ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
Leidos Holdings, Inc.
|
|
(Exact name of registrant as specified in its charter)
|
|
Delaware
|
|
20-3562868
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
11951 Freedom Drive, Reston, Virginia
|
|
20190
|
(Address of principal executive office)
|
|
(Zip Code)
|
|
|
|
(571) 526-6000
|
||
(Registrant's telephone number, including area code)
|
|
Large accelerated filer
|
x
|
|
|
|
|
Accelerated filer
|
¨
|
|
|
Non-accelerated filer
|
¨
|
(Do not check if a smaller reporting company)
|
|
Smaller reporting company
|
¨
|
|
||
|
|
|
|
|
|
|
Emerging growth company
|
¨
|
|
|
|
Page
|
Part I
|
|
|
|
|
|
Item 1.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
Part II
|
|
|
|
|
|
Item 1.
|
||
|
|
|
Item 1A.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
Item 5.
|
||
|
|
|
Item 6.
|
||
|
|
|
|
|
|
March 31,
2017 |
|
December 30,
2016 |
||||
|
|
(in millions)
|
||||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
206
|
|
|
$
|
376
|
|
Receivables, net
|
|
1,841
|
|
|
1,657
|
|
||
Inventory, prepaid expenses and other current assets
|
|
348
|
|
|
348
|
|
||
Total current assets
|
|
2,395
|
|
|
2,381
|
|
||
Property, plant and equipment, net
|
|
238
|
|
|
259
|
|
||
Intangible assets, net
|
|
1,520
|
|
|
1,589
|
|
||
Goodwill
|
|
4,619
|
|
|
4,622
|
|
||
Deferred tax assets
|
|
15
|
|
|
16
|
|
||
Other assets
|
|
353
|
|
|
265
|
|
||
|
|
$
|
9,140
|
|
|
$
|
9,132
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
592
|
|
|
$
|
591
|
|
Accrued liabilities
|
|
837
|
|
|
836
|
|
||
Accrued payroll and employee benefits
|
|
396
|
|
|
483
|
|
||
Dividends payable
|
|
21
|
|
|
23
|
|
||
Income taxes payable
|
|
53
|
|
|
21
|
|
||
Notes payable and long-term debt, current portion
|
|
84
|
|
|
62
|
|
||
Total current liabilities
|
|
1,983
|
|
|
2,016
|
|
||
Notes payable and long-term debt, net of current portion
|
|
3,188
|
|
|
3,225
|
|
||
Deferred tax liabilities
|
|
564
|
|
|
540
|
|
||
Other long-term liabilities
|
|
217
|
|
|
204
|
|
||
Stockholders’ equity:
|
|
|
|
|
||||
Common stock, $.0001 par value, 500 million shares authorized, 151 million and 150 million shares issued and outstanding at March 31, 2017 and December 30, 2016, respectively
|
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
|
3,323
|
|
|
3,316
|
|
||
Accumulated deficit
|
|
(154
|
)
|
|
(177
|
)
|
||
Accumulated other comprehensive income (loss)
|
|
8
|
|
|
(4
|
)
|
||
Total Leidos stockholders’ equity
|
|
3,177
|
|
|
3,135
|
|
||
Non-controlling interest
|
|
11
|
|
|
12
|
|
||
Total equity
|
|
3,188
|
|
|
3,147
|
|
||
|
|
$
|
9,140
|
|
|
$
|
9,132
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
2017 |
|
April 1,
2016 |
||||
|
|
(in millions, except per share amounts)
|
||||||
Revenues
|
|
$
|
2,580
|
|
|
$
|
1,312
|
|
Cost of revenues
|
|
2,270
|
|
|
1,154
|
|
||
Selling, general and administrative expenses
|
|
144
|
|
|
60
|
|
||
Acquisition and integration costs
|
|
19
|
|
|
9
|
|
||
Restructuring expenses
|
|
13
|
|
|
—
|
|
||
Equity earnings of non-consolidated subsidiaries
|
|
(7
|
)
|
|
—
|
|
||
Operating income
|
|
141
|
|
|
89
|
|
||
Interest income
|
|
2
|
|
|
3
|
|
||
Interest expense
|
|
(38
|
)
|
|
(14
|
)
|
||
Other income, net
|
|
3
|
|
|
—
|
|
||
Income from continuing operations before income taxes
|
|
108
|
|
|
78
|
|
||
Income tax expense
|
|
(34
|
)
|
|
(25
|
)
|
||
Net income
|
|
74
|
|
|
53
|
|
||
Less: net income attributable to non-controlling interest, net of taxes
|
|
2
|
|
|
—
|
|
||
Net income attributable to Leidos common stockholders
|
|
$
|
72
|
|
|
$
|
53
|
|
Earnings per share:
|
|
|
|
|
||||
Basic
|
|
$
|
0.48
|
|
|
$
|
0.74
|
|
Diluted
|
|
0.47
|
|
|
0.72
|
|
||
|
|
|
|
|
||||
Cash dividends declared per share
|
|
$
|
0.32
|
|
|
$
|
0.32
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
2017 |
|
April 1,
2016 |
||||
|
|
(in millions)
|
||||||
Net income
|
|
$
|
74
|
|
|
$
|
53
|
|
Other comprehensive income, net of taxes:
|
|
|
|
|
||||
Foreign currency translation adjustments
|
|
11
|
|
|
2
|
|
||
Unrecognized gain on derivative instruments
|
|
1
|
|
|
—
|
|
||
Total other comprehensive income, net of taxes
|
|
12
|
|
|
2
|
|
||
Comprehensive income
