Formula Systems Reports Results for Third Quarter of 2013 with Net Income of $5.2 Million, a Year over Year Increase of 10%

OR YEHUDA, Israel, Nov. 13, 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 third quarter of 2013.

Financial Highlights for the Third Quarter Ended September 30, 2013

• Revenues for the third quarter ended September 30, 2013, increased 8% to $197.3 million compared to $182.0 million in the same period of 2012.
• Operating income for the third quarter ended September 30, 2013, increased 5% to $14.8 million, compared to $14.0 million in the same period of 2012; Non-GAAP operating income for the third quarter ended September 30, 2013, decreased 2% to $17.5 million, compared to $17.9 million in the same period of 2012. Operating income was negatively impacted by seasonality, with the early timing of holidays compared to 2012.
• Net income for the third quarter ended September 30, 2013, increased 10% to $5.2 million (or $0.36 per fully diluted share) compared to $4.7 million (or $0.33 per fully diluted share) in the same period of 2012. Non-GAAP net income for the third quarter ended September 30, 2013, increased 10% to $7.4 million compared to $6.7 million in the same period of 2012.

Financial Highlights for the Nine-Month Period Ended September 30, 2013

• Revenues for the nine-month period ended September 30, 2013, increased 7% to $587.2 million compared to $546.5 million in the same period of 2012.
• Operating income for the nine-month period ended September 30, 2013, increased 4% to $43.4 million compared to $41.9 million in the same period of 2012; Non-GAAP operating income for the nine-month period ended September 30, 2013, decreased 3% to $52.0 million compared to $53.5 million in the same period of 2012.
• Net income for the nine-month period ended September 30, 2013, decreased 13% to $14.3 million (or $0.99 per fully diluted share) compared to $16.5 million (or $1.18 per fully diluted share) in the same period of 2012; Net income in 2012 included a net gain of $3.4 million resulting from the remeasurement of the Company's investments, attributable to regaining a controlling interest in Sapiens. Non-GAAP net income for the nine-month period ended September 30, 2013, decreased 13% to $19.5 million compared to $22.5 million in the same period of 2012.
• Formula's consolidated cash and short-term and long-term investments in marketable securities totaled approximately $126.0 million, as of September 30, 2013.
• Total equity on September 30, 2013 was $495.9 million, representing 54% of the total balance sheet.

Comments of Management
Commenting on the results, Guy Bernstein, CEO of Formula Systems, said, "I am happy to report Formula's third quarter results which reflect continuing strong financial performance across all of our subsidiaries, with both Sapiens and Magic recording record-breaking top-line results for the first nine months of 2013. During this quarter, Matrix has continued to benefit from its on-going investments in broadening its software service offerings and from winning new projects. Sapiens reached record-breaking revenues of $34.6 million for the third quarter with 20% year-over-year growth in revenues for the first nine months, thanks to increasing demand for its solutions across North America, Europe and Asia-Pacific, creating a strong financial foundation for its continued future growth. And with record income of $6.0 million from operating activity in the third quarter, Magic continues to reap the results of recent enhancements it has made to enrich its enterprise mobility, integration and services offerings, strengthening its position in these growth markets. " 

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;
• Unwinding of discount in connection with liabilities due to acquisitions; and
• Related tax effect of the above items.

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 www.formulasystems.com.

Press Contact:

Formula Systems (1985) Ltd.
+972-3-5389487
[email protected]

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.

SOURCE Formula Systems