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): February 28, 2006

ICT GROUP, INC.

(Exact Name of Registrant as Specified in its 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, Pennsylvania	18940
(Address of Principal Executive Offices)	(Zip Code)

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

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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Section Act (17 CFR 230.425).

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12).

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b)).

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240-13e-4(c)).

Item 7.01.   Regulation FD Disclosure.

On February 28, 2006, ICT Group, Inc. (the “Company”) posted a management presentation dated March 1, 2006 on its web site. Management will deliver the presentation orally on March 1, 2006, which presentation will simultaneously be made available to the public in a webcast. A copy of this management presentation is furnished with this Current Report on Form 8-K as Exhibit 99.1 and incorporated into this Item 7.01 by reference.

The management presentation includes certain non-GAAP historical financial measures. Reconciliations of such measures to the most directly comparable GAAP historical measure are attached hereto as Exhibit 99.2 and incorporated into this Item 7.01 by reference.

The information in this Form 8-K and the exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

Item 9.01.   Financial Statements and Exhibits.

The following exhibit is being furnished with this report

(a) Financial Statements of Businesses Acquired.

None.

(b) Pro Forma Financial Information.

None.

(d) Exhibits.

Exhibit Number	Exhibit Title
99.1	Management Presentation dated March 1, 2006.
99.2	Reconciliation Tables for Investor Presentation.

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.
By:	/s/ Jeffrey C. Moore
	Jeffrey C. Moore
	Senior Vice President, General Counsel

Dated: February 28, 2006

2

EXHIBIT INDEX

Exhibit Number	Exhibit Title
99.1	Management Presentation dated March 1, 2006.
99.2	Reconciliation Tables for Investor Presentation.

3

EX-99.1

Exhibit 99.1

ROBERT W. BAIRD & CO.’S 2006 BUSINESS SOLUTIONS CONFERENCE

ICT GROUP, INC.

NASDAQ: ICTG

John Brennan, Chairman & CEO

March 1, 2006

Company Statements

This presentation contains certain forward-looking statements that are subject to risks and uncertainties. Forward-looking statements include without limitation certain information relating to the effect of competition in the telemarketing industry, ICT Group’s ability to execute its business strategy, the development of alliances upon terms acceptable to ICT Group and the achievement of the anticipated benefits of such alliances, as well as statements that are preceded by, followed by or include the words “believes,” “expects,” “estimates,” “anticipates,” “plans,” “should,” or similar expressions. 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 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, 2004 and other documents filed by ICT Group with the Securities and Exchange Commission. ICT Group makes no undertaking and disclaims any obligation to update such forward-looking statements.

This presentation shows net income for 1996, 2002, 2003, 2004 and 2005 exclusive of special charges. In 1996 the Company reported a pre-tax, nonrecurring, non-cash charge of $12.7M which was primarily associated with the granting of options, concurrent with the Company’s IPO, to replace certain previously granted expiring options. In 2002 the Company incurred special charges of $12.6M, pre-tax. This included charges of $8.9M, pre-tax, associated with the closing and scaling back of facilities and staff in the U.S. and Europe. It also included $3.7M, pre-tax, of additional charges, including a $1.4M charge for a client claim, a $1.7M charge for the costs associated with the defense of a class action litigation and a $0.6M charge for costs associated with a postponed underwritten public offering. In 2003, the Company incurred special charges of $4.0M, pre-tax associated with a class action litigation which were partially offset by a $0.7M partial reversal of the 2002 restructuring charge. In 2004, the Company incurred special charges of $10.3M, pre-tax associated with costs incurred to defend and the settlement of a class action litigation.

In 2005, the Company received $4.2M of insurance recoveries and incurred $0.6M, pre-tax associated with the class action litigation.

2 March 1, 2006

Company Overview

Leading global provider of outsourced customer management and related marketing/BPO solutions Focus on mid-sized opportunities within Fortune 500 Target select group of high-growth vertical industries Extensive offshore operations supported from U.S. 41 service centers in U.S. and 7 foreign countries 16,200 employees—820 full-time LTM Revenues: $401M

3

March 1, 2006

U.S. Customer Interaction Services ($B) $40.0 $30.0 $20.0 $10.0 $0.0 $20.4 $23.1 $26.3 $30.0 $34.3 $38.7

2004 2005 2006 2007 2008 2009

CAGR 13.7%

Customer Service

Sales

Marketing

Technical Support/Help Desk

Source: IDC

4

March 1, 2006

Return to

Historical Financial Performance $500 $450 $400 $350 $300 $250 $200 $150 $100 $50 $0

Revenue (millions)

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006E

EBITDA (millions) $50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $0

See slide 2

Revenue EBITDA

5

March 1, 2006

Strong Financial Performance in 4Q05 and FY 2005*

(millions) 4Q05 4Q04 V% FY05 FY04 V%

Revenue $110.4 $92.5 19% $401.3 $325.5 23%

EBITDA $11.1 $8.3 33% $36.0 $25.4 41%

EBIT $5.7 $3.4 70% $15.2 $7.6 99%

Net Income $3.8 $1.9 100% $9.3 $4.0 131%

Diluted EPS $0.29 $0.15 93% $0.72 $0.31 132%

Tax Rate 25% 33% 27% 33%

* Excluding special charges [see Slide 2]

6

March 1, 2006

Revenue and Earnings Growth $120 $110 $100 $90 $80 $70 $60 $50

1Q04 2Q04 3Q04 4Q04 1Q05 2Q05

3Q 05

4Q 05

1Q06

Revenue (millions) $0.32 $0.28 $0.24 $0.20 $0.16 $0.12 $0.08 $0.04 $0.00

1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06

Diluted EPS

Excluding special charges [see Slide 2]

7

March 1, 2006

Key Growth Drivers

Shifted to more consistent services business while improving operating performance of sales business Focused on select verticals while diversifying customer base Developed and implemented successful offshore strategy Added higher margin marketing and technology services

8

March 1, 2006

Rapid Growth of Services Revenue

- 32% Per Annum Since 2001 -

2001

32% 62% 6% $239M

2003

41%

52%

7% $298M

2005

30%

59%

11% $401M

Customer Service

Other Services

Sales

9

March 1, 2006

Focusing Resources on Select Markets

ICT differentiates itself through its vertical marketing expertise and application knowledge base Have become an industry leader in financial services and health care sectors: account for 65% of revenue Improved our sales close rate and enabled cross-selling of additional services to existing clients Now applying vertical strategy to expand into new markets: government, technology and energy services

10

March 1, 2006

Key Clients in Major Verticals

11

March 1, 2006

Diversification of Client Base

100%

80%

60%

40%

20%

0%

2001 2003 2005

$239M $298M $401M

All Other Second 5 Top 5

March 1, 2006

12

Global Capabilities

Based on proven international expertise Initially supported local country markets Expanded to provide low cost near-shore and offshore solutions Launched home shoring alternative in 2H05 Evaluating additional expansion for 2006

13

March 1, 2006

Global Strategy: Markets & Operations

U.K. Canada Ireland

U.S.

Philippines Mexico Caribbean India

Argentina

Australia

Served Market

Served Market with External Production External Production

Under Evaluation

Consistent Technology Platform Worldwide

Best-in-class technology platform:

Centralized architecture for reliability/flexibility VoIP telephony to reduce costs Redundant private network for voice & data communications

Intense focus on quality

All centers are ISO 9001:2000 certified

15

March 1, 2006

Leveraging Offshore Operations to Target New BPO Opportunities

Use offshore operations during off-peak hours to support other BPO services for new and existing clients Amortize infrastructure over expanded business base Raise utilization rates resulting in higher revenue and margin per workstation and higher ROIC

Add services through internal expansion, strategic relationships and acquisitions

16

March 1, 2006

Workstation Growth & Increased Utilization

Annualized Revenue ($000’s) / Average # of Workstations $43 $42 $41 $40 $39 $38 $37 $36 $35 $37.7 $37.5

$36.5

$35.4

$37.1

$36.7

$35.4 $41.1 $41.1 $40.6 $40.3 $42.3

1Q03

2Q03

3Q03

4Q03

1Q04

2Q04

3Q04

4Q04

1Q05

2Q05

3Q05

4Q05

10,500 10,000 9,500 9,000 8,500 8,000 7,500

Average # of Workstations

Utilization Workstations

17

March 1, 2006

Margin Enhancement from CRM Technology Services

Expanded service offerings now include:

Hosted CRM, e-mail and knowledge-base software Hosted ACD, IVR and message alert services

Small but growing part of business achieving operating margins in excess of 25%

Strong pipeline for message alert services across multiple applications

Added management and sales staff

Establishing strategic alliances to target key markets

18

March 1, 2006

Strategic Expansion from ICT’s Core CRM Business

Technology Services

E-Mail Management IVR

Active Alerts Knowledge Base Quality Monitoring

Key: Current Services Potential Services

Marketing Services

Technology Hosting

CRM

Tele-Sales

Customer Care

Market Research DBMS

Lead Generation Data Analytics Voice Mining Business Intelligence

Collections Data Capture

Application Processing Claims Processing Mortgage Processing

BPO Services

19

March 1, 2006

Balance Sheet and Cash Flow December 31, 2005 $10 million of Cash and Cash Equivalents $57 million of Working Capital

2.1 current ratio

Generated $12.7 million of Free Cash Flow in 2005 Expanded bank credit facility to $125 million $90 million available borrowing capacity, Plus $50 million accordion feature $81 million in Shareholders’ Equity

Annualized 4Q05 Return on Equity of 19.4%

20

March 1, 2006

Positive Outlook

Solid top-line growth and improved profitability Three year internal targets of:

Revenue growth of 10-15% per annum (2006 – 2008) Operating margins to reach 7-8% in 2008

Strong pipeline of new business opportunities Expanded near-shore and offshore operations

Broader technology, marketing and BPO service offerings Strong financial position to invest in future internal growth and pursue strategic acquisitions to accelerate revenue, margin and earnings growth

21

March 1, 2006

NASDAQ: ICTG

March 1, 2006

EX-99.2

Exhibit 99.2

ICT Group, Inc.

Reconciliation Tables for Investor Presentation on March 1, 2006

About Non-GAAP Financial Measures

Management uses certain non-GAAP measures of financial performance. These non-GAAP measures include adjusted net income, EBITDA, adjusted EBITDA, EBIT, adjusted EBIT, adjusted diluted earnings per share, free cash flow, adjusted free cash flow and adjusted income tax effective rate. Reconciliation tables for the other non-GAAP measures are presented below.

Free Cash Flow and Adjusted Free Cash Flow

Free cash flow is an additional measurement used by management to evaluate the liquidity of the business. Free cash flow measures operating cash flows less purchases of property and equipment. In addition, management also evaluates liquidity using an adjusted free cash flow measurement, which excludes the cash flows associated with litigation settlement payments and recoveries.

The reconciliation of operating cash flows to free cash flow and adjusted free cash flow is as follows:

For the year ended December 31, 2005 (in thousands) (unaudited)
Cash flows provided by operating activities	$	26,093
Less: Purchases of property and equipment		(21,132	)
Free Cash Flow				$	4,961
Cash flows associated with litigation settlement payments (1)					7,865
Adjusted Free Cash Flow				$	12,826

(1) Cash flows associated with the litigation settlement payments reflect the $14,750 settlement amount paid less the $6,885 of insurance proceeds received.

Adjusted Net Income and Adjusted Diluted Earnings per Share

The following table shows a reconciliation of net income to adjusted net income. The calculation of adjusted diluted earnings per share is also shown. Management uses these measurements to evaluate the profitability of the business. The adjusted net income and adjusted diluted earnings per share excludes the effects of litigation costs (recoveries) as well as certain tax adjustments.

(in thousands) (unaudited) For the fiscal quarters ended:	3/31/2004			6/30/2004			9/30/2004			12/31/2004			3/31/2005			6/30/2005			9/30/2005			12/31/2005
Net income (loss), as reported	$	224		$	350		$	276		$	(3,543	)	$	1,064		$	1,744		$	5,472		$	3,895
Addback:
Litigation costs (recoveries)		560			445			887			8,446			477			91			(4,064	)		(115	)
Tax effect of litigation costs (recoveries), and income tax adjustments		(184	)		(146	)		(293	)		(2,995	)		(143	)		(27	)		873			28
Adjusted net income	$	600		$	649		$	870		$	1,908		$	1,398		$	1,808		$	2,281		$	3,808
Shares used to compute diluted earnings per share		12,953			12,918			12,849			12,873			12,911			12,897			12,981			13,098
Adjusted diluted earnings per share	$	0.05		$	0.05		$	0.07		$	0.15		$	0.11		$	0.14		$	0.18		$	0.29

Adjusted Net Income, Adjusted EBIT and Adjusted Diluted Earnings per Share

The following table shows a reconciliation of net income and EBIT to adjusted net income and adjusted EBIT, both of which exclude litigation costs and recoveries. The calculation of adjusted diluted earnings per share and adjusted income tax effective rate is also shown. Management uses these measurements to evaluate the profitability of the business.

Adjusted EBIT, as presented, is supplemental information and is not presented and should not be considered in isolation, or as a substitute for ICT’s consolidated financial information presented under GAAP. There are potentially different definitions of EBIT and ICT’s definition may differ from other definitions.

	Three months ended December 31,						Years ended December 31,
(in thousands, except per share data) (unaudited)	2005			2004			2005			2004
Net income (loss)	$	3,895		$	(3,543	)	$	12,175		$	(2,693	)
Addback:
Income tax provision ( benefit)		1,297			(2,054	)		4,133			(1,634	)
Interest expense, net		662			524			2,464			1,594
EBIT	$	5,854		$	(5,073	)	$	18,772		$	(2,733	)
Addback litigation costs (recoveries)		(115	)		8,446			(3,611	)		10,338
Adjusted EBIT	$	5,739		$	3,373		$	15,161		$	7,605
Less:
Interest expense, net		662			524			2,464			1,594
Income tax provision, adjusted for the tax effect of the addback for litigation costs (recoveries)		1,269			941			3,402			1,984
Adjusted net income	$	3,808		$	1,908		$	9,295		$	4,027
Adjusted diluted earnings per share	$	0.29		$	0.15		$	0.72		$	0.31
Shares used in computing adjusted diluted earnings per share		13,098			12,873			12,964			12,886
Adjusted EBIT	$	5,739		$	3,373		$	15,161		$	7,605
Less: Interest expense, net		662			524			2,464			1,594
Adjusted earnings before tax		5,077			2,849			12,697			6,011
Adjusted income tax provision		1,269			941			3,402			1,984
Adjusted net income	$	3,808		$	1,908		$	9,295		$	4,027
Effective income tax rate, as adjusted		25	%		33	%		27	%		33	%

Annualized Return on Equity:

The following chart shows the calculation of the annualized fourth quarter of 2005 return on equity. Net income used in the calculation is adjusted to exclude the effects of litigation costs and recoveries.

(in thousands) (unaudited)
Total Shareholders’ Equity at 9/30/05	$	76,180
Total Shareholders’ Equity at 12/31/05	$	81,012
Average Shareholders’ Equity			$	78,596
Adjusted Net Income	$	3,808
Annualized Adjusted Net Income			$	15,232
Annualized Return on Equity				19.4	%

Annualized Revenue per Average Workstation:

The following chart shows the calculation of quarterly annualized revenue per average workstation. Management uses this metric to evaluate ongoing utilization of the workstations in our contact centers.

(in thousands, except workstation data)	3/31/2003		6/30/2003		9/30/2003		12/31/2003		3/31/2004		6/30/2004		9/30/2004		12/31/2004
Revenue	$	76,579	$	70,543	$	73,320	$	77,700	$	77,098	$	75,511	$	80,395	$	92,525
Annualized Revenue		306,316		282,172		293,280		310,800		308,392		302,044		321,580		370,100
Average Workstations		8,172		7,980		8,032		8,248		8,398		8,540		8,677		9,006
Annualized Revenue per Average Workstation		37.48		35.36		36.51		37.68		36.72		35.37		37.06		41.09

	3/31/2005		6/30/2005		9/30/2005		12/31/2005
Revenue	$	94,019	$	96,991	$	99,921	$	110,403
Annualized Revenue		376,076		387,964		399,684		441,612
Average Workstations		9,272		9,447		9,911		10,435
Annualized Revenue per Average Workstation		40.56		41.07		40.33		42.32

EBITDA and Adjusted EBITDA

EBITDA is commonly defined as Earnings before Interest, Taxes, Depreciation and Amortization. Management believes that Adjusted EBITDA is a meaningful indicator of profitability for the business. Adjusted EBITDA excludes from EBITDA the effects of special charges (reversals).

Adjusted EBITDA, as presented, is supplemental information and is not presented and should not be considered in isolation, or as a substitute for ICT’s consolidated financial information presented under GAAP. There are potentially different definitions of EBITDA and ICT’s definition may differ from other definitions.

The reconciliation of net income to EBITDA and Adjusted EBITDA is as follows:

(in thousands) For fiscal years:	1994		1995		1996			1997			1998		1999		2000		2001		2002
Net income (loss), as reported	$	898	$	1,570	$	(7,517	)	$	2,672		$	2,427	$	4,745	$	6,729	$	7,978	$	2,968
Addback:
Interest expense, net		511		833		180			(398	)		406		801		1,207		1,079		828
Income tax provision or benefit		—		—		(2,998	)		1,708			1,549		3,033		4,302		4,506		1,398
Depreciation and Amortization		1,243		1,877		2,792			3,560			5,667		8,004		9,621		11,279		15,443
EBITDA	$	2,652	$	4,280	$	(7,543	)	$	7,542		$	10,049	$	16,583	$	21,859	$	24,842	$	20,637
Addback:
Charge related to stock compensation at time of IPO		—		—		12,690			—			—		—		—		—		—
Restructuring charge (reversals)		—		—		—			—			—		—		—		—		8,894
Client claim		—		—		—			—			—		—		—		—		1,409
Litigation costs		—		—		—			—			—		—		—		—		1,673
Writeoff of deferred offering costs		—		—		—			—			—		—		—		—		581
Adjusted EBITDA	$	2,652	$	4,280	$	5,147		$	7,542		$	10,049	$	16,583	$	21,859	$	24,842	$	33,194

(in thousands) For fiscal years:	2003			2004			2005
Net income (loss), as reported	$	(1,144	)	$	(2,693	)	$	12,175
Addback:
Interest expense, net		1,183			1,594			2,464
Income tax provision or benefit		(856	)		(1,634	)		4,133
Depreciation and Amortization		17,855			17,822			20,790
EBITDA	$	17,038		$	15,089		$	39,562
Addback:
Charge related to stock compensation at time of IPO		—			—			—
Restructuring charge (reversals)		(686	)		—			—
Client claim		—			—			—
Litigation costs		4,693			10,338			(3,611	)
Writeoff of deferred offering costs		—			—			—
Adjusted EBITDA	$	21,045		$	25,427		$	35,951

For fiscal quarters ended:	12/31/04			12/31/05
Net income (loss), as reported	$	(3,543	)	$	3,895
Addback:
Interest expense, net		524			662
Income tax provision or (benefit)		(2,054	)		1,297
Depreciation and Amortization		4,975			5,365
EBITDA	$	(98	)	$	11,219
Addback:
Litigation costs (recoveries)		8,446			(115	)
Adjusted EBITDA	$	8,348		$	11,104