LEIDOS HOLDINGS, INC.

UNAUDITED NON-GAAP FINANCIAL MEASURES [CONTINUED]

(in millions, except per share amounts)

Six Months Ended July 1, 2016

As reported

Acquisition and integration costs

Amortization of intangibles

Restructuring expenses

Loss (gain) on sale of assets and businesses

Non-GAAP results

Operating income

$

164

$

24

$

3

$

1

$

—

$

192

Non-operating expense, net

(26)

—

—

—

(5)

(31)

Income from continuing operations, before income taxes

138

24

3

1

(5)

161

Income tax expense¹

(44)

(10)

(1)

—

1

(54)

Net income

$

94

$

14

$

2

$

1

$

(4)

$

107

Diluted EPS

$

1.27

$

0.19

$

0.03

$

0.01

$

(0.05)

$

1.45

Diluted shares

74

74

74

74

74

74

⁽¹⁾ Calculation uses an estimated statutory tax rate on non-GAAP tax deductible adjustments.