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Item 9A. Controls and Procedures

2023-02-14 compared with 2022-02-15 · 37 added, 44 removed, 319 unchanged (20% of the section changed)

6 unchanged sentences

Changes in Internal Control Over Financial Reporting

During the first and second quarter of fiscal 2021, we completed our acquisition of 1901 Group and Gibbs & Cox, respectively.

As part of the ongoing integration of 1901 Group and Gibbs & Cox, we are in the process of incorporating the controls and related procedures of these businesses.

Other than incorporating controls for 1901 Group and Gibbs & Cox, there have been no other changes in our internal control over financial reporting that occurred in the fourth quarter of the period ended December 31, 2021, covered by this Annual Report that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

During the fourth quarter of fiscal 2022, we completed our acquisition of Cobham Special Mission.

As part of the ongoing integration of Cobham Special Mission, we are in the process of incorporating the controls and related procedures of these businesses.

Other than incorporating controls for Cobham Special Mission, there have been no other changes in our internal control over financial reporting that occurred in the fourth quarter of the period ended December 30, 2022, covered by this Annual Report that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

1 unchanged sentence

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

As permitted by the SEC rules, management's assessment and conclusion on the effectiveness of our internal control over financial reporting as of December 31, 2021, excludes an assessment of the internal control over financial reporting of 1901 Group and Gibbs & Cox, acquired on January 14, 2021 and May 7, 2021, respectively.

As permitted by the SEC rules, management's assessment and conclusion on the effectiveness of our internal control over financial reporting as of December 30, 2022, excludes an assessment of the internal control over financial reporting of Cobham Special Mission, acquired on October 30, 2022.

Cobham Special Mission represents approximately 1.55% of our consolidated total assets, excluding the preliminary value of goodwill and intangible assets related to Cobham Special Mission, at December 30, 2022, and 0.15% and 0.28% of our consolidated revenues and operating income, respectively, for the fiscal year ended December 30, 2022.

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our internal control over financial reporting as of December 30, 2022, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

12 unchanged sentences

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the fiscal year ended December 30, 2022, of the Company and our report dated February 14, 2023, expressed an unqualified opinion on those financial statements.

As described in Management’s Report on Internal Control Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at 1901 Group and Gibbs & Cox, which were acquired on January 14, 2021 and May 7, 2021, respectively, whose financial statements reflect total assets of 1.45% and 3.03%, respectively, and revenues constituting 0.35% and 0.71%, respectively, of the consolidated financial statement amounts as of and for the fiscal year ended December 31, 2021.

Accordingly, our audit did not include the internal control over financial reporting at 1901 Group and Gibbs & Cox.

As described in Management’s Report on Internal Control Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Cobham Special Mission, which was acquired on October 30, 2022, and whose financial statements constitute total assets of 1.55%, excluding the preliminary value of goodwill and intangible assets, 0.15% of revenues, and 0.28% of operating income of the consolidated financial statement amounts as of and for the fiscal year ended December 30, 2022.

Accordingly, our audit did not include the internal control over financial reporting at Cobham Special Mission.

Basis for Opinion

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Other Information

On February 10, 2023, the Board of Directors amended our Amended and Restated Bylaws (as amended, "Bylaws"), effective immediately.

The amendments update various Bylaws provisions to make technical changes reflecting Rule 14a-19 promulgated under the Securities Exchange Act of 1934, and the DGCL, including recent DGCL amendments.

The amendments also update the Bylaws to use gender-neutral terms and include various immaterial modifications that provide clarification and consistency.

The foregoing description of the amendments is qualified in its entirety by reference to the Bylaws, a copy of which is filed as Exhibit 3.2 to this Annual Report on Form 10-K and incorporated by reference herein.

Directors, Executive Officers and Corporate Governance

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We have a code of conduct that applies to our principal executive officer and our senior financial officers.

A copy of our code of conduct is available on the Investor Relations section of our website free of charge at www.leidos.com by clicking on the links entitled "Investors" then "Corporate Governance" then "Overview" and then "Code of Conduct." Documents available under “Corporate Governance” in the Investor Relations section of our website also include our Certificate of Incorporation, Bylaws, Corporate Governance Guidelines, and charters for the Audit and Finance Committee, Human Resources and Compensation Committee, Corporate Governance and Ethics Committee, and Technology and Information Security Committee of the Board of Directors.

We intend to post on our website any material changes to or waivers from our code of business ethics.

The information on our website is not incorporated by reference into and is not a part of this Annual Report on Form 10-K.

79 unchanged sentences

3.2 Amended and Restated Bylaws of Leidos Holdings, Inc.

Incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed with the SEC on May 15, 2020.

4.1** Indenture dated June 28, 2002, between Leidos, Inc.

22 unchanged sentences

Incorporated by reference to Exhibit 4.4 to our Current Report on Form 8-K filed with the SEC on May 12, 2020.

4.9 Exchange and Registration Rights Agreement, dated May 12, 2020, by and among Leidos, Inc., Leidos Holdings, Inc., Citigroup Global Markets Inc., MUFG Securities Americas Inc.

and BofA Securities, Inc.

Incorporated by reference to Exhibit 4.5 to our Current Report on Form 8-K filed with the SEC on May 12, 2020.

4.9 Indenture relating to the 2.300% Senior Notes due 2031, dated as of October 8, 2020 among Leidos, Inc., Leidos Holdings, Inc, as guarantor, and Citibank, N.A., as trustee.

2 unchanged sentences

Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K filed with the SEC on October 9, 2020.

4.12 Registration Rights Agreement, dated October 8, 2020, among Leidos, Inc., Leidos Holdings, Inc., BofA Securities, Inc., Citigroup Global Markets Inc.

and MUFG Securities Americas Inc.

Incorporated by reference to Exhibit 4.3 to our Current Report on Form 8-K filed with the SEC on October 9, 2020.

4.11 Description of Common Stock.

2 unchanged sentences

Incorporated by reference to Exhibit 10.1 to our Annual Report on Form 10-K filed with the SEC on March 27, 2014.

10.2* Leidos Holdings, Inc.'s 2017 Omnibus Incentive Plan.

Incorporated by reference to Exhibit 4.3 to our Registration Statement on Form S-8 filed with the SEC on June 1, 2017.

10.2 * Leidos Holdings, Inc.

Amended and Restated 2017 Omnibus Incentive Plan

10.3* Leidos, Inc.

11 unchanged sentences

Incorporated by reference to Exhibit 10.7 to our Annual Report on Form 10-K filed with the SEC on March 27, 2014.

Leidos Holdings, Inc.

Annual Report - 111

Number Description of Exhibit

10.9* Form of Nonstatutory Stock Option Agreement of Leidos Holdings, Inc.’s 2006 Equity Incentive Plan.

4 unchanged sentences

Incorporated by reference to Exhibit 10.14 to our Annual Report on Form 10-K filed with the SEC on March 27, 2014.

Leidos Holdings, Inc.

Annual Report - 115

Number Description of Exhibit

10.12* Form of Restricted Unit Award Agreement (Management) of Leidos Holdings, Inc.’s 2006 Equity Incentive Plan.

15 unchanged sentences

10.20* Form of Notice of Grant of Options for Non-Employee Directors under the Leidos Holdings, Inc.

2017 Omnibus Plan.

Amended and Restated 2017 Omnibus I ncentive Plan.

Incorporated by reference to Exhibit 10.22 to our Annual Report on Form 10-K filed with the SEC on February 23, 2018.

10.21* Form of Notice of Grant of Options for Employees under the Leidos Holdings, Inc.

2017 Omnibus Plan.

Incorporated by reference to Exhibit 10.23 to our Annual Report on Form 10-K filed with the SEC on February 23, 2018.

A mended and R estated 2017 Omnibus I ncentive Plan.

10.22* Form of Notice of Grant of Restricted Stock Unit Awards (Performance-Vesting) for Employees under the Leidos Holdings, Inc.

2017 Omnibus Plan.

Incorporated by reference to Exhibit 10.24 to our Annual Report on Form 10-K filed with the SEC on February 23, 2018.

10.23* Form of Notice of Grant of Performance Share Awards for Employees under the Leidos Holdings, Inc.

