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Monday June 3, 2:00 am Eastern Time
Formula Systems Announces First Quarter Results for 2002 - A Return to Profitability
HERZLIYA, Israel, June 3 /PRNewswire-FirstCall/ -- Formula Systems Ltd., (Nasdaq: FORTY - news), a leading provider of information technology products, solutions and services, today announced its financial results for the first quarter ended March 31, 2002.
Revenues for the first quarter of 2002 totaled $73.6 million. In the first quarter of 2002 the company ceased to consolidate in its reports its stake in Ventures Funds and Start Up companies that were sold to Formula Vision at the end of 2001.
Operating income for the first quarter was $1.1 million as compared to $15.3 million operating loss in the first quarter of 2001.
The company reported a net income of $292,000 for the quarter compared to $13.2 million net loss in the same period last year.
Gad Goldstein, President of Formula Systems, commented: "We are pleased with the performance the company achieved in the first quarter. We are in line with our publicly stated objective of returning Formula to profitability. In this quarter, despite the challenging economic conditions, we managed to pick up the fruits of the intense process of positioning and restructuring that our subsidiaries underwent during 2001. We expect the positive trend to continue in the future."
"Formula is now a focused and specialized IT holding company with full grown subsidiaries each of which has a clear identity of its own. We will continue to invest towards our growth objectives in the quarters ahead within the framework of our financial and operational plan, while maintaining a vigilant watch on our subsidiaries."
As previously announced starting from this quarter, the Company is reporting its financials according to US GAAP.
Formula maintains its accounts in New Israeli Shekels ("NIS"). All US dollar figures represent an exchange rate of NIS 4.668 to $1.00 at March 31, 2002.
About Formula
Formula Systems Ltd., is a global 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.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
Statements made in this press release that are not historical facts are 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, dependence on strategic partners, integration of new business, successful implementation of Formula's products, economic and competitive factors, international market conditions, management of growth, technological developments, the ability to finance operations and other factors which are detailed in Formula's Securities and Exchange Commission filings, including its most recent report on Form 20-F. Formula undertakes no obligation to publicly release any revision to any forward-looking statement.
FORMULA SYSTEMS (1985) LTD.
(An Israeli Corporation)
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2002 2001
U.S. $
(in thousands)
CURRENT ASSETS:
Cash and cash equivalents 77,408 80,904
Short-term investments 10,783 10,896
Trade receivables 85,674 86,610
Other accounts receivable 21,335 21,361
Inventories 5,161 4,788
200,361 204,559
LONG-TERM INVESTMENTS, LOANS AND RECEIVABLES:
Loans and other investments 9,451 8,841
Investments in affiliates 12,620 11,238
22,071 20,079
DEBENTURE 75,429 57,014
SEVERANCE PAY FUND 8,636 8,750
FIXED ASSETS, NET 29,487 30,454
OTHER ASSETS, NET 125,119 122,244
461,103 443,100
CURRENT LIABILITIES:
Credit from banks and others 75,468 51,567
Trade payables 34,195 36,873
Other accounts payable 61,966 67,414
Restructuring accrual 3,887 4,685
175,516 160,539
LONG-TERM LIABILITIES:
Deferred taxes 2,003 2,003
Customer advances 641 716
Liabilities to banks and others 10,253 7,880
Accrued severance pay 11,921 12,237
Unrealized gain 5,051 5,093
29,869 27,929
MINORITY INTEREST 91,084 92,011
SHAREHOLDERS' EQUITY 164,634 162,621
461,103 443,100
FORMULA SYSTEMS (1985) LTD.
(An Israeli Corporation)
CONSOLIDATED STATEMENTS OF INCOME
Three months ended
March 31,
2002 2001
U.S. $
(in thousands, except
per share data)
Revenues 73,581 90,399
Cost of revenues 47,353 61,388
Gross profit 26,228 29,011
Research and development costs, net 4,290 4,627
Selling and marketing expenses, net 7,939 11,359
General and administrative expenses 11,845 18,231
Depreciation and amortization 1,052 4,785
Restructuring and non-recurring costs -- 5,312
Operating income (loss) 1,102 (15,303)
Financial income (expenses), net (113) 1,141
989 (14,162)
Other income (expenses), net 5 (7,601)
Gain on realization of investments 111 99
Income (loss) before taxes on income 1,105 (21,664)
Taxes on income 391 1,417
714 (23,081)
Company's equity in results of affiliates, net (160) (2,992)
Minority interest, net (262) 12,918
Net income (loss) 292 (13,155)
Earnings per share -- basic and fully-diluted:
Net earnings (loss) 0.028 (1.41)
 
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