☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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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,
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Reston,
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Virginia
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20190
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(Address of principal executive office)
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(Zip Code)
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Title of each class
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Trading symbol(s)
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Name of each exchange on which registered
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Common stock, par value $.0001 per share
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LDOS
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New York Stock Exchange
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Part I
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Part II
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Item 1.
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Item 1A.
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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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September 27,
2019 |
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December 28,
2018 |
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(in millions)
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ASSETS
|
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||||
Cash and cash equivalents
|
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$
|
635
|
|
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$
|
327
|
|
Receivables, net
|
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1,775
|
|
|
1,877
|
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||
Other current assets
|
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514
|
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543
|
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Assets held for sale
|
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—
|
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92
|
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||
Total current assets
|
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2,924
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2,839
|
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||
Property, plant and equipment, net
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228
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237
|
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Intangible assets, net
|
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571
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652
|
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Goodwill
|
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4,889
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4,860
|
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Operating lease right-of-use assets, net
|
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394
|
|
|
—
|
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Other assets
|
|
404
|
|
|
182
|
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$
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9,410
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$
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8,770
|
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LIABILITIES AND EQUITY
|
|
|
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|
||||
Accounts payable and accrued liabilities
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$
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2,004
|
|
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$
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1,491
|
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Accrued payroll and employee benefits
|
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446
|
|
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473
|
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Long-term debt, current portion
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77
|
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72
|
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Liabilities held for sale
|
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—
|
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23
|
|
||
Total current liabilities
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2,527
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2,059
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Long-term debt, net of current portion
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2,939
|
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3,052
|
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Operating lease liabilities
|
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295
|
|
|
—
|
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Deferred tax liabilities
|
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196
|
|
|
170
|
|
||
Other long-term liabilities
|
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203
|
|
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178
|
|
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Commitments and contingencies (Notes 20 and 21)
|
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|
||||
Stockholders’ equity:
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||||
Common stock, $.0001 par value, 500 million shares authorized, 141 million and 146 million shares issued and outstanding at September 27, 2019 and December 28, 2018, respectively
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—
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—
|
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||
Additional paid-in capital
|
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2,590
|
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2,966
|
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Retained earnings
|
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764
|
|
|
372
|
|
||
Accumulated other comprehensive loss
|
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(108
|
)
|
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(30
|
)
|
||
Total Leidos stockholders’ equity
|
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3,246
|
|
|
3,308
|
|
||
Non-controlling interest
|
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4
|
|
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3
|
|
||
Total equity
|
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3,250
|
|
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3,311
|
|
||
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$
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9,410
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$
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8,770
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Three Months Ended
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Nine Months Ended
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||||||||||||
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September 27,
2019 |
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September 28,
2018 |
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September 27,
2019 |
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September 28,
2018 |
||||||||
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(in millions, except per share amounts)
|
||||||||||||||
Revenues
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$
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2,835
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$
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2,575
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$
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8,140
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$
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7,547
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Cost of revenues
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2,450
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2,174
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7,019
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6,412
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|
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Selling, general and administrative expenses
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177
|
|
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194
|
|
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518
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547
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|
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Bad debt expense and recoveries
|
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(35
|
)
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1
|
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(35
|
)
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—
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||||
Integration and restructuring costs
|
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—
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7
|
|
|
3
|
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32
|
|
||||
Asset impairment charges
|
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—
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—
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—
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7
|
|
||||
Equity earnings of non-consolidated subsidiaries
|
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(6
|
)
|
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(4
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)
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(16
|
)
|
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(12
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)
|
||||
Operating income
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249
|
|
|
203
|
|
|
651
|
|
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561
|
|
||||
Non-operating (expense) income:
|
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||||||||
Interest expense, net
|
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(28
|
)
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(35
|
)
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(99
|
)
|
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(104
|
)
|
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Other (expense) income, net
|
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(7
|
)
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2
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87
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3
|
|
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Income before income taxes
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214
|
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170
|
|
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639
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460
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Income tax expense
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(52
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)
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(23
|
)
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(150
|
)
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(66
|
)
|
||||
Net income
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162
|
|
|
147
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|
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489
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394
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|
||||
Less: net income attributable to non-controlling interest
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1
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—
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3
|
|
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1
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Net income attributable to Leidos common stockholders
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$
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161
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$
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147
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$
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486
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$
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393
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Earnings per share:
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Basic
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$
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1.13
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$
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0.97
|
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$
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3.38
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$
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2.59
|
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Diluted
|
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1.11
|
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0.96
|
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|
3.33
|
|
|
2.55
|
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Three Months Ended
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Nine Months Ended
|
||||||||||||
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September 27,
2019 |
|
September 28,
2018 |
|
September 27,
2019 |
|
September 28,
2018 |
||||||||
|
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(in millions)
|
||||||||||||||
Net income
|
|
$
|
162
|
|
|
$
|
147
|
|
|
$
|
489
|
|
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$
|
394
|
|
Foreign currency translation adjustments
|
|
(24
|
)
|
|
(8
|
)
|
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(26
|
)
|
|
(41
|
)
|
||||
Unrecognized (loss) gain on derivative instruments
|
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(11
|
)
|
|
(2
|
)
|
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(52
|
)
|
|
12
|
|
||||
Total other comprehensive loss, net of taxes
|
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(35
|
)
|
|
(10
|
)
|
|
(78
|
)
|
|
(29
|
)
|
||||
Comprehensive income
|
|
127
|
|
|
137
|
|
|
411
|
|
|
365
|
|
||||
Less: comprehensive income attributable to non-controlling interest
|
|
1
|
|
|
—
|
|
|
3
|
|
|
1
|
|
||||
Comprehensive income attributable to Leidos common stockholders
|
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$
|
126
|
|
|
$
|
137
|
|
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$
|
408
|
|
|
$
|
364
|
|
|
|
Shares of common stock
|
|
Additional
paid-in capital |
|
Retained earnings
|
|
Accumulated
other comprehensive loss |
|
Leidos Holdings, Inc. stockholders' equity
|
|
Non-controlling interest
|
|
Total
|
|||||||||||||
|
|
(in millions, except for per share amounts)
|
|||||||||||||||||||||||||
Balance at December 28, 2018
|
|
146
|
|
|
$
|
2,966
|
|
|
$
|
372
|
|
|
$
|
(30
|
)
|
|
$
|
3,308
|
|
|
$
|
3
|
|
|
$
|
3,311
|
|
Cumulative adjustments related to ASU adoption
|
|
—
|
|
|
—
|
|
|
48
|
|
|
—
|
|
|
48
|
|
|
—
|
|
|
48
|
|
||||||
Balance at December 29, 2018
|
|
146
|
|
|
2,966
|
|
|
420
|
|
|
(30
|
)
|
|
3,356
|
|
|
3
|
|
|
3,359
|
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
189
|
|
|
—
|
|
|
189
|
|
|
—
|
|
|
189
|
|
||||||
Other comprehensive loss, net of taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
||||||
Issuances of stock
|
|
1
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
||||||
Repurchases of stock and other
|
|
(3
|
)
|
|
(222
|
)
|
|
—
|
|
|
—
|
|
|
(222
|
)
|
|
—
|
|
|
(222
|
)
|
||||||
Dividends of $0.32 per share
|
|
—
|
|
|
—
|
|
|
(47
|
)
|
|
—
|
|
|
(47
|
)
|
|
—
|
|
|
(47
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
||||||
Balance at March 29, 2019
|
|
144
|
|
|
2,767
|
|
|
562
|
|
|
(35
|
)
|
|
3,294
|
|