2017 Omnibus Plan.

Incorporated by reference to Exhibit 10.25 to our Annual Report on Form 10-K filed with the SEC on February 23, 2018.

Amended and Restated 2017 O mnibus Incentive Plan.

10.23* For m of Notice of Grant of Performance Share Awards for Employees under the Leidos Holdings, Inc.

A mended and R estated 2017 Omnibus Incentive Plan.

10.24* Form of Notice of Grant of Restricted Stock Unit Awards (Time-Vesting) for Employees under the Leidos Holdings, Inc.

2017 Omnibus Plan.

Incorporated by reference to Exhibit 10.26 to our Annual Report on Form 10-K filed with the SEC on February 23, 2018.

A mended and R estated 2017 Omnibus Incentive Plan.

10.25* Form of Notice of Grant of Restricted Stock Unit Awards (Time-Vesting) for Non-Employee Directors under the Leidos Holdings, Inc.

2017 Omnibus Plan.

A mended and R estated 2017 Omnibus Incentive Plan.

Incorporated by reference to Exhibit 10.27 to our Annual Report on Form 10-K filed with the SEC on February 23, 2018.

Leidos Holdings, Inc.

Annual Report - 112

Number Description of Exhibit

10.26 Agreement, dated October 11, 2013, by and among Leidos Renewable Energy, LLC, Plainfield Renewable Energy Owner, LLC and Plainfield Renewable Energy Holdings, LLC.

4 unchanged sentences

Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on July 23, 2015.

Leidos Holdings, Inc.

Annual Report - 116

Number Description of Exhibit

10.29 Credit Agreement dated August 16, 2016, among Leidos Holdings, Inc., Leidos, Inc., as Borrower, the lenders party thereto and Citibank, N.A., as administrative agent.

16 unchanged sentences

Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on November 20, 2018.

Leidos Holdings, Inc.

Annual Report - 113

Number Description of Exhibit

10.38 Intellectual Property Matters Agreement, dated August 16, 2016, between Lockheed Martin Corporation and Abacus Innovations Corporation.

6 unchanged sentences

Incorporated by reference to Exhibit 10.6 to our Quarterly Report on Form 10-Q filed with the SEC on November 4, 2016.

Leidos Holdings, Inc.

Annual Report - 117

Number Description of Exhibit

10.42 Supply Agreement (Parent to Splitco), dated August 16, 2016, between Lockheed Martin Corporation and Splitco.

10 unchanged sentences

Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on February 14, 2020.

10.47 364-Day Term Loan Credit Agreement, dated as of June 18, 2020, by and among Leidos Holdings, Inc., Leidos, Inc., the guarantors party thereto, the lenders party thereto and Mizuho Bank, Ltd., as administrative agent.

Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on June 18, 2020.

10.47 Form of Commercial Paper Dealer Agreement, dated July 12, 2021, between Leidos, Inc., as issuer, the Company, as guarantor, and the applicable Dealer party thereto.

3 unchanged sentences

22 List of Guarantors and Subsidiary Issuers of Guaranteed Securities.

Incorporated herein by reference from the Company's Registration Statement on Form S-4, filed with the U.S.

Securities and Exchange Commission on May 6, 2021.

23.1 Consent of Independent Registered Public Accounting Firm, Deloitte & Touche LLP.

5 unchanged sentences

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Leidos Holdings, Inc.

Annual Report - 114

Number Description of Exhibit

99.1 Patent License and Assignment Agreement dated as of August 12, 2005, between Leidos, Inc.

15 unchanged sentences

Incorporated by reference to Exhibit 99.13 to our Registration Statement on Form S-4 filed with the SEC on June 28, 2016.

Leidos Holdings, Inc.

Annual Report - 118

Number Description of Exhibit

99.7† Professional Services Contract effective September 7, 1999, between Leidos, Inc.

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Fubini Director February 14, 2023

Geer Director February 14, 2023

/s/ Miriam E.

5 unchanged sentences

Mohapatra Director February 14, 2023

/s/ Patrick M.

Shanahan Director February 14, 2023

/s/ Robert S.

1 unchanged sentence

Stalnecker Director February 14, 2023

Williams Director February 15, 2022

Leidos Holdings, Inc.

1 unchanged sentence

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 9A. Controls and Procedures