SAIC Announces Financial Results for Second Quarter of Fiscal Year 2014

   SAIC Announces Financial Results for Second Quarter of Fiscal Year 2014

- Revenues: $2.47 billion

- Operating Income: $75 million

- Diluted EPS from Continuing Operations: $0.13

-Cash Flows from Continuing Operations: $217 million

-Net New Bookings: $1.86 billion (book-to-bill ratio of 0.75)

PR Newswire

MCLEAN, Va., Sept. 4, 2013

MCLEAN, Va., Sept. 4, 2013 /PRNewswire/ --SAIC, Inc. (NYSE: SAI), a
scientific, engineering, and technology applications company, today announced
financial results for the second quarter of fiscal year 2014, which ended
August 2, 2013. 

"This quarter we experienced both operational successes and challenges. Our
financial results and outlook were impacted by a number of discrete items
relating to the planned separation of SAIC into two companies, net charges for
underperforming programs and contracts coupled with the ongoing effects of
sequestration. As a result, we have prudently chosen tolower our fiscal year
2014 guidance, not only to address these items but because of the continuing
challenges posed by the current environment. Nevertheless, the business
continues to generate strong operating cash flow, which exceeded $200 million
in the quarter. Furthermore, we continue to make progress on our cost
containment programs and improved rates that will benefit us as we move
forward ultimately as two highly focused and purpose built companies," said
John P. Jumper, SAIC Chairman and Chief Executive Officer. "The entire SAIC
leadership team and our nearly 37,000 employees remain excited and committed
to the planned separation and the enormous potential of two new companies to
be more competitive in the markets they will address."

Summary Results

Revenues for the second quarter of fiscal year 2014 were $2.47 billion,
compared to $2.83 billion in the second quarter of fiscal year 2013,
reflecting a revenue contraction of 12 percent andan internal revenue
contraction of 15 percent. Revenues were impacted by the ramp down of certain
contracts, drawdowns of overseas U.S. military forces and the reduction of the
U.S. Government budget, partially offset by growth in the Health and
Engineering segment primarily resulting from the fiscal year 2013 acquisition
of maxIT Healthcare Holdings, Inc. The ramp down of two programs, Joint
Logistics Integration (JLI) and DISN Global Solutions (DGS), accounted for 5
percent of the revenue contraction year over year. Internal revenue
contraction for the quarter would have been 13 percent without the negative
impact of $38 million in revenues for the one less working day as compared to
the second quarter of fiscal year 2013.

Operating income for the quarter was $75 million (3.0 percent of revenues),
down from $189 million (6.7 percent of revenues) in the second quarter of
fiscal year 2013. The reduction in operating income was primarily attributable
to $35 million of separation transaction expenses, a non-cash $30 million
intangible asset impairment charge, $29 million for the increase in the net
unfavorable changes in contract cost estimates and $26 million related to the
contraction in revenue.

Diluted earnings per share from continuing operations for the quarter were
$0.13, down 59 percent from $0.32 in the second quarter of fiscal year 2013.
This decline was primarily attributable to the aforementioned operating income
reductions that translated to a reduction in income from continuing operations
of $64 million. The diluted share count for the quarter was 341 million, up 2
percent from 333 million in the second quarter of fiscal year 2013.

Segment Operating Results

Effective February 1, 2013, in preparation for the planned separation
transaction, the Company redefined its reportable segments into the reportable
segments referenced in the chart below. Following completion of the planned
separation transaction, the Technical Services and Information Technology
segment will operate as an independent publicly traded company under the name
Science Applications International Corporation, and the Health and Engineering
and National Security Solutions segments will operate as a separate
independent publicly traded company under the name Leidos Holdings, Inc. The
segment information for the second quarter of fiscal year 2013 has been recast
to give effect to the change in reportable segments and for discontinued
operations.

                           Three Months Ended
                           August 2,       July 31,         Revenue Growth (%)
                           2013            2012             Total   Internal
                           ($ millions)
Revenues:
Health and Engineering     $         $          8%      -8%
                           451             417
National Security          1,022           1,209            -15%    -15%
Solutions
Technical Services and
Information
 Technology               1,009           1,202            -16%    -16%
Corporate and other        (7)             -                n/a     n/a
Intersegment Elimination   (1)             (2)              n/a     n/a
Total                      $           $            -12%    -15%
                           2,474          2,826
                                                            Operating Margin
                                                            2013    2012
Operating Income (Loss):
Health and Engineering     $        $         0.9%    8.2%
                            4             34
National Security          79              104              7.7%    8.6%
Solutions
Technical Services and
Information
 Technology               68              75               6.7%    6.2%
Corporate and Other        (76)            (24)             n/a     n/a
Total                      $        $          3.0%    6.7%
                           75              189
                           Six Months Ended
                           August 2,       July 31,         Revenue Growth (%)
                           2013            2012             Total   Internal
                           ($ millions)
Revenues:
Health and Engineering     $         $          17%     0%
                           972             833
National Security          2,101           2,393            -12%    -12%
Solutions
Technical Services and
Information
 Technology               2,116           2,365            -11%    -11%
Corporate and other        (7)             -                n/a     n/a
Intersegment Elimination   (2)             (2)              n/a     n/a
Total                      $           $            -7%     -10%
                           5,180          5,589
                                                            Operating Margin
                                                            2013    2012
Operating Income (Loss):
Health and Engineering     $        $         4.6%    8.3%
                           45              69
National Security          157             200              7.5%    8.4%
Solutions
Technical Services and
Information
 Technology               139             160              6.6%    6.8%
Corporate and Other        (123)           (31)             n/a     n/a
Total                      $         $          4.2%    7.1%
                           218             398

Health and Engineering

Health and Engineering revenues increased $34 million, or 8 percent, for the
second quarter of fiscal year 2014 as compared to the second quarter of fiscal
year 2013. Revenue growth was due to the August 2012 acquisition of maxIT
Healthcare Holdings, Inc., a provider of healthcare IT consulting services to
commercial clients. Internal revenue contracted by 8 percent and internal
revenue would have contracted by 7 percent without the negative impact of $6
million in revenues for the one less working day as compared to the second
quarter of fiscal year 2013. Internal revenue contraction reflects a decline
in our health business driven by program completions and lower levels of U.S.
Government funding including reductions in Medicaid and Medicare
reimbursements and a decline in engineering services for U.S. Government
customers. These declines were partially offset by increased unit deliveries
and related maintenance of our non-intrusive inspection engineering products.

Health and Engineering operating income decreased $30 million, or 88 percent,
for the second quarter of fiscal year 2014 as compared to the second quarter
of fiscal year 2013. The decrease was primarily attributable to an impairment
charge of intangible assets acquired in August 2010 in connection with the
acquisition of Reveal Imaging Technologies, a provider of threat detection
products and services. There was also an increase in the net unfavorable
changes in contract estimates primarily related to an energy fixed-priced
construction project and lower operating income from the commercial health
business primarily due to lower margins coupled with an increase in intangible
asset amortization expense. These decreases were partially offset by higher
revenue attributed to deliveries of engineering products, which typically
generate higher margins.

National Security Solutions

National Security Solutions revenues decreased $187 million, or 15 percent,
all of which was internal revenue contraction, for the second quarter of
fiscal year 2014 as compared to the second quarter of fiscal year 2013.
Revenue contraction for the quarter would have been 14 percent without the
negative impact of $16 million in revenues for the one less working day as
compared to the second quarter of fiscal year 2013. Revenue contraction was
primarily attributable to the ramp down of the JLI program for tactical mine
resistant ambush protected vehicles and the completion of several intelligence
programs, with the remainder of the decline driven by the reduction of the
U.S. Government budget resulting from sequestration and drawdowns of overseas
U.S. military forces. This contraction was partially offset by increased
revenues related to three new intelligence contracts for classified customers
and one new intelligence information processing, exploitation, and
dissemination program.

