What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-06 compared with 2024-10-29 · 113 added, 138 removed, 125 unchanged (67% of the section changed)

10 unchanged sentences

Unless indicated otherwise, references in this report to "we," "us" and "our" refer collectively to Leidos and its consolidated subsidiaries.

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

With a global workforce of approximately 48,000, Leidos is committed to developing smarter technology solutions, particularly for customers in highly regulated industries.

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

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

Leidos is an industry and technology leader serving government and commercial customers with smarter, more efficient digital and mission innovations.

Headquartered in Reston, Virginia, with 47,000 global employees, we bring domain-specific capabilities, technologies and insights to customers in each of these markets by leveraging seven technical core capabilities:

trusted mission artificial intelligence, cyber operations, digital modernization, mission software systems, integrated systems, mission operations, and rapid prototyping and manufacturing.

Our customers include the U.S.

3 unchanged sentences

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

Beginning in fiscal 2024, we realigned our business and operate in four reportable segments that are focused on specific, defined capability sets we bring to our customers.

As a result of this change, prior year segment results and disclosures have been recast to reflect the current reportable segment structure.

We now operate in the following reportable segments:

National Security & Digital, Health & Civil, Commercial & International and Defense Systems.

We also separately present the unallocable costs associated with corporate functions as Corporate (see "Note 10–Business Segments").

BUSINESS ENVIRONMENT AND TRENDS

GOVERNMENT MARKETS

During the three and nine months ended September 27, 2024, we generated approximately 87% of total revenues from contracts with the U.S.

government, as compared to 87% and 86% for the three and nine months ended September 29, 2023, respectively.

During both of the three months ended April 4, 2025, and March 29, 2024, we generated approximately 87% of total revenues from contracts with the U.S.

Accordingly, our business performance is affected by the overall level of U.S.

government spending, especially on national security, homeland security and intelligence, and the alignment of our service and product offerings and capabilities with current and future budget priorities of the U.S.

On September 26, 2024, Congress avoided a federal government shutdown by passing a continuing resolution that provides government funding through December 20, 2024.

The continuing resolution gives lawmakers additional time after the November elections to consider the 12 appropriations bills for government fiscal year 2025, emergency supplemental funding for the recent hurricanes and wildfires, and organize new leadership of the House of Representatives and Senate.

Failure to pass the appropriation bills or another continuing resolution by December 20, 2024, will result in a partial or complete federal government shutdown.

government spending, especially national security, homeland security and intelligence spending, and the alignment of our service and product offerings and capabilities with current and future budget priorities of the U.S.

The federal government is currently operating under a continuing resolution that runs through September 30, 2025.

Key congressional and administrative initiatives under consideration include tax reform, energy policy measures and investments in defense and border security.

The Department of Government Efficiency, established under the current administration aims to streamline federal operations and reduce expenditures which have resulted in contract cancellations, modifications and stop work orders.

As a company, Leidos remains aligned with the administration's efforts to drive efficiency in government agencies and operations, while increasing the quality of mission outcomes.

Leidos Holdings, Inc.

PART I—FINANCIAL INFORMATION

INTERNATIONAL MARKETS

Sales to customers in international markets represented approximately 8% of total revenues for both the three and nine months ended September 27, 2024, as compared to 9% for both the three and nine months ended September 29, 2023.

Sales to customers in international markets represented approximately 8% of total revenues for both of the three months ended April 4, 2025, and March 29, 2024.

Our international customers include foreign governments and their agencies.

Our international business increases our exposure to international markets and the associated international regulatory and geopolitical risks.

Changes in international trade policies, including higher tariffs on imported goods and materials, may increase the procurement cost of certain IT hardware used both on our contracts and internally.

However, we expect to recover certain portions of these higher tariffs through our cost-plus contracts.

We are currently evaluating the impact of higher tariffs, and do not expect the tariffs to have a significant impact to our business.

Our international business increases our exposure to international markets and the associated international regulatory, foreign currency exchange rate and geopolitical risks.

Changes in international trade policies, including higher tariffs on imported goods and materials, may increase the cost of certain goods necessary to fulfill our contractual requirements and for internal purposes.

We expect to recover certain portions of the increase to the cost of goods through contractual measures.

While we continue to evaluate the impact of the higher tariffs, we currently do not expect them to have a significant effect on our business.

