NEWPORT NEWS, Va. --- Northrop Grumman Corporation and Science Applications International Corporation announced a plan to restructure their joint venture, AMSEC LLC (AMSEC), by dividing the company along customer and product lines. AMSEC is a full-service supplier that provides engineering, logistics and technical support services primarily to Navy ship and aviation programs.
Under this restructuring, Northrop Grumman's Newport News sector will retain the ship engineering, logistics and technical services businesses under the AMSEC name.
SAIC will receive the aviation, combat systems and strike force integration services businesses from AMSEC. These businesses include AMSEC's subsidiary Eagan, McAllister Associates, Inc. (EMA), a command, control, communications, computers, intelligence, surveillance and reconnaissance, information technology and naval aviation support services firm, which will become a wholly owned subsidiary of SAIC and part of SAIC's Defense Solutions Group.
In addition, SAIC will receive AMSEC's Strike Force Systems and Integration Division (SSI), which provides combat systems (including Aegis), integration, training, and engineering support to a number of major Navy customers and which will also be integrated into SAIC's Defense Solutions Group following completion of the restructuring.
The restructuring is not expected to be material to Northrop Grumman's financial results.
Since AMSEC currently is a majority owned subsidiary of SAIC and its results are included in SAIC's financial results, following completion of the transaction, the restructuring will be accounted for in SAIC's financial statements as discontinued operations. The revenue associated with the portion of the business remaining at AMSEC that will be removed from SAIC's financial results following completion of the restructuring is estimated to be approximately $200 million on an annual basis for SAIC's 2008 fiscal year and is expected to have a negligible impact on SAIC's earnings per share from continuing operations and cash flow from continuing operations for SAIC's fiscal 2008.
Completion of the restructuring is subject to customary conditions, including termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The restructuring is expected to be completed in mid-July 2007.
Following completion of the restructuring, AMSEC LLC will operate as a separate business unit of Northrop Grumman's Newport News sector and will report to Irwin F. Edenzon, vice president of technology development and fleet support "We are enthusiastic about the future of AMSEC. The joint venture with SAIC has been very successful and the proposed restructuring will allow us to focus on supporting Navy ships throughout their service life," Edenzon said.
"Throughout the joint ownership of AMSEC LLC, we have enjoyed a successful relationship with Northrop Grumman's Newport News sector," said Deborah Alderson, president of SAIC's Defense Solutions Group. "The professional services afforded by AMSEC's employees serving our customers have been invaluable. We now look forward to the increased ability to focus on our core business areas of command, control and communications and enterprise solutions and providing more depth in our solution offerings to our customers through the realignment of EMA and SSI into SAIC."
AMSEC LLC was formed in 1999 as a joint venture between Northrop Grumman Newport News sector and SAIC and has since grown from $100 million in revenue in 2000 to approximately $500 million in fiscal year 2007, which ended in January 2007.
SAIC is a leading provider of scientific, engineering, systems integration and technical services and solutions. With more than 44,000 employees in over 150 cities worldwide, SAIC had annual revenues of $8.3 billion for its fiscal year ended January 31, 2007.
Northrop Grumman Corporation is a $30 billion global defense and technology company whose 122,000 employees provide innovative systems, products, and solutions in information and services, electronics, aerospace and shipbuilding to government and commercial customers worldwide.
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