Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Oct. 31, 2014 | Nov. 24, 2014 | |
Document Information [Line Items] | ' | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 31-Oct-14 | ' |
Document Fiscal Year Focus | '2015 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Trading Symbol | 'LDOS | ' |
Entity Registrant Name | 'Leidos Holdings, Inc. | ' |
Entity Central Index Key | '0001336920 | ' |
Current Fiscal Year End Date | '--01-31 | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 74,066,871 |
Leidos, Inc. | ' | ' |
Document Information [Line Items] | ' | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 31-Oct-14 | ' |
Document Fiscal Year Focus | '2015 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Entity Registrant Name | 'Leidos, Inc. | ' |
Entity Central Index Key | '0000353394 | ' |
Current Fiscal Year End Date | '--01-31 | ' |
Entity Filer Category | 'Non-accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 5,000 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Oct. 31, 2014 | Jan. 31, 2014 |
In Millions, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $418 | $430 |
Receivables, net | 1,021 | 1,082 |
Inventory, prepaid expenses and other current assets | 228 | 256 |
Assets of discontinued operations | 8 | 39 |
Total current assets | 1,675 | 1,807 |
Property, plant and equipment (less accumulated depreciation and amortization of $311 million and $341 million at October 31, 2014 and January 31, 2014, respectively) | 360 | 482 |
Intangible assets, net | 39 | 93 |
Goodwill | 1,207 | 1,693 |
Deferred income taxes | 18 | 15 |
Other assets | 99 | 72 |
Total assets | 3,398 | 4,162 |
Current liabilities: | ' | ' |
Accounts payable and accrued liabilities | 704 | 716 |
Accrued payroll and employee benefits | 287 | 285 |
Notes payable and long-term debt, current portion | 2 | 2 |
Liabilities of discontinued operations | 8 | 6 |
Total current liabilities | 1,001 | 1,009 |
Notes payable and long-term debt, net of current portion | 1,227 | 1,331 |
Other long-term liabilities | 194 | 227 |
Commitments and contingencies (Notes 12 and 13) | ' | ' |
Stockholders' equity: | ' | ' |
Preferred stock, $.0001 par value, 10 million shares authorized and no shares issued and outstanding at October 31, 2014 and January 31, 2014 | 0 | 0 |
Common stock | 0 | 0 |
Additional paid-in capital | 1,435 | 1,576 |
Accumulated (deficit) earnings | -453 | 25 |
Accumulated other comprehensive loss | -6 | -6 |
Total stockholders’ equity | 976 | 1,595 |
Total liabilities and stockholders' equity | 3,398 | 4,162 |
Leidos, Inc. | ' | ' |
Current assets: | ' | ' |
Cash and cash equivalents | 418 | 430 |
Receivables, net | 1,021 | 1,082 |
Inventory, prepaid expenses and other current assets | 228 | 256 |
Assets of discontinued operations | 8 | 39 |
Total current assets | 1,675 | 1,807 |
Property, plant and equipment (less accumulated depreciation and amortization of $311 million and $341 million at October 31, 2014 and January 31, 2014, respectively) | 360 | 482 |
Intangible assets, net | 39 | 93 |
Goodwill | 1,207 | 1,693 |
Deferred income taxes | 18 | 15 |
Other assets | 99 | 72 |
Note receivable from Leidos Holdings, Inc. | 1,394 | 1,137 |
Total assets | 4,792 | 5,299 |
Current liabilities: | ' | ' |
Accounts payable and accrued liabilities | 704 | 716 |
Accrued payroll and employee benefits | 287 | 285 |
Notes payable and long-term debt, current portion | 2 | 2 |
Liabilities of discontinued operations | 8 | 6 |
Total current liabilities | 1,001 | 1,009 |
Notes payable and long-term debt, net of current portion | 1,227 | 1,331 |
Other long-term liabilities | 194 | 227 |
Commitments and contingencies (Notes 12 and 13) | ' | ' |
Stockholders' equity: | ' | ' |
Common stock | 0 | 0 |
Additional paid-in capital | 207 | 207 |
Accumulated (deficit) earnings | 2,169 | 2,531 |
Accumulated other comprehensive loss | -6 | -6 |
Total stockholders’ equity | 2,370 | 2,732 |
Total liabilities and stockholders' equity | $4,792 | $5,299 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Oct. 31, 2014 | Jan. 31, 2014 |
In Millions, except Share data, unless otherwise specified | ||
Property, plant and equipment, accumulated depreciation and amortization | $311 | $341 |
Preferred Stock, Par or Stated Value Per Share | $0.00 | $0.00 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common stock, par value per share | $0.00 | $0.00 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 74,000,000 | 80,000,000 |
Common stock, shares outstanding | 74,000,000 | 80,000,000 |
Leidos, Inc. | ' | ' |
Property, plant and equipment, accumulated depreciation and amortization | $311 | $341 |
Common stock, par value per share | $0.01 | $0.01 |
Common stock, shares authorized | 10,000 | 10,000 |
Common stock, shares issued | 5,000 | 5,000 |
Common stock, shares outstanding | 5,000 | 5,000 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Income (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, except Per Share data, unless otherwise specified | Oct. 31, 2014 | Nov. 01, 2013 | Oct. 31, 2014 | Nov. 01, 2013 |
Revenues | $1,276 | $1,414 | $3,894 | $4,464 |
Costs and expenses: | ' | ' | ' | ' |
Cost of revenues | 1,115 | 1,219 | 3,375 | 3,885 |
Selling, general and administrative expenses | 72 | 113 | 239 | 343 |
Bad debt expense | 0 | 43 | 3 | 45 |
Goodwill impairment charges | 0 | 0 | 486 | 0 |
Intangible asset impairment charges | 17 | 19 | 41 | 51 |
Separation transaction and restructuring expenses | 0 | 25 | 1 | 58 |
Operating income (loss) | 72 | -5 | -251 | 82 |
Non-operating income (expense): | ' | ' | ' | ' |
Interest income | 0 | 5 | 1 | 15 |
Interest expense | -18 | -21 | -58 | -59 |
Other income, net | 0 | 2 | 1 | 3 |
Income (loss) from continuing operations before income taxes | 54 | -19 | -307 | 41 |
Income tax (expense) benefit | -16 | 11 | -49 | -4 |
Income (loss) from continuing operations | 38 | -8 | -356 | 37 |
Discontinued operations: | ' | ' | ' | ' |
(Loss) income from discontinued operations before income taxes | -1 | 19 | -12 | 144 |
Income tax (expense) benefit | -3 | -14 | 1 | -61 |
(Loss) income from discontinued operations | -4 | 5 | -11 | 83 |
Net income (loss) | 34 | -3 | -367 | 120 |
Basic: | ' | ' | ' | ' |
Income (loss) from continuing operations (dollar per share) | $0.52 | ($0.10) | ($4.75) | $0.40 |
(Loss) income from discontinued operations (dollar per share) | ($0.05) | $0.06 | ($0.14) | $0.99 |
Basic earnings per share (dollar per share) | $0.47 | ($0.04) | ($4.89) | $1.39 |
Diluted: | ' | ' | ' | ' |
Income (loss) from continuing operations (dollar per share) | $0.51 | ($0.10) | ($4.75) | $0.40 |
(Loss) income from discontinued operations (dollar per share) | ($0.05) | $0.06 | ($0.14) | $0.99 |
Diluted earnings per share (dollar per share) | $0.46 | ($0.04) | ($4.89) | $1.39 |
Cash dividends declared per share | $0.32 | $0.32 | $0.96 | $5.28 |
Leidos, Inc. | ' | ' | ' | ' |
Revenues | 1,276 | 1,414 | 3,894 | 4,464 |
Costs and expenses: | ' | ' | ' | ' |
Cost of revenues | 1,115 | 1,219 | 3,375 | 3,885 |
Selling, general and administrative expenses | 72 | 113 | 239 | 343 |
Bad debt expense | 0 | 43 | 3 | 45 |
Goodwill impairment charges | 0 | 0 | 486 | 0 |
Intangible asset impairment charges | 17 | 19 | 41 | 51 |
Separation transaction and restructuring expenses | 0 | 25 | 1 | 58 |
Operating income (loss) | 72 | -5 | -251 | 82 |
Non-operating income (expense): | ' | ' | ' | ' |
Interest income | 3 | 5 | 9 | 15 |
Interest expense | -18 | -21 | -58 | -59 |
Other income, net | 0 | 2 | 1 | 3 |
Income (loss) from continuing operations before income taxes | 57 | -19 | -299 | 41 |
Income tax (expense) benefit | -17 | 11 | -52 | -4 |
Income (loss) from continuing operations | 40 | -8 | -351 | 37 |
Discontinued operations: | ' | ' | ' | ' |
(Loss) income from discontinued operations before income taxes | -1 | 19 | -12 | 144 |
Income tax (expense) benefit | -3 | -14 | 1 | -61 |
(Loss) income from discontinued operations | -4 | 5 | -11 | 83 |
Net income (loss) | $36 | ($3) | ($362) | $120 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Comprehensive Income (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Oct. 31, 2014 | Nov. 01, 2013 | Oct. 31, 2014 | Nov. 01, 2013 |
Net income (loss) | $34 | ($3) | ($367) | $120 |
Other comprehensive income, net of tax | 0 | 0 | 0 | 0 |
Comprehensive income (loss) | 34 | -3 | -367 | 120 |
Leidos, Inc. | ' | ' | ' | ' |
Net income (loss) | 36 | -3 | -362 | 120 |
Other comprehensive income, net of tax | 0 | 0 | 0 | 0 |
Comprehensive income (loss) | $36 | ($3) | ($362) | $120 |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statement of Stockholders' Equity (USD $) | Total | Shares of Common stock | Additional paid-in capital | Accumulated earnings (deficit) | Accumulated other comprehensive loss | Leidos, Inc. | Leidos, Inc. | Leidos, Inc. | Leidos, Inc. | Leidos, Inc. |
In Millions, except Share data, unless otherwise specified | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | Shares of Common stock | Additional paid-in capital | Accumulated earnings (deficit) | Accumulated other comprehensive loss | |
USD ($) | USD ($) | USD ($) | ||||||||
Balance, value at Jan. 31, 2014 | $1,595 | ' | $1,576 | $25 | ($6) | $2,732 | ' | $207 | $2,531 | ($6) |
Balance, shares at Jan. 31, 2014 | ' | 80,000,000 | ' | ' | ' | ' | 5,000 | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net income (loss) | -367 | ' | ' | -367 | ' | -362 | ' | ' | -362 | ' |
Other comprehensive income, net of tax | 0 | ' | ' | ' | ' | 0 | ' | ' | ' | ' |
Issuances of stock, net of cancellations | 9 | ' | 9 | ' | ' | ' | ' | ' | ' | ' |
Shares repurchased and retired or withheld for tax withholdings on vesting of restricted stock , shares | ' | -6,000,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Shares repurchased and retired or withheld for tax withholdings on vesting of restricted stock, value | -213 | ' | -176 | -37 | ' | ' | ' | ' | ' | ' |
Dividends of $0.96 per share | -74 | ' | ' | -74 | ' | ' | ' | ' | ' | ' |
Adjustments for income tax benefits (deficiency)from stock-based compensation | -5 | ' | -5 | ' | ' | ' | ' | ' | ' | ' |
Stock-based compensation | 33 | ' | 33 | ' | ' | ' | ' | ' | ' | ' |
Other | -2 | ' | -2 | ' | ' | ' | ' | ' | ' | ' |
Balance, value at Oct. 31, 2014 | 976 | ' | 1,435 | -453 | -6 | 2,370 | ' | 207 | 2,169 | -6 |
Balance, shares at Oct. 31, 2014 | ' | 74,000,000 | ' | ' | ' | ' | 5,000 | ' | ' | ' |
Balance, value at Aug. 01, 2014 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net income (loss) | 34 | ' | ' | ' | ' | 36 | ' | ' | ' | ' |
Other comprehensive income, net of tax | 0 | ' | ' | ' | ' | 0 | ' | ' | ' | ' |
Balance, value at Oct. 31, 2014 | $976 | ' | ' | ' | ($6) | $2,370 | ' | $207 | ' | ($6) |
Balance, shares at Oct. 31, 2014 | ' | ' | ' | ' | ' | ' | 5,000 | ' | ' | ' |
Condensed_Consolidated_Stateme3
Condensed Consolidated Statement of Stockholders' Equity (Parenthetical) (USD $) | 9 Months Ended |
Oct. 31, 2014 | |
Statement of Stockholders' Equity [Abstract] | ' |
Cash dividends per share | $0.96 |
Condensed_Consolidated_Stateme4
Condensed Consolidated Statements of Cash Flows (USD $) | 9 Months Ended | |
Oct. 31, 2014 | Nov. 01, 2013 | |
Cash flows from operations: | ' | ' |
Net income (loss) | ($367,000,000) | $120,000,000 |
Loss (income) from discontinued operations | 11,000,000 | -83,000,000 |
Adjustments to reconcile net (loss) income to net cash provided by operations: | ' | ' |
Depreciation and amortization | 50,000,000 | 64,000,000 |
Stock-based compensation | 33,000,000 | 43,000,000 |
Goodwill impairment charges | 486,000,000 | 0 |
Intangible asset impairment charges | 41,000,000 | 51,000,000 |
Bad debt expense | 3,000,000 | 45,000,000 |
Restructuring charges, net | 1,000,000 | 18,000,000 |
Other | 3,000,000 | -3,000,000 |
Change in assets and liabilities, net of effects of acquisitions and dispositions: | ' | ' |
Receivables | 29,000,000 | -142,000,000 |
Inventory, prepaid expenses and other current assets | 2,000,000 | 27,000,000 |
Deferred income taxes | 46,000,000 | 20,000,000 |
Other assets | -2,000,000 | 3,000,000 |
Accounts payable and accrued liabilities | -11,000,000 | -7,000,000 |
Accrued payroll and employee benefits | 3,000,000 | -46,000,000 |
Income taxes receivable/payable | -22,000,000 | -14,000,000 |
Other long-term liabilities | -12,000,000 | -14,000,000 |
Total cash flows provided by operating activities of continuing operations | 294,000,000 | 82,000,000 |
Cash flows from investing activities: | ' | ' |
Expenditures for property, plant and equipment | -26,000,000 | -31,000,000 |
Proceeds from sale of assets | 0 | 65,000,000 |
Proceeds from U.S. Treasury cash grant | 80,000,000 | 0 |
Net proceeds of cost method investments | 0 | 12,000,000 |
Dividend received from the separation of New SAIC | 0 | 295,000,000 |
Contribution paid related to the separation of New SAIC | 0 | -26,000,000 |
Other | 0 | -3,000,000 |
Total cash flows provided by investing activities of continuing operations | 54,000,000 | 312,000,000 |
Cash flows from financing activities: | ' | ' |
Payments of notes payable and long-term debt | -104,000,000 | -1,000,000 |
Payments of deferred financing costs | 0 | -5,000,000 |
Payments from New SAIC for deferred financing costs | 0 | 5,000,000 |
Proceeds from real estate financing transaction | 0 | 38,000,000 |
Proceeds from debt issuance | 0 | 500,000,000 |
Distribution of debt to New SAIC | 0 | -500,000,000 |
Sales of stock and exercises of stock options | 6,000,000 | 11,000,000 |
Repurchases of stock | -213,000,000 | -17,000,000 |
Dividend payments | -72,000,000 | -452,000,000 |
Other | 1,000,000 | 2,000,000 |
Total cash flows used in financing activities of continuing operations | -382,000,000 | -419,000,000 |
Decrease in cash and cash equivalents from continuing operations | -34,000,000 | -25,000,000 |
Cash flows from discontinued operations: | ' | ' |
Cash (used in) provided by operating activities of discontinued operations | -5,000,000 | 121,000,000 |
Cash provided by (used in) investing activities of discontinued operations | 27,000,000 | -17,000,000 |
Cash used in financing activities of discontinued operations | 22,000,000 | 104,000,000 |
Increase in cash and cash equivalents from discontinued operations | -12,000,000 | 79,000,000 |
Cash and cash equivalents at beginning of period | 430,000,000 | 735,000,000 |
Cash and cash equivalents at end of period | 418,000,000 | 814,000,000 |
Leidos, Inc. | ' | ' |
Cash flows from operations: | ' | ' |
Net income (loss) | -362,000,000 | 120,000,000 |
Loss (income) from discontinued operations | 11,000,000 | -83,000,000 |
Adjustments to reconcile net (loss) income to net cash provided by operations: | ' | ' |
Depreciation and amortization | 50,000,000 | 64,000,000 |
Stock-based compensation | 33,000,000 | 43,000,000 |
Goodwill impairment charges | 486,000,000 | 0 |
Intangible asset impairment charges | 41,000,000 | 51,000,000 |
Bad debt expense | 3,000,000 | 45,000,000 |
Restructuring charges, net | 1,000,000 | 18,000,000 |
Other | -2,000,000 | -3,000,000 |
Change in assets and liabilities, net of effects of acquisitions and dispositions: | ' | ' |
Receivables | 29,000,000 | -142,000,000 |
Inventory, prepaid expenses and other current assets | 2,000,000 | 27,000,000 |
Deferred income taxes | 46,000,000 | 20,000,000 |
Other assets | -2,000,000 | 3,000,000 |
Accounts payable and accrued liabilities | -11,000,000 | -7,000,000 |
Accrued payroll and employee benefits | 3,000,000 | -46,000,000 |
Income taxes receivable/payable | -22,000,000 | -14,000,000 |
Other long-term liabilities | -12,000,000 | -14,000,000 |
Total cash flows provided by operating activities of continuing operations | 294,000,000 | 82,000,000 |
Cash flows from investing activities: | ' | ' |
Proceeds on obligations of Leidos Holdings, Inc. | 82,000,000 | 0 |
Payments on obligations of Leidos Holdings, Inc. | -360,000,000 | 0 |
Expenditures for property, plant and equipment | -26,000,000 | -31,000,000 |
Proceeds from sale of assets | 0 | 65,000,000 |
Proceeds from U.S. Treasury cash grant | 80,000,000 | 0 |
Net proceeds of cost method investments | 0 | 12,000,000 |
Contribution paid related to the separation of New SAIC | 0 | -26,000,000 |
Other | 0 | -3,000,000 |
Total cash flows provided by investing activities of continuing operations | -224,000,000 | 17,000,000 |
Cash flows from financing activities: | ' | ' |
Proceeds on obligations of Leidos Holdings, Inc. | 0 | 11,000,000 |
Payments on obligations of Leidos Holdings, Inc. | 0 | -442,000,000 |
Payments of notes payable and long-term debt | -104,000,000 | -1,000,000 |
Payments of deferred financing costs | 0 | -5,000,000 |
Payments from New SAIC for deferred financing costs | 0 | 5,000,000 |
Proceeds from real estate financing transaction | 0 | 38,000,000 |
Other | 0 | 2,000,000 |
Total cash flows used in financing activities of continuing operations | -104,000,000 | -392,000,000 |
Decrease in cash and cash equivalents from continuing operations | -34,000,000 | -293,000,000 |
Cash flows from discontinued operations: | ' | ' |
Cash (used in) provided by operating activities of discontinued operations | -5,000,000 | 121,000,000 |
Cash provided by (used in) investing activities of discontinued operations | 27,000,000 | -17,000,000 |
Cash used in financing activities of discontinued operations | 22,000,000 | 104,000,000 |
Increase in cash and cash equivalents from discontinued operations | -12,000,000 | -189,000,000 |
Cash and cash equivalents at beginning of period | 430,000,000 | 735,000,000 |
Cash and cash equivalents at end of period | $418,000,000 | $546,000,000 |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 9 Months Ended | |||||||||||||||
Oct. 31, 2014 | ||||||||||||||||
Summary of Significant Accounting Policies | ' | |||||||||||||||
Summary of Significant Accounting Policies: | ||||||||||||||||
Nature of Operations and Basis of Presentation | ||||||||||||||||
Leidos Holdings, Inc. ("Leidos") is a holding company whose direct 100%-owned subsidiary is Leidos, Inc., a company focused on delivering science and technology solutions and services primarily in the areas of national security, health and engineering to agencies of the U.S. Department of Defense ("DoD"), the intelligence community, the U.S. Department of Homeland Security and other U.S. Government civil agencies, state and local government agencies, foreign governments, and customers across a variety of commercial markets. Unless indicated otherwise, references to the "Company," "we," "us," and "our" refer collectively to Leidos, Leidos, Inc., and its consolidated subsidiaries. | ||||||||||||||||
On September 27, 2013 (the "Distribution Date"), Leidos completed the spin-off of its technical services and enterprise information technology services business into an independent, publicly traded company named Science Applications International Corporation (“New SAIC”). The separation was effected through a tax-free distribution to Leidos' stockholders of 100% of the shares of New SAIC's common stock. On the Distribution Date, New SAIC's common stock was distributed, on a pro rata basis, to Leidos' stockholders of record as of the close of business on September 19, 2013, the record date. Each holder of Leidos common stock received one share of New SAIC common stock for every seven shares of Leidos common stock held on the record date. Prior to the Distribution Date, Leidos Holdings, Inc. was named SAIC, Inc. and Leidos, Inc. was named Science Applications International Corporation. | ||||||||||||||||
As a result of the spin-off, the assets, liabilities, results of operations, and cash flows of New SAIC have been classified as discontinued operations for all periods presented. References to financial data are to the Company’s continuing operations, unless otherwise noted. See Note 2–Dispositions for further information. | ||||||||||||||||
Immediately following the spin-off, Leidos effectuated a one-for-four reverse stock split of its shares of common stock, so that every four shares of Leidos common stock issued and outstanding were combined and converted into one share of Leidos common stock. Each reference to the number of shares outstanding or per share amounts has been adjusted to reflect the reverse stock split for all periods presented. | ||||||||||||||||
The condensed consolidated financial statements of Leidos include the accounts of its majority-owned and 100%-owned subsidiaries, including Leidos, Inc. The condensed consolidated financial statements of Leidos, Inc. include the accounts of its majority-owned and 100%-owned subsidiaries. Leidos does not have separate operations, assets or liabilities independent of Leidos, Inc., except for a note with Leidos, Inc. (the “related party note”), on which interest is recognized. From time to time, Leidos issues stock to employees of Leidos, Inc. and its subsidiaries, which is reflected in Leidos’ Condensed Consolidated Statement of Stockholders’ Equity and results in an increase to the related party note. All intercompany transactions and accounts have been eliminated in consolidation. | ||||||||||||||||
The accompanying financial information has been prepared by the Company pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") and accounting principles generally accepted in the United States of America ("GAAP"). Certain disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and combined notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2014. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Estimates have been prepared by management on the basis of the most current and best available information at the time of estimation and actual results could differ from those estimates. | ||||||||||||||||
In the opinion of management, the financial information as of October 31, 2014 and for the three and nine months ended October 31, 2014 and November 1, 2013 reflects all adjustments, which consist of normal recurring adjustments, necessary for a fair presentation thereof. Operating results for the three and nine months ended October 31, 2014 are not necessarily indicative of the results that may be expected for the fiscal year ending January 30, 2015, or any future period. | ||||||||||||||||
Unless otherwise noted, references to fiscal years are to fiscal years ended the Friday closest to January 31. Fiscal 2015 began on February 1, 2014 and ends on January 30, 2015. The third quarter of fiscal 2015 ended on October 31, 2014. | ||||||||||||||||
Separation Transaction and Restructuring Expenses | ||||||||||||||||
In anticipation of the spin-off of New SAIC from the Company, the Company initiated a program to align the Company’s cost structure for post-spin-off. In fiscal 2014 the Company reduced headcount, which resulted in severance costs, and reduced its real estate footprint by vacating facilities that are not necessary for its future requirements, which resulted in lease termination and facility consolidation expenses. | ||||||||||||||||
Separation transaction and restructuring expenses related to New SAIC, exclusive of any tax impacts, of $20 million and $55 million for the three and nine months ended November 1, 2013, respectively, were reclassified as discontinued operations. | ||||||||||||||||
The separation transaction and restructuring expenses for continuing operations were as follows: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
October 31, | November 1, | October 31, | November 1, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(in millions) | ||||||||||||||||
Strategic advisory services | $ | — | $ | 5 | $ | — | $ | 7 | ||||||||
Legal and accounting services | — | 1 | — | 1 | ||||||||||||
Lease termination and facility consolidation expenses | — | 17 | 1 | 40 | ||||||||||||
Severance costs | — | 2 | — | 10 | ||||||||||||
Separation transaction and restructuring expenses in operating income (loss) | — | 25 | 1 | 58 | ||||||||||||
Less: income tax benefit | — | (10 | ) | — | (23 | ) | ||||||||||
Separation transaction and restructuring expenses, net of tax | $ | — | $ | 15 | $ | 1 | $ | 35 | ||||||||
During the nine months ended October 31, 2014, the lease termination and facility consolidation expenses related to an adjustment to the reserve established for loss on leases in connection with revised sublease income assumptions. | ||||||||||||||||
For the nine months ended October 31, 2014 and November 1, 2013, all separation transaction and restructuring expenses for continuing operations were recorded in the Corporate and Other segment. | ||||||||||||||||
The following table represents the restructuring liability balance as of October 31, 2014 and summarizes the changes during the period attributable to costs incurred and charged to expense, costs paid or otherwise settled, and any adjustments to the liability: | ||||||||||||||||
Severance Costs | Lease Termination and Facility Consolidation Expenses | Total | ||||||||||||||
(in millions) | ||||||||||||||||
Balance as of January 31, 2014 | $ | 1 | $ | 20 | $ | 21 | ||||||||||
Charges | — | 1 | 1 | |||||||||||||
Cash payments | (1 | ) | (11 | ) | (12 | ) | ||||||||||
Balance as of October 31, 2014 | $ | — | $ | 10 | $ | 10 | ||||||||||
Receivables | ||||||||||||||||
The Company’s accounts receivable include both amounts billed and currently due from customers, and unbilled receivables consisting of costs and fees billable upon contract completion or the occurrence of a specified event, substantially all of which are expected to be billed and collected within one year. Unbilled receivables are stated at estimated realizable value. Since the Company’s receivables are primarily with the U.S. Government, the Company does not have a material credit risk exposure. Contract retentions are billed when the Company has negotiated final indirect rates with the U.S. Government and, once billed, are subject to audit and approval by government representatives. Consequently, the timing of collection of retention balances is outside the Company’s control. Based on the Company’s historical experience, the majority of retention balances are expected to be collected beyond one year and write-offs of retention balances have not been significant. | ||||||||||||||||
The Company has extended deferred payment terms with contractual maturities that may exceed one year to commercial customers related to certain construction projects. As of October 31, 2014, the Company had outstanding receivables of $28 million, net of allowance of $7 million, related to one construction project with deferred payment terms, which have not been paid in accordance with the initial payment terms established with the customer. The Company has filed a legal claim to enforce the payment terms as established in the contract. Based on these events, the Company has determined that the receivables are not expected to be collected within the next 12 months. Accordingly, the receivables are classified as non-current in “Other Assets” on the condensed consolidated balance sheet as of October 31, 2014. | ||||||||||||||||
When events or conditions indicate that amounts outstanding from customers may become uncollectible, an allowance is estimated and recorded. | ||||||||||||||||
Fair Value Measurements | ||||||||||||||||
The accounting standard for fair value measurements establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows: observable inputs such as quoted prices in active markets (Level 1); inputs other than the quoted prices in active markets that are observable either directly or indirectly (Level 2); and unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions (Level 3). | ||||||||||||||||
The fair value of financial instruments is determined based on quoted market prices, if available, or management’s best estimate. It is management’s belief that the carrying amounts of the Company’s financial instruments other than derivatives (see below), which include cash equivalents and long-term investments in private equity securities are reasonable estimates of their related fair values. | ||||||||||||||||
Cash equivalents are recorded at historical cost which equals fair value based on quoted market prices (Level 1 input). The Company’s cash equivalents were primarily comprised of investments in several large institutional money market funds and bank deposits. There are no restrictions on the withdrawal of the Company’s cash and cash equivalents. | ||||||||||||||||
Management evaluates its investments for other-than-temporary impairment at each balance sheet date. When testing long-term investments for recovery of carrying value, the fair value of long-term investments in private equity securities is determined using various valuation techniques and factors, such as market prices of comparable companies (Level 2 input), discounted cash flow models (Level 3 input) and recent capital transactions of the portfolio companies being valued (Level 3 input). If management determines that an other-than-temporary decline in the fair value of an investment has occurred, an impairment loss is recognized to reduce the investment to its estimated fair value (Level 2 input). The fair value of long-term debt is determined based on current interest rates available for debt with terms and maturities similar to the Company’s existing debt arrangements (Level 2). | ||||||||||||||||
The carrying value of accounts receivable, accounts payable, and accrued expenses approximate their fair value. | ||||||||||||||||
Financial Instruments | ||||||||||||||||
The Company is exposed to certain market risks which are inherent in certain transactions entered into during the normal course of business. These transactions include sales or purchase contracts denominated in foreign currencies, investments in equity securities and exposure to changing interest rates. The Company uses a risk management policy to assess and manage cash flow and fair value exposure. The policy permits the use of derivative instruments with certain restrictions. | ||||||||||||||||
The Company uses interest rate swaps to hedge its fixed rate debt against changes in fair value due to variability in interest rates. The Company is party to interest rate swap agreements that have been designated as fair value hedges and are recorded at fair value on the condensed consolidated balance sheet. The fair value of the interest rate swaps are determined based on observed values for underlying interest rates on the LIBOR yield curve (Level 2). | ||||||||||||||||
The Company does not hold derivative instruments for trading or speculative purposes. | ||||||||||||||||
Changes in Estimates on Contracts | ||||||||||||||||
Changes in estimates related to certain types of contracts accounted for using the percentage of completion method of accounting are recognized in the period in which such changes are made for the inception-to-date effect of the changes. Changes in these estimates can routinely occur over the contract performance period for a variety of reasons, including changes in contract scope, changes in contract cost estimates due to unanticipated cost growth or retirements of risk for amounts different than estimated and changes in estimated incentive or award fees. Aggregate changes in contract estimates resulted in an increase to operating income of $6 million and an increase of $0.05 per diluted share for the three months ended October 31, 2014, and an increase to operating income of $24 million and an increase of $0.20 per diluted share for the nine months ended October 31, 2014. Aggregate changes in contract estimates resulted in a decrease to operating income of $1 million and a decrease of $0.02 per diluted share for the three months ended November 1, 2013, and a decrease to operating income of $29 million and a decrease of $0.22 per diluted share for the nine months ended November 1, 2013. | ||||||||||||||||
Goodwill and Intangible Assets | ||||||||||||||||
Goodwill | ||||||||||||||||
Goodwill represents purchase consideration paid in a business combination that exceeds the values assigned to the net assets of acquired businesses. Goodwill is not amortized, but instead is tested for impairment at the reporting unit level annually, at the beginning of the fourth quarter and during interim periods whenever events or circumstances indicate that the carrying value may not be recoverable. Goodwill is evaluated for impairment either under a qualitative assessment option or a two-step quantitative approach depending on facts and circumstances of a reporting unit, including the excess of fair value over carrying amount in previous assessments and changes in business environment. | ||||||||||||||||
When performing a qualitative assessment, the Company considers factors including, but not limited to, current macroeconomic conditions, industry and market conditions, cost factors, financial performance and other events relevant to the entity or reporting unit under evaluation to determine whether it is more likely or not that the fair value of a reporting unit is less than its carrying amount. If the Company determines that it is more likely than not that a reporting unit’s fair value is less than its carrying amount, a quantitative two-step goodwill impairment test is performed. | ||||||||||||||||
In evaluating the first step of the two-step quantitative goodwill impairment test, the estimated fair value of each reporting unit is compared to its carrying value, which includes the allocated goodwill. If the estimated fair value of a reporting unit is more than its carrying value, including allocated goodwill, no further analysis is required. If the estimated fair value of a reporting unit is less than its carrying value, including allocated goodwill, a second step is performed to compute the amount of the impairment by determining an implied fair value of goodwill. The implied fair value of goodwill is the residual fair value derived by deducting the fair value of a reporting unit’s identifiable assets and liabilities from its estimated fair value calculated in the first step. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, then the Company records an impairment charge equal to the difference. | ||||||||||||||||
The Company estimates the fair value of each reporting unit using both market and income approaches (Level 3) when a quantitative analysis is required. | ||||||||||||||||
The market approach consists of the guideline public company method which is a valuation technique where the fair value is calculated based on market prices obtained from a detailed market analysis of publicly traded companies that provide a reasonable basis of comparison for each reporting unit. Valuation ratios are selected that relate market prices to selected financial metrics from comparable companies. These ratios are applied after consideration of adjustments and weightings related to financial position, growth, volatility, working capital movement, and other factors. Due to the fact that stock prices of comparable companies represent minority interests the Company also considers an acquisition control premium to reflect the impact of additional value associated with a controlling interest. | ||||||||||||||||
The income approach is a valuation technique where the fair value is calculated based on forecasted future cash flows within the projection period discounted back to the present value with appropriate risk adjusted discount rates, which represent the weighted-average cost of capital ("WACC") for each reporting unit. This includes assessing the cost of equity and debt capital as of the valuation date. In addition, a terminal value is developed for forecasted future cash flows beyond the projection period discounted back to the present value. The forecasts used in the Company’s estimation of fair value are developed by management based on known business and market considerations. | ||||||||||||||||
The goodwill impairment test process and valuation model is based upon certain key assumptions that require the exercise of significant judgment including judgments for the use of appropriate financial projections, economic expectations, discount rates and WACC as well as using available market data. | ||||||||||||||||
An interim goodwill impairment evaluation was performed during the second quarter of fiscal 2015 and resulted in goodwill impairment charges of $486 million for the three months ended August 1, 2014. See Note 4–Goodwill and Intangible Assets for further information. | ||||||||||||||||
