EXHIBIT 99.1
PRESS RELEASE
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NESS TECHNOLOGIES ANNOUNCES
RECORD RESULTS FOR FOURTH QUARTER AND FISCAL YEAR 2004
QUARTERLY REVENUES GREW 19.1% TO $82.3 MILLION YEAR-OVER-YEAR
QUARTERLY NET INCOME INCREASED TO OF $5.4 MILLION OR $0.16 PER DILUTED SHARE
HACKENSACK, NJ - FEBRUARY 16, 2005 - NESS TECHNOLOGIES, INC. (NASDAQ: NSTC), a
global provider of IT services and solutions, today announced financial results
for the fourth quarter and fiscal year ended December 31, 2004.
FOURTH QUARTER AND FISCAL YEAR 2004 HIGHLIGHTS
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U.S. dollars in millions
Q4 2004 Full Year 2004
Revenue $82.3 +19% $304.5 +35%
Operating Income $6.1 +176% $21.1 +231%
Net Income $5.4 +570% $14.4 +316%
o Backlog increased to $401 million, up 68.5% compared to $238 million as
of December 31, 2003.
o Worldwide employees increased to 5,025 as of December 31, 2004, an
increase of 835 employees compared to the same time last year.
Ness' fourth quarter 2004 revenues were a record $82.3 million, an organic
increase of $13.2 million or 19.1%, compared to $69.1 million in the fourth
quarter 2003. Revenues for the fiscal year ended December 31, 2004 totaled
$304.5 million, an increase of $78.8 million or 34.9%, compared to $225.7
million for the fiscal year ended December 31, 2003. Revenue growth for the full
year 2004 was driven by organic growth and growth from an acquisition in mid
2003.
Fourth quarter 2004 net income increased to a record $5.4 million, an increase
of more than six times the $0.9 million reported in the fourth quarter 2003.
Diluted net earnings per share for the fourth quarter 2004 were $0.16 compared
to $0.04 in the fourth quarter 2003. Net income for the full year 2004 was $14.4
million, more than four times the $3.5 million reported for the full year 2003.
Diluted net earnings per share for the fiscal year 2004 were $0.53, compared to
$0.12 diluted net earnings per share for fiscal year 2003.
Commenting on today's results, Mr. Raviv Zoller, President and Chief Executive
Officer of Ness Technologies said, "We are pleased to have reported record
results for 2004 reflected in our key measures. The strength of our financial
results were supported by new customer wins in our core market verticals, strong
recurring revenue streams from existing customers and continued strength in
growing our backlog. With our focused service offerings and worldwide reputation
for quality, Ness is uniquely positioned to benefit from the continuing
expansion of the IT services market, with the strongest growth present in the
outsourcing and offshore IT services lines."
As of December 31, 2004, Ness' cash and cash equivalent position was $104.7
million, up from $41.3 million on September 30, 2004. This increase in cash
included net proceeds from the Company's October 2004 initial public offering of
$89.6 million and strong cash flow from operations during the fourth quarter.
The Company used $36 million in cash during the fourth quarter for the repayment
of long-term debt, in line with its previously announced $40 million debt
reduction plan.
Yaron Garmazi, Chief Financial Officer of Ness said, "We continue to focus on
further improving our financial strength. In addition to reporting record sales
and profits for the year, we have also strengthened our balance sheet. These
balance sheet improvements were mostly due to our successful IPO in the fourth
quarter, solid cash generation from our core businesses and the repayment of a
significant portion of our long-term debt. We are looking ahead to 2005 with
confidence because of the visibility provided by our strong backlog."
GUIDANCE
For the first quarter 2005 Ness expects to generate revenues in the range of
$84.0 million to $86.0 million. For the full year 2005, Ness expects to generate
revenues in the range of $370 million to $375 million, representing
year-over-year growth of 21.6% to 23.2%.
Ness forecasts first quarter 2005 diluted net earnings per share within a range
of $0.14 to $0.17 and full year 2005 diluted net earnings per share to be within
the range of $0.70 to $0.75. These estimates exclude the impact associated with
expensing of stock-based compensation under the Financial Accounting Standards
Board's Statement 123R, which will go into effect for periods beginning after
June 15, 2005.
CONFERENCE CALL DETAILS
Ness President and Chief Executive Officer Raviv Zoller and Chief Financial
Officer Yaron Garmazi will conduct a conference call to discuss the fourth
quarter and fiscal year 2004 results, which will be simultaneously webcast, at
5:00 PM Eastern Time/2:00 PM Pacific Time on Wednesday, February 16, 2005.
To access the Ness Technologies fourth quarter and full year 2004 earnings
conference call, participants in North America should dial 1-800-399-0427 and
international participants should dial 1-706-634-5453. A live webcast of the
conference call will be available on the investor relations page of the Ness
Technologies corporate web site at http://www.ness.com. Please visit the web
site at least 15 minutes early to register for the teleconference webcast and
download any necessary audio software. A replay of the call will be available on
the web site approximately two hours after the conference call is completed.
ABOUT NESS TECHNOLOGIES
Ness Technologies (NASDAQ: NSTC) is a global provider of end-to-end IT services
and solutions designed to help clients improve competitiveness and efficiency.
Specializing in outsourcing and offshore, systems integration and application
development, software and consulting, and quality assurance and training, Ness
serves a blue-chip client base of over 500 public- and private-sector customers.
With 5,000 employees, Ness maintains operations in 14 countries across North
America, Europe and Asia Pacific, and partners with over 100 software and
hardware vendors worldwide. Ness' "best-shore" capabilities streamline service
delivery and address the full range of client needs. For more information about
Ness visit WWW.NESS.COM.
Investor Contact: Media Contact:
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Daphna Golden David Kanaan
Phone: +972-3-7666816 Phone: + 972-3-6315166
Email: media.int@ness.com
Erik Knettel Allan Jordan
Phone: 646-284-9415 Phone: 646-284-9452
Email: investor@ness.com Email: media@ness.com
THIS PRESS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. FORWARD-LOOKING STATEMENTS
OFTEN ARE PROCEEDED BY WORDS SUCH AS "BELIEVES," "EXPECTS," "MAY,"
"ANTICIPATES," "PLANS," "INTENDS," "ASSUMES," "WILL" OR SIMILAR EXPRESSIONS.
FORWARD-LOOKING STATEMENTS REFLECT MANAGEMENT'S CURRENT EXPECTATIONS, AS OF THE
DATE OF THIS PRESS RELEASE, AND INVOLVE CERTAIN RISKS AND UNCERTAINTIES. NESS'
ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD
LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. SOME OF THE FACTORS THAT
COULD CAUSE FUTURE RESULTS TO MATERIALLY DIFFER FROM THE RECENT RESULTS OR THOSE
PROJECTED IN FORWARD-LOOKING STATEMENTS INCLUDE THE "RISK FACTORS" DESCRIBED IN
NESS' PROSPECTUS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER
29, 2004.
NESS TECHNOLOGIES, INC
AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except per share data)
Three months ended Twelve months ended
December 31, December 31,
2004 2003 2004 2003
Revenues 82,348 69,079 304,525 225,768
Cost of revenues 57,582 48,909 211,725 159,775
Gross profit 24,766 20,170 92,800 65,993
Operating expenses:
Selling and marketing 6,754 5,863 25,706 21,287
General and administrative 11,900 11,482 46,042 36,115
Research and development, net 0 406 0 1,559
Other 0 205 0 665
Total operating expenses 18,654 17,956 71,748 59,626
Operating income 6,112 2,214 21,052 6,367
Financial income (expenses), net 866 44 (3,461) (1,451)
Other income (expenses), net (170) (702) (91) (422)
Income before taxes on income 6,808 1,556 17,500 4,494
Taxes on income (tax benefit) 1,362 (19) 2,320 (54)
Equity in net earnings (losses) of affiliates 4 (45) (647) 11
Minority interests in losses (earnings) of subsidiary (91) (286) (156) 0
Income from continuing operations 5,359 1,244 14,377 4,559
Loss from discontinued operations 0 (359) 0 (1,105)
Net income 5,359 885 14,377 3,454
Allocation of undistributed earnings on Class B 0 (85) (1,356) (1,445)
Convertible Preferred stock
Net income after allocation of undistributed earnings 5,359 800 13,021 2,009
Basic net earnings per share 0.17 0.04 0.58 0.13
Diluted net earnings per share 0.16 0.04 0.53 0.12
Weighted average number of shares (In thousands)
used in computing basic net earnings per share 32,323 18,609 22,292 15,395
Weighted average number of shares (In thousands) 34,497 19,990 24,748 16,627
used in computing diluted net earnings per share
NESS TECHNOLOGIES, INC
AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
December 31, December 31,
2004 2003
Current assets:
Cash and cash equivalents 104,229 46,004
Short-term bank deposits 0 3,248
Marketable securities 383 368
Trade receivables (net of allowance for doubtful accounts) 75,188 61,067
Unbilled receivables 20,327 14,921
Other accounts receivable and pre-paid expenses 9,122 9,756
Work in progress 1,168 1,348
Total current assets 210,417 136,712
Long-term assets:
Long-term prepaid expenses 3,724 2,211
Deferred income taxes 4,823 5,626
Severance pay fund 33,558 30,421
Total long-term assets 42,105 38,258
Property and equipment, net 18,879 14,436
Other intangible assets, net 4,197 2,485
Goodwill 149,158 147,592
Total assets 424,756 339,483
Current liabilities:
Short term bank loans and credit 1,275 8,898
Current maturities of long-term debt 13,364 21,703
Trade payables 31,280 29,802
Advances from customers 7,679 3,940
Other accounts payable and accrued expenses 64,271 54,604
Total liabilities attributed to discontinued operations -- 995
Total current liabilities 117,869 119,942
Long-term liabilities:
Long-term debt, net of current maturities 36,918 59,852
Excess of losses over investment in affiliate 306 286
Accrued severance pay 36,888 32,912
Minority interests 295 136
Total long-term liabilities 74,407 93,186
Total stockholders' equity 232,480 126,355
Total liabilities and stockholders' equity 424,756 339,483
