MCLEAN, Va., Aug. 30, 2012 -- Science Applications International Corporation (SAIC) (NYSE: SAI) today announced that its Board of Directors, following a recently completed comprehensive strategic review, has authorized management to pursue a plan to separate into two independent, publicly traded companies. The proposed separation is intended to take the form of a tax-free spin-off to SAIC stockholders of 100% of the shares of a newly formed company focused on government technical services and enterprise information technology (IT).

The spin-off is expected to occur in the latter half of next fiscal year, subject to final approval of the Board of Directors.  The spin-off is not expected to require a vote of the stockholders of SAIC.

"In this next step of our strategic plan we configure ourselves for the future.  Our two new companies will be designed so that their businesses can be more differentiated and more competitive in their own space.  More importantly, that addressable space will expand for each as we eliminate the burden of organizational conflicts of interest (OCI)," said John Jumper, chairman and chief executive officer. "This affords both companies an excellent opportunity to combine optimized cost structures, unrestricted access to their respective markets, and the leveraging of decades of SAIC's scientific and engineering excellence to unleash the growth and value we can deliver to our customers, employees and shareholders."

Based on current plans, the two separate businesses would be:

• A technical services business – This business will focus on government technical services and enterprise IT businesses, and have a leaner and more efficient cost structure. As one of the largest, pure-play government services companies in the market, it will compete in a broad market space, leveraging its deep mission knowledge and customer relationships in a more competitive and agile organizational structure. It will be free of potential OCI restrictions caused by its current relationship with other SAIC business pursuits, specifically those involved in developing ISR solutions and products for the Department of Defense and Intelligence agencies. New opportunities due to the elimination of OCI are expected to include Systems Engineering and Technical Assistance (SETA), Cost & Financial Analysis, and Program Office Support. Likewise, we will be able to expand our offerings noted above to the Intelligence Community and Civil Agencies. Pro forma revenue for the fiscal year ending January 31, 2013 for the future technical services business is estimated at $4 billion.

• A solutions-focused business – This business will focus on delivering science and technology solutions in three high-growth markets that reflect high priority, long-term global needs – national security, engineering and health. These three markets share an increasingly important convergence of the physical and digital worlds they represent. These markets operate in complex, data rich environments, and are foundational for securing the future of our families, our communities, and our world. We believe we have a unique opportunity to horizontally integrate our deep success in developing mission-critical systems, with SAIC's rapidly emerging technologies in cyber defense, together with our demonstrated solutions in big data analytics, to deliver the next generation of information security and performance in a cyber world. The elimination of OCI with SAIC's services business will allow this business to have unimpeded access to significant new business opportunities not available today. This includes science and technology opportunities in both Major Defense Acquisition Programs (MDAP) and Programs of Record (POR) in multiple Command, Control, Communications, Computers, and Intelligence (C4ISR) regimes, specifically Maritime ISR systems, US Navy Airborne programs, Battlespace Awareness, Maritime Domain Awareness, Electronic Warfare (EW), and Missile Warning, as well as Logistics, Readiness and Sustainment growth across a range of both US and International customers just to name a few. Pro forma revenue for the fiscal year ending January 31, 2013 for the future solutions-focused business is estimated at $7 billion.

The two companies are expected to:

• Unlock substantial value by removing both the potential and the perception of organizational conflicts of interest that now prevent pursuit of new business in both the services and the solutions markets.
• Enable internal efficiency by managing distinct businesses differently, producing more cost competitive offerings and unlocking potential for increased revenue and margin performance.
• Deliver better differentiated systems and solutions to customers by focusing our investment where it's needed the most, to deliver the greatest impact to customers' missions.
• Open new opportunities for employees through growth in leadership positions through expanded market share.
• Provide investors with a more focused and compelling view of our businesses and their growth potential.

"We feel that SAIC is now well positioned to leverage its strong market position in both the solutions and services businesses, including several high growth markets, and it is time to enact the next step in our strategy," said Chief Operating Officer Stu Shea. "Competitive conditions warrant a more efficient cost structure, and increased competition requires us to operate in unconstrained environments, free of OCI and other impediments. We believe this separation will create value for our stockholders by unlocking the full growth potential of SAIC."

The two entities together are initially expected to pay a dividend that is approximately equal in sum to the current SAIC dividend.

Management is continuing to develop detailed plans on capital structure, management, governance and other significant matters.  In addition, the completion of any separation transaction will be subject to certain customary conditions, including implementation of intercompany agreements, filing of required documents with the Securities and Exchange Commission, receipt of an opinion from tax counsel and a ruling from the Internal Revenue Service as to the tax-free nature of such a transaction.  Although SAIC expects that the separation of its businesses, if consummated, would be completed in the second half of fiscal year 2014, there can be no assurance that a separation will ultimately occur.

The Company has engaged Citigroup Global Markets as its financial advisor.

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 http://www.saic.com/.  SAIC: From Science to Solutions®