-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GvRcGavPeChBzG4kX5LRYCmP55BE2r/QYAD1qANySaRx2/XfN5z4SpgE4BOtQsY9 k303HBRYMLfPjpDonIhNHw== 0000950116-97-002036.txt : 19971114 0000950116-97-002036.hdr.sgml : 19971114 ACCESSION NUMBER: 0000950116-97-002036 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971112 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ICT GROUP INC CENTRAL INDEX KEY: 0001013149 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 232458937 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-20807 FILM NUMBER: 97713178 BUSINESS ADDRESS: STREET 1: 800 TOWN CENTER DR CITY: LANGHORNE STATE: PA ZIP: 19047 BUSINESS PHONE: 2157570200 MAIL ADDRESS: STREET 1: 800 TOWN CENTER DR CITY: LANGHORNE STATE: PA ZIP: 19047-1748 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 1997 or [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ___________________ to ___________________. Commission File Number: 0-20807 ------- ICT GROUP, INC. ----------------------------------------------- (Exact name of registrant as specified in its charter) Pennsylvania 23-2458937 -------------------------------- ------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 800 Town Center Drive, Langhorne PA 19047 ---------------------------------------- ------------------------- (Address of principal executive offices) (Zip Code) 215-757-0200 --------------------------------------------------- Registrant's telephone number, including area code. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. Common Shares, $0.01 par value, 11,542,300 shares outstanding as of November 5, 1997. ICT GROUP, INC. INDEX PART 1 FINANCIAL INFORMATION PAGE Item 1 CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Consolidated Balance Sheets - September 30, 1997 and December 31, 1996 3 Consolidated Statements of Operations - Three and nine months ended September 30, 1997 and 1996 5 Consolidated Statements of Cash Flows - Nine months ended September 30, 1997 and 1996 6 Notes to Consolidated Financial Statements 7 Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8 PART II OTHER INFORMATION Item 6 EXHIBITS AND REPORTS ON FORM 8-K 14 SIGNATURES 15 2 ICT GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) (Unaudited)
September 30, December 31, 1997 1996 -------------- -------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $16,787 $18,298 Accounts receivable, net 15,557 13,539 Grant receivable 612 535 Prepaid expenses and other 1,624 433 -------------- -------------- Total current assets 34,580 32,805 -------------- -------------- PROPERTY AND EQUIPMENT, net Communications and computer equipment 24,195 16,753 Furniture and fixtures 4,319 2,936 Leasehold improvements 1,739 1,581 -------------- -------------- 30,253 21,270 Less: Accumulated depreciation and amortization (12,440) (9,638) -------------- -------------- Net property and equipment 17,813 11,632 -------------- -------------- DEFERRED INCOME TAXES 3,251 3,251 -------------- -------------- OTHER ASSETS 1,398 1,424 -------------- -------------- $57,042 $49,112 ============== ==============
The accompanying notes are an integral part of these statements. 3 ICT GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) (Unaudited)
September 30, December 31, 1997 1996 -------------- -------------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long-term debt $1,386 $284 Current portion of capitalized lease obligations 552 725 Accounts payable 3,916 2,807 Accrued expenses 2,607 1,923 -------------- -------------- Total current liabilities 8,461 5,739 -------------- -------------- LONG-TERM DEBT 5,102 1,057 -------------- -------------- CAPITALIZED LEASE OBLIGATIONS 888 1,296 -------------- -------------- SHAREHOLDERS' EQUITY: Preferred stock, $0.01 par value 5,000 shares authorized, none issued -- -- Common Stock, $0.01 par value, 40,000 shares authorized, 11,542 and 11,538 shares issued and outstanding 115 115 Additional paid-in capital 49,343 49,339 Deferred compensation (121) (161) Accumulated deficit (6,540) (8,290) Cumulative translation adjustment (206) 17 -------------- -------------- Total shareholders' equity 42,591 41,020 -------------- -------------- $57,042 $49,112 ============== ============== The accompanying notes are an integral part of these statements. 4
ICT GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ------------------------------------- -------------------------------- 1997 1996 1997 1996 --------------------- -------------- -------------- -------------- NET REVENUES $21,715 $17,306 $65,072 $51,887 OPERATING EXPENSES: Cost of services 11,690 9,253 35,861 27,906 Selling, general and administrative 8,986 7,621 26,682 22,047 Non-recurring compensation expense -- -- -- 12,689 --------------------- -------------- -------------- -------------- 20,676 16,874 62,543 62,642 --------------------- -------------- -------------- -------------- Operating income (loss) 1,039 432 2,529 (10,755) INTEREST EXPENSE (INCOME), NET (77) (178) (344) 302 --------------------- -------------- -------------- -------------- Income (loss) before taxes 1,116 610 2,873 (11,057) INCOME TAX EXPENSE (BENEFIT) 435 238 1,123 (3,208) --------------------- -------------- -------------- -------------- NET INCOME (LOSS) $681 $372 $1,750 ($7,849) ===================== ============== ============== ============== Net income per share $0.06 $0.03 $0.14 ===================== ============== ============== Shares used in computing net income per share 12,124 12,157 12,124 ===================== ============== ============== PRO FORMA DATA: Historical loss before taxes ($11,057) Pro forma income tax benefit (3,977) -------------- Pro forma net loss ($7,080) ============== Pro forma net loss per share ($0.71) ============== Shares used in computing pro forma net loss per share 9,972 ============== The accompanying notes are an integral part of these statements. 5
ICT GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
Nine Months Ended September 30, -------------------------------- 1997 1996 -------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $1,750 ($7,849) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Minority interest in subsidiary earnings -- 37 Depreciation and amortization 2,842 1,815 Deferred income tax benefit -- (3,680) Non-recurring compensation charge -- 12,689 (Increase) decrease in: Accounts receivable (2,018) (4,006) Prepaid expenses and other (1,191) (403) Receivable from related party -- 133 Grant receivable (77) 164 Other assets 26 (557) Increase (decrease) in: Accounts payable 1,109 1,295 Accrued expenses 684 103 Deferred revenue -- (421) -------------- -------------- Net cash provided by (used in) operating activities 3,125 (680) -------------- -------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (8,983) (4,446) Purchase of minority interest in subsidiary -- (129) -------------- -------------- Net cash used in investing activities (8,983) (4,575) -------------- -------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net payments on lines of credit -- (6,201) Proceeds from long-term debt 5,515 2,169 Payments on long-term debt (368) (3,007) Payments on capitalized lease obligations (581) (680) Payments on subordinated notes -- (300) Payment of Subchapter S distribution -- (2,718) Proceeds from initial public offering, net of offering costs -- 34,612 Proceeds from exercise of stock options 4 36 -------------- -------------- Net cash provided by financing activities 4,570 23,911 EFFECT OF FOREIGN EXCHANGE RATE CHANGE ON CASH (223) 11 -------------- -------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,511) 18,667 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 18,298 447 -------------- -------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $16,787 $19,114 ============== ============== The accompanying notes are an integral part of these statements. 6
ICT GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1: BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 1997 and 1996 are not necessarily indicative of the results that may be expected for the complete fiscal year. For additional information, refer to the consolidated financial statements and footnotes thereto included in the Form 10-K for the year ended December 31, 1996. Note 2: PRO FORMA INFORMATION Pro Forma Income Data Shortly before the effective date of the Company's initial public offering in June 1996, the Company terminated its status as an S Corporation and became subject to federal and state income taxes. Accordingly, for informational purposes, the accompanying statements of operations for the nine months ended September 30, 1996 include a pro forma adjustment for income taxes which would have been recorded if the Company had not been an S Corporation, based on the tax laws in effect during the period. For the three months ended September 30, 1997 and 1996 and the nine months ended September 30, 1997, the Company was fully subject to federal and state income taxes. Note 3: EARNINGS PER SHARE Pro Forma Net Income Per Share Pro forma net income per share for the nine months ended September 30, 1996 was calculated by dividing pro forma net income by the weighted average number of shares of Common Stock outstanding for the respective periods, adjusted for the dilutive effect of Common Stock equivalents, if applicable, which consist of stock options, using the treasury stock method. Pursuant to the requirements of the Securities and Exchange Commission, Common Stock equivalents issued by the Company during the twelve months immediately preceding the Offering have been included in the calculation of the shares used in computing pro forma net income per share as if