Operating income rises 107% and net income rises 94% year-over-year, to GAAP $0.21 per diluted share, on a 36% increase in revenues, with strong operating cash flows
 
Hackensack, NJ – July 29, 2008 – Ness Technologies, Inc. (NASDAQ: NSTC), a global provider of IT services and solutions, today announced financial results for the quarter ended June 30, 2008.

Second Quarter 2008 Highlights:
• Revenues were an all-time record $170.6 million, up 36% year-over-year.
• Operating income was an all-time record $11.2 million, up 107% year-over-year.
• Net income was $8.1 million, up 94% year-over-year.
• GAAP diluted net earnings per share was $0.21, compared to $0.11 in the second quarter of 2007.
• Non-GAAP diluted net earnings per share was $0.25, compared to $0.13 in the second quarter of 2007 ( ).
• Operating cash flows for the quarter were a second quarter record $13.0 million.
• Backlog as of June 30, 2008 was a record $799 million, up 23% compared to $650 million as of June 30, 2007.
 
 “We had a great quarter, executing well on our strategy and setting several new records, in what is normally a seasonally weak quarter for Ness,” said Sachi Gerlitz, president and chief executive officer of Ness Technologies. “Our Ness Europe and Ness Israel operations continued to perform well, while our Software Product Labs business improved markedly from first quarter. In this quarter, we also see the benefit from our increased focus on high-margin business around the world. With continued backlog growth and a strong sales pipeline, we remain optimistic about the future.”
 
“Second quarter did have some macroeconomic challenges, particularly in terms of currency headwinds; despite this, we did well – through good performance and efficient operations,” said Ofer Segev, executive vice president and chief financial officer. “We are particularly pleased about our record second quarter cash flows from operations. Our balance sheet and liquidity are strong, and we feel good about the future.”
 
Guidance
For the full year 2008, Ness reiterates its guidance of GAAP diluted net earnings per share in the range of $1.00 to $1.05, and increases its revenue guidance to the range of $670 million to $695 million.
The recently announced sale to SAP AG of the company’s Israeli SAP sales and distribution division did not negatively impact guidance, as Ness anticipates that the future reduction in revenue and earnings will be offset by other factors, including stronger than expected revenue growth. These factors, as well as foreign exchange effects, account for the increase in revenue guidance.
 
In addition, Ness expects to recognize a gain of $0.18 to $0.23 per diluted share in the third quarter, upon the closing of the sale of its Israeli SAP sales and distribution division.

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 second quarter 2008 results.

The call, which will be simultaneously webcast, will begin at 8:30 AM Eastern Time / 5:30 AM Pacific Time on Tuesday, July 29, 2008.
To access the Ness Technologies second quarter 2008 earnings conference call, participants in North America should dial 1-800-399-0427 and international participants should dial +1-706-643-1624. 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.

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. The Ness portfolio of solutions and services consists of software product development, including both offshore and near-shore outsourcing; system integration, application development and consulting; and software distribution. With over 7,800 employees, Ness maintains operations in 18 countries, and partners with numerous software and hardware vendors worldwide. For more information about Ness Technologies, visit www.ness.com.
 
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Ness uses various non-GAAP measures of net income and earnings per share, including adjustments from results based on GAAP to exclude non-cash stock-based compensation expenses in accordance with SFAS 123R and amortization of intangible assets, net of taxes. Ness’ management believes the non-GAAP financial information provided in this release is useful to investors’ understanding and assessment of Ness’ on-going core operations and prospects for the future. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Management uses both GAAP and non-GAAP information in evaluating and operating business internally and as such has determined that it is important to provide this information to investors.
 
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 preceded 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’ Annual Report of Form 10-K filed with the Securities and Exchange Commission on March 17, 2008. Ness is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of such changes, new information, subsequent events or otherwise.

Ness Technologies media contact:
David Kanaan
USA: 1-888-244-4919
Intl: + 972-3-540-8188
Email: media.int@ness.com

Ness Technologies investor contact:
Drew Wright
USA: 1-201-488-3262
Email: investor@ness.com 

 Download full financial results here