Exhibit 99.1
iGATE Corporation Reports Revenues of $73.9 Million for Fourth Quarter 2003
* iGATE Corporation's Indian subsidiary, iGATE Global Solutions, signs
two multi-year $20 million contracts
* iGATE Corporation intends to further simplify internal structure
PITTSBURGH, Feb. 5 /PRNewswire-FirstCall/ -- iGATE Corporation
(Nasdaq: IGTE), a US-based global provider of IT and BPO services, today
announced consolidated revenues of $73.9 million for the fourth quarter ended
December 31, 2003, which is a 6.3% increase from $69.6 million in the same
period a year ago and a 1.9% increase compared with $72.5 million reported in
the third quarter of 2003. Revenues for the year ended December 31, 2003 were
$287.8 million compared with revenues of $292.6 million for the prior year.
Net loss for the quarter ended December 31, 2003 was ($8.5) million or
($0.16) per share compared with ($35.6) million or ($0.69) per share in the
same quarter a year ago. For the year ended December 31, 2003, net loss was
($9.0) million or ($0.17) per share compared with ($27.5) million or ($0.54)
per share for the prior year.
Commenting on the net loss for the fourth quarter, Michael J. Zugay,
iGATE's Chief Financial Officer said, "The fourth quarter net loss per share
of ($0.16) was higher than the ($0.06) loss per share guidance provided last
quarter because of two non-cash charges and a very low effective tax rate.
The two non-cash charges accounted for approximately ($0.09) loss per share
and represented revised estimates for previously abandoned office space and
goodwill impairment write-offs for previous acquisitions. An additional
($0.01) loss per share was due to a lower than anticipated effective tax rate
mainly related to the previously announced sale of a subsidiary to iGATE
Global Solutions."
"2003 was a critical year of transition for iGATE as we pursued our
strategy to enhance offshore outsourcing services. The various acquisitions
we made in the offshore Business Process Outsourcing space along with the
significant strengthening of our management team at iGATE Global Solutions are
contributing to the unique positioning of our integrated approach to IT and
BPO service offerings," said Sunil Wadhwani, iGATE's Chief Executive Officer
and Co-Founder.
Phaneesh Murthy, CEO of iGATE Global Solutions, commenting on iGATE Global
Solutions' results this quarter stated, "Integration and consolidation
continue to be key initiatives. As a result of these efforts and due to the
sub-critical mass of our BPO and contact center operations, we incurred losses
this quarter. However, we are starting to see traction in the market place
for our integrated technology and operations model -- in the last month we
have announced two deals worth approximately $20 million each."
"The outlook for the offshore market looks greater than ever. Clients
around the world are adopting this now proven and efficient way of doing
business enabling them to reap significant savings to accomplish their IT
needs. These same clients are now considering offshore outsourcing for their
back-office transactions also called BPO. This market trend is in line with
iGATE Global Solutions' (iGS) integrated approach to offering both IT and BPO
services and should result in increased traction for iGS's services," said
Ashok Trivedi, iGATE Corporation's President and Co-Founder.
Offshore Outsourcing Services.
* iGATE Global Solutions Ltd. announced in December that it closed a
five-year $20 million IT outsourcing contract with ING Vysya Bank, the
Indian subsidiary of ING Group. Under this agreement, iGS was
entrusted to play a key role in ING Vysya Bank's IT strategy, including
hardware identification and procurement, definition and implementation
of the technology strategy for the bank and taking responsibility for
all data center operations, systems and network management, and local
or remote support at ING Vysya locations. While the relationship with
the bank was a long-standing relationship with IdeaSpace, a company
acquired last quarter for $1.5 million, the extended range of services
iGS offers helped enhanced the scope of the contract.
* In January of 2004, iGS signed its first BPO contract with a large
financial institution, with about $22 billion in assets. As part of
this multi-year contract for approximately $20 million, iGS will manage
selective parts of the client's back office processes and enhance
efficiency and operational excellence.
* In the quarter, iGATE Global Solutions continued to strengthen its
management team with the addition of Mohan Shekar, appointed Chief
Delivery Officer at iGS in November. Mohan Shekar, formerly head of IT
delivery operations for North America at Infosys, also brings
significant experience in systems integration and infrastructure
management services. In his new role at iGS, his focus is to
strengthen delivery operations, improve the offshore ratios, integrate
project management onsite and offsite and bring excellence in
operations.
* Finally, in an effort to further simplify the corporate/capital
structure and clearly combine all consulting and BPO-related assets
together, iGATE Corporation and iGATE Global Solutions have proposed to
make the following two strategic changes:
* First, to eliminate the initially planned cross-ownership of
Quintant -- the Indian-based Business Services Provisioning
entity acquired in July 2003 -- iGATE Global Solutions, instead
of iGATE Corporation, intends to issue stock to acquire the
remaining 49% of Quintant's stock. This simpler ownership will
group 100% of Quintant under iGATE Global Solutions.
* Second, iGATE Corporation intends to transfer two of its US-
based subsidiaries, Symphoni and Global Financial Services, to
iGATE Global Solutions. Symphoni and Global Financial Services
are two financial consulting entities which have been working
intimately together and have been providing IT and process
consulting services to leading US banks and financial
institutions for over 15 years. Combined these entities had, in
2003, revenues of $16.3 million in 2003 and operating loss of
($0.2) million. These entities will supplement iGATE Global
Solutions' offerings in the financial and insurance industry and
consolidate all solutions activities under the same entity.
These two transactions should be finalized within the next several weeks
as they are subject to Indian regulations and approvals, including independent
valuations performed by third parties in the US and in India for the
acquisition of Symphoni and Global Financial Services.
Professional Services.
* Revenues in the iGATE Professional Services segment increased 5.5%
sequentially to $35.1 million this quarter, as the staffing business
for the second quarter in a row showed signs of a more stable
environment.
* Increased activity in iGATE's North-American staffing operations, in
the third and early part of the fourth quarter, was primarily
responsible for the revenue increase. These results were achieved
despite lower utilization rates in the quarter due to the holiday
season, and continued pricing pressure in all staffing operations
around the world.
* SG&A expenses for the segment represented 14.1% of revenues, which is
in line with the third quarter 2003 and compares favorably with 15.4%
of revenues recorded in the same quarter a year ago.
Looking ahead to Q1 2004, Sunil Wadhwani added, "As iGATE Global Solutions
continues to put in place the right infrastructure, build its pipeline and
critical mass, and iGATE Professional Services continues to generate
profitability and cash flow to iGATE Corporation, we do not expect first
quarter 2004 revenues and earnings to change materially from the fourth
quarter 2003. We expect revenues to be flat to slightly up compared with Q4
and first quarter's losses per share to range between ($0.03) and ($0.04). We
remain optimistic about iGATE Global Solutions' long-term outlook and continue
to believe iGS is well positioned to take advantage of the offshore BPO market
growth through its unique integrated IT and BPO approach. Phaneesh has
assembled an impressive leadership team over the past six months. He and his
team are on track to position iGS for future revenues and earnings growth in
the second half of 2004, as evidenced by the two multi-year $20 million deals
announced recently and continued developments in the pipeline."
iGATE will host its third quarter earnings conference call at 9:00 am ET,
on Thursday, February 5, 2004. The call will be webcast at iGATE Corporation's
new website address www.igatecorp.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 1:00
p.m. February 5, 2004 through 12:00 midnight, February 12, 2004. Domestic
callers can access the replay by dialing 800-642-1687 and entering pass code
4524355. International callers can access the replay by dialing 706-645-9291
and entering the same pass code: 4524355. The webcast will be available for
replay though February 12, 2004 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 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,
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.igatecorp.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 Twelve Months Ended
December December December December
31, 2003 31, 2002 31, 2003 31, 2002
Revenues $73,916 $69,568 $287,801 $292,648
Cost of revenues (1) 55,625 51,063 212,985 209,445
Gross margin 18,291 18,505 74,816 83,203
Selling, general and
administrative (1) 23,046 18,849 78,668 77,465
Special items 604 4,232 604 4,232
Goodwill impairment 3,933 29,688 3,933 29,688
Loss from operations (9,292) (34,264) (8,389) (28,182)
Other income, net 638 523 2,324 1,530
Minority interest 87 (56) (312) (441)
Gain on deconsolidation of subsidiary - - - 7,086
Equity in losses of affiliated
companies (99) - (99) -
Loss on venture investments and
affiliated companies - (7,395) - (7,610)
Loss before income taxes (8,666) (41,192) (6,476) (27,617)
Income tax (benefit) provision (129) (5,556) 2,544 (126)
Net loss $(8,537) $(35,636) $(9,020) $(27,491)
Net loss per common share, Basic: $(0.16) $(0.69) $(0.17) $(0.54)
Net loss per common share, Diluted:$(0.16) $(0.69) $(0.17) $(0.54)
Weighted average common shares
outstanding 52,017 51,355 51,697 51,304
Weighted average dilutive common
equivalent shares outstanding 52,017 51,355 51,697 51,304
Reconciliation of GAAP loss to net
loss excluding the tax provision
related to the sale of eJiva to
iGATE Global Solutions (2):
Net loss $(8,537) $(35,636) $(9,020) $(27,491)
Add: provision for income taxes
related to the sale of eJiva to
iGATE Global Solutions 363 - 2,149 -
Net loss excluding the provision
for income taxes related to the
sale of eJiva to iGATE Global
Solutions $(8,174) $(35,636) $(6,871) $(27,491)
Net loss excluding the provision
for income taxes per common
share: $(0.16) $(0.69) $(0.13) $(0.54)
(1) 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.