|
|
86
|
|
|
55
|
|
||
Less: comprehensive income attributable to non-controlling interest, net of taxes
|
|
2
|
|
|
—
|
|
||
Comprehensive income attributable to Leidos common stockholders
|
|
$
|
84
|
|
|
$
|
55
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
2017 |
|
April 1,
2016 |
||||
|
|
(in millions)
|
||||||
Cash flows from operations:
|
|
|
|
|
||||
Net income
|
|
$
|
74
|
|
|
$
|
53
|
|
Adjustments to reconcile net income to net cash used in operations:
|
|
|
|
|
||||
Depreciation and amortization
|
|
82
|
|
|
8
|
|
||
Stock-based compensation
|
|
10
|
|
|
8
|
|
||
Other
|
|
2
|
|
|
2
|
|
||
Change in assets and liabilities, net of effects of acquisitions and dispositions:
|
|
|
|
|
||||
Receivables
|
|
(190
|
)
|
|
(48
|
)
|
||
Inventory, prepaid expenses and other current assets
|
|
6
|
|
|
(11
|
)
|
||
Accounts payable and accrued liabilities
|
|
(37
|
)
|
|
18
|
|
||
Accrued payroll and employee benefits
|
|
(86
|
)
|
|
(51
|
)
|
||
Deferred income taxes and income taxes receivable/payable
|
|
31
|
|
|
9
|
|
||
Other long-term assets/liabilities
|
|
20
|
|
|
(2
|
)
|
||
Total cash flows used in operating activities of continuing operations
|
|
(88
|
)
|
|
(14
|
)
|
||
Cash flows from investing activities:
|
|
|
|
|
||||
Payments for property, plant and equipment
|
|
(7
|
)
|
|
(4
|
)
|
||
Proceeds from collections on promissory note
|
|
2
|
|
|
—
|
|
||
Net proceeds from sale of assets
|
|
—
|
|
|
3
|
|
||
Total cash flows used in investing activities of continuing operations
|
|
(5
|
)
|
|
(1
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
||||
Payments of long-term debt
|
|
(22
|
)
|
|
(1
|
)
|
||
Proceeds from issuances of stock
|
|
1
|
|
|
2
|
|
||
Repurchases of stock and other
|
|
(6
|
)
|
|
(9
|
)
|
||
Dividend payments
|
|
(50
|
)
|
|
(23
|
)
|
||
Total cash flows used in financing activities of continuing operations
|
|
(77
|
)
|
|
(31
|
)
|
||
Decrease in cash and cash equivalents from continuing operations
|
|
(170
|
)
|
|
(46
|
)
|
||
Cash flows from discontinued operations:
|
|
|
|
|
||||
Cash used in investing activities of discontinued operations
|
|
—
|
|
|
(1
|
)
|
||
Decrease in cash and cash equivalents from discontinued operations
|
|
—
|
|
|
(1
|
)
|
||
Total decrease in cash and cash equivalents
|
|
(170
|
)
|
|
(47
|
)
|
||
Cash and cash equivalents at beginning of period
|
|
376
|
|
|
656
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
206
|
|
|
$
|
609
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
2017 |
|
April 1,
2016 |
||||
|
|
(in millions, except per share amounts)
|
||||||
Net favorable impact to income from continuing operations before taxes
|
|
$
|
22
|
|
|
$
|
8
|
|
Impact on diluted EPS from continuing operations attributable to Leidos common stockholders
|
|
$
|
0.09
|
|
|
$
|
0.07
|
|
Value of common stock issued to Lockheed Martin stockholders
(1)
|
$
|
2,929
|
|
Equity consideration for replacement awards
(2)
|
9
|
|
|
Preliminary working capital adjustments
|
56
|
|
|
Preliminary purchase price
|
$
|
2,994
|
|
Cash
|
$
|
25
|
|
Receivables
|
943
|
|
|
Inventory, prepaid expenses and other current assets
|
73
|
|
|
Property, plant and equipment
|
114
|
|
|
Deferred tax assets
|
12
|
|
|
Intangible assets
|
1,650
|
|
|
Other assets
|
104
|
|
|
Accounts payable
|
(286
|
)
|
|
Accrued liabilities
|
(446
|
)
|
|
Accrued payroll and employee benefits
|
(190
|
)
|
|
Long-term debt, current portion
|
(23
|
)
|
|
Deferred tax liabilities
|
(556
|
)
|
|
Long-term debt, net of current portion
|
(1,780
|
)
|
|
Other long-term liabilities
|
(50
|
)
|
|
Total identifiable net liabilities assumed
|
(410
|
)
|
|
Non-controlling interest
|
(8
|
)
|
|
Goodwill
|
3,412
|
|
|
Preliminary purchase price
|
$
|
2,994
|
|
|
|
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
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
2017 |
|
April 1,
2016 |
||||
|
|
(in millions)
|
||||||
Acquisition costs
|
|
$
|
1
|
|
|
$
|
6
|
|
Integration costs
|
|
18
|
|
|
3
|
|
||
Total acquisition and integration costs
|
|
$
|
19
|
|
|
$
|
9
|
|
|
|
Three Months Ended
|
||
(unaudited)
|
|
April 1,
2016 |
||
|
|
(in millions, except per share amounts)
|
||
Revenues
|
|
$
|
2,637
|
|
