Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
May 03, 2019 | May 24, 2019 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | May 3, 2019 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | SAIC | |
Entity Registrant Name | Science Applications International Corporation | |
Entity Central Index Key | 0001571123 | |
Current Fiscal Year End Date | --01-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 59,020,969 | |
Entity Emerging Growth Company | false | |
Entity Small Business | false |
CONDENSED AND CONSOLIDATED STAT
CONDENSED AND CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | |
May 03, 2019 | May 04, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Revenues | $ 1,615 | $ 1,175 |
Cost of revenues | 1,435 | 1,074 |
Selling, general and administrative expenses | 77 | 35 |
Acquisition and integration costs (Note 4) | 10 | 0 |
Operating income | 93 | 66 |
Interest expense | 25 | 12 |
Other (income) expense, net | (2) | (1) |
Income before income taxes | 70 | 55 |
Provision for income taxes (Note 6) | (14) | (6) |
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | 56 | 49 |
Net Income (Loss) Attributable to Noncontrolling Interest | 1 | 0 |
Net income | $ 55 | $ 49 |
Earnings per share (Note 2): | ||
Basic (in dollars per share) | $ 0.93 | $ 1.16 |
Diluted (in dollars per share) | $ 0.92 | $ 1.13 |
CONDENSED AND CONSOLIDATED BALA
CONDENSED AND CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | May 03, 2019 | Feb. 01, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 151 | $ 237 |
Receivables, net | 1,039 | 1,050 |
Inventories, prepaid expenses and other current assets | 127 | 146 |
Total current assets | 1,317 | 1,433 |
Goodwill | 2,120 | 2,120 |
Intangible assets (net of accumulated amortization of $104 million and $79 million at May 3, 2019 and February 1, 2019, respectively) | 778 | 803 |
Property, plant, and equipment (net of accumulated depreciation of $165 million and $159 million at May 3, 2019 and February 1, 2019, respectively) | 103 | 103 |
Other assets | 289 | 104 |
Total assets | 4,607 | 4,563 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 714 | 632 |
Accrued payroll and employee benefits | 259 | 241 |
Long-term debt, current portion (Note 7) | 37 | 24 |
Total current liabilities | 1,010 | 897 |
Long-term debt, net of current portion (Note 7) | 1,902 | 2,065 |
Other long-term liabilities | 222 | 102 |
Commitments and contingencies (Note 11) | ||
Equity: | ||
Common stock, $.0001 par value, 1 billion shares authorized, 59 million and 60 million shares issued and outstanding as of May 3, 2019 and February 1, 2019, respectively | 0 | 0 |
Additional paid-in capital | 1,086 | 1,132 |
Retained earnings | 400 | 367 |
Accumulated other comprehensive loss | (24) | (14) |
Total common stockholders' equity | 1,462 | 1,485 |
Stockholders' Equity Attributable to Noncontrolling Interest | 11 | 14 |
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | 1,473 | 1,499 |
Total liabilities and stockholders' equity | $ 4,607 | $ 4,563 |
CONDENSED AND CONSOLIDATED BA_2
CONDENSED AND CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | May 03, 2019 | Feb. 01, 2019 |
Statement of Financial Position [Abstract] | ||
Intangible assets, accumulated amortization | $ 104 | $ 79 |
Property, plant and equipment, accumulated depreciation | $ 165 | $ 159 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued (in shares) | 59,000,000 | 60,000,000 |
Common stock, shares outstanding (in shares) | 59,000,000 | 60,000,000 |
CONDENSED AND CONSOLIDATED ST_2
CONDENSED AND CONSOLIDATED STATEMENT OF EQUITY - USD ($) $ in Millions | Total | Shares of common stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive (loss) income | Non-Controlling Interest |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Cumulative impact from adopting ASC 606 on February 3, 2018 | $ 3 | $ 3 | ||||
Balance, beginning (in shares) at Feb. 02, 2018 | 43,000,000 | |||||
Beginning Balance at Feb. 02, 2018 | 327 | $ 0 | 323 | $ 4 | $ 0 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 49 | 49 | ||||
Issuances of stock (in shares) | 1,000,000 | |||||
Issuances of stock | 2 | 2 | ||||
Other comprehensive loss, net of tax | 1 | 1 | ||||
Dividends, Common Stock, Cash | (13) | (13) | ||||
Stock-based compensation | (11) | (2) | (9) | |||
Repurchases of stock (in shares) | (1,000,000) | |||||
Repurchases of stock | (33) | 0 | (33) | |||
Net Income (Loss) Attributable to Noncontrolling Interest | 0 | |||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | 49 | |||||
Distributions to non-controlling interest | 0 | |||||
Balance, ending (in shares) at May. 04, 2018 | 43,000,000 | |||||
Ending Balance at May. 04, 2018 | $ 325 | 0 | 320 | 5 | 0 | |
Balance, beginning (in shares) at Feb. 01, 2019 | 60,000,000 | 60,000,000 | ||||
Beginning Balance at Feb. 01, 2019 | $ 1,499 | 1,132 | 367 | (14) | 14 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 55 | 55 | ||||
Issuances of stock (in shares) | 0 | |||||
Issuances of stock | 3 | 3 | ||||
Other comprehensive loss, net of tax | (10) | (10) | ||||
Dividends, Common Stock, Cash | (22) | (22) | ||||
Stock-based compensation | (4) | (4) | 0 | |||
Repurchases of stock (in shares) | (1,000,000) | |||||
Repurchases of stock | (45) | (45) | 0 | |||
Net Income (Loss) Attributable to Noncontrolling Interest | (1) | 1 | ||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | 56 | |||||
Distributions to non-controlling interest | $ (4) | (4) | ||||
Balance, ending (in shares) at May. 03, 2019 | 59,000,000 | 59,000,000 | ||||
Ending Balance at May. 03, 2019 | $ 1,473 | $ 1,086 | $ 400 | $ (24) | $ 11 |
CONDENSED AND CONSOLIDATED ST_3
CONDENSED AND CONSOLIDATED STATEMENT OF EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |
May 03, 2019 | May 04, 2018 | |
Statement of Stockholders' Equity [Abstract] | ||
Cash dividends paid per share (in dollars per share) | $ 0.37 | $ 0.31 |
Cash dividends declared per share (in dollars per share) | $ 0.37 | $ 0.31 |
CONDENSED AND CONSOLIDATED ST_4
CONDENSED AND CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | |
May 03, 2019 | May 04, 2018 | |
Cash flows from operating activities: | ||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | $ 56 | $ 49 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 36 | 11 |
Deferred Income Taxes and Tax Credits | 9 | 0 |
Stock-based compensation expense | 8 | 8 |
Increase (decrease) resulting from changes in operating assets and liabilities: | ||
Receivables | 11 | 8 |
Inventory, prepaid expenses and other current assets | 16 | 7 |
Other assets | 11 | (6) |
Accounts payable and accrued liabilities | 20 | (24) |
Accrued payroll and employee benefits | 18 | 34 |
Other long-term liabilities | (7) | 1 |
Net cash provided by operating activities | 178 | 88 |
Cash flows from investing activities: | ||
Expenditures for property, plant, and equipment | (9) | (6) |
Purchases of marketable securities | (21) | 0 |
Net cash used in investing activities | (30) | (6) |
Cash flows from financing activities: | ||
Dividend payments to stockholders | (23) | (14) |
Principal payments on borrowings | (153) | (8) |
Issuances of stock | 2 | 2 |
Stock repurchased and retired or withheld for taxes on equity awards | (56) | (53) |
Debt issuance costs | 0 | (1) |
Distributions to non-controlling interest | (4) | 0 |
Net cash used in financing activities | (234) | (74) |
Net (decrease) increase in cash, cash equivalents and restricted cash | (86) | 8 |
Cash, cash equivalents and restricted cash at beginning of period | 246 | 152 |
Cash, cash equivalents and restricted cash at end of period (Note 1) | $ 160 | $ 160 |
CONDENSED AND CONSOLIDATED ST_5
CONDENSED AND CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Statement - USD ($) $ in Millions | 3 Months Ended | |
May 03, 2019 | May 04, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | $ 56 | $ 49 |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest | 46 | 50 |
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest | 1 | 0 |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent | 45 | 50 |
Other Comprehensive Income (Loss), Net of Tax | (10) | 1 |
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification, after Tax | (10) | 1 |
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, after Tax | 0 | 0 |
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), after Reclassification and Tax | $ (10) | $ 1 |
CONDENSED AND CONSOLIDATED ST_6
CONDENSED AND CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (PARENTHETICAL) (Parentheticals) - USD ($) $ in Millions | 3 Months Ended | |
May 03, 2019 | May 04, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification, Tax | $ 4 | $ (1) |
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, Tax | $ 0 | $ 0 |
Business Overview and Summary o
Business Overview and Summary of Significant Accounting Policies | 3 Months Ended |
May 03, 2019 | |
Accounting Policies [Abstract] | |
Business Overview and Summary of Significant Accounting Policies | 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 enterprise information technology (IT) services primarily to the U.S. government. The Company provides engineering and integration services for large, complex projects and offers a broad range of services with a targeted emphasis on higher-end, differentiated technology services. The Company is organized as a matrix comprised of three customer facing operating segments supported by a solutions and technology group. Each of the Company’s three customer facing operating segments is focused on providing the Company’s comprehensive technical and enterprise IT service offerings to one or more agencies of the U.S federal government. The Company's operating segments are aggregated into one reportable segment for financial reporting purposes. On January 14, 2019, the Company completed the acquisition of Engility Holdings, Inc. (collectively with its consolidated subsidiaries, "Engility"), which provides increased customer and market access, as well as increased scale in strategic business areas of national interest, such as defense, federal civilian agencies, intelligence and space. Principles of Consolidation and Basis of Presentation The accompanying financial information has been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission for interim reporting purposes. References to “financial statements” refer to the condensed and 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. The financial statements are unaudited, but in the opinion of management include all adjustments, which consist of normal recurring adjustments, necessary for a fair presentation thereof. 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 February 1, 2019 . Non-controlling Interest. As a result of the acquisition of Engility, the Company holds a 50.1% majority interest in Forfeiture Support Associates J.V. (FSA). The results of operations of FSA are included in the Company's condensed and consolidated statements of income. The non-controlling interest reported on the condensed and consolidated balance sheets represents the portion of FSA's equity that is attributable to the non-controlling interest. 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 2019 began on February 3, 2018 and ended on February 1, 2019 , while fiscal 2020 began on February 2, 2019 and ends on January 31, 2020 . 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. Derivative Instruments Designated as Cash Flow Hedges Derivative instruments are recorded on the condensed and consolidated balance sheets at fair value. Unrealized gains and losses on derivatives designated as cash flow hedges are reported in other comprehensive income (loss) and reclassified to earnings in a manner that matches the timing of the earnings impact of the hedged transactions. The Company’s fixed interest rate swaps are considered over-the-counter derivatives, and fair value is calculated using a standard pricing model for interest rate swaps with contractual terms for maturities, amortization and interest rates. Level 2, or market observable inputs (such as yield and credit curves), are used within the standard pricing models in order to determine fair value. The fair value is an estimate of the amount that the Company would pay or receive as of a measurement date if the agreements were transferred to a third party or canceled. See Note 8 for further discussion on the Company’s derivative instruments designated as cash flow hedges. Inventory Inventory is substantially comprised of finished goods inventory purchased for resale to customers, such as tires and lubricants, and is valued at the lower of cost or net realizable value, generally using the average method. The Company evaluates current inventory against historical and planned usage to estimate the appropriate provision for obsolete inventory. Marketable Securities Investments in marketable securities consist of equity securities which are recorded at fair value using observable inputs such as quoted prices in active markets (Level 1). As of May 3, 2019 and February 1, 2019 , the fair value of our investments total $26 million and $4 million and was included in other assets on our condensed and consolidated balance sheets. Our investments are primarily held in a custodial account, which includes investments to fund our deferred compensation plan liabilities. Cash, Cash Equivalents and Restricted Cash The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the condensed and consolidated balance sheets for the periods presented: May 3, February 1, (in millions) Cash and cash equivalents $ 151 $ 237 Restricted cash included in other assets 9 9 Cash, cash equivalents and restricted cash $ 160 $ 246 Accounting Standards Updates In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842), which supersedes the existing lease accounting standards (Topic 840). Under the new guidance, a lessee will be required to recognize lease assets and lease liabilities for all leases with lease terms in excess of twelve months. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as either a finance lease or operating lease. The criteria for distinction between a finance lease and an operating lease are substantially similar to existing lease guidance for capital leases and operating leases. Some changes to lessor accounting have been made to conform and align that guidance with the lessee guidance and other areas within GAAP, such as Revenue from Contracts with Customers (Topic 606) . In July 2018, the FASB provided an optional transition method of adoption, permitting entities to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption as opposed to the beginning of the earliest period presented in the financial statements. ASU 2016-02 became effective for the Company in the first quarter of fiscal 2020. The Company adopted the standard using the optional transition method. Accordingly, the prior periods were not recast, and all prior period amounts disclosed are presented under ASC 840. The Company elected certain practical expedients provided under the standard, including the package of practical expedients, which allows entities not to reassess whether existing contracts are or contain leases. Therefore, at adoption, existing leases have been identified using the criteria of ASC 840. As a result of the adoption of the new standard, on February 2, 2019, the Company recognized approximately $169 million of right of use operating assets and $187 million of operating lease liabilities, of which $140 million was noncurrent. The adoption did not have a material impact on retained earnings, the condensed and consolidated statements of income, or the condensed and consolidated statements of cash flows. In August 2018, the FASB issued ASU No. 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract , which aligns the capitalization requirements for implementation costs incurred in a hosting arrangement that is a service contract with the existing capitalization requirements for implementation costs incurred to develop or obtain internal-use software (Subtopic 350-40) . ASU 2018-15 becomes effective for the Company in the first quarter of fiscal 2021 and may be adopted either retrospectively or prospectively. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of this standard on its financial statements. Other Accounting Standards Updates effective after May 3, 2019 are not expected to have a material effect on the Company’s financial statements. |
Earnings Per Share and Dividend
Earnings Per Share and Dividends | 3 Months Ended |
May 03, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share and Dividends | Earnings Per Share and Dividends: Earnings Per Share Basic earnings per share (EPS) is computed by dividing net income attributable to common stockholders 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 options and other stock-based awards. A reconciliation of the weighted-average number of shares outstanding used to compute basic and diluted EPS was: Three Months Ended May 3, May 4, (in millions) Basic weighted-average number of shares outstanding 59.3 42.4 Dilutive common share equivalents - stock options and other stock-based awards 0.7 1.0 Diluted weighted-average number of shares outstanding 60.0 43.4 The following stock-based awards were excluded from the weighted-average number of shares outstanding used to compute diluted EPS: Three Months Ended May 3, May 4, (in millions) Antidilutive stock options excluded 0.4 0.3 Dividends The Company declared and paid a quarterly dividend of $0.37 per share of its common stock during the three months ended May 3, 2019. On June 5, 2019, the Company's Board of Directors declared a quarterly dividend of $0.37 per share of the Company's common stock payable on July 26, 2019 to stockholders of record on July 12, 2019. |
Revenues
Revenues | 3 Months Ended |
May 03, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Revenues: Changes in Estimates 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 routinely occur 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. 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 changes in these estimates increased operating income by $8 million ( $0.11 per diluted share) for the three months ended May 3, 2019 , and decreased operating income by $5 million ( $0.09 per diluted share) for the three months ended May 4, 2018 . Changes in these estimates increased net income by $6 million for the three months ended May 3, 2019 . In addition, revenues were $9 million higher for the three months ended May 3, 2019 , due to net revenue recognized from performance obligations satisfied in prior periods. 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 vs. subcontractor to the federal government. Disaggregated revenues by customer were as follows: Three Months Ended May 3, 2019 May 4, 2018 (in millions) Department of Defense $ 864 $ 746 Other federal government agencies 722 413 Commercial, state and local 29 16 Total $ 1,615 $ 1,175 Disaggregated revenues by contract-type were as follows: Three Months Ended May 3, 2019 May 4, 2018 (in millions) Cost reimbursement $ 921 $ 533 Time and materials (T&M) 325 315 Firm-fixed price (FFP) 369 327 Total $ 1,615 $ 1,175 Disaggregated revenues by prime vs. subcontractor were as follows: Three Months Ended May 3, 2019 May 4, 2018 (in millions) Prime contractor to federal government $ 1,434 $ 1,077 Subcontractor to federal government 152 82 Other 29 16 Total $ 1,615 $ 1,175 Contract Balances Contract balances for the periods presented were as follows: Balance Sheet line item May 3, February 1, (in millions) Billed and billable receivables, net (1) Receivables, net $ 714 $ 740 Contract assets - unbillable receivables Receivables, net 325 310 Contract assets - contract retentions Other assets 16 13 Contract liabilities - current Accounts payable and accrued liabilities 36 34 Contract liabilities - non-current Other long-term liabilities $ 8 $ 6 (1) Net of allowance for doubtful accounts of $2 million as of May 3, 2019 and February 1, 2019 . During the three months ended May 3, 2019 and May 4, 2018 , the Company recognized revenues of $13 million and $9 million relating to amounts that were included in the opening balance of contract liabilities as of February 1, 2019 and February 3, 2018, respectively. Deferred Costs Deferred costs for the periods presented were as follows: Balance Sheet line item May 3, February 1, (in millions) Pre-contract costs Inventory, prepaid expenses and other current assets $ — $ 1 Fulfillment costs - non-current Other assets $ 14 $ 13 Pre-contract costs of $1 million were expensed during the three months ended May 3, 2019 . Fulfillment costs of $1 million were amortized during the three months ended May 3, 2019 . Remaining Performance Obligations As of May 3, 2019 , the Company had $4.1 billion of remaining performance obligations. Remaining performance obligations exclude any variable consideration that is allocated entirely to unsatisfied performance obligations on our supply chain contracts. The Company expects to recognize revenue on approximately 80% of the remaining performance obligations over the next 12 months and approximately 90% over the next 24 months, with the remaining recognized thereafter. |
Engility Acquisition
Engility Acquisition | 3 Months Ended |
May 03, 2019 | |
Business Combinations [Abstract] | |
Engility Acquisition | Engility Acquisition: On January 14, 2019, the Company completed the acquisition of Engility Holdings, Inc., a leading provider of integrated solutions and services supporting U.S. government customers in the defense, federal civilian, and intelligence and space communities. This strategic acquisition enables greater market and customer access, particularly in the intelligence and space communities, and enhances the Company's portfolio of capabilities, particularly in the area of systems engineering and integration. The acquisition enables acceleration of revenue growth through increased market and customer access, increased investment capacity, addition of cleared personnel and strategic alignment with key customers. The acquisition also enables increased profitability and cash generation with an improved margin profile and greater financial flexibility for investment and capital deployment. The acquisition was funded through a combination of SAIC common stock and additional borrowings. At the effective time of the acquisition, each outstanding share of Engility common stock was automatically cancelled and converted into the right to receive 0.45 shares of the Science Applications International Corporation common stock. The Company amended its credit agreement to provide for a new five-year senior secured $1.1 billion term loan facility. SAIC borrowed the entire amount of the term loan facility, the proceeds of which were immediately used to repay Engility's existing credit facility and outstanding notes and to pay fees and expenses associated with the acquisition, with the balance retained by SAIC to be used for general corporate purposes. The purchase consideration for the acquisition of Engility was as follows: (in millions) Common stock issued to Engility shareholders (1) $ 1,086 Converted vesting stock awards assumed (2) 22 Cash consideration paid to extinguish Engility outstanding debt 1,052 Purchase price $ 2,160 (1) Represents approximately 16.8 million new shares of SAIC common stock issued to Engility shareholders prior to the market opening on January 14, 2019, using the SAIC share price of $65.03 at the close of business on January 11, 2019. (2) Represents the fair value of the converted vesting stock awards assumed attributable to pre-acquisition service. The purchase price was allocated, on a preliminary basis, among assets acquired and liabilities assumed at fair value on the acquisition date, January 14, 2019, based on the best available information, with the excess purchase price recorded as goodwill. As of May 3, 2019, the Company had not finalized the determination of fair values allocated to various assets and liabilities, including, but not limited to, receivables, other current assets, deferred tax assets, property, plant, and equipment, other accrued liabilities and goodwill. The allocation of the purchase price is subject to change as the Company continues to obtain and assess relevant information that existed as of the acquisition date, including but not limited to, information pertaining to Engility’s historical government compliance accounting practices, legal proceedings, reserves, income taxes, contracts with customers, and pre-acquisition contingencies. The Company expects to have sufficient information available to resolve these items by the fourth quarter of fiscal 2020, which could potentially result in changes in assets or liabilities on Engility’s opening balance sheet and an adjustment to goodwill. The purchase accounting entries were recorded on a preliminary basis as follows: (in millions) Cash and cash equivalents $ 51 Receivables 351 Inventories 5 Prepaid expenses 5 Other current assets 15 Property, plant, and equipment 39 Deferred tax assets 91 Other assets 7 Intangible assets 648 Goodwill 1,257 Total assets acquired 2,469 Accounts payable 115 Accrued payroll and other employee benefits 30 Accrued vacation 39 Other accrued liabilities 58 Other long-term liabilities 54 Total liabilities assumed 296 Non-controlling interest 13 Net assets acquired $ 2,160 Amount of tax deductible goodwill $ 441 Goodwill represents intellectual capital and an acquired assembled work force. The Company inherited Engility's historical tax basis in deductible goodwill, certain other intangible assets, and net operating loss carryforwards. The following table summarizes the fair value of intangible assets and the related weighted average useful lives: Amount Weighted-Average Amortization Period (in millions) (in years) Backlog $ 30 1 Developed technology 2 10 Customer relationships 616 14 Total intangible assets $ 648 13 The Company incurred $128 million in costs associated with the acquisition and integration of Engility. Acquisition-related expenses, all of which were incurred in fiscal year 2019, were $63 million including $31 million of debt issue costs, and $2 million in stock issue costs. For the three months ended May 3, 2019 , the Company incurred $10 million of costs in connection with the integration of Engility, primarily for strategic consulting services, severance costs, and other integration-related costs. The Company did not incur any acquisition and integration costs for the three months ended May 4, 2018 . These costs are included in acquisition and integration costs on the condensed and consolidated statements of income. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
May 04, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation: Stock Options During the three months ended May 3, 2019 , the Company granted certain employees 0.1 million stock options with a weighted-average exercise price and weighted-average grant date fair value of $74.97 and $16.71 , respectively. These options will expire on the seven th anniversary of the grant date and will vest ratably on each anniversary of the grant date over a three -year period. Restricted Stock Units (RSUs) During the three months ended May 3, 2019 , the Company granted certain employees 0.4 million RSUs with a weighted-average grant date fair value of $74.97 , which will vest ratably on each anniversary of the grant date over a three -year period. |
Income Taxes
Income Taxes | 3 Months Ended |
May 03, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes: The Company's effective income tax rate was 19.8% for the three months ended May 3, 2019 and 10.3% for the three months ended May 4, 2018 . The Company's effective tax rate was higher for the three months ended May 3, 2019 compared to the prior year period due principally to lower excess tax benefits related to employee share-based compensation. Tax rates for the periods ended May 3, 2019 were lower than the combined federal and state statutory rates due principally to excess tax benefits related to employee share-based compensation, research and development credits, partially offset by permanent book tax differences. As of May 3, 2019 , the balance of unrecognized tax benefits included liabilities for uncertainty in income taxes of $15 million , which is classified as other long-term liabilities on the condensed and consolidated balance sheets. Of this balance, $12 million , if recognized, would impact the effective income tax rate for the Company. While the Company believes it has adequate accruals for uncertainty in income taxes, the tax authorities, on review of the Company’s tax filings, may determine that the Company owes taxes in excess of recorded accruals, or the recorded accruals may be in excess of the final settlement amounts agreed to by tax authorities. Although the timing of such reviews is not certain, we believe it is reasonably possible that $2 million to $4 million of unrecognized tax benefits will reverse in the next 12 months due to the resolution of a tax authority examination and approximately $2 million as a result of statute of limitations expirations, along with associated interest and penalties. |
Debt Obligations
Debt Obligations | 3 Months Ended |
May 03, 2019 | |
Debt Disclosure [Abstract] | |
Debt Obligations | Debt Obligations: The Company’s long-term debt as of the dates presented was as follows: May 3, 2019 February 1, 2019 Stated interest rate Effective interest rate Principal Unamortized Debt Issuance Costs Net Principal Unamortized Debt Issuance Costs Net (in millions) Term Loan A Facility due October 2023 3.98 % 4.32 % $ 918 $ (11 ) $ 907 $ 1,068 $ (14 ) $ 1,054 Term Loan B Facility due October 2025 4.23 % 4.45 % 1,044 (12 ) 1,032 1,047 (12 ) 1,035 Total long-term debt $ 1,962 $ (23 ) $ 1,939 $ 2,115 $ (26 ) $ 2,089 Less current portion 37 — 37 24 — 24 Total long-term debt, net of current portion $ 1,925 $ (23 ) $ 1,902 $ 2,091 $ (26 ) $ 2,065 As of May 3, 2019 , the Company has a $2.4 billion credit facility (the Credit Facility) consisting of a $400 million secured Revolving Credit Facility due October 2023, a $918 million secured Term Loan A Facility, and a $1,044 million secured Term Loan B Facility (together, the Term Loan Facilities). There is no balance outstanding on the Revolving Credit Facility as of May 3, 2019 . During the three months ended May 3, 2019 , the Company made $150 million of voluntary principal prepayments on the Term Loan A Facility. As of May 3, 2019 , the Company was in compliance with the covenants under its Credit Facility. As of May 3, 2019 and February 1, 2019 , the carrying value of the Company’s outstanding debt obligations approximated its fair value. The fair value of long-term 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. |
Derivative Instruments Designat
Derivative Instruments Designated as Cash Flow Hedges | 3 Months Ended |
May 03, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments Designated as Cash Flow Hedges | Derivative Instruments Designated as Cash Flow Hedges: The Company’s derivative instruments designated as cash flow hedges consist of: Liability Fair Value (1) at Notional Amount at May 3, 2019 Pay Fixed Rate Receive Variable Rate Settlement and Termination May 3, 2019 February 1, 2019 (in millions) (in millions) Interest rate swaps #1 $ 340 2.78 % 1-month LIBOR Monthly through $ (3 ) $ (2 ) Interest rate swaps #2 500 3.07 % 1-month LIBOR Monthly through October 31, 2025 (28 ) (21 ) Interest rate swaps #3 500 2.49 % 1-month LIBOR Monthly through October 31, 2023 (6 ) (1 ) Total $ 1,340 $ (37 ) $ (24 ) (1) The fair value of the fixed interest rate swaps liability is included in accounts payable and accrued liabilities on the condensed and consolidated balance sheets. The Company is party to fixed interest rate swap instruments that are designated and accounted for as cash flow hedges to manage risks associated with interest rate fluctuations on a portion of the Company’s floating rate debt. The counterparties to all swap agreements are financial institutions. See Note 9 for the unrealized change in fair values on cash flow hedges recognized in other comprehensive loss and the amounts reclassified from accumulated other comprehensive loss into earnings for the current and comparative periods presented. The Company estimates that it will reclassify $1 million of unrealized losses from accumulated other comprehensive loss into earnings in the twelve months following May 3, 2019 . On October 31, 2018, the Company exited one of its interest rate swaps and discontinued hedge accounting. The Company received cash proceeds of $6 million upon the early settlement. The $6 million of deferred gains in accumulated other comprehensive loss will be reclassified into interest expense over the original contractual term of the interest rate swaps, which has a maturity date of May 7, 2020. |
Changes in Accumulated Other Co
Changes in Accumulated Other Comprehensive Income by Component | 3 Months Ended |
May 03, 2019 | |
Equity [Abstract] | |
Changes in Accumulated Other Comprehensive Income by Component | Changes in Accumulated Other Comprehensive Loss by Component: The following table presents the changes in accumulated other comprehensive loss attributable to the Company’s fixed interest rate swap cash flow hedges that are discussed in Note 8 . Pre-Tax Amount Unrealized Gains (Losses) on Fixed Interest Rate Swap Cash Flow Hedges (1) (in millions) Three months ended May 3, 2019 Balance at February 1, 2019 $ (19 ) Other comprehensive loss before reclassifications (14 ) Amounts reclassified from accumulated other comprehensive loss — Net other comprehensive loss (14 ) Balance at May 3, 2019 $ (33 ) Three months ended May 4, 2018 Balance at February 2, 2018 $ 5 Other comprehensive income before reclassifications 2 Amounts reclassified from accumulated other comprehensive income — Net other comprehensive income 2 Balance at May 4, 2018 $ 7 (1) The amount reclassified from accumulated other comprehensive loss is included in interest expense. |
Leases
Leases | 3 Months Ended |
May 03, 2019 | |
Leases [Abstract] | |
Leases | Leases: The Company occupies most of its facilities under operating leases. Certain equipment also is leased under short-term or cancelable operating leases. Effective upon the adoption of ASU 2016-02, the Company recognizes a right of use (ROU) asset and a lease liability upon the commencement of its operating leases. The initial lease liability is equal to the future fixed minimum lease payments discounted using the Company’s incremental borrowing rate, on a secured basis. The lease term includes option renewal periods and early termination payments when it is reasonably certain that the Company will exercise those rights. The initial measurement of the ROU asset is equal to the initial lease liability plus any initial direct costs and prepayments, less any lease incentives. The Company recognizes lease costs on a straight-line basis over the remaining lease term, except for variable lease payments that are expensed in the period in which the obligation for those payments is incurred. For its facility leases, the Company combines and accounts for lease and non-lease components together as a single component. The Company does not recognize lease liabilities and ROU assets for facility leases with original terms of 12 months or less. ROU assets are evaluated for impairment as a long-lived asset. Total operating lease cost is comprised of the following: Three Months Ended Income Statement line item(s) May 3, 2019 (in millions) Operating lease cost Cost of revenues and selling, general and administrative expenses $ 16 Variable lease cost Cost of revenues and selling, general and administrative expenses 4 Short-term lease cost Cost of revenues and selling, general and administrative expenses 1 Sublease income Cost of revenues and selling, general and administrative expenses (1 ) Total lease cost $ 20 The Company's ROU assets and lease liabilities consisted of the following: Balance Sheet line item May 3, 2019 (in millions) Operating lease ROU asset Other assets $ 166 Operating lease current liability Accounts payable and accrued liabilities 49 Operating lease non-current liability Other long-term liabilities 134 Total operating lease liabilities $ 183 Other supplemental operating lease information consists of the following: Three Months Ended May 3, 2019 (dollars in millions) Cash paid for amounts included in the measurement of operating lease liabilities 16 ROU assets obtained in exchange for new operating lease obligations 11 Weighted average remaining lease term 5 years Weighted average discount rate 4.3 % Maturities of operating lease liabilities as of May 3, 2019 were as follows: Fiscal Year Ending Total (in millions) 2020 (excluding the three months ended May 3, 2019) $ 41 2021 45 2022 39 2023 21 2024 18 Thereafter 43 Total minimum lease payments 207 Less: imputed interest (24 ) Present value of operating lease liabilities $ 183 As of May 3, 2019 , the Company has rental commitments of $24 million for facility leases that have not yet commenced. These operating leases are expected to commence in fiscal 2020 and have a weighted average lease term of approximately 10 years. |
Legal Proceedings and Other Com
Legal Proceedings and Other Commitments and Contingencies | 3 Months Ended |
May 03, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Proceedings and Other Commitments and Contingencies | 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. AAV Termination for Convenience On August 27, 2018, the Company received a stop-work order from the United States Marine Corps on the Assault Amphibious Vehicle (AAV) contract and on October 3, 2018 the program was terminated for convenience by the customer. Beginning in fiscal 2018, the Company entered into contracts with various vendors for long-lead time materials that would be necessary to complete the low-rate initial production (LRIP) phase of the program, including portions of the LRIP phase which had not yet been awarded. As a result of the program termination, the Company recognized an inventory provision for long-lead items. The Company is continuing to negotiate with the Marine Corps to recover all costs associated with the termination. Agreements with Former Parent The Company commenced its operations on September 27, 2013 (the Distribution Date) following completion of a tax-free spin-off transaction from its former parent company, Leidos Holdings, Inc. (formerly SAIC, Inc., collectively with its consolidated subsidiaries, “former Parent”). In the spin-off transaction, former Parent’s technical, engineering and enterprise IT services business was separated (the separation) into an independent, publicly traded company named Science Applications International Corporation (formerly SAIC Gemini, Inc.). Former Parent and the Company executed various agreements to provide mechanisms for an orderly transition and to govern certain ongoing relationships between the companies following the separation. The agreements include a Distribution Agreement, Employee Matters Agreement, Tax Matters Agreement, Master Transition Services Agreement, and Master Transitional Contracting Agreement (MTCA). These agreements generally provide that each party is responsible for its respective assets, liabilities and obligations, including employee benefits, insurance and tax-related assets and liabilities. The MTCA also governs the relationship between former Parent and the Company with regard to the treatment of contracts, proposals, and teaming arrangements where both companies are or will be jointly performing work after separation. Each of former Parent and the Company indemnify the other party for work performed by it under the MTCA. Contingent losses that were unknown at the time of separation and arise from the operation of the Company’s historical business or the former Parent’s historical corporate losses will be shared between the parties to the extent that losses in any such category exceed $50 million in the aggregate. If they arise and exceed the $50 million threshold, the Company will be responsible for 30% of the former Parent’s incremental contingent losses on corporate claims (and former Parent will be responsible for 70% of the Company’s incremental losses on claims relating to operations that exceed $50 million ). 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 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. The indirect cost audits by the DCAA of the Company’s business remain open for fiscal 2011 and subsequent years. Although the Company has recorded contract revenues subsequent to and including fiscal 2011 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. The Company has recorded reserves for estimated net amounts to be refunded to customers for potential adjustments for indirect cost audits and compliance with Cost Accounting Standards. As of May 3, 2019 , the Company has recorded a total liability of $64 million for estimated net amounts to be refunded to customers for potential adjustments from audits of contract costs, which is presented in accounts payable and accrued liabilities on the condensed and consolidated balance sheets. Any additional amounts which may be determined to be owed for periods prior to the separation will be allocated to former Parent and the Company in proportions determined in accordance with the Distribution Agreement. Letters of Credit and Surety Bonds The Company has outstanding obligations relating to letters of credit of $11 million as of May 3, 2019 , principally related to guarantees on insurance policies. The Company also has outstanding obligations relating to surety bonds in the amount of $18 million , principally related to performance and payment bonds on the Company’s contracts. |
Business Overview and Summary_2
Business Overview and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
May 03, 2019 | |
Accounting Policies [Abstract] | |
Segment Reporting | The Company is organized as a matrix comprised of three customer facing operating segments supported by a solutions and technology group. Each of the Company’s three customer facing operating segments is focused on providing the Company’s comprehensive technical and enterprise IT service offerings to one or more agencies of the U.S federal government. The Company's operating segments are aggregated into one reportable segment for financial reporting purposes. |
Basis of Presentation | The accompanying financial information has been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission for interim reporting purposes. References to “financial statements” refer to the condensed and 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). |
Consolidation | All intercompany transactions and account balances within the Company have been eliminated. |
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 2019 began on February 3, 2018 and ended on February 1, 2019 , while fiscal 2020 began on February 2, 2019 and ends on January 31, 2020 . |
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. |
Derivative Instruments Designated as Cash Flow Hedges | Derivative instruments are recorded on the condensed and consolidated balance sheets at fair value. Unrealized gains and losses on derivatives designated as cash flow hedges are reported in other comprehensive income (loss) and reclassified to earnings in a manner that matches the timing of the earnings impact of the hedged transactions. The Company’s fixed interest rate swaps are considered over-the-counter derivatives, and fair value is calculated using a standard pricing model for interest rate swaps with contractual terms for maturities, amortization and interest rates. Level 2, or market observable inputs (such as yield and credit curves), are used within the standard pricing models in order to determine fair value. The fair value is an estimate of the amount that the Company would pay or receive as of a measurement date if the agreements were transferred to a third party or canceled. See Note 8 for further discussion on the Company’s derivative instruments designated as cash flow hedges. |
Accounting Standards Updates | Accounting Standards Updates In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842), which supersedes the existing lease accounting standards (Topic 840). Under the new guidance, a lessee will be required to recognize lease assets and lease liabilities for all leases with lease terms in excess of twelve months. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as either a finance lease or operating lease. The criteria for distinction between a finance lease and an operating lease are substantially similar to existing lease guidance for capital leases and operating leases. Some changes to lessor accounting have been made to conform and align that guidance with the lessee guidance and other areas within GAAP, such as Revenue from Contracts with Customers (Topic 606) . In July 2018, the FASB provided an optional transition method of adoption, permitting entities to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption as opposed to the beginning of the earliest period presented in the financial statements. ASU 2016-02 became effective for the Company in the first quarter of fiscal 2020. The Company adopted the standard using the optional transition method. Accordingly, the prior periods were not recast, and all prior period amounts disclosed are presented under ASC 840. The Company elected certain practical expedients provided under the standard, including the package of practical expedients, which allows entities not to reassess whether existing contracts are or contain leases. Therefore, at adoption, existing leases have been identified using the criteria of ASC 840. As a result of the adoption of the new standard, on February 2, 2019, the Company recognized approximately $169 million of right of use operating assets and $187 million of operating lease liabilities, of which $140 million was noncurrent. The adoption did not have a material impact on retained earnings, the condensed and consolidated statements of income, or the condensed and consolidated statements of cash flows. In August 2018, the FASB issued ASU No. 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract , which aligns the capitalization requirements for implementation costs incurred in a hosting arrangement that is a service contract with the existing capitalization requirements for implementation costs incurred to develop or obtain internal-use software (Subtopic 350-40) . ASU 2018-15 becomes effective for the Company in the first quarter of fiscal 2021 and may be adopted either retrospectively or prospectively. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of this standard on its financial statements. Other Accounting Standards Updates effective after May 3, 2019 are not expected to have a material effect on the Company’s financial statements. |
Earnings Per Share | Basic earnings per share (EPS) is computed by dividing net income attributable to common stockholders 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 options and other stock-based awards. |
Change in Estimates and Disaggregation of Revenues | Changes in Estimates 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 routinely occur 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. 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. 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 vs. subcontractor to the federal government. |
Inventory | Inventory is substantially comprised of finished goods inventory purchased for resale to customers, such as tires and lubricants, and is valued at the lower of cost or net realizable value, generally using the average method. The Company evaluates current inventory against historical and planned usage to estimate the appropriate provision for obsolete inventory. |
Marketable Securities | Investments in marketable securities consist of equity securities which are recorded at fair value using observable inputs such as quoted prices in active markets (Level 1). As of May 3, 2019 and February 1, 2019 , the fair value of our investments total $26 million and $4 million |
Lessee | The Company occupies most of its facilities under operating leases. Certain equipment also is leased under short-term or cancelable operating leases. Effective upon the adoption of ASU 2016-02, the Company recognizes a right of use (ROU) asset and a lease liability upon the commencement of its operating leases. The initial lease liability is equal to the future fixed minimum lease payments discounted using the Company’s incremental borrowing rate, on a secured basis. The lease term includes option renewal periods and early termination payments when it is reasonably certain that the Company will exercise those rights. The initial measurement of the ROU asset is equal to the initial lease liability plus any initial direct costs and prepayments, less any lease incentives. The Company recognizes lease costs on a straight-line basis over the remaining lease term, except for variable lease payments that are expensed in the period in which the obligation for those payments is incurred. For its facility leases, the Company combines and accounts for lease and non-lease components together as a single component. The Company does not recognize lease liabilities and ROU assets for facility leases with original terms of 12 months or less. ROU assets are evaluated for impairment as a long-lived asset. |
Business Overview and Summary_3
Business Overview and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
May 03, 2019 | |
Accounting Policies [Abstract] | |
Reconciliation of Cash, Cash Equivalents and Restricted Cash | The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the condensed and consolidated balance sheets for the periods presented: May 3, February 1, (in millions) Cash and cash equivalents $ 151 $ 237 Restricted cash included in other assets 9 9 Cash, cash equivalents and restricted cash $ 160 $ 246 |
Earnings Per Share and Divide_2
Earnings Per Share and Dividends (Tables) | 3 Months Ended |
May 03, 2019 | |
Earnings Per Share [Abstract] | |
Reconciliation of Weighted Average Number of Shares Outstanding Used to Compute Basic and Diluted EPS | A reconciliation of the weighted-average number of shares outstanding used to compute basic and diluted EPS was: Three Months Ended May 3, May 4, (in millions) Basic weighted-average number of shares outstanding 59.3 42.4 Dilutive common share equivalents - stock options and other stock-based awards 0.7 1.0 Diluted weighted-average number of shares outstanding 60.0 43.4 |
Stock-Based Awards Excluded from Weighted Average Number of Shares Outstanding Used to Compute Diluted EPS | The following stock-based awards were excluded from the weighted-average number of shares outstanding used to compute diluted EPS: Three Months Ended May 3, May 4, (in millions) Antidilutive stock options excluded 0.4 0.3 |
Revenues (Tables)
Revenues (Tables) | 3 Months Ended |
May 03, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregated Revenues | Disaggregated revenues by customer were as follows: Three Months Ended May 3, 2019 May 4, 2018 (in millions) Department of Defense $ 864 $ 746 Other federal government agencies 722 413 Commercial, state and local 29 16 Total $ 1,615 $ 1,175 Disaggregated revenues by contract-type were as follows: Three Months Ended May 3, 2019 May 4, 2018 (in millions) Cost reimbursement $ 921 $ 533 Time and materials (T&M) 325 315 Firm-fixed price (FFP) 369 327 Total $ 1,615 $ 1,175 Disaggregated revenues by prime vs. subcontractor were as follows: Three Months Ended May 3, 2019 May 4, 2018 (in millions) Prime contractor to federal government $ 1,434 $ 1,077 Subcontractor to federal government 152 82 Other 29 16 Total $ 1,615 $ 1,175 |
Contract Related Assets and Liabilities | Contract balances for the periods presented were as follows: Balance Sheet line item May 3, February 1, (in millions) Billed and billable receivables, net (1) Receivables, net $ 714 $ 740 Contract assets - unbillable receivables Receivables, net 325 310 Contract assets - contract retentions Other assets 16 13 Contract liabilities - current Accounts payable and accrued liabilities 36 34 Contract liabilities - non-current Other long-term liabilities $ 8 $ 6 (1) Net of allowance for doubtful accounts of $2 million as of May 3, 2019 and February 1, 2019 . |
Deferred Costs | Deferred costs for the periods presented were as follows: Balance Sheet line item May 3, February 1, (in millions) Pre-contract costs Inventory, prepaid expenses and other current assets $ — $ 1 Fulfillment costs - non-current Other assets $ 14 $ 13 |
Engility Acquisition (Tables)
Engility Acquisition (Tables) | 3 Months Ended |
May 03, 2019 | |
Business Combinations [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block] | The purchase accounting entries were recorded on a preliminary basis as follows: (in millions) Cash and cash equivalents $ 51 Receivables 351 Inventories 5 Prepaid expenses 5 Other current assets 15 Property, plant, and equipment 39 Deferred tax assets 91 Other assets 7 Intangible assets 648 Goodwill 1,257 Total assets acquired 2,469 Accounts payable 115 Accrued payroll and other employee benefits 30 Accrued vacation 39 Other accrued liabilities 58 Other long-term liabilities 54 Total liabilities assumed 296 Non-controlling interest 13 Net assets acquired $ 2,160 Amount of tax deductible goodwill $ 441 |
Schedule of Business Acquisitions, by Acquisition [Table Text Block] | The purchase consideration for the acquisition of Engility was as follows: (in millions) Common stock issued to Engility shareholders (1) $ 1,086 Converted vesting stock awards assumed (2) 22 Cash consideration paid to extinguish Engility outstanding debt 1,052 Purchase price $ 2,160 (1) Represents approximately 16.8 million new shares of SAIC common stock issued to Engility shareholders prior to the market opening on January 14, 2019, using the SAIC share price of $65.03 at the close of business on January 11, 2019. (2) Represents the fair value of the converted vesting stock awards assumed attributable to pre-acquisition service. |
Schedule of Indefinite-lived Intangible Assets Acquired as Part of Business Combination [Table Text Block] | The following table summarizes the fair value of intangible assets and the related weighted average useful lives: Amount Weighted-Average Amortization Period (in millions) (in years) Backlog $ 30 1 Developed technology 2 10 Customer relationships 616 14 Total intangible assets $ 648 13 |
Debt Obligations (Tables)
Debt Obligations (Tables) | 3 Months Ended |
May 03, 2019 | |
Debt Disclosure [Abstract] | |
Long-term Debt | The Company’s long-term debt as of the dates presented was as follows: May 3, 2019 February 1, 2019 Stated interest rate Effective interest rate Principal Unamortized Debt Issuance Costs Net Principal Unamortized Debt Issuance Costs Net (in millions) Term Loan A Facility due October 2023 3.98 % 4.32 % $ 918 $ (11 ) $ 907 $ 1,068 $ (14 ) $ 1,054 Term Loan B Facility due October 2025 4.23 % 4.45 % 1,044 (12 ) 1,032 1,047 (12 ) 1,035 Total long-term debt $ 1,962 $ (23 ) $ 1,939 $ 2,115 $ (26 ) $ 2,089 Less current portion 37 — 37 24 — 24 Total long-term debt, net of current portion $ 1,925 $ (23 ) $ 1,902 $ 2,091 $ (26 ) $ 2,065 |
Derivative Instruments Design_2
Derivative Instruments Designated as Cash Flow Hedges (Tables) | 3 Months Ended |
May 03, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments | The Company’s derivative instruments designated as cash flow hedges consist of: Liability Fair Value (1) at Notional Amount at May 3, 2019 Pay Fixed Rate Receive Variable Rate Settlement and Termination May 3, 2019 February 1, 2019 (in millions) (in millions) Interest rate swaps #1 $ 340 2.78 % 1-month LIBOR Monthly through $ (3 ) $ (2 ) Interest rate swaps #2 500 3.07 % 1-month LIBOR Monthly through October 31, 2025 (28 ) (21 ) Interest rate swaps #3 500 2.49 % 1-month LIBOR Monthly through October 31, 2023 (6 ) (1 ) Total $ 1,340 $ (37 ) $ (24 ) (1) The fair value of the fixed interest rate swaps liability is included in accounts payable and accrued liabilities on the condensed and consolidated balance sheets. |
Changes in Accumulated Other _2
Changes in Accumulated Other Comprehensive Income by Component (Tables) | 3 Months Ended |
May 03, 2019 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | The following table presents the changes in accumulated other comprehensive loss attributable to the Company’s fixed interest rate swap cash flow hedges that are discussed in Note 8 . Pre-Tax Amount Unrealized Gains (Losses) on Fixed Interest Rate Swap Cash Flow Hedges (1) (in millions) Three months ended May 3, 2019 Balance at February 1, 2019 $ (19 ) Other comprehensive loss before reclassifications (14 ) Amounts reclassified from accumulated other comprehensive loss — Net other comprehensive loss (14 ) Balance at May 3, 2019 $ (33 ) Three months ended May 4, 2018 Balance at February 2, 2018 $ 5 Other comprehensive income before reclassifications 2 Amounts reclassified from accumulated other comprehensive income — Net other comprehensive income 2 Balance at May 4, 2018 $ 7 (1) The amount reclassified from accumulated other comprehensive loss is included in interest expense. |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
May 03, 2019 | |
Leases [Abstract] | |
Lease, Cost [Table Text Block] | Total operating lease cost is comprised of the following: Three Months Ended Income Statement line item(s) May 3, 2019 (in millions) Operating lease cost Cost of revenues and selling, general and administrative expenses $ 16 Variable lease cost Cost of revenues and selling, general and administrative expenses 4 Short-term lease cost Cost of revenues and selling, general and administrative expenses 1 Sublease income Cost of revenues and selling, general and administrative expenses (1 ) Total lease cost $ 20 |
Supplemental Balance Sheet Disclosures [Text Block] | The Company's ROU assets and lease liabilities consisted of the following: Balance Sheet line item May 3, 2019 (in millions) Operating lease ROU asset Other assets $ 166 Operating lease current liability Accounts payable and accrued liabilities 49 Operating lease non-current liability Other long-term liabilities 134 Total operating lease liabilities $ 183 |
OtherSupplementalLeaseInformation [Table Text Block] | Other supplemental operating lease information consists of the following: Three Months Ended May 3, 2019 (dollars in millions) Cash paid for amounts included in the measurement of operating lease liabilities 16 ROU assets obtained in exchange for new operating lease obligations 11 Weighted average remaining lease term 5 years Weighted average discount rate 4.3 % |
Lessee, Operating Lease, Liability, Maturity [Table Text Block] | Maturities of operating lease liabilities as of May 3, 2019 were as follows: Fiscal Year Ending Total (in millions) 2020 (excluding the three months ended May 3, 2019) $ 41 2021 45 2022 39 2023 21 2024 18 Thereafter 43 Total minimum lease payments 207 Less: imputed interest (24 ) Present value of operating lease liabilities $ 183 |
Business Overview and Summary_4
Business Overview and Summary of Significant Accounting Policies - Narrative (Detail) $ in Millions | 3 Months Ended | |
May 03, 2019USD ($)segment | Feb. 01, 2019USD ($) | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Number of operating segments | 3 | |
Number of reportable segments | 1 | |
Operating cycle (greater than) | 1 year | |
Retained earnings | $ | $ 400 | $ 367 |
Forfeiture Support Associates J.V. [Member] | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Noncontrolling Interest, Ownership Percentage by Parent | 50.10% |
Business Overview and Summary_5
Business Overview and Summary of Significant Accounting Policies - Reconciliation of Cash, Cash Equivalents and Restricted Cash (Detail) - USD ($) $ in Millions | May 03, 2019 | Feb. 01, 2019 | May 04, 2018 | Feb. 02, 2018 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 151 | $ 237 | ||
Restricted cash included in other assets | 9 | 9 | ||
Cash, cash equivalents and restricted cash | $ 160 | $ 246 | $ 160 | $ 152 |
Business Overview and Summary_6
Business Overview and Summary of Significant Accounting Policies Significant Accounting Policies (Details) - USD ($) $ in Millions | May 03, 2019 | Feb. 01, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Marketable Securities, Noncurrent | $ 26 | $ 4 |
Business Overview and Summary_7
Business Overview and Summary of Significant Accounting Policies ASC 842 Impact (Details) - USD ($) $ in Millions | May 03, 2019 | Feb. 02, 2019 |
ASC 842 Adoption Impact [Abstract] | ||
Operating Lease, Right-of-Use Asset | $ 166 | $ 169 |
Operating Lease, Liability, Current | 49 | 187 |
Operating Lease, Liability, Noncurrent | $ 134 | $ 140 |
Earnings Per Share and Divide_3
Earnings Per Share and Dividends (Detail) - $ / shares shares in Millions | 3 Months Ended | |
May 03, 2019 | May 04, 2018 | |
Computation Of Earnings Per Share [Line Items] | ||
Common Stock, Dividends, Per Share, Cash Paid | $ 0.37 | $ 0.31 |
Basic weighted-average number of shares outstanding (in shares) | 59.3 | 42.4 |
Dilutive common share equivalents - stock options and other stock-based awards (in shares) | 0.7 | 1 |
Diluted weighted-average number of shares outstanding (in shares) | 60 | 43.4 |
Stock Options | ||
Computation Of Earnings Per Share [Line Items] | ||
Antidilutive stock options excluded (in shares) | 0.4 | 0.3 |
Quarterly Dividend [Member] | ||
Computation Of Earnings Per Share [Line Items] | ||
Common Stock, Dividends, Per Share, Cash Paid | $ 0.37 |
Revenues - Narrative (Details)
Revenues - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
May 03, 2019 | May 04, 2018 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Increase (decrease) in income from change in contract estimates | $ 93 | $ 66 |
Increase (decrease) in income from change in contract estimates per diluted share (in dollars per share) | $ 0.92 | $ 1.13 |
Net income | $ 55 | $ 49 |
Contract with customer, performance obligation satisfied in previous period | 9 | |
Contract with Customer, Liability, Revenue Recognized | 13 | 9 |
Remaining performance obligation | 4,100 | |
Change in Accounting Method Accounted for as Change in Estimate | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Increase (decrease) in income from change in contract estimates | $ 8 | $ 5 |
Increase (decrease) in income from change in contract estimates per diluted share (in dollars per share) | $ 0.11 | $ 0.09 |
Net income | $ 6 | |
Pre-contract costs | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Capitalized Contract Cost, Amortization | 1 | |
Fulfillment costs - current | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Capitalized Contract Cost, Amortization | $ 1 |
Revenues - Disaggregation of Re
Revenues - Disaggregation of Revenues (Details) - USD ($) $ in Millions | 3 Months Ended | |
May 03, 2019 | May 04, 2018 | |
Disaggregation of Revenue [Line Items] | ||
Total revenues | $ 1,615 | $ 1,175 |
Prime contractor to federal government | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 1,434 | 1,077 |
Subcontractor to federal government | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 152 | 82 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 29 | 16 |
Cost reimbursement | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 921 | 533 |
Time and materials (T&M) | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 325 | 315 |
Firm-fixed price (FFP) | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 369 | 327 |
Department of Defense | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 864 | 746 |
Other federal government agencies | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 722 | 413 |
Commercial, state and local | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | $ 29 | $ 16 |
Revenues - Contract Related Ass
Revenues - Contract Related Assets and Liabilities (Details) - USD ($) $ in Millions | 3 Months Ended | ||
May 03, 2019 | May 04, 2018 | Feb. 01, 2019 | |
Disaggregation of Revenue [Line Items] | |||
Allowance for doubtful accounts | $ 2 | $ 2 | |
Contract with Customer, Liability, Revenue Recognized | 13 | $ 9 | |
Receivables, net | |||
Disaggregation of Revenue [Line Items] | |||
Billed and billable receivables, net | 714 | 740 | |
Contract assets | 325 | 310 | |
Accounts payable and accrued liabilities | |||
Disaggregation of Revenue [Line Items] | |||
Contract liabilities - current | 36 | 34 | |
Other long-term liabilities | |||
Disaggregation of Revenue [Line Items] | |||
Contract liabilities - non-current | 8 | 6 | |
Contract retentions | Other assets | |||
Disaggregation of Revenue [Line Items] | |||
Contract assets | $ 16 | $ 13 |
Revenues - Deferred Costs (Deta
Revenues - Deferred Costs (Details) - USD ($) $ in Millions | 3 Months Ended | |
May 03, 2019 | Feb. 01, 2019 | |
Pre-contract costs | ||
Capitalized Contract Cost [Line Items] | ||
Capitalized Contract Cost, Amortization | $ 1 | |
Inventory, prepaid expenses and other current assets | Pre-contract costs | ||
Capitalized Contract Cost [Line Items] | ||
Deferred costs | 0 | $ 1 |
Other assets | Fulfillment costs - non-current | ||
Capitalized Contract Cost [Line Items] | ||
Deferred costs | $ 14 | $ 13 |
Revenues - Remaining Performanc
Revenues - Remaining Performance Obligations (Details) | May 03, 2019 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-05-03 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation (percent) | 80.00% |
Revenue, remaining performance obligation, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-05-02 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation (percent) | 90.00% |
Revenue, remaining performance obligation, period | 1 year |
Engility Acquisition (Details)
Engility Acquisition (Details) $ in Millions | Jan. 14, 2019USD ($) | May 03, 2019USD ($) | May 04, 2018USD ($) | Feb. 01, 2019USD ($) | Sep. 09, 2018 |
Business Acquisition [Line Items] | |||||
Long-term Debt, Gross | $ 1,962 | $ 2,115 | |||
Debt issuance costs | 0 | $ 1 | |||
Acquisition and integration costs (Note 4) | 10 | $ 0 | |||
Engility Holdings, Inc [Member] | |||||
Business Acquisition [Line Items] | |||||
Common shares conversion ratio | 0.45 | ||||
Business Acquisition, Transaction Costs | 128 | ||||
Business Combination, Acquisition Related Costs | $ 63 | ||||
Debt issuance costs | 31 | ||||
Payments of Stock Issuance Costs | $ 2 | ||||
Acquisition and integration costs (Note 4) | 10 | ||||
Term Loan A Facility Commitment Due October Two Thousand Twenty Three | |||||
Business Acquisition [Line Items] | |||||
Long-term Debt, Gross | 918 | $ 1,068 | |||
Term Loan A Facility Commitment Due October Two Thousand Twenty Three | Third Amended Credit Agreement | |||||
Business Acquisition [Line Items] | |||||
Debt Instrument, Term | 5 years | ||||
Long-term Debt, Gross | $ 1,100 |
Engility Acquisition Summary of
Engility Acquisition Summary of Preliminary Purchase Consideration (Details) - Engility Holdings, Inc [Member] $ / shares in Units, shares in Millions, $ in Millions | Jan. 14, 2019USD ($)$ / sharesshares |
Business Acquisition [Line Items] | |
Payments to Acquire Businesses, Gross | $ 1,052 |
Business Combination, Consideration Transferred | $ 2,160 |
Business Acquisition, Share Price | $ / shares | $ 65.03 |
Shares of common stock | |
Business Acquisition [Line Items] | |
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable | $ 1,086 |
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | shares | 16.8 |
Restricted Stock [Member] | |
Business Acquisition [Line Items] | |
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable | $ 22 |
Engility Acquisition Fair Value
Engility Acquisition Fair Values of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions | May 03, 2019 | Feb. 01, 2019 | Jan. 14, 2019 |
Business Acquisition [Line Items] | |||
Goodwill | $ 2,120 | $ 2,120 | |
Engility Holdings, Inc [Member] | |||
Business Acquisition [Line Items] | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Cash and Equivalents | $ 51 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables | 351 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Inventory | 5 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Prepaid Expense and Other Assets | 5 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Other | 15 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment | 39 | ||
Business Combination Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Assets | 91 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Other Noncurrent Assets | 7 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill | 648 | ||
Goodwill | 1,257 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets Including Goodwill | 2,469 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Accounts Payable | 115 | ||
Business Combination Recognized Identifiable Assets Acquired And Liabilities Assumed Current Liabilities Accrued Payroll And Employee Benefits | 30 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities, Accrued Vacation | 39 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities, Other Accrued | 58 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities, Other | 54 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities | 296 | ||
Business Combination, Acquisition of Less than 100 Percent, Noncontrolling Interest, Fair Value | 13 | ||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest | 2,160 | ||
Business Acquisition, Goodwill, Expected Tax Deductible Amount | $ 441 |
Engility Acquisition Fair Val_2
Engility Acquisition Fair Value of Intangible Assets and Related Weighted Average Useful Lives (Details) - Engility Holdings, Inc [Member] $ in Millions | Jan. 14, 2019USD ($) |
Business Acquisition [Line Items] | |
Finite-lived Intangible Assets Acquired | $ 648 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 13 years |
Order or Production Backlog [Member] | |
Business Acquisition [Line Items] | |
Finite-lived Intangible Assets Acquired | $ 30 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 1 year |
Technology-Based Intangible Assets [Member] | |
Business Acquisition [Line Items] | |
Finite-lived Intangible Assets Acquired | $ 2 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 10 years |
Customer Relationships [Member] | |
Business Acquisition [Line Items] | |
Finite-lived Intangible Assets Acquired | $ 616 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 14 years |
Stock-Based Compensation (Detai
Stock-Based Compensation (Detail) shares in Millions | 3 Months Ended |
May 03, 2019$ / sharesshares | |
Employee Stock Option | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options granted (in shares) | shares | 0.1 |
Stock option weighted-average exercise price (in dollars per share) | $ 74.97 |
Weighted-average grant date fair value of options awarded (in dollars per share) | $ 16.71 |
Contractual term | 7 years |
Vesting period | 3 years |
Restricted Stock Units (RSUs) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period | 3 years |
Awards granted (in shares) | shares | 0.4 |
Weighted-average grant date fair value (in dollars per share) | $ 74.97 |
Income Taxes (Detail)
Income Taxes (Detail) - USD ($) $ in Millions | 3 Months Ended | |
May 03, 2019 | May 04, 2018 | |
Income Taxes [Line Items] | ||
Effective income tax rate | 19.80% | 10.30% |
Liabilities for uncertainty in income taxes | $ 15 | |
Unrecognized tax benefits | 12 | |
Statute of Limitations Expiration [Member] | ||
Income Taxes [Line Items] | ||
Decrease in Unrecognized Tax Benefits is Reasonably Possible | 2 | |
Settlement with Taxing Authority [Member] | Minimum | ||
Income Taxes [Line Items] | ||
Decrease in Unrecognized Tax Benefits is Reasonably Possible | 2 | |
Settlement with Taxing Authority [Member] | Maximum | ||
Income Taxes [Line Items] | ||
Decrease in Unrecognized Tax Benefits is Reasonably Possible | $ 4 |
Debt Obligations - Long-term De
Debt Obligations - Long-term Debt (Detail) - USD ($) | May 03, 2019 | Feb. 01, 2019 |
Debt Instrument [Line Items] | ||
Principal amount of long-term debt | $ 1,962,000,000 | $ 2,115,000,000 |
Unamortized debt issuance costs, total long-term debt | (23,000,000) | (26,000,000) |
Total long-term debt | 1,939,000,000 | 2,089,000,000 |
Less current portion | 37,000,000 | 24,000,000 |
Debt Issuance Costs, Current, Net | 0 | 0 |
Principal amount of long-term debt, net of current portion | 1,925,000,000 | 2,091,000,000 |
Unamortized debt issuance costs, total long-term debt, net of current portion | (23,000,000) | (26,000,000) |
Total long-term debt, net of current portion | $ 1,902,000,000 | 2,065,000,000 |
Term Loan A Facility Commitment Due October Two Thousand Twenty Three | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 3.98% | |
Effective interest rate | 4.32% | |
Principal amount of long-term debt | $ 918,000,000 | 1,068,000,000 |
Unamortized debt issuance costs, total long-term debt | (11,000,000) | (14,000,000) |
Total long-term debt | $ 907,000,000 | 1,054,000,000 |
Term Loan B Facility Due October Two Thousand Twenty Five | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 4.23% | |
Effective interest rate | 4.45% | |
Principal amount of long-term debt | $ 1,044,000,000 | 1,047,000,000 |
Unamortized debt issuance costs, total long-term debt | (12,000,000) | (12,000,000) |
Total long-term debt | 1,032,000,000 | $ 1,035,000,000 |
Line of Credit [Member] | February 2019 Credit Facility [Member] | ||
Debt Instrument [Line Items] | ||
Credit Facility, Maximum Borrowing Capacity | 2,400,000,000 | |
Revolving Credit Facility | Line of Credit [Member] | February 2019 Credit Facility [Member] | ||
Debt Instrument [Line Items] | ||
Credit Facility, Maximum Borrowing Capacity | 400,000,000 | |
Secured Debt [Member] | Line of Credit [Member] | Term Loan A Facility Commitment Due October Two Thousand Twenty Three | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Face Amount | $ 918,000,000 |
Debt Obligations - Narrative (D
Debt Obligations - Narrative (Detail) - USD ($) | 3 Months Ended | ||
May 03, 2019 | May 04, 2018 | Feb. 01, 2019 | |
Debt Instrument [Line Items] | |||
Principal amount of long-term debt | $ 1,962,000,000 | $ 2,115,000,000 | |
Outstanding credit facility | 0 | ||
Repayments of Long-term Debt | 150,000,000 | ||
Interest expense | 25,000,000 | $ 12,000,000 | |
Debt issuance costs | 0 | $ 1,000,000 | |
Term Loan B Facility Due October Two Thousand Twenty Five | |||
Debt Instrument [Line Items] | |||
Principal amount of long-term debt | 1,044,000,000 | 1,047,000,000 | |
Term Loan B Facility Due October Two Thousand Twenty Five | Third Amended Credit Agreement | |||
Debt Instrument [Line Items] | |||
Principal amount of long-term debt | 1,044,000,000 | ||
Term Loan A Facility Commitment Due October Two Thousand Twenty Three | |||
Debt Instrument [Line Items] | |||
Principal amount of long-term debt | 918,000,000 | $ 1,068,000,000 | |
Term Loan A Facility Commitment Due October Two Thousand Twenty Three | Third Amended Credit Agreement | |||
Debt Instrument [Line Items] | |||
Principal amount of long-term debt | $ 1,100,000,000 |
Derivative Instruments Design_3
Derivative Instruments Designated as Cash Flow Hedges - Schedule of Derivative Instruments (Detail) - USD ($) | 3 Months Ended | |
May 03, 2019 | Feb. 01, 2019 | |
Derivative [Line Items] | ||
Notional amount | $ 1,340,000,000 | |
Asset Fair Value | (37,000,000) | $ (24,000,000) |
Term loan interest rate swaps 2 [Member] | Interest Rate Swaps | ||
Derivative [Line Items] | ||
Notional amount | $ 340,000,000 | |
Pay fixed rate | 2.78% | |
Receive variable rate | 1-month LIBOR | |
Settlement and termination | Monthly through July 30, 2021 | |
Asset Fair Value | $ (3,000,000) | (2,000,000) |
Interest rate swaps 2 | Interest Rate Swaps | ||
Derivative [Line Items] | ||
Notional amount | $ 500,000,000 | |
Pay fixed rate | 3.07% | |
Receive variable rate | 1-month LIBOR | |
Settlement and termination | Monthly through October 31, 2025 | |
Asset Fair Value | $ (28,000,000) | (21,000,000) |
Interest rate swaps 3 | Interest Rate Swaps | ||
Derivative [Line Items] | ||
Notional amount | $ 500,000,000 | |
Pay fixed rate | 2.49% | |
Receive variable rate | 1-month LIBOR | |
Settlement and termination | Monthly through October 31, 2023 | |
Asset Fair Value | $ (6,000,000) | $ (1,000,000) |
Derivative Instruments Design_4
Derivative Instruments Designated as Cash Flow Hedges - Narrative (Detail) - Interest Rate Swaps - USD ($) | 3 Months Ended | |
May 03, 2019 | May 04, 2018 | |
Derivative [Line Items] | ||
Unrealized gains estimated to be reclassified from accumulated other comprehensive income into earnings in the next twelve months | $ 1,000,000 | |
Cash Flow Hedging | ||
Derivative [Line Items] | ||
Ineffective portion of the unrealized change in fair value, net of tax | $ 0 | |
Interest rate swaps 1(2) | ||
Derivative [Line Items] | ||
Derivative, Cash Received on Hedge | 6,000,000 | |
Accumulated Other Comprehensive Income Loss Cumulative Changes In Net Gain Loss From Cash Flow Hedges Effect Before Tax1 | $ 6,000,000 |
Changes in Accumulated Other _3
Changes in Accumulated Other Comprehensive Income by Component (Detail) - Accumulated Gain (Loss), Cash Flow Hedge, Including Noncontrolling Interest [Member] - USD ($) $ in Millions | 3 Months Ended | |||
May 03, 2019 | May 04, 2018 | Feb. 01, 2019 | Feb. 02, 2018 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, before Tax | $ (33) | $ 7 | $ (19) | $ 5 |
Other Comprehensive Income (Loss), before Reclassifications, before Tax | (14) | 2 | ||
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax | 0 | 0 | ||
Other Comprehensive Income (Loss), before Tax | $ (14) | $ 2 |
Leases Assets and Liabilities,
Leases Assets and Liabilities, Leases (Details) - USD ($) $ in Millions | May 03, 2019 | Feb. 02, 2019 |
Assets and Liabilities, Lessee [Abstract] | ||
Operating Lease, Right-of-Use Asset | $ 166 | $ 169 |
Operating Lease, Liability, Current | 49 | 187 |
Operating Lease, Liability, Noncurrent | 134 | $ 140 |
Operating Lease, Liability | $ 183 |
Leases Operating Lease Liabilit
Leases Operating Lease Liabilities, Payments Due (Details) $ in Millions | May 03, 2019USD ($) |
Operating Lease Liabilities, Payments Due [Abstract] | |
Operating Leases, Future Minimum Payments Due, Next Twelve Months | $ 41 |
Operating Leases, Future Minimum Payments, Due in Two Years | 45 |
Operating Leases, Future Minimum Payments, Due in Three Years | 39 |
Operating Leases, Future Minimum Payments, Due in Four Years | 21 |
Operating Leases, Future Minimum Payments, Due in Five Years | 18 |
Operating Leases, Future Minimum Payments, Due Thereafter | 43 |
Operating Leases, Future Minimum Payments Due | 207 |
Lessee, Operating Lease, Liability, Undiscounted Excess Amount | (24) |
Operating Lease, Liability | $ 183 |
Leases Other Supplemental Lease
Leases Other Supplemental Lease Information (Details) | 3 Months Ended |
May 03, 2019USD ($) | |
Lessee, Lease, Description [Line Items] | |
LesseeOperatingLeaseNotyetCommencedValue | $ 24,000,000 |
Operating Lease, Payments | 16 |
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability | $ 11 |
Operating Lease, Weighted Average Remaining Lease Term | 5 years |
Operating Lease, Weighted Average Discount Rate, Percent | 4.30% |
Lease Arrangement 1 [Member] | |
Lessee, Lease, Description [Line Items] | |
Lessee, Operating Lease, Lease Not yet Commenced, Term of Contract | 10 years |
Leases Lease, Cost (Details)
Leases Lease, Cost (Details) $ in Millions | 3 Months Ended |
May 03, 2019USD ($) | |
Lease, Cost [Abstract] | |
Operating Lease, Cost | $ 16 |
Variable Lease, Cost | 4 |
Short-term Lease, Cost | 1 |
Sublease Income | 1 |
Lease, Cost | $ 20 |
Legal Proceedings and Other C_2
Legal Proceedings and Other Commitments and Contingencies (Detail) - USD ($) | 3 Months Ended | |
May 03, 2019 | Feb. 01, 2019 | |
Commitments And Contingencies [Line Items] | ||
Contingent losses, loss sharing percentage in excess of threshold | 30.00% | |
Inventories, prepaid expenses and other current assets | $ 127,000,000 | $ 146,000,000 |
Government Investigations And Reviews | ||
Commitments And Contingencies [Line Items] | ||
Estimated net amounts to be refunded for potential adjustments | 64,000,000 | |
Letters of Credit | ||
Commitments And Contingencies [Line Items] | ||
Outstanding obligations | 11,000,000 | |
Surety Bonds | ||
Commitments And Contingencies [Line Items] | ||
Outstanding obligations | $ 18,000,000 | |
Former Parent | ||
Commitments And Contingencies [Line Items] | ||
Contingent losses, loss sharing percentage in excess of threshold | 70.00% | |
Former Parent | Minimum | ||
Commitments And Contingencies [Line Items] | ||
Contingent losses, threshold for loss sharing with former parent | $ 50,000,000 |