What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-02 compared with 2022-05-03 · 94 added, 70 removed, 149 unchanged (52% of the section changed)

2 unchanged sentences

The following discussion contains forward-looking statements, including statements regarding our intent, belief or current expectations with respect to, among other things, trends affecting our financial condition or results of operations, backlog, our industry, the impact of our merger and acquisition activity, government budgets and spending, our business contingency plans, interest rates and uncertainties in tax due to new tax legislation or other regulatory developments.

In some cases, forward-looking statements can be identified by words such as “will,” “expect,” “estimate,” “plan,” “potential,” “continue” or similar expressions.

Such statements are not guarantees of future performance and involve risks and uncertainties, including uncertainties relating to the coronavirus pandemic ("COVID-19") and the actions taken by authorities and us to respond, and actual results may differ materially from those in the forward-looking statements as a result of various factors.

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We have acted to protect the health and safety of our employees, comply with workplace health and safety regulations and work with our customers to minimize disruptions.

For the three months ended April 1, 2022, the COVID-19 pandemic did not have a material impact to revenues and operating income.

For the three and six months ended July 1, 2022, the COVID-19 pandemic did not have a material impact to revenues and operating income, other than the receipt of $28 million in recoveries for the three months ended July 1, 2022, within our Health segment related to stop work orders on certain programs.

The full extent of the impact of the COVID-19 pandemic on our operational and financial performance, including our ability to execute on programs in the expected timeframe, will depend on future developments, including the duration and spread of the pandemic and the distribution of vaccines, all of which are uncertain and cannot be predicted.

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We are prepared to comply with the executive order in the event the injunction is lifted.

LEIDOS HOLDINGS, INC.

Business Environment and Trends

Government Markets

During the three months ended April 1, 2022, we generated approximately 87% of our total revenues from contracts with the U.S.

During both of the three and six months ended July 1, 2022, we generated approximately 86%, of our total revenues from contracts with the U.S.

Accordingly, our business performance is affected by the overall level of U.S.

government spending, especially on national security, homeland security and intelligence, and the alignment of our service and product offerings and capabilities with current and future budget priorities of the U.S.

LEIDOS HOLDINGS, INC.

On March 15, 2022, President Biden signed the 2022 Consolidated Appropriations Act into law, funding the federal government through the remainder of GFY 2022.

The Consolidated Appropriations Act includes $782 billion in defense spending and $730 billion in non-defense spending.

The legislation also includes the 2022 Ukraine Supplemental Appropriations Act, which provides $14 billion in humanitarian and military aid for Ukraine.

On March 28, 2022, Congress received the GFY 2023 President’s Budget Request totaling $5.8 trillion.

The request includes $813 billion in defense spending and $769 billion in non-defense spending for GFY 2023 beginning on October 1, 2022.

Congress is currently working on the 12 appropriations bills that will fund the federal government in GFY 2023.

Failure to pass the appropriations bills before October 1, 2022, will require a continuing resolution to avoid a federal government shut down.

The length of any continuing resolution will be determined at a later date.

International Markets

Sales to customers in international markets represented approximately 8% of total revenues for the three months ended April 1, 2022.

Sales to customers in international markets represented approximately 8% of total revenues for both of the three and six months ended July 1, 2022.

Our international customers include foreign governments and their agencies.

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The following table summarizes our condensed consolidated results of operations for the periods presented:

Three Months Ended

2022 April 2,

Three Months Ended Six Months Ended

2021 Dollar change Percent change July 1,

2021 Dollar change Percent change

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Segment and Corporate Results

Three Months Ended

Defense Solutions April 1,

2022 April 2,

Three Months Ended Six Months Ended

Defense Solutions July 1,

2021 Dollar change Percent change July 1,

2021 Dollar change Percent change

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Operating margin 6.8 % 6.8 % 6.6 % 7.3 %

The increase in revenues for the three months ended April 1, 2022, as compared to the three months ended April 2, 2021, was primarily attributable to program wins and $27 million of revenues from the Gibbs & Cox acquisition.

This was partially offset by the completion of contracts, a net decrease in volumes on certain programs, $11 million related to unfavorable exchange rate movements and contracts that were reassigned from the Defense Solutions reportable segment to the Civil reportable segment during the third quarter of fiscal 2021.

The decrease in operating income for the three months ended April 1, 2022, as compared to the three months ended April 2, 2021, was primarily attributable to the completion of certain contracts, net profit write-downs on certain programs, a net decrease in volumes and increased amortization expense.

The decrease was partially offset by program wins.

The increase in revenues for the three months ended July 1, 2022, as compared to the three months ended July 2, 2021, was primarily attributable to program wins, a net increase in volumes on certain programs and a $14 million net increase in revenue related to our acquisitions made in the second and third quarter of the prior year.

The increase was partially offset by the completion of certain contracts, $24 million related to unfavorable exchange rate movements and contracts that were reassigned from Defense Solutions reportable segment to the Civil reportable segment during the third quarter of fiscal 2021.

LEIDOS HOLDINGS, INC.

Three Months Ended

Civil April 1,

2022 April 2,

The increase in revenues for the six months ended July 1, 2022, as compared to the six months ended July 2, 2021, was primarily attributable to a net increase in volumes on certain programs, program wins and a $47 million net increase in revenue related to our acquisitions made in the second and third quarter of the prior year.

The increase was partially offset by the completion of certain contracts, $34 million related to unfavorable exchange rate movements and contracts that were reassigned from Defense Solutions reportable segment to the Civil reportable segment during the third quarter of fiscal 2021.

The increase in operating income for the three months ended July 1, 2022, as compared to the three months ended July 2, 2021, was primarily attributable to program wins and a net increase in volumes on certain programs, partially offset by the completion of certain contracts and unfavorable exchange rate movements.

The decrease in operating income for the six months ended July 1, 2022, as compared to the six months ended July 2, 2021, was primarily attributable to the completion of certain contracts and increased amortization expense, partially offset by program wins and a net increase in volumes on certain programs.

Three Months Ended Six Months Ended

Civil July 1,

2021 Dollar change Percent change July 1,

2021 Dollar change Percent change

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Operating margin 4.4 % 6.9 % 4.9 % 8.2 %

The increase in revenues for the three months ended April 1, 2022, as compared to the three months ended April 2, 2021, was primarily attributable to a net increase in program volumes and contracts that were reassigned from the Defense Solutions reportable segment to the Civil reportable segment during the third quarter of fiscal 2021.

The decrease in operating income for the three months ended April 1, 2022, as compared to the three months ended April 2, 2021, was primarily due to a $26 million benefit in the prior year from an adjustment to legal reserves related to the Mission Support Alliance joint venture.

Three Months Ended

Health April 1,

2022 April 2,

The increase in revenues for the three and six months ended July 1, 2022, as compared to the three and six months ended July 2, 2021, was primarily attributable to a net increase in program volumes, program wins and contracts that were reassigned from Defense Solutions reportable segment to the Civil reportable segment during the third quarter of fiscal 2021.

The increase was partially offset by the completion of certain contracts.

The decrease in operating income for the three and six months ended July 1, 2022, as compared to the three and six months ended July 2, 2021, was primarily due to a $17 million and $19 million increase in legal reserves and fees, respectively, resulting from an adverse arbitration ruling related to the 2016 acquisition of the Information Systems & Global Solutions business (“IS&GS Business”) from Lockheed Martin, during the current year periods.

Operating income for the six months ended July 2, 2021 included a $26 million benefit from a legal reserve adjustment related to the Mission Support Alliance joint venture.

Three Months Ended Six Months Ended

Health July 1,

2021 Dollar change Percent change July 1,

2021 Dollar change Percent change

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Operating margin 18.3 % 16.6 % 18.2 % 16.9 %

The increases in revenue and operating income for the three months ended April 1, 2022, as compared to the three months ended April 2, 2021, was primarily due to a net increase in volumes on higher margin programs and net profit write-ups on certain programs.

Three Months Ended

Corporate April 1,

2022 April 2,

The increase in revenues for the three and six months ended July 1, 2022, as compared to the three and six months ended July 2, 2021, was primarily attributable to a net increase in program volumes and $28 million in recoveries related to stop work orders on certain programs as a result of COVID-19.

The increase was partially offset by the completion of certain contracts.

The increase in operating income for the three months ended July 1, 2022, as compared to the three months ended July 2, 2021, was primarily due to $28 million in recoveries related to stop work orders on certain programs as a result of COVID-19.

The increase was partially offset by the completion of certain contracts.

The increase in operating income for the six months ended July 1, 2022, as compared to the six months ended July 2, 2021, was primarily due to $28 million in recoveries related to stop work orders on certain programs as a result of COVID-19 and an increase in net profit write-ups on certain programs.

The increase was partially offset by the completion of certain contracts.

LEIDOS HOLDINGS, INC.

Three Months Ended Six Months Ended

Corporate July 1,

2021 Dollar change Percent change July 1,

2021 Dollar change Percent change

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Operating loss $ (32) $ (30) $ (2) 6.7 % $ (55) $ (50) $ (5) 10.0 %

The increase in operating loss for the three months ended April 1, 2022, as compared to the three months ended April 2, 2021, was primarily attributable to an increase in legal costs.

The increase in operating loss for the three and six months ended July 1, 2022, as compared to the three and six months ended July 2, 2021, was primarily attributable to an increase in legal costs, offset by lower acquisition and integration costs.

Non-Operating Expense, net

Non-operating expense, net for the three months ended April 1, 2022, was $49 million as compared to $46 million for the three months ended April 2, 2021.

The increase was primarily due to higher interest expenses driven by changes in interest rates and the short-term senior unsecured term loan incurred in the second quarter of fiscal 2021 to fund the acquisition of Gibbs & Cox.

Non-operating expense, net for the three months ended July 1, 2022, was $46 million, and remained unchanged as compared to the three months ended July 2, 2021.

Non-operating expense, net for the six months ended July 1, 2022, was $95 million as compared to $92 million for the six months ended July 2, 2021.

The increase was primarily due to higher interest expenses driven by changes in interest rates, partially offset by exchange rate movements.

Provision for Income Taxes

For the three months ended April 1, 2022, our effective tax rate was 20.3% compared to 21.8% for the three months ended April 2, 2021.

The decrease in the effective tax rate was primarily due to excess tax benefits related to employee stock-based payment transactions and federal research tax credits.

Beginning in 2022, the Tax Cuts and Jobs Act of 2017 eliminated the option to deduct research and development costs for tax purposes and requires taxpayers to capitalize and amortize research costs over five years.

For the three months ended July 1, 2022, our effective tax rate was 23.6% compared to 23.8% for the three months ended July 2, 2021.

The decrease to the effective tax rate was primarily due to lower state taxes in current quarter offset by an increase in unrecognized tax benefits.

For the six months ended July 1, 2022, the effective tax rate was 21.9% compared to 22.7% for the six months ended July 2, 2021.

The decrease in the effective tax rate was primarily due to an increase in benefits related to employee stock-based compensation and an increase in research tax credits.

Beginning in 2022, the Tax Cuts and Jobs Act of 2017 (“TCJA”) eliminated the option to currently deduct certain research and development costs for tax purposes and requires taxpayers to capitalize and amortize research costs over five years.

Although it is possible that Congress may defer, modify, or repeal this provision, potentially with retroactive effect, we have no assurance that Congress will take any action with respect to this provision.

If the 2022 effective date remains in place, based on the law as currently enacted, our initial assessment is that our cash from operations will decrease by approximately $150 million in fiscal 2022 and our net deferred tax assets will increase by a similar amount.

The actual impact on fiscal 2022 cash from operations will depend on the amount of research and development costs we will incur, on whether Congress modifies or repeals this provision and on whether new guidance and interpretive rules are issued by the US Treasury, among other factors.

If the 2022 effective date remains in place, based on the law as currently enacted, our initial assessment is that our income taxes payable and net deferred tax assets will each increase by approximately $150 million in fiscal 2022, and the related impact to cash from operations will be realized in fiscal 2023.

The actual impact on cash from operations will depend on the amount of research and development costs the Company will incur, whether Congress modifies or repeals this provision and whether new guidance and interpretive rules are issued by the U.S.

Treasury, among other factors.

For the six months ended July 1, 2022, unrecognized tax benefits increased $55 million with a corresponding increase to net deferred tax assets as a result of uncertain tax positions arising from certain provisions of the TCJA becoming effective.

LEIDOS HOLDINGS, INC.

Bookings and Backlog

We recorded net bookings worth an estimated $5.4 billion during the three months ended April 1, 2022, as compared to $3.8 billion for the three months ended April 2, 2021.

We recorded net bookings worth an estimated $2.2 billion and $7.6 billion during the three and six months ended July 1, 2022, as compared to $3.8 billion and $7.6 billion for the three and six months ended July 2, 2021.

The estimated value of our total backlog was as follows:

April 1, 2022 April 2, 2021

July 1, 2022 July 2, 2021

Segment Funded Unfunded Total Funded Unfunded Total

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Backlog does 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.

Total backlog at April 1, 2022, included a negative impact of $33 million when compared to total backlog at April 2, 2021, primarily due to the exchange rate movements in the British pound and Australian dollar when compared to the U.S.

Total backlog at July 1, 2022, included a negative impact of $268 million when compared to total backlog at July 2, 2021, primarily due to the exchange rate movements in the British pound and Australian dollar when compared to the U.S.

Backlog estimates are subject to change and may be affected by factors including modifications of contracts and foreign currency movements.

Liquidity and Capital Resources

As of April 1, 2022, we had $297 million in cash and cash equivalents.

As of July 1, 2022, we had $339 million in cash and cash equivalents.

Additionally, we have an unsecured revolving credit facility which can provide up to $750 million in additional borrowing, if required.

As of April 1, 2022, there were no borrowings outstanding under the revolving credit facility.

We had outstanding debt of $5.1 billion at April 1, 2022, and December 31, 2021.

As of July 1, 2022, there were no borrowings outstanding under the revolving credit facility.

We had outstanding debt of $5.2 billion and $5.1 billion at July 1, 2022, and December 31, 2021, respectively.

On May 6, 2022, we entered into a Term Loan Agreement which provided for a senior unsecured term loan facility in an aggregate principal amount of $380 million.

We have a commercial paper program in which we may issue short-term unsecured commercial paper notes not to exceed $750 million and have maturities of up to 397 days from the date of issuance.

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

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.

Our credit facilities, the 2021 credit agreement, commercial paper notes, senior unsecured term loans and notes outstanding as of April 1, 2022, contain financial covenants and customary restrictive covenants.

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

As of July 1, 2022, we had $150 million of commercial paper notes outstanding.

We made principal payments on our long-term debt of $407 million and $434 million during the three and six months ended July 1, 2022, respectively, and $27 million and $53 million during the three and six months ended July 2, 2021, respectively.

This activity included required principal payments on our term loans of $404 million and $428 million during the three and six months ended July 1, 2022, respectively, and $24 million and $48 million during the three and six months ended July 2, 2021, respectively.

Our credit facilities, term loan agreement, commercial paper notes, senior unsecured term loans and notes outstanding as of July 1, 2022, contain financial covenants and customary restrictive covenants.

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

LEIDOS HOLDINGS, INC.

Interest on our Credit Facilities is calculated based on the London Interbank Offered Rate (“LIBOR”).

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In addition, the overall credit market may be disrupted as a result of the replacement of LIBOR or in the anticipation thereof, which could have an adverse impact on our ability to refinance, reprice, or amend our existing indebtedness or incur additional indebtedness on favorable terms.

LEIDOS HOLDINGS, INC.

We paid dividends of $51 million and $50 million during the three months ended April 1, 2022, and April 2, 2021, respectively.

During the three months ended April 1, 2022, we sold $209 million of accounts receivable under accounts receivable purchase agreements and received proceeds of $209 million.

During the three months ended April 2, 2021, we sold $465 million of accounts receivable under accounts receivable purchase agreements and received proceeds of $464 million (see "Note 9–Sale of Accounts Receivable").

We paid dividends of $49 million and $100 million during the three and six months ended July 1, 2022, respectively, and $48 million and $98 million during the three and six months ended July 2, 2021, respectively.

During the six months ended July 1, 2022, we sold $209 million of accounts receivable under accounts receivable purchase agreements and received proceeds of $209 million.

We did not sell any accounts receivable during the three months ended July 1, 2022.

During the three and six months ended July 2, 2021, we sold $228 million and $693 million, respectively, of accounts receivable under accounts receivable purchase agreements and received proceeds of $229 million and $693 million, respectively (see "Note 9–Sale of Accounts Receivable").

Stock repurchases of Leidos common stock may be made on the open market or in privately negotiated transactions with third parties including through accelerated share repurchase agreements.

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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 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.

Beginning in 2022, a provision in the Tax Cuts and Jobs Act of 2017 (“TCJA”) which eliminated the option to deduct research and development costs for tax purposes and requires taxpayers to capitalize and amortize the costs over five years became effective.

Congress may defer, modify or repeal the provision, but the ultimate outcome is uncertain.

During the quarter ended April 1, 2022, we paid $500 million to the financial institution and received an initial delivery of 4.5 million shares.

In May 2022, the financial institution elected to partially settle $125 million of the original $500 million prepayment under the ASR agreement based on the volume-weighted-average-price of $104.32 per share for the period February 17, 2022, to April 29, 2022, which resulted in an additional delivery of 0.1 million shares.

Subsequently, the financial Institution elected to fully settle the remaining $375 million of the original payment under the ASR agreement based upon a volume-weighted-average-price of $104.23 per share for the period February 17, 2022, to May 5, 2022, and delivered an additional 0.2 million shares.

During the third quarter of fiscal 2022, we anticipate making a $25 million payment in connection with the adverse arbitration ruling related to the 2016 acquisition of the IS&GS Business from Lockheed Martin, which occurred during the current quarter.

The uncertainty surrounding the TCJA provision and the potential for COVID-19 to continue to affect the financial markets may impact our liquidity.

If the 2022 effective date of the TCJA research cost capitalization provision remains in place, our initial assessment indicates we will have a negative impact to cash of approximately $150 million in fiscal 2022 and our net deferred tax assets will increase by a similar amount.

If the 2022 effective date of the TCJA research cost capitalization provision remains in place, our initial assessment indicates our income taxes payable and net deferred tax assets will each increase by approximately $150 million in fiscal 2022, and the related negative impact to cash will be realized in fiscal 2023.

We will continue to assess our liquidity needs as the tax legislation and pandemic evolve.

For the next 12 months, we anticipate that we will be able to meet our liquidity needs, including servicing our debt, through cash generated from operations, available cash balances, sales of accounts receivable and, if needed, borrowings from our revolving credit facility and commercial paper program.

LEIDOS HOLDINGS, INC.

Summary of Cash Flows

The following table summarizes cash flow information for the periods presented:

Three Months Ended

2022 April 2,

Three Months Ended Six Months Ended

2021 Dollar Change July 1,

2021 Dollar Change

(in millions)

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Net cash used in investing activities (8) (396) 388 (29) (640) 611

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

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

Net cash provided by operating activities decreased $146 million for the three months ended April 1, 2022, when compared to the prior year quarter.

The decrease was primarily due to lower sale of accounts receivable and timing of customer and vendor payments in the current quarter as compared to the prior year quarter.

Net cash used in investing activities decreased $223 million for the three months ended April 1, 2022, when compared to the prior year quarter, primarily due to $214 million of net cash paid related to the acquisition of 1901 Group during the prior year quarter and proceeds received from the sale of Aviation & Missile Solutions LLC in the current quarter (see "Note 3–Acquisitions, Divestitures, Goodwill and Intangible Assets").

Net cash used in financing activities increased $371 million for the three months ended April 1, 2022, when compared to the prior year quarter.

The change was primarily due to the Accelerated Share Repurchase agreement entered into by the Company on February 16, 2022, which resulted in an increase of $403 million in stock repurchases during the current quarter and $38 million in capital contributions received from our non-controlling interest in the prior year quarter, partially offset by $75 million of net proceeds from our commercial paper program in the current quarter.

LEIDOS HOLDINGS, INC.

Net cash provided by (used in) financing activities 6 313 (307) (513) 165 (678)

Net increase (decrease) in cash, cash equivalents and restricted cash $ 38 $ (66) $ 104 $ (409) $ (219) $ (190)

Net cash provided by operating activities increased during the three months ended July 1, 2022, when compared to the prior year quarter.

The change was primarily due to favorable timing of customer payments partially offset by less favorable timing of working capital changes.

Net cash provided by operating activities decreased for the six months ended July 1, 2022, when compared to the prior year primarily due to unfavorable timing of customer payments, higher tax and interest payments of $22 million and less favorable timing of working capital changes in the current year.

Net cash used in investing activities decreased for the three months ended July 1, 2022, when compared to the prior year quarter, primarily due to $375 million of net cash paid related to the acquisition of Gibbs & Cox from the prior year quarter.

Net cash used in investing activities decreased for the six months ended July 1, 2022, when compared to the prior year primarily due to $593 million of net cash paid related to our business acquisitions in the prior year and $15 million of proceeds received from the sale of Aviation & Missile Solutions LLC in the current year.

Net cash provided by financing activities decreased for the three months ended July 1, 2022, when compared to the prior year quarter primarily due to a $380 million decrease in net cash inflows related to our short-term senior unsecured term loans, partially offset by $75 million net proceeds received from our commercial paper program in the current quarter.

Net cash used in financing activities increased for the six months ended July 1, 2022, when compared to the prior year.

The change was primarily due to an increase of $402 million in stock repurchases primarily attributable to the Accelerated Share Repurchase agreement, a $380 million decrease in net cash inflows related to our short-term senior unsecured term loans and a $42 million decrease in net capital contributions received from our non-controlling interest, partially offset by $150 million in net proceeds received from our commercial paper program.

Off-Balance Sheet Arrangements

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We also have letters of credit outstanding principally related to performance guarantees on contracts and surety bonds outstanding principally related to performance and subcontractor payment bonds as described in "Note 12–Commitments and Contingencies" of the notes to the condensed consolidated financial statements contained within this Quarterly Report on Form 10-Q.

These arrangements have not had, and management does not believe it is likely that they will in the future have, a material effect on our liquidity, capital resources, operations or financial condition.

These arrangements have not had, and management does not believe it is likely that they will in the future have, a material effect on our liquidity, capital expenditures or capital resources, operations or financial condition.

LEIDOS HOLDINGS, INC.

Guarantor and Issuer of Guaranteed Securities

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The summarized balance sheet for Leidos Holdings, Inc.

and Leidos, Inc., net of eliminations, as of April 1, 2022, was as follows (in millions):

and Leidos, Inc., net of eliminations, as of July 1, 2022, was as follows (in millions):

Balance Sheet

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The summarized statements of income for Leidos Holdings, Inc.

and Leidos, Inc., net of eliminations, for the three months ended April 1, 2022, were as follows (in millions):

and Leidos, Inc., net of eliminations, for the three and six months ended July 1, 2022, were as follows (in millions):

Statements of Income

Three Months Ended Six Months Ended

Revenues, net $ 2,402 $ 4,776

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For a discussion of these items, see "Note 12–Commitments and Contingencies" of the notes to the condensed consolidated financial statements contained within this Quarterly Report on Form 10-Q.

LEIDOS HOLDINGS, INC.

Critical Accounting Policies

There were no material changes to our critical accounting policies, estimates or judgments during the period covered by this report from those discussed in our Annual Report on Form 10-K for the year ended December 31, 2021.

LEIDOS HOLDINGS, INC.

Recently Adopted and Issued Accounting Standards

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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 2. Management’s Discussion and Analysis