Cover Page
Cover Page - shares | 3 Months Ended | |
Apr. 03, 2020 | Apr. 27, 2020 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Apr. 3, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-33072 | |
Entity Registrant Name | Leidos Holdings, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 20-3562868 | |
Entity Address, Address Line One | 1750 Presidents Street, | |
Entity Address, City or Town | Reston, | |
Entity Address, State or Province | VA | |
Entity Address, Postal Zip Code | 20190 | |
City Area Code | 571 | |
Local Phone Number | 526-6000 | |
Title of 12(b) Security | Common stock, par value $.0001 per share | |
Trading Symbol | LDOS | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 142,043,769 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0001336920 | |
Current Fiscal Year End Date | --01-01 | |
Former Address | ||
Entity Information [Line Items] | ||
Entity Address, Address Line One | 11951 Freedom Drive | |
Entity Address, City or Town | Reston | |
Entity Address, State or Province | VA | |
Entity Address, Postal Zip Code | 20190 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Millions | Apr. 03, 2020 | Jan. 03, 2020 |
ASSETS | ||
Cash and cash equivalents | $ 445 | $ 668 |
Receivables, net | 1,793 | 1,734 |
Other current assets | 630 | 410 |
Total current assets | 2,868 | 2,812 |
Property, plant and equipment, net | 490 | 287 |
Intangible assets, net | 950 | 530 |
Goodwill | 5,719 | 4,912 |
Operating lease right-of-use assets, net | 539 | 400 |
Other assets | 422 | 426 |
Total assets | 10,988 | 9,367 |
LIABILITIES AND EQUITY | ||
Accounts payable and accrued liabilities | 1,966 | 1,837 |
Accrued payroll and employee benefits | 531 | 435 |
Long-term debt, current portion | 1,793 | 61 |
Total current liabilities | 4,290 | 2,333 |
Long-term debt, net of current portion | 2,444 | 2,925 |
Operating lease liabilities | 500 | 326 |
Deferred tax liabilities | 176 | 184 |
Other long-term liabilities | 219 | 182 |
Commitments and contingencies (Notes 14 and 15) | ||
Stockholders’ equity: | ||
Common stock, $0.0001 par value, 500 million shares authorized, 142 million and 141 million shares issued and outstanding at April 3, 2020 and January 3, 2020, respectively | 0 | 0 |
Additional paid-in capital | 2,579 | 2,587 |
Retained earnings | 961 | 896 |
Accumulated other comprehensive loss | (185) | (70) |
Total Leidos stockholders’ equity | 3,355 | 3,413 |
Non-controlling interest | 4 | 4 |
Total equity | 3,359 | 3,417 |
Total liabilities and stockholders' equity | $ 10,988 | $ 9,367 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares | Apr. 03, 2020 | Jan. 03, 2020 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 142,000,000 | 141,000,000 |
Common stock, shares outstanding (in shares) | 142,000,000 | 141,000,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 03, 2020 | Mar. 29, 2019 | |
Income Statement [Abstract] | ||
Revenues | $ 2,889 | $ 2,577 |
Cost of revenues | 2,494 | 2,221 |
Selling, general and administrative expenses | 197 | 166 |
Acquisition, integration and restructuring costs | 12 | 2 |
Equity earnings of non-consolidated subsidiaries | (6) | (4) |
Operating income | 192 | 192 |
Non-operating (expense) income: | ||
Interest expense, net | (48) | (38) |
Other (expense) income, net | (14) | 92 |
Income before income taxes | 130 | 246 |
Income tax expense | (15) | (57) |
Net income attributable to Leidos common stockholders | $ 115 | $ 189 |
Earnings per share: | ||
Basic (dollars per share) | $ 0.81 | $ 1.30 |
Diluted (dollars per share) | $ 0.80 | $ 1.29 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 03, 2020 | Mar. 29, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 115 | $ 189 |
Foreign currency translation adjustments | (74) | 10 |
Unrecognized loss on derivative instruments | (42) | (15) |
Pension adjustments | 1 | 0 |
Total other comprehensive loss, net of taxes | (115) | (5) |
Comprehensive income attributable to Leidos common stockholders | $ 0 | $ 184 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED) - USD ($) shares in Millions, $ in Millions | Total | Shares of common stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive loss | Leidos Holdings, Inc. stockholders' equity | Non-controlling interest |
Beginning balance (shares) at Dec. 28, 2018 | 146 | ||||||
Beginning Balance at Dec. 28, 2018 | $ 3,311 | $ 2,966 | $ 372 | $ (30) | $ 3,308 | $ 3 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 189 | 189 | 189 | ||||
Other comprehensive loss, net of taxes | (5) | (5) | (5) | ||||
Issuances of stock (shares) | 1 | ||||||
Issuances of stock | 11 | 11 | 11 | ||||
Repurchases of stock and other (shares) | (3) | ||||||
Repurchases of stock and other | (222) | (222) | (222) | ||||
Dividends | (47) | (47) | (47) | ||||
Stock-based compensation | 12 | 12 | 12 | ||||
Ending balance (shares) at Mar. 29, 2019 | 144 | ||||||
Ending Balance at Mar. 29, 2019 | 3,297 | 2,767 | 562 | (35) | 3,294 | 3 | |
Beginning balance (shares) at Jan. 03, 2020 | 141 | ||||||
Beginning Balance at Jan. 03, 2020 | 3,417 | 2,587 | 896 | (70) | 3,413 | 4 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 115 | 115 | 115 | ||||
Other comprehensive loss, net of taxes | (115) | (115) | (115) | ||||
Issuances of stock (shares) | 1 | ||||||
Issuances of stock | 9 | 9 | 9 | ||||
Repurchases of stock and other | (32) | (32) | (32) | ||||
Dividends | (49) | (49) | (49) | ||||
Stock-based compensation | 15 | 15 | 15 | ||||
Ending balance (shares) at Apr. 03, 2020 | 142 | ||||||
Ending Balance at Apr. 03, 2020 | $ 3,359 | $ 2,579 | $ 961 | $ (185) | $ 3,355 | $ 4 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED) (Parenthetical) - $ / shares | 3 Months Ended | |
Apr. 03, 2020 | Mar. 29, 2019 | |
Statement of Stockholders' Equity [Abstract] | ||
Dividends (in dollars per share) | $ 0.34 | $ 0.32 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 03, 2020 | Mar. 29, 2019 | |
Cash flows from operations: | ||
Net income | $ 115 | $ 189 |
Adjustments to reconcile net income to net cash provided by operations: | ||
Gain on sale of business | 0 | (88) |
Depreciation and amortization | 61 | 58 |
Stock-based compensation | 15 | 12 |
Deferred income taxes | 2 | 13 |
Other | 28 | 3 |
Change in assets and liabilities, net of effects of acquisitions and dispositions: | ||
Receivables | 89 | (21) |
Other current assets and other long-term assets | (43) | (25) |
Accounts payable and accrued liabilities and other long-term liabilities | 25 | 214 |
Accrued payroll and employee benefits | 68 | (108) |
Income taxes receivable/payable | 12 | 41 |
Net cash provided by operating activities | 372 | 288 |
Cash flows from investing activities: | ||
Acquisition of business, net of cash acquired | (1,642) | 0 |
Payments for property, equipment and software | (44) | (30) |
Proceeds from disposition of business | 0 | 171 |
Net proceeds from sale of assets | 0 | 96 |
Other | 1 | 0 |
Net cash (used in) provided by investing activities | (1,685) | 237 |
Cash flows from financing activities: | ||
Proceeds from debt issuance | 3,175 | 0 |
Payments of long-term debt | (1,927) | (31) |
Payments for debt issuance costs | (12) | 0 |
Dividend payments | (51) | (54) |
Repurchases of stock and other | (32) | (222) |
Proceeds from issuances of stock | 8 | 10 |
Net cash provided by (used in) financing activities | 1,161 | (297) |
Net (decrease) increase in cash, cash equivalents and restricted cash | (152) | 228 |
Cash, cash equivalents and restricted cash at beginning of period | 717 | 369 |
Cash, cash equivalents and restricted cash at end of period | $ 565 | $ 597 |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 3 Months Ended |
Apr. 03, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Note 1–Basis of Presentation and Summary of Significant Accounting Policies Nature of Operations and Basis of Presentation Leidos Holdings, Inc. ("Leidos"), a Delaware corporation, is a holding company whose direct 100%-owned subsidiary and principal operating company is Leidos, Inc. Leidos is a FORTUNE 500 ® science, engineering and information technology company that provides services and solutions in the defense, intelligence, civil and health markets. Leidos' domestic customers include the U.S. Department of Defense ("DoD"), the U.S. Intelligence Community, the U.S. Department of Homeland Security, the Federal Aviation Administration, the Department of Veterans Affairs and many other U.S. government civilian agencies, as well as state and local government agencies. Leidos' international customers include foreign governments and their agencies, primarily located in Australia and the United Kingdom ("U.K."). Unless indicated otherwise, references to "we," "us" and "our" refer collectively to Leidos Holdings, Inc. and its consolidated subsidiaries. We operate in three reportable segments: Defense Solutions, Civil and Health. Additionally, we separately present the unallocable costs associated with corporate functions as Corporate. We have a controlling interest in Mission Support Alliance, LLC ("MSA"), a joint venture with Centerra Group, LLC. The financial results for MSA are consolidated into our unaudited condensed consolidated financial statements. The unaudited condensed consolidated financial statements also include the balances of all voting interest entities in which Leidos has a controlling voting interest ("subsidiaries") and a variable interest entity ("VIE") in which Leidos is the primary beneficiary. The consolidated balances of the VIE are not material to the unaudited condensed consolidated financial statements for the periods presented. Intercompany accounts and transactions between consolidated companies 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 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. Management evaluates these estimates and assumptions on an ongoing basis, including those relating to estimated profitability of long-term contracts, indirect billing rates, allowances for doubtful accounts, inventories, right of use assets and lease liabilities, fair value and impairment of intangible assets and goodwill, income taxes, stock-based compensation expense and contingencies. These 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. Effective the beginning of fiscal 2020, certain contracts were reassigned from the Civil reportable segment to the Defense Solutions reportable segment. Prior year segment results have been recast to reflect this change (see "Note 13–Business Segments"). Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation. We separately disclosed "Deferred income taxes" and "Income taxes receivable/payable" within operating activities on the condensed consolidated statements of cash flows. Additionally, we combined "Other current assets" and "Other long-term assets" into "Other current assets and other long-term assets" and "Accounts payable and accrued liabilities" and "Other long-term liabilities" into "Accounts payable and accrued liabilities and other long-term liabilities" on the condensed consolidated statements of cash flows. 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 notes thereto included in the Annual Report on Form 10-K filed on February 18, 2020. Accounting Standards Updates ("ASU") Adopted ASU 2016-13, ASU 2018-19, ASU 2019-05 and ASU 2019-11, Financial Instruments – Credit Losses (Topic 326) In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13 and subsequent updates, which eliminates the requirement that a credit loss on a financial instrument be "probable" prior to recognition. Instead, a valuation allowance will be recorded to reflect an entity's current estimate of all expected credit losses, based on both historical and forecasted information related to an instrument. The update is effective for public companies for annual and interim reporting periods beginning after December 15, 2019, and should be adopted using a modified retrospective approach, which applies a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. A prospective approach is required for debt securities for which an other-than-temporary impairment had been recognized before the effective date and loans and debt securities acquired with deteriorated credit quality. Early adoption is permitted. Effective January 4, 2020, we adopted the requirements of Topic 326 using the modified retrospective approach. The adoption resulted in an immaterial impact to our financial assets and processes for determining the expected credit loss. Accounting Standards Updates Issued But Not Yet Adopted ASU 2020-04, Reference Rate Reform (Topic 848) In March 2020, the FASB issued ASU 2020-04 which provides companies with optional expedients and exceptions to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. This update provides optional expedients for applying accounting guidance to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of the reference rate reform. The amendments in this update are effective for all entities as of March 2020 and can be adopted using a prospective approach no later than December 31, 2022. We are currently evaluating the impacts of the reference rate reform. Changes in Estimates on Contracts Changes in estimates related to contracts accounted for using the cost-to-cost method of accounting are recognized in the period in which such changes are made for the inception-to-date effect of the changes, with the exception of contracts acquired through a business combination, where the adjustment is made for the period commencing from the date of acquisition. Changes in estimates on contracts were as follows: Three Months Ended April 3, March 29, (in millions, except per share amounts) Favorable impact $ 24 $ 23 Unfavorable impact (7) (19) Net impact to income before income taxes $ 17 $ 4 Impact on diluted EPS attributable to Leidos common stockholders $ 0.09 $ 0.02 The impact on diluted earnings per share ("EPS") attributable to Leidos common stockholders is calculated using the statutory tax rate. Revenue Recognized from Prior Obligations Revenue recognized from performance obligations satisfied in previous periods was $20 million and $7 million for the three months ended April 3, 2020 and March 29, 2019, respectively. The changes primarily relate to revisions of variable consideration, including award and incentive fees, and revisions to estimates at completion resulting from changes in contract scope, mitigation of contract risks or due to true-ups of contract estimates at the end of contract performance. Cash and Cash Equivalents Our cash equivalents are primarily comprised of investments in several large institutional money market accounts, with original maturity of three months or less. Outstanding payments are included within "Cash and cash equivalents" and "Accounts payable and accrued liabilities" correspondingly on the condensed consolidated balance sheets. At April 3, 2020 and January 3, 2020, $200 million and $169 million, respectively, of outstanding payments were included within "Cash and cash equivalents." |
Revenues
Revenues | 3 Months Ended |
