SAIC Announces Financial Results for Third Quarter Fiscal Year 2008

SAN DIEGO and MCLEAN, Va., Dec. 10 /PRNewswire-FirstCall/ -- SAIC, Inc. (NYSE: SAI), a leading provider of research, engineering, and technology services and solutions, today announced financial results for the third quarter of fiscal year 2008...


SAN DIEGO and MCLEAN, Va., Dec. 10 /PRNewswire-FirstCall/ -- SAIC, Inc. (NYSE: SAI), a leading provider of research, engineering, and technology services and solutions, today announced financial results for the third quarter of fiscal year 2008, which ended October 31, 2007 .

"During the third quarter, we posted strong financial results and are on track for an excellent year," said Ken Dahlberg , SAIC chairman and chief executive officer. "Our employees are providing critical services and solutions for our customers' most important missions. Their dedicated efforts are driving accelerated revenue growth and winning significant new business to fuel future growth. In addition, our improved discipline around bidding and executing work and our focus on managing indirect spending are enhancing our profitability."

During the quarter, the company completed the acquisitions of Benham Investment Holdings, LLC (Benham) and Scicom Technologies Private Limited (Scicom). Benham offers a full range of capabilities in consulting, engineering, architecture and design/build, including specialized expertise in energy management, alternative fuels, process engineering, industrial manufacturing, facilities, software development and integration, and advanced visualization and communication systems. Scicom, headquartered in New Delhi , India , provides onsite and offshore hydrocarbon exploration product development services and technology consulting in the science and engineering sector.

Summary Operating Results

Revenues for the quarter were $2.37 billion, up 14 percent from $2.08 billion in the third quarter of fiscal year 2007. Internal, or non- acquisition, growth represented 8 percentage points of the consolidated growth for the quarter. Key drivers of internal growth included new and expanding programs in the defense and intelligence markets and increased sales of border, port, and mobile security products.

Operating income for the quarter was $186 million (7.9 percent of revenue), up 32 percent from $141 million (6.8 percent of revenue) in the third quarter of fiscal year 2007. Operating income benefited from increased sales of more profitable border, port, and mobile security products; improved fees on several large programs; and stronger overall recovery of indirect costs.

Income from continuing operations for the quarter was $109 million, up 21 percent from $90 million in the third quarter of fiscal year 2007. The increase in income from continuing operations came despite a $21 million decrease in interest income due primarily to reduced cash balances resulting from the payment of the $2.45 billion special dividend in November 2006 .

Diluted earnings per share from continuing operations for the quarter were $0.26, unchanged from the third quarter of fiscal year 2007, despite the higher share count compared to the prior year. The diluted share count for the quarter was 414 million, up 19 percent from 347 million in the third quarter of fiscal year 2007 as a result of the 86 million shares issued in the October 2006 IPO.

Diluted earnings per share, which include discontinued operations, were $0.25 for the quarter, down 11 percent from $0.28 in the third quarter of fiscal year 2007. The Fiscal Year 2007 quarter included the $19 million pre- tax gain arising from the sale of ANX, a majority-owned subsidiary, during the third quarter of fiscal year 2007.

Cash Generation and Capital Deployment

The company generated $95 million in cash flows from operations during the quarter, down 54 percent from $207 million in the third quarter of fiscal year 2007. Cash flow from operations tracked consistent with net income; the decrease in cash flow from operations is largely attributable to the increased working capital needed to support the acceleration of revenue growth in the current quarter coupled with an increase in days sales outstanding for the quarter from 64 days to 70 days.

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