Receivables

11 Months Ended

Jan. 01, 2016

Accounts, Notes, Loans and Financing Receivable [Line Items]

Receivables

Receivables:

The components of receivables, net consisted of the following:

	January 1, 2016			January 30, 2015
	(in millions)
Billed and billable receivables	$	715		$	655
Unbilled receivables:
Amounts billable	187			230
Contract retentions	29			21
Allowance for doubtful accounts	(10		)	(10		)
	$	921		$	896

The Company’s accounts receivable includes amounts billed and currently due from customers as well as billable receivables that generally consist of amounts to be billed within the next month. Since the Company’s receivables are primarily with the U.S. Government, the Company does not have exposure to a material credit risk. 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.

The Company has extended deferred payment terms with original contractual maturities that may exceed one year to commercial customers related to certain construction projects. As of January 30, 2015, the Company had outstanding net receivables of $18 million, which reflects an allowance of $7 million, related to one construction project with deferred payment terms reflected in "Other assets" on the Company's consolidated balance sheet. These receivables had not been paid in accordance with the initial payment terms established with the customer and as such the Company filed a legal claim to enforce the payment terms as established in the contract. During the 11-month period ended January 1, 2016, the Company reached an agreement to settle the legal claim. As a result of the settlement terms, the Company recorded "Bad debt expense" of $11 million in the Company's consolidated statements of income. During the 11-month period ended January 1, 2016, and fiscal 2015, the Company received partial payments of $6 millionand $21 million, respectively, from the customer. As of January 1, 2016, the remaining receivables balance related to this construction project is immaterial.

During fiscal 2014, the Company recorded "Bad debt expense" in the Company's consolidated statements of income of $41 million related to two different construction projects.

Leidos, Inc.

Accounts, Notes, Loans and Financing Receivable [Line Items]

Receivables

Receivables:

The components of receivables, net consisted of the following:

	January 1, 2016			January 30, 2015
	(in millions)
Billed and billable receivables	$	715		$	655
Unbilled receivables:
Amounts billable	187			230
Contract retentions	29			21
Allowance for doubtful accounts	(10		)	(10		)
	$	921		$	896

The Company’s accounts receivable includes amounts billed and currently due from customers as well as billable receivables that generally consist of amounts to be billed within the next month. Since the Company’s receivables are primarily with the U.S. Government, the Company does not have exposure to a material credit risk. 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.

The Company has extended deferred payment terms with original contractual maturities that may exceed one year to commercial customers related to certain construction projects. As of January 30, 2015, the Company had outstanding net receivables of $18 million, which reflects an allowance of $7 million, related to one construction project with deferred payment terms reflected in "Other assets" on the Company's consolidated balance sheet. These receivables had not been paid in accordance with the initial payment terms established with the customer and as such the Company filed a legal claim to enforce the payment terms as established in the contract. During the 11-month period ended January 1, 2016, the Company reached an agreement to settle the legal claim. As a result of the settlement terms, the Company recorded "Bad debt expense" of $11 million in the Company's consolidated statements of income. During the 11-month period ended January 1, 2016, and fiscal 2015, the Company received partial payments of $6 millionand $21 million, respectively, from the customer. As of January 1, 2016, the remaining receivables balance related to this construction project is immaterial.

During fiscal 2014, the Company recorded "Bad debt expense" in the Company's consolidated statements of income of $41 million related to two different construction projects.