Magic Software Enterprises Announces Second Quarter 2001 Results; Shows Slight Improvement in Quarterly Revenues.Business Editors/High-Tech Writers 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)--August 13, 2001 Magic Software Enterprises, Ltd. (Nasdaq:MGIC MGIC Mortgage Guaranty Insurance Company MGIC Montana Geographic Information Council ), a leading provider of state-of-the-art application development technology and business solutions, announced today results for the second quarter ended June June: see month. 30, 2001. In addition to posting a slight increase in revenues for the quarter, Magic also managed to reduce its EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become loss from $2.4 million in the first quarter of 2001 to $0.8 million in the second quarter. Second Quarter Results Total revenues for the second quarter 2001 were $20.2 million as compared to $20.1 million for the comparable period in 2000, a slight increase over last year and over the $20.0 million recorded for the first quarter of 2001. Almost 40% of second quarter revenues came from Magic's North American operations North American operation Surgical oncology Radical surgery of a 'frozen pelvis', consisting of radical en bloc resection of the uterus and urinary bladder. See 'Frozen pelvis.'. Cf 'All-American' and 'South American' operations. , which include Magic Software Enterprises, Inc., CoreTech Consulting Group, Inc., Answers on Demand and Access Data. Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net loss for the second quarter (which excludes amortization of goodwill and intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. , and any non-recurring expenses) was $1.9 million or $0.07 loss per share, compared with the $2.7 million pro forma net income or $0.06 earnings per share posted for the same period a year ago. Actual (or GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) net loss for the second quarter of 2001 was $3.0 million or $0.10 loss per share, compared with the $1.9 million net income or $0.06 earnings per share recorded one year ago. "Magic's second quarter results met our overall expectations. In spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite a tough market situation, we managed to slightly increase our revenues, acquired several new customers, and continued to receive recognition for our products worldwide," said Menachem Hasfari, chief executive officer of Magic. "However, we also were not immune to some of the problems that affected many of our competitors. "We saw ongoing weakness in the software arena, which continues to be plagued by unusually long decision-making decision-making, n the process of coming to a conclusion or making a judgment. decision-making, evidence-based, n a type of informal decision-making that combines clinical expertise, patient concerns, and evidence gathered from cycles. And we saw diminished di·min·ish v. di·min·ished, di·min·ish·ing, di·min·ish·es v.tr. 1. a. To make smaller or less or to cause to appear so. b. demand for CRM (Customer Relationship Management) An integrated information system that is used to plan, schedule and control the presales and postsales activities in an organization. (Customer Relationship Management) solutions. We expect these factors will continue to work against us in the second half of this year. "However, we continue to work aggressively to contain costs, and recently reduced our worldwide work force by approximately five percent in response to current market conditions. As a result, we expect to see improved results moving forward, and continue to believe that we are well positioned to benefit from an eventual economic upturn and improvement in industry demand." Second Quarter Developments During the quarter, Magic continued to receive recognition for its products and to grow its customer list with major companies worldwide. Recognition In April, it was announced that Magic eService(TM), the Company's Web-based customer management solution, had received a Product of the Year 2000 Award from Customer Inter To cross over boundaries; for example, internetwork means from one network to another. Contrast with intra. @ction Solutions magazine. The award was the result of an extensive product review conducted by the publication to determine those products whose "technological evolution and applications refinements" set them apart from other competitive offerings in the market. New Deals Among the several significant new deals closed during the quarter were: -- BBDO InterOne, a member of the BBDO worldwide network of agencies, to use Magic eService to provide BBDO InterOne and its customers totally Web-enabled service centers. -- adidas-Salomon Canada, Salomon AG's Canadian subsidiary, to provide the company the tools and training to enable it to build its own custom business-to-business site for the IBM iSeries platform. -- Scotland's Inverclyde Council, to develop a number of strategic systems based upon a range of legacy platforms, including the AS/400. -- Koninklijke Nederlandse Gymnastiek Unie, the Dutch association of gymnastics, to create a Web-based solution that will enable members, clubs, districts and third parties, such as journalists and the general public, to exchange information. -- K.K. Prime Systems, a major Japanese software house, to create a combined customer relationship management and e-commerce solution employing both Magic eMerchant(TM) and Magic eService. Other new contracts to implement Magic eService were signed with Kalamazoo Kalamazoo (kăl'əməz  `), city (1990 pop. 80,277), seat of Kalamazoo co., SW Mich., on the Kalamazoo River at its confluence with Portage Creek; inc. 1883. Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). , a car dealership This article is about car dealerships. For the indie pop band, see Dealership (band). A car dealership or vehicle local distribution is a business that sells new cars and/or used cars at the retail level, based on a dealership contract with an automaker or management system organization; Compartner Com`part´ner n. 1. See Copartner. Systems (Germany), a software house; and Airtrade (Netherlands Netherlands (nĕth`ərləndz), Du. Nederland or Koninkrijk der Nederlanden, officially Kingdom of the Netherlands, constitutional monarchy (2005 est. pop. 16,407,000), 15,963 sq mi (41,344 sq km), NW Europe. ), an airline ticket management firm. Magic eContact(TM) deals included two French outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. firms specializing in customer care and services, as well as outbound/inbound telemarketing telemarketing, the practice of selling goods or services to customers by means of the telephone or of surveying consumer preferences in telephone conversations. campaigns: B2S B2S Back to School B2S Bag2School (UK school fundraising) and Komerezo. Answers on Demand, Inc., Magic's North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. subsidiary, which markets and supports proprietary integrated software Separate software components or applications that have been combined into one package. See integrated software package. solutions designed specifically for the long-term care long-term care (LTC), n the provision of medical, social, and personal care services on a recurring or continuing basis to persons with chronic physical or mental disorders. industry, also signed significant deals during the quarter with two multi-site facilities located in Missouri Missouri, state, United States Missouri (mĭz  r`ē, –ə), one of the midwestern states of the United States. and Kansas Kansas, state, United StatesKansas (kăn`zəs), midwestern state occupying the center of the coterminous United States. It is bordered by Missouri (E), Oklahoma (S), Colorado (W), and Nebraska (N). . Conference Call Magic will host a conference call on Monday Monday: see week. , August 13, 2001, at 12:00 noon EST EST electroshock therapy. EST abbr. electroshock therapy (9:00 a.m. PST PST Paroxysmal supraventricular tachycardia, see there ), to discuss the Company's second quarter results. To participate, interested parties should call the appropriate number listed below five to ten minutes prior to the start of the conference call.
