Good afternoon. My name is [Regina], and I will be your conference facilitator today. Welcome to SAIC’s Third Quarter Fiscal Year 2011 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions) Today’s conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today’s call, Paul Levi, Senior Vice President of Investor Relations. Please proceed, sir.

Thank you, Regina and welcome everyone. Here on today’s call are Walt Havenstein, our CEO; Mark Sopp, our CFO and other members of our leadership team. During this call, we will make forward-looking statements to assist you in understanding the company and our expectations about its future financial and operating performance. These statements are subject to a number of risks that could cause actual events to differ materially and I refer you to our SEC filings for a discussion of these risks. In addition, the statements represent our views as of today. We anticipate that subsequent events and developments will cause our views to change. We may elect to update the forward-looking statements at some point in the future, but we specifically disclaim any obligation to do so. I would like now to turn the call over to Walt Havenstein, our CEO.

Thank you, Paul and good afternoon, everyone. During our third quarter, we continued to make progress in implementing our strategy. As you will recall, our strategy anticipated ever-increasing headwinds in our government market and considering that, our belief of the importance of expanding our business development efforts. These efforts are succeeding. We continue to expand our pipeline of new opportunities and the volume of our submitted proposals and wins have increased at double-digit growth rates over a year ago. That said, the market environment in terms of generating revenues has proved more difficult than anticipated. That environment continues to be challenging and is manifesting itself in unexpected delays and a longer cycle for the conversion of awards to revenues which has led to growth below my expectations. For the call today, I’ll provide highlights of our recent business development results, cover market conditions and ongoing efforts to implement our strategy and close with acquisitions and recognitions. Then Mark Sopp will provide a recap of our overall financial performance and outlook. Regarding our overall business development results, bookings totaled $3.1 billion in the third quarter, with a book-to-bill of 1.1. On a year-to-date basis, bookings are up 14% over the first three quarters of last fiscal year and book-to-bill is 1.1. We ended Q3 with $16.3 billion in total backlog of which $6.3 billion is funded backlog, an increase of $500 million during the quarter. As mentioned in my opening remarks, we are continuing to expand the volume of submitted proposals. Year-to-date submittals for definitive delivery contracts are up $5.4 billion or 28% compared with the same period a year ago, reflecting our more aggressive business development objectives. We began the third quarter with $18.8 billion in outstanding submittals for delivery -- for defined delivery and IDIQ contracts combined. During the…

Thank you, Walt and good afternoon everyone as well. Our third quarter continued to demonstrate many of the business conditions that have made this a difficult year to predict. As we approach the end of the government fiscal year in September, procurement decisions picked up and accordingly our bookings improved considerably at that time. This was demonstrated by winning eight contracts over $100 million between the end of July and the end of September. The pickup in award decisions did not, however, continue in October when we experienced a stall in new procurement decisions being made and reduced customer confidence in incrementally funding existing programs. With this, in our third quarter, we were able to pick up the pace in revenues from the first half of this fiscal year, but as Walt said it was nonetheless short of our expectations. Total revenues were about $2.9 billion for the quarter, up 4%. Our operating margins in the third quarter conversely were quite strong at 9%, up from the prior year, due to an effective program execution and cost efficiencies implementation, more on this in a bit. Diluted earnings per share from continuing operations were up 21% on the high operating margin and a reduced share count. Working capital metrics were solid with operating cash flow of about $300 million. With that overview, I will now hit the major components in a little more detail. Total revenue growth of 4% this quarter was equally divided between internal and acquisition related growth. Our strategic growth areas, that is, ISR, cyber, energy, logistics readiness and sustainment and health continued to outpace aggregate growth, with an internal growth rate of 6% for the quarter in these areas. However, revenue ramp-up from new contracts across the board was lower than forecast. We see a number of…

In closing, our prepared remarks today, I would say that, of course, I’m not satisfied that we did not meet our growth expectations. I would like to emphasize, however, that we saw improvement in our internal revenue growth and that we delivered our third consecutive quarter of healthy new bookings. Despite headwinds in our market, during quarter three, consistent program execution and favorable returns on fixed price contracts contributed to improved operating profit and double-digit earnings per share growth over the same period last year. We have a growing pipeline of new business opportunities and a backlog of submitted proposals awaiting decision, a solid financial position and a track record for generating cash flow. In the fourth quarter and in FY12 and beyond, we will leverage these and other strengths to pursue strategic growth efforts that should increase shareholder value on a long-term basis. Thank you. Regina, we are now ready to take questions.

Thank you. (Operator Instructions) Your first question today comes from the line of Jeremy Devaney with BB&T Capital Markets. Jeremy Devaney – BB&T Capital Markets: Good evening, gentlemen. Nice work on the bookings in the quarter, seeing some growth there. I was wondering if we could talk a little bit about your contract mix. What in fact was the contract mix in the quarter, fixed price, cost plus?

Jeremy, it’s Mark Sopp. The contract mix was similar to what you’ve seen in recent quarters. You’ll see fixed price in our 10-Q filed tomorrow at 23%, same number as last quarter and the rest of the numbers are similar as well. Jeremy Devaney – BB&T Capital Markets: All right. Are you seeing any drift in the awards going into backlog, any indication that cost plus is increasing in the business mix?

I wouldn’t call it a trend. We may see a little of that but I certainly wouldn’t call it a trend at this point. Jeremy Devaney – BB&T Capital Markets: And then lastly, if you’ll allow me one more before I hop back in queue, looking at the continuing resolution, if we wind up seeing a full year continuation of the CR, what kind of impact would you expect to have on your overall business?

Well, I think from our perspective, the continual -- having a decision made, whether it’s a full year continuing resolution or whether it’s an omnibus appropriations or what have you, I think is a good sign for everybody because it allows our customers to be a little more precise in knowing what they’re going to be able to do. So getting a decision made, no matter what the bill says, is going to be fundamental. I think in the context of continuing resolutions, we don’t have a significant number of new starts and by the way, the continuing resolutions should be able to accommodate, depending on how the Congress writes the continuing resolutions, could accommodate new starts as well. So from my perspective, I think assuming the continued resolution is at or near the budget requested. I don’t see a significant impact in the forecast that we’ve just given you. Jeremy Devaney – BB&T Capital Markets: Great. Thank you for the response.

Thank you.

Your next question comes from the line of Jason Kupferberg with UBS. Jason Kupferberg – UBS: Hey, thanks, guys. Just wanted to start with a couple of questions on the margins in the quarter, clearly better than we and I’m assuming others were expecting at 9%. I think Mark, you called out some of the factors there but was hoping to just get a sense from you in terms of which of those factors would you characterize as kind of more one-offish or one-timish in nature and if we can quantify some of those pieces, just so people can get a sense of where the normalized margins should be because obviously as we go into fiscal ‘12 as you said you’re going to be down closer to 8% for the full year. So any color there would be helpful?

Certainly, Jason. I wouldn’t consider any of these one-time in particular, but the elements are there. So we had about 60 basis points of contribution from recovery of costs, cost reimbursable contracts, arguably some of that is catch-up from prior quarters which you typically see contractors do in the second half of the year, once they have a clearer view of how they’ll finish the year. The NRC matter was relatively minor, I call it 10 basis points, but we’re certainly pleased to see a favorable outcome as we believed all along on that front. The milestone fee was considerable but it was also offset by some lineups we had in the prior years, so that’s kind of a push. So you’re talking 60, 70 basis points of things of that nature but the base was strong as you can see, as well, with strong performance across our program base. Jason Kupferberg – UBS: Okay. And just as an extension to that, I think at the analyst meeting when we had talked sort of in general terms about long-term margin potential in the business, I think there was some suggestion that maybe on a long-term basis the business could get to 9%. I just wanted to check in on that, see if that’s still how you guys feel, sounded like during some of the prepared remarks you were talking qualitatively at least about kind of stability to modest improvement over time. So not to try and split hairs on the language but just wanted to take your temperature on longer term margin potential of the business.

