View Filing Data

Print Document View Excel Document

Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 30, 2016	Feb. 14, 2017	Jul. 01, 2016
Document Documentand Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	FY
Trading Symbol	LDOS
Entity Registrant Name	Leidos Holdings, Inc.
Entity Central Index Key	0001336920
Current Fiscal Year End Date	--12-30
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		150,352,251
Entity Public Float			$ 3,457,775,161

Consolidated Balance Sheets - USD ($) $ in Millions	Dec. 30, 2016	Jan. 01, 2016
Current assets:
Cash and cash equivalents	$ 376	$ 656
Receivables, net	1,657	921
Inventory, prepaid expenses and other current assets	348	216
Total current assets	2,381	1,793
Property, plant and equipment, net	259	142
Intangible assets, net	1,589	25
Goodwill	4,622	1,207
Deferred income taxes	16	8
Other assets	265	195
Total assets	9,132	3,370
Current liabilities:
Accounts payable and accrued liabilities	1,427	761
Accrued payroll and employee benefits	483	268
Dividends payable	23	2
Income taxes payable	21	6
Notes payable and long-term debt, current portion	62	2
Liabilities of discontinued operations	0	1
Total current liabilities	2,016	1,040
Notes payable and long-term debt, net of current portion	3,225	1,079
Deferred tax liabilities	540	34
Other long-term liabilities	204	149
Commitments and contingencies (Notes 17, 20 and 21)
Total liabilities and stockholders' equity	9,132	3,370
Stockholder's equity:
Preferred stock, $.0001 par value,10 million shares authorized and no shares issued and outstanding at December 30, 2016 and January 1, 2016	0	0
Common stock, $.0001 par value, 500 million shares authorized, 150 million and 72 million shares issued and outstanding at December 30, 2016, and January 1, 2016, respectively	0	0
Additional paid-in capital	3,316	1,353
Accumulated deficit	(177)	(277)
Accumulated other comprehensive loss	(4)	(8)
Non-controlling interest	12	0
Total equity	3,147	1,068
Total stockholder's equity	$ 3,135	$ 1,068

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 30, 2016	Jan. 01, 2016
Statement of Financial Position [Abstract]
Preferred stock, par value (usd per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (shares)	10,000,000	10,000,000
Preferred stock, shares issued (shares)	0	0
Preferred stock, shares outstanding (shares)	0	0
Common stock, par value (usd per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (shares)	500,000,000	500,000,000
Common stock, shares issued (shares)	150,000,000	72,000,000
Common stock, shares outstanding (shares)	150,000,000	72,000,000

Consolidated Statements Of Income - USD ($) $ in Millions	11 Months Ended		12 Months Ended
Consolidated Statements Of Income - USD ($) $ in Millions	Jan. 01, 2016	Jan. 02, 2015	Dec. 30, 2016	Jan. 30, 2015
Income Statement [Abstract]
Revenues	$ 4,712	$ 4,690	$ 7,043	$ 5,063
Cost of revenues	4,146	4,069	6,191	4,392
Selling, general and administrative expenses	201	280	334	310
Bad debt expense	8	4	3	5
Acquisition and integration costs	0	0	90	0
Goodwill impairment charges	0	486	0	486
Asset impairment charges	33	41	4	81
Restructuring expenses	4	1	14	3
Equity earnings of non-consolidated subsidiaries	0	0	(10)	0
Operating income (loss)	320	(191)	417	(214)
Interest income	4	1	10	1
Interest expense	(53)	(71)	(96)	(75)
Other (expense) income, net	84	5	(13)	5
Income (loss) from continuing operations before income taxes	355	(256)	318	(283)
Income tax expense	(112)	(67)	(72)	(47)
Income (loss) from continuing operations	243	(323)	246	(330)
Discontinued operations:
Loss from discontinued operations before income taxes	(1)	(14)	0	(13)
Income tax benefit	0	3	0	20
(Loss) income from discontinued operations	(1)	(11)	0	7
Net income (loss)	242	(334)	246	(323)
Less: net income attributable to non-controlling interest, net of taxes	0	0	2	0
Net income (loss) attributable to Leidos common stockholders	$ 242	$ (334)	$ 244	$ (323)
Basic:
Income (loss) from continuing operations attributable to Leidos common stockholders (usd per share)	$ 3.33	$ (4.36)	$ 2.39	$ (4.46)
Discontinued operations, net of taxes (usd per share)	(0.01)	(0.15)	0.00	0.10
Net income (loss) attributable to Leidos common stockholders (usd per share)	3.32	(4.51)	2.39	(4.36)
Diluted:
Income (loss) from continuing operations attributable to Leidos common stockholders (usd per share)	3.28	(4.36)	2.35	(4.46)
Discontinued operations, net of taxes (usd per share)	(0.01)	(0.15)	0.00	0.10
Net income (loss) attributable to Leidos common stockholders (usd per share)	$ 3.27	$ (4.51)	$ 2.35	$ (4.36)

Consolidated Statements Of Comprehensive Income (Loss) - USD ($) $ in Millions	11 Months Ended		12 Months Ended
	Jan. 01, 2016	Jan. 02, 2015	Dec. 30, 2016	Jan. 30, 2015
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 242	$ (334)	$ 246	$ (323)
Other comprehensive income (loss), net of taxes:
Foreign currency translation adjustments, net of taxes of $1 million for fiscal 2016 and fiscal 2015	(1)	(1)	(7)	(1)
Unrecognized gain on derivative instruments, net of taxes of ($10) million for fiscal 2016	1	1	14	0
Pension liability adjustments, net of taxes of $2 million, ($2) million, $2 million and $3 million for fiscal 2016, the 11-month periods ended January 1, 2016 and January 2, 2015, and fiscal 2015, respectively	3	(4)	(3)	(4)
Total other comprehensive income (loss), net of taxes	3	(4)	4	(5)
Comprehensive income (loss)	245	(338)	250	(328)
Less: comprehensive income attributable to non-controlling interest, net of taxes	0	0	2	0
Comprehensive income (loss) attributable to Leidos	$ 245	$ (338)	$ 248	$ (328)

Consolidated Statements of Comprehensive Income (loss) (Parenthetical) - USD ($) $ in Millions	11 Months Ended		12 Months Ended
	Jan. 01, 2016	Jan. 02, 2015	Dec. 30, 2016	Jan. 30, 2015
Statement of Comprehensive Income [Abstract]
Foreign currency translation adjustments, tax			$ 1	$ 1
Unrecognized gain on derivative instruments, tax			(10)
Pension liability adjustments, tax	$ (2)	$ 2	$ 2	$ 3

Consolidated Statements Of Stockholders' Equity - USD ($) shares in Millions, $ in Millions	Total	Leidos Holdings, Inc. stockholders' equity	Shares of common stock	Additional paid-in capital	Accumulated earnings (deficit)	Accumulated other comprehensive loss	Non-controlling interest
Balance, shares at Jan. 31, 2014			80.0
Balance, value at Jan. 31, 2014	$ 1,595	$ 1,595		$ 1,576	$ 25	$ (6)	$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	(323)	(323)			(323)
Other comprehensive income (loss), net of tax	(5)	(5)				(5)
Issuances of stock (less forfeitures), shares			1.0
Issuances of stock (less forfeitures)	$ 1	1		1
Repurchases of stock, shares	(6.3)		(7.0)
Repurchases of stock and other	$ (215)	(215)		(178)	(37)
Dividends	(89)	(89)			(89)
Adjustments for income tax benefits from stock-based compensation	(6)	(6)		(6)
Stock-based compensation	42	42		42
Stock issued for the IS&GS Business acquisition	0
Other	(2)	(2)		(2)
Balance, shares at Jan. 30, 2015			74.0
Balance, value at Jan. 30, 2015	998	998		1,433	(424)	(11)	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	242	242			242
Other comprehensive income (loss), net of tax	3	3				3
Issuances of stock (less forfeitures), shares			1.0
Issuances of stock (less forfeitures)	7	7		7
Repurchases of stock, shares			(3.0)
Repurchases of stock and other	(118)	(118)		(118)
Dividends	(95)	(95)			(95)
Adjustments for income tax benefits from stock-based compensation	1	1		1
Stock-based compensation	30	30		30
Stock issued for the IS&GS Business acquisition	0
Balance, shares at Jan. 01, 2016			72.0
Balance, value at Jan. 01, 2016	1,068	1,068		1,353	(277)	(8)	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	246	244			244		2
Other comprehensive income (loss), net of tax	4	4				4
Issuances of stock (less forfeitures), shares			1.0
Issuances of stock (less forfeitures)	36	36		36
Repurchases of stock and other	(24)	(24)		(24)
Dividends	(144)	(144)			(144)
Special cash dividend of $13.64 per share	(1,022)	(1,022)		(1,022)
Stock-based compensation	35	35		35
Stock issued for the IS&GS Business acquisition, shares			77.0
Stock issued for the IS&GS Business acquisition	2,938	2,938		2,938
Equity interest acquired	10						10
Balance, shares at Dec. 30, 2016			150.0
Balance, value at Dec. 30, 2016	$ 3,147	$ 3,135		$ 3,316	$ (177)	$ (4)	$ 12

Consolidated Statements Of Equity (Parenthetical) - $ / shares	11 Months Ended	12 Months Ended
	Jan. 01, 2016	Dec. 30, 2016	Jan. 30, 2015
Statement of Stockholders' Equity [Abstract]
Cash dividend per share	$ 1.28	$ 1.28	$ 1.28
Special cash dividend		$ 13.64

