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Executives

Paul E. Levi - Senior Vice President of Investor Relations

John P. Jumper - Chairman, Chief Executive Officer, President, Member of Classified Business Oversight Committee and Member of Ethics & Corporate Responsibility Committee

Douglas E. Scott - Secretary

Mark W. Sopp - Chief Financial Officer and Executive Vice President

Brian F. Keenan - Head of Government, Technical Services and Enterprise Information Technology Business

SAIC, Inc. (SAI) 2013 Annual Shareholder Meeting June 7, 2013 9:00 AM ET

Paul E. Levi

I would like to welcome all employees, stockholders and other guests to the 2013 Annual Shareholder Meeting. Besides the stockholders participating in person today here at SAIC's Conference Center, we have stockholders listening in from all over the world via audio and webcast.

I would now like to introduce John Jumper, the Chair of SAIC's Board of Directors and Chief Executive Officer.

John P. Jumper

Thank you, Paul. Thank you, everyone. Thank you. Thank you. On behalf of the Board of Directors and SAIC's management team, I'd also like to welcome you to this Annual Meeting of Stockholders, and thank you for your interest in the company and for your interest today. I will be acting as Chair of the meeting. Doug Scott, the company's Corporate Secretary, will act as Secretary. At this time, I'd like to call the Annual Meeting of the Stockholders to order.

It's my pleasure to introduce the other directors who are present here today. And as I call their names, I'll ask them to stand and turn around. France Cordova, France; Jere Drummond, Jere's also the Chair of the Nominating and Corporate Governance Committee; Tommy Frist, who is the Chair of our Finance Committee; John Hamre, who is the Chair of the Classified Business Oversight Committee; Mim John; Anita Jones, who is the Chair of the Ethics and Corporate Responsibility Committee; Harry Kraemer, who is the Chair of the Audit Committee; Larry Nussdorf, who is the Independent Lead Director; and Sandy Sanderson, who is Chair of the Human Resources and Compensation Committee. Thank you all for your service to the company.

Also present from Deloitte & Touche, the company's auditors, is Mike Condro, who will be available for appropriate questions. Thank you, Mike, for standing, later on in the meeting.

Mr. Secretary, was the notice of this meeting properly sent?

Douglas E. Scott

Yes. The notice of meeting, proxy statement and annual report, together with the proxy and voting instruction card, were properly delivered on or about April 26, 2013, to our company's stockholders of record as of April 8, 2013, which was the record date for this meeting. Extra copies of the proxy statement and annual report are available at the information table on the lobby. A list of the stockholders of record as of the record date has been available for inspection for the past 10 days. This list will remain available for inspection during the meeting.

John P. Jumper

At this time, I'd like to introduce Scott Ballenger [ph], who will act as Inspector of Elections for the meeting.

Mr. Secretary, will you report to us on the presence of a quorum?

Douglas E. Scott

Yes, sir. As of April 8, 2013, the record date established for this meeting, there were 342,114,336 shares of the company's common stock outstanding. Holders of common stock are entitled to one vote per share. Federal law requires that the holders of record of a majority and voting interest of the company's shares be present in person or by proxy in order to constitute a quorum at a meeting of stockholders. Prior to the commencement of this meeting, I received proxies or voting instructions representing 78% of the total voting interest of the shares outstanding on the record date. This constitutes the majority of outstanding voting interest, and a quorum is present for the conduct of business.

John P. Jumper

Thank you. The ANnual Meeting of Stockholders is now officially convened. We have 7 matters to consider and to vote on that this meeting: number one, a proposal to elect 10 directors; number two, a proposal to amend the company's Restated Certificate of Incorporation to implement a reverse stock split; number three, a proposal to amend the company's Restated Certificate of Incorporation to change the company's name from SAIC, Inc. to Leidos Holdings, Inc.; number four, a proposal to amend the company's Restated Certificate of Incorporation to decrease the number of required directors; number five, a proposal to amend the company's Certificate of Incorporation to eliminate or reduce supermajority voting requirements; number six, a proposal to approve executive compensation by an advisory vote; and number seven, a proposal to ratify the appointment of Deloitte & Touche LLP as the company's independent registered public accounting firm for the fiscal year ending January 31, 2014.

Your board is recommending that you vote in favor of each of these proposals. A description of each item, your board's recommendations and its rationale for the recommendations are all set forth in detail in the proxy statement. As is our usual practice, there will be time for discussion of each proposal after it's been formally presented.

If you have a comment or question concerning one of the proposals, please come up to one of the microphones during the discussion period for that proposal, state your name and indicate whether you're a stockholder or a proxy holder.

Proposal #1, the election of directors. First item to be voted on is the proposal to elect 10 directors to serve for 1 year term, ending in 2014. The nominees are France Cordova, Jere Drummond, Tommy Frist, John Hamre, Mim John, Anita Jones, John Jumper, Harry Kraemer, Larry Nussdorf and Sandy Sanderson. Is there any discussion on this proposal?

Seeing none, Proposal #2. This is a proposal to approve an amendment of the company's Restated Certificate of Incorporation to effect a reverse stock split. Is there any discussion on this proposal?

Seeing none, Proposal #3. We'll now take up the third item, a proposal to approve an amendment to the company's Restated Certificate of Incorporation to change the company's name from SAIC, Inc. to Leidos Holdings, Inc. Is there any discussion on this proposal?

Yes, sir, please. Microphone? You're name, please, sir?

Unknown Shareholder

Ralph Sievers [ph], a stockholder.

John P. Jumper

Yes, sir.

Unknown Shareholder

Many of us who have been with the company a long time, the SAIC is a great term. Sorry to say this. Much of the company in the future will not have that name. Does Leidos go with the majority? Does SAIC go with the minority? And have you explored any other options? When I first saw Leidos, I thought who -- we're renaming it for a Greek. It was a Greek word, certainly, but not a Greek person. But why would you use Leidos when you have names like [indiscernible]? I have no problem with what you're doing or what's splitting the company, but I'd like to see that we have had good consideration as to how to maximize the use of a great name that we have had until now.

John P. Jumper

Yes, sir. Thank you for your question. I think that all the members of management would agree that if you ever had a choice between a root canal and renaming a company, take the root canal. It is probably the single most difficult part of the transition we've had to undertake. And it's a very good question. Leidos, of course, we didn't take it from a Greek word. We took it from kaleidoscope, kaleidoscope, which we think captures the creative nature of our solutions company going forward. And we also didn't consider a minority or a majority as far as the separation of the company goes. Our intention from the very start was to create both companies as equally important entities even if their total revenues varied slightly one side to another. But our total commitment is to make sure that we ensure the success of both companies going forward with equal energy. But we narrowed down the name from a list that started at about 2,000. You have to go through a betting process that make sure that you're not using a name that has an inappropriate meeting in another language, that you can get the ticker single symbol on the New York Stock Exchange that is similar to your name, that you can get the domain in the -- on the web that has your website. And when you filter these all down and you try to attach a name that's got creative attachment to your company, then you've come down very quickly to a very few choices. We had budgeted, I think Stu, I think about 3 months for this. It think it took us 6 months to get through this process to include employees, focus groups and others to try to arrive at this final name. So it was a very deliberate process, sir. It was not taken lightly and with the greatest respect to the legacy that we've come from. Thank you, sir. Yes, sir?

Unknown Shareholder

My name is Tom Hogan [ph]. I'm a retired employee and a stockholder. My question is I've read through a lot of the stuff put up by SAIC on the stock split and the splitting into 2 companies. But I couldn't find out what happens to my stock. So I assume you have 1,000 shares or 10,000 shares, whatever, what happens to that stock? Do we own both companies or some of both? What happens to my stock?

John P. Jumper

Sure. Can we differ that question to the question-and-answer period so we can get through the votes on the particular proposals? And we'll be glad to take that question at the end, if that's okay. Thank you very much for that question.

Unknown Shareholder

I can do that.

John P. Jumper

If there are no further questions on Proposal #3, we'll go to Proposal 4. We'll take up the fourth item, a proposal to amend the company's Restated Certificate of Incorporation to reduce the range of required directors. Is there any discussion on this?

Seeing none, Proposal #5. A proposal to amend the company's Certificate of Incorporation to eliminate or reduce supermajority approval requirements. Is there any discussion on this one?

Seeing none, we'll now take up the sixth item, which is an advisory vote on executive compensation. Is there any discussion on this one?

Seeing none, Proposal #7. The last item is a proposal to ratify the appointment of Deloitte & Touche LLP as the company's independent registered public accounting firm for the fiscal year ending January 31, 2014. Is there any discussion on this one? Next slide, Chris [ph].

Delaware Corporate Law requires that we announce the opening and closing of the polls for the matters to be voted on. I hereby declare that the polls for the 7 matters just discussed will open on the 7th day of June at 9:11 a.m.

Mr. Scott will now vote the proxies received by the company. If you brought your proxy card to the meeting and have not turned it in, please raise your hand now so your proxy card can be collected.

The attendants will also have ballot forms as you may use to vote if you haven't voted yet or wish to change your vote. If there's anyone who is voting personally by ballot, please raise your hand now so your ballot can be collected by one of the attendants.

Thank you. Has everyone who wishes to vote done so? Thank you.

It now being 9:10 a.m., the polls are now closed. The inspector of elections -- 9:11, I guess, sorry. The inspector of elections will tabulate -- I have an analog watch, that's my problem. The inspector of elections will tabulate the votes and report the results. While the votes are being tabulated, I'll take a few minutes to talk a little bit about the company. And after the presentation, we'll open the floor for questions from our shareholders. Chris [ph]?

Everyone knows what SAIC is. We're a very large company that specializes in the science and engineering and technology that goes along with our core businesses. We leverage our deep domain knowledge, and we solve the problems of vital importance to the nation, and we think that we engage in missions that matter for the nation, for our communities, for ourselves as a company and for individual employees and for our shareholders.

We have 38,000 employees, and we serve a wide variety of customers throughout the United States government and the commercial side in Health and Engineering. And we are in the throes of preparing ourselves to create 2 world-class companies. Chris [ph]?

Our people make our company what it is today. There's no doubt about that. We have a rich range of talent. We know our customers. We know their missions. We know the domains that they live in. We are closely engaged with our customers, and we consider that to be a core competency of our company.

We have a strong management team. The management team has a wide range of skills across a variety of sectors of the business. We sustain an environment of trust and ethical -- the highest ethical standards in the company. And I think that you see the dealership leaving that day in and day out, and it's reflected in the performance of our company all throughout our 38,000 employees.

During the year, we enjoyed a revenue growth of 2%, book-to-bill ratio of 1.0. And we won 42 awards or $100 million or more, making up a very large book of business that carries us into 2014. Next slide.

As you all know, we have a recurring dividend, quarterly dividend. And we declared a special dividend of $1 per share. That's for voters of record, I think, on the 14th of June, to be paid out on the 28th of June this month.

In M&A activity, we completed the acquisition of maxIT, which is a commercial health information technology company that was integrated with our Vitalize Consulting services because one of the largest health IT providers in the health sector. The combination of these 2 businesses has established us firmly in the health care industry with great credibility. And the integration of these 2 companies that used to be competitors has gone amazingly well, and they are continuing to grow and to be very profitable. And of course, the biggest news is we continue with the strategic separation of SAIC into 2 great companies that will propel us into the future.

Under Project Gemini, we have proceeded with the separation, next slide, and -- from SAIC into Leidos and the new SAIC. What are these 2 companies? Chris [ph], next slide.

Leidos will be a $6.5 billion revenue company. The leadership that you see up there are familiar faces, Stu Shea; Mark Sopp; Sarah Allen; Joe Craver; our newest president, Lou Von Thaer; and our General Counsel, Vince Maffeo. This company will be made up of National Security Sector, Health and Engineering, mostly government but also commercial. And it will be a company that's modeled on being able to have a successful high-growth commercial business that helps dampen the dynamics of government budgeting that we're going through right now.

On the SAIC side, led by Tony Moraco, with his leadership team, a business that specializes in technical and engineering services and information enterprise, information technology. Going forward, those in about equal shares will go forward as new SAIC. Both of these entities have been reorganized so that we can be at REIT structures that are extremely competitive going into the future. And when these new companies, I think, emerge, we'll find that we have structures that will be very attractive to our shareholders because of the competitive nature of these 2 companies and their ability to win business now in an era that is in a market that we have taken away the OCI, the organizational conflicts of interest, so that we can compete in new spaces that have been denied to us before as a single company where we conflicted with one another internally for all of these years. We look forward to that advantage going forward. Next slide.

