Amentum Holdings, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1 —Basis of Presentation

Amentum Holdings, Inc. (collectively with its subsidiaries, “we,” “us,” “our,” “Amentum,” or the “Company”) is a global advanced engineering and technology solutions provider to a broad base of U.S. and allied government agencies, and customers in international and commercial markets, supporting programs of critical national importance across energy and environmental, intelligence, space, defense, civilian and commercial end-markets. We offer a broad reach of capabilities including energy, environmental remediation, intelligence and counter threat solutions, data fusion and analytics, engineering and integration, advanced test, training and readiness, and citizen solutions. As a leading provider of differentiated technology solutions, we have built a repertoire of deep customer knowledge, enabling us to engage our customers across multiple capabilities and markets.

We conduct our business activities and report financial results astwo reportable segments: Digital Solutions (“DS”) and Global Engineering Solutions (“GES”). The DS segment provides advanced digital and data-driven solutions including intelligence analytics, space system development, cybersecurity, and next generation IT across the federal government and commercial clients. The GES segment provides large-scale environmental remediation, nuclear power solutions, platform engineering, sustainment and supply chain management across all seven continents for the U.S. government and allied nations.

The accompanying unaudited condensed consolidated financial statements of the Company include the assets, liabilities, results of operations, comprehensive income and cash flows for the Company, including its wholly-owned subsidiaries and joint ventures that are majority-owned or otherwise controlled by the Company. Certain information and note disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted, although the Company believes that the disclosures made are adequate to make the information presented not misleading. All intercompany transactions and balances have been eliminated in consolidation.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments and reclassifications (all of which are of a normal, recurring nature) that are necessary for the fair presentation of the periods presented. It is suggested that these unaudited condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s latest annual report for the fiscal year ended October 3, 2025. The results of operations for the three months ended January 2, 2026 are not necessarily indicative of the results to be expected for any subsequent interim period or for the full fiscal year.

Note 2 —Recent Accounting Pronouncements

Accounting Standards Updates Issued but Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to enhance transparency and usefulness of income tax disclosures. This update requires disaggregated information about an entity’s effective tax rate reconciliation as well as information on income taxes paid. We plan to adopt ASU 2023-09 using the prospective approach beginning with our annual fiscal year 2026 financial statements.

In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses, to enhance the transparency of certain expense disclosures. The update requires disclosure of specific types of expenses included in certain expense captions presented on the face of the consolidated statements of operations. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim reporting periods beginning after December 15, 2027, and may be applied on a prospective or retrospective basis. Early adoption is permitted. We are currently evaluating the impacts of the new standard on our financial statements.

Note 3 —Revenues

Disaggregation of Revenues

The Company disaggregates revenues by customer, contract type, prime contractor versus subcontractor, geographic location and whether the solution provided is primarily Digital Solutions or Global Engineering Solutions. These categories represent how the nature, amount, timing, and uncertainty of revenues and cash flows are affected.

Disaggregated revenues by customer-type were as follows:

Disaggregated revenues by contract-type were as follows:

Disaggregated revenues by prime contractor versus subcontractor were as follows:

Revenues by geographic location are reported by the country in which the work is performed and were as follows:

Changes in Estimates on Contracts

Changes in estimated contract earnings at completion using the cumulative catch-up method of accounting were recognized in revenues as follows:

(1) The impact on diluted earnings per share attributable to common shareholders is calculated using our statutory tax rate.

Remaining Performance Obligations

As of January 2, 2026, we had a remaining performance obligations balance of $10.8 billion and expect to recognize approximately 76% and 90% of the remaining performance obligations balance as revenues over the next 12 and 24 months, respectively, with the remainder to be recognized thereafter.

Note 4 —Contract Balances

The Company's contract balances consisted of the following (in millions):

Contract assets primarily relate to accruals for reimbursable costs and fees in which our right to consideration is conditional. Long-term contract assets relate to a prior acquisition.

We recognized revenues of $127 million and $65 million during the three months ended January 2, 2026 and December 27, 2024, respectively, that was included in Contract liabilities as of October 3, 2025 and September 27, 2024, respectively.

Note 5 —Sales of Receivables

In March 2024, we entered into a Master Accounts Receivable Purchase Agreement (“MARPA”) with MUFG Bank, Ltd., (the “Purchaser”) for the sale of certain designated eligible U.S. Government receivables. In December 2024, we amended the MARPA with the Purchaser to increase the maximum amount of eligible receivables that can be sold up to a maximum amount of $400 million. Under the MARPA, the Company can sell certain eligible receivables without recourse for any U.S. Government credit risk.

The Company's MARPA activity consisted of the following (in millions):

(1) For the three months ended January 2, 2026 and December 27, 2024, the Company recorded a net cash inflow of $64 million and $7 million in its cash flows from operating activities, respectively, from sold receivables. MARPA cash flows are calculated as the change in the outstanding balance during the fiscal year.

