Intelligroup Reports Fourth Quarter Financial Results

Edison, NJ, USA – March 23, 2007 - EDISON, N.J., March 22 /PRNewswire-FirstCall/ -- Intelligroup Inc., a consulting, business optimization, and outsourcing firm serving global corporations, today reported financial results for its fourth quarter and year-ended December 31, 2006. Such results are included at the end of this release and in the periodic report on Form 10-K for the period ended December 31, 2006, as filed with the United States Securities and Exchange Commission.
Fourth Quarter Highlights

Revenue: Fourth quarter revenue remained relatively flat compared to revenue in the third quarter of 2006, but it increased by 9% over the fourth quarter of 2005. Utilization rates: Utilization rates increased from 64% for the fourth quarter of 2005 to 68% for the fourth quarter of 2006 although sequentially utilization rates dipped from 72% in the third quarter of 2006. Operating Performance: Operating performance improved by $3.6 million in fiscal year 2006 compared to fiscal year 2005 New Customers: 26 new customers were added globally in the fourth quarter.

Fourth Quarter performance:
The Company reported revenues in the fourth quarter of 2006 of $32.0 million, which marks a slight decrease of 1.5% from $32.5 million in the third quarter of 2006 and a 9% increase from $29.4 million in the fourth quarter of 2005. The Company's average bill rates were relatively flat in the fourth quarter of 2006 as compared with the third quarter of 2006 and the fourth quarter of 2005. The Company reported gross margin of 23.3% for the fourth quarter of 2006, which marks a decrease from 28.6% for the third quarter of 2006 and 29.4% for the fourth quarter of 2005. The Company reported an operating loss of $2.6 million in the fourth quarter of 2006, which marks a decrease of $3.2 million from the operating income of $545,000 in third quarter of 2006. Of this decrease approximately $1.0 million is attributable to increased payroll cost due to the increase in hiring of technical personnel and approximately $1.3 million is attributable to a reserve provided against accounts receivable and unbilled revenue for one customer contract. The operating loss increased by $923,000 in fourth quarter of 2006 compared to an operating loss of $1.7 million in the fourth quarter of 2005.

Full year performance:
The Company reported revenue of $125.3 million for the fiscal year 2006 which is flat as compared with revenue of $125.3 million for fiscal year 2005. The Company reported gross margin of 27.3% for fiscal year 2006 which represents a slight increase from gross margin of 26.3% in fiscal year 2005. The Company's operating performance improved by $3.6 million from an operating loss of $6.9 million in fiscal year 2005 to an operating loss of $3.3 million in fiscal year 2006.

About Intelligroup
Intelligroup is a vertically led ERP focused Life Cycle Management partner serving global corporations as well as public sector clients. Its proven Global delivery model has enabled customers to accelerate results and reduce costs significantly. With deep expertise in industry-specific enterprise solutions, Intelligroup has earned a reputation for consistently exceeding client expectations. Intelligroup develops, implements and supports IT solutions for some of the largest U.S. school systems and global corporations including GE, Hershey, Abbott Labs, Eastman Chemical, Hitachi, and Kimball International.

For more information please visit our website at http://www.intelligroup.com

Safe Harbor Statement
Certain statements contained herein, including statements regarding the development of services and markets and future demand for services 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).

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, 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, unanticipated costs associated with continued litigation, 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, general economic conditions, risks associated with intellectual property rights, risks associated with international operations and other risk factors detailed under the caption "Risk Factors" in Intelligroup's SEC filings. 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 and the Intelligroup logo are registered trademarks and 'Creating the Intelligent Enterprise', 4Sight, 4Sight Plus, ASPPlus, myADVISOR, ASPPlus Power Upgrade Services and Uptimizer are service marks of Intelligroup in the U.S. and other countries. All other trademarks and company names mentioned are the property of their respective owners.

INTELLIGROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands except par value)

Assets December 31, 2006 December 31, 2005 CURRENT ASSETS     Cash and cash equivalents $12,277 $5,305 Short-term investments 2,227 - Accounts receivable, less allowance for doubtful accounts of $991 and $1,329 at December 31, 2006 and 2005, respectively 20,477 18,533 Unbilled services, less allowance for doubtful accounts of $891 at December 31, 2006 9,464 9,475 Prepaid expenses and other current assets 2,423 2,497 Total current assets 46,868 35,810 Property and equipment, net 5,472 4,098 Deferred taxes and other assets 2,203 3,090 Total assets $54,543 $42,998 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT Liabilities     Line of credit borrowings $4,959 $3,427 Accounts payable 3,078 5,044 Accrued payroll and related taxes 11,301 10,690 Accrued expenses and other current liabilities 4,695 4,076 Current portion of deferred revenue 2,294 847 Income taxes payable -- 167 Current portion of obligations under capital leases 483 257 Total current liabilities 26,810 24,508 Obligations under capital leases, net of current portion 552 350 Deferred revenue, net of current portion 686 -- Other long-term liabilities 101 250 Total liabilities $28,149 $25,108 Commitments and contingencies Shareholders' Equity     Preferred stock, $.01 par value, 5,000 shares authorized, none issued or outstanding -- -- Common stock, $.01 par value, 50,000 shares authorized at December 31, 2006 and 2005, respectively, and 41,933 and 35,103 shares issued and outstanding at December 31, 2006 and 2005, respectively 419 351 Additional paid-in capital 69,702 58,137 Accumulated deficit (43,753) (40,046) Accumulated other comprehensive loss 26 (552) Total shareholders' equity 26,394 17,890 Total liabilities and shareholders' equity $54,543 $42,998

INTELLIGROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (in thousands except per share data)

YEAR ENDED DECEMBER 31,   2006 2006 2006 2005   US GAAP Adjustments Non-GAAP US GAAP Revenue $125,309   $125,309 $125,326 Cost of revenue 91,104 (645)(a) 90,459 92,304 Gross profit 34,205  645       34,850 33,022 Selling, general and administrative expenses 35,031 (966)(a) 34,065 37,705 Depreciation and amortization 2,474   2,474 2,260 Total operating expenses 37,505 (966) 36,539 39,965 Operating income (loss) (3,300) 1,611 (1,689) (6,943) Interest income (expense), net (570)   (570) (171) Other income (expense), net 1,300   1,300 283 Income (loss) before income tax provision (benefit) (2,570) 1,611 (959) (6,831) Provision for (benefit of) income taxes 1,137   1,137 (240) Net income (loss) $(3,707) $1,611 $(2,096) $(6,591) Income (loss) per share:         Basic net income (loss) per share $(0.09) $0.04 $(0.05) $(0.19) Weighted average number of common shares outstanding - basic 40,179 40,179 40,179 35,103 Diluted net income (loss) per share $(0.09) $0.04 $(0.05) $(0.19) Weighted average number of common shares outstanding - diluted 40,179 40,179 40,179 35,103

In addition to its reported operating results in accordance with U.S. generally accepted accounting principles (GAAP), Intelligroup has included in the table above non-GAAP operating measures that the
Securities and Exchange Commission defines as "non-GAAP financial measures." Management believes that such non-GAAP financial measures, when read in conjunction with the company's reported results, can provide useful supplemental information for investors analyzing period to period comparisons of the company's results. The non-GAAP financial measures disclosed by the company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements should be carefully evaluated. The non-GAAP column above for the twelve months ended December 31, 2006 reflects the following adjustment:

(a) To exclude stock-based compensation expense under FAS 123R, and related income tax benefit, recorded in the twelve months ended December 31, 2006.

INTELLIGROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (in thousands except per share data)

THREE MONTHS ENDED DECEMBER 31,   2006 2006 2006 2005   US GAAP Adjustments Non-GAAP US GAAP Revenue $32,033   $32,033 $29,462 Cost of revenue 24,577 (145) (a) 24,432 20,790 Gross profit 7,456 145 7,601 8,672 Selling, general and administrative expenses 9,444 (209) (a) 9,235 9,750 Depreciation and amortization 645   645 632 Total operating expenses 10,089 (209) 9,880 10,382 Operating income (loss) (2,633) 354 (2,279) (1,710) Interest income (expense), net (172)   (172) 14 Other income (expense), net (348)   (348) 570 Income (loss) before income tax provision (benefit) (3,153) 354 (2,799) (1,126) Provision for (benefit of) income taxes (811)   (811) 88 Net income (loss) $(2,342) $354 $(1,988) $(1,038) Income (loss) per share:         Basic net income (loss) per share $(0.06) $0.01 $(0.05) $(0.03) Weighted average number of common shares outstanding - basic 41,933 41,933 41,933 35,103 Diluted net income (loss) per share $(0.06) $0.01 $(0.05) $(0.03) Weighted average number of common shares outstanding - diluted 41,933 41,933 41,933 35,103

In addition to its reported operating results in accordance with U.S. generally accepted accounting principles (GAAP), Intelligroup has included in the table above non-GAAP operating measures that the
Securities and Exchange Commission defines as "non-GAAP financial measures." Management believes that such non-GAAP financial measures, when read in conjunction with the company's reported results, can provide useful supplemental information for investors analyzing period to period comparisons of the company's results. The non-GAAP financial measures disclosed by the company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements should be carefully evaluated. The non-GAAP column above for the three months ended December 31 , 2006 reflects the following adjustment:

(a) To exclude stock-based compensation expense under FAS 123R, and related income tax benefit, recorded in the three months ended December 31, 2006.