Apr. 03, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Note 2–Revenues Remaining Performance Obligations Remaining performance obligations represent the expected value of exercised contracts, both funded and unfunded, less revenue recognized to date. Remaining performance obligations do not include unexercised option periods and future potential task orders expected to be awarded under indefinite delivery/indefinite quantity ("IDIQ"), General Services Administration Schedule or other master agreement contract vehicles, with the exception of certain IDIQ contracts where task orders are not competitively awarded and separately priced but instead are used as a funding mechanism, and where there is a basis for estimating future revenues and funding on future task orders is anticipated. As of April 3, 2020, we had $13.8 billion of remaining performance obligations, which are expected to be recognized as revenues in the amounts of $6.5 billion, $2.5 billion and $4.8 billion for the remainder of fiscal 2020, fiscal 2021 and fiscal 2022 and thereafter, respectively. Disaggregation of Revenues We disaggregate revenues by customer-type, contract-type and geographic location for each of our reportable segments. These categories represent how the nature, timing and uncertainty of revenues and cash flows are affected. Prior year segment results have been recast for the contracts that were reassigned from the Civil reportable segment to the Defense Solutions reportable segment. Disaggregated revenues by customer-type were as follows: Three Months Ended April 3, 2020 Defense Solutions Civil Health Total (in millions) DoD and U.S. Intelligence Community $ 1,285 $ 17 $ 124 $ 1,426 Other government agencies (1) 208 544 375 1,127 Commercial and non-U.S. customers 212 71 28 311 Total $ 1,705 $ 632 $ 527 $ 2,864 Three Months Ended March 29, 2019 Defense Solutions Civil Health Total (in millions) DoD and U.S. Intelligence Community $ 1,135 $ 17 $ 124 $ 1,276 Other government agencies (1) 156 511 302 969 Commercial and non-U.S. customers 199 87 28 314 Total $ 1,490 $ 615 $ 454 $ 2,559 (1) Includes federal government agencies other than the DoD and U.S. Intelligence Community, as well as state and local government agencies. The majority of our revenues are generated from U.S. government contracts, either as a prime contractor or as a subcontractor. Revenues from the U.S. government can be adversely impacted by spending caps or changes in budgetary priorities of the U.S. government, as well as delays in program start dates or the award of a contract. Disaggregated revenues by contract-type were as follows: Three Months Ended April 3, 2020 Defense Solutions Civil Health Total (in millions) Cost-reimbursement and fixed-price-incentive-fee $ 1,094 $ 346 $ 65 $ 1,505 Firm-fixed-price 440 173 373 986 Time-and-materials and fixed-price-level-of-effort 171 113 89 373 Total $ 1,705 $ 632 $ 527 $ 2,864 Three Months Ended March 29, 2019 Defense Solutions Civil Health Total (in millions) Cost-reimbursement and fixed-price-incentive-fee $ 986 $ 367 $ 69 $ 1,422 Firm-fixed-price 364 142 269 775 Time-and-materials and fixed-price-level-of-effort 140 106 116 362 Total $ 1,490 $ 615 $ 454 $ 2,559 Cost-reimbursement and fixed-price-incentive-fee contracts are generally lower risk and have lower profits. Time-and-materials ("T&M") and fixed-price-level-of-effort contracts are also lower risk but profits may vary depending on actual labor costs compared to negotiated contract billing rates. Firm-fixed-price ("FFP") contracts offer the potential for higher profits while increasing the exposure to risk of cost overruns. Disaggregated revenues by geographic location were as follows: Three Months Ended April 3, 2020 Defense Solutions Civil Health Total (in millions) United States $ 1,513 $ 619 $ 527 $ 2,659 International 192 13 — 205 Total $ 1,705 $ 632 $ 527 $ 2,864 Three Months Ended March 29, 2019 Defense Solutions Civil Health Total (in millions) United States $ 1,304 $ 599 $ 454 $ 2,357 International 186 16 — 202 Total $ 1,490 $ 615 $ 454 $ 2,559 Our international business operations, primarily located in Australia and the U.K., are subject to additional and different risks than our U.S. business. Failure to comply with U.S. government laws and regulations applicable to international business, such as the Foreign Corrupt Practices Act or U.S. export control regulations, could have an adverse impact on our business with the U.S. government. In some countries, there is an increased chance for economic, legal or political changes that may adversely affect the performance of our services, sales of products or repatriation of profits. International transactions can also involve increased financial and legal risks arising from foreign exchange variability, imposition of tariffs or additional taxes and restrictive trade policies and delays or failure to collect amounts due to differing legal systems. Revenues by customer-type, contract-type and geographic location exclude $25 million and $18 million of lease income for the three months ended April 3, 2020 and March 29, 2019, respectively (see "Note 6–Leases"). Note 3–Contract Assets and Liabilities Performance obligations are satisfied either over time as work progresses or at a point in time. FFP contracts are typically billed to the customer using milestone payments while cost-reimbursable and T&M contracts are typically billed to the customer on a monthly or bi-weekly basis as indicated by the negotiated billing terms and conditions of the contract. As a result, the timing of revenue recognition, customer billings and cash collections for each contract results in a net contract asset or liability at the end of each reporting period. Contract assets consist of unbilled receivables, which is the amount of revenue recognized that exceeds the amount billed to the customer, where right to payment is not just subject to the passage of time. Contract liabilities consist of deferred revenue. The components of contract assets and contract liabilities consisted of the following: Balance sheet line item April 3, January 3, (in millions) Contract assets - current: Unbilled receivables (1) Receivables, net $ 718 $ 735 Contract liabilities - current: Deferred revenue Accounts payable and accrued liabilities $ 420 $ 400 Contract liabilities - non-current: Deferred revenue Other long-term liabilities $ 8 $ 9 (1) Balances exclude $572 million determined to be billable at April 3, 2020, and January 3, 2020. The decrease in unbilled receivables was primarily due to the timing of revenue recognized on certain contracts. The increase in deferred revenue was primarily due to the timing of advance payments from customers offset by revenue recognized during the period. Revenue recognized for the three months ended April 3, 2020 of $145 million was included as a contract liability at January 3, 2020. Revenue recognized for the three months ended March 29, 2019 of $113 million was included as a contract liability at December 28, 2018. |
Contract Asset and Liabilities
Contract Asset and Liabilities | 3 Months Ended |
Apr. 03, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Contract Asset and Liabilities | Note 2–Revenues Remaining Performance Obligations Remaining performance obligations represent the expected value of exercised contracts, both funded and unfunded, less revenue recognized to date. Remaining performance obligations do not include unexercised option periods and future potential task orders expected to be awarded under indefinite delivery/indefinite quantity ("IDIQ"), General Services Administration Schedule or other master agreement contract vehicles, with the exception of certain IDIQ contracts where task orders are not competitively awarded and separately priced but instead are used as a funding mechanism, and where there is a basis for estimating future revenues and funding on future task orders is anticipated. As of April 3, 2020, we had $13.8 billion of remaining performance obligations, which are expected to be recognized as revenues in the amounts of $6.5 billion, $2.5 billion and $4.8 billion for the remainder of fiscal 2020, fiscal 2021 and fiscal 2022 and thereafter, respectively. Disaggregation of Revenues We disaggregate revenues by customer-type, contract-type and geographic location for each of our reportable segments. These categories represent how the nature, timing and uncertainty of revenues and cash flows are affected. Prior year segment results have been recast for the contracts that were reassigned from the Civil reportable segment to the Defense Solutions reportable segment. Disaggregated revenues by customer-type were as follows: Three Months Ended April 3, 2020 Defense Solutions Civil Health Total (in millions) DoD and U.S. Intelligence Community $ 1,285 $ 17 $ 124 $ 1,426 Other government agencies (1) 208 544 375 1,127 Commercial and non-U.S. customers 212 71 28 311 Total $ 1,705 $ 632 $ 527 $ 2,864 Three Months Ended March 29, 2019 Defense Solutions Civil Health Total (in millions) DoD and U.S. Intelligence Community $ 1,135 $ 17 $ 124 $ 1,276 Other government agencies (1) 156 511 302 969 Commercial and non-U.S. customers 199 87 28 314 Total $ 1,490 $ 615 $ 454 $ 2,559 (1) Includes federal government agencies other than the DoD and U.S. Intelligence Community, as well as state and local government agencies. The majority of our revenues are generated from U.S. government contracts, either as a prime contractor or as a subcontractor. Revenues from the U.S. government can be adversely impacted by spending caps or changes in budgetary priorities of the U.S. government, as well as delays in program start dates or the award of a contract. Disaggregated revenues by contract-type were as follows: Three Months Ended April 3, 2020 Defense Solutions Civil Health Total (in millions) Cost-reimbursement and fixed-price-incentive-fee $ 1,094 $ 346 $ 65 $ 1,505 Firm-fixed-price 440 173 373 986 Time-and-materials and fixed-price-level-of-effort 171 113 89 373 Total $ 1,705 $ 632 $ 527 $ 2,864 Three Months Ended March 29, 2019 Defense Solutions Civil Health Total (in millions) Cost-reimbursement and fixed-price-incentive-fee $ 986 $ 367 $ 69 $ 1,422 Firm-fixed-price 364 142 269 775 Time-and-materials and fixed-price-level-of-effort 140 106 116 362 Total $ 1,490 $ 615 $ 454 $ 2,559 Cost-reimbursement and fixed-price-incentive-fee contracts are generally lower risk and have lower profits. Time-and-materials ("T&M") and fixed-price-level-of-effort contracts are also lower risk but profits may vary depending on actual labor costs compared to negotiated contract billing rates. Firm-fixed-price ("FFP") contracts offer the potential for higher profits while increasing the exposure to risk of cost overruns. Disaggregated revenues by geographic location were as follows: Three Months Ended April 3, 2020 Defense Solutions Civil Health Total (in millions) United States $ 1,513 $ 619 $ 527 $ 2,659 International 192 13 — 205 Total $ 1,705 $ 632 $ 527 $ 2,864 Three Months Ended March 29, 2019 Defense Solutions Civil Health Total (in millions) United States $ 1,304 $ 599 $ 454 $ 2,357 International 186 16 — 202 Total $ 1,490 $ 615 $ 454 $ 2,559 Our international business operations, primarily located in Australia and the U.K., are subject to additional and different risks than our U.S. business. Failure to comply with U.S. government laws and regulations applicable to international business, such as the Foreign Corrupt Practices Act or U.S. export control regulations, could have an adverse impact on our business with the U.S. government. In some countries, there is an increased chance for economic, legal or political changes that may adversely affect the performance of our services, sales of products or repatriation of profits. International transactions can also involve increased financial and legal risks arising from foreign exchange variability, imposition of tariffs or additional taxes and restrictive trade policies and delays or failure to collect amounts due to differing legal systems. Revenues by customer-type, contract-type and geographic location exclude $25 million and $18 million of lease income for the three months ended April 3, 2020 and March 29, 2019, respectively (see "Note 6–Leases"). Note 3–Contract Assets and Liabilities Performance obligations are satisfied either over time as work progresses or at a point in time. FFP contracts are typically billed to the customer using milestone payments while cost-reimbursable and T&M contracts are typically billed to the customer on a monthly or bi-weekly basis as indicated by the negotiated billing terms and conditions of the contract. As a result, the timing of revenue recognition, customer billings and cash collections for each contract results in a net contract asset or liability at the end of each reporting period. Contract assets consist of unbilled receivables, which is the amount of revenue recognized that exceeds the amount billed to the customer, where right to payment is not just subject to the passage of time. Contract liabilities consist of deferred revenue. The components of contract assets and contract liabilities consisted of the following: Balance sheet line item April 3, January 3, (in millions) Contract assets - current: Unbilled receivables (1) Receivables, net $ 718 $ 735 Contract liabilities - current: Deferred revenue Accounts payable and accrued liabilities $ 420 $ 400 Contract liabilities - non-current: Deferred revenue Other long-term liabilities $ 8 $ 9 (1) Balances exclude $572 million determined to be billable at April 3, 2020, and January 3, 2020. The decrease in unbilled receivables was primarily due to the timing of revenue recognized on certain contracts. The increase in deferred revenue was primarily due to the timing of advance payments from customers offset by revenue recognized during the period. Revenue recognized for the three months ended April 3, 2020 of $145 million was included as a contract liability at January 3, 2020. Revenue recognized for the three months ended March 29, 2019 of $113 million was included as a contract liability at December 28, 2018. |
Acquisitions
Acquisitions | 3 Months Ended |
Apr. 03, 2020 | |
Business Combinations [Abstract] | |
Acquisitions | Note 4–Acquisitions L3Harris Technologies ("L3Harris") Transaction On February 3, 2020, we entered into a definitive agreement to acquire L3Harris' security detection and automation businesses for cash consideration of $1.0 billion, subject to net working capital adjustments, if any. L3Harris' security detection and automation businesses provide airport and critical infrastructure screening products, automated tray return systems and other industrial automation products. Additionally, on February 12, 2020, we entered into a senior unsecured delayed-draw term loan facility providing for $1.0 billion of commitments from certain financial institutions in connection with the L3Harris transaction (see "Note 9–Debt"). On May 4, 2020, we completed our acquisition of L3Harris' security detection and automation businesses and drew on our senior unsecured delayed-draw term loan facility (see "Note 16–Subsequent Events"). Dynetics Acquisition On January 31, 2020 (the "Acquisition Date"), we completed our acquisition of Dynetics, Inc. ("Dynetics"), an industry-leading applied research and national security solutions company. All of the issued and outstanding shares of common stock of Dynetics were purchased for $1.64 billion, net of cash acquired. In connection with the acquisition, we entered into a Bridge Credit Agreement with certain financial institutions, which provided for a senior unsecured 364-day bridge loan facility in an aggregate principal amount of $1.25 billion (the "Bridge Facility"). See "Note 9–Debt" for further details. The proceeds of the Bridge Facility and cash on hand on the Acquisition Date were used to fund the purchase of Dynetics and repay in full all third party indebtedness of Dynetics, terminate all commitments thereunder and discharge and release all existing guarantees and liens. The addition of Dynetics will accelerate opportunities within our innovation engine that researches and develops new technologies and solutions to address the most challenging needs of our customers. The preliminary fair values of the assets acquired and liabilities assumed at the Acquisition Date were as follows (in millions): Cash $ 18 Receivables 159 Other current assets 64 Operating lease right-of-use assets 25 Property, plant and equipment 161 Intangible assets 464 Accounts payable and accrued liabilities (45) Accrued payroll and employee benefits (29) Operating lease liabilities (20) Total identifiable net assets acquired 797 Goodwill 863 Preliminary purchase price $ 1,660 Due to the timing and complexity of the acquisition, the assets acquired and liabilities assumed were recorded at their preliminary estimated fair values. As of April 3, 2020, we had not finalized the determination of fair values of the acquired assets and liabilities, primarily including, but not limited to: property, plant and equipment and intangible assets. The preliminary purchase price allocation is subject to change as we complete our determination of the fair value of the acquired assets and liabilities, the impact of which could be material. The goodwill represents intellectual capital and the acquired assembled workforce, none of which qualify for recognition as a separate intangible asset. For tax purposes, $867 million of goodwill is deductible. The following table summarizes the preliminary fair value of intangible assets acquired at the Acquisition Date and the related weighted average amortization period: Weighted average amortization period Fair value (in years) (in millions) Program intangibles 10 $ 430 Backlog intangibles 1 34 Total 9 $ 464 The following expenses were incurred related to the acquisition of Dynetics: Three Months Ended April 3, (in millions) Acquisition costs $ 8 Integration costs 1 Total acquisition and integration costs $ 9 For the three months ended April 3, 2020, $129 million of revenues related to Dynetics were recognized within the Defense Solutions reportable segment. Pro Forma Financial Information The following unaudited pro forma financial information presents consolidated results of operations as if the acquisition had occurred on December 29, 2018. The pro forma financial information was prepared based on historical financial information and has been adjusted to give effect to the events that are directly attributable to the acquisition of Dynetics and factually supportable. The unaudited pro forma results below do not reflect future events that have occurred or may occur after the acquisition, including anticipated synergies or other expected benefits that may be realized from the acquisition. The pro forma information is not intended to reflect the actual results of operations that would have occurred if the acquisition had been completed on December 29, 2018, nor is it intended to be an indication of future operating results. Three Months Ended April 3, March 29, (in millions, except per share amounts) Revenues $ 2,952 $ 2,722 Net income attributable to Leidos common stockholders 130 158 Earnings per share: Basic $ 0.92 $ 1.09 Diluted 0.90 1.07 The unaudited pro forma financial information above includes the following nonrecurring significant adjustment made to account for certain costs incurred as if the acquisition had been completed on December 29, 2018: |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Apr. 03, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Note 5–Goodwill and Intangible Assets Goodwill The following table presents changes in the carrying amount of goodwill by reportable segment: Defense Solutions Civil Health Total (in millions) Goodwill at December 28, 2018 $ 2,015 $ 1,924 $ 921 $ 4,860 Goodwill re-allocation 25 (25) — — Acquisition of IMX Medical Management Services, Inc. — — 50 50 Divestiture of health staff augmentation business — — (5) (5) Foreign currency translation adjustments (4) 8 — 4 Adjustment to goodwill 3 — — 3 Goodwill at January 3, 2020 2,039 1,907 966 4,912 Goodwill re-allocation 429 (429) — — Acquisition of Dynetics 863 — — 863 Foreign currency translation adjustments (56) — — (56) Goodwill at April 3, 2020 $ 3,275 $ 1,478 $ 966 $ 5,719 Effective the beginning of fiscal 2020, certain contracts were reassigned from the Civil reportable segment to the Defense Solutions reportable segment. This change resulted in the reallocation of $429 million of goodwill between the reporting units within the two reportable segments. We evaluated goodwill for impairment for certain of our reporting units using either a quantitative step one analysis or qualitative analysis, both before and after the changes were made, and determined that goodwill was not impaired. Intangible Assets Intangible assets consisted of the following: April 3, 2020 January 3, 2020 Gross carrying value Accumulated amortization Net carrying value Gross carrying value Accumulated amortization Net carrying value (in millions) Finite-lived intangible assets: Program intangibles $ 1,427 $ (566) $ 861 $ 1,003 $ (536) $ 467 Software and technology 102 (84) 18 102 (83) 19 Customer relationships 45 (7) 38 45 (6) 39 Backlog 34 (6) 28 — — — Trade names 1 — 1 1 — 1 Total finite-lived intangible assets 1,609 (663) 946 1,151 (625) 526 Indefinite-lived intangible assets: Trade names 4 — 4 4 — 4 Total intangible assets $ 1,613 $ (663) $ 950 $ 1,155 $ (625) $ 530 Amortization expense was $43 million for both the three months ended April 3, 2020 and March 29, 2019. Program intangibles and backlog intangible assets are amortized over their respective estimated useful lives in proportion to the pattern of economic benefit based on expected future discounted cash flows. Customer relationships and trade name intangible assets are amortized on a straight-line basis over their estimated useful lives. Software and technology intangible assets are amortized either on a straight-line basis over their estimated useful lives or over their respective estimated useful lives in proportion to the pattern of economic benefit based on expected future discounted cash flows, as deemed appropriate. The estimated annual amortization expense as of April 3, 2020, was as follows: Fiscal year ending (in millions) 2020 (remainder of year) $ 142 2021 171 2022 166 2023 144 2024 100 2025 and thereafter 223 $ 946 We are monitoring the impacts of the coronavirus outbreak ("COVID-19") on the fair value of our intangible assets and goodwill. While we currently do not anticipate any impairments to intangible assets and goodwill as a result of COVID-19, future changes in the expectations of the impact on our operations, financial performance and cash flows related to the intangible assets and goodwill could cause these assets to be impaired. |
Leases
Leases | 3 Months Ended |
Apr. 03, 2020 | |
Leases [Abstract] | |
Leases | Note 6–Leases Lessee On January 24, 2018, we entered into a lease agreement with our current lessor for office space in a building to be constructed to function as our new corporate headquarters in Reston, VA. We will occupy the space for an initial term of 148 months and lease expense will be $11 million for the first lease year, with an annual rent expense increase of 2.5%. In March 2020, we took occupancy of our new corporate headquarters in Reston, VA. As a result, we recorded $105 million of right-of-use assets and $133 million of lease liabilities. Lessor The components of lease income were as follows: Three Months Ended Income statement line item April 3, March 29, (in millions) Sales-type leases: Selling price at lease commencement Revenues $ 16 $ 10 Cost of underlying asset Cost of revenues (13) (9) Operating income 3 1 Interest income on lease receivables Revenues 2 — 5 1 Operating lease income Revenues 7 8 Total lease income $ 12 $ 9 |
Leases | Note 6–Leases Lessee On January 24, 2018, we entered into a lease agreement with our current lessor for office space in a building to be constructed to function as our new corporate headquarters in Reston, VA. We will occupy the space for an initial term of 148 months and lease expense will be $11 million for the first lease year, with an annual rent expense increase of 2.5%. In March 2020, we took occupancy of our new corporate headquarters in Reston, VA. As a result, we recorded $105 million of right-of-use assets and $133 million of lease liabilities. Lessor The components of lease income were as follows: Three Months Ended Income statement line item April 3, March 29, (in millions) Sales-type leases: Selling price at lease commencement Revenues $ 16 $ 10 Cost of underlying asset Cost of revenues (13) (9) Operating income 3 1 Interest income on lease receivables Revenues 2 — 5 1 Operating lease income Revenues 7 8 Total lease income $ 12 $ 9 |
Leases | Note 6–Leases Lessee On January 24, 2018, we entered into a lease agreement with our current lessor for office space in a building to be constructed to function as our new corporate headquarters in Reston, VA. We will occupy the space for an initial term of 148 months and lease expense will be $11 million for the first lease year, with an annual rent expense increase of 2.5%. In March 2020, we took occupancy of our new corporate headquarters in Reston, VA. As a result, we recorded $105 million of right-of-use assets and $133 million of lease liabilities. Lessor The components of lease income were as follows: Three Months Ended Income statement line item April 3, March 29, (in millions) Sales-type leases: Selling price at lease commencement Revenues $ 16 $ 10 Cost of underlying asset Cost of revenues (13) (9) Operating income 3 1 Interest income on lease receivables Revenues 2 — 5 1 Operating lease income Revenues 7 8 Total lease income $ 12 $ 9 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Apr. 03, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 7–Fair Value Measurements The accounting standard for fair value measurements establishes a three-level fair 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 quoted prices in active markets for identical assets or liabilities that are observable either directly or indirectly or quoted prices that are not active (Level 2); and unobservable inputs in which there is little or no market data (e.g., discounted cash flow and other similar pricing models), which requires us to develop our own assumptions (Level 3). The accounting guidance for fair value measurements requires that we maximize the use of observable inputs and minimize the use of unobservable inputs in determining fair value. The accounting guidance provides for the irrevocable option to elect, on a contract-by-contract basis, to measure certain financial assets and liabilities at fair value at inception of the contract and record any subsequent changes in fair value in earnings. We have not made fair value option elections on any of our financial assets and liabilities. The financial instruments measured at fair value on a recurring basis consisted of the following: April 3, 2020 January 3, 2020 Carrying value Fair value Carrying value Fair value (in millions) Financial assets: Derivatives $ 5 $ 5 $ 2 $ 2 Financial liabilities: Derivatives $ 125 $ 125 $ 75 $ 75 Our derivatives primarily consisted of the fair value interest rate swaps on the $450 million, fixed rate 4.45% senior unsecured notes maturing in December 2020 and cash flow interest rate swaps on $1.5 billion of the variable rate senior unsecured term loan (see "Note 8–Derivative Instruments"). The fair value of the fair value interest rate swaps and cash flow interest rate swaps is determined based on observed values for underlying interest rates on the LIBOR yield curve and the underlying interest rate, respectively (Level 2 inputs). The carrying amounts of our financial instruments, other than derivatives, which include cash equivalents, accounts receivable, accounts payable and accrued expenses, are reasonable estimates of their related fair values. The carrying value of our notes receivable of $21 million and $20 million as of April 3, 2020, and January 3, 2020, respectively, approximates fair value as the stated interest rates within the agreements are consistent with current market rates used in notes with similar terms in the market (Level 2 inputs). As of April 3, 2020, and January 3, 2020, the fair value of debt was $4.3 billion and $3.1 billion, respectively, and the carrying amount was $4.2 billion and $3.0 billion, respectively (see "Note 9–Debt"). The fair value of long-term debt is determined based on current interest rates available for debt with terms and maturities similar to our existing debt arrangements (Level 2 inputs). On January 31, 2020, non-financial instruments measured at fair value on a non-recurring basis were recorded in connection with the acquisition of Dynetics (see "Note 4–Acquisitions"). The preliminary fair values of the assets acquired and liabilities assumed were determined using Level 3 inputs. As of April 3, 2020, we did not have any assets or liabilities measured at fair value on a non-recurring basis. |
Derivative Instruments
Derivative Instruments | 3 Months Ended |
Apr. 03, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Note 8–Derivative Instruments We manage our risk to changes in interest rates and foreign currency exchange rates through the use of derivative instruments. We do not hold derivative instruments for trading or speculative purposes. For fixed rate borrowings, we use variable interest rate swaps, effectively converting fixed rate borrowings to variable rate borrowings. These swaps are designated as fair value hedges. For variable rate borrowings, we use fixed interest rate swaps, effectively converting a portion of the variable interest rate payments to fixed interest rate payments. These swaps are designated as cash flow hedges. We transact business globally and are subject to risks associated with changing foreign currency exchange rates. We enter into foreign currency forward contracts in order to mitigate fluctuations in our earnings and cash flows due to changes in foreign currency exchange rates. The foreign currency forward contracts are not designated as hedges and do not qualify for hedge accounting. The fair value of the interest rate swaps and foreign currency forward contracts was as follows: Asset derivatives Balance sheet line item April 3, January 3, (in millions) Fair value interest rate swaps Other current assets (1) $ 4 $ 2 Foreign currency forward contracts Other current assets 1 — $ 5 $ 2 (1) The carrying amount of the fair value interest rate swaps were recorded within "Other assets" as of January 3, 2020. Liability derivatives Balance sheet line item April 3, January 3, (in millions) Cash flow interest rate swaps Other long-term liabilities $ 125 $ 75 The cash flows associated with the interest rate swaps are classified as operating activities in the condensed consolidated statements of cash flows. Fair Value Hedge We have interest rate swap agreements to hedge the fair value of the $450 million fixed rate 4.45% senior unsecured 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). Under the terms of the interest rate swap agreements, we 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 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. 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) (See "Note 9–Debt"). The fair value of the Notes is stated at an amount that reflects changes in the six-month LIBOR rate subsequent to the inception of the interest rate swaps through the reporting date. The following amounts were recorded on the condensed consolidated balance sheets related to cumulative basis adjustments for fair value hedges: Carrying amount of hedged item Cumulative amount of fair value adjustment included within the hedged item Balance sheet line item of hedged item April 3, January 3, April 3, January 3, (in millions) Long-term debt, current portion (1) $ 454 $ 452 $ 4 $ 2 (1) The carrying amount of the hedged item and cumulative amount of fair value adjustments were recorded within "Long-term debt, net of current portion" as of January 3, 2020. Cash Flow Hedges We have interest rate swap agreements to hedge the cash flows of $1.5 billion of the variable rate senior unsecured term loan (the "Variable Rate Loan"). These interest rate swap agreements have a maturity date of August 2025 and a fixed interest rate of 3.00%. The objective of these instruments is to reduce variability in the forecasted interest payments of the Variable Rate Loan, which are based on the LIBOR rate. Under the terms of the interest rate swap agreements, we will receive monthly variable interest payments based on the one-month LIBOR rate and will pay interest at a fixed rate. The interest rate swap transactions were accounted for as cash flow hedges. The gain/loss on the swap is reported as a component of other comprehensive income (loss) and is reclassified into earnings when the interest payments on the underlying hedged items impact earnings. A qualitative assessment of hedge effectiveness is performed on a quarterly basis, unless facts and circumstances indicate the hedge may no longer be highly effective. The effect of the cash flow hedges on other comprehensive loss and earnings for the periods presented was as follows: Three Months Ended April 3, March 29, (in millions) Total interest expense, net presented in the condensed consolidated statements of income in which the effects of cash flow hedges are recorded $ 48 $ 38 Amount recognized in other comprehensive loss $ (55) $ (18) Amount reclassified from accumulated other comprehensive loss to interest expense, net — (2) We expect to reclassify net losses of $8 million from accumulated other comprehensive loss into earnings during the next 12 months. |
Debt
Debt | 3 Months Ended |
Apr. 03, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Note 9–Debt Our debt consisted of the following: Stated interest rate Effective interest rate April 3, 2020 (1) January 3, 2020 (1) (in millions) Senior unsecured bridge loan: $1,250 million bridge loan, due January 2021 2.37% 4.00% $ 1,238 $ — Senior unsecured term loan: $1,925 million Term Loan A, due January 2025 2.37% 2.64% 1,906 — Senior secured term loans: $690 million Term Loan A, due August 2023 3.31% 3.74% — 581 $310 million Term Loan A, due August 2023 3.31% 3.76% — 242 $1,131 million Term Loan B, due August 2025 3.56% 3.91% — 1,075 Senior unsecured notes: $450 million notes, due December 2020 4.45% 4.53% 454 452 $300 million notes, due December 2040 5.95% 6.03% 216 216 $250 million notes, due July 2032 7.13% 7.43% 247 247 $300 million notes, due July 2033 5.50% 5.88% 158 158 Notes payable and finance leases due on various dates through fiscal 2030 2.85%-5.49% Various 18 15 Total long-term debt 4,237 2,986 Less: current portion (1,793) (61) Total long-term debt, net of current portion $ 2,444 $ 2,925 (1) The carrying amounts of the senior term loans, notes and bridge loan as of April 3, 2020, and January 3, 2020, include the remaining principal outstanding of $4,254 million and $3,004 million, respectively, less total unamortized debt discounts and deferred debt issuances costs of $39 million and $35 million, respectively, and a $4 million and $2 million asset, respectively, related to the fair value interest rate swaps (see "Note 8–Derivative Instruments"). Bridge Facility On January 31, 2020, in connection with the acquisition of Dynetics, we entered into a Bridge Credit Agreement with certain financial institutions, which provided for a senior unsecured 364-day bridge loan facility in an aggregate principal amount of $1.25 billion. The Bridge Facility will mature 364 days after the Acquisition Date. Borrowings under the Bridge Credit Agreement bear interest at a rate determined, at our option, based on either an alternate base rate or a LIBOR rate, plus, in each case, an applicable margin that may range from 1.25% to 2.38% depending on our credit rating, subject to increases by 0.25% at 90, 180 and 270 days after the Acquisition Date. Based on our current ratings, the applicable margin for LIBOR-denominated borrowings is 1.38%. Additionally, we will pay to each lender under the Bridge Facility a duration fee equal to 0.50%, 0.75% and 1.00% of the aggregate outstanding principal amount of the loans under the Bridge Facility at 90, 180, and 270 days after the Acquisition Date, respectively. The financial covenants in the Bridge Credit Agreement require that we maintain, as of the last day of each fiscal quarter (beginning with the second fiscal quarter of 2020), a ratio of adjusted consolidated total debt to consolidated earnings before interest, taxes, depreciation and amortization ("EBITDA") of not more than 3.75 to 1.00, subject to increases to 4.50 to 1.00 following a material acquisition. Term Loans and Revolving Credit Facility On January 17, 2020 (the "Closing Date"), we entered into a Credit Agreement (the "Credit Agreement") with certain financial institutions, which provided for a senior unsecured term loan A facility in an aggregate principal amount of $1.9 billion (the "Term Loan Facility") and a $750 million senior unsecured revolving facility (the "Revolving Facility" and, together with the Term Loan Facility, the "Credit Facilities"). The Credit Facilities will mature five years from the Closing Date, subject to up to two additional one year extensions. The proceeds of the Term Loan Facility and cash on hand on the Closing Date were used to repay in full all indebtedness, and terminate all commitments, under, and discharge and release all guarantees and liens existing in connection with the credit agreements entered into in August 2016 (the "Terminated Credit Agreements"). As a result of the termination of the liens under the Terminated Credit Agreements, the liens securing the outstanding $450 million notes due 2020 and $300 million notes due 2040 were also released and such notes are now senior unsecured obligations. Borrowings under the Credit Agreement bear interest at a rate determined, at our option, based on either an alternate base rate or a LIBOR rate plus, in each case, an applicable margin that varies depending on our credit rating. The applicable margin range for LIBOR-denominated borrowings is from 1.13% to 1.75%. Based on our current ratings, the applicable margin for LIBOR-denominated borrowings is 1.38%. Principal payments are made quarterly on the Term Loan Facility, with the majority of the principal due at maturity. Interest on the Term Loan Facility for LIBOR-denominated borrowings is payable on a periodic basis, which must be at least quarterly. The financial covenants in the Credit Agreement require that we maintain, as of the last day of each fiscal quarter (beginning with the second fiscal quarter of 2020), a ratio of adjusted consolidated total debt to consolidated EBITDA of not more than 3.75 to 1.00, subject to two increases to 4.50 to 1.00 following a material acquisition, and a ratio of EBITDA to consolidated interest expense of not less than 3.50 to 1.00. In addition to the refinancing activity noted above, we made principal payments on our long-term debt of $2 million and $31 million during the three months ended April 3, 2020 and March 29, 2019, respectively. This activity included principal payments on our term loans of $27 million during the three months ended March 29, 2019. As of April 3, 2020, and January 3, 2020, there were no borrowings outstanding under the unsecured and secured credit facility, respectively. In connection with the Credit Facilities and Bridge Facility, $29 million of debt issuance costs that were related to the loan facilities and revolving credit facility were recognized, which were recorded as an offset against the carrying value of debt and capitalized within "Other assets" in the condensed consolidated balance sheets, respectively. Additionally, $19 million of debt discount and debt issuance costs were written off related to the Terminated Credit Agreements. Amortization of debt discount and debt issuance costs for the three months ended April 3, 2020 and March 29, 2019 were $4 million and $3 million, respectively. Senior Notes As of January 3, 2020, the carrying value of the $450 million senior notes maturing in December 2020 was reflected within “Long-term debt, net of current portion” as we had the ability to consummate and intention to refinance the existing debt. During the three months ended April 3, 2020, we determined that it was more beneficial to repay our $450 million senior notes maturing in December 2020 as contractually obligated rather than to refinance the debt based on current financial market conditions. As a result, the carrying value has been reclassified into the current portion of long-term debt as of April 3, 2020. The senior unsecured term loans, notes, revolving credit facility and the bridge loan are fully and unconditionally guaranteed and contain certain customary restrictive covenants, including among other things, restrictions on our ability to create liens and enter into sale and leaseback transactions under certain circumstances. We were in compliance with all covenants as of April 3, 2020. Delayed-draw Term Loan Facility On February 12, 2020, we entered into a senior unsecured delayed-draw term loan facility providing for $1.0 billion of commitments from certain financial institutions in connection with the acquisition of L3Harris' security detection and automation businesses. The maturity date will be two years from the funding date if we draw on this commitment. As of April 3, 2020, we have not drawn any funds under the delayed-draw term loan facility. On May 4, 2020, we completed our acquisition of L3Harris' security detection and automation businesses and drew on our senior unsecured delayed-draw term loan facility (see "Note 16–Subsequent Events"). |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Apr. 03, 2020 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | Note 10–Accumulated Other Comprehensive Loss Changes in the components of accumulated other comprehensive loss were as follows: Foreign currency translation adjustments Unrecognized gain (loss) on derivative instruments Pension adjustments Total accumulated other comprehensive loss (in millions) Balance at December 28, 2018 $ (41) $ 14 $ (3) $ (30) Other comprehensive income (loss) 5 (55) (1) (51) Taxes 3 15 — 18 Reclassification from accumulated other comprehensive loss — (7) — (7) Balance at January 3, 2020 (33) (33) (4) (70) Other comprehensive (loss) income (76) (55) 1 (130) Taxes 2 13 — 15 Balance at April 3, 2020 $ (107) $ (75) $ (3) $ (185) Reclassifications from unrecognized gain (loss) on derivative instruments are recorded in "Interest expense, net" in the condensed consolidated statements of income. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Apr. 03, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 11–Earnings Per Share 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, March 29, (in millions) Basic weighted average number of shares outstanding 142 145 Dilutive common share equivalents—stock options and other stock awards 2 2 Diluted weighted average number of shares outstanding 144 147 Anti-dilutive stock-based awards are excluded from the weighted average number of shares outstanding used to compute diluted EPS. For the three months ended April 3, 2020 and March 29, 2019, there were 1 million and 2 million, respectively, of outstanding stock options and vesting stock awards that were anti-dilutive. |
Supplementary Cash Flow Informa
Supplementary Cash Flow Information and Restricted Cash | 3 Months Ended |
Apr. 03, 2020 | |
Supplemental Cash Flow Information [Abstract] | |
Supplementary Cash Flow Information and Restricted Cash | Note 12–Supplementary Cash Flow Information and Restricted Cash Supplementary cash flow information, and non-cash activities, for the periods presented was as follows: Three Months Ended April 3, March 29, (in millions) Supplementary cash flow information: Cash paid for interest $ 27 $ 43 Cash paid for income taxes, net of refunds — 3 Non-cash investing activity: Fixed asset additions $ 13 $ — Non-cash financing activity: Finance lease obligations $ 6 $ — Sale of Accounts Receivable We have entered into purchase agreements with a financial institution which provide us the election to sell accounts receivable at a discount. The receivables sold are typically collectable within 30 days of the sale date. During the three months ended April 3, 2020, we sold $564 million of accounts receivable under the agreements and received proceeds of $563 million, which were classified as operating activities in the condensed consolidated statements of cash flows. These transfers have been recognized as a sale, as the receivables have been legally isolated from Leidos, the financial institution has the right to pledge or exchange the assets received and we do not maintain effective control over the transferred accounts receivable. Our only continuing involvement with the transferred financial assets is as the collection and servicing agent. As a result, the accounts receivable balance on the condensed consolidated balance sheets is presented net of the transferred amounts. No servicing asset or liability was recognized for continued servicing of the sold receivables, as the servicing fee approximates fair value. The difference between the carrying amount of the receivables sold and the net cash received was recognized as a loss on sale and was recorded within "Selling, general and administrative expenses" on the condensed consolidated statements of income. Sold receivables activity for the period was as follows: Three Months Ended April 3, (in millions) Sales of accounts receivable $ 564 Cash collections on sold receivables remitted to financial institution (367) Outstanding balance sold to financial institution 197 Cash collected but not yet remitted to financial institution (60) Sold receivables due from customers $ 137 Restricted Cash The following is a reconciliation of cash and cash equivalents, as reported within the condensed consolidated balance sheets, to the total cash, cash equivalents and restricted cash, as reported within the condensed consolidated statements of cash flows: April 3, January 3, (in millions) Cash and cash equivalents $ 445 $ 668 Restricted cash 120 49 Total cash, cash equivalents and restricted cash $ 565 $ 717 Restricted cash is recorded within "Other current assets" in the condensed consolidated balance sheets. The restricted cash is primarily comprised of collections on sold receivables to be remitted to the financial institution and advances from customers that are restricted as to use for certain expenditures related to that customer's contract. |
Business Segments
Business Segments | 3 Months Ended |
Apr. 03, 2020 | |
Segment Reporting [Abstract] | |
Business Segments | Note 13–Business Segments Our operations and reportable segments are organized around the customers and markets we serve. We define our reportable segments based on the way the chief operating decision maker ("CODM"), currently our Chairman and Chief Executive Officer, manages operations for the purposes of allocating resources and assessing performance. Effective the beginning of fiscal 2020, certain contracts were reassigned from the Civil reportable segment to the Defense Solutions reportable segment to better align operations within the reportable segments to the customers they serve. Prior year segment results have been recast to reflect this change. Additionally, the results of Dynetics were included within the Defense Solutions reportable segment. The segment information for the periods presented was as follows: Three Months Ended April 3, March 29, (in millions) Revenues: Defense Solutions $ 1,705 $ 1,491 Civil 654 623 Health 530 463 Total revenues $ 2,889 $ 2,577 Operating income (loss): Defense Solutions $ 95 $ 104 Civil 59 58 Health 73 45 Corporate (35) (15) Total operating income $ 192 $ 192 The income statement performance measures used to evaluate segment performance are revenues and operating income. As a result, "Interest expense, net," "Other (expense) income, net" and "Income tax expense" as reported in the condensed consolidated financial statements are not allocated to our segments. Under U.S. Government Cost Accounting Standards, indirect costs including depreciation expense are collected in indirect cost pools, which are then collectively allocated to the reportable segments based on a representative causal or beneficial relationship of the costs in the pool to the costs in the base. As such, depreciation expense is not separately disclosed on the condensed consolidated statements of income. |
Contingencies
Contingencies | 3 Months Ended |
Apr. 03, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Note 14–Contingencies Legal Proceedings MSA Joint Venture On November 10, 2015, MSA received a final decision by the Department of Energy ("DoE") contracting officer for the Mission Support Contract concluding that certain payments to MSA by the DoE for the performance of IT services by Lockheed Martin Services, Inc. ("LMSI") under a subcontract to MSA constituted alleged affiliate fees in violation of Federal Acquisition Regulations ("FAR"). Lockheed Martin Integrated Technology LLC (now known as Leidos Integrated Technology LLC) is a member entity of MSA. Subsequent to the contracting officer's final decision, MSA, LMSI, and Lockheed Martin Corporation received notice from the U.S. Attorney's Office for the Eastern District of Washington that the U.S. government had initiated a False Claims Act investigation into the facts surrounding this dispute. On February 8, 2019, the Department of Justice filed a complaint in the United States District Court for the Eastern District of Washington against MSA, Lockheed Martin Corporation, Lockheed Martin Services, Inc. and a Lockheed Martin employee ("Defendants"). The complaint alleges violations of the False Claims Act, the Anti-Kickback Act and breach of contract with the DoE, among other things. On January 13, 2020, the Defendants' motions to dismiss were granted in part and denied in part. Litigation will proceed for the False Claims Act and other common law claims, although the Anti-Kickback Act claim has been dismissed with prejudice. The U.S. Attorney's office had previously advised that a parallel criminal investigation was open, although no subjects or targets of the investigation had been identified. The U.S. Attorney's office has informed MSA that it has closed the criminal investigation. Since this issue first was raised by the DoE, MSA has asserted that the IT services performed by LMSI under a fixed-price/fixed-unit rate subcontract approved by the DoE meet the definition of a "commercial item" under the FAR and any profits earned on that subcontract are permissible. MSA filed an appeal of the contracting officer's decision with the Civilian Board of Contract Appeals ("CBCA"), which was stayed pending resolution of the False Claims Act matter. Subsequent to the filing of MSA's appeal, the contracting officer demanded that MSA reimburse the DoE in the amount of $64 million, which was his estimate of the profits earned during the period from 2010 to 2014 by LMSI. The DoE has deferred collection of $32 million of that demand, pending resolution of the appeal and without prejudice to MSA's position that it is not liable for any of the DOE's $64 million reimbursement claim. On December 10, 2019, MSA received a second final decision by the DoE contracting officer, estimating approximately $29 million in alleged unallowable profit and associated general and administrative costs during the period from 2015 to 2016 by LMSI. MSA filed an appeal of the second contracting officer's decision, which has been consolidated with the prior proceeding before the CBCA and stayed pending resolution of the False Claims Act matter. The DoE and MSA also executed an agreement to defer the entire amount of the disallowed costs from the second contracting officer's final decision until the CBCA proceedings are finally resolved. Leidos has agreed to indemnify Jacobs Group, LLC and Centerra Group, LLC for any liability MSA incurs in this matter. Under the terms of the Separation Agreement, Lockheed Martin agreed to indemnify Leidos for 100% of any damages in excess of $38 million up to $64 million, and 50% of any damages in excess of $64 million, with respect to claims asserted against MSA related to this matter. At April 3, 2020, we had a liability of $42 million recorded in the condensed consolidated balance sheets for this matter. The amount of possible loss ultimately incurred, if any, is subject to a range of complex factors and potential outcomes that remain to be determined, including information gathered during the course of litigation, pretrial and trial rulings and other litigation-related developments. Securities Litigation Between February and April 2012, alleged stockholders filed three putative securities class actions against Leidos and several former executives relating to a contract to develop and implement an automated time and attendance and workforce management system for certain agencies of the City of New York ("CityTime"). 