 9, 2009.
|
|
|
|
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 filed with the SEC on December 9, 2009.
|
|
|
|
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 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 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 filed with the SEC on June 3, 2011.
|
|
|
|
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 filed with the SEC on June 1, 2012.
|
|
|
|
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 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 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 our Quarterly Report on Form 10-Q filed with the SEC on June 4, 2010.
|
|
|
|
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 filed with the SEC on March 15, 2011.
|
|
|
|
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*
|
|
Executive Severance Plan.
|
|
|
|
Exhibit
Number |
|
Description of Exhibit
|
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 with the SEC on March 14, 2012.
|
|
|
|
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 with the SEC on August 21, 2012.
|
|
|
|
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.
|
|
|
|
Exhibit
Number |
|
Description of Exhibit
|
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.
|
|
|
|
10.38
|
|
Credit Agreement dated August 16, 2016, among Leidos Holdings, Inc., Leidos, Inc., as Borrower, the lenders party thereto and Citibank, N.A., as administrative agent. Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q filed with the SEC on November 4, 2016.
|
|
|
|
10.39
|
|
Credit Agreement dated August 16, 2016, among Leidos Innovations Corporation (formerly Abacus Innovations Corporation) as Borrower, the lenders party thereto, and Citibank, N.A., as administrative agent. Incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q filed with the SEC on November 4, 2016.
|
|
|
|
10.40
|
|
Intellectual Property Matters Agreement, dated August 16, 2016, between Lockheed Martin Corporation and Abacus Innovations Corporation. Incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q filed with the SEC on November 4, 2016.
|
|
|
|
10.41
|
|
Shared Contracts Agreement - Shared Contracts (Parent Companies), dated August 16, 2016, between Lockheed Martin Corporation and Splitco. Incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q filed with the SEC on November 4, 2016.
|
|
|
|
10.42
|
|
Shared Contracts Agreement - Shared Contracts (Splitco Companies), dated August 16, 2016, between Lockheed Martin Corporation and Splitco. Incorporated by reference to Exhibit 10.5 to our Quarterly Report on Form 10-Q filed with the SEC on November 4, 2016.
|
|
|
|
10.43
|
|
Subcontract Pending Novation and Consent (Parent to Splitco), dated August 16, 2016, between Lockheed Martin Corporation and Splitco. Incorporated by reference to Exhibit 10.6 to our Quarterly Report on Form 10-Q filed with the SEC on November 4, 2016.
|
|
|
|
10.44
|
|
Supply Agreement (Parent to Splitco), dated August 16, 2016, between Lockheed Martin Corporation and Splitco. Incorporated by reference to Exhibit 10.7 to our Quarterly Report on Form 10-Q filed with the SEC on November 4, 2016.
|
|
|
|
10.45
|
|
Supply Agreement (Splitco to Parent), dated August 16, 2016, between Lockheed Martin Corporation and Splitco. Incorporated by reference to Exhibit 10.8 to our Quarterly Report on Form 10-Q filed with the SEC on November 4, 2016.
|
|
|
|
10.46
|
|
Transition Services Agreement (Parent to Splitco), dated August 16, 2016, between Lockheed Martin Corporation and Splitco. Incorporated by reference to Exhibit 10.9 to our Quarterly Report on Form 10-Q filed with the SEC on November 4, 2016.
|
|
|
|
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 our Annual Report on Form 10-K filed with the SEC on April 1, 2010.
|
|
|
|
Exhibit
Number |
|
Description of Exhibit
|
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 our Annual Report on Form 10-K filed with the SEC on April 1, 2010.
|
|
|
|
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 our Form 10-K filed with the SEC on April 1, 2010.
|
|
|
|
99.4
|
|
Employee Matters Agreement, dated as of January 26, 2016, among Lockheed Martin Corporation, Abacus Innovations Corporation and Leidos Holdings, Inc. Incorporated by reference to Exhibit 99.1 to our Registration Statement on Form S-4 filed with the SEC on April 18, 2016.
|
|
|
|
99.5
|
|
Tax Matters Agreement, dated as of January 26, 2016, among Lockheed Martin Corporation, Abacus Innovations Corporation and Leidos Holdings, Inc. Incorporated by reference to Exhibit 99.2 to our Registration Statement on Form S-4 filed with the SEC on April 18, 2016.
|
|
|
|
99.6
|
|
First Amendment to Employee Matters Agreement, dated June 27, 2016, among Lockheed Martin Corporation, Abacus Innovations Corporation and Leidos Holdings, Inc. Incorporated by reference to Exhibit 99.13 to our Registration Statement on Form S-4 filed with the SEC on June 28, 2016.
|
|
|
|
99.7†
|
|
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 our Annual Report on Form 10-K filed with the SEC on April 1, 2010.
|
|
|
|
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
|
Signature
|
Title
|
Date
|
|
|
|
/s/ Roger A. Krone
|
Principal Executive Officer
|
February 24, 2017
|
Roger A. Krone
|
||
|
|
|
/s/ James C. Reagan
|
Principal Financial Officer
|
February 24, 2017
|
James C. Reagan
|
||
|
|
|
/s/ Ranjit S. Chadha
|
Principal Accounting Officer
|
February 24, 2017
|
Ranjit S. Chadha
|
||
|
|
|
/s/ Gregory R. Dahlberg
|
Director
|
February 24, 2017
|
Gregory R. Dahlberg
|
||
|
|
|
/s/ David G. Fubini
|
Director
|
February 24, 2017
|
David G. Fubini
|
||
|
|
|
/s/ Miriam E. John
|
Director
|
February 24, 2017
|
Miriam E. John
|
||
|
|
|
/s/ John P. Jumper
|
Director
|
February 24, 2017
|
John P. Jumper
|
||
|
|
|
/s/ Harry M. J. Kraemer, Jr.
|
Director
|
February 24, 2017
|
Harry M. J. Kraemer, Jr.
|
||
|
|
|
/s/ Gary S. May
|
Director
|
February 24, 2017
|
Gary S. May
|
||
|
|
|
/s/ Surya N. Mohapatra
|
Director
|
February 24, 2017
|
Surya N. Mohapatra
|
||
|
|
|
/s/ Lawrence C. Nussdorf
|
Director
|
February 24, 2017
|
Lawrence C. Nussdorf
|
||
|
|
|
/s/ Robert S. Shapard
|
Director
|
February 24, 2017
|
Robert S. Shapard
|
||
|
|
|
/s/ Susan M. Stalnecker
|
Director
|
February 24, 2017
|
Susan M. Stalnecker
|
||
|
|
|
/s/ Noel B. Williams
|
Director
|
February 24, 2017
|
Noel B. Williams
|
|
|
Page
|
CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
||
|
|
|
Consolidated Balance Sheets
as of December 30, 2016, and January 1, 2016
|
|
|
|
|
|
Consolidated Statements of Income (Loss) for
the fiscal year ended December 30, 2016, the 11-month periods ended January 1, 2016, and January 2, 2015 (unaudited) and the fiscal year ended January 30, 2015
|
|
|
|
|
|
Consolidated Statements of Comprehensive Income (Loss) for
the fiscal year ended December 30, 2016, the 11-month periods ended January 1, 2016, and January 2, 2015 (unaudited) and the fiscal year ended January 30, 2015
|
|
|
|
|
|
Consolidated Statements of Equity for
the fiscal year ended December 30, 2016, the 11-month period ended January 1, 2016, and the fiscal year ended January 30, 2015
|
|
|
|
|
|
Consolidated Statements of Cash Flows for
the fiscal year ended December 30, 2016, the 11-month periods ended January 1, 2016, and January 2, 2015 (unaudited), and the fiscal year ended January 30, 2015
|
|
|
|
|
|
|
|
|
December 30,
2016 |
|
January 1,
2016 |
||||
|
|
(in millions)
|
||||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
376
|
|
|
$
|
656
|
|
Receivables, net
|
|
1,657
|
|
|
921
|
|
||
Inventory, prepaid expenses and other current assets
|
|
348
|
|
|
216
|
|
||
Total current assets
|
|
2,381
|
|
|
1,793
|
|
||
Property, plant and equipment, net
|
|
259
|
|
|
142
|
|
||
Intangible assets, net
|
|
1,589
|
|
|
25
|
|
||
Goodwill
|
|
4,622
|
|
|
1,207
|
|
||
Deferred tax assets
|
|
16
|
|
|
8
|
|
||
Other assets
|
|
265
|
|
|
195
|
|
||
|
|
$
|
9,132
|
|
|
$
|
3,370
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable and accrued liabilities
|
|
$
|
1,427
|
|
|
$
|
761
|
|
Accrued payroll and employee benefits
|
|
483
|
|
|
268
|
|
||
Dividends payable
|
|
23
|
|
|
2
|
|
||
Income taxes payable
|
|
21
|
|
|
6
|
|
||
