TechTeam Global, Inc., (Nasdaq: TEAM), a worldwide provider of information technology outsourcing and business process outsourcing services, today reported a net loss for the Company for the three months ended December 31, 2009 of $22.4 million, or $2.11 per diluted share, including a non-cash charge of $27.5 million related to the impairment of certain goodwill and intangibles. On a comparable basis, excluding the impairment and the restructuring charges in both periods, the Company would have reported net income of $542,000, or $0.05 per diluted share, which compares to net income of $2.9 million, or $0.27 per diluted share, for the three months ended December 31, 2008.

Please see “Reconciliation of Earnings Excluding Restructuring and Impairment Charges to Net Income (Loss)” in the Financial Data section of this press release.

Fourth quarter 2009 highlights include the following:

Revenue was $48.5 million, a decrease of $13.5 million or 21.7% from the fourth quarter 2008. The decrease was primarily driven by the previously announced wind-down of certain customer contracts during the second half of 2009, including the U.S. federal government in-sourcing of certain services provided to U.S. Air National Guard and the discontinuation of services for the Volvo Car Company as a result of divestiture efforts by the Ford Motor Company. In addition, $0.7 million of the decrease was due to the previously reported divestiture of the Company’s ANE business in the fourth quarter 2008.

Gross margin of 23.0% in the fourth quarter 2009 declined from 24.6% reported in the fourth quarter 2008 due to the previously noted wind-down of the U.S. Air National Guard and Volvo Car Company contracts which were at higher gross margin levels.

Selling, General and Administrative (SG&A) expense was $10.4 million for the fourth quarter 2009, a 10.0% decrease in dollar terms from $11.6 million in SG&A reported for the fourth quarter 2008. Despite the dollar decrease, SG&A as a percent of revenue increased to 21.5% on a year-over-year basis, largely to support continued demand generation efforts to build backlog and business scale.

The Company reduced its total outstanding debt by an additional 21.0% or $4.0 million during the fourth quarter. As of December 31, 2009, the Company achieved a positive net cash position (defined as total cash and cash equivalents minus total bank debt).

The net loss for fourth quarter included non-cash charges for the write-down of goodwill and certain intangibles in the Company’s Government Solutions and SQM reporting units resulting from annual impairment testing. The total impairment charges for goodwill were $20.8 million and $4.4 million for Government Solutions and SQM reporting units, respectively. The total impairment charges for certain other intangibles were $0.5 million and $1.8 million for Government Solutions and SQM reporting units, respectively.

The Company consolidated its North American and European commercial business units into a global operating structure resulting in a $1.2 million pre-tax restructuring charge in the fourth quarter of 2009. This restructuring was the first phase of a broader restructuring effort to be completed in the first quarter of 2010.

Full year 2009 highlights include the following:
Cash provided by operations for the 12 months ended December 31, 2009 increased by 130.0% to $20.2 million over the $8.8 million in cash provided by operations during the same period in 2008, primarily driven by improvements in working capital management.

For the full year 2009, the Company retired a total of $20.1 million in outstanding debt, eliminating approximately 57.0% of its outstanding debt during the 12 months ended December 31, 2009, achieving a positive net cash position.

Gross margins in 2009 increased by 0.7 percentage points to 23.9% from 23.2% for the full year of 2008.

Gartner, Inc. positioned the Company in the Leaders Quadrant in both the Magic Quadrant for Help Desk Outsourcing, North America, and the Magic Quadrant for Desktop Outsourcing Services, North America reports.(1)

Through direct customer feedback, TechTeam received significant recognition in Datamonitor’s 2009 Black Book of Outsourcing, achieving the no. 1 ranking globally in Help Desk Outsourcing across Tier 1 and Mid Tier customers, and the no. 1 ranking globally in IT Infrastructure Outsourcing for Mid Tier customers.

The Company formed a Global Life Sciences Business Unit to capitalize on continued growth opportunities in the life sciences industry.

For the first time in its history, the Company’s Government Solutions business unit achieved milestone recognition by being named to the “Top 250 Federal GSA IT Contractors” list by Federal Times.

Subsequent event in Q1, 2010:
As previously mentioned, the Company will complete its second phase of restructuring during the first quarter of 2010 recording an estimated pre-tax cash restructuring charge of between $2.7 million and $3.4 million. The combined restructuring actions reduce certain redundant costs, eliminate some excess capacity and support the Company’s strategy to more tightly focus its business.

“In the fourth quarter, the Company adapted its business well to customers who were heavily impacted by the global economic environment,” said Gary J. Cotshott, President and Chief Executive Officer. “While we ramped up new business with several large customers in the quarter, it was insufficient to overcome the revenue erosion we experienced due to customer-driven volume reductions and the conclusion of certain contracts, most notably with the U.S. Air National Guard and the Volvo Car Company. We have navigated this very difficult period of economic adjustment while maintaining profitability before special charges, delivering strong cash flow, paying down 57.0% of our debt and achieving a positive net cash position in 2009. For 2010, we are cautiously optimistic about the stability we see in our customer base and the new account opportunities we are pursuing in the market as the economic recovery continues.”

“Our primary operating focus is on executing our strategy by increasing our visibility in the market, expanding our global footprint, building capabilities to increase the value we bring to customers and scaling our cost structure as we add new business to our portfolio,” said Cotshott. “The restructuring actions we are taking are consistent with our strategy to consolidate, globalize and narrow the focus of our business and, in doing so, create shareholder value.”

Cotshott continued, “As we reposition the Company, we are pleased with our pipeline of new account opportunities that provide a solid basis to resume revenue growth over time. Our goal is not merely to find ourselves stronger and more competitive but better equipped for the future through continued execution of our strategy. More than ever before, industry analysts and customers are recognizing TechTeam’s leadership and capabilities as a top tier IT outsourcing service provider.”

Other Financial Information

In the first quarter of fiscal 2009, management changed its methodology for evaluation of the performance of the Company’s outsourcing services. As a result of this change, certain costs, which were previously included in SG&A expense, are now being included in Cost of Revenue in the Company’s Condensed Consolidated Statement of Operations because they are directly related to revenue. The Company’s financial statements for fiscal year 2008 have been revised, for all periods presented, to conform to the current year presentation. This re-categorization of expenses did not change net income or earnings per share for all periods presented in fiscal year 2008. There was no cumulative effect to retained earnings as a result of this re-categorization and there was no change to the carrying amount of assets and liabilities in fiscal year 2008.

For additional financial information please refer to the Company’s Form 10-K for the fiscal year ending December 31, 2009, expected to be filed before March 31, 2010. Further information regarding the re-categorization of expense can be found in “Note 1 – Summary of Significant Accounting Policies” of the Form 10-K. Further information regarding the impairment of goodwill and intangibles can be found in “Note 4 – Goodwill and Other Intangible Assets.”

Conference Call Information
TechTeam Global, Inc. will host an investor teleconference to discuss its fourth quarter 2009 financial results at 8:00 a.m. EDT, Wednesday, March 31, 2010. To participate in the teleconference, including the question and answer session that will follow the results announcement and discussion, please call 1-877-941-9205. If dialing from outside the United States, call +1-480-629-9835. Please reference Conference ID 4277386. To access a simultaneous Web cast of the teleconference, go to the TechTeam Global Web site at http://www.techteam.com/investors and click on the Web cast icon. From this site, you can download the necessary software and listen to the teleconference. TechTeam encourages you to review the site before the teleconference to ensure that your computer is configured properly.

A taped replay of the call will be available beginning at approximately 10:00 a.m. EDT, Wednesday, March 31, 2010. This toll-free replay will be available through Wednesday, April 14, 2010. To listen to the teleconference replay, call 1-800-406-7325. If dialing from outside the United States, call +1-303-590-3030. Please reference Conference ID 4277386.

(1) The Magic Quadrant for Help Desk Outsourcing, North America was authored by Richard T. Matlus and William Maurer and was published on March 4, 2009. The Magic Quadrant for Desktop Outsourcing Services, North America was authored by William Maurer, Richard T. Matlus and Lilian Dutra and was published on March 3, 2009.

Source:http://www.prnewswire.com/news-releases/techteam-global-reports-fourth-quarter-and-year-end-2009-financial-results-89470822.html