SAN DIEGO and MCLEAN, Va. , Sept. 3 /PRNewswire-FirstCall/ -- SAIC, Inc.
(NYSE: SAI), a leading provider of research, engineering, and technology
services and solutions, today announced financial results for the second
quarter of fiscal year 2009, which ended July 31, 2008 .
"Our company continued its strong operating momentum in the second quarter
of fiscal year 2009," said Ken Dahlberg , SAIC chairman and chief executive
officer. "Internal revenue growth, contract execution, and cash collections
were all excellent. Our employees' dedicated work is delivering excellent
contract execution and critical support to our customers. Our growing labor
base and improving business discipline gives us increasing confidence that we
can achieve our financial goals for fiscal year 2009."
Summary Operating Results
Revenues for the quarter were $2.56 billion, up 15 percent from
$2.22 billion in the second 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 $186 million (7.3 percent of
revenue), up 8 percent from $173 million (7.8 percent of revenue) in the
second quarter of fiscal year 2008. Contract fees were slightly higher
year-over-year, but operating income was reduced by $6 million as a result of
the civil judgment in favor of the Nuclear Regulatory Commission, most of
which is not deductible for tax purposes, and $3 million due to severance
costs associated with efforts to reduce infrastructure in the commercial
business segment and preparations to move certain corporate support functions
to a shared services center.
Income from continuing operations for the quarter was $104 million, up 5
percent from $99 million in the second quarter of fiscal year 2008. Diluted
earnings per share from continuing operations for the quarter were $0.26, up 8
percent from $0.24 in the second 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 403 million,
down 4 percent from 418 million in the second quarter of fiscal year 2008, due
primarily to share repurchases made over the course of fiscal year 2008 and
continuing into the second quarter of fiscal year 2009.
Diluted earnings per share, which include discontinued operations, were
$0.27 for the quarter, down 13 percent from $0.31 in the second quarter of
fiscal year 2008, which included a $31 million pre-tax gain in discontinued
operations on the portion of the business disposed in the AMSEC reorganization
Cash Generation and Capital Deployment
Cash flow from operations for the quarter was $229 million (or 2.2 times
income from continuing operations), down 11 percent from $257 million during
the second quarter of fiscal year 2008. The strong cash collections were
driven primarily by the improvement in days sales outstanding (DSO) from 73
days in the first quarter of fiscal 2009 to 66 days in the second quarter of
fiscal 2009. The year-over-year decline in cash flow from operations primarily
results from an exceptional reduction in DSO -- from 73 days to 64 days -- in
the second quarter of fiscal year 2008.
During the quarter, the company used $65 million to fund the acquisition
of SM Consulting, Inc. In addition, the company used $157 million to
repurchase approximately 8.0 million shares, including 7.3 million shares
under the 40 million share stock repurchase program and the remainder in
recurring repurchases from employees in settlement of withholding taxes
associated with stock option exercises and vesting events. Whether any future
repurchases are made and the timing and actual number of shares repurchased
under the stock repurchase program will depend on a variety of factors,
including share price, corporate capital requirements, and other market
conditions. As of July 31, 2008 , the company had $692 million in cash and cash
equivalents and $1.1 billion in long-term debt.
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