RESULTS OF OPERATIONS

The following table summarizes our condensed consolidated results of operations for the periods presented:

Three Months Ended Nine Months Ended

September 27,

2024 September 29,

2023 Dollar change Percent change September 27,

2024 September 29,

2023 Dollar change Percent change

(dollars in millions)

Three Months Ended

(dollars in millions) April 4,

2025 March 29,

2024 Percent change

Revenues $ 4,245 $ 3,975 6.8 %

Operating income (loss) 516 (336) 852 NM 1,406 260 1,146 NM

Operating income

530 415 27.7 %

Non-operating expense, net

(52) (47) 10.6 %

Income (loss) before income taxes

470 (388) 858 NM 1,264 93 1,171 NM

Income before income taxes 478 368 29.9 %

Income tax expense (113) (85) 32.9 %

(108) (8) (100) NM (295) (115) (180) 156.5 %

Net income (loss) 362 (396) 758 191.4 % 969 (22) 991 NM

Net income (loss) attributable to Leidos common stockholders

$ 364 $ (399) $ 763 191.2 % $ 970 $ (30) $ 1,000 NM

Net income 365 283 29.0 %

Net income attributable to Leidos common stockholders $ 363 $ 284 27.8 %

Operating margin 12.5 % 10.4 %

NM- Not Meaningful

SEGMENT AND CORPORATE RESULTS

Three Months Ended Nine Months Ended

National Security & Digital September 27,

2024 September 29,

2023 Dollar change Percent change September 27,

2024 September 29,

2023 Dollar change Percent change

Three Months Ended

National Security & Digital

(dollars in millions)

2025 March 29,

2024 Percent change

Revenues $ 1,878 $ 1,793 4.7 %

1 unchanged sentence

Operating margin 9.9 % 9.8 %

The increase in revenues for the three and nine months ended September 27, 2024, as compared to the three and nine months ended September 29, 2023, was primarily attributable to program wins and a net increase in volumes on certain contracts, partially offset by the completion of certain contracts.

The increase in operating income for the three and nine months ended September 27, 2024, as compared to the three and nine months ended September 29, 2023, was primarily attributable to contract efficiencies, a net increase in volumes on certain contracts and program wins, partially offset by the completion of certain contracts.

The increase in revenues and operating income for the three months ended April 4, 2025, as compared to the three months ended March 29, 2024, was primarily attributable to a net increase in volumes on certain programs and program wins, partially offset by the completion of certain contracts.

Leidos Holdings, Inc.

Three Months Ended Nine Months Ended

Health & Civil September 27,

2024 September 29,

2023 Dollar change Percent change September 27,

2024 September 29,

2023 Dollar change Percent change

PART I—FINANCIAL INFORMATION

Three Months Ended

Health & Civil

(dollars in millions)

2025 March 29,

2024 Percent change

Revenues $ 1,291 $ 1,199 7.7 %

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Operating margin 23.2 % 18.5 %

The increase in revenues for the three and nine months ended September 27, 2024, as compared to the three and nine months ended September 29, 2023, was primarily attributable to a net increase in volumes and case complexity within the managed health services business, an increase in net write-ups on certain programs and program wins.

The increase in operating income for the three and nine months ended September 27, 2024, as compared to the three and nine months ended September 29, 2023, was primarily driven by an increase in volumes and case complexity within in the managed health services business and an increase in net write-ups on certain programs.

Three Months Ended Nine Months Ended

Commercial & International September 27,

2024 September 29,

2023 Dollar change Percent change September 27,

2024 September 29,

2023 Dollar change Percent change

The increase in revenues and operating income for the three months ended April 4, 2025, as compared to the three months ended March 29, 2024, was primarily attributable to a net increase in volumes and case complexity within the managed health services business.

Three Months Ended

Commercial & International

(dollars in millions)

2025 March 29,

2024 Percent change

Revenues $ 568 $ 509 11.6 %

Operating (loss) income 41 (646) 687 106.3 % 64 (599) 663 110.7 %

Operating income 37 34 8.8 %

Operating margin 6.5 % 6.7 %

The increase in revenues for the three months ended September 27, 2024, as compared to the three months ended September 29, 2023, was primarily attributable to programs wins and a net increase in volumes, partially offset by the completion of certain programs.

