Intelligroup Reports a 200 Basis Point Improvement in Q2 2009 Gross Margin and EPS of $0.08 vs. $0.03 in Q2 2008

- Hosts Conference Call & Webcast Today at 10:00 a.m. EDT -
PRINCETON, N.J.--(Business Wire)--
Intelligroup, Inc. (OTC BB: ITIG), an information technology and outsourcing
services provider principally focused on enterprise resource planning (ERP) and
extended ERP solutions, today announced its financial results for the second
quarter ended June 30, 2009. Intelligroup will host a conference call today at
10:00 a.m. EDT to review its financial results.

Conference Call/Replay: Dial 800-918-9476 or 212-231-2905. A phone replay will
be available until August 3, 2009 by dialing 800-633-8284 or 402-977-9140,
passcode: 21430875.

Webcast: Available live at www.intelligroup.com/ig_events_webcasts.html or
www.earnings.comand archived for 30 days.

Q2 Highlights:

* Q2 `09 revenue remained flat at $31 million compared to Q1 `09 revenue of
$30.9 million and decreased 22.7% compared to $40.1 million in Q2 '08
* Q2 `09 gross margin rose to 34.5% compared to 31.2% in Q1 `09 and 32.5% in Q2
`08
* Q2 `09 operating margin rose to 9.3% compared to 5.9% in Q1 `09 and 6.5% in Q2
`08
* Q2 `09 foreign exchange (fx) gain of $0.7 million compared to an fx loss of
$0.6 million in Q1 `09 and an fx loss of $1.4 million in Q2 `08
* Q1 `09 net income of $3.2 million, or $0.08 per diluted share, compared to
$0.8 million, or $0.02 per diluted share, in Q1 `09 and $1.1 million, or $0.03
per diluted share, in Q2 `08
* Q2 `09 cash from operating activities of $4.4 million; $10.6 million
year-to-date
* Cash and cash equivalents including short-term investments were $20.3 million
as of June 30, 2009, compared to $15.9 million at March 31, 2009 and $11.2
million at December 31, 2008
* Intelligroup added 32 new customers globally in Q2 `09

Overview of Key Operating Metrics:
Q2' 09 Q1' 09 Q4' 08 Q3' 08 Q2' 08 2008 2007
Utilization Rate 78% 72% 70% 72% 73% 71% 70%
Billing Rates - Offshore $21 $22 $24 $24 $23 $24 $21
Billing Rates - Onsite $105 $106 $110 $108 $106 $107 $103
Revenue Mix - Offshore 32% 32%* 32% 29% 30% 30% 28%
Revenue Mix - Onsite 68% 68%* 68% 71% 70% 70% 72%
Top 10 Customer Revenue % 39% 36% 38% 36% 36% 35% 41%

* Corrected from Q1 `09 release

Intelligroup President and Chief Executive Officer, Vikram Gulati, commented,
"We have made meaningful advances during the past six months to enhance
productivity in spite of lower levels of business. These actions are reflected
in our financial results for the June quarter and demonstrate our ability to
execute on our plan to make Intelligroup more operationally efficient. Though
the business environment continued to be challenging in Q2, we are seeing some
encouraging signs in the overall IT services sector, including a much greater
degree of receptiveness from many of our customers and prospects to discuss new
or expanded initiatives."

Mr. Gulati concluded, "We are pleased with our position in the marketplace and
remain encouraged by the clear relevance of our value proposition within the ERP
space. The guiding roadmap of the entire Intelligroup organization is on
continually improving our customer satisfaction. In this regard, we are honored
to have been acknowledged over the last several months with various awards for
the quality of our work and for the high level of customer service we bring to
our clients."

Q2 Operating Results:

Revenues for Q2 '09 decreased 22.7% to $31.0 million, compared to $40.1 million
in Q2 '08, however remained flat compared to Q1 `09. In spite of continued
top-line challenges, gross margins expanded to 34.5%, a 200 basis point
improvement versus the year ago period, and a 330 basis point increase as
compared to Q1 `09.

SG&A, including depreciation and amortization, decreased by 25.0% to $7.8
million compared to $10.4 million in Q2 `08, while remaining flat compared to Q1
`09. Q2 `09 operating income was $2.9 million, or 9.3% of revenues, a 280 basis
point improvement over $2.6 million, or 6.5% of revenues, in Q2 `08 and a 340
basis point improvement compared to operating income of $1.8 million, or 5.9% of
revenues, in Q1 `09.

Intelligroup recorded a foreign exchange gain of $0.7 million in Q2 `09,
reflecting the strengthening of the Indian Rupee versus the U.S. Dollar as
compared to previous quarters. This compares to a net foreign exchange loss of
$1.4 million in Q2 `08 and a net foreign exchange loss of $0.6 million in Q1
`09. Tax expenses totaled $0.6 million in Q2 `09 as compared to $0.3 million in
Q2 `08 and $0.5 million in Q1 `09, commensurate with the increase in profits.

Q2 `09 net income was $3.2 million, or $0.08 per diluted share, compared to Q2
`08 net income of $1.1 million, or $0.03 per diluted share, and Q1 `09 net
income of $0.8 million, or $0.02 per share. Diluted shares outstanding were 41.5
million in Q2 `09, a decrease of 1.7% and 1.0% compared to Q2 `08 and Q1 `09,
respectively, as the Company continued to purchase shares under its share
repurchase program. During Q2 2009, Intelligroup repurchased 86,800 shares of
common stock at an average price of $1.41. Intelligroup purchased 671,650 shares
at an average cost of $1.49 per share in the first half of 2009, bringing
purchases since the inception of the program to 750,950 shares.

Intelligroup generated cash from operating activities of $4.4 million in Q2 `09,
ending the quarter with $20.2 million of cash and cash equivalents and short
term investments, net of line of credit borrowings, an increase of approximately
$9 million from year-end 2008.

Alok Bajpai, CFO, added, "Excellent execution throughout our organization
contributed significantly to our performance this quarter. Targeted revenue
opportunities along with disciplined cost management and a keen focus on working
capital helped drive strong cash flow from operations and generate EPS of $0.08
per share. With Intelligroup`s strong financial position and our commitment to
manage our businesses with an intense focus on improving productivity, we are
confidant that we will meet future opportunities and challenges successfully."

About Intelligroup, Inc.

Intelligroup is an ERP-focused enterprise applications systems integrator
providing consulting, implementation, testing, application management and other
IT services for global corporations. The Company possesses deep expertise and
proprietary tools in industry-specific enterprise solutions and has been
recognized by clients, partners including SAP and Oracle, and IT industry
analysts for consistently exceeding expectations. Intelligroup is the recipient
of the 2007 and 2009 Pinnacle Award from SAP, nominated as a finalist for the
Oracle 2007 Titan Awards, received the 2009 Supply-Chain Technology Management
Excellence Award from the Supply-Chain Council and in 2009 and named one of the
"50 Best Managed Global Outsourcing Vendors" by the Black Book of Outsourcing.
Intelligroup`s global service delivery model combines onsite teams and offshore
development capabilities to deliver solutions that accelerate results, reduce
costs and generate meaningful ROI for clients. Intelligroup clients include
Varian Medical, Reckitt Benckiser, Royal Greenland, SAP, Magellan, Hershey`s,
Eastman Chemical Company and Hitachi. For more information please visit
www.intelligroup.com.

Safe Harbor for Forwarding-looking Statements:

Certain statements contained herein, including statements regarding the
development of services and markets, future demand for services and the effect
of the share repurchases by the Company and other statements regarding matters
that are not historical facts, are forward-looking statements (as defined in the
Private Securities Litigation Reform Act of 1995), including future financial
performance and the effect of share repurchase by the company. Such
forward-looking statements include risks and uncertainties; consequently, actual
results may differ materially from those expressed or implied thereby. Factors
that could cause actual results to differ materially include, but are not
limited to, the continuation of the current global economic crisis or further
deterioration of the global economy, variability of quarterly operating results,
continued uncertainty of the IT market and revenues derived from application
management business, uncertainty in revenues for traditional professional
services offerings, loss of one or more significant customers, reliance on large
projects, concentration of revenue, volatility caused by fluctuations in the
currency markets, ability to attract and retain professional staff, dependence
on key personnel, ability to manage growth effectively, risks associated with
strategic partnerships, various project-associated risks, including termination
with short notice, substantial competition, risks associated with intellectual
property rights, risks associated with international operations and other risk
factors detailed under the caption "Risk Factors" in Intelligroup's annual
report on Form 10-K for the period ended December 31, 2008. Intelligroup
disclaims any intention or obligation to update forward looking statements as a
result of developments occurring after the date of this press release.

Intelligroup, the Intelligroup logo and `Creating the Intelligent Enterprise`,
are trade-marks of the Company. 4Sight, 4Sight Plus, PowerUp Services, HotPac
Analyzer and Uptimizer are service marks of Intelligroup.

All other trademarks and company names mentioned are the property of their
respective owners

(tables to follow)

INTELLIGROUP, INC.
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2009 AND DECEMBER 31, 2008
(In thousands except par value)

June 30, December 31,
2009 2008
ASSETS (Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 18,496 $ 10,161
Short-term Investments 1,826 1,031
Accounts receivable, less allowance for doubtful accounts of $2,089 and $1,996 at June 30, 2009 and December 31, 2008, respectively 21,024 23,805
Unbilled services, less allowance for doubtful accounts of $20 as at June 30, 2009 and December 31, 2008 5,843 10,456
Deferred tax asset, current portion 679 545
Prepaid expenses and Prepaid Taxes 1,043 1,115
Other current assets 868 617
Total current assets 49,779 47,730
Property and equipment, net 3,917 5,041
Goodwill and Intangibles 2,092 1,941
Restricted Cash & Investments 2,193 882
Prepaid taxes 888 393
Deferred taxes and other assets 2,521 4,243
Total Assets $ 61,390 $ 60,230

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Line of credit borrowings $ 125 $ 125
Accounts payable 3,571 4,441
Accrued payroll and related taxes 9,953 11,609
Accrued expenses and other current liabilities 3,920 4,930
Deferred revenue, current portion 1,372 735
Tax Payable 1,046 -
Capital lease and deferred rent, current portion 612 805
Total current liabilities 20,599 22,645
Obligations under capital lease, net of current portion 287 533
Deferred revenue, net of current portion 385 454
Other long-term liabilities 989 1,556
Total Liabilities 22,260 25,188
SHARE HOLDERS' EQUITY
Preferred stock, $.01 par value, 5,000 shares authorized, none issued or outstanding - -
Common stock, $.01 par value, 65,000 shares authorized at June 30, 2009 and December 31, 2008 and 41,442and 42,114 shares issued and outstanding at June 30, 2009 and December 31, 2008, respectively 414 421
Additional paid-in capital 71,475 72,089
Accumulated deficit (30,120 ) (34,100 )
Accumulated other comprehensive income (2,639 ) (3,368 )

Total shareholders` equity 39,130 35,042

Total liabilities and shareholders` equity $ 61,390 $ 60,230

INTELLIGROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
in thousands OF U.S. dollars except per share data

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2009 2008 2009 2008
(Unaudited) (Unaudited)
Revenue $ 30,960 $ 40,137 $ 61,829 $ 78,590
Cost of revenue $ 20,267 27,099 $ 41,515 54,128
Gross profit 10,693 13,038 20,314 24,462

Selling, general and administrative expenses 7,034 9,670 14,292 18,668
Depreciation and amortization 794 743 1,348 1,463
Total operating expenses 7,828 10,413 15,640 20,131

Operating Income 2,865 2,625 4,674 4,331

Interest income 31 70 64 176
Interest expense (18 ) (196 ) (38 ) (356 )
Foreign currency transaction gain (loss), net 729 (1,410 ) 114 (1,059 )
Other income (expense), net 190 357 289 543

Income before income taxes 3,797 1,446 5,103 3,635
Provision for income taxes 593 $ 312 1,123 $ 638
Net Income $ 3,204 $ 1,134 $ 3,980 $ 2,998

Basic net income per share $ 0.08 $ 0.03 $ 0.10 $ 0.07
Diluted net income per share $ 0.08 $ 0.03 $ 0.10 $ 0.07

Weighted average no. of common shares outstanding 41,498 42,160 41,608 42,160
- Basic
- Diluted 41,516 42,248 41,626 42,369

INTELLIGROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR SIX MONTH ENDED JUNE 30, 2009 AND 2008
(USD in thousands)

SIX MONTHS ENDED JUNE 30,
2009 2008

Cash flows from operating activities: (Unaudited)
Net Income $ 3,980 $ 2,998
Adjustments to reconcile net loss to net
Cash provided by (used in) operating activities:
Depreciation and amortization 1,620 1,793
Provision for doubtful accounts and advances 467 640
Stock compensation expense 383 555
Loss/ (Profit) on sale of fixed assets 20 -
Exchange (gain) loss (1,480 ) (1,595 )
Deferred taxes (266 ) (771 )
Changes in operating assets and liabilities:
Accounts receivable 2,852 (2,292 )
Unbilled services 4,697 (950 )
Prepaid taxes (435 ) -
Prepaid expenses and other current assets (190 ) 283
Other assets (106 ) (75 )
Restricted Cash 717 (104 )
Accounts payable (120 ) (451 )
Accrued payroll and related taxes (1,724 ) (282 )
Accrued expenses and other current liabilities (950 ) (312 )
Deferred revenue and advanced payments 608 (590 )
Income taxes payable 634 1,295
Other long-term liabilities (59 ) 1,617
Net cash provided by operating activities $ 10,648 $ 1,759

Cash flows from investing activities:
Purchase of property and equipment $ (682 ) $ (295 )
Proceeds from sale of equipment - 33
Purchases of investments (7,803 ) -
Proceeds from sale of Investments 7,049 -
Net cash used in investing activities $ (1,436 ) $ (262 )

Cash flows from financing activities:
Principal payments under capital leases $ (138 ) $ (365 )
Stock Repurchase (1,004 ) -
Net change in line of credit borrowings - (1,052 )
Net cash used in financing activities $ (1,142 ) $ (1,418 )

Effect of foreign currency exchange rate changes on cash $ 265 $ (397 )

Net increase (decrease) in cash and cash equivalents 8,335 (319 )
Cash and cash equivalents - beginning of year $ 10,161 $ 8,419
Cash and cash equivalents - end of the period $ 18,496 $ 8,100

INVESTORS:
Jaffoni & Collins Incorporated
Norberto Aja/David Collins, 212-835-8500
itig@jcir.com

Copyright Business Wire 2009

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