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Wednesday May 21, 12:01 am ET
Formula Systems Announces First Quarter Results
Revenues increased to $87.7 million
HERZLIYA, Israel, May 21 /PRNewswire-FirstCall/ -- Formula Systems Ltd., (Nasdaq:FORTY - News), a leading provider of information technology products, solutions and services, today is pleased to announce its financial results for the first quarter ended March 31, 2003.
Revenues in the first quarter of 2003 increased to $87.7 million from $73.2 million in the first quarter of 2002. Net loss for the first quarter was $1.0 million compared with a net profit of $1.7 million in the first quarter of 2002.
First Quarter Highlights
Consolidation of Sapiens
In the first quarter of 2003 the company has consolidated the results of its subsidiary Sapiens International Corporation N.V. (Nasdaq and TASE: SPNS) in its reports. Sapiens is a provider of proven IT solutions that modernize business processes and enable insurance organizations and other leading companies to adapt quickly to change.
Crystal-Liraz Merger Proceeding as Planned
During the first quarter our subsidiary Crystal Systems Solutions (Nasdaq:CRYS - news) successfully completed its tender offer to acquire all outstanding shares in Liraz Systems. As a result, the entire merger plan with Liraz, and its wholly owned subsidiary BluePhoenix, was immediately implemented. The combination of Crystal and BluePhoenix creates a company with a global presence, highly regarded technology and extensive business expertise.
Merger in Matrix Group Continues
In the first quarter our subsidiary Matrix continued its efforts to merger its subsidiaries New Applicom, Sintec and Sivan, creating the largest IT company in Israel, providing Matrix with critical mass, operating efficiency and a more unified corporate structure and identity.
Magic launches iBOLT
During the quarter, our subsidiary Magic Software Enterprises (Nasdaq:MGIC - News) announced the launch of its iBOLT Integration Suite. iBOLT is a new product family that will provide affordable enterprise application to mid-sized businesses and systems integrators.
NextSource releases People Blue Book version II
During the first quarter of 2003 NextSource Inc released version two of its People Blue Book, the one source for solutions to all of a company's human capital management needs. The People Blue Book contains the People Ticker, the only real-time view of salaries and rates based on industry, position level and location. Another chapter in the People Blue Book is TAMS (Talent Acquisition Management Solution). This web-based, staffing lifecycle system enables corporations to control and monitor both the processes and spend associated with contingent, full-time and project-based workers. NextSource continues to gain market share in this rapidly growing industry.
Gad Goldstein, President of Formula, commented: "In the first quarter most of our subsidiaries regained operational profitability and more important positive cash flow. Throughout this year we will work closely with the managements of our portfolio companies to assure the return to growth patterns and net profits. We believe that achieving positive EBITDA is a goal that all of our subsidiaries can accomplish. Furthermore based on the backlog of our subsidiaries we are amending our previous revenues expectations for 2003 and raising it by 5% to $336 million -- $367 million."
The Company announces that Dr. Shlomo Nass has joined the Company's Board of Directors. Dr. Ness is a certified CPA and holds a PH.D in Law. Dr. Nass serves as the board's financial expert.
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,
2003 2002
U.S. $
(in thousands)
CURRENT ASSETS:
Cash and cash equivalents 104,733 90,561
Short-term investments 16,951 12,101
Trade receivables 81,754 67,642
Other accounts receivable 25,586 19,642
Inventories 4,595 3,590
233,619 193,536
LONG-TERM INVESTMENTS, LOANS AND RECEIVABLES:
Loans and other investments 3,953 3,400
Investments in affiliates 5,456 22,659
9,409 26,059
DEBENTURES 76,994 75,951
SEVERANCE PAY FUND 8,700 8,262
FIXED ASSETS, NET 27,368 25,045
OTHER ASSETS, NET 169,312 139,744
525,402 468,597
CURRENT LIABILITIES:
Credit from banks and others 85,684 87,752
Trade payables 32,968 26,811
Other accounts payable 80,229 60,172
Restructuring accrual 1,867 2,661
200,748 177,396
LONG-TERM LIABILITIES:
Debentures 50,498 33,726
Allowance for expected losses in other
investment 2,512 2,512
Deferred taxes 880 871
Customer advances 1,330 491
Liabilities to banks and others 26,907 7,556
Liability due to activity acquisition 2,326 2,334
Accrued severance pay 13,455 12,048
Unrealized gain 6,250 6,184
104,158 65,722
MINORITY INTEREST 69,078 72,130
SHAREHOLDERS' EQUITY 151,418 153,349
525,402 468,597
FORMULA SYSTEMS (1985) LTD.
(An Israeli Corporation)
CONSOLIDATED STATEMENTS OF INCOME
Three months
ended March 31,
2003 2002
U.S. $
(in thousands,
except per share
data)
Revenues 87,722 73,231
Cost of revenues 56,958 46,898
Gross profit 30,764 26,333
Research and development costs, net 4,672 4,282
Selling, general and administrative expenses 26,014 19,801
Depreciation and amortization 1,099 1,020
Operating income (loss) (1,021) 1,230
Financial income (expenses), net (539) 1,227
(1,560) 2,457
Other income, net 486 388
Gain (loss) on realization of investments 392 (232)
Income (loss) before taxes on income (682) 2,613
Taxes on income 693 326
(1,375) 2,287
Company's equity in results of affiliates, net (176) (163)
Minority interest, net 527 (460)
Net income (loss) (1,024) 1,664
Earnings per share -- basic and fully-diluted:
Net earnings (loss) (0.1) 0.16
 
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