RESTON, Va., July 28, 2016 /PRNewswire/ -- Leidos
Holdings, Inc. (NYSE: LDOS), a national security, health and
infrastructure solutions company, today reported financial results
for the second quarter of fiscal year 2016.
Roger Krone, Leidos Chairman and
Chief Executive Officer commented: "Our second quarter results were
in-line with our expectations and reflect strong organic growth in
both of our business segments. Cash generation was also as
expected, culminating in a strong balance sheet ahead of our
impending transaction with IS&GS. I am excited by the progress
we are making in driving growth, supporting our customers, and
maximizing value to our shareholders."
Summary Results
Revenues for the quarter were $1.29
billion as compared to $1.26
billion in the prior year, reflecting a growth of 2%.
Operating income from continuing operations for the quarter was
$75 million compared to $64 million in the prior year, a growth of 17%.
Operating margin increased to 5.8% from 5.1% in the prior year. The
current year quarter included $15
million of acquisition and integration costs related to the
Lockheed Martin Transaction, while the prior year quarter included
a non-cash asset impairment charge of $29
million related to our former Plainfield Renewable Energy
facility ("Plainfield facility").
Diluted earnings per share ("EPS") from continuing operations
for the quarter was $0.55 compared to
$0.50 in the prior year. The diluted
share count for the quarter was 74 million, which is consistent
with the prior year.
Non-GAAP diluted EPS from continuing operations for the quarter
was $0.68 compared to $0.77 in the prior year.
National Security Solutions
National Security Solutions revenues for the quarter increased
$36 million, or 4%, compared to the
prior year. The revenue growth was primarily attributable to
revenues associated with our new United Kingdom Ministry of Defense
logistics program.
National Security Solutions operating income margin for the
quarter was 6.7%, down from 8.4% in the prior year primarily due to
lower program fees and contract mix.
Health and Infrastructure Sector
Health and Infrastructure Sector revenues for the quarter
decreased $6 million, or 2%, compared
to the prior year. The revenue decline is primarily due to the
divestiture of our design, build and heavy construction engineering
services business in the second quarter and the sale of the
Plainfield Renewable Energy facility, which closed in the prior
year quarter. The impact of these divestitures was primarily offset
by revenue growth in our health business mainly due to our Defense
Electronic Health Record system modernization program, and higher
revenues from the sale of our security products.
Health and Infrastructure Sector operating income margin for the
quarter was 10.5%, up from (1.8)% in the prior year. The prior year
quarter included a non-cash asset impairment charge of $29 million related to our former Plainfield
facility. The current quarter benefited from improved fee
performance from our federal and commercial health businesses.
Cash Flow Summary
Cash flows provided by operating activities of continuing
operations for the quarter was $72
million compared to $151
million in the prior year. The lower operating cash inflows
were primarily due to timing of collections in the year ago
quarter.
Cash flows provided by investing activities of continuing
operations for the quarter was $19
million compared to $14
million used in the prior year. The $33 million increase was primarily due to
$23 million of proceeds from the
divestiture of our design, build and heavy construction engineering
services business and payment of $13
million, in connection with a prior acquisition in the prior
year, that did not recur in fiscal 2016.
Cash flows used in financing activities of continuing operations
for the quarter was $30 million
compared to $149 million in the prior
year. The lower financing cash outflows were primarily due to a
$100 million reduction in share
repurchases and a $17 million
reduction in the repurchases of term notes from the prior year.
As of July 1, 2016, the Company
had $670 million in cash and cash
equivalents and $1.1 billion in
long-term debt.
New Business Awards
Net business bookings totaled $1.0
billion in the quarter, representing a book-to-bill ratio of
0.74.
Notable recent awards received include:
- Hawaii Public Utilities Commission: Leidos was
awarded a single-award, prime contract by the Hawaii Public
Utilities Commission to administer the Hawaii Energy conservation
and efficiency program. The contract has a three-year base period
worth $85 million followed by two
successive three-year extensions.
- U.S. Army: Leidos was awarded a prime contract by
the U.S. Army to provide Intelligence, Surveillance and
Reconnaissance Research and Development - Analytic Software to the
Army Research Laboratory Sensors Electron Devices Directorate. The
multiple-award indefinite-delivery/indefinite-quantity cost-plus
fixed-fee contract has a one-year base period of performance, four
one-year options, and a total contract value of approximately
$250 million for all awardees, if all
options are exercised.
