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| NSTC > SEC Filings for NSTC > Form 10-Q on 6-Nov-2009 | All Recent SEC Filings |
6-Nov-2009
Quarterly Report
You should read the following discussion and analysis together with our unaudited consolidated financial statements and the accompanying notes. This discussion contains forward-looking statements, within the meaning of Section 27A of Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Private Securities Litigation Reform Act of 1995, including statements regarding our expected financial position, business and financing plans. These statements involve risks and uncertainties. Our actual results could differ materially from the results described in or implied by these forward-looking statements as a result of various factors, including those discussed below and elsewhere in our Annual Report on Form 10-K filed with the SEC on March 16, 2009, particularly under the headings "Disclosure Statement" and "Risk Factors."
Overview
We are a global provider of information technology, or IT, and business services and solutions with specialized expertise in software product engineering; system integration, application development and consulting; and software distribution. We deliver our portfolio of services and solutions using a global delivery model combining offshore, near-shore and local teams. The primary industries, or verticals, we serve include high-tech companies and independent software vendors, or ISVs; utilities and government; financial services; defense and homeland security; and life sciences and healthcare.
We have operations in 18 countries across North America, Europe, Israel and Asia Pacific. We combine our deep vertical expertise and strong technical capabilities to provide a complete range of high quality services on a global scale. By integrating our local and international personnel in focused business and project teams, we leverage our corporate knowledge and experience, intellectual property and global infrastructure to develop innovative solutions for clients across the geographic areas and verticals we serve. Through our global delivery model, which includes lower-cost offshore and near-shore delivery capabilities, we can achieve meaningful cost reductions or other benefits for our clients.
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.
The dollar strengthened by an average of 10% and 13% against the New Israeli Shekel, or NIS, and by an average of 17% and 24% against the Euro and other relevant European currencies in the three and nine months ended September 30, 2009 compared to the three and nine months ended September 30, 2008, respectively. Approximately 60% of our revenues and 80% of our expenses are denominated in non-dollar currencies. We estimate that our revenues were $9.3 million and $44.6 million lower in the three and nine months ended September 30, 2009 as a result of changes in foreign currency exchange rates versus their average rates for the three and nine months ended September 30, 2008, respectively. There was no material effect on our operating income in the three and nine months ended September 30, 2009 as a result of changes in foreign currency exchange rates versus their average rates for the three and nine months ended September 30, 2008, respectively.
Our client base is diverse, and we are not dependent on any single client. In the three and nine months ended September 30, 2009, no client accounted for more than 5% of our revenues and our largest twenty clients together accounted for approximately 34% of our revenues. For the three and nine months ended September 30, 2009, the percentage of our revenues derived in aggregate from agencies of the government of Israel was approximately 12%. Existing clients from prior years generated more than 85% of our revenues in the three and nine months ended September 30, 2009.
Our backlog as of September 30, 2009 was $655 million compared to $764 million as of September 30, 2008, representing a year-over-year backlog decline of $87 million plus a reduction in the dollar value of our non-U.S. backlog due to the stronger dollar of $22 million. We achieve backlog through new signings of IT services projects and outsourcing contracts, including for new and repeat customers. We recognize backlog as revenue when we perform the services related to backlog.
For the three and nine months ended September 30, 2009, the percentage of our revenues derived from clients in Europe was 32% and 32%, respectively; in Israel, 32% and 32%, respectively; in North America, 32% and 32%, respectively; and in Asia Pacific, 5% and 5%, respectively.
As of September 30, 2009, we had approximately 7,780 employees, including approximately 6,675 IT professionals. Of the 7,780 employees, approximately 2,805 were in India, 2,460 were in Israel, 1,590 were in Europe, 510 were in North America and 415 were in Asia Pacific.
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