LEIDOS HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

Three Months Ended  

Nine Months Ended  

September 30,
 2016  

October 2,
 2015  

September 30,
 2016  

October 2,
 2015  

Cash flows from operations:

Net income

$

92

$

49

$

186

$

127

Income from discontinued operations

—

—

—

(18)

Adjustments to reconcile net income to net cash provided by operations:

Depreciation and amortization

37

11

54

35

Stock-based compensation

9

9

25

23

Asset impairment charges

—

4

—

73

Bad debt expense and other, net

1

9

(2)

8

Change in assets and liabilities, net of effects of acquisitions
  and dispositions:

Receivables

216

82

140

145

Inventory, prepaid expenses and other current assets

(117)

(12)

(124)

(22)

Accounts payable and accrued liabilities

29

57

36

71

Accrued payroll and employee benefits

(4)

(6)

(2)

(26)

Deferred income taxes and income taxes receivable/payable

(26)

68

(19)

(20)

Other long-term assets/liabilities

(11)

(2)

(10)

(18)

Total cash flows provided by operating activities of continuing operations

226

269

284

378

Cash flows from investing activities:

Payments for property, plant and equipment

(13)

(7)

(20)

(15)

Acquisition of business

25

—

25

—

Payments on accrued purchase price related to prior acquisition

—

—

—

(13)

Net proceeds from sale of assets

—

4

3

9

Proceeds from disposition of business

—

27

23

27

Proceeds from collections on promissory note

4

—

4

—

Other

—

—

(1)

—

Total cash flows provided by investing activities of
  continuing operations

16

24

34

8

Cash flows from financing activities:

Payments of long-term debt

(100)

(2)

(102)

(49)

Proceeds from debt issuance

690

—

690

—

Payments for debt issuance costs

(30)

—

(30)

—

Proceeds from issuances of stock

19

1

25

4

Repurchases of stock and other

(1)

(1)

(20)

(116)

Special cash dividend payment

(993)

—

(993)

—

Dividend payments

(48)

(23)

(94)

(71)

Other

—

2

—

3

Total cash flows used in financing activities of continuing operations

(463)

(23)

(524)

(229)

(Decrease) increase in cash and cash equivalents from continuing 
     operations

(221)

270

(206)

157

Cash flows from discontinued operations:

Cash provided by operating activities of discontinued operations

—

—

—

13

Cash (used in) provided by investing activities of discontinued operations

—

—

(1)

6

(Decrease) increase in cash and cash equivalents from discontinued 
      operations

—

—

(1)

19

Total (decrease) increase in cash and cash equivalents

(221)

270

(207)

176

Cash and cash equivalents at beginning of period

670

365

656

459

Cash and cash equivalents at end of period

$

449

$

635

$

449

$

635