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 operations.
Summary Operating Results
Revenues for the quarter were
Operating income for the quarter was
Income from continuing operations for the quarter was
Diluted earnings per share from continuing operations for the quarter were
Cash Generation and Capital Deployment
Cash flows from operations for the quarter were
During the quarter, the company used
Mark Sopp , SAIC chief financial officer commented, "I am pleased that the hard work of the entire SAIC team is paying off in both strong current financial results and the forward indicators of new bookings and net hires. We are on track to meet all of our key financial metrics for the year, including revenue, operating margin, earnings per share, and cash flows from operations. We continue to use our cash prudently, through selected acquisitions and share repurchases. We are currently investing our cash conservatively, with correspondingly lower returns, in light of the uncertainty in the financial markets."
New Business Awards
Net new business bookings totaled
Large, competitive definite delivery contract awards received during the quarter include:
-- U.S. Army Human Resources Command (HRC) Information Technology (IT) Support. Under a five-year,
-- National Media Exploitation Center (NMEC) Support. SAIC was awarded a four-and-one-half-year,
-- U.S. Central Command (USCENTCOM) Information Technology (IT) Support. Under a five-year,
-- Naval Sea Systems Command (NAVSEA) Enterprise Resource Planning (ERP). SAIC has been awarded a five-year,
-- National Cancer Institute (NCI) Operation. SAIC's wholly-owned subsidiary SAIC-Frederick, Inc. received a follow-on contract from the NCI to provide operations and technical support to NCI's Federally Funded Research and Development Center in Frederick, Md. , which strives to develop new technologies and translate scientific discoveries into novel agents for the prevention, diagnosis, and treatment of cancer and AIDS. The contract has a 10-year period of performance and an estimated value of
In addition, SAIC also won several indefinite delivery/indefinite quantity (IDIQ) contracts that are not included in net bookings. The most notable IDIQ awards during the quarter were:
-- Future Flexible Acquisition and Sustainment Tool (F2AST) Program. SAIC was awarded a contract by the U.S. Air Force Warner Robins Air Logistics Center to support the F2AST program. The multiple-award contract has a seven-year period of performance and a total value for all awardees of
-- Office of Federal Student Aid (FSA) Software Development. SAIC was awarded a contract by the U.S. Department of Education, Office of FSA to provide software development services. The multiple-award contract has a ten-year period of performance and a ceiling value of
The company's backlog of signed business orders at the end of third quarter of fiscal year 2009 was
As part of its October 2006 initial public offering, the company articulated its long-term, average annual financial goals:-- Growing revenue internally in the six percent to nine percent range; -- Adding strategic acquisitions that contribute to revenue and earnings growth; -- Improving operating margin by 20 to 30 basis points until reaching a sustainable level between eight percent and nine percent; and -- Growing earnings per share from 11 percent to 18 percent, varying with internal financial performance, and volume of acquisitions and share repurchases.
Given its operating results through the third quarter of the year, recent contract wins, and share repurchases to date, the company expects to meet all of its long-term financial goals in fiscal year 2009.
The company's business development and contract execution performance in fiscal year 2009, coupled with a healthy U.S. defense budget through October 2009 , provide good visibility for fiscal year 2010. Unless there are significant, unanticipated disruptions in government funding, the company expects its revenue and operating margin performance to be consistent with its long-term goals in fiscal year 2010. The company is investing its cash balance primarily in U.S. Treasury securities, which will significantly reduce interest income and, as a result, make the EPS growth goal more difficult to achieve. However, the company intends to offset the shortfall by deploying its balance sheet and free cash flow generation on acquisitions and share repurchases if they can be made at attractive prices.
SAIC is a FORTUNE 500(R) scientific, engineering, and technology applications company that uses its deep domain knowledge to solve problems of vital importance to the nation and the world, in national security, energy and the environment, critical infrastructure, and health. The company's approximately 45,000 employees serve customers in the Department of Defense, the intelligence community, the U.S. Department of Homeland Security, other U.S. Government civil agencies and selected commercial markets. SAIC had annual revenues of
Certain statements in this release contain or are based on "forward-looking" information within the meaning of the Private Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by words such as "expects," "intends," "plans," "anticipates," "believes," "estimates," "guidance" and similar words or phrases. Forward-looking statements in this release include, among others, estimates of future revenues, earnings, backlog, outstanding shares and cash flows. These statements reflect our belief and assumptions as to future events that may not prove to be accurate. Actual performance and results may differ materially from the guidance and other forward-looking statements made in this release depending on a variety of factors, including: changes in the U.S. Government defense budget or budgetary priorities or delays in the U.S. budget process; changes in U.S. Government procurement rules and regulations; our compliance with various U.S. Government and other government procurement rules and regulations; the outcome of U.S. Government audits of our company; our ability to win contracts with the U.S. Government and others; our ability to attract, train and retain skilled employees; our ability to maintain relationships with prime contractors, subcontractors and joint venture partners; our ability to obtain required security clearances for our employees; our ability to accurately estimate costs associated with our firm-fixed-price and other contracts; resolution of legal and other disputes with our customers and others; our ability to successfully acquire and integrate businesses; our ability to manage risks associated with our international business; our ability to compete with others in the markets in which we operate; and our ability to execute our business plan effectively and to overcome these and other known and unknown risks that we face. These are only some of the factors that may affect the forward-looking statements contained in this release. For further information concerning risks and uncertainties associated with our business, please refer to the filings we make from time to time with the SEC, including the "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Legal Proceedings" sections of our latest annual report on Forms 10-K and 10-K/A and quarterly report on Forms 10-Q and 10-Q/A, which may be viewed or obtained through the Investor Relations section of our Web site at www.saic.com.
All information in this release is as of December 9, 2008 . SAIC expressly disclaims any duty to update the guidance or any other forward-looking statement provided in this release to reflect subsequent events, actual results or changes in the company's expectations. SAIC also disclaims any duty to comment upon or correct information that may be contained in reports published by investment analysts or others.CONTACTS: Investor Relations: Stuart Davis (703) 676-2283 [email protected] Media Relations: Laura Luke Melissa Koskovich (703) 676-6533 (703) 676-6762 [email protected] [email protected] SAIC, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited, in millions, except per share amounts) Three Months Ended Nine Months Ended October 31 October 31 2008 2007 2008 2007 As Restated Revenues $2,631 $2,364 $7,552 $6,593 Costs and expenses: Cost of revenues 2,277 2,026 6,529 5,676 Selling, general and administrative expenses 149 149 455 416 Operating income 205 189 568 501 Non-operating income (expense): Interest income 4 14 18 42 Interest expense (19) (22) (59) (67) Minority interest in income of consolidated subsidiaries - - - (3) Other expense, net (16) - (5) (4) Income from continuing operations before income taxes 174 181 522 469 Provision for income taxes (56) (71) (194) (183) Income from continuing operations 118 110 328 286 Discontinued operations: Income (loss) from discontinued operations before minority interest in income of consolidated subsidiaries and income taxes (12) (6) (20) 41 Minority interest in income of consolidated subsidiaries - - - (2) Benefit (provision) for income taxes 14 1 24 (8) Income (loss) from discontinued operations 2 (5) 4 31 Net income $120 $105 $332 $317 Earnings per share: Basic: Income from continuing operations $0.30 $0.27 $0.83 $0.71 Income (loss) from discontinued operations 0.01 (0.01) 0.01 0.07 $0.31 $0.26 $0.84 $0.78 Diluted: Income from continuing operations $0.29 $0.27 $0.81 $0.69 Income (loss) from discontinued operations 0.01 (0.02) 0.01 0.07 $0.30 $0.25 $0.82 $0.76 Weighted average shares outstanding: Basic 392 402 396 404 Diluted 402 414 406 417 SAIC, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, in millions) October 31, January 31, 2008 2008 ASSETS Current assets: Cash and cash equivalents $812 $1,096 Receivables, net 2,010 1,884 Inventory, prepaid expenses and other current assets 299 252 Assets of discontinued operations 4 15 Total current assets 3,125 3,247 Property, plant and equipment (less accumulated depreciation and amortization of $325 and $297 at October 31, 2008 and January 31, 2008, respectively) 395 392 Intangible assets, net 96 94 Goodwill 1,249 1,076 Deferred income taxes 84 71 Other assets 90 101 $5,039 $4,981 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $1,211 $1,109 Accrued payroll and employee benefits 607 562 Income taxes payable - 64 Notes payable and long-term debt, current portion 18 130 Liabilities of discontinued operations 1 2 Total current liabilities 1,837 1,867 Notes payable and long-term debt, net of current portion 1,099 1,098 Other long-term liabilities 144 148 Stockholders' equity: Common and preferred stock - - Additional paid-in capital 1,892 1,804 Retained earnings 96 87 Accumulated other comprehensive loss (29) (23) Total stockholders' equity 1,959 1,868 $5,039 $4,981 SAIC, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in millions) Three Months Ended Nine Months Ended October 31 October 31 2008 2007 2008 2007 As Cash flows from operations: Restated Net income $120 $105 $332 $317 Loss (income) from discontinued operations (2) 5 (4) (31) Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization 21 22 65 55 Stock-based compensation 24 23 69 68 Excess tax benefits from stock- based compensation (9) (12) (52) (51) Impairment losses 16 2 16 7 Other items (3) 1 (6) 8 Increase (decrease) in cash and cash equivalents, excluding effects of acquisitions and divestitures, resulting from changes in: Receivables (129) (202) (112) (194) Inventory, prepaid expenses and other current assets (14) 7 (59) (20) Deferred income taxes - (11) - (5) Other assets 1 5 (7) 2 Accounts payable and accrued liabilities 90 131 100 51 Accrued payroll and employee benefits 46 15 46 (2) Income taxes payable 22 7 35 27 Other long-term liabilities 3 (1) 7 (6) Total cash flows provided by operations 186 97 430 226 Cash flows from investing activities: Expenditures for property, plant and equipment (20) (19) (45) (42) Acquisition of businesses, net of cash acquired (1) (144) (201) (144) Payments for businesses acquired in previous years (1) (1) (4) (1) Other 3 11 15 9 Total cash flows used in investing activities (19) (153) (235) (178) Cash flows from financing activities: Payments on notes payable and long-term debt (2) - (112) (9) Sales of stock and exercise of stock options 14 24 64 79 Repurchases of stock (13) (98) (429) (270) Excess tax benefits from stock- based compensation 9 12 52 51 Other - (1) (1) (1) Total cash flows provided by (used in) financing activities 8 (63) (426) (150) Increase (decrease) in cash and cash equivalents from continuing operations 175 (119) (231) (102) Cash flows of discontinued operations: Cash used in operating activities of discontinued operations (40) (4) (33) (6) Cash provided by (used in) investing activities of discontinued operations (3) 3 (8) 6 Decrease in cash and cash equivalents from discontinued operations (43) (1) (41) - Effect of foreign exchange rate changes on cash and cash equivalents (12) - (12) - Total increase (decrease) in cash and cash equivalents 120 (120) (284) (102) Cash and cash equivalents at beginning of period - continuing operations 692 1,131 1,096 1,109 Cash and cash equivalents at beginning of period - discontinued operations - - - 4 Cash and cash equivalents at beginning of period 692 1,131 1,096 1,113 Cash and cash equivalents at end of period $812 $1,011 $812 $1,011
SOURCE SAIC, Inc.