they were outstanding for all periods presented. New Accounting Pronouncement In February 1997, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share", which the Company is required to adopt for both interim and annual periods ending after December 15, 1997. SFAS No. 128 simplifies the EPS calculation by replacing primary EPS with basic EPS. Basic EPS is computed by dividing reported earnings available to common stockholders by the weighted average shares outstanding. Diluted EPS reflects the potential dilution from the exercise or conversion of securities into common stock, such as stock options. Early application is prohibited, although footnote disclosure of pro forma EPS amounts is required. For the three and nine months ended September 30, 1997 and 1996 the Company believes the effect of the application of SFAS No. 128 would be immaterial. 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SEPTEMBER 30, 1997 GENERAL ICT Group, Inc. ("ICT" or "the Company") is an independent multinational provider of call center teleservices, which consists of outbound and inbound telemarketing and customer support services, together with related value-added services such as marketing, research, management and consulting services. The Company's call center management experience, technological leadership and expertise in target industries enable it to provide clients with high quality, cost-effective call center services. In addition to supporting customers' teleservice programs from its own call centers, the Company is pursuing additional opportunities to manage clients' call centers on a contract basis. The Company has broadened its market position from its original outbound consumer telemarketing orientation to its present range of call center services through both internal growth and a series of strategic acquisitions. ICT has expanded beyond its traditional markets of insurance, financial services, publishing and telecommunications to include the pharmaceutical, health care services, energy services and computer software and hardware industries, which are emerging as areas of rapid growth in the use and outsourcing of call center teleservices. The Company intends to pursue continued expansion through a combination of internal growth, strategic alliances, and acquisitions of domestic and international businesses that provide teleservices that are complementary to ICT's core telemarketing expertise. With the increasing use of teleservices by businesses and the trend toward outsourcing call center activities, ICT believes significant opportunities exist to expand its business. The Company's growth strategy includes the following key elements: o Pursue Outsourced Call Center Management Opportunities o Increase International Presence o Develop Strategic Alliances and Acquisitions o Expand Value-Added Marketing Services o Maintain Industry Specialization o Maintain Technology Leadership o Continue Commitment to Quality Service 8 RESULTS OF OPERATIONS Three Months Ended September 30, 1997 and 1996: - ----------------------------------------------- Net Revenues. Net revenues increased 26% to $21.7 million for the three months ended September 30, 1997 from $17.3 million for the third quarter of 1996 primarily due to growth in TeleServices revenues. TeleService division revenues increased 30% to $18.0 million for the three months ended September 30, 1997 from $13.9 million in the third quarter of 1996 resulting from continued strong growth in both international and domestic markets. International TeleService revenues grew 56% to $3.2 million in 1997 from $2.1 million in 1996. Domestic TeleService revenues grew 25% to $14.8 million in 1997 from $11.8 million in 1996 as a result of growth in the insurance, financial services and health care industries. Marketing services revenues increased 38% to $2.5 million in 1997 from $1.8 million in 1996 due to strong growth in market research revenues. Management services revenues decreased 24% to $1.2 million in 1997 from $1.6 million in 1996 due to the conclusion of a service contract in the second quarter of 1997. Cost of Services. Cost of services, which consist primarily of direct labor and telecommunications costs, increased 26% to $11.7 million for the three months ended September 30, 1997 from $9.3 million in the third quarter of 1996. This increase is primarily the result of increased direct labor force and telecommunication costs required to support the increased revenue volume. Selling, General and Administrative Expenses. Selling, general and administrative expenses increased 18% to $9.0 million for the three months ended September 30, 1997 from $7.6 million for the third quarter of 1996 due to increased numbers of call centers and workstation capacity and additional sales and systems support implemented to support business