Exhibit 99.1
iGATE Reports Revenues of $72.5 Million for Third Quarter 2003
- iGATE acquires Quintant
- iGATE Global Solutions signs joint-venture with leading German software
firm, Software AG
- iGATE Global acquires IT Solutions and Services business of IdeaSpace
(India) and strikes strategic alliance with US-based consulting firm,
Concours Group
PITTSBURGH, Oct. 30 /PRNewswire-FirstCall/ - iGATE Corporation
(Nasdaq: IGTE), a global provider of IT and BPO services, today announced
consolidated revenues of $72.5 million for the third quarter ended September
30, 2003, which is a slight increase from $72.1 million in the same period a
year ago and flat compared with $72.7 million reported in the second quarter
of 2003. For the first nine months of 2003, revenues were $213.9 million
compared with revenues of $223.1 million for the same period a year ago.
iGATE's consolidated SG&A expenses increased sequentially from
$18.3 million in the second quarter to $20.8 million in this quarter, for
three primary reasons. First, iGATE incurred approximately $0.8 million of
acquisition-related expenses associated with the purchase of Quintant, which
closed on August 21, 2003. Second, IT&T's call center and infrastructure
management businesses and Quintant are early-stage entities, and contributed
approximately $1.2 million of additional SG&A expenses this quarter. Finally,
deferred compensation expenses and goodwill amortization related to the
Quintant acquisition amounted to a $0.7 million non-cash charge this quarter.
Net loss for the third quarter of 2003 was ($1.4) million or ($0.03) per
share compared with net income of $1.3 million or $0.03 per diluted share in
the same quarter a year ago and $1.4 million or $0.03 per diluted share in the
second quarter of 2003. For the nine-month period ended September 30, 2003,
net loss was ($0.5) million or ($0.01) per share which compares with last
year's net income of $8.1 million, or $0.16 per diluted share, including a
$4.3 million one-time gain.
"Over the past several months, we have made significant strides in
expanding our offshore outsourcing activities. In March, we acquired an IT
development center in China and have begun pilot projects there for several
clients. We marked our entry into the BPO space in May, with the acquisition
of IT&T's Call Center and Infrastructure Management Services businesses in
India. In July, we acquired Quintant, an Indian firm which offers process and
technology optimization and offshore outsourcing services. In August, we
appointed Phaneesh Murthy as CEO of iGATE Global Solutions, iGATE's offshore
subsidiary. Phaneesh was formerly a senior executive at Infosys and
shareholder and advisor of Quintant. We expect the positive strategic impact
of these actions to become visible in the next two to three quarters, once all
the elements are fully integrated," said Sunil Wadhwani, iGATE's Chief
Executive Officer and Co-Founder.
"The acquisition of Quintant was a significant move for iGATE Global
Solutions. It has brought management strength, domain expertise in the
banking and insurance industries and deep experience in the transaction
processing outsourcing area. We are confident that this transaction, combined
with the addition of IdeaSpace and the partnership with Concours will
contribute to iGATE Global Solutions' growth," said Ashok Trivedi, iGATE
Corporation's President and Co-Founder.
Phaneesh Murthy, appointed CEO of iGATE Global Solutions in July 2003,
commenting on iGATE Global's results this quarter stated, "The restructuring
and integration efforts are progressing smoothly. We are putting in place
measures to increase operational efficiencies, and we expect these measures to
show results in 2004."
Highlights during the quarter:
Offshore Outsourcing Services.
- The acquisition of Quintant, and the integration of its strong
management team within iGATE Global Solutions resulted, in a newly
structured iGATE Global Solutions focused on three business areas: IT
operations, BSP/BPO operations, and Call Center & Infrastructure
Management services. iGATE Global Solutions is now uniquely positioned
to sell and deliver an integrated set of IT & BPO services.
- iGATE Global Solutions formed a joint venture, in August, with Software
AG (SAG), a leading provider of system software and services based in
Germany. The joint venture, named Software AG (India) Private Ltd. is
49% owned by iGATE Global Solutions and started to operate early
October. Software AG will contribute to increasing iGATE Global
Solutions' offshore business by offering SAG services including
application development, application management and maintenance, and
professional services projects.
- On October 20, 2003, iGATE Global announced it would acquire the assets
of Bangalore-based IdeaSpace Solutions Ltd.'s information technology
solutions and services business for approximately $1.7 million. This
entity has as a major client in ING Vysya Bank, the Indian subsidiary
of the $47 billion European-based ING Group, which offers banking,
insurance and asset management services. The acquisition will add 170
billable employees to iGATE Global Solutions, many of whom are
specialists in banking technology and operations.
- iGATE Global Solutions recently strengthened its consulting team by
establishing an alliance with the Concours Group, a US based strategy
consulting and research firm delivering research, education and
consulting to its clients. iGATE Global Solutions will make a
$1.8 million equity investment in Concours and through this alliance
will be positioned to leverage Concours' clients executive-level
relationships with over 300 of the Global 1000 companies.
Professional Services.
- While revenues in the iGATE Professional Services segment declined to
$33.2 million this quarter as a result of continued pressure on bill
rates and decreased headcount in some geographies, iGATE's North-
American staffing operation experienced a significant net headcount
growth in this quarter.
- In addition, iGATE's North American staffing unit further positioned
itself to increase its margins by leveraging iGATE's offshore BPO
capabilities for its own internal processes.
As previously announced, additional non-cash compensation charges related to
the Quintant acquisition will occur over the next four years. The total amount
of these charges will be approximately $10.4 million rather than the previously
announced range of $5 to $6 million. In addition, iGATE will incur quarterly
non-cash charges amounting to $5 million over an average of four years,
reflecting the amortization of Quintant's intangible assets that were acquired
in the deal.
Looking ahead to Q4 2003, Sunil Wadhwani added, "We expect that it will
take two to three quarters for the results from our recent acquisitions and
strengthened management team to be visible. Considering these factors, and
the lower utilization typically experienced in the fourth quarter due to the
holiday season, we expect fourth quarter revenues to be flat to slightly down
compared with Q3 and fourth quarter's losses per share to range between
($0.04) and ($0.06) including ($0.02) associated with non-cash charges."
iGATE will host its third quarter earnings conference call at 10:00 am
EST, on Thursday, October 30, 2003. The call will be webcast at www.igate.com
via the Investor Relations section of the site. Investors should log on 10
minutes prior to the start of the program.
A replay of the call will be available beginning at approximately
2:00 p.m. October 30, 2003 through 12:00 midnight, November 6, 2003. Domestic
callers can access the replay by dialing 888-266-2081 and entering pass code
267999. International callers can access the replay by dialing 703-925-2533
and entering the same pass code: 267999. The webcast will be available for
replay though November 6, 2003 on iGATE's corporate website.
About iGATE:
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, 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, system integration,
package evaluation and implementation, re-engineering and maintenance.
iGATE Corporation also offers IT Professional Services through its other
subsidiaries.
The company services more than 500 clients across five continents.
Clients rely on iGATE because of our high quality of service, our
responsiveness and our cost-effective global reach. More information on iGATE
is available at www.igate.com .
Some of the statements in this news release that are not historical facts
are forward-looking statements. These forward-looking statements include our
financial, growth and liquidity projections as well as statements concerning
our plans, strategies, intentions and beliefs concerning our business, cash
flows, costs and the markets in which we operate. 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 us, and we assume
no obligation to update these statements as circumstances change. There are
risks and uncertainties that could cause actual events to differ materially
from these forward-looking statements. These risks include, but are not
limited to, our ability to predict our financial performance, the level of
market demand for our services, the highly-competitive market for the types of
services that we offer, the impact of competitive factors on profit margins,
market conditions that could cause our customers to reduce their spending for
our services, our ability to create, acquire and build new businesses and to
grow our existing businesses, our ability to attract and retain qualified
personnel, our ability to 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 our filings with the Securities and
Exchange Commission including our Form 10-K for the year ended December 31,
2002.
iGate Corporation
Consolidated Statements of Income
(dollars in thousands, except per share data)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2003 2002 2003 2002
Revenues $72,535 $72,122 $213,885 $223,080
Cost of revenues (A) 53,816 51,805 157,360 158,382
Gross margin 18,719 20,317 56,525 64,698
Selling, general and
administrative (A) 20,762 18,047 55,622 58,616
(Loss) income from operations (2,043) 2,270 903 6,082
Other income, net 94 18 1,686 1,007
Minority interest 117 (53) (399) (385)
Gain on deconsolidation of
subsidiary - - - 7,086
Loss on venture investments and
affiliated companies - - - (215)
(Loss) income before income taxes (1,832) 2,235 2,190 13,575
Provision for income taxes (404) 894 2,673 5,430
Net (loss) income $(1,428) $1,341 $(483) $8,145
Net (loss) income per common
share, Basic: $(0.03) $0.03 $(0.01) $0.16
Net (loss) income per common
share, Diluted: $(0.03) $0.03 $(0.01) $0.16
Weighted average common shares
outstanding 51,664 51,328 51,573 51,271
Weighted average dilutive common
equivalent shares outstanding 51,664 52,318 51,573 52,326
Reconciliation of GAAP earnings to
net (loss) earnings excluding the
tax provision related to the sale
of eJiva to Mascot (B):
Net (loss) income $(1,428) $1,341 $(483) $8,145
Add: provision for income taxes
related to the sale of eJiva to
Mascot - - 1,786 -
Net earnings excluding the
provision for income taxes
related to the sale of eJiva to
Mascot $(1,428) $1,341 $1,303 $8,145
Net (loss) earnings excluding the
provision for income taxes per
common share: $(0.03) $0.03 $0.03 $0.16
(A) Bench expenses were reclassified from SG&A expenses to Cost of
revenues. "Bench expenses" correspond to the costs associated with
consultants not currently working on projects.
(B) This reconciliation is for informational purposes only, and is not a
substitute for the GAAP financial information presented above
under net (loss) income.
iGATE CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(dollars in thousands)
September 30, December 31,
2003 2002
ASSETS
Current assets:
Cash and cash equivalents $51,428 $56,793
Short term investments 37,986 51,188
Accounts receivable, net 53,567 47,964
Prepaid and other current assets 8,769 7,690
Prepaid income taxes 506 3,334
Deferred income taxes 4,154 4,624
Total current assets 156,410 171,593
Land, building, equipment and
leasehold improvements, net 16,247 10,710
Intangible assets, net 19,238 4,015
Investments in unconsolidated
affiliates 4,244 2,622
Total assets $196,139 $188,940
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $11,088 $8,706
Accrued payroll and related
costs 20,720 19,421
Accrued income taxes 522 4,475
Other accrued liabilities 17,527 18,970
Deferred revenue 1,039 3,837
Total current liabilities 50,896 55,409
Other long term liabilities 1,063 1,319
Deferred income taxes 9,965 8,839
Total liabilities 61,924 65,567
Minority interest 6,668 6,224
Shareholders' equity:
Common Stock, par value $0.01
per share 528 525
Additional paid-in capital 159,848 143,568
Retained deficit (9,962) (9,479)
Deferred compensation (9,685) (102)
Common stock in treasury, at cost (14,714) (14,714)
Accumulated other comprehensive
income (loss) 1,532 (2,649)
Total shareholders' equity 127,547 117,149
Total liabilities and
shareholders' equity $196,139 $188,940
iGate
Professional iGate iGate
Three Months Ended Services Solutions Corporate Total
September 30, 2003
External revenues $33,246 $38,874 $415 $72,535
Cost of revenues 26,546 26,997 273 53,816
Gross margin 6,700 11,877 142 18,719
Selling, general and administrative 4,606 13,057 3,099 20,762
Income (loss) from operations $2,094 $(1,180) (2,957) (2,043)
Other income, net 94 94
Minority interest 117 117
(Loss) income before income taxes $(2,746) $(1,832)
Nine Months Ended
September 30, 2003
External revenues $100,018 $112,873 $994 $213,885
Cost of revenues 78,796 77,978 586 157,360
Gross margin 21,222 34,895 408 56,525
Selling, general and administrative 14,053 33,259 8,310 55,622
Income (loss) from operations $7,169 $1,636 (7,902) 903
Other income, net 1,686 1,686
Minority interest (399) (399)
(Loss) income before income taxes $(6,615) $2,190
SOURCE iGATE Corporation
-0- 10/30/2003
/CONTACT: Laureen Laby, Investor Relations iGATE Corporation,
+1-412-787-9230, or llaby@igate.com/
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PRN Photo Desk, 888-776-6555 or 212-782-2840/
/Web site: http://www.igatecorp.com/
(IGTE)
CO: iGATE Corporation
ST: Pennsylvania
IN: CPR STW
SU: ERN CCA MAV