Intangible assets | ||||||||||||||||
Intangible assets with finite lives are amortized using the method that best reflects how their economic benefits are utilized or, if a pattern of economic benefits cannot be reliably determined, on a straight-line basis over their estimated useful lives. | ||||||||||||||||
Intangible assets with finite lives are assessed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. See Note 4–Goodwill and Intangible Assets for impairment charges taken during the period. Intangible assets with indefinite lives are not amortized but are assessed for impairment at the beginning of the fourth quarter and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. | ||||||||||||||||
Supplementary Cash Flow Information | ||||||||||||||||
Supplementary cash flow information, including non-cash investing and financing activities, for the periods presented was as follows: | ||||||||||||||||
Nine Months Ended | ||||||||||||||||
October 31, | November 1, | |||||||||||||||
2014 | 2013 | |||||||||||||||
(in millions) | ||||||||||||||||
Vested stock issued as settlement of annual bonus accruals | $ | 1 | $ | 2 | ||||||||||||
Stock issued in lieu of cash dividends | $ | 2 | $ | 17 | ||||||||||||
Fair value of assets acquired in acquisitions | $ | — | $ | 259 | ||||||||||||
Cash paid in acquisitions | $ | — | $ | (1 | ) | |||||||||||
Forgiveness of accounts receivable to acquire equity interest in business combination | $ | — | $ | (105 | ) | |||||||||||
Accrued liability for acquisition of business | $ | — | $ | (5 | ) | |||||||||||
Liabilities assumed in acquisitions | $ | — | $ | (148 | ) | |||||||||||
Cash paid for interest (including discontinued operations) | $ | 41 | $ | 37 | ||||||||||||
Cash paid for income taxes, net of refunds (including discontinued operations) | $ | 22 | $ | 62 | ||||||||||||
Accounting Standards Updates Adopted | ||||||||||||||||
In February 2013, the Financial Accounting Standards Board ("FASB") issued ASU 2013-04: Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date. This standard requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The guidance also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. The amendments in this update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of the provisions of ASU 2013-04 did not have a material effect on the Company's consolidated financial position, results of operations, or cash flows. | ||||||||||||||||
In March 2013, the FASB issued ASU No. 2013-05, Foreign Currency Matters (Topic 830): Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity. This standard applies to the release of the cumulative translation adjustment into net income when a parent either sells a part of or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. In addition, the amendments resolve the diversity in practice for the treatment of business combinations achieved in stages (i.e., step acquisitions) involving a foreign entity. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of the provisions of ASU 2013-05 did not have a material effect on the Company's consolidated financial position, results of operations, or cash flows. | ||||||||||||||||
In June 2014, the FASB issued ASU No. 2014-12, Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. This standard was issued to provide guidance on share based payment awards in which a performance target may be achieved after an employee completes the requisite service period to achieve the award. In some instances, this has led to a performance award being granted subsequent to the employee no longer rendering services to the issuing company. Previously, no guidance had been included in the codification on how to account for these transactions. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The amendments in this ASU are effective for all entities for annual periods and interim periods within those annual periods beginning after December 15, 2015. Early adoption is permitted. The amendments may be adopted prospectively or retrospectively. The Company elected to early adopt the provisions of ASU No. 2014-12 and the standard did not have a material effect on the Company's financial position, results of operations, or cash flows. | ||||||||||||||||
During the quarter presented, the Company adopted various other accounting standards issued by the FASB, none of which had a material effect on the Company's consolidated financial position, results of operations, or cash flows. | ||||||||||||||||
Accounting Standards Updates Issued But Not Yet Adopted | ||||||||||||||||
In April 2014, the FASB issued ASU No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in the ASU change the criteria for reporting discontinued operations while enhancing disclosures in this area. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. Those strategic shifts should have a major effect on the organization’s operations and financial results. Examples include a disposal of a major geographic location, a major line of business or a major equity method investment. In addition, the new guidance requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income and expenses of discontinued operations. The new guidance also requires disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. This disclosure will provide users with information about the ongoing trends in a reporting organization’s results from continuing operations. The amendments in the ASU are effective in the first quarter of 2015 for public organizations with calendar year ends. Early adoption is permitted. The Company is still evaluating the provisions of ASU 2014-08 and its impact on the Company's consolidated financial position, results of operations, or cash flows. | ||||||||||||||||
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the codification. Additionally, this ASU supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts. The guidance's core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying the revenue principles, an entity will identify the performance obligations, determine the transaction price, allocate the transaction price to the performance obligations and recognize revenue when the performance obligation is satisfied. The ASU further states that an entity should disclose sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amendments in this ASU are effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016, for public companies. Early adoption is not permitted. The Company is still evaluating the provisions of ASU 2014-09 and its impact on the Company's consolidated financial position, results of operations, or cash flows. | ||||||||||||||||
Leidos, Inc. | ' | |||||||||||||||
Summary of Significant Accounting Policies | ' | |||||||||||||||
Summary of Significant Accounting Policies: | ||||||||||||||||
Nature of Operations and Basis of Presentation | ||||||||||||||||
Leidos Holdings, Inc. ("Leidos") is a holding company whose direct 100%-owned subsidiary is Leidos, Inc., a company focused on delivering science and technology solutions and services primarily in the areas of national security, health and engineering to agencies of the U.S. Department of Defense ("DoD"), the intelligence community, the U.S. Department of Homeland Security and other U.S. Government civil agencies, state and local government agencies, foreign governments, and customers across a variety of commercial markets. Unless indicated otherwise, references to the "Company," "we," "us," and "our" refer collectively to Leidos, Leidos, Inc., and its consolidated subsidiaries. | ||||||||||||||||
On September 27, 2013 (the "Distribution Date"), Leidos completed the spin-off of its technical services and enterprise information technology services business into an independent, publicly traded company named Science Applications International Corporation (“New SAIC”). The separation was effected through a tax-free distribution to Leidos' stockholders of 100% of the shares of New SAIC's common stock. On the Distribution Date, New SAIC's common stock was distributed, on a pro rata basis, to Leidos' stockholders of record as of the close of business on September 19, 2013, the record date. Each holder of Leidos common stock received one share of New SAIC common stock for every seven shares of Leidos common stock held on the record date. Prior to the Distribution Date, Leidos Holdings, Inc. was named SAIC, Inc. and Leidos, Inc. was named Science Applications International Corporation. | ||||||||||||||||
As a result of the spin-off, the assets, liabilities, results of operations, and cash flows of New SAIC have been classified as discontinued operations for all periods presented. References to financial data are to the Company’s continuing operations, unless otherwise noted. See Note 2–Dispositions for further information. | ||||||||||||||||
Immediately following the spin-off, Leidos effectuated a one-for-four reverse stock split of its shares of common stock, so that every four shares of Leidos common stock issued and outstanding were combined and converted into one share of Leidos common stock. Each reference to the number of shares outstanding or per share amounts has been adjusted to reflect the reverse stock split for all periods presented. | ||||||||||||||||
The condensed consolidated financial statements of Leidos include the accounts of its majority-owned and 100%-owned subsidiaries, including Leidos, Inc. The condensed consolidated financial statements of Leidos, Inc. include the accounts of its majority-owned and 100%-owned subsidiaries. Leidos does not have separate operations, assets or liabilities independent of Leidos, Inc., except for a note with Leidos, Inc. (the “related party note”), on which interest is recognized. From time to time, Leidos issues stock to employees of Leidos, Inc. and its subsidiaries, which is reflected in Leidos’ Condensed Consolidated Statement of Stockholders’ Equity and results in an increase to the related party note. All intercompany transactions and accounts have been eliminated in consolidation. | ||||||||||||||||
The accompanying financial information has been prepared by the Company pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") and accounting principles generally accepted in the United States of America ("GAAP"). Certain disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and combined notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2014. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Estimates have been prepared by management on the basis of the most current and best available information at the time of estimation and actual results could differ from those estimates. | ||||||||||||||||
In the opinion of management, the financial information as of October 31, 2014 and for the three and nine months ended October 31, 2014 and November 1, 2013 reflects all adjustments, which consist of normal recurring adjustments, necessary for a fair presentation thereof. Operating results for the three and nine months ended October 31, 2014 are not necessarily indicative of the results that may be expected for the fiscal year ending January 30, 2015, or any future period. | ||||||||||||||||
Unless otherwise noted, references to fiscal years are to fiscal years ended the Friday closest to January 31. Fiscal 2015 began on February 1, 2014 and ends on January 30, 2015. The third quarter of fiscal 2015 ended on October 31, 2014. | ||||||||||||||||
Separation Transaction and Restructuring Expenses | ||||||||||||||||
In anticipation of the spin-off of New SAIC from the Company, the Company initiated a program to align the Company’s cost structure for post-spin-off. In fiscal 2014 the Company reduced headcount, which resulted in severance costs, and reduced its real estate footprint by vacating facilities that are not necessary for its future requirements, which resulted in lease termination and facility consolidation expenses. | ||||||||||||||||
Separation transaction and restructuring expenses related to New SAIC, exclusive of any tax impacts, of $20 million and $55 million for the three and nine months ended November 1, 2013, respectively, were reclassified as discontinued operations. | ||||||||||||||||
The separation transaction and restructuring expenses for continuing operations were as follows: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
October 31, | November 1, | October 31, | November 1, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(in millions) | ||||||||||||||||
Strategic advisory services | $ | — | $ | 5 | $ | — | $ | 7 | ||||||||
Legal and accounting services | — | 1 | — | 1 | ||||||||||||
Lease termination and facility consolidation expenses | — | 17 | 1 | 40 | ||||||||||||
Severance costs | — | 2 | — | 10 | ||||||||||||
Separation transaction and restructuring expenses in operating income (loss) | — | 25 | 1 | 58 | ||||||||||||
Less: income tax benefit | — | (10 | ) | — | (23 | ) | ||||||||||
Separation transaction and restructuring expenses, net of tax | $ | — | $ | 15 | $ | 1 | $ | 35 | ||||||||
During the nine months ended October 31, 2014, the lease termination and facility consolidation expenses related to an adjustment to the reserve established for loss on leases in connection with revised sublease income assumptions. | ||||||||||||||||
For the nine months ended October 31, 2014 and November 1, 2013, all separation transaction and restructuring expenses for continuing operations were recorded in the Corporate and Other segment. | ||||||||||||||||
The following table represents the restructuring liability balance as of October 31, 2014 and summarizes the changes during the period attributable to costs incurred and charged to expense, costs paid or otherwise settled, and any adjustments to the liability: | ||||||||||||||||
Severance Costs | Lease Termination and Facility Consolidation Expenses | Total | ||||||||||||||
(in millions) | ||||||||||||||||
Balance as of January 31, 2014 | $ | 1 | $ | 20 | $ | 21 | ||||||||||
Charges | — | 1 | 1 | |||||||||||||
Cash payments | (1 | ) | (11 | ) | (12 | ) | ||||||||||
Balance as of October 31, 2014 | $ | — | $ | 10 | $ | 10 | ||||||||||
Receivables | ||||||||||||||||
The Company’s accounts receivable include both amounts billed and currently due from customers, and unbilled receivables consisting of costs and fees billable upon contract completion or the occurrence of a specified event, substantially all of which are expected to be billed and collected within one year. Unbilled receivables are stated at estimated realizable value. Since the Company’s receivables are primarily with the U.S. Government, the Company does not have a material credit risk exposure. Contract retentions are billed when the Company has negotiated final indirect rates with the U.S. Government and, once billed, are subject to audit and approval by government representatives. Consequently, the timing of collection of retention balances is outside the Company’s control. Based on the Company’s historical experience, the majority of retention balances are expected to be collected beyond one year and write-offs of retention balances have not been significant. | ||||||||||||||||
The Company has extended deferred payment terms with contractual maturities that may exceed one year to commercial customers related to certain construction projects. As of October 31, 2014, the Company had outstanding receivables of $28 million, net of allowance of $7 million, related to one construction project with deferred payment terms, which have not been paid in accordance with the initial payment terms established with the customer. The Company has filed a legal claim to enforce the payment terms as established in the contract. Based on these events, the Company has determined that the receivables are not expected to be collected within the next 12 months. Accordingly, the receivables are classified as non-current in “Other Assets” on the condensed consolidated balance sheet as of October 31, 2014. | ||||||||||||||||
When events or conditions indicate that amounts outstanding from customers may become uncollectible, an allowance is estimated and recorded. | ||||||||||||||||
Fair Value Measurements | ||||||||||||||||
The accounting standard for fair value measurements establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows: observable inputs such as quoted prices in active markets (Level 1); inputs other than the quoted prices in active markets that are observable either directly or indirectly (Level 2); and unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions (Level 3). | ||||||||||||||||
The fair value of financial instruments is determined based on quoted market prices, if available, or management’s best estimate. It is management’s belief that the carrying amounts of the Company’s financial instruments other than derivatives (see below), which include cash equivalents and long-term investments in private equity securities are reasonable estimates of their related fair values. | ||||||||||||||||
Cash equivalents are recorded at historical cost which equals fair value based on quoted market prices (Level 1 input). The Company’s cash equivalents were primarily comprised of investments in several large institutional money market funds and bank deposits. There are no restrictions on the withdrawal of the Company’s cash and cash equivalents. | ||||||||||||||||
Management evaluates its investments for other-than-temporary impairment at each balance sheet date. When testing long-term investments for recovery of carrying value, the fair value of long-term investments in private equity securities is determined using various valuation techniques and factors, such as market prices of comparable companies (Level 2 input), discounted cash flow models (Level 3 input) and recent capital transactions of the portfolio companies being valued (Level 3 input). If management determines that an other-than-temporary decline in the fair value of an investment has occurred, an impairment loss is recognized to reduce the investment to its estimated fair value (Level 2 input). The fair value of long-term debt is determined based on current interest rates available for debt with terms and maturities similar to the Company’s existing debt arrangements (Level 2). | ||||||||||||||||
The carrying value of accounts receivable, accounts payable, and accrued expenses approximate their fair value. | ||||||||||||||||
Financial Instruments | ||||||||||||||||
The Company is exposed to certain market risks which are inherent in certain transactions entered into during the normal course of business. These transactions include sales or purchase contracts denominated in foreign currencies, investments in equity securities and exposure to changing interest rates. The Company uses a risk management policy to assess and manage cash flow and fair value exposure. The policy permits the use of derivative instruments with certain restrictions. | ||||||||||||||||
The Company uses interest rate swaps to hedge its fixed rate debt against changes in fair value due to variability in interest rates. The Company is party to interest rate swap agreements that have been designated as fair value hedges and are recorded at fair value on the condensed consolidated balance sheet. The fair value of the interest rate swaps are determined based on observed values for underlying interest rates on the LIBOR yield curve (Level 2). | ||||||||||||||||
The Company does not hold derivative instruments for trading or speculative purposes. | ||||||||||||||||
Changes in Estimates on Contracts | ||||||||||||||||
Changes in estimates related to certain types of contracts accounted for using the percentage of completion method of accounting are recognized in the period in which such changes are made for the inception-to-date effect of the changes. Changes in these estimates can routinely occur over the contract performance period for a variety of reasons, including changes in contract scope, changes in contract cost estimates due to unanticipated cost growth or retirements of risk for amounts different than estimated and changes in estimated incentive or award fees. Aggregate changes in contract estimates resulted in an increase to operating income of $6 million and an increase of $0.05 per diluted share for the three months ended October 31, 2014, and an increase to operating income of $24 million and an increase of $0.20 per diluted share for the nine months ended October 31, 2014. Aggregate changes in contract estimates resulted in a decrease to operating income of $1 million and a decrease of $0.02 per diluted share for the three months ended November 1, 2013, and a decrease to operating income of $29 million and a decrease of $0.22 per diluted share for the nine months ended November 1, 2013. | ||||||||||||||||
Goodwill and Intangible Assets | ||||||||||||||||
Goodwill | ||||||||||||||||
Goodwill represents purchase consideration paid in a business combination that exceeds the values assigned to the net assets of acquired businesses. Goodwill is not amortized, but instead is tested for impairment at the reporting unit level annually, at the beginning of the fourth quarter and during interim periods whenever events or circumstances indicate that the carrying value may not be recoverable. Goodwill is evaluated for impairment either under a qualitative assessment option or a two-step quantitative approach depending on facts and circumstances of a reporting unit, including the excess of fair value over carrying amount in previous assessments and changes in business environment. | ||||||||||||||||
When performing a qualitative assessment, the Company considers factors including, but not limited to, current macroeconomic conditions, industry and market conditions, cost factors, financial performance and other events relevant to the entity or reporting unit under evaluation to determine whether it is more likely or not that the fair value of a reporting unit is less than its carrying amount. If the Company determines that it is more likely than not that a reporting unit’s fair value is less than its carrying amount, a quantitative two-step goodwill impairment test is performed. | ||||||||||||||||
In evaluating the first step of the two-step quantitative goodwill impairment test, the estimated fair value of each reporting unit is compared to its carrying value, which includes the allocated goodwill. If the estimated fair value of a reporting unit is more than its carrying value, including allocated goodwill, no further analysis is required. If the estimated fair value of a reporting unit is less than its carrying value, including allocated goodwill, a second step is performed to compute the amount of the impairment by determining an implied fair value of goodwill. The implied fair value of goodwill is the residual fair value derived by deducting the fair value of a reporting unit’s identifiable assets and liabilities from its estimated fair value calculated in the first step. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, then the Company records an impairment charge equal to the difference. | ||||||||||||||||
The Company estimates the fair value of each reporting unit using both market and income approaches (Level 3) when a quantitative analysis is required. | ||||||||||||||||
The market approach consists of the guideline public company method which is a valuation technique where the fair value is calculated based on market prices obtained from a detailed market analysis of publicly traded companies that provide a reasonable basis of comparison for each reporting unit. Valuation ratios are selected that relate market prices to selected financial metrics from comparable companies. These ratios are applied after consideration of adjustments and weightings related to financial position, growth, volatility, working capital movement, and other factors. Due to the fact that stock prices of comparable companies represent minority interests the Company also considers an acquisition control premium to reflect the impact of additional value associated with a controlling interest. | ||||||||||||||||
The income approach is a valuation technique where the fair value is calculated based on forecasted future cash flows within the projection period discounted back to the present value with appropriate risk adjusted discount rates, which represent the weighted-average cost of capital ("WACC") for each reporting unit. This includes assessing the cost of equity and debt capital as of the valuation date. In addition, a terminal value is developed for forecasted future cash flows beyond the projection period discounted back to the present value. The forecasts used in the Company’s estimation of fair value are developed by management based on known business and market considerations. | ||||||||||||||||
The goodwill impairment test process and valuation model is based upon certain key assumptions that require the exercise of significant judgment including judgments for the use of appropriate financial projections, economic expectations, discount rates and WACC as well as using available market data. | ||||||||||||||||
An interim goodwill impairment evaluation was performed during the second quarter of fiscal 2015 and resulted in goodwill impairment charges of $486 million for the three months ended August 1, 2014. See Note 4–Goodwill and Intangible Assets for further information. | ||||||||||||||||
Intangible assets | ||||||||||||||||
Intangible assets with finite lives are amortized using the method that best reflects how their economic benefits are utilized or, if a pattern of economic benefits cannot be reliably determined, on a straight-line basis over their estimated useful lives. | ||||||||||||||||
Intangible assets with finite lives are assessed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. See Note 4–Goodwill and Intangible Assets for impairment charges taken during the period. Intangible assets with indefinite lives are not amortized but are assessed for impairment at the beginning of the fourth quarter and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. | ||||||||||||||||
Supplementary Cash Flow Information | ||||||||||||||||
Supplementary cash flow information, including non-cash investing and financing activities, for the periods presented was as follows: | ||||||||||||||||
Nine Months Ended | ||||||||||||||||
October 31, | November 1, | |||||||||||||||
2014 | 2013 | |||||||||||||||
(in millions) | ||||||||||||||||
Vested stock issued as settlement of annual bonus accruals | $ | 1 | $ | 2 | ||||||||||||
Stock issued in lieu of cash dividends | $ | 2 | $ | 17 | ||||||||||||
Fair value of assets acquired in acquisitions | $ | — | $ | 259 | ||||||||||||
Cash paid in acquisitions | $ | — | $ | (1 | ) | |||||||||||
Forgiveness of accounts receivable to acquire equity interest in business combination | $ | — | $ | (105 | ) | |||||||||||
Accrued liability for acquisition of business | $ | — | $ | (5 | ) | |||||||||||
Liabilities assumed in acquisitions | $ | — | $ | (148 | ) | |||||||||||
Cash paid for interest (including discontinued operations) | $ | 41 | $ | 37 | ||||||||||||
Cash paid for income taxes, net of refunds (including discontinued operations) | $ | 22 | $ | 62 | ||||||||||||
Accounting Standards Updates Adopted | ||||||||||||||||
In February 2013, the Financial Accounting Standards Board ("FASB") issued ASU 2013-04: Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date. This standard requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The guidance also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. The amendments in this update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of the provisions of ASU 2013-04 did not have a material effect on the Company's consolidated financial position, results of operations, or cash flows. | ||||||||||||||||
In March 2013, the FASB issued ASU No. 2013-05, Foreign Currency Matters (Topic 830): Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity. This standard applies to the release of the cumulative translation adjustment into net income when a parent either sells a part of or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. In addition, the amendments resolve the diversity in practice for the treatment of business combinations achieved in stages (i.e., step acquisitions) involving a foreign entity. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of the provisions of ASU 2013-05 did not have a material effect on the Company's consolidated financial position, results of operations, or cash flows. | ||||||||||||||||
In June 2014, the FASB issued ASU No. 2014-12, Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. This standard was issued to provide guidance on share based payment awards in which a performance target may be achieved after an employee completes the requisite service period to achieve the award. In some instances, this has led to a performance award being granted subsequent to the employee no longer rendering services to the issuing company. Previously, no guidance had been included in the codification on how to account for these transactions. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The amendments in this ASU are effective for all entities for annual periods and interim periods within those annual periods beginning after December 15, 2015. Early adoption is permitted. The amendments may be adopted prospectively or retrospectively. The Company elected to early adopt the provisions of ASU No. 2014-12 and the standard did not have a material effect on the Company's financial position, results of operations, or cash flows. | ||||||||||||||||
During the quarter presented, the Company adopted various other accounting standards issued by the FASB, none of which had a material effect on the Company's consolidated financial position, results of operations, or cash flows. | ||||||||||||||||
Accounting Standards Updates Issued But Not Yet Adopted | ||||||||||||||||
In April 2014, the FASB issued ASU No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in the ASU change the criteria for reporting discontinued operations while enhancing disclosures in this area. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. Those strategic shifts should have a major effect on the organization’s operations and financial results. Examples include a disposal of a major geographic location, a major line of business or a major equity method investment. In addition, the new guidance requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income and expenses of discontinued operations. The new guidance also requires disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. This disclosure will provide users with information about the ongoing trends in a reporting organization’s results from continuing operations. The amendments in the ASU are effective in the first quarter of 2015 for public organizations with calendar year ends. Early adoption is permitted. The Company is still evaluating the provisions of ASU 2014-08 and its impact on the Company's consolidated financial position, results of operations, or cash flows. | ||||||||||||||||
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the codification. Additionally, this ASU supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts. The guidance's core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying the revenue principles, an entity will identify the performance obligations, determine the transaction price, allocate the transaction price to the performance obligations and recognize revenue when the performance obligation is satisfied. The ASU further states that an entity should disclose sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amendments in this ASU are effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016, for public companies. Early adoption is not permitted. The Company is still evaluating the provisions of ASU 2014-09 and its impact on the Company's consolidated financial position, results of operations, or cash flows. |
Dispositions
Dispositions | 9 Months Ended | |||||||||||||||
Oct. 31, 2014 | ||||||||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ' | |||||||||||||||
Dispositions | ' | |||||||||||||||
Dispositions: | ||||||||||||||||
Fiscal 2015 Discontinued Operations | ||||||||||||||||
In July 2014, the Company committed to plans to dispose of a business primarily focused on full service emergency management consulting for disaster preparedness, response, recovery, and mitigation historically included in the Company's Health and Engineering segment. The sale transaction was completed in the third quarter of fiscal 2015 with cash proceeds received of $19 million, resulting in an immaterial loss on sale. | ||||||||||||||||
Fiscal 2014 Discontinued Operations | ||||||||||||||||
Separation of New SAIC | ||||||||||||||||
As discussed in Note 1, the Company completed the spin-off of New SAIC on September 27, 2013. New SAIC was a subsidiary of Leidos prior to the separation date. At separation, New SAIC made a $295 million dividend payment to Leidos and reimbursed Leidos, Inc. $5 million for financing costs previously advanced to New SAIC to secure a revolving and term credit facility, and Leidos, Inc. made a $26 million capital contribution to New SAIC. | ||||||||||||||||
The spin-off was made pursuant to the terms of a Distribution Agreement and several other agreements entered into between the Company and New SAIC on September 25, 2013. These agreements set forth, among other things, the principal actions needed to be taken in connection with the separation and govern certain aspects of the relationship between the Company and New SAIC following the separation. These agreements generally provide, with certain exceptions, that each party is responsible for its respective assets, liabilities and obligations, including employee benefits, insurance and tax related assets and liabilities, whether accrued or contingent, except that unknown liabilities will be shared between the parties in certain circumstances. The agreements also describe the party’s commitments to provide each other with certain services for a limited time to help ensure an orderly transition. The agreements also include the treatment of existing contracts, proposals, and teaming arrangements where New SAIC will jointly perform work after separation on Leidos contracts. While the Company is a party to the Distribution Agreement and the ancillary agreements, the Company has determined that it does not have significant continuing involvement in the operations of New SAIC, nor does the Company expect significant continuing cash flows from New SAIC. | ||||||||||||||||
The operating results of New SAIC through the Distribution Date, which have been classified as discontinued operations, for the periods presented were as follows: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
31-Oct-14 | November 1, | October 31, | November 1, | |||||||||||||
2013 | 2014 | 2013 | ||||||||||||||
(in millions) | ||||||||||||||||
Revenues | $ | 8 | $ | 598 | $ | 34 | $ | 2,712 | ||||||||
Costs and expenses: | ||||||||||||||||
Cost of revenues | 8 | 533 | 34 | 2,446 | ||||||||||||
Selling, general and administrative expenses | — | 22 | — | 42 | ||||||||||||
Separation transaction and restructuring expenses | — | 20 | — | 55 | ||||||||||||
Operating income | $ | — | $ | 23 | $ | — | $ | 169 | ||||||||
Other Fiscal 2014 Discontinued Operations | ||||||||||||||||
Other fiscal 2014 non-strategic dispositions were historically included in the Company's National Security Solutions segment. | ||||||||||||||||
In August 2013, the Company committed to plans to dispose of a business primarily focused on technology used to detect if an individual is concealing explosive devices or other hidden weapons. In the first quarter of fiscal 2015, the Company adjusted the carrying values of the business's assets to their fair value based on the estimated selling price of the business. The carrying value exceeded the fair value which resulted in approximately $12 million of impairment charges recorded in discontinued operations, of which $9 million related to fixed assets and inventory and the remainder related to intangible assets. The sale transaction was completed in the second quarter of fiscal 2015 with insignificant cash proceeds received, resulting in an immaterial loss on sale. | ||||||||||||||||