Notes payable and long-term debt, current portion
|
|
62
|
|
|
2
|
|
||
Liabilities of discontinued operations
|
|
—
|
|
|
1
|
|
||
Total current liabilities
|
|
2,016
|
|
|
1,040
|
|
||
Notes payable and long-term debt, net of current portion
|
|
3,225
|
|
|
1,079
|
|
||
Deferred tax liabilities
|
|
540
|
|
|
34
|
|
||
Other long-term liabilities
|
|
204
|
|
|
149
|
|
||
Commitments and contingencies (Notes 17, 20 and 21)
|
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
|
||||
Preferred stock, $.0001 par value,10 million shares authorized and no shares issued and outstanding at December 30, 2016 and January 1, 2016
|
|
—
|
|
|
—
|
|
||
Common stock, $.0001 par value, 500 million shares authorized, 150 million and 72 million shares issued and outstanding at December 30, 2016, and January 1, 2016, respectively
|
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
|
3,316
|
|
|
1,353
|
|
||
Accumulated deficit
|
|
(177
|
)
|
|
(277
|
)
|
||
Accumulated other comprehensive loss
|
|
(4
|
)
|
|
(8
|
)
|
||
Total Leidos stockholders’ equity
|
|
3,135
|
|
|
1,068
|
|
||
Non-controlling interest
|
|
12
|
|
|
—
|
|
||
Total equity
|
|
3,147
|
|
|
1,068
|
|
||
|
|
$
|
9,132
|
|
|
$
|
3,370
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||||
|
|
December 30,
2016 |
|
January 1,
2016 |
|
January 2,
2015 |
|
January 30,
2015 |
||||||||
|
|
|
|
|
|
(unaudited)
|
|
|
||||||||
|
|
(in millions, except per share amounts)
|
||||||||||||||
Revenues
|
|
$
|
7,043
|
|
|
$
|
4,712
|
|
|
$
|
4,690
|
|
|
$
|
5,063
|
|
Cost of revenues
|
|
6,191
|
|
|
4,146
|
|
|
4,069
|
|
|
4,392
|
|
||||
Selling, general and administrative expenses
|
|
334
|
|
|
201
|
|
|
280
|
|
|
310
|
|
||||
Bad debt expense
|
|
3
|
|
|
8
|
|
|
4
|
|
|
5
|
|
||||
Acquisition and integration costs
|
|
90
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Goodwill impairment charges
|
|
—
|
|
|
—
|
|
|
486
|
|
|
486
|
|
||||
Asset impairment charges
|
|
4
|
|
|
33
|
|
|
41
|
|
|
81
|
|
||||
Restructuring expenses
|
|
14
|
|
|
4
|
|
|
1
|
|
|
3
|
|
||||
Equity earnings of non-consolidated subsidiaries
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Operating income (loss)
|
|
417
|
|
|
320
|
|
|
(191
|
)
|
|
(214
|
)
|
||||
Interest income
|
|
10
|
|
|
4
|
|
|
1
|
|
|
1
|
|
||||
Interest expense
|
|
(96
|
)
|
|
(53
|
)
|
|
(71
|
)
|
|
(75
|
)
|
||||
Other (expense) income, net
|
|
(13
|
)
|
|
84
|
|
|
5
|
|
|
5
|
|
||||
Income (loss) from continuing operations before income taxes
|
|
318
|
|
|
355
|
|
|
(256
|
)
|
|
(283
|
)
|
||||
Income tax expense
|
|
(72
|
)
|
|
(112
|
)
|
|
(67
|
)
|
|
(47
|
)
|
||||
Income (loss) from continuing operations
|
|
246
|
|
|
243
|
|
|
(323
|
)
|
|
(330
|
)
|
||||
Discontinued operations:
|
|
|
|
|
|
|
|
|
||||||||
Loss from discontinued operations before income taxes
|
|
—
|
|
|
(1
|
)
|
|
(14
|
)
|
|
(13
|
)
|
||||
Income tax benefit
|
|
—
|
|
|
—
|
|
|
3
|
|
|
20
|
|
||||
(Loss) income from discontinued operations
|
|
—
|
|
|
(1
|
)
|
|
(11
|
)
|
|
7
|
|
||||
Net income (loss)
|
|
246
|
|
|
242
|
|
|
(334
|
)
|
|
(323
|
)
|
||||
Less: net income attributable to non-controlling interest, net of taxes
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net income (loss) attributable to Leidos common stockholders
|
|
$
|
244
|
|
|
$
|
242
|
|
|
$
|
(334
|
)
|
|
$
|
(323
|
)
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
||||||||
Basic:
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations attributable to Leidos common stockholders
|
|
$
|
2.39
|
|
|
$
|
3.33
|
|
|
$
|
(4.36
|
)
|
|
$
|
(4.46
|
)
|
Discontinued operations, net of taxes
|
|
—
|
|
|
(0.01
|
)
|
|
(0.15
|
)
|
|
0.10
|
|
||||
Net income (loss) attributable to Leidos common stockholders
|
|
$
|
2.39
|
|
|
$
|
3.32
|
|
|
$
|
(4.51
|
)
|
|
$
|
(4.36
|
)
|
Diluted:
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations attributable to Leidos common stockholders
|
|
$
|
2.35
|
|
|
$
|
3.28
|
|
|
$
|
(4.36
|
)
|
|
$
|
(4.46
|
)
|
Discontinued operations, net of taxes
|
|
—
|
|
|
(0.01
|
)
|
|
(0.15
|
)
|
|
0.10
|
|
||||
Net income (loss) attributable to Leidos common stockholders
|
|
$
|
2.35
|
|
|
$
|
3.27
|
|
|
$
|
(4.51
|
)
|
|
$
|
(4.36
|
)
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||||
|
|
December 30,
2016 |
|
January 1,
2016 |
|
January 2,
2015 |
|
January 30,
2015 |
||||||||
|
|
|
|
|
|
(unaudited)
|
|
|
||||||||
|
|
(in millions)
|
||||||||||||||
Net income (loss)
|
|
$
|
246
|
|
|
$
|
242
|
|
|
$
|
(334
|
)
|
|
$
|
(323
|
)
|
Other comprehensive income (loss), net of taxes:
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments, net of taxes of $1 million for fiscal 2016 and fiscal 2015
|
|
(7
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
||||
Unrecognized gain on derivative instruments, net of taxes of ($10) million for fiscal 2016
|
|
14
|
|
|
1
|
|
|
1
|
|
|
—
|
|
||||
Pension liability adjustments, net of taxes of $2 million, ($2) million, $2 million and $3 million for fiscal 2016, the 11-month periods ended January 1, 2016 and January 2, 2015, and fiscal 2015, respectively
|
|
(3
|
)
|
|
3
|
|
|
(4
|
)
|
|
(4
|
)
|
||||
Total other comprehensive income (loss), net of taxes
|
|
4
|
|
|
3
|
|
|
(4
|
)
|
|
(5
|
)
|
||||
Comprehensive income (loss)
|
|
250
|
|
|
245
|
|
|
(338
|
)
|
|
(328
|
)
|
||||
Less: comprehensive income attributable to non-controlling interest, net of taxes
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Comprehensive income (loss) attributable to Leidos
|
|
$
|
248
|
|
|
$
|
245
|
|
|
$
|
(338
|
)
|
|
$
|
(328
|
)
|
|
|
Shares of common stock
|
|
Additional
paid-in capital |
|
Accumulated earnings (deficit)
|
|
Accumulated
other comprehensive loss |
|
Leidos Holdings, Inc. stockholders' equity
|
|
Non-controlling interest
|
|
Total
|
|||||||||||||
|
|
|
|||||||||||||||||||||||||
|
|
(in millions, except for per share amounts)
|
|||||||||||||||||||||||||
Balance at January 31, 2014
|
|
80
|
|
|
$
|
1,576
|
|
|
$
|
25
|
|
|
$
|
(6
|
)
|
|
$
|
1,595
|
|
|
$
|
—
|
|
|
$
|
1,595
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
(323
|
)
|
|
—
|
|
|
(323
|
)
|
|
—
|
|
|
(323
|
)
|
||||||
Other comprehensive loss, net of taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
||||||
Issuances of stock (less forfeitures)
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||
Repurchases of stock and other
|
|
(7
|
)
|
|
(178
|
)
|
|
(37
|
)
|
|
—
|
|
|
(215
|
)
|
|
—
|
|
|
(215
|
)
|
||||||
Dividends of $1.28 per common share
|
|
—
|
|
|
—
|
|
|
(89
|
)
|
|
—
|
|
|
(89
|
)
|
|
—
|
|
|
(89
|
)
|
||||||
Adjustments for income tax benefits from stock-based compensation
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
(6
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
42
|
|
|
—
|
|
|
—
|
|
|
42
|
|
|
—
|
|
|
42
|
|
||||||
Other
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
||||||
Balance at January 30, 2015
|
|
74
|
|
|
1,433
|
|
|
(424
|
)
|
|
(11
|
)
|
|
998
|
|
|
—
|
|
|
998
|
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
242
|
|
|
—
|
|
|
242
|
|
|
—
|
|
|
242
|
|
||||||
Other comprehensive income, net of tax
es
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||||
Issuances of stock (less forfeitures)
|
|
1
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
||||||
Repurchases of stock and other
|
|
(3
|
)
|
|
(118
|
)
|
|
—
|
|
|
—
|
|
|
(118
|
)
|
|
—
|
|
|
(118
|
)
|
||||||
Dividends of $1.28 per common share
|
|
—
|
|
|
—
|
|
|
(95
|
)
|
|
—
|
|
|
(95
|
)
|
|
—
|
|
|
(95
|
)
|
||||||
Adjustments for income tax benefits from stock-based compensation
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||
Stock-based compensation
|
|
—
|
|
|
30
|
|
|
—
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|
30
|
|
||||||
Balance at January 1, 2016
|
|
72
|
|
|
1,353
|
|
|
(277
|
)
|
|
(8
|
)
|
|
1,068
|
|
|
—
|
|
|
1,068
|
|
||||||
Net income
|
|
|
|
|
|
|
|
244
|
|
|
—
|
|
|
244
|
|
|
2
|
|
|
246
|
|
||||||
Other comprehensive income, net of taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||||
Issuances of stock (less forfeitures)
|
|
1
|
|
|
36
|
|
|
—
|
|
|
—
|
|
|
36
|
|
|
—
|
|
|
36
|
|
||||||
Repurchases of stock and other
|
|
—
|
|
|
(24
|
)
|
|
—
|
|
|
—
|
|
|
(24
|
)
|
|
—
|
|
|
(24
|
)
|
||||||
Dividends of $1.28 per share
|
|
—
|
|
