Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Apr. 29, 2022 | May 20, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Period End Date | Apr. 29, 2022 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Fiscal Year Focus | 2023 | |
Current Fiscal Year End Date | --02-03 | |
Entity File Number | 001-35832 | |
Entity Registrant Name | Science Applications International Corporation | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 46-1932921 | |
Entity Address, Address Line One | 12010 Sunset Hills Road | |
Entity Address, State or Province | Reston | |
Entity Address, State or Province | VA | |
Entity Address, Postal Zip Code | 20190 | |
City Area Code | 703 | |
Local Phone Number | 676-4300 | |
Amendment Flag | false | |
Title of 12(b) Security | Common Stock, par value $.0001 per share | |
Trading Symbol | SAIC | |
Entity Central Index Key | 0001571123 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 55,683,744 | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Document Fiscal Period Focus | Q1 | |
Entity Interactive Data Current | Yes | |
Security Exchange Name | NYSE | |
Entity Interactive Data Current | Yes | |
Entity Shell Company | false |
CONDENSED AND CONSOLIDATED STAT
CONDENSED AND CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Millions | 3 Months Ended | |
Apr. 29, 2022 | Apr. 30, 2021 | |
Statement of Comprehensive Income [Abstract] | ||
Revenues | $ 1,996 | $ 1,878 |
Cost of revenues | 1,770 | 1,661 |
Selling, general and administrative expenses | 92 | 80 |
Acquisition and integration costs | 9 | 10 |
Other operating income | 0 | (3) |
Operating income | 125 | 130 |
Interest expense | 27 | 27 |
Other (income) expense, net | 3 | (2) |
Income before income taxes | 95 | 105 |
Provision for income taxes | (21) | (23) |
Net income | 74 | 82 |
Net income attributable to non-controlling interest | 1 | 1 |
Net income attributable to common stockholders | $ 73 | $ 81 |
Earnings per share: | ||
Basic (in dollars per share) | $ 1.30 | $ 1.39 |
Diluted (in dollars per share) | $ 1.29 | $ 1.38 |
CONDENSED AND CONSOLIDATED ST_2
CONDENSED AND CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Statement - USD ($) $ in Millions | 3 Months Ended | |
Apr. 29, 2022 | Apr. 30, 2021 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 74 | $ 82 |
Net unrealized gain on derivative instruments | 37 | 14 |
Total other comprehensive income, net of tax | 37 | 14 |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||
Comprehensive income | 111 | 96 |
Comprehensive income attributable to non-controlling interest | 1 | 1 |
Comprehensive income attributable to common stockholders | $ 110 | $ 95 |
CONDENSED AND CONSOLIDATED BALA
CONDENSED AND CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Apr. 29, 2022 | Jan. 28, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 56 | $ 106 |
Receivables, net | 1,104 | 1,015 |
Inventory, prepaid expenses and other current assets | 131 | 142 |
Total current assets | 1,291 | 1,263 |
Goodwill | 2,911 | 2,913 |
Net carrying value | 1,101 | 1,132 |
Property, plant, and equipment (net of accumulated depreciation of $189 million and $182 million at April 29, 2022 and January 28, 2022, respectively) | 97 | 100 |
Operating lease right of use assets | 187 | 209 |
Other assets | 129 | 129 |
Total assets | 5,716 | 5,746 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 820 | 840 |
Accrued payroll and employee benefits | 395 | 364 |
Long-term debt, current portion | 119 | 148 |
Total current liabilities | 1,334 | 1,352 |
Long-term debt, net of current portion | 2,342 | 2,370 |
Operating lease liabilities | 175 | 192 |
Deferred income taxes | 45 | 43 |
Other long-term liabilities | 170 | 160 |
Commitments and contingencies (Note 11) | ||
Common stock, shares outstanding (in shares) | 56,000,000 | 56,000,000 |
Common stock, shares issued (in shares) | 56,000,000 | 56,000,000 |
Equity: | ||
Common stock | $ 0 | $ 0 |
Additional paid-in capital | 770 | 838 |
Retained earnings | 870 | 818 |
Accumulated other comprehensive loss | 0 | (37) |
Total common stockholders' equity | 1,640 | 1,619 |
Non-controlling interest | 10 | 10 |
Total stockholders' equity | 1,650 | 1,629 |
Total liabilities and stockholders' equity | $ 5,716 | $ 5,746 |
CONDENSED AND CONSOLIDATED BA_2
CONDENSED AND CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Apr. 29, 2022 | Jan. 28, 2022 |
Statement of Financial Position [Abstract] | ||
Property, plant and equipment, accumulated depreciation | $ 189 | $ 182 |
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) | 56,000,000 | 56,000,000 |
Common stock, shares outstanding (in shares) | 56,000,000 | 56,000,000 |
CONDENSED AND CONSOLIDATED ST_3
CONDENSED AND CONSOLIDATED STATEMENT OF EQUITY - USD ($) $ in Millions | Total | Shares of common stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive loss | Non-controlling interest |
Balance, beginning (in shares) at Jan. 29, 2021 | 58,000,000 | |||||
Beginning Balance at Jan. 29, 2021 | $ 1,552 | $ 1,004 | $ 627 | $ (89) | $ 10 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 81 | 81 | ||||
Net income attributable to non-controlling interest | 1 | 1 | ||||
Net income | 82 | |||||
Issuances of stock | 4 | 4 | ||||
Net other comprehensive income | 14 | 14 | ||||
Cash dividends | (21) | (21) | ||||
Stock-based compensation | (3) | (3) | ||||
Repurchases of stock | (40) | (40) | ||||
Distributions to non-controlling interest | (1) | (1) | ||||
Balance, ending (in shares) at Apr. 30, 2021 | 58,000,000 | |||||
Ending Balance at Apr. 30, 2021 | $ 1,587 | 965 | 687 | (75) | 10 | |
Balance, beginning (in shares) at Jan. 28, 2022 | 56,000,000 | 56,000,000 | ||||
Beginning Balance at Jan. 28, 2022 | $ 1,629 | 838 | 818 | (37) | 10 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 73 | 73 | ||||
Net income attributable to non-controlling interest | 1 | 1 | ||||
Net income | 74 | |||||
Issuances of stock (in shares) | 1,000,000 | |||||
Issuances of stock | 5 | 5 | ||||
Net other comprehensive income | 37 | 37 | ||||
Cash dividends | (21) | (21) | ||||
Stock-based compensation | (4) | (4) | ||||
Repurchases of stock (in shares) | (1,000,000) | |||||
Repurchases of stock | (69) | (69) | ||||
Distributions to non-controlling interest | $ (1) | (1) | ||||
Balance, ending (in shares) at Apr. 29, 2022 | 56,000,000 | 56,000,000 | ||||
Ending Balance at Apr. 29, 2022 | $ 1,650 | $ 770 | $ 870 | $ 0 | $ 10 |
CONDENSED AND CONSOLIDATED ST_4
CONDENSED AND CONSOLIDATED STATEMENT OF EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |
Apr. 29, 2022 | Apr. 30, 2021 | |
Statement of Stockholders' Equity [Abstract] | ||
Cash dividends paid per share (in dollars per share) | $ 0.37 | $ 0.37 |
Cash dividends declared per share (in dollars per share) | $ 0.37 | $ 0.37 |
CONDENSED AND CONSOLIDATED ST_5
CONDENSED AND CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | |
Apr. 29, 2022 | Apr. 30, 2021 | |
Cash flows from operating activities: | ||
Net income | $ 74 | $ 82 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 41 | 42 |
Amortization of off-market customer contracts | (2) | (4) |
Amortization of debt issuance costs | 2 | 2 |
Deferred income taxes | 2 | 20 |
Stock-based compensation expense | 11 | 10 |
Gain on divestitures | 0 | (3) |
Impairment of assets | 0 | 7 |
Increase (decrease) resulting from changes in operating assets and liabilities: | ||
Receivables | (89) | (61) |
Inventory, prepaid expenses and other current assets | 11 | (5) |
Other assets | 3 | (4) |
Accounts payable and accrued liabilities | 39 | 44 |
Accrued payroll and employee benefits | 31 | 57 |
Operating lease assets and liabilities, net | (4) | 5 |
Other long-term liabilities | (1) | (3) |
Net cash provided by operating activities | 118 | 189 |
Cash flows from investing activities: | ||
Expenditures for property, plant, and equipment | (5) | (10) |
Purchases of marketable securities | (2) | (2) |
Sales of marketable securities | 1 | 1 |
Proceeds from divestitures | 0 | 8 |
Other | 0 | (1) |
Net cash used in investing activities | (6) | (4) |
Cash flows from financing activities: | ||
Dividend payments to stockholders | (22) | (22) |
Principal payments on borrowings | (59) | (39) |
Issuances of stock | 4 | 4 |
Stock repurchased and retired or withheld for taxes on equity awards | (84) | (53) |
Proceeds from borrowings | 0 | 16 |
Distributions to non-controlling interest | (1) | (1) |
Net cash used in financing activities | (162) | (95) |
Net (decrease) increase in cash, cash equivalents and restricted cash | (50) | 90 |
Cash, cash equivalents and restricted cash at beginning of period | 115 | 190 |
Cash, cash equivalents and restricted cash at end of period | $ 65 | $ 280 |
Business Overview and Summary o
Business Overview and Summary of Significant Accounting Policies | 3 Months Ended |
Apr. 29, 2022 | |
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 these services for large, complex projects with a targeted emphasis on higher-end, differentiated technology services and solutions that accelerate and transform secure and resilient digital environments through system development, modernization, integration, and sustainment to drive enterprise and mission outcomes. The Company is organized as a matrix comprised of two customer facing operating sectors supported by an enterprise solutions and operations organization. The Company's operating sectors are aggregated into one reportable segment for financial reporting purposes. Each of the Company’s two customer facing operating sectors is focused on providing both (1) growth and technology accelerating solutions and (2) core IT service offerings to one or more agencies of the U.S. federal government. Growth and technology accelerating solutions include the delivery of secure cloud modernization, outcome based enterprise IT as-a-service, and the integration, production and modernization of defense systems. Core IT services include systems engineering, the operation and maintenance of existing IT systems and networks, and logistics and supply chain solutions. During the second quarter of fiscal 2022, the Company completed the acquisition of Halfaker and Associates, LLC (Halfaker), a mission focused, pure-play health IT company, growing the Company's digital transformation portfolio. Additionally, the Company acquired Koverse, a software company that provides a data management platform enabling artificial intelligence and machine learning on complex sensitive data. 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 January 28, 2022. Non-controlling Interest. 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 and comprehensive income and statements of cash flows. 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 2023 began on January 29, 2022 and ends on February 3, 2023, while fiscal 2022 began on January 30, 2021 and ended on January 28, 2022. 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. 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 April 29, 2022 and January 28, 2022, the fair value of our investments totaled $27 million and $28 million, respectively, and are included in other assets on the condensed and consolidated balance sheets. The Company's 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: April 29, January 28, (in millions) Cash and cash equivalents $ 56 $ 106 Restricted cash included in inventory, prepaid expenses and other current assets 5 5 Restricted cash included in other assets 4 4 Cash, cash equivalents and restricted cash $ 65 $ 115 Acquisition and Integration Costs Acquisition-related costs that are not part of the purchase price consideration are generally expensed as incurred, except for certain costs that are deferred in connection with the issuance of debt. These costs typically include transaction-related costs, such as finder’s fees, legal, accounting, and other professional costs. Integration-related costs represent costs directly related to combining the Company and its acquired businesses. Integration-related costs typically include strategic consulting services, facility consolidation, employee related costs, such as retention and severance, costs to integrate information technology infrastructure, enterprise planning systems, processes, and other non-recurring integration-related costs. Acquisition and integration costs are presented together as acquisition and integration costs on the condensed and consolidated statements of income. The amounts recognized in acquisition and integration costs on the condensed and consolidated statements of income are as follows: Three Months Ended April 29, April 30, (in millions) Acquisition (1) $ (1) $ 1 Integration (2) 10 9 Total acquisition and integration costs $ 9 $ 10 (1) Acquisition expenses for the three months ended April 29, 2022 and April 30, 2021 relate to the acquisition of Koverse. The three months ended April 29, 2022 reflects the amount recognized to reduce the fair value of the Koverse earnout liability. See Note 4 for additional information related to the acquisition. (2) Integration expenses for the three months ended April 30, 2021 include $7 million for the impairment of assets. Accounting Standards Updates In October 2021, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured at the acquisition date in accordance with Topic 606 as if the acquirer had originated the contracts. The standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and must be applied prospectively. Early adoption is permitted. The Company adopted the requirements of ASU 2021-08 on a prospective basis effective the first day of fiscal 2023. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . This standard provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (LIBOR) or other reference rates expected to be discontinued due to reference rate reform. The Company adopted this standard on a prospective basis in the fourth quarter of fiscal 2021, and the adoption did not have a material impact on the Company’s financial statements. The Company’s credit facility and derivative instruments reference LIBOR-based rates. Although the Company does not expect the transition from LIBOR to have a material impact on its financial statements, it will continue to monitor the impact until transition is completed. Other Accounting Standards Updates effective after April 29, 2022 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 |
Apr. 29, 2022 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share, Share Repurchases and Dividends: Earnings Per Share (EPS) Basic earnings per share 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 April 29, April 30, (in millions) Basic weighted-average number of shares outstanding 56.1 58.1 Dilutive common share equivalents - stock options and other stock-based awards 0.5 0.6 Diluted weighted-average number of shares outstanding 56.6 58.7 Antidilutive stock awards excluded from the weighted-average number of shares outstanding used to compute diluted EPS for the three months ended April 29, 2022 and April 30, 2021 were immaterial. Share Repurchases The Company may repurchase shares in accordance with established repurchase plans. The Company retires its common stock upon repurchase with the excess over par value allocated to additional paid-in capital. The Company has not made any material purchases of common stock other than in connection with established share repurchase plans. On March 27, 2019, the number of shares of our common stock that may be repurchased under our existing repurchase plan was increased by approximately 4.6 million shares, bringing the total authorized shares to be repurchased under the plan to approximately 16.4 million shares. As of April 29, 2022, we have repurchased approximately 15.2 million shares of common stock under the program. Subsequent to the end of the quarter, the number of shares that may be repurchased increased by approximately 8.0 million shares, bringing the total authorized shares to be repurchased under the plan to approximately 24.4 million shares. Dividends |
