353394--5/1/2006--SCIENCE_APPLICATIONS_INTERNATIONAL

related topics

{regulation, government, change}

{stock, price, share}

{cost, contract, operation}

{stock, price, operating}

{loss, insurance, financial}

{personnel, key, retain}

{acquisition, growth, future}

{financial, litigation, operation}

{provision, law, control}

{system, service, information}

{customer, product, revenue}

{debt, indebtedness, cash}

{cost, regulation, environmental}

{property, intellectual, protect}

{operation, international, foreign}

Risks Relating to Our Business We depend on our contracts with U.S. Government agencies for a significant portion of our revenues and, if our reputation or relationships with these agencies were harmed, our future revenues and growth prospects would be adversely affected. The U.S. Government may modify, curtail or terminate our contracts at any time prior to their completion and, if we do not replace them, we may be unable to sustain our revenue growth and may suffer a decline in revenues. We may not realize as revenues the full amounts reflected in our backlog, which could adversely affect our future revenues and growth prospects. The U.S. Government has increasingly relied on IDIQ and other contracts that are subject to a competitive bidding process. Due to this competitive pressure, we may be unable to sustain our revenue growth and profitability. Our overall profit margins on our contracts may decrease and our results of operations could be adversely affected if material and subcontract revenues continue to grow at a faster rate than labor-related revenues. A decline in the U.S. defense budget or changes in budgetary priorities may adversely affect our future revenues and limit our growth prospects. A delay in the completion of the U.S. Government s budget process could delay procurement of our services and solutions and have an adverse effect on our future revenues. Our financial results may vary significantly from period-to-period. The failure to successfully resolve issues related to our Greek Olympic contract could adversely affect our profitability and could require us to make large payments to the Greek government. We use estimates in recognizing revenue, and changes in our estimates could adversely affect our future financial results. Adverse judgments or settlements in legal disputes could require us to pay potentially large damage awards, which would adversely affect our cash balances and profitability. Our failure to attract, train and retain skilled employees, including our management team, would adversely affect our ability to execute our strategy. Our revenues and growth prospects may be adversely affected if we or our employees are unable to obtain the security clearances or other qualifications we and they need to perform services for our customers. Employee misconduct, including security breaches, or our failure to comply with laws or regulations applicable to our business could cause us to lose customers or our ability to contract with the U.S. Government. Our U.S. Government contracts may be terminated and we may be liable for penalties under a variety of procurement rules and regulations and changes in government regulations or practices could adversely affect our profitability, cash balances or growth prospects. Our business is subject to routine audits and cost adjustments by the U.S. Government, which, if resolved unfavorably to us, could adversely affect our profitability. If we are unable to accurately estimate the costs, time and resources, or to effectively manage and control costs, associated with various contractual commitments, our profitability may be adversely affected. Our services and operations sometimes involve using, handling or disposing of hazardous materials, which could expose us to potentially significant liabilities. Acquisitions, investments and joint ventures could result in operating difficulties, dilution and other adverse consequences to our business. In conducting our business, we depend on other contractors and subcontractors. If these parties fail to satisfy their obligations to us or the U.S. Government, or if we are unable to maintain these relationships, our revenues, profitability and growth prospects could be adversely affected. Systems failures could disrupt our business and impair our ability to effectively provide our products and services to our customers, which could damage our reputation and adversely affect our revenues and profitability. We have only a limited ability to protect our intellectual property rights, which are important to our success. Our failure to adequately protect our intellectual property rights could adversely affect our competitive position. We face risks associated with our international business. We face aggressive competition that can impact our ability to obtain contracts and therefore affect our future revenues and growth prospects. Our existing indebtedness may affect our ability to take certain extraordinary corporate actions and may negatively affect our ability to borrow additional amounts at favorable rates. Risks Relating to Our Stock Because no public market exists for our stock, the ability of stockholders to sell their SAIC stock is limited. If a trade in the limited market is undersubscribed, our stockholders may not be able to sell all the shares they desire to sell. Our stock price may be impacted by the lack of liquidity provided by the limited market. The ability of stockholders to sell or transfer their common stock outside the limited market is restricted. Our stock price and the price at which all trades in the limited market occur is determined by our board of directors and is not established by market forces. Future returns on our common stock may be significantly lower than historical returns. Changes in our business, the volatility of the market value of our comparable companies and the impact of litigation and disputes may increase the volatility of the stock price. Restrictions in our certificate of incorporation and bylaws may discourage takeover attempts that you might find attractive. You may not be able to rely on forward-looking statements.

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353394--5/1/2006--SCIENCE_APPLICATIONS_INTERNATIONAL_CORP