Nov. 4, 2009 (PR Newswire) --

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.