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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 offices)
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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 and ground ISR, maritime systems, sensor systems, autonomous systems and command and control. We provide multi-spectral, airborne, ground and maritime ISR collection and processing systems, advanced sensor design, command and control solutions and training systems.
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•
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Enterprise IT and Integrated Systems –
We offer extensive software development capabilities for intelligence and information systems and deliver mission and enterprise-level solutions to the U.S. and allied Intelligence Community, DoD, military services, DHS and the Australian Department of Defense. Our markets include cybersecurity, data analytics, enterprise IT and operations and logistics. Our cybersecurity solutions detect and manage the most sophisticated cyber threats. We are highly skilled in data analytics, and we design, develop, integrate, deploy and support information-centric software and enterprise IT systems for complex, data-driven national security challenges. Our operations and logistics offerings include enterprise platforms that speed the supply chain of highly complex systems.
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•
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Global Services –
We provide high-end services to the 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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•
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Aviation Solutions –
Leidos is a trusted systems integrator serving Air Navigation Service Providers including the FAA, the Transportation Security Administration ("TSA") and airport operators. Our work in airport modernization helps stakeholders achieve stated objectives, including increased operational efficiency and safety, a technology enhanced passenger experience, non-aeronautical revenue enablement and state-of-the-art situational awareness and security. Leidos air traffic control systems are used in Air Navigation Service Provider facilities that control more than 60 percent of the world's air traffic. We work diligently to support the Federal Aviation Administration's NextGen program with government accepted systems including En Route Automation Modernization, Advanced Technology Oceanic Procedures, Time Based Flow Management and Terminal Flight Data Management. For the NATS system in the United Kingdom, we offer the SkyLine Air Traffic Management suite to enhance safety, improve on-time performance, and increase fuel efficiency.
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•
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Security Products –
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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•
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Enterprise IT Services –
We deliver secure, user-centric IT solutions in cloud computing, mobility, application modernization, DevOps, data center and network modernization, asset management, help desk operations and digital workplace enablement
.
We help our customers achieve their missions and business goals by delivering purpose-built solutions, cybersecurity as a standard, efficient project delivery, and end-user satisfaction. Leidos is modernizing enterprise IT for CONUS/OCONUS programs in classified and unclassified environments, including programs with the General Services Administration, the Department of Housing and Urban Development and the Department of Justice.
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•
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Federal Environment and Infrastructure –
We are trusted by civilian and defense agencies with substantial environmental and sustainability driven missions. Our pedigree across environmental management, nuclear security, energy efficiency, infrastructure management, mission support, and IT modernization provides the applicable expertise needed to transform operations while modernizing aging infrastructure and maintaining environmental stewardship. We support several of the Department of Energy's largest nuclear production, operations and remediation sites. At Hanford, we provide site-wide infrastructure management and operation including oversight of land and logistics, public works, information technology, fleet transportation, environmental sustainability and compliance, first responder services, and future project planning. Our environmental engineers and scientists address all aspects of remediation for soil, groundwater, surface water, and sediment, including removal, treatment, bioremediation, containment, resource management, land use and institutional controls, air emission control and monitoring, and remedy performance monitoring and reviews, including National Emergency Rapid Response.
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Logistics –
Leidos is a global leader in large-scale, complex operations and logistics. Our programs extend from the bottom of the world on the Antarctic ice to the orbiting outpost that is the International Space Station. Our expertise goes beyond supply sourcing, shipping, warehousing, and maintenance as we also provide systems engineering, specialized product support, training and field readiness, base operations, data analytics, and software development. We are helping our customers – including the United Kingdom Ministry of Defence ("U.K. MoD"), the National Science Foundation ("NSF") and the National Aeronautics and Space Administration ("NASA") – streamline logistics through data analytics so more of their budgets can be applied to their mission activities.
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Complex Systems Integration
– Leidos employs whole-systems thinking in fielding applied technology solutions across the entire continuum of care. We are working as the lead systems integrator deploying the next generation electronic health records system to DoD hospitals and treatment facilities worldwide, responsible for architecture, cyber and complex systems integration. We provide information technology solutions to the Department of Veterans Affairs, National Institutes of Health, DoD and other government customers. Commercially, we are one of the largest systems integration and staff support firms for hospitals deploying modern electronic health records, and combined with our federal work, Leidos has a significant presence in electronic health record implementation, optimization and support. In addition, we provide
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Managed Health Services
– We deploy a national footprint of health clinics and health providers to support care delivery services, including medical disability examinations for the Veterans Administration (including behavioral assessments), as well as serving other independent medical exam markets. We have developed unique capabilities in behavioral health management through many decades of experience with a special emphasis on substance abuse services. Our managed health services activities leverage our IT and mission enablement capabilities.
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Enterprise IT Transformation
– We manage the entire lifecycle of the IT journey for our customers. Our expertise includes IT strategic planning, outsourcing and management of large scale data centers, agile software development and system transformation, cloud migration and application modernization, digitization and advanced analytics. Our customers include the Centers for Medicare & Medicaid Services, Food and Drug Administration, Social Security Administration, VA and commercial customers. Leidos helps customers transform our customer’s IT environment in support of their most critical missions. All of this is accomplished in a highly secure manner by leveraging our cyber security capabilities.
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Life Sciences –
We provide life science research and development support to the National Institutes of Health, Center for Disease Control, Army Medical Research community, commercial biotech companies and the Frederick National Laboratory for Cancer Research, where we employ about
2,200
scientists, technicians, administrators and support staff. Our professionals operate a wide range of leading-edge research and development laboratories in the areas of genetics and genomics, proteins and proteomics, advanced biomedical computing and information technology, biopharmaceutical development and manufacturing, nanotechnology characterization and clinical trials management.
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12 Months Ended
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11 Months Ended
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December 29,
2017 |
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December 30,
2016 |
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January 1,
2016 |
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U.S. Government
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84
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%
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81
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%
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76
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%
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U.S. DoD
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47
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%
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56
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%
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64
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%
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U.S. Army
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13
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%
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14
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%
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14
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%
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Maryland Procurement Office
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5
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%
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7
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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
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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., CSRA, Inc., ManTech International Corporation, SAIC, Cubic, Jacobs, Vencore and KeyW;
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diversified commercial and U.S. Government IT providers, such as Accenture plc, DXC Technology, International Business Machines Corporation ("IBM"), 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 Technologies Inc. and Smiths Group plc;
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contractors providing supply chain management, other logistics services and major systems operations and maintenance, including AAR, DynCorp, Parsons, PAE, Vectrus and Cubic;
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companies focused on providing health solutions and services to the U.S. Government and hospitals, including Accenture plc, Booz Allen Hamilton, CSRA, Inc., DXC Technology, IBM and Optum; and
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diversified international federal government IT and technical services providers, including BAE Systems plc, The Boeing Company, IBM, Accenture plc, Thales, Cubic and DXC Technology.
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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
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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
-
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
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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 achieve expected business growth or operate profitably, which could adversely affect our operating income or operating margins, and we may be unable to recover investments in any such acquisitions;
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acquisitions, investments and joint ventures may require us to spend a significant amount of cash or to issue capital stock, resulting in dilution of ownership; and
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we may not be able to effectively influence the operations of our joint ventures, or we may be exposed to certain liabilities if our joint venture partners do not fulfill their obligations.
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Our certificate of incorporation provides that our bylaws and certain provisions of our certificate of incorporation may be amended by only two-thirds or more voting power of all of the outstanding shares entitled to vote. These supermajority voting requirements could impede our stockholders’ ability to make changes to our certificate of incorporation and bylaws.
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Our certificate of incorporation contains certain supermajority voting provisions, which generally provide that mergers and certain other business combinations between us and a related person be approved by the holders of securities having at least
80%
of our outstanding voting power, as well as by the holders of a majority of the voting power of such securities that are not owned by the related person.
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Our stockholders may not act by written consent. As a result, a holder, or holders, controlling a majority of our capital stock are limited in their ability to take certain actions other than in connection with its annual
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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;
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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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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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13.5
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Columbia, Maryland
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1
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95,000
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7.3
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Orlando, Florida
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1
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85,000
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8.5
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Oak Ridge, Tennessee
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1
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83,000
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8.4
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Reston, Virginia
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1
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62,000
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2.6
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Name of officer
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Age
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Position(s) with the company and prior business experience
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Roger A. Krone
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61
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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. 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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59
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Mr. Reagan has served as Executive Vice President and 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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Ann M. Addison
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56
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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.
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Gerard A. Fasano
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52
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Mr. Fasano has served as Executive Vice President and 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 in their former Information Systems & Global Solutions business.
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John J. Fratamico, Jr.
|
|
60
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|
Dr. Fratamico has served as Executive Vice President and Chief Technology Officer since November 2016 and before that, as President, National Security Solutions - Surveillance and Reconnaissance Group. Before joining Leidos, Dr. Fratamico served as Chief Scientist at McDonnell Douglas Technologies Incorporated.
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Angela L. Heise
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|
43
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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 Solutions for Lockheed Martin Corporation's former Information Systems & Global Solutions business.
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Jerald S. Howe, Jr.
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|
62
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Mr. Howe has served as Executive Vice President and General Counsel since July 2017. Prior to joining Leidos, Mr. Howe was a partner at Fried, Frank, Harris, Shriver & Jacobson LLP where he served in the firm’s government contracts, mergers and acquisitions, and aerospace and defense practices. Prior to joining Fried Frank, Mr. Howe held general counsel positions at TASC, a leading aerospace and defense company, and at Veridian Corporation, a publicly traded company that provided advanced technology services and solutions to the intelligence community, military, and homeland defense agencies.
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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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Timothy J. Reardon
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|
53
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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.
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Jonathan W. Scholl
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56
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Mr. Scholl has served as President, Health Group since August 2016, and before that, as President, Health and Infrastructure 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.
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Fiscal 2017
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||||||
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|
High
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|
Low
|
||||
1st quarter (December 31, 2016 to March 31, 2017)
|
|
$
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54.87
|
|
|
$
|
48.31
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|
2nd quarter (April 1, 2017 to June 30, 2017)
|
|
$
|
56.37
|
|
|
$
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49.95
|
|
3rd quarter (July 1, 2017 to September 29, 2017)
|
|
$
|
59.43
|
|
|
$
|
51.19
|
|
4th quarter (September 30, 2017 to December 29, 2017)
|
|
$
|
65.22
|
|
|
$
|
59.92
|
|
|
|
Fiscal 2016
|
||||||
|
|
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
|
|
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 |
|
(d)
Maximum Number of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs |
|||||
September 30, 2017
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
5,718,172
|
|
October 1, 2017 - October 31, 2017
|
|
5,993
|
|
|
60.88
|
|
|
—
|
|
|
5,718,172
|
|
|
November 1, 2017 - November 30, 2017
|
|
6,571
|
|
|
62.34
|
|
|
—
|
|
|
5,718,172
|
|
|
December 1, 2017 - December 29, 2017
|
|
2,993
|
|
|
63.61
|
|
|
—
|
|
|
5,718,172
|
|
|
Total
|
|
15,557
|
|
|
$
|
62.02
|
|
|
—
|
|
|
|
(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.
|
|
|
12 Months Ended
(1)
|
|
11 Months Ended
(1)
|
|
12 Months Ended
(1)
|
||||||||||||||
|
|
December 29, 2017
(2)
|
|
December 30, 2016
(3)
|
|
January 1, 2016
(4)
|
|
January 30, 2015
(5)
|
|
January 31, 2014
(6)
|
||||||||||
|
|
(in millions, except for per share amounts)
|
||||||||||||||||||
Consolidated Statement of Income (Loss) Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
10,170
|
|
|
$
|
7,043
|
|
|
$
|
4,712
|
|
|
$
|
5,063
|
|
|
$
|
5,755
|
|
Operating income (loss)
|
|
559
|
|
|
417
|
|
|
320
|
|
|
(214
|
)
|
|
163
|
|
|||||
Income (loss) from continuing operations
|
|
364
|
|
|
246
|
|
|
243
|
|
|
(330
|
)
|
|
84
|
|
|||||
(Loss) income from discontinued operations, net of taxes
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
7
|
|
|
80
|
|
|||||
Net income (loss)
|
|
364
|
|
|
246
|
|
|
242
|
|
|
(323
|
)
|
|
164
|
|
|||||
Less: net (loss) income attributable to non-controlling interest
|
|
(2
|
)
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income (loss) attributable to Leidos Holdings, Inc.
|
|
$
|
366
|
|
|
$
|
244
|
|
|
$
|
242
|
|
|
$
|
(323
|
)
|
|
$
|
164
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) from continuing operations attributable to Leidos common stockholders
|
|
$
|
2.41
|
|
|
$
|
2.39
|
|
|
$
|
3.33
|
|
|
$
|
(4.46
|
)
|
|
$
|
0.98
|
|
(Loss) income from discontinued operations, net of taxes
|
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
|
0.10
|
|
|
0.96
|
|
|||||
Net income (loss) attributable to Leidos common stockholders
|
|
$
|
2.41
|
|
|
$
|
2.39
|
|
|
$
|
3.32
|
|
|
$
|
(4.36
|
)
|
|
$
|
1.94
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) from continuing operations attributable to Leidos common stockholders
|
|
$
|
2.38
|
|
|
$
|
2.35
|
|
|
$
|
3.28
|
|
|
$
|
(4.46
|
)
|
|
$
|
0.98
|
|
(Loss) income from discontinued operations, net of taxes
|
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
|
0.10
|
|
|
0.96
|
|
|||||
Net income (loss) attributable to Leidos common stockholders
|
|
$
|
2.38
|
|
|
$
|
2.35
|
|
|
$
|
3.27
|
|
|
$
|
(4.36
|
)
|
|
$
|
1.94
|
|
Cash dividend per common share
|
|
$
|
1.28
|
|
|
$
|
14.92
|
|
|
$
|
1.28
|
|
|
$
|
1.28
|
|
|
$
|
5.60
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
December 29,
2017 |
|
December 30,
2016 |
|
January 1,
2016 |
|
January 30,
2015 |
|
January 31,
2014 |
||||||||||
|
|
(in millions)
|
||||||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
|
$
|
8,990
|
|
|
$
|
9,132
|
|
|
$
|
3,370
|
|
|
$
|
3,281
|
|
|
$
|
4,162
|
|
Long-term debt, including current portion
|
|
$
|
3,111
|
|
|
$
|
3,287
|
|
|
$
|
1,081
|
|
|
$
|
1,158
|
|
|
$
|
1,323
|
|
Other long-term liabilities
(7)
|
|
$
|
129
|
|
|
$
|
204
|
|
|
$
|
149
|
|
|
$
|
147
|
|
|
$
|
161
|
|
(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 2017 includes acquisition and integration costs of
$102 million
and restructuring expenses of
$37 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)
|
Fiscal 2016 includes 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.
|
(4)
|
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
|
(5)
|
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
.
|
(6)
|
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
.
|
(7)
|
For fiscal 2017 and 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 2017, fiscal 2016, the 11-month period ended January 1, 2016, fiscal 2015 and fiscal 2014 were
$220 million
,
$540 million
,
$34 million
,
$21 million
and
$66 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
|
||||||||
|
|
December 29,
2017 |
|
December 30,
2016 |
|
January 1,
2016 |
||||||
|
|
(in millions)
|
||||||||||
Revenues
|
|
$
|
10
|
|
|
$
|
14
|
|
|
$
|
17
|
|
Cost of revenues
|
|
10
|
|
|
14
|
|
|
17
|
|
|||
Selling, general and administrative expenses
|
|
—
|
|
|
—
|
|
|
2
|
|
|||
Operating loss
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
Non-operating income
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
|
12 Months Ended
|
|
12 Months Ended
|
|
11 Months Ended
|
|
|
|
|
||||||||||||||||||||
|
|
December 29,
2017 |
|
December 30,
2016 |
|
Dollar change
|
|
Percent
change |
|
December 30,
2016 |
|
January 1,
2016 |
|
Dollar change
|
|
Percent
change |
||||||||||||||
|
|
(dollars in millions)
|
||||||||||||||||||||||||||||
Revenues
|
|
$
|
10,170
|
|
|
$
|
7,043
|
|
|
$
|
3,127
|
|
|
44
|
%
|
|
$
|
7,043
|
|
|
$
|
4,712
|
|
|
$
|
2,331
|
|
|
49
|
%
|
Cost of revenues
|
|
8,923
|
|
|
6,191
|
|
|
2,732
|
|
|
44
|
%
|
|
6,191
|
|
|
4,146
|
|
|
2,045
|
|
|
49
|
%
|
||||||
Selling, general and administrative expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
General and administrative
|
|
388
|
|
|
201
|
|
|
187
|
|
|
93
|
%
|
|
201
|
|
|
105
|
|
|
96
|
|
|
91
|
%
|
||||||
Bid and proposal
|
|
122
|
|
|
89
|
|
|
33
|
|
|
37
|
%
|
|
89
|
|
|
67
|
|
|
22
|
|
|
33
|
%
|
||||||
Internal research and development
|
|
42
|
|
|
44
|
|
|
(2
|
)
|
|
(5
|
)%
|
|
44
|
|
|
29
|
|
|
15
|
|
|
52
|
%
|
||||||
Bad debt expense
|
|
10
|
|
|
3
|
|
|
7
|
|
|
NM
|
|
|
3
|
|
|
8
|
|
|
(5
|
)
|
|
(63
|
)%
|
||||||
Asset impairment charges
|
|
—
|
|
|
4
|
|
|
(4
|
)
|
|
(100
|
)%
|
|
4
|
|
|
33
|
|
|
(29
|
)
|
|
(88
|
)%
|
||||||
Acquisition and integration costs
|
|
102
|
|
|
90
|
|
|
12
|
|
|
13
|
%
|
|
90
|
|
|
—
|
|
|
90
|
|
|
100
|
%
|
||||||
Restructuring expenses
|
|
37
|
|
|
14
|
|
|
23
|
|
|
164
|
%
|
|
14
|
|
|
4
|
|
|
10
|
|
|
NM
|
|
||||||
Equity earnings of non-consolidated subsidiaries
|
|
(13
|
)
|
|
(10
|
)
|
|
(3
|
)
|
|
30
|
%
|
|
(10
|
)
|
|
—
|
|
|
(10
|
)
|
|
100
|
%
|
||||||
Operating income
|
|
559
|
|
|
417
|
|
|
142
|
|
|
34
|
%
|
|
417
|
|
|
320
|
|
|
97
|
|
|
30
|
%
|
||||||
Non-operating (expense) income, net
|
|
(166
|
)
|
|
(99
|
)
|
|
(67
|
)
|
|
68
|
%
|
|
(99
|
)
|
|
35
|
|
|
(134
|
)
|
|
NM
|
|
||||||
Income from continuing operations before income taxes
|
|
393
|
|
|
318
|
|
|
75
|
|
|
24
|
%
|
|
318
|
|
|
355
|
|
|
(37
|
)
|
|
(10
|
)%
|
||||||
Income tax expense
|
|
(29
|
)
|
|
(72
|
)
|
|
43
|
|
|
(60
|
)%
|
|
(72
|
)
|
|
(112
|
)
|
|
40
|
|
|
(36
|
)%
|
||||||
Income from continuing operations
|
|
364
|
|
|
246
|
|
|
118
|
|
|
48
|
%
|
|
246
|
|
|
243
|
|
|
3
|
|
|
1
|
%
|
||||||
Loss from discontinued operations, net of taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
(1
|
)
|
|
1
|
|
|
100
|
%
|
||||||
Net income
|
|
364
|
|
|
246
|
|
|
118
|
|
|
48
|
%
|
|
246
|
|
|
242
|
|
|
4
|
|
|
2
|
%
|
||||||
Less: net (loss) income attributable to non-controlling interest
|
|
(2
|
)
|
|
2
|
|
|
(4
|
)
|
|
(200
|
)%
|
|
2
|
|
|
—
|
|
|
2
|
|
|
100
|
%
|
||||||
Net income attributable to Leidos Holdings, Inc.
|
|
$
|
366
|
|
|
$
|
244
|
|
|
$
|
122
|
|
|
50
|
%
|
|
$
|
244
|
|
|
$
|
242
|
|
|
$
|
2
|
|
|
1
|
%
|
Operating income margin
|
|
5.5
|
%
|
|
5.9
|
%
|
|
|
|
|
|
5.9
|
%
|
|
6.8
|
%
|
|
|
|
|
|
|
12 Months Ended
|
|
12 Months Ended
|
|
11 Months Ended
|
|
|
|
|
||||||||||||||||||||
Defense Solutions
|
|
December 29,
2017 |
|
December 30,
2016 |
|
Dollar change
|
|
Percent
change |
|
December 30,
2016 |
|
January 1,
2016 |
|
Dollar change
|
|
Percent
change |
||||||||||||||
|
|
(dollars in millions)
|
||||||||||||||||||||||||||||
Revenues
|
|
$
|
4,959
|
|
|
$
|
3,843
|
|
|
$
|
1,116
|
|
|
29
|
%
|
|
$
|
3,843
|
|
|
$
|
3,009
|
|
|
$
|
834
|
|
|
28
|
%
|
Operating income
|
|
307
|
|
|
312
|
|
|
(5
|
)
|
|
(2
|
)%
|
|
312
|
|
|
260
|
|
|
52
|
|
|
20
|
%
|
||||||
Operating income margin
|
|
6.2
|
%
|
|
8.1
|
%
|
|
|
|
|
|
8.1
|
%
|
|
8.6
|
%
|
|
|
|
|
|
|
12 Months Ended
|
|
12 Months Ended
|
|
11 Months Ended
|
|
|
|
|
||||||||||||||||||||
Civil
|
|
December 29,
2017 |
|
December 30,
2016 |
|
Dollar change
|
|
Percent change
|
|
December 30,
2016 |
|
January 1,
2016 |
|
Dollar change
|
|
Percent change
|
||||||||||||||
|
|
(dollars in millions)
|
||||||||||||||||||||||||||||
Revenues
|
|
$
|
3,409
|
|
|
$
|
2,082
|
|
|
$
|
1,327
|
|
|
64
|
%
|
|
$
|
2,082
|
|
|
$
|
1,141
|
|
|
$
|
941
|
|
|
82
|
%
|
Operating income
|
|
226
|
|
|
146
|
|
|
80
|
|
|
55
|
%
|
|
146
|
|
|
33
|
|
|
113
|
|
|
NM
|
|
||||||
Operating income margin
|
|
6.6
|
%
|
|
7.0
|
%
|
|
|
|
|
|
7.0
|
%
|
|
2.9
|
%
|
|
|
|
|
|
|
12 Months Ended
|
|
12 Months Ended
|
|
11 Months Ended
|
|
|
|
|
||||||||||||||||||||
Health
|
|
December 29,
2017 |
|
December 30,
2016 |
|
Dollar change
|
|
Percent
change |
|
December 30,
2016 |
|
January 1,
2016 |
|
Dollar change
|
|
Percent
change |
||||||||||||||
|
|
(dollars in millions)
|
||||||||||||||||||||||||||||
Revenues
|
|
$
|
1,802
|
|
|
$
|
1,117
|
|
|
$
|
685
|
|
|
61
|
%
|
|
$
|
1,117
|
|
|
$
|
556
|
|
|
$
|
561
|
|
|
101
|
%
|
Operating income
|
|
228
|
|
|
110
|
|
|
118
|
|
|
107
|
%
|
|
110
|
|
|
46
|
|
|
64
|
|
|
139
|
%
|
||||||
Operating income margin
|
|
12.7
|
%
|
|
9.8
|
%
|
|
|
|
|
|
9.8
|
%
|
|
8.3
|
%
|
|
|
|
|
|
|
12 Months Ended
|
|
12 Months Ended
|
|
11 Months Ended
|
|
|
|
|
||||||||||||||||||||
Corporate
|
|
December 29,
2017 |
|
December 30,
2016 |
|
Dollar change
|
|
Percent
change |
|
December 30,
2016 |
|
January 1,
2016 |
|
Dollar change
|
|
Percent
change |
||||||||||||||
|
|
(dollars in millions)
|
||||||||||||||||||||||||||||
Revenues
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
(100
|
)%
|
|
$
|
1
|
|
|
$
|
6
|
|
|
$
|
(5
|
)
|
|
(83
|
)%
|
Operating loss
|
|
(202
|
)
|
|
(151
|
)
|
|
(51
|
)
|
|
34
|
%
|
|
(151
|
)
|
|
(19
|
)
|
|
(132
|
)
|
|
NM
|
|
•
|
$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.
|
•
|
Funded Backlog.
Funded backlog for contracts with the U.S. Government represents the value on contracts for which funding is appropriated less revenues previously recognized on these contracts. Funded backlog for contracts with non-U.S. Government entities 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 the contracts.
|
•
|
Negotiated Unfunded Backlog.
Negotiated unfunded backlog represents estimated amounts of revenue to be earned in the future from contracts for which funding has not been appropriated and 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, with the exception of certain IDIQ contracts where task orders are not competitively awarded or separately priced but instead are used as a funding mechanism, and where there is a basis for estimating future revenues and funding on future task orders is anticipated.
|
|
|
December 29,
2017 |
|
December 30,
2016 |
||||
|
|
(in millions)
|
||||||
Defense Solutions:
|
|
|
|
|
||||
Funded backlog
|
|
$
|
2,384
|
|
|
$
|
3,171
|
|
Negotiated unfunded backlog
|
|
5,285
|
|
|
4,936
|
|
||
Total Defense Solutions backlog
|
|
$
|
7,669
|
|
|
$
|
8,107
|
|
Civil:
|
|
|
|
|
||||
Funded backlog
|
|
$
|
2,064
|
|
|
$
|
1,950
|
|
Negotiated unfunded backlog
|
|
5,321
|
|
|
5,250
|
|
||
Total Civil backlog
|
|
$
|
7,385
|
|
|
$
|
7,200
|
|
Health:
|
|
|
|
|
||||
Funded backlog
|
|
$
|
595
|
|
|
$
|
854
|
|
Negotiated unfunded backlog
|
|
1,827
|
|
|
1,575
|
|
||
Total Health backlog
|
|
$
|
2,422
|
|
|
$
|
2,429
|
|
Total:
|
|
|
|
|
||||
Funded backlog
|
|
$
|
5,043
|
|
|
$
|
5,975
|
|
Negotiated unfunded backlog
|
|
12,433
|
|
|
11,761
|
|
||
Total backlog
|
|
$
|
17,476
|
|
|
$
|
17,736
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|||||
|
|
December 29,
2017 |
|
December 30,
2016 |
|
January 1,
2016 |
|||
Cost-reimbursement and fixed price-incentive fee (FP-IF)
|
|
56
|
%
|
|
51
|
%
|
|
51
|
%
|
Firm-fixed-price (FFP)
|
|
28
|
|
|
30
|
|
|
27
|
|
Time and materials (T&M) and fixed-price-level-of-effort (FP-LOE)
|
|
16
|
|
|
19
|
|
|
22
|
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
12 Months Ended
|
|
11 Months Ended
|
||||||||
|
|
December 29,
2017 |
|
December 30,
2016 |
|
January 1,
2016 |
||||||
|
|
(in millions)
|
||||||||||
Net cash provided by operating activities of continuing operations
|
|
$
|
526
|
|
|
$
|
449
|
|
|
$
|
382
|
|
Net cash (used in) provided by investing activities of continuing operations
|
|
(71
|
)
|
|
26
|
|
|
70
|
|
|||
Net cash used in financing activities of continuing operations
|
|
(429
|
)
|
|
(751
|
)
|
|
(251
|
)
|
|||
Net decrease in cash, cash equivalents and restricted cash from discontinued operations
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
|
$
|
26
|
|
|
$
|
(277
|
)
|
|
$
|
200
|
|
|
|
Total
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023 & Thereafter
|
||||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||||||
Contractual obligations
(1)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Long-term debt (including current portion)
(2)
|
|
$
|
4,245
|
|
|
$
|
174
|
|
|
$
|
194
|
|
|
$
|
710
|
|
|
$
|
212
|
|
|
$
|
727
|
|
|
$
|
2,228
|
|
Operating lease obligations
|
|
495
|
|
|
140
|
|
|
107
|
|
|
78
|
|
|
53
|
|
|
39
|
|
|
78
|
|
|||||||
Capital lease obligations
|
|
6
|
|
|
3
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Other long-term liabilities
(3)
|
|
67
|
|
|
5
|
|
|
15
|
|
|
6
|
|
|
6
|
|
|
6
|
|
|
29
|
|
|||||||
Total contractual obligations
|
|
$
|
4,813
|
|
|
$
|
322
|
|
|
$
|
319
|
|
|
$
|
794
|
|
|
$
|
271
|
|
|
$
|
772
|
|
|
$
|
2,335
|
|
(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
$122 million
,
$126 million
,
$128 million
,
$99 million
and
$85 million
of the balance for fiscal 2018, fiscal 2019, fiscal 2020, fiscal 2021 and fiscal 2022, respectively, and
$535 million
for fiscal 2023 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 29, 2017. 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: 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
$7 million
and
$2 million
of additional tax liabilities, as we are not able to reasonably estimate the timing of payments in individual years due to uncertainties in the timing of audit outcomes and when settlements will become due. There is no obligation included for our foreign defined benefit pension plan, as the plan is overfunded by
$9 million
as of December 29, 2017. For a discussion of potential changes in these pension obligations, see "Note 17—Retirement Plans" of the notes to consolidated financial statements contained within this Annual Report on Form 10-K.
|
•
|
Revenue Recognition
|
•
|
Business Combinations
|
•
|
Goodwill Impairment
|
•
|
Intangible Assets Impairment
|
•
|
Income Taxes
|
|
|
12 Months Ended
|
|
11 Months Ended
|
||||||||
|
|
December 29,
2017 |
|
December 30,
2016 |
|
January 1,
2016 |
||||||
|
|
(in millions, except for per share amounts)
|
||||||||||
Net favorable impact to income from continuing operations before taxes
|
|
$
|
103
|
|
|
$
|
37
|
|
|
$
|
18
|
|
Impact on diluted EPS from continuing operations attributable to Leidos common stockholders
|
|
$
|
0.41
|
|
|
$
|
0.22
|
|
|
$
|
0.14
|
|
|
|
Page
|
CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
||
|
|
|
Consolidated Balance Sheets
as of December 29, 2017 and December 30, 2016
|
|
|
|
|
|
Consolidated Statements of Income for
the fiscal years ended December 29, 2017 and December 30, 2016 and the 11-month period ended January 1, 2016
|
|
|
|
|
|
Consolidated Statements of Comprehensive Income for
the fiscal years ended December 29, 2017 and December 30, 2016 and the 11-month period ended January 1, 2016
|
|
|
|
|
|
Consolidated Statements of Equity for
the fiscal years ended December 29, 2017 and December 30, 2016 and the 11-month period ended January 1, 2016
|
|
|
|
|
|
Consolidated Statements of Cash Flows for
the fiscal years ended December 29, 2017 and December 30, 2016 and the 11-month period ended January 1, 2016
|
|
|
|
|
|
|
|
|
December 29,
2017 |
|
December 30,
2016 |
||||
|
|
(in millions)
|
||||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
390
|
|
|
$
|
376
|
|
Receivables, net
|
|
1,831
|
|
|
1,657
|
|
||
Inventory, prepaid expenses and other current assets
|
|
453
|
|
|
348
|
|
||
Total current assets
|
|
2,674
|
|
|
2,381
|
|
||
Property, plant and equipment, net
|
|
232
|
|
|
259
|
|
||
Intangible assets, net
|
|
856
|
|
|
1,589
|
|
||
Goodwill
|
|
4,974
|
|
|
4,622
|
|
||
Deferred tax assets
|
|
—
|
|
|
16
|
|
||
Other assets
|
|
254
|
|
|
265
|
|
||
|
|
$
|
8,990
|
|
|
$
|
9,132
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable and accrued liabilities
|
|
$
|
1,639
|
|
|
$
|
1,427
|
|
Accrued payroll and employee benefits
|
|
487
|
|
|
483
|
|
||
Dividends payable
|
|
17
|
|
|
23
|
|
||
Income taxes payable
|
|
4
|
|
|
21
|
|
||
Long-term debt, current portion
|
|
55
|
|
|
62
|
|
||
Total current liabilities
|
|
2,202
|
|
|
2,016
|
|
||
Long-term debt, net of current portion
|
|
3,056
|
|
|
3,225
|
|
||
Deferred tax liabilities
|
|
220
|
|
|
540
|
|
||
Other long-term liabilities
|
|
129
|
|
|
204
|
|
||
Commitments and contingencies (Notes 18, 21 and 22)
|
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
|
||||
Preferred stock, $.0001 par value,10 million shares authorized and no shares issued and outstanding at December 29, 2017, and December 30, 2016
|
|
—
|
|
|
—
|
|
||
Common stock, $.0001 par value, 500 million shares authorized, 151 million and 150 million shares issued and outstanding at December 29, 2017, and December 30, 2016, respectively
|
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
|
3,344
|
|
|
3,316
|
|
||
Accumulated deficit
|
|
(7
|
)
|
|
(177
|
)
|
||
Accumulated other comprehensive income (loss)
|
|
33
|
|
|
(4
|
)
|
||
Total Leidos stockholders’ equity
|
|
3,370
|
|
|
3,135
|
|
||
Non-controlling interest
|
|
13
|
|
|
12
|
|
||
Total equity
|
|
3,383
|
|
|
3,147
|
|
||
|
|
$
|
8,990
|
|
|
$
|
9,132
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
||||||||
|
|
December 29,
2017 |
|
December 30,
2016 |
|
January 1,
2016 |
||||||
|
|
(in millions, except per share amounts)
|
||||||||||
Revenues
|
|
$
|
10,170
|
|
|
$
|
7,043
|
|
|
$
|
4,712
|
|
Cost of revenues
|
|
8,923
|
|
|
6,191
|
|
|
4,146
|
|
|||
Selling, general and administrative expenses
|
|
552
|
|
|
334
|
|
|
201
|
|
|||
Bad debt expense
|
|
10
|
|
|
3
|
|
|
8
|
|
|||
Acquisition and integration costs
|
|
102
|
|
|
90
|
|
|
—
|
|
|||
Asset impairment charges
|
|
—
|
|
|
4
|
|
|
33
|
|
|||
Restructuring expenses
|
|
37
|
|
|
14
|
|
|
4
|
|
|||
Equity earnings of non-consolidated subsidiaries
|
|
(13
|
)
|
|
(10
|
)
|
|
—
|
|
|||
Operating income
|
|
559
|
|
|
417
|
|
|
320
|
|
|||
Interest income
|
|
8
|
|
|
10
|
|
|
4
|
|
|||
Interest expense
|
|
(148
|
)
|
|
(96
|
)
|
|
(53
|
)
|
|||
Other (expense) income, net
|
|
(26
|
)
|
|
(13
|
)
|
|
84
|
|
|||
Income from continuing operations before income taxes
|
|
393
|
|
|
318
|
|
|
355
|
|
|||
Income tax expense
|
|
(29
|
)
|
|
(72
|
)
|
|
(112
|
)
|
|||
Income from continuing operations
|
|
364
|
|
|
246
|
|
|
243
|
|
|||
Discontinued operations:
|
|
|
|
|
|
|
||||||
Loss from discontinued operations before income taxes
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Loss from discontinued operations
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Net income
|
|
364
|
|
|
246
|
|
|
242
|
|
|||
Less: net (loss) income attributable to non-controlling interest
|
|
(2
|
)
|
|
2
|
|
|
—
|
|
|||
Net income attributable to Leidos common stockholders
|
|
$
|
366
|
|
|
$
|
244
|
|
|
$
|
242
|
|
Earnings per share:
|
|
|
|
|
|
|
||||||
Basic:
|
|
|
|
|
|
|
||||||
Income from continuing operations attributable to Leidos common stockholders
|
|
$
|
2.41
|
|
|
$
|
2.39
|
|
|
$
|
3.33
|
|
Discontinued operations, net of taxes
|
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
|||
Net income attributable to Leidos common stockholders
|
|
$
|
2.41
|
|
|
$
|
2.39
|
|
|
$
|
3.32
|
|
Diluted:
|
|
|
|
|
|
|
||||||
Income from continuing operations attributable to Leidos common stockholders
|
|
$
|
2.38
|
|
|
$
|
2.35
|
|
|
$
|
3.28
|
|
Discontinued operations, net of taxes
|
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
|||
Net income attributable to Leidos common stockholders
|
|
$
|
2.38
|
|
|
$
|
2.35
|
|
|
$
|
3.27
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
||||||||
|
|
December 29,
2017 |
|
December 30,
2016 |
|
January 1,
2016 |
||||||
|
|
(in millions)
|
||||||||||
Net income
|
|
$
|
364
|
|
|
$
|
246
|
|
|
$
|
242
|
|
Other comprehensive income, net of taxes:
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
|
24
|
|
|
(7
|
)
|
|
(1
|
)
|
|||
Unrecognized gain on derivative instruments
|
|
4
|
|
|
14
|
|
|
1
|
|
|||
Pension liability adjustments
|
|
9
|
|
|
(3
|
)
|
|
3
|
|
|||
Total other comprehensive income, net of taxes
|
|
37
|
|
|
4
|
|
|
3
|
|
|||
Comprehensive income
|
|
401
|
|
|
250
|
|
|
245
|
|
|||
Less: comprehensive (loss) income attributable to non-controlling interest
|
|
(2
|
)
|
|
2
|
|
|
—
|
|
|||
Comprehensive income attributable to Leidos common stockholders
|
|
$
|
403
|
|
|
$
|
248
|
|
|
$
|
245
|
|
|
|
Shares of common stock
|
|
Additional
paid-in capital |
|
Accumulated deficit
|
|
Accumulated
other comprehensive income (loss) |
|
Leidos Holdings, Inc. stockholders' equity
|
|
Non-controlling interest
|
|
Total
|
|||||||||||||
|
|
|
|||||||||||||||||||||||||
|
|
(in millions, except for per share amounts)
|
|||||||||||||||||||||||||
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
|
|
||||||
Net income (loss)
|
|
—
|
|
|
—
|
|
|
366
|
|
|
—
|
|
|
366
|
|
|
(2
|
)
|
|
364
|
|
||||||
Other comprehensive income, net of taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37
|
|
|
37
|
|
|
—
|
|
|
37
|
|
||||||
Issuances of stock (less forfeitures)
|
|
1
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
16
|
|
||||||
Repurchases of stock and other
|
|
—
|
|
|
(31
|
)
|
|
—
|
|
|
—
|
|
|
(31
|
)
|
|
—
|
|
|
(31
|
)
|
||||||
Dividends of $1.28 per share
|
|
—
|
|
|
—
|
|
|
(196
|
)
|
|
—
|
|
|
(196
|
)
|
|
—
|
|
|
(196
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
43
|
|
|
—
|
|
|
—
|
|
|
43
|
|
|
—
|
|
|
43
|
|
||||||
Adjustment to original purchase price allocation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
||||||
Balance at December 29, 2017
|
|
151
|
|
|
$
|
3,344
|
|
|
$
|
(7
|
)
|
|
$
|
33
|
|
|
$
|
3,370
|
|
|
$
|
13
|
|
|
$
|
3,383
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
||||||||
|
|
December 29,
2017 |
|
December 30,
2016 |
|
January 1,
2016 |
||||||
|
|
(in millions)
|
||||||||||
Cash flows from operations:
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
364
|
|
|
$
|
246
|
|
|
$
|
242
|
|
Income from discontinued operations
|
|
—
|
|
|
—
|
|
|
1
|
|
|||
Adjustments to reconcile net income to net cash provided by continuing operations:
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
336
|
|
|
122
|
|
|
41
|
|
|||
Amortization of equity method investments
|
|
14
|
|
|
—
|
|
|
—
|
|
|||
Stock-based compensation
|
|
43
|
|
|
35
|
|
|
30
|
|
|||
Asset impairment charges
|
|
—
|
|
|
4
|
|
|
33
|
|
|||
Promissory note impairment
|
|
33
|
|
|
—
|
|
|
—
|
|
|||
Gain on a real estate sale
|
|
—
|
|
|
—
|
|
|
(82
|
)
|
|||
Bad debt expense
|
|
10
|
|
|
3
|
|
|
8
|
|
|||
Non-cash interest expense
|
|
12
|
|
|
4
|
|
|
1
|
|
|||
Other
|
|
9
|
|
|
(7
|
)
|
|
(3
|
)
|
|||
Change in assets and liabilities, net of effects of acquisitions and dispositions:
|
|
|
|
|
|
|
||||||
Receivables
|
|
(191
|
)
|
|
123
|
|
|
(19
|
)
|
|||
Inventory, prepaid expenses and other current assets
|
|
(76
|
)
|
|
(98
|
)
|
|
(14
|
)
|
|||
Accounts payable and accrued liabilities
|
|
152
|
|
|
(25
|
)
|
|
102
|
|
|||
Accrued payroll and employee benefits
|
|
8
|
|
|
26
|
|
|
5
|
|
|||
Deferred income taxes and income taxes receivable/payable
|
|
(151
|
)
|
|
36
|
|
|
81
|
|
|||
Other long-term assets/liabilities
|
|
(37
|
)
|
|
(20
|
)
|
|
(44
|
)
|
|||
Net cash provided by operating activities of continuing operations
|
|
526
|
|
|
449
|
|
|
382
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
||||||
Payments for property, plant and equipment
|
|
(81
|
)
|
|
(29
|
)
|
|
(27
|
)
|
|||
Acquisitions of businesses
|
|
—
|
|
|
25
|
|
|
—
|
|
|||
Payments on accrued purchase price related to prior acquisition
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|||
Net proceeds from sale of assets
|
|
8
|
|
|
3
|
|
|
79
|
|
|||
Proceeds from disposition of business
|
|
—
|
|
|
23
|
|
|
27
|
|
|||
Other
|
|
2
|
|
|
4
|
|
|
4
|
|
|||
Net cash (used in) provided by investing activities of continuing operations
|
|
(71
|
)
|
|
26
|
|
|
70
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
||||||||
|
|
December 29,
2017 |
|
December 30,
2016 |
|
January 1,
2016 |
||||||
|
|
(in millions)
|
||||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
||||||
Payments of long-term debt
|
|
(209
|
)
|
|
(277
|
)
|
|
(39
|
)
|
|||
Payments on real estate financing transaction
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|||
Proceeds from debt issuance
|
|
—
|
|
|
690
|
|
|
—
|
|
|||
Payments for debt issuance and modification costs
|
|
(4
|
)
|
|
(30
|
)
|
|
—
|
|
|||
Proceeds from issuances of stock
|
|
13
|
|
|
25
|
|
|
6
|
|
|||
Repurchases of stock and other
|
|
(31
|
)
|
|
(24
|
)
|
|
(118
|
)
|
|||
Special cash dividend payment
|
|
—
|
|
|
(993
|
)
|
|
—
|
|
|||
Dividend payments
|
|
(198
|
)
|
|
(142
|
)
|
|
(93
|
)
|
|||
Other
|
|
—
|
|
|
—
|
|
|
1
|
|
|||
Net cash used in financing activities of continuing operations
|
|
(429
|
)
|
|
(751
|
)
|
|
(251
|
)
|
|||
Net increase (decrease) in cash, cash equivalents and restricted cash from continuing operations
|
|
26
|
|
|
(276
|
)
|
|
201
|
|
|||
Cash flows from discontinued operations:
|
|
|
|
|
|
|
||||||
Net cash used in operating activities of discontinued operations
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|||
Net cash (used in) provided by investing activities of discontinued operations
|
|
—
|
|
|
(1
|
)
|
|
6
|
|
|||
Net decrease in cash, cash equivalents and restricted cash from discontinued operations
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
|
26
|
|
|
(277
|
)
|
|
200
|
|
|||
Cash, cash equivalents and restricted cash at beginning of year
|
|
396
|
|
|
673
|
|
|
473
|
|
|||
Cash, cash equivalents and restricted cash at end of year
|
|
$
|
422
|
|
|
$
|
396
|
|
|
$
|
673
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
||||||||
|
|
December 29,
2017 |
|
December 30,
2016 |
|
January 1,
2016 |
||||||
|
|
(in millions, except for per share amounts)
|
||||||||||
Net favorable impact to income from continuing operations before taxes
|
|
$
|
103
|
|
|
$
|
37
|
|
|
$
|
18
|
|
Impact on diluted EPS from continuing operations attributable to Leidos common stockholders
|
|
$
|
0.41
|
|
|
$
|
0.22
|
|
|
$
|
0.14
|
|
|
|
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 and fixtures
|
|
Straight-line or declining-balance
|
|
6-9
|
|
|
Estimated useful lives (in years)
|
Program and contract intangibles
|
|
6-11
|
Backlog
|
|
1
|
Customer relationships
|
|
8
|
Software and technology
|
|
4-15
|
Value of common stock issued to Lockheed Martin stockholders
(1)
|
$
|
2,929
|
|
Equity consideration for replacement awards
(2)
|
9
|
|
|
Working capital adjustments
(3)
|
81
|
|
|
Purchase price
|
$
|
3,019
|
|
Cash
|
$
|
25
|
|
Receivables, net
|
938
|
|
|
Inventory, prepaid expenses and other current assets
|
73
|
|
|
Property, plant and equipment
|
87
|
|
|
Intangible assets
|
1,194
|
|
|
Other assets
|
58
|
|
|
Accounts payable and accrued liabilities
|
(733
|
)
|
|
Accrued payroll and employee benefits
|
(186
|
)
|
|
Long-term debt, current portion
|
(23
|
)
|
|
Deferred tax liabilities
|
(328
|
)
|
|
Long-term debt, net of current portion
|
(1,780
|
)
|
|
Other long-term liabilities
|
(45
|
)
|
|
Total identifiable net liabilities assumed
|
(720
|
)
|
|
Non-controlling interest
|
(13
|
)
|
|
Goodwill
|
3,752
|
|
|
Purchase price
|
$
|
3,019
|
|
|
|
Weighted average amortization period
|
|
Fair value
|
||
|
|
(in years)
|
|
(in millions)
|
||
Program and contract intangibles
(1)
|
|
9.7
|
|
$
|
1,011
|
|
Backlog
|
|
1.8
|
|
157
|
|
|
Software and technology
(1)
|
|
4.6
|
|
26
|
|
|
Total
|
|
8.6
|
|
$
|
1,194
|
|
|
|
12 Months Ended
|
||||||
|
|
December 29,
2017 |
|
December 30,
2016 |
||||
|
|
(in millions)
|
||||||
Acquisition costs
|
|
$
|
25
|
|
|
$
|
44
|
|
Integration costs
|
|
77
|
|
|
46
|
|
||
Total acquisition and integration costs
|
|
$
|
102
|
|
|
$
|
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
|
|
340
|
|
|
336
|
|
||
Income from continuing operations attributable to Leidos common stockholders
|
|
335
|
|
|
331
|
|
||
Earnings per share:
|
|
|
|
|
||||
Basic
|
|
$
|
2.23
|
|
|
$
|
2.21
|
|
Diluted
|
|
$
|
2.20
|
|
|
$
|
2.19
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
||||||||
|
|
December 29,
2017 |
|
December 30,
2016 |
|
January 1,
2016 |
||||||
|
|
(in millions)
|
||||||||||
Revenues
|
|
$
|
10
|
|
|
$
|
14
|
|
|
$
|
17
|
|
Cost of revenues
|
|
10
|
|
|
14
|
|
|
17
|
|
|||
Operating income
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
12 Months Ended
|
||||||
|
|
December 29,
2017 |
|
December 30,
2016 |
||||
|
|
(in millions)
|
||||||
Severance costs
|
|
$
|
18
|
|
|
$
|
10
|
|
Lease termination expenses
|
|
19
|
|
|
2
|
|
||
Restructuring expenses related to the IS&GS Business in operating income
|
|
$
|
37
|
|
|
$
|
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
|
|
|||
Charges
|
|
18
|
|
|
19
|
|
|
37
|
|
|||
Cash payments
|
|
(20
|
)
|
|
(16
|
)
|
|
(36
|
)
|
|||
Balance as of December 29, 2017
|
|
$
|
5
|
|
|
$
|
4
|
|
|
$
|
9
|
|
|
|
December 29, 2017
|
|
December 30, 2016
|
||||||||||||
|
|
Carrying value
|
|
Fair value
|
|
Carrying value
|
|
Fair value
|
||||||||
|
|
(in millions)
|
||||||||||||||
Derivatives
|
|
$
|
37
|
|
|
$
|
37
|
|
|
$
|
29
|
|
|
$
|
29
|
|
|
|
Defense Solutions
|
|
Civil
|
|
Health
|
|
Total
|
||||||||
|
|
(in millions)
|
||||||||||||||
Goodwill at January 1, 2016
(1)
|
|
$
|
792
|
|
|
$
|
244
|
|
|
$
|
171
|
|
|
$
|
1,207
|
|
Acquisition of the IS&GS Business
|
|
1,162
|
|
|
1,487
|
|
|
766
|
|
|
3,415
|
|
||||
Goodwill at December 30, 2016
(1)
|
|
1,954
|
|
|
1,731
|
|
|
937
|
|
|
4,622
|
|
||||
Adjustment to original purchase price allocation
|
|
94
|
|
|
259
|
|
|
(16
|
)
|
|
337
|
|
||||
Foreign currency translation adjustments
|
|
7
|
|
|
8
|
|
|
—
|
|
|
15
|
|
||||
Goodwill at December 29, 2017
(1)
|
|
$
|
2,055
|
|
|
$
|
1,998
|
|
|
$
|
921
|
|
|
$
|
4,974
|
|
|
|
December 29, 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Program and contract intangibles
|
|
$
|
1,013
|
|
|
$
|
(187
|
)
|
|
$
|
826
|
|
|
$
|
1,450
|
|
|
$
|
(25
|
)
|
|
$
|
1,425
|
|
Backlog
|
|
158
|
|
|
(158
|
)
|
|
—
|
|
|
200
|
|
|
(54
|
)
|
|
146
|
|
||||||
Software and technology
|
|
89
|
|
|
(64
|
)
|
|
25
|
|
|
61
|
|
|
(48
|
)
|
|
13
|
|
||||||
Customer relationships
|
|
4
|
|
|
(3
|
)
|
|
1
|
|
|
6
|
|
|
(5
|
)
|
|
1
|
|
||||||
Total finite-lived intangible assets
|
|
1,264
|
|
|
(412
|
)
|
|
852
|
|
|
1,717
|
|
|
(132
|
)
|
|
1,585
|
|
||||||
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trade names
|
|
4
|
|
|
—
|
|
|
4
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||||
Total intangible assets
|
|
$
|
1,268
|
|
|
$
|
(412
|
)
|
|
$
|
856
|
|
|
$
|
1,721
|
|
|
$
|
(132
|
)
|
|
$
|
1,589
|
|
Fiscal Year Ending
|
|
|
||
|
|
(in millions)
|
||
2018
|
|
$
|
202
|
|
2019
|
|
172
|
|
|
2020
|
|
128
|
|
|
2021
|
|
106
|
|
|
2022
|
|
92
|
|
|
2023 and thereafter
|
|
152
|
|
|
|
|
$
|
852
|
|
|
|
December 29,
2017 |
|
December 30,
2016 |
||||
|
|
(in millions)
|
||||||
Billed receivables
|
|
$
|
771
|
|
|
$
|
847
|
|
Unbilled receivables
|
|
1,074
|
|
|
821
|
|
||
Allowance for doubtful accounts
|
|
(14
|
)
|
|
(11
|
)
|
||
|
|
$
|
1,831
|
|
|
$
|
1,657
|
|
|
|
December 29,
2017 |
|
December 30,
2016 |
||||
|
|
(in millions)
|
||||||
Computers and other equipment
|
|
$
|
194
|
|
|
$
|
172
|
|
Leasehold improvements
|
|
171
|
|
|
161
|
|
||
Buildings and improvements
|
|
54
|
|
|
104
|
|
||
Office furniture and fixtures
|
|
34
|
|
|
35
|
|
||
Land
|
|
49
|
|
|
57
|
|
||
Construction in progress
|
|
44
|
|
|
12
|
|
||
|
|
546
|
|
|
541
|
|
||
Less: accumulated depreciation and amortization
|
|
(314
|
)
|
|
(282
|
)
|
||
|
|
$
|
232
|
|
|
$
|
259
|
|
Balance Sheet
|
|
December 29,
2017 |
|
December 30,
2016 |
||||
|
|
(in millions)
|
||||||
Inventory, prepaid expenses and other current assets:
|
|
|
|
|
||||
Prepaid expenses
|
|
$
|
90
|
|
|
$
|
90
|
|
Inventory
|
|
76
|
|
|
67
|
|
||
Pre-contract costs
|
|
64
|
|
|
33
|
|
||
Transition costs and project assets
|
|
59
|
|
|
62
|
|
||
Prepaid income taxes and tax refunds receivable
|
|
54
|
|
|
13
|
|
||
Short-term notes receivable
|
|
40
|
|
|
3
|
|
||
Restricted cash
|
|
32
|
|
|
20
|
|
||
Other
|
|
38
|
|
|
60
|
|
||
|
|
$
|
453
|
|
|
$
|
348
|
|
Other assets:
|
|
|
|
|
||||
Investment in rabbi trust
|
|
$
|
58
|
|
|
$
|
48
|
|
Derivatives
|
|
37
|
|
|
29
|
|
||
Equity method investments
(1)
|
|
37
|
|
|
20
|
|
||
Deferred costs
|
|
24
|
|
|
31
|
|
||
Long-term notes receivables
|
|
23
|
|
|
89
|
|
||
Other
|
|
75
|
|
|
48
|
|
||
|
|
$
|
254
|
|
|
$
|
265
|
|
Accounts payable and accrued liabilities:
|
|
|
|
|
||||
Accrued liabilities
|
|
$
|
747
|
|
|
$
|
493
|
|
Accounts payable
|
|
557
|
|
|
591
|
|
||
Collections in excess of revenues and deferred revenue
|
|
293
|
|
|
246
|
|
||
Tax indemnity liability
|
|
23
|
|
|
—
|
|
||
Provision for loss contracts
|
|
19
|
|
|
97
|
|
||
|
|
$
|
1,639
|
|
|
$
|
1,427
|
|
Accrued payroll and employee benefits:
|
|
|
|
|
||||
Salaries, bonuses and amounts withheld from employees’ compensation
|
|
$
|
245
|
|
|
$
|
211
|
|
Accrued vacation
|
|
236
|
|
|
244
|
|
||
Accrued contributions to employee benefit plans
|
|
6
|
|
|
28
|
|
||
|
|
$
|
487
|
|
|
$
|
483
|
|
Other long-term liabilities:
|
|
|
|
|
||||
Deferred compensation
|
|
$
|
56
|
|
|
$
|
48
|
|
Lease related obligations
|
|
33
|
|
|
37
|
|
||
Deferred revenue
|
|
17
|
|
|
20
|
|
||
Liabilities for uncertain tax positions
|
|
7
|
|
|
5
|
|
||
Tax indemnity liability
|
|
1
|
|
|
31
|
|
||
Accrued pension liabilities
|
|
—
|
|
|
6
|
|
||
Other
|
|
15
|
|
|
57
|
|
||
|
|
$
|
129
|
|
|
$
|
204
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
||||||||
Income Statement
|
|
December 29,
2017 |
|
December 30,
2016 |
|
January 1,
2016 |
||||||
|
|
(in millions)
|
||||||||||
Other (expense) income, net
|
|
|
|
|
|
|
||||||
Promissory note impairment
|
|
$
|
(33
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Gain (loss) on foreign currency
|
|
5
|
|
|
(18
|
)
|
|
—
|
|
|||
Gain on sale of former headquarters
|
|
—
|
|
|
—
|
|
|
82
|
|
|||
Other income, net
|
|
2
|
|
|
5
|
|
|
2
|
|
|||
|
|
$
|
(26
|
)
|
|
$
|
(13
|
)
|
|
$
|
84
|
|
|
|
Balance sheet line item
|
|
December 29,
2017 |
|
December 30,
2016 |
||||
|
|
|
|
(in millions)
|
||||||
Fair value interest rate swaps
|
|
Other assets
|
|
$
|
—
|
|
|
$
|
3
|
|
Cash flow interest rate swaps
|
|
Other assets
|
|
37
|
|
|
26
|
|
||
|
|
|
|
$
|
37
|
|
|
$
|
29
|
|
|
|
12 Months Ended
|
||||||
|
|
December 29,
2017 |
|
December 30,
2016 |
||||
|
|
(in millions)
|
||||||
Effective portion recognized in other comprehensive income
|
|
$
|
10
|
|
|
$
|
22
|
|
Effective portion reclassified from accumulated other comprehensive income (loss) to interest expense
|
|
—
|
|
|
2
|
|
||
Ineffective portion recognized in other (expense) income, net
|
|
1
|
|
|
2
|
|
|
|
Stated
interest rate |
|
Effective
interest rate |
|
December 29, 2017
(1)
|
|
December 30, 2016
(1)
|
||||||
|
|
|
|
|
|
(in millions)
|
||||||||
Senior secured notes:
|
|
|
|
|
|
|
|
|
||||||
$450 million notes, due December 2020
|
|
4.45
|
%
|
|
4.53
|
%
|
|
$
|
449
|
|
|
$
|
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
|
|
—
|
%
|
|
—
|
%
|
|
—
|
|
|
123
|
|
||
$690 million Term Loan A, due August 2022
|
|
3.13
|
%
|
|
3.61
|
%
|
|
644
|
|
|
676
|
|
||
$310 million Term Loan A, due August 2022
|
|
3.13
|
%
|
|
3.60
|
%
|
|
270
|
|
|
304
|
|
||
$1,131 million Term Loan B, due August 2023
|
|
3.38
|
%
|
|
3.74
|
%
|
|
1,101
|
|
|
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 and notes payable due on various dates through fiscal 2022
|
|
0%-5.55%
|
|
|
Various
|
|
|
27
|
|
|
3
|
|
||
Total long-term debt
|
|
|
|
|
|
3,111
|
|
|
3,287
|
|
||||
Less: current portion
|
|
|
|
|
|
55
|
|
|
62
|
|
||||
Total long-term debt, net of current portion
|
|
|
|
|
|
$
|
3,056
|
|
|
$
|
3,225
|
|
(1)
|
The carrying amounts of the senior secured term loans and notes and unsecured notes as of December 29, 2017, and December 30, 2016, include the remaining principal outstanding of
$3,129 million
and
$3,336 million
, respectively, plus an immaterial amount and
$3 million
, respectively, related to the fair value of the interest rate swaps (see "Note 11—Derivative Instruments"), less unamortized debt discounts of
$35 million
and
$46 million
, respectively, less deferred debt issuance costs of
$10 million
and
$9 million
, respectively.
|
Fiscal Year Ending
|
|
|
||
|
|
(in millions)
|
||
2018
|
|
$
|
55
|
|
2019
|
|
71
|
|
|
2020
|
|
582
|
|
|
2021
|
|
113
|
|
|
2022
|
|
642
|
|
|
2023 and thereafter
|
|
1,693
|
|
|
Total principal payments
|
|
3,156
|
|
|
Less: unamortized debt discount and issuance costs
|
|
(45
|
)
|
|
Total long-term debt
|
|
$
|
3,111
|
|
|
|
Foreign currency translation adjustments
|
|
Unrecognized (loss) gain on derivative instruments
|
|
Pension liability adjustments
|
|
Total accumulated other comprehensive income (loss)
|
||||||||
|
|
(in millions)
|
||||||||||||||
Balance at January 30, 2015
|
|
$
|
1
|
|
|
$
|
(5
|
)
|
|
$
|
(7
|
)
|
|
$
|
(11
|
)
|
Other comprehensive (loss) income
|
|
(1
|
)
|
|
1
|
|
|
5
|
|
|
5
|
|
||||
Taxes
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
||||
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
|
|
36
|
|
|
10
|
|
|
9
|
|
|
55
|
|
||||
Taxes
|
|
(12
|
)
|
|
(6
|
)
|
|
—
|
|
|
(18
|
)
|
||||
Balance at December 29, 2017
|
|
$
|
17
|
|
|
$
|
14
|
|
|
$
|
2
|
|
|
$
|
33
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|||||
|
|
December 29,
2017 |
|
December 30,
2016 |
|
January 1,
2016 |
|||
|
|
(in millions)
|
|||||||
Basic weighted average number of shares outstanding
|
|
152
|
|
|
102
|
|
|
73
|
|
Dilutive common share equivalents—stock options and other stock awards
|
|
2
|
|
|
2
|
|
|
1
|
|
Diluted weighted average number of shares outstanding
|
|
154
|
|
|
104
|
|
|
74
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
||||||||
|
|
December 29,
2017 |
|
December 30,
2016 |
|
January 1,
2016 |
||||||
|
|
(in millions)
|
||||||||||
Total stock-based compensation expense
|
|
$
|
43
|
|
|
$
|
35
|
|
|
$
|
30
|
|
Tax benefits recognized from stock-based compensation
|
|
$
|
17
|
|
|
$
|
14
|
|
|
$
|
12
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
||||||||||||
|
|
December 29,
2017 |
|
December 30, 2016
(Grants after acquisition) |
|
December 30, 2016
(Grants before acquisition) |
|
January 1,
2016 |
||||||||
Weighted average grant-date fair value
|
|
$
|
11.53
|
|
|
$
|
10.33
|
|
|
$
|
9.54
|
|
|
$
|
6.72
|
|
Expected term (in years)
|
|
4.7
|
|
|
4.7
|
|
|
4.8
|
|
|
4.7
|
|
||||
Expected volatility
|
|
29.7
|
%
|
|
37.9
|
%
|
|
29.9
|
%
|
|
24.5
|
%
|
||||
Risk-free interest rate
|
|
1.9
|
%
|
|
1.2
|
%
|
|
1.3
|
%
|
|
1.4
|
%
|
||||
Dividend yield
|
|
2.5
|
%
|
|
2.7
|
%
|
|
2.5
|
%
|
|
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 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
|
|
|
Options granted
|
|
0.5
|
|
|
53.51
|
|
|
|
|
|
|
||
Options forfeited or expired
|
|
(0.2
|
)
|
|
35.72
|
|
|
|
|
|
|
||
Options exercised
|
|
(0.8
|
)
|
|
27.23
|
|
|
|
|
23
|
|
||
Outstanding at December 29, 2017
|
|
2.8
|
|
|
34.38
|
|
|
3.9
|
|
86
|
|
||
Exercisable at December 29, 2017
|
|
1.6
|
|
|
$
|
29.13
|
|
|
2.7
|
|
$
|
56
|
|
Vested and expected to vest in the future as of December 29, 2017
|
|
2.7
|
|
|
$
|
33.98
|
|
|
3.8
|
|
$
|
83
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
||||||||
|
|
December 29,
2017 |
|
December 30,
2016 |
|
January 1,
2016 |
||||||
|
|
(in millions)
|
||||||||||
Tax benefits from stock options exercised
|
|
$
|
7
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Fair value of stock surrendered in payment of the exercise price for stock options exercised
|
|
$
|
2
|
|
|
$
|
4
|
|
|
$
|
3
|
|
Cash received from exercises of stock options
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Shares of stock
under stock
awards
|
|
Weighted
average grant-
date fair value
|
|||
|
|
(in millions)
|
|
|
|||
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
|
|
Awards granted
|
|
0.8
|
|
|
53.91
|
|
|
Awards forfeited
|
|
(0.3
|
)
|
|
45.89
|
|
|
Awards vested
|
|
(1.0
|
)
|
|
41.02
|
|
|
Unvested stock awards at December 29, 2017
|
|
2.0
|
|
|
$
|
44.96
|
|
|
|
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 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
|
|
Awards granted
|
|
0.2
|
|
|
57.94
|
|
|
Awards vested
|
|
(0.1
|
)
|
|
42.85
|
|
|
Unvested at December 29, 2017
|
|
0.5
|
|
|
$
|
50.34
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
||||||||
|
|
December 29,
2017 |
|
December 30,
2016 |
|
January 1,
2016 |
||||||
Expected volatility
|
|
27.19
|
%
|
|
31.73
|
%
|
|
27.67
|
%
|
|||
Risk free rate of return
|
|
1.53
|
%
|
|
1.01
|
%
|
|
0.82
|
%
|
|||
Weighted average grant date stock price
|
|
$
|
53.73
|
|
|
$
|
46.54
|
|
|
$
|
42.61
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
||||||||
|
|
December 29,
2017 |
|
December 30,
2016 |
|
January 1,
2016 |
||||||
|
|
(in millions)
|
||||||||||
Current:
|
|
|
|
|
|
|
||||||
Federal and foreign
|
|
$
|
130
|
|
|
$
|
88
|
|
|
$
|
71
|
|
State
|
|
30
|
|
|
16
|
|
|
14
|
|
|||
Deferred:
|
|
|
|
|
|
|
||||||
Federal and foreign
|
|
(141
|
)
|
|
(29
|
)
|
|
20
|
|
|||
State
|
|
10
|
|
|
(3
|
)
|
|
7
|
|
|||
Total
|
|
$
|
29
|
|
|
$
|
72
|
|
|
$
|
112
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
||||||||
|
|
December 29,
2017 |
|
December 30,
2016 |
|
January 1,
2016 |
||||||
|
|
(in millions)
|
||||||||||
Amount computed at the statutory federal income tax rate (35%)
|
|
$
|
138
|
|
|
$
|
111
|
|
|
$
|
124
|
|
Change in statutory federal tax rate
|
|
(125
|
)
|
|
—
|
|
|
—
|
|
|||
State income taxes, net of federal tax benefit
|
|
31
|
|
|
8
|
|
|
14
|
|
|||
Excess tax benefits from stock-based compensation
|
|
(12
|
)
|
|
(8
|
)
|
|
—
|
|
|||
Capitalized transaction costs
|
|
9
|
|
|
7
|
|
|
—
|
|
|||
Change in valuation allowance for deferred tax assets
|
|
7
|
|
|
(8
|
)
|
|
(21
|
)
|
|||
Research and development credits
|
|
(7
|
)
|
|
(4
|
)
|
|
(4
|
)
|
|||
Dividends paid to employee stock ownership plan
|
|
(4
|
)
|
|
(38
|
)
|
|
(3
|
)
|
|||
Impact of foreign operations
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|||
Change in accruals for uncertain tax positions
|
|
—
|
|
|
1
|
|
|
(4
|
)
|
|||
Other
|
|
(4
|
)
|
|
3
|
|
|
6
|
|
|||
Total
|
|
$
|
29
|
|
|
$
|
72
|
|
|
$
|
112
|
|
Effective income tax rate
|
|
7.4
|
%
|
|
22.6
|
%
|
|
31.5
|
%
|
|
|
December 29,
2017 |
|
December 30,
2016 |
||||
|
|
(in millions)
|
||||||
Reserves
|
|
$
|
62
|
|
|
$
|
103
|
|
Capital loss carryover
|
|
60
|
|
|
81
|
|
||
Accrued vacation and bonuses
|
|
54
|
|
|
89
|
|
||
Credits and net operating losses carryovers
|
|
33
|
|
|
35
|
|
||
Deferred compensation
|
|
22
|
|
|
38
|
|
||
Vesting stock awards
|
|
17
|
|
|
23
|
|
||
Deferred rent and tenant allowances
|
|
10
|
|
|
16
|
|
||
Investments
|
|
2
|
|
|
3
|
|
||
Employee benefit contributions
|
|
—
|
|
|
3
|
|
||
Other
|
|
18
|
|
|
17
|
|
||
Total deferred tax assets
|
|
278
|
|
|
408
|
|
||
Valuation allowance
|
|
(83
|
)
|
|
(102
|
)
|
||
Deferred tax assets, net of valuation allowance
|
|
195
|
|
|
306
|
|
||
|
|
|
|
|
||||
Purchased intangible assets
|
|
(340
|
)
|
|
(748
|
)
|
||
Deferred revenue
|
|
(34
|
)
|
|
(42
|
)
|
||
Partnership interest
|
|
(17
|
)
|
|
(14
|
)
|
||
Accumulated other comprehensive income
|
|
(13
|
)
|
|
(8
|
)
|
||
Employee benefit contributions
|
|
(3
|
)
|
|
—
|
|
||
Fixed asset basis differences
|
|
—
|
|
|
(11
|
)
|
||
Other
|
|
(8
|
)
|
|
(7
|
)
|
||
Total deferred tax liabilities
|
|
(415
|
)
|
|
(830
|
)
|
||
Net deferred tax liabilities
|
|
$
|
(220
|
)
|
|
$
|
(524
|
)
|
|
|
December 29,
2017 |
|
December 30,
2016 |
||||
|
|
(in millions)
|
||||||
Net non-current deferred tax assets
|
|
$
|
—
|
|
|
$
|
16
|
|
Net non-current deferred tax liabilities
|
|
(220
|
)
|
|
(540
|
)
|
||
Total net deferred tax liabilities
|
|
$
|
(220
|
)
|
|
$
|
(524
|
)
|
|
|
12 Months Ended
|
|
11 Months Ended
|
||||||||
|
|
December 29,
2017 |
|
December 30,
2016 |
|
January 1,
2016 |
||||||
|
|
(in millions)
|
||||||||||
Unrecognized tax benefits at beginning of year
|
|
$
|
9
|
|
|
$
|
11
|
|
|
$
|
17
|
|
Additions for tax positions related to current year
|
|
2
|
|
|
1
|
|
|
5
|
|
|||
Additions for tax positions related to prior years
|
|
2
|
|
|
4
|
|
|
4
|
|
|||
Reductions for tax positions related to prior years
|
|
(3
|
)
|
|
(7
|
)
|
|
(15
|
)
|
|||
Unrecognized tax benefits at end of year
|
|
$
|
10
|
|
|
$
|
9
|
|
|
$
|
11
|
|
Unrecognized tax benefits that, if recognized, would affect the effective income tax rate
|
|
$
|
7
|
|
|
$
|
4
|
|
|
$
|
7
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
||||||||
|
|
December 29,
2017 |
|
December 30,
2016 |
|
January 1,
2016 |
||||||
|
|
(in millions)
|
||||||||||
Gross rental expense
|
|
$
|
181
|
|
|
$
|
107
|
|
|
$
|
83
|
|
Less: sublease income
|
|
(3
|
)
|
|
(2
|
)
|
|
(8
|
)
|
|||
Net rental expense
|
|
$
|
178
|
|
|
$
|
105
|
|
|
$
|
75
|
|
Fiscal Year Ending
|
|
Operating lease
commitment |
|
Sublease
receipts |
||||
|
|
(in millions)
|
||||||
2018
|
|
$
|
140
|
|
|
$
|
2
|
|
2019
|
|
107
|
|
|
1
|
|
||
2020
|
|
78
|
|
|
1
|
|
||
2021
|
|
53
|
|
|
1
|
|
||
2022
|
|
39
|
|
|
—
|
|
||
2023 and thereafter
|
|
78
|
|
|
—
|
|
||
Total
|
|
$
|
495
|
|
|
$
|
5
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
||||||||
|
|
December 29,
2017 |
|
December 30,
2016 |
|
January 1,
2016 |
||||||
|
|
(in millions)
|
||||||||||
Supplementary cash flow information:
|
|
|
|
|
|
|
||||||
Cash paid for income taxes, net of refunds
|
|
$
|
214
|
|
|
$
|
47
|
|
|
$
|
31
|
|
Cash paid for interest
|
|
133
|
|
|
90
|
|
|
50
|
|
|||
|
|
|
|
|
|
|
||||||
Non-cash investing activity:
|
|
|
|
|
|
|
||||||
Stock issued for acquisition of the IS&GS Business
|
|
$
|
—
|
|
|
$
|
2,938
|
|
|
$
|
—
|
|
Promissory note, net received for disposition of business
|
|
—
|
|
|
—
|
|
|
72
|
|
|||
Promissory note, net received from a real estate sale
|
|
—
|
|
|
—
|
|
|
20
|
|
|||
|
|
|
|
|
|
|
||||||
Non-cash financing activity:
|
|
|
|
|
|
|
||||||
Capital lease and notes payable obligations
|
|
$
|
27
|
|
|
$
|
—
|
|
|
$
|
6
|
|
Dividends declared and other
|
|
3
|
|
|
21
|
|
|
2
|
|
|
|
December 29,
2017 |
|
December 30,
2016 |
||||
|
|
(in millions)
|
||||||
Cash and cash equivalents
|
|
$
|
390
|
|
|
$
|
376
|
|
Restricted cash
|
|
32
|
|
|
20
|
|
||
Total cash, cash equivalents and restricted cash
|
|
$
|
422
|
|
|
$
|
396
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
||||||||
|
|
December 29,
2017 |
|
December 30,
2016 |
|
January 1,
2016 |
||||||
|
|
(in millions)
|
||||||||||
Revenues:
|
|
|
|
|
|
|
||||||
Defense Solutions
|
|
$
|
4,959
|
|
|
$
|
3,843
|
|
|
$
|
3,009
|
|
Civil
|
|
3,409
|
|
|
2,082
|
|
|
1,141
|
|
|||
Health
|
|
1,802
|
|
|
1,117
|
|
|
556
|
|
|||
Corporate
|
|
—
|
|
|
1
|
|
|
6
|
|
|||
Total revenues
|
|
$
|
10,170
|
|
|
$
|
7,043
|
|
|
$
|
4,712
|
|
|
|
|
|
|
|
|
||||||
Operating income (loss):
|
|
|
|
|
|
|
||||||
Defense Solutions
|
|
$
|
307
|
|
|
$
|
312
|
|
|
$
|
260
|
|
Civil
|
|
226
|
|
|
146
|
|
|
33
|
|
|||
Health
|
|
228
|
|
|
110
|
|
|
46
|
|
|||
Corporate
|
|
(202
|
)
|
|
(151
|
)
|
|
(19
|
)
|
|||
Total operating income
|
|
$
|
559
|
|
|
$
|
417
|
|
|
$
|
320
|
|
|
|
|
|
|
|
|
||||||
Amortization of intangible assets:
|
|
|
|
|
|
|
||||||
Defense Solutions
|
|
$
|
108
|
|
|
$
|
17
|
|
|
$
|
—
|
|
Civil
|
|
132
|
|
|
39
|
|
|
6
|
|
|||
Health
|
|
41
|
|
|
28
|
|
|
2
|
|
|||
Total amortization of intangible assets
|
|
$
|
281
|
|
|
$
|
84
|
|
|
$
|
8
|
|
|
|
12 Months Ended
|
|
11 Months Ended
|
|||||
|
|
December 29,
2017 |
|
December 30,
2016 |
|
January 1,
2016 |
|||
U.S. Government
|
|
84
|
%
|
|
81
|
%
|
|
76
|
%
|
U.S. DoD
|
|
47
|
%
|
|
56
|
%
|
|
64
|
%
|
U.S. Army
|
|
13
|
%
|
|
14
|
%
|
|
14
|
%
|
Maryland Procurement Office
|
|
5
|
%
|
|
7
|
%
|
|
10
|
%
|
|
|
Three Months Ended
|
||||||||||||||
|
|
March 31,
2017 |
|
June 30,
2017 |
|
September 29,
2017 |
|
December 29,
2017 |
||||||||
|
|
(in millions, except per share amounts)
|
||||||||||||||
Fiscal 2017
(1)
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
$
|
2,580
|
|
|
$
|
2,571
|
|
|
$
|
2,503
|
|
|
$
|
2,516
|
|
Operating income
|
|
$
|
141
|
|
|
$
|
166
|
|
|
$
|
151
|
|
|
$
|
101
|
|
Net income
|
|
$
|
74
|
|
|
$
|
98
|
|
|
$
|
79
|
|
|
$
|
113
|
|
Net income attributable to Leidos common stockholders
|
|
$
|
72
|
|
|
$
|
98
|
|
|
$
|
82
|
|
|
$
|
114
|
|
Basic earnings per share attributable to Leidos
common stockholders
(4)
|
|
$
|
0.48
|
|
|
$
|
0.65
|
|
|
$
|
0.54
|
|
|
$
|
0.75
|
|
Diluted earnings per share attributable to Leidos common stockholders
|
|
$
|
0.47
|
|
|
$
|
0.64
|
|
|
$
|
0.53
|
|
|
$
|
0.74
|
|
|
|
Three Months Ended
|
||||||||||||||
|
|
April 1,
2016 |
|
July 1,
2016 |
|
September 30,
2016 |
|
December 30,
2016 |
||||||||
|
|
(in millions, except per share amounts)
|
||||||||||||||
Fiscal 2016
(2)
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
$
|
1,312
|
|
|
$
|
1,288
|
|
|
$
|
1,868
|
|
|
$
|
2,575
|
|
Operating income
|
|
$
|
89
|
|
|
$
|
75
|
|
|
$
|
101
|
|
|
$
|
152
|
|
Net income
(3)
|
|
$
|
53
|
|
|
$
|
41
|
|
|
$
|
92
|
|
|
$
|
60
|
|
Net income attributable to Leidos common stockholders
|
|
$
|
53
|
|
|
$
|
41
|
|
|
$
|
91
|
|
|
$
|
59
|
|
Basic earnings per share attributable to Leidos common stockholders
(4)
|
|
$
|
0.74
|
|
|
$
|
0.56
|
|
|
$
|
0.81
|
|
|
$
|
0.39
|
|
Diluted earnings per share attributable to Leidos common stockholders
(4)
|
|
$
|
0.72
|
|
|
$
|
0.55
|
|
|
$
|
0.80
|
|
|
$
|
0.39
|
|
(1)
|
The fiscal 2017 quarterly results include acquisition and integration costs of
$19 million
,
$16 million
,
$21 million
, and
$46 million
in the first, second, third and fourth quarter, respectively, and restructuring expenses of
$13 million
,
$6 million
,
$6 million
, and
$12 million
in the first, second, third and fourth quarter, respectively. The fiscal 2017 fourth quarter results include a
$33 million
promissory note impairment charge.
|
(2)
|
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.
|
(3)
|
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.
|
(4)
|
Earnings per share are computed independently for each of the quarters presented and therefore may not sum to the totals for fiscal 2017 and fiscal 2016.
|
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)
|
|
5,282,826
|
|
(2)
|
$
|
34.38
|
|
(3)
|
14,455,526
|
|
(4)
|
Equity compensation plans not approved by security holders
(6)
|
|
—
|
|
|
—
|
|
|
—
|
|
(5)
|
|
Total
|
|
5,282,826
|
|
|
$
|
34.38
|
|
(3)
|
14,455,526
|
|
|
(1)
|
The following equity compensation plans approved by security holders are included in this plan category: the 2017 Omnibus Incentive Plan, the 2006 Equity Incentive Plan, as amended, and the 2006 Employee Stock Purchase Plan, as amended.
|
(2)
|
Represents (i)
2,442,121
shares of Leidos common stock reserved for future issuance for service-based awards and 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
244,673
shares if the maximum level of performance is achieved) and other stock awards under the 2017 Omnibus Incentive Plan and 2006 Equity Incentive Plan, (ii)
27,463
shares of Leidos common stock issuable pursuant to dividend equivalent rights and (iii)
2,813,242
shares of Leidos common stock reserved for future issuance upon the exercise of outstanding options awarded under the 2017 Omnibus Incentive Plan and 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.
|
(4)
|
Represents
7,365,495
,
2,303,601
and
4,786,430
shares of Leidos common stock under the 2017 Omnibus Incentive Plan, 2006 Equity Incentive Plan, and 2006 Employee Stock Purchase Plan, respectively. The maximum number of shares initially available for issuance under the 2017 Omnibus Incentive Plan was
7.5 million
. 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
. The 2006 Employee Stock Purchase Plan was amended in September 2016 to provide that the maximum number of shares available for issuance thereunder is
5.0 million
. Those shares (i) that are issued under the 2017 Omnibus Incentive Plan and 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 2017 Omnibus Incentive Plan.
|
(5)
|
The Stock Compensation Plan and the Management Stock Compensation Plan have not been approved by security holders and are included in this plan category. These plans do not provide for a maximum number of shares available for future issuance. For further information on these plans, see "Note 15—Stock-Based Compensation" of the notes to the consolidated financial statements contained within this Annual Report on Form 10-K.
|
Exhibit
Number |
|
Description of Exhibit
|
2.1
|
|
|
|
|
|
2.2
|
|
|
|
|
|
2.3
|
|
|
|
|
|
2.4
|
|
|
|
|
|
2.5
|
|
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
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
|
|
|
|
|
|
4.3
|
|
|
|
|
|
10.1*
|
|
|
|
|
|
Exhibit
Number |
|
Description of Exhibit
|
10.2*
|
|
|
|
|
|
10.3*
|
|
|
|
|
|
10.4*
|
|
|
|
|
|
10.5*
|
|
|
|
|
|
10.6*
|
|
|
|
|
|
10.7*
|
|
|
|
|
|
10.8*
|
|
|
|
|
|
10.9*
|
|
|
|
|
|
10.10*
|
|
|
|
|
|
10.11*
|
|
|
|
|
|
10.12*
|
|
|
|
|
|
10.13*
|
|
|
|
|
|
10.14*
|
|
|
|
|
|
10.15*
|
|
|
|
|
|
10.16*
|
|
|
|
|
|
10.17*
|
|
|
|
|
|
10.18*
|
|
|
|
|
|
10.19*
|
|
|
|
|
|
10.20*
|
|
|
|
|
|
Exhibit
Number |
|
Description of Exhibit
|
10.21*
|
|
|
|
|
|
10.22*
|
|
|
|
|
|
10.23*
|
|
|
|
|
|
10.24*
|
|
|
|
|
|
10.25*
|
|
|
|
|
|
10.26*
|
|
|
|
|
|
10.27*
|
|
|
|
|
|
10.28
|
|
|
|
|
|
10.29
|
|
|
|
|
|
10.30
|
|
|
|
|
|
10.31
|
|
|
|
|
|
10.32
|
|
|
|
|
|
10.33
|
|
|
|
|
|
10.34
|
|
|
|
|
|
10.35
|
|
|
|
|
|
10.36
|
|
|
|
|
|
Exhibit
Number |
|
Description of Exhibit
|
10.37
|
|
|
|
|
|
10.38
|
|
|
|
|
|
10.39
|
|
|
|
|
|
10.40
|
|
|
|
|
|
10.41
|
|
|
|
|
|
10.42
|
|
|
|
|
|
21
|
|
|
|
|
|
23.1
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1
|
|
|
|
|
|
32.2
|
|
|
|
|
|
99.1
|
|
|
|
|
|
99.2†
|
|
|
|
|
|
99.3
|
|
|
|
|
|
99.4
|
|
|
|
|
|
99.5
|
|
|
|
|
|
99.6
|
|
|
|
|
|
99.7†
|
|
|
|
|
|
Exhibit
Number |
|
Description of Exhibit
|
101
|
|
Interactive Data File.
|
*
|
Executive Compensation Plans and Arrangements
|
†
|
Confidential treatment has been granted with respect to certain portions of these exhibits
|
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 23, 2018
|
Roger A. Krone
|
||
|
|
|
/s/ James C. Reagan
|
Principal Financial Officer
|
February 23, 2018
|
James C. Reagan
|
||
|
|
|
/s/ Ranjit S. Chadha
|
Principal Accounting Officer
|
February 23, 2018
|
Ranjit S. Chadha
|
||
|
|
|
/s/ Gregory R. Dahlberg
|
Director
|
February 23, 2018
|
Gregory R. Dahlberg
|
||
|
|
|
/s/ David G. Fubini
|
Director
|
February 23, 2018
|
David G. Fubini
|
||
|
|
|
/s/ Miriam E. John
|
Director
|
February 23, 2018
|
Miriam E. John
|
||
|
|
|
/s/ John P. Jumper
|
Director
|
February 23, 2018
|
John P. Jumper
|
||
|
|
|
/s/ Frank Kendall III
|
Director
|
February 23, 2018
|
Frank Kendall III
|
||
|
|
|
/s/ Harry M. J. Kraemer, Jr.
|
Director
|
February 23, 2018
|
Harry M. J. Kraemer, Jr.
|
||
|
|
|
/s/ Gary S. May
|
Director
|
February 23, 2018
|
Gary S. May
|
||
|
|
|
/s/ Surya N. Mohapatra
|
Director
|
February 23, 2018
|
Surya N. Mohapatra
|
||
|
|
|
/s/ Lawrence C. Nussdorf
|
Director
|
February 23, 2018
|
Lawrence C. Nussdorf
|
||
|
|
|
/s/ Robert S. Shapard
|
Director
|
February 23, 2018
|
Robert S. Shapard
|
||
|
|
|
/s/ Susan M. Stalnecker
|
Director
|
February 23, 2018
|
Susan M. Stalnecker
|
||
|
|
|
/s/ Noel B. Williams
|
Director
|
February 23, 2018
|
Noel B. Williams
|
1.
|
Grant of Option
.
|
2.
|
Exercise of Option
. Subject to the terms of the Plan and this Agreement, the Option, to the extent vested and exercisable, shall be exercised pursuant to procedures established by the Committee, which may include electronic or voice procedures as may be specified by the Committee and which may include a requirement to acknowledge this Agreement prior to exercise. Acceptable forms and methods of payment to exercise the Option may include (i) by cashier’s check, money order or wire transfer; (ii) by a cashless exercise procedure; or (iii) by tendering shares of Stock acceptable to the Committee valued at their Fair Market Value as of the date of exercise. No shares of Stock shall be issued pursuant to the exercise of the Option unless the issuance and exercise comply with applicable laws. Assuming such compliance, for income tax purposes the shares of Stock shall be considered transferred to the Grantee on the date on which the Option is exercised with respect to such shares. Until such time as the Option has been duly exercised and shares of Stock have been delivered, the Grantee shall not be entitled to exercise any voting rights with respect to such shares and shall not be entitled to receive dividends or other distributions with respect thereto.
|
3.
|
Responsibility for Taxes
.
|
4.
|
Grantee Representations
. The Grantee hereby represents to the Company that the Grantee has read and fully understands the provisions of this Agreement, the Prospectus and the Plan, and the Grantee’s decision to participate in the Plan is completely voluntary. Further, the Grantee acknowledges that the Grantee is relying solely on his or her own advisors with respect to the tax consequences of this Award.
|
5.
|
Regulatory Restrictions on the Shares Issued Upon Exercise
. Notwithstanding the other provisions of this Agreement, the Committee shall have the sole discretion to impose such conditions, restrictions and limitations on the issuance of shares of Stock with respect to this Award unless and until the Committee
determines that such issuance complies with (i) any applicable registration requirements under the Securities Act or the Committee has determined that an exemption therefrom is available, (ii) any applicable listing requirement of any stock exchange on which the Stock is listed, (iii) any applicable Company policy or administrative rules, and (iv) any other applicable provision of state, federal or foreign law, including foreign securities laws where applicable.
|
6.
|
Non-Solicitation and Non-Competition
.
|
7.
|
Miscellaneous
.
|
Vesting Date
|
% Vesting
|
|
|
(i)
|
has been convicted, or entered a plea of nolo contendere, for committing an act of fraud, embezzlement, theft or other act constituting a felony (other than traffic related offenses or as a result of vicarious liability);
|
(ii)
|
willfully engages in illegal conduct or gross misconduct that is significantly injurious to the Company, including the Grantee’s material breach of his or her obligations under any written Company policy, including any code of ethics or conduct, which is not cured, if curable, within ten (10) days after the Company notifies the Grantee of such breach; however, no act or failure to act on the Grantee’s part shall be considered “willful” unless done or omitted to be done by the Grantee not in good faith and without reasonable belief that his or her action or omission was in the best interest of the Company; or
|
(iii)
|
fails to perform his or her duties in a reasonably satisfactory manner after the receipt of a notice from the Company detailing such failure if the failure is incapable of cure, and if the failure is capable of cure, upon the failure to cure such failure within 30 days of such notice or upon its recurrence.
|
(i)
|
any material adverse change in the Grantee’s authority, duties or responsibilities (including reporting responsibilities) from the Grantee’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;
|
(ii)
|
a material reduction in Grantee’s base salary or any failure to pay the Grantee any cash compensation to which the Grantee is entitled within 15 days after the date when due;
|
(iii)
|
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 Grantee be based at any place outside a 50-mile radius from the Grantee’s principal place of employment immediately prior to the Change in Control and which has a material adverse effect on the Grantee’s commuting requirements;
|
(iv)
|
if the Grantee is a participant in the Company’s Executive Severance Plan, any other event that constitutes “Good Reason” under that plan.
|
1.
|
Grant of Option
.
|
2.
|
Exercise of Option
. Subject to the terms of the Plan and this Agreement, the Option, to the extent vested and exercisable, shall be exercised pursuant to procedures established by the Committee, which may include electronic or voice procedures as may be specified by the Committee and which may include a requirement to acknowledge this Agreement prior to exercise. Acceptable forms and methods of payment to exercise the Option may include (i) by cashier’s check, money order or wire transfer; (ii) by a cashless exercise procedure; or (iii) by tendering shares of Stock acceptable to the Committee valued at their Fair Market Value as of the date of exercise. No shares of Stock shall be issued pursuant to the exercise of the Option unless the issuance and exercise comply with applicable laws. Assuming such compliance, for income tax purposes the shares of Stock shall be considered transferred to the Grantee on the date on which the Option is exercised with respect to such shares. Until such time as the Option has been duly exercised and shares of Stock have been delivered, the Grantee shall not be entitled to
|
3.
|
Responsibility for Taxes
.
|
4.
|
Grantee Representations
. The Grantee hereby represents to the Company that the Grantee has read and fully understands the provisions of this Agreement, the Prospectus and the Plan, and the Grantee’s decision to participate in the Plan is completely voluntary. Further, the Grantee acknowledges that the Grantee is relying solely on his or her own advisors with respect to the tax consequences of this Award.
|
5.
|
Regulatory Restrictions on the Shares Issued Upon Exercise
. Notwithstanding the other provisions of this Agreement, the Committee shall have the sole discretion to impose such conditions, restrictions and limitations on the issuance of shares of Stock with respect to this Award unless and until the Committee
determines that such issuance complies with (i) any applicable registration requirements under the Securities Act or the Committee has determined that an exemption therefrom is available, (ii) any applicable listing requirement of any stock exchange on which the Stock is listed, (iii) any applicable Company policy or administrative rules, and (iv) any other applicable provision of state, federal or foreign law, including foreign securities laws where
|
6.
|
Non-Solicitation and Non-Competition
.
|
7.
|
Miscellaneous
.
|
Vesting Date
|
% Vesting
|
Later of Determination Date or 1st anniversary of Grant Date
|
25%
|
2nd anniversary of Grant Date
|
25%
|
3rd anniversary of Grant Date
|
25%
|
4th anniversary of Grant Date
|
25%
|
(i)
|
has been convicted, or entered a plea of nolo contendere, for committing an act of fraud, embezzlement, theft or other act constituting a felony (other than traffic related offenses or as a result of vicarious liability);
|
(ii)
|
willfully engages in illegal conduct or gross misconduct that is significantly injurious to the Company, including the Grantee’s material breach of his or her obligations under any written Company policy, including any code of ethics or conduct, which is not cured, if curable, within ten (10) days after the Company notifies the Grantee of such breach; however, no act or failure to act on the Grantee’s part shall be considered “willful” unless done or omitted to be done by the Grantee not in good faith and without reasonable belief that his or her action or omission was in the best interest of the Company; or
|
(iii)
|
fails to perform his or her duties in a reasonably satisfactory manner after the receipt of a notice from the Company detailing such failure if the failure is incapable of cure, and if the failure is capable of cure, upon the failure to cure such failure within 30 days of such notice or upon its recurrence.
|
(i)
|
any material adverse change in the Grantee’s authority, duties or responsibilities (including reporting responsibilities) from the Grantee’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;
|
(ii)
|
a material reduction in Grantee’s base salary or any failure to pay the Grantee any cash compensation to which the Grantee is entitled within 15 days after the date when due;
|
(iii)
|
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 Grantee be based at any place outside a 50-mile radius from the Grantee’s principal place of employment immediately prior to the Change in Control and which has a material adverse effect on the Grantee’s commuting requirements; or
|
(iv)
|
if the Grantee is a participant in the Company’s Executive Severance Plan, any other event that constitutes “Good Reason” under that plan.
|
1.
|
Grant of Units
.
|
2.
|
Restrictions
. Subject to any exceptions set forth in this Agreement, until such time as the Units become earned and vested and are settled in shares of Stock in accordance with Section 1, the Units or the rights relating thereto may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Grantee. Any attempt to assign, alienate, pledge, attach, sell or otherwise transfer or encumber the Units or the rights relating thereto shall be wholly ineffective and, if any such attempt is made, the Units will be forfeited by the Grantee and all of the Grantee’s rights to such Units shall immediately terminate without any payment of consideration by the Company.
|
3.
|
Cancellation of Rights
. If any portion of the Units fail to become earned and vested (for example, because the Grantee fails to satisfy the vesting conditions specified in the Notice prior to a Separation from Service), then such Units shall be immediately forfeited as of the date of such failure and all of the Grantee’s rights to such Units shall immediately terminate without any payment of consideration by the Company.
|
4.
|
Responsibility for Taxes
.
|
5.
|
Grantee Representations
. The Grantee hereby represents to the Company that the Grantee has read and fully understands the provisions of this Agreement, the Prospectus and the Plan, and the Grantee’s decision to participate in the Plan is completely voluntary. Further, the Grantee acknowledges that the Grantee is relying solely on his or her own advisors with respect to the tax consequences of this Award.
|
6.
|
Regulatory Restrictions on the Shares Issued Upon Settlement
. Notwithstanding the other provisions of this Agreement, the Committee shall have the sole discretion to impose such conditions, restrictions and limitations on the issuance of shares of Stock with respect to this Award unless and until the Committee
determines that such issuance complies with (i) any applicable registration requirements under the Securities Act or the Committee has determined that an exemption therefrom is available, (ii) any applicable listing requirement of any stock exchange on which the Stock is listed, (iii) any applicable Company policy or administrative rules, and (iv) any other applicable provision of state, federal or foreign law, including foreign securities laws where applicable.
|
7.
|
Non-Solicitation and Non-Competition
.
|
8.
|
Miscellaneous
.
|
Vesting Date
|
% Vesting
|
|
End of Performance Period
|
100% (after performance adjustment)
|
(i)
|
has been convicted, or entered a plea of nolo contendere, for committing an act of fraud, embezzlement, theft or other act constituting a felony (other than traffic related offenses or as a result of vicarious liability);
|
(ii)
|
willfully engages in illegal conduct or gross misconduct that is significantly injurious to the Company, including the Grantee’s material breach of his or her obligations under any written Company policy, including any code of ethics or conduct, which is not cured, if curable, within ten (10) days after the Company notifies the Grantee of such breach; however, no act or failure to act on the Grantee’s part shall be considered “willful” unless done or omitted to be done by the Grantee not in good faith and without reasonable belief that his or her action or omission was in the best interest of the Company; or
|
(iii)
|
fails to perform his or her duties in a reasonably satisfactory manner after the receipt of a notice from the Company detailing such failure if the failure is incapable of cure, and if the failure is capable of cure, upon the failure to cure such failure within 30 days of such notice or upon its recurrence.
|
(i)
|
any material adverse change in the Grantee’s authority, duties or responsibilities (including reporting responsibilities) from the Grantee’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;
|
(ii)
|
a material reduction in Grantee’s base salary or any failure to pay the Grantee any cash compensation to which the Grantee is entitled within 15 days after the date when due;
|
(iii)
|
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 Grantee be based at any place outside a 50-mile radius from the Grantee’s principal place of employment immediately prior to the Change in Control and which has a material adverse effect on the Grantee’s commuting requirements; or
|
(iv)
|
if the Grantee is a participant in the Company’s Executive Severance Plan, any other event that constitutes “Good Reason” under that plan.
|
1.
|
Grant of Units
.
|
2.
|
Restrictions
. Subject to any exceptions set forth in this Agreement, until such time as the Units become earned and vested and are settled in shares of Stock in accordance with Section 1, the Units or the rights relating thereto may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Grantee. Any attempt to assign, alienate, pledge, attach, sell or otherwise transfer or encumber the Units or the rights relating thereto shall be wholly ineffective and, if any such attempt is made, the Units will be forfeited by the Grantee and all of the Grantee’s rights to such Units shall immediately terminate without any payment of consideration by the Company.
|
3.
|
Cancellation of Rights
. If any portion of the Units fail to become earned and vested (for example, because the Grantee fails to satisfy the vesting conditions specified in the Notice prior to a Separation from Service), then such Units shall be immediately forfeited as of the date of such failure and all of the Grantee’s rights to such Units shall immediately terminate without any payment of consideration by the Company.
|
4.
|
Responsibility for Taxes
.
|
5.
|
Grantee Representations
. The Grantee hereby represents to the Company that the Grantee has read and fully understands the provisions of this Agreement, the Prospectus and the Plan, and the Grantee’s decision to participate in the Plan is completely voluntary. Further, the Grantee acknowledges that the Grantee is relying solely on his or her own advisors with respect to the tax consequences of this Award.
|
6.
|
Regulatory Restrictions on the Shares Issued Upon Settlement
. Notwithstanding the other provisions of this Agreement, the Committee shall have the sole discretion to impose such conditions, restrictions and limitations on the issuance of shares of Stock with respect to this Award unless and until the Committee
determines that such issuance complies with (i) any applicable registration requirements under the Securities Act or the Committee has determined that an exemption therefrom is available, (ii) any applicable listing requirement of any stock exchange on which the Stock is listed, (iii) any applicable Company policy or administrative rules, and (iv) any other applicable provision of state, federal or foreign law, including foreign securities laws where applicable.
|
7.
|
Non-Solicitation and Non-Competition
.
|
8.
|
Miscellaneous
.
|
Vesting Date
|
% Vesting
|
|
|
(i)
|
has been convicted, or entered a plea of nolo contendere, for committing an act of fraud, embezzlement, theft or other act constituting a felony (other than traffic related offenses or as a result of vicarious liability);
|
(ii)
|
willfully engages in illegal conduct or gross misconduct that is significantly injurious to the Company, including the Grantee’s material breach of his or her obligations under any written Company policy, including any code of ethics or conduct, which is not cured, if curable, within ten (10) days after the Company notifies the Grantee of such breach; however, no act or failure to act on the Grantee’s part shall be considered “willful” unless done or omitted to be done by the Grantee not in good faith and without reasonable belief that his or her action or omission was in the best interest of the Company; or
|
(iii)
|
fails to perform his or her duties in a reasonably satisfactory manner after the receipt of a notice from the Company detailing such failure if the failure is incapable of cure, and if the failure is capable of cure, upon the failure to cure such failure within 30 days of such notice or upon its recurrence.
|
(i)
|
any material adverse change in the Grantee’s authority, duties or responsibilities (including reporting responsibilities) from the Grantee’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;
|
(ii)
|
a material reduction in Grantee’s base salary or any failure to pay the Grantee any cash compensation to which the Grantee is entitled within 15 days after the date when due;
|
(iii)
|
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 Grantee be based at any place outside a 50-mile radius from the Grantee’s principal place of employment immediately
|
(iv)
|
if the Grantee is a participant in the Company’s Executive Severance Plan, any other event that constitutes “Good Reason” under that plan.
|
1.
|
Grant of Units
.
|
2.
|
Restrictions
. Subject to any exceptions set forth in this Agreement, until such time as the Units become earned and vested and are settled in shares of Stock in accordance with Section 1, the Units or the rights relating thereto may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Grantee. Any attempt to assign, alienate, pledge, attach, sell or otherwise transfer or encumber the Units or the rights relating thereto shall be wholly ineffective and, if any such attempt is made, the Units will be forfeited by the Grantee and all of the Grantee’s rights to such Units shall immediately terminate without any payment of consideration by the Company.
|
3.
|
Cancellation of Rights
. If any portion of the Units fail to become earned and vested (for example, because the Grantee fails to satisfy the vesting conditions specified in the Notice prior to a Separation from Service), then such Units shall be immediately forfeited as of the date of such failure and all of the Grantee’s rights to such Units shall immediately terminate without any payment of consideration by the Company.
|
4.
|
Responsibility for Taxes
.
|
5.
|
Grantee Representations
. The Grantee hereby represents to the Company that the Grantee has read and fully understands the provisions of this Agreement, the Prospectus and the Plan, and the Grantee’s decision to participate in the Plan is completely voluntary. Further, the Grantee acknowledges that the Grantee is relying solely on his or her own advisors with respect to the tax consequences of this Award.
|
6.
|
Regulatory Restrictions on the Shares Issued Upon Settlement
. Notwithstanding the other provisions of this Agreement, the Committee shall have the sole discretion to impose such conditions, restrictions and limitations on the issuance of shares of Stock with respect to this Award unless and until the Committee
determines that such issuance complies with (i) any applicable registration requirements under the Securities Act or the Committee has determined that an exemption therefrom is available, (ii) any applicable listing requirement of any stock exchange on which the Stock is listed, (iii) any applicable Company policy or administrative rules, and (iv) any other applicable provision of state, federal or foreign law, including foreign securities laws where applicable.
|
7.
|
Non-Solicitation and Non-Competition
.
|
8.
|
Miscellaneous
.
|
1.
|
Grant of Units
.
|
2.
|
Restrictions
. Subject to any exceptions set forth in this Agreement, until such time as the Units become earned and vested and are settled in shares of Stock in accordance with Section 1, the Units or the rights relating thereto may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Grantee. Any attempt to assign, alienate, pledge, attach, sell or otherwise transfer or encumber the Units or the rights relating thereto shall be wholly ineffective and, if any such attempt is made, the Units will be forfeited by the Grantee and all of the Grantee’s rights to such Units shall immediately terminate without any payment of consideration by the Company.
|
3.
|
Cancellation of Rights
. If any portion of the Units fail to become earned and vested (for example, because the Grantee fails to satisfy the vesting conditions specified in the Notice prior to a Separation from Service), then such Units shall be immediately forfeited as of the date of such failure and all of the Grantee’s rights to such Units shall immediately terminate without any payment of consideration by the Company.
|
4.
|
Responsibility for Taxes
.
|
5.
|
Grantee Representations
. The Grantee hereby represents to the Company that the Grantee has read and fully understands the provisions of this Agreement, the Prospectus and the Plan, and the Grantee’s decision to participate in the Plan is completely voluntary. Further, the Grantee acknowledges that the Grantee is relying solely on his or her own advisors with respect to the tax consequences of this Award.
|
6.
|
Regulatory Restrictions on the Shares Issued Upon Settlement
. Notwithstanding the other provisions of this Agreement, the Committee shall have the sole discretion to impose such conditions, restrictions and limitations on the issuance of shares of Stock with respect to this Award unless and until the Committee
determines that such issuance complies with (i) any applicable registration requirements under the Securities Act or the Committee has determined that an exemption therefrom is available, (ii) any applicable listing requirement of any stock exchange on which the Stock is listed, (iii) any applicable Company policy or administrative rules, and (iv) any other applicable provision of state, federal or foreign law, including foreign securities laws where applicable.
|
7.
|
Non-Solicitation and Non-Competition
.
|
8.
|
Miscellaneous
.
|
Name
|
Jurisdiction of Formation
|
Leidos, Inc.
|
Delaware
|
Leidos Biomedical Research, Inc.
|
Delaware
|
Leidos Consulting Engineers, Inc.
|
California
|
Leidos Engineering, LLC
|
Delaware
|
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 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
|
Chairman and 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
|
Executive Vice President and 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
|
Executive Vice President and Chief Financial Officer
|