8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 24, 2003

ICT GROUP, INC.

(Exact name of registrant specified in Charter)

Pennsylvania	0-20807	23-2458937
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

100 Brandywine Boulevard Newtown, PA	18940
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone, including area code:    (267) 685-5000

Not Applicable

(Former name and former address, if changed since last report)

Item 7. Financial Statements and Exhibits.

(c) Exhibits.

Exhibit Number	Exhibit Title
99	Press Release by the Registrant, dated April 24, 2003, furnished in accordance with Item 12 of this Current Report on Form 8-K.

Item 9. Regulation FD Disclosure.

On April 24, 2003, the Registrant issued a press release regarding its financial results for the quarter ended March 31, 2003. A copy of the press release is furnished as Exhibit 99 to this report.

Use of Non-GAAP Financial Information

To supplement its consolidated financial statements presented in accordance with GAAP, the Registrant uses non-GAAP measures of operating results, net income and/or net income per share, adjusted from results based on GAAP, to exclude certain income and expenses. Non-GAAP adjustments are provided to enhance the user’s overall understanding of the Registrant’s current financial performance and its prospects for the future. Specifically, the Registrant believes the non-GAAP results provide useful information to both management and investors by excluding certain income and expenses that it believes are not indicative of the Registrant’s core operating results. In addition, the Registrant has historically reported similar non-GAAP guidance and results to the investment community, and, as a result, believes the inclusion of non-GAAP presentations provides consistency in its financial reporting. Further, the non-GAAP results are one of the primary indicators management uses for planning and forecasting future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with accounting principles generally accepted in the United States.

The information set forth under this “Item 9. Regulation FD Disclosure” is furnished under “Item 12. Results of Operations and Financial Condition” in accordance with SEC Release No. 33-8216. Such information (including the exhibit) shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be incorporated by reference in any filing made by the Registrant pursuant to the Securities Act of 1933, as amended, other than to the extent that such filing incorporates by reference any or all of such information by express reference thereto.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: April 24, 2003	By:	/s/ John J. Brennan
	Name: Title:	John J. Brennan President and Chief Executive Officer

EX-99

EXHIBIT 99

ICT GROUP FINANCIAL MEDIA CONTACT:	ICT GROUP INVESTOR CONTACT:
BERNS COMMUNICATIONS GROUP, LLC	BROD GROUP
Stacy Berns/Michael McMullan	Betsy Brod/Jonathan Schaffer
212-994-4660	212-750-5800

ICT GROUP REPORTS FIRST QUARTER RESULTS

~ First Quarter Revenue and Earnings In Line with Previous Guidance;

Updates 2003 Outlook ~

NEWTOWN, PA, APRIL 24, 2003 – ICT GROUP, INC. (NASDAQ: ICTG), today reported results for the first quarter ended March 31, 2003. First quarter revenue increased 6% to $76.6 million compared to $72.3 million in the prior-year period and in line with the Company’s previous guidance of $76 to $78 million. Including a recently announced pre-tax charge of $11.7 million related to an ongoing class action lawsuit, operating loss was $8.1 million in the 2003 first quarter and net loss for the period was $5.2 million, or $0.42 per diluted share. Net income in the prior year period was $3.1 million, or $0.24 per diluted share.

Excluding litigation costs, net income for the period would have been $0.18 per diluted share, consistent with the Company’s previous guidance of first quarter earnings of $0.18 to $0.21 per diluted share, which also excluded potential litigation costs.

“In the first quarter of 2003, our CRM services business continued to grow rapidly, and we experienced a strong rebound in our international business, across all country markets. We also made substantial progress in executing our plan to shift global production capacity to more cost-effective near-shore and offshore facilities,” commented John J. Brennan, Chairman and Chief Executive Officer of ICT GROUP. “Revenue from our CRM services business increased 28% for the period and accounted for 54% of total Company revenue, compared to 44% in last year’s first quarter. Revenue from our international business units increased significantly and accounted for 24% of total Company revenue.”

The Company’s pipeline of outsourced customer care contracts is strong, as prospective clients are increasingly looking to reduce their costs by using alternative near-shore and offshore solutions. Since the beginning of the year, ICT GROUP has been awarded four new customer care programs and one expanded agreement. Implementation of these programs will begin during the second quarter of 2003 with substantial expansion planned for the third and fourth quarters, which may require up to 800 additional workstations by year-end.

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ICT GROUP REPORTS FIRST QUARTER RESULTS (CONT.)

Revenue for the Company’s domestic CRM sales business was lower due to the current economic environment, and to a lesser extent from legislative and geopolitical initiatives. The Company is now better positioned having reduced its dependency on outbound domestic programs to represent 31% of total Company revenue in the first quarter of 2003, compared to 40% in last year’s first quarter. Strong double-digit growth in ICT GROUP’s international CRM sales business also helped offset the dynamics in domestic CRM sales business.

“Demand for our customer care services continues to grow with the addition of new clients, including an agreement with VTech announced today, and the recently announced expansion of our relationship with Virgin Mobile USA,” continued Mr. Brennan. “These agreements, along with our current base of business, should enable ICT GROUP to increase CRM services revenue by 20% to 30% in 2003. The Company also believes that it is on track to produce between 55% to 60% of its total call volumes outside of the U.S. in 2003, up from 42% in 2002, and we are on schedule to open our first contact center in the Philippines in May. This center is expected to support close to 500 workstations by year-end. At the same time, we have also begun to install additional workstation capacity at new and existing facilities in Canada and Mexico to support local country and U.S. markets.

“The anticipated gains in revenue and profitability from the growth of the Company’s CRM services operations are expected to materially contribute to results beginning in the second half of 2003. In the second quarter, our financial results will reflect the start-up costs associated with new customer care programs, the winding down of two legacy accounts, and the ongoing global production shift, which is proceeding on schedule.”

As a result of these factors, combined with a shift in demand trends for outbound domestic CRM sales, the Company expects second quarter revenue of approximately $74 to $78 million and earnings in the range of $0.12 to $0.18 per diluted share. For the full year, ICT GROUP now expects revenue and earnings growth of 5% to 10%. Revenue and profitability are expected to improve during the third and fourth quarters, driven largely by the ramp-up of business already secured. All 2003 quarterly and full-year earnings guidance and related statements are before any expenses that the Company has incurred or may incur in the period related to the ongoing class action litigation.

Due to the court order reported by the Company on April 21, the Company increased its accrual related to the ongoing class action litigation and, as a result, may no longer be in compliance with the financial covenants of its credit facility. The Company has reached an agreement with its lead bank and

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ICT GROUP REPORTS FIRST QUARTER RESULTS (CONT.)

expects that it will be able to reach an agreement with the full Bank Group to amend the financial covenants of its credit facility to remain in compliance.

ICT GROUP, headquartered in Newtown, Pa., is a leading global provider of integrated customer relationship management (CRM) solutions. The Company helps clients identify, acquire, retain, service, measure and maximize the lifetime value of their customer relationships. The Company manages CRM service operations in the U.S., Europe, Canada, Australia, Mexico and the Caribbean from which it supports domestic and multinational corporations and institutions, primarily in the financial, insurance, telecommunications, healthcare, information technology, media and energy services industries. ICT GROUP also offers a full suite of hosted CRM solutions, for use by clients at their own in-house facility or on a co-sourced basis in conjunction with ICT GROUP’s fully compatible Web-enabled customer service operations. To learn more about ICT GROUP, visit the Company’s website at www.ictgroup.com.

Important Cautionary Information Regarding Forward-Looking Statements

This press release contains certain forward-looking statements, such as expected revenue and earnings, plans to expand into new international markets and to increase capacity, ability to maintain growth momentum, expected demand for services, ability to migrate operations to lower cost centers and ability to transition business to faster growing operations. The forward-looking statements involve assumptions and are subject to substantial risks and uncertainties. Whenever possible, forward-looking statements are preceded by, followed by or include the words “believes,” “expects,” “anticipates” or similar expressions, which speak only as of the date the statement is made. ICT GROUP assumes no obligation to update any such forward-looking statements. For such statements, ICT GROUP claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Actual events or results of operations, cash flows and financial condition of ICT GROUP may differ materially from those discussed in the forward-looking statements as a result of various factors, including without limitation, those discussed in ICT GROUP’s annual report on Form 10-K for the year ended December 31, 2002 and other documents, such as reports on Form 8-K and other reports on Form 10-Q filed by ICT GROUP with the Securities and Exchange Commission. Although ICT GROUP believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct and we undertake no obligation to update such expectations.

Important factors that could cause actual results to differ materially from ICT GROUP’s expectations, or that could materially and adversely affect ICT GROUP’s financial condition, may include, but are not limited to the following, many of which are outside ICT GROUP’s control: demand for ICT GROUP’s services, the cost to defend or settle litigation against ICT GROUP, judgments, orders, rulings and other developments in litigation against ICT GROUP, unanticipated labor difficulties, ICT GROUP’s capital and financing needs, ICT GROUP’s ability to integrate acquired businesses, customer demand for a client’s product, the client’s budgets and plans, interest rates and other conditions affecting the client’s industry, unanticipated contract or technical difficulties, identifying and opening planned contact centers within timeframes necessary to meet client demands, reliance on strategic partners, industry and government regulation, reliance on telecommunications and computer technology, general and local economic conditions, competitive pressures in ICT GROUP’s industry, terrorist attacks, and the impact of war. These factors, as well as others, such as conditions in the securities markets and actual or perceived results or developments affecting companies in our industry, could affect the trading price of our common stock.

(Tables Follow)

ICT GROUP, INC.

Consolidated Condensed Statements of Operations

(In thousands, except per share data)

(Unaudited)

	Three Months Ended March 31,
	2003			2002
REVENUE	$	76,579		$	72,264
OPERATING EXPENSES:
Costs of services		44,716			41,459
Selling, general and administrative		28,238			25,839
Litigation costs		11,700			250
		84,654			67,548
Operating income (loss)		(8,075	)		4,716
Interest expense, net		200			149
Income (loss) before income taxes (benefit)		(8,275	)		4,567
Income taxes (benefit)		(3,081	)		1,461
Net income (loss)	($	5,194	)	$	3,106
Diluted earnings (loss) per share	($	0.42	)	$	0.24
Shares used in computing diluted earnings (loss) per share		12,394			12,913
Adjusted Results of Operations:
Income (loss) before income taxes	($	8,275	)
Litigation costs		11,700
Adjusted income before income taxes		3,425
Adjusted income taxes		1,130
Adjusted net income	$	2,295
Adjusted earnings per share	$	0.18
Shares used in computing adjusted earnings per share		12,864

ICT GROUP, INC.

Consolidated Balance Sheets

(In thousands)

(Unaudited)

	March 31, 2003		December 31, 2002
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	15,564	$	16,279
Accounts receivable, net		56,074		54,253
Other current assets		15,313		12,712
Total current assets	$	86,951	$	83,244
PROPERTY AND EQUIPMENT, net	$	46,985	$	43,327
OTHER ASSETS	$	3,936	$	4,247
	$	137,872	$	130,818
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt	$	24,500	$	4,000
Accounts payable and other current liabilities		49,347		39,782
Total current liabilities	$	73,847	$	43,782
LONG-TERM DEBT		—	$	19,000
TOTAL SHAREHOLDERS’ EQUITY	$	64,025	$	68,036
	$	137,872	$	130,818
Additional Information
WORKSTATIONS AT PERIOD END		8,067		8,277

News Release

ICT GROUP, INC.

800-799-6880

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