What changed in this filing

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Item 9A. Controls and Procedures

2025-03-17 compared with 2024-03-20 · 499 added, 385 removed, 1263 unchanged (41% of the section changed)

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Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer (our Chief Executive Officer) and principal financial officer (our Chief Financial Officer), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of February 2, 2024, and our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.

Our management, with the participation of our principal executive officer (our Chief Executive Officer) and principal financial officer (our Chief Financial Officer), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of January 31, 2025, and our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.

These disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

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Our management is responsible for establishing and maintaining adequate internal control over financial reporting.

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, completely, accurately and fairly reflect the transactions and dispositions of our assets;

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Internal control over financial reporting includes the controls themselves, monitoring and internal auditing practices and actions taken to correct deficiencies as identified.

Our management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our internal control over financial reporting as of February 2, 2024 based on the framework established in the 2013 Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Our management has assessed in its evaluation the effectiveness of our internal control over financial reporting as of February 2, 2024 and has concluded that our internal control over financial reporting was effective.

Our management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our internal control over financial reporting as of January 31, 2025 based on the framework established in the 2013 Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Our management has assessed in its evaluation the effectiveness of our internal control over financial reporting as of January 31, 2025 and has concluded that our internal control over financial reporting was effective.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Ernst & Young LLP, an independent registered public accounting firm, audited our consolidated financial statements included in this report and our internal control over financial reporting, and the firm’s report on our internal control over financial reporting are set forth below this report.

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Opinion on Internal Control Over Financial Reporting

We have audited Science Applications International Corporation's internal control over financial reporting as of February 2, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Science Applications International Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of February 2, 2024, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of February 2, 2024 and February 3, 2023, the related consolidated statements of income, comprehensive income, equity and cash flows for each of the three years in the period ended February 2, 2024, and the related notes and our report dated March 20, 2024 expressed an unqualified opinion thereon.

We have audited Science Applications International Corporation's internal control over financial reporting as of January 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of January 31, 2025 and February 2, 2024, the related consolidated statements of income, comprehensive income, equity and cash flows for each of the three years in the period ended January 31, 2025, and the related notes and our report dated March 17, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

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Other Information

During the three months ended February 2, 2024, neither the Company nor any director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement," as such terms are defined in Item 408 of Regulation S-K.

During the three months ended January 31, 2025, neither the Company nor any director or officer of the Company adopted, modified or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement," as such terms are defined in Item 408 of Regulation S-K.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

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Townes-Whitley served as President of U.S.

Regulated Industries at Microsoft from July 2018 to October 2022 and Corporate Vice President of Industry from March 2015 to July 2018.

Before joining Microsoft, she served as President of CGI Federal from May 2010 to March 2015 and Senior Vice President from 2011 through 2014.

Previously, she held several management roles at Unisys Corporation leading global and commercial-sector system integration and the Federal Civilian group.

Regulated Industries at Microsoft from July 2018 to September 2021 and as Corporate Vice President of Industry from March 2015 to July 2018.

Before joining Microsoft, she served as President of CGI Federal from 2011 to 2015 and as Vice President, Core Agencies from 2010 until 2011.

Previously, she held several management roles with Unisys Corporation, leading global and commercial-sector system integration and the Federal Civilian group, as well as with Arthur Andersen LLP, a former accounting firm.

Hageman 56 Executive Vice President, General Counsel and Corporate Secretary since July 2022.

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Natarajan has held positions at The AES Corporation and PricewaterhouseCoopers LLP.

O'Hara 48 Executive Vice President and Chief Human Resources Officer since October 2019.

Prior to this role, Ms.

O’Hara served as Senior Vice President for Human Resources, after serving as head of talent strategy, total rewards, learning and development, diversity, executive compensation, and talent acquisition.

Before joining SAIC, Ms.

O’Hara served in senior leadership roles at global professional services and technology companies including BearingPoint, Perot Systems Corporation and Booz Allen Hamilton.

Srinivas Attili

47 Executive Vice President of the Civilian Business Group since May 2024.

Attili joined SAIC from McKinsey & Company, where he served as a partner from March 2021 to May 2024 and led digital transformation initiatives for healthcare organizations.

Prior to McKinsey, Mr.

Attili was a principal at Deloitte from July 2017 to February 2021, was at IBM for over 14 years from October 2002 to June 2017, and served as a consultant at PwC from November 2000 to October 2002.

Attili received an MBA from the University of Maryland, College Park, a Master of Science in computer science from the New Jersey Institute of Technology and a Bachelor of Engineering in computer technology from Nagpur University.

66 Executive Vice President of the Air Force and Combatant Commands Business Group since February 2024.

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The information on our website is not incorporated by reference into and is not a part of this report.

We have adopted an insider trading policy that governs the purchase, sale, and/or other transactions of our securities by our directors, officers and employees.

A copy of our insider trading policy is filed as Exhibit 19 to this report.

The Company complies with the federal securities laws and the applicable exchange listing requirements, including those that govern trading by a company in its own securities.

Executive Compensation

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For information required by Item 12 with respect to the security ownership of certain beneficial owners and management, see the information set forth under the caption “Other Information” in the 2025 Definitive Proxy Statement, which information is incorporated by reference into this report.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

We currently maintain three shareholder-approved equity compensation plans that issue stock-based awards including the 2023 Equity Incentive Plan ("2023 EIP"), the Management Stock Compensation Plan, and the Amended and Restated 2013 Employee Stock Purchase Plan ("ESPP").

For summaries of these plans, see Note 8—Stock-Based Compensation to the consolidated financial statements contained within this report.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

The following table provides the number of shares of our common stock to be issued, the weighted-average exercise price of the outstanding stock options and the number of shares remaining for future award grants as of February 2, 2024:

Equity Compensation Plan Information

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Financial statement schedules are omitted because they are not applicable or the required information is shown in our consolidated financial statements or the notes thereto.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Description of Exhibit

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Amended and Restated Bylaws.

Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K as filed with the SEC on March 29, 2023.

Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K as filed with the SEC on September 5, 2024.

Description of Securities.

Incorporated by reference to Exhibit 4.1 to the Company's Annual Report on Form 10-K as filed with the SEC on March 20 , 202 4 .

Indenture, dated March 13, 2020, by and among Science Applications International Corporation, the guarantors party thereto and U.S.

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Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 16, 2020.

Seventh Amendment to the Third Amended and Restated Credit Agreement, dated October 18, 2024, by and among SAIC, Citibank N.A., as administrative agent and collateral agent, and certain other lenders and parties thereto.

Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on October 22, 2024.

Sixth Amendment to the Third Amended and Restated Credit Agreement, dated February 8, 2024, by and among SAIC, Citibank N.A., as administrative agent and collateral agent, and certain other lenders and parties thereto.

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Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on June 30, 2022.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Description of Exhibit

Fourth Amendment to the Third Amended and Restated Credit Agreement, dated July 2, 2021, by and among SAIC, Citibank N.A., as administrative agent and collateral agent, and certain other lenders and parties thereto.

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Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 24, 2020.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Description of Exhibit

Second Amendment, dated March 13, 2020, to the Third Amended and Restated Credit Agreement, dated October 31, 2018 by and among Science Applications International Corporation, Citibank, N.A., as administrative agent and collateral agent, and certain other agents and lenders party thereto.

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Incorporated by reference to Exhibit 4.5 to the Company’s Registration Statement on Form S-8 as filed with the SEC on September 27, 2013.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Description of Exhibit

Science Applications International Corporation 401(k) Excess Deferral Plan, effective September 27, 2013.

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Incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A as filed with the SEC on April 24, 2014.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Description of Exhibit

Form of Restricted Stock Unit Award Agreement of the Science Applications International Corporation 2013 Equity Incentive Plan.

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Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on May 18, 2023.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Description of Exhibit

Science Applications International Corporation 2023 Equity Incentive Plan, effective June 7, 2023.

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333-272484) as filed with the Securities and Exchange Commission (SEC) on June 7, 2023.

First Amendment to the Science Applications International Corporation 2023 Equity Incentive Plan, effective March 5, 2024, incorporated by reference as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q as filed with the SEC on June 3, 2024.

Form of Restricted Stock Unit Award Agreement of the Science Applications International Corporation 2023 Equity Incentive Plan.

Incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the SEC on June 13, 2023.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Description of Exhibit

Form of Performance Stock Unit Award Agreement of the Science Applications International Corporation 2023 Equity Incentive Plan.

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Incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed with the SEC on June 13, 2023.

First Amendment to the Science Applications International Corporation Amended and Restated 2013 Employee Stock Purchase Plan, effective March 5, 2024 , incorporated by reference as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q as filed with the SEC on June 3, 2024.

Insider Trading Policies and Procedures.

Subsidiaries of Registrant.

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Policy Relating to Recovery of Erroneously Awarded Compensation .

Incorporated by reference to Exhibit 97 to the Company's Annual Report on Form 10-K as filed with the SEC on March 20, 2024.

101 Interactive Data File.

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Morea Chair of the Board March 17, 2025

Director March 20, 2024

Graham Director March 17, 2025

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Shane Director March 17, 2025

Director March 17, 2025

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

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Note 3—Revenues

Note 4—Acquisitions

Note 4—Divestitures

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Note 14—Sale of Receivables

Note 1 6 —Leases

Note 15—Operating Leases

Note 16—Business Segment Information

Note 17—Legal Proceedings and Commitments and Contingencies

Note 19—Subsequent Events

Financial statement schedules are omitted because they are not applicable or the required information is shown in our consolidated financial statements or the notes thereto.

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Science Applications International Corporation (the Company) as of February 2, 2024 and February 3, 2023, the related consolidated statements of income, comprehensive income, equity and cash flows for each of the three years in the period ended February 2, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at February 2, 2024 and February 3, 2023, and the results of its operations and its cash flows for each of the three years in the period ended February 2, 2024, in conformity with U.S.

We have audited the accompanying consolidated balance sheets of Science Applications International Corporation (the Company) as of January 31, 2025 and February 2, 2024, the related consolidated statements of income, comprehensive income, equity and cash flows for each of the three years in the period ended January 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at January 31, 2025 and February 2, 2024, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2025, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of February 2, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 20, 2024 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of January 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 17, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

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SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Revenue recognition based on certain contracts using a cost input measure of progress

Description of the Matter The Company recognizes a portion of its revenues using a cost input (cost-to-cost) measure of progress.

Cost estimation for revenue recognition on certain contracts using a cost input measure of progress

Description of the Matter

The Company recognizes a portion of its revenues using a cost input measure of progress (cost-to-cost).

Under the cost-to-cost measure of progress, revenue is recognized based on the ratio of costs incurred to the total estimated costs at completion.

As described in Note 1 to the consolidated financial statements, recognizing revenue on long-term contracts involves significant judgments and estimates.

As described in Note 1 to the consolidated financial statements, recognizing revenue on long-term contracts involves significant estimates and judgments.

Estimating costs at completion for certain contracts is complex due to the nature of the services being performed and the length of the contracts.

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Management estimates total costs at completion by making assumptions regarding the complexity of the work to be performed, the schedule and associated tasks, labor productivity and availability, increases in wages and prices of materials, execution by subcontractors, overhead cost rates, and other variables.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s recognition of revenue using the cost input measure of progress.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s recognition of revenue using the cost input measure of progress.

For example, we tested controls over the significant assumptions applied in determining the estimation of costs to be incurred on the contract and controls evaluating the appropriateness of changes in estimated costs to complete throughout the contract’s period of performance.

We also tested internal controls that management executes to validate the data used in determining this revenue was complete and accurate.

To test the accuracy of the Company’s estimated costs at completion, our audit procedures included, among others, comparing estimates of labor costs, subcontractor costs, and materials to actual costs incurred to date, comparing estimated margins to margins on similar contracts, and agreeing the key terms to contract documentation and prior management estimates.

Our audit procedures also included, among others, evaluating the nature, timing and extent of the amounts of revenue and costs recorded to date, including any changes in estimated costs at completion from the prior period.

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SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Certain unrecognized tax benefits that, if recognized, would affect the effective income tax rate

Description of the Matter As discussed in Notes 1 and 11 to the consolidated financial statements, the Company files income tax returns in the U.S.

Federal jurisdiction and various state jurisdictions.

Certain unrecognized tax benefits that, if recognized, would materially affect the effective income tax rate

Description of the Matter

As described in Notes 1 and 10 to the consolidated financial statements, the Company files income tax returns in the U.S.

and in various foreign jurisdictions.

The Company recognizes liabilities for uncertainty in income taxes when it is more likely than not that a tax position will not be sustained on examination and settlement with various taxing authorities.

Auditing these liabilities associated with unrecognized tax benefits that, if recognized, would affect the effective income tax rate was challenging due to the significant judgment in applying the relevant tax laws and inherent uncertainty involved in predicting the ultimate resolution of such matters with the taxing authority.

Changes to the liability resulting from ongoing or future audits by the taxing authorities could have a material effect on the Company’s results of operations.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process of accounting for income taxes, including unrecognized tax benefits.

For example, we tested management’s controls over the review of tax positions taken by the Company to determine whether the positions met the threshold for recognition within the consolidated financial statements, as well as determination of the measurement of the unrecognized tax liability.

To test the recognition of the Company’s unrecognized tax benefits that, if recognized, would affect the effective tax rate and measurement of these unrecognized tax benefits, we involved tax professionals with specialized skills and knowledge to assess the technical merits of the Company’s material tax positions.

We performed audit procedures that included, among others, evaluating communications with relevant taxing authorities, evaluating whether management appropriately considered new information that could significantly change the recognition, measurement, or disclosure of these unrecognized tax benefits, and testing the assumptions used by management in estimating the valuation of any associated liability.

Auditing these liabilities associated with unrecognized tax benefits that, if recognized, would affect the effective income tax rate was complex due to the significant judgment in applying the relevant tax laws and inherent uncertainty involved in predicting the ultimate resolution of such matters with the taxing authority.

Changes to these liabilities resulting from ongoing or future audits by the taxing authorities could have a material effect on the Company’s results of operations.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process of accounting for income taxes, including unrecognized tax benefits.

For example, we tested the Company’s controls over management’s review of tax positions taken by the Company to determine whether the positions met the threshold for recognition within the consolidated financial statements, as well as determination of the measurement of the liabilities for unrecognized tax benefits.

To test the recognition of the Company’s unrecognized tax benefits that, if recognized, would materially affect the effective tax rate and measurement of these unrecognized tax benefits, we involved tax professionals with specialized skills and knowledge to assess the technical merits of the Company’s material tax positions.

/s/ Ernst & Young LLP

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2025 February 2,

2023 January 28,

2024 February 3,

(in millions, except per share amounts)

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Selling, general and administrative expenses 339 373 374

Acquisition and integration costs 1 13 56

Gain on divestitures, net of transaction costs

(Gain) loss on divestitures, net of transaction costs

Other operating (income) expense

( 10 ) ( 2 ) 13

Other operating income ( 3 ) — ( 1 )

Operating income 563 741 501

Interest expense, net

Other expense (income), net

Other (income) expense, net

Income before income taxes 428 620 375

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

February 2, 2024 February 3, 2023 January 28, 2022

January 31, 2025 February 2, 2024 February 3, 2023

(in millions)

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Receivables, net 1,000 914

Inventories, net 3 71

Prepaid expenses 78 93

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Operating lease right of use assets 164 152

Deferred income taxes

Other assets 194 195

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Other accrued liabilities 113 144

Long-term debt, current portion 77 31

Debt, current portion 313 77

Total current liabilities 1,396 1,158

Long-term debt, net of current portion 2,022 2,343

Debt, net of current portion 1,907 2,022

Operating lease liabilities 173 147

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Commitments and contingencies (Note 17)

Common stock, $ 0.0001 par value, 1 billion shares authorized, 52 million shares and 54 million shares issued and outstanding as of February 2, 2024 and February 3, 2023, respectively

Common stock, $ 0.0001 par value, 1 billion shares authorized, 48 million shares and 52 million shares issued and outstanding as of January 31, 2025 and February 2, 2024, respectively

Additional paid-in capital — 337

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Accumulated other comprehensive income 12 16

Total common stockholders' equity 1,785 1,694

Non-controlling interest — 10

Total stockholders' equity 1,577 1,785

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Distributions to non-controlling interest — — — — ( 3 ) ( 3 )

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

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

Net income — — 477 — — 477

Issuances of stock 1 18 — — — 18

Other comprehensive income, net of tax — — — 59 — 59

Other comprehensive loss, net of tax

— — — ( 6 ) — ( 6 )

Dividends of $ 1.48 per share

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Repurchases of stock ( 3 ) ( 363 ) — — — ( 363 )

Distributions to non-controlling interest — — — — ( 3 ) ( 3 )

Deconsolidation of non-controlling interest

— — — — ( 10 ) ( 10 )

Balance at February 2, 2024 52 337 1,432 16 — 1,785

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Repurchases of stock ( 4 ) ( 379 ) ( 154 ) — — ( 533 )

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

Balance at February 2, 2024 52 $ 337 $ 1,432 $ 16 $ — $ 1,785

Balance at January 31, 2025 48 $ — $ 1,565 $ 12 $ — $ 1,577

(1) In fiscal 2025, fiscal 2024 and fiscal 2023, the shares withheld for taxes related to stock-based compensation arrangements amounted to $ 31 million, $ 23 million, and $ 19 million, respectively.

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2025 February 2,

2023 January 28,

2024 February 3,

(in millions)

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Depreciation and amortization 140 142 157

Amortization of off-market customer contracts ( 5 ) ( 14 ) ( 33 )

Amortization of debt issuance costs 7 9 7

Deferred income taxes ( 3 ) ( 17 ) ( 17 )

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Gain on divestitures — ( 247 ) —

Impairment of assets — 4 18

( 7 ) ( 6 ) ( 1 )

Increase (decrease) resulting from changes in operating assets and liabilities, net of the effect of the acquisitions and divestitures:

Receivables ( 86 ) ( 46 ) 79

Inventory, prepaid expenses, and other current assets ( 43 ) ( 10 ) 14

Prepaid expenses and other current assets

24 ( 43 ) ( 10 )

Other assets 1 ( 14 ) 6

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Sales of marketable securities 12 6 4

Cash paid for acquisitions, net of cash acquired — — ( 255 )

Proceeds from sale of equity method investments

Proceeds from divestitures — 356 —

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Other ( 7 ) ( 5 ) ( 8 )

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

( 35 ) 314 ( 36 )

Cash flows from financing activities:

Dividend payments to stockholders ( 79 ) ( 83 ) ( 86 )

Principal payments on borrowings ( 1,381 ) ( 441 ) ( 990 )

Issuances of stock 17 16 16

Stock repurchased and retired or withheld for taxes on equity awards ( 382 ) ( 267 ) ( 226 )

Proceeds from borrowings 1,499 160 840

Stock repurchased and retired or withheld for taxes on equity awards ( 558 ) ( 382 ) ( 267 )

Dividend payments to stockholders ( 75 ) ( 79 ) ( 83 )

Issuances of stock 20 17 16

Debt issuance costs — — ( 6 )

Distributions to non-controlling interest — ( 3 ) ( 2 )

( 3 ) — ( 3 )

Net cash used in financing activities

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Cash paid for income taxes $ 66 $ 165 $ 70

Non-cash investing and financing activities:

Increase (decrease) in accrued plan share repurchases

Non-cash investing activities:

Increase (decrease) in accrued property, plant, and equipment

$ 2 $ ( 1 ) $ ( 1 )

Decrease in accrued property, plant, and equipment $ ( 1 ) $ ( 1 ) $ ( 2 )

Non-cash financing activities:

Increase (decrease) in accrued plan share repurchases $ 1 $ 1 $ ( 2 )

Increase in accrued excise taxes on plan share repurchases $ 5 $ 3 $ —

See accompanying notes to consolidated financial statements.

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The Company provides these services for large, complex projects with a targeted emphasis on higher-end, differentiated technology services and solutions that accelerate and transform secure and resilient digital environments through system development, modernization, integration, and sustainment to drive enterprise and mission outcomes.

The Company is organized as a matrix comprised of two customer facing operating sectors supported by the enterprise organizations, including the Innovation Factory.

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

The Innovation Factory includes designated teams focused on Artificial Intelligence ("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.

The Company's operating sectors are aggregated into one reportable segment for financial reporting purposes.

See Note 17—Business Segment Information for additional information.

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

The reorganization is designed to enhance management's involvement with customers and advance the Company’s innovation and go-to-market strategy.

The new business group leaders will report directly to the Company's Chief Executive Officer ("CEO") who will continue to be the chief operating decision maker ("CODM").

The Company is currently evaluating the impact of the reorganization on its segment reporting.

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

The Company's five business groups, which are also its operating segments, are aggregated into two reportable segments for financial reporting purposes given the similarity in economic and qualitative characteristics, and based on the nature of the customers they serve.

The Company’s two reportable segments are the Defense and Intelligence segment and the Civilian segment.

The Defense and Intelligence segment provides a diverse portfolio of national security solutions to the Department of Defense ("DoD") and Intelligence Community 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, border security, 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 and advisory, 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.

The Company's Innovation Factory supports the operating segments by developing enterprise-class solutions which are delivered to the Company's 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, engineering, and cybersecurity.

It uses a highly automated, cloud-hosted tool set to rapidly build, test and deploy solutions 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 activities.

See Note 16—Business Segments Information for additional information.

Within this report, the Company has recast historical financial information to reflect the new reportable segments.

The recast historical information has no impact on the Company's previously reported consolidated financial statements.

Principles of Consolidation and Basis of Presentation

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Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation.

Interest income was reclassified from "Other expense (income), net" to "Interest expense, net" on the consolidated statements of income and gains on divestitures, net of transaction costs were reclassified from "Other operating income" to "Gain on divestitures, net of transaction costs" on the consolidated statements of income.

"Deferred income taxes" for the prior year was reclassified from "Other assets" to its own line item on the consolidated balance sheets.

"Acquisition and integration costs" are now presented within "Other operating (income) expense" on the consolidated statements of income.

"Inventories, net" are now presented within "Other current assets" on the consolidated balance sheets.

"Amortization of off-market customer contracts," "Amortization of debt issuance costs,"

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

and "Impairment of assets" are now presented in "Other" within "Adjustments to reconcile net income to net cash provided by operating activities" on the consolidated statements of cash flows.

"Distributions to non-controlling interest are now presented in "Other" within "Cash flows from financing activities" on the consolidated statements of cash flows.

Non-controlling Interest.

3 unchanged sentences

Prior to February 4, 2023, the Company held a 50.1 % majority interest in FSA.

For fiscal 2023 and 2022, the results of operations of FSA were included in the Company's consolidated statements of income and comprehensive income and statements of cash flows.

As of February 3, 2023, the non-controlling interest reported on the consolidated balance sheet represents the portion of FSA’s equity that is attributable to the non-controlling interest.

For fiscal 2023, the results of operations of FSA were included in the Company's consolidated statements of income and comprehensive income and statements of cash flows.

Use of Estimates

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods.

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods.

Significant estimates inherent in the preparation of the financial statements may include, but are not limited to, estimated profitability of long-term contracts, income taxes, fair value measurements, fair value of goodwill and other intangible assets, pension and defined benefit plan obligations, and contingencies.

2 unchanged sentences

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 ended on February 2, 2024, fiscal 2023 began on January 29, 2022 and ended on February 3, 2023, and fiscal 2022 began on January 30, 2021 and ended on January 28, 2022.

Fiscal 2024 consisted of 52 weeks, while fiscal 2023 and 2022 consisted of 53 weeks and 52 weeks, respectively.

Fiscal 2025 began on February 3, 2024 and ended on January 31, 2025, fiscal 2024 began on February 4, 2023 and ended on February 2, 2024, and fiscal 2023 began on January 29, 2022 and ended on February 3, 2023.

Fiscal 2025 and 2024 consisted of 52 weeks, while fiscal 2023 consisted of 53 weeks.

Revenue Recognition

13 unchanged sentences

The majority of the Company’s contracts contain a single performance obligation involving a significant integration of various activities that are performed together to deliver a combined service or solution.

Performance obligations may be satisfied over time or at a point in time, but the majority of the Company’s performance obligations are satisfied over time.

Performance obligations may be satisfied over time or at a point in time, but the majority of the

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Company’s performance obligations are satisfied over time.

The Company selects the appropriate measure of progress for revenue recognition based on the nature of the performance obligation, contract type and other pertinent contract terms.

4 unchanged sentences

Deliverable-based performance obligations are satisfied over time when the Company’s performance creates or enhances an asset that is controlled by the customer, or when the Company’s performance creates an asset that is customized to the customer’s specifications and the Company has a right to payment, including a reasonable profit margin, for work performed to date.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For series-services performance obligations, the Company measures progress using either a cost input measure (cost-to-cost), a time-elapsed output measure, or the as-invoiced practical expedient.

4 unchanged sentences

Where fixed-price contracts also provide for reimbursement of certain costs, such as travel or other direct costs, consideration may be attributed only to a distinct subset of time within the performance period.

The Company’s time-and-material and fixed price-level of effort contracts generally qualify for the as-invoiced practical expedient.

The Company’s time-and-material, fixed price-level of effort, and certain cost-plus-fixed-fee contracts generally qualify for the as-invoiced practical expedient.

Revenue on these contracts is recognized in the amount to which the Company has a contractual right to invoice.

13 unchanged sentences

Since the Company typically provides customized services and solutions that are specific to a single customer’s requirements, standalone selling price is most often estimated based on expected costs plus a reasonable profit margin.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Changes in Estimates on Contracts

5 unchanged sentences

and performance being better or worse than previously estimated.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

A significant portion of the Company's contracts recognize revenue on performance obligations using a cost input measure (cost-to-cost), which requires estimates of total costs at completion.

27 unchanged sentences

For contracts using the as-invoiced practical expedient or a time-elapsed revenue recognition measure, prepaid contract costs are amortized on a straight-line basis over the expected period of benefit.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Costs Allocated to Contracts

1 unchanged sentence

government Cost Accounting Standards ("CAS").

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Stock-based Compensation

18 unchanged sentences

Cash and cash equivalents are comprised of cash in banks and highly liquid instruments, which primarily consist of bank deposits and investments in institutional money market funds.

The Company includes outstanding payments within "Cash and cash equivalents" and "Accounts payable" on the consolidated balance sheets and as of February 2, 2024 and February 3, 2023 these amounts were $ 26 million and $ 49 million, respectively.

The Company includes outstanding payments within "Cash and cash equivalents" and "Accounts payable" on the consolidated balance sheets and as of January 31, 2025 and February 2, 2024 these amounts were $ 33 million and $ 26 million, respectively.

The Company does not invest in high yield or high risk securities.

The cash in bank accounts at times may exceed federally insured limits.

Restricted cash includes cash amounts held that are contractually restricted from use in operations, but are subject to future claims of creditors.

The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheets for the periods presented:

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

February 2, 2024 February 3, 2023

Restricted cash includes cash amounts held that are contractually restricted from use in operations, but are subject to future claims of creditors.

The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the consolidated balance sheets for the periods presented:

January 31, 2025 February 2, 2024

(in millions)

11 unchanged sentences

government on the Company’s receipt of progress payments.

Progress payments received of $ 90 million and $ 42 million offset unbilled receivables as of February 2, 2024 and February 3, 2023, respectively.

Progress payments received of $ 82 million and $ 90 million offset unbilled receivables as of January 31, 2025 and February 2, 2024, respectively.

Contract retentions are billed when contract conditions have been met and may relate to uncompleted indirect cost negotiations with the U.S.

14 unchanged sentences

These costs typically include transaction-related costs, such as finder’s fees, legal, accounting and other professional costs.

Integration-related costs represent costs directly related to combining the Company and its acquired businesses.

Integration-related costs typically include strategic consulting services, facility consolidation, employee related costs, such as retention and severance, costs to integrate information technology infrastructure, enterprise planning systems, processes,

Integration-related

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

and other non-recurring integration-related costs.

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

The amounts recognized in "Acquisition and integration costs" on the consolidated statements of income are as follows:

costs represent costs directly related to combining the Company and its acquired businesses.

Acquisition and integration costs are presented within "Other operating (income) expense" on the consolidated statements of income.

The Company's acquisition and integration costs were as follows for the periods presented:

2025 February 2,

2023 January 28,

2024 February 3,

(in millions)

1 unchanged sentence

$ ( 2 ) $ — $ ( 2 )

Integration (2)

Total acquisition and integration costs $ ( 2 ) $ 1 $ 13

(1) Acquisition costs in fiscal 2025 include a reversal of immaterial costs related to the fiscal 2022 Koverse acquisition.

Acquisition costs in fiscal 2023 reflect adjustments to the fair value of the Koverse earnout liability.

Acquisition costs recognized for fiscal 2022 were related to the acquisitions of Halfaker and Associates, LLC ("Halfaker") and Koverse.

See Note 4—Acquisitions for additional information.

(2) Integration costs include $ 17 million for the impairment of assets for fiscal 2022.

See Note 6—Restructuring and Impairment for additional information.

Restructuring Costs

17 unchanged sentences

All of the Company’s lessor arrangements are operating leases.

Operating lease income is recognized on a straight-line basis over the term of the lease and is

Operating lease income is recognized on a straight-line basis over the term of the lease and is presented in "Revenues" on the consolidated statements of income.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

presented in "Revenues" on the consolidated statements of income.

Goodwill and Intangible Assets

43 unchanged sentences

The carrying value of the Company’s outstanding debt obligations approximates its fair value, which is calculated using Level 2 inputs, based on interest rates available for debt with terms and maturities similar to the Company’s existing debt arrangements.

Non-financial assets acquired and liabilities assumed in a business combination were measured at fair value using income, market and cost valuation methodologies.

See Note 4—Acquisitions for additional information.

The fair value measurements were estimated using significant inputs that are not observable in the market and thus represent a Level 3 measurement.

Non-financial assets acquired and liabilities assumed in a business combination are measured at fair value using income, market and cost valuation methodologies.

Marketable Securities

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 February 2, 2024 and February 3, 2023, the fair value of the Company's investments totaled $ 32 million and $ 28 million, respectively, and are included in "Other assets" on the consolidated balance sheets.

As of January 31, 2025 and February 2, 2024, the fair value of the Company's investments totaled $ 36 million and $ 32 million, respectively, and are primarily included in "Other assets" on the consolidated balance sheets.

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

10 unchanged sentences

Operating Cycle

The Company’s operating cycle may be greater than one year and is measured by the average time intervening between the inception and the completion of contracts.

The Company’s operating cycle may be greater than one year and is represented by the average time intervening between the inception and the completion of contracts.

Research and Development

1 unchanged sentence

IR&D efforts consist of projects involving basic research, applied research, development, and systems and other concept formulation studies.

Company-funded IR&D expense is included in selling, general and administrative expenses ("SG&A") and was $ 4 million, $ 1 million and $ 4 million in fiscal 2024, 2023 and 2022, respectively.

Company-funded IR&D expense is included in "Selling, general and administrative expenses" and was $ 12 million, $ 4 million and $ 1 million in fiscal 2025, 2024 and 2023, respectively.

Customer-funded research and development activities performed under customer contracts are charged directly to cost of revenues for those particular contracts.

4 unchanged sentences

The results of these investments are not material to the consolidated financial statements for the periods presented.

The Company applies the equity method of accounting to its unconsolidated investments when it has the ability to exercise significant influence over the entity and recognizes its proportionate share of the entities’ net income or loss within "Other operating income" on the consolidated statements of income.

Equity investments in entities over which the Company does not have the ability to exercise significant influence and whose securities do not have a readily determinable fair value are carried at cost or cost net of other-than-temporary impairments.

Sale of Equity Method Investment

On August 30, 2024, Morpheus Data, one of the Company’s unconsolidated venture investments, completed a transaction to sell all its outstanding equity, including the Company's equity investment, to Hewlett Packard Enterprise (NYSE:

HPE) for $ 10 million in cash.

The Company recognized the cash as "Proceeds from sale of equity method investments" on the consolidated statements of cash flows.

The transaction resulted in a pre-tax gain of $ 5 million which is included within "Other operating (income) expense" on the consolidated statements of income.

Accounting Standards Updates

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

Accounting Standards Updates Recently Adopted

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

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, 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 was effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Company adopted the annual disclosure requirements in fiscal 2025 and will adopt the interim disclosure requirements in fiscal 2026.

See Note 16—Business Segments Information for additional information.

Accounting Standards Updates Recently Issued But Not Yet Adopted

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

4 unchanged sentences

The amendments can be applied on a prospective or retrospective basis.

The Company plans to adopt this standard in fiscal 2026 and is currently evaluating the impact of adoption of this standard on its consolidated financial statements and related disclosures.

The Company plans to adopt this standard prospectively in fiscal 2026 and does not expect it to have a material impact on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , 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 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 plans to adopt the annual disclosure in fiscal 2025 and the interim disclosure in fiscal 2026 and is currently evaluating the impact of adoption of this standard on its consolidated financial statements.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

In September 2022, the FASB issued ASU No.

2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations , which requires annual and interim disclosures for entities that use supplier finance programs in connection with the purchase of goods and services.

The new standard does not affect the recognition, measurement or financial statement presentation of supplier finance program obligations.

These amendments are effective for fiscal years beginning after December 15, 2022, except for the requirement to provide rollforward information, which is effective for fiscal years beginning after December 15, 2023.

2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.

The standard includes new disclosure requirements relating to specified categories of expenses (purchases of inventory, employee compensation, depreciation, and amortization) that are included in certain expense captions presented on the face of the income statement.

Early adoption is permitted.

The Company adopted the requirements of ASU 2022-04 effective the first day of fiscal 2024.

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.

Payment obligations outstanding under the Company’s supplier finance program are presented within "Accounts payable" on the consolidated balance sheets and were immaterial as of February 2, 2024.

During the twelve months ended February 2, 2024, total payment obligations financed and financed obligations paid under the Company’s supplier finance program were immaterial.

The amendments can be applied on a prospective or retrospective basis.

In January 2025, the FASB clarified the effective date of the standard by issuing ASU No.

2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Clarifying the Effective Date.

The standard is effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027.

The Company is currently evaluating the impact of adoption of this standard on its financial statement disclosures.

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

5 unchanged sentences

2025 February 2,

2023 January 28,

2024 February 3,

(in millions)

3 unchanged sentences

Antidilutive stock awards excluded from the weighted-average number of shares outstanding used to compute diluted EPS for fiscal 2025, 2024, and 2023 were immaterial .

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Share Repurchases

1 unchanged sentence

The Company retires its common stock upon repurchase with the excess over par value allocated to additional paid-in capital.

When repurchases for the period exceed total additional-paid-in-capital, the excess repurchases are recorded as a reduction to retained earnings.

The Company has not made any material purchases of common stock other than in connection with established share repurchase plans.

In June 2022, the number of shares of the Company's common stock that may be repurchased under the Company's 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 February 2, 2024, the Company has repurchased approximately 20.3 million shares of its common stock under the plan.

In December 2024, the Company's Board of Directors authorized the repurchase of up to $ 1.2 billion of the Company's outstanding common stock under its existing share repurchase plan.

This authorization was effective as of December 16, 2024 and has no expiration date.

Since the program’s inception in December of 2013, the Company has repurchased approximately 24.5 million shares of its common stock from the open market for approximately $ 2.1 billion, which included amounts previously authorized under the plan prior to December 2024.

The Company declared and paid quarterly dividends of $ 0.37 per share every quarter for the years presented.

Total dividends declared and paid were $ 1.48 per share during fiscal 2025, 2024 and 2023.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Subsequent to the end of fiscal 2025, on March 13, 2025, the Company’s Board of Directors declared a cash dividend of $ 0.37 per share of the Company’s common stock payable on April 25, 2025 to stockholders of record on April 11, 2025.

Note 3—Revenues:

2 unchanged sentences

2025 February 2,

2023 January 28,

2024 February 3,

(in millions, except per share amounts)

10 unchanged sentences

government including subcontracts with other contractors engaged in work for the U.S.

The Company disaggregates revenues by customer, contract type and prime versus subcontractor to the federal government.

The Company disaggregates revenues by customer, contract type and prime versus subcontractor to the federal government for each of its reportable segments.

Disaggregated revenues by customer were as follows:

February 2, 2024 February 3, 2023 January 28, 2022

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Year Ended January 31, 2025

Defense and Intelligence

(in millions)

Department of Defense $ 3,856 $ 17 $ 3,873

Other federal government agencies 3,450 3,750 3,671

Intelligence and other federal government agencies

1,841 1,601 3,442

Commercial, state and local governments and international

Total $ 5,726 $ 1,753 $ 7,479

Year Ended February 2, 2024

Defense and Intelligence Civilian Total SAIC

(in millions)

Department of Defense $ 3,814 $ 26 $ 3,840

Intelligence and other federal government agencies

1,986 1,464 3,450

Commercial, state and local governments and international

Total $ 5,817 $ 1,627 $ 7,444

Year Ended February 3, 2023

Defense and Intelligence Civilian Total SAIC

(in millions)

Department of Defense $ 3,772 $ 34 $ 3,806

Intelligence and other federal government agencies

2,089 1,661 3,750

Commercial, state and local governments and international

Total $ 5,876 $ 1,828 $ 7,704

Disaggregated revenues by contract type were as follows:

February 2, 2024 February 3, 2023 January 28, 2022

Year Ended January 31, 2025

Defense and Intelligence

(in millions)

5 unchanged sentences

Total $ 5,726 $ 1,753 $ 7,479

Year Ended February 2, 2024

Defense and Intelligence Civilian Total SAIC

(in millions)

Cost reimbursement $ 4,442 $ 85 $ 4,527

Time and materials ("T&M")

491 972 1,463

Firm-fixed price ("FFP")

884 570 1,454

Total $ 5,817 $ 1,627 $ 7,444

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Year Ended February 3, 2023

Defense and Intelligence Civilian Total SAIC

(in millions)

Cost reimbursement $ 4,104 $ 178 $ 4,282

Time and materials ("T&M")

369 1,095 1,464

Firm-fixed price ("FFP")

1,403 555 1,958

Total $ 5,876 $ 1,828 $ 7,704

Disaggregated revenues by prime versus subcontractor were as follows:

February 2, 2024 February 3, 2023 January 28, 2022

Year Ended January 31, 2025

Defense and Intelligence

(in millions)

3 unchanged sentences

Total $ 5,726 $ 1,753 $ 7,479

Year Ended February 2, 2024

Defense and Intelligence Civilian Total SAIC

(in millions)

Prime contractor to federal government $ 5,355 $ 1,367 $ 6,722

Subcontractor to federal government 445 123 568

Other 17 137 154

Total $ 5,817 $ 1,627 $ 7,444

Year Ended February 3, 2023

Defense and Intelligence Civilian Total SAIC

(in millions)

Prime contractor to federal government $ 5,428 $ 1,568 $ 6,996

Subcontractor to federal government 433 127 560

Other 15 133 148

Total $ 5,876 $ 1,828 $ 7,704

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Contract Balances

Contract balances for the periods presented were as follows:

Balance Sheet line item February 2,

Balance Sheet line item January 31,

2025 February 2,

3 unchanged sentences

Contract assets - unbillable receivables Receivables, net 474 359

Contract assets - unbillable receivables

Contract assets - contract retentions Other assets 15 14

1 unchanged sentence

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

(1) Net of allowance of $ 3 million and $ 4 million as of February 2, 2024 and February 3, 2023, respectively.

(1) Net of allowance of $ 3 million as of January 31, 2025 and February 2, 2024.

The changes in the Company's contract assets and contract liabilities during the current period primarily result from timing differences between the Company's performance, invoicing and customer payments.

During fiscal 2024 and 2023, the Company recognized revenues of $ 40 million and $ 46 million relating to amounts that were included in the opening balance of contract liabilities as of February 3, 2023 and January 28, 2022, respectively.

As of January 31, 2025, the Company classified $ 29 million of unbillable receivables that are expected to be billed and collected beyond one year within "Other assets" on the consolidated balance sheets.

During fiscal 2025 and 2024, the Company recognized revenues of $ 35 million and $ 40 million relating to amounts that were included in the opening balance of contract liabilities as of February 2, 2024 and February 3, 2023, respectively.

Deferred Costs

Deferred costs for the periods presented were as follows:

Balance Sheet line item February 2,

Balance Sheet line item January 31,

2025 February 2,

6 unchanged sentences

Costs to obtain Other assets $ 6 $ 6

Pre-contract costs of $ 9 million and $ 6 million were expensed during fiscal 2024 and 2023, respectively.

Pre-contract costs of $ 9 million were expensed during fiscal 2025 and 2024 .

Prepaid contract costs of $ 36 million and $ 46 million were amortized during fiscal 2025 and 2024, respectively.

Fulfillment costs of $ 5 million were amortized during fiscal 2024 and 2023.

Costs to obtain of $ 1 million were amortized during fiscal 2024 and 2023.

Fulfillment costs of $ 3 million and $ 5 million were amortized during fiscal 2025 and 2024, respectively.

Costs to obtain of $ 2 million and $ 1 million were amortized during fiscal 2025 and 2024, respectively.

Remaining Performance Obligations

1 unchanged sentence

RPO does not include unexercised option periods and future task orders expected to be awarded under IDIQ contracts.

As of February 2, 2024, the Company had approximately $ 5.5 billion of remaining performance obligations.

The Company expects to recognize revenue on approximately 79 % of the remaining performance obligations over the next 12 months and approximately 92 % over the next 24 months, with the remaining recognized thereafter.

As of January 31, 2025, the Company had approximately $ 5.6 billion of RPO.

The Company expects to recognize revenue on approximately 82 % of the RPO over the next 12 months and approximately 93 % over the next 24 months, with the remaining recognized thereafter.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 4—Acquisitions:

On July 2, 2021, the Company completed the acquisition of Halfaker, a mission focused, pure-play health IT company for a purchase price of $ 228 million, net of $ 3 million cash acquired.

The Company funded the transaction from increased borrowings (as discussed in Note 12—Debt Obligations) and cash on hand.

During fiscal 2023, the Company made fair value adjustments decreasing goodwill and increasing customer relationships intangible assets by $ 2 million.

The Company has completed the determination of fair values of the acquired assets and liabilities assumed.

The allocation of the purchase price resulted in goodwill of $ 104 million and intangible assets of $ 114 million, both of which are deductible for income tax purposes.

The recognized goodwill is primarily associated with future customer relationships and an acquired assembled work force.

The intangible assets consist of customer relationships of $ 97 million and backlog of $ 17 million and are being amortized beginning on July 2, 2021 over a period of nine years and one year , respectively.

The Company made additional cash payments of $ 21 million in March 2022 associated with certain change in control provisions that are recognized as post-combination expense.

On May 3, 2021, the Company acquired Koverse, a software company that provides a data management platform enabling artificial intelligence and machine learning on complex sensitive data, for a purchase price of $ 30 million, net of $ 2 million cash acquired.

The purchase price included $ 3 million of contingent consideration, representing the acquisition date fair value recognized for up to $ 27 million gross of potential future earnout payments based on the achievement of certain revenue targets over the next four years .

The Company has completed the allocation of the purchase price which resulted in goodwill of $ 21 million and intangible assets of $ 10 million, both of which are not deductible for income tax purposes.

The goodwill is primarily associated with intellectual capital, future customer relationships, and an acquired assembled work force.

The intangible assets, which primarily consist of developed technology, are being amortized over a weighted average period of seven years .

As of February 2, 2024, the Company has recognized $ 13 million of post-combination compensation expense associated with employee retention agreements.

Note 4—Divestitures:

4 unchanged sentences

The equity method investment is included within "Other assets" on the consolidated balance sheets.

The remeasurement resulted in a gain of $ 7 million which is included within "Gain on divestitures, net of transaction costs" on the consolidated statements of income and is reflected within "Gain on divestitures" on the consolidated statements of cash flows.

The remeasurement resulted in a gain of $ 7 million which is included within "(Gain) loss on divestitures, net of transaction costs" on the consolidated statements of income and is reflected within "Gain on divestitures" on the consolidated statements of cash flows in fiscal 2024.

The Company estimated the fair value of its retained investment in FSA based on Level 3 inputs of the fair value hierarchy.

3 unchanged sentences

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

The Company recorded a pre-tax gain of $ 233 million, net of $ 7 million of transaction costs, which is included within "Gain on divestitures, net of transaction costs" on the consolidated statements of income in fiscal 2024.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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.

The Company recognized the cash as "Proceeds from divestitures" on the consolidated statements of cash flows in fiscal 2024.

The Company recorded a pre-tax gain of $ 233 million, net of $ 7 million of transaction costs, which is included within "(Gain) loss on divestitures, net of transaction costs" on the consolidated statements of income in fiscal 2024.

The disposition did 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.

The major classes of assets and liabilities divested were as follows:

10 unchanged sentences

Total liabilities divested $ 65

In connection with the sale of the Supply Chain Business, 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 first quarter of fiscal 2025 on a cost reimbursable basis.

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

In connection with the sale, the Company and ASRC Federal entered into certain transition services agreements pursuant to which the Company provided certain services to ASRC Federal through the first quarter of fiscal 2025 on a cost reimbursable basis.

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

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 5—Restructuring and Impairment:

Restructuring and impairment costs recognized were as follows:

Statements of Income line item

February 2, 2024 February 3, 2023 January 28, 2022

January 31, 2025 February 2, 2024 February 3, 2023

(in millions)

2024 Restructuring:

Severance and other employee costs SG&A

Other associated costs SG&A 13 — —

2023 Restructuring:

Severance and other employee costs SG&A and Cost of revenues — 6 —

Other associated costs SG&A — 14 —

2022 Restructuring:

Other associated costs SG&A — — 1

Restructuring costs:

Severance and other employee costs $ 1 $ 10 $ 6

Other associated costs 7 13 14

Total restructuring costs (1)

Impairment of assets SG&A — 4 1

Impairment of assets Acquisition and integration costs — — 17

Total impairment of assets — 4 18

Impairment of assets (2)

Total restructuring costs and impairment $ 8 $ 23 $ 24

In fiscal 2024, the Company initiated restructuring activities associated with the reorganization of its business sectors into business groups and the optimization and consolidation of certain facilities (collectively, the “2024 Restructuring”).

As part of the 2024 Restructuring, the Company incurred severance and other employee costs,

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

consulting costs and costs related to the consolidation and exit of certain facilities.

(1) Restructuring costs included in the table above are recorded in Corporate "Selling, general and administrative expenses."

(2) Impairment charges in fiscal 2023 relate to assets associated with exited facilities.

During fiscal 2025 and 2024, the Company incurred costs related to restructuring activities associated with the reorganization of its business sectors into business groups and for the optimization and consolidation of certain facilities.

As part of these activities, the Company incurred severance and other employee costs, consulting costs, and costs related to the consolidation and exit of certain facilities.

Other employee costs include the impact of accelerated stock compensation expense for terminated employees.

The 2024 Restructuring activities are expected to be completed in fiscal 2025.

During fiscal 2024, cash paid for consulting costs was $ 1 million.

The remaining liability for consulting costs ($ 2 million) and severance will be paid in fiscal 2025.

In fiscal 2023, the Company initiated restructuring activities (the "2023 Restructuring") associated with the optimization of business processes and incurred consulting costs, severance and other employee costs, and other costs related to the consolidation of certain facilities.

The Company completed the 2023 Restructuring activities in fiscal 2024.

During fiscal 2024 and 2023, cash paid for consulting costs was $ 2 million and $ 5 million, respectively, and there was no remaining liability for the 2023 Restructuring as of February 2, 2024.

In fiscal 2022, the Company initiated and completed restructuring activities (the “2022 Restructuring”) associated with the optimization and consolidation of certain facilities.

The 2022 Restructuring included total restructuring costs of $ 1 million which were fully paid as of January 28, 2022.

During fiscal 2024, the Company's impairment charges for certain assets associated with exited facilities were immaterial .

During fiscal 2023 and 2022, the Company recognized impairment charges for certain assets associated with exited facilities of $ 4 million and $ 18 million, respectively.

During fiscal 2023, the Company incurred costs related to restructuring activities associated with the optimization of business processes and incurred consulting costs, severance and other employee costs, and other costs related to the consolidation of certain facilities.

The Company completed these activities in fiscal 2024.

During fiscal 2024 and 2023, cash paid for consulting costs was $ 2 million and $ 5 million, respectively, and there was no remaining liability for these costs as of February 2, 2024.

Note 6—Goodwill and Intangible Assets

Goodwill had a carrying value of $ 2,851 million and $ 2,911 million as of February 2, 2024 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 5—Divestitures).There were no impairments of goodwill during the periods presented.

The following table presents the carrying value of goodwill by reportable segment:

2025 February 2,

(in millions)

Defense and Intelligence

$ 2,001 $ 2,001

$ 2,851 $ 2,851

As a result of the internal reorganization on February 3, 2024, the Company reallocated its goodwill to its five new goodwill reporting units.

The Company performed a goodwill impairment test immediately before and after the reorganization, both of which resulted in no impairment.

For the goodwill impairment test immediately after the reorganization, the Company performed a quantitative assessment of its goodwill as of February 3, 2024 for its five new goodwill reporting units.

The Company estimated the fair value of each reporting unit using a 50:50 weighting of fair values derived from an income approach and market approach.

Under the income approach, the Company estimated the fair value of its reporting units using a multi-year discounted cash flow model involving assumptions about projected future revenue growth, operating margins, income tax rates, capital expenditures, discount rate, and terminal value.

Under the market approach, the Company estimated the fair value of its reporting units based on multiples of earnings derived from observable market data of comparable public companies.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

During the fourth quarter of fiscal 2025, the Company completed its annual goodwill impairment testing using a qualitative assessment and determined that it was more likely than not that an impairment did not exist and that a quantitative analysis was not necessary.

Intangible Assets

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

February 2, 2024 February 3, 2023

January 31, 2025 February 2, 2024

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

4 unchanged sentences

Total intangible assets $ 1,473 $ ( 694 ) $ 779 $ 1,473 $ ( 579 ) $ 894

Amortization expense related to intangible assets was $ 115 million, $ 125 million and $ 128 million for fiscal 2024, 2023 and 2022, respectively.

Amortization expense related to intangible assets was $ 115 million for fiscal 2025 and 2024 and $ 125 million for fiscal 2023.

There were no impairments of intangible assets during the periods presented.

Intangible assets with a gross carrying value of $ 5 million became fully amortized during fiscal 2024 and are no longer reflected in the gross carrying value and accumulated amortization as of February 2, 2024.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of February 2, 2024, the estimated future annual amortization expense related to intangible assets is as follows:

As of January 31, 2025, the estimated future annual amortization expense related to intangible assets is as follows:

Fiscal Year (in millions)

1 unchanged sentence

Actual amortization expense in future periods could differ from these estimates as a result of future acquisitions, divestitures, impairments and other factors.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 7—Property, Plant, and Equipment:

2 unchanged sentences

amortization method

Estimated useful lives (in years) February 2,

Estimated useful lives (in years) January 31,

2025 February 2,

(in millions)

Computer equipment Straight-line or

Computer and other equipment

Straight-line or

declining balance 3 - 10

Capitalized software and software licenses Straight-line or

Capitalized software

Straight-line or

declining balance 3- 6

8 unchanged sentences

Depreciation and amortization expense for property, plant, and equipment was $ 25 million, $ 26 million and $ 32 million in fiscal 2025, 2024 and 2023, respectively.

The change in accumulated depreciation and amortization from fiscal 2023 to fiscal 2024 is primarily due to write offs of fully depreciated assets and divestitures, partially offset by capital expenditures during the year.

Note 8—Stock-Based Compensation :

Plan Summaries

As of February 2, 2024, the Company had stock-based compensation awards outstanding under the following plans:

As of January 31, 2025, the Company had stock-based compensation awards outstanding under the following plans:

“2023 Equity Incentive Plan” ("2023 EIP"), “2013 Equity Incentive Plan” ("2013 EIP"), “Management Stock Compensation Plan”, and the “Amended and Restated 2013 Employee Stock Purchase Plan” ("ESPP") which are herein referred to together as the “Plans.” The Company issues new shares on the vesting of stock awards or exercise of stock options under these Plans.

During fiscal year 2024, the Company terminated the Third Amended and Restated 2012 Long Term Performance Plan ("LTPP") and deregistered all remaining unissued shares thereunder.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

On June 7, 2023, the Company’s stockholders approved the 2023 EIP.

2 unchanged sentences

After June 7, 2023, no new awards may be issued under the 2013 EIP and any awards that subsequently expire, are forfeited or canceled, are settled in cash, or are used to cover recipient tax obligations, will become available for issuance under the 2023 Plan.

As of February 2, 2024, the total authorized shares of common stock for issuance under the 2023 EIP is 2.2 million.

As of January 31, 2025, the total authorized shares of common stock for issuance under the 2023 EIP is 1.9 million.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The 2023 EIP and 2013 EIP both provide the Company’s employees and directors the opportunity to receive various types of stock-based compensation and cash awards.

The terms of the stock-based awards granted to employees and directors are the same, except that those for directors cliff vest within one year of the grant date.

As of February 2, 2024, the Company has unvested stock and performance share awards under the 2023 EIP and 2013 EIP and outstanding stock options under the 2013 EIP.

As of January 31, 2025, the Company has unvested stock and performance share awards under the 2023 EIP and 2013 EIP and outstanding stock options under the 2013 EIP.

Vesting stock awards granted in fiscal 2020 and thereafter generally vest equally over three years, while vesting stock awards granted prior to fiscal 2020 generally vest equally over four years.

9 unchanged sentences

For performance-based stock awards granted prior to fiscal 2023, the performance metrics are based on annual operating cash flows and a three year cumulative measure of earnings.

For performance-based stock awards granted in fiscal 2023 and 2024, the performance metrics are based on three year cumulative operating cash flows and a three year cumulative measure of earnings.

For performance-based stock awards granted in fiscal 2023 and thereafter, the performance metrics are based on three year cumulative operating cash flows and a three year cumulative measure of earnings.

The market conditions for awards granted in fiscal 2022 and thereafter are based on the Company's total shareholder return over the three year performance period as compared to the total shareholder return for a specified group of companies over the same period.

9 unchanged sentences

The ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount of up to 15 % of the fair market value on the date of purchase.

During the three fiscal years ended February 2, 2024, the ESPP discount was 5 % of the fair market value on the date of purchase, thereby resulting in the ESPP being non-compensatory.

As of February 2, 2024, 1.9 million shares of the Company’s common stock are authorized for issuance under the ESPP.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

During the three fiscal years ended January 31, 2025, the ESPP discount was 5 % of the fair market value on the date of purchase, thereby resulting in the ESPP being non-compensatory.

As of January 31, 2025, 1.7 million shares of the Company’s common stock are authorized for issuance under the ESPP.

The LTPP provides certain employees of the Company the opportunity to receive various types of stock-based compensation awards.

2 unchanged sentences

Vesting stock awards under the LTPP have forfeitable rights to dividends.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expense and Related Tax Benefits Recognized

1 unchanged sentence

2025 February 2,

2023 January 28,

2024 February 3,

(in millions)

2 unchanged sentences

Performance share awards 16 23 10

Stock options — — 1

Total stock-based compensation expense $ 53 $ 68 $ 48

Tax benefits recognized from stock-based compensation $ 18 $ 25 $ 16

The Company did not have stock-based compensation expense for stock options for fiscal 2025.

Stock-based compensation expense for stock options was not material for fiscal 2024 and 2023.

Vesting Stock Awards

Vesting stock award activity for the year ended February 2, 2024 was:

Vesting stock award activity for the year ended January 31, 2025 was:

Shares of stock under vesting stock awards Weighted-average grant date fair value

4 unchanged sentences

Awards vested ( 0.5 ) 97.83

Unvested at February 2, 2024 0.9 $ 100.51

Unvested at January 31, 2025 0.7 $ 115.43

The grant date fair value of vesting stock awards is based on the closing market price of the Company’s common stock on the last trading day preceding the grant date.

The weighted-average grant date fair value of the vesting stock awards granted in fiscal 2025, 2024 and 2023 was $ 127.33 , $ 108.64 and $ 95.43 , respectively.

As of February 2, 2024 there was $ 39 million of unrecognized compensation cost, net of estimated forfeitures, related to vesting stock awards, which is expected to be recognized over a weighted-average period of 1.8 years.

As of January 31, 2025 there was $ 40 million of unrecognized compensation cost, net of estimated forfeitures, related to vesting stock awards, which is expected to be recognized over a weighted-average period of 1.8 years.

The fair value of vesting stock awards that vested in fiscal 2025, 2024 and 2023 was $ 61 million, $ 48 million and $ 44 million, respectively.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Performance Share Awards

Performance share award activity for the year ended February 2, 2024 was:

Performance share award activity for the year ended January 31, 2025 was:

Shares of stock under performance shares Weighted-average grant date fair value

5 unchanged sentences

Performance adjustments ( 0.1 ) 125.15

Unvested at February 2, 2024 0.5 $ 112.86

Unvested at January 31, 2025 0.3 $ 116.97

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The actual number of shares to be issued upon vesting range between 0 - 200 % of the specified target shares.

9 unchanged sentences

The fair value of performance share awards that vested in fiscal 2025 was $ 18 million.

As of February 2, 2024 there was $ 14 million of unrecognized compensation cost, net of estimated forfeitures, related to performance share awards, which is expected to be recognized over a weighted-average period of 1.8 years.

As of January 31, 2025 there was $ 19 million of unrecognized compensation cost, net of estimated forfeitures, related to performance share awards, which is expected to be recognized over a weighted-average period of 1.7 years.

Stock Options

Stock options are granted with their exercise price equal to the closing market price of the Company’s common stock on the last trading day preceding the grant date.

Stock option activity for the year ended February 2, 2024 was:

Stock option activity for the year ended January 31, 2025 was:

Shares of stock under stock options Weighted-average exercise price Weighted-average remaining contractual term Aggregate intrinsic value

2 unchanged sentences

Options exercised — 77.28

Outstanding at February 2, 2024 0.1 $ 77.85 2.2 $ 6

Exercisable at February 2, 2024 0.1 $ 77.85 2.2 $ 6

Vested and expected to vest at February 2, 2024 0.1 $ 77.85 2.2 $ 6

As of February 2, 2024, the unrecognized compensation cost, net of estimated forfeitures, related to stock options was not material.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Outstanding at January 31, 2025 0.1 $ 78.10 1.4 $ 2

Exercisable at January 31, 2025 0.1 $ 78.10 1.4 $ 2

Vested and expected to vest at January 31, 2025 0.1 $ 78.10 1.4 $ 2

As of January 31, 2025, the unrecognized compensation cost, net of estimated forfeitures, related to stock options was not material.

The following table summarizes activity related to exercises of stock options:

2025 February 2,

2023 January 28,

2024 February 3,

(in millions)

3 unchanged sentences

Total intrinsic value of options exercised $ 2 $ 9 $ 8

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 9—Retirement Plans :

18 unchanged sentences

Defined Benefit Plans

In connection with the acquisition of Engility in fiscal 2019, the Company assumed two defined benefit plans sponsored by Engility for certain current and former employees:

In connection with the acquisition of Engility Holdings, Inc.

("Engility") in fiscal 2019, the Company assumed two defined benefit plans sponsored by Engility for certain current and former employees:

a Defined Benefit Pension Plan ("Pension Plan") and a Retiree Health Reimbursement Account Plan ("RHRA Benefit Plan").

2 unchanged sentences

Additional amounts are contributed to assure that plan assets will be adequate to provide retirement benefits.

During fiscal 2025, the Company expects to contribute $ 1 million to fund the RHRA Benefit Plan.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

During fiscal 2024, the Company recognized a net gain of $ 1 million on its retirement plans within other comprehensive income due to an increase in discount rates and the difference between actual investment return and expected return.

During fiscal 2026, the Company expects to contribute $ 3 million to fund the Pension Plan and $ 1 million to fund the RHRA Benefit Plan, respectively.

During fiscal 2025 and 2024, the Company recognized a net gain of $ 3 million and $ 1 million, respectively, on its retirement plans within other comprehensive income primarily due to an increase in discount rates and the difference between actual investment return and expected return.

During fiscal 2023, the Company recognized a net gain of $ 4 million on its retirement plans within other comprehensive income.

The gain was comprised of a $ 10 million gain due to an increase in discount rates, partially offset by a $ 6 million loss due to the difference between actual investment return and expected return.

During fiscal 2022, the Company recognized a net gain of $ 5 million on its retirement plans within other comprehensive income.

The gain was comprised of a $ 4 million gain due to an increase in discount rates and a $ 1 million gain from the excess in actual investment return over the expected return.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Net Periodic Benefit Cost

1 unchanged sentence

Pension Plan RHRA Benefit Plan

February 2, 2024 February 3, 2023 January 28, 2022 February 2, 2024 February 3, 2023 January 28, 2022

January 31, 2025 February 2, 2024 February 3, 2023 January 31, 2025 February 2, 2024 February 3, 2023

(in millions)

7 unchanged sentences

Pension Plan RHRA Benefit Plan

February 2, 2024 February 3, 2023 February 2, 2024 February 3, 2023

January 31, 2025 February 2, 2024 January 31, 2025 February 2, 2024

(in millions)

12 unchanged sentences

Unfunded status $ 2 $ 4 $ 7 $ 10

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Amounts recognized in the consolidated balance sheets consist of:

Pension Plan RHRA Benefit Plan

February 2, 2024 February 3, 2023 February 2, 2024 February 3, 2023

January 31, 2025 February 2, 2024 January 31, 2025 February 2, 2024

(in millions)

4 unchanged sentences

Under the spot rate approach, the Company uses individual spot rates along the yield curve that correspond with the timing of each benefit payment.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The discount rates represent the estimated rate at which the Company could effectively settle its defined benefit obligations using a high quality bond yield curve.

4 unchanged sentences

Pension Plan RHRA Benefit Plan

February 2, 2024 February 3, 2023 January 28, 2022 February 2, 2024 February 3, 2023 January 28, 2022

January 31, 2025 February 2, 2024 February 3, 2023 January 31, 2025 February 2, 2024 February 3, 2023

Discount rate 5.50 % 5.16 % 4.94 % 5.29 % 5.08 % 4.85 %

7 unchanged sentences

According to the plan's investment policy, performance will be evaluated across all time periods, with a particular emphasis on longer-term returns relative to associated peers and benchmarks.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The fair value measurement of plan assets by category is as follows:

Asset Category Fair Value Hierarchy February 2, 2024 February 3, 2023

Asset Category Fair Value Hierarchy January 31, 2025 February 2, 2024

(in millions)

1 unchanged sentence

Fixed income Level 1 7 7

Guaranteed deposit account Level 3 2 1

Subtotal 38 39

Collective trust - fixed income

Measured at NAV 7 7

Total $ 45 $ 46

(1) Collective trusts are measured at fair value using net asset value ("NAV") as a practical expedient and have not been categorized in the fair value hierarchy.

Guaranteed deposit account Level 3 1 2

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Fair Value Measurement Using Significant Unobservable Inputs (Level 3)

2 unchanged sentences

(in millions)

Balance at January 28, 2022

Balance at February 3, 2023

Balance at February 2, 2024

Balance at January 31, 2025

The GDA is designed to provide liquidity and safety of principal with a competitive guaranteed rate of return.

13 unchanged sentences

Note 10—Income Taxes :

Substantially all of the Company’s income before income taxes for the fiscal year ended February 2, 2024 and the two preceding fiscal years is subject to taxation in the United States.

Substantially all of the Company’s income before income taxes for the fiscal year ended January 31, 2025 and the two preceding fiscal years is subject to taxation in the United States.

The provision for income taxes for each of the periods presented include the following:

2025 February 2,

2023 January 28,

2024 February 3,

(in millions)

6 unchanged sentences

2025 February 2,

2023 January 28,

2024 February 3,

(in millions)

8 unchanged sentences

Effective income tax rate 15.5 % 23.1 % 19.3 %

The effective income tax rate for fiscal 2024 is higher than the rate in fiscal 2023 primarily due to the gain from the divestiture of the Supply Chain Business and the associated non-deductible goodwill, along with an increase in non-deductible compensation related to the Company's reorganization and executive transition.

These expenses are partially offset by additional deductions for foreign-derived intangible income and the expiration of an uncertain tax position.

The effective income tax rate for fiscal 2025 is lower than the rate in fiscal 2024 primarily due to the gain from the divestiture of the Supply Chain Business and the associated non-deductible goodwill in the prior year.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

16 unchanged sentences

Payroll tax deferral ( 2 ) ( 2 )

Fixed asset basis difference ( 3 ) —

Purchased intangible assets ( 302 ) ( 287 )

7 unchanged sentences

2025 February 2,

2023 January 28,

2024 February 3,

(in millions)

3 unchanged sentences

Reductions for tax positions related to prior years

( 8 ) ( 59 ) —

Reductions for prior year tax positions related to statute expiration ( 14 ) ( 8 ) —

3 unchanged sentences

Accrued interest and penalties

In fiscal 2024, unrecognized tax benefits decreased from $ 158 million to $ 117 million.

This decline was primarily driven by a $ 59 million decrease, with a corresponding decrease in net deferred tax assets, resulting from our analysis of Internal Revenue Service ("IRS") Notice 2023-63 released on September 8, 2023 indicating that certain expenditures related to the performance of cost-type contracts are not subject to capitalization for tax purposes.

$ 17 $ 13 $ 8

The Company includes net interest and penalties as a component of income tax expense.

6 unchanged sentences

The Company is currently under examination by the IRS for fiscal years 2016 through 2019.

As of February 2, 2024, the Company has approximately $ 53 million of tax effected federal loss carryforwards, $ 8 million of tax effected state loss carryforwards and approximately $ 10 million of state credit carryforwards that will begin to expire in fiscal 2025.

The valuation allowance of $ 8 million at February 2, 2024 relates to these state credit carryforwards.

As of January 31, 2025, the Company has approximately $ 47 million of tax effected federal loss carryforwards, $ 6 million of tax effected state loss carryforwards and approximately $ 8 million of state credit carryforwards that will begin to expire in fiscal 2026.

The valuation allowance of $ 7 million at January 31, 2025 relates to these state credit carryforwards.

Note 11—Debt Obligations :

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

February 2, 2024 February 3, 2023

The Company’s debt as of the periods presented was as follows:

January 31, 2025 February 2, 2024

Stated interest rate Effective interest rate Principal Unamortized debt issuance costs Net Principal Unamortized debt issuance costs Net

3 unchanged sentences

Term Loan B2 Facility due March 2027 — % — % — — — 182 ( 2 ) 180

Term Loan B3 Facility due February 2031

6.06 % 6.20 % 506 ( 3 ) 503 — — —

Senior Notes due April 2028 4.88 % 5.11 % 400 ( 3 ) 397 400 ( 3 ) 397

Total long-term debt

Revolving Credit Facility due June 2027 (1)

6.71 % — % 200 — 200 — — —

$ 2,228 $ ( 8 ) $ 2,220 $ 2,109 $ ( 10 ) $ 2,099

Less current portion

313 — 313 77 — 77

Total long-term debt, net of current portion

Total debt, net of current portion

$ 1,915 $ ( 8 ) $ 1,907 $ 2,032 $ ( 10 ) $ 2,022

As of February 2, 2024, the Company has a $ 2.7 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 secured Revolving Credit Facility due June 2027 (the "Revolving Credit Facility").

Any obligations under the Credit Facility are secured by liens on substantially all of the assets of the Company and its subsidiaries.

The Revolving Credit Facility is available to the Company through June 2027 and there is no balance outstanding as of February 2, 2024.

As of February 2, 2024, the Company was in compliance with the covenants under its Credit Facility.

(1) The stated interest rate for the Revolving Credit Facility due June 2027 reflects the weighted-average interest rate for the outstanding borrowings as of January 31, 2025.

As of January 31, 2025, the Company has a $ 2.6 billion secured credit facility (the "Credit Facility") consisting of a Term Loan A Facility due June 2027, a Term Loan B3 Facility due February 2031 (together, the "Term Loan Facilities"), and a $ 1.0 billion secured Revolving Credit Facility due June 2027 (the "Revolving Credit Facility").

The Company's Third Amended and Restated Credit Agreement ("Third Amended Credit Agreement") contains certain restrictive covenants applicable to the Company and its subsidiaries including a requirement to maintain a Senior Secured Leverage Ratio (as defined in the Third Amended Credit Agreement) of not greater than 4.00 to 1.00, unless a Permitted Acquisition (as defined in the Third Amended Credit Agreement) occurs in which case not greater than 4.25 to 1.00 for three consecutive quarters following such a transaction.

Borrowings under the Term Loan B Facility due October 2025 amortize quarterly at 0.25 % of the original borrowed amount.

Borrowings under the Term Loan B2 Facility due March 2027 amortize quarterly at 0.25 % of the original borrowed amount with the remaining unamortized balance due in full upon its maturity in March 2027.

The Term Loan B2 Facility due March 2027 is subject to the same mandatory prepayments as the Company’s existing term loans under the Credit Facility and is subject to the same covenants and events of default as the Company's Term Loan B Facility due October 2025.

Prior to being paid off in fiscal 2025, borrowings under the Term Loan B Facility due October 2025 and the Term Loan B2 Facility due March 2027 amortized quarterly at 0.25 % of the original borrowed amounts.

On March 1, 2021, the Company executed the Third Amendment to the Third Amended and Restated Credit Agreement, which reduced the applicable margin for the Term Loan B2 Facility due March 2027 for LIBOR loans from 2.25 % to 1.875 % and for base rate loans from 1.25 % to 0.875 %.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The Company's Senior Notes due 2028 (the "Senior Notes") have 4.875 % interest payable semi-annually on April 1 and October 1 of each year, and the principal is due April 2028.

On July 2, 2021, the Company executed the Fourth Amendment to the Third Amended and Restated Credit Agreement, which established a new senior secured incremental term loan credit facility commitment in the amount of $ 100 million (the "Term Loan A2 Facility due October 2023").

The entirety of the Term Loan A2 Facility due October 2023 was borrowed by the Company and the proceeds were immediately used to pay a portion of the purchase price of Halfaker (see Note 4—Acquisitions).

On June 30, 2022, the Company executed the Fifth Amendment to the Third Amended and Restated Credit Agreement ("Fifth Amendment"), which established, among other things, a $ 1,230 million senior secured term loan credit facility ("Term Loan A Facility due June 2027") and increased the Revolving Credit Facility commitment from $ 400 million to $ 1,000 million.

8 unchanged sentences

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

The Company incurred $ 8 million of debt issuance costs associated with the Fifth Amendment, of which $ 2 million was recognized in interest expense, with the remaining $ 6 million deferred and amortized to interest expense through the maturity dates of the facilities utilizing the effective interest rate method.

The scheduled principal repayments for the Term Loan Facilities may be further reduced or eliminated by annual mandatory prepayments of a portion of the Company’s Excess Cash Flow (as defined in the Third Amended Credit Agreement).

Mandatory principal prepayments are allocated to the Term Loan Facilities on a pro rata basis and reduce the remaining scheduled principal installments for each facility.

During fiscal 2024, the Company made scheduled principal repayments of $ 31 million on the Term Loan A Facility due June 2027 and voluntary principal prepayments of $ 160 million and $ 90 million on the Term Loan B Facility due October 2025 and the Term Loan B2 Facility due March 2027, respectively.

During fiscal 2023, in addition to the voluntary principal prepayment mentioned above associated with the Fifth Amendment, the Company made voluntary principal prepayments on the Term Loan B Facility due October 2025 of $ 90 million.

The Company wrote off deferred debt issuance costs of

During fiscal 2024, the Company incurred $ 8 million of debt issuance costs associated with the Fifth Amendment, of which $ 2 million was recognized in interest expense, with the remaining $ 6 million deferred and amortized to interest expense through the maturity dates of the facilities utilizing the effective interest rate method.

On February 8, 2024, the Company executed the Sixth Amendment to the Third Amended and Restated Credit Agreement ("Sixth Amendment"), which established a $ 510 million senior secured term loan credit facility ("Term Loan B3 Facility due February 2031").

The entire Term Loan B3 Facility due February 2031 was immediately borrowed by the Company and the proceeds were used to pay in full the outstanding principal balances under the Term Loan B Facility due October 2025 and Term Loan B2 Facility due March 2027.

The Tranche B3 Facility due February 2031 is subject to the same covenants and events of default as the Company's existing Term Loan Facilities.

Borrowings under the Term Loan B3 Facility due February 2031 amortize quarterly beginning on July 31, 2024 at 0.25 % of the original borrowed amount with the remaining unamortized balance due in full upon its maturity on February 8, 2031.

On October 18, 2024, the Company executed the Seventh Amendment to the Third Amended and Restated Credit Agreement ("Seventh Amendment"), which lowered the applicable margin for the Term Loan B3 Facility due February 2031 from 1.875 % to 1.750 % for Term SOFR loans and from 0.875 % to 0.750 % for base rate loans.

In the event any portion of the Term Loan B3 Facility due February 2031 is repaid prior to April 18, 2025 as a result of a repricing event, the Company will be required to pay a 1.00 % fee of the amount repaid.

After April 18, 2025, the Term Loan B3 Facility due February 2031 may be prepaid at any time without penalty and is subject to the same mandatory prepayments, including from excess cash flow, as the Company’s existing term loans under the Credit Facility.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

$ 2 million and $ 3 million during fiscal 2024 and 2023, respectively, associated with voluntary principal prepayments which were recognized in interest expense.

During fiscal 2024 and fiscal 2023, the Company borrowed and repaid $ 160 million and $ 410 million under the Revolving Credit Facility, respectively.

Maturities of long-term debt as of February 2, 2024 are:

During fiscal 2025, the Company incurred $ 6 million of debt issuance costs associated with the Sixth and Seventh Amendments, of which $ 4 million was recognized in interest expense and the remaining $ 2 million deferred and amortized to interest expense through the maturity date of the facility utilizing the effective interest rate method.

The scheduled principal repayments for the Term Loan Facilities may be reduced or eliminated by annual mandatory prepayments of a portion of the Company’s Excess Cash Flow (as defined in the Third Amended Credit Agreement).

Mandatory prepayments are allocated to the Term Loan Facilities on a pro rata basis and reduce the remaining scheduled principal installments for each facility.

During fiscal 2025, the Company made scheduled principal repayments of $ 77 million and $ 4 million on the Term Loan A Facility due June 2027 and the Term Loan B3 Facility due February 2031, respectively.

During fiscal 2024, the Company wrote off deferred debt issuance costs of $ 2 million associated with the voluntary principal prepayments which were recognized in interest expense.

During fiscal 2025 and fiscal 2024, the Company borrowed $ 1.4 billion and $ 160 million and repaid $ 1.2 billion and $ 160 million under the Revolving Credit Facility, respectively.

As of January 31, 2025, the outstanding principal under the Revolving Credit Facility was classified as current portion of debt on the consolidated balance sheets.

Subsequent to year end, the Company repaid $ 100 million of the outstanding principal under the Revolving Credit Facility.

Any obligations under the Credit Facility are secured by liens on substantially all of the assets of the Company and its subsidiaries.

The Revolving Credit Facility is available to the Company through June 2027.

As of January 31, 2025, the Company was in compliance with the covenants under its Credit Facility.

The Company's Senior Notes due 2028 (the "Senior Notes") have 4.875 % interest payable semi-annually on April 1 and October 1 of each year, and the principal is due April 2028.

Maturities of debt as of January 31, 2025 are:

Fiscal Year Total

(in millions)

Thereafter 480

Total principal payments $ 2,228

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Fair Value of Asset (1) at

Notional Amount at February 2, 2024 Pay Fixed Rate Receive Variable Rate Settlement and Termination February 2,

Notional Amount at January 31, 2025 Pay Fixed Rate Receive Variable Rate Settlement and Termination January 31,

2025 February 2,

(in millions) (in millions)

Interest rate swaps #1 685 2.96 % Term SOFR Monthly through October 31, 2025 15 16

Interest rate swaps #2 — 2.36 % Term SOFR Monthly through October 31, 2023 — 9

Total $ 685 $ 15 $ 25

Interest rate swaps

685 2.96 % Term SOFR Monthly through October 31, 2025 6 15

(1) The fair value of the fixed interest rate swap asset is included in "Other assets" on the consolidated balance sheets.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The Company is party to fixed interest rate swap instruments that are designated and accounted for as cash flow hedges to manage risks associated with interest rate fluctuations on a portion of the Company’s floating rate debt within the Credit Facility.

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See Note 13—Changes in Accumulated Other Comprehensive Income by Component 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.

During fiscal 2024, Interest Rate Swaps #2 matured which had a notional value of $ 450 million upon maturity.

The Company estimates that it will reclassify $ 13 million of unrealized gains from accumulated other comprehensive income into earnings in the twelve months following February 2, 2024.

During fiscal 2024, Interest Rate Swaps due October 31, 2023 matured which had a notional value of $ 450 million upon maturity.

The Company estimates that it will reclassify $ 6 million of unrealized gains from accumulated other comprehensive income into earnings from January 31, 2025 until the remaining interest rate swaps mature on October 31, 2025.

On June 30, 2022 and in conjunction with the Fifth Amendment, the Company transitioned the variable rate on its interest rate swaps from 1-month LIBOR to 1-month Term SOFR.

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As a result, the transition did not have an impact on the Company’s hedge accounting or a material impact to the Company’s consolidated financial statements.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 13—Changes in Accumulated Other Comprehensive Income by Component :

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Net other comprehensive income

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

Other comprehensive income before reclassifications 67 4 71

Amounts reclassified from accumulated other comprehensive loss 9 — 9

Income tax impact ( 20 ) ( 1 ) ( 21 )

Net other comprehensive income 56 3 59

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

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Balance at February 2, 2024 $ 11 $ 5 $ 16

Other comprehensive income before reclassifications 5 5 10

Amounts reclassified from accumulated other comprehensive income

( 14 ) ( 1 ) ( 15 )

Income tax impact 2 ( 1 ) 1

Net other comprehensive loss ( 7 ) 3 ( 4 )

Balance at January 31, 2025 $ 4 $ 8 $ 12

(1) The amount reclassified from accumulated other comprehensive income (loss) is included in "Interest expense, net."

(2) The amount reclassified from accumulated other comprehensive income (loss) is included in "Other expense (income), net.

(2) The amount reclassified from accumulated other comprehensive income (loss) is included in "Other (income) expense, net.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 14—Sale of Receivables :

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The Company does not retain an ongoing financial interest in the transferred receivables other than cash collection and administrative services.

The Company estimated that its servicing fee was at fair value and therefore has not recognized a servicing asset or liability as of February 2, 2024 and February 3, 2023.

The Company estimated that its servicing fee was at fair value and therefore has not recognized a servicing asset or liability as of January 31, 2025 and February 2, 2024.

Proceeds from the sale of receivables are reflected as cash flows from operating activities on the consolidated statements of cash flows.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

During fiscal 2024, 2023 and 2022, the Company incurred purchase discount fees of $ 9 million, $ 8 million and $ 2 million, respectively, which are presented in "Other expense (income), net" on the consolidated statements of income.

During fiscal 2025, 2024 and 2023, the Company incurred purchase discount fees of $ 14 million, $ 9 million and $ 8 million, respectively, which are presented in "Other (income) expense, net" on the consolidated statements of income.

MARPA Facility activity consisted of the following:

February 2, 2024 February 3, 2023

January 31, 2025 February 2, 2024

(in millions)

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( 49 ) ( 54 )

Remaining sold receivables $ 151 $ 220

(1) For fiscal 2024 and 2023, the Company recorded a net decrease of $ 45 million and a net increase of $ 50 million to cash flows from operating activities, respectively, from sold receivables.

(2) Primarily represents the cash collected on behalf of but not yet remitted to the Purchaser as of February 2, 2024 and February 3, 2023.

Remaining sold receivables to be collected from customers

(1) For fiscal 2025 and 2024, the Company recorded a net decrease of $ 41 million and $ 45 million to cash flows from operating activities, respectively, from sold receivables.

(2) Primarily represents the cash collected on behalf of but not yet remitted to the Purchaser as of January 31, 2025 and February 2, 2024.

This balance is included in "Accounts payable" on the consolidated balance sheets.

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Total operating lease cost is comprised of the following:

February 2, 2024 February 3, 2023 January 28, 2022

January 31, 2025 February 2, 2024 February 3, 2023

(in millions)

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Short-term lease cost 2 2 2

Sublease income — — ( 1 )

Total lease cost $ 63 $ 71 $ 80

Lease cost and sublease income are included primarily in cost of revenues and SG&A, except for $ 12 million of impairment of right of use assets for fiscal 2022 that are included in acquisition and integration costs.

Lease cost is included primarily in "Cost of revenues" and "Selling, general and administrative expenses" on the consolidated statements of income.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The Company's ROU assets and lease liabilities consisted of the following:

Balance Sheet line item February 2, 2024 February 3, 2023

Balance Sheet line item January 31, 2025 February 2, 2024

(in millions)

3 unchanged sentences

Total operating lease liabilities $ 193 $ 186

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Other supplemental operating lease information consists of the following:

February 2, 2024 February 3, 2023 January 28, 2022

January 31, 2025 February 2, 2024 February 3, 2023

(in millions)

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ROU assets obtained in exchange for new operating lease obligations $ 51 $ 43 $ 15

Maturities of operating lease liabilities as of February 2, 2024 were as follows:

Maturities of operating lease liabilities as of January 31, 2025 were as follows:

Fiscal Year Total

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Present value of operating lease liabilities $ 193

The weighted-average remaining lease term and the weighted-average discount rate was 5 years and 4.3 % as of February 2, 2024, respectively, and 5 years and 3.5 % as of February 3, 2023, respectively.

As of February 2, 2024, the Company had rental commitments of $ 7 million for facility leases that have not yet commenced.

These operating leases are expected to commence in fiscal 2025 and have a weighted-average lease term of approximately 8 years.

During fiscal 2024 and 2023, revenue recognized from the exercise of purchase options under certain lessor arrangements was immaterial and $ 23 million, respectively.

Operating lease income was immaterial for fiscal 2024, but was $ 2 million and $ 18 million for fiscal 2023 and 2022, respectively.

Note 17—Business Segment Information :

The Company is organized as a matrix comprised of two customer facing operating sectors supported by the enterprise organizations, including the Innovation Factory.

The Company defines its operating sectors based on the way the CODM, currently the Company's CEO, manages the operations for the purpose of allocating resources and assessing performance.

The two operating sectors are responsible for customer relationships, program management, delivery and execution, and, in collaboration with the enterprise organizations, manage the development of the Company's offerings, solutions and capabilities which support the Company's four strategic pivots — portfolio, go-to-market, culture and brand.

The Company's Innovation Factory develops superior enterprise-class solutions which are delivered to its customers as stand-alone solutions or integrated with and aligned to the Company's product offerings 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.

The Company's operating sectors are aggregated into one reportable segment because they have similar economic characteristics and meet the other aggregation criteria including similarities in the nature of the services provided, methods of service delivery, customers served and the regulatory environment in which they operate.

The weighted-average remaining lease term and the weighted-average discount rate was 7 years and 5.2 % as of January 31, 2025, respectively, and 5 years and 4.3 % as of February 2, 2024, respectively.

As of January 31, 2025, the Company had rental commitments of $ 30 million for facility leases that have not yet commenced.

These operating leases have a weighted-average lease term of approximately 9 years.

During fiscal 2025, the Company did not recognize any operating lease income or revenue from the exercise of purchase options under lessor arrangements.

During fiscal 2024, operating lease income and revenue recognized from the exercise of purchase options under lessor arrangements was immaterial .

During fiscal 2023, operating lease income was $ 2 million, and revenue recognized from the exercise of purchase options under certain lessor arrangements was $ 23 million.

Note 16—Business Segments Information :

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

The five business groups represent the Company’s 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 Company defines its operating segments based on the way the CODM, currently the Company's CEO, manages the operations for the purpose of allocating resources and assessing performance.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

The reorganization is designed to enhance management's involvement with customers and advance the Company’s innovation and go-to-market strategy.

The new business group leaders will report directly to the Company's CEO, who will continue to be the CODM.

The Company is currently evaluating the impact of the reorganization on its segment reporting.

The Defense and Intelligence segment provides a diverse portfolio of national security solutions to the DoD and Intelligence Community of the United States Government.

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, AI, mission systems support, training and simulation, and ground vehicles support.

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

The CODM reviews and evaluates segment operating performance using segment "Revenues" and "Adjusted operating income (loss)".

Adjusted operating income is a performance measure that primarily excludes the impact of non-recurring transactions that the Company does not consider to be indicative of the Company's ongoing operating performance.

In fiscal 2025, the Company adopted ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

Amongst other amendments, the standard requires disclosure of significant segment expenses that are regularly provided to the CODM.

Labor base is the significant expense that is regularly provided to the Company's CODM, and primarily includes direct labor on customer contracts.

The segment information for the periods presented was as follows:

Year Ended January 31, 2025

Defense and Intelligence

(in millions)

Revenues $ 5,726 $ 1,753 $ — $ 7,479

Labor base 1,627 500 — 2,127

Other operating expenses (1)

3,590 1,037 20 4,647

Adjusted operating income (loss) $ 509 $ 216 $ ( 20 ) $ 705

Year Ended February 2, 2024

Defense and Intelligence Civilian Corporate Total SAIC

(in millions)

Revenues $ 5,817 $ 1,627 $ — $ 7,444

Labor base 1,597 482 — 2,079

Other operating expenses (1)

3,716 939 51 4,706

Adjusted operating income (loss) $ 504 $ 206 $ ( 51 ) $ 659

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Year Ended February 3, 2023

Defense and Intelligence Civilian Corporate Total SAIC

(in millions)

Revenues $ 5,876 $ 1,828 $ — $ 7,704

Labor base 1,541 538 — 2,079

Other operating expenses (1)

3,827 1,066 52 4,945

Adjusted operating income (loss) $ 508 $ 224 $ ( 52 ) $ 680

(1) "Other operating expenses" includes cost of revenues, selling, general and administrative expenses, and other operating income or loss which are not regularly provided to the CODM.

This excludes labor base which is presented separately.

The table below includes a reconciliation of total "Adjusted operating income" to "Income before income taxes" for the years ended January 31, 2025, February 2, 2024, and February 3, 2023.

2025 February 2,

2024 February 3,

(in millions)

Adjusted operating income

$ 705 $ 659 $ 680

Depreciation of property, plant, and equipment

Amortization of intangible assets

Acquisition and integration costs (1)

Restructuring and impairment costs 8 23 24

Depreciation included in restructuring and impairment costs

( 1 ) ( 1 ) ( 3 )

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

( 3 ) ( 6 ) ( 12 )

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

Interest expense, net

Other (income) expense, net

Income before income taxes

$ 428 $ 620 $ 375

(1) Fiscal 2025 adjustment consists of a reversal of immaterial costs related to the fiscal 2022 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.

Asset information by segment is not a key measure of performance used by the CODM.

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

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Department of Justice, Antitrust Division ("DOJ").

As required by the subpoenas, the Company has provided the DOJ with a broad range of documents related to the investigation, and the Company’s collection and production process remains ongoing.

As required by the subpoenas, the Company has provided the DOJ with a broad range of documents related to the investigation,

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

and the Company’s collection and production process remains ongoing.

The Company is fully cooperating with the investigation.

2 unchanged sentences

On August 27, 2018, the Company received a stop-work order from the United States Marine Corps on the Assault Amphibious Vehicle ("AAV") contract and on October 3, 2018 the program was terminated for convenience by the customer.

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

In fiscal 2025, the Company entered into a $ 21 million termination settlement agreement with the customer to recover the contract costs associated with the termination, which resulted in an increase to "Revenues" of $ 13 million on the Company's consolidated statements of income in fiscal 2025.

The settlement agreement releases the customer from all obligation and claims from the Company.

Proceeds for the full settlement amount were received in the first quarter of fiscal 2026.

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.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of February 2, 2024, 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 CAS.

As of January 31, 2025, 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 CAS.

Letters of Credit and Surety Bonds

The Company has outstanding obligations relating to letters of credit of $ 9 million as of February 2, 2024, principally related to guarantees on insurance policies.

The Company has outstanding obligations relating to letters of credit of $ 8 million as of January 31, 2025, principally related to guarantees on insurance policies.

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

Note 19—Subsequent Events:

Debt Refinancing

Borrowings will bear interest based on the Term SOFR or a base rate, plus an applicable margin of 1.875 % for Term SOFR loans and 0.875 % for base rate loans.

In the event any portion of the Term Loan B3 Facility due February 2031 is repaid prior to August 8, 2024 as a result of a Repricing Event (as defined in the Sixth Amendment), the Company will be required to repay a 1.00 % fee of the amount repaid.

After this initial six month period, the Term Loan B3 Facility due February 2031 may be prepaid at any time without penalty and is subject to the same mandatory prepayments, including from excess cash flow, as the Company’s existing term loans under the Credit Facility.

Transfer of Listing of Common Stock to The Nasdaq Stock Market LLC ("Nasdaq")

On February 20, 2024, the Company provided notice to the New York Stock Exchange (“NYSE”) that it intended to have its shares of common stock voluntarily delisted from the NYSE after the close of trading on March 4, 2024.

The Company’s common stock was authorized for listing on Nasdaq, and effective as of the opening of trading on March 5, 2024, the Company voluntarily transferred the listing of its shares of common stock from the NYSE to the Nasdaq.

The Company’s common stock will continue to trade under the symbol “SAIC."

Quarterly Dividend Declared

Subsequent to the end of fiscal 2024, on March 14, 2024, the Company’s Board of Directors declared a cash dividend of $ 0.37 per share of the Company’s common stock payable on April 26, 2024 to stockholders of record on April 12, 2024.

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-K

Item 9A. Controls and Procedures