What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-06-03 compared with 2023-12-04 · 142 added, 89 removed, 152 unchanged (60% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations and quantitative and qualitative disclosures about market risk should be read in conjunction with our unaudited condensed and consolidated financial statements and the related notes.

The following discussion and analysis of our financial condition and results of operations and quantitative and qualitative disclosures about market risk should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes.

It contains forward-looking statements (which may be identified by words such as those described in “Risk Factors—Forward-Looking Statement Risks” in Part I of the most recently filed Annual Report on Form 10-K), including statements regarding our intent, belief, or current expectations with respect to, among other things, trends affecting our financial condition or results of operations (including our financial targets discussed below under “Management of Operating Performance and Reporting” and “Liquidity and Capital Resources”);

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The Company utilizes a 52/53 week fiscal year, ending on the Friday closest to January 31, with fiscal quarters typically consisting of 13 weeks.

Fiscal 2024 began on February 4, 2023 and ends on February 2, 2024, while fiscal 2023 began on January 29, 2022 and ended on February 3, 2023.

Fiscal 2025 began on February 3, 2024 and ends on January 31, 2025, while fiscal 2024 began on February 4, 2023 and ended on February 2, 2024.

Business Overview

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Substantially all of our revenues and tangible long-lived assets are generated and located in the United States.

Effective February 3, 2024, the first day of fiscal 2025, we completed a business reorganization which replaced our previous two operating sectors with five customer facing business groups supported by the enterprise organizations, including the Innovation Factory.

The five business groups represent our operating segments and have been aggregated into two reportable segments (Defense and Intelligence, and Civilian) given the similarity in economic and qualitative characteristics, and based on the nature of the customers they serve.

The Defense and Intelligence segment provides a diverse portfolio of national security solutions to the defense and intelligence departments and agencies of the United States Government.

The Civilian segment provides solutions to the civilian markets, encompassing federal, state, and local governments, in order to deliver services for citizen well-being and protecting lives.

This includes integrating solutions into a spectrum of public service missions that impact travel, trade, health and the economy.

The offerings of both reportable segments entail the integration of emerging technologies into mission critical operations that modernize and enable national imperatives, including IT modernization, digital engineering, artificial intelligence ("AI"), mission systems support, training and simulation, and ground vehicles support.

These services include end-to-end solutions spanning the design, development, integration, deployment, management and operations, sustainment and security of the customers’ entire IT infrastructure.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Our Innovation Factory supports the operating segments by developing superior enterprise-class solutions which are delivered to the our customers as stand-alone solutions or integrated with and aligned to product offerings through the operations of the business to meet complex customer needs and accelerate digital transformation.

The Innovation Factory includes designated teams focused on AI, application development, network services, platforms and cloud, and cyber.

It uses a highly automated, cloud-hosted tool set to rapidly build, test and deploy solutions quickly and works with customers to enhance solutions going forward.

Costs associated with corporate functions that are not allocable to the reportable segments are presented as Corporate.

See Note 11—Business Segments Information to the condensed consolidated financial statements contained within this report for additional information.

Economic Opportunities, Challenges, and Risks

During the three and nine months ended November 3, 2023, we generated 98% of our revenues from contracts with the U.S.

During the three months ended May 3, 2024, we generated 98% of our revenues from contracts with the U.S.

government, including subcontracts on which we perform.

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Appropriations measures passed in December 2022 provided full funding for the federal government through the end of government fiscal year ("GFY") 2023.

In November 2023, the President signed a continuing resolution which will fund the U.S.

government through January 2024.

If Congress is not able to pass appropriations for GFY 2024 funding by January 2024, it could result in the U.S.

government operating on additional continuing resolutions and/or could potentially lead to a partial or full government shutdown.

In March 2024, the President signed appropriation measures that provide funding for GFY 2024 for all of the U.S.

government and submitted the GFY 2025 budget request which adheres to the Fiscal Responsibility Act of 2023.

The GFY 2025 budget includes 1% growth for defense budgets and an overall 1% growth for non-defense budgets.

If Congress is not able to pass the GFY 2025 funding measures by the end of September 2024, it could result in the U.S.

government operating on a continuing resolution or could potentially lead to a partial or full government shutdown.

In January 2023, the Federal debt ceiling was reached and the U.S.

