What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-12-05 compared with 2024-09-05 · 128 added, 94 removed, 241 unchanged (48% of the section changed)

38 unchanged sentences

Economic Opportunities, Challenges, and Risks

During the three and six months ended August 2, 2024, we generated 98% of our revenues from contracts with the U.S.

During the three and nine months ended November 1, 2024, we generated 98% of our revenues from contracts with the U.S.

government, including subcontracts on which we perform.

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government spending and the alignment of our offerings and capabilities with the budget priorities of the U.S.

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

In March 2024, the President signed appropriation measures that provide funding for government fiscal year ("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 September 2024, the President signed a continuing resolution which will fund the U.S.

government under GFY 2024 levels through December 2024.

If Congress is not able to pass appropriations for GFY 2025 funding by December 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 addition, if full-year appropriations are not signed into law by April 30, 2025, a 1% sequestration would be applied to all agencies.

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

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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."

Department of the Treasury will return to operating under "extraordinary measures." Congressional debt limit brinksmanship can lead to negative impacts on our business, and any agreement to raise the ceiling that significantly reduces future funding could affect our addressable market in subsequent years.

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

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In doing so, we leverage our expertise and scale to help them execute their mission.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

We succeed as a business based on the solutions we deliver, our past performance, and our ability to compete on price.

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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

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

managed services in a more commercial business model are expected to allow us to compete effectively on price in an evolving environment.

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.

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.

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Throughout each contract's life cycle, program managers review performance and update contract performance estimates to reflect their understanding of the best information available.

We evaluate our results of operations by considering the drivers causing changes in revenues, operating income and operating cash flows.

We evaluate our results of operations by considering the drivers causing changes in revenues, operating income, adjusted operating income (1) , adjusted EBITDA (1) , and operating cash flows.

Given that revenues fluctuate on our contract portfolio over time due to contract awards and completions, changes in customer requirements, and increases or decreases in ordering volume of materials, we evaluate significant trends and fluctuations resulting from these factors.

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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.

(1) Non-GAAP measure, see "Non-GAAP Measures" section below for additional information about this measure.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

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

The following table summarizes our condensed consolidated results of operations:

Three Months Ended Six Months Ended

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2023 August 2,

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Three Months Ended Nine Months Ended

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2023 November 1,

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(dollars in millions)

$ 1,818 2 % $ 1,784 $ 3,665 (4 %) $ 3,812

Revenues $ 1,976 4 % $ 1,895 $ 5,641 (1 %) $ 5,707

Cost of revenues 1,739 4 % 1,666 4,981 (1 %) 5,027

1,608 3 % 1,568 3,242 (4 %) 3,361

As a percentage of revenues 88.0 % 87.9 % 88.3 % 88.1 %

88.4 % 87.9 % 88.5 % 88.2 %

Selling, general and administrative expenses

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Operating income 160 12 % 143 425 (36 %) 662

134 (63 %) 362 265 (49 %) 519

As a percentage of revenues 8.1 % 7.5 % 7.5 % 11.6 %

7.4 % 20.3 % 7.2 % 13.6 %

Provision for income taxes (20) (5 %) (21) (57) (57 %) (134)

$ 106 14 % $ 93 $ 264 (40 %) $ 438

Revenues increased $34 million for the three months ended August 2, 2024 as compared to the same period in the prior year primarily due to ramp up in volume on existing and new contracts, partially offset by contract completions.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Revenues decreased $147 million for the six months ended August 2, 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.

Revenues increased $81 million for the three months ended November 1, 2024 as compared to the same period in the prior year primarily due to ramp up in volume on existing and new contracts, partially offset by contract completions.

Revenues decreased $66 million for the nine months ended November 1, 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), and contract completions.

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

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Operating Income.

Operating income as a percentage of revenues for the three months ended August 2, 2024 decreased from the comparable prior year period prim arily due to the gain on the sale of the Supply Chain Business ($234 million) in the prior year period, and contract completions, partially offset by ramp up in volume on existing and new contracts.

Operating income as a percentage of revenues for the six months ended August 2, 2024 decreased from the comparable prior year period primarily due to the gain on the sale of the Supply Chain Business ($233 million) in the prior year, a gain recognized from the deconsolidation of FSA ($7 million), and contract completions, partially offset by ramp up in volume on existing and new contracts.

Operating income as a percentage of revenues for the three months ended November 1, 2024 increased from the comparable prior year period primarily due to ramp up in volume on existing and new contracts, and the resolution of the Assault Amphibious Vehicle ("AAV") contract termination (see Note 12—Legal Proceedings and Other Commitments and Contingencies for additional information), partially offset by contract completions.

Operating income as a percentage of revenues for the nine months ended November 1, 2024 decreased from the comparable prior year period primarily due to the prior year gains on the sale of the Supply Chain Business ($233 million) and deconsolidation of FSA ($7 million), and contract completions, partially offset by ramp up in volume on existing and new contracts.

Income Taxes.

Our effective income tax rate was 19.6% and 19.3% for the three and six months ended August 2, 2024, respectively, and 26.4% and 24.7% for the three and six months ended August 4, 2023, respectively.

Our effective income tax rate was 15.6% and 17.8% for the three and nine months ended November 1, 2024, respectively, and 18.0% and 23.4% for the three and nine months ended November 3, 2023, respectively.

Our effective tax rate differs from the statutory tax rate primarily due to the deduction for foreign derived intangible income, research and development tax credits, and stock-based compensation windfalls.

Our effective tax rate for the three and six months ended August 2, 2024 decreased compared to the same periods in the previous year due to the non-recurrence of a gain from the disposition of the Supply Chain Business and the associated non-deductible goodwill.

The effective tax rate in the prior year further differed from the statutory tax rate due to a gain from the disposition of the Supply Chain Business and the associated non-deductible goodwill.

Our effective tax rate for the three and nine months ended November 1, 2024 decreased compared to the same periods in the prior year due to the non-recurrence of a gain from the disposition of the Supply Chain Business and the associated non-deductible goodwill.

In addition, the effective tax rates for the three and nine months ended November 1, 2024 benefited from the release of certain state liabilities for uncertain tax positions.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

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.

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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 primary financial performance measures we use to manage our reportable segments and monitor results of operations are revenues and adjusted operating income (1) .

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

Defense and Intelligence Three Months Ended Six Months Ended

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2023 August 2,

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Defense and Intelligence Three Months Ended Nine Months Ended

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2023 November 1,

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(dollars in millions)

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As a percentage of revenues 8.6 % 7.2 % 7.9 % 7.5 %

Revenues increased $26 million for the three months ended August 2, 2024 as compared to the same period in the prior year primarily due to ramp up in volume on existing and new contracts, partially offset by contract completions.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Revenues decreased $135 million for the six months ended August 2, 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.

Depreciation of property, plant and equipment

1 — % 1 1 — % 1

Amortization of intangible assets

17 6 % 16 51 2 % 50

Adjusted operating income (1)

$ 148 20 % $ 123 $ 396 2 % $ 387

As a percentage of revenues 9.8 % 8.3 % 9.1 % 8.7 %

(1) Non-GAAP measure, see "Non-GAAP Measures" section below for additional information about this measure.

Revenues increased $36 million for the three months ended November 1, 2024 as compared to the same period in the prior year primarily due to ramp up in volume on existing and new contracts, partially offset by contract completions.

Revenues decreased $99 million for the nine months ended November 1, 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.

Adjusting for the impact of the divestiture, revenues grew 2.1%.

Operating Income:

Operating income as a percentage of revenues for the three months ended August 2, 2024 was comparable to the prior year period, primarily due to ramp up in volume on existing and new contracts, offset by contract completions.

Operating income as a percentage of revenues for the six months ended August 2, 2024 decreased from the comparable prior year period primarily due to contract completions and the sale of the Supply Chain Business in the prior year, partially offset by ramp up in volume on existing and new contracts.

Three Months Ended Six Months Ended

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2023 August 2,

change August 4,

Operating and adjusted operating income:

Operating and adjusted operating income as a percentage of revenues for the three months ended November 1, 2024 increased from the comparable prior year period primarily due to ramp up in volume on existing and new contracts, and the resolution of the AAV contract termination, partially offset by contract completions.

Operating and adjusted operating income as a percentage of revenues for the nine months ended November 1, 2024 increased from the comparable prior year period primarily due to ramp up in volume on existing and new contracts, and the resolution of the AAV contract termination, partially offset by contract completions and the gain on the sale of the Supply Chain Business in the prior year.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Three Months Ended Nine Months Ended

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2023 November 1,

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(dollars in millions)

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As a percentage of revenues 8.0 % 13.0 % 8.2 % 11.2 %

Revenues increased $8 million for the three months ended August 2, 2024 as compared to the same period in the prior year primarily due to ramp up in volume on existing contracts.

Revenues decreased $12 million for the six months ended August 2, 2024 as compared to the same period in the prior year primarily due to reduced volume on existing contracts, partially offset by new contracts.

Operating Income:

Operating income as a percentage of revenues for the three months ended August 2, 2024 decreased from the comparable prior year period partially due to timing and volume mix.

Operating income as a percentage of revenues for the six months ended August 2, 2024 decreased from the comparable prior year primarily due to reduced volume on existing contracts.

Three Months Ended Six Months Ended

change August 4,

2023 August 2,

change August 4,

Amortization of intangible assets 12 — % 12 36 — % 36

Adjusted operating income (1)

$ 49 (26 %) $ 66 $ 141 (19 %) $ 175

As a percentage of revenues 10.6 % 15.9 % 11.1 % 14.1 %

(1) Non-GAAP measure, see "Non-GAAP Measures" section below for additional information about this measure.

Revenues increased $45 million for the three months ended November 1, 2024 as compared to the same period in the prior year primarily due to ramp up in volume on existing contracts.

Revenues increased $33 million for the nine months ended November 1, 2024 as compared to the same period in the prior year primarily due to ramp up in volume on existing and new contracts, partially offset by contract completions.

Operating and adjusted operating income:

Operating and adjusted operating income as a percentage of revenues for the three months ended November 1, 2024 decreased from the comparable prior year period due to timing and volume mix.

Operating and adjusted operating income as a percentage of revenues for the nine months ended November 1, 2024 decreased from the comparable prior year primarily due to timing and reduced volume on existing contracts.

Three Months Ended Nine Months Ended

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2023 November 1,

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(dollars in millions)

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$ (7) (59 %) $ (17) $ (24) 113 % $ 187

Operating (Loss) Income:

Operating loss increased $220 million for the three months ended August 2, 2024 as compared to the same period in the prior year primarily due to the gain recognized from the divestiture of the Supply Chain Business in the prior year period ($234 million), partially offset by lower selling, general and administrative expenses.

Operating loss increased $221 million for the six months ended August 2, 2024 as compared to the same period in the prior year primarily due to the divestiture of the Supply Chain Business in the prior year ($233 million) and the gain recognized from the deconsolidation of FSA ($7 million), partially offset by lower selling, general and administrative expenses.

Depreciation of property, plant, and equipment 5 — % 5 16 (11 %) 18

Acquisition and integration costs (1)

— — % — (2) (300 %) 1

Restructuring and impairment costs — (100 %) 2 4 (50 %) 8

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

— (100 %) (1) (2) 100 % (1)

(Gain) loss on divestitures, net of transaction costs — — % — — (100 %) (240)

Adjusted operating loss (3)

$ (2) (82 %) $ (11) $ (8) (70 %) $ (27)

(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.

(3) Non-GAAP measure, see "Non-GAAP Measures" section below for additional information about this measure.

Operating and adjusted operating (loss) income:

Operating and adjusted operating loss decreased $10 million and $9 million, respectively, for the three months ended November 1, 2024 as compared to the same period in the prior year primarily due to lower selling, general and administrative expenses and a gain on sale of an equity method investment.

Operating loss increased $211 million for the nine months ended November 1, 2024 as compared to the same period in the prior year primarily due to the gain on the sale of the Supply Chain Business in the prior year ($233 million) and the gain recognized from the deconsolidation of FSA ($7 million), partially offset by lower selling, general and administrative expenses in the current year.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Adjusted operating income decreased $19 million for the nine months ended November 1, 2024 as compared to the same period in the prior year primarily due to lower selling, general and administrative expenses in the current year.

Non-GAAP Measures

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

Adjusted operating income, 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 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.

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Other companies may define similar measures differently.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Adjusted operating income.

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

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

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

The restructuring and impairment costs represent the reorganization and facilities optimization costs or impairments of long-lived assets.

The recovery of acquisition and integration costs and restructuring and impairment costs relate to costs recovered through the Company's indirect rates in accordance with Cost Accounting Standards.

Depreciation of property, plant, and equipment relates to property, plant, and equipment specifically identifiable for each segment.

Adjusted operating income also excludes amortization of intangible assets because we do not have a history of significant acquisition activity, we do not acquire businesses on a predictable cycle, and the amount of an acquisition's purchase price allocated to intangible assets and the related amortization term are unique to each acquisition.

We believe that these performance measures 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.

EBITDA and Adjusted EBITDA.

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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 our long-term financial performance.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

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

Three Months Ended Six Months Ended

2024 August 4,

2023 August 2,

2024 August 4,

Three Months Ended Nine Months Ended

2024 November 3,

2023 November 1,

2024 November 3,

(dollars in millions)

$ 81 $ 247 $ 158 $ 345

Net income $ 106 $ 93 $ 264 $ 438

Interest expense, net and loss on sale of receivables

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Depreciation and amortization 35 34 104 106

169 402 336 596

EBITDA 197 177 533 773

EBITDA as a percentage of revenues 10.0 % 9.3 % 9.4 % 13.5 %

9.3 % 22.5 % 9.2 % 15.6 %

Acquisition and integration costs (1)

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

(Gain) loss on divestitures, net of transaction costs

— (1) (2) (1)

(Gain) loss on divestitures, net of transaction costs

Adjusted EBITDA $ 197 $ 178 $ 533 $ 541

$ 170 $ 174 $ 336 $ 363

Adjusted EBITDA as a percentage of revenues 10.0 % 9.4 % 9.4 % 9.5 %

9.4 % 9.8 % 9.2 % 9.5 %

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

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government Cost Accounting Standards.

Adjusted EBITDA as a percentage of revenues for the three and six months ended August 2, 2024 decreased compared to the same periods in the prior year primarily due to contract completions, partially offset by ramp up in volume on existing and new contracts.

Adjusted EBITDA as a percentage of revenues for the three months ended November 1, 2024 increased compared to the same periods in the prior year primarily due to the resolution of the AAV contract termination, and ramp up in volume on existing and new contracts, partially offset by contract completions.

Adjusted EBITDA as a percentage of revenues for the nine months ended November 1, 2024 decreased compared to the same periods in the prior year primarily due to contract completions, partially offset by the resolution of the AAV contract termination, and ramp up in volume on existing and new contracts.

Other Key Performance Measures

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We calculate net bookings as the period’s ending backlog plus the period’s revenues less the prior period’s ending backlog and initial backlog obtained through acquisitions.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Backlog represents the estimated amount of future revenues to be recognized under negotiated contracts as work is performed.

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

August 2, 2024 February 2, 2024

November 1, 2024 February 2, 2024

Defense and Intelligence

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Funded backlog $ 3,489 $ 977 $ 4,466 $ 2,707 $ 832 $ 3,539

$ 3,411 $ 826 $ 4,237 $ 2,707 $ 832 $ 3,539

Negotiated unfunded backlog 14,822 3,099 17,921 16,316 2,908 19,224

15,819 2,843 18,662 16,316 2,908 19,224

Total backlog $ 18,311 $ 4,076 $ 22,387 $ 19,023 $ 3,740 $ 22,763

$ 19,230 $ 3,669 $ 22,899 $ 19,023 $ 3,740 $ 22,763

We had net bookings worth an estimated $1.2 billion and $3.8 billion during the three and six months ended August 2, 2024.

We had net bookings worth an estimated $1.5 billion and $5.3 billion during the three and nine months ended November 1, 2024, respectively.

Contract Types.

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

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Three Months Ended

August 2, 2024

August 4, 2023

November 1, 2024

November 3, 2023

Defense and Intelligence

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Total 100 % 100 % 100 % 100 % 100 % 100 %

Six Months Ended

August 2, 2024

August 4, 2023

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Nine Months Ended

November 1, 2024

November 3, 2023

Defense and Intelligence

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Total 100 % 100 % 100 % 100 % 100 % 100 %

The change in contract mix for the six months ended August 2, 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.

The change in contract mix for the nine months ended November 1, 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.

Cost of Revenues Mix.

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Three Months Ended

August 2, 2024

August 4, 2023

November 1, 2024

November 3, 2023

Defense and Intelligence

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Total 100 % 100 % 100 % 100 % 100 % 100 %

Six Months Ended

August 2, 2024

August 4, 2023

Nine Months Ended

November 1, 2024

November 3, 2023

Defense and Intelligence

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Total 100 % 100 % 100 % 100 % 100 % 100 %

The change in cost of revenues mix for the six months ended August 2, 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.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

The change in cost of revenues mix for the nine months ended November 1, 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.

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.

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

During the first and third quarters 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.

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The following table summarizes our cash flows:

Six Months Ended

2024 August 4,

Nine Months Ended

2024 November 3,

(in millions)

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Net Cash Provided by Operating Activities.

Cash flows provided by operating activities increased $4 million for the six months ended August 2, 2024 as compared to the prior year primarily due to timing of customer collections and vendor payments, lower tax payments in the current year, and other net favorable changes in working capital, partially offset by higher incentive-based compensation payments and higher cash used from 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).

Cash flows provided by operating activities increased $46 million for the nine months ended November 1, 2024 as compared to the prior year primarily due to 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), and lower tax payments in the current year, partially offset by timing of customer collections and vendor payments, higher incentive-based compensation payments in the current year, and other changes in working capital.

Net Cash (Used in) Provided by Investing Activities.

Cash used in investing activities for the six months ended August 2, 2024 was $16 million compared to cash provided by investing activities of $334 million in the prior year period.

Cash used in investing activities for the nine months ended November 1, 2024 was $15 million compared to cash provided by investing activities of $324 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 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 six months ended August 2, 2024 decreased compared to the prior year period primarily due to higher proceeds received from borrowings, net of principal payments, partially offset by higher share repurchases in the current year.

Cash used in financing activities for the nine months ended November 1, 2024 decreased compared to the prior year period primarily due to higher proceeds received from borrowings, net of principal payments, partially offset by 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 six months ended August 2, 2024 from those disclosed in our most recently filed Annual Report on Form 10-K.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

There have been no changes to our critical accounting policies and estimates during the nine months ended November 1, 2024 from those disclosed in our most recently filed Annual Report on Form 10-K.

Recently Issued But Not Yet Adopted Accounting Pronouncements

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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