Consolidated Statements Of Cash Flows - USD ($) $ in Millions	11 Months Ended		12 Months Ended
	Jan. 01, 2016	Jan. 02, 2015	Dec. 30, 2016	Jan. 30, 2015
Cash flows from operations:
Net income (loss)	$ 242	$ (334)	$ 246	$ (323)
Income (loss) from discontinued operations	1	11	0	(7)
Adjustments to reconcile net income (loss) to net cash provided by continuing operations:
Depreciation and amortization	41	58	122	62
Stock-based compensation	30	40	35	42
Goodwill impairment charges	0	486	0	486
Asset impairment charges	33	41	4	81
Gain on a real estate sale	(82)	0	0	0
Other	6	4	0	8
Change in assets and liabilities, net of effects of acquisitions and dispositions:
Receivables	(19)	68	123	162
Inventory, prepaid expenses and other current assets	3	6	(101)	(12)
Accounts payable and accrued liabilities	102	(41)	(25)	(43)
Accrued payroll and employee benefits	5	10	26	(21)
Increase (Decrease) in Income Taxes	81	37	36	(31)
Increase (Decrease) in Other Noncurrent Assets and Liabilities, Net	(44)	(1)	(20)	(8)
Total cash flows provided by operating activities of continuing operations	399	385	446	396
Cash flows from investing activities:
Payments for property, plant and equipment	(27)	(29)	(29)	(29)
Acquisitions of businesses	(2)	0	25	0
Payments on accrued purchase price related to prior acquisition	(13)	0	0	0
Net proceeds from sale of assets	79	0	3	0
Proceeds from disposition of business	27	0	23	0
Proceeds from collections on promissory note	0	0	4	0
Proceeds from U.S. Treasury cash grant	0	80	0	80
Total cash flows provided by investing activities of continuing operations	64	51	26	51
Cash flows from financing activities:
Payments of long-term debt	(39)	(154)	(277)	(177)
Payments on real estate financing transaction	(8)	0	0	0
Proceeds from debt issuance	0	0	690	0
Payments for debt issuance costs	0	0	(30)	0
Proceeds from issuances of stock	6	7	25	7
Repurchases of stock and other	(118)	(213)	(24)	(215)
Special cash dividend payment	0	0	(993)	0
Dividend payments	(93)	(72)	(142)	(95)
Other	3	1	0	2
Total cash flows used in financing activities of continuing operations	(249)	(431)	(751)	(478)
(Decrease) increase in cash and cash equivalents from continuing operations	214	5	(279)	(31)
Cash flows from discontinued operations:
(Decrease) increase in cash and cash equivalents from discontinued operations	(7)	(5)	0	15
Cash (used in) provided by operating activities of discontinued operations	6	29	(1)	29
(Decrease) increase in cash and cash equivalents from discontinued operations	(1)	24	(1)	44
Total (decrease) increase in cash and cash equivalents	213	29	(280)	13
Cash and cash equivalents at beginning of year	443	430	656	430
Cash and cash equivalents at end of year	$ 656	$ 459	$ 376	$ 443

Summary of Significant Accounting Policies

12 Months Ended

Dec. 30, 2016

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Nature of Operations and Basis of Presentation

Leidos Holdings, Inc. ("Leidos") is a holding company whose direct 100%-owned subsidiaries and principal operating companies are Leidos, Inc. and Leidos Innovations Corporation ("Leidos Innovations"). Leidos is a global science and technology solutions company that provides technology and engineering solutions in the defense, intelligence, homeland security, civil and health markets. Leidos brings domain-specific capability and cross-market innovations to customers in each of these markets by leveraging seven core capabilities: command, control, computing, communications and intelligence surveillance and reconnaissance ("C4ISR"); cybersecurity; systems engineering; large-scale agile software development; data analytics; enterprise IT modernization; and operations and sustainment. Leidos' domestic customers include agencies of the U.S. Department of Defense ("DoD"), the U.S. Intelligence Community, the U.S. Department of Homeland Security ("DHS"), the Federal Aviation Administration ("FAA"), the Department of Health and Human Services, other U.S. Government civil agencies and state and local government agencies. Leidos' international customers include foreign governments and their agencies, primarily located in the United Kingdom, the Middle East and Australia. Unless indicated otherwise, references to the "Company," "we," "us" and "our" refer collectively to Leidos Holdings, Inc., and its consolidated subsidiaries.

On August 16, 2016, a wholly-owned subsidiary of Leidos Holdings, Inc. merged with the Information Systems & Global Solutions business (the "IS&GS Business") of Lockheed Martin Corporation in a Reverse Morris Trust transaction. The acquired IS&GS Business was renamed Leidos Innovations Corporation. See "Note 2–Acquisitions" for further information. As a result of the Lockheed Martin transaction, the Company received an interest in Mission Support Alliance, LLC ("MSA"), a joint venture with Jacobs Engineering Group, Inc. and Centerra Group, LLC. The Company has consolidated the financial results for MSA into its consolidated financial statements.

The consolidated financial statements of Leidos include the balances of its majority-owned and 100%-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation. The Company disaggregated "Goodwill and intangible assets, net" into "Goodwill" and "Intangible assets, net"; separately disclosed "Dividends payable" and "Income taxes payable," which were previously aggregated within "Accounts payable and accrued liabilities"; and separately disclosed "Deferred tax liabilities," which was previously aggregated within "Other long-term liabilities" on the consolidated balance sheets.

Reporting Periods

On March 20, 2015, the Board of Directors approved the amendment and restatement of the bylaws of Leidos to change Leidos' year end from the Friday nearest the end of January to the Friday nearest the end of December.

As a result of this change, the Company filed a Transition Report on Form 10-K for the 11-month period which began on January 31, 2015, and ended on January 1, 2016.

This change did not impact the Company's prior reported fiscal years, which covered a 12-month period and ended on the Friday closest to January 31. Fiscal 2015 began on February 1, 2014, and ended on January 30, 2015.

This Annual Report on Form 10-K for fiscal 2016 covers a 12-month period that began on January 2, 2016, and ended on December 30, 2016.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("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 indirect cost billings, allowances for doubtful accounts, inventories, fair value and impairment of intangible assets and goodwill, income taxes, estimated profitability of long-term contracts, pension benefits, stock-based compensation expense and contingencies. 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.

Restructuring Expenses

Restructuring expenses are incurred in connection with programs aimed at reducing the Company's costs and primarily include lease termination, vacancy costs and termination costs associated with headcount reduction. A liability for costs associated with vacant or idle facilities is recognized and measured initially at its fair value in the period in which the liability is incurred and the use of the facility has ceased. Sublease loss liabilities are estimated and recorded, as of the estimated sublease commencement date, and adjusted when necessary. Liabilities associated with reduced headcount occur when the obligations are probable and estimable based on management's approval date for these termination benefit obligations regardless of whether the Company has communicated its decision to terminate the employees.

Operating Cycle

The Company’s operating cycle for long-term contracts may be greater than one year and is measured by the average time intervening between the inception and the completion of those contracts. Contract-related assets and liabilities are therefore generally classified as current assets and current liabilities.

Business Combinations, Investments and Variable Interest Entities

Business Combinations

The accounting for business combinations requires the Company to make judgments and estimates related to the fair value of assets acquired, including the identification and valuation of intangible assets, as well as liabilities and contingencies assumed. Such judgments and estimates directly impact the amount of goodwill recognized in connection with an acquisition.

Investments

Investments in entities and corporate joint ventures where the Company has a noncontrolling ownership interest representing less than 50% and over which the Company has the ability to exercise significant influence, are accounted for under the equity method of accounting whereby the Company recognizes its proportionate share of the entities’ net income or loss and does not consolidate the entities' assets and liabilities.

Equity investments in entities over which the Company does not have the ability to exercise significant influence and whose securities do not have a readily determinable fair value are carried at cost or cost net of other-than-temporary impairments.

Variable Interest Entities

The Company occasionally forms joint ventures and/or enters into arrangements with special purpose limited liability companies for the purpose of bidding and executing on specific projects. The Company analyzes each such arrangement to determine whether it represents a variable interest entity ("VIE"). If the arrangement is determined to be a VIE, the Company assesses whether it is the primary beneficiary of the VIE and is consequently required to consolidate the VIE.

Revenue Recognition

The Company’s revenues are generated primarily from contracts with the U.S. Government, commercial customers and various international, state and local governments or from subcontracts with other contractors engaged in work with such customers. The Company performs under various types of contracts, which include firm-fixed-price, time-and-materials, fixed-price-level-of-effort, cost-plus-fixed-fee, cost-plus-award-fee, cost-plus-incentive-fee and fixed-price-incentive fee contracts.

Firm-fixed-price contracts—Revenues and fees on these contracts that are system integration or engineering in nature are primarily recognized using the percentage-of-completion method of accounting utilizing the cost-to-cost method. The completed contract method is utilized when reasonable and reliable cost estimates for a project cannot be made.

Time-and-materials contracts—Revenue is recognized on time-and-materials contracts based on the hours provided in performance under the contract multiplied by the negotiated contract billing rates, plus the negotiated contract billing rate of any allowable material and subcontract costs and out-of-pocket expenses.

Fixed-price-level-of-effort contracts ("FP-LOE")—These contracts are substantially similar to time-and-materials contracts except they require a specified level of effort over a stated period of time. Accordingly, the Company recognizes revenue on FP-LOE contracts with the U.S. Government in a manner similar to time-and-materials contracts in which the Company measures progress toward completion based on the hours provided in performance under the contract multiplied by the negotiated contract billing rates, plus the negotiated contract billing rate of any allowable material costs and out-of-pocket expenses.

Cost-plus-fixed-fee contracts—Revenue is recognized on cost-plus-fixed-fee contracts with the U.S. Government on the basis of partial performance equal to costs incurred, plus an estimate of applicable fees earned as the Company becomes contractually entitled to reimbursement of costs and the applicable fees.

Cost-plus-award-fee/cost-plus-incentive fee contracts—Revenues and fees on these contracts with the U.S. Government are primarily recognized using the percentage-of-completion method of accounting, most often based on the cost-to-cost method. The Company includes an estimate of the ultimate incentive or award fee to be received on the contract in the estimate of contract revenues for purposes of applying the percentage-of-completion method of accounting.

Fixed-price-incentive fee (“FP-IF”)—Contracts are substantially similar to cost plus incentive fee contracts recognized using the percentage-of-completion method of accounting except they require specified targets for cost and profit, price ceiling (but not a profit ceiling or floor), and profit adjustment formula. Under an FP-IF contract, the allowable costs incurred are eligible for reimbursement but are subject to a cost-share arrangement, which affects profitability. Generally, if costs exceed the contract target cost or are not allowable under the applicable regulations, the Company may not be able to obtain reimbursement for all costs and may have fees reduced or eliminated.

Revenues from services and maintenance contracts, notwithstanding contract type, are recognized over the term of the respective contracts as the services are performed and revenue is earned. Revenues from unit-priced contracts are recognized as transactions are processed based on objective measures of output. Revenues from the sale of manufactured products are recorded upon passage of title and risk of loss to the customer, which is generally upon delivery, provided that all other requirements for revenue recognition have been met.

The Company also uses the efforts-expended method of percentage-of-completion using measures such as labor dollars for measuring progress toward completion in situations in which this approach is more representative of the progress on the contract. For example, the efforts-expended method is utilized when there are significant amounts of materials or hardware procured for the contract that is not representative of progress on the contract. Additionally, the Company utilizes the units-of-delivery method under percentage-of-completion on contracts where separate units of output are produced. Under the units-of-delivery method, revenue is generally recognized when the units are delivered to the customer, provided that all other requirements for revenue recognition have been met.

The Company evaluates its contracts for multiple elements, and when appropriate, separates the contracts into separate units of accounting for revenue recognition. Revenues generated from product sales do not represent a material amount of the Company's total revenues.

The Company provides for anticipated losses on contracts by recording an expense during the period in which the losses are determined. Amounts billed and collected but not yet recognized as revenues under contracts are deferred. Contract costs incurred for U.S. Government contracts, including indirect costs, are subject to audit and adjustment through negotiations between the Company and government representatives. The Company's indirect cost audits by the DCAA remain open for fiscal 2012 and subsequent fiscal years for Leidos, Inc. and for fiscal 2009 and subsequent fiscal years for Leidos Innovations Corporation. Revenues on U.S. Government contracts have been recorded in amounts that are expected to be realized upon final settlement.

Contract claims are unanticipated additional costs incurred but not provided for in the executed contract price that the Company seeks to recover from the customer. Such costs are expensed as incurred. Additional revenue related to contract claims is recognized when the amounts are awarded by the customer. Un-priced change orders are included in revenue when they are probable of recovery in an amount at least equal to the cost.

In certain situations, primarily where the Company is not the primary obligor on certain elements of a contract such as the provision of administrative oversight and/or management of government-owned facilities or support services related to other vendors' products, the Company recognizes as revenue the net management fee associated with the services and excludes from its income statement the gross sales and costs associated with the facility or other vendors' products.

Changes in Estimates on Contracts

Changes in estimates related to contracts accounted for using the percentage of completion method of accounting are recognized in the period in which such changes are made for the inception-to-date effect of the changes, with the exception of IS&GS contracts where the adjustment is for the period commencing from the date of acquisition. Changes in these estimates can routinely occur over the contract performance period for a variety of reasons, including changes in contract scope, contract cost estimates and estimated incentive or award fees.

Changes in estimates on contracts for fiscal 2016, the 11-month period ended January 1, 2016, and fiscal 2015 were as follows:



	12 Months Ended		11 Months Ended		12 Months Ended
	December 30, 2016		January 1, 2016		January 30, 2015
	(in millions, except for per share amounts)
Net favorable impact to income (loss) from continuing operations before taxes	$	37	$	18	$	24
Impact on diluted EPS from continuing operations attributable to Leidos common stockholders	$	0.22	$	0.14	$	0.20

Divestitures

From time-to-time, the Company may dispose (or management may commit to plans to dispose) of strategic or non-strategic components of the business. Divestitures representing a strategic shift in operations are reclassified as discontinued operations for all periods presented. Non-strategic divestitures are not reclassified as discontinued operations and remain in continuing operations.

During fiscal 2015, the Company adopted the provisions of Accounting Standards Update ("ASU") 2014-08 Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which designated new discontinued operations qualification criteria. For the divestitures presented in this Annual Report for periods prior to the 11-month period ended January 1, 2016, the provisions in ASU 2014-08 were not applicable and thus the divestitures reclassified as discontinued operations for those periods represent both non-strategic and strategic shifts in operations.

Pre-contract and Transition Costs

Pre-contract Costs

Costs incurred on projects as pre-contract costs are deferred as assets (inventory, prepaid expenses and other current assets) when the Company has been requested by the customer to begin work under a new arrangement prior to contract execution and it is probable that the Company will recover the costs through the issuance of a contract. When the formal contract has been executed, the costs are recorded to the contract and revenue is recognized.

Transition Costs

Under certain services contracts, costs are incurred, usually at the beginning of the contract performance, to transition the services, employees and equipment from the customer or prior contractor. These costs are capitalized as deferred assets and amortized over the shorter of the contractual period of performance or expected period of performance, if recoverability is deemed probable. Payments received from the customer for the performance of the transition services are deferred and amortized to over the same period as costs.

Fair Value Measurements

The accounting standard for fair value measurements establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows: observable inputs such as quoted prices in active markets (Level 1); inputs other than the quoted prices in active markets that are observable either directly or indirectly (Level 2); and unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions (Level 3).

The fair value of financial instruments is determined based on quoted market prices, if available, or management's best estimate (see "Financial Instruments" below). At December 30, 2016, the Company did not have any financial assets or liabilities measured at fair value on a recurring basis using Level 3 inputs.

Management evaluates its investments for other-than-temporary impairment at each balance sheet date. When testing long-term investments for recovery of carrying value, the fair value of long-term investments is determined using various valuation techniques and factors such as, market prices of comparable companies (Level 2 input), discounted cash flow models (Level 3 input) and recent capital transactions of the portfolio companies being valued (Level 3 input). If management determines that an other-than-temporary decline in the fair value of an investment has occurred, an impairment loss is recognized to reduce the investment to its estimated fair value.

The Company’s non-financial instruments measured at fair value on a non-recurring basis include goodwill, indefinite-lived intangible assets and long-lived tangible assets. The valuation methods used to determine fair value require a significant degree of management judgment to determine the key assumptions. As such, the Company generally classifies non-financial instruments as either Level 2 or Level 3 fair value measurements. On August 16, 2016, the Company had non-financial instruments measured at fair value on a non-recurring basis in connection with the acquisition of Lockheed Martin's IS&GS Business. Refer to "Note 2–Acquisitions" for the preliminary fair values of the assets acquired and liabilities assumed. At December 30, 2016, the Company did not have any material non-financial instruments measured at fair value on a non-recurring basis.

The carrying amounts of the Company’s 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 the Company's notes receivable (see "Note 3–Divestitures" and "Note 17–Leases") as of December 30, 2016, of $92 million approximates fair value as the stated interest rates within the agreements are consistent with the current market rates used in notes with similar terms in the market (Level 2 inputs). The fair value of long-term debt (see "Note 11–Debt") is determined based on current interest rates available for debt with terms and maturities similar to the Company’s existing debt arrangements (Level 2 inputs).

Financial Instruments

The Company is exposed to certain market risks which are inherent in certain transactions entered into during the normal course of business. These transactions include sales or purchase contracts denominated in foreign currencies, investments in equity securities and exposure to changing interest rates. The Company manages its risk to changes in interest rates through the use of derivative instruments.

For fixed rate borrowings, the Company uses variable interest rate swaps, effectively converting fixed rate borrowings to variable rate borrowings. These swaps are designated as fair value hedges. The fair value of these interest rate swaps is determined based on observed values for underlying interest rates on the LIBOR yield curve (Level 2).

For variable rate borrowings, the Company uses fixed interest rate swaps, effectively converting a portion of the variable rate borrowings to fixed rate borrowings. These swaps are designated as cash flow hedges. The fair value of these interest rate swaps is determined based on observed values for the underlying interest rate (Level 2).

The Company does not hold derivative instruments for trading or speculative purposes.

The Company's defined benefit plan assets consist of investments in pooled funds that contain investments with values based on quoted market prices, but for which the pools are not valued on a daily quoted market basis (Level 2 inputs).

Cash and Cash Equivalents

The Company’s cash equivalents were primarily comprised of investments in several large institutional money market funds and bank deposits, with original maturity of three months or less. There are immaterial restrictions on the withdrawal of the Company’s cash and cash equivalents of foreign currency due to exchange control regulations.

Restricted Cash

The Company has restricted cash balances, primarily representing advances from customers that are restricted as to use for certain expenditures related to that customer's contract. Restricted cash balances are included as "Inventory, prepaid expenses and other current assets" in the Company's consolidated balance sheets.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk primarily consists of accounts receivable. Since the Company’s receivables are primarily with the U.S. Government, the Company does not have exposure to a material credit risk. Additionally, the Company is subject to credit risk related to its derivatives. This risk is limited, as the Company's derivatives are managed through the use of multiple counterparties with high credit standards.

Receivables

The Company’s accounts receivable include amounts billed and currently due from customers. As of the 11-month period ended January 1, 2016, the amounts billable within the next month were classified as billed receivables. Such receivables were classified as unbilled receivables for fiscal 2016.

Amounts billable are stated at estimated realizable value and consist of costs and fees, substantially all of which are expected to be billed and collected within one year. Amounts billable also include rate variances that are billable upon negotiation of final indirect rates with the U.S. Government and, once billed, are subject to audit and approval by government representatives.

Contract retentions are billed upon contract completion, or the occurrence of a specified event, and when negotiation of final indirect rates with the U.S. Government is complete. Consequently, the timing of collection of retention balances is outside the Company’s control. Based on the Company’s historical experience, the majority of retention balances are expected to be collected beyond one year and write-offs of retention balances have not been significant. When events or conditions indicate that amounts outstanding from customers may become uncollectible, an allowance is estimated and recorded.

Inventories

Inventories are valued at the lower of cost or estimated net realizable value. Raw material inventory is valued using the average cost method. Work-in-process inventory includes raw material costs plus labor costs, including fringe benefits, and allocable overhead costs. The majority of finished goods inventory consists of security products and baggage scanning equipment. The Company evaluates inventory against historical and planned usage to determine appropriate provisions for obsolete inventory.

Property, Plant and Equipment

Purchases of property, plant and equipment as well as costs associated with major renewals and improvements are capitalized. Maintenance, repairs and minor renewals and improvements are expensed as incurred.

Construction in Progress ("CIP") is used to accumulate all costs for projects that are not yet complete. CIP balances are transferred to the appropriate asset account when the asset is capitalized and ready for its intended use.

When assets are sold or otherwise disposed of, the cost and related accumulated depreciation or amortization are removed from the accounts and any resulting gain or loss is recognized. Depreciation is recognized using the methods and estimated useful lives as follows:



	Depreciation method	Estimated useful lives (in years)
Computers and other equipment	Straight-line or declining-balance	2-10
Buildings	Straight-line	Not to exceed 40
Building improvements and leasehold improvements	Straight-line	Shorter of useful life of asset or remaining lease term
Office furniture	Straight-line or declining-balance	6-9

The Company evaluates its long-lived assets for potential impairment whenever there is evidence that events or changes in circumstances indicate that the carrying value may not be recoverable and the carrying amount of the asset exceeds its estimated fair value.

Project Assets

Purchases of project assets are capitalized for specific contracts where delivery has not yet occurred or ownership is maintained by the Company over the life of the contract. Project assets include enterprise software licenses, computers, and significant material purchases on contracts. These project assets are relieved from the balance sheet based on different methodologies, including transfer of assets, amortization based on useful life and percentage of completion utilizing efforts expended method of revenue recognition.

Goodwill

Goodwill represents purchase consideration paid in a business combination that exceeds the fair values of the net assets of acquired businesses. Goodwill is not amortized, but instead is tested for impairment at the reporting unit level annually, on the first day of the fourth quarter, and during interim periods, if events or circumstances indicate that the carrying value may not be recoverable. The Company's policy is to perform its annual goodwill impairment evaluation as of the first day of the fourth quarter of its fiscal year.

The change in the Company's fiscal year-end from the Friday nearest the end of January to the Friday nearest the end of December resulted in an annual goodwill impairment test date for the 11-month period ended January 1, 2016, that was approximately one month earlier than in previous years. The change in the annual goodwill impairment testing date was deemed to be a change in accounting principle, which the Company believes to be preferable. The change was made to better align with the Company's most significant customer’s fiscal year as well as the Company's year-end reporting cycle and annual planning and budgeting process, which is a significant element in the annual goodwill impairment test. This change in accounting principle did not delay, accelerate or avoid a goodwill impairment charge. The annual goodwill impairment test was performed on November 1, 2014, for fiscal 2015, and on October 3, 2015, for the 11-month period ended January 1, 2016, such that a period greater than 12 months did not elapse between test dates. The change in the annual goodwill impairment testing date was applied prospectively beginning on October 3, 2015, and had no effect on the consolidated financial statements. This change was not applied retrospectively as it is impracticable to objectively determine valuation estimates in prior periods.

Goodwill is evaluated for impairment either under a qualitative assessment option or a two-step quantitative approach depending on the facts and circumstances of a reporting unit, including consideration of the excess of fair value over carrying amount in previous assessments and changes in business environment.

When performing a qualitative assessment, the Company considers factors including, but not limited to, current macroeconomic conditions, industry and market conditions, cost factors, financial performance and other events relevant to the entity or reporting unit under evaluation to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company determines that it is more likely than not that a reporting unit's fair value is less than its carrying amount, a quantitative two-step goodwill impairment test is performed.

In evaluating the first step of the two-step quantitative goodwill impairment test, the estimated fair value of each reporting unit is compared to its carrying value, which includes the allocated goodwill. If the estimated fair value of a reporting unit is more than its carrying value, no further analysis is required. If the estimated fair value of a reporting unit is less than its carrying value, a second step is performed to compute the amount of the impairment by determining an implied fair value of goodwill. The implied fair value of goodwill is the residual fair value derived by deducting the fair value of a reporting unit’s identifiable assets and liabilities from its estimated fair value calculated in the first step. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, then the Company records an impairment charge equal to the difference.

The Company estimates the fair value of each reporting unit using both market and income approaches (Level 3) when a quantitative analysis is performed.

The market approach is a technique where the fair value is calculated based on fair values of publicly-traded companies that provide a reasonable basis of comparison with the reporting unit. Valuation ratios are selected that relate market prices to selected financial metrics from comparable companies. These ratios are applied after consideration of adjustments and weightings related to financial position, growth, volatility, working capital movement, and other factors. Due to the fact that stock prices of comparable companies represent minority interests, the Company also considers an acquisition control premium to reflect the impact of additional value associated with a controlling interest.

The income approach is a technique where the fair value is calculated based on present value of future cash flows using risk-adjusted discount rates, which represent the weighted-average cost of capital ("WACC") for each reporting unit. Determination of WACC includes assessing the cost of equity and debt as of the valuation date. In addition, a terminal value is developed for forecasted future cash flows beyond the projection period discounted back to the present value. The forecasts used in the Company’s estimation of fair value are developed by management based on business and market considerations.

The goodwill impairment test process and valuation model is based upon certain key assumptions that require the exercise of significant judgment including judgments for the use of appropriate financial projections, economic expectations, discount rates and WACC as well as using available market data.

Intangible Assets

Acquired intangible assets with finite lives are amortized using the method that best reflects how their economic benefits are utilized or, if a pattern of economic benefits cannot be reliably determined, on a straight-line basis over their estimated useful lives. Intangible assets with finite lives are being amortized over the following periods:



		Estimated useful lives (in years)
Customer relationships		8-10
Software and technology		9-15
Programs and contract intangibles		10
Backlog		1

Intangible assets with finite lives are assessed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. See "Note 6—Intangible Assets" for impairment charges taken during the 11-month period ended January 1, 2016 and fiscal 2015.

Intangible assets with indefinite lives are not amortized but are assessed for impairment at the beginning of the fourth quarter and whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

Selling, General and Administrative Expenses

The Company classifies indirect costs incurred within or allocated to its U.S. Government customers as overhead (included in cost of revenues) or general and administrative expenses in the same manner as such costs are defined in the Company’s disclosure statements under U.S. Government Cost Accounting Standards.

Selling, general and administrative expenses include general and administrative, bid and proposal and internal research and development ("IR&D") expenses.

The Company conducts research and development activities under customer-funded contracts and with company-funded IR&D funds. For fiscal 2016, the 11-month period ended January 1, 2016, and fiscal 2015, company-funded IR&D expense was $44 million, $29 million and $37 million, respectively. Expenses for research and development activities performed under customer contracts are charged directly to cost of revenues for those contracts.

Income Taxes

The Company accounts for income taxes under the asset and liability method in accordance with the accounting standard for income taxes. The asset and liability method requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities. Under this method, changes in tax rates and laws are recognized in income in the period such changes are enacted.

The Company records net deferred tax assets to the extent that it believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent results of operations. If the Company were to determine that it would be able to realize its deferred income tax assets in the future in excess of their net recorded amount or would no longer be able to realize its deferred income tax assets in the future as currently recorded, the Company would make an adjustment to the valuation allowance which would decrease or increase the provision for income taxes.

The provision for federal, state, foreign and local income taxes is calculated on income before income taxes based on current tax law and includes the cumulative effect of any changes in tax rates from those used previously in determining deferred tax assets and liabilities. Such provision differs from the amounts currently payable because certain items of income and expense are recognized in different reporting periods for financial reporting purposes than for income tax purposes.

The Company recognizes liabilities for uncertain tax positions when it is more likely than not that a tax position will not be sustained upon examination and settlement with various taxing authorities. Liabilities for uncertain tax positions are measured based upon the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company recognizes interest and penalties related to uncertain tax positions in its income tax expense.

Stock-Based Compensation

The Company recognizes the fair value of all stock-based awards granted to employees and directors in exchange for services as compensation expense over the requisite service period, which is typically the vesting period, net of an estimated forfeiture rate.

Foreign Currency

The financial statements of consolidated international subsidiaries, for which the functional currency is not the U.S. dollar, are translated into U.S. dollars using the exchange rate at each balance sheet date for assets and liabilities and a weighted average exchange rate over the reporting period for revenues, expenses, gains and losses. Translation adjustments are recorded as accumulated other comprehensive income (loss) in stockholders' equity. Gains and losses due to movements in foreign currency exchange rates, are recognized in the Company's consolidated statements of income (loss).

Accounting Standards Updates Adopted

During fiscal 2016, the Company adopted the following Accounting Standard Updates (ASUs):

In April 2015, the Financial Accounting Standards Board ("FASB") issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. This update eliminates separate presentation for debt issuance costs as an asset and requires issuance costs to be reported in the balance sheet as a direct reduction to the face amount of the associated debt. The Company adopted this ASU on a retrospective basis during the Company's first quarter ended April 1, 2016. This resulted in a reclassification of deferred financing costs related to the Company's notes of $7 million from "Other assets" to "Notes payable and long-term debt, net of current portion" as of January 1, 2016.

In March 2016, the FASB issued ASU 2016-09 Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This update is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted. Among other requirements in the new standard, the ASU requires that an entity, (i) recognize excess tax benefits and deficiencies related to employee share-based payment transactions as an income tax expense or benefit in the income statement rather than in equity; (ii) present the excess tax benefits as an operating activity on the statement of cash flows versus current guidance to present them as financing activities; and, (iii) elect to either recognize stock forfeitures as they occur or estimate them. During the quarter ended July 1, 2016, the Company elected to early adopt the provisions of the ASU prospectively from January 2, 2016, including continuation of estimating forfeitures instead of recording them as they occur. Consequently, the Company recognized an $8 million discrete tax benefit for fiscal 2016, and operating cash flows for fiscal 2016 increased $8 million with a corresponding decrease to financing cash flows.

The Company adopted various other accounting standard updates, none of which had a material effect on the Company’s consolidated financial position, results of operations or cash flows.

Accounting Standards Updates Issued But Not Yet Adopted

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). This ASU will supersede all revenue recognition requirements in Topic 605, Revenue Recognition and industry-specific guidance throughout the Industry Topics of the codification. The guidance's core principle is an entity should recognize revenue to depict the transfer of control for promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying the revenue principles, an entity will identify the contract(s) with a customer, identify the performance obligations, determine the transaction price, allocate the transaction price to the performance obligations and recognize revenue when the performance obligation is satisfied (i.e., either over time or point in time). The ASU further states that an entity should disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The original effective date for public companies was the beginning of fiscal 2017.

Subsequently, in August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which approved a one-year deferral of the effective date of the ASU to the beginning of fiscal 2018, with an option for early adoption of the standard on the original effective date.

The Company will adopt the new revenue standard in the beginning of fiscal 2018. We are in the process of evaluating the adoption methodology of the standard along with the potential impacts. The Company has substantially completed an initial assessment of the new standard and began to quantify the financial statement impact. We believe the majority of our long-term contracts will continue to recognize revenue over time as the work progresses because of the continuous transfer of control to the customer, generally using an input measure (e.g., cost incurred) to reflect progress.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This ASU will supersede the current lease guidance under ASC 840 and makes several changes, such as requiring an entity to recognize a right-of-use asset and corresponding lease obligation in the balance sheet, classified as financing or operating, as appropriate. The update is effective for public companies in the beginning of fiscal 2019 and should be adopted under the modified retrospective approach. Early adoption is permitted. The Company is evaluating the provisions of ASU 2016-02 and its impact on the Company's consolidated financial position, results of operations and cash flows.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. This ASU 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 in the beginning of fiscal 2020 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. The guidance may be early-adopted for fiscal 2019. The Company is evaluating the provisions of ASU 2016-13 and its impact on the Company's consolidated financial position, results of operations and cash flows.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments. This ASU clarifies guidance for cash flow classification to reduce current and potential future diversity in practice. The update is effective for public companies in the beginning of fiscal 2018. The amendments should be applied using a retrospective transition method to each period presented. For items that are impractical to apply the amendments retrospectively, they shall be applied prospectively as of the earliest date practicable. Early adoption is permitted. The Company is evaluating the provisions of ASU 2016-15 and its impact on the Company's consolidated cash flows.

In November, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) - Restricted Cash. This ASU amends the presentation and disclosure requirements of restricted cash and restricted cash equivalents. The majority of the amendments revise how restricted cash and restricted cash equivalents are presented in the statements of cash flows. The update is effective for public companies in the beginning of fiscal 2018 and should be applied on a retrospective basis. Early adoption is permitted. The Company is evaluating the provisions of ASU 2016-18 and its impact on the Company's consolidated cash flows.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment. This ASU eliminates Step 2 of the goodwill impairment test and simplifies how the amount of an impairment loss is determined. The update is effective for public companies in the beginning of fiscal year 2020 and shall be applied on a prospective basis. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. The Company is evaluating the provisions of ASU 2017-04 and its impact on the Company's consolidated financial position, results of operation and cash flows.

Various other accounting standard updates were issued but are not effective for the Company until periods subsequent to December 30, 2016. The Company is still evaluating the guidance or does not expect these updates to have a material impact on its consolidated financial position, results of operations, or cash flows.

Acquisitions

12 Months Ended

Dec. 30, 2016

Business Combinations [Abstract]

Acquisitions

The Company may acquire businesses as part of its growth strategy to provide new or enhance existing capabilities and offerings to customers. During fiscal 2016, the Company completed the acquisition of Lockheed Martin's IS&GS Business (as described below). No businesses were acquired during the 11-month period ended January 1, 2016, and fiscal 2015.

Lockheed Martin Transaction

On January 26, 2016, Leidos announced that it had entered into a definitive agreement (as amended, the "Merger Agreement") with Lockheed Martin Corporation ("Lockheed Martin"); Abacus Innovations Corporation, a Delaware corporation and a wholly owned subsidiary of Lockheed Martin ("Splitco"); and Lion Merger Co., a Delaware corporation and, at the time of announcement, a wholly owned subsidiary of Leidos ("Merger Sub"), pursuant to which Leidos would combine with Lockheed Martin’s realigned Information Systems & Global Solutions business in a Reverse Morris Trust transaction. In connection with the Merger Agreement, Lockheed Martin and Splitco entered into a Separation Agreement dated January 26, 2016 (as amended, the "Separation Agreement"), pursuant to which Lockheed Martin would separate the IS&GS Business from Lockheed Martin and transfer the IS&GS Business to Splitco. The transactions contemplated by the Merger Agreement and the Separation Agreement are referred to herein as the “Transactions.”

On August 16, 2016, the acquisition date, the Company completed the Transactions. In the Transactions, among other steps, (i) Lockheed Martin transferred the IS&GS Business to Splitco; (ii) Lockheed Martin offered to Lockheed Martin stockholders the right to exchange all or a portion of their shares of Lockheed Martin common stock for shares of Splitco common stock by way of an exchange offer (the "Distribution"); and (iii) Merger Sub merged with and into Splitco, with Splitco as the surviving corporation (the "Merger") and a wholly owned subsidiary of Leidos. Additionally, on the closing date of the Transactions, Splitco's name was changed to Leidos Innovations Corporation. Upon consummation of the Transactions, those Lockheed Martin stockholders who elected to participate in the exchange offer received approximately 77 million shares of Leidos common stock, which represent approximately 50.5% of the outstanding shares of Leidos common stock after consummation of the Transactions. Holders of Leidos shares prior to the transaction held the remaining 49.5% of the outstanding shares of Leidos common stock immediately after the closing.

Prior to the Distribution, Splitco incurred third-party debt financing in an aggregate principal amount of $1.8 billion and immediately thereafter, Lockheed Martin transferred the IS&GS Business to Splitco and Splitco made a special cash payment to Lockheed Martin of $1.8 billion.

In connection with the Transactions, Leidos incurred new indebtedness and assumed Splitco's indebtedness in the form of term loans in an aggregate principal amount of $690 million and $1.8 billion, respectively, and entered into a new $750 million senior secured revolving credit facility, which replaced its existing revolving credit facility. See "Note 11–Debt" for further information regarding the new debt incurred and the new senior revolving credit facility.

In conjunction with the Transactions, Leidos' Board of Directors declared a special dividend of $13.64 per share of Leidos common stock. Consequently, on August 22, 2016, the Company paid $993 million to stockholders of record as of August 15, 2016, and accrued $29 million of dividend equivalents with respect to outstanding equity awards. See "Note 14–Stock-Based Compensation" for further information regarding the modifications made to the Company's outstanding stock awards as a result of the special dividend.

As a result of the Transactions, membership on the Leidos Board of Directors was increased to 12 directors, in which three directors designated by Lockheed Martin were appointed to the board. A majority of the senior management of Leidos immediately prior to the consummation of the Transactions remained Leidos executive officers immediately after the Transactions. Leidos management determined that Leidos is the accounting acquirer in the Transactions based on the facts and circumstances noted within this section and other relevant factors.

The acquisition adds large, complex IT system implementation and operation experience and additional federal and international IT solutions and services work to the Leidos portfolio, providing more venues to sell value added services such as cybersecurity and analytics. As a result, the Company is more diversified in markets it serves and provides the Company the scale and access to markets intended to further growth.

In connection with the Transactions, certain additional agreements were entered into, including, among others an employee matters agreement, a tax matters agreement, transition services agreements, an intellectual property matters agreement, agreements relating to certain government contracts matters, supply agreements and certain real estate related agreements.

The preliminary purchase consideration for the acquisition of the IS&GS Business was as follows (in millions):



Value of common stock issued to Lockheed Martin stockholders⁽¹⁾	$	2,929
Equity consideration for replacement awards⁽²⁾	9
Preliminary working capital adjustments	50
Preliminary purchase price	$	2,988

⁽¹⁾ Represents approximately 77 million new shares of Leidos common stock issued to those Lockheed Martin stockholders who elected to participate in the exchange offer, based on the Company's August 16, 2016, closing share price of $51.69, less the Leidos special cash dividend amount of $13.64, which the Lockheed Martin stockholders were not entitled to receive.

⁽²⁾ The fair value of replacement equity-based awards attributable to pre-Merger service was recorded as part of the consideration transferred in the Merger (see "Note 14–Stock-Based Compensation").

The preliminary fair values of the assets acquired and liabilities assumed at the date of the Transactions were as follows (in millions):



Cash	$	25
Receivables, net	940
Inventory, prepaid expenses and other current assets	71
Property, plant and equipment	137
Deferred tax assets	12
Intangible assets	1,650
Other assets	23
Accounts payable and accrued liabilities	(700		)
Accrued payroll and employee benefits	(190		)
Long-term debt, current portion	(23		)
Deferred tax liabilities	(532		)
Long-term debt, net of current portion	(1,780		)
Other long-term liabilities	(50		)
Total identifiable net liabilities assumed	(417		)
Non-controlling interest	(10		)
Goodwill	3,415
Preliminary purchase price	$	2,988

Due to the timing and complexity of the Transactions, the Company recorded the assets acquired and liabilities assumed at their preliminary estimated fair values. As of December 30, 2016, the Company had not finalized the determination of fair values allocated to various assets and liabilities, including, but not limited to, receivables, net; property, plant and equipment; deferred income taxes; deferred revenue; intangible assets; accounts payable and accrued liabilities; loss contracts; non-controlling interest; residual amount allocated to goodwill; and the allocation of goodwill. The preliminary purchase price allocation is subject to change as the Company completes its analysis of the fair value at the date of the Transactions, which could have a material impact. During the fourth quarter of fiscal 2016, the Company recorded valuation adjustments to certain preliminary estimated fair values which resulted in an increase of $41 million in property, plant and equipment, a $23 million decrease in deferred tax assets, a $34 million reduction in receivables, a $315 million reduction in deferred tax liabilities, a $32 million increase in other long-term liabilities and a $252 million reduction in goodwill.

The goodwill is attributable to the new reportable IS&GS segment. The goodwill represents intellectual capital and the acquired assembled work force, none of which qualify for recognition as a separate intangible asset. The preliminary goodwill presented above includes $418 million of tax deductible goodwill.

The Company identified $1.7 billion of intangible assets, representing programs and contract intangibles and backlog. The following table summarizes the preliminary fair value of intangible assets acquired at the date of acquisition and the related weighted average amortization period:



	Weighted average amortization period	Fair value
	(in years)	(in millions)
Programs and contract intangibles⁽¹⁾	10.0	$	1,450
Backlog	1.4	200
Total	9.0	$	1,650

⁽¹⁾ An average 10-year amortization period for programs and contract intangibles has been estimated based on the projected economic benefits associated with these assets. Programs and contract intangibles are amortized using the pattern of economic benefit, which approximates discounted future cash flows. Refer to "Note 6 - Intangible Assets" for additional information.

The Company incurred the following expenses related to the acquisition and integration of the IS&GS Business:



	12 Months Ended
	December 30, 2016
	(in millions)
Acquisition costs	$	44
Integration costs	46
Total acquisition and integration costs	$	90

Pro Forma Financial Information (unaudited)

The following pro forma financial information presents consolidated results of operations as if the acquisition had occurred on January 31, 2015. 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 Transactions and factually supportable. The pro forma results below do not reflect future events that have occurred or may occur after the Transactions, including anticipated synergies or other expected benefits that may be realized from the Transactions. The pro forma financial information is not intended to reflect the actual results of operations that would have occurred if the acquisition had been completed on January 31, 2015, nor is it intended to be an indication of future operating results.



	12 Months Ended		11 Months Ended
(unaudited)	December 30, 2016		January 1, 2016
	(in millions, except for per share amounts)
Revenues	$	10,443	$	9,868
Income from continuing operations	342		343
Income from continuing operations attributable to Leidos common stockholders	336		338
Earnings per share:
Basic	$	2.24	$	2.25
Diluted	$	2.21	$	2.24

The unaudited pro forma financial information above includes the following nonrecurring significant adjustment made to account for certain costs incurred as if the Transactions had been completed on January 31, 2015:


•	Acquisition-related costs of $44 million were excluded within the pro forma financial information for fiscal 2016 and were included within the supplemental pro forma earnings for the 11-month period ended January 1, 2016.

- Definition

The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1497-128463

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1490-128463

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1392-128463

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 30
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e7008-128479

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1486-128463

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 30
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e6927-128479

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4845-128472

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1524-128463

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 30
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e7000-128479

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 20
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4922-128472

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 20
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4934-128472

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 20
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4926-128472

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 20
-Section 50
-Paragraph 4A
-URI http://asc.fasb.org/extlink&oid=73530397&loc=SL65897772-128472

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1383-128463

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 30
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e6996-128479

+ Details

Divestitures

12 Months Ended

Dec. 30, 2016

Discontinued Operations and Disposal Groups [Abstract]

Divestitures

In April 2016, the Company’s Health and Infrastructure ("HIS") segment disposed of a business that was primarily focused on providing design, build and heavy construction engineering services. The Company received cash proceeds of $23 million, resulting in a preliminary pre-tax gain on sale of $3 million. The major classes of assets and liabilities sold included $73 million of accounts receivable, net; $3 million of non-current assets and $63 million of accounts payable and accrued liabilities. In addition, the Company recorded a $6 million liability in connection with issuance of a performance guarantee on a contract and guarantee of collection of the accounts receivables transferred. The Company paid $1 million of selling costs related to the transaction. The Company recorded the pre-tax gain on sale in "Other (expense) income, net" in the Company's consolidated statements of income (loss).

Plainfield Renewable Energy Holdings LLC

Plainfield Renewable Energy Holdings LLC ("Plainfield") is a 37.5 megawatt biomass-fueled power plant in Plainfield, Connecticut (the "plant"). On October 11, 2013, the Company became the primary beneficiary of Plainfield, which required the consolidation of the VIE. The Company also determined that Plainfield met the definition of a business and as such gained control of 100% of PRE Holdings equity through the consensual foreclosure agreement which constituted a change in control accounted for as a business combination. Subsequent to the business combination, three of the acquired fuel supply agreements were impaired in fiscal 2015. See "Note 6—Intangible Assets" for further information.

In July 2014, the Company received a cash grant of $80 million from the U.S. Treasury Department, which was recorded as a reduction to the fixed asset basis of the plant on the Company's consolidated balance sheets. For tax purposes, the tax basis of the plant was reduced by half of the amount of the cash grant. This difference between the excess tax basis of the plant over the book basis resulted in a $27 million deferred tax asset which was recorded as a reduction to the fixed asset basis of the plant. The U.S. Treasury grant also contains a recapture provision that could require the Company to repay funds to the Treasury in certain circumstances (see further discussion below).

In March 2015, the Company entered into a definitive Membership Interest Purchase Agreement (the "Agreement") to sell 100% of the equity membership interest in Plainfield resulting in an approximate $40 million impairment charge in the Company's Health and Infrastructure segment in January 2015 to adjust the carrying values of Plainfield's assets to their fair values based on the estimated selling price of the business (Level 1).

During the quarter ended July 3, 2015, further negotiations occurred related to the sale of Plainfield resulting in an approximate $29 million impairment charge. The Company adjusted the carrying values of Plainfield's assets to their fair values based on the estimated selling price of the business pursuant to the terms of the Agreement that was amended on July 17, 2015 (Level 1). The Company recorded these tangible asset impairment charges in "Asset impairment charges" in the Company’s consolidated statements of income (loss).

On July 24, 2015, the Company completed the sale of its equity interests in Plainfield for an aggregate consideration of $102 million, subject to certain adjustments, and contingent earn-out payments. The consideration received at closing consisted of a cash payment of $29 million (the "Closing Payment") and a secured promissory note for $73 million, net of discount (the "Note"). The sale resulted in an immaterial deferred gain. In addition to the Closing Payment and the Note, the Company is eligible to receive certain contingent earn-out payments not to exceed $30 million. The Company will recognize any consideration for the contingent earn-out payments when received. In conjunction with the sale of the plant, the Company paid $2 million of the purchase price contingent consideration accrued at January 30, 2015, based on the successful sale of the plant. The remaining accrued contingent consideration was released and not paid as the selling price did not meet the qualifications for the payment of the remaining contingent consideration.

The maturity date of the Note is July 24, 2017 (the "Original Maturity Date"), with an option to extend the maturity date for three consecutive one-year periods. The annual interest rate of 6% will increase to 8% if the maturity date is extended beyond July 24, 2017, and will increase to 9% if extended beyond July 24, 2019. The first payment of accrued and unpaid interest was due January 24, 2016, with subsequent payments occurring every six months, including a portion of the principal balance. The note allows for a six-month deferral of certain payments due in January 2016, and July 2016. In January 2016 and July 2016, the Company was notified by the buyer that the interest payment due on January 24, 2016 would be deferred to the next payment date, and a portion of the principal payment due on July 24, 2016, would be deferred to the next payment due date. The Company collected $6 million of principal and interest during fiscal 2016.

The remaining unpaid principal amount and accrued interest is due on the Original Maturity Date (as may be extended as described above) or each six months thereafter, if extended. Payments under the Note are secured by a general security interest in the personal property of Plainfield, a pledge of the membership interests of Plainfield and a first mortgage on the real property that comprises the plant. As of December 30, 2016, the Company expects the Note to be collectible in full.

As outlined in the amended Agreement, the buyer represents to the Company that it meets the definition of a qualified buyer in regards to the terms in the U.S. Treasury cash grant. During the remaining recapture period that follows the closing date of the sale, the buyer and any following acquired companies, including any transferred membership interests to these companies, is contractually obligated to remain a qualified buyer, and the buyer shall cause any transferee of the plant permitted under the Agreement to enter into a written agreement to be jointly liable for any recapture event. In addition, the buyer and any continuing membership interests to acquired companies shall operate the plant as an “open-loop biomass” facility in accordance with Section 1603 of the cash grant, timely file all reports related to Section 1603 and indemnify the Company for any liabilities incurred that may arise if these obligations are breached. Based on the indemnification in the Agreement, and since the onus is on the buyer to comply with the conditions of the grant, the Company has deemed a recapture event not probable; therefore, has not recorded a liability associated with a potential recapture of the grant.

Discontinued Operations

In August 2014, the Company sold a business, historically included in the Company's Health and Infrastructure segment, which primarily focused on full service emergency management consulting for disaster preparedness, response, recovery and mitigation, for cash proceeds of $19 million, resulting in an immaterial gain on sale.

In January 2014, the Company committed to plans to dispose of Cloudshield Technologies, Inc. ("Cloudshield"), historically included in the Company's National Security Solutions segment, which was previously acquired in fiscal 2011 and primarily focused on producing a suite of cybersecurity hardware and associated software and services. The sale transaction was completed in February 2015 with cash proceeds received of $5 million, resulting in an immaterial loss on sale.

In August 2013, the Company committed to plans to dispose of a business, historically included in the Company's National Security Solutions segment, which primarily focused on technology used to detect if an individual is concealing explosive devices or other hidden weapons. In the first quarter ended May 2, 2014, the Company adjusted the carrying values of the business's assets to their fair value based on the estimated selling price of the business. The carrying value exceeded the fair value which resulted in $12 million of impairment charges recorded in discontinued operations, of which $9 million related to fixed assets and inventory and the remainder related to intangible assets. The sale transaction was completed in May 2014 with insignificant cash proceeds received, resulting in an immaterial loss on sale.

Separation of New SAIC

The Company completed the spin-off of New SAIC on September 27, 2013. The spin-off was made pursuant to the terms of a Distribution Agreement and several other agreements entered into between the Company and New SAIC on September 25, 2013. These agreements set forth, among other things, the principal actions needed to be taken in connection with the separation and govern certain aspects of the relationship between the Company and New SAIC following the separation. These agreements generally provide with certain exceptions, that each party is responsible for its respective assets, liabilities and obligations, including employee benefits, insurance and tax related assets and liabilities, whether accrued or contingent, except that unknown liabilities will be shared between the parties in certain circumstances. The agreements also describe the party’s commitments to provide each other with certain services for a limited time to help ensure an orderly transition. The agreements also include the treatment of existing contracts, proposals, and teaming arrangements where New SAIC will jointly perform work after separation on Leidos contracts. While the Company is a party to the Distribution Agreement and the ancillary agreements, the Company has determined that it does not have significant continuing involvement in the operations of New SAIC, nor does the Company expect significant continuing cash flows from New SAIC.

The operating results of New SAIC through the Distribution Date, which have been classified as discontinued operations, for the periods presented were as follows:



	12 Months Ended		11 Months Ended		12 Months Ended
	December 30, 2016		January 1, 2016		January 30, 2015
	(in millions)
Revenues	$	14	$	17	$	39
Cost of revenues	14		17		39
Operating income	$	—	$	—	$	—

The operating results through the date of disposal of the Company's discontinued operations discussed above, excluding the spin-off of New SAIC, for the periods presented were as follows:



	11 Months Ended			12 Months Ended
	January 1, 2016			January 30, 2015
	(in millions)
Revenues	$	—		$	29
Cost of revenues	—			21
Selling, general and administrative expenses (including impairment charges of $9 million for the fiscal year ended January 30, 2015)	2			29
Intangible asset impairment charges	—			3
Operating loss	$	(2	)	$	(24	)
Non-operating income	$	1		$	11

The operating results for fiscal 2016 for the Company's discontinued operations above, excluding the spin-off of New SAIC, were immaterial.

The major classes of assets and liabilities included in discontinued operations through the date of disposal for the periods presented are immaterial for disclosure purposes.

- Definition

The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 45
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=65878427&loc=SL51721533-107759

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 4B
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721665-107760

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 5C
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721675-107760

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 360
-SubTopic 10
-Section 50
-Paragraph 3A
-URI http://asc.fasb.org/extlink&oid=64862545&loc=SL51724579-110230

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 4A
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721663-107760

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 360
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=64862545&loc=d3e2941-110230

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=64827811&loc=d3e1361-107760

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 5B
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721673-107760

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 3A
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721659-107760

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 5A
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721671-107760

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 5D
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721677-107760

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=64827811&loc=d3e1474-107760

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721683-107760

+ Details

Restructuring Expenses

12 Months Ended

Dec. 30, 2016

Restructuring and Related Activities [Abstract]

Restructuring Expenses

IS&GS Business Acquisition

After the acquisition of the IS&GS Business, the Company began an initiative to align its cost structure, which includes optimization of its real estate portfolio by vacating certain facilities and consolidating others, and by reducing headcount.

The related restructuring expenses were as follows:



	12 Months Ended
	December 30, 2016
	(in millions)
Severance costs	$	10
Lease termination expenses	2
Restructuring expenses related to the IS&GS Business in operating income	$	12

These restructuring expenses have been recorded within the Corporate and Other segment and presented separately within "Restructuring expenses" on the consolidated statements of income (loss).

The related restructuring liability at December 30, 2016, was:



	Severance Costs			Lease Termination Expenses			Total
	(in millions)
Balance as of January 1, 2016	$	—		$	—		$	—
Charges	10			2			12
Cash payments	(3		)	(1		)	(4		)
Balance as of December 30, 2016	$	7		$	1		$	8

The Company does not expect the restructuring liability to be fully settled within one year.

Separation of New SAIC and Real Estate Optimization Initiatives

In fiscal 2014, in anticipation of the spin-off of New SAIC from the Company, the Company initiated an overall spin-off program to align the Company’s cost structure for post spin-off.

The restructuring expenses related to the separation of New SAIC and the Company's real estate optimization initiatives were as follows:



	12 Months Ended		11 Months Ended		12 Months Ended
	December 30, 2016		January 1, 2016		January 30, 2015
	(in millions)
Lease termination expenses	$	2	$	4	$	3

During fiscal 2016, the 11-month period ended January 1, 2016, and fiscal 2015, the lease termination expenses related to lease losses and an adjustment to reserves for lease losses from the spin-off due to revised sublease income assumptions. The termination expenses were recorded within the Corporate and Other segment and presented separately within "Restructuring expenses" on the consolidated statements of income (loss).

The restructuring liability related to the separation of New SAIC at December 30, 2016, was:



	Lease Termination Expenses
	(in millions)
Balance as of January 30, 2015	$	11
Charges	1
Cash payments	(5		)
Balance as of January 1, 2016	$	7
Charges	2
Cash payments	(5		)
Balance as of December 30, 2016	$	4

The Company does not expect the restructuring liability to be fully settled within one year.

Goodwill

12 Months Ended

Dec. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The Company has the following reportable segments that contain goodwill: National Security Solutions ("NSS"), Health and Infrastructure ("HIS") and Information Systems & Global Solutions ("IS&GS").

The balance and changes in the carrying amount of goodwill by segment, including the preliminary fair value of goodwill related to the acquisition of the IS&GS Business, were as follows:



	NSS		HIS		IS&GS		Total
	(in millions)
Goodwill at January 30, 2015	$	788	$	419	$	—	$	1,207
Adjustments	—		—		—		—
Goodwill at January 1, 2016	$	788	$	419	$	—	$	1,207
Acquisition of the IS&GS Business	—		—		3,415		3,415
Goodwill at December 30, 2016	$	788	$	419	$	3,415	$	4,622

⁽¹⁾Accumulated impairment losses at January 1, 2016, and December 30, 2016, were $486 million within the HIS segment.

Based on a qualitative analysis performed during the Company's annual impairment evaluation for fiscal 2016, the 11-month period ended January 1, 2016, and fiscal 2015 for certain of its reporting units, it was determined that it is more likely than not that the fair values of the reporting units were in excess of the individual reporting unit carrying values, and as a result, a quantitative step one analysis was not necessary. Additionally, based on the results of the quantitative step one analysis for certain other of its reporting units, it was determined that their fair values were in excess of the individual reporting units carrying values. As a result, no goodwill impairments were identified as part of the annual goodwill impairment evaluation for periods mentioned above.

During the second quarter of fiscal 2015, the Health Solutions reporting unit within HIS experienced a significant decline in both actual and forecasted revenue volumes, primarily in the Company's commercial health consulting business, resulting from a reduction in project opportunities, delayed award decisions and completion of several larger electronic health records ("EHR") implementation engagements that were not extended or replaced with other projects. The declines were also impacted by delays in legislative compliance deadlines (i.e., ICD-10 and Meaningful Use Stage 2). These events attributed to a significant reduction in the Company's sales pipeline, forecasted revenue and operating income. The nature of the Company's commercial health consulting engagements are short term in nature and the aforementioned events transpired and became known during the second quarter of fiscal 2015 and triggered a revised and lower financial forecast.

During the second quarter of fiscal 2015, the Infrastructure reporting unit within HIS experienced delayed or lost award decisions and reductions in scope on several large engineering construction projects as clients shifted priorities and adjusted their capital expenditure plans that were anticipated to be awarded to the Company during the second quarter of fiscal 2015. The Infrastructure reporting unit was also impacted by significant reduction in scope of services with an existing client. These events culminated in a significant reduction in the Company's sales pipeline, revenue and operating income. The aforementioned events transpired and became known during the second quarter of fiscal 2015 and triggered a revised and lower financial forecast.

Based on the unexpected impacts and other unanticipated factors discussed above, the Company conducted an interim goodwill impairment test using the two-step quantitative approach.

As described in Note 1, the Company utilized both the market and income approach as part of the first step of the two-step quantitative goodwill impairment test to determine the estimated fair value of both the Health Solutions and Infrastructure reporting units.

The Company performed the market approach, guideline public company method, by applying pricing multiples derived from publicly traded guideline companies that are comparable to the reporting units to determine their fair values. The Company utilized enterprise/earnings before interest, taxes, depreciation and amortization ("EBITDA") multiples and enterprise/revenue multiples which averaged 6.0 and 0.5, respectively, for the Health Solutions reporting unit, and 6.8 and 0.4, respectively, for the Infrastructure reporting unit. In addition, the fair value under the guideline public company method included a control premium of 20%, which was determined based on a review of comparable market transactions.

The income approach was performed by calculating the fair value based on forecasted future cash flows discounted back to the present value, including significant judgments related to the risk adjusted discount rates, terminal growth rates and weighted-average cost of capital ("WACC"). The projected cash flows were developed by management for planning purposes based on current known business and market conditions as well as future anticipated industry trends. The method included certain cost adjustments that a market participant buyer would not incur to operate the respective reporting units. A terminal value growth rate of 3% and 2% and WACC of 12% and 14% (which includes a specific company risk premium of 2%) were used for the Health Solutions and Infrastructure reporting units, respectively.

Based on the first step of the two-step quantitative goodwill impairment test, the Company determined that the fair values of the Health Solutions and Infrastructure reporting units were 62% and 91% of their carrying values, respectively. Due to the fact that indicators of impairment existed, the second step of the two-step quantitative goodwill impairment test was performed to determine the implied fair value of goodwill and the impairment amount of the respective reporting units.

As a result of the second step evaluation, the Company recorded goodwill impairment charges in the Health Solutions and Infrastructure reporting units of $369 million and $117 million, respectively, for the second quarter ended August 1, 2014, which represents the difference between the carrying value and the implied fair value.

Intangible Assets

12 Months Ended

Dec. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

Intangible assets, including the preliminary fair values of those acquired through the purchase of the IS&GS Business, consisted of the following:



	December 30, 2016							January 1, 2016
	Gross carrying value		Accumulated amortization			Net carrying value		Gross carrying value		Accumulated amortization			Net carrying value
	(in millions)
Finite-lived intangible assets:
Customer relationships	$	6	$	(5	)	$	1	$	20	$	(16	)	$	4
Software and technology	61		(48		)	13		61		(44		)	17
Programs and contract intangibles	1,450		(25		)	1,425		—		—			—
Backlog	200		(54		)	146		—		—			—
Total finite-lived intangible assets	1,717		(132		)	1,585		81		(60		)	21
Indefinite-lived intangible assets:
Trade names	4		—			4		4		—			4
Total intangible assets	$	1,721	$	(132	)	$	1,589	$	85	$	(60	)	$	25

The Company recognized intangible asset impairment charges of $4 million and $41 million for the 11-month period ended January 1, 2016 and fiscal 2015, respectively. There were no intangible asset impairment charges during fiscal 2016. Intangible asset impairment charges were recorded in "Asset impairment charges" in the Company's consolidated statements of income (loss).

The Company determined that certain customer relationship intangible assets associated with Vitalize and maxIT were not recoverable due to lower projected revenue and operating income levels from the associated customers. As a result, the Health and Infrastructure reportable segment recognized impairment charges of $24 million during fiscal 2015 to reduce the carrying value of these intangible assets to their estimated fair values. Additionally, in the 11-month period ended January 1, 2016, the Health and Infrastructure reportable segment recognized an impairment charge of $4 million to write-off the remaining carrying value (with a gross carrying value of $38 million).

The Company determined that certain intangible assets consisting of software and technology, associated with the acquisition of Reveal Imaging Technologies, Inc. were not recoverable due to lower projected revenue levels from the associated products and customers. As a result, the Health and Infrastructure reportable segment recognized impairment charges of $14 million during fiscal 2015, to reduce the carrying value of these intangible assets to their estimated fair values.

During fiscal 2015, the Company determined that certain intangible assets associated with fuel supply contracts obtained through the Plainfield Renewable Energy Project foreclosure were not recoverable due to changes in the Company's fuel supply strategy and newly identified requirements to operate the plant, which impacted expected benefits from the related fuel supply arrangements. As a result, the Health and Infrastructure reportable segment recognized an impairment charge of $3 million to write-off the carrying value associated with the intangible assets of three fuel supply agreements.

The fair value of the impairment charges described above were estimated using the income approach based on management's forecast of future cash flows to be derived from the assets' use (Level 3).

Amortization expense related to amortizable intangible assets, including the preliminary amortization for acquired IS&GS intangibles, was $84 million, $8 million and $15 million for fiscal 2016, the 11-month period ended January 1, 2016, and fiscal 2015, respectively. The acquired programs and contract intangible assets are amortized over their respective estimated useful lives in proportion to the pattern of economic benefit based on expected future cash flows on a discounted basis. The acquired backlog intangible asset, as well as the Company's existing customer relationships and software and technology intangible assets, are amortized on a straight-line basis over their estimated useful lives.

The estimated annual amortization expense related to finite-lived intangible assets as of December 30, 2016, is as follows:



Fiscal Year Ending
	(in millions)
2017	$	277
2018	213
2019	188
2020	165
2021	139
2022 and thereafter	603
	$	1,585

Actual amortization expense in future periods could differ from these estimates as a result of future acquisitions, divestitures, impairments, the outcome and timing of completion of in-process research and development projects , adjustments to preliminary valuations of intangible assets and other factors.

Receivables

12 Months Ended

Dec. 30, 2016

Receivables [Abstract]

Receivables

The components of receivables, net consisted of the following:



	December 30, 2016			January 1, 2016
	(in millions)
Billed and billable receivables	$	847		$	715
Unbilled receivables	821			216
Allowance for doubtful accounts	(11		)	(10		)
	$	1,657		$	921

During the 11-month period ended January 1, 2016, the Company reached an agreement to settle a legal claim related to receivables from one construction project with deferred payment terms that had not been paid in accordance with the initial payment terms established with the customer. As a result of the settlement terms, the Company recorded "Bad debt expense" of $11 million in the Company's consolidated statements of income (loss). During the 11-month period ended January 1, 2016, the Company received a partial payment of $6 million, from the customer. As of January 1, 2016, the remaining receivables balance related to this construction project was immaterial.

- Definition

The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses.

+ References + Details

Property Plant and Equipment

12 Months Ended

Dec. 30, 2016

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, plant and equipment, net consisted of the following:



	December 30, 2016			January 1, 2016
	(in millions)
Computers and other equipment	$	172		$	161
Leasehold improvements	161			149
Buildings and improvements	104			57
Office furniture and fixtures	35			30
Land	57			15
Construction in progress	12			2
	541			414
Less accumulated depreciation and amortization	(282		)	(272		)
	$	259		$	142

Depreciation expense was $38 million, $33 million and $47 million for fiscal 2016, the 11-month period ended January 1, 2016, and fiscal 2015, respectively. The acquired asset balances related to the Transactions may change upon final valuation, see "Note 2–Acquisitions".

During the 11-month period ended January 1, 2016, the Company amended its sale agreement entered into in 2013 and closed the sale of the remaining building, parcels of land that surround the building and the multi-level surface parking garage associated with the Company's former headquarters. The sale resulted in a write-off of $40 million in aggregate net book value of assets disposed, including $29 million for buildings and $10 million attributed to land. See "Note 17—Leases" for further information regarding the sale of the Company's former headquarters.

Composition of Certain Financial Statement Captions

12 Months Ended

Dec. 30, 2016

Disclosure Schedule Of Certain Financial Statement Captions [Abstract]

Composition of Certain Financial Statement Captions

Balance Sheet



	December 30, 2016		January 1, 2016
	(in millions)
Inventory, prepaid expenses and other current assets:
Inventory	$	67	$	70
Prepaid expenses	90		26
Prepaid income taxes and tax refunds receivable	13		56
Transition costs and project assets	62		26
Pre-contract costs	33		1
Restricted cash	20		17
Short-term notes receivable	3		4
Other	60		16
	$	348	$	216
Other assets:
Long-term notes receivables	$	89	$	91
Investment in rabbi trust	48		44
Deferred costs	31		18
Derivatives	29		8
Equity method investments⁽¹⁾	20		1
Other	48		33
	$	265	$	195
Accounts payable and accrued liabilities:
Accounts payable	$	591	$	306
Accrued liabilities	493		318
Collections in excess of revenues and deferred revenue	246		133
Provision for loss contracts	97		4
	$	1,427	$	761
Accrued payroll and employee benefits:
Salaries, bonuses and amounts withheld from employees’ compensation	$	211	$	142
Accrued vacation	244		121
Accrued contributions to employee benefit plans	28		5
	$	483	$	268
Other long-term liabilities:
Deferred compensation	$	48	$	41
Lease related obligations	37		35
Tax indemnity liability	31		—
Deferred revenue	20		18
Accrued pension liabilities	6		—
Liabilities for uncertain tax positions	5		5
Other	57		50
	$	204	$	149

⁽¹⁾Net of $10 million of dividends received during fiscal 2016 from these investments that were recorded in cash flows provided by operating activities of continuing operations on the consolidated statements of cash flows.

Fiscal 2016 balances include IS&GS as of the date of acquisition on August 16, 2016, and may change upon finalization of the valuation of the acquired assets (see "Note 2 Acquisitions").

Income Statement



	12 Months Ended			11 Months Ended		12 Months Ended
	December 30, 2016			January 1, 2016		January 30, 2015
	(in millions)
Other (expense) income, net
Loss on foreign currency	$	(18	)	$	—	$	(4	)
Gain on sale of former headquarters	—			82		—
Other income, net	5			2		9
	$	(13	)	$	84	$	5

Derivative Instruments and Hedging Activities

12 Months Ended

Dec. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

The Company manages its risk to changes in interest rates through the use of derivative instruments. The Company does not hold derivative instruments for trading or speculative purposes. For fixed rate borrowings, the Company uses 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, the Company uses fixed interest rate swaps, effectively converting a portion of the variable rate borrowings to fixed rate borrowings. These swaps are designated as cash flow hedges.

Fair Value Hedges

In September 2014, the Company entered into interest rate swap agreements to hedge the fair value of the $450 million fixed rate 4.45% senior secured 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, the Company will receive semi-annual interest payments at the coupon rate of 4.45% and will pay variable interest based on the six-month LIBOR rate.

The interest rate swaps were accounted for as a fair value hedge of the Notes and qualified for the shortcut method of hedge accounting, which allows for the assumption of no ineffectiveness reported in earnings. The resulting changes in the fair value of the interest rate swaps are fully offset by the changes in the fair value of the underlying debt (the hedged item). The fair value of the interest rate swaps is determined based on observed values for underlying interest rates on the LIBOR yield curve (Level 2).

The fair value of the Notes is stated at an amount that reflects changes in the benchmark interest rate, the six-month LIBOR rate, subsequent to the inception of the interest rate swaps through the reporting date.

Cash Flow Hedges

In August 2016, the Company entered into interest rate swap agreements to hedge the cash flows with respect to $1.2 billion of the Company's variable rate senior secured term loans (the "Variable Rate Loans"). The objective of these instruments is to reduce variability in the forecasted interest payments of the Company's Variable Rate Loans, which is based on the LIBOR rate. Under the terms of the interest rate swap agreements, which mature in December 2021, the Company will receive monthly variable interest payments based on the one-month LIBOR rate and will pay interest at a fixed rate of 1.08%. The counterparties to these agreements are financial institutions.

The interest rate swaps were accounted for as a cash flow hedge of the Variable Rate Loans and qualified for hedge accounting treatment through the application of the long-haul method, which involves the comparison of cumulative changes in the fair value of the swap to the cumulative change in fair value of scheduled interest payments on the notional value (the perfectly effective hypothetical or "PEH"). The effective portion of the gain/loss on the swap will be reported as a component of other comprehensive income/loss and will be reclassified into earnings on the dates the interest payments impact earnings. The amount of ineffectiveness, if any, recorded in earnings will be equal to the excess of the cumulative change in fair value of the swap over the cumulative change in the fair value of the PEH. The fair value of the interest rate swaps is determined based on observed values for the underlying interest rate (Level 2).

The fair value of the interest rate swaps was as follows:



	Balance sheet line item	December 30, 2016		January 1, 2016
		(in millions)
Fair value interest rate swaps	Other assets	$	3	$	8
Cash flow interest rate swaps	Other assets	26		—

The fair value adjustment to the fair value interest rate swap and the underlying debt was a decrease of $5 million and $9 million for the year ended December 30, 2016, and the 11-month period ended January 1, 2016, respectively.

The effect of the Company's cash flow hedge on other comprehensive income and earnings for the periods presented was as follows:



	12 Months Ended
	December 30, 2016
	(in millions)
Effective portion recognized in other comprehensive income	$	22
Effective portion reclassified from accumulated other comprehensive loss to earnings	2
Ineffective portion recognized in earnings	2

The Company expects to reclassify losses of $1 million from accumulated other comprehensive loss into earnings during the next 12 months.

The cash flows associated with both interest rate swaps are classified as operating activities in the consolidated statements of cash flows.

- Definition

The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 30
-Section 45
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6441202&loc=d3e80720-113993

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4C
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5624171-113959

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=64837297&loc=d3e41620-113959

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4B
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5624163-113959

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5579240-113959

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4D
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5624177-113959

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 30
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=35736893&loc=d3e80784-113994

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=64837297&loc=d3e41641-113959

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5579245-113959

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4H
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5624258-113959

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 30
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=35736893&loc=d3e80748-113994

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4K
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5708775-113959

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4J
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5708773-113959

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4A
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5618551-113959

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 1B
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5580258-113959

Reference 16: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4E
-URI http://asc.fasb.org/extlink&oid=64837297&loc=SL5624181-113959

Reference 17: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 25
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6886632&loc=d3e76258-113986

Reference 18: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=64837297&loc=d3e41638-113959

Reference 19: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(n))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

+ Details

Debt

12 Months Ended

Dec. 30, 2016

Debt Disclosure [Abstract]

Debt

Notes Payable and Long-Term Debt

The Company’s notes payable and long-term debt consisted of the following:



	Stated interest rate		Effective interest rate		December 30, 2016⁽¹⁾		January 1, 2016⁽¹⁾
	(dollars in millions)
Senior secured notes:
$450 million notes, due December 2020	4.45	%	4.53	%	$	451	$	455
$300 million notes, due December 2040	5.95	%	6.03	%	216		216
Senior secured term loans:
$400 million Term Loan A, due August 2019	2.86	%	3.78	%	123		—
$690 million Term Loan A, due August 2021	2.86	%	3.42	%	676		—
$310 million Term Loan A, due August 2021	2.86	%	3.39	%	304		—
$1,131 million Term Loan B, due August 2023	3.36	%	3.70	%	1,110		—
Senior unsecured notes:
$250 million notes, due July 2032	7.13	%	7.43	%	246		246
$300 million notes, due July 2033	5.50	%	5.88	%	158		158
Capital leases due on various dates through fiscal 2020