The increase in revenues for the nine months ended September 27, 2024, as compared to the nine months ended September 29, 2023, was primarily attributable to a net increase in volumes and programs wins.

This was partially offset by the impact of write-downs on certain programs within our UK operations for which cost and schedule were rebaselined as well as the the completion of certain programs.

The increase in operating income for the three months ended September 27, 2024, as compared to the three months ended September 29, 2023, was primarily driven by impairment charges of $679 million recorded in the prior year.

The increase in operating income for the nine months ended September 27, 2024, as compared to the nine months ended September 29, 2023, was primarily driven by impairment charges of $679 million recorded in the prior year, programs wins and a net increase in volumes.

This was partially offset by the impact of write-downs on certain programs within our UK operations for which cost and schedule were rebaselined as well as the completion of certain programs.

Three Months Ended Nine Months Ended

Defense Systems September 27,

2024 September 29,

2023 Dollar change Percent change September 27,

2024 September 29,

2023 Dollar change Percent change

The increase in revenues and operating income for the three months ended April 4, 2025, as compared to the three months ended March 29, 2024, was primarily attributable to a net increase in volumes and program wins, partially offset by the completion of certain programs.

Three Months Ended

Defense Systems

(dollars in millions)

2025 March 29,

2024 Percent change

Revenues $ 508 $ 474 7.2 %

Operating income 37 3 34 NM 92 47 45 95.7 %

Operating income 34 21 61.9 %

Operating margin 6.7 % 4.4 %

NM- Not Meaningful

The increase in revenues for the three and nine months ended September 27, 2024, as compared to the three and nine months ended September 29, 2023, was primarily attributable to programs wins and a net increase in volumes, partially offset by the completion of certain contracts.

LEIDOS HOLDINGS, INC.

The increase in operating income for the three months ended September 27, 2024, as compared to the three months ended September 29, 2023, was primarily attributable to program wins and improved program execution on certain programs.

The increase in operating income for the nine months ended September 27, 2024, as compared to the nine months ended September 29, 2023, was primarily attributable to programs wins, improved program execution and higher integration costs in the prior year.

Three Months Ended Nine Months Ended

Corporate September 27,

2024 September 29,

2023 Dollar change Percent change September 27,

2024 September 29,

2023 Dollar change Percent change

The increase in revenues for the three months ended April 4, 2025, as compared to the three months ended March 29, 2024, was primarily attributable to program wins, partially offset by the completion of certain contracts.

The increase in operating income for the three months ended April 4, 2025, as compared to the three months ended March 29, 2024, was primarily attributable to program wins and a decrease in amortization expense.

Three Months Ended

(dollars in millions)

2025 March 29,

2024 Percent change

Operating loss $ (25) $ (37) (32.4 %)

The increase in operating loss for the three months ended September 27, 2024, as compared to the three months ended September 29, 2023, was primarily attributable to increased general and administrative expenses and legal fees.

The increase in operating loss for the nine months ended September 27, 2024, as compared to the nine months ended September 29, 2023, was primarily attributable to increased general and administrative expenses.

The decrease in operating loss for the three months ended April 4, 2025, as compared to the three months ended March 29, 2024, was primarily attributable to decreased general and administrative expenses and legal fees.

NON-OPERATING EXPENSE, NET

Non-operating expense, net for the three months ended September 27, 2024, was $46 million as compared to $52 million for the three months ended September 29, 2023.

The decrease was primarily driven by increased interest income due to higher cash balances.

Non-operating expense, net for the nine months ended September 27, 2024, was $142 million as compared to $167 million for the nine months ended September 29, 2023.

The decrease was primarily driven by increased interest income due to higher cash balances, lower interest expense driven by commercial paper borrowings in the prior year and favorable exchange rate movements.

Non-operating expense, net for the three months ended April 4, 2025, was $52 million as compared to $47 million for the three months ended March 29, 2024.

The increase was primarily driven by unfavorable exchange rate movements.

Leidos Holdings, Inc.

PART I—FINANCIAL INFORMATION

PROVISION FOR INCOME TAXES

For the three months ended September 27, 2024, our effective tax rate was 23.0% compared to (2.1)% for the three months ended September 29, 2023.

The increase to the effective tax rate was primarily due to the tax impacts from non-deductible goodwill impairments for the three months ended September 29, 2023, and an increase in unrecognized tax benefits for the three months ended September 27, 2024.

