SAIC Announces Financial Results for Third Quarter of Fiscal Year 2013

    SAIC Announces Financial Results for Third Quarter of Fiscal Year 2013

- Revenues: $2.87 billion

- Operating Income: $193 million

- Diluted EPS from Continuing Operations: $0.33

- Cash Flows from Operations: $295 million

- Bookings: $4.8 billion (book-to-bill ratio of 1.7)

PR Newswire

MCLEAN, Va., Dec. 5, 2012

MCLEAN, Va., Dec.5, 2012 /PRNewswire/ --SAIC, Inc. (NYSE: SAI), a
scientific, engineering, and technology applications company, today announced
financial results for the third quarter of fiscal year 2013, which ended
October 31, 2012. 

"This quarter we are reporting modest year-over-year revenue growth and solid
new business bookings even in the currently cautious government market. This
reflects our more aggressive pursuit of new business opportunities and the
strong commitment of our 40,000 employees to the highest level of customer
service, even as we undertake significant changes within the Company," said
John P. Jumper, chairman and chief executive officer. "Our outlook continues
to be cautious as the government approaches critical fiscal decisions. Under
any scenario, we expect government spending to be constrained, especially in
the defense market, and we are preparing for the budget pressures. For the
long term, our plan to separate SAIC into two highly competitive and
differentiated companies is well underway and generating great excitement in
the Company. In the near term, we are taking action to reduce our cost
structure in response to an increasingly competitive environment. This
reduction will impact approximately 700 employees, largely as a result of a
restructuring focused on indirect costs. While these decisions are painful,
they are necessary to meet competitive demands, customer cost expectations and
effectiveness, and to deliver financial performance for our shareholders."

Summary Results

Revenues for the third quarter of fiscal year 2013 were $2.87 billion, up 3
percent from $2.79 billion in the third quarter of fiscal year 2012. Internal
revenues were essentially flat.

Operating income for the quarter was $193 million (6.7 percent of revenue).
Operating loss for the prior year quarter of $20 million included a $232
million loss provision relating to the CityTime workforce management contract
with the City of New York. The prior year quarter's operating income
excluding the CityTime loss provision was $212 million (7.5 percent of
revenue). The reduction in operating income, as adjusted, was primarily
attributable to $15 million of expenses incurred in connection with the
planned separation transaction and the corporate relocation.

Income from continuing operations for the quarter was $112 million, up from a
$92 million loss in the third quarter of fiscal year 2012.

Diluted earnings per share from continuing operations for the quarter were
$0.33, up from a loss of $0.28 in the third quarter of fiscal year 2012. The
diluted share count for the quarter was 334 million, up 2 percent from 329
million in the third quarter of fiscal year 2012.

Segment Operating Results

                                   Three Months Ended
                                   October 31               Revenue Growth (%)
                                   2012        2011         Total    Internal
                                   ($ in millions)
Revenues:
Defense Solutions                  $        $        6%       6%
                                   1,183      1,117
Health, Energy and Civil           743         726          2%       -4%
Solutions
Intelligence and Cybersecurity     945         947          0%       0%
Solutions
Corporate and Other                -           1            n/a      n/a
Intersegment Elimination           (1)         (1)          n/a      n/a
Total                              $        $        3%       1%
                                   2,870      2,790
                                                            Operating Margin
Operating Income (Loss):                                    FY 2013  FY 2012
Defense Solutions                  $      $        7.7%     -11.9%
                                    91        (133)
Health Energy and Civil Solutions  69          77           9.3%     10.6%
Intelligence and Cybersecurity     68          54           7.2%     5.7%
Solutions
Corporate and Other                (35)        (18)         n/a      n/a
Total                              $      $       6.7%     -0.7%
                                   193         (20)

                                   Nine Months Ended
                                   October 31               Revenue Growth (%)
                                   2012        2011         Total    Internal
                                   ($ in millions)
Revenues:
Defense Solutions                  $        $        8%       8%
                                   3,597      3,339
Health, Energy and Civil           2,077       1,997        4%       -2%
Solutions
Intelligence and Cybersecurity     2,792       2,691        4%       4%
Solutions
Corporate and Other                -           2            n/a      n/a
Intersegment Elimination           (4)         (3)          n/a      n/a
Total                              $        $        5%       4%
                                   8,462      8,026
                                                            Operating Margin
Operating Income (Loss):                                    FY 2013  FY 2012
Defense Solutions                  $      $       7.9%     1.3%
                                   284          45
Health Energy and Civil Solutions  168         187          8.1%     9.4%
Intelligence and Cybersecurity     203         215          7.3%     8.0%
Solutions
Corporate and Other                (66)        (34)         n/a      n/a
Total                              $      $       7.0%     5.1%
                                   589         413

Defense Solutions

Defense Solutions revenues for the quarter were $1.183 billion. Excluding the
$52 million revenue reductionassociated with the prior year CityTime loss
provision, Defense Solutions revenue increased $14 million or 1 percent from
the third quarter of fiscal 2012. Internal revenue growth was attributable to
increased activity on the Vanguard program to operate and maintain the
enterprise network IT infrastructure for the U.S. Department of State and the
ramp up of a program with the Defense Logistics Agency to provide supply chain
management of military land and aircraft tires. These increases were
partially offset by reduced revenue from the U.S. Army Brigade Combat Team
Modernization (BCTM) program, which was terminated during the third quarter of
fiscal year 2012. 

Defense Solutions operating income for the quarter was 7.7 percent of revenue
compared to 8.5 percent of revenue excluding the CityTime loss provision
(-11.9 percent on a GAAP basis) in the third quarter of fiscal year 2012. The
reduction in Defense Solutions operating income, as adjusted, was attributable
to a prior year gain on the sale of assets.

Health, Energy and Civil Solutions

Health, Energy and Civil Solutions revenues for the quarter increased 2
percent from the third quarter of fiscal year 2012. Internal revenues
decreased 4 percent due to declines in various federal civilian programs and
program completions with federal health information technology customers.
These decreases were partially offset by an increase in healthcare IT
consulting services with commercial clients.

Health, Energy and Civil Solutions operating income for the quarter was 9.3
percent of revenue, down from 10.6 percent of revenue in the third quarter of
fiscal year 2012. The decline was primarily due to net unfavorable changes in
contract estimates, increased bid and proposal costs, increased amortization
expense associated with acquired intangible assets, and reduced volume of
non-intrusive inspection systems. These decreases were partially offset by
reduced research and development expense, which reflected the advancement
through the product development lifecycle of new non-intrusive inspection
system offerings.

Intelligence and Cybersecurity Solutions

Intelligence and Cybersecurity Solutions revenues for the quarter were down
slightly from the third quarter of fiscal year 2012 as increased activity on a
geospatial intelligence program and an airborne surveillance program were
offset by higher prior year material deliveries on a processing, exploitation
and dissemination program.

Intelligence and Cybersecurity Solutions operating income for the quarter was
7.2 percent of revenue, up from 5.7 percent of revenue in the third quarter of
fiscal year 2012, primarily due to a $19 million impairment of intangible
assets in the prior yearpartially offset byreduced fee rates due to
increased subcontractor and material costs.

Corporate and Other

Corporate and Other segment operating loss for the quarter increased from the
third quarter of fiscal year 2012, primarily due to $15 million of expenses
incurred in connection with the planned separation transaction and the
corporate relocation.

Cash Generation and Capital Deployment

Cash flow provided by operations for the quarter was $295 million, down from
$421 million for the third quarter of fiscal year 2012, primarily due to a
payroll funding timing difference. Days sales outstanding were 61 days this
quarter compared to 71 days in the prior year quarter as a result of
accelerated payments from the government.

During the quarter, the Company paid a cash dividend of $0.12 per share. The
Company intends to continue paying dividends on a quarterly basis, although
the declaration of any future dividends will be determined by the Company's
Board of Directors each quarter and will depend on earnings, financial
condition, capital requirements and other factors.

As of October 31, 2012, the Company had $531 million in cash and cash
equivalents and $1.3 billion in long-term debt.

New Business Awards

Net business bookings totaled $4.8 billion in the third quarter of fiscal year
2013, representing a book-to-bill ratio of 1.7. Notable awards received
during the quarter include:

U.S. Central Command's (USCENTCOM) Directorate of Command and Control,
Communications and Computers. The Company was awarded a task order to provide
enterprise information technology services to the USCENTCOM Directorate of
Command and Control, Communications and Computers. The cost-plus award-fee
task order has a one-year base period of performance, four one-year options,
and a total contract value of $433 million, if all options are exercised.

U.S Army Military Intelligence Enterprise. The Company was awarded a prime
contract to provide information technology design, implementation and
operational sustainment support services to the U.S. Department of the Army G2
Army Military Intelligence Enterprise. The single-award task order has a
one-year base period of performance, two one-year options, one six-month
option, and a total contract value of approximately $149 million, if all
options are exercised. The task order was awarded under the Solutions for the
Information Technology Enterprise contract vehicle.

Federal Emergency Management Agency Center for Domestic Preparedness. The
Company was awarded a prime contract to provide training delivery services in
support of the Center for Domestic Preparedness. The single-award cost-plus
award-fee and fixed price contract has a one-year base period of performance,
four one-year options, and a total contract value of approximately $52
million, if all options are exercised.

Healthcare IT Awards. Recently the Company highlighted its continued progress
in the healthcare IT sector, noting that in the Company's third quarter of
fiscal year 2013 it won contracts totaling approximately $242 million. New
contracts and work orders range from implementing electronic health record
products and systems for commercial healthcare providers, to a number of new
federal programs in health information technology, life sciences, and
behavioral health services. This includes over $100 million in contracts from
its newly acquired healthcare IT consulting businesses maxIT Healthcare and
Vitalize Consulting Solutions.

The Company's backlog of signed business orders at the end of the third
quarter of fiscal year 2013 was $18.6 billion, of which $5.7 billion was
funded. As compared to the end of the third quarter of fiscal year 2012,
total backlog was flat while funded backlog decreased 8 percent. Negotiated
unfunded backlog does not include any estimate of future task orders expected
to be awarded under IDIQ, GSA Schedule or other master agreement contract
vehicles.

Subsequent Events

Subsequent to the end of the quarter, the Company completed the previously
announced sale of its operational test and evaluation services business. The
Company also entered into an issue resolution agreement with the Internal
Revenue Service with respect to the tax deductible portion of the March 2012
CityTime settlement payment, which will give rise to a $96 million reduction
in income tax expense during the fourth quarter of fiscal year 2013.
Additionally, the Company implemented a cost-reduction plan which will result
in the elimination of approximately 700 positions and an estimated severance
charge of approximately $15 million during the fourth quarter of fiscal year
2013, which will benefit the Company's cost structure at the beginning of the
next fiscal year.

Forward Guidance

Based upon its operating and business development performance through the
third quarter of the fiscal year and the subsequent events discussed above,
the Company is increasing its expectation for fiscal year 2013 diluted
earnings per share from continuing operations and cash flows from continuing
operations. The Company expects its fiscal year 2013 revenues to be
consistent with the forward guidance provided on August 30, 2012. The revised
fiscal year 2013 guidance is:

  oRevenues of $10.9 billion to $11.4 billion;
  oDiluted earnings per share from continuing operations of $1.49 to $1.54
    (previously, $1.26 to $1.36); and
  oCash flows from continuing operations at or above $200 million inclusive
    of the March 2012 CityTime payment, net of associated tax benefits

Fiscal year 2013 guidance excludes the impact of potential future acquisitions
and other non-ordinary course items.

About SAIC

SAIC is a FORTUNE 500^® scientific, engineering, and technology applications
company that uses its deep domain knowledge to solve problems of vital
importance to the nation and the world, in national security, energy and the
environment, critical infrastructure, and health. The Company's approximately
40,000 employees serve customers in the U.S. Department of Defense, the
intelligence community, the U.S. Department of Homeland Security, other U.S.
Government civil agencies and selected commercial markets. Headquartered in
McLean, Va., SAIC had annual revenues of approximately $10.6 billion for its
fiscal year ended January 31, 2012. For more information, visit
www.saic.com. SAIC: From Science to Solutions^®

Forward-Looking Statements

Certain statements in this release contain or are based on "forward-looking"
information within the meaning of the Private Securities Litigation Reform Act
of 1995. In some cases, you can identify forward-looking statements by words
such as "expects," "intends," "plans," "anticipates," "believes," "estimates,"
"guidance," and similar words or phrases. Forward-looking statements in this
release include, among others, estimates of future revenues, operating income,
earnings, earnings per share, charges, backlog, outstanding shares and cash
flows, as well as statements about future dividends, share repurchases and
acquisitions. These statements reflect our belief and assumptions as to future
events that may not prove to be accurate. Actual performance and results may
differ materially from the guidance and other forward-looking statements made
in this release depending on a variety of factors, including: our ability to
declare future dividends based on our earnings, financial condition, capital
requirements and other factors, including compliance with applicable law and
agreements of the Company; our ability to comply with certain agreements
entered into in connection with the CityTime settlement; developments in the
U.S. Government defense budget, including budget reductions, implementation of
spending cuts (including sequestration) or changes in budgetary priorities, or
delays in the U.S. Government budget process; delays in the U.S. Government
contract procurement process or the award of contracts and delays or loss of
contracts as a result of competitor protests; changes in U.S. Government
procurement rules, regulations and practices; our compliance with various U.S.
Government and other government procurement rules and regulations;
governmental reviews, audits and investigations of our company; our ability to
effectively compete and win contracts with the U.S. Government and other
customers; our ability to attract, train and retain skilled employees,
including our management team, and to obtain security clearances for our
employees; our ability to accurately estimate costs associated with our
firm-fixed-price and other contracts; cybersecurity, data security or other
security threats, systems failures or other disruptions of our business;
resolution of legal and other disputes with our customers and others or legal
or regulatory compliance issues; our ability to effectively acquire businesses
and make investments; our ability to maintain relationships with prime
contractors, subcontractors and joint venture partners; our ability to manage
performance and other risks related to customer contracts, including complex
engineering or design build projects; the failure of our inspection or
detection systems to detect threats; the adequacy of our insurance programs
designed to protect us from significant product or other liability claims; our
ability to manage risks associated with our international business; risks
associated with the proposed spin-off of our technical services business, such
as disruption to business operations, unanticipated expenses, significant
transaction costs and/or unknown liabilities, the timing of the spin-off or a
failure to complete the proposed spin-off or realize the expected benefits of
the proposed spin-off; and our ability to execute our business plan and
long-term management initiatives effectively and to overcome these and other
known and unknown risks that we face. These are only some of the factors that
may affect the forward-looking statements contained in this release. For
further information concerning risks and uncertainties associated with our
business, please refer to the filings we make from time to time with the U.S.
Securities and Exchange Commission, including the "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Legal Proceedings" sections of our latest annual report on
Form 10-K and quarterly reports on Form 10-Q, all of which may be viewed or
obtained through the Investor Relations section of our web site at
www.saic.com.

All information in this release is as of December 5, 2012. The Company
expressly disclaims any duty to update the guidance or any other
forward-looking statement provided in this release to reflect subsequent
events, actual results or changes in the Company's expectations. The Company
also disclaims any duty to comment upon or correct information that may be
contained in reports published by investment analysts or others.

CONTACTS:
Investor Relations:   Media Relations:
Paul Levi             Melissa Koskovich
(703)676-2283         (703)676-6762
Paul.E.Levi@saic.com koskovichm@saic.com



SAIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in millions, except per share amounts)
                             Three Months Ended       Nine Months Ended
                             October 31               October 31
                             2012        2011         2012        2011
Revenues                    $      $       $      $     
                             2,870      2,790       8,462      8,026
Costs and expenses:
 Cost of revenues           2,509       2,477        7,429       7,051
 Selling, general and        157         333          429         562
 administrative expenses
 Separation transaction      11          -            15          -
 expenses
Operating income (loss)      193         (20)         589         413
Non-operating income
(expense):
 Interest income            2           2            6           3
 Interest expense           (20)        (29)         (73)        (85)
 Other income (expense), net 2           (2)          8           3
Income (loss) from
continuing operations before 177         (49)         530         334
income taxes
Provision for income taxes   (65)        (43)         (193)       (188)
Income (loss) from           112         (92)         337         146
continuing operations
Discontinued operations:
 Income from discontinued
 operations before income    -           4            3           127
 taxes
 Provision for income taxes  -           (1)          (1)         (53)
Income from discontinued     -           3            2           74
operations
Net income (loss)            $      $       $      $     
                               112       (89)       339       220
Earnings per share (EPS):
 Income (loss) from         $      $       $      $     
 continuing operations, as     112       (92)       337       146
 reported
  Less: allocation of
  distributed and            (2)         -            (7)         (5)
  undistributed earnings to
  participating securities
 Income (loss) from         $      $       $      $     
 continuing operations, for    110       (92)       330       141
 computing EPS
 Net income (loss), as      $      $       $      $     
 reported                     112       (89)       339       220
  Less: allocation of
  distributed and            (2)         -            (7)         (8)
  undistributed earnings to
  participating securities
 Net income (loss), for     $      $       $      $     
 computing EPS                110       (89)       332       212
 Basic:
  Income (loss) from         $      $       $      $     
  continuing operations      0.33     (0.28)       0.99      0.42
  Income from discontinued   -           0.01         0.01        0.21
  operations
                             $      $       $      $     
                              0.33     (0.27)       1.00      0.63
 Diluted:
  Income (loss) from         $      $       $      $     
  continuing operations      0.33     (0.28)       0.99      0.42
  Income from discontinued   -           0.01         0.01        0.21
  operations
                             $      $       $      $     
                              0.33     (0.27)       1.00      0.63
 Weighted average number of
 shares outstanding:
  Basic                      334         329          333         338
  Diluted                   334         329          333         339





SAIC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in millions)
                                                October 31,      January 31,
                                                2012             2012
ASSETS
Current assets:
  Cash and cash equivalents                     $         $     
                                                531              1,592
  Receivables, net                              1,943            2,164
  Inventory, prepaid expenses and other         554              439
  current assets
  Assets of discontinued operations             34               36
         Total current assets                  3,062            4,231
Property, plant and equipment, net              319              348
Intangible assets, net                         214              176
Goodwill                                       2,195            1,800
Deferred income taxes                           -                37
Other assets                                   76               75
                                                $           $     
                                                5,866           6,667
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable and accrued liabilities     $           $     
                                                1,291           1,961
  Accrued payroll and employee benefits        624              504
  Income taxes payable                          41               -
  Notes payable and long-term debt, current     2                553
  portion
  Liabilities of discontinued operations        8                7
         Total current liabilities             1,966            3,025
Notes payable and long-term debt, net of        1,297            1,299
current portion
Other long-term liabilities                    148              162
Stockholders' equity:
  Common stock, $.0001 par value, 2 billion
  shares authorized, 342 million
   and 341 million shares issued and          -                -
  outstanding at October 31, 2012 and
   January 31, 2012, respectively
  Additional paid-in capital                   2,089            2,028
  Retained earnings                            367              164
  Accumulated other comprehensive loss         (1)              (11)
  Total stockholders' equity                    2,455            2,181
                                                $           $     
                                                5,866           6,667



SAIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in millions)
                                Three Months Ended     Nine Months Ended
                                October 31             October 31
                                2012      2011         2012        2011
Cash flows from operating
activities of continuing
operations:
 Net income (loss)              $     $       $      $     
                                   112   (89)       339       220
 Income from discontinued       -         (3)          (2)         (74)
 operations
 Adjustments to reconcile net
 income to net cash provided by
 operating activities
 ofcontinuing operations:
  Depreciation and              30        31           85          86
  amortization
  Stock-based compensation      21        21           67          64
  Impairment losses             1         19           2           19
  Net gain on sales and         (1)       (4)          (7)         (32)
  disposals of assets
  Other                         2         (1)          3           -
  Increase (decrease) in cash
  and cash equivalents, net of
  acquisitions and
  divestitures, resulting from
  changes in:
   Receivables                86        (46)         271         (94)
   Inventory, prepaid
  expenses and other current    (106)     24           (79)        38
  assets
   Deferred income taxes     (4)       (12)         (4)         (11)
   Other assets              (2)       (3)          (1)         (21)
   Accounts payable and       (33)      320          (697)       322
  accrued liabilities
   Accrued payroll and        151       159          118         104
  employee benefits
   Income taxes payable      32        8            35          10
   Other long-term            6         (3)          4           (4)
  liabilities
Total cash flows provided by
operating activities of         295       421          134         627
continuing operations
Cash flows from investing
activities of continuing
operations:
 Expenditures for property,     (10)      (18)         (43)        (48)
 plant and equipment
 Acquisition of a business, net (478)     (190)        (478)       (216)
 of cash acquired
 Net receipt (payments) for
 purchase price adjustments     -         (1)          1           (4)
 related to prior year
 acquisitions
 Proceeds from sale of assets   1         5            3           84
 Other                          -         -            -           (1)
Total cash flows used in
investing activities of         (487)     (204)        (517)       (185)
continuing operations
Cash flows from financing
activities of continuing
operations:
 Payments on notes payable and  (1)       (1)          (553)       (3)
 long-term debt
 Sales of stock and exercises   5         7            15          21
 of stock options
 Repurchases of stock           (1)       (53)         (21)        (470)
 Dividend payments              (41)      -            (124)       -
 Other                          -         -            -           (2)
Total cash flows used in
financing activities of         (38)      (47)         (683)       (454)
continuing operations
Increase (decrease) in cash and
cash equivalents from           (230)     170          (1,066)     (12)
continuing operations
Cash flows from discontinued
operations:
 Cash provided by (used in)
 operating activities of        5         (45)         5           (61)
 discontinued operations
 Cash provided by investing
 activities of discontinued     -         2            -           168
 operations
Increase (decrease) in cash and
cash equivalents from           5         (43)         5           107
discontinued operations
Effect of foreign currency
exchange rate changes on cash   -         -            -           1
and cash equivalents
Total increase (decrease) in    (225)     127          (1,061)     96
cash and cash equivalents
Cash and cash equivalents at    756       1,336        1,592       1,367
beginning of period
Cash and cash equivalents at    $     $       $      $     
end of period                      531 1,463         531     1,463





SAIC, INC.
BACKLOG BY REPORTABLE SEGMENT
(Unaudited, $ in millions)
Backlog represents the estimated amount of future revenues to be recognized
under negotiated contracts as work is performed and excludes contract awards
which have been protested by competitors. SAIC, Inc. segregates its 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 on a quarterly or annual
basis 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 on contracts, which may
cover multiple future years, under which SAIC, Inc. is obligated to perform,
less revenues previously recognized on these contracts. Negotiated unfunded
backlog represents the estimated amounts of revenues to be earned in the
future from (1) negotiated contracts for which funding has not been
appropriated or otherwise authorized and (2) unexercised priced contract
options. Negotiated unfunded backlog does not include any estimate of future
potential task orders expected to be awarded under IDIQ, GSA Schedule, or
other master agreement contract vehicles.

The estimated value of backlog as of the dates presented was as follows:

                              October 31, July 31,     April 30,   January 31,
                              2012        2012         2012        2012
Defense Solutions:
    Funded backlog            $      $       $      $     
                              2,174      2,013       2,026      2,143
    Negotiated unfunded       4,563       4,309        4,605       4,961
    backlog
    Total Defense Solutions   $      $       $      $     
    backlog                   6,737      6,322       6,631      7,104
Health, Energy and Civil
Solutions:
    Funded backlog            $      $       $      $     
                              1,842      1,858       1,911      2,057
    Negotiated unfunded       2,854       2,865        3,061       3,238
    backlog
    Total Health, Energy and  $      $       $      $     
    Civil Solutions backlog   4,696      4,723       4,972      5,295
Intelligence and
Cybersecurity Solutions:
    Funded backlog            $      $       $      $     
                              1,705      1,615       1,752      1,317
    Negotiated unfunded       5,440       3,867        3,880       4,169
    backlog
    Total Intelligence and    $      $       $      $     
    Cybersecurity Solutions   7,145      5,482       5,632      5,486
    backlog
Total:
    Funded backlog            $      $       $      $     
                              5,721      5,486       5,689      5,517
    Negotiated unfunded       12,857      11,041       11,546      12,368
    backlog
    Total backlog             $       $        $       $    
                              18,578     16,527      17,235     17,885





SAIC, INC.
INTERNAL REVENUE GROWTH (CONTRACTION) PERCENTAGE CALCULATIONS (NON-GAAP
RECONCILIATION)
(Unaudited, $ in millions)
In this release, SAIC, Inc. refers to internal revenue growth (contraction)
percentage, which is a non-GAAP financial measure that is reconciled to the
most directly comparable GAAP financial measure. The Company calculates its
internal revenue growth (contraction) percentage by comparing reported
revenues for the current year period to the revenues for the prior year period
adjusted to include the actual revenues of acquired businesses for the
comparable prior year period before acquisition. This calculation has the
effect of adding revenues for the acquired businesses for the comparable prior
year period to the company's prior year period reported revenues.

SAIC, Inc. uses internal revenue growth (contraction) percentage as an
indicator of how successful it is at growing its base business and how
successful it is at growing the revenues of the businesses that it acquires.
The integration of acquired businesses allows current management to leverage
business development capabilities, drive internal resource collaboration,
utilize access to markets and qualifications, and refine strategies to realize
synergies, which benefits both acquired and existing businesses. As a result,
the performance of the combined enterprise post-acquisition is an important
measurement. In addition, as a means of rewarding the successful integration
and growth of acquired businesses, and not acquisitions themselves, incentive
compensation for executives and the broader employee population is based, in
part, on achievement of revenue targets linked to internal revenue growth.

The limitation of this non-GAAP financial measure as compared to the most
directly comparable GAAP financial measure is that internal revenue growth
(contraction) percentage is one of two components of the total revenue growth
(contraction) percentage, which is the most directly comparable GAAP financial
measure. The company addresses this limitation by presenting the total revenue
growth (contraction) percentage next to or near disclosures of internal
revenue growth (contraction) percentage. This financial measure is not meant
to be considered in isolation or as a substitute for comparable GAAP measures
and should be read only in conjunction with SAIC, Inc.'s consolidated
financial statements prepared in accordance with GAAP. The method that the
Company uses to calculate internal revenue growth (contraction) percentage is
not necessarily comparable to similarly titled financial measures presented by
other companies.

Internal revenue growth (contraction) percentages for the three and nine
months ended October 31, 2012 were calculated as follows:

                                              Three Months     Nine Months
                                              Ended            Ended
                                              October 31,      October 31,
                                              2012             2012
Defense Solutions:
    Prior year period's revenues, as          $           $     
    reported                                  1,117           3,339
    Revenues of acquired businesses for the   -                -
    comparable prior year period
    Prior year period's revenues, as          $           $     
    adjusted                                  1,117           3,339
    Current year period's revenues, as        1,183            3,597
    reported
    Internal revenue growth                   $         $       
                                               66             258
    Internal revenue growth percentage        6%               8%
Health, Energy and Civil Solutions:
    Prior year period's revenues, as          $         $     
    reported                                  726              1,997
    Revenues of acquired businesses for the   46               127
    comparable prior year period
    Prior year period's revenues, as          $         $     
    adjusted                                  772              2,124
    Current year period's revenues, as        743              2,077
    reported
    Internal revenue contraction              $         $       
                                              (29)             (47)
    Internal revenue contraction percentage   -4%              -2%
Intelligence and Cybersecurity Solutions:
    Prior year period's revenues, as          $         $     
    reported                                  947              2,691
    Revenues of acquired businesses for the   -                -
    comparable prior year period
    Prior year period's revenues, as          $         $     
    adjusted                                  947              2,691
    Current year period's revenues, as        945              2,792
    reported
    Internal revenue growth (contraction)     $         $       
                                               (2)            101
    Internal revenue growth (contraction)     0%               4%
    percentage
Total*:
    Prior year period's revenues, as          $           $     
    reported                                  2,790           8,026
    Revenues of acquired businesses for the   46               127
    comparable prior year period
    Prior year period's revenues, as          $           $     
    adjusted                                  2,836           8,153
    Current year period's revenues, as        2,870            8,462
    reported
    Internal revenue growth                   $         $       
                                               34             309
    Internal revenue growth percentage        1%               4%
*Total revenues include amounts related to Corporate and Other and
intersegment eliminations.





SAIC, INC.
CONDENSED CONSOLIDATED INCOME STATEMENT EXCLUDINGTHE CITYTIME LOSS PROVISION
(NON-GAAP RECONCILIATION)
(Unaudited, $ in millions, except per share amounts)


In this release, SAIC, Inc. refers to operating income, operating margin,
income from continuing operations and diluted earnings per share (EPS) from
continuing operations excluding the CityTime loss provision, which are
non-GAAP financial measures. The Company calculates these measures by
excluding the CityTime loss provision from operating income, operating margin,
income from continuing operations and diluted EPS from continuing operations,
the most directly comparable GAAP financial measures.



The Company uses these non-GAAP financial measures to provide investors with
visibility to how its business performed excluding the CityTime loss
provision. The limitation of these non-GAAP financial measures as compared to
the most directly comparable GAAP financial measures is that the Company has
recorded the CityTime loss provision which is not reflected in these non-GAAP
financial measures. The Company addresses this limitation by presenting this
reconciliation to the most directly comparable GAAP financial measures. These
financial measures are not meant to be considered in isolation or as a
substitute for comparable GAAP financial measures and should be read only in
connection with the Company's consolidated financial statements prepared in
accordance with GAAP.

Three Months Ended October 31,   As Reported    CityTime Loss    As Adjusted
2011                                            Provision
Revenues                         $          $         $    
                                 2,790         52              2,842
Cost of revenues                 2,477          -                2,477
Selling, general and             333            (180)            153
administrative expenses
Operating income (loss)          (20)           232              212
Non-operating expenses, net      (29)           -                (29)
Income (loss) from continuing    (49)           232              183
operations before income taxes
Provision for income taxes       (43)           (23)             (66)
Income (loss) from continuing    (92)           209              117
operations
Income from discontinued         3              -                3
operations, net of tax
Net income (loss)                $        $          $      
                                 (89)          209             120
Operating margin                 -0.7%                           7.5%
Diluted EPS from continuing      $                          $     
operations                       (0.28)                          0.34
Nine Months Ended October 31,    As Reported    CityTime Loss    As Adjusted
2011                                            Provision
Revenues                         $          $         $    
                                 8,026         52              8,078
Cost of revenues                 7,051          -                7,051
Selling, general and             562            (180)            382
administrative expenses
Operating income                 413            232              645
Non-operating expenses, net      (79)           -                (79)
Income from continuing           334            232              566
operations before income taxes
Provision for income taxes       (188)          (23)             (211)
Income from continuing           146            209              355
operations
Income from discontinued         74             -                74
operations, net of tax
Net income                       $        $          $      
                                 220            209             429
Operating margin                 5.1%                            8.0%
Diluted EPS from continuing      $                          $     
operations                       0.42                           1.01





SAIC, INC.
DEFENSE SOLUTIONS SEGMENT
CONDENSED CONSOLIDATED INCOME STATEMENT EXCLUDING THE CITYTIME LOSS PROVISION
(NON-GAAP RECONCILIATION)
(Unaudited, $ in millions)
In this release, SAIC, Inc. refers to revenue, operating income and operating
margin of the Defense Solutions segment excluding the CityTime loss provision,
which are non-GAAP financial measures. The Company calculates these measures
by excluding the CityTime loss provision from Defense Solutions revenues,
operating income and operating margin, the most directly comparable GAAP
financial measures.



The Company uses these non-GAAP financial measures to provide investors with
visibility to how its business performed excluding the CityTime loss
provision. The limitation of these non-GAAP financial measures as compared to
the most directly comparable GAAP financial measures is that the Company has
recorded the CityTime loss provision which is not reflected in these non-GAAP
financial measures. The Company addresses this limitation by presenting this
reconciliation to the most directly comparable GAAP financial measures. These
financial measures are not meant to be considered in isolation or as a
substitute for comparable GAAP financial measures and should be read only in
connection with the Company's consolidated financial statements prepared in
accordance with GAAP.

Three Months Ended October    As Reported  CityTime Loss           As Adjusted
31, 2011                                   Provision
Revenues                      1,117        52                      1,169
Operating income (loss)       (133)        232                     99
Operating margin              -11.9%                               8.5%
Nine Months Ended October     As Reported  CityTime Loss           As Adjusted
31, 2011                                   Provision
Revenues                      3,339        52                      3,391
Operating income              45           232                     277
Operating margin              1.3%                                 8.2%

SOURCE SAIC

Website: http://www.saic.com