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):     October 23, 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 October 23, 2003, furnished in accordance with Item 12 of this Current Report on Form 8-K.

Item 9.     Regulation FD Disclosure.

On October 23, 2003, the Registrant issued a press release announcing the Registrant’s financial results for the quarter and nine-month period ended September 30, 2003 and providing guidance for the fourth quarter of 2003. The Registrant is furnishing the press release 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: October 23, 2003
	By:         /S/    JOHN J. BRENNAN                                  Name:     John J. Brennan Title:       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 IMPROVED THIRD QUARTER RESULTS

~ Company Achieves Sequential Revenue Growth and Return to Operating Profitability ~

~ CRM Services Revenue Increases 30% ~

NEWTOWN, PA, OCTOBER 23, 2003—ICT GROUP, INC. (NASDAQ: ICTG) today reported results for the third quarter ended September 30, 2003.

Revenue for the 2003 third quarter was $73.3 million, which represents a 4% increase sequentially from 2003 second quarter revenue of $70.5 million and compares to 2002 third quarter revenue of $74.1 million. The net loss for the 2003 third quarter was $217,000, or $0.02 per diluted share, compared to net income of $2.9 million, or $0.23 per diluted share, in last year’s third quarter. Adjusting for certain income and expense items related to the Company’s ongoing litigation and previously recorded restructuring charges, net income for the 2003 third quarter would have been $86,000, or $0.01 per diluted share.

During the third quarter of 2003, the Company’s CRM services revenue totaled $45.3 million, an increase of 30% compared to the same period last year, and was up 11% sequentially from the 2003 second quarter. CRM services revenue represented 62% of total Company revenue in the quarter, up from 47% in last year’s third quarter. CRM sales revenue declined 29% year-over-year to $28.0 million, which represented 38% of total Company revenue, compared to 53% in last year’s quarter. While a slowdown in domestic outbound consumer telemarketing continued to impact overall CRM sales revenue, as the Company expected this business began to level out at 2003 second quarter levels despite the market confusion over Do-Not-Call legislation. For the period, domestic outbound consumer telemarketing accounted for approximately 18% of total Company revenue versus 32% in last year’s third quarter.

“We are very pleased with the significant improvement in our financial performance and our return to operating profitability during this quarter,” commented John J. Brennan, Chairman and Chief Executive Officer of ICT GROUP. “Results for the quarter would have been even stronger were it not for the sudden curtailment of a large, short-term project with an existing client.”

Brennan further commented, “With continued strong demand for our CRM services business, accelerating interest in our offshore solutions, and the leveling of our domestic CRM sales business, we

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ICT GROUP REPORTS IMPROVED THIRD QUARTER RESULTS (CONT.)

are confident in our ability to achieve renewed top- and bottom-line growth as we move forward. We believe we have successfully repositioned the Company to be much less dependent on domestic outbound consumer telemarketing and more focused on capturing new business in the rapidly expanding CRM services markets for customer and marketing services, which now represent more than 60% of total Company revenue. The CRM services pipeline remains strong, and during the third quarter we won two new agreements, increasing the total year-to-date number to nine, which will utilize our expanded service capabilities and offerings.

“We are particularly pleased with the diversity of the new and expanded wins, which include clients in financial services, telecommunications, information technology, consumer electronics, retail and energy services. Our cost-effective near-shore and offshore operations in the Philippines, Mexico and the Caribbean are proving critical to our success in winning new business and deepening relationships with existing clients. By servicing clients through our offshore operations, we are able to offer additional cost-effective support services, thus creating the potential for greater utilization of our systems and facilities and higher operating margins over the long-term.”

ICT GROUP now expects revenue for the fourth quarter of 2003 to increase 5% to 10% sequentially from the third quarter with diluted earning per share in the range of $0.08 to $0.12. Fourth quarter 2003 earnings guidance is before any expenses related to the ongoing class action litigation.

Mr. Brennan concluded, “We demonstrated significant improvement in revenue and earnings from the 2003 second quarter to the third quarter, and we expect the growth of our outsourced customer service business to extend our positive momentum into the fourth quarter as well as into 2004. While the anticipated improvement in revenue and earnings for the second half of 2003 will be slower than previously expected, our recovery is clear and our outlook for renewed growth is encouraging with top- and bottom-line gains now projected for 2004.”

Conference Call:

The Company will hold a conference call today, October 23, 2003, at 11 a.m. Eastern Time. Investors may access the call by visiting the ICT GROUP website at www.ictgroup.com. If you are unable to participate during the live webcast, a replay of the call will be available on the website through October 30, 2003.

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, the Caribbean, and the Philippines from

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ICT GROUP REPORTS IMPROVED THIRD QUARTER RESULTS (CONT.)

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, expansion of international operations, the ability of hedging activities and international pricing policies to mitigate currency risks, expected revenue increases under new and existing agreements, anticipated demand for services and ability to effectively deploy new technologies. 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 or affecting 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 and foreign currency exchange rates (including the effectiveness of strategies to manage fluctuations in these 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, the impact of war and the use of financial instruments to hedge foreign exchange exposure. 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 Statements of Operations (Unaudited)

(In thousands, except per share data)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2003			2002		2003			2002
REVENUE	$	73,320		$	74,121	$	220,442		$	221,299
OPERATING EXPENSES:
Costs of services		44,112			42,473		132,802			126,327
Selling, general and administrative		28,690			26,937		85,692			80,241
Litigation costs		668			150		7,694			450
Restructuring charge reversals		(215	)		—		(592	)		—
		73,255			69,560		225,596			207,018
Operating income (loss)		65			4,561		(5,154	)		14,281
Interest expense, net		389			242		846			645
Income (loss) before income taxes		(324	)		4,319		(6,000	)		13,636
Income tax provision (benefit)		(107	)		1,382		(2,176	)		4,363
Net income (loss)	$	(217	)	$	2,937	$	(3,824	)	$	9,273
Diluted earnings (loss) per share	$	(0.02	)	$	0.23	$	(0.31	)	$	0.71
Shares used in computing diluted earnings (loss) per share		12,396			13,009		12,396			13,023
Adjusted Results of Operations:
Loss before income taxes	$	(324	)			$	(6,000	)
Litigation accrual		225					6,725
Litigation costs		443					969
Restructuring charge reversals		(215	)				(592	)
Adjusted income before income taxes		129					1,102
Adjusted income tax provision		43					362
Adjusted net income	$	86				$	740
Adjusted diluted earnings per share	$	0.01				$	0.06
Shares used in computing adjusted diluted earnings per share		12,858					12,852

ICT Group, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

	September 30, 2003		December 31, 2002
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	10,710	$	16,279
Accounts receivable, net		51,149		54,254
Other current assets		19,044		12,711
Total current assets		80,903		83,244
PROPERTY AND EQUIPMENT, net		46,945		43,327
OTHER ASSETS		3,866		4,247
	$	131,714	$	130,818
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt	$	27,500	$	4,000
Accounts payable and other current liabilities		34,347		34,602
Total current liabilities		61,847		38,602
LONG-TERM DEBT		—		19,000
OTHER LIABILITIES		3,201		5,180
TOTAL SHAREHOLDERS’ EQUITY		66,666		68,036
	$	131,714	$	130,818
Additional Information
WORKSTATIONS AT PERIOD END		8,172		8,277

News Release

ICT Group, Inc.

800-799-6880

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