EX-99.1 2 v352077_ex99-1.htm EXHIBIT 99.1

PRESS RELEASE

 

Magic Reports Second Quarter 2013 Results with Revenues of $34.8 Million, an Increase of 24% Year over Year and Non-GAAP Operating Income of $4.7 Million

 

Revenues for the first half increased 17% year over year to $68.2 million; Non-GAAP operating income for the first half increased 10% to $9.9 million

 

Or Yehuda, Israel, August 7, 2013 – Magic Software Enterprises Ltd. (NASDAQ and TASE: MGIC), a global provider of mobile and cloud-enabled application and business integration platforms, announced today its financial results for the six months and quarter ended June 30, 2013.

 

Financial Highlights for the Second Quarter Ended June 30, 2013

·Revenues for the second quarter increased 24% year over year to $34.8 million from $28.0 million.

 

·Non-GAAP operating income for the second quarter increased 8% to $4.7 million, compared to $4.3 million in the same period last year. Operating income increased 7% to $4.1 million, compared to $3.8 million in the same period last year.

 

·Non-GAAP net income for the second quarter decreased 7% to $3.8 million, compared to $4.1 million in the same period last year. Net income decreased 3% to $3.5 million (or $0.09 per fully diluted share) compared to $3.6 million (or $0.10 per fully diluted share) in the same period last year. The decrease in net income was mainly attributable to an increase in tax expenses recorded for the second quarter.

 

 

Financial Highlights for the Six-Month Period Ended June 30, 2013

·

Revenues for the first half of 2013 increased 17% to $68.2 million compared to $58.1 million in the same period last year.

 

·

Non-GAAP operating income for the first half of 2013 increased 10% to $9.9 million compared to $9.0 million in the same period last year; Operating income for the first half of 2013 increased 8% to $8.7 million compared to $8.0 million in the same period last year.

 

·

Non-GAAP net income for the first half of 2013 decreased 7% to $8.0 million compared to $8.6 million in the same period last year. Net income for the first half of 2013 decreased 10% to $7.0 million (or $0.19 per fully diluted share) compared to $7.8 million (or $0.21 per fully diluted share) in the same period last year. The decrease in net income was mainly attributable to tax expenses recorded with respect to utilization of deferred tax assets. In accordance with U.S. generally accepted accounting principles, the Company records deferred tax expenses on utilization of carry-forward tax losses.

 

·

Operating cash flow for the first half of 2013 totaled approximately $11 million.

 

·

Total net cash, cash equivalents and short-term investments as of June 30, 2013, amounted to $39.3 million.

 

Comments of Management

Guy Bernstein, Chief Executive Officer of Magic Software Enterprises, said, “I am very pleased to report that Magic maintained double-digit growth momentum through the first half of 2013 with strong performance across our products and professional services in all regions. We continue to win new and repeat business and expand our professional service activities, and are happy with the steady improvements in our European and Japanese markets.”

 

“By helping our customers transition to enterprise mobility and maximize revenues, competitiveness and operational efficiencies through integration of their enterprise systems, Magic is well-positioned to increase the value for our shareholders today and in the future,” added 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;

 

·Unwinding of discounts in connection with liabilities due to acquisitions; and

 

·Related tax effects of the above items.

 

Magic Software’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 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.

 

Refer to the Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP tables below.

 

About Magic Software Enterprises

Magic Software Enterprises Ltd. (NASDAQ and TASE: MGIC) is a global provider of mobile and cloud-enabled application and business integration platforms.

 

For more information, visit www.magicsoftware.com.

 

 

Press Contact:

 

Tania Amar, VP Global Marketing

Magic Software Enterprises

Tel: +972 (0)3 538 9300

tania@magicsoftware.com

 

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. 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, 
   2013   2012   2013   2012 
   Unaudited   Unaudited 
Revenues   34,756    28,030    68,170    58,072 
Cost of Revenues   20,965    16,101    40,855    33,018 
Gross profit   13,791    11,929    27,315    25,054 
Research and development, net   919    336    1,802    1,242 
Selling, marketing and general and                    
    administrative expenses   8,805    7,790    16,805    15,784 
Total operating costs and expenses   9,724    8,126    18,607    17,026 
Operating income   4,067    3,803    8,708    8,028 
Financial expenses, net   122    234    520    198 
Other income, net   -    67    -    67 
Income before taxes on income   3,945    3,636    8,188    7,897 
Taxes on income   282    23    777    67 
Net income   3,663    3,613    7,411    7,830 
Change in redeemable non-controlling interests   (122)   -    (142)   - 
Net income attributable to non-controlling interests   (60)   (9)   (268)   (15)
Net income attributable to Magic's shareholders   3,481    3,604    7,001    7,815 
                     
