Formula Systems Reports Second Quarter Results for 2015

Aug 13, 2015, 09:10 ET from Formula Systems (1985) Ltd.

OR YEHUDA, Israel, Aug. 13, 2015 /PRNewswire/ -- Formula Systems (1985) Ltd. (NASDAQ: FORTY) 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, today announced its results for the second quarter and first half of 2015.

Financial Highlights for the Second Quarter of 2015

  • Revenues for the second quarter ended June 30, 2015 increased 33.4% to $196.8 million, compared to $147.5 million in the same period last year. Revenues for the second quarter increased by approximately $43.4 million due to the consolidation of the results of operations of Sapiens, which were not consolidated during 2014.
  • Operating income for the second quarter ended June 30, 2015, increased 56.3% to $13.1 million compared to $8.4 million in the same period last year. Operating income for the second quarter increased by $4.8 million due to the consolidation of the results of operations of Sapiens, which were not consolidated during 2014.
  • Net income for the second quarter ended June 30, 2015 was $2.3 million, or $0.16 per fully diluted share, compared to $2.9 million, or $0.20 per fully diluted share, in the same period last year.

Financial Highlights for the Six-Month Period Ended June 30, 2015

  • Revenues for the six-month period ended June 30, 2015 increased 21.9% to $391.2 million, compared to $321.0 million in the same period last year. Revenues for the six-month period increased by approximately $84.4 million due to the consolidation of the results of operations of Sapiens, which were not consolidated during 2014, offset, in part, by $27.3 million that was included in the same period last year due to the consolidation of Magic's results of operations in part in the first quarter of 2014, and which were not consolidated in the six-month period ended June 30, 2015.
  • Operating income for the six-month period ended June 30, 2015, increased 71.8% to $26.4 million compared to $15.3 million in the same period last year. Operating income for the six-month period increased by $8.7 million due to the consolidation of the results of operations of Sapiens, which were not consolidated during 2014, offset, in part, by $4.0 million that were consolidated in the same period last year, due to the consolidation of Magic's results of operations in part during the first quarter of 2014, and which were not consolidated in the six-month period ended June 30, 2015.
  • Net income for the six-month period ended June 30, 2015 was $8.5 million, or $0.58 per fully diluted share, compared to $65.8 million, or $4.55 per fully diluted share, in the same period last year. Net income for the initial six-month period of 2014 was positively impacted by net gain of $67.2 million recorded in relation to Magic Software's March 2014 public offering pursuant to which Formula's holdings in Magic were reduced below 50%, which in turn resulted in Formula's investment in Magic being accounted from March 2014 under the equity method of accounting and the related re-measurement to fair value of Formula's investment in Magic.
  • As of June 30, 2015 Formula held 50.0%, 50.0% and 45.6% of the outstanding ordinary shares of Matrix, Sapiens and Magic, respectively. 
  • Consolidated cash and short-term and long-term investments in marketable securities totaled approximately $163.9 million as of June 30, 2015.
  • Formula standalone net debt totaled approximately $32.2 million as of June 30, 2015.
  • Total equity as of June 30, 2015 was $666.9 million (representing 59% of the total balance sheet).

Comments of Management

Commenting on the results, Guy Bernstein, CEO of Formula Systems, said, "We are very pleased with the excellent performance across our entire portfolio of companies this quarter. Sapiens had another strong quarter featuring double-digit growth and increasing profitability as a result of improvements in their base business that has led to a more efficient cost structure. Strong demand across all of sapiens product portfolio along with expectations from the recent acquisition of Insseco, which is not reflected in the results of the second quarter, expanding their footprint in Europe, led Sapiens to increase their revenue guidance for the year of $176 million to $180 million which represent growth of approximately 20% on a constant currency basis. Matrix is also continuing its strong momentum with double-digit growth this quarter across all key indicators - revenue, gross margin, operating and net profit, plus strong operating cash flow. Matrix is expanding its activities in the US market, gaining market share there as well as locally in Israel, where it has been ranked as the leading IT services provider in the country for eight consecutive years and continues to widen the gap against its competitors. Magic reported a good second quarter. Magic continues to see strong growth in its professional services business and solid demand for its software products, in which it continues to invest. This quarter, Magic released a major update to its flagship Magic xpa Application Platform, with additional mobility features and performance enhancements based on innovative In-Memory Data Grid technology to meet the growing need for rapid cross-platform development."

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

Six months ended 

June 30, 

June 30, 

2015

2014

2015

2014

Unaudited

Unaudited

Revenues 

196,777

147,517

391,186

321,006

Cost of revenues 

156,476

125,368

311,517

264,497

Gross profit 

40,301

22,149

79,669

56,509

Research and development costs, net 

2,385

0

5,006

787

Selling, general and administrative expenses 

24,839

13,785

48,304

40,385

Other income (expenses), net 

(1)

3

(1)

3

Operating income 

13,076

8,367

26,358

15,340

Financial expenses, net 

4,948

2,459

5,965

4,523

Income before taxes on income 

8,128

5,908

20,393

10,817

Taxes on income 

3,018

1,752

6,107

4,437

Income after taxes

5,110

4,156

14,286

6,380

Equity in gains of affiliated companies, net 

1,974

937

4,234

66,609

Net income 

7,084

5,093

18,520

72,989

Change in redeemable non-controlling interests

133

(354)

392

305

Net income attributable to non-controlling interests 

4,656

2,545

9,610

6,915

Net income attributable to Formula's shareholders 

2,295

2,902

8,518

65,769

Earnings per share (basic)

0.16

0.21

0.61

4.72

Earnings per share (diluted)

0.15

0.20

0.58

4.55

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

14,053,068

13,911,782

14,035,212

13,894,239

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

14,502,856

14,427,788

14,467,943

14,397,005

 

 

 

FORMULA SYSTEMS (1985) LTD.

CONSOLIDATED CONDENSED BALANCE SHEETS

U.S. dollars in thousands

June 30,

December 31,

2015

2014

(Unaudited)

 ASSETS

CURRENT ASSETS:

     Cash and cash equivalents

108,329

107,416

     Marketable securities

16,173

15,784

     Short-term deposit

12

6,454

     Trade receivables

178,367

191,995

     Other accounts receivable and prepaid expenses

44,415

36,458

     Inventories

3,998

2,259

Total current assets

351,294

360,366

LONG-TERM INVESTMENTS:

     Marketable securities 

39,372

33,748

     Deferred Taxes

14,223

12,738

     Prepaid expenses and other accounts receivable

9,540

10,287

Total  Long-Term Investments

63,135

56,773

INVESTMENTS IN AFFILIATED COMPANIES

170,827

169,143

SEVERANCE PAY FUND 

63,058

65,322

PROPERTY, PLANTS AND EQUIPMENT, NET 

20,465

19,879

NET INTANGIBLE ASSETS AND GOODWILL

464,057

449,256

TOTAL  ASSETS

1,132,836

1,120,739

CURRENT LIABILITIES:

     Liabilities to banks 

61,115

41,818

     Trade payables 

47,950

52,335

     Deferred revenues 

35,721

34,556

     Other accounts payable 

92,512

89,235

     Dividend payable 

5,132

7,876

Total current liabilities

242,430

225,820

LONG-TERM LIABILITIES:

     Liabilities to banks and others 

89,248

108,203

     Deferred taxes

29,106

31,118

     Deferred revenue

5,784

4,838

     Other long-term payables

11,357

7,932

     Accrued severance pay 

76,724

77,948

Total long-term liabilities

212,219

230,039

REDEEMABLE NON-CONTROLLING INTEREST

11,250

10,313

EQUITY 

     Formula shareholders' equity

395,980

388,656

     Non-controlling interests

270,957

265,911

Total equity

666,937

654,567

TOTAL LIABILITIES AND EQUITY

1,132,836

1,120,739

 

SOURCE Formula Systems (1985) Ltd.



RELATED LINKS

http://www.formulasystems.com