For the nine months ended September 27, 2024, our effective tax rate was 23.3% compared to 123.7% for the nine months ended September 29, 2023.

The decrease to the effective tax rate was primarily due to the tax impacts from non-deductible goodwill impairments for the nine months ended September 29, 2023, partially offset by a reduced benefit in federal research tax credits for the nine months ended September 27, 2024.

For the three months ended April 4, 2025, our effective tax rate was 23.6% compared to 23.1% for the three months ended March 29, 2024.

The increase to the effective tax rate was primarily due to a decrease in excess tax benefits related to employee stock-based payment transactions.

In December 2021, the Organization for Economic Cooperation and Development enacted model rules for a new 15% global minimum tax framework (“Pillar Two”).

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The Pillar Two legislation became effective for certain jurisdictions beginning in fiscal 2024.

We will continue to evaluate the impact of the rules as additional legislation gets enacted but currently do not expect them to have a material impact.

LEIDOS HOLDINGS, INC.

We will continue to evaluate the impact of the rules as additional legislation gets enacted;

however, there has been no material impact from jurisdictions where Pillar Two rules are currently in effect.

BOOKINGS AND BACKLOG

We recorded net bookings worth an estimated $8.1 billion and $15.8 billion during the three and nine months ended September 27, 2024, respectively, as compared to $7.9 billion and $13.8 billion for the three and nine months ended September 29, 2023, respectively.

Effective for the first quarter of fiscal 2025, we changed our backlog policy to include estimated future revenue on task orders expected to be awarded under sole source indefinite delivery/indefinite quantity ("IDIQ") contracts in our reported backlog.

We believe this presentation provides enhanced visibility for investors and more accurately reflects the future revenues we expect to generate from our business.

We recorded net bookings worth an estimated $2.1 billion during the three months ended April 4, 2025, as compared to $3.8 billion for the three months ended March 29, 2024.

The estimated value of our total backlog was as follows:

September 27, 2024 September 29, 2023

Segment Funded Unfunded Total Funded Unfunded Total

(in millions)

April 4, 2025 March 29, 2024 (1)

(in millions) Funded Unfunded Total Funded Unfunded Total

National Security & Digital $ 2,733 $ 21,601 $ 24,334 $ 2,411 $ 19,616 $ 22,027

3 unchanged sentences

Total $ 7,329 $ 38,967 $ 46,296 $ 7,965 $ 33,718 $ 41,683

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

Backlog does not include unexercised option periods and future potential task orders expected to be awarded under indefinite delivery/indefinite quantity ("IDIQ") contracts, General Services Administration Schedule or other master agreement contract vehicles, with the exception of certain IDIQ contracts where task orders are not competitively awarded and separately priced but instead are used as a funding mechanism, and where there is a basis for estimating future revenues and funding on future anticipated task orders.

(1) Amounts have been recast to include estimated future revenue on task orders expected to be awarded under sole source IDIQ contracts.

As a result, unfunded backlog increased $5,112 million.

Backlog represents the revenues we expect to recognize under negotiated contracts and unissued task orders on sole source IDIQ contracts, to the extent we believe their execution and funding to be probable.

Backlog does not include potential task orders expected to be awarded under multiple award IDIQ contracts.

Backlog estimates are subject to change and may be affected by factors including modifications of contracts and foreign currency movements.

LIQUIDITY AND CAPITAL RESOURCES

As of September 27, 2024, we had $1,185 million in cash and cash equivalents.

OVERVIEW OF LIQUIDITY

As of April 4, 2025, we had $842 million in cash and cash equivalents.

We have a senior unsecured revolving credit facility which can provide up to $1 billion in additional borrowing, if required.

As of September 27, 2024, and December 29, 2023, there were no borrowings outstanding under the revolving credit facility.

We had outstanding debt of $4.7 billion at both September 27, 2024, and December 29, 2023.

As of April 4, 2025, and January 3, 2025, there were no borrowings outstanding under the revolving credit facility.

We had outstanding debt of $5.1 billion and $4.7 billion at April 4, 2025, and January 3, 2025, respectively.

In February 2025, we issued and sold $500 million 5.40% and $500 million 5.50% senior unsecured notes maturing in March 2032 and March 2035, respectively.

The annual interest rate is payable on a semi-annual basis.

The proceeds from the issuance of the notes were used to retire the $500 million senior unsecured notes due May 2025 and repurchase $500 million outstanding shares of common stock.

We have a commercial paper program in which we may issue short-term unsecured commercial paper notes ("Commercial Paper Notes") and have maturities of up to 397 days from the date of issuance.

As of September 27, 2024, and December 29, 2023, we did not have any Commercial Paper Notes outstanding.

We made principal payments, excluding the impacts of our Commercial Paper Notes, on our debt of $5 million and $14 million during the three and nine months ended September 27, 2024, respectively, and $5 million and $2,041 million for the three and nine months ended September 29, 2023, respectively.

The activity for the nine months ended September 29, 2023, included a $1,210 million payment to discharge the $1.9 billion 5.77% senior unsecured term loan facility, a $498 million payment to discharge the $500 million 2.95% notes, due May 2023, and a required principal payment of $320 million to discharge the 364-day term loan credit agreement.

Our credit facilities, commercial paper notes and senior unsecured notes outstanding as of September 27, 2024, contain financial covenants and customary restrictive covenants.

We were in compliance with all covenants as of September 27, 2024.

We paid dividends of $51 million and $155 million during the three and nine months ended September 27, 2024, respectively, and $50 million and $150 million during the three and nine months ended September 29, 2023, respectively.

Stock repurchases of Leidos common stock may be made on the open market or in privately negotiated transactions with third parties including through accelerated share repurchase agreements.

As of April 4, 2025, and January 3, 2025, we did not have any Commercial Paper Notes outstanding.

Leidos Holdings, Inc.

PART I—FINANCIAL INFORMATION

We made principal payments on our debt of $529 million and $4 million during the three months ended April 4, 2025, and March 29, 2024, respectively.

The activity for the three months ended April 4, 2025, included a $500 million payment to discharge the $500 million notes due May 2025.

Our senior unsecured term loan, senior unsecured notes and senior unsecured revolving facility contain financial covenants and customary restrictive covenants.

We were in compliance with all financial covenants as of April 4, 2025.

We paid dividends of $53 million during both of the three months ended April 4, 2025, and March 29, 2024.

Stock repurchases of Leidos common stock may be made on the open market or in privately negotiated transactions with third parties including through accelerated share repurchase ("ASR") agreements.

Whether repurchases are made and the timing and actual number of shares repurchased depends on a variety of factors including price, corporate capital requirements, other market conditions and regulatory requirements.

The repurchase program may be accelerated, suspended, delayed or discontinued at any time.

LEIDOS HOLDINGS, INC.

During the three and nine months ended September 27, 2024, we made open market repurchases of our common stock for an aggregate purchase price of $200 million and $450 million, respectively, and $25 million during the nine months ended September 29, 2023.There were no share repurchases for the three months ended September 29, 2023.

On February 20, 2025, we entered into an ASR agreement with a financial institution to repurchase shares of our outstanding common stock.

We paid $500 million to the financial institution and received an initial delivery of 3 million shares.

The purchase was recorded to "Additional paid-in capital" in the condensed consolidated balance sheets (see "Note 8–Earnings Per Share").

All shares delivered were immediately retired.

During the three months ended March 29, 2024, we made open market repurchases of our common stock for an aggregate purchase price of $150 million.

There were no open market share repurchases during the three months ended April 4, 2025.

For the next 12 months, we anticipate that we will be able to meet our liquidity needs, including servicing our debt, through cash generated from operations, available cash balances, borrowings from our commercial paper program and, if needed, sales of accounts receivable and borrowings from our revolving credit facility.

1 unchanged sentence

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

Three Months Ended Nine Months Ended

September 27,

2024 September 29,

2023 September 27,

2024 September 29,

(in millions)

Three Months Ended

(in millions) April 4,

2025 March 29,

Net cash provided by operating activities (1)

$ 656 $ 795 $ 1,093 $ 861

Net cash used in investing activities (22) (12)

Net cash used in financing activities (110) (228)

(257) (249) (644) (470)

Net cash provided by operating activities decreased $139 million during the three months ended September 27, 2024, when compared to the prior year quarter.

The decrease was primarily due to unfavorable changes in working capital, partially offset by higher earnings and the timing of payroll and employee benefit accruals.

