4 unchanged sentences
Report of Independent Registered Public Accounting Firm (PCAOB ID No.
−Removed: Consolidated Balance Sheets as of December 29, 2023 and December 30, 2022
−Removed: Consolidated Statements of Operations for the fiscal years ended December 29, 2023, December 30, 2022 and December 31, 2021
−Removed: Consolidated Statements of Comprehensive Income for the fiscal years ended December 29, 2023, December 30, 2022 and December 31, 2021,
−Removed: Consolidated Statements of Equity for the fiscal years ended December 29, 2023, December 30, 2022 and December 31, 2021
−Removed: Consolidated Statements of Cash Flows for the fiscal years ended December 29, 2023, December 30, 2022 and December 31, 2021
+Added: Consolidated Balance Sheets as of January 3, 2025 , and D ecember 29, 2023
+Added: Consolidated Statements of Operations for the fiscal years ended January 3, 2025 , December 29, 2023 , and December 3 0, 2022
+Added: Consolidated Statements of Comprehensive Income for the fiscal years ended January 3, 2025 , December 29, 2023 , and December 3 0, 2022
+Added: Consolidated Statements of Equity for the fiscal years ended January 3, 2025 , December 29, 2023 , and December 3 0, 2022
+Added: Consolidated Statements of Cash Flows for the fiscal years ended January 3, 2025 , December 29, 2023 , and December 3 0, 2022
Notes to Consolidated Financial Statements
7 unchanged sentences
We have audited the accompanying consolidated balance sheets of Leidos Holdings, Inc.
−Removed: and subsidiaries (the "Company") as of December 29, 2023 and December 30, 2022, the related consolidated statements of operations, comprehensive income, equity, and cash flows, for the fiscal years ended December 29, 2023, December 30, 2022, and December 31, 2021, and the related notes (collectively referred to as the "financial statements").
−Removed: In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 29, 2023 and December 30, 2022, and the results of its operations and its cash flows for the fiscal years ended December 29, 2023, December 30, 2022, and December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.
−Removed: We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 29, 2023, based on criteria established in Internal Control — Integrated Framework (2013 ) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 13, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.
+Added: and subsidiaries (the “Company”) as of January 3, 2025 and December 29, 2023, the related consolidated statements of operations, comprehensive income, equity, and cash flows, for the fiscal years ended January 3, 2025, December 29, 2023, and December 30, 2022, and the related notes (collectively referred to as the "financial statements").
+Added: In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 3, 2025 and December 29, 2023, and the results of its operations and its cash flows for the fiscal years ended January 3, 2025, December 29, 2023, and December 30, 2022, in conformity with accounting principles generally accepted in the United States of America.
+Added: We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of January 3, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 11, 2025, expressed an unqualified opinion on the Company’s internal control over financial reporting.
Basis for Opinion
12 unchanged sentences
The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 65
−Removed: Goodwill Valuation – Security Enterprise Solutions Reporting Unit - Refer to Note 3 and Note 8 to the financial statements
+Added: Goodwill Valuation – Security Enterprise Solutions Reporting Unit - Refer to Notes 3 and 8 to the Financial Statements
Critical Audit Matter Description
−Removed: The Company’s accounting policy is to test goodwill for impairment on the first day of the fourth quarter of each year and more frequently if events or circumstances indicate that the carrying value may not be recoverable.
−Removed: During the third quarter of fiscal year 2023, the Security Enterprise Solutions (“SES”) reporting unit refined its business portfolio and made strategic business decisions to exit certain product offerings, as well as cease operations in certain countries in order to align the operations of the reporting unit with its strategic business plan.
−Removed: These decisions, along with the continued delays in airline travel infrastructure projects and higher than anticipated servicing costs, contributed to a significant reduction in the reporting unit’s forecasted revenue and cash flows.
−Removed: As a result, the Company performed an interim quantitative impairment analysis of goodwill for the SES reporting unit by comparing the estimated fair value of the reporting unit to its carrying value.
−Removed: The Company’s determination of the estimated fair value of the reporting unit was based on a blended approach, including discounted cash flow-models and market earnings multiple.
−Removed: Estimating the fair value of a reporting unit requires the exercise of significant judgment and assumptions including judgments about expected future cash flows, weighted-average cost of capital, and growth rates in revenue and margins.
+Added: The Company performed a quantitative impairment evaluation of the goodwill for the Security Enterprise Solutions reporting unit by comparing the estimated fair value of the reporting unit to its carrying value.
+Added: Estimating the fair value of a reporting unit requires the exercise of significant judgment and assumptions including judgments about expected future cash flows, weighted-average cost of capital, discount rates, expected long-term growth rates and operating margins as well as changes in the business environment.
Changes in these assumptions could have a significant impact on the fair value of the reporting unit, the amount of any goodwill impairment charge, or both.
−Removed: As a result of the quantitative assessment, the Company concluded that the carrying value of the reporting unit exceeded the fair value and recognized a goodwill impairment charge of $596 million for the year ended December 29, 2023.
−Removed: We identified goodwill for the SES reporting unit as a critical audit matter due to the significant judgments made by management to estimate the fair value of the reporting unit and the sensitivity of the fair value to changes in these estimates.
−Removed: Performing audit procedures to evaluate the reasonableness of management’s estimate required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.
−Removed: How the Critical Audit Matter Was Addressed in the Audit
−Removed: Our audit procedures related to the selection of the discount rate, terminal growth rate and forecasts of future revenues and cash flows for the Security Enterprise Solutions reporting unit included the following, among others:
−Removed: • We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the selection of the discount, and terminal growth rates and management’s development of forecasted revenues and cash flows, including the completeness, accuracy and reasonableness of the forecasted amounts.
−Removed: • We performed a sensitivity analysis of the forecasts of future revenue, earnings before interest, taxes, depreciation and amortization (“EBITDA”) and capital expenditures, which included their impact on the fair value of the SES reporting unit.
−Removed: • We evaluated management’s ability to accurately forecast future SES reporting unit revenue and operating income, comparing actual results to management’s historical forecasts.
−Removed: • We evaluated the reasonableness of management’s SES reporting unit revenue growth rates, EBITDA projections and timing of future cash flows by comparing the forecasts to:
−Removed: ◦ Historical results and current performance.
−Removed: ◦ Internal communications to management and the Board of Directors.
−Removed: ◦ Forecasted information included in industry reports considering macroeconomic factors.
−Removed: • With the assistance of our fair value specialists, we evaluated (1) the valuation methodology utilized, including testing mathematical accuracy of calculations and (2) the projections of future revenue growth rates, the discount rate and the determination of market multiples by either testing the underlying source information, or by developing a range of independent estimates and comparing those to the rate selected by management.
+Added: The Company’s accounting policy is to test for impairment on the first day of the fourth quarter of each fiscal year and more frequently if events or circumstances indicate that the carrying value may not be recoverable.
+Added: As a result of the quantitative assessment, the Company concluded that the fair value of the Security Enterprise Solutions reporting unit exceeded the carrying value, which resulted in no impairment for the fiscal year ended January 3, 2025.
Leidos Holdings, Inc.
Annual Report
−Removed: Revenues — Refer to Note 3 and Note 4 to the financial statements
+Added: We identified goodwill for the Security Enterprise Solutions reporting unit as a critical audit matter due to the significant judgments made by management to estimate the fair value of the reporting unit and the difference between its fair value and carrying value.
+Added: Performing audit procedures to evaluate management’s estimate of the Security Enterprise Solutions reporting unit fair value required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.
+Added: How the Critical Audit Matter Was Addressed in the Audit
+Added: Our audit procedures related to the selection of the discount rate, terminal growth rate and forecasts of future revenues and cash flows for the Security Enterprise Solutions reporting unit included the following, among others:
+Added: u We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the selection of the discount rate, terminal growth rate and management’s development of forecasted revenues, operating margins and cash flows.
+Added: u We evaluated management’s ability to accurately forecast future Security Enterprise Solutions reporting unit revenue and operating margins comparing actual results to management’s historical forecasts.
+Added: u We developed an independent estimate of the Security Enterprise Solutions reporting unit fair value using the income approach.
+Added: We utilized the historical results of the reporting unit and inspected third-party industry reports for the global aviation, maritime, and border security products and related services markets to develop projections.
+Added: Additionally, we developed the discount rate and terminal year growth rate with the assistance of our fair value specialists
+Added: u We developed an independent estimate of the Security Enterprise Solutions reporting unit fair value using the market approach.
+Added: We selected guideline peer companies and developed enterprise value multiples of revenues and earnings before interest, taxes, depreciation and amortization with the assistance of our fair value specialists.
+Added: u We calculated our independent expectation of the fair value of the reporting unit by weighting the results of the market and income approaches and compared the resulting fair value to the carrying value of the Security Enterprise Solutions reporting unit.
+Added: Revenues – Refer to Notes 3 and 4 to the Financial Statements
Critical Audit Matter Description
2 unchanged sentences
A performance obligation's EAC includes all direct costs such as materials, labor, subcontract costs, overhead and a ratable portion of general and administrative costs.
−Removed: The accounting for these contracts involves judgment, particularly as it relates to the process of estimating total costs for the performance obligation.
In addition, an EAC of a performance obligation includes future losses estimated to be incurred on onerous contracts, as and when known.
−Removed: Given the judgments necessary to determine whether multiple promises within a single contract represent a single performance obligation, whether or not the Company is acting as principal in the fulfillment of the identified performance obligations on certain contracts, and estimates of total costs for the performance obligations that recognize revenue using the cost-to-cost method, auditing such accounting conclusions and estimates required extensive audit effort due to the volume and complexity of these contracts and a high degree of auditor judgment when performing audit procedures and evaluating the results of those procedures.
+Added: The accounting for these contracts involves judgment, particularly as it relates to the process of estimating total revenues and costs for the performance obligation.
+Added: Given the judgments necessary to determine whether multiple promises within a single contract represent a single performance obligation, whether or not the Company is acting as principal in the fulfillment of the identified performance obligations on certain contracts, and estimates of total revenues and costs for the performance obligations that recognize revenue using the cost-to-cost method, auditing such accounting conclusions and estimates required extensive audit effort due to the volume and complexity of these contracts and a high degree of auditor judgment when performing audit procedures and evaluating the results of those procedures.
+Added: Leidos Holdings, Inc.
+Added: Annual Report
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to management’s conclusions regarding whether multiple promises within a single contract represent a single performance obligation, whether the Company is acting as a principal or an agent in fulfilling identified performance obligations on certain contracts, and estimates of total costs for the performance obligations that recognize revenue using the cost-to-cost method included the following, among others:
−Removed: • We tested the effectiveness of controls over contract revenue, including management’s controls over the initial setup of new contract arrangements and the estimates of total costs and revenues for identified performance obligations.
−Removed: • We developed an expectation of revenue and compared it to the recorded balance.
−Removed: • For a selection of contracts, we performed the following for each contract:
−Removed: ◦ Evaluated the terms and conditions of each contract and the appropriateness of the accounting treatment in accordance with accounting principles generally accepted in the United States of America, by:
−Removed: ▪ Inspecting the executed contract to verify that the facts on which management’s conclusions were reached were consistent with the actual terms and conditions of the contract.
−Removed: ▪ Evaluating the contract within the context of the five-step model and that management’s conclusions were appropriate by evaluating the nature of the promises within the contract, the interrelationship of the promised services and/or products provided, the pattern by which obligations are fulfilled, the number of performance obligations identified, and which party is acting as principal in the fulfillment of the identified performance obligations.
−Removed: ▪ Evaluating the appropriateness and consistency of the methods and assumptions used by management to develop estimates of future revenues that will be recognized and costs that will be incurred.
−Removed: ▪ Tested the mathematical accuracy of management’s calculation of revenue for the performance obligation.
−Removed: • We analyzed cumulative adjustments recorded during the year and tested those with characteristics of audit interest to determine that the adjustments were the result of changes in facts and circumstances and not estimates that were previously inaccurate.
+Added: u We tested the effectiveness of controls over contract revenue, including management’s controls over evaluating the revenue recognition methodology, initial setup of new contract arrangements, and estimates of total costs and revenues for identified performance obligations.
+Added: u We developed an expectation of revenue based on the Company’s historical performance and compared it to the recorded balance.
+Added: u For a selection of contracts, we performed audit procedures based on certain characteristics of audit interest, which included some of the following:
+Added: u Evaluated the terms and conditions of selected contracts and the appropriateness of the accounting treatment in accordance with accounting principles generally accepted in the United States of America, by:
+Added: u Inspection of the executed contract to assess that the facts on which management’s conclusions were reached were consistent with the actual terms and conditions of the contract.
+Added: u Evaluation of the contract within the context of the revenue recognition model and that management’s conclusions were appropriate by evaluating the nature of the promises within the contract, the interrelationship of the promised services and/or products provided, the pattern by which obligations are fulfilled, the number of performance obligations identified, and which party is acting as principal in the fulfillment of the identified performance obligations.
+Added: u Evaluation of the appropriateness and consistency of the methods and assumptions used by management to develop estimates of future revenues that will be recognized and costs that will be incurred.
+Added: u Evaluate the mathematical accuracy of management’s calculation of revenue for the performance obligation.
+Added: u We analyzed impacts to income before income tax recorded during the year as a result of changes in estimates on contracts and tested those with characteristics of audit interest to determine that the adjustments were the result of changes in facts and circumstances and not estimates that were previously inaccurate.
/s/ Deloitte & Touche LLP
6 unchanged sentences
CONSOLIDATED BALANCE SHEETS
−Removed: 2023 December 30,
(in millions, except share and per share data)
+Added: 2025 December 29,
Cash and cash equivalents $ 943 $ 777
11 unchanged sentences
Accrued payroll and employee benefits 811 695
−Removed: Short-term debt and current portion of long-term debt 18 992
+Added: Current portion of long-term debt
Total current liabilities 3,654 2,990
1 unchanged sentence
Operating lease liabilities 621 516
−Removed: Deferred tax liabilities 3 40
Other long-term liabilities 317 267
2 unchanged sentences
Stockholders’ equity:
−Removed: Preferred stock, $ 0.0001 par value, 10,000,000 shares authorized and no shares issued and outstanding at December 29, 2023 and December 30, 2022
−Removed: Common stock, $ 0.0001 par value, 500,000,000 shares authorized, 135,766,419 and 136,926,990 shares issued and outstanding at December 29, 2023, and December 30, 2022, respectively
+Added: Preferred stock, $ 0.0001 par value, 10,000,000 shares authorized and no shares issued and outstanding at January 3, 2025 and December 29, 2023
+Added: Common stock, $ 0.0001 par value, 500,000,000 shares authorized, 131,163,899 and 135,766,419 shares issued and outstanding at January 3, 2025, and December 29, 2023, respectively
Additional paid-in capital 1,112 1,885
5 unchanged sentences
Total liabilities and stockholders’ equity
+Added: $ 13,104 $ 12,695
See accompanying notes to consolidated financial statements.
3 unchanged sentences
CONSOLIDATED STATEMENTS OF OPERATIONS
+Added: (in millions, except per share data)
2025 December 29,
2023 December 30,
−Removed: (in millions, except per share data)
Revenues $ 16,662 $ 15,438 $ 14,396
8 unchanged sentences
Interest expense, net ( 193 ) ( 212 ) ( 199 )
−Removed: Other expense, net ( 6 ) ( 3 ) ( 1 )
+Added: Other income (expense), net
+Added: 5 ( 6 ) ( 3 )
Income before income taxes 1,639 403 886
1 unchanged sentence
Net income 1,251 208 693
−Removed: net income attributable to non-controlling interest 9 8 6
+Added: net (loss) income attributable to non-controlling interest
Net income attributable to Leidos common stockholders $ 1,254 $ 199 $ 685
−Removed: $ 199 $ 685 $ 753
Earnings per share:
−Removed: $ 1.45 $ 5.00 $ 5.34
−Removed: 1.44 4.96 5.27
+Added: Basic $ 9.36 $ 1.45 $ 5.00
+Added: Diluted 9.22 1.44 4.96
See accompanying notes to consolidated financial statements.