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 asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on allegations that Leidos and individual defendants made misleading statements or omissions about revenues, operating income and internal controls in connection with disclosures relating to the CityTime project. The plaintiffs sought to recover from Leidos and the individual defendants an unspecified amount of damages class members allegedly incurred by buying Leidos' stock at an inflated price. The District Court dismissed the plaintiffs' claims with prejudice and without leave to replead. The plaintiffs then appealed to the United States Court of Appeals for the Second Circuit, which issued an opinion affirming in part, and vacating in part, the District Court's ruling. Leidos filed a petition for a writ of certiorari in the U.S. Supreme Court, which was granted on March 27, 2017. The District Court granted Leidos' request to stay all proceedings, including discovery, pending the outcome at the Supreme Court. In September 2017, the parties engaged in mediation resulting in an agreement to settle all remaining claims for an immaterial amount to be paid by Leidos. On October 2, 2019, the court granted preliminary approval of the proposed settlement. The amounts payable by Leidos are covered by an insurance policy. Arbitration Proceeding Leidos is a party to an arbitration proceeding involving a claim by Lockheed Martin for indemnification for $56 million in taxes attributable to deferred revenue recognized as a result of the acquisition of Lockheed Martin's Information Systems & Global Solutions business. Based on the arguments advanced to date, Leidos believes that the claim appears to be without merit and intends to vigorously defend itself in arbitration. We do not believe that a material loss is probable, and have therefore not recorded any liability for this matter. Other We are also involved in various claims and lawsuits arising in the normal conduct of our business, none of which, in the opinion of management, based upon current information, will likely have a material adverse effect on our financial position, results of operations or cash flows. Other Contingencies VirnetX, Inc. On September 29, 2017, the federal trial court in the Eastern District of Texas entered a final judgment in the VirnetX v. Apple case referred to as the Apple I case. The court found that Apple willfully infringed the VirnetX patents at issue in the Apple I case and awarded enhanced damages, bringing the total award against Apple to over $343 million in pre-interest damages. The court subsequently awarded an additional sum of over $96 million for costs, attorneys' fees, and interest, bringing the total award to VirnetX in the Apple I case to over $439 million. Apple appealed the judgment in the Apple I case with the U.S. Court of Appeals for the Federal Circuit and on January 15, 2019, the court affirmed the $439 million judgment. On August 1, 2019, the U.S. Court of Appeals for the Federal Circuit denied Apple’s petition for panel and en banc rehearing, but Apple subsequently filed motions to stay and vacate the judgment, and for leave to file a second petition for rehearing. These motions were denied by the court on October 1, 2019. On December 27, 2019, Apple filed a petition in the Apple I matter for a writ of certiorari with the United States Supreme Court, which was denied on February 24, 2020. On February 20, 2020, Apple filed a Motion for Relief from Judgment in the U.S. District Court for the Eastern District of Texas, further arguing that VirnetX should not be allowed to recover the large amount of damages awarded in this case. On March 13, 2020, VirnetX announced that it had received payment from Apple of over $454 million, which represents the judgment with interest for the Apple I matter. However, the Motion remains pending, with Apple indicating it may seek restitution of its payment to VirnetX. On April 10, 2018, a jury trial concluded in an additional patent infringement case brought by VirnetX against Apple, referred to as the Apple II case, in which the jury returned a verdict against Apple for infringement and awarded VirnetX damages in the amount of over $502 million. On April 11, 2018, in a second phase of the Apple II trial, the jury found Apple's infringement to be willful. On August 30, 2018, the federal trial court in the Eastern District of Texas entered a final judgment and rulings on post-trial motions in the Apple II case. The court affirmed the jury’s verdict of over $502 million and granted VirnetX’s motions for supplemental damages, a sunset royalty and royalty rate of $1.20 per infringing device, along with pre-judgment and post-judgment interest and costs. The court denied VirnetX’s motions for enhanced damages, attorneys’ fees and an injunction. The court also denied Apple’s motions for judgment as a matter of law and for a new trial. An additional sum of over $93 million for costs and pre-judgment interest was subsequently agreed upon pursuant to a court order, bringing the total award to VirnetX in the Apple II case to over $595 million. Apple filed an appeal of the judgment in the Apple II case with the U.S. Court of Appeals for the Federal Circuit, and on November 22, 2019, the Federal Circuit affirmed in part, reversed in part and remanded the Apple II case back to the District Court. The Federal Circuit affirmed that Apple infringed two of the patents at issue in the case, and ruled that Apple is precluded from making certain patent invalidity arguments. However, the Federal Circuit reversed the judgment that Apple infringed two other patents at issue, vacated the prior damages awarded in the Apple II case, and remanded the Apple II case back to the District Court for further proceedings regarding damages. Under our agreements with VirnetX, Leidos would receive 25% of the proceeds obtained by VirnetX after reduction for attorneys' fees and costs. However, the verdicts in these cases remain subject to the ongoing and potential future proceedings and appeals. In addition, the patents at issue in these cases are subject to U.S. Patent and Trademark Office post-grant inter partes review and/or reexamination proceedings and related appeals, which may result in all or part of these patents being invalidated or the claims of the patents being limited. Thus, no assurances can be given when or if we will receive any proceeds in connection with these jury awards. In addition, if Leidos receives any proceeds, we are required to pay a royalty to the customer who paid for the development of the technology. We do not have any assets or liabilities recorded in connection with this matter as of April 3, 2020. Government Investigations and Reviews We are routinely subject to investigations and reviews relating to compliance with various laws and regulations with respect to our 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 could have a material effect on our business, financial position, results of operations and cash flows due to our reliance on government contracts. |
Commitments
Commitments | 3 Months Ended |
Apr. 03, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | Note 15–Commitments We have outstanding letters of credit of $63 million as of April 3, 2020, principally related to performance guarantees on contracts. We also have outstanding surety bonds with a notional amount of $49 million, principally related to performance and subcontractor payment bonds on contracts. The value of the surety bonds may vary due to changes in the underlying project status and/or contractual modifications. The outstanding letters of credit and surety bonds have various terms with the majority expiring over the remainder of the current fiscal year and the next two |
Subsequent Events
Subsequent Events | 3 Months Ended |
Apr. 03, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 16–Subsequent Events L3Harris Transaction On May 4, 2020 (the "Transaction Date"), we completed the acquisition of L3Harris' security detection and automation businesses for preliminary cash consideration of $1.0 billion, subject to working capital adjustments. In connection with the acquisition, we drew on our senior unsecured delayed-draw term loan facility in an aggregate principal amount of $1.0 billion (the "Facility"). The proceeds of the Facility were used to fund the purchase of L3Harris' security detection and automation businesses. The Facility will mature two years after the Transaction Date. Borrowings bear interest at a rate determined, at our option, based on either an alternate base rate or a LIBOR rate plus, in each case, an applicable margin that varies depending on our credit rating, subject to increases every 90 days. Sale of Accounts Receivable On April 14, 2020, we sold an additional $107 million of accounts receivable for proceeds of $107 million. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Apr. 03, 2020 | |
Accounting Policies [Abstract] | |
Accounting Standards Update Adopted and Issued But Not Yet Adopted | Accounting Standards Updates ("ASU") Adopted ASU 2016-13, ASU 2018-19, ASU 2019-05 and ASU 2019-11, Financial Instruments – Credit Losses (Topic 326) In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13 and subsequent updates, which eliminates the requirement that a credit loss on a financial instrument be "probable" prior to recognition. Instead, a valuation allowance will be recorded to reflect an entity's current estimate of all expected credit losses, based on both historical and forecasted information related to an instrument. The update is effective for public companies for annual and interim reporting periods beginning after December 15, 2019, and should be adopted using a modified retrospective approach, which applies a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. A prospective approach is required for debt securities for which an other-than-temporary impairment had been recognized before the effective date and loans and debt securities acquired with deteriorated credit quality. Early adoption is permitted. Effective January 4, 2020, we adopted the requirements of Topic 326 using the modified retrospective approach. The adoption resulted in an immaterial impact to our financial assets and processes for determining the expected credit loss. Accounting Standards Updates Issued But Not Yet Adopted ASU 2020-04, Reference Rate Reform (Topic 848) In March 2020, the FASB issued ASU 2020-04 which provides companies with optional expedients and exceptions to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. This update provides optional expedients for applying accounting guidance to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of the reference rate reform. The amendments in this update are effective for all entities as of March 2020 and can be adopted using a prospective approach no later than December 31, 2022. We are currently evaluating the impacts of the reference rate reform. |
Changes in Estimates on Contracts | Changes in Estimates on Contracts Changes in estimates related to contracts accounted for using the cost-to-cost method of accounting are recognized in the period in which such changes are made for the inception-to-date effect of the changes, with the exception of contracts acquired through a business combination, where the adjustment is made for the period commencing from the date of acquisition.The impact on diluted earnings per share ("EPS") attributable to Leidos common stockholders is calculated using the statutory tax rate. |
Cash and Cash Equivalents | Cash and Cash EquivalentsOur cash equivalents are primarily comprised of investments in several large institutional money market accounts, with original maturity of three months or less. Outstanding payments are included within "Cash and cash equivalents" and "Accounts payable and accrued liabilities" correspondingly on the condensed consolidated balance sheets. |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Apr. 03, 2020 | |
Accounting Policies [Abstract] | |
Schedule of changes In estimates on contracts | Changes in estimates on contracts were as follows: Three Months Ended April 3, March 29, (in millions, except per share amounts) Favorable impact $ 24 $ 23 Unfavorable impact (7) (19) Net impact to income before income taxes $ 17 $ 4 Impact on diluted EPS attributable to Leidos common stockholders $ 0.09 $ 0.02 |
Revenues (Tables)
Revenues (Tables) | 3 Months Ended |
Apr. 03, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of disaggregated revenue | Disaggregated revenues by customer-type were as follows: Three Months Ended April 3, 2020 Defense Solutions Civil Health Total (in millions) DoD and U.S. Intelligence Community $ 1,285 $ 17 $ 124 $ 1,426 Other government agencies (1) 208 544 375 1,127 Commercial and non-U.S. customers 212 71 28 311 Total $ 1,705 $ 632 $ 527 $ 2,864 Three Months Ended March 29, 2019 Defense Solutions Civil Health Total (in millions) DoD and U.S. Intelligence Community $ 1,135 $ 17 $ 124 $ 1,276 Other government agencies (1) 156 511 302 969 Commercial and non-U.S. customers 199 87 28 314 Total $ 1,490 $ 615 $ 454 $ 2,559 (1) Includes federal government agencies other than the DoD and U.S. Intelligence Community, as well as state and local government agencies. Disaggregated revenues by contract-type were as follows: Three Months Ended April 3, 2020 Defense Solutions Civil Health Total (in millions) Cost-reimbursement and fixed-price-incentive-fee $ 1,094 $ 346 $ 65 $ 1,505 Firm-fixed-price 440 173 373 986 Time-and-materials and fixed-price-level-of-effort 171 113 89 373 Total $ 1,705 $ 632 $ 527 $ 2,864 Three Months Ended March 29, 2019 Defense Solutions Civil Health Total (in millions) Cost-reimbursement and fixed-price-incentive-fee $ 986 $ 367 $ 69 $ 1,422 Firm-fixed-price 364 142 269 775 Time-and-materials and fixed-price-level-of-effort 140 106 116 362 Total $ 1,490 $ 615 $ 454 $ 2,559 Disaggregated revenues by geographic location were as follows: Three Months Ended April 3, 2020 Defense Solutions Civil Health Total (in millions) United States $ 1,513 $ 619 $ 527 $ 2,659 International 192 13 — 205 Total $ 1,705 $ 632 $ 527 $ 2,864 Three Months Ended March 29, 2019 Defense Solutions Civil Health Total (in millions) United States $ 1,304 $ 599 $ 454 $ 2,357 International 186 16 — 202 Total $ 1,490 $ 615 $ 454 $ 2,559 |
Contract Asset and Liabilities
Contract Asset and Liabilities (Tables) | 3 Months Ended |
Apr. 03, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Components of contract assets and contract liabilities | The components of contract assets and contract liabilities consisted of the following: Balance sheet line item April 3, January 3, (in millions) Contract assets - current: Unbilled receivables (1) Receivables, net $ 718 $ 735 Contract liabilities - current: Deferred revenue Accounts payable and accrued liabilities $ 420 $ 400 Contract liabilities - non-current: Deferred revenue Other long-term liabilities $ 8 $ 9 (1) Balances exclude $572 million determined to be billable at April 3, 2020, and January 3, 2020. |
Acquisitions Acquisitions (Tabl
Acquisitions Acquisitions (Tables) | 3 Months Ended |
Apr. 03, 2020 | |
Business Combinations [Abstract] | |
Schedule of preliminary fair values of the assets acquired and liabilities assumed | The preliminary fair values of the assets acquired and liabilities assumed at the Acquisition Date were as follows (in millions): Cash $ 18 Receivables 159 Other current assets 64 Operating lease right-of-use assets 25 Property, plant and equipment 161 Intangible assets 464 Accounts payable and accrued liabilities (45) Accrued payroll and employee benefits (29) Operating lease liabilities (20) Total identifiable net assets acquired 797 Goodwill 863 Preliminary purchase price $ 1,660 |
Schedule of preliminary fair values of intangible assets acquired and related weighted average amortization periods | The following table summarizes the preliminary fair value of intangible assets acquired at the Acquisition Date and the related weighted average amortization period: Weighted average amortization period Fair value (in years) (in millions) Program intangibles 10 $ 430 Backlog intangibles 1 34 Total 9 $ 464 |
Acquisition expenses incurred | The following expenses were incurred related to the acquisition of Dynetics: Three Months Ended April 3, (in millions) Acquisition costs $ 8 Integration costs 1 Total acquisition and integration costs $ 9 |
Acquisition pro forma information | The pro forma information is not intended to reflect the actual results of operations that would have occurred if the acquisition had been completed on December 29, 2018, nor is it intended to be an indication of future operating results. Three Months Ended April 3, March 29, (in millions, except per share amounts) Revenues $ 2,952 $ 2,722 Net income attributable to Leidos common stockholders 130 158 Earnings per share: Basic $ 0.92 $ 1.09 Diluted 0.90 1.07 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Apr. 03, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of carrying amount of goodwill by reportable segment | The following table presents changes in the carrying amount of goodwill by reportable segment: Defense Solutions Civil Health Total (in millions) Goodwill at December 28, 2018 $ 2,015 $ 1,924 $ 921 $ 4,860 Goodwill re-allocation 25 (25) — — Acquisition of IMX Medical Management Services, Inc. — — 50 50 Divestiture of health staff augmentation business — — (5) (5) Foreign currency translation adjustments (4) 8 — 4 Adjustment to goodwill 3 — — 3 Goodwill at January 3, 2020 2,039 1,907 966 4,912 Goodwill re-allocation 429 (429) — — Acquisition of Dynetics 863 — — 863 Foreign currency translation adjustments (56) — — (56) Goodwill at April 3, 2020 $ 3,275 $ 1,478 $ 966 $ 5,719 |
Schedule of intangible assets | Intangible assets consisted of the following: April 3, 2020 January 3, 2020 Gross carrying value Accumulated amortization Net carrying value Gross carrying value Accumulated amortization Net carrying value (in millions) Finite-lived intangible assets: Program intangibles $ 1,427 $ (566) $ 861 $ 1,003 $ (536) $ 467 Software and technology 102 (84) 18 102 (83) 19 Customer relationships 45 (7) 38 45 (6) 39 Backlog 34 (6) 28 — — — Trade names 1 — 1 1 — 1 Total finite-lived intangible assets 1,609 (663) 946 1,151 (625) 526 Indefinite-lived intangible assets: Trade names 4 — 4 4 — 4 Total intangible assets $ 1,613 $ (663) $ 950 $ 1,155 $ (625) $ 530 |
Schedule of estimated annual amortization expense | The estimated annual amortization expense as of April 3, 2020, was as follows: Fiscal year ending (in millions) 2020 (remainder of year) $ 142 2021 171 2022 166 2023 144 2024 100 2025 and thereafter 223 $ 946 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Apr. 03, 2020 | |
Leases [Abstract] | |
Schedule of components of lease income, operating lease | The components of lease income were as follows: Three Months Ended Income statement line item April 3, March 29, (in millions) Sales-type leases: Selling price at lease commencement Revenues $ 16 $ 10 Cost of underlying asset Cost of revenues (13) (9) Operating income 3 1 Interest income on lease receivables Revenues 2 — 5 1 Operating lease income Revenues 7 8 Total lease income $ 12 $ 9 |
Schedule of components of lease income, sale-type lease | The components of lease income were as follows: Three Months Ended Income statement line item April 3, March 29, (in millions) Sales-type leases: Selling price at lease commencement Revenues $ 16 $ 10 Cost of underlying asset Cost of revenues (13) (9) Operating income 3 1 Interest income on lease receivables Revenues 2 — 5 1 Operating lease income Revenues 7 8 Total lease income $ 12 $ 9 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Apr. 03, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of financial assets measured on a recurring basis | The financial instruments measured at fair value on a recurring basis consisted of the following: April 3, 2020 January 3, 2020 Carrying value Fair value Carrying value Fair value (in millions) Financial assets: Derivatives $ 5 $ 5 $ 2 $ 2 Financial liabilities: Derivatives $ 125 $ 125 $ 75 $ 75 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 3 Months Ended |
Apr. 03, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of fair value of the Company's interest rate swaps | The fair value of the interest rate swaps and foreign currency forward contracts was as follows: Asset derivatives Balance sheet line item April 3, January 3, (in millions) Fair value interest rate swaps Other current assets (1) $ 4 $ 2 Foreign currency forward contracts Other current assets 1 — $ 5 $ 2 (1) The carrying amount of the fair value interest rate swaps were recorded within "Other assets" as of January 3, 2020. Liability derivatives Balance sheet line item April 3, January 3, (in millions) Cash flow interest rate swaps Other long-term liabilities $ 125 $ 75 |
Schedule of amounts recorded on the consolidated balance sheets related to cumulative basis adjustments for fair value hedges | The following amounts were recorded on the condensed consolidated balance sheets related to cumulative basis adjustments for fair value hedges: Carrying amount of hedged item Cumulative amount of fair value adjustment included within the hedged item Balance sheet line item of hedged item April 3, January 3, April 3, January 3, (in millions) Long-term debt, current portion (1) $ 454 $ 452 $ 4 $ 2 (1) The carrying amount of the hedged item and cumulative amount of fair value adjustments were recorded within "Long-term debt, net of current portion" as of January 3, 2020. |
Schedule of effect of the Company's cash flow hedges on other comprehensive income and earnings | The effect of the cash flow hedges on other comprehensive loss and earnings for the periods presented was as follows: Three Months Ended April 3, March 29, (in millions) Total interest expense, net presented in the condensed consolidated statements of income in which the effects of cash flow hedges are recorded $ 48 $ 38 Amount recognized in other comprehensive loss $ (55) $ (18) Amount reclassified from accumulated other comprehensive loss to interest expense, net — (2) |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Apr. 03, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of notes payable and long-term debt | Our debt consisted of the following: Stated interest rate Effective interest rate April 3, 2020 (1) January 3, 2020 (1) (in millions) Senior unsecured bridge loan: $1,250 million bridge loan, due January 2021 2.37% 4.00% $ 1,238 $ — Senior unsecured term loan: $1,925 million Term Loan A, due January 2025 2.37% 2.64% 1,906 — Senior secured term loans: $690 million Term Loan A, due August 2023 3.31% 3.74% — 581 $310 million Term Loan A, due August 2023 3.31% 3.76% — 242 $1,131 million Term Loan B, due August 2025 3.56% 3.91% — 1,075 Senior unsecured notes: $450 million notes, due December 2020 4.45% 4.53% 454 452 $300 million notes, due December 2040 5.95% 6.03% 216 216 $250 million notes, due July 2032 7.13% 7.43% 247 247 $300 million notes, due July 2033 5.50% 5.88% 158 158 Notes payable and finance leases due on various dates through fiscal 2030 2.85%-5.49% Various 18 15 Total long-term debt 4,237 2,986 Less: current portion (1,793) (61) Total long-term debt, net of current portion $ 2,444 $ 2,925 (1) The carrying amounts of the senior term loans, notes and bridge loan as of April 3, 2020, and January 3, 2020, include the remaining principal outstanding of $4,254 million and $3,004 million, respectively, less total unamortized debt discounts and deferred debt issuances costs of $39 million and $35 million, respectively, and a $4 million and $2 million asset, respectively, related to the fair value interest rate swaps (see "Note 8–Derivative Instruments"). |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Apr. 03, 2020 | |
Equity [Abstract] | |
Schedule of changes in the components of accumulated other comprehensive (loss) income | Changes in the components of accumulated other comprehensive loss were as follows: Foreign currency translation adjustments Unrecognized gain (loss) on derivative instruments Pension adjustments Total accumulated other comprehensive loss (in millions) Balance at December 28, 2018 $ (41) $ 14 $ (3) $ (30) Other comprehensive income (loss) 5 (55) (1) (51) Taxes 3 15 — 18 Reclassification from accumulated other comprehensive loss — (7) — (7) Balance at January 3, 2020 (33) (33) (4) (70) Other comprehensive (loss) income (76) (55) 1 (130) Taxes 2 13 — 15 Balance at April 3, 2020 $ (107) $ (75) $ (3) $ (185) |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Apr. 03, 2020 | |
Earnings Per Share [Abstract] | |
Reconciliation of the weighted average number of shares outstanding used to compute basic and diluted EPS | 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, March 29, (in millions) Basic weighted average number of shares outstanding 142 145 Dilutive common share equivalents—stock options and other stock awards 2 2 Diluted weighted average number of shares outstanding 144 147 |
Supplementary Cash Flow Infor_2
Supplementary Cash Flow Information and Restricted Cash (Tables) | 3 Months Ended |
Apr. 03, 2020 | |
Supplemental Cash Flow Information [Abstract] | |
Schedule of supplementary cash flow information | Supplementary cash flow information, and non-cash activities, for the periods presented was as follows: Three Months Ended April 3, March 29, (in millions) Supplementary cash flow information: Cash paid for interest $ 27 $ 43 Cash paid for income taxes, net of refunds — 3 Non-cash investing activity: Fixed asset additions $ 13 $ — Non-cash financing activity: Finance lease obligations $ 6 $ — Sale of Accounts Receivable We have entered into purchase agreements with a financial institution which provide us the election to sell accounts receivable at a discount. The receivables sold are typically collectable within 30 days of the sale date. During the three months ended April 3, 2020, we sold $564 million of accounts receivable under the agreements and received proceeds of $563 million, which were classified as operating activities in the condensed consolidated statements of cash flows. These transfers have been recognized as a sale, as the receivables have been legally isolated from Leidos, the financial institution has the right to pledge or exchange the assets received and we do not maintain effective control over the transferred accounts receivable. Our only continuing involvement with the transferred financial assets is as the collection and servicing agent. As a result, the accounts receivable balance on the condensed consolidated balance sheets is presented net of the transferred amounts. No servicing asset or liability was recognized for continued servicing of the sold receivables, as the servicing fee approximates fair value. The difference between the carrying amount of the receivables sold and the net cash received was recognized as a loss on sale and was recorded within "Selling, general and administrative expenses" on the condensed consolidated statements of income. Sold receivables activity for the period was as follows: Three Months Ended April 3, (in millions) Sales of accounts receivable $ 564 Cash collections on sold receivables remitted to financial institution (367) Outstanding balance sold to financial institution 197 Cash collected but not yet remitted to financial institution (60) Sold receivables due from customers $ 137 Restricted Cash The following is a reconciliation of cash and cash equivalents, as reported within the condensed consolidated balance sheets, to the total cash, cash equivalents and restricted cash, as reported within the condensed consolidated statements of cash flows: April 3, January 3, (in millions) Cash and cash equivalents $ 445 $ 668 Restricted cash 120 49 Total cash, cash equivalents and restricted cash $ 565 $ 717 |
Accounts receivable sale activity | Sold receivables activity for the period was as follows: Three Months Ended April 3, (in millions) Sales of accounts receivable $ 564 Cash collections on sold receivables remitted to financial institution (367) Outstanding balance sold to financial institution 197 Cash collected but not yet remitted to financial institution (60) Sold receivables due from customers $ 137 |
Business Segments (Tables)
Business Segments (Tables) | 3 Months Ended |
Apr. 03, 2020 | |
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, March 29, (in millions) Revenues: Defense Solutions $ 1,705 $ 1,491 Civil 654 623 Health 530 463 Total revenues $ 2,889 $ 2,577 Operating income (loss): Defense Solutions $ 95 $ 104 Civil 59 58 Health 73 45 Corporate (35) (15) Total operating income $ 192 $ 192 |
Basis of Presentation and Sum_4
Basis of Presentation and Summary of Significant Accounting Policies (Detail) $ in Millions | 3 Months Ended | ||
Apr. 03, 2020USD ($)segment | Mar. 29, 2019USD ($) | Jan. 03, 2020USD ($) | |
Significant Accounting Policies [Line Items] | |||
Number of reportable segments | segment | 3 | ||
Revenue recognized for performance obligation satisfied in the previous periods | $ 20 | $ 7 | |
Accounts payable and accrued liabilities | 1,966 | $ 1,837 | |
Cash and Cash Equivalents | |||
Significant Accounting Policies [Line Items] | |||
Accounts payable and accrued liabilities | $ 200 | $ 169 |
Basis of Presentation and Sum_5
Basis of Presentation and Summary of Significant Accounting Policies (Changes in Estimates on Contracts) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Apr. 03, 2020 | Mar. 29, 2019 | |
Accounting Policies [Abstract] | ||
Favorable impact | $ 24 | $ 23 |
Unfavorable impact | (7) | (19) |
Net impact to income before income taxes | $ 17 | $ 4 |
Impact on diluted EPS attributable to Leidos common stockholders (usd per share) | $ 0.09 | $ 0.02 |
Revenues (Remaining Performance
Revenues (Remaining Performance Obligations Narrative) (Details) $ in Billions | Apr. 03, 2020USD ($) |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Remaining performance obligations, which are expected to be recognized as revenue | $ 13.8 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-04 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Remaining performance obligations, which are expected to be recognized as revenue | $ 6.5 |
Remaining performance obligations, which are expected to be recognized as revenue, period | 9 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-02 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Remaining performance obligations, which are expected to be recognized as revenue | $ 2.5 |
Remaining performance obligations, which are expected to be recognized as revenue, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Remaining performance obligations, which are expected to be recognized as revenue | $ 4.8 |
Remaining performance obligations, which are expected to be recognized as revenue, period |
Revenues (Disaggregation of rev
Revenues (Disaggregation of revenue) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 03, 2020 | Mar. 29, 2019 | |
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 2,864 | $ 2,559 |
United States | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 2,659 | 2,357 |
International | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 205 | 202 |
Cost-reimbursement and fixed-price-incentive-fee | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 1,505 | 1,422 |
Firm-fixed-price | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 986 | 775 |
Time-and-materials and fixed-price-level-of-effort | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 373 | 362 |
DoD and U.S. Intelligence Community | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 1,426 | 1,276 |
Other government agencies | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 1,127 | 969 |
Commercial and non-U.S. customers | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 311 | 314 |
Defense Solutions | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 1,705 | 1,490 |
Defense Solutions | United States | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 1,513 | 1,304 |
Defense Solutions | International | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 192 | 186 |
Defense Solutions | Cost-reimbursement and fixed-price-incentive-fee | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 1,094 | 986 |
Defense Solutions | Firm-fixed-price | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 440 | 364 |
Defense Solutions | Time-and-materials and fixed-price-level-of-effort | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 171 | 140 |
Defense Solutions | DoD and U.S. Intelligence Community | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 1,285 | 1,135 |
Defense Solutions | Other government agencies | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 208 | 156 |
Defense Solutions | Commercial and non-U.S. customers | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 212 | 199 |
Civil | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 632 | 615 |
Civil | United States | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 619 | 599 |
Civil | International | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 13 | 16 |
Civil | Cost-reimbursement and fixed-price-incentive-fee | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 346 | 367 |
Civil | Firm-fixed-price | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 173 | 142 |
Civil | Time-and-materials and fixed-price-level-of-effort | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 113 | 106 |
Civil | DoD and U.S. Intelligence Community | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 17 | 17 |
Civil | Other government agencies | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 544 | 511 |
Civil | Commercial and non-U.S. customers | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 71 | 87 |
Health | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 527 | 454 |
Health | United States | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 527 | 454 |
Health | International | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 0 | 0 |
Health | Cost-reimbursement and fixed-price-incentive-fee | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 65 | 69 |
Health | Firm-fixed-price | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 373 | 269 |
Health | Time-and-materials and fixed-price-level-of-effort | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 89 | 116 |
Health | DoD and U.S. Intelligence Community | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 124 | 124 |
Health | Other government agencies | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 375 | 302 |
Health | Commercial and non-U.S. customers | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 28 | $ 28 |
Revenues (Additional Informatio
Revenues (Additional Information) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 03, 2020 | Mar. 29, 2019 | |
Revenue from Contract with Customer [Abstract] | ||
Revenues under ASC 842 | $ 25 | $ 18 |
Contract Asset and Liabilitie_2
Contract Asset and Liabilities (Details) - USD ($) $ in Millions | Apr. 03, 2020 | Jan. 03, 2020 | Apr. 03, 2020 | Mar. 29, 2019 |
Revenue from Contract with Customer [Abstract] | ||||
Contract assets - current | $ 718 | $ 735 | $ 718 | |
Contract liabilities - current | 420 | 400 | 420 | |
Contract liabilities - non-current | 8 | 9 | 8 | |
Contract assets billable | $ 572 | $ 572 | ||
Contract liability revenue recognized | $ 145 | $ 113 |
Acquisitions (Details)
Acquisitions (Details) - USD ($) | Feb. 12, 2020 | Feb. 03, 2020 | Jan. 31, 2020 | Apr. 03, 2020 | Mar. 29, 2019 |
Restructuring Cost and Reserve [Line Items] | |||||
Payments to acquire businesses, net of cash acquired | $ 1,642,000,000 | $ 0 | |||
Revenues | 2,889,000,000 | $ 2,577,000,000 | |||
L3Harris Security Detection and Automation Businesses | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Business combination, consideration transferred | $ 1,000,000,000 | ||||
L3Harris Security Detection and Automation Businesses | Delayed Draw Term Loan Facility | Unsecured Debt | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Line of credit facility, maximum borrowing capacity | $ 1,000,000,000 | ||||
Debt instrument term | 2 years | ||||
Dynetics | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Payments to acquire businesses, net of cash acquired | $ 1,640,000,000 | ||||
Goodwill tax deductible amount | $ 867,000,000 | ||||
Revenues | 129,000,000 | ||||
Acquisition costs | $ 8,000,000 | ||||
Dynetics | Bridge Loan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Debt instrument term | 364 days | ||||
Debt instrument, face amount | $ 1,250,000,000 |
Acquisitions (Schedule of preli
Acquisitions (Schedule of preliminary fair values of the assets acquired and liabilities assumed) (Details) - USD ($) $ in Millions | Apr. 03, 2020 | Jan. 31, 2020 | Jan. 03, 2020 | Dec. 28, 2018 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 5,719 | $ 4,912 | $ 4,860 | |
Dynetics | ||||
Business Acquisition [Line Items] | ||||
Cash | $ 18 | |||
Receivables | 159 | |||
Other current assets | 64 | |||
Operating lease right-of-use assets | 25 | |||
Property, plant and equipment | 161 | |||
Intangible assets | 464 | |||
Accounts payable and accrued liabilities | (45) | |||
Accrued payroll and employee benefits | (29) | |||
Operating lease liabilities | (20) | |||
Total identifiable net assets acquired | 797 | |||
Goodwill | 863 | |||
Preliminary purchase price | $ 1,660 |
Acquisitions (Schedule of intan
Acquisitions (Schedule of intangible assets acquired) (Details) - Dynetics $ in Millions | Jan. 31, 2020USD ($) |
Acquired Indefinite-lived Intangible Assets [Line Items] | |
Weighted average amortization period | 9 years |
Fair value | $ 464 |
Program intangibles | |
Acquired Indefinite-lived Intangible Assets [Line Items] | |
Weighted average amortization period | 10 years |
Fair value | $ 430 |
Backlog intangibles | |
Acquired Indefinite-lived Intangible Assets [Line Items] | |
Weighted average amortization period | 1 year |
Fair value | $ 34 |
Acquisitions (Acquisition expen
Acquisitions (Acquisition expenses incurred) (Details) - Dynetics $ in Millions | 3 Months Ended |
Apr. 03, 2020USD ($) | |
Business Acquisition [Line Items] | |
Acquisition costs | $ 8 |
Integration costs | 1 |
Total acquisition and integration costs | $ 9 |
Acquisitions (Pro Forma Informa
Acquisitions (Pro Forma Information) (Details) - Dynetics - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Apr. 03, 2020 | Mar. 29, 2019 | |
Business Acquisition [Line Items] | ||
Revenues | $ 2,952 | $ 2,722 |
Net income attributable to Leidos common stockholders | $ 130 | $ 158 |
Earnings per share | ||
Pro forma basic (in dollars per share) | $ 0.92 | $ 1.09 |
Pro forma diluted (in dollars per share) | $ 0.90 | $ 1.07 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Carrying Amount of Goodwill by Reportable Segment) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Apr. 03, 2020 | Jan. 03, 2020 | |
Indefinite-lived Intangible Assets [Line Items] | ||
Goodwill, Beginning Balance | $ 4,912 | $ 4,860 |
Goodwill re-allocation | 0 | 0 |
Goodwill acquired during period | 863 | 50 |
Divestiture of health staff augmentation business | (5) | |
Foreign currency translation adjustments | (56) | 4 |
Adjustment to goodwill | 3 | |
Ending balance, Goodwill | 5,719 | 4,912 |
Defense Solutions | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Goodwill, Beginning Balance | 2,039 | 2,015 |
Goodwill re-allocation | 429 | 25 |
Goodwill acquired during period | 863 | 0 |
Divestiture of health staff augmentation business | 0 | |
Foreign currency translation adjustments | (56) | (4) |
Adjustment to goodwill | 3 | |
Ending balance, Goodwill | 3,275 | 2,039 |
Civil | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Goodwill, Beginning Balance | 1,907 | 1,924 |
Goodwill re-allocation | (429) | (25) |
Goodwill acquired during period | 0 | 0 |
Divestiture of health staff augmentation business | 0 | |
Foreign currency translation adjustments | 0 | 8 |
Adjustment to goodwill | 0 | |
Ending balance, Goodwill | 1,478 | 1,907 |
Health | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Goodwill, Beginning Balance | 966 | 921 |
Goodwill re-allocation | 0 | 0 |
Goodwill acquired during period | 0 | 50 |
Divestiture of health staff augmentation business | (5) | |
Foreign currency translation adjustments | 0 | 0 |
Adjustment to goodwill | 0 | |
Ending balance, Goodwill | $ 966 | $ 966 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets (Schedule of intangible assets) (Details) - USD ($) $ in Millions | Apr. 03, 2020 | Jan. 03, 2020 |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross carrying value | $ 1,609 | $ 1,151 |
Finite-lived intangible assets, accumulated amortization | (663) | (625) |
Finite-lived intangible assets, net carrying value | 946 | 526 |
Total intangible assets, gross carrying value | 1,613 | 1,155 |
Total intangible assets, net carrying value | 950 | 530 |
Trade names | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 4 | 4 |
Program intangibles | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross carrying value | 1,427 | 1,003 |
Finite-lived intangible assets, accumulated amortization | (566) | (536) |
Finite-lived intangible assets, net carrying value | 861 | 467 |
Software and technology | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross carrying value | 102 | 102 |
Finite-lived intangible assets, accumulated amortization | (84) | (83) |
Finite-lived intangible assets, net carrying value | 18 | 19 |
Customer relationships | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross carrying value | 45 | 45 |
Finite-lived intangible assets, accumulated amortization | (7) | (6) |
Finite-lived intangible assets, net carrying value | 38 | 39 |
Backlog | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross carrying value | 34 | 0 |
Finite-lived intangible assets, accumulated amortization | (6) | 0 |
Finite-lived intangible assets, net carrying value | 28 | 0 |
Trade names | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross carrying value | 1 | 1 |
Finite-lived intangible assets, accumulated amortization | 0 | 0 |
Finite-lived intangible assets, net carrying value | $ 1 | $ 1 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets (Narrative) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Apr. 03, 2020 | Mar. 29, 2019 | Jan. 03, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Goodwill re-allocation | $ 0 | $ 0 | |
Goodwill impairments | 0 | ||
Amortization of intangible assets | $ 43,000,000 | $ 43,000,000 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets (Schedule of estimated annual amortization expense) (Details) - USD ($) $ in Millions | Apr. 03, 2020 | Jan. 03, 2020 |
Estimated Annual Intangible Amortization Expense | ||
2020 (remainder of year) | $ 142 | |
2021 | 171 | |
2022 | 166 | |
2023 | 144 | |
2024 | 100 | |
2025 and thereafter | 223 | |
Finite-lived intangible assets, net carrying value | $ 946 | $ 526 |
Leases (Narrative) (Details)
Leases (Narrative) (Details) - USD ($) $ in Millions | Apr. 03, 2020 | Mar. 31, 2020 | Jan. 03, 2020 | Jan. 24, 2018 |
Leases [Abstract] | ||||
Operating lease, initial term | 148 months | |||
Rent expense for year one, per agreement | $ 11 | |||
Annual rent increase percentage | 2.50% | |||
Operating lease right-of-use assets, net | $ 539 | $ 105 | $ 400 | |
Operating lease liability | $ 133 |
Leases (Schedule of components
Leases (Schedule of components of lease income) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 03, 2020 | Mar. 29, 2019 | |
Sales-type leases: | ||
Selling price at lease commencement | $ 16 | $ 10 |
Cost of underlying asset | (13) | (9) |
Operating income | 3 | 1 |
Interest income on lease receivables | 2 | 0 |
Sales-type lease, lease income | 5 | 1 |
Operating leases | ||
Operating lease income | 7 | 8 |
Total lease income | $ 12 | $ 9 |
Fair Value Measurements (Financ
Fair Value Measurements (Financial Instruments Measured at Fair Value on Recurring Basis) (Details) - USD ($) $ in Millions | Apr. 03, 2020 | Jan. 03, 2020 |
Carrying value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative asset | $ 5 | $ 2 |
Derivative liability | 125 | 75 |
Fair value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative asset | 5 | 2 |
Derivative liability | $ 125 | $ 75 |
Fair Value Measures (Narrative)
Fair Value Measures (Narrative) (Details) - USD ($) | Apr. 03, 2020 | Jan. 03, 2020 |
Carrying value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of notes receivable | $ 21,000,000 | $ 20,000,000 |
Fair value of debt instrument | 4,200,000,000 | 3,000,000,000 |
Fair value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of debt instrument | 4,300,000,000 | $ 3,100,000,000 |
Interest Rate Swap | Designated as Hedging Instrument | $450 million notes, due December 2020 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Hedged instrument, face amount | $ 450,000,000 | |
Stated interest rate (in percentage) | 4.45% | |
Interest Rate Swap | Designated as Hedging Instrument | $450 million notes, due December 2020 | Senior Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Stated interest rate (in percentage) | 4.45% | |
Interest Rate Swap | Designated as Hedging Instrument | Variable Rate Loan | Unsecured Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Hedged instrument, face amount | $ 1,500,000,000 |
Derivative Instruments (Details
Derivative Instruments (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Sep. 28, 2018 | Apr. 03, 2020 | Mar. 29, 2019 | Jan. 03, 2020 | |
Derivative [Line Items] | ||||
Asset derivatives | $ 5,000,000 | $ 2,000,000 | ||
Carrying amount of hedged item | 454,000,000 | 452,000,000 | ||
Cumulative amount of fair value adjustment included within the hedged item | 4,000,000 | 2,000,000 | ||
Total interest expense, net presented in the condensed consolidated statements of income in which the effects of cash flow hedges are recorded | 48,000,000 | $ 38,000,000 | ||
Amount recognized in other comprehensive loss | (55,000,000) | (18,000,000) | ||
Losses expected to be reclassified in the next 12 months | 8,000,000 | |||
Asset Derivatives | Designated as Hedging Instrument | $450 million notes, due December 2020 | ||||
Derivative [Line Items] | ||||
Hedged instrument, face amount | $ 450,000,000 | |||
Stated interest rate (in percentage) | 4.45% | |||
Asset Derivatives | Long term debt | Designated as Hedging Instrument | $450 million notes, due December 2020 | ||||
Derivative [Line Items] | ||||
Hedged instrument, face amount | $ 450,000,000 | |||
Stated interest rate (in percentage) | 4.45% | |||
Foreign currency forward contracts | Other current assets | Not Designated as Hedging Instrument | ||||
Derivative [Line Items] | ||||
Asset derivatives | $ 1,000,000 | 0 | ||
Fair Value Hedging | Asset Derivatives | Other current assets | Designated as Hedging Instrument | ||||
Derivative [Line Items] | ||||
Asset derivatives | 4,000,000 | |||
Fair Value Hedging | Asset Derivatives | Other assets | Designated as Hedging Instrument | ||||
Derivative [Line Items] | ||||
Asset derivatives | 2,000,000 | |||
Cash Flow Hedging | Asset Derivatives | ||||
Derivative [Line Items] | ||||
Net derivative gain | $ 60,000,000 | |||
Cash Flow Hedging | Asset Derivatives | Other long-term liabilities | Designated as Hedging Instrument | ||||
Derivative [Line Items] | ||||
Liability derivatives | 125,000,000 | $ 75,000,000 | ||
Unsecured Debt | Asset Derivatives | Designated as Hedging Instrument | Variable Rate Loan | ||||
Derivative [Line Items] | ||||
Hedged instrument, face amount | $ 1,500,000,000 | |||
Unsecured Debt | Interest Rate Swap, Maturity Date August 2025 | Designated as Hedging Instrument | ||||
Derivative [Line Items] | ||||
Stated interest rate (in percentage) | 3.00% | |||
Interest Expense | ||||
Derivative [Line Items] | ||||
Amount reclassified from accumulated other comprehensive loss to interest expense, net | $ 0 | $ (2,000,000) |
Debt (Summary of Debt) (Detail)
Debt (Summary of Debt) (Detail) - USD ($) | Apr. 03, 2020 | Jan. 03, 2020 |
Debt Instrument [Line Items] | ||
Total long-term debt | $ 4,237,000,000 | $ 2,986,000,000 |
Less: current portion | (1,793,000,000) | (61,000,000) |
Total long-term debt, net of current portion | 2,444,000,000 | 2,925,000,000 |
Long-term debt | 4,254,000,000 | 3,004,000,000 |
Unamortized debt discounts and deferred debt issuances costs | 39,000,000 | 35,000,000 |
Notes payable and finance leases due on various dates through fiscal 2030 | ||
Debt Instrument [Line Items] | ||
Notes payable and finance leases | $ 18,000,000 | 15,000,000 |
Minimum | Notes payable and finance leases due on various dates through fiscal 2030 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 2.85% | |
Maximum | Notes payable and finance leases due on various dates through fiscal 2030 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 5.49% | |
Secured Debt | $690 million Term Loan A, due August 2023 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 3.31% | |
Effective interest rate | 3.74% | |
Senior secured term loans | $ 0 | 581,000,000 |
Debt instrument, face amount | $ 690,000,000 | |
Secured Debt | $310 million Term Loan A, due August 2023 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 3.31% | |
Effective interest rate | 3.76% | |
Senior secured term loans | $ 0 | 242,000,000 |
Debt instrument, face amount | $ 310,000,000 | |
Secured Debt | $1,131 million Term Loan B, due August 2025 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 3.56% | |
Effective interest rate | 3.91% | |
Senior secured term loans | $ 0 | 1,075,000,000 |
Debt instrument, face amount | $ 1,131,000,000 | |
Unsecured Debt | $1,250 million bridge loan, due January 2021 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 2.37% | |
Effective interest rate | 4.00% | |
Senior unsecured debt | $ 1,238,000,000 | 0 |
Debt instrument, face amount | $ 1,250,000,000 | |
Unsecured Debt | $1,925 million Term Loan A, due January 2025 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 2.37% | |
Effective interest rate | 2.64% | |
Senior unsecured debt | $ 1,906,000,000 | 0 |
Debt instrument, face amount | $ 1,925,000,000 | |
Unsecured Debt | $450 million notes, due December 2020 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 4.45% | |
Effective interest rate | 4.53% | |
Senior unsecured debt | $ 454,000,000 | 452,000,000 |
Debt instrument, face amount | $ 450,000,000 | |
Unsecured Debt | $300 million notes, due December 2040 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 5.95% | |
Effective interest rate | 6.03% | |
Senior unsecured debt | $ 216,000,000 | 216,000,000 |
Debt instrument, face amount | $ 300,000,000 | |
Unsecured Debt | $250 million notes, due July 2032 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 7.13% | |
Effective interest rate | 7.43% | |
Senior unsecured debt | $ 247,000,000 | 247,000,000 |
Debt instrument, face amount | $ 250,000,000 | |
Unsecured Debt | $300 million notes, due July 2033 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 5.50% | |
Effective interest rate | 5.88% | |
Senior unsecured debt | $ 158,000,000 | 158,000,000 |
Debt instrument, face amount | 300,000,000 | |
Asset Derivatives | Designated as Hedging Instrument | Fair Value Hedging | ||
Debt Instrument [Line Items] | ||
Derivative asset | $ 4,000,000 | $ 2,000,000 |
Debt (Narrative) (Detail)
Debt (Narrative) (Detail) | Feb. 12, 2020USD ($) | Jan. 31, 2020USD ($) | Jan. 17, 2020USD ($)extensionnumberOfIncreases | Apr. 03, 2020USD ($) | Mar. 29, 2019USD ($) | Jan. 03, 2020USD ($) |
Debt Instrument [Line Items] | ||||||
Payments of long-term debt | $ 1,927,000,000 | $ 31,000,000 | ||||
Debt issuance costs | $ 29,000,000 | |||||
Amortization of debt discount and debt issuance costs | 4,000,000 | 3,000,000 | ||||
The Credit Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument term | 5 years | |||||
Covenant, adjusted consolidated total debt to consolidated EBITDA ratio | 3.75 | |||||
Covenant, leverage ratio, maximum, potential increase following material acquisition | 4.50 | |||||
Number of options to extend term | extension | 2 | |||||
Extension term | 1 year | |||||
Number of potential leverage ratio increases | numberOfIncreases | 2 | |||||
Covenant, consolidated EBITDA to interest expense ratio | 3.50 | |||||
Debt payments, excluding refinanced debt | ||||||
Debt Instrument [Line Items] | ||||||
Payments of long-term debt | 2,000,000 | |||||
Secured Debt | ||||||
Debt Instrument [Line Items] | ||||||
Payments of long-term debt | $ 27,000,000 | |||||
Write off of debt discount and issuance costs | $ 19,000,000 | |||||
Unsecured Debt | $450 million notes, due December 2020 | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | 450,000,000 | |||||
Unsecured Debt | $300 million notes, due December 2040 | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | 300,000,000 | |||||
Unsecured Debt | Delayed Draw Term Loan Facility | ||||||
Debt Instrument [Line Items] | ||||||
Debt | 0 | |||||
Term Loan A | The Credit Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | 1,900,000,000 | |||||
Revolving Credit Facility | Line of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Outstanding credit facility | $ 0 | $ 0 | ||||
Revolving Credit Facility | Line of Credit | The Credit Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Unsecured borrowing capacity | $ 750,000,000 | |||||
Bridge Loan | ||||||
Debt Instrument [Line Items] | ||||||
Covenant, adjusted consolidated total debt to consolidated EBITDA ratio | 3.75 | |||||
Covenant, leverage ratio, maximum, potential increase following material acquisition | 4.50 | |||||
London Interbank Offered Rate (LIBOR) | The Credit Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Variable rate percentage | 1.38% | |||||
London Interbank Offered Rate (LIBOR) | Minimum | The Credit Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Variable rate percentage | 1.13% | |||||
London Interbank Offered Rate (LIBOR) | Maximum | The Credit Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Variable rate percentage | 1.75% | |||||
London Interbank Offered Rate (LIBOR) | Bridge Loan | ||||||
Debt Instrument [Line Items] | ||||||
Variable rate percentage | 1.38% | |||||
London Interbank Offered Rate (LIBOR) | Bridge Loan | Ninety Days After Acquisition Date | ||||||
Debt Instrument [Line Items] | ||||||
Variable rate percentage increase | 0.25% | |||||
Duration fee percentage | 0.50% | |||||
London Interbank Offered Rate (LIBOR) | Bridge Loan | One Hundred And Eighty Days After Acquisition Date | ||||||
Debt Instrument [Line Items] | ||||||
Variable rate percentage increase | 0.25% | |||||
Duration fee percentage | 0.75% | |||||
London Interbank Offered Rate (LIBOR) | Bridge Loan | Two Hundred And Seventy Days After Acquisition Date | ||||||
Debt Instrument [Line Items] | ||||||
Variable rate percentage increase | 0.25% | |||||
Duration fee percentage | 1.00% | |||||
London Interbank Offered Rate (LIBOR) | Bridge Loan | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Variable rate percentage | 1.25% | |||||
London Interbank Offered Rate (LIBOR) | Bridge Loan | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Variable rate percentage | 2.38% | |||||
Dynetics | Bridge Loan | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument term | 364 days | |||||
Debt instrument, face amount | $ 1,250,000,000 | |||||
L3Harris Security Detection and Automation Businesses | Unsecured Debt | Delayed Draw Term Loan Facility | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument term | 2 years | |||||
Unsecured borrowing capacity | $ 1,000,000,000 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Schedule of accumulated other comprehensive loss) (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Apr. 03, 2020 | Jan. 03, 2020 | |
AOCI, Net of Tax [Roll Forward] | ||
Beginning balance | $ 3,413 | |
Other comprehensive income (loss) | (130) | $ (51) |
Taxes | 15 | 18 |
Reclassification from accumulated other comprehensive loss | (7) | |
Ending balance | 3,355 | 3,413 |
Foreign currency translation adjustments | ||
AOCI, Net of Tax [Roll Forward] | ||
Beginning balance | (33) | (41) |
Other comprehensive income (loss) | (76) | 5 |
Taxes | 2 | 3 |
Reclassification from accumulated other comprehensive loss | 0 | |
Ending balance | (107) | (33) |
Unrecognized gain (loss) on derivative instruments | ||
AOCI, Net of Tax [Roll Forward] | ||
Beginning balance | (33) | 14 |
Other comprehensive income (loss) | (55) | (55) |
Taxes | 13 | 15 |
Reclassification from accumulated other comprehensive loss | (7) | |
Ending balance | (75) | (33) |
Pension adjustments | ||
AOCI, Net of Tax [Roll Forward] | ||
Beginning balance | (4) | (3) |
Other comprehensive income (loss) | 1 | (1) |
Taxes | 0 | 0 |
Reclassification from accumulated other comprehensive loss | 0 | |
Ending balance | (3) | (4) |
Total accumulated other comprehensive loss | ||
AOCI, Net of Tax [Roll Forward] | ||
Beginning balance | (70) | (30) |
Ending balance | $ (185) | $ (70) |
Earnings Per Share (Reconciliat
Earnings Per Share (Reconciliation of weighted average number of shares outstanding) (Detail) - shares shares in Millions | 3 Months Ended | |
Apr. 03, 2020 | Mar. 29, 2019 | |
Earnings Per Share [Abstract] | ||
Basic weighted average number of shares outstanding (shares) | 142 | 145 |
Dilutive common share equivalents-stock options and other stock awards (shares) | 2 | 2 |
Diluted weighted average number of shares outstanding (shares) | 144 | 147 |
Earnings Per Share (Narrative)
Earnings Per Share (Narrative) (Details) - shares shares in Millions | 3 Months Ended | |
Apr. 03, 2020 | Mar. 29, 2019 | |
Earnings Per Share [Abstract] | ||
Anti-dilutive shares (in shares) | 1 | 2 |
Supplementary Cash Flow Infor_3
Supplementary Cash Flow Information and Restricted Cash (Supplementary Cash Flow Information) (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Apr. 03, 2020 | Mar. 29, 2019 | Jan. 03, 2020 | Dec. 28, 2018 | |
Supplementary cash flow information: | ||||
Cash paid for interest | $ 27 | $ 43 | ||
Cash paid for income taxes, net of refunds | 0 | 3 | ||
Non-cash investing activity: | ||||
Fixed asset additions | 13 | 0 | ||
Non-cash financing activity: | ||||
Finance lease obligations | 6 | 0 | ||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | ||||
Cash and cash equivalents | 445 | $ 668 | ||
Restricted cash | 120 | 49 | ||
Total cash, cash equivalents and restricted cash | $ 565 | $ 597 | $ 717 | $ 369 |
Supplementary Cash Flow Infor_4
Supplementary Cash Flow Information and Restricted Cash (Accounts Receivable Sale Activity) (Details) $ in Millions | 3 Months Ended |
Apr. 03, 2020USD ($) | |
Supplemental Cash Flow Information [Abstract] | |
Sales of accounts receivable | $ 564 |
Cash collections on sold receivables remitted to financial institution | (367) |
Outstanding balance sold to financial institution | 197 |
Cash collected but not yet remitted to financial institution | (60) |
Sold receivables due from customers | $ 137 |
Supplementary Cash Flow Infor_5
Supplementary Cash Flow Information and Restricted Cash (Narrative) (Details) $ in Millions | 3 Months Ended |
Apr. 03, 2020USD ($) | |
Supplemental Cash Flow Information [Abstract] | |
Receivable collectible period | 30 days |
Sales of accounts receivable | $ 564 |
Proceeds from sale of receivables | $ 563 |
Business Segments (Schedule of
Business Segments (Schedule of segment reporting information by segment) (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 03, 2020 | Mar. 29, 2019 | |
Segment Reporting Information [Line Items] | ||
Revenues | $ 2,889 | $ 2,577 |
Operating income (loss) | 192 | 192 |
Operating Segments | Defense Solutions | ||
Segment Reporting Information [Line Items] | ||
Revenues | 1,705 | 1,491 |
Operating income (loss) | 95 | 104 |
Operating Segments | Civil | ||
Segment Reporting Information [Line Items] | ||
Revenues | 654 | 623 |
Operating income (loss) | 59 | 58 |
Operating Segments | Health | ||
Segment Reporting Information [Line Items] | ||
Revenues | 530 | 463 |
Operating income (loss) | 73 | 45 |
Corporate | ||
Segment Reporting Information [Line Items] | ||
Operating income (loss) | $ (35) | $ (15) |
Contingencies (Detail)
Contingencies (Detail) | Mar. 13, 2020USD ($) | Nov. 22, 2019USD ($) | Aug. 30, 2018USD ($) | Apr. 10, 2018USD ($) | Sep. 29, 2017USD ($) | Apr. 03, 2020USD ($) | Apr. 30, 2012legalMatterlawsuit | Dec. 10, 2019USD ($) | Nov. 10, 2015USD ($) |
Securities Class Actions | |||||||||
Legal Proceedings [Line Items] | |||||||||
Number of lawsuits | lawsuit | 3 | ||||||||
Number of lawsuits, withdrawn | legalMatter | 1 | ||||||||
Number of lawsuits, consolidated | legalMatter | 2 | ||||||||
MSA Venture | |||||||||
Legal Proceedings [Line Items] | |||||||||
Estimate of possible loss | $ 64,000,000 | $ 29,000,000 | $ 64,000,000 | ||||||
Estimate of possible loss, amount deferred | 32,000,000 | ||||||||
Contingency accrual | 42,000,000 | ||||||||
Lockheed Martin | |||||||||
Legal Proceedings [Line Items] | |||||||||
Estimate of possible loss | $ 56,000,000 | ||||||||
Lockheed Martin | MSA Venture | |||||||||
Legal Proceedings [Line Items] | |||||||||
Percentage of damages covered, between $38 million and $64 million (percentage) | 100.00% | ||||||||
Percentage of damages covered, excess of $64 million settlement amount (percentage) | 50.00% | ||||||||
Leidos | |||||||||
Legal Proceedings [Line Items] | |||||||||
Litigation settlement, percentage of total (percentage) | 25.00% | ||||||||
Leidos | MSA Venture | |||||||||
Legal Proceedings [Line Items] | |||||||||
Estimate of possible loss | $ 38,000,000 | ||||||||
Virnet X Inc | |||||||||
Legal Proceedings [Line Items] | |||||||||
Proceeds from legal settlements | $ 454,000,000 | ||||||||
Amount awarded to other party, pre interest | $ 343,000,000 | ||||||||
Awarded to the other party, interest and legal fees | $ 93,000,000 | 96,000,000 | |||||||
Amount awarded from other party | 595,000,000 | $ 502,000,000 | $ 439,000,000 | ||||||
Royalty rate awarded, per device | $ 1.20 | ||||||||
Number of infringed patents | 2 | ||||||||
Number of infringed other patents | 2 |
Commitments (Detail)
Commitments (Detail) $ in Millions | 3 Months Ended |
Apr. 03, 2020USD ($) | |
Standby Letters of Credit | |
Other Commitments And Contingencies [Line Items] | |
Amount outstanding | $ 63 |
Performance Guarantee | |
Other Commitments And Contingencies [Line Items] | |
Surety bonds notional amount | $ 49 |
Standby Letters of Credit and Surety Bonds | |
Other Commitments And Contingencies [Line Items] | |
Debt instrument term | 2 years |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | May 04, 2020 | Apr. 14, 2020 | Feb. 12, 2020 | Feb. 03, 2020 | Apr. 03, 2020 |
Subsequent Event [Line Items] | |||||
Sales of accounts receivable | $ 564,000,000 | ||||
Proceeds from sale of receivables | 563,000,000 | ||||
Delayed Draw Term Loan Facility | Unsecured Debt | |||||
Subsequent Event [Line Items] | |||||
Debt | $ 0 | ||||
L3Harris Security Detection and Automation Businesses | |||||
Subsequent Event [Line Items] | |||||
Business combination, consideration transferred | $ 1,000,000,000 | ||||
L3Harris Security Detection and Automation Businesses | Delayed Draw Term Loan Facility | Unsecured Debt | |||||
Subsequent Event [Line Items] | |||||
Debt instrument term | 2 years | ||||
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Sales of accounts receivable | $ 107,000,000 | ||||
Proceeds from sale of receivables | $ 107,000,000 | ||||
Subsequent Event | Delayed Draw Term Loan Facility | Unsecured Debt | |||||
Subsequent Event [Line Items] | |||||
Debt | $ 1,000,000,000 | ||||
Debt instrument term | 2 years | ||||
Period of time interest rate is subject to increases | 90 days | ||||
Subsequent Event | L3Harris Security Detection and Automation Businesses | |||||
Subsequent Event [Line Items] | |||||
Business combination, consideration transferred | $ 1,000,000,000 |
Uncategorized Items - ldos-2020
Label | Element | Value |
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1 | $ 3,359,000,000 |
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1 | 3,416,000,000 |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 48,000,000 |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (1,000,000) |
Parent [Member] | ||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1 | 3,356,000,000 |
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1 | 3,412,000,000 |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 48,000,000 |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (1,000,000) |
AOCI Attributable to Parent [Member] | ||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1 | (70,000,000) |
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1 | (30,000,000) |
Noncontrolling Interest [Member] | ||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1 | 4,000,000 |
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1 | 3,000,000 |
Retained Earnings [Member] | ||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1 | 420,000,000 |
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1 | 895,000,000 |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 48,000,000 |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (1,000,000) |
Additional Paid-in Capital [Member] | ||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1 | 2,966,000,000 |
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1 | $ 2,587,000,000 |