Magic Software Announces First Quarter 1998 Results.OR YEHUDA Or Yehuda (אור יהודה) is a city in the Tel Aviv District in Israel. According to the Israel Central Bureau of Statistics (CBS), at the end of 2004 the city had a total population of 30,100. , Israel--(BUSINESS WIRE)--May 7, 1998--Magic Software Enterprises Ltd. (Nasdaq: MGICF) Thursday announced results for the first quarter of 1998. Total revenues were lower at $8,186,000 vs. $9,565,000 for the comparable period in 1997. Magic's loss for this period was $1,239,000 compared with a loss of $492,000 during last year's first quarter. The net loss per share was $0.25 vs. a loss of $0.10 in 1997. Revenues for the quarter ended March 31, 1998 declined 14.4% from the same period last year. Gross Profit was $4.93 million or 60.2% of total revenues vs. $6.20 million or 64.8% last year. The company experienced an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. for the quarter of $1.1 million compared with a $181,000 operating loss in 1997. Sales and marketing expenses for the quarter declined 18% to $3.8 million from $4.4 million. First quarter research and development expenses increased slightly to $0.8 million from $0.7 million. The company's net loss for the quarter was $1.2 million compared with a loss of $0.5 million in the period last year. The company's lower revenues and net loss for the period reflected a restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of the company's sales force in various parts of the world, weaker sales in Japan in particular and Asia in general. Jack Dunitz, president and chief executive officer of Magic Software Enterprises, noted that: "The company is experiencing a continued shift of sales from the department level to the enterprise and from products to services. The company has taken necessary steps to make our sales force more responsive to the needs of our enterprise customers. "While these changes have been ongoing we have noted a transitional decline in sales for the quarter, particularly in Asia. While recognizing our need to improve our financial performance we are gratified grat·i·fy tr.v. grat·i·fied, grat·i·fy·ing, grat·i·fies 1. To please or satisfy: His achievement gratified his father. See Synonyms at please. 2. to see that Magic Version 8, the Enterprise Edition, received the A-List award from Open Systems Advisors at the annual Crossroads Conference and was praised in a number of very positive reviews from industry journals including PC Week and Computerworld. Moreover, customer feedback on Version 8 from both new and existing users continues to be highly favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. ." Magic recently formed an alliance with IBM-Japan and Matsushita whereby Magic will be used as a strategic development tool for the AS/400 server platform in Japan. Matsushita, traditionally a strategic reseller An organization that sells hardware and software to the general public. Resellers purchase products from software publishers and hardware manufacturers. of Magic client development tools, will resell re·sell tr.v. re·sold , re·sell·ing, re·sells 1. To sell again. 2. To sell (a product or service) to the public or to an end user, especially as an authorized dealer. Magic development tools for the AS/400, through its subsidiary sales division, Panasonic Computer Co. Magic continued to penetrate new corporate accounts, recruit new value-added resellers A value-added reseller (VAR) is a company that adds some feature(s) to an existing product(s), then resells it (usually to end-users) as an integrated product or complete "turn-key" solution. , and expand business to existing accounts during the first quarter. In the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Magic's new corporate accounts included Honda honda a quick release metal eyelet for the end of a lariat. When the restrained animal is no longer required it is not necessary to slacken off the loop and pull it over the head—a very great advantage when working with wild cattle or unbroken horses. of America for a manufacturing and inventory control application based on Windows NT (Windows New Technology) A 32-bit operating system from Microsoft for Intel x86 CPUs. NT is the core technology in Windows 2000 and Windows XP (see Windows). Available in separate client and server versions, it includes built-in networking and preemptive multitasking. and Oracle database; General Electric for their Arecibo, Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. facility, and Chase Manhattan Bank The Chase Manhattan Bank, now part of JPMorgan Chase, was formed by the merger of the Chase National Bank and the Bank of the Manhattan Company in 1955. The bank is headquartered in New York City. Global Investment Services for a mutual trust funds accounting application to be run on IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) AIX (Advanced Interactive eXecutive) IBM's Unix-based operating system which runs on its Intellistation workstations and pSeries, p5, iSeries and i5 server families. RS6000 Unix servers A medium to large-scale computer system in a network that runs under Unix. Unix servers are widely used as application servers and database servers and are available from a variety of vendors, including Sun, IBM, HP and others. . Other new accounts in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. included the City of Westminster Noun 1. City of Westminster - a borough of Greater London on the Thames; contains Buckingham Palace and the Houses of Parliament and Westminster Abbey Westminster Police Department, RCO RCO Remote Communications Outlet RCO Royal Concertgebouw Orchestra RCO Recycling Council of Ontario (Canada) RCO Royal College of Organists (UK) RCO Rear Commodore RCO Regenerative Catalytic Oxidizer Engineering, Solar Tours, and Skyline Freight. -0-
Other noteworthy sales outside the United States:
-- In Germany: to AM Music, for a distribution, inventory, and
warehouse management application integrating Windows NT and SCO
Unix; to Voight, a VAR specializing in oil and gas production
and distribution systems; to Beta Research, for a pay TV
subscriber management system running on Sun Solaris with Oracle
database, and new sales were made to Develey and Moebel Unger.
-- In the United Kingdom: to Opus Technology, a PC manufacturer,
Magic received a large contract involving mission critical order
processing, manufacturing, and online management information,
production, and inventory control. Also, follow on sales were
made to Sumitomo, Crown Agents, and Mackays.
-- In the Netherlands: a new account sale was made to Van Gend en
Loos, a large logistics firm. The company also sold to
LaBouchere, a Dutch bank; Modderkolk, an electrical engineering
firm, and Pecoma, a Magic VAR who developed a subscriber
management system for publisher Wolters Kluwer.
-- In France: Magic closed a deal for the Sicovan project at the
Bank of France. The company also made sales to the CEPME Bank,
and the Sogeres restaurant chain.
Subsequent to the quarter end, as announced on April 23, the shareholders approved a Share Purchase Agreement with Formula Systems (1985) Ltd. pursuant to which Formula purchased 800,000 ordinary shares of the company in consideration of $4 million and received an additional 1.4 million warrants at an exercise price of $5.00 per share, expiring ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. on Sept. 30, 1998, and June 30, 1999. Formula Systems Ltd. is an international technology company, principally engaged through its subsidiaries and affiliates in providing software services, developing proprietary software products and providing computer-based software solutions. ABOUT MAGIC Magic Software Enterprises develops, publishes, markets and supports Magic, a highly productive, table-driven, engine-based cross-platform Rapid Application Development and Deployment system for developing client/server and Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the solutions. Magic is used by corporate MIS (1) (Management Information System) An information system that integrates data from all the departments it serves and provides operations and management with the information they require. departments and a wide range of solutions partners including value-added resellers, systems integrators An individual or organization that builds systems from a variety of diverse components. With increasing complexity of technology, more customers want complete solutions to information problems, requiring hardware, software and networking expertise in a multivendor environment. , consultants, independent developers and packaged software See software package. publishers. Magic's products and services are available through a global network of subsidiaries, distributors and Magic Solutions Partners in more than 50 countries. Magic Software Enterprises home page address is http//www.magic-sw.com. Contacts: Israel Teiblum - Magic Software Enterprises Ltd., Tel: 011-972-3-538-9292, e-mail: israel_teiblum@magic-sw.com; or CFSG CFSG Classification of Finite Simple Groups , John Harbaugh, Tel: 888/425-0234, e-mail: cfsg-tn@worldnet.att.net. -0- 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 on a number of factors, including, but not limited to, risks in product and technology development, market acceptance of new products and continuing product demand, the impact of competitive products and pricing, changing economic 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. -0-
Magic Software Enterprises Ltd. - Unaudited Balance Sheet
(US Dollars in Thousands)
March 31, Dec. 31,
1998 1997
Assets
Current Assets
Cash and Cash Equivalents $1,491 $1,300
Accounts receivable:
Trade 12,600 14,782
Other and prepaid expenses 2,129 2,599
Parent and affiliated companies 0 0
Inventories 187 476
Total Current Assets 16,407 19,157
Severance pay fund 1,191 1,045
Other investments 413 454
Fixed assets, net 5,816 6,279
Other assets, net 6,724 6,316
$30,551 $33,251
Liabilities
Current Liabilities
Short term Bank Debt $ 3,690 $ 536
Trade payables 2,725 1,772
Payables - parent and affiliated
companies 344 36
Accrued expenses and other liabilities 8,654 7,855
Current Maturity of long term loans 0 0
Total Current Liabilities 15,413 10,199
Long Term Loans 2,158 107
Accrued Severance Pay 1,721 1,543
Minority Interests 0 0
Shareholders' Equity
Share Capital 179 178
Capital Surplus 18,098 17,041
Retained Earnings (7,018) 4,183
Total Shareholders' Equity 11,259 21,402
$30,551 $33,251
-0-
Magic Software Enterprises Ltd.
Unaudited Consolidated Statement of Operations
(US Dollars in Thousands)
Three months ended March 31,
1998 1997
Revenues
Software sales $4,594 $6,778
Services 3,592 2,787
Total revenues 8,186 9,565
Cost of revenues
Software sales 604 1,287
Services 2,650 2,079
Total cost of revenues 3,254 3,366
Gross profit 4,932 6,199
Research & development, net 806 714
Sales & marketing, net 3,768 4,448
General & Administrative Expenses 1,463 1,218
Operating Income (Loss) (1,105) (181)
Financial Expenses, net 112 210
Capital gain 0 8
Profit (Loss) before taxes (1,217) (383)
Taxes on income 25 144
Income (Loss) before minority interest (1,242) (527)
Minority interest in losses
(income) of consolidated subsidiary 73 33
Equity in earnings (losses) of affiliate (70) 2
Net income (Loss) ($1,239) ($492)
Earnings (Loss) per share ($0.25) ($0.10)
Weighted average number of
shares outstanding 4,872 4,850
CONTACT: Magic Software Enterprises Ltd. Israel Teiblum 011-972-3-538-9311 israel_teiblum@magic-sw.com or Consulting For Strategic Growth Ltd. Corporate Development Consultants Stanley Wunderlich / John Harbaugh 800/625-2236 / 800/807-6388 cfsg-tn@worldnet.att.net |
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