Jason Kupferberg – UBS: Okay. And just last one from me on cash deployment, obviously you made some comments on that as far as your near-term priorities with the M&A and perhaps some additional buybacks. I mean, it seems like you’ve been pretty consistent in saying that you’d prefer to find some good size M&A and deploy your excess cash, but I think at the same time at the analyst meeting you said, hey look, if the M&A opportunities don’t materialize for whatever reason you would be and the Board would be more willing to consider alternate forms of cash deployment whether that’s a dividend or much bigger buybacks? And what I wanted to get a sense of is from an investor’s point of view how long should folks feel like they need to wait before you guys make that call in terms of whether some sizable deals will shake out of the M&A pipeline or if it’s time to consider alternate balance sheet strategies?

I think we’ve been pretty consistent in that regard and I think the -- in that we will take a balanced approach and where we see opportunities on the acquisition front and they come and go, I would tell you right now, that if there’s opportunities on the acquisition front that will allow us to buy a bolt-on acquisition to bill a technology or capability gap, or allow us to expand a market access that will accelerate organic growth, then we’re going to take advantage of it. We’ll take advantage of that in the context that it is a good investment relative to other investments for that capital and so -- and I think if you look at our track record over the last 12 months, 12, 14 months, we’ve had a fairly balanced view of that and that if we’re not going to deploy it in acquisitions and we prefer to use that capital to buyback stock and I don’t think that’s we would say anything differently from that today. Jason Kupferberg – UBS: Okay. Fair enough. Thanks, guys.

Thank you, Jason.

Your next question comes from the line of Cai von Rumohr with Cowen and Company. Cai von Rumohr – Cowen and Company: Yeah. Thanks so much. So $23.1 billion in bids out and more than 50% are kind of non-IDIQ, so is that number like $12 billion versus $10 in the prior quarter? Is that essentially what we’re looking at?

I think you’ve got the $12, right, I’m trying to think about in the context of the prior quarter, just... Cai von Rumohr – Cowen and Company: But the prior quarter was $10, so $12 is the number, so you’re up 20%. And yet also, I look here, your funded backlog which really is the determinant of revenue, is up $500 million. Your months of funded backlog are $6.6, up from $6 going into the year. You have balance of bids awaiting decision that presumably at some time are going to be decided. I mean, are you assuming in your revenue guide for next year that those bids awaiting decision of the non-IDIQ variety stay at the $12 billion level, because most of your competitors saw some of that long jam start to break in the quarter, are you assuming it stays up at that level?

I think it’s pretty hard to predict, first of all, Cai. I think we’re still bidding an awful lot of acquisitions right now. So my guess is we’re going to continue to grow that. We’re going to continue to work to grow that submittal undecided bids until we see -- we have clear evidence that that backlog is actually breaking. And frankly, our -- I’ve got to tell you t only thing that gives me some degree of optimism and I’m a pretty optimistic guy is the fact that if we hadn’t done this a year ago, if we hadn’t had made those conscious decisions to continue to invest, we’d be in a lot different position now. Cai von Rumohr – Cowen and Company: Okay.

One thing I’ve got to mention to you, I have a certain concern about the backlog getting reduced over time not just by revenue generation but by the fact that things get de-scoped, all right and we’ve seen some evidence of that over the last 12 months. And so we have taken a relatively conservative position about what could happen with regard to what I’ll call de-bookings that comes from de-scoping and I think, if someone were to say that they can tell exactly how the government’s going to respond over the next six to 12 months with respect to priorities, well, good on them. That’s one little crystal ball I’m -- that’s been cloudy for me for the last 12 months, frankly and I think it probably will be for a while. Cai von Rumohr – Cowen and Company: Okay. And then on the margin front, you mentioned these kind of investments in cyber, as well as ground combat vehicle team and yet your SG&A is really down sequentially and your guidance seems to imply a big decline in margins sequentially in the fourth quarter to a little over $7 a month, I’m just reading that. Should we expect the SG&A to ramp in the fourth quarter and were any of these recoveries you had in the third pull forwards?

Not sure I follow the last part of that, Cai. But we could see a little pickup in SG&A in the fourth quarter. I would point out that much of the investments we’re making are actually in the overhead category, which is in the gross margin. So it’s not entirely in SG&A. Cai von Rumohr – Cowen and Company: Okay.

