SAIC Prepares $1 Billion Offering

Workers Would Retain Control of San Diego Contractor

San Diego-based government contractor Science Applications International Corp. has set a price range for its initial public offering of between $13 and $15, which would give the company proceeds of about $1 billion, according to documents filed yesterday with the Securities and Exchange Commission.

The company, which has been publicly contemplating an IPO for the past year, plans to sell 75 million shares to the public. The offering is expected this fall.

SAIC has been employee-owned since its founding in 1969, and its 43,000 employees would retain control of the firm after it goes public.

The company has estimated that after the IPO, current shareholders will own 81 percent of the firm's capital stock and hold 98 percent of shareholder voting power because each current share will be worth 10 votes. Current stockholders will also share in a special dividend totaling between $620 million and $1.4 billion.

The path to a public offering was cleared Wednesday, when shareholders approved a corporate reorganization that was a crucial part of chief executive Ken C. Dahlberg's plan to take the company public.

SAIC, which would trade on the New York Stock Exchange under the symbol SAI, had $7.8 billion in revenue last year, with 89 percent of that total coming from contracts with the U.S. government.

In its filing with the SEC, the company said it expected government spending to grow in areas where it specializes "as a result of homeland security and intelligence needs arising from the global war on terror, the ongoing transformation of the U.S. military and the increased reliance on outsourcing by the U.S. government."

The company also warned, however, that the government has recently begun using strategies that make the contracting industry more competitive, which could hurt the company's bottom line.

"The U.S. government has increasingly relied on certain types of contracts that are subject to a competitive bidding process," according to SAIC's filing. "Due to this competitive pressure, we may be unable to sustain our revenue growth and profitability."