SAN DIEGO and MCLEAN, Va. , Dec. 9 /PRNewswire-FirstCall/ -- SAIC, Inc.
(NYSE: SAI), a scientific, engineering, and technology applications company,
today announced financial results for the third quarter of fiscal year 2009,
which ended October 31, 2008 .
"We continue to deliver strong contract performance and financial results
consistent with our plan," said Ken Dahlberg , SAIC chairman and chief
executive officer. "Our 45,000 employees are dedicated to solving our
customers' hardest problems, which creates a powerful discriminator in the
markets we serve. Our success in capturing larger and more demanding programs
and recruiting and retaining the skilled workforce to execute them provide
good visibility into fiscal year 2010."
During the quarter, the company decided to sell a small products business
that was previously part of Applied Marine Technology, Inc. (AMTI), which was
acquired in December 2006 . AMTI's primary business, including services and
solutions for the special warfare community and ground-based signals
intelligence, continues to be core to the company's strategic intent. The
results from the AMTI products business are reflected in discontinued
Summary Operating Results
Revenues for the quarter were $2.63 billion, up 11 percent from $2.36
billion in the third quarter of fiscal year 2008. Internal, or
non-acquisition, growth represented 10 percentage points of the consolidated
growth for the quarter. Key drivers of internal growth for the quarter
included new and expanding programs in the intelligence and defense markets,
including systems integration and logistics support activities for mine
resistant ambush protected (MRAP) vehicles.
Operating income for the quarter was $205 million (7.8 percent of
revenue), up 8 percent from $189 million (8.0 percent of revenue) in the third
quarter of fiscal year 2008. The year-over-year decline in operating margin
was primarily attributable to fewer shipments of higher margin border and port
security products, lower recovery of prior year indirect cost over-runs, and a
higher percentage of revenues from lower margin materials and subcontractor
revenues compared to the third quarter of fiscal year 2008.
Income from continuing operations for the quarter was $118 million, up 7
percent from $110 million in the third quarter of fiscal year 2008. Growth in
income from continuing operations was driven by higher revenues and operating
income, but it was adversely affected by a $7 million reduction in interest
income net of interest expense and $16 million of impairments on several
equity investments, partially offset by a lower tax rate as a result of the
favorable settlement of certain income tax audits and the reenactment of the
federal research tax credit in the third quarter of fiscal 2009.
Diluted earnings per share from continuing operations for the quarter were
$0.29, up 7 percent from $0.27 in the third quarter of fiscal year 2008,
driven by the increase in income from continuing operations and a lower share
count compared to the prior year. The diluted share count for the quarter was
402 million, down 3 percent from 414 million in the third quarter of fiscal
year 2008, due primarily to repurchases under the company's stock repurchase
program. Diluted earnings per share, which include discontinued operations,
were $0.30 for the quarter, up 20 percent from $0.25 in the third quarter of
fiscal year 2008.
Cash Generation and Capital Deployment
Cash flows from operations for the quarter were $186 million (or 1.6 times
income from continuing operations), up 92 percent from $97 million for the
third quarter of fiscal year 2008. Cash collections continued to be strong as
days sales outstanding (DSO) were 69 days, within the company's target range.
The year-over-year increase in cash flows from operations primarily results
from a 3-day larger rise in DSO in the third quarter of fiscal year 2008.
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