What changed in this filing

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Item 1. Financial Statements

2022-05-03 compared with 2021-11-02 · 165 added, 281 removed, 467 unchanged (49% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

2021 January 1,

2022 December 31,

(in millions)

21 unchanged sentences

Stockholders’ equity:

Common stock, $ 0.0001 par value, 500 million shares authorized, 140 million and 142 million shares issued and outstanding at October 1, 2021 and January 1, 2021, respectively

Common stock, $ 0.0001 par value, 500 million shares authorized, 137 million and 140 million shares issued and outstanding at April 1, 2022, and December 31, 2021, respectively

Additional paid-in capital 1,928 2,423

Retained earnings 2,007 1,880

Accumulated other comprehensive loss ( 40 ) ( 46 )

Accumulated other comprehensive income (loss) 20 ( 12 )

Total Leidos stockholders’ equity 3,955 4,291

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

Three Months Ended Nine Months Ended

2021 October 2,

2020 October 1,

2021 October 2,

Three Months Ended

2022 April 2,

(in millions, except per share amounts)

2 unchanged sentences

Selling, general and administrative expenses 236 159

Bad debt expense and recoveries ( 1 ) 2 ( 11 ) ( 70 )

Acquisition, integration and restructuring costs 3 5

Asset impairment charges 3 — 3 11

Equity (earnings) loss of non-consolidated subsidiaries ( 5 ) 3 ( 14 ) ( 10 )

Equity loss (earnings) of non-consolidated subsidiaries 2 ( 5 )

Operating income 271 308

1 unchanged sentence

Interest expense, net ( 48 ) ( 45 )

Other income (expense), net 2 — 1 ( 30 )

Other expense, net ( 1 ) ( 1 )

Income before income taxes

260 214 745 536

Income tax expense

3 unchanged sentences

Net income attributable to Leidos common stockholders

$ 205 $ 163 $ 579 $ 431

Earnings per share:

$ 1.26 $ 1.44

1.43 1.13 4.05 2.99

See accompanying notes to condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

Three Months Ended Nine Months Ended

2021 October 2,

2020 October 1,

2021 October 2,

Three Months Ended

2022 April 2,

(in millions)

1 unchanged sentence

Foreign currency translation adjustments

( 29 ) 26 ( 12 ) 13

Unrecognized gain (loss) on derivative instruments

4 4 18 ( 41 )

Unrecognized gain on derivative instruments

Pension adjustments

Total other comprehensive (loss) income, net of taxes ( 25 ) 29 6 ( 28 )

Total other comprehensive income, net of taxes 32 9

Comprehensive income 209 214

1 unchanged sentence

Comprehensive income attributable to Leidos common stockholders

$ 180 $ 192 $ 585 $ 403

See accompanying notes to condensed consolidated financial statements.

4 unchanged sentences

other comprehensive

loss Leidos Holdings, Inc.

income Leidos Holdings, Inc.

stockholders' equity Non-controlling interest Total

(in millions, except for per share amounts)

Balance at January 1, 2021 142 $ 2,580 $ 1,328 $ ( 46 ) $ 3,862 $ 9 $ 3,871

Balance at December 31, 2021 140 $ 2,423 $ 1,880 $ ( 12 ) $ 4,291 $ 53 $ 4,344

Net income — — 175 — 175 2 177

6 unchanged sentences

Stock-based compensation — 16 — — 16 — 16

Capital contributions from non-controlling interests — — — — — 38 38

Capital distributions to non-controlling interests — — — — — ( 2 ) ( 2 )

Balance at April 1, 2022 137 $ 1,928 $ 2,007 $ 20 $ 3,955 $ 53 $ 4,008

Net income — — 169 — 169 1 170

Other comprehensive income, net of taxes — — — 22 22 — 22

Issuances of stock 1 9 — — 9 — 9

Repurchases of stock and other

— ( 3 ) — — ( 3 ) — ( 3 )

Dividends of $ 0.34 per share

— — ( 48 ) — ( 48 ) — ( 48 )

Stock-based compensation — 17 — — 17 — 17

Net capital contributions from non-controlling interests — — — — — 1 1

Balance at July 2, 2021 142 2,509 1,605 ( 15 ) 4,099 49 4,148

Net income — — 205 — 205 3 208

Other comprehensive loss, net of taxes — — — ( 25 ) ( 25 ) — ( 25 )

Issuances of stock — 11 — — 11 — 11

Repurchases of stock and other

( 2 ) ( 140 ) — — ( 140 ) — ( 140 )

Dividends of $ 0.36 per share

— — ( 52 ) — ( 52 ) — ( 52 )

Stock-based compensation — 17 — — 17 — 17

Net capital contributions to non-controlling interest — — — — — ( 1 ) ( 1 )

Balance at October 1, 2021 140 $ 2,397 $ 1,758 $ ( 40 ) $ 4,115 $ 51 $ 4,166

See accompanying notes to condensed consolidated financial statements.

LEIDOS HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

Shares of common stock Additional

5 unchanged sentences

Balance at January 1, 2021 142 $ 2,580 $ 1,328 $ ( 46 ) $ 3,862 $ 9 $ 3,871

Cumulative adjustments related to ASU adoption

— — ( 1 ) — ( 1 ) — ( 1 )

Balance at January 4, 2020 141 2,587 895 ( 70 ) 3,412 4 3,416

Net income — — 205 — 205 — 205

Other comprehensive loss, net of taxes

— — — ( 115 ) ( 115 ) — ( 115 )

Issuances of stock 1 9 — — 9 — 9

Repurchases of stock and other

— ( 32 ) — — ( 32 ) — ( 32 )

Dividends of $ 0.34 per share

— — ( 49 ) — ( 49 ) — ( 49 )

Stock-based compensation — 15 — — 15 — 15

Balance at April 3, 2020 142 2,579 961 ( 185 ) 3,355 4 3,359

Net income — — 153 — 153 1 154

Other comprehensive loss, net of taxes — — — 58 58 — 58

Issuances of stock — 8 — — 8 — 8

Repurchases of stock and other — ( 2 ) — — ( 2 ) — ( 2 )

Dividends of $ 0.34 per share

— — ( 49 ) — ( 49 ) — ( 49 )

Stock-based compensation — 15 — — 15 — 15

Capital contributions from non-controlling interests — — — — — 4 4

Balance at July 3, 2020 142 2,600 1,065 ( 127 ) 3,538 9 3,547

Net income — — 163 — 163 — 163

Other comprehensive income, net of taxes — — — 9 9 — 9

5 unchanged sentences

Stock-based compensation — 15 — — 15 — 15

Balance at October 2, 2020 142 $ 2,624 $ 1,180 $ ( 98 ) $ 3,706 $ 9 $ 3,715

Capital contributions from non-controlling interest — — — — — 38 38

Balance at April 2, 2021 141 $ 2,486 $ 1,484 $ ( 37 ) $ 3,933 $ 47 $ 3,980

See accompanying notes to condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Nine Months Ended

2021 October 2,

Three Months Ended

2022 April 2,

(in millions)

4 unchanged sentences

Stock-based compensation 16 15

Loss on debt extinguishment — 31

Asset impairment charges 3 11

Deferred income taxes ( 61 ) —

9 unchanged sentences

Acquisition of businesses, net of cash acquired ( 2 ) ( 218 )

Divestiture of a business

Payments for property, equipment and software ( 28 ) ( 26 )

Net proceeds from sale of assets — 10

Net cash used in investing activities ( 21 ) ( 244 )

Cash flows from financing activities:

Proceeds from debt issuance 380 6,225

Net proceeds from commercial paper 75 —

Payments of long-term debt ( 27 ) ( 26 )

Payments for debt issuance costs — ( 39 )

Dividend payments ( 51 ) ( 50 )

Repurchases of stock and other ( 526 ) ( 123 )

Capital distributions to non-controlling interests ( 3 ) —

Capital contributions from non-controlling interests 41 4

Net capital (distribution to) contributions from non-controlling interests ( 2 ) 38

Proceeds from issuances of stock 12 13

Net cash (used in) provided by financing activities ( 44 ) 1,353

Net increase in cash, cash equivalents and restricted cash 84 25

Net cash used in financing activities ( 519 ) ( 148 )

Net decrease in cash, cash equivalents and restricted cash ( 447 ) ( 153 )

Cash, cash equivalents and restricted cash at beginning of period 875 687

16 unchanged sentences

("Leidos"), a Delaware corporation, is a holding company whose direct 100%-owned subsidiary and principal operating company is Leidos, Inc.

Leidos is a FORTUNE 500 ® science, engineering and information technology company that provides services and solutions in the defense, intelligence, civil and health markets, both domestically and internationally.

Leidos is a FORTUNE 500 ® technology, engineering, and science company that provides services and solutions in the defense, intelligence, civil and health markets, both domestically and internationally.

Leidos' customers include the U.S.

2 unchanged sentences

Department of Homeland Security, the Federal Aviation Administration, the Department of Veterans Affairs and many other U.S.

civilian, state and local government agencies as well as foreign government agencies.

civilian, state and local government agencies, foreign government agencies and commercial businesses.

Unless indicated otherwise, references to "we," "us" and "our" refer collectively to Leidos Holdings, Inc.

22 unchanged sentences

Accounting Standards Updates ("ASU") Adopted

ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity's Own Equity (Subtopic 815-40)

In August 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-06 which simplifies the accounting for convertible debt and convertible preferred stock by removing the requirements to separate embedded conversion features from the host convertible instruments.

Additionally, the amendments in this update simplify the guidance in Subtopic 815-40 by removing certain criteria that must be satisfied in order to classify a contract as equity.

This update also improves the consistency of earnings per share calculations by requiring an entity to use the if-converted method of calculating diluted earnings per share rather than the treasury stock method for convertible instruments and also by requiring the inclusion of the potential effect of shares settled in cash or shares in the diluted earnings per share calculation.

The amendments in this update are effective for public entities for fiscal years beginning after December 15, 2021, and adopted using either a fully or modified retrospective approach.

Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020.

Entities should adopt the guidance as of the beginning of the fiscal year of adoption and cannot adopt the guidance in an interim reporting period.

Effective January 2, 2021, we adopted the requirements of ASU 2020-06 using the modified retrospective method.

The adoption did not have an impact to our financial position, results of operations and earnings per share.

ASU 2021-05, Leases (Topic 842) Lessors—Certain Leases with Variable Lease Payments

In July 2021, the FASB issued ASU 2021-05, which amends lessor’s accounting for leases with variable lease payments classified as sales-type or direct financing leases.

The amendments in this update modify the lease classification requirements for lessors, whereby leases with variable lease payments that are not dependent on a reference index or a rate will be accounted for as operating leases if classification as a sales-type or direct financing lease would have resulted in a day-one loss.

The amendments in this update are effective for public entities for fiscal years beginning after December 15, 2021, as well as interim periods within those fiscal years, and can be adopted using either a prospective or retrospective approach.

Early adoption is also permitted.

Effective July 3, 2021, we adopted the requirements of ASU 2021-05 using the prospective method.

The adoption did not have an impact to our financial position, results of operations and earnings per share.

ASU 2021-08, Business Combinations (Topic 805)

In October 2021, the FASB issued ASU 2021-08, which amends how contract assets and liabilities acquired in a business combination are measured.

Current guidance requires contract assets and liabilities to be measured at fair value in accordance with ASC 805, Business Combinations.

The amendments in this Update remove the requirement to measure contract assets and liabilities at fair value and instead require that they be recognized in accordance with ASC 606, Revenue from Contracts with Customers.

The amendments in this Update are effective for public business entities for the fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and must be applied prospectively.

Early adoption is permitted.

We adopted the requirements of ASU 2021-08 using the prospective method effective the first day of fiscal 2022.

For business combinations occurring after adoption, we will measure contract assets and liabilities acquired in accordance with ASC 606.

Accounting Standards Updates Issued But Not Yet Adopted

10 unchanged sentences

Changes in estimates related to contracts accounted for using the cost-to-cost method of accounting are recognized in the period in which such changes are made for the inception-to-date effect of the changes, with the exception of contracts acquired through a business combination, where the adjustment is made for the period commencing from the date of acquisition.

LEIDOS HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Changes in estimates on contracts were as follows:

Three Months Ended Nine Months Ended

2021 October 2,

2020 October 1,

2021 October 2,

Three Months Ended

2022 April 2,

(in millions, except per share amounts)

5 unchanged sentences

The impact on diluted earnings per share ("EPS") attributable to Leidos common stockholders is calculated using the statutory tax rate.

LEIDOS HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Revenue Recognized from Prior Obligations

Revenue recognized from performance obligations satisfied in previous periods was $ 17 million and $ 35 million for the three and nine months ended October 1, 2021, respectively, and $ 10 million and $ 42 million for the three and nine months ended October 2, 2020, respectively.

Revenue recognized from performance obligations satisfied in previous periods was $ 14 million and $ 9 million for the three months ended April 1, 2022, and April 2, 2021, respectively.

The changes primarily related to revisions of variable consideration including award and incentive fees, and revisions to estimates at completion resulting from changes in contract scope, mitigation of contract risks or true-ups of contract estimates at the end of contract performance.

1 unchanged sentence

Our cash equivalents are primarily comprised of investments in several large institutional money market accounts, with original maturity of three months or less.

At October 1, 2021 and January 1, 2021, $ 180 million and $ 237 million, respectively, of outstanding payments were included within "Cash and cash equivalents" and "Accounts payable and accrued liabilities" correspondingly on the condensed consolidated balance sheets.

At April 1, 2022, and December 31, 2021, $ 176 million and $ 138 million, respectively, of outstanding payments were included within "Cash and cash equivalents" and "Accounts payable and accrued liabilities" correspondingly on the condensed consolidated balance sheets.

Restricted Cash

We have restricted cash balances, primarily representing advances from customers that are restricted for use on certain expenditures related to that customer's contract.

We have restricted cash balances, primarily representing advances from customers that are restricted for use on certain expenditures related to that customer's contract and cash collected from the sale of accounts receivable but

not yet remitted to the financial institution (see Note 9–Sale of Accounts Receivable).

Restricted cash balances are included as "Other current assets" in the condensed consolidated balance sheets.

Our restricted cash balances were $ 184 million and $ 163 million at October 1, 2021 and January 1, 2021, respectively.

Our restricted cash balances were $ 131 million and $ 148 million at April 1, 2022, and December 31, 2021, respectively.

Note 2–Revenues from Contracts with Customers

2 unchanged sentences

Remaining performance obligations do not include unexercised option periods and future potential task orders expected to be awarded under indefinite delivery/indefinite quantity ("IDIQ") contracts, General Services Administration Schedule or other master agreement contract vehicles, with the exception of certain IDIQ contracts where task orders are not competitively awarded and separately priced but instead are used as a funding mechanism, and where there is a basis for estimating future revenues and funding on future anticipated task orders.

As of October 1, 2021, we had $ 14.6 billion of RPO and expect to recognize approximately 54 % and 71 % over the next 12 months and 24 months, respectively, with the remainder to be recognized thereafter.

As of April 1, 2022, we had $ 15.4 billion of RPO and expect to recognize approximately 55 % and 73 % over the next 12 months and 24 months, respectively, with the remainder to be recognized thereafter.

Disaggregation of Revenues

4 unchanged sentences

Disaggregated revenues by customer-type were as follows:

Three Months Ended October 1, 2021 Nine Months Ended October 1, 2021

Defense Solutions Civil Health Total Defense Solutions Civil Health Total

Three Months Ended April 1, 2022

Defense Solutions Civil Health Total

(in millions)

6 unchanged sentences

Total $ 2,048 $ 780 $ 650 $ 3,478

Three Months Ended October 2, 2020 Nine Months Ended October 2, 2020

Defense Solutions Civil Health Total Defense Solutions Civil Health Total

Three Months Ended April 2, 2021

Defense Solutions Civil Health Total

(in millions)

9 unchanged sentences

Disaggregated revenues by contract-type were as follows:

Three Months Ended October 1, 2021 Nine Months Ended October 1, 2021

Defense Solutions Civil Health Total Defense Solutions Civil Health Total

Three Months Ended April 1, 2022

Defense Solutions Civil Health Total

(in millions)

5 unchanged sentences

Total $ 2,048 $ 780 $ 650 $ 3,478

Three Months Ended October 2, 2020 Nine Months Ended October 2, 2020

Defense Solutions Civil Health Total Defense Solutions Civil Health Total

Three Months Ended April 2, 2021

Defense Solutions Civil Health Total

(in millions)

8 unchanged sentences

Disaggregated revenues by geographic location were as follows:

Three Months Ended October 1, 2021 Nine Months Ended October 1, 2021

Defense Solutions Civil Health Total Defense Solutions Civil Health Total

Three Months Ended April 1, 2022

Defense Solutions Civil Health Total

(in millions)

2 unchanged sentences

International

231 33 — 264 732 113 — 845

Total $ 2,048 $ 780 $ 650 $ 3,478

Three Months Ended October 2, 2020 Nine Months Ended October 2, 2020

Defense Solutions Civil Health Total Defense Solutions Civil Health Total

Three Months Ended April 2, 2021

Defense Solutions Civil Health Total

(in millions)

2 unchanged sentences

International

220 39 — 259 608 100 — 708

Total $ 1,957 $ 743 $ 591 $ 3,291

Revenues by customer-type, contract-type and geographic location exclude lease income of $ 34 million and $ 89 million for the three and nine months ended October 1, 2021, respectively, and $ 24 million and $ 71 million for the three and nine months ended October 2, 2020, respectively.

Revenues by customer-type, contract-type and geographic location exclude lease income of $ 16 million and $ 24 million for the three months ended April 1, 2022 and April 2, 2021, respectively.

Contract Assets and Liabilities

6 unchanged sentences

The components of contract assets and contract liabilities consisted of the following:

Balance sheet line item October 1,

2021 January 1,

Balance sheet line item April 1,

2022 December 31,

(in millions)

7 unchanged sentences

Other long-term liabilities $ 25 $ 24

(1) Certain contracts record revenue on a net contract basis, and therefore, the respective deferred revenue balance will not fully convert to revenue.

(1) Certain contracts record revenue net of cost of revenues, and therefore, the respective deferred revenue balance will not fully convert to revenue.

The increase in unbilled receivables was primarily due to revenue recognized on certain contracts partially offset by the timing of billings.

The decrease in deferred revenue was primarily due to the timing of advance payments and revenue recognized during the period.

Revenue recognized for the three months ended April 1, 2022, of $ 188 million was included as a contract liability at December 31, 2021.

Revenue recognized for the three months ended April 2, 2021, of $ 144 million was included as a contract liability at January 1, 2021.

LEIDOS HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Revenue recognized for the three and nine months ended October 1, 2021 of $ 31 million and $ 253 million, respectively, was included as a contract liability at January 1, 2021.

Revenue recognized for the three and nine months ended October 2, 2020 of $ 41 million and $ 267 million, respectively, was included as a contract liability at January 3, 2020.

Note 3–Acquisitions, Goodwill and Intangible Assets

Gibbs & Cox Acquisition

Note 3–Acquisitions, Divestitures, Goodwill and Intangible Assets

Business Acquisitions

On May 7, 2021 (the "Purchase Date"), we completed the acquisition of Gibbs & Cox for purchase consideration of approximately $ 375 million, net of $ 1 million of cash acquired.

Gibbs & Cox is an independent engineering and design firm specializing in naval architecture, marine engineering, management support and engineering consulting.

The preliminary goodwill recognized of $ 190 million represents intellectual capital and the acquired assembled workforce, neither of which qualify for recognition as a separate intangible asset.

As of April 1, 2022, we had completed the determination of fair values of the acquired assets and liabilities assumed.

The final goodwill recognized of $ 276 million represents intellectual capital and the acquired assembled workforce, neither of which qualify for recognition as a separate intangible asset.

All of the goodwill recognized is tax deductible.

The following table summarizes the preliminary fair value of intangible assets acquired at the Purchase Date and the related weighted average amortization period:

Weighted average amortization period Fair value

(in years) (in millions)

Programs 11 $ 175

As of October 1, 2021, we had not finalized the determination of fair values allocated to assets and liabilities, including, but not limited to, intangible assets, accounts receivables and accounts payable and accrued liabilities.

1901 Group Acquisition

On January 14, 2021 (the "Closing Date"), we completed the acquisition of 1901 Group for purchase consideration of $ 212 million, net of $ 2 million of cash acquired.

The preliminary goodwill recognized of $ 122 million represents intellectual capital and the acquired assembled workforce, none of which qualify for recognition as separate intangible assets.

Of the goodwill recognized, $ 102 million is tax deductible.

The following table summarizes the fair value of intangible assets acquired at the Closing Date and the related weighted average amortization period:

Weighted average amortization period Fair value

(in years) (in millions)

Technology 8 $ 43

Programs 10 37

As of October 1, 2021, we had not finalized the determination of fair values allocated to assets and liabilities, including, but not limited to accounts receivables and accounts payable and accrued liabilities.

For the three and nine months ended October 1, 2021, $ 47 million and $ 97 million, respectively, of revenues related to the Gibbs & Cox and 1901 Group acquisitions were recognized within the Defense Solutions reportable segmen t.

On September 21, 2021, we completed an inconsequential business acquisition for preliminary purchase consideration of approximately $ 36 million.

The preliminary goodwill and intangible assets recognized in connection with the acquisition were $ 21 million and $ 8 million, respectively.

LEIDOS HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SD&A Businesses Acquisition

On May 4, 2020 (the "Transaction Date"), we completed the acquisition of L3Harris Technologies' security detection and automation businesses (the "SD&A Businesses").

The SD&A Businesses were acquired for cash consideration of $ 1,019 million, net of $ 27 million of cash acquired.

The purchase consideration includes the initial cash payment of $ 1,015 million, plus a $ 31 million payment for contractual net working capital acquired.

The SD&A Businesses provide airport and critical infrastructure screening products, automated tray return systems and other industrial automation products.

The addition of the SD&A Businesses expands the scope and scale of our global security detection and automation offerings.

The final goodwill of $ 574 million represents intellectual capital and the acquired assembled workforce.

Of the goodwill recognized, $ 432 million is deductible for tax purposes.

The following table summarizes the final fair value of intangible assets acquired at the Transaction Date and the related weighted average amortization period:

Weighted average amortization period Fair value

(in years) (in millions)

Programs 13 $ 141

Customer relationships 10 49

Technology 10 73

In-process research and development ("IPR&D") (1)

Total 11 $ 355

(1) IPR&D assets are indefinite-lived at the acquisition date until placed into service, at which time such assets will be reclassified to a finite-lived amortizable intangible asset.

For the nine months ended October 1, 2021 and October 2, 2020, $ 216 million and $ 154 million, respectively, of revenues related to the SD&A Businesses were recognized within the Civil reportable segment.

Dynetics Acquisition

On January 31, 2020 (the "Acquisition Date"), we completed our acquisition of Dynetics, an industry-leading applied research and national security solutions company.

The addition of Dynetics will accelerate opportunities within our innovation engine that researches and develops new technologies and solutions to address the most challenging needs of our customers.

All of the issued and outstanding shares of common stock of Dynetics were purchased for $ 1.64 billion, net of cash acquired.

The final goodwill recognized of $ 789 million represents intellectual capital and the acquired assembled workforce.

All of the goodwill recognized is deductible for tax purposes.

The following table summarizes the final fair value of intangible assets acquired at the Acquisition Date and the related weighted average amortization period:

The following table summarizes the fair value of intangible assets acquired at the Purchase Date and the related weighted average amortization period:

Weighted average amortization period Fair value

1 unchanged sentence

Programs 12 $ 89

Technology 11 11

Total 12 $ 528

For the nine months ended October 1, 2021 and October 2, 2020, $ 816 million and $ 637 million, respectively, of revenues related to Dynetics were recognized within the Defense Solutions reportable segment.

LEIDOS HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Acquisition and Integration Costs

The following expenses were incurred related to the acquisitions of Dynetics, the SD&A Businesses, 1901 Group and Gibbs & Cox:

Three Months Ended Nine Months Ended

2021 October 2,

2020 October 1,

2021 October 2,

(in millions)

Acquisition costs $ — $ — $ 4 $ 23

Integration costs 5 4 14 7

Total acquisition and integration costs $ 5 $ 4 $ 18 $ 30

These acquisition and integration costs are recorded within Corporate and presented in "Acquisition, integration and restructuring costs" on the condensed consolidated statements of income.

For the three months ended April 1, 2022, $ 27 million of revenues related to the Gibbs & Cox acquisition were recognized within the Defense Solutions reportable segmen t.

On September 21, 2021, we completed an immaterial strategic business acquisition for preliminary purchase consideration of approximately $ 36 million.

In connection with the transaction, we recognized an $ 8 million program intangible asset and preliminary goodwill of $ 25 million.

Aviation & Missile Solutions LLC ("AMS") Divestiture

On November 22, 2021, we signed a definitive agreement within our Defense Solutions segment to dispose of its AMS business in order to focus on leading-edge and technologically advanced services, solutions and products.

The net sales price is $ 15 million, and the divestiture was completed on April 29, 2022.

The following table presents changes in the carrying amount of goodwill by reportable segment:

2 unchanged sentences

Goodwill at January 1, 2021 $ 3,300 $ 2,047 $ 966 $ 6,313

Goodwill re-allocation 429 ( 429 ) — —

Acquisitions of businesses 425 5 — 430

Foreign currency translation adjustments 44 — — 44

Goodwill at January 1, 2021 3,300 2,047 966 6,313

Acquisitions of businesses 334 5 — 339

Divestiture of a business ( 1 ) — — ( 1 )

Goodwill re-allocation ( 17 ) 17 — —

Foreign currency translation adjustments ( 26 ) 28 — 2

Goodwill at October 1, 2021

Goodwill at December 31, 2021 $ 3,681 $ 2,097 $ 966 $ 6,744

Acquisition of a business 1 — — 1

Divestiture of a business ( 4 ) — — ( 4 )

Foreign currency translation adjustments 8 ( 7 ) — 1

Goodwill at April 1, 2022

$ 3,686 $ 2,090 $ 966 $ 6,742

There were no goodwill impairments during the nine months ended October 1, 2021 and October 2, 2020.

As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021, the estimated fair value of the Security Products reporting unit within the Civil reportable segment exceeded the carrying value by approximately 6 % as of the most recent assessment date.

In the event that there are significant unfavorable changes to the forecasted cash flows of the reporting unit (including if the impact of COVID-19 on passenger travel levels is more prolonged or severe than what is incorporated into our forecast), terminal growth rates or the cost of capital used in the fair value estimates, we may be required to record a material impairment of goodwill at a future date.

During the three months ended April 1, 2022, and April 2, 2021, there were no impairments to goodwill.

LEIDOS HOLDINGS, INC.

2 unchanged sentences

Intangible assets, net consisted of the following:

October 1, 2021 January 1, 2021

April 1, 2022 December 31, 2021

Gross carrying value Accumulated amortization Net carrying value Gross carrying value Accumulated amortization Net carrying value

15 unchanged sentences

Total intangible assets $ 2,125 $ ( 1,016 ) $ 1,109 $ 2,184 $ ( 1,007 ) $ 1,177

Amortization expense was $ 63 million and $ 173 million for the three and nine months ended October 1, 2021, respectively, and $ 60 million and $ 154 million for the three and nine months ended October 2, 2020, respectively.

Amortization expense was $ 59 million and $ 55 million for the three months ended April 1, 2022 and April 2, 2021, respectively.

Program intangible assets are amortized over their respective estimated useful lives in proportion to the pattern of economic benefit based on expected future discounted cash flows.

1 unchanged sentence

Customer relationships and software and technology intangible assets are amortized either on a straight-line basis over their estimated useful lives or over their respective estimated useful lives in proportion to the pattern of economic benefit based on expected future discounted cash flows, as deemed appropriate.

The estimated annual amortization expense as of October 1, 2021, was as follows:

The estimated annual amortization expense as of April 1, 2022, was as follows:

Fiscal year ending

10 unchanged sentences

The financial instruments measured at fair value on a recurring basis primarily consisted of the following:

October 1, 2021 January 1, 2021

April 1, 2022 December 31, 2021

Carrying value Fair value Carrying value Fair value

2 unchanged sentences

Derivatives $ 13 $ 13 $ 53 $ 53

As of October 1, 2021, our derivatives primarily consisted of the cash flow interest rate swaps on $ 1.1 billion of the variable rate senior unsecured term loan (see "Note 5–Derivative Instruments").

As of April 1, 2022, our derivatives primarily consisted of the cash flow interest rate swaps on $ 1.0 billion of the variable rate senior unsecured term loan (see "Note 5–Derivative Instruments").

The fair value of the cash flow interest rate swaps is determined based on observed values for underlying interest rates on the LIBOR yield curve and the underlying interest rate (Level 2 inputs).

The carrying amounts of our financial instruments, other than derivatives, which include cash equivalents, accounts receivable, accounts payable and accrued expenses, are reasonable estimates of their related fair values.

The carrying value of our notes receivable of $ 15 million as of October 1, 2021, and January 1, 2021, approximates fair value as the stated interest rates within the agreements are consistent with current market rates used in notes with similar terms in the market (Level 2 inputs).

As of October 1, 2021, and January 1, 2021, the fair value of debt was $ 5.5 billion and $ 5.2 billion, respectively, and the carrying amount was $ 5.1 billion and $ 4.7 billion, respectively (see "Note 6–Debt").

