Leidos Holdings, Inc.

OVERVIEW OF LIQUIDITY

As of April 3, 2026, we had $457 million in cash and cash equivalents. We have a senior unsecured revolving credit facility which can provide up to $1.5 billion in additional borrowing, if required. As of April 3, 2026, and January 2, 2026, there were no borrowings outstanding under the revolving credit facility.

We had outstanding debt of $6.3 billion and $4.6 billion at April 3, 2026, and January 2, 2026 respectively. In March 2026, we issued and sold $600 million 4.10% and $800 million 5.00% senior unsecured notes maturing in March 2029 and March 2036, respectively. The annual interest rate is payable on a semi-annual basis. The proceeds from the notes were used to fund a portion of the consideration payable in connection with the acquisition of Entrust and for general corporate purposes.

We have a commercial paper program in which we may issue short-term unsecured commercial paper notes ("Commercial Paper Notes") and have maturities of up to 397 days from the date of issuance. As of April 3, 2026, we had $300 million of Commercial Paper Notes outstanding. As of January 2, 2026, we did not have any Commercial Paper Notes outstanding.

We made $5 million and $529 million principal payments on our long-term debt during the three months ended April 3, 2026 and April 4, 2025, respectively. The activity for the three months ended April 4, 2025, included a $500 million payment to discharge the $500 million notes due May 2025.

Our senior unsecured revolving credit facility, Commercial Paper Notes, senior unsecured term loan and notes outstanding as of April 3, 2026, contain financial covenants and customary restrictive covenants. We were in compliance with all financial covenants as of April 3, 2026.

We paid dividends of $55 million and $53 million during the three months ended April 3, 2026, and April 4, 2025, respectively.

We may from time to time seek to retire or purchase our outstanding debt through cash purchases in the open market, privately negotiated transactions or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Stock repurchases of Leidos common stock may be made on the open market or in privately negotiated transactions with third parties including through accelerated share repurchase agreements. Whether repurchases are made and the timing and actual number of shares repurchased depends on a variety of factors including price, corporate capital requirements, other market conditions and regulatory requirements. The repurchase program may be accelerated, suspended, delayed or discontinued at any time.

We made open market repurchases of our common stock for an aggregate purchase price of $200 million during the three months ended April 3, 2026. During the three months ended April 4, 2025, we did not make any open market repurchases; however, we repurchased $500 million of shares under an accelerated share repurchase agreement.

During the three months ended April 3, 2026, we invested $6 million in an investment fund as a limited partner, In connection with this investment, we have committed to invest an additional $94 million over the next five years. We expect to fund this investment with cash on hand and cash generated through our operations.

For the next 12 months, we anticipate that we will be able to meet our liquidity needs, including servicing our debt, through cash generated from operations, available cash balances, borrowings from our commercial paper program and, if needed, sales of accounts receivable and borrowings from our revolving credit facility.

SUMMARY OF CASH FLOWS

The following table summarizes cash flow information for the periods presented:

Net cash provided by operating activities increased $243 million during the three months ended April 3, 2026, when compared to the prior year quarter. The increase was primarily due to favorable changes in working capital.

Net cash used in investing activities increased $2,337 million for the three months ended April 3, 2026, when compared to the prior year quarter. The increase was primarily due to $2,338 million of net cash paid in connection with the acquisition of Entrust.

Net cash provided by financing activities increased $1,503 million for the three months ended April 3, 2026, when compared to the prior year quarter. The increase was primarily due a net increase of $1,216 million in cash inflows from debt activity, consisting of proceeds from debt issuances and payments for borrowings and debt issuance costs. The increase was also related to a $300 million net decrease in stock repurchases primarily attributable to the prior year accelerated share repurchase activities.