3 unchanged sentences
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
+Added: (in millions)
2025 December 29,
2023 December 30,
−Removed: (in millions)
Net income $ 1,251 $ 208 $ 693
2 unchanged sentences
Pension adjustments 1 ( 1 ) ( 20 )
−Removed: Total other comprehensive income (loss), net of taxes
+Added: Total other comprehensive (loss) income, net of taxes
+Added: ( 62 ) 25 ( 61 )
Comprehensive income 1,189 233 632
−Removed: net income attributable to non-controlling interest
+Added: net (loss) income attributable to non-controlling interest
Comprehensive income attributable to Leidos common stockholders $ 1,192 $ 224 $ 624
4 unchanged sentences
CONSOLIDATED STATEMENTS OF EQUITY
−Removed: Shares of common stock Additional
+Added: (in millions, except for per share data) Shares of common stock Additional
capital Retained earnings Accumulated
1 unchanged sentence
income (loss) Leidos stockholders' equity Non-controlling interest Total stockholders' equity
−Removed: (in millions, except for per share data)
−Removed: Balance at January 1, 2021 142 $ 2,580 $ 1,328 $ ( 46 ) $ 3,862 $ 9 $ 3,871
+Added: Balance at December 31, 2021 140 $ 2,423 $ 1,880 $ ( 12 ) $ 4,291 $ 53 $ 4,344
Net income — — 685 — 685 8 693
−Removed: Other comprehensive income, net of taxes
+Added: Other comprehensive loss, net of taxes
— — — ( 61 ) ( 61 ) — ( 61 )
1 unchanged sentence
Repurchases of stock and other ( 4 ) ( 542 ) — — ( 542 ) — ( 542 )
−Removed: ( 3 ) ( 270 ) — — ( 270 ) — ( 270 )
Dividends of $ 1.44 per share
1 unchanged sentence
Stock-based compensation — 73 — — 73 — 73
−Removed: Net capital contributions from non-controlling interest — — — — — 38 38
+Added: Net capital distributions to non-controlling interest — — — — — ( 7 ) ( 7 )
Balance at December 30, 2022 137 2,005 2,367 ( 73 ) 4,299 54 4,353
Net income — — 199 — 199 9 208
−Removed: Other comprehensive loss, net of taxes
+Added: Other comprehensive income, net of taxes
— — — 25 25 — 25
1 unchanged sentence
Repurchases of stock and other ( 2 ) ( 247 ) — — ( 247 ) — ( 247 )
−Removed: ( 4 ) ( 542 ) — — ( 542 ) — ( 542 )
Dividends of $ 1.46 per share
3 unchanged sentences
Balance at December 29, 2023 136 1,885 2,364 ( 48 ) 4,201 57 4,258
−Removed: Net income — — 199 — 199 9 208
−Removed: Other comprehensive income, net of taxes
+Added: Net income (loss) — — 1,254 — 1,254 ( 3 ) 1,251
+Added: Other comprehensive loss, net of taxes
— — — ( 62 ) ( 62 ) — ( 62 )
1 unchanged sentence
Repurchases of stock and other ( 6 ) ( 913 ) — — ( 913 ) — ( 913 )
−Removed: ( 2 ) ( 247 ) — — ( 247 ) — ( 247 )
Dividends of $ 1.54 per share
2 unchanged sentences
Net capital distributions to non-controlling interest — — — — — ( 6 ) ( 6 )
−Removed: Balance at December 29, 2023 136 $ 1,885 $ 2,364 $ ( 48 ) $ 4,201 $ 57 $ 4,258
+Added: Balance at January 3, 2025 131 $ 1,112 $ 3,410 $ ( 110 ) $ 4,412 $ 48 $ 4,460
See accompanying notes to consolidated financial statements.
3 unchanged sentences
CONSOLIDATED STATEMENTS OF CASH FLOWS
+Added: (in millions)
2025 December 29,
2023 December 30,
−Removed: (in millions)
Cash flows from operations:
11 unchanged sentences
Accounts payable and accrued liabilities and other long-term liabilities ( 160 ) 31 ( 143 )
−Removed: 31 ( 143 ) ( 210 )
Accrued payroll and employee benefits 121 ( 5 ) 98
−Removed: ( 5 ) 98 ( 32 )
Income taxes receivable/payable ( 28 ) ( 158 ) 97
14 unchanged sentences
Proceeds from issuances of stock 55 50 48
−Removed: Net capital (distributions to) contributions from non-controlling interests ( 9 ) ( 7 ) 38
+Added: Net capital distributions to non-controlling interests ( 6 ) ( 9 ) ( 7 )
+Added: Other ( 1 ) — —
Net cash used in financing activities ( 1,084 ) ( 715 ) ( 865 )
9 unchanged sentences
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
+Added: (in millions)
2025 December 29,
2023 December 30,
−Removed: (in millions)
Supplementary cash flow information:
14 unchanged sentences
(“Leidos”), a Delaware corporation, is a holding company whose direct 100 %-owned subsidiary and principal operating company is Leidos, Inc.
−Removed: 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.
−Removed: With a global workforce of approximately 47,000 , Leidos is committed to developing smarter technology solutions, particularly for customers in highly regulated industries.
−Removed: Leidos' customers include the U.S.
+Added: Leidos is an industry and technology leader serving government and commercial customers with smarter, more efficient digital and mission innovations.
+Added: Headquartered in Reston, Virginia, with 48,000 global employees, Leidos’ customers include the U.S.
Department of Defense (“DoD”), the U.S.
4 unchanged sentences
and its consolidated subsidiaries.
−Removed: Our business has been aligned into three reportable segments:
−Removed: Defense Solutions, Civil and Health.
−Removed: Additionally, we separately present the unallocable costs associated with corporate functions as Corporate.
−Removed: We have an 88 % controlling interest in Mission Support Alliance, LLC ("MSA"), a joint venture with Centerra Group, LLC, which includes 41 % purchased from Jacobs Group, LLC on January 26, 2018.
+Added: During fiscal 2024, we completed a realignment of our segment and reporting structure, which resulted in the identification of four reportable segments:
+Added: National Security & Digital, Health & Civil, Commercial & International and Defense Systems.
+Added: We commenced operating and reporting under the new organizational structure effective the first day of fiscal 2024.
+Added: In addition, we separately present the unallocated costs associated with corporate functions as Corporate.
+Added: As a result of this change, prior year segment results and disclosures have been recast to reflect the current reportable segment structure.
+Added: We have an 88 % controlling interest in Mission Support Alliance, LLC (“MSA”), a joint venture with Centerra Group, LLC.
MSA’s contract ended on January 24, 2021.
5 unchanged sentences
Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation.
−Removed: We combined "Credit losses (recoveries), net" into "Selling, general and administrative expenses" on the consolidated statements of operations.
−Removed: We have certain entities where the functional currency is not the U.S.
−Removed: dollar and have separately presented the effect of exchange rate changes on cash, cash equivalents and restricted cash held in foreign currencies as a separate line in the consolidated statements of cash flows.
+Added: We combined "Deferred tax liabilities" into "Other long-term liabilities" on the consolidated balance sheets.
Note 2—Accounting Standards
ACCOUNTING STANDARDS UPDATES ADOPTED
−Removed: Accounting Standards Updates ("ASU") 2020-04, ASU 2021-01, and ASU 2022-06 Reference Rate Reform
−Removed: In March 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-04, which provides companies with optional expedients and exceptions to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued.
−Removed: This update provides optional expedients for applying accounting guidance to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of the reference rate reform.
−Removed: The amendments in this update are effective for all entities as of March 2020 and can be adopted using a prospective approach no later than December 31, 2022.
−Removed: In January 2021, the FASB issued ASU 2021-01 which amends the scope of ASU 2020-04.
−Removed: The amendments in this
−Removed: update are elective and provide optional relief for entities with hedge accounting and contract modifications affected
−Removed: by the transition from LIBOR through December 31, 2022.
−Removed: In December 2022, the FASB issued ASU 2022-06 which extend the deadline for application of ASU 2021-01 through December 31, 2024.
−Removed: Under this relief, entities may continue to account for contract modifications as a continuation of the existing contract and the continuation of the hedge accounting arrangement.
−Removed: In the first half of fiscal 2023, we adopted certain practical expedients available under Accounting Standards Codification ("ASC") 848.
−Removed: Our term loans are based on a Secured Overnight Financing Rate (“SOFR”) rate (see "Note 13—Debt").
−Removed: In fiscal 2023, we modified our interest rate swap agreements to reference SOFR (see "Note 12—Derivative Instruments") in conformity with the relief available under ASC 848.
−Removed: The standard did not have a material impact on our financial position, results of operations or earnings per share.
+Added: ASU 2023-07 Segment Reporting
+Added: In November 2023, the FASB issued ASU 2023-07 to improve reportable segment disclosure requirements.
+Added: This update requires companies to disclose significant segment expense categories that are regularly provided to the chief operating decision maker (“CODM”) on an interim and annual basis and requires disclosures about a reportable segment’s profit or loss and assets that are currently required annually to be made on an interim basis.
+Added: Companies must also disclose how segment measures of profit or loss are used by the CODM.
+Added: The amendments in this update are effective for public entities on a retrospective basis for annual periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024.
+Added: Effective fiscal 2024, we adopted the requirements of ASU 2023-07 using the retrospective method (See "Note 20 Business Segments").
+Added: The adoption did not have an impact to our financial position, results of operations and earnings per share.
Leidos Holdings, Inc.
3 unchanged sentences
ACCOUNTING STANDARDS UPDATES ISSUED BUT NOT YET ADOPTED
−Removed: ASU 2023-07 Segment Reporting
−Removed: In November 2023, the FASB issued ASU 2023-07, to improve reportable segment disclosure requirements.
−Removed: This update requires companies to disclose significant segment expense categories that are regularly provided to the chief operating decision maker ("CODM") on an interim and annual basis and disclosures about a reportable segment’s profit or loss and assets that are currently required annually on an interim basis.
−Removed: Companies must also disclose how segment measures of profit or loss are used by the CODM.
−Removed: The amendments in this update are effective for public entities as of November 2023 and should be adopted retrospectively for annual periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024.
−Removed: We are evaluating the impact of the update and plan to adopt the amendments for annual disclosures in fiscal 2024.
ASU 2023-09 Income Taxes
4 unchanged sentences
Early adoption is permitted.
−Removed: We are currently evaluating the impacts of this update and plan to adopt these amendments using the prospective approach for annual disclosures in fiscal year 2025.
+Added: We are currently evaluating the impacts of this update and plan to adopt these amendments using the prospective approach for annual disclosures in fiscal 2025.
+Added: ASU 2024-03 Disaggregation of Income Statement Expenses
+Added: In November 2024, the FASB issued ASU 2024-03, to enhance the transparency of certain expense disclosures.
+Added: The update requires disclosure of specific expense categories in the notes to the financial statements at interim and annual reporting periods.
+Added: The update requires disaggregated information about certain prescribed expense categories underlying any relevant income statement expense caption.
+Added: The amendments in this update are effective for public entities for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027.
+Added: The amendments may be adopted either prospectively or retrospectively.
+Added: Early adoption is permitted.
+Added: We are currently evaluating the impacts of this update and plan to adopt these amendments for annual disclosures in fiscal 2027 and interim disclosures in fiscal 2028.
Note 3—Summary of Significant Accounting Policies
1 unchanged sentence
Leidos’ fiscal year ends on the Friday nearest the end of December.
−Removed: Fiscal 2023 ended December 29, 2023, fiscal 2022 ended December 30, 2022, and fiscal 2021 ended December 31, 2021.
−Removed: Each fiscal year included 52 weeks.
+Added: Fiscal 2024 ended January 3, 2025, fiscal 2023 ended December 29, 2023, and fiscal 2022 ended December 30, 2022.
+Added: Fiscal 2024 included 53 weeks, fiscal 2023 and 2022 both included 52 weeks.
USE OF ESTIMATES
5 unchanged sentences
Our operating cycle for long-term contracts may be greater than one year and is measured by the average time intervening between the inception and the completion of those contracts.
+Added: Leidos Holdings, Inc.
+Added: Annual Report
+Added: LEIDOS HOLDINGS, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BUSINESS COMBINATIONS, INVESTMENTS AND VARIABLE INTEREST ENTITIES
3 unchanged sentences
Estimating the fair value of acquired assets and assumed liabilities, including intangibles, requires judgments about expected future cash flows, weighted-average cost of capital, discount rates and expected long-term growth rates.
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 75
−Removed: LEIDOS HOLDINGS, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Investments in entities and corporate joint ventures where we have a non-controlling ownership interest but over which we have the ability to exercise significant influence, are accounted for under the equity method of accounting.
8 unchanged sentences
RESTRUCTURING EXPENSES
−Removed: Restructuring expenses are incurred in connection with programs aimed at reducing our costs.
+Added: Restructuring expenses represent costs associated with an exit or disposal activity which no longer provide on-going economic benefits to the Company.
Restructuring costs may include employee severance benefits, costs to terminate contracts and other permanent exit costs to consolidate or close facilities directly related to the restructuring program.
3 unchanged sentences
REVENUE RECOGNITION
−Removed: Our revenues from contracts with customers are from offerings including digital modernization, cyber operations, mission software systems, integrated systems and mission operations, primarily with the U.S.
+Added: Our revenues from contracts with customers are from offerings including trusted mission artificial intelligence, cyber operations, digital modernization, mission software systems, integrated systems, mission operations, and rapid prototyping and manufacturing, primarily with the U.S.
government and its agencies.
We also serve various state and local governments, foreign governments and commercial customers.
−Removed: We perform under various types of contracts, which include firm-fixed-price ("FFP"), time-and-materials ("T&M"), fixed-price-level-of-effort ("FP-LOE"), cost-plus-fixed-fee ("CPFF"), cost-plus-award-fee, cost-plus-incentive-fee and fixed-price-incentive-fee ("FP-IF") contracts.
+Added: We perform under various types of contracts, which include firm-fixed-price (“FFP”), time-and-materials (“T&M”), fixed-price-level-of-effort (“FPLOE”), cost-plus-fixed-fee (“CPFF”), cost-plus-award-fee, cost-plus-incentive-fee and fixed-price-incentive-fee (“FPIF”) contracts.
To determine the proper revenue recognition, we first evaluate whether we have a duly approved and enforceable contract with a customer, in which the rights of the parties and payment terms are identified, and collectability is probable.
2 unchanged sentences
Contract modifications generally relate to changes in contract specifications and requirements and do not add distinct services, and therefore are accounted for as part of the original performance obligation.
−Removed: If contract modifications add distinct goods or services and increase the contract value by an amount that reflects the standalone selling price, those modifications are accounted for as separate contracts.
Leidos Holdings, Inc.
2 unchanged sentences
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: If contract modifications add distinct goods or services and increase the contract value by an amount that reflects the standalone selling price, those modifications are accounted for as separate contracts.
Most of our contracts contain multiple promises including the design and build of software-based systems, integration of hardware and software solutions, running and maintaining of IT infrastructure and procurement services.
7 unchanged sentences
These variable amounts generally are awarded upon achievement of certain performance metrics, program milestones or cost targets and can be based upon customer discretion.
