Ness Technologies Inc. (NSTC) filed Quarterly Report for the period ended 2009-09-30.
Ness Tech Inc is a global provider of information technology services and end-to-end solutions designed to help clients improve their competitiveness and effectiveness. Their portfolio of solutions and services includes outsourcing system integration and application development software and consulting and quality assurance and training. They provide services to a significant number of clients in the commercial industrial and government sectors. Ness Technologies Inc. has a market cap of $199.2 million; its shares were traded at around $5.18 with a P/E ratio of 8.1 and P/S ratio of 0.3.
Highlight of Business Operations:
Our revenues decreased to $132.7 million and $406.4 million for the three and nine months ended September 30, 2009, from $164.1 million and $494.4 million for the three and nine months ended September 30, 2008, respectively. Net income decreased to $0.8 million and $3.4 million for the three and nine months ended September 30, 2009 from $16.1 million and $31.1 million for the three and nine months ended September 30, 2008, respectively.
Our revenues decreased from $164.1 million in the three months ended September 30, 2008 to $132.7 million in the three months ended September 30, 2009, representing a decrease of $31.4 million, or 19.1%. This decrease was primarily due to a sales downturn in our System Integration and Application Development segment, primarily in Central and Eastern Europe and in Israel, representing $29.0 million, foreign currency translation effects on our non-dollar revenues attributable to the stronger dollar, representing $9.3 million, reduced sales in our Software Distribution segment, representing $2.2 million, and lost revenue from the sale in August 2008 of our Israeli SAP sales and distribution operations, representing $1.8 million, offset by acquisitions, representing $7.9 million, and a write-off of trade receivables in the three months ended September 30, 2008 resulting from the sale in August 2008 of our Israeli SAP sales and distribution operations, representing $3.2 million.
Our cost of revenues, including salaries, wages and other direct and indirect costs, decreased from $120.9 million in the three months ended September 30, 2008 to $96.8 million in the three months ended September 30, 2009, representing a decrease of $24.2 million, or 20.0%. The decrease was due primarily to a reduction in our delivery staff in response to our decrease in revenues, representing $22.3 million, foreign currency translation effects on non-dollar expenses attributable to the stronger dollar, representing $6.7 million, and the sale in August 2008 of our Israeli SAP sales and distribution operations, representing $1.2 million, offset by acquisitions, representing $6.4 million.
Our gross profit (revenues less cost of revenues) decreased from $43.2 million in the three months ended September 30, 2008 to $36.0 million in the three months ended September 30, 2009, representing a decrease of $7.2 million, or 16.6%. The decrease was due primarily to the reduction in our revenues, net of lower personnel costs, representing $9.1 million, foreign currency translation effects on our non-dollar gross profits attributable to the stronger dollar, representing $2.5 million, and lost gross profit from the sale in August 2008 of our Israeli SAP sales and distribution operations, representing $0.6 million, offset by a write-off of trade receivables in the three months ended September 30, 2008 resulting from the sale in August 2008 of our Israeli SAP sales and distribution operations for which there was no corresponding amount in the three months ended September 30, 2009, representing $3.2 million, and acquisitions, representing $1.5 million. Gross margin increased from 26.3% in the three months ended September 30, 2008 to 27.1% in the three months ended September 30, 2009 primarily due to the improved gross margin in our Software Product Engineering segment and a write-off of trade receivables in the three months ended September 30, 2008 resulting from the sale in August 2008 of our Israeli SAP sales and distribution operations for which there was no corresponding amount in the three months ended September 30, 2009, partially offset by slowdowns in our Central and Eastern European system integration business and our Software Distribution segment.
General and administrative expenses decreased from $25.0 million in the three months ended September 30, 2008 to $21.8 million in the three months ended September 30, 2009, representing a decrease of $3.2 million, or 12.7%. This decrease was due primarily to additional expenses in the three months ended September 30, 2008 related to the August 2008 sale of our Israeli SAP sales and distribution operations for which there was no corresponding expense in the three months ended September 30, 2009, representing $2.1 million, foreign currency translation effects on non-dollar expenses attributable to the stronger dollar, representing $1.6 million, and cost reductions, representing $1.2 million, offset by increases in our Center of Excellence, IT, Human Resources and Finance organizations throughout 2008 needed to support internal initiatives, together representing $0.8 million, and acquisitions, representing $0.3 million.
Operating income decreased from $23.1 million in the three months ended September 30, 2008 to $2.1 million in the three months ended September 30, 2009, representing a decrease of $21.0 million, or 91.0%. The major factors contributing to this decrease were the gain in the three months ended September 30, 2008 from the August 2008 sale of our Israeli SAP sales and distribution operations for which there was no corresponding amount in the three months ended September 30, 2009, net of related expenses and other charges, representing $13.1 million, a decrease in operating income of our System Integration and Application Development segment, representing $7.6 million, a decrease in operating income of our Software Distribution segment due to reduced sales, representing $0.9 million, and acquisitions, representing $0.3 million, offset by an increase in operating income of our Software Product Engineering segment, representing $0.5 million, and a decrease in unallocated expenses, representing $0.5 million. See also “—Results by Business Segment.”
NSTC is in the portfolios of Arnold Schneider of Schneider Capital Management, HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC.
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