Information Services Group Announces Third Quarter 2009 Financial Results

Third Quarter Revenues of $32.5 Million, Down 21% from 2008;

STAMFORD, Conn., Nov. 4 /PRNewswire-FirstCall/ -- Information Services Group,
Inc. (ISG) (Nasdaq: III, IIIIU, IIIIW), an industry-leading, information-based
services company, today announced financial results for the third quarter of
2009 which ended on September 30, 2009.

Third Quarter 2009 Results
ISG reported total revenues of $32.5 million during third quarter 2009, a
decrease of $8.6 million (or 21%) from $41.1 million in the third quarter of
2008. Reported revenues decreased 18% before the impact of currency
translation. Fee revenues (revenues before client reimbursable expenses)
aggregated $29.9 million during the third quarter of 2009, a decrease of 21%
year-over-year (down 18% before the impact of currency translation). Revenues
in the Americas decreased 14% for the quarter. Revenues from international
operations decreased 25% on a constant currency basis and 29% including the
impact of currency translation from third quarter 2008 levels. Revenues were
essentially flat to second quarter 2009 before the impact of currency
translation. During third quarter, revenues related to new sourcing
transactions decreased as current and prospective clients continued to defer
the implementation of new sourcing strategies in the face of the continuing
economic downturn. This decrease was partially offset by higher demand for
contract renegotiation support and post contract management and governance
services.

ISG reported a $4.2 million operating loss for the three months ended
September 30, 2009 compared with a reported operating income of $3.8 million
during the same 2008 period. The third quarter 2009 operating loss was
attributable to a $6.8 million charge for the impairment of indefinite life
intangible assets associated with trademarks and trade names. The non-cash
impairment charge resulted primarily from 2009 revenue compression driven by
the global recession which has impacted and reduced sourcing industry
activity. Excluding the impact of the impairment charge and year-on-year
currency translation on reported revenues and expenses, operating income was
down $0.6 million or 21% from third quarter 2008 levels.

Third quarter 2009 earnings before interest, taxes, depreciation amortization
and non-cash impairment charges (adjusted EBITDA, a non-GAAP measure) totaled
$4.9 million (16.3% of fee revenues). This represents a decrease of 24%
compared with third quarter 2008 EBITDA of $6.4 million (16.9% of fee
revenues). Excluding the impact of currency translation, adjusted EBITDA
declined by $0.8 million or 15% from third quarter 2008 levels.

The declines in operating income before the impact of the impairment charge
and adjusted EBITDA reported during the third quarter of 2009 were primarily
the result of lower revenue levels in all regions partially offset by
reductions of direct costs as well as selling and general and administrative
expenses of 25% and 12%, respectively resulting from ongoing cost productivity
programs.

Reported fully diluted earnings per share (EPS) for third quarter 2009 totaled
a loss of $0.11 (positive $0.02 before the previously discussed impairment
charge) versus $0.05 for the same 2008 period. Fully diluted cash EPS (a
non-GAAP measure) for third quarter 2009 was $0.10 compared with $0.13 for
third quarter of 2008. The decrease in diluted cash EPS was principally
attributable to lower revenues partially offset by expense reductions and cost
productivity.

Other Financial and Operating Highlights
Cash and cash equivalents aggregated $42.9 million at September 30, 2009
compared with $45.8 million at June 30, 2009 and $61.1 million at December 31,
2008. The decrease in cash balances from year-end 2008 was principally
attributable to term loan principal and interest payments and the disbursement
of 2008 variable incentive plan payments during March 2009. Total outstanding
debt at September 30, 2009 was $76.8 million compared with $81.8 million at
June 30, 2009 and $94.1 million at December 31, 2008. ISG made principal
repayments of $12.0 million and $5.0 million in June and September 2009,
respectively. In addition, during September 2009 ISG agreed to make
additional principal repayments of $5.0 million and $2.0 million in December
2009 and March 2010. In consideration of the principal repayment made in
September 2009 and the required repayments due in December 2009 and March
2010, ISG's lenders agreed to amend the total leverage ratio for the balance
of the term of the loan to provide the Company with greater financial
flexibility.

"ISG remains focused on cost productivity, investing in new products and
services, expanding our global presence, retaining and recruiting the best
professional advisors in the industry and pursuing acquisitions to expand
capabilities and scale. Although growth in the overall sourcing market
remains challenging in 2009, ISG's third quarter revenues were essentially
flat to the second quarter 2009 on a constant currency basis. We experienced
year-on-year growth in the automotive and financial service sectors for the
first time since 2007 as well as strong demand from companies in the retail
and restaurant verticals. We also continued to expand our post contract
governance services business and signed our first major contract in China. As
world economic activity stabilizes and corporate confidence returns, we
believe ISG is well positioned to support our clients' efforts to lower their
costs and drive business improvements," said Michael P. Connors, Chairman and
CEO of ISG.

Conference Call
ISG has scheduled a conference call at 2:00 p.m. Eastern Standard Time,
Thursday, November 5, 2009, to discuss the Company's financial results. The
call can be accessed by dialing 1 (800) 723-6498 or for international callers
001 (785) 830-7989. The access code is 4817599.

About Information Services Group, Inc.
Information Services Group, Inc. (ISG) was founded in 2006 to build an
industry-leading, high-growth, information-based services company by acquiring
and growing businesses in advisory, data, business and media information
services. In November 2007, ISG acquired TPI, the largest sourcing advisory
firm in the world. Based in Stamford, Connecticut, ISG has a proven
leadership team with global experience in information-based services and a
track record of creating significant value for shareowners, clients and
employees. For more, visit www.informationsg.com.

About TPI
TPI, a unit of ISG, is the founder and innovator of the sourcing advisory
industry, and the largest sourcing data and advisory firm in the world. TPI
is expert at a broad range of business support functions and related research
methodologies. Utilizing deep functional domain expertise and extensive
practical experience, TPI's accomplished industry experts collaborate with
organizations to help them advance their business operations through the best
combination of business process improvement, shared services, outsourcing and
offshoring. In addition, TPI Momentum, a business unit of TPI, provides
information and insights to outsourcing and offshoring service providers to
help them provide enhanced services to their sourcing clients. For additional
information, visit www.tpi.net.

Non-GAAP Financial Measures
ISG reports all financial information required in accordance with U.S.
generally accepted accounting principles (GAAP). In this release, ISG has
presented both GAAP financial results as well as non-GAAP information for the
three and nine months ended September 30, 2009 and September 30, 2008. ISG
believes that evaluating its ongoing operating results will be enhanced if it
discloses certain non-GAAP information. These non-GAAP financial measures
exclude non-cash and certain other special charges that many investors believe
may obscure the user's overall understanding of ISG's current financial
performance and the Company's prospects for the future. ISG believes that
these non-GAAP measures provide useful information to investors because they
improve the comparability of the financial results between periods and provide
for greater transparency of key measures used to evaluate the Company's
performance.

ISG provides adjusted EBITDA (defined as net income plus income taxes, net
interest income/(expense), depreciation, amortization of intangible assets
resulting from acquisitions and non-cash impairment charges for goodwill and
intangible assets) and cash earnings (defined as net income plus amortization
of intangible assets, non-cash stock based compensation and non-cash
impairment charges for goodwill and intangible assets) and selected financial
data on a constant currency basis (using foreign currency exchange rates as of
November 30, 2008), which are non-GAAP measures that the Company believes
provide useful information to both management and investors by excluding
certain expenses and financial implications of foreign currency translations,
which management believes are not indicative of ISG's core operations. These
non-GAAP measures are used by ISG to evaluate the Company's business
strategies and management's performance.

Non-GAAP financial measures, when presented, are reconciled to the most
closely applicable GAAP measure. Non-GAAP measures are provided as additional
information and should not be considered in isolation or as a substitute for
results prepared in accordance with GAAP.

Forward-Looking Statements
This communication contains "forward-looking statements" which represent the
current expectations and beliefs of management of ISG concerning future events
and their potential effects. Statements contained herein including words such
as "anticipate," "believe," "contemplate," "plan," "estimate," "expect,"
"intend," "will," "continue," "should," "may," and other similar expressions,
are "forward-looking statements" under the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are not guarantees of
future results and are subject to certain risks and uncertainties that could
cause actual results to differ materially from those anticipated. Those risks
relate to inherent business, economic and competitive uncertainties and
contingencies relating to the businesses of ISG and TPI including without
limitation: (1) failure to secure new engagements or loss of important
clients; (2) ability to hire and retain enough qualified employees to support
operations; (3) ability to maintain or increase billing and utilization rates;
(4) management of growth; (5) success of expansion internationally; (6)
competition; (7) ability to move the product mix into higher margin
businesses; (8) general political and social conditions such as war, political
unrest and terrorism; (9) healthcare and benefit cost management; (10) ability
to protect ISG and TPI's intellectual property and the intellectual property
of others; (11) currency fluctuations and exchange rate adjustments; (12)
ability to successfully consummate or integrate strategic acquisitions; (13)
financial condition of various clients in the financial, automotive and
transportation sectors which account for significant portions of the Company's
revenues and may maintain sizable accounts receivables with the Company; and
(14) ability to achieve the cost reduction and productivity improvements
contemplated in the previously announced "Value Creation Plan" and in
subsequent programs. Certain of these and other applicable risks, cautionary
statements and factors that could cause actual results to differ from ISG's
forward-looking statements are included in ISG's filings with the U.S.
Securities and Exchange Commission ("SEC"). ISG undertakes no obligation to
update or revise any forward-looking statements to reflect subsequent events
or circumstances.

Information Services Group, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except per share amounts)

Three Months Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
2009 2008 2009 2008
---- ---- ---- ----

Revenue $32,462 $41,123 $98,279 $137,370
Operating expenses
Direct costs and
expenses for advisors 16,968 22,771 49,447 76,827
Selling, general
and administrative 10,532 11,934 35,647 39,482
Depreciation and
amortization 2,366 2,614 7,160 7,793
Impairment of
intangible assets 6,800 - 6,800 -
----- -- ----- --
Operating (loss) income (4,204) 3,804 (775) 13,268
------ ----- ---- ------
Interest income 39 307 254 963
Interest expense (1,111) (1,572) (3,640) (5,162)
Foreign currency
transaction (loss) gain (107) (3) (151) 405
---- -- ---- ---

Income (loss) before
taxes (5,383) 2,536 (4,312) 9,474
Income tax benefit
(provision) 1,786 (1,079) 1,354 (3,930)
----- ------ ----- ------
Net (loss) income $(3,597) $1,457 $(2,958) $5,544
======= ====== ======= ======

Weighted average shares
outstanding:
Basic 31,478 31,208 31,456 31,290
Diluted 31,478 31,281 31,456 31,357

(Loss) income per share:
Basic $(0.11) $0.05 $(0.09) $0.18
====== ===== ====== =====
Diluted $(0.11) $0.05 $(0.09) $0.18
====== ===== ====== =====

Adjusted EBITDA $4,855 $6,415 $13,034 $21,466
Less:
Income taxes (1,786) 1,079 (1,354) 3,930
Interest expense
(net of interest
income) 1,072 1,265 3,386 4,199
Depreciation and
amortization 2,366 2,614 7,160 7,793
Impairment of
intangible assets 6,800 - 6,800 -
----- -- ----- --
Net (loss) income (3,597) 1,457 (2,958) 5,544
Plus:
Amortization 2,036 2,212 6,108 6,636
Impairment of
intangible assets,
net of tax 4,140 - 4,140 -
Non-cash stock
compensation 563 460 1,873 1,813
--- --- ----- -----
Cash Earnings $3,142 $4,129 $9,163 $13,993
====== ====== ====== =======

Cash Earnings Per Share:
Basic $0.10 $0.13 $0.29 $0.45
===== ===== ===== =====
Diluted $0.10 $0.13 $0.29 $0.45
===== ===== ===== =====

Information Services Group, Inc.
Selected Financial Data
Constant Currency Comparison

Three Months Ended
Three Months Ended Constant currency September 30, 2009
September 30, 2009 impact (1) Adjusted
------------------ ---------- --------
Revenue $32,462 $(1,912) $30,550
Operating
income (2) $2,596 $(485) $2,111
EBITDA (2) $4,855 $(378) $4,477

Three Months Ended
Three Months Ended Constant currency September 30, 2008
September 30, 2008 impact (1) Adjusted
------------------ ---------- --------
Revenue $41,123 $(3,758) $37,365
Operating
income (2) $3,804 $(1,125) $2,679
EBITDA (2) $6,415 $(1,121) $5,294

Nine Months Ended
Nine Months Ended Constant currency September 30, 2009
September 30, 2009 impact (1) Adjusted
------------------ ---------- ---------
Revenue $98,279 $(3,339) $94,940
Operating
income (2) $6,025 $(549) $5,476
EBITDA (2) $13,034 $(374) $12,660

Nine Months Ended
Nine Months Ended Constant currency September 30, 2008
September 30, 2008 impact (1) Adjusted
------------------ ---------- --------
Revenue $137,370 $(13,491) $123,879
Operating
income (2) $13,268 $(2,821) $10,447
EBITDA (2) $21,466 $(2,921) $18,545

(1) Using foreign currency rates as of November 30, 2008
(2) Excluding impairment of intangible assets charge of $6.8 million
recorded in the third quarter of 2009

SOURCE Information Services Group, Inc.

Press Contact: Barry Holt, +1-203-517-3110, bholt@informationsg.com, Investor
Contact: David Berger, +1-203-517-3104, dberger@informationsg.com