LDOS: 10-K Risk Factor Changes

13 Table of ContentsPART I Table of Contents PART I Table of Contents PART I uOur failure to comply with various complex procurement rules and regulations could result in us being liable for penalties, including termination of our U.S. government contracts, disqualification from bidding on future U.S. government contracts and suspension or debarment from U.S. government contracting. uThe U.S. government may adopt new contract rules and regulations or revise its procurement practices in a manner adverse to us at any time. uApplication of the U.S. government's organizational conflict of interest (OCI) rules could limit our ability to successfully compete for new contracts or task orders, which would adversely affect our results of operations. uAs a U.S. government contractor, our partners and we are subject to reviews, audits and cost adjustments by the U.S. government, which could adversely affect our profitability, cash position or growth prospects if resolved unfavorably to us. uOur business is subject to governmental review and investigation, which could adversely affect our financial position, operating results and growth prospects. uInvestigations, audits, claims, disputes, enforcement actions, litigation, arbitration or other legal proceedings could require us to pay potentially large damage awards or penalties and could be costly to defend, which would adversely affect our cash balances and profitability, and could damage our reputation. uOur business and operations expose us to numerous legal and regulatory requirements, and any violation of these requirements could harm our business. uOur business is subject to complex and evolving laws and regulations regarding data privacy and security which could subject us to investigations, claims or monetary penalties against us, require us to change our business practices or otherwise adversely affect our revenues and profitability. uMisconduct of employees, subcontractors, agents, suppliers, business partners or joint ventures and others working on our behalf could cause us to lose existing contracts or customers and adversely affect our ability to obtain new contracts and could have a material adverse impact on our business, reputation and future results. uA failure to attract, retain, and develop talent with critical skills, including our leadership team, would adversely affect our ability to execute our strategy and may disrupt our operations. uWe may not realize the full amounts reflected in our backlog as revenues, which could adversely affect our expected future revenues and growth prospects. uOur earnings and profitability may vary based on the mix of our contracts and may be adversely affected by our failure to estimate and manage costs, time and resources accurately. uWe use estimates in recognizing revenues, and if we make changes to estimates used in recognizing revenues, our profitability may be adversely affected. uCybersecurity breaches and other information security incidents could negatively impact our business and financial results, impair our ability to effectively provide our services to our customers and cause harm to our reputation or competitive position. uInternal system or service failures, or failures in the systems or services of third parties on which we rely, could disrupt our business and impair our ability to effectively provide our services and products to our customers, which could damage our reputation and adversely affect our revenues and profitability. uCustomer systems failures could damage our reputation and adversely affect our revenues and profitability. uOur success depends, in part, on our ability to work with complex and rapidly changing technologies to meet the needs of our customers. uWe utilize artificial intelligence, which could expose us to liability or adversely affect our business, especially if we are unable to compete effectively with others in adopting artificial intelligence. uWe have classified contracts with the U.S. government, which may limit investor insight into portions of our business. uWe have made and continue to make acquisitions, investments, joint ventures and divestitures that involve numerous risks and uncertainties. uJoint ventures, other strategic alliances, and strategic business transactions may not achieve intended results. We may experience operational challenges in integrating or segregating assets for such a venture or transaction. 14Leidos Holdings, Inc. Annual Report 14Leidos Holdings, Inc. Annual Report 14Leidos Holdings, Inc. Annual Report 14 Leidos Holdings, Inc. Annual Report 14Leidos Holdings, Inc. Annual Report 14Leidos Holdings, Inc. Annual Report 14 Leidos Holdings, Inc. Annual Report 14Leidos Holdings, Inc. Annual Report 14 Leidos Holdings, Inc. Annual Report 14 Leidos Holdings, Inc. Annual Report Table of ContentsPART I Table of Contents PART I Table of Contents PART I uGoodwill represents a significant asset on our balance sheet and any impairment of this asset could negatively impact our results of operations, and shareholders’ equity. uWe depend on our teaming arrangements and relationships with other contractors and subcontractors. If we are not able to maintain these relationships, or if these parties fail to satisfy their obligations to us or the customer, our revenues, profitability and growth prospects could be adversely affected. uWe could incur significant liabilities and suffer negative publicity if our inspection or detection systems fail to detect bombs, explosives, weapons, contraband or other threats. uWe face risks associated with our international business. uChanges in tax laws and regulations or exposure to additional tax liabilities could adversely affect our financial results.