Magic Software Announces First Quarter Results; Significant Growth in Applications and Maintenance Revenue.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 Israel, in the Bible Israel (ĭz`rēəl, ĭz`rāəl) [as understood by Hebrews,=he strives with God], according to the book of Genesis, name given to Jacob as eponymous ancestor of the Hebrews, the chosen people of God. -- Magic Software Enterprises Ltd. (Nasdaq:MGIC MGIC Mortgage Guaranty Insurance Company MGIC Montana Geographic Information Council ), a leading provider of state-of-the-art business integration and development technology, reported today its results for the quarter ended March 31, 2005. The results show a 33% and 27% increase in revenue from Applications and from Maintenance and Support, respectively, despite a 6% drop in total revenue compared with last year. First Quarter Results Total revenue for the first quarter ended March 31, 2005 were $15.50 million, a decrease of 6% from the $16.45 million reported in the comparable quarter of 2004. License sales for the quarter, at $4.87 million, decreased 11% from $5.46 million in the first quarter of 2004. Application sales for the quarter were $2.21 million, an increase of 33% from $1.66 million in the comparable quarter. Revenue from maintenance and support, at $3.55 million, increased 27% from $2.80 million in the first quarter of 2004, reflecting the accelerated efforts the company has been making in customer retention and customer loyalty. Consulting and other services revenues, at $4.88 million, decreased 25% from $6.53 million for the comparable quarter of last year. Gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. for the first quarter of 2005 amounted to 60%, compared to a margin of 61% in the equivalent quarter in 2004. The company also reported other income of $1.17 million in its subsidiary AAOD AAOD Army Aviation Operating Detachment AAOD Army Air Operations Directorate (White Sands Missile Range, NM) . Net profit for the first quarter of 2005 was $163,000 (or $0.01 per share) compared with a net profit of $718,000 (or $0.02 per share) in the first quarter of 2004. In the first quarter of 2005, Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). accounted for 40% of total
revenues, while 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. and Japan accounted for 30% and 20%,
respectively. The rest of the world accounted for 10% of total revenues
in the quarter."Despite a weak quarter, especially in Europe, we have achieved significant growth in application, as well as in maintenance and support revenue. Our initiative with SAP business partners worldwide is progressing and we are engaged with many of them in upcoming projects, involving a joint platform of SAP Business One SAP Business One is an integrated enterprise resource planning (ERP) software that targets business software requirements of small and medium sized enterprises (SMEs) from SAP AG based at Walldorf, Germany. and iBOLT iBOLT Studio is an enterprise application integration (EAI) and business process management (BPM) software by Magic Software Enterprises. Following the introduction of iBOLT, Magic Software Enterprises was placed in the integrated services environment quadrant by information ." said Menachem Hasfari, CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Magic Software. "A combination of weak economies in some countries and last minute lost deals caused our below-expectation results in the quarter. The decline in our income is obviously attributable to lower sales, but also to accelerated investments in sales and marketing we have been making in the iBOLT program. I believe that the results we are showing for the quarter are in no way indicative of the overall trend for the rest of the year." Accomplishments: The following highlights were announced, or occurred since Magic Software Enterprises' last earnings statement: Magic released its latest iBOLT version 2.5. This new version, along with its predecessor, iBOLT 2.0, were the subject of extremely positive analyst and media coverage, including: --Placement as a Challenger in the Gartner (Gartner, Inc., Stamford, CT, www.gartner.com) The largest information technology consulting firm that specializes in research and analysis. Founded in 1979 by Gideon Gartner, it has grown through acquisitions, including Dataquest in 1995 and Techrepublic in 2000. Magic Quadrant The Gartner Magic Quadrant is a proprietary research tool developed by Gartner Inc., a US based research and advisory firm. It is designed to provide an unbiased qualitative analysis of a “markets’ direction, maturity, and participants. for Business Rules Engines. --Magic's iBOLT Achieves Gold Award Accreditation accreditation, n a process of formal recognition of a school or institution attesting to the required ability and performance in an area of education, training, or practice. in the City Compass B.I.S.S. for Financial Services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. . --Placement as a Visionary 1. visionary - One who hacks vision, in the sense of an Artificial Intelligence researcher working on the problem of getting computers to "see" things using TV cameras. (There isn't any problem in sending information from a TV camera to a computer. in the Gartner Magic Quadrant for Integration Backbone Software. --Extremely positive reviews by both eWeek
eWEEK (tagline: The Enterprise Newsweekly) is a weekly computing business magazine published by Ziff Davis Media, featuring editorials, reviews, lab tests and news. and The Butler Group. Some of the iBOLT deals announced in the reported quarter include: --Transaction Auditing Group (TAG) of the USA -- a pioneer in the field of independent "best execution" trade analysis, regulatory and customized reporting. --Primagas -- one of Germany's largest suppliers of liquid gas. --The Transportation Authority of Miskolc Miskolc (mĭsh`kôlts), city (1991 est. pop 194,000), NE Hungary, on the Sajó River. Hungary's second largest city and a major industrial center, Miskolc has large iron and steel mills, lime and cement works, and a large food processing City -- Hungary's second largest city. Business Development Highlights: --Magic started to implement the SAP Business One partnership in numerous countries worldwide, and followed by training courses and pilot projects. --Magic participated in FKOM FKOM Field Kick-Off Meeting FKOM Flaggkommandør (Rear Admiral, Lower Rank, Norway) , SAP's annual kickoff event in Florida Florida, state, United States Florida (flôr`ĭdə, flŏr`–), state in the extreme SE United States. A long, low peninsula between the Atlantic Ocean (E) and the Gulf of Mexico (W), Florida is bordered by Georgia and , and presented iBOLT to SAP partners. --Magic partnered with Bwise, an Enterprise Risk Management, Corporate Compliance and Internal Control software provider. This Alliance enhances Magic's appeal and access to the Corporate Governance Corporate Governance The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. and Compliance market. Magic opened its first office in China. This office has already completed a number of Proof-Of-Concepts for some large corporations and government agencies. Conference Call Magic Software will host a conference call today, Tuesday Tuesday: see week. , May 10, 2005. The conference call will begin at 9 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy , 2 p.m. GMT (Greenwich Mean Time) See UTC. GMT - Universal Time 1 or 4 p.m. in Israel, to discuss the Company's first quarter financial results. To participate, interested parties should call the appropriate number listed below at least five to ten minutes prior to the start of the call: From the US: 1-866-229-7198 From Canada: 1-866-485-2399 From Israel: 03 918 0609 All others: +972 3 918 0609 Callers should reference the Magic Software third quarter earnings conference call. A replay of the conference call will be available approximately 48 hours after the call ends, and will be available for three months, at http://www.magicsoftware.com/investors. About Magic Software Enterprises Magic Software Enterprises, a subsidiary of Formula Systems (Nasdaq:FORTY), develops, markets and supports software development, deployment and integration 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 (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. are available through a global network of subsidiaries, distributors and Magic solutions partners in approximately 50 countries. The Company's North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. subsidiary is located at 17310 Redhill Redhill can refer to:
Irvine (ûr`vĭn), town (1991 pop. 32,507), North Ayrshire, SW Scotland, on the Irvine River estuary. Industries include iron and brass foundries. Other products are chemicals, electric goods, and clothing. , CA 92614-5637, telephone 800-345-6244, 949-250-1718, fax 949-250-7404, http://www.magicsoftware.com/. Except for the historical information contained herein, the matters discussed in this news release include forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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.
Consolidated Statement of Operations
(US Dollars in Thousands)
Three months ended
March 31,
-------------------
2005 2004
------- -------
(Unaudited) (Unaudited)
Revenues
Software sales $4,870 $5,461
Applications 2,208 1,664
Maintenance 3,545 2,795
Consultancy & other services 4,880 6,534
------- -------
Total revenues $15,503 $16,454
Cost of revenues
Software sales 1,508 1,868
Maintenance 873 803
Consultancy & other services 3,797 3,769
------- -------
Total cost of revenues $6,178 $6,440
Gross profit $9,325 $10,014
Research & development, net 1,054 1,205
Sales, marketing, and general & administrative
expenses 8,237 7,777
Depreciation 430 439
------- -------
Operating income (loss) $(396) $593
Financial expenses, net 320 114
Other income 1,169 -
------- -------
Income before taxes $453 $479
Taxes on income 231 -
------- -------
Income before equity in earnings of affiliates
minority Interest $222 $479
Equity in earnings of affiliates 53 -
Minority interest in income of subsidiaries 112 (239)
------- -------
Net income $163 $718
Basic earnings per share $0.01 $0.02
Diluted earnings per share $0.01 $0.02
Weighted avg. shares outstanding (000's) 31,144 30,647
Diluted weighted avg. shares outstanding
(000's) 31,904 32,501
Consolidated Balance Sheets
(US Dollars in Thousands)
March December
31, 31,
2005 2004
------- -------
(Unaudited)
Assets
Current assets
Cash and cash equivalents $8,794 $7,580
Short term marketable securities 5,096 5,223
Accounts receivable
Trade receivables 19,366 20,543
Other receivables and prepaid expenses 5,584 3,432
Inventory 743 433
------------------
Total current assets 39,583 37,211
------------------
Severance pay fund 2,009 2,033
Long term deposits 853 587
Investments in affiliated companies 232 179
Fixed assets, net 7,309 7,540
Goodwill 21,210 21,684
Other assets, net 11,006 11,051
------------------
Total assets $82,202 $80,285
==================
Liabilities
Current liabilities
Short-term bank debt $2,299 $2,223
Trade payables 2,634 2,920
Accrued expenses and other liabilities 15,111 12,216
------------------
Total current liabilities 20,044 17,359
------------------
Long-term loans 99 94
Accrued severance pay 2,417 2,455
Minority interests 876 830
Shareholders' equity
Share capital 827 827
Capital surplus 105,631 106,298
Treasury stock (6,152) (5,875)
Accumulated deficit (41,540) (41,703)
------------------
Total shareholders' equity 58,766 59,547
------------------
Total liabilities and shareholders' equity $82,202 $80,285
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