Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Apr. 03, 2015 | 4-May-15 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 3-Apr-15 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | LDOS | |
Entity Registrant Name | Leidos Holdings, Inc. | |
Entity Central Index Key | 1336920 | |
Current Fiscal Year End Date | -1 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 74,390,525 | |
Leidos, Inc. | ||
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 3-Apr-15 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | Leidos, Inc. | |
Entity Central Index Key | 353394 | |
Current Fiscal Year End Date | -1 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 5,000 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Apr. 03, 2015 | Jan. 30, 2015 |
In Millions, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $377 | $443 |
Receivables, net | 977 | 896 |
Inventory, prepaid expenses and other current assets | 297 | 273 |
Assets of discontinued operations | 0 | 6 |
Total current assets | 1,651 | 1,618 |
Property, plant and equipment (less accumulated depreciation and amortization of $324 million and $313 million at April 3, 2015 and January 30, 2015, respectively) | 308 | 308 |
Intangible assets, net | 35 | 37 |
Goodwill | 1,207 | 1,207 |
Deferred income taxes | 13 | 14 |
Other assets | 95 | 97 |
Total assets | 3,309 | 3,281 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 745 | 675 |
Accrued payroll and employee benefits | 237 | 264 |
Notes payable and long-term debt, current portion | 2 | 2 |
Liabilities of discontinued operations | 3 | 10 |
Total current liabilities | 987 | 951 |
Notes payable and long-term debt, net of current portion | 1,156 | 1,164 |
Other long-term liabilities | 166 | 168 |
Commitments and contingencies (Notes 10 and 11) | ||
Stockholders' equity: | ||
Preferred stock, $.0001 par value, 10 million shares authorized and no shares issued and outstanding at April 3, 2015 and January 30, 2015 | 0 | 0 |
Common stock | 0 | 0 |
Additional paid-in capital | 1,431 | 1,433 |
Accumulated deficit | -419 | -424 |
Accumulated other comprehensive loss | -12 | -11 |
Total stockholders’ equity | 1,000 | 998 |
Total liabilities and stockholders' equity | 3,309 | 3,281 |
Leidos, Inc. | ||
Current assets: | ||
Cash and cash equivalents | 377 | 443 |
Receivables, net | 977 | 896 |
Inventory, prepaid expenses and other current assets | 297 | 273 |
Assets of discontinued operations | 0 | 6 |
Total current assets | 1,651 | 1,618 |
Property, plant and equipment (less accumulated depreciation and amortization of $324 million and $313 million at April 3, 2015 and January 30, 2015, respectively) | 308 | 308 |
Intangible assets, net | 35 | 37 |
Goodwill | 1,207 | 1,207 |
Deferred income taxes | 13 | 14 |
Other assets | 95 | 97 |
Note receivable from Leidos Holdings, Inc. | 1,440 | 1,412 |
Total assets | 4,749 | 4,693 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 745 | 675 |
Accrued payroll and employee benefits | 237 | 264 |
Notes payable and long-term debt, current portion | 2 | 2 |
Liabilities of discontinued operations | 3 | 10 |
Total current liabilities | 987 | 951 |
Notes payable and long-term debt, net of current portion | 1,156 | 1,164 |
Other long-term liabilities | 166 | 168 |
Commitments and contingencies (Notes 10 and 11) | ||
Stockholders' equity: | ||
Common stock | 0 | 0 |
Additional paid-in capital | 207 | 207 |
Accumulated deficit | 2,245 | 2,214 |
Accumulated other comprehensive loss | -12 | -11 |
Total stockholders’ equity | 2,440 | 2,410 |
Total liabilities and stockholders' equity | $4,749 | $4,693 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Apr. 03, 2015 | Jan. 30, 2015 |
In Millions, except Share data, unless otherwise specified | ||
Property, plant and equipment, accumulated depreciation and amortization | $324 | $313 |
Preferred Stock, Par or Stated Value Per Share (dollar 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 (dollar 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 (dollar 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 | |
In Millions, except Per Share data, unless otherwise specified | Apr. 03, 2015 | 2-May-14 |
Revenues | $1,246 | $1,312 |
Costs and expenses: | ||
Cost of revenues | 1,093 | 1,141 |
Selling, general and administrative expenses | 75 | 84 |
Asset impairment charges | 40 | 0 |
Operating income | 38 | 87 |
Non-operating income (expense): | ||
Interest expense, net | -14 | -20 |
Other (expense) income, net | -1 | 2 |
Income from continuing operations before income taxes | 23 | 69 |
Income tax expense | 0 | -24 |
Income from continuing operations | 23 | 45 |
Discontinued operations: | ||
Income (loss) from discontinued operations before income taxes | 0 | -13 |
Income tax benefit | 18 | 5 |
Income (loss) from discontinued operations | 18 | -8 |
Net income | 41 | 37 |
Basic: | ||
Income (loss) from continuing operations (dollar per share) | $0.32 | $0.58 |
(Loss) income from discontinued operations (dollar per share) | $0.24 | ($0.10) |
Basic earnings per share (dollar per share) | $0.56 | $0.48 |
Diluted: | ||
Income (loss) from continuing operations (dollar per share) | $0.31 | $0.57 |
(Loss) income from discontinued operations (dollar per share) | $0.24 | ($0.10) |
Diluted earnings per share (dollar per share) | $0.55 | $0.47 |
Basic weighted average number of shares outstanding (shares) | 73 | 77 |
Diluted weighted average number of shares outstanding (shares) | 75 | 78 |
Cash dividends declared per share (dollars per share) | $0.32 | $0.32 |
Leidos, Inc. | ||
Revenues | 1,246 | 1,312 |
Costs and expenses: | ||
Cost of revenues | 1,093 | 1,141 |
Selling, general and administrative expenses | 75 | 84 |
Asset impairment charges | 40 | 0 |
Operating income | 38 | 87 |
Non-operating income (expense): | ||
Interest expense, net | -11 | -18 |
Other (expense) income, net | -1 | 2 |
Income from continuing operations before income taxes | 26 | 71 |
Income tax expense | -1 | -25 |
Income from continuing operations | 25 | 46 |
Discontinued operations: | ||
Income (loss) from discontinued operations before income taxes | 0 | -13 |
Income tax benefit | 18 | 5 |
Income (loss) from discontinued operations | 18 | -8 |
Net income | $43 | $38 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Comprehensive Income (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Apr. 03, 2015 | 2-May-14 |
Net income | $41 | $37 |
Foreign currency translation adjustments | -2 | 0 |
Deferred taxes | 1 | 0 |
Foreign currency translation adjustments, net of tax | -1 | 0 |
Pension liability adjustments, net of tax | -1 | 0 |
Total other comprehensive (loss) income, net of tax | -2 | 0 |
Comprehensive income | 39 | 37 |
Leidos, Inc. | ||
Net income | 43 | 38 |
Foreign currency translation adjustments | -2 | 0 |
Deferred taxes | 1 | 0 |
Foreign currency translation adjustments, net of tax | -1 | 0 |
Pension liability adjustments, net of tax | -1 | 0 |
Total other comprehensive (loss) income, net of tax | -2 | 0 |
Comprehensive income | $41 | $38 |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |
Apr. 03, 2015 | 2-May-14 | |
Cash flows from operations: | ||
Net income | $41,000,000 | $37,000,000 |
(Income) loss from discontinued operations | -18,000,000 | 8,000,000 |
Adjustments to reconcile net income to net cash provided by operations: | ||
Depreciation and amortization | 12,000,000 | 18,000,000 |
Stock-based compensation | 6,000,000 | 11,000,000 |
Asset impairment charges | 40,000,000 | 0 |
Other | -1,000,000 | -1,000,000 |
Change in assets and liabilities, net of effects of acquisitions and dispositions: | ||
Receivables | 17,000,000 | -48,000,000 |
Inventory, prepaid expenses and other current assets | -29,000,000 | -36,000,000 |
Deferred income taxes | 23,000,000 | 0 |
Accounts payable and accrued liabilities | 30,000,000 | 22,000,000 |
Accrued payroll and employee benefits | -59,000,000 | -32,000,000 |
Income taxes receivable/payable | -98,000,000 | 14,000,000 |
Other long-term assets / liabilities | -6,000,000 | -2,000,000 |
Total cash flows used in operating activities of continuing operations | -42,000,000 | -9,000,000 |
Cash flows from investing activities: | ||
Expenditures for property, plant and equipment | -3,000,000 | -10,000,000 |
Other | 1,000,000 | 0 |
Total cash flows used in investing activities of continuing operations | -2,000,000 | -10,000,000 |
Cash flows from financing activities: | ||
Payments of notes payable and long-term debt | -29,000,000 | 0 |
Sales of stock and exercises of stock options | 1,000,000 | 2,000,000 |
Repurchases of stock and stock received for tax withholdings | -6,000,000 | -212,000,000 |
Dividend payments | -24,000,000 | -24,000,000 |
Other | 1,000,000 | 1,000,000 |
Total cash flows used in financing activities of continuing operations | -57,000,000 | -233,000,000 |
Decrease in cash and cash equivalents from continuing operations | -101,000,000 | -252,000,000 |
Cash flows from discontinued operations: | ||
Cash provided by operating activities of discontinued operations | 13,000,000 | 5,000,000 |
Cash provided by investing activities of discontinued operations | 6,000,000 | 0 |
Increase in cash and cash equivalents from discontinued operations | 19,000,000 | 5,000,000 |
Increase in cash and cash equivalents from discontinued operations | -82,000,000 | -247,000,000 |
Cash and Cash Equivalents, at Carrying Value, Including Discontinued Operations | 377,000,000 | 183,000,000 |
Leidos, Inc. | ||
Cash flows from operations: | ||
Net income | 43,000,000 | 38,000,000 |
(Income) loss from discontinued operations | -18,000,000 | 8,000,000 |
Adjustments to reconcile net income to net cash provided by operations: | ||
Depreciation and amortization | 12,000,000 | 18,000,000 |
Stock-based compensation | 6,000,000 | 11,000,000 |
Asset impairment charges | 40,000,000 | 0 |
Other | -3,000,000 | -2,000,000 |
Change in assets and liabilities, net of effects of acquisitions and dispositions: | ||
Receivables | 17,000,000 | -48,000,000 |
Inventory, prepaid expenses and other current assets | -29,000,000 | -36,000,000 |
Deferred income taxes | 23,000,000 | 0 |
Accounts payable and accrued liabilities | 30,000,000 | 22,000,000 |
Accrued payroll and employee benefits | -59,000,000 | -32,000,000 |
Income taxes receivable/payable | -98,000,000 | 14,000,000 |
Other long-term assets / liabilities | -6,000,000 | -2,000,000 |
Total cash flows used in operating activities of continuing operations | -42,000,000 | -9,000,000 |
Cash flows from investing activities: | ||
Proceeds on obligations of Leidos Holdings, Inc. | 15,000,000 | 3,000,000 |
Payments on obligations of Leidos Holdings, Inc. | -43,000,000 | -237,000,000 |
Expenditures for property, plant and equipment | -3,000,000 | -10,000,000 |
Other | 1,000,000 | 0 |
Total cash flows used in investing activities of continuing operations | -30,000,000 | -244,000,000 |
Cash flows from financing activities: | ||
Payments of notes payable and long-term debt | -29,000,000 | 0 |
Other | 0 | 1,000,000 |
Total cash flows used in financing activities of continuing operations | -29,000,000 | 1,000,000 |
Decrease in cash and cash equivalents from continuing operations | -101,000,000 | -252,000,000 |
Cash flows from discontinued operations: | ||
Cash provided by operating activities of discontinued operations | 13,000,000 | 5,000,000 |
Cash provided by investing activities of discontinued operations | 6,000,000 | 0 |
Increase in cash and cash equivalents from discontinued operations | 19,000,000 | 5,000,000 |
Increase in cash and cash equivalents from discontinued operations | -82,000,000 | -247,000,000 |
Cash and Cash Equivalents, at Carrying Value, Including Discontinued Operations | $377,000,000 | $183,000,000 |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 3 Months Ended | |||||||
Apr. 03, 2015 | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
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., an applied technology company focused on delivering solutions and services that leverage expertise in the national security, health and engineering markets. Leidos, Inc. provides these solutions and services to government and commercial customers, both domestically and internationally. These customers include agencies of the U.S. Department of Defense ("DoD"), the intelligence community, the U.S. Department of Homeland Security ("DHS"), and other U.S. Government civil agencies, state and local government agencies and foreign governments. Unless indicated otherwise, references to the "Company," "we," "us" and "our" refer collectively to Leidos Holdings, Inc., Leidos, Inc., and its consolidated subsidiaries. | ||||||||
The unaudited condensed consolidated financial statements of Leidos include the accounts of its majority-owned and 100%-owned subsidiaries, including Leidos, Inc. The unaudited 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 stockholders' equity in Leidos’ condensed consolidated balance sheets and results in an increase to the related party note. All intercompany transactions and accounts have been eliminated in consolidation. | ||||||||
The accompanying unaudited condensed financial information has been prepared in accordance with the rules 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. 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; however, actual results could differ materially from those estimates. | ||||||||
