What changed in this filing

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Item 1A. Risk Factors

2026-03-16 compared with 2025-03-17 · 48 added, 40 removed, 287 unchanged (23% of the section changed)

9 unchanged sentences

Our relationship with the U.S.

government – particularly with DoD agencies – is key to maintaining these contracts, winning new work, and growing our revenues.

government – particularly with DoW agencies – is key to maintaining these contracts, winning new work, and growing our revenues.

Negative press reports or publicity, regardless of accuracy, could harm our reputation and jeopardize our business with our customers, potentially adversely affecting our revenues, cash flows, and financial results.

6 unchanged sentences

A change in administration or changing national priorities may reduce defense-related and other programs due to competing demands for federal funds and the number and intensity of military conflicts or other factors.

The DoW has released a new Acquisition Transformation Strategy to rebuild the defense industrial base, which prioritizes speed and execution in the acquisition process, and may restructure contract requirements, reorganize the DoW workforce, shift its acquisition strategy toward longer-term contract structures, and require increased upfront investment on R&D-based concepts and solutions.

We will remain engaged and responsive to these new requirements and assess impacts on our procurement, contracting and program execution.

When Congress fails to pass a budget before the end of the fiscal year, government operations typically are funded through one or more continuing resolutions ("CRs"), which enable government agencies to continue operating but do not allow new spending initiatives.

CRs can lead to contract awards being delayed, canceled, or funded at lower levels, which could adversely impact our operations, cash flows, and financial results.

In addition, it is possible that an impasse on policy issues could threaten continuous government funding through September 30, 2025, or result in another federal government shutdown, which could cause us to incur labor or other costs without reimbursement under customer contracts or the delay or cancellation of key programs, and could adversely affect our operations, cash flows, and financial results.

In addition, it is possible that an impasse on policy issues could impact continuous government funding for the Department of Homeland Security through September 30, 2026, which could cause us to incur labor or other costs without reimbursement under customer contracts or the delay or cancellation of key programs, and could adversely affect our operations, cash flows, and financial results.

government also conducts periodic reviews of U.S.

defense strategies and priorities, which may shift DoD budgetary priorities, reduce overall spending or delay contract or task order awards for defense-related programs from which we would otherwise expect to derive a significant portion of our future revenues.

defense strategies and priorities, which may shift DoW budgetary priorities, reduce overall spending or delay contract or task order awards for defense-related programs from which we would otherwise expect to derive a significant portion of our future revenues.

A significant decline in overall U.S.

22 unchanged sentences

Cost-reimbursable and T&M contracts are generally less profitable than FFP contracts.

In fiscal 2025, approximately 16%, 22% and 62% of our total revenues came from FFP contracts, T&M and cost-reimbursable contracts, respectively.

In fiscal 2026, approximately 62%, 22% and 16% of our total revenues came from cost-reimbursable contracts, T&M contracts and FFP contracts, respectively.

To varying degrees, there is financial risk with each of these contract types if we underestimate the costs of performance or fail to manage the program efficiently and cost-effectively.

10 unchanged sentences

Many of our U.S.

government contracts contain organizational conflict of interest ("OCI") clauses that may limit our ability to compete for or perform certain other contracts or other types of services for particular customers.

government contracts contain OCI clauses that may limit our ability to compete for or perform certain other contracts or other types of services for particular customers.

OCI arises when we engage in activities that may make us unable to render impartial assistance or advice to the U.S.

4 unchanged sentences

government customer has increasingly focused on affordability, efficiencies, and cost recovery when contracting with private companies.

The new Department of Government Efficiency (“DOGE”) is currently evaluating federal agencies and existing government contracts, grants, and programs for affordability, efficiency, and alignment with U.S.

government performs ongoing evaluations of federal agencies and existing government contracts, grants, and programs for affordability, efficiency, and alignment with U.S.

government objectives.

DOGE’s efforts to reduce federal spending create uncertainty and risk for government contractors, including potentially resulting in change in budgetary priorities and timing on issuing awards.

These efforts to reduce federal spending create uncertainty and risk for government contractors, including potentially resulting in change in budgetary priorities and timing on issuing awards.

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.

At the same time, given the nature of our business, the administration’s focus on efficiency, along with the potential for certain traditionally government functions to be transferred to private entities, may present business opportunities for us.

Federal legislation, regulations, executive orders, and other initiatives dealing with, among other things, procurement reform, the mitigation of potential OCIs, the deterrence of fraud, the elimination of diversity, equity, and inclusion (“DEI”), and changes in corporate environmental obligations, could affect our business.

Federal legislation, regulations, executive orders, and other initiatives dealing with, among other things, procurement reform, the mitigation of potential OCIs, the deterrence of fraud, the U.S.

government taking ownership stakes in certain competitors, the threat of contract cancellation if timely performance is not met, the elimination of diversity, equity, and inclusion (“DEI”), and changes in corporate environmental obligations, could affect our business.

A recent executive order was issued to limit stock buy-backs, dividends or other forms of corporate distribution if certain contractors underperform on critical defense supply contracts.

We will continue to monitor to determine if this ultimately affects our future revenues, cash flows and profitability.

Additionally, we are subject to the laws and regulations of the states in which we operate, which, at times, may conflict with federal laws and regulations, introducing ambiguity.

Recent executive orders relating to DEI and other social issues and “return-to-office” requirements, along with pending legal challenges, create uncertainty and may be temporarily unsettling for portions of our workforce.

Recent executive orders relating to DEI, other social issues and “return-to-office” requirements, along with pending legal challenges, create uncertainty and may be temporarily unsettling for portions of our workforce.

As always, we are committed to complying with all applicable laws and regulations, and we do not anticipate an adverse impact on our future operations and revenues related to these executive orders.

2 unchanged sentences

We could face increased competition, greater scrutiny, a more complex regulatory environment, heightened compliance requirements, and additional administrative burdens, all of which have the potential to affect our profitability.

The FAR Council recently proposed significant revisions to the FAR related to OCIs, which, if adopted, could limit our ability to bid on certain contracts and/or require us to modify or restructure some business relationships.

An executive order was issued to overhaul the FAR, including simplifying the procurement process and potentially changing the criteria for cost allowability and compliance, which could negatively impact our profitability.

In addition, the FAR Council recently proposed significant revisions to the FAR related to OCIs, which, if adopted, could limit our ability to bid on certain contracts and/or require us to modify or restructure some business relationships.

They could also impose additional compliance burdens and constraints on our business operations.

2 unchanged sentences

Although deregulation initiatives could provide short-term relief from regulatory obligations, the executive orders introduce uncertainty and risk, including the potential for legal challenges and the possibility of new environmental policies at the state or local levels that may impose stricter regulations.

We are actively monitoring and adapting to changes in environmental laws, assessing the physical risks posed by climate change, and implementing sustainability initiatives aimed at reducing the environmental impact of our operations.

However, the full extent of these risks and their potential impact on our business remains uncertain and could materially affect its financial performance.

We are actively monitoring and adapting to changes in environmental laws, assessing the physical risks posed by climate change, and

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implementing sustainability initiatives aimed at reducing the environmental impact of our operations.

However, the full extent of these risks and their potential impact on our business remains uncertain and could materially affect its financial performance.

We are subject to government audits, cost adjustments, reviews, and investigations that could adversely affect our profitability, cash flows, or growth prospects.

36 unchanged sentences

Changes in tax laws and regulations or exposure to additional tax liabilities could adversely affect our financial results.

Changes in federal or state tax regulations or in their interpretation and application, including those with retroactive effect, could cause increases in our tax expense and affect profitability and cash flows.

For example, beginning in fiscal 2023, the Tax Cuts and Jobs Act of 2017 eliminated the option to deduct research and development expenditures in the year incurred, instead requiring taxpayers to amortize such expenditures over five years for tax purposes.

The impact of this change is dependent on the amount of research and development expenses we incur, as well as the potential for Congress to modify or repeal the provision or for the U.S.

Treasury Department to release new guidance or interpretive rules.

The impact to our income taxes payable was most significant in fiscal 2023 decreasing over the five-year amortization period.

By year six, we anticipate any impact to be immaterial.

We are subject to income and other taxes in the U.S.

and various foreign jurisdictions.

Our future effective tax rates, profitability, cash flows, and financial position could be adversely affected by changes in applicable domestic or foreign tax laws, regulations, treaties, or policies (including those with retroactive effect), or their interpretation and application.

This includes unanticipated changes in our tax provisions, increases in tax liabilities from final determinations of tax audits, disputes, litigation, or agreements, reevaluation of uncertain tax positions, or other factors requiring significant judgment.

In July 2025, the One Big Beautiful Bill Act (the “Act”) was enacted, making permanent or extending many provisions from the prior Tax Cuts and Jobs Act ("TCJA") while introducing key changes such as the repeal of mandatory capitalization of research and development expenditures, restoration of 100% depreciation for qualified property placed in service after January 19, 2025, and other modifications to deductions, credits, and incentives.

These provisions have favorably affected our fiscal year 2026 results, including lower tax payments, improved cash flows from accelerated deductions on R&D, and an overall reduction in near-term cash tax liabilities compared to prior years impacted by TCJA amortization requirements.

Legal disputes could require us to pay potentially large damage awards and could be costly to defend, which could adversely affect our cash balances and profitability, and could damage our reputation.

7 unchanged sentences

Settlements or adverse judgments may result in significant monetary damages or injunctions, and litigation and claims could be costly to defend.

Even if we are successful, fully indemnified, or insured, we could suffer damage to our reputation that impedes our ability to compete for work or obtain adequate insurance in the future.

The outcome of litigation and other claims, including those described under “Legal Proceedings” in Part I, Item 3 of this report, is inherently uncertain, and management’s view of these matters may change in the future.

Even if we are successful, fully indemnified, or insured, we could suffer damage to our reputation that impedes our ability to compete for work

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or obtain adequate insurance in the future.

Our business is subject to numerous legal and regulatory requirements, and any violation of these requirements, or any misconduct by our employees, subcontractors, agents, or business partners, could harm our business and reputation.

17 unchanged sentences

Although we have succession plans in place, the loss of key personnel in critical functions could temporarily impair our ability to win new contracts or perform existing work.

We may make acquisitions, investments, joint ventures, and divestitures in the future that involve numerous risks, which, if realized, may adversely affect our business and financial performance.

We may make acquisitions, divestitures, investments, or enter into joint ventures in the future that involve numerous risks, which, if realized, may adversely affect our business and financial performance.

Subject to the limitations of our credit facility (as further described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of this report), we may make strategic acquisitions or investments, engage in joint ventures, or divest existing businesses, which could cause unforeseen expenses, disrupt our business, fail to yield the anticipated benefits, or pose other risks that could adversely affect our reputation, operations, or financial results, including:

1 unchanged sentence

• we may fail to successfully integrate acquired businesses, such as failing to successfully implement IT and other control systems relating to the operations of any acquired business;

• we may not generate sufficient earnings to meet the required Leverage Ratio under the Credit Facility, which would give lenders the right to, among other things, foreclose on our assets;

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

• we may not generate sufficient earnings to meet the required Leverage Ratio under the Credit Facility, which would give lenders the right to, among other things, foreclose on our assets;

• acquisitions normally require a significant investment of time and resources, which may disrupt our business and distract our management from other important responsibilities;

5 unchanged sentences

They may disrupt our business, distract management from other responsibilities, and create losses on disposal or continued financial involvement in the divested business, including through indemnification, guarantee, or other financial arrangements, for a period of time following the transaction, which could adversely affect our financial results.

We use and deploy AI solutions for our customers that could harm our reputation or create liability if they do not function as predicted.

We use and deploy AI solutions for our customers that could harm our reputation, create liability if they do not function as predicted, or we are required to discontinue their use.

We deploy and integrate AI solutions for our business operations and for customers, including AI solutions that assist with the design, deployment, and management of AI applications that allow customers to work with their complex and sensitive data to power the most demanding analytics, data science, and AI use cases.

1 unchanged sentence

Additionally, because this technology is developing so rapidly, we may be unable to keep up with new AI developments.

We use some AI solutions that we develop and some that we obtain others from third parties.

The development methods and algorithms of these solutions could be flawed, and the datasets could contain incorrect or biased information.

We use some AI solutions that we develop and other AI solutions that we obtain from third parties.

The development methods and algorithms of these solutions could be flawed, and the datasets could contain incorrect or biased information, which may require us to discontinue use of certain AI technology immediately or within short timelines.

Content or code generated by AI systems may be vulnerable to cyberattack, require human review, be unreliable, illegal, or offensive, and could result in the AI solution not working as intended.

If we deploy AI solutions that have unintended consequences or are more controversial than we anticipate, our customers may seek redress, and we may experience reputational harm that could affect our business or financial results.

Our use of AI solutions could be limited by, or subject to regulatory action or legal liability under, proposed rules or legislation regarding privacy, intellectual property, and other laws.

Our use and deployment of AI solutions and capabilities could be limited by, or subject to regulatory action, supply chain risk, or legal liability under, proposed rules or legislation regarding privacy, intellectual property, and other laws, which could ultimately affect our competitiveness in bids or impair our performance on existing contracts.

We face various risks related to health epidemics, pandemics, and similar outbreaks, which may have material adverse effects on our business, financial position, results of operations, and/or cash flows.

6 unchanged sentences

Customer systems failures could damage our reputation and adversely affect our revenues and profitability.

Many of the systems and networks that we develop, install, and maintain for our customers involve managing and protecting personal information and information relating to national security and other sensitive government functions.

While we have programs designed to comply with relevant privacy and security laws and restrictions, if a system or network that we develop, install, or maintain were to fail or experience a security breach or service interruption (whether caused by us, third-party service providers, cybersecurity threats, or other events), we may

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experience loss of revenue, remediation costs, claims for damages, or contract termination.

This could cause serious harm to our reputation and prevent us from having access to, or being eligible for, further work involving these systems and networks.

6 unchanged sentences

We may contract with subcontractors that do not have experience on U.S.

government contracts or with our customers, providing them with the experience, relationships, and past performance to compete with us on future contracts and potential result in contract losses.

government contracts or with our customers, providing them with the experience, relationships, and past performance to compete with us on future contracts, which could potentially result in contract losses.

If subcontractors fail to timely meet their contractual obligations or have regulatory compliance or other problems, our ability to fulfill our obligations as a prime contractor or higher tier subcontractor may be jeopardized.

18 unchanged sentences

In these instances, if there were a severe weather event that impacted such a location, we might not be able to meet the client’s requirements or our contractual obligations.

In the shorter term, a climate-related event could temporarily impede our ability to do the required work in person, produce operational or other unforeseen challenges, and in the longer term, threaten our performance of contracts, any of which could harm our business and its results.

Although we have business continuity plans and other safeguards in place, there is no assurance that such plans and safeguards will be effective in preventing adverse impacts on our operations or long-term plans.

Local conditions and regulations may delay the return of employees to business sites, which could undermine our efforts

In the shorter term, a climate-related event could temporarily impede our ability to do the

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to meet our contractual obligations.

required work in person, produce operational or other unforeseen challenges, and in the longer term, threaten our performance of contracts, any of which could harm our business and its results.

Local conditions and regulations may delay the return of employees to business sites, which could undermine our efforts to meet our contractual obligations.

Climate-related limitations on individual employees may also create obstacles to meeting customer requirements or our contractual obligations.

26 unchanged sentences

government customers in countries that are politically unstable, active conflict zones, or subject to high-risk intelligence operations.

Operating in these environments may increase the risk of an incident resulting in injury or loss of life, property damage or destruction, or the inability to meet our contractual obligations.

It is impossible to predict the impact that these regulatory, geopolitical, and other factors may have on our business in the future.

Operating in these environments may increase the risk of an incident resulting in injury or loss of life, property damage or destruction, or the inability to

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meet our contractual obligations.

It is impossible to predict the impact that these regulatory, geopolitical, and other factors may have on our business in the future.

Pension funding and costs are dependent upon several economic assumptions, which, if changed, may cause our future earnings and cash flow to fluctuate significantly.

28 unchanged sentences

A material loss related to a bank failure could have a material adverse effect on our financial position and could impact our ability to pay operational expenses or make other payments.

Additionally, if our customers, suppliers, insurers, joint venture partners, sureties, or other parties with which we partner are materially impacted by a bank failure or other issues in the banking industry, including changes in legislation and regulation, it may have an adverse impact on our operational and financial performance.

Additionally, if our customers, suppliers, insurers, joint venture partners, sureties, or other parties with which we partner are materially impacted by a bank failure or

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other issues in the banking industry, including changes in legislation and regulation, it may have an adverse impact on our operational and financial performance.

Cybersecurity Risks

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These statements are not guarantees of future performance and are subject to risks and uncertainties, including but not limited to changes in market conditions, regulatory and legal developments, governmental and political conditions, competitive pressures, technological advancements, economic conditions, supply chain disruptions, and the risk factors discussed above that could cause actual results to differ materially from those expressed or implied in this report.

Except where required by law, we expressly disclaim a duty to update or revise any forward-looking statements after the date of this Form 10-K to reflect subsequent events, changed circumstances or expectations, or revised

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estimates and assumptions.

The forward-looking statements in this Form 10-K are intended to be subject to the safe harbor protections in the federal securities laws.

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 1A. Risk Factors