Formula Systems Reports Record-breaking Revenues of $186 Million for the Second Quarter of 2012, with 12% Growth Year-over-Year
Second Quarter Non-GAAP Net Income Increased by 19% Year-Over-Year to Reach $7.6 Million
OR YEHUDA, Israel, August 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 second quarter of 2012.
Financial Highlights for the Six-Month Period Ended June 30, 2012
- Revenues for the six-month period ended June 30, 2012, increased 13% to $364.4 million compared to $321.8 million in the same period last year.
- Operating income for the six-month period ended June 30, 2012, increased 8% to $27.8 million compared to $25.7 million in the same period last year; Non-GAAP operating income for the six-month period ended June 30, 2012, increased 21% to $35.4 million compared to $29.2 million in the same period last year.
- Net income for the six-month period ended June 30, 2012, increased 29% to $11.8 million compared to $9.2 million in the same period last year; Non-GAAP net income for the six-month period ended June 30, 2012, increased 49% to $18.5 million compared to $12.4 million in the same period last year
- Formula's consolidated cash and short term and long term investments in marketable securities totaled approximately $126.0 million, as of June 30, 2012.
- Total equity on June 30, 2012 was $448.7 million, representing 54% of the total balance sheet.
Financial Highlights for the Second Quarter Ended June 30, 2012
- Revenues for the second quarter ended June 30, 2012, increased 12% to $186.1 million compared to $165.9 million in the same period last year. Revenues for the second quarter of 2012 were negatively affected mainly by the devaluation of the U.S. dollar versus the New Israeli Shekel and the Euro in the amount of approximately $16.1 million in comparison to the same period last year.
- Operating income for the second quarter ended June 30, 2012, increased 3% to $13.9 million, compared to $13.5 million in the same period last year. Operating income for the second quarter of 2012 was negatively affected by the devaluation of the U.S. dollar versus the New Israeli Shekel in the amount of approximately $0.6 million in comparison to the same period last year; Non-GAAP operating income for the second quarter ended June 30, 2012, increased 20% to $17.9 million, compared to $15.0 million in the same period last year.
- Net income for the second quarter ended June 30, 2012, decreased 20% to $4.0 million compared to $5.0 million in the same period last year. Net income for the second quarter of 2012 was negatively affected mainly by the devaluation of the U.S. Dollar versus the New Israeli Shekel and the Euro in the amount of approximately $0.6 million in comparison to the same period last year; Non-GAAP Net income for the second quarter ended June 30, 2012, increased 19% to $7.6 million compared to $6.4 million in the same period last year.
Results
- For the six-month period ended June 30, 2012, total revenues were $364.4 million, with net income of $11.8 million, or $0.84 per fully diluted share. This compares with revenues of $321.8 million and net income of $9.2 million, or $0.65 per fully diluted share, for the same period last year.
- For the second quarter ended June 30, 2012, total revenues were $186.1 million, with net income of $4.0 million, or $0.28 per fully diluted share. This compares with revenues of $165.9 million and net income of $5.0 million, or $0.35 per fully diluted share, for the same period last year.
Comments of Management
Commenting on the results, Guy Bernstein, CEO of Formula Systems, said: "The first half of 2012 was a very successful period for Formula, reflecting the continued strong performance of our subsidiaries, Matrix, Sapiens, and Magic. Despite an uncertain climate in the enterprise software industry and in the global economy in general, we continued to set new records for revenue and maintained our profitability. Moving forward, we plan to continue to nurture and strengthen our relationships with our customers and partners, developing our product portfolios and our business models to provide greater added value."
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 our 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 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 Six months ended
June 30, June 30,
________________________________________________
2012 2011 2012 2011
________________________ ______________________
Unaudited Unaudited
________________________ ______________________
Revenues 186,124 165,875 364,429 321,791
Cost of revenues 142,017 126,022 278,353 245,738
_________ _______ _______ _______
Gross profit 44,107 39,853 86,076 76,053
Research and development costs, net 2,772 1,535 5,211 3,220
Selling, general and administrative
expenses 27,506 24,993 53,113 47,265
Other income, net 74 146 74 177
_________ _______ _______ _______
Operating income 13,903 13,471 27,826 25,745
Financial expenses, net 2,265 1,788 3,759 3,146
_________ _______ _______ _______
Income before taxes on income 11,638 11,683 24,067 22,599
Taxes on income 1,610 1,685 3,652 3,861
_________ _______ _______ _______
10,028 9,998 20,415 18,738
Gain derived from consolidation of
subsidiary and equity in gains (losses)
of affiliated companies, net - 103 3,719 (137)
_________ _______ _______ _______
Net income 10,028 10,101 24,134 18,601
Change in redeemable non-controlling
interests 1,343 - 1,343 -
Net income attributable to non-controlling
interests 4,666 5,089 10,970 9,412
_________ _______ _______ _______
Net income attributable to Formula's
shareholders 4,019 5,012 11,821 9,189
_________ _______ _______ _______
Earnings per share (basic) 0.30 0.37 0.87 0.68
Earnings per share (diluted) 0.28 0.35 0.84 0.65
Number of shares used in computing earnings per
share (basic) 13,596 13,497 13,596 13,481
_________ _______ _______ _______
Number of shares used in computing earnings per
share (diluted) 13,808 13,679 13,778 13,663
_________ _______ _______ _______
FORMULA SYSTEMS (1985) LTD.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
U.S. dollars in thousands (except per share data)
Three months ended Six months ended
June 30, June 30,
_____________________________________________________
2012 2011 2012 2011
_____________________________ ______________________
Unaudited Unaudited
_____________________________ ______________________
GAAP operating income 13,903 13,471 27,826 25,745
Amortization of capitalized software
and other intangible assets 4,901 2,878 9,374 5,442
Capitalization of software
development (2,026) (2,579) (4,128) (5,023)
Stock-based compensation 1,169 1,188 2,357 3,009
_______ _________ _______ ________
Total adjustments to GAAP 4,044 1,487 7,603 3,428
_______ _________ _______ ________
Non-GAAP operating income 17,947 14,958 35,429 29,173
_______ _________ _______ ________
GAAP net income attributable
to Formula's shareholders 4,019 5,012 11,821 9,189
Amortization of capitalized software
and other intangible assets 4,901 2,878 9,374 5,442
Capitalization of software
development (2,026) (2,579) (4,128) (5,023)
Stock-based compensation 1,169 1,188 2,357 3,009
Taxes on the above items (463) (128) (904) (226)
_______ _________ _______ ________
Total adjustments to GAAP 3,581 1,359 6,699 3,202
_______ _________ _______ ________
Non-GAAP net income attributable
to Formula's shareholders 7,600 6,371 18,520 12,391
_______ _________ _______ ________
Non-GAAP earnings per share (basic) 0.55 0.43 1.35 0.89
_______ _________ _______ ________
Number of shares used in
computing earnings per share
(basic) 13,596 13,497 13,596 13,481
_______ _________ _______ ________
Non-GAAP earnings per share
(diluted) 0.53 0.45 1.31 0.86
_______ _________ _______ ________
Number of shares used in
computing earnings per share
(diluted) 13,808 13,679 13,778 13,663
_______ _________ _______ ________
FORMULA SYSTEMS (1985) LTD.
CONSOLIDATED CONDENSED BALANCE SHEETS
U.S. dollars in thousands
June 30, December 31,
___________ ____________
2012 2011
___________ ____________
(Unaudited)
___________
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 108,863 88,172
Marketable securities 14,002 14,347
Short-term deposits 397 5,170
Trade receivables 180,003 163,219
Other accounts receivable 39,373 36,085
___________ ____________
Total current assets 342,638 306,993
___________ ____________
LONG-TERM INVESTMENTS:
Marketable securities 2,762 2,746
Deferred Taxes 17,162 11,630
Investments in affiliated companies 2,850 77,107
Prepaid expenses and other accounts receivable 4,438 3,885
___________ ____________
Total long-Term Investments 27,212 95,368
___________ ____________
SEVERANCE PAY FUND 60,420 49,507
___________ ____________
PROPERTY, PLANTS AND EQUIPMENT, NET 20,263 19,165
___________ ____________
NET INTANGIBLE ASSETS AND GOODWILL 377,155 198,188
___________ ____________
TOTAL ASSETS 827,688 669,221
___________ ____________
CURRENT LIABILITIES:
Liabilities to banks 15,068 16,642
Debentures 15,731 31,472
Trade payables 43,112 40,344
Deferred revenues 46,342 22,653
Other accounts payable 80,287 70,054
___________ ____________
Total current liabilities 200,540 181,165
___________ ____________
LONG-TERM LIABILITIES:
Liabilities to banks and others 42,413 34,459
Debentures 15,027 15,246
Deferred revenue 1,752 2,094
Other long-term pyables 11,171 9,258
Accrued severance pay 77,387 63,321
___________ ____________
Total long-term liabilities 147,750 124,378
___________ ____________
REDEEMABLE NON-CONTROLING INTEREST 30,691 11,469
___________ ____________
EQUITY
Formula shareholders' equity 229,251 218,668
Non-controlling interests 219,456 133,541
___________ ____________
Total equity 448,707 352,209
___________ ____________
TOTAL LIABILITIES AND EQUITY 827,688 669,221
___________ ____________
Press Contact:
Formula Systems (1985) Ltd.
+972-3-5389487
[email protected]
SOURCE Formula Systems
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