In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which consist of normal recurring adjustments, necessary for a fair presentation thereof. The results reported in these unaudited condensed consolidated financial statements are not necessarily indicative of the results that may be expected for the entire year. These unaudited 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. | ||||||||
Fiscal Year End Change | ||||||||
On March 20, 2015, the Board of Directors of the Company approved the amendment and restatement of the bylaws of the Company to change both Leidos' and Leidos, Inc.'s year end from the Friday nearest the end of January to the Friday nearest the end of December. | ||||||||
As a result of this change, the Company will file its Annual Report on Form 10-K, which will cover the 11 month period ending on January 1, 2016, as its transition report. This change does not impact the Company's prior year, which ended January 30, 2015. | ||||||||
In order to allow an immediate transition to the new calendar and to maintain transparency and comparability of financial information included in the Company's quarterly Form 10-Q filings, the quarterly information in this Form 10-Q is being presented on a three month basis for the current year which includes the last month of the year ended January 30, 2015. Therefore, the condensed consolidated statements of income and comprehensive income and the condensed consolidated statements of cash flows reflect the results for the three month period ended April 3, 2015. | ||||||||
The Company's business is primarily driven by productive hours and time sold in relation to the solutions and services provided to its customers, as such the productive hours and time sold do not vary materially quarter over quarter. Therefore, the Company does not believe that the change in its year end has a material effect on the comparability of the prior periods presented. As such, the quarterly periods of the prior year have not been recast to correspond with the new quarterly periods. | ||||||||
The following table shows the periods included in each quarter and year end: | ||||||||
Period | Current year | Prior year | ||||||
First Quarter | January 3, 2015 to April 3, 2015 | February 1, 2014 to May 2, 2014 | ||||||
Second Quarter | April 4, 2015 to July 3, 2015 | May 3, 2014 to August 1, 2014 | ||||||
Third Quarter | July 4, 2015 to October 2, 2015 | August 2, 2014 to October 31, 2014 | ||||||
Year End | January 31, 2015 to January 1, 2016 (transition period) | February 1, 2014 to January 30, 2015 | ||||||
As a result of the overlap of the month of January 2015 between the fourth quarter of the prior year and the first quarter of the current year, $373 million of revenue and $23 million of operating loss from January 2015 is included in the condensed consolidated statements of income and comprehensive income for the three months ended April 3, 2015, which was also included in the Company's results for the year ended January 30, 2015 included in the Company's Form 10-K as filed on March 25, 2015. | ||||||||
In addition, the condensed consolidated statement of cash flows includes an adjustment as a result of the January 2015 overlap described above. The total adjustment was $16 million, primarily due to $47 million of cash used in financing activities, partially offset by cash flows from discontinued operations of $20 million. | ||||||||
Separation Transaction and Restructuring Expenses | ||||||||
During the year ended January 31, 2014, Leidos completed the spin-off of its technical services and enterprise information technology services business. In anticipation of the spin-off, the Company initiated a program to align the Company’s cost structure for post-spin-off and incurred severance and lease termination costs. | ||||||||
For the three months ended April 3, 2015 and May 2, 2014, for continuing operations, the Company incurred approximately $2 million and $1 million, respectively, of lease termination expenses in its Corporate and Other segment related to an adjustment to reserves established in prior years for loss on leases in connection with revised sublease income assumptions. The separation transaction and restructuring expenses are recorded within "Selling, general and administrative expenses" in the Company's condensed consolidated statements of income. The lease termination liability as of April 3, 2015 and January 30, 2015 was $10 million and $11 million, respectively, of which the change reflects cash payments. The Company does not expect to incur significant additional separation transaction and restructuring expenses in the current year related to the spin-off transaction. | ||||||||
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, which include cash equivalents and long-term investments, are reasonable estimates of their related fair values. The carrying value of accounts receivable, accounts payable, and accrued expenses approximate their fair values. The fair value of long-term debt (see Note 5) is determined based on current interest rates available for debt with terms and maturities similar to the Company’s existing debt arrangements (Level 2 inputs). | ||||||||
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. The Company's cash equivalents are recorded at historical cost, which equals fair value based on quoted market prices (Level 1 input). | ||||||||
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 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). At April 3, 2015, the Company did not have any financial assets or liabilities measured at fair value on a recurring basis using Level 2 or Level 3 inputs. | ||||||||
The Company’s non-financial instruments measured at fair value on a non-recurring basis included goodwill, indefinite-lived intangible assets and long-lived tangible assets. The valuation methods used to determine fair value require a significant degree of management judgment to determine the key assumptions, as such the Company generally classifies non-financial instruments as either Level 2 or Level 3 fair value measurements. | ||||||||
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 $4 million and an increase of $0.04 per diluted share for the three months ended April 3, 2015. Aggregate changes in contract estimates resulted in an increase to operating income of $11 million and an increase of $0.09 per diluted share for the three months ended May 2, 2014. | ||||||||
Supplementary Cash Flow Information | ||||||||
Supplementary cash flow information, including non-cash investing and financing activities, for the periods presented was as follows: | ||||||||
Three Months Ended | ||||||||
April 3, | May 2, | |||||||
2015 | 2014 | |||||||
(in millions) | ||||||||
Vested stock issued as settlement of annual bonus accruals | $ | 1 | $ | 1 | ||||
Stock issued in lieu of cash dividends | $ | 1 | $ | 1 | ||||
Accrued dividends declared | $ | 25 | $ | — | ||||
Cash paid for income taxes, net of refunds (including discontinued operations) | $ | 60 | $ | 5 | ||||
Accounting Standards Updates Issued But Not Yet Adopted | ||||||||
In May 2014, the Financial Accounting Standards Board ("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. This ASU will supersede all revenue recognition requirements in Topic 605, Revenue Recognition and industry-specific guidance throughout the Industry Topics of the codification. 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 contract(s) with a customer, 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 (either over time or point in time). 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. In April 2015, the FASB proposed a one-year deferral of the effective date of the ASU to December 15, 2017, with an option to early adopt the standard on the original effective date. Early adoption prior to the original effective date is not permitted. The Company is still evaluating the provisions of ASU 2014-09 and its impact on the Company's condensed consolidated financial position, results of operations, or cash flows. | ||||||||
Various other accounting standards updates were issued but are not effective for the Company until periods subsequent to April 3, 2015. These updates include guidance to eliminate extraordinary items on the statements of income, guidance that changes the evaluation criteria for consolidation, and guidance to present debt issuance cost as a reduction of the related debt liability as opposed to an asset. The Company is still evaluating the guidance or does not expect it to have a material impact on the Company's condensed consolidated financial position, results of operations, or cash flows. | ||||||||
Leidos, Inc. | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
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., an applied technology company focused on delivering solutions and services that leverage expertise in the national security, health and engineering markets. Leidos, Inc. provides these solutions and services to government and commercial customers, both domestically and internationally. These customers include agencies of the U.S. Department of Defense ("DoD"), the intelligence community, the U.S. Department of Homeland Security ("DHS"), and other U.S. Government civil agencies, state and local government agencies and foreign governments. Unless indicated otherwise, references to the "Company," "we," "us" and "our" refer collectively to Leidos Holdings, Inc., Leidos, Inc., and its consolidated subsidiaries. | ||||||||
The unaudited condensed consolidated financial statements of Leidos include the accounts of its majority-owned and 100%-owned subsidiaries, including Leidos, Inc. The unaudited 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 stockholders' equity in Leidos’ condensed consolidated balance sheets and results in an increase to the related party note. All intercompany transactions and accounts have been eliminated in consolidation. | ||||||||
The accompanying unaudited condensed financial information has been prepared in accordance with the rules 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. 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; however, actual results could differ materially from those estimates. | ||||||||
In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which consist of normal recurring adjustments, necessary for a fair presentation thereof. The results reported in these unaudited condensed consolidated financial statements are not necessarily indicative of the results that may be expected for the entire year. These unaudited 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. | ||||||||
Fiscal Year End Change | ||||||||
On March 20, 2015, the Board of Directors of the Company approved the amendment and restatement of the bylaws of the Company to change both Leidos' and Leidos, Inc.'s year end from the Friday nearest the end of January to the Friday nearest the end of December. | ||||||||
As a result of this change, the Company will file its Annual Report on Form 10-K, which will cover the 11 month period ending on January 1, 2016, as its transition report. This change does not impact the Company's prior year, which ended January 30, 2015. | ||||||||
In order to allow an immediate transition to the new calendar and to maintain transparency and comparability of financial information included in the Company's quarterly Form 10-Q filings, the quarterly information in this Form 10-Q is being presented on a three month basis for the current year which includes the last month of the year ended January 30, 2015. Therefore, the condensed consolidated statements of income and comprehensive income and the condensed consolidated statements of cash flows reflect the results for the three month period ended April 3, 2015. | ||||||||
The Company's business is primarily driven by productive hours and time sold in relation to the solutions and services provided to its customers, as such the productive hours and time sold do not vary materially quarter over quarter. Therefore, the Company does not believe that the change in its year end has a material effect on the comparability of the prior periods presented. As such, the quarterly periods of the prior year have not been recast to correspond with the new quarterly periods. | ||||||||
The following table shows the periods included in each quarter and year end: | ||||||||
Period | Current year | Prior year | ||||||
First Quarter | January 3, 2015 to April 3, 2015 | February 1, 2014 to May 2, 2014 | ||||||
Second Quarter | April 4, 2015 to July 3, 2015 | May 3, 2014 to August 1, 2014 | ||||||
Third Quarter | July 4, 2015 to October 2, 2015 | August 2, 2014 to October 31, 2014 | ||||||
Year End | January 31, 2015 to January 1, 2016 (transition period) | February 1, 2014 to January 30, 2015 | ||||||
As a result of the overlap of the month of January 2015 between the fourth quarter of the prior year and the first quarter of the current year, $373 million of revenue and $23 million of operating loss from January 2015 is included in the condensed consolidated statements of income and comprehensive income for the three months ended April 3, 2015, which was also included in the Company's results for the year ended January 30, 2015 included in the Company's Form 10-K as filed on March 25, 2015. | ||||||||
In addition, the condensed consolidated statement of cash flows includes an adjustment as a result of the January 2015 overlap described above. The total adjustment was $16 million, primarily due to $47 million of cash used in financing activities, partially offset by cash flows from discontinued operations of $20 million. | ||||||||
