Formula Systems Reports Fourth Quarter and Full Year Results for 2012
Fourth Quarter Revenues Increased by 26% Year-Over-Year to $198.3 Million; Non-GAAP Net Income for the Fourth Quarter Increased 83% to $10.0 Million
OR YEHUDA, Israel, March 14, 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 fourth quarter and full year of 2012.
Financial Highlights for the Year Ended December 31, 2012
- Revenues for the year ended December 31, 2012, increased 16% to $744.7 million compared to $640.6 million in the year ended December 31, 2011.
- Operating income for the year ended December 31, 2012, increased 15% to $57.0 million compared to $49.5 million in the year ended December 31, 2011. Non-GAAP operating income for the year ended December 31, 2012, increased 29% to $72.8 million compared to $56.4 million in the year ended December 31, 2011.
- Net income for the year ended December 31, 2012, increased 40% to $24.0 million, or $1.72 per fully diluted share, compared to $17.2 million, or $1.3 per fully diluted share, in the year ended December 31, 2011, excluding income of $25.8 million recorded in the year ended December 31, 2011 in connection with the acquisition by Sapiens International Corporation N.V. of IDIT I.D.I Technologies Ltd and FIS Software Ltd. Non-GAAP net income for the year ended December 31, 2012, increased 49% to $32.0 million compared to $21.6 million in the year ended December 31, 2011, excluding $25.8 million recorded in the year ended December 31, 2011 in connection with the foregoing acquisition by Sapiens.
- Consolidated cash and short term and long term investments in marketable securities totaled approximately $126.4 million as of December 31, 2012.
- Total equity on December 31, 2012 was $468.5 million (representing 53% of the total balance sheet.)
Financial Highlights for the Fourth Quarter Ended December 31, 2012
- Revenues for the fourth quarter ended December 31, 2012, increased 26% to $198.3 million compared to $157.3 million in the same period of 2011.
- Operating income for the fourth quarter ended December 31, 2012, increased 42% to $15.1 million, compared to $10.7 million in the same period of 2011. Non-GAAP operating income for the fourth quarter ended December 31, 2012, increased 55% to $20.3 million, compared to $13.1 million in the same period of 2011;
- Net income for the fourth quarter ended December 31, 2012, increased 82% to $7.5 million, or $0.53 per fully diluted share, compared to $4.1 million, or $0.30 per fully diluted share, in the same period of 2011. Non-GAAP net income for the fourth quarter ended December 31, 2012, increased 83% to $10.0 million compared to $5.5 million in the same period of 2011.
Comments of Management
Commenting on the results, Guy Bernstein, CEO of Formula Systems, said, "We are very pleased with our 2012 fourth quarter and full year results, during which all of our businesses grew in both their top and bottom lines accompanied with strong cash flow from their ongoing operations. Looking at 2012, Sapiens launched its newest product suit and its new innovative Decision management solution designated to top tier financial institutions, continued closing new deals with tier one customers in its target markets in North America, UK, Europe and APAC and finished the year scoring record high revenue and profit. Magic, with its powerful and versatile enterprise-grade application development and integration solutions continued to further enhance its offering by strengthening its relationships with partners and vendors in the enterprise mobility and enterprise software ecosystems, like Samsung, SAP, Salesforce.com, Oracle JDE,IBM and Microsoft SharePoint. Matrix, despite the challenging economic climate and increased pressure on margins, showed growth from both new and existing customers, continuing the expansion of its offerings in fields such as information security, fraud risk and fraud prevention solutions, allowing it to extend its services to customers outside of Israel."
"Looking forward, We believe that we are well positioned to continue our growth track in 2013" concluded Bernstein.
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; and
- Related tax effect.
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 http://www.formulasystems.com.
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 Year ended December 31, December 31, --------------------- ------------------- 2012 2011 2012 2011 --------- -------- -------- -------- Unaudited Unaudited --------------------- -------- Revenues 198,267 157,329 744,731 640,617 Cost of revenues 149,858 123,739 564,803 492,886 --------- -------- -------- -------- Gross profit 48,409 33,590 179,928 147,731 Research and development costs, net 3,416 488 12,349 5,148 Selling, general and administrative expenses 29,869 22,400 110,758 93,340 Other income (expenses), net 12 (24) 174 207 --------- -------- -------- -------- Operating income 15,136 10,678 56,995 49,450 Financial expenses, net (1,841) (1,541) (6,672) (6,500) --------- -------- -------- -------- Income before taxes on income 13,295 9,137 50,323 42,950 Taxes on income (tax benefit) 1,413 (89) 6,583 5,689 --------- -------- -------- -------- Income after taxes 11,882 9,226 43,740 37,261 Equity in gains of affiliated companies, net 25 424 3,744 25,870 --------- -------- -------- -------- Net income 11,907 9,650 47,484 63,131 Change in redeemable non controlling interests (3,689) - (898) - Net income attributable to non-controlling interests 8,110 5,534 24,352 20,169 --------- -------- -------- -------- Net income attributable to Formula's shareholders 7,486 4,116 24,030 42,962 Earnings per share (basic) 0.55 0.31 1.78 3.17 Earnings per share (diluted) 0.53 0.30 1.72 3.11 Number of shares used in computing earnings per share (basic) 13,596 13,563 13,596 13,514 ========= ======== ======== ======== Number of shares used in computing earnings per share (diluted) 13,853 13,674 13,790 13,669 ========= ======== ======== ========
FORMULA SYSTEMS (1985) LTD. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION U.S. dollars in thousands (except per share data) Three months ended Year ended December 31, December 31, --------------------- ------------------- 2012 2011 2012 2011 --------- -------- ------- -------- Unaudited Unaudited --------------------- ------------------- GAAP operating income 15,136 10,678 56,995 49,450 Amortization of capitalized software and other intangible assets 6,429 2,686 19,539 10,713 Capitalization of software development (2,444) (1,376) (8,433) (8,299) Stock-based compensation 1,206 1,140 4,680 4,551 --------- -------- ------- -------- Total adjustments to GAAP 5,191 2,450 15,786 6,965 --------- -------- ------- -------- Non-GAAP operating income 20,327 13,128 72,781 56,415 --------- -------- ------- -------- GAAP net income attributable to Formula's shareholders 7,486 4,116 24,030 42,962 Amortization of capitalized software and other intangible assets 6,429 2,686 19,539 10,713 Capitalization of software development (2,444) (1,376) (8,433) (8,299) Stock-based compensation 1,206 1,140 4,680 4,551 Non-controlling interest in amortization intangible assets (1,875) (823) (5,759) (1,878) Taxes on the above items (786) (283) (2,043) (680) --------- -------- ------- -------- Total adjustments to GAAP 2,530 1,344 7,984 4,407 --------- -------- ------- -------- Non-GAAP net income attributable to Formula's shareholders 10,016 5,460 32,014 47,369 ========= ======== ======== ======== Non-GAAP earnings per share (basic) 0.55 0.40 2.38 3.51 ========= ======== ======== ======== Weighted average number of shares used in computing earnings per share (basic) 13,596 13,530 13,596 13,514 --------- -------- ------- -------- Non-GAAP earnings per share (diluted) 0.53 0.40 2.31 3.47 ========= ======== ======== ======== Weighted average number of shares used in computing earnings per share (diluted) 13,853 13,674 13,790 13,669 --------- -------- ------- --------
FORMULA SYSTEMS (1985) LTD. CONSOLIDATED CONDENSED BALANCE SHEETS U.S. dollars in thousands December 31, December 31, ------------ ----------- 2012 2011 ------------ ----------- (Unaudited) ------------ ASSETS CURRENT ASSETS: Cash and cash equivalents 111,238 88,172 Marketable securities 14,866 14,347 Short-term deposits - 5,170 Trade receivables 201,886 163,219 Other accounts receivable 41,012 36,085 ------------ ----------- Total current assets 369,002 306,993 ------------ ----------- LONG-TERM INVESTMENTS: Marketable securities 331 2,746 Deferred Taxes 13,618 11,630 Investments in affiliated companies 3,022 77,107 Prepaid expenses and other accounts receivable 5,406 3,885 ------------ ----------- Total long-term investments 22,377 95,368 ------------ ----------- SEVERANCE PAY FUND 66,799 49,507 ------------ ----------- PROPERTY, PLANTS AND EQUIPMENT, NET 21,459 19,165 ------------ ----------- NET INTANGIBLE ASSETS AND GOODWILL 401,404 200,104 ------------ ----------- ------------ ----------- TOTAL ASSETS 881,041 671,137 ============ =========== CURRENT LIABILITIES: Liabilities to banks 23,607 16,642 Debentures 15,735 31,472 Trade payables 51,943 40,344 Deferred revenues 33,998 24,001 Other accounts payable 97,848 70,204 ------------ ----------- Total current liabilities 223,131 182,663 ------------ ----------- LONG-TERM LIABILITIES: Liabilities to banks and others 64,587 34,459 Debentures 121 15,246 Deferred revenue 1,346 2,094 Other long-term payables 19,243 9,697 Accrued severance pay 81,832 63,321 ------------ ----------- Total long-term liabilities 167,129 124,817 ------------ ----------- REDEEMABLE NON-CONTROLING INTEREST 22,283 11,469 ------------ ----------- EQUITY Formula shareholders' equity 245,052 218,668 Non-controlling interests 223,446 133,520 ------------ ----------- Total equity 468,498 352,188 ------------ ----------- TOTAL LIABILITIES AND EQUITY 881,041 671,137 ============ ===========
Press Contact:
Formula Systems (1985) Ltd.
+972-3-5389487
[email protected]
SOURCE Formula Systems
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