|
—
|
|
|
(144
|
)
|
|
—
|
|
|
(144
|
)
|
|
—
|
|
|
(144
|
)
|
||||||
Special cash dividend of $13.64 per share
|
|
—
|
|
|
(1,022
|
)
|
|
—
|
|
|
—
|
|
|
(1,022
|
)
|
|
—
|
|
|
(1,022
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
35
|
|
|
—
|
|
|
—
|
|
|
35
|
|
|
—
|
|
|
35
|
|
||||||
Stock issued for the IS&GS Business acquisition
|
|
77
|
|
|
2,938
|
|
|
—
|
|
|
—
|
|
|
2,938
|
|
|
—
|
|
|
2,938
|
|
||||||
Equity interest acquired
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
10
|
|
||||||
Balance at December 30, 2016
|
|
150
|
|
|
$
|
3,316
|
|
|
$
|
(177
|
)
|
|
$
|
(4
|
)
|
|
$
|
3,135
|
|
|
$
|
12
|
|
|
$
|
3,147
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||||
|
|
December 30,
2016 |
|
January 1,
2016 |
|
January 2,
2015 |
|
January 30,
2015 |
||||||||
|
|
|
|
|
|
(unaudited)
|
|
|
||||||||
|
|
(in millions)
|
||||||||||||||
Cash flows from operations:
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
|
$
|
246
|
|
|
$
|
242
|
|
|
$
|
(334
|
)
|
|
$
|
(323
|
)
|
Income (loss) from discontinued operations
|
|
—
|
|
|
1
|
|
|
11
|
|
|
(7
|
)
|
||||
Adjustments to reconcile net income (loss) to net cash provided by continuing operations:
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
|
122
|
|
|
41
|
|
|
58
|
|
|
62
|
|
||||
Stock-based compensation
|
|
35
|
|
|
30
|
|
|
40
|
|
|
42
|
|
||||
Goodwill impairment charges
|
|
—
|
|
|
—
|
|
|
486
|
|
|
486
|
|
||||
Asset impairment charges
|
|
4
|
|
|
33
|
|
|
41
|
|
|
81
|
|
||||
Gain on a real estate sale
|
|
—
|
|
|
(82
|
)
|
|
—
|
|
|
—
|
|
||||
Other
|
|
—
|
|
|
6
|
|
|
4
|
|
|
8
|
|
||||
Change in assets and liabilities, net of effects of acquisitions and dispositions:
|
|
|
|
|
|
|
|
|
|
|
||||||
Receivables
|
|
123
|
|
|
(19
|
)
|
|
68
|
|
|
162
|
|
||||
Inventory, prepaid expenses and other current assets
|
|
(101
|
)
|
|
3
|
|
|
6
|
|
|
(12
|
)
|
||||
Accounts payable and accrued liabilities
|
|
(25
|
)
|
|
102
|
|
|
(41
|
)
|
|
(43
|
)
|
||||
Accrued payroll and employee benefits
|
|
26
|
|
|
5
|
|
|
10
|
|
|
(21
|
)
|
||||
Deferred income taxes and income taxes receivable/payable
|
|
36
|
|
|
81
|
|
|
37
|
|
|
(31
|
)
|
||||
Other long-term assets/liabilities
|
|
(20
|
)
|
|
(44
|
)
|
|
(1
|
)
|
|
(8
|
)
|
||||
Total cash flows provided by operating activities of continuing operations
|
|
446
|
|
|
399
|
|
|
385
|
|
|
396
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
||||||||
Payments for property, plant and equipment
|
|
(29
|
)
|
|
(27
|
)
|
|
(29
|
)
|
|
(29
|
)
|
||||
Acquisitions of businesses
|
|
25
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
||||
Payments on accrued purchase price related to prior acquisition
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
||||
Net proceeds from sale of assets
|
|
3
|
|
|
79
|
|
|
—
|
|
|
—
|
|
||||
Proceeds from disposition of business
|
|
23
|
|
|
27
|
|
|
—
|
|
|
—
|
|
||||
Proceeds from collections on promissory note
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Proceeds from U.S. Treasury cash grant
|
|
—
|
|
|
—
|
|
|
80
|
|
|
80
|
|
||||
Total cash flows provided by investing activities of continuing operations
|
|
26
|
|
|
64
|
|
|
51
|
|
|
51
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||||
|
|
December 30,
2016 |
|
January 1,
2016 |
|
January 2,
2015 |
|
January 30,
2015 |
||||||||
|
|
|
|
|
|
(unaudited)
|
|
|
||||||||
|
|
(in millions)
|
||||||||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
||||||||
Payments of long-term debt
|
|
(277
|
)
|
|
(39
|
)
|
|
(154
|
)
|
|
(177
|
)
|
||||
Payments on real estate financing transaction
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
||||
Proceeds from debt issuance
|
|
690
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Payments for debt issuance costs
|
|
(30
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Proceeds from issuances of stock
|
|
25
|
|
|
6
|
|
|
7
|
|
|
7
|
|
||||
Repurchases of stock and other
|
|
(24
|
)
|
|
(118
|
)
|
|
(213
|
)
|
|
(215
|
)
|
||||
Special cash dividend payment
|
|
(993
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Dividend payments
|
|
(142
|
)
|
|
(93
|
)
|
|
(72
|
)
|
|
(95
|
)
|
||||
Other
|
|
—
|
|
|
3
|
|
|
1
|
|
|
2
|
|
||||
Total cash flows used in financing activities of continuing operations
|
|
(751
|
)
|
|
(249
|
)
|
|
(431
|
)
|
|
(478
|
)
|
||||
(Decrease) increase in cash and cash equivalents from continuing operations
|
|
(279
|
)
|
|
214
|
|
|
5
|
|
|
(31
|
)
|
||||
Cash flows from discontinued operations:
|
|
|
|
|
|
|
|
|
||||||||
Cash (used in) provided by operating activities of discontinued operations
|
|
—
|
|
|
(7
|
)
|
|
(5
|
)
|
|
15
|
|
||||
Cash (used in) provided by investing activities of discontinued operations
|
|
(1
|
)
|
|
6
|
|
|
29
|
|
|
29
|
|
||||
(Decrease) increase in cash and cash equivalents from discontinued operations
|
|
(1
|
)
|
|
(1
|
)
|
|
24
|
|
|
44
|
|
||||
Total (decrease) increase in cash and cash equivalents
|
|
(280
|
)
|
|
213
|
|
|
29
|
|
|
13
|
|
||||
Cash and cash equivalents at beginning of year
|
|
656
|
|
|
443
|
|
|
430
|
|
|
430
|
|
||||
Cash and cash equivalents at end of year
|
|
$
|
376
|
|
|
$
|
656
|
|
|
$
|
459
|
|
|
$
|
443
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||
|
|
December 30,
2016 |
|
January 1,
2016 |
|
January 30,
2015 |
||||||
|
|
(in millions, except for per share amounts)
|
||||||||||
Net favorable impact to income (loss) from continuing operations before taxes
|
|
$
|
37
|
|
|
$
|
18
|
|
|
$
|
24
|
|
Impact on diluted EPS from continuing operations attributable to Leidos common stockholders
|
|
$
|
0.22
|
|
|
$
|
0.14
|
|
|
$
|
0.20
|
|
|
|
Depreciation method
|
|
Estimated useful lives (in years)
|
Computers and other equipment
|
|
Straight-line or declining-balance
|
|
2-10
|
Buildings
|
|
Straight-line
|
|
Not to exceed 40
|
Building improvements and leasehold improvements
|
|
Straight-line
|
|
Shorter of useful life of asset or remaining lease term
|
Office furniture
|
|
Straight-line or declining-balance
|
|
6-9
|
|
|
Estimated useful lives (in years)
|
Customer relationships
|
|
8-10
|
Software and technology
|
|
9-15
|
Programs and contract intangibles
|
|
10
|
Backlog
|
|
1
|
Value of common stock issued to Lockheed Martin stockholders
(1)
|
$
|
2,929
|
|
Equity consideration for replacement awards
(2)
|
9
|
|
|
Preliminary working capital adjustments
|
50
|
|
|
Preliminary purchase price
|
$
|
2,988
|
|
Cash
|
$
|
25
|
|
Receivables, net
|
940
|
|
|
Inventory, prepaid expenses and other current assets
|
71
|
|
|
Property, plant and equipment
|
137
|
|
|
Deferred tax assets
|
12
|
|
|
Intangible assets
|
1,650
|
|
|
Other assets
|
23
|
|
|
Accounts payable and accrued liabilities
|
(700
|
)
|
|
Accrued payroll and employee benefits
|
(190
|
)
|
|
Long-term debt, current portion
|
(23
|
)
|
|
Deferred tax liabilities
|
(532
|
)
|
|
Long-term debt, net of current portion
|
(1,780
|
)
|
|
Other long-term liabilities
|
(50
|
)
|
|
Total identifiable net liabilities assumed
|
(417
|
)
|
|
Non-controlling interest
|
(10
|
)
|
|
Goodwill
|
3,415
|
|
|
Preliminary purchase price
|
$
|
2,988
|
|
|
|
Weighted average amortization period
|
|
Fair value
|
||
|
|
(in years)
|
|
(in millions)
|
||
Programs and contract intangibles
(1)
|
|
10.0
|
|
$
|
1,450
|
|
Backlog
|
|
1.4
|
|
200
|
|
|
Total
|
|
9.0
|
|
$
|
1,650
|
|
|
|
12 Months Ended
|
||
|
|
December 30,
2016 |
||
|
|
(in millions)
|
||
Acquisition costs
|
|
$
|
44
|
|
Integration costs
|
|
46
|
|
|
Total acquisition and integration costs
|
|
$
|
90
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
||||
(unaudited)
|
|
December 30,
2016 |
|
January 1,
2016 |
||||
|
|
(in millions, except for per share amounts)
|
||||||
Revenues
|
|
$
|
10,443
|
|
|
$
|
9,868
|
|
Income from continuing operations
|
|
342
|
|
|
343
|
|
||
Income from continuing operations attributable to Leidos common stockholders
|
|
336
|
|
|
338
|
|
||
Earnings per share:
|
|
|
|
|
||||
Basic
|
|
$
|
2.24
|
|
|
$
|
2.25
|
|
Diluted
|
|
$
|
2.21
|
|
|
$
|
2.24
|
|
•
|
Acquisition-related costs of
$44 million
were excluded within the pro forma financial information for fiscal 2016 and were included within the supplemental pro forma earnings for the 11-month period ended January 1, 2016.
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||
|
|
December 30,
2016 |
|
January 1,
2016 |
|
January 30,
2015 |
||||||
|
|
(in millions)
|
||||||||||
Revenues
|
|
$
|
14
|
|
|
$
|
17
|
|
|
$
|
39
|
|
Cost of revenues
|
|
14
|
|
|
17
|
|
|
39
|
|
|||
Operating income
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
11 Months Ended
|
|
12 Months Ended
|
||||
|
|
January 1,
2016 |
|
January 30,
2015 |
||||
|
|
(in millions)
|
||||||
Revenues
|
|
$
|
—
|
|
|
$
|
29
|
|
Cost of revenues
|
|
—
|
|
|
21
|
|
||
Selling, general and administrative expenses (including impairment charges of $9 million for the fiscal year ended January 30, 2015)
|
|
2
|
|
|
29
|
|
||
Intangible asset impairment charges
|
|
—
|
|
|
3
|
|
||
Operating loss
|
|
$
|
(2
|
)
|
|
$
|
(24
|
)
|
Non-operating income
|
|
$
|
1
|
|
|
$
|
11
|
|
|
|
12 Months Ended
|
||
|
|
December 30,
2016 |
||
|
|
(in millions)
|
||
Severance costs
|
|
$
|
10
|
|
Lease termination expenses
|
|
2
|
|
|
Restructuring expenses related to the IS&GS Business in operating income
|
|
$
|
12
|
|
|
|
Severance Costs
|
|
Lease Termination Expenses
|
|
Total
|
||||||
|
|
(in millions)
|
||||||||||
Balance as of January 1, 2016
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Charges
|
|
10
|
|
|
2
|
|
|
12
|
|
|||
Cash payments
|
|
(3
|
)
|
|
(1
|
)
|
|
(4
|
)
|
|||
Balance as of December 30, 2016
|
|
$
|
7
|
|
|
$
|
1
|
|
|
$
|
8
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||
|
|
December 30,
2016 |
|
January 1,
2016 |
|
January 30,
2015 |
||||||
|
|
(in millions)
|
||||||||||
Lease termination expenses
|
|
$
|
2
|
|
|
$
|
4
|
|
|
$
|
3
|
|
|
|
Lease Termination Expenses
|
||
|
|
(in millions)
|
||
Balance as of January 30, 2015
|
|
$
|
11
|
|
Charges
|
|
1
|
|
|
Cash payments
|
|
(5
|
)
|
|
Balance as of January 1, 2016
|
|
$
|
7
|
|
Charges
|
|
2
|
|
|
Cash payments
|
|
(5
|
)
|
|
Balance as of December 30, 2016
|
|
$
|
4
|
|
|
|
NSS
|
|
HIS
|
|
IS&GS
|
|
Total
|
||||||||
|
|
(in millions)
|
||||||||||||||
Goodwill at January 30, 2015
|
|
$
|
788
|
|
|
$
|
419
|
|
|
$
|
—
|
|
|
$
|
1,207
|
|
Adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Goodwill at January 1, 2016
|
|
$
|
788
|
|
|
$
|
419
|
|
|
$
|
—
|
|
|
$
|
1,207
|
|
Acquisition of the IS&GS Business
|
|
—
|
|
|
—
|
|
|
3,415
|
|
|
3,415
|
|
||||
Goodwill at December 30, 2016
|
|
$
|
788
|
|
|
$
|
419
|
|
|
$
|
3,415
|
|
|
$
|
4,622
|
|
|
|
December 30, 2016
|
|
January 1, 2016
|
||||||||||||||||||||
|
|
Gross
carrying value |
|
Accumulated
amortization |
|
Net
carrying value |
|
Gross
carrying value |
|
Accumulated
amortization |
|
Net
carrying value |
||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
|
$
|
6
|
|
|
$
|
(5
|
)
|
|
$
|
1
|
|
|
$
|
20
|
|
|
$
|
(16
|
)
|
|
$
|
4
|
|
Software and technology
|
|
61
|
|
|
(48
|
)
|
|
13
|
|
|
61
|
|
|
(44
|
)
|
|
17
|
|
||||||
Programs and contract intangibles
|
|
1,450
|
|
|
(25
|
)
|
|
1,425
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Backlog
|
|
200
|
|
|
(54
|
)
|
|
146
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total finite-lived intangible assets
|
|
1,717
|
|
|
(132
|
)
|
|
1,585
|
|
|
81
|
|
|
(60
|
)
|
|
21
|
|
||||||
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trade names
|
|
4
|
|
|
—
|
|
|
4
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||||
Total intangible assets
|
|
$
|
1,721
|
|
|
$
|
(132
|
)
|
|
$
|
1,589
|
|
|
$
|
85
|
|
|
$
|
(60
|
)
|
|
$
|
25
|
|
Fiscal Year Ending
|
|
|
||
|
|
(in millions)
|
||
2017
|
|
$
|
277
|
|
2018
|
|
213
|
|
|
2019
|
|
188
|
|
|
2020
|
|
165
|
|
|
2021
|
|
139
|
|
|
2022 and thereafter
|
|
603
|
|
|
|
|
$
|
1,585
|
|
|
|
December 30,
2016 |
|
January 1,
2016 |
||||
|
|
(in millions)
|
||||||
Billed and billable receivables
|
|
$
|
847
|
|
|
$
|
715
|
|
Unbilled receivables
|
|
821
|
|
|
216
|
|
||
Allowance for doubtful accounts
|
|
(11
|
)
|
|
(10
|
)
|
||
|
|
$
|
1,657
|
|
|
$
|
921
|
|
|
|
December 30,
2016 |
|
January 1,
2016 |
||||
|
|
(in millions)
|
||||||
Computers and other equipment
|
|
$
|
172
|
|
|
$
|
161
|
|
Leasehold improvements
|
|
161
|
|
|
149
|
|
||
Buildings and improvements
|
|
104
|
|
|
57
|
|
||
Office furniture and fixtures
|
|
35
|
|
|
30
|
|
||
Land
|
|
57
|
|
|
15
|
|
||
Construction in progress
|
|
12
|
|
|
2
|
|
||
|
|
541
|
|
|
414
|
|
||
Less accumulated depreciation and amortization
|
|
(282
|
)
|
|
(272
|
)
|
||
|
|
$
|
259
|
|
|
$
|
142
|
|
|
|
December 30,
2016 |
|
January 1,
2016 |
||||
|
|
(in millions)
|
||||||
Inventory, prepaid expenses and other current assets:
|
|
|
|
|
||||
Inventory
|
|
$
|
67
|
|
|
$
|
70
|
|
Prepaid expenses
|
|
90
|
|
|
26
|
|
||
Prepaid income taxes and tax refunds receivable
|
|
13
|
|
|
56
|
|
||
Transition costs and project assets
|
|
62
|
|
|
26
|
|
||
Pre-contract costs
|
|
33
|
|
|
1
|
|
||
Restricted cash
|
|
20
|
|
|
17
|
|
||
Short-term notes receivable
|
|
3
|
|
|
4
|
|
||
Other
|
|
60
|
|
|
16
|
|
||
|
|
$
|
348
|
|
|
$
|
216
|
|
Other assets:
|
|
|
|
|
||||
Long-term notes receivables
|
|
$
|
89
|
|
|
$
|
91
|
|
Investment in rabbi trust
|
|
48
|
|
|
44
|
|
||
Deferred costs
|
|
31
|
|
|
18
|
|
||
Derivatives
|
|
29
|
|
|
8
|
|
||
Equity method investments
(1)
|
|
20
|
|
|
1
|
|
||
Other
|
|
48
|
|
|
33
|
|
||
|
|
$
|
265
|
|
|
$
|
195
|
|
Accounts payable and accrued liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
591
|
|
|
$
|
306
|
|
Accrued liabilities
|
|
493
|
|
|
318
|
|
||
Collections in excess of revenues and deferred revenue
|
|
246
|
|
|
133
|
|
||
Provision for loss contracts
|
|
97
|
|
|
4
|
|
||
|
|
$
|
1,427
|
|
|
$
|
761
|
|
Accrued payroll and employee benefits:
|
|
|
|
|
||||
Salaries, bonuses and amounts withheld from employees’ compensation
|
|
$
|
211
|
|
|
$
|
142
|
|
Accrued vacation
|
|
244
|
|
|
121
|
|
||
Accrued contributions to employee benefit plans
|
|
28
|
|
|
5
|
|
||
|
|
$
|
483
|
|
|
$
|
268
|
|
Other long-term liabilities:
|
|
|
|
|
||||
Deferred compensation
|
|
$
|
48
|
|
|
$
|
41
|
|
Lease related obligations
|
|
37
|
|
|
35
|
|
||
Tax indemnity liability
|
|
31
|
|
|
—
|
|
||
Deferred revenue
|
|
20
|
|
|
18
|
|
||
Accrued pension liabilities
|
|
6
|
|
|
—
|
|
||
Liabilities for uncertain tax positions
|
|
5
|
|
|
5
|
|
||
Other
|
|
57
|
|
|
50
|
|
||
|
|
$
|
204
|
|
|
$
|
149
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||
|
|
December 30,
2016 |
|
January 1,
2016 |
|
January 30,
2015 |
||||||
|
|
(in millions)
|
||||||||||
Other (expense) income, net
|
|
|
|
|
|
|
||||||
Loss on foreign currency
|
|
$
|
(18
|
)
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
Gain on sale of former headquarters
|
|
—
|
|
|
82
|
|
|
—
|
|
|||
Other income, net
|
|
5
|
|
|
2
|
|
|
9
|
|
|||
|
|
$
|
(13
|
)
|
|
$
|
84
|
|
|
$
|
5
|
|
|
|
Balance sheet line item
|
|
December 30,
2016 |
|
January 1,
2016 |
||||
|
|
|
|
(in millions)
|
||||||
Fair value interest rate swaps
|
|
Other assets
|
|
$
|
3
|
|
|
$
|
8
|
|
Cash flow interest rate swaps
|
|
Other assets
|
|
26
|
|
|
—
|
|
|
|
12 Months Ended
|
||
|
|
December 30,
2016 |
||
|
|
(in millions)
|
||
Effective portion recognized in other comprehensive income
|
|
$
|
22
|
|
Effective portion reclassified from accumulated other comprehensive loss to earnings
|
|
2
|
|
|
Ineffective portion recognized in earnings
|
|
2
|
|
|
|
Stated
interest rate |
|
Effective
interest rate |
|
December 30, 2016
(1)
|
|
January 1, 2016
(1)
|
||||||
|
|
(dollars in millions)
|
||||||||||||
Senior secured notes:
|
|
|
|
|
|
|
|
|
||||||
$450 million notes, due December 2020
|
|
4.45
|
%
|
|
4.53
|
%
|
|
$
|
451
|
|
|
$
|
455
|
|
$300 million notes, due December 2040
|
|
5.95
|
%
|
|
6.03
|
%
|
|
216
|
|
|
216
|
|
||
Senior secured term loans:
|
|
|
|
|
|
|
|
|
||||||
$400 million Term Loan A, due August 2019
|
|
2.86
|
%
|
|
3.78
|
%
|
|
123
|
|
|
—
|
|
||
$690 million Term Loan A, due August 2021
|
|
2.86
|
%
|
|
3.42
|
%
|
|
676
|
|
|
—
|
|
||
$310 million Term Loan A, due August 2021
|
|
2.86
|
%
|
|
3.39
|
%
|
|
304
|
|
|
—
|
|
||
$1,131 million Term Loan B, due August 2023
|
|
3.36
|
%
|
|
3.70
|
%
|
|
1,110
|
|
|
—
|
|
||
Senior unsecured notes:
|
|
|
|
|
|
|
|
|
||||||
$250 million notes, due July 2032
|
|
7.13
|
%
|
|
7.43
|
%
|
|
246
|
|
|
246
|
|
||
$300 million notes, due July 2033
|
|
5.50
|
%
|
|
5.88
|
%
|
|
158
|
|
|
158
|
|
||
Capital leases due on various dates through fiscal 2020
|
|
0%-5.94%
|
|
|
Various
|
|
|
3
|
|
|
6
|
|
||
Total notes payable and long-term debt
|
|
|
|
|
|
3,287
|
|
|
1,081
|
|
||||
Less: current portion
|
|
|
|
|
|
62
|
|
|
2
|
|
||||
Total notes payable and long-term debt, net of current portion
|
|
|
|
|
|
$
|
3,225
|
|
|
$
|
1,079
|
|
||
Fair value of notes payable and long-term debt
|
|
|
|
|
|
$
|
3,336
|
|
|
$
|
1,060
|
|
(1)
|
The carrying amounts of the notes payable and long-term debt as of December 30, 2016, and January 1, 2016, include the remaining principal outstanding of
$3,339 million
and
$1,087 million
, respectively, unamortized debt discounts of
$46 million
and
$5 million
, respectively, and deferred debt issuance costs of
$9 million
and
$7 million
, respectively.