Income from continuing operations
|
|
52
|
|
|
Income from continuing operations attributable to Leidos common stockholders
|
|
50
|
|
|
Earnings per share:
|
|
|
||
Basic
|
|
$
|
0.34
|
|
Diluted
|
|
0.33
|
|
|
|
Three Months Ended
|
||
|
|
March 31,
2017 |
||
|
|
(in millions)
|
||
Severance costs
|
|
$
|
10
|
|
Lease termination expenses
|
|
3
|
|
|
Restructuring expenses related to the IS&GS Business
|
|
$
|
13
|
|
|
|
Severance costs
|
|
Lease termination expenses
|
|
Total
|
||||||
|
|
(in millions)
|
||||||||||
Balance as of December 30, 2016
|
|
$
|
7
|
|
|
$
|
1
|
|
|
$
|
8
|
|
Charges
|
|
10
|
|
|
3
|
|
|
13
|
|
|||
Cash payments
|
|
(14
|
)
|
|
(3
|
)
|
|
(17
|
)
|
|||
Balance as of March 31, 2017
|
|
$
|
3
|
|
|
$
|
1
|
|
|
$
|
4
|
|
|
|
March 31, 2017
|
|
December 30, 2016
|
||||||||||||
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
||||||||
|
|
(in millions)
|
||||||||||||||
Financial assets
|
|
|
|
|
|
|
|
|
||||||||
Derivatives
|
|
$
|
31
|
|
|
$
|
31
|
|
|
$
|
29
|
|
|
$
|
29
|
|
|
|
Defense Solutions
|
|
Civil
|
|
Health
|
|
Total
|
||||||||
|
|
(in millions)
|
||||||||||||||
Goodwill at January 1, 2016
|
|
$
|
792
|
|
|
$
|
244
|
|
|
$
|
171
|
|
|
$
|
1,207
|
|
Acquisition of the IS&GS Business
|
|
1,162
|
|
|
1,487
|
|
|
766
|
|
|
3,415
|
|
||||
Goodwill at December 30, 2016
|
|
1,954
|
|
|
1,731
|
|
|
937
|
|
|
4,622
|
|
||||
Adjustment to original purchase price allocation
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
(3
|
)
|
||||
Goodwill at March 31, 2017
|
|
$
|
1,953
|
|
|
$
|
1,730
|
|
|
$
|
936
|
|
|
$
|
4,619
|
|
|
|
March 31, 2017
|
|
December 30, 2016
|
||||||||||||||||||||
|
|
Gross carrying value
|
|
Accumulated amortization
|
|
Net carrying value
|
|
Gross carrying value
|
|
Accumulated amortization
|
|
Net carrying value
|
||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Programs and contract intangibles
|
|
$
|
1,450
|
|
|
$
|
(57
|
)
|
|
$
|
1,393
|
|
|
$
|
1,450
|
|
|
$
|
(25
|
)
|
|
$
|
1,425
|
|
Backlog
|
|
200
|
|
|
(91
|
)
|
|
109
|
|
|
200
|
|
|
(54
|
)
|
|
146
|
|
||||||
Software and technology
|
|
61
|
|
|
(48
|
)
|
|
13
|
|
|
61
|
|
|
(48
|
)
|
|
13
|
|
||||||
Customer relationships
|
|
6
|
|
|
(5
|
)
|
|
1
|
|
|
6
|
|
|
(5
|
)
|
|
1
|
|
||||||
Total finite-lived intangible assets
|
|
1,717
|
|
|
(201
|
)
|
|
1,516
|
|
|
1,717
|
|
|
(132
|
)
|
|
1,585
|
|
||||||
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trade names
|
|
4
|
|
|
—
|
|
|
4
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||||
Total intangible assets
|
|
$
|
1,721
|
|
|
$
|
(201
|
)
|
|
$
|
1,520
|
|
|
$
|
1,721
|
|
|
$
|
(132
|
)
|
|
$
|
1,589
|
|
Fiscal Year Ending
|
|
|
||
|
|
(in millions)
|
||
2017 (remainder of year)
|
|
$
|
208
|
|
2018
|
|
213
|
|
|
2019
|
|
188
|
|
|
2020
|
|
165
|
|
|
2021
|
|
139
|
|
|
2022 and thereafter
|
|
603
|
|
|
|
|
$
|
1,516
|
|
|
|
March 31,
2017 |
|
December 30,
2016 |
||||
|
|
(in millions)
|
||||||
Computers and other equipment
|
|
$
|
193
|
|
|
$
|
172
|
|
Leasehold improvements
|
|
165
|
|
|
161
|
|
||
Buildings and improvements
|
|
62
|
|
|
104
|
|
||
Office furniture and fixtures
|
|
41
|
|
|
35
|
|
||
Land
|
|
52
|
|
|
57
|
|
||
Construction in progress
|
|
14
|
|
|
12
|
|
||
|
|
527
|
|
|
541
|
|
||
Less: accumulated depreciation and amortization
|
|
(289
|
)
|
|
(282
|
)
|
||
|
|
$
|
238
|
|
|
$
|
259
|
|
|
|
Balance sheet line item
|
|
March 31,
2017 |
|
December 30,
2016 |
||||
|
|
|
|
(in millions)
|
||||||
Fair value interest rate swaps
|
|
Other assets
|
|
$
|
3
|
|
|
$
|
3
|
|
Cash flow interest rate swaps
|
|
Other assets
|
|
28
|
|
|
26
|
|
|
|
Three Months Ended
|
||
|
|
March 31,
2017 |
||
|
|
(in millions)
|
||
Effective portion recognized in other comprehensive income
|
|
$
|
1
|
|
Effective portion reclassified from accumulated other comprehensive income (loss) to earnings
|
|
1
|
|
|
|
Stated interest rate
|
|
Effective interest rate
|
|
March 31, 2017
(1)
|
|
December 30, 2016
(1)
|
||||
|
|
|
|
|
|
(in millions)
|
||||||
Senior secured notes:
|
|
|
|
|
|
|
|
|
||||
$450 million notes, due December 2020
|
|
4.45%
|
|
4.53%
|
|
$
|
451
|
|
|
$
|
451
|
|
$300 million notes, due December 2040
|
|
5.95%
|
|
6.03%
|
|
216
|
|
|
216
|
