Hewitt Associates has reported a net revenue increase of 17% to $478.1 million in its fiscal 2003 second quarter ended March 31, compared to $408.7 million in the comparable prior-year quarter.



Reported net income was $23.5 million for the second quarter, or$0.24 per diluted share, and included a $4.7 million pre-tax charge for the fiscal 2002, IPO-related grant of restricted stock to employees. Because the Company operated as a private partnership prior to June 2002, there is no comparable reported net income for the prior-year period.



Core earnings increased 46% to $26.2 million, or $0.26 per diluted share, from $17.9 million, or $0.23 per diluted share, in the second quarter of fiscal 2002, but were below the average analyst estimate compiled by Reuters Research of 27 cents a share. Hewitt's shares were trading down between 17.5 and 19 percent on Monday following the release of the earnings report.



Consulting business increased 36%, driven primarily by the acquisition of the actuarial and benefits consulting business of U.K.-based Bacon & Woodrow. Adjusting for the effects of acquisitions and favorable foreign currency translations, total Company revenues grew 5%, and Consulting revenues grew 1%. Outsourcing revenue growth was not affected by acquisitions, and only minimally affected by foreign currency translations.



"Revenue and operating income both were within our guidance despite the significant economic uncertainty and challenges that our clients are facing," said Dale L. Gifford, chairman and chief executive officer. "Our unrelenting focus on quality and delivering the results we promise is helping us maintain strong client satisfaction with our services, which is helping to drive steady growth in this tough economy."



Revenues in the Company's Outsourcing business increased 8% in the second quarter, and revenues in the Consulting business increased 36%, driven primarily by the acquisition of the actuarial and benefits consulting business of U.K.-based Bacon & Woodrow. Adjusting for the effects of acquisitions and favorable foreign currency translations, total Company revenues grew 5%, and Consulting revenues grew 1%. Outsourcing revenue growth was not affected by acquisitions, and only minimally affected by foreign currency translations.



The Company revised its outlook for fiscal 2003 net revenue growth, and now expects total Company net revenue growth of 12%-to-14%, exclusive of any anticipated revenue from the recently announced Cyborg and Northern Trust Retirement Consulting transactions. Including these transactions, revenue growth is expected to be 13%-to-16% for the fiscal year. The revenue growth forecast is comprised of approximately 6%-to-8% growth in the Company's Outsourcing business, or 8%-to-10% including these transactions, and near 20% growth in the Company's Consulting business, due to the Bacon & Woodrow acquisition.



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