- VA T4-NextGen: Leidos was awarded a prime contract by
the Department of Veterans Affairs ("VA") to provide technical
solutions under the VA Transformation Twenty-One Total
Technology Next Generation (T4NG) program. The multiple-award
indefinite-delivery/indefinite-quantity contract has a five-year
base period of performance, one five-year option period, and a
total contract value of approximately $22
billion for all awardees, if the option is exercised. Leidos
is one of 24 contractors eligible to compete for work under the
contract.
- Intelligence Community: The Company was awarded
contracts valued at $343 million, if
all options are exercised, by U.S. national security and
intelligence clients. Though the specific nature of these contracts
is classified, they all encompass mission-critical services that
help to counter global threats and strengthen national
security.
The Company's backlog of signed business orders at the end of
the quarter was $9.0 billion, of
which $2.4 billion was funded.
Forward Guidance
As a result of the Company's year-to-date performance and
updated expectations for the second half, the Company is updating
guidance for revenues and non-GAAP diluted earnings per share from
continuing operations. The updated guidance, which is based on a
12-month period from January 2, 2016,
to December 30, 2016, is as
follows:
- Revenues of $5.1 billion to $5.2
billion versus the prior range of $5.1 billion to $5.3 billion;
- Non-GAAP diluted earnings per share from continuing operations
of $2.85 to $3.05, up from the
previous range of $2.75 to $2.95;
and
- Cash flows provided by operating activities from continuing
operations at or above $275
million.
Fiscal year 2016 guidance excludes the impact of the potential
transaction with Lockheed Martin, including the impact of any
acquisition related costs incurred prior to closing, and any other
future acquisitions, divestitures, or other non-ordinary course
items.
Non-GAAP diluted earnings per share excludes amortization of
acquired intangible assets, impairment charges, restructuring
expenses, acquisition and integration related costs, gains and
losses on disposal of assets and businesses and adjustments to the
income tax provision to reflect non-GAAP exclusions. See Leidos'
non-GAAP financial measures and the related reconciliation included
elsewhere in this release.
Conference Call Information
Leidos management will discuss operations and financial results
in an earnings conference call beginning at 8 A.M. eastern time on July 28, 2016. Analysts and institutional
investors may participate by dialing +1 (877) 869-3847 (U.S.
dial-in) or +1 (201) 689-8261 (international dial-in).
A live audio broadcast of the conference call along with a
supplemental presentation will be available to the public through
links on the Leidos Investor Relations website
(http://ir.leidos.com).
After the call concludes, an audio replay can be accessed on the
Leidos Investor Relations website or by dialing +1 (877) 660-6853
(toll-free U.S.) or +1 (201) 612-7415 (international) and entering
conference ID 13640498.
Investor Day Information
Leidos will host an Investor Day on Monday, August 1 at the NYSE in New York
City. The event will provide the investment community with an
opportunity to hear from Leidos' senior management team about its
strategy, operations, and financial targets, including updates
related to the proposed combination with Lockheed Martin's
IS&GS business. Speakers will include Roger Krone, Chairman and Chief Executive
Officer, James Reagan, Chief
Financial Officer, and others.
A live webcast of the event and presentation will be accessible
to the general public at approximately 12:30
p.m. on August 1 on the
Investor Relations section of the Company's website, ir.leidos.com.
A replay of the webcast and full copy of the presentation will be
available later that day following the completion of the event,
also accessible on the Investor Relations section of the Company's
website, ir.leidos.com, and will remain available until
May 1, 2017.
About Leidos
Leidos is a science and technology solutions leader working to
address some of the world's toughest challenges in national
security, health and infrastructure. The Company's 18,000 employees
support vital missions for government and commercial customers,
develop innovative solutions to drive better outcomes and defend
our digital and physical infrastructure from 'new world' threats.
Headquartered in Reston, Virginia, Leidos reported
annual revenues of approximately $5.09 billion for the 12 months ended
January 1, 2016.
For more information, visit www.leidos.com.
Forward-Looking Statements
Certain statements in this release contain or are based on
"forward-looking" information within the meaning of the Private
Securities Litigation Reform Act of 1995. In some cases, you can
identify forward-looking statements by words such as "expects,"
"intends," "plans," "anticipates," "believes," "estimates,"
"guidance" and similar words or phrases. Forward-looking statements
in this release include, among others, estimates of future
revenues, operating income, earnings, earnings per share, charges,
backlog, outstanding shares and cash flows, as well as statements
about future dividends, share repurchases, acquisitions and
dispositions. These statements reflect our belief and assumptions
as to future events that may not prove to be accurate.
Actual performance and results may differ materially from the
guidance and other forward-looking statements made in this release
depending on a variety of factors, including: changes to our
reputation and relationships with government agencies, developments
in the U.S. Government defense budget, including budget reductions,
implementation of spending cuts (sequestration) or changes in
budgetary priorities; delays in the U.S. Government budget process;
delays in the U.S. Government contract procurement process or the
award of contracts; delays or loss of contracts as a result of
competitor protests; changes in U.S. Government procurement rules,
regulations and practices; changes in interest rates and other
market factors out of our control; our compliance with various U.S.
Government and other government procurement rules and regulations;
governmental reviews, audits and investigations of our Company; our
ability to effectively compete for and win contracts with the U.S.
Government and other customers; our ability to attract, train and
retain skilled employees, including our management team, and to
obtain security clearances for our employees; factors relating to
the satisfaction of the conditions to the proposed transaction with
Lockheed Martin, including regulatory approvals and the required
approvals of our stockholders; our and Lockheed Martin's ability to
meet expectations regarding the timing, completion and accounting
and tax treatments of the transaction with Lockheed Martin; the
possibility that we may be unable to achieve expected synergies and
operating efficiencies in connection with the transaction with
Lockheed Martin within the expected time-frames or at all; the
integration of the Information Systems & Global Solutions
business being acquired from Lockheed Martin being more difficult,
time-consuming or costly than expected; the effect of any changes
resulting from the proposed transaction in customer, supplier and
other business relationships; general market perception of the
proposed transaction with Lockheed Martin; exposure to lawsuits and
contingencies associated with Lockheed Martin's Information Systems
& Global Solutions business; the mix of our contracts and our
ability to accurately estimate costs associated with our
firm-fixed-price and other contracts; our ability to realize as
revenues the full amount of our backlog; cybersecurity, data
security or other security threats, systems failures or other
disruptions of our business; resolution of legal and other disputes
with our customers and others or legal or regulatory compliance
issues; our ability to effectively acquire businesses and make
investments; our ability to maintain relationships with prime
contractors, subcontractors and joint venture partners; our ability
to manage performance and other risks related to customer
contracts, including complex engineering or design build projects;
the failure of our inspection or detection systems to detect
threats; the adequacy of our insurance programs designed to protect
us from significant product or other liability claims; our ability
to manage risks associated with our international business; our
ability to declare future dividends based on our earnings,
financial condition, capital requirements and other factors,
including compliance with applicable laws and contractual
agreements; and our ability to execute our business plan and
long-term management initiatives effectively and to overcome these
and other known and unknown risks that we face. These are only some
of the factors that may affect the forward-looking statements
contained in this release. For further information concerning risks
and uncertainties associated with our business, please refer to the
filings we make from time to time with the U.S. Securities and
Exchange Commission ("SEC"), including the prospectus included in
the registration statement on Form S-4 filed by the Company on
July 11, 2016 (which was declared
effective by the SEC on July 11,
2016), our definitive proxy statement for the Company's
annual meeting of stockholders filed on July
7, 2016, and the "Risk Factors," "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and
"Legal Proceedings" sections of our latest Transition Report on
Form 10-K and quarterly reports on Form 10-Q, all of which may be
viewed or obtained through the Investor Relations section of our
website at www.leidos.com.
All information in this release is as of July 28, 2016. The Company expressly disclaims
any duty to update the guidance or any other forward-looking
statement provided in this release to reflect subsequent events,
actual results or changes in the Company's expectations. The
Company also disclaims any duty to comment upon or correct
information that may be contained in reports published by
investment analysts or others.
CONTACTS:
|
|
|
|
Investor
Relations:
|
Media
Relations:
|
Kelly P.
Hernandez
|
Melissa
Koskovich
|
571.526.6404
|
571.526.6850
|
kelly.p.hernandez@leidos.com
|
koskovichm@leidos.com
|
LEIDOS HOLDINGS,
INC.
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
(in millions,
except per share amounts)
|
|
|
Three
Months Ended
|
|
Six Months
Ended
|
|
July 1,
2016
|
|
July 3,
2015
|
|
July 1,
2016
|
|
July 3,
2015
|
Revenues
|
$
|
1,288
|
|
|
$
|
1,257
|
|
|
$
|
2,600
|
|
|
$
|
2,503
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Cost of
revenues
|
1,141
|
|
|
1,113
|
|
|
2,295
|
|
|
2,206
|
|
Selling, general and
administrative expenses
|
57
|
|
|
51
|
|
|
117
|
|
|
126
|
|
Acquisition and
integration costs
|
15
|
|
|
—
|
|
|
24
|
|
|
—
|
|
Asset impairment
charges
|
—
|
|
|
29
|
|
|
—
|
|
|
69
|
|
Operating
income
|
75
|
|
|
64
|
|
|
164
|
|
|
102
|
|
Non-operating
expense:
|
|
|
|
|
|
|
|
Interest expense,
net
|
(13)
|
|
|
(14)
|
|
|
(24)
|
|
|
(28)
|
|
Other (expense) income,
net
|
(2)
|
|
|
2
|
|
|
(2)
|
|
|
1
|
|
Income from
continuing operations before income taxes
|
60
|
|
|
52
|
|
|
138
|
|
|
75
|
|
Income tax
expense
|
(19)
|
|
|
(15)
|
|
|
(44)
|
|
|
(15)
|
|
Income from
continuing operations
|
41
|
|
|
37
|
|
|
94
|
|
|
60
|
|
Discontinued
operations:
|
|
|
|
|
|
|
|
Income tax
benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
|
Income from
discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
|
Net income
|
$
|
41
|
|
|
$
|
37
|
|
|
$
|
94
|
|
|
$
|
78
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
Income from continuing
operations
|
$
|
0.56
|
|
|
$
|
0.51
|
|
|
$
|
1.31
|
|
|
$
|
0.82
|
|
Income from
discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
0.25
|
|
|
$
|
0.56
|
|
|
$
|
0.51
|
|
|
$
|
1.31
|
|
|
$
|
1.07
|
|
Diluted:
|
|
|
|
|
|
|
|
Income from continuing
operations
|
$
|
0.55
|
|
|
$
|
0.50
|
|
|
$
|
1.27
|
|
|
$
|
0.80
|
|
Income from
discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
0.24
|
|
|
$
|
0.55
|
|
|
$
|
0.50
|
|
|
$
|
1.27
|
|
|
$
|
1.04
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
73
|
|
|
73
|
|
|
72
|
|
|
73
|
|
Diluted
|
74
|
|
|
74
|
|
|
74
|
|
|
75
|
|
|
|
|
|
|
|
|
|
Cash dividends
declared per share
|
$
|
0.32
|
|
|
$
|
0.32
|
|
|
$
|
0.64
|
|
|
$
|
0.64
|
|
LEIDOS HOLDINGS,
INC.
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(in
millions)
|
|
|
July 1,
2016
|
|
January 1,
2016
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
670
|
|
|
$
|
656
|
|
Receivables,
net
|
924
|
|
|
921
|
|
Inventory, prepaid
expenses and other current assets
|
223
|
|
|
216
|
|
Total current
assets
|
1,817
|
|
|
1,793
|
|
Property, plant and
equipment, net
|
131
|
|
|
142
|
|
Goodwill and
intangible assets, net
|
1,228
|
|
|
1,232
|
|
Deferred income
taxes
|
7
|
|
|
8
|
|
Other
assets
|
218
|
|
|
195
|
|
|
$
|
3,401
|
|
|
$
|
3,370
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
720
|
|
|
$
|
769
|
|
Accrued payroll and
employee benefits
|
269
|
|
|
268
|
|
Notes payable
and long-term debt, current portion
|
1
|
|
|
2
|
|
Liabilities of
discontinued operations
|
—
|
|
|
1
|
|
Total current liabilities
|
990
|
|
|
1,040
|
|
Notes payable and
long-term debt, net of current portion
|
1,092
|
|
|
1,079
|
|
Other long-term
liabilities
|
195
|
|
|
183
|
|
Commitments and
contingencies
|
|
|
|
Stockholders'
equity:
|
|
|
|
Preferred stock,
$.0001 par value, 10 million shares authorized and no shares issued
and outstanding at
July 1, 2016 and January 1,
2016
|
—
|
|
|
—
|
|
Common stock, $.0001
par value, 500 million shares authorized, 73 million and 72 million
shares issued and outstanding at
July 1, 2016 and January 1, 2016,
respectively
|
—
|
|
|
—
|
|
Additional paid-in
capital
|
1,358
|
|
|
1,353
|
|
Accumulated
deficit
|
(230)
|
|
|
(277)
|
|
Accumulated other
comprehensive loss
|
(4)
|
|
|
(8)
|
|
Total stockholders'
equity
|
1,124
|
|
|
1,068
|
|
|
$
|
3,401
|
|
|
$
|
3,370
|
|
LEIDOS HOLDINGS,
INC.
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(in
millions)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
July 1,
2016
|
|
July 3,
2015
|
|
July 1,
2016
|
|
July 3,
2015
|
Cash flows from
operations:
|
|
|
|
|
|
|
|
Net income
|
$
|
41
|
|
|
$
|
37
|
|
|
$
|
94
|
|
|
$
|
78
|
|
Income from
discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
(18)
|
|
Adjustments to
reconcile net income to net cash provided by operations:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
9
|
|
|
12
|
|
|
17
|
|
|
24
|
|
Stock-based
compensation
|
8
|
|
|
8
|
|
|
16
|
|
|
14
|
|
Asset impairment
charges
|
—
|
|
|
29
|
|
|
—
|
|
|
69
|
|
Other
|
(5)
|
|
|
—
|
|
|
(3)
|
|
|
(1)
|
|
Change in assets and
liabilities, net of effects of acquisitions and
dispositions:
|
|
|
|
|
|
|
|
Receivables
|
(28)
|
|
|
46
|
|
|
(76)
|
|
|
63
|
|
Inventory, prepaid
expenses and other current assets
|
4
|
|
|
19
|
|
|
(7)
|
|
|
(10)
|
|
Accounts payable and
accrued liabilities
|
(11)
|
|
|
(16)
|
|
|
7
|
|
|
14
|
|
Accrued payroll and
employee benefits
|
53
|
|
|
39
|
|
|
2
|
|
|
(20)
|
|
Deferred income taxes
and income taxes receivable/payable
|
(2)
|
|
|
(13)
|
|
|
7
|
|
|
(88)
|
|
Other long-term
assets/liabilities
|
3
|
|
|
(10)
|
|
|
1
|
|
|
(16)
|
|
Total cash flows
provided by operating activities of continuing
operations
|
72
|
|
|
151
|
|
|
58
|
|
|
109
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Expenditures for
property, plant and equipment
|
(3)
|
|
|
(5)
|
|
|
(7)
|
|
|
(8)
|
|
Payments on accrued
purchase price related to prior acquisition
|
—
|
|
|
(13)
|
|
|
—
|
|
|
(13)
|
|
Net proceeds from
sale of assets
|
—
|
|
|
5
|
|
|
3
|
|
|
5
|
|
Proceeds from
disposition of business
|
23
|
|
|
—
|
|
|
23
|
|
|
—
|
|
Other
|
(1)
|
|
|
(1)
|
|
|
(1)
|
|
|
—
|
|
Total cash flows
