What changed in this filing

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Item 1. Financial Statements

2023-12-04 compared with 2023-09-07 · 128 added, 116 removed, 451 unchanged (35% of the section changed)

2 unchanged sentences

CONDENSED AND CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended Six Months Ended

2023 July 29,

2022 August 4,

2023 July 29,

Three Months Ended Nine Months Ended

2023 October 28,

2022 November 3,

2023 October 28,

(in millions, except per share amounts)

20 unchanged sentences

CONDENSED AND CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended Six Months Ended

2023 July 29,

2022 August 4,

2023 July 29,

Three Months Ended Nine Months Ended

2023 October 28,

2022 November 3,

2023 October 28,

(in millions)

Net income $ 93 $ 80 $ 438 $ 228

Other comprehensive income (loss), net of tax:

Net unrealized gain (loss) on derivative instruments 7 ( 3 ) 1 34

Total other comprehensive income (loss), net of tax 7 ( 3 ) 1 34

Other comprehensive (loss) income, net of tax:

Net unrealized (loss) gain on derivative instruments

( 3 ) 29 ( 2 ) 63

Total other comprehensive (loss) income, net of tax

( 3 ) 29 ( 2 ) 63

Comprehensive income $ 90 $ 109 $ 436 $ 291

14 unchanged sentences

Intangible assets, net 923 1,009

Property, plant, and equipment (net of accumulated depreciation of $ 193 million and $ 194 million at August 4, 2023 and February 3, 2023, respectively)

Property, plant, and equipment (net of accumulated depreciation of $ 176 million and $ 194 million at November 3, 2023 and February 3, 2023, respectively)

Operating lease right of use assets 136 158

11 unchanged sentences

Commitments and contingencies (Note 11)

Common stock, $ 0.0001 par value, 1 billion shares authorized, 53 million and 54 million shares issued and outstanding as of August 4, 2023 and February 3, 2023, respectively

Common stock, $ 0.0001 par value, 1 billion shares authorized, 52 million and 54 million shares issued and outstanding as of November 3, 2023 and February 3, 2023, respectively

Additional paid-in capital 395 637

15 unchanged sentences

(in millions)

Balance at May 5, 2023 54 $ 563 $ 1,113 $ 16 $ — $ 1,692

Balance at August 4, 2023 53 $ 480 $ 1,340 $ 23 $ — $ 1,843

Net income — — 93 — — 93

5 unchanged sentences

Repurchases of stock ( 1 ) ( 103 ) — — — ( 103 )

Balance at August 4, 2023 53 $ 480 $ 1,340 $ 23 $ — $ 1,843

Balance at November 3, 2023 52 $ 395 $ 1,413 $ 20 $ — $ 1,828

Balance at February 3, 2023 54 $ 637 $ 1,035 $ 22 $ 10 $ 1,704

7 unchanged sentences

Deconsolidation of non-controlling interest — — — — ( 10 ) ( 10 )

Balance at August 4, 2023 53 $ 480 $ 1,340 $ 23 $ — $ 1,843

Balance at April 29, 2022 56 $ 770 $ 870 $ — $ 10 $ 1,650

Balance at November 3, 2023 52 $ 395 $ 1,413 $ 20 $ — $ 1,828

Balance at July 29, 2022 55 $ 723 $ 923 $ ( 3 ) $ 10 $ 1,653

Net income — — 80 — — 80

6 unchanged sentences

Distributions to non-controlling interest — — — — — —

Balance at July 29, 2022 55 $ 723 $ 923 $ ( 3 ) $ 10 $ 1,653

Balance at October 28, 2022 55 $ 679 $ 981 $ 26 $ 10 $ 1,696

Balance at January 28, 2022 56 $ 838 $ 818 $ ( 37 ) $ 10 $ 1,629

7 unchanged sentences

Distributions to non-controlling interest — — — — ( 2 ) ( 2 )

Balance at July 29, 2022 55 $ 723 $ 923 $ ( 3 ) $ 10 $ 1,653

Balance at October 28, 2022 55 $ 679 $ 981 $ 26 $ 10 $ 1,696

See accompanying notes to condensed and consolidated financial statements.

1 unchanged sentence

CONDENSED AND CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

2023 July 29,

Nine Months Ended

2023 October 28,

(in millions)

80 unchanged sentences

Investments in marketable securities consist of equity securities, which are recorded at fair value using observable inputs such as quoted prices in active markets (Level 1).

As of August 4, 2023 and February 3, 2023, the fair value of the Company's investments totaled $ 30 million and $ 28 million, respectively, and are included in other assets on the condensed and consolidated balance sheets.

As of November 3, 2023 and February 3, 2023, the fair value of the Company's investments totaled $ 29 million and $ 28 million, respectively, and are included in other assets on the condensed and consolidated balance sheets.

The Company's investments are primarily held in a custodial account, which includes investments to fund its deferred compensation plan liabilities.

13 unchanged sentences

Acquisition and integration costs are presented together as acquisition and integration costs on the condensed and consolidated statements of income.

Acquisition costs for the three and six months ended August 4, 2023 were immaterial.

During the six months ended July 29, 2022, the Company recognized a $ 1 million benefit related to the acquisition of Koverse.

During the three and six months ended August 4, 2023, the Company incurred $ 1 million of integration costs related to the acquisitions of Halfaker and Koverse.

During the three and six months ended July 29, 2022, the Company incurred $ 1 million and $ 11 million of integration costs, respectively, related to the acquisitions of Halfaker and Koverse.

Acquisition costs for the three and nine months ended November 3, 2023 were immaterial.

During the three and nine months ended October 28, 2022, the Company recognized a benefit of $ 1 million and $ 2 million, respectively, related to the acquisition of Koverse.

During the nine months ended November 3, 2023, the Company incurred $ 1 million of integration costs related to the acquisitions of Halfaker and Koverse.

During the three and nine months ended October 28, 2022, the Company incurred $ 2 million and $ 13 million of integration costs, respectively, related to the acquisitions of Halfaker and Koverse.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

1 unchanged sentence

Restructuring

During the three and six months ended August 4, 2023, the Company incurred $ 5 million and $ 6 million of restructuring costs, respectively.

During the three and six months ended July 29, 2022, the Company incurred $ 2 million of restructuring costs.

During the three and nine months ended November 3, 2023, the Company incurred $ 2 million and $ 8 million of restructuring costs, respectively.

During the three and nine months ended October 28, 2022, the Company incurred $ 5 million and $ 7 million of restructuring costs.

These costs are associated with the optimization and consolidation of certain facilities and are presented within selling, general and administrative expenses on the condensed and consolidated statements of income.

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Accounting Standards Updates

In September 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2023-07, Segment Reporting (Topic 280) , to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

Amongst other amendments, the standard requires annual and interim disclosures of significant segment expenses that are regularly provided to the chief operating decision maker (CODM), and interim disclosures about a reportable segment’s profit or loss and assets that are currently required annually.

This standard does not change how an entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments.

The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The Company is currently evaluating the impact of adoption of this standard on its consolidated financial statements.

In September 2022, the FASB issued ASU No.

2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50) , which requires annual and interim disclosures for entities that use supplier finance programs in connection with the purchase of goods and services.

4 unchanged sentences

The Company maintains a supplier finance program through a financial institution in which participating suppliers, at their sole discretion, may enroll with the financial institution to finance at a discounted price one or more payment obligations of the Company prior to their scheduled due dates.

As of August 4, 2023, payment obligations outstanding under the Company’s supplier finance program were not material .

Payment obligations outstanding under the Company’s supplier finance program are presented within accounts payable and accrued liabilities on the condensed and consolidated balance sheets and were immaterial as of November 3, 2023 .

Note 2— Earnings Per Share, Share Repurchases and Dividends:

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Diluted EPS is computed similarly to basic EPS, except the weighted-average number of shares outstanding is increased to include the dilutive effect of outstanding stock options and other stock-based awards.

The dilutive effect of outstanding stock options and other stock-based awards is computed using the treasury stock method.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

1 unchanged sentence

The following table provides a reconciliation of the weighted-average number of shares outstanding used to compute basic and diluted EPS for the periods presented:

Three Months Ended Six Months Ended

2023 July 29,

2022 August 4,

2023 July 29,

Three Months Ended Nine Months Ended

2023 October 28,

2022 November 3,

2023 October 28,

(in millions)

5 unchanged sentences

53.3 55.5 54.0 56.0

Antidilutive stock awards excluded from the weighted-average number of shares outstanding used to compute diluted EPS for the three and six months ended August 4, 2023 and July 29, 2022 were immaterial .