As of April 1, 2022, and December 31, 2021, the fair value of debt was $ 5.1 billion and $ 5.4 billion, respectively, and the carrying amount was $ 5.1 billion and $ 5.1 billion, respectively (see "Note 6–Debt").

The fair value of long-term debt is determined based on current interest rates available for debt with terms and maturities similar to our existing debt arrangements (Level 2 inputs).

On May 7, 2021, January 14, 2021, May 4, 2020 and January 31, 2020, non-financial instruments measured at fair value on a non-recurring basis were recorded in connection with the acquisitions of Gibbs & Cox, 1901 Group, SD&A Businesses and Dynetics, respectively (see "Note 3–Acquisitions, Goodwill and Intangible Assets").

On May 7, 2021, and January 14, 2021, non-financial instruments measured at fair value on a non-recurring basis were recorded in connection with the acquisitions of Gibbs & Cox and 1901 Group.

The fair values of the assets acquired and liabilities assumed were determined using Level 3 inputs.

As of October 1, 2021, we did not have any assets or liabilities measured at fair value on a non-recurring basis.

As of April 1, 2022, we did not have any assets or liabilities measured at fair value on a non-recurring basis.

LEIDOS HOLDINGS, INC.

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Liability derivatives

Balance sheet line item October 1,

2021 January 1,

Balance sheet line item April 1,

2022 December 31,

(in millions)

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The effect of the cash flow hedges on other comprehensive income (loss) and earnings for the periods presented was as follows:

Three Months Ended Nine Months Ended

2021 October 2,

2020 October 1,

2021 October 2,

Three Months Ended

2022 April 2,

(in millions)

Total interest expense, net presented in the condensed consolidated statements of income in which the effects of cash flow hedges are recorded

$ 47 $ 44 $ 138 $ 133

Amount recognized in other comprehensive income (loss) $ — $ — $ 9 $ ( 62 )

Amount recognized in other comprehensive income $ 32 $ 12

Amount reclassified from accumulated other comprehensive income (loss) to interest expense, net $ 6 $ 5

We expect to reclassify net losses of $ 23 million from accumulated other comprehensive loss into earnings during the next 12 months.

We expect to reclassify net losses of $ 15 million from accumulated other comprehensive income into earnings during the next 12 months.

LEIDOS HOLDINGS, INC.

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Our debt consisted of the following:

Stated interest rate Effective interest rate October 1,

Stated interest rate Effective interest rate April 1,

(in millions)

Short-term debt:

Commercial paper 0.52 %- 1.13 %

Various $ 75 $ —

Senior unsecured term loans:

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1.59 % 1.69 % 380 380

Total short-term debt $ 455 $ 380

Long-term debt:

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$ 4,569 $ 4,593

(1) The carrying amounts of the senior term loans and notes as of October 1, 2021, and January 1, 2021, include the remaining principal outstanding of $ 5,090 million and $ 4,782 million, respectively, less total unamortized debt discounts and deferred debt issuances costs of $ 45 million and $ 51 million, respectively.

(2) We filed a Registration Statement on Form S-4 with the Securities and Exchange Commission on May 6, 2021, and was declared effective on May 19, 2021.

(1) The carrying amounts of the senior unsecured term loans and notes as of April 1, 2022, and December 31, 2021, include the remaining principal outstanding of $ 5,041 million and $ 5,065 million, respectively, less total unamortized debt discounts and deferred debt issuances costs of $ 41 million and $ 43 million, respectively.

Term Loans and Revolving Credit Facility

We have a Credit Agreement (the "Credit Agreement") with certain financial institutions, which provided for a senior unsecured term loan facility in an aggregate principal amount of $ 1.9 billion (the "Term Loan Facility") and a $ 750 million senior unsecured revolving facility (the "Revolving Facility").

The Credit Facilities will mature in January 2025.

The Revolving Facility permits two additional one-year extensions subject to lender consent.

Borrowings under the Credit Agreement bear interest at a rate determined, at our option, based on either an alternate base rate or a LIBOR rate plus, in each case, an applicable margin that varies depending on our credit rating.

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Based on our current ratings, the applicable margin for LIBOR-denominated borrowings is 1.38 %.

Principal payments are made quarterly on the Term Loan Facility, with the majority of the principal due at maturity.

Interest on the Term Loan Facility for LIBOR-denominated borrowings is payable on a periodic basis, which must be at least quarterly.

The financial covenants in the Credit Agreement require that we maintain, as of the last day of each fiscal quarter, a ratio of adjusted consolidated total debt to consolidated EBITDA of not more than 3.75 to 1.00, subject to two increases to 4.50 to 1.00 following a material acquisition, and a ratio of EBITDA to consolidated interest expense of not less than 3.50 to 1.00.

LEIDOS HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

On May 7, 2021, we entered into a Credit Agreement (the "2021 Credit Agreement") with certain financial institutions, which provided for a senior unsecured term loan facility in an aggregate principal amount of $ 380 million with maturity 364 days after the 2021 Credit Agreement date.

The proceeds were used to fund the acquisition of Gibbs & Cox.

LEIDOS HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Borrowings under the 2021 Credit Agreement bear interest at a rate determined, at our option, based on either an alternate base rate plus 0.13 % or a LIBOR rate plus 1.13 %.

The financial covenants in the 2021 Credit Agreement require that we maintain, as of the last day of each fiscal quarter, a ratio of adjusted consolidated total debt to consolidated EBITDA of not more than 3.75 to 1.00, subject to increases to 4.50 to 1.00 following a material acquisition, and a ratio of EBITDA to consolidated interest expense of not less than 3.50 to 1.00.

The senior unsecured term loans, notes and revolving credit facility are fully and unconditionally guaranteed and contain certain customary restrictive covenants, including among other things, restrictions on our ability to create liens and enter into sale and leaseback transactions under certain circumstances.

We were in compliance with all covenants as of October 1, 2021.

Commercial Paper

On July 12, 2021, we established a commercial paper program in which the Company may issue short-term unsecured commercial paper notes ("Commercial Paper Notes") not to exceed $ 750 million.

We have a commercial paper program in which the Company may issue short-term unsecured commercial paper notes ("Commercial Paper Notes") not to exceed $ 750 million.

The proceeds will be used for general corporate purposes, including working capital, capital expenditures, acquisitions and share repurchases.

The Commercial Paper Notes will be issued in minimum denominations of $ 0.25 million and will have maturities of up to 397 days from the date of issuance.

The Commercial Paper Notes will bear either a stated or floating interest rate, if interest bearing, or will be sold at a discount from the face amount.

As of October 1, 2021, we did not have any Commercial Paper Notes outstanding.

The Commercial Paper Notes will be fully and unconditionally guaranteed by an intercompany guarantee and contains certain customary restrictive covenants.

The Commercial Paper Notes are issued in minimum denominations of $ 0.25 million and have maturities of up to 397 days from the date of issuance.

The Commercial Paper Notes either bear a stated or floating interest rate, if interest bearing, or will be sold at a discount from the face amount.

As of April 1, 2022, we had $ 75 million of Commercial Paper Notes outstanding.

Principal Payments and Debt Issuance Costs

We made principal payments on our long-term debt of $ 27 million and $ 80 million during the three and nine months ended October 1, 2021, respectively, and $ 477 million and $ 705 million during the three and nine months ended October 2, 2020, respectively.

This activity included required principal payments on our term loans of $ 24 million and $ 72 million during the three and nine months ended October 1, 2021, respectively, and $ 24 million and $ 48 million for the three and nine months ended October 2, 2020, respectively.

During the nine months ended October 2, 2020, we made additional payments of $ 3,975 million, related to our refinancing activities.

Additionally, on September 1, 2020, we retired our $ 450 million senior unsecured notes due December 2020.

As of October 1, 2021 and January 1, 2021, there were no borrowings outstanding under the Revolving Facility.

For the nine months ended October 2, 2020, $ 31 million of debt discount and debt issuance costs were written off related to the prior year refinancing activities.

Amortization of debt discount and debt issuance costs was $ 3 million and $ 7 million for the three and nine months ended October 1, 2021, respectively, and $ 4 million and $ 13 million for the three and nine months ended October 2, 2020, respectively.

LEIDOS HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 7–Accumulated Other Comprehensive Loss

Changes in the components of accumulated other comprehensive loss were as follows:

Foreign currency translation adjustments Unrecognized gain (loss) on derivative instruments Pension adjustments Total accumulated other comprehensive loss

We made principal payments on our long-term debt of $ 27 million and $ 26 million during the three months ended April 1, 2022, and April 2, 2021, respectively.

This activity included required principal payments on our term loans of $ 24 million for both the three months ended April 1, 2022, and April 2, 2021.

As of April 1, 2022, and December 31, 2021, there were no borrowings outstanding under the Revolving Facility.

Amortization of debt discount and debt issuance costs was $ 3 million and $ 2 million for the three months ended April 1, 2022, and April 2, 2021, respectively.

The Credit Facilities, the 2021 Credit Agreement, Commercial Paper Notes, senior unsecured term loans and notes are fully and unconditionally guaranteed and contain certain customary restrictive covenants, including among other things, restrictions on our ability to create liens and enter into sale and leaseback transactions under certain circumstances.

We were in compliance with all covenants as of April 1, 2022.

Note 7–Accumulated Other Comprehensive Income (Loss)

Changes in the components of accumulated other comprehensive income (loss) were as follows:

Foreign currency translation adjustments Unrecognized gain (loss) on derivative instruments Pension adjustments Total accumulated other comprehensive income (loss)

(in millions)

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Other comprehensive income (loss) ( 3 ) 18 17 32

Reclassification from accumulated other comprehensive loss

Balance at January 1, 2021 30 ( 70 ) ( 6 ) ( 46 )

( 5 ) ( 8 ) ( 4 ) ( 17 )

Reclassification from accumulated other comprehensive income (loss)

Balance at December 31, 2021 22 ( 41 ) 7 ( 12 )

Other comprehensive income (loss) ( 2 ) 32 1 31

Taxes 4 ( 9 ) — ( 5 )

Reclassification from accumulated other comprehensive loss

Balance at October 1, 2021 $ 18 $ ( 52 ) $ ( 6 ) $ ( 40 )

Reclassification from accumulated other comprehensive income (loss) — 6 — 6

Balance at April 1, 2022 $ 24 $ ( 12 ) $ 8 $ 20

Reclassifications from unrecognized loss on derivative instruments are recorded in "Interest expense, net" in the condensed consolidated statements of income.

LEIDOS HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 8–Earnings Per Share

The following table provides a reconciliation of the weighted average number of shares outstanding used to compute basic and diluted EPS for the periods presented:

Three Months Ended Nine Months Ended

2021 October 2,

2020 October 1,

2021 October 2,

Three Months Ended

2022 April 2,

(in millions)

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Anti-dilutive stock-based awards are excluded from the weighted average number of shares outstanding used to compute diluted EPS.

The total outstanding stock options and vesting stock awards that were anti-dilutive were 1 million for both the three and nine months ended October 1, 2021, and the three and nine months ended October 2, 2020.

During the three and nine months ended October 1, 2021, we made open market repurchases of our common stock for an aggregate purchase price of $ 137 million and $ 237 million, respectively.

All shares repurchased were immediately retired.

The total outstanding stock options and vesting stock awards that were anti-dilutive were 1 million for both the three months ended April 1, 2022, and April 2, 2021.

On February 16, 2022, we entered into an Accelerated Share Repurchase ("ASR") agreement with a financial institution to repurchase shares of our outstanding common stock.

We paid $ 500 million to the financial institution and received an initial delivery of 4.5 million shares at an average price of $ 88.72 per share.

The purchase was recorded to "Additional paid-in capital" in the condensed consolidated balance sheets.

All shares delivered were immediately retired.

The specific number of shares that we will ultimately receive under the ASR agreement will be based on the volume-weighted-average-price during the period February 17, 2022, to May 16, 2022.

