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TechTeam Global Reports Third Quarter 2010 Financial Results
Nov 09, 2010 (03:11 PM EST)
Reports net loss of $8.4 million, or $(0.78) per share, mainly due to impairment charge and professional fees primarily related to sale of Government subsidiary
Excluding special items, income from continuing operations would have been $934,000, or $0.09 per share
SOUTHFIELD, Mich., Nov. 9, 2010 /PRNewswire-FirstCall/ -- TechTeam Global, Inc. (Nasdaq: TEAM), a worldwide provider of information technology outsourcing and business process outsourcing services, today reported a net loss of $8.4 million, or $(0.78) per diluted share and a net loss from continuing operations of $9.2 million, or $(0.86) per diluted share, for the three months ended September 30, 2010. For the three months ended September 30, 2009, net income was $0.9 million, or $0.08 per diluted share and net income from continuing operations was $1.1 million or $0.11 per diluted share. The three months ended September 30, 2010 included a non-cash impairment charge of $9.4 million and $1.3 million of expense for professional fees related primarily to the sale of TechTeam Government Solutions, Inc. Excluding special items, the Company would have achieved net income from continuing operations of $934,000, or $0.09 per share in the third quarter 2010.
Please see "Reconciliation of Third Quarter and Year-to-Date Net Income (Loss) from Continuing Operations to Earnings from Continuing Operations Excluding Special Items" in the Financial Data section of this press release.
After the end of the third quarter 2010, the Company completed the previously announced sale of TechTeam Government Solutions to Jacobs Engineering Group Inc. (NYSE: JEC) for $43.0 million in cash. For more information regarding this matter, please see the Form 8-K filed on October 5, 2010 regarding this transaction. In addition, on November 1, 2010, the Company entered into a definitive agreement pursuant to which an affiliate of Stefanini International Holdings Ltd. (d/b/a Stefanini IT Solutions), a privately held global provider of onshore and nearshore IT consulting, integration and development, and outsourcing services, will file a tender offer with the intention of acquiring and merging with TechTeam Global. For more information regarding this matter, please see the Form 8-K filed on November 2, 2010 regarding this transaction.
Third Quarter 2010 Financial Data Section follows:
Third quarter highlights include the following:
Gary J. Cotshott, president and chief executive officer of TechTeam Global, said, "We believe that combining our business with Stefanini IT Solutions will allow us to deliver a set of services having greater breadth and depth across an expanded geographic footprint to our customers and prospects around the world. We are looking forward to the completion of a successful tender offer and merger."
About TechTeam Global, Inc.
TechTeam Global, Inc. is a leading provider of IT outsourcing and business process outsourcing services to large and medium businesses. The company's primary services include service desk, technical support, desk-side support, security administration, infrastructure management and related professional services. TechTeam also provides a number of specialized, value-added services in specific vertical markets. Founded in 1979, TechTeam has approximately 2,200 employees across the world, providing IT support in 32 languages. TechTeam's common stock is traded on the NASDAQ Global Market under the symbol "TEAM." For more information, call 800-522-4451 or visit www.techteam.com.
About the Magic Quadrant
The Magic Quadrant is copyrighted 2010 by Gartner, Inc. and is reused with permission. The Magic Quadrant is a graphical representation of a marketplace at and for a specific time period. It depicts Gartner's analysis of how certain vendors measure against criteria for that marketplace, as defined by Gartner. Gartner does not endorse any vendor, product or service depicted in the Magic Quadrant, and does not advise technology users to select only those vendors placed in the "Leaders" quadrant. The Magic Quadrant is intended solely as a research tool, and is not meant to be a specific guide to action. Gartner disclaims all warranties, express or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.
Note to Investors
The tender offer to purchase shares of TechTeam Global, Inc. (the "Company") common stock referenced in this press release has not yet commenced, and this press release is neither an offer to purchase, nor a solicitation of an offer to sell, any securities. The tender offer to purchase shares of TechTeam Global common stock will be made only pursuant to a Tender Offer Statement on Schedule TO containing an offer to purchase, forms of letters of transmittal and other documents relating to the tender offer (the "Tender Offer Statement"), which Platinum Merger Sub, Inc., a wholly-owned subsidiary of Stefanini International Holdings Ltd, will file with the SEC and mail to TechTeam Global stockholders. At the time the tender offer is commenced, TechTeam Global will file a Solicitation/Recommendation Statement with respect to the tender offer (the "Recommendation Statement"). Security holders of TechTeam Global are advised to read the Tender Offer Statement and Recommendation Statement when they become available, because they will contain important information about the tender offer. Investors and security holders of TechTeam Global also are advised that they may obtain free copies of the Tender Offer Statement and other documents filed by Platinum Merger Sub, Inc. with the SEC (when these documents become available) and the Recommendation Statement and other documents filed by Stefanini International Holdings Ltd (when these documents become available) on the SEC's website at http://www.sec.gov. In addition, free copies of the Tender Offer Statement and related materials may be downloaded (when these documents become available) from TechTeam Global's website at: http://www.techteam.com/investors/sec-filings; and free copies of the Recommendation Statement and related materials may be obtained (when these documents become available) from TechTeam Global by written request to: TechTeam Global, Inc., Attn: Investor Relations, 27335 West 11 Mile Road, Southfield, Michigan 48033.
Safe Harbor Statement
The statements contained in this press release that are not purely historical, including statements regarding the Company's expectations, hopes, beliefs, intentions, or strategies regarding the future, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Actual results may differ materially from those expected because of various known and unknown risks and uncertainties, including, but not limited to, the ongoing U.S. recession, the existing global credit and financial crisis and other changes in general economic and industry conditions, the award or loss of significant client assignments, timing of contracts, recruiting and new business solicitation efforts, currency fluctuations, other factors affecting the financial health of our clients, uncertainties as to the timing of the tender offer and the merger; uncertainties as to how many of the Company's stockholders will tender their stock in the tender offer; the risk that competing offers will be made; the possibility that various closing conditions for the transaction may not be satisfied or waived, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the transaction; the effects of disruption from the transaction making it more difficult to maintain relationships with employees, licensees, other business partners or governmental entities; other business effects, including the effects of industry, economic or political conditions outside of the Company's control; transaction costs; actual or contingent liabilities; and other risks and uncertainties discussed in documents filed with the SEC by the Company, including the solicitation/recommendation statement to be filed by the Company. These and other risks are described in the Company's most recent annual report on Form 10-K and subsequent reports filed with or furnished to the U.S. Securities and Exchange Commission. The forward-looking statements included in this press release are based on information available to the Company on the date hereof, and the Company assumes no obligation to update any such forward-looking statements.
Reconciliation of Third Quarter and Year-to-Date Net Income (Loss) from Continuing Operations to Earnings from Continuing Operations Excluding Special Items
This press release includes a discussion of "Net Income (Loss) from Continuing Operations to Earnings from Continuing Operations Excluding Special Items" which is a non-GAAP financial measure. The Company defines Net Income (Loss) from Continuing Operations to Earnings from Continuing Operations Excluding Special Items as net income (loss) from continuing operations excluding impairment charges, restructuring, legal and professional fees primarily related to the sale of TechTeam Government Solutions and increases (decreases) of bad debt expense largely related to bankruptcy filing of its customers.
The Company believes this non-GAAP financial measure provides important supplemental information to management and investors. This non-GAAP financial measure reflects an additional way of viewing aspects of the Company's operations that, when viewed with the GAAP results and the accompanying reconciliation to the most directly comparable GAAP financial measure, provide a more complete understanding of factors and trends affecting the Company's business and results of operations.
Net Income (Loss) from Continuing Operations to Earnings from Continuing Operations Excluding Special Items, which is a non-GAAP financial measure, should not be considered an alternative to, or more meaningful than, net (loss) income prepared on a GAAP basis. Management strongly encourages investors to review the Company's consolidated financial statements in their entirety and to not rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare this financial measure with other companies' non-GAAP financial measures having the same or similar names. In addition, the Company expects to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of these items from the Company's non-GAAP measure should not be construed as an inference that these costs are unusual, infrequent or non-recurring.
The Company provided the following table which reconciles GAAP net income (loss) from continuing operations, as reported, to Earnings from Continuing Operations Excluding Special Items:
SOURCE TechTeam Global, Inc.