(2) This reconciliation is for informational purposes only, and is not a
substitute for the GAAP financial information presented above under
net loss.
iGATE CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(dollars in thousands)
December 31, December 31,
2003 2002
ASSETS
Current assets:
Cash and cash equivalents $36,133 $56,793
Short term investments 39,582 51,188
Accounts receivable, net 53,838 47,964
Prepaid and other current assets 7,563 7,690
Prepaid income taxes 792 3,334
Deferred income taxes 4,545 4,624
Total current assets 142,453 171,593
Land, building, equipment and
leasehold improvements, net 16,770 10,710
Intangible assets, net 18,786 4,015
Investments in unconsolidated affiliates 2,931 2,622
Total assets $180,940 $188,940
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $11,737 $8,706
Accrued payroll and related costs 19,149 19,421
Accrued income taxes 1,102 4,475
Other accrued liabilities 8,178 18,970
Deferred revenue 994 3,837
Total current liabilities 41,160 55,409
Other long term liabilities 1,304 1,319
Deferred income taxes 9,467 8,839
Total liabilities 51,931 65,567
Minority interest 6,874 6,224
Shareholders' equity:
Common Stock, par value $0.01 per share 529 525
Additional paid-in capital 160,336 143,568
Retained deficit (18,499) (9,479)
Deferred compensation (8,933) (102)
Common stock in treasury, at cost (14,714) (14,714)
Accumulated other comprehensive
income (loss) 3,416 (2,649)
Total shareholders' equity 122,135 117,149
Total liabilities and
shareholders' equity $180,940 $188,940
Three Months Ended
December 31, 2003 Professional iGate iGate
Services Solutions Corporate Total
External revenues $35,067 $38,187 $662 $73,916
Cost of revenues 28,288 26,967 370 55,625
Gross margin 6,779 11,220 292 18,291
Selling, general and administrative 4,956 15,032 3,058 23,046
Special items - 524 80 604
Goodwill impairment 3,933 - - 3,933
Income (loss) from operations $(2,110) $(4,336) (2,846) (9,292)
Other income, net 638 638
Minority interest 87 87
Equity in losses of affiliated
companies (99) (99)
Loss before income taxes $(2,220) $(8,666)
Twelve Months Ended
December 31, 2003
External revenues $135,085 $151,060 $1,656 $287,801
Cost of revenues 107,084 104,945 956 212,985
Gross margin 28,001 46,115 700 74,816
Selling, general and administrative 19,009 48,291 11,368 78,668
Special items - 524 80 604
Goodwill impairment 3,933 - - 3,933
Income (loss) from operations $5,059 $(2,700) (10,748) (8,389)
Other income, net 2,324 2,324
Minority interest (312) (312)
Equity in losses of affiliated
companies (99) (99)
Loss before income taxes $(8,835) $(6,476)
SOURCE iGATE Corporation
-0- 02/05/2004
/CONTACT: Laureen Laby, Investor Relations of iGATE Corporation,
+1-412-787-9230, or llaby@igate.com /
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/Web site: http://www.igatecorp.com /
(IGTE)
CO: iGATE Corporation; iGATE Global Solutions
ST: Pennsylvania
IN: CPR STW
SU: ERN ERP CCA MAV