What changed in this filing

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Item 1. Business

2024-02-13 compared with 2023-02-14 · 65 added, 66 removed, 344 unchanged (28% of the section changed)

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and its consolidated subsidiaries.

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

Leidos, recognized as a member of the Fortune 500®, is a dynamic innovation company that is at the forefront of addressing the world’s most challenging issues in national security and health sectors.

With a global workforce of approximately 47,000, Leidos is committed to developing smarter technology solutions, particularly for customers in highly regulated industries.

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

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Intelligence Community, the U.S.

Department of Homeland Security ("DHS"), the Federal Aviation Administration ("FAA"), the Department of Veterans Affairs ("VA") and many other U.S.

Department of Homeland Security ("DHS"), the Federal Aviation Administration ("FAA"), the Department of Veterans Affairs ("VA"), National Aeronautics and Space Administration ("NASA") and many other U.S.

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

With a focus on delivering mission-critical solutions, Leidos generated 87% of revenues for the fiscal year ended December 29, 2023, ("fiscal 2023") from U.S.

government contracts.

government contracts, either as a prime contractor or a subcontractor to other contractors engaged in work for the U.S.

By leveraging expertise in multiple disciplines, tailoring our services and solutions to the particular needs of our targeted markets and using advanced analytics, we work to securely deliver services and solutions that not only meet customers' current goals, but also support their future missions.

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Our Business Segments

At December 30, 2022, our business is aligned into three reportable segments (Defense Solutions, Civil and Health).

At December 29, 2023, our business has been aligned into three reportable segments (Defense Solutions, Civil and Health).

Additionally, we separately present the unallocable costs associated with corporate functions as Corporate.

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

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

Approximately 9% of our revenues are generated 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.

Defense Solutions has provided 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 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.

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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 Space Development Agency, 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, 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.

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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 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").

Defense Solutions represented 56% of total revenues for fiscal 2023, 57% of total revenues for the fiscal year ended December 30, 2022 ("fiscal 2022") and 58% of total revenues for the fiscal year ended December 31, 2021 ("fiscal 2021").

Leidos Holdings, Inc.

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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 are a market leader 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 Gibbs & Cox subsidiary is one of 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.

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and allied defense and intelligence organizations.

We offer innovative data analytics capabilities, and we design, develop, integrate, deploy and support information-centric software and enterprise IT systems for complex, data-driven national security challenges.

This includes encryption key management, the use of artificial intelligence to automate and streamline processes and the development of software to manage some of the worlds toughest data problems.

Our capabilities are enhanced by our advanced software factories, providing the brainpower to deliver the optimum software solutions for our customer base.

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Army we perform complex software development projects, develop training simulators for Army vehicles, maintain and conduct soldier training for field C2 equipment, and we are installing our cloud-based Army base access control system throughout the U.S.

Leidos Holdings, Inc.

Annual Report - 4

• Intelligence Analysis, Mission Support and Logistics Services – We deliver high-end services to the U.S.

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Army, Navy and Air Force customers, including planning and managing the cost and performance across the product’s lifecycle.

We deliver turn-key logistics support to U.S.

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

We offer reverse engineering, classified manufacturing and design, and threat exploitation services to a wide breadth of U.S.

Intelligence Community customers.

• 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.

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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.

Our Civil business has been 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 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.

Civil represented 24% of total revenues for both fiscal 2023 and 2022, and 23% of total revenues for fiscal 2021.

• Transportation Solutions – Leidos is a trusted systems developer, service provider and integrator serving Air Navigation Service Providers around the world, including the FAA.

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

Leidos Holdings, Inc.

Annual Report - 5

• 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.

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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

• 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.

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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.

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

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 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.

In addition, we help investor-owned utilities and industrial customers 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 has been focused 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.

Our solutions enable customers to deliver on the health mission of providing high-quality, cost-effective care, and are accomplished through the integration of information technology, engineering, life sciences, health services, clinical insights and health policy.

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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.

Health represented 20% of total revenues for fiscal 2023, and 19% of total revenues for both fiscal 2022 and 2021.

Leidos Holdings, Inc.

Annual Report - 6

• Health Information Management Services – Leidos employs holistic-systems thinking in fielding applied technology solutions across the entire continuum of healthcare.

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We also provide enterprise IT solutions to the VA, National Institutes of Health ("NIH"), DoD and other federal health customers to help operate mission critical infrastructure reliably and at a reasonable cost.

Commercially, we are leveraging these same Leidos-wide capabilities to manage critical infrastructure to one of the largest health systems in the United States.

• Managed Health Services – We deploy a national footprint of health clinics and health providers to support care delivery services, including medical disability and behavioral health examinations for the VA, as well as serving other independent medical exam markets.

We have developed unique capabilities in behavioral health management through many decades of experience with a special emphasis on substance abuse services.

We have developed unique capabilities in behavioral health management through many decades of experience with a special emphasis on substance abuse services and non-medical counseling.

We believe that these capabilities can be expanded into other clinical adjacencies.

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.

Leidos Holdings, Inc.

Annual Report - 6

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

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Our customers include the Centers for Medicare & Medicaid Services, Food and Drug Administration, Social Security Administration, VA, Defense Health Agency ("DHA") and commercial customers.

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 helps transform our customers' technology 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.

• 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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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.

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

During fiscal 2023, we completed an immaterial disposition of a business within our Defense Solutions segment.

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.

Leidos Holdings, Inc.

Annual Report - 7

Key Customers

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government, our revenues are diversified across many agencies, including various intelligence agencies, the U.S.

Army, Navy and Air Force, DHS, DISA, FAA, Transportation Security Administration, CBP, DHA, VA, Department of Health and Human Services, NASA, National Science Foundation, DoE, the Environmental Protection Agency and research agencies such as Defense Advanced Research Projects Agency.

Army, Navy and Air Force, U.S Space Force, DHS, DISA, FAA, Transportation Security Administration, CBP, DHA, VA, Department of Health and Human Services, NASA, National Science Foundation, DoE, the Environmental Protection Agency and research agencies such as Defense Advanced Research Projects Agency.

These customers have a number of subsidiary agencies that have separate budgets and procurement functions.

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

Employee and Workforce Demographics

As of December 30, 2022, we employed approximately 45,000 full and part-time employees of whom approximately 41,000 are located in the United States and the remainder of which are located in more than 40 countries worldwide.

As of December 29, 2023, we employed approximately 47,000 full and part-time employees of whom approximately 41,800 are located in the United States and the remainder of which are located in 50 countries worldwide.

Approximately 36% of our employees have degrees in science, technology, engineering or mathematics fields, approximately 23% of our employees have advanced degrees, 52% of our employees possess U.S.

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Gender of global employees (1)

Undisclosed 1 %

(1) Based on employees who self-identify.

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Culture and Values

We have six core values that make us who we are as individuals and collectively as a company – integrity, inclusion, innovation, agility, collaboration and commitment.

We have six core values that make us who we are as individuals and collectively as a company:

integrity, inclusion, innovation, agility, collaboration and commitment.

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 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.

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

Our values are demonstrated by our employees as they help our customers execute important missions on the front lines of the world’s most complex markets.

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

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.

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 workplace 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.

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

For the sixth consecutive year, the Ethisphere Institute named Leidos one of the World's Most Ethical Companies in 2023.

Diversity, Equity and Inclusion ("DEI")

Our DEI strategy and approach focus on education and best practices that enable leader accountability and shift the organization from awareness to meaningful actions.

Our priorities focus on improving enterprise and senior leader representation and enhancing an inclusive culture.

Leaders, managers and employees of the Company are required to take DEI training annually to recognize challenges and mitigate barriers to inclusion in the workplace.

We continue to grow and expand our employee resource groups (“ERGs”) and DEI learning resources to equip employees with the tools to develop cultural their competence across all dimensions of inclusion, enhance their personal networks, and develop leadership skills to actively shape and change workplace culture.

The Enterprise Inclusion Council and group/functional level councils continue to champion DEI efforts across the enterprise and advise on the evolution of our DEI strategy.

These councils are comprised of volunteers from across the business functions, ERG leaders, key stakeholders with oversight and guidance from executive leadership and a Board liaison.

Diversity in Talent Acquisition

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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 resources, development, and experiential learning to enable employees to grow, including a talent marketplace where employees can fill temporary roles to develop skills or provide additional assistance.

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

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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.

Additionally, we offer tuition reimbursement and certification exam reimbursement to full-time employees at accredited universities.

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

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

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 conduct formal employee engagement surveys and 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.

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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 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.

Our primary focus is on the health and safety of our employees, with the physical and mental well-being of our employees being top priority as one of the three pillars of Leidos Life.

To support the physical and mental well-being of our employees, we provide many well-being and mental health benefits to all employees, including access to our Employee Assistance Program, Headspace, Virgin Pulse and meQuilibrium resources.

These partners provide a multitude of free resources to assist employees with their mental, financial, and physical health.

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.

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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 $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.

Our company-funded research and development expense was $128 million, $116 million and $109 million for fiscal 2023, 2022 and 2021, respectively, which as a percentage of consolidated revenues was 0.8% for fiscal 2023, 2022 and 2021.

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

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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.

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, Northrop Grumman Corporation, Raytheon Technologies Corporation, SAIC and Peraton.

Our principal competitors currently include the following companies:

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

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

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In order to help ensure compliance with these complex laws and regulations, all of our employees are required to complete ethics and other compliance trainings relevant to their position.

Privacy and Data Security Laws

Some of our operations and service offerings involve access to and use by us of personally identifiable information and/or protected health information.

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 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;

Data Privacy and Security Laws

Some of our operations and service offerings involve access to and use by us of personal information and/or protected health information.

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

For example, among others:

• the European Union's ("EU’s") General Data Protection Regulation (“GDPR”), which imposes compliance obligations for companies that process personal data of EU data subjects, necessitating investment into ongoing data protection activities and documentation requirements, and creates the potential for significant fines for noncompliance;

• the United Kingdom’s (“UK’s”) General Data Protection Regulation, ("U.K.

GDPR"),which creates similar compliance obligations for companies that process personal data of UK data subjects as are imposed by the GDPR;

• the California Consumer Privacy Act, as amended by the California Privacy Rights Act (collectively, “CCPA”), which broadly defines personal information and provides expanded consumer privacy rights to natural persons residing in California, such as affording them the right to access and request deletion of their information and to opt out of certain sharing and sales of personal information;

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

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.

These regulations and related risks are described in more detail below under "Risk Factors" in this Annual Report on Form 10-K.

Company Website and Information

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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-K

Item 1. Business