National Security Solutions operating income decreased $25 million, or 24
percent, for the second quarter of fiscal year 2014 as compared to the second
quarter of fiscal year 2013. This decrease was primarily attributable to lower
revenues and a net unfavorable change in contract estimates compared to a net
favorable change in the second quarter of fiscal year 2013, primarily
attributable to increased expenses on two international fixed price
development programs, partially offset by a reduction in indirect costs.

Technical Services and Information Technology

Technical Services and Information Technology revenues decreased $193 million,
or 16 percent, all of which was internal revenue contraction, for the second
quarter of fiscal year 2014 as compared to the second quarter of fiscal year
2013. Revenue contraction for the quarter would have been 15 percent without
the negative impact of $16 million in revenues for the one less working day as
compared to the second quarter of fiscal year 2013. Revenue contraction was
primarily attributable to the ramp down of the DGS program with the Defense
Information Systems Agency and the completion of a network operational
management program for the U.S. Forces in Afghanistan, with the remainder of
the decline driven by the slower U.S. Government contracting ordering
environment resulting from sequestration.

Technical Services and Information Technology operating income decreased $7
million, or 9 percent, for the second quarter of fiscal year 2014 as compared
to the second quarter of fiscal year 2013. This decrease was primarily due to
lower revenues, including the ramp down of the DGS program which had
relatively higher profit margins, partially offset by a reduction in indirect
costs.

Corporate and Other

Corporate and Other segment operating loss for the quarter increased from the
second quarter of fiscal year 2013 primarily due to expenses incurred in
connection with the planned separation transaction of $35 million and costs to
establish infrastructures for the two future companies of $14 million.

Cash Generation and Capital Deployment

Cash flow provided by continuing operations for the quarter was $217 million
which is relatively consistent with $200 million for the second quarter of
fiscal year 2013.

During the quarter, the Company paid a cash dividend of $1.12 per share, which
included a special cash dividend of $1.00 per share that was paid in June
2013, for a total cash outlay of $383 million. 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 August 2, 2013, the Company had $462 million in cash and cash
equivalents and $1.3 billion in long-term debt.

New Business Awards

Net business bookings totaled $1.86 billion in the second quarter of fiscal
year 2014, representing a book-to-bill ratio of 0.75. Notable recent awards
received include:

  oUnited States Marine Corps. The Company was awarded a prime contract by
    the U.S. Marine Corps Logistics Command to provide responsive logistics
    support to meet the evolving mission needs of the war fighter. The
    multiple-award, indefinite-delivery/indefinite quantity contract has a
    one-year base period of performance, four one-year options, and a total
    contract value of $854 million for all awardees, if all options are
    exercised.
  oU.S. Federal Government. The Company was awarded $522 million, if all
    options are exercised, in 154 separate awards by U.S. Federal Government
    clients in the national security and intelligence communities. Though the
    specific nature of these contracts may be classified, they all encompass
    mission-critical services that help to counter global threats and
    strengthen national security.
  oOrange County, California. The Company was awarded a prime contract by
    Orange County, California to provide information technology managed
    services to assist county modernization of infrastructure and applications
    systems. The single award firm fixed-price contract has a five year base
    period of performance valued at more than $74 million, two one-year
    options, and a total contract value of approximately $102 million, if all
    options are exercised.
  oIndian Health Service Company. The Company was awarded a task order by
    Indian Health Service Company to deploy improved electronic dental health
    record to American Indians and Alaska Natives. The single-award firm
    fixed-price/time and materials task order has a one-year base period of
    performance, four one-year options, and a total contract value of
    approximately $17 million, if all options are exercised. The task order
    was awarded under the General Services Administration's Alliant
    government-wide acquisition contract.

The Company's backlog of signed business orders at the end of the second
quarter of fiscal year 2014 was $15.88 billion, of which $4.56 billion was
funded. As compared to the end of the second quarter of fiscal year 2013,
total backlog decreased 4 percent and funded backlog decreased 17 percent.
Negotiated backlog does not include any estimate of future task orders
expected to be awarded under IDIQ, GSA Schedule or other master agreement
contract vehicles.

Forward Guidance

Based upon its operating and business development performance through the
second quarter of the fiscal year, the Company revised its previously issued
guidance for revenues and diluted earnings per share from continuing
operations. These expectations are:

  oRevenues of $9.7 billion to $10.2 billion;
  oDiluted earnings per share from continuing operations of $0.95 to $1.03;
    and
  oCash flows from continuing operations at or above $450 million
    (unchanged).

The guidance is based on SAIC, Inc. operating for the full fiscal year as one
company, yet includes substantial costs to prepare for the previously
announced separation transaction. If the separation occurs during fiscal year
2014 as is currently contemplated, it is expected that guidance policies will
be provided for each of the two separate companies at the time of the
separation. Fiscal year 2014 guidance excludes the impact of potential future
acquisitions and other non-ordinary course items.

About SAIC

SAIC management will discuss operations and financial results in an earnings
conference call beginning at 8 a.m. eastern on September 4, 2013. A live
audio broadcast of the conference call along with a supplemental presentation
will be available to the public through links on the Investor Relations
section of the SAIC web site (http://investors.saic.com).

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
38,000 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 $11.2 billion for its
fiscal year ended January 31, 2013. 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: developments in
the U.S. Government defense budget, including budget reductions,
implementation of spending cuts (sequestration) or changes in budgetary
priorities; delays in the U.S. Government budget process or approval to raise
the U.S. debt ceiling; delays in the U.S. Government contract procurement
process or the award of contracts; delays or loss of contracts as 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; our
ability to comply with certain agreements entered into in connection with the
CityTime matter; 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; our ability to declare future
dividends based on our earnings, financial condition, capital requirements and
other factors, including compliance with applicable laws and contractual
agreements; risks associated with the proposed spin-off of our technical,
engineering and enterprise information technology services business, such as
disruption to business operations, unanticipated expenses, significant
transaction costs and/or 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 September 4, 2013. 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:
Paul Levi
(703)676-2283
Paul.E.Levi@saic.com

Media Relations:
Melissa Koskovich
(703)676-6762
koskovichm@saic.com



SAIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in millions, except per share amounts)
                              Three Months Ended       Six Months Ended
                              August 2    July 31      August 2    July 31
                              2013        2012         2013        2012
Revenues                     $      $       $      $     
                              2,474      2,826       5,180      5,589
Costs and expenses:
 Cost of revenues            2,217       2,485        4,594       4,917
 Selling, general and         117         152          266         274
 administrative expenses
 Impairment losses            30          -            34          -
 Separation transaction       35          -            68          -
 expenses
Operating income             75          189          218         398
Non-operating income:
 Interest income             6           2            10          4
 Interest expense            (19)        (24)         (39)        (53)
 Other income, net            -           4            1           6
Income from continuing
operations before income      62          171          190         355
taxes
Provision for income taxes    (18)        (63)         (64)        (129)
Income from continuing        $      $       $      $     
operations                       44      108        126       226
Discontinued operations
 Income (loss) from
 discontinued operations      (4)         2            (5)         1
 before income taxes
 Provision for income taxes   2           -            2           -
Income (loss) from            (2)         2            (3)         1
discontinued operations
Net Income                    $      $       $      $     
                                 42      110        123       227
Earnings per share (EPS):
 Basic EPS:
 Net income, as reported    $      $       $      $     
                                 42      110        123       227
  Less: allocation of
  distributed and             -           (2)          (3)         (6)
  undistributed earnings to
  participating securities
 Net income, for computing   $      $       $      $     
 EPS                            42      108        120       221
 Diluted EPS:
 Net income, as reported    $      $       $      $     
                                 42      110        123       227
  Less: allocation of
  distributed and             -           (2)          (3)         (6)
  undistributed earnings to
  participating securities
 Net income, for computing   $      $       $      $     
 EPS                            42      108        120       221
 Basic:
  Income from continuing      $      $       $      $     
  operations                  0.13      0.32       0.37      0.66
  Income (loss) from          (0.01)      -            (0.01)      0.01
  discontinued operations
                              $      $       $      $     
                               0.12      0.32       0.36      0.67
 Diluted:
  Income from continuing      $      $       $      $     
  operations                  0.13      0.32       0.37      0.66
  Income (loss) from          (0.01)      -            (0.01)      0.01
  discontinued operations
                              $      $       $      $     
                               0.12      0.32       0.36      0.67
 Weighted average number of
 shares outstanding:
  Basic                       337         333          336         332
  Diluted                    341         333          336         332
 Cash dividends declared per  $      $       $      $     
 share                         0.12      0.12       1.24      0.24





SAIC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in millions)
                                               August 2       January 31
                                               2013           2013
ASSETS
Current assets:
 Cash and cash equivalents                     $        $       
                                                462          736
 Receivables, net                              1,989          1,885
 Inventory, prepaid expenses and other current 350            443
 assets
 Assets of discontinued operations            15             20
        Total current assets                  2,816          3,084
Property, plant and equipment, net             280            317
Intangible assets, net                        128            187
Goodwill                                      2,195          2,195
Deferred income taxes                          13             14
Other assets                                  79             78
                                               $         $     
                                               5,511         5,875
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable and accrued liabilities     $         $     
                                               1,178         1,249
 Accrued payroll and employee benefits        478            542
 Notes payable and long-term debt, current     3              2
 portion
        Total current liabilities             1,659          1,793
Notes payable and long-term debt, net of       1,332          1,296
current portion
Other long-term liabilities                   175            168
Stockholders' equity:
 Common stock, $.0001 par value, 2 billion
 shares authorized, 343 million and 342
 million shares issued
        and outstanding at August 2, 2013 and  -              -
        January 31, 2013
 Additional paid-in capital                   2,165          2,110
 Retained earnings                            182            510
 Accumulated other comprehensive loss         (2)            (2)
 Total stockholders' equity                    2,345          2,618
                                               $         $     
                                               5,511         5,875





SAIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in millions)
                                Three Months Ended       Six Months Ended
                                August 2    July 31      August 2    July 31
                                2013        2012         2013        2012
Cash flows from operating
activities:
 Net income                    $      $       $      $    
                                   42      110        123        227
 Income from discontinued       2           (2)          3           (1)
 operations
 Adjustments to reconcile net
 income to net cash provided by
 operations:
  Depreciation and              28          28           58          56
  amortization
  Stock-based compensation      21          22           45          46
  Impairment losses             30          1            34          1
  Inventory write-down          3           -            3           -
  Net loss (gain)on sales and  3           (5)          (7)         (6)
  disposals of assets
  Other                         2           -            4           1
  Increase (decrease) in cash
  and cash equivalents, net of
  effects of acquisitions and
  divestitures, resulting from
  changes in:
   Receivables                71          183          (104)       188
   Inventory, prepaid
  expenses and other current    13          41           73          25
  assets
   Deferred income taxes     1           -            -           -
   Other assets              (1)         1            3           1
   Accounts payable and       (33)        (110)        (71)        (664)
  accrued liabilities
   Accrued payroll and        30          (41)         (62)        (32)
  employee benefits
   Income taxes payable      3           (25)         -           3
   Other long-term            2           (3)          4           (2)
  liabilities
Total cash flow provided
by(used in) operating          217         200          106         (157)
activities of continuing
operations
Cash flows from investing
activities:
 Expenditures for property,     (13)        (25)         (32)        (33)
 plant and equipment
 Proceeds from sale of assets   40          2            65          2
 Other                          (1)         -            1           1
Total cash flows provided by
(used in) investing activities  26          (23)         34          (30)
of continuing operations
Cash flows from financing
activities:
 Payments on notes payable and  (1)         (551)        (1)         (552)
 long-term debt
 Payments for deferred          (5)         -            (5)         -
 financing costs
 Proceeds of leasehold          38          -            38          -
 financing liability
 Sales of stock and exercises   4           6            8           10
 of stock options
 Repurchases of stock           (1)         (1)          (17)        (20)
 Dividend payments              (383)       (42)         (424)       (83)
 Other                          2           -            2           -
Total cash flows used in
financing activities of         (346)       (588)        (399)       (645)
continuing operations
Decrease in cash and cash
equivalents from continuing     (103)       (411)        (259)       (832)
operations
Cash flows from discontinued
operations:
 Cash provided by(used in)
 operating activities of        2           (4)          (15)        (4)
 discontinued operations
Decrease in cash and cash
equivalents from discontinued   2           (4)          (15)        (4)
operations
Total decrease in cash and cash (101)       (415)        (274)       (836)
equivalents
Cash and cash equivalents at    563         1,167        736         1,592
beginning of period
Cash and cash equivalents at    $      $       $      $    
end of period                     462       752        462        756





