LDOSMEDIUM SIGNALMANAGEMENT10-K

LDOS underwent strategic repositioning with the Entrust acquisition while significantly reducing share buybacks and increasing capital investments.

The company shifted from seven technical capabilities to five strategic growth pillars, signaling a more focused business strategy, while the Entrust acquisition language suggests integration risks that management is actively managing. The reduction in workforce from 48,000 to 47,000 employees alongside strategic refocusing indicates operational optimization efforts.

Comparing 2026-02-17 vs 2025-02-11View on EDGAR →
FINANCIAL ANALYSIS

LDOS demonstrated strong operational performance with operating cash flow surging 25.7% to $1.8B and net income growing 15.5% to $1.4B, while operating income increased 15.4% to $2.1B. The company significantly reduced share buybacks by 52.9% to $400M while increasing capital expenditures by 65.8% to $121M and R&D spending by 24.7% to $187M, indicating a strategic shift toward growth investments over shareholder returns. Balance sheet strength improved with current liabilities declining 22.6% to $2.8B, cash increasing 17.5% to $1.1B, and stockholders' equity growing 11.4% to $4.9B, reflecting solid financial health supporting the strategic transformation.

FINANCIAL STATEMENT CHANGES
Capital Expenditure
Cash Flow
+65.8%
$73.0M→$121.0M

Capital expenditure jumped 65.8% — major investment cycle underway; assess returns on deployment.

Share Buybacks
Cash Flow
-52.9%
$850.0M→$400.0M

Buyback activity reduced 52.9% — capital being redeployed elsewhere or cash conservation underway.

Operating Cash Flow
Cash Flow
+25.7%
$1.4B→$1.8B

Operating cash flow grew 25.7% — strong conversion of earnings to cash, healthy business fundamentals.

R&D Expense
P&L
+24.7%
$150.0M→$187.0M

R&D investment increased 24.7% — signals commitment to future product development, though near-term margin impact.

Current Liabilities
Balance Sheet
-22.6%
$3.7B→$2.8B

Current liabilities reduced — improved short-term financial position and working capital health.

Cash & Equivalents
Balance Sheet
+17.5%
$943.0M→$1.1B

Cash grew 17.5% — improving liquidity position supports investment and shareholder returns.

Net Income
P&L
+15.5%
$1.3B→$1.4B

Net income grew 15.5% — bottom-line growth signals improving overall business health.

Operating Income
P&L
+15.4%
$1.8B→$2.1B

Operating income improving — cost discipline or growing revenue base absorbing fixed costs.

Stockholders Equity
Balance Sheet
+11.4%
$4.4B→$4.9B

Equity base grew 11.4% — retained earnings accumulation or equity issuance strengthening the balance sheet.

LANGUAGE CHANGES
NEW — 2026-02-17
PRIOR — 2025-02-11
ADDED
government defense and non-defense budgets, including budget reductions, sequestration, implementation of spending limits or changes in budgetary priorities, initiatives aimed at improving governmental efficiency, delays in the U.S.
( Entrust ) or successfully integrate Entrust to achieve the expected benefits of such acquisition; and u our ability to execute our business plan and long-term management initiatives effectively and to overcome these and other known and unknown risks that we face.
Headquartered in Reston, Virginia, with 47,000, global employees, we pursue strategic growth across five pillars: space and maritime; energy infrastructure; digital modernization and cyber; mission software; and managed health services.
Department of Homeland Security ( DHS ), the Federal Aviation Administration ( FAA ), the Department of Veterans Affairs ( VA ) and many other U.S.
With a focus on delivering mission-critical solutions, Leidos generated 87% of revenues for the fiscal year ended January 2, 2026, ( fiscal 2025 ) from U.S.
government contracts, either as a prime contractor or a subcontractor to others.
OUR BUSINESS SEGMENTS As of January 2, 2026, our business is aligned into four reportable segments: National Security Digital, Health Civil, Commercial International and Defense Systems.
NATIONAL SECURITY DIGITAL Our National Security Digital business provides leading-edge and technologically advanced services, solutions and products across substantially all U.S.
Our advanced capabilities allow us to provide technology-enabled services, software capabilities and IT modernization, including: u Digital Modernization and Transformation We provide worldwide digital support for our nation s largest and most critical infrastructure.
We design, develop, implement, protect and maintain IT environments to provide stability, security and flexibility to mission needs.
REMOVED
government defense and non-defense budgets, including budget reductions, sequestration, implementation of spending limits or changes in budgetary priorities, delays in the U.S.
Headquartered in Reston, Virginia, with 48,000, global employees, we bring domain-specific capabilities, technologies and insights to customers in each of these markets by leveraging seven technical core capabilities: trusted mission artificial intelligence, cyber operations, digital modernization, mission software systems, integrated systems, mission operations, and rapid prototyping and manufacturing.
Applying our technically-advanced solutions to help solve our customers most difficult problems has enabled us to build strong relationships with key customers.
Department of Homeland Security ( DHS ), the Federal Aviation Administration ( FAA ), the Department of Veterans Affairs ( VA ), National Aeronautics and Space Administration ( NASA ) and many other U.S.
With a focus on delivering mission-critical solutions, Leidos generated 87% of revenues for the fiscal year ended January 3, 2025, ( fiscal 2024 ) from U.S.
government contracts, either as a prime contractor or a subcontractor to other contractors engaged in work for the U.S.
OUR BUSINESS SEGMENTS Beginning in fiscal 2024, we realigned our business and operate in four reportable segments that are focused on specific, defined capability sets we bring to our customers.
As a result of this change, prior year segment results and disclosures have been recast to reflect the current reportable segment structure.
We now operate in the following reportable segments: National Security Digital, Health Civil, Commercial International and Defense Systems.
NATIONAL SECURITY DIGITAL Our National Security Digital business provides leading-edge and technologically advanced services, solutions and products, as well as mission software capabilities for defense and intelligence customers in the areas of cyber, logistics, security operations and decision analytics.
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