Separation Transaction and Restructuring Expenses | ||||||||
During the year ended January 31, 2014, Leidos completed the spin-off of its technical services and enterprise information technology services business. In anticipation of the spin-off, the Company initiated a program to align the Company’s cost structure for post-spin-off and incurred severance and lease termination costs. | ||||||||
For the three months ended April 3, 2015 and May 2, 2014, for continuing operations, the Company incurred approximately $2 million and $1 million, respectively, of lease termination expenses in its Corporate and Other segment related to an adjustment to reserves established in prior years for loss on leases in connection with revised sublease income assumptions. The separation transaction and restructuring expenses are recorded within "Selling, general and administrative expenses" in the Company's condensed consolidated statements of income. The lease termination liability as of April 3, 2015 and January 30, 2015 was $10 million and $11 million, respectively, of which the change reflects cash payments. The Company does not expect to incur significant additional separation transaction and restructuring expenses in the current year related to the spin-off transaction. | ||||||||
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, which include cash equivalents and long-term investments, are reasonable estimates of their related fair values. The carrying value of accounts receivable, accounts payable, and accrued expenses approximate their fair values. The fair value of long-term debt (see Note 5) is determined based on current interest rates available for debt with terms and maturities similar to the Company’s existing debt arrangements (Level 2 inputs). | ||||||||
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. The Company's cash equivalents are recorded at historical cost, which equals fair value based on quoted market prices (Level 1 input). | ||||||||
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 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). At April 3, 2015, the Company did not have any financial assets or liabilities measured at fair value on a recurring basis using Level 2 or Level 3 inputs. | ||||||||
The Company’s non-financial instruments measured at fair value on a non-recurring basis included goodwill, indefinite-lived intangible assets and long-lived tangible assets. The valuation methods used to determine fair value require a significant degree of management judgment to determine the key assumptions, as such the Company generally classifies non-financial instruments as either Level 2 or Level 3 fair value measurements. | ||||||||
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 $4 million and an increase of $0.04 per diluted share for the three months ended April 3, 2015. Aggregate changes in contract estimates resulted in an increase to operating income of $11 million and an increase of $0.09 per diluted share for the three months ended May 2, 2014. | ||||||||
Supplementary Cash Flow Information | ||||||||
Supplementary cash flow information, including non-cash investing and financing activities, for the periods presented was as follows: | ||||||||
Three Months Ended | ||||||||
April 3, | May 2, | |||||||
2015 | 2014 | |||||||
(in millions) | ||||||||
Vested stock issued as settlement of annual bonus accruals | $ | 1 | $ | 1 | ||||
Stock issued in lieu of cash dividends | $ | 1 | $ | 1 | ||||
Accrued dividends declared | $ | 25 | $ | — | ||||
Cash paid for income taxes, net of refunds (including discontinued operations) | $ | 60 | $ | 5 | ||||
Accounting Standards Updates Issued But Not Yet Adopted | ||||||||
In May 2014, the Financial Accounting Standards Board ("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. This ASU will supersede all revenue recognition requirements in Topic 605, Revenue Recognition and industry-specific guidance throughout the Industry Topics of the codification. 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 contract(s) with a customer, 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 (either over time or point in time). 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. In April 2015, the FASB proposed a one-year deferral of the effective date of the ASU to December 15, 2017, with an option to early adopt the standard on the original effective date. Early adoption prior to the original effective date is not permitted. The Company is still evaluating the provisions of ASU 2014-09 and its impact on the Company's condensed consolidated financial position, results of operations, or cash flows. | ||||||||
Various other accounting standards updates were issued but are not effective for the Company until periods subsequent to April 3, 2015. These updates include guidance to eliminate extraordinary items on the statements of income, guidance that changes the evaluation criteria for consolidation, and guidance to present debt issuance cost as a reduction of the related debt liability as opposed to an asset. The Company is still evaluating the guidance or does not expect it to have a material impact on the Company's condensed consolidated financial position, results of operations, or cash flows. |
Dispositions
Dispositions | 3 Months Ended | |||||||
Apr. 03, 2015 | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Dispositions | Dispositions: | |||||||
Dispositions | ||||||||
Plainfield Renewable Energy Holdings LLC | ||||||||
In October 2013, the Company gained control of 100% of the equity interest in Plainfield Renewable Energy Holdings, LLC ("Plainfield") through the consensual foreclosure agreement which constituted a change in control accounted for as a business combination. Plainfield is a 37.5 megawatt biomass-fueled power plant (the "plant"). | ||||||||
In March 2015, the Company entered into a definitive agreement to sell 100% of the equity membership interest in Plainfield. The Company adjusted the carrying values of Plainfield's assets to their fair values based on the estimated selling price of the business pursuant to the terms of the agreement (Level 1). The carrying value exceeded the fair value which resulted in approximately $40 million of impairment charges recorded in January 2015 in the Health and Engineering segment. The sale transaction is expected to be completed later in the year ending January 1, 2016. | ||||||||
Discontinued Operations for the Year Ended January 30, 2015 | ||||||||
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 ended October 31, 2014 with cash proceeds received of $19 million, resulting in an immaterial gain on sale. | ||||||||
Discontinued Operations for the Year Ended January 31, 2014 | ||||||||
Separation of New SAIC | ||||||||
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. 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 govern 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. | ||||||||
Other Discontinued Operations | ||||||||
Other 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 ended May 2, 2014, 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 ended August 1, 2014 with insignificant cash proceeds received, resulting in an immaterial loss 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 sale transaction was completed in February 2015 with cash proceeds received of $5 million, resulting in an immaterial gain on sale as of April 3, 2015. | ||||||||
The pre-sale operating results through the date of disposal of the Company’s discontinued operations discussed above, for the periods presented were as follows: | ||||||||
Three Months Ended | ||||||||
April 3, | May 2, | |||||||
2015 | 2014 | |||||||
(in millions) | ||||||||
Revenues | $ | 8 | $ | 26 | ||||
Costs and expenses: | ||||||||
Cost of revenues | 7 | 22 | ||||||
Selling, general and administrative expenses (including impairment charges of $9 million for the three months ended May 2, 2014) | 3 | 14 | ||||||
Intangible asset impairment charges | — | 3 | ||||||
Operating loss | $ | (2 | ) | $ | (13 | ) | ||
Non-operating income | $ | 2 | $ | — | ||||
Income (loss) from discontinued operations before income taxes | $ | — | $ | (13 | ) | |||
Leidos, Inc. | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Dispositions | Dispositions: | |||||||
Dispositions | ||||||||
Plainfield Renewable Energy Holdings LLC | ||||||||
In October 2013, the Company gained control of 100% of the equity interest in Plainfield Renewable Energy Holdings, LLC ("Plainfield") through the consensual foreclosure agreement which constituted a change in control accounted for as a business combination. Plainfield is a 37.5 megawatt biomass-fueled power plant (the "plant"). | ||||||||
In March 2015, the Company entered into a definitive agreement to sell 100% of the equity membership interest in Plainfield. The Company adjusted the carrying values of Plainfield's assets to their fair values based on the estimated selling price of the business pursuant to the terms of the agreement (Level 1). The carrying value exceeded the fair value which resulted in approximately $40 million of impairment charges recorded in January 2015 in the Health and Engineering segment. The sale transaction is expected to be completed later in the year ending January 1, 2016. | ||||||||
Discontinued Operations for the Year Ended January 30, 2015 | ||||||||
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 ended October 31, 2014 with cash proceeds received of $19 million, resulting in an immaterial gain on sale. | ||||||||
Discontinued Operations for the Year Ended January 31, 2014 | ||||||||
Separation of New SAIC | ||||||||
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. 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 govern 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. | ||||||||
Other Discontinued Operations | ||||||||
Other 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 ended May 2, 2014, 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 ended August 1, 2014 with insignificant cash proceeds received, resulting in an immaterial loss 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 sale transaction was completed in February 2015 with cash proceeds received of $5 million, resulting in an immaterial gain on sale as of April 3, 2015. | ||||||||
The pre-sale operating results through the date of disposal of the Company’s discontinued operations discussed above, for the periods presented were as follows: | ||||||||
Three Months Ended | ||||||||
April 3, | May 2, | |||||||
2015 | 2014 | |||||||
(in millions) | ||||||||
Revenues | $ | 8 | $ | 26 | ||||
Costs and expenses: | ||||||||
Cost of revenues | 7 | 22 | ||||||
Selling, general and administrative expenses (including impairment charges of $9 million for the three months ended May 2, 2014) | 3 | 14 | ||||||
Intangible asset impairment charges | — | 3 | ||||||
Operating loss | $ | (2 | ) | $ | (13 | ) | ||
Non-operating income | $ | 2 | $ | — | ||||
Income (loss) from discontinued operations before income taxes | $ | — | $ | (13 | ) | |||
Goodwill_and_Intangible_Assets
Goodwill and Intangible Assets | 3 Months Ended | |||||||||||||||||||||||
Apr. 03, 2015 | ||||||||||||||||||||||||
Goodwill [Line Items] | ||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets: | |||||||||||||||||||||||
The Company's National Security Solutions ("NSS") and Health and Engineering ("HES") reportable segments contain goodwill. The balance and changes in the carrying amount of goodwill by segment were as follows: | ||||||||||||||||||||||||
NSS | HES | Total | ||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Goodwill at January 31, 2014 | $ | 788 | $ | 905 | $ | 1,693 | ||||||||||||||||||
Goodwill impairment charges | — | (486 | ) | (486 | ) | |||||||||||||||||||
Goodwill at January 30, 2015 | $ | 788 | $ | 419 | $ | 1,207 | ||||||||||||||||||
Adjustments | — | — | — | |||||||||||||||||||||
Goodwill at April 3, 2015 | $ | 788 | $ | 419 | $ | 1,207 | ||||||||||||||||||
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. There were no goodwill impairments during the three months ended April 3, 2015 and May 2, 2014. During the second quarter ended August 1, 2014, 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. No goodwill impairments were identified as part of the Company's annual goodwill impairment evaluation performed in the prior year. | ||||||||||||||||||||||||
Intangible assets consisted of the following: | ||||||||||||||||||||||||
April 3, 2015 | January 30, 2015 | |||||||||||||||||||||||
Gross carrying value | Accumulated amortization | Net carrying value | Gross carrying value | Accumulated amortization | Net carrying value | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Finite-lived intangible assets: | ||||||||||||||||||||||||
Customer relationships | $ | 71 | $ | (59 | ) | $ | 12 | $ | 70 | $ | (57 | ) | $ | 13 | ||||||||||
Software and technology | 60 | (41 | ) | 19 | 52 | (41 | ) | 11 | ||||||||||||||||
Total finite-lived intangible assets | 131 | (100 | ) | 31 | 122 | (98 | ) | 24 | ||||||||||||||||
Indefinite-lived intangible assets: | ||||||||||||||||||||||||
In-process research and development | — | — | — | 9 | — | 9 | ||||||||||||||||||
Trade names | 4 | — | 4 | 4 | — | 4 | ||||||||||||||||||
Total indefinite-lived intangible assets | 4 | — | 4 | 13 | — | 13 | ||||||||||||||||||
Total intangible assets | $ | 135 | $ | (100 | ) | $ | 35 | $ | 135 | $ | (98 | ) | $ | 37 | ||||||||||
The gross carrying value of finite-lived intangible assets increased from January 30, 2015 due to the addition of an in-process research and development intangible asset that reached technological feasibility and began amortizing as a software and technology intangible asset over its useful life of nine years. | ||||||||||||||||||||||||
Amortization expense related to amortizable intangible assets was $2 million for the three months ended April 3, 2015 and $5 million for the three months ended May 2, 2014. | ||||||||||||||||||||||||
The estimated annual amortization expense related to finite-lived intangible assets as of April 3, 2015 was as follows: | ||||||||||||||||||||||||
Year Ending | ||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
January 1, 2016 (remainder of year) | $ | 7 | ||||||||||||||||||||||
Fiscal 2016 | 8 | |||||||||||||||||||||||
Fiscal 2017 | 6 | |||||||||||||||||||||||
Fiscal 2018 | 4 | |||||||||||||||||||||||
Fiscal 2019 | 2 | |||||||||||||||||||||||
Fiscal 2020 and thereafter | 4 | |||||||||||||||||||||||
$ | 31 | |||||||||||||||||||||||
Leidos, Inc. | ||||||||||||||||||||||||
Goodwill [Line Items] | ||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets: | |||||||||||||||||||||||
The Company's National Security Solutions ("NSS") and Health and Engineering ("HES") reportable segments contain goodwill. The balance and changes in the carrying amount of goodwill by segment were as follows: | ||||||||||||||||||||||||
NSS | HES | Total | ||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Goodwill at January 31, 2014 | $ | 788 | $ | 905 | $ | 1,693 | ||||||||||||||||||
Goodwill impairment charges | — | (486 | ) | (486 | ) | |||||||||||||||||||
Goodwill at January 30, 2015 | $ | 788 | $ | 419 | $ | 1,207 | ||||||||||||||||||
Adjustments | — | — | — | |||||||||||||||||||||
Goodwill at April 3, 2015 | $ | 788 | $ | 419 | $ | 1,207 | ||||||||||||||||||
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. There were no goodwill impairments during the three months ended April 3, 2015 and May 2, 2014. During the second quarter ended August 1, 2014, 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. No goodwill impairments were identified as part of the Company's annual goodwill impairment evaluation performed in the prior year. | ||||||||||||||||||||||||
Intangible assets consisted of the following: | ||||||||||||||||||||||||
April 3, 2015 | January 30, 2015 | |||||||||||||||||||||||
Gross carrying value | Accumulated amortization | Net carrying value | Gross carrying value | Accumulated amortization | Net carrying value | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Finite-lived intangible assets: | ||||||||||||||||||||||||
Customer relationships | $ | 71 | $ | (59 | ) | $ | 12 | $ | 70 | $ | (57 | ) | $ | 13 | ||||||||||
Software and technology | 60 | (41 | ) | 19 | 52 | (41 | ) | 11 | ||||||||||||||||
Total finite-lived intangible assets | 131 | (100 | ) | 31 | 122 | (98 | ) | 24 | ||||||||||||||||
Indefinite-lived intangible assets: | ||||||||||||||||||||||||
In-process research and development | — | — | — | 9 | — | 9 | ||||||||||||||||||
Trade names | 4 | — | 4 | 4 | — | 4 | ||||||||||||||||||
Total indefinite-lived intangible assets | 4 | — | 4 | 13 | — | 13 | ||||||||||||||||||
Total intangible assets | $ | 135 | $ | (100 | ) | $ | 35 | $ | 135 | $ | (98 | ) | $ | 37 | ||||||||||
The gross carrying value of finite-lived intangible assets increased from January 30, 2015 due to the addition of an in-process research and development intangible asset that reached technological feasibility and began amortizing as a software and technology intangible asset over its useful life of nine years. | ||||||||||||||||||||||||
Amortization expense related to amortizable intangible assets was $2 million for the three months ended April 3, 2015 and $5 million for the three months ended May 2, 2014. | ||||||||||||||||||||||||
The estimated annual amortization expense related to finite-lived intangible assets as of April 3, 2015 was as follows: | ||||||||||||||||||||||||
Year Ending | ||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
January 1, 2016 (remainder of year) | $ | 7 | ||||||||||||||||||||||
Fiscal 2016 | 8 | |||||||||||||||||||||||
Fiscal 2017 | 6 | |||||||||||||||||||||||
Fiscal 2018 | 4 | |||||||||||||||||||||||
Fiscal 2019 | 2 | |||||||||||||||||||||||
Fiscal 2020 and thereafter | 4 | |||||||||||||||||||||||
$ | 31 | |||||||||||||||||||||||
Derivative_Instruments_and_Hed
Derivative Instruments and Hedging Activities | 3 Months Ended | ||||||||||||||
Apr. 03, 2015 | |||||||||||||||
Derivative [Line Items] | |||||||||||||||
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities: | ||||||||||||||
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 does not hold derivative instruments for trading or speculative purposes. | |||||||||||||||
In September 2014, 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 interest rate swaps are determined based on observed values for underlying interest rates on the LIBOR yield curve (Level 2). | |||||||||||||||
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 | April 3, | January 30, | Balance sheet line item | April 3, | January 30, | ||||||||||
2015 | 2015 | 2015 | 2015 | ||||||||||||
(in millions) | |||||||||||||||
Other assets | $ | 15 | $ | 17 | Notes payable and long-term debt, net of current portion | $ | 15 | $ | 17 | ||||||
Leidos, Inc. | |||||||||||||||
Derivative [Line Items] | |||||||||||||||
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities: | ||||||||||||||
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 does not hold derivative instruments for trading or speculative purposes. | |||||||||||||||
In September 2014, 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 interest rate swaps are determined based on observed values for underlying interest rates on the LIBOR yield curve (Level 2). | |||||||||||||||
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 | April 3, | January 30, | Balance sheet line item | April 3, | January 30, | ||||||||||
2015 | 2015 | 2015 | 2015 | ||||||||||||
(in millions) | |||||||||||||||
Other assets | $ | 15 | $ | 17 | Notes payable and long-term debt, net of current portion | $ | 15 | $ | 17 | ||||||
Debt
Debt | 3 Months Ended | |||||||||||||
Apr. 03, 2015 | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Debt | Debt: | |||||||||||||
Revolving Credit Facility | ||||||||||||||
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 third quarter 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. 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 April 3, 2015 and January 30, 2015, 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 April 3, 2015. 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 April 3, 2015 is $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. | ||||||||||||||
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 | April 3, | 30-Jan-15 | |||||||||||
2015 | ||||||||||||||
(dollars in millions) | ||||||||||||||
Leidos Holdings, Inc. senior unsecured notes: | ||||||||||||||
$450 million notes, which mature in December 2020 (1) | 4.45 | % | 4.53 | % | $ | 464 | $ | 466 | ||||||
$300 million notes, which mature in December 2040 | 5.95 | % | 6.03 | % | 228 | 232 | ||||||||
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 | % | 5.85 | % | 181 | 182 | ||||||||
Capital leases and other notes payable due on various dates through fiscal 2020 | 0%-3.7% | Various | 37 | 38 | ||||||||||
Total notes payable and long-term debt | $ | 1,158 | $ | 1,166 | ||||||||||
Less current portion | 2 | 2 | ||||||||||||
Total notes payable and long-term debt, net of current portion | $ | 1,156 | $ | 1,164 | ||||||||||
Fair value of notes payable and long-term debt | $ | 1,148 | $ | 1,152 | ||||||||||
-1 | As a result of executing the interest rate swap agreements, the carrying value of $464 million includes a fair value adjustment of $15 million attributable to changes in the benchmark interest rate, the six-month LIBOR rate, from the inception of the interest rate swap agreements to April 3, 2015. | |||||||||||||
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 first quarter ended April 3, 2015, the Company repurchased in the open market and retired principal amounts of $15 million on its $300 million 5.95% notes issued by Leidos Holdings, Inc. maturing in December 2040, including $11 million repurchased in January 2015, and $14 million on its $300 million 5.50% notes issued by Leidos, Inc. maturing in July 2033, including $13 million repurchased in January 2015. For the first quarter ended April 3, 2015, the Company recorded an immaterial gain on extinguishment of debt for the Leidos Holdings, Inc. notes and a $1 million 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 $28 million for the first quarter ended April 3, 2015, including $23 million in January 2015, 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 on extinguishment of debt in "Other (expense) income, net" in the Company’s condensed consolidated statements of income. | ||||||||||||||
Interest is payable on the Company’s senior unsecured notes on a semi-annual basis with principal payments due on maturity. 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 April 3, 2015. | ||||||||||||||
Leidos, Inc. | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Debt | Debt: | |||||||||||||
Revolving Credit Facility | ||||||||||||||
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 third quarter 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. 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 April 3, 2015 and January 30, 2015, 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 April 3, 2015. 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 April 3, 2015 is $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. | ||||||||||||||
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 | April 3, | 30-Jan-15 | |||||||||||
2015 | ||||||||||||||
(dollars in millions) | ||||||||||||||
Leidos Holdings, Inc. senior unsecured notes: | ||||||||||||||
$450 million notes, which mature in December 2020 (1) | 4.45 | % | 4.53 | % | $ | 464 | $ | 466 | ||||||
$300 million notes, which mature in December 2040 | 5.95 | % | 6.03 | % | 228 | 232 | ||||||||
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 | % | 5.85 | % | 181 | 182 | ||||||||
Capital leases and other notes payable due on various dates through fiscal 2020 | 0%-3.7% | Various | 37 | 38 | ||||||||||
Total notes payable and long-term debt | $ | 1,158 | $ | 1,166 | ||||||||||
Less current portion | 2 | 2 | ||||||||||||
Total notes payable and long-term debt, net of current portion | $ | 1,156 | $ | 1,164 | ||||||||||
Fair value of notes payable and long-term debt | $ | 1,148 | $ | 1,152 | ||||||||||
-1 | As a result of executing the interest rate swap agreements, the carrying value of $464 million includes a fair value adjustment of $15 million attributable to changes in the benchmark interest rate, the six-month LIBOR rate, from the inception of the interest rate swap agreements to April 3, 2015. | |||||||||||||
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 first quarter ended April 3, 2015, the Company repurchased in the open market and retired principal amounts of $15 million on its $300 million 5.95% notes issued by Leidos Holdings, Inc. maturing in December 2040, including $11 million repurchased in January 2015, and $14 million on its $300 million 5.50% notes issued by Leidos, Inc. maturing in July 2033, including $13 million repurchased in January 2015. For the first quarter ended April 3, 2015, the Company recorded an immaterial gain on extinguishment of debt for the Leidos Holdings, Inc. notes and a $1 million 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 $28 million for the first quarter ended April 3, 2015, including $23 million in January 2015, 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 on extinguishment of debt in "Other (expense) income, net" in the Company’s condensed consolidated statements of income. | ||||||||||||||
Interest is payable on the Company’s senior unsecured notes on a semi-annual basis with principal payments due on maturity. 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 April 3, 2015. |
Related_Party_Transactions
Related Party Transactions | 3 Months Ended |
Apr. 03, 2015 | |
Related Party Transaction [Line Items] | |
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 2017. 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. The note receivable also includes the distribution of the assets and liabilities of New SAIC that occurred at the time of the separation in September 2013. As of April 3, 2015, the note receivable from Leidos Holdings, Inc. to Leidos, Inc. was $1.4 billion. | |
Leidos, Inc. | |
Related Party Transaction [Line Items] | |
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 2017. 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. The note receivable also includes the distribution of the assets and liabilities of New SAIC that occurred at the time of the separation in September 2013. As of April 3, 2015, the note receivable from Leidos Holdings, Inc. to Leidos, Inc. was $1.4 billion. |
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive Loss | 3 Months Ended | |||||||
Apr. 03, 2015 | ||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss: | |||||||
The components of accumulated other comprehensive loss were as follows: | ||||||||
April 3, | January 30, | |||||||
