OR YEHUDA, Israel, Aug. 4, 2009 (GLOBE NEWSWIRE) -- Magic Software Enterprises Ltd. (www.magicsoftware.com) (Nasdaq:MGIC), a provider of application platforms and business and process integration solutions, today announced its financial results for the second quarter ended June 30, 2009. All references to $ are to U.S. Dollars.
Financial Highlights
* Operating income in the second quarter increased to $1.0 million compared to $0.7 million in the first quarter of 2009.
* Operating income for the first half of 2009 grew to $1.7 million, up from $1.5 million in the first half of 2008, representing a 16% increase.
* Net income for the second quarter rose to $1.1 million, up from $0.7 million in the first quarter of 2009.
* Net income for the first half of 2009 was $1.8 million, up from $1.7 million in the first half of 2008.
* In comparison to last year, the company reported a reduction in revenues mainly due to a slowdown in the Japanese and U.S. markets.
* Total cash, cash equivalents and short-term investments as of June 30, 2009 increased to $37 million compared to $33 million at December 31, 2008.
* Cash flow from operations for the first half of 2009 amounted to $4.7 million.
Comments of Management
Guy Bernstein, Chairman of Magic Software, commented on the results: "While the outcome of the recession has affected our revenues, particularly in our Japanese and U.S. markets, we succeeded in compensating with improved operational efficiency and shortened sales cycle. These measures have allowed us to present an increase in our profitability and cash balances. We are now starting to see signs of improvement in our U.S. business, and we believe that these will translate into additional sales in the near future."
Summary of the Quarter
* The company won a significant number of new customers, many of which are in the U.S.
* The uniPaaS application platform continues to be adopted by worldwide customers, including the Norfolk and Norwich University NHS Trust in the UK.
* Despite the severe recession in Japan, the company is now implementing more than 50 uniPaaS RIA projects with Japanese customers and has won four new Japanese partners.
* The company is growing its presence in Eastern Europe with the win of new partners and customers such as DSB of the Czech Republic and AlphaSoft of Romania.
* Existing application platform partners worldwide are increasingly migrating to uniPaaS to prepare for the new opportunities presented by RIA and SaaS.
* The iBOLT business and process integration suite has new connectors and adaptors for HL7 (healthcare), Lotus Notes, and the Data Replicator for Salesforce.com. The expanded iBOLT range facilitated project wins in a number of countries including Austria, the U.S., and the Netherlands.
* The company's uniPaaS and iBOLT solutions attracted significant media attention in the quarter from specialist IT media publications including AjaxWorld, SDTimes, MicroScope, CRN, SaaSDirectory, CloudAve, IT Knowledge Exchange, SoftwareCEO, ZDNet, ComputerWorldUK, BTQ, CBR, businesscloud9, computing.co.uk, SOAWorld. For a full listing of our media coverage read here.
* Magic Software is listed by Gartner as a provider of SaaS/Cloud-Enabled Application Platforms and of Composite Applications. ['Hype Cycle for Application Development 2009', 22nd July 2009, ID G00168168].
* Magic Software is listed by Gartner as one of 13 strategic partners and long-term providers of application infrastructure, ['A Summary of Magic Quadrants for Application Infrastructure', 3rd March 2009, ID G00165017].
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.
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, and for more about our industry related news, business issues and trends, read the Magic Software Blog.
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 Six months ended
June 30, March 31, June 30,
----------------- -------- -----------------
2009 2008 2009 2009 2008
------- ------- ------ ------- -------
Unaudited Unaudited
--------------------------- ----------------
Revenues 13,595 16,030 13,770 27,365 31,100
Cost of Revenues 6,443 6,784 6,737 13,180 13,568
------- ------- ------ ------- -------
Gross profit 7,152 9,246 7,033 14,185 17,532
------- ------- ------ ------- -------
Research and
development, net 260 460 339 599 1,021
Selling, general
and
administrative
expenses 5,937 7,188 5,954 11,891 15,049
Total operating
expenses, net 6,197 7,648 6,293 12,490 16,070
------- ------- ------ ------- -------
Operating income 955 1,598 740 1,695 1,462
------- ------- ------ ------- -------
Financial income
(expenses), net (78) 178 64 (14) 359
Other income
(expenses), net 286 (61) -- 286 (18)
------- ------- ------ ------- -------
Income before taxes
on income 1,163 1,715 804 1,967 1,803
Taxes on income 76 51 90 166 75
------- ------- ------ ------- -------
Income after taxes
on
income 1,087 1,664 714 1,801 1,728
Minority interest -- 2 -- -- (2)
Equity in losses of
affiliates -- -- -- -- (8)
------- ------- ------ ------- -------
Net income 1,087 1,666 714 1,801 1,718
Basic net earnings
per share 0.03 0.05 0.02 0.06 0.05
======= ======= ====== ======= =======
Diluted net earnings
per share 0.03 0.05 0.02 0.06 0.05
======= ======= ====== ======= =======
Weighted average
number of shares
used in computing
net earnings per
share
Basic 31,894 31,732 31,894 31,894 31,677
------- ------- ------ ------- -------
Diluted 32,009 32,047 31,938 31,973 31,978
------- ------- ------ ------- -------
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 Six months
ended ended
June 30, June 30,
----------------- -----------------
2009 2008 2009 2008
------- ------- ------- -------
Unaudited Unaudited
----------------- -----------------
GAAP operating income 955 1,598 1,695 1,462
Amortization of intangibles 881 512 1,750 1,050
Capitalization of software
development (830) (754) (1,585) (1,610)
Stock-based compensation 69 89 125 580
------- ------- ------- -------
Total adjustments to GAAP 120 (153) 290 20
------- ------- ------- -------
Non-GAAP operating income 1,075 1,445 1,985 1,482
------- ------- ------- -------
GAAP net income 1,087 1,666 1,801 1,718
Total adjustments to GAAP
as above 120 (153) 290 20
------- ------- ------- -------
Non-GAAP net income 1,207 1,513 2,091 1,738
======= ======= ======= =======
Non-GAAP basic net earnings
per share 0.04 0.05 0.07 0.05
======= ======= ======= =======
Weighted average number of
shares used in computing
basic net earnings per share 31,894 31,732 31,894 31,677
------- ------- ------- -------
Non-GAAP diluted net earnings
per share 0.04 0.05 0.07 0.05
======= ======= ======= =======
Weighted average number of
shares used in computing
diluted net earnings per
share 32,123 32,047 32,035 31,978
------- ------- ------- -------
MAGIC SOFTWARE ENTERPRISES LTD.
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
June 30, Dec. 31,
------- -------
2009 2008
------- -------
(Unaudited)
-------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 20,792 27,309
Short-term bank deposits 13,457 1,810
Available for sale marketable securities 2,594 3,469
Trade receivable, net 12,882 13,140
Other accounts receivable and prepaid expenses 2,807 1,933
Current assets of discontinued operation 31 31
------- -------
Total current Assets 52,563 47,692
------- -------
LONG-TERM INVESTMENTS:
Severance pay fund 367 316
Long-term lease deposits 268 235
------- -------
Total long-term investments 635 551
------- -------
Property and equipment, net 4,999 5,436
Goodwill 16,505 16,829
Other intangible assets, net 10,490 10,656
------- -------
TOTAL ASSETS 85,192 81,164
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term credit and current maturities of long
term loans 89 147
Trade payables 3,175 2,988
Deferred revenues 6,014 1,643
Accrued expenses and other accounts payable 6,823 8,691
Current liabilities of discontinued operation 377 372
------- -------
Total current liabilities 16,478 13,841
------- -------
Long-term loans 31 33
Accrued severance pay 568 535
------- -------
Total non-current Liabilities 599 568
------- -------
SHAREHOLDERS' EQUITY 68,115 66,755
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 85,192 81,164
======= =======