LDOS

Business Context and Reporting Period

This Form 8-K Current Report was filed by Leidos Holdings, Inc. on January 28, 2016, covering events occurring on January 26 and January 27, 2016. The filing primarily addresses a definitive agreement to combine with Lockheed Martin Corporation's Information Systems & Global Solutions (IS&GS) business via a Reverse Morris Trust transaction, as well as an amendment to the company's credit agreement.

Key Financial Metrics and Agreements

• Credit Facility Extension: On January 27, 2016, Leidos entered into Amendment No. 3 to its Amended and Restated Four Year Credit Agreement. All but one lender agreed to a one-year extension of the Maturity Date to March 11, 2018.
• Commitment Amount: As of March 11, 2017, the combined commitment of the lenders agreeing to the extension is $472 million.
• Transaction Structure: The proposed combination involves Lockheed Martin separating its IS&GS business into a wholly-owned subsidiary ("Spinco") and merging it with Leidos.

Material Changes and Events

The filing discloses two material definitive agreements:

1. Merger Agreement: Dated January 26, 2016, this agreement outlines the Reverse Morris Trust transaction between Leidos and Lockheed Martin's IS&GS business.
2. Separation Agreement: Dated January 26, 2016, this agreement governs the separation of the IS&GS business from Lockheed Martin.
3. Debt Restructuring: The extension of the credit agreement maturity date alters the company's debt schedule, pushing the final maturity to 2018.

Guidance, Risks, and Contingencies

The filing contains extensive cautionary statements regarding forward-looking information. Key risks and contingencies include:

• Transaction Completion: The merger is subject to stockholder and regulatory approvals, as well as market conditions affecting the split-off transaction.
• Integration Risks: Potential business disruptions, operational problems, and the ability to successfully integrate the businesses and achieve anticipated synergies.
• Financial Uncertainty: Risks related to unforeseen liabilities, future capital expenditures, revenues, expenses, and the anticipated tax treatment of the transaction.
• Representations and Warranties: The filing notes that representations in the Merger Agreement are qualified by confidential disclosure letters and should not be treated as categorical statements of fact.

Note: This filing does not provide specific revenue, profit, cash flow, or margin figures for the reporting period. Investors are directed to the Form 10-K and Form 10-Q for detailed financial results.

Investor Verification Checklist

• Verify the status of stockholder and regulatory approvals required for the Lockheed Martin IS&GS merger.
• Review the upcoming Form S-4/S-1 registration statement and proxy statement for detailed terms of the transaction and potential tax implications.
• Confirm the identity of the single lender that did not agree to the credit agreement extension and assess the impact on the $472 million commitment.
• Examine the confidential disclosure letters referenced in the Merger Agreement to understand qualifications to representations and warranties.
• Monitor for potential business disruptions or operational issues arising from the transaction process.