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Item 7. Management’s Discussion and Analysis

2026-03-16 compared with 2025-03-17 · 153 added, 181 removed, 342 unchanged (49% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations, and quantitative and qualitative disclosures about market risk should be read in conjunction with our consolidated financial statements and the related notes included in this Form 10-K, as well as Part II, Item 7 "Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the year ended January 31, 2025, which provides additional information on comparisons of fiscal 2025 and 2024.

It contains forward-looking statements (which may be identified by words such as those described in “Risk Factors—Forward-Looking Statement Risks” in Part I, Item 1A of this report), including statements regarding our intent, belief, or current expectations with respect to, among other things, trends affecting our financial condition or results of operations;

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

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

Fiscal 2026 began on February 1, 2025 and ended on January 30, 2026, fiscal 2025 began on February 3, 2024 and ended on January 31, 2025, and fiscal 2024 began on February 4, 2023 and ended on February 2, 2024.

Business Overview

We are a leading technology integrator providing full life cycle services and solutions in the technical, engineering and enterprise information technology ("IT") markets.

We are a leading technology integrator providing full life cycle services and solutions in the technical, engineering and mission and enterprise information technology ("IT") markets.

We developed our brand by addressing our customers’ mission critical needs and solving their most complex problems for over 50 years.

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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 DoD and Intelligence Community of the United States Government.

The Defense and Intelligence segment provides a diverse portfolio of national security solutions to the DoW and the 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.

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See Note 16—Business Segments Information to the consolidated financial statements contained within this report for additional information.

Within this report, we have recast historical financial information to reflect the new reportable segments.

The recast historical information has no impact on our previously reported consolidated financial statements.

Effective January 31, 2026, the first day of fiscal 2027, we completed a business reorganization that consolidated our five business groups into three.

The reorganization is designed to simplify our structure and optimize operations and customer focus for growth.

The consolidated business groups will continue to report directly to our Chief Executive Officer (“CEO”) who will continue to be the chief operating decision maker (“CODM”).

We do not expect the reorganization to have an impact on our reportable segments.

Economic Opportunities, Challenges, and Risks

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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.

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.

In addition, agencies are expected to conduct comprehensive reviews of existing contracting activity to identify potential efficiencies or nonalignment with new Administration priorities.

SAIC contracts will be subject to these reviews.

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

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

The Treasury has not yet indicated when those measures will be exhausted, but it is expected that the date of potential default will be sometime during the summer of 2025.

Before that time, Congress will need to pass, and the President will need to sign, legislation that would extend or eliminate the debt limit.

Failure to do so 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.

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

Some of these actions could create delays in the timely issuance of contract awards.

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

In July 2025, Congress passed a budget reconciliation package that will add approximately $150 billion in new non-border defense spending, and $175 billion in new border security and enforcement spending, among other provisions.

This funding is available to agencies immediately, and can be used through GFY 2029.

Portions of this new funding will increase spending in areas addressable to us, including new investments in Naval operations and border surveillance.

The measure also extended and expanded key tax provisions that will positively impact our Company.

On October 1, 2025, the federal government shut down following the expiration of the March 2025 CR.

On November 12, 2025, the President signed a spending agreement that officially reopened the government after 43 days.

The agreement includes three full-year appropriations bills, including the Agriculture-FDA, Military Construction-Veterans Affairs, and Legislative Branch packages.

In February 2026, the President signed an appropriations package that finalized full-year funding for most government agencies.

All agencies and functions funded by those bills will now be covered in full through September 30, 2026, the close of GFY 2026.

The Department of Homeland Security is currently the only remaining agency with a delay in approved appropriations for GFY 2026 and is currently shut down.

If the shutdown continues for an extended period of time, it could have an adverse impact on our financial outlook.

As part of the budget reconciliation package signed into law in July 2025, the federal debt limit was increased by $5 trillion.

This is expected to extend protection from a potential government default until at least the end of calendar year 2026.

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

In addition, the U.S government performs an ongoing evaluation of the structure and priorities of Federal agencies.

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

Our contracts have been, and will continue to 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, ongoing reductions in personnel, changes in agency alignment, required reviews of new contracting activity, decreases or delays in new or existing contract awards and in government spending on the types of programs that we support, and terminations or stop-work-orders and delay in funding on government contracts on which we are currently performing could adversely affect our future revenues, cash flows and profitability.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

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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Our ability to be competitive in the future will continue to be driven by our reputation for successful program execution, competitive cost structure, development of new pricing and business models, and efficiencies in assigning the right people, at the right time, in support of our contracts.

On October 15, 2025, we acquired SilverEdge Government Solutions ("SilverEdge"), an innovative provider of mission-driven technology solutions and products.

The acquisition advances our strategy to provide mission focused solutions and commercial products to our customers.

See Note 4—Acquisitions and Divestitures to the consolidated financial statements contained within this report for additional information.

On May 6, 2023, SAIC closed the sale of its logistics and supply chain management business ("Supply Chain Business") to ASRC Federal Holding Company, LLC ("ASRC Federal").

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

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

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

The primary financial measures used to evaluate our consolidated results of operations include revenues, operating income, adjusted operating income (1) , adjusted EBITDA (1) , and operating cash flows.

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

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

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Consolidated Results of Operations

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

The following table summarizes our results of operations:

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

January 30, 2026 Percent change January 31, 2025 Percent change February 2, 2024

(dollars in millions)

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Selling, general and administrative expenses 350 3 % 339 (9) % 373

Gain on divestitures, net of transaction costs

(Gain) loss on divestitures, net of transaction costs

— — % — (100) % (240)

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(29) (56) % (66) (54) % (143)

Net income attributable to common stockholders $ 362 (24) % $ 477 59 % $ 300

Revenues increased $35 million from fiscal 2024 to fiscal 2025 primarily due to ramp up in volume in existing and new contracts.

This was partially offset by the sale of the Supply Chain Business ($188 million) (see Note 4—Divestitures) in the prior year, and contract completions.

Adjusting for the impact of the divestiture, revenues grew approximately 3.1%.

Revenues decreased $260 million from fiscal 2023 to fiscal 2024 primarily due to the sale of the Supply Chain Business ($493 million) and the deconsolidation of FSA ($143 million), contract completions and five additional working days in fiscal 2023.

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

Adjusting for the impact of the divestiture, deconsolidation and estimated impact of the additional five working days in fiscal 2023, revenues grew approximately 7.4%.

Net income $ 358 (1) % $ 362 (24) % $ 477

Revenues decreased $217 million from fiscal 2025 to fiscal 2026 primarily due to contract completions and ramp down in volume on existing contracts, including approximately $26 million attributable to the government shutdown, partially offset by new contracts.

Revenues attributed to SilverEdge for the year ended January 30, 2026 were $27 million.

Adjusting for the acquisition of SilverEdge, revenues contracted by approximately 3.3%.

Cost of Revenues.

Cost of revenues increased $15 million from fiscal 2024 to fiscal 2025 primarily due to ramp up in volume on existing and new contracts.

This was partially offset by the sale of the Supply Chain Business ($172 million) in the prior year, and contract completions.

Adjusting for the impact of the divestiture, cost of revenues grew approximately 2.9%.

Cost of revenues decreased $244 million from fiscal 2023 to fiscal 2024 primarily due to the sale of the Supply Chain Business ($461 million) and the deconsolidation of FSA ($132 million), contract completions and five additional working days in fiscal 2023.

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

Adjusting for the impact of the divestiture, deconsolidation and estimated impact of the additional five working days in fiscal 2023, cost of revenues grew approximately 7.7%.

Cost of revenues decreased $197 million from fiscal 2025 to fiscal 2026 primarily due to contract completions and ramp down in volume on existing contracts, partially offset by new contracts.

Selling, General and Administrative Expenses.

Selling, general and administrative expenses decreased $34 million from fiscal 2024 to fiscal 2025 primarily due to lower incentive-based compensation expense and lower stock-based compensation related to the restructuring and executive transition.

Selling, general and administrative expenses decreased $1 million from fiscal 2023 to fiscal 2024 primarily due to lower indirect spend and intangible amortization and depreciation, partially offset by higher incentive-based compensation expense, including acceleration of stock-based compensation related to the reorganization and executive transition.

Selling, general and administrative expenses increased $11 million from fiscal 2025 to fiscal 2026 primarily due to executive transition costs, net of recoveries and costs related to the settlement of federal tax audits, partially offset by a recovery of costs from the settlement of a patent infringement matter (see Note 17—Legal Proceedings and Other Commitments and Contingencies for additional information).

Operating Income.

Operating income as a percentage of revenues decreased from fiscal 2024 to fiscal 2025 primarily due to a $233 million gain recognized from the sale of the Supply Chain Business and a $7 million gain recognized from the deconsolidation of FSA in the prior year.

This was partially offset by improved profitability across our contract portfolio, the resolution of the Assault Amphibious Vehicle ("AAV") contract termination, lower

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

incentive-based compensation expense, and lower stock-based compensation related to the restructuring and executive transition.

Operating income as a percentage of revenues increased from fiscal 2023 to fiscal 2024 primarily due to a $233 million gain recognized from the sale of the Supply Chain Business, a $7 million gain recognized from the deconsolidation of FSA, improved profitability across our contract portfolio and lower acquisition and integration costs, partially offset by higher incentive-based compensation expense, including acceleration of stock-based compensation related to the reorganization and executive transition.

Operating income as a percentage of revenues decreased from fiscal 2025 to fiscal 2026 primarily due to executive transition costs, net of recoveries, the favorable resolution of the Assault Amphibious Vehicle ("AAV") contract termination in the prior year ($13 million), costs related to the settlement of federal tax audits, and timing and volume mix in our contract portfolio, partially offset by a recovery of costs from the settlement of a patent infringement matter.

Income Taxes.

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

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

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

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.

While the impact to income taxes payable was most significant in fiscal 2023, this impact will decrease over the five-year amortization period and is anticipated to be immaterial in year six.

The actual impact will depend on the amount of research and development expenses we incur, whether Congress modifies or repeals this provision and whether new guidance and interpretive rules are released by the U.S.

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.

Our effective income tax rate for fiscal 2026 was 7.5%, compared to 15.5% for fiscal 2025.

This decrease was primarily driven by a $47 million tax benefit related to an IRS audit settlement, pending final

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

administrative approvals, covering fiscal years 2016 through 2019, and adjustments in liabilities for uncertain tax positions related to other open tax years.

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

corporate income tax laws.

One key provision of the Act permanently reinstates the immediate expensing of U.S.

research and development expenditures, resulting in a cash tax benefit in the current year.

Based on our interpretation, the Act results in an increase to our income taxes receivable with an offsetting decrease to our deferred tax assets and an increase to our effective tax rate for the year.

These impacts are reflected in our current period effective tax rate but may change as we await further interpretive guidance from the IRS.

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 consolidated results of operations, financial position, and cash flows.

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

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

Defense and Intelligence

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

January 30, 2026 Percent change January 31, 2025 Percent change February 2, 2024

(dollars in millions)

Revenues $ 5,581 (3) % $ 5,726 (2) % $ 5,817

Operating income $ 440 1 % $ 436 — % $ 438

As a percentage of revenues 7.7 % 7.5 % 7.5 %

Depreciation of property, plant and equipment 2 100 % 1 — % 1

Amortization of intangible assets 67 — % 67 (3) % 69

Adjusted operating income

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As a percentage of revenues 8.6 % 8.9 % 8.7 %

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

Revenues decreased $91 million from fiscal 2024 to fiscal 2025 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 1.7%.

Revenues decreased $59 million from fiscal 2023 to fiscal 2024 primarily due to the sale of Supply Chain Business ($493 million), contract completions and five additional working days in fiscal 2023.

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

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Operating and adjusted operating income.

Operating and adjusted operating income as a percentage of revenues increased from fiscal 2024 to fiscal 2025 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 sale of the Supply Chain Business in the prior year.

Operating and adjusted operating income as a percentage of revenues was consistent from fiscal 2023 to fiscal 2024, respectively.

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

Revenues decreased $145 million from fiscal 2025 to fiscal 2026 primarily due to contract completions and ramp down in volume on existing contracts, partially offset by new contracts.

Revenues attributed to SilverEdge for the year ended January 30, 2026 were $27 million.

Adjusted operating income.

Adjusted operating income as a percentage of revenues decreased from fiscal 2025 to fiscal 2026 primarily due to contract completions and ramp down in volume on existing contracts and the favorable resolution of the AAV contract termination in the prior year ($13 million), partially offset by new contracts.

January 30, 2026 Percent change January 31, 2025 Percent change February 2, 2024

(dollars in millions)

Revenues $ 1,681 (4) % $ 1,753 8 % $ 1,627

Operating income $ 168 6 % $ 158 (5) % $ 167

As a percentage of revenues 9.6 % 9.7 % 9.1 %

Depreciation of property, plant and equipment — — % — (100) % 1

Amortization of intangible assets 48 — % 48 (14) % 56

Adjusted operating income

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As a percentage of revenues 13.6 % 12.3 % 12.7 %

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

Revenues increased $126 million from fiscal 2024 to fiscal 2025 primarily due to ramp up in volume on existing and new contracts, partially offset by contract completions.

Revenues decreased $201 million from fiscal 2023 to fiscal 2024 primarily due to the deconsolidation of FSA ($143 million), contract completions and five additional working days in fiscal 2023.

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

Operating and adjusted operating income.

Operating and adjusted operating income as a percentage of revenues decreased from fiscal 2024 to fiscal 2025 primarily due to timing and volume mix.

Operating and adjusted operating income as a percentage of revenues increased from fiscal 2023 to fiscal 2024 primarily due to improved profitability across our contract portfolio.

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

Revenues decreased $72 million from fiscal 2025 to fiscal 2026 primarily due to ramp down in volume on existing contracts and contract completions, partially offset by new contracts.

Adjusted operating income.

Adjusted operating income as a percentage of revenues increased from fiscal 2025 to fiscal 2026 primarily due to improved profitability across the contract portfolio.

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

January 30, 2026 Percent change January 31, 2025 Percent change February 2, 2024

(dollars in millions)

Operating (loss) income

$ (45) 131 % $ 147 (241) % $ (104)

Depreciation of property, plant and equipment 23 (8) % 25 (17) % 30

Acquisition and integration costs (1)

(2) (300) % 1 (92) % 13

Restructuring and impairment costs

8 (65) % 23 (4) % 24

Depreciation included in restructuring and impairment costs (1) — % (1) (67) % (3)

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

(3) (50) % (6) (50) % (12)

(Gain) loss on divestitures, net of transaction costs

— (100) % (240) 100 % —

Adjusted operating loss

$ (4) (80) % $ (20) (61) % $ (51)

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

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

government Cost Accounting Standards.

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

Operating (loss) income and adjusted operating loss.

Operating loss was $45 million in fiscal 2025 compared to an operating income of $147 million in fiscal 2024 primarily due to the gain on the sale of the Supply Chain Business in

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

the prior year ($233 million) and the gain recognized from the deconsolidation of FSA ($7 million) in the prior year, partially offset by lower incentive-based compensation expense, and lower stock-based compensation related to the restructuring and executive transition.

Adjusted operating loss decreased from fiscal 2024 to fiscal 2025 due to lower incentive-based compensation expense, and lower stock-based compensation related to the restructuring and executive transition.

Operating loss decreased from fiscal 2023 to fiscal 2024 primarily due a $233 million gain recognized from the sale of the Supply Chain Business, a $7 million gain recognized from the deconsolidation of FSA and lower acquisition and integration costs, partially offset by higher incentive-based compensation expense, including acceleration of stock-based compensation related to the reorganization and executive transition.

Adjusted operating loss remained consistent from fiscal 2023 to fiscal 2024.

Adjusted operating loss.

Adjusted operating loss decreased from fiscal 2025 to fiscal 2026 primarily due to recovery of costs from the settlement of a patent infringement matter and lower other selling, general and administrative expenses.

Non-GAAP Measures

Adjusted operating income, earnings before interest, taxes, depreciation and amortization ("EBITDA"), and adjusted EBITDA are non-GAAP financial measures.

Consolidated adjusted operating income, earnings before interest, taxes, depreciation and amortization ("EBITDA"), and adjusted EBITDA are non-GAAP financial measures.

While we believe that these non-GAAP financial measures are also useful for management and investors in evaluating our financial information, they should be considered as supplemental in nature and not as a substitute for financial information prepared in accordance with GAAP.

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Adjusted operating income.

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

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

The acquisition and integration costs relate to our acquisitions.

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

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 our Company.

Refer to "Segment and Corporate Results" section above for the reconciliation of the GAAP financial measure to the non-GAAP financial measure.

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

Acquisition, integration, restructuring and impairment costs represent costs incurred related to acquisitions, reorganizations, facilities optimization efforts, and impairments of long-lived assets, along with associated depreciation.

Recovery of acquisition, integration, restructuring and impairment costs represents 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 and Corporate.

Adjusted operating income also excludes amortization of intangible assets because we do not have a history of significant acquisition activity, and therefore consider acquisitions to be a non-recurring activity, and the amount of an acquisition's purchase price allocated to intangible assets and the related amortization term are unique to each acquisition.

Executive transition costs, net of recoveries, represent costs associated with the departure of our CEO and other executives in the third quarter of the fiscal year 2026, net of the portion recovered through our indirect rates in accordance with Cost Accounting Standards.

Costs related to the settlement of federal tax audits represent costs related to the IRS audit settlement for fiscal years 2016 through 2019 .

The (Gain) loss on divestitures, net of transaction costs includes gains associated with the deconsolidation of FSA and the sale of the Supply Chain Business.

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

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION

Adjusted operating income for the periods presented were calculated as follows:

January 30, 2026 January 31, 2025 February 2, 2024

(dollars in millions)

Revenues $ 7,262 $ 7,479 $ 7,444

Operating income

$ 521 $ 563 $ 741

Operating income as a percentage of revenues 7.2 % 7.5 % 10.0 %

Depreciation of property, plant, and equipment 30 25 26

Amortization of intangible assets 119 115 115

Acquisition, integration, restructuring and impairment costs 16 6 24

Depreciation included in restructuring and impairment costs (1) (1) (1)

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

Executive transition costs, net of recoveries 16 — —

Costs related to the settlement of federal tax audits 7 — —

(Gain) loss on divestitures, net of transaction costs

Adjusted operating income

$ 702 $ 705 $ 659

Adjusted operating income as a percentage of revenues

9.7 % 9.4 % 8.9 %

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

government Cost Accounting Standards.

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 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.

See Note 1—Business Overview and Summary of Significant Accounting Policies and Note 5—Restructuring and Impairment to the consolidated financial statements contained within this report for information related to our restructuring and impairment costs.

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

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

Recovery of acquisition, integration, restructuring and impairment costs represents costs recovered through our indirect rates in accordance with Cost Accounting Standards.

Costs related to the settlement of federal tax audits represent costs related to the IRS audit settlement for fiscal years 2016 through 2019 .

The (Gain) loss on divestitures, net of transaction costs includes gains associated with the deconsolidation of FSA and the sale of the Supply Chain Business.

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 the long-term financial performance of our Company.

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

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

(in millions)

January 30, 2026 January 31, 2025 February 2, 2024

(dollars in millions)

$ 7,262 $ 7,479 $ 7,444

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Depreciation and amortization 149 140 142

EBITDA 708 891 658

EBITDA as a percentage of revenues 9.3 % 9.5 % 12.0 %

Acquisition and integration costs (1)

Restructuring and impairment costs 8 23 24

Acquisition, integration, restructuring and impairment costs 16 6 24

Depreciation included in restructuring and impairment costs (1) (1) (1)

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

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

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

Executive transition costs, net of recoveries 16 — —

Costs related to the settlement of federal tax audits 7 — —

(Gain) loss on divestitures, net of transaction costs

Adjusted EBITDA

$ 708 $ 710 $ 668

Adjusted EBITDA as a percentage of revenues 9.7 % 9.5 % 9.0 %

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

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

(1) Adjustment reflects the portion of acquisition, integration, 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 increased from fiscal 2024 to fiscal 2025 primarily due to improved profitability across our contract portfolio, the resolution of the AAV contract termination, lower incentive-based compensation expense, and lower stock-based compensation related to the restructuring and executive transition.

Adjusted EBITDA as a percentage of revenues increased from fiscal 2023 to fiscal 2024, primarily due to improved profitability across our contract portfolio, partially offset by higher incentive-based compensation expense, including acceleration of stock-based compensation related to the reorganization and executive transition.

Adjusted operating income and adjusted EBITDA as a percentage of revenues increased from fiscal 2025 to fiscal 2026 primarily due to a recovery of costs from the settlement of a patent infringement matter and lower other selling, general and administrative expenses, partially offset by the favorable resolution of the AAV contract termination in the prior year ($13 million), and 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.

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We segregate our backlog into two categories as follows:

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government and other customers even though the contract may call for performance over a number of years.

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.

Funded backlog for contracts with non-government customers represents the estimated value on

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contracts, which may cover multiple future years, under which we are obligated to perform, less revenues previously recognized on these contracts.

• Negotiated Unfunded Backlog.

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

January 31, 2025 February 2, 2024

January 30, 2026 January 31, 2025

Defense and Intelligence

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Total 100 % 100 % 100 %

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Year Ended February 2, 2024

Year Ended January 31, 2025

Defense and Intelligence Civilian Total SAIC

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Total 100 % 100 % 100 %

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Year Ended February 2, 2024

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Total 100 % 100 % 100 %

The change in contract mix for fiscal 2025 and fiscal 2024 reflects a decrease in firm-fixed price type contracts due to the divestiture of the Supply Chain Business which historically had a higher proportion of these contracts.

Cost of Revenues Mix.

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Total 100 % 100 % 100 %

Year Ended February 2, 2024

Year Ended January 31, 2025

Defense and Intelligence Civilian Total SAIC

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

Supply chain materials-related cost of revenues 3 % — % 2 %

Other materials-related cost of revenues 15 % 14 % 15 %

Total 100 % 100 % 100 %

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Year Ended February 2, 2024

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(1) Labor-related cost of revenues includes direct labor on customer contracts, direct fringe, and other direct costs.

The change in cost of revenues mix for fiscal 2025 and fiscal 2024 reflects a decrease in supply chain materials-related costs due to the divestiture of the Supply Chain Business.

Liquidity and Capital Resources

As a services provider, our business generally requires minimal infrastructure investment.

As a services provider, our business currently requires minimal infrastructure investment.

We expect to fund our ongoing working capital, commitments and any other discretionary investments with cash on hand, future operating cash flows and, if needed, borrowings under our $1.0 billion Revolving Credit Facility and $300 million Master Accounts Receivable Purchase Agreement ("MARPA Facility") (see Note 14—Sale of Receivables to the consolidated financial statements contained within this report for additional information).

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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.

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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 fiscal 2023 and fiscal 2025, we amended our Credit Facility.

Borrowings under our Term Loan Facilities and our Revolving Credit Facility ("Credit Facility") incur interest at a variable rate.

During fiscal 2026, we issued unsecured senior notes through a private offering and amended our Credit Facility.

See Note 11—Debt Obligations to the consolidated financial statements contained within this report for additional information.

Borrowings under our Term Loan Facilities, our MARPA Facility, and our Revolving Credit Facility incur interest at a variable rate.

In accordance with our risk management objectives, we hold fixed interest rate swap agreements to hedge the variability in interest payment cash flows on a substantial portion of our outstanding variable rate debt.

These instruments are accounted for as cash flow hedges.

Under the swap agreements, we pay the fixed rate and the counterparties to the agreement pay a floating interest rate.

Our Credit Facility contains customary terms and conditions including financial covenants and covenants restricting our ability to merge or consolidate with another entity or undertake other fundamental changes, enter into property sale and leaseback transactions, and incur liens.

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Failure to maintain acceptable ratings could have an adverse effect on our future cost of capital and any significant increase in the level of our borrowings could negatively impact these ratings.

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We did not experience any significant impact to our liquidity or access to capital, and we were not required to obtain additional financing or make significant modifications to our capital deployment strategy, as a result of the COVID-19 pandemic.

The Coronavirus Aid, Relief, and Economic Security Act ("the CARES Act") allowed for the deferral of certain payroll tax payments through December 31, 2020 and we deferred total payments of approximately $103 million.

The first installment (approximately $51 million) of these deferred payroll taxes was paid during fiscal 2022 and the second and final installment was paid during fiscal 2023.

We may repurchase shares in accordance with established repurchase plans.

We retire our common stock upon repurchase with the excess over par value allocated to additional paid-in capital.

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

We have not made any material purchases of common stock other than in connection with established share repurchase plans.

During fiscal 2026, we repurchased approximately 4.0 million shares of our common stock from the open market under our existing share repurchase plan for approximately $422 million.

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

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

During fiscal 2025, we repurchased approximately 4.2 million shares of our common stock from the open market for approximately $527 million in connection with our share purchase plan.

Since the plan's inception in December of 2013, we have repurchased approximately 24.5 million shares of our common stock from the open market for approximately $2.1 billion.

As of January 30, 2026, we have repurchased approximately 28.5 million shares of our common stock under the plan for approximately $2.5 billion, which included amounts previously authorized under the plan prior to December 2024.

The following table summarizes our principal contractual commitments as of January 30, 2026:

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Debt, including current portion

$ 2,228 $ 313

Interest payments on debt (1)

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Total contractual obligations $ 3,606 $ 258

(1) Amounts include an estimate of future variable interest payments on the Term Loan Facilities based on scheduled outstanding principal amounts, current applicable margin and projected 1-month Term SOFR as of January 31, 2025.

The amounts presented in this table exclude the effects of interest rate swaps used to hedge against changes in 1-month Term SOFR.

(2) Excludes purchase orders for services or products to be delivered pursuant to U.S.

government contracts in which we have full recourse under normal contract termination clauses.

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(3) Other liabilities primarily consist of liabilities associated with deferred compensation plan obligations and liabilities for unrecognized tax benefits.

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The following table summarizes our cash flows:

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

January 30, 2026 January 31, 2025 February 2, 2024

(in millions)

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Net cash used in financing activities (235) (498) (725)

(498) (725) (493)

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

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

$ 126 $ (39) $ (15)

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Cash flows provided by operating activities were $609 million for fiscal 2026, which represented an increase of $115 million from fiscal 2025.

The increase was primarily due to higher tax

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payments in fiscal 2024 from the sale of the Supply Chain Business and other changes in working capital, partially offset by higher incentive-based compensation payments in the current year.

Cash flows provided by operating activities decreased $136 million from fiscal 2023 to fiscal 2024.

The decrease was primarily due to lower cash provided by the MARPA Facility and higher tax payments in fiscal 2024 from the sale of the Supply Chain Business, partially offset by lower incentive-based compensation payments and other changes in working capital.

The increase was primarily due to timing of customer collections, lower cash outflows from the usage of the MARPA Facility, lower cash taxes paid, net of tax refunds received in the current year, and other changes in working capital, partially offset by timing of vendor payments.

Cash (Used in) Provided by Investing Activities.

Cash used in investing activities was $35 million in fiscal 2025 compared to cash provided by investing activities of $314 million in the prior year primarily due to the $356 million of cash proceeds from the sale of the Supply Chain Business in the prior year (see Note 4—Divestitures to the consolidated financial statements contained within this report for additional information).

Cash provided by investing activities was $314 million in fiscal 2024 compared to cash used in investing activities of $36 million in fiscal 2023 primarily due to the $356 million of cash proceeds from the sale of the Supply Chain Business in fiscal 2024.

Cash used in investing activities increased by $213 million in fiscal 2026 compared to the prior year period primarily due to $203 million of cash paid in the current year for the acquisition of SilverEdge, net of cash acquired and proceeds from the sale of equity method investments in the prior year.

Cash Used in Financing Activities.

Cash used in financing activities decreased in fiscal 2025 compared to the prior year period primarily due to higher proceeds from borrowings, net of principal payments of $399 million, partially offset by higher plan share repurchases of $170 million in the current year.

Cash used in financing activities increased from fiscal 2023 to fiscal 2024 primarily due to higher principal payments, net of proceeds received from borrowings of $131 million and higher plan share repurchases of $112 million.

Cash used in financing activities decreased by $263 million in fiscal 2026 compared to the prior year period primarily due to higher proceeds from borrowings, net of principal payments and debt issuance costs, and a decrease in stock repurchases in the current year.

Commitments and Contingencies

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Estimates and assumptions may change in the future as more current information is available.

Management believes that our critical accounting policies and estimates are those that are both material to the presentation of our financial condition and results of operations and require management’s most difficult, subjective and complex judgments.

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and complex judgments.

Typically, the circumstances that make these judgments difficult, subjective and complex have to do with making estimates about the effect of matters that are inherently uncertain.

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Revenue Recognition.

We generate our revenues primarily from long-term contracts in which we provide technical, engineering and enterprise IT services directly for the U.S.

We generate our revenues primarily from long-term contracts in which we provide technical, engineering and mission and enterprise IT services directly for the U.S.

government and as a subcontractor with other contractors engaged in work for the U.S.

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These estimates of costs can span several years and take into account many factors including the availability, productivity and cost of labor, potential delays in our performance and the level of future indirect cost allocations.

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Many of our contracts include forms of variable consideration such as reimbursable costs, award and incentive fees, usage-based pricing, service-level penalties, performance bonuses, and other provisions that can either increase or decrease the transaction price.

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Business Combinations.

We record all tangible and intangible assets acquired and liabilities assumed in a business combination at fair value as of the acquisition date.

We record substantially all assets acquired and liabilities assumed in a business combination at fair value as of the acquisition date.

The excess amount of the aggregated purchase consideration paid over the fair value of the net of assets acquired and liabilities assumed is recorded as goodwill.

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Under the income approach, fair value is based on the present value of future cash flows to be generated over the remaining economic life of an asset or liability being measured.

This method includes estimates for projections of revenues and expenses, royalty rates, tax rates, contributory asset charges, discount rates, and tax amortization benefits.

This method includes estimates for projections of revenues and expenses, royalty rates, tax rates, contributory asset charges, discount rates, and tax amortization

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Under the cost approach, fair value is measured by determining the replacement cost of an asset.

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During the measurement period that shall not exceed one year from the acquisition date, we may adjust provisional amounts recorded for assets acquired and liabilities assumed to reflect new information that we have subsequently obtained regarding facts and circumstances that existed as of the acquisition date.

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Goodwill and Intangible Assets.

Goodwill is recorded as the difference between the aggregate consideration paid for an acquisition and the fair value of the net tangible and intangible assets acquired and liabilities assumed.

Goodwill is recorded as the difference between the aggregate consideration paid for an acquisition and the fair value of the assets acquired and liabilities assumed.

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

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During the fourth quarter of fiscal 2026, we completed our annual goodwill impairment testing using a qualitative assessment and determined that it was more likely than not that an impairment did not exist and that a quantitative analysis was not necessary.

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Intangible assets with finite lives are amortized using the method that best reflects how their economic benefits are utilized or, if a pattern of economic benefits cannot be reliably determined, on a straight-line basis over their estimated useful lives.

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We record net deferred tax assets to the extent we believe these assets will more likely than not be realized.

In making this determination, we consider all available positive and negative evidence, including future reversals of

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existing taxable temporary differences, projected future taxable income, tax planning strategies and recent operating results.

In making this determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent operating results.

If we were to determine that we would be able to realize our deferred income tax assets in the future in excess of their net recorded amount or would no longer be able to realize our deferred income tax assets in the future as currently recorded, we would make an adjustment to the valuation allowance, which would either decrease or increase, respectively, the provision for income taxes.

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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-K

Item 7. Management’s Discussion and Analysis