2014

Formula Systems Reports First Quarter Results for 2013 First Quarter Revenues Increased by 6% Year-Over-Year to $188.8

OR YEHUDA, Israel, May 13, 2013 /PRNewswire/ -- Formula Systems (1985) Ltd. (NASDAQ: FORTY) a leading provider of software consulting services, computer-based business solutions, and proprietary software products, today announced its results for the first quarter  of 2013.

Financial Highlights for the First quarter of 2013

  • Revenues for the quarter ended March 31, 2013, increased 6% year over year to $188.8 million from $178.3.
  • Operating income for the quarter ended March 31, 2013, decreased 6% to $13.1 million compared to $13.9 million in the same period last year. Non-GAAP operating income for the first quarter decreased 6% to $16.7 million compared to $17.7 million in the same period last year.
  • Net income for the quarter ended March 31, 2013, decreased 46% to $4.2 million, or $0.30 per fully diluted share, compared to $7.8 million, or $0.56 per fully diluted share, in the same period last year. Net income in 2012 included a net gain of $3.4 million resulting from the remeasurement of the Company's investments, attributable to regaining the controlling interest in Sapiens. Non-GAAP net income for the first quarter decreased 36% to $6.3 million compared to $9.7 million in the same period last year.
  • Consolidated cash and short term and long term investments in marketable securities totaled approximately $128.1 million as of March 31, 2013.
  • Total equity on March 31, 2013 was $476.7 million (representing 54% of the total balance sheet).

Comments of Management

Commenting on the results, Guy Bernstein, CEO of Formula Systems, said, "after an excellent 2012, we are very pleased with our 2013 first quarter results, which are in line with our plan for the year. While Matrix, a leader in the provision of software solutions and services in Israel, experienced a decline in its operations due to seasonality (resulting from the early timing of holidays compared to 2012), both Sapiens and Magic, global providers of software solutions, continued their solid growth track with double digit growth in their top line."

Non-GAAP Financial Measures

This release includes non-GAAP operating income, net income, basic and diluted earnings per share and other non-GAAP financial measures. These non-GAAP measures exclude the following items:

  • Amortization of intangible assets derived from acquisitions;
  • Research and development capitalization and related amortization;
  • Share-based compensation;
  • Unwinding of discount in connection with liabilities due to acquisitions; and
  • Related tax effect of the above items.

Formula's management believes that the purpose of such adjustments is to give an indication of Formula's performance exclusive of non-cash charges and other items that are considered by management to be outside of Formula's core operating results.

This non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. Formula believes that non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with Formula's results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Formula's results of operations in conjunction with the corresponding GAAP measures. Please refer to the Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP tables below.

About Formula

Formula Systems (1985) Ltd. is a global information technology company principally engaged, through its subsidiaries and affiliates, in providing software consulting services, developing proprietary software products, and providing computer-based business solutions.

For more information, visit www.formulasystems.com.

Press Contact:
Formula Systems (1985) Ltd.
+972-3-5389487
ir@formula.co.il

Except for any historical information contained herein, matters discussed in this press release might include forward-looking statements that involve a number of risks and uncertainties. Regarding any financial statements, actual results might vary significantly based upon a number of factors including, but not limited to, risks in product and technology development, market acceptance of new products and continuing product conditions, both locally and abroad, release and sales of new products by strategic resellers and customers, and other risk factors detailed in Formula's most recent annual report and other filings with the Securities and Exchange Commission. These forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

 





FORMULA SYSTEMS (1985) LTD.




CONSOLIDATED CONDENSED STATEMENTS OF INCOME



U.S. dollars in thousands (except per share data)









Three months ended 


March 31,


2013


2012


Unaudited

Revenues 

188,770


178,305

Cost of revenues 

143,410


136,336





Gross profit 

45,360


41,969

Research and development costs, net 

4,107


2,439

Selling, general and administrative expenses 

28,120


25,607

Other income, net 

9


-





Operating income 

13,142


13,923





Financial expenses, net 

(1,475)


(1,494)





Income before taxes on income 

11,667


12,429

Taxes on income 

1,786


2,042





Income after taxes

9,881


10,387

Equity in gains of affiliated companies, net 

11


3,719





Net income 

9,892


14,106

Change in redeemable non controlling interests

752


-

Net income attributable to non-controlling interests 

4,900


6,304





Net income attributable to Formula's shareholders 

4,240


7,802





Earnings per share (basic)

0.31


0.58

Earnings per share (diluted)

0.30


0.56





Number of shares used in computing earnings per share (basic)

13,596,000


13,596,000

Number of shares used in computing earnings per share (diluted)

13,966,314


13,749,000

 

FORMULA SYSTEMS (1985) LTD.







RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION



U.S. dollars in thousands (except per share data)













Three months ended 








March 31, 








2013


2012








Unaudited











GAAP operating income





13,142


13,923

Amortization of capitalized software and other intangible assets

4,768


4,709

Capitalization of software development




(2,318)


(2,102)

Stock-based compensation





1,145


1,188

Total adjustments to GAAP





3,595


3,795

Non-GAAP operating income





16,737


17,718





















GAAP net income attributable to Formula's shareholders 


4,240


7,802

Amortization of capitalized software and other intangible assets

4,768


4,709

Capitalization of software development




(2,318)


(2,102)

Stock-based compensation





1,145


1,188

Non-controlling interest in amortization intangible assets


(1,366)


(1,403)

Unwinding of discount in connection with liabilities due to acquisitions

207


-

Deferred taxes on the above items




(413)


(476)

Total adjustments to GAAP 





2,023


1,916

Non-GAAP net income attributable to Formula's shareholders 

6,263


9,718





















Non-GAAP earnings per share (basic)




0.47


0.71

Weighted average number of shares used in






   computing earnings per share (basic)




13,596,000


13,596,000











Non-GAAP earnings per share (diluted)




0.39


0.66

Weighted average number of shares used in






   computing earnings per share (diluted)




14,718,782


14,718,782











 


FORMULA SYSTEMS (1985) LTD.





CONSOLIDATED CONDENSED BALANCE SHEETS




U.S. dollars in thousands






March 31,


December 31,



2013


2012



(Unaudited)


(Unaudited)

 ASSETS




CURRENT ASSETS:





Cash and cash equivalents

112,001


111,238


Marketable securities

15,766


14,866


Trade receivables

189,925


201,886


Other accounts receivable

43,380


41,012

Total current assets

361,072


369,002






LONG-TERM INVESTMENTS:





Marketable securities 

331


331


Deferred Taxes

13,715


13,618


Investments in affiliated companies

3,196


3,022


Prepaid expenses and other accounts receivable

8,613


5,285

Total  long-Term Investments

25,855


22,256






SEVERANCE PAY FUND 

68,536


66,799






PROPERTY, PLANTS AND EQUIPMENT, NET 

22,024


21,459






NET INTANGIBLE ASSETS AND GOODWILL

405,638


401,404






TOTAL  ASSETS

883,125


880,920






CURRENT LIABILITIES:





Liabilities to banks 

17,619


23,607


Debentures

16,316


15,735


Trade payables 

48,294


51,943


Deferred revenues 

40,754


33,998


Other accounts payable 

85,862


98,009

Total current liabilities

208,845


223,292






LONG-TERM LIABILITIES:





Liabilities to banks and others 

64,235


64,659


Deferred revenue

6,605


1,346


Other long-term payables

20,058


19,010


Accrued severance pay 

83,941


81,832

Total long-term liabilities

174,839


166,847






REDEEMABLE NON-CONTROLLING INTEREST

22,770


22,363






EQUITY 





Formula shareholders' equity

251,837


245,067


Non-controlling interests

224,834


223,351

Total  equity

476,671


468,418






TOTAL LIABILITIES AND EQUITY

883,125


880,920






 

SOURCE Formula Systems



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