(2) Includes the cash collected on behalf of but not yet remitted to the Purchaser as of January 2, 2026 and December 27, 2024. This balance is included in Other current liabilities as of the balance sheet date.

Note 6 —Goodwill and Intangible Assets

Goodwill

The carrying amount of goodwill for our reportable segments, DS and GES, was $2,260 million and $3,443 million, respectively, as of both January 2, 2026 and October 3, 2025.

Intangible Assets

Intangible assets, net consisted of the following:

Amortization expense was $94 million and $120 million for the three months ended January 2, 2026 and December 27, 2024, respectively.

Note 7 —Income Taxes

The Company's effective tax rate was 31.3% and 53.3% for the three months ended January 2, 2026 and December 27, 2024, respectively.

The most significant item contributing to the difference between the statutory U.S. federal corporate tax rate of 21.0% and the Company’s effective tax rate for the three months ended January 2, 2026 and December 27, 2024 was an increase in the valuation allowance against the deferred tax asset related to disallowed interest expense of $4 million and $12 million, respectively.

On July 4, 2025, the One Big, Beautiful Bill Act (“OBBBA”) was enacted, introducing several significant amendments to U.S. income tax legislation including the permanent restoration of EBITDA as the basis for computing business interest expense limitations and the immediate expensing of research expenditures. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We have incorporated these amendments into our fiscal year 2025 and 2026 income tax provisions, as applicable, which impacted the realizability of our deferred tax assets and valuation allowance assessment.

Note 8 —Debt

Debt consisted of the following:

As amended, the Company’s senior secured credit facility (the “Credit Facility”) consists of our term facility (“Term Loan”) maturing on September 27, 2031 and a $850 million revolving facility (“Revolver”) maturing on September 27, 2029, which includes a $200 million letter of credit subfacility and a $100 million swingline subfacility.

The interest rates applicable to the Term Loan are floating interest rates equal to an Alternate Base Rate or Adjusted Term Secured Overnight Financing Rate plus an applicable margin based upon net leverage ratio. The Term Loan requires quarterly principal amortization payments of $9 million, which commenced on March 31, 2025, with the remainder of the principal thereunder being due at maturity.

As of January 2, 2026 and October 3, 2025, the available borrowing capacity under the Credit Facility was $768 million and $766 million, respectively, and included $82 million and $84 million, respectively, in issued letters of credit. As of January 2, 2026 and October 3, 2025, there were no amounts borrowed under the Revolver.

In August 2024, the Company completed an offering of $1,000 million in aggregate principal amount of 7.250% senior notes due August 1, 2032 (the “Senior Notes”). Interest is payable on February 1 and August 1 of each year, which commenced on February 1, 2025.

The Credit Facility and the Senior Notes are guaranteed by substantially all of our wholly owned material domestic restricted subsidiaries, subject to customary exceptions set forth in the credit agreement and indenture, respectively.

Each of the credit agreement and indenture requires us to comply with certain representations and warranties, customary affirmative and negative covenants and, in the case of the Revolver, under certain circumstances, a financial covenant. We were in compliance with all covenants as of January 2, 2026.

Cash Flow Hedges

The Company utilizes derivative financial instruments to manage interest rate risk related to its variable rate debt. The Company’s objective is to manage its exposure to interest rate movements and reduce volatility of interest expense. The Company entered into several interest rate swaps with an aggregate notional value of $1.6 billion that were designated as cash flow hedges, in which the Company will pay at the fixed rate and receive payment at a floating rate indexed to the three-month term SOFR through maturity. The swaps mature at various dates through January 31, 2027. The change in fair value of the interest rate swaps is presented within accumulated other comprehensive income on our consolidated balance sheet and subsequently reclassified into interest expense and other, net on our consolidated statements of operations and comprehensive income in the period when the hedged transaction affects earnings.

Note 9 —Joint Ventures

The Company’s joint ventures provide services to customers including program management and operations and maintenance services. Joint ventures, the combination of two or more partners, are generally formed for a specific project. Management of the joint venture is typically controlled by a joint venture executive committee, comprised of representatives from the joint venture partners. The joint venture executive committee normally provides management oversight and controls decisions which could have a significant impact on the joint venture.

We account for joint ventures in accordance with ASC 810, Consolidation. The Company analyzes its joint ventures and classifies them as either:

•a Variable Interest Entity (“VIE”) that must be consolidated because the Company is the primary beneficiary or the joint venture is not a VIE and the Company holds the majority voting interest with no significant participative rights available to the other partners; or

•a VIE that does not require consolidation and is treated as an equity method investment because the Company is not the primary beneficiary or the joint venture is not a VIE and the Company does not hold the majority voting interest.

The following table presents selected financial information for our consolidated joint ventures that are VIEs as of January 2, 2026 and October 3, 2025:

The following table presents selected financial information for our consolidated joint ventures that are VIEs for the three months ended January 2, 2026 and December 27, 2024:

The Company has an ownership share in approximately 30 active joint ventures that are accounted for as equity method investments and the Company’s ownership percentages generally range from 25% to 50%. Related party receivables due from our equity method investments were $63 million as of both January 2, 2026 and October 3, 2025. These receivables are a result of items purchased and services rendered by us on behalf of our equity method investments. We have assessed these receivables as having minimal collection risk based on our historic experience with these joint ventures and our inherent influence through our ownership interest. The related party revenues earned from our equity method investments was $50 million and $44 million for the three months ended January 2, 2026 and December 27, 2024, respectively.

Many of our joint ventures only perform on a single contract. The modification or termination of a contract under a joint venture could trigger an impairment in the fair value of our investment in these entities. In the aggregate, our maximum exposure to losses was $218 million related to our equity method investments as of January 2, 2026.

Note 10 —Accumulated Other Comprehensive Income (Loss)

The accumulated balances and reporting period activities for the three months ended January 2, 2026 and December 27, 2024 related to accumulated other comprehensive income (loss) are summarized as follows:

Note 11 —Segment Information

We operate our business activities and report financial results astwo reportable segments: Digital Solutions and Global Engineering Solutions.

The Digital Solutions segment provides advanced digital and data-driven solutions including intelligence analytics, space system development, cybersecurity, and next generation IT across the federal government and commercial clients.

The Global Engineering Solutions segment provides large-scale environmental remediation, nuclear power solutions, platform engineering, sustainment and supply chain management across all seven continents for the U.S. government and allied nations.

The presentation of financial results astwo reportable segments is consistent with the way the Company operates its business and the manner in which our chief operating decision maker (“CODM”), currently our Chief Executive Officer, manages the operations of the Company for purposes of allocating resources and assessing performance. The CODM evaluates the performance of our segments based on revenues and Adjusted EBITDA.

The Company’s segment revenues were as follows:

Adjusted EBITDA is most comparable to net income attributable to common shareholders prepared based on GAAP. The Company defines Adjusted EBITDA as net income attributable to common shareholders adjusted for interest expense and other, net, provision for income taxes, depreciation and amortization, and certain discrete items that are not considered in the evaluation of ongoing operating performance. These discrete items include acquisition, transaction, and integration costs, utilization of certain fair market value adjustments assigned in purchase accounting, and stock-based compensation. While we believe Adjusted EBITDA is a useful metric in evaluating operating performance by allowing better evaluation of underlying segment performance and better period-to-period comparability, it is not a metric defined by GAAP and may not be comparable to non-GAAP metrics presented by other companies.

The following table reconciles segment Adjusted EBITDA to net income attributable to common shareholders:

(1) Represents the difference between segment revenues, costs of revenues, and Adjusted EBITDA attributable to Amentum Holdings, Inc. Other segment expenses primarily includes selling, general, and administrative expenses, and equity earnings of non-consolidated subsidiaries and excludes certain discrete items that are not considered in the evaluation of ongoing performance.

(2) Represents acquisition, transaction and integration costs, including severance, retention, and other adjustments related to acquisition and integration activities.

(3) Represents the periodic utilization of the fair market value adjustments assigned to certain equity method investments and non-controlling interests based on the remaining period of performance for the related contract.

(4) Represents non-cash compensation expenses recognized for stock-based arrangements.

Asset information by segment is not a key measure of performance used by the CODM.

Note 12 —Earnings Per Share

Basic and diluted earnings per share are computed as follows (in millions, except per share data):

Note 13 —Legal Proceedings and Commitments and Contingencies

The Company is involved in various claims, disputes and administrative proceedings arising in the normal course of business. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that an unfavorable result and/or liability will be incurred and the cost of the unfavorable result or liability can be reasonably estimated. Management is of the opinion that any liability or loss associated with such matters, either individually or in the aggregate, will not have a material adverse effect on the Company’s operations and liquidity.

Payments to the Company on cost-plus-fee contracts are provisional and are subject to adjustments upon audit by the Defense Contract Audit Agency (“DCAA”). In management’s opinion, audit adjustments that may result from audits not yet completed or started are not expected to have a material adverse effect on the Company’s operations and liquidity.

U.S. Government Investigations

We primarily sell our services to the U.S. Government. These contracts are subject to extensive legal and regulatory requirements, and we are occasionally the subject of investigations by various agencies of the U.S. Government who investigate whether our operations are being conducted in accordance with these requirements. Such investigations could result in administrative, civil or criminal liabilities, including repayments, fines or penalties being imposed on us, or could lead to suspension or debarment from future U.S. Government contracting. U.S. Government investigations often take years to complete and may result in adverse action against us. Any adverse actions arising from such matters could have a material effect on our ability to invoice and receive timely payment on our contracts, perform contracts or compete for contracts with the U.S. Government and could have a material effect on our operating performance. There are currently no investigations that are expected to have a material impact on our results of operations.