So that’s important to understand, but we are being cautious in the fourth quarter, some of the things that did occur in the third will not reoccur in the fourth given the timing of those items. Cai von Rumohr – Cowen and Company: Okay. And the last one is the normally you get a lift in the fourth quarter from product sales. Did you kind of pick it up in the third or should we still get that lift in the fourth quarter?

We will not -- we’re not expecting a pickup in the fourth quarter due to the timing of the shipments. So we’re flat to down in the fourth quarter from the third sequentially, Cai. Cai von Rumohr – Cowen and Company: Got it. Thank you very much.

Thank you, Cai.

Your next question comes from the line of Joe Nadol with JPMorgan. Rica Mendoza – JPMorgan: Hi. Thanks for taking my question. This is actually Rica Mendoza in for Joe Nadol. Good afternoon.

Hi, Rica. Rica Mendoza – JPMorgan: I just wanted to ask sort of a similar question on book-to-bill and what your expectations are for Q4 and obviously, it’s a leading indicator for the following year, you know, what sort of book-to-bill level do you expect in ‘12 and how do you see your pipeline?

We expect to end the year this fiscal year with a book-to-bill of $1.1 and it’s probably a little too early to give you specifics around how we see book-to-bill for the next fiscal year, but as we finish this fiscal year we’ll make sure the next call we give you a snapshot of that. Rica Mendoza – JPMorgan: Okay. Great. Thanks. I also wanted to ask you about what sort of sizable recompete do you see next year as well?

Rica, Mark here. The big three for us, you know we’re not very concentrated in terms of singular program lift, but we do have our large this recompete, new name is GSM, old name is DGS and before that GIG-BE. We talked about that in each of the calls recently. That’s our largest program in terms of annual revenues but still not in excess of 3% of revenues. The last piece of the NASA UNITeS recompete if you will which is broken into four parts is expected next year. That’s call NICS, N I C S and then DHS EAGLE which is an IDIQ contract is also scheduled for recompete. So those are the biggest three although there are numerous others. Overall, the revenue on which we’re counting that is subject to recompete is not abnormal to our previous years. Rica Mendoza – JPMorgan: Okay. Great. Thanks. And then lastly, I wanted to ask for your thoughts on sort of more broadly on overall competitive environment and what you’ve been seeing in terms of trends that DoD is looking for more -- looking more at price in contract negotiations and I was wondering if you could talk about, are you seeing pricing becoming more of an issue and are your competitors getting more aggressive?

The answer is yeah and yeah, and I would simply say that we similarly are being more aggressive in the context of reducing costs, so that we can be more cost competitive across the board. And I think the proof is in the pudding in that our competitive win rate is still above 60% and if we can maintain that, which we have every intention of doing, it will reflect that we’ve taken a proper action on our cost to enable to be price competitive and continue to invest in the differentiators that where cost is not the primary concern but the specific solution is then we think we’ll continue to be successful. Rica Mendoza – JPMorgan: Okay. Great. Thank you very much.

Your next question comes from the line of Edward Caso with Wells Fargo. Edward Caso – Wells Fargo: Hi. Good evening. Couple of quick questions here. Could you update us on your real estate situation both in (inaudible) and San Diego?

Sure, Ed. We have two meaningful sized properties that are in negotiation at this time. They’re certainly not closed but they are on track to have a reasonably good chance of closing in the near-term. One is on the East Coast, one’s on the West Coast and hopefully we’ll get those done. The larger project on the McLean campus which concerns redevelopments associated with the metro and so forth is a few years out. But nonetheless, getting a lot of attention including the appropriate zoning to make the property more valuable for that purpose. Edward Caso – Wells Fargo: Should we assume that, given you’ve owned these properties for a while that there will be a fairly sizable gain involved and will that be turned around and put back into some investments?

The guidance I provided at the Analyst Day still holds, so the answer is yeah, though property’s cost basis is substantially below the fair market value and we’ll want to be flexible with how we use the gains should they occur with respect to reinvestments or other purposes. Edward Caso – Wells Fargo: The tax rate for the coming quarter of Q4?

Let me just stick to the full year for fiscal ‘11 should be right around 37% flat. Edward Caso – Wells Fargo: All right. And the -- you mentioned an acquisition closing in this F Q4, can you give us sort of financial framework?

The acquisition we’re talking about, the [Aptech] assets and intellectual property, I wouldn’t consider it in the context of a normal acquisition. So I’m not going to -- we’ve disclosed that the investment we made there. You want to put more color on that, Mark?

We’ll disclose the investment in our 10-K, not a huge amount and the revenue contribution next year is nominal. Edward Caso – Wells Fargo: Great. Thank you.

Thanks.

Your next question comes from the line of, I apologize. We just had somebody drop off the line. Your next line come, I’m sorry, your next call comes from the line of James Friedman with SIG.

He dropped off. Operator?

I apologize. He may have dropped off as well. Your next question comes from the line of Tim Quillin with Stephens Incorporated. Tim Quillin – Stephens Incorporated: The last man standing, I guess. I wanted the to follow on a little bit on Cai’s extrapolation of the fourth quarter guidance and by the way, thank you for giving explicit guidance for next year. But I just want to make sure that I’m reading this correctly, that the proper EPS number that you’re growing off of for fiscal ‘10 is above $1.24. You’re growing that 14% to 18%. You’ve done above 15 so far in continuing EPS and so we’re looking at implied EPS guidance for 4Q or $0.26 to $0.31. Is that right?

Actually, at the top end at $0.32, so we’re off a penny on that front. Tim Quillin – Stephens Incorporated: Okay. So rounding difference…

But it’s correct, your base of $1.24 for the prior year is accurate. Tim Quillin – Stephens Incorporated: Right. And so that, I mean, the midpoint we’re talking about a down, a negative growth, a decline in EPS and as Cai noted, I guess the margins would be around 7%, which is down a lot from the previous quarter and down a lot year-to-year? And can you just go through kind of the reasons for that the investments in overhead that you had discussed that might bring that margin down that much? Thanks.

Sure, Tim. The broad overview, some of this is repeated from Cai’s question, lack of repeat of some of the favorable items in the third quarter. We do have some product revenue fall off in the fourth quarter and we do expect an uptick on SG&A, particularly R&D in the fourth quarter. Not huge amounts but some negative effects there. And as always you have holidays and vacations that affect labor utilization and so, we want to be cautious there. We certainly think it’s possible to do better than the implied range on the margin but I think it’s prudent to be cautious at this point and hopefully we’ll finish strong. Tim Quillin – Stephens Incorporated: Okay. And then also on your guidance for cash flow from operations for fiscal ‘12 and again, it may be that you’re trying to be cautious and I know that’s an at least number but $500 million would be below net income and I just wondered what kind of the puts and takes might be there in terms of cash generation and why that wouldn’t be north of $600 million? Thanks.

I was explicit in saying we don’t expect any major shifts in our cash flow model i.e. working capital sources or uses. So you should generally expect our historical experience once you derive your income statement model when you’re providing a floor, you want to be conservative, so that’s what I did. As you might have heard, the government is increasingly interested in giving contractors in the form of withholds and they have increasingly passed regulation to do so. So I’m cautious on that regard but hopefully we will successfully navigate through that and continue the strong cash flow experience we’ve had. Tim Quillin – Stephens Incorporated: Got it. Thanks much.

Thank you.

Your next question comes from the line of Erik Olbeter with Pacific Crest Securities. Eric Leeper – Pacific Crest Securities: Hi, guys. Thanks for taking my question. This is actually Eric Leeper in for Erik Olbeter today. Just getting back to the SG&A line, looks like it’s down about $24 million year-over-year and I think, I heard you mention that your bids submitted was up 28% this year. I was just hoping to get a little bit of extra clarity around what’s going on with that SG&A line, where you’re seeing efficiencies and how you see that panning out really as we look towards fiscal ‘12?