Net cash provided by operating activities increased $232 million during the nine months ended September 27, 2024, when compared to the prior year.

The increase was primarily due to higher earnings and lower tax payments of $49 million primarily due to payments made in the prior year for the TCJA provision and payroll taxes related to the CARES act.

Net cash used in investing activities decreased $29 million and $79 million during the three and nine months ended September 27, 2024, respectively, when compared to the prior year.

The decreases were primarily due to lower capital expenditures of $27 million and $66 million for the three and nine months ended September 27, 2024, respectively.

Net cash used in financing activities increased $8 million for the three months ended September 27, 2024, when compared to the prior year quarter, primarily due to a $202 million increase in stock repurchases, partially offset by $200 million in commercial paper net proceeds received in the prior year.

Net cash used in financing activities increased $174 million for the nine months ended September 27, 2024, when compared to the prior year.

The increase was primarily due to a $425 million increase in stock repurchases, a $31 million increase in shares withheld for tax obligations, partially offset by a decrease of $291 million in net payments made on debt activities.

(1) Net cash provided by operating activities for the three months ended March 29, 2024, was recast to reflect a change in the accounting policy, see "Note 1–Basis of Presentation and Summary of Significant Accounting Policies."

Net cash provided by operating activities decreased $55 million during the three months ended April 4, 2025, when compared to the prior year quarter.

The decrease was primarily due to the timing of payroll and employee benefit payments, partially offset by higher earnings and favorable changes in working capital.

Net cash used in investing activities increased $10 million during the three months ended April 4, 2025, when compared to the prior year quarter.

The increase was primarily due to higher capital expenditures of $5 million in the current year quarter.

Net cash used in financing activities decreased $118 million for the three months ended April 4, 2025, when compared to the prior year quarter, primarily due to a net increase of $465 million in cash inflows from proceeds received from the issuance of debt, payments for borrowings and payments for debt issuance costs, partially offset by a $350 million net increase in stock repurchases primarily attributable to the accelerated share repurchase activities in the current quarter.

OFF-BALANCE SHEET ARRANGEMENTS

3 unchanged sentences

Leidos Holdings, Inc.

PART I—FINANCIAL INFORMATION

GUARANTOR AND ISSUER OF GUARANTEED SECURITIES

8 unchanged sentences

$500 million 5.400% notes, due March 2032

$750 million 5.750% notes, due March 2033

$500 million 5.500% notes, due March 2035

(1) The $500 million senior unsecured notes were discharged as of April 4, 2025.

Leidos Holdings, Inc.

16 unchanged sentences

BALANCE SHEET INFORMATION FOR THE GUARANTOR AND ISSUER OF REGISTERED NOTES

September 27,

2024 December 29,

(in millions)

(in millions) April 4,

2025 January 3,

Total current assets $ 2,639 $ 2,550

8 unchanged sentences

Leidos Holdings, Inc.

PART I—FINANCIAL INFORMATION

STATEMENT OF OPERATIONS INFORMATION FOR THE GUARANTOR AND ISSUER OF REGISTERED NOTES

Nine Months Ended

September 27,

(in millions)

Three Months Ended

(in millions) April 4,

Revenues, net $ 2,698

4 unchanged sentences

For a discussion of these items, see "Note 11–Commitments and Contingencies" of the notes to the condensed consolidated financial statements contained within this Quarterly Report on Form 10-Q.

Critical Accounting Policies

There were no material changes to our critical accounting policies, estimates or judgments during the period covered by this report from those discussed in our Annual Report on Form 10-K for the year ended December 29, 2023.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There were no material changes to our critical accounting policies, estimates or judgments that would have a significant impact on earnings during the period covered by this report from those discussed in our Annual Report on Form 10-K for the year ended January 3, 2025.

RECENTLY ADOPTED AND ISSUED ACCOUNTING STANDARDS

1 unchanged sentence

Leidos Holdings, Inc.

PART I—FINANCIAL INFORMATION

Quantitative and Qualitative Disclosures About Market Risk

There were no material changes in our market risk exposure from those discussed in our Annual Report on Form 10-K for the year ended December 29, 2023.

There were no material changes in our market risk exposure from those discussed in our Annual Report on Form 10-K for the year ended January 3, 2025.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis