What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-01 compared with 2022-08-02 · 100 added, 84 removed, 159 unchanged (54% of the section changed)

24 unchanged sentences

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 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.

For the three and nine months ended September 30, 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 nine months ended September 30, 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.

5 unchanged sentences

Government Markets

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.

During both of the three and nine months ended September 30, 2022, we generated approximately 87% 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.

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.

Congress continues to work on the 12 appropriations bills to fund the federal government in GFY 2023.

The GFY 2023 began on October 1, 2022;

however, the federal government is currently operating under a continuing resolution (“CR”).

The CR funds the federal government at GFY 2022 levels until December 16, 2022, after that Congress will need to pass the full-year appropriation bills or an additional CR prior to December 16, 2022, in order to prevent a federal government shutdown.

International Markets

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

Sales to customers in international markets represented approximately 8% of total revenues for both of the three and nine months ended September 30, 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 Six Months Ended

2021 Dollar change Percent change July 1,

Three Months Ended Nine Months Ended

September 30,

2022 October 1,

2021 Dollar change Percent change September 30,

2022 October 1,

2021 Dollar change Percent change

12 unchanged sentences

Operating margin 7.8 % 8.8 % 7.7 % 8.6 %

LEIDOS HOLDINGS, INC.

Segment and Corporate Results

Three Months Ended Six Months Ended

Defense Solutions July 1,

2021 Dollar change Percent change July 1,

Three Months Ended Nine Months Ended

Defense Solutions September 30,

2022 October 1,

2021 Dollar change Percent change September 30,

2022 October 1,

2021 Dollar change Percent change

3 unchanged sentences

Operating margin 6.6 % 7.0 % 6.6 % 7.2 %

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.

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 in revenues for the three months ended September 30, 2022, as compared to the three months ended October 1, 2021, was primarily attributable to program wins and a net increase in volumes on certain programs.

The increase was partially offset by the completion of certain contracts, $28 million related to unfavorable exchange rate movements and net write-downs on certain contracts.

The increase in revenues for the nine months ended September 30, 2022, as compared to the nine months ended October 1, 2021, was primarily attributable to program wins, a net increase in volumes on certain programs and a $42 million net increase in revenue related to our acquisitions made in the second and third quarters of the prior year.

The increase was partially offset by the completion of certain contracts, $63 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,

The decrease in operating income for the three months ended September 30, 2022, as compared to the three months ended October 1, 2021, was primarily attributable to net write-downs, the completion of certain contracts and additional general and administrative expenses.

The decrease was partially offset by program wins and a net increase in volumes on certain programs.

The decrease in operating income for the nine months ended September 30, 2022, as compared to the nine months ended October 1, 2021, was primarily attributable to the completion of certain contracts, net write-downs, additional general and administrative expenses and increased amortization.

The decrease was partially offset by program wins and a net increase in volumes on certain programs.

Three Months Ended Nine Months Ended

Civil September 30,

2022 October 1,

2021 Dollar change Percent change September 30,

2022 October 1,

2021 Dollar change Percent change

3 unchanged sentences

Operating margin 9.0 % 7.3 % 6.3 % 7.9 %

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,

The increase in revenues for the three months ended September 30, 2022, as compared to the three months ended October 1, 2021, was primarily attributable to a net increase in program volumes, partially offset by net write-downs on certain contracts and unfavorable exchange rate movements.

The increase in revenues for the nine months ended September 30, 2022, as compared to the nine months ended October 1, 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 unfavorable exchange rate movements and the completion of certain contracts.

The increase in operating income for the three months ended September 30, 2022, as compared to the three months ended October 1, 2021, was primarily due to a net increase in program volumes mainly within our Security Enterprise Solutions reporting unit, partially offset by net write-downs on certain contracts.

The decrease in operating income for the nine months ended September 30, 2022, as compared to the nine months ended October 1, 2021, was primarily due to a $19 million increase in legal fees and settlement costs resulting from an adverse arbitration ruling related to the 2016 acquisition of the Information Systems & Global Solutions business (“IS&GS Business”) from Lockheed Martin, partially offset by a net increase in program volumes.

Operating income for the nine months ended October 1, 2021, included a $26 million benefit from a legal reserve adjustment related to the Mission Support Alliance joint venture.

LEIDOS HOLDINGS, INC.