These companies, as you see, will be able to go-to-market in the areas that are noted here. Again, all of us are focused in both companies going forward on shareholder value, on our ability to grow and to be profitable. And I think we are configuring ourselves very, very well to be able to do that. Next slide.

And not only do we do business, but we practice our responsibilities in other ways as well. We are very focused on our obligation to our veterans. When they come out of the combat zone, as you can see, we are very active in hiring veterans. As a matter of fact, almost 25% of our employees are veterans in SAIC.

We pay close attention to inclusion and diversity as we organize our employee groups to make sure we stay in touch with employees at all levels and to be able to consider the concerns of all of our groups within our employee base.

In our communities, we are very active in the giving and the supporting of nonprofit organizations, a large commitment to volunteer hours, a large commitment to science, technology, education, engineering and mathematics education. Our 2013 employee outreach program, the employees voted on their support for veterans, wounded warriors and their families, and as a result, have raised themselves approximately $300,000 and volunteered the number of hours you see, 1,200 hours or so, in the service of that cause.

And in the environment, we're committed to sustainable business practices, and we are well on the way, as a matter of fact, we're ahead of our schedule on meeting our 2020 goals by a significant amount. Next slide.

So we -- as we look forward to the next few months, we are very enthusiastic about the future of these 2 great companies. This management team and the Board of Directors have been engaged in an extraordinary way to ensure the success of the companies. And I want the shareholders to know that the steps we are taking are in their interest for the future.

I will now ask the inspector to report on the results of the voting of the proposals.

Unknown Executive

Each of France Cordova, Jere Drummond, Tommy Frist, John Hamre, Mim John, Anita Jones, John Jumper, Harry Kraemer, Larry Nussdorf and Sandy Sanderson has received the necessary votes for election as director.

Proposal 2, the proposal to amend the company's Restated Certificate of Incorporation to effect a reverse stock split received the required vote for approval and passed.

Proposal 3, the proposal to approve amendment of the company's Restated Certificate of Incorporation to change the name of the company from SAIC, Inc. to Leidos Holdings, Inc. received the required vote for approval and passed.

Proposal 4, the proposal to amend the company's Restated Certificate of Incorporation to decrease the range of required directors received the required vote for approval and passed.

Proposal 5, the proposal to amend the company's Certificate of Incorporation to eliminate or reduce supermajority voting provisions did not receive the required vote for approval, and therefore, has not passed.

Proposal 6, stockholders approved on a nonbinding advisory basis the compensation of the executive officers as described in the proxy statement.

And Proposal 7, the ratification of the appointment of Deloitte & Touche LLP as the company's independent registered public accounting firm for the fiscal year ending January 31, 2014, received sufficient votes to pass.

John P. Jumper

Thank you. And in a moment, we'll move to the question-and-answer session and get to the question that was asked. But it's my duty now to conclude the formal stockholders meeting. I now declare the formal meeting adjourned.

Thank you, all. I'd like to now open the floor for questions or comments from the stockholders, and we'll begin with the question that was on the floor earlier.

And Mark, could you answer that question for us, please?

Question-and-Answer Session

Mark W. Sopp

Well, good morning, everyone. My name is Mark Sopp, I'm CFO of SAIC, Inc., future CFO of Leidos. And Mr. Hogan, I'll start with a simple explanation. It is it gets more complicated when you get into the distribution ratio and the reverse stock split, but I'll put that aside for a moment. Simply said, if you have 1,000 shares with SAIC, Inc. today, that would convert to 1,000 shares and will remain as 1,000 shares of Leidos going forward, and at the time of the separation, would receive a stock dividend for new shares of new SAIC based on the distribution ratio that is established. So in light of that set of transactions, you will remain a shareholder of Leidos. You'll become a shareholder of the new SAIC. In theory, the value of both of those together will be equal to today's value subject to what would happen between now [indiscernible]. Does that answer your question, sir? My colleagues, anything to add to that?

John P. Jumper

Thank you, Mark. Other questions please? Yes, sir, please.

Unknown Shareholder

Mark Sievers [ph] again, a stockholder, a former employee. If you can -- for the employees, I assume that most of them are stockholders also. They all know which company they're going to go with. Are they being given the option to get all of their stock as one or the other or maybe they don't want that?

John P. Jumper

Yes, sir.

Unknown Shareholder

How are you handling that to keep them focused but also not to take away any of their privileges as stockholders?

John P. Jumper

Good question. Good question. Mark, you're up again, buddy.

Mark W. Sopp

Probably, Brian, if you'd care to chime in because it can get more complicated with the types of shares that employees own. But generally speaking, for employees that are earmarked to become or assigned to become Leidos, their stock ownership would fall in that direction. And for those that go to new SAIC, their stock ownership and options and things of that nature will go towards the new companies such that their interests are precisely aligned with shareholders of the 2 respective companies. Brian, you want to add to that?

Brian F. Keenan

I'm Brian Keenan, the Head of HR for current SAIC and the Head of HR for new SAIC. That's the general question [ph], how is that going to work just like any shareholder, if you hold common stock of current SAIC, it's going to get broken up the same way Mark explained before. Anything you may hold as an employee, if you're going to go to new SAIC and it's unvested, we're going to turn that into a mix that's all follow you to new SAIC, not vested, [indiscernible] SAIC stock. If you're going to stay with Leidos, you stay with Leidos stock. There are some minor differences in the deferred compensation plan, but effectively, that's the way you're going to -- anything you hold with the shareholders is treated the same with everybody else. If it's unvested, it goes the way you're going with the new company. And everybody who is an employee today have been informed where they're going to go. That's [indiscernible]. So all the things are aligned appropriately. And we've had [indiscernible] out on our website and employees are generally aware. And we're are going to keep communicating with these [indiscernible].

Unknown Shareholder

[indiscernible]

John P. Jumper

Generally, the businesses aligned up pretty well with what they're already doing. Of course, there were some trades back and forth as appropriate to follow the right contracts, the right specialties. But generally, there's nothing illogical that happened about where employees fill and I think no surprises about how that worked out. Yes, sir? Any other comments or questions? Yes, sir, please.

Unknown Attendee

My name is Daniel Hasslinger [ph]. My company, Micro Macro Integrated Systems [ph] was fired by SAIC in 1989. A great family, great group of people [indiscernible]. Question 1. I have a couple of questions. The $1 dividend, I imagine our CFO could answer that, so we're on record, is that a qualified dividend, meaning that capital gains, 15%?

John P. Jumper

Yes, yes.

Unknown Attendee

We want to help our government out.

John P. Jumper

Yes, we can.

Unknown Attendee

But we're shareholders. Leidos, will that be as a holding company, an LLC or an S or a C corp?

John P. Jumper

Yes, it's a C corp, yes, yes, yes.

Unknown Attendee

No problem. Then furthermore, the companies, as they split into their areas, the direction that I think you had mentioned you, yourself and the other individual, is -- will there be possibly another IPO or anything that as we grow or may see public funds or so on in Wall Street be available, being taken into consideration?

John P. Jumper

Well, in the environment we're in right now, we are focused on getting the 2 companies going in a very deliberate fashion going forward. Business opportunities that present themselves in the future will be considered as a common -- as the market conditions might suggest and as these things happen. So right now, our focus is very deliberate to get us started in a positive way, profitable, growing, et cetera, in the best, and as I said, interest of the shareholders. But what develops in the future, we're wide open. Yes, sir.

Unknown Attendee

I commend our directors and yourself, Mr. Jumper, you have a very great group of people. Thank you for leading the company.

John P. Jumper

Thank you, sir. Thank you very much. Yes, sir.

Unknown Attendee

When the company is split, there's nothing that [indiscernible].

John P. Jumper

That's correct.

Unknown Attendee

There's no reason to expect that they will compete against each other.

John P. Jumper

That's correct.

Unknown Attendee

Absolutely [indiscernible].

John P. Jumper

That's correct. Now we have taken steps to make sure that the vectors, the initial vectors, the 2 companies are sort of toward their own markets. And our motto sort of is why don't we go take the other guy's business first, why wouldn't we do that rather than feeding on each other? And I think that's the attitude that you'll find among our employees and our leadership going into this separation. Other questions? We have one here.

Unknown Shareholder

Gerald Riski [ph]. I've been an employee for 30 years, and I'm a stockholder. The SAIC fund in the 401(k) plan and Vanguard plan, after the split, what will happen to that?

John P. Jumper

Okay, Brian?

Brian F. Keenan

Brian Keenan again. It's going to be handled the same way. Common stock is going to wind up being split between Leidos and new SAIC. And if you're an employee, if you go to Leidos, the expectations over time, within about a year, you can't hold company stock from another company in the plan. So initially, you'll get the same distribution like a shareholder and the expectation on the new SAIC side or Leidos side, you will get rid of those holdings inside the 401(k) plan [indiscernible]. You have -- within the year in the 401(k) plan, you can put it into another investment. If you don't make a choice within a year, it will automatically be sold or put into something out. But there will be a whole period of time [indiscernible].

Unknown Shareholder

[indiscernible] of SAIC. What about the stockholders that's no longer an employee of SAIC but they still own stock? What will happen to their stock?

Brian F. Keenan

You mean in the 401(k) plan? Okay. So if you're no longer an employee and you leave, typically you would follow the parent company. In this case, your still -- the parent is Leidos, and your stock will be combination of Leidos and the new SAIC. And it should be in the Leidos historical plan, you can keep Leidos with the expectations you would sell new SAIC within a year of separation.

John P. Jumper

Okay. Yes, sir. The microphone, please.

Unknown Shareholder

Bee Carpenter [ph], current employee, former employee turning back to SAIC. I'm happy to do so. You mentioned ERGs, and I forgot the exact explanation what those mean, employee resource groups, I believe. Okay. Great thing to have is a vehicle for employees to work with each other across the company and to relationships [ph]. And I understand that they have means of doing that. And I've looked at several of the charters. I'm a former employee [indiscernible], and I believe strongly that it's slightly unique and different from some of those current ERGs. I'd just like to put in a vote or mention the words for something like employee forum [ph]. I believe it's been suspended, and perhaps it should reemerge as an ERG or something. That certainly is a valuable purpose because we believe the other ERGs do not serve as the voice of the employees direct to people like yourself and the new SAIC Inc. and the Leidos as well.

John P. Jumper

Thank you. And you can be assured that we're going to have adequate ways of communicating vertically with our employees in all of their forms going forward. So yes, sir, please?

Unknown Shareholder

Mitch Hustevi [ph], a retired employee, stockholder. Chairman Jumper, I have a question that appeals with your opening slide and describing SAIC and Leidos. It struck me that if I deleted SAIC, 38,000 employees, that the statements were somewhat generic and any company similar to SAIC might have the same opening slide. I'd like to hear your comments on, going forward, why we now have a competitive edge. What is new in SAIC that gives us a competitive edge that will make us grow into 2 great companies?

John P. Jumper

And there are 2 -- there are lots of reasons, but there are 2 main reasons. First of all, we relieve ourselves from billions of dollars of hindrance in organizational conflict of interest. But it built up over the 40-plus years of the history of the company. Whereas one SAIC, we were completely prohibited from competing in entire segments of the market because the other side of the company or the services side of the company or one or the other had a function in either evaluating or preparing proposals or doing studies that set requirements for the larger business. So if you take the world, for instance, of Electronic Warfare, because we had a role in establishing requirements, we're evaluating equipment in Electronic Warfare, we were not able to compete in any services, Electronic Warfare programs, billions of dollars a year. That opens space for us to be able to compete even in a down market, when revenues are being depressed on the government, when sequestration is in place. We now have open opportunities that we did not have before. And of course, the other factor is that when you take the 2 companies we have, a $4.5 billion company and a $6.5 billion company, it's different from what the competition has done when they have sort of spun off their services company for instance. You take -- they take what -- they sort of didn't want what was a conflict which is probably maybe 10% of the business and sort of shoved it aside. We are proud of our services and information IT business, as well as our solution business. And that is a $4.5 billion chunk and a $6.5 billion chunk. It is -- you have to -- you can't just take all of the overhead from the $4.5 billion side and switch it over to the $6.5 billion side in order to get your cost basis down for services or vice versa. You have to design both companies from scratch and to cost. So what we have been able to do and I think is what a lot of my fellow CEOs would love to be able to do is start from scratch and create 2 companies that are built to comply with the cost structure that is going to take to go be competitive into the future. Those 2 things are the 2 things, I think, among many others, that will make us -- give us an edge and make us much more competitive into the future.

