Divestitures

6 Months Ended

Jul. 01, 2016

Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]

Divestitures

Divestitures

Dispositions

In February 2015, the Company committed to a plan to dispose of a business, historically included within the Company’s Health and Infrastructure Sector segment, that is primarily focused on providing design, build and heavy construction engineering services. The sale was completed on April 15, 2016, with net cash proceeds received of $23 million, resulting in a preliminary gain on sale of $3 million, subject to certain customary working capital adjustments. The Company incurred and paid $1 million of selling costs related to the transaction. The major classes of assets and liabilities sold include $73 million of accounts receivable, net, $3 million of other non current assets, and $63 million of accounts payable and accrued liabilities. The Company has issued certain guarantees to the buyer related to the performance on a contract sold and the collectibility of accounts receivable transferred and accordingly has recorded a $6 million liability which reduced the gain on sale. In addition, the Company is eligible to receive contingent earn-out payments not to exceed $2 million, subject to the achievement of certain income targets. The Company will recognize any consideration for the contingent earn-out payments when received. The Company recorded the preliminary gain on sale in "Other (expense) income, net" in the Company's condensed consolidated statements of income.

Plainfield Renewable Energy Holdings LLC

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 Renewable Energy Holdings, LLC ("Plainfield") resulting in an approximate $40 million impairment charge in the Company's Health and Infrastructure Sector 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 condensed consolidated statements of income.

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 by the Company at closing consisted of a cash payment of approximately $29 million and a secured promissory note for approximately $73 million, net of discount (the “Note”). The Note allows for a six-month deferral of certain payments due on January 2016 and July 2016. In January 2016 and July 2016, the buyer elected to defer the interest payment due to the next payment due date in July 2016 and January 2017, respectively. As of July 1, 2016, the Company expects the Note to be collectible in full.

Discontinued Operations

Separation of New SAIC

The Company completed the spin-off of New SAIC on September 27, 2013. New SAIC was a subsidiary of Leidos prior to the separation date. The spin-off was consummated pursuant to the terms of a Distribution Agreement and several other agreements entered into between the Company and New SAIC on September 25, 2013. These agreements govern the treatment of existing contracts, proposals and teaming arrangements where New SAIC will jointly perform work after separation on Leidos contracts.

The operating results of the Company's discontinued operations for the periods presented were as follows:

	Three Months Ended				Six Months Ended
	July 1, 2016		July 3, 2015		July 1, 2016		July 3, 2015
	(in millions)
Revenues	$	4	$	6	$	7	$	14
Costs and expenses:	—
Cost of revenues	4		6		7		12
Selling, general and administrative expenses	—		—		—		4
Operating loss	$	—	$	—	$	—	$	(2	)
Non-operating income	$	—	$	—	$	—	$	2

Leidos, Inc.

Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]

Divestitures

Divestitures

Dispositions

In February 2015, the Company committed to a plan to dispose of a business, historically included within the Company’s Health and Infrastructure Sector segment, that is primarily focused on providing design, build and heavy construction engineering services. The sale was completed on April 15, 2016, with net cash proceeds received of $23 million, resulting in a preliminary gain on sale of $3 million, subject to certain customary working capital adjustments. The Company incurred and paid $1 million of selling costs related to the transaction. The major classes of assets and liabilities sold include $73 million of accounts receivable, net, $3 million of other non current assets, and $63 million of accounts payable and accrued liabilities. The Company has issued certain guarantees to the buyer related to the performance on a contract sold and the collectibility of accounts receivable transferred and accordingly has recorded a $6 million liability which reduced the gain on sale. In addition, the Company is eligible to receive contingent earn-out payments not to exceed $2 million, subject to the achievement of certain income targets. The Company will recognize any consideration for the contingent earn-out payments when received. The Company recorded the preliminary gain on sale in "Other (expense) income, net" in the Company's condensed consolidated statements of income.

Plainfield Renewable Energy Holdings LLC

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 Renewable Energy Holdings, LLC ("Plainfield") resulting in an approximate $40 million impairment charge in the Company's Health and Infrastructure Sector 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 condensed consolidated statements of income.

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 by the Company at closing consisted of a cash payment of approximately $29 million and a secured promissory note for approximately $73 million, net of discount (the “Note”). The Note allows for a six-month deferral of certain payments due on January 2016 and July 2016. In January 2016 and July 2016, the buyer elected to defer the interest payment due to the next payment due date in July 2016 and January 2017, respectively. As of July 1, 2016, the Company expects the Note to be collectible in full.

Discontinued Operations

Separation of New SAIC

The Company completed the spin-off of New SAIC on September 27, 2013. New SAIC was a subsidiary of Leidos prior to the separation date. The spin-off was consummated pursuant to the terms of a Distribution Agreement and several other agreements entered into between the Company and New SAIC on September 25, 2013. These agreements govern the treatment of existing contracts, proposals and teaming arrangements where New SAIC will jointly perform work after separation on Leidos contracts.

The operating results of the Company's discontinued operations for the periods presented were as follows:

	Three Months Ended				Six Months Ended
	July 1, 2016		July 3, 2015		July 1, 2016		July 3, 2015
	(in millions)
Revenues	$	4	$	6	$	7	$	14
Costs and expenses:	—
Cost of revenues	4		6		7		12
Selling, general and administrative expenses	—		—		—		4
Operating loss	$	—	$	—	$	—	$	(2	)
Non-operating income	$	—	$	—	$	—	$	2