Exhibit 99.2
ICT Group, Inc.
Reconciliation Tables for Investor Presentation on November 8, 2005
About Non-GAAP Financial Measures
Management uses certain non-GAAP measures of financial performance. These non-GAAP measures include adjusted net income, EBITDA, adjusted EBITDA, adjusted operating income, adjusted diluted earnings per share and net debt. Net debt is a metric used to provide an overall assessment of the Company’s debt situation and is calculated by taking amounts outstanding under its Credit Facility ($38 million at September 30, 2005) less cash and cash equivalents ($10 million at September 30, 2005). Reconciliation tables for the other non-GAAP measures are presented below.
Adjusted Net Income and Adjusted Diluted Earnings per Share
The following table shows a reconciliation of net income to adjusted net income. The calculation of adjusted diluted earnings per share is also shown. Management uses these measurements to evaluate the profitability of the business. The adjusted net income and adjusted diluted earnings per share excludes the effects of litigation costs (recoveries) and restructuring charges (reversals) as well as certain tax adjustments.
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| (in thousands) (unaudited) | | 12/31/2003
| | | 3/31/2004
| | | 6/30/2004
| | | 9/30/2004
| | | LTM
Total
| | | 12/31/2004
| | | 3/31/2005
| | | 6/30/2005
| | | 9/30/2005
| | | LTM
Total
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For the fiscal quarters ended: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss), as reported | | $ | 2,680 | | | $ | 224 | | | $ | 350 | | | $ | 276 | | | $ | 3,530 | | | $ | (3,543 | ) | | $ | 1,064 | | | $ | 1,744 | | | $ | 5,472 | | | $ | 4,737 | |
Addback: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Litigation costs (recoveries) | | | (3,001 | ) | | | 560 | | | | 445 | | | | 887 | | | $ | (1,109 | ) | | | 8,446 | | | | 477 | | | | 91 | | | | (4,064 | ) | | $ | 4,950 | |
Restructuring charge (reversal) | | | (94 | ) | | | | | | | | | | | | | | $ | (94 | ) | | | | | | | | | | | | | | | | | | | | |
Tax effect of litigation costs (recoveries), restructuring charge (reversals) and income tax adjustments | | | 1,399 | | | | (184 | ) | | | (146 | ) | | | (293 | ) | | $ | 776 | | | | (2,995 | ) | | | (143 | ) | | | (27 | ) | | | 873 | | | $ | (2,292 | ) |
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Adjusted net income | | $ | 984 | | | $ | 600 | | | $ | 649 | | | $ | 870 | | | $ | 3,103 | | | $ | 1,908 | | | $ | 1,398 | | | $ | 1,808 | | | $ | 2,281 | | | $ | 7,395 | |
Shares used to compute diluted earnings per share | | | 12,938 | | | | 12,953 | | | | 12,918 | | | | 12,849 | | | | | | | | 12,873 | | | | 12,911 | | | | 12,897 | | | | 12,981 | | | | | |
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Adjusted diluted earnings per share | | $ | 0.08 | | | $ | 0.05 | | | $ | 0.05 | | | $ | 0.07 | | | $ | 0.24 | | | $ | 0.15 | | | $ | 0.11 | | | $ | 0.14 | | | $ | 0.18 | | | $ | 0.57 | |
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Adjusted Operating Income
The following table shows a reconciliation of net income to operating income and adjusted operating income. Management uses these measurements to evaluate the profitability of the business. The adjusted income excludes the effects of litigation costs (recoveries) and restructuring charges (reversals).
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(in thousands)
(unaudited) | | 12/31/2003
| | | 3/31/2004
| | 6/30/2004
| | 9/30/2004
| | LTM
Total
| | | 12/31/2004
| | | 3/31/2005
| | 6/30/2005
| | 9/30/2005
| | | LTM
Total
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For the fiscal quarters ended: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss), as reported | | $ | 2,680 | | | $ | 224 | | $ | 350 | | $ | 276 | | $ | 3,530 | | | $ | (3,543 | ) | | $ | 1,064 | | $ | 1,744 | | $ | 5,472 | | | $ | 4,737 |
Addback: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Income tax provision (benefit) | | | 1,320 | | | | 111 | | | 173 | | | 136 | | | 1,740 | | | | (2,054 | ) | | | 456 | | | 748 | | | 1,632 | | | | 782 |
Interest expense, net | | | 337 | | | | 294 | | | 325 | | | 451 | | | 1,407 | | | | 524 | | | | 487 | | | 659 | | | 656 | | | | 2,326 |
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Operating income | | $ | 4,337 | | | $ | 629 | | $ | 848 | | $ | 863 | | $ | 6,677 | | | $ | (5,073 | ) | | $ | 2,007 | | $ | 3,151 | | $ | 7,760 | | | $ | 7,845 |
Addback: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Litigation costs (recoveries) | | | (3,001 | ) | | | 560 | | | 445 | | | 887 | | | (1,109 | ) | | | 8,446 | | | | 477 | | | 91 | | | (4,064 | ) | | | 4,950 |
Restructuring charge (reversal) | | | (94 | ) | | | — | | | — | | | — | | | (94 | ) | | | — | | | | — | | | — | | | — | | | | |
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Adjusted operating income | | $ | 1,242 | | | $ | 1,189 | | $ | 1,293 | | $ | 1,750 | | $ | 5,474 | | | $ | 3,373 | | | $ | 2,484 | | $ | 3,242 | | $ | 3,696 | | | $ | 12,795 |
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EBITDA and Adjusted EBITDA
EBITDA is commonly defined as Earnings before Interest, Taxes, Depreciation and Amortization. Management believes that Adjusted EBITDA is a meaningful indicator of profitability for the business. Adjusted EBITDA excludes from EBITDA the effects of special charges (reversals).
Adjusted EBITDA, as presented, is supplemental information and is not presented and should not be considered in isolation, or as a substitute for ICT’s consolidated financial information presented under GAAP. There are potentially different definitions of EBITDA and ICT’s definition may differ from other definitions.
The reconciliation of net income to EBITDA and Adjusted EBITDA is as follows:
(in thousands)
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| For fiscal years: | | 1994
| | 1995
| | 1996
| | | 1997
| | | 1998
| | 1999
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Net income (loss), as reported | | $ | 898 | | $ | 1,570 | | $ | (7,517 | ) | | $ | 2,672 | | | $ | 2,427 | | $ | 4,745 |
Addback: | | | | | | | | | | | | | | | | | | | | |
Interest expense, net | | | 511 | | | 833 | | | 180 | | | | (398 | ) | | | 406 | | | 801 |
Income tax provision or benefit | | | — | | | — | | | (2,998 | ) | | | 1,708 | | | | 1,549 | | | 3,033 |
Depreciation and Amortization | | | 1,243 | | | 1,877 | | | 2,792 | | | | 3,560 | | | | 5,667 | | | 8,004 |
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EBITDA | | $ | 2,652 | | $ | 4,280 | | $ | (7,543 | ) | | $ | 7,542 | | | $ | 10,049 | | $ | 16,583 |
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Addback: | | | | | | | | | | | | | | | | | | | | |
Charge related to stock compensation at time of IPO | | | — | | | — | | | 12,690 | | | | — | | | | — | | | — |
Restructuring charge (reversals) | | | — | | | — | | | — | | | | — | | | | — | | | — |
Client claim | | | — | | | — | | | — | | | | — | | | | — | | | — |
Litigation costs | | | — | | | — | | | — | | | | — | | | | — | | | — |
Writeoff of deferred offering costs | | | — | | | — | | | — | | | | — | | | | — | | | — |
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Adjusted EBITDA | | $ | 2,652 | | $ | 4,280 | | $ | 5,147 | | | $ | 7,542 | | | $ | 10,049 | | $ | 16,583 |
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(in thousands)
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| For fiscal years: | | 2000
| | 2001
| | 2002
| | 2003
| | | 2004
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Net income (loss), as reported | | $ | 6,729 | | $ | 7,978 | | $ | 2,968 | | $ | (1,144 | ) | | $ | (2,693 | ) |
Addback: | | | | | | | | | | | | | | | | | |
Interest expense, net | | | 1,207 | | | 1,079 | | | 828 | | | 1,183 | | | | 1,594 | |
Income tax provision or benefit | | | 4,302 | | | 4,506 | | | 1,398 | | | (856 | ) | | | (1,634 | ) |
Depreciation and Amortization | | | 9,621 | | | 11,279 | | | 15,443 | | | 17,855 | | | | 17,822 | |
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EBITDA | | $ | 21,859 | | $ | 24,842 | | $ | 20,637 | | $ | 17,038 | | | $ | 15,089 | |
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Addback: | | | | | | | | | | | | | | | | | |
Charge related to stock compensation at time of IPO | | | — | | | — | | | — | | | — | | | | — | |
Restructuring charge (reversals) | | | — | | | — | | | 8,894 | | | (686 | ) | | | — | |
Client claim | | | — | | | — | | | 1,409 | | | — | | | | — | |
Litigation costs | | | — | | | — | | | 1,673 | | | 4,693 | | | | 10,338 | |
Writeoff of deferred offering costs | | | — | | | — | | | 581 | | | — | | | | — | |
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Adjusted EBITDA | | $ | 21,859 | | $ | 24,842 | | $ | 33,194 | | $ | 21,045 | | | $ | 25,427 | |
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