Revenues
Revenues | 3 Months Ended |
Apr. 29, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Revenues: Changes in Estimates on Contracts Changes in estimates of revenues, cost of revenues or profits related to performance obligations satisfied over time are recognized in operating income in the period in which such changes are made for the inception-to-date effect of the changes. Changes in these estimates can occur routinely over the performance period for a variety of reasons, which include: changes in scope; changes in cost estimates due to unanticipated cost growth or reassessments of risks impacting costs; changes in the estimated transaction price, such as variable amounts for incentive or award fees; and performance being better or worse than previously estimated. Many of the Company's contracts recognize revenue on performance obligations using a cost input measure (cost-to-cost), which requires estimates of total costs at completion. In cases when total expected costs exceed total estimated revenues for a performance obligation, the Company recognizes the total estimated loss in the quarter identified. Total estimated losses are inclusive of any unexercised options that are probable of award, only if they increase the amount of the loss. Aggregate net changes in estimates on contracts accounted for using the cost-to-cost method of accounting were recognized in operating income as follows: Three Months Ended April 29, April 30, (in millions, except per share amounts) Net favorable adjustments $ 5 $ 3 Net favorable adjustments, after tax 4 2 Diluted EPS impact $ 0.07 $ 0.03 Revenues were $4 million and $5 million higher for the three months ended April 29, 2022 and April 30, 2021, respectively, 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 versus subcontractor to the federal government. Disaggregated revenues by customer were as follows: Three Months Ended April 29, April 30, (in millions) Department of Defense $ 946 $ 920 Other federal government agencies 1,013 923 Commercial, state and local 37 35 Total $ 1,996 $ 1,878 Disaggregated revenues by contract-type were as follows: Three Months Ended April 29, April 30, (in millions) Cost reimbursement $ 1,095 $ 990 Time and materials (T&M) 386 411 Firm-fixed price (FFP) 515 477 Total $ 1,996 $ 1,878 Disaggregated revenues by prime versus subcontractor were as follows: Three Months Ended April 29, April 30, (in millions) Prime contractor to federal government $ 1,822 $ 1,690 Subcontractor to federal government 137 153 Other 37 35 Total $ 1,996 $ 1,878 Contract Balances Contract balances for the periods presented were as follows: Balance Sheet line item April 29, January 28, (in millions) Billed and billable receivables, net (1) Receivables, net $ 675 $ 615 Contract assets - unbillable receivables Receivables, net 429 400 Contract assets - contract retentions Other assets 17 17 Contract liabilities - current Accounts payable and accrued liabilities 44 55 Contract liabilities - non-current Other long-term liabilities $ 8 $ 9 (1) Net of allowance of $4 million as of April 29, 2022 and January 28, 2022. During the three months ended April 29, 2022 and April 30, 2021, the Company recognized revenues of $27 million and $50 million relating to amounts that were included in the opening balance of contract liabilities as of January 28, 2022 and January 29, 2021, respectively. Remaining Performance Obligations As of April 29, 2022, the Company had $4.8 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. Lessor Revenue The Company leases IT equipment and hardware to its customers. All of the Company’s lessor arrangements are operating leases. Operating lease revenue is recognized on a straight-line basis over the term of the lease. Operating lease income is reported as revenue on the condensed and consolidated statements of income. During the three months ended April 29, 2022, the Company recognized revenue of $23 million from the exercise of purchase options under certain lessor arrangements. Operating lease income was immaterial for the three months ended April 29, 2022 and $9 million for the three months ended April 30, 2021. |
Acquisitions
Acquisitions | 3 Months Ended |
Apr. 29, 2022 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions: Halfaker On July 2, 2021, the Company completed the acquisition of Halfaker, a mission focused, pure-play health IT company for a purchase price of $228 million, net of $3 million cash acquired. The Company funded the transaction from increased borrowings and cash on hand. During the first quarter of fiscal 2023, the Company made fair value adjustments decreasing goodwill and increasing customer relationships intangible assets by $2 million. As of April 29, 2022, the Company has completed the determination of fair values of the acquired assets and liabilities assumed. The allocation of the purchase price resulted in goodwill of $104 million and intangible assets of $114 million, both of which are deductible for income tax purposes. The recognized goodwill is primarily associated with future customer relationships and an acquired assembled work force. The intangible assets consist of customer relationships of $97 million and backlog of $17 million that will be amortized over a period of nine years and one year, respectively. The Company made additional cash payments of $21 million in March 2022 associated with certain change in control provisions that are recognized as post-combination expense. Koverse On May 3, 2021, the Company acquired Koverse, a software company that provides a data management platform enabling artificial intelligence and machine learning on complex sensitive data, for a purchase price of $30 million, net of $2 million cash acquired. The purchase price included $3 million of contingent consideration, representing the acquisition date fair value recognized for up to $27 million gross of potential future earnout payments based on the achievement of certain revenue targets over the next four years. The Company has completed the allocation of the purchase price which resulted in goodwill of $21 million and intangible assets of $10 million, which are both not deductible for income tax purposes. The goodwill is primarily associated with intellectual capital, future customer relationships, and an acquired assembled work force. The intangible assets, which primarily consist of developed technology, are being amortized over a weighted-average period of seven years. The Company is recognizing an additional $13 million of post-combination compensation expense associated with certain employee retention agreements over a two year period. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Notes) | 3 Months Ended |
Apr. 29, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets: Goodwill Goodwill had a carrying value of $2,911 million and $2,913 million as of April 29, 2022 and January 28, 2022, respectively. There were no impairments of goodwill during the periods presented. Intangible Assets Intangible assets, all of which were finite-lived, consisted of the following: April 29, 2022 January 28, 2022 Gross carrying value Accumulated amortization Net carrying value Gross carrying value Accumulated amortization Net carrying value (in millions) Customer relationships $ 1,467 $ (378) $ 1,089 $ 1,467 $ (351) $ 1,116 Backlog 17 (14) 3 17 (10) 7 Developed technology 10 (2) 8 10 (2) 8 Trade name 1 — 1 1 — 1 Total intangible assets $ 1,495 $ (394) $ 1,101 $ 1,495 $ (363) $ 1,132 Amortization expense related to intangible assets was $33 million and $32 million for the three months ended April 29, 2022 and April 30, 2021, respectively. There were no intangible asset impairment losses during the periods presented. As of April 29, 2022, the estimated future annual amortization expense related to intangible assets is as follows: Fiscal Year (in millions) Remainder of 2023 $ 92 2024 115 2025 115 2026 115 2027 115 Thereafter 549 Total $ 1,101 Actual amortization expense in future periods could differ from these estimates as a result of future acquisitions, divestitures, impairments, and other factors. |
Income Taxes
Income Taxes | 3 Months Ended |
Apr. 29, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes:The Company's effective income tax rate was 22.0% and 22.5% for the three months ended April 29, 2022 and April 30, 2021, respectively. The Company’s effective tax rate was lower for the three months ended April 29, 2022 compared to the prior year period primarily due to an increased deduction for foreign-derived intangible income. Tax rates for the three months ended April 29, 2022 were lower than the combined federal and state statutory rates principally due to excess tax benefits related to employee stock-based compensation, research and development tax credits, and other permanent book tax differences. |
Debt Obligations
Debt Obligations | 3 Months Ended |
Apr. 29, 2022 | |
Debt Disclosure [Abstract] | |
Debt Obligations | Debt Obligations: The Company’s long-term debt as of the dates presented was as follows: April 29, 2022 January 28, 2022 Stated Effective Principal Unamortized Net Principal Unamortized Net (in millions) Term Loan A Facility due October 2023 2.51 % 2.84 % $ 731 $ (3) $ 728 $ 785 $ (5) $ 780 Term Loan A2 Facility due October 2023 2.51 % 2.67 % 99 — 99 100 — 100 Term Loan B Facility due October 2025 2.64 % 2.84 % 979 (7) 972 983 (7) 976 Term Loan B2 Facility due March 2027 2.64 % 3.04 % 272 (5) 267 272 (5) 267 Senior Notes due April 2028 4.88 % 5.04 % 400 (5) 395 400 (5) 395 Total long-term debt $ 2,481 $ (20) $ 2,461 $ 2,540 $ (22) $ 2,518 Less current portion 119 — 119 148 — 148 Total long-term debt, net of current portion $ 2,362 $ (20) $ 2,342 $ 2,392 $ (22) $ 2,370 As of April 29, 2022, the Company has a $2.5 billion credit facility (the Credit Facility) consisting of a secured Term Loan A Facility due October 2023, a secured Term Loan A2 Facility due October 2023, a secured Term Loan B Facility due October 2025, a secured Term Loan B2 Facility due March 2027 (together, the Term Loan Facilities), and a $400 million secured Revolving Credit Facility due October 2023. There is no balance outstanding on the Revolving Credit Facility as of April 29, 2022. As of April 29, 2022, the Company was in compliance with the covenants under its Credit Facility. |
Derivative Instruments Designat
Derivative Instruments Designated as Cash Flow Hedges | 3 Months Ended |
Apr. 29, 2022 | |
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: Fair Value of (Liability) Asset (1) at Notional Amount at April 29, 2022 Pay Fixed Receive Settlement and April 29, January 28, 2022 (in millions) (in millions) Interest rate swaps #1 $ 685 3.07 % 1-month Monthly through October 31, 2025 $ (4) $ (39) Interest rate swaps #2 538 2.49 % 1-month Monthly through October 31, 2023 2 (12) Total $ 1,223 $ (2) $ (51) (1) The fair value of the fixed interest rate swap liability is included in accounts payable and accrued liabilities on the condensed and consolidated balance sheets. The fair value of the fixed interest rate swap asset is included in other assets 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 income (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 $5 million of unrealized losses from accumulated other comprehensive loss into earnings in the twelve months following April 29, 2022. |
Changes in Accumulated Other Co
Changes in Accumulated Other Comprehensive Income by Component | 3 Months Ended |
Apr. 29, 2022 | |
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 and the Company's defined benefit plans. Unrealized Gains (Losses) on Fixed Interest Rate Swap Cash Flow Hedges (1) Defined Benefit Total (in millions) Three months ended April 29, 2022 Balance at January 28, 2022 $ (38) $ 1 $ (37) Other comprehensive income before reclassifications 42 — 42 Amounts reclassified from accumulated other comprehensive loss 8 — 8 Income tax impact (13) — (13) Net other comprehensive income 37 — 37 Balance at April 29, 2022 $ (1) $ 1 $ — Three months ended April 30, 2021 Balance at January 29, 2021 $ (86) $ (3) $ (89) Other comprehensive income before reclassifications 10 — 10 Amounts reclassified from accumulated other comprehensive loss 9 — 9 Income tax impact (5) — (5) Net other comprehensive income 14 — 14 Balance at April 30, 2021 $ (72) $ (3) $ (75) (1) The amount reclassified from accumulated other comprehensive loss is included in interest expense. |
Sale of Receivables (Notes)
Sale of Receivables (Notes) | 3 Months Ended |
Apr. 29, 2022 | |
Receivables [Abstract] | |
Sales of Receivables | Sales of Receivables: The Company has a Master Accounts Receivable Purchase Agreement (MARPA Facility) with MUFG Bank, Ltd. (the Purchaser) for the sale of up to a maximum amount of $300 million of certain designated eligible receivables with the U.S. government. Effective March 31, 2022, the Company amended the MARPA Facility to transition the purchase discount rate defined within the facility agreement from using LIBOR to Term Secured Overnight Finance Rate (SOFR). The amendment did not have a material impact on the Company's condensed and consolidated financial statements. During the three months ended April 29, 2022 and April 30, 2021, the Company incurred purchase discount fees of $1 million, which are presented in Other (income) expense, net on the condensed and consolidated statements of income. MARPA Facility activity consisted of the following: Three Months Ended April 29, April 30, (in millions) Beginning balance $ 200 $ 185 Sale of receivables 934 836 Cash collections (934) (821) Outstanding balance sold to Purchaser (1) 200 200 Cash collected, not remitted to Purchaser (2) (22) (42) Remaining sold receivables $ 178 $ 158 (1) There was no net impact to cash flows from operating activities from sold receivables for the three months ended April 29, 2022. For the three months ended April 30, 2021, the Company recorded a net increase to cash flows from operating activities of $15 million from sold receivables. |
Legal Proceedings and Other Com
Legal Proceedings and Other Commitments and Contingencies | 3 Months Ended |
Apr. 29, 2022 | |
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. The Company is continuing to negotiate with the Marine Corps to recover costs associated with the termination. Government Investigations, Audits and Reviews The Company is routinely subject to investigations and reviews relating to compliance with various laws and regulations with respect, in particular, to its role as a contractor to federal, state and local government customers and in connection with performing services in countries outside of the United States. U.S. government agencies, including the Defense Contract Audit Agency (DCAA), the Defense Contract Management Agency and others, routinely audit and review a contractor’s performance on government contracts, indirect rates and pricing practices, and compliance with applicable contracting and procurement laws, regulations and standards. They also review the adequacy of the contractor’s compliance with government standards for its business systems. Adverse findings in these investigations, audits, or reviews can lead to criminal, civil or administrative proceedings, and the Company could face disallowance of previously billed costs, penalties, fines, compensatory damages and suspension or debarment from doing business with governmental agencies. Due to the Company’s reliance on government contracts, adverse findings could also have a material impact on the Company’s business, including its financial position, results of operations and cash flows. The indirect cost audits by the DCAA of the Company’s business remain open for certain prior years and the current year. Although the Company has recorded contract revenues based on an estimate of costs that the Company believes will be approved on final audit, the Company does not know the outcome of any ongoing or future audits. If future completed audit adjustments exceed the Company’s reserves for potential adjustments, the Company’s profitability could be materially adversely affected. 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 April 29, 2022, the Company has recorded a total liability of $14 million which is presented in accounts payable and accrued liabilities on the condensed and consolidated balance sheets. Letters of Credit and Surety Bonds |
Business Overview and Summary_2
Business Overview and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Apr. 29, 2022 | |
Accounting Policies [Abstract] | |
Segment Reporting | The Company is organized as a matrix comprised of two customer facing operating sectors supported by an enterprise solutions and operations organization. The Company's operating sectors are aggregated into one reportable segment for financial reporting purposes. Each of the Company’s two customer facing operating sectors is focused on providing both (1) growth and technology accelerating solutions and (2) core IT service offerings to one or more agencies of the U.S. federal government. Growth and technology accelerating solutions include the delivery of secure cloud modernization, outcome based enterprise IT as-a-service, and the integration, production and modernization of defense systems. Core IT services include systems engineering, the operation and maintenance of existing IT systems and networks, and logistics and supply chain solutions. |
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 2023 began on January 29, 2022 and ends on February 3, 2023, while fiscal 2022 began on January 30, 2021 and ended on January 28, 2022. |
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. |
Earnings Per Share | Basic earnings per share 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 on Contracts Changes in estimates of revenues, cost of revenues or profits related to performance obligations satisfied over time are recognized in operating income in the period in which such changes are made for the inception-to-date effect of the changes. Changes in these estimates can occur routinely over the performance period for a variety of reasons, which include: changes in scope; changes in cost estimates due to unanticipated cost growth or reassessments of risks impacting costs; changes in the estimated transaction price, such as variable amounts for incentive or award fees; and performance being better or worse than previously estimated. Many of the Company's contracts recognize revenue on performance obligations using a cost input measure (cost-to-cost), which requires estimates of total costs at completion. In cases when total expected costs exceed total estimated revenues for a performance obligation, the Company recognizes the total estimated loss in the quarter identified. Total estimated losses are inclusive of any unexercised options that are probable of award, only if they increase the amount of the loss. |
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 April 29, 2022 and January 28, 2022, the fair value of our investments totaled $27 million and $28 million, respectively, and are included in other assets on the condensed and consolidated balance sheets. The Company's investments are primarily held in a custodial account, which includes investments to fund our deferred compensation plan liabilities. |
Business Combinations Policy | Acquisition and Integration Costs Acquisition-related costs that are not part of the purchase price consideration are generally expensed as incurred, except for certain costs that are deferred in connection with the issuance of debt. These costs typically include transaction-related costs, such as finder’s fees, legal, accounting, and other professional costs. Integration-related costs represent costs directly related to combining the Company and its acquired businesses. Integration-related costs typically include strategic consulting services, facility consolidation, employee related costs, such as retention and severance, costs to integrate information technology infrastructure, enterprise planning systems, processes, and other non-recurring integration-related costs. Acquisition and integration costs are presented together as acquisition and integration costs on the condensed and consolidated statements of income. |
Accounting Standards Updates | Accounting Standards Updates In October 2021, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured at the acquisition date in accordance with Topic 606 as if the acquirer had originated the contracts. The standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and must be applied prospectively. Early adoption is permitted. The Company adopted the requirements of ASU 2021-08 on a prospective basis effective the first day of fiscal 2023. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . This standard provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (LIBOR) or other reference rates expected to be discontinued due to reference rate reform. The Company adopted this standard on a prospective basis in the fourth quarter of fiscal 2021, and the adoption did not have a material impact on the Company’s financial statements. The Company’s credit facility and derivative instruments reference LIBOR-based rates. Although the Company does not expect the transition from LIBOR to have a material impact on its financial statements, it will continue to monitor the impact until transition is completed. Other Accounting Standards Updates effective after April 29, 2022 are not expected to have a material effect on the Company’s financial statements. |
Business Overview and Summary_3
Business Overview and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Apr. 29, 2022 | |
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: April 29, January 28, (in millions) Cash and cash equivalents $ 56 $ 106 Restricted cash included in inventory, prepaid expenses and other current assets 5 5 Restricted cash included in other assets 4 4 Cash, cash equivalents and restricted cash $ 65 $ 115 |
Business Combination, Separately Recognized Transactions [Table Text Block] | The amounts recognized in acquisition and integration costs on the condensed and consolidated statements of income are as follows: Three Months Ended April 29, April 30, (in millions) Acquisition (1) $ (1) $ 1 Integration (2) 10 9 Total acquisition and integration costs $ 9 $ 10 (1) Acquisition expenses for the three months ended April 29, 2022 and April 30, 2021 relate to the acquisition of Koverse. The three months ended April 29, 2022 reflects the amount recognized to reduce the fair value of the Koverse earnout liability. See Note 4 for additional information related to the acquisition. (2) Integration expenses for the three months ended April 30, 2021 include $7 million for the impairment of assets. |
Earnings Per Share and Divide_2
Earnings Per Share and Dividends (Tables) | 3 Months Ended |
Apr. 29, 2022 | |
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 April 29, April 30, (in millions) Basic weighted-average number of shares outstanding 56.1 58.1 Dilutive common share equivalents - stock options and other stock-based awards 0.5 0.6 Diluted weighted-average number of shares outstanding 56.6 58.7 |
Revenues (Tables)
Revenues (Tables) | 3 Months Ended |
Apr. 29, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregated Revenues | Aggregate net changes in estimates on contracts accounted for using the cost-to-cost method of accounting were recognized in operating income as follows: Three Months Ended April 29, April 30, (in millions, except per share amounts) Net favorable adjustments $ 5 $ 3 Net favorable adjustments, after tax 4 2 Diluted EPS impact $ 0.07 $ 0.03 Disaggregated revenues by customer were as follows: Three Months Ended April 29, April 30, (in millions) Department of Defense $ 946 $ 920 Other federal government agencies 1,013 923 Commercial, state and local 37 35 Total $ 1,996 $ 1,878 Disaggregated revenues by contract-type were as follows: Three Months Ended April 29, April 30, (in millions) Cost reimbursement $ 1,095 $ 990 Time and materials (T&M) 386 411 Firm-fixed price (FFP) 515 477 Total $ 1,996 $ 1,878 Disaggregated revenues by prime versus subcontractor were as follows: Three Months Ended April 29, April 30, (in millions) Prime contractor to federal government $ 1,822 $ 1,690 Subcontractor to federal government 137 153 Other 37 35 Total $ 1,996 $ 1,878 |
Contract Related Assets and Liabilities | Contract balances for the periods presented were as follows: Balance Sheet line item April 29, January 28, (in millions) Billed and billable receivables, net (1) Receivables, net $ 675 $ 615 Contract assets - unbillable receivables Receivables, net 429 400 Contract assets - contract retentions Other assets 17 17 Contract liabilities - current Accounts payable and accrued liabilities 44 55 Contract liabilities - non-current Other long-term liabilities $ 8 $ 9 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Apr. 29, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | Intangible assets, all of which were finite-lived, consisted of the following: April 29, 2022 January 28, 2022 Gross carrying value Accumulated amortization Net carrying value Gross carrying value Accumulated amortization Net carrying value (in millions) Customer relationships $ 1,467 $ (378) $ 1,089 $ 1,467 $ (351) $ 1,116 Backlog 17 (14) 3 17 (10) 7 Developed technology 10 (2) 8 10 (2) 8 Trade name 1 — 1 1 — 1 Total intangible assets $ 1,495 $ (394) $ 1,101 $ 1,495 $ (363) $ 1,132 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | As of April 29, 2022, the estimated future annual amortization expense related to intangible assets is as follows: Fiscal Year (in millions) Remainder of 2023 $ 92 2024 115 2025 115 2026 115 2027 115 Thereafter 549 Total $ 1,101 |
Debt Obligations (Tables)
Debt Obligations (Tables) | 3 Months Ended |
Apr. 29, 2022 | |
Debt Disclosure [Abstract] | |
Long-term Debt | The Company’s long-term debt as of the dates presented was as follows: April 29, 2022 January 28, 2022 Stated Effective Principal Unamortized Net Principal Unamortized Net (in millions) Term Loan A Facility due October 2023 2.51 % 2.84 % $ 731 $ (3) $ 728 $ 785 $ (5) $ 780 Term Loan A2 Facility due October 2023 2.51 % 2.67 % 99 — 99 100 — 100 Term Loan B Facility due October 2025 2.64 % 2.84 % 979 (7) 972 983 (7) 976 Term Loan B2 Facility due March 2027 2.64 % 3.04 % 272 (5) 267 272 (5) 267 Senior Notes due April 2028 4.88 % 5.04 % 400 (5) 395 400 (5) 395 Total long-term debt $ 2,481 $ (20) $ 2,461 $ 2,540 $ (22) $ 2,518 Less current portion 119 — 119 148 — 148 Total long-term debt, net of current portion $ 2,362 $ (20) $ 2,342 $ 2,392 $ (22) $ 2,370 |
Derivative Instruments Design_2
Derivative Instruments Designated as Cash Flow Hedges (Tables) | 3 Months Ended |
Apr. 29, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments | The Company’s derivative instruments designated as cash flow hedges consist of: Fair Value of (Liability) Asset (1) at Notional Amount at April 29, 2022 Pay Fixed Receive Settlement and April 29, January 28, 2022 (in millions) (in millions) Interest rate swaps #1 $ 685 3.07 % 1-month Monthly through October 31, 2025 $ (4) $ (39) Interest rate swaps #2 538 2.49 % 1-month Monthly through October 31, 2023 2 (12) Total $ 1,223 $ (2) $ (51) |
Changes in Accumulated Other _2
Changes in Accumulated Other Comprehensive Income by Component (Tables) | 3 Months Ended |
Apr. 29, 2022 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | 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 and the Company's defined benefit plans. Unrealized Gains (Losses) on Fixed Interest Rate Swap Cash Flow Hedges (1) Defined Benefit Total (in millions) Three months ended April 29, 2022 Balance at January 28, 2022 $ (38) $ 1 $ (37) Other comprehensive income before reclassifications 42 — 42 Amounts reclassified from accumulated other comprehensive loss 8 — 8 Income tax impact (13) — (13) Net other comprehensive income 37 — 37 Balance at April 29, 2022 $ (1) $ 1 $ — Three months ended April 30, 2021 Balance at January 29, 2021 $ (86) $ (3) $ (89) Other comprehensive income before reclassifications 10 — 10 Amounts reclassified from accumulated other comprehensive loss 9 — 9 Income tax impact (5) — (5) Net other comprehensive income 14 — 14 Balance at April 30, 2021 $ (72) $ (3) $ (75) (1) The amount reclassified from accumulated other comprehensive loss is included in interest expense. |
Sale of Receivables (Tables)
Sale of Receivables (Tables) | 3 Months Ended |
Apr. 29, 2022 | |
Receivables [Abstract] | |
Transfers Of Financial Assets Accounted For As Sales, Marpa | MARPA Facility activity consisted of the following: Three Months Ended April 29, April 30, (in millions) Beginning balance $ 200 $ 185 Sale of receivables 934 836 Cash collections (934) (821) Outstanding balance sold to Purchaser (1) 200 200 Cash collected, not remitted to Purchaser (2) (22) (42) Remaining sold receivables $ 178 $ 158 (1) There was no net impact to cash flows from operating activities from sold receivables for the three months ended April 29, 2022. For the three months ended April 30, 2021, the Company recorded a net increase to cash flows from operating activities of $15 million from sold receivables. |
Business Overview and Summary_4
Business Overview and Summary of Significant Accounting Policies - Narrative (Detail) $ in Millions | 3 Months Ended | ||
Apr. 29, 2022USD ($)segment | Apr. 30, 2021USD ($) | Jan. 28, 2022USD ($) | |
Summary of Significant Accounting Policies [Line Items] | |||
Number of operating segments | segment | 2 | ||
Number of reportable segments | segment | 1 | ||
Operating cycle (greater than) | 1 year | ||
Marketable securities | $ 27 | $ 28 | |
Acquisition costs | (1) | $ 1 | |
Integration costs | 10 | 9 | |
Acquisition and integration costs | $ 9 | 10 | |
Asset Impairment | |||
Summary of Significant Accounting Policies [Line Items] | |||
Integration costs | $ 7 | ||
Forfeiture Support Associates J.V. | |||
Summary of Significant Accounting Policies [Line Items] | |||
Noncontrolling interest, ownership percentage (as a percent) | 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 | Apr. 29, 2022 | Jan. 28, 2022 | Apr. 30, 2021 | Jan. 29, 2021 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 56 | $ 106 | ||
Restricted cash included in other assets | 4 | 4 | ||
Restricted Cash Equivalents, Current | 5 | 5 | ||
Cash, cash equivalents and restricted cash | $ 65 | $ 115 | $ 280 | $ 190 |
Earnings Per Share and Divide_3
Earnings Per Share and Dividends (Detail) - $ / shares | May 31, 2022 | Apr. 29, 2022 | Apr. 30, 2021 | Jun. 06, 2022 | Mar. 27, 2019 |
Computation Of Earnings Per Share [Line Items] | |||||
Basic weighted-average number of shares outstanding (in shares) | 56,100,000 | 58,100,000 | |||
Dilutive common share equivalents - stock options and other stock-based awards (in shares) | 500,000 | 600,000 | |||
Diluted weighted-average number of shares outstanding (in shares) | 56,600,000 | 58,700,000 | |||
Cash dividends declared per share (in dollars per share) | $ 0.37 | $ 0.37 | |||
Cash dividends paid per share (in dollars per share) | $ 0.37 | $ 0.37 | |||
Employee Stock | |||||
Computation Of Earnings Per Share [Line Items] | |||||
Antidilutive stock options excluded (in shares) | 0 | 0 | |||
Stock Repurchase Plan | |||||
Computation Of Earnings Per Share [Line Items] | |||||
Increase in number of shares authorized to be repurchased under the repurchase plan (in shares) | 4,600,000 | ||||
Shares repurchased under the repurchase plan (in shares) | 15,200,000 | ||||
Stock Repurchase Plan | Maximum | |||||
Computation Of Earnings Per Share [Line Items] | |||||
Stock Repurchase Program, Number of Shares Authorized to be Repurchased | 16,400,000 | ||||
Subsequent Event | |||||
Computation Of Earnings Per Share [Line Items] | |||||
Increase in number of shares authorized to be repurchased under the repurchase plan (in shares) | 8,000,000 | ||||
Stock Repurchase Program, Number of Shares Authorized to be Repurchased | 24,400,000 | ||||
Dividend Declared | Subsequent Event | |||||
Computation Of Earnings Per Share [Line Items] | |||||
Cash dividends paid per share (in dollars per share) | $ 0.37 |
Revenues - Narrative (Details)
Revenues - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Apr. 29, 2022 | Apr. 30, 2021 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net favorable adjustments | $ 125 | $ 130 |
Net favorable adjustments, after tax | $ 73 | $ 81 |
Diluted EPS impact (in dollars per share) | $ 1.29 | $ 1.38 |
Contract with customer, performance obligation satisfied in previous period | $ 4 | $ 5 |
Revenue recognized | 27 | 50 |
Remaining performance obligation | 4,800 | |
Revenue from exercise of purchase options | 23 | |
Lease income | 0 | 9 |
Change in Accounting Method Accounted for as Change in Estimate | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net favorable adjustments | 5 | 3 |
Net favorable adjustments, after tax | $ 4 | $ 2 |
Diluted EPS impact (in dollars per share) | $ 0.07 | $ 0.03 |
Revenues - Disaggregation of Re
Revenues - Disaggregation of Revenues (Details) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 29, 2022 | Apr. 30, 2021 | |
Disaggregation of Revenue [Line Items] | ||
Total revenues | $ 1,996 | $ 1,878 |
Prime contractor to federal government | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 1,822 | 1,690 |
Subcontractor to federal government | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 137 | 153 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 37 | 35 |
Cost reimbursement | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 1,095 | 990 |
Time and materials (T&M) | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 386 | 411 |
Firm-fixed price (FFP) | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 515 | 477 |
Department of Defense | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 946 | 920 |
Other federal government agencies | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | 1,013 | 923 |
Commercial, state and local | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues | $ 37 | $ 35 |
Revenues - Contract Related Ass
Revenues - Contract Related Assets and Liabilities (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Apr. 29, 2022 | Apr. 30, 2021 | Jan. 28, 2022 | |
Disaggregation of Revenue [Line Items] | |||
Allowance for doubtful accounts | $ 4 | $ 4 | |
Revenue recognized | 27 | $ 50 | |
Receivables, net | |||
Disaggregation of Revenue [Line Items] | |||
Billed and billable receivables, net | 675 | 615 | |
Contract assets | 429 | 400 | |
Accounts payable and accrued liabilities | |||
Disaggregation of Revenue [Line Items] | |||
Contract liabilities - current | 44 | 55 | |
Other long-term liabilities | |||
Disaggregation of Revenue [Line Items] | |||
Contract liabilities - non-current | 8 | 9 | |
Contract retentions | Other assets | |||
Disaggregation of Revenue [Line Items] | |||
Contract assets | $ 17 | $ 17 |
Revenues - Remaining Performanc
Revenues - Remaining Performance Obligations (Details) | Apr. 29, 2022 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-04-30 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation (percent) | 80.00% |
Revenue, remaining performance obligation, period | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-30 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation (percent) | 90.00% |
Revenue, remaining performance obligation, period | 24 months |
Acquisitions (Details)
Acquisitions (Details) - USD ($) $ in Millions | Jul. 02, 2021 | May 03, 2021 | Apr. 29, 2022 |
Halfaker and Associates, LLC | |||
Business Acquisition [Line Items] | |||
Payments to Acquire Businesses, Net of Cash Acquired | $ 228 | ||
Cash Acquired in Excess of Payments to Acquire Business | 3 | ||
Goodwill, Purchase Accounting Adjustments | $ 2 | ||
Goodwill acquired | 104 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | 114 | ||
Business Combination, Additional Cash Payments | $ 21 | ||
Halfaker and Associates, LLC | Backlog | |||
Business Acquisition [Line Items] | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | $ 17 | ||
Finite-Lived Intangible Asset, Useful Life | 1 year | ||
Halfaker and Associates, LLC | Customer relationships | |||
Business Acquisition [Line Items] | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | $ 97 | ||
Finite-Lived Intangible Asset, Useful Life | 9 years | ||
Koverse | |||
Business Acquisition [Line Items] | |||
Payments to Acquire Businesses, Net of Cash Acquired | $ 30 | ||
Cash Acquired in Excess of Payments to Acquire Business | 2 | ||
Goodwill acquired | 21 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | $ 10 | ||
Finite-Lived Intangible Asset, Useful Life | 7 years | ||
Business Combination, Additional Cash Payments | $ 27 | ||
Business Combination, Contingent Consideration, Liability | 3 | ||
Post-Combination Expense | $ 13 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets (Details) - USD ($) | Jan. 28, 2022 | Apr. 29, 2022 | Apr. 30, 2021 |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Goodwill | $ 2,913,000,000 | $ 2,911,000,000 | |
Goodwill impairment | 0 | $ 0 | |
Amortization of intangible assets | 33,000,000 | $ 32,000,000 | |
Impairment of intangible assets | $ 0 | $ 0 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets Intangible Assets (Details) - USD ($) $ in Millions | Apr. 29, 2022 | Jan. 28, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying value | $ 1,495 | $ 1,495 |
Accumulated amortization | (394) | (363) |
Net carrying value | 1,101 | 1,132 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying value | 1,467 | 1,467 |
Accumulated amortization | (378) | (351) |
Net carrying value | 1,089 | 1,116 |
Backlog | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying value | 17 | 17 |
Accumulated amortization | (14) | (10) |
Net carrying value | 3 | 7 |
Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying value | 10 | 10 |
Accumulated amortization | (2) | (2) |
Net carrying value | 8 | 8 |
Trade name | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying value | 1 | 1 |
Accumulated amortization | 0 | 0 |
Net carrying value | $ 1 | $ 1 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets Intangible Assets Amortization (Details) - USD ($) $ in Millions | Apr. 29, 2022 | Jan. 28, 2022 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Remainder of 2023 | $ 92 | |
2024 | 115 | |
2025 | 115 | |
2026 | 115 | |
2027 | 115 | |
Thereafter | 549 | |
Net carrying value | $ 1,101 | $ 1,132 |
Income Taxes (Detail)
Income Taxes (Detail) | 3 Months Ended | |
Apr. 29, 2022 | Apr. 30, 2021 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax rate | 22.00% | 22.50% |
Debt Obligations - Long-term De
Debt Obligations - Long-term Debt (Detail) - USD ($) $ in Millions | Apr. 29, 2022 | Jan. 28, 2022 |
Debt Instrument [Line Items] | ||
Principal amount of long-term debt | $ 2,481 | $ 2,540 |
Unamortized debt issuance costs, total long-term debt | (20) | (22) |
Total long-term debt | 2,461 | 2,518 |
Less current portion | 119 | 148 |
Debt Issuance Costs, Current, Net | 0 | 0 |
Principal amount of long-term debt, net of current portion | 2,362 | 2,392 |
Unamortized debt issuance costs, total long-term debt, net of current portion | (20) | (22) |
Total long-term debt, net of current portion | $ 2,342 | 2,370 |
Term Loan A Facility Commitment Due October Two Thousand Twenty Three | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 2.51% | |
Effective interest rate | 2.84% | |
Principal amount of long-term debt | $ 731 | 785 |
Unamortized debt issuance costs, total long-term debt | (3) | (5) |
Total long-term debt | $ 728 | 780 |
Term Loan A2 Facility Due October Two Thousand Twenty Three | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 2.51% | |
Effective interest rate | 2.67% | |
Principal amount of long-term debt | $ 99 | 100 |
Unamortized debt issuance costs, total long-term debt | 0 | 0 |
Total long-term debt | $ 99 | 100 |
Term Loan B Facility Due October Two Thousand Twenty Five | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 2.64% | |
Effective interest rate | 2.84% | |
Principal amount of long-term debt | $ 979 | 983 |
Unamortized debt issuance costs, total long-term debt | (7) | (7) |
Total long-term debt | $ 972 | 976 |
Term Loan B2 Facility Due March Two Thousand Twenty Seven [Member] | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 2.64% | |
Effective interest rate | 3.04% | |
Principal amount of long-term debt | $ 272 | 272 |
Unamortized debt issuance costs, total long-term debt | (5) | (5) |
Total long-term debt | $ 267 | 267 |
Senior Notes Due April Two Thousand Twenty Eight | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 4.88% | |
Effective interest rate | 5.04% | |
Principal amount of long-term debt | $ 400 | 400 |
Unamortized debt issuance costs, total long-term debt | (5) | (5) |
Total long-term debt | $ 395 | $ 395 |
Debt Obligations - Narrative (D
Debt Obligations - Narrative (Detail) - Line of Credit [Member] - Credit Facility | Apr. 29, 2022USD ($) |
Debt Instrument [Line Items] | |
Maximum borrowing capacity | $ 2,500,000,000 |
Revolving Credit Facility | |
Debt Instrument [Line Items] | |
Maximum borrowing capacity | $ 400,000,000 |
Derivative Instruments Design_3
Derivative Instruments Designated as Cash Flow Hedges - Schedule of Derivative Instruments (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 29, 2022 | Jan. 28, 2022 | |
Derivative [Line Items] | ||
Notional amount | $ 1,223 | |
Asset Fair Value | (2) | $ (51) |
Interest rate swaps #1 | Interest Rate Swaps | ||
Derivative [Line Items] | ||
Notional amount | $ 685 | |
Pay fixed rate | 3.07% | |
Receive variable rate | 1-month LIBOR | |
Settlement and termination | Monthly through October 31, 2025 | |
Asset Fair Value | $ (4) | (39) |
Interest rate swaps #2 | Interest Rate Swaps | ||
Derivative [Line Items] | ||
Notional amount | $ 538 | |
Pay fixed rate | 2.49% | |
Receive variable rate | 1-month LIBOR | |
Settlement and termination | Monthly through October 31, 2023 | |
Asset Fair Value | $ 2 | $ (12) |
Derivative Instruments Design_4
Derivative Instruments Designated as Cash Flow Hedges - Narrative (Detail) $ in Millions | Apr. 29, 2022USD ($) |
Interest Rate Swaps | |
Derivative [Line Items] | |
Unrealized gains estimated to be reclassified from accumulated other comprehensive income into earnings in the next twelve months | $ 5 |
Changes in Accumulated Other _3
Changes in Accumulated Other Comprehensive Income by Component (Detail) - USD ($) $ in Millions | 3 Months Ended | |||
Apr. 29, 2022 | Apr. 30, 2021 | Jan. 28, 2022 | Jan. 29, 2021 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, before Tax | $ 0 | $ (75) | $ (37) | $ (89) |
Other comprehensive income before reclassifications | 42 | 10 | ||
Income tax impact | (13) | (5) | ||
Net other comprehensive income | 37 | 14 | ||
Amounts reclassified from accumulated other comprehensive loss | 8 | 9 | ||
Unrealized Gains (Losses) on Fixed Interest Rate Swap Cash Flow Hedges(1) | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, before Tax | (1) | (72) | (38) | (86) |
Other comprehensive income before reclassifications | 42 | 10 | ||
Income tax impact | (13) | (5) | ||
Net other comprehensive income | 37 | 14 | ||
Amounts reclassified from accumulated other comprehensive loss | 8 | 9 | ||
Defined Benefit Obligation Adjustment | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
AOCI Including Portion Attributable to Noncontrolling Interest, before Tax | 1 | (3) | $ 1 | $ (3) |
Other comprehensive income before reclassifications | 0 | 0 | ||
Income tax impact | 0 | 0 | ||
Net other comprehensive income | 0 | 0 | ||
Amounts reclassified from accumulated other comprehensive loss | $ 0 | $ 0 |
Sale of Receivables (Details)
Sale of Receivables (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Apr. 29, 2022 | Apr. 30, 2021 | Jan. 28, 2022 | Jan. 29, 2021 | |
Receivables [Abstract] | ||||
Maximum commitment | $ 300 | |||
Purchase discount fees | 1 | $ 1 | ||
Outstanding balance sold to Purchaser | 200 | 200 | $ 200 | $ 185 |
Sale of receivables | 934 | 836 | ||
Cash collections | (934) | (821) | ||
Cash collected, not remitted to Purchaser(2) | (22) | (42) | ||
Remaining sold receivables | 178 | 158 | ||
Increase to cash flows from operating activities | $ 0 | $ 15 |
Legal Proceedings and Other C_2
Legal Proceedings and Other Commitments and Contingencies (Detail) $ in Millions | Apr. 29, 2022USD ($) |
Government Investigations And Reviews | |
Commitments And Contingencies [Line Items] | |
Estimated net amounts to be refunded for potential adjustments | $ 14 |
Letters of Credit | |
Commitments And Contingencies [Line Items] | |
Outstanding obligations | 10 |
Surety Bonds | |
Commitments And Contingencies [Line Items] | |
Outstanding obligations | $ 19 |