growth. As a percentage of revenues, selling, general and administrative expenses declined to 41% in the third quarter of 1997 from 44% in the same quarter of 1996 as the Company has better managed the timing of opening additional call centers and adding workstation capacity; consolidated certain call centers into larger centers, spread fixed costs of operations over larger centers and generally managed fixed expenses to support a larger revenue base. Interest Expense (Income), net. Net interest income of $77,000 and $178,000 in the third quarter of 1997 and 1996, respectively, reflects the investment of funds obtained through the Company's initial public offering partially offset by interest expense related to capital leases and borrowings against the Company's equipment line of credit for capital expansion. The decrease in net interest income is the result of increased average outstanding balances on the equipment line of credit and decreased average invested funds in 1997 as compared to 1996. In 1997, the Company intends to finance capital equipment purchases under its equipment line of credit. In the third quarter of 1997, the Company borrowed approximately $2.6 million under its equipment line. Provision for Income Taxes. Provision for income taxes increased $197,000 to $435,000 for the third quarter of 1997 from $238,000 in the third quarter of 1996. For the third quarter of 1997 and 1996, the provision for income taxes was approximately 39% of income before taxes. 9 Nine Months Ended September 30, 1997 and 1996 - --------------------------------------------- Net Revenues. Net revenues increased 25% to $65.1 million for the nine months ended September 30, 1997 from $51.9 million for the comparable 1996 period primarily due to growth in TeleServices revenues. TeleService division revenues increased 30% to $54.4 million for the nine months ended September 30, 1997 from $41.8 million in the comparable 1996 period resulting from continued strong growth in both international and domestic markets. International TeleService revenues grew 94% to $9.6 million in 1997 from $5.0 million in 1996. Domestic TeleService revenues grew 21% to $44.7 million in 1997 from $36.8 million in 1996 as a result of growth in the insurance telecommunications and health care industries. Marketing services revenues decreased 16% to 6.7 million in 1997 from $8.0 million in 1996 due to reduced revenues from financial service clients within this division. Management services revenues increased 90% to $4.1 million in 1997 from $2.1 million in 1996 as a result of the Management Services division commencing operations in the latter half of the second quarter of 1996. Cost of Services. Cost of services, which consist primarily of direct labor and telecommunications costs, increased 29% to $35.9 million for the nine months ended September 30, 1997 from $27.9 million in the comparable 1996 period. This increase is due to increased direct labor force and telecommunications costs to support the increased revenue volume. Selling, General and Administrative Expenses. Selling, general and administrative expenses increased 21% to $26.7 million for the nine months ended September 30, 1997 from $22.0 million for the comparable 1996 period due to increased numbers of call centers and workstation capacity and additional sales and systems support implemented primarily in the latter half of 1996. As a percentage of revenues, selling, general and administrative expenses declined to 41% in 1997 from 42% in 1996 as the Company has better managed the timing of opening additional call centers and adding workstation capacity; consolidated certain call centers into larger centers, spread fixed costs of operations over the larger centers and generally managed fixed expenses to support a larger revenue base. Non-recurring Compensation Expense. In the second quarter of 1996, the Company recorded a non-recurring, non-cash compensation expense of $12.7 million in connection with its initial public offering resulting from granting and extension of stock options. Interest Expense (Income), net. Net interest income of $344,000 for the nine months ended September 30, 1997 reflects the investment of funds obtained through the Company's initial public offering partially offset by interest expense related to capital leases and borrowings against the Company's equipment line of credit. Subsequent to the Company's initial public offering in June 1996, the Company repaid all indebtedness under its revolving line of credit and term loans with its bank and subordinated debt. In 1997, the Company intends to finance capital equipment purchases under its equipment line of credit. For the nine months ended September 30, 1997, borrowings under the equipment line of credit were approximately $5.5 million. Pro Forma Provision For Income Taxes. Prior to the effective date of the Company's initial public offering, the Company was subject to taxation under Subchapter S of the Internal Revenue Code. As a result, the net income of the Company, for federal and state tax purposes, had been reported by and taxed directly to the Company's shareholders. Subsequent to its initial public offering, the Company has been fully subject to federal and state income taxes. For the nine months ended September 30, 1997, provision for income taxes was $1.1 million or approximately 39% of income before taxes. 10 Quarterly Results and Seasonality The Company has experienced and expects to continue to experience significant quarterly variations in operating results, principally as a result of the timing of clients' telemarketing campaigns, the commencement and expiration of contracts, the timing and amount of new business generated by the Company, the Company's revenue mix, the timing of additional selling, general and administrative expenses to support the growth and development of new business units and the competitive conditions in the telemarketing industry. The Company's business tends to be strongest in the fourth quarter due to the high level of client telemarketing activity prior to the holiday season. In the first quarter, business generally slows as a result of reduced telemarketing activities and client transitions to new marketing programs during the first quarter of the calendar year. In addition, the Company typically expands its operations in the first quarter to support anticipated business growth beginning in the second quarter. As a result, selling, general and administrative costs typically increase in the first quarter without a commensurate increase in revenues which results in decreased profitability for the first quarter versus the previous fourth quarter. Also, demand for the Company's services typically slows or decreases in the third quarter as the volume of telemarketing projects decreases during the summer months. In addition, the Company's operating expenses increase during the third quarter in anticipation of higher demand for its services during the fourth quarter. Liquidity and Capital Resources Prior to the Company's initial public offering in June 1996, ICT's primary sources of liquidity had been cash flow from operations and borrowing on its bank revolving line of credit. Acquisitions and capital expenditures had been financed through bank term loans and capitalized lease obligations. Cash provided by operating activities increased to $3.1 million for the nine months ended September 30, 1997 from approximately $680,000 of cash used in operating activities for the nine months ended September 30, 1996. The approximate $3.8 million increase resulted from increased earnings before noncash charges and reduced working capital requirements. Cash used in investing activities increased to $9.0 million for the nine months ended September 30, 1997 from $4.6 million for the comparable 1996 period. The increase of $4.4 million is primarily attributable to an increase in the number of workstations to 2,358 at September 30, 1997 from 2,068 at December 31, 1997, upgraded telephony equipment and continued development and implementation of Informix and IMA/Edge Software. Cash provided by financing activities decreased to $4.6 million for the nine months ended September 30, 1997 from $23.9 million for the comparable 1996 period. In 1997, the Company borrowed $5.5 million from its equipment line of credit to partially fund its capital expenditures. In 1996, the Company raised $34.6 million in net proceeds from its initial public offering and repaid certain indebtedness. The Company's telemarketing activities will continue to require significant capital expenditures. Historically, equipment purchases have been financed through the Company's equipment line of credit and through capitalized lease obligations with various equipment vendors and lending institutions. The lease obligations are payable in varying installments through 2001. Outstanding obligations under capitalized leases at September 30, 1997 were $1.4 million. The Company maintains an equipment line of credit of $6.5 million that is scheduled to expire in January 1998. At September 30, 1997, outstanding obligations under the equipment line of credit were $6.5 million. The Company is currently negotiating increases in its equipment line of credit. 11 The Company maintains a revolving line of credit with a bank of $15.0 million. Borrowings on the line of credit are limited to 80% of eligible accounts receivable and bear interest at the bank's prime rate (8.50% at September 30, 1997). At September 30, 1997, there were no borrowings outstanding under the line of credit. The line of credit is scheduled to expire in January 1998. The Company is currently negotiating increases in its domestic financing arrangements, as well as seeking similar arrangements for its international operations. The Company believes that cash flows generated from operations, together with the remaining net proceeds from the June 1996 initial public offering and funds available under its revolving line of credit will be sufficient to finance its current operations and planned capital expenditures at least through 1998. 12 FORWARD LOOKING STATEMENTS This report contains certain forward-looking statements that are subject to risks and uncertainties. Forward-looking statements include certain information relating to trends in the telemarketing industry and the overall domestic economy, the Company's business strategy including the markets in which it operates, the services it provides and the customers it targets, the benefits of certain technologies the Company has acquired, variations in operating results and liquidity, as well as information contained elsewhere in this Report where statements are preceded by, followed by or include the words "believes," "expects," "anticipates" or similar expressions. For such statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The forward-looking statements in this document are subject to risks and uncertainties that could cause the assumptions underlying such forward-looking statements and the actual results to differ materially from those expressed in or implied by the statements. The most important factors that could prevent the Company from achieving its goals--and cause the assumptions underlying the forward-looking statements and the actual results of the Company to differ materially from those expressed in or implied by those forward-looking statements--include, but are not limited to, the following: (i) The competitive nature of the telemarketing industry and the ability of the Company to continue to distinguish its services from other telemarketing companies and other marketing activities on the basis of quality, effectiveness, reliability and value; (ii) Economic conditions which could alter the desire of businesses to outsource certain sales and service functions and the ability of the Company to obtain additional contracts to manage outsourced sales and service functions; (iii) The ability of the Company to offer value-added services to businesses in its targeted industries and the ability of the Company to benefit from its industry specialization strategy; (iv) Risks associated with investments and operations in foreign countries including, but not limited to, those related to local economic conditions, exchange rate fluctuations, local regulatory requirements, political factors, generally higher telecommunication costs, barriers to the repatriation of earnings and potentially adverse tax consequences; (v) Technology risks including the ability of the Company to select or develop new and enhanced technology on a timely basis, anticipate and respond to technological shifts and implement new technology to remain competitive; (vi) The ability of the Company to successfully identify, complete and integrate strategic acquisitions that expand or complement its business; and (vii) The results of operations which depend on numerous factors including, but not limited to, the timing of clients' telemarketing campaigns, the commencement and expiration of contracts, the timing and amount of new business generated by the Company, the Company's revenue mix, the timing of additional selling, general and administrative expenses and the general competitive conditions in the telemarketing industry and the overall economy. 13 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) The following documents are furnished as exhibits and numbered pursuant to Item 601 of Regulation S-K: None (b) The registrant was not required to file any reports on Form 8-K for the three months ended September 30, 1997. 14 SIGNATURES 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. ICT GROUP, INC. Date: November 12, 1997 By: /s/ John J. Brennan ------------------- John J. Brennan Chairman, President and Chief Executive Officer Date: November 12, 1997 By: /s/ Carl E. Smith ----------------- Carl E. Smith Senior Vice President, Finance and Administration Chief Financial Officer 15 EX-27 2 FINANCIAL DATA SCHEDULE
5 0001013149 ICT GROUP, INC. 1,000 U.S. DOLLARS 9-MOS 9-MOS DEC-31-1997 DEC-31-1996 JAN-01-1997 JAN-01-1996 SEP-30-1997 SEP-30-1996 1 1 16,787 20,070 0 0 15,557 13,716 562 289 0 0 34,580 35,111 30,253 17,432 12,440 8,178 57,042 49,708 8,461 6,384 0 0 0 0 0 0 115 115 42,476 41,100 57,042 49,708 0 0 65,072 51,887 0 0 35,861 27,906 26,543 34,603 139 133 (344) 302 2,873 (11,057) 1,123 (3,977) 1,750 (7,849) 0 0 0 0 0 0 1,750 (7,849) 0.14 (0.71) 0.14 (0.71)
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