Leidos Holdings, Inc. · NYSE:LDOS
Leidos — Merger or Acquisition (January 2016)
18 slides from Leidos's merger presentation, Jan 26, 2016
Slide 1: Leidos + Lockheed Martin's Information Systems & Global Solutions Business
© Leidos. All rights reserved. Leidos + Lockheed Martin’s Information Systems & Global Solutions Business A New Leader in US Government IT Services January 26, 2016 Exhibit 99.2
Slide 2: Cautionary Statement Regarding Forward Looking Statements
Cautionary Statement Regarding Forward Looking Statements The forward looking statements contained in this document involve risks and uncertainties that may affect Leidos Holdings, Inc.’s (“Leidos”) operations, markets, products, services, prices and other factors as discussed in filings with the Se
Slide 3: Agenda
Agenda Announcement Leidos has entered into a definitive agreement to combine with Lockheed Martin’s Information Systems & Global Solutions (“IS&GS”) business Structure The transaction will be structured as a Reverse Morris Trust and preserve the tax-free nature of Lockheed Martin’s split-off of IS&
Slide 4: Management Presenters
Marillyn Hewson Chairman, President, and CEO Lockheed Martin Roger Krone Chairman and CEO Leidos Jim Reagan CFO Leidos Management Presenters
Slide 5: Leidos and IS&GS: A Powerful Combination
Leidos and Lockheed Martin have entered into an agreement whereby Leidos will combine with Lockheed Martin’s IS&GS business, valued at approximately $5 billion, in a Reverse Morris Trust transaction, expected to be tax-free Key Benefits Creates ~$10B revenue industry leader in government services Co
Slide 6: Structure and Consideration; Approvals and Timing
Structure and Consideration Approvals and Timing Leidos to combine with Lockheed Martin’s Information Systems & Global Solutions (“IS&GS”) business via a Reverse Morris Trust structure Total transaction value of $5 billion for IS&GS, including $3.2 billion(1) in Leidos stock (~77 million shares) and
Slide 7: Leidos Overview
Leidos Overview NATIONAL SECURITY SECTOR HEALTH & ENGINEERING SECTOR $3.4B revenue Critical mission support for intelligence community ~10,000(1) employees with >8,500 possessing security clearances C4ISR, Cyber, Data Analytics solutions 97% government 3% commercial Serves Intel community, DoD, UK M
Slide 8: IS&GS Overview
IS&GS Overview Civil Defense & Intel Provides IT infrastructure, mission and business solutions, facilities M&O and logistics Headquartered in Gaithersburg, MD with 16,000+ employees Revenue of ~$4.7 billion(1) Contract mix: 90% prime; 45% cost-plus, 42% fixed price, 13% time & material Employee cle
Slide 9: Strategic Rationale for Leidos
Strategic Rationale for Leidos Increased Scale and Diversification Largest pure-play IT services provider to the U.S. federal government with ~$10 billion in revenue and ~33,000 skilled employees Diversified customer base with strengthened relationship and reach in Intelligence, Defense and Civil ag
Slide 10: Creates a Leader in Government Services
Creates a Leader in Government Services Note: Data based on TTM Revenue as of 9/30/2015 ($ in billions), except IS&GS based on adjusted pro forma revenue. Other large defense contractors such as General Dynamics, Northrop Grumman, and Raytheon also have significant Government Services Businesses. (1
Slide 11: Diversifies Leidos' Business Mix
Diversifies Leidos’ Business Mix Source: Leidos and Lockheed Martin. Estimated based on TTM revenue through 09/30/2015. IS&GS Combined Company Civil and Commercial 60% Defense 32% Intelligence 8% Civil and Commercial 45% Defense 35% Intelligence 20% Civil and Commercial 28% Defense 40% Intelligence
Slide 12: Complementary Customer Reach
Complementary Customer Reach
Slide 13: Complementary Market Offerings
Complementary Market Offerings Leidos IS&GS Overlapping Defense Civil C4ISR Sensor Development Data Integration & Analysis Mission IT USAF Combat Mission Support Healthcare Information Transportation Transportation Security Design, Develop, Integrate and Support Mission Systems Aviation Maintenance
Slide 14: Attractive Pro Forma Financial Profile
Attractive Pro Forma Financial Profile Creates a ~$10 billion company with significant scale and improved margin profile Note: Leidos based on trailing twelve months through 09/30/2015, IS&GS based on estimated 2016 adjusted pro forma financials. + IS&GS + IS&GS Revenue Adjusted EBITDA Margin 8.0% 9
Slide 15: Significant Cost Synergies
Significant Cost Synergies Synergies Breakdown Expected Value Corporate Home Office Gains from labor base scale ~$50M Line Management & Functional Cost Merging similar businesses and consolidating operating units ~$60M Real Estate and Other Real estate, supply chain and other synergies ~$10M Total a
Slide 16: Post-Close Capital Deployment Priorities
Post-Close Capital Deployment Priorities Gross Leverage Ratio(1) Leidos will remain committed to paying its quarterly 32c per share dividend to all shareholders Upon close, top priority for deployment of excess cash will be paying down the debt to reduce leverage Strong free cash flow enables rapid
Slide 17: Significant Value Creation for Employees, Shareholders and Customers
For Our Employees For Our Shareholders More diversified sources of revenue, product, and customer mix Benefits from substantial cost synergies and positioned for revenue upside potential Accretive to adjusted EPS in the second year of operations, neutral in the first year Significant special dividen
Slide 18: Next Steps
File Combined Company S-4/S-1, Leidos Form S-4, and Leidos preliminary proxy statement Next Steps Continue transition and integration planning Hold Investor Day prior to transaction closing
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