Infosys announces Q3 results, outlook for March '06

Infosys Technologies Ltd has announced the following audited results for the quarter ended December 31, 2005:

It has posted a net profit of Rs642 crore for the quarter ended December 31, 2005, as compared to Rs496 crore for the quarter ended December 31, 2004.
Total Income has increased from Rs1,845 crore in Q3-05 to Rs2,396 crore for the quarter ended December 31, 2005.

The consolidated results are as follows:

The group has posted a net profit after tax and exceptional item and minority interest of Rs649 crore for the quarter ended December 31, 2005 as compared to Rs497 crore for the quarter ended December 31, 2004. Total Income has increased from Rs1,922 crore in Q3-05 to Rs2,527 crore for the quarter ended December 31, 2005.

Business Outlook:
Infosys has announced the following outlook (consolidated) for the quarter and the fiscal year ending March 31, 2006, under Indian GAAP and US GAAP:

Outlook under Indian GAAP (consolidated):

Quarter ending March 31, 2006 ($ conversion at Rs44.50):

- Income is expected to be in the range of Rs2,590 crore and Rs2,599 crore; YoY growth of 30.35 per cent - 30.80 per cent

- Earnings per share before exceptional items is expected to be between Rs24.30 and Rs24.70; YoY growth of 27.83 per cent - 29.93 per cent

Fiscal year ending March 31, 2006 ($ conversion at Rs44.50):

- Income is expected to be in the range of Rs9,487 crore and Rs94,96 crore; YoY growth of 33.10 per cent - 33.20 per cent

- Earnings per share before exceptional items is expected to be between Rs89.90 and Rs90.30; YoY growth of 30.69 per cent - 31.27 per cent

Outlook under US GAAP:

Quarter ending March 31, 2006:

- Consolidated revenues is expected to be in the range of $582 million and $584 million; YoY growth of 27.91 per cent - 28.35 per cent

- Consolidated earnings per American Depositary Share is expected to be between $0.55 and $0.56; YoY growth of 17.02 per cent - 19.15 per cent

Fiscal year ending March 31, 2006:
- Consolidated revenues is expected to be $2.14 billion; growth of 34.59 per cent

- Consolidated earnings per American Depositary Share is expected to be between $2.04 and $2.05; growth of 29.94 per cent - 30.57 per cent

"We have seen another quarter of steady growth," said Nandan M. Nilekani, CEO, president and managing director, "Our initiatives in strategic alignment, capability building and operational excellence are all on track."

Reconciliation of accounts as per Indian GAAP & US GAAP
The company has also announced following reconciliation of accounts as per Indian GAAP and US GAAP.

Reasons for differences in net income as per Indian GAAP and US GAAP

Gain on forward foreign exchange contracts
Until April 01, 2004, Indian GAAP required the premium / discount on forward contract to be recognised as income or expenditure over the life of the related contract. Under US GAAP, the same is marked-to-market as on the reporting date. The resultant gain / loss is recognised immediately in the income statement. Effective April 01, 2004, the company changed its accounting policy in India in line with the revised Accounting Standard 11 on forward contracts and hence the company has decided to account for the forward exchange contracts based on their designation as 'effective hedges' or 'not effective'.

Amortisation of Intangibles
US GAAP requires the purchase price in business combination transactions to be allocated to identifiable assets and liabilities, including intangible assets. Intangible assets are to be amortized over the estimated useful life. The amortisation relates to that of an intangible asset identified in allocation of the purchase price of Expert Information Services Pty Ltd, Australia.

Deferred taxes on GAAP differences
The accounting treatments for forward exchange contracts and amortisation of intangibles have a deferred tax impact.