Exhibit 99.1
PRESS RELEASE
Ness Technologies Announces
Record Third Quarter 2005 Financial Results
Net Income Rises 63% and Operating Income Rises 42% Year-over-Year
on a 27% Increase in Revenues
Hackensack, NJ – November 8, 2005 – Ness Technologies, Inc. (NASDAQ: NSTC), a global provider of IT services and solutions, today announced financial results for the third quarter ended September 30, 2005.
Third Quarter 2005 Highlights:
• Revenues reached a record $97.7 million, up 27% year-over-year.
• Operating income increased to a record $7.7 million, up 42% year-over-year.
• Net income increased to a record $6.0 million, up 63% year-over-year.
• Backlog increased to $439 million, up 24% year-over year.
• Global workforce increased by 295 sequentially to 5,725.
“The strength of our third quarter financial performance reflects our success in implementing our strategy of building a leadership position in targeted business verticals and penetrating key geographic markets, as we continue to grow our global diversified customer base,” stated Raviv Zoller, President and Chief Executive Officer of Ness Technologies. “Our record quarterly revenue, as well as operating and net income provide clear evidence of our ability to capitalize on the growing demand for our services while increasing billable headcount and keeping a tight control on expenses.”
Ness’ third quarter 2005 revenues totaled $97.7 million, an increase of $20.5 million or 27%, compared to $77.2 million in the third quarter of 2004.
Third quarter 2005 operating income increased to $7.7 million, an increase of $2.3 million or 42%, compared to $5.4 million in the third quarter of 2004.
Third quarter 2005 net income increased to $6.0 million, an increase of $2.3 million or 63%, compared to $3.7 million in the third quarter of 2004. Diluted net earnings per share for the third quarter of 2005 were $0.17 compared to $0.14 in the third quarter of 2004. The year-over-year diluted net earnings per share comparison was
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impacted by the change in share count since the third quarter of 2004, when Ness completed its initial public offering.
Backlog as of September 30, 2005 increased to $439 million, up 24% compared to $354 million as of September 30, 2004.
“We continue to grow our bottom line profitability at a faster pace than our solid top line growth rate. This trend reflects the significant operating leverage we are yielding from our strategic business model on a global basis,” stated Ytzhak Edelman, Executive Vice President and Chief Financial Officer, Ness Technologies, Inc. “The initiatives we announced last quarter to reduce our financial expenses are yielding positive and measurable results. We remain dedicated to further reducing our financial expenses and to maintaining a lower level of foreign exchange exposure related to our global operating structure. Overall, we remain focused on further increasing our operating and bottom line profitability.”
Guidance
For the fourth quarter 2005 Ness expects to generate revenues in the range of $101 million to $104 million and diluted net earnings per share in the range of $0.17 to $0.20.
The Company is increasing its 2005 annual revenue guidance to a range of $381 million to $384 million, from its previously stated range of $376 million to $381 million, based on the increased revenue contribution expected from Ness Slovakia as result of the Delta acquisition which closed on October 3, 2005.
Full year 2005 diluted net earnings per share guidance remains in the range of $0.63 to $0.66.
Conference Call Details
Ness Technologies President and Chief Executive Officer Raviv Zoller and Executive Vice President and Chief Financial Officer Ytzhak Edelman will conduct a conference call to discuss the third quarter 2005 results, which will be simultaneously webcast at 9:00 A.M. Eastern Time/6:00 A.M. Pacific Time on Tuesday, November 8, 2005.
To access the Ness Technologies third quarter 2005 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.
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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 over 5,700 employees, Ness maintains operations in 15 countries across North America, Europe and Asia Pacific, and more than 100 alliances and partnerships around the world. For more information about Ness, visit www.ness.com.
Forward Looking Statement
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. 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’ Annual Report of Form 10-K filed with the Securities and Exchange Commission on March 31, 2005.
Contacts:
Media Contacts:
David Kanaan
International: + 972-3-5408188
US: 1-888-244-4919
Email: media.int@ness.com
Allan Jordan
(New York)
US: 1-646-284-9452
Email: media@ness.com
Investor Contact:
Daphna Golden
International: +972-3-7666816
US: 1-888- 267-8160
Email: daphna.golden@ness.com
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NESS TECHNOLOGIES, INC.
AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
Unaudited
| | September 30,
2005 | | December 31,
2004 | |
| | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 74,303 | | $ | 104,229 | |
Marketable securities | | 5,212 | | 383 | |
Trade receivables (net of allowance for doubtful accounts) | | 87,059 | | 75,183 | |
Unbilled receivables | | 28,956 | | 20,327 | |
Other accounts receivable and prepaid expenses | | 10,117 | | 9,127 | |
Inventories and work in progress | | 2,446 | | 1,168 | |
Total current assets | | 208,093 | | 210,417 | |
| | | | | |
Long-term assets: | | | | | |
Long-term prepaid expenses | | 5,066 | | 3,655 | |
Marketable securities | | — | | 69 | |
Deferred income taxes | | 6,112 | | 4,823 | |
Severance pay fund | | 34,575 | | 33,558 | |
Total long-term assets | | 45,753 | | 42,105 | |
| | | | | |
Property and equipment, net | | 20,874 | | 18,879 | |
Other intangible assets, net | | 6,365 | | 4,265 | |
Goodwill | | 150,083 | | 149,090 | |
Total assets | | $ | 431,168 | | $ | 424,756 | |
| | | | | |
Current liabilities: | | | | | |
Short-term bank loans and credit | | $ | 7,096 | | $ | 1,275 | |
Current maturities of long-term debt | | 28,550 | | 13,364 | |
Trade payables | | 22,122 | | 31,280 | |
Advances from customers | | 3,713 | | 7,679 | |
Other accounts payable and accrued expenses | | 72,511 | | 64,271 | |
Total current liabilities | | 133,992 | | 117,869 | |
| | | | | |
Long-term liabilities: | | | | | |
Long-term debt, net of current maturities | | 9,027 | | 36,918 | |
Excess of losses over investment in affiliates | | 304 | | 306 | |
Accrued severance pay | | 38,272 | | 36,888 | |
Minority interests | | — | | 295 | |
Total long-term liabilities | | 47,603 | | 74,407 | |
| | | | | |
Total stockholders’ equity | | 249,573 | | 232,480 | |
Total liabilities and stockholders’ equity | | $ | 431,168 | | $ | 424,756 | |
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NESS TECHNOLOGIES, INC.
AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except per share data)
| | Nine months ended
September 30, | | Three months ended
September 30, | |
| | 2005 | | 2004 | | 2005 | | 2004 | |
| | unaudited | | unaudited | |
Revenues | | $ | 280,342 | | $ | 222,177 | | $ | 97,719 | | $ | 77,152 | |
Cost of revenues | | 200,154 | | 154,143 | | 69,628 | | 53,995 | |
Gross profit | | 80,188 | | 68,034 | | 28,091 | | 23,157 | |
| | | | | | | | | |
Operating expenses: | | | | | | | | | |
Selling and marketing | | 21,114 | | 18,952 | | 7,081 | | 6,822 | |
General and administrative | | 38,663 | | 33,951 | | 13,268 | | 10,888 | |
Stock base compensation | | 1,973 | | 191 | | 76 | | 57 | |
Total operating expenses | | 61,750 | | 53,094 | | 20,425 | | 17,767 | |
| | | | | | | | | |
Operating income | | 18,438 | | 14,940 | | 7,666 | | 5,390 | |
Financial expenses, net | | (1,297 | ) | (4,327 | ) | (383 | ) | (1,177 | ) |
Other income, net | | (10 | ) | 79 | | (14 | ) | (16 | ) |
Income before taxes on income | | 17,130 | | 10,692 | | 7,269 | | 4,197 | |
| | | | | | | | | |
Taxes on income | | 2,277 | | 958 | | 1,252 | | 473 | |
Equity in net losses of affiliates | | (29 | ) | (651 | ) | — | | (3 | ) |
Minority interests in losses (earnings) of subsidiary | | 101 | | (65 | ) | — | | (30 | ) |
Net income | | 14,926 | | 9,018 | | 6,017 | | 3,691 | |
| | | | | | | | | |
Allocation of undistributed earnings on Class B Convertible Preferred stock | | — | | (1,356 | ) | — | | (554 | ) |
Net income after allocation of undistributed earnings | | $ | 14,926 | | $ | 7,662 | | 6,017 | | $ | 3,137 | |
| | | | | | | | | |
Basic net earnings per share | | 0.43 | | 0.40 | | 0.17 | | 0.16 | |
Diluted net earnings per share | | 0.42 | | 0.36 | | 0.17 | | 0.14 | |
| | | | | | | | | |
Weighted average number of shares (In thousands) used in computing basic net earnings per share | | 34,314 | | 18,949 | | 34,648 | | 19,066 | |
Weighted average number of shares (In thousands) used in computing diluted net earnings per share | | 35,562 | | 21,499 | | 35,499 | | 22,002 | |
| | | | | | | | | | | | | |
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