|
||
Senior secured term loans:
|
|
|
|
|
|
|
|
|
||||
$400 million Term Loan A, due August 2019
|
|
2.81%
|
|
3.73%
|
|
118
|
|
|
123
|
|
||
$690 million Term Loan A, due August 2021
|
|
2.81%
|
|
3.37%
|
|
668
|
|
|
676
|
|
||
$310 million Term Loan A, due August 2021
|
|
2.81%
|
|
3.35%
|
|
301
|
|
|
304
|
|
||
$1,131 million Term Loan B, due August 2023
|
|
3.06%
|
|
3.42%
|
|
1,107
|
|
|
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
|
|
7
|
|
|
3
|
|
||
Total notes payable and long-term debt
|
|
|
|
|
|
3,272
|
|
|
3,287
|
|
||
Less: current portion
|
|
|
|
|
|
84
|
|
|
62
|
|
||
Total notes payable and long-term debt, net of current portion
|
|
|
|
|
|
$
|
3,188
|
|
|
$
|
3,225
|
|
(1)
|
The carrying amounts of the senior secured term loans and notes and unsecured notes as of March 31, 2017, and December 30, 2016, include the remaining principal outstanding of
$3,315 million
and
$3,336 million
, respectively, plus
$3 million
for both periods related to the fair value of the interest rate swaps (see "Note 9–Derivative Instruments"), less unamortized debt discounts of
$43 million
and
$46 million
, respectively, less deferred debt issuance costs of
$10 million
and
$9 million
, respectively.
|
|
|
Foreign currency translation adjustments
|
|
Unrecognized (loss) gain on derivative instruments
|
|
Pension liability adjustments
|
|
Total accumulated other comprehensive income (loss)
|
||||||||
|
|
(in millions)
|
||||||||||||||
Balance at January 1, 2016
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
$
|
(4
|
)
|
|
$
|
(8
|
)
|
Other comprehensive (loss) income
|
|
(8
|
)
|
|
26
|
|
|
1
|
|
|
19
|
|
||||
Taxes
|
|
1
|
|
|
(10
|
)
|
|
2
|
|
|
(7
|
)
|
||||
Reclassification from accumulated other comprehensive income (loss)
|
|
—
|
|
|
(2
|
)
|
|
(6
|
)
|
|
(8
|
)
|
||||
Balance at December 30, 2016
|
|
(7
|
)
|
|
10
|
|
|
(7
|
)
|
|
(4
|
)
|
||||
Other comprehensive income
|
|
13
|
|
|
2
|
|
|
—
|
|
|
15
|
|
||||
Taxes
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||
Reclassification from accumulated other comprehensive income (loss)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||
Balance at March 31, 2017
|
|
$
|
4
|
|
|
$
|
11
|
|
|
$
|
(7
|
)
|
|
$
|
8
|
|
|
|
Three Months Ended
|
||||
|
|
March 31,
2017 |
|
April 1,
2016 |
||
|
|
(in millions)
|
||||
Basic weighted average number of shares outstanding
|
|
150
|
|
|
72
|
|
Dilutive common share equivalents—stock options and other stock awards
|
|
3
|
|
|
2
|
|
Diluted weighted average number of shares outstanding
|
|
153
|
|
|
74
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
2017 |
|
April 1,
2016 |
||||
|
|
(in millions)
|
||||||
Supplementary cash flow information:
|
|
|
|
|
||||
Cash paid for interest
|
|
$
|
32
|
|
|
$
|
13
|
|
Cash paid for income taxes, net of refunds
|
|
1
|
|
|
17
|
|
||
Non-cash financing activity:
|
|
|
|
|
||||
Capital lease obligation
|
|
6
|
|
|
—
|
|
•
|
Defense Solutions – delivers cutting edge technology and services to the DoD, military services, the U.S. Intelligence Community, DHS, agencies of U.S. allies abroad and other federal and civilian customers. The Company's Defense Solutions business is focused on cybersecurity, data analytics, IT modernization and software development, as well as technology to support intelligence, surveillance and reconnaissance services.
|
•
|
Civil – provides services and solutions to civil agencies of the U.S. Government and commercial customers. The Company's Civil business is focused on software development, operations and sustainment, enterprise IT modernization, systems engineering and cyber services.
|
•
|
Health – provides services and solutions to the Defense Health Agency, Veterans Administration, HHS, other civil health agencies of the U.S. Government and commercial healthcare providers. The Company's Health business is focused on enterprise IT modernization, software development, data analytics, electronic health record implementation, mission critical operations and sustainment, life sciences and public health.
|
•
|
Corporate – includes the operations of various corporate activities and certain expense items that are not reimbursed by our U.S. Government customers.
