LEONIA, N.J., Aug. 9 /PRNewswire-FirstCall/ -- Infocrossing, Inc. , a provider of selective IT infrastructure, enterprise application and business process outsourcing services, announced today its financial results for the second quarter and six months ended June 30, 2007. (Amounts other than EPS are in thousands.)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
(Unaudited) (Unaudited)
REVENUES $ 61,980 $ 56,836 $ 121,138 $ 112,757
EBITDA (A) 11,313 9,900 21,489 18,365
Depreciation and
amortization 4,645 4,129 9,181 8,260
Interest expense (net) 2,417 2,455 4,781 4,872
INCOME BEFORE
INCOME TAXES 4,251 3,316 7,527 5,233
Income tax expense 1,828 1,366 3,311 2,272
NET INCOME $ 2,423 $ 1,950 $ 4,216 $ 2,961
BASIC EARNINGS PER SHARE:
Net income $ 0.11 $ 0.09 $ 0.19 $ 0.14
Weighted average
number of Common
shares outstanding 22,123 21,266 22,066 21,012
DILUTED EARNINGS PER
SHARE:
Net income $ 0.10 $ 0.09 $ 0.18 $ 0.14
Weighted average
number of common
shares and share
equivalents
outstanding 23,598 22,214 23,503 21,858
(A) A reconciliation of EBITDA to net income follows in Appendix A, and
descriptions of this measure and the reasons for presenting it, as
well as its limitations, are explained below.
On August 6, 2007, the Company announced that it had signed a definitive agreement to be acquired by Wipro Technologies, the global IT services business of Wipro Limited , for $18.70 per share in cash. The acquisition will be conducted by means of a tender offer for all of the outstanding shares of Infocrossing, followed by a merger of Infocrossing with a Wipro subsidiary. The tender offer is subject to a number of customary closing conditions, including regulatory approvals.
The Company met its previously announced guidance for the second quarter with respect to EBITDA, net income, and earnings per share, and exceeded guidance with respect to revenue. Due to the announcement of the acquisition and the uncertainty of the actual closing date of the acquisition, the Company believes it is no longer appropriate to continue to issue guidance.
EBITDA represents net income before interest, taxes, depreciation and amortization. The Company presents EBITDA because it considers such information an important supplemental measure of its performance and believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies with comparable market capitalization, many of which present EBITDA when reporting their results. The Company also uses EBITDA for the following purposes: (1) EBITDA is one of the factors used to determine the total amount of bonuses available to be awarded to executive officers and other employees; (2) the Company's credit agreement uses EBITDA (with additional adjustments) to measure compliance with covenants such as interest coverage and debt incurrence; (3) EBITDA is also used by prospective and current lessors as well as potential lenders to evaluate potential transactions with the Company; and (4) EBITDA is also used by us to evaluate and price potential acquisition candidates.
EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of the Company's results as reported under GAAP. Some of these limitations are: (a) EBITDA does not reflect changes in, or cash requirements for, the Company's working capital needs; (b) EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on the Company's debts; and (c) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and EBITDA does not reflect any cash requirements for such capital expenditures. Because of these limitations, EBITDA should not be considered as a principal indicator of the Company's performance. The Company compensates for these limitations by relying primarily on the Company's GAAP results and using EBITDA only on a supplemental basis.
About Infocrossing (http://www.infocrossing.com/)
Infocrossing, Inc. is a provider of selective IT infrastructure, enterprise application and business process outsourcing services delivering the computing platforms and proprietary systems that enable companies, regardless of industry, to process data and share information within their business, and between their customers, suppliers and distribution channels. Leading companies leverage Infocrossing's robust computing infrastructure, skilled technical team, and process-driven operations to reduce costs and improve service delivery by outsourcing the operation of mainframes, mid-range, open system servers, networks and business processes to Infocrossing.
Safe Harbor Statement
This release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. As such, final results could differ from estimates or expectations due to risks and uncertainties, including, but not limited to: successful completion of the tender offer for all of the Company's shares followed by the merger with a subsidiary of Wipro Technologies; incomplete or preliminary information; changes in government regulations and policies; continued acceptance of the Company's products and services in the marketplace; competitive factors; closing contracts with new customers and renewing contracts with existing customers on favorable terms; expanding services to existing customers; new products; technological changes; the Company's dependence upon third-party suppliers; intellectual property rights; difficulties with the identification, completion, and integration of acquisitions; and other risks. For any of these factors, the Company claims the protection of the safe harbor for forward- looking statements contained in the Private Securities Litigation Reform Act of 1995, as amended.
Additional Information
The tender offer described in this press release has not yet commenced, and this press release is neither an offer to purchase nor a solicitation of an offer to sell Infocrossing, Inc.'s ("Infocrossing") common stock. Investors and security holders are urged to read both the tender offer statement and the solicitation/recommendation statement regarding the tender offer described in this press release when they become available because they will contain important information. The tender offer statement will be filed by Wipro Limited ("Wipro") with the Securities and Exchange Commission ("SEC"), and the solicitation/recommendation statement will be filed by Infocrossing with the SEC. Investors and security holders may obtain a free copy of these statements (when available) and other documents filed by Infocrossing or Wipro with the SEC at the website maintained by the SEC at http://www.sec.gov/. The tender offer statement and related materials, solicitation/recommendation statement, and such other documents may be obtained for free by directing such requests to Infocrossing, Inc., Investor Relations, 2 Christie Heights Street, Leonia, New Jersey 07605, (201) 840-4700.
INFOCROSSING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, In Thousands Except
Numbers of Shares and Per Share Amounts)
Three Months Ended Six months Ended
June 30, June 30,
2007 2006 2007 2006
(Unaudited) (Unaudited)
REVENUES $ 61,980 $ 56,836 $ 121,138 $ 112,757
COSTS and EXPENSES:
Costs of revenues,
excluding depreciation
and amortization
shown below 42,442 39,829 83,424 79,705
Selling and promotion
costs 3,066 2,446 6,110 4,738
General and
administrative
expenses 5,159 4,661 10,115 9,949
Depreciation and
amortization 4,645 4,129 9,181 8,260
55,312 51,065 108,830 102,652
INCOME FROM OPERATIONS 6,668 5,771 12,308 10,105
Interest income (177) (142) (288) (247)
Interest expense 2,594 2,597 5,069 5,119
2,417 2,455 4,781 4,872
INCOME BEFORE
INCOME TAXES 4,251 3,316 7,527 5,233
Income tax expense 1,828 1,366 3,311 2,272
NET INCOME $ 2,423 $ 1,950 $ 4,216 $ 2,961
BASIC EARNINGS PER SHARE:
Net income $ 0.11 $ 0.09 $ 0.19 $ 0.14
Weighted average
number of common
shares outstanding 22,123,392 21,266,019 22,066,034 21,011,521
DILUTED EARNINGS PER SHARE:
Net income $ 0.10 $ 0.09 $ 0.18 $ 0.14
Weighted average
number of common
shares and share
equivalents
outstanding 23,598,479 22,213,539 23,502,616 21,857,723
Certain reclassifications were made to prior period expense amounts to conform to the current presentation.
INFOCROSSING, INC. AND SUBSIDIARIES
SUMMARY CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Amounts)
June 30, Dec. 31,
ASSETS 2007 2006
(Unaudited)
CURRENT ASSETS:
Cash and equivalents $15,051 $ 22,324
Trade accounts receivable, net of allowances for
doubtful accounts of $226 at June 30, 2007 and
$380 at December 31, 2006 25,456 23,000
Due from related parties 127 167
Prepaid software costs 10,005 8,399
Deferred income taxes 2,447 2,447
Current deferred customer acquisition costs 1,174 1,039
Other current assets 8,812 7,584
Total current assets 63,072 64,960
Property, equipment and purchased software, net 52,850 45,049
Deferred software, net 3,035 2,826
Goodwill 157,454 157,454
Other intangible assets, net 15,194 16,819
Deferred income taxes 1,766 4,184
Deferred customer acquisition costs 2,604 2,658
Deferred financing costs 2,313 2,836
Other non-current assets 1,328 1,339
TOTAL ASSETS $ 299,616 $ 298,125
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $10,969 $ 11,065
Current portion of long-term debt and capitalized
lease obligations 22,441 18,749
Accrued expenses 11,591 13,596
Income taxes payable 2,023 1,544
Current deferred revenue 3,616 4,334
Total current liabilities 50,640 49,288
Notes payable, long-term debt and capitalized lease
obligations, net of current portion 106,526 113,202
Deferred revenue, net of current portion 5,486 6,067
Other long-term liabilities 4,705 4,326
TOTAL LIABILITIES 167,357 172,883
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock; $0.01 par value; 3,000,000 shares
authorized; none issued - -
Common stock; $0.01 par value; 50,000,000 shares
authorized; shares issued of 22,919,616
and 22,675,811 at June 30, 2007 and December
31, 2006, respectively 229 227
Additional paid-in capital 176,483 173,684
Accumulated deficit (40,832) (45,048)
135,880 128,863
Less 668,969 shares at June 30, 2007 and
December 31, 2006, of common stock held
in treasury, at cost (3,621) (3,621)
TOTAL STOCKHOLDERS' EQUITY 132,259 125,242
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 299,616 $ 298,125
Certain reclassifications were made to prior period expense amounts to
conform to the current presentation.
SUPPLEMENTARY INFORMATION
Appendix A - Reconciliations of Historical Information
EBITDA Reconciliation
The reconciliation of EBITDA with net income for the quarters ended June
30, 2007 and 2006, respectively, is as follows (in thousands):
Reconciliation - in Thousands
Quarter Ended June 30,
2007 2006
NET INCOME $ 2,423 $ 1,950
Add back:
Tax expense 1,828 1,366
Interest expense 2,417 2,455
Depreciation and amortization 4,645 4,129
EBITDA $ 11,313 $ 9,900
The reconciliation of EBITDA with net income for the six months ended June
30, 2007 and 2006, respectively, is as follows (in thousands):
Reconciliation - in Thousands
Six Months Ended June 30,
2007 2006
NET INCOME $ 4,216 $ 2,961
Add back:
Tax expense 3,311 2,272
Interest expense 4,781 4,872
Depreciation and amortization 9,181 8,260
EBITDA $ 21,489 $ 18,365
EBITDA is a measure of our performance that is not required by, or
presented in accordance with, GAAP. EBITDA is not a measurement of our
financial performance under GAAP and should not be considered as an
alternative to net income, income from operating activities or any other
performance measures derived in accordance with GAAP.
