Dispositions

6 Months Ended

Jul. 03, 2015

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

Dispositions

Dispositions:

Dispositions

Plainfield Renewable Energy Holdings LLC

In October 2013, the Company gained control of 100% of the equity interest in Plainfield Renewable Energy Holdings, LLC ("Plainfield") through the consensual foreclosure agreement which constituted a change in control accounted for as a business combination. Plainfield is a 37.5 megawatt biomass-fueled power plant (the "Plant").

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. 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 (Level 1). The carrying value exceeded the fair value which resulted in approximately $40 million of impairment charges recorded in January 2015 in the Health and Engineering segment.

During the quarter ended July 3, 2015, further negotiations occurred related to the sale of Plainfield resulting in certain closing conditions being waived. As a result, the Company determined that a sale of Plainfield was probable and classified Plainfield as "Held for Sale" in Leidos' condensed consolidated balance sheet as of July 3, 2015. Additionally, as of July 3, 2015, the Company adjusted the carrying values of Plainfield's assets down to the fair value of the anticipated consideration to be received pursuant to an amendment to the Agreement (Level 1), resulting in approximately $29 million of asset impairment charges. The adjustment related to a reduction in the purchase price, the recapture of previously recognized tax benefits, and incurred transaction costs.

On July 17, 2015, the Company executed an amendment to the Agreement based on prior negotiations and completed the sale on July 24, 2015 of its equity interests in Plainfield for an aggregate consideration of $101 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 (the "Closing Payment") and a secured promissory note for approximately $73 million (the “Note”). 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. 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.

Discontinued Operations for the Year Ended January 30, 2015

In July 2014, the Company committed to plans to dispose of a business primarily focused on full service emergency management consulting for disaster preparedness, response, recovery, and mitigation historically included in the Company's Health and Engineering segment. The sale transaction was completed in the third quarter ended October 31, 2014 with cash proceeds received of $19 million, resulting in an immaterial gain on sale.

Discontinued Operations for the Year Ended January 31, 2014

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 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 govern the treatment of existing contracts, proposals, and teaming arrangements where New SAIC will jointly perform work after separation on Leidos contracts.

Other Discontinued Operations

Other non-strategic dispositions were historically included in the Company's National Security Solutions segment.

In August 2013, the Company committed to plans to dispose of a business 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 approximately $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 the second quarter ended August 1, 2014 with insignificant cash proceeds received, resulting in an immaterial loss on sale.

In January 2014, the Company committed to plans to dispose of Cloudshield Technologies, Inc. ("Cloudshield"), previously acquired in fiscal 2011, which is 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 gain on sale as of July 3, 2015.

The pre-sale operating results through the date of disposal of the Company’s discontinued operations discussed above, for the periods presented were as follows:

	Three Months Ended					Six Months Ended
	July 3, 2015		August 1, 2014			July 3, 2015			August 1, 2014
	(in millions)
Revenues	$	6	$	20		$	14		$	46
Costs and expenses:
Cost of revenues	6		21			12			43
Selling, general and administrative expenses (including impairment charges of $9 million for the six months ended August 1, 2014)	—		5			4			19
Intangible asset impairment charges	—		—			—			3
Operating loss	$	—	$	(6	)	$	(2	)	$	(19	)
Non-operating income	$	—	$	8		$	2		$	8
Income (loss) from discontinued operations before income taxes	$	—	$	2		$	—		$	(11	)

Leidos, Inc.

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

Dispositions

Dispositions:

Dispositions

Plainfield Renewable Energy Holdings LLC

In October 2013, the Company gained control of 100% of the equity interest in Plainfield Renewable Energy Holdings, LLC ("Plainfield") through the consensual foreclosure agreement which constituted a change in control accounted for as a business combination. Plainfield is a 37.5 megawatt biomass-fueled power plant (the "Plant").

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. 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 (Level 1). The carrying value exceeded the fair value which resulted in approximately $40 million of impairment charges recorded in January 2015 in the Health and Engineering segment.

During the quarter ended July 3, 2015, further negotiations occurred related to the sale of Plainfield resulting in certain closing conditions being waived. As a result, the Company determined that a sale of Plainfield was probable and classified Plainfield as "Held for Sale" in Leidos' condensed consolidated balance sheet as of July 3, 2015. Additionally, as of July 3, 2015, the Company adjusted the carrying values of Plainfield's assets down to the fair value of the anticipated consideration to be received pursuant to an amendment to the Agreement (Level 1), resulting in approximately $29 million of asset impairment charges. The adjustment related to a reduction in the purchase price, the recapture of previously recognized tax benefits, and incurred transaction costs.

On July 17, 2015, the Company executed an amendment to the Agreement based on prior negotiations and completed the sale on July 24, 2015 of its equity interests in Plainfield for an aggregate consideration of $101 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 (the "Closing Payment") and a secured promissory note for approximately $73 million (the “Note”). 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. 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.

Discontinued Operations for the Year Ended January 30, 2015

In July 2014, the Company committed to plans to dispose of a business primarily focused on full service emergency management consulting for disaster preparedness, response, recovery, and mitigation historically included in the Company's Health and Engineering segment. The sale transaction was completed in the third quarter ended October 31, 2014 with cash proceeds received of $19 million, resulting in an immaterial gain on sale.

Discontinued Operations for the Year Ended January 31, 2014

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 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 govern the treatment of existing contracts, proposals, and teaming arrangements where New SAIC will jointly perform work after separation on Leidos contracts.

Other Discontinued Operations

Other non-strategic dispositions were historically included in the Company's National Security Solutions segment.

In August 2013, the Company committed to plans to dispose of a business 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 approximately $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 the second quarter ended August 1, 2014 with insignificant cash proceeds received, resulting in an immaterial loss on sale.

In January 2014, the Company committed to plans to dispose of Cloudshield Technologies, Inc. ("Cloudshield"), previously acquired in fiscal 2011, which is 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 gain on sale as of July 3, 2015.

The pre-sale operating results through the date of disposal of the Company’s discontinued operations discussed above, for the periods presented were as follows:

	Three Months Ended					Six Months Ended
	July 3, 2015		August 1, 2014			July 3, 2015			August 1, 2014
	(in millions)
Revenues	$	6	$	20		$	14		$	46
Costs and expenses:
Cost of revenues	6		21			12			43
Selling, general and administrative expenses (including impairment charges of $9 million for the six months ended August 1, 2014)	—		5			4			19
Intangible asset impairment charges	—		—			—			3
Operating loss	$	—	$	(6	)	$	(2	)	$	(19	)
Non-operating income	$	—	$	8		$	2		$	8
Income (loss) from discontinued operations before income taxes	$	—	$	2		$	—		$	(11	)