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
2017 |
|
April 1,
2016 |
||||
|
|
(in millions)
|
||||||
Revenues:
|
|
|
|
|
||||
Defense Solutions
|
|
$
|
1,294
|
|
|
$
|
780
|
|
Civil
|
|
842
|
|
|
361
|
|
||
Health
|
|
443
|
|
|
171
|
|
||
Corporate
|
|
1
|
|
|
—
|
|
||
Total revenues
|
|
$
|
2,580
|
|
|
$
|
1,312
|
|
|
|
|
|
|
||||
Operating income (loss):
|
|
|
|
|
||||
Defense Solutions
|
|
$
|
79
|
|
|
$
|
71
|
|
Civil
|
|
54
|
|
|
22
|
|
||
Health
|
|
47
|
|
|
16
|
|
||
Corporate
|
|
(39
|
)
|
|
(20
|
)
|
||
Total operating income
|
|
$
|
141
|
|
|
$
|
89
|
|
|
|
Three Months Ended
|
|||||||||||||
|
|
March 31,
2017 |
|
April 1,
2016 |
|
Dollar change
|
|
Percent change
|
|||||||
|
|
(dollars in millions)
|
|||||||||||||
Revenues
|
|
$
|
2,580
|
|
|
$
|
1,312
|
|
|
$
|
1,268
|
|
|
96.6
|
%
|
|
|
|
|
|
|
|
|
|
|||||||
Operating income
|
|
141
|
|
|
89
|
|
|
52
|
|
|
58.4
|
%
|
|||
Non-operating expense, net
|
|
(33
|
)
|
|
(11
|
)
|
|
(22
|
)
|
|
200.0
|
%
|
|||
Income from continuing operations before income taxes
|
|
108
|
|
|
78
|
|
|
30
|
|
|
38.5
|
%
|
|||
Income tax expense
|
|
(34
|
)
|
|
(25
|
)
|
|
(9
|
)
|
|
36.0
|
%
|
|||
Net income
|
|
74
|
|
|
53
|
|
|
21
|
|
|
39.6
|
%
|
|||
Less: net income attributable to non-controlling interest, net of taxes
|
|
2
|
|
|
—
|
|
|
2
|
|
|
NM
|
|
|||
Net income attributable to Leidos common stockholders
|
|
$
|
72
|
|
|
$
|
53
|
|
|
$
|
19
|
|
|
35.8
|
%
|
Operating margin
|
|
5.5
|
%
|
|
6.8
|
%
|
|
|
|
|
|
|
Three Months Ended
|
|||||||||||||
Defense Solutions
|
|
March 31,
2017 |
|
April 1,
2016 |
|
Dollar change
|
|
Percent change
|
|||||||
|
|
(dollars in millions)
|
|||||||||||||
Revenues
|
|
$
|
1,294
|
|
|
$
|
780
|
|
|
$
|
514
|
|
|
65.9
|
%
|
Operating income
|
|
79
|
|
|
71
|
|
|
8
|
|
|
11.3
|
%
|
|||
Operating income margin
|
|
6.1
|
%
|
|
9.1
|
%
|
|
|
|
|
|
|
Three Months Ended
|
|||||||||||||
Civil
|
|
March 31,
2017 |
|
April 1,
2016 |
|
Dollar change
|
|
Percent change
|
|||||||
|
|
(dollars in millions)
|
|||||||||||||
Revenues
|
|
$
|
842
|
|
|
$
|
361
|
|
|
$
|
481
|
|
|
133.2
|
%
|
Operating income
|
|
54
|
|
|
22
|
|
|
32
|
|
|
145.5
|
%
|
|||
Operating income margin
|
|
6.4
|
%
|
|
6.1
|
%
|
|
|
|
|
|
|
Three Months Ended
|
|||||||||||||
Health
|
|
March 31,
2017 |
|
April 1,
2016 |
|
Dollar change
|
|
Percent change
|
|||||||
|
|
(dollars in millions)
|
|||||||||||||
Revenues
|
|
$
|
443
|
|
|
$
|
171
|
|
|
$
|
272
|
|
|
159.1
|
%
|
Operating income
|
|
47
|
|
|
16
|
|
|
31
|
|
|
193.8
|
%
|
|||
Operating income margin
|
|
10.6
|
%
|
|
9.4
|
%
|
|
|
|
|
|
|
Three Months Ended
|
|||||||||||||
Corporate
|
|
March 31,
2017 |
|
April 1,
2016 |
|
Dollar change
|
|
Percent change
|
|||||||
|
|
(dollars in millions)
|
|||||||||||||
Revenues
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
NM
|
|
Operating loss
|
|
(39
|
)
|
|
(20
|
)
|
|
(19
|
)
|
|
95.0
|
%
|
|||
NM - Not meaningful
|
|
|
|
|
|
|
|
|
|
|
March 31,
2017 |
|
December 30,
2016 |
||||
|
|
(in millions)
|
||||||
Defense Solutions:
|
|
|
|
|
||||
Funded backlog
|
|
$
|
2,572
|
|
|
$
|
3,171
|
|
Negotiated unfunded backlog
|
|
5,005
|
|
|
4,936
|
|
||
Total Defense Solutions backlog
|
|
$
|
7,577
|
|
|
$
|
8,107
|
|
Civil:
|
|
|
|
|
||||
Funded backlog
|
|
$
|
1,596
|
|
|
$
|
1,950
|
|
Negotiated unfunded backlog
|
|
5,466
|
|
|
5,250
|
|
||
Total Civil backlog
|
|
$
|
7,062
|
|
|
$
|
7,200
|
|
Health:
|
|
|
|
|
||||
Funded backlog
|
|
$
|
684
|
|
|
$
|
854
|
|
Negotiated unfunded backlog
|
|
1,566
|
|
|
1,575
|
|
||
Total Health backlog
|
|
$
|
2,250
|
|
|
$
|
2,429
|
|
Total:
|
|
|
|
|
||||
Funded backlog
|
|
$
|
4,852
|
|
|
$
|
5,975
|
|
Negotiated unfunded backlog
|
|
12,037
|
|
|
11,761
|
|
||
Total backlog
|
|
$
|
16,889
|
|
|
$
|
17,736
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
2017 |
|
April 1,
2016 |
||||
|
|
(in millions)
|
||||||
Cash used in operating activities of continuing operations
|
|
$
|
(88
|
)
|
|
$
|
(14
|
)
|
Cash used in investing activities of continuing operations
|
|
(5
|
)
|
|
(1
|
)
|
||
Cash used in financing activities of continuing operations
|
|
(77
|
)
|
|
(31
|
)
|
||
Decrease in cash and cash equivalents from continuing operations
|
|
(170
|
)
|
|
(46
|
)
|
||
Decrease in cash and cash equivalents from discontinued operations
|
|
—
|
|
|
(1
|
)
|
||
Total decrease in cash and cash equivalents
|
|
$
|
(170
|
)
|
|
$
|
(47
|
)
|
(a)
|
None
|
(b)
|
None
|
(c)
|
Purchases of Equity Securities by the Company
|
Period
|
|
Total Number of Shares
(or Units) Purchased (1) |
|
Average Price
Paid per Share (or Unit) |
|
Total Number of Shares
(or Units) Purchased as Part of Publicly Announced Repurchase Plans or Programs |
|
Maximum Number of Shares (or Units) that May Yet Be
Purchased Under the Plans or Programs |
|||||
December 31, 2016
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
5,718,172
|
|
January 1, 2017 - January 31, 2017
|
|
20,029
|
|
|
50.77
|
|
|
—
|
|
|
5,718,172
|
|
|
February 1, 2017 - February 28, 2017
|
|
6,112
|
|
|
48.76
|
|
|
—
|
|
|
5,718,172
|
|
|
March 1, 2017 - March 31, 2017
|
|
10,775
|
|
|
53.21
|
|
|
—
|
|
|
5,718,172
|
|
|
Total
|
|
36,916
|
|
|
51.15
|
|
|
—
|
|
|
|
(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.
|
Exhibit
Number |
|
Description of Exhibit
|
10.1
|
|
Notice of Separation and Release of Claims dated January 19, 2017. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on January 20, 2017.
|
|
|
|
10.2
|
|
First Amendment, dated February 16, 2017, to the Credit Agreement dated as of August 16, 2016, by and among Leidos Innovations (f/k/a Abacus Innovations Corporation), as borrower, Leidos Holdings, Inc., Citibank, N.A., as administrative agent and the other lending institutions party to the amendment. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on February 21, 2017.
|
|
|
|
10.3
|
|
Form of Restricted Stock Unit Award Agreement of Leidos Holdings, Inc.'s 2006 Equity Incentive Plan.
|
|
|
|
10.4
|
|
Form of Nonstatutory Stock Option Agreement of Leidos Holdings, Inc.'s 2006 Equity Incentive Plan.
|
|
|
|
10.5
|
|
Form of Performance Share Award Agreement of Leidos Holdings, Inc.'s 2006 Equity Incentive Plan.
|
|
|
|
31.1
|
|
Certification of Chairman and 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 Chairman and Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.2
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101
|
|
Interactive Data File.
|
Leidos Holdings, Inc.
|
|
/s/ James C. Reagan
|
James C. Reagan
Executive Vice President and Chief Financial Officer and
as a duly authorized officer
|
b)
|
Section 409A
.
|
|
|
|
NQ0217
|
2
|
|
a)
|
The Option may not be exercised in whole or in part at any time prior to the first- year anniversary of the Grant Date.
|
b)
|
The Option may be exercised as to 25% of the Option Shares after the first-year anniversary of the Grant Date.
|
c)
|
The Option may be exercised as to an additional 25% of the Option Shares after the second-year anniversary of the Grant Date.
|
d)
|
The Option may be exercised as to an additional 25% of the Option Shares after the third-year anniversary of the Grant Date.
|
e)
|
The Option may be exercised as to the remaining 25% of the Option Shares after the fourth-year anniversary of the Grant Date.
|
NQ0217
|
3
|
|
a)
|
If Optionee is an Executive Officer and has met the provisions of subsection (iii) of the definition of the term “Special Retirement” in Section 1 above, or if Optionee is a director of the Company and has met the provisions of subsection (iv) of the definition of the term “Special Retirement” in Section 1 above, the right to exercise this Option shall continue to vest and be exercisable in accordance with the schedule set forth in Section 4.1 above.
|
b)
|
If Optionee has met the provisions of subsection (i) or (ii) of the definition of the term “Special Retirement” in Section 1 above, the right to exercise this Option shall continue to vest and be exercisable in accordance with the schedule set forth in Section 4.1 above, but only if Optionee has held this Option at least twelve (12) months prior to the date of such Special Retirement.
|
NQ0217
|
4
|
|
5.
|
TERMINATION OF OPTION; EVENTS IMPACTING ABILITY TO EXERCISE OPTION.
|
NQ0217
|
5
|
|
NQ0217
|
6
|
|
NQ0217
|
7
|
|
a)
|
involves the same programs or projects for that customer in which Optionee was personally and substantially involved during the 12 months prior to termination of employment; or
|
b)
|
has been, at any time during the 12 months prior to termination of employment, the subject of any bid, offer or proposal activity by the Company or an Affiliate in respect of that customer or prospective customer, or any negotiations or discussions about the possible performance of services by the Company or an Affiliate to that customer or potential customer, in which Optionee was personally and substantially involved.
|
NQ0217
|
8
|
|
NQ0217
|
9
|
|
a)
|
Performance Goals
. Following the end of the Performance Period, the Committee shall determine whether and the extent to which each of the Performance Goals have been achieved for the entire Performance Period and shall determine the number of Shares, if any, issuable to Recipient with respect to the level of achievement of each individual Performance Goal;
provided
that with respect to any Performance Share Award to a “covered employee” within the meaning of Section 162(m) of the Code, the Committee shall have certified the achievement of the Performance Goals. The aggregate number of Shares potentially issuable to Recipient with respect to all Performance Goals shall be between 0% and 150% of the number of Target Shares. If applicable, the Committee’s determinations with respect to the achievement of Performance Goals shall be based on the Company’s financial results reported in its annual report on Form 10-K as filed with the SEC, subject to any adjustments made by the Committee in accordance with Section 3 (c) below.
|
b)
|
Committee Discretion to Reduce Performance Share Award
. Notwithstanding satisfaction, achievement or completion of the Performance Goals set forth in the Award Grant Notice (or any adjustments thereto as provided below), the number of Shares issuable hereunder may be reduced by the Committee on the basis of such further considerations as the Committee in its sole discretion shall determine.
|
c)
|
Adjustment of Performance Goals
. To the extent it is intended that this Performance Share Award comply with the performance-based exception to Section 162(m) of the Code, the Committee shall make no adjustment to the Performance Goals set forth in the Award Grant Notice with respect to a “covered employee” within the meaning of Section 162(m) of the Code, including the performance targets or the method of calculating the actual performance achieved relative to the Performance Goals, except to exclude the impact of (i) changes in accounting standards or adoption of any new accounting standards in accordance with generally accepted accounting principles in the United States, (ii) changes in federal statutory corporate tax rates, and (iii) extraordinary or unusual gains or losses, events or circumstances over which the Company has no or limited control, including the occurrence of any disaster, act of God or any other force majeure event.
|
d)
|
Section 162(m)
. To the extent the Committee has determined that this Performance Share Award is intended to comply with the performance-based exception to Section 162(m) of the Code and the Recipient is a “covered employee” within the meaning of Section 162(m) of the Code, all actions taken hereunder (including without limitation any adjustments of Performance Goals or determination of whether a Fundamental Transaction has occurred) shall be made in a manner which would comply with Section 162(m) of the Code.
|
a)
|
Shares
. Shares shall be issued, if and to the extent earned based on the achievement of the Performance Goals as determined by the Committee, on (or as promptly as administratively practicable following) the Determination Date, and in no event later than ninety (90) days following the end of the Performance Period.
|
b)
|
Accrued Dividends
. If the Company pays any cash dividends on its common stock, Recipient will be entitled to receive an amount in cash (less any required withholding for taxes) equal in value to the cash dividends that would have been paid on Shares earned and issued under this Agreement assuming that such Shares had been outstanding as of the record date for such dividends declared on or after the Grant Date and prior to the issuance date of the Shares (“Accrued Dividends”). Such Accrued Dividends will be retained by the Company (without interest) and paid in cash when, and if, and to the extent that Shares are earned and issued based on the achievement of the Performance Goals. To the extent that Recipient has elected to defer receipt of the Shares in accordance with the terms of the applicable non-qualified deferral plan, payment of Accrued Dividends with respect to such Shares will be subject to the terms and conditions of such plan. The right to receive Dividend will cease and be forfeited upon the forfeiture and cancellation of this Performance Share Award.
|
c)
|
Taxes, Deferrals and Other Matters
. As a condition to the issuance of Shares hereunder, Recipient must have satisfied his or her tax withholding obligations as specified in this Agreement and must have completed, signed and returned any documents and taken any additional action that the Company deems appropriate to enable it to accomplish the delivery of the Shares. In no event will the Company be obligated to issue a fractional share. Notwithstanding the foregoing, (i) the Company shall not be obligated to deliver any Shares during any period when the Company determines that the issuance or the delivery of Shares hereunder would violate any federal, state or other applicable laws and/or may issue Shares subject to any restrictive legends that, as determined by the Company, is necessary to comply with securities or other regulatory requirements, and (ii) the date on which Shares are issued may include a delay (but not later than the next December 31
st
after the end of the Performance Period) in order to provide the Company such time as it determines appropriate to address tax withholding and other administrative matters. If eligible, Recipient shall be given the opportunity to elect to defer receipt of the Shares. Such deferral election shall be in accordance with the terms of the applicable non-qualified deferral plan of the Company or an Affiliate and the requirements of Section 409A and subject to such additional terms and conditions as are set by the Committee.
|
a)
|
Disability, Special Retirement or Involuntary Termination Without Cause
.
|
(i)
|
If Recipient ceases to be employed by the Company or an Affiliate as a result of Recipient’s Permanent Disability, Special Retirement or Involuntary Termination Without Cause, Recipient shall remain eligible to receive, on (or as promptly as administratively practicable following) the Determination Date, a prorated portion of the Shares that would otherwise be issuable to Recipient under the Performance Share Award in the absence of such employment termination based on the actual achievement of the Performance Goals for the Performance Period;
provided
that the prorated amount shall be determined based on the ratio of (x) the number of days elapsed from the beginning of the Performance Period to the employment termination date over (y) the number of days in the entire Performance Period (and not reflecting any shortening of the Performance Period as a result of a Fundamental Transaction as described below).
|
(ii)
|
Notwithstanding the foregoing, Recipient shall not be entitled to any Shares under the Performance Share Award if Recipient: (i) fails to execute and deliver, no later than ninety (90) days following the end of the Performance Period, a general release of claims if requested by, and in a form satisfactory to, the Company or an Affiliate, (ii) violates the terms of his or her inventions, copyright and confidentiality agreement with the Company or an Affiliate, or (iii) breaches his or her other contractual or legal obligations to the Company or an Affiliate, including the non-solicitation obligations set forth in Section 13 of this Agreement.
