OR YEHUDA, Israel, Feb. 18, 2009 (GLOBE NEWSWIRE) -- Magic Software Enterprises Ltd. (Nasdaq:MGIC), a leading provider of application platform and business and process integration solutions, today announced its financial results for the fourth quarter and full year ended December 31, 2008.
Financial Results for the Year ended December 31, 2008
* Net income from continuing operations reached $4.5 million,
compared to $1.1 million in 2007, an increase of 309%.
* Operating income amounted to $4.3 million, an increase of 231%
compared to $1.3 million in 2007.
* Gross margin improved to 56.2% from 53.2% in 2007.
* Revenues from sales of licenses grew to $17.9 million, an
increase of 19% compared to $15.0 million in 2007.
* Total revenues increased by 6% to $62.0 million, up from $58.4
million in 2007.
* Total cash and short-term investments as of December 31, 2008
were $32.6 million and shareholders' equity was $66.8 million.
* Operational cash flow for the year amounted to $5 million.
* On a non-GAAP basis, net income from continuing operations
increased by 269% to $4.8 million from $1.3 million in 2007.
Financial Results for the Fourth Quarter of 2008
* Net income from continuing operations totaled $1.1 million
compared to $0.3 million for the fourth quarter of 2007, an
increase of 267%.
* Operating income amounted to $1.2 million, a six-fold increase
compared to $0.2 million recorded in the same period of 2007.
* Total revenues were $15.1 million, a decrease of 4% compared
to $15.7 million for the fourth quarter of 2007.
* Net income from continuing operations on a non-GAAP basis was
$1.2 million compared to net income of $0.4 million recorded
in the fourth quarter of 2007.
* Net income from discontinued operations for the fourth quarter
of 2007 included a $9.3 million one-time capital gain from the
sale of the Company's AAOD subsidiary and contributions from
AAOD operations.
Comments of Management
Commenting on the results, Guy Bernstein, Chairman of Magic Software, said: "I am pleased to report that the Company continued to increase its sales and profits throughout 2008 despite the challenging economic climate. We are maintaining our competitive edge by providing our customers with cost-effective solutions and solid support. We are also maintaining tight control over costs and remain focused on the long-term growth of the Company."
"Our successful introduction of uniPaaS during 2008 and the increasing adoption of iBOLT by the industry place Magic Software in the forefront of the Application Platform industry and we are now considered to be one of the few global strategic providers in this field," stated Mr. Bernstein.
Key Trends
* Significant reduction of the Company's churn rate. This has
been demonstrated by growth in the Company's license sales
and by the renewal and strengthening of existing customers'
interest and commitment.
* Industry recognition of the value of Magic Software's "Power
of Choice." Numerous partners and customers have expressed
appreciation that Magic Software platforms enable them to
deploy certain application modules as Client/Server and
others as RIA (Rich Internet Applications).
* Significant adoption of Service Oriented Architecture. The
migration to Service Oriented Architecture is driving the
initiation of many new IT projects based on Magic Software
products and increasing the scope of existing ones. In parallel,
an increasing number of Service Oriented Architecture projects
are using both uniPaaS and iBOLT.
* Growth in the use of iBOLT in the SAP ecosystem, in particular
at the Enterprise level. This has been accompanied by
increasing sales into the Salesforce.com space and the Oracle
JD Edwards ecosystem.
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 provide 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.
Please refer to the Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP tables below.
Conference Call Magic Software's management will also host a conference call today at 10:00 AM EST / 5:00 PM in Israel. To participate in the conference call, please call the appropriate number listed below at least five to ten minutes prior to the start of the call:
From the U.S.: 1-888-723-3164 From Canada: 1-866-958-6867 From Israel: 1-800-227-297 All others: +972-3-9180609
Callers should reference the Magic Software Earnings Conference Call.
A replay of the call will be available from 1:00 p.m. EST on February 19, 2009 through 12:00 p.m. EST on February 26, 2009. To access the replay, please call:
From the U.S.: 1-888-295-2634 From Canada: 1-866-500-4964 From Israel: 1-800-286-285 All others: +972-3-9255937
An archive of the online broadcast will be available on the investor relations part of Magic Software's website, from February 19, at: http://www.magicsoftware.com/2024-en/Magic.aspx
About Magic Software
Magic Software Enterprises Ltd. (Nasdaq:MGIC) is a leading provider of multiple-mode application platform solutions -- including Full Client, Rich Internet Applications (RIA) or Software-as-a-Service (SaaS) modes -- and business and process integration solutions. Magic Software has offices in 10 countries and a presence in over 50, as well as a global network of ISV's, system integrators, value-added distributors and resellers, and consulting and OEM partners. The company's award-winning code-free solutions give partners and customers the power to leverage existing IT resources, enhance business agility and focus on core business priorities. Magic Software's technological approach, product roadmap and corporate strategy are recognized by leading industry analysts. Magic Software has partnerships with global IT leaders including SAP AG, salesforce.com, IBM and Oracle. For more information about Magic Software and its products and services, visit www.magicsoftware.com.
Magic Software is a subsidiary of Formula Systems in the Emblaze Group of companies.
The Magic Software Enterprises Ltd. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5524
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 SOFTWARE ENTERPRISES LTD.
Consolidated Statements of Operations
U.S. dollars in thousands (except per share data)
Three months ended Year ended
December 31, December 31,
-------------------- --------------------
2008 2007 2008 2007
-------- -------- -------- --------
(Unaudited) (Unaudited)
-------------------- --------------------
Revenues $ 15,071 $ 15,679 $ 61,980 $ 58,428
Cost of Revenues 6,923 6,612 27,139 27,340
-------- -------- -------- --------
Gross profit 8,148 9,067 34,841 31,088
-------- -------- -------- --------
Research and
development, net 653 837 2,350 2,716
Selling, general
and administrative
expenses 6,302 8,076 28,224 27,090
Total operating
expenses 6,955 8,913 30,574 29,806
-------- -------- -------- --------
Operating income 1,193 154 4,267 1,282
-------- -------- -------- --------
Financial income
(expenses), net (34) 136 448 161
Other income
(expenses), net (24) 95 -- 170
-------- -------- -------- --------
Income before taxes
on income 1,135 385 4,715 1,613
-------- -------- -------- --------
Taxes on income 54 49 199 362
Minority interest 3 (17) -- (22)
Equity in loss of
affiliates -- (35) (8) (86)
-------- -------- -------- --------
Net income before
discontinued
operation 1,084 284 4,508 1,143
-------- -------- -------- --------
Net income from
discontinued
operation -- 9,733 -- 11,465
-------- -------- -------- --------
Net income $ 1,084 $ 10,017 $ 4,508 $ 12,608
======== ======== ======== ========
Basic net earnings
per ordinary share $ 0.03 $ 0.32 $ 0.14 $ 0.40
======== ======== ======== ========
Diluted net earnings
per ordinary share $ 0.03 $ 0.31 $ 0.14 $ 0.39
======== ======== ======== ========
Weighted average
number of ordinary
shares used in
computing net
earnings per share
Basic 31,894 31,520 31,769 31,443
======== ======== ======== ========
Diluted 32,010 31,993 32,032 32,023
======== ======== ======== ========
MAGIC SOFTWARE ENTERPRISES LTD.
RECONCILIATION BETWEEN GAAP AND NON-GAAP STATEMENTS OF
OPERATIONS FOR COMPARATIVE PURPOSES
U.S. dollars in thousands (except per share data)
Three months ended Year ended
December 31, December 31,
------------------ ------------------
2008 2007 2008 2007
------- ------- ------- -------
(Unaudited) (Unaudited)
------------------ ------------------
GAAP operating income 1,193 154 4,267 1,282
Amortization of intangibles 783 583 2,600 2,761
Capitalization of software
development (546) (717) (2,577) (3,027)
Stock-based compensation (168) 248 244 434
------- ------- ------- -------
Total adjustments to GAAP 69 114 267 168
------- ------- ------- -------
Non-GAAP operating income 1,262 268 4,534 1,450
======= ======= ======= =======
GAAP net income before
discontinued operation 1,084 284 4,508 1,143
Total adjustments to GAAP
as above before
discontinued operation 69 114 267 168
------- ------- ------- -------
Non-GAAP net income before
discontinued operation 1,153 398 4,775 1,311
======= ======= ======= =======
GAAP net income 1,084 10,017 4,508 12,608
Total adjustments to GAAP
as above 69 114 267 168
------- ------- ------- -------
Non-GAAP net income 1,153 10,131 4,775 12,776
======= ======= ======= =======
Non-GAAP earnings per
ordinary share (basic) $ 0.04 $ 0.32 $ 0.15 $ 0.41
======= ======= ======= =======
Weighted average number of
ordinary shares used in
computing basic net
earnings per ordinary
share 31,894 31,520 31,769 31,443
======= ======= ======= =======
Non-GAAP diluted earnings
per ordinary share $ 0.04 $ 0.32 $ 0.15 $ 0.40
======= ======= ======= =======
Weighted average number of
ordinary shares used in
computing diluted net
earnings per ordinary
share 32,010 31,993 32,032 32,023
======= ======= ======= =======
MAGIC SOFTWARE ENTERPRISES LTD.
Consolidated Balance Sheets
U.S. dollars in thousands
December 31, December 31,
----------- -----------
2008 2007
----------- -----------
(Unaudited) (Unaudited)
----------- -----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $27,309 $12,178
Short-term bank deposits 1,810 89
Marketable securities 3,469 4,179
Trade accounts receivable, net 13,140 12,941
Other accounts receivables and prepaid
expenses 1,933 2,010
Receivables from a sale of subsidiary -- 16,000
Current assets of discontinued operations 31 41
----------- -----------
Total Current Assets 47,692 47,438
----------- -----------
LONG-TERM INVESTMENTS:
Severance pay fund 1,753 1,925
Long-term lease deposits 290 383
Investment in an affiliated company -- 127
Property and equipment, net 5,436 5,758
Goodwill 16,829 15,986
Other intangible assets, net 10,656 10,681
----------- -----------
Total Non-Current Assets 34,964 34,860
----------- -----------
TOTAL ASSETS $82,656 $82,298
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term credit and current maturities
of long term loans $ 147 $ 3,621
Trade payables 2,988 2,999
Deferred revenues 1,643 2,314
Accrued expenses and other accounts
payable 8,779 9,169
Current liabilities of discontinued
operations 372 503
----------- -----------
Total Current Liabilities 13,929 18,606
----------- -----------
NON-CURRENT LIABILITIES:
Long-term loans 33 132
Accrued severance pay 1,939 2,316
----------- -----------
Total Non-Current Liabilities 1,972 2,448
----------- -----------
SHAREHOLDERS' EQUITY 66,755 61,244
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $82,656 $82,298
=========== ===========