LEIDOS HOLDINGS, INC.
UNAUDITED HISTORICAL FINANCIAL MEASURES
Background
Beginning in fiscal 2024, Leidos will operate in four reportable segments that are focused on specific, defined capability sets delivered to customers:
National Security and Digital—provides technology enabled services and mission software capabilities for defense and intelligence customers in the areas of cyber, logistics, security operations and decision analytics, as well as IT operations and digital transformation programs across all U.S. federal government customers.
Health & Civil—will deliver customer solutions with unique capabilities in the areas of public health, care coordination, life and environmental sciences and transportation.
Commercial & International—encompasses our security enterprise solution and commercial energy offerings, as well as our United Kingdom and Australian businesses.
Defense Systems—includes programs to develop and produce advanced space, aerial, surface and sub-surface manned and un-manned Defense Systems.
We have prepared unaudited historical consolidated financial information based on the new reporting structure set forth below, which includes certain non-GAAP measures. Management believes that these non-GAAP measures provide another representation of the results of operations and financial condition, including its ability to comply with financial covenants. These non-GAAP measures are frequently used by financial analysts covering Leidos and its peers. The computation of non-GAAP measures may not be comparable to similarly titled measures reported by other companies, thus limiting their use for comparability.
Unaudited Historical Financial Measures
The following table presents revenues for fiscal 2023 and 2022 under the new segment structure (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Year Ended |
| | March 31,
2023 | | June 30,
2023 | | September 29,
2023 | | December 29,
2023 | | December 29,
2023 | | December 30,
2022 |
| National Security and Digital | | $ | 1,757 | | | $ | 1,791 | | | $ | 1,852 | | | $ | 1,796 | | | $ | 7,196 | | | $ | 6,745 | |
| Health & Civil | | 1,008 | | | 1,034 | | | 1,055 | | | 1,141 | | | 4,238 | | | 3,945 | |
| Commercial & International | | 489 | | | 547 | | | 552 | | | 538 | | | 2,126 | | | 1,900 | |
| Defense Systems | | 445 | | | 466 | | | 462 | | | 505 | | | 1,878 | | | 1,806 | |
| Total | | $ | 3,699 | | | $ | 3,838 | | | $ | 3,921 | | | $ | 3,980 | | | $ | 15,438 | | | $ | 14,396 | |
LEIDOS HOLDINGS, INC.
UNAUDITED NON-GAAP HISTORICAL FINANCIAL MEASURES
The following tables present the reconciliation of operating income by reportable segment to non-GAAP operating income for fiscal 2023 and 2022 under the new segment structure (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, 2023 |
| | Operating income (loss) | | Acquisition, integration and restructuring costs | | Amortization of acquired intangibles | | Non-GAAP operating income (loss) |
| National Security and Digital | | $ | 145 | | | $ | — | | | $ | 12 | | | $ | 157 | |
| Health & Civil | | 113 | | | — | | | 10 | | | 123 | |
| Commercial & International | | 13 | | | — | | | 10 | | | 23 | |
| Defense Systems | | 23 | | | — | | | 20 | | | 43 | |
| Corporate | | (29) | | | 3 | | | — | | | (26) | |
| Total | | $ | 265 | | | $ | 3 | | | $ | 52 | | | $ | 320 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, 2023 |
| | Operating income (loss) | | Acquisition, integration and restructuring costs | | Amortization of acquired intangibles | | Non-GAAP operating income (loss) |
| National Security and Digital | | $ | 172 | | | $ | — | | | $ | 11 | | | $ | 183 | |
| Health & Civil | | 134 | | | — | | | 11 | | | 145 | |
| Commercial & International | | 34 | | | 1 | | | 10 | | | 45 | |
| Defense Systems | | 21 | | | — | | | 19 | | | 40 | |
| Corporate | | (30) | | | 5 | | | — | | | (25) | |
| Total | | $ | 331 | | | $ | 6 | | | $ | 51 | | | $ | 388 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 29, 2023 |
| | Operating income (loss) | | Acquisition, integration and restructuring costs | | Amortization of acquired intangibles | | Asset impairment charges | | Goodwill impairment charges | | Non-GAAP operating income (loss) |
| National Security and Digital | | $ | 170 | | | $ | — | | | $ | 12 | | | $ | — | | | $ | — | | | $ | 182 | |
| Health & Civil | | 165 | | | — | | | 9 | | | — | | | — | | | 174 | |
| Commercial & International | | (646) | | | 9 | | | 9 | | | 80 | | | 599 | | | 51 | |
| Defense Systems | | 3 | | | 3 | | | 20 | | | 8 | | | — | | | 34 | |
| Corporate | | (28) | | | 5 | | | — | | | — | | | — | | | (23) | |
| Total | | $ | (336) | | | $ | 17 | | | $ | 50 | | | $ | 88 | | | $ | 599 | | | $ | 418 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended December 29, 2023 |
| | Operating income (loss) | | Acquisition, integration and restructuring costs | | Amortization of acquired intangibles | | Asset impairment charges | | Goodwill impairment charges | | | | | Non-GAAP operating income (loss) |
| National Security and Digital | | $ | 185 | | | $ | — | | | $ | 12 | | | $ | — | |
| $ | — | | | | | | $ | 197 | |
| Health & Civil | | 162 | | | — | | | 10 | | | — | | | — | | | | | | 172 | |
| Commercial & International | | 39 | | | — | | | 8 | | | 3 | | | (3) | | | | | | 47 | |
| Defense Systems | | 18 | | | 2 | | | 19 | | | — | | | — | | | | | | 39 | |
| Corporate | | (43) | | | 8 | | | — | | | — | | | — | | | | | | (35) | |
| Total | | $ | 361 | | | $ | 10 | | | $ | 49 | | | $ | 3 | | | $ | (3) | | | | | | $ | 420 | |
LEIDOS HOLDINGS, INC.
UNAUDITED NON-GAAP HISTORICAL FINANCIAL MEASURES [CONTINUED]
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Year Ended December 29, 2023 |
| | Operating income (loss) | | Acquisition, integration and restructuring costs | | Amortization of acquired intangibles | | Asset impairment charges | | Goodwill impairment charges | | Non-GAAP operating income (loss) |
| National Security and Digital | | $ | 672 | | | $ | — | | | $ | 47 | | | $ | — | | | $ | — | | | $ | 719 | |
| Health & Civil | | 574 | | | — | | | 40 | | | — | | | — | | | 614 | |
| Commercial & International | | (560) | | | 10 | | | 37 | | | 83 | | | 596 | | | 166 | |
| Defense Systems | | 65 | | | 5 | | | 78 | | | 8 | | | — | | | 156 | |
| Corporate | | (130) | | | 21 | | | — | | | — | | | — | | | (109) | |
| Total | | $ | 621 | | | $ | 36 | | | $ | 202 | | | $ | 91 | | | $ | 596 | | | $ | 1,546 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Year Ended December 30, 2022 |
| | Operating income (loss) | | Acquisition, integration and restructuring costs | | Amortization of acquired intangibles | | Asset impairment charges | | Non-GAAP operating income (loss) |
| National Security and Digital | | $ | 606 | | | $ | — | | | $ | 57 | | | $ | 14 | | | $ | 677 | |
| Health & Civil | | 448 | | | — | | | 48 | | | 13 | | | 509 | |
| Commercial & International | | 131 | | | — | | | 35 | | | 4 | | | 170 | |
| Defense Systems | | 11 | | | — | | | 89 | | | 4 | | | 104 | |
| Corporate | | (108) | | | 17 | | | — | | | 5 | | | (86) | |
| Total | | $ | 1,088 | | | $ | 17 | | | $ | 229 | | | $ | 40 | | | $ | 1,374 | |
