SAIC Announces Financial Results for Fourth Quarter and Fiscal Year 2008

SAN DIEGO and MCLEAN, Va., March 25 /PRNewswire-FirstCall/ -- SAIC, Inc. (NYSE: SAI), a leading provider of research, engineering, and technology services and solutions, today announced financial results for the fourth quarter and fiscal year...


SAN DIEGO and MCLEAN, Va., March 25 /PRNewswire-FirstCall/ -- SAIC, Inc. (NYSE: SAI), a leading provider of research, engineering, and technology services and solutions, today announced financial results for the fourth quarter and fiscal year 2008, which ended January 31, 2008 .

"As we enter our 40th year, our company is stronger than ever," said Ken Dahlberg , SAIC chairman and chief executive officer. "This year we accelerated revenue growth, significantly expanded our operating margins, and built a strong foundation for continued growth. Our success is a testament to our employees and their dedication to solving our customers' most critical global problems."

Summary Operating Results

Revenues for the quarter were $2.34 billion, up 12 percent from $2.09 billion in the fourth quarter of fiscal year 2007. Revenues for the year were $8.94 billion, up 11 percent from $8.06 billion in fiscal year 2007. Internal, or non-acquisition, growth represented 9 percentage points of the consolidated growth for the quarter and 7 percentage points of the consolidated growth for the fiscal year. Key drivers of internal growth for the quarter included new and expanding programs in the intelligence and defense markets.

Operating income for the quarter was $171 million (7.3 percent of revenue), up 20 percent from $142 million (6.8 percent of revenue) in the fourth quarter of fiscal year 2007. Growth in quarterly operating margin percentage was driven by stronger program performance, improved contract fees, and greater recovery of indirect costs. Full-year operating income was $666 million (7.5 percent of revenue), up 16 percent from $572 million (7.1 percent of revenue) in fiscal year 2007.

Income from continuing operations for the quarter was $103 million, up 23 percent from $84 million in the fourth quarter of fiscal year 2007. Full-year income from continuing operations was $386 million, up 6 percent from $365 million in fiscal year 2007. Full-year income from continuing operations was up less than full-year operating income because of a $60 million decline in interest income due primarily to lower fiscal year 2008 cash balances after paying the $2.45 billion special dividend in November 2006 .

Diluted earnings per share from continuing operations for the quarter were $0.25, up 25 percent from $0.20 in the fourth quarter of fiscal year 2007. The diluted share count for the quarter was 416 million, down 1 percent from 420 million in the fourth quarter of fiscal year 2007, due primarily to share repurchases made throughout the year. Diluted earnings per share from continuing operations for the year were $0.93, down 7 percent from $1.00 in fiscal year 2007, as the diluted share count increased from 364 million to 417 million as a result of the 86 million shares issued in the October 2006 initial public offering (IPO).

Diluted earnings per share, which include discontinued operations, were $0.24 for the quarter, up 20 percent from $0.20 in the fourth quarter of fiscal year 2007. Diluted earnings per share for the year were $1.00, down 7 percent from $1.07 in fiscal year 2007. Discontinued operations include: the divisions of the former majority-owned subsidiary AMSEC LLC, which were divested in the second quarter of fiscal year 2008; the majority-owned subsidiary ANXeBusiness Corp., which was sold in the third quarter of fiscal year 2007; and Telcordia Technologies, Inc., which was sold in the first quarter of fiscal year 2006.

Cash Generation and Capital Deployment

Cash flow from operations for the quarter was $122 million, down 39 percent from $199 million in the fourth quarter of fiscal year 2007. Cash flow from operations was below the company's expectation due to a three-day increase in days sales outstanding to 73 days, coupled with increased working capital needs to support revenue growth acceleration. For the year, cash flow from operations was $345 million, down 50 percent from $693 million in fiscal year 2007. As of January 31, 2008 , the company had $1.1 billion in cash and cash equivalents and $1.2 billion in long-term debt. On February 1, 2008 , the first day of fiscal year 2009, the company repaid $100 million of long-term debt, as scheduled.

This content continues onto the next page...