Formula Systems Reports Fiscal Year Results for 2011 with an Increase of 17% in Revenues and an Increase of 134% in Net Income
2011 Revenues Increased 17% Year over Year to Reach $640.6-Million with Net Income of $43.0-Million
OR YEHUDA, Israel, March 15, 2012 /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 of 2011 and the full fiscal year ended December-31, 2011.
Financial Highlights for the Fourth Quarter of 2011
- Revenues for the fourth quarter ended on December 31, 2011, increased by 2.6% year over year to $157.3-million compared to $153.3-million in the same period last year. The acquisition by Sapiens International Corporation N.V (NASDAQ and TASE: SPNS) of IDIT I.D.I. Technologies Ltd. and FIS Software Ltd. Consummated on August 21, 2011, resulted in Formula's loss of its controlling interest in Sapiens and the deconsolidation of Sapiens' results from Formula's reports. Since August 21, 2011, the Company recorded Sapiens' results under the 'equity in gains of affiliated company' line in accordance with the equity method. Results for the corresponding quarter in 2010 included Sapiens' results on a consolidated basis for the full quarter.
- Operating income for the fourth quarter ended December 31, 2011 decreased by 18.5% year over year to $10.7-million, compared to $13.1-million in the same period last year. The decrease resulted primarily from Formula's loss of control in Sapiens.
- Net income for the fourth quarter decreased by 15.5% year over year to $4.1-million compared to $4.9-million in the respective period last year.
Financial Highlights for the Full Year Ended December 31, 2011
- Revenues for the fiscal year ended December 31, 2011, increased by 17% to $640.6-million compared to $549.7-million in 2010. The acquisition by Sapiens of IDIT I.D.I. Technologies Ltd. and FIS Software Ltd. consummated on August 21, 2011, resulted in Formula's loss of its controlling interest in Sapiens and the deconsolidation of Sapiens' results from Formula's reports. Since August 21, 2011, the Company recorded Sapiens' results under the 'equity in gains of affiliated company' line in accordance with the equity method. Results for 2010 included Sapiens' results on a consolidated basis for the full year. Excluding Sapiens' results, revenues increased by 21% compared to 2010.
- Operating income for the fiscal year ended December 31, 2011, increased by 4% to $49.2-million compared to $47.2-million in 2010. Excluding Sapiens' results, operating income increased by 11% compared to 2010.
- Net income for the fiscal year ended December 31, 2011, increased by 134% to $43.0-million compared to $18.4-million in 2010. Net income for 2011 included income of $25.8 million recorded in connection with the consummation of the acquisition by Sapiens of IDIT I.D.I. Technologies Ltd and FIS Software Ltd.
- Formula's consolidated cash and short-term and long-term investments in marketable securities totaled approximately $111.0 million, as of December 31, 2011, of which Formula's standalone net cash and short-term and long-term investments totaled $1.7 million.
- Total equity on December 31, 2011 was $354.8 million, representing 53% of the total balance sheet.
- On January 27, 2012, the Company consummated the purchase of Sapiens common shares, resulting in the Company's interest in Sapiens' outstanding common share increasing to 52.1%, restoring the Company's controlling interest in Sapiens.
Comments of Management
Commenting on the results, Guy Bernstein, CEO of Formula Systems, said: "The Formula group has concluded 2011 seeing the growth and improved operational performance of Matrix, Magic, and Sapiens. We achieved significant increase in the group's recorded profit, despite the deconsolidation of Sapiens' results (due to its merger with IDIT and FIS). In the first quarter of 2012 we have restored our controlling interest in Sapiens through our acquisition of shares in the company. Magic also continue strengthening its standing after purchasing BluePhoenix's AppBuilder activity. Therefore, we enter 2012 with optimism regarding the performance of our three main companies, which are continuing to increase their revenues organically, while also constantly pursuing opportunities for M&A activities that will accelerate growth in the future."
About Formula
Formula Systems 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.
Statements made in this press release that are not historical facts are forward-looking statements. Such statements involve various risks that may cause actual results to differ materially. These risks and uncertainties include, but are not limited to: market demand for the company's products, dependence on strategic partners, integration of new business, successful implementation of Formula's products, economic and competitive factors, international market conditions, management of growth, technological developments, the ability to finance operations and other factors which are detailed in Formula's Securities and Exchange Commission filings, including its most recent report on Form 20-F. Formula undertakes no obligation to publicly release any revision to any forward-looking statement.
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,
_________________________________________
2011 2010 2011 2010
_________________________________________
Unaudited Unaudited
_________________________________________
Revenues 157,329 153,337 640,617 549,694
Cost of revenues 123,739 115,133 492,886 412,463
_________________________________________
Gross profit 33,590 38,204 147,731 137,231
Research and development costs,
net 488 1,510 5,148 5,503
Selling, general and
administrative expenses 22,400 23,566 93,340 84,510
_________________________________________
Operating income 10,702 13,128 49,243 47,218
Financial expenses, net 1,541 1,617 6,500 4,371
_________________________________________
9,161 11,511 42,743 42,847
Other income (expenses), net -24 -379 207 -231
Income before taxes on income 9,137 11,132 42,950 42,616
Taxes on income -89 1,455 5,689 6,544
_________________________________________
9,226 9,677 37,261 36,072
Gain derived from
deconsolidation of subsidiary
and
equity in gains (losses) of
affiliated companies, net 424 -421 25,870 -1,070
_________________________________________
Net income 9,650 9,256 63,131 35,002
Net income attributable to
non-controlling interests 5,534 4,386 20,169 16,623
Net income attributable to _________________________________________
Formula's shareholders 4,116 4,870 42,962 18,379
Net earnings per share
atributable Formula:
Basic 0.31 0.36 3.17 1.37
Diluted 0.30 0.36 3.11 1.36
Weighted average number of
shares in thousands
used in computing net earnings
per share:
Basic 13,563 13,431 13,514 13,382
_________________________________________
Diluted 13,678 13,530 13,669 13,523
_________________________________________
FORMULA SYSTEMS (1985) LTD.
CONSOLIDATED CONDENSED BALANCE SHEETS
U.S. dollars in thousands
December 31, December 31,
2011 2010
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 88,172 110,508
Marketable securities 14,347 38,170
Short-term deposits 5,170 24
Trade receivables 163,219 154,366
Other accounts receivable 33,635 23,140
Inventories 2,450 5,601
_________________________
Total current assets 306,993 331,809
_________________________
LONG-TERM INVESTMENTS:
Marketable securities 3,264 2,828
Deferred Taxes 11,630 13,135
Investments in affiliated company 79,202 3,209
Prepaid expenses and other assets 3,885 5,493
_________________________
Total long-Term Investments 97,981 24,665
_________________________
SEVERANCE PAY FUND 49,507 55,286
_________________________
PROPERTY, PLANTS AND EQUIPMENT, NET 19,165 12,411
_________________________
NET INTANGIBLE ASSETS AND GOODWILL 198,188 199,596
_________________________
_________________________
TOTAL ASSETS 671,834 623,767
_________________________
CURRENT LIABILITIES:
Liabilities to banks 13,120 6,684
Trade payables 40,060 53,177
Deferred revenues 22,653 26,845
Employees and payroll accrual 40,814 40,704
Other accounts payable 27,693 30,693
Dividend payable to non controling
interests 29 -
Liability in respect of business
combinations 3,718 3,963
Debentures 31,472 15,927
_________________________
Total current liabilities 179,559 177,993
_________________________
LONG-TERM LIABILITIES:
Debentures 15,246 31,854
Deferred taxes 4,836 2,654
Customer advances 2,094 3,520
Liabilities to banks and others 37,985 3,154
Liability in respect of business
combinations 2,502 4,758
Accrued severance pay 63,321 65,450
_________________________
Total long-term liabilities 125,984 111,390
_________________________
REDEEMABLE NON-CONTROLING INTEREST 11,469 -
_________________________
EQUITY
Formula shareholders' equity 221,281 197,615
Non-controlling interests 133,541 136,769
_________________________
Total equity 354,822 334,384
_________________________
TOTAL LIABILITIES AND EQUITY 671,834 623,767
_________________________
Contact:
Formula Systems (1985) Ltd.
+972-3-5389487
[email protected]
SOURCE Formula Systems
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