EX-99.1 2 v368001_ex99-1.htm PRESS RELEASE

 

Exhibit 99.1

 

 

Magic Reports Record-Breaking Results for the Fourth Quarter of 2013 with Revenues of
$41.2 Million, an Increase of 15% Year over Year, and Non-GAAP Operating Income of
$6.8 Million, an Increase of 34% Year over Year

 

Annual revenues for 2013 increased 15% year over year to a record-breaking result of $145.0 million; Non-GAAP operating income increased 22% to $22.7 million for the year

 

OR YEHUDA, Israel, Feb. 12, 2014 /PRNewswire/ -- 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 fourth quarter and full year ended December 31, 2013.

 

Financial Highlights for the Fourth Quarter, 2013

 

•Revenues for the fourth quarter increased 15% year over year to $41.2 million from $35.7 million in the corresponding 2013 quarter.

 

•Non-GAAP operating income increased 34% to $6.8 million, compared to $5.1 million in the same period last year. Operating income for the fourth quarter increased 28% to $5.4 million, compared to $4.3 million in the same period last year.

 

•Non-GAAP net income increased 17% to $6.0 million, compared to $5.1 million in the same period last year. Net income for the fourth quarter increased 10% to $4.7 million compared to $4.3 million in the same period last year.

 

Financial Highlights for the Full Year Ended December 31, 2013

 

•Revenues for the year ended December 31, 2013 reached $145.0 million, an increase of 15%, compared to $126.4 million in 2012.

 

•Non-GAAP operating income for 2013 increased 22% to $22.7 million, compared to $18.6 million in 2012. Operating income for the year ended December 31, 2013 increased 17% to $19.1 million compared to $16.4 million in the prior year. Operating income in 2013 was negatively impacted compared to 2012 due to the devaluation of the Japanese Yen and the appreciation of the New Israeli Shekel versus the U.S. Dollar by approximately $1 million. 

 

•Non-GAAP net income for 2013 increased 6% to $19.5 million, compared to $18.3 million in 2012. Net income for the year ended December 31, 2013, decreased 2% to $15.9 million compared to $16.2 million in the prior year. Net income for 2013 was negatively impacted by $0.5 million in non-cash tax expenses recorded with respect to utilization of deferred tax assets and by $0.5 million in financial expenses recorded as a result of unfavorable foreign currency exchange rates. In accordance with U.S. generally accepted accounting principles, the Company records deferred tax expenses on utilization of carry-forward tax losses.

 

•Total cash, cash equivalents and short-term investments as of December 31, 2013 amounted to $36.0 million.

  

•Operating cash flow for the year ended December 31, 2013 totaled $18 million.

 

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Results

 

•For the fourth quarter ended December 31, 2013, total revenues were $41.2 million, with net income of $4.7 million, or $0.13 per fully diluted share. This compares with revenues of $35.7 million and net income of $4.3 million, or $0.12 per fully diluted share for the same period in 2012.

 

•For the fourth quarter of 2013, operating income was $5.4 million. This compares to operating income of $4.3 million for the same period in 2012.

 

•For the year ended December 31, 2013, total revenues were $145.0 million, with net income of $15.9 million, or $0.43 per fully diluted share. This compares with revenues of $126.4 million and net income of $16.2 million, or $0.44 per fully diluted share, for the same period in 2012.

 

•Operating income for the year ended December 31, 2013, was $19.1 million. This compares to operating income of $16.4 million for the same period in 2012.

 

Comments of Management

 

Guy Bernstein, Chief Executive Officer of Magic Software Enterprises, said, "2013 was a tremendous year for Magic with record sales and strong performance across all of our products and professional services in all regions. Our results demonstrate increasing customer demand for our products and services coupled with continued focus on operational discipline. Our award-winning enterprise mobility solution, integration platform and complementary software services are well-positioned for sustained growth as we enter 2014, in terms of both immediate sales and longer-term maintenance and support revenues.”

 

"We are continuing to strengthen our products and expand our services portfolio to help businesses meet the increasing demand of enterprise mobility, cloud and big data and have high expectations for accelerated growth in 2014," 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;

 

•Change in valuation of contingent consideration; and

 

•The 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.

 

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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.

 

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.

 

Press Contact:

 

Tania Amar, VP Global Marketing
Magic Software Enterprises
Tel: +972 (0)3 538 9300
tania@magicsoftware.com

 

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MAGIC SOFTWARE ENTERPRISES LTD. AND ITS SUBSIDIARIES        

CONDENSED CONSOLIDATED STATEMENTS OF INCOME            

U.S. dollars in thousands (except per share data)              

 

                 
                 
                 
   Three months ended   Year ended 
   December 31,   December 31, 
   2013   2012   2013   2012 
   Unaudited   Unaudited 
Revenues  $41,192   $35,730   $144,958   $126,380 
Cost of Revenues   24,305    20,792    85,893    73,393 
Gross profit   16,887    14,938    59,065    52,987 
Research and development, net   925    813    3,706    2,947 
Selling, marketing and general and administrative   10,513    9,867    36,232    33,632 
Total operating expenses   11,438    10,680    39,938    36,579 
Operating income   5,449    4,258    19,127    16,408 
Financial (expenses) income, net   (90)   193    (684)   10 
Other (expenses) income, net   (12)   -    (12)   136 
Income before taxes on income   5,347    4,451    18,431    16,554 
Taxes on income   441    52    1,575    94 
Net income   4,906    4,399    16,856    16,460 
Change in redeemable non-controlling interests   (208)   -    (401)   - 
Net income attributable to non-controlling interests   (8)   (146)   (575)   (277)
Net income attributable to Magic's shareholders  $4,690   $4,253   $15,880   $16,183 
                     
Net earnings per share                    
Basic  $0.13   $0.12   $0.43   $0.44 
Diluted   0.13    0.12    0.43    0.44 
                     
Weighted average number of shares used in                    
  computing net earnings per share                    
                     
     Basic   37,081    36,553    36,835    36,502 
         .           
     Diluted   37,454    37,042    37,294    37,108 

 

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MAGIC SOFTWARE ENTERPRISES LTD. AND ITS SUBSIDIARIES            

RECONCILIATION OF GAAP AND NON-GAAP RESULTS              

U.S. dollars in thousands (except per share data)

 

                 
                 
                 
   Three months ended   Year ended 
   December 31,   December 31, 
   2013   2012   2013   2012 
   Unaudited   Unaudited 
                 
GAAP operating income  $5,449   $4,258   $19,127   $16,408 
Amortization of capitalized software and other intangible assets   2,212    2,376    7,722    6,687 
Change in valuation of contingent consideration   230    -    230    - 
Capitalization of software development   (1,147)   (1,625)   (4,713)   (4,969)
Stock-based compensation   70    75    325    515 
Total adjustments to GAAP   1,365    826    3,564    2,233 
Non-GAAP operating income  $6,814   $5,084   $22,691   $18,641 
                     
                     
GAAP net income  attributable to Magic's shareholders  $4,690   $4,253   $15,880   $16,183 
Operating income adjustments   1,365    826    3,564    2,233 
Unwinding of discount in connection with liabilities due to acquisitions   45    -    310    - 
Amortization expenses attributed to redeemable non-controlling interests   (49)   -    (164)   - 
Deferred taxes on the above items   (80)   17    (83)   (98)
Total adjustments to GAAP   1,281    843    3,627    2,135 
Non-GAAP net income  $5,971   $5,096   $19,507   $18,318 
                     
Non-GAAP basic net earnings per share  $0.16   $0.14   $0.53   $0.50 
Weighted average number of shares used in                    
  computing basic net earnings per share   37,081    36,553    36,835    36,502 
                     
Non-GAAP diluted net earnings per share  $0.16   $0.14   $0.52   $0.49 
Weighted average number of shares used in                    
  computing diluted net earnings per share   37,487    37,091    37,337    37,198 

 

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MAGIC SOFTWARE ENTERPRISES LTD. AND ITS SUBSIDIARIES    

CONDENSED CONSOLIDATED BALANCE SHEETS      

U.S. dollars in thousands      

 

 

 

         
   December 31,   December 31, 
   2013   2012 
   Unaudited     
         
  ASSETS          
CURRENT ASSETS:          
  Cash and cash equivalents  $35,134   $37,744 
  Available-for-sale marketable securities   854    890 
  Trade receivables, net   31,976    28,367 
  Other accounts receivable and prepaid expenses   5,209    6,696 
Total current assets   73,173    73,697 
           
LONG-TERM RECEIVABLES:          
  Severance pay fund   403    351 
  Other long-term receivables   3,792    2,287 
Total long-term receivables   4,195    2,638 
           
PROPERTY AND EQUIPMENT, NET   1,773    1,898 
IDENTIFIABLE INTANGIBLE ASSETS AND          
  GOODWILL, NET   86,529    74,721 
           
TOTAL ASSETS   165,670    152,954 
           
           
  LIABILITIES AND SHAREHOLDERS' EQUITY          
           
CURRENT LIABILITIES:          
  Short-term credit and current maturities of long-term loans   1055    - 
  Trade payables   4,149    4,722 
  Accrued expenses and other accounts payable   16,937    17,188 
  Deferred tax liabilities   3,045    3,422 
  Deferred revenues   3,294    4,160 
Total current liabilities   28,480    29,492 
           
NON CURRENT LIABILITIES:          
  Accrued severance pay   1,275    1,245 
  Loans   2,274    - 
  Long term liabilities   1,726    750 
  Liability due to acquisition activities   1,396    1,192 
Total non-current liabilities   6,671    3,187 
           
Redeemable non- controlling interest   2,460    1,914 
           
SHAREHOLDERS' EQUITY:          
  Magic Shareholders' equity   127,072    117,786 
  Non-controlling interests   987    575 
Total shareholders' equity   128,059    118,361 
           
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY  $165,670   $152,954 

 

 

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