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Contributors: Douglas McIntyre Jon C. Ogg

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Tuesday, October 03, 2006

IPO Alert: SAIC Should Debut Next Week

SAIC will trade under the ticker SAI, and it has completed its voting to come public via an IPO. It also set terms at 75 million shares with a $13.00 to $15.00 range. It has now listed Morgan Stanley and Bear Stearns as the joint book-runners; co-managers are listed as Citigroup, Wachovia, Banc of America, Cowen & Co, Jefferies, and Stifel Nicklaus.

SAIC has been in the IPO hopper for longer than anyone can recall, and it filed to raise up to $1.73 Billion in proceeds via an IPO last year.

SAIC is a defense and government contractor 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. SAIC has not been without controversy regarding contract appropriations, but in the government contract arena that seems status quo.

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.

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. The IPO should debut by the end of next week according to investment calendars.

Jon C. Ogg
Oct. 3, 2006

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