[December 07, 2017] |
|
SAIC Announces Third Quarter of Fiscal Year 2018 Results
Science Applications International Corporation (NYSE: SAIC), a leading
technology integrator providing full life-cycle services and solutions
in the technical, engineering, intelligence, and enterprise information
technology markets, today announced results for the third quarter ended
November 3, 2017.
"SAIC's third quarter performance delivers on the expectations of
revenue growth and improved profitability," said SAIC CEO Tony Moraco.
"In addition to the continued strong business development results, I am
encouraged by the ongoing actions to align operations to our long-term
strategy to drive the future success of the company."
Third Quarter of Fiscal Year 2018: Summary
Operating Results
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
November 3, 2017
|
|
|
Percent change
|
|
|
November 4, 2016
|
|
|
November 3, 2017
|
|
|
Percent change
|
|
|
November 4, 2016
|
|
|
(in millions, except per share amounts)
|
Revenues
|
|
$
|
1,145
|
|
|
|
3
|
%
|
|
|
$
|
1,114
|
|
|
|
$
|
3,326
|
|
|
|
(3
|
)%
|
|
|
$
|
3,424
|
|
Operating income
|
|
72
|
|
|
|
(3
|
)%
|
|
|
74
|
|
|
|
194
|
|
|
|
(8
|
)%
|
|
|
210
|
|
Operating income as a percentage of revenues
|
|
6.3
|
%
|
|
|
-30
|
bps
|
|
|
6.6
|
%
|
|
|
5.8
|
%
|
|
|
-30
|
bps
|
|
|
6.1
|
%
|
Adjusted operating income(1)
|
|
73
|
|
|
|
(1
|
)%
|
|
|
74
|
|
|
|
197
|
|
|
|
(10
|
)%
|
|
|
220
|
|
Adjusted operating income as a percentage of revenues
|
|
6.4
|
%
|
|
|
-20
|
bps
|
|
|
6.6
|
%
|
|
|
5.9
|
%
|
|
|
-50
|
bps
|
|
|
6.4
|
%
|
Net income
|
|
43
|
|
|
|
2
|
%
|
|
|
42
|
|
|
|
128
|
|
|
|
14
|
%
|
|
|
112
|
|
EBITDA(1)
|
|
84
|
|
|
|
(2
|
)%
|
|
|
86
|
|
|
|
227
|
|
|
|
(9
|
)%
|
|
|
249
|
|
EBITDA as a percentage of revenues
|
|
7.3
|
%
|
|
|
-40
|
bps
|
|
|
7.7
|
%
|
|
|
6.8
|
%
|
|
|
-50
|
bps
|
|
|
7.3
|
%
|
Adjusted EBITDA(1)
|
|
85
|
|
|
|
(1
|
)%
|
|
|
86
|
|
|
|
230
|
|
|
|
(11
|
)%
|
|
|
257
|
|
Adjusted EBITDA as a percentage of revenues
|
|
7.4
|
%
|
|
|
-30
|
bps
|
|
|
7.7
|
%
|
|
|
6.9
|
%
|
|
|
-60
|
bps
|
|
|
7.5
|
%
|
Diluted earnings per share
|
|
$
|
0.98
|
|
|
|
8
|
%
|
|
|
$
|
0.91
|
|
|
|
$
|
2.86
|
|
|
|
18
|
%
|
|
|
$
|
2.43
|
|
Net cash provided by operating activities
|
|
$
|
80
|
|
|
|
(48
|
)%
|
|
|
$
|
153
|
|
|
|
$
|
133
|
|
|
|
(37
|
)%
|
|
|
$
|
211
|
|
Free cash flow(1)
|
|
$
|
72
|
|
|
|
(52
|
)%
|
|
|
$
|
150
|
|
|
|
$
|
118
|
|
|
|
(41
|
)%
|
|
|
$
|
200
|
|
|
(1)Non-GAAP measure, see Schedule 5 for information
about this measure.
Revenues for the quarter increased $31 million, or 3%, compared to the
prior year quarter primarily due to higher revenue on new contracts
supporting NASA, the U.S. Army and the Environmental Protection Agency
(EPA) ($56 million), partially offset by the completion of contracts and
other net decreases across our portfolio. These decreases include the
loss of an IT integration contract supporting the Department of Homeland
Security (DHS) ($14 million). The Company's internal revenue growth(1)
for the third quarter was 3.0%.
Operating income as a percentage of revenues decreased to 6.3% of
revenues, compared to 6.6% for the prior year quarter, primarily due to
lower profit from a higher volume of cost reimbursable contracts and
higher material cost mix.
Net income for the quarter increased $1 million from the comparable
prior year period primarily due to lower interest expense as a result of
refinancing our long-term debt in the prior year ($3 million, net of
tax) partially offset by an increase in the effective tax rate.
Adjusted EBITDA(1) as a percentage of revenues for the
quarter was 7.4%, compared to 7.7% for the prior year quarter due
primarily to lower profit from a higher volume of cost reimbursable
contracts and higher material cost mix.
Diluted earnings per share was $0.98 for the quarter. Diluted earnings
per share was positively impacted by $0.05 during the quarter due to the
adoption of ASU 2016-09 at the beginning of the fiscal year. The
weighted-average diluted shares outstanding during the quarter was 44.2
million shares.
(1)Non-GAAP measure, see Schedule 5 for information
about this measure.
Cash Generation and Capital Deployment
Total cash flows provided by operating activities for the third quarter
were $80 million. The $73 million decrease in cash provided by operating
activities compared to the prior year quarter was primarily due to
delayed customer collections ($69 million) and a prior year return of
working capital investment in Marine Corps platform integration and IT
services programs ($24 million), partially offset by a decrease in
payments for trade-related payables due to normal fluctuations in the
timing of activity ($22 million).
During the quarter SAIC deployed $59 million of capital, consisting of
$39 million in plan share repurchases (562 thousand shares) under SAIC's
previously announced share repurchase program, $12 million in cash
dividends and a $8 million term loan repayment.
New Business Awards
Net bookings for the quarter were approximately $2.6 billion, which
reflects a book-to-bill ratio of approximately 2.3, and marks the second
quarter in a row SAIC has set a new record for highest quarterly
bookings. SAIC's estimated backlog of signed business orders at the end
of the quarter was approximately $10.7 billion of which $2.6 billion was
funded.
SAIC was awarded the following contracts during the quarter:
Notable Protect Awards (maintaining our
existing contract base):
U.S. Army Software Engineering Directorate (SED): The General
Services Administration (GSA), on behalf of the Army SED, awarded SAIC
the Battlefield Systems task order to help deploy new technologies to
warfighters in the field and provide systems engineering and computer
resource engineering services to SED, the Aviation and Missile Research,
Development, and Engineering Center (AMRDEC), and the Army Research,
Development and Engineering Command (USA RDECOM). The task order has a
one-year period of performance, two one-year options, and is worth
approximately $970 million, if all options are exercised.
U.S. Department of Agriculture (USDA): The USDA awarded SAIC a
task order to provide the Farm Service Agency (FSA) with end-to-end web
application development and maintenance services in support of the
Conservation Reserve Program and other FSA-administered
conservation-related programs. The single-award task order has a
one-year base period of performance, four one-year options, and a total
contract award value of approximately $43 million, if all options are
exercised.
U.S. Naval Surface Warfare Center Dahlgren: SAIC was awarded a
task order to provide systems engineering and training analysis services
to the Center for Surface Combat Systems (CSCS). SAIC engineers and
analysts will continue to monitor the development of new combat system
capabilities and work with CSCS to integrate these systems into
maintenance and operator training curriculum. The task order has a
one-year base period of performance, four one-year options, and is worth
approximately $49 million, if all options are exercised.
Notable Expand Awards (selling new services
& solutions to existing customers):
U.S. Army Tank Automotive Research, Development and Engineering
Center (TARDEC): TARDEC awarded a Defense Automotive Technologies
Consortium (DATC)-group led by SAIC a task order to assist in the
development of a next generation combat vehicle - experimental prototype
(NGCV-EP). SAIC and teammates shall serve as collaborative partners with
TARDEC in the research, design, development, refinement, build,
integration and demonstration of two identical combat vehicle
demonstrator NGCV-EP platforms. The task order has an eight-year term
and is valued at approximately $237 million.
USDA: The USDA awarded SAIC the Information Technology
Governance, Management, Strategy and Security blanket purchase agreement
to provide enterprise architecture and security support services that
will streamline and standardize architectures and roadmaps across the
USDA. The multiple-award agreement, awarded under GSA's IT Schedule 70
contract vehicle, has a five year period of performance, and a ceiling
value of $250 million for all awardees. SAIC is one of two awardees.
USDA: The USDA awarded SAIC a task order to provide the FSA with
support services to the agency's price support programs enabling the
delivery of a variety of loan programs for America's crop and dairy
producers. The single-award task order has a one-year base period of
performance, four one-year options, and a total contract award value of
approximately $43 million, if all options are exercised.
Notable Grow Awards (selling services &
solutions to new customers):
U.S. Cyber Command (USCYBERCOM): USCYBERCOM awarded SAIC a task
order to support the Directorate of Operations (J3) Joint Operations
Center and Special Programs in securing, operating, and defending the
Department of Defense Information Network (DODIN) by coordinating,
synchronizing, and de-conflicting DOD cyber forces and cyberspace
operations. The task order has a one-year base period of performance,
four one-year option periods, and is worth approximately $93 million, if
all options are exercised.
The Commonwealth of Virginia: Virginia selected SAIC to serve as
a multi-sourcing service integrator (MSI) to provide an innovative
approach to assist the Virginia Information Technologies Agency (VITA)
with modernizing the state's technology infrastructure. The single-award
contract has a five-year base period of performance, two, two-year
options, and a potential value of approximately $272 million, if all
options are exercised.
Webcast Information
SAIC management will discuss operations and financial results in an
earnings conference call beginning at 5 p.m. Eastern time on December 7,
2017. The conference call will be webcast simultaneously to the public
through a link on the Investor Relations section of the SAIC website (http://investors.saic.com).
We will be providing webcast access only - "dial-in" access is no longer
available. Additionally, a supplemental presentation will be available
to the public through links to the Investor Relations section of the
SAIC website. After the call concludes, an on-demand audio replay of the
webcast can be accessed on the Investor Relations website.
About SAIC
SAIC is a premier technology integrator providing full life cycle
services and solutions in the technical, engineering, intelligence, and
enterprise information technology markets. SAIC is Redefining Ingenuity
through its deep customer and domain knowledge to enable the delivery of
systems engineering and integration offerings for large, complex
projects. SAIC's more than 15,000 employees are driven by integrity and
mission focus to serve customers in the U.S. federal government.
Headquartered in Reston, Virginia, SAIC has annual revenues of
approximately $4.5 billion. For more information, visit saic.com.
For ongoing news, please visit our newsroom.
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
may include, among others, estimates of future revenues, operating
income, earnings, earnings per share, charges, total contract value,
backlog, outstanding shares and cash flows, as well as statements about
future dividends, share repurchases and other capital deployment plans.
Such statements are not guarantees of future performance and involve
risk, uncertainties and assumptions, and actual results may differ
materially from the guidance and other forward-looking statements made
in this release as a result of various factors. Risks, uncertainties and
assumptions that could cause or contribute to these material differences
include those discussed in the "Risk Factors," "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and
"Legal Proceedings" sections of our Annual Report on Form 10-K, as
updated in any subsequent Quarterly Reports on Form 10-Q and other
filings with the SEC, which may be viewed or obtained through the
Investor Relations section of our website at www.saic.com
or on the SEC's website at www.sec.gov.
Due to such risks, uncertainties and assumptions you are cautioned not
to place undue reliance on such forward-looking statements, which speak
only as of the date hereof. SAIC expressly disclaims any duty to update
any forward-looking statement provided in this release to reflect
subsequent events, actual results or changes in SAIC'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.
|
Schedule 1:
|
|
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
|
CONDENSED AND CONSOLIDATED STATEMENTS OF INCOME
|
(Unaudited)
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
|
November 3, 2017
|
|
|
November 4, 2016
|
|
|
November 3, 2017
|
|
|
November 4, 2016
|
(in millions, except per share amounts)
|
Revenues
|
|
|
|
$
|
1,145
|
|
|
|
$
|
1,114
|
|
|
|
$
|
3,326
|
|
|
|
$
|
3,424
|
|
Cost of revenues
|
|
|
|
1,036
|
|
|
|
1,000
|
|
|
|
3,022
|
|
|
|
3,084
|
|
Selling, general and administrative expenses
|
|
|
|
37
|
|
|
|
40
|
|
|
|
110
|
|
|
|
130
|
|
Operating income
|
|
|
|
72
|
|
|
|
74
|
|
|
|
194
|
|
|
|
210
|
|
Interest expense
|
|
|
|
11
|
|
|
|
15
|
|
|
|
32
|
|
|
|
41
|
|
Other (income) expense, net
|
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
-
|
|
Income before income taxes
|
|
|
|
62
|
|
|
|
59
|
|
|
|
163
|
|
|
|
169
|
|
Provision for income taxes
|
|
|
|
(19
|
)
|
|
|
(17
|
)
|
|
|
(35
|
)
|
|
|
(57
|
)
|
Net income
|
|
|
|
$
|
43
|
|
|
|
$
|
42
|
|
|
|
$
|
128
|
|
|
|
$
|
112
|
|
Weighted-average number of shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
43.2
|
|
|
|
44.2
|
|
|
|
43.5
|
|
|
|
44.6
|
|
Diluted
|
|
|
|
44.2
|
|
|
|
45.6
|
|
|
|
44.8
|
|
|
|
46.0
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
$
|
0.99
|
|
|
|
$
|
0.95
|
|
|
|
$
|
2.94
|
|
|
|
$
|
2.51
|
|
Diluted
|
|
|
|
$
|
0.98
|
|
|
|
$
|
0.91
|
|
|
|
$
|
2.86
|
|
|
|
$
|
2.43
|
|
Cash dividends declared and paid per share
|
|
|
|
$
|
0.31
|
|
|
|
$
|
0.31
|
|
|
|
$
|
0.93
|
|
|
|
$
|
0.93
|
|
|
|
Schedule 2:
|
|
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
|
CONDENSED AND CONSOLIDATED BALANCE SHEETS
|
(Unaudited)
|
|
|
|
|
|
|
|
November 3, 2017
|
|
|
|
February 3, 2017
|
|
|
|
|
|
|
(in millions)
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
$
|
125
|
|
|
|
|
$
|
210
|
Receivables, net
|
|
|
|
|
|
717
|
|
|
|
|
539
|
Inventory, prepaid expenses and other current assets
|
|
|
|
|
|
134
|
|
|
|
|
152
|
Total current assets
|
|
|
|
|
|
976
|
|
|
|
|
901
|
Goodwill
|
|
|
|
|
|
863
|
|
|
|
|
863
|
Intangible assets, net
|
|
|
|
|
|
184
|
|
|
|
|
200
|
Property, plant, and equipment, net
|
|
|
|
|
|
61
|
|
|
|
|
60
|
Other assets
|
|
|
|
|
|
17
|
|
|
|
|
18
|
Total assets
|
|
|
|
|
|
$
|
2,101
|
|
|
|
|
$
|
2,042
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
|
|
|
$
|
490
|
|
|
|
|
$
|
432
|
Accrued payroll and employee benefits
|
|
|
|
|
|
203
|
|
|
|
|
158
|
Long-term debt, current portion
|
|
|
|
|
|
37
|
|
|
|
|
25
|
Total current liabilities
|
|
|
|
|
|
730
|
|
|
|
|
615
|
Long-term debt, net of current portion
|
|
|
|
|
|
994
|
|
|
|
|
1,022
|
Other long-term liabilities
|
|
|
|
|
|
55
|
|
|
|
|
51
|
Total equity
|
|
|
|
|
|
322
|
|
|
|
|
354
|
Total liabilities and equity
|
|
|
|
|
|
$
|
2,101
|
|
|
|
|
$
|
2,042
|
|
|
Schedule 3:
|
|
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
|
CONDENSED AND CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
|
November 3, 2017
|
|
|
November 4, 2016
|
|
|
November 3, 2017
|
|
|
November 4, 2016
|
|
|
|
|
(in millions)
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
43
|
|
|
|
$
|
42
|
|
|
|
$
|
128
|
|
|
|
$
|
112
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
11
|
|
|
|
13
|
|
|
|
33
|
|
|
|
41
|
|
Stock-based compensation expense
|
|
|
|
6
|
|
|
|
7
|
|
|
|
21
|
|
|
|
25
|
|
Excess tax benefits from stock-based compensation
|
|
|
|
-
|
|
|
|
(6
|
)
|
|
|
-
|
|
|
|
(15
|
)
|
Loss on extinguishment of debt
|
|
|
|
-
|
|
|
|
2
|
|
|
|
-
|
|
|
|
2
|
|
Increase (decrease) resulting from changes in operating assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
|
(78
|
)
|
|
|
39
|
|
|
|
(178
|
)
|
|
|
19
|
|
Inventory, prepaid expenses and other current assets
|
|
|
|
(21
|
)
|
|
|
6
|
|
|
|
17
|
|
|
|
(13
|
)
|
Other assets
|
|
|
|
1
|
|
|
|
-
|
|
|
|
1
|
|
|
|
(1
|
)
|
Accounts payable and accrued liabilities
|
|
|
|
70
|
|
|
|
9
|
|
|
|
62
|
|
|
|
4
|
|
Accrued payroll and employee benefits
|
|
|
|
47
|
|
|
|
37
|
|
|
|
45
|
|
|
|
33
|
|
Other long-term liabilities
|
|
|
|
1
|
|
|
|
4
|
|
|
|
4
|
|
|
|
4
|
|
Net cash provided by operating activities
|
|
|
|
80
|
|
|
|
153
|
|
|
|
133
|
|
|
|
211
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenditures for property, plant, and equipment
|
|
|
|
(8
|
)
|
|
|
(3
|
)
|
|
|
(15
|
)
|
|
|
(11
|
)
|
Asset acquisition
|
|
|
|
-
|
|
|
|
(2
|
)
|
|
|
-
|
|
|
|
(2
|
)
|
Net cash used in investing activities
|
|
|
|
(8
|
)
|
|
|
(5
|
)
|
|
|
(15
|
)
|
|
|
(13
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend payments to stockholders
|
|
|
|
(12
|
)
|
|
|
(14
|
)
|
|
|
(40
|
)
|
|
|
(41
|
)
|
Principal payments on borrowings
|
|
|
|
(33
|
)
|
|
|
(210
|
)
|
|
|
(42
|
)
|
|
|
(236
|
)
|
Issuances of stock
|
|
|
|
1
|
|
|
|
1
|
|
|
|
4
|
|
|
|
3
|
|
Stock repurchased and retired or withheld for taxes on equity awards
|
|
|
|
(43
|
)
|
|
|
(49
|
)
|
|
|
(148
|
)
|
|
|
(137
|
)
|
Excess tax benefits from stock-based compensation
|
|
|
|
-
|
|
|
|
6
|
|
|
|
-
|
|
|
|
15
|
|
Disbursements for obligations assumed from Scitor acquisition
|
|
|
|
-
|
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
|
(5
|
)
|
Proceeds from borrowings
|
|
|
|
-
|
|
|
|
209
|
|
|
|
25
|
|
|
|
209
|
|
Deferred financing costs
|
|
|
|
-
|
|
|
|
(2
|
)
|
|
|
-
|
|
|
|
(2
|
)
|
Net cash flows used in financing activities
|
|
|
|
(87
|
)
|
|
|
(61
|
)
|
|
|
(203
|
)
|
|
|
(194
|
)
|
Net (decrease) increase in cash, cash equivalents and restricted cash
|
|
|
|
(15
|
)
|
|
|
87
|
|
|
|
(85
|
)
|
|
|
4
|
|
Cash, cash equivalents and restricted cash at beginning of period
|
|
|
|
148
|
|
|
|
126
|
|
|
|
218
|
|
|
|
209
|
|
Cash, cash equivalents and restricted cash at end of period
|
|
|
|
$
|
133
|
|
|
|
$
|
213
|
|
|
|
$
|
133
|
|
|
|
$
|
213
|
|
|
|
Schedule 4:
|
|
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
|
BACKLOG
|
(Unaudited)
|
|
The estimated value of our total backlog as of the dates presented
was:
|
|
|
|
|
|
|
|
|
|
November 3, 2017
|
|
|
|
August 4, 2017
|
|
|
|
February 3, 2017
|
|
|
|
|
|
|
(in millions)
|
Funded backlog
|
|
|
|
|
|
$
|
2,609
|
|
|
|
|
$
|
1,805
|
|
|
|
|
$
|
1,811
|
Negotiated unfunded backlog
|
|
|
|
|
|
8,135
|
|
|
|
|
7,436
|
|
|
|
|
6,209
|
Total backlog
|
|
|
|
|
|
$
|
10,744
|
|
|
|
|
$
|
9,241
|
|
|
|
|
$
|
8,020
|
|
|
Backlog represents the estimated amount of future revenues to be
recognized under negotiated contracts and task orders as work is
performed and excludes contract awards which have been protested by
competitors until the protest is resolved in our favor. SAIC
segregates 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 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 of contracts which may cover multiple future years under which
SAIC is obligated to perform, less revenues previously recognized on
these contracts. Negotiated unfunded backlog represents the
estimated future revenues to be earned from negotiated contracts for
which funding has not been appropriated or authorized, and
unexercised priced contract options. Negotiated unfunded backlog
does not include any estimate of future potential task orders
expected to be awarded under indefinite delivery, indefinite
quantity (IDIQ), U.S. General Services Administration (GSA)
schedules or other master agreement contract vehicles.
|
|
|
Schedule 5:
|
|
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
|
NON-GAAP FINANCIAL MEASURES
|
(Unaudited)
|
|
This schedule describes the non-GAAP financial measures included in
this earnings release. While we believe that these non-GAAP
financial measures may be useful in evaluating our financial
information, they should be considered as supplemental in nature and
not as a substitute for financial information prepared in accordance
with GAAP. Reconciliations, definitions, and how we believe these
measures are useful to management and investors are provided below.
Other companies may define similar measures differently.
|
|
|
Internal Revenue Growth
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
|
November 3, 2017
|
|
|
|
|
(in millions)
|
Prior year period's revenues, as reported
|
|
|
|
$
|
1,114
|
|
|
|
$
|
3,424
|
|
Prior year period's revenues performed by former Parent
|
|
|
|
(2
|
)
|
|
|
(8
|
)
|
Estimated impact of 53rd week
|
|
|
|
-
|
|
|
|
(88
|
)
|
Revenues of acquired business for the pre-acquisition prior year
period
|
|
|
|
-
|
|
|
|
-
|
|
Prior year period's revenues, as adjusted
|
|
|
|
1,112
|
|
|
|
3,328
|
|
Current year revenues, as reported
|
|
|
|
1,145
|
|
|
|
3,326
|
|
Internal revenue growth (contraction)(1)
|
|
|
|
$
|
33
|
|
|
|
$
|
(2
|
)
|
Internal revenue growth (contraction)(1)
percentage
|
|
|
|
3.0
|
%
|
|
|
(0.1
|
)%
|
|
We utilize internal revenue growth (or internal revenue contraction
if negative) to evaluate revenue growth. Internal revenue growth is
calculated by comparing our reported revenues for the current year
to the reported revenues for the prior year comparable period
adjusted to include any pre-acquisition historical revenues of
acquired businesses. We also adjust current and prior year revenue
to exclude the impact of revenue performed by our former parent
company, Leidos Holdings, Inc. ("former Parent") since revenues on
pre-separation joint work are recorded equal to cost and are
expected to decline over time. For fiscal 2017, a 53-week fiscal
year, we have also adjusted revenue to exclude the estimated impact
of the additional week in order to facilitate comparison to the
current year period. We estimate the revenue impact of the
additional week by dividing the first quarter fiscal 2017 revenues
by the number of days in the first quarter and multiplying that
amount by the number of additional days in the first quarter of
fiscal 2017. We believe that adjusting prior year revenues to
reflect the impact of the additional week improves comparability
since differences in the number of days generally have a direct
impact on the amount of revenues earned during the respective
periods. We believe that internal revenue growth provides management
and investors with useful information in assessing trends on how
successful the Company has been in growing revenues as we develop
our base business and access new markets and capabilities provided
by acquisitions.
|
|
(1)Non-GAAP measure, see above for definition.
|
Schedule 5 (continued):
|
|
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
|
NON-GAAP FINANCIAL MEASURES (continued)
|
(Unaudited)
|
|
EBITDA, Adjusted EBITDA and Adjusted
Operating Income
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
|
November 3, 2017
|
|
|
November 4, 2016
|
|
|
November 3, 2017
|
|
November 4, 2016
|
|
|
|
|
(in millions)
|
Net income
|
|
|
|
$
|
43
|
|
|
|
$
|
42
|
|
|
|
$
|
128
|
|
|
$
|
112
|
|
Interest expense
|
|
|
|
11
|
|
|
|
15
|
|
|
|
32
|
|
|
41
|
|
Provision for income taxes
|
|
|
|
19
|
|
|
|
17
|
|
|
|
35
|
|
|
57
|
|
Depreciation and amortization
|
|
|
|
11
|
|
|
|
12
|
|
|
|
32
|
|
|
39
|
|
EBITDA(1)
|
|
|
|
$
|
84
|
|
|
|
$
|
86
|
|
|
|
$
|
227
|
|
|
$
|
249
|
|
EBITDA as a percentage of revenues
|
|
|
|
7.3
|
%
|
|
|
7.7
|
%
|
|
|
6.8
|
%
|
|
7.3
|
%
|
Restructuring costs
|
|
|
|
1
|
|
|
|
-
|
|
|
|
3
|
|
|
-
|
|
Acquisition and integration costs
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
10
|
|
Depreciation included in acquisition and integration costs
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
(2
|
)
|
Adjusted EBITDA(1)
|
|
|
|
$
|
85
|
|
|
|
$
|
86
|
|
|
|
$
|
230
|
|
|
$
|
257
|
|
Adjusted EBITDA as a percentage of revenues
|
|
|
|
7.4
|
%
|
|
|
7.7
|
%
|
|
|
6.9
|
%
|
|
7.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
$
|
72
|
|
|
|
$
|
74
|
|
|
|
$
|
194
|
|
|
$
|
210
|
|
Operating income as a percentage of revenues
|
|
|
|
6.3
|
%
|
|
|
6.6
|
%
|
|
|
5.8
|
%
|
|
6.1
|
%
|
Restructuring costs
|
|
|
|
1
|
|
|
|
-
|
|
|
|
3
|
|
|
-
|
|
Acquisition and integration costs
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
10
|
|
Adjusted operating income(1)
|
|
|
|
$
|
73
|
|
|
|
$
|
74
|
|
|
|
$
|
197
|
|
|
$
|
220
|
|
Adjusted operating income as a percentage of revenues
|
|
|
|
6.4
|
%
|
|
|
6.6
|
%
|
|
|
5.9
|
%
|
|
6.4
|
%
|
|
EBITDA is a performance measure that is calculated by taking net
income and excluding interest expense, provision for income taxes,
and depreciation and amortization. Adjusted EBITDA and adjusted
operating income are performance measures that exclude
restructuring and acquisition and integration costs that we do not
consider to be indicative of our ongoing operating performance.
The restructuring costs excluded relate to the Company's plan to
restructure certain aspects of its operations. This is the only
significant restructuring since we began operating as an
independent company over four years ago. The acquisition and
integration costs relate to the Company's significant acquisition
of Scitor. We believe that these performance measures provide
management and investors with useful information in assessing
trends in our ongoing operating performance and may provide
greater visibility in understanding the long-term financial
performance of the Company.
|
|
(1)Non-GAAP measure, see above for definition.
Schedule 5 (continued):
|
|
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
|
NON-GAAP FINANCIAL MEASURES (continued)
|
(Unaudited)
|
|
Free Cash Flow
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
|
November 3, 2017
|
|
|
November 4, 2016
|
|
|
November 3, 2017
|
|
|
November 4, 2016
|
|
|
|
|
(in millions)
|
Net cash provided by operating activities
|
|
|
|
$
|
80
|
|
|
|
$
|
153
|
|
|
|
$
|
133
|
|
|
|
$
|
211
|
|
Expenditures for property, plant, and equipment
|
|
|
|
(8
|
)
|
|
|
(3
|
)
|
|
|
(15
|
)
|
|
|
(11
|
)
|
Free cash flow(1)
|
|
|
|
$
|
72
|
|
|
|
$
|
150
|
|
|
|
$
|
118
|
|
|
|
$
|
200
|
|
|
Free cash flow is calculated by taking cash flows provided by
operating activities less expenditures for property, plant, and
equipment. We believe that free cash flow provides management and
investors with useful information in assessing trends in our cash
flows and in comparing them to other peer companies, many of whom
present a similar non-GAAP liquidity measure. This measure should
not be considered as a measure of residual cash flow available for
discretionary purposes.
|
|
(1)Non-GAAP measure, see above for definition.
View source version on businesswire.com: http://www.businesswire.com/news/home/20171207005845/en/
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