In November 2013, the Company sold a certain component of the Company's business focused on machine language translation with insignificant cash proceeds received, resulting in an immaterial gain on sale. | ||||||||||||||||
In January 2014, the Company committed to plans to dispose of Cloudshield Technologies, Inc. ("Cloudshield"), previously acquired in fiscal 2011, which is focused on producing a suite of cybersecurity hardware and associated software and services. | ||||||||||||||||
The pre-sale operating results through the date of disposal of the Company’s discontinued operations discussed above, not including the separation of New SAIC, for the periods presented were as follows: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
October 31, | November 1, | October 31, | November 1, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(in millions) | ||||||||||||||||
Revenues | $ | 5 | $ | 7 | $ | 25 | $ | 25 | ||||||||
Costs and expenses: | ||||||||||||||||
Cost of revenues | 2 | 10 | 19 | 27 | ||||||||||||
Selling, general and administrative expenses (including impairment charges of $9 million for the nine months ended October 31, 2014) | 5 | 1 | 24 | 20 | ||||||||||||
Intangible asset impairment charges | — | — | 3 | 2 | ||||||||||||
Operating loss | $ | (2 | ) | $ | (4 | ) | $ | (21 | ) | $ | (24 | ) | ||||
Non-operating income (expense) | $ | 1 | $ | — | $ | 9 | $ | (1 | ) | |||||||
Total loss from discontinued operations before income taxes | $ | (1 | ) | $ | (4 | ) | $ | (12 | ) | $ | (25 | ) | ||||
Leidos, Inc. | ' | |||||||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ' | |||||||||||||||
Dispositions | ' | |||||||||||||||
Dispositions: | ||||||||||||||||
Fiscal 2015 Discontinued Operations | ||||||||||||||||
In July 2014, the Company committed to plans to dispose of a business primarily focused on full service emergency management consulting for disaster preparedness, response, recovery, and mitigation historically included in the Company's Health and Engineering segment. The sale transaction was completed in the third quarter of fiscal 2015 with cash proceeds received of $19 million, resulting in an immaterial loss on sale. | ||||||||||||||||
Fiscal 2014 Discontinued Operations | ||||||||||||||||
Separation of New SAIC | ||||||||||||||||
As discussed in Note 1, the Company completed the spin-off of New SAIC on September 27, 2013. New SAIC was a subsidiary of Leidos prior to the separation date. At separation, New SAIC made a $295 million dividend payment to Leidos and reimbursed Leidos, Inc. $5 million for financing costs previously advanced to New SAIC to secure a revolving and term credit facility, and Leidos, Inc. made a $26 million capital contribution to New SAIC. | ||||||||||||||||
The spin-off was made pursuant to the terms of a Distribution Agreement and several other agreements entered into between the Company and New SAIC on September 25, 2013. These agreements set forth, among other things, the principal actions needed to be taken in connection with the separation and govern certain aspects of the relationship between the Company and New SAIC following the separation. These agreements generally provide, with certain exceptions, that each party is responsible for its respective assets, liabilities and obligations, including employee benefits, insurance and tax related assets and liabilities, whether accrued or contingent, except that unknown liabilities will be shared between the parties in certain circumstances. The agreements also describe the party’s commitments to provide each other with certain services for a limited time to help ensure an orderly transition. The agreements also include the treatment of existing contracts, proposals, and teaming arrangements where New SAIC will jointly perform work after separation on Leidos contracts. While the Company is a party to the Distribution Agreement and the ancillary agreements, the Company has determined that it does not have significant continuing involvement in the operations of New SAIC, nor does the Company expect significant continuing cash flows from New SAIC. | ||||||||||||||||
The operating results of New SAIC through the Distribution Date, which have been classified as discontinued operations, for the periods presented were as follows: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
31-Oct-14 | November 1, | October 31, | November 1, | |||||||||||||
2013 | 2014 | 2013 | ||||||||||||||
(in millions) | ||||||||||||||||
Revenues | $ | 8 | $ | 598 | $ | 34 | $ | 2,712 | ||||||||
Costs and expenses: | ||||||||||||||||
Cost of revenues | 8 | 533 | 34 | 2,446 | ||||||||||||
Selling, general and administrative expenses | — | 22 | — | 42 | ||||||||||||
Separation transaction and restructuring expenses | — | 20 | — | 55 | ||||||||||||
Operating income | $ | — | $ | 23 | $ | — | $ | 169 | ||||||||
Other Fiscal 2014 Discontinued Operations | ||||||||||||||||
Other fiscal 2014 non-strategic dispositions were historically included in the Company's National Security Solutions segment. | ||||||||||||||||
In August 2013, the Company committed to plans to dispose of a business primarily focused on technology used to detect if an individual is concealing explosive devices or other hidden weapons. In the first quarter of fiscal 2015, the Company adjusted the carrying values of the business's assets to their fair value based on the estimated selling price of the business. The carrying value exceeded the fair value which resulted in approximately $12 million of impairment charges recorded in discontinued operations, of which $9 million related to fixed assets and inventory and the remainder related to intangible assets. The sale transaction was completed in the second quarter of fiscal 2015 with insignificant cash proceeds received, resulting in an immaterial loss on sale. | ||||||||||||||||
In November 2013, the Company sold a certain component of the Company's business focused on machine language translation with insignificant cash proceeds received, resulting in an immaterial gain on sale. | ||||||||||||||||
In January 2014, the Company committed to plans to dispose of Cloudshield Technologies, Inc. ("Cloudshield"), previously acquired in fiscal 2011, which is focused on producing a suite of cybersecurity hardware and associated software and services. | ||||||||||||||||
The pre-sale operating results through the date of disposal of the Company’s discontinued operations discussed above, not including the separation of New SAIC, for the periods presented were as follows: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
October 31, | November 1, | October 31, | November 1, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(in millions) | ||||||||||||||||
Revenues | $ | 5 | $ | 7 | $ | 25 | $ | 25 | ||||||||
Costs and expenses: | ||||||||||||||||
Cost of revenues | 2 | 10 | 19 | 27 | ||||||||||||
Selling, general and administrative expenses (including impairment charges of $9 million for the nine months ended October 31, 2014) | 5 | 1 | 24 | 20 | ||||||||||||
Intangible asset impairment charges | — | — | 3 | 2 | ||||||||||||
Operating loss | $ | (2 | ) | $ | (4 | ) | $ | (21 | ) | $ | (24 | ) | ||||
Non-operating income (expense) | $ | 1 | $ | — | $ | 9 | $ | (1 | ) | |||||||
Total loss from discontinued operations before income taxes | $ | (1 | ) | $ | (4 | ) | $ | (12 | ) | $ | (25 | ) |
Acquisitions
Acquisitions | 9 Months Ended | |||
Oct. 31, 2014 | ||||
Business Acquisition [Line Items] | ' | |||
Acquisitions | ' | |||
Acquisitions: | ||||
Plainfield Renewable Energy Holdings LLC | ||||
On October 11, 2013, the Company and Plainfield Renewable Energy Owner, LLC (“project owner”) entered into a consensual foreclosure agreement pursuant to which the project owners agreed to transfer 100% of the equity interest of Plainfield Renewable Energy Holdings, LLC (“PRE Holdings”) to an indirect wholly-owned subsidiary of Leidos in full satisfaction of certain secured obligations owed by the project owner to the Company. Plainfield Renewable Energy LLC or "Plainfield" was a wholly-owned subsidiary of PRE Holdings. As a result of the entry into the foreclosure agreement, the Company determined that it has the power to direct the activities of the VIE and has the right to receive benefits from or the obligation to absorb the losses of the VIE. Accordingly, the Company was deemed the primary beneficiary of the VIE, resulting in the consolidation of Plainfield as of October 11, 2013 (the "transaction"). The Company also determined that Plainfield met the definition of a business and as such gained control of 100% of PRE Holdings equity through the consensual foreclosure agreement which constituted a change in control accounted for as a business combination. | ||||
The Plainfield Renewable Energy Project involves the design, construction, and financing of a 37.5 megawatt biomass-fueled power plant in Plainfield, Connecticut (the "plant"). Connecticut Light & Power will purchase approximately 80% of the power produced by the plant based on a 15-year off-take agreement, utilizing the plant's status as a renewable power source. In addition, there are fuel supply agreements with initial terms of 5 to 15 years and minimum purchase requirements either at prevailing market prices or a set price plus a CPI index. | ||||
At the time the Company became the primary beneficiary of Plainfield, the Company measured the assets acquired and liabilities assumed at their fair values. The difference between the estimated fair value of the plant in comparison to the carrying value of the Company's deferred payment term receivables forgiven as of the date of the transaction resulted in a $32 million loss as bad debt expense in the Company's condensed consolidated statements of income during the three months ended November 1, 2013. In addition as part of the transaction, contingent consideration of approximately $3 million remains to be paid as of October 31, 2014, of which $2 million will be paid on the earlier of November 2015 or the successful sale of the plant, and the remainder of which will be paid solely upon the successful sale of the plant. | ||||
In July 2014, the Company received a cash grant of $80 million from the U.S. Treasury Department, which was recorded as a reduction to the fixed asset basis of the plant on the condensed consolidated balance sheet, and will be recognized ratably over the life of the plant through reduced depreciation expense. For tax purposes, the tax basis of the plant was reduced by half of the amount of the cash grant. This difference between the excess tax basis of the plant over the book basis resulted in a $27 million deferred tax asset which was recorded as a reduction to the fixed asset basis of the plant. The U.S. Treasury grant also contains a recapture provision that could require the Company to repay funds to the Treasury in certain circumstances which the Company deems not probable. | ||||
The aggregate purchase consideration that the Company exchanged for PRE Holdings is as follows (in millions): | ||||
Forgiveness of accounts receivable (net of $32 million bad debt expense) | $ | 105 | ||
Contingent consideration | 6 | |||
Total purchase consideration | $ | 111 | ||
The fair values of the assets acquired and liabilities assumed at the date of acquisition were as follows (in millions): | ||||
Property, plant and equipment | $ | 248 | ||
Other assets | 8 | |||
Notes payable assumed (net of debt discount) | (148 | ) | ||
Total identifiable net assets acquired | 108 | |||
Intangible assets | 3 | |||
Total purchase consideration | $ | 111 | ||
Leidos, Inc. | ' | |||
Business Acquisition [Line Items] | ' | |||
Acquisitions | ' | |||
Acquisitions: | ||||
Plainfield Renewable Energy Holdings LLC | ||||
On October 11, 2013, the Company and Plainfield Renewable Energy Owner, LLC (“project owner”) entered into a consensual foreclosure agreement pursuant to which the project owners agreed to transfer 100% of the equity interest of Plainfield Renewable Energy Holdings, LLC (“PRE Holdings”) to an indirect wholly-owned subsidiary of Leidos in full satisfaction of certain secured obligations owed by the project owner to the Company. Plainfield Renewable Energy LLC or "Plainfield" was a wholly-owned subsidiary of PRE Holdings. As a result of the entry into the foreclosure agreement, the Company determined that it has the power to direct the activities of the VIE and has the right to receive benefits from or the obligation to absorb the losses of the VIE. Accordingly, the Company was deemed the primary beneficiary of the VIE, resulting in the consolidation of Plainfield as of October 11, 2013 (the "transaction"). The Company also determined that Plainfield met the definition of a business and as such gained control of 100% of PRE Holdings equity through the consensual foreclosure agreement which constituted a change in control accounted for as a business combination. | ||||
The Plainfield Renewable Energy Project involves the design, construction, and financing of a 37.5 megawatt biomass-fueled power plant in Plainfield, Connecticut (the "plant"). Connecticut Light & Power will purchase approximately 80% of the power produced by the plant based on a 15-year off-take agreement, utilizing the plant's status as a renewable power source. In addition, there are fuel supply agreements with initial terms of 5 to 15 years and minimum purchase requirements either at prevailing market prices or a set price plus a CPI index. | ||||
At the time the Company became the primary beneficiary of Plainfield, the Company measured the assets acquired and liabilities assumed at their fair values. The difference between the estimated fair value of the plant in comparison to the carrying value of the Company's deferred payment term receivables forgiven as of the date of the transaction resulted in a $32 million loss as bad debt expense in the Company's condensed consolidated statements of income during the three months ended November 1, 2013. In addition as part of the transaction, contingent consideration of approximately $3 million remains to be paid as of October 31, 2014, of which $2 million will be paid on the earlier of November 2015 or the successful sale of the plant, and the remainder of which will be paid solely upon the successful sale of the plant. | ||||
In July 2014, the Company received a cash grant of $80 million from the U.S. Treasury Department, which was recorded as a reduction to the fixed asset basis of the plant on the condensed consolidated balance sheet, and will be recognized ratably over the life of the plant through reduced depreciation expense. For tax purposes, the tax basis of the plant was reduced by half of the amount of the cash grant. This difference between the excess tax basis of the plant over the book basis resulted in a $27 million deferred tax asset which was recorded as a reduction to the fixed asset basis of the plant. The U.S. Treasury grant also contains a recapture provision that could require the Company to repay funds to the Treasury in certain circumstances which the Company deems not probable. | ||||
The aggregate purchase consideration that the Company exchanged for PRE Holdings is as follows (in millions): | ||||
Forgiveness of accounts receivable (net of $32 million bad debt expense) | $ | 105 | ||
Contingent consideration | 6 | |||
Total purchase consideration | $ | 111 | ||
The fair values of the assets acquired and liabilities assumed at the date of acquisition were as follows (in millions): | ||||
Property, plant and equipment | $ | 248 | ||
Other assets | 8 | |||
Notes payable assumed (net of debt discount) | (148 | ) | ||
Total identifiable net assets acquired | 108 | |||
Intangible assets | 3 | |||
Total purchase consideration | $ | 111 | ||
Goodwill_and_Intangible_Assets
Goodwill and Intangible Assets | 9 Months Ended | |||||||||||||||||||||||
Oct. 31, 2014 | ||||||||||||||||||||||||
Goodwill and Intangible Assets | ' | |||||||||||||||||||||||
Goodwill and Intangible Assets: | ||||||||||||||||||||||||
The Company's National Security Solutions ("NSS") and Health and Engineering ("HES") are the reportable segments that contain goodwill. Goodwill is tested for impairment at the reporting unit level annually, at the beginning of the fourth quarter, and during interim periods whenever events or circumstances indicate that the carrying value may not be recoverable. As disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2014, the annual goodwill impairment assessment was completed in the fourth quarter fiscal 2014 and it was concluded that the estimated fair value of all of the Company's reporting units exceeded their carrying value. In the second quarter of fiscal 2015, as part of its normal quarterly procedures, the Company considered both qualitative and quantitative factors associated with each of the Company's reporting units and determined that there were indicators that the carrying values of the Health Solutions and Engineering reporting units may not be fully recoverable due to operating performance shortfalls and forecasted declines of revenues and operating income. The Company performed an interim evaluation for these reporting units that resulted in impairments of the goodwill carrying value. | ||||||||||||||||||||||||
The changes in the carrying value of goodwill for NSS and HES were as follows: | ||||||||||||||||||||||||
NSS | HES | Total | ||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Goodwill at January 31, 2014 | $ | 788 | $ | 905 | $ | 1,693 | ||||||||||||||||||
Goodwill impairment charges | — | (486 | ) | (486 | ) | |||||||||||||||||||
Goodwill at October 31, 2014 | $ | 788 | $ | 419 | $ | 1,207 | ||||||||||||||||||
During the second quarter of fiscal 2015, the Health Solutions reporting unit experienced a significant decline in both actual and forecasted revenue volumes primarily in the Company's commercial health consulting business resulting from a reduction in new project opportunities, delayed award decisions, and completion of several larger electronic health records ("EHR") implementation engagements that were not extended or replaced with other projects. The declines were also impacted by delays in legislative compliance deadlines (i.e., ICD-10 and Meaningful Use Stage 2). These events attributed to a significant reduction in the Company's sales pipeline, revenue, and operating income. The nature of the Company's commercial health consulting engagements are short term in nature and the aforementioned events transpired and became known during the second quarter of fiscal 2015 and triggered a revised and lower financial forecast. | ||||||||||||||||||||||||
During the second quarter of fiscal 2015, the Engineering reporting unit experienced delayed or lost award decisions and reductions in scope on several large engineering construction projects as clients shifted priorities and adjusted their capital expenditure plans that were anticipated to be awarded to the Company during the second quarter of fiscal 2015. The Engineering reporting unit was also impacted by significant reduction in scope of services with an existing client. These events culminated in a significant reduction in the Company's sales pipeline, revenue, and operating income. The aforementioned events transpired and became known during the second quarter of fiscal 2015 and triggered a revised and lower financial forecast. | ||||||||||||||||||||||||
Based on the unexpected impacts and other unanticipated factors discussed above, the Company conducted an interim goodwill impairment test using the two-step quantitative approach. | ||||||||||||||||||||||||
As described in Note 1, the Company utilized both the market and income approach as part of the first step of the two-step quantitative goodwill impairment test to determine the estimated fair value of both the Health Solutions and Engineering reporting units. | ||||||||||||||||||||||||
The Company performed the market approach, guideline public company method, by applying pricing multiples derived from publicly traded guideline companies that are comparable to the reporting units to determine their fair values. The Company utilized enterprise/earnings before interest, taxes, depreciation, and amortization ("EBITDA") multiples and enterprise/revenue multiples which averaged 6.0 and 0.5, respectively, for the Health Solutions reporting unit, and 6.8 and 0.4, respectively, for the Engineering reporting unit. In addition, the fair value under the guideline public company method included a control premium of 20%, which was determined based on a review of comparable market transactions. | ||||||||||||||||||||||||
The income approach was performed by calculating the fair value based on forecasted future cash flows discounted back to the present value, including significant judgments related to the risk adjusted discount rates, terminal growth rates, and weighted-average cost of capital ("WACC"). The projected cash flows were developed by management for planning purposes based on current known business and market conditions as well as future anticipated industry trends. The method included certain cost adjustments that a market participant buyer would not incur to operate the respective reporting units. A terminal value growth rate of 3% and 2% and WACC of 12% and 14% (which includes a specific company risk premium of 2%) were used for the Health Solutions and Engineering reporting units, respectively. | ||||||||||||||||||||||||
Based on the first step of the two-step quantitative goodwill impairment test, the Company determined that the fair values of the Health Solutions and Engineering reporting units were 62% and 91% of their carrying values, respectively. Due to the fact that indicators of impairment existed, the second step of the two-step quantitative goodwill impairment test was performed to determine the implied fair value of goodwill and the impairment amount of the respective reporting units. | ||||||||||||||||||||||||
As a result of the second step evaluation, the Company recorded goodwill impairment charges in the Health Solutions and Engineering reporting units of $369 million and $117 million, respectively, for the three months ended August 1, 2014, which represents the difference between the carrying value and the implied fair value. There were no other goodwill impairment charges recorded for the remaining reporting units. There were no goodwill impairments during the three months ended October 31, 2014. | ||||||||||||||||||||||||
Intangible assets consisted of the following: | ||||||||||||||||||||||||
October 31, 2014 | January 31, 2014 | |||||||||||||||||||||||
Gross carrying value | Accumulated amortization | Net carrying value | Gross carrying value | Accumulated amortization | Net carrying value | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Finite-lived intangible assets: | ||||||||||||||||||||||||
Customer relationships | $ | 70 | $ | (56 | ) | $ | 14 | $ | 94 | $ | (47 | ) | $ | 47 | ||||||||||
Software and technology | 52 | (40 | ) | 12 | 65 | (36 | ) | 29 | ||||||||||||||||
Other | — | — | — | 4 | (1 | ) | 3 | |||||||||||||||||
Total finite-lived intangible assets | 122 | (96 | ) | 26 | 163 | (84 | ) | 79 | ||||||||||||||||
Indefinite-lived intangible assets: | ||||||||||||||||||||||||
In-process research and development | 9 | — | 9 | 10 | — | 10 | ||||||||||||||||||
Trade names | 4 | — | 4 | 4 | — | 4 | ||||||||||||||||||
Total indefinite-lived intangible assets | 13 | — | 13 | 14 | — | 14 | ||||||||||||||||||
Total intangible assets | $ | 135 | $ | (96 | ) | $ | 39 | $ | 177 | $ | (84 | ) | $ | 93 | ||||||||||
Amortization expense related to amortizable intangible assets was $3 million and $13 million for the three and nine months ended October 31, 2014, respectively, and $7 million and $29 million for the three and nine months ended November 1, 2013, respectively. | ||||||||||||||||||||||||
The Company recognized impairment charges for intangible assets of $17 million and $41 million during the three and nine months ending October 31, 2014, respectively, and $19 million and $51 million for the three and nine months ended November 1, 2013, respectively. | ||||||||||||||||||||||||
The Company determined that certain intangible assets consisting of software and technology, associated with the acquisition of Reveal Imaging Technologies, Inc. in fiscal 2011, were not recoverable due to lower projected revenue levels from the associated products and customers. As a result, the Health and Engineering reportable segment recognized impairment charges of $14 million and $30 million during the third quarter of fiscal 2015 and the second quarter of fiscal 2014, respectively, to reduce the carrying value of these intangible assets to their estimated fair values. Fair value was estimated using the income approach based on management's forecast of future cash flows to be derived from the assets' use. | ||||||||||||||||||||||||
The Company determined that certain customer relationship intangible assets associated with the acquisitions of Vitalize and maxIT in fiscal 2012 and 2013, respectively, were not recoverable due to lower projected revenue and operating income levels from the associated customers. As a result, the Health and Engineering reportable segment recognized impairment charges of $24 million and $19 million during the second quarter of fiscal 2015 and the third quarter of 2014, respectively, to reduce the carrying value of these intangible assets to their estimated fair values. Fair value was estimated using the income approach based on management’s forecast of future cash flows to be derived from the assets’ use (Level 3). | ||||||||||||||||||||||||
During the third quarter of fiscal 2015, the Company determined that certain intangible assets associated with fuel supply contracts obtained through the Plainfield Renewable Energy Project foreclosure were not recoverable due to changes in the Company's fuel supply strategy and newly identified requirements to operate the plant which impacted expected benefits from the related fuel supply arrangements. As a result, the Health and Engineering reportable segment recognized an impairment charge of $3 million to write-off the carrying value associated with the intangible assets of three fuel supply agreements. | ||||||||||||||||||||||||
The estimated annual amortization expense related to finite-lived intangible assets as of October 31, 2014 was as follows: | ||||||||||||||||||||||||
Fiscal Year Ending January 31 | ||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
2015 (remainder of the fiscal year) | $ | 2 | ||||||||||||||||||||||
2016 | 8 | |||||||||||||||||||||||
2017 | 7 | |||||||||||||||||||||||
2018 | 5 | |||||||||||||||||||||||
2019 | 3 | |||||||||||||||||||||||
2020 and thereafter | 1 | |||||||||||||||||||||||
$ | 26 | |||||||||||||||||||||||
Actual amortization expense in future periods could differ from these estimates as a result of future acquisitions, dispositions, impairments, the outcome and timing of completion of in-process research and development projects (the assets of which will become amortizable upon completion and placement into service, or will be impaired if abandoned), adjustments to preliminary valuations of intangible assets and other factors. | ||||||||||||||||||||||||
Leidos, Inc. | ' | |||||||||||||||||||||||
Goodwill and Intangible Assets | ' | |||||||||||||||||||||||
Goodwill and Intangible Assets: | ||||||||||||||||||||||||
The Company's National Security Solutions ("NSS") and Health and Engineering ("HES") are the reportable segments that contain goodwill. Goodwill is tested for impairment at the reporting unit level annually, at the beginning of the fourth quarter, and during interim periods whenever events or circumstances indicate that the carrying value may not be recoverable. As disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2014, the annual goodwill impairment assessment was completed in the fourth quarter fiscal 2014 and it was concluded that the estimated fair value of all of the Company's reporting units exceeded their carrying value. In the second quarter of fiscal 2015, as part of its normal quarterly procedures, the Company considered both qualitative and quantitative factors associated with each of the Company's reporting units and determined that there were indicators that the carrying values of the Health Solutions and Engineering reporting units may not be fully recoverable due to operating performance shortfalls and forecasted declines of revenues and operating income. The Company performed an interim evaluation for these reporting units that resulted in impairments of the goodwill carrying value. | ||||||||||||||||||||||||
The changes in the carrying value of goodwill for NSS and HES were as follows: | ||||||||||||||||||||||||
NSS | HES | Total | ||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Goodwill at January 31, 2014 | $ | 788 | $ | 905 | $ | 1,693 | ||||||||||||||||||
Goodwill impairment charges | — | (486 | ) | (486 | ) | |||||||||||||||||||
Goodwill at October 31, 2014 | $ | 788 | $ | 419 | $ | 1,207 | ||||||||||||||||||
During the second quarter of fiscal 2015, the Health Solutions reporting unit experienced a significant decline in both actual and forecasted revenue volumes primarily in the Company's commercial health consulting business resulting from a reduction in new project opportunities, delayed award decisions, and completion of several larger electronic health records ("EHR") implementation engagements that were not extended or replaced with other projects. The declines were also impacted by delays in legislative compliance deadlines (i.e., ICD-10 and Meaningful Use Stage 2). These events attributed to a significant reduction in the Company's sales pipeline, revenue, and operating income. The nature of the Company's commercial health consulting engagements are short term in nature and the aforementioned events transpired and became known during the second quarter of fiscal 2015 and triggered a revised and lower financial forecast. | ||||||||||||||||||||||||
During the second quarter of fiscal 2015, the Engineering reporting unit experienced delayed or lost award decisions and reductions in scope on several large engineering construction projects as clients shifted priorities and adjusted their capital expenditure plans that were anticipated to be awarded to the Company during the second quarter of fiscal 2015. The Engineering reporting unit was also impacted by significant reduction in scope of services with an existing client. These events culminated in a significant reduction in the Company's sales pipeline, revenue, and operating income. The aforementioned events transpired and became known during the second quarter of fiscal 2015 and triggered a revised and lower financial forecast. | ||||||||||||||||||||||||
Based on the unexpected impacts and other unanticipated factors discussed above, the Company conducted an interim goodwill impairment test using the two-step quantitative approach. | ||||||||||||||||||||||||
As described in Note 1, the Company utilized both the market and income approach as part of the first step of the two-step quantitative goodwill impairment test to determine the estimated fair value of both the Health Solutions and Engineering reporting units. | ||||||||||||||||||||||||
The Company performed the market approach, guideline public company method, by applying pricing multiples derived from publicly traded guideline companies that are comparable to the reporting units to determine their fair values. The Company utilized enterprise/earnings before interest, taxes, depreciation, and amortization ("EBITDA") multiples and enterprise/revenue multiples which averaged 6.0 and 0.5, respectively, for the Health Solutions reporting unit, and 6.8 and 0.4, respectively, for the Engineering reporting unit. In addition, the fair value under the guideline public company method included a control premium of 20%, which was determined based on a review of comparable market transactions. | ||||||||||||||||||||||||
The income approach was performed by calculating the fair value based on forecasted future cash flows discounted back to the present value, including significant judgments related to the risk adjusted discount rates, terminal growth rates, and weighted-average cost of capital ("WACC"). The projected cash flows were developed by management for planning purposes based on current known business and market conditions as well as future anticipated industry trends. The method included certain cost adjustments that a market participant buyer would not incur to operate the respective reporting units. A terminal value growth rate of 3% and 2% and WACC of 12% and 14% (which includes a specific company risk premium of 2%) were used for the Health Solutions and Engineering reporting units, respectively. | ||||||||||||||||||||||||
Based on the first step of the two-step quantitative goodwill impairment test, the Company determined that the fair values of the Health Solutions and Engineering reporting units were 62% and 91% of their carrying values, respectively. Due to the fact that indicators of impairment existed, the second step of the two-step quantitative goodwill impairment test was performed to determine the implied fair value of goodwill and the impairment amount of the respective reporting units. | ||||||||||||||||||||||||
As a result of the second step evaluation, the Company recorded goodwill impairment charges in the Health Solutions and Engineering reporting units of $369 million and $117 million, respectively, for the three months ended August 1, 2014, which represents the difference between the carrying value and the implied fair value. There were no other goodwill impairment charges recorded for the remaining reporting units. There were no goodwill impairments during the three months ended October 31, 2014. | ||||||||||||||||||||||||
Intangible assets consisted of the following: | ||||||||||||||||||||||||
October 31, 2014 | January 31, 2014 | |||||||||||||||||||||||
Gross carrying value | Accumulated amortization | Net carrying value | Gross carrying value | Accumulated amortization | Net carrying value | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Finite-lived intangible assets: | ||||||||||||||||||||||||
Customer relationships | $ | 70 | $ | (56 | ) | $ | 14 | $ | 94 | $ | (47 | ) | $ | 47 | ||||||||||
Software and technology | 52 | (40 | ) | 12 | 65 | (36 | ) | 29 | ||||||||||||||||
Other | — | — | — | 4 | (1 | ) | 3 | |||||||||||||||||
Total finite-lived intangible assets | 122 | (96 | ) | 26 | 163 | (84 | ) | 79 | ||||||||||||||||
Indefinite-lived intangible assets: | ||||||||||||||||||||||||
In-process research and development | 9 | — | 9 | 10 | — | 10 | ||||||||||||||||||
Trade names | 4 | — | 4 | 4 | — | 4 | ||||||||||||||||||
Total indefinite-lived intangible assets | 13 | — | 13 | 14 | — | 14 | ||||||||||||||||||
Total intangible assets | $ | 135 | $ | (96 | ) | $ | 39 | $ | 177 | $ | (84 | ) | $ | 93 | ||||||||||
Amortization expense related to amortizable intangible assets was $3 million and $13 million for the three and nine months ended October 31, 2014, respectively, and $7 million and $29 million for the three and nine months ended November 1, 2013, respectively. | ||||||||||||||||||||||||
The Company recognized impairment charges for intangible assets of $17 million and $41 million during the three and nine months ending October 31, 2014, respectively, and $19 million and $51 million for the three and nine months ended November 1, 2013, respectively. | ||||||||||||||||||||||||
The Company determined that certain intangible assets consisting of software and technology, associated with the acquisition of Reveal Imaging Technologies, Inc. in fiscal 2011, were not recoverable due to lower projected revenue levels from the associated products and customers. As a result, the Health and Engineering reportable segment recognized impairment charges of $14 million and $30 million during the third quarter of fiscal 2015 and the second quarter of fiscal 2014, respectively, to reduce the carrying value of these intangible assets to their estimated fair values. Fair value was estimated using the income approach based on management's forecast of future cash flows to be derived from the assets' use. | ||||||||||||||||||||||||
The Company determined that certain customer relationship intangible assets associated with the acquisitions of Vitalize and maxIT in fiscal 2012 and 2013, respectively, were not recoverable due to lower projected revenue and operating income levels from the associated customers. As a result, the Health and Engineering reportable segment recognized impairment charges of $24 million and $19 million during the second quarter of fiscal 2015 and the third quarter of 2014, respectively, to reduce the carrying value of these intangible assets to their estimated fair values. Fair value was estimated using the income approach based on management’s forecast of future cash flows to be derived from the assets’ use (Level 3). | ||||||||||||||||||||||||
During the third quarter of fiscal 2015, the Company determined that certain intangible assets associated with fuel supply contracts obtained through the Plainfield Renewable Energy Project foreclosure were not recoverable due to changes in the Company's fuel supply strategy and newly identified requirements to operate the plant which impacted expected benefits from the related fuel supply arrangements. As a result, the Health and Engineering reportable segment recognized an impairment charge of $3 million to write-off the carrying value associated with the intangible assets of three fuel supply agreements. | ||||||||||||||||||||||||
The estimated annual amortization expense related to finite-lived intangible assets as of October 31, 2014 was as follows: | ||||||||||||||||||||||||
Fiscal Year Ending January 31 | ||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
2015 (remainder of the fiscal year) | $ | 2 | ||||||||||||||||||||||
2016 | 8 | |||||||||||||||||||||||
2017 | 7 | |||||||||||||||||||||||
2018 | 5 | |||||||||||||||||||||||
2019 | 3 | |||||||||||||||||||||||
2020 and thereafter | 1 | |||||||||||||||||||||||
$ | 26 | |||||||||||||||||||||||
Actual amortization expense in future periods could differ from these estimates as a result of future acquisitions, dispositions, impairments, the outcome and timing of completion of in-process research and development projects (the assets of which will become amortizable upon completion and placement into service, or will be impaired if abandoned), adjustments to preliminary valuations of intangible assets and other factors. |
Derivative_Instruments_and_Hed
Derivative Instruments and Hedging Activities | 9 Months Ended | ||||||||||||||
Oct. 31, 2014 | |||||||||||||||
Derivative [Line Items] | ' | ||||||||||||||
Derivative Instruments and Hedging Activities | ' | ||||||||||||||
Derivative Instruments and Hedging Activities: | |||||||||||||||
During the third quarter of fiscal 2015, the Company entered into interest rate swap agreements to hedge the fair value with respect to all of the $450 million aggregate principal outstanding on the Company's fixed rate 4.45% notes maturing in December 2020 (the “Notes”). The objective of these instruments is to hedge the Notes against changes in fair value due to the variability in the six-month LIBOR rate (the benchmark interest rate), which effectively converted the debt into floating interest rate debt. Under the terms of the interest rate swap agreements, the Company will receive semi-annual interest payments at the coupon rate of 4.45% and will pay variable interest based on the six-month LIBOR rate. The counterparties to these agreements are financial institutions. | |||||||||||||||
The interest rate swaps were accounted for as a fair value hedge of the Notes and qualified for the shortcut method of hedge accounting which allows for the assumption of no ineffectiveness reported in earnings. The resulting changes in the fair value of the interest rate swaps are fully offset by the changes in the fair value of the underlying debt (the hedged item). | |||||||||||||||
The fair value of the Notes is stated at an amount that reflects changes in the benchmark interest rate subsequent to the inception of the interest rate swaps through the reporting date. The cash flows associated with the interest rate swaps are classified as operating activities in the condensed consolidated statement of cash flows. | |||||||||||||||
The fair value of the interest rate swaps and their impact on the related fair value of the debt in the condensed consolidated balance sheet is as follows: | |||||||||||||||
Interest rate swaps | Hedged items | ||||||||||||||
Balance sheet line item | October 31, | January 31, | Balance sheet line item | October 31, | January 31, | ||||||||||
2014 | 2014 | 2014 | 2014 | ||||||||||||
(in millions) | |||||||||||||||
Other assets | $ | 2 | $ | — | Notes payable and long-term debt, net of current portion | $ | 2 | $ | — | ||||||
Leidos, Inc. | ' | ||||||||||||||
Derivative [Line Items] | ' | ||||||||||||||
Derivative Instruments and Hedging Activities | ' | ||||||||||||||
Derivative Instruments and Hedging Activities: | |||||||||||||||
During the third quarter of fiscal 2015, the Company entered into interest rate swap agreements to hedge the fair value with respect to all of the $450 million aggregate principal outstanding on the Company's fixed rate 4.45% notes maturing in December 2020 (the “Notes”). The objective of these instruments is to hedge the Notes against changes in fair value due to the variability in the six-month LIBOR rate (the benchmark interest rate), which effectively converted the debt into floating interest rate debt. Under the terms of the interest rate swap agreements, the Company will receive semi-annual interest payments at the coupon rate of 4.45% and will pay variable interest based on the six-month LIBOR rate. The counterparties to these agreements are financial institutions. | |||||||||||||||
The interest rate swaps were accounted for as a fair value hedge of the Notes and qualified for the shortcut method of hedge accounting which allows for the assumption of no ineffectiveness reported in earnings. The resulting changes in the fair value of the interest rate swaps are fully offset by the changes in the fair value of the underlying debt (the hedged item). | |||||||||||||||
The fair value of the Notes is stated at an amount that reflects changes in the benchmark interest rate subsequent to the inception of the interest rate swaps through the reporting date. The cash flows associated with the interest rate swaps are classified as operating activities in the condensed consolidated statement of cash flows. | |||||||||||||||
The fair value of the interest rate swaps and their impact on the related fair value of the debt in the condensed consolidated balance sheet is as follows: | |||||||||||||||
Interest rate swaps | Hedged items | ||||||||||||||
Balance sheet line item | October 31, | January 31, | Balance sheet line item | October 31, | January 31, | ||||||||||
2014 | 2014 | 2014 | 2014 | ||||||||||||
(in millions) | |||||||||||||||
Other assets | $ | 2 | $ | — | Notes payable and long-term debt, net of current portion | $ | 2 | $ | — | ||||||
Debt
Debt | 9 Months Ended | |||||||||||||
Oct. 31, 2014 | ||||||||||||||
Debt | ' | |||||||||||||
Debt: | ||||||||||||||
Leidos has a revolving credit facility, which is fully and unconditionally guaranteed by Leidos, Inc. which had provided for $750 million in unsecured borrowing capacity at interest rates determined, at Leidos’ option, based on either LIBOR plus a margin or a defined base rate. During the three months ended October 31, 2014, the Company amended the credit facility to, among other things, change the ratio of consolidated funded debt to EBITDA that the Company is required to maintain. A pro-rata portion of the unamortized deferred costs related to the prior arrangement was written off at the time of the amendment. The remaining unamortized deferred costs relating to the prior arrangement and the immaterial fee paid to amend the credit facility which were deferred, will be amortized over the term of the amended credit facility. In connection with the amendment to the credit facility, the Company exercised its right under the credit agreement to voluntarily reduce the combined commitments of the lenders from $750 million to $500 million. The maturity date of the credit facility is March 2017. As of October 31, 2014 and January 31, 2014, there were no borrowings outstanding under the credit facility. | ||||||||||||||
The credit facility contains certain customary representations and warranties, as well as certain affirmative and negative covenants. The financial covenants contained in the amended credit facility require that, for a period of four trailing fiscal quarters, the Company maintains a ratio of consolidated funded debt, including borrowings under this credit facility, to EBITDA (adjusted for certain items as defined in the credit facility) of not more than 4.0 to 1.0 until no later than January 29, 2016 and 3.75 to 1.0 thereafter, and a ratio of EBITDA (adjusted for certain items as defined in the credit facility) to interest expense of greater than 3.5 to 1.0. The Company was in compliance with these financial covenants as of October 31, 2014. A failure by the Company to meet these financial covenants in the future could eliminate the Company’s borrowing capacity under the credit facility. | ||||||||||||||
The available borrowing capacity on the credit facility may vary each quarter based on the trailing four quarters of EBITDA. If the Company's trailing four quarters of EBITDA declines below a certain threshold in relation to outstanding debt, the borrowing capacity available under the credit facility is reduced. The available borrowing capacity based on the results of the Company's trailing four quarters of EBITDA as of October 31, 2014 was approximately $500 million. | ||||||||||||||
Other covenants in the credit facility restrict certain of the Company’s activities, including, among other things, its ability to create liens, dispose of certain assets and merge or consolidate with other entities. The credit facility also contains certain customary events of default, including, among others, defaults based on certain bankruptcy and insolvency events, nonpayment, cross-defaults to other debt, breach of specified covenants, Employee Retirement Income Security Act (ERISA) events, material monetary judgments, change of control events, and the material inaccuracy of the Company’s representations and warranties. In addition, the Company's ability to declare and pay future dividends on Leidos stock may be restricted by the provisions of Delaware law and covenants in the revolving credit facility. | ||||||||||||||
The Company’s notes payable and long-term debt consisted of the following: | ||||||||||||||
Stated interest rate | Effective interest rate | 31-Oct-14 | 31-Jan-14 | |||||||||||
(dollars in millions) | ||||||||||||||
Leidos Holdings, Inc. senior unsecured notes: | ||||||||||||||
$450 million notes, which mature in December 2020 (1) | 4.45 | % | 4.53 | % | $ | 451 | $ | 449 | ||||||
$300 million notes, which mature in December 2040 | 5.95 | % | 6.03 | % | 291 | 300 | ||||||||
Leidos, Inc. senior unsecured notes: | ||||||||||||||
$250 million notes, which mature in July 2032 | 7.13 | % | 7.43 | % | 248 | 248 | ||||||||
$300 million notes, which mature in July 2033 | 5.5 | % | 5.83 | % | 201 | 296 | ||||||||
Capital leases and other notes payable due on various dates through fiscal 2021 | 0%-3.7% | Various | 38 | 40 | ||||||||||
Total notes payable and long-term debt | $ | 1,229 | $ | 1,333 | ||||||||||
Less current portion | 2 | 2 | ||||||||||||
Total notes payable and long-term debt, net of current portion | $ | 1,227 | $ | 1,331 | ||||||||||
Fair value of notes payable and long-term debt | $ | 1,228 | $ | 1,350 | ||||||||||
-1 | As a result of executing the interest rate swap agreements, the carrying value of $451 million includes a fair value adjustment of $2 million attributable to changes in the benchmark interest rate, the six-month LIBOR rate, from the inception of the interest rate swap agreements to October 31, 2014. | |||||||||||||
The fair value of long-term debt is determined based on current interest rates available for debt with terms and maturities, and credit risk similar to the Company’s existing debt arrangements. | ||||||||||||||
During the third quarter of fiscal 2015, the Company repurchased in the open market and retired principal amounts of $9 million on its $300 million 5.95% notes issued by Leidos Holdings, Inc. maturing in December 2040 and $96 million on its $300 million 5.50% notes issued by Leidos, Inc. maturing in July 2033. The Company recorded an immaterial loss on extinguishment of debt for the Leidos Holdings, Inc. notes and an immaterial gain for the Leidos, Inc. notes as part of the partial repayment of the respective notes. The net combined gain represents the difference between the repurchase price of $102 million and the net carrying amount of the notes repurchased less the write-off of a portion of the unamortized debt discount and deferred financing costs on a pro-rata basis to the reduction of debt. The Company recorded the gain (loss) on extinguishment of debt in Other income, net in the Company’s condensed consolidated statements of income. | ||||||||||||||
The senior unsecured notes contain customary restrictive covenants, including, among other things, restrictions on the Company’s ability to create liens and enter into sale and leaseback transactions under certain circumstances. The Company was in compliance with all covenants as of October 31, 2014. | ||||||||||||||
Leidos, Inc. | ' | |||||||||||||
Debt | ' | |||||||||||||
Debt: | ||||||||||||||
Leidos has a revolving credit facility, which is fully and unconditionally guaranteed by Leidos, Inc. which had provided for $750 million in unsecured borrowing capacity at interest rates determined, at Leidos’ option, based on either LIBOR plus a margin or a defined base rate. During the three months ended October 31, 2014, the Company amended the credit facility to, among other things, change the ratio of consolidated funded debt to EBITDA that the Company is required to maintain. A pro-rata portion of the unamortized deferred costs related to the prior arrangement was written off at the time of the amendment. The remaining unamortized deferred costs relating to the prior arrangement and the immaterial fee paid to amend the credit facility which were deferred, will be amortized over the term of the amended credit facility. In connection with the amendment to the credit facility, the Company exercised its right under the credit agreement to voluntarily reduce the combined commitments of the lenders from $750 million to $500 million. The maturity date of the credit facility is March 2017. As of October 31, 2014 and January 31, 2014, there were no borrowings outstanding under the credit facility. | ||||||||||||||
The credit facility contains certain customary representations and warranties, as well as certain affirmative and negative covenants. The financial covenants contained in the amended credit facility require that, for a period of four trailing fiscal quarters, the Company maintains a ratio of consolidated funded debt, including borrowings under this credit facility, to EBITDA (adjusted for certain items as defined in the credit facility) of not more than 4.0 to 1.0 until no later than January 29, 2016 and 3.75 to 1.0 thereafter, and a ratio of EBITDA (adjusted for certain items as defined in the credit facility) to interest expense of greater than 3.5 to 1.0. The Company was in compliance with these financial covenants as of October 31, 2014. A failure by the Company to meet these financial covenants in the future could eliminate the Company’s borrowing capacity under the credit facility. | ||||||||||||||
The available borrowing capacity on the credit facility may vary each quarter based on the trailing four quarters of EBITDA. If the Company's trailing four quarters of EBITDA declines below a certain threshold in relation to outstanding debt, the borrowing capacity available under the credit facility is reduced. The available borrowing capacity based on the results of the Company's trailing four quarters of EBITDA as of October 31, 2014 was approximately $500 million. | ||||||||||||||
Other covenants in the credit facility restrict certain of the Company’s activities, including, among other things, its ability to create liens, dispose of certain assets and merge or consolidate with other entities. The credit facility also contains certain customary events of default, including, among others, defaults based on certain bankruptcy and insolvency events, nonpayment, cross-defaults to other debt, breach of specified covenants, Employee Retirement Income Security Act (ERISA) events, material monetary judgments, change of control events, and the material inaccuracy of the Company’s representations and warranties. In addition, the Company's ability to declare and pay future dividends on Leidos stock may be restricted by the provisions of Delaware law and covenants in the revolving credit facility. | ||||||||||||||
The Company’s notes payable and long-term debt consisted of the following: | ||||||||||||||
Stated interest rate | Effective interest rate | 31-Oct-14 | 31-Jan-14 | |||||||||||
(dollars in millions) | ||||||||||||||
Leidos Holdings, Inc. senior unsecured notes: | ||||||||||||||
$450 million notes, which mature in December 2020 (1) | 4.45 | % | 4.53 | % | $ | 451 | $ | 449 | ||||||
$300 million notes, which mature in December 2040 | 5.95 | % | 6.03 | % | 291 | 300 | ||||||||
Leidos, Inc. senior unsecured notes: | ||||||||||||||
$250 million notes, which mature in July 2032 | 7.13 | % | 7.43 | % | 248 | 248 | ||||||||
$300 million notes, which mature in July 2033 | 5.5 | % | 5.83 | % | 201 | 296 | ||||||||
Capital leases and other notes payable due on various dates through fiscal 2021 | 0%-3.7% | Various | 38 | 40 | ||||||||||
Total notes payable and long-term debt | $ | 1,229 | $ | 1,333 | ||||||||||
Less current portion | 2 | 2 | ||||||||||||
Total notes payable and long-term debt, net of current portion | $ | 1,227 | $ | 1,331 | ||||||||||
Fair value of notes payable and long-term debt | $ | 1,228 | $ | 1,350 | ||||||||||
-1 | As a result of executing the interest rate swap agreements, the carrying value of $451 million includes a fair value adjustment of $2 million attributable to changes in the benchmark interest rate, the six-month LIBOR rate, from the inception of the interest rate swap agreements to October 31, 2014. | |||||||||||||
The fair value of long-term debt is determined based on current interest rates available for debt with terms and maturities, and credit risk similar to the Company’s existing debt arrangements. | ||||||||||||||
During the third quarter of fiscal 2015, the Company repurchased in the open market and retired principal amounts of $9 million on its $300 million 5.95% notes issued by Leidos Holdings, Inc. maturing in December 2040 and $96 million on its $300 million 5.50% notes issued by Leidos, Inc. maturing in July 2033. The Company recorded an immaterial loss on extinguishment of debt for the Leidos Holdings, Inc. notes and an immaterial gain for the Leidos, Inc. notes as part of the partial repayment of the respective notes. The net combined gain represents the difference between the repurchase price of $102 million and the net carrying amount of the notes repurchased less the write-off of a portion of the unamortized debt discount and deferred financing costs on a pro-rata basis to the reduction of debt. The Company recorded the gain (loss) on extinguishment of debt in Other income, net in the Company’s condensed consolidated statements of income. | ||||||||||||||
The senior unsecured notes contain customary restrictive covenants, including, among other things, restrictions on the Company’s ability to create liens and enter into sale and leaseback transactions under certain circumstances. The Company was in compliance with all covenants as of October 31, 2014. |
Related_Party_Transactions
Related Party Transactions | 9 Months Ended |
Oct. 31, 2014 | |
Related Party Transactions | ' |
Related Party Transactions: | |
Leidos, Inc. has fully and unconditionally guaranteed the obligations of Leidos under its $450 million 4.45% notes and $300 million 5.95% notes. These notes have been reflected as debt of Leidos, Inc. in these condensed consolidated financial statements. Leidos, Inc. has fully and unconditionally guaranteed any borrowings under Leidos’ amended and restated revolving credit facility maturing in fiscal 2018. Leidos has fully and unconditionally guaranteed the obligations of Leidos, Inc. under its $300 million 5.50% notes and $250 million 7.13% notes. | |
Leidos and Leidos, Inc. have a related party note in connection with a loan of cash between the entities, which is adjusted to reflect issuances of stock by Leidos to employees of Leidos, Inc. and its subsidiaries and Leidos Inc.’s payment of certain obligations on behalf of Leidos. The related party note bears interest based on LIBOR plus a market-based premium. Portions of the related party note may be repaid at any time. The note automatically extends for successive one-year periods unless either Leidos or Leidos, Inc. provides prior notice to the other party. As of October 31, 2014, the note receivable from Leidos Holdings, Inc. to Leidos, Inc. was $1.4 billion. The note receivable also includes the distribution of the assets and liabilities of New SAIC of $736 million that occurred at the time of the separation in September 2013. | |
Leidos, Inc. | ' |
Related Party Transactions | ' |
Related Party Transactions: | |
Leidos, Inc. has fully and unconditionally guaranteed the obligations of Leidos under its $450 million 4.45% notes and $300 million 5.95% notes. These notes have been reflected as debt of Leidos, Inc. in these condensed consolidated financial statements. Leidos, Inc. has fully and unconditionally guaranteed any borrowings under Leidos’ amended and restated revolving credit facility maturing in fiscal 2018. Leidos has fully and unconditionally guaranteed the obligations of Leidos, Inc. under its $300 million 5.50% notes and $250 million 7.13% notes. | |
Leidos and Leidos, Inc. have a related party note in connection with a loan of cash between the entities, which is adjusted to reflect issuances of stock by Leidos to employees of Leidos, Inc. and its subsidiaries and Leidos Inc.’s payment of certain obligations on behalf of Leidos. The related party note bears interest based on LIBOR plus a market-based premium. Portions of the related party note may be repaid at any time. The note automatically extends for successive one-year periods unless either Leidos or Leidos, Inc. provides prior notice to the other party. As of October 31, 2014, the note receivable from Leidos Holdings, Inc. to Leidos, Inc. was $1.4 billion. The note receivable also includes the distribution of the assets and liabilities of New SAIC of $736 million that occurred at the time of the separation in September 2013. |
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive Loss | 9 Months Ended | |||||||
Oct. 31, 2014 | ||||||||
Accumulated Other Comprehensive Loss | ' | |||||||
Accumulated Other Comprehensive Loss: | ||||||||
The components of accumulated other comprehensive loss were as follows: | ||||||||
October 31, | January 31, | |||||||
2014 | 2014 | |||||||
(in millions) | ||||||||
Foreign currency translation adjustments, net of taxes of $(1) million as of October 31, 2014 and January 31, 2014 | $ | 2 | $ | 2 | ||||
Unrecognized net loss on settled derivative instruments associated with outstanding debt, net of taxes of $3 million as of October 31, 2014 and January 31, 2014 | (5 | ) | (5 | ) | ||||
Unrecognized net loss on defined benefit plan, net of taxes of $2 million as of October 31, 2014 and January 31, 2014 | (3 | ) | (3 | ) | ||||
Total accumulated other comprehensive loss, net of taxes of $4 million as of October 31, 2014 and January 31, 2014 | $ | (6 | ) | $ | (6 | ) | ||
Reclassifications from other comprehensive income to net income, relating to foreign currency translation adjustments, unrecognized gain (loss) on settled derivative instruments and the unrecognized net gain (loss) on the defined benefit plan for the three and nine months ended October 31, 2014, were not material. Reclassifications for foreign currency translation adjustments and unrecognized gain (loss) on settled derivative instruments are recorded in other income, net, and reclassifications for the unrecognized net gain (loss) on the defined benefit plan is recorded in selling, general, and administrative expenses. | ||||||||
Leidos, Inc. | ' | |||||||
Accumulated Other Comprehensive Loss | ' | |||||||
Accumulated Other Comprehensive Loss: | ||||||||
The components of accumulated other comprehensive loss were as follows: | ||||||||
October 31, | January 31, | |||||||
2014 | 2014 | |||||||
(in millions) | ||||||||
Foreign currency translation adjustments, net of taxes of $(1) million as of October 31, 2014 and January 31, 2014 | $ | 2 | $ | 2 | ||||
Unrecognized net loss on settled derivative instruments associated with outstanding debt, net of taxes of $3 million as of October 31, 2014 and January 31, 2014 | (5 | ) | (5 | ) | ||||
Unrecognized net loss on defined benefit plan, net of taxes of $2 million as of October 31, 2014 and January 31, 2014 | (3 | ) | (3 | ) | ||||
Total accumulated other comprehensive loss, net of taxes of $4 million as of October 31, 2014 and January 31, 2014 | $ | (6 | ) | $ | (6 | ) | ||
Reclassifications from other comprehensive income to net income, relating to foreign currency translation adjustments, unrecognized gain (loss) on settled derivative instruments and the unrecognized net gain (loss) on the defined benefit plan for the three and nine months ended October 31, 2014, were not material. Reclassifications for foreign currency translation adjustments and unrecognized gain (loss) on settled derivative instruments are recorded in other income, net, and reclassifications for the unrecognized net gain (loss) on the defined benefit plan is recorded in selling, general, and administrative expenses. |
Earnings_Loss_Per_Share_EPS
Earnings (Loss) Per Share (EPS) | 9 Months Ended | |||||||||||||||
Oct. 31, 2014 | ||||||||||||||||
Earnings (Loss) Per Share (EPS) | ' | |||||||||||||||
Earnings (Loss) Per Share (EPS): | ||||||||||||||||
The Company is required to allocate a portion of its earnings to its unvested stock awards containing nonforfeitable rights to dividends or dividend equivalents (participating securities) in calculating EPS using the two-class method. | ||||||||||||||||
Unvested stock awards granted prior to fiscal 2013 are participating securities requiring application of the two-class method. In fiscal 2013, the Company began issuing unvested stock awards that have forfeitable rights to dividends or dividend equivalents. These stock awards are not participating securities requiring application of the two-class method, but are dilutive common share equivalents subject to the treasury stock method. Basic EPS is computed by dividing income less earnings allocable to participating securities by the basic weighted average number of shares outstanding. Diluted EPS is computed similar to basic EPS, except the weighted average number of shares outstanding is increased to include the dilutive effect of outstanding stock options and other stock-based awards. | ||||||||||||||||
A reconciliation of the income (loss) used to compute basic and diluted EPS for the periods presented was as follows: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
October 31, 2014 | November 1, | October 31, | November 1, | |||||||||||||
2013 | 2014 | 2013 | ||||||||||||||
(in millions) | ||||||||||||||||
Basic EPS: | ||||||||||||||||
Income (loss) from continuing operations, as reported | $ | 38 | $ | (8 | ) | $ | (356 | ) | $ | 37 | ||||||
Less: allocation of distributed and undistributed earnings to participating securities | — | — | — | (3 | ) | |||||||||||
Income (loss) from continuing operations, for computing | $ | 38 | $ | (8 | ) | $ | (356 | ) | $ | 34 | ||||||
basic EPS | ||||||||||||||||
Net income (loss), as reported | $ | 34 | $ | (3 | ) | $ | (367 | ) | $ | 120 | ||||||
Less: allocation of distributed and undistributed earnings to participating securities | — | — | — | (3 | ) | |||||||||||
Net income (loss), for computing basic EPS | $ | 34 | $ | (3 | ) | $ | (367 | ) | $ | 117 | ||||||
Diluted EPS: | ||||||||||||||||
Income (loss) from continuing operations, as reported | $ | 38 | $ | (8 | ) | $ | (356 | ) | $ | 37 | ||||||
Less: allocation of distributed and undistributed earnings to participating securities | — | — | — | (3 | ) | |||||||||||
Income (loss) from continuing operations, for computing | $ | 38 | $ | (8 | ) | $ | (356 | ) | $ | 34 | ||||||
diluted EPS | ||||||||||||||||
Net income (loss), as reported | $ | 34 | $ | (3 | ) | $ | (367 | ) | $ | 120 | ||||||
Less: allocation of distributed and undistributed earnings to participating securities | — | — | — | (3 | ) | |||||||||||
Net income (loss), for computing diluted EPS | $ | 34 | $ | (3 | ) | $ | (367 | ) | $ | 117 | ||||||
The following table provides a reconciliation of the weighted average number of shares outstanding used to compute basic and diluted EPS for the periods presented. The presentation for the three and nine months ended November 1, 2013 gives effect to the one-for-four reverse stock split which occurred after market close on September 27, 2013. | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
October 31, 2014 | November 1, | October 31, | November 1, | |||||||||||||
2013 | 2014 | 2013 | ||||||||||||||
(in millions) | ||||||||||||||||
Basic weighted average number of shares outstanding | 73 | 84 | 75 | 84 | ||||||||||||
Dilutive common share equivalents—stock options and | 1 | — | — | — | ||||||||||||
other stock awards | ||||||||||||||||
Diluted weighted average number of shares outstanding | 74 | 84 | 75 | 84 | ||||||||||||
For the nine months ended October 31, 2014, all outstanding common stock equivalents were excluded in the computation of diluted income (loss) per share because their effect would have been anti-dilutive due to the net loss for the period. | ||||||||||||||||
For the three months ended November 1, 2013, all outstanding common stock equivalents were excluded in the computation of diluted income (loss) per share because their effect would have been anti-dilutive due to the net loss for the quarter. For the nine months ended November 1, 2013, the declared dividends exceeded current period earnings. Therefore, the Company was in a loss position for computing diluted income (loss) per share and all outstanding common stock equivalents were excluded in the computation because their effect would have been anti-dilutive. | ||||||||||||||||
The following anti-dilutive stock-based awards were excluded from the weighted average number of shares outstanding used to compute basic and diluted EPS for the periods presented: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
October 31, 2014 | November 1, | October 31, | November 1, | |||||||||||||
2013 | 2014 | 2013 | ||||||||||||||
(in millions) | ||||||||||||||||
Stock options | 2 | 5 | 4 | 5 | ||||||||||||
Vesting stock awards | — | 3 | 3 | 3 | ||||||||||||
In December 2013, the Company entered into an Accelerated Share Repurchase ("ASR") agreement with a financial institution to repurchase shares of its outstanding common stock for an aggregate purchase price of $300 million. During the fourth quarter of fiscal 2014, the Company paid $300 million to the financial institution and received an initial delivery of 5.6 million shares of its outstanding shares of common stock for an aggregate value of $255 million. The final delivery of approximately 1.0 million shares for a total value of $45 million under the program was completed during the first quarter of fiscal 2015. The purchase was allocated between additional paid in capital and retained earnings. All shares delivered were immediately retired. | ||||||||||||||||
In March 2014, the Company entered into a second Accelerated Share Repurchase agreement with a different financial institution to repurchase shares of its outstanding common stock for an aggregate purchase price of $200 million. During the first quarter of fiscal 2015, the Company paid $200 million to the financial institution and received an initial delivery of 4.5 million shares of its outstanding shares of common stock for an aggregate value of approximately $168 million. The final delivery of approximately 0.8 million shares for a total value of approximately $32 million under the program was completed during the second quarter of fiscal 2015. The purchase was allocated between additional paid in capital and retained earnings. All shares delivered were immediately retired. | ||||||||||||||||
The delivery of 6.3 million shares of Leidos common stock for both ASR purchases for the nine months ended October 31, 2014 reduced the Company's outstanding shares used to determine the weighted average shares outstanding for purposes of calculating basic and diluted EPS for the periods presented. | ||||||||||||||||
Leidos, Inc. | ' | |||||||||||||||
Earnings (Loss) Per Share (EPS) | ' | |||||||||||||||
Earnings (Loss) Per Share (EPS): | ||||||||||||||||
The Company is required to allocate a portion of its earnings to its unvested stock awards containing nonforfeitable rights to dividends or dividend equivalents (participating securities) in calculating EPS using the two-class method. | ||||||||||||||||
Unvested stock awards granted prior to fiscal 2013 are participating securities requiring application of the two-class method. In fiscal 2013, the Company began issuing unvested stock awards that have forfeitable rights to dividends or dividend equivalents. These stock awards are not participating securities requiring application of the two-class method, but are dilutive common share equivalents subject to the treasury stock method. Basic EPS is computed by dividing income less earnings allocable to participating securities by the basic weighted average number of shares outstanding. Diluted EPS is computed similar to basic EPS, except the weighted average number of shares outstanding is increased to include the dilutive effect of outstanding stock options and other stock-based awards. | ||||||||||||||||
A reconciliation of the income (loss) used to compute basic and diluted EPS for the periods presented was as follows: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
October 31, 2014 | November 1, | October 31, | November 1, | |||||||||||||
2013 | 2014 | 2013 | ||||||||||||||
(in millions) | ||||||||||||||||
Basic EPS: | ||||||||||||||||
Income (loss) from continuing operations, as reported | $ | 38 | $ | (8 | ) | $ | (356 | ) | $ | 37 | ||||||
Less: allocation of distributed and undistributed earnings to participating securities | — | — | — | (3 | ) | |||||||||||
Income (loss) from continuing operations, for computing | $ | 38 | $ | (8 | ) | $ | (356 | ) | $ | 34 | ||||||
basic EPS | ||||||||||||||||
Net income (loss), as reported | $ | 34 | $ | (3 | ) | $ | (367 | ) | $ | 120 | ||||||
Less: allocation of distributed and undistributed earnings to participating securities | — | — | — | (3 | ) | |||||||||||
Net income (loss), for computing basic EPS | $ | 34 | $ | (3 | ) | $ | (367 | ) | $ | 117 | ||||||
Diluted EPS: | ||||||||||||||||
Income (loss) from continuing operations, as reported | $ | 38 | $ | (8 | ) | $ | (356 | ) | $ | 37 | ||||||
Less: allocation of distributed and undistributed earnings to participating securities | — | — | — | (3 | ) | |||||||||||
Income (loss) from continuing operations, for computing | $ | 38 | $ | (8 | ) | $ | (356 | ) | $ | 34 | ||||||
diluted EPS | ||||||||||||||||
Net income (loss), as reported | $ | 34 | $ | (3 | ) | $ | (367 | ) | $ | 120 | ||||||
Less: allocation of distributed and undistributed earnings to participating securities | — | — | — | (3 | ) | |||||||||||
Net income (loss), for computing diluted EPS | $ | 34 | $ | (3 | ) | $ | (367 | ) | $ | 117 | ||||||
The following table provides a reconciliation of the weighted average number of shares outstanding used to compute basic and diluted EPS for the periods presented. The presentation for the three and nine months ended November 1, 2013 gives effect to the one-for-four reverse stock split which occurred after market close on September 27, 2013. | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
October 31, 2014 | November 1, | October 31, | November 1, | |||||||||||||
2013 | 2014 | 2013 | ||||||||||||||
(in millions) | ||||||||||||||||
Basic weighted average number of shares outstanding | 73 | 84 | 75 | 84 | ||||||||||||
Dilutive common share equivalents—stock options and | 1 | — | — | — | ||||||||||||
other stock awards | ||||||||||||||||
Diluted weighted average number of shares outstanding | 74 | 84 | 75 | 84 | ||||||||||||
For the nine months ended October 31, 2014, all outstanding common stock equivalents were excluded in the computation of diluted income (loss) per share because their effect would have been anti-dilutive due to the net loss for the period. | ||||||||||||||||
For the three months ended November 1, 2013, all outstanding common stock equivalents were excluded in the computation of diluted income (loss) per share because their effect would have been anti-dilutive due to the net loss for the quarter. For the nine months ended November 1, 2013, the declared dividends exceeded current period earnings. Therefore, the Company was in a loss position for computing diluted income (loss) per share and all outstanding common stock equivalents were excluded in the computation because their effect would have been anti-dilutive. | ||||||||||||||||
The following anti-dilutive stock-based awards were excluded from the weighted average number of shares outstanding used to compute basic and diluted EPS for the periods presented: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
October 31, 2014 | November 1, | October 31, | November 1, | |||||||||||||
2013 | 2014 | 2013 | ||||||||||||||
(in millions) | ||||||||||||||||
Stock options | 2 | 5 | 4 | 5 | ||||||||||||
Vesting stock awards | — | 3 | 3 | 3 | ||||||||||||
In December 2013, the Company entered into an Accelerated Share Repurchase ("ASR") agreement with a financial institution to repurchase shares of its outstanding common stock for an aggregate purchase price of $300 million. During the fourth quarter of fiscal 2014, the Company paid $300 million to the financial institution and received an initial delivery of 5.6 million shares of its outstanding shares of common stock for an aggregate value of $255 million. The final delivery of approximately 1.0 million shares for a total value of $45 million under the program was completed during the first quarter of fiscal 2015. The purchase was allocated between additional paid in capital and retained earnings. All shares delivered were immediately retired. | ||||||||||||||||
In March 2014, the Company entered into a second Accelerated Share Repurchase agreement with a different financial institution to repurchase shares of its outstanding common stock for an aggregate purchase price of $200 million. During the first quarter of fiscal 2015, the Company paid $200 million to the financial institution and received an initial delivery of 4.5 million shares of its outstanding shares of common stock for an aggregate value of approximately $168 million. The final delivery of approximately 0.8 million shares for a total value of approximately $32 million under the program was completed during the second quarter of fiscal 2015. The purchase was allocated between additional paid in capital and retained earnings. All shares delivered were immediately retired. | ||||||||||||||||
The delivery of 6.3 million shares of Leidos common stock for both ASR purchases for the nine months ended October 31, 2014 reduced the Company's outstanding shares used to determine the weighted average shares outstanding for purposes of calculating basic and diluted EPS for the periods presented. |
StockBased_Compensation
Stock-Based Compensation | 9 Months Ended | |||||||||||||||
Oct. 31, 2014 | ||||||||||||||||
Stock-Based Compensation | ' | |||||||||||||||
Stock-Based Compensation: | ||||||||||||||||
Plan Summaries: At October 31, 2014, the Company had stock-based compensation awards outstanding under the following plans: the 2006 Equity Incentive Plan, the Management Stock Compensation Plan, the Stock Compensation Plan, and the 2006 Employee Stock Purchase Plan (ESPP). Leidos issues new shares upon the issuance of stock awards or exercise of stock options under these plans. | ||||||||||||||||
The 2006 Equity Incentive Plan provides the Company's and its affiliates' employees, directors, and consultants the opportunity to receive various types of stock-based compensation and cash awards. The Company has issued stock options, vested stock awards, restricted stock awards including stock units (vesting stock), performance-based awards, and cash awards under this plan. | ||||||||||||||||
Stock awards granted under the plan prior to fiscal 2015 generally vest or became exercisable 20% a year for the first three years and 40% in the fourth year. In fiscal 2015, the Company has begun granting awards that generally vest or become exercisable 25% a year over four years. | ||||||||||||||||
Total Stock-Based Compensation. Total stock-based compensation expense and related tax benefits recognized for the periods presented was as follows: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
October 31, | November 1, | October 31, | November 1, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(in millions) | ||||||||||||||||
Stock-based compensation expense: | ||||||||||||||||
Stock options | $ | 1 | $ | 4 | $ | 4 | $ | 9 | ||||||||
Vesting stock awards | 9 | 10 | 27 | 35 | ||||||||||||
Vested stock awards | — | — | 2 | — | ||||||||||||
Total stock-based compensation expense recorded in continuing operations | $ | 10 | $ | 14 | $ | 33 | $ | 44 | ||||||||
Total stock-based compensation expense recorded in discontinued operations | $ | — | $ | 6 | $ | — | $ | 21 | ||||||||
Tax benefits recognized from stock-based compensation | $ | 4 | $ | 5 | $ | 13 | $ | 17 | ||||||||
New SAIC Separation Adjustments. As a result of the separation of New SAIC, effective September 27, 2013, all outstanding equity awards related to New SAIC employees were assumed by New SAIC. Also in connection with the separation, adjustments were made to the share amounts and exercise prices of all remaining outstanding Leidos stock options, and the share amounts for vesting stock awards and performance-based stock awards as of the Distribution Date such that the adjustments were generally made to preserve the aggregate intrinsic value at the distribution date pursuant to the terms of the stock based compensation plans under which they were issued. Taking into account the change in the value of the Company’s common stock as a result of the distribution of the New SAIC shares, the conversion ratio applied to all outstanding equity awards at the distribution date was 1.4523. In addition, all outstanding equity awards reflected the Company’s one-for-four reverse stock split. | ||||||||||||||||
Stock Options | ||||||||||||||||
Stock options granted during the nine months ended October 31, 2014 and November 1, 2013 have terms of seven years and a vesting period of four years based upon required service conditions, except for stock options granted to the Company’s outside directors, which have a vesting period of one year. | ||||||||||||||||
The fair value of the Company’s stock option awards is estimated on the date of grant using the Black-Scholes option-pricing model. The weighted average grant date fair value and assumptions used to determine the fair value of stock options granted for the periods presented were as follows: | ||||||||||||||||
Nine Months Ended | ||||||||||||||||
October 31, | October 2013 Grants | 2013 Grants Before Spin | ||||||||||||||
2014 | ||||||||||||||||
Options granted (in millions) | 0.6 | 0.1 | 1.4 | * | ||||||||||||
Weighted average grant-date fair value | $ | 6.14 | $ | 9.48 | $ | 6.96 | * | |||||||||
Expected term (in years) | 4.7 | 5 | 5 | |||||||||||||
Expected volatility | 25.1 | % | 30 | % | 25 | % | ||||||||||
Risk-free interest rate | 1.6 | % | 1.4 | % | 0.8 | % | ||||||||||
Dividend yield | 2.9 | % | 2.8 | % | 3.8 | % | ||||||||||
*Adjusted for additional awards granted for the $4.00 special cash dividend | ||||||||||||||||
In March 2013, Leidos' board of directors declared a special cash dividend of $4.00 per share of Leidos common stock and paid an aggregate $342 million on June 28, 2013 to stockholders of record on June 14, 2013. In connection with the special cash dividend, anti-dilutive adjustments were made to all outstanding stock options on the dividend record date to preserve their value following the special cash dividend, as required by the Company's 2006 Equity Incentive Plan. The modifications were made to reduce the exercise prices of the outstanding stock options and to increase the number of shares issuable upon the exercise of each option such that the aggregate difference between the market price and exercise price times the number of shares issuable upon exercise was substantially the same immediately before and after the payment of the special dividend. These adjustments did not result in additional share-based compensation expense, as the fair value of the outstanding options immediately following the payment of the special cash dividend was equal to the fair value immediately prior to such distribution. | ||||||||||||||||
As of October 31, 2014, compensation cost related to unvested stock options not yet recognized in the income statement was $7 million and is expected to be recognized over an average period of 1.6 years. | ||||||||||||||||
Vesting Stock | ||||||||||||||||
Compensation expense is measured at the grant date fair value and generally vests over a four-year vesting period, or seven-years for certain stock awards, based upon required service conditions and in some cases performance conditions. The grant date fair value is based on the closing price of the Company's common stock generally on the day before the date of grant. | ||||||||||||||||
During the nine months ended October 31, 2014, the Company granted 0.7 million shares of vesting stock at a weighted average grant date fair value of $36.92. | ||||||||||||||||
As of October 31, 2014, compensation cost related to unvested shares not yet recognized in the income statement was $55 million and is expected to be recognized over an average period of 1.7 years. | ||||||||||||||||
Performance-Based Awards | ||||||||||||||||
The Company grants performance-based stock awards to certain officers and key employees of the Company under the 2006 Equity Incentive Plan. The Company’s performance-based stock awards vest and the stock is issued at the end of a three-year period based upon the achievement of specific performance criteria, with the number of shares ultimately awarded, if any, ranging up to 150% of the specified target awards. If performance is below the threshold level of performance, no shares will be issued. The performance period for performance-based stock awards granted in fiscal 2013 was deemed completed as of the last fiscal quarter prior to the separation of New SAIC with the target shares prorated for the completed period earned. For all of the remaining target shares in the original award, the performance condition was removed and the awards are subject to vesting based on continued employment through the original performance period. | ||||||||||||||||
During the nine months ended October 31, 2014, the Company granted approximately 50 thousand shares of performance based awards at a weighted average grant date fair value of $36.88. | ||||||||||||||||
There were no performance-based stock awards granted in fiscal 2014. For the fiscal 2015 awards granted, one-third of the target number of shares of stock granted under the awards will be allocated to each fiscal year over the three-year performance period and the actual number of shares to be issued with respect to each fiscal year will be based upon the achievement of that fiscal year’s performance criteria. | ||||||||||||||||
As of October 31, 2014, compensation cost related to unvested performance-based awards not yet recognized in the income statement was $1 million and is expected to be recognized over an average period of 2.0 years. | ||||||||||||||||
Leidos, Inc. | ' | |||||||||||||||
Stock-Based Compensation | ' | |||||||||||||||
Stock-Based Compensation: | ||||||||||||||||
Plan Summaries: At October 31, 2014, the Company had stock-based compensation awards outstanding under the following plans: the 2006 Equity Incentive Plan, the Management Stock Compensation Plan, the Stock Compensation Plan, and the 2006 Employee Stock Purchase Plan (ESPP). Leidos issues new shares upon the issuance of stock awards or exercise of stock options under these plans. | ||||||||||||||||
The 2006 Equity Incentive Plan provides the Company's and its affiliates' employees, directors, and consultants the opportunity to receive various types of stock-based compensation and cash awards. The Company has issued stock options, vested stock awards, restricted stock awards including stock units (vesting stock), performance-based awards, and cash awards under this plan. | ||||||||||||||||
Stock awards granted under the plan prior to fiscal 2015 generally vest or became exercisable 20% a year for the first three years and 40% in the fourth year. In fiscal 2015, the Company has begun granting awards that generally vest or become exercisable 25% a year over four years. | ||||||||||||||||
Total Stock-Based Compensation. Total stock-based compensation expense and related tax benefits recognized for the periods presented was as follows: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
October 31, | November 1, | October 31, | November 1, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(in millions) | ||||||||||||||||
Stock-based compensation expense: | ||||||||||||||||
Stock options | $ | 1 | $ | 4 | $ | 4 | $ | 9 | ||||||||
Vesting stock awards | 9 | 10 | 27 | 35 | ||||||||||||
Vested stock awards | — | — | 2 | — | ||||||||||||
Total stock-based compensation expense recorded in continuing operations | $ | 10 | $ | 14 | $ | 33 | $ | 44 | ||||||||
Total stock-based compensation expense recorded in discontinued operations | $ | — | $ | 6 | $ | — | $ | 21 | ||||||||
Tax benefits recognized from stock-based compensation | $ | 4 | $ | 5 | $ | 13 | $ | 17 | ||||||||
New SAIC Separation Adjustments. As a result of the separation of New SAIC, effective September 27, 2013, all outstanding equity awards related to New SAIC employees were assumed by New SAIC. Also in connection with the separation, adjustments were made to the share amounts and exercise prices of all remaining outstanding Leidos stock options, and the share amounts for vesting stock awards and performance-based stock awards as of the Distribution Date such that the adjustments were generally made to preserve the aggregate intrinsic value at the distribution date pursuant to the terms of the stock based compensation plans under which they were issued. Taking into account the change in the value of the Company’s common stock as a result of the distribution of the New SAIC shares, the conversion ratio applied to all outstanding equity awards at the distribution date was 1.4523. In addition, all outstanding equity awards reflected the Company’s one-for-four reverse stock split. | ||||||||||||||||
Stock Options | ||||||||||||||||
Stock options granted during the nine months ended October 31, 2014 and November 1, 2013 have terms of seven years and a vesting period of four years based upon required service conditions, except for stock options granted to the Company’s outside directors, which have a vesting period of one year. | ||||||||||||||||
The fair value of the Company’s stock option awards is estimated on the date of grant using the Black-Scholes option-pricing model. The weighted average grant date fair value and assumptions used to determine the fair value of stock options granted for the periods presented were as follows: | ||||||||||||||||
Nine Months Ended | ||||||||||||||||
October 31, | October 2013 Grants | 2013 Grants Before Spin | ||||||||||||||
2014 | ||||||||||||||||
Options granted (in millions) | 0.6 | 0.1 | 1.4 | * | ||||||||||||
Weighted average grant-date fair value | $ | 6.14 | $ | 9.48 | $ | 6.96 | * | |||||||||
Expected term (in years) | 4.7 | 5 | 5 | |||||||||||||
Expected volatility | 25.1 | % | 30 | % | 25 | % | ||||||||||
Risk-free interest rate | 1.6 | % | 1.4 | % | 0.8 | % | ||||||||||
Dividend yield | 2.9 | % | 2.8 | % | 3.8 | % | ||||||||||
*Adjusted for additional awards granted for the $4.00 special cash dividend | ||||||||||||||||
In March 2013, Leidos' board of directors declared a special cash dividend of $4.00 per share of Leidos common stock and paid an aggregate $342 million on June 28, 2013 to stockholders of record on June 14, 2013. In connection with the special cash dividend, anti-dilutive adjustments were made to all outstanding stock options on the dividend record date to preserve their value following the special cash dividend, as required by the Company's 2006 Equity Incentive Plan. The modifications were made to reduce the exercise prices of the outstanding stock options and to increase the number of shares issuable upon the exercise of each option such that the aggregate difference between the market price and exercise price times the number of shares issuable upon exercise was substantially the same immediately before and after the payment of the special dividend. These adjustments did not result in additional share-based compensation expense, as the fair value of the outstanding options immediately following the payment of the special cash dividend was equal to the fair value immediately prior to such distribution. | ||||||||||||||||
As of October 31, 2014, compensation cost related to unvested stock options not yet recognized in the income statement was $7 million and is expected to be recognized over an average period of 1.6 years. | ||||||||||||||||
Vesting Stock | ||||||||||||||||
Compensation expense is measured at the grant date fair value and generally vests over a four-year vesting period, or seven-years for certain stock awards, based upon required service conditions and in some cases performance conditions. The grant date fair value is based on the closing price of the Company's common stock generally on the day before the date of grant. | ||||||||||||||||
During the nine months ended October 31, 2014, the Company granted 0.7 million shares of vesting stock at a weighted average grant date fair value of $36.92. | ||||||||||||||||
As of October 31, 2014, compensation cost related to unvested shares not yet recognized in the income statement was $55 million and is expected to be recognized over an average period of 1.7 years. | ||||||||||||||||
Performance-Based Awards | ||||||||||||||||
The Company grants performance-based stock awards to certain officers and key employees of the Company under the 2006 Equity Incentive Plan. The Company’s performance-based stock awards vest and the stock is issued at the end of a three-year period based upon the achievement of specific performance criteria, with the number of shares ultimately awarded, if any, ranging up to 150% of the specified target awards. If performance is below the threshold level of performance, no shares will be issued. The performance period for performance-based stock awards granted in fiscal 2013 was deemed completed as of the last fiscal quarter prior to the separation of New SAIC with the target shares prorated for the completed period earned. For all of the remaining target shares in the original award, the performance condition was removed and the awards are subject to vesting based on continued employment through the original performance period. | ||||||||||||||||
During the nine months ended October 31, 2014, the Company granted approximately 50 thousand shares of performance based awards at a weighted average grant date fair value of $36.88. | ||||||||||||||||
There were no performance-based stock awards granted in fiscal 2014. For the fiscal 2015 awards granted, one-third of the target number of shares of stock granted under the awards will be allocated to each fiscal year over the three-year performance period and the actual number of shares to be issued with respect to each fiscal year will be based upon the achievement of that fiscal year’s performance criteria. | ||||||||||||||||
As of October 31, 2014, compensation cost related to unvested performance-based awards not yet recognized in the income statement was $1 million and is expected to be recognized over an average period of 2.0 years. |
Business_Segment_Information
Business Segment Information | 9 Months Ended | |||||||||||||||
Oct. 31, 2014 | ||||||||||||||||
Business Segment Information | ' | |||||||||||||||
Business Segment Information: | ||||||||||||||||
The Company defines its reportable segments based on the way the chief operating decision maker ("CODM"), currently its chief executive officer, manages the operations of the Company for purposes of allocating resources and assessing performance. | ||||||||||||||||
The Company's reportable segments are as follows: National Security Solutions, Health and Engineering, and Corporate and Other. | ||||||||||||||||
National Security Solutions provides solutions and systems for air, land, sea, space, and cyberspace for the U.S. intelligence community, the DoD, the military services, and the U.S. Department of Homeland Security. The Company's solutions deliver technology, large scale intelligence systems, data analytics, cyber solutions, logistics, and intelligence analysis and operations support to critical missions around the world. Major customers of National Security Solutions include national and military intelligence agencies and other federal, civilian, and commercial customers in the national security complex. | ||||||||||||||||
Health and Engineering provides health systems integration services to implement and optimize the use of electronic health records, apply data analytics and behavioral health research to help enable customers to improve healthcare quality and patient outcomes, detect and prevent diseases, enhance scientific discovery, and reduce costs to the healthcare system. Health and Engineering also provides engineering services and solutions focused on solving energy, environmental, and infrastructure challenges. These include products and solutions in energy generation, efficiency and management, environmental services, securing critical infrastructure, and designing and building construction projects. Major customers of Health and Engineering primarily include the U.S. federal government, state and local governmental agencies, foreign governments, and commercial enterprises in various industries. | ||||||||||||||||
Corporate and Other includes the operations of the Company’s internal real estate management subsidiary, various corporate activities, certain corporate expense items that are not reimbursed by the Company’s U.S. Government customers and certain revenue and expense items excluded from the CODM’s evaluation of a reportable segment’s performance. | ||||||||||||||||
The segment information for the periods presented was as follows: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
October 31, | November 1, | October 31, | November 1, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(in millions) | ||||||||||||||||
Revenues: | ||||||||||||||||
National Security Solutions | $ | 906 | $ | 1,011 | $ | 2,775 | $ | 3,107 | ||||||||
Health and Engineering | 373 | 406 | 1,126 | 1,368 | ||||||||||||
Corporate and Other | (3 | ) | (2 | ) | (7 | ) | (8 | ) | ||||||||
Intersegment elimination | — | (1 | ) | — | (3 | ) | ||||||||||
Total revenues | $ | 1,276 | $ | 1,414 | $ | 3,894 | $ | 4,464 | ||||||||
Operating income (loss): | ||||||||||||||||
National Security Solutions | $ | 72 | $ | 66 | $ | 227 | $ | 209 | ||||||||
Health and Engineering | 4 | (30 | ) | (455 | ) | 2 | ||||||||||
Corporate and Other | (4 | ) | (41 | ) | (23 | ) | (129 | ) | ||||||||
Total operating income (loss) | $ | 72 | $ | (5 | ) | $ | (251 | ) | $ | 82 | ||||||
Asset information by segment is not a key measure of performance used by the CODM. Interest income, interest expense, and provision for income taxes, as reported in the condensed consolidated financial statements, are not part of operating income and are primarily recorded at the corporate level. Under U.S. Government Cost Accounting Standards, indirect costs including depreciation expense are collected in numerous indirect cost pools which are then collectively allocated out to the Company’s reportable segments based on a representative causal or beneficial relationship of the costs in the pool to the costs in the base. | ||||||||||||||||
Leidos, Inc. | ' | |||||||||||||||
Business Segment Information | ' | |||||||||||||||
Business Segment Information: | ||||||||||||||||
The Company defines its reportable segments based on the way the chief operating decision maker ("CODM"), currently its chief executive officer, manages the operations of the Company for purposes of allocating resources and assessing performance. | ||||||||||||||||
The Company's reportable segments are as follows: National Security Solutions, Health and Engineering, and Corporate and Other. | ||||||||||||||||
National Security Solutions provides solutions and systems for air, land, sea, space, and cyberspace for the U.S. intelligence community, the DoD, the military services, and the U.S. Department of Homeland Security. The Company's solutions deliver technology, large scale intelligence systems, data analytics, cyber solutions, logistics, and intelligence analysis and operations support to critical missions around the world. Major customers of National Security Solutions include national and military intelligence agencies and other federal, civilian, and commercial customers in the national security complex. | ||||||||||||||||
Health and Engineering provides health systems integration services to implement and optimize the use of electronic health records, apply data analytics and behavioral health research to help enable customers to improve healthcare quality and patient outcomes, detect and prevent diseases, enhance scientific discovery, and reduce costs to the healthcare system. Health and Engineering also provides engineering services and solutions focused on solving energy, environmental, and infrastructure challenges. These include products and solutions in energy generation, efficiency and management, environmental services, securing critical infrastructure, and designing and building construction projects. Major customers of Health and Engineering primarily include the U.S. federal government, state and local governmental agencies, foreign governments, and commercial enterprises in various industries. | ||||||||||||||||
Corporate and Other includes the operations of the Company’s internal real estate management subsidiary, various corporate activities, certain corporate expense items that are not reimbursed by the Company’s U.S. Government customers and certain revenue and expense items excluded from the CODM’s evaluation of a reportable segment’s performance. | ||||||||||||||||
The segment information for the periods presented was as follows: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
October 31, | November 1, | October 31, | November 1, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(in millions) | ||||||||||||||||
Revenues: | ||||||||||||||||
National Security Solutions | $ | 906 | $ | 1,011 | $ | 2,775 | $ | 3,107 | ||||||||
Health and Engineering | 373 | 406 | 1,126 | 1,368 | ||||||||||||
Corporate and Other | (3 | ) | (2 | ) | (7 | ) | (8 | ) | ||||||||
Intersegment elimination | — | (1 | ) | — | (3 | ) | ||||||||||
Total revenues | $ | 1,276 | $ | 1,414 | $ | 3,894 | $ | 4,464 | ||||||||
Operating income (loss): | ||||||||||||||||
National Security Solutions | $ | 72 | $ | 66 | $ | 227 | $ | 209 | ||||||||
Health and Engineering | 4 | (30 | ) | (455 | ) | 2 | ||||||||||
Corporate and Other | (4 | ) | (41 | ) | (23 | ) | (129 | ) | ||||||||
Total operating income (loss) | $ | 72 | $ | (5 | ) | $ | (251 | ) | $ | 82 | ||||||
Asset information by segment is not a key measure of performance used by the CODM. Interest income, interest expense, and provision for income taxes, as reported in the condensed consolidated financial statements, are not part of operating income and are primarily recorded at the corporate level. Under U.S. Government Cost Accounting Standards, indirect costs including depreciation expense are collected in numerous indirect cost pools which are then collectively allocated out to the Company’s reportable segments based on a representative causal or beneficial relationship of the costs in the pool to the costs in the base. |
Legal_Proceedings
Legal Proceedings | 9 Months Ended |
Oct. 31, 2014 | |
Legal Proceedings | ' |
Legal Proceedings: | |
Timekeeping Contract with City of New York | |
In March 2012, the Company reached a settlement with the U.S. Attorney’s Office for the Southern District of New York and the City of New York (City) relating to investigations being conducted by the U.S. Attorney’s Office and the City with respect to the Company’s contract to develop and implement an automated time and attendance and workforce management system (CityTime) for certain agencies of the City. As part of this settlement, the Company entered into a deferred prosecution agreement with the U.S. Attorney’s Office, under which the Company paid approximately $500 million and the U.S. Attorney’s Office deferred prosecution of a single criminal count against the Company, which alleged that the Company, through the conduct of certain managerial employees and others, caused the City to significantly overpay for the CityTime system. If the Company complies with the terms of the deferred prosecution agreement, the U.S Attorney will dismiss the criminal count at the end of a three-year period. In August 2012, the Company entered into an administrative agreement with the U.S. Army, on behalf of all agencies of the U.S. Government that confirms the Company’s continuing eligibility to enter into and perform contracts with all agencies of the U.S. Government following the CityTime settlement. The Army has determined that the U.S. Government will have adequate assurances under the terms of the administrative agreement that initiation of suspension or debarment is not necessary to protect the U.S. Government’s interests following the CityTime settlement. Under the terms of the administrative agreement, the Company has agreed, among other things, to maintain a contractor responsibility program having the specific elements described in the administrative agreement, including retaining a monitor and providing certain reports to the U.S. Army. The administrative agreement will continue in effect for five years, provided that the Company may request earlier termination after three years. | |
Data Privacy Litigation | |
The Company was previously a defendant in a putative class action, In Re: Science Applications International Corporation ("SAIC") Backup Tape Data Theft Litigation, which was an Multidistrict Litigation ("MDL") action in U.S. District Court for the District of Columbia relating to the theft of computer back-up tapes from a vehicle of a company employee. In May 2014, the District Court dismissed all but two plaintiffs from the MDL action. In June 2014, Leidos and its co-defendant, TRICARE, entered into settlement agreements with the remaining two plaintiffs who subsequently dismissed their claims with prejudice. | |
On September 20, 2014, the Company was named as a defendant in a putative class action, Martin Fernandez, on Behalf Of Himself And All Other Similarly Situated v. Leidos, Inc. in the Eastern District Court of California, related to the same theft of computer backup tapes. The recent complaint includes allegations of violations of the California Confidentiality of Medical Information Act, the California Unfair Competition Law, and other claims. The Company intends to vigorously defend against these claims. | |
Derivative and Securities Litigation | |
Between February and April 2012, six stockholder derivative lawsuits were filed, each purportedly on the Company’s behalf. Two cases have been withdrawn and the four remaining cases were consolidated in the U.S. District Court for the Southern District of New York in In re SAIC, Inc. Derivative Litigation. On June 10, 2013, the District Court dismissed the consolidated complaint with prejudice and on January 30, 2014, the United States Court of Appeals for the Second Circuit affirmed the dismissal. | |
The Company has also received four stockholder demand letters related to CityTime (one of which is also related to the TRICARE matter described above). An independent committee of the Company’s board of directors reviewed the demands and the Company’s lead director has notified all four stockholders’ attorneys, on behalf of the board of directors, that the Company has decided not to pursue the claims outlined in their demand letters. | |
Between February and April 2012, alleged stockholders filed three putative securities class actions. One case was withdrawn and two cases were consolidated in the U.S. District Court for the Southern District of New York in In re SAIC, Inc. Securities Litigation. The consolidated securities complaint names as defendants the Company, its chief financial officer, two former chief executive officers, a former group president and the former program manager on the CityTime program, and was filed purportedly on behalf of all purchasers of the Company's common stock from April 11, 2007 through September 1, 2011. The consolidated securities complaint asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on allegations that the Company and individual defendants made misleading statements or omissions about the Company’s revenues, operating income and internal controls in connection with disclosures relating to the CityTime project. The plaintiffs sought to recover from the Company and the individual defendants an unspecified amount of damages class members allegedly incurred by buying Leidos' stock at an inflated price. On October 1, 2013, the District Court dismissed many claims in the complaint with prejudice and on January 30, 2014, the District Court entered an order dismissing all remaining claims with prejudice and without leave to replead. The plaintiffs moved to vacate the District Court's judgment or obtain relief from the judgment and for leave to file an amended complaint. On September 30, 2014, the District Court denied plantiffs' motions. The plaintiffs filed a notice of appeal on October 30, 2014 to the United States Court of Appeals for the Second Circuit. | |
Greek Government Contract | |
Background and Arbitration. In May 2003, the Company entered into a firm-fixed-price contract with the Hellenic Republic of Greece (the "Customer") to provide a Command, Control, Communications, Coordination and Integration System (the "System") to support the 2004 Athens Summer Olympic Games (the "Olympics") and to serve as the security system for the Customer’s public order departments following completion of the Olympics. | |
In November 2008, the Customer accepted the System in writing pursuant to the requirements of the contract. At the time, the Customer determined that the System substantially complied with the terms of the contract and accepted the System with certain alleged minor omissions and deviations. Upon System acceptance, the Company invoiced the Customer for approximately $17 million, representing the undisputed portion of the contract balance owed to the Company. The Customer has not paid this final invoice. | |
