What changed in this filing

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Item 1. Business

2023-02-14 compared with 2022-02-15 · 110 added, 102 removed, 300 unchanged (41% of the section changed)

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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.

We bring domain-specific capabilities and innovations to customers in each of these markets by leveraging five technical core competencies:

We bring domain-specific capabilities and innovations to customers in each of these markets by leveraging five technical core capabilities:

digital modernization, cyber operations, mission software systems, integrated systems and mission operations.

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We provide a wide array of scientific, engineering and technical services and solutions across these reportable segments.

Less than 8% of our revenues and tangible long-lived assets are generated by or owned by entities located outside of the United States.

Approximately 8% of our revenues and tangible long-lived assets are generated by or owned by entities located outside of the United States.

Defense Solutions

Defense Solutions provides leading-edge and technologically advanced services, solutions and products to a broad customer base.

Our ever-changing technologies and innovations cover a wide spectrum of markets with primary areas of concentration in digital transformation, Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance ("C4ISR") technologies and services, transformative software, analytics, intelligence analysis, mission support and logistics services, weapons systems and human space exploration.

Our ever-changing technologies and innovations cover a wide spectrum of markets with primary areas of concentration in digital modernization, mission systems and integration, Command, Control, Computers, Communications, Intelligence, Surveillance and Reconnaissance ("C4ISR") technologies and services, maritime solutions, transformative software, analytics, intelligence analysis, mission support and logistics services, weapons systems and space systems and solutions.

We are dedicated to delivering cost-effective solutions backed by innovation-generating research and development to meet the evolving missions of our customers.

We provide a diverse portfolio of national security solutions and systems for air, land, sea, space and cyberspace for the U.S.

Intelligence Community, the DoD, the National Aeronautics and Space Administration ("NASA"), Defense Information Systems Agency ("DISA"), military services, government agencies of U.S.

Intelligence Community, the DoD, the Space Development Agency, the National Aeronautics and Space Administration ("NASA"), Defense Information Systems Agency ("DISA"), military services, government agencies of U.S.

allies abroad and other federal and commercial customers in the national security industry.

We are heavily engaged in the top defense Research Development Test and Evaluation priorities that are driven by critical evolving threat-driven needs.

Our solutions deliver innovative technology, large-scale systems, command and control platforms, data analytics, logistics and cybersecurity solutions, as well as intelligence analysis and operations support to critical missions around the world.

Defense Solutions represented 58% of total revenues for fiscal 2021, 60% of total revenues for the fiscal year ended January 1, 2021 ("fiscal 2020") and 57% of total revenues for the fiscal year ended January 3, 2020 ("fiscal 2019").

Defense Solutions represented 57% of total revenues for fiscal 2022, 58% of total revenues for the fiscal year ended December 31, 2021 ("fiscal 2021") and 60% of total revenues for the fiscal year ended January 1, 2021 ("fiscal 2020").

Leidos Holdings, Inc.

Annual Report - 3

• Digital Transformation – As an industry leader in enterprise IT, we provide extensive worldwide digital support operations for our nation's largest and most critical infrastructure.

• Digital Modernization – As an industry leader in cyber and enterprise IT, we provide extensive worldwide digital support for our nation's largest and most critical infrastructure.

We design, develop, implement and maintain IT environments to provide stability and flexibility to mission needs.

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Intelligence Community, DoD and military services.

Our market concentration is on airborne and ground intelligence, surveillance and reconnaissance ("ISR"), maritime systems, electronic warfare systems, distributed sensor systems, autonomous systems, sensors and Command and Control ("C2").

We provide multi-spectral, airborne, ground and maritime ISR collection and processing systems, advanced sensor design, C2 solutions and training systems.

We provide multi-spectral, airborne, ground, maritime and space-based ISR collection, algorithm development and processing systems, advanced sensor design, C2 solutions and training systems.

We also provide laser and radio frequency-based communications systems for airborne, ground, naval and space platforms.

We link our high-end solutions to other key services demanded by our customers.

In the air, we support a fleet of over 100 government and Leidos-owned fixed wing, rotary wing and unmanned aircraft.

On the ground, we provide mission-critical Command, Control and ISR and support through innovative solutions, essential services and enriched data management tools facilitating critical decision making.

On and under the sea, we continue to enhance our surface and subsurface autonomous and unmanned technologies to help make maritime operations safer and more efficient for government and industry by providing leading sensor systems, signal processing, communications hardware and software to support these vital missions.

In the air, we support a fleet of government and Leidos-owned fixed wing, rotary wing and unmanned aircraft.

We apply an open architecture approach to digitally connect the joint force across air, land, sea, cyber and space domains in support of the DoD’s JADC2 imperative and support through innovative solutions, essential services and enriched data management tools facilitating critical decision making.

• Maritime Solutions – On and under the sea, we offer a wide range of capabilities.

We continue to enhance our surface and subsurface autonomous and unmanned technologies to help make maritime operations safer and more efficient for government and industry by providing leading sensor systems, signal processing, communications hardware and software to support these vital missions.

In space we provide sensor, algorithm development and integrated payload capabilities to identify and track threats and cue defensive systems.

We have developed and delivered full integrated small satellite systems.

We are among the market leaders in submarine collection technologies and anti-submarine warfare system installation and maintenance and are expanding our capabilities in these areas to meet market demand for this growing threat.

We also provide prototyping and research and development support services to a wide variety of DoD customers from concept analysis to classified manufacturing.

Our Gibbs & Cox subsidiary is the largest independent naval architecture and marine engineering firm by headcount in the United States.

Our naval architecture services span the entire ship’s lifetime, from early-stage concept designs through detailed design, shipyard construction support, full lifecycle and sustainment support, ship alterations, service life extensions, and disposal.

Our Marine Engineering involves a wide range of activities, beginning with concept and feasibility design and continues through detailed design, construction support, life-cycle support and into ship-alt design for service-life extensions.

• Transformative Software, Analytics – We offer extensive software development capabilities for C2, intelligence and information systems and deliver mission and enterprise-level solutions to the U.S.

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and key allies, and we provide enterprise solutions, including large-scale, end-to-end supply chain optimization and modernization.

We offer reverse engineering, classified manufacturing and design, and threat exploitation services to a wide breadth of Intelligence Community customers.

Leidos Holdings, Inc.

Annual Report - 4

• Weapons Systems – We offer tactical weapons components and systems for surface-launched missiles, cruise missiles, air-to-air, air-to-ground and anti-ship missiles and guided munitions and rockets across the DoD.

We also deliver offensive boost-glide, launcher and air-breathing systems and hypersonic defense systems.

We have capabilities in integrated force protection in both directed energy (such as high-energy lasers and microwave systems) and area defense (such as counter-unmanned aviation systems, radar systems and kinetic weapon launchers).

We also deliver offensive boost-glide, launcher and air-breathing systems, thermal protection systems and hypersonic defense systems.

In addition, we provide cyber-physical systems in the development of offensive and defensive cyber command and control, toolkits and exploits, as well as offensive cyber operations.

We also support autonomous systems in the areas of unmanned aerial systems, surface ships, undersea vehicles and ground vehicles as well as autonomy software and hardware for autonomous vehicles and platforms.

Leidos Holdings, Inc.

Annual Report - 4

• Human Space Exploration – We provide integrated design, manufacturing, integration of human-rated and exploration spacecraft for NASA and commercial customers.

We have the capability to design and manufacture for satellite propulsion, structures and avionics and key launch vehicle subsystems such as avionics/mission computing, guidance, navigation and control, boosters and structures.

Our unique autonomy algorithms provide decision support for the heavily-burdened warfighter and support coordinated man-autonomous machine operations.

• Space Systems and Solutions – We provide integrated design, manufacturing, integration of human-rated and exploration spacecraft for NASA and commercial customers.

We have the capability to design and manufacture space systems and key launch vehicle subsystems such as avionics/mission computing, guidance, navigation and control, boosters and structures.

We provide expertise in the design, manufacturing, and integration of satellite propulsion, structures, and space-based EO/IR, multi/hyperspectral, EW/SIGINT and communications payloads.

Our Civil business is focused on modernizing infrastructure, systems and security for government and commercial customers both domestically and internationally.

By applying leading science, innovative technologies and business acumen, our talented employees help customers achieve their missions and take on the connected world with data-driven insights, improved efficiencies and technological advantages in the areas of transportation solutions, security detection and automation, digital transformation services and environment, energy and infrastructure.

By applying leading science, innovative technologies and business acumen, our talented employees help customers achieve their missions and take on the connected world with data-driven insights, improved efficiencies and technological advantages in the areas of digital modernization, energy infrastructure, integrated missions, transportation applications and security detection.

Civil represented 24% of total revenues for fiscal 2022, 23% of total revenues for fiscal 2021 and 24% of total revenues for fiscal 2020.

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We provide air traffic control systems that help manage the world's most complex airspace.

We deliver many of the FAA's key automation systems and services, including the En Route Automation Modernization ("ERAM"), Advanced Technology Oceanic Procedures ("ATOP"), Time Based Flow Management, Terminal Flight Data Management, Enterprise-Information Display System, Geo-7 and Future Flight Services.

Leidos recently received 10+ year extensions to the ERAM and ATOP contracts for continued delivery of the evolving National Airspace System needs.

We deliver many of the FAA's key automation systems and services, including the En Route Automation Modernization ("ERAM"), Advanced Technologies and Oceanic Procedures ("ATOP"), Time Based Flow Management, Terminal Flight Data Manager, Enterprise-Information Display System, Geo-7 and Future Flight Services.

Leidos received 10+ year extensions to the ERAM and ATOP contracts for continued delivery of the evolving National Airspace System needs.

In addition, under the Mode S Beacon Replacement Systems contract, Leidos is supporting the replacement of the FAA's Mode S Beacon Systems, which are secondary surveillance radar capable of providing surveillance and specific aircraft information necessary to support Air Traffic Control automation in all traffic environments.

We also provide key air traffic control systems around the world, including New Zealand and South Korea.

• Security Detection and Automation – Our comprehensive suite of fully-integrated security detection and automation solutions help increase security for aviation, ports and borders and critical infrastructure customers around the world.

With more than 24,000 products deployed across over 120 countries, this business has the most widespread global footprint within the Civil portfolio.

Leveraging this portfolio, our core technical strengths and robust research and development initiatives, we are positioned to address emerging and evolving threats through rapid development of innovative solutions for our global customers.

We are also a leader in aviation screening equipment, facilitating secure and efficient passenger movement through fully-integrated solutions in airports worldwide.

Our aviation solutions include best-in-class checkpoint computed tomography, people scanners, explosive trace detectors and checked baggage screening.

For ports and borders worldwide, Leidos is helping safeguard the flow of regulated commerce through innovations in screening technologies, common interfaces and artificial intelligence and machine learning to effectively detect and mitigate threats across all trade elements, including cargo, vehicles and people.

We are the leading supplier of mobile non-intrusive inspection systems to U.S.

• Security Enterprise Solutions ("SES") – Leidos is an industry leader of fully-integrated security detection solutions, making security screening and checkpoints safer for aviation, ports and borders, and critical infrastructure customers around the world.

With more than 24,000 products deployed across over 120 countries, the SES business has the most widespread global footprint within the Civil Group portfolio.

We are a leader in aviation screening equipment, computed tomography carry-on baggage scanners, people scanners and explosive trace detectors, facilitating secure and efficient passenger movement in airports worldwide.

We also have cutting-edge screening technologies for checked baggage and cargo.

Leidos is the leading supplier of mobile non-intrusive inspection systems to U.S.

Customs and Border Protection ("CBP").

Leidos implemented the CBP “Port of the Future” pilot at Brownsville, Texas border crossing aimed at achieving CPB cargo and privately-owned vehicle border screening goals.

In addition, we are transforming security detection beyond ports of entry to deliver fully-integrated and frictionless security solutions for public venues and critical infrastructure.