2015 | 2015 | |||||||
(in millions) | ||||||||
Foreign currency translation adjustments, net of taxes of $0 million as of April 3, 2015 and January 30, 2015, respectively | $ | — | $ | 1 | ||||
Unrecognized net loss on settled derivative instruments associated with outstanding debt, net of taxes of $3 million as of April 3, 2015 and January 30, 2015, respectively | (4 | ) | (5 | ) | ||||
Unrecognized net loss on defined benefit plan, net of taxes of $4 million and $5 million as of April 3, 2015 and January 30, 2015, respectively | (8 | ) | (7 | ) | ||||
Total accumulated other comprehensive loss, net of taxes of $7 million and $8 million as of April 3, 2015 and January 30, 2015, respectively | $ | (12 | ) | $ | (11 | ) | ||
Reclassifications from other comprehensive income to net income relating to unrecognized net gain (loss) on settled derivative instruments associated with outstanding debt for the first quarter ended April 3, 2015 were not material. There were no reclassifications from other comprehensive income to net income relating to foreign currency translation adjustments or unrecognized net gain (loss) on defined benefit plan during the period. Reclassifications for unrecognized gain (loss) on settled derivative instruments associated with outstanding debt are recorded in "Other (expense) income, net". | ||||||||
Leidos, Inc. | ||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss: | |||||||
The components of accumulated other comprehensive loss were as follows: | ||||||||
April 3, | January 30, | |||||||
2015 | 2015 | |||||||
(in millions) | ||||||||
Foreign currency translation adjustments, net of taxes of $0 million as of April 3, 2015 and January 30, 2015, respectively | $ | — | $ | 1 | ||||
Unrecognized net loss on settled derivative instruments associated with outstanding debt, net of taxes of $3 million as of April 3, 2015 and January 30, 2015, respectively | (4 | ) | (5 | ) | ||||
Unrecognized net loss on defined benefit plan, net of taxes of $4 million and $5 million as of April 3, 2015 and January 30, 2015, respectively | (8 | ) | (7 | ) | ||||
Total accumulated other comprehensive loss, net of taxes of $7 million and $8 million as of April 3, 2015 and January 30, 2015, respectively | $ | (12 | ) | $ | (11 | ) | ||
Reclassifications from other comprehensive income to net income relating to unrecognized net gain (loss) on settled derivative instruments associated with outstanding debt for the first quarter ended April 3, 2015 were not material. There were no reclassifications from other comprehensive income to net income relating to foreign currency translation adjustments or unrecognized net gain (loss) on defined benefit plan during the period. Reclassifications for unrecognized gain (loss) on settled derivative instruments associated with outstanding debt are recorded in "Other (expense) income, net". |
Earnings_Loss_Per_Share_EPS
Earnings (Loss) Per Share (EPS) | 3 Months Ended | |||||
Apr. 03, 2015 | ||||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||||
Earnings (Loss) Per Share (EPS) | Earnings Per Share (EPS): | |||||
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. 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. | ||||||
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. | ||||||
Three Months Ended | ||||||
April 3, | May 2, | |||||
2015 | 2014 | |||||
(in millions) | ||||||
Basic weighted average number of shares outstanding | 73 | 77 | ||||
Dilutive common share equivalents—stock options and | 2 | 1 | ||||
other stock awards | ||||||
Diluted weighted average number of shares outstanding | 75 | 78 | ||||
Anti-dilutive stock-based awards are excluded from the weighted average number of shares outstanding used to compute basic and diluted EPS. For the three months ended April 3, 2015, there were 1 million of outstanding stock option awards that were antidilutive. For the three months ended May 2, 2014, there were 2 million and 1 million of outstanding stock options and vesting stock awards, respectively, that were antidilutive. | ||||||
In the year ended January 30, 2015, we entered into an Accelerated Share Repurchase ("ASR") agreement with a financial institution to repurchase shares of our outstanding common stock for an aggregate purchase price of $200 million, resulting in a delivery of 4.5 million shares, completed during the first quarter ended May 2, 2014. The final delivery of approximately 0.8 million shares was completed during the second quarter ended August 1, 2014. | ||||||
In the year ended January 31, 2014, we entered into an ASR agreement with a different financial institution to repurchase shares of our outstanding common stock for an aggregate purchase price of $300 million, resulting in an initial delivery of 5.6 million shares of our outstanding shares of common stock. The final delivery of approximately 1.0 million shares was completed during the first quarter ended May 2, 2014. | ||||||
The delivery of 6.3 million shares of Leidos common stock for both ASR purchases for the year ended January 30, 2015 was additive to the shares repurchased during the year ended January 31, 2014 and 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 Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||||
Earnings (Loss) Per Share (EPS) | Earnings Per Share (EPS): | |||||
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. 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. | ||||||
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. | ||||||
Three Months Ended | ||||||
April 3, | May 2, | |||||
2015 | 2014 | |||||
(in millions) | ||||||
Basic weighted average number of shares outstanding | 73 | 77 | ||||
Dilutive common share equivalents—stock options and | 2 | 1 | ||||
other stock awards | ||||||
Diluted weighted average number of shares outstanding | 75 | 78 | ||||
Anti-dilutive stock-based awards are excluded from the weighted average number of shares outstanding used to compute basic and diluted EPS. For the three months ended April 3, 2015, there were 1 million of outstanding stock option awards that were antidilutive. For the three months ended May 2, 2014, there were 2 million and 1 million of outstanding stock options and vesting stock awards, respectively, that were antidilutive. | ||||||
In the year ended January 30, 2015, we entered into an Accelerated Share Repurchase ("ASR") agreement with a financial institution to repurchase shares of our outstanding common stock for an aggregate purchase price of $200 million, resulting in a delivery of 4.5 million shares, completed during the first quarter ended May 2, 2014. The final delivery of approximately 0.8 million shares was completed during the second quarter ended August 1, 2014. | ||||||
In the year ended January 31, 2014, we entered into an ASR agreement with a different financial institution to repurchase shares of our outstanding common stock for an aggregate purchase price of $300 million, resulting in an initial delivery of 5.6 million shares of our outstanding shares of common stock. The final delivery of approximately 1.0 million shares was completed during the first quarter ended May 2, 2014. | ||||||
The delivery of 6.3 million shares of Leidos common stock for both ASR purchases for the year ended January 30, 2015 was additive to the shares repurchased during the year ended January 31, 2014 and 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. |
Business_Segment_Information
Business Segment Information | 3 Months Ended | |||||||
Apr. 03, 2015 | ||||||||
Segment Reporting Information [Line Items] | ||||||||
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 has the following reportable segments: National Security Solutions, Health and Engineering, and Corporate and Other. | ||||||||
The segment information for the periods presented was as follows: | ||||||||
Three Months Ended | ||||||||
April 3, | May 2, | |||||||
2015 | 2014 | |||||||
(in millions) | ||||||||
Revenues: | ||||||||
National Security Solutions | $ | 862 | $ | 944 | ||||
Health and Engineering | 385 | 372 | ||||||
Corporate and Other | (1 | ) | (4 | ) | ||||
Total revenues | $ | 1,246 | $ | 1,312 | ||||
Operating income (loss): | ||||||||
National Security Solutions | $ | 62 | $ | 77 | ||||
Health and Engineering | (7 | ) | 23 | |||||
Corporate and Other | (17 | ) | (13 | ) | ||||
Total operating income | $ | 38 | $ | 87 | ||||
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. | ||||||||
Segment Reporting Information [Line Items] | ||||||||
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 has the following reportable segments: National Security Solutions, Health and Engineering, and Corporate and Other. | ||||||||
The segment information for the periods presented was as follows: | ||||||||
Three Months Ended | ||||||||
April 3, | May 2, | |||||||
2015 | 2014 | |||||||
(in millions) | ||||||||
Revenues: | ||||||||
National Security Solutions | $ | 862 | $ | 944 | ||||
Health and Engineering | 385 | 372 | ||||||
Corporate and Other | (1 | ) | (4 | ) | ||||
Total revenues | $ | 1,246 | $ | 1,312 | ||||
Operating income (loss): | ||||||||
National Security Solutions | $ | 62 | $ | 77 | ||||
Health and Engineering | (7 | ) | 23 | |||||
Corporate and Other | (17 | ) | (13 | ) | ||||
Total operating income | $ | 38 | $ | 87 | ||||
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 | 3 Months Ended |
Apr. 03, 2015 | |
Loss Contingencies [Line Items] | |
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 ("DPA") 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. Leidos fully satisfied the requirements of the DPA during its three year term and the DPA expired on March 14, 2015. As a result, the U.S. Attorney's Office filed an application with the Court to dispose of the charge that was filed against Leidos as part of the DPA. On March 16, 2015, the Court entered an order disposing of the pending charge. | |
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 a 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, 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 where the appeal remains pending. | |
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 $15 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 $42 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 months ended April 3, 2015 and May 2, 2014. As of April 3, 2015, 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 April 3, 2015, the Company has $11 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 $27 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 April 3, 2015, there were $4 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 $21 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 $17 million as of April 3, 2015, of which $16 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. | |
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 condensed consolidated financial position, results of operations, or cash flows. | |
Leidos, Inc. | |
Loss Contingencies [Line Items] | |
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 ("DPA") 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. Leidos fully satisfied the requirements of the DPA during its three year term and the DPA expired on March 14, 2015. As a result, the U.S. Attorney's Office filed an application with the Court to dispose of the charge that was filed against Leidos as part of the DPA. On March 16, 2015, the Court entered an order disposing of the pending charge. | |
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 a 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, 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 where the appeal remains pending. | |
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 $15 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 $42 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 months ended April 3, 2015 and May 2, 2014. As of April 3, 2015, 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 April 3, 2015, the Company has $11 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 $27 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 April 3, 2015, there were $4 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 $21 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 $17 million as of April 3, 2015, of which $16 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. | |
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 condensed consolidated financial position, results of operations, or cash flows. |
Other_Commitments_and_Continge
Other Commitments and Contingencies | 3 Months Ended |
Apr. 03, 2015 | |
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, but the United States Court of Appeals for the Federal Circuit vacated this award. Although VirnetX petitioned the appeals court for an en banc review, this request was denied and the case has been remanded to the Federal District Court for further proceedings. On December 17, 2014, VirnetX settled a separate patent infringement dispute with Microsoft Corporation, with those parties executing an Amended Settlement and License Agreement. This agreement amended and restated certain terms of the original Settlement and License Agreement, dated May 14, 2010, between VirnetX and Microsoft. Under the terms of the amended agreement, Microsoft agreed to pay $23 million to VirnetX to settle the patent dispute and expand Microsoft's license. Under its agreements with VirnetX, the Company would receive 35% of the proceeds obtained by VirnetX under this settlement with Microsoft after reduction for attorneys' fees and costs incurred in litigating those claims. The Company and VirnetX are currently in discussions regarding the allocation of these proceeds. No assurances can be given as to when or if the Company will receive any proceeds in connection with these matters. 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 April 3, 2015. | |
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, condensed 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 in 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 payments, penalties and potentially decremented billing rates. | |
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 apportioned between Leidos and New SAIC in accordance with the Distribution Agreement. | |
As of April 3, 2015, the Company has recorded a total liability of $46 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 2014. With a few exceptions, as of April 3, 2015, the Company is no longer subject to state, local, or foreign examinations by the tax authorities for years before fiscal 2012. | |
As of April 3, 2015, the balance of unrecognized tax benefits included liabilities for uncertain tax positions of $20 million, $5 million of which were classified as other long-term liabilities in the condensed consolidated balance sheet. | |
During the next 12 months, it is reasonably possible that resolution of reviews by taxing authorities, both domestic and international, could be reached with respect to $15 million of the Company’s unrecognized tax benefits, depending on the timing of ongoing examinations, 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 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 condensed consolidated financial position, results of operations, or cash flows. | |
Letters of Credit and Surety Bonds | |
The Company has outstanding letters of credit of $67 million as of April 3, 2015, principally related to guarantees on contracts. The Company also has outstanding surety bonds in the amount of $233 million, principally related to performance and subcontractor payment bonds on the Company’s contracts. The outstanding letters of credit and surety bonds have various terms with the majority of the letters of credit and bonds expiring over the next five fiscal years. Certain letters of credit and surety bonds have auto-renewal periods that will extend their expiration dates past the next five fiscal years. | |
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, but the United States Court of Appeals for the Federal Circuit vacated this award. Although VirnetX petitioned the appeals court for an en banc review, this request was denied and the case has been remanded to the Federal District Court for further proceedings. On December 17, 2014, VirnetX settled a separate patent infringement dispute with Microsoft Corporation, with those parties executing an Amended Settlement and License Agreement. This agreement amended and restated certain terms of the original Settlement and License Agreement, dated May 14, 2010, between VirnetX and Microsoft. Under the terms of the amended agreement, Microsoft agreed to pay $23 million to VirnetX to settle the patent dispute and expand Microsoft's license. Under its agreements with VirnetX, the Company would receive 35% of the proceeds obtained by VirnetX under this settlement with Microsoft after reduction for attorneys' fees and costs incurred in litigating those claims. The Company and VirnetX are currently in discussions regarding the allocation of these proceeds. No assurances can be given as to when or if the Company will receive any proceeds in connection with these matters. 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 April 3, 2015. | |
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, condensed 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 in 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 payments, penalties and potentially decremented billing rates. | |
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 apportioned between Leidos and New SAIC in accordance with the Distribution Agreement. | |
As of April 3, 2015, the Company has recorded a total liability of $46 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 2014. With a few exceptions, as of April 3, 2015, the Company is no longer subject to state, local, or foreign examinations by the tax authorities for years before fiscal 2012. | |
As of April 3, 2015, the balance of unrecognized tax benefits included liabilities for uncertain tax positions of $20 million, $5 million of which were classified as other long-term liabilities in the condensed consolidated balance sheet. | |
During the next 12 months, it is reasonably possible that resolution of reviews by taxing authorities, both domestic and international, could be reached with respect to $15 million of the Company’s unrecognized tax benefits, depending on the timing of ongoing examinations, 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 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 condensed consolidated financial position, results of operations, or cash flows. | |
Letters of Credit and Surety Bonds | |
The Company has outstanding letters of credit of $67 million as of April 3, 2015, principally related to guarantees on contracts. The Company also has outstanding surety bonds in the amount of $233 million, principally related to performance and subcontractor payment bonds on the Company’s contracts. The outstanding letters of credit and surety bonds have various terms with the majority of the letters of credit and bonds expiring over the next five fiscal years. Certain letters of credit and surety bonds have auto-renewal periods that will extend their expiration dates past the next five fiscal years. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 3 Months Ended | ||
Apr. 03, 2015 | |||
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., an applied technology company focused on delivering solutions and services that leverage expertise in the national security, health and engineering markets. Leidos, Inc. provides these solutions and services to government and commercial customers, both domestically and internationally. These customers include agencies of the U.S. Department of Defense ("DoD"), the intelligence community, the U.S. Department of Homeland Security ("DHS"), and other U.S. Government civil agencies, state and local government agencies and foreign governments. Unless indicated otherwise, references to the "Company," "we," "us" and "our" refer collectively to Leidos Holdings, Inc., Leidos, Inc., and its consolidated subsidiaries. | |||
The unaudited condensed consolidated financial statements of Leidos include the accounts of its majority-owned and 100%-owned subsidiaries, including Leidos, Inc. The unaudited 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 stockholders' equity in Leidos’ condensed consolidated balance sheets and results in an increase to the related party note. All intercompany transactions and accounts have been eliminated in consolidation. | |||
The accompanying unaudited condensed financial information has been prepared in accordance with the rules 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. 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; however, actual results could differ materially from those estimates. | |||
In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which consist of normal recurring adjustments, necessary for a fair presentation thereof. The results reported in these unaudited condensed consolidated financial statements are not necessarily indicative of the results that may be expected for the entire year. | |||
Reporting Periods | Fiscal Year End Change | ||
On March 20, 2015, the Board of Directors of the Company approved the amendment and restatement of the bylaws of the Company to change both Leidos' and Leidos, Inc.'s year end from the Friday nearest the end of January to the Friday nearest the end of December. | |||
As a result of this change, the Company will file its Annual Report on Form 10-K, which will cover the 11 month period ending on January 1, 2016, as its transition report. This change does not impact the Company's prior year, which ended January 30, 2015. | |||
In order to allow an immediate transition to the new calendar and to maintain transparency and comparability of financial information included in the Company's quarterly Form 10-Q filings, the quarterly information in this Form 10-Q is being presented on a three month basis for the current year which includes the last month of the year ended January 30, 2015. Therefore, the condensed consolidated statements of income and comprehensive income and the condensed consolidated statements of cash flows reflect the results for the three month period ended April 3, 2015. | |||
The Company's business is primarily driven by productive hours and time sold in relation to the solutions and services provided to its customers, as such the productive hours and time sold do not vary materially quarter over quarter. Therefore, the Company does not believe that the change in its year end has a material effect on the comparability of the prior periods presented. As such, the quarterly periods of the prior year have not been recast to correspond with the new quarterly periods. | |||
The following table shows the periods included in each quarter and year end: | |||
Period | Current year | Prior year | |
First Quarter | January 3, 2015 to April 3, 2015 | February 1, 2014 to May 2, 2014 | |
Second Quarter | April 4, 2015 to July 3, 2015 | May 3, 2014 to August 1, 2014 | |
Third Quarter | July 4, 2015 to October 2, 2015 | August 2, 2014 to October 31, 2014 | |
Year End | January 31, 2015 to January 1, 2016 (transition period) | February 1, 2014 to January 30, 2015 | |
Receivables | Separation Transaction and Restructuring Expenses | ||
During the year ended January 31, 2014, Leidos completed the spin-off of its technical services and enterprise information technology services business. In anticipation of the spin-off, the Company initiated a program to align the Company’s cost structure for post-spin-off and incurred severance and lease termination costs. | |||
For the three months ended April 3, 2015 and May 2, 2014, for continuing operations, the Company incurred approximately $2 million and $1 million, respectively, of lease termination expenses in its Corporate and Other segment related to an adjustment to reserves established in prior years for loss on leases in connection with revised sublease income assumptions. The separation transaction and restructuring expenses are recorded within "Selling, general and administrative expenses" in the Company's condensed consolidated statements of income. The lease termination liability as of April 3, 2015 and January 30, 2015 was $10 million and $11 million, respectively, of which the change reflects cash payments. The Company does not expect to incur significant additional separation transaction and restructuring expenses in the current year related to the spin-off transaction. | |||
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, which include cash equivalents and long-term investments, are reasonable estimates of their related fair values. The carrying value of accounts receivable, accounts payable, and accrued expenses approximate their fair values. The fair value of long-term debt (see Note 5) is determined based on current interest rates available for debt with terms and maturities similar to the Company’s existing debt arrangements (Level 2 inputs). | |||
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. The Company's cash equivalents are recorded at historical cost, which equals fair value based on quoted market prices (Level 1 input). | |||
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 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). At April 3, 2015, the Company did not have any financial assets or liabilities measured at fair value on a recurring basis using Level 2 or Level 3 inputs. | |||
The Company’s non-financial instruments measured at fair value on a non-recurring basis included goodwill, indefinite-lived intangible assets and long-lived tangible assets. The valuation methods used to determine fair value require a significant degree of management judgment to determine the key assumptions, as such the Company generally classifies non-financial instruments as either Level 2 or Level 3 fair value measurements. | |||
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 $4 million and an increase of $0.04 per diluted share for the three months ended April 3, 2015. Aggregate changes in contract estimates resulted in an increase to operating income of $11 million and an increase of $0.09 per diluted share for the three months ended May 2, 2014. | |||
Accounting Standards Updates Issued But Not Yet Adopted | Accounting Standards Updates Issued But Not Yet Adopted | ||
In May 2014, the Financial Accounting Standards Board ("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. This ASU will supersede all revenue recognition requirements in Topic 605, Revenue Recognition and industry-specific guidance throughout the Industry Topics of the codification. 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 contract(s) with a customer, 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 (either over time or point in time). 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. In April 2015, the FASB proposed a one-year deferral of the effective date of the ASU to December 15, 2017, with an option to early adopt the standard on the original effective date. Early adoption prior to the original effective date is not permitted. The Company is still evaluating the provisions of ASU 2014-09 and its impact on the Company's condensed consolidated financial position, results of operations, or cash flows. | |||
Various other accounting standards updates were issued but are not effective for the Company until periods subsequent to April 3, 2015. These updates include guidance to eliminate extraordinary items on the statements of income, guidance that changes the evaluation criteria for consolidation, and guidance to present debt issuance cost as a reduction of the related debt liability as opposed to an asset. The Company is still evaluating the guidance or does not expect it to have a material impact on the Company's condensed consolidated financial position, results of operations, or cash flows. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 3 Months Ended | |||||||
Apr. 03, 2015 | ||||||||
Accounting Policies [Abstract] | ||||||||
Schedule of Supplementary Cash Flow Information | Supplementary cash flow information, including non-cash investing and financing activities, for the periods presented was as follows: | |||||||
Three Months Ended | ||||||||
April 3, | May 2, | |||||||
2015 | 2014 | |||||||
(in millions) | ||||||||
Vested stock issued as settlement of annual bonus accruals | $ | 1 | $ | 1 | ||||
Stock issued in lieu of cash dividends | $ | 1 | $ | 1 | ||||
Accrued dividends declared | $ | 25 | $ | — | ||||
Cash paid for income taxes, net of refunds (including discontinued operations) | $ | 60 | $ | 5 | ||||
Dispositions_Tables
Dispositions (Tables) (Other Disposals) | 3 Months Ended | |||||||
Apr. 03, 2015 | ||||||||
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, for the periods presented were as follows: | |||||||
Three Months Ended | ||||||||
April 3, | May 2, | |||||||
2015 | 2014 | |||||||
(in millions) | ||||||||
Revenues | $ | 8 | $ | 26 | ||||
Costs and expenses: | ||||||||
Cost of revenues | 7 | 22 | ||||||
Selling, general and administrative expenses (including impairment charges of $9 million for the three months ended May 2, 2014) | 3 | 14 | ||||||
Intangible asset impairment charges | — | 3 | ||||||
Operating loss | $ | (2 | ) | $ | (13 | ) | ||
Non-operating income | $ | 2 | $ | — | ||||
Income (loss) from discontinued operations before income taxes | $ | — | $ | (13 | ) | |||
Goodwill_and_Intangible_Assets1
Goodwill and Intangible Assets (Tables) | 3 Months Ended | |||||||||||||||||||||||
Apr. 03, 2015 | ||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||
Schedule of Goodwill | The balance and changes in the carrying amount of goodwill by segment were as follows: | |||||||||||||||||||||||
NSS | HES | Total | ||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Goodwill at January 31, 2014 | $ | 788 | $ | 905 | $ | 1,693 | ||||||||||||||||||
Goodwill impairment charges | — | (486 | ) | (486 | ) | |||||||||||||||||||
Goodwill at January 30, 2015 | $ | 788 | $ | 419 | $ | 1,207 | ||||||||||||||||||
Adjustments | — | — | — | |||||||||||||||||||||
Goodwill at April 3, 2015 | $ | 788 | $ | 419 | $ | 1,207 | ||||||||||||||||||
Schedule of Intangible Assets Including Estimates of Assets Acquired | Intangible assets consisted of the following: | |||||||||||||||||||||||
April 3, 2015 | January 30, 2015 | |||||||||||||||||||||||
Gross carrying value | Accumulated amortization | Net carrying value | Gross carrying value | Accumulated amortization | Net carrying value | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Finite-lived intangible assets: | ||||||||||||||||||||||||
Customer relationships | $ | 71 | $ | (59 | ) | $ | 12 | $ | 70 | $ | (57 | ) | $ | 13 | ||||||||||
Software and technology | 60 | (41 | ) | 19 | 52 | (41 | ) | 11 | ||||||||||||||||
Total finite-lived intangible assets | 131 | (100 | ) | 31 | 122 | (98 | ) | 24 | ||||||||||||||||
Indefinite-lived intangible assets: | ||||||||||||||||||||||||
In-process research and development | — | — | — | 9 | — | 9 | ||||||||||||||||||
Trade names | 4 | — | 4 | 4 | — | 4 | ||||||||||||||||||
Total indefinite-lived intangible assets | 4 | — | 4 | 13 | — | 13 | ||||||||||||||||||
Total intangible assets | $ | 135 | $ | (100 | ) | $ | 35 | $ | 135 | $ | (98 | ) | $ | 37 | ||||||||||
Schedule of Amortization Expense for Finite-Lived Intangible Assets | The estimated annual amortization expense related to finite-lived intangible assets as of April 3, 2015 was as follows: | |||||||||||||||||||||||
Year Ending | ||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
January 1, 2016 (remainder of year) | $ | 7 | ||||||||||||||||||||||
Fiscal 2016 | 8 | |||||||||||||||||||||||
Fiscal 2017 | 6 | |||||||||||||||||||||||
Fiscal 2018 | 4 | |||||||||||||||||||||||
Fiscal 2019 | 2 | |||||||||||||||||||||||
Fiscal 2020 and thereafter | 4 | |||||||||||||||||||||||
$ | 31 | |||||||||||||||||||||||
Derivative_Instruments_and_Hed1
Derivative Instruments and Hedging Activities (Tables) | 3 Months Ended | ||||||||||||||
Apr. 03, 2015 | |||||||||||||||
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 | April 3, | January 30, | Balance sheet line item | April 3, | January 30, | ||||||||||
2015 | 2015 | 2015 | 2015 | ||||||||||||
(in millions) | |||||||||||||||
Other assets | $ | 15 | $ | 17 | Notes payable and long-term debt, net of current portion | $ | 15 | $ | 17 | ||||||
Debt_Tables
Debt (Tables) | 3 Months Ended | |||||||||||||
Apr. 03, 2015 | ||||||||||||||
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 | April 3, | 30-Jan-15 | |||||||||||
2015 | ||||||||||||||
(dollars in millions) | ||||||||||||||
Leidos Holdings, Inc. senior unsecured notes: | ||||||||||||||
$450 million notes, which mature in December 2020 (1) | 4.45 | % | 4.53 | % | $ | 464 | $ | 466 | ||||||
$300 million notes, which mature in December 2040 | 5.95 | % | 6.03 | % | 228 | 232 | ||||||||
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 | % | 5.85 | % | 181 | 182 | ||||||||
Capital leases and other notes payable due on various dates through fiscal 2020 | 0%-3.7% | Various | 37 | 38 | ||||||||||
Total notes payable and long-term debt | $ | 1,158 | $ | 1,166 | ||||||||||
Less current portion | 2 | 2 | ||||||||||||
Total notes payable and long-term debt, net of current portion | $ | 1,156 | $ | 1,164 | ||||||||||
Fair value of notes payable and long-term debt | $ | 1,148 | $ | 1,152 | ||||||||||
-1 | As a result of executing the interest rate swap agreements, the carrying value of $464 million includes a fair value adjustment of $15 million attributable to changes in the benchmark interest rate, the six-month LIBOR rate, from the inception of the interest rate swap agreements to April 3, 2015. |
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended | |||||||
Apr. 03, 2015 | ||||||||
Equity [Abstract] | ||||||||
Schedule of Accumulated Other Comprehensive Loss | The components of accumulated other comprehensive loss were as follows: | |||||||
April 3, | January 30, | |||||||
2015 | 2015 | |||||||
(in millions) | ||||||||
Foreign currency translation adjustments, net of taxes of $0 million as of April 3, 2015 and January 30, 2015, respectively | $ | — | $ | 1 | ||||
Unrecognized net loss on settled derivative instruments associated with outstanding debt, net of taxes of $3 million as of April 3, 2015 and January 30, 2015, respectively | (4 | ) | (5 | ) | ||||
Unrecognized net loss on defined benefit plan, net of taxes of $4 million and $5 million as of April 3, 2015 and January 30, 2015, respectively | (8 | ) | (7 | ) | ||||
Total accumulated other comprehensive loss, net of taxes of $7 million and $8 million as of April 3, 2015 and January 30, 2015, respectively | $ | (12 | ) | $ | (11 | ) |
Earnings_Loss_Per_Share_EPS_Ta
Earnings (Loss) Per Share (EPS) (Tables) | 3 Months Ended | |||||
Apr. 03, 2015 | ||||||
Earnings Per Share [Abstract] | ||||||
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. | |||||
Three Months Ended | ||||||
April 3, | May 2, | |||||
2015 | 2014 | |||||
(in millions) | ||||||
Basic weighted average number of shares outstanding | 73 | 77 | ||||
Dilutive common share equivalents—stock options and | 2 | 1 | ||||
other stock awards | ||||||
Diluted weighted average number of shares outstanding | 75 | 78 | ||||
Business_Segment_Information_T
Business Segment Information (Tables) | 3 Months Ended | |||||||
Apr. 03, 2015 | ||||||||
Segment Reporting [Abstract] | ||||||||
Schedule of Segment Reporting Information by Segment | The segment information for the periods presented was as follows: | |||||||
Three Months Ended | ||||||||
April 3, | May 2, | |||||||
2015 | 2014 | |||||||
(in millions) | ||||||||
Revenues: | ||||||||
National Security Solutions | $ | 862 | $ | 944 | ||||
Health and Engineering | 385 | 372 | ||||||
Corporate and Other | (1 | ) | (4 | ) | ||||
Total revenues | $ | 1,246 | $ | 1,312 | ||||
Operating income (loss): | ||||||||
National Security Solutions | $ | 62 | $ | 77 | ||||
Health and Engineering | (7 | ) | 23 | |||||
Corporate and Other | (17 | ) | (13 | ) | ||||
Total operating income | $ | 38 | $ | 87 | ||||
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Additional Information) (Detail) (USD $) | 1 Months Ended | 3 Months Ended | |||
In Millions, except Per Share data, unless otherwise specified | Jan. 30, 2015 | Apr. 03, 2015 | 2-May-14 | Sep. 27, 2013 | Sep. 19, 2013 |
Significant Accounting Policies [Line Items] | |||||
Percentage of ownership after spin-off transaction | 100.00% | ||||
Reverse stock split | 0.25 | ||||
Revenues | $373 | $1,246 | $1,312 | ||
Net income | -23 | 41 | 37 | ||
Increase (decrease) in income due to contract estimates | 4 | 11 | |||
Increase (decrease) in income due to contract estimates per diluted share | $0.04 | $0.09 | |||
Total adjustment to cash flow | 16 | -82 | -247 | ||
Financing activities | 47 | 57 | 233 | ||
Cash flow from discontinued operations | 20 | 19 | 5 | ||
Leidos, Inc. | |||||
Significant Accounting Policies [Line Items] | |||||
Ownership interest | 100.00% | ||||
Revenues | 1,246 | 1,312 | |||
Net income | 43 | 38 | |||
Total adjustment to cash flow | -82 | -247 | |||
Financing activities | 29 | -1 | |||
Cash flow from discontinued operations | $19 | $5 | |||
SAIC | |||||
Significant Accounting Policies [Line Items] | |||||
Stock issued to Leidos shareholder upon divestiture of SAIC, ratio | 1.4285 |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Restructuring Reserve) (Details) (Facility Closing, USD $) | 3 Months Ended | ||
In Millions, unless otherwise specified | Apr. 03, 2015 | 2-May-14 | Jan. 30, 2015 |
Facility Closing | |||
Restructuring Reserve [Roll Forward] | |||
Beginng balance | $11 | ||
Charges | 2 | 1 | |
Ending balance | $10 | $11 |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies (Schedule of Supplementary Cash Flow Information) (Detail) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Apr. 03, 2015 | 2-May-14 |
Accounting Policies [Abstract] | ||
Vested stock issued as settlement of annual bonus accruals | $1 | $1 |
Stock issued in lieu of cash dividends | 1 | 1 |
Accrued dividends declared | 25 | 0 |
Cash paid for income taxes, net of refunds (including discontinued operations) | $60 | $5 |
Dispositions_Details
Dispositions (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Apr. 03, 2015 | 2-May-14 |
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract] | ||
Income (loss) from discontinued operations before income taxes | $0 | ($13) |
Other Disposals | ||
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract] | ||
Revenues | 8 | 26 |
Cost of revenues | 7 | 22 |
Selling, general and administrative expenses | 3 | 14 |
Intangible asset impairment charges | 0 | 3 |
Operating loss | -2 | -13 |
Non-operating income | 2 | 0 |
Income (loss) from discontinued operations before income taxes | $0 | ($13) |
Dispositions_Narrative_Details
Dispositions (Narrative) (Details) (USD $) | 3 Months Ended | 1 Months Ended | 3 Months Ended | 1 Months Ended | ||
In Millions, unless otherwise specified | Apr. 03, 2015 | 2-May-14 | Mar. 31, 2015 | Oct. 31, 2014 | Feb. 28, 2015 | Oct. 31, 2013 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Impairment charge | $40 | $0 | ||||
Plainfield | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Percentage of ownership | 100.00% | |||||
Impairment charge | 40 | |||||
Emergency Management Consulting | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Net proceeds from divestures | 19 | |||||
Other Disposals | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Impairment charge | 9 | |||||
Impairment of assets | 12 | |||||
Cloudshield Technologies | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Net proceeds from divestures | $5 | |||||
Plainfield | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Percentage of ownership | 100.00% | |||||
Capacity of power plant | 37.5 |
Goodwill_and_Intangible_Assets2
Goodwill and Intangible Assets (Goodwill Rollforward) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |
Apr. 03, 2015 | 2-May-14 | Jan. 30, 2015 | |
Goodwill [Roll Forward] | |||
Beginning balance | $1,693,000,000 | $1,693,000,000 | |
Goodwill impairment charges | 0 | 0 | -486,000,000 |
Ending balance | 1,207,000,000 | 1,207,000,000 | |
NSS | |||
Goodwill [Roll Forward] | |||
Beginning balance | 788,000,000 | 788,000,000 | |
Goodwill impairment charges | 0 | ||
Ending balance | 788,000,000 | 788,000,000 | |
HES | |||
Goodwill [Roll Forward] | |||
Beginning balance | 905,000,000 | 905,000,000 | |
Goodwill impairment charges | -486,000,000 | ||
Ending balance | $419,000,000 | $419,000,000 |
Goodwill_and_Intangible_Assets3
Goodwill and Intangible Assets (Schedule of Intangible Assets Including Estimates of Assets Acquired) (Detail) (USD $) | Apr. 03, 2015 | Jan. 30, 2015 |
In Millions, unless otherwise specified | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying value | $131 | $122 |
Accumulated amortization | -100 | -98 |
Net carrying value | 31 | 24 |
Indefinite-lived intangible assets | 4 | 13 |
Total intangible asset, gross | 135 | 135 |
Total intangible assets, Net carrying value | 35 | 37 |
In-Process Research And Development | ||
Finite-Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 0 | 9 |
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 | 71 | 70 |
Accumulated amortization | -59 | -57 |
Net carrying value | 12 | 13 |
Software and Technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying value | 60 | 52 |
Accumulated amortization | -41 | -41 |
Net carrying value | $19 | $11 |
Goodwill_and_Intangible_Assets4
Goodwill and Intangible Assets (Schedule of Amortization Expense for Finite-Lived Intangible Assets) (Detail) (USD $) | Apr. 03, 2015 | Jan. 30, 2015 |
In Millions, unless otherwise specified | ||
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2016 (remainder of the fiscal year) | $7 | |
2016 | 8 | |
2017 | 6 | |
2018 | 4 | |
2019 | 2 | |
2020 and thereafter | 4 | |
Net carrying value | $31 | $24 |
Goodwill_and_Intangible_Assets5
Goodwill and Intangible Assets (Additional Information) (Detail) (USD $) | 3 Months Ended | 12 Months Ended | |
Apr. 03, 2015 | 2-May-14 | Jan. 30, 2015 | |
Goodwill [Line Items] | |||
Goodwill impairment charges | $0 | $0 | $486,000,000 |
Amortization expense related to amortizable intangible assets | 2,000,000 | 5,000,000 | |
NSS | |||
Goodwill [Line Items] | |||
Goodwill impairment charges | 0 | ||
HES | |||
Goodwill [Line Items] | |||
Goodwill impairment charges | $486,000,000 | ||
Software and Technology | |||
Goodwill [Line Items] | |||
Useful life of intangible | 9 years |
Derivative_Instruments_and_Hed2
Derivative Instruments and Hedging Activities (Details) (Interest rate swaps, Designated as Hedging Instrument, USD $) | Apr. 03, 2015 | Jan. 30, 2015 | Oct. 31, 2014 |
In Millions, unless otherwise specified | |||
Notes payable and long-term debt, net of current portion | |||
Derivative [Line Items] | |||
Derivative liability | $15 | $17 | |
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 | $15 | $17 |
Debt_Additional_Information_De
Debt (Additional Information) (Detail) (USD $) | 3 Months Ended | 1 Months Ended | ||
Apr. 03, 2015 | Jan. 30, 2015 | Oct. 31, 2014 | Oct. 30, 2014 | |
Debt Instrument [Line Items] | ||||
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 | |||
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 | |||
Fair value adjustment | 15,000,000 | |||
Gain on repurchase of notes | 1,000,000 | |||
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. | |||
Available borrowing capacity | 500,000,000 | |||
Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Repurchase and retirement of long term debt | 28,000,000 | 23,000,000 | ||
Notes Which Mature In July 2033 | ||||
Debt Instrument [Line Items] | ||||
Senior unsecured notes | 181,000,000 | 182,000,000 | ||
Debt Instrument, Face Amount | 300,000,000 | |||
Stated interest rate | 5.50% | |||
Notes Which Mature In July 2033 | Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, repurchase amount | 14,000,000 | 13,000,000 | ||
Notes Which Mature In December 2040 | ||||
Debt Instrument [Line Items] | ||||
Senior unsecured notes | 228,000,000 | 232,000,000 | ||
Debt Instrument, Face Amount | 300,000,000 | |||
Stated interest rate | 5.95% | |||
Notes Which Mature In December 2040 | Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, repurchase amount | $15,000,000 | $11,000,000 |
Debt_Schedule_of_Notes_Payable
Debt (Schedule of Notes Payable and Long-Term Debt) (Detail) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Apr. 03, 2015 | Jan. 30, 2015 |
Debt Instrument [Line Items] | ||
Total notes payable and long-term debt | $1,158 | $1,166 |
Less current portion | 2 | 2 |
Total notes payable and long-term debt, net of current portion | 1,156 | 1,164 |
Fair value of notes payable and long-term debt | 1,148 | 1,152 |
Notes Which Mature In December 2020 | ||
Debt Instrument [Line Items] | ||
Senior unsecured notes | 464 | 466 |
Stated interest rate | 4.45% | |
Effective interest rate | 4.53% | |
Notes Which Mature In December 2040 | ||
Debt Instrument [Line Items] | ||
Senior unsecured notes | 228 | 232 |
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 | 181 | 182 |
Stated interest rate | 5.50% | |
Effective interest rate | 5.85% | |
Capital leases and other notes payable due on various dates through fiscal 2020 | ||
Debt Instrument [Line Items] | ||
Other notes payable due on various dates through fiscal 2021 | $37 | $38 |
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) (Footnotes) (Detail) (USD $) | 3 Months Ended |
Apr. 03, 2015 | |
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 $) | 3 Months Ended |
Apr. 03, 2015 | |
Related Party Transaction [Line Items] | |
Credit facility, maturity date | 2017 |
Leidos Holdings Inc, | |
Related Party Transaction [Line Items] | |
Notes receivable | 1,400,000,000 |
Notes Which Mature In December 2020 | |
Related Party Transaction [Line Items] | |
Notes payable | 450,000,000 |
Stated interest rate | 4.45% |
Notes Which Mature In December 2040 | |
Related Party Transaction [Line Items] | |
Notes payable | 300,000,000 |
Stated interest rate | 5.95% |
Notes Which Mature In July 2033 | |
Related Party Transaction [Line Items] | |
Notes payable | 300,000,000 |
Stated interest rate | 5.50% |
Notes Which Mature In July 2032 | |
Related Party Transaction [Line Items] | |
Notes payable | 250,000,000 |
Stated interest rate | 7.13% |
Accumulated_Other_Comprehensiv2
Accumulated Other Comprehensive Loss (Schedule of Accumulated Other Comprehensive Loss) (Detail) (USD $) | Apr. 03, 2015 | Jan. 30, 2015 |
In Millions, unless otherwise specified | ||
Accumulated Other Comprehensive Loss [Abstract] | ||
Foreign currency translation adjustments, net of taxes of $0 million as of April 3, 2015 and January 30, 2015, respectively | $0 | $1 |
Unrecognized net loss on settled derivative instruments associated with outstanding debt, net of taxes of $3 million as of April 3, 2015 and January 30, 2015, respectively | -4 | -5 |
Unrecognized net loss on defined benefit plan, net of taxes of $4 million and $5 million as of April 3, 2015 and January 30, 2015, respectively | -8 | -7 |
Total accumulated other comprehensive loss, net of taxes of $7 million and $8 million as of April 3, 2015 and January 30, 2015, respectively | ($12) | ($11) |
Accumulated_Other_Comprehensiv3
Accumulated Other Comprehensive Loss (Schedule of Accumulated Other Comprehensive Loss) (Intext) (Detail) (USD $) | Apr. 03, 2015 | Jan. 30, 2015 |
In Millions, unless otherwise specified | ||
Equity [Abstract] | ||
Foreign currency translation adjustments, tax effect | $0 | $1 |
Unrecognized net loss on settled derivative instruments associated with outstanding debt, tax effect | 3 | 3 |
Unrecognized net loss on defined benefit plan, taxes | 4 | 5 |
Total accumulated other comprehensive loss, tax effect | $7 | $8 |
Earnings_Loss_Per_Share_EPS_Re
Earnings (Loss) Per Share (EPS) (Reconciliation of Weighted Average Number of Shares Outstanding) (Detail) | 3 Months Ended | |
In Millions, unless otherwise specified | Apr. 03, 2015 | 2-May-14 |
Earnings Per Share [Abstract] | ||
Basic weighted average number of shares outstanding (shares) | 73 | 77 |
Dilutive common share equivalents-stock options and other stock awards | 2 | 1 |
Diluted weighted average number of shares outstanding | 75 | 78 |
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 | |
In Millions, unless otherwise specified | Apr. 03, 2015 | 2-May-14 |
Stock Options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive stock based awards | 1 | 2 |
Vested Stock Awards | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive stock based awards | 1 |
Earnings_Loss_Per_Share_EPS_Sh
Earnings (Loss) Per Share (EPS) (Shares Repurchase Program) (Details) (USD $) | 3 Months Ended | 12 Months Ended | 3 Months Ended | ||
Share data in Millions, unless otherwise specified | Apr. 03, 2015 | 2-May-14 | Jan. 30, 2015 | Jan. 31, 2014 | Aug. 01, 2014 |
Accelerated Share Repurchases [Line Items] | |||||
Repurchases of stock | $6,000,000 | $212,000,000 | |||
Shares repurchased and retired | 6.3 | ||||
Accelerated Share Repurchase | |||||
Accelerated Share Repurchases [Line Items] | |||||
Repurchases of stock | 300,000,000 | ||||
Shares repurchased and retired | 1 | 5.6 | |||
Second Accelerated Share Repurchase | |||||
Accelerated Share Repurchases [Line Items] | |||||
Repurchases of stock | $200,000,000 | ||||
Shares repurchased and retired | 4.5 | 0.8 |
Schedule_of_Segment_Reporting_
Schedule of Segment Reporting Information by Segment (Detail) (USD $) | 1 Months Ended | 3 Months Ended | |
In Millions, unless otherwise specified | Jan. 30, 2015 | Apr. 03, 2015 | 2-May-14 |
Segment Reporting Information [Line Items] | |||
Revenues | $373 | $1,246 | $1,312 |
Operating income (loss) | 38 | 87 | |
Segments | National Security Solutions | |||
Segment Reporting Information [Line Items] | |||
Revenues | 862 | 944 | |
Operating income (loss) | 62 | 77 | |
Segments | Health and Engineering | |||
Segment Reporting Information [Line Items] | |||
Revenues | 385 | 372 | |
Operating income (loss) | -7 | 23 | |
Segments | Corporate and Other | |||
Segment Reporting Information [Line Items] | |||
Revenues | -1 | -4 | |
Operating income (loss) | ($17) | ($13) |
Legal_Proceedings_Additional_I
Legal Proceedings - Additional Information (Detail) (USD $) | 1 Months Ended | 14 Months Ended | 3 Months Ended | 1 Months Ended | |||
In Millions, unless otherwise specified | Mar. 31, 2012 | Mar. 29, 2013 | Apr. 03, 2015 | Jun. 30, 2014 | 31-May-14 | Jul. 31, 2013 | Nov. 30, 2008 |
LegalMatter | plaintiff | plaintiff | |||||
executive | |||||||
Timekeeping Contract with City of New York | |||||||
Legal Proceedings [Line Items] | |||||||
Cash settlement payment | $500 | ||||||
Securities Class Actions | |||||||
Legal Proceedings [Line Items] | |||||||
Number of lawsuits | 3 | ||||||
Number of lawsuits, withdrawn | 1 | ||||||
Number of lawsuits, consolidated | 2 | ||||||
Number of former Chief Executive Officers | 2 | ||||||
Greek Government Contract | |||||||
Legal Proceedings [Line Items] | |||||||
Arbitral award | 21 | 42 | |||||
Recorded losses | 123 | ||||||
Greek Government Contract | Invoice for Undisputed Portion of Contract | |||||||
Legal Proceedings [Line Items] | |||||||
Contracts receivable | 15 | ||||||
Greek Government Contract | Value Added Taxes | |||||||
Legal Proceedings [Line Items] | |||||||
Contracts receivable | 27 | ||||||
Receivables relating to value added taxes | 11 | ||||||
Greek Government Contract | Letters of Credit Relating to Delivery | |||||||
Legal Proceedings [Line Items] | |||||||
Letter of credit available to the company | 16 | ||||||
Greek Government Contract | Standby Letters of Credit | |||||||
Legal Proceedings [Line Items] | |||||||
Letter of credit available to the company | 17 | ||||||
Greek Government Contract | Letters Of Credit Related System Support And Maintenance [Member] | Letters of Credit Relating to Delivery | |||||||
Legal Proceedings [Line Items] | |||||||
Amount outstanding | $4 | ||||||
Data Privacy Litigation | |||||||
Legal Proceedings [Line Items] | |||||||
Number of plaintiffs | 2 | 2 |
Other_Commitments_and_Continge1
Other Commitments and Contingencies - Additional Information (Detail) (USD $) | 1 Months Ended | 8 Months Ended | 0 Months Ended | |
In Millions, unless otherwise specified | Nov. 30, 2012 | Sep. 27, 2013 | Dec. 17, 2014 | Apr. 03, 2015 |
Other Commitments And Contingencies [Line Items] | ||||
Percentage of proceeds obtained | 35.00% | |||
Government Investigations And Reviews | ||||
Other Commitments And Contingencies [Line Items] | ||||
Liability for estimate of loss | $27 | |||
Loss contingency accrual | 46 | |||
Tax Audits And Reviews | ||||
Other Commitments And Contingencies [Line Items] | ||||
Liabilities for uncertain tax positions | 20 | |||
Other long-term liabilities | 5 | |||
Unrecognized tax benefits | 15 | |||
Standby Letters of Credit | ||||
Other Commitments And Contingencies [Line Items] | ||||
Amount outstanding | 67 | |||
Performance Guarantee | ||||
Other Commitments And Contingencies [Line Items] | ||||
Surety bonds | 233 | |||
Virnet X Inc | ||||
Other Commitments And Contingencies [Line Items] | ||||
Number of patents infringed | 2 | |||
Patents transferred and awarded | 368 | 23 | ||
SAIC | Government Investigations And Reviews | ||||
Other Commitments And Contingencies [Line Items] | ||||
Liability for estimate of loss | 18 | |||
Predecessor [Member] | Government Investigations And Reviews | ||||
Other Commitments And Contingencies [Line Items] | ||||
Liability for estimate of loss | $45 |
Uncategorized_Items
Uncategorized Items | 1/31/14 | 1/2/15 | ||
USD ($) | USD ($) | |||
[us-gaap_CashAndCashEquivalentsAtCarryingValueIncludingDiscontinuedOperations] | 430,000,000 | 430,000,000 | 459,000,000 | 459,000,000 |