Magic Software Reports Record-Breaking Operating Results in the First Quarter of 2011

Magic Software Reports Strong Results for Q1 2011 with 68% Year-over-Year Net Income Growth

28 Apr, 2011, 03:31 ET from Magic Software Enterprises Ltd.

OR YEHUDA, Israel, April 28, 2011 /PRNewswire/ -- Magic Software Enterprises Ltd. (NASDAQ: MGIC), a global provider of cloud and on-premise enabled application platforms and business integration solutions, today announced its financial results for the first quarter of 2011.

Financial Highlights for the First Quarter

First quarter revenues increased 29% year over year to $25.5 million from $19.7 million.

Operating income for the first quarter increased 78% year over year to $3.1 million, compared to $1.8 million in the same period last year.

Net income for the first quarter increased 68% year over year to $3.1 million from $1.9 million in the same period last year.

Operating cash flow for the quarter amounted to $4.8 million. Total cash and cash equivalents, short-term bank deposits and short-term investments in marketable securities as of March 31, 2011 amounted to $50.2 million.

Results

For the quarter ended March 31, 2011, total revenues were $25.5 million, with net income of $3.1 million, or $0.08 per fully diluted share. This compares with revenues of $19.7 million and net income of $1.9 million, or $0.06 per fully diluted share, for the same period last year.

Operating income for the quarter ended March 31, 2011, was $3.1 million, or $0.08 per fully diluted share. This compares to operating income of $1.8 million, or $0.05 per fully diluted share, for the same period a year ago.

Comments of Management

Commenting on the results, Guy Bernstein, Chief Executive Officer of Magic Software, said: "These strong results have continued the trend set in the previous quarter, once again breaking company records for revenues and profit, and sustaining double-digit overall growth year over year. Despite the slowdown we are experiencing in Japan due to the current crisis, and the sluggishness of the economic recovery in the US and Europe, Magic has continued to perform well in all centers of activity around the world."

"We have expanded our installed base globally by adding new customers. In addition, our existing customers have continued to upgrade their Magic products, migrating to our newest advanced technology offering. Moving forward, we have exciting new product launches for mobile and cloud environments scheduled for the coming months," concluded Mr. 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 purchased intangible assets
  • In-process research and development capitalization and amortization and
  • Equity-based compensation expense

Magic Software's management believes that the presentation of non-GAAP measures provides useful information to investors and management regarding financial and business trends relating to the Company's financial condition and results of operations as well as the net amount of cash generated by its business operations after taking into account capital spending required to maintain or expand the business.

These 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. Magic Software believes that non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with Magic Software's results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Magic Software's results of operations in conjunction with the corresponding GAAP measures.

Refer to the Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP tables below.

About Magic Software

Magic Software Enterprises Ltd. (NASDAQ: MGIC) is a global provider of cloud and on-premise application platform and business integration solutions. For more information, visit http://www.magicsoftware.com

Except for the historical information contained herein, the matters discussed in this news release include forward-looking statements that may involve a number of risks and uncertainties. Actual results may 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 here and abroad, release and sales of new products by strategic resellers and customers, and other risk factors detailed in the Company's most recent annual report and other filings with the Securities and Exchange Commission.

Magic is the trademark of Magic Software Enterprises Ltd.

Press contact: Tania Amar Magic Software Enterprises Tel: +972 (0)3 538 9300 Email: tania@magicsoftware.com

MAGIC SOFTWARE ENTERPRISES LTD. 

CONSOLIDATED STATEMENTS OF INCOME

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

Three months ended

March 31,

2011

2010

Unaudited

Revenues

25,488

19,711

Cost of Revenues

15,156

11,247

Gross profit

10,332

8,464

Research and development, net

366

631

Selling, marketing and general and

   administrative expenses

6,835

6,079

Total operating costs and expenses

7,201

6,710

Operating income

3,131

1,754

Financial income, net

102

113

Other income, net

11

61

Income before taxes on income

3,244

1,928

Taxes on income

43

78

Net income

3,201

1,850

Net income attributable to non-controlling interests

(88)

-

Net income attributable to Magic Shareholders

3,113

1,850

Net earnings per share attributable to

  Magic:

Basic

0.09

0.06

Diluted

0.08

0.06

Weighted average number of shares used in

    computing net earnings per share attributable to

    Magic:

       Basic

36,085

31,942

       Diluted

37,074

32,351

MAGIC SOFTWARE ENTERPRISES LTD. 

RECONCILIATION BETWEEN GAAP AND NON-GAAP

STATEMENTS OF INCOME FOR COMPARATIVE PURPOSES

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

Three months ended

March 31,

2011

2010

Unaudited

GAAP operating income

3,131

1,754

Amortization of capitalized software and

  other intangible assets

883

950

Capitalization of software development

(1,289)

(711)

Stock-based compensation

164

36

Total adjustments to GAAP

(242)

275

Non-GAAP operating income

2,889

2,029

GAAP net income attributable to Magic Shareholders

3,113

1,850

Total adjustments to GAAP as above

(242)

275

Non-GAAP net income attributable to Magic

 Shareholders

2,871

2,125

Non-GAAP basic net earnings per share

  attributable to Magic

0.08

0.07

Weighted average number of shares used in

  computing basic net earnings per share

36,085

31,942

Non-GAAP diluted net earnings per share

  attributable to Magic

0.08

0.07

Weighted average number of shares used in

  computing diluted net earnings per share

37,173

32,401

MAGIC SOFTWARE ENTERPRISES LTD. 

CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

March 31,

December 31,

2011

2010

(Unaudited)

ASSETS

CURRENT ASSETS:

    Cash and cash equivalents

41,309

43,661

    Short-term bank deposits

5,965

24

    Available-for-sale marketable securities

2,881

2,857

    Trade receivables, net

19,956

17,801

    Other accounts receivable and  prepaid expenses

3,490

4,029

Total current assets

73,601

68,372

LONG-TERM RECEIVABLES:

   Severance pay fund

328

325

   Other long-term receivables

2,474

2,141

Total other long-term receivables

2,802

2,466

PROPERTY AND EQUIPMENT, NET

1,811

1,827

IDENTIFIABLE INTANGIBLE ASSETS AND

   GOODWILL, NET

42,725

39,285

TOTAL ASSETS

120,939

111,950

LIABILITIES AND EQUITY

CURRENT LIABILITIES:

    Short-term credit and current maturities

       of long term loans

7

9

    Trade payables

3,068

2,994

    Accrued expenses and other accounts payable  

14,472

15,028

     Deferred revenues

6,586

1,526

Total current liabilities

24,133

19,557

NON-CURRENT LIABILITIES:

    Long-term loans

2

2

    Liability due to acquisition activities

1,315

2,990

    Accrued severance pay    

549

536

Total non-current liabilities

1,866

3,528

EQUITY

  Magic Shareholders' equity

93,353

88,865

  Non-controlling interests

1,587

-

Total equity

94,940

88,865

TOTAL LIABILITIES AND EQUITY

120,939

111,950

SOURCE Magic Software Enterprises Ltd.



RELATED LINKS

http://www.magicsoftware.com