EX-99 3 sks84b.htm PRESS RELEASE

Inforte Corp. Announces First Quarter 2005 Results

CHICAGO, April 21, 2005 /PRNewswire-FirstCall/ — Business and Customer Intelligence consultancy Inforte Corp. (Nasdaq: INFT — News) announced today that revenue and diluted earnings per share (EPS) excluding capital restructuring expenses were both within the guidance ranges for the quarter ending March 31, 2005.

First quarter revenue was $9.5 million, net revenue was $8.7 million and pro forma diluted earnings per share (EPS) were $0.00. Pro forma information excludes the costs of the capital restructuring during the first quarter, which included an exchange of outstanding options for cash and restricted stock and the granting of additional common stock. This information is provided to enhance the understanding of the Company’s financial performance and is reconciled to the Company’s GAAP information in the accompanying tables.

Dave Sutton, Inforte’s chief executive officer and president, commented, “Over the last few months we have restructured our facilities, executed a capital restructuring program and successfully completed the integration of the Compendit acquisition into the rest of our business. We now have a sound foundation for maximizing our earnings potential as we progress through the balance of the year and beyond.”

Actual earnings results for the quarter and year ended March 31, 2005, and financial highlights, are as follows:

• Pro forma net income for the quarter was $25,000

• Employees totaled 223, of which 180 were billable.

• Cash and marketable securities were $52.2 million before reflecting the special one-time distribution which was paid in April, 2005; this represents $4.55 of cash and marketable securities per share, based upon 11,453,734 actual shares outstanding.

• Quarterly net revenue per consultant and per employee were both improved from last quarter at $194,000 and $161,000 annualized, respectively.

Guidance is as follows:

• Inforte’s net revenue guidance for 2Q05 is a range of $8.5 million to $9.5 million compared to actual of $8.7million in 1Q05.

• EPS guidance for 2Q05 is a range of $0.00 to $0.04 compared to actual of $0.00 in 1Q05.

• Net revenue guidance for 3Q05 is a range of $8.5 million to $9.5 million. 3Q05 EPS guidance is a range of $0.00 to $0.04.

This year Inforte completed its capital restructuring program. There were 2.6 million options outstanding at the end of 2004 compared to 739,751 at the end of the first quarter. Approximately $17.4 million of cash has been distributed to stockholders.

Nick Heyes, Inforte’s chief financial officer, commented, “So far this year we have been able to give back $1.50 per share to stockholders and we still have enough cash to execute against our growth plans. We have eliminated more than 1.85 million dilutive and potentially dilutive options and we have immaterial exposure to option expensing when we have to adopt it next year.”

This press release contains forward-looking statements that involve risks and uncertainties. Actual results may differ from forward-looking results for a number of reasons, including but not limited to, Inforte’s ability to: (i) effectively forecast demand and profitably match resources with demand during a period of tight client budgets and lower spending levels, and when worldwide economic and geopolitical uncertainty is high; (ii) attract and retain clients and satisfy our clients’ expectations; (iii) recruit and retain qualified professionals; (iv) accurately estimate the time and resources necessary for the delivery of our services; (v) build and maintain marketing relationships with leading software vendors while occasionally competing with their professional services organizations; (vi) compete with emerging alternative economic models for delivery, such as offshore development; and (vii) identify and successfully offer the solutions that clients demand; as well as other factors discussed from time to time in our SEC filings.

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. All forward-looking statements included in this document are made as of the date hereof, based on information available to Inforte on the date thereof, and Inforte assumes no obligation to update any forward-looking statements.

About Inforte Corp.

Inforte Corp. increases the competitive strength of its Global 1000 clients by providing them with insight, intelligence and an infrastructure to close the fact-gap and enable more timely and profitable decision-making. Inforte consultants combine real-world industry, functional and analytical expertise with innovative go-to-market strategies and technology solutions, ensuring that our clients can drive transformational, measurable results in their customer interactions. Inforte executives are the authors of several leading books on enterprise-grade business intelligence, customer insight and marketing transformation including Mastering the SAP Business Information Warehouse; CRM Unplugged: Releasing CRM’s Strategic Value; and Enterprise Marketing Management: The New Science of Marketing. Founded in 1993, Inforte is headquartered in Chicago and has offices in Atlanta; Dallas; Delhi, India; Hamburg, Germany; London; Los Angeles; New York; San Francisco; Walldorf, Germany; and Washington, D.C. For more information, contact Inforte at 800.340.0200 or visit www.inforte.com.

CONTACT: Kelly Richards, +1.312.233.9567, kelly.richards@inforte.com, or ir@inforte.com.

Visit http://www.inforte.com/investor/ to access the April 21, 2005, Investor Conference Call web cast, which begins at 8:30 a.m. Eastern.

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CONSOLIDATED STATEMENTS OF OPERATIONS
(000‘s, except per share data)

THREE MONTHS ENDED
MARCH 31,
2004
 2005
(Unaudited) (Unaudited)
Revenues:            
             
   Revenue before reimbursements (net revenue)   $ 10,662   $ 8,655  
   Reimbursements    1,413    891  
   
  
Total Revenues    12,075    9,546  
     
Operating expenses:          
   Project personnel and related expenses    5,580    5,759  
   Reimbursed expenses    1,413    891  
   Sales and marketing    1,186    613  
   Recruiting, retention and training    364    199  
   Management and administrative    2,907    3,636  
   
  
      Total operating expenses    11,450    11,098  
     
Operating income    625    (1,552 )
             
Interest income, net and other    233    261  
   
  
Income (loss) before income tax    858    (1,291 )
Income tax expense (benefit)    343    (521 )
   
  
Net income (loss)   $ 515   $ (770 )
   
  
Earnings (loss) per share:          
-Basic   $ 0.05   $ (0.07 )
-Diluted   $ 0.05   $ (0.07 )
             
Weighted average common shares outstanding:          
-Basic    10,990    11,132  
-Diluted    11,328    11,132  
             
Expenses as a percentage of net revenue          
   Project personnel and related expenses    52.3 %  66.5 %
   Sales and marketing    11.1 %  7.1 %
   Recruiting, retention, and training    3.4 %  2.3 %
   Management and administrative    27.3 %  42.0 %
             
Income tax rate    40.0 %  40.3 %
             
Margins          
   Gross income    47.7 %  33.5 %
   Operating income    5.9 %  (17.9 )%
   Pretax income    8.0 %  (14.9 )%
   Net income    4.8 %  (8.9 )%
             
Year-over-year change          
   Net revenue        (19 )%
   Gross income        (43 )%
   Operating income (loss)        (349 )%
   Pretax income (loss)        (250 )%
   Net income (loss)        (240 )%
   Diluted EPS          

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NON-GAAP SUPPLEMENTAL INFORMATION (UNAUDITED) (1)
STATEMENTS OF OPERATIONS
(000's, except per share data)

THREE MONTHS ENDED
MARCH 31,
2004
 2005
Unaudited Unaudited
Operating income      625    (1,552 )
Tender offer related charges    --    1,316  
Interest income, net and other    233    261  
Income before income tax    858    25  
Income tax expense (benefit)    343    --  
Net income   $ 515   $ 25  
Earnings per share:  
-Basic   $ 0 .05 $ 0 .00
-Diluted   $ 0 .05 $ 0 .00
   
Weighted average common shares outstanding:  
-Basic    10,990    11,132  
-Diluted    11,328    11,279  
   
Expenses as a percentage of net revenue  
 Project personnel and related expenses    52 .3%  63 .2%
 Sales and marketing    11 .1%  5 .7%
 Recruiting, retention, and training    3 .4%  2 .2%
 Management and administrative    27 .3%  31 .6%
   
Margins  
 Gross income    47 .7%  36 .8%
 Operating income    5 .9%  (2 .7)%
 Pretax income    8 .0%  0 .3%
 Net income    4 .8%  0 .3%
   
Year-over-year change  
 Net revenue        -19%  
 Gross income        -37%  
 Operating income        -138%  
 Pretax income        -97%  
 Net income        -95%  
 Diluted EPS        -100%  

(1)     The Non-GAAP supplemental information shows results excluding the impact of one-time charges related to the tender offer to convert certain stock options into cash and restricted stock and a one-time cash distribution to stockholders that occurred in the first quarter of 2005. The total expense of $1,316 included: (i)$848 for charges related to the exchange of stock options for cash; (ii) $378 for common stock grants to employees who had chosen not to exercise options prior to the one-time cash distribution; and (iii) $90 for professional services. The non-GAAP results are provided in order to enhance the user’s overall understanding of the company’s current and future financial performance by excluding certain items that management believes are not indicative of its core operating results and by providing results that provide a more consistent basis for comparison between quarters. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with accounting principles generally accepted in the United States of America.

INFORTE CORP.
CONSOLIDATED BALANCE SHEETS
(000‘s)

MAR 31, 2004
 JUN 30, 2004
 SEPT 30, 2004
 DEC 31, 2004
 MAR 31, 2005
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
ASSETS                        
Current assets:                      
   Cash and cash equivalents   $ 18,630   $ 17,767   $ 18,889   $ 20,817   $ 22,041  
   Short-term marketable securities    15,860    22,273    25,457    24,657    24,036  
   Accounts receivable    8,633    8,893    7,469    7,491    6,760  
   Allowance for doubtful accounts    (500 )  (500 )  (500 )  (450 )  (450 )
   
  
  
  
  
   Accounts receivable, net    8,133    8,393    6,969    7,041    6,310  
   Prepaid expenses and other current assets    1,273    1,144    985    875    1,163  
   Interest receivable on investment Securities    403    314    389    383    399  
   Deferred income taxes    643    656    622    2,662    2,424  
   Income taxes recoverable    401    460    501    1,025    1,042  
   
  
  
  
  
      Total current assets    45,343    51,007    53,812    57,460    57,415  
   
  
  
  
  
Computers, purchased software and property    2,525    2,682    3,113    3,218    2,642  
Less accumulated depreciation and amortization    1,572    1,690    1,907    2,125    1,623  
   
  
  
  
  
Computers, purchased software and property, net    953    992    1,206    1,093    1,019  
   
  
  
  
  
Long-term marketable securities    24,457    18,441    14,136    12,106    6,086  
Intangible assets    127    78    38    --    --  
Goodwill    5,378    5,434    11,737    11,726    11,726  
Deferred income taxes    317    309    295    207    366  
   
  
  
  
  
      Total assets   $ 76,575   $ 76,261   $ 81,224   $ 82,592   $ 76,612  
   
  
  
  
  
LIABILITIES AND STOCKHOLDERS' EQUITY                      
   
  
  
  
  
Current liabilities:                      
   Accounts payable   $ 1,554   $ 1,341   $ 995   $ 756   $ 710  
   Income taxes payable    --    --    --    1,309    148  
   Accrued expenses    3,146    3,315    2,738    2,364    2,274  
   Accrued loss on disposal of Leased property    489    419    346    2,278    1,826  
   Current portion of deferred acquisition payment    500    --    3,150    3,150    3,150  
   Dividends declared    --    --    --    --    17,375  
   Deferred revenue    2,657    2,778    2,209    1,667    1,085  
   
  
  
  
  
      Total current liabilities    8,346    7,853    9,438    11,524    26,568  
   
  
  
  
  
Non current liabilities:                      
   Non-current portion of deferred acquisition payment    --    --    3,150    3,150    --  
Stockholders' equity:                      
   Common stock, $0.001 par value                      
   authorized- 50,000,000 shares;                      
   issued and outstanding (net of treasury stock)                      
   11,453,734 as of Mar. 31, 2005, excluding option grants    11    11    11    11    11  
   Additional paid-in capital    80,113    80,206    80,384    80,652    74,015  
   Cost of common stock in treasury (2,720,823                      
   shares as of Mar. 31, 2005)    (24,997 )  (24,997 )  (24,997 )  (24,997 )  (24,997 )
   Stock-based compensation    60    161    180    181    585  
   Retained earnings    12,541    12,737    12,742    11,462    --  
   Accumulated other comprehensive income    501    290    316    609    430  
   
  
  
  
  
      Total stockholders' equity    68,229    68,408    68,636    67,918    50,044  
   
  
  
  
  
      Total liabilities and stockholders' equity   $ 76,575   $ 76,261   $ 81,224   $ 82,592   $ 76,612  
   
  
  
  
  
Total cash and marketable securities   $ 58,947   $ 58,481   $ 58,482   $ 57,580   $ 52,163  

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INFORTE CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(000's)

THREE MONTHS ENDED MARCH 31,
2004
 2005
(Unaudited) (Unaudited)
Cash flows from operating activities            
Net income (loss)   $ 515   $ (770 )
 
  
Adjustments to reconcile net income to net          
cash provided by (used in) operating activities:          
   Depreciation and amortization    355    384  
   Non-cash compensation    60    404  
   Deferred income taxes    31    79  
Changes in operating assets and liabilities          
Accounts receivable    (1,628 )  731  
   Prepaid expenses and other current assets    (539 )  (305 )
   Accounts payable    (48 )  (46 )
   Income taxes    (1,042 )  (1,178 )
   Accrued expenses and other    (1,272 )  (542 )
   Deferred revenue    (108 )  (582 )
 
  
Net cash provided by (used in) operating activities    (3,676 )  (1,825 )
   
Cash flows from investing activities          
   Acquisition of Compendit, net of cash    (5,120 )  (3,150 )
   Decrease in marketable securities    3,155    6,359  
Purchases of property and equipment    (253 )  (137 )
 
  
Net cash provided by (used in) investing activities    (2,218 )  3,072  
   
Cash flows from financing activities          
   Proceeds from stock option and purchase plans    322    46  
 
  
Net cash provided by financing activities    322    46  
 
  
Effect of changes in exchange rates on cash    131    (69 )
Increase (decrease) in cash and cash equivalents    (5,441 )  1,224  
Cash and cash equivalents, beg. of period    24,071    20,817  
 
  
Cash and cash equivalents, end of period   $ 18,630   $ 22,041  
 
  

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