Net earnings per share                    
Basic   0.10    0.10    0.19    0.21 
Diluted   0.09    0.10    0.19    0.21 
                     
Weighted average number of shares used in                    
     computing net earnings per share                    
                     
        Basic   36,722    36,503    36,691    36,458 
         .           
        Diluted   37,243    37,170    37,165    37,170 

 

 

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MAGIC SOFTWARE ENTERPRISES LTD.                
RECONCILIATION BETWEEN GAAP AND NON-GAAP                
STATEMENTS OF INCOME FOR COMPARATIVE PURPOSES            
U.S. dollars in thousands (except per share data)                
                 
                 
                 
   Three months ended   Six months ended 
   June 30,   June 30, 
   2013   2012   2013   2012 
   Unaudited   Unaudited 
                 
GAAP operating income   4,067    3,803    8,708    8,028 
Amortization of capitalized software and other intangible assets   1,821    1,471    3,528    2,893 
Capitalization of software development   (1,290)   (1,091)   (2,500)   (2,213)
Stock-based compensation   92    143    185    297 
Total adjustments to GAAP   623    523    1,213    977 
Non-GAAP operating income   4,690    4,326    9,921    9,005 
                     
                     
GAAP net income   3,481    3,604    7,001    7,815 
Amortization of capitalized software and other intangible assets   1,821    1,471    3,528    2,893 
Capitalization of software development   (1,290)   (1,091)   (2,500)   (2,213)
Stock-based compensation   92    143    185    297 
Unwinding of discount in connection with liabilities due to acquisitions   8    -    215    - 
Amortization expenses attributed to redeemable non-controlling interests   (30)   -    (60)   - 
Taxes on the above items   (290)   (63)   (337)   (157)
Total adjustments to GAAP   311    460    1,031    820 
Non-GAAP net income   3,792    4,064    8,032    8,635 
                     
                     
Non-GAAP basic net earnings per share   0.10    0.11    0.22    0.24 
Weighted average number of shares used in                    
   computing basic net earnings per share   36,722    36,503    36,691    36,458 
                     
Non-GAAP diluted net earnings per share   0.10    0.11    0.22    0.23 
Weighted average number of shares used in                    
   computing diluted net earnings per share   37,293    37,286    37,221    37,293 

 

 

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MAGIC SOFTWARE ENTERPRISES LTD.        
CONSOLIDATED BALANCE SHEETS        
U.S. dollars in thousands        
         
   June 30,   December 31, 
   2013   2012 
   Unaudited   Audited 
         
ASSETS          
CURRENT ASSETS:          
     Cash and cash equivalents   38,469    37,744 
     Available-for-sale marketable securities   866    890 
     Trade receivables, net   30,048    28,367 
     Other accounts receivable and  prepaid expenses   5,606    6,696 
Total current assets   74,989    73,697 
           
LONG-TERM RECEIVABLES:          
    Severance pay fund   407    351 
    Other long-term receivables   3,673    2,287 
Total long-term receivables   4,080    2,638 
           
PROPERTY AND EQUIPMENT, NET   1,927    1,898 
IDENTIFIABLE INTANGIBLE ASSETS AND          
    GOODWILL, NET   80,160    74,721 
           
TOTAL ASSETS   161,156    152,954 
           
           
LIABILITIES AND EQUITY          
           
CURRENT LIABILITIES:          
     Trade payables   4,286    4,722 
     Accrued expenses and other accounts payable   18,100    17,335 
     Deferred tax liabilities   2,774    3,422 
     Deferred revenues   9,040    4,160 
Total current liabilities   34,200    29,639 
           
NON CURRENT LIABILITIES:          
     Long term liabilities   1,877    750 
     Liability due to acquisition activities   1,331    1,192 
     Accrued severance pay   1,251    1,245 
Total non-current liabilities   4,459    3,187 
           
Redeemable non-controlling interest   2,302    1,931 
           
EQUITY:          
   Magic Shareholders' equity   119,587    117,786 
   Non-controlling interests   608    411 
Total equity   120,195    118,197 
           
TOTAL LIABILITIES AND EQUITY   161,156    152,954 

 

 

 

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