• Digital Transformation – We deliver secure, user-centric IT solutions in cloud computing, mobility, application modernization, DevOps, data center and network modernization, asset management, help desk operations and digital workplace enablement.

We help our customers achieve their missions and business goals by delivering purpose-built solutions, cybersecurity as a standard, efficient project delivery and end-user satisfaction.

Leidos is modernizing enterprise IT in classified and unclassified environments, including programs with the FAA, NASA, IRS and the Department of Justice.

For CBP, and other global customers, we help to safeguard the flow of travel and trade through solutions that effectively detect and mitigate threats across all trade elements, including cargo, vehicles and people.

Leidos is also transforming security detection beyond aviation and ports of entry to help government agencies and the private sector secure public venues and critical infrastructures.

Leidos Holdings, Inc.

Annual Report - 5

We help our customers achieve their missions and business goals by delivering purpose-built solutions, cybersecurity as a standard, efficient project delivery and end-user satisfaction.

We accelerate enterprise transformation using customizable roadmaps and repeatable processes, enabling customers to effectively use their resources and advance their objectives.

Using our cyber expertise, we continually enhance our techniques and processes to build systems that operate resiliently in the face of evolving cyber threats.

Leidos is modernizing enterprise IT in classified and unclassified environments, including programs with the FAA, NASA, Department of Justice, IRS, U.S.

MINT, Department of Commerce, FTC, and HUD.

• Climate, Energy and Environment – We are trusted by government agencies and commercial customers with substantial environmental and sustainability driven-missions.

Our reputation across environmental management, nuclear security, energy efficiency, infrastructure management, mission support and IT modernization provides the applicable expertise needed to transform operations while modernizing aging infrastructure and maintaining environmental stewardship.

We support the critical missions of the Department of Energy ("DoE"), National Nuclear Security Administration, National Science Foundation, utilities, energy investors and developers and energy efficiency administrators.

Our reputation across climate science, environmental management and operations, nuclear security, power grid engineering, energy efficiency, infrastructure management, mission support and IT modernization provides the applicable expertise needed to transform operations while modernizing aging infrastructure and maintaining environmental stewardship.

At the DoE Hanford site, we provide site-wide infrastructure management and operation including oversight of land and logistics, public works, information technology, fleet transportation, environmental sustainability, and compliance, first responder services and future project planning.

At the National Energy Technology Laboratory, we actively perform and provide support for fundamental and applied research efforts, including providing product and logistical support comprising of strategic business development, technology transfer and agreements and education and outreach support for the effective and efficient conduct of research.

In addition, we help investor-owned utilities modernize power delivery systems, implement energy management strategies, transform digital infrastructure and gain operational efficiencies to meet evolving energy needs.

At the National Energy Technology Laboratory, we actively conduct and support fundamental and applied research efforts, including providing product and logistical support comprising strategic business development, technology transfer and agreements and education and outreach support for the effective and efficient execution of research programs.

In addition, we help investor-owned utilities and industrial clients modernize power delivery systems for improved reliability, implement energy management strategies, support vehicle electrification, transform digital infrastructure and gain operational efficiencies to meet evolving energy needs and climate change goals.

Our Health business focuses on delivering effective and affordable solutions to federal and commercial customers that are responsible for the health and well-being of people worldwide, including service members and veterans.

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The capabilities we provide predominantly fall in four major areas of activity:

health information management services, managed health services, digital transformation and life sciences research and development.

health information management services, managed health services, digital modernization and life sciences research and development.

Health represented 19% of total revenues for fiscal 2022, 19% of total revenues for fiscal 2021 and 16% of total revenues for 2020.

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Our managed health services activities leverage our IT and mission enablement capabilities, which underpin solutions we offer to our customers across all of our served markets.

• Digital Transformation – We manage the entire lifecycle of the IT journey for our customers.

Leidos Holdings, Inc.

Annual Report - 6

• Digital Modernization – We manage the entire lifecycle of the IT journey for our customers.

Our expertise includes IT strategic planning, outsourcing and management of large-scale data centers, agile software development and system transformation, cloud migration and application modernization, digitization and big data management and advanced analytics.

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Leidos helps transform our customers' IT environments in support of their most critical missions, accomplished in a highly secure manner by leveraging our cybersecurity domain expertise and our Leidos rapid application development software platform.

Leidos Holdings, Inc.

Annual Report - 6

• Life Sciences Research & Development – We provide life science research and development support to the NIH, Center for Disease Control, Army Medical Research community and commercial biotech companies.

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Acquisitions and Divestitures

During fiscal 2022, we completed the acquisition of Cobham Aviation Services Australia’s Special Mission business.

During fiscal 2021, we completed the acquisitions of Gibbs & Cox, 1901 Group, LLC, and an immaterial strategic business acquisition.

During fiscal 2020, we completed the acquisitions of L3Harris Technologies' ("L3Harris") security detection and automation businesses and Dynetics, Inc.

Additionally, during fiscal 2019, we completed the acquisition of acquired IMX Medical Management Services and its affiliated businesses.

See "Note 5—Acquisitions and Divestitures" in Part II of this Annual Report on Form 10-K for further information.

During fiscal 2021, we signed a definitive agreement to dispose of Aviation & Missile Solutions LLC within our Defense Solutions segment.

During fiscal 2019, we divested of our commercial cybersecurity and health staff augmentation businesses.

During fiscal 2022, we completed the disposition of Aviation & Missile Solutions LLC within our Defense Solutions segment.

For further information, see "Note 5—Acquisitions and Divestitures" in Part II of this Annual Report on Form 10-K.

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Our contracts may be with the highest level of these agencies or with the subsidiary agencies of these customers.

Leidos Holdings, Inc.

Annual Report - 7

Human Capital

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security clearances and approximately 19% of our employees are military veterans.

Leidos Holdings, Inc.

Annual Report - 7

As of December 30, 2022, our workforce consisted of the following:

Gender of global employees Male (1)

Global workforce 66 % 34 %

Gender of global employees (1)

Undisclosed 1 %

(1) Based on employees who self-identify.

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Greater than 50 years 38 %

Ethnicity of US employees (1)

Ethnicity of U.S.

employees (1)

Asian/Indian 10 %

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(1) Based on employees who self-identify.

Inclusion and Diversity

Our inclusion and diversity strategy and approach focuses on extensive education and best practices to enable leader accountability, improve enterprise representation and evolve an inclusive culture.

To further incorporate inclusion in all areas of our business processes and practices, all leaders and employees are required to take inclusion training annually to recognize challenges and mitigate barriers to inclusion in the workplace.

Our employees are encouraged to create and join multiple employee resource groups (“ERGs”) where they can continue to develop cultural competence across various categories of diversity, enhance their personal networks, develop leadership skills, and actively contribute to making Leidos a great place to work.

In fiscal 2020, we launched our inaugural Enterprise Inclusion Council to advise on the evolution of our inclusion and diversity strategy and help leverage best practices across the company.

The Council is chaired by two senior executives, a board member who serves as a senior advisor and volunteers from across the business lines and functions.

Our Executive Mentoring Program is a year-long cohort designed to engage, develop and retain high-potential employees, most of which are female and/or ethnically diverse participants.

Our executives are each assigned to mentor at least one employee nominated through the program to provide advice and guidance on development and preparation for advancement opportunities.

Culture and Values

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These values provide a roadmap for our behavior and help to guide our decisions in the workplace.

They are a key component of our corporate culture and are integrated into all employees' annual assessments to reinforce expectations.

They are a key component of our corporate culture and are integrated into all employees' annual performance assessments to reinforce expectations.

Our practices are based on our commitment to do the right thing for our customers, our employees and our community.

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Our policies, procedures, training and communications form a comprehensive program that promotes a culture of integrity as a foundation for employee conduct.

For the fourth consecutive year, the Ethisphere Institute named Leidos one of the World's Most Ethical Companies in 2021.

For the fifth consecutive year, the Ethisphere Institute named Leidos one of the World's Most Ethical Companies in 2022.

Leidos Holdings, Inc.

Annual Report - 8

Inclusion and Diversity

Our inclusion and diversity strategy and approach focuses on extensive education and best practices to enable leader accountability, improve enterprise representation and evolve an inclusive culture.

We have an Enterprise Inclusion Council ("the Council") to advise on the evolution of our inclusion and diversity strategy and help leverage best practices across the company.

The Council is comprised of volunteers from across the business functions, ERG leaders, key stakeholders with oversight and guidance from executive leadership and a Board liaison.

Our Executive Mentoring Program is a year-long cohort designed to engage, develop and retain high-potential employees, most of whom are female and/or ethnically diverse.

Our executives are each assigned to mentor at least one employee nominated through the program to support preparation for advancement opportunities.

Diversity in Talent Acquisition

Leidos is committed to promoting equity in our hiring practices, especially when we are seeking to fill senior level positions.

Our recruiting strategy includes building a pipeline with diverse representation of candidates.

Each year we attend and sponsor national conferences and local career fairs that target our key market segments and talent from historically underrepresented groups.

We leverage college campuses, military veteran resources as well as our ERGs to recruit and expand our outreach.

Our college campus outreach engages talent from multiple university sources including the Leidos Strategic University Alliances, Historically Black Colleges and Universities, Hispanic and other minority-serving institutions.

Our military veteran outreach program attracts, retains and supports current veterans, transitioning service members and military spouses.

Career Mobility, Development and Growth

We recognize the value of a high-performing workforce and are committed to providing opportunities for employees by encouraging career growth and movement across the enterprise.

We view career development as a partnership between employees, leaders and the company with a focus on building skills and experiences through internal mobility, experiential learning, specialized programs (such as rotational opportunities), feedback and mentoring.

We provide a variety of career development resources, training and engagement sessions for employees and leaders.

We are dedicated to undertaking efforts to retain and strengthen our highly-skilled workforce.

We recognize the importance of technical upskilling and reskilling to support evolving workforce needs, and we offer programs which allow us to develop and retain internal talent while providing employees with career growth.

We have an Internal Mobility Program with a dedicated team that proactively focuses on the redeployment of our employees.

We teach employees how to use the tools and resources available to them, and gain visibility across the enterprise.

We have a strong focus on our employees’ career, flexibility and well-being.

We call this Leidos Life.

It is about embracing what makes Leidos great and advancing a culture that helps every employee achieve personal and professional success.

Leidos Life is our commitment to make Leidos an even better place to work.

Leidos empowers and challenges employees to continuously seek, share and apply new knowledge, skills and behaviors.

We recognize the value of a high-performing workforce where every member of the team has an opportunity to feel motivated, valued and fulfilled, and have a purposeful and long career at Leidos.

We provide resources, development, and experiential learning to enable employees to grow.

We provide leaders with the knowledge, skills and resources needed to coach employees and enable employees' career development.

We value and develop a highly-skilled future-ready workforce.

We have a strong technical upskilling and reskilling program to develop and retain talent.

We offer formal programs to help employees earn many industry-standard professional and technical certifications.

Additionally, we offer tuition assistance to full-time employees at accredited universities.

Our Internal Mobility Program has a dedicated team that proactively focuses on the redeployment of our employees.

We teach employees how to use the tools and resources available to them and help them gain visibility across the enterprise.

We assist managers and recruiters in identifying internal candidates for their programs.

We also conduct formal employee engagement surveys and run quarterly pulse surveys to drive engagement, inclusion and retention across the organization.

We offer instructor-led, virtual training and self-paced learning and development programs that develop and enhance employee skills.

We offer formal programs to help employees prepare for certifications including the Project Management Institute and International Council on Systems Engineering as well as resources to prepare for over 95 industry-standard professional and technical certifications.

Additionally, we offer tuition assistance to all U.S.

full-time employees at accredited universities.

We invest in our current and future leaders in a number of ways.

We have the Leidos Leadership program, which develops effective and inclusive leaders, where our managers and executive leaders participate in leadership development programs targeted towards the competencies and skills needed at their level.

We conduct formal employee engagement surveys and quarterly pulse surveys to listen to employees and develop customized strategies to drive engagement, inclusion and retention across the organization.

We invest in our current and future leaders in several ways.

We provide a variety of leadership development programs, targeted for each level of leader, and numerous resources for leader development.

Annually, we host a two-day Leadership Summit for approximately 350 of our most senior leaders aligning business strategy and transformation initiatives, alongside emphasizing the core values of our organization.

We have an annual succession planning rhythm and process that identifies and develops high-potential employees at all levels of the organization.

Leidos Holdings, Inc.

Annual Report - 9

Through our ongoing talent planning processes, we identify and develop high-potential employees for future roles.

We create succession plans for all executive-level positions as well as for other roles throughout the organization considered vital to our success.

In addition, we establish development and engagement plans for top talent comprised of formal and informal training, mentoring, coaching and experiential learning opportunities.

Diversity in Talent Acquisition

Leidos is committed to promoting diversity and inclusion in our hiring practices, especially when we are seeking to fill senior level positions.

Our recruiting strategy includes building a pipeline of diverse candidates.

Each year we attend and sponsor a variety of national conferences and local career fairs that specifically engage talent across various dimensions of diversity including ethnically diverse, gender, military status and sexual orientation.

We leverage our college campus and military veteran outreach as well as our ERGs to recruit diverse candidates.

Our military veteran outreach program attracts, retains and supports current veterans, transitioning service members and military spouses.

In addition, we establish development and engagement plans for top talent that may include formal training, mentoring, coaching, sponsorship and experiential learning opportunities.

Health and Workplace Safety

Our primary focus is on the health and safety of our employees.

Our multi-functional working group established in fiscal 2020 continues to monitor and respond to COVID-19.

Our multi-functional working group established in fiscal 2020 to respond the COVID-19 pandemic has transitioned to a Pandemic Preparedness working group that continues to monitor and respond to COVID-19 and other issues that pose a health risk to our employees.

This group closely follows the recommendations of the World Health Organization and the U.S.

Centers for Disease Control and Prevention, as well as national and local authorities in the regions where we perform work for our customers.

We have taken steps to support increased teleworking and working environments.

We have established a COVID-19 Safety Policy to ensure safety protocols are implemented throughout the pandemic.

Employees are also required to review our self-screening checklist to ensure they are not experiencing symptoms prior to coming into a facility.

Leidos Holdings, Inc.

Annual Report - 9

On September 9, 2021, President Biden issued a series of executive orders to combat COVID-19, one of which requires us, as a federal contractor, to have our employees fully vaccinated unless the employee is legally entitled to a religious or medical exemption.

That executive order is currently under a nationwide injunction and its future is uncertain.

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

We believe we are a leader in the field of occupational health and safety (“OH&S”), and we place a strong emphasis on these activities, both internally and on behalf of our customers.

Internally, we emphasize direct management responsibility, corporate policies and directives, OH&S program implementation, employee training and compliance assessments.

Internally, we emphasize direct management responsibility, corporate policies and procedures, OH&S program implementation, employee training and compliance assessments.

Our corporate policies and procedures support compliance with OH&S regulations at work locations.

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Company-funded research and development expenses are included in selling, general and administrative expenses.

Our company-funded research and development expense was $109 million, $73 million and $49 million for fiscal 2021, 2020 and 2019, respectively, which as a percentage of consolidated revenues was 0.8%, 0.6% and 0.4% for fiscal 2021, 2020 and 2019, respectively.

Our company-funded research and development expense was $116 million, $109 million and $73 million for fiscal 2022, 2021 and 2020, respectively, which as a percentage of consolidated revenues was 0.8% for both fiscal 2022 and 2021 and 0.6% for fiscal 2020.

We charge expenses for research and development activities performed under customer contracts directly to cost of revenues for those contracts.

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In the case of some subcontracts that we perform, the prime contractor generally obtains rights to use the programs and products that we deliver under the subcontract to perform its prime contract obligations.

Leidos Holdings, Inc.

Annual Report - 10

Competition for contracts is significant, and we often compete against a large number of well-established corporations that may have greater name and brand recognition.

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government and our commercial customers, we frequently collaborate with other companies to compete for large contracts and bid against these same companies in other situations.

Leidos Holdings, Inc.

Annual Report - 10

We believe that our principal competitors currently include the following companies:

Amentum Services Inc., Booz Allen Hamilton Inc., CACI International Inc., General Dynamics Corporation, Jacobs Engineering Group Inc., KBR Inc., L3Harris, Lockheed Martin Corporation, ManTech International Corporation, Northrop Grumman Corporation, Raytheon Technologies Corporation, SAIC and Peraton.

Amentum Services Inc., Booz Allen Hamilton Inc., CACI International Inc., General Dynamics Corporation, Jacobs Engineering Group Inc., KBR Inc., L3Harris, Lockheed Martin Corporation, Northrop Grumman Corporation, Raytheon Technologies Corporation, SAIC and Peraton.

These companies span across sectors that include engineering and technical services divisions of large defense contractors, diversified U.S.

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Some significant laws and regulations that affect us include:

• the Federal Acquisition Regulation ("FAR") and supplements, including the DoD Federal Federal Acquisition Regulation Supplement ("DFARS"), which regulate the formation, administration and performance of U.S.

• the Federal Acquisition Regulation ("FAR") and supplements, including the DoD Federal Acquisition Regulation Supplement ("DFARS"), which regulate the formation, administration and performance of U.S.

government contracts;

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These activities are regulated by extensive federal, state and international privacy and data security laws requiring organizations to provide certain privacy protections and security safeguards for such information.

• the European Union's ("EU’s") General Data Protection Regulation (“GDPR”), which took effect in May 2018, has created new compliance obligations for companies that process data of EU data subjects, which require investment into ongoing data protection activities and documentation requirements, and creates the potential for significantly increased fines for noncompliance;

• the California Consumer Protection Privacy Act of 2018 (“CCPA”), which took effect on January 1, 2020, provides new consumer privacy rights to natural persons residing in California by regulating the processing of personal information of California residents and increasing the obligations on businesses in connection with such activities;

• the California Privacy Rights Act (“CPRA”), will take effect in most material respects on January 1, 2023.

The CPRA modifies the CCPA significantly, including by expanding consumers’ rights with respect to certain sensitive personal information and creating a new state agency to oversee implementation and enforcement efforts;

• the Virginia Consumer Data Protection Act (“VCDPA”), which will go into effect on January 1, 2023, grants Virginia residents the rights to access, correct, delete, know and opt-out of the sale and processing for targeted advertising purposes of their personal information, similar to the CCPA and CPRA.

The VCDPA also provides for additional data protection assessment requirements.

• the European Union's ("EU’s") General Data Protection Regulation (“GDPR”), which took effect in May 2018, has created new compliance obligations for companies that process personal data of EU data subjects, which require investment into ongoing data protection activities and documentation requirements, and creates the potential for significantly increased fines for noncompliance;

• the United Kingdom’s (“UK’s”) General Data Protection Regulation, which took effect on January 1, 2021, creates similar compliance obligations for companies that process personal data of UK data subjects as are imposed by the EU GDPR;

• the California Consumer Privacy Act of 2018 (“CCPA”), which took effect on January 1, 2020, provides new consumer privacy rights to natural persons residing in California by regulating the processing of personal information of California residents and increasing the obligations on businesses in connection with such activities;

• the California Privacy Rights Act (“CPRA”), which took effect in most material respects on January 1, 2023.

The CPRA modifies the CCPA significantly, including by expanding consumers’ rights with respect to certain sensitive personal information, extending the scope of the CCPA to include employees and job applicants residing in California and creating a new state agency to oversee implementation and enforcement efforts;

Leidos Holdings, Inc.

Annual Report - 14

• the Health Insurance Portability and Accountability Act, as amended by the Health Information Technology for Economic and Clinical Health Act, establishes privacy and security compliance obligations with respect to the processing of protected health information by covered entities and business associates, which require investment in technical and organizational compliance measures and creates the potential for substantial fines for noncompliance.

Company Website and Information

9 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-K

Item 1. Business