−Removed: We estimate variable consideration at the most probable amount that we expect to be entitled to, based on the assessment of the contractual variable fee criteria, complexity of work and related risks, extent of customer discretion, amount of variable consideration received historically and the potential of significant reversal of revenue.
+Added: We estimate variable consideration at the most likely amount that we expect to be entitled to, based on the assessment of the contract specific variable fee criteria, complexity of work and related risks, extent of customer discretion, amount of variable consideration received historically and the potential of significant reversal of revenue.
Contracts with the U.S.
5 unchanged sentences
government agencies and commercial customers is based on specific negotiations with each customer.
−Removed: We allocate the transaction price of a contract to its performance obligations based on their respective standalone selling prices.
+Added: We allocate the transaction price of a contract to its performance obligations primarily based upon the proportional individual selling prices.
The performance obligation’s standalone selling price is generally based on an expected cost-plus margin approach.
−Removed: For certain product sales, prices from other standalone sales are used.
+Added: For certain product sales, performance obligations may be allocated to a contract's transaction price based on prices from other standalone sales or the residual value method.
Substantially all of our contracts do not contain a significant financing component, which would require an adjustment to the transaction price of the contract.
6 unchanged sentences
In certain product sales, where the products have an alternate use, revenue is recognized at a point in time when the customer takes control of the asset usually denoted by possession, transfer of legal title and acceptance by the customer.
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 77
−Removed: LEIDOS HOLDINGS, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On performance obligations that require system integration and capability development efforts or contain variable consideration, revenue is recognized over time generally using a method that measures the extent of progress towards completion of a performance obligation, principally using a cost-input method (referred to as the cost-to-cost method).
2 unchanged sentences
In addition, an EAC of a performance obligation includes future losses estimated to be incurred on onerous contracts, as and when known.
−Removed: On certain other performance obligations, principally associated with T&M, FP-LOE and CPFF contracts, revenue is generally recognized using the right-to-invoice practical expedient as we are contractually able to invoice the customer based on the control transferred to the customer.
+Added: On certain other performance obligations, principally associated with T&M, FPLOE and CPFF contracts, revenue is generally recognized using the right-to-invoice practical expedient as we are contractually able to invoice the customer based on the control transferred to the customer.
Additionally, on maintenance (generally FFP) performance obligations, revenue is recognized over time using a straight-line method as the control of the services is provided to the customer evenly over the period of performance.
+Added: Leidos Holdings, Inc.
+Added: Annual Report
+Added: LEIDOS HOLDINGS, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For certain performance obligations where we are not primarily responsible for fulfilling the promise to provide the goods or service to the customer, do not have inventory risk and do not have discretion in establishing the price for the goods or service, we recognize revenue on a net basis.
13 unchanged sentences
Project assets include prepaid services and maintenance agreements, certain material purchases and other costs incurred on contracts.
−Removed: Project assets are amortized using the straight-line method over the shorter of the estimated useful life of the asset or the expected contract period of performance.
+Added: Project assets are generally amortized using the straight-line method over the shorter of the estimated useful life of the asset or the expected contract period of performance.
CHANGES IN ESTIMATES ON CONTRACTS
Changes in estimates related to contracts accounted for using the cost-to-cost method of accounting are recognized in the period in which such changes are made for the inception-to-date effect of the changes, with the exception of contracts acquired through a business combination, where the adjustment is made for the period commencing from the date of acquisition.
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 78
−Removed: LEIDOS HOLDINGS, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Changes in estimates on contracts for the periods presented were as follows:
+Added: (in millions, except for per share amounts)
2025 December 29,
2023 December 30,
−Removed: (in millions, except for per share amounts)
Favorable impact $ 184 $ 140 $ 146
−Removed: $ 140 $ 146 $ 149
Unfavorable impact ( 153 ) ( 100 ) ( 113 )
−Removed: ( 100 ) ( 113 ) ( 102 )
Net favorable impact to income before income taxes $ 31 $ 40 $ 33
−Removed: $ 40 $ 33 $ 47
Impact on diluted EPS attributable to Leidos common stockholders $ 0.17 $ 0.22 $ 0.17
−Removed: $ 0.22 $ 0.17 $ 0.25
+Added: The unfavorable impact for fiscal 2024, included $ 40 million in write-downs on programs within our UK operations related to cost increases and schedule delays.
The impact on diluted earnings per share (“EPS”) attributable to Leidos common stockholders is calculated using our statutory tax rate.
+Added: Leidos Holdings, Inc.
+Added: Annual Report
+Added: LEIDOS HOLDINGS, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Revenue Recognized from Prior Obligations
17 unchanged sentences
Such provision differs from the amounts currently payable because certain items of income and expense are recognized in different reporting periods for financial reporting purposes than for income tax purposes.
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 79
−Removed: LEIDOS HOLDINGS, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
We record liabilities for uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.
3 unchanged sentences
Outstanding payments are included within “Cash and cash equivalents” and “Accounts payable and accrued liabilities” correspondingly on the consolidated balance sheets.
−Removed: At December 29, 2023, and December 30, 2022, $ 136 million and $ 158 million, respectively, of outstanding payments were included within "Cash and cash equivalents."
+Added: At January 3, 2025, and December 29, 2023, $ 94 million and $ 136 million, respectively, of outstanding payments were included within “Cash and cash equivalents.”
RESTRICTED CASH
1 unchanged sentence
Restricted cash balances are included within “Other current assets” on the consolidated balance sheets.
−Removed: Our restricted cash balances were $ 151 million and $ 167 million at December 29, 2023, and December 30, 2022, respectively.
+Added: Our restricted cash balances were $ 141 million and $ 151 million at January 3, 2025, and December 29, 2023, respectively.
+Added: Leidos Holdings, Inc.
+Added: Annual Report
+Added: LEIDOS HOLDINGS, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Receivables include amounts billed and currently due from customers, amounts billable where the right to consideration is unconditional and amounts unbilled.
19 unchanged sentences
Inventory is evaluated against historical or planned usage to determine appropriate provisions for obsolete inventory.
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 80
−Removed: LEIDOS HOLDINGS, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Goodwill represents the excess of the fair value of consideration transferred, plus the fair value of any non-controlling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date.
1 unchanged sentence
Our policy is to perform our annual goodwill impairment evaluation as of the first day of the fourth quarter of our fiscal year.
−Removed: During both fiscal 2023 and 2022, we had seven reporting units for the purpose of testing goodwill for impairment.
+Added: During fiscal 2024 and 2023, we had eight and seven reporting units, respectively, for the purpose of testing goodwill for impairment.
Goodwill is evaluated for impairment either under a qualitative assessment option or a quantitative approach, which depends on the facts and circumstances of a reporting unit, consideration of the excess of a reporting unit’s fair value over its carrying amount in previous assessments and changes in business environment.
2 unchanged sentences
When performing a quantitative goodwill impairment test, the reporting unit carrying value is compared to its fair value.
−Removed: Goodwill is deemed impaired if, and the impairment loss is recognized for the amount by which, the reporting unit carrying value exceeds its fair value.
+Added: Goodwill is deemed impaired if the reporting unit carrying value exceeds its fair value.
+Added: The impairment loss is recognized for the amount by which the carrying value exceeds its fair value.
+Added: Leidos Holdings, Inc.
+Added: Annual Report
+Added: LEIDOS HOLDINGS, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
We estimate the fair value of each reporting unit using Level 3 inputs when a quantitative analysis is performed.
−Removed: These analyses rely on significant judgments and assumptions about expected future cash flows, weighted-average cost of capital, discount rates, expected long-term growth rates, operating margins and on the selection of guideline public companies.
+Added: These analyses rely on significant judgments and assumptions about expected future cash flows, weighted-average cost of capital, discount rates, expected long-term growth rates, operating margins and selection of guideline public companies.
INTANGIBLE ASSETS
1 unchanged sentence
Program intangible assets are amortized over their respective estimated useful lives in proportion to the pattern of economic benefit based on expected future discounted cash flows.
−Removed: Backlog and trade name intangible assets are amortized on a straight-line basis over their estimated useful lives.
Customer relationships and software and technology intangible assets are amortized either on a straight-line basis over their estimated useful lives or over their respective estimated useful lives in proportion to the pattern of economic benefit based on expected future discounted cash flows, as deemed appropriate.
1 unchanged sentence
Estimated useful lives (in years)
−Removed: Customer relationships 8 - 10
−Removed: Programs 4 - 13
Software and technology 3 - 15
−Removed: Trade names 3
+Added: Programs 4 - 13
+Added: Customer relationships 8 - 10
Intangible assets with finite lives are assessed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
3 unchanged sentences
Maintenance, repairs and minor renewals and improvements are expensed as incurred.
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 81
−Removed: LEIDOS HOLDINGS, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Construction-in-progress (“CIP”) is used to accumulate all costs for projects that are not yet complete.
10 unchanged sentences
We evaluate our long-lived assets for potential impairment whenever there is evidence that events or changes in circumstances indicate that the carrying value may not be recoverable and the carrying value of the asset exceeds its estimated fair value.
+Added: Leidos Holdings, Inc.
+Added: Annual Report
+Added: LEIDOS HOLDINGS, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
We have facilities and equipment lease arrangements.
9 unchanged sentences
Variable lease payments that depend on an index or a rate are included in the determination of ROU assets and lease liabilities using the index or rate at the lease commencement date, whereas variable lease payments that do not depend on an index or rate are recorded as lease expense in the period incurred.
−Removed: At December 29, 2023, certain of the Company's equipment leases include residual value guarantees.
+Added: At January 3, 2025, certain of the Company’s equipment leases include residual value guarantees.
We use the practical expedient to not separate non-lease components from lease components and instead account for both components as a single lease.
4 unchanged sentences
This includes an establishment of a plan of abandonment, which occurs when we have committed to a plan to abandon the lease before the end of its previously estimated useful life and there is no expectation that we will re-enter or re-purpose the space.
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 82
−Removed: LEIDOS HOLDINGS, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
We are a lessor on certain equipment sales-type and operating lease arrangements with our customers.
8 unchanged sentences
If we account for an arrangement both as a lease and non-lease component, then the allocation of consideration for each component will be based on the relative standalone sales price.
+Added: Leidos Holdings, Inc.
+Added: Annual Report
+Added: LEIDOS HOLDINGS, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FAIR VALUE MEASUREMENTS
20 unchanged sentences
The fair value of these interest rate swaps is determined based on observed values for the underlying interest rates (Level 2).
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 83
−Removed: LEIDOS HOLDINGS, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
We enter into foreign currency forward contracts in order to mitigate fluctuations in our earnings and cash flows due to changes in foreign currency exchange rates.
9 unchanged sentences
These judgments directly affect the amount of compensation expense that will ultimately be recognized.
+Added: Leidos Holdings, Inc.
+Added: Annual Report
+Added: LEIDOS HOLDINGS, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOREIGN CURRENCY
3 unchanged sentences
Translation adjustments are recorded as accumulated other comprehensive loss in stockholders’ equity.
−Removed: Gains and losses due to movements in foreign currency exchange rates are recognized as "Other expense, net" on the consolidated statements of operations.
+Added: Gains and losses due to movements in foreign currency exchange rates are recognized as “Other income (expense), net” on the consolidated statements of operations.
Note 4—Revenues
2 unchanged sentences
RPO does not include unexercised option periods and future potential task orders expected to be awarded under IDIQ contracts, General Services Administration Schedule or other master agreement contract vehicles, with the exception of certain IDIQ contracts where task orders are not competitively awarded and separately priced but instead are used as a funding mechanism, and where there is a basis for estimating future revenues and funding on future anticipated task orders.
−Removed: As of December 29, 2023, we had $ 15.4 billion of RPO and expect to recognize approximately 62 % and 79 % over the next 12 months and 24 months, respectively, with the remaining to be recognized thereafter.
+Added: As of January 3, 2025, we had $ 16.3 billion of RPO and expect to recognize approximately 65 % and 82 % over the next 12 months and 24 months, respectively, with the remaining to be recognized thereafter.
DISAGGREGATION OF REVENUES
2 unchanged sentences
Disaggregated revenues by customer-type were as follows:
−Removed: Year Ended December 29, 2023
−Removed: Defense Solutions Civil Health Total
−Removed: (in millions)
+Added: Year Ended January 3, 2025
+Added: (in millions) National Security & Digital
+Added: Health & Civil
+Added: Commercial & International
+Added: Defense Systems Total
Intelligence Community $ 5,074 $ 1,032 $ 44 $ 1,812 $ 7,962
−Removed: $ 6,480 $ 97 $ 1,000 $ 7,577
government agencies (1)
3 unchanged sentences
Total $ 7,304 $ 4,994 $ 2,248 $ 2,030 $ 16,576
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 84
−Removed: LEIDOS HOLDINGS, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 29, 2023
−Removed: Defense Solutions Civil Health Total
(in millions)
+Added: National Security & Digital
+Added: Health & Civil
+Added: Commercial & International
+Added: Defense Systems Total
Intelligence Community $ 4,799 $ 1,059 $ 35 $ 1,684 $ 7,577
−Removed: $ 6,027 $ 84 $ 999 $ 7,110
government agencies (1)
4 unchanged sentences
Year Ended December 30, 2022
−Removed: Defense Solutions Civil Health Total
−Removed: (in millions)
+Added: (in millions) National Security & Digital
+Added: Health & Civil
+Added: Commercial & International
+Added: Defense Systems Total
Intelligence Community $ 4,502 $ 1,047 $ 31 $ 1,530 $ 7,110
6 unchanged sentences
Intelligence Community, as well as state and local government agencies.
+Added: Leidos Holdings, Inc.
+Added: Annual Report
+Added: LEIDOS HOLDINGS, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The majority of our revenues are generated from U.S.
4 unchanged sentences
Disaggregated revenues by contract-type were as follows:
−Removed: Year Ended December 29, 2023
−Removed: Defense Solutions Civil Health Total
+Added: Year Ended January 3, 2025
(in millions)
+Added: National Security & Digital
+Added: Health & Civil
+Added: Commercial & International
+Added: Defense Systems Total
Cost-reimbursement and fixed-price-incentive-fee $ 3,870 $ 1,787 $ 358 $ 1,290 $ 7,305
−Removed: $ 4,793 $ 1,900 $ 648 $ 7,341
Firm-fixed-price 2,023 2,990 1,454 587 7,054
−Removed: 2,855 1,105 2,004 5,964
Time-and-materials and fixed-price-level-of-effort 1,411 217 436 153 2,217
−Removed: 1,080 566 388 2,034
Total $ 7,304 $ 4,994 $ 2,248 $ 2,030 $ 16,576
Year Ended December 29, 2023
−Removed: Defense Solutions Civil Health Total
(in millions)
+Added: National Security & Digital
+Added: Health & Civil
+Added: Commercial & International
+Added: Defense Systems Total
Cost-reimbursement and fixed-price-incentive-fee $ 3,808 $ 2,015 $ 345 $ 1,173 $ 7,341
−Removed: $ 4,620 $ 1,781 $ 712 $ 7,113
Firm-fixed-price 2,040 2,006 1,351 567 5,964
−Removed: 2,642 1,077 1,683 5,402
Time-and-materials and fixed-price-level-of-effort 1,294 181 420 139 2,034
−Removed: 980 504 288 1,772
Total $ 7,142 $ 4,202 $ 2,116 $ 1,879 $ 15,339
Year Ended December 30, 2022
−Removed: Defense Solutions Civil Health Total
(in millions)
+Added: National Security & Digital
+Added: Health & Civil
+Added: Commercial & International
+Added: Defense Systems Total
Cost-reimbursement and fixed-price-incentive-fee $ 3,618 $ 2,047 $ 306 $ 1,142 $ 7,113
−Removed: $ 4,792 $ 1,576 $ 508 $ 6,876
Firm-fixed-price 2,031 1,700 1,181 490 5,402
−Removed: 2,290 1,020 1,661 4,971
Time-and-materials and fixed-price-level-of-effort 1,052 166 379 175 1,772
−Removed: 947 448 375 1,770
Total $ 6,701 $ 3,913 $ 1,866 $ 1,807 $ 14,287
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 85
−Removed: LEIDOS HOLDINGS, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Cost-reimbursement and FP-IF contracts are generally lower risk and have lower profits.
