SAIC Announces Financial Results for Third Quarter of Fiscal Year 2013
SAIC Announces Financial Results for Third Quarter of Fiscal Year 2013
- Revenues: $2.87 billion
- Operating Income: $193 million
- Diluted EPS from Continuing Operations: $0.33
- Cash Flows from Operations: $295 million
- Bookings: $4.8 billion (book-to-bill ratio of 1.7)
PR Newswire
MCLEAN, Va., Dec. 5, 2012
MCLEAN, Va., Dec. 5, 2012 /PRNewswire/ -- SAIC, Inc. (NYSE: SAI), a
scientific, engineering, and technology applications company, today announced
financial results for the third quarter of fiscal year 2013, which ended
October 31, 2012.
"This quarter we are reporting modest year-over-year revenue growth and solid
new business bookings even in the currently cautious government market. This
reflects our more aggressive pursuit of new business opportunities and the
strong commitment of our 40,000 employees to the highest level of customer
service, even as we undertake significant changes within the Company," said
John P. Jumper, chairman and chief executive officer. "Our outlook continues
to be cautious as the government approaches critical fiscal decisions. Under
any scenario, we expect government spending to be constrained, especially in
the defense market, and we are preparing for the budget pressures. For the
long term, our plan to separate SAIC into two highly competitive and
differentiated companies is well underway and generating great excitement in
the Company. In the near term, we are taking action to reduce our cost
structure in response to an increasingly competitive environment. This
reduction will impact approximately 700 employees, largely as a result of a
restructuring focused on indirect costs. While these decisions are painful,
they are necessary to meet competitive demands, customer cost expectations and
effectiveness, and to deliver financial performance for our shareholders."
Summary Results
Revenues for the third quarter of fiscal year 2013 were $2.87 billion, up 3
percent from $2.79 billion in the third quarter of fiscal year 2012. Internal
revenues were essentially flat.
Operating income for the quarter was $193 million (6.7 percent of revenue).
Operating loss for the prior year quarter of $20 million included a $232
million loss provision relating to the CityTime workforce management contract
with the City of New York. The prior year quarter's operating income
excluding the CityTime loss provision was $212 million (7.5 percent of
revenue). The reduction in operating income, as adjusted, was primarily
attributable to $15 million of expenses incurred in connection with the
planned separation transaction and the corporate relocation.
Income from continuing operations for the quarter was $112 million, up from a
$92 million loss in the third quarter of fiscal year 2012.
Diluted earnings per share from continuing operations for the quarter were
$0.33, up from a loss of $0.28 in the third quarter of fiscal year 2012. The
diluted share count for the quarter was 334 million, up 2 percent from 329
million in the third quarter of fiscal year 2012.
Segment Operating Results
Three Months Ended
October 31 Revenue Growth (%)
2012 2011 Total Internal
($ in millions)
Revenues:
Defense Solutions $ $ 6% 6%
1,183 1,117
Health, Energy and Civil 743 726 2% -4%
Solutions
Intelligence and Cybersecurity 945 947 0% 0%
Solutions
Corporate and Other - 1 n/a n/a
Intersegment Elimination (1) (1) n/a n/a
Total $ $ 3% 1%
2,870 2,790
Operating Margin
Operating Income (Loss): FY 2013 FY 2012
Defense Solutions $ $ 7.7% -11.9%
91 (133)
Health Energy and Civil Solutions 69 77 9.3% 10.6%
Intelligence and Cybersecurity 68 54 7.2% 5.7%
Solutions
Corporate and Other (35) (18) n/a n/a
Total $ $ 6.7% -0.7%
193 (20)
Nine Months Ended
October 31 Revenue Growth (%)
2012 2011 Total Internal
($ in millions)
Revenues:
Defense Solutions $ $ 8% 8%
3,597 3,339
Health, Energy and Civil 2,077 1,997 4% -2%
Solutions
Intelligence and Cybersecurity 2,792 2,691 4% 4%
Solutions
Corporate and Other - 2 n/a n/a
Intersegment Elimination (4) (3) n/a n/a
Total $ $ 5% 4%
8,462 8,026
Operating Margin
Operating Income (Loss): FY 2013 FY 2012
Defense Solutions $ $ 7.9% 1.3%
284 45
Health Energy and Civil Solutions 168 187 8.1% 9.4%
Intelligence and Cybersecurity 203 215 7.3% 8.0%
Solutions
Corporate and Other (66) (34) n/a n/a
Total $ $ 7.0% 5.1%
589 413
Defense Solutions
Defense Solutions revenues for the quarter were $1.183 billion. Excluding the
$52 million revenue reduction associated with the prior year CityTime loss
provision, Defense Solutions revenue increased $14 million or 1 percent from
the third quarter of fiscal 2012. Internal revenue growth was attributable to
increased activity on the Vanguard program to operate and maintain the
enterprise network IT infrastructure for the U.S. Department of State and the
ramp up of a program with the Defense Logistics Agency to provide supply chain
management of military land and aircraft tires. These increases were
partially offset by reduced revenue from the U.S. Army Brigade Combat Team
Modernization (BCTM) program, which was terminated during the third quarter of
fiscal year 2012.
Defense Solutions operating income for the quarter was 7.7 percent of revenue
compared to 8.5 percent of revenue excluding the CityTime loss provision
(-11.9 percent on a GAAP basis) in the third quarter of fiscal year 2012. The
reduction in Defense Solutions operating income, as adjusted, was attributable
to a prior year gain on the sale of assets.
Health, Energy and Civil Solutions
Health, Energy and Civil Solutions revenues for the quarter increased 2
percent from the third quarter of fiscal year 2012. Internal revenues
decreased 4 percent due to declines in various federal civilian programs and
program completions with federal health information technology customers.
These decreases were partially offset by an increase in healthcare IT
consulting services with commercial clients.
Health, Energy and Civil Solutions operating income for the quarter was 9.3
percent of revenue, down from 10.6 percent of revenue in the third quarter of
fiscal year 2012. The decline was primarily due to net unfavorable changes in
contract estimates, increased bid and proposal costs, increased amortization
expense associated with acquired intangible assets, and reduced volume of
non-intrusive inspection systems. These decreases were partially offset by
reduced research and development expense, which reflected the advancement
through the product development lifecycle of new non-intrusive inspection
system offerings.
Intelligence and Cybersecurity Solutions
Intelligence and Cybersecurity Solutions revenues for the quarter were down
slightly from the third quarter of fiscal year 2012 as increased activity on a
geospatial intelligence program and an airborne surveillance program were
offset by higher prior year material deliveries on a processing, exploitation
and dissemination program.
Intelligence and Cybersecurity Solutions operating income for the quarter was
7.2 percent of revenue, up from 5.7 percent of revenue in the third quarter of
fiscal year 2012, primarily due to a $19 million impairment of intangible
assets in the prior year partially offset by reduced fee rates due to
increased subcontractor and material costs.
Corporate and Other
Corporate and Other segment operating loss for the quarter increased from the
third quarter of fiscal year 2012, primarily due to $15 million of expenses
incurred in connection with the planned separation transaction and the
corporate relocation.
Cash Generation and Capital Deployment
Cash flow provided by operations for the quarter was $295 million, down from
$421 million for the third quarter of fiscal year 2012, primarily due to a
payroll funding timing difference. Days sales outstanding were 61 days this
quarter compared to 71 days in the prior year quarter as a result of
accelerated payments from the government.
During the quarter, the Company paid a cash dividend of $0.12 per share. The
Company intends to continue paying dividends on a quarterly basis, although
the declaration of any future dividends will be determined by the Company's
Board of Directors each quarter and will depend on earnings, financial
condition, capital requirements and other factors.
As of October 31, 2012, the Company had $531 million in cash and cash
equivalents and $1.3 billion in long-term debt.
New Business Awards
Net business bookings totaled $4.8 billion in the third quarter of fiscal year
2013, representing a book-to-bill ratio of 1.7. Notable awards received
during the quarter include:
U.S. Central Command's (USCENTCOM) Directorate of Command and Control,
Communications and Computers. The Company was awarded a task order to provide
enterprise information technology services to the USCENTCOM Directorate of
Command and Control, Communications and Computers. The cost-plus award-fee
task order has a one-year base period of performance, four one-year options,
and a total contract value of $433 million, if all options are exercised.
U.S Army Military Intelligence Enterprise. The Company was awarded a prime
contract to provide information technology design, implementation and
operational sustainment support services to the U.S. Department of the Army G2
Army Military Intelligence Enterprise. The single-award task order has a
one-year base period of performance, two one-year options, one six-month
option, and a total contract value of approximately $149 million, if all
options are exercised. The task order was awarded under the Solutions for the
Information Technology Enterprise contract vehicle.
Federal Emergency Management Agency Center for Domestic Preparedness. The
Company was awarded a prime contract to provide training delivery services in
support of the Center for Domestic Preparedness. The single-award cost-plus
award-fee and fixed price contract has a one-year base period of performance,
four one-year options, and a total contract value of approximately $52
million, if all options are exercised.
Healthcare IT Awards. Recently the Company highlighted its continued progress
in the healthcare IT sector, noting that in the Company's third quarter of
fiscal year 2013 it won contracts totaling approximately $242 million. New
contracts and work orders range from implementing electronic health record
products and systems for commercial healthcare providers, to a number of new
federal programs in health information technology, life sciences, and
behavioral health services. This includes over $100 million in contracts from
its newly acquired healthcare IT consulting businesses maxIT Healthcare and
Vitalize Consulting Solutions.
The Company's backlog of signed business orders at the end of the third
quarter of fiscal year 2013 was $18.6 billion, of which $5.7 billion was
funded. As compared to the end of the third quarter of fiscal year 2012,
total backlog was flat while funded backlog decreased 8 percent. Negotiated
unfunded backlog does not include any estimate of future task orders expected
to be awarded under IDIQ, GSA Schedule or other master agreement contract
vehicles.
Subsequent Events
Subsequent to the end of the quarter, the Company completed the previously
announced sale of its operational test and evaluation services business. The
Company also entered into an issue resolution agreement with the Internal
Revenue Service with respect to the tax deductible portion of the March 2012
CityTime settlement payment, which will give rise to a $96 million reduction
in income tax expense during the fourth quarter of fiscal year 2013.
Additionally, the Company implemented a cost-reduction plan which will result
in the elimination of approximately 700 positions and an estimated severance
charge of approximately $15 million during the fourth quarter of fiscal year
2013, which will benefit the Company's cost structure at the beginning of the
next fiscal year.
Forward Guidance
Based upon its operating and business development performance through the
third quarter of the fiscal year and the subsequent events discussed above,
the Company is increasing its expectation for fiscal year 2013 diluted
earnings per share from continuing operations and cash flows from continuing
operations. The Company expects its fiscal year 2013 revenues to be
consistent with the forward guidance provided on August 30, 2012. The revised
fiscal year 2013 guidance is:
o Revenues of $10.9 billion to $11.4 billion;
o Diluted earnings per share from continuing operations of $1.49 to $1.54
(previously, $1.26 to $1.36); and
o Cash flows from continuing operations at or above $200 million inclusive
of the March 2012 CityTime payment, net of associated tax benefits
Fiscal year 2013 guidance excludes the impact of potential future acquisitions
and other non-ordinary course items.
About SAIC
SAIC is a FORTUNE 500^® 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
40,000 employees serve customers in the U.S. Department of Defense, the
intelligence community, the U.S. Department of Homeland Security, other U.S.
Government civil agencies and selected commercial markets. Headquartered in
McLean, Va., SAIC had annual revenues of approximately $10.6 billion for its
fiscal year ended January 31, 2012. For more information, visit
www.saic.com. SAIC: From Science to Solutions^®
Forward-Looking Statements
Certain statements in this release contain or are based on "forward-looking"
information within the meaning of the Private Securities 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, operating income,
earnings, earnings per share, charges, backlog, outstanding shares and cash
flows, as well as statements about future dividends, share repurchases and
acquisitions. 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: our ability to
declare future dividends based on our earnings, financial condition, capital
requirements and other factors, including compliance with applicable law and
agreements of the Company; our ability to comply with certain agreements
entered into in connection with the CityTime settlement; developments in the
U.S. Government defense budget, including budget reductions, implementation of
spending cuts (including sequestration) or changes in budgetary priorities, or
delays in the U.S. Government budget process; delays in the U.S. Government
contract procurement process or the award of contracts and delays or loss of
contracts as a result of competitor protests; changes in U.S. Government
procurement rules, regulations and practices; our compliance with various U.S.
Government and other government procurement rules and regulations;
governmental reviews, audits and investigations of our company; our ability to
effectively compete and win contracts with the U.S. Government and other
customers; our ability to attract, train and retain skilled employees,
including our management team, and to obtain security clearances for our
employees; our ability to accurately estimate costs associated with our
firm-fixed-price and other contracts; cybersecurity, data security or other
security threats, systems failures or other disruptions of our business;
resolution of legal and other disputes with our customers and others or legal
or regulatory compliance issues; our ability to effectively acquire businesses
and make investments; our ability to maintain relationships with prime
contractors, subcontractors and joint venture partners; our ability to manage
performance and other risks related to customer contracts, including complex
engineering or design build projects; the failure of our inspection or
detection systems to detect threats; the adequacy of our insurance programs
designed to protect us from significant product or other liability claims; our
ability to manage risks associated with our international business; risks
associated with the proposed spin-off of our technical services business, such
as disruption to business operations, unanticipated expenses, significant
transaction costs and/or unknown liabilities, the timing of the spin-off or a
failure to complete the proposed spin-off or realize the expected benefits of
the proposed spin-off; and our ability to execute our business plan and
long-term management initiatives 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 U.S.
Securities and Exchange Commission, 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
Form 10-K and quarterly reports on Form 10-Q, all of 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 5, 2012. The Company
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. The Company
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: Media Relations:
Paul Levi Melissa Koskovich
(703)676-2283 (703)676-6762
Paul.E.Levi@saic.com koskovichm@saic.com
SAIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in millions, except per share amounts)
Three Months Ended Nine Months Ended
October 31 October 31
2012 2011 2012 2011
Revenues $ $ $ $
2,870 2,790 8,462 8,026
Costs and expenses:
Cost of revenues 2,509 2,477 7,429 7,051
Selling, general and 157 333 429 562
administrative expenses
Separation transaction 11 - 15 -
expenses
Operating income (loss) 193 (20) 589 413
Non-operating income
(expense):
Interest income 2 2 6 3
Interest expense (20) (29) (73) (85)
Other income (expense), net 2 (2) 8 3
Income (loss) from
continuing operations before 177 (49) 530 334
income taxes
Provision for income taxes (65) (43) (193) (188)
Income (loss) from 112 (92) 337 146
continuing operations
Discontinued operations:
Income from discontinued
operations before income - 4 3 127
taxes
Provision for income taxes - (1) (1) (53)
Income from discontinued - 3 2 74
operations
Net income (loss) $ $ $ $
112 (89) 339 220
Earnings per share (EPS):
Income (loss) from $ $ $ $
continuing operations, as 112 (92) 337 146
reported
Less: allocation of
distributed and (2) - (7) (5)
undistributed earnings to
participating securities
Income (loss) from $ $ $ $
continuing operations, for 110 (92) 330 141
computing EPS
Net income (loss), as $ $ $ $
reported 112 (89) 339 220
Less: allocation of
distributed and (2) - (7) (8)
undistributed earnings to
participating securities
Net income (loss), for $ $ $ $
computing EPS 110 (89) 332 212
Basic:
Income (loss) from $ $ $ $
continuing operations 0.33 (0.28) 0.99 0.42
Income from discontinued - 0.01 0.01 0.21
operations
$ $ $ $
0.33 (0.27) 1.00 0.63
Diluted:
Income (loss) from $ $ $ $
continuing operations 0.33 (0.28) 0.99 0.42
Income from discontinued - 0.01 0.01 0.21
operations
$ $ $ $
0.33 (0.27) 1.00 0.63
Weighted average number of
shares outstanding:
Basic 334 329 333 338
Diluted 334 329 333 339
SAIC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in millions)
October 31, January 31,
2012 2012
ASSETS
Current assets:
Cash and cash equivalents $ $
531 1,592
Receivables, net 1,943 2,164
Inventory, prepaid expenses and other 554 439
current assets
Assets of discontinued operations 34 36
Total current assets 3,062 4,231
Property, plant and equipment, net 319 348
Intangible assets, net 214 176
Goodwill 2,195 1,800
Deferred income taxes - 37
Other assets 76 75
$ $
5,866 6,667
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ $
1,291 1,961
Accrued payroll and employee benefits 624 504
Income taxes payable 41 -
Notes payable and long-term debt, current 2 553
portion
Liabilities of discontinued operations 8 7
Total current liabilities 1,966 3,025
Notes payable and long-term debt, net of 1,297 1,299
current portion
Other long-term liabilities 148 162
Stockholders' equity:
Common stock, $.0001 par value, 2 billion
shares authorized, 342 million
and 341 million shares issued and - -
outstanding at October 31, 2012 and
January 31, 2012, respectively
Additional paid-in capital 2,089 2,028
Retained earnings 367 164
Accumulated other comprehensive loss (1) (11)
Total stockholders' equity 2,455 2,181
$ $
5,866 6,667
SAIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in millions)
Three Months Ended Nine Months Ended
October 31 October 31
2012 2011 2012 2011
Cash flows from operating
activities of continuing
operations:
Net income (loss) $ $ $ $
112 (89) 339 220
Income from discontinued - (3) (2) (74)
operations
Adjustments to reconcile net
income to net cash provided by
operating activities
of continuing operations:
Depreciation and 30 31 85 86
amortization
Stock-based compensation 21 21 67 64
Impairment losses 1 19 2 19
Net gain on sales and (1) (4) (7) (32)
disposals of assets
Other 2 (1) 3 -
Increase (decrease) in cash
and cash equivalents, net of
acquisitions and
divestitures, resulting from
changes in:
Receivables 86 (46) 271 (94)
Inventory, prepaid
expenses and other current (106) 24 (79) 38
assets
Deferred income taxes (4) (12) (4) (11)
Other assets (2) (3) (1) (21)
Accounts payable and (33) 320 (697) 322
accrued liabilities
Accrued payroll and 151 159 118 104
employee benefits
Income taxes payable 32 8 35 10
Other long-term 6 (3) 4 (4)
liabilities
Total cash flows provided by
operating activities of 295 421 134 627
continuing operations
Cash flows from investing
activities of continuing
operations:
Expenditures for property, (10) (18) (43) (48)
plant and equipment
Acquisition of a business, net (478) (190) (478) (216)
of cash acquired
Net receipt (payments) for
purchase price adjustments - (1) 1 (4)
related to prior year
acquisitions
Proceeds from sale of assets 1 5 3 84
Other - - - (1)
Total cash flows used in
investing activities of (487) (204) (517) (185)
continuing operations
Cash flows from financing
activities of continuing
operations:
Payments on notes payable and (1) (1) (553) (3)
long-term debt
Sales of stock and exercises 5 7 15 21
of stock options
Repurchases of stock (1) (53) (21) (470)
Dividend payments (41) - (124) -
Other - - - (2)
Total cash flows used in
financing activities of (38) (47) (683) (454)
continuing operations
Increase (decrease) in cash and
cash equivalents from (230) 170 (1,066) (12)
continuing operations
Cash flows from discontinued
operations:
Cash provided by (used in)
operating activities of 5 (45) 5 (61)
discontinued operations
Cash provided by investing
activities of discontinued - 2 - 168
operations
Increase (decrease) in cash and
cash equivalents from 5 (43) 5 107
discontinued operations
Effect of foreign currency
exchange rate changes on cash - - - 1
and cash equivalents
Total increase (decrease) in (225) 127 (1,061) 96
cash and cash equivalents
Cash and cash equivalents at 756 1,336 1,592 1,367
beginning of period
Cash and cash equivalents at $ $ $ $
end of period 531 1,463 531 1,463
SAIC, INC.
BACKLOG BY REPORTABLE SEGMENT
(Unaudited, $ in millions)
Backlog represents the estimated amount of future revenues to be recognized
under negotiated contracts as work is performed and excludes contract awards
which have been protested by competitors. SAIC, Inc. segregates its backlog
into two categories: funded backlog and negotiated unfunded backlog. Funded
backlog for contracts with government agencies primarily represents contracts
for which funding is appropriated less revenues previously recognized on these
contracts, and does not include the unfunded portion of contracts where
funding is incrementally appropriated or authorized on a quarterly or annual
basis by the U.S. Government and other customers, even though the contract may
call for performance over a number of years. Funded backlog for contracts with
non-government agencies represents the estimated value on contracts, which may
cover multiple future years, under which SAIC, Inc. is obligated to perform,
less revenues previously recognized on these contracts. Negotiated unfunded
backlog represents the estimated amounts of revenues to be earned in the
future from (1) negotiated contracts for which funding has not been
appropriated or otherwise authorized and (2) unexercised priced contract
options. Negotiated unfunded backlog does not include any estimate of future
potential task orders expected to be awarded under IDIQ, GSA Schedule, or
other master agreement contract vehicles.
The estimated value of backlog as of the dates presented was as follows:
October 31, July 31, April 30, January 31,
2012 2012 2012 2012
Defense Solutions:
Funded backlog $ $ $ $
2,174 2,013 2,026 2,143
Negotiated unfunded 4,563 4,309 4,605 4,961
backlog
Total Defense Solutions $ $ $ $
backlog 6,737 6,322 6,631 7,104
Health, Energy and Civil
Solutions:
Funded backlog $ $ $ $
1,842 1,858 1,911 2,057
Negotiated unfunded 2,854 2,865 3,061 3,238
backlog
Total Health, Energy and $ $ $ $
Civil Solutions backlog 4,696 4,723 4,972 5,295
Intelligence and
Cybersecurity Solutions:
Funded backlog $ $ $ $
1,705 1,615 1,752 1,317
Negotiated unfunded 5,440 3,867 3,880 4,169
backlog
Total Intelligence and $ $ $ $
Cybersecurity Solutions 7,145 5,482 5,632 5,486
backlog
Total:
Funded backlog $ $ $ $
5,721 5,486 5,689 5,517
Negotiated unfunded 12,857 11,041 11,546 12,368
backlog
Total backlog $ $ $ $
18,578 16,527 17,235 17,885
SAIC, INC.
INTERNAL REVENUE GROWTH (CONTRACTION) PERCENTAGE CALCULATIONS (NON-GAAP
RECONCILIATION)
(Unaudited, $ in millions)
In this release, SAIC, Inc. refers to internal revenue growth (contraction)
percentage, which is a non-GAAP financial measure that is reconciled to the
most directly comparable GAAP financial measure. The Company calculates its
internal revenue growth (contraction) percentage by comparing reported
revenues for the current year period to the revenues for the prior year period
adjusted to include the actual revenues of acquired businesses for the
comparable prior year period before acquisition. This calculation has the
effect of adding revenues for the acquired businesses for the comparable prior
year period to the company's prior year period reported revenues.
SAIC, Inc. uses internal revenue growth (contraction) percentage as an
indicator of how successful it is at growing its base business and how
successful it is at growing the revenues of the businesses that it acquires.
The integration of acquired businesses allows current management to leverage
business development capabilities, drive internal resource collaboration,
utilize access to markets and qualifications, and refine strategies to realize
synergies, which benefits both acquired and existing businesses. As a result,
the performance of the combined enterprise post-acquisition is an important
measurement. In addition, as a means of rewarding the successful integration
and growth of acquired businesses, and not acquisitions themselves, incentive
compensation for executives and the broader employee population is based, in
part, on achievement of revenue targets linked to internal revenue growth.
The limitation of this non-GAAP financial measure as compared to the most
directly comparable GAAP financial measure is that internal revenue growth
(contraction) percentage is one of two components of the total revenue growth
(contraction) percentage, which is the most directly comparable GAAP financial
measure. The company addresses this limitation by presenting the total revenue
growth (contraction) percentage next to or near disclosures of internal
revenue growth (contraction) percentage. This financial measure is not meant
to be considered in isolation or as a substitute for comparable GAAP measures
and should be read only in conjunction with SAIC, Inc.'s consolidated
financial statements prepared in accordance with GAAP. The method that the
Company uses to calculate internal revenue growth (contraction) percentage is
not necessarily comparable to similarly titled financial measures presented by
other companies.
Internal revenue growth (contraction) percentages for the three and nine
months ended October 31, 2012 were calculated as follows:
Three Months Nine Months
Ended Ended
October 31, October 31,
2012 2012
Defense Solutions:
Prior year period's revenues, as $ $
reported 1,117 3,339
Revenues of acquired businesses for the - -
comparable prior year period
Prior year period's revenues, as $ $
adjusted 1,117 3,339
Current year period's revenues, as 1,183 3,597
reported
Internal revenue growth $ $
66 258
Internal revenue growth percentage 6% 8%
Health, Energy and Civil Solutions:
Prior year period's revenues, as $ $
reported 726 1,997
Revenues of acquired businesses for the 46 127
comparable prior year period
Prior year period's revenues, as $ $
adjusted 772 2,124
Current year period's revenues, as 743 2,077
reported
Internal revenue contraction $ $
(29) (47)
Internal revenue contraction percentage -4% -2%
Intelligence and Cybersecurity Solutions:
Prior year period's revenues, as $ $
reported 947 2,691
Revenues of acquired businesses for the - -
comparable prior year period
Prior year period's revenues, as $ $
adjusted 947 2,691
Current year period's revenues, as 945 2,792
reported
Internal revenue growth (contraction) $ $
(2) 101
Internal revenue growth (contraction) 0% 4%
percentage
Total*:
Prior year period's revenues, as $ $
reported 2,790 8,026
Revenues of acquired businesses for the 46 127
comparable prior year period
Prior year period's revenues, as $ $
adjusted 2,836 8,153
Current year period's revenues, as 2,870 8,462
reported
Internal revenue growth $ $
34 309
Internal revenue growth percentage 1% 4%
*Total revenues include amounts related to Corporate and Other and
intersegment eliminations.
SAIC, INC.
CONDENSED CONSOLIDATED INCOME STATEMENT EXCLUDING THE CITYTIME LOSS PROVISION
(NON-GAAP RECONCILIATION)
(Unaudited, $ in millions, except per share amounts)
In this release, SAIC, Inc. refers to operating income, operating margin,
income from continuing operations and diluted earnings per share (EPS) from
continuing operations excluding the CityTime loss provision, which are
non-GAAP financial measures. The Company calculates these measures by
excluding the CityTime loss provision from operating income, operating margin,
income from continuing operations and diluted EPS from continuing operations,
the most directly comparable GAAP financial measures.
The Company uses these non-GAAP financial measures to provide investors with
visibility to how its business performed excluding the CityTime loss
provision. The limitation of these non-GAAP financial measures as compared to
the most directly comparable GAAP financial measures is that the Company has
recorded the CityTime loss provision which is not reflected in these non-GAAP
financial measures. The Company addresses this limitation by presenting this
reconciliation to the most directly comparable GAAP financial measures. These
financial measures are not meant to be considered in isolation or as a
substitute for comparable GAAP financial measures and should be read only in
connection with the Company's consolidated financial statements prepared in
accordance with GAAP.
Three Months Ended October 31, As Reported CityTime Loss As Adjusted
2011 Provision
Revenues $ $ $
2,790 52 2,842
Cost of revenues 2,477 - 2,477
Selling, general and 333 (180) 153
administrative expenses
Operating income (loss) (20) 232 212
Non-operating expenses, net (29) - (29)
Income (loss) from continuing (49) 232 183
operations before income taxes
Provision for income taxes (43) (23) (66)
Income (loss) from continuing (92) 209 117
operations
Income from discontinued 3 - 3
operations, net of tax
Net income (loss) $ $ $
(89) 209 120
Operating margin -0.7% 7.5%
Diluted EPS from continuing $ $
operations (0.28) 0.34
Nine Months Ended October 31, As Reported CityTime Loss As Adjusted
2011 Provision
Revenues $ $ $
8,026 52 8,078
Cost of revenues 7,051 - 7,051
Selling, general and 562 (180) 382
administrative expenses
Operating income 413 232 645
Non-operating expenses, net (79) - (79)
Income from continuing 334 232 566
operations before income taxes
Provision for income taxes (188) (23) (211)
Income from continuing 146 209 355
operations
Income from discontinued 74 - 74
operations, net of tax
Net income $ $ $
220 209 429
Operating margin 5.1% 8.0%
Diluted EPS from continuing $ $
operations 0.42 1.01
SAIC, INC.
DEFENSE SOLUTIONS SEGMENT
CONDENSED CONSOLIDATED INCOME STATEMENT EXCLUDING THE CITYTIME LOSS PROVISION
(NON-GAAP RECONCILIATION)
(Unaudited, $ in millions)
In this release, SAIC, Inc. refers to revenue, operating income and operating
margin of the Defense Solutions segment excluding the CityTime loss provision,
which are non-GAAP financial measures. The Company calculates these measures
by excluding the CityTime loss provision from Defense Solutions revenues,
operating income and operating margin, the most directly comparable GAAP
financial measures.
The Company uses these non-GAAP financial measures to provide investors with
visibility to how its business performed excluding the CityTime loss
provision. The limitation of these non-GAAP financial measures as compared to
the most directly comparable GAAP financial measures is that the Company has
recorded the CityTime loss provision which is not reflected in these non-GAAP
financial measures. The Company addresses this limitation by presenting this
reconciliation to the most directly comparable GAAP financial measures. These
financial measures are not meant to be considered in isolation or as a
substitute for comparable GAAP financial measures and should be read only in
connection with the Company's consolidated financial statements prepared in
accordance with GAAP.
Three Months Ended October As Reported CityTime Loss As Adjusted
31, 2011 Provision
Revenues 1,117 52 1,169
Operating income (loss) (133) 232 99
Operating margin -11.9% 8.5%
Nine Months Ended October As Reported CityTime Loss As Adjusted
31, 2011 Provision
Revenues 3,339 52 3,391
Operating income 45 232 277
Operating margin 1.3% 8.2%
SOURCE SAIC
Website: http://www.saic.com
Sponsored Links
Advertisement
Advertisements
Sponsored Links
Advertisement
Rate this Page