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Magic Software 2Q96 sales hit record $9.05 million; Company Posts Fourth Profitable Quarter In a Row.

OR YEHUDA, Israel--(BUSINESS WIRE)--July 30, 1996--Magic Software Enterprises, Ltd. (NASDAQ: MGICF), a leading international provider of software development tools, today announced record second quarter and six month results for 1996. Quarterly sales reached $9.05 million, up 71 percent from sales of $5.31 million in second quarter 1995.

Magic achieved a net profit of $548,000 or 12 cents per share in the 1996 period as contrasted with a loss of $887,000 or 21 cents per share in the 1995 second quarter.

Second quarter operating income reached $967,000 as compared with a loss of $885,000 in 1995. Gross profit rose 61 percent to $7.21 million as compared with $4.46 million last year.

Second quarter research and development expenses rose from $636,000 in the 1995 period to $1.11 million in the 1996 second quarter, and selling, general and administrative expenses were up from $4.63 million last year to $5.13 million.

The quarter was highlighted by several operating achievements, including the establishment of an Italian distributor with offices in Rome and Milan, the release of Magic Version 7, and significant product sales to major new accounts, including CIBA Geigy (UK), W.H. Smith, Oklahoma Farmers Union, Database Associates, Unicef, San Francisco Municipal Court, and Semenis Vegetable. Magic also moved its US headquarters to a larger facility in Irvine.

"A number of these developments contributed to our very strong results for the second quarter," Magic's Acting Chairman, Jack Dunietz, said today. "The big revenue drivers were Magic Version 6, which is contributing to strong sales growth, new account penetration in the US, new VAR recruitment in the context of the recently announced Magic Solutions Partner Program, and a number of new consulting projects."

The new Italian subsidiary is a joint venture with Gruppo Engineering, the largest system integrator in Italy, which will continue to act both as a Magic system integrator and reseller on large, strategic application development projects.

"Magic views the Italian market as ripe and very much in need of strategic development tools such as Magic, as large Italian industrial and governmental organizations rapidly migrate to client/server environments," Mr. Dunietz said.

Magic Version 7 for Windows 95', Windows NT and the Internet, released during the second quarter, provides dramatic time savings and productivity increases by allowing resuse of form templates, and includes enhanced support for development of multi-lingual applications.

David Assia, Magic's President and CEO, who has been on medical leave since March and has returned to work on a part time basis, said "Version 7 signifies a quantum leap in offering very rapid development across Windows 95', NT, the Internet and the Intranet. As the Internet and the Intranet become more important as application deployment environments, it is critical that we provide tools that can rapidly enable Internet and Intranet-based applications."

Mr. Assia intends to resume his position on a full time basis in October.

Magic Software Enterprises, Ltd., publishes a family of software tools to accelerate the development cycle by providing a totally table driven environment, radically reducing the time spent on coding, compiling, debugging and recoding applications. Homepage address: http//www.magic- sw.com. -0-
-0-
Unaudited Consolidated
Statement of Operations
(US Dollars In Thousands)


 Three Months Ended Six Months Ended
 June 30 June 30
 1996 1995 1996 1995
Revenues
 Software sales $7,439 $12,876 $8,244 $4,261
 Services 1,615 1,049 3,574 1,942
Total revenues 9,054 5,310 16,450 10,186


Cost of revenues
 Software sales 968 339 1,895 1,004
 Services 881 587 1,608 1,114
Total Cost of revenues 1,849 926 3,503 2,118


Gross profit 7,205 4,384 12,947 8,068


Research & development, net 1,106 636 1,433 1,295
Sales & marketing, net 3,967 3,630 7,767 6,428
General & Administrative 1,165 1,003 2,382 1,894
Operating Income (Loss) 967 (885) 1,365 (1,549)


Financial Income
 (Expenses), net (254) 2 (361) (25)


Profit (Loss) before taxes 713 (883) 1,004 (1,574)


Taxes on income 119 162 294 277


Income (Loss) before
 minority interest 594 (1,045) 710 (1,851)


Minority interest 0 (158) 0 (266)


Equity in losses of affiliate (46) 0 (44) 0


Net Income (Loss) $548 ($887) $666 ($1,585)


Earnings (Loss) per share $0.12 ($0.21) $0.15 ($0.38)


Weighted average number 4,540 4,249 4,503 4,215
-0-


Magic Software Enterprises Ltd. - Balance Sheets
(US Dollars in Thousands)
 June 30 December 31
 1996 1996
Assets Unaudited
Current Assets
Cash and Cash Equivalents $1,159 $633
Marketable Securities 0 191
Accounts receivable:
 Trade 12,623 11,244
 Other and prepiaid expenses 1,784 1,610
 Inventories 277 266
 Inventories
Total Current Assets $15,843 $13,944


Other Investments 454 451
Fixed assets, net 6,091 5,782
Other asstes, net 4,324 3,668
 $26,712 $23,845


Liabilities
Current Liabilities
Short term Bank Debt $2,349 $1,470
Trade payables Accrued 1,506 1,391
Accrued expenses and other liabilities 5,480 4,870
Total Current Liabilities 9,335 7,731


Long Term Loans 455 485
Accrued Severance Pay 534 418
 Severance Pay
Deffered Income Taxes 288 102


Shareholders' Equity
Share Capital 159 158
Capital Surplus 12,116 11,674
Retained Earnings 3,825 3,277
Total Shareholders' equity 16,100 15,109
 $26,712 $23,845
-0-




CONTACT: Jack Dunietz and Elan Penn

Magic Software

Tel. 011-972-3-538-9292

or

Jeffrey Starr and Lisa Blaisdell

Magic Software

Tel. 714-250-1718

or

Leslie C. Wolf

The Anne McBride Company

Tel. 212-752-0504
COPYRIGHT 1996 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1996, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Publication:Business Wire
Date:Jul 30, 1996
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