|
Thursday May 10, 9:04 am Eastern Time
Magic Software Enterprises Announces First Quarter 2001 Results
OR YEHUDA, Israel--(BUSINESS WIRE)--May 10, 2001-- Magic Software Enterprises (Nasdaq:MGIC - news), a leading provider of state-of-the-art application development technology and business solutions, today announced results for the first quarter ended March 31, 2001.
First Quarter Results
Total revenues for the first quarter 2001 were $20 million as compared with $21.7 million for the comparable period in 2000, a 9% decrease over last year.
Pro forma net loss for the first quarter (which excludes amortization of goodwill and intangibles, and any non-recurring expenses) was $2.8 million or $0.09 loss per share, compared with the $4.5 million pro forma net income or $0.16 earnings per share posted for the same period a year ago.
Actual (or GAAP) net loss for the first quarter of 2001 was $9.4 million or $0.32 loss per share, compared with the $4 million net income or $0.15 earnings per share recorded one year ago.
"Our first quarter results reflect the sharp decline in capital spending in the information technology sector, and are consistent with the realization that there will be periods of growth in our industry both above and below expected levels," said Menachem Hasfari, chief executive officer of Magic. "However, given our strong cash position, we continued to invest in new products, R&D, and our sales and service capabilities, and I feel confident that we will emerge stronger than ever from the current economic downturn, returning to profitability by the second half of this year."
The Company took a $5.5 million restructuring charge during the quarter as a result of a cost-reduction plan aimed at closing certain operations in areas where market demand had significantly moderated. A significant portion of this charge is related to the closing of Caswell, a Magic subsidiary and application company in the Netherlands.
"Magic is using the current slow period in the industry to prepare its infrastructure to take advantage of the long-term growth potential of the software market," added Hasfari. "Looking forward, we remain focused on maximizing long-term earnings by continuing to deliver increasingly innovative application development technology and business solutions designed to meet our customers' critical needs."
First Quarter Developments
New Products
During the quarter, Magic continued to introduce new or enhanced products designed to increase the company's revenue and pipeline, and its ability to meet its goals for 2001.
In February, Magic launched its revolutionary new application development tool, Magic eDeveloper. Magic eDeveloper is part of the Magic eBusiness Platform, a comprehensive framework for rapidly developing, customizing and deploying complex e-business solutions. To date, 15 launch events have taken place before crowds totaling more than 3,000 developers worldwide.
Also early in the quarter, Magic released Magic eContact(TM) Version 2, which provides contact center and telemarketing agents the professional tools needed to efficiently and cost-effectively manage customer interactions.
Strategic Alliances
Magic took several steps to solidify its growing relationship with IBM during the quarter. The Company has recruited a VP of Strategic Alliances in the U.S. who will focus on strengthening the relationship with IBM. Already, there are significant discussions underway to increase cooperation in the areas of R&D and business development.
In addition, Magic was invited by IBM to share the main stage with senior IBM executives in the Linux Forum at the IBM PartnerWorld event. At this event, IBM showcased Magic's highly customizable e-business solution, Magic eMerchant, in its IBM pavilion. Magic also has been appearing with IBM in a series of e-business roadshows.
Recognition
In addition, Magic received considerable recognition during the quarter. In March, Customer Inter@ction Solutions magazine awarded Magic its Product of the Year 2000 Award for the company's Magic eService(TM) Web-based customer management solution. The award acknowledges those products the publication believes embody "the latest technological evolution and application refinements" among companies' offerings.
Also in March, Magic was named a finalist in the American Electronics Association's (AEA's) 2001 High-Tech Awards for its Magic eFactory(TM) solution, a real-time apparel manufacturing data collection system that gathers and responds to shop floor information during production. Winners of the AEA 2001 High-Tech Awards will be announced on May 17.
New Deals
Several significant new deals were closed during the quarter as well:
- The Office of the Administrator of the Courts (OAC) for the State of Washington (U.S.), to deliver a Web-based Juvenile Tracking System that takes advantage of Magic's extensive Web development expertise and integration capabilities;
- NMB-Heller Holding N.V. (Germany), to develop and implement a new EDP system for the company's subsidiaries in Germany, Poland, the Czech Republic and Slovakia; and
- SEPEPN (France), to develop and implement a customer relationship management solution for the organization's sales and technical departments to enable agents to propose, book, plan, install and bill rentals of halls and booths for major exhibitions.
Among the quarter's larger Magic eMerchant deals were Promocash/Groupe Carrefour (France) and MCC-Sequel K.K. (Japan). In addition, Magic closed several Magic eService deals during the first quarter, including: Leroy Merlin (France), B&N Software AG and Intersoft AG (Germany), and Websphera and ORAD (Israel).
Conference Call
Magic will host a conference call on Thursday, May 10, 2001, at noon EST (9 a.m. PST), to discuss the company's first quarter results. To participate, interested parties should call the appropriate number listed below five to 10 minutes prior to the start of the conference call.
North America: 800/553-0351
Internationally: 612/332-0819
Callers should reference "Magic Software Q1 Earnings Conference Call" with the AT&T Operator.
A replay of the conference call will be available from 12:30 p.m. PST, May 10, 2001, through 11:59 p.m. PST, May 17, 2001. Interested parties should call the appropriate number below:
North America: 800/475-6701
Internationally: 320/365-3844
Callers should reference Access Code No. 586429.
Investors also will have the opportunity to listen to the conference call over the Internet through Vcall, a service of the Investor Broadcast Network, at http://www.vcall.com. To listen to the "live" call, investors should go to the Web site at least 15 minutes early to register, and download and install any necessary audio software.
For those who cannot listen to the live Internet broadcast, a replay of the conference call will be available for up to 90 days on the Vcall Web site.
Magic Software Enterprises, a member of the Formula Group (Nasdaq:FORTY - news), develops, markets and supports software development and deployment technology that enables enterprises to accelerate the process of building and deploying applications that can be rapidly customized and integrated with existing systems.
Magic technology, applications and professional services are available through a global network of subsidiaries, distributors and Magic solutions partners in approximately 50 countries. The company's North American subsidiary is located at 1642 Kaiser Ave., Irvine, Calif., 92614, telephone 949/250-1718, fax 949/250-7404, http://www.magicsoftware.com.
The Formula Group is an international information technology company principally engaged, through its subsidiaries and affiliates, in providing software consulting services, developing proprietary software products and producing computer-based solutions.
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.
Pro Forma Consolidated Statement of Operations (Unaudited)
(U.S. Dollars in Thousands)
Excluding Amortization of Goodwill and Intangibles,
And Restructuring Costs and Non-Recurring Expenses
Q1 Q1
Three Months ended March 31,
2001 2000
Revenues
Software sales $ 5,286 $ 9,708
Applications 1,871 3,327
Maintenance 2,766 2,861
Consulting & other services 10,092 5,755
Total Revenues $ 20,015 $ 21,651
Cost of Revenues
Software sales $ 1,039 $ 941
Applications 465 425
Maintenance 1,085 1,103
Consulting & other services 7,590 3,641
Total Cost of Revenues $ 10,179 $ 6,110
Gross Profit $ 9,836 $ 15,541
Research & development, net 1,841 1,003
Sales, marketing, general &
administrative expenses 10,448 8,419
Depreciation 488 498
Operating Income (Loss) $ (2,941) $ 5,621
Financial (income) expenses, net 30 (150)
Income (Loss) before taxes (2,971) 5,771
Taxes on income 62 102
Income (Loss) before minority interest (3,033) 5,669
Minority interest in losses (income) of
Subsidiaries 265 (1,176)
Net Income $ (2,768) $ 4,493
Basic Earnings per Share ($0.09) $ 0.16
Diluted Earnings per Share ($0.09) $ 0.16
Weighted Avg. Shares Outstanding 29,497 27,294
Diluted Weighted Avg. Shares Outstanding 29,871 28,707
NOTE: Excludes $1,121 and $486 of amortization of goodwill and
intangibles for the three months ended March 31, 2001 and 2000,
respectively, and restructuring costs and non-recurring expenses of
$3,300 for the three months ended March 31, 2001. Including the above
items, there was a net loss of $9,408 or $0.32 per share for the three
months ended March 31, 2001, and net income of $4,007 or $0.15 per
share for the three months ended March 31, 2000.
Consolidated Statement of Operations
(U.S. Dollars in Thousands)
Q1 Q1
Three Months ended March 31,
2001 2000
Revenues
Software sales $ 5,286 $ 9,708
Applications 1,871 3,327
Maintenance 2,766 2,861
Consulting & other services 10,092 5,755
Total Revenues $ 20,015 $ 21,651
Cost of Revenues
Software sales $ 1,039 $ 941
Applications 465 425
Maintenance 1,085 1,103
Consulting & other services 7,590 3,641
Total Cost of Revenues $ 10,179 $ 6,110
Gross Profit $ 9,836 $ 15,541
Research & development, net 1,841 1,003
Sales, marketing, general &
administrative expenses 10,448 8,419
Depreciation 488 498
Amortization 1,121 486
Restructuring costs & non-recurring
expenses 3,300 0
Operating Income (Loss) $ (7,362) $ 5,135
Financial (income) expenses, net 30 (150)
Impairment expense 2,219 0
Income (Loss) before taxes (9,611) 5,285
Taxes on income 62 102
Income (Loss) before minority interest (9,673) 5,183
Minority interest in losses (income) of
subsidiaries 265 (1,176)
Net Income (Loss) $ (9,408) $ 4,007
Basic Earnings per Share ($0.32) $ 0.15
Diluted Earnings per Share ($0.31) $ 0.14
Weighted Avg. Shares Outstanding 29,497 27,294
Diluted Weighted Avg. Shares
Outstanding 29,871 28,707
Consolidated Balance Sheets
(U.S. Dollars in Thousands)
March 31, December 31,
2001 2000
(Unaudited)
Assets
Current Assets
Cash and cash equivalents $ 37,960 $ 42,546
Accounts receivable:
Trade receivables 22,168 22,782
Related parties 692 278
Other receivables and prepaid
expenses 6,243 5,640
Inventory 390 402
Total Current Assets $ 67,453 $ 71,648
Severance pay fund 1,881 2,042
Investments in affiliated companies 250 250
Fixed assets, net 9,688 11,050
Other assets, net 49,356 52,179
Total Assets $128,628 $137,169
Liabilities
Current Liabilities
Short-term bank debt $ 813 $ 1,381
Trade payables 5,102 5,232
Accrued expenses and other liabilities 15,486 12,557
Restructuring accrual 3,823 3,160
Total Current Liabilities $ 25,224 $ 22,330
Long-term loans $ 0 $ 1,671
Accrued severance pay 2,306 3,511
Minority interests 926 251
Shareholders' Equity
Share capital 804 803
Capital surplus 114,611 114,438
Treasury stock (5,424) (5,424)
Retained earnings (9,819) (411)
Total Shareholders' Equity 100,172 109,406
$128,628 $137,169
Contact:
Magic Software Enterprises, Irvine
Katharine Hanley, 949/250-1718 ext. 220
khanley@magic-sw.com
or
Guy Bernstein, +972-3-538-9292
gbernstein@magicsoftware.com
 
|
 |