−Removed: T&M and FP-LOE contracts are also lower risk, but profits may vary depending on actual labor costs compared to negotiated contract billing rates.
+Added: Cost-reimbursement and FPIF contracts are generally lower risk and have lower profits.
+Added: T&M and FPLOE contracts are also lower risk, but profits may vary depending on actual labor costs compared to negotiated contract billing rates.
FFP contracts offer the potential for higher profits while increasing the exposure to risk of cost overruns.
Disaggregated revenues by geographic location were as follows:
−Removed: Year Ended December 29, 2023
−Removed: Defense Solutions Civil Health Total
+Added: Year Ended January 3, 2025
(in millions)
+Added: National Security & Digital
+Added: Health & Civil
+Added: Commercial & International
+Added: Defense Systems Total
United States $ 7,274 $ 4,989 $ 961 $ 1,982 $ 15,206
−Removed: $ 7,594 $ 3,381 $ 3,040 $ 14,015
International 30 5 1,287 48 1,370
−Removed: 1,134 190 — 1,324
Total $ 7,304 $ 4,994 $ 2,248 $ 2,030 $ 16,576
+Added: Leidos Holdings, Inc.
+Added: Annual Report
+Added: LEIDOS HOLDINGS, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 29, 2023
−Removed: Defense Solutions Civil Health Total
(in millions)
+Added: National Security & Digital Health & Civil Commercial & International Defense Systems Total
United States $ 7,105 $ 4,197 $ 852 $ 1,861 $ 14,015
−Removed: $ 7,212 $ 3,203 $ 2,683 $ 13,098
International 37 5 1,264 18 1,324
−Removed: 1,030 159 — 1,189
Total $ 7,142 $ 4,202 $ 2,116 $ 1,879 $ 15,339
Year Ended December 30, 2022
−Removed: Defense Solutions Civil Health Total
(in millions)
+Added: National Security & Digital Health & Civil Commercial & International Defense Systems Total
United States $ 6,661 $ 3,911 $ 760 $ 1,766 $ 13,098
−Removed: $ 7,045 $ 2,880 $ 2,544 $ 12,469
International 40 2 1,106 41 1,189
−Removed: 984 164 — 1,148
Total $ 6,701 $ 3,913 $ 1,866 $ 1,807 $ 14,287
−Removed: Our international business operations, primarily located in Australia and the U.K., are subject to additional and different risks than our U.S.
+Added: Our international business operations, primarily located in Australia and the UK, are subject to additional and different risks than our U.S.
Failure to comply with U.S.
11 unchanged sentences
Contract liabilities consist of deferred revenue, which represents cash advances received prior to performance for programs and billings in excess of revenue recognized.
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 86
−Removed: LEIDOS HOLDINGS, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The components of contract assets and contract liabilities consisted of the following:
−Removed: Balance sheet line item December 29,
−Removed: 2023 December 30,
(in millions)
+Added: Balance sheet line item January 3,
+Added: 2025 December 29,
Contract assets - current:
7 unchanged sentences
(1) Certain contracts record revenue on a net contract basis, and therefore, the respective deferred revenue balance will not fully convert to revenue.
−Removed: The increase in deferred revenue was primarily due to the timing of advanced payments from customers, offset by revenue recognized during the period.
+Added: The decrease in unbilled receivables was primarily due to the timing of billings, partially offset by revenue recognized on certain contracts during the period.
+Added: The decrease in deferred revenue was primarily due to the timing of advanced payments and revenue recognized during the period.
+Added: Leidos Holdings, Inc.
+Added: Annual Report
+Added: LEIDOS HOLDINGS, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Revenue recognized during fiscal 2024 and 2023 of $ 278 million and $ 232 million, respectively, was included as a contract liability at December 29, 2023, and December 30, 2022, respectively.
3 unchanged sentences
During fiscal 2022, we completed the acquisition of Cobham Aviation Services Australia’s Special Mission business (“Cobham Special Mission”).
−Removed: During fiscal 2021, we completed the acquisitions of Gibbs & Cox, 1901 Group, LLC ("1901 Group") and an immaterial strategic acquisition.
Cobham Special Mission Acquisition
1 unchanged sentence
Cobham Special Mission provides airborne border surveillance and search and rescue services to the Australian Federal Government.
−Removed: In the third quarter of fiscal 2023, we completed the determination of fair values of the assets acquired and liabilities assumed.
−Removed: The final goodwill recognized of $ 22 million represents intellectual capital and the acquired assembled workforce, neither of which qualify for recognition as a separate intangible asset.
−Removed: None of the goodwill recognized is tax deductible.
−Removed: In connection with this acquisition, we acquired property, plant and equipment with a fair value of $ 148 million at the Agreement Date.
−Removed: The following table summarizes the fair value of intangible assets acquired at the Agreement Date and the related weighted average amortization period:
−Removed: Weighted average amortization period Fair value
−Removed: (in years) (in millions)
−Removed: Programs 11 $ 19
−Removed: Technology 10 5
−Removed: Total 11 $ 24
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 87
−Removed: LEIDOS HOLDINGS, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: For fiscal 2023 and 2022, $ 115 million and $ 21 million, respectively, of revenues related to the Cobham Special Mission acquisition were recognized within the Defense Solutions reportable segmen t.
−Removed: Gibbs & Cox Acquisition
−Removed: On May 7, 2021 (the "Purchase Date"), we completed the acquisition of Gibbs & Cox for purchase consideration of approximately $ 375 million, net of $ 1 million of cash acquired.
−Removed: Gibbs & Cox is an independent engineering and design firm specializing in naval architecture, marine engineering, management support and engineering consulting.
−Removed: The final goodwill recognized of $ 276 million represents intellectual capital and the acquired assembled workforce, neither of which qualify for recognition as a separate intangible asset.
−Removed: All of the goodwill recognized is tax deductible.
−Removed: The following table summarizes the fair value of intangible assets acquired at the Purchase Date and the related weighted average amortization period:
−Removed: Weighted average amortization period Fair value
−Removed: (in years) (in millions)
−Removed: Programs 12 $ 89
−Removed: For fiscal 2023, 2022 and 2021, $ 129 million, $ 114 million and $ 98 million, respectively, of revenues related to the Gibbs & Cox acquisition were recognized within the Defense Solutions reportable segment .
−Removed: 1901 Group Acquisition
−Removed: On January 14, 2021 (the "Closing Date"), we completed the acquisition of 1901 Group for purchase consideration of $ 212 million, net of $ 2 million of cash acquired.
−Removed: The final goodwill recognized of $ 123 million represents intellectual capital and the acquired assembled workforce, none of which qualify for recognition as separate intangible assets.
−Removed: Of the goodwill recognized, $ 118 million is tax deductible.
−Removed: The following table summarizes the fair value of intangible assets acquired at the Closing Date and the related weighted average amortization period:
−Removed: Weighted average amortization period Fair value
−Removed: (in years) (in millions)
−Removed: Technology 8 $ 43
−Removed: Programs 10 37
−Removed: For fiscal 2023, 2022 and 2021, $ 46 million, $ 40 million and $ 47 million, respectively, of revenues related to the 1901 Group acquisition were recognized within the Defense Solutions reportable segmen t.
−Removed: Strategic Business Acquisition
−Removed: On September 21, 2021, we completed an immaterial strategic business acquisition for purchase consideration of approximately $ 36 million.
−Removed: In connection with the transaction, the Company recognized an $ 8 million program intangible asset and goodwill of $ 25 million.
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 88
−Removed: LEIDOS HOLDINGS, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Acquisition and Integration Costs
+Added: For fiscal 2024, 2023 and 2022, $ 128 million, $ 115 million and $ 21 million, respectively, of revenues related to the Cobham Special Mission acquisition were recognized within the Commercial & International reportable segmen t.
+Added: Integration Costs
The following expenses were incurred related to the Company’s acquisitions:
+Added: (in millions) January 3,
2025 December 29,
2023 December 30,
−Removed: (in millions)
−Removed: Acquisition costs $ — $ — $ 4
Integration costs
−Removed: Total acquisition and integration costs $ 19 $ 16 $ 24
−Removed: These acquisition and integration costs have been primarily recorded within Corporate and presented in "Acquisition, integration and restructuring costs" on the consolidated statement of operations.
+Added: $ 10 $ 19 $ 16
+Added: These integration costs have been primarily recorded within Corporate and presented in “Acquisition, integration and restructuring costs” on the consolidated statement of operations.
Immaterial Divestiture
On October 20, 2023, we disposed of an immaterial business within our Defense Solutions reportable segment.
−Removed: The preliminary sales price was approximately $ 2 million and net assets of $ 7 million were divested as a result of the transaction.
−Removed: Aviation & Missile Solutions LLC ("AMS")
−Removed: On November 22, 2021, our Defense Solutions reportable segment signed a definitive agreement to dispose of its AMS business in order to focus on leading-edge and technologically advanced services, solutions and products.
−Removed: The divestiture was completed on April 29, 2022.
−Removed: The net sales price was $ 15 million and net assets of $ 19 million were divested.
−Removed: The loss was recorded within "Other expense, net" on the consolidated statements of operations.
−Removed: This disposition did not meet the criteria to be classified as a discontinued operation in the financial statements.
+Added: The final sales price was approximately $ 2 million and net assets of $ 7 million were divested as a result of the transaction.
Note 6—Receivables
The components of receivables, net consisted of the following:
−Removed: 2023 December 30,
(in millions)
+Added: 2025 December 29,
Billed and billable receivables $ 1,820 $ 1,416
2 unchanged sentences
$ 2,645 $ 2,429
−Removed: Sale of Accounts Receivable
−Removed: We have entered into purchase agreements with a financial institution which provide us the election to sell accounts receivable at a discount.
−Removed: The receivables sold are typically collectable from our customers within 30 days of the sale date.
−Removed: During fiscal 2022 and 2021, we sold $ 209 million and $ 693 million, respectively, of accounts receivable under the agreements and received proceeds of $ 209 million and $ 693 million, respectively.
−Removed: These activities are classified as operating activities in the consolidated statements of cash flows.
−Removed: There were no sales of accounts receivable during fiscal 2023.
−Removed: These transfers have been recognized as a sale, as the receivables had been legally isolated from Leidos, the financial institution had the right to pledge or exchange the assets received and we did not maintain effective control over the transferred accounts receivable.
−Removed: As of December 30, 2022, and December 31, 2021, all sold receivables had been remitted to the financial institution.
Leidos Holdings, Inc.
4 unchanged sentences
The components of inventory, net consisted of the following:
−Removed: 2023 December 30,
(in millions)
+Added: 2025 December 29,
Raw materials $ 217 $ 190
2 unchanged sentences
Note 8—Goodwill and Intangible Assets
+Added: During fiscal 2024, the Company completed a business realignment, which resulted in identification of new reportable segments.
+Added: The Company commenced operating and reporting under the new organizational structure effective the first day of fiscal 2024 (see "Note 20—Business Segments").
+Added: Goodwill was allocated to the new reporting units within our reportable segments based on a relative fair value approach.
The following table presents changes in the carrying amount of goodwill by reportable segment:
−Removed: Defense Solutions Civil Health Total
(in millions)
+Added: National Security & Digital
+Added: Health & Civil
+Added: Commercial & International
+Added: Defense Systems Total
Goodwill at December 30, 2022
$ 2,755 $ 1,366 $ 1,389 $ 1,186 $ 6,696
+Added: Goodwill impairment — — ( 596 ) — ( 596 )
Acquisitions of businesses (1)
−Removed: Divestiture of a business ( 6 ) — — ( 6 )
+Added: — — ( 4 ) — ( 4 )
Foreign currency translation adjustments 3 — 11 2 16
1 unchanged sentence
2,758 1,366 800 1,188 6,112
−Removed: Goodwill impairment — ( 596 ) — ( 596 )
−Removed: Acquisitions of a business (2)
−Removed: ( 4 ) — — ( 4 )
Foreign currency translation adjustments — — ( 28 ) — ( 28 )
−Removed: Goodwill at December 29, 2023 (3)
+Added: Goodwill at January 3, 2025 (2)
$ 2,758 $ 1,366 $ 772 $ 1,188 $ 6,084
−Removed: (1) Carrying amount includes accumulated impairment losses of $ 369 million and $ 117 million within the Health and Civil segments, respectively.
(1) Adjustment to goodwill resulting from a measurement period purchase accounting adjustment.
−Removed: (3) Carrying amount includes accumulated impairment losses of $ 369 million and $ 713 million within the Health and Civil segments, respectively.
−Removed: Operations of the Security Enterprise Solutions (“SES”) reporting unit rely heavily on the sales and servicing of security and detection products, which continue to be negatively impacted due to delays in airline travel infrastructure projects as customer budgets recover from the pandemic.
−Removed: During the third quarter of fiscal 2023, the SES reporting unit refined its portfolio and made strategic business decisions to exit certain product offerings, and cease operations in certain countries in order to align the operations of the reporting unit with its strategic business plan.
+Added: (2) Carrying amount includes accumulated impairment loss of $ 596 million within the Commercial & International segment.
+Added: Operations of the Security Enterprise Solutions (“SES”) reporting unit rely heavily on the sales and servicing of security and detection products, which prior to fiscal 2024, have been negatively impacted due to delays in airline travel infrastructure projects as customer budgets recover from the pandemic.
+Added: During fiscal 2023, the SES reporting unit refined its portfolio and made strategic business decisions to exit certain product offerings, and cease operations in certain countries in order to align the operations of the reporting unit with its strategic business plan.
These decisions, along with the delays in airline travel infrastructure projects and higher than anticipated servicing costs, contributed to a significant reduction in the reporting unit’s forecasted revenue and cash flows.
As a result, in fiscal 2023, we conducted a quantitative goodwill impairment analysis and our estimates led us to determine that the carrying value of the SES reporting unit exceeded its estimated fair value (see “Note 11—Fair Value Measurements”).
−Removed: Accordingly, we recognized a non-cash goodwill impairment charge of $ 596 million and had $ 308 million of goodwill remaining at the SES reporting unit as of December 29, 2023.
−Removed: The impairment was recorded within the Civil reportable segment in the consolidated statements of operations.
−Removed: In the fourth quarter of fiscal 2023, we performed a qualitative analysis for certain reporting units which determined that it was more likely than not that the fair values of these reporting units were in excess of the individual reporting units' carrying values.
−Removed: We performed a second quantitative analysis for the SES reporting unit and concluded that no incremental impairment was necessary as the fair value of the reporting unit exceeded the carrying value as of the fourth quarter of fiscal 2023.
−Removed: In the event that there are significant unfavorable changes to the forecasted cash flows, forecasted revenue, terminal growth rates or the cost of capital used in the fair value estimates, we may be required to record an additional impairment of goodwill at a future date.
+Added: Accordingly, we recognized a non-cash goodwill impairment charge of $ 596 million at the SES reporting unit as of December 29, 2023.
+Added: The impairment was recorded within the Commercial & International reportable segment in the consolidated statements of operations.
