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
 
Ness board of directors approves stock repurchase program for up to 4 million shares
 

Hackensack, NJ – November 3, 2008 – Ness Technologies, Inc. (NASDAQ: NSTC), a global provider of IT services and solutions, today announced financial results for the quarter ended September 30, 2008.

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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 ( ):
  - 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.
 
 “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 +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 8,300 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 (a) non-cash stock-based compensation expenses in accordance with SFAS 123R and amortization of intangible assets, net of taxes, and (b) the company’s one-time operating gain in the third quarter of 2008 from the sale of its Israeli SAP sales and distribution division, net of related expenses and other charges, 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