Business Context and Reporting Period
Company: Science Applications International Corporation (SAIC)
Filing Type: Form 8-K (Current Report)
Date of Report: February 27, 2020
Primary Event: Regulation FD Disclosure regarding a proposed acquisition and related financing.
Key Financial Metrics and Transaction Details
- Proposed Financing: A new seven-year senior secured $600 million Term Loan B.
- Structure: Incremental term loan facility under the Company's existing credit agreement.
- Purpose: To finance the acquisition of Unisys Federal, an operating unit of Unisys Corporation.
- Financial Data: The filing references Unaudited Pro Forma Condensed Financial Information for the twelve months ended November 1, 2019 (Exhibit 99.2). However, the text explicitly states this information has not been prepared in accordance with SEC Article 11 of Regulation S-X and does not reflect all required pro forma adjustments. Specific revenue, profit, or cash flow figures are not provided in the main text of this filing.
Material Changes and Outlook
The filing discloses a material potential change in the Company's capital structure and operations pending the completion of the Unisys Federal acquisition. Management is currently in discussions with prospective lenders to secure the $600 million facility. There can be no assurances that the acquisition or the related financing will be completed.
Risks, Contingencies, and Management Commentary
Management highlights significant risks associated with the proposed transaction and general operations, including:
- Transaction Risk: Failure to complete the acquisition or financing within the expected timeframe or at all.
- Integration Risk: Difficulties in integrating Unisys Federal's business and realizing anticipated benefits.
- Operational Disruption: Potential disruptions to SAIC and Unisys Federal businesses during the pendency of the acquisition.
- Liabilities: Unknown, probable, or estimable liabilities of Unisys Federal.
- Government Contracting Risks: Declines in the U.S. government defense budget, changes in spending priorities, delays in contract awards, and unfavorable resolution of government audits.
- Other Risks: Cybersecurity threats, legal disputes, and impairment of goodwill or intangible assets.
Note: The information furnished in this Item 7.01, including the exhibits, is not deemed "filed" for purposes of the Exchange Act and shall not be incorporated by reference into other filings except as specifically provided.
Investor Verification Checklist
- Verify the final terms and closing status of the $600 million Term Loan B facility.
- Confirm the completion of the Unisys Federal acquisition and the final purchase price.
- Review the full Unaudited Pro Forma Financial Information (Exhibit 99.2) for projected impacts on leverage and earnings, noting the disclaimer regarding SEC compliance.
- Monitor for any regulatory approvals required for the acquisition of a federal operating unit.
- Assess the impact of the transaction on SAIC's existing credit agreement covenants.