+Added: In the fourth quarter of fiscal 2023, we performed a second quantitative analysis for the SES reporting unit and concluded that no incremental impairment was necessary as the fair value of the reporting unit exceeded the carrying value.
+Added: In the fourth quarter of fiscal 2024, we performed a quantitative analysis for the SES reporting unit and concluded that no further impairment was necessary as the fair value of the reporting unit exceeded the carrying value.
Leidos Holdings, Inc.
3 unchanged sentences
In the fourth quarter of fiscal 2024, 2023 and 2022, we performed a qualitative analysis for certain reporting units which determined that it was more likely than not that the fair values of these reporting units were in excess of the individual reporting units’ carrying values.
−Removed: We performed a quantitative analysis for certain reporting units and concluded that these reporting units were not impaired as their fair values exceeded their carrying values.
+Added: In the event that there are significant unfavorable changes to the forecasted cash flows, forecasted revenue, terminal growth rates or the cost of capital used in the fair value estimates, we may be required to record an additional impairment of goodwill at a future date.
INTANGIBLE ASSETS
Intangible assets, net consisted of the following:
−Removed: December 29, 2023 December 30, 2022
+Added: January 3, 2025 December 29, 2023
+Added: (in millions)
value Accumulated
2 unchanged sentences
amortization Net
−Removed: (in millions)
Finite-lived intangible assets:
2 unchanged sentences
Customer relationships 52 ( 28 ) 24 52 ( 22 ) 30
−Removed: Trade names — — — 1 ( 1 ) —
Total finite-lived intangible assets 1,999 ( 1,486 ) 513 2,004 ( 1,341 ) 663
Indefinite-lived intangible assets:
−Removed: In-process research and development (1)
−Removed: — — — 92 — 92
Trade names 4 — 4 4 — 4
−Removed: Total indefinite-lived intangible assets 4 — 4 96 — 96
Total intangible assets $ 2,003 $ ( 1,486 ) $ 517 $ 2,008 $ ( 1,341 ) $ 667
−Removed: (1) IPR&D intangible assets are indefinite-lived at the acquisition date until placed into service, at which time such assets will be reclassified to a finite-lived amortizable intangible asset.
−Removed: During fiscal 2023, $ 59 million was placed into service and reclassified to software and technology intangible assets.
−Removed: Our strategic decisions regarding SES’ product offerings and operating regions (see the goodwill discussion above) caused certain technology, customer relationships and IPR&D intangible assets to be abandoned and the carrying values of certain program intangible assets to become unrecoverable.
+Added: Our strategic decisions regarding SES’ product offerings and operating regions (see the goodwill discussion above) caused certain technology, customer relationships and in-process research and development ("IPR&D") intangible assets to be abandoned and the carrying values of certain program intangible assets to become unrecoverable.
As a result, we recognized intangible asset impairment charges of $ 79 million for fiscal 2023, which included $ 33 million for IPR&D intangible assets.
−Removed: The impairment was recorded to “Asset impairment charges” in the consolidated statements of operations within the Civil reportable segment.
−Removed: In the event that we are required to make an additional impairment of goodwill at a future date for any of the reasons identified in our discussion of goodwill or if other events occur that negatively impact these intangible assets, we may also be required to record an additional impairment of intangible assets at that time.
+Added: The impairment was recorded to “Asset impairment charges” in the consolidated statements of operations within the Commercial & International reportable segment.
+Added: In the event that we are required to make an additional impairment of goodwill at a future date or if other events occur that negatively impact these intangible assets, we may also be required to record an additional impairment of intangible assets at that time.
Amortization expense related to intangible assets was $ 147 million, $ 202 million and $ 230 million for fiscal 2024, 2023 and 2022, respectively.
+Added: The estimated annual amortization expense related to finite-lived intangible assets as of January 3, 2025, is as follows:
+Added: Fiscal year ending (in millions)
+Added: 2030 and thereafter
+Added: Actual amortization expense in future periods could differ from these estimates as a result of future acquisitions, divestitures, impairments and other factors.
Leidos Holdings, Inc.
2 unchanged sentences
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: The estimated annual amortization expense related to finite-lived intangible assets as of December 29, 2023, is as follows:
−Removed: Fiscal Year Ending
−Removed: (in millions)
−Removed: 2029 and thereafter 162
−Removed: Actual amortization expense in future periods could differ from these estimates as a result of future acquisitions, divestitures, impairments and other factors.
Note 9—Property, Plant and Equipment
Property, plant and equipment, net consisted of the following:
−Removed: 2023 December 30,
(in millions)
+Added: 2025 December 29,
Computers and other equipment $ 473 $ 455
6 unchanged sentences
Depreciation expense was $ 143 million, $ 129 million and $ 103 million for fiscal 2024, 2023 and 2022, respectively.
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 92
−Removed: LEIDOS HOLDINGS, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 10—Leases
ROU assets and lease liabilities consisted of the following:
−Removed: Balance sheet line item December 29,
−Removed: 2023 December 30,
(in millions)
+Added: Balance sheet line item January 3,
+Added: 2025 December 29,
Finance leases Property, plant and equipment, net $ 69 $ 89
6 unchanged sentences
Operating leases Operating lease liabilities 621 516
+Added: During fiscal 2024 and 2022, we reduced our leased space by exiting and consolidating underutilized buildings as part of an ongoing facility rationalization effort.
+Added: We used discounted cash flow models to estimate the fair values of the affected assets and as a result, we recorded impairments of ROU and other assets in the amount of $ 11 million and $ 37 million for fiscal 2024 and 2022, respectively.
+Added: The impairment charges were allocated across our reportable segments and to Corporate.
+Added: In fiscal 2024, we took occupancy of our newly constructed facility in San Diego, CA.
+Added: As a result we recorded $ 117 million of ROU assets and $ 169 million of lease liabilities.
In fiscal 2022, the Company entered into a Master Lease Agreement whereby we agreed to lease two aircraft from the time each aircraft is accepted through June 30, 2027.
In March 2023, we took possession of both aircraft and recognized a $ 64 million finance lease obligation and a corresponding ROU asset.
−Removed: During fiscal 2022, we reduced our leased space by exiting and consolidating underutilized buildings as part of an ongoing facility rationalization effort.
−Removed: We used discounted cash flow models to estimate the fair values of the affected assets and as a result, we recorded impairments of ROU and other assets in the amount of $ 37 million.
−Removed: The impairment charges were allocated across our reportable segments and to Corporate.
+Added: Leidos Holdings, Inc.
+Added: Annual Report
+Added: LEIDOS HOLDINGS, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Total lease cost for the periods presented consisted of the following:
+Added: (in millions)
2025 December 29,
2023 December 30,
−Removed: (in millions)
Finance lease cost:
8 unchanged sentences
Lease costs and sublease income are included in “Cost of revenues” and “Selling, general and administrative expenses” within the consolidated statements of operations.
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 93
−Removed: LEIDOS HOLDINGS, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Lease terms and discount rates related to leases were as follows:
8 unchanged sentences
Other information related to leases was as follows:
+Added: (in millions)
2025 December 29,
2023 December 30,
−Removed: (in millions)
Cash paid for amounts included in measurement of lease liabilities:
6 unchanged sentences
The change in operating ROU assets and lease liabilities are presented within cash flows from operations on the consolidated statements of cash flows.
−Removed: Future minimum lease commitments of our finance and operating leases on an undiscounted basis, reconciled to the respective lease liability at December 29, 2023, were as follows:
−Removed: Fiscal Year Ending Finance lease commitments Operating lease commitments
−Removed: (in millions)
+Added: Leidos Holdings, Inc.
+Added: Annual Report
+Added: LEIDOS HOLDINGS, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: Future minimum lease commitments of our finance and operating leases on an undiscounted basis, reconciled to the respective lease liability at January 3, 2025, were as follows:
+Added: Fiscal Year Ending (in millions)
+Added: Finance lease commitments Operating lease commitments
2025 $ 22 $ 153
2 unchanged sentences
imputed interest ( 7 ) ( 211 )
−Removed: Lease liability as of December 29, 2023 $ 91 $ 652
−Removed: As of December 29, 2023, we have approximately $ 195 million of facility lease commitments that have not yet commenced.
−Removed: The leases are expected to commence in fiscal 2024 with lease terms ranging from 12 to 16 years.
−Removed: As of December 29, 2023 and December 30, 2022, we had a total net investment in sales-type leases, which relates to lease payment receivables, of $ 100 million and $ 103 million, respectively.
+Added: Lease liability as of January 3, 2025 $ 73 $ 744
+Added: As of January 3, 2025, and December 29, 2023, we had a total net investment in sales-type leases, which relates to lease payment receivables, of $ 94 million and $ 100 million, respectively.
The current and non-current portions of net investment in sales-type leases are included within “Other current assets” and “Other long-term assets”, respectively, on the consolidated balance sheets.
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 94
−Removed: LEIDOS HOLDINGS, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The components of lease income were as follows:
−Removed: Statement of operations line item December 29,
+Added: (in millions)
+Added: Statement of operations line item January 3,
2025 December 29,
2023 December 30,
−Removed: (in millions)
Sales-type leases:
5 unchanged sentences
Total lease income $ 46 $ 58 $ 57
−Removed: As of December 29, 2023, undiscounted cash flows for sales-type and operating leases for the next five years are as follows:
−Removed: Fiscal Year Ending Sales-type leases Operating leases
−Removed: (in millions)
+Added: As of January 3, 2025, undiscounted cash flows for sales-type and operating leases for the next five years are as follows:
+Added: Fiscal Year Ending (in millions)
+Added: Sales-type leases Operating leases
2025 $ 43 $ 5
2 unchanged sentences
Difference between undiscounted cash flows and discounted cash flows $ 4
+Added: Leidos Holdings, Inc.
+Added: Annual Report
+Added: LEIDOS HOLDINGS, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 11—Fair Value Measurements
Financial instruments measured on a recurring basis at fair value consisted of the following:
−Removed: December 29, 2023 December 30, 2022
−Removed: Carrying value Fair value Carrying value Fair value
+Added: January 3, 2025 December 29, 2023
(in millions)
+Added: Carrying value Fair value Carrying value Fair value
Financial assets:
Derivatives $ 4 $ 4 $ 11 $ 11
−Removed: As of December 29, 2023, and December 30, 2022, our derivatives primarily consisted of the cash flow interest rate swaps on $ 500 million and $ 1.0 billion, respectively, of the variable rate senior unsecured term loan (see "Note 12—Derivative Instruments").
−Removed: The fair value of the cash flow interest rate swaps is determined based on observed values for underlying interest rates on the one-month SOFR rate as of December 29, 2023 and the LIBOR yield curve as of December 30, 2022 (Level 2 inputs).
+Added: As of January 3, 2025, and December 29, 2023, our derivatives primarily consisted of the cash flow interest rate swaps on $ 500 million of the variable rate senior unsecured term loan (see “Note 12—Derivative Instruments”).
+Added: The fair value of the cash flow interest rate swaps is determined based on observed values for underlying interest rates on the one-month Secured Overnight Financing Rate ("SOFR") rate as of January 3, 2025, and December 29, 2023 (Level 2 inputs).
Financial instruments measured on a recurring basis at fair value also include our defined benefit plan assets (Level 2 inputs).
See “Note 19—Retirement Plans” for further details on these investments.
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 95
−Removed: LEIDOS HOLDINGS, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The carrying amounts of our financial instruments, other than derivatives, which include cash equivalents, accounts receivable, accounts payable and accrued expenses, are reasonable estimates of their related fair values.
−Removed: The carrying value of our notes receivable of $ 12 million as of both December 29, 2023, and December 30, 2022, approximates fair value as the stated interest rates within the agreements are consistent with the current market rates used in notes with similar terms in the market (Level 2 inputs).
−Removed: As of December 29, 2023, and December 30, 2022, the fair value of debt was $ 4.6 billion for both periods, and the carrying amount was $ 4.7 billion and $ 4.9 billion, respectively (see "Note 13—Debt").
+Added: The carrying value of our notes receivable of $ 16 million and $ 12 million as of January 3, 2025, and December 29, 2023, respectively, approximates fair value as the stated interest rates within the agreements are consistent with the current market rates used in notes with similar terms in the market (Level 2 inputs).
+Added: Our notes receivable are included within “Other current assets” and "Other long-term assets" on the consolidated balance sheets.
+Added: As of January 3, 2025, and December 29, 2023, the fair value of debt was $ 4.5 billion and $ 4.6 billion, respectively, and the carrying amount was $ 4.7 billion for both periods (see “Note 13—Debt”).
The fair value of debt is determined based on current interest rates available for debt with terms and maturities similar to our existing debt arrangements (Level 2 inputs).
6 unchanged sentences
The fair value of the SES reporting unit was determined using Level 3 inputs.
−Removed: On October 30, 2022, non-financial instruments measured at fair value on a non-recurring basis were recorded in connection with the acquisition of Cobham Special Mission.
−Removed: The fair values of the assets acquired and liabilities assumed were determined using Level 3 inputs.
−Removed: See "Note 5—Acquisitions and Divestitures" for further details on this acquisition.
−Removed: As of December 29, 2023, and December 30, 2022, we did not have any assets or liabilities measured at fair value on a non-recurring basis.
+Added: As of January 3, 2025, and December 29, 2023, we did not have any assets or liabilities measured at fair value on a non- recurring basis.
Note 12—Derivative Instruments
The fair value of the interest rate swaps was as follows:
−Removed: Balance sheet line item December 29,
−Removed: 2023 December 30,
(in millions)
−Removed: Cash flow interest rate swaps Other long-term assets $ 11 $ 20
+Added: Balance sheet line item January 3,
+Added: 2025 December 29,
+Added: Cash flow interest rate swaps Other current assets (1)
+Added: (1) As of December 29, 2023, the cash flow interest rate swaps were reported in the "other long-term assets" on the consolidated balance sheet.
The cash flows associated with the interest rate swaps are classified as operating activities in the consolidated statements of cash flows.
+Added: Leidos Holdings, Inc.
+Added: Annual Report
+Added: LEIDOS HOLDINGS, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CASH FLOW HEDGES
2 unchanged sentences
The objective of these instruments is to reduce variability in the forecasted interest payments of the Variable Rate Loan.
−Removed: During fiscal 2023, we modified our interest rate swap agreements to receive monthly variable interest payments based on the one-month SOFR rate as compared to LIBOR, and we will continue to pay interest at a fixed rate.
−Removed: We applied the guidance of ASC 848 which permits the continuation of hedge accounting for such modification.
The interest rate swap transactions are accounted for as cash flow hedges.
1 unchanged sentence
A qualitative assessment of hedge effectiveness is performed on a quarterly basis, unless facts and circumstances indicate the hedge may no longer be highly effective.
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 96
−Removed: LEIDOS HOLDINGS, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The effect of the cash flow hedges on other comprehensive income (loss) and earnings for the periods presented was as follows:
+Added: (in millions)
2025 December 29,
2023 December 30,
−Removed: (in millions)
Total interest expense, net presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded $ 193 $ 212 $ 199
−Removed: $ 212 $ 199 $ 184
Amount recognized in other comprehensive income 5 6 59
1 unchanged sentence
We expect to reclassify net gains of $ 3 million from accumulated other comprehensive loss into earnings during the next 12 months.
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 97
−Removed: LEIDOS HOLDINGS, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Debt consisted of the following:
+Added: (in millions) Stated
interest rate Effective
−Removed: interest rate December 29, 2023 December 30, 2022
−Removed: (in millions)
−Removed: Short-term debt and current portion of long-term debt:
−Removed: Senior unsecured term loans:
−Removed: $ 380 million term loan, due May 2023
−Removed: 6.08 % 6.17 % $ — $ 320
−Removed: Current portion of long-term debt 18 672
−Removed: Total short-term debt and current portion of long-term debt $ 18 $ 992
−Removed: Long-term debt:
−Removed: Senior unsecured term loans:
−Removed: $ 1,925 million term loan, due January 2025
−Removed: 5.77 % 6.09 % $ — $ 1,211
+Added: interest rate January 3, 2025 December 29, 2023
+Added: Senior unsecured term loan:
$ 1,000 million term loan, due March 2028
5 unchanged sentences
4.38 % 4.50 % 750 750
−Removed: $ 750 million notes, due May 2030
−Removed: 4.38 % 4.50 % 750 750
−Removed: $ 750 million notes, due March 2033
−Removed: 5.75 % 5.81 % 750 —
$ 1,000 million notes, due February 2031
2 unchanged sentences
7.13 % 7.43 % 250 250
+Added: $ 750 million notes, due March 2033
+Added: 5.75 % 5.81 % 750 750
$ 300 million notes, due July 2033
7 unchanged sentences
Total long-term debt, net of current portion $ 4,052 $ 4,664
−Removed: $ 4,664 $ 3,928
+Added: Leidos Holdings, Inc.
+Added: Annual Report
+Added: LEIDOS HOLDINGS, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TERM LOANS AND REVOLVING CREDIT FACILITY
2 unchanged sentences
The Revolving Facility permits two additional one-year extensions subject to lender consent.
−Removed: As of December 29, 2023, there were no borrowings outstanding under the Revolving Facility.
+Added: As of January 3, 2025, and December 29, 2023, there were no borrowings outstanding under the Revolving Facility.
The proceeds of the Term Loan Facility and cash on hand on the Closing Date were used to repay in full all indebtedness, terminate all commitments and discharge all guarantees existing in connection with a predecessor $ 1.9 billion senior unsecured term loan facility and a $ 750 million senior unsecured revolving facility.
−Removed: As of December 30, 2022, there were no borrowings outstanding under the predecessor senior unsecured revolving facility.
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 98
−Removed: LEIDOS HOLDINGS, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Borrowings under the Credit Agreement bear interest at a rate determined, at our option, based on either an alternate base rate or a Term SOFR rate with a 0.10 %, per annum Term SOFR adjustment, plus, in each case, an applicable margin that varies depending on our credit rating.
3 unchanged sentences
Interest on the Term Loan Facility for Term SOFR-denominated borrowings is payable on a periodic basis, which must be at least quarterly.
−Removed: The financial covenants in the Term Loan Agreement require that we maintain, as of the last day of each fiscal quarter, a ratio of adjusted consolidated total debt to consolidated EBITDA of not more than 3.75 to 1.00, subject to increases to 4.50 to 1.00 following a material acquisition, and a ratio of EBITDA to consolidated interest expense of not less than 3.50 to 1.00.
−Removed: On May 6, 2022, we entered into a 364 -day term loan credit agreement with certain financial institutions, which provided for a senior unsecured term loan facility in an aggregate principal amount of $ 380 million, and was repaid in fiscal 2023.
−Removed: The proceeds of the term loan were used to repay the $ 380 million senior unsecured term loan entered into on May 7, 2021.
−Removed: On February 28, 2023, we issued and sold $ 750 million aggregate principal amount of fixed-rate senior notes (the “Notes”) maturing in March 2033.
+Added: In fiscal 2023, we issued and sold $ 750 million aggregate principal amount of fixed-rate senior notes (the “Notes”) maturing in March 2033.
The Notes are senior unsecured obligations issued by Leidos, Inc.
2 unchanged sentences
In connection with the issuance of the Notes, $ 11 million of debt issuance costs and debt discounts were recognized, which were recorded as an offset against the carrying value of debt.
−Removed: The proceeds from the Notes were used to repay all of the outstanding obligations in respect of principal, interest and fees on the $ 500 million 2.95 % notes, due May 2023, the majority of which were retired on February 28, 2023.
−Removed: The remaining proceeds from the Notes were used to repay $ 210 million of the outstanding balance on the predecessor $ 1.9 billion senior unsecured term loan facility, due January 2025, and fund general corporate purposes.
+Added: The proceeds from the Notes were used to repay all of the outstanding obligations in respect of principal, interest and fees on the $ 500 million 2.95 % notes, due May 2023, and repay $ 210 million of the outstanding balance on the predecessor $ 1.9 billion senior unsecured term loan facility, due January 2025, and fund general corporate purposes.
COMMERCIAL PAPER
−Removed: We have a commercial paper program in which the Company may issue short-term unsecured commercial paper notes ("Commercial Paper Notes").
−Removed: On May 26, 2023, we increased the size of the commercial paper program by $ 250 million, or not to exceed $ 1.0 billion.
+Added: We have a commercial paper program in which the Company may issue short-term unsecured commercial paper notes (“Commercial Paper Notes”) not to exceed $ 1.0 billion.
The proceeds will be used for general corporate purposes, including working capital, capital expenditures, acquisitions and share repurchases.
1 unchanged sentence
The Commercial Paper Notes will bear either a stated or floating interest rate, if interest bearing, or will be sold at a discount from the face amount.
−Removed: As of December 29, 2023, and December 30, 2022, we did not have any Commercial Paper Notes outstanding.
−Removed: The Credit Facilities, Commercial Paper Notes, senior unsecured term loans and notes are fully and unconditionally guaranteed and contain certain customary restrictive covenants, including among other things, restrictions on our ability to create liens and enter into sale and leaseback transactions under certain circumstances.
−Removed: We were in compliance with all covenants as of December 29, 2023.
+Added: As of January 3, 2025, and December 29, 2023, we did not have any Commercial Paper Notes outstanding.
+Added: The Credit Facilities, Commercial Paper Notes, senior unsecured notes are fully and unconditionally guaranteed and contain certain customary restrictive covenants, including among other things, restrictions on our ability to create liens and enter into sale and leaseback transactions under certain circumstances.
+Added: The financial covenants in the Credit Agreement require that we maintain, as of the last day of each fiscal quarter, a ratio of adjusted consolidated total debt to consolidated EBITDA of not more than 3.75 to 1.00, subject to increases to 4.50 to 1.00 for four fiscal quarters following a material acquisition, and a ratio of EBITDA to consolidated interest expense of not less than 3.50 to 1.00.
+Added: We were in compliance with all covenants as of January 3, 2025.
Leidos Holdings, Inc.
4 unchanged sentences
Future minimum payments of debt are as follows:
−Removed: Fiscal Year Ending
−Removed: (in millions)
+Added: Fiscal Year Ending (in millions)
2030 and thereafter 3,140
1 unchanged sentence
unamortized debt discount and issuance costs ( 32 )
−Removed: Total short-term and long-term debt $ 4,682
+Added: Total long-term debt $ 4,670
Note 14—Accumulated Other Comprehensive Income (Loss)
Changes in the components of Accumulated Other Comprehensive Income (Loss) (“AOCI”) were as follows:
−Removed: Foreign currency translation adjustments Unrecognized gain (loss) on derivative instruments Pension adjustments Total AOCI
−Removed: (in millions)
−Removed: Balance at January 1, 2021 $ 30 $ ( 70 ) $ ( 6 ) $ ( 46 )
+Added: (in millions) Foreign currency translation adjustments Unrecognized gain (loss) on derivative instruments Pension adjustments Total AOCI
+Added: Balance at December 31, 2021 $ 22 $ ( 41 ) $ 7 $ ( 12 )
Other comprehensive income (loss) ( 108 ) 59 ( 27 ) ( 76 )
9 unchanged sentences
Reclassification from AOCI — ( 11 ) — ( 11 )
−Removed: Balance at December 29, 2023 $ ( 39 ) $ 5 $ ( 14 ) $ ( 48 )
−Removed: Reclassifications for unrecognized gain (loss) on derivative instruments are associated with outstanding debt are recorded in "Interest expense, net" on the consolidated statements of operations.
+Added: Balance at January 3, 2025 $ ( 98 ) $ 1 $ ( 13 ) $ ( 110 )
+Added: Reclassifications for unrecognized gain (loss) on derivative instruments associated with outstanding debt are recorded in “Interest expense, net” on the consolidated statements of operations.
See “Note 12—Derivative Instruments” for more information on our interest rate swap agreements.
4 unchanged sentences
Note 15—Composition of Certain Financial Statement Captions
−Removed: Balance Sheets
+Added: Balance Sheets (in millions)
2025 December 29,
−Removed: (in millions)
Other current assets:
11 unchanged sentences
Salaries, bonuses and amounts withheld from employees’ compensation 445 315
−Removed: (1) During the year ended December 29, 2023, and December 30, 2022, $ 417 million and $ 489 million, respectively, of amortization was recognized related to transition costs and project assets.
+Added: (1) During the year ended January 3, 2025, and December 29, 2023, $ 328 million and $ 417 million, respectively, of amortization was recognized related to transition costs and project assets.
(2) Balance represents items that are not individually significant to disclose separately.
5 unchanged sentences
These stock awards are dilutive common share equivalents subject to the treasury stock method.
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 101
−Removed: LEIDOS HOLDINGS, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The weighted average number of shares used to compute basic and diluted EPS attributable to Leidos stockholders were:
+Added: (in millions)
2025 December 29,
2023 December 30,
−Removed: (in millions)
Basic weighted average number of shares outstanding 134 137 137
2 unchanged sentences
Anti-dilutive stock-based awards are excluded from the weighted average number of shares outstanding used to compute diluted EPS.
−Removed: The total outstanding stock options and vesting stock awards that were anti-dilutive were 1 million for each of the periods presented above.
+Added: The total number of outstanding stock options and vesting stock awards that were anti-dilutive was less than 0.5 million for fiscal 2024 and 1 million for both fiscal 2023 and 2022.
+Added: Leidos Holdings, Inc.
+Added: Annual Report
+Added: LEIDOS HOLDINGS, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SHARE REPURCHASES
1 unchanged sentence
There were no open market share repurchases in fiscal 2022.
−Removed: In fiscal 2022, we entered into Accelerated Share Repurchase agreement with a financial institution to repurchase shares of our outstanding common stock.
+Added: In fiscal 2022, we entered into an Accelerated Share Repurchase agreement with a financial institution to repurchase shares of our outstanding common stock.
We paid $ 500 million to the financial institution and received 4.8 million shares.
3 unchanged sentences
PLAN SUMMARIES
−Removed: As of December 29, 2023, we had stock-based compensation awards outstanding under the following plans:
+Added: As of January 3, 2025, we had stock-based compensation awards outstanding under the following plans:
the 2017 Omnibus Incentive Plan, the 2006 Equity Incentive Plan, as amended, and the 2006 Employee Stock Purchase Plan, as amended (“ESPP”).
2 unchanged sentences
We grant service-based awards that generally vest or become exercisable 33 % a year over three years , 25 % a year over four years or cliff vest in three years .
−Removed: As of December 29, 2023, 3.8 million shares of Leidos' stock were reserved for future issuance under the 2017 Omnibus Incentive Plan and the 2006 Equity Incentive Plan.
+Added: As of January 3, 2025, 2.9 million shares of Leidos’ stock were reserved for future issuance under the 2017 Omnibus Incentive Plan and the 2006 Equity Incentive Plan.
We offer eligible employees the opportunity to defer restricted stock units into an equity-based deferred equity compensation plan, the Key Executive Stock Deferral Plan (“KESDP”).
7 unchanged sentences
A total of 1.9 million shares remain available for future issuance under the ESPP.
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 102
−Removed: LEIDOS HOLDINGS, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Stock-based compensation and related tax benefits recognized under all plans were as follows:
+Added: (in millions)
2025 December 29,
2023 December 30,
−Removed: (in millions)
Total stock-based compensation expense $ 85 $ 77 $ 73
−Removed: $ 77 $ 73 $ 67
Tax benefits recognized from stock-based compensation 17 17 16
4 unchanged sentences
The fair value of the stock option awards to employees are expensed on a straight-line basis over the vesting period of three or four years , except for stock options granted to our outside directors, which is recognized over the vesting period of one year or less.
−Removed: During fiscal 2023, 2022 and 2021, we used a blended approach to measure expected volatility that is based on our weighted average historical and implied volatilities.
+Added: During fiscal 2024, 2023 and 2022, we used a blended approach to measure expected volatility that is based on our weighted average historical and implied volatility.
+Added: Leidos Holdings, Inc.
+Added: Annual Report
+Added: LEIDOS HOLDINGS, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The risk-free rate is derived using the yield curve of a zero-coupon U.S.
9 unchanged sentences
Dividend yield 1.3 % 1.4 % 1.6 %
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 103
−Removed: LEIDOS HOLDINGS, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Stock option activity for each of the periods presented was as follows:
4 unchanged sentences
(in millions) (in years) (in millions)
−Removed: Outstanding at January 1, 2021 2.2 $ 56.01 3.5 $ 108
+Added: Outstanding at December 31, 2021 2.1 $ 65.18 3.5 $ 54
Options granted 0.3 105.01
9 unchanged sentences
Options exercised ( 0.8 ) 80.93 43
−Removed: Outstanding at December 29, 2023 1.9 $ 86.22 3.7 $ 41
−Removed: Exercisable at December 29, 2023 1.1 $ 78.73 2.6 $ 32
−Removed: Vested and expected to vest in the future as of December 29, 2023
+Added: Outstanding at January 3, 2025 1.2 $ 97.53 3.9 $ 58
+Added: Exercisable at January 3, 2025 0.6 $ 86.05 2.7 $ 36
+Added: Vested and expected to vest in the future as of January 3, 2025
1.2 $ 97.34 3.9 $ 58
−Removed: As of December 29, 2023, there was $ 7 million of unrecognized compensation cost, net of estimated forfeitures, related to stock options, which is expected to be recognized over a weighted-average period of 1.8 years.
+Added: As of January 3, 2025, there was $ 6 million of unrecognized compensation cost, net of estimated forfeitures, related to stock options, which is expected to be recognized over a weighted-average period of 1.6 years.
Tax benefits from stock options exercised for fiscal 2024, 2023 and 2022 were $ 7 million, $ 2 million and $ 9 million, respectively.
6 unchanged sentences
Restricted stock units and awards activity for each of the periods presented was as follows:
+Added: (in millions)
Shares of stock
2 unchanged sentences
date fair value
−Removed: (in millions)
−Removed: Unvested stock awards at January 1, 2021 1.3 $ 79.05
+Added: Unvested stock awards at December 31, 2021 1.4 $ 88.89
Awards granted 0.5 104.78
9 unchanged sentences
Awards vested ( 0.6 ) 94.94
−Removed: Unvested stock awards at December 29, 2023 1.4 $ 97.71
−Removed: As of December 29, 2023, there was $ 57 million of unrecognized compensation cost, net of estimated forfeitures, related to restricted stock units, which is expected to be recognized over a weighted average period of 1.8 years.
+Added: Unvested stock awards at January 3, 2025 1.2 $ 111.43
+Added: As of January 3, 2025, there was $ 56 million of unrecognized compensation cost, net of estimated forfeitures, related to restricted stock units, which is expected to be recognized over a weighted average period of 1.7 years.
The fair value of restricted stock units that vested in fiscal 2024, 2023 and 2022 was $ 74 million, $ 40 million and $ 52 million, respectively.
11 unchanged sentences
Performance-based stock award activity for each of the periods presented was as follows:
+Added: (in millions)
Expected number
5 unchanged sentences
date fair value
−Removed: (in millions)
−Removed: Unvested at January 1, 2021 0.5 $ 80.20
+Added: Unvested at December 31, 2021 0.5 $ 88.72
Awards granted 0.2 114.98
9 unchanged sentences
Awards vested ( 0.2 ) 88.81
−Removed: Unvested at December 29, 2023 0.6 $ 102.22
+Added: Unvested at January 3, 2025 0.4 $ 123.89
The weighted average grant date fair value for performance-based stock, excluding those with a market condition, during fiscal 2024, 2023 and 2022 was $ 130.15 , $ 93.90 and $ 105.07 , respectively.
6 unchanged sentences
Weighted average grant date stock price $ 130.15 $ 93.90 $ 107.67
−Removed: As of December 29, 2023, there was $ 18 million of unrecognized compensation cost, net of estimated forfeitures, which is expected to be recognized over a weighted average period of 1.6 years.
+Added: As of January 3, 2025, there was $ 24 million of unrecognized compensation cost, net of estimated forfeitures, which is expected to be recognized over a weighted average period of 1.8 years.
The fair value of performance-based stock awards that vested in fiscal 2024, 2023 and 2022 was $ 16 million, $ 12 million, and $ 17 million, respectively.
5 unchanged sentences
The provision for income taxes for the periods presented included the following:
+Added: (in millions) January 3,
2025 December 29,
2023 December 30,
−Removed: (in millions)
Federal $ 381 $ 212 $ 290
6 unchanged sentences
A reconciliation of the provision for income taxes to the amount computed by applying the statutory federal income tax rate to income before income taxes for the periods presented was as follows:
+Added: (in millions)
2025 December 29,
2023 December 30,
−Removed: (in millions)
Amount computed at the statutory federal income tax rate $ 344 $ 85 $ 186
10 unchanged sentences
Effective income tax rate 23.7 % 48.4 % 21.8 %
−Removed: The effective tax rate for fiscal 2023 was unfavorably impacted primarily by non tax deductible goodwill impairments.
−Removed: The effective tax rates for both fiscal 2022 and fiscal 2021 were favorably impacted primarily by federal research tax credits and excess tax benefits related to employee stock-based payment transactions.
+Added: The effective tax rate for fiscal 2024 was favorably impacted primarily by federal research tax credits and lower state income taxes, partially offset by an increase in unrecognized tax benefits.
+Added: The effective tax rate for fiscal 2023 was unfavorably impacted primarily by non tax deductible goodwill impairments and fiscal 2022 was favorably impacted primarily by federal research tax credits and excess tax benefits related to employee stock-based payment transactions.
Leidos Holdings, Inc.
4 unchanged sentences
Deferred tax assets (liabilities) were comprised of the following:
+Added: (in millions) January 3,
2025 December 29,
−Removed: (in millions)
Capitalized research and development $ 370 $ 290
5 unchanged sentences
Vesting stock awards 30 29
+Added: Deferred revenue 9 —
Accumulated other comprehensive loss 6 —
8 unchanged sentences
Total deferred tax liabilities ( 604 ) ( 570 )
−Removed: Net deferred tax assets (liabilities) $ 99 $ ( 12 )
−Removed: At December 29, 2023, we had state net operating losses of $ 92 million.
−Removed: These will begin to expire in fiscal 2023, however, we expect to utilize $ 76 million of these state net operating losses.
+Added: Net deferred tax assets $ 201 $ 99
+Added: At January 3, 2025, we had state net operating losses of $ 70 million, which we expect to utilize.
+Added: The losses will begin to expire in fiscal 2029.
We had foreign tax credits of $ 24 million that will begin to expire in fiscal 2030.
−Removed: We expect to utilize $ 6 million of these foreign tax credits.
+Added: We expect to utilize $ 4 million of the foreign tax credits.
We also had foreign net operating losses of $ 57 million, which do not expire.
−Removed: We expect to utilize $ 2 million of these foreign net operating losses.
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 108
−Removed: LEIDOS HOLDINGS, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: We expect to utilize $ 30 million of the foreign net operating losses.
Income tax balance sheet items are included in the accompanying consolidated balance sheets as follows:
−Removed: 2023 December 30,
(in millions)
+Added: 2025 December 29,
Other current assets:
4 unchanged sentences
Income taxes payable $ 21 $ 3
−Removed: Deferred tax liabilities $ 3 $ 40
Other long-term liabilities:
+Added: Deferred tax liabilities $ 2 $ 3
Unrecognized tax benefits $ 162 $ 114
+Added: Leidos Holdings, Inc.
+Added: Annual Report
+Added: LEIDOS HOLDINGS, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unrecognized tax benefits are primarily related to certain recurring deductions customary for our industry.
The changes in the unrecognized tax benefits were as follows:
+Added: (in millions) January 3,
2025 December 29,
2023 December 30,
−Removed: (in millions)
Unrecognized tax benefits at beginning of year $ 110 $ 92 $ 2
7 unchanged sentences
Unrecognized tax benefits that, if recognized, would affect the effective income tax rate $ 57 $ 15 $ —
−Removed: At December 29, 2023, December 30, 2022, and December 31, 2021, the balance of unrecognized tax benefits included liabilities for uncertain tax positions of $ 110 million, $ 92 million and $ 2 million, respectively, which were classified as other long-term liabilities on the consolidated balance sheets.
−Removed: For fiscal 2023, unrecognized tax benefits decreased $ 54 million for tax positions related to prior years, primarily as a result of completing a detailed study of our capitalized research and development costs and considering recent guidance issued by the Internal Revenue Service.
+Added: At January 3, 2025, December 29, 2023, and December 30, 2022, the balance of unrecognized tax benefits included liabilities for uncertain tax positions of $ 173 million, $ 110 million and $ 92 million, respectively.
+Added: At January 3, 2025, $ 17 million of the balance of unrecognized tax benefits was classified as accounts payable and accrued liabilities, and $ 156 million was classified as other long-term liabilities on the consolidated balance sheets.
+Added: At December 29, 2023, and December 30, 2022, the balance of the unrecognized tax benefits were classified as other long-term liabilities on the consolidated balance sheets.
+Added: For fiscal 2024, unrecognized tax benefits decreased $ 16 million for tax positions related to prior years, primarily as a result of resolving uncertainty regarding capitalized research and development costs with the IRS for the tax year ended December 30, 2022, partially offset by an increase in uncertain state tax positions.
In addition, unrecognized tax benefits increased $ 80 million for tax positions related to the current year, primarily as a result of capitalized research and development costs.
−Removed: At December 29, 2023, accrued interest and penalties totaled $ 4 million.
−Removed: At December 30, 2022, and December 31, 2021, accrued interest and penalties were immaterial.
−Removed: For fiscal 2023, $ 4 million of interest and penalties were recognized in the Company's consolidated statements of operations.
−Removed: For fiscal 2022 and 2021, the amount of interest and penalties was immaterial .
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 109
−Removed: LEIDOS HOLDINGS, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: At January 3, 2025, and December 29, 2023, accrued interest and penalties totaled $ 7 million and $ 4 million, respectively.
+Added: At December 30, 2022, accrued interest and penalties were immaterial.
+Added: For fiscal 2024 and 2023, $ 7 million and $ 4 million respectively, of interest and penalties were recognized in the Company’s consolidated statements of operations.
We file income tax returns in the United States and various state and foreign jurisdictions.
−Removed: For the years ended December 30, 2022, and December 29, 2023, we are participating in the Internal Revenue Service (“IRS”) Compliance Assurance Process ("CAP"), a real-time audit of our consolidated federal corporate income tax returns.
−Removed: The IRS has examined our consolidated federal income tax returns through the year ended January 3, 2020.
+Added: For the years ended December 30, 2022, December 29, 2023, and January 3, 2025, we are participating in the Internal Revenue Service (“IRS”) Compliance Assurance Process (“CAP”), a real-time audit of our consolidated federal corporate income tax returns.
+Added: The IRS has completed their examination of our consolidated federal income tax returns through the year ended December 31, 2021.
For the years ended January 1, 2021, and December 31, 2021, we were selected to participate in the phase of CAP reserved for taxpayers whose risk of noncompliance does not warrant use of IRS resources.
We believe that participation in CAP should reduce tax-related uncertainties, if any.
−Removed: Additionally, with a few exceptions, as of December 29, 2023, we were no longer subject to state, local, or foreign examinations by the tax authorities for fiscal years ended on or before January 3, 2020.
−Removed: During the next 12 months, we expect our balance of unrecognized tax benefits to decrease by $ 22 million related to capitalized research and development costs.
+Added: Additionally, with a few exceptions, as of January 3, 2025, we were no longer subject to state, local, or foreign examinations by the tax authorities for fiscal years ended on or before January 1, 2021.
+Added: During the next 12 months, we expect our balance of unrecognized tax benefits to decrease by $ 73 million primarily related to capitalized research and development costs.
While we believe we have adequate accruals for uncertain tax positions, the tax authorities may determine that we owe taxes in excess of recorded accruals or the recorded accruals may be in excess of the final settlement amounts agreed to by tax authorities.
4 unchanged sentences
Company contributions were $ 159 million, $ 148 million and $ 145 million for fiscal 2024, 2023 and 2022, respectively.
+Added: Leidos Holdings, Inc.
+Added: Annual Report
+Added: LEIDOS HOLDINGS, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DEFERRED COMPENSATION PLANS
12 unchanged sentences
We sponsor two frozen defined benefit pension plans (“the Defined Benefit Plans”), one in the United Kingdom (“UK”) for former employees on an expired customer contract and another assumed as a result of the Gibbs & Cox acquisition.
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 110
−Removed: LEIDOS HOLDINGS, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On May 20, 2022, the trustee of our UK defined benefit pension plan (the “Plan”) invested the assets of the Plan in a bulk purchase annuity policy to fully insure the benefits payable to the members of the Plan.
2 unchanged sentences
At this future date, a settlement loss will be recognized for an amount equal to any unamortized loss associated with the Plan recorded within AOCI and any remaining net plan assets of the Plan will be remitted to the Company.
−Removed: As of December 29, 2023, and December 30, 2022, the unamortized loss within AOCI related to the Plan was $ 21 million and $ 20 million, respectively.
−Removed: As of December 29, 2023, and December 30, 2022, the Plan had net assets of $ 8 million and $ 7 million, respectively.
−Removed: The projected benefit obligation of the Defined Benefit Plans as of December 29, 2023, and December 30, 2022, was $ 99 million and $ 101 million, respectively.
−Removed: The decrease in the projected benefit obligation was primarily due to assumption changes, offset by exchange rate movements.
−Removed: The fair value of the Defined Benefit Plans assets as of December 29, 2023, and December 30, 2022, was $ 103 million and $ 101 million, respectively.
−Removed: The decrease was primarily driven by assumption changes to reflect the fair value of the annuity contract and return on plan assets.
−Removed: The UK Plan funding status was overfunded $ 8 million and $ 7 million as of December 29, 2023, and December 30, 2022, respectively.
−Removed: The Gibbs & Cox defined benefit pension plan funding status was underfunded $ 4 million and $ 7 million as of December 29, 2023, and December 30, 2022, respectively.
−Removed: The fair value of Plans assets has been included within "Other long-term liabilities" on the consolidated balance sheets.
+Added: As of January 3, 2025, and December 29, 2023, the unamortized loss within AOCI related to the Plan was $ 20 million and $ 21 million, respectively.
+Added: As of January 3, 2025, and December 29, 2023, the Plan had net assets of $ 7 million and $ 8 million, respectively.
+Added: The projected benefit obligation of the Defined Benefit Plans as of January 3, 2025, and December 29, 2023, was $ 88 million and $ 99 million, respectively.
+Added: The decrease in the projected benefit obligation was primarily due to assumption changes.
+Added: The fair value of the Defined Benefit Plans assets as of January 3, 2025, and December 29, 2023, was $ 94 million and $ 103 million, respectively.
+Added: The decrease was primarily driven by assumption changes to reflect the fair value of the annuity contract.
+Added: The UK Plan funding status was overfunded $ 7 million and $ 8 million as of January 3, 2025, and December 29, 2023, respectively.
+Added: The Gibbs & Cox defined benefit pension plan funding status was underfunded $ 1 million and $ 4 million as of January 3, 2025, and December 29, 2023, respectively.
+Added: The fair value of the the Defined Benefit Plans' assets has been included within “Other long-term liabilities” and "Other long-term assets" on the consolidated balance sheets.
We also sponsor multiemployer defined benefit pension plans and defined contribution plans (401(k) plans) (the “Sponsored Plans”) for employees working on two U.S.
12 unchanged sentences
We define our reportable segments based on the way the CODM, currently the Chief Executive Officer, manages the operations for purposes of allocating resources and assessing performance.
−Removed: Our business has been aligned into three reportable segments (Defense Solutions, Civil and Health).
−Removed: Additionally, we separately present the unallocable costs associated with corporate functions as Corporate.
−Removed: Defense Solutions has provided leading-edge and technologically advanced services, solutions and products to a broad customer base.
−Removed: 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.
−Removed: We are dedicated to delivering cost-effective solutions backed by innovation-generating research and development to meet the evolving missions of our customers.
−Removed: We provide a diverse portfolio of national security solutions and systems for air, land, sea, space and cyberspace for the U.S.
−Removed: Intelligence Community, the DoD, the Space Development Agency, the National Aeronautics and Space Administration, Defense Information Systems Agency, military services, government agencies of U.S.
−Removed: allies abroad and other federal and commercial customers in the national security industry.
+Added: The CODM considers segment revenue and operating income to assist with the evaluation of strategic business decisions, including potential acquisitions or divestitures, whether to invest in certain products or services, share repurchases and the declaration of dividends.
+Added: Beginning in fiscal 2024, we realigned our business to report in six operating segments, which are aggregated into four reportable segments in accordance with the criteria established under ASC 280:
+Added: National Security & Digital, Health & Civil, Commercial & International and Defense Systems.
+Added: Our reportable segments are focused on specific, defined capability sets that we bring to our customers.
+Added: Additionally, we separately present the unallocated costs associated with corporate functions as Corporate.
+Added: As a result of this change, prior year segment results have been recast to reflect the current reportable segment structure.
+Added: Our National Security & Digital business provides leading-edge and technologically advanced services, solutions and products, as well as mission software capabilities for defense and intelligence customers in the areas of cyber, logistics, security operations and decision analytics.
+Added: We also deliver IT operations and digital transformation programs across all U.S.
+Added: federal government customers.
+Added: Our advanced capabilities include the delivery of technology-enabled services, mission software capabilities and IT modernization services.
+Added: Our capabilities allow us to provide innovative technology solutions in software development, engineering & design, modeling & simulation, analytics, cyber security, intelligence analysis, linguistics and mission operations.
+Added: Our Health & Civil business provides services and solutions to federal and commercial customers in the areas of public health, care coordination, life and environmental sciences and transportation.
+Added: We are dedicated to delivering effective and affordable solutions that are responsible for the health and well-being of people, including service members and veterans.
+Added: Our core capabilities include health information management services, managed health services, systems and infrastructure modernization, and life sciences research and development.
+Added: We help customers achieve their missions and take on the connected world with data-driven insights, improved efficiencies and technological advantages.
+Added: Our Commercial & International business delivers a portfolio of products, services, and solutions aimed at securing national assets, modernizing energy and critical infrastructure, and enhancing mission outcomes.
+Added: Our key customers include Investor-Owned Utilities, government agencies in the United Kingdom and Australia, the Transportation Security Administration, U.S.
+Added: Customs & Border Protection, as well as airports and ports and borders authorities.
+Added: We offer a broad range of capabilities, including design and engineering services, security products and solutions, digital modernization, mission software, logistics, and airborne solutions.
+Added: Our Defense Systems business addresses threats facing our nation by rapidly prototyping and delivering advanced hardware, software, and integrated systems solutions for the U.S.
+Added: Department of Defense, Army, Navy, Air Force, Space Force, Marine Corps, United States Special Operations Command, NASA, Defense Advanced Research Projects Agency, intelligence agencies, and international customers.
We are heavily engaged in the top defense Research Development Test and Evaluation priorities that are driven by critical evolving threat-driven needs.
−Removed: 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.
−Removed: Our Civil business has been focused on modernizing infrastructure, systems and security for government and commercial customers both domestically and internationally.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: The capabilities we provide predominantly fall in four major areas of activity:
−Removed: health information management services, managed health services, digital modernization and life sciences research and development.
+Added: Defense Systems provides services in the air, land, sea, space and cyberspace environments.
+Added: The Defense Systems business is dedicated to delivering cost-effective solutions in the space, airborne, land, maritime and cyber domains and supporting critical missions worldwide.
Corporate includes the operations of various corporate activities, certain corporate expense items that are not reimbursed by our U.S.
5 unchanged sentences
The following table summarizes business segment information for the periods presented:
−Removed: 2023 December 30,
−Removed: 2022 December 31,
−Removed: (in millions)
−Removed: Defense Solutions $ 8,732 $ 8,244 $ 8,032
−Removed: Civil 3,664 3,464 3,157
−Removed: Health 3,042 2,688 2,548
−Removed: Total revenues $ 15,438 $ 14,396 $ 13,737
−Removed: Operating income (loss):
−Removed: Defense Solutions $ 636 $ 541 $ 569
−Removed: Civil ( 413 ) 234 248
−Removed: Health 528 421 442
−Removed: Corporate ( 130 ) ( 108 ) ( 107 )
+Added: Year Ended January 3, 2025
+Added: (in millions) National Security & Digital Health & Civil Commercial & International Defense Systems Total
+Added: Revenues $ 7,365 $ 5,015 $ 2,252 $ 2,030 $ 16,662
+Added: Direct labor 1,934 951 407 407 3,699
+Added: Amortization of intangible assets 23 27 30 67 147
+Added: Other segment expense 4,688 2,942 1,711 1,462 10,803
+Added: Segment operating income $ 720 $ 1,095 $ 104 $ 94 $ 2,013
+Added: Corporate expense
Total operating income $ 1,827
+Added: Year Ended December 29, 2023
+Added: (in millions) National Security & Digital Health & Civil Commercial & International Defense Systems Total
+Added: Revenues $ 7,196 $ 4,238 $ 2,126 $ 1,878 $ 15,438
+Added: Direct labor 1,838 894 386 378 3,496
Amortization of intangible assets 47 40 37 78 202
−Removed: Defense Solutions $ 117 $ 130 $ 121
−Removed: Civil 62 70 73
−Removed: Health 23 30 34
−Removed: Total amortization of intangible assets $ 202 $ 230 $ 228
+Added: Other segment expense 4,639 2,730 2,263 1,357 10,989
+Added: Segment operating income (loss) $ 672 $ 574 $ ( 560 ) $ 65 $ 751
+Added: Corporate expense
+Added: Total operating income $ 621
+Added: Year Ended December 30, 2022
+Added: (in millions)
+Added: National Security & Digital
+Added: Health & Civil Commercial & International Defense Systems Total
+Added: Revenues $ 6,745 $ 3,945 $ 1,900 $ 1,806 $ 14,396
+Added: Direct labor 1,699 825 322 368 3,214
+Added: Amortization of intangible assets 57 48 35 89 229
+Added: Other segment expense 4,383 2,624 1,412 1,338 9,757
+Added: Segment operating income $ 606 $ 448 $ 131 $ 11 $ 1,196
+Added: Corporate expense
+Added: Total operating income $ 1,088
The statement of operations performance measures used to evaluate segment performance are revenues and operating income.
−Removed: As a result, "Interest expense, net," "Other expense, net," and "Income tax expense," as reported in the consolidated financial statements are not allocated to our segments.
+Added: As a result, “Interest expense, net,” “Other income (expense), net,” and “Income tax expense,” as reported in the consolidated financial statements are not allocated to our segments.
+Added: Other segment expenses include direct program costs such as materials and subcontractor expenses, as well as allocable indirect costs such as depreciation and Corporate compensation expenses, but excludes direct labor which is separately presented above.
+Added: The Health & Civil and Defense Systems segments also include equity earnings of non-consolidated subsidiaries within operating income.
+Added: Leidos Holdings, Inc.
+Added: Annual Report
+Added: LEIDOS HOLDINGS, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
government Cost Accounting Standards, indirect costs including depreciation expense are collected in indirect cost pools, which are then collectively allocated out to the reportable segments based on a representative causal or beneficial relationship of the costs in the pool to the costs in the base.
2 unchanged sentences
Asset information by segment is not a key measure of performance used by the CODM.
−Removed: We generated approximately 87 % of our total revenues in fiscal 2023, 86 % in fiscal 2022 and 87 % in fiscal 2021 from contracts with the U.S.
+Added: We generated approximately 87 % of our total revenues in both fiscal 2024 and 2023, and 86 % in fiscal 2022 from contracts with the U.S.
government, either as a prime contractor or a subcontractor to other contractors engaged in work for the U.S.
1 unchanged sentence
Intelligence Community, including subcontracts under which the DoD or the U.S.
−Removed: Intelligence Community is the ultimate purchaser, represented approximately 49 % of our total revenues for fiscal 2023 and 44 % of total revenues for both fiscal 2022 and 2021.
−Removed: Approximately 9 % of our revenues in fiscal 2023, and 8 % in both fiscal 2022 and 2021, are generated by entities outside of the United States.
+Added: Intelligence Community is the ultimate purchaser, represented approximately 48 % of our total revenues for fiscal 2024 and 49 % of total revenues for fiscal 2023 and 44 % of total revenues for fiscal 2022.
+Added: Revenues generated by entities outside of the United States were approximately 8 % in both fiscal 2024 and 2022, and 9 % in fiscal 2023.
As such, additional financial information by geographic location is not presented.
2 unchanged sentences
We are involved in various claims and lawsuits arising in the normal conduct of our business, none of which, in the opinion of management, based upon current information, will likely have a material adverse effect on our financial position, results of operations or cash flows.
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 113
−Removed: LEIDOS HOLDINGS, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONTINGENCIES
−Removed: VirnetX, Inc.
−Removed: On April 10, 2018, a jury trial concluded in an additional patent infringement case brought by VirnetX against Apple, referred to as the Apple II case, in which the jury returned a verdict against Apple for infringement and awarded VirnetX damages in the amount of over $ 502 million.
−Removed: On April 11, 2018, in a second phase of the Apple II trial, the jury found Apple's infringement to be willful.
−Removed: On August 30, 2018, the federal trial court in the Eastern District of Texas entered a final judgment and rulings on post-trial motions in the Apple II case.
−Removed: The court affirmed the jury’s verdict of over $ 502 million and granted VirnetX’s motions for supplemental damages, a sunset royalty and royalty rate of $ 1.20 per infringing device, along with pre-judgment and post-judgment interest and costs.
−Removed: The court denied VirnetX’s motions for enhanced damages, attorneys’ fees and an injunction.
−Removed: The court also denied Apple’s motions for judgment as a matter of law and for a new trial.
−Removed: An additional sum of over $ 93 million for costs and pre-judgment interest was subsequently agreed upon pursuant to a court order, bringing the total award to VirnetX in the Apple II case to over $ 595 million.
−Removed: Apple filed an appeal of the judgment in the Apple II case with the U.S.
−Removed: Court of Appeals for the Federal Circuit, and on November 22, 2019, the Federal Circuit affirmed in part, reversed in part and remanded the Apple II case back to the District Court.
−Removed: The Federal Circuit affirmed that Apple infringed two of the patents at issue in the case, and ruled that Apple is precluded from making certain patent invalidity arguments.
−Removed: However, the Federal Circuit reversed the judgment that Apple infringed two other patents at issue, vacated the prior damages awarded in the Apple II case, and remanded the Apple II case back to the District Court for further proceedings regarding damages.
−Removed: On April 23, 2020, the District Court ordered a new trial on damages in the Apple II case, which was delayed by the coronavirus pandemic and started on October 26, 2020.
−Removed: On October 30, 2020, the jury awarded VirnetX $ 503 million in damages and specified a royalty rate of $ 0.84 per infringing device.
−Removed: In January 2021, the District Court entered final judgment affirming the jury award and the parties separately agreed on additional costs and interest of over $ 75 million, subject to Apple's appeal.
−Removed: On February 4, 2021, Apple filed a notice of appeal with the U.S.
−Removed: Court of Appeals for the Federal Circuit in the Apple II case.
−Removed: Under our agreements with VirnetX, Leidos would receive 25 % of the proceeds obtained by VirnetX after reduction for attorneys' fees and costs.
−Removed: However, the verdict in the Apple II case remains subject to the ongoing and potential future proceedings and appeals.
−Removed: In addition, the patents at issue in these cases are subject to U.S.
−Removed: Patent and Trademark Office ("USPTO") post-grant inter partes review and/or reexamination proceedings and related appeals, which may result in all or part of these patents being invalidated or the claims of the patents being limited.
−Removed: On March 30, 2023, the U.S.
−Removed: Court of Appeals for the Federal Circuit issued a ruling affirming prior decisions of the USPTO’s Patent Trial and Appeal Board finding certain claims of the patents at issue in the Apple II case to be unpatentable.
−Removed: On March 31, 2023, the Federal Circuit issued a decision vacating the District Court’s judgment in the Apple II case and remanding it back to the District Court with instructions to dismiss the case as moot.
−Removed: These Federal Circuit decisions remain subject to potential motions and/or appeals by VirnetX, including potentially seeking rehearing or certiorari review.
−Removed: On May 1, 2023, VirnetX filed a petition for panel rehearing on the Apple II litigation decision at the Federal Circuit, but this petition was denied by the Federal Circuit on June 27, 2023.
−Removed: On June 5, 2023, VirnetX filed a petition for panel rehearing on the Federal Circuit’s decision finding the patents at issue in the Apple II case to be unpatentable, but this petition was denied by the Federal Circuit on June 22, 2023.
−Removed: On September 20, 2023, VirnetX filed a petition for a writ of certiorari with the Supreme Court of the United States to review the Federal Circuit decisions.
−Removed: Thus, no assurances can be given when or if we will receive any proceeds in connection with the Apple II case.
−Removed: In addition, if Leidos receives any proceeds, we are required to pay a royalty to the customer who paid for the development of the technology.
Government Investigations and Reviews
1 unchanged sentence
Adverse findings could have a material effect on our business, financial position, results of operations and cash flows due to our reliance on government contracts.
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 114
−Removed: LEIDOS HOLDINGS, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Defense Contract Audit Agency
−Removed: As of December 29, 2023, active indirect cost audits by the DCAA remain open for fiscal 2021 and subsequent fiscal years.
+Added: As of January 3, 2025, active indirect cost audits by the DCAA remain open for fiscal 2022 and subsequent fiscal years.
Although we have recorded contract revenues based upon an estimate of costs that we believe will be approved upon final audit or review, we cannot predict the outcome of any ongoing or future audits or reviews and adjustments and, if future adjustments exceed estimates, our profitability may be adversely affected.
−Removed: As of December 29, 2023, we believe we have adequately reserved for potential adjustments from audits or reviews of contract costs.
+Added: As of January 3, 2025, we believe we have adequately reserved for potential adjustments from audits or reviews of contract costs.
Other Government Investigations and Reviews
Through its internal processes, the Company discovered, in late 2021, activities by its employees, third party representatives and subcontractors, raising concerns related to a portion of our business that conducts international operations.
−Removed: The Company is conducting an internal investigation, overseen by an independent committee of the Board of Directors, with the assistance of external legal counsel, to determine whether the identified conduct may have violated the Company’s Code of Conduct and potentially applicable laws, including the U.S.
−Removed: Foreign Corrupt Practices Act ("FCPA").
−Removed: The Company has voluntarily self-reported this investigation to the Department of Justice and the Securities and Exchange Commission and is cooperating with both agencies.
−Removed: Because the investigation is ongoing, the Company cannot anticipate the timing, outcome or possible impact of the investigation, although violations of the FCPA and other applicable laws may result in criminal and civil sanctions, including monetary penalties, and reputational damage.
−Removed: In September 2022, the Company received a Federal Grand Jury Subpoena related to the criminal investigation by the U.S.
−Removed: Attorney’s Office for the Southern District of California, in conjunction with the U.S.
−Removed: Department of Justice’s Fraud Division.
−Removed: The subpoena requests documents relating to the conduct that is the subject of the Company’s internal investigation.
−Removed: The Company has responded to the subpoena.
+Added: The Company conducted an internal investigation, overseen by an independent committee of the Board of Directors, with the assistance of external legal counsel, to determine whether the identified conduct may have violated the Company’s Code of Conduct and potentially applicable laws, including the U.S.
+Added: Foreign Corrupt Practices Act.
+Added: The Company voluntarily self-reported this investigation to the Department of Justice and the Securities and Exchange Commission and cooperated with both agencies.
+Added: In December 2024, the Company received notification from the U.S.
+Added: Department of Justice that it had closed its inquiry.
+Added: While the Company has engaged with the SEC, the Company cannot anticipate the timing, outcome or possible impact of an SEC investigation, although violations of applicable laws may result in civil sanctions, including monetary penalties, and reputational damage.
In February 2023, a former employee of the Company who was terminated at the outset of the investigation was indicted on wire fraud and other charges by a Federal Grand Jury in the U.S.
1 unchanged sentence
These charges were later dismissed as a result of the death of the former employee.
+Added: Leidos Holdings, Inc.
+Added: Annual Report
+Added: LEIDOS HOLDINGS, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In August 2022, the Company received a Federal Grand Jury Subpoena in connection with a criminal investigation being conducted by the U.S.
4 unchanged sentences
It is not possible at this time to determine whether we will incur, or to reasonably estimate the amount of, any fines, penalties, or further liabilities in connection with the investigation pursuant to which the subpoena was issued.
−Removed: As of December 29, 2023, we have outstanding letters of credit of $ 64 million, principally related to performance guarantees on contracts and outstanding surety bonds with a notional amount of $ 104 million, principally related to performance and subcontractor payment bonds on contracts.
+Added: As of January 3, 2025, we have outstanding letters of credit of $ 61 million, principally related to performance guarantees on contracts and outstanding surety bonds with a notional amount of $ 121 million, principally related to performance and subcontractor payment bonds on contracts.
The value of the surety bonds may vary due to changes in the underlying project status and/or contractual modifications.
−Removed: As of December 29, 2023, the future expirations of the outstanding letters of credit and surety bonds were as follows:
−Removed: Fiscal year ending
−Removed: (in millions)
+Added: As of January 3, 2025, the future expirations of the outstanding letters of credit and surety bonds were as follows:
+Added: Fiscal year ending (in millions)
2030 and thereafter 2
1 unchanged sentence
Annual Report
−Removed: LEIDOS HOLDINGS, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Note 22—Subsequent Events
−Removed: Segment Realignment
−Removed: Beginning in fiscal 2024, we will operate in four reportable segments that are focused on specific, defined capability sets we bring to our customers.
−Removed: The four reportable segments will be National Security and Digital, Health & Civil, Commercial & International and Defense Systems.
−Removed: We will also separately present the unallocable costs associated with corporate functions as Corporate.
−Removed: All historical segment financial information will be recast to conform to the new reportable segment structure in our financial statements and accompanying notes, beginning in the first quarter of fiscal 2024.
−Removed: Leidos Holdings, Inc.
−Removed: Annual Report - 116
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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.