SAIC Announces Third Quarter of Fiscal Year 2020 Results

Backlog represents the estimated amount of future revenues to be recognized under negotiated contracts and task orders as work is performed and excludes contract awards which have been protested by competitors until the protest is resolved in our favor. SAIC segregates backlog into two categories, funded backlog and negotiated unfunded backlog. Funded backlog for contracts with government agencies primarily represents contracts for which funding is appropriated less revenues previously recognized on these contracts, and does not include the unfunded portion of contracts where funding is incrementally appropriated or authorized by the U.S. government and other customers even though the contract may call for performance over a number of years. Funded backlog for contracts with non-government agencies represents the estimated value of contracts which may cover multiple future years under which SAIC is obligated to perform, less revenues previously recognized on these contracts. Negotiated unfunded backlog represents the estimated future revenues to be earned from negotiated contracts for which funding has not been appropriated or authorized, and unexercised priced contract options. Negotiated unfunded backlog does not include any estimate of future potential task orders expected to be awarded under indefinite delivery, indefinite quantity (IDIQ), U.S. General Services Administration (GSA) schedules or other master agreement contract vehicles.

Schedule 5:

SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
NON-GAAP FINANCIAL MEASURES
(Unaudited)

This schedule describes the non-GAAP financial measures included in this earnings release. While we believe that these non-GAAP financial measures may be useful in evaluating our financial information, they should be considered as supplemental in nature and not as a substitute for financial information prepared in accordance with GAAP. Reconciliations, definitions, and how we believe these measures are useful to management and investors are provided below. Other companies may define similar measures differently.

EBITDA, Adjusted EBITDA and Adjusted Operating Income

	Three Months Ended						Nine Months Ended
	November 1, 2019			November 2, 2018			November 1, 2019			November 2, 2018
	(in millions)
Net income	$	56		$	48		$	169		$	146
Interest expense	22			16			69			38
Interest income	(1		)	(1		)	(3		)	(2		)
Provision for income taxes	17			10			48			31
Depreciation and amortization	32			11			98			31
EBITDA ⁽¹⁾	126			84			381			244
EBITDA as a percentage of revenues	*7.7*		%	7.1		%	*7.9*		%	7.0		%
Acquisition and integration costs	12			14			30			14
Depreciation included in acquisition and integration costs	(1		)	—			(1		)	—
Recovery of acquisition and integration costs	(2		)	—			(6		)	—
Adjusted EBITDA ⁽¹⁾	$	135		$	98		$	404		$	258
Adjusted EBITDA as a percentage of revenues	*8.3*		%	8.3		%	*8.3*		%	7.4		%

Operating income	$	94		$	73		$	282		$	213
Operating income as a percentage of revenues	*5.8*		%	6.2		%	*5.8*		%	6.1		%
Acquisition and integration costs	12			14			30			14
Recovery of acquisition and integration costs	(2		)	—			(6		)	—
Adjusted operating income ⁽¹⁾	$	104		$	87		$	306		$	227
Adjusted operating income as a percentage of revenues	*6.4*		%	7.4		%	*6.3*		%	6.5		%

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