Three Months Ended Nine Months Ended

Health September 30,

2022 October 1,

2021 Dollar change Percent change September 30,

2022 October 1,

2021 Dollar change Percent change

3 unchanged sentences

Operating margin 13.8 % 19.1 % 16.8 % 17.7 %

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 decrease in revenues for the three months ended September 30, 2022, as compared to the three months ended October 1, 2021, was primarily attributable to the completion of certain contracts, partially offset by a net increase in program volumes.

The increase in revenues for the nine months ended September 30, 2022, as compared to the nine months ended October 1, 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.

LEIDOS HOLDINGS, INC.

Three Months Ended Six Months Ended

Corporate July 1,

2021 Dollar change Percent change July 1,

The decrease in operating income for the three months ended September 30, 2022, as compared to the three months ended October 1, 2021, was primarily attributable to net decrease in the volume of disability exams as the Company worked through a backlog of cases caused by COVID-19 during the three months ended October 1, 2021, and the completion of certain contracts.

The decrease in operating income for the nine months ended September 30, 2022, as compared to the nine months ended October 1, 2021, was primarily due to a net decrease in volumes on higher margin programs and the completion of certain contracts.

The decrease was partially offset by $28 million in recoveries related to stop work orders on certain programs as a result of COVID-19 and an increase in net write-ups on certain programs.

Three Months Ended Nine Months Ended

Corporate September 30,

2022 October 1,

2021 Dollar change Percent change September 30,

2022 October 1,

2021 Dollar change Percent change

1 unchanged sentence

Operating loss $ (26) $ (23) $ (3) 13.0 % $ (81) $ (73) $ (8) 11.0 %

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.

The increase in operating loss for the three and nine months ended September 30, 2022, as compared to the three and nine months ended October 1, 2021, was primarily attributable to an increase in legal costs, partially offset by lower acquisition and integration costs.

Non-Operating Expense, net

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.

Non-operating expense, net for the three months ended September 30, 2022, was $60 million as compared to $45 million for the three months ended October 1, 2021.

The increase was primarily due to a net unrealized loss in our foreign currency forward contract related to the Cobham Special Mission acquisition as a result of unfavorable exchange rate movements and higher interest expenses driven by changes in interest rates.

Non-operating expense, net for the nine months ended September 30, 2022, was $155 million as compared to $137 million for the nine months ended October 1, 2021.

Provision for Income Taxes

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.

For the three months ended September 30, 2022, our effective tax rate was 25.8% compared to 20.0% for the three months ended October 1, 2021.

The increase to the effective tax rate was primarily due to a benefit from foreign operations recognized in the prior year and an increase to state income taxes and an increase in unrecognized tax benefits in the current quarter.

For the nine months ended September 30, 2022, the effective tax rate was 23.2% compared to 21.7% for the nine months ended October 1, 2021.

The increase in the effective tax rate was primarily due to a benefit from foreign operations recognized in the prior year and an increase in unrecognized tax benefits in the current year.

LEIDOS HOLDINGS, INC.

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.

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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.

For the nine months ended September 30, 2022, unrecognized tax benefits increased $95 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.

Bookings and Backlog

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.

We recorded net bookings worth an estimated $4.1 billion and $11.6 billion during the three and nine months ended September 30, 2022, as compared to $4.7 billion and $12.3 billion for the three and nine months ended October 1, 2021.

The estimated value of our total backlog was as follows:

July 1, 2022 July 2, 2021

September 30, 2022 October 1, 2021

Segment Funded Unfunded Total Funded Unfunded Total

4 unchanged sentences

Total $ 7,429 $ 27,599 $ 35,028 $ 7,289 $ 27,403 $ 34,692

The increase in backlog includes $49 million of backlog acquired through business combinations in our Defense Solutions reportable segment.

The increase in backlog as of September 30, 2022, as compared to October 1, 2021, includes $43 million of backlog acquired through business combinations in our Defense Solutions reportable segment.

Backlog represents the estimated amount of future revenues to be recognized under negotiated contracts, both funded and unfunded.

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 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.

Total backlog at September 30, 2022, included a negative impact of $363 million when compared to total backlog at October 1, 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 July 1, 2022, we had $339 million in cash and cash equivalents.

As of September 30, 2022, we had $807 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 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.

As of September 30, 2022, there were no borrowings outstanding under the revolving credit facility.

We had outstanding debt of $5.0 billion and $5.1 billion at September 30, 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 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.

As of September 30, 2022, we did not have any commercial paper notes outstanding.

LEIDOS HOLDINGS, INC.

We made principal payments on our long-term debt of $25 million and $459 million during the three and nine months ended September 30, 2022, respectively, and $27 million and $80 million during the three and nine months ended October 1, 2021, respectively.

This activity included required principal payments on our term loans of $24 million and $452 million during the three and nine months ended September 30, 2022, respectively, and $24 million and $72 million during the three and nine months ended October 1, 2021, respectively.

Our credit facilities, term loan agreement, commercial paper notes, senior unsecured term loans and notes outstanding as of September 30, 2022, contain financial covenants and customary restrictive covenants.

We were in compliance with all covenants as of September 30, 2022.

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.

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").

We paid dividends of $49 million and $149 million during the three and nine months ended September 30, 2022, respectively, and $51 million and $149 million during the three and nine months ended October 1, 2021, respectively.

During the nine months ended September 30, 2022, and October 1, 2021, we sold $209 million and $693 million, respectively, of accounts receivable under accounts receivable purchase agreements and received proceeds of $209 million and $693 million, respectively.

We did not sell any accounts receivable during the three months ended September 30, 2022, and October 1, 2021.

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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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.

During the three and nine months ended September 30, 2022, we made 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 second quarter of fiscal 2022.

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

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

Three Months Ended Six Months Ended

2021 Dollar Change July 1,

2021 Dollar Change

Three Months Ended Nine Months Ended

September 30,

2022 October 1,

2021 September 30,

2022 October 1,

(in millions)

1 unchanged sentence

Net cash used in investing activities (26) (53) (55) (693)

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.

Net cash used in financing activities (217) (209) (730) (44)

Net increase in cash, cash equivalents and restricted cash $ 505 $ 303 $ 96 $ 84

Net cash provided by operating activities increased $183 million and $60 million during the three and nine months ended September 30, 2022, respectively, when compared to the prior year.

The changes were primarily due to favorable working capital changes, partially offset with timing of vendor payments, a $25 million payment in connection with the adverse arbitration ruling related to the 2016 acquisition of the IS&GS Business from Lockheed Martin and $23 million of payments for other legal and tax settlements.

Net cash used in investing activities decreased $27 million for the three months ended September 30, 2022, when compared to the prior year quarter, primarily due to net cash paid used to acquire an immaterial strategic business in the prior year quarter.

Net cash used in investing activities decreased $638 million for the nine months ended September 30, 2022, when compared to the prior year primarily due to $622 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 used in financing activities increased $8 million for the three months ended September 30, 2022, when compared to the prior year quarter primarily due to a $150 million repayment on our commercial paper program in the current quarter, partially offset by $136 million net decrease of open market stock repurchases.

Net cash used in financing activities increased $686 million for the nine months ended September 30, 2022, when compared to the prior year.

The change was primarily due to a $380 million decrease in net cash inflows related to our short-term senior unsecured term loans, an increase of $266 million in stock repurchases primarily attributable to the Accelerated Share Repurchase agreement and a $43 million decrease in net capital contributions received from our non-controlling interest.

Off-Balance Sheet Arrangements

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Leidos Holdings, Inc.

has fully and unconditionally guaranteed the obligations of its subsidiary, Leidos, Inc., under its $500 million notes due May 2023, $500 million notes due May 2025, $750 million due May 2030 and $1,000 million notes due February 2031 (collectively, "the Notes").

has fully and unconditionally guaranteed the obligations of its subsidiary, Leidos, Inc., under its $500 million notes due May 2023, $500 million notes due May 2025, $750 million notes due May 2030 and $1,000 million notes due February 2031 (collectively, "the Notes").

The underlying subsidiaries of Leidos, Inc.

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Pursuant to these registration rights agreements, we filed a Registration Statement on Form S-4 with the Securities and Exchange Commission on May 6, 2021, which was declared effective on May 19, 2021.

The summarized balance sheet for Leidos Holdings, Inc.

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

The summarized balance sheets for Leidos Holdings, Inc.

and Leidos, Inc., net of eliminations were as follows (in millions):

Balance Sheet

September 30,

2022 December 31,

Total current assets $ 2,358 $ 2,229

10 unchanged sentences

Total liabilities and stockholders' equity $ 12,730 $ 12,680

The summarized statements of income for Leidos Holdings, Inc.

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

The summarized statement of income for Leidos Holdings, Inc.

and Leidos, Inc., net of eliminations, for the nine months ended September 30, 2022, was as follows (in millions):

Statements of Income

Three Months Ended Six Months Ended

Revenues, net $ 7,265

12 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 2. Management’s Discussion and Analysis