|
3
|
|
|
3,297
|
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
136
|
|
|
—
|
|
|
136
|
|
|
2
|
|
|
138
|
|
||||||
Other comprehensive loss, net of taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38
|
)
|
|
(38
|
)
|
|
—
|
|
|
(38
|
)
|
||||||
Issuances of stock
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
||||||
Repurchases of stock and other
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
||||||
Dividends of $0.32 per share
|
|
—
|
|
|
—
|
|
|
(46
|
)
|
|
—
|
|
|
(46
|
)
|
|
—
|
|
|
(46
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
13
|
|
||||||
Other
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(2
|
)
|
|
(3
|
)
|
||||||
Balance at June 28, 2019
|
|
144
|
|
|
2,780
|
|
|
652
|
|
|
(73
|
)
|
|
3,359
|
|
|
3
|
|
|
3,362
|
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
161
|
|
|
—
|
|
|
161
|
|
|
1
|
|
|
162
|
|
||||||
Other comprehensive loss, net of taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(35
|
)
|
|
(35
|
)
|
|
—
|
|
|
(35
|
)
|
||||||
Repurchases of stock and other
|
|
(3
|
)
|
|
(203
|
)
|
|
—
|
|
|
—
|
|
|
(203
|
)
|
|
—
|
|
|
(203
|
)
|
||||||
Dividends of $0.34 per share
|
|
—
|
|
|
—
|
|
|
(49
|
)
|
|
—
|
|
|
(49
|
)
|
|
—
|
|
|
(49
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
13
|
|
||||||
Balance at September 27, 2019
|
|
141
|
|
|
$
|
2,590
|
|
|
$
|
764
|
|
|
$
|
(108
|
)
|
|
$
|
3,246
|
|
|
$
|
4
|
|
|
$
|
3,250
|
|
|
|
Shares of common stock
|
|
Additional
paid-in capital |
|
(Accumulated deficit) retained earnings
|
|
Accumulated
other comprehensive income |
|
Leidos Holdings, Inc. stockholders' equity
|
|
Non-controlling interest
|
|
Total
|
|||||||||||||
|
|
(in millions, except for per share amounts)
|
|||||||||||||||||||||||||
Balance at December 29, 2017
|
|
151
|
|
|
$
|
3,344
|
|
|
$
|
(7
|
)
|
|
$
|
33
|
|
|
$
|
3,370
|
|
|
$
|
13
|
|
|
$
|
3,383
|
|
Cumulative adjustments related to ASU adoptions
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
9
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||
Balance at December 30, 2017
|
|
151
|
|
|
3,344
|
|
|
(15
|
)
|
|
42
|
|
|
3,371
|
|
|
13
|
|
|
3,384
|
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
102
|
|
|
—
|
|
|
102
|
|
|
—
|
|
|
102
|
|
||||||
Other comprehensive income, net of taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
14
|
|
|
—
|
|
|
14
|
|
||||||
Issuances of stock
|
|
1
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
||||||
Repurchases of stock and other
|
|
—
|
|
|
(22
|
)
|
|
—
|
|
|
—
|
|
|
(22
|
)
|
|
—
|
|
|
(22
|
)
|
||||||
Dividends of $0.32 per share
|
|
—
|
|
|
—
|
|
|
(50
|
)
|
|
—
|
|
|
(50
|
)
|
|
—
|
|
|
(50
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
||||||
Purchase of a non-controlling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
(10
|
)
|
||||||
Balance at March 30, 2018
|
|
152
|
|
|
3,338
|
|
|
37
|
|
|
56
|
|
|
3,431
|
|
|
3
|
|
|
3,434
|
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
144
|
|
|
—
|
|
|
144
|
|
|
1
|
|
|
145
|
|
||||||
Other comprehensive loss, net of taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33
|
)
|
|
(33
|
)
|
|
—
|
|
|
(33
|
)
|
||||||
Issuances of stock
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||||
Repurchases of stock and other
|
|
(2
|
)
|
|
(94
|
)
|
|
—
|
|
|
—
|
|
|
(94
|
)
|
|
—
|
|
|
(94
|
)
|
||||||
Dividends of $0.32 per share
|
|
—
|
|
|
—
|
|
|
(48
|
)
|
|
—
|
|
|
(48
|
)
|
|
—
|
|
|
(48
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
||||||
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
||||||
Balance at June 29, 2018
|
|
150
|
|
|
3,260
|
|
|
133
|
|
|
23
|
|
|
3,416
|
|
|
2
|
|
|
3,418
|
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
147
|
|
|
—
|
|
|
147
|
|
|
—
|
|
|
147
|
|
||||||
Other comprehensive loss, net of taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
(10
|
)
|
|
—
|
|
|
(10
|
)
|
||||||
Issuances of stock
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
||||||
Repurchases of stock and other
|
|
—
|
|
|
(66
|
)
|
|
—
|
|
|
—
|
|
|
(66
|
)
|
|
—
|
|
|
(66
|
)
|
||||||
Dividends of $0.32 per share
|
|
—
|
|
|
—
|
|
|
(49
|
)
|
|
—
|
|
|
(49
|
)
|
|
—
|
|
|
(49
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
||||||
Purchase of a non-controlling interest
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||||
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||||
Balance at September 28, 2018
|
|
150
|
|
|
$
|
3,210
|
|
|
$
|
231
|
|
|
$
|
13
|
|
|
$
|
3,454
|
|
|
$
|
3
|
|
|
$
|
3,457
|
|
|
|
Nine Months Ended
|
||||||
|
|
September 27,
2019 |
|
September 28,
2018 |
||||
|
|
(in millions)
|
||||||
Cash flows from operations:
|
|
|
|
|
||||
Net income
|
|
$
|
489
|
|
|
$
|
394
|
|
Adjustments to reconcile net income to net cash provided by operations:
|
|
|
|
|
||||
Gain on sale of businesses
|
|
(87
|
)
|
|
—
|
|
||
Depreciation and amortization
|
|
174
|
|
|
193
|
|
||
Stock-based compensation
|
|
38
|
|
|
33
|
|
||
Asset impairment charges
|
|
—
|
|
|
7
|
|
||
Bad debt expense
|
|
19
|
|
|
—
|
|
||
Other
|
|
3
|
|
|
17
|
|
||
Change in assets and liabilities, net of effects of acquisitions and dispositions:
|
|
|
|
|
||||
Receivables
|
|
68
|
|
|
2
|
|
||
Other current assets
|
|
(49
|
)
|
|
(24
|
)
|
||
Accounts payable and accrued liabilities
|
|
253
|
|
|
61
|
|
||
Accrued payroll and employee benefits
|
|
(17
|
)
|
|
(71
|
)
|
||
Deferred income taxes and income taxes receivable/payable
|
|
9
|
|
|
3
|
|
||
Other long-term assets/liabilities
|
|
(77
|
)
|
|
49
|
|
||
Net cash provided by operating activities
|
|
823
|
|
|
664
|
|
||
Cash flows from investing activities:
|
|
|
|
|
||||
Proceeds from disposition of businesses
|
|
183
|
|
|
—
|
|
||
Net proceeds from sale of assets
|
|
96
|
|
|
—
|
|
||
Acquisitions of businesses
|
|
(94
|
)
|
|
(81
|
)
|
||
Payments for property, equipment and software
|
|
(67
|
)
|
|
(53
|
)
|
||
Collections on promissory note
|
|
—
|
|
|
40
|
|
||
Other
|
|
1
|
|
|
—
|
|
||
Net cash provided by (used in) investing activities
|
|
119
|
|
|
(94
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
||||
Repurchases of stock and other
|
|
(430
|
)
|
|
(182
|
)
|
||
Dividend payments
|
|
(101
|
)
|
|
(151
|
)
|
||
Payments of long-term debt
|
|
(50
|
)
|
|
(59
|
)
|
||
Proceeds from issuances of stock
|
|
16
|
|
|
13
|
|
||
Payment of tax indemnification liability
|
|
—
|
|
|
(23
|
)
|
||
Payments for non-controlling interest acquired
|
|
—
|
|
|
(8
|
)
|
||
Payments for debt issuance and modification costs
|
|
—
|
|
|
(6
|
)
|
||
Other
|
|
—
|
|
|
(1
|
)
|
||
Net cash used in financing activities
|
|
(565
|
)
|
|
(417
|
)
|
||
Net increase in cash, cash equivalents and restricted cash
|
|
377
|
|
|
153
|
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
|
369
|
|
|
422
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
|
$
|
746
|
|
|
$
|
575
|
|
|
|
Balance at December 28, 2018
|
|
Adjustments due to ASU 2016-02
|
|
Balance at December 29, 2018
|
||||||
|
|
(in millions)
|
||||||||||
Assets - non-current:
|
|
|
|
|
|
|
||||||
Property, plant and equipment, net
|
|
$
|
237
|
|
|
$
|
1
|
|
|
$
|
238
|
|
Operating lease right-of-use assets, net
|
|
—
|
|
|
418
|
|
|
418
|
|
|||
|
|
|
|
|
|
|
||||||
Liabilities - current:
|
|
|
|
|
|
|
||||||
Accounts payable and accrued liabilities
|
|
$
|
1,491
|
|
|
$
|
132
|
|
|
$
|
1,623
|
|
Long-term debt, current portion
|
|
72
|
|
|
8
|
|
|
80
|
|
|||
|
|
|
|
|
|
|
||||||
Liabilities - non-current:
|
|
|
|
|
|
|
||||||
Long-term debt, net of current portion
|
|
$
|
3,052
|
|
|
$
|
(72
|
)
|
|
$
|
2,980
|
|
Operating lease liabilities
|
|
—
|
|
|
320
|
|
|
320
|
|
|||
Deferred tax liabilities
|
|
170
|
|
|
17
|
|
|
187
|
|
|||
Other long-term liabilities
|
|
178
|
|
|
(34
|
)
|
|
144
|
|
|||
|
|
|
|
|
|
|
||||||
Equity:
|
|
|
|
|
|
|
||||||
Retained earnings
|
|
$
|
372
|
|
|
$
|
48
|
|
|
$
|
420
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 27,
2019 |
|
September 28,
2018 |
|
September 27,
2019 |
|
September 28,
2018 |
||||||||
|
|
(in millions, except per share amounts)
|
||||||||||||||
Favorable impact
|
|
$
|
23
|
|
|
$
|
34
|
|
|
$
|
69
|
|
|
$
|
135
|
|
Unfavorable impact
|
|
(11
|
)
|
|
(17
|
)
|
|
(40
|
)
|
|
(49
|
)
|
||||
Net impact to income before income taxes
|
|
$
|
12
|
|
|
$
|
17
|
|
|
$
|
29
|
|
|
$
|
86
|
|
|
|
|
|
|
|
|
|
|
||||||||
Impact on diluted EPS attributable to Leidos common stockholders
|
|
$
|
0.06
|
|
|
$
|
0.07
|
|
|
$
|
0.15
|
|
|
$
|
0.41
|
|
|
|
Balance sheet line item
|
|
September 27,
2019 |
||
|
|
|
|
(in millions)
|
||
ROU assets:
|
|
|
|
|
||
Finance leases
|
|
Property, plant and equipment, net
|
|
$
|
9
|
|
Operating leases
|
|
Operating lease right-of-use assets, net
|
|
394
|
|
|
|
|
|
|
$
|
403
|
|
Current lease liabilities:
|
|
|
|
|
||
Finance leases
|
|
Long-term debt, current portion
|
|
$
|
7
|
|
Operating leases
|
|
Accounts payable and accrued liabilities
|
|
141
|
|
|
|
|
|
|
$
|
148
|
|
Non-current lease liabilities:
|
|
|
|
|
||
Finance leases
|
|
Long-term debt, net of current portion
|
|
$
|
2
|
|
Operating leases
|
|
Operating lease liabilities
|
|
295
|
|
|
|
|
|
|
$
|
297
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||
|
|
September 27,
2019 |
|
September 27,
2019 |
||||
|
|
(in millions)
|
||||||
Finance lease cost:
|
|
|
|
|
||||
Amortization of ROU assets
|
|
$
|
2
|
|
|
$
|
6
|
|
|
|
|
|
|
||||
Operating lease cost
|
|
34
|
|
|
116
|
|
||
|
|
|
|
|
||||
Variable lease cost
|
|
28
|
|
|
79
|
|
||
Short-term lease cost
|
|
2
|
|
|
5
|
|
||
Less: Sublease income
|
|
(3
|
)
|
|
(4
|
)
|
||
Total lease cost
|
|
$
|
63
|
|
|
$
|
202
|
|
|
|
Nine Months Ended
|
||
|
|
September 27,
2019 |
||
|
|
(in millions)
|
||
Cash paid for amounts included in measurement of lease liabilities:
|
|
|
||
Operating cash flows from operating leases
|
|
$
|
111
|
|
Financing cash flows from finance leases
|
|
6
|
|
|
Lease liabilities arising from obtaining ROU assets:
|
|
|
||
Operating lease liabilities
|
|
$
|
81
|
|
Fiscal Year Ending
|
|
Finance lease commitments
|
|
Operating lease commitments
|
||||
|
|
(in millions)
|
||||||
2019 (remainder of year)
|
|
$
|
2
|
|
|
$
|
49
|
|
2020
|
|
5
|
|
|
136
|
|
||
2021
|
|
1
|
|
|
86
|
|
||
2022
|
|
1
|
|
|
65
|
|
||
2023
|
|
—
|
|
|
46
|
|
||
2024 and thereafter
|
|
—
|
|
|
102
|
|
||
Total undiscounted cash flows
|
|
9
|
|
|
484
|
|
||
Less: imputed interest
|
|
—
|
|
|
(48
|
)
|
||
Lease liability as of September 27, 2019
|
|
$
|
9
|
|
|
$
|
436
|
|
Fiscal Year Ending
|
|
Capital lease commitments
|
|
Operating lease commitments
|
|
Sublease receipts
|
||||||
|
|
(in millions)
|
||||||||||
2019
|
|
$
|
3
|
|
|
$
|
144
|
|
|
$
|
3
|
|
2020
|
|
—
|
|
|
114
|
|
|
1
|
|
|||
2021
|
|
—
|
|
|
83
|
|
|
1
|
|
|||
2022
|
|
—
|
|
|
71
|
|
|
—
|
|
|||
2023
|
|
—
|
|
|
55
|
|
|
—
|
|
|||
2024 and thereafter
|
|
—
|
|
|
246
|
|
|
—
|
|
|||
Total
|
|
$
|
3
|
|
|
$
|
713
|
|
|
$
|
5
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||
|
|
Income statement line item
|
|
September 27,
2019 |
|
September 27,
2019 |
||||
|
|
|
|
(in millions)
|
||||||
Sales-type leases:
|
|
|
|
|
|
|
||||
Selling price at lease commencement
|
|
Revenues
|
|
$
|
53
|
|
|
$
|
68
|
|
Cost of underlying asset
|
|
Cost of revenues
|
|
56
|
|
|
70
|
|
||
Operating loss
|
|
|
|
(3
|
)
|
|
(2
|
)
|
||
Interest income on lease receivables
|
|
Revenues
|
|
1
|
|
|
1
|
|
||
|
|
|
|
$
|
(2
|
)
|
|
$
|
(1
|
)
|
|
|
|
|
|
|
|
||||
Operating lease income
|
|
Revenues
|
|
$
|
4
|
|
|
$
|
19
|
|
Total lease income
|
|
|
|
$
|
2
|
|
|
$
|
18
|
|
Fiscal Year Ending
|
|
Sales-type leases
|
|
Operating leases
|
||||
|
|
(in millions)
|
||||||
2019 (remainder of year)
|
|
$
|
11
|
|
|
$
|
6
|
|
2020
|
|
31
|
|
|
22
|
|
||
2021
|
|
16
|
|
|
22
|
|
||
2022
|
|
5
|
|
|
22
|
|
||
2023
|
|
1
|
|
|
22
|
|
||
2024 and thereafter
|
|
—
|
|
|
22
|
|
||
Total undiscounted cash flows
|
|
$
|
64
|
|
|
$
|
116
|
|
Present value of lease payments as lease receivables
|
|
56
|
|
|
|
|||
Difference between undiscounted cash flows and discounted cash flows
|
|
$
|
8
|
|
|
|
|
|
Three Months Ended September 27, 2019
|
|
Nine Months Ended September 27, 2019
|
||||||||||||||||||||||||||||
|
|
Defense Solutions
|
|
Civil
|
|
Health
|
|
Total
|
|
Defense Solutions
|
|
Civil
|
|
Health
|
|
Total
|
||||||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||||||||||
DoD and U.S. Intelligence Community(1)
|
|
$
|
1,191
|
|
|
$
|
37
|
|
|
$
|
123
|
|
|
$
|
1,351
|
|
|
$
|
3,464
|
|
|
$
|
125
|
|
|
$
|
360
|
|
|
$
|
3,949
|
|
Other government agencies(1)(2)
|
|
75
|
|
|
679
|
|
|
337
|
|
|
1,091
|
|
|
203
|
|
|
1,936
|
|
|
982
|
|
|
3,121
|
|
||||||||
Commercial and non-U.S. customers
|
|
88
|
|
|
202
|
|
|
45
|
|
|
335
|
|
|
299
|
|
|
571
|
|
|
112
|
|
|
982
|
|
||||||||
Total
|
|
$
|
1,354
|
|
|
$
|
918
|
|
|
$
|
505
|
|
|
$
|
2,777
|
|
|
$
|
3,966
|
|
|
$
|
2,632
|
|
|
$
|
1,454
|
|
|
$
|
8,052
|
|
|
|
Three Months Ended September 28, 2018
|
|
Nine Months Ended September 28, 2018
|
||||||||||||||||||||||||||||
|
|
Defense Solutions
|
|
Civil
|
|
Health
|
|
Total
|
|
Defense Solutions
|
|
Civil
|
|
Health
|
|
Total
|
||||||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||||||||||
DoD and U.S. Intelligence Community(3)
|
|
$
|
1,100
|
|
|
$
|
40
|
|
|
$
|
88
|
|
|
$
|
1,228
|
|
|
$
|
3,256
|
|
|
$
|
89
|
|
|
$
|
262
|
|
|
$
|
3,607
|
|
Other government agencies(2)(3)
|
|
45
|
|
|
605
|
|
|
312
|
|
|
962
|
|
|
137
|
|
|
1,746
|
|
|
937
|
|
|
2,820
|
|
||||||||
Commercial and non-U.S. customers
|
|
105
|
|
|
236
|
|
|
44
|
|
|
385
|
|
|
308
|
|
|
691
|
|
|
121
|
|
|
1,120
|
|
||||||||
Total
|
|
$
|
1,250
|
|
|
$
|
881
|
|
|
$
|
444
|
|
|
$
|
2,575
|
|
|
$
|
3,701
|
|
|
$
|
2,526
|
|
|
$
|
1,320
|
|
|
$
|
7,547
|
|
|
|
Three Months Ended September 27, 2019
|
|
Nine Months Ended September 27, 2019
|
||||||||||||||||||||||||||||
|
|
Defense Solutions
|
|
Civil
|
|
Health
|
|
Total
|
|
Defense Solutions
|
|
Civil
|
|
Health
|
|
Total
|
||||||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||||||||||
Cost-reimbursement and fixed-price-incentive-fee
|
|
$
|
936
|
|
|
$
|
511
|
|
|
$
|
57
|
|
|
$
|
1,504
|
|
|
$
|
2,749
|
|
|
$
|
1,453
|
|
|
$
|
173
|
|
|
$
|
4,375
|
|
Firm-fixed-price
|
|
299
|
|
|
268
|
|
|
333
|
|
|
900
|
|
|
870
|
|
|
763
|
|
|
930
|
|
|
2,563
|
|
||||||||
Time-and-materials and fixed-price-level-of-effort
|
|
119
|
|
|
139
|
|
|
115
|
|
|
373
|
|
|
347
|
|
|
416
|
|
|
351
|
|
|
1,114
|
|
||||||||
Total
|
|
$
|
1,354
|
|
|
$
|
918
|
|
|
$
|
505
|
|
|
$
|
2,777
|
|
|
$
|
3,966
|
|
|
$
|
2,632
|
|
|
$
|
1,454
|
|
|
$
|
8,052
|
|
|
|
Three Months Ended September 28, 2018
|
|
Nine Months Ended September 28, 2018
|
||||||||||||||||||||||||||||
|
|
Defense Solutions
|
|
Civil
|
|
Health
|
|
Total
|
|
Defense Solutions
|
|
Civil
|
|
Health
|
|
Total
|
||||||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||||||||||
Cost-reimbursement and fixed-price-incentive-fee
|
|
$
|
920
|
|
|
$
|
464
|
|
|
$
|
42
|
|
|
$
|
1,426
|
|
|
$
|
2,552
|
|
|
$
|
1,377
|
|
|
$
|
134
|
|
|
$
|
4,063
|
|
Firm-fixed-price
|
|
214
|
|
|
276
|
|
|
277
|
|
|
767
|
|
|
772
|
|
|
719
|
|
|
814
|
|
|
2,305
|
|
||||||||
Time-and-materials and fixed-price-level-of-effort
|
|
116
|
|
|
141
|
|
|
125
|
|
|
382
|
|
|
377
|
|
|
430
|
|
|
372
|
|
|
1,179
|
|
||||||||
Total
|
|
$
|
1,250
|
|
|
$
|
881
|
|
|
$
|
444
|
|
|
$
|
2,575
|
|
|
$
|
3,701
|
|
|
$
|
2,526
|
|
|
$
|
1,320
|
|
|
$
|
7,547
|
|
|
|
Three Months Ended September 27, 2019
|
|
Nine Months Ended September 27, 2019
|
||||||||||||||||||||||||||||
|
|
Defense Solutions
|
|
Civil
|
|
Health
|
|
Total
|
|
Defense Solutions
|
|
Civil
|
|
Health
|
|
Total
|
||||||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||||||||||
United States
|
|
$
|
1,261
|
|
|
$
|
790
|
|
|
$
|
505
|
|
|
$
|
2,556
|
|
|
$
|
3,689
|
|
|
$
|
2,273
|
|
|
$
|
1,454
|
|
|
$
|
7,416
|
|
International
|
|
93
|
|
|
128
|
|
|
—
|
|
|
221
|
|
|
277
|
|
|
359
|
|
|
—
|
|
|
636
|
|
||||||||
Total
|
|
$
|
1,354
|
|
|
$
|
918
|
|
|
$
|
505
|
|
|
$
|
2,777
|
|
|
$
|
3,966
|
|
|
$
|
2,632
|
|
|
$
|
1,454
|
|
|
$
|
8,052
|
|
|
|
Three Months Ended September 28, 2018
|
|
Nine Months Ended September 28, 2018
|
||||||||||||||||||||||||||||
|
|
Defense Solutions
|
|
Civil
|
|
Health
|
|
Total
|
|
Defense Solutions
|
|
Civil
|
|
Health
|
|
Total
|
||||||||||||||||
|
|
(in millions)
|
||||||||||||||||||||||||||||||
United States
|
|
$
|
1,156
|
|
|
$
|
739
|
|
|
$
|
444
|
|
|
$
|
2,339
|
|
|
$
|
3,424
|
|
|
$
|
2,112
|
|
|
$
|
1,320
|
|
|
$
|
6,856
|
|
International
|
|
94
|
|
|
142
|
|
|
—
|
|
|
236
|
|
|
277
|
|
|
414
|
|
|
—
|
|
|
691
|
|
||||||||
Total
|
|
$
|
1,250
|
|
|
$
|
881
|
|
|
$
|
444
|
|
|
$
|
2,575
|
|
|
$
|
3,701
|
|
|
$
|
2,526
|
|
|
$
|
1,320
|
|
|
$
|
7,547
|
|
|
|
Balance sheet line item
|
|
September 27,
2019 |
|
December 28,
2018 |
||||
|
|
|
|
(in millions)
|
||||||
Contract assets - current:
|
|
|
|
|
|
|
||||
Unbilled receivables(1)
|
|
Receivables, net
|
|
$
|
756
|
|
|
$
|
818
|
|
|
|
|
|
|
|
|
||||
Contract liabilities - current:
|
|
|
|
|
|
|
||||
Deferred revenue
|
|
Accounts payable and accrued liabilities
|
|
$
|
444
|
|
|
$
|
276
|
|
|
|
|
|
|
|
|
||||
Contract liabilities - non-current:
|
|
|
|
|
|
|
||||
Deferred revenue
|
|
Other long-term liabilities
|
|
$
|
9
|
|
|
$
|
10
|
|
Receivables, net
|
|
$
|
14
|
|
Other current assets
|
|
5
|
|
|
Property, plant and equipment, net
|
|
3
|
|
|
Intangible assets, net
|
|
5
|
|
|
Goodwill
|
|
57
|
|
|
Deferred tax assets
|
|
6
|
|
|
Total assets divested
|
|
$
|
90
|
|
|
|
|
||
Accounts payable and accrued liabilities
|
|
$
|
(13
|
)
|
Accrued payroll and employee benefits
|
|
(5
|
)
|
|
Other long-term liabilities
|
|
(3
|
)
|
|
Total liabilities divested
|
|
$
|
(21
|
)
|
|
|
Defense Solutions
|
|
Civil
|
|
Health
|
|
Total
|
||||||||
|
|
(in millions)
|
||||||||||||||
Goodwill at December 29, 2017
|
|
$
|
2,055
|
|
|
$
|
1,998
|
|
|
$
|
921
|
|
|
$
|
4,974
|
|
Foreign currency translation adjustments
|
|
(40
|
)
|
|
(11
|
)
|
|
—
|
|
|
(51
|
)
|
||||
Transfers to assets held for sale
|
|
—
|
|
|
(57
|
)
|
|
—
|
|
|
(57
|
)
|
||||
Adjustment to goodwill
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
(6
|
)
|
||||
Goodwill at December 28, 2018
|
|
2,015
|
|
|
1,924
|
|
|
921
|
|
|
4,860
|
|
||||
Goodwill re-allocation
|
|
25
|
|
|
(25
|
)
|
|
—
|
|
|
—
|
|
||||
Acquisition of IMX
|
|
—
|
|
|
—
|
|
|
51
|
|
|
51
|
|
||||
Divestiture of health staff augmentation business
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
||||
Foreign currency translation adjustments
|
|
(16
|
)
|
|
(4
|
)
|
|
—
|
|
|
(20
|
)
|
||||
Adjustment to goodwill
|
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
Goodwill at September 27, 2019
|
|
$
|
2,027
|
|
|
$
|
1,895
|
|
|
$
|
967
|
|
|
$
|
4,889
|
|
|
|
September 27, 2019
|
|
December 28, 2018
|
||||||||||||||||||||
|
|
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
|
|
$
|
1,001
|
|
|
$
|
(494
|
)
|
|
$
|
507
|
|
|
$
|
1,003
|
|
|
$
|
(374
|
)
|
|
$
|
629
|
|
Software and technology
|
|
100
|
|
|
(81
|
)
|
|
19
|
|
|
93
|
|
|
(74
|
)
|
|
19
|
|
||||||
Customer relationships
|
|
45
|
|
|
(5
|
)
|
|
40
|
|
|
4
|
|
|
(4
|
)
|
|
—
|
|
||||||
Trade names
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total finite-lived intangible assets
|
|
1,147
|
|
|
(580
|
)
|
|
567
|
|
|
1,100
|
|
|
(452
|
)
|
|
648
|
|
||||||
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trade names
|
|
4
|
|
|
—
|
|
|
4
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||||
Total intangible assets
|
|
$
|
1,151
|
|
|
$
|
(580
|
)
|
|
$
|
571
|
|
|
$
|
1,104
|
|
|
$
|
(452
|
)
|
|
$
|
652
|
|
Fiscal year ending
|
|
|
||
|
|
(in millions)
|
||
2019 (remainder of year)
|
|
$
|
43
|
|
2020
|
|
131
|
|
|
2021
|
|
110
|
|
|
2022
|
|
97
|
|
|
2023
|
|
77
|
|
|
2024 and thereafter
|
|
109
|
|
|
|
|
$
|
567
|
|
|
|
September 27,
2019 |
|
December 28,
2018 |
||||
|
|
(in millions)
|
||||||
Computers and other equipment
|
|
$
|
248
|
|
|
$
|
233
|
|
Leasehold improvements
|
|
187
|
|
|
206
|
|
||
Office furniture and fixtures
|
|
34
|
|
|
36
|
|
||
Buildings and improvements
|
|
23
|
|
|
56
|
|
||
Land
|
|
4
|
|
|
40
|
|
||
Construction in progress
|
|
58
|
|
|
15
|
|
||
|
|
554
|
|
|
586
|
|
||
Less: accumulated depreciation
|
|
(326
|
)
|
|
(349
|
)
|
||
|
|
$
|
228
|
|
|
$
|
237
|
|
|
|
September 27, 2019
|
|
December 28, 2018
|
||||||||||||
|
|
Carrying value
|
|
Fair value
|
|
Carrying value
|
|
Fair value
|
||||||||
|
|
(in millions)
|
||||||||||||||
Financial assets:
|
|
|
|
|
|
|
|
|
||||||||
Derivatives
|
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Derivatives
|
|
$
|
88
|
|
|
$
|
88
|
|
|
$
|
35
|
|
|
$
|
35
|
|
|
|
Asset derivatives
|
||||||||
|
|
Balance sheet line item
|
|
September 27,
2019 |
|
December 28,
2018 |
||||
|
|
|
|
(in millions)
|
||||||
Fair value interest rate swaps
|
|
Other assets
|
|
$
|
3
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
||||
|
|
Liability derivatives
|
||||||||
|
|
Balance sheet line item
|
|
September 27,
2019 |
|
December 28,
2018 |
||||
|
|
|
|
(in millions)
|
||||||
Fair value interest rate swaps
|
|
Other long-term liabilities
|
|
$
|
—
|
|
|
$
|
3
|
|
Cash flow interest rate swaps
|
|
Other long-term liabilities
|
|
88
|
|
|
32
|
|
||
|
|
|
|
$
|
88
|
|
|
$
|
35
|
|
|
|
Carrying amount of hedged item
|
|
Cumulative amount of fair value adjustment included within the hedged item
|
||||||||||||
Balance sheet line item of hedged item
|
|
September 27,
2019 |
|
December 28,
2018 |
|
September 27,
2019 |
|
December 28,
2018 |
||||||||
|
|
(in millions)
|
||||||||||||||
Long-term debt, net of current portion
|
|
$
|
453
|
|
|
$
|
447
|
|
|
$
|
3
|
|
|
$
|
(3
|
)
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 27,
2019 |
|
September 28,
2018 |
|
September 27,
2019 |
|
September 28,
2018 |
||||||||
|
|
(in millions)
|
||||||||||||||
Total interest expense, net presented in the condensed consolidated statements of income in which the effects of cash flow hedges are recorded
|
|
$
|
28
|
|
|
$
|
35
|
|
|
$
|
99
|
|
|
$
|
104
|
|
|
|
|
|
|
|
|
|
|
||||||||
Amount recognized in other comprehensive loss
|
|
$
|
(13
|
)
|
|
$
|
1
|
|
|
$
|
(62
|
)
|
|
$
|
22
|
|
Amount reclassified from accumulated other comprehensive loss to interest expense, net
|
|
(2
|
)
|
|
(3
|
)
|
|
(6
|
)
|
|
(6
|
)
|
|
|
Stated interest rate
|
|
Effective interest rate
|
|
September 27,
2019(1)
|
|
December 28, 2018(1)
|
||||
|
|
|
|
|
|
(in millions)
|
||||||
Senior secured notes:
|
|
|
|
|
|
|
|
|
||||
$450 million notes, due December 2020
|
|
4.45%
|
|
4.53%
|
|
$
|
453
|
|
|
$
|
447
|
|
$300 million notes, due December 2040
|
|
5.95%
|
|
6.03%
|
|
216
|
|
|
216
|
|
||
Senior secured term loans:
|
|
|
|
|
|
|
|
|
||||
$690 million Term Loan A, due August 2023
|
|
3.56%
|
|
3.99%
|
|
596
|
|
|
617
|
|
||
$310 million Term Loan A, due August 2023
|
|
3.56%
|
|
4.01%
|
|
249
|
|
|
258
|
|
||
$1,131 million Term Loan B, due August 2025
|
|
3.81%
|
|
4.16%
|
|
1,079
|
|
|
1,085
|
|
||
Senior unsecured notes:
|
|
|
|
|
|
|
|
|
||||
$250 million notes, due July 2032
|
|
7.13%
|
|
7.43%
|
|
247
|
|
|
246
|
|
||
$300 million notes, due July 2033
|
|
5.50%
|
|
5.88%
|
|
158
|
|
|
158
|
|
||
Notes payable and finance leases due on various dates through fiscal 2022 (see Note 2)
|
|
2.85%-5.49%
|
|
Various
|
|
18
|
|
|
97
|
|
||
Total long-term debt
|
|
|
|
|
|
3,016
|
|
|
3,124
|
|
||
Less: current portion
|
|
|
|
|
|
77
|
|
|
72
|
|
||
Total long-term debt, net of current portion
|
|
|
|
|
|
$
|
2,939
|
|
|
$
|
3,052
|
|
|
|
Foreign currency translation adjustments
|
|
Unrecognized gain (loss) on derivative instruments
|
|
Pension adjustments
|
|
Total accumulated other comprehensive income (loss)
|
||||||||
|
|
(in millions)
|
||||||||||||||
Balance at December 29, 2017
|
|
$
|
17
|
|
|
$
|
14
|
|
|
$
|
2
|
|
|
$
|
33
|
|
Cumulative adjustments related to ASU adoptions
|
|
3
|
|
|
10
|
|
|
(4
|
)
|
|
9
|
|
||||
Balance at December 30, 2017
|
|
20
|
|
|
24
|
|
|
(2
|
)
|
|
42
|
|
||||
Other comprehensive loss
|
|
(65
|
)
|
|
(7
|
)
|
|
(1
|
)
|
|
(73
|
)
|
||||
Taxes
|
|
4
|
|
|
3
|
|
|
—
|
|
|
7
|
|
||||
Reclassification from accumulated other comprehensive loss
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
(6
|
)
|
||||
Balance at December 28, 2018
|
|
(41
|
)
|
|
14
|
|
|
(3
|
)
|
|
(30
|
)
|
||||
Other comprehensive loss
|
|
(27
|
)
|
|
(62
|
)
|
|
—
|
|
|
(89
|
)
|
||||
Taxes
|
|
1
|
|
|
16
|
|
|
—
|
|
|
17
|
|
||||
Reclassification from accumulated other comprehensive loss
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
(6
|
)
|
||||
Balance at September 27, 2019
|
|
$
|
(67
|
)
|
|
$
|
(38
|
)
|
|
$
|
(3
|
)
|
|
$
|
(108
|
)
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
|
September 27,
2019 |
|
September 28,
2018 |
|
September 27,
2019 |
|
September 28,
2018 |
||||
|
|
(in millions)
|
||||||||||
Basic weighted average number of shares outstanding
|
|
143
|
|
|
151
|
|
|
144
|
|
|
152
|
|
Dilutive common share equivalents—stock options and other stock awards
|
|
2
|
|
|
2
|
|
|
2
|
|
|
2
|
|
Diluted weighted average number of shares outstanding
|
|
145
|
|
|
153
|
|
|
146
|
|
|
154
|
|
|
|
Nine Months Ended
|
||||||
|
|
September 27,
2019 |
|
September 28,
2018 |
||||
|
|
(in millions)
|
||||||
Supplementary cash flow information:
|
|
|
|
|
||||
Cash paid for income taxes, net of refunds
|
|
$
|
142
|
|
|
$
|
68
|
|
Cash paid for interest
|
|
112
|
|
|
101
|
|
||
Non-cash investing activity:
|
|
|
|
|
||||
Fixed asset additions
|
|
$
|
9
|
|
|
$
|
—
|
|
|
|
September 27,
2019 |
|
December 28,
2018 |
||||
|
|
(in millions)
|
||||||
Cash and cash equivalents
|
|
$
|
635
|
|
|
$
|
327
|
|
Restricted cash
|
|
111
|
|
|
42
|
|
||
Total cash, cash equivalents and restricted cash
|
|
$
|
746
|
|
|
$
|
369
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 27,
2019 |
|
September 28,
2018 |
|
September 27,
2019 |
|
September 28,
2018 |
||||||||
|
|
(in millions)
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
||||||||
Defense Solutions
|
|
$
|
1,354
|
|
|
$
|
1,250
|
|
|
$
|
3,967
|
|
|
$
|
3,701
|
|
Civil
|
|
973
|
|
|
881
|
|
|
2,701
|
|
|
2,526
|
|
||||
Health
|
|
508
|
|
|
444
|
|
|
1,472
|
|
|
1,320
|
|
||||
Total revenues
|
|
$
|
2,835
|
|
|
$
|
2,575
|
|
|
$
|
8,140
|
|
|
$
|
7,547
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating income (loss):
|
|
|
|
|
|
|
|
|
||||||||
Defense Solutions
|
|
$
|
93
|
|
|
$
|
89
|
|
|
$
|
283
|
|
|
$
|
273
|
|
Civil
|
|
57
|
|
|
92
|
|
|
198
|
|
|
221
|
|
||||
Health
|
|
63
|
|
|
52
|
|
|
169
|
|
|
162
|
|
||||
Corporate
|
|
36
|
|
|
(30
|
)
|
|
1
|
|
|
(95
|
)
|
||||
Total operating income
|
|
$
|
249
|
|
|
$
|
203
|
|
|
$
|
651
|
|
|
$
|
561
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||||||||||
|
|
September 27,
2019 |
|
September 28,
2018 |
|
Dollar change
|
|
Percent change
|
|
September 27,
2019 |
|
September 28,
2018 |
|
Dollar change
|
|
Percent change
|
||||||||||||||
|
|
(dollars in millions)
|
||||||||||||||||||||||||||||
Revenues
|
|
$
|
2,835
|
|
|
$
|
2,575
|
|
|
$
|
260
|
|
|
10.1
|
%
|
|
$
|
8,140
|
|
|
$
|
7,547
|
|
|
$
|
593
|
|
|
7.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Operating income
|
|
249
|
|
|
203
|
|
|
46
|
|
|
22.7
|
%
|
|
651
|
|
|
561
|
|
|
90
|
|
|
16.0
|
%
|
||||||
Non-operating expense, net
|
|
(35
|
)
|
|
(33
|
)
|
|
(2
|
)
|
|
6.1
|
%
|
|
(12
|
)
|
|
(101
|
)
|
|
89
|
|
|
(88.1
|
)%
|
||||||
Income before income taxes
|
|
214
|
|
|
170
|
|
|
44
|
|
|
25.9
|
%
|
|
639
|
|
|
460
|
|
|
179
|
|
|
38.9
|
%
|
||||||
Income tax expense
|
|
(52
|
)
|
|
(23
|
)
|
|
(29
|
)
|
|
126.1
|
%
|
|
(150
|
)
|
|
(66
|
)
|
|
(84
|
)
|
|
127.3
|
%
|
||||||
Net income
|
|
$
|
162
|
|
|
$
|
147
|
|
|
$
|
15
|
|
|
10.2
|
%
|
|
$
|
489
|
|
|
$
|
394
|
|
|
$
|
95
|
|
|
24.1
|
%
|
Operating margin
|
|
8.8
|
%
|
|
7.9
|
%
|
|
|
|
|
|
8.0
|
%
|
|
7.4
|
%
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net income attributable to Leidos common stockholders
|
|
$
|
161
|
|
|
$
|
147
|
|
|
$
|
14
|
|
|
9.5
|
%
|
|
$
|
486
|
|
|
$
|
393
|
|
|
$
|
93
|
|
|
23.7
|
%
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||||||||||
Defense Solutions
|
|
September 27,
2019 |
|
September 28,
2018 |
|
Dollar change
|
|
Percent change
|
|
September 27,
2019 |
|
September 28,
2018 |
|
Dollar change
|
|
Percent change
|
||||||||||||||
|
|
(dollars in millions)
|
||||||||||||||||||||||||||||
Revenues
|
|
$
|
1,354
|
|
|
$
|
1,250
|
|
|
$
|
104
|
|
|
8.3
|
%
|
|
$
|
3,967
|
|
|
$
|
3,701
|
|
|
$
|
266
|
|
|
7.2
|
%
|
Operating income
|
|
93
|
|
|
89
|
|
|
4
|
|
|
4.5
|
%
|
|
283
|
|
|
273
|
|
|
10
|
|
|
3.7
|
%
|
||||||
Operating margin
|
|
6.9
|
%
|
|
7.1
|
%
|
|
|
|
|
|
7.1
|
%
|
|
7.4
|
%
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||||||||||
Civil
|
|
September 27,
2019 |
|
September 28,
2018 |
|
Dollar change
|
|
Percent change
|
|
September 27,
2019 |
|
September 28,
2018 |
|
Dollar change
|
|
Percent change
|
||||||||||||||
|
|
(dollars in millions)
|
||||||||||||||||||||||||||||
Revenues
|
|
$
|
973
|
|
|
$
|
881
|
|
|
$
|
92
|
|
|
10.4
|
%
|
|
$
|
2,701
|
|
|
$
|
2,526
|
|
|
$
|
175
|
|
|
6.9
|
%
|
Operating income
|
|
57
|
|
|
92
|
|
|
(35
|
)
|
|
(38.0
|
)%
|
|
198
|
|
|
221
|
|
|
(23
|
)
|
|
(10.4
|
)%
|
||||||
Operating margin
|
|
5.9
|
%
|
|
10.4
|
%
|
|
|
|
|
|
7.3
|
%
|
|
8.7
|
%
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||||||||||
Health
|
|
September 27,
2019 |
|
September 28,
2018 |
|
Dollar change
|
|
Percent change
|
|
September 27,
2019 |
|
September 28,
2018 |
|
Dollar change
|
|
Percent change
|
||||||||||||||
|
|
(dollars in millions)
|
||||||||||||||||||||||||||||
Revenues
|
|
$
|
508
|
|
|
$
|
444
|
|
|
$
|
64
|
|
|
14.4
|
%
|
|
$
|
1,472
|
|
|
$
|
1,320
|
|
|
$
|
152
|
|
|
11.5
|
%
|
Operating income
|
|
63
|
|
|
52
|
|
|
11
|
|
|
21.2
|
%
|
|
169
|
|
|
162
|
|
|
7
|
|
|
4.3
|
%
|
||||||
Operating margin
|
|
12.4
|
%
|
|
11.7
|
%
|
|
|
|
|
|
11.5
|
%
|
|
12.3
|
%
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|||||||||||||||||||||||||
Corporate
|
|
September 27,
2019 |
|
September 28,
2018 |
|
Dollar change
|
|
Percent change
|
|
September 27,
2019 |
|
September 28,
2018 |
|
Dollar change
|
|
Percent change
|
|||||||||||||
|
|
(dollars in millions)
|
|||||||||||||||||||||||||||
Operating income (loss)
|
|
$
|
36
|
|
|
$
|
(30
|
)
|
|
$
|
66
|
|
|
NM
|
|
$
|
1
|
|
|
$
|
(95
|
)
|
|
$
|
96
|
|
|
(101.1
|
)%
|
|
|
September 27,
2019 |
|
December 28,
2018 |
||||
|
|
(in millions)
|
||||||
Defense Solutions:
|
|
|
|
|
||||
Funded backlog
|
|
$
|
2,700
|
|
|
$
|
2,821
|
|
Negotiated unfunded backlog
|
|
8,682
|
|
|
6,925
|
|
||
Total Defense Solutions backlog
|
|
$
|
11,382
|
|
|
$
|
9,746
|
|
Civil:
|
|
|
|
|
||||
Funded backlog
|
|
$
|
2,034
|
|
|
$
|
2,304
|
|
Negotiated unfunded backlog
|
|
5,271
|
|
|
5,045
|
|
||
Total Civil backlog
|
|
$
|
7,305
|
|
|
$
|
7,349
|
|
Health:
|
|
|
|
|
||||
Funded backlog
|
|
$
|
924
|
|
|
$
|
1,254
|
|
Negotiated unfunded backlog
|
|
4,321
|
|
|
2,483
|
|
||
Total Health backlog
|
|
$
|
5,245
|
|
|
$
|
3,737
|
|
Total:
|
|
|
|
|
||||
Funded backlog
|
|
$
|
5,658
|
|
|
$
|
6,379
|
|
Negotiated unfunded backlog
|
|
18,274
|
|
|
14,453
|
|
||
Total backlog
|
|
$
|
23,932
|
|
|
$
|
20,832
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 27,
2019 |
|
September 28,
2018 |
|
September 27,
2019 |
|
September 28,
2018 |
||||||||
|
|
(in millions)
|
||||||||||||||
Net cash provided by operating activities
|
|
$
|
349
|
|
|
$
|
371
|
|
|
$
|
823
|
|
|
$
|
664
|
|
Net cash (used in) provided by investing activities
|
|
(102
|
)
|
|
15
|
|
|
119
|
|
|
(94
|
)
|
||||
Net cash used in financing activities
|
|
(204
|
)
|
|
(134
|
)
|
|
(565
|
)
|
|
(417
|
)
|
||||
Net increase in cash, cash equivalents and restricted cash
|
|
$
|
43
|
|
|
$
|
252
|
|
|
$
|
377
|
|
|
$
|
153
|
|
(a)
|
None
|
(b)
|
None
|
(c)
|
Purchases of Equity Securities by the Company
|
Period
|
|
Total Number of Shares
(or Units) Purchased (1) |
|
Average Price
Paid per Share (or Unit) |
|
Total Number of Shares
(or Units) Purchased as Part of Publicly Announced Repurchase Plans or Programs |
|
Maximum Number of Shares (or Units) that May Yet Be
Purchased Under the Plans or Programs |
|||||
June 29, 2019 - June 30, 3019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
10,349,982
|
|
July 1, 2019 - July 31, 2019
|
|
1,847
|
|
|
79.56
|
|
|
—
|
|
|
10,349,982
|
|
|
August 1, 2019 - August 31, 2019
|
|
1,950,440
|
|
|
84.25
|
|
|
1,948,842
|
|
|
8,401,140
|
|
|
September 1, 2019 - September 27, 2019
|
|
430,814
|
|
|
84.29
|
|
|
424,885
|
|
|
7,976,255
|
|
|
Total
|
|
2,383,101
|
|
|
$
|
84.25
|
|
|
2,373,727
|
|
|
|
(1)
|
The total number of shares purchased includes shares surrendered to satisfy statutory tax withholdings obligations related to vesting of restricted stock units.
|
Exhibit
Number |
|
Description of Exhibit
|
10.1
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1
|
|
|
|
|
|
32.2
|
|
|
|
|
|
101
|
|
Interactive Data File. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
|
|
104
|
|
Cover Page Interactive Data File. The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
Leidos Holdings, Inc.
|
|
/s/ James C. Reagan
|
James C. Reagan
Executive Vice President and Chief Financial Officer and
as a duly authorized officer
|
(a)
|
Is an active, full-time employee of the Company; and
|
(b)
|
Is (i) an Eligible Officer, as defined above, who meets the additional eligibility criteria set forth in Appendices A or B, or (ii) as of the date of Notice of Termination is in a job code that is mapped to the “Executive” Career Stream, levels E1 or E2, but is not an Eligible Officer and meets the additional eligibility criteria set forth in Appendix C.
|
(a)
|
For Eligible Officers eligible for benefits described in Appendix A, the bonus based on the target annual cash incentive established by the Compensation Committee for the year in which the Termination Date occurs (or the target annual bonus established by the Compensation Committee for the most recently completed fiscal year if the Termination Date occurs prior to the establishment of an annual target bonus for the fiscal year in which the Termination Date occurs) with the payout amount calculated based only on the financial performance results (no personal performance) multiplied by a fraction, the numerator of which is the number of days elapsed in the then fiscal year through and including the Termination Date and the denominator of which is the number of days in the Company’s fiscal year.
|
(b)
|
For Eligible Officers eligible for benefits described in Appendix B, the bonus based on the target annual cash incentive established by the Compensation Committee for the year in which the Termination Date occurs (or the target annual bonus established by the Compensation Committee for the most recently completed fiscal year if the Termination Date occurs prior to the establishment of an annual target bonus for the
|
(c)
|
For Executives eligible for benefits described in Appendix C, the bonus based on the target annual cash incentive established by the Company under the Executive Incentive Plan for the year in which the Termination Date occurs (or the target annual bonus established by the Compensation Committee for the most recently completed fiscal year if the Termination Date occurs prior to the establishment of an annual target bonus for the fiscal year in which the Termination Date occurs), with the payout amount calculated based only on the financial performance results (no personal performance) multiplied by a fraction, the numerator of which is the number of days elapsed in the then fiscal year through and including the Termination Date and the denominator of which is the number of days in the Company’s fiscal year.
|
(a)
|
in the case of the Eligible Employee’s death, the Eligible Employee’s date of death,
|
SECTION 2.
|
Administration of Plan; Amendment and Termination
|
SECTION 3.
|
Benefits
|
SECTION 9.
|
Nonexclusivity of Rights.
|
(a)
|
The acquisition by any Person of Beneficial Ownership of twenty-five percent (25%) or more of the outstanding voting power; provided, however, that the following acquisitions shall not constitute a Change in Control for purposes of this subparagraph (a): (A) any acquisition directly from the Company; (B) any acquisition by the Company or any of its Subsidiaries; (C) any acquisition by any employee benefit plan (or related trust)
|
(b)
|
Individuals who at the beginning of any two year period constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual who becomes a director of the Company during such two year period and whose election, or whose nomination for election by the Company’s stockholders, to the Board was either (i) approved by a vote of at least a majority of the directors then comprising the Incumbent Board or (ii) recommended by a nominating committee comprised entirely of directors who are then Incumbent Board members shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange Act), other actual or threatened solicitation of proxies or consents or an actual or threatened tender offer; or
|
(c)
|
Consummation of a reorganization, merger, or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case unless following such Business Combination, (i) all or substantially all of the Persons who were the Beneficial Owners, respectively, of the outstanding shares and outstanding voting securities immediately prior to such Business Combination own, directly or indirectly, more than fifty percent (50%) of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the Company, as the case may be, of the entity resulting from the Business Combination (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the outstanding voting securities (provided, however, that for purposes of this clause (i) any shares of common stock or voting securities of such resulting entity received by such Beneficial Owners in such Business Combination other than as the result of such Beneficial Owners’ ownership of outstanding shares or outstanding voting securities immediately prior to such Business Combination shall not be considered to be owned by such Beneficial Owners for the purposes of calculating their percentage of ownership of the outstanding common stock and voting power of the resulting entity); (ii) no Person (excluding any entity resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such entity resulting from the Business Combination) beneficially owns, directly or indirectly, twenty-five percent (25%) or more of the combined voting power of the then outstanding voting securities of such entity resulting from the Business Combination unless such Person owned twenty-five percent (25%) or more of the outstanding shares or outstanding voting securities immediately prior to the Business Combination; and (iii) at least a majority of the members of the Board of the entity resulting from such Business Combination were members of the Incumbent Board at
|
(d)
|
Approval by the Company’s stockholders of a complete liquidation or dissolution of the Company.
|
(a)
|
any material adverse change in the Eligible Officer’s authority, duties or responsibilities (including reporting responsibilities) from the Eligible Officer’s authority, duties or responsibilities as in effect at any time within 90 days preceding the date of the Change in Control or at any time thereafter, or (ii) in the case of an Eligible Officer who is an Eligible Officer of the Company a significant portion of whose responsibilities relate to the Company’s status as a public company, the failure of such Eligible Officer to continue to serve as an Eligible Officer of a public company, in each case except in connection with the termination of the Eligible Officer’s employment for Disability, Cause, as a result of the Eligible Officer’s death or by the Eligible Officer other than for Good Reason;
|
(b)
|
a material reduction in Eligible Officer’s base salary or any failure to pay the Eligible Officer any cash compensation to which the Eligible Officer is entitled within 15 days after the date when due;
|
(c)
|
the imposition of a requirement (other than for reasonably required travel on Company business which is not materially greater in frequency or duration than prior to the Change in Control) that the Eligible Officer be based (i) at any place outside a 50-mile radius from the Eligible Officer’s principal place of employment immediately prior to the Change in Control and which has a material adverse effect on the Eligible Officer’s commuting requirements, or (ii) at any location other than the Company’s corporate headquarters or, if applicable, the headquarters of the business unit by which he or she was employed immediately prior to the Change in Control, and which has a material adverse effect on the Eligible Officer’s commuting requirements;
|
(d)
|
any material breach by the Company of any provision of this Plan;
|
(e)
|
any purported termination of the Eligible Officer’s employment for Cause by the Company which does not comply with the definition in this Plan; or
|
(f)
|
the failure of the Company to obtain, as contemplated in Section 6, agreement from any Successor to assume the obligations and liabilities under this Plan.
|
A.
|
_________ acknowledges that [he/she] has read and understands the terms of this Plan.
|
B.
|
__________ acknowledges that [he/she] has been advised in writing to consult with an attorney, if desired, concerning this Plan and has received all advice [he/she] deems necessary concerning this Plan.
|
C.
|
__________ acknowledges that [he/she] has been given twenty-one (21) days to consider whether or not to enter into this Plan, has taken as much of this time as necessary to consider whether to enter into this Plan, and has chosen to enter into this Plan freely, knowingly and voluntarily.
|
D.
|
For a seven day period following the execution of this Plan, _________ may revoke this Plan by delivering a written revocation to at the Company. This Plan shall not become effective and enforceable until the revocation period has expired.
|
|
Dated: ____________________, 20__
|
|
[Signature]
|
|
[Print Name]
|
Leidos Holdings, Inc.
|
|
By:
|
Name:
|
Its:
|
(1)
|
Restrictions Following Termination of Employment.
|
(a)
|
Covenant Not to Compete – Without the express written consent of the Chief Executive Officer of the Company or his/her designee, during the [18/12/6]- month period following the termination of my employment (“Termination Date”), I will not, directly or indirectly, be employed by, or provided services to, a “Competitive Company”, whether as an employee, advisor, director, officer, partner or consultant, or in any other position, function or role that, in any such case, (i) oversees, controls or affects the design, operation, research, manufacture, marketing, sale or distribution of “Competitive Products or Services” (as defined herein) of or by the Competitive Company, or (ii) would involve a substantial risk that the “Confidential or Proprietary Information” could be used to the disadvantage of the Company.
|
i.
|
“Competitive Company” means those entities listed as principal competitors of the Company in the most recent 10k filed by the Company with the SEC immediately prior to the Termination Date.
|
ii.
|
“Competitive Products or Services” means products or services that compete with, or are an alternative or potential alternative to, products sold or services provided by a subsidiary, business area, division or operating unit or business of the Company as of the Termination Date and at any time within the two-year period ending on the Termination Date; provided, that, (a) if I had direct responsibility for the business of, or function with respect to, a subsidiary, or for a business area, division or operating unit or business of the Company at any time within the two- year period ending on the Termination Date, Competitive Products or
|
(b)
|
Non-Solicit- Without the express written consent of [the Chief Executive Officer of the Company/or the Compensation Committee with respect to Eligible Officers of the Company], during the [18/12/6]-month period following the Termination Date, I will not directly or indirectly (i) interfere with any contractual relationship between the Company and any customer, supplier, distributor or manufacturer of or to the Company to the detriment of the Company or (ii) hire directly or indirectly by inducing or attempting to induce any person who is an employee of the Company to perform work or services for any entity other than the Company.
|
(c)
|
Protection of Proprietary Information- Except to the extent required by law, following my Termination Date, I will have a continuing obligation to comply with the terms of any non-disclosure or similar Plans that I signed while employed by the Company committing to hold confidential the "Confidential or Proprietary Information" (as defined below) of the Company or any of its affiliates, subsidiaries, related companies, joint ventures, partnerships, customers, suppliers, partners, contractors or agents, in each case in accordance with the terms of such Plans. I will not use or disclose or allow the use or disclosure by others to any person or entity of Confidential or Proprietary Information of the Company or others to which I had access or that I was responsible for creating or overseeing during my employment with the Company. In the event I become legally compelled (by deposition, interrogatory, request for documents, subpoena, civil investigative demand or otherwise) to disclose any proprietary or confidential information, I will immediately notify the Company's Executive Vice President and General Counsel as to the existence of the obligation and will cooperate with any reasonable request by the Company for assistance in seeking to protect the information. All materials to which I have had access, or which were furnished or otherwise made available to me in connection with my employment with the· Company shall be and remain the property of the Company. For purposes of this PECA, "Confidential or Proprietary Information" means any and all confidential and/or proprietary knowledge, data or information
|
(i)
|
existing and contemplated business, marketing and financial business information such as business plans and methods, marketing information, cost estimates, forecasts, financial data, cost or pricing data, bid and proposal information, customer identification, sources of supply, contemplated product lines, proposed business alliances, and information about customers or competitors, or
|
(ii)
|
existing or contemplated technical information and documentation pertaining to technology, know how, equipment, machines, devices and systems, computer hardware and software, compositions, formulas, products, processes, methods, designs, specifications, mask works, testing or evaluation procedures, manufacturing processes, or production processes.
|
(d)
|
No disparagement- Following the Termination Date, I will not make any statements, whether verbal or written, that disparage or reasonably may be interpreted to disparage the Company or its stockholders, directors, officers, employees, agents, attorneys, representatives, technology, products or services with respect to any matter whatsoever.
|
(e)
|
Cooperation in Litigation and Investigations- Following the Termination Date, I will, to the extent reasonably requested, cooperate with the Company in any pending or future litigation (including alternative dispute resolution proceedings) or investigations in which the Company or any of its subsidiaries or affiliates is a party or is required or requested to provide testimony and regarding which, as a result of my employment with the Company, I reasonably could be expected to have knowledge or information relevant to the litigation or investigation. Notwithstanding any other provision of this PECA, nothing in this PECA shall affect my obligation to cooperate with any governmental inquiry or investigation or to give truthful testimony in court.
|
(2)
|
Consideration and Release of Claims. I acknowledge and agree that the Severance Benefit being made to me is in addition to the payments or benefits that otherwise are or would be owed to me by the Company and that the Severance Benefit being provided to me is in consideration for my entering into this PECA and the Release of Claims attached to this PECA. I acknowledge that the scope and duration of the restrictions in Section 1 are necessary to be effective and are fair and reasonable in light of the value of the payments being made to me. I further acknowledge and agree that as a result of the high level Eligible Employee and management positions I have held within the Company and the access to and extensive knowledge of the Company's Confidential or Proprietary Information, employees, suppliers and customers, these restrictions are reasonably required for the protection of the Company's legitimate business interests.
|
(3)
|
Remedies for Breach of Section 1; Additional Remedies of Clawback and Recoupment.
|
(a)
|
I agree, upon demand by the Company, to repay the Severance Benefit to the Company in the event any of the following occur:
|
(i)
|
I breach any of the covenants in Section 1;
|
(ii)
|
The Company determines that either (a) my intentional misconduct or gross negligence, or (b) my failure to report another person's intentional misconduct or gross negligence of which I had knowledge during the period I was employed by the Company, or breach of the Company’s clawback/recoupment policy in effect from time to time, contributed to the Company having to restate all or a portion of its financial statements filed for any period with the Securities and Exchange Commission; or
|
(iii)
|
The Company determines that I engaged in fraud, bribery or any other illegal act or that my intentional misconduct or gross negligence (including the failure to report the acts of another person of which I had knowledge during the period I was employed by the Company) contributed to another person's fraud, bribery or other illegal act, which in any such case adversely affected the Company's financial position or reputation.
|
(b)
|
The remedy provided in Section 3(a) shall not be the exclusive remedy available to the Company for any of the conduct described in Section 3(a) and shall not limit the Company from seeking damages or injunctive relief.
|
(4)
|
Injunctive Relief. I acknowledge that the Company's remedies at law may be inadequate to protect the Company against any actual or threatened breach of the provisions of Section 1 or the conduct described in Section 3(a), and, therefore, without prejudice to any other rights and remedies otherwise available to the
|
(5)
|
Invalidity; Unenforceability. It is the desire and intent of the parties that the provisions of this PECA shall be enforced to the fullest extent permissible. Accordingly, if any particular provision of this PECA is adjudicated to be invalid or unenforceable, this PECA shall be deemed amended to delete the portion adjudicated to be invalid or unenforceable, such deletion to apply only with respect to the operation of this provision in the particular jurisdiction in which such adjudication is made.
|
(6)
|
Miscellaneous
|
(a)
|
The Severance Plan, and this PECA along with the attached Release of All Claims and Potential Claims in Appendix D, constitutes the entire Plan governing the terms of the Severance Benefit and supersedes all other prior Plans and understandings, both written and oral, between me and the Company or any employee, officer or director of the Company concerning payments on account of my termination of employment.
|
(b)
|
This PECA shall be governed by Virginia law, without regard to its provisions governing conflicts of law.
|
(c)
|
This PECA shall inure to the benefit of the Company's successors and assigns and may be assigned by the Company without my consent.
|
|
|
[Signature]
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the period ended September 27, 2019, of Leidos Holdings, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including the registrant's consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ Roger A. Krone
|
Roger A. Krone
Chairman and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the period ended September 27, 2019, of Leidos Holdings, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including the registrant's consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ James C. Reagan
|
James C. Reagan
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
|