1089638--3/15/2006--NESS_TECHNOLOGIES

related topics

{operation, international, foreign}

{system, service, information}

{regulation, government, change}

{stock, price, operating}

{acquisition, growth, future}

{tax, income, asset}

{provision, law, control}

{control, financial, internal}

{personnel, key, retain}

{operation, natural, condition}

{property, intellectual, protect}

{cost, contract, operation}

{investment, property, distribution}

Risks Relating to Our Business If we fail to manage our growth, our business could be disrupted and our profitability will likely decline. We may engage in acquisitions, strategic investments, partnerships, alliances or other ventures that are not successful, or fail to integrate acquired businesses into our operations, which may adversely affect our competitive position and growth prospects. Because we derive a significant portion of our revenues from the Israeli government, a reduction of government spending in Israel on IT services would reduce, possibly materially, our revenues and profitability; and any delay in its annual budget approval process would negatively impact our cash flows. Quarterly fluctuations in our results of operations could cause our stock price to decline or fluctuate. If our clients terminate significant contracted projects or choose not to retain us for additional projects, or if we are restricted from providing services to our clients competitors, our revenues and profitability may be negatively affected. If we fail to meet our clients performance expectations, our reputation may be harmed, causing us to lose clients or exposing us to legal liability. We may be required to be responsible for the performance of business partners we do not control, which could lower our margins and reduce profitability. If we fail to complete fixed price contracts on budget and on time, our reputation may be harmed, causing us to lose clients and negatively affecting our profitability. Our success depends in part upon the senior members of our management team, and our inability to attract and retain them could have a negative effect on our ability to operate our business. Disruptions in our telecommunications infrastructure could harm our ability to operate and to deliver our services effectively, which could result in client dissatisfaction and a reduction of our revenues and results of operations. Our inability to protect our intellectual property rights may force us to incur unanticipated costs. If we are unable to secure necessary additional financing, we may not be able to fund our operations or strategic growth. Our clients complex regulatory requirements may increase our costs, which could negatively impact our profits. We will be exposed to risks relating to evaluations of internal control over financial reporting required by Section 404 of the Sarbanes-Oxley Act of 2002. Risks Relating to Our International Operations Our international operations subject us to risks inherent in doing business on an international level, any of which could increase our costs and hinder our growth. If we fail to achieve planned growth in our offshore facilities, our ability to fulfill client commitments profitably or to fulfill them at all may be compromised. Regional instability in Israel and India may adversely affect business conditions in those regions, which may disrupt our operations and negatively affect our revenues and profitability. Wage inflation in India and Israel could reduce our profitability. Our international operations subject us to currency exchange fluctuations, which could negatively impact our profitability. Potential anti-outsourcing legislation could impair our ability to service our clients. Terrorist attacks or a war could negatively affect our financial results and prospects. Restrictions on immigration may affect our ability to compete for and provide services in our clients countries, which could hamper our growth and cause our revenues to decline. If the government of India were to reduce or withdraw tax benefits and other incentives it provides to us, our net income will decrease. Risks Relating to Our Stock Our stock price is likely to be highly volatile and could drop unexpectedly. Your ability to influence corporate decisions may be limited because our executive officers, directors and affiliated major stockholders beneficially own approximately 28.1% of our common stock. Provisions in our charter documents and under Delaware law may prevent or delay a change of control of us and could also limit the market price of our common stock.

Full 10-K form ▸

1089638--3/15/2006--NESS_TECHNOLOGIES_INC