Unknown Shareholder

And let me just have one follow-up question, focusing on something conflict of interest component of your answer, would you dare project the increase in revenues that would come from that change alone?

John P. Jumper

It's -- the potential is in the billions. But no, I don't want to be predictive because you have to -- it's a very deliberate process of making sure you've got the right qualifications. You've got to go, in many cases, take business away from someone else. There's some low hanging fruit that we can go after fairly early because we already have the qualifications. But this is -- I think it's going to take a time for us to be able to establish ourselves in these markets. But we have the people. We have the talent to do that. So when you open up a $30 billion opportunity, there is bound to be some things that you can -- which is what we're doing, there are bound to be opportunities to lift your revenue accordingly. Other questions? Yes, sir? Yes, Yes. Yes, ma'am?

Unknown Shareholder

I'm Becky's Siserck [ph], and I'm a current stockholder. I have 2 different questions. One is could you elaborate on the decision to do a reverse stock split?

John P. Jumper

And the other question?

Unknown Shareholder

It's about the rent. So I thought maybe we could -- it's a fairly different subject.

John P. Jumper

Okay, okay. There are people more qualified than I to talk about the reverse stock split. So Mark?

Mark W. Sopp

Okay. Becky [ph], great to see you. The reason for the reverse stock split is the following. Many institutional shareholders, which comprise 90-plus percent of our investing class, our shareholders are significantly institutional investors, tend to shy away from stocks that trade in single-digit pricing for a variety of reasons. And so it's a pretty widely accepted fact that for IPOs or other situations for a company can affect their price to do so well above single-digit territories that can attract as many possible investors for their stock as possible, more demand, better situation from a stockholder perspective. And so in this opportunity where we're today trading roughly $15 today and to Mr. Hogan's [ph] question, when you receive the stock dividend from new SAIC, the value attributable to the new SAIC will naturally deflate that $15 to a lower number replaced by the value, reciprocal value, if you will, of new SAIC that is reflected in the $15 price. If you add the 2 together, you should get $15. But one comes down considerably because of the removal of the value of new SAIC, that will be Leidos. That could get pretty close to single-digit territory. we had an opportunity to avoid that by doing a reverse stock split where our shareholders would actually, at the current share count, reduce but the intrinsic value would stay the same, having the impact of raising the price by the reciprocal. But we do a reverse split of 2:1, that having 1,000 shares, you have 500 shares with the stock price for Leidos doubled and have its name value overall. So it's a way to really improve the demand of the stock, which is with our shareholders over the long term.

Unknown Shareholder

Don't down yet. So given that, if I now own half the number of shares but at equal value in total, what happens to the dividend? Do I get less dividend? Or does the dividend go up pro-rationally to equal [indiscernible]?

Mark W. Sopp

[indiscernible]

Unknown Shareholder

Great, okay. Great, good news, okay. Now my second question, it has to do with the real estate. I know that we've decided that new SAIC is going to stay in Tower 3 and that Tower 1 and 2 are going to be, I guess, cordoned off and rented to some third-party company or companies. The talk around the water cooler is why are we doing this? Why wouldn't we just cordon it off and have Leidos in one area and new SAIC in the other if we're trying to truly reduce cost? I think we know that we own the property at a really good price. So we're kind of -- me and people I talk to you were just wondering of that decision-making.

John P. Jumper

Well, if there's anything harder than naming the company, it's the real estate. So there are several elements to this, and it's really a long answer. And we probably need to sit down and have a longer conversation about this.

Unknown Shareholder

Okay, I'm available.

John P. Jumper

It's about how you consolidate the real estate around the whole Washington area and taking the opportunity to get a place that is the right size that allows you to consolidate our real estate throughout the whole region. We could have done exactly what you said except that having the same people occupy the same building and the same cafeteria would not look to us or to outsiders as if you'd really separated the company. You have a new company called Leidos that has really no brand recognition and needs to be, we thought, out where it could be in an entity where it's recognized separately, not in a place that will forever be known. I don't care if General Motors moves into this building. This will always be SAIC Towers, like the Chrysler Building in New York or something. This will forever be associated with SAIC. Leidos, in order to do what it needs to do, it needs to be separate. It needs to be identified separately and be on its way. So all those considerations. And then there's a long explanation about the finances of it that Stu could take more of your time. Then if you're a current employee, I'm willing to give -- to explain it to you. So thank you for that question. Yes, ma'am?

Unknown Shareholder

Sir, I'm Gretchen Vogel [ph]. I am a shareholder and a current employee. Following on Becky's [ph] question, and I understand that, that response is making Leidos its own and its separate. And there's an interesting pool going on to where it will locate. How soon -- what's the timeline for making this split? our strength is our employees, our intellectual capital. Now you've got competitors sitting in the same building, at the same cafeteria, using the same [indiscernible].

John P. Jumper

So the timing on the split, is that what you're saying?

Unknown Shareholder

The physical split of moving Leidos from the Towers into its own entity as a way to assure shareholders and also employees. This is not a pleasant split for many people. There's tremendous loyalty to SAIC. There's tremendous excitement about Leidos. How are we moving -- how are we splitting these people up? When are we moving?

John P. Jumper

The when is soon, and it's a financial transaction that has to go through. It follows the sale of the property here. And of course, I think the employees know which way they're going. I think that's not a mystery. But I think it happens -- the move will happen before the spin, and the spin happens in the next couple of months. We can't be precise on that because we're subject to regulatory approvals. But all of this is receiving on the pace that is posted in ISSAIC, and the timelines that we are all familiar with, and we're at the point right now where a move is more or less the next step, yes. And we all share the loyalty and the dedication to the company. None of this is being done out of any sense of disloyalty to you, our employees or the company. It's trying to preserve the best of what we've got and be competitive into the future is what we're focused on.

Unknown Shareholder

We understand that. For those of us who've gone through divorce, this is exactly the same thing. Even though it's the best for everybody, it's painful.

John P. Jumper

Thank you. It is, it is. Other questions? Yes, sir. Ralph, buddy?

Unknown Shareholder

I joined SAIC in '77 and bought my first stock and we've been very profitable. We went for many, many years without a dividend, and we had a blockbuster dividend in '06, which was worth 1/3 of the value of the stock that come out of the dividend. And then last year came a surprise in SAIC giving dividend. And now uncertainty, we don't -- can't expect that Leidos is going to pick up the entire dividend, continuing on, whether it's going to be 60% of the prior size. We don't know if SAIC is going to be Leidos [ph] or consume a portion of like 40% of the present dividend and if that can be imposed upon them or if they are encouraged to come up with the same decision. Can you predict what the dividend situation is going to be with the split -- when the split goes into effect?

John P. Jumper

The Board of Directors every quarter reviews the dividend policy. We see no reason to change where we are for the -- at the current time. But the situation that you live with quarter to quarter, especially during sequestration, dictates what's best for all shareholders with regard to dividends. And that's the way we consider and look at it every single quarter, and that's what we'll continue to do. Mark?

Mark W. Sopp

I'd just like to add more color to your question, Mr. Sievers [ph], because we -- and we have publicly stated this, so I'm just repeating for the public record. But we did state that we intend to continue the regular dividend post-separation in aggregate, if you will. And so there's no plan to change that. And we also publicly stated that we expect both companies to pick up, if you will, or pay a pro rata portion of that existing regular dividend in correlation to their profitability and/or their cash flows so that they would have an equal amount of sharing, if you will, of that current dividend that is commensurate with their ability to sustain that via the profitability and cash flows of each prospective business. So that is the plan.

John P. Jumper

Yes, sir?

Unknown Shareholder

[indiscernible] asked a couple of questions. My question is when you split the company, are both companies going to be publicly traded on the New York Stock Exchange? And will one of those companies, the new company, be considered an IPO? Or what is the consideration of that? And what is the risk of the question that was asked just before me, what is the risk to our stock in both companies? I mean, will you assume we're going to set a price but is the public going to consider that price the same?

John P. Jumper

Well, the market forces will determine the price. But they will both be publicly traded companies, yes, as we emerge from this separation. So what assurances? The assurance is that we have created 2 competitive businesses that are attractive to investors. We have investor roadshows planed where we go out and we present the case for both of our companies. We'll be on the road much of next month doing that and preparing ourselves for this separation that will convince investors that this is the right place to have their -- make their investments. And that's our plan. Other questions?

Thank you very much, ladies and gentlemen. This will conclude the meeting today. Thank you.

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