|
Fiscal Year Ending
|
|
|
||
|
|
(in millions)
|
||
2017
|
|
$
|
62
|
|
2018
|
|
82
|
|
|
2019
|
|
190
|
|
|
2020
|
|
593
|
|
|
2021
|
|
711
|
|
|
2022 and thereafter
|
|
1,704
|
|
|
Total principal payments
|
|
3,342
|
|
|
Less: unamortized debt discount and issuance costs
|
|
55
|
|
|
|
|
$
|
3,287
|
|
|
|
Foreign currency translation adjustments
|
|
Unrecognized net (loss) income on derivative instruments
|
|
Pension liability adjustments
|
|
Total accumulated other comprehensive loss
|
||||||||
|
|
(in millions)
|
||||||||||||||
Balance at January 31, 2014
|
|
$
|
2
|
|
|
$
|
(5
|
)
|
|
$
|
(3
|
)
|
|
$
|
(6
|
)
|
Other comprehensive loss
|
|
(1
|
)
|
|
—
|
|
|
(4
|
)
|
|
(5
|
)
|
||||
Balance at January 30, 2015
|
|
1
|
|
|
(5
|
)
|
|
(7
|
)
|
|
(11
|
)
|
||||
Other comprehensive (loss) income
|
|
(1
|
)
|
|
1
|
|
|
3
|
|
|
3
|
|
||||
Balance at January 1, 2016
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
|
(8
|
)
|
||||
Other comprehensive (loss) income
|
|
(7
|
)
|
|
16
|
|
|
3
|
|
|
12
|
|
||||
Reclassification from accumulated other comprehensive loss
|
|
—
|
|
|
(2
|
)
|
|
(6
|
)
|
|
(8
|
)
|
||||
Balance at December 30, 2016
|
|
$
|
(7
|
)
|
|
$
|
10
|
|
|
$
|
(7
|
)
|
|
$
|
(4
|
)
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||||
|
|
December 30,
2016 |
|
January 1,
2016 |
|
January 2,
2015 |
|
January 30,
2015 |
||||||||
|
|
|
|
|
|
(unaudited)
|
|
|
||||||||
Basic:
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations attributable to Leidos common stockholders
|
|
$
|
2.39
|
|
|
$
|
3.33
|
|
|
$
|
(4.36
|
)
|
|
$
|
(4.46
|
)
|
Discontinued operations, net of taxes
|
|
—
|
|
|
(0.01
|
)
|
|
(0.15
|
)
|
|
0.10
|
|
||||
Net income (loss) attributable to Leidos common stockholders
|
|
$
|
2.39
|
|
|
$
|
3.32
|
|
|
$
|
(4.51
|
)
|
|
$
|
(4.36
|
)
|
Diluted:
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations attributable to Leidos common stockholders
|
|
$
|
2.35
|
|
|
$
|
3.28
|
|
|
$
|
(4.36
|
)
|
|
$
|
(4.46
|
)
|
Discontinued operations, net of taxes
|
|
—
|
|
|
(0.01
|
)
|
|
(0.15
|
)
|
|
0.10
|
|
||||
Net income (loss) attributable to Leidos common stockholders
|
|
$
|
2.35
|
|
|
$
|
3.27
|
|
|
$
|
(4.51
|
)
|
|
$
|
(4.36
|
)
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||
|
|
December 30,
2016 |
|
January 1,
2016 |
|
January 2,
2015 |
|
January 30,
2015 |
||||
|
|
|
|
|
|
(unaudited)
|
|
|
||||
|
|
(in millions)
|
||||||||||
Basic weighted average number of shares outstanding
|
|
102
|
|
|
73
|
|
|
74
|
|
|
74
|
|
Dilutive common share equivalents—stock options and other stock awards
|
|
2
|
|
|
1
|
|
|
—
|
|
|
—
|
|
Diluted weighted average number of shares outstanding
|
|
104
|
|
|
74
|
|
|
74
|
|
|
74
|
|
|
|
11 Months Ended
|
|
12 Months Ended
|
|||||
|
|
January 1,
2016 |
|
January 2,
2015 |
|
January 30,
2015 |
|||
|
|
|
|
(unaudited)
|
|
|
|||
|
|
(in millions)
|
|||||||
Stock options excluded
|
|
1
|
|
|
4
|
|
|
4
|
|
Vesting stock awards excluded
|
|
—
|
|
|
3
|
|
|
3
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||
|
|
December 30,
2016 |
|
January 1,
2016 |
|
January 30,
2015 |
||||||
|
|
(in millions)
|
||||||||||
Total stock-based compensation expense
|
|
$
|
35
|
|
|
$
|
30
|
|
|
$
|
42
|
|
Tax benefits recognized from stock-based compensation
|
|
$
|
14
|
|
|
$
|
12
|
|
|
$
|
16
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||||
|
|
December 30, 2016
(Grants after acquisition) |
|
December 30, 2016
(Grants before acquisition) |
|
January 1, 2016
|
|
January 30, 2015
|
||||||||
Weighted average grant-date fair value
|
|
$
|
10.33
|
|
|
$
|
9.54
|
|
|
$
|
6.72
|
|
|
$
|
6.15
|
|
Expected term (in years)
|
|
4.7
|
|
|
4.8
|
|
|
4.7
|
|
|
4.7
|
|
||||
Expected volatility
|
|
37.9
|
%
|
|
29.9
|
%
|
|
24.5
|
%
|
|
25.1
|
%
|
||||
Risk-free interest rate
|
|
1.2
|
%
|
|
1.3
|
%
|
|
1.4
|
%
|
|
1.6
|
%
|
||||
Dividend yield
|
|
2.7
|
%
|
|
2.5
|
%
|
|
2.9
|
%
|
|
2.9
|
%
|
|
|
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, 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
|
|
Options granted
|
|
0.6
|
|
|
43.56
|
|
|
|
|
|
|||
Special dividend adjustments
|
|
0.9
|
|
|
|
|
|
|
|
||||
Options forfeited or expired
|
|
(0.2
|
)
|
|
34.98
|
|
|
|
|
|
|||
Options exercised
|
|
(0.4
|
)
|
|
34.11
|
|
|
|
|
5
|
|
||
Outstanding at December 30, 2016
|
|
3.3
|
|
|
29.77
|
|
|
4.1
|
|
70
|
|
||
Exercisable at December 30, 2016
|
|
1.6
|
|
|
$
|
28.19
|
|
|
3.1
|
|
$
|
37
|
|
Vested and expected to vest in the future as of December 30, 2016
|
|
3.1
|
|
|
$
|
29.58
|
|
|
4.1
|
|
$
|
67
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
||||
|
|
December 30,
2016 |
|
January 1,
2016 |
||||
|
|
(in millions)
|
||||||
Tax benefits from stock options exercised
|
|
$
|
1
|
|
|
$
|
1
|
|
Fair value of stock surrendered in payment of the exercise price for stock options exercised
|
|
$
|
4
|
|
|
$
|
3
|
|
|
|
Shares of stock
under stock
awards
|
|
Weighted
average grant-
date fair value
|
|||
|
|
(in millions)
|
|
|
|||
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
|
|
Awards granted
|
|
1.5
|
|
|
41.45
|
|
|
Awards forfeited
|
|
(0.2
|
)
|
|
40.88
|
|
|
Awards vested
|
|
(1.1
|
)
|
|
38.91
|
|
|
Unvested stock awards at December 30, 2016
|
|
2.5
|
|
|
$
|
40.39
|
|
|
|
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, 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
|
|
|
Awards granted
|
|
0.2
|
|
|
45.62
|
|
|
|
Unvested at December 30, 2016
|
|
0.4
|
|
|
$
|
44.44
|
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||
|
|
December 30,
2016 |
|
January 1,
2016 |
|
January 30,
2015 |
||||||
|
|
(in millions)
|
||||||||||
Current:
|
|
|
|
|
|
|
||||||
Federal and foreign
|
|
$
|
88
|
|
|
$
|
71
|
|
|
$
|
16
|
|
State
|
|
16
|
|
|
14
|
|
|
(6
|
)
|
|||
Deferred:
|
|
|
|
|
|
|
||||||
Federal and foreign
|
|
(29
|
)
|
|
20
|
|
|
26
|
|
|||
State
|
|
(3
|
)
|
|
7
|
|
|
11
|
|
|||
Total
|
|
$
|
72
|
|
|
$
|
112
|
|
|
$
|
47
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||
|
|
December 30,
2016 |
|
January 1,
2016 |
|
January 30,
2015 |
||||||
|
|
(in millions)
|
||||||||||
Amount computed at the statutory federal income tax rate (35%)
|
|
$
|
111
|
|
|
$
|
124
|
|
|
$
|
(99
|
)
|
State income taxes, net of federal tax benefit
|
|
8
|
|
|
14
|
|
|
3
|
|
|||
Taxable conversion of subsidiary
|
|
—
|
|
|
—
|
|
|
(116
|
)
|
|||
Change in valuation allowance for deferred tax assets
|
|
(8
|
)
|
|
(21
|
)
|
|
105
|
|
|||
Change in accruals for uncertain tax positions
|
|
1
|
|
|
(4
|
)
|
|
2
|
|
|||
Research and development credits
|
|
(4
|
)
|
|
(4
|
)
|
|
(4
|
)
|
|||
Dividends paid to employee stock ownership plan
|
|
(38
|
)
|
|
(3
|
)
|
|
(4
|
)
|
|||
Capitalized transaction costs
|
|
7
|
|
|
—
|
|
|
—
|
|
|||
Excess tax benefits from stock-based compensation
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|||
Non-deductible goodwill
|
|
—
|
|
|
—
|
|
|
156
|
|
|||
Other
|
|
3
|
|
|
6
|
|
|
4
|
|
|||
Total
|
|
$
|
72
|
|
|
$
|
112
|
|
|
$
|
47
|
|
Effective income tax rate
|
|
22.6
|
%
|
|
31.5
|
%
|
|
(16.6
|
)%
|
|
|
December 30,
2016 |
|
January 1,
2016 |
||||
|
|
(in millions)
|
||||||
Accrued vacation and bonuses
|
|
$
|
89
|
|
|
$
|
45
|
|
Investments
|
|
3
|
|
|
3
|
|
||
Deferred compensation
|
|
38
|
|
|
39
|
|
||
Vesting stock awards
|
|
23
|
|
|
21
|
|
||
Credits and net operating losses carryovers
|
|
35
|
|
|
15
|
|
||
Employee benefit contributions
|
|
3
|
|
|
—
|
|
||
Capital loss carryover
|
|
81
|
|
|
91
|
|
||
Reserves
|
|
103
|
|
|
31
|
|
||
Deferred rent and tenant allowances
|
|
16
|
|
|
14
|
|
||
Other
|
|
17
|
|
|
13
|
|
||
Total deferred tax assets
|
|
408
|
|
|
272
|
|
||
Valuation allowance
|
|
(102
|
)
|
|
(102
|
)
|
||
Deferred tax assets, net of valuation allowance
|
|
306
|
|
|
170
|
|
||
|
|
|
|
|
||||
Deferred revenue
|
|
(42
|
)
|
|
(36
|
)
|
||
Fixed asset basis differences
|
|
(11
|
)
|
|
(1
|
)
|
||