Antidilutive stock awards excluded from the weighted-average number of shares outstanding used to compute diluted EPS for the three and nine months ended November 3, 2023 and October 28, 2022 were immaterial .

Share Repurchases

3 unchanged sentences

In June 2022, the number of shares of the Company's common stock that may be repurchased under its existing repurchase plan was increased by 8.0 million shares, bringing the total authorized shares to be repurchased under the plan to approximately 24.4 million shares.

As of August 4, 2023, the Company has repurchased approximately 18.7 million shares of common stock under the program.

The Company declared and paid a quarterly dividend of $ 0.37 per share of its common stock during the three months ended August 4, 2023.

Subsequent to the end of the quarter, on September 6, 2023, the Company's Board of Directors declared a quarterly dividend of $ 0.37 per share of the Company's common stock payable on October 27, 2023 to stockholders of record on October 13, 2023.

As of November 3, 2023, the Company has repurchased approximately 19.6 million shares of common stock under the program.

The Company declared and paid a quarterly dividend of $ 0.37 per share of its common stock during the three months ended November 3, 2023.

Subsequent to the end of the quarter, on November 30, 2023, the Company's Board of Directors declared a quarterly dividend of $ 0.37 per share of the Company's common stock payable on January 26, 2024 to stockholders of record on January 12, 2024.

Note 3— Revenues:

12 unchanged sentences

Aggregate net changes in estimates on contracts accounted for using the cost-to-cost method of accounting were recognized in operating income as follows:

Three Months Ended Six Months Ended

2023 July 29,

2022 August 4,

2023 July 29,

Three Months Ended Nine Months Ended

2023 October 28,

2022 November 3,

2023 October 28,

(in millions, except per share amounts)

2 unchanged sentences

Diluted EPS impact $ 0.04 $ ( 0.09 ) $ 0.09 $ 0.05

Revenues were $ 1 million lower and $ 4 million higher for the three and six months ended August 4, 2023, respectively, and $ 5 million and $ 9 million higher for the three and six months ended July 29, 2022, respectively, due to net revenue recognized from performance obligations satisfied in prior periods.

Revenues were $ 4 million and $ 8 million higher for the three and nine months ended November 3, 2023, respectively, and $ 2 million lower and $ 7 million higher for the three and nine months ended October 28, 2022, respectively, due to net revenue recognized from performance obligations satisfied in prior periods.

Disaggregation of Revenues

3 unchanged sentences

Disaggregated revenues by customer were as follows:

Three Months Ended Six Months Ended

2023 July 29,

2022 August 4,

2023 July 29,

Three Months Ended Nine Months Ended

2023 October 28,

2022 November 3,

2023 October 28,

(in millions)

4 unchanged sentences

Disaggregated revenues by contract type were as follows:

Three Months Ended Six Months Ended

2023 July 29,

2022 August 4,

2023 July 29,

Three Months Ended Nine Months Ended

2023 October 28,

2022 November 3,

2023 October 28,

(in millions)

6 unchanged sentences

Disaggregated revenues by prime versus subcontractor were as follows:

Three Months Ended Six Months Ended

2023 July 29,

2022 August 4,

2023 July 29,

Three Months Ended Nine Months Ended

2023 October 28,

2022 November 3,

2023 October 28,

(in millions)

5 unchanged sentences

Contract balances for the periods presented were as follows:

Balance Sheet line item August 4,

Balance Sheet line item November 3,

2023 February 3,

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Contract liabilities - non-current Other long-term liabilities $ 2 $ 4

(1) Net of allowance of $ 4 million as of August 4, 2023 and February 3, 2023.

During the three and six months ended August 4, 2023, the Company recognized revenues of $ 12 million and $ 33 million, respectively, relating to amounts that were included in the opening balance of contract liabilities as of February 3, 2023.

During the three and six months ended July 29, 2022, the Company recognized revenues of $ 8 million and $ 35 million, respectively, relating to amounts that were included in the opening balance of contract liabilities as of January 28, 2022.

(1) Net of allowance of $ 3 million and $ 4 million as of November 3, 2023 and February 3, 2023, respectively.

During the three and nine months ended November 3, 2023, the Company recognized revenues of $ 5 million and $ 38 million, respectively, relating to amounts that were included in the opening balance of contract liabilities as of February 3, 2023.

During the three and nine months ended October 28, 2022, the Company recognized revenues of $ 4 million and $ 39 million, respectively, relating to amounts that were included in the opening balance of contract liabilities as of January 28, 2022.

Remaining Performance Obligations

As of August 4, 2023, the Company had approximately $ 5 billion of remaining performance obligations.

As of November 3, 2023, the Company had approximately $ 5.5 billion of remaining performance obligations.

The Company expects to recognize revenue on approximately 80 % of the remaining performance obligations over the next 12 months and approximately 90 % over the next 24 months, with the remaining recognized thereafter.

3 unchanged sentences

Operating lease income is recognized on a straight-line basis over the term of the lease and is reported as revenue on the condensed and consolidated statements of income.

During the six months ended July 29, 2022, the Company recognized revenue of $ 23 million from the exercise of purchase options under certain lessor arrangements.

Operating lease income was immaterial for the three and six months ended August 4, 2023 and July 29, 2022.

During the nine months ended October 28, 2022, the Company recognized revenue of $ 23 million from the exercise of purchase options under certain lessor arrangements.

Operating lease income was immaterial for the three and nine months ended November 3, 2023 and October 28, 2022.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

11 unchanged sentences

Sale of Logistics and Supply Chain Management Business

On May 6, 2023, the Company closed the sale of its logistics and supply chain management business (Supply Chain Business) to ASRC Federal Holding Company, LLC (ASRC Federal) for $ 356 million in cash, including $ 355 million received at closing and a preliminary post-closing adjustment for working capital.

The sale enables the Company to focus its resources on long-term strategic growth areas.

The Company recorded a preliminary pre-tax gain of $ 233 million, net of $ 7 million of transaction costs, which is included within other operating income on the condensed and consolidated statements of income.

The Company recorded a pre-tax gain of $ 233 million, net of $ 7 million of transaction costs, which is included within other operating income on the condensed and consolidated statements of income.

The disposition does not represent a strategic shift in operations that will have a material effect on the Company's operations and financial results, and accordingly has not been presented as discontinued operations.

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Total liabilities divested $ 65

In connection with the sale, the Company and ASRC Federal entered into certain transition services agreements pursuant to which the Company will provide certain services through approximately the end of fiscal 2024 on a cost reimbursable basis to ASRC Federal.

In connection with the sale, the Company and ASRC Federal entered into certain transition services agreements pursuant to which the Company will provide certain services to ASRC Federal through approximately the end of fiscal 2024 on a cost reimbursable basis.

The transition services include certain IT, finance and other services necessary to support the transition of the sale.

2 unchanged sentences

Note 5— Goodwill and Intangible Assets:

Goodwill had a carrying value of $ 2,851 million and $ 2,911 million as of August 4, 2023 and February 3, 2023, respectively.

Goodwill had a carrying value of $ 2,851 million and $ 2,911 million as of November 3, 2023 and February 3, 2023, respectively.

Goodwill decreased $ 60 million compared to February 3, 2023 due to the sale of the Supply Chain Business (see Note 4).

2 unchanged sentences

Intangible assets, all of which were finite-lived, consisted of the following:

August 4, 2023 February 3, 2023

November 3, 2023 February 3, 2023

Gross carrying value Accumulated amortization Net carrying value Gross carrying value Accumulated amortization Net carrying value

4 unchanged sentences

Total intangible assets $ 1,473 $ ( 550 ) $ 923 $ 1,478 $ ( 469 ) $ 1,009

Amortization expense related to intangible assets was $ 29 million and $ 58 million for the three and six months ended August 4, 2023, respectively, and $ 32 million and $ 65 million for the three and six months ended July 29, 2022, respectively.

Amortization expense related to intangible assets was $ 28 million and $ 86 million for the three and nine months ended November 3, 2023, respectively, and $ 29 million and $ 94 million for the three and nine months ended October 28, 2022, respectively.

There were no intangible asset impairment losses during the periods presented.

As of August 4, 2023, the estimated future annual amortization expense related to intangible assets is as follows:

As of November 3, 2023, the estimated future annual amortization expense related to intangible assets is as follows:

Fiscal Year (in millions)

3 unchanged sentences

Note 6— Income Taxes:

The Company's effective income tax rate was 26.4 % and 24.7 % for the three and six months ended August 4, 2023, respectively, and 21.8 % and 21.9 % for the three and six months ended July 29, 2022, respectively.

The Company’s higher effective tax rate for the three and six months ended August 4, 2023, compared to the same periods in the prior year, is primarily attributable to the gain from the disposition of the Supply Chain Business and the associated non-deductible goodwill, partially offset by higher tax benefits from stock-based compensation and the completion of a foreign-derived intangible income study.

Beginning in fiscal 2023, the Tax Cuts and Jobs Act of 2017 (TCJA) removed the ability of taxpayers to immediately deduct specific research and development expenditures in the year incurred and instead requires taxpayers to capitalize and amortize such research expenditures over a period of five years.

The Company's effective income tax rate was 18.0 % and 23.4 % for the three and nine months ended November 3, 2023, respectively, and 20.3 % and 21.3 % for the three and nine months ended October 28, 2022, respectively.

The Company’s effective tax rate for the three months ended November 3, 2023, is lower compared to the effective tax rate from the same period in the prior year due to higher tax benefits from the deduction for foreign-derived intangible income.

The Company's effective tax rate for the nine months ended November 3, 2023, is higher compared to the effective tax rate from the same period in the prior year due to the gain from the disposition of the Supply Chain Business and the associated non-deductible goodwill.

The increase was partially offset by higher tax benefits from stock-based compensation and the deduction for foreign-derived intangible income.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS

As of August 4, 2023, the Company's unrecognized tax benefits were $ 207 million, compared to $ 156 million as of February 3, 2023.

The increase during the six months ended August 4, 2023 is primarily attributable to research tax credits and capitalized research and development costs in accordance with the TCJA.

As of November 3, 2023, the Company's unrecognized tax benefits were $ 225 million, compared to $ 156 million as of February 3, 2023.

The increase during the nine months ended November 3, 2023 is primarily attributable to research tax credits and capitalized research and development costs in accordance with the TCJA.

This increase also resulted in a corresponding $ 44 million increase to deferred tax assets.

As of August 4, 2023 and February 3, 2023, the net deferred tax asset balance was $ 74 million and $ 14 million, respectively, and is presented in other assets on the condensed and consolidated balance sheets.

The unrecognized tax benefits are presented within other long-term liabilities on the condensed and consolidated balance sheets.

As of November 3, 2023 and February 3, 2023, the net deferred tax asset balance was $ 92 million and $ 14 million, respectively, and is presented in other assets on the condensed and consolidated balance sheets.

Note 7— Debt Obligations:

The Company’s long-term debt as of the dates presented was as follows:

August 4, 2023 February 3, 2023

November 3, 2023 February 3, 2023

rate Effective

12 unchanged sentences

$ 2,206 $ ( 12 ) $ 2,194 $ 2,359 $ ( 16 ) $ 2,343

As of August 4, 2023, the Company has a $ 2.9 billion secured credit facility (the Credit Facility) consisting of a Term Loan A Facility due June 2027, a Term Loan B Facility due October 2025, a Term Loan B2 Facility due March 2027 (together, the Term Loan Facilities), and a $ 1.0 billion Revolving Credit Facility due June 2027 (the Revolving Credit Facility).

During the three and six months ended August 4, 2023, the Company made principal prepayments of $ 64 million and $ 36 million on the Term Loan B Facility due October 2025 and the Term Loan B2 Facility due March 2027, respectively.

During the six months ended August 4, 2023, the Company borrowed and repaid $ 160 million under the Revolving Credit Facility.

There was no balance outstanding on the Revolving Credit Facility as of August 4, 2023.

As of August 4, 2023, the Company was in compliance with the covenants under its Credit Facility.

As of August 4, 2023 and February 3, 2023, the carrying value of the Company’s outstanding debt obligations approximated its fair value.

As of November 3, 2023, the Company had a $ 2.9 billion secured credit facility (the Credit Facility) consisting of a Term Loan A Facility due June 2027, a Term Loan B Facility due October 2025, a Term Loan B2 Facility due March 2027 (together, the Term Loan Facilities), and a $ 1.0 billion Revolving Credit Facility due June 2027 (the Revolving Credit Facility).

During the nine months ended November 3, 2023, the Company made a scheduled principal payment of $ 15 million on the Term Loan A Facility due June 2027 and principal prepayments of $ 64 million and $ 36 million on the Term Loan B Facility due October 2025 and the Term Loan B2 Facility due March 2027, respectively.

During the nine months ended November 3, 2023, the Company borrowed and repaid $ 160 million under the Revolving Credit Facility.

There was no balance outstanding on the Revolving Credit Facility as of November 3, 2023.

Commitment fees for undrawn amounts under the Revolving Credit Facility range from 0.125 % to 0.25 % per annum based on the Company’s leverage ratio.

As of November 3, 2023, the Company was in compliance with the covenants under its Credit Facility.

As of November 3, 2023 and February 3, 2023, the carrying value of the Company’s outstanding debt obligations approximated its fair value.

The fair value of long-term debt is calculated using Level 2 inputs, based on interest rates available for debt with terms and maturities similar to the Company’s Term Loan Facilities and Senior Notes.

1 unchanged sentence

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS

Maturities of long-term debt as of August 4, 2023 are:

Maturities of long-term debt as of November 3, 2023 are:

Fiscal Year Total

6 unchanged sentences

Fair Value of Asset (1) at

Notional Amount at August 4, 2023 Pay Fixed

Notional Amount at November 3, 2023 Pay Fixed

Rate Settlement and

Termination August 4,

Termination November 3,

2023 February 3, 2023

7 unchanged sentences

See Note 9 for the unrealized change in fair values on cash flow hedges recognized in other comprehensive income (loss) and the amounts reclassified from accumulated other comprehensive income (loss) into earnings for the current and comparative periods presented.

The Company estimates that it will reclassify $ 19 million of unrealized gains from accumulated other comprehensive income into earnings in the twelve months following August 4, 2023.

During the three months ended November 3, 2023, Interest Rate Swaps #2 matured which had a notional value of $ 450 million upon maturity.

The Company estimates that it will reclassify $ 15 million of unrealized gains from accumulated other comprehensive income into earnings in the twelve months following November 3, 2023.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

9 unchanged sentences

(in millions)

Three months ended August 4, 2023

Balance at May 5, 2023 $ 12 $ 4 $ 16

Three months ended November 3, 2023

Balance at August 4, 2023 $ 19 $ 4 $ 23

Other comprehensive income before reclassifications 4 — 4

1 unchanged sentence

Income tax impact 1 — 1

Net other comprehensive income 7 — 7

Balance at August 4, 2023 $ 19 $ 4 $ 23

Three months ended July 29, 2022

Balance at April 29, 2022 $ ( 1 ) $ 1 $ —

Net other comprehensive loss

( 3 ) — ( 3 )

Balance at November 3, 2023 $ 16 $ 4 $ 20

Three months ended October 28, 2022

Balance at July 29, 2022 $ ( 4 ) $ 1 $ ( 3 )

Other comprehensive loss before reclassifications 38 — 38

1 unchanged sentence

Income tax impact ( 10 ) — ( 10 )

Net other comprehensive loss ( 3 ) — ( 3 )

Balance at July 29, 2022 $ ( 4 ) $ 1 $ ( 3 )

Six months ended August 4, 2023

Net other comprehensive income

Balance at October 28, 2022 $ 25 $ 1 $ 26

Nine months ended November 3, 2023

Balance at February 3, 2023 $ 18 $ 4 $ 22

2 unchanged sentences

Income tax impact 1 — 1

Net other comprehensive income 1 — 1

Balance at August 4, 2023 $ 19 $ 4 $ 23

Six months ended July 29, 2022

Net other comprehensive loss

( 2 ) — ( 2 )

Balance at November 3, 2023 $ 16 $ 4 $ 20

Nine months ended October 28, 2022

Balance at January 28, 2022 $ ( 38 ) $ 1 $ ( 37 )

4 unchanged sentences

Net other comprehensive income 63 — 63

Balance at July 29, 2022 $ ( 4 ) $ 1 $ ( 3 )

Balance at October 28, 2022 $ 25 $ 1 $ 26

(1) The amount reclassified from accumulated other comprehensive income (loss) is included in interest expense.

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(the Purchaser) for the sale of up to a maximum amount of $ 300 million of certain designated eligible receivables with the U.S.

During the six months ended August 4, 2023 and July 29, 2022, the Company incurred purchase discount fees of $ 5 million and $ 2 million, respectively, which are presented in other (income) expense, net on the condensed and consolidated statements of income and are reflected as cash flows from operating activities on the condensed and consolidated statements of cash flows.

During the nine months ended November 3, 2023 and October 28, 2022, the Company incurred purchase discount fees of $ 7 million and $ 4 million, respectively, which are presented in other (income) expense, net on the condensed and consolidated statements of income and are reflected as cash flows from operating activities on the condensed and consolidated statements of cash flows.

MARPA Facility activity consisted of the following:

Six Months Ended

2023 July 29,

Nine Months Ended

2023 October 28,

(in millions)

6 unchanged sentences

Remaining sold receivables $ 217 $ 245

(1) For the six months ended August 4, 2023 there was no net impact to cash flows from operating activities from sold receivables.

For the six months ended July 29, 2022, the Company recorded a net increase to cash flows from operating activities of $ 60 million from sold receivables.

(2) Primarily represents the cash collected on behalf of but not yet remitted to the Purchaser as of August 4, 2023 and July 29, 2022.

(1) For the nine months ended November 3, 2023 there was no net impact to cash flows from operating activities from sold receivables.

For the nine months ended October 28, 2022, the Company recorded a net increase to cash flows from operating activities of $ 60 million from sold receivables.

(2) Primarily represents the cash collected on behalf of but not yet remitted to the Purchaser as of November 3, 2023 and October 28, 2022.

This balance is included in accounts payable and accrued liabilities on the condensed and consolidated balance sheets.

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The Company is involved in various claims and lawsuits arising in the normal conduct of its business, none of which the Company’s management believes, based on current information, is expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows.

A vendor used by the Company to audit employee retirement benefits confirmed to the Company on August 4, 2023, that it had experienced a cybersecurity incident related to MOVEit software, a commonly used secure file transfer application.

The vendor indicated that the incident may have resulted in the personal information of certain employees and former employees of the Company being accessed by an unauthorized third party.

The vendor and the Company have conducted a review of the incident and the vendor has undertaken remedial measures including credit monitoring at its expense.

At this time, the Company has not experienced and does not anticipate any material impact on its ongoing operations, financial condition or results of operations as a direct result of this incident.

This disclosure should be read in conjunction with "Risk Factors" in Part I of the most recently filed Annual Report on Form 10-K.

In April 2022, the Company received a Federal Grand Jury Subpoena in connection with a criminal investigation being conducted by the U.S.

In April 2022 and October 2023, the Company received a Federal Grand Jury Subpoena in connection with a criminal investigation being conducted by the U.S.

Department of Justice, Antitrust Division (DOJ).

1 unchanged sentence

The Company is fully cooperating with the investigation.

At this time, it is not possible to determine whether the Company will incur, or to reasonably estimate the amount of, any fines, penalties or further liabilities in connection with the investigation pursuant to which the subpoena was issued.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS

AAV Termination for Convenience

1 unchanged sentence

The Company is continuing to negotiate with the Marine Corps to recover costs associated with the termination.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS

Government Investigations, Audits and Reviews

7 unchanged sentences

If future completed audit adjustments exceed the Company’s reserves for potential adjustments, the Company’s profitability could be materially adversely affected.

As of August 4, 2023, the Company believes it has adequately reserved for estimated net amounts to be refunded to customers for potential adjustments for indirect cost audits and compliance with U.S.

As of November 3, 2023, the Company believes it has adequately reserved for estimated net amounts to be refunded to customers for potential adjustments for indirect cost audits and compliance with U.S.

government Cost Accounting Standards.

Letters of Credit and Surety Bonds

The Company has outstanding obligations relating to letters of credit of $ 9 million as of August 4, 2023, principally related to guarantees on insurance policies.

The Company has outstanding obligations relating to letters of credit of $ 9 million as of November 3, 2023, principally related to guarantees on insurance policies.

The Company also has outstanding obligations relating to surety bonds of $ 19 million, principally related to performance and payment bonds on the Company’s contracts.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements