EDISON, N.J., Nov. 2 /PRNewswire-FirstCall/ -- Intelligroup Inc., a consulting, business optimization, and outsourcing firm serving global corporations, today reported financial results for its third quarter and nine-month period ended September 30, 2006. Such results are included at the end of this release and in the periodic report on Form 10-Q for the period ended September 30, 2006, as filed with the United States Securities and Exchange Commission.
Third Quarter Highlights
- Revenue growth: growth of 3% from second quarter to third quarter;
growth of 9% from the third quarter of 2005.
- Gross Margin: Though gross margin declined by a 2% from second quarter
to third quarter, it grew 35% from the third quarter of 2005.
- Operating Margin: Though operating margin declined by 8% from the
second to third quarter, it grew by 115% from third quarter of 2005.
- Utilization rates: Improved from 68% to 72% from the second to third
quarter and from 64% in the third quarter of 2005 to 72% in the third
quarter of 2006.
- New Customers: Added 33 new customers globally in the third quarter.
The Company reported third quarter 2006 revenues of $32.5 million, which marks a 3% increase from $31.5 million in the second quarter of 2006 and a 9% increase from $29.7 million in the third quarter of 2005. The Company's average bill rates were relatively flat in the third quarter of 2006 as compared with the second quarter of 2006 and the third quarter of 2005. The Company reported gross margin of 28.6% for the third quarter of 2006, which marks a decrease from 30.1% for the second quarter of 2006 but an increase from 23.3% for the third quarter of 2005. In spite of the improved utilization, gross margin declined from the second quarter to the third quarter primarily due to compensation increases that took effect in the third quarter. The Company reported operating income from continuing operations of $545,000, which marks a decrease of $48,000 from the operating income of $593,000 in second quarter of 2006 but an improvement of $4.3 million from an operating loss of $3.7 million in the third quarter of 2005.
"The third quarter results were driven by the Company's focus on growing revenue while tightly managing utilization rates and sales, general and administrative costs" stated Vikram Gulati, the Company's Chief Executive Officer and President. "Such efforts have resulted in an improvement of $4.3 million in our operating performance from the third quarter of 2005 and a $4.6 million improvement in operating performance for year to date 2006 compared with 2005."
ABOUT INTELLIGROUP
Intelligroup is a vertically-led ERP focused life cycle management partner serving global corporations as well as public sector clients. Its proven Global delivery model has enabled customers to accelerate results and reduce costs significantly. With deep expertise in industry-specific enterprise solutions, Intelligroup has earned a reputation for consistently exceeding client expectations. Intelligroup develops implements and supports IT solutions for some of the largest U.S. school systems and global corporations including GE, Hershey, Abbott Labs, Eastman Chemical, Hitachi, and Kimball International.
SAFE HARBOR STATEMENT
Certain statements contained herein, including statements regarding the development of services and markets and future demand for services and other statements regarding matters that are not historical facts, are forward- looking statements (as defined in the Private Securities Litigation Reform Act of 1995).
Such forward-looking statements include risks and uncertainties; consequently, actual results may differ materially from those expressed or implied thereby. Factors that could cause actual results to differ materially include, but are not limited to, variability of quarterly operating results, continued uncertainty of the IT market and revenues derived from application management business, uncertainty in revenues for traditional professional services offerings, loss of one or more significant customers, reliance on large projects, concentration of revenue, unanticipated costs associated with continued litigation, ability to attract and retain professional staff, dependence on key personnel, ability to manage growth effectively, risks associated with strategic partnerships, various project-associated risks, including termination with short notice, substantial competition, general economic conditions, risks associated with intellectual property rights, risks associated with international operations and other risk factors detailed under the caption "Risk Factors" in Intelligroup's annual report on Form 10-K for the period ended December 31, 2005. Intelligroup disclaims any intention or obligation to update forward looking statements as a result of developments occurring after the date of this press release.
Intelligroup and the Intelligroup logo are registered trademarks and 'Creating the Intelligent Enterprise', 4Sight, 4Sight Plus, ASPPlus, myADVISOR, ASPPlus Power Upgrade Services and Uptimizer are service marks of Intelligroup in the U.S. and other countries. All other trademarks and company names mentioned are the property of their respective owners.
INTELLIGROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands except par value)
September 30 December 31,
2006 2005
(unaudited) (Note 1)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $13,425 $5,305
Accounts receivable, less allowance
for doubtful accounts of $633 and
$1,329 at June 30, 2006 and December
31, 2005, respectively 19,635 18,533
Unbilled services 11,064 9,475
Prepaid expenses and other current
assets 2,160 3,285
Total current assets 46,284 36,598
Property and equipment, net 6,589 4,098
Deferred tax and other assets 2,511 3,090
Total assets $55,384 $43,786
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Line of credit borrowings $4,345 $3,427
Accounts payable 3,705 5,044
Accrued payroll and related taxes 10,852 10,690
Accrued expenses and other current
liabilities 4,173 4,076
Deferred revenue 1,312 847
Income taxes payable 1,256 955
Current portion of obligations under
capital lease 467 257
Total current liabilities 26,110 25,296
Obligations under capital lease, net
of current portion 403 350
Other long-term liabilities 1,852 250
Total liabilities 28,365 25,896
Commitments and contingencies
Shareholders' Equity
Preferred stock, $.01 par value,
5,000 shares authorized, none issued
or outstanding - -
Common stock, $.01 par value, 50,000
shares authorized, 41,933 and 35,103
shares issued and outstanding at
September 30, 2006 and December 31,
2005, respectively 419 351
Additional paid-in capital 69,246 58,137
Accumulated deficit (41,412) (40,046)
Accumulated other comprehensive loss (1,234) (552)
Total shareholders' equity 27,019 17,890
Total liabilities and shareholders'
equity $55,384 $43,786
Note 1: Information presented for December 31, 2005 was derived from the
Company's 2005 Annual Report and Form 10-K, filed with the United States
Securities and Exchange Commission on March 31, 2006.
INTELLIGROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS)
(UNAUDITED)
(in thousands except per share data)
NINE MONTHS ENDED SEPTEMBER 30,
2006 2006 2006 2005
US GAAP ADJUSTMENTS Non-GAAP US GAAP
Revenue $93,277 $- $93,277 $95,865
Cost of revenue 66,527 (473)(a) 66,054 71,514
Gross profit 26,750 473 27,223 24,351
Selling, general and
administrative expenses 25,587 (710)(a) 24,877 27,957
Depreciation and amortization 1,829 1,829 1,628
Total operating expenses 27,416 (710) 26,706 29,585
Operating income (loss) (666) 1,183 517 (5,234)
Interest income (expense), net (399) (399) (186)
Other income (expense) 1,647 1,647 (286)
Income (loss) before income tax
provision (benefit) 582 1,183 1,765 (5,706)
Provision for (benefit of)
income taxes 1,947 1,947 (153)
Net income (loss) $(1,365) $1,183 $(182) $(5,553)
Income (loss) per share:
Basic net income (loss) per
share $(0.03) $0.03 $- $(0.16)
Weighted average number of
common shares outstanding -
basic 39,591 39,591 39,591 35,103
Diluted net income (loss) per
share $(0.03) $0.03 $- $(0.16)
Weighted average number of
common shares outstanding -
diluted 39,591 39,591 39,591 35,103
In addition to its reported operating results in accordance with U.S.
generally accepted accounting principles (GAAP), Intelligroup has
included in the table above non-GAAP operating measures that the
Securities and Exchange Commission defines as "non-GAAP financial
measures." Management believes that such non-GAAP financial measures,
when read in conjunction with the company's reported results, can provide
useful supplemental information for investors analyzing period to period
comparisons of the company's results. The non-GAAP financial measures
disclosed by the company should not be considered a substitute for, or
superior to, financial measures calculated in accordance with GAAP, and
the financial results calculated in accordance with GAAP and
reconciliations to those financial statements should be carefully
evaluated. The non-GAAP column above for the nine months ended September
30, 2006 reflects the following adjustment:
(a) To exclude stock-based compensation expense under FAS 123R, and
related income tax benefit, recorded in the nine months ended September
30, 2006.
THREE MONTHS ENDED SEPTEMBER 30,
2006 2006 2006 2005
US GAAP ADJUSTMENTS Non-GAAP US GAAP
Revenue $32,530 $- $32,530 $29,738
Cost of revenue 23,214 (194)(a) 23,020 22,823
Gross profit 9,316 194 9,510 6,915
Selling, general and
administrative expenses 8,092 (185)(a) 7,907 10,043
Depreciation and amortization 679 679 583
Total operating expenses 8,771 (185) 8,586 10,626
Operating income (loss) 545 379 924 (3,711)
Interest income (expense), net (220) (220) (34)
Other income (expense) 340 340 302
Income (loss) before income tax
provision (benefit) 665 379 1,044 (3,443)
Provision for (benefit of)
income taxes 878 878 132
Net income (loss) $(213) $379 $166 $(3,575)
Income (loss) per share:
Basic net income (loss) per
share $(0.01) $0.01 $- $(0.10)
Weighted average number of
common shares outstanding -
basic 41,802 41,802 41,802 35,103
Diluted net income (loss) per
share $(0.01) $0.01 $- $(0.10)
Weighted average number of
common shares outstanding -
diluted 41,802 41,802 41,802 35,103
In addition to its reported operating results in accordance with U.S.
generally accepted accounting principles (GAAP), Intelligroup has
included in the table above non-GAAP operating measures that the
Securities and Exchange Commission defines as "non-GAAP financial
measures." Management believes that such non-GAAP financial measures,
when read in conjunction with the company's reported results, can provide
useful supplemental information for investors analyzing period to period
comparisons of the company's results. The non-GAAP financial measures
disclosed by the company should not be considered a substitute for, or
superior to, financial measures calculated in accordance with GAAP, and
the financial results calculated in accordance with GAAP and
reconciliations to those financial statements should be carefully
evaluated. The non-GAAP column above for the three months ended September
30, 2006 reflects the following adjustment:
(a) To exclude net stock-based compensation expense under FAS 123R, and
related income tax benefit, recorded in the three months ended September
30, 2006.
