EXHIBIT 99
FOR RELEASE 8:00 A.M. EST
Contacts:
Chairman/CEO Chief Financial Officer
Zach Lonstein William McHale
Infocrossing, Inc. Infocrossing, Inc.
(201) 840-4726 (201) 840-4732
zlonstein@infocrossing.com wmchale@infocrossing.com
Investor Relations
Matthew Hayden
Hayden Communications, Inc.
(858) 704-5065
INFOCROSSING REPORTS RECORD REVENUES AND EARNINGS FOR FISCAL 2004
PROFIT OUTLOOK ALLOWS COMPANY TO RELEASE DEFERRED TAX VALUATION ALLOWANCE
FISCAL 2005 GUIDANCE UPDATED; FIRST QUARTER 2005 GUIDANCE PROVIDED
LEONIA, NJ, March 16, 2005 - Infocrossing, Inc. (Nasdaq: IFOX) a provider of
selective IT outsourcing and business processing solutions announced today
financial results for the fourth quarter and fiscal year ended December 31,
2004.
Summary of Results
For the full year, revenue increased 90.0% to $104.9 million. Net income was
$20.0 million compared with a loss of ($5.5) million a year earlier, and diluted
earnings per share (EPS) was $0.95 versus ($0.76) for the previous period.
Excluding the impact of (1) releasing a $12.5 million deferred tax valuation
allowance and (2) an accounting rule change to include in the computation of EPS
the shares into which contingently convertible debt may be converted, net income
was $7.4 million and EPS $0.38, ahead of the Company's previously issued
guidance of $6.9 million and $0.35, respectively. For the three months ended
December 31, 2004, net income was $17.4 million compared with $1.2 million a
year earlier, and EPS was $0.68 compared with $0.08 for the previous period.
Excluding the impact of releasing the deferred tax valuation allowance and
accounting rule change, net income was $4.9 million and EPS $0.23, ahead of the
Company's previously issued guidance of $4.4 million and $0.20, respectively.
See Appendix B in the financial section of this press release for a
reconciliation of EPS and net income adjusted to reflect the releasing of the
deferred tax valuation allowance and the accounting rule change.
2004 Fourth Quarter Detail
For the fourth quarter of 2004, Infocrossing reported record revenue of $38.7
million, up 169.0% or $24.3 million versus $14.4 million reported for the fourth
quarter of 2003. The increase in revenue resulted from acquisitions and organic
growth. Revenue for the quarter included $12.9 million from Infocrossing
Healthcare Services, Inc. (IHS), a company acquired in October 2004. Excluding
revenue from acquisitions, Infocrossing's revenue for the fourth quarter of 2004
increased $2.4 million or 17.0% compared with the revenue of the same period a
year ago.
Earnings before interest, taxes, depreciation and amortization (EBITDA)
increased more than 225.0% to $9.2 million during the fourth quarter, an
increase of $6.4 million, versus $2.8 million reported a year earlier. This
increase reflects revenue growth and the Company's success in leveraging its
operational infrastructure. Infocrossing uses EBITDA because it considers such
information an important supplemental measure of its operating performance and
believes EBITDA 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. See
Appendix A for a reconciliation of EBITDA to net income in the financial section
of this press release.
Income before taxes increased more than 800.0% to $4.9 million from $.5 million
for the fourth quarter of 2003. As a result of the Company's profitability and
forecasts for future periods, the Company released approximately $12.5 million
of a deferred tax valuation allowance. The Company has concluded it is more
likely than not that an amount equal to such allowance will be fully realized in
future periods, so the allowance is no longer required. An allowance is required
only if there is uncertainty with respect to having sufficient taxable income to
utilize deferred tax assets in future periods. The Company will enjoy the cash
benefit of these deferred assets through lower taxes payable in the future. See
Appendix B in the financial section of this press release for a reconciliation
of EPS and net income as a result of releasing the deferred tax valuation
allowance and the accounting rule change described above.
Net income for the period was $17.4 million or $0.68 per diluted share compared
with net income of $1.2 million or $0.08 per diluted share for the same period a
year ago. The weighted average number of shares and share equivalents used to
calculate EPS was 26.2 million shares for the current period compared with 14.2
million shares the same period a year earlier. The share count increase was a
result of the March 30, 2004 private placement of 2.9 million shares, the
potential issuance of 4.7 million shares from the conversion of $72.0 million of
contingently convertible notes issued earlier in 2004, and the improved market
value of the Company's shares.
In addition to releasing the deferred tax valuation allowance, the Company's
guidance for the period, which was issued on November 15, 2004, did not
encompass the impact of a change in the accounting rules to determine the effect
of contingently convertible securities on EPS. As a result of an action taken by
the Emerging Issues Task Force of the Financial Accounting Standards Board, the
potential conversion of approximately 4.7 million shares must be included in
determining the number of shares used to calculate EPS. The accounting rule
change also requires that interest, net of tax on the Company's convertible
notes, be added back to net income for the purpose of computing EPS. The change
applies to accounting periods ending after December 15, 2004.
See Appendix B in the financial section of this press release for a
reconciliation of EPS and net income as a result of releasing the deferred tax
valuation allowance and the accounting rule change with respect to determining
EPS when a company has contingently convertible debt outstanding.
2004 Fiscal Year Detail
For the year ended December 31, 2004, revenue reached a record $104.9 million,
an increase of $49.7 million or 90.0% compared with $55.2 million in the same
period a year earlier. Revenue for the period was ahead of the Company's
previously issued guidance of $103.2 million. During the year, the Company
completed two significant acquisitions that broadened its geographic reach and
established a major presence in IT outsourcing to the healthcare sector.
Excluding revenue from the acquisitions during the year, revenue increased $9.1
million or 18.0% year-over-year.
EBITDA for 2004 was $21.6 million, an increase of $11.6 million or 116.0%
compared with $10.0 million for 2003. A reconciliation of EBITDA to net income
can be found in Appendix A in the financial section of this press release.
Net income was $20.0 million or $0.95 per diluted share for 2004 compared with a
loss of $5.5 million or $0.76 loss per diluted share for 2003. The weighted
average number of shares and share equivalents used to calculate EPS was 21.9
million shares for the period compared with 7.3 million shares in the same
period a year earlier. Earnings per share for 2004 includes a pre-tax loss of
$0.06 per share taken in the second quarter resulting from the non-cash
write-off of $1.3 million of unamortized financing costs.
Zach Lonstein, Chairman and Chief Executive Officer of Infocrossing, said "This
has been a year of extraordinary achievements at Infocrossing. Our commitment to
customer service is unwavering. Our customers tell us that reliability, quality
of service, cost savings, and flexibility are foundational reasons why they use
our selective IT outsourcing solutions. Our continuing concentration on meeting
our customers' exacting requirements coupled with acquisitions has given us the
scale and breadth of offerings that resulted in double digit revenue and
earnings growth."
2004 Business Highlights
o Infocrossing added $4.2 million in incremental revenue commitments in the
fourth quarter over contract terms up to three years in length, resulting
in total new revenue commitments achieved in 2004 of $52.0 million.
o Annualized revenue per full-time employee (FTE) grew to $275,000, a
productivity improvement of 30.0% from $215,000 at end of fiscal 2003. The
Company believes revenue per FTE represents its ability to leverage highly
skilled IT personnel, standardized processes and automation capabilities
across its client base.
o Expanded services include outsourced email solutions for content filtering
and security against spam, viruses, denial of service attacks and other
email-borne threats.
o Summary of Significant Acquisitions Completed in 2004
- A segment of Verizon Information Technologies, Inc., renamed
"Infocrossing Healthcare Services, Inc." was acquired on October 1,
2004. The transaction enabled the Company to provide value-added
services to government and commercial healthcare claims processing
market, including Medicare, Medicaid and managed care services.
- ITO Acquisition Corporation d/b/a Systems Management Specialists
("SMS") was acquired on April 2, 2004. The addition of a west coast
data center infrastructure established Infocrossing as a national
provider of IT outsourcing services.
o Management has determined that the Company's internal control over
financial reporting is effective as of December 31, 2004, and the Company's
independent registered public accounting firm has concluded that the
Company maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2004.
Mr. Lonstein concluded, "EBITDA improved year-over-year at a faster pace than
revenue, thereby demonstrating our ability to achieve higher margins by
leveraging our facilities, systems, processes and people. We completed the
integration of SMS earlier this month. With the integration of IHS progressing
according to plan, we expect to see continued improvement in our EBITDA
margins."
Business Outlook
The Company's previously issued 2005 revenue projections of $167.0 million to
$170.0 remain unchanged. The Company's pretax income projection also remains
unchanged. As a result of the deferred tax valuation allowance, the anticipated
tax rate will change from 33.0% to 40.0% for 2005, resulting in approximately
$0.08 to $0.09 reduction in forecasted EPS. In addition, previous guidance of
25.8 million shares has been updated to 27.7 million shares. As a result, EPS is
reduced by an additional $0.06, resulting in revised in EPS guidance of $0.72 to
$0.74 and net income of $18.2 million to $18.8 million for 2005. The Company
noted that fiscal 2005 EPS does not reflect the impact of expensing options
FASB-123(R), effective July 1, 2005.
For the first quarter of fiscal 2005, the Company expects revenue of $37.2
million, net income of approximately $2.6 million, EPS of approximately $0.11
and fully diluted shares outstanding of approximately 27.7 million shares.
Conference Call and Webcast Information
Infocrossing will hold a conference call for investors and analysts on Wednesday
March 16, 2005 at 11:00 a.m. EST to discuss results for the Company's fourth
quarter and full year 2004. The call-in number for the live audio call beginning
at 11:00 AM EST is 1-973-935-2404. A live web cast of the conference call will
be available for 30 days on Infocrossing's website at
http://www.infocrossing.com. An audio replay of the conference call will be
available from 12:30 p.m. EST on Wednesday, March 16, through midnight EST on
Wednesday March 22, at 973-341-3080. The password for the replay is 5813524.
About Infocrossing
Infocrossing, Inc. (http://www.infocrossing.com) is a provider of selective IT
outsourcing services, delivering the computing platforms and proprietary systems
that enable companies to process data and safely 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: incomplete or preliminary information; changes in
government regulations and policies; continued acceptance of the Company's
products and services in the marketplace; competitive factors; new products;
technological changes; the Company's dependence upon third-party suppliers;
intellectual property rights; difficulties with the integration of acquisitions
including Infocrossing Healthcare Services, Inc., f/k/a Verizon Information
Technologies Inc. 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.
(financial tables follow)
INFOCROSSING, INC. & SUBSIDIARIES
SUMMARY OF CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
2004 2003 2004 2003
-------------- -------------- -------------- --------------
Revenues $38,717 $14,403 $104,949 $55,228
-------------- -------------- -------------- --------------
Costs and expenses
Cost of revenues 25,065 9,429 71,368 36,663
Selling and promotion 835 719 3,277 2,978
General and administrative 3,627 1,444 8,744 5,587
Depreciation and amortization 2,783 1,623 8,679 6,104
Total costs and expenses 32,310 13,215 92,068 51,332
-------------- -------------- -------------- --------------
Income from operations 6,407 1,188 12,881 3,896
-------------- -------------- -------------- --------------
Net interest expense
Interest income (107) (51) (313) (103)
Debt fees related to loans repaid - - 1,347 -
Interest expense 1,640 730 4,423 2,601
-------------- -------------- -------------- --------------
Net Interest expense 1,533 69 5,457 2,498
-------------- -------------- -------------- --------------
Income before income tax (benefit) 4,874 509 7,424 1,398
Income tax (benefit) expense (12,535) (20) (12,539) 42
-------------- -------------- -------------- --------------
Net income before preferred dividends
$17,409 $529 $19,963 $1,356
Accretion and dividends on redeemable
preferred stock - 628 - (6,877)
-------------- -------------- -------------- --------------
Net income (loss) to common stockholders
$17,409 $1,157 $19,963 ($5,521)
============== ============== ============== ==============
Diluted earnings per share (1) $0.68 $0.08 $0.95 ($0.76)
============== ============== ============== ==============
Fully diluted weighted average number of
common shares outstanding
26,315 14,164 21,932 7,280
============== ============== ============== ==============
Basic earnings per share $0.91 $0.09 $1.12 ($0.76)
============== ============== ============== ==============
Weighted average number of common shares
outstanding 19,157 12,909 17,827 7,280
============== ============== ============== ==============
Certain reclassifications were made to prior period amounts to conform to the
current presentation.
INFOCROSSING, INC. & SUBSIDIARIES
SUMMARY OF CONSOLIDATED BALANCE SHEETS
(UNAUDITED, IN THOUSANDS)
DECEMBER 31,
2004 2003
---------------- --------------
ASSETS
Cash and equivalents $26,311 $10,073
Accounts receivable 26,707 3,592
Other current assets 7,733 2,951
---------------- --------------
Total current assets 60,751 16,616
Property and equipment, net 25,113 18,725
Goodwill 103,177 28,361
Other non current assets 27,609 3,436
---------------- --------------
Total Assets $216,650 $67,138
================ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $23,002 $8,401
---------------- --------------
Notes payable, long-term debt and capitalized leases 100,432 25,732
---------------- --------------
Total liabilities 125,413 36,337
---------------- --------------
Common stockholders' equity 91,237 30,801
---------------- --------------
Total liabilities and common stockholders' equity $216,650 $67,138
================ ==============
Certain reclassifications were made to prior period amounts to conform to the
current presentation.
SUPPLEMENTARY INFORMATION
APPENDIX A
EBITDA RECONCILIATION
The reconciliation of EBITDA with net income for the quarter and twelve-month
period ended December 31, 2004 and 2003 is as follows (in thousands):
THREE MONTHS ENDED DECEMBER YEAR ENDED DECEMBER 31,
31,
2004 2003 2004 2003
-------------- -------------- ---------------- -------------
Net Income $17,409 $529 $19,963 $1,356
Add (deduct)
Income tax provision (benefit) (12,535) (20) (12,539) 42
Net interest expense 1,533 679 5,457 2,498
Depreciation and amortization 2,783 1,623 8,679 6,104
-------------- -------------- ---------------- -------------
EBITDA $9,190 $2,811 $21,560 $10,000
============== ============== ================ =============
APPENDIX B
NET INCOME AND EPS RECONCILIATION
The following table compares net income and earnings per share without the
effect of releasing the $12.5 million deferred tax valuation allowance and the
accounting rule change with respect to the calculation on EPS to the Company's
previously issued guidance.
THREE MONTHS ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
2004 GUIDANCE 2004 GUIDANCE
---------------- -------------- -------------- ---------------
Revenue $38,717 $37,000 $104,949 $103,200
---------------- -------------- -------------- ---------------
Net Income 17,409 19,963
Add (deduct)
Release of deferred tax valuation allowance
(12,535) (12,539)
---------------- -------------- -------------- ---------------
Adjusted net income $4,874 $4,400 $7,424 $6,900
================ ============== ============== ===============
Diluted EPS $0.23 $0.20 $0.38 $0.35
================ ============== ============== ===============
Weighted average number of common shares
outstanding 21,528 21,100 19,601 19,900
================ ============== ============== ===============
(3) Excludes 4.7 million and 2.3 million shares from the $72.0 million
contingency convertible notes for the fiscal year and fourth quarter,
respectively.
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