Purchased intangible assets
|
|
(748
|
)
|
|
(138
|
)
|
||
Partnership interest
|
|
(14
|
)
|
|
(11
|
)
|
||
Employee benefit contributions
|
|
—
|
|
|
(1
|
)
|
||
Other
|
|
(15
|
)
|
|
(9
|
)
|
||
Total deferred tax liabilities
|
|
(830
|
)
|
|
(196
|
)
|
||
Net deferred tax liabilities
|
|
$
|
(524
|
)
|
|
$
|
(26
|
)
|
|
|
December 30,
2016 |
|
January 1,
2016 |
||||
|
|
(in millions)
|
||||||
Net non-current deferred tax assets
|
|
$
|
16
|
|
|
$
|
8
|
|
Net non-current deferred tax liabilities
|
|
(540
|
)
|
|
(34
|
)
|
||
Total net deferred tax liabilities
|
|
$
|
(524
|
)
|
|
$
|
(26
|
)
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||
|
|
December 30,
2016 |
|
January 1,
2016 |
|
January 30,
2015 |
||||||
|
|
(in millions)
|
||||||||||
Unrecognized tax benefits at beginning of year
|
|
$
|
11
|
|
|
$
|
17
|
|
|
$
|
14
|
|
Additions for tax positions related to current year
|
|
1
|
|
|
5
|
|
|
2
|
|
|||
Additions for tax positions related to prior years
|
|
4
|
|
|
4
|
|
|
11
|
|
|||
Reductions for tax positions related to prior years
|
|
(7
|
)
|
|
(15
|
)
|
|
(5
|
)
|
|||
Settlements with taxing authorities
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Lapse of statute of limitations
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|||
Unrecognized tax benefits at end of year
|
|
$
|
9
|
|
|
$
|
11
|
|
|
$
|
17
|
|
Unrecognized tax benefits that, if recognized, would affect the effective income tax rate
|
|
$
|
4
|
|
|
$
|
7
|
|
|
$
|
5
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||
|
|
December 30,
2016 |
|
January 1,
2016 |
|
January 30,
2015 |
||||||
|
|
(in millions)
|
||||||||||
Gross rental expense
|
|
$
|
107
|
|
|
$
|
83
|
|
|
$
|
107
|
|
Less: sublease income
|
|
(2
|
)
|
|
(8
|
)
|
|
(9
|
)
|
|||
Net rental expense
|
|
$
|
105
|
|
|
$
|
75
|
|
|
$
|
98
|
|
Fiscal Year Ending
|
|
Operating lease
commitment |
|
Sublease
receipts |
||||
|
|
(in millions)
|
||||||
2017
|
|
$
|
142
|
|
|
$
|
4
|
|
2018
|
|
106
|
|
|
2
|
|
||
2019
|
|
83
|
|
|
1
|
|
||
2020
|
|
58
|
|
|
1
|
|
||
2021
|
|
41
|
|
|
1
|
|
||
2022 and thereafter
|
|
92
|
|
|
—
|
|
||
Total
|
|
$
|
522
|
|
|
$
|
9
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||||||
|
|
December 30,
2016 |
|
January 1,
2016 |
|
January 2,
2015 |
|
January 30,
2015 |
||||||||
|
|
|
|
|
|
(unaudited)
|
|
|
||||||||
|
|
(in millions)
|
||||||||||||||
Dividends declared and other
|
|
$
|
21
|
|
|
$
|
2
|
|
|
$
|
25
|
|
|
$
|
—
|
|
Capital lease obligations
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Promissory note, net received for disposition of business
|
|
$
|
—
|
|
|
$
|
72
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Promissory note, net received from a real estate sale
|
|
$
|
—
|
|
|
$
|
20
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Stock issued for acquisition of the IS&GS Business
|
|
$
|
2,938
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Cash paid for interest
|
|
$
|
90
|
|
|
$
|
50
|
|
|
$
|
74
|
|
|
$
|
74
|
|
Cash paid for income taxes, net of refunds (including discontinued operations)
|
|
$
|
47
|
|
|
$
|
31
|
|
|
$
|
22
|
|
|
$
|
55
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|
12 Months Ended
|
||||||
|
|
December 30,
2016 |
|
January 1,
2016 |
|
January 30,
2015 |
||||||
|
|
(in millions)
|
||||||||||
Revenues:
|
|
|
|
|
|
|
||||||
National Security Solutions
|
|
$
|
3,610
|
|
|
$
|
3,210
|
|
|
$
|
3,594
|
|
Information Systems & Global Solutions
|
|
1,971
|
|
|
—
|
|
|
—
|
|
|||
Health and Infrastructure
|
|
1,463
|
|
|
1,496
|
|
|
1,485
|
|
|||
Corporate and Other
|
|
(1
|
)
|
|
6
|
|
|
(16
|
)
|
|||
Total revenues
|
|
$
|
7,043
|
|
|
$
|
4,712
|
|
|
$
|
5,063
|
|
Operating income (loss):
|
|
|
|
|
|
|
||||||
National Security Solutions
|
|
292
|
|
|
263
|
|
|
286
|
|
|||
Operating income margin
|
|
8.1
|
%
|
|
8.2
|
%
|
|
8.0
|
%
|
|||
Information Systems & Global Solutions
|
|
114
|
|
|
—
|
|
|
—
|
|
|||
Operating income margin
|
|
5.8
|
%
|
|
—
|
%
|
|
—
|
%
|
|||
Health and Infrastructure
|
|
162
|
|
|
76
|
|
|
(472
|
)
|
|||
Operating income (loss) margin
|
|
11.1
|
%
|
|
5.1
|
%
|
|
(31.8
|
)%
|
|||
Corporate and Other
|
|
(151
|
)
|
|
(19
|
)
|
|
(28
|
)
|
|||
Total operating income (loss)
|
|
$
|
417
|
|
|
$
|
320
|
|
|
$
|
(214
|
)
|
Operating income (loss) margin
|
|
5.9
|
%
|
|
6.8
|
%
|
|
(4.2
|
)%
|
|||
Amortization of intangible assets:
|
|
|
|
|
|
|
||||||
Information Systems & Global Solutions
|
|
79
|
|
|
—
|
|
|
—
|
|
|||
Health and Infrastructure
|
|
5
|
|
|
8
|
|
|
15
|
|
|||
Total amortization of intangible assets
|
|
$
|
84
|
|
|
$
|
8
|
|
|
$
|
15
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|
12 Months Ended
|
|||
|
|
December 30,
2016 |
|
January 1,
2016 |
|
January 30,
2015 |
|||
U.S. Government
|
|
81
|
%
|
|
76
|
%
|
|
79
|
%
|
U.S. DoD
|
|
56
|
%
|
|
64
|
%
|
|
67
|
%
|
U.S. Army
|
|
14
|
%
|
|
14
|
%
|
|
16
|
%
|
Maryland Procurement Office
|
|
7
|
%
|
|
10
|
%
|
|
10
|
%
|
|
|
Three Months Ended
|
||||||||||||||
|
|
April 1,
2016 |
|
July 1,
2016 |
|
September 30,
2016 |
|
December 30,
2016 |
||||||||
|
|
(in millions, except per share amounts)
|
||||||||||||||
Fiscal 2016
(1)
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
$
|
1,312
|
|
|
$
|
1,288
|
|
|
$
|
1,868
|
|
|
$
|
2,575
|
|
Operating income
|
|
$
|
89
|
|
|
$
|
75
|
|
|
$
|
101
|
|
|
$
|
152
|
|
Income from continuing operations
(2)
|
|
$
|
53
|
|
|
$
|
41
|
|
|
$
|
92
|
|
|
$
|
60
|
|
Net income
(2)
|
|
$
|
53
|
|
|
$
|
41
|
|
|
$
|
92
|
|
|
$
|
60
|
|
Net income attributable to Leidos common stockholders
|
|
$
|
53
|
|
|
$
|
41
|
|
|
$
|
91
|
|
|
$
|
59
|
|
Basic earnings per share attributable to Leidos
common stockholders
(3)
|
|
$
|
0.74
|
|
|
$
|
0.56
|
|
|
$
|
0.81
|
|
|
$
|
0.39
|
|
Diluted earnings per share attributable to Leidos common stockholders
(3)
|
|
$
|
0.72
|
|
|
$
|
0.55
|
|
|
$
|
0.80
|
|
|
$
|
0.39
|
|
|
|
Three Months Ended
|
||||||||||||||
|
|
April 3,
2015 |
|
July 3,
2015 |
|
October 2,
2015 |
|
January 1,
2016 |
||||||||
|
|
(in millions, except per share amounts)
|
||||||||||||||
Calendar 2015
(4)(5)
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
$
|
1,246
|
|
|
$
|
1,257
|
|
|
$
|
1,302
|
|
|
$
|
1,281
|
|
Operating income
|
|
$
|
38
|
|
|
$
|
64
|
|
|
$
|
94
|
|
|
$
|
102
|
|
Income from continuing operations
|
|
$
|
23
|
|
|
$
|
37
|
|
|
$
|
49
|
|
|
$
|
127
|
|
Income from discontinued operations
|
|
$
|
18
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Net income
|
|
$
|
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
|
|
(1)
|
Includes the results of the IS&GS Business acquired on August 16, 2016. Additionally, the fiscal 2016 quarterly results include acquisition and integration costs of
$9 million
,
$15 million
,
$44 million
, and
$22 million
in the first, second, third, and fourth quarter, respectively, and restructuring expenses of
$1 million
,
$5 million
, and
$8 million
in the second, third, and fourth quarter, respectively.
|
(2)
|
Due to the adoption of ASU 2016-09 in the second quarter of fiscal 2016, the Company recognized a
$4 million
,
$3 million
and
$1 million
discrete tax benefit for the first, second and third quarter, respectively, of fiscal 2016.
|
(3)
|
Earnings per share from continuing operations are computed independently for each of the quarters presented and therefore may not sum to the total for fiscal 2016 and calendar 2015.
|
(4)
|
On March 20, 2015, the Board of Directors approved the amendment and restatement of the bylaws of Leidos to change Leidos' 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.
|
(5)
|
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 Company's fiscal 2015 results.
|
(a)
|
Is an active, full-time employee of the Company; and
|
(b)
|
Is (i) an Eligible Officer, as defined above, who meets the additional eligibility criteria set forth in Appendices A or B, or (ii) as of the date of Notice of Termination is in a job code that is mapped to the “Executive” Career Stream, levels E1 or E2, but is not an Eligible Officer and meets the additional eligibility criteria set forth in Appendix C.
|
(a)
|
For Eligible Officers eligible for benefits described in Appendix A, the bonus based on the target annual cash incentive established by the Compensation Committee for the year in which the Termination Date occurs (or the target annual bonus established by the Compensation Committee for the most recently completed fiscal year if the Termination Date occurs prior to the establishment of an annual target bonus for the fiscal year in which the Termination Date occurs) with the payout amount calculated based only on the financial performance results (no personal performance) multiplied by a fraction, the numerator of which is the number of days elapsed in the then fiscal year through and including the Termination Date and the denominator of which is 365.
|
(b)
|
For Eligible Officers eligible for benefits described in Appendix B, the bonus based on the target annual cash incentive established by the Compensation Committee for the year in which the Termination Date occurs (or the target annual bonus established by the Compensation Committee for the most recently completed fiscal year if the Termination Date occurs prior to the establishment of an annual target bonus for the fiscal year in which the Termination Date occurs) (no financial or personal performance) multiplied by a fraction, the numerator of which is the number of days elapsed in the
|
(c)
|
For Executives eligible for benefits described in Appendix C, the bonus based on the target annual cash incentive established by the Company under the Executive Incentive Plan for the year in which the Termination Date occurs (or the target annual bonus established by the Compensation Committee for the most recently completed fiscal year if the Termination Date occurs prior to the establishment of an annual target bonus for the fiscal year in which the Termination Date occurs), with the payout amount calculated based only on the financial performance results (no personal performance) multiplied by a fraction, the numerator of which is the number of days elapsed in the then fiscal year through and including the Termination Date and the denominator of which is 365.
|
(a)
|
in the case of the Eligible Employee’s death, the Eligible Employee’s date of death,
|
SECTION 2.
|
Administration of Plan; Amendment and Termination
|
SECTION 3.
|
Benefits
|
SECTION 9.
|
Nonexclusivity of Rights
.
|
(a)
|
The acquisition by any Person of Beneficial Ownership of twenty-five percent (25%) or more of the outstanding voting power; provided, however, that the following acquisitions shall not constitute a Change in Control for purposes of this subparagraph (a): (A) any acquisition directly from the Company; (B) any acquisition by the Company or any of its Subsidiaries; (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Subsidiaries; or (D) any
|
(b)
|
Individuals who at the beginning of any two year period constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual who becomes a director of the Company during such two year period and whose election, or whose nomination for election by the Company’s stockholders, to the Board was either (i) approved by a vote of at least a majority of the directors then comprising the Incumbent Board or (ii) recommended by a nominating committee comprised entirely of directors who are then Incumbent Board members shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange Act), other actual or threatened solicitation of proxies or consents or an actual or threatened tender offer; or
|
(c)
|
Consummation of a reorganization, merger, or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case unless following such Business Combination, (i) all or substantially all of the Persons who were the Beneficial Owners, respectively, of the outstanding shares and outstanding voting securities immediately prior to such Business Combination own, directly or indirectly, more than fifty percent (50%) of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the Company, as the case may be, of the entity resulting from the Business Combination (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the outstanding voting securities (provided, however, that for purposes of this clause (i) any shares of common stock or voting securities of such resulting entity received by such Beneficial Owners in such Business Combination other than as the result of such Beneficial Owners’ ownership of outstanding shares or outstanding voting securities immediately prior to such Business Combination shall not be considered to be owned by such Beneficial Owners for the purposes of calculating their percentage of ownership of the outstanding common stock and voting power of the resulting entity); (ii) no Person (excluding any entity resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such entity resulting from the Business Combination) beneficially owns, directly or indirectly, twenty-five percent (25%) or more of the combined voting power of the then outstanding voting securities of such entity resulting from the Business Combination unless such Person owned twenty-five percent (25%) or more of the outstanding shares or outstanding voting securities immediately prior to the Business Combination; and (iii) at least a majority of the members of the Board of the entity resulting from such Business Combination were members of the Incumbent Board at
|
(d)
|
Approval by the Company’s stockholders of a complete liquidation or dissolution of the Company.
|
(a)
|
any material adverse change in the Eligible Officer’s authority, duties or responsibilities (including reporting responsibilities) from the Eligible Officer’s authority, duties or responsibilities as in effect at any time within 90 days preceding the date of the Change in Control or at any time thereafter, or (ii) in the case of an Eligible Officer who is an Eligible Officer of the Company a significant portion of whose responsibilities relate to the Company’s status as a public company, the failure of such Eligible Officer to continue to serve as an Eligible Officer of a public company, in each case except in connection with the termination of the Eligible Officer’s employment for Disability, Cause, as a result of the Eligible Officer’s death or by the Eligible Officer other than for Good Reason;
|
(b)
|
a material reduction in Eligible Officer’s base salary or any failure to pay the Eligible Officer any cash compensation to which the Eligible Officer is entitled within 15 days after the date when due;
|
(c)
|
the imposition of a requirement (other than for reasonably required travel on Company business which is not materially greater in frequency or duration than prior to the Change in Control) that the Eligible Officer be based (i) at any place outside a 50-mile radius from the Eligible Officer’s principal place of employment immediately prior to the Change in Control and which has a material adverse effect on the Eligible Officer’s commuting requirements, or (ii) at any location other than the Company’s corporate headquarters or, if applicable, the headquarters of the business unit by which he or she was employed immediately prior to the Change in Control, and which has a material adverse effect on the Eligible Officer’s commuting requirements;
|
(d)
|
any material breach by the Company of any provision of this Plan;
|
(e)
|
any purported termination of the Eligible Officer’s employment for Cause by the Company which does not comply with the definition in this Plan; or
|
(f)
|
the failure of the Company to obtain, as contemplated in Section 6, agreement from any Successor to assume the obligations and liabilities under this Plan.
|
A.
|
_________ acknowledges that [he/she] has read and understands the terms of this Plan.
|
B.
|
__________ acknowledges that [he/she] has been advised in writing to consult with an attorney, if desired, concerning this Plan and has received all advice [he/she] deems necessary concerning this Plan.
|
C.
|
__________ acknowledges that [he/she] has been given twenty-one (21) days to consider whether or not to enter into this Plan, has taken as much of this time as necessary to consider whether to enter into this Plan, and has chosen to enter into this Plan freely, knowingly and voluntarily.
|
D.
|
For a seven day period following the execution of this Plan, _________ may revoke this Plan by delivering a written revocation to at the Company. This Plan shall not become effective and enforceable until the revocation period has expired.
|
|
Dated: ____________________, 20__
|
|
[Signature]
|
|
[Print Name]
|
Leidos Holdings, Inc.
|
|
By:
|
Name:
|
Its:
|
(1)
|
Restrictions Following Termination of Employment.
|
(a)
|
Non-Solicit
- Without the express written consent of [the Chief Executive Officer of the Company/or the Compensation Committee with respect to Eligible Officers of the Company], during the [18/12]-month period following the Termination Date, I will not directly or indirectly (i) interfere with any contractual relationship between the Company and any customer, supplier, distributor or manufacturer of or to the Company to the detriment of the Company or (ii) hire directly or indirectly by inducing or attempting to induce any person who is an employee of the Company to perform work or services for any entity other than the Company.
|
(b)
|
Protection of Proprietary Information
- Except to the extent required by law, following my Termination Date, I will have a continuing obligation to comply with the terms of any non-disclosure or similar Plans that I signed while employed by the Company committing to hold confidential the "Confidential or Proprietary Information" (as defined below) of the Company or any of its affiliates, subsidiaries, related companies, joint ventures, partnerships, customers, suppliers, partners, contractors or agents, in each case in accordance with the terms of such Plans. I will not use or disclose or allow the use or disclosure by others to any person or entity of Confidential or Proprietary Information of the Company or others to which I had access or that I was responsible for creating or overseeing during my employment with the Company. In the event I become legally compelled (by deposition, interrogatory, request for documents, subpoena, civil investigative demand or otherwise) to disclose any proprietary or confidential information, I will immediately notify the Company's Executive Vice President and General Counsel as to the existence of the obligation and will cooperate with any reasonable request by the
Company for assistance in seeking to protect the information. All materials to which I have had access, or which were furnished or otherwise made available to me in connection with my employment with the
·
Company shall be and remain the property of the
|
(i)
|
existing and contemplated business, marketing and financial business information such as business plans and methods, marketing information, cost estimates, forecasts, financial data, cost or pricing data, bid and proposal information, customer identification, sources of supply, contemplated product lines, proposed business alliances, and information about customers or competitors, or
|
(ii)
|
existing or contemplated technical information and documentation pertaining to technology, know how, equipment, machines, devices and systems, computer hardware and software, compositions, formulas, products, processes, methods, designs, specifications, mask works, testing or evaluation procedures, manufacturing processes, or production processes.
|
(c)
|
No disparagement
- Following the Termination Date, I will not make any statements, whether verbal or written, that disparage or reasonably may be interpreted to disparage the Company or its stockholders, directors, officers, employees, agents, attorneys, representatives, technology, products or services with respect to any matter whatsoever.
|
(d)
|
Cooperation in Litigation and Investigations
- Following the Termination Date, I will, to the extent reasonably requested, cooperate with the Company in any pending or future litigation (including alternative dispute resolution proceedings) or investigations in which the Company or any of its subsidiaries or affiliates is a party or is required or requested to provide testimony and regarding which, as a result of my employment with the Company, I reasonably could be expected to have knowledge or information relevant to the litigation or investigation. Notwithstanding any other provision of this PECA, nothing in this PECA shall affect my obligation to cooperate with any governmental inquiry or investigation or to give truthful testimony in court.
|
(2)
|
Consideration and Release of Claims.
I acknowledge and agree that the Severance Benefit being made to me is in addition to the payments or benefits that otherwise are or would be owed to me by the Company and that the Severance Benefit being provided to me is in consideration for my entering into this PECA and the Release of Claims attached to this PECA. I acknowledge that the scope and duration of the restrictions in Section 1 are necessary to be effective and are fair and reasonable in light of the value of the payments being made to me. I further acknowledge and agree
|
(3)
|
Remedies for Breach of Section 1; Additional Remedies of Clawback and Recoupment.
|
(a)
|
I agree, upon demand by the Company, to repay the Severance Benefit to the Company in the event any of the following occur:
|
(i)
|
I breach any of the covenants in Section 1;
|
(ii)
|
The Company determines that either (a) my intentional misconduct or gross negligence, or (b) my failure to report another person's intentional misconduct or gross negligence of which I had knowledge during the period I was employed by the Company, or breach of the Company’s clawback/recoupment policy in effect from time to time, contributed to the Company having to restate all or a portion of its financial statements filed for any period with the Securities and Exchange Commission; or
|
(iii)
|
The Company determines that I engaged in fraud, bribery or any other illegal act or that my intentional misconduct or gross negligence (including the failure to report the acts of another person of which I had knowledge during the period I was employed by the Company) contributed to another person's fraud, bribery or other illegal act, which in any such case adversely affected the Company's financial position or reputation.
|
(b)
|
The remedy provided in Section 3(a) shall not be the exclusive remedy available to the Company for any of the conduct described in Section 3(a) and shall not limit the Company from seeking damages or injunctive relief.
|
(4)
|
Injunctive Relief
. I acknowledge that the Company's remedies at law may be inadequate to protect the Company against any actual or threatened breach of the provisions of Section 1 or the conduct described in Section 3(a), and, therefore, without prejudice to any other rights and remedies otherwise available to the Company at law or in equity (including but not limited to, an action under Section 3(a)), the Company shall be entitled to the granting of injunctive relief in its favor and to specific performance without proof of actual damages and without the requirement of the posting of any bond or similar security.
|
(5)
|
Invalidity; Unenforceability
. It is the desire and intent of the parties that the provisions of this PECA shall be enforced to the fullest extent permissible.
|
(6)
|
Miscellaneous
|
(a)
|
The Severance Plan, and this PECA along with the attached Release of All Claims and Potential Claims in Appendix D, constitutes the entire Plan governing the terms of the Severance Benefit and supersedes all other prior Plans and understandings, both written and oral, between me and the Company or any employee, officer or director of the Company concerning payments on account of my termination of employment.
|
(b)
|
This PECA shall be governed by Virginia law, without regard to its provisions governing conflicts of law.
|
(c)
|
This PECA shall inure to the benefit of the Company's successors and assigns and may be assigned by the Company without my consent.
|
|
|
[Signature]
|
Name
|
Jurisdiction of Formation
|
Leidos, Inc.
|
Delaware
|
Leidos Biomedical Research, Inc.
|
Delaware
|
Leidos Consulting Engineers, Inc.
|
California
|
Leidos Engineering, LLC
|
Delaware
|
Benham/Ellerbe Becket, LLC
|
Oklahoma
|
Leidos Global Technology Corporation
|
Delaware
|
Leidos Services, Inc.
|
Delaware
|
Reveal Imaging Technologies, Inc.
|
Delaware
|
Varec Holdings, Inc.
|
Delaware
|
Varec, Inc.
|
Georgia
|
Leidos Europe, Limited
|
United Kingdom
|
Leidos Supply, Limited
|
United Kingdom
|
Benham Military Communities, LLC
|
Oklahoma
|
Leidos Integrated Technology, LLC
|
Delaware
|
Leidos Health Holdings, LLC
|
Delaware
|
Leidos Health, LLC
|
Delaware
|
Leidos CDM Solutions, LLC
|
Delaware
|
BECHTEL SAIC COMPANY, LLC
|
Delaware
|
Leidos Arabia Company Limited
|
Saudi Arabia
|
Leidos Innovations Corporation
|
Delaware
|
Leidos Intermediate Holdings, Inc.
|
Delaware
|
Leidos Federal Healthcare, Inc.
|
Maryland
|
Leidos Government Services, Inc.
|
Maryland
|
QTC Holdings, Inc.
|
Delaware
|
QTC Management, Inc.
|
California
|
QTC Medical Services, Inc.
|
California
|
Leidos Cyber, Inc.
|
Delaware
|
Leidos Management Systems Designers, Inc.
|
Virginia
|
Systems Made Simple, Inc.
|
New York
|
The Sytex Group, Inc.
|
Pennsylvania
|
Sytex, Inc.
|
Pennsylvania
|
Leidos Innovations Global, Inc.
|
Delaware
|
Leidos Innovations Australia Pty Ltd.
|
Australia
|
Leidos Integrated Technology, LLC
|
Delaware
|
Mission Support Alliance, LLC
|
Delaware
|
1.
|
I have reviewed this Annual Report on Form 10-K of Leidos Holdings, 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 registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s 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 registrant, including the registrant’s 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 registrant’s 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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s 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 registrant’s 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 registrant’s internal control over financial reporting.
|
/s/ Roger A. Krone
|
Roger A. Krone
|
Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K of Leidos Holdings, Inc.;
|
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 registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s 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 registrant, including the registrant’s 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 registrant’s 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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s 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 registrant’s 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 registrant’s internal control over financial reporting.
|
/s/ James C. Reagan
|
James C. Reagan
|
Chief Financial Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Roger A. Krone
|
Roger A. Krone
|
Chief Executive Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ James C. Reagan
|
James C. Reagan
|
Chief Financial Officer
|