In June 2009, the Company initiated arbitration before the International Chamber of Commerce against the Customer seeking damages for breaches of contract by the Customer. In July 2013, the Company received an arbitral award for approximately $49 million. The Customer has yet to satisfy the arbitral award. The Company is pursuing an enforcement action in U.S. District Court for the District of Columbia. In September 2013, the Customer filed a petition in a Greek court seeking to nullify the arbitral award and to stay enforcement of the award in Greece. A hearing on the Customer's nullification request was held in Greece in April 2014. The parties agreed to a stay of the Company's enforcement action in U.S. District Court until the Greek court issued a ruling on the Customer's nullification request. In June 2014, the Athens Court of Appeals annulled the arbitral award. The Company has a right to appeal the annulment decision to the Supreme Court of Greece to have the arbitral award reinstated. The Company is continuing to pursue enforcement of the award in the U.S. District Court as is still its right under U.S. and international law. The outcomes of a possible appeal in Greece and the Company's pending enforcement action are uncertain. | |
Financial Status and Contingencies. As a result of the significant uncertainties on this contract, the Company converted to the completed-contract method of accounting and ceased recognizing revenues for the System development portion of this contract in fiscal 2006. No profits or losses were recorded on the Greek contract during the three and nine months ended October 31, 2014 and November 1, 2013. As of October 31, 2014, the Company has recorded $123 million of losses under the Greek contract, reflecting the Company’s estimated total cost to complete the System, assuming the Greek contract value was limited to the cash received to date. Based on the complex nature of this contractual situation and the difficulties encountered to date, significant uncertainties exist and the Company is unable to reliably estimate the ultimate outcome. The Company may reverse a portion of the losses from the Greek contract if it receives payments as provided in the arbitral award. | |
As of October 31, 2014, the Company has $14 million of receivables relating to value added tax ("VAT") that the Company has paid and believes it is entitled to recover either as a refund from the taxing authorities or as a payment under the Greek contract. The Company has invoiced the Customer for $32 million for VAT and the Customer has failed to make payment. If the Customer fails to pay the outstanding VAT amounts or the Company is unable to recover the amount as a refund from the taxing authorities, the Company’s total losses on the Greek contract could increase. | |
The Company has met certain advance payment and performance bonding requirements through the issuance of euro-denominated standby letters of credit. As of October 31, 2014, there were $2 million in standby letters of credit outstanding relating to the support and maintenance of the System. In the arbitration, the Company was awarded but has not received $24 million representing the amounts drawn by the Customer in fiscal 2011 on certain standby letters of credit as well as damages. The principal subcontractor has provided to the Company euro-denominated standby letters of credit in the amount of $20 million as of October 31, 2014, of which $18 million relates to the delivery of the System. The Company may draw on the subcontractor’s standby letters of credit under certain circumstances by providing a statement to the responsible bank that the subcontractor has not fulfilled its obligations under the subcontract. | |
Nuclear Regulatory Commission | |
The U.S. Department of Justice filed a lawsuit against the Company in September 2004 in U.S. District Court for the District of Columbia alleging civil False Claims Act violations and breach of contract by the Company on two contracts that the Company had with the Nuclear Regulatory Commission ("NRC"). The complaint alleged that the Company’s performance of several subcontracts on separate U.S. Department of Energy ("DOE") programs, the participation of a Company employee in an industry trade association, and certain other alleged relationships created organizational conflicts of interest under the two NRC contracts. The Company disputed that the work performed on the DOE programs and the alleged relationships raised by the government created organizational conflicts of interest. In July 2008, the jury found in favor of the government on the breach of contract and two False Claims Act counts. The jury awarded a nominal amount in damages for breach of contract and $2 million in damages for the False Claims Act claims. The judge entered the judgment in October 2008, trebling the False Claims Act damages and awarding $585,000 in civil penalties, for total damages of $7 million. The Company appealed to the U.S. Court of Appeals for the District of Columbia Circuit. In December 2010, the Court of Appeals affirmed the District Court’s judgment as to both liability and damages on the breach of contract count and rescinded the judgment on the False Claims Act counts, including the aggregate damages and penalties. The Court of Appeals sent the False Claims Act counts back to the District Court for further proceedings. In October 2014, the parties entered into a settlement agreement to resolve the False Claims Act claims, with no admission of liability, and payment by the Company of $2 million. The case was dismissed with prejudice on November 13, 2014. | |
Other | |
The Company is also involved in various claims and lawsuits arising in the normal conduct of its business, none of which, in the opinion of the Company’s management, based upon current information, will likely have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows. | |
Leidos, Inc. | ' |
Legal Proceedings | ' |
Legal Proceedings: | |
Timekeeping Contract with City of New York | |
In March 2012, the Company reached a settlement with the U.S. Attorney’s Office for the Southern District of New York and the City of New York (City) relating to investigations being conducted by the U.S. Attorney’s Office and the City with respect to the Company’s contract to develop and implement an automated time and attendance and workforce management system (CityTime) for certain agencies of the City. As part of this settlement, the Company entered into a deferred prosecution agreement with the U.S. Attorney’s Office, under which the Company paid approximately $500 million and the U.S. Attorney’s Office deferred prosecution of a single criminal count against the Company, which alleged that the Company, through the conduct of certain managerial employees and others, caused the City to significantly overpay for the CityTime system. If the Company complies with the terms of the deferred prosecution agreement, the U.S Attorney will dismiss the criminal count at the end of a three-year period. In August 2012, the Company entered into an administrative agreement with the U.S. Army, on behalf of all agencies of the U.S. Government that confirms the Company’s continuing eligibility to enter into and perform contracts with all agencies of the U.S. Government following the CityTime settlement. The Army has determined that the U.S. Government will have adequate assurances under the terms of the administrative agreement that initiation of suspension or debarment is not necessary to protect the U.S. Government’s interests following the CityTime settlement. Under the terms of the administrative agreement, the Company has agreed, among other things, to maintain a contractor responsibility program having the specific elements described in the administrative agreement, including retaining a monitor and providing certain reports to the U.S. Army. The administrative agreement will continue in effect for five years, provided that the Company may request earlier termination after three years. | |
Data Privacy Litigation | |
The Company was previously a defendant in a putative class action, In Re: Science Applications International Corporation ("SAIC") Backup Tape Data Theft Litigation, which was an Multidistrict Litigation ("MDL") action in U.S. District Court for the District of Columbia relating to the theft of computer back-up tapes from a vehicle of a company employee. In May 2014, the District Court dismissed all but two plaintiffs from the MDL action. In June 2014, Leidos and its co-defendant, TRICARE, entered into settlement agreements with the remaining two plaintiffs who subsequently dismissed their claims with prejudice. | |
On September 20, 2014, the Company was named as a defendant in a putative class action, Martin Fernandez, on Behalf Of Himself And All Other Similarly Situated v. Leidos, Inc. in the Eastern District Court of California, related to the same theft of computer backup tapes. The recent complaint includes allegations of violations of the California Confidentiality of Medical Information Act, the California Unfair Competition Law, and other claims. The Company intends to vigorously defend against these claims. | |
Derivative and Securities Litigation | |
Between February and April 2012, six stockholder derivative lawsuits were filed, each purportedly on the Company’s behalf. Two cases have been withdrawn and the four remaining cases were consolidated in the U.S. District Court for the Southern District of New York in In re SAIC, Inc. Derivative Litigation. On June 10, 2013, the District Court dismissed the consolidated complaint with prejudice and on January 30, 2014, the United States Court of Appeals for the Second Circuit affirmed the dismissal. | |
The Company has also received four stockholder demand letters related to CityTime (one of which is also related to the TRICARE matter described above). An independent committee of the Company’s board of directors reviewed the demands and the Company’s lead director has notified all four stockholders’ attorneys, on behalf of the board of directors, that the Company has decided not to pursue the claims outlined in their demand letters. | |
Between February and April 2012, alleged stockholders filed three putative securities class actions. One case was withdrawn and two cases were consolidated in the U.S. District Court for the Southern District of New York in In re SAIC, Inc. Securities Litigation. The consolidated securities complaint names as defendants the Company, its chief financial officer, two former chief executive officers, a former group president and the former program manager on the CityTime program, and was filed purportedly on behalf of all purchasers of the Company's common stock from April 11, 2007 through September 1, 2011. The consolidated securities complaint asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on allegations that the Company and individual defendants made misleading statements or omissions about the Company’s revenues, operating income and internal controls in connection with disclosures relating to the CityTime project. The plaintiffs sought to recover from the Company and the individual defendants an unspecified amount of damages class members allegedly incurred by buying Leidos' stock at an inflated price. On October 1, 2013, the District Court dismissed many claims in the complaint with prejudice and on January 30, 2014, the District Court entered an order dismissing all remaining claims with prejudice and without leave to replead. The plaintiffs moved to vacate the District Court's judgment or obtain relief from the judgment and for leave to file an amended complaint. On September 30, 2014, the District Court denied plantiffs' motions. The plaintiffs filed a notice of appeal on October 30, 2014 to the United States Court of Appeals for the Second Circuit. | |
Greek Government Contract | |
Background and Arbitration. In May 2003, the Company entered into a firm-fixed-price contract with the Hellenic Republic of Greece (the "Customer") to provide a Command, Control, Communications, Coordination and Integration System (the "System") to support the 2004 Athens Summer Olympic Games (the "Olympics") and to serve as the security system for the Customer’s public order departments following completion of the Olympics. | |
In November 2008, the Customer accepted the System in writing pursuant to the requirements of the contract. At the time, the Customer determined that the System substantially complied with the terms of the contract and accepted the System with certain alleged minor omissions and deviations. Upon System acceptance, the Company invoiced the Customer for approximately $17 million, representing the undisputed portion of the contract balance owed to the Company. The Customer has not paid this final invoice. | |
In June 2009, the Company initiated arbitration before the International Chamber of Commerce against the Customer seeking damages for breaches of contract by the Customer. In July 2013, the Company received an arbitral award for approximately $49 million. The Customer has yet to satisfy the arbitral award. The Company is pursuing an enforcement action in U.S. District Court for the District of Columbia. In September 2013, the Customer filed a petition in a Greek court seeking to nullify the arbitral award and to stay enforcement of the award in Greece. A hearing on the Customer's nullification request was held in Greece in April 2014. The parties agreed to a stay of the Company's enforcement action in U.S. District Court until the Greek court issued a ruling on the Customer's nullification request. In June 2014, the Athens Court of Appeals annulled the arbitral award. The Company has a right to appeal the annulment decision to the Supreme Court of Greece to have the arbitral award reinstated. The Company is continuing to pursue enforcement of the award in the U.S. District Court as is still its right under U.S. and international law. The outcomes of a possible appeal in Greece and the Company's pending enforcement action are uncertain. | |
Financial Status and Contingencies. As a result of the significant uncertainties on this contract, the Company converted to the completed-contract method of accounting and ceased recognizing revenues for the System development portion of this contract in fiscal 2006. No profits or losses were recorded on the Greek contract during the three and nine months ended October 31, 2014 and November 1, 2013. As of October 31, 2014, the Company has recorded $123 million of losses under the Greek contract, reflecting the Company’s estimated total cost to complete the System, assuming the Greek contract value was limited to the cash received to date. Based on the complex nature of this contractual situation and the difficulties encountered to date, significant uncertainties exist and the Company is unable to reliably estimate the ultimate outcome. The Company may reverse a portion of the losses from the Greek contract if it receives payments as provided in the arbitral award. | |
As of October 31, 2014, the Company has $14 million of receivables relating to value added tax ("VAT") that the Company has paid and believes it is entitled to recover either as a refund from the taxing authorities or as a payment under the Greek contract. The Company has invoiced the Customer for $32 million for VAT and the Customer has failed to make payment. If the Customer fails to pay the outstanding VAT amounts or the Company is unable to recover the amount as a refund from the taxing authorities, the Company’s total losses on the Greek contract could increase. | |
The Company has met certain advance payment and performance bonding requirements through the issuance of euro-denominated standby letters of credit. As of October 31, 2014, there were $2 million in standby letters of credit outstanding relating to the support and maintenance of the System. In the arbitration, the Company was awarded but has not received $24 million representing the amounts drawn by the Customer in fiscal 2011 on certain standby letters of credit as well as damages. The principal subcontractor has provided to the Company euro-denominated standby letters of credit in the amount of $20 million as of October 31, 2014, of which $18 million relates to the delivery of the System. The Company may draw on the subcontractor’s standby letters of credit under certain circumstances by providing a statement to the responsible bank that the subcontractor has not fulfilled its obligations under the subcontract. | |
Nuclear Regulatory Commission | |
The U.S. Department of Justice filed a lawsuit against the Company in September 2004 in U.S. District Court for the District of Columbia alleging civil False Claims Act violations and breach of contract by the Company on two contracts that the Company had with the Nuclear Regulatory Commission ("NRC"). The complaint alleged that the Company’s performance of several subcontracts on separate U.S. Department of Energy ("DOE") programs, the participation of a Company employee in an industry trade association, and certain other alleged relationships created organizational conflicts of interest under the two NRC contracts. The Company disputed that the work performed on the DOE programs and the alleged relationships raised by the government created organizational conflicts of interest. In July 2008, the jury found in favor of the government on the breach of contract and two False Claims Act counts. The jury awarded a nominal amount in damages for breach of contract and $2 million in damages for the False Claims Act claims. The judge entered the judgment in October 2008, trebling the False Claims Act damages and awarding $585,000 in civil penalties, for total damages of $7 million. The Company appealed to the U.S. Court of Appeals for the District of Columbia Circuit. In December 2010, the Court of Appeals affirmed the District Court’s judgment as to both liability and damages on the breach of contract count and rescinded the judgment on the False Claims Act counts, including the aggregate damages and penalties. The Court of Appeals sent the False Claims Act counts back to the District Court for further proceedings. In October 2014, the parties entered into a settlement agreement to resolve the False Claims Act claims, with no admission of liability, and payment by the Company of $2 million. The case was dismissed with prejudice on November 13, 2014. | |
Other | |
The Company is also involved in various claims and lawsuits arising in the normal conduct of its business, none of which, in the opinion of the Company’s management, based upon current information, will likely have a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows. |
Other_Commitments_and_Continge
Other Commitments and Contingencies | 9 Months Ended |
Oct. 31, 2014 | |
Other Commitments and Contingencies | ' |
Other Commitments and Contingencies: | |
VirnetX, Inc. | |
In fiscal 2007, the Company transferred several patents to VirnetX Inc., a subsidiary of VirnetX Holding Corp. In consideration of this transfer, the Company received certain license rights and the right to receive a percentage of the consideration received in patent infringement or enforcement claims against third parties. In November 2012, a jury found that Apple Corporation infringed two of the patents that the Company previously transferred to VirnetX and awarded approximately $368 million to VirnetX. Under its agreements with VirnetX, the Company would receive 25% of the proceeds obtained by VirnetX in this lawsuit against Apple after reduction for attorneys’ fees and costs incurred in litigating those claims. Apple filed an appeal of the jury verdict with the United States Court of Appeals for the Federal Circuit, and on September 16, 2014, the appeals court vacated and remanded the jury's $368 million damages award. On October 16, 2014, VirnetX petitioned the appeals court for an en banc rehearing of this decision. No assurances can be given as to when or if the Company will receive any proceeds in connection with this matter. In addition, if the Company receives any proceeds under its agreements with VirnetX, the Company is required to pay a royalty on the proceeds received to the customer who paid for the development of the technology. The Company does not have any assets or liabilities recorded in connection with this matter as of October 31, 2014. | |
Government Investigations and Reviews | |
The Company is routinely subject to investigations and reviews relating to compliance with various laws and regulations with respect to its role as a contractor to federal, state, and local government customers and in connection with performing services in countries outside of the United States. Adverse findings in these investigations or reviews can lead to criminal, civil or administrative proceedings, and the Company could face penalties, fines, compensatory damages, and suspension or debarment from doing business with governmental agencies. In addition, the Company could suffer serious reputational harm if allegations of impropriety were made against Leidos. Adverse findings could also have a material adverse effect on the Company’s business, consolidated financial position, results of operations, and cash flows due to its reliance on government contracts. | |
U.S. Government agencies, including the Defense Contract Audit Agency ("DCAA"), Defense Contract Management Agency ("DCMA"), and others, routinely audit and review a contractor’s performance on government contracts, indirect rates and pricing practices, and compliance with applicable contracting and procurement laws, regulations, and standards. They also review the adequacy of the contractor’s compliance with government standards for its business systems, including: a contractor’s accounting system, earned value management system, estimating system, materials management and accounting system, property management system, and purchasing system. Both contractors and the U.S. Government agencies conducting these audits and reviews have come under increased scrutiny including such subjects as billing practices, labor charging, and accounting for unallowable costs. As a result, audits and reviews have become more rigorous and the standards to which the Company is held are being more strictly interpreted, increasing the likelihood of an audit or review resulting in an adverse outcome. During the course of its current audits, the DCAA is closely examining and questioning costs and several of the Company’s long established and disclosed practices increasing the uncertainty as to the ultimate conclusion that will be reached. In addition, the Company also monitors compliance with these practices and has an obligation under its contracts to make disclosures of specific improprieties based on credible evidence. | |
The Company changed its indirect rate structure used in its indirect cost system and its direct labor bid structure used for its estimating system for fiscal 2011 and future years. The DCAA is performing reviews of these changes and the Company’s compliance with certain other U.S. Government Cost Accounting Standards. A finding of significant control deficiencies in the Company’s system audits or other reviews can result in cash withholds and potentially decremented billing rates to its U.S. Government customers until the control deficiencies are corrected and their remediation is accepted by the DCMA. | |
The Company’s indirect cost audits by the DCAA remain open for fiscal 2009 and subsequent fiscal years. Although the Company has recorded contract revenues subsequent to and including fiscal 2009 based upon an estimate of costs that the Company believes will be approved upon final audit or review, the Company does not know the outcome of any ongoing or future audits or reviews and adjustments, and if future adjustments exceed the Company’s estimates, its profitability would be adversely affected. Pursuant to the Distribution Agreement with New SAIC and upon the separation date, the Company's liability of $45 million of net amounts to be refunded to customers for potential adjustments from such audit or review of contract costs was allocated to New SAIC in the amount of $18 million and the Company in the amount of $27 million. For open periods prior to the spin-off, matters may be settled by the Company with reimbursements due from New SAIC. Subsequent to the separation date, any amounts owed in addition to the $45 million liability for periods prior to the separation date will be proportioned between Leidos and New SAIC in accordance with the Distribution Agreement. | |
As of October 31, 2014, the Company has recorded a total liability of $29 million for its current best estimate of net amounts to be refunded to customers for potential adjustments from such audits or reviews of contract costs. This amount includes potential adjustments related to both pre-separation and post-separation audits or reviews. | |
Tax Audits and Reviews | |
The Company files income tax returns in the United States and various state and foreign jurisdictions and is subject to routine compliance reviews by the IRS and other taxing authorities. The Company has effectively settled with the IRS for all fiscal years prior to fiscal 2014. | |
As of October 31, 2014, the Company has a liability for unrecognized tax benefits, including liabilities for uncertain tax positions of $10 million of which $6 million were classified as other long-term liabilities in the condensed consolidated balance sheet. | |
During the next twelve months, it is reasonably possible that resolution of reviews by taxing authorities, both domestic and international, could be reached with respect to $4 million of the Company’s unrecognized tax benefits depending on the timing of ongoing examinations or any litigation and expiration of statute of limitations, either because the Company’s tax positions are sustained or because the Company agrees to their disallowance and pays the related income tax. | |
While the Company believes it has adequate accruals for uncertain tax positions, the tax authorities may determine that the Company owes taxes in excess of recorded accruals or the recorded accruals may be in excess of the final settlement amounts agreed to by the tax authorities. | |
The Company is subject to periodic audits by government agencies for taxes other than income taxes. The Company does not believe that the outcome of any other such tax matters would have a material adverse effect on its consolidated financial position, results of operations, or cash flows. | |
Letters of Credit and Surety Bonds | |
The Company has outstanding letters of credit of $55 million as of October 31, 2014, principally related to guarantees on contracts. The Company also has outstanding surety bonds in the amount of $135 million, principally related to performance and subcontractor payment bonds on the Company’s contracts. | |
Leidos, Inc. | ' |
Other Commitments and Contingencies | ' |
Other Commitments and Contingencies: | |
VirnetX, Inc. | |
In fiscal 2007, the Company transferred several patents to VirnetX Inc., a subsidiary of VirnetX Holding Corp. In consideration of this transfer, the Company received certain license rights and the right to receive a percentage of the consideration received in patent infringement or enforcement claims against third parties. In November 2012, a jury found that Apple Corporation infringed two of the patents that the Company previously transferred to VirnetX and awarded approximately $368 million to VirnetX. Under its agreements with VirnetX, the Company would receive 25% of the proceeds obtained by VirnetX in this lawsuit against Apple after reduction for attorneys’ fees and costs incurred in litigating those claims. Apple filed an appeal of the jury verdict with the United States Court of Appeals for the Federal Circuit, and on September 16, 2014, the appeals court vacated and remanded the jury's $368 million damages award. On October 16, 2014, VirnetX petitioned the appeals court for an en banc rehearing of this decision. No assurances can be given as to when or if the Company will receive any proceeds in connection with this matter. In addition, if the Company receives any proceeds under its agreements with VirnetX, the Company is required to pay a royalty on the proceeds received to the customer who paid for the development of the technology. The Company does not have any assets or liabilities recorded in connection with this matter as of October 31, 2014. | |
Government Investigations and Reviews | |
The Company is routinely subject to investigations and reviews relating to compliance with various laws and regulations with respect to its role as a contractor to federal, state, and local government customers and in connection with performing services in countries outside of the United States. Adverse findings in these investigations or reviews can lead to criminal, civil or administrative proceedings, and the Company could face penalties, fines, compensatory damages, and suspension or debarment from doing business with governmental agencies. In addition, the Company could suffer serious reputational harm if allegations of impropriety were made against Leidos. Adverse findings could also have a material adverse effect on the Company’s business, consolidated financial position, results of operations, and cash flows due to its reliance on government contracts. | |
U.S. Government agencies, including the Defense Contract Audit Agency ("DCAA"), Defense Contract Management Agency ("DCMA"), and others, routinely audit and review a contractor’s performance on government contracts, indirect rates and pricing practices, and compliance with applicable contracting and procurement laws, regulations, and standards. They also review the adequacy of the contractor’s compliance with government standards for its business systems, including: a contractor’s accounting system, earned value management system, estimating system, materials management and accounting system, property management system, and purchasing system. Both contractors and the U.S. Government agencies conducting these audits and reviews have come under increased scrutiny including such subjects as billing practices, labor charging, and accounting for unallowable costs. As a result, audits and reviews have become more rigorous and the standards to which the Company is held are being more strictly interpreted, increasing the likelihood of an audit or review resulting in an adverse outcome. During the course of its current audits, the DCAA is closely examining and questioning costs and several of the Company’s long established and disclosed practices increasing the uncertainty as to the ultimate conclusion that will be reached. In addition, the Company also monitors compliance with these practices and has an obligation under its contracts to make disclosures of specific improprieties based on credible evidence. | |
The Company changed its indirect rate structure used in its indirect cost system and its direct labor bid structure used for its estimating system for fiscal 2011 and future years. The DCAA is performing reviews of these changes and the Company’s compliance with certain other U.S. Government Cost Accounting Standards. A finding of significant control deficiencies in the Company’s system audits or other reviews can result in cash withholds and potentially decremented billing rates to its U.S. Government customers until the control deficiencies are corrected and their remediation is accepted by the DCMA. | |
The Company’s indirect cost audits by the DCAA remain open for fiscal 2009 and subsequent fiscal years. Although the Company has recorded contract revenues subsequent to and including fiscal 2009 based upon an estimate of costs that the Company believes will be approved upon final audit or review, the Company does not know the outcome of any ongoing or future audits or reviews and adjustments, and if future adjustments exceed the Company’s estimates, its profitability would be adversely affected. Pursuant to the Distribution Agreement with New SAIC and upon the separation date, the Company's liability of $45 million of net amounts to be refunded to customers for potential adjustments from such audit or review of contract costs was allocated to New SAIC in the amount of $18 million and the Company in the amount of $27 million. For open periods prior to the spin-off, matters may be settled by the Company with reimbursements due from New SAIC. Subsequent to the separation date, any amounts owed in addition to the $45 million liability for periods prior to the separation date will be proportioned between Leidos and New SAIC in accordance with the Distribution Agreement. | |
As of October 31, 2014, the Company has recorded a total liability of $29 million for its current best estimate of net amounts to be refunded to customers for potential adjustments from such audits or reviews of contract costs. This amount includes potential adjustments related to both pre-separation and post-separation audits or reviews. | |
Tax Audits and Reviews | |
The Company files income tax returns in the United States and various state and foreign jurisdictions and is subject to routine compliance reviews by the IRS and other taxing authorities. The Company has effectively settled with the IRS for all fiscal years prior to fiscal 2014. | |
As of October 31, 2014, the Company has a liability for unrecognized tax benefits, including liabilities for uncertain tax positions of $10 million of which $6 million were classified as other long-term liabilities in the condensed consolidated balance sheet. | |
During the next twelve months, it is reasonably possible that resolution of reviews by taxing authorities, both domestic and international, could be reached with respect to $4 million of the Company’s unrecognized tax benefits depending on the timing of ongoing examinations or any litigation and expiration of statute of limitations, either because the Company’s tax positions are sustained or because the Company agrees to their disallowance and pays the related income tax. | |
While the Company believes it has adequate accruals for uncertain tax positions, the tax authorities may determine that the Company owes taxes in excess of recorded accruals or the recorded accruals may be in excess of the final settlement amounts agreed to by the tax authorities. | |
The Company is subject to periodic audits by government agencies for taxes other than income taxes. The Company does not believe that the outcome of any other such tax matters would have a material adverse effect on its consolidated financial position, results of operations, or cash flows. | |
Letters of Credit and Surety Bonds | |
The Company has outstanding letters of credit of $55 million as of October 31, 2014, principally related to guarantees on contracts. The Company also has outstanding surety bonds in the amount of $135 million, principally related to performance and subcontractor payment bonds on the Company’s contracts. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Oct. 31, 2014 | |
Accounting Policies [Abstract] | ' |
Nature of Operations and Basis of Presentation | ' |
Nature of Operations and Basis of Presentation | |
Leidos Holdings, Inc. ("Leidos") is a holding company whose direct 100%-owned subsidiary is Leidos, Inc., a company focused on delivering science and technology solutions and services primarily in the areas of national security, health and engineering to agencies of the U.S. Department of Defense ("DoD"), the intelligence community, the U.S. Department of Homeland Security and other U.S. Government civil agencies, state and local government agencies, foreign governments, and customers across a variety of commercial markets. Unless indicated otherwise, references to the "Company," "we," "us," and "our" refer collectively to Leidos, Leidos, Inc., and its consolidated subsidiaries. | |
On September 27, 2013 (the "Distribution Date"), Leidos completed the spin-off of its technical services and enterprise information technology services business into an independent, publicly traded company named Science Applications International Corporation (“New SAIC”). The separation was effected through a tax-free distribution to Leidos' stockholders of 100% of the shares of New SAIC's common stock. On the Distribution Date, New SAIC's common stock was distributed, on a pro rata basis, to Leidos' stockholders of record as of the close of business on September 19, 2013, the record date. Each holder of Leidos common stock received one share of New SAIC common stock for every seven shares of Leidos common stock held on the record date. Prior to the Distribution Date, Leidos Holdings, Inc. was named SAIC, Inc. and Leidos, Inc. was named Science Applications International Corporation. | |
As a result of the spin-off, the assets, liabilities, results of operations, and cash flows of New SAIC have been classified as discontinued operations for all periods presented. References to financial data are to the Company’s continuing operations, unless otherwise noted. See Note 2–Dispositions for further information. | |
Immediately following the spin-off, Leidos effectuated a one-for-four reverse stock split of its shares of common stock, so that every four shares of Leidos common stock issued and outstanding were combined and converted into one share of Leidos common stock. Each reference to the number of shares outstanding or per share amounts has been adjusted to reflect the reverse stock split for all periods presented. | |
The condensed consolidated financial statements of Leidos include the accounts of its majority-owned and 100%-owned subsidiaries, including Leidos, Inc. The condensed consolidated financial statements of Leidos, Inc. include the accounts of its majority-owned and 100%-owned subsidiaries. Leidos does not have separate operations, assets or liabilities independent of Leidos, Inc., except for a note with Leidos, Inc. (the “related party note”), on which interest is recognized. From time to time, Leidos issues stock to employees of Leidos, Inc. and its subsidiaries, which is reflected in Leidos’ Condensed Consolidated Statement of Stockholders’ Equity and results in an increase to the related party note. All intercompany transactions and accounts have been eliminated in consolidation. | |
The accompanying financial information has been prepared by the Company pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") and accounting principles generally accepted in the United States of America ("GAAP"). Certain disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and combined notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2014. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Estimates have been prepared by management on the basis of the most current and best available information at the time of estimation and actual results could differ from those estimates. | |
In the opinion of management, the financial information as of October 31, 2014 and for the three and nine months ended October 31, 2014 and November 1, 2013 reflects all adjustments, which consist of normal recurring adjustments, necessary for a fair presentation thereof. Operating results for the three and nine months ended October 31, 2014 are not necessarily indicative of the results that may be expected for the fiscal year ending January 30, 2015, or any future period. | |
Reporting Periods | ' |
Unless otherwise noted, references to fiscal years are to fiscal years ended the Friday closest to January 31. Fiscal 2015 began on February 1, 2014 and ends on January 30, 2015. The third quarter of fiscal 2015 ended on October 31, 2014. | |
Receivables | ' |
Receivables | |
The Company’s accounts receivable include both amounts billed and currently due from customers, and unbilled receivables consisting of costs and fees billable upon contract completion or the occurrence of a specified event, substantially all of which are expected to be billed and collected within one year. Unbilled receivables are stated at estimated realizable value. Since the Company’s receivables are primarily with the U.S. Government, the Company does not have a material credit risk exposure. Contract retentions are billed when the Company has negotiated final indirect rates with the U.S. Government and, once billed, are subject to audit and approval by government representatives. Consequently, the timing of collection of retention balances is outside the Company’s control. Based on the Company’s historical experience, the majority of retention balances are expected to be collected beyond one year and write-offs of retention balances have not been significant. | |
The Company has extended deferred payment terms with contractual maturities that may exceed one year to commercial customers related to certain construction projects. As of October 31, 2014, the Company had outstanding receivables of $28 million, net of allowance of $7 million, related to one construction project with deferred payment terms, which have not been paid in accordance with the initial payment terms established with the customer. The Company has filed a legal claim to enforce the payment terms as established in the contract. Based on these events, the Company has determined that the receivables are not expected to be collected within the next 12 months. Accordingly, the receivables are classified as non-current in “Other Assets” on the condensed consolidated balance sheet as of October 31, 2014. | |
When events or conditions indicate that amounts outstanding from customers may become uncollectible, an allowance is estimated and recorded. | |
Fair Value Measurement | ' |
Fair Value Measurements | |
The accounting standard for fair value measurements establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows: observable inputs such as quoted prices in active markets (Level 1); inputs other than the quoted prices in active markets that are observable either directly or indirectly (Level 2); and unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions (Level 3). | |
The fair value of financial instruments is determined based on quoted market prices, if available, or management’s best estimate. It is management’s belief that the carrying amounts of the Company’s financial instruments other than derivatives (see below), which include cash equivalents and long-term investments in private equity securities are reasonable estimates of their related fair values. | |
Cash equivalents are recorded at historical cost which equals fair value based on quoted market prices (Level 1 input). The Company’s cash equivalents were primarily comprised of investments in several large institutional money market funds and bank deposits. There are no restrictions on the withdrawal of the Company’s cash and cash equivalents. | |
Management evaluates its investments for other-than-temporary impairment at each balance sheet date. When testing long-term investments for recovery of carrying value, the fair value of long-term investments in private equity securities is determined using various valuation techniques and factors, such as market prices of comparable companies (Level 2 input), discounted cash flow models (Level 3 input) and recent capital transactions of the portfolio companies being valued (Level 3 input). If management determines that an other-than-temporary decline in the fair value of an investment has occurred, an impairment loss is recognized to reduce the investment to its estimated fair value (Level 2 input). The fair value of long-term debt is determined based on current interest rates available for debt with terms and maturities similar to the Company’s existing debt arrangements (Level 2). | |
The carrying value of accounts receivable, accounts payable, and accrued expenses approximate their fair value. | |
Financial Instruments | ' |
Financial Instruments | |
The Company is exposed to certain market risks which are inherent in certain transactions entered into during the normal course of business. These transactions include sales or purchase contracts denominated in foreign currencies, investments in equity securities and exposure to changing interest rates. The Company uses a risk management policy to assess and manage cash flow and fair value exposure. The policy permits the use of derivative instruments with certain restrictions. | |
The Company uses interest rate swaps to hedge its fixed rate debt against changes in fair value due to variability in interest rates. The Company is party to interest rate swap agreements that have been designated as fair value hedges and are recorded at fair value on the condensed consolidated balance sheet. The fair value of the interest rate swaps are determined based on observed values for underlying interest rates on the LIBOR yield curve (Level 2). | |
The Company does not hold derivative instruments for trading or speculative purposes. | |
Changes in Estimates on Contracts | ' |
Changes in Estimates on Contracts | |
Changes in estimates related to certain types of contracts accounted for using the percentage of completion method of accounting are recognized in the period in which such changes are made for the inception-to-date effect of the changes. Changes in these estimates can routinely occur over the contract performance period for a variety of reasons, including changes in contract scope, changes in contract cost estimates due to unanticipated cost growth or retirements of risk for amounts different than estimated and changes in estimated incentive or award fees. Aggregate changes in contract estimates resulted in an increase to operating income of $6 million and an increase of $0.05 per diluted share for the three months ended October 31, 2014, and an increase to operating income of $24 million and an increase of $0.20 per diluted share for the nine months ended October 31, 2014. Aggregate changes in contract estimates resulted in a decrease to operating income of $1 million and a decrease of $0.02 per diluted share for the three months ended November 1, 2013, and a decrease to operating income of $29 million and a decrease of $0.22 per diluted share for the nine months ended November 1, 2013. | |
Goodwill and Intangible Assets | ' |
Goodwill and Intangible Assets | |
Goodwill | |
Goodwill represents purchase consideration paid in a business combination that exceeds the values assigned to the net assets of acquired businesses. Goodwill is not amortized, but instead is tested for impairment at the reporting unit level annually, at the beginning of the fourth quarter and during interim periods whenever events or circumstances indicate that the carrying value may not be recoverable. Goodwill is evaluated for impairment either under a qualitative assessment option or a two-step quantitative approach depending on facts and circumstances of a reporting unit, including the excess of fair value over carrying amount in previous assessments and changes in business environment. | |
When performing a qualitative assessment, the Company considers factors including, but not limited to, current macroeconomic conditions, industry and market conditions, cost factors, financial performance and other events relevant to the entity or reporting unit under evaluation to determine whether it is more likely or not that the fair value of a reporting unit is less than its carrying amount. If the Company determines that it is more likely than not that a reporting unit’s fair value is less than its carrying amount, a quantitative two-step goodwill impairment test is performed. | |
In evaluating the first step of the two-step quantitative goodwill impairment test, the estimated fair value of each reporting unit is compared to its carrying value, which includes the allocated goodwill. If the estimated fair value of a reporting unit is more than its carrying value, including allocated goodwill, no further analysis is required. If the estimated fair value of a reporting unit is less than its carrying value, including allocated goodwill, a second step is performed to compute the amount of the impairment by determining an implied fair value of goodwill. The implied fair value of goodwill is the residual fair value derived by deducting the fair value of a reporting unit’s identifiable assets and liabilities from its estimated fair value calculated in the first step. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, then the Company records an impairment charge equal to the difference. | |
The Company estimates the fair value of each reporting unit using both market and income approaches (Level 3) when a quantitative analysis is required. | |
The market approach consists of the guideline public company method which is a valuation technique where the fair value is calculated based on market prices obtained from a detailed market analysis of publicly traded companies that provide a reasonable basis of comparison for each reporting unit. Valuation ratios are selected that relate market prices to selected financial metrics from comparable companies. These ratios are applied after consideration of adjustments and weightings related to financial position, growth, volatility, working capital movement, and other factors. Due to the fact that stock prices of comparable companies represent minority interests the Company also considers an acquisition control premium to reflect the impact of additional value associated with a controlling interest. | |
The income approach is a valuation technique where the fair value is calculated based on forecasted future cash flows within the projection period discounted back to the present value with appropriate risk adjusted discount rates, which represent the weighted-average cost of capital ("WACC") for each reporting unit. This includes assessing the cost of equity and debt capital as of the valuation date. In addition, a terminal value is developed for forecasted future cash flows beyond the projection period discounted back to the present value. The forecasts used in the Company’s estimation of fair value are developed by management based on known business and market considerations. | |
The goodwill impairment test process and valuation model is based upon certain key assumptions that require the exercise of significant judgment including judgments for the use of appropriate financial projections, economic expectations, discount rates and WACC as well as using available market data. | |
An interim goodwill impairment evaluation was performed during the second quarter of fiscal 2015 and resulted in goodwill impairment charges of $486 million for the three months ended August 1, 2014. See Note 4–Goodwill and Intangible Assets for further information. | |
Intangible assets | |
Intangible assets with finite lives are amortized using the method that best reflects how their economic benefits are utilized or, if a pattern of economic benefits cannot be reliably determined, on a straight-line basis over their estimated useful lives. | |
Intangible assets with finite lives are assessed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. See Note 4–Goodwill and Intangible Assets for impairment charges taken during the period. Intangible assets with indefinite lives are not amortized but are assessed for impairment at the beginning of the fourth quarter and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. | |
Accounting Standards Updates Adopted | ' |
Accounting Standards Updates Adopted | |
In February 2013, the Financial Accounting Standards Board ("FASB") issued ASU 2013-04: Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date. This standard requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The guidance also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. The amendments in this update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of the provisions of ASU 2013-04 did not have a material effect on the Company's consolidated financial position, results of operations, or cash flows. | |
In March 2013, the FASB issued ASU No. 2013-05, Foreign Currency Matters (Topic 830): Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity. This standard applies to the release of the cumulative translation adjustment into net income when a parent either sells a part of or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. In addition, the amendments resolve the diversity in practice for the treatment of business combinations achieved in stages (i.e., step acquisitions) involving a foreign entity. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of the provisions of ASU 2013-05 did not have a material effect on the Company's consolidated financial position, results of operations, or cash flows. | |
In June 2014, the FASB issued ASU No. 2014-12, Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. This standard was issued to provide guidance on share based payment awards in which a performance target may be achieved after an employee completes the requisite service period to achieve the award. In some instances, this has led to a performance award being granted subsequent to the employee no longer rendering services to the issuing company. Previously, no guidance had been included in the codification on how to account for these transactions. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The amendments in this ASU are effective for all entities for annual periods and interim periods within those annual periods beginning after December 15, 2015. Early adoption is permitted. The amendments may be adopted prospectively or retrospectively. The Company elected to early adopt the provisions of ASU No. 2014-12 and the standard did not have a material effect on the Company's financial position, results of operations, or cash flows. | |
During the quarter presented, the Company adopted various other accounting standards issued by the FASB, none of which had a material effect on the Company's consolidated financial position, results of operations, or cash flows. | |
Accounting Standards Updates Issued But Not Yet Adopted | ' |
Accounting Standards Updates Issued But Not Yet Adopted | |
In April 2014, the FASB issued ASU No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in the ASU change the criteria for reporting discontinued operations while enhancing disclosures in this area. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. Those strategic shifts should have a major effect on the organization’s operations and financial results. Examples include a disposal of a major geographic location, a major line of business or a major equity method investment. In addition, the new guidance requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income and expenses of discontinued operations. The new guidance also requires disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. This disclosure will provide users with information about the ongoing trends in a reporting organization’s results from continuing operations. The amendments in the ASU are effective in the first quarter of 2015 for public organizations with calendar year ends. Early adoption is permitted. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 9 Months Ended | |||||||||||||||
Oct. 31, 2014 | ||||||||||||||||
Accounting Policies [Abstract] | ' | |||||||||||||||
Schedule of Separation Transaction and Restructuring Expense | ' | |||||||||||||||
The separation transaction and restructuring expenses for continuing operations were as follows: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
October 31, | November 1, | October 31, | November 1, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(in millions) | ||||||||||||||||
Strategic advisory services | $ | — | $ | 5 | $ | — | $ | 7 | ||||||||
Legal and accounting services | — | 1 | — | 1 | ||||||||||||
Lease termination and facility consolidation expenses | — | 17 | 1 | 40 | ||||||||||||
Severance costs | — | 2 | — | 10 | ||||||||||||
Separation transaction and restructuring expenses in operating income (loss) | — | 25 | 1 | 58 | ||||||||||||
Less: income tax benefit | — | (10 | ) | — | (23 | ) | ||||||||||
Separation transaction and restructuring expenses, net of tax | $ | — | $ | 15 | $ | 1 | $ | 35 | ||||||||
Schedule of Restructuring Reserve | ' | |||||||||||||||
The following table represents the restructuring liability balance as of October 31, 2014 and summarizes the changes during the period attributable to costs incurred and charged to expense, costs paid or otherwise settled, and any adjustments to the liability: | ||||||||||||||||
Severance Costs | Lease Termination and Facility Consolidation Expenses | Total | ||||||||||||||
(in millions) | ||||||||||||||||
Balance as of January 31, 2014 | $ | 1 | $ | 20 | $ | 21 | ||||||||||
Charges | — | 1 | 1 | |||||||||||||
Cash payments | (1 | ) | (11 | ) | (12 | ) | ||||||||||
Balance as of October 31, 2014 | $ | — | $ | 10 | $ | 10 | ||||||||||
Schedule of Supplementary Cash Flow Information | ' | |||||||||||||||
Supplementary cash flow information, including non-cash investing and financing activities, for the periods presented was as follows: | ||||||||||||||||
Nine Months Ended | ||||||||||||||||
October 31, | November 1, | |||||||||||||||
2014 | 2013 | |||||||||||||||
(in millions) | ||||||||||||||||
Vested stock issued as settlement of annual bonus accruals | $ | 1 | $ | 2 | ||||||||||||
Stock issued in lieu of cash dividends | $ | 2 | $ | 17 | ||||||||||||
Fair value of assets acquired in acquisitions | $ | — | $ | 259 | ||||||||||||
Cash paid in acquisitions | $ | — | $ | (1 | ) | |||||||||||
Forgiveness of accounts receivable to acquire equity interest in business combination | $ | — | $ | (105 | ) | |||||||||||
Accrued liability for acquisition of business | $ | — | $ | (5 | ) | |||||||||||
Liabilities assumed in acquisitions | $ | — | $ | (148 | ) | |||||||||||
Cash paid for interest (including discontinued operations) | $ | 41 | $ | 37 | ||||||||||||
Cash paid for income taxes, net of refunds (including discontinued operations) | $ | 22 | $ | 62 | ||||||||||||
Dispositions_Tables
Dispositions (Tables) | 9 Months Ended | |||||||||||||||
Oct. 31, 2014 | ||||||||||||||||
SAIC | ' | |||||||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ' | |||||||||||||||
Schedule of Income Statement, Balance Sheet for Discontinued Operation | ' | |||||||||||||||
The operating results of New SAIC through the Distribution Date, which have been classified as discontinued operations, for the periods presented were as follows: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
31-Oct-14 | November 1, | October 31, | November 1, | |||||||||||||
2013 | 2014 | 2013 | ||||||||||||||
(in millions) | ||||||||||||||||
Revenues | $ | 8 | $ | 598 | $ | 34 | $ | 2,712 | ||||||||
Costs and expenses: | ||||||||||||||||
Cost of revenues | 8 | 533 | 34 | 2,446 | ||||||||||||
Selling, general and administrative expenses | — | 22 | — | 42 | ||||||||||||
Separation transaction and restructuring expenses | — | 20 | — | 55 | ||||||||||||
Operating income | $ | — | $ | 23 | $ | — | $ | 169 | ||||||||
Other Disposals | ' | |||||||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ' | |||||||||||||||
Schedule of Income Statement, Balance Sheet for Discontinued Operation | ' | |||||||||||||||
The pre-sale operating results through the date of disposal of the Company’s discontinued operations discussed above, not including the separation of New SAIC, for the periods presented were as follows: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
October 31, | November 1, | October 31, | November 1, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(in millions) | ||||||||||||||||
Revenues | $ | 5 | $ | 7 | $ | 25 | $ | 25 | ||||||||
Costs and expenses: | ||||||||||||||||
Cost of revenues | 2 | 10 | 19 | 27 | ||||||||||||
Selling, general and administrative expenses (including impairment charges of $9 million for the nine months ended October 31, 2014) | 5 | 1 | 24 | 20 | ||||||||||||
Intangible asset impairment charges | — | — | 3 | 2 | ||||||||||||
Operating loss | $ | (2 | ) | $ | (4 | ) | $ | (21 | ) | $ | (24 | ) | ||||
Non-operating income (expense) | $ | 1 | $ | — | $ | 9 | $ | (1 | ) | |||||||
Total loss from discontinued operations before income taxes | $ | (1 | ) | $ | (4 | ) | $ | (12 | ) | $ | (25 | ) |
Acquisitions_Tables
Acquisitions (Tables) | 9 Months Ended | |||
Oct. 31, 2014 | ||||
Business Acquisition [Line Items] | ' | |||
Schedule of detail break-up of purchase price | ' | |||
The aggregate purchase consideration that the Company exchanged for PRE Holdings is as follows (in millions): | ||||
Forgiveness of accounts receivable (net of $32 million bad debt expense) | $ | 105 | ||
Contingent consideration | 6 | |||
Total purchase consideration | $ | 111 | ||
Plainfield | ' | |||
Business Acquisition [Line Items] | ' | |||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | ' | |||
The fair values of the assets acquired and liabilities assumed at the date of acquisition were as follows (in millions): | ||||
Property, plant and equipment | $ | 248 | ||
Other assets | 8 | |||
Notes payable assumed (net of debt discount) | (148 | ) | ||
Total identifiable net assets acquired | 108 | |||
Intangible assets | 3 | |||
Total purchase consideration | $ | 111 | ||
Goodwill_and_Intangible_Assets1
Goodwill and Intangible Assets (Tables) | 9 Months Ended | |||||||||||||||||||||||
Oct. 31, 2014 | ||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | |||||||||||||||||||||||
Schedule of Goodwill | ' | |||||||||||||||||||||||
The changes in the carrying value of goodwill for NSS and HES were as follows: | ||||||||||||||||||||||||
NSS | HES | Total | ||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Goodwill at January 31, 2014 | $ | 788 | $ | 905 | $ | 1,693 | ||||||||||||||||||
Goodwill impairment charges | — | (486 | ) | (486 | ) | |||||||||||||||||||
Goodwill at October 31, 2014 | $ | 788 | $ | 419 | $ | 1,207 | ||||||||||||||||||
Schedule of Intangible Assets Including Estimates of Assets Acquired | ' | |||||||||||||||||||||||
Intangible assets consisted of the following: | ||||||||||||||||||||||||
October 31, 2014 | January 31, 2014 | |||||||||||||||||||||||
Gross carrying value | Accumulated amortization | Net carrying value | Gross carrying value | Accumulated amortization | Net carrying value | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Finite-lived intangible assets: | ||||||||||||||||||||||||
Customer relationships | $ | 70 | $ | (56 | ) | $ | 14 | $ | 94 | $ | (47 | ) | $ | 47 | ||||||||||
Software and technology | 52 | (40 | ) | 12 | 65 | (36 | ) | 29 | ||||||||||||||||
Other | — | — | — | 4 | (1 | ) | 3 | |||||||||||||||||
Total finite-lived intangible assets | 122 | (96 | ) | 26 | 163 | (84 | ) | 79 | ||||||||||||||||
Indefinite-lived intangible assets: | ||||||||||||||||||||||||
In-process research and development | 9 | — | 9 | 10 | — | 10 | ||||||||||||||||||
Trade names | 4 | — | 4 | 4 | — | 4 | ||||||||||||||||||
Total indefinite-lived intangible assets | 13 | — | 13 | 14 | — | 14 | ||||||||||||||||||
Total intangible assets | $ | 135 | $ | (96 | ) | $ | 39 | $ | 177 | $ | (84 | ) | $ | 93 | ||||||||||
Schedule of Amortization Expense for Finite-Lived Intangible Assets | ' | |||||||||||||||||||||||
The estimated annual amortization expense related to finite-lived intangible assets as of October 31, 2014 was as follows: | ||||||||||||||||||||||||
Fiscal Year Ending January 31 | ||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
2015 (remainder of the fiscal year) | $ | 2 | ||||||||||||||||||||||
2016 | 8 | |||||||||||||||||||||||
2017 | 7 | |||||||||||||||||||||||
2018 | 5 | |||||||||||||||||||||||
2019 | 3 | |||||||||||||||||||||||
2020 and thereafter | 1 | |||||||||||||||||||||||
$ | 26 | |||||||||||||||||||||||
Derivative_Instruments_and_Hed1
Derivative Instruments and Hedging Activities (Tables) | 9 Months Ended | ||||||||||||||
Oct. 31, 2014 | |||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ||||||||||||||
Schedule of Interest Rate Derivative | ' | ||||||||||||||
The fair value of the interest rate swaps and their impact on the related fair value of the debt in the condensed consolidated balance sheet is as follows: | |||||||||||||||
Interest rate swaps | Hedged items | ||||||||||||||
Balance sheet line item | October 31, | January 31, | Balance sheet line item | October 31, | January 31, | ||||||||||
2014 | 2014 | 2014 | 2014 | ||||||||||||
(in millions) | |||||||||||||||
Other assets | $ | 2 | $ | — | Notes payable and long-term debt, net of current portion | $ | 2 | $ | — | ||||||
Debt_Tables
Debt (Tables) | 9 Months Ended | |||||||||||||
Oct. 31, 2014 | ||||||||||||||
Debt Disclosure [Abstract] | ' | |||||||||||||
Schedule of Notes Payable and Long-Term Debt | ' | |||||||||||||
The Company’s notes payable and long-term debt consisted of the following: | ||||||||||||||
Stated interest rate | Effective interest rate | 31-Oct-14 | 31-Jan-14 | |||||||||||
(dollars in millions) | ||||||||||||||
Leidos Holdings, Inc. senior unsecured notes: | ||||||||||||||
$450 million notes, which mature in December 2020 (1) | 4.45 | % | 4.53 | % | $ | 451 | $ | 449 | ||||||
$300 million notes, which mature in December 2040 | 5.95 | % | 6.03 | % | 291 | 300 | ||||||||
Leidos, Inc. senior unsecured notes: | ||||||||||||||
$250 million notes, which mature in July 2032 | 7.13 | % | 7.43 | % | 248 | 248 | ||||||||
$300 million notes, which mature in July 2033 | 5.5 | % | 5.83 | % | 201 | 296 | ||||||||
Capital leases and other notes payable due on various dates through fiscal 2021 | 0%-3.7% | Various | 38 | 40 | ||||||||||
Total notes payable and long-term debt | $ | 1,229 | $ | 1,333 | ||||||||||
Less current portion | 2 | 2 | ||||||||||||
Total notes payable and long-term debt, net of current portion | $ | 1,227 | $ | 1,331 | ||||||||||
Fair value of notes payable and long-term debt | $ | 1,228 | $ | 1,350 | ||||||||||
-1 | As a result of executing the interest rate swap agreements, the carrying value of $451 million includes a fair value adjustment of $2 million attributable to changes in the benchmark interest rate, the six-month LIBOR rate, from the inception of the interest rate swap agreements to October 31, 2014. |
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended | |||||||
Oct. 31, 2014 | ||||||||
Equity [Abstract] | ' | |||||||
Schedule of Accumulated Other Comprehensive Loss | ' | |||||||
The components of accumulated other comprehensive loss were as follows: | ||||||||
October 31, | January 31, | |||||||
2014 | 2014 | |||||||
(in millions) | ||||||||
Foreign currency translation adjustments, net of taxes of $(1) million as of October 31, 2014 and January 31, 2014 | $ | 2 | $ | 2 | ||||
Unrecognized net loss on settled derivative instruments associated with outstanding debt, net of taxes of $3 million as of October 31, 2014 and January 31, 2014 | (5 | ) | (5 | ) | ||||
Unrecognized net loss on defined benefit plan, net of taxes of $2 million as of October 31, 2014 and January 31, 2014 | (3 | ) | (3 | ) | ||||
Total accumulated other comprehensive loss, net of taxes of $4 million as of October 31, 2014 and January 31, 2014 | $ | (6 | ) | $ | (6 | ) |
Earnings_Loss_Per_Share_EPS_Ta
Earnings (Loss) Per Share (EPS) (Tables) | 9 Months Ended | |||||||||||||||
Oct. 31, 2014 | ||||||||||||||||
Earnings Per Share [Abstract] | ' | |||||||||||||||
Reconciliation of Income used in Calculating Earnings Per Share | ' | |||||||||||||||
A reconciliation of the income (loss) used to compute basic and diluted EPS for the periods presented was as follows: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
October 31, 2014 | November 1, | October 31, | November 1, | |||||||||||||
2013 | 2014 | 2013 | ||||||||||||||
(in millions) | ||||||||||||||||
Basic EPS: | ||||||||||||||||
Income (loss) from continuing operations, as reported | $ | 38 | $ | (8 | ) | $ | (356 | ) | $ | 37 | ||||||
Less: allocation of distributed and undistributed earnings to participating securities | — | — | — | (3 | ) | |||||||||||
Income (loss) from continuing operations, for computing | $ | 38 | $ | (8 | ) | $ | (356 | ) | $ | 34 | ||||||
basic EPS | ||||||||||||||||
Net income (loss), as reported | $ | 34 | $ | (3 | ) | $ | (367 | ) | $ | 120 | ||||||
Less: allocation of distributed and undistributed earnings to participating securities | — | — | — | (3 | ) | |||||||||||
Net income (loss), for computing basic EPS | $ | 34 | $ | (3 | ) | $ | (367 | ) | $ | 117 | ||||||
Diluted EPS: | ||||||||||||||||
Income (loss) from continuing operations, as reported | $ | 38 | $ | (8 | ) | $ | (356 | ) | $ | 37 | ||||||
Less: allocation of distributed and undistributed earnings to participating securities | — | — | — | (3 | ) | |||||||||||
Income (loss) from continuing operations, for computing | $ | 38 | $ | (8 | ) | $ | (356 | ) | $ | 34 | ||||||
diluted EPS | ||||||||||||||||
Net income (loss), as reported | $ | 34 | $ | (3 | ) | $ | (367 | ) | $ | 120 | ||||||
Less: allocation of distributed and undistributed earnings to participating securities | — | — | — | (3 | ) | |||||||||||
Net income (loss), for computing diluted EPS | $ | 34 | $ | (3 | ) | $ | (367 | ) | $ | 117 | ||||||
Reconciliation of Weighted Average Number of Shares Outstanding | ' | |||||||||||||||
The following table provides a reconciliation of the weighted average number of shares outstanding used to compute basic and diluted EPS for the periods presented. The presentation for the three and nine months ended November 1, 2013 gives effect to the one-for-four reverse stock split which occurred after market close on September 27, 2013. | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
October 31, 2014 | November 1, | October 31, | November 1, | |||||||||||||
2013 | 2014 | 2013 | ||||||||||||||
(in millions) | ||||||||||||||||
Basic weighted average number of shares outstanding | 73 | 84 | 75 | 84 | ||||||||||||
Dilutive common share equivalents—stock options and | 1 | — | — | — | ||||||||||||
other stock awards | ||||||||||||||||
Diluted weighted average number of shares outstanding | 74 | 84 | 75 | 84 | ||||||||||||
Schedule of Stock-Based Awards Excluded from Weighted Average Shares Outstanding | ' | |||||||||||||||
The following anti-dilutive stock-based awards were excluded from the weighted average number of shares outstanding used to compute basic and diluted EPS for the periods presented: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
October 31, 2014 | November 1, | October 31, | November 1, | |||||||||||||
2013 | 2014 | 2013 | ||||||||||||||
(in millions) | ||||||||||||||||
Stock options | 2 | 5 | 4 | 5 | ||||||||||||
Vesting stock awards | — | 3 | 3 | 3 | ||||||||||||
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 9 Months Ended | |||||||||||||||
Oct. 31, 2014 | ||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||||||||
Schedule of Stock-Based Compensation Expenses | ' | |||||||||||||||
Total stock-based compensation expense and related tax benefits recognized for the periods presented was as follows: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
October 31, | November 1, | October 31, | November 1, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(in millions) | ||||||||||||||||
Stock-based compensation expense: | ||||||||||||||||
Stock options | $ | 1 | $ | 4 | $ | 4 | $ | 9 | ||||||||
Vesting stock awards | 9 | 10 | 27 | 35 | ||||||||||||
Vested stock awards | — | — | 2 | — | ||||||||||||
Total stock-based compensation expense recorded in continuing operations | $ | 10 | $ | 14 | $ | 33 | $ | 44 | ||||||||
Total stock-based compensation expense recorded in discontinued operations | $ | — | $ | 6 | $ | — | $ | 21 | ||||||||
Tax benefits recognized from stock-based compensation | $ | 4 | $ | 5 | $ | 13 | $ | 17 | ||||||||
Schedule of Weighted Average Grant-Date Fair Value and Assumptions Used | ' | |||||||||||||||
The fair value of the Company’s stock option awards is estimated on the date of grant using the Black-Scholes option-pricing model. The weighted average grant date fair value and assumptions used to determine the fair value of stock options granted for the periods presented were as follows: | ||||||||||||||||
Nine Months Ended | ||||||||||||||||
October 31, | October 2013 Grants | 2013 Grants Before Spin | ||||||||||||||
2014 | ||||||||||||||||
Options granted (in millions) | 0.6 | 0.1 | 1.4 | * | ||||||||||||
Weighted average grant-date fair value | $ | 6.14 | $ | 9.48 | $ | 6.96 | * | |||||||||
Expected term (in years) | 4.7 | 5 | 5 | |||||||||||||
Expected volatility | 25.1 | % | 30 | % | 25 | % | ||||||||||
Risk-free interest rate | 1.6 | % | 1.4 | % | 0.8 | % | ||||||||||
Dividend yield | 2.9 | % | 2.8 | % | 3.8 | % | ||||||||||
*Adjusted for additional awards granted for the $4.00 special cash dividend |
Business_Segment_Information_T
Business Segment Information (Tables) | 9 Months Ended | |||||||||||||||
Oct. 31, 2014 | ||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||
Schedule of Segment Reporting Information by Segment | ' | |||||||||||||||
The segment information for the periods presented was as follows: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
October 31, | November 1, | October 31, | November 1, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(in millions) | ||||||||||||||||
Revenues: | ||||||||||||||||
National Security Solutions | $ | 906 | $ | 1,011 | $ | 2,775 | $ | 3,107 | ||||||||
Health and Engineering | 373 | 406 | 1,126 | 1,368 | ||||||||||||
Corporate and Other | (3 | ) | (2 | ) | (7 | ) | (8 | ) | ||||||||
Intersegment elimination | — | (1 | ) | — | (3 | ) | ||||||||||
Total revenues | $ | 1,276 | $ | 1,414 | $ | 3,894 | $ | 4,464 | ||||||||
Operating income (loss): | ||||||||||||||||
National Security Solutions | $ | 72 | $ | 66 | $ | 227 | $ | 209 | ||||||||
Health and Engineering | 4 | (30 | ) | (455 | ) | 2 | ||||||||||
Corporate and Other | (4 | ) | (41 | ) | (23 | ) | (129 | ) | ||||||||
Total operating income (loss) | $ | 72 | $ | (5 | ) | $ | (251 | ) | $ | 82 | ||||||
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Additional Information) (Detail) (USD $) | 3 Months Ended | 4 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 9 Months Ended | ||||||
In Millions, except Per Share data, unless otherwise specified | Oct. 31, 2014 | Aug. 01, 2014 | Nov. 01, 2013 | Jan. 31, 2014 | Oct. 31, 2014 | Nov. 01, 2013 | Oct. 31, 2014 | Nov. 01, 2013 | Oct. 31, 2014 | Nov. 01, 2013 | Nov. 01, 2013 | Nov. 01, 2013 | Sep. 19, 2013 | Oct. 31, 2014 |
Leidos, Inc. | Leidos, Inc. | Leidos, Inc. | Leidos, Inc. | SAIC | SAIC | SAIC | One Customer | |||||||
project | ||||||||||||||
Significant Accounting Policies [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Ownership interest | ' | ' | ' | ' | ' | ' | 100.00% | ' | 100.00% | ' | ' | ' | ' | ' |
Reverse stock split | ' | ' | ' | 0.25 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock issued to Leidos shareholder upon divestiture of SAIC, ratio | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.4285 | ' |
Restructuring charges, net | ' | ' | ' | ' | $1 | ' | ' | ' | ' | ' | $20 | $55 | ' | ' |
Outstanding receivables | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 28 |
Allowance for outstanding receivable | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7 |
Number of projects | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1 |
Increase (decrease) in income due to contract estimates | 6 | ' | -1 | ' | 24 | -29 | ' | ' | ' | ' | ' | ' | ' | ' |
Increase (decrease) in income due to contract estimates per diluted share | ($0.05) | ' | $0.02 | ' | ($0.20) | $0.22 | ' | ' | ' | ' | ' | ' | ' | ' |
Goodwill impairment charges | $0 | $486 | $0 | ' | $486 | $0 | $0 | $0 | $486 | $0 | ' | ' | ' | ' |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Separation Transaction Expenses) (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Oct. 31, 2014 | Nov. 01, 2013 | Oct. 31, 2014 | Nov. 01, 2013 |
Accounting Policies [Abstract] | ' | ' | ' | ' |
Strategic advisory services | $0 | $5 | $0 | $7 |
Legal and accounting services | 0 | 1 | 0 | 1 |
Lease termination and facility consolidation expenses | 0 | 17 | 1 | 40 |
Severance costs | 0 | 2 | 0 | 10 |
Separation transaction and restructuring expenses in operating income (loss) | 0 | 25 | 1 | 58 |
Less: income tax benefit | 0 | -10 | 0 | -23 |
Separation transaction and restructuring expenses, net of tax | $0 | $15 | $1 | $35 |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies (Restructuring Reserve) (Details) (USD $) | 9 Months Ended |
In Millions, unless otherwise specified | Oct. 31, 2014 |
Restructuring Reserve [Roll Forward] | ' |
Beginng balance | $21 |
Charges | 1 |
Cash payments | -12 |
Ending balance | 10 |
Employee Severance | ' |
Restructuring Reserve [Roll Forward] | ' |
Beginng balance | 1 |
Charges | 0 |
Cash payments | -1 |
Ending balance | 0 |
Facility Closing | ' |
Restructuring Reserve [Roll Forward] | ' |
Beginng balance | 20 |
Charges | 1 |
Cash payments | -11 |
Ending balance | $10 |
Summary_of_Significant_Account6
Summary of Significant Accounting Policies (Schedule of Supplementary Cash Flow Information) (Detail) (USD $) | 9 Months Ended | |
In Millions, unless otherwise specified | Oct. 31, 2014 | Nov. 01, 2013 |
Accounting Policies [Abstract] | ' | ' |
Vested stock issued as settlement of annual bonus accruals | $1 | $2 |
Stock issued in lieu of cash dividends | 2 | 17 |
Fair value of assets acquired in acquisitions | 0 | 259 |
Cash paid in acquisitions | 0 | -1 |
Forgiveness of accounts receivable to acquire equity interest in business combination | 0 | -105 |
Accrued liability for acquisition of business | 0 | -5 |
Liabilities assumed in acquisitions | 0 | -148 |
Cash paid for interest (including discontinued operations) | 41 | 37 |
Cash paid for income taxes, net of refunds (including discontinued operations) | $22 | $62 |
Dispositions_Details
Dispositions (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Oct. 31, 2014 | Nov. 01, 2013 | Oct. 31, 2014 | Nov. 01, 2013 |
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract] | ' | ' | ' | ' |
Total loss from discontinued operations before income taxes | ($1) | $19 | ($12) | $144 |
Impairment of assets | ' | ' | 9 | ' |
SAIC | ' | ' | ' | ' |
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract] | ' | ' | ' | ' |
Revenues | 8 | 598 | 34 | 2,712 |
Cost of revenues | 8 | 533 | 34 | 2,446 |
Selling, general and administrative expenses | 0 | 22 | 0 | 42 |
Separation transaction and restructuring expenses | 0 | 20 | 0 | 55 |
Operating income | 0 | 23 | 0 | 169 |
Other Disposals | ' | ' | ' | ' |
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract] | ' | ' | ' | ' |
Revenues | 5 | 7 | 25 | 25 |
Cost of revenues | 2 | 10 | 19 | 27 |
Selling, general and administrative expenses | 5 | 1 | 24 | 20 |
Intangible asset impairment charges | 0 | 0 | 3 | 2 |
Operating income | -2 | -4 | -21 | -24 |
Non-operating income (expense) | 1 | 0 | 9 | -1 |
Total loss from discontinued operations before income taxes | -1 | -4 | -12 | -25 |
Impairment of assets | ' | ' | $9 | ' |
Dispositions_Narrative_Details
Dispositions (Narrative) (Details) (USD $) | 0 Months Ended | 9 Months Ended | 3 Months Ended | 0 Months Ended | |
In Millions, unless otherwise specified | Sep. 26, 2013 | Oct. 31, 2014 | Nov. 01, 2013 | Oct. 31, 2014 | Sep. 26, 2013 |
Emergency Management Consulting | Leidos, Inc. | ||||
SAIC | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ' | ' | ' | ' | ' |
Net proceeds from divestures | $295 | $0 | $295 | $19 | ' |
Reimbursement received from SAIC for financing costs | ' | ' | ' | ' | 5 |
Contribution paid to New SAIC | ' | ' | ' | ' | 26 |
Impairment charges | ' | 12 | ' | ' | ' |
Impairment of assets | ' | $9 | ' | ' | ' |
Acquisitions_Narrative_Details
Acquisitions (Narrative) (Details) (USD $) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | ||||||
In Millions, unless otherwise specified | Jul. 31, 2014 | Oct. 31, 2014 | Nov. 01, 2013 | Oct. 31, 2014 | Nov. 01, 2013 | Oct. 11, 2013 | Oct. 11, 2013 | Oct. 11, 2013 | Nov. 01, 2013 | Oct. 11, 2013 | Oct. 31, 2014 | Oct. 31, 2014 |
Plainfield | Minimum | Maximum | Receivable from PRE Holdings | Connecticut Light and Power | Achievement of milestones | November 2015 or successful sale of the plant | ||||||
MW | Plainfield | Plainfield | Plainfield | Plainfield | Plainfield | Plainfield | ||||||
Business Acquisition [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of ownership | ' | ' | ' | ' | ' | 100.00% | ' | ' | ' | ' | ' | ' |
Capacity of the power plant | ' | ' | ' | ' | ' | 37.5 | ' | ' | ' | ' | ' | ' |
Percentage of power to be purchased | ' | ' | ' | ' | ' | ' | ' | ' | ' | 80.00% | ' | ' |
Term of agreement | ' | ' | ' | ' | ' | ' | ' | ' | ' | '15 years | ' | ' |
Fuel supply agreement, term | ' | ' | ' | ' | ' | ' | '5 years | '15 years | ' | ' | ' | ' |
Bad debt expense | ' | $0 | $43 | $3 | $45 | ' | ' | ' | $32 | ' | ' | ' |
Contingent consideration | ' | ' | ' | ' | ' | 6 | ' | ' | ' | ' | 3 | 2 |
Proceeds from U.S. Treasury cash grant | 80 | ' | ' | 80 | 0 | ' | ' | ' | ' | ' | ' | ' |
Deferred tax assets | $27 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Acquisitions_Aggregate_of_Purc
Acquisitions (Aggregate of Purchase Price) (Details) (USD $) | 9 Months Ended | 0 Months Ended | |
In Millions, unless otherwise specified | Oct. 31, 2014 | Nov. 01, 2013 | Oct. 11, 2013 |
Plainfield | |||
Business Acquisition [Line Items] | ' | ' | ' |
Forgiveness of accounts receivable (net of $32 million bad debt expense) | $0 | $105 | $105 |
Contingent consideration | ' | ' | 6 |
Total purchase consideration | ' | ' | $111 |
Acquisitions_Purchase_Price_Al
Acquisitions (Purchase Price Allocation) (Details) (Plainfield, USD $) | 0 Months Ended |
In Millions, unless otherwise specified | Oct. 11, 2013 |
Plainfield | ' |
Business Acquisition [Line Items] | ' |
Property, plant and equipment | $248 |
Other assets | 8 |
Notes payable assumed (net of debt discount) | -148 |
Total identifiable net assets acquired | 108 |
Intangible assets | 3 |
Total purchase consideration | $111 |
Goodwill_and_Intangible_Assets2
Goodwill and Intangible Assets (Goodwill Rollforward) (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Millions, unless otherwise specified | Oct. 31, 2014 | Aug. 01, 2014 | Nov. 01, 2013 | Oct. 31, 2014 | Nov. 01, 2013 |
Goodwill [Roll Forward] | ' | ' | ' | ' | ' |
Beginning balance | ' | ' | ' | $1,693 | ' |
Goodwill impairment charges | 0 | -486 | 0 | -486 | 0 |
Ending balance | 1,207 | ' | ' | 1,207 | ' |
NSS | ' | ' | ' | ' | ' |
Goodwill [Roll Forward] | ' | ' | ' | ' | ' |
Beginning balance | ' | ' | ' | 788 | ' |
Goodwill impairment charges | ' | ' | ' | 0 | ' |
Ending balance | 788 | ' | ' | 788 | ' |
HES | ' | ' | ' | ' | ' |
Goodwill [Roll Forward] | ' | ' | ' | ' | ' |
Beginning balance | ' | ' | ' | 905 | ' |
Goodwill impairment charges | ' | ' | ' | -486 | ' |
Ending balance | $419 | ' | ' | $419 | ' |
Goodwill_and_Intangible_Assets3
Goodwill and Intangible Assets (Schedule of Intangible Assets Including Estimates of Assets Acquired) (Detail) (USD $) | Oct. 31, 2014 | Jan. 31, 2014 |
In Millions, unless otherwise specified | ||
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Gross carrying value | $122 | $163 |
Accumulated amortization | -96 | -84 |
Net carrying value | 26 | 79 |
Indefinite-lived intangible assets | 13 | 14 |
Total intangible asset, gross | 135 | 177 |
Total intangible assets, Net carrying value | 39 | 93 |
In-Process Research And Development | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Indefinite-lived intangible assets | 9 | 10 |
Trade Names | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Indefinite-lived intangible assets | 4 | 4 |
Customer Relationships | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Gross carrying value | 70 | 94 |
Accumulated amortization | -56 | -47 |
Net carrying value | 14 | 47 |
Software and Technology | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Gross carrying value | 52 | 65 |
Accumulated amortization | -40 | -36 |
Net carrying value | 12 | 29 |
Other | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Gross carrying value | 0 | 4 |
Accumulated amortization | 0 | -1 |
Net carrying value | $0 | $3 |
Goodwill_and_Intangible_Assets4
Goodwill and Intangible Assets (Schedule of Amortization Expense for Finite-Lived Intangible Assets) (Detail) (USD $) | Oct. 31, 2014 | Jan. 31, 2014 |
In Millions, unless otherwise specified | ||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ' |
2015 (remainder of the fiscal year) | $2 | ' |
2016 | 8 | ' |
2017 | 7 | ' |
2018 | 5 | ' |
2019 | 3 | ' |
2020 and thereafter | 1 | ' |
Net carrying value | $26 | $79 |
Goodwill_and_Intangible_Assets5
Goodwill and Intangible Assets (Additional Information) (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 3 Months Ended | |||||||||||||||||||
In Millions, unless otherwise specified | Oct. 31, 2014 | Aug. 01, 2014 | Nov. 01, 2013 | Oct. 31, 2014 | Nov. 01, 2013 | Oct. 31, 2014 | Oct. 31, 2014 | Aug. 01, 2014 | Aug. 01, 2014 | Aug. 01, 2014 | Aug. 01, 2014 | Aug. 01, 2014 | Aug. 01, 2014 | Aug. 01, 2014 | Aug. 01, 2014 | Aug. 01, 2014 | Aug. 01, 2014 | Oct. 31, 2014 | Aug. 02, 2013 | Aug. 01, 2014 | Nov. 01, 2013 | Oct. 31, 2014 |
NSS | HES | Health Solutions | Health Solutions | Engineering | Engineering | Market Approach Valuation Technique | Market Approach Valuation Technique | Market Approach Valuation Technique | Income Approach Valuation Technique | Income Approach Valuation Technique | Income Approach Valuation Technique | Reveal Imaging Technologies, Inc. [Member] | Reveal Imaging Technologies, Inc. [Member] | Vitalize and maxIT [Member] | Vitalize and maxIT [Member] | Plainfield | ||||||
HES | HES | HES | Health Solutions | Engineering | Health Solutions | Engineering | ||||||||||||||||
Goodwill [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
EBITDA multiple used for goodwill impairment test | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 6 | 6.8 | ' | ' | ' | ' | ' | ' | ' | ' |
Revenue multiple used for goodwill impairment test | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.5 | 0.4 | ' | ' | ' | ' | ' | ' | ' | ' |
Control premium | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 20.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Terminal value growth rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3.00% | 2.00% | ' | ' | ' | ' | ' |
WACC | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 12.00% | 14.00% | ' | ' | ' | ' | ' |
Specific company risk premium | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2.00% | ' | ' | ' | ' | ' | ' | ' |
Fair value as percentage of carrying value | ' | ' | ' | ' | ' | ' | ' | 62.00% | ' | 91.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Goodwill impairment charges | $0 | $486 | $0 | $486 | $0 | $0 | $486 | ' | $369 | ' | $117 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amortization expense related to amortizable intangible assets | 3 | ' | 7 | 13 | 29 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Impairment loss for intangible assets | $17 | ' | $19 | $41 | $51 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $14 | $30 | $24 | $19 | $3 |
Derivative_Instruments_and_Hed2
Derivative Instruments and Hedging Activities (Details) (Interest rate swaps, Designated as Hedging Instrument, USD $) | Oct. 31, 2014 | Jan. 31, 2014 |
In Millions, unless otherwise specified | ||
Notes payable and long-term debt, net of current portion | ' | ' |
Derivative [Line Items] | ' | ' |
Derivative Asset, Fair Value, Gross Liability | $2 | $0 |
Notes payable and long-term debt, net of current portion | Notes Which Mature In December 2020 | ' | ' |
Derivative [Line Items] | ' | ' |
Hedged instrument, face amount | 450 | ' |
Stated interest rate | 4.45% | ' |
Other assets | ' | ' |
Derivative [Line Items] | ' | ' |
Derivative asset | $2 | $0 |
Debt_Additional_Information_De
Debt (Additional Information) (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 3 Months Ended | |||||||
3-May-13 | Oct. 31, 2014 | Aug. 01, 2014 | Oct. 31, 2014 | Oct. 31, 2014 | Jan. 31, 2014 | Oct. 31, 2014 | Oct. 31, 2014 | Jan. 31, 2014 | Oct. 31, 2014 | |
Senior Notes | Notes Which Mature In July 2033 | Notes Which Mature In July 2033 | Notes Which Mature In July 2033 | Notes Which Mature In December 2040 | Notes Which Mature In December 2040 | Notes Which Mature In December 2040 | ||||
Senior Notes | Senior Notes | |||||||||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Senior unsecured notes | ' | ' | ' | ' | $201,000,000 | $296,000,000 | ' | $291,000,000 | $300,000,000 | ' |
Fair value adjustment | ' | 2,000,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Debt Instrument, Repurchase Amount | ' | ' | ' | ' | ' | ' | 96,000,000 | ' | ' | 9,000,000 |
Repurchase and retirement of long term debt | ' | ' | ' | 102,000,000 | ' | ' | ' | ' | ' | ' |
Unsecured borrowing capacity | ' | 500,000,000 | 750,000,000 | ' | ' | ' | ' | ' | ' | ' |
Extended maturity date of revolving credit facility | 1-Mar-17 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Ratio of consolidated funded debt to EBITDA, numerator, maximum, until Jan 29, 2016 | ' | 4 | ' | ' | ' | ' | ' | ' | ' | ' |
Revolving credit facility financial covenants description | ' | 'For a period of four trailing fiscal quarters, the Company maintains a ratio of consolidated funded debt, including borrowings under this facility, to EBITDA adjusted for other items as defined in the credit facility of not more than 4.0 to 1.0 until no later than January 29, 2016 and 3.75 to 1.0 thereafter, and a ratio of EBITDA adjusted for other items as defined in the credit facility to interest expense of greater than 3.5 to 1.0. | ' | ' | ' | ' | ' | ' | ' | ' |
Ratio of consolidated funded debt to EBITDA, numerator, maximum | ' | 3.75 | ' | ' | ' | ' | ' | ' | ' | ' |
Ratio of consolidated funded debt to EBITDA, denominator, maximum | ' | 1 | ' | ' | ' | ' | ' | ' | ' | ' |
Minimum ratio of EBITDA to interest expense, numerator | ' | 3.5 | ' | ' | ' | ' | ' | ' | ' | ' |
Minimum ratio of EBITDA to interest expense, denominator | ' | 1 | ' | ' | ' | ' | ' | ' | ' | ' |
Available borrowing capacity | ' | $500,000,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Debt_Schedule_of_Notes_Payable
Debt (Schedule of Notes Payable and Long-Term Debt) (Detail) (USD $) | 9 Months Ended | |
In Millions, unless otherwise specified | Oct. 31, 2014 | Jan. 31, 2014 |
Debt Instrument [Line Items] | ' | ' |
Total notes payable and long-term debt | $1,229 | $1,333 |
Less current portion | 2 | 2 |
Total notes payable and long-term debt, net of current portion | 1,227 | 1,331 |
Fair value of notes payable and long-term debt | 1,228 | 1,350 |
Notes Which Mature In December 2020 | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Senior unsecured notes | 451 | 449 |
Stated interest rate | 4.45% | ' |
Effective interest rate | 4.53% | ' |
Notes Which Mature In December 2040 | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Senior unsecured notes | 291 | 300 |
Stated interest rate | 5.95% | ' |
Effective interest rate | 6.03% | ' |
Notes Which Mature In July 2032 | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Senior unsecured notes | 248 | 248 |
Stated interest rate | 7.13% | ' |
Effective interest rate | 7.43% | ' |
Notes Which Mature In July 2033 | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Senior unsecured notes | 201 | 296 |
Stated interest rate | 5.50% | ' |
Effective interest rate | 5.83% | ' |
Capital leases and other notes payable due on various dates through fiscal 2021 | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Other notes payable due on various dates through fiscal 2021 | $38 | $40 |
Minimum stated interest rate | 0.00% | ' |
Maximum stated interest rate | 3.70% | ' |
Debt_Schedule_of_Notes_Payable1
Debt (Schedule of Notes Payable and Long-Term Debt) (Parenthetical) (Detail) (USD $) | 9 Months Ended |
Oct. 31, 2014 | |
Notes Which Mature In December 2020 | ' |
Debt Instrument [Line Items] | ' |
Senior unsecured notes, face amount | $450,000,000 |
Debt maturity date | 1-Dec-20 |
Notes Which Mature In December 2040 | ' |
Debt Instrument [Line Items] | ' |
Senior unsecured notes, face amount | 300,000,000 |
Debt maturity date | 1-Dec-40 |
Notes Which Mature In July 2032 | ' |
Debt Instrument [Line Items] | ' |
Senior unsecured notes, face amount | 250,000,000 |
Debt maturity date | 1-Jul-32 |
Notes Which Mature In July 2033 | ' |
Debt Instrument [Line Items] | ' |
Senior unsecured notes, face amount | $300,000,000 |
Debt maturity date | 1-Jul-33 |
Related_Party_Transactions_Add
Related Party Transactions (Additional Information) (Detail) (USD $) | 9 Months Ended | 0 Months Ended | |||||
Oct. 31, 2014 | Oct. 31, 2014 | Oct. 31, 2014 | Oct. 31, 2014 | Oct. 31, 2014 | Oct. 31, 2014 | Sep. 26, 2013 | |
Leidos Holdings Inc, | Notes Which Mature In December 2020 | Notes Which Mature In December 2040 | Notes Which Mature In July 2033 | Notes Which Mature In July 2032 | SAIC | ||
Leidos Holdings Inc, | |||||||
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Notes payable | ' | ' | $450,000,000 | $300,000,000 | $300,000,000 | $250,000,000 | ' |
Stated interest rate | ' | ' | 4.45% | 5.95% | 5.50% | 7.13% | ' |
Credit facility, maturity date | '2018 | ' | ' | ' | ' | ' | ' |
Notes receivable | ' | 1,400,000,000 | ' | ' | ' | ' | ' |
Distribution upon separation | ' | ' | ' | ' | ' | ' | $736,000,000 |
Accumulated_Other_Comprehensiv2
Accumulated Other Comprehensive Loss (Schedule of Accumulated Other Comprehensive Loss) (Detail) (USD $) | Oct. 31, 2014 | Jan. 31, 2014 |
In Millions, unless otherwise specified | ||
Accumulated Other Comprehensive Loss [Abstract] | ' | ' |
Foreign currency translation adjustments, net of taxes of $(1) million as of October 31, 2014 and January 31, 2014 | $2 | $2 |
Unrecognized net loss on settled derivative instruments associated with outstanding debt, net of taxes of $3 million as of October 31, 2014 and January 31, 2014 | -5 | -5 |
Unrecognized net loss on defined benefit plan, net of taxes of $2 million as of October 31, 2014 and January 31, 2014 | -3 | -3 |
Total accumulated other comprehensive loss, net of taxes of $4 million as of October 31, 2014 and January 31, 2014 | ($6) | ($6) |
Accumulated_Other_Comprehensiv3
Accumulated Other Comprehensive Loss (Schedule of Accumulated Other Comprehensive Loss) (Parenthetical) (Detail) (USD $) | Oct. 31, 2014 | Jan. 31, 2014 |
In Millions, unless otherwise specified | ||
Equity [Abstract] | ' | ' |
Foreign currency translation adjustments, tax effect | ($1) | ($1) |
Unrecognized net loss on settled derivative instruments associated with outstanding debt, tax effect | 3 | 3 |
Unrecognized net loss on defined benefit plan, taxes | 2 | 2 |
Total accumulated other comprehensive loss, tax effect | $4 | $4 |
Earnings_Loss_Per_Share_EPS_Re
Earnings (Loss) Per Share (EPS) (Reconciliation of Income used in Calculating Earnings per Share) (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Oct. 31, 2014 | Nov. 01, 2013 | Oct. 31, 2014 | Nov. 01, 2013 |
Basic EPS: | ' | ' | ' | ' |
Income (loss) from continuing operations, as reported | $38 | ($8) | ($356) | $37 |
Less: allocation of distributed and undistributed earnings to participating securities | 0 | 0 | 0 | -3 |
Income (loss) from continuing operations, for computing basic EPS | 38 | -8 | -356 | 34 |
Net income, as reported | 34 | -3 | -367 | 120 |
Net income, for computing basic EPS | 34 | -3 | -367 | 117 |
Diluted EPS: | ' | ' | ' | ' |
Income (loss) from continuing operations, as reported | 38 | -8 | -356 | 37 |
Less: allocation of distributed and undistributed earnings to participating securities | 0 | 0 | 0 | -3 |
Income (loss) from continuing operations, for computing diluted EPS | 38 | -8 | -356 | 34 |
Net income, as reported | 34 | -3 | -367 | 120 |
Net income, for computing diluted EPS | $34 | ($3) | ($367) | $117 |
Earnings_Loss_Per_Share_EPS_Re1
Earnings (Loss) Per Share (EPS) (Reconciliation of Weighted Average Number of Shares Outstanding) (Detail) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Oct. 31, 2014 | Nov. 01, 2013 | Oct. 31, 2014 | Nov. 01, 2013 |
Earnings Per Share [Abstract] | ' | ' | ' | ' |
Basic weighted average number of shares outstanding | 73 | 84 | 75 | 84 |
Dilutive common share equivalents-stock options and other stock awards | 1 | 0 | 0 | 0 |
Diluted weighted average number of shares outstanding | 74 | 84 | 75 | 84 |
Earnings_Loss_Per_Share_EPS_Sc
Earnings (Loss) Per Share (EPS) (Schedule of Stock-Based Awards Excluded from Weighted Average Shares Outstanding) (Detail) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Oct. 31, 2014 | Nov. 01, 2013 | Oct. 31, 2014 | Nov. 01, 2013 |
Stock Options | ' | ' | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' | ' |
Antidilutive stock based awards | 2 | 5 | 4 | 5 |
Vesting Stock Awards | ' | ' | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' | ' |
Antidilutive stock based awards | 0 | 3 | 3 | 3 |
Earnings_Loss_Per_Share_EPS_Sh
Earnings (Loss) Per Share (EPS) (Shares Repurchase Program) (Details) (USD $) | 9 Months Ended | 1 Months Ended | 3 Months Ended | 1 Months Ended | 3 Months Ended | |||
Share data in Millions, unless otherwise specified | Oct. 31, 2014 | Nov. 01, 2013 | Dec. 31, 2013 | 2-May-14 | Jan. 31, 2014 | Mar. 31, 2014 | Aug. 01, 2014 | 2-May-14 |
Accelerated Share Repurchase | Accelerated Share Repurchase | Accelerated Share Repurchase | Second Accelerated Share Repurchase | Second Accelerated Share Repurchase | Second Accelerated Share Repurchase | |||
Accelerated Share Repurchases [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' |
Aggregate purchase price | ' | ' | $300,000,000 | ' | ' | $200,000,000 | ' | ' |
Repurchases of stock | 213,000,000 | 17,000,000 | ' | ' | 300,000,000 | ' | ' | 200,000,000 |
Shares repurchased and retired | 6.3 | ' | ' | 1 | 5.6 | ' | 0.8 | 4.5 |
Value of initial shares repurchased | ' | ' | ' | $45,000,000 | $255,000,000 | ' | $32,000,000 | $168,000,000 |
Schedule_of_StockBased_Compens
Schedule of Stock-Based Compensation and Related Tax Benefits Recognized (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Oct. 31, 2014 | Nov. 01, 2013 | Oct. 31, 2014 | Nov. 01, 2013 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Tax benefits recognized from stock-based compensation | $4 | $5 | $13 | $17 |
Continuing Operations | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Total stock-based compensation expense recorded in continuing operations | 10 | 14 | 33 | 44 |
Continuing Operations | Stock Options | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Total stock-based compensation expense recorded in continuing operations | 1 | 4 | 4 | 9 |
Continuing Operations | Vesting Stock Awards | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Total stock-based compensation expense recorded in continuing operations | 9 | 10 | 27 | 35 |
Continuing Operations | Vested Stock Awards | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Total stock-based compensation expense recorded in continuing operations | 0 | 0 | 2 | 0 |
Discontinued Operations | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Total stock-based compensation expense recorded in continuing operations | $0 | $6 | $0 | $21 |
StockBased_Compensation_Additi
Stock-Based Compensation - Additional Information (Detail) (USD $) | 0 Months Ended | 1 Months Ended | 8 Months Ended | 9 Months Ended | 9 Months Ended | 9 Months Ended | |||||||||||||
In Millions, except Share data, unless otherwise specified | Jun. 14, 2013 | Nov. 01, 2013 | Sep. 27, 2013 | Oct. 31, 2014 | Nov. 01, 2013 | Mar. 31, 2013 | Oct. 31, 2014 | Nov. 01, 2013 | Oct. 31, 2014 | Nov. 01, 2013 | Oct. 31, 2014 | Oct. 31, 2014 | Nov. 01, 2013 | Jan. 31, 2014 | Oct. 31, 2014 | Oct. 31, 2014 | Oct. 31, 2014 | Sep. 19, 2013 | Sep. 19, 2013 |
Stock Options | Stock Options | Performance-Based Stock Awards | Performance-Based Stock Awards | Vesting Stock Awards | Outside Directors | Outside Directors | 2006 Equity Incentive Plan | 2015 Equity Incentive Plan | Group One | Group Two | SAIC | SAIC | |||||||
2006 Equity Incentive Plan | 2006 Equity Incentive Plan | Stock Options | |||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock issued to Leidos shareholder upon divestiture of SAIC, ratio | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.4285 | 1.4523 |
Percentage of stock awards vest or exercisable after one year | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 20.00% | 25.00% | ' | ' | ' | ' |
Percentage of stock awards vest or exercisable after two years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 25.00% | ' | ' | ' | ' |
Percentage of stock awards vest or exercisable after three years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 25.00% | ' | ' | ' | ' |
Percentage of stock awards vest or exercisable after four years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 40.00% | 25.00% | ' | ' | ' | ' |
Vesting period | ' | ' | ' | '3 years | ' | ' | '4 years | '4 years | '3 years | ' | '4 years | '1 year | '1 year | ' | ' | '4 years | '7 years | ' | ' |
Expected term | ' | '5 years | '5 years | '4 years 8 months 12 days | ' | ' | '7 years | '7 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Special cash dividends per share | ' | ' | ' | ' | ' | $4 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Payments of special dividend, aggregate | $342 | ' | ' | $72 | $452 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unvested stock option not recognized | ' | ' | ' | ' | ' | ' | $7 | ' | $1 | ' | $55 | ' | ' | ' | ' | ' | ' | ' | ' |
Unvested stock option not recognized, period for recognition | ' | ' | ' | ' | ' | ' | '1 year 7 months 6 days | ' | '2 years | ' | '1 year 8 months 12 days | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum percentage that will ultimately be awarded | ' | ' | ' | 150.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Grants during the period (shares) | ' | ' | ' | ' | ' | ' | ' | ' | 50,000 | 0 | 700,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted average grant date fair value (usd per share) | ' | ' | ' | ' | ' | ' | ' | ' | $36.88 | ' | $36.92 | ' | ' | ' | ' | ' | ' | ' | ' |
Performance period | ' | ' | ' | ' | ' | ' | ' | ' | '3 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
StockBased_Compensation_Schedu
Stock-Based Compensation (Schedule of Weighted Average Grant-Date Fair Value and Assumptions Used) (Detail) (USD $) | 1 Months Ended | 8 Months Ended | 9 Months Ended |
In Millions, except Per Share data, unless otherwise specified | Nov. 01, 2013 | Sep. 27, 2013 | Oct. 31, 2014 |
Stock-Based Compensation [Abstract] | ' | ' | ' |
Options granted (in millions) | 0.1 | 1.4 | 0.6 |
Weighted average grant-date fair value ( usd per share) | $9.48 | $6.96 | $6.14 |
Expected term (in years) | '5 years | '5 years | '4 years 8 months 12 days |
Expected volatility | 30.00% | 25.00% | 25.10% |
Risk-free interest rate | 1.40% | 0.80% | 1.60% |
Dividend yield | 2.80% | 3.80% | 2.90% |
Schedule_of_Segment_Reporting_
Schedule of Segment Reporting Information by Segment (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Oct. 31, 2014 | Nov. 01, 2013 | Oct. 31, 2014 | Nov. 01, 2013 |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Revenues | $1,276 | $1,414 | $3,894 | $4,464 |
Operating income (loss) | 72 | -5 | -251 | 82 |
Segments | National Security Solutions | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Revenues | 906 | 1,011 | 2,775 | 3,107 |
Operating income (loss) | 72 | 66 | 227 | 209 |
Segments | Health and Engineering | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Revenues | 373 | 406 | 1,126 | 1,368 |
Operating income (loss) | 4 | -30 | -455 | 2 |
Segments | Corporate and Other | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Revenues | -3 | -2 | -7 | -8 |
Operating income (loss) | -4 | -41 | -23 | -129 |
Intersegment Elimination | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' |
Revenues | $0 | ($1) | $0 | ($3) |
Legal_Proceedings_Additional_I
Legal Proceedings - Additional Information (Detail) (USD $) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 1 Months Ended | |||||||||||||
Aug. 31, 2012 | Jul. 31, 2008 | Mar. 31, 2012 | Sep. 30, 2004 | Apr. 30, 2011 | Oct. 31, 2014 | Apr. 30, 2012 | Oct. 31, 2014 | Jul. 31, 2013 | Nov. 30, 2008 | Oct. 31, 2014 | Oct. 31, 2014 | Oct. 31, 2014 | Oct. 31, 2014 | Oct. 31, 2014 | Oct. 31, 2008 | Jul. 31, 2008 | Jun. 30, 2014 | 31-May-14 | |
LegalMatter | Timekeeping Contract with City of New York | Stockholder Derivative Cases | Stockholder Derivative Cases | Demand Letter for CityTime | Securities Class Actions | Greek Government Contract | Greek Government Contract | Greek Government Contract | Greek Government Contract | Greek Government Contract | Greek Government Contract | Greek Government Contract | Nuclear Regulatory Commission | Nuclear Regulatory Commission | Nuclear Regulatory Commission | Data Privacy Litigation | Data Privacy Litigation | ||
LegalMatter | LegalMatter | LegalMatter | executive | Invoice for Undisputed Portion of Contract | Value Added Taxes | Letters of Credit Relating to Delivery | Standby Letters of Credit | Letters of Credit Related System Support and Maintenance | False Claims Act Claims | False Claims Act Claims | False Claims Act Claims | plaintiff | plaintiff | ||||||
LegalMatter | Letters of Credit Relating to Delivery | ||||||||||||||||||
Legal Proceedings [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash settlement payment | ' | ' | $500,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $2,000,000 | ' | ' | ' | ' |
Period to dismiss criminal count (in years) | ' | ' | '3 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Term of administrative agreement (in years) | '5 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
DPA provides that the monitor will serve for a period (in years) | '3 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of plaintiffs | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2 | 2 |
Number of lawsuits | ' | ' | ' | ' | 6 | ' | 3 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of lawsuits, withdrawn | ' | ' | ' | 2 | 2 | 1 | 1 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of false claims | ' | 2 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of cases reviewed by the board | ' | ' | ' | ' | ' | 4 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of lawsuits, consolidated | ' | ' | ' | ' | 4 | 4 | 2 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of former Chief Executive Officers | ' | ' | ' | ' | ' | ' | 2 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Contracts receivable | ' | ' | ' | ' | ' | ' | ' | ' | ' | 17,000,000 | 32,000,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Arbitral award | ' | ' | ' | ' | ' | ' | ' | 24,000,000 | 49,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Recorded losses | ' | ' | ' | ' | ' | ' | ' | 123,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Receivables relating to value added taxes | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 14,000,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Amount outstanding | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,000,000 | ' | ' | ' | ' | ' |
Letter of credit available to the company | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 18,000,000 | 20,000,000 | ' | ' | ' | ' | ' | ' |
Judgment rescinded on appeal | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 585,000 | 2,000,000 | ' | ' |
Total damage | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $7,000,000 | ' | ' | ' |
Other_Commitments_and_Continge1
Other Commitments and Contingencies - Additional Information (Detail) (USD $) | 1 Months Ended | 8 Months Ended | 9 Months Ended | 1 Months Ended | 8 Months Ended | ||||
In Millions, unless otherwise specified | Nov. 30, 2012 | Sep. 27, 2013 | Nov. 01, 2013 | Oct. 31, 2014 | Oct. 31, 2014 | Oct. 31, 2014 | Oct. 31, 2014 | Nov. 30, 2012 | Sep. 27, 2013 |
Government Investigations And Reviews | Government Investigations And Reviews | Government Investigations And Reviews | Tax Audits And Reviews | Standby Letters of Credit | Performance Guarantee | Virnet X Inc | SAIC | ||
patents | Government Investigations And Reviews | ||||||||
Other Commitments And Contingencies [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of patents infringed | ' | ' | ' | ' | ' | ' | ' | 2 | ' |
Patents transferred and awarded | ' | ' | ' | ' | ' | ' | ' | $368 | ' |
Percentage of proceeds obtained | 25.00% | ' | ' | ' | ' | ' | ' | ' | ' |
Liability for estimate of loss | ' | 27 | 45 | ' | ' | ' | ' | ' | 18 |
Loss contingency accrual | ' | ' | ' | 29 | ' | ' | ' | ' | ' |
Liabilities for uncertain tax positions | ' | ' | ' | ' | 10 | ' | ' | ' | ' |
Other long-term liabilities | ' | ' | ' | ' | 6 | ' | ' | ' | ' |
Unrecognized tax benefits | ' | ' | ' | ' | 4 | ' | ' | ' | ' |
Amount outstanding | ' | ' | ' | ' | ' | 55 | ' | ' | ' |
Surety bonds | ' | ' | ' | ' | ' | ' | $135 | ' | ' |