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 revenue 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:

                                        August 2,     May 3,       January 31,
                                        2013          2013         2013
Health and Engineering:
    Funded backlog                      $       $       $     
                                         996         1,094       1,295
    Negotiated unfunded backlog         669           664          676
    Total Health and Engineering        1,665         1,758        1,971
    backlog
National Security Solutions:
    Funded backlog                      1,900         1,877        2,119
    Negotiated unfunded backlog         5,442         5,737        6,037
    Total National Security Solutions   7,342         7,614        8,156
    backlog
Technical Services and Information
Technology:
    Funded backlog                      1,664         1,733        1,945
    Negotiated unfunded backlog         5,209         5,389        5,802
    Total Technical Services and        6,873         7,122        7,747
    Information Technology backlog
Total:
    Funded backlog                      4,560         4,704        5,359
    Negotiated unfunded backlog         11,320        11,790       12,515
    Total backlog                       $         $        $    
                                        15,880       16,494      17,874





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 revenue
for the current year period to the revenue for the prior year period adjusted
to include the actual revenue of acquired businesses for the comparable prior
year period before acquisition. This calculation has the effect of adding
revenue for the acquired businesses for the comparable prior year period to
the company's prior year period reported revenue.



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 senior management 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 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 were calculated as follows:

                                             Three Months     Six Months
                                             Ended            Ended
                                             August 2,        August 2,
                                             2013             2013
Health and Engineering:
    Prior year period's revenues, as         $         $       
    reported                                 417              833
    Revenues of acquired businesses for the  72               135
    comparable prior year period
    Prior year period's revenues, as         489              968
    adjusted
    Current year period's revenues, as       451              972
    reported
    Internal revenue growth (contraction)    $         $       
                                             (38)               4
    Internal revenue growth (contraction)    -8%              0%
    percentage
National Security Solutions:
    Prior year period's revenues, as         $           $     
    reported                                 1,209           2,393
    Revenues of acquired businesses for the  -                -
    comparable prior year period
    Prior year period's revenues, as         1,209            2,393
    adjusted
    Current year period's revenues, as       1,022            2,101
    reported
    Internal revenue contraction             $          $      
                                             (187)            (292)
    Internal revenue contraction percentage  -15%             -12%
Technical Services and Information
Technology:
    Prior year period's revenues, as         $           $     
    reported                                 1,202           2,365
    Revenues of acquired businesses for the  -                -
    comparable prior year period
    Prior year period's revenues, as         1,202            2,365
    adjusted
    Current year period's revenues, as       1,009            2,116
    reported
    Internal revenue contraction             $          $      
                                             (193)            (249)
    Internal revenue contraction percentage  -16%             -11%
Total*:
    Prior year period's revenues, as         $           $     
    reported                                 2,826           5,589
    Revenues of acquired businesses for the  72               135
    comparable prior year period
    Prior year period's revenues, as         2,898            5,724
    adjusted
    Current year period's revenues, as       2,474            5,180
    reported
    Internal revenue contraction             $          $      
                                             (424)            (544)
    Internal revenue contraction percentage  -15%             -10%
* Total revenues include amounts related to Corporate and Other and
intersegment eliminations.



SOURCE SAIC

Website: http://www.saic.com
 
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