Department of the Treasury was operating under "extraordinary measures." In June 2023, the President signed the Fiscal Responsibility Act of 2023 which suspends the Federal debt ceiling until January 1, 2025, postponing the threat of a federal government default.

If a new debt ceiling agreement is not reached by January 2025, the U.S.

Department of the Treasury will return to operating under "extraordinary measures."

Adverse changes in fiscal and economic conditions could materially impact our business.

Some changes that could have an adverse impact on our business include adverse regulations, the implementation of future spending reductions (including sequestration), delayed passage of appropriations bills resulting in temporary or full-year continuing resolutions, extreme inflationary increases adversely impacting fixed price contracts, and potential government shutdowns.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Spending packages, including the infrastructure bill, Inflation Reduction Act, and CHIPS and Science Act, as well as future potential spending packages, may provide additional opportunity in areas of SAIC focus such as digital modernization, cyber, microelectronics support, and climate resiliency.

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Our solutions are inspired through innovation based on adoption of best practices and technology integration of the best capabilities available.

Our Innovation Factory develops superior enterprise-class solutions which are delivered to our customers as stand-alone solutions or integrated with and aligned to our Growth Technology and CORE product offerings to meet complex customer needs and accelerate the digital transformation.

Our Innovation Factory develops superior enterprise-class solutions which are delivered to our customers as stand-alone solutions or integrated with and aligned to our product offerings to meet complex customer needs and accelerate the digital transformation.

Our past performance was achieved by employees dedicated to supporting our customers' most challenging missions.

Our current cost structure and ongoing efforts to reduce costs by strategic sourcing and developing repeatable offerings sold "as a service" and as managed services in a more commercial business model are expected to allow us to compete effectively on price in an evolving environment.

We believe that our ability to be competitive in the future will continue to be driven by our reputation for successful program execution, competitive cost structure, development of new pricing and business models, and efficiencies in assigning the right people, at the right time, in support of our contracts.

Our current cost structure and

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

ongoing efforts to reduce costs by strategic sourcing and developing repeatable offerings sold "as a service" and as managed services in a more commercial business model are expected to allow us to compete effectively on price in an evolving environment.

Our ability to be competitive in the future will continue to be driven by our reputation for successful program execution, competitive cost structure, development of new pricing and business models, and efficiencies in assigning the right people, at the right time, in support of our contracts.

Management of Operating Performance and Reporting

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Changes in operating cash flows are described with regard to changes in cash generated through the provision of services, significant drivers of fluctuations in assets or liabilities and the impacts of changes in timing of cash receipts or disbursements.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Results of Operations

Condensed Consolidated Results of Operations

The primary financial performance measures we use to manage our business and monitor results of operations are revenues, operating income, and cash flows from operating activities.

The following table summarizes our results of operations:

Three Months Ended Nine Months Ended

change October 28,

2022 November 3,

change October 28,

The following table summarizes our condensed consolidated results of operations:

Three Months Ended

change May 5,

(dollars in millions)

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Selling, general and administrative expenses

87 — % 87 259 (5 %) 272

Acquisition and integration costs — (100 %) 1 1 (91 %) 11

Other operating income (1) 100 % — (242) 100 % —

(Gain) loss on divestitures, net of transaction costs — (100 %) (6)

Other operating (income) expense

Operating income 131 (17 %) 157

As a percentage of revenues 7.1 % 7.7 %

Net income attributable to common stockholders $ 93 16 % $ 80 $ 438 94 % $ 226

Provision for income taxes $ (18) 28 % $ (25)

$ 77 (21 %) $ 98

Net cash provided by operating activities $ 98 20 % $ 82

Revenues decreased $14 million for the three months ended November 3, 2023 as compared to the same period in the prior year primarily due to the sale of the Supply Chain Business ($161 million) and the deconsolidation of FSA ($35 million) (see Note 4 for additional information), and contract completions, partially offset by ramp up on existing and new contracts.

Adjusting for the impact of the divestiture of the Supply Chain Business and the deconsolidation of FSA, revenues grew 10.6%.

Revenues decreased $29 million for the nine months ended November 3, 2023 as compared to the same period in the prior year primarily due to the sale of the Supply Chain Business ($310 million), the deconsolidation of FSA ($106 million), and contract completions, partially offset by ramp up on existing and new contracts.

Adjusting for the impact of the divestiture of the Supply Chain Business and the deconsolidation of FSA, revenues grew 7.3%.

Cost of Revenues.

Cost of revenues decreased $22 million for the three months ended November 3, 2023 as compared to the same period in the prior year primarily due to the sale of the Supply Chain Business ($153 million) and the deconsolidation of FSA ($32 million), partially offset by ramp up on existing and new contracts.

Adjusting for the impact of the divestiture of the Supply Chain Business and the deconsolidation of FSA, cost of revenues increased 10.8%, in line with revenues.

Cost of revenues decreased $43 million for the nine months ended November 3, 2023 as compared to the same period in the prior year primarily due to the sale of the Supply Chain business ($291 million) and the deconsolidation of FSA ($97 million), partially offset by ramp up on existing and new contracts.

Adjusting for the impact of the divestiture of the Supply Chain Business and the deconsolidation of FSA, cost of revenues increased 7.4%, in line with revenues.

Selling, General and Administrative Expenses (SG&A).

SG&A remained consistent for the three months ended November 3, 2023 as compared to the same period in the prior year.

SG&A decreased $13 million for the nine months ended November 3, 2023, as compared to the same period in the prior year primarily due to lower indirect costs and intangible asset amortization.

Revenues decreased $181 million for the three months ended May 3, 2024 as compared to the same period in the prior year primarily due to the sale of the Supply Chain Business ($188 million) in the prior year (see Note 4—Divestitures to the condensed consolidated financial statements), and contract completions.

This was partially offset by ramp up in volume on existing and new contracts .

A djusting for the impact of the divestiture, revenues grew 0.4%.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Operating Income.

Operating income as a percentage of revenues for the three months ended November 3, 2023 increased from the comparable prior year period primarily due to improved profitability across our contract portfolio.

Operating income as a percentage of revenues for the three months ended May 3, 2024 decreased from the comparable prior year period primarily due to sale of the Supply Chain Business in the prior year, a gain recognized from the deconsolidation of FSA in the prior year period, and contract completions, partially offset by ramp up in volume on existing and new contracts .

Income Taxes.

Our effective income tax rate was 19.0% and 20.0% for the three months ended May 3, 2024 and May 5, 2023, respectively.

Our effective tax rate for the three months ended May 3, 2024, is lower compared to the effective tax rate from the same period in the prior year primarily due to higher tax benefits from the deduction for foreign-derived intangible income.

Beginning in fiscal 2023, the Tax Cuts and Jobs Act of 2017 eliminated the option to deduct research and development expenditures immediately in the year incurred and requires taxpayers to amortize such expenditures over five years for tax purposes.

While the impact to income taxes payable was most significant in fiscal 2023, this impact will decrease over the five-year amortization period and is anticipated to be immaterial in year six.

The actual impact will depend on the amount of research and development costs incurred by us, whether Congress modifies or repeals this provision and whether new guidance and interpretive rules are issued by the U.S.

Treasury, among other factors.

In December 2021, the Organisation for Economic Co-operation and Development (OECD) enacted model rules for a new 15% global minimum tax framework (“Pillar Two”) which became effective in certain jurisdictions beginning in fiscal 2024.

We do not anticipate Pillar Two to have a significant impact on our effective tax rate or our consolidated results of operations, financial position, and cash flows.

Cash Flows Provided by Operating Activities.

Cash flows provided by operating activities increased $16 million for the three months ended May 3, 2024 as compared to the prior year primarily due to the higher cash provided by the Master Accounts Receivable Purchase Agreement ("MARPA Facility") in the current year (see Note 10—Sales of Receivables to the condensed consolidated financial statements contained within this report for additional information), partially offset by higher incentive-based compensation payments in the current year and other changes in working capital.

Segment and Corporate Results

The primary financial performance measures we use to manage our reportable segments and monitor results of operations are revenues and operating income.

The following tables summarize our results of operations by reportable segment:

Defense and Intelligence

Three Months Ended

change May 5,

(dollars in millions)

Revenues $ 1,436 (10 %) $ 1,597

Operating income $ 107 (14 %) $ 124

As a percentage of revenues 7.5 % 7.8 %

Revenues decreased $161 million for the three months ended May 3, 2024 as compared to the same period in the prior year primarily due to the sale of the Supply Chain Business ($188 million) in the prior year, and contract completions.

This was partially offset by ramp up in volume on existing and new contracts.

A djusting for the impact of the divestiture, revenues grew 1.9%.

Operating Income.

Operating income as a percentage of revenues for the three months ended May 3, 2024 decreased from the comparable prior year period primarily due to the sale of the Supply Chain Business in the prior year.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Operating income as a percentage of revenues increased for the nine months ended November 3, 2023 from the comparable prior year period primarily due to a $233 million gain recognized from the sale of the Supply Chain Business, a $7 million gain recognized from the deconsolidation of FSA, improved profitability across our contract portfolio, lower indirect costs, and lower intangible asset amortization.

Net Cash Provided by Operating Activities.

Net cash provided by operating activities decreased $54 million for the nine months ended November 3, 2023 as compared to the prior year primarily due to higher tax payments in the current year associated with Section 174 of the Internal Revenue Code, tax payments in the current year associated with the sale of the Supply Chain Business and higher cash provided by the MARPA Facility in the prior year, partially offset by timing of vendor payments.

Three Months Ended

change May 5,

(dollars in millions)

Revenues $ 411 (5 %) $ 431

Operating income $ 34 (19 %) $ 42

As a percentage of revenues 8.3 % 9.7 %

Revenues decreased $20 million for the three months ended May 3, 2024 as compared to the same period in the prior year primarily due to reduced volume partially offset by new contracts.

Operating Income.

Operating income as a percentage of revenues for the three months ended May 3, 2024 decreased from the comparable prior year peri od primarily due to reduced volume.

Three Months Ended

change May 5,

(dollars in millions)

Operating loss

$ (10) 11 % $ (9)

Operating Loss.

Operating loss increased $1 million for the three months ended May 3, 2024 as compared to the same period in the pri or year primarily due to the gain recognized from the deconsolidation of FSA in the prior year period, partially offset by lower selling, general and administrative expenses.

Non-GAAP Measures

Earnings before interest, taxes, depreciation and amortization ("EBITDA"), and adjusted EBITDA are non-GAAP financial measures.

While we believe that these non-GAAP financial measures are useful for management and investors in evaluating our financial information, they should be considered as supplemental in nature and not as a substitute for financial information prepared in accordance with GAAP.

While we believe that these non-GAAP financial measures are also useful for management and investors in evaluating our financial information, they should be considered as supplemental in nature and not as a substitute for financial information prepared in accordance with GAAP.

Reconciliations, definitions, and how we believe these measures are useful to management and investors are provided below.

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The performance measure EBITDA is calculated by taking net income and excluding interest and loss on sale of receivables, provision for income taxes, and depreciation and amortization.

Adjusted EBITDA is a performance measure that excludes the impact of non-recurring transactions that we do not consider to be indicative of our ongoing performance.

Adjusted EBITDA is calculated by taking EBITDA and excluding acquisition and integration costs, impairments, restructuring costs, and any other material non-recurring items.

Adjusted EBITDA is a performance measure that excludes costs that we do not consider to be indicative of our ongoing performance.

Adjusted EBITDA is calculated by taking EBITDA and excluding acquisition and integration costs, impairments, restructuring costs, and any other material non-recurring costs.

Integration costs are costs to integrate acquired companies including costs of strategic consulting services, facility consolidation and employee related costs such as retention and severance costs.

The acquisition and integration costs relate to the Company's acquisitions.

We believe that EBITDA and adjusted EBITDA provide management and investors with useful information in assessing trends in our ongoing operating performance and may provide greater visibility in understanding the long-term financial performance of the Company.

The acquisition and integration costs relate to our acquisitions.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

EBITDA and adjusted EBITDA for the periods presented were calculated as follows:

Three Months Ended Nine Months Ended

2023 October 28,

2022 November 3,

2023 October 28,

Three Months Ended

(dollars in millions)

Net income $ 77 $ 98

Interest expense and loss on sale of receivables 33 32 104 91

Interest income (4) (1) (9) (1)

Interest expense, net and loss on sale of receivables

Provision for income taxes 18 25

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Restructuring and impairment costs 2 1

Depreciation included in acquisition and integration costs and restructuring and impairment costs

Recovery of acquisition and integration costs and restructuring and impairment costs (2)

(1) (3) (1) (6)

Gain on divestitures, net of transaction costs — — (240) —

(Gain) loss on divestitures, net of transaction costs

Adjusted EBITDA $ 166 $ 189

Adjusted EBITDA as a percentage of revenues 9.0 % 9.3 %

(1) Adjustment reflects the portion of acquisition and integration costs and restructuring and impairment costs recovered through the Company's indirect rates in accordance with U.S.

(1) Adjustment consists of a reversal of immaterial costs related to the Koverse acquisition.

(2) Adjustment reflects the portion of acquisition and integration costs and restructuring and impairment costs recovered through our indirect rates in accordance with U.S.

government Cost Accounting Standards.

Adjusted EBITDA as a percentage of revenues for the three and nine months ended November 3, 2023 increased to 9.4% from 8.9% and increased to 9.5% from 8.9% for the same periods in the prior year, respectively, primarily due to improved profitability across our contract portfolio and lower indirect costs.

Adjusted EBITDA as a percentage of revenues for the three months ended May 3, 2024 decreased to 9.0% from 9.3% in the prior year period, primarily due to contract completions, partially offset by ramp up in volume on existing and new contracts .

Other Key Performance Measures

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Additionally, we do not include in backlog contract awards that are under protest until the protest is resolved in our favor.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

We segregate our backlog into two categories as follows:

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Funded backlog for contracts with non-government customers represents the estimated value on contracts, which may cover multiple future years, under which we are obligated to perform, less revenues previously recognized on these contracts.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

• Negotiated Unfunded Backlog.

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The estimated value of our total backlog as of the dates presented was:

2023 February 3,

May 3, 2024 February 2, 2024

Defense and Intelligence

(in millions)

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Total backlog $ 19,855 $ 3,709 $ 23,564 $ 19,023 $ 3,740 $ 22,763

We had net bookings worth an estimated $2.5 billion and $5.3 billion during the three and nine months ended November 3, 2023.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

We had net bookings worth an estimated $2.6 billion during the three months ended May 3, 2024.

Contract Types.

Our earnings and profitability may vary materially depending on changes in the proportionate amount of revenues derived from each type of contract.

For a discussion of the types of contracts under which we generate revenues, see “Contract Types” in Part I of the most recently filed Annual Report on Form 10-K.

The following table summarizes revenues by contract type as a percentage of revenues for the periods presented:

Nine Months Ended

2023 October 28,

For a discussion of the types of contracts under which we generate revenues, see “Business - Contract Types” in Part I, Item 1 of the most recently filed Annual Report on Form 10-K.

The following table summarizes revenues by contract type as a percentage of each reportable segment and total SAIC revenues for the periods presented:

Three Months Ended May 3, 2024

Defense and Intelligence

(in millions)

Cost reimbursement 79 % 5 % 62 %

Time and materials ("T&M")

10 % 65 % 23 %

Firm-fixed price ("FFP")

11 % 30 % 15 %

Total 100 % 100 % 100 %

The change in contract mix for the nine months ended November 3, 2023 reflects a decrease in firm-fixed price type contracts due to the divestiture of the Supply Chain Business which historically had a higher proportion of these contracts.

Three Months Ended May 5, 2023

Defense and Intelligence

(in millions)

Cost reimbursement 68 % 5 % 55 %

Time and materials ("T&M")

7 % 59 % 18 %

Firm-fixed price ("FFP")

25 % 36 % 27 %

Total 100 % 100 % 100 %

The change in contract mix for the three months ended May 3, 2024 is primarily due to a decrease in firm-fixed price type contracts due to the divestiture of the Supply Chain Business in the prior year, which historically had a higher proportion of these contracts.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Cost of Revenues Mix.

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Contracts performed with a higher proportion of SAIC labor are generally more profitable.

The following table presents cost mix for the periods presented:

Three Months Ended Nine Months Ended

2023 October 28,

2022 November 3,

2023 October 28,

(as a % of total cost of revenues)

The following table presents cost mix as a percentage of each reportable segment and total SAIC revenues for the periods presented:

Three Months Ended May 3, 2024

Defense and Intelligence

(in millions)

Labor-related cost of revenues 58 % 59 % 58 %

Subcontractor-related cost of revenues 30 % 30 % 30 %

Other materials-related cost of revenues 12 % 11 % 12 %

Total 100 % 100 % 100 %

Three Months Ended May 5, 2023

Defense and Intelligence

(in millions)

Labor-related cost of revenues 50 % 56 % 52 %

Subcontractor-related cost of revenues 28 % 33 % 29 %

Supply chain materials-related cost of revenues 11 % — % 8 %

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Total 100 % 100 % 100 %

The change in cost of revenues mix for the three and nine months ended November 3, 2023 reflects a decrease in supply chain materials-related costs due to the divestiture of the Supply Chain Business.

The change in cost of revenues mix for the three months ended May 3, 2024 is primarily due to a decrease in supply chain materials-related costs due to the divestiture of the Supply Chain Business in the prior year.

Liquidity and Capital Resources

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We consider various financial measures when we develop and update our capital deployment strategy, which include evaluating cash provided by operating activities, free cash flow and financial leverage.

When our cash generation enables us to exceed our target average minimum cash balance, we intend to deploy excess cash through dividends, share repurchases, debt prepayments or strategic acquisitions.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Our ability to fund these needs will depend, in part, on our ability to generate cash in the future, which depends on our future financial results.

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Nevertheless, we believe that our existing cash on hand, generation of future operating cash flows, and access to bank financing and capital markets will provide adequate resources to meet our short-term liquidity and long-term capital needs.

Beginning in fiscal 2023, the Tax Cuts and Jobs Act of 2017 requires the capitalization of research and development costs for tax purposes and requires taxpayers to amortize such expenditures over five years.

We estimate that our income taxes payable for fiscal 2024 will increase by approximately $77 million as a result of this provision, offset by a corresponding deferred tax asset.

The actual impact will depend on the amount of research and development costs incurred by the Company, whether the U.S.

Congress modifies or repeals this provision and whether new guidance and interpretive rules are issued by the U.S.

Treasury, among other factors.

During the first quarter of fiscal 2025, we amended our Credit Facility.

See Note 7—Debt Obligations to the condensed consolidated financial statements contained within this report for additional information.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Historical Cash Flow Trends

The following table summarizes our cash flows:

Nine Months Ended

2023 October 28,

Three Months Ended

(in millions)

Net cash provided by operating activities $ 98 $ 82

Net cash provided by (used in) investing activities 324 (23)

Net cash (used in) provided by investing activities

Net cash used in financing activities (136) (105)

Net increase (decrease) in cash, cash equivalents and restricted cash $ 202 $ (53)

Net (decrease) increase in cash, cash equivalents and restricted cash

Net Cash Provided by Operating Activities.

Refer to “Results of Operations” above for a discussion of the changes in cash provided by operating activities between the nine months ended November 3, 2023 and the comparable prior year period.

Net Cash Provided by (Used in) Investing Activities.

Cash provided by investing activities for the nine months ended November 3, 2023 was $324 million compared to cash used in investing activities of $23 million in the prior year period.

This change is primarily due to the $356 million of cash proceeds for the sale of the Supply Chain Business (see Note 4 to the condensed and consolidated financial statements).

Refer to “Results of Operations” above for a discussion of the changes in cash provided by operating activities between the three months ended May 3, 2024 and the comparable prior year period.

Net Cash (Used in) Provided by Investing Activities.

Cash used investing activities for the three months ended May 3, 2024 was $7 million compared to cash provided by investing activities of $336 million in the prior year period.

This change is primarily due to the $355 million of cash proceeds for the sale of the Supply Chain Business in the prior year period (see Note 4 to the condensed consolidated financial statements).

Net Cash Used in Financing Activities.

Cash used in financing activities for the nine months ended November 3, 2023 increased compared to the prior year period primarily due to higher share repurchases, partially offset by lower term loan principal payments.

Cash used in financing activities for the three months ended May 3, 2024 increased compared to the prior year period primarily due to higher principal payments, net of proceeds received from borrowings and higher share repurchases in the current year.

Critical Accounting Policies and Estimates

There have been no changes to our critical accounting policies and estimates during the nine months ended November 3, 2023 from those disclosed in our most recently filed Annual Report on Form 10-K.

There have been no changes to our critical accounting policies and estimates during the three months ended May 3, 2024 from those disclosed in our most recently filed Annual Report on Form 10-K.

Recently Issued But Not Yet Adopted Accounting Pronouncements

For information on recently issued but not yet adopted accounting pronouncements, see Note 1 to the condensed and consolidated financial statements contained within this report.

For information on recently issued but not yet adopted accounting pronouncements, see Note 1 to the condensed consolidated financial statements contained within this report.

Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to our market risks from those discussed in our most recently filed Annual Report on Form 10-K.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

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 2. Management’s Discussion and Analysis