North America: 888/273-9887
Internationally: 612/332-1213
Callers should reference "Magic Software Q2 Earnings Conference Call" with the AT&T Operator. A replay of the conference call will be available from 12:30 p.m. PST, August 13, 2001, through 11:59 p.m. PST, August 20, 2001. Interested parties should call the appropriate number below:
North America: 800/475-6701
Internationally: 320/365-3844
Callers should reference Access Code No. 596954. Investors also will have the opportunity to listen to the conference call over the 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 through Vcall, a service of the Investor Broadcast Network, at http://www.vcall.com. To listen to the "live" call, investors should go to the Website at least fifteen minutes early to register, and download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any necessary audio software. For those who cannot listen to the live Internet broadcast, a replay of the conference call will be available for up to 90 days on the Vcall Website. About Magic Software Enterprises Magic Software Enterprises, a member of the Formula Group (Nasdaq:FORTY), develops, markets and supports software development and deployment 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 subsidiary is located at 1642 Kaiser Avenue, Irvine Irvine, town, Scotland 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. , Calif., 92614, telephone (949) 250-1718, fax (949) 250-7404, http://www.magicsoftware.com. The Formula Group is an international information technology company principally engaged, through its subsidiaries and affiliates, in providing software consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" , developing proprietary software products and producing computer-based solutions. 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.
Pro Forma Consolidated Statement of Operations (Unaudited)
(U.S. Dollars in Thousands)
Excluding Amortization of Goodwill and Intangibles,
And Restructuring Costs and Non-Recurring Expenses
Three Months ended Six Months ended
June 30, June 30,
2001 2000 2001 2000
Revenues
Software sales $ 4,579 $ 6,565 $ 9,865 $16,273
Applications 3,066 3,207 4,937 6,534
Maintenance 3,106 2,727 5,872 5,588
Consultancy &
other services 9,439 7,559 19,531 13,314
Total Revenues $20,190 $20,058 $40,205 $41,709
Cost of Revenues
Software sales $ 1,023 $ 985 $ 2,062 $ 1,926
Applications 639 479 1,104 904
Maintenance 1,053 1,056 2,138 2,159
Consultancy &
other services 6,088 4,712 13,678 8,353
Total Cost of
Revenues $ 8,803 $ 7,232 $18,982 $13,342
Gross Profit $11,387 $12,826 $21,223 $28,367
Research &
development, net 1,808 1,587 3,649 2,590
Sales, marketing,
and general
& administrative
expenses 10,344 9,855 20,792 18,814
Depreciation 497 386 985 495
Operating Income $(1,262) $ 998 $(4,203) $ 6,468
Financial (income)
expenses, net 4 (1,258) 34 (1,407)
Income (Loss)
before taxes (1,266) 2,256 (4,237) 7,875
Taxes on income 193 149 255 251
Income (Loss)
before minority
interest (1,459) 2,107 (4,492) 7,624
Minority interest
in losses
(income) of
Subsidiaries (483) 606 (218) (570)
Equity in earnings
(losses) of
affiliate 0 (57) 0 (57)
Net Income $(1,942) $2,656 $(4,710) $6,997
Basic Earnings
per Share $ (0.07) $ 0.06 $ (0.16) $ 0.24
Diluted Earnings
per Share $ (0.06) $ 0.06 $ (0.15) $ 0.23
Weighted Avg.
Shares
Outstanding (000) 29,568 29,963 29,533 28,677
Diluted Weighted
Avg. Shares
Outstanding (000) 30,269 31,281 30,390 29,994
NOTE: Excludes $2.2 million and $1.1 million of amortization of
goodwill and intangibles for the six months ended June 30, 2001 and
2000, respectively, and restructuring costs and non-recurring expenses
of $3.3 million and impairment expenses of $2.2 million for the six
months ended June 30, 2001. Including the above items, there was a net
loss of $12.4 million or $0.42 loss per share for the six months ended
June 30, 2001, and net income of $5.9 million or $0.21 earnings per
share for the six months ended June 30, 2000.
Unaudited Consolidