HYDERABAD, India, Oct. 17 /PRNewswire-FirstCall/ -- Satyam Computer Services Ltd. (NYSE: SAY), a leading global consulting and information technology services company, today reported US GAAP results for its second quarter, which ended September 30, 2008.
Financial highlights
Despite a challenging market that impacted several key industries and regions, Satyam posted strong growth figures, and exceeded its guidance in the second quarter. Revenue was US$652.2 million, an increase of 28 percent year over year, and 2.3 percent sequentially. Net income was US$132.3 million, an increase of 29.8 percent year over year and 4.5 percent sequentially. In addition, basic earnings per ADS for the quarter was US$0.39, an increase of 25.8 percent year over year and 2.6 percent sequentially. Further, operating margin (earnings before interest and taxes) for the quarter was 20.3 percent.
"The second quarter was challenging in many respects, as problems in the US financial industry affected other regions and sectors," said Satyam Chairman and Founder B. Ramalinga Raju. "Despite this background, a heightened focus on operational efficiency, a comprehensive services portfolio and an ability to provide true transformation have enabled Satyam to excel."
Other highlights
The parent company ended the quarter with 48,434 Associates, an addition of 1,814 professionals, including 221 trainees. The total number of employees including subsidiaries and joint ventures is 52,865. Attrition, on a trailing 12-month basis, fell to 12.3 percent from 12.6 percent in Q1. Annualized attrition for the quarter stood at 12.7 percent, one of the lowest in the industry. In addition, Satyam added 33 new customers in the quarter.
Business Outlook
For fiscal 2009, under US GAAP, revenue is expected to be between US$ 2.55 bn and US$ 2.59 bn, implying a growth rate of 19.0% to 21.0% over fiscal 2008. Basic earnings per ADS* for fiscal 2009 is expected to be between US$ 1.47 and US$ 1.50, implying a growth rate of 17.6 % to 20.0% over fiscal 2008
For Q3 FY 2009, under US GAAP, revenue is expected to be between US$ 634.0 mn and US$ 652.2 mn. Basic earnings per ADS* for the quarter is expected to be between US$ 0.35 and US$ 0.36
* Excluding Fringe Benefit Tax (FBT) on ESOPs
"Increased volatility witnessed in the currency environment in the second quarter continues having an adverse impact on our annual USD revenue growth rate of 3%," said Satyam Chief Financial Officer Srinivas Vadlamani. "Despite this, we have increased our annual earnings per share guidance driven by operational efficiencies."
Key Q2 Business Developments
Indian consumer durables major
Based on its end-to-end capabilities in set-top-box solutions and industry expertise, Satyam was engaged to help an Indian consumer durables organization launch a direct-to-home broadcasting solution with conditional access system support.
Global technology and services conglomerate
Satyam has helped a global electrical products company's Chinese business units introduce more than 30 new products to US and European markets. The team has also helped remove more than $15 million in costs from the client's processes and systems.
Global soft drink company
Satyam is supporting and maintaining the soft drink company's SAP ECC 6.0 application in China. Chinese-speaking Satyam professionals are helping the client overcome language barriers with local SAP users, and optimizing the software's rollout and use.
UK-based insurance company
Satyam is defining an insurance company's operational and technical requirements, and identifying and recommending a solution to outline how it can meet its growth plans. The roadmap will also show how the company can introduce new treasury products to maintain its market leadership.
US-based financial services company
Citisoft is managing a front-office system selection exercise for the Private Wealth Management division of one of the world's largest financial services companies. Geographies involved include North America, Europe, Asia Pacific and the Middle East. The objective is to provide a unified, global, multi-asset class decision support and trading platform.
Global aluminum smelter
Satyam is managing a two-year plant automation and integration project at the client's United Arab Emirates facility. Satyam will supervise and manage plant automation related deliveries of Engineering, Procurement and Construction Management, and carry out technical assurance audits and quality control checks.
Global chemical company
Satyam is managing the SAP implementation of a global chemical company. The project resulted from other successful SAP projects Satyam had managed for the organization, as well as its familiarity with the chemical industry and constantly expanding capabilities in the enterprise software.
Global thermal control manufacturer
Satyam won a data connectivity engagement with a leading thermal controls manufacturing company. The team will provide an enterprise data-management platform to store equipment data in SQL Server, providing users with consistent access to information through reports.
Global avionics company
Satyam is designing the system electrical integration scheme for one of the world's leading manufacturers of business, special mission and trainer aircrafts. Satyam began working with the client by handling mechanical system design.
UK-based pharmaceutical company
Satyam is helping a global pharmaceutical company-and longtime client-save nearly $800,000 by consolidating its services under a single work order. The account team has also optimized and automated a reporting mechanism, resulting in a more streamlined operation and reduced headcount.
European construction firm
Satyam won a major MDM project with a heavy equipment manufacturing company in Europe. The solution provides a closed-loop, multi-layer framework that ensures an accurate, reliable, 360-degree view of business entities by integrating master data from disparate source systems.
Healthcare initiative for rural Indians
Satyam delivers world-class healthcare to remote villages in India. The public/private partnership between the government of the Indian state of Andhra Pradesh and Satyam provides a fleet of healthcare vans-mobile health units (MHU)-that visit villages on designated days to residents, many of whom have never been seen by medical professionals before.
Conference Call and Webcast Details
Satyam will host a conference call at 6:30 p.m. IST today to discuss its second-quarter 2008 financial results. To participate, please dial +1 866 746 2133 [+91 22 6629 5728 in India] approximately 10 minutes before the scheduled start of the call. The conference call will also be accessible live on the Investor Relations section of the Satyam Web site at www.satyam.com.
The replay will also be available via telephone by dialing + 1 877 344 7529 [United States], +91 22 3065 1212 [India], +1 412 317 0088 [all other locations] and entering access code 728926# from 8:30 p.m. IST Friday, October 17th - Friday, October 24th, 2008.
About Satyam
Satyam (NYSE: SAY), a leading global business and information technology services company, delivers consulting, systems integration, and outsourcing solutions to clients in 20* industries and more than 65* countries.
Satyam leverages deep industry and functional expertise, leading technology practices, and an advanced, global delivery model to help clients transform their highest-value business processes and improve their business performance. The company's 52,865* professionals excel in engineering and product development, supply chain management, client relationship management, business process quality, business intelligence, enterprise integration, and infrastructure management, among other key capabilities.
Satyam development and delivery centers in the US, Canada, Brazil, the UK, Hungary, Egypt, UAE, India, China, Malaysia, Singapore, and Australia serve 690* clients, including 185* Fortune 500. For more information, see www.satyam.com.
*As of Sept. 30, 2008
Safe Harbor
This release contains forward-looking statements within the meaning of section 27A of Securities Act of 1933, as amended and section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward- looking statements. Satyam undertakes no duty to update any forward-looking statements.
For a discussion of the risks associated with our business, please see the discussions under the heading "Risk Factors" in our report on Form 6-K concerning the quarter ended June, 2008 furnished to the United States Securities and Exchange Commission on July 25, 2008 and the other reports filed with the Securities and Exchange Commission from time to time. These filings are available at www.sec.gov.
Satyam Computer Services Limited
Consolidated Statement of Income
(US Dollars in million except per share data and as stated otherwise)
Three months ended Six months ended Year ended
September 30, September 30, March 31
2008 2007 2008 2007 2008
(Un- (Un- (Un- (Un-
audited) audited) audited) audited) (Audited)
Revenues 652.2 509.6 1,289.5 961.9 2,138.1
Cost of revenues(1) (394.5) (330.3) (780.2) (619.5) (1,359.2)
Gross profit 257.7 179.3 509.3 342.4 778.9
Selling, General and
administrative expenses(2) (125.1) (89.0) (242.7) (162.0) (370.2)
Total operating expenses (125.1) (89.0) (242.7) (162.0) (370.2)
Operating income/(loss) 132.6 90.3 266.6 180.4 408.7
Interest income 15.5 16.8 31.7 33.2 67.4
Interest expense (4.3) (1.0) (5.7) (1.8) (5.1)
Other income/(expense), net 0.7 - 0.9 - 1.8
Gain/(loss) on foreign
exchange transactions 39.5 (1.2) 85.5 (24.1) (12.0)
Gain/(Loss) on foreign
exchange forward and
option contracts (36.7) 11.7 (91.50) 33.8 9.0
Income/(loss) before
income taxes, minority
interest and equity in
earnings/(losses) of
associated companies 147.3 116.6 287.5 221.5 469.8
Income taxes (15.1) (14.7) (28.8) (26.5) (52.9)
Minority interest - - - - -
Income before equity in
earnings/(losses) of
associated companies 132.2 101.9 258.7 195.0 416.9
Equity in earnings/(losses)
of associated companies,
net of taxes 0.1 - 0.2 - 0.1
Net income 132.3 101.9 $258.9 195.0 $417.0
Earnings per share:
Basic $0.20 $0.15 $0.39 $0.29 $0.63
Diluted $0.19 $0.15 $0.38 $0.29 $0.61
Weighted average number of
shares used in computing
earnings per share (in
millions)
Basic 670.9 665.6 670.1 665.5 666.4
Diluted 682.2 679.6 681.3 679.6 679.4
(1) Includes stock based compensation of US$ 1.1 and US$ 3.0 for the three
months ended September 30, 2008 and 2007(unaudited), US$ 2.4 and US$
5.7 for the six months ended September 30, 2008 and 2007(unaudited)
and US$9.8 for the year ended March 31, 2008 respectively.
(2) Includes stock based compensation of US$2.2 and US$ 3.3 for the three
months ended September 30, 2008 and 2007(unaudited), US$ 4.8 and US$
6.5 for the six months ended September 30, 2008 and 2007(unaudited)
and US$13.0 for the year ended March 31, 2008 respectively.
Consolidated Balance Sheet
(US Dollars in million except per share data and as stated otherwise)
As of September 30, As of
2008 2007 March 31,
(Un- (Un- 2008
ASSETS audited) audited) (Audited)
Current assets
Cash and cash equivalents 433.4 164.3 290.5
Investments in bank deposits 714.0 - 826.7
Accounts receivable, net of allowance for
doubtful debts 552.8 451.1 508.4
Unbilled revenue on contracts 53.9 67.8 81.5
Deferred income taxes 25.3 21.2 23.7
Derivative financial instruments - 27.6 -
Prepaid expenses and other receivables 137.7 49.9 131.7
Total current assets 1,917.1 781.9 1,862.5
Investments in bank deposits 0.1 832.3 -
Investments in associated companies 3.8 4.5 4.7
Premises and equipment, net 256.7 203.3 236.6
Goodwill, net 92.3 72.8 80.0
Intangible assets, net 59.3 6.9 15.6
Other assets 53.7 74.3 43.9
Derivative financial instruments - 8.4 0.3
Total assets 2,383.0 1,984.4 2,243.6
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term and current portion of long-
term debts 80.1 23.4 29.3
Accounts payable 38.3 26.1 32.4
Accrued expenses and other current
liabilities 284.6 201.5 236.0
Derivative financial instruments 62.5 - 2.6
Unearned and deferred revenue 34.5 35.2 33.1
Total current liabilities 500.0 286.2 333.4
Long-term debt, excluding current portion 18.5 24.7 24.8
Gratuity, excluding current portion 12.0 11.7 12.6
Derivative financial instruments 10.4 - -
Other liabilities-non current 13.5 - -
Deferred income taxes 8.5 10.8 11.0
Total liabilities 562.9 333.4 381.8
Shareholders' equity
Common stock - par value Rs.2 (US$0.04)*
per equity share(800 million equity shares
authorized as of March 31, 2008. 673487968
and 668,549,777 equity shares as of
September 30, 2008 and 2007 respectively
and 670,479,293 as of March 31, 2008) 36.3 36.0 36.1
Additional paid-in capital 612.9 569.9 592.4
Shares subscribed but unissued 0.6 1.1 0.5
Retained earnings 1,283.8 867.7 1,069.8
Accumulated other comprehensive
income/(loss) (112.4) 177.5 164.1
1,821.2 1,652.2 1,862.9
Shares held by the SC-Trust under
associate stock option plan(2,104,780 and
2,295,880 equity shares as of September
30, 2008 and 2007 respectively and
2,201,680 as of March 31, 2008) (1.1) (1.2) (1.1)
Total shareholders' equity 1,820.1 1,651.0 1,861.8
Total liabilities and shareholders' equity 2,383.0 1,984.4 2,243.6
* The par value in US$ has been converted at the closing rate
as of September 30, 2008, 1US$=Rs.46.45
The detailed highlights of Q2 fiscal 2009 is given in the investorLink document. We have also uploaded the financial statements on our website (www.satyam.com) for easy access.
For further information, contact:
Anomitra Bhattacharyya
Mayfair Centre, S.P. Road, Secunderabad - 500 003.
Ph: +91-40-30654182 Fax: +91-40-27840058
Email: Investorrelations@satyam.com
Satyam Contacts:
For clarifications, write to us at MediaRelations@Satyam.com
Or contact our global Satyam PR representatives at:
India Ajith Henry ajith.henry@ipan.com
+91-982-081-4870
US James Swords James_Swords@Satyam.com
+1-703-877-2225
Europe Sandeep Thawani Sandeep_Thawani@Satyam.com
+44-783-010-3838
Asia-Pacific Dan Bleakman Dan@howorth.com.au
+61-439-408-484
Reshma Wad Jain Reshma@wer1.net
+65-98-140-507
SOURCE Satyam Computer Services Ltd.
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