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DynCorp International shares to begin NYSE trading today Print

Ridder Tribune News Service May 4, 2006

Bob Cox, Fort Worth Star-Telegram, Texas May 4--Shares of DynCorp International will begin trading on the New York Stock Exchange (ticker: DCP) today, giving the public an opportunity to invest in the Irving-based company that is expected to benefit from growing U.S. defense and anti-terrorism spending. DynCorp expects to sell 25 million shares of common stock at $15 a share. The company hopes to raise about $375 million from the offering.

Nearly $100 million of the proceeds will go Veritas Capital, the investment company that acquired DynCorp a little more than a year ago from CSC, according to documents filed with the Securities and Exchange Commission. Veritas will retain ownership of about 56 percent of the company.
DynCorp had 2005 revenue of about $1.9 billion, the bulk of it from Pentagon and State Department contracts. The company has 14,000 employees worldwide, including about 400 in Irving and 300 at its Fort Worth aviation division, which recently moved into new offices at Fort Worth Alliance Airport.

facilities, trains military and police personnel in foreign countries, andDynCorp is one of a number of companies that provide critical services, in large part overseas, to the U.S. military and State Department agencies. The company, which has played a significant role in Afghanistan and Iraq, provides security personnel for guarding key government officials and performs other, often shadowy functions.

The aviation division provides aircraft maintenance, repair and modification and other support functions for the Drug Enforcement Administration and at U.S. military bases, and is looking to increase its commercial business.

"We intend to continue to capitalize on the U.S. government's increasing reliance on outsourcing and increased spending in our targeted end-markets," the company said in its filing. It has numerous competitors in both business segments.

Financial analysts say DynCorp should have strong growth prospects as the federal government and the Pentagon, adapting to the prospects of a drawn-out, worldwide battle with terrorist groups, increasingly outsource many important noncombat functions to the private sector.

The U.S. government "is not going to get less involved internationally," said Jon Kutler of Admiralty Partners in Los Angeles. "DynCorp, the heart of what it does, is outsourced military capabilities."

Kutler previously was a financial adviser to the company while he was a principal of Quarterdeck Jeffries, one of the investment bankers underwriting the offering.

The company, in its SEC filing, said it has a firm backlog of $2.7 billion and has contracts that are potentially worth $18.5 billion.

Forbes magazine personal finance writer Scott Reeves wrote last week that DynCorp "looks like a good company" but that investors should "keep a wary eye on its debt and on any political changes in Washington" that could diminish the company's future business prospects.

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