© infosys technologies limited 2002-2003 performance of infosys for the third quarter ended...

© Infosys Technologies Limited 2002-2003

Performance of Infosys for the Third Quarter ended December 31, 2002

Nandan M. NilekaniChief Executive Officer, President and Managing Director


Safe HarbourSafe Harbour

Certain statements in this release concerning our future growth prospects are forward-looking statements, which involve a number of risks, and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition in IT services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed- price, fixed-time frame contracts, client concentration, restrictions on immigration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which Infosys has made strategic investments, withdrawal of governmental fiscal incentives, political instability, legal restrictions on raising capital or acquiring companies outside India, and unauthorized use of our intellectual property and general economic conditions affecting our industry. Additional risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission filings including our Annual Report on Form 20-F for the fiscal year ended March 31, 2002 and Quarterly Reports on Form 6-K for the quarters ended June 30, 2002 and September 30, 2002. These filings are available at www.sec.gov. Infosys may, from time to time, make additional written and oral forward looking statements, including statements contained in the company’s filings with the Securities and Exchange Commission and our reports to shareholders. The company does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of the company.

© Infosys Technologies Limited 2002-2003 Slide 3

AgendaAgenda

Financial Performance

Operational Performance

Client Acquisition & Expansion of Services

Human Resources

Capex and Infrastructure

Outlook for the Future

Summary


Financial Performance


HighlightsHighlights

Q3 FY 03 Q2 FY 03 YTD FY 03

Indian GAAPY-O-Y Growth

Income 45.1% 35.3%35.3%

PAT from ord. Activities 24.4% 12.0%17.0%

US GAAPY-O-Y Growth

Revenues 45.4% 32.2% 32.7%

Net income 25.5% 13.1%16.1%

New clients 23 18 64Repeat business 89.7% 94.9% 93.7%Headcount

Gross addition 1,133 2,065 3,970Net addition 948 1,806 3,320Period end headcount 14,058 13,110 14,058


Highlights (Indian GAAP*-Quarterly)Highlights (Indian GAAP*-Quarterly)

(Rs. crore)

FY2003 FY2003 FY 2002 % growth overQ3 Q2 Q3 Q2 03 Q3 02

Income 958.64 879.57 660.80 8.99 45.07

S/w development expenses 481.62 424.49 309.50 13.46 55.61

Gross profit 477.02 455.08 351.30 4.82 35.79

S,G&A expenses 143.53 131.84 83.85 8.87 71.17

Operating profit 333.49 323.24 267.45 3.17 24.69

Depreciation 49.48 46.24 41.33 7.01 19.72

Operating profit after depreciation 284.01 277.00 226.12 2.53 25.60

Other income 29.80 17.53 14.92 69.99 99.73

Provision for investment - 23.76 - - -

PBT 313.81 270.77 241.04 15.90 30.19

Provision for tax 57.50 45.00 35.00 27.78 64.29

PAT from ordinary activities 256.31 225.77 206.04 13.53 24.40

* Non-consolidated


Highlights (Indian GAAP*-YTD)Highlights (Indian GAAP*-YTD)

(Rs. crore)

FY 2003 % FY 2002 % GrowthYTD YTD

Income 2,602.83 100.0 1,923.46 100.0 35.3

S/w development expenses 1,283.50 49.3 902.01 46.9 42.3

Gross profit 1,319.33 50.7 1,021.45 53.1 29.2

S,G&A expenses 387.67 14.9 254.56 13.2 52.3

Operating profit 931.66 35.8 766.89 39.9 21.5

Depreciation 136.19 5.2 115.83 6.0 17.6

Operating profit after depreciation 795.47 30.6 651.06 33.9 22.2

Other income 72.22 2.8 43.07 2.2 67.7

Provision for investments 23.76 0.9 - - -

PBT 843.93 32.4 694.13 36.1 21.6

Provision for tax 145.00 5.6 96.50 5.0 50.3

PAT from ordinary activities 698.93 26.9 597.63 31.1 17.0

* Non-consolidated


Balance Sheet Summary*Balance Sheet Summary*

(Rs. crore)

Dec 31, 2002 % Dec 31, 2001 %

LIABILITIES

Shareholders’ funds 2,707.10 100 1,949.92 100

Total liabilities 2,707.10 100 1,949.92 100

ASSETS Fixed assets 754.91 28 725.29 37Investments 33.20 1 44.44 3Deferred tax assets 35.03 1 22.33 1Current assets Cash & equivalents 1,432.21 53 866.35 44 Accounts receivables 487.32 18 310.53 16 Other current assets 646.13 24 377.78 19Less: Current liabilities (681.70) (25) (396.80) (20)Net current assets 1,883.96 70 1,157.86 59Total assets 2,707.10 100 1,949.92 100

* Non-consolidated


Region wise Revenue (%)Region wise Revenue (%)

FY2003 FY2003 FY2002 FY 2003 FY 2002

Q3 Q2 Q3 YTD YTD

North America 74.2 73.8 70.9 73.5 71.4

Europe 16.4 16.5 19.4 17.3 19.4

India 1.2 2.5 1.9 1.8 2.1

Rest of the world 8.2 7.2 7.8 7.4 7.1

Total 100.0 100.0 100.0 100.0 100.0


Operational Performance


Utilization RatesUtilization Rates

82.2%78.1%84.2%

76.1%

0.0%

100.0%

Q3 FY 2003 Q2 FY 2003

Q3 FY 2003 76.1% 82.2%

Q2 FY 2003 78.1% 84.2%

Including training Excluding training


Revenues by Project type (%)Revenues by Project type (%)

FY2003 FY2003 FY2002 FY 2003 FY 2002

Q3 Q2 Q3 YTD YTD

Fixed Price 37.6 36.1 35.1 36.5 30.7

Time & Materials 62.4 63.9 64.9 63.5 69.3

Total 100.0 100.0 100.0 100.0 100.0


Onsite-Offshore Revenue split (%)Onsite-Offshore Revenue split (%)

FY2003 FY2003 FY2002 FY 2003 FY 2002

Q3 Q2 Q3 YTD YTD

Onsite 55.5 54.6 49.9 54.4 50.3

Offshore 44.5 45.4 50.1 45.6 49.7

Total 100.0 100.0 100.0 100.0 100.0


Customer ConcentrationCustomer Concentration

FY2003 FY2003 FY2002Q3 Q2 Q3

Top client contribution to revenues 6.3% 5.9% 5.5%

Top 5 client contribution to revenues 23.8% 24.0% 24.1%

Top 10 client contribution to revenues 37.9% 37.9% 38.3%

Million dollar clients* 99 92 90

Five million dollar clients* 30 28 24

Ten million dollar clients* 14 15 13

Twenty million dollar clients 7 5 4

Thirty million dollar clients 3 2 1

* LTM


Other HighlightsOther Highlights

Software revenues in US dollar terms grew by 9.6% for the

quarter as compared to the quarter ended September 30,

2002. Revenue growth comprised a volume growth of 10.5%

and a price decline of 0.9%, as compared to the quarter

ended September 30, 2002.


Client Acquisition & Expansion of Services


Client Acquisition & Expansion of ServicesClient Acquisition & Expansion of Services

Client acquisitions during the quarter were 23

Expanded presence in the financial services industry Helping Compass Bank to design a new system to optimize and automate

technology projects

Developing and rolling out a new global customer reference system for the

investment banking business of a leading international financial institution

Assisting a leading global investment banking and securities firm in the

management of its equity front office systems

Partnered with Swiss Re to implement PeopleSoft ERP package for its

Division Asia operations, spanning Asia Pacific and Middle East

In the mortgage sector, Infosys was selected by a leading provider of

mortgage risk management technology to identify, assess and define its

technical architecture in order to underpin its core processing systems



Strengthened presence in the area of mobile and wireless Signed a three-year strategic sourcing contract with AT&T Wireless

Partnering with TTPCom for co-developing new software for its 2.5 generation mobile phones

Established relationships with many prestigious clients in the healthcare industry

Access Dental, a leading provider of dental care services and insurance, selected Infosys to develop its IT strategy and help create a scalable portfolio of applications and processes

New clients in this sector include Bristol-Myers Squibb, a global pharmaceutical and healthcare products company

In the hi-tech space, Infosys is working with a world leader in the delivery of innovative electronics manufacturing services helping them in leveraging SAP applications



Continued to partner companies in the retail industry for technology initiatives

Assessing the effectiveness of labelling processes and systems for Foster Farms, a leading U.S. based poultry company

Working with PerformanceRetail, a leading provider of web-architected software applications for the convenience industry

Helping Island Pacific to enhance the latest version of its multi-channel technology solution package for one of its key clients, who is a major retailer for toys

Transportation sector Began a legacy application re-engineering project with the banking arm of

a large European logistics company that is in the business of moving packages, money and people through its extensive network of offices, fleet of vehicles and banking operations

Strengthened its relationship with a leading company in the worldwide express courier and logistics industry by becoming the preferred partner for its global IT strategy


Banking ProductsBanking Products

Implemented FinalceTM Core Banking in all six Lagos offices of Broad Bank Nigeria. The bank has implemented both the retail banking and the trade finance modules.

Three offices of Kakawa Discount House, Nigeria also started using FINACLE TM Core Banking during this quarter


Human Resources


Human ResourcesHuman Resources

Total employee strength at 14,058 as on December 31,

2002, up from 13,110 as on September 30, 2002

Net addition of 948 employees during the quarter as

compared to 1,806 during the quarter ended September

30, 2002

Gross addition of employees during the quarter was 1,133,

out of which 272 were laterals

12,801 software professionals as on December 31, 2002,

up from 11,892 as on September 30, 2002

Of these software professionals, 538 belong to the Banking

Business Unit


Capex and Infrastructure


Capex and InfrastructureCapex and Infrastructure

Capital expenditure of Rs. 50.86 cr was incurred during the

quarter

As on December 31, 2002, the company had 31,20,150 sq.

ft of space capable of accommodating 15,175

professionals and 7,18,600 sq. ft under completion


Outlook for the Future


Indian GAAPIndian GAAP

Guidance increased for revenue and EPS

Quarter ending March 31, 2003 Income from software development services and products is

projected to be between Rs. 975 cr to Rs. 989 cr

Earnings per share is expected to be between Rs. 39.10 and Rs.

39.40

Fiscal year ending March 31, 2003 Income from software development services and products is

projected to be between Rs. 3,578 cr to Rs. 3,592 cr

Earnings per share is expected to be between Rs. 144.70 to Rs.

145.00


Summary


SummarySummary

Increased revenue and EPS guidance for Fiscal 2003

Disciplined execution

Demonstrated scalability without compromising on quality

Infosys continues to enjoy confidence of large marqué

clients

Strong free cash flows and comfortable liquidity

Increased interest in offshore outsourcing


Thank You

© infosys technologies limited 2002-2003 performance of infosys for the third quarter ended...

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