Infosys Technologies Announces Results for the Quarter Ended December

Infosys Technologies Announces Results for the Quarter Ended December 31, 2004; Q3 Revenue Grows by 53%; Revenue is Expected to Grow by 50% in Fiscal 2005

    Business Editors

    FREMONT, Calif.--(BUSINESS WIRE)--Jan. 12, 2005--Infosys Technologies Limited (Nasdaq:INFY)

    Highlights

    Consolidated results for the quarter ended December 31, 2004

--	Third quarter revenues at $423 million, up 53% from the corresponding quarter last fiscal
--	Earnings per American Depositary Share (ADS) increased to $0.42 from $0.27(a) in the corresponding quarter last fiscal
--	38 new clients were added during the quarter
--	Net addition of 2,280 employees for the quarter
--	35,229 employees as on December 31, 2004

    (a) adjusted for the two for one stock dividend distributed on
    July 6, 2004. Each ADS represents one equity share

    Outlook for the quarter and the fiscal year ending March 31, 2005

    -- Consolidated revenues expected to be between $452 million and
    $454 million for the quarter ending March 31, 2005, (growth
    of 49% to 50%) and between $1,589 million and $1,591 million
    for the fiscal year ending March 31, 2005; growth of 50%

    -- Consolidated earnings per ADS(a) expected to be $ 0.44 for the
    quarter ending March 31, 2005, (growth of 52%) and $1.53 for
    the fiscal year ending March 31, 2005; growth of 49%

    (a) adjusted for the two for one stock dividend distributed on
    July 6, 2004. Each ADS represents one equity share

    Infosys Technologies Limited ("Infosys" or "the company") today announced financial results for its third quarter ended December 31, 2004. Revenues for the quarter aggregated $423 million, up 53% from $276 million for the quarter ended December 31, 2003.
    Net income was $112 million ($71 million for the quarter ended December 31, 2003) and earnings per ADS was $0.42 ($0.27 for the quarter ended December 31, 2003(a)).

    (a) adjusted for the two for one stock dividend distributed on
    July 6, 2004. Each ADS represents one equity share

    "We have seen another quarter of robust growth," said Nandan M. Nilekani, CEO, President and Managing Director. "Infoscions have shown great energy and enthusiasm for all our new initiatives."
    "Our focus on creating synergies through Infosys Consulting and Progeon at either end of the services chain has enhanced our competitiveness," said S. Gopalakrishnan, Member of the Board and COO.
    Large corporations in the Insurance and Healthcare industries are increasingly using the Infosys-pioneered Global Delivery Model to improve efficiency and customer focus. Infosys is working with a premier US-based wellness company and a provider of tools, applications and healthcare content to analyze, design and implement new systems that strengthen their internal processes. In a mission-critical assignment, the most distinguished preferred provider organization (PPO) network in the US selected Infosys to rewrite its core system. For one of the largest insurance companies in the US, Infosys developed an enterprise-wide road map for content management strategy.
    Infosys' business solutions continued to enhance competitiveness for clients in the Retail industry. A US supermarket giant used Infosys' services to address process improvement initiatives and program management issues. Infosys also completed a large end-to-end business process re-engineering initiative for a leading corporation in the food distribution business. A premier apparel marketer in the US partnered with Infosys for a business consulting engagement.
    "Demand for offshore outsourcing continued to be strong," said Basab Pradhan, Head -- World-wide Sales and Senior Vice President. "Clients have responded favorably to the combination of our consulting services and offshore delivery."
    "Our growth has been well supported by our relentless pursuit of excellence, not only in our core client delivery processes but also in all the business enabling areas," said S. D. Shibulal, Member of the Board and Head -- World-wide Customer Delivery
    Cash and cash equivalents and investments in liquid mutual funds, increased by $88 million during the quarter, from $545 million to $633 million, after incurring capital expenditure of $58 million.
    "We have been able to maintain our operating margins despite the appreciation of the rupee," said T. V. Mohandas Pai, Member of the Board and Chief Financial Officer.

    About the company

    Infosys is a leading global technology services firm founded in 1981. Infosys provides end-to-end business solutions that leverage technology for its clients across the entire software life cycle: consulting, design, development, software re-engineering, maintenance, systems integration, package evaluation and implementation and infrastructure management services. In addition, Infosys offers software products to the banking industry, as well as business process management services through its majority-owned subsidiary, Progeon. For more information, contact V. Balakrishnan at +91 (80) 2852 0440 in India or visit us on the World Wide Web at www.infosys.com.

    Safe Harbor

    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, industry segment concentration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks or system failures, 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 and regional conflicts, 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, 2004 and on Form 6-K for the quarters ended June 30, 2004 and September 30, 2004 and Registration Statement on Form F-3 filed on December 20, 2004. 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 statements that may be made from time to time by or on behalf of the company.

Infosys Technologies Limited and Subsidiaries Consolidated balance sheets as of

($ in millions) ---------------------------------------------------------------------- March 31, 2004 Dec. 31, 2004 (1) (Unaudited) ---------------------------------------------------------------------- ASSETS Current Assets Cash and cash equivalents $445 $389 Investment in liquid mutual fund units 218 244 Trade accounts receivable, net of allowances 150 240 Deferred tax assets -- 2 Prepaid expenses and other current assets 36 39 Unbilled revenue 24 29 ---------------- ---------------- Total current assets 873 943 Property, plant and equipment, net 228 321 Goodwill 8 8 Intangible assets, net 2 1 Deferred tax assets 7 8 Other assets 14 24 ---------------- ---------------- Total Assets $1,132 $1,305 ---------------- ---------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $1 $1 Client deposits 15 8 Other accrued liabilities 99 114 Income taxes payable 22 32 Unearned revenue 15 26 ---------------- ---------------- Total current liabilities 152 181 Non-current liabilities Preferred stock of subsidiary 22 22 Other non-current liabilities 5 5 Stockholders' Equity Common stock, $ 0.16 par value 300,000,000 equity shares authorized as of December 31, 2004 Issued and outstanding - 266,564,224 and 269,456,304 equity shares as of March 31, 2004 and December 31, 2004 respectively 9 31 Additional paid-in capital 157 228 Accumulated other comprehensive income 39 42 Retained earnings 748 796 ---------------- ---------------- Total stockholders' equity 953 1,097 ---------------- ---------------- Total Liabilities and Stockholders' Equity $1,132 $1,305 ---------------- ----------------

(1) March 31, 2004 balances were obtained from audited financial statements

Infosys Technologies Limited and Subsidiaries Unaudited consolidated statements of income

($ in millions, except share and per share data) ---------------------------------------------------------------------- Three months ended Nine months ended December 31, December 31, ---------------------------------------------------------------------- 2003 2004 2003 2004 ------------ ------------ ------------ ------------ Revenues $276 $423 $760 $1,137 Cost of revenues (including amortization of stock compensation expenses of $2 million for the nine months ended December 31, 2003) 155 241 430 642 ------------ ------------ ------------ ------------ Gross profit 121 182 330 495 ------------ ------------ ------------ ------------ Operating Expenses: Selling and marketing expenses 21 26 56 76 General and administrative expenses 21 34 59 91 Amortization of stock compensation expenses -- -- 1 -- Amortization of intangible assets 3 -- 7 1 ------------ ------------ ------------ ------------ Total operating expenses 45 60 123 168 ------------ ------------ ------------ ------------ Operating income 76 122 207 327 Other income 9 11 24 17 ------------ ------------ ------------ ------------ Income before income taxes 85 133 231 344 Provision for income taxes 14 21 38 52 ------------ ------------ ------------ ------------ Net income $71 $112 $193 $292 ------------ ------------ ------------ ------------ Earnings per equity share Basic 0.27 0.42 0.74 1.09 Diluted 0.26 0.40 0.73 1.07 Weighted average equity shares used in computing earnings per equity share Basic 262,839,448 267,360,142 262,512,796 266,307,767 Diluted 268,727,184 275,372,238 266,228,668 272,581,961

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CONTACT: Infosys Technologies Limited Investor Relations: Sandeep Shroff, 510-742-2960 (U.S.) sandeepshroff@infosys.com V. Balakrishnan, +91 (80) 2852-0440 (India) balakv@infosys.com Media Relations: Tina George, +91 (80) 2852-2408 (India) tinageorge@infosys.com Steven Gottlieb, 206-404-7101 (U.S.) Steven.Gottlieb@zenogroup.com

KEYWORD: CALIFORNIA INDIA INTERNATIONAL ASIA PACIFIC INDUSTRY KEYWORD: BANKING SOFTWARE EARNINGS SOURCE: Infosys Technologies Limited

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