Good day and welcome to the SAIC Fiscal Year 2017 Q3 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Paul Levi, Investor Relations. Please go ahead, sir.

Good morning and thank you for joining us for SAIC’s third quarter fiscal year 2017 earnings call. This morning, we issued our earnings release. And joining me today to discuss our business and financial results are, Tony Moraco, our CEO; Charlie Mathis, our CFO; and other members of our management team. Today’s call is being webcast at investors.saic.com where you will also find the earnings release and supplemental financial presentation slides to be utilized in conjunction with today’s call. Both of these documents, in addition to our Form 10-Q to be filed soon, should be utilized in evaluating our results and outlook along with information provided on today’s call. Please note we may make forward-looking statements on today’s call that are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from the statements made on this call. I refer you to our SEC filings for a discussion of these risks, including the Risk Factor section of our annual report on Form 10-K and quarterly reports on Form 10-Q. In addition, the statements represent our views as of today, and subsequent events may cause our views to change. We may elect to update the forward-looking statements at some point in the future, but we specifically disclaim any obligation to do so. It is now my pleasure to introduce our CEO, Tony Moraco.

Thank you, Paul, and good morning. Before presenting the third quarter business results and outlook, I would like to introduce our new Chief Financial Officer, Charlie Mathis and welcome him to the SAIC team. He joined SAIC about a month ago, and I am very pleased to have a senior business leader with broad experience across to defense, technology and financial sectors. Charlie will cover our financial results in a few minutes. I also want to thank Maria Bishop, our Corporate Controller, who successfully led the finance team as our Interim CFO. SAIC’s solid contract performance and consistent capital deployment continues to be the underpinning of our value proposition. Third quarter revenue of approximately $1.1 billion is down slightly when compared to the prior year quarter. Similar to the second quarter results, reduced revenues resulted from lower supply chain material volumes, other non-labor related materials on various programs, and the expected completion of the Marine Corps Assault Amphibious Vehicle or AAV prototype delivery phase. These reductions were partially offset by revenues from the ramp up of awarded programs in the federal civilian portfolio and our Marine Corp Assault Combat Vehicle or ACV contract. Third quarter EBITDA margin was a strong 7.7% and represents a 50 basis point improvement in our margins from the prior year quarter adjusted EBITDA. While delivering strong margins in the quarter, we continue to make investments in outcome based solutions as we expand our capabilities in areas such as cyber, data analytics, and train and simulation. Diluted earnings per share increased to $0.91 for the third quarter and operating cash flow was robust $153 million. We continued to be confident in our alignment of SAIC’s capabilities to market demands with an improved outlook for the customers we serve. For quite some time, market headwinds outpace tailwinds, but that dynamics seem to be shifting albeit modestly. The likely extension of a continuing resolution provides our customers the ability to execute their missions while adjusting to new leadership in the highest positions of our federal government. We do not expect any material impact to our business as a result of a continuing resolution extension and upcoming administration transitions. We are encouraged that our capabilities map well to focus areas and new initiatives mentioned throughout the election cycle. Additionally, there seems to be a broad consensus that the president elect and congressional republic and majority could raise the defense budget and make further investments in areas such as national security, train and simulation to increase readiness of our military forces, and address the cyber security threat. We continue to operate in a very competitive and complex market space, but believe that SAIC’s continued investments and strategy execution have positioned us well to help our customers react to changing priorities. While federal government macro level priorities are likely to shift somewhat, our long term outlook remains the same with expected modest growth in our markets for the next few years, consistent with our long term financial targets. Strong contract award activity led to bookings of $1.9 billion in the third quarter and translates to a book-to-bill of $1.7 billion. This is the strongest quarterly bookings total since our separation and contributed to a year-to-date book-to-bill of $1.3 billion. Our protect, expand and growth strategy continues to build the quality pipeline, has enabled many significant wins, and produced an overall win rate now about 65%. Third quarter bookings, included the $575 million of new business award to support the U.S. Army Corps of Engineers, high performance computing modernization program. Currently on this program, SAIC will advance the services, capabilities, infrastructure and technologies in the Corps of Engineered supercomputing centers. Thanks to the team on the successful efforts to capture this important expand opportunity. We were also successful in another expand opportunity with the award of a $383 million contract from the U.S. Navy to manufacture MK48 heavyweight torpedo afterbody/tailcone sections to ensure the Navy is ready to meet their missions at sea across the globe. Also contributing to this quarter’s bookings were $149 million of intelligence community awards, $122 million of awards in support of our U.S. Army AMCOM customer, and $151 million of orders in our supply chain business. Although contributing modestly to third quarter bookings, we retired a significant risk with the recomplete or protect award of our Polycom contract. Now known as [Chempol 2] is $1.4 billion single award IDIQ contract allows SAIC to continue providing the defense logistics agency and military services with the chemical, petroleum, oils and lubricant distribution services for the next 10 years. Consistent with our historical practice, we recognized booking on this contract as orders are placed by the customer. As a result of strong bookings in the third quarter, SAIC’s total contract backlog is $8.2 billion, up 10% from the second quarter and funded backlog is $2 billion. The estimated value of SAIC submitted proposals awaiting award is approximately $14 billion, down from the second quarter, primarily due to successful contract awards in the third quarter to include the [Chempol 2] re-compete award I mentioned earlier. Let me provide you with a brief update on our platform integration programs the Marine Corps AAV and ACV contracts. Recently, we completed the first phase of the AAV program with delivery of 10 prototype refurbished amphibious vehicles, and we are supporting Marine Corps efforts as they performed testing for approximately nine months. After completion of the testing phase, we anticipate to enter low rate initial production or LRIP in the fall of 2017. As we transition to AAV testing, we are ramping up activities on the ACV program. By this time next year, we expect to deliver 16 ACV prototypes of a completely new amphibious vehicle to the Marine Corps. Similar to the AAV program, we will then support the Marine Corps test and evaluation phase. At that point, the Marine Corps will down select to one company to enter LRIP of the ACV vehicle in mid-2018. Another important business segment where SAIC is making investments, we were recognized by military training international with a top simulation and training company for the third consecutive year, and was recognized for innovation in our human centric approach to training solutions. As our customers continue to manage their limited financial resources, yet training and certify their personnel, they have increasingly recognized the safe and cost effective benefits of synthetic training environments, including game based, augmented and virtual reality to deliver training and improve readiness. We are leveraging strategic partners and making investments in these key technologies in addition to our Serious Game Lab in Seattle, Washington, which enables SAIC to harness the top talent and innovations in augmented and virtual reality. As we prepare for the future of training and simulation, SAIC is integrating all forms of simulation to deliver the right training at the right time and have just launched SAIC integrated training edge, our platform to deliver the effective training solutions. As an example, we provide peer side stimulated training to navy personnel in order to reduce the costs of deploying shifts offshore for training activities. In addition, our experience with more than 250 models and simulations, we can simulate complex situations to reduce uncertainty and national security strategic planning in critical mission area like space, intelligence and cyber. Additionally, through leveraging our metrics operating model, our FAA Controller Training contract was enabled by leveraging our military training and simulating capabilities with our FAA mission understanding Charlie, and over to you to provide more details on our financial results.

Thank you, Tony and good morning everyone. Before discussing our third quarter results, I would like to express how much of an honor it is to have joined SAIC. Through my prior positions serving the government contracting and IT market spaces, I was aware of the Company’s tremendous market reputation, its rich tradition of being a thought leader and the importance of fulfilling the nobler more complex missions of national importance. I look to continue to execute on SAIC strategy for creating shareholder value and driving financial performance above our peers. Our third quarter revenues of approximately $1.1 billion reflect contraction of 1.5% as compared to the third quarter of last fiscal year. The timing of revenues on contracts such as CSA down price operations, and the Marine Corps ACV contract offset decreased material volume. Operating income of $74 million in the third quarter resulted in an operating margin of 6.6% and EBITDA, as a percentage of revenues, was 7.7% and reflects an increase of 50 basis points from prior year quarter adjusted EBITDA. Strong EBITDA margin performance was primarily driven by solid program execution and lower operating expenses across the portfolio. I should note that acquisition and integration costs from our Scitor acquisition have concluded and did not impact our third quarter results. Our performance has led to a strong year-to-date adjusted EBITDA margin performance of 7.5%, and is on track to deliver on our goal of 10 to 20 basis points improvement from our fiscal year ’16 baseline of 7.2%. I would like to remind you that our fourth quarter is typically the lowest margin quarter of the year due to holidays and associated employee vacation time. Net income for the third quarter was $42 million and diluted earnings per share was $0.91 for the quarter. Net income was negatively impacted on a pre-tax basis by $3 million, consisting of $5 million of cost associated with the debt refinancing completed in August offset by $2 million of ongoing interest expense savings. Net income was positively impacted by approximately $2 million due to a lower effective tax rate. The effective tax rate for the quarter was approximately 28% lower than our normative rate of about 36.5% due to tax credits associated with research and development expenses from fiscal year ’16 and fiscal year ’17. We now expect the fourth quarter effective tax rate to be a more normalized 36% and the full year tax rate to be approximately 34%. SAIC’s cash flow generation continues to be strength and our shareholder value proposition. Third quarter operating cash flow of $153 million and free cash flow of $150 million in the third quarter was consistent with our expectations. We are on track to deliver on our $240 million of normalized annual free cash flow with fiscal year ’17 impacted by about $25 million due to the extra payroll week. Day sales outstanding at 50 days is an improvement of four days from the second quarter, principally due to collections and reduced working capital requirements on the AAV program. We expect our DSOs to return to the mid-50s as we build working capital usage on our ACV program. The third quarter ended with a cash balance of $203 million, our total debt is just over $1 billion, equating to a leverage ratio of approximately 3 times debt to adjusted EBITDA at the end of the third quarter. During the third quarter, we deployed $54 million of capital, consisting of $14 million in cash dividends and $40 million of planned share purchases, representing about 607,000 shares. We continue to have confidence in our cash generation capability, and plan to continue our recurring dividend and effectively deploy capital through alternatives, such as share repurchases and strategic M&A. As a reminder, we do not have mandatory principal repayments from one year of completions of our debt refinancing executed this past August. I should note that our Board of Directors meets next week and will consider the approval of our quarterly dividend, which is typically payable at the end of January. We continue to have confidence in our long-term financial targets, and they remain unchanged. On average and overtime, we expect low-single-digit internal revenue growth and profitability improvement of 10 to 20 basis points annually. We expect generation of approximately $240 million of annual free cash flow. Before taking your questions, I am very fortunate that I’ve joined a very experience and knowledgeable finance staff at SAIC. I am impressed by it at this point and rigorous attention to detail that they display every day and I am glad to have joined the team to drive financial performance. Operator, we are now ready to take your questions.

Thank you [Operator Instructions]. And we’ll take our first question from Jon Raviv with Citi. Please go ahead, sir.

Tony, how are you thinking about the potential from upside impact on your low-single-digit growth outlook? Or from your perspective, is it all within the range of that low-single-digit?

So I thought it was in that range, in the low-single-digit budgets. If you look at the budgets collectively, either on the defense, even on federal or civilian side, they are all in the 2% to 3% range going forward. We might see some modest shift in priorities and the like within that budget, but I think the macro budget outlook is still in that low-single-digit. We believe will perform in that same range as the market evolves. It will take some time for other specific policies to be reflected in the recent near-term bookings and revenue streams as the administration go through the transition. But very much in line with that low-single-digit both in federal government budgets, as well as our long-term outlook.

And then the strong growth in the quarter. Did anything happened this quarter that you did or did not expect; again, from growth perspective, perhaps the program not ramping as quickly. I just, I think I remember you guys just asking maybe the possibility of some modest or slight growth in the second half?

I think the general portfolio of operators we expected with the programs coming online, I think we’ve talked about with GSA, GEO and FAA, are reaching a normal run out at this point that provides the revenue growth; AAV, ACV are in points of transition. So, we saw the AAV beginning to fall-off. Those will again tend to be neutral. The biggest variability this quarter and in our portfolio is the hold in the supply chain and materials builds business. This quarter, in particular, the year-over-year comparison is subject to two MRO contracts from BLA from last year that we didn’t pursue, or we’re not successful in winning low margin business. And so I’d say at this point the revenue growth is in line with our expectations on the mission and system engineering work and then the enterprise IT, variability in the materials and supply chain. And that variability and contraction is really attributed to the materials in the lower margin portfolio. So, all-in-all, although the macro number on revenue isn’t as favorable as we would expected, it's really aligned to the material shortfalls not so much beyond ramping of the major programs that we’ve won recently.

And we’ll take our next question from Amit Singh with Jefferies. Please go ahead sir.

Just staying on the revenue growth side, I know it seems like this year you have year-over-year revenue headwinds from the supply chain material sort of work. And you have a long term guidance of low single-digit. But as you’re looking at next year, specifically, I know you don’t provide the yearly guidance. But is that type of growth, the low single-digit achievable next year?

I believe so. It's very much in line. As I said, I think we’ll see less of the headwind on the supply chain variance. We will see more of that, the run rate and the on-ramping of those larger programs that we talked about through the year. And now with the addition of recently announced awards with heads as an example, we do believe that that low single-digit growth will be there. We will see timing variability quarter-to-quarter, but look at again that the quality of the pipeline, the quality of the portfolio, and diversification. We would expect that low single-digit growth to continue, complemented by the margin expansion. So with that the both top line and bottom line, and lots of margin expansion growth, so we can contribute to the EPS as well.

And then just a quick question on the defense policy bail that recently got sort of approved, especially a section in it, and I think section 865, which talks about limiting staff augmentation contracts at the headquarters of DoD. So, I just want to get your sense, what is your feeling about that -- that particular part in the overall policy bail, and how that could impact yours and other vendors’ business?

Well, I don’t think it’s going to affect our business specifically in any material way. It’s the definition around staff augmentation I think continue to evolve. But as we rated a lot of the initiatives across the federal government is in cost savings, trying to shift the administrative and management costs to mission area. So, we believe that the current model reliance on private sector technology development that SAIC provides as a technology integrator is still very well aligned to the customer’s needs. The staff augmentation and policy to drive cost efficiencies inside the government, I think are just at -- it's more of an inside. And SAIC’s portfolio, at least does not have much exposure on what we consider the staff augmentation that we think the language aligns with.

And we’ll take our next question from Cai Von Rumohr with Cowen & Company.

So Tony, when you were spun out sort of the idea was you were going to do more of a peer services, and your former parent was going to do the solutions; and now you have AAV, ACV; and now the torpedo contract and you’ve hired a CFO, who has experience for protection with vehicles. Are we likely to see more of a shift toward those hardware work type contracts? And if so, can you give us a little bit of color in terms of your strategy going forward?

I think the general portfolio, as a technology integrator and the early thin short hand on services versus solutions was may be a little oversimplified. But we’ve, traditionally, from the very beginning, delivered technology solutions to our customers. As a technology integrator, we do operate more of the services business model as opposed to maybe a traditional OEM in a manufacturing production domain. But as an integrator, we will continue to deliver systems and solutions. And as I think the markets continue to shift, we think we’re again we’ll positioned for outcome-based solutions that the customer seek, whether it’s in the context of new innovation, on fixed price basis, and outcome oriented, that allows really the contractors to deliver a specific capability. We’re very much aligned to that. The platform integration portfolio that is an area of growth for us is an example of technology integration applied on maybe a broader scale than perhaps in sub-system work that we did maybe pre-spin. So, we are developing further capabilities through the value proposition in the services model, the platform integration, the AAV, ACV and now the MK48. These are just all examples of bringing good system engineering together with good program management, broad market awareness and be a channel for those technologies to really do systems upgrade modernization. And so we’re still aligned on readiness. And modernization of those platforms like we never get into new factory type production, so I think integration of solution is around that outcome base. And so I do expect to see as we migrate from EMD phases and test phases into lower rate production, and even full rate production. We have the capability to do integration at the system level, and that will be a part of the portfolio going forward.

And then your stock is up here high 79%. At what point, and you’ve talked about the good cash flow. And you’ve been using it pretty much exclusively since Scitor to buy back stock. At what point, do you shift the focus and say, with our stock price where it is today, maybe it makes a little bit more sense to do M&A? And if so, what would you be looking at?

Let me have Charlie come on that Cai, because we’ve been discussing, and obviously in line with a broader strategy.

Cai, hi. This is Charlie. So let me just comment on the capital deployment strategy. I would love to continue to execute on what I believe had been a very successful capital deployment strategy. It’s a very balanced approached with dividends and required debt payments. And then the excess cash is used for alternatives, such as share repurchase and strategic M&A. So, I would see the share repurchase to continue, should the -- consistent repurchasing program throughout the year, which has generated shareholder value, and I would see that continuing.

Our next question comes from Bill Loomis with Stifel.

Just on the awards in the quarter, just to be clear from what you say. I guess, it’s an IDIQ and temp holders no value in your awards in the quarter, or backlog right now until you get passed under it?

About $70 million is related to the temp hold based on the initial awards, and then that will run out for the 10 years, based on what we’ve done in the in the past.

So $70 million, and then as you win new task orders that continually adds to awards or/and backlog as those come out, right?

Correct. We’ll associate any future orders as bookings, and then those have a fairly quick turn to revenue as we deliver those materials out of that portfolio. So it's probably consistent run rate in $125 million, $150 million range. And so we expect that to continue. And so, those retire some, some of it if you will, and just the general slow. And I think the collective supply chain portfolio, I mentioned earlier, is relatively stable at this point from a contract perspective. We’ll still see some variability based on off tempo, and perhaps and see their operations and the like, as the military consumes those supplies. But the contract portfolio at this point is pretty static and stable.

And then just looking at your targets for low single-digit growth, so this year you had from lower supply chain work. And you noted decreases in our contract portfolio due to programs have ended or have experienced lower activity. How much of that later one has impacted the growth and has been more of a surprise versus expected for you?

Well, I think collectively, the variability is in the $30 million range. So, collectively, those programs, I would say, in the $10 million to $30 million range. As we see on a quarterly basis, programs become the logical ends and the shift for a very broad portfolio in over 1,600, 1,800 contracts in any given quarter. So, the variability is there. But at the same time, the diversification -- we’re not heavily concentrated in any one. So, it’s really in the aggregate that we see the variability with no contracts coming to an end drives a particular revenue outcome collectively. We think the current product pipeline, the larger programs that we’ve won, and as they reach run rates, as well as the longer term platform integration work, all contribute to confidence in long term single-digit growth performance.

So what’s the headwind over the next year? Do you still see supply chains being a revenue headwind? Because it seems with the awards you’ve spent winning, and the fact there doesn’t seem to be any big new drop-off in contracts that you should have better than your target growth next year. What are the headwinds we should be looking for in calendar ’17, fiscal ’18?

I think you just touched on the variability of the supply chain, and it's still $0.5 billion of our portfolio. But that $30 million to $50 million swing in any given quarter may contribute to. But we think on average overtime for a full year we’ll mitigate that. The step function of the two MRO contracts from last year will be behind this next quarter. And again, the larger programs as they reach a run-rate. There’ll be some variability across the portfolio but it’s really tied to timing, the revenue streams as those programs ramp up. And then probably the biggest variability in probably FY18, FY19 will be the product from integration revenue as we move from engineering test phases into production phases, which will have higher revenue, as well as higher margin. So, that’s focused on the margin expansion as we are on top-line revenue.

And then just one final one on the supply chain, do you see, if we do see the core structure of Army going up, and not timing you further. Do you see that as being having a quick positive impact on your supply chain work?

Yes, so we do see any shifts, and our tempo could be even -- further readiness and training. If the core structure does in fact expand and we see activity shift to mission capabilities, all of that generally contributes positively to the supply chain growth on the contract vehicles that we already have in place. So, we would expect to further offset any potential headwinds with that increased volume going forward. So, it does more favorable than that given what we’re hearing and how the military, particularly, may operate over the course of the next few years.

Our next question is coming from Tobey Sommer with SunTrust. Please go ahead.

I wanted to ask a question about your commentary on trading and simulation. You spent some time discussing that opportunities as you see it. In general, do you think that those are opportunities to expand or grow as they fit into your strategy? Thanks.

Very much an important part of our expand and grow; do you think the training and simulation together covers a wide range of requirements; the needs that are emerging. I think in terms of the -- whether it’d be on the enterprise IT side with emerging applications; modernization of IT infrastructure; ability to train different ERP platforms and the like; and on the mission side, where we typically talk about it, our fleet forces training; FAA controller training. As the government modernizes mission capability, the training capabilities are very much required. We’ve got a very broad suite, which we described inside on our training edge’ which does give us from training through augmented and virtual reality’ a full suite of training methods; and the mission understandings through each of our various program areas, give us a mission understanding to help refine curriculum. So that metrics integration right down the FAA allows that we think to apply consistent training delivery that’s effective on the human centric basic that we’ve think we’ve got some market leadership in, combined with the broad breath of curriculum development as part of our mission’s capabilities. It couple as well with continued terms of the platform modernization. And as we extend the life of certain programs, modernization again implies a level of training and upgrade as we upgrade the system themselves. So the training and simulation supports the readiness side of activities, or structure think of, it supports the modernization of IT platforms and mission capabilities. And the simulation elements that are really part of that also are really strong tools in architecture assessment and analysis. And so, simulation in that same umbrella is a critical component to also support our system engineering efforts. So, collectively, we do think that discipline, it is one that we can leverage to sustain and drive growth in expanding and delivering to new customers.

I wanted to just kind of ask a question about your, the vehicle wins that are in projects that you’re working on now, and now that the torpedo contract. Is there a common thread among those wins in terms the innovative approach or something that you see that has provided some differentiation in your success as you’ve increased your exposure to that kind of work? Thanks.

It’s in really two areas, one, I think is the services business model that allows us to be perhaps a little more flexible, agile, and do not have about broader carrying cost of physical factories or infrastructure. That traditionally some of our competitors have delivered that same capability in different way. So I think it’s a little more agile as an integrator; less infrastructure costs; partnering with the customers to take advantage of government infrastructure; all will facilitate a lower cost profile as we deliver it. On the technical and engineering side, we do think that the innovation that we can deliver that provide value, are a source from our mission understanding and the system engineering work that we do to convert the mission on the operational requirement through a technology capability and need. Because we take a broad market analysis, and not only sell what we may perhaps build or as others will build for themselves, we’re less vertically integrated. So we take a broad market analysis and become the channel for the market to the customer. And that allows us to take the best technologies with the best capabilities at the best price to package of solutions integrated to meet the operational requirements of the customer. So the service model itself, and I think our broad market reach to pick the best technologies that are available at the time, at the best price point as a channel for those commercial technologies for the government are the key areas we think will differentiate on the platform integration portfolio.

In terms of your submitted bids, I think, you’ve quoted out $14 billion effective, if that’s right. If you look at that and compare it to the percentage of revenue that you currently have from solutions, et cetera, a larger proportion of higher margin solutions, business that’s been submitted. Kind of curious as to what the margin profile of the backlog -- on the submitted bids looks like? Thanks.

The quality of pipeline I think has continued to evolve and mature. It does reflect, on the submitted proposals. And you’re right this is up $14 billion, is at higher margins than we’ve traditionally operated at. It's the key filter on the pursuit that we put forward. There’s a lot of variability. I mean not every program is at that higher-margin when you think strategically. Some of the programs, as we’ve just described, whether the enterprise IT, large programs as well as the platform integration have a slow start, and then would ramp-up overtime, both in revenue and in margins. And so, there is a level of complexity, if you will, than traditional services where you would just take and divide it by 5 and then up with a flat line revenue and margin stream. Both of these programs and the outcome base do start a little bit slower in revenue and margin, and then you pick-up that based on either volume or efficiencies that are baked into that. But the quality of the pipeline does reflect in the submitted side, higher marketing performance, which again gives us confidence in that margin expansion that 10 to 20 basis points over the foreseeable future.

Last question for me, could you comment on the percentage of business up for re-compete in the next fiscal year. Just want to get a glimpse of what that looks like. Thanks.

Generally, it's in the 20% to 25% of our portfolio, in any form or re-compete, as I mentioned the high for the past quarters and volume, large foreign contracts across the board. So, working through those, generally 20% to 25% of our portfolio is in the state of re-compete in any given time.

And your last question comes from Brian Ruttenbur with Drexel Hamilton. Please go ahead, sir.

Couple of housekeeping, a lot of the good questions were already been answered. But CapEx, for the remainder of this year, is still in the blank, and then next year in ’18. Is it going to be shifting higher as you have more hardware on the torpedo and vehicle side? Just trying to understand where CapEx is going. And then I have a follow-up.

Brian, this is Charlie. No, you don’t look where the CapEx would change very much from this year looking $4 million to $5 million in the fourth quarter, and then consistent going into ’18?

So we’re talking about $20 million a year, roughly?

Yes.

And then interest expense, again, more housekeeping, I apologize. You were up to around $15 million. There’s been some fluctuations from quarter-to-quarter. Is $15 million a good number going forward and what is that assuming. I assume that you’re not paying down debt, and that interest rates remained relatively flat.

Yes. Brian, so we had the refinancing last quarter, and which we lowered the interest expense as we mentioned on the call last quarter. So, I think there is a savings about $2 million per year and interest expense per quarter.

Correct, yes, I remember the refinancing. But moving forward is the $15 million number a good number, assuming that we don’t have fluctuations with interest rates per quarter?

I may have to get back to you on that Brian. Let me get back to you, I don’t want to give you an answer I don’t have the full information on. But it’s slightly lower, I believe for next year.

And then bookings, obviously, very strong; seasonally strong fourth quarter; seasonally should be weak. And I’m just trying to understand the comp effect, and I’m sure that this is a difficult question, in fact, improvement possible to answer. But I’ll take a stab at it any way. With the CR sequestration, I would imagine that there is going to be weak bookings in the fourth quarter, fourth calendar quarter and first calendar quarter. And then there would be an upswing. Is that what you’re anticipating, or am I reading that wrong? Because you’re bidding on existing contracts, and things should flow better than anticipated.

I think it's going to be fairly steady. Q4 is traditionally a lower bookings quarter, as well as our overall performance, given the holidays. There is a lot of submit activity that goes on in Q4. But overall, wouldn’t expect -- I would expect a modest decline, some normal run rate, whether it would be in the 0.8 to 1.0 type of areas on book-to-bills in Q4. It will likely continue into Q1 of next year, as far maybe some of the larger opportunity that’s in drive. The book-to-bill is north of 1.0. Not that it is really driven so much by the CR, even on the transition itself, since most of the bookings that are pending are based on proposals that have already been submitted. So there’s very little impact of what might be submitted in the near term is going to drive even collectively FY18 revenues. But the pace, we would expect potentially to be slightly down as we work through the transition of the leadership within the government into Q1 to up Q2. But we will not see any impact on the CR, and as I said Q4 generally is lower just on a year-over-year basis just given the holidays.

It appears there are no further questions, at this time. I would like to turn the conference back over to Mr. Levi for any additional or closing remarks.

Thank you very much operator. I would like to thank you all for participating in today’s call, and your interest in SAIC. Have a great day.

And once again, that does conclude today’s presentation. We thank you all for your participation. And you may now disconnect.