Let me go back a couple of phone calls, I probably should have reminded everyone this time but starting in fiscal ‘11, the year we’re now in, we made a reclassification of some categories of costs, which are affecting the year-over-year comparison and if you’ll recall from that about -- the SG&A is down about a 4 percentage point to revenues as a result of that, so it used to be 5.7%, 5.8% of revenues is now you’re seeing 4.7%, 4.8%, so that’s the biggest reason for the delta that you’re seeing. We are not too different year-over-year in B&P cost and IR&D cost compared to fiscal ‘10 on an apples-to-apples basis. However, a lot of the incremental investments that we talked about at the Investor Day are in the overhead category to the earlier question. Eric Leeper – Pacific Crest Securities: Okay. That’s helpful. Yeah. I’ve forgotten about the reclassification there. So those investments are obviously playing out well, starting this quarter, is that kind of what I’m hearing, because, I mean, if your bid and proposal was flat you’ve got almost 30% more bids going out just to imply you’re starting to realize some of the return on those investments, is that how I should be thinking about this?

I think you should be thinking about it in that context but keep in mind, the acquisition cycle time is longer and so we aren’t yet seeing the full benefit of those investments. And the fact that our funded or excuse me our submitted bids has increased so much is the only evidence of that investment, our expectation is we’re going to win our fair share and our fair share is north of 60% and so we’ll expect to see those awards at some point. But we’ve been continually disappointed in the government’s ability to get those contracts awarded. And I’ve got to tell you, we’ve also put an awful lot of effort in over the year to make the overall bid process in the enterprise much more efficient and effective, focusing much more deliberately on and frankly earlier on these acquisitions and so you’re seeing some of the results of that. So how much we bid versus how much we submit and how much we spend to submitted is getting better year-over-year.

And Eric I would just point out in addition to Walt’s points which are appropriate. Is we are spending more effort in a longer lead time for bids to occur in the future, capture process is starting earlier to improve our probability of win and those costs are not captured in the B&P category until the actual bid is on the Street. So the B&P doesn’t necessarily track with the level of investment to grow our pipeline. Eric Leeper – Pacific Crest Securities: Okay. Thank you. That’s helpful.

Your next question comes from the line of James Friedman with SIG. Mr. Friedman?

We lost him again.

He is not there. I apologize. Your next question comes from the line of Bill Loomis with Stifel, Nicolaus. Bill Loomis – Stifel, Nicolaus: Thanks. Mark, I know (inaudible) dead horse here on the fourth quarter guidance but you talked about the one-time items being 60 or 70 basis points. If we take that off the third quarter sequentially that still brings it down to 8.3%. The fourth quarter guidance implies 7% or even lower operating margins, that’s a huge gap there. Is there some large one-time item because the gap’s in the range of $60 million or so, it’s pretty significant?

I really don’t have anything more to add from my earlier response, Bill. So I’ll leave that as it was. Bill Loomis – Stifel, Nicolaus: And on the – and that obviously assumes no share buybacks in this third quarter?

That is the -- that is how we provide guidance. So we don’t have our future earning, well, it doesn’t affect the margin question to begin with, right, but… Bill Loomis – Stifel, Nicolaus: On EPS it does.

But the answer is no, we’re not counting on big repurchases in the fourth quarter. Those are not reflected in the guidance. Bill Loomis – Stifel, Nicolaus: Okay. And then looking out to the fiscal ‘12 guidance, the EPS range for fiscal ‘12 implies a nice pickup sequentially from what your guidance is in the fourth quarter. I guess the counter to asking the fourth quarter question is why is that going to change fairly quickly into fiscal ‘12, some of the headwinds you see right now?

In general, we expect the margin progression to generally track in fiscal ‘12 as it has historically, although there is some years where there have been exceptions but we do expect to grow sequentially for the most part during fiscal ‘12 and we do expect to improve margins sequentially in accordance with that. The product shipments should generally be more backend weighted although not a huge shift for next fiscal year, so we do intend to migrate north on the margin front, consistent with the guidance. Fairly equally weighted in terms of a bell curve on the margin front for next fiscal year, quarter-to-quarter. Bill Loomis – Stifel, Nicolaus: Okay. Thank you.

Thank you, [Regina]. And on behalf of the SAIC team we want to thank everybody on the call today for their participation and their interest in the company. This concludes our call for today. Thank you everyone. Thanks, Paul. Thank you.