Business Segments

6 Months Ended

Jul. 01, 2016

Segment Reporting Information [Line Items]

Business Segments

Business Segments

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.

During the first quarter of fiscal 2016, the Company entered into an agreement to sell its design, build and heavy construction engineering business (see "Note 3–Divestitures"). This transaction allows the Company to better focus its engineering efforts in the utility and broader infrastructure markets. Accordingly, the reportable segment of Health and Engineering was renamed as Health and Infrastructure Sector ("HIS"). The Company has the following reportable segments: National Security Solutions, Health and Infrastructure Sector, and Corporate and Other.

The segment information for the periods presented was as follows:

	Three Months Ended						Six Months Ended
	July 1, 2016			July 3, 2015			July 1, 2016			July 3, 2015
	(in millions)
Revenues:
National Security Solutions	$	915		$	879		$	1,813		$	1,741
Health and Infrastructure Sector	373			379			787			764
Corporate and Other	—			(1		)	—			(2		)
Total revenues	$	1,288		$	1,257		$	2,600		$	2,503
Operating income (loss):
National Security Solutions	$	61		$	74		$	133		$	136
Operating income margin	6.7		%	8.4		%	7.3		%	7.8		%
Health and Infrastructure Sector	39			(7		)	75			(14		)
Operating income (negative) margin	10.5		%	(1.8		)%	9.5		%	(1.8		)%
Corporate and Other	(25		)	(3		)	(44		)	(20		)
Total operating income	$	75		$	64		$	164		$	102
Operating income margin	5.8		%	5.1		%	6.3		%	4.1		%

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.

Segment Reporting Information [Line Items]

Business Segments

Business Segments

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.

During the first quarter of fiscal 2016, the Company entered into an agreement to sell its design, build and heavy construction engineering business (see "Note 3–Divestitures"). This transaction allows the Company to better focus its engineering efforts in the utility and broader infrastructure markets. Accordingly, the reportable segment of Health and Engineering was renamed as Health and Infrastructure Sector ("HIS"). The Company has the following reportable segments: National Security Solutions, Health and Infrastructure Sector, and Corporate and Other.

The segment information for the periods presented was as follows:

	Three Months Ended						Six Months Ended
	July 1, 2016			July 3, 2015			July 1, 2016			July 3, 2015
	(in millions)
Revenues:
National Security Solutions	$	915		$	879		$	1,813		$	1,741
Health and Infrastructure Sector	373			379			787			764
Corporate and Other	—			(1		)	—			(2		)
Total revenues	$	1,288		$	1,257		$	2,600		$	2,503
Operating income (loss):
National Security Solutions	$	61		$	74		$	133		$	136
Operating income margin	6.7		%	8.4		%	7.3		%	7.8		%
Health and Infrastructure Sector	39			(7		)	75			(14		)
Operating income (negative) margin	10.5		%	(1.8		)%	9.5		%	(1.8		)%
Corporate and Other	(25		)	(3		)	(44		)	(20		)
Total operating income	$	75		$	64		$	164		$	102
Operating income margin	5.8		%	5.1		%	6.3		%	4.1		%

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.