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<TITLE>Science Applications International Corporation</TITLE>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="2">As filed with the Securities and Exchange
Commission on August&nbsp;30, 2002.</FONT></B>
</DIV>

<DIV align="right">
<B><FONT size="2">Registration Statement
No.&nbsp;333-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B>
</DIV>

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<B><FONT size="4">SECURITIES AND EXCHANGE COMMISSION</FONT></B>

<DIV align="center">
<B>Washington, D.C. 20549</B>
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<B><FONT size="5">Form S-8</FONT></B>

<DIV align="center">
<B>REGISTRATION STATEMENT</B>
</DIV>

<DIV align="center">
<B>UNDER</B>
</DIV>

<DIV align="center">
<B>THE SECURITIES ACT OF 1933</B>
</DIV>

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<B><FONT size="6">Science Applications International
Corporation</FONT></B>

<DIV align="center">
<I><FONT size="2">(Exact name of registrant as specified in its
charter)</FONT></I>
</DIV>

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    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Delaware</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <B><FONT size="2">95-3630868</FONT></B></TD>
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    <TD align="center" valign="top">
    <I><FONT size="2">(State or other jurisdiction<BR>
    of incorporation or organization)</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <I><FONT size="2">(I.R.S. Employer<BR>
    Identification No.)</FONT></I></TD>
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<B><FONT size="2">10260 Campus Point Drive</FONT></B>

<DIV align="center">
<B><FONT size="2">San Diego, California 92121</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(858)&nbsp;826-6000</FONT></B>
</DIV>

<DIV align="center">
<I><FONT size="2">(Address, including zip code, and telephone
number, including</FONT></I>
</DIV>

<DIV align="center">
<I><FONT size="2">area code of registrant&#146;s principal
executive offices)</FONT></I>
</DIV>

<P align="center">
<B><FONT size="2">Direct Stock Purchase Program</FONT></B>

<DIV align="center">
<I><FONT size="2">(Full title of the plan)</FONT></I>
</DIV>

<P align="center">
<B><FONT size="2">Douglas E. Scott, Esq.</FONT></B>

<DIV align="center">
<B><FONT size="2">Senior Vice President and General
Counsel</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Science Applications International
Corporation</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">10260 Campus Point Drive</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">San Diego, California 92121</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(858)&nbsp;826-6000</FONT></B>
</DIV>

<DIV align="center">
<I><FONT size="2">(Name, address, including zip code, and
telephone number,</FONT></I>
</DIV>

<DIV align="center">
<I><FONT size="2">including area code, of agent for
service)</FONT></I>
</DIV>

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<B><FONT size="2">CALCULATION OF REGISTRATION FEE</FONT></B>

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    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
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    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
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    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="17%"><FONT size="2">&nbsp;</FONT></TD>
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    <TD colspan="3"></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Proposed Maximum</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Proposed Maximum</FONT></B></TD>
    <TD></TD>
    <TD></TD>
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<TR>
    <TD align="center" nowrap><B><FONT size="1">Title of Each Class of</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Amount to</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Offering Price</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Aggregate</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Amount of</FONT></B></TD>
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    <TD align="center" nowrap><B><FONT size="1">Securities to be Registered</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">be Registered*</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Per Unit**</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Offering Price</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Registration Fee</FONT></B></TD>
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    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Class&nbsp;A Common Stock, par value $.01 per
    share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">1,242,804
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">$28.90
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">$35,917,036
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="bottom">
    <FONT size="2">$3,305
    </FONT></TD>
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    <TD width="96%"></TD>
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    <TD><FONT size="2">&nbsp; *&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">This Registration Statement shall also cover any
    additional shares of Class A Common Stock which become issuable
    under the Direct Stock Purchase Program or to the selling
    stockholders by reason of any stock dividend, stock split,
    recapitalization or other similar transaction which results in
    an increase in the number of the outstanding shares of
    Registrant&#146;s Common Stock.
    </FONT></TD>
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    <TD><FONT size="2">**&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Estimated solely for the purpose of calculating
    the registration fee. The proposed maximum offering price per
    share is estimated in accordance with Rule 457(h) under the
    Securities Act and was determined using the formula price (as
    defined in the Prospectus which is a part of this Registration
    Statement) of the SAIC Class&nbsp;A Common Stock on the date
    hereof.
    </FONT></TD>
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<P align="center">
<B><FONT size="2">EXPLANATORY NOTE</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This Registration Statement on Form&nbsp;S-8
registers 1,242,804 shares of Class&nbsp;A common stock of
Science Applications International Corporation that may be
issued from time to time under our Direct Stock Purchase Program
or offered for resale by certain selling stockholders under a
reoffer prospectus included in this Registration Statement. The
contents of the Registrant&#146;s Registration Statement on
Form&nbsp;S-8 (File No.&nbsp;333-67698) filed on
October&nbsp;17, 2001 (the &#147;Earlier Registration
Statement&#148;) are hereby incorporated by reference pursuant
to Instruction E of Form&nbsp;S-8. This Registration Statement
combined with the Earlier Registration Statement registers an
aggregate of 10,750,000 shares of the Registrant&#146;s
Class&nbsp;A Common Stock of which Registrant is offering
9,000,000 shares and the selling stockholders are offering
1,750,000 shares.
</FONT>

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<DIV align="left">
<B><FONT size="2">PROSPECTUS</FONT></B>
</DIV>

<P align="right">
<IMG src="a84085ora84085l1.gif" alt="(SAIC LOGO)">

<P align="center">
<B><FONT size="4">10,750,000 Shares</FONT></B>

<DIV align="center">
<B><FONT size="4">of Class&nbsp;A Common Stock</FONT></B>
</DIV>

<P align="center">
<B><FONT size="5">Science Applications International
Corporation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">SAIC is offering 9,000,000 shares of its
Class&nbsp;A common stock to present and future employees,
consultants and directors, which includes shares that are
anticipated to be offered and sold directly by our stockholders
in our limited market, which sales may be attributed to SAIC by
the SEC.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The selling stockholders may from time to time
offer and sell up to an aggregate of 1,750,000 shares of
Class&nbsp;A common stock under this prospectus.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our certificate of incorporation limits a
stockholder&#146;s right to transfer these shares. We have a
right to repurchase the shares if a stockholder&#146;s
employment or affiliation with us terminates.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All stockholders who sell shares in our limited
market, other than our retirement plans, will pay a
1%&nbsp;commission. We will receive proceeds only from sales of
shares made directly by us. We will not receive any proceeds
from sales made by our stockholders, even when such sales are
attributable to SAIC by the SEC.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>Investing in our Class&nbsp;A common stock involves risks.
See &#147;Risk Factors&#148; beginning on page&nbsp;2 to read
about factors you should consider before buying shares of our
common stock.</B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved
of these securities or determined if this prospectus is truthful
or complete. Any representation to the contrary is a criminal
offense.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Class&nbsp;A common stock is not listed on
any national securities exchange or the Nasdaq stock market. Our
board of directors determines the price at which shares are
purchased. They use a valuation process, which includes a
formula and the assistance of an independent appraisal firm, to
establish the stock price. The price of the shares on
August&nbsp;30, 2002 was $28.90.
</FONT>

<P align="center">
<FONT size="2">The date of this prospectus is August 30, 2002
</FONT>
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<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
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<TR><TD colspan="9"><A HREF="#000"><FONT size="2">SCIENCE APPLICATIONS INTERNATIONAL CORPORATION</FONT></A></TD></TR>
<TR><TD colspan="9"><A HREF="#001"><FONT size="2">RISK FACTORS</FONT></A></TD></TR>
<TR><TD colspan="9"><A HREF="#002"><FONT size="2">STATEMENT REGARDING FORWARD-LOOKING STATEMENTS</FONT></A></TD></TR>
<TR><TD colspan="9"><A HREF="#003"><FONT size="2">THE LIMITED MARKET</FONT></A></TD></TR>
<TR><TD colspan="9"><A HREF="#004"><FONT size="2">USE OF PROCEEDS</FONT></A></TD></TR>
<TR><TD colspan="9"><A HREF="#005"><FONT size="2">DETERMINATION OF OFFERING PRICE</FONT></A></TD></TR>
<TR><TD colspan="9"><A HREF="#006"><FONT size="2">DIRECT STOCK PURCHASE PROGRAM</FONT></A></TD></TR>
<TR><TD colspan="9"><A HREF="#007"><FONT size="2">PLAN OF DISTRIBUTION</FONT></A></TD></TR>
<TR><TD colspan="9"><A HREF="#008"><FONT size="2">DESCRIPTION OF CAPITAL STOCK</FONT></A></TD></TR>
<TR><TD colspan="9"><A HREF="#009"><FONT size="2">SELLING STOCKHOLDERS</FONT></A></TD></TR>
<TR><TD colspan="9"><A HREF="#010"><FONT size="2">LEGAL MATTERS</FONT></A></TD></TR>
<TR><TD colspan="9"><A HREF="#011"><FONT size="2">AVAILABLE INFORMATION</FONT></A></TD></TR>
<TR><TD colspan="9"><A HREF="#012"><FONT size="2">INCORPORATION OF INFORMATION BY REFERENCE</FONT></A></TD></TR>
<TR><TD colspan="9"><A HREF="#013"><FONT size="2">INDEMNIFICATION</FONT></A></TD></TR>
<TR><TD colspan="9"><A HREF="#014"><FONT size="2">SIGNATURES</FONT></A></TD></TR>
<TR><TD colspan="9"><A HREF="a84085orexv5wxay.txt">EXHIBIT 5(A)</A></TD></TR>
<TR><TD colspan="9"><A HREF="a84085orexv23wxby.txt">EXHIBIT 23(B)</A></TD></TR>
<TR><TD colspan="9"><A HREF="a84085orexv23wxcy.txt">EXHIBIT 23(C)</A></TD></TR>
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<P align="center">
<B><FONT size="2">TABLE OF CONTENTS</FONT></B>

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    <TD width="90%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
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    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Page</FONT></B></TD>
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    <TD></TD>
    <TD></TD>
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    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Science Applications International Corporation
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Risk Factors
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Statement Regarding Forward-Looking Statements
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">The Limited Market
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Use of Proceeds
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Determination of Offering Price
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Direct Stock Purchase Program
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Plan of Distribution
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Implementation of Statement of Financial
    Accounting Standards (&#147;SFAS&#148;) No.&nbsp;142,
    &#147;Goodwill and Other Intangible Assets&#148;
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Description of Capital Stock
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Selling Stockholders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Legal Matters
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Available Information
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Incorporation of Information by Reference
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Indemnification
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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<!-- link1 "<FONT size="2">SCIENCE APPLICATIONS INTERNATIONAL CORPORATION</FONT>" -->
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<P align="center">
<B><FONT size="2">SCIENCE APPLICATIONS INTERNATIONAL
CORPORATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We provide diversified professional and technical
services involving the application of scientific expertise to
solve complex problems for both commercial and government
customers in the U.S. and abroad. These services frequently
involve computer and systems technology. Through one of our
subsidiaries, Telcordia Technologies, Inc. (which we refer to as
&#147;Telcordia&#148;), we are a global provider of software,
engineering and consulting services, advanced research and
development, technical training and other services to the
telecommunications industry.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We provide technical services mainly in the
following market areas:
</FONT>
<P>

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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
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    <FONT size="2">national security
    </FONT></TD>
</TR>

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    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
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    <FONT size="2">health care
    </FONT></TD>
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    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
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    <FONT size="2">environment
    </FONT></TD>
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    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
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    <FONT size="2">energy
    </FONT></TD>
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    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">telecommunications
    </FONT></TD>
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    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">information technology
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our principal office and corporate headquarters
are located in San Diego, California at 10260&nbsp;Campus Point
Drive, San Diego, California 92121 and our telephone number is
(858)&nbsp;826-6000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">This summary highlights information contained
elsewhere in this prospectus. This summary is not complete and
may not contain all of the information that you should consider
before investing in the securities.</FONT></B>

<P align="center"><FONT size="2">1
</FONT>

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<P align="center">
<B><FONT size="2">RISK FACTORS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">You should carefully consider the risks and
uncertainties described below in your evaluation of our business
and us. These are not the only risks and uncertainties that we
face. If any of these risks or uncertainties actually occur, our
business, financial condition or operating results could be
materially harmed and the price of our common stock could
decline.</FONT></I>

<P align="left">
<B><FONT size="2">Risks Relating to Our Business</FONT></B>

<DIV>&nbsp;</DIV>

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    <B><I><FONT size="2">A substantial percentage of our revenue is
    from U.S. Government customers and the regional Bell operating
    companies</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We derive a substantial portion of our revenues
from the U.S. Government as a prime contractor or a
subcontractor. The percentage of total revenues from the
U.S.&nbsp;Government was 58% in fiscal year 2002, 54% in fiscal
year 2001 and 52% in fiscal year 2000. Our revenues could be
adversely impacted by a reduction in the overall level of
U.S.&nbsp;Government spending and by changes in its spending
priorities from year to year. Furthermore, even if the overall
level of U.S.&nbsp;Government spending does increase or remains
stable, the budgets of the government agencies with whom we do
business may be decreased or our projects with them may not be
sufficiently funded, particularly because Congress usually
appropriates funds for a given project on a fiscal-year basis
even though contract performance may take more than one year. In
addition, obtaining U.S.&nbsp;Government contracts remains a
highly competitive process and this has led to a greater portion
of our revenue base being associated with contracts providing
for a lower amount of reimbursable cost than we have
traditionally been able to recover.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Telcordia historically has derived a majority of
its revenues from the regional Bell operating companies which we
call &#147;RBOCs.&#148; The percentage of total Telcordia
revenues from the RBOCs was 65% in fiscal year 2002, 62% in
fiscal year 2001 and 53% in fiscal year 2000. With the downturn
in the telecommunications industry, Telcordia&#146;s business is
more dependent on its business from the RBOCs and it continues
efforts to diversify its business by obtaining new customers. A
continued downturn in the telecommunications industry and loss
of business from the RBOCs could further reduce revenues and
have an adverse impact on our business.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have made progress in our efforts to diversify
our business across a greater number of customers. However, we
still remain heavily dependent upon the U.S.&nbsp;Government as
our primary customer and the RBOCs as a major source of
Telcordia&#146;s revenues. Our future success and revenue growth
will depend in part upon our ability to continue to expand our
customer base.
</FONT>

<DIV>&nbsp;</DIV>

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    <B><I><FONT size="2">We face increasing risks associated with
    our international business</FONT></I></B></TD>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are increasingly subject to the risks of
conducting business internationally. These risks include:
</FONT>
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    <FONT size="2">unexpected changes in regulatory requirements
    </FONT></TD>
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    <TD>&nbsp;</TD>
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    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
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    <FONT size="2">tariffs
    </FONT></TD>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
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    <FONT size="2">political and economic instability
    </FONT></TD>
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    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">unfamiliar and unknown business practices and
    customs
    </FONT></TD>
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    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
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    <FONT size="2">restrictive trade policies
    </FONT></TD>
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    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
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    <FONT size="2">inconsistent product regulation
    </FONT></TD>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
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    <FONT size="2">cost of complying with a variety of laws
    </FONT></TD>
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    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">licensing requirements
    </FONT></TD>
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</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We do not know the impact that such regulatory,
geopolitical and other factors may have on our business in the
future. These risks may be significant for entities such as
Informatica Negocios&nbsp;y Tecnologia, S.A.
(&#147;INTESA&#148;), a Venezuelan joint venture in which we own
60%. INTESA derives substantially all of its
</FONT>

<P align="center"><FONT size="2">2
</FONT>

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<DIV align="left">
<FONT size="2">revenues from Petroleos de Venezuela, S.A.
(&#147;PDVSA&#148;), Venezuela&#146;s national oil company,
which is not only INTESA&#146;s primary customer, but also our
joint venture partner that owns 40% of INTESA. During the first
quarter of fiscal 2003, revenues from INTESA represented 4% of
our consolidated revenues. The political and economic
environment in Venezuela is unstable and we are uncertain what
impact, if any, this may have on INTESA&#146;s business. In
addition, the basic term of the outsourcing contract INTESA has
with PDVSA expired on June&nbsp;30, 2002 and the parties are
operating under a six-month agreement to allow for ongoing
service delivery through December&nbsp;31, 2002. PDVSA and SAIC
have recently commenced negotiations in regard to PDVSA&#146;s
request to purchase our ownership interest in INTESA. Therefore,
our role in the future ownership and operation of INTESA is
uncertain.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have transactions denominated in foreign
currencies because some of our business is conducted outside of
the United States. In addition, our foreign subsidiaries
generally conduct business in foreign currencies. We are exposed
to fluctuations in exchange rates, which could result in losses
and have a significant impact on our results of operations. Our
risks include the possibility of significant changes in exchange
rates and the imposition or modification of foreign exchange
controls by either the U.S. or applicable foreign governments.
We have no control over the factors that generally affect these
risks, such as economic, financial and political events and the
supply and demand for the applicable currencies. We may use
forward foreign currency exchange rate contracts to hedge
against movements in exchange rates for contracts denominated in
foreign currencies. We cannot assure you that a significant
fluctuation in exchange rates will not have a significant
negative impact on our results of operations.
</FONT>

<DIV>&nbsp;</DIV>

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    <TD>
    <B><I><FONT size="2">Our business could suffer if we lose the
    services of Dr.&nbsp;Beyster or other key
    personnel</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our success to date has resulted in part from the
significant contributions of our executive officers, in
particular those of our founder and chief executive officer,
J.R.&nbsp;Beyster (age 78). Dr.&nbsp;Beyster has been our only
chief executive officer and chairman of the board since he
founded the company in 1969. He also currently serves as our
president. Dr.&nbsp;Beyster plays a key role in many aspects of
our business, including marketing, operations and management.
Dr.&nbsp;Beyster and our other executive officers are expected
to continue to make important contributions to our success. The
loss of Dr.&nbsp;Beyster or any of the other key personnel could
materially affect our operations. We generally do not have
long-term employment contracts with these key personnel nor do
we maintain &#147;key person&#148; life insurance policies.
</FONT>

<DIV>&nbsp;</DIV>

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    <TD>
    <B><I><FONT size="2">Unsuccessful resolution of the Telkom South
    Africa Arbitration could harm our business</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our Telcordia subsidiary filed a Demand for
Arbitration with the International Chamber of Commerce in Paris,
France initiating arbitration and seeking damages of
approximately $130&nbsp;million from Telkom South Africa related
to a contract dispute. The dispute involves a contract executed
on June&nbsp;24, 1999, pursuant to which Telcordia would provide
a Service Activation and Assurance System. The value of
Telcordia&#146;s portion of the contracted work was
$208&nbsp;million. Telcordia performed the contract for over
18&nbsp;months and delivered multiple software releases to
Telkom South Africa. On January&nbsp;12, 2001, Telcordia
notified Telkom South Africa that Telkom South Africa had
breached the contract for, among other things, taking and using
Telcordia software without paying for it, improperly refusing to
accept software deliveries, failing to cooperate in defining
future software releases, and failing to make other payments due
under the contract. On February&nbsp;2, 2001, Telkom South
Africa responded by denying Telcordia&#146;s claims and
asserting various breaches on the part of Telcordia. The parties
were unable to negotiate a mutually acceptable resolution of the
dispute. On March&nbsp;6, 2001, Telcordia initiated arbitration.
On May&nbsp;22, 2001, Telkom South Africa filed with the
International Chamber of Commerce its Answer to Telcordia&#146;s
Demand for Arbitration and its Counterclaims against Telcordia.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Telkom South Africa contends in its Counterclaims
that Telcordia breached the contract for, among other things,
failing to provide deliverables compliant with the requirements
of the contract at the times provided in the contract. Telkom
South Africa also contends that Telcordia misrepresented its
capabilities and the benefits that Telkom South Africa would
receive under the contract. Telkom South Africa seeks
substantial damages from Telcordia, including repayment of
approximately $97&nbsp;million previously paid to Telcordia
under the contract and the excess costs of reprocuring a
replacement system, estimated by Telkom
</FONT>

<P align="center"><FONT size="2">3
</FONT>

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<DIV align="left">
<FONT size="2">South Africa to be $234&nbsp;million. Telkom
South Africa&#146;s Counterclaim contains additional claims
which have not been quantified by Telkom South Africa. On
April&nbsp;11, 2002, Telkom South Africa filed an amended Answer
and Counterclaim. Telcordia disputes Telkom South Africa&#146;s
contentions and intends to vigorously defend against these
claims while pursuing its own claims in the arbitration. The
arbitration hearing to determine the merit of both parties&#146;
substantive claims commenced in May 2002 in Johannesburg, South
Africa with witness testimony. Upon completion of witness
testimony, Telcordia and Telkom South Africa submitted briefs as
requested by the arbitrator. Oral closing arguments were
presented in London, England on July&nbsp;30 and 31, 2002. At
the close of the hearing, the arbitrator indicated his intention
to issue a decision within four weeks. Telkom South Africa
submitted a letter dated August&nbsp;16, 2002 to the arbitrator
indicating that it believed the issue of the interpretation of
the contract under the laws of South Africa should be made by
the South African High Court rather than the arbitrator. The
letter also indicated that if the arbitrator did not refer that
issue to the High Court for a decision, Telkom South Africa
would file an application with the South African High Court
requesting that it decide the issue. In a letter dated
August&nbsp;27, 2002, the arbitrator responded to Telkom South
Africa&#146;s letter by reaffirming his intention to declare the
proceedings closed and rule on the issues raised in this stage
of the arbitration, but posing additional questions to Telkom
South Africa regarding its request for a judicial referral.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Due to the complex nature of the legal and
factual issues involved and the uncertainty of litigation in
general, the outcome of the arbitration is not presently
determinable; however, an adverse resolution could materially
harm our business, consolidated financial position, results of
operations and cash flows. Protracted litigation, regardless of
outcome, could result in substantial costs and divert
management&#146;s attention and resources.
</FONT>

<DIV>&nbsp;</DIV>

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    <TD>
    <B><I><FONT size="2">We face risks relating to Government
    contracts</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">The Government may modify, curtail or
terminate our contracts.</FONT></I><FONT size="2"> Many of the
U.S.&nbsp;Government programs in which we participate as a
contractor or subcontractor may extend for several years;
however, these programs are normally funded on an annual basis.
The U.S. Government may modify, curtail or terminate its
contracts and subcontracts at its convenience. Modification,
curtailment or termination of our major programs or contracts
could have a material adverse effect on our results of
operations and financial condition.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Our business is subject to potential
Government inquiries and
investigations.</FONT></I><FONT size="2"> We are from time to
time subject to certain U.S. Government inquiries and
investigations of our business practices due to our
participation in government contracts. We cannot assure you that
any such inquiry or investigation would not have a material
adverse effect on our results of operations and financial
condition.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Our contract costs are subject to audits by
Government agencies.</FONT></I><FONT size="2"> The costs we
incur on our U.S.&nbsp;Government contracts, including allocated
indirect costs, may be audited by U.S.&nbsp;Government
representatives. These audits may result in adjustments to our
contract costs. We normally negotiate with U.S.&nbsp;Government
representatives before settling on final adjustments to our
contract costs. Substantially all of our indirect contract costs
have been agreed upon through fiscal year 2000 and are not
subject to further adjustment. We have recorded contract
revenues in fiscal years 2001 and 2002 based upon costs we
expect to realize upon final audit. However, we do not know the
outcome of any future audits and adjustments and we may be
required to reduce our revenues or profits upon completion and
final negotiation of these audits.
</FONT>

<DIV>&nbsp;</DIV>

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    <TD>
    <B><I><FONT size="2">If we fail to control fixed-price or target
    cost and fee with risk sharing contracts, it may result in
    reduced profits or losses</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The percentage of our revenues from firm
fixed-price contracts was 29% for fiscal year 2002, 32% for
fiscal year 2001 and 36% for fiscal year 2000. Because we assume
the risk of performing a firm fixed-price contract at a set
price, the failure to accurately estimate ultimate costs or to
control costs during performance of the work could result, and
in some instances has resulted, in reduced profits or losses for
such contracts.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Many of our customers in the information
technology outsourcing business contract on the basis of target
cost and fee with risk sharing. The percentage of our revenues
derived from target cost and fee with risk sharing contracts was
7% for fiscal year 2002, 5% for fiscal year 2001 and 4% for
fiscal year 2000. Under target
</FONT>

<P align="center"><FONT size="2">4
</FONT>

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<DIV align="left">
<FONT size="2">cost and fee with risk sharing contracts, the
customers reimburse our costs plus a specified or target fee or
profit; however, if our actual costs exceed the target cost, our
target fee and cost reimbursement are reduced by a portion of
the overrun. Failure to control costs during performance of the
work could result in reduced profits for such contracts.
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

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    <TD>
    <B><I><FONT size="2">If we fail to recover pre-contract costs,
    it may result in reduced profits or losses</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Any costs we incur before the execution of a
contract or contract amendment are incurred at our risk, and it
is possible that the customer will not reimburse us for these
pre-contract costs. At April&nbsp;30, 2002, we had pre-contract
costs of $38,395,000. We cannot assure you that contracts or
contract amendments covering this work will be executed or that
we will recover the related costs.
</FONT>

<DIV>&nbsp;</DIV>

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    <TD></TD>
    <TD>
    <B><I><FONT size="2">If we fail to implement our acquisition or
    investment strategy, our business could suffer</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have historically supplemented our internal
growth through acquisitions, investments or joint ventures. We
evaluate potential acquisitions, investments and joint ventures
on an ongoing basis. Our acquisition and investment strategy
poses many risks, including:
</FONT>
<P>

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    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">We may not be able to compete successfully for
    available acquisition candidates, complete future acquisitions
    and investments or accurately estimate their financial effect on
    our business
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Future acquisitions, investments and joint
    ventures may require us to issue additional common stock, spend
    significant cash amounts or decrease our operating income
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">We may have trouble integrating the acquired
    business and retaining its personnel
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Acquisitions, investments or joint ventures may
    disrupt our business and distract our management from other
    responsibilities
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">If our acquisitions or investments fail, our
    business could be harmed
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

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    <TD></TD>
    <TD>
    <B><I><FONT size="2">Unfavorable economic conditions could harm
    our business</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our business, financial condition and results of
operations may be affected by various economic factors.
Unfavorable economic conditions may make it more difficult for
us to maintain and continue our revenue growth. In an economic
recession or under other adverse economic conditions, customers
and vendors may be more likely to be unable to meet contractual
terms or their payment obligations. A decline in economic
conditions may have a material adverse effect on our business.
</FONT>

<P align="left">
<B><FONT size="2">Risks Relating to Our Industry</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Our business could suffer if we fail to
    attract, train and retain skilled employees</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The availability of highly trained and skilled
professional, administrative and technical personnel is critical
to our future growth and profitability. Competition for
scientists, engineers, technicians, management and professional
personnel is intense and competitors aggressively recruit key
employees. Because of our growth and competition for experienced
personnel, particularly in highly specialized areas, it has
become more difficult to meet all of our needs for these
employees in a timely manner. We intend to continue to devote
significant resources to recruit, train and retain qualified
employees; however, we cannot assure you that we will be able to
attract and retain such employees on acceptable terms. Any
failure to do so could have a material adverse effect on our
operations.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Our failure to remain competitive could
    harm our business</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our business is highly competitive, particularly
in the business areas of telecommunications and information
technology outsourcing. We compete with larger companies that
have greater financial resources and larger technical staffs. We
also compete with smaller, more specialized entities who are
able to concentrate their resources on particular areas. We also
compete with the U.S. Government&#146;s own in-house
</FONT>

<P align="center"><FONT size="2">5
</FONT>

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<DIV align="left">
<FONT size="2">capabilities and federal non-profit contract
research centers. To continue our success, we must provide
superior service and performance on a cost-effective basis to
our customers.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Risks Relating to Our Stock</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Because no public market exists for our
    stock, the ability of stockholders to sell their SAIC stock in
    the limited market is limited</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There is no public market for the Class&nbsp;A
common stock. The limited market maintained by our wholly-owned
broker-dealer subsidiary, Bull, Inc., permits existing
stockholders to offer our stock for sale only on predetermined
trade dates and only at the price determined by the board of
directors. Generally, there are four trade dates each year,
however, a scheduled trade date could be postponed or cancelled.
The trade originally scheduled for July&nbsp;26, 2002 was
postponed to August&nbsp;16, 2002 in order to modify the stock
price set by the board of directors on July&nbsp;12, 2002 as it
no longer represented a fair market value.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">If a trade in the limited market is
    undersubscribed, our stockholders may not be able to sell all
    the shares they desire to sell</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the number of shares offered for sale by
stockholders exceeds the number of shares sought to be purchased
by authorized buyers in any trade, our stockholders who
requested to sell stock may not be able to sell all such stock
in that trade. Although we are currently authorized, we are not
obligated to purchase shares of Class&nbsp;A common stock in the
limited market on any trade date. In deciding whether to make
such purchases, we will consider a variety of factors, including
our cash position and cash flows, investment and capital
activities, financial performance, financial covenants, the
number of shares outstanding and the amount of the under
subscription in the market. This determination is not made until
the trade date. We have purchased a significant amount of
Class&nbsp;A common stock in the limited market during recent
periods. We purchased 14,028,781 shares on the trade dates in
fiscal year 2002 and 7,625,797 shares on the trade dates in
fiscal year 2001. These purchases accounted for 88.2% and 67.7%,
respectively, of the total shares purchased by all buyers in the
limited market during fiscal years 2002 and 2001. Our purchases
balanced the number of shares offered for sale by stockholders
with the number of shares sought to be purchased by authorized
buyers. If the increasing trend of trade imbalances continues,
we cannot assure you that we will continue to purchase such
excess shares in the future. Accordingly, if the aggregate
number of shares offered for sale exceeds the aggregate number
of shares sought to be purchased by authorized buyers, and we
elect not to participate in a trade or otherwise limit our
participation in a trade, our stockholders may be unable to sell
all the shares they desire to sell.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">The ability of stockholders to sell or
    transfer their common stock outside the limited market is
    restricted</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our certificate of incorporation limits our
stockholders&#146; ability to sell or transfer shares of
Class&nbsp;A common stock in some circumstances. These
restrictions include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our right of first refusal to purchase shares a
    stockholder offers to sell to a third party other than in our
    limited market
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our right to repurchase shares upon the
    termination of a stockholder&#146;s employment or affiliation
    with us
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We may, but are not obligated to, defer our
repurchase right for up to five years with respect to those
employees who qualify for our Alumni Program.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">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</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our stock price is not determined by a trading
market of bargaining buyers and sellers. Our board of directors,
most of whom are stockholders, determines the price at which the
Class&nbsp;A common stock trades by using the valuation process
that includes input from an independent appraiser and a stock
price formula as described under &#147;Determination of Offering
Price.&#148; The stock price remains in effect until
subsequently changed. The board of directors has authorized its
stock policy committee to review the stock price during the
</FONT>

<P align="center"><FONT size="2">6
</FONT>
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<DIV align="left">
<FONT size="2">period between meetings of the board of directors
to determine whether the stock price continues to represent a
fair market value, and if necessary, modify the price. If a
stock price modification is necessary, the stock policy
committee would apply the same valuation process used by the
board of directors. The stock policy committee modified the
stock price on July&nbsp;29, 2002 after it was determined that
the stock price established by the board of directors on
July&nbsp;12, 2002 no longer represented a fair market value.
All trades in the limited market will occur at the stock price
determined by the board of directors or its stock policy
committee. Our board of directors believes the stock price
represents a fair market value; however, we cannot assure you
that the stock price represents the value that would be obtained
if our stock were publicly traded. The formula, which is one
part of the valuation process, does not specifically include
variables reflecting all financial and valuation criteria that
may be relevant. In addition, our board of directors generally
has broad discretion to modify the formula. Absent changes in
the market factor used in the formula, which may change from
quarter to quarter as appropriate to reflect changing business,
financial and market conditions, and accounting and other
impacts unrelated to our value, the mechanical application of
the formula tends to reduce the impact of quarterly fluctuations
in our operating results on the stock price because the formula
takes into account our segment operating income for the four
preceding quarters.
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Future returns on our common stock may be
    significantly lower than historical returns</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We cannot assure you that the Class&nbsp;A common
stock will provide returns in the future comparable to those
achieved historically or that the price will not decline.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Changes in our business and the volatility
    of the market value of our comparable companies may increase the
    volatility of the stock price</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The stock price could be subject to fluctuations
in the future. This volatility is expected to result from the
impact on our stock price of:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the mix of our commercial and international
    business as a proportion of our overall business and the
    volatility associated with companies in those business areas
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our significant investments in publicly and
    privately traded companies and the volatility of the price of
    those companies&#146; shares
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the impact of acquisitions, investments, joint
    ventures and divestitures that we may undertake
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the volatility of the market value of comparable
    public companies that are considered in our valuation process
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Restrictions in our certificate of
    incorporation and bylaws may discourage takeover attempts that
    you might find attractive</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our certificate of incorporation and bylaws may
discourage or prevent attempts to acquire control of us that are
not approved by our board of directors, including transactions
in which stockholders might receive a premium for their shares
above the stock price. Our stockholders may view such a takeover
attempt favorably. In addition, the restrictions may make it
more difficult for our stockholders to elect directors not
endorsed by us.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Federal legislation has been proposed that
    may impact our retirement plans, stock system and
    liquidity</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Federal legislation has been proposed that, if
adopted, would impose new requirements and restrictions on
certain types of retirement plans which could impact our stock
system and liquidity. If legislation of this nature were
adopted, it would be likely that purchases of our stock by our
retirement plans would decrease and sales increase. If this
occurred, the ability of our stockholders to resell their shares
in the limited market may be adversely affected. In addition,
reduced purchases (or increased sales) of our stock by the
trustees of our retirement plans may adversely impact our
liquidity and cash position. Because of the uncertainty of if,
when, and in what final form such legislation may be enacted, we
are unable to determine the impact this legislation might have
on our retirement plans, the operation of our limited market and
our liquidity and cash needs.
</FONT>

<P align="center"><FONT size="2">7
</FONT>

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<P align="center">
<B><FONT size="2">STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The information contained in this report or in
documents that we incorporate by reference or in statements made
by our management includes some forward-looking statements that
involve a number of risks and uncertainties. A number of
factors, including but not limited to those outlined in the Risk
Factors, could cause our actual results, performance,
achievements, or industry results to be very different from the
results, performance or achievements expressed or implied by
these forward-looking statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, forward-looking statements depend
upon assumptions, estimates and dates that may not be correct or
precise and involve known or unknown risks, uncertainties and
other factors. Accordingly, a forward-looking statement in this
report is not a prediction of future events or circumstances and
those future events or circumstances may not occur. Given these
uncertainties and risks, you are warned not to rely on the
forward-looking statements. A forward-looking statement is
usually identified by our use of certain terminology, including
&#147;believes,&#148; &#147;expects,&#148; &#147;may,&#148;
&#147;will,&#148; &#147;should,&#148; &#147;seeks,&#148;
&#147;pro forma,&#148; &#147;anticipates&#148; or
&#147;intends,&#148; or by discussions of strategies or
intentions. We are not undertaking any obligation to update
these factors or to publicly announce the results of any changes
to our forward-looking statements due to future events or
developments.
</FONT>

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<DIV align="left"><A NAME="003"></A></DIV>

<P align="center">
<B><FONT size="2">THE LIMITED MARKET</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Since our inception, we have followed a policy of
remaining essentially employee owned. As a result, there has
never been a general public market for any of our securities. In
order to provide liquidity for our stockholders, however, we
have maintained a limited secondary market which we call the
&#147;limited market,&#148; through our wholly-owned,
broker-dealer subsidiary, Bull Inc., which was organized in 1973
for the purpose of maintaining the limited market.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The limited market permits existing stockholders
to offer for sale shares of Class&nbsp;A common stock on
predetermined days which we call a &#147;trade date.&#148;
Generally, there are four trade dates each year, however, a
scheduled trade date could be postponed or cancelled. In fact,
the trade originally scheduled for July 26, 2002 was postponed
to August&nbsp;16, 2002 in order to modify the stock price set
by the board of directors on July&nbsp;12, 2002 as it no longer
represented a fair market value. A trade date typically occurs
two weeks after our quarterly board of directors meetings,
currently scheduled for January, April, July and October. All
shares of Class&nbsp;B common stock to be sold in the limited
market must first be converted into 20 times as many shares of
Class&nbsp;A common stock. All sales are made at the prevailing
price of the Class&nbsp;A common stock determined by the board
of directors or its stock policy committee pursuant to the
valuation process described below. All sellers in the limited
market (other than our retirement plans and us) pay Bull, Inc. a
commission currently equal to 1% of the proceeds from such
sales. No commission is paid by purchasers in the limited market.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The purchase of Class&nbsp;A common stock in the
limited market is restricted to (i)&nbsp;current employees of
SAIC and eligible subsidiaries who desire to purchase
Class&nbsp;A common stock in an amount that does not exceed a
pre-approved limit established by the board of directors or the
operating committee of the board, (ii)&nbsp;current employees,
consultants and non-employee directors of SAIC and eligible
subsidiaries who have been specifically approved by the board of
directors or the operating committee of the board to purchase a
specified number of shares which may exceed the pre-approved
limit, and (iii)&nbsp;trustees or agents of the retirement and
benefit plans of SAIC and its eligible subsidiaries. These
employees, consultants, directors, trustees and agents are
referred to as &#147;authorized buyers.&#148; No one, other than
these authorized buyers, is eligible to purchase Class&nbsp;A
common stock in the limited market.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the aggregate number of shares offered for
sale in the limited market on any trade date is greater than the
aggregate number of shares sought to be purchased by authorized
buyers, offers by stockholders to sell 2,000 or less shares of
Class&nbsp;A common stock (or up to the first 2,000 shares if
more than 2,000 shares of Class&nbsp;A common stock are offered
by any such stockholder) will be accepted first. Offers to sell
shares in excess of 2,000 shares of Class&nbsp;A common stock
will be accepted on a pro-rata basis determined by dividing the
total number of shares remaining under purchase orders by the
total number of shares remaining under sell orders. If, however,
there are insufficient purchase orders to support the primary
allocation of 2,000 shares of
</FONT>

<P align="center"><FONT size="2">8
</FONT>

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<DIV align="left">
<FONT size="2">Class&nbsp;A common stock for each proposed
seller, then the purchase orders will be allocated equally among
all of the proposed sellers up to the total number of shares
offered for sale.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are currently authorized, but not obligated,
to purchase shares of Class&nbsp;A common stock in the limited
market on any trade date, but only if and to the extent that the
number of shares offered for sale by stockholders exceeds the
number of shares sought to be purchased by authorized buyers,
and we, in our discretion, determine to make such purchases. In
deciding whether to make such purchases, we will consider a
variety of factors, including our cash position and cash flows,
investment and capital activities, financial performance,
financial covenants, the number of shares outstanding and the
amount of the under subscription in the market. This
determination is not made until the trade date. We have
purchased a significant amount of Class&nbsp;A common stock in
the limited market during recent periods. We purchased
14,028,781 shares on the trade dates in fiscal year 2002 and
7,625,797 shares on the trade dates in fiscal year 2001. These
purchases accounted for 88.2% and 67.7%, respectively, of the
total shares purchased by all buyers in the limited market
during fiscal years 2002 and 2001. Our purchases balanced the
number of shares offered for sale by stockholders with the
number of shares sought to be purchased by authorized buyers. If
the increasing trend of trade imbalances continues, we cannot
assure you that we will continue to purchase such excess shares
in the future. Accordingly, if the aggregate number of shares
offered for sale exceeds the aggregate number of shares sought
to be purchased by authorized buyers, and we elect not to
participate in a trade or otherwise limit our participation in a
trade, our stockholders may be unable to sell all the shares
they desire to sell.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the 2002 and 2001 fiscal years, the
trustees of certain of our retirement and benefit plans
purchased an aggregate of 1,450,018 and 1,733,624 shares,
respectively, in the limited market. These purchases accounted
for approximately 9.1% and 15.4% of the total shares purchased
by all buyers in the limited market during fiscal years 2002 and
2001, respectively. Such purchases may change in the future,
depending on the levels of participation in and contributions to
such plans and the extent to which such contributions are
invested in Class&nbsp;A common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Federal legislation has been proposed that, if
adopted, would impose new requirements and restrictions on
certain types of retirement plans which could impact our stock
system and liquidity. If legislation of this nature were
adopted, it could have a significant impact on the level of
participation in the limited market by our retirement plans. To
the extent that purchases by the trustees of our retirement and
benefit plans decrease, and purchases by us decrease or do not
increase, the ability of stockholders to resell their shares in
the limited market will likely be adversely affected. Although
all shares of Class&nbsp;A common stock offered for sale were
sold in the limited market on each trade date occurring during
the last two fiscal years, we cannot assure you that a
stockholder desiring to sell all or a portion of his or her
shares of our Class&nbsp;A common stock on any trade date will
be able to do so.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To the extent that the aggregate number of shares
sought to be purchased by authorized buyers exceeds the
aggregate number of shares offered for sale by stockholders, we
may, but are not obligated to, sell authorized but unissued
shares of Class&nbsp;A common stock in the limited market. In
making this determination, we will consider a variety of
factors, including our cash position and cash flows, investment
and capital activities, financial performance, financial
covenants, the number of shares outstanding and the amount of
the over subscription in the market. This determination is not
made until the trade date. In fiscal years 2002 and 2001, we did
not sell any shares of Class&nbsp;A common stock in the limited
market as the number of shares sought to be purchased by
authorized buyers did not exceed the number of shares offered
for sale by stockholders. To the extent that we choose not to
sell authorized but unissued shares of Class&nbsp;A common stock
in the limited market, the ability of individuals to purchase
shares on the limited market may be adversely affected. We
cannot assure you that an individual desiring to buy shares of
our Class&nbsp;A common stock in any future trade will be able
to do so.
</FONT>

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<P align="center">
<B><FONT size="2">USE OF PROCEEDS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are offering shares of Class&nbsp;A common
stock to present and future employees, consultants and
directors, which includes shares that are anticipated to be
offered and sold directly by our stockholders in our limited
market, which shares may be attributable to us by the SEC. We
will not receive any proceeds from
</FONT>

<P align="center"><FONT size="2">9
</FONT>

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<DIV align="left">
<FONT size="2">sales made by our stockholders, even when such
sales are attributable to us by the SEC. We will receive
proceeds only from sales made directly by us, if any. The net
proceeds to be received by us from the sale of shares of
Class&nbsp;A common stock we offer, after deducting expenses
payable by us which are estimated to be $144,000, will be used
for working capital and general corporate purposes.
</FONT>
</DIV>

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<DIV align="left"><A NAME="005"></A></DIV>

<P align="center">
<B><FONT size="2">DETERMINATION OF OFFERING PRICE</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our board of directors determines the price of
the Class&nbsp;A common stock using the valuation process
described below. The board of directors reviews and sets the
market factor in the formula, which is set forth below and used
in the valuation process, at the value which causes the formula
to yield the stock price which the board believes represents a
fair market value for the Class&nbsp;A common stock. Our board
of directors reviews the stock price at least four times each
year, generally at quarterly meetings. These meetings are
currently scheduled in January, April, July and October of each
year and are held approximately two weeks before the four
predetermined trade dates. The board of directors has authorized
its stock policy committee to review the stock price during the
period between meetings of the board of directors to determine
whether the stock price continues to represent a fair market
value, and if necessary, modify the price. If a stock price
modification is necessary, the stock policy committee would
apply the same valuation process used by the board of directors.
The stock policy committee modified the stock price on
July&nbsp;29, 2002 after it was determined that the stock price
established by the board of directors on July&nbsp;12, 2002 no
longer represented a fair market value. The Class&nbsp;A common
stock is traded in the limited market maintained by Bull, Inc.
at the stock price determined by the board of directors or its
stock policy committee. Our certificate of incorporation
provides that the price of the Class&nbsp;B common stock is
equal to 20 times the stock price applicable to the Class&nbsp;A
common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following formula is used in the valuation
process:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">the price per share is equal to the sum of
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(1)&nbsp;a fraction, the numerator of which is
    our stockholders&#146; equity at the end of the fiscal quarter
    immediately preceding the date on which a price determination is
    to occur, adjusted to reflect the value of our publicly traded
    equity securities classified as investments in marketable
    securities, as well as the profit or loss impact, if any, on
    stockholders&#146; equity arising from investment activities,
    non-recurring gains or losses on sales of business units,
    subsidiary common stock or similar transactions closed, as of
    the valuation date (&#147;E&#148;) and the denominator of which
    is the number of outstanding common shares and common share
    equivalents at the end of such fiscal quarter
    (&#147;W<SUB>(1)</SUB>&#148;) and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(2)&nbsp;a fraction, the numerator of which is
    5.66 multiplied by the market factor (&#147;M&#148; or
    &#147;market factor&#148;), multiplied by our operating income
    for the four fiscal quarters immediately preceding the price
    determination, net of taxes, excluding investment activities,
    losses on impaired intangible assets, non-recurring gains or
    losses on sales of business units, subsidiary common stock and
    similar items, and including our equity in the income or loss of
    unconsolidated affiliates and the minority interest in income or
    loss of consolidated subsidiaries (&#147;P&#148;), and the
    denominator of which is the weighted average number of
    outstanding common shares and common share equivalents for those
    four fiscal quarters, as used by us in computing diluted
    earnings per share (&#147;W&#148;).
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The formula, shown as an equation, is as follows:
</FONT>

<CENTER>
<TABLE width="40%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="12%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="14%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="12%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="15%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="middle">
    <FONT size="2">E
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="middle">
    <FONT size="2">5.66MP
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Stock Price
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="middle">
    <FONT size="2">=
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="middle">
    <HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="middle">
    <FONT size="2">+
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="middle">
    <HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="middle">
    <FONT size="2">W <SUB>(1)</SUB>
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="middle">
    <FONT size="2">W
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The number of outstanding common shares and
common share equivalents described above in the formula assumes
that each share of Class&nbsp;B common stock is converted into
20 shares of Class&nbsp;A common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The board of directors first used a valuation
formula in establishing the price of the Class&nbsp;A common
stock in 1972. The valuation formula has periodically been
modified ever since. The market factor concept was
</FONT>

<P align="center"><FONT size="2">10
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">first added to the formula in 1973 and was
mechanically linked to the performance of Nasdaq until 1984. The
5.66 factor was added to the formula in 1976 in connection with
other modifications and has not been assessed for change since
that time. The 5.66 factor was added as a constant to cause the
price generated by the formula to reflect a fair market value of
the Class&nbsp;A common stock. In 1984, the board of directors,
with the assistance of an outside appraisal firm, began its
current practice of establishing the value of the market factor
to reflect the broad range of business, financial and market
forces that also affect the fair market value of the
Class&nbsp;A common stock.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At its April 2001 meeting, the board of directors
approved the modifications of the definitions of the
&#147;E&#148; or the stockholders&#146; equity component and
&#147;P&#148; or the earnings component of the formula,
effective as of the July 2001 valuation. The revised definitions
of these terms are set forth above in the discussion of the
formula. Before approving these changes to the formula, the
board of directors consulted with Houlihan Lokey Howard &#38;
Zukin Financial Advisors, Inc. (&#147;HLHZ&#148;), an
independent valuation firm, and then determined that these
definitional changes are appropriate and that our valuation
process will continue to generate a fair market value of the
Class&nbsp;A common stock within a broad range of financial
criteria. All other terms of the formula remained unchanged.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The board of directors has broad discretion to
modify the valuation process. However, the board of directors
does not anticipate changing the valuation process unless:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a change in the formula or any other aspect of
    the valuation process used to value the Class&nbsp;A common
    stock is required under applicable law, or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">in the good faith exercise of its fiduciary
    duties and after consultation with our independent accountants
    as to whether the change would result in a charge to earnings
    upon the sale of Class&nbsp;A common stock, the board of
    directors, including a majority of the directors who are not our
    employees, determines that the valuation process no longer
    results in a fair market value for the Class&nbsp;A common
    stock, or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">in the good faith exercise of its fiduciary
    duties, the board of directors, including a majority of
    directors who are not our employees, after consulting with an
    independent appraisal firm, determines that a change in the
    formula or any other aspect of the valuation process is
    appropriate and that the stock price established by the board of
    directors through the modified valuation process reflects a fair
    market value of the Class&nbsp;A common stock.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In determining the price of the Class&nbsp;A
common stock, the board of directors considers many relevant
factors, including:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the performance of the general securities markets
    and relevant industry groups
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our historical financial performance versus
    comparable public companies
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the prospects for our future performance
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the value of our investments
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">general economic conditions
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">valuation input from HLHZ
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In conjunction with the board of directors&#146;
valuation process, HLHZ prepares an appraisal of the
Class&nbsp;A common stock. The stock price and market factor, as
determined by the board of directors, remain in effect until
subsequently changed by the board of directors or its stock
policy committee. The board of directors believes that the
current valuation process results in a value which represents a
fair market value for the Class&nbsp;A common stock within a
broad range of financial criteria.
</FONT>

<P align="center"><FONT size="2">11
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The price of the Class&nbsp;A common stock could
be subject to fluctuations in the future due to a number of
factors, including:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the mix of our commercial and international
    business as a proportion of our overall business and the
    volatility associated with companies in these business areas
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our significant investments in publicly and
    privately traded companies and the volatility of the price of
    those companies&#146; shares
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the impact of acquisitions, investments, joint
    ventures and divestitures that we may undertake
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the impact of the volatility of the market value
    of comparable public companies that are considered in our
    valuation process
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Stock Price Table</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth information
concerning the formula price for the Class&nbsp;A common stock,
the applicable price for the Class&nbsp;B common stock and each
of the variables contained in the formula, including the market
factor, in effect for the periods beginning on the dates
indicated. There can be no assurance that the Class&nbsp;A
common stock or the Class&nbsp;B common stock will in the future
provide returns comparable to historical returns.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="22%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="1">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="1">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">&#147;W&#148; or</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Per Share</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Per Share</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">&#147;E&#148; or</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">&#147;W<SUB>1</SUB>&#148; or</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">of Class A</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">of Class B</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percentage</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Market</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Stockholders&#146;</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">&#147;P&#148; or</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Avg. Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Common</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Common</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Price</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Factor</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Equity(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Outstanding(2)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Earnings(3)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Outstanding(4)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Stock</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Stock</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Change(5)</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">July&nbsp;13, 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2.90</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3,240,228,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">238,760,127</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">264,390,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">243,836,689</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">31.37</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">627.40</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">3.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">October&nbsp;12, 2001
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2.90</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2,916,237,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">230,102,050</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">283,936,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">237,824,353</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">32.27</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">645.40</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">January&nbsp;11, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2.90</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2,711,163,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">222,177,263</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">292,044,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">231,029,621</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">32.95</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">659.00</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">April&nbsp;12, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2.90</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2,455,657,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">215,804,158</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">297,660,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">225,382,561</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">33.06</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">661.20</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">0.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">July&nbsp;12, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2.60</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2,483,464,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">215,331,807</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">319,724,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">218,864,381</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">33.03</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">660.60</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(0.1</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="1">July&nbsp;29, 2002
    </FONT></DIV>
    </TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2.10</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">2,483,864,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">215,331,807</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">319,724,000</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">218,864,381</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">28.90</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="1">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">578.00</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="1">(12.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="1">)%</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">&#147;E&#148; or Stockholders&#146; Equity is our
    stockholders&#146; equity at the end of the fiscal quarter
    immediately preceding the date on which a price determination is
    to occur, adjusted to reflect the value of publicly traded
    equity securities classified as investments in marketable
    securities, as well as the profit or loss impact, if any, on
    stockholders&#146; equity arising from investment activities,
    non-recurring gains or losses on sales of business units,
    subsidiary common stock, or similar transactions closed, as of
    the valuation date.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">&#147;W<SUB>1</SUB>&#148; or Shares Outstanding
    is the number of outstanding common shares and common share
    equivalents at the end of the fiscal quarter immediately
    preceding the date on which a price determination is to occur.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">&#147;P&#148; or Earnings is our operating income
    for the four fiscal quarters immediately preceding the price
    determination, net of taxes, excluding investment activities,
    losses on impaired intangible assets, non-recurring gains or
    losses on sales of business units, subsidiary common stock and
    similar items, and including our equity in the income or loss of
    unconsolidated affiliates and the minority interest in income or
    loss of consolidated subsidiaries. The aggregate amount of these
    items on a pre-tax basis is disclosed as &#147;segment operating
    income&#148; in our consolidated quarterly and annual financial
    statements filed with the SEC.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">&#147;W&#148; or Weighted Average Shares
    Outstanding is the weighted average number of outstanding common
    shares and common share equivalents for the four fiscal quarters
    immediately preceding the price determination, as used by us in
    computing diluted earnings per share.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(5)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Value shown represents the percentage change in
    the price per share of Class&nbsp;A common stock from the prior
    valuation.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">12
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "<FONT size="2">DIRECT STOCK PURCHASE PROGRAM</FONT>" -->
<DIV align="left"><A NAME="006"></A></DIV>

<P align="center">
<B><FONT size="2">DIRECT STOCK PURCHASE PROGRAM</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under our direct stock purchase program, our
employees, directors and consultants are eligible to purchase
Class&nbsp;A common stock in the limited marked on a trade date
at the stock price determined by our board of directors. The
purchase of Class&nbsp;A common stock in the limited market is
restricted to:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(i)&nbsp;current employees of SAIC and eligible
    subsidiaries who desire to purchase Class&nbsp;A common stock in
    an amount that does not exceed a pre-approved limit established
    by the board of directors or the operating committee of the
    board,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(ii)&nbsp;current employees, consultants and
    non-employee directors of SAIC and eligible subsidiaries who
    have been specifically approved by the board of directors or the
    operating committee of the board to purchase a specified number
    of shares which may exceed the pre-approved limit, and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(iii)&nbsp;trustees or agents of the retirement
    and benefit plans of SAIC and eligible subsidiaries.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">No one, other than these authorized buyers, is
eligible to purchase Class&nbsp;A common stock in the limited
market. Employees may not request to both buy and sell
Class&nbsp;A common stock in the same trade. Receipt of this
document does not entitle the recipient to automatically
participate in the limited market.
</FONT>

<P align="left">
<B><FONT size="2">Pre-approved Employee Purchases</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Employees of SAIC and eligible subsidiaries are
currently pre-approved by the operating committee of the board
to purchase up to $20,000 worth of Class&nbsp;A common stock in
the limited market on a trade date. The minimum number of shares
that may be purchased in a quarterly trade is adjusted each
trade to approximately $500 worth of Class&nbsp;A common stock.
The board of directors or the operating committee may modify the
amount of the pre-approved purchase and the minimum purchase at
any time in its sole discretion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Through our first time buyer program (FTBP),
employees who have never before purchased stock in a trade may
purchase a minimum of approximately $500 up to a maximum of
approximately $2,000 of Class&nbsp;A common stock (rounded up to
the next whole share) and receive a match of two vesting stock
options for every share purchased under the FTBP. An employee
may only participate in the FTBP once, but may purchase
additional shares (without the automatic option match) in that
same trade or in any subsequent trade.
</FONT>

<P align="left">
<B><FONT size="2">Offer Cycle Purchases Subject to
Approval</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Current employees, consultants and non-employee
directors may also purchase Class&nbsp;A common stock in the
limited market if, and to the extent, approved by the board of
directors or operating committee of the board. These approvals
are obtained pursuant to the process outlined below which is
commonly referred to as the offer cycle. Employees who wish to
request a purchase of more than $20,000 must submit a request
prior to the trade date through their manager or group stock
coordinator by a pre-established deadline (generally at least
seven weeks prior to the trade date). Consultants, non-employee
directors and employees on leave of absence for personal reasons
(other than military leave, medical leave and family leave) are
ineligible to purchase stock pursuant to the pre-approved
employee purchase process and must submit any request to
purchase Class&nbsp;A common stock (even those less than
$20,000) prior to the trade date through the offer cycle by a
pre-established deadline. Stock purchase requests endorsed by
the group manager are submitted to SAIC Stock Programs, which
facilitates the review of the requests by the operating
committee. The operating committee typically meets approximately
three to four weeks prior to the trade and makes determinations
concerning each purchaser&#146;s request. Proposed purchasers
either receive an offer letter stating the approved purchase
amount or are notified if the operating committee has modified
the request. An offer letter is mailed to approved purchasers
approximately three weeks prior to the trade. The offer letter
does not obligate the approved purchaser to make the purchase.
Payment for the purchase of the Class&nbsp;A common stock must
be received by Bull, Inc. (if by check), or initiated by the
purchaser (if by electronic funds transfer), by 5&nbsp;p.m.
Pacific Time on the day of the trade, or the offer expires and
the approved purchaser cannot purchase shares in the trade.
</FONT>

<P align="center"><FONT size="2">13
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Miscellaneous</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The direct stock purchase program is not subject
to ERISA. There is no income tax withholding or assessment
required at the time of the stock purchase. A taxable event
occurs upon the sale or other disposition of the shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The board of directors and operating committee of
the board make determinations relating to the eligibility and
participation limits and certain higher level policy aspects of
the program. SAIC&#146;s Corporate Executive Vice President for
Administration and Corporate Secretary makes administrative
decisions concerning the program. The program is currently
expected to continue indefinitely.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You should not construe the contents of this
prospectus or any prior or subsequent communications from us,
whether written or oral, as investment, tax or legal advice.
This prospectus and its exhibits should be reviewed by your
investment, tax or other advisors, accountants and/or legal
counsel.
</FONT>

<P align="left">
<B><FONT size="2">Additional Information</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our stockholders receive a quarterly report of
their SAIC stock account. Additional information about
purchasing Class&nbsp;A common stock in the limited market under
the direct stock purchase program or the program&#146;s
administrators may be obtained by calling SAIC&#146;s Stock
Programs during normal business hours at (800)&nbsp;785-7764 or
writing to them at our principal executive offices,
10260&nbsp;Campus Point Drive, San&nbsp;Diego, CA 92121.
</FONT>

<!-- link1 "<FONT size="2">PLAN OF DISTRIBUTION</FONT>" -->
<DIV align="left"><A NAME="007"></A></DIV>

<P align="center">
<B><FONT size="2">PLAN OF DISTRIBUTION</FONT></B>

<P align="left">
<B><FONT size="2">Class&nbsp;A Common Stock Offered by or
Attributed to SAIC</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The shares of Class&nbsp;A common stock offered
by us may be offered directly or contingently to present, future
and potential employees, consultants and directors of SAIC or
any entity in which we have an equity interest (which we refer
to as an &#147;affiliate&#148;). We believe that our success
depends on our employees, consultants and directors. Therefore,
our general policy is to offer these persons opportunities to
acquire SAIC Class&nbsp;A common stock as an incentive to become
or remain employed by, or affiliated with us or our affiliates.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As described above under &#147;Direct Stock
Purchase Program,&#148; the board of directors or the operating
committee of the board of directors is authorized to offer
shares of Class&nbsp;A common stock to the employees, directors,
consultants and trustees or agents of the retirement and benefit
plans of SAIC and its affiliates. These sales may be made in our
limited market or made directly by us from time to time. In
addition, a stockholder may offer to sell shares in our limited
market and these sales may be attributed to us by the SEC. Our
certificate of incorporation provides that all shares of
Class&nbsp;A common stock are subject to a right of first
refusal and a right of repurchase by us upon termination of
employment or affiliation by an individual stockholder. The
repurchase restriction does not apply to qualified employees who
elect to have us defer our repurchase rights for five years by
entering into a repurchase agreement with us.
</FONT>

<P align="left">
<B><FONT size="2">Class&nbsp;A Common Stock Offered by the
Selling Stockholders</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The selling stockholders whose shares of
Class&nbsp;A common stock are also being offered under this
prospectus may offer 1,750,000 shares of Class&nbsp;A common
stock. The selling stockholders will not be treated more
favorably than other stockholders selling in our limited market.
Like all stockholders selling shares in the limited market
(other than our retirement plans), the selling stockholders will
pay a 1% percent commission to our wholly-owned, broker-dealer
subsidiary, Bull, Inc.
</FONT>

<P align="center"><FONT size="2">14
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">IMPLEMENTATION OF STATEMENT OF FINANCIAL
ACCOUNTING STANDARDS</FONT></B>

<DIV align="center">
<B><FONT size="2">(&#147;SFAS&#148;) NO.&nbsp;142,
&#147;GOODWILL AND OTHER INTANGIBLE ASSETS&#148;</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Effective February&nbsp;1, 2002, we adopted SFAS
No.&nbsp;142, &#147;Goodwill and Other Intangible Assets&#148;
which changes the accounting for goodwill such that the
amortization of goodwill ceases. Instead of amortization, the
carrying value of goodwill is evaluated for impairment on an
annual basis or between annual tests if an event occurs or
circumstances change that would more likely than not reduce the
fair value of a reporting unit, which includes the allocated
goodwill, below its carrying value. Intangible assets with
indefinite lives are no longer amortized in accordance with SFAS
No.&nbsp;142. We do not have any intangible assets with
indefinite lives. Intangible assets with finite lives continue
to be amortized over their useful lives and are evaluated for
impairment whenever events or changes in circumstances indicate
that their carrying value may not be recoverable under SFAS
No.&nbsp;144, &#147;Accounting for Impairment or Disposal of
Long-Lived Assets.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following unaudited pro forma information
presents net income and earnings per share as if we had adopted
SFAS No.&nbsp;142 effective at the beginning of the periods
specified and, accordingly, did not amortize goodwill.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Year Ended January 31</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">(In thousands, except per share amounts)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income before cumulative effect of accounting
    change, as reported
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,206</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,058,956</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">619,849</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amortization of goodwill, net of tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,303</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,265</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,498</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pro forma income before cumulative effect of
    accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35,509</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,076,221</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">634,347</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative effect of accounting change, net of tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">711</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pro forma net income
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36,220</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,076,221</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">634,347</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Basic Earnings Per Share:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income before cumulative effect of accounting
    change, as reported
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">.08</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.76</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.61</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amortization of goodwill, net of tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">.08</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">.06</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pro forma income before cumulative effect of
    accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">.16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.83</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.67</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative effect of accounting change, net of tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">.01</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pro forma basic earning per share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">.17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.83</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.67</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <B><FONT size="2">Diluted Earnings Per Share:</FONT></B></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Income before cumulative effect of accounting
    change, as reported
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">.08</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Amortization of goodwill, net of tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">.08</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">.07</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">.06</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pro forma income before cumulative effect of
    accounting change
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">.16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Cumulative effect of accounting change, net of tax
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

<TR valign="bottom" bgcolor="#EEEEEE">
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Pro forma diluted earnings per share
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">.16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8.18</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left"><HR size="4" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As previously disclosed in our Annual Report on
Form&nbsp;10-K for the year ended January&nbsp;31, 2002, the
cumulative effect of accounting change of $711,000 referred to
in the table above relates to our adoption of SFAS No.&nbsp;133,
&#147;Accounting for Derivative Instruments and Hedging
Activities&#148; in the prior fiscal year.
</FONT>

<P align="center"><FONT size="2">15
</FONT>

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<!-- link1 "<FONT size="2">DESCRIPTION OF CAPITAL STOCK</FONT>" -->
<DIV align="left"><A NAME="008"></A></DIV>

<P align="center">
<B><FONT size="2">DESCRIPTION OF CAPITAL STOCK</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are authorized to issue
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">1,000,000,000 shares of Class&nbsp;A common stock
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">5,000,000 shares of Class&nbsp;B common stock
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">3,000,000 shares of preferred stock
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of August&nbsp;23, 2002, 189,228,118 shares of
Class&nbsp;A common stock, 246,683&nbsp;shares of Class&nbsp;B
common stock and no shares of preferred stock were issued and
outstanding.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of August&nbsp;23, 2002, there were 31,692
record holders of Class&nbsp;A common stock and 175 record
holders of Class&nbsp;B common stock.
</FONT>

<P align="left">
<B><FONT size="2">Common Stock</FONT></B>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General</FONT></I></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Voting</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except as otherwise provided by law, the holders
of shares of Class&nbsp;A and Class&nbsp;B common stock vote
together as a single class in all matters. Each holder of
Class&nbsp;A common stock has one vote per share and each holder
of Class B common stock has 20 votes per share.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All the holders of common stock are entitled to
cumulate their votes for the election of directors. This means
that each Class&nbsp;A stockholder can cast the number of votes
that equals the number of shares of Class&nbsp;A common stock
held multiplied by the number of directors to be elected. Each
Class&nbsp;B stockholder can cast 20&nbsp;times the number of
shares of Class&nbsp;B common stock held multiplied by the
number of directors to be elected. Each stockholder may cast all
of their votes for a single nominee or may distribute them among
any two or more nominees as the stockholder sees fit.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Classified Board of Directors</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our certificate of incorporation provides for a
classified board of directors consisting of three classes which
shall be nearly as equal in number as possible. The number of
authorized directors is currently fixed at 17 directors, with
six directors in each of Class&nbsp;I and Class&nbsp;II and five
directors in Class&nbsp;III. Each year the stockholders elect a
different class of directors to serve a three-year term.
Classification of the board of directors requires a greater
number of votes to ensure the election of a director than would
be required without the classification.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Dividends</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subject to the rights of any preferred
stockholders, the common stockholders have the right to receive
dividends that our board of directors declares and to share
proportionately in our assets in the event of liquidation or
dissolution, after payment of any amounts due to creditors. Any
dividend or distribution made with respect to a share of
Class&nbsp;B common stock must be 20 times the dividend or
distribution made with respect to each share of Class&nbsp;A
common stock.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Reclassification</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Neither class of common stock may be subdivided,
consolidated, reclassified or otherwise changed unless the
relative powers, preferences, rights, qualifications,
limitations and restrictions applicable to the other class of
common stock are maintained.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Prohibition on Issuance of Class&nbsp;B
    Common Stock</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the terms of our certificate of
incorporation, we are prohibited from issuing any additional
shares of Class&nbsp;B common stock. The holders may convert
each share of Class&nbsp;B common stock at any time into
</FONT>

<P align="center"><FONT size="2">16
</FONT>

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<DIV align="left">
<FONT size="2">20&nbsp;shares of Class A common stock. We will
retire all shares of Class&nbsp;B common stock that we reacquire
and those shares will not be available for reissuance.
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Mergers, Consolidations or Business
    Combinations</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In any merger, consolidation or business
combination to which we are a party, other than one in which we
are the surviving corporation and which does not result in any
reclassification of or change in the outstanding shares of
common stock, each share of Class&nbsp;B common stock is
entitled to receive 20 times the consideration to be received
with respect to each share of Class&nbsp;A common stock.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Mergers with Related Persons</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our certificate of incorporation generally
requires that mergers and certain other business combinations
between us and a related person must be approved by the holders
of securities having 80% of our outstanding voting power, as
well as by the holders of a majority of such securities that are
not owned by the related person. A &#147;related person&#148;
means any holder of 5% or more of our outstanding voting power.
Under Delaware law, unless the certificate of incorporation
provides otherwise, only a majority of our outstanding voting
power is required to approve certain of these transactions, such
as mergers and consolidations, while certain other of these
transactions would not require stockholder approval.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 80% and majority of independent voting power
requirements of our certificate of incorporation will not apply,
however, to a business combination with a related person, if the
transaction
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(1)&nbsp;is approved by our board of directors
    before the related person acquired beneficial ownership of 5% or
    more of our outstanding voting power, or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(2)&nbsp;is approved by at least a majority of
    the members of our board of directors who are not affiliated
    with the related person and who were directors before the
    related person became a related person, or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(3)&nbsp;involves only us and one or more of our
    subsidiaries and certain other conditions are satisfied.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Amendment of Charter</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The amendment of certain provisions of our
certificate of incorporation and bylaws require the approval of
at least two-thirds of the total voting power of all of our
outstanding shares of voting stock. These provisions relate to
the number of directors, the election of directors and the vote
of stockholders required to modify the provisions of the
certificate of incorporation and bylaws requiring these
approvals.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Transfer Agent</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We act as our own transfer agent for both the
Class&nbsp;A and Class&nbsp;B common stock.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><FONT size="2">Restrictions on Class&nbsp;A Common
    Stock</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The shares of Class&nbsp;A common stock are
subject to restrictions under our certificate of incorporation,
including
</FONT>

<DIV>&nbsp;</DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Right of Repurchase upon Termination of
    Employment or Affiliation</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Generally, shares of Class&nbsp;A common stock
are subject to a right of repurchase upon the termination of the
stockholder&#146;s employment or affiliation with us.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our right of repurchase does not apply to shares
of Class&nbsp;A common stock that are held by a stockholder who
received the shares
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">in connection with our reorganization in 1984 in
    exchange for shares that were not subject to a right of
    repurchase upon termination of employment or affiliation
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">17
</FONT>
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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">upon exercise of a non-qualified stock option
    granted before October&nbsp;1, 1981 under our 1979 Stock Option
    Plan that were not converted into incentive stock options
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">in exchange for shares of Class&nbsp;B common
    stock that were not subject to a right of repurchase upon
    termination of employment or affiliation
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">in connection with a stock dividend or a stock
    split on the outstanding shares of Class&nbsp;A common stock
    which have been issued under any of the circumstances described
    in the bullet points above
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our right of repurchase will apply to all shares
of Class&nbsp;A common stock which the stockholder has the right
to acquire after his or her termination of employment or
affiliation under
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any of our employee benefit plans, except the
    Employee Stock Retirement Plan or any other retirement or
    pension plan that we or one of our subsidiaries adopt that does
    not provide us the repurchase right
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any option or other contractual right to acquire
    shares of Class&nbsp;A common stock which was in effect at the
    date of the termination of employment or affiliation
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our right of repurchase is exercised by mailing a
written notice to the stockholder within 60&nbsp;days following
termination of employment or affiliation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If we repurchase the shares, the price will be
the stock price per share on the date
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">of the termination of employment or affiliation,
    for shares owned by the stockholder on that date or shares
    acquired after that date in connection with options or other
    contractual right which were in effect on that date or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the shares are distributed to the holder, for
    shares distributed to the holder after termination of employment
    or affiliation in connection with any of our employee benefit
    plans
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We will pay for the shares in cash within
90&nbsp;days of the date used to determine the repurchase price.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">With respect to stock options issued after
March&nbsp;1, 2001, and options issued prior to March&nbsp;1,
2001 for which the holder has exercised an addendum agreement,
if the holder exercises these options within 6&nbsp;months of
termination or within the proper time after termination, our
right of repurchase becomes effective 180&nbsp;days after the
option shares are purchased. If we repurchase the shares, the
price will be the share price in effect on the 180th day after
the option was exercised. Our right of repurchase is exercised
by mailing written notice to the holder within 240&nbsp;days
after the exercise and paying for such shares within
270&nbsp;days after the exercise.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">With respect to shares distributed under our
Management Stock Compensation Plan and Key Executive Stock
Deferral Plan after termination of employment or affiliation,
our right of repurchase becomes effective 210&nbsp;days after
distribution, which we refer to as the effective date. Our right
of repurchase is exercised by mailing written notice to the
stockholder within 60&nbsp;days following the effective date. If
we repurchase the shares, the price will be the price per share
on the effective date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We may, but are not obligated to, defer our
repurchase right by entering into a deferral agreement with
qualified employees whereby we defer the repurchase right on
their direct stock holdings for five years. Under the Alumni
Program, an employee who is over 59&nbsp;1/2 and has more than
10&nbsp;years of employment with us at the date of his or her
retirement generally can enter into such a repurchase agreement.
During the five-year deferral period, the stockholder may sell
shares in our limited market. At the end of the five-year
deferral period, all the shares will be subject to repurchase at
the stock price in effect at that time, unless we agree to
extend the agreement. The Alumni Program pertains only to the
deferral of the right of repurchase. It does not provide the
employee any rights with respect to the vesting or prevent the
forfeiture of any shares or options the employee holds at the
date of his or her retirement, nor does it guarantee that we
will repurchase the shares at the end of the deferral period.
</FONT>

<P align="center"><FONT size="2">18
</FONT>

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<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Right of First Refusal</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If a stockholder wants to sell any shares of
Class&nbsp;A common stock other than in the limited market, the
stockholder must give notice first to our corporate secretary.
The notice must include the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a statement signed by the stockholder that he or
    she wants to sell shares of Class&nbsp;A common stock and has
    received a valid offer to purchase the shares
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a statement signed by the person offering to buy
    the shares that includes the following: the intended
    purchaser&#146;s full name, address and taxpayer identification
    number; the number of shares to be purchased; the price per
    share to be paid; the other terms under which the purchase is
    intended to be made; and a representation that the offer, under
    the terms specified, is valid
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">if the purchase price is payable in cash, a copy
    of a certified check, cashier&#146;s check or money order
    payable to the stockholder from the purchaser in the amount of
    the purchase price to be paid in cash
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have the right to purchase the shares from the
stockholder within 14 days on the same terms described in the
notice. If we do not exercise this right, the holder may sell
the shares within 30&nbsp;days to the person at the price and on
the terms identified in the notice. The holder may not sell the
shares to any other person or at any different price or on any
different terms without first re-offering the shares to us.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Transfers Other than by Sale</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except for sales in our limited market and as
described above, a stockholder may not sell, assign or transfer
any shares of Class&nbsp;A common stock without our prior
written approval. We may require the person to whom the shares
are transferred to agree to hold the shares subject to our right
to repurchase the shares upon the termination of employment or
affiliation of the employee, director or consultant who is
transferring the shares.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Lapse or Waiver of
    Restrictions</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All of the restrictions on the Class&nbsp;A
common stock will automatically terminate if we make an
underwritten public offering of either class of our common stock
or apply to have any class of our common stock listed on a
national securities exchange. In addition, our board of
directors may waive any or all of the restrictions on shares of
Class&nbsp;A common stock in other circumstances deemed
appropriate.
</FONT>

<P align="left">
<B><FONT size="2">Preferred Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under our certificate of incorporation, the board
of directors may issue shares of preferred stock at any time in
one or more series without stockholder approval. Further, the
issuance of preferred stock must be approved by a majority of
our independent directors who do not have an interest in the
transaction and who have access, at our expense, to independent
legal counsel. The board of directors determines the
designations, preferences and relative rights, qualifications
and limitations of each series. Each series of preferred stock
could rank senior to the Class&nbsp;A and Class&nbsp;B common
stock with respect to dividend, redemption and liquidation
rights.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Holders of preferred stock would not have any
preferential right to purchase any shares of our capital stock.
We do not have any present plan to issue any shares of preferred
stock.
</FONT>

<P align="left">
<B><FONT size="2">Anti-Takeover Effects</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The combined effect of a variety of provisions
may discourage, delay or prevent attempts to acquire control of
us that are not approved by the board of directors. These
provisions include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the classification of our board of directors into
    three different classes
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the cumulative voting rights of the stockholders
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the supermajority vote requirements for mergers
    or business combinations with related persons
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">19
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the provisions of the certificate of
    incorporation and bylaws requiring two-thirds approval for
    certain amendments to the certificate of incorporation or bylaws
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our right of first refusal
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our right of repurchase upon termination of
    employment or affiliation
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These provisions may have the effect of
discouraging takeover attempts that some stockholders might
consider to be in their best interests, including tender offers
in which stockholders might receive a premium for their shares
over the stock price available in our limited market.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These provisions may also make it more difficult
for individual stockholders or a group of stockholders to elect
directors. However, our board of directors believes that these
provisions are in the best interests of us and our stockholders.
These provisions may encourage potential acquirers to negotiate
directly with our board of directors, which is in the best
position to act on behalf of all stockholders.
</FONT>

<!-- link1 "<FONT size="2">SELLING STOCKHOLDERS</FONT>" -->
<DIV align="left"><A NAME="009"></A></DIV>

<P align="center">
<B><FONT size="2">SELLING STOCKHOLDERS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each of the selling stockholders is or has been a
director and/or officer of us within the past three years. The
following table presents information as of August&nbsp;23, 2002
regarding the number of shares of Class&nbsp;A common stock
owned by each selling stockholder. Shares issuable upon the
exercise of stock options that are exercisable within
60&nbsp;days of August&nbsp;23, 2002 and shares allocated to the
selling stockholder&#146;s accounts as of July&nbsp;31, 2002
under our employee benefit plans are included. The information
shown is adjusted to reflect the sale of all shares of
Class&nbsp;A common stock being offered by each selling
stockholder. The table does not give effect to the sale of any
shares of Class&nbsp;A common stock being offered by us. Except
as indicated below, all the shares are owned of record and
beneficially. The percentage of shares owned is based upon the
total number of outstanding shares of Class&nbsp;A common stock
at August&nbsp;23, 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based upon the total number of shares of
Class&nbsp;A and Class&nbsp;B common stock outstanding at
August&nbsp;23, 2002 and assuming that each outstanding share of
Class&nbsp;B common stock is converted into 20&nbsp;shares of
Class&nbsp;A common stock, Dr.&nbsp;J.R. Beyster owns 1.58% of
common stock before the offering and would own 1.45% after the
offering and all of the selling stockholders as a group own
3.88% of common stock before the offering and would own 3.04%
after the offering.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The number of shares of Class&nbsp;A common stock
sold by any of the selling stockholders pursuant to this
prospectus may not exceed, during any three month period, one
percent of the total outstanding shares of common stock of SAIC.
</FONT>

<P align="center"><FONT size="2">20
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The &#147;Other Selling Stockholders Group&#148;
listed in the following table is comprised of 14&nbsp;directors
and officers that together held less than 1% of Class&nbsp;A
common stock immediately prior to the offering.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="34%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Shares Owned</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Shares Owned</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Prior to Offering</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">After the Offering</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Name and Position</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percentage</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Being Offered</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percentage</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">D.P. Andrews
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">292,265</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">257,265</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Corporate Executive Vice President
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">J.R. Beyster
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3,061,395</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.58</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">240,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,821,395</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.47%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Chairman of the Board, Chief Executive Officer
    and President
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">J.E. Glancy
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">633,590</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">175,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">458,590</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Director and Executive Vice President
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">J.D. Heipt
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">393,470</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">293,470</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Corporate Executive Vice President
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">B.R. Inman
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">273,659</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">233,659</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">W.A. Roper, Jr.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">269,839</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">169,839</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Corporate Executive Vice President
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">J.P. Walkush
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">343,245</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">150,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">193,245</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Director and Executive Vice President
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">J.H. Warner, Jr.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">472,416</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">80,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">392,416</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Director and Corporate Executive Vice President
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Other Selling Stockholders Group
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,853,290</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">830,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,023,290</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes shares that are owned of record by
    family members and/or trusts.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 49,446 shares held by The Beyster Family
    Foundation.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">*</FONT></TD>
    <TD align="left">
    <FONT size="2">Represents less than 1% of both:
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the outstanding shares of Class&nbsp;A common
    stock and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the outstanding shares of Class&nbsp;A common
    stock assuming that each outstanding share of Class&nbsp;B
    common stock is converted into 20&nbsp;shares of Class&nbsp;A
    common stock.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 1,750,000 shares of Class&nbsp;A common stock
registered for sale by the selling stockholders listed above
represent only the maximum number of shares these stockholders
may sell in accordance with this prospectus. Of the
1,170,135&nbsp;shares of Class&nbsp;A common stock offered by
selling stockholders under our prospectus dated
February&nbsp;28, 2002, as of August&nbsp;23, 2002, 279,733 were
actually sold by those stockholders.
</FONT>

<!-- link1 "<FONT size="2">LEGAL MATTERS</FONT>" -->
<DIV align="left"><A NAME="010"></A></DIV>

<P align="center">
<B><FONT size="2">LEGAL MATTERS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The legality of the Class&nbsp;A common stock
being offered hereby has been reviewed for us and the selling
stockholders by Douglas&nbsp;E. Scott,&nbsp;Esq., Senior Vice
President and General Counsel of SAIC. As of August&nbsp;23,
2002, Mr.&nbsp;Scott owned of record 67,978&nbsp;shares of
Class&nbsp;A common stock, beneficially owned a total of
19,405&nbsp;shares through our retirement plans, had the right
to acquire an additional 43,000&nbsp;shares pursuant to vested
stock options and upon future vesting, will have a right to
acquire an additional 104,000&nbsp;shares pursuant to previously
granted stock options.
</FONT>

<P align="center"><FONT size="2">21
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "<FONT size="2">AVAILABLE INFORMATION</FONT>" -->
<DIV align="left"><A NAME="011"></A></DIV>

<P align="center">
<B><FONT size="2">AVAILABLE INFORMATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We file annual, quarterly and current reports,
proxy statements and other information with the SEC. We have
also filed with the SEC a registration statement on
Form&nbsp;S-8 to register the shares of Class&nbsp;A common
stock being offered in this prospectus. This prospectus, which
forms a part of the registration statement, does not contain all
of the information included in the registration statement. For
further information about us and the shares of Class&nbsp;A
common stock offered in this prospectus, you should refer to the
registration statement and its exhibits and our other SEC
filings.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You may read and copy any document we file at the
SEC&#146;s public reference rooms at 450 Fifth Street NW in
Washington,&nbsp;D.C., or those located in New York, New York
and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. Our SEC
filings are also available to the public at the SEC&#146;s web
site at http://www.sec.gov.
</FONT>

<!-- link1 "<FONT size="2">INCORPORATION OF INFORMATION BY REFERENCE</FONT>" -->
<DIV align="left"><A NAME="012"></A></DIV>

<P align="center">
<B><FONT size="2">INCORPORATION OF INFORMATION BY
REFERENCE</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The SEC allows us to &#147;incorporate by
reference&#148; into this prospectus certain information we have
filed with the SEC. This means that we can disclose important
information to you by referring you to those documents. The
information incorporated by reference is considered to be part
of this prospectus.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We incorporate by reference the documents listed
below:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Annual Report on Form&nbsp;10-K for the year
    ended January&nbsp;31, 2002
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Quarterly Report on Form&nbsp;10-Q for the
    quarter ended April&nbsp;30, 2002
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Current Reports on Form&nbsp;8-K filed with the
    SEC on April&nbsp;8, 2002, April&nbsp;17, 2002, July&nbsp;3,
    2002, July&nbsp;17, 2002, July&nbsp;29, 2002, July&nbsp;30,
    2002, August&nbsp;7, 2002, August&nbsp;15, 2002 and
    August&nbsp;19, 2002
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Proxy Statement dated June&nbsp;7, 2002
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">All reports we have filed pursuant to
    Section&nbsp;13(a) or 15(d) of the Exchange Act since
    January&nbsp;31, 2002 up to the effective date of this prospectus
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The description of the Class&nbsp;A common stock,
    par value $.01 per share, contained in our registration
    statement on Form&nbsp;8-A, which was filed with the SEC and
    declared effective as of August&nbsp;23, 1984, as amended on
    April&nbsp;28, 1998 and September&nbsp;13, 1999, and including
    any other amendment or report filed for the purpose of updating
    such description
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All documents we filed with the SEC pursuant to
Section&nbsp;13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this registration statement and prior
to the filing of a post-effective amendment that indicates all
securities offered have been sold or that deregisters all
securities then remaining unsold, shall be deemed to be
incorporated by reference in this registration statement and to
be a part of it from the respective dates of filing of such
documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this registration
statement to the extent that a statement contained herein or in
any other subsequently filed document which also is, or is
deemed to be, incorporated by reference herein modifies or
supersedes any such statement. Any such statement so modified or
superseded will not be deemed, except as so modified or
superseded, to constitute a part of this registration statement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You may request a copy of these filings, at no
cost, by writing to or telephoning our corporate secretary at
the following address and telephone number:
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="20%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="77%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Science Applications International Corporation<BR>
    10260 Campus Point Drive<BR>
    San Diego, California 92121<BR>
    Attention: Corporate Secretary<BR>
    Tel: (858)&nbsp;826-7323
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">22
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">You should rely only on the information
incorporated by reference or provided in this prospectus. We
have not authorized anyone to provide you with different
information. We are not making an offer of these securities in
any state where the offer is not permitted. You should not
assume that the information in this prospectus is accurate as of
any date other than the date on the front cover of this
prospectus.</FONT></B>

<!-- link1 "<FONT size="2">INDEMNIFICATION</FONT>" -->
<DIV align="left"><A NAME="013"></A></DIV>

<P align="center">
<B><FONT size="2">INDEMNIFICATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our restated certificate of incorporation
provides for us to indemnify our directors and officers to the
fullest extent authorized by Delaware law. This indemnification
would cover all expenses and liabilities reasonably incurred in
connection with their services for or on behalf of us. In
addition, our restated certificate of incorporation provides
that our directors will not be personally liable for monetary
damages to us for breaches of their fiduciary duty as directors,
unless they violated their duty of loyalty to us or our
stockholders, acted in bad faith knowingly or intentionally
violated the law, authorized illegal dividends or redemptions or
derived an improper personal benefit from their action as
directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted under
our amended and restated certificate of incorporation or
otherwise to our directors, officers, or controlling persons of
SAIC, we have been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by us of expenses incurred or paid by a director, officer or
controlling person of SAIC in the successful defense of any
action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, we will, unless in the opinion of our counsel
the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
</FONT>

<P align="center"><FONT size="2">23
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<HR size="1" width="100%" align="left" noshade>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>

<P align="center">
<B><FONT size="4">10,750,000 Shares</FONT></B>

<DIV align="center">
<B><FONT size="4">Class&nbsp;A Common Stock</FONT></B>
</DIV>

<P align="center">
<IMG src="a84085ora84085l1.gif" alt="(SAIC LOGO)">

<P align="center">
<HR size="1" width="31%" align="center" noshade>

<DIV align="center">
<B>PROSPECTUS</B>
</DIV>

<DIV align="center">
<HR size="1" width="31%" align="center" noshade>
</DIV>

<P align="center">
<FONT size="2">August 30, 2002
</FONT>

<P align="left">
<HR size="1" width="100%" align="left" noshade>

<DIV align="left">
<HR size="1" width="100%" align="left" noshade>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Item&nbsp;8.<I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exhibits</I></FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="85%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exhibit</FONT></B></TD>
    <TD></TD>
    <TD></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">No.</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Description of Exhibits</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">&nbsp;5(a)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Opinion of Douglas E. Scott, Esq.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">23(a)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Consent of Douglas E. Scott, Esq. (contained in
    Exhibit&nbsp;5(a))
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">23(b)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Consent of Deloitte &#38; Touche LLP.*
    </FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">23(c)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Consent of Houlihan Lokey Howard &#38; Zukin
    Financial Advisors, Inc.*
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">*&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Filed herewith.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">II-1
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "<FONT size="2">SIGNATURES</FONT>" -->
<DIV align="left"><A NAME="014"></A></DIV>

<P align="center">
<B><FONT size="2">SIGNATURES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the requirements of the Securities
Act of 1933, Registrant certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on
Form&nbsp;S-8 and has duly caused this Registration Statement to
be signed on its behalf by the undersigned, thereunto duly
authorized in the City of San Diego, State of California on
August&nbsp;29, 2002.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">SCIENCE APPLICATIONS
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">INTERNATIONAL CORPORATION
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="center">
    <FONT size="2">/s/ J.R. BEYSTER
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <FONT size="2">J.R. Beyster
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <I><FONT size="2">Chairman of the Board and</FONT></I></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="center">
    <I><FONT size="2">Chief Executive Officer</FONT></I></TD>
</TR>

</TABLE>

<DIV align="center">

</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">KNOW ALL PERSONS BY THESE PRESENT, that each
individual whose signature appears below constitutes and
appoints J.D. Heipt and D.E. Scott power of substitution, for
him and in his name, place and stead, in any and all capacities
to sign any and all amendments (including post-effective
amendments) to this registration statement, and new registration
statements relating to this Form&nbsp;S-8, and to file the same
with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full
power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the
premises, as fully to confirming all that said attorneys-in-fact
and agents, or either of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue
hereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the requirements of the Securities
Act of 1933, this Registration Statement on Form&nbsp;S-8 has
been signed by the following persons in the capacities and on
the dates indicated.
</FONT>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="51%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="30%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="13%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Signature</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Title</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <FONT size="2">/s/ J.R. BEYSTER<BR>
    <HR size="1" noshade>J.R. Beyster
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Chairman of the Board and Principal Executive
    Officer
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top">
    <FONT size="2">August&nbsp;29, 2002
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <FONT size="2">/s/ T.E. DARCY<BR>
    <HR size="1" noshade>T.E. Darcy
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Principal Financial Officer
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top">
    <FONT size="2">August&nbsp;29, 2002
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <FONT size="2">/s/ P.N. PAVLICS<BR>
    <HR size="1" noshade>P.N. Pavlics
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Principal Accounting Officer
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top">
    <FONT size="2">August&nbsp;29, 2002
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <FONT size="2">/s/ D.P. ANDREWS<BR>
    <HR size="1" noshade>D.P. Andrews
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top">
    <FONT size="2">August&nbsp;29, 2002
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <FONT size="2">/s/ W.H. DEMISCH<BR>
    <HR size="1" noshade>W.H. Demisch
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top">
    <FONT size="2">August&nbsp;29, 2002
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <BR>
    <HR size="1" noshade><FONT size="2">D.W. Dorman
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <FONT size="2">/s/ D.H. FOLEY<BR>
    <HR size="1" noshade>D.H. Foley
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top">
    <FONT size="2">August&nbsp;29, 2002
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">II-2
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="51%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="30%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="13%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Signature</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Title</FONT></B></TD>
    <TD></TD>
    <TD align="center" nowrap><B><FONT size="1">Date</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <FONT size="2">/s/ J.E. GLANCY<BR>
    <HR size="1" noshade>J.E. Glancy
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top">
    <FONT size="2">August&nbsp;29, 2002
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <FONT size="2">/s/ B.R. INMAN<BR>
    <HR size="1" noshade>B.R. Inman
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top">
    <FONT size="2">August&nbsp;29, 2002
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <FONT size="2">/s/ A.K. JONES<BR>
    <HR size="1" noshade>A.K. Jones
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top">
    <FONT size="2">August&nbsp;29, 2002
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <FONT size="2">/s/ H.M.J. KRAEMER, JR.<BR>
    <HR size="1" noshade>H.M.J. Kraemer, Jr.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top">
    <FONT size="2">August&nbsp;29, 2002
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <FONT size="2">/s/ C.B. MALONE<BR>
    <HR size="1" noshade>C.B. Malone
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top">
    <FONT size="2">August&nbsp;29, 2002
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <FONT size="2">/s/ S.D. ROCKWOOD<BR>
    <HR size="1" noshade>S.D. Rockwood
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top">
    <FONT size="2">August&nbsp;29, 2002
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <FONT size="2">/s/ R. SNYDERMAN<BR>
    <HR size="1" noshade>R. Snyderman
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top">
    <FONT size="2">August&nbsp;29, 2002
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <FONT size="2">/s/ M.E. TROUT<BR>
    <HR size="1" noshade>M.E. Trout
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top">
    <FONT size="2">August&nbsp;29, 2002
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <FONT size="2">/s/ J.P. WALKUSH<BR>
    <HR size="1" noshade>J.P. Walkush
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top">
    <FONT size="2">August&nbsp;29, 2002
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <FONT size="2">/s/ J.H. WARNER, JR.<BR>
    <HR size="1" noshade>J.H. Warner, Jr.
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top">
    <FONT size="2">August&nbsp;29, 2002
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <FONT size="2">/s/ J.A. WELCH<BR>
    <HR size="1" noshade>J.A. Welch
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top">
    <FONT size="2">August&nbsp;29, 2002
    </FONT></TD>
</TR>

<TR>
    <TD colspan="5"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <FONT size="2">/s/ A.T. YOUNG<BR>
    <HR size="1" noshade>A.T. Young
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">Director
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top">
    <FONT size="2">August&nbsp;29, 2002
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">II-3
</FONT>
</BODY>
</HTML>
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Science Applications International Corporation
Table of Contents
As filed with the Securities and Exchange
Commission on August 30, 2002.
Registration Statement
No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Science Applications International
Corporation
(Exact name of registrant as specified in its
charter)
Delaware
95-3630868
(State or other jurisdiction
of incorporation or organization)
(I.R.S. Employer
Identification No.)
10260 Campus Point Drive
San Diego, California 92121
(858) 826-6000
(Address, including zip code, and telephone
number, including
area code of registrant's principal
executive offices)
Direct Stock Purchase Program
(Full title of the plan)
Douglas E. Scott, Esq.
Senior Vice President and General
Counsel
Science Applications International
Corporation
10260 Campus Point Drive
San Diego, California 92121
(858) 826-6000
(Name, address, including zip code, and
telephone number,
including area code, of agent for
service)
CALCULATION OF REGISTRATION FEE
Proposed Maximum
Proposed Maximum
Title of Each Class of
Amount to
Offering Price
Aggregate
Amount of
Securities to be Registered
be Registered*
Per Unit**
Offering Price
Registration Fee
Class A Common Stock, par value $.01 per
    share
1,242,804
$28.90
$35,917,036
$3,305
*
This Registration Statement shall also cover any
    additional shares of Class A Common Stock which become issuable
    under the Direct Stock Purchase Program or to the selling
    stockholders by reason of any stock dividend, stock split,
    recapitalization or other similar transaction which results in
    an increase in the number of the outstanding shares of
    Registrant's Common Stock.
**
Estimated solely for the purpose of calculating
    the registration fee. The proposed maximum offering price per
    share is estimated in accordance with Rule 457(h) under the
    Securities Act and was determined using the formula price (as
    defined in the Prospectus which is a part of this Registration
    Statement) of the SAIC Class A Common Stock on the date
    hereof.
Table of Contents
EXPLANATORY NOTE
This Registration Statement on Form S-8
registers 1,242,804 shares of Class A common stock of
Science Applications International Corporation that may be
issued from time to time under our Direct Stock Purchase Program
or offered for resale by certain selling stockholders under a
reoffer prospectus included in this Registration Statement. The
contents of the Registrant's Registration Statement on
Form S-8 (File No. 333-67698) filed on
October 17, 2001 (the "Earlier Registration
Statement") are hereby incorporated by reference pursuant
to Instruction E of Form S-8. This Registration Statement
combined with the Earlier Registration Statement registers an
aggregate of 10,750,000 shares of the Registrant's
Class A Common Stock of which Registrant is offering
9,000,000 shares and the selling stockholders are offering
1,750,000 shares.
Table of Contents
PROSPECTUS
10,750,000 Shares
of Class A Common Stock
Science Applications International
Corporation
SAIC is offering 9,000,000 shares of its
Class A common stock to present and future employees,
consultants and directors, which includes shares that are
anticipated to be offered and sold directly by our stockholders
in our limited market, which sales may be attributed to SAIC by
the SEC.
The selling stockholders may from time to time
offer and sell up to an aggregate of 1,750,000 shares of
Class A common stock under this prospectus.
Our certificate of incorporation limits a
stockholder's right to transfer these shares. We have a
right to repurchase the shares if a stockholder's
employment or affiliation with us terminates.
All stockholders who sell shares in our limited
market, other than our retirement plans, will pay a
1% commission. We will receive proceeds only from sales of
shares made directly by us. We will not receive any proceeds
from sales made by our stockholders, even when such sales are
attributable to SAIC by the SEC.
Investing in our Class A common stock involves risks.
See "Risk Factors" beginning on page 2 to read
about factors you should consider before buying shares of our
common stock.
Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved
of these securities or determined if this prospectus is truthful
or complete. Any representation to the contrary is a criminal
offense.
The Class A common stock is not listed on
any national securities exchange or the Nasdaq stock market. Our
board of directors determines the price at which shares are
purchased. They use a valuation process, which includes a
formula and the assistance of an independent appraisal firm, to
establish the stock price. The price of the shares on
August 30, 2002 was $28.90.
The date of this prospectus is August 30, 2002
TABLE OF CONTENTS
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
RISK FACTORS
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
THE LIMITED MARKET
USE OF PROCEEDS
DETERMINATION OF OFFERING PRICE
DIRECT STOCK PURCHASE PROGRAM
PLAN OF DISTRIBUTION
DESCRIPTION OF CAPITAL STOCK
SELLING STOCKHOLDERS
LEGAL MATTERS
AVAILABLE INFORMATION
INCORPORATION OF INFORMATION BY REFERENCE
INDEMNIFICATION
SIGNATURES
EXHIBIT 5(A)
EXHIBIT 23(B)
EXHIBIT 23(C)
Table of Contents
TABLE OF CONTENTS
Page
Science Applications International Corporation
1
Risk Factors
2
Statement Regarding Forward-Looking Statements
8
The Limited Market
8
Use of Proceeds
9
Determination of Offering Price
10
Direct Stock Purchase Program
13
Plan of Distribution
14
Implementation of Statement of Financial
    Accounting Standards ("SFAS") No. 142,
    "Goodwill and Other Intangible Assets"
15
Description of Capital Stock
16
Selling Stockholders
20
Legal Matters
21
Available Information
22
Incorporation of Information by Reference
22
Indemnification
23
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SCIENCE APPLICATIONS INTERNATIONAL
CORPORATION
We provide diversified professional and technical
services involving the application of scientific expertise to
solve complex problems for both commercial and government
customers in the U.S. and abroad. These services frequently
involve computer and systems technology. Through one of our
subsidiaries, Telcordia Technologies, Inc. (which we refer to as
"Telcordia"), we are a global provider of software,
engineering and consulting services, advanced research and
development, technical training and other services to the
telecommunications industry.
We provide technical services mainly in the
following market areas:
•
national security
•
health care
•
environment
•
energy
•
telecommunications
•
information technology
Our principal office and corporate headquarters
are located in San Diego, California at 10260 Campus Point
Drive, San Diego, California 92121 and our telephone number is
(858) 826-6000.
This summary highlights information contained
elsewhere in this prospectus. This summary is not complete and
may not contain all of the information that you should consider
before investing in the securities.
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RISK FACTORS
You should carefully consider the risks and
uncertainties described below in your evaluation of our business
and us. These are not the only risks and uncertainties that we
face. If any of these risks or uncertainties actually occur, our
business, financial condition or operating results could be
materially harmed and the price of our common stock could
decline.
Risks Relating to Our Business
A substantial percentage of our revenue is
    from U.S. Government customers and the regional Bell operating
    companies
We derive a substantial portion of our revenues
from the U.S. Government as a prime contractor or a
subcontractor. The percentage of total revenues from the
U.S. Government was 58% in fiscal year 2002, 54% in fiscal
year 2001 and 52% in fiscal year 2000. Our revenues could be
adversely impacted by a reduction in the overall level of
U.S. Government spending and by changes in its spending
priorities from year to year. Furthermore, even if the overall
level of U.S. Government spending does increase or remains
stable, the budgets of the government agencies with whom we do
business may be decreased or our projects with them may not be
sufficiently funded, particularly because Congress usually
appropriates funds for a given project on a fiscal-year basis
even though contract performance may take more than one year. In
addition, obtaining U.S. Government contracts remains a
highly competitive process and this has led to a greater portion
of our revenue base being associated with contracts providing
for a lower amount of reimbursable cost than we have
traditionally been able to recover.
Telcordia historically has derived a majority of
its revenues from the regional Bell operating companies which we
call "RBOCs." The percentage of total Telcordia
revenues from the RBOCs was 65% in fiscal year 2002, 62% in
fiscal year 2001 and 53% in fiscal year 2000. With the downturn
in the telecommunications industry, Telcordia's business is
more dependent on its business from the RBOCs and it continues
efforts to diversify its business by obtaining new customers. A
continued downturn in the telecommunications industry and loss
of business from the RBOCs could further reduce revenues and
have an adverse impact on our business.
We have made progress in our efforts to diversify
our business across a greater number of customers. However, we
still remain heavily dependent upon the U.S. Government as
our primary customer and the RBOCs as a major source of
Telcordia's revenues. Our future success and revenue growth
will depend in part upon our ability to continue to expand our
customer base.
We face increasing risks associated with
    our international business
We are increasingly subject to the risks of
conducting business internationally. These risks include:
•
unexpected changes in regulatory requirements
•
tariffs
•
political and economic instability
•
unfamiliar and unknown business practices and
    customs
•
restrictive trade policies
•
inconsistent product regulation
•
cost of complying with a variety of laws
•
licensing requirements
We do not know the impact that such regulatory,
geopolitical and other factors may have on our business in the
future. These risks may be significant for entities such as
Informatica Negocios y Tecnologia, S.A.
("INTESA"), a Venezuelan joint venture in which we own
60%. INTESA derives substantially all of its
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revenues from Petroleos de Venezuela, S.A.
("PDVSA"), Venezuela's national oil company,
which is not only INTESA's primary customer, but also our
joint venture partner that owns 40% of INTESA. During the first
quarter of fiscal 2003, revenues from INTESA represented 4% of
our consolidated revenues. The political and economic
environment in Venezuela is unstable and we are uncertain what
impact, if any, this may have on INTESA's business. In
addition, the basic term of the outsourcing contract INTESA has
with PDVSA expired on June 30, 2002 and the parties are
operating under a six-month agreement to allow for ongoing
service delivery through December 31, 2002. PDVSA and SAIC
have recently commenced negotiations in regard to PDVSA's
request to purchase our ownership interest in INTESA. Therefore,
our role in the future ownership and operation of INTESA is
uncertain.
We have transactions denominated in foreign
currencies because some of our business is conducted outside of
the United States. In addition, our foreign subsidiaries
generally conduct business in foreign currencies. We are exposed
to fluctuations in exchange rates, which could result in losses
and have a significant impact on our results of operations. Our
risks include the possibility of significant changes in exchange
rates and the imposition or modification of foreign exchange
controls by either the U.S. or applicable foreign governments.
We have no control over the factors that generally affect these
risks, such as economic, financial and political events and the
supply and demand for the applicable currencies. We may use
forward foreign currency exchange rate contracts to hedge
against movements in exchange rates for contracts denominated in
foreign currencies. We cannot assure you that a significant
fluctuation in exchange rates will not have a significant
negative impact on our results of operations.
Our business could suffer if we lose the
    services of Dr. Beyster or other key
    personnel
Our success to date has resulted in part from the
significant contributions of our executive officers, in
particular those of our founder and chief executive officer,
J.R. Beyster (age 78). Dr. Beyster has been our only
chief executive officer and chairman of the board since he
founded the company in 1969. He also currently serves as our
president. Dr. Beyster plays a key role in many aspects of
our business, including marketing, operations and management.
Dr. Beyster and our other executive officers are expected
to continue to make important contributions to our success. The
loss of Dr. Beyster or any of the other key personnel could
materially affect our operations. We generally do not have
long-term employment contracts with these key personnel nor do
we maintain "key person" life insurance policies.
Unsuccessful resolution of the Telkom South
    Africa Arbitration could harm our business
Our Telcordia subsidiary filed a Demand for
Arbitration with the International Chamber of Commerce in Paris,
France initiating arbitration and seeking damages of
approximately $130 million from Telkom South Africa related
to a contract dispute. The dispute involves a contract executed
on June 24, 1999, pursuant to which Telcordia would provide
a Service Activation and Assurance System. The value of
Telcordia's portion of the contracted work was
$208 million. Telcordia performed the contract for over
18 months and delivered multiple software releases to
Telkom South Africa. On January 12, 2001, Telcordia
notified Telkom South Africa that Telkom South Africa had
breached the contract for, among other things, taking and using
Telcordia software without paying for it, improperly refusing to
accept software deliveries, failing to cooperate in defining
future software releases, and failing to make other payments due
under the contract. On February 2, 2001, Telkom South
Africa responded by denying Telcordia's claims and
asserting various breaches on the part of Telcordia. The parties
were unable to negotiate a mutually acceptable resolution of the
dispute. On March 6, 2001, Telcordia initiated arbitration.
On May 22, 2001, Telkom South Africa filed with the
International Chamber of Commerce its Answer to Telcordia's
Demand for Arbitration and its Counterclaims against Telcordia.
Telkom South Africa contends in its Counterclaims
that Telcordia breached the contract for, among other things,
failing to provide deliverables compliant with the requirements
of the contract at the times provided in the contract. Telkom
South Africa also contends that Telcordia misrepresented its
capabilities and the benefits that Telkom South Africa would
receive under the contract. Telkom South Africa seeks
substantial damages from Telcordia, including repayment of
approximately $97 million previously paid to Telcordia
under the contract and the excess costs of reprocuring a
replacement system, estimated by Telkom
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South Africa to be $234 million. Telkom
South Africa's Counterclaim contains additional claims
which have not been quantified by Telkom South Africa. On
April 11, 2002, Telkom South Africa filed an amended Answer
and Counterclaim. Telcordia disputes Telkom South Africa's
contentions and intends to vigorously defend against these
claims while pursuing its own claims in the arbitration. The
arbitration hearing to determine the merit of both parties'
substantive claims commenced in May 2002 in Johannesburg, South
Africa with witness testimony. Upon completion of witness
testimony, Telcordia and Telkom South Africa submitted briefs as
requested by the arbitrator. Oral closing arguments were
presented in London, England on July 30 and 31, 2002. At
the close of the hearing, the arbitrator indicated his intention
to issue a decision within four weeks. Telkom South Africa
submitted a letter dated August 16, 2002 to the arbitrator
indicating that it believed the issue of the interpretation of
the contract under the laws of South Africa should be made by
the South African High Court rather than the arbitrator. The
letter also indicated that if the arbitrator did not refer that
issue to the High Court for a decision, Telkom South Africa
would file an application with the South African High Court
requesting that it decide the issue. In a letter dated
August 27, 2002, the arbitrator responded to Telkom South
Africa's letter by reaffirming his intention to declare the
proceedings closed and rule on the issues raised in this stage
of the arbitration, but posing additional questions to Telkom
South Africa regarding its request for a judicial referral.
Due to the complex nature of the legal and
factual issues involved and the uncertainty of litigation in
general, the outcome of the arbitration is not presently
determinable; however, an adverse resolution could materially
harm our business, consolidated financial position, results of
operations and cash flows. Protracted litigation, regardless of
outcome, could result in substantial costs and divert
management's attention and resources.
We face risks relating to Government
    contracts
The Government may modify, curtail or
terminate our contracts.
Many of the
U.S. Government programs in which we participate as a
contractor or subcontractor may extend for several years;
however, these programs are normally funded on an annual basis.
The U.S. Government may modify, curtail or terminate its
contracts and subcontracts at its convenience. Modification,
curtailment or termination of our major programs or contracts
could have a material adverse effect on our results of
operations and financial condition.
Our business is subject to potential
Government inquiries and
investigations.
We are from time to
time subject to certain U.S. Government inquiries and
investigations of our business practices due to our
participation in government contracts. We cannot assure you that
any such inquiry or investigation would not have a material
adverse effect on our results of operations and financial
condition.
Our contract costs are subject to audits by
Government agencies.
The costs we
incur on our U.S. Government contracts, including allocated
indirect costs, may be audited by U.S. Government
representatives. These audits may result in adjustments to our
contract costs. We normally negotiate with U.S. Government
representatives before settling on final adjustments to our
contract costs. Substantially all of our indirect contract costs
have been agreed upon through fiscal year 2000 and are not
subject to further adjustment. We have recorded contract
revenues in fiscal years 2001 and 2002 based upon costs we
expect to realize upon final audit. However, we do not know the
outcome of any future audits and adjustments and we may be
required to reduce our revenues or profits upon completion and
final negotiation of these audits.
If we fail to control fixed-price or target
    cost and fee with risk sharing contracts, it may result in
    reduced profits or losses
The percentage of our revenues from firm
fixed-price contracts was 29% for fiscal year 2002, 32% for
fiscal year 2001 and 36% for fiscal year 2000. Because we assume
the risk of performing a firm fixed-price contract at a set
price, the failure to accurately estimate ultimate costs or to
control costs during performance of the work could result, and
in some instances has resulted, in reduced profits or losses for
such contracts.
Many of our customers in the information
technology outsourcing business contract on the basis of target
cost and fee with risk sharing. The percentage of our revenues
derived from target cost and fee with risk sharing contracts was
7% for fiscal year 2002, 5% for fiscal year 2001 and 4% for
fiscal year 2000. Under target
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cost and fee with risk sharing contracts, the
customers reimburse our costs plus a specified or target fee or
profit; however, if our actual costs exceed the target cost, our
target fee and cost reimbursement are reduced by a portion of
the overrun. Failure to control costs during performance of the
work could result in reduced profits for such contracts.
If we fail to recover pre-contract costs,
    it may result in reduced profits or losses
Any costs we incur before the execution of a
contract or contract amendment are incurred at our risk, and it
is possible that the customer will not reimburse us for these
pre-contract costs. At April 30, 2002, we had pre-contract
costs of $38,395,000. We cannot assure you that contracts or
contract amendments covering this work will be executed or that
we will recover the related costs.
If we fail to implement our acquisition or
    investment strategy, our business could suffer
We have historically supplemented our internal
growth through acquisitions, investments or joint ventures. We
evaluate potential acquisitions, investments and joint ventures
on an ongoing basis. Our acquisition and investment strategy
poses many risks, including:
•
We may not be able to compete successfully for
    available acquisition candidates, complete future acquisitions
    and investments or accurately estimate their financial effect on
    our business
•
Future acquisitions, investments and joint
    ventures may require us to issue additional common stock, spend
    significant cash amounts or decrease our operating income
•
We may have trouble integrating the acquired
    business and retaining its personnel
•
Acquisitions, investments or joint ventures may
    disrupt our business and distract our management from other
    responsibilities
•
If our acquisitions or investments fail, our
    business could be harmed
Unfavorable economic conditions could harm
    our business
Our business, financial condition and results of
operations may be affected by various economic factors.
Unfavorable economic conditions may make it more difficult for
us to maintain and continue our revenue growth. In an economic
recession or under other adverse economic conditions, customers
and vendors may be more likely to be unable to meet contractual
terms or their payment obligations. A decline in economic
conditions may have a material adverse effect on our business.
Risks Relating to Our Industry
Our business could suffer if we fail to
    attract, train and retain skilled employees
The availability of highly trained and skilled
professional, administrative and technical personnel is critical
to our future growth and profitability. Competition for
scientists, engineers, technicians, management and professional
personnel is intense and competitors aggressively recruit key
employees. Because of our growth and competition for experienced
personnel, particularly in highly specialized areas, it has
become more difficult to meet all of our needs for these
employees in a timely manner. We intend to continue to devote
significant resources to recruit, train and retain qualified
employees; however, we cannot assure you that we will be able to
attract and retain such employees on acceptable terms. Any
failure to do so could have a material adverse effect on our
operations.
Our failure to remain competitive could
    harm our business
Our business is highly competitive, particularly
in the business areas of telecommunications and information
technology outsourcing. We compete with larger companies that
have greater financial resources and larger technical staffs. We
also compete with smaller, more specialized entities who are
able to concentrate their resources on particular areas. We also
compete with the U.S. Government's own in-house
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capabilities and federal non-profit contract
research centers. To continue our success, we must provide
superior service and performance on a cost-effective basis to
our customers.
Risks Relating to Our Stock
Because no public market exists for our
    stock, the ability of stockholders to sell their SAIC stock in
    the limited market is limited
There is no public market for the Class A
common stock. The limited market maintained by our wholly-owned
broker-dealer subsidiary, Bull, Inc., permits existing
stockholders to offer our stock for sale only on predetermined
trade dates and only at the price determined by the board of
directors. Generally, there are four trade dates each year,
however, a scheduled trade date could be postponed or cancelled.
The trade originally scheduled for July 26, 2002 was
postponed to August 16, 2002 in order to modify the stock
price set by the board of directors on July 12, 2002 as it
no longer represented a fair market value.
If a trade in the limited market is
    undersubscribed, our stockholders may not be able to sell all
    the shares they desire to sell
If the number of shares offered for sale by
stockholders exceeds the number of shares sought to be purchased
by authorized buyers in any trade, our stockholders who
requested to sell stock may not be able to sell all such stock
in that trade. Although we are currently authorized, we are not
obligated to purchase shares of Class A common stock in the
limited market on any trade date. In deciding whether to make
such purchases, we will consider a variety of factors, including
our cash position and cash flows, investment and capital
activities, financial performance, financial covenants, the
number of shares outstanding and the amount of the under
subscription in the market. This determination is not made until
the trade date. We have purchased a significant amount of
Class A common stock in the limited market during recent
periods. We purchased 14,028,781 shares on the trade dates in
fiscal year 2002 and 7,625,797 shares on the trade dates in
fiscal year 2001. These purchases accounted for 88.2% and 67.7%,
respectively, of the total shares purchased by all buyers in the
limited market during fiscal years 2002 and 2001. Our purchases
balanced the number of shares offered for sale by stockholders
with the number of shares sought to be purchased by authorized
buyers. If the increasing trend of trade imbalances continues,
we cannot assure you that we will continue to purchase such
excess shares in the future. Accordingly, if the aggregate
number of shares offered for sale exceeds the aggregate number
of shares sought to be purchased by authorized buyers, and we
elect not to participate in a trade or otherwise limit our
participation in a trade, our stockholders may be unable to sell
all the shares they desire to sell.
The ability of stockholders to sell or
    transfer their common stock outside the limited market is
    restricted
Our certificate of incorporation limits our
stockholders' ability to sell or transfer shares of
Class A common stock in some circumstances. These
restrictions include:
•
our right of first refusal to purchase shares a
    stockholder offers to sell to a third party other than in our
    limited market
•
our right to repurchase shares upon the
    termination of a stockholder's employment or affiliation
    with us
We may, but are not obligated to, defer our
repurchase right for up to five years with respect to those
employees who qualify for our Alumni Program.
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
Our stock price is not determined by a trading
market of bargaining buyers and sellers. Our board of directors,
most of whom are stockholders, determines the price at which the
Class A common stock trades by using the valuation process
that includes input from an independent appraiser and a stock
price formula as described under "Determination of Offering
Price." The stock price remains in effect until
subsequently changed. The board of directors has authorized its
stock policy committee to review the stock price during the
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period between meetings of the board of directors
to determine whether the stock price continues to represent a
fair market value, and if necessary, modify the price. If a
stock price modification is necessary, the stock policy
committee would apply the same valuation process used by the
board of directors. The stock policy committee modified the
stock price on July 29, 2002 after it was determined that
the stock price established by the board of directors on
July 12, 2002 no longer represented a fair market value.
All trades in the limited market will occur at the stock price
determined by the board of directors or its stock policy
committee. Our board of directors believes the stock price
represents a fair market value; however, we cannot assure you
that the stock price represents the value that would be obtained
if our stock were publicly traded. The formula, which is one
part of the valuation process, does not specifically include
variables reflecting all financial and valuation criteria that
may be relevant. In addition, our board of directors generally
has broad discretion to modify the formula. Absent changes in
the market factor used in the formula, which may change from
quarter to quarter as appropriate to reflect changing business,
financial and market conditions, and accounting and other
impacts unrelated to our value, the mechanical application of
the formula tends to reduce the impact of quarterly fluctuations
in our operating results on the stock price because the formula
takes into account our segment operating income for the four
preceding quarters.
Future returns on our common stock may be
    significantly lower than historical returns
We cannot assure you that the Class A common
stock will provide returns in the future comparable to those
achieved historically or that the price will not decline.
Changes in our business and the volatility
    of the market value of our comparable companies may increase the
    volatility of the stock price
The stock price could be subject to fluctuations
in the future. This volatility is expected to result from the
impact on our stock price of:
•
the mix of our commercial and international
    business as a proportion of our overall business and the
    volatility associated with companies in those business areas
•
our significant investments in publicly and
    privately traded companies and the volatility of the price of
    those companies' shares
•
the impact of acquisitions, investments, joint
    ventures and divestitures that we may undertake
•
the volatility of the market value of comparable
    public companies that are considered in our valuation process
Restrictions in our certificate of
    incorporation and bylaws may discourage takeover attempts that
    you might find attractive
Our certificate of incorporation and bylaws may
discourage or prevent attempts to acquire control of us that are
not approved by our board of directors, including transactions
in which stockholders might receive a premium for their shares
above the stock price. Our stockholders may view such a takeover
attempt favorably. In addition, the restrictions may make it
more difficult for our stockholders to elect directors not
endorsed by us.
Federal legislation has been proposed that
    may impact our retirement plans, stock system and
    liquidity
Federal legislation has been proposed that, if
adopted, would impose new requirements and restrictions on
certain types of retirement plans which could impact our stock
system and liquidity. If legislation of this nature were
adopted, it would be likely that purchases of our stock by our
retirement plans would decrease and sales increase. If this
occurred, the ability of our stockholders to resell their shares
in the limited market may be adversely affected. In addition,
reduced purchases (or increased sales) of our stock by the
trustees of our retirement plans may adversely impact our
liquidity and cash position. Because of the uncertainty of if,
when, and in what final form such legislation may be enacted, we
are unable to determine the impact this legislation might have
on our retirement plans, the operation of our limited market and
our liquidity and cash needs.
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STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
The information contained in this report or in
documents that we incorporate by reference or in statements made
by our management includes some forward-looking statements that
involve a number of risks and uncertainties. A number of
factors, including but not limited to those outlined in the Risk
Factors, could cause our actual results, performance,
achievements, or industry results to be very different from the
results, performance or achievements expressed or implied by
these forward-looking statements.
In addition, forward-looking statements depend
upon assumptions, estimates and dates that may not be correct or
precise and involve known or unknown risks, uncertainties and
other factors. Accordingly, a forward-looking statement in this
report is not a prediction of future events or circumstances and
those future events or circumstances may not occur. Given these
uncertainties and risks, you are warned not to rely on the
forward-looking statements. A forward-looking statement is
usually identified by our use of certain terminology, including
"believes," "expects," "may,"
"will," "should," "seeks,"
"pro forma," "anticipates" or
"intends," or by discussions of strategies or
intentions. We are not undertaking any obligation to update
these factors or to publicly announce the results of any changes
to our forward-looking statements due to future events or
developments.
THE LIMITED MARKET
Since our inception, we have followed a policy of
remaining essentially employee owned. As a result, there has
never been a general public market for any of our securities. In
order to provide liquidity for our stockholders, however, we
have maintained a limited secondary market which we call the
"limited market," through our wholly-owned,
broker-dealer subsidiary, Bull Inc., which was organized in 1973
for the purpose of maintaining the limited market.
The limited market permits existing stockholders
to offer for sale shares of Class A common stock on
predetermined days which we call a "trade date."
Generally, there are four trade dates each year, however, a
scheduled trade date could be postponed or cancelled. In fact,
the trade originally scheduled for July 26, 2002 was postponed
to August 16, 2002 in order to modify the stock price set
by the board of directors on July 12, 2002 as it no longer
represented a fair market value. A trade date typically occurs
two weeks after our quarterly board of directors meetings,
currently scheduled for January, April, July and October. All
shares of Class B common stock to be sold in the limited
market must first be converted into 20 times as many shares of
Class A common stock. All sales are made at the prevailing
price of the Class A common stock determined by the board
of directors or its stock policy committee pursuant to the
valuation process described below. All sellers in the limited
market (other than our retirement plans and us) pay Bull, Inc. a
commission currently equal to 1% of the proceeds from such
sales. No commission is paid by purchasers in the limited market.
The purchase of Class A common stock in the
limited market is restricted to (i) current employees of
SAIC and eligible subsidiaries who desire to purchase
Class A common stock in an amount that does not exceed a
pre-approved limit established by the board of directors or the
operating committee of the board, (ii) current employees,
consultants and non-employee directors of SAIC and eligible
subsidiaries who have been specifically approved by the board of
directors or the operating committee of the board to purchase a
specified number of shares which may exceed the pre-approved
limit, and (iii) trustees or agents of the retirement and
benefit plans of SAIC and its eligible subsidiaries. These
employees, consultants, directors, trustees and agents are
referred to as "authorized buyers." No one, other than
these authorized buyers, is eligible to purchase Class A
common stock in the limited market.
If the aggregate number of shares offered for
sale in the limited market on any trade date is greater than the
aggregate number of shares sought to be purchased by authorized
buyers, offers by stockholders to sell 2,000 or less shares of
Class A common stock (or up to the first 2,000 shares if
more than 2,000 shares of Class A common stock are offered
by any such stockholder) will be accepted first. Offers to sell
shares in excess of 2,000 shares of Class A common stock
will be accepted on a pro-rata basis determined by dividing the
total number of shares remaining under purchase orders by the
total number of shares remaining under sell orders. If, however,
there are insufficient purchase orders to support the primary
allocation of 2,000 shares of
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Class A common stock for each proposed
seller, then the purchase orders will be allocated equally among
all of the proposed sellers up to the total number of shares
offered for sale.
We are currently authorized, but not obligated,
to purchase shares of Class A common stock in the limited
market on any trade date, but only if and to the extent that the
number of shares offered for sale by stockholders exceeds the
number of shares sought to be purchased by authorized buyers,
and we, in our discretion, determine to make such purchases. In
deciding whether to make such purchases, we will consider a
variety of factors, including our cash position and cash flows,
investment and capital activities, financial performance,
financial covenants, the number of shares outstanding and the
amount of the under subscription in the market. This
determination is not made until the trade date. We have
purchased a significant amount of Class A common stock in
the limited market during recent periods. We purchased
14,028,781 shares on the trade dates in fiscal year 2002 and
7,625,797 shares on the trade dates in fiscal year 2001. These
purchases accounted for 88.2% and 67.7%, respectively, of the
total shares purchased by all buyers in the limited market
during fiscal years 2002 and 2001. Our purchases balanced the
number of shares offered for sale by stockholders with the
number of shares sought to be purchased by authorized buyers. If
the increasing trend of trade imbalances continues, we cannot
assure you that we will continue to purchase such excess shares
in the future. Accordingly, if the aggregate number of shares
offered for sale exceeds the aggregate number of shares sought
to be purchased by authorized buyers, and we elect not to
participate in a trade or otherwise limit our participation in a
trade, our stockholders may be unable to sell all the shares
they desire to sell.
During the 2002 and 2001 fiscal years, the
trustees of certain of our retirement and benefit plans
purchased an aggregate of 1,450,018 and 1,733,624 shares,
respectively, in the limited market. These purchases accounted
for approximately 9.1% and 15.4% of the total shares purchased
by all buyers in the limited market during fiscal years 2002 and
2001, respectively. Such purchases may change in the future,
depending on the levels of participation in and contributions to
such plans and the extent to which such contributions are
invested in Class A common stock.
Federal legislation has been proposed that, if
adopted, would impose new requirements and restrictions on
certain types of retirement plans which could impact our stock
system and liquidity. If legislation of this nature were
adopted, it could have a significant impact on the level of
participation in the limited market by our retirement plans. To
the extent that purchases by the trustees of our retirement and
benefit plans decrease, and purchases by us decrease or do not
increase, the ability of stockholders to resell their shares in
the limited market will likely be adversely affected. Although
all shares of Class A common stock offered for sale were
sold in the limited market on each trade date occurring during
the last two fiscal years, we cannot assure you that a
stockholder desiring to sell all or a portion of his or her
shares of our Class A common stock on any trade date will
be able to do so.
To the extent that the aggregate number of shares
sought to be purchased by authorized buyers exceeds the
aggregate number of shares offered for sale by stockholders, we
may, but are not obligated to, sell authorized but unissued
shares of Class A common stock in the limited market. In
making this determination, we will consider a variety of
factors, including our cash position and cash flows, investment
and capital activities, financial performance, financial
covenants, the number of shares outstanding and the amount of
the over subscription in the market. This determination is not
made until the trade date. In fiscal years 2002 and 2001, we did
not sell any shares of Class A common stock in the limited
market as the number of shares sought to be purchased by
authorized buyers did not exceed the number of shares offered
for sale by stockholders. To the extent that we choose not to
sell authorized but unissued shares of Class A common stock
in the limited market, the ability of individuals to purchase
shares on the limited market may be adversely affected. We
cannot assure you that an individual desiring to buy shares of
our Class A common stock in any future trade will be able
to do so.
USE OF PROCEEDS
We are offering shares of Class A common
stock to present and future employees, consultants and
directors, which includes shares that are anticipated to be
offered and sold directly by our stockholders in our limited
market, which shares may be attributable to us by the SEC. We
will not receive any proceeds from
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sales made by our stockholders, even when such
sales are attributable to us by the SEC. We will receive
proceeds only from sales made directly by us, if any. The net
proceeds to be received by us from the sale of shares of
Class A common stock we offer, after deducting expenses
payable by us which are estimated to be $144,000, will be used
for working capital and general corporate purposes.
DETERMINATION OF OFFERING PRICE
Our board of directors determines the price of
the Class A common stock using the valuation process
described below. The board of directors reviews and sets the
market factor in the formula, which is set forth below and used
in the valuation process, at the value which causes the formula
to yield the stock price which the board believes represents a
fair market value for the Class A common stock. Our board
of directors reviews the stock price at least four times each
year, generally at quarterly meetings. These meetings are
currently scheduled in January, April, July and October of each
year and are held approximately two weeks before the four
predetermined trade dates. The board of directors has authorized
its stock policy committee to review the stock price during the
period between meetings of the board of directors to determine
whether the stock price continues to represent a fair market
value, and if necessary, modify the price. If a stock price
modification is necessary, the stock policy committee would
apply the same valuation process used by the board of directors.
The stock policy committee modified the stock price on
July 29, 2002 after it was determined that the stock price
established by the board of directors on July 12, 2002 no
longer represented a fair market value. The Class A common
stock is traded in the limited market maintained by Bull, Inc.
at the stock price determined by the board of directors or its
stock policy committee. Our certificate of incorporation
provides that the price of the Class B common stock is
equal to 20 times the stock price applicable to the Class A
common stock.
The following formula is used in the valuation
process:
the price per share is equal to the sum of
(1) a fraction, the numerator of which is
    our stockholders' equity at the end of the fiscal quarter
    immediately preceding the date on which a price determination is
    to occur, adjusted to reflect the value of our publicly traded
    equity securities classified as investments in marketable
    securities, as well as the profit or loss impact, if any, on
    stockholders' equity arising from investment activities,
    non-recurring gains or losses on sales of business units,
    subsidiary common stock or similar transactions closed, as of
    the valuation date ("E") and the denominator of which
    is the number of outstanding common shares and common share
    equivalents at the end of such fiscal quarter
    ("W
(1)
") and
(2) a fraction, the numerator of which is
    5.66 multiplied by the market factor ("M" or
    "market factor"), multiplied by our operating income
    for the four fiscal quarters immediately preceding the price
    determination, net of taxes, excluding investment activities,
    losses on impaired intangible assets, non-recurring gains or
    losses on sales of business units, subsidiary common stock and
    similar items, and including our equity in the income or loss of
    unconsolidated affiliates and the minority interest in income or
    loss of consolidated subsidiaries ("P"), and the
    denominator of which is the weighted average number of
    outstanding common shares and common share equivalents for those
    four fiscal quarters, as used by us in computing diluted
    earnings per share ("W").
The formula, shown as an equation, is as follows:
E
5.66MP
Stock Price
=
+
W
(1)
W
The number of outstanding common shares and
common share equivalents described above in the formula assumes
that each share of Class B common stock is converted into
20 shares of Class A common stock.
The board of directors first used a valuation
formula in establishing the price of the Class A common
stock in 1972. The valuation formula has periodically been
modified ever since. The market factor concept was
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first added to the formula in 1973 and was
mechanically linked to the performance of Nasdaq until 1984. The
5.66 factor was added to the formula in 1976 in connection with
other modifications and has not been assessed for change since
that time. The 5.66 factor was added as a constant to cause the
price generated by the formula to reflect a fair market value of
the Class A common stock. In 1984, the board of directors,
with the assistance of an outside appraisal firm, began its
current practice of establishing the value of the market factor
to reflect the broad range of business, financial and market
forces that also affect the fair market value of the
Class A common stock.
At its April 2001 meeting, the board of directors
approved the modifications of the definitions of the
"E" or the stockholders' equity component and
"P" or the earnings component of the formula,
effective as of the July 2001 valuation. The revised definitions
of these terms are set forth above in the discussion of the
formula. Before approving these changes to the formula, the
board of directors consulted with Houlihan Lokey Howard &
Zukin Financial Advisors, Inc. ("HLHZ"), an
independent valuation firm, and then determined that these
definitional changes are appropriate and that our valuation
process will continue to generate a fair market value of the
Class A common stock within a broad range of financial
criteria. All other terms of the formula remained unchanged.
The board of directors has broad discretion to
modify the valuation process. However, the board of directors
does not anticipate changing the valuation process unless:
•
a change in the formula or any other aspect of
    the valuation process used to value the Class A common
    stock is required under applicable law, or
•
in the good faith exercise of its fiduciary
    duties and after consultation with our independent accountants
    as to whether the change would result in a charge to earnings
    upon the sale of Class A common stock, the board of
    directors, including a majority of the directors who are not our
    employees, determines that the valuation process no longer
    results in a fair market value for the Class A common
    stock, or
•
in the good faith exercise of its fiduciary
    duties, the board of directors, including a majority of
    directors who are not our employees, after consulting with an
    independent appraisal firm, determines that a change in the
    formula or any other aspect of the valuation process is
    appropriate and that the stock price established by the board of
    directors through the modified valuation process reflects a fair
    market value of the Class A common stock.
In determining the price of the Class A
common stock, the board of directors considers many relevant
factors, including:
•
the performance of the general securities markets
    and relevant industry groups
•
our historical financial performance versus
    comparable public companies
•
the prospects for our future performance
•
the value of our investments
•
general economic conditions
•
valuation input from HLHZ
In conjunction with the board of directors'
valuation process, HLHZ prepares an appraisal of the
Class A common stock. The stock price and market factor, as
determined by the board of directors, remain in effect until
subsequently changed by the board of directors or its stock
policy committee. The board of directors believes that the
current valuation process results in a value which represents a
fair market value for the Class A common stock within a
broad range of financial criteria.
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The price of the Class A common stock could
be subject to fluctuations in the future due to a number of
factors, including:
•
the mix of our commercial and international
    business as a proportion of our overall business and the
    volatility associated with companies in these business areas
•
our significant investments in publicly and
    privately traded companies and the volatility of the price of
    those companies' shares
•
the impact of acquisitions, investments, joint
    ventures and divestitures that we may undertake
•
the impact of the volatility of the market value
    of comparable public companies that are considered in our
    valuation process
Stock Price Table
The following table sets forth information
concerning the formula price for the Class A common stock,
the applicable price for the Class B common stock and each
of the variables contained in the formula, including the market
factor, in effect for the periods beginning on the dates
indicated. There can be no assurance that the Class A
common stock or the Class B common stock will in the future
provide returns comparable to historical returns.
Price
Price
"W" or
Per Share
Per Share
"E" or
"W
1
" or
Weighted
of Class A
of Class B
Percentage
Market
Stockholders'
Shares
"P" or
Avg. Shares
Common
Common
Price
Date
Factor
Equity(1)
Outstanding(2)
Earnings(3)
Outstanding(4)
Stock
Stock
Change(5)
July 13, 2001
2.90
$
3,240,228,000
238,760,127
$
264,390,000
243,836,689
$
31.37
$
627.40
3.9
%
October 12, 2001
2.90
$
2,916,237,000
230,102,050
$
283,936,000
237,824,353
$
32.27
$
645.40
2.9
%
January 11, 2002
2.90
$
2,711,163,000
222,177,263
$
292,044,000
231,029,621
$
32.95
$
659.00
2.1
%
April 12, 2002
2.90
$
2,455,657,000
215,804,158
$
297,660,000
225,382,561
$
33.06
$
661.20
0.3
%
July 12, 2002
2.60
$
2,483,464,000
215,331,807
$
319,724,000
218,864,381
$
33.03
$
660.60
(0.1
)%
July 29, 2002
2.10
$
2,483,864,000
215,331,807
$
319,724,000
218,864,381
$
28.90
$
578.00
(12.5
)%
(1)
"E" or Stockholders' Equity is our
    stockholders' equity at the end of the fiscal quarter
    immediately preceding the date on which a price determination is
    to occur, adjusted to reflect the value of publicly traded
    equity securities classified as investments in marketable
    securities, as well as the profit or loss impact, if any, on
    stockholders' equity arising from investment activities,
    non-recurring gains or losses on sales of business units,
    subsidiary common stock, or similar transactions closed, as of
    the valuation date.
(2)
"W
1
" or Shares Outstanding
    is the number of outstanding common shares and common share
    equivalents at the end of the fiscal quarter immediately
    preceding the date on which a price determination is to occur.
(3)
"P" or Earnings is our operating income
    for the four fiscal quarters immediately preceding the price
    determination, net of taxes, excluding investment activities,
    losses on impaired intangible assets, non-recurring gains or
    losses on sales of business units, subsidiary common stock and
    similar items, and including our equity in the income or loss of
    unconsolidated affiliates and the minority interest in income or
    loss of consolidated subsidiaries. The aggregate amount of these
    items on a pre-tax basis is disclosed as "segment operating
    income" in our consolidated quarterly and annual financial
    statements filed with the SEC.
(4)
"W" or Weighted Average Shares
    Outstanding is the weighted average number of outstanding common
    shares and common share equivalents for the four fiscal quarters
    immediately preceding the price determination, as used by us in
    computing diluted earnings per share.
(5)
Value shown represents the percentage change in
    the price per share of Class A common stock from the prior
    valuation.
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DIRECT STOCK PURCHASE PROGRAM
Under our direct stock purchase program, our
employees, directors and consultants are eligible to purchase
Class A common stock in the limited marked on a trade date
at the stock price determined by our board of directors. The
purchase of Class A common stock in the limited market is
restricted to:
(i) current employees of SAIC and eligible
    subsidiaries who desire to purchase Class A common stock in
    an amount that does not exceed a pre-approved limit established
    by the board of directors or the operating committee of the
    board,
(ii) current employees, consultants and
    non-employee directors of SAIC and eligible subsidiaries who
    have been specifically approved by the board of directors or the
    operating committee of the board to purchase a specified number
    of shares which may exceed the pre-approved limit, and
(iii) trustees or agents of the retirement
    and benefit plans of SAIC and eligible subsidiaries.
No one, other than these authorized buyers, is
eligible to purchase Class A common stock in the limited
market. Employees may not request to both buy and sell
Class A common stock in the same trade. Receipt of this
document does not entitle the recipient to automatically
participate in the limited market.
Pre-approved Employee Purchases
Employees of SAIC and eligible subsidiaries are
currently pre-approved by the operating committee of the board
to purchase up to $20,000 worth of Class A common stock in
the limited market on a trade date. The minimum number of shares
that may be purchased in a quarterly trade is adjusted each
trade to approximately $500 worth of Class A common stock.
The board of directors or the operating committee may modify the
amount of the pre-approved purchase and the minimum purchase at
any time in its sole discretion.
Through our first time buyer program (FTBP),
employees who have never before purchased stock in a trade may
purchase a minimum of approximately $500 up to a maximum of
approximately $2,000 of Class A common stock (rounded up to
the next whole share) and receive a match of two vesting stock
options for every share purchased under the FTBP. An employee
may only participate in the FTBP once, but may purchase
additional shares (without the automatic option match) in that
same trade or in any subsequent trade.
Offer Cycle Purchases Subject to
Approval
Current employees, consultants and non-employee
directors may also purchase Class A common stock in the
limited market if, and to the extent, approved by the board of
directors or operating committee of the board. These approvals
are obtained pursuant to the process outlined below which is
commonly referred to as the offer cycle. Employees who wish to
request a purchase of more than $20,000 must submit a request
prior to the trade date through their manager or group stock
coordinator by a pre-established deadline (generally at least
seven weeks prior to the trade date). Consultants, non-employee
directors and employees on leave of absence for personal reasons
(other than military leave, medical leave and family leave) are
ineligible to purchase stock pursuant to the pre-approved
employee purchase process and must submit any request to
purchase Class A common stock (even those less than
$20,000) prior to the trade date through the offer cycle by a
pre-established deadline. Stock purchase requests endorsed by
the group manager are submitted to SAIC Stock Programs, which
facilitates the review of the requests by the operating
committee. The operating committee typically meets approximately
three to four weeks prior to the trade and makes determinations
concerning each purchaser's request. Proposed purchasers
either receive an offer letter stating the approved purchase
amount or are notified if the operating committee has modified
the request. An offer letter is mailed to approved purchasers
approximately three weeks prior to the trade. The offer letter
does not obligate the approved purchaser to make the purchase.
Payment for the purchase of the Class A common stock must
be received by Bull, Inc. (if by check), or initiated by the
purchaser (if by electronic funds transfer), by 5 p.m.
Pacific Time on the day of the trade, or the offer expires and
the approved purchaser cannot purchase shares in the trade.
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Miscellaneous
The direct stock purchase program is not subject
to ERISA. There is no income tax withholding or assessment
required at the time of the stock purchase. A taxable event
occurs upon the sale or other disposition of the shares.
The board of directors and operating committee of
the board make determinations relating to the eligibility and
participation limits and certain higher level policy aspects of
the program. SAIC's Corporate Executive Vice President for
Administration and Corporate Secretary makes administrative
decisions concerning the program. The program is currently
expected to continue indefinitely.
You should not construe the contents of this
prospectus or any prior or subsequent communications from us,
whether written or oral, as investment, tax or legal advice.
This prospectus and its exhibits should be reviewed by your
investment, tax or other advisors, accountants and/or legal
counsel.
Additional Information
Our stockholders receive a quarterly report of
their SAIC stock account. Additional information about
purchasing Class A common stock in the limited market under
the direct stock purchase program or the program's
administrators may be obtained by calling SAIC's Stock
Programs during normal business hours at (800) 785-7764 or
writing to them at our principal executive offices,
10260 Campus Point Drive, San Diego, CA 92121.
PLAN OF DISTRIBUTION
Class A Common Stock Offered by or
Attributed to SAIC
The shares of Class A common stock offered
by us may be offered directly or contingently to present, future
and potential employees, consultants and directors of SAIC or
any entity in which we have an equity interest (which we refer
to as an "affiliate"). We believe that our success
depends on our employees, consultants and directors. Therefore,
our general policy is to offer these persons opportunities to
acquire SAIC Class A common stock as an incentive to become
or remain employed by, or affiliated with us or our affiliates.
As described above under "Direct Stock
Purchase Program," the board of directors or the operating
committee of the board of directors is authorized to offer
shares of Class A common stock to the employees, directors,
consultants and trustees or agents of the retirement and benefit
plans of SAIC and its affiliates. These sales may be made in our
limited market or made directly by us from time to time. In
addition, a stockholder may offer to sell shares in our limited
market and these sales may be attributed to us by the SEC. Our
certificate of incorporation provides that all shares of
Class A common stock are subject to a right of first
refusal and a right of repurchase by us upon termination of
employment or affiliation by an individual stockholder. The
repurchase restriction does not apply to qualified employees who
elect to have us defer our repurchase rights for five years by
entering into a repurchase agreement with us.
Class A Common Stock Offered by the
Selling Stockholders
The selling stockholders whose shares of
Class A common stock are also being offered under this
prospectus may offer 1,750,000 shares of Class A common
stock. The selling stockholders will not be treated more
favorably than other stockholders selling in our limited market.
Like all stockholders selling shares in the limited market
(other than our retirement plans), the selling stockholders will
pay a 1% percent commission to our wholly-owned, broker-dealer
subsidiary, Bull, Inc.
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Table of Contents
IMPLEMENTATION OF STATEMENT OF FINANCIAL
ACCOUNTING STANDARDS
("SFAS") NO. 142,
"GOODWILL AND OTHER INTANGIBLE ASSETS"
Effective February 1, 2002, we adopted SFAS
No. 142, "Goodwill and Other Intangible Assets"
which changes the accounting for goodwill such that the
amortization of goodwill ceases. Instead of amortization, the
carrying value of goodwill is evaluated for impairment on an
annual basis or between annual tests if an event occurs or
circumstances change that would more likely than not reduce the
fair value of a reporting unit, which includes the allocated
goodwill, below its carrying value. Intangible assets with
indefinite lives are no longer amortized in accordance with SFAS
No. 142. We do not have any intangible assets with
indefinite lives. Intangible assets with finite lives continue
to be amortized over their useful lives and are evaluated for
impairment whenever events or changes in circumstances indicate
that their carrying value may not be recoverable under SFAS
No. 144, "Accounting for Impairment or Disposal of
Long-Lived Assets."
The following unaudited pro forma information
presents net income and earnings per share as if we had adopted
SFAS No. 142 effective at the beginning of the periods
specified and, accordingly, did not amortize goodwill.
Year Ended January 31
2002
2001
2000
(In thousands, except per share amounts)
Income before cumulative effect of accounting
    change, as reported
$
18,206
$
2,058,956
$
619,849
Amortization of goodwill, net of tax
17,303
17,265
14,498
Pro forma income before cumulative effect of
    accounting change
35,509
2,076,221
634,347
Cumulative effect of accounting change, net of tax
711
—
—
Pro forma net income
$
36,220
$
2,076,221
$
634,347
Basic Earnings Per Share:
Income before cumulative effect of accounting
    change, as reported
$
.08
$
8.76
$
2.61
Amortization of goodwill, net of tax
.08
.07
.06
Pro forma income before cumulative effect of
    accounting change
.16
8.83
2.67
Cumulative effect of accounting change, net of tax
.01
—
—
Pro forma basic earning per share
$
.17
$
8.83
$
2.67
Diluted Earnings Per Share:
Income before cumulative effect of accounting
    change, as reported
$
.08
$
8.11
$
2.42
Amortization of goodwill, net of tax
.08
.07
.06
Pro forma income before cumulative effect of
    accounting change
.16
8.18
2.48
Cumulative effect of accounting change, net of tax
—
—
—
Pro forma diluted earnings per share
$
.16
$
8.18
$
2.48
As previously disclosed in our Annual Report on
Form 10-K for the year ended January 31, 2002, the
cumulative effect of accounting change of $711,000 referred to
in the table above relates to our adoption of SFAS No. 133,
"Accounting for Derivative Instruments and Hedging
Activities" in the prior fiscal year.
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DESCRIPTION OF CAPITAL STOCK
We are authorized to issue
•
1,000,000,000 shares of Class A common stock
•
5,000,000 shares of Class B common stock
•
3,000,000 shares of preferred stock
As of August 23, 2002, 189,228,118 shares of
Class A common stock, 246,683 shares of Class B
common stock and no shares of preferred stock were issued and
outstanding.
As of August 23, 2002, there were 31,692
record holders of Class A common stock and 175 record
holders of Class B common stock.
Common Stock
General
Voting
Except as otherwise provided by law, the holders
of shares of Class A and Class B common stock vote
together as a single class in all matters. Each holder of
Class A common stock has one vote per share and each holder
of Class B common stock has 20 votes per share.
All the holders of common stock are entitled to
cumulate their votes for the election of directors. This means
that each Class A stockholder can cast the number of votes
that equals the number of shares of Class A common stock
held multiplied by the number of directors to be elected. Each
Class B stockholder can cast 20 times the number of
shares of Class B common stock held multiplied by the
number of directors to be elected. Each stockholder may cast all
of their votes for a single nominee or may distribute them among
any two or more nominees as the stockholder sees fit.
Classified Board of Directors
Our certificate of incorporation provides for a
classified board of directors consisting of three classes which
shall be nearly as equal in number as possible. The number of
authorized directors is currently fixed at 17 directors, with
six directors in each of Class I and Class II and five
directors in Class III. Each year the stockholders elect a
different class of directors to serve a three-year term.
Classification of the board of directors requires a greater
number of votes to ensure the election of a director than would
be required without the classification.
Dividends
Subject to the rights of any preferred
stockholders, the common stockholders have the right to receive
dividends that our board of directors declares and to share
proportionately in our assets in the event of liquidation or
dissolution, after payment of any amounts due to creditors. Any
dividend or distribution made with respect to a share of
Class B common stock must be 20 times the dividend or
distribution made with respect to each share of Class A
common stock.
Reclassification
Neither class of common stock may be subdivided,
consolidated, reclassified or otherwise changed unless the
relative powers, preferences, rights, qualifications,
limitations and restrictions applicable to the other class of
common stock are maintained.
Prohibition on Issuance of Class B
    Common Stock
Under the terms of our certificate of
incorporation, we are prohibited from issuing any additional
shares of Class B common stock. The holders may convert
each share of Class B common stock at any time into
16
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20 shares of Class A common stock. We will
retire all shares of Class B common stock that we reacquire
and those shares will not be available for reissuance.
Mergers, Consolidations or Business
    Combinations
In any merger, consolidation or business
combination to which we are a party, other than one in which we
are the surviving corporation and which does not result in any
reclassification of or change in the outstanding shares of
common stock, each share of Class B common stock is
entitled to receive 20 times the consideration to be received
with respect to each share of Class A common stock.
Mergers with Related Persons
Our certificate of incorporation generally
requires that mergers and certain other business combinations
between us and a related person must be approved by the holders
of securities having 80% of our outstanding voting power, as
well as by the holders of a majority of such securities that are
not owned by the related person. A "related person"
means any holder of 5% or more of our outstanding voting power.
Under Delaware law, unless the certificate of incorporation
provides otherwise, only a majority of our outstanding voting
power is required to approve certain of these transactions, such
as mergers and consolidations, while certain other of these
transactions would not require stockholder approval.
The 80% and majority of independent voting power
requirements of our certificate of incorporation will not apply,
however, to a business combination with a related person, if the
transaction
(1) is approved by our board of directors
    before the related person acquired beneficial ownership of 5% or
    more of our outstanding voting power, or
(2) is approved by at least a majority of
    the members of our board of directors who are not affiliated
    with the related person and who were directors before the
    related person became a related person, or
(3) involves only us and one or more of our
    subsidiaries and certain other conditions are satisfied.
Amendment of Charter
The amendment of certain provisions of our
certificate of incorporation and bylaws require the approval of
at least two-thirds of the total voting power of all of our
outstanding shares of voting stock. These provisions relate to
the number of directors, the election of directors and the vote
of stockholders required to modify the provisions of the
certificate of incorporation and bylaws requiring these
approvals.
Transfer Agent
We act as our own transfer agent for both the
Class A and Class B common stock.
Restrictions on Class A Common
    Stock
The shares of Class A common stock are
subject to restrictions under our certificate of incorporation,
including
Right of Repurchase upon Termination of
    Employment or Affiliation
Generally, shares of Class A common stock
are subject to a right of repurchase upon the termination of the
stockholder's employment or affiliation with us.
Our right of repurchase does not apply to shares
of Class A common stock that are held by a stockholder who
received the shares
•
in connection with our reorganization in 1984 in
    exchange for shares that were not subject to a right of
    repurchase upon termination of employment or affiliation
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•
upon exercise of a non-qualified stock option
    granted before October 1, 1981 under our 1979 Stock Option
    Plan that were not converted into incentive stock options
•
in exchange for shares of Class B common
    stock that were not subject to a right of repurchase upon
    termination of employment or affiliation
•
in connection with a stock dividend or a stock
    split on the outstanding shares of Class A common stock
    which have been issued under any of the circumstances described
    in the bullet points above
Our right of repurchase will apply to all shares
of Class A common stock which the stockholder has the right
to acquire after his or her termination of employment or
affiliation under
•
any of our employee benefit plans, except the
    Employee Stock Retirement Plan or any other retirement or
    pension plan that we or one of our subsidiaries adopt that does
    not provide us the repurchase right
•
any option or other contractual right to acquire
    shares of Class A common stock which was in effect at the
    date of the termination of employment or affiliation
Our right of repurchase is exercised by mailing a
written notice to the stockholder within 60 days following
termination of employment or affiliation.
If we repurchase the shares, the price will be
the stock price per share on the date
•
of the termination of employment or affiliation,
    for shares owned by the stockholder on that date or shares
    acquired after that date in connection with options or other
    contractual right which were in effect on that date or
•
the shares are distributed to the holder, for
    shares distributed to the holder after termination of employment
    or affiliation in connection with any of our employee benefit
    plans
We will pay for the shares in cash within
90 days of the date used to determine the repurchase price.
With respect to stock options issued after
March 1, 2001, and options issued prior to March 1,
2001 for which the holder has exercised an addendum agreement,
if the holder exercises these options within 6 months of
termination or within the proper time after termination, our
right of repurchase becomes effective 180 days after the
option shares are purchased. If we repurchase the shares, the
price will be the share price in effect on the 180th day after
the option was exercised. Our right of repurchase is exercised
by mailing written notice to the holder within 240 days
after the exercise and paying for such shares within
270 days after the exercise.
With respect to shares distributed under our
Management Stock Compensation Plan and Key Executive Stock
Deferral Plan after termination of employment or affiliation,
our right of repurchase becomes effective 210 days after
distribution, which we refer to as the effective date. Our right
of repurchase is exercised by mailing written notice to the
stockholder within 60 days following the effective date. If
we repurchase the shares, the price will be the price per share
on the effective date.
We may, but are not obligated to, defer our
repurchase right by entering into a deferral agreement with
qualified employees whereby we defer the repurchase right on
their direct stock holdings for five years. Under the Alumni
Program, an employee who is over 59 1/2 and has more than
10 years of employment with us at the date of his or her
retirement generally can enter into such a repurchase agreement.
During the five-year deferral period, the stockholder may sell
shares in our limited market. At the end of the five-year
deferral period, all the shares will be subject to repurchase at
the stock price in effect at that time, unless we agree to
extend the agreement. The Alumni Program pertains only to the
deferral of the right of repurchase. It does not provide the
employee any rights with respect to the vesting or prevent the
forfeiture of any shares or options the employee holds at the
date of his or her retirement, nor does it guarantee that we
will repurchase the shares at the end of the deferral period.
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Right of First Refusal
If a stockholder wants to sell any shares of
Class A common stock other than in the limited market, the
stockholder must give notice first to our corporate secretary.
The notice must include the following:
•
a statement signed by the stockholder that he or
    she wants to sell shares of Class A common stock and has
    received a valid offer to purchase the shares
•
a statement signed by the person offering to buy
    the shares that includes the following: the intended
    purchaser's full name, address and taxpayer identification
    number; the number of shares to be purchased; the price per
    share to be paid; the other terms under which the purchase is
    intended to be made; and a representation that the offer, under
    the terms specified, is valid
•
if the purchase price is payable in cash, a copy
    of a certified check, cashier's check or money order
    payable to the stockholder from the purchaser in the amount of
    the purchase price to be paid in cash
We have the right to purchase the shares from the
stockholder within 14 days on the same terms described in the
notice. If we do not exercise this right, the holder may sell
the shares within 30 days to the person at the price and on
the terms identified in the notice. The holder may not sell the
shares to any other person or at any different price or on any
different terms without first re-offering the shares to us.
Transfers Other than by Sale
Except for sales in our limited market and as
described above, a stockholder may not sell, assign or transfer
any shares of Class A common stock without our prior
written approval. We may require the person to whom the shares
are transferred to agree to hold the shares subject to our right
to repurchase the shares upon the termination of employment or
affiliation of the employee, director or consultant who is
transferring the shares.
Lapse or Waiver of
    Restrictions
All of the restrictions on the Class A
common stock will automatically terminate if we make an
underwritten public offering of either class of our common stock
or apply to have any class of our common stock listed on a
national securities exchange. In addition, our board of
directors may waive any or all of the restrictions on shares of
Class A common stock in other circumstances deemed
appropriate.
Preferred Stock
Under our certificate of incorporation, the board
of directors may issue shares of preferred stock at any time in
one or more series without stockholder approval. Further, the
issuance of preferred stock must be approved by a majority of
our independent directors who do not have an interest in the
transaction and who have access, at our expense, to independent
legal counsel. The board of directors determines the
designations, preferences and relative rights, qualifications
and limitations of each series. Each series of preferred stock
could rank senior to the Class A and Class B common
stock with respect to dividend, redemption and liquidation
rights.
Holders of preferred stock would not have any
preferential right to purchase any shares of our capital stock.
We do not have any present plan to issue any shares of preferred
stock.
Anti-Takeover Effects
The combined effect of a variety of provisions
may discourage, delay or prevent attempts to acquire control of
us that are not approved by the board of directors. These
provisions include:
•
the classification of our board of directors into
    three different classes
•
the cumulative voting rights of the stockholders
•
the supermajority vote requirements for mergers
    or business combinations with related persons
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Table of Contents
•
the provisions of the certificate of
    incorporation and bylaws requiring two-thirds approval for
    certain amendments to the certificate of incorporation or bylaws
•
our right of first refusal
•
our right of repurchase upon termination of
    employment or affiliation
These provisions may have the effect of
discouraging takeover attempts that some stockholders might
consider to be in their best interests, including tender offers
in which stockholders might receive a premium for their shares
over the stock price available in our limited market.
These provisions may also make it more difficult
for individual stockholders or a group of stockholders to elect
directors. However, our board of directors believes that these
provisions are in the best interests of us and our stockholders.
These provisions may encourage potential acquirers to negotiate
directly with our board of directors, which is in the best
position to act on behalf of all stockholders.
SELLING STOCKHOLDERS
Each of the selling stockholders is or has been a
director and/or officer of us within the past three years. The
following table presents information as of August 23, 2002
regarding the number of shares of Class A common stock
owned by each selling stockholder. Shares issuable upon the
exercise of stock options that are exercisable within
60 days of August 23, 2002 and shares allocated to the
selling stockholder's accounts as of July 31, 2002
under our employee benefit plans are included. The information
shown is adjusted to reflect the sale of all shares of
Class A common stock being offered by each selling
stockholder. The table does not give effect to the sale of any
shares of Class A common stock being offered by us. Except
as indicated below, all the shares are owned of record and
beneficially. The percentage of shares owned is based upon the
total number of outstanding shares of Class A common stock
at August 23, 2002.
Based upon the total number of shares of
Class A and Class B common stock outstanding at
August 23, 2002 and assuming that each outstanding share of
Class B common stock is converted into 20 shares of
Class A common stock, Dr. J.R. Beyster owns 1.58% of
common stock before the offering and would own 1.45% after the
offering and all of the selling stockholders as a group own
3.88% of common stock before the offering and would own 3.04%
after the offering.
The number of shares of Class A common stock
sold by any of the selling stockholders pursuant to this
prospectus may not exceed, during any three month period, one
percent of the total outstanding shares of common stock of SAIC.
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The "Other Selling Stockholders Group"
listed in the following table is comprised of 14 directors
and officers that together held less than 1% of Class A
common stock immediately prior to the offering.
Shares Owned
Shares Owned
Prior to Offering
After the Offering
Number of Shares
Name and Position
Number(1)
Percentage
Being Offered
Number(1)
Percentage
D.P. Andrews
292,265
*
35,000
257,265
*
Corporate Executive Vice President
J.R. Beyster
3,061,395
1.58
%
240,000
2,821,395
1.47%
Chairman of the Board, Chief Executive Officer
    and President
J.E. Glancy
633,590
*
175,000
458,590
*
Director and Executive Vice President
J.D. Heipt
393,470
*
100,000
293,470
*
Corporate Executive Vice President
B.R. Inman
273,659
*
40,000
233,659
*
Director
W.A. Roper, Jr.
269,839
*
100,000
169,839
*
Corporate Executive Vice President
J.P. Walkush
343,245
*
150,000
193,245
*
Director and Executive Vice President
J.H. Warner, Jr.
472,416
*
80,000
392,416
*
Director and Corporate Executive Vice President
Other Selling Stockholders Group
1,853,290
*
830,000
1,023,290
*
(1)
Includes shares that are owned of record by
    family members and/or trusts.
(2)
Includes 49,446 shares held by The Beyster Family
    Foundation.
*
Represents less than 1% of both:
•
the outstanding shares of Class A common
    stock and
•
the outstanding shares of Class A common
    stock assuming that each outstanding share of Class B
    common stock is converted into 20 shares of Class A
    common stock.
The 1,750,000 shares of Class A common stock
registered for sale by the selling stockholders listed above
represent only the maximum number of shares these stockholders
may sell in accordance with this prospectus. Of the
1,170,135 shares of Class A common stock offered by
selling stockholders under our prospectus dated
February 28, 2002, as of August 23, 2002, 279,733 were
actually sold by those stockholders.
LEGAL MATTERS
The legality of the Class A common stock
being offered hereby has been reviewed for us and the selling
stockholders by Douglas E. Scott, Esq., Senior Vice
President and General Counsel of SAIC. As of August 23,
2002, Mr. Scott owned of record 67,978 shares of
Class A common stock, beneficially owned a total of
19,405 shares through our retirement plans, had the right
to acquire an additional 43,000 shares pursuant to vested
stock options and upon future vesting, will have a right to
acquire an additional 104,000 shares pursuant to previously
granted stock options.
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AVAILABLE INFORMATION
We file annual, quarterly and current reports,
proxy statements and other information with the SEC. We have
also filed with the SEC a registration statement on
Form S-8 to register the shares of Class A common
stock being offered in this prospectus. This prospectus, which
forms a part of the registration statement, does not contain all
of the information included in the registration statement. For
further information about us and the shares of Class A
common stock offered in this prospectus, you should refer to the
registration statement and its exhibits and our other SEC
filings.
You may read and copy any document we file at the
SEC's public reference rooms at 450 Fifth Street NW in
Washington, D.C., or those located in New York, New York
and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. Our SEC
filings are also available to the public at the SEC's web
site at http://www.sec.gov.
INCORPORATION OF INFORMATION BY
REFERENCE
The SEC allows us to "incorporate by
reference" into this prospectus certain information we have
filed with the SEC. This means that we can disclose important
information to you by referring you to those documents. The
information incorporated by reference is considered to be part
of this prospectus.
We incorporate by reference the documents listed
below:
•
Annual Report on Form 10-K for the year
    ended January 31, 2002
•
Quarterly Report on Form 10-Q for the
    quarter ended April 30, 2002
•
Current Reports on Form 8-K filed with the
    SEC on April 8, 2002, April 17, 2002, July 3,
    2002, July 17, 2002, July 29, 2002, July 30,
    2002, August 7, 2002, August 15, 2002 and
    August 19, 2002
•
Proxy Statement dated June 7, 2002
•
All reports we have filed pursuant to
    Section 13(a) or 15(d) of the Exchange Act since
    January 31, 2002 up to the effective date of this prospectus
•
The description of the Class A common stock,
    par value $.01 per share, contained in our registration
    statement on Form 8-A, which was filed with the SEC and
    declared effective as of August 23, 1984, as amended on
    April 28, 1998 and September 13, 1999, and including
    any other amendment or report filed for the purpose of updating
    such description
All documents we filed with the SEC pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this registration statement and prior
to the filing of a post-effective amendment that indicates all
securities offered have been sold or that deregisters all
securities then remaining unsold, shall be deemed to be
incorporated by reference in this registration statement and to
be a part of it from the respective dates of filing of such
documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this registration
statement to the extent that a statement contained herein or in
any other subsequently filed document which also is, or is
deemed to be, incorporated by reference herein modifies or
supersedes any such statement. Any such statement so modified or
superseded will not be deemed, except as so modified or
superseded, to constitute a part of this registration statement.
You may request a copy of these filings, at no
cost, by writing to or telephoning our corporate secretary at
the following address and telephone number:
Science Applications International Corporation
10260 Campus Point Drive
San Diego, California 92121
Attention: Corporate Secretary
Tel: (858) 826-7323
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Table of Contents
You should rely only on the information
incorporated by reference or provided in this prospectus. We
have not authorized anyone to provide you with different
information. We are not making an offer of these securities in
any state where the offer is not permitted. You should not
assume that the information in this prospectus is accurate as of
any date other than the date on the front cover of this
prospectus.
INDEMNIFICATION
Our restated certificate of incorporation
provides for us to indemnify our directors and officers to the
fullest extent authorized by Delaware law. This indemnification
would cover all expenses and liabilities reasonably incurred in
connection with their services for or on behalf of us. In
addition, our restated certificate of incorporation provides
that our directors will not be personally liable for monetary
damages to us for breaches of their fiduciary duty as directors,
unless they violated their duty of loyalty to us or our
stockholders, acted in bad faith knowingly or intentionally
violated the law, authorized illegal dividends or redemptions or
derived an improper personal benefit from their action as
directors.
Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted under
our amended and restated certificate of incorporation or
otherwise to our directors, officers, or controlling persons of
SAIC, we have been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by us of expenses incurred or paid by a director, officer or
controlling person of SAIC in the successful defense of any
action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, we will, unless in the opinion of our counsel
the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
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Table of Contents
10,750,000 Shares
Class A Common Stock
PROSPECTUS
August 30, 2002
Table of Contents
Item 8.
Exhibits
Exhibit
No.
Description of Exhibits
5(a)
Opinion of Douglas E. Scott, Esq.*
23(a)
Consent of Douglas E. Scott, Esq. (contained in
    Exhibit 5(a))
23(b)
Consent of Deloitte & Touche LLP.*
23(c)
Consent of Houlihan Lokey Howard & Zukin
    Financial Advisors, Inc.*
*
Filed herewith.
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SIGNATURES
Pursuant to the requirements of the Securities
Act of 1933, Registrant certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on
Form S-8 and has duly caused this Registration Statement to
be signed on its behalf by the undersigned, thereunto duly
authorized in the City of San Diego, State of California on
August 29, 2002.
SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
By:
/s/ J.R. BEYSTER
J.R. Beyster
Chairman of the Board and
Chief Executive Officer
KNOW ALL PERSONS BY THESE PRESENT, that each
individual whose signature appears below constitutes and
appoints J.D. Heipt and D.E. Scott power of substitution, for
him and in his name, place and stead, in any and all capacities
to sign any and all amendments (including post-effective
amendments) to this registration statement, and new registration
statements relating to this Form S-8, and to file the same
with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full
power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the
premises, as fully to confirming all that said attorneys-in-fact
and agents, or either of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities
Act of 1933, this Registration Statement on Form S-8 has
been signed by the following persons in the capacities and on
the dates indicated.
Signature
Title
Date
/s/ J.R. BEYSTER
J.R. Beyster
Chairman of the Board and Principal Executive
    Officer
August 29, 2002
/s/ T.E. DARCY
T.E. Darcy
Principal Financial Officer
August 29, 2002
/s/ P.N. PAVLICS
P.N. Pavlics
Principal Accounting Officer
August 29, 2002
/s/ D.P. ANDREWS
D.P. Andrews
Director
August 29, 2002
/s/ W.H. DEMISCH
W.H. Demisch
Director
August 29, 2002
D.W. Dorman
Director
/s/ D.H. FOLEY
D.H. Foley
Director
August 29, 2002
II-2
Table of Contents
Signature
Title
Date
/s/ J.E. GLANCY
J.E. Glancy
Director
August 29, 2002
/s/ B.R. INMAN
B.R. Inman
Director
August 29, 2002
/s/ A.K. JONES
A.K. Jones
Director
August 29, 2002
/s/ H.M.J. KRAEMER, JR.
H.M.J. Kraemer, Jr.
Director
August 29, 2002
/s/ C.B. MALONE
C.B. Malone
Director
August 29, 2002
/s/ S.D. ROCKWOOD
S.D. Rockwood
Director
August 29, 2002
/s/ R. SNYDERMAN
R. Snyderman
Director
August 29, 2002
/s/ M.E. TROUT
M.E. Trout
Director
August 29, 2002
/s/ J.P. WALKUSH
J.P. Walkush
Director
August 29, 2002
/s/ J.H. WARNER, JR.
J.H. Warner, Jr.
Director
August 29, 2002
/s/ J.A. WELCH
J.A. Welch
Director
August 29, 2002
/s/ A.T. YOUNG
A.T. Young
Director
August 29, 2002
II-3