SAIC Earnings Call Nuggets: Health Business and Engineering vs Healthcare

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SAIC (NYSE:SAI) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.

Health Business

Ross Cowley – Credit Suisse: This is actually Ross Cowley in for Rob. I had two quick questions. On the first one specifically looking at health and engineering. You had nice growth of around 25% there and the margin came down. Now I know you said in the 8-K that some of this was because of intangible asset amortization expenses, but is it possible to breakout, how much of the pressure is related to spend and how much is related to things such as greater competition, et cetera?

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Mark W. Sopp – EVP and CFO: This is Mark here. I did mention in my prepared remarks that the health businesses we did, make some steps to integrate the previous Vitalize acquisition as well as the recent maxIT acquisition, and so that was pretty meaningful in the quarter and, nonetheless the right thing to do. On the engineering side, we had strong performance overall, I would say and good energy or engineering products going out the door as well, and also including, give Joe a lot of credit, a healthy maintenance business as part of that which has been very profitable for us. So, a little bit of investment. Very bullish on the long-term prospects of both growth and prosperity in that area.

Ross Cowley – Credit Suisse: Just one more. Is it possible to quantify the mix of cost-plus versus fixed-price contracts in each of the two new businesses in Leidos and SAIC?

Mark W. Sopp – EVP and CFO: Give us a second to check that out. Yeah, why don’t we come back to that question in a moment. We have it for the consolidated business of course in the sectors, but we’d like to redo it for Leidos and new SAIC per your question.

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