provided by (used in) investing activities of continuing
operations
|
19
|
|
|
(14)
|
|
|
18
|
|
|
(16)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Payments of notes
payable and long-term debt
|
(1)
|
|
|
(18)
|
|
|
(2)
|
|
|
(47)
|
|
Sales of stock and
exercises of stock options
|
4
|
|
|
2
|
|
|
6
|
|
|
3
|
|
Repurchases of stock
and stock received for tax withholdings
|
(10)
|
|
|
(109)
|
|
|
(19)
|
|
|
(115)
|
|
Dividend
payments
|
(23)
|
|
|
(24)
|
|
|
(46)
|
|
|
(48)
|
|
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
Total cash flows used
in financing activities of continuing operations
|
(30)
|
|
|
(149)
|
|
|
(61)
|
|
|
(206)
|
|
Increase (decrease)
in cash and cash equivalents from continuing operations
|
61
|
|
|
(12)
|
|
|
15
|
|
|
(113)
|
|
Cash flows from
discontinued operations:
|
|
|
|
|
|
|
|
Cash provided by
operating activities of discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
Cash (used in)
provided by investing activities of discontinued
operations
|
—
|
|
|
—
|
|
|
(1)
|
|
|
6
|
|
(Decrease) increase
in cash and cash equivalents from discontinued
operations
|
—
|
|
|
—
|
|
|
(1)
|
|
|
19
|
|
Total increase
(decrease) in cash and cash equivalents
|
61
|
|
|
(12)
|
|
|
14
|
|
|
(94)
|
|
Cash and cash
equivalents at beginning of period
|
609
|
|
|
377
|
|
|
656
|
|
|
459
|
|
Cash and cash
equivalents at end of period
|
$
|
670
|
|
|
$
|
365
|
|
|
$
|
670
|
|
|
$
|
365
|
|
LEIDOS HOLDINGS,
INC.
|
UNAUDITED SEGMENT
OPERATING RESULTS
|
(in
millions)
|
|
During the first
quarter, the Company renamed the reportable segment of Health and
Engineering as Health and Infrastructure Sector to better focus our
engineering efforts in the utility and broader infrastructure
markets.
|
|
The segment
information for the periods presented was as follows:
|
|
|
Three
Months Ended
|
|
Six Months
Ended
|
|
July 1,
2016
|
|
July 3,
2015
|
|
Dollar
change
|
|
Percent
change
|
|
July 1,
2016
|
|
July 3,
2015
|
|
Dollar
change
|
|
Percent
change
|
Revenues:
|
|
|
|
|
|
|
|
|
|
National Security
Solutions
|
$
|
915
|
|
|
$
|
879
|
|
|
$
|
36
|
|
|
4.1%
|
|
|
$
|
1,813
|
|
|
$
|
1,741
|
|
|
$
|
72
|
|
|
4.1%
|
|
Health and
Infrastructure
Sector
|
373
|
|
|
379
|
|
|
(6)
|
|
|
(1.6)%
|
|
|
787
|
|
|
764
|
|
|
23
|
|
|
3.0%
|
|
Corporate and
Other
|
—
|
|
|
(1)
|
|
|
1
|
|
|
NM
|
|
—
|
|
|
(2)
|
|
|
2
|
|
|
NM
|
Total
|
$
|
1,288
|
|
|
$
|
1,257
|
|
|
$
|
31
|
|
|
2.5%
|
|
|
$
|
2,600
|
|
|
$
|
2,503
|
|
|
$
|
97
|
|
|
3.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
National Security
Solutions
|
$
|
61
|
|
|
$
|
74
|
|
|
$
|
(13)
|
|
|
(17.6)%
|
|
|
$
|
133
|
|
|
$
|
136
|
|
|
$
|
(3)
|
|
|
(2.2)%
|
|
Health and
Infrastructure
Sector
|
39
|
|
|
(7)
|
|
|
46
|
|
|
NM
|
|
75
|
|
|
(14)
|
|
|
89
|
|
|
NM
|
Corporate and
Other
|
(25)
|
|
|
(3)
|
|
|
(22)
|
|
|
NM
|
|
(44)
|
|
|
(20)
|
|
|
(24)
|
|
|
NM
|
Total
|
$
|
75
|
|
|
$
|
64
|
|
|
$
|
11
|
|
|
17.2%
|
|
|
$
|
164
|
|
|
$
|
102
|
|
|
$
|
62
|
|
|
60.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss) margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
National Security
Solutions
|
6.7%
|
|
|
8.4%
|
|
|
|
|
|
|
7.3%
|
|
|
7.8%
|
|
|
|
|
|
Health and
Infrastructure
Sector
|
10.5%
|
|
|
(1.8)%
|
|
|
|
|
|
|
9.5%
|
|
|
(1.8)%
|
|
|
|
|
|
Total
|
5.8%
|
|
|
5.1%
|
|
|
|
|
|
|
6.3%
|
|
|
4.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NM - Not
Meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LEIDOS HOLDINGS,
INC.
|
UNAUDITED BACKLOG
BY REPORTABLE SEGMENT
|
(in
millions)
|
|
Backlog represents
the estimated amount of future revenues to be recognized under
negotiated contracts as work is performed. Backlog estimates are
subject to change and may be affected by factors including
modifications of contracts and foreign currency
movements.
|
|
Funded backlog for
contracts with the U.S. Government represents the value on
contracts for which funding is appropriated less revenues
previously recognized on these contracts. Funded backlog for
contracts with non-U.S. Government agencies and commercial
customers represents the estimated value on contracts, which may
cover multiple future years, under which Leidos is obligated to
perform, less revenue previously recognized on the
contracts.
|
|
Negotiated unfunded
backlog represents estimated amounts of revenue to be earned in the
future from (1) contracts for which funding has not been
appropriated and (2) unexercised priced contract options.
Negotiated unfunded backlog does not include future potential task
orders expected to be awarded under indefinite delivery/indefinite
quantity, General Services Administration Schedule or other master
agreement contract vehicles.
|
|
The estimated value
of backlog as of the dates presented was as follows:
|
|
|
July 1,
2016
|
|
January 1,
2016
|
National Security
Solutions:
|
|
|
|
Funded
backlog
|
$
|
1,523
|
|
|
$
|
1,472
|
|
Negotiated unfunded
backlog
|
5,765
|
|
|
6,554
|
|
Total
National Security Solutions backlog
|
$
|
7,288
|
|
|
$
|
8,026
|
|
Health and
Infrastructure Sector:
|
|
|
|
Funded
backlog
|
$
|
868
|
|
|
$
|
1,049
|
|
Negotiated unfunded
backlog
|
811
|
|
|
820
|
|
Total Health and
Infrastructure Sector backlog
|
$
|
1,679
|
|
|
$
|
1,869
|
|
Total:
|
|
|
|
Funded
backlog
|
$
|
2,391
|
|
|
$
|
2,521
|
|
Negotiated unfunded
backlog
|
6,576
|
|
|
7,374
|
|
Total
backlog
|
$
|
8,967
|
|
|
$
|
9,895
|
|
LEIDOS HOLDINGS, INC.
UNAUDITED
NON-GAAP FINANCIAL MEASURES
(in millions, except per
share amounts)
The Company uses and refers to non-GAAP operating income,
adjusted EBITDA, non-GAAP income from continuing operations, and
non-GAAP EPS from continuing operations, which are not measures of
financial performance under generally accepted accounting
principles in the U.S. ("GAAP") and, accordingly, these measures
should not be considered in isolation or as a substitute for the
comparable GAAP measures and should be read in conjunction with the
Company's consolidated financial statements prepared in accordance
with GAAP.
Management believes that these non-GAAP measures provide another
measure of the Company's 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 Company's computation
of its non-GAAP measures may not be comparable to similarly titled
measures reported by other companies, thus limiting their use for
comparability.
Non-GAAP operating income is computed by excluding the
following items from income (loss) from continuing operations: (i)
other income (expense), net; (ii) interest expense; (iii) interest
income; (iv) income tax (expense) benefit adjusted to reflect
non-GAAP adjustments; and (v) the following discrete items:
- Acquisition and integration costs - Represents costs related to
the Lockheed Martin transaction and integration of the acquired
business.
- Amortization of acquired intangible assets - Represents the
amortization expense associated with acquired intangible
assets.
- Restructuring expenses - Represents costs associated with lease
termination and facility consolidation, including costs related to
the Company' September 2013 spin-off
of its former technical services and enterprise IT business.
- Gains and losses on disposal of assets and businesses -
Represents the gains or losses on certain sales of real estate and
businesses.
- Asset impairment charges - Represents impairments of long-lived
intangible and tangible assets.
