What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-06-02 compared with 2024-12-05 · 80 added, 140 removed, 229 unchanged (49% of the section changed)

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We use the terms "SAIC," the “Company,” “we,” “us” and “our” to refer to Science Applications International Corporation and its consolidated subsidiaries.

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

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

Fiscal 2026 began on February 1, 2025 and ends on January 30, 2026, while fiscal 2025 began on February 3, 2024 and ended on January 31, 2025.

Business Overview

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

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

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

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

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

We have five customer facing business groups supported by the enterprise organizations, including the Innovation Factory.

The five business groups, which are also our 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.

Our 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.

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SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

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

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

Our Innovation Factory supports the operating segments by developing enterprise-class solutions which are delivered to our customers as stand-alone solutions or integrated with and aligned to our 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.

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Economic Opportunities, Challenges, and Risks

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

During the three months ended May 2, 2025, we generated 98% of our revenues from contracts with the U.S.

government, including subcontracts on which we perform.

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

In March 2024, the President signed appropriation measures that provide funding for government fiscal year ("GFY") 2024 for all of the U.S.

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

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

In September 2024, the President signed a continuing resolution which will fund the U.S.

government under GFY 2024 levels through December 2024.

If Congress is not able to pass appropriations for GFY 2025 funding by December 2024, it could result in the U.S.

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

In addition, if full-year appropriations are not signed into law by April 30, 2025, a 1% sequestration would be applied to all agencies.

In March 2025, the President signed a continuing resolution ("CR") that extends government funding through the close of government fiscal year ("GFY") 2025.

The measure provides budget certainty for agencies through September 30, 2025.

The CR also provides flexibility for new starts on programs at the DoD, which are typically not allowed under CRs.

Under terms of the Fiscal Responsibility Act, a 1% sequestration is to be applied to all agencies operating under CRs past April 30, 2025.

However, the law provides discretion on implementation of these reductions to the Office of Management and Budget ("OMB").

It is unclear where or if the OMB will choose to implement such cuts.

Congress is currently working on a budget reconciliation package that will add new defense and border defense spending, among other provisions.

government administration is putting in place a number of executive orders and actions which could affect our business.

In addition, the Department of Government Efficiency is driving changes in the structure and priorities of Federal agencies.

Reductions in personnel, changes in agency alignment, and required reviews of new contracting activity are slowing new awards.

Agencies are expected to conduct comprehensive reviews of existing and new contracting activity to identify potential efficiencies or nonalignment with new Administration priorities.

SAIC contracts will be subject to these reviews.

We have not experienced a material financial statement impact from recent executive orders or program cancellations across the government, however decreases in, or delays in contract awards and in government spending on the types of programs that we support, and terminations or stop-work-orders on government contracts on which we are currently performing could adversely affect our future revenues and profitability.

In January 2025, the Federal debt ceiling was reached, and the U.S.

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

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

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

Department of the Treasury is operating under "extraordinary measures" to service debt obligations of the U.S.

Failure to pass legislation surrounding the Federal debt ceiling could lead to negative impacts on our business, and any agreement to raise the ceiling that significantly reduces future funding could affect our addressable market in subsequent years.

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

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government has put renewed emphasis on increasing the number of small business prime set-aside contracts that further reduce the addressable market in some areas.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Despite the budget and competitive pressures affecting the industry, we believe we are well-positioned to protect and expand existing customer relationships and benefit from opportunities that we have not previously pursued.

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

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

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

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The following table summarizes our condensed consolidated results of operations:

Three Months Ended Nine Months Ended

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2023 November 1,

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Three Months Ended

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(dollars in millions)

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Selling, general and administrative expenses

83 (5 %) 87 245 (5 %) 259

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

Other operating (income) expense

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$ 68 (12 %) $ 77

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

Revenues decreased $66 million for the nine months ended November 1, 2024 as compared to the same period in the prior year primarily due to the sale of the Supply Chain Business ($188 million) in the prior year (see Note 4—Divestitures), and contract completions.

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

Adjusting for the impact of the divestiture, revenues grew 2.2%.

Revenues increased $30 million for the three months ended May 2, 2025 as compared to the same period in the prior year primarily due to ramp up in volume in existing and new contracts, partially offset by contract completions.

Operating Income.

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

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

Operating income as a percentage of revenues for the three months ended May 2, 2025 decreased from the comparable prior year period primarily due to timing and volume mix in our contract portfolio.

Income Taxes.

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

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

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

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

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

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Our effective income tax rate was 20.6% and 19.0% for the three months ended May 2, 2025 and May 3, 2024, respectively.

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

Our effective tax rate for the three months ended May 2, 2025 increased compared to the same period in the prior year primarily due to lower tax benefits from employee share-based compensation.

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

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Treasury, among other factors.

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

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

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

adoption is uncertain, several countries where we operate have implemented it, and others are in the process of adopting.

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

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Segment and Corporate Results

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

Adjusted operating income is a Non-GAAP measure.

See "Non-GAAP Measures" section below for additional information about this measure.

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

Defense and Intelligence Three Months Ended Nine Months Ended

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2023 November 1,

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Defense and Intelligence Three Months Ended

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(dollars in millions)

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As a percentage of revenues 6.8 % 7.5 %

Depreciation of property, plant and equipment

1 — % 1 1 — % 1

Amortization of intangible assets

17 6 % 16 51 2 % 50

Restructuring and impairment costs 1 100 % —

Recovery of acquisition and integration costs and restructuring and impairment costs (1)

Adjusted operating income (2)

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As a percentage of revenues 8.0 % 8.6 %

(1) 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.

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

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

Revenues decreased $99 million for the nine months ended November 1, 2024 as compared to the same period in the prior year primarily due to the sale of the Supply Chain Business ($188 million) in the prior year, and contract completions.

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

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

Revenues decreased $3 million for the three months ended May 2, 2025 as compared to the same period in the prior year primarily due to contract completions, partially offset by ramp up in volume on existing and new contracts.

Operating and adjusted operating income (2) :

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

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

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Three Months Ended Nine Months Ended

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2023 November 1,

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Operating and adjusted operating income as a percentage of revenues for the three months ended May 2, 2025 decreased from the comparable prior year period primarily due to timing and volume mix in our contract portfolio.

Three Months Ended

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(dollars in millions)

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

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

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

Revenues increased $33 million for the three months ended May 2, 2025 as compared to the same period in the prior year primarily due to ramp up in volume on existing and new contracts.

Operating and adjusted operating income (1) :

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

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

Three Months Ended Nine Months Ended

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2023 November 1,

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Operating and adjusted operating income as a percentage of revenues for the three months ended May 2, 2025 increased from the comparable prior year period due to ramp up in volume on existing and new contracts.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Three Months Ended

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(dollars in millions)

Operating (loss) income

Operating loss

$ (17) 70 % $ (10)

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Acquisition and integration costs

— — % — (2) (300 %) 1

Restructuring and impairment costs 2 — % 2

Recovery of acquisition and integration costs and restructuring and impairment costs (1)

— (100 %) (1) (2) 100 % (1)

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

Adjusted operating loss (2)

$ (9) 80 % $ (5)

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

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

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

Operating and adjusted operating (loss) income:

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

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

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

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

Operating and adjusted operating loss (2) :

Operating and adjusted operating loss increased $7 million and $4 million, respectively, for the three months ended May 2, 2025 as compared to the same period in the prior year primarily due to higher selling, general and administrative expenses.

Non-GAAP Measures

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

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

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

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

The acquisition and integration costs relate to our acquisitions.

The restructuring and impairment costs represent the reorganization and facilities optimization costs and impairments of long-lived assets, along with associated depreciation.

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

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

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

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

EBITDA and Adjusted EBITDA.

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

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

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

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

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

The acquisition and integration costs relate to our acquisitions.

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

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

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

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

Three Months Ended Nine Months Ended

2024 November 3,

2023 November 1,

2024 November 3,

Three Months Ended

(dollars in millions)

$ 1,877 $ 1,847

Net income $ 68 $ 77

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Recovery of acquisition and integration costs and restructuring and impairment costs (1)

— (1) (2) (1)

(Gain) loss on divestitures, net of transaction costs

Adjusted EBITDA $ 157 $ 166

Adjusted EBITDA as a percentage of revenues 8.4 % 9.0 %

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

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

government Cost Accounting Standards.

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

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

Adjusted EBITDA as a percentage of revenues for the three months ended May 2, 2025 decreased compared to the same period in the prior year primarily due to timing and volume mix in our contract portfolio.

Other Key Performance Measures

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

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

We segregate our backlog into two categories as follows:

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

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

• Negotiated Unfunded Backlog.

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

November 1, 2024 February 2, 2024

May 2, 2025 January 31, 2025

Defense and Intelligence

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Total backlog $ 18,381 $ 3,962 $ 22,343 $ 17,940 $ 3,917 $ 21,857

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

We had net bookings worth an estimated $2.4 billion during the three months ended May 2, 2025.

Contract Types.

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Three Months Ended

November 1, 2024

November 3, 2023

Defense and Intelligence

(in millions)

Cost reimbursement 79 % 4 % 62 % 79 % 5 % 62 %

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Nine Months Ended

November 1, 2024

November 3, 2023

Defense and Intelligence

(in millions)

Cost reimbursement 79 % 6 % 63 % 76 % 4 % 60 %

Time and materials ("T&M")

10 % 64 % 22 % 8 % 60 % 19 %

Firm-fixed price ("FFP")

11 % 30 % 15 % 16 % 36 % 21 %

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

The change in contract mix for the nine months ended November 1, 2024 is primarily due to a decrease in firm-fixed price type contracts due to the divestiture of the Supply Chain Business in the prior year, which historically had a higher proportion of these contracts.

Cost of Revenues Mix.

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Three Months Ended

November 1, 2024

November 3, 2023

Defense and Intelligence

(in millions)

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

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

Nine Months Ended

November 1, 2024

November 3, 2023

Defense and Intelligence

(in millions)

Labor-related cost of revenues 56 % 58 % 56 % 53 % 58 % 54 %

Subcontractor-related cost of revenues 29 % 31 % 30 % 30 % 34 % 31 %

Supply chain materials-related cost of revenues — % — % — % 4 % — % 3 %

Other materials-related cost of revenues 15 % 11 % 14 % 13 % 8 % 12 %

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

The change in cost of revenues mix for the nine months ended November 1, 2024 is primarily due to a decrease in supply chain materials-related costs due to the divestiture of the Supply Chain Business in the prior year.

Liquidity and Capital Resources

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

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

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

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

During the first and third quarters of fiscal 2025, we amended our Credit Facility.

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

Historical Cash Flow Trends

The following table summarizes our cash flows:

Nine Months Ended

2024 November 3,

Three Months Ended

(in millions)

Net cash provided by operating activities $ 100 $ 98

Net cash (used in) provided by investing activities

Net cash used in investing activities

Net cash used in financing activities (94) (136)

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

Net decrease in cash, cash equivalents and restricted cash

Net Cash Provided by Operating Activities.

Cash flows provided by operating activities increased $46 million for the nine months ended November 1, 2024 as compared to the prior year primarily due to higher cash provided by the Master Accounts Receivable Purchase Agreement ("MARPA Facility") in the current year (see Note 10—Sales of Receivables to the condensed consolidated financial statements contained within this report for additional information), and lower tax payments in the current year, partially offset by timing of customer collections and vendor payments, higher incentive-based compensation payments in the current year, and other changes in working capital.

Net Cash (Used in) Provided by Investing Activities.

Cash used in investing activities for the nine months ended November 1, 2024 was $15 million compared to cash provided by investing activities of $324 million in the prior year period.

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

Cash flows provided by operating activities for the three months ended May 2, 2025 increased $2 million compared to the prior year primarily due to higher cash provided by the Master Accounts Receivable Purchase Agreement ("MARPA Facility") in the current year (see Note 9—Sales of Receivables to the condensed consolidated financial statements contained within this report for additional

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

information) and lower incentive-based compensation payments in the current year, partially offset by timing of vendor payments and other changes in working capital.

Net Cash Used in Investing Activities.

Cash used in investing activities for the three months ended May 2, 2025 increased $8 million compared to the prior year primarily due to higher contributions to investments in the current year.

Net Cash Used in Financing Activities.

Cash used in financing activities for the nine months ended November 1, 2024 decreased compared to the prior year period primarily due to higher proceeds received from borrowings, net of principal payments, partially offset by higher share repurchases in the current year.

Cash used in financing activities for the three months ended May 2, 2025 decreased $42 million compared to the prior year period primarily due to higher proceeds from borrowings, net of principal payments, partially offset by higher plan share repurchases in the current year.

Critical Accounting Policies and Estimates

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

There have been no changes to our critical accounting policies and estimates during the three months ended May 2, 2025 from those disclosed in our most recently filed Annual Report on Form 10-K.

Recently Issued But Not Yet Adopted Accounting Pronouncements

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis