HCL Technologies (HCLTECH) Q4 01/02 earnings summary

Executive summary

• FY02 revenue rose 11.5% YoY to $332.8m, driven entirely by acquired entities; the pre-existing software services business declined 4.2%.

• Portfolio rebalancing, acquisitions and alliances expanded application services and BPO capabilities as technology R&D demand weakened.

• FY02 net income fell 14.7% YoY to $86.9m, while operating income declined 17.7% to $68.5m.

Financial highlights

• Revenue was $332.8m vs. $298.4m in FY01; net revenue was $332.9m vs. $296.7m, including an $0.08m stock-based sales incentive benefit in FY02.

• Net income was $86.9m vs. $101.9m; basic EPS was $0.31 vs. $0.36 and diluted EPS was $0.30 vs. $0.34.

• Operating income was $68.5m vs. $83.2m; other income increased 11.5% to $19.4m, including a $4.8m provision for investment impairments.

• Net cash from operations was $80.9m vs. $77.6m; cash and cash equivalents were $34.3m at June 30, 2002.

Outlook and guidance

• Significant revenue contribution from US customers was expected to continue near term; Europe was expected to gain from newly acquired entities focused on that region.

• Non-operating income was expected to fall significantly in FY03 after shifting debt mutual fund holdings from dividend to growth plans, with gains recognized upon redemption.

• Cash, liquid assets, expected operating cash flows and credit facilities were considered sufficient for anticipated working capital, capital expenditure and investment needs over the next 12 months.