Note 9–Sale of Accounts Receivable

We have entered into purchase agreements with a financial institution which provide us the election to sell accounts receivable at a discount.

The receivables sold are typically collectable from our customers within 30 days of the sale date.

During the three months ended April 1, 2022, and April 2, 2021, we sold $ 209 million and $ 465 million, respectively, of accounts receivable under the agreements and received proceeds of $ 209 million and $ 464 million, respectively, which were classified as operating activities in the condensed consolidated statements of cash flows.

These transfers have been recognized as a sale, as the receivables have been legally isolated from Leidos, the financial institution has the right to pledge or exchange the assets received and we do not maintain effective control over the transferred accounts receivable.

Our only continuing involvement with the transferred financial assets is as the collection and servicing agent.

As a result, the accounts receivable balance on the condensed consolidated balance sheets is presented net of the transferred amounts.

No servicing asset or liability was recognized for continued servicing of the sold receivables, as the servicing fee approximates fair value.

The difference between the carrying amount of the receivables sold and the net cash received was recognized as a loss on sale and was recorded within "Selling, general and administrative expenses" on the condensed consolidated statements of income.

Sold receivables activity for the periods presented was as follows:

Three Months Ended

2022 April 2,

(in millions)

Sales of accounts receivable $ 209 $ 465

Cash collections on sold receivables remitted to financial institution ( 209 ) ( 371 )

Outstanding balance sold to financial institution — 94

Cash collected but not yet remitted to financial institution — ( 19 )

Sold receivables due from customers $ — $ 75

LEIDOS HOLDINGS, INC.

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We define our reportable segments based on the way the chief operating decision maker ("CODM"), currently our Chairman and Chief Executive Officer, manages operations for the purposes of allocating resources and assessing performance.

Effective July 3, 2021, certain contracts were reassigned from the Defense Solutions reportable segment to the Civil reportable segment.

Impact on prior year segment results were determined to be immaterial and have not been recast to reflect this change.

The segment information for the periods presented was as follows:

Three Months Ended Nine Months Ended

2021 October 2,

2020 October 1,

2021 October 2,

Three Months Ended

2022 April 2,

(in millions)

5 unchanged sentences

Defense Solutions $ 133 $ 152

Civil 58 54 187 191

Health 118 102

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The income statement performance measures used to evaluate segment performance are revenues and operating income.

As a result, "Interest expense, net," "Other income (expense), net" and "Income tax expense" as reported in the condensed consolidated statements of income are not allocated to our segments.

As a result, "Interest expense, net," "Other expense, net" and "Income tax expense" as reported in the condensed consolidated statements of income are not allocated to our segments.

Government Cost Accounting Standards, indirect costs including depreciation expense are collected in indirect cost pools, which are then collectively allocated to the reportable segments based on a representative causal or beneficial relationship of the costs in the pool to the costs in the base.

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Asset information by segment is not a key measure of performance used by the CODM.

Note 10–Commitments and Contingencies

Legal Proceedings

Class Action Lawsuit

On March 2, 2021, Leidos and certain current officers of Leidos were named as defendants in a putative class action securities lawsuit filed in the U.S.

District Court for the Southern District of New York.

The complaint alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder relating to alleged misstatements or omissions in Leidos' public filings with the SEC and other public statements during the period from May 4, 2020 to February 23, 2021 relating, among other things, to Leidos' acquisition of the SD&A Businesses.

The plaintiff sought to recover from the Company and the individual defendants an unspecified amount of damages at this time.

On July 30, 2021, the District Court appointed a lead plaintiff and lead counsel.

On September 28, 2021, the lead plaintiff voluntarily dismissed the action without prejudice.

LEIDOS HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Other Contingencies

Note 11–Commitments and Contingencies

Contingencies

VirnetX, Inc.

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Adverse findings could have a material effect on our business, financial position, results of operations and cash flows due to our reliance on government contracts.

As of October 1, 2021, indirect cost active audits by the Defense Contract Audit Agency remain open for fiscal 2016 and subsequent fiscal years.

As of April 1, 2022, active indirect cost audits by the Defense Contract Audit Agency remain open for fiscal 2016 and subsequent fiscal years.

Although we have recorded contract revenues based upon an estimate of costs that we believe will be approved upon final audit or review, we cannot predict the outcome of any ongoing or future audits or reviews and adjustments, and if future adjustments exceed estimates, our profitability may be adversely affected.

As of October 1, 2021, we believe we have adequately reserved for potential adjustments from audits or reviews of contract costs.

As of April 1, 2022, we believe we have adequately reserved for potential adjustments from audits or reviews of contract costs.

LEIDOS HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

We have outstanding letters of credit of $ 68 million as of October 1, 2021, principally related to performance guarantees on contracts.

Through its internal processes, the Company discovered, in late 2021, activities by its employees, third party representatives and subcontractors, raising concerns related to a portion of our business that conducts international operations.

The Company is conducting an internal investigation, overseen by an independent committee of the Board of Directors, with the assistance of external legal counsel, to determine whether the identified conduct may have violated the Company’s Code of Conduct and potentially applicable laws, including the U.S.

Foreign Corrupt Practices Act ("FCPA").

The Company has voluntarily self-reported this investigation to the Department of Justice and the Securities and Exchange Commission and is cooperating with both agencies.

Because the investigation is ongoing, the Company cannot anticipate the timing, outcome or possible impact of the investigation, although violations of the FCPA and other applicable laws may result in criminal and civil sanctions, including monetary penalties, and reputational damage.

We have outstanding letters of credit of $ 51 million as of April 1, 2022, principally related to performance guarantees on contracts.

We also have outstanding surety bonds with a notional amount of $ 100 million, principally related to performance and subcontractor payment bonds on contracts.

The value of the surety bonds may vary due to changes in the underlying project status and/or contractual modifications.

As of October 1, 2021, the future expirations of the outstanding letters of credit and surety bonds were as follows:

As of April 1, 2022, the future expirations of the outstanding letters of credit and surety bonds were as follows:

Fiscal year ending

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements