Item 1. Financial Statements
Item 1. Financial Statements
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Six Months Ended
July 31,
2026 August 1,
2025 July 31,
2026 August 1,
2025
(in millions, except per share amounts)
Revenues $ 1,880 $ 1,769 $ 3,786 $ 3,646
Cost of revenues 1,641 1,554 3,298 3,222
Selling, general and administrative expenses 87 75 170 164
Other operating (income) expense
— 1 ( 13 ) —
Operating income 152 139 331 260
Interest expense, net
33 31 66 61
Other (income) expense, net — — 1 5
Income before income taxes 119 108 264 194
Income tax (expense) benefit ( 17 ) 19 ( 47 ) 1
Net income $ 102 $ 127 $ 217 $ 195
Earnings per share:
Basic $ 2.41 $ 2.72 $ 5.03 $ 4.14
Diluted $ 2.38 $ 2.71 $ 5.00 $ 4.12
See accompanying notes to condensed consolidated financial statements.
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Table of Conten ts
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended Six Months Ended
July 31,
2026 August 1,
2025 July 31,
2026 August 1,
2025
(in millions)
Net income $ 102 $ 127 $ 217 $ 195
Other comprehensive (loss) income, net of tax:
Defined benefit obligation adjustment — — ( 1 ) —
Net unrealized (loss) gain on derivative instruments
— ( 2 ) — ( 3 )
Total other comprehensive (loss) income, net of tax
— ( 2 ) ( 1 ) ( 3 )
Comprehensive income $ 102 $ 125 $ 216 $ 192
See accompanying notes to condensed consolidated financial statements.
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Table of Conten ts
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
July 31,
2026 January 30,
2026
(in millions)
ASSETS
Current assets:
Cash and cash equivalents $ 126 $ 182
Receivables, net 996 853
Prepaid expenses
129 122
Other current assets
28 22
Total current assets 1,279 1,179
Goodwill 2,943 2,944
Intangible assets, net 697 761
Property, plant, and equipment (net of accumulated depreciation of $ 220 million and $ 215 million at July 31, 2026 and January 30, 2026, respectively)
122 110
Operating lease right of use assets 210 193
Other assets 172 167
Total assets $ 5,423 $ 5,354
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$ 597 $ 500
Accrued payroll and employee benefits 334 316
Other accrued liabilities
98 147
Debt, current portion 33 19
Total current liabilities 1,062 982
Debt, net of current portion 2,452 2,468
Operating lease liabilities 220 198
Deferred income taxes 147 104
Other long-term liabilities 106 102
Commitments and contingencies (Note 11)
Equity:
Common stock, $ 0.0001 par value, 1 billion shares authorized, 42 million and 44 million shares issued and outstanding as of July 31, 2026 and January 30, 2026, respectively
— —
Additional paid-in capital — —
Retained earnings 1,429 1,492
Accumulated other comprehensive income 7 8
Total stockholders' equity 1,436 1,500
Total liabilities and stockholders' equity $ 5,423 $ 5,354
See accompanying notes to condensed consolidated financial statements.
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SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(UNAUDITED)
Shares of
common
stock Additional
paid-in
capital Retained
earnings Accumulated
other
comprehensive
income (loss) Total
(in millions)
Balance at May 1, 2026 43 $ — $ 1,416 $ 7 $ 1,423
Net income — — 102 — 102
Issuances of stock — 5 — — 5
Other comprehensive loss, net of tax — — — — —
Cash dividends of $ 0.37 per share
— — ( 16 ) — ( 16 )
Stock-based compensation, net of shares withheld for taxes (1)
— 13 — — 13
Repurchases of stock ( 1 ) ( 18 ) ( 73 ) — ( 91 )
Balance at July 31, 2026 42 $ — $ 1,429 $ 7 $ 1,436
Balance at May 2, 2025 47 $ — $ 1,494 $ 11 $ 1,505
Net income — — 127 — 127
Issuances of stock — 6 — — 6
Other comprehensive loss, net of tax
— — — ( 2 ) ( 2 )
Cash dividends of $ 0.37 per share
— — ( 18 ) — ( 18 )
Stock-based compensation, net of shares withheld for taxes (1)
— 8 — — 8
Repurchases of stock ( 1 ) ( 14 ) ( 95 ) — ( 109 )
Balance at August 1, 2025 46 $ — $ 1,508 $ 9 $ 1,517
Balance at January 30, 2026 44 $ — $ 1,492 $ 8 $ 1,500
Net income — — 217 — 217
Issuances of stock 1 10 — — 10
Other comprehensive loss, net of tax — — — ( 1 ) ( 1 )
Cash dividends of $ 0.74 per share
— — ( 32 ) — ( 32 )
Stock-based compensation, net of shares withheld for taxes (1)
— 9 — — 9
Repurchases of stock ( 3 ) ( 19 ) ( 248 ) — ( 267 )
Balance at July 31, 2026 42 $ — $ 1,429 $ 7 $ 1,436
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)
— 6 — — 6
Repurchases of stock ( 2 ) ( 18 ) ( 216 ) — ( 234 )
Balance at August 1, 2025 46 $ — $ 1,508 $ 9 $ 1,517
(1) During the three months ended July 31, 2026 and August 1, 2025, shares withheld for taxes related to stock-based compensation arrangements amounted to $ 2 million. During the six months ended July 31, 2026 and August 1, 2025, shares withheld for taxes related to stock-based compensation arrangements amounted to $ 19 million.
See accompanying notes to condensed consolidated financial statements.
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SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
July 31,
2026 August 1,
2025
(in millions)
Cash flows from operating activities:
Net income $ 217 $ 195
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 79 71
Stock-based compensation expense 28 25
Deferred income taxes 43 109
Gain on sales of investments
( 12 ) —
Other ( 4 ) —
Increase (decrease) resulting from changes in operating assets and liabilities:
Receivables ( 143 ) 49
Prepaid expenses and other current assets
( 14 ) ( 107 )
Accounts payable and other accrued liabilities
60 ( 84 )
Accrued payroll and employee benefits 18 ( 3 )
Operating lease assets and liabilities, net ( 2 ) ( 4 )
Other assets and other long-term liabilities, net
3 ( 29 )
Net cash provided by operating activities 273 222
Cash flows from investing activities:
Expenditures for property, plant, and equipment ( 24 ) ( 15 )
Contributions to investments
( 9 ) ( 7 )
Purchases of marketable securities ( 9 ) ( 4 )
Sales of marketable securities 11 4
Proceeds from sales of investments
15 —
Other
2 —
Net cash used in investing activities
( 14 ) ( 22 )
Cash flows from financing activities:
Stock repurchased and retired or withheld for taxes on equity awards ( 286 ) ( 252 )
Dividend payments to stockholders ( 33 ) ( 36 )
Principal payments on borrowings ( 2 ) ( 1,235 )
Proceeds from borrowings — 1,307
Issuances of stock 10 12
Other
( 4 ) ( 4 )
Net cash used in financing activities ( 315 ) ( 208 )
Net decrease in cash, cash equivalents and restricted cash ( 56 ) ( 8 )
Cash, cash equivalents and restricted cash at beginning of period 190 64
Cash, cash equivalents and restricted cash at end of period $ 134 $ 56
See accompanying notes to condensed consolidated financial statements.
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SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1—Business Overview and Summary of Significant Accounting Policies:
Overview
Science Applications International Corporation (collectively, with its consolidated subsidiaries, the “Company") is a leading provider of technical, engineering, and information technology ("IT") services primarily to the U.S. government. The Company integrates emerging technology securely and in real-time into mission critical operations that modernize and enable national imperatives. The Company provides these services for large, complex projects with a targeted emphasis on higher-end, differentiated technology services and solutions that accelerate and transform secure and resilient digital environments through system development, modernization, integration, and sustainment to drive enterprise and mission outcomes.
Effective January 31, 2026, the first day of fiscal 2027, the Company completed a business reorganization that consolidated its five previous business groups into three . The reorganization was designed to simplify the Company's organization structure and optimize operations and customer focus for growth. The consolidated business groups are led by three Executive Vice Presidents. The three business groups report directly to the Company’s Chief Executive Officer (“CEO”), the chief operating decision maker (“CODM”). The reorganization did not have an impact on the Company's reportable segments.
The Company has three customer facing business groups which are also its operating segments. They are aggregated into two reportable segments for financial reporting purposes given the similarity in economic and qualitative characteristics, and based on the nature of the customers they serve. The Company’s two reportable segments are the Defense and Intelligence segment and the Civilian segment.
The Defense and Intelligence segment provides a diverse portfolio of national security solutions to the Department of War ("DoW", formerly referred to as the Department of Defense) and the Intelligence Community of the United States Government, supporting a variety of missions across land, sea, air, and space.
The Civilian segment provides solutions to the civilian markets, encompassing federal, state, and local governments. This includes integrating solutions into a spectrum of public service missions that impact travel, security, trade, health and the economy.
The offerings of both reportable segments entail the integration of emerging technologies into mission critical operations that modernize and enable national imperatives. These services include end-to-end solutions spanning the design, development, integration, deployment, management, operation, sustainment, and security of customer hardware and software platforms.
The Company's Solutions and Technology Group ("STG") supports the operating segments by developing enterprise-class solutions to meet complex customer needs and accelerate digital transformation. These capabilities are delivered to the Company's customers as stand-alone solutions, or integrated with the Company's product offerings through the operations of the business. The STG includes teams focused on artificial intelligence, application development, network services, platforms and cloud, engineering, and cybersecurity. It uses a highly automated, cloud-hosted tool set to rapidly build, test, deploy, and continuously enhance solutions.
Costs associated with corporate functions that are not allocable to the reportable segments are presented as Corporate activities. See Note 10—Business Segments Information for additional information.
Principles of Consolidation and Basis of Presentation
References to “financial statements” refer to the condensed consolidated financial statements of the Company, which include the statements of income and comprehensive income, balance sheets, statements of equity and statements of cash flows. These financial statements were prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). All intercompany transactions and account balances within the Company have been eliminated.
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SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The results reported in these financial statements are not necessarily indicative of results that may be expected for the entire year and should be read in conjunction with the information contained in the Company’s Annual Report on Form 10-K for the year ended January 30, 2026.
Use of Estimates
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Significant estimates inherent in the preparation of the financial statements may include, but are not limited to, estimated profitability of long-term contracts, income taxes, fair value measurements, fair value of goodwill and other intangible assets, pension and defined benefit plan obligations, and contingencies. Estimates have been prepared by management on the basis of the most current and best available information at the time of estimation and actual results could differ from those estimates.
Reporting Periods
The Company utilizes a 52/53 week fiscal year ending on the Friday closest to January 31, with fiscal quarters typically consisting of 13 weeks. Fiscal 2027 began on January 31, 2026 and ends on January 29, 2027, while fiscal 2026 began on February 1, 2025 and ended on January 30, 2026.
Operating Cycle
The Company’s operating cycle may be greater than one year and is measured by the average time intervening between the inception and the completion of contracts.
Investments in Equity Securities
The Company invests in certain companies that advance or develop new technologies applicable to its business. Each investment is evaluated for consolidation under the variable interest entities model and/or the voting interest model. As of July 31, 2026, none of the Company's investments in equity securities were consolidated.
During the first quarter of fiscal 2027, on April 20, 2026, the Company sold all of its equity in one of its investments, which resulted in a gain of $ 12 million recognized within "Other operating (income) expense" on the condensed consolidated statements of income and $ 15 million in cash proceeds, recognized within "Proceeds from sales of investments" on the condensed consolidated statements of cash flows.
Cash, Cash Equivalents and Restricted Cash
The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported on the condensed consolidated balance sheets for the periods presented:
July 31,
2026 January 30,
2026
(in millions)
Cash and cash equivalents $ 126 $ 182
Restricted cash included in other current assets
3 3
Restricted cash included in other assets 5 5
Cash, cash equivalents and restricted cash $ 134 $ 190
Accounting Standards Updates
Accounting Standards Updates Recently Issued But Not Yet Adopted
In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The standard includes new disclosure requirements relating to specified categories of expenses (purchases of inventory,
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SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
employee compensation, depreciation, and amortization) that are included in certain expense captions presented on the face of the income statement. Early adoption is permitted. The amendments can be applied on a prospective or retrospective basis. In January 2025, the FASB clarified the effective date of the standard by issuing ASU No. 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. The standard is effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of adoption of this standard on its financial statement disclosures.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The standard modernizes the accounting for internal-use software costs by removing all references to project stages and defining a probable-to-complete threshold to begin capitalizing costs. The standard also clarifies the disclosure requirements for capitalized internal-use software costs. The standard is effective for annual reporting periods, including interim reporting periods within those annual reporting periods, beginning after December 15, 2027. The amendment can be applied prospectively, retrospectively, or on a modified transition approach. Early adoption is permitted. The Company is currently evaluating the impact of adoption of this standard on its consolidated financial statements and related disclosures.
Note 2—Earnings Per Share, Share Repurchases and Dividends:
Earnings Per Share ("EPS")
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. 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 Six Months Ended
July 31,
2026 August 1,
2025 July 31,
2026 August 1,
2025
(in millions)
Basic weighted-average number of shares outstanding
42.4 46.7 43.1 47.1
Dilutive common share equivalents - stock options and other stock-based awards 0.4 0.1 0.3 0.2
Diluted weighted-average number of shares outstanding
42.8 46.8 43.4 47.3
Antidilutive stock awards excluded from the weighted-average number of shares outstanding used to compute diluted EPS for the three and six months ended July 31, 2026 and August 1, 2025 were immaterial .
Share Repurchases
The Company may repurchase shares in accordance with established repurchase plans. The Company retires its common stock upon repurchase with the excess over par value allocated to additional paid-in capital. When repurchases for the period exceed total additional paid-in capital, the excess repurchases are recorded as a reduction to retained earnings. The Company has not made any material purchases of common stock other than in connection with its established share repurchase plans.
During the six months ended July 31, 2026, the Company repurchased approximately 2.7 million shares of its common stock from the open market under its existing share repurchase plan for approximately $ 265 million. In December 2024, the Company's Board of Directors authorized the repurchase of up to $ 1.2 billion of the Company's outstanding common stock under its existing share repurchase plan. As of July 31, 2026, the Company has repurchased approximately 31.2 million shares of its common stock under the plan for approximately $ 2.8 billion, which included amounts previously authorized under the plan prior to December 2024.
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SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Dividends
The Company declared and paid a quarterly dividend of $ 0.37 per share of its common stock during the three months ended July 31, 2026.
Note 3—Revenues:
Changes in Estimates on Contracts
Changes in estimates of revenues, cost of revenues or profits related to performance obligations satisfied over time are recognized in operating income in the period in which such changes are made for the inception-to-date effect of the changes. Changes in these estimates can occur routinely over the performance period for a variety of reasons, which include: changes in scope; changes in cost estimates due to unanticipated cost growth or reassessments of risks impacting costs; changes in the estimated transaction price, such as variable amounts for incentive or award fees; and performance being better or worse than previously estimated.
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. In cases when total expected costs exceed total estimated revenues for a performance obligation, the Company recognizes the total estimated loss in the quarter identified. Total estimated losses are inclusive of any unexercised options that are probable of award, only if they increase the amount of the loss.
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 Six Months Ended
July 31,
2026 August 1,
2025 July 31,
2026 August 1,
2025
(in millions, except per share amounts)
Net favorable (unfavorable) adjustments
$ 6 $ 5 $ 14 $ 3
Net favorable (unfavorable) adjustments, after tax
5 6 11 3
Basic EPS impact $ 0.12 $ 0.13 $ 0.26 $ 0.06
Diluted EPS impact $ 0.12 $ 0.13 $ 0.25 $ 0.06
Revenues were $ 6 million and $ 9 million higher for the three and six months ended July 31, 2026, respectively, and were $ 7 million higher for the three and six months ended August 1, 2025, due to net revenue recognized from performance obligations satisfied in prior periods.
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SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Disaggregation of Revenues
The Company's revenues are generated primarily from long-term contracts with the U.S. government including subcontracts with other contractors engaged in work for the U.S. government. The Company disaggregates revenues by customer, contract type and prime versus subcontractor to the federal government for each of its reportable segments.
Disaggregated revenues by customer were as follows:
Three Months Ended
July 31, 2026
August 1, 2025
Defense and Intelligence
Civilian
Total SAIC
Defense and Intelligence
Civilian
Total SAIC
(in millions)
Department of War $ 986 $ 1 $ 987 $ 920 $ 2 $ 922
Intelligence and other federal government agencies
453 387 840 444 360 804
Commercial, state and local governments and international
10 43 53 10 33 43
Total $ 1,449 $ 431 $ 1,880 $ 1,374 $ 395 $ 1,769
Six Months Ended
July 31, 2026
August 1, 2025
Defense and Intelligence
Civilian
Total SAIC
Defense and Intelligence
Civilian
Total SAIC
(in millions)
Department of War $ 1,967 $ 2 $ 1,969 $ 1,902 $ 5 $ 1,907
Intelligence and other federal government agencies
932 783 1,715 889 768 1,657
Commercial, state and local governments and international
16 86 102 16 66 82
Total $ 2,915 $ 871 $ 3,786 $ 2,807 $ 839 $ 3,646
Disaggregated revenues by contract type were as follows:
Three Months Ended
July 31, 2026
August 1, 2025
Defense and Intelligence
Civilian
Total SAIC
Defense and Intelligence
Civilian
Total SAIC
(in millions)
Cost reimbursement $ 1,123 $ 11 $ 1,134 $ 1,093 $ 13 $ 1,106
Time and materials ("T&M")
145 283 428 117 276 393
Firm-fixed price ("FFP")
181 137 318 164 106 270
Total $ 1,449 $ 431 $ 1,880 $ 1,374 $ 395 $ 1,769
Six Months Ended
July 31, 2026
August 1, 2025
Defense and Intelligence
Civilian
Total SAIC
Defense and Intelligence
Civilian
Total SAIC
(in millions)
Cost reimbursement $ 2,287 $ 19 $ 2,306 $ 2,227 $ 33 $ 2,260
Time and materials ("T&M")
283 589 872 258 568 826
Firm-fixed price ("FFP")
345 263 608 322 238 560
Total $ 2,915 $ 871 $ 3,786 $ 2,807 $ 839 $ 3,646
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SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Disaggregated revenues by prime versus subcontractor were as follows:
Three Months Ended
July 31, 2026 August 1, 2025
Defense and Intelligence
Civilian
Total SAIC
Defense and Intelligence
Civilian
Total SAIC
(in millions)
Prime contractor to federal government $ 1,286 $ 358 $ 1,644 $ 1,239 $ 329 $ 1,568
Subcontractor to federal government 153 30 183 125 33 158
Other 10 43 53 10 33 43
Total $ 1,449 $ 431 $ 1,880 $ 1,374 $ 395 $ 1,769
Six Months Ended
July 31, 2026 August 1, 2025
Defense and Intelligence
Civilian
Total SAIC
Defense and Intelligence
Civilian
Total SAIC
(in millions)
Prime contractor to federal government $ 2,625 $ 729 $ 3,354 $ 2,538 $ 701 $ 3,239
Subcontractor to federal government 274 56 330 253 72 325
Other 16 86 102 16 66 82
Total $ 2,915 $ 871 $ 3,786 $ 2,807 $ 839 $ 3,646
Contract Balances
Contract balances for the periods presented were as follows:
Balance Sheet line item July 31,
2026 January 30,
2026
(in millions)
Billed and billable receivables, net (1)
Receivables, net $ 574 $ 490
Contract assets - unbillable receivables Receivables, net 422 363
Contract assets - unbillable receivables Other assets
22 23
Contract assets - contract retentions Other assets 18 18
Contract liabilities - current Other accrued liabilities
33 41
Contract liabilities - non-current
Other long-term liabilities
$ 2 $ 2
(1) Net of allowance of $ 2 million as of July 31, 2026 and January 30, 2026.
During the three and six months ended July 31, 2026, the Company recognized revenues of $ 11 million and $ 29 million, respectively, relating to amounts that were included in the opening balance of contract liabilities as of January 30, 2026. 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.
Remaining Performance Obligations
Remaining performance obligations ("RPO") represent the transaction price of exercised contracts (both funded and unfunded) less inception to date revenue recognized. RPO does not include unexercised option periods and future task orders expected to be awarded under IDIQ contracts. As of July 31, 2026, the Company had approximately $ 6.4 billion of RPO. The Company expects to recognize revenue on approximately 75 % of the RPO over the next 12 months and approximately 90 % over the next 24 months, with the remaining recognized thereafter.
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SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 4—Acquisitions:
Acquisition of SilverEdge Government Solutions (“SilverEdge”)
On October 15, 2025, the Company acquired SilverEdge, an innovative provider of mission-driven technology solutions and products, for a purchase price of $ 202 million, net of $ 6 million cash acquired. The acquisition advances the Company's strategy to provide mission focused, IP-based solutions and commercial products to its customers. The Company funded the transaction from increased borrowings and cash on hand.
As of July 31, 2026, the Company has substantially completed the purchase price allocation, primarily subject to the final measurement of deferred income taxes. The Company has preliminarily recorded goodwill and amortizable intangible assets of $ 93 million and $ 101 million, respectively. Substantially all of the goodwill recorded is tax deductible. The goodwill is primarily associated with intellectual capital and an acquired assembled workforce. The intangible assets consist of customer relationships of $ 90 million, developed technology of $ 9 million, and backlog of $ 2 million that will be amortized over a period of ten years , eight years , and one year , respectively.
During the three and six months ended July 31, 2026, revenues of $ 20 million and $ 39 million, respectively, related to SilverEdge were recorded to the Defense and Intelligence reportable segment.
Note 5—Goodwill and Intangible Assets:
Goodwill
The following table presents the carrying value of goodwill by reportable segment:
July 31,
2026 January 30,
2026
(in millions)
Defense and Intelligence
$ 2,093 $ 2,094
Civilian
850 850
Total
$ 2,943 $ 2,944
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. The goodwill impairment test is performed at the reporting unit level. As a result of the internal reorganization on January 31, 2026, the Company reallocated its goodwill to its three new goodwill reporting units.
The Company performed a goodwill impairment test immediately before and after the reorganization, both of which resulted in no impairment. For the goodwill impairment test immediately after the reorganization, the Company performed a quantitative assessment of its goodwill as of January 31, 2026 for its three new goodwill reporting units. The Company estimated the fair value of each reporting unit using a 50:50 weighting of fair values derived from an income approach and market approach.
Under the income approach, the Company estimated the fair value of its reporting units using a multi-year discounted cash flow model involving assumptions about projected future revenue growth, operating margins, income tax rates, capital expenditures, discount rate, and terminal value. Under the market approach, the Company estimated the fair value of its reporting units based on multiples of earnings derived from observable market data of comparable public companies.
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SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Intangible Assets
Intangible assets, all of which were finite-lived, consisted of the following:
July 31, 2026 January 30, 2026
Gross carrying value Accumulated amortization Net carrying value Gross carrying value Accumulated amortization Net carrying value
(in millions)
Customer relationships $ 1,550 $ ( 865 ) $ 685 $ 1,551 $ ( 804 ) $ 747
Developed technology 19 ( 7 ) 12 19 ( 6 ) 13
Backlog
2 ( 2 ) — 2 ( 1 ) 1
Total intangible assets $ 1,571 $ ( 874 ) $ 697 $ 1,572 $ ( 811 ) $ 761
Amortization expense related to intangible assets was $ 32 million and $ 64 million for the three and six months ended July 31, 2026, respectively, and was $ 29 million and $ 58 million for the three and six months ended August 1, 2025, respectively. There were no intangible asset impairment losses during the periods presented.
As of July 31, 2026, the estimated future annual amortization expense related to intangible assets is as follows:
Fiscal Year Total
(in millions)
Remainder of 2027 $ 62
2028 108
2029 108
2030 105
2031 98
Thereafter 216
$ 697
Actual amortization expense in future periods could differ from these estimates as a result of future acquisitions, divestitures, impairments, and other factors.
Note 6—Income Taxes:
The Company's effective income tax rate was 14.2 % and 17.9 % for the three and six months ended July 31, 2026, respectively, and was ( 17.2 )% and ( 0.4 )% for the three and six months ended August 1, 2025, respectively. The effective tax rates for the prior year periods reflected a $ 47 million tax benefit related to the settlement of an IRS audit covering fiscal years 2016 through 2019.
For the three and six months ended July 31, 2026, the Company's effective tax rates were lower than the combined federal and state statutory tax rates, primarily due to research and development tax credits and the tax deduction for foreign-derived deduction eligible income.
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SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 7—Debt Obligations:
The Company’s debt as of the dates presented was as follows:
July 31, 2026 January 30, 2026
Stated
interest
rate Effective
interest
rate Principal Unamortized
debt
issuance
costs Net Principal Unamortized
debt
issuance
costs Net
(dollars in millions)
Term Loan A Facility due September 2030
4.98 % 5.06 % $ 1,100 $ ( 3 ) $ 1,097 $ 1,100 $ ( 3 ) $ 1,097
Term Loan B3 Facility due February 2031 5.48 % 5.62 % 499 ( 3 ) 496 501 ( 3 ) 498
Senior Notes due April 2028 4.88 % 5.11 % 400 ( 2 ) 398 400 ( 2 ) 398
Senior Notes due November 2033
5.88 % 6.09 % 500 ( 6 ) 494 500 ( 6 ) 494
Total debt
$ 2,499 $ ( 14 ) $ 2,485 $ 2,501 $ ( 14 ) $ 2,487
Less current portion 33 — 33 19 — 19
Total debt, net of current portion
$ 2,466 $ ( 14 ) $ 2,452 $ 2,482 $ ( 14 ) $ 2,468
As of July 31, 2026, the Company had a $ 2.6 billion secured credit facility (the "Credit Facility") consisting of a Term Loan A Facility due September 2030, a Term Loan B3 Facility due February 2031 (together, the "Term Loan Facilities"), and a $ 1.0 billion Revolving Credit Facility due September 2030 (the "Revolving Credit Facility").
During the three and six months ended July 31, 2026, the Company made scheduled principal payments of $ 1 million and $ 2 million, respectively, on the Term Loan B3 Facility due February 2031.
During the three and six months ended July 31, 2026, the Company made no borrowings or repayments under the Revolving Credit Facility, and as of July 31, 2026 and January 30, 2026, there were no borrowings outstanding.
As of July 31, 2026, the Company was in compliance with the covenants under its Credit Facility.
As of July 31, 2026 and January 30, 2026, 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 July 31, 2026 are:
Fiscal Year Total
(in millions)
Remainder of 2027 $ 17
2028 31
2029 489
2030 88
2031 899
Thereafter 975
$ 2,499
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SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 8—Changes in Accumulated Other Comprehensive Income (Loss) by Component:
The following table presents the changes in accumulated other comprehensive income (loss) attributable to the Company’s fixed interest rate swap cash flow hedges and the Company's defined benefit plans.
Defined Benefit
Obligation
Adjustment (1)
Unrealized Gains
(Losses) on Fixed
Interest Rate
Swap Cash Flow
Hedges (2)
Total
(in millions)
Three months ended July 31, 2026
Balance at May 1, 2026 $ 7 $ — $ 7
Other comprehensive income before reclassifications — — —
Amounts reclassified from accumulated other comprehensive income — — —
Income tax impact — — —
Net other comprehensive loss — — —
Balance at July 31, 2026 $ 7 $ — $ 7
Three months ended August 1, 2025
Balance at May 2, 2025 $ 8 $ 3 $ 11
Other comprehensive income before reclassifications
— 1 1
Amounts reclassified from accumulated other comprehensive income
— ( 3 ) ( 3 )
Income tax impact — — —
Net other comprehensive loss
— ( 2 ) ( 2 )
Balance at August 1, 2025 $ 8 $ 1 $ 9
Six months ended July 31, 2026
Balance at January 30, 2026 $ 8 $ — $ 8
Other comprehensive income before reclassifications — — —
Amounts reclassified from accumulated other comprehensive income ( 1 ) — ( 1 )
Income tax impact — — —
Net other comprehensive loss ( 1 ) — ( 1 )
Balance at July 31, 2026 $ 7 $ — $ 7
Six months ended August 1, 2025
Balance at January 31, 2025 $ 8 $ 4 $ 12
Other comprehensive income before reclassifications — 1 1
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 $ 8 $ 1 $ 9
(1) The amount reclassified from accumulated other comprehensive income (loss) is included in "Other (income) expense, net."
(2) The amount reclassified from accumulated other comprehensive income (loss) is included in "Interest expense, net. "
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SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 9—Sales of Receivables:
The Company has a Master Accounts Receivable Purchase Agreement ("MARPA") Facility for the sale of up to a maximum amount of $ 300 million of certain designated eligible receivables with the U.S. government.
MARPA Facility activity consisted of the following:
Six Months Ended
July 31,
2026 August 1,
2025
(in millions)
Beginning balance $ 164 $ 164
Sale of receivables 1,581 2,443
Cash collections ( 1,581 ) ( 2,342 )
Outstanding balance sold (1)
164 265
Cash collected, not remitted (2)
( 44 ) ( 25 )
Remaining sold receivables (3)
$ 120 $ 240
(1) For the six months ended July 31, 2026, there was no net impact to cash flows from operating activities from sold receivables. 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.
(2) The cash collected, not remitted balance is included in "Accounts payable" on the condensed consolidated balance sheets.
(3) The remaining sold receivables balance is included in "Receivables, net" on the condensed consolidated balance sheets.
Note 10—Business Segments Information:
Effective January 31, 2026, the first day of fiscal 2027, the Company completed a business reorganization that consolidated its five previous business groups into three . The reorganization was designed to simplify the Company's organization structure and optimize operations and customer focus for growth. The consolidated business groups are led by three Executive Vice Presidents. The three business groups report directly to the Company’s CEO, the CODM. The reorganization did not have an impact on the Company's reportable segments.
The Company has three customer facing business groups which are also its operating segments. They are aggregated into two reportable segments for financial reporting purposes given the similarity in economic and qualitative characteristics, and based on the nature of the customers they serve. The Company’s two reportable segments are the Defense and Intelligence segment and the Civilian segment. The Company defines its operating segments based on the way the CODM manages the operations for the purpose of allocating resources and assessing performance.
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, supporting a variety of missions across land, sea, air, and space.
The Civilian segment provides solutions to the civilian markets, encompassing federal, state, and local governments. This includes integrating solutions into a spectrum of public service missions that impact travel, security, trade, health and the economy.
The offerings of both reportable segments entail the integration of emerging technologies into mission critical operations that modernize and enable national imperatives. These services include end-to-end solutions spanning the design, development, integration, deployment, management, operation, sustainment, and security of customer hardware and software platforms.
Costs associated with corporate functions that are not allocable to the reportable segments are presented as Corporate.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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 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 amortization of intangible assets, depreciation of property, plant, and equipment, 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 July 31, 2026
Defense and Intelligence
Civilian
Corporate
Total SAIC
(in millions)
Revenues $ 1,449 $ 431 $ — $ 1,880
Labor base 404 126 — 530
Other operating expenses (income) (1)
907 249 3 1,159
Adjusted operating income (loss) $ 138 $ 56 $ ( 3 ) $ 191
Three Months Ended August 1, 2025
Defense and Intelligence Civilian Corporate Total SAIC
(in millions)
Revenues $ 1,374 $ 395 $ — $ 1,769
Labor base 410 124 — 534
Other operating expenses (income) (1)
840 217 ( 4 ) 1,053
Adjusted operating income (loss) $ 124 $ 54 $ 4 $ 182
Six Months Ended July 31, 2026
Defense and Intelligence
Civilian
Corporate
Total SAIC
(in millions)
Revenues $ 2,915 $ 871 $ — $ 3,786
Labor base 840 254 — 1,094
Other operating expenses (income) (1)
1,791 493 ( 4 ) 2,280
Adjusted operating income (loss) $ 284 $ 124 $ 4 $ 412
Six Months Ended August 1, 2025
Defense and Intelligence Civilian Corporate Total SAIC
(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
(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.
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SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The table below includes a reconciliation of total "Adjusted operating income" to "Income before income taxes" for the three and six months ended July 31, 2026 and August 1, 2025.
Three Months Ended
Six Months Ended
July 31,
2026 August 1,
2025 July 31,
2026 August 1,
2025
(in millions)
Adjusted operating income
$ 191 $ 182 $ 412 $ 340
Depreciation of property, plant, and equipment
7 6 15 13
Amortization of intangible assets
32 29 64 58
Acquisition, integration, restructuring and impairment costs 2 1 4 4
Recovery of acquisition, integration, restructuring and impairment costs
( 1 ) — ( 2 ) ( 2 )
Costs related to the settlement of federal tax audits
— 7 1 7
Gain on divestitures, net of transaction costs
( 1 ) — ( 1 ) —
Interest expense, net
33 31 66 61
Other (income) expense, net
— — 1 5
Income before income taxes
$ 119 $ 108 $ 264 $ 194
Asset information by segment is not a key measure of performance used by the CODM.
Note 11—Legal Proceedings and Other Commitments and Contingencies:
Legal Proceedings
The Company is involved in various claims and lawsuits arising in the normal conduct of its business, none of which the Company’s management believes, based on current information, is expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows.
In April 2022 and October 2023, the Company received Federal Grand Jury Subpoenas in connection with a criminal investigation being conducted by the U.S. Department of Justice, Antitrust Division ("DOJ"). As required by the subpoenas, the Company has provided the DOJ with a broad range of documents related to the investigation, and the Company’s collection and production process remains ongoing. The Company is fully cooperating with the investigation. 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.
Government Investigations, Audits and Reviews
The Company is routinely subject to investigations and reviews relating to compliance with various laws and regulations with respect, in particular, to its role as a contractor to federal, state and local government customers and in connection with performing services in countries outside of the United States. U.S. government agencies, including the Defense Contract Audit Agency ("DCAA"), the Defense Contract Management Agency and others, routinely audit and review a contractor’s performance on government contracts, indirect rates and pricing practices, and compliance with applicable contracting and procurement laws, regulations and standards. 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. 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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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The indirect cost audits by the DCAA of the Company’s business remain open for certain prior years and the current year. Although the Company has recorded contract revenues based on an estimate of costs that the Company believes will be approved on final audit, the Company does not know the outcome of any ongoing or future audits. If future completed audit adjustments exceed the Company’s reserves for potential adjustments, the Company’s profitability could be materially adversely affected.
As of July 31, 2026, 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 July 31, 2026, 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.
Note 12—Subsequent Events:
Accounts Receivable Facility
On August 14, 2026, the Company amended the MARPA to increase the aggregate facility limit from $ 300 million to $ 400 million.
Quarterly Dividend Declared
On August 27, 2026, the Company's Board of Directors declared a quarterly dividend of $ 0.37 per share of the Company's common stock payable on October 23, 2026 to stockholders of record on October 9, 2026.
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