EX-10.1 2 v320650_ex10-1.htm EXHIBIT 10.1

  

Exhibit 10.1

 

Magic Reports Strong Performance in the Second Quarter of 2012 with 39% Growth in Non-GAAP Operating Income Year Over Year

 

Company Reports Solid Cash Position with $13 Million Operating Cash Flow for the First Half of 2012 and $44 Million in Total Net Cash as of June 30, 2012

 

Or Yehuda, Israel, August 08, 2012 – Magic Software Enterprises Ltd. (NASDAQ: MGIC), a global provider of software platforms for enterprise mobility, cloud applications, and business integration, announced today its financial results for the first half of 2012.

 

Financial Highlights for the Six-Month Period Ended June 30, 2012

 

·Revenues for the first half of 2012 increased 10% to $58.1 million compared to $52.9 million in the same period last year.

 

·Operating income for the first half of 2012 increased 23% to $8.0 million compared to $6.5 million in the same period last year; Non-GAAP operating income for the first half of 2012 increased 50% to $9.0 million compared to $6.0 million in the same period last year.

 

·Net income for the first half of 2012 increased 17% to $7.8 million compared to $6.7 million in the same period last year; Non-GAAP net income for the first half of 2012 increased 41% to $8.6 million compared to $6.1 million in the same period last year.

 

·Operating cash flow for the first half of 2012 totaled $13 million.

 

·Total net cash, cash equivalents and short-term investments as of June 30, 2012, amounted to $43.7 million.

 

Financial Highlights for the Second Quarter Ended June 30, 2012

 

·Second quarter revenues increased 2% to $28 million compared to $27.4 million in the same period last year.

 

·Operating income for the second quarter increased 12% to $3.8 million, compared to $3.4 million in the same period last year; Non-GAAP operating income for the second quarter increased 39% to $4.3 million, compared to $3.1 million in the same period last year.

 

·Net income for the second quarter increased 2% to $3.6 million compared to $3.5 million in the same period last year. Non-GAAP net income for the second quarter increased 24% to $4.1 million compared to $3.3 million in the same period last year. Net income for the second quarter of 2012 was affected by $0.3 million of expenses related to the devaluation of the Euro versus the US dollar.

 

 

 

Results

 

·For the six-month period ended June 30, 2012, total revenues were $58.1 million, with net income of $7.8 million, or $0.21 per fully diluted share. This compares with revenues of $52.9 million and net income of $6.7 million, or $0.18 per fully diluted share, for the same period last year.

 

·For the second quarter ended June 30, 2012, total revenues were $28.0 million, with net income of $3.6 million, or $0.1 per fully diluted share. This compares with revenues of $27.4 million and net income of $3.5 million, or $0.1 per fully diluted share for the same period last year.

 

Comments of Management

 

Commenting on the results, Guy Bernstein, Chief Executive Officer of Magic Software Enterprises, said: “The first half of 2012 was a very successful period for Magic, with strong performance across the board. We recently extended our mobile offering to include support for the iOS and Android mobile platforms for smartphones and tablets, enhancing the flexibility and future-readiness of our productive and scalable solution for enterprise mobility.”

 

“Our expectations for stronger demand during the second half of 2012, combined with our continued strong cash position, provide us with a positive outlook towards further growth in 2012," concluded Mr. Bernstein.

 

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

 

·Equity-based compensation expense and

 

·Related tax effect

 

Magic’s management believes that the presentation of non-GAAP measures provides 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 believes that non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with Magic’s results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Magic’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.

 

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About Magic Software Enterprises

 

Magic Software Enterprises (NASDAQ: MGIC) empowers customers and partners around the globe with smarter technology that provides a multichannel user experience of enterprise logic and data.

 

For more information, visit www.magicsoftware.com.

 

Press Contact:

 

Tania Amar | VP Global Marketing

 

Magic Software Enterprises

tania@magicsoftware.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 Magic'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.

Magic is a registered trademark of Magic Software Enterprises Ltd. All other product and company names mentioned herein are for identification purposes only and are the property of, and might be trademarks of, their respective owners.

 

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MAGIC SOFTWARE ENTERPRISES LTD.                

CONSOLIDATED 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   28,030    27,380    58,072    52,868 
Cost of Revenues   16,101    16,318    33,018    31,474 
Gross profit   11,929    11,062    25,054    21,394 
Research and development, net   336    454    1,242    820 
Selling, marketing and general and                    
   administrative expenses   7,790    7,205    15,784    14,040 
Total operating costs and expenses   8,126    7,659    17,026    14,860 
Operating income   3,803    3,403    8,028    6,534 
Financial income (expenses) , net   (234)   149    (198)   251 
Other income, net   67    62    67    73 
Income before taxes on income   3,636    3,614    7,897    6,858 
Taxes on income   23    —    67    43 
Net income   3,613    3,614    7,830    6,815 
Net income attributable to non-controlling interests   (9)   (67)   (15)   (155)
Net income attributable to Magic Shareholders   3,604    3,547    7,815    6,660 
                     
Earnings per share (basic)   0.10    0.10    0.21    0.18 
                     
Earnings per share (diluted)   0.10    0.10    0.21    0.18 
                     
                     
Number of shares used in computing earnings per share (basic)   36,503    36,299    36,458    36,192 
                     
Number of shares used in computing earnings per share (diluted)   37,170    37,144    37,170    37,109 

 

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MAGIC SOFTWARE ENTERPRISES 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   3,803    3,403    8,028    6,534 
Amortization of capitalized software and other intangible assets   1,471    880    2,893    1,763 
Capitalization of software development   (1,091)   (1,304)   (2,213)   (2,593)
Stock-based compensation   143    144    297    308 
Total adjustments to GAAP   523    (280)   977    (522)
Non-GAAP operating income   4,326    3,123    9,005    6,012 
                     
                     
GAAP net income   3,604    3,547    7,815    6,660 
Amortization of capitalized software and other intangible assets   1,471    880    2,893    1,763 
Capitalization of software development   (1,091)   (1,304)   (2,213)   (2,593)
Stock-based compensation   143    144    297    308 
Taxes on the above items   (63)   —    (157)   — 
Total adjustments to GAAP   460    (280)   820    (522)
Non-GAAP net income   4,064    3,267    8,635    6,138 
                     
                     
Non-GAAP earnings per share (basic)   0.11    0.09    0.24    0.17 
Weighted average number of shares used in                    
  computing earnings per share (basic)   36,503    36,299    36,458    36,192 
                     
Non-GAAP earnings per share (diluted)   0.11    0.09    0.23    0.17 
Weighted average number of shares used in                    
  computing earnings per share (diluted)   37,286    37,247    37,293    37,210 

   

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MAGIC SOFTWARE ENTERPRISES LTD.        

CONSOLIDATED BALANCE SHEETS        

U.S. dollars in thousands        

 

   June 30,   December 31, 
   2012   2011 
   Unaudited     
ASSETS          
CURRENT ASSETS:          
    Cash and cash equivalents   42,400    28,711 
    Short-term bank deposits   397    2,170 
    Available-for-sale marketable securities   878    1,241 
    Trade receivables, net   23,685    24,946 
    Other accounts receivable and  prepaid expenses   5,563    6,401 
Total current Assets   72,923    63,469 
           
LONG-TERM RECEIVABLES:          
   Severance pay fund   360    351 
   Other Long-term receivables   3,572    3,824 
Total other long-term receivables   3,932    4,175 
           
PROPERTY AND EQUIPMENT, NET   1,908    2,029 
IDENTIFIABLE INTANGIBLE ASSETS AND          
   GOODWILL, NET   65,672    66,512 
           
TOTAL ASSETS   144,435    136,185 
           
LIABILITIES AND EQUITY          
           
CURRENT LIABILITIES:          
    Short-term credit and current maturities          
       of long term loans   —    4 
    Trade payables   3,894    3,545 
    Accrued expenses and other accounts payable   13,416    16,797 
    Deferred tax liability   2,368    2,359 
     Deferred revenues   9,421    5,092 
Total current liabilities   29,099    27,797 
           
NON CURRENT LIABILITIES:          
    Long-term loans   25    9 
    Deferred tax Liabilities   720    296 
    Liability due to acquisition activities   —    1,350 
    Accrued severance pay   1,083    1,087 
Total non-current Liabilities   1,828    2,742 
           
EQUITY:          
  Magic Shareholders' equity   113,003    105,156 
  Non-controlling interests   505    490 
Total equity   113,508    105,646 
           
TOTAL LIABILITIES AND EQUITY   144,435    136,185 

  

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