Thursday March 2, 9:25 am Eastern Time
Formula Systems Reports Fourth Quarter and Year-End Results, Record EPS of $4.93 Per Share for the Year Ended 1999
HERZLIYA, Israel, - Formula Systems (1985) Ltd.,
(Nasdaq: FORTY - news), a leading international provider of information technology
products and services, announced today its financial results for the three
month period and year ended December 31, 1999.
Revenues for the fourth quarter of 1999 were $88 million, compared to
$84.7 million in the same period of 1998.
Revenues for the year ended
December 31, 1999 were $335.5 million, compared to $262.7 million for the year
1998.
Gross margin for the fourth quarter increased to 43% ($37.8 million), as
compared to 39%, ($33 million) in the fourth quarter of 1998.
Gross margin
for the year ended, December 31, 1999 was 41%, ($138 million), as compared to
35.5% in 1998 ($93.2 million).
The constant improvement in the gross margin
during the year 1999, was driven by increased revenue contribution from the
higher margin export-oriented proprietary software solutions.
Net income for the fourth quarter of 1999 was $10 million, or $1.07 per share,
as compared to $5.7 million, or $0.59 per share, for the same period in 1998.
Net income for the year ended December 31, 1999 totaled $46.2 million, or
$4.93 per share, compared to net income of $27 million, or $3.17 per share in
1998.
Dan Goldstein, Chairman of the Board of Formula Systems Ltd. said, "We are
very pleased with our annual and fourth quarter results.
Throughout 1999, we
engaged successfully in a restructuring process of creating larger
subsidiaries, with greater efficiencies and synergies in order to simplify the
corporate structure and to build upon our successful IT operations worldwide.
As part of this process, in the second quarter we merged Nikuv into our
subsidiary ForSoft and in the third quarter, we merged F.C.T. into our
subsidiary Applicom.
In addition, during the past year, we significantly
increased our presence in the Web technology and e-business applications area
through most of our subsidiaries (Crystal, Magic, ForSoft, Applicom etc.)
We
accomplished this both by acquisitions and internal development within these
subsidiaries."
Mr. Goldstein said, "Also during the year 1999, our venture fund, Formula
Ventures, completed a round of financing bringing its size to approximately
$86 million.
I am very pleased that we have accomplished our stated
objectives during 1999 and our goal to continue to enhance value for our
shareholders."
Mr. Goldstein added, "As previously announced, Formula is going to open
the year 2000 with a capital gain, net after tax, of $31 million in the first
quarter of 2000 due to the public offering of its subsidiary Magic Software
Enterprises."
Formula Systems will be holding an investor call on Thursday, March 2,
2000, at 12:00 PM (EST) to discuss 1999 earnings.
In the United States, the conference call dial-in number is
1-800-841-9385.
International callers should dial 1-203-498-0057, to gain
access to the call.
A conference call playback will be available from
Thursday, March 2 at 2:00 PM (EST) and ending at 11:00 PM (EST) on Sunday,
March 6.
The playback can be accessed by dialing I-888-836-6074 within the
United States, and 1-703-925-2505 for international callers.
The access code
for the playback is 58408.
Formula Systems Ltd. is an international information technology company
principally engaged, through its subsidiaries and affiliates, in providing
software consulting services, developing proprietary software products and
providing computer-based business solutions.
Formula maintains its accounts in New Israeli Shekels ("NIS").
All U.S.
dollar figures represent an exchange rate of NIS 4.143 to $1.00 at
December 31, 1999.
This press release contains forward-looking statements.
Such statements
involve various risks that may cause actual results to differ materially.
These risks and uncertainties include, but are not limited to: market demand
for the company's products, successful implementation of the company's
products, economic and competitive factors, international market conditions,
technological developments, the ability to finance operations and other
factors which are detailed in the Company's SEC filings.
FORMULA SYSTEMS (1985) LTD.
(An Israeli Corporation)
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
1999 1998
US $ US $
(In thousands)
CURRENT ASSETS:
Cash and cash equivalents 156,874 118,422
Short-term investments 17,509 32,648
Trade receivables 105,001 89,602
Other accounts receivable 36,458 13,795
Inventories 5,793 4,316
Work in progress, net
of customer advances 2,148 1,395
323,783 260,178
LONG-TERM INVESTMENTS, LOANS AND
RECEIVABLES:
Trade receivables 215 903
Loans and other investments 10,927 9,497
Investments in affiliates 5,441 1,275
16,583 11,675
FIXED ASSETS, NET 33,000 31,572
OTHER ASSETS, NET 79,526 47,923
452,892 351,348
CURRENT LIABILITIES:
Credit from banks and others 26,587 19,743
Trade payables 36,115 40,105
Other accounts payable 65,143 41,359
Customer advances,
net of work in progress 516 47
128,361 101,254
LONG-TERM LIABILITIES:
Customer advances 538 783
Liabilities to banks
and others 7,901 5,051
Severance pay 3,353 3,811
Unrealized gain 8,181 --
19,973 9,645
MINORITY INTEREST 122,198 101,810
RECEIPTS ON ACCOUNT OF OPTIONS -- 329
SHAREHOLDERS' EQUITY 182,360 138,310
452,892 351,348
CONSOLIDATED STATEMENTS OF INCOME
Three months ended Year ended
December 31, December 31,
1999 1998 1999 1998
US$ US$ US$ US$
(In thousands, except per share data)
Revenues 88,002 84,739 335,495 262,718
Cost of revenues 50,171 51,694 197,463 169,481
Gross profit 37,831 33,045 138,032 93,237
Software development
costs, net 4,162 2,749 12,944 8,477
Selling expenses 11,437 9,390 42,507 21,892
General and
administrative
expenses 14,499 11,707 50,267 36,908
Operating income 7,733 9,199 32,314 25,960
Financial income, net 9 2,280 5,845 6,091
7,742 11,479 38,159 32,051
Other expenses, net (5,127) (1,297) (9,603) (1,048)
Gain on realization
of shareholdings 18,288 1,569 60,216 16,877
Income before taxes
on income 20,903 11,751 88,772 47,880
Taxes on income 3,734 1,353 19,388 4,601
17,169 10,398 69,384 43,279
Company's equity
in results of
affiliates, net (303) (717) (1,741) (1,961)
Minority interest,
net (6,820) (4,002) (21,453) (14,368)
Net income 10,046 5,679 46,190 26,950
Earnings per share:
Basic earnings 1.07 0.59 4.93 3.17
