Business Segment Information

9 Months Ended

Oct. 31, 2014

Business Segment Information

Business Segment Information:

The Company defines its reportable segments based on the way the chief operating decision maker ("CODM"), currently its chief executive officer, manages the operations of the Company for purposes of allocating resources and assessing performance.

The Company's reportable segments are as follows: National Security Solutions, Health and Engineering, and Corporate and Other.

National Security Solutions provides solutions and systems for air, land, sea, space, and cyberspace for the U.S. intelligence community, the DoD, the military services, and the U.S. Department of Homeland Security. The Company's solutions deliver technology, large scale intelligence systems, data analytics, cyber solutions, logistics, and intelligence analysis and operations support to critical missions around the world. Major customers of National Security Solutions include national and military intelligence agencies and other federal, civilian, and commercial customers in the national security complex.

Health and Engineering provides health systems integration services to implement and optimize the use of electronic health records, apply data analytics and behavioral health research to help enable customers to improve healthcare quality and patient outcomes, detect and prevent diseases, enhance scientific discovery, and reduce costs to the healthcare system. Health and Engineering also provides engineering services and solutions focused on solving energy, environmental, and infrastructure challenges. These include products and solutions in energy generation, efficiency and management, environmental services, securing critical infrastructure, and designing and building construction projects. Major customers of Health and Engineering primarily include the U.S. federal government, state and local governmental agencies, foreign governments, and commercial enterprises in various industries.

Corporate and Other includes the operations of the Company’s internal real estate management subsidiary, various corporate activities, certain corporate expense items that are not reimbursed by the Company’s U.S. Government customers and certain revenue and expense items excluded from the CODM’s evaluation of a reportable segment’s performance.

The segment information for the periods presented was as follows:

	Three Months Ended						Nine Months Ended
	October 31, 2014			November 1, 2013			October 31, 2014			November 1, 2013
	(in millions)
Revenues:
National Security Solutions	$	906		$	1,011		$	2,775		$	3,107
Health and Engineering	373			406			1,126			1,368
Corporate and Other	(3		)	(2		)	(7		)	(8		)
Intersegment elimination	—			(1		)	—			(3		)
Total revenues	$	1,276		$	1,414		$	3,894		$	4,464
Operating income (loss):
National Security Solutions	$	72		$	66		$	227		$	209
Health and Engineering	4			(30		)	(455		)	2
Corporate and Other	(4		)	(41		)	(23		)	(129		)
Total operating income (loss)	$	72		$	(5	)	$	(251	)	$	82

Asset information by segment is not a key measure of performance used by the CODM. Interest income, interest expense, and provision for income taxes, as reported in the condensed consolidated financial statements, are not part of operating income and are primarily recorded at the corporate level. Under U.S. Government Cost Accounting Standards, indirect costs including depreciation expense are collected in numerous indirect cost pools which are then collectively allocated out to the Company’s reportable segments based on a representative causal or beneficial relationship of the costs in the pool to the costs in the base.

Leidos, Inc.

Business Segment Information

Business Segment Information:

The Company defines its reportable segments based on the way the chief operating decision maker ("CODM"), currently its chief executive officer, manages the operations of the Company for purposes of allocating resources and assessing performance.

The Company's reportable segments are as follows: National Security Solutions, Health and Engineering, and Corporate and Other.

National Security Solutions provides solutions and systems for air, land, sea, space, and cyberspace for the U.S. intelligence community, the DoD, the military services, and the U.S. Department of Homeland Security. The Company's solutions deliver technology, large scale intelligence systems, data analytics, cyber solutions, logistics, and intelligence analysis and operations support to critical missions around the world. Major customers of National Security Solutions include national and military intelligence agencies and other federal, civilian, and commercial customers in the national security complex.

Health and Engineering provides health systems integration services to implement and optimize the use of electronic health records, apply data analytics and behavioral health research to help enable customers to improve healthcare quality and patient outcomes, detect and prevent diseases, enhance scientific discovery, and reduce costs to the healthcare system. Health and Engineering also provides engineering services and solutions focused on solving energy, environmental, and infrastructure challenges. These include products and solutions in energy generation, efficiency and management, environmental services, securing critical infrastructure, and designing and building construction projects. Major customers of Health and Engineering primarily include the U.S. federal government, state and local governmental agencies, foreign governments, and commercial enterprises in various industries.

Corporate and Other includes the operations of the Company’s internal real estate management subsidiary, various corporate activities, certain corporate expense items that are not reimbursed by the Company’s U.S. Government customers and certain revenue and expense items excluded from the CODM’s evaluation of a reportable segment’s performance.

The segment information for the periods presented was as follows:

	Three Months Ended						Nine Months Ended
	October 31, 2014			November 1, 2013			October 31, 2014			November 1, 2013
	(in millions)
Revenues:
National Security Solutions	$	906		$	1,011		$	2,775		$	3,107
Health and Engineering	373			406			1,126			1,368
Corporate and Other	(3		)	(2		)	(7		)	(8		)
Intersegment elimination	—			(1		)	—			(3		)
Total revenues	$	1,276		$	1,414		$	3,894		$	4,464
Operating income (loss):
National Security Solutions	$	72		$	66		$	227		$	209
Health and Engineering	4			(30		)	(455		)	2
Corporate and Other	(4		)	(41		)	(23		)	(129		)
Total operating income (loss)	$	72		$	(5	)	$	(251	)	$	82

Asset information by segment is not a key measure of performance used by the CODM. Interest income, interest expense, and provision for income taxes, as reported in the condensed consolidated financial statements, are not part of operating income and are primarily recorded at the corporate level. Under U.S. Government Cost Accounting Standards, indirect costs including depreciation expense are collected in numerous indirect cost pools which are then collectively allocated out to the Company’s reportable segments based on a representative causal or beneficial relationship of the costs in the pool to the costs in the base.