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Contributors: Douglas McIntyre Jon C. Ogg

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Monday, September 11, 2006

SAIC On Track For Its IPO (Complete Story)

SAIC's Proposed IPO is Still coming along and the company will trade under the approved ticker of "SAI" on the NYSE. It appears as though the company has a vote set for September 27 to vote for the proposed IPO. This one has been years in the making, so while on we noted "on track" please understand we are referring to a government contractor that has many risks due to its business operations. Last year the company made an IPO filing for up to $1.73 Billion in security sales.

The company put in its amended S-1 filing, although we have not compared this yet to prior documents. The company is going to merge several classes of stock from its old holders, and it will also have a significant dividend pay-out ahead of the IPO. SAIC is listed as a defense name and is a leading provider of scientific, engineering, systems integration and technical services and solutions to all branches of the U.S. military, agencies of the U.S. Department of Defense, the intelligence community, the U.S. Department of Homeland Security and other U.S. Government civil agencies, as well as to customers in selected commercial markets.

The company has 43,100 full-time employees and part-time employees. The U.S. Government is by far the largets customer with revenues as a percentage of All revenues as follows: 89% for 2006; 86% for 2005, and 85% for 2004. It has a consolidated negotiated backlog listed on its balance sheet of just over $15 Billion.

Its fiscal 2006 (Jan 31 year-end) showed $7.792 Billion in revenues with net income listed as $792 million. Its firscal 2005 revenues were listed as $7.187 Billion and net income of $409 million. It listed total assets for January 31, 2006 as $5.655 Billion, with $2.91 Billion in working capital; and it listed stockholders equity as $2.907 Billion. Long-term debt was listed as $1.192 Billion.

MORGAN STANLEY and BEAR, STEARNS are listed as lead underwriters with the following brokerage firms listed in the underwriting: Banc of America Securities, Citigroup, Cowen & Co., Jefferies, KeyBanc Capital Markets, Mellon Financial Markets, Stephens Inc., Stifel Nicolaus, Wachovia Securities, and William Blair.

Below are some of the listed holders:

Beneficial Owner Shares Owned
K.C. Dahlberg 290,927
W.H. Demisch 131,404
J.A. Drummond 11,062
D.H. Foley 193,821
J.J. Hamre 2,390
A.K. Jones 66,224
H.M.J. Kraemer, Jr. 102,644
W.A. Roper, Jr. 352,180
E.J. Sanderson, Jr. 15,897
G.T. Singley, III 80,000
J.P. Walkush 255,707
J.H. Warner, Jr. 364,202
A.T. Young 84,999
Vanguard, trustee 63,525,789
Equity Approved Comps. 27,554,786

Please understand that these shares were taken from the prospectus and there may be a substantial overlap and a substantial number of holders left off. We will compile a more specific list ahead of the actual IPO.

We will also follow-up with more data as it comes in, but SAIC has been listed as one of the top forward IPO's to watch for years. Now we may finally get the IPO. While we think this is one name that many key holders will need to own in their investment portfolio and while it is possible that the company will get a faster track into many stock indexes compared to other names, there are still details that may need to be worked out.

SAIC is a government contractor name that is not without controversy regarding contract appropriations, but in the government contract arena that seems status quo. Stay tuned because this IPO has been in the making for a long time. the company issued a release that it has completed its acquisition of "bd Sytems Inc."

Because of the long private history and the pending vote ahead (plus some old contract issues and government peak speanding), while we noted this as "on track" you should not rely on this IPO as being 100% set to go. It is a name that has been on the IPO radar for years, but market acceptance and the pending vote will be key.

Jon C. Ogg
September 11, 2006

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