|
b)
|
Death
. If Recipient’s employment with the Company and its Affiliates terminates due to the death of Recipient, then Recipient’s estate shall receive, promptly after the date of death, a prorated portion of the Shares that Recipient would have been issued pursuant to the Performance Share Award based on the formula set forth in subsection (c) below as if a Fundamental Transaction had occurred on such date of death.
|
c)
|
Change in Control of Company
. If a Fundamental Transaction (as defined in the Plan) occurs prior to the end of the Performance Period while Recipient is employed by the Company or an Affiliate or remains entitled to receive Shares pursuant to Section 5(a) above, the Performance Period shall be terminated and Recipient shall be entitled to receive, immediately prior to the consummation of such Fundamental Transaction, the following number of Shares (the “
CIC Earned Shares
”):
|
(i)
|
If the Fundamental Transaction occurs on or prior to 50% of the Performance Period elapsing, a prorated number of Target Shares based on the portion of the Performance Period that has elapsed; plus
|
(ii)
|
If the Fundamental Transaction occurs following at least 50% of the Performance Period elapsing, a number of Shares based on the achievement of the Performance Goals at the time of consummation of the Fundamental Transaction as determined by the Committee and prorated to reflect the portion of the Performance Period that has elapsed through the date of consummation of the Fundamental Transaction.
|
a)
|
Tax Withholding.
If the Company or an Affiliate is required to withhold any federal, state, local or other taxes upon the vesting or any acceleration of vesting of the RSUs, or any issuance of Common Stock or otherwise under this Agreement, Recipient authorizes the Company to withhold a sufficient number of shares of Common Stock issuable upon settlement of the RSUs at the then current Fair Market Value (as defined in the Plan) to meet the withholding obligation based on the minimum rates as required and/or permitted by law. Recipient further authorizes the Company, in the Company’s sole discretion, to sell a sufficient number of shares of Common Stock on behalf of Recipient to satisfy such obligations, accept payment to satisfy such obligations in the form of cash or delivery to the Company of shares of Company stock already owned by Recipient, withhold amounts from Recipient’s compensation, or any combination of the foregoing or other actions as may be necessary or appropriate to satisfy any such tax withholding obligations as permitted by law.
|
b)
|
Section 409A
.
|
a)
|
Recipient’s employment or affiliation with the Company or an Affiliate is not for any specified term and may be terminated by Recipient or by the Company or an Affiliate at any time, for any reason, with or without cause and with or without notice. Nothing in this Agreement, the Plan or any covenant of good faith and fair dealing that may be found implicit in this Agreement or the Plan shall: (i) confer upon Recipient any right to continue in the employ of, or affiliation with, the Company or an Affiliate; (ii) constitute any promise or commitment by the Company or an Affiliate regarding the fact or nature of future positions, future work assignments, future compensation or any other term or condition of employment or affiliation; (iii) confer any right or benefit under this Agreement or the Plan unless such right or benefit has specifically accrued under the terms of this Agreement or Plan; or (iv) deprive the Company of the right to terminate Recipient at will and without regard to any future vesting opportunity that Recipient may have.
|
b)
|
Recipient acknowledges and agrees that the right to receive Shares pursuant to this Agreement is earned, among other requirements, only by continuing as an employee at the will of the Company (not through the act of being hired, being granted the Performance Share Award or any other award or benefit) and that the Company has the right to reorganize, sell, spin-out or otherwise restructure one or more of its businesses or Affiliates at any time or from time to time, as it deems appropriate (a “reorganization”). Recipient acknowledges and agrees that such a reorganization could result in the termination of Recipient’s relationship as an employee to the Company or an Affiliate, or the termination of Affiliate status of Recipient’s employer and the loss of benefits available to Recipient under this Agreement, including but not limited to, the termination of the right to receive Shares under this Agreement. Recipient further acknowledges that if the Performance Goals are not met, it is possible that no Shares will be issued hereunder.
|
a)
|
Solicitation of Employees
. Recipient agrees that, both while employed by the Company or an Affiliate and for one year afterward, Recipient will not solicit or attempt to solicit any employee of the Company or an Affiliate to leave his or her employment or to violate the terms of any agreement or understanding that employee may have with the Company or an Affiliate. The foregoing obligations apply to both the Recipient’s direct and indirect actions, and apply to actions intended to benefit Recipient or any other person, business or entity.
|
b)
|
Solicitation of Customers
. Recipient agrees that, for one year after termination of employment with the Company or an Affiliate, Recipient will not participate in any solicitation of any customer or prospective customer of the Company or an Affiliate concerning any business that:
|
(i)
|
involves the same programs or projects for that customer in which Recipient was personally and substantially involved during the 12 months prior to termination of employment; or
|
(ii)
|
has been, at any time during the 12 months prior to termination of employment, the subject of any bid, offer or proposal activity by the Company or an Affiliate in respect of that customer or prospective customer, or any negotiations or discussions about the possible performance of services by the Company or an Affiliate to that customer or potential customer, in which Recipient was personally and substantially involved.
|
c)
|
Remedies
. Recipient acknowledges and agrees that a breach of any of the promises or agreements contained in this Section 13 will result in immediate, irreparable and continuing damage to the Company for which there is no adequate remedy at law, and the Company or an Affiliate will be entitled to injunctive relief, a decree for specific performance, and other relief as may be proper, including money damages.
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the period ended March 31, 2017, 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 registrant 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
Chairman and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the period ended March 31, 2017, 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 registrant 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
Chairman and Chief Executive Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ James C. Reagan
|
James C. Reagan
Chief Financial Officer
|