Ninth Consecutive Quarter Of Year-Over-Year Revenue Growth; Income
from Operations of $1.7 million versus a Loss of ($1.5) million;
Offshore Subsidiary Adds Eight Clients, Six are Global 1000
PITTSBURGH, Nov. 8 /PRNewswire-FirstCall/ -- iGATE Corporation
(NASDAQ:IGTE), a global provider of IT and BPO services, today
announced its financial results for the third quarter ended
September 30, 2005. (Logo:
http://www.newscom.com/cgi-bin/prnh/20010110/IGTELOGO) Third
Quarter Highlights * Consolidated revenues increase 5.3%
year-over-year, 3.2% sequentially. * Sequential gross margin
increase to 27.0% from 24.7%. * Consolidated income from operations
of $1.7 million compared to ($1.5) million loss from operations
last year and ($0.6) million loss from operations in 2005 second
quarter. * Diluted earnings per share of $0.02 compared to net loss
of ($0.03) last year. * Cash flow provided by operations a positive
$8.4 million year to date. Third Quarter Results Consolidated
revenues for the third quarter increased 5.3% to $70.1 million from
$66.6 million in the same quarter last year and rose 3.2% from
$67.9 million reported in the second quarter of 2005. The
year-over-year revenue increase was due to revenue growth at the
Company's offshore subsidiary, iGATE Global Solutions ("iGS"),
which was driven by momentum from new clients added during the past
15 months, increases in billable headcount and utilization. The
sequential third quarter revenue improvement was due to higher
revenues from iGS as well as net growth in the Company's core
staffing operations, iGATE Professional Services ("iPS"). Gross
margin, as a percentage of sales, increased to 27.0% in the third
quarter from 25.3% in last year's third quarter and the 24.7%
reported in the 2005 second quarter. The improvements were due to
higher revenue and gross margin at iGS and higher utilization rates
at both iGS and iPS. Selling, general, and administrative
(SG&A) expense for the third quarter decreased 6.0% to $17.2
million from $18.3 million in the same period last year and
decreased 0.9% from $17.4 million reported in the 2005 second
quarter. The sequential quarter over quarter decrease was due
primarily to a reduction in bad debt expense at iPS. As a
percentage of sales, third quarter SG&A declined to 24.6% from
27.5% in the corresponding period last year and from 25.6% in the
2005 second quarter. Third quarter income from operations improved
to $1.7 million compared to a loss of ($1.5) million in the
corresponding period last year. Last year's third quarter included
a $1.6 million pretax charge related to the completion of the
Company's Quintant acquisition. On a sequential basis, the third
quarter income from operations of $1.7 million compared to a second
quarter loss from operations of ($0.6) million. The Company
reported net income of $0.9 million, or $0.02 per diluted share,
for the third quarter compared to a net loss of ($1.8) million, or
($0.03) per diluted share, in the corresponding period last year.
"We are pleased with the solid progress being made on our top
priorities of growing offshore revenues and expanding our overall
profitability," stated Sunil Wadhwani, Chief Executive Officer and
co-founder of iGATE Corporation. "During the quarter, we had
material revenue growth in offshore services and our overall gross
profit margins improved significantly. In conjunction with our
shift in strategic focus to pursue more Global 1000 clients that
represent greater growth opportunities, we continued to add more
high quality clients at iGS during the quarter, and we are gaining
more project and service traction with clients added during the
previous 15 months. In addition, our staffing business remains
steady, is profitable and continues to generate solid cash flow."
Ashok Trivedi, President and co-founder of iGATE Corporation
commented, "iGS secured eight additional clients during the third
quarter and six are Global 1000 companies. In addition, iGS again
increased its billable headcount and utilization rates. We are very
encouraged by the recent client additions and believe that our
business strategy of focusing on larger, multi- year contracts with
Global 1000 companies is beginning to show the positive results we
expect." Year-To-Date Results Consolidated revenues for the nine
months ended September 30, 2005 increased 5.7% to $207.6 million
from $196.5 million in the same period last year. The year-to-date
revenue increase was due primarily to higher revenues from iPS as a
result of a large financial services client project that began in
the second quarter of 2004 and reached completion during the 2005
third quarter. Also contributing to the nine month revenue increase
was slightly higher revenues reported at iGS. As a percentage of
sales, year-to-date gross margin declined slightly to 25.5% from
25.6% in the corresponding period last year. The gross margin
decline was attributable to a higher revenue contribution from the
Company's lower margin iPS business and annual wage increases at
iGS. Year-to-date net income was $1.9 million, or $0.04 per diluted
share, compared to a net loss of ($9.3) million, or ($0.18) per
basic share, in the same period last year. Operating Segments iGATE
Global Solutions (iGS) * iGS reported third quarter revenues of
$35.2 million, up 3.2% from second quarter revenues of $34.1
million. * iGS reported third quarter gross margins of 31.0%, up
from 26.9% in the second quarter. * iGS reported third quarter
operating income of $0.7 million compared to an operating loss of
($0.5) million in the second quarter. * iGS added eight new clients
during the third quarter, six of which are Global 1000 companies,
bringing to 57 the total number of new clients added during the
past 15 months, 33 of which are Global 1000 companies. * The
improvement in iGS's third quarter results was primarily due to
recent client additions, increases in billable headcount and
utilization rates. * The third quarter offshore/onsite ratio
improved to 68% / 32% compared with 57% / 43% in the corresponding
period last year and 67% / 33% in the 2005 second quarter. *
Offshore revenues contributed 40.6% to total third quarter iGS IT
services revenues compared with 36.8% in the 2005 second quarter. *
iGS added 73 employees during the third quarter, 64 of which are
billable employees. As of the end of September, the iGS total
employee headcount was approximately 4,360. * Mr. UVG Sekar,
formerly with IBM Corporation, joined iGS as the Global Head of
Human Resources. He will be leading the company's recruitment and
human resource initiatives, policies and administration. * The iGS
Board of Directors approved the initial plan regarding Phase III of
the company's Whitefield campus at Bangalore, India. This project
is projected to add 1,000 seats and is expected to be completed in
2007. iGATE Professional Services * Third quarter revenues of $34.2
million were comparable to $34.4 million reported in the same
period last year and up 3.4 percent compared with $33.1 million in
the 2005 second quarter. * Third quarter gross margins increased to
22.3%, up from 21.7% in the second quarter. * Third quarter income
from operations for iPS of $3.7 million was comparable with the
corresponding period last year and up 31.0% compared with the $2.8
million reported in the 2005 second quarter. * Growth in core
staffing operations strengthened with a net growth of 50
consultants during the third quarter. Cash Flow & Balance Sheet
For the nine month year-to-date period ended September 30, 2005,
cash flow provided by operations was a positive $8.4 million
compared to cash used by operations of $14.9 million for the
corresponding period in 2004. The Company continues to maintain a
strong balance sheet. As of September 30, 2005, the Company had
$62.5 million in cash and short-term investments and no outstanding
borrowings. Conference Call iGATE will host a telephone conference
call to discuss the company's third quarter financial results on
Tuesday, November 8, 2005 at 10:00 a.m. EST. A live webcast of this
conference call will be available on the company's website,
http://www.igatecorp.com/. Simply click on the investor relations
section and follow the links to the live webcast. The webcast will
remain available for replay through November 15, 2005. About iGATE
Corporation Pittsburgh, Pennsylvania-based iGATE Corporation
(NASDAQ:IGTE) is the first fully integrated technology and
operations firm with a global service model. iGATE Corporation,
through its offshore subsidiary, iGATE Global Solutions Ltd.,
enables clients to optimize their business through a combination of
process investment strategies, technology leverage and business
process outsourcing and provisioning. Services include consulting,
enterprise data management and data warehousing, business
intelligence and analytics, design, development, systems
integration, package evaluation, and implementation, re-engineering
and maintenance. iGATE Corporation also offers IT Professional
Services in the areas of packaged application implementation,
custom development, web services and business intelligence. The
company services more than 300 clients across five continents.
Clients rely on iGATE because of the high quality of service,
responsiveness, and cost-effective global reach. More information
about iGATE is available at http://www.igatecorp.com/.
Forward-Looking Statements Some of the statements contained in this
news release that are not historical facts are forward-looking
statements. These forward-looking statements include the company's
financial, growth and liquidity projections as well as statements
concerning the company's plans, strategies, intentions and beliefs
concerning business cash flows, costs and the markets in which it
operates. Without limiting the foregoing, the words "believes,"
"anticipates," "plans," "expects" and similar expressions are
intended to identify certain forward-looking statements. These
statements are based on information currently available to the
company and it assumes no obligation to update the forward
statements as circumstances change. There are risks and
uncertainties that could cause actual events to differ materially
from the forward-looking statements. These risks include, but are
not limited to, the company's ability to predict its financial
performance, the level of market demand for its services, the
highly-competitive market for the types of services offered by the
company, the impact of competitive factors on profit margins,
market conditions that could cause the company's customers to
reduce their spending for its services, the company's ability to
create, acquire and build new businesses and to grow existing
businesses, attract and retain qualified personnel, reduce costs
and conserve cash, currency fluctuations and market conditions in
India and elsewhere around the world, political and military
tensions in India and South Asia, changes in generally accepted
accounting principles and/or their interpretation and other risks
that are described in more detail in the company's filings with the
Securities and Exchange Commission including its Form 10-K (as
amended) for the year ended December 31, 2004. iGATE CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS (dollars in thousands)
September 30, December 31, 2005 2004 (unaudited) (audited) ASSETS
Current assets: Cash and cash equivalents $31,510 $28,201 Short
term investments 31,010 35,863 Accounts receivable, net 54,702
61,363 Prepaid and other current assets 6,094 6,985 Prepaid income
taxes 1,896 435 Deferred income taxes 1,817 2,304 Total current
assets 127,029 135,151 Investments in unconsolidated affiliates
4,328 3,951 Land, building, equipment and leasehold improvements,
net 29,880 25,814 Goodwill 9,192 9,398 Intangible assets, net 4,142
5,918 Total assets $174,571 $180,232 LIABILITIES AND SHAREHOLDERS'
EQUITY Current liabilities: Accounts payable $8,342 $8,636 Accrued
payroll and related costs 16,321 16,662 Accrued income taxes -
2,019 Other accrued liabilities 5,750 9,555 Restructuring reserve
2,413 3,692 Deferred revenue 177 653 Current liabilities of
discontinued operations 81 88 Total current liabilities 33,084
41,305 Restructuring reserve 2,974 3,777 Other long term
liabilities 528 564 Deferred income taxes 9,723 9,520 Total
liabilities 46,309 55,166 Minority interest 14,271 13,366
Shareholders' equity: Common Stock, par value $0.01 per share 536
535 Additional paid-in capital 161,587 161,345 Retained deficit
(34,777) (36,710) Deferred compensation (1,323) (1,934) Common
stock in treasury, at cost (14,714) (14,714) Accumulated other
comprehensive income 2,682 3,178 Total shareholders' equity 113,991
111,700 Total liabilities and shareholders' equity $174,571
$180,232 iGATE Corporation Consolidated Statements of Income
(dollars in thousands, except per share data) (unaudited) Three
Months ended Nine Months Ended September 30, September 30, 2005
2004 2005 2004 Revenues $70,102 $66,565 $207,599 $196,496 Cost of
revenues 51,172 49,728 154,674 146,236 Gross margin 18,930 16,837
52,925 50,260 Selling, general and administrative 17,221 18,311
51,824 54,565 Restructuring charges - - - 4,896 Income (loss) from
operations 1,709 (1,474) 1,101 (9,201) Other income, net 411 611
645 867 Minority interest (260) (73) (403) 56 Equity in income
(losses) of affiliated companies 137 (98) 108 (285) Income (loss)
before income taxes 1,997 (1,034) 1,451 (8,563) Income tax expense
(benefit) 1,122 785 (482) 4,525 Income (loss) from continuing
operations 875 (1,819) 1,933 (13,088) Income from discontinued
operations, net of income taxes - 3 - 3,818 Net income (loss) $875
$(1,816) $1,933 $(9,270) Net earnings (loss) per common share,
Basic: Earnings (loss) from continuing operations $0.02 $(0.03)
$0.04 $(0.25) Earnings from discontinued operations - 0.00 - 0.07
Net earnings (loss) - Basic $0.02 $(0.03) $0.04 $(0.18) Net
earnings (loss) per common share, Diluted: Earnings (loss) from
continuing operations $0.02 $(0.03) $0.04 $(0.25) Earnings from
discontinued operations - 0.00 - 0.07 Net earnings (loss) - Diluted
$0.02 $(0.03) $0.04 $(0.18) Weighted average common shares
outstanding, Basic 52,529 52,922 52,507 52,710 Weighted average
dilutive common equivalent shares outstanding 52,706 52,922 52,712
52,710 iGATE iGATE Professional iGATE Three Months Ended Solutions
Services Corporate Total March 31, 2005 External revenues $32,711
$36,457 $433 $69,601 Cost of revenues 23,193 28,957 254 52,404
Gross margin 9,518 7,500 179 17,197 Selling, general and
administrative 9,277 4,551 3,401 17,229 Income (loss) from
operations $241 $2,949 (3,222) (32) Other expense, net (286) (286)
Minority interest (84) (84) Equity in losses of affiliated
companies (117) (117) Loss before income taxes $(3,709) $(519)
iGATE iGATE Professional iGATE Three Months Ended Solutions
Services Corporate Total June 30, 2005 External revenues $34,071
$33,056 $769 $67,896 Cost of revenues 24,922 25,889 287 51,098
Gross margin 9,149 7,167 482 16,798 Selling, general and
administrative 9,660 4,370 3,344 17,374 (Loss) income from
operations $(511) $2,797 (2,862) (576) Other expense, net 520 520
Minority interest (59) (59) Equity in income of affiliated
companies 88 88 Loss before income taxes $(2,313) $(27) iGATE iGATE
Professional iGATE Three Months Ended Solutions Services Corporate
Total September 30, 2005 External revenues $35,151 $34,188 $763
$70,102 Cost of revenues 24,246 26,551 375 51,172 Gross margin
10,905 7,637 388 18,930 Selling, general and administrative 10,162
3,973 3,086 17,221 Income (loss) from operations $743 $3,664
(2,698) 1,709 Other expense, net 411 411 Minority interest (260)
(260) Equity in income of affiliated companies 137 137 Loss before
income taxes $(2,410) $1,997 iGATE iGATE Professional iGATE Nine
Months Ended Solutions Services Corporate Total September 30, 2005
External revenues $101,933 $103,701 $1,965 $207,599 Cost of
revenues 72,361 81,397 916 154,674 Gross margin 29,572 22,304 1,049
52,925 Selling, general and administrative 29,099 12,894 9,831
51,824 (Loss) income from operations $473 $9,410 (8,782) 1,101
Other expense, net 645 645 Minority interest (403) (403) Equity in
income of affiliated companies 108 108 Loss before income taxes
$(8,432) $1,451
http://www.newscom.com/cgi-bin/prnh/20010110/IGTELOGO
http://photoarchive.ap.org/ DATASOURCE: iGATE Corporation CONTACT:
Michael J. Zugay, Sr. Vice President & CFO of iGATE
Corporation, +1-412-787-9590, or Web site:
http://www.igatecorp.com/
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