Indus Reports Record Third Quarter Financial Results.

SAN FRANCISCO--(BUSINESS WIRE)--Oct. 24, 1996--The Indus Group, Inc. (NASDAQ:IGRP) today reported record results for the third quarter ended September 30, 1996.

Total revenues increased 50% to a record $20.0 million from $13.3 million for the comparable quarter of the prior year. This brings total revenues for the nine months ended September 30 to $54.5 million in 1996, a 41% increase compared to the same period in 1995. Net income was also a record at $2.7 million, or $.14 per share for the third quarter of 1996. This compares with pro forma net income of $1.5 million, or $.09 per share for the third quarter of 1995. For the first nine months of the current year, pro forma net income totaled $6.5 million, or $.35 per share, compared to pro forma net income of $5.0 million, or $.29 per share during the same period in 1995.

For comparability, prior year net income and earnings per share have been adjusted to reflect the impact of converting from an S Corporation to a C Corporation effective January 1, 1996. As detailed in the attached Financial Highlights, pro forma net income in 1995 reflects a provision for taxes assuming the Company was taxed as a C Corporation and an adjustment relating to a stock option compensation charge. Shares used in the per share calculation increased primarily as a result of the issuance of 2.5 million common shares in the Company's initial public offering in March 1996.

In summarizing the quarter, Robert W. Felton, President and CEO at INDUS said, "We are very excited about the quality and cross section of new customers added to our client base during the last three months. In our core utility industry segment we entered into an agreement with Basin Electric Power Cooperative and added significant new business with a number of our existing customers. We also expanded our presence in the chemical refining industry with Kerr-McGee Chemical Corporation. Most importantly, due to the ability of our software to strengthen safety and compliance guidelines and to manage facility-related matters, we recognized that our product was easily adaptable to other similar process-related industries. This foresight was rewarded with new contracts at Los Alamos and Westinghouse Savannah River Company in the Department of Energy arena and with a major insurance company in the facilities management arena. The signing of these contracts adds to our already strong base of business."

These successes are part of the firm's strategy for delivering flexible new systems that address the needs of an entire enterprise. To maximize our Sales and Marketing investment, the firm recently announced a new strategy designed to further segment its marketing efforts into five vertical business areas, including: Power Generation, Energy Delivery, Oil/Gas/Chemical Refining, Integrated Process and DOE/Facilities management. This new approach was applauded by PassPort customers and potential customers at the Annual Conference of the International PassPort User Group (IPUG) in September. More than 500 attendees met in Hollywood to become familiar with recently released PassPort software products and further understand the opportunities encompassed by new strategic product alliances. Users also shared business success stories allowing others to take back new approaches for implementing projects using ABACUS and other service packages available from INDUS.

Emphasizing the importance of involving the customer in future developments considered by the firm, Felton said, "As part of our new product marketing efforts, IPUG WEEK also allows our product developers to meet with industry groups so that INDUS can continue to offer new `best practice' enhancements designed to deliver value to our customer base. Investing in new products and services that deliver real value will improve our quest to becoming the world's leading supplier of information systems and services to the process industry."

The Indus Group develops, markets, and supports a proprietary line of enterprise management software and implementation services for process industry customers worldwide. Taking advantage of the client/server model of networked computing, PassPort Software Solutions contain "best business practices" which serve as the catalyst for changing core business functions for electric utilities, oil and gas, chemical refining, forest products and steel producing industries. ABACUS, The Indus Group's proprietary methodology, accelerates the realization of benefits by delivering a reliable cost and time-efficient approach to implementation across the enterprise. -0-

                          THE INDUS GROUP, INC.
                          Financial Highlights
                 (in thousands, except per share data)
                              (Unaudited)
             Condensed Consolidated Statements of Operations


                             For the Three Months  For the Nine Months
                                 Ended Sept. 30,   Ended Sept. 30,
                                 1996      1995     1996     1995

Revenues:
 Software licensing fees       $  4,277 $  2,585  $ 12,028 $  8,304
 Services and maintenance        15,728   10,717    42,435   30,291
   Total revenues                20,005   13,302    54,463   38,595
Cost of revenues                  8,562    5,883    22,599   16,042
Research and development          2,905    2,311     9,613    5,984
Sales and marketing               2,352    1,414     6,283    3,996
General and administrative        1,979    1,116     5,668    3,070
Compensation charge-stock
 options                             --   18,900        --   18,900
Income (loss) from operations     4,207  (16,322)   10,300   (9,397)
Other income, net                   384       31       812      118
Income (loss) before income taxes 4,591  (16,291)   11,112   (9,279)
Provision for income taxes        1,927       31     4,594      243
Income (loss) before effect of
 conversion to C Corporation      2,664  (16,322)    6,518   (9,522)
Cumulative effect of
 deferred income taxes
 provided upon
 January 1, 1996
 conversion to
 C Corporation                       --       --     6,700       --
Net income (loss)              $  2,664 $(16,322) $   (182) $(9,522)
Pro forma net income(a)        $  2,664 $  1,512  $  6,518  $ 4,995
Per share(b)                   $   0.14 $   0.09  $   0.35  $  0.29
Shares used in computing
 per share data                  19,401   17,490    18,817   17,490

(a) Pro forma net income for the nine months ended September 30,
1996 is exclusive of the $6,700 cumulative effect adjustment.  Pro
forma net income in 1995 reflects normal income tax provisions as if
the Company had been a C Corporation prior to 1996.  Pro forma net
income for the nine months ended September 30, 1995 reflects a
provision for taxes assuming the Company was taxed as a C Corporation
and a net $17,900 million nonrecurring add back relating to a stock
option compensation charge.

(b) Based on pro forma net income for 1995 periods and nine months
ended September 30, 1996.  Based on net income for the three months
ended September 30, 1996.


                        THE INDUS GROUP, INC.
                Condensed Consolidated Balance Sheets

                                      Sept. 30,       Dec. 31,
                                        1996            1995
                                     (Unaudited)
ASSETS
Cash and cash equivalents           $    2,203       $      45
Marketable securities                   20,575              --
Billed accounts receivable, net         16,990          17,661
Unbilled accounts receivable             9,796           9,053
Other assets                             3,042           1,108
                                       -------         -------
                                        52,606          27,867
Marketable securities-noncurrent         9,112              --
Property and equipment, net              5,126           3,128
Other assets                                70              80
                                       -------         -------
                                     $  66,914       $  31,075

LIABILITIES
Borrowings under line of credit     $       --       $   8,900
Accounts payable                         1,676           1,331
Income taxes payable                        --             218
Deferred income taxes                    4,211             326
Other accrued liabilities                2,744           2,027
Deferred revenue                         9,427           7,425
                                       -------         -------
                                        18,058          20,227

SHAREHOLDERS' EQUITY
Common stock                                18             609
Additional capital                      42,695(a)       18,900
Other                                     (375)           (438)
Retained earnings (deficit)              6,518(b)       (8,223)
                                       -------         -------
                                        48,856          10,848
                                       -------         -------
                                     $  66,914       $  31,075

(a) The accumulated deficit of $8,223 at December 31, 1995 and the
$6,700 nonrecurring cumulative deferred income tax charge were
applied against additional capital upon January 1, 1996 conversion to
C Corporation status.

(b) Represents income through the third quarter, exclusive of the
$6,700 nonrecurring cumulative deferred income tax charge upon
conversion to C Corporation

CONTACT: Indus Group

Suzanne Bouldoukian, 415/904-5000

[e-mail]

http://www.indusgroup.com