Debt

3 Months Ended

Apr. 03, 2026

Note 5–Debt

Our debt consisted of the following:


(in millions)	Stated interest rate		Effective interest rate		April 3, 2026		January 2, 2026
Short-term debt and current portion of long-term debt
Commercial paper	4.13%- 4.23%		Various		$	300	$	—
Current portion of long-term debt					20		20
Total short-term debt and current portion of long-term debt					$	320	$	20

Long-term debt:
Senior unsecured term loan:
$1,000 million term loan, due March 2028	5.02	%	5.16	%	$	500	$	500
Senior unsecured notes:
$600 million notes, due March 2029	4.10	%	4.20	%	600		—
$750 million notes, due May 2030	4.38	%	4.50	%	750		750
$1,000 million notes, due February 2031	2.30	%	2.38	%	1,000		1,000
$500 million notes, due March 2032	5.40	%	5.42	%	500		500
$250 million notes, due July 2032	7.13	%	7.43	%	250		250
$750 million notes, due March 2033	5.75	%	5.81	%	750		750
$300 million notes, due July 2033	5.50	%	5.88	%	161		161
$500 million notes, due March 2035	5.50	%	5.55	%	500		500
$800 million notes, due March 2036	5.00	%	5.03	%	800		—
$300 million notes, due December 2040	5.95	%	6.03	%	218		218
Finance leases due on various dates through fiscal 2032	Various		2.28%-6.31%		49		54
Less: unamortized debt discounts and deferred debt issuance costs					(44)		(35)
Total long-term debt					6,034		4,648
Less: current portion					(20)		(20)
Total long-term debt, net of current portion					$	6,014	$	4,628

REVOLVING CREDIT FACILITY

On February 12, 2026, we amended and restated our existing senior unsecured revolving credit facility (the “Revolving Facility”) to increase the borrowing capacity from $1.0 billion to $1.5 billion. The Revolving Facility will mature in February 2031 and permits two additional one-year extensions subject to lender consent. Borrowings under the Revolving Facility will bear interest at a rate determined, at the Company's option, based on either an alternate base rate or term SOFR rate, plus an applicable margin and is subject to an annual commitment fee rate of 0.11% on the unused credit availability. As of April 3, 2026, and January 2, 2026, there were no borrowings outstanding under the Revolving Facility.

SENIOR NOTES

On March 2, 2026, we issued and sold $600 million senior notes maturing in March 2029 (the "2029 Notes") and $800 million senior notes maturing in March 2036 (the "2036 Notes", and together with the 2029 Notes, the "Notes"). The Notes are senior unsecured obligations issued by Leidos, Inc. and guaranteed by Leidos Holdings, Inc. The annual interest rates for the 2029 Notes and the 2036 Notes are 4.10% and 5.00%, respectively, and the interest is payable on a semi-annual basis. In connection with the issuance of the Notes, $10 million of debt issuance costs and discount were recognized, which were

recorded as an offset against the carrying value of debt. 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.

BRIDGE FACILITY

In connection with the acquisition of Entrust, we entered into an agreement with Citigroup Global Markets Inc., which provides for a senior unsecured 364-day bridge loan facility in an aggregate principal amount of $1.4 billion (the "Bridge Facility"). The Bridge Facility was undrawn and was terminated following the issuance of the Notes. As a result, we recognized $5 million of fees which were recorded within "Interest expense, net" on the condensed consolidated statements of operations.

COMMERCIAL PAPER

We have a commercial paper program in which the Company may issue short-term unsecured commercial paper notes ("Commercial Paper Notes"). The proceeds will be used for general corporate purposes, including working capital, capital expenditures, acquisitions and share repurchases.

The Commercial Paper Notes are issued in minimum denominations of $0.25 million and have maturities of up to 397 days from the date of issuance. The Commercial Paper Notes either bear a stated or floating interest rate, if interest bearing, or will be sold at a discount from the face amount. 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.

COVENANTS

The Commercial Paper Notes, senior unsecured term loan, senior unsecured notes and Revolving Facility are fully and unconditionally guaranteed and contain certain customary restrictive covenants, including among other things, restrictions on our ability to create liens and enter into sale and leaseback transactions under certain circumstances.

The financial covenants in the Revolving Facility and the senior unsecured term loan require that we maintain, as of the last day of each fiscal quarter, a ratio of adjusted consolidated total debt to consolidated EBITDA of not more than 3.75 to 1.00, subject to increases to 4.50 to 1.00 for four fiscal quarters following a material acquisition, and a ratio of EBITDA to consolidated interest expense of not less than 3.50 to 1.00.

We were in compliance with all financial covenants as of April 3, 2026.

PRINCIPAL PAYMENTS

Future minimum payments of long-term debt are as follows:


Fiscal year ending (in millions)
2026 (remainder of year)	$	15
2027	14
2028	504
2029	605
2030	755
2031 and thereafter	4,185
Total principal payments	6,078
Less: unamortized debt discount and issuance costs	(44)
Total long-term debt	$	6,034