Adjusted EBITDA is computed by excluding the following
items from income (loss) from continuing operations: (i) discrete
items as identified above; (ii) interest expense; (iii) interest
income; (iv) depreciation expense; and (v) income tax (expense)
benefit, adjusted to reflect the non-GAAP adjustments.
Non-GAAP income from continuing operations is computed by
excluding the discrete items as identified above from income (loss)
from continuing operations and adjusting income tax (expense)
benefit for the effect of such exclusions.
LEIDOS HOLDINGS,
INC.
|
UNAUDITED NON-GAAP
FINANCIAL MEASURES [CONTINUED]
|
(in millions,
except per share amounts)
|
|
The following table
presents the reconciliation of the non-GAAP measures identified
above to the most directly comparable GAAP measures, income from
continuing operations and diluted EPS from continuing
operations:
|
|
|
Three
Months Ended
|
|
Six Months
Ended
|
|
July 1,
2016
|
|
July 3,
2015
(2)
|
|
July 1,
2016
|
|
July 3,
2015 (2)
|
Non-GAAP operating
income from continuing operations
|
$
|
93
|
|
|
$
|
96
|
|
|
$
|
192
|
|
|
$
|
178
|
|
Depreciation
expense
|
7
|
|
|
9
|
|
|
14
|
|
|
19
|
|
Other (expense)
income, net
|
(5)
|
|
|
2
|
|
|
(7)
|
|
|
1
|
|
Adjusted
EBITDA
|
$
|
95
|
|
|
$
|
107
|
|
|
$
|
199
|
|
|
$
|
198
|
|
Depreciation
expense
|
(7)
|
|
|
(9)
|
|
|
(14)
|
|
|
(19)
|
|
Interest expense,
net
|
(13)
|
|
|
(14)
|
|
|
(24)
|
|
|
(28)
|
|
Income tax expense
adjusted to reflect non-GAAP adjustments
|
(25)
|
|
|
(27)
|
|
|
(54)
|
|
|
(44)
|
|
Non-GAAP income
from continuing operations
|
$
|
50
|
|
|
$
|
57
|
|
|
$
|
107
|
|
|
$
|
107
|
|
Acquisition and
integration costs
|
(15)
|
|
|
—
|
|
|
(24)
|
|
|
—
|
|
Amortization of
acquired intangible assets
|
(2)
|
|
|
(3)
|
|
|
(3)
|
|
|
(5)
|
|
Gain on sale of a
business
|
3
|
|
|
—
|
|
|
3
|
|
|
—
|
|
Restructuring
expenses
|
(1)
|
|
|
—
|
|
|
(1)
|
|
|
(2)
|
|
Gain on a real estate
sale
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
Asset impairment
charges
|
—
|
|
|
(29)
|
|
|
—
|
|
|
(69)
|
|
Adjustment to the
income tax provision to reflect non-GAAP adjustments
(1)
|
6
|
|
|
12
|
|
|
10
|
|
|
29
|
|
GAAP income from
continuing operations
|
$
|
41
|
|
|
$
|
37
|
|
|
$
|
94
|
|
|
$
|
60
|
|
|
|
|
|
|
|
|
|
Non-GAAP diluted EPS
from continuing operations
|
$
|
0.68
|
|
|
$
|
0.77
|
|
|
$
|
1.45
|
|
|
$
|
1.43
|
|
Total adjustments
from non-GAAP income from continuing operations
|
(0.13)
|
|
|
(0.27)
|
|
|
(0.18)
|
|
|
(0.63)
|
|
GAAP diluted EPS from
continuing operations
|
$
|
0.55
|
|
|
$
|
0.50
|
|
|
$
|
1.27
|
|
|
$
|
0.80
|
|
Diluted shares (for
computing non-GAAP EPS)
|
74
|
|
|
74
|
|
|
74
|
|
|
75
|
|
|
(1)
Calculation uses an estimated statutory rate on non-GAAP tax
deductible adjustments.
|
(2) Prior
period has been recast to reflect amortization of acquired
intangible assets as a non-GAAP adjustment.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/leidos-holdings-inc-reports-second-quarter-fiscal-year-2016-results-300305416.html
SOURCE Leidos