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Magic Software Reports Results for the Third Quarter of 2009
(GlobeNewswire Via Acquire Media NewsEdge) OR YEHUDA, Israel, Nov. 4, 2009 (GLOBE NEWSWIRE) -- Magic Software Enterprises Ltd. (Nasdaq:MGIC), a provider of application platforms and business and process integration solutions, today announced its financial results for the third quarter ended September 30, 2009. All references to $ are to U.S. Dollars.
Financial Highlights for the Quarter
Revenues for the third quarter were $13.5 million compared to $13.6 million in the second quarter of 2009. Operating income in the third quarter was $0.8 million compared to $1.0 million in the second quarter of 2009. Net income for the third quarter was $0.9 million, compared to $1.1 million in the second quarter of 2009. Total cash, cash equivalents and short-term investments as of September 30, 2009 were $37 million, compared to $33 million as of December 31, 2008. Financial Highlights for the First Nine Months
Cash flow from operations for the first nine months of 2009 amounted to $4.3 million. Revenues reached $40.9 million, compared to $46.9 million for the first nine months of 2008. Operating income was $2.5 million, compared to $3.1 million for the first nine months of 2008. Net income was $2.7 million, compared to $3.4 million for the first nine months of 2008. Comments of Management
Guy Bernstein, Chairman of Magic Software, commented on the results: "We are pleased to report an eleventh consecutive quarter of profitability for the company, which comes despite the continuing challenges in the global economy. Notwithstanding these challenges, we have been successful in obtaining new business this year, including twenty new customers in the U.S. alone. While cautiously encouraged by the reviving markets in the U.S. and Japan, we continue to exercise fiscal and operational restraint. To ensure ongoing stability and profitability, we continue to invest in our core growth engines."
Summary of the Quarter
Eyal Pfeifel has been appointed as the company's new CTO. Eyal brings with him previous Magic Software experience and 20 years in planning and managing large-scale and innovative technology projects. The company's U.S. branch continues to gain new customers, and increased revenues and profits this quarter. The company's Japanese branch also showed improved revenues and profitability thanks to careful planning, and provides a basis for cautious optimism in the Japanese market recovery. The uniPaaS application platform continues to be adopted worldwide. The company is now implementing close to 100 uniPaaS RIA projects in Japan alone. Other significant uniPaaS deals include uniPaaS RIA for KLAFS, Europe's leading sauna and spa manufacturer; and Bank Leumi, Israel's leading commercial bank, which is migrating 60 of its applications to uniPaaS. The company has won a number of new iBOLT deals, including a SaaS/on-premise integration for Clinical Financial Services in the U.S.; a Lotus Notes integration for MintWave in Japan; a Salesforce.com/SAP R/3 integration for AVL in Austria; and a SAPR/3 integration for KLAFS in Germany. The company also entered into a new partnership agreement with nefos GmbH, a leading consulting partner for Salesforce.com, based in Zurich, Switzerland. Magic Software's executives continue to speak at industry events, including the recent Software Business 2009 Conference and the 2009 Quest West Conference. Magic Software joined Salesforce.com Foundation's 'Power of Us' partner program. The company was ranked 250 among the World's Largest Software Companies by Software Magazine. The company's uniPaaS and iBOLT solutions gained significant media coverage in the quarter from specialist IT media publications including IT-Business, banking technology, ebizQ, Channel Pro, ITBusinessEdge, ITWeb, manufacturing.net, SaaS Directory, BCW, Software Mag.com, and Retail Technology. For a full listing of our media coverage read here. Magic Software was included in five Gartner and Forrester industry analyst reports this quarter. Magic Software's uniPaaS was recently added to Gartner's Magic Quadrant for Enterprise Application Servers, (Gartner Report, 24 September 2009, Yefim V. Natis, Massimo Pezzini, Kimihiko Iijima). 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 global 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)
(Unaudited)
Three months ended September 30,
Three months ended June 30,
Nine months ended September 30,
2009
2008
2009
2009
2008
Revenues13,50415,80913,59540,86946,909Cost of Revenues6,6256,6486,44319,80520,216Gross profit
6,879
9,161
7,152
21,064
26,693
Research and development, net3586762609571,697Selling, general and administrative expenses5,7096,8735,93717,60021,922Total operating expenses, net6,0677,5496,19718,55723,619Operating income
812
1,612
955
2,507
3,074
Financial income (expenses), net154123(78)140482Other income (expenses), net(63)4228622324Income before taxes on income9031,7771,1632,8703,580Taxes on income17076167145Income after taxes on income9021,7071,0872,7033,435Minority interest--(1)----(3)Equity in losses of affiliates--------(8)Net income
902
1,706
1,087
2,703
3,424
Basic net earnings per share0.030.050.030.080.11Diluted net earnings per share0.030.050.030.080.11 Weighted average number of shares used in computing net earnings per shareBasic31,89431,82931,89431,89431,727 Diluted
32,169
32,159
32,009
32,038
32,039
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 September 30, (Unaudited)
Nine months ended September 30, (Unaudited)
2009
2008
2009
2008
GAAP operating income8121,6122,5073,074Amortization of intangibles9507672,7001,817Capitalization of software development(771)(421)(2,356)(2,031)Stock-based compensation64(168)189412Total adjustments to GAAP
243
178
533
198
Non-GAAP operating income
1,055
1,790
3,040
3,272
GAAP net income
902
1,706
2,703
3,424
Total adjustments to GAAP as above243178533198Non-GAAP net income1,1451,8843,2363,622 Non-GAAP basic net earnings per share0.040.060.100.11Weighted average number of shares used in computing basic net earnings per share31,89431,82931,89431,727 Non-GAAP diluted net earnings per share0.040.060.100.11Weighted average number of shares used in computing diluted net earnings per share32,27632,15932,11532,039
MAGIC SOFTWARE ENTERPRISES LTD.
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
September 30, 2009 (Unaudited)
December 31, 2008
ASSETS
CURRENT ASSETS:
Cash and cash equivalents20,39227,309Short-term bank deposits12,5571,810Available for sale marketable securities3,9053,469Trade receivable, net11,93513,140Other accounts receivable and prepaid expenses2,5671,933Current assets of discontinued operation3231Total current Assets
51,388
47,692
LONG-TERM INVESTMENTS:Severance pay fund385316Long-term lease deposits267235Total long-term investments
652
551
Property and equipment, net4,9115,436Goodwill16,90016,829Other intangible assets, net10,31110,656
TOTAL ASSETS
84,162
81,164
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term credit and current maturities of long term loans76147Trade payables2,8452,988Deferred revenues3,6641,643Accrued expenses and other accounts payable6,6168,691Current liabilities of discontinued operation391372Total current liabilities
13,592
13,841
Long-term loans
17
33
Accrued severance pay598535Total non-current Liabilities
615
568
SHAREHOLDERS' EQUITY
69,955
66,755
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
84,16281,164 CONTACT: Magic Software Enterprises Ltd.
Arita Mattsoff, VP Marketing
+972 (0)3 538 9284
ir@magicsoftware.com
2009 GlobeNewswire, Inc.
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