LEIDOS HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

Three Months Ended

Nine Months Ended

September 29,
 2017

September 30,
 2016

September 29,
 2017

September 30,
 2016

Cash flows from operations:

Net income

$

79

$

92

$

251

$

186

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

Depreciation and amortization

92

37

254

54

Stock-based compensation

12

9

32

25

Bad debt expense

(1)

1

11

1

Other

8

—

23

(3)

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

Receivables

24

216

(155)

140

Inventory, prepaid expenses and other current
  assets

(86)

(70)

(46)

(80)

Accounts payable and accrued liabilities

128

29

5

36

Accrued payroll and employee benefits

(37)

(4)

(44)

(2)

Deferred income taxes and income taxes
  receivable/payable

(6)

(26)

(50)

(19)

Other long-term assets/liabilities

55

(11)

81

(10)

Net cash provided by operating activities of continuing operations

268

273

362

328

Cash flows from investing activities:

Payments for property, plant and equipment

(19)

(13)

(42)

(20)

Acquisition of business

—

25

—

25

Collections on promissory note

—

4

2

4

Net proceeds from sale of assets

—

—

7

3

Proceeds from disposition of business

—

—

—

23

Other

—

—

—

(1)

Net cash (used in) provided by investing activities of
  continuing operations

(19)

16

(33)

34

Cash flows from financing activities:

Payments of long-term debt

(125)

(100)

(194)

(102)

Proceeds from debt issuance

—

690

—

690

Payments for debt issuance and modification costs

(4)

(30)

(4)

(30)

Proceeds from issuances of stock

3

19

10

25

Repurchases of stock and other

(1)

(1)

(26)

(20)

Special cash dividend payment

—

(993)

—

(993)

Dividend payments

(48)

(48)

(150)

(94)

Net cash used in financing activities of continuing
  operations

(175)

(463)

(364)

(524)

Net increase (decrease) in cash, cash equivalents and
  restricted cash from continuing operations

74

(174)

(35)

(162)

Cash flows from discontinued operations:

Net cash used in investing activities of discontinued
  operations

—

—

—

(1)

Net decrease in cash, cash equivalents and
  restricted cash from discontinued operations

—

—

—

(1)

Net increase (decrease) in cash, cash equivalents and
  restricted cash

74

(174)

(35)

(163)

Cash, cash equivalents and restricted cash at
  beginning of period

287

684

396

673

Cash, cash equivalents and restricted cash at end of
  period

$

361

$

510

$

361

$

510