Ness Technologies Inc (NSTC)

[Swany]

Re Cap of 3rd Qtr. report and share buy back

Ness Technologies Announces Third Quarter 2008 Financial Results and Stock Repurchase Program
Date : 11/03/2008 @ 5:00AM
Source : PR Newswire
Stock : Ness Technologies (MM) (NSTC)
Quote : 4.24 -0.07 (-1.62%) @ 8:00PM

Ness Technologies Announces Third Quarter 2008 Financial Results and Stock Repurchase Program




Operating Income Rises 157% and Net Income Rises 121% Year-Over-Year to GAAP $0.41 Per Diluted Share, on an 18% Increase in Revenues

HACKENSACK, New Jersey, November 3 /PRNewswire-FirstCall/ -- Ness Technologies, Inc. (NASDAQ:NSTC), a global provider of IT services and solutions, today announced financial results for the quarter ended September 30, 2008.

Third Quarter 2008 Highlights:

- On a GAAP basis: - Revenues were $164.1 million, up 18% year-over-year.

- Operating income was $23.1 million, up 157% year-over-year.

- Net income was $16.1 million, up 121% year-over-year.

- Diluted net earnings per share were $0.41, compared to $0.19 in the third quarter of 2007.

- Operating results for the third quarter include an operating gain related to the sale of the company's Israeli SAP sales and distribution division.

- On a non-GAAP basis, excluding the gain, net of related expenses and other charges, stock-based compensation expenses and amortization of intangibles, net of taxes (1): - Revenues were $167.3 million, up 21% year-over-year.

- Operating income was $12.4 million, up 20% year-over year.

- Net income was $9.4 million, up 10% year-over-year.

- Diluted net earnings per share were $0.24, compared to $0.22 in the third quarter of 2007.

- Cash and cash equivalents totaled $80.4 million as of September 30, 2008.

- Operating cash flows for the quarter were $3.5 million.

- Backlog as of September 30, 2008 was $764 million, up 14% compared to $669 million as of September 30, 2007.

- The company's four primary business units, Ness Software Product Labs (SPL), Ness Europe, Ness Israel and Technology & Systems Group (TSG) met or exceeded our expectations in the third quarter.

- The company experienced a sales slowdown in its 'Other' segment: its U.S.-based financial services business unit, representing 4% of revenues, and its NessPRO software distribution business, representing 8% of revenues.

(1) See "Use of Non-GAAP Financial Information" below for more information regarding Ness' use of non-GAAP financial measures.



"We had a very good quarter despite the world economic storm. Our core business did very well in the third quarter, and it continues to demonstrate solid fundamentals," said Sachi Gerlitz, president and chief executive officer of Ness Technologies. "Our strategy of geographic and line-of-business diversification has paid off, as our U.S. revenue concentration is low, with much of it coming from R&D spending rather than discretionary IT spending. Our core services businesses, Ness SPL, Ness Europe, TSG and Ness Israel, all met or exceeded our expectations, and we believe we will continue with healthy growth in 2009 despite the current economic outlook."

"The story this quarter was all about the economy and exposure to certain verticals," said Ofer Segev, executive vice president and chief financial officer. "Despite a tough playing field, we made good progress, delivering healthy earnings and solid operating cash flows. Our balance sheet and cash position are strong, which keeps us in our comfort zone regarding liquidity. We are taking steps to improve the underperforming units, and, as appropriate to these times, we are applying a more conservative approach to our guidance until the economy recovers."

Guidance

The uncertainty of various external factors, including the unpredictability of the capital markets and their effect on the value of Ness' employee severance pay fund in Israel, which may require a non-cash adjustment at year-end, has made it difficult for Ness to provide guidance as it has historically. Therefore, Ness is only providing non-GAAP guidance for the remainder of the year. Ness' guidance for the remainder of 2008 is non-GAAP diluted net earnings per share of $0.24 to $0.31 and revenues of $175 million to $185 million.

Additional details will be provided on the conference call.

Stock Repurchase Program

The board of directors of the company has authorized a program to repurchase up to 4,000,000 shares of the company's common stock, or approximately 10% of the outstanding shares, over the next 12 months. "The board's approval of the share repurchase program reflects its confidence in Ness' long-term prospects for growth and its ongoing commitment to increase shareholder value," said Aharon Fogel, chairman of the board of directors.

The share repurchase program may be carried out at the direction of the company through open market purchases (which may or may not include a plan under Rule 10b5-1 under the Securities Exchange Act of 1934), block trades and board-approved privately negotiated transactions and does not include specific price targets. The stock may be repurchased on an ongoing basis and will be subject to the availability of shares, general market conditions, the trading price of the stock, alternative uses for capital, and the company's financial condition; therefore, the actual number of shares that may be repurchased is unknown. Any repurchased shares will be held in treasury or retired.

Conference Call Details

Sachi Gerlitz, president and chief executive officer of Ness Technologies, and Ofer Segev, executive vice president and chief financial officer, will also conduct a conference call to discuss the third quarter 2008 results. The call, which will be simultaneously webcast, will be at 8:30 AM Eastern Time / 5:30 AM Pacific Time on Monday, November 3, 2008.

To access the Ness Technologies third quarter 2008 earnings conference call, participants in North America should dial 1-800-399-0427 and international participants should dial [phone]. A live audio webcast of the conference call will be available on the investor relations page of the Ness Technologies corporate web site at http://investor.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.