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Item 1. Financial Statements

2025-09-04 compared with 2025-06-02 · 228 added, 81 removed, 442 unchanged (41% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended

Three Months Ended Six Months Ended

2025 August 2,

2024 August 1,

2025 August 2,

(in millions, except per share amounts)

3 unchanged sentences

Other operating (income) expense

1 ( 1 ) — ( 4 )

Operating income 139 134 260 265

2 unchanged sentences

Income before income taxes 108 100 194 195

Provision for income taxes ( 18 ) ( 18 )

Income tax (expense) benefit 19 ( 19 ) 1 ( 37 )

Net income $ 127 $ 81 $ 195 $ 158

6 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended

Three Months Ended Six Months Ended

2025 August 2,

2024 August 1,

2025 August 2,

(in millions)

2 unchanged sentences

Net unrealized (loss) gain on derivative instruments

( 2 ) ( 8 ) ( 3 ) ( 5 )

Total other comprehensive (loss) income, net of tax

( 2 ) ( 8 ) ( 3 ) ( 5 )

Comprehensive income $ 125 $ 73 $ 192 $ 153

8 unchanged sentences

Receivables, net 951 1,000

Prepaid expenses and other current assets

Prepaid expenses

Other current assets

Total current assets 1,204 1,154

1 unchanged sentence

Intangible assets, net 721 779

Property, plant, and equipment (net of accumulated depreciation of $ 206 million and $ 200 million at May 2, 2025 and January 31, 2025, respectively)

Property, plant, and equipment (net of accumulated depreciation of $ 210 million and $ 200 million at August 1, 2025 and January 31, 2025, respectively)

Operating lease right of use assets 156 164

13 unchanged sentences

Commitments and contingencies (Note 11)

Common stock, $ 0.0001 par value, 1 billion shares authorized, 47 million and 48 million shares issued and outstanding as of May 2, 2025 and January 31, 2025, respectively

Common stock, $ 0.0001 par value, 1 billion shares authorized, 46 million and 48 million shares issued and outstanding as of August 1, 2025 and January 31, 2025, respectively

Additional paid-in capital — —

12 unchanged sentences

(in millions)

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

Balance at May 2, 2025 47 $ — $ 1,494 $ 11 $ 1,505

Net income — — 127 — 127

4 unchanged sentences

Stock-based compensation, net of shares withheld for taxes (1)

Repurchases of stock ( 1 ) ( 14 ) ( 95 ) — ( 109 )

Balance at August 1, 2025 46 $ — $ 1,508 $ 9 $ 1,517

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

Net income — — 195 — 195

Issuances of stock — 12 — — 12

Other comprehensive loss, net of tax

— — — ( 3 ) ( 3 )

Cash dividends of $ 0.74 per share

— — ( 36 ) — ( 36 )

Stock-based compensation, net of shares withheld for taxes (1)

Repurchases of stock ( 2 ) ( 18 ) ( 216 ) — ( 234 )

Balance at August 1, 2025 46 $ — $ 1,508 $ 9 $ 1,517

Balance at May 3, 2024 51 $ 251 $ 1,489 $ 19 $ 1,759

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

Net income — — 81 — 81

Issuances of stock — 5 — — 5

Other comprehensive income, net of tax

Other comprehensive loss, net of tax

— — — ( 8 ) ( 8 )

Cash dividends of $ 0.37 per share

1 unchanged sentence

Stock-based compensation, net of shares withheld for taxes (1)

Repurchases of stock ( 1 ) ( 204 ) — — ( 204 )

Balance at August 2, 2024 50 $ 63 $ 1,551 $ 11 $ 1,625

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

Net income — — 158 — 158

Issuances of stock — 9 — — 9

Other comprehensive loss, net of tax

— — — ( 5 ) ( 5 )

Cash dividends of $ 0.74 per share

— — ( 39 ) — ( 39 )

Stock-based compensation, net of shares withheld for taxes (1)

Repurchases of stock ( 2 ) ( 285 ) — — ( 285 )

Balance at May 3, 2024 51 $ 251 $ 1,489 $ 19 $ 1,759

(1) During the three months ended May 2, 2025 and May 3, 2024, shares withheld for taxes related to stock-based compensation arrangements amounted to $ 17 million and $ 22 million, respectively.

Balance at August 2, 2024

50 $ 63 $ 1,551 $ 11 $ 1,625

(1) During the three months ended August 1, 2025 and August 2, 2024, shares withheld for taxes related to stock-based compensation arrangements amounted to $ 2 million and $ 1 million, respectively.

During the six months ended August 1, 2025 and August 2, 2024, shares withheld for taxes related to stock-based compensation arrangements amounted to $ 19 million and $ 23 million, respectively.

See accompanying notes to condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

2025 August 2,

(in millions)

4 unchanged sentences

Stock-based compensation expense 25 25

Deferred income taxes 109 ( 8 )

Other — ( 3 )

2 unchanged sentences

Prepaid expenses and other current assets

Accounts payable and accrued liabilities

Accounts payable and other accrued liabilities

Accrued payroll and employee benefits ( 3 ) ( 32 )

8 unchanged sentences

Net cash used in investing activities

( 22 ) ( 16 )

Cash flows from financing activities:

Principal payments on borrowings ( 689 ) ( 310 )

Proceeds from borrowings 1,307 673

Principal payments on borrowings ( 1,235 ) ( 606 )

Stock repurchased and retired or withheld for taxes on equity awards ( 252 ) ( 304 )

52 unchanged sentences

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

As of May 2, 2025 and January 31, 2025, the fair value of the Company's investments totaled $ 35 million and $ 36 million, respectively, and are included in "Other assets" on the condensed consolidated balance sheets.

As of August 1, 2025 and January 31, 2025, the fair value of the Company's investments totaled $ 36 million and are included in "Other assets" on the condensed consolidated balance sheets.

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

39 unchanged sentences

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

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

1 unchanged sentence

Basic EPS is computed by dividing net income by the basic weighted-average number of shares outstanding.

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

Diluted EPS is computed similarly to basic EPS, except the weighted-average number of shares outstanding is

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

increased to include the dilutive effect of outstanding stock-based awards.

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

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

Three Months Ended

Three Months Ended Six Months Ended

2025 August 2,

2024 August 1,

2025 August 2,

(in millions)

Basic weighted-average number of shares outstanding

46.7 50.9 47.1 51.3

Dilutive common share equivalents - stock options and other stock-based awards 0.1 0.3 0.2 0.4

Diluted weighted-average number of shares outstanding

Antidilutive stock awards excluded from the weighted-average number of shares outstanding used to compute diluted EPS for the three months ended May 2, 2025 and May 3, 2024 were immaterial .

46.8 51.2 47.3 51.7

Antidilutive stock awards excluded from the weighted-average number of shares outstanding used to compute diluted EPS for the three and six months ended August 1, 2025 and August 2, 2024 were immaterial .

Share Repurchases

3 unchanged sentences

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

During the three months ended May 2, 2025, the Company repurchased approximately 1.2 million shares of its common stock from the open market under its existing share repurchase plan for approximately $ 125 million.

As of May 2, 2025, the Company has repurchased approximately 25.7 million shares of its common stock under the plan for approximately $ 2.2 billion.

The Company declared and paid a quarterly dividend of $ 0.37 per share of its common stock during the three months ended May 2, 2025.

Subsequent to the end of the quarter, on May 29, 2025, the Company's Board of Directors declared a quarterly dividend of $ 0.37 per share of the Company's common stock payable on July 25, 2025 to stockholders of record on July 11, 2025.

During the six months ended August 1, 2025, the Company repurchased approximately 2.1 million shares of its common stock from the open market under its existing share repurchase plan for approximately $ 231 million.

As of August 1, 2025, the Company has repurchased approximately 26.6 million shares of its common stock under the plan for approximately $ 2.3 billion.

The Company declared and paid a quarterly dividend of $ 0.37 per share of its common stock during the three months ended August 1, 2025.

Subsequent to the end of the quarter, on August 28, 2025, the Company's Board of Directors declared a quarterly dividend of $ 0.37 per share of the Company's common stock payable on October 24, 2025 to stockholders of record on October 10, 2025.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 3—Revenues:

6 unchanged sentences

and performance being better or worse than previously estimated.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO CONDENSED 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.

2 unchanged sentences

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

Three Months Ended

Three Months Ended Six Months Ended

2025 August 2,

2024 August 1,

2025 August 2,

(in millions, except per share amounts)

Net favorable (unfavorable) adjustments

$ 5 $ ( 1 ) $ 3 $ —

Net favorable (unfavorable) adjustments, after tax

Diluted EPS impact $ 0.13 $ ( 0.02 ) $ 0.06 $ —

Revenues were unchanged and $ 1 million higher for the three months ended May 2, 2025 and May 3, 2024, respectively, due to net revenue recognized from performance obligations satisfied in prior periods.

Revenues were $ 7 million higher for the three and six months ended August 1, 2025, and $ 1 million higher for the six months ended August 2, 2024, due to net revenue recognized from performance obligations satisfied in prior periods.

There was no revenue recognized during the three months ended August 2, 2024 from performance obligations satisfied in prior periods.

Disaggregation of Revenues

4 unchanged sentences

Three Months Ended

August 1, 2025

August 2, 2024

Defense and Intelligence

7 unchanged sentences

Total $ 1,374 $ 395 $ 1,769 $ 1,415 $ 403 $ 1,818

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Six Months Ended

August 1, 2025

August 2, 2024

Defense and Intelligence

(in millions)

Department of Defense $ 1,902 $ 5 $ 1,907 $ 1,924 $ 2 $ 1,926

Intelligence and other federal government agencies

889 768 1,657 913 745 1,658

Commercial, state and local governments and international

16 66 82 14 67 81

Total $ 2,807 $ 839 $ 3,646 $ 2,851 $ 814 $ 3,665

Disaggregated revenues by contract type were as follows:

Three Months Ended

August 1, 2025

August 2, 2024

Defense and Intelligence

7 unchanged sentences

Total $ 1,374 $ 395 $ 1,769 $ 1,415 $ 403 $ 1,818

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Six Months Ended

August 1, 2025

August 2, 2024

Defense and Intelligence

(in millions)

Cost reimbursement $ 2,227 $ 33 $ 2,260 $ 2,219 $ 41 $ 2,260

Time and materials ("T&M")

258 568 826 311 532 843

Firm-fixed price ("FFP")

322 238 560 321 241 562

Total $ 2,807 $ 839 $ 3,646 $ 2,851 $ 814 $ 3,665

Disaggregated revenues by prime versus subcontractor were as follows:

Three Months Ended

May 2, 2025 May 3, 2024

August 1, 2025 August 2, 2024

Defense and Intelligence

5 unchanged sentences

Total $ 1,374 $ 395 $ 1,769 $ 1,415 $ 403 $ 1,818

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Six Months Ended

August 1, 2025

August 2, 2024

Defense and Intelligence

(in millions)

Prime contractor to federal government $ 2,538 $ 701 $ 3,239 $ 2,592 $ 677 $ 3,269

Subcontractor to federal government 253 72 325 245 70 315

Other 16 66 82 14 67 81

Total $ 2,807 $ 839 $ 3,646 $ 2,851 $ 814 $ 3,665

Contract Balances

Contract balances for the periods presented were as follows:

Balance Sheet line item May 2,

Balance Sheet line item August 1,

2025 January 31,

6 unchanged sentences

Contract liabilities - current Other accrued liabilities

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

During the three months ended May 2, 2025 and May 3, 2024, the Company recognized revenues of $ 17 million and $ 20 million relating to amounts that were included in the opening balance of contract liabilities as of January 31, 2025 and February 2, 2024 , respectively.

Contract liabilities - non-current

Other long-term liabilities

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

During the three and six months ended August 1, 2025, the Company recognized revenues of $ 8 million and $ 25 million, respectively, relating to amounts that were included in the opening balance of contract liabilities as of January 31, 2025.

During the three and six months ended August 2, 2024, the Company recognized revenues of $ 10 million and $ 30 million, respectively, relating to amounts that were included in the opening balance of contract liabilities as of February 2, 2024.

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 May 2, 2025, the Company had approximately $ 5.8 billion of RPO.

As of August 1, 2025, the Company had approximately $ 6.1 billion of RPO.

The Company expects to recognize revenue on approximately 79 % of the RPO over the next 12 months and approximately 89 % over the next 24 months, with the remaining recognized thereafter.

6 unchanged sentences

$ 2,851 $ 2,851

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Goodwill is not amortized, but rather tested for potential impairment annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

1 unchanged sentence

There were no impairments of goodwill during the periods presented.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Intangible Assets

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

May 2, 2025 January 31, 2025

August 1, 2025 January 31, 2025

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

4 unchanged sentences

Total intangible assets $ 1,471 $ ( 750 ) $ 721 $ 1,473 $ ( 694 ) $ 779

Amortization expense related to intangible assets was $ 29 million for the three months ended May 2, 2025 and May 3, 2024.

Amortization expense related to intangible assets was $ 29 million and $ 58 million for the three and six months ended August 1, 2025 and August 2, 2024, respectively.

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

As of May 2, 2025, the estimated future annual amortization expense related to intangible assets is as follows:

As of August 1, 2025, the estimated future annual amortization expense related to intangible assets is as follows:

Fiscal Year (in millions)

3 unchanged sentences

Note 5—Income Taxes:

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

The Company’s 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.

The Company’s 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.

The Company's effective income tax rate was ( 17.2 )% and ( 0.4 )% for the three and six months ended August 1, 2025, respectively, and 19.6 % and 19.3 % for the three and six months ended August 2, 2024, respectively.

The effective tax rate significantly decreased compared to the same period last year primarily due to a $ 47 million benefit from an IRS audit settlement subject to final administrative approvals covering fiscal years 2016 through 2019 and decreases in liabilities for uncertain tax positions for the remaining open tax years.

Additionally, the Company’s effective tax rate differs from the statutory tax rate primarily due to research and development tax credits and tax benefits from employee share-based compensation.

On July 4, 2025, the One Big Beautiful Bill Act ("the Act") was enacted, introducing several significant changes to U.S.

corporate income tax law.

One key provision of the Act is the permanent reinstatement of the immediate expensing of U.S.

research and development expenditures which the Company expects will result in a cash tax benefit in the current year.

Based on the Company's interpretation of the Act, there will be an immaterial increase to the Company's effective tax rate for the year.

The Company is awaiting interpretive guidance from the IRS, and therefore the current estimated impacts of the Act are subject to change.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

2 unchanged sentences

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

May 2, 2025 January 31, 2025

August 1, 2025 January 31, 2025

rate Effective

12 unchanged sentences

$ 1,852 $ ( 8 ) $ 1,844 $ 1,915 $ ( 8 ) $ 1,907

(1) The stated interest rate for the Revolving Credit Facility due June 2027 reflects the weighted average interest rate for outstanding borrowings as of May 2, 2025.

As of May 2, 2025, the Company had 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 Revolving Credit Facility due June 2027 (the "Revolving Credit Facility").

During the three months ended May 2, 2025, the Company made scheduled principal payments of $ 23 million and $ 1 million on the Term Loan A Facility due June 2027 and the Term Loan B3 Facility due February 2031, respectively.

During the three months ended May 2, 2025, the Company borrowed $ 750 million and repaid $ 665 million under the Revolving Credit Facility.

As of May 2, 2025, the outstanding principal under the Revolving Credit Facility was classified as "Debt, current portion" on the condensed consolidated balance sheets.

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

As of August 1, 2025, the Company had 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 Revolving Credit Facility due June 2027 (the "Revolving Credit Facility").

During the three and six months ended August 1, 2025, the Company made scheduled principal payments of $ 23 million and $ 46 million on the Term Loan A Facility due June 2027 and made scheduled principal payments of $ 1 million and $ 2 million on the Term Loan B3 Facility due February 2031, respectively.

During the three and six months ended August 1, 2025, the Company borrowed $ 557 million and $ 1.3 billion, respectively, and repaid $ 522 million and $ 1.2 billion, respectively, under the Revolving Credit Facility.

As of August 1, 2025, the outstanding principal under the Revolving Credit Facility was classified as "Debt, current portion" on the condensed consolidated balance sheets.

Subsequent to quarter end, the Company repaid $ 95 million of the outstanding principal under the Revolving Credit Facility.

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

As of May 2, 2025, the Company was in compliance with the covenants under its Credit Facility.

As of May 2, 2025 and January 31, 2025, the carrying value of the Company’s outstanding debt obligations approximated its fair value.

As of August 1, 2025, the Company was in compliance with the covenants under its Credit Facility.

As of August 1, 2025 and January 31, 2025, the carrying value of the Company’s outstanding debt obligations approximated its fair value.

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

Maturities of debt as of May 2, 2025 are:

Maturities of debt as of August 1, 2025 are:

Fiscal Year Total

8 unchanged sentences

Fair Value of Asset (1) at

Notional Amount at May 2, 2025 Pay Fixed

Notional Amount at August 1, 2025 Pay Fixed

Rate Settlement and

Termination May 2,

Termination August 1,

2025 January 31, 2025

6 unchanged sentences

See Note 8—Changes in Accumulated Other Comprehensive Income (Loss) 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.

The Company estimates that it will reclassify $ 4 million of unrealized gains from accumulated other comprehensive income into earnings from May 3, 2025 until the interest rate swaps mature on October 31, 2025.

The Company estimates that it will reclassify $ 2 million of unrealized gains from accumulated other comprehensive income into earnings from August 2, 2025 until the interest rate swaps mature on October 31, 2025.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

9 unchanged sentences

(in millions)

Three months ended May 2, 2025

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

Other comprehensive loss before reclassifications

Three months ended August 1, 2025

Balance at May 2, 2025 $ 3 $ 8 $ 11

Other comprehensive income before reclassifications

Amounts reclassified from accumulated other comprehensive income ( 3 ) — ( 3 )

1 unchanged sentence

Net other comprehensive loss ( 2 ) — ( 2 )

Balance at August 1, 2025 $ 1 $ 8 $ 9

Three months ended August 2, 2024

Balance at May 3, 2024 $ 14 $ 5 $ 19

Three months ended May 3, 2024

Other comprehensive loss before reclassifications

( 6 ) — ( 6 )

Amounts reclassified from accumulated other comprehensive income

( 4 ) — ( 4 )

Income tax impact 2 — 2

Net other comprehensive loss

( 8 ) — ( 8 )

Balance at August 2, 2024 $ 6 $ 5 $ 11

Six months ended August 1, 2025

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

Other comprehensive income before reclassifications

Amounts reclassified from accumulated other comprehensive income ( 5 ) — ( 5 )

Income tax impact 1 — 1

Net other comprehensive loss ( 3 ) — ( 3 )

Balance at August 1, 2025 $ 1 $ 8 $ 9

Six months ended August 2, 2024

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

3 unchanged sentences

Income tax impact

Net other comprehensive income

Balance at May 3, 2024 $ 14 $ 5 $ 19

Net other comprehensive loss

( 5 ) — ( 5 )

Balance at August 2, 2024 $ 6 $ 5 $ 11

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

4 unchanged sentences

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

During the three months ended May 2, 2025 and May 3, 2024, the Company incurred purchase discount fees of approximately $ 4 million and $ 3 million, respectively.

During the three and six months ended August 1, 2025, the Company incurred purchase discount fees of approximately $ 3 million and $ 7 million, respectively.

During the three and six months ended August 2, 2024, the Company incurred purchase discount fees of $ 4 million and $ 7 million, respectively.

The purchase discount fees are presented in "Other (income) expense, net" on the condensed consolidated statements of income and are reflected as cash flows from operating activities on the condensed consolidated statements of cash flows.

MARPA Facility activity consisted of the following:

Three Months Ended

Six Months Ended

2025 August 2,

(in millions)

6 unchanged sentences

Remaining sold receivables $ 240 $ 144

(1) During the three months ended May 2, 2025 and May 3, 2024, the Company recorded a net increase to cash flows from operating activities of $ 136 million and $ 79 million, respectively, from sold receivables.

(2) Primarily represents the cash collected on behalf of but not yet remitted to the Purchaser as of May 2, 2025 and May 3, 2024.

(1) For the six months ended August 1, 2025, the Company recorded a net increase of $ 101 million to cash flows from operating activities from sold receivables.

For the six months ended August 2, 2024, the Company recorded a net decrease of $ 30 million to cash flows from operating activities from sold receivables.

(2) Primarily represents the cash collected on behalf of but not yet remitted to the Purchaser as of August 1, 2025 and August 2, 2024.

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

13 unchanged sentences

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 its ongoing operating performance.

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

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

The CODM uses revenues and adjusted operating income to assess the financial performance of each operating segment against pre-established performance targets and to allocate resources for strategic business decisions, including investments in certain products or services, potential acquisitions or divestitures, and capital deployment.

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

The segment information for the periods presented was as follows:

Three Months Ended May 2, 2025

Three Months Ended August 1, 2025

Defense and Intelligence

2 unchanged sentences

Labor base 410 124 — 534

Other operating expenses (1)

Other operating expenses (income) (1)

840 217 ( 4 ) 1,053

Adjusted operating income (loss) $ 124 $ 54 $ 4 $ 182

Three Months Ended May 3, 2024

Three Months Ended August 2, 2024

Defense and Intelligence Civilian Corporate Total SAIC

2 unchanged sentences

Labor base 403 125 — 528

Other operating expenses (1)

Other operating expenses (income) (1)

888 232 1 1,121

Adjusted operating income (loss) $ 124 $ 46 $ ( 1 ) $ 169

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

Six Months Ended August 1, 2025

Defense and Intelligence

(in millions)

Revenues $ 2,807 $ 839 $ — $ 3,646

Labor base 841 257 — 1,098

Other operating expenses (income) (1)

1,727 476 5 2,208

Adjusted operating income (loss) $ 239 $ 106 $ ( 5 ) $ 340

Six Months Ended August 2, 2024

Defense and Intelligence Civilian Corporate Total SAIC

(in millions)

Revenues $ 2,851 $ 814 $ — $ 3,665

Labor base 832 254 — 1,086

Other operating expenses (income) (1)

1,771 468 6 2,245

Adjusted operating income (loss) $ 248 $ 92 $ ( 6 ) $ 334

(1) "Other operating expenses (income)" includes cost of revenues, selling, general and administrative expenses, and other operating income or expenses 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 three months ended May 2, 2025 and May 3, 2024.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The table below includes a reconciliation of total "Adjusted operating income" to "Income before income taxes" for the three and six months ended August 1, 2025 and August 2, 2024.

Three Months Ended

Six Months Ended

2025 August 2,

2024 August 1,

2025 August 2,

(in millions)

Adjusted operating income

$ 182 $ 169 $ 340 $ 334

Depreciation of property, plant, and equipment

Amortization of intangible assets

Acquisition and integration costs

Restructuring and impairment costs 3 2

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

Acquisition, integration, restructuring and impairment costs

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

— ( 1 ) ( 2 ) ( 2 )

Costs related to the settlement of federal tax audits

Interest expense, net

1 unchanged sentence

Income before income taxes

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

$ 108 $ 100 $ 194 $ 195

(1) Adjustment reflects the portion of acquisition, integration, restructuring and impairment costs recovered through the Company's 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.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 11—Legal Proceedings and Other Commitments and Contingencies:

6 unchanged sentences

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

In June 2017, the Company filed a patent infringement complaint in the United States Court of Federal Claims against the United States and three other parties, alleging infringement of the Company’s Enhanced Rapid Engagement and Vision in Ambient Lighting patents.

In July 2025, the Company executed a favorable settlement agreement with all parties.

As part of the settlement, the Company recovered $ 15 million and recognized $ 9 million as a recovery for costs previously incurred within "Selling, general and administrative expenses" within the Company’s condensed consolidated statements of income during the second quarter of fiscal 2026.

In addition, the Company recognized $ 6 million of costs that was contingent on the settlement of the patent infringement matter.

Government Investigations, Audits and Reviews

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They also review the adequacy of the contractor’s compliance with government standards for its business systems.

Adverse findings in these investigations, audits, or reviews can lead to criminal, civil or administrative proceedings, and the Company could face disallowance of previously billed costs, penalties, fines, compensatory damages and suspension or debarment from doing business with governmental agencies.

Adverse findings in

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

these investigations, audits, or reviews can lead to criminal, civil or administrative proceedings, and the Company could face disallowance of previously billed costs, penalties, fines, compensatory damages and suspension or debarment from doing business with governmental agencies.

Due to the Company’s reliance on government contracts, adverse findings could also have a material impact on the Company’s business, including its financial position, results of operations and cash flows.

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

As of May 2, 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 U.S.

As of August 1, 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 U.S.

government Cost Accounting Standards.

Letters of Credit and Surety Bonds

The Company has outstanding obligations relating to letters of credit of $ 8 million as of May 2, 2025, principally related to guarantees on insurance policies.

The Company has outstanding obligations relating to letters of credit of $ 8 million as of August 1, 2025, principally related to guarantees on insurance policies.

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

1 unchanged sentence

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

What changed 10-Q

Item 1. Financial Statements