Financial Analysis

Note 4Acquisitions: 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 preliminary purchase price of $203 million, net of $6 million cash acquired, subject to post-closing adjustments. 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 May 1, 2026, the Company has substantially completed the purchase price allocation related to this acquisition, primarily subject to the finalization of working capital adjustments. 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 months ended May 1, 2026, revenues of $19 million related to SilverEdge were recorded to the Defense and Intelligence reportable segment. …

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"Note 7Debt Obligations: The Companys debt as of the dates presented was as follows: May 1, 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 4.90 % 4.98 % $ 1,100 $ (3) $ 1,097 $ 1,100 $ (3) $ 1,097 Term Loan B3 Facility due February 2031 5.40 % 5.54 % 500 (3) 497 501 (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 $ 2,500 $ (14) $ 2,486 $ 2,501 $ (14) $ 2,487 Less current portion 26 26 19 19 Total debt, net of current portion $ 2,474 $ (14) $ 2,460 $ 2,482 $ (14) $ 2,468 As of May 1, 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 months ended May 1, 2026, the Company made a scheduled principal payment of $1 million on the Term Loan B3 Facility due February 2031. During the three months ended May 1, 2026, the Company made no borrowings or repayments under the Revolving Credit Facility, and as of May 1, 2026 and January 30, 2026, there were no borrowings outstanding. As of May 1, 2026, the Company was in compli …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

"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 May 1, 2026 May 2, 2025 (in millions, except per share amounts) Net favorable (unfavorable) adjustments $ 8 $ (2) Net favorable (unfavorable) adjustments, after tax 6 (2) Basic and Diluted EPS impact $ 0.14 $ (0.04) Disaggregated revenues by customer were as follows: Three Months Ended May 1, 2026 May 2, 2025 Defense and Intelligence Civilian Total SAIC Defense and Intelligence Civilian Total SAIC (in millions) Department of War $ 981 $ 1 $ 982 $ 982 $ 3 $ 985 Intelligence and other federal government agencies 479 396 875 445 408 853 Commercial, state and local governments and international 6 43 49 6 33 39 Total $ 1,466 $ 440 $ 1,906 $ 1,433 $ 444 $ 1,877 Disaggregated revenues by contract type were as follows: Three Months Ended May 1, 2026 May 2, 2025 Defense and Intelligence Civilian Total SAIC Defense and Intelligence Civilian Total SAIC (in millions) Cost reimbursement $ 1,164 $ 8 $ 1,172 $ 1,134 $ 20 $ 1,154 Time and materials (""T&M"") 138 306 444 141 292 433 Firm-fixed price (""FFP"") 164 126 290 158 132 290 Total $ 1,466 $ 440 $ 1,906 $ 1,433 $ 444 $ 1,877 Disaggregated revenues by prime versus subcontractor were as follows: Three Months Ended May 1, 2026 May 2, 2025 Defense and Intelligence Civilian Total SAIC Defense and Intelligence Civilian Total SAIC (in millions) Prime contractor to fed …

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Note 5Goodwill and Intangible Assets: Goodwill The following table presents the carrying value of goodwill by reportable segment: May 1, 2026 January 30, 2026 (in millions) Defense and Intelligence $ 2,094 $ 2,094 Civilian 850 850 Total $ 2,944 $ 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 i …

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Note 6Income Taxes: The Company's effective income tax rate was 20.9% and 20.6% for the three months ended May 1, 2026 and May 2, 2025, respectively. The rate for both periods was below the Company's combined federal and state statutory tax rate, primarily due to research and development tax credits and the tax deduction for foreign-derived deduction eligible income. …

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"Note 11Legal 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 Companys management believes, based on current information, is expected to have a material adverse effect on the Companys 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 Companys 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 …

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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, 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 StatementReporting Comprehensive IncomeExpense 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 probabl …

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"Note 3Revenues: 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 May 1, 2026 May 2, 2025 (in millions, except per share amounts) Net favorable (unfavorable) adjustments $ 8 $ (2) Net favorable ( …

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"Note 10Business 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 will be led by three Executive Vice Presidents. The three business groups will continue to report directly to the Companys CEO, the CODM. The reorganization did not have an impact on the Company's reportable segments. The Company now 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 Companys 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 …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing