Exhibit 99.1
IGATE REPORTS REVENUE INCREASE OF 10% IN THE FOURTH QUARTER OF 2004 OVER SAME
QUARTER A YEAR AGO
- Offshore subsidiary adds 15 new clients, including 8 Fortune 1000 firms
- And wins two five-year engagements in Mortgage Banking and Finance &
Accounting -
PITTSBURGH, April 21 /PRNewswire-FirstCall/ -- iGATE Corporation (Nasdaq:
IGTEE), a global provider of IT and BPO services, today announced its financial
results for the fourth quarter ending December 31, 2004. Consolidated revenues
for the quarter ended December 31, 2004 were $68.1 million, a 10.3% increase
from $61.8 million reported in the same quarter a year ago and a 2.3% sequential
increase from $66.6 million in the third quarter of 2004. For the fiscal year
2004, revenues increased 10.0% to $264.6 million compared with revenues of
$240.6 million reported in 2003. As mentioned in prior press releases and SEC
filings, fourth quarter 2004 revenues were negatively impacted by approximately
$0.8 million as a result of adjustments made to certain clients' accounts
receivable balances.
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Gross margin at iGate Global Solutions (iGS) increased to 31.9% this
quarter from 29.1% in the prior quarter, due to greater offshore business mix
and increased higher value added services. This was offset by slightly lower
gross margin in the professional services business, which led to consolidated
gross margin of 24.6% for the quarter.
Net loss for the fourth quarter of 2004 was ($0.17) per share or ($8.9)
million. This quarter's results included a ($10.5) million compensation charge
related to the completion of the Quintant acquisition. This charge is higher
than previously announced by $1.3 million, due to a computational error in
determining the amount of compensation expense to be recognized from the
cancellation of 2.1 million shares of restricted stock. Also included in this
quarter was a ($0.9) million restructuring charge related to the write-down of
leased office space in Canada and a pre-tax gain of $3.6 million on the sale of
unused land in India. This quarter's net loss compares with a net loss of ($8.5)
million or ($0.16) per share reported in the fourth quarter of 2003. For the
twelve months ended December 31, 2004, net loss was ($0.35) per share or ($18.2)
million. This ($18.2) million loss for 2004 -- which included a ($12.1) million
compensation expense related to the completion of the Quintant acquisition, a
($5.8) million restructuring charge and a $3.6 million gain on sale of land --
compared with a net loss of ($9.0) million or ($0.17) per share for the twelve
months ended December 31, 2003.
Commenting on the quarter, Michael Zugay, Chief Financial Officer of iGATE
Corporation said: "Although this quarter's loss from operations totaled ($8.1)
million, it is important to note that ($7.8) million came from net charges that
will not occur in future quarters. Excluding the impact of these one-time,
non-cash charges, this quarter's operating results would have been breakeven and
we are very encouraged by these results."
Sunil Wadhwani, Chief Executive Officer and co-founder of iGATE Corporation
said: "Our offshore subsidiary, iGATE Global Solutions, strengthened all aspects
of its organization in 2004 by further strengthening its management team, adding
41 new clients (including 22 Fortune 1000 companies), expanding its offshore
infrastructure, developing its brand name, and improving key financial metrics
such as offshore revenues, gross margins and lower SG&A expenses. We are
confident these elements will lead to increased revenues and profits in 2005.
iGATE's Professional Services business also made progress through revenue growth
and maintained its operating profitability at levels well above the industry
average. Both businesses are on the right track and we anticipate their
successful performance in 2005 to translate into increased shareholder value."
Ashok Trivedi, President and co-founder of iGATE Corporation, commented:
"2005 is going to be a key year that will demonstrate the validity and viability
of the Integrated Technology and Operations business model at iGate Global
Solutions. We are looking forward to the challenge, and the resultant
opportunities we are creating for our clients and shareholders."
Offshore Outsourcing Services
iGS made progress on several fronts this quarter. The company:
- Increased offshore volume by 9% sequentially which in total contributed
62% of iGS's IT revenues compared to 57% in the prior quarter.
- Improved bill rates onsite and offshore, and started to offer higher
value services such as consulting.
- Increased number of billable employees to 3,301 by adding 172 individuals
in the quarter.
- Added 15 new clients in the quarter, including 8 Fortune 1000 customers,
an increase from 5 in the prior quarter.
- Entered into two new 5-year engagements based on iGS's "Integrated
Technology and Operations" business model:
- In the mortgage banking industry, iGS will handle processes through the
entire value chain of loan servicing. This project has the potential to
add up to 500 billable employees 18 months from now.
- iGS will manage accounts payable for a contract manufacturing firm
which could employ up to 60 billable employees through 2005.
- Experienced increased momentum in the business process consulting
practice with engagements in risk management, program management and
customer experience consulting.
Commenting on the progress of iGS, Phaneesh Murthy, CEO of iGS, said: "Over
the past year we have been building out the integrated technology and operations
business model, as we have felt that a pure labor-arbitrage based BPO is not a
sustainable model for growth and profitability. I believe that the two recent
5-year engagements we entered into is early validation of our belief that
clients will receive substantial and sustainable benefits if the underlying
technology is treated as an integral part of the process being outsourced."
Professional Services
- Despite the typical seasonality observed in the fourth quarter of 2004,
revenue increased 6.5% sequentially to $36.7 million from $34.4 million
in the third quarter of 2004 and 48.1% from $24.8 million reported in the
fourth quarter a year ago. For the year 2004 revenues increased 40.9% to
$131.2 million from $93.1 million in 2003.
- Income from operations was $0.1 million in the fourth quarter 2004 and
$9.2 million or 7% of revenues for the full year 2004. This result for
the fourth quarter of 2004 includes a $0.9 million restructuring charge
for the write down of leases in Canada as mentioned earlier.
"Despite noticeable lower utilization in December due to the holiday season,
revenues this quarter were favorably impacted by the continuation of a large
project which we had originally expected to be completed," said Steve Shangold,
President of iGATE Mastech Inc. He added, "The majority of this year's very
strong growth was sparked by the backlog of IT projects that our clients had
accumulated over the past few years. We now expect our 2005 revenue growth rate
to be somewhat more moderate. However, our focus remains on maintaining a lean
cost structure at iGATE Mastech, to deliver above industry average levels of
profitability."
As previously indicated in prior public announcements, the company has
received a delisting notice from Nasdaq. Nasdaq has concluded that the Company
will not be in compliance with the Nasdaq listing standards until the Company
completes its assessment of internal controls under Section 404 of the
Sarbanes-Oxley Act and includes managements' annual report on internal control
over financial reporting and the related attestation report of the independent
registered public accounting firm in an amendment to the Form 10-K. iGATE's
management has requested a hearing to appeal Nasdaq's decision and the date has
been set for May 5, 2005. The Company is working diligently to complete its
management report on internal control over financial reporting and expects to
file its report and the related attestation report of the independent registered
public accounting firm in an amendment to the Form 10-K prior to May 2, 2005.
Separately, the Company expects to report its financial results for the
quarter ending March 31, 2005 on May 10, 2005. A conference call to discuss
these results will be hosted on May 10, 2005 at 10:00 am EDT. The call will be
webcast at 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.
May 10, 2005 through 12:00 midnight, May 17, 2005. Domestic callers will be able
to access the replay by dialing 877-660-6853 and entering account code 293 and
conference number 147099. International callers will be able to access the
replay by dialing 201-612-7415 and entering the same two codes. The webcast will
be available for replay though May 18, 2005 on iGATE's corporate website.
About iGATE:
iGATE Corporation (Nasdaq: IGTEE) 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 in the areas of packaged application
implementation, custom development, web services and business intelligence.
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, 2004.
iGATE CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(dollars in thousands)
December 31, December 31,
2004 2003
(audited) (audited)
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 28,201 $ 36,133
Short term investments 35,863 39,582
Accounts receivable, net 61,363 46,937
Prepaid and other current assets 6,985 7,282
Prepaid income taxes 435 792
Deferred income taxes 2,304 4,545
Current assets of discontinued operations 0 7,182
Total current assets 135,151 142,453
Investments in unconsolidated affiliates 3,951 2,931
Land, building, equipment and
leasehold improvements, net 25,814 16,483
Goodwill 9,398 8,624
Intangible assets, net 5,918 8,262
Noncurrent assets of discontinued operations 0 2,187
Total assets $ 180,232 $ 180,940
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 8,636 $ 9,092
Accrued payroll and related costs 16,662 16,896
Accrued income taxes 2,019 1,122
Other accrued liabilities 9,555 5,858
Restructuring reserve 3,692 3,354
Deferred revenue 653 994
Current liabilities of
discontinued operations 88 3,844
Total current liabilities 41,305 41,160
Restructuring reserve 3,777 1,304
Other long term liabilities 564 0
Deferred income taxes 9,520 8,719
Noncurrent liabilities of
discontinued operations 0 748
Total liabilities 55,166 51,931
Minority interest 13,366 6,874
Shareholders' equity:
Common Stock, par value $0.01 per share 535 529
Additional paid-in capital 161,345 160,336
Retained deficit -36,710 -18,499
Deferred compensation -1,934 -8,933
Common stock in treasury, at cost -14,714 -14,714
Accumulated other comprehensive income 3,178 3,416
Total shareholders' equity 111,700 122,135
Total liabilities and
shareholders' equity $ 180,232 $ 180,940
iGate Corporation
Consolidated Statements of Income
(dollars in thousands, except per share data)
(audited)
Three Months Ended Twelve Months Ended
---------------------------- ----------------------------
31-Dec-04 31-Dec-03 31-Dec-04 31-Dec-03
------------ ------------ ------------ ------------
Revenues $ 68,089 $ 61,757 $ 264,585 $ 240,634
Cost of revenues 51,341 44,902 197,577 171,654
Gross margin 16,748 16,855 67,008 68,980
Selling, general
and administrative 27,514 21,549 82,079 72,936
Gain on sale of land -3,615 0 -3,615 0
Restructuring charges 909 604 5,805 604
Loss from operations -8,060 -5,298 -17,261 -4,560
Other income, net 507 -75 1,374 1,560
Minority interest -733 87 -677 -312
Loss on venture investments
and affiliated companies 0 -28 0 -28
Equity in losses of
affiliated companies -50 -99 -335 -99
Loss before income taxes -8,336 -5,413 -16,899 -3,439
Provision (benefit)
for income taxes 605 -412 5,130 2,179
Loss from continuing
operations -8,941 -5,001 -22,029 -5,618
(Loss) income from
discontinued operations
net of income taxes 0 -3,536 3,818 -3,402
Net loss $ (8,941) $ (8,537) $ (18,211) $ (9,020)
Net loss per common share, Basic:
Loss from continuing
operations $ (0.17) $ (0.10) $ (0.42) $ (0.11)
(Loss) earnings
from discontinued
operations - -0.07 0.07 -0.07
Net loss - Basic $ (0.17) $ (0.16) $ (0.35) $ (0.17)
Net loss per common share, Diluted:
Loss from continuing
operations $ (0.17) $ (0.10) $ (0.42) $ (0.11)
(Loss) earnings from
discontinued operations - -0.07 0.07 -0.07
Net loss - Diluted $ (0.17) $ (0.16) $ (0.35) $ (0.17)
Weighted average common
shares outstanding, Basic 53,277 52,017 52,721 51,697
Weighted average dilutive
common equivalent shares
outstanding 53,277 52,017 52,721 51,697
Reconciliation of GAAP
loss to net loss excluding
the tax provision related
to the sale of eJiva to
iGATE Global Solutions (1):
Net loss $ (8,941) $ (8,537) $ (18,211) $ (9,020)
Add: provision for
income taxes related
to the sale of eJiva
to iGATE Global
Solutions 0 0 0 1,786
Net loss excluding the
provision for income
taxes related to the
sale of eJiva to
iGATE Global Solutions $ (8,941) $ (8,537) $ (18,211) $ (7,234)
Net loss excluding
the provision for
income taxes per
common share: $ (0.17) $ (0.16) $ (0.35) $ (0.14)
(1) This reconciliation is for informational purposes only, and is not a
substitute for the GAAP financial information presented above under net
loss.
iGate
Three Months Ended iGate Professional iGate
March 31, 2004 Solutions Services Corporate Total
- ------------------------ ------------ ------------ ------------ ------------
External revenues $ 34,551 $ 28,858 $ 654 $ 64,063
Cost of revenues 24,188 22,525 313 47,026
Gross margin 10,363 6,333 341 17,037
Selling, general and
administrative 11,901 4,302 3,077 19,280
(Loss) income from
operations $ (1,538) $ 2,031 -2,736 -2,243
Other income, net 756 756
Minority interest -23 -23
Equity in losses of
affiliated companies -100 -100
Loss before income taxes $ (2,103) $ (1,610)
iGate
Three Months Ended iGate Professional iGate
June 30, 2004 Solutions Services Corporate Total
- ------------------------ ------------ ------------ ------------ ------------
External revenues $ 34,124 $ 31,273 $ 471 $ 65,868
Cost of revenues 24,490 24,692 300 49,482
Gross margin 9,634 6,581 171 16,386
Selling, general and
administrative 11,154 3,280 2,540 16,974
Restructuring charges 4,896 0 0 4,896
(Loss) income from
operations $ (6,416) $ 3,301 -2,369 -5,484
Other expense, net -500 -500
Minority interest 152 152
Equity in losses of
affiliated companies -87 -87
Loss before income taxes $ (2,804) $ (5,919)
iGate
Three Months Ended iGate Professional iGate
September 30, 2004 Solutions Services Corporate Total
- ------------------------ ------------ ------------ ------------ ------------
External revenues $ 31,704 $ 34,440 $ 421 $ 66,565
Cost of revenues 22,467 26,968 293 49,728
Gross margin 9,237 7,472 128 16,837
Selling, general and
administrative 11,673 3,767 2,871 18,311
(Loss) income from
operations $ (2,436) $ 3,705 -2,743 -1,474
Other income, net 611 611
Minority interest -73 -73
Equity in losses of
affiliated companies -98 -98
Loss before income taxes $ (2,303) $ (1,034)
iGate
Three Months Ended iGate Professional iGate
December 31, 2004 Solutions Services Corporate Total
- ------------------------ ------------ ------------ ------------ ------------
External revenues $ 31,105 $ 36,670 $ 314 $ 68,089
Cost of revenues 21,184 29,946 211 51,341
Gross margin 9,921 6,724 103 16,748
Selling, general and
administrative 20,469 5,697 1,348 27,514
Gain on sale of land -3,615 0 0 -3,615
Restructuring charges 0 909 0 909
(Loss) income from
operations $ (6,933) $ 118 -1,245 -8,060
Other income, net 507 507
Minority interest -733 -733
Equity in losses of
affiliated companies -50 -50
Loss before income taxes $ (1,521) $ (8,336)
iGate
Twelve Months Ended iGate Professional iGate
December 31, 2004 Solutions Services Corporate Total
- ------------------------- ------------ ------------ ------------ ------------
External revenues $ 131,484 $ 131,241 $ 1,860 $ 264,585
Cost of revenues 92,329 104,131 1,117 197,577
Gross margin 39,155 27,110 743 67,008
Selling, general and
administrative 55,197 17,046 9,836 82,079
Gain on sale of land -3,615 0 0 -3,615
Restructuring charges 4,896 909 0 5,805
(Loss) income from
operations $ (17,323) $ 9,155 -9,093 -17,261
Other income, net 1,374 1,374
Minority interest -677 -677
Equity in losses of
affiliated companies -335 -335
Loss before income taxes $ (8,731) $ (16,899)
SOURCE iGATE Corporation
-0- 04/21/2005
/CONTACT: Laureen Laby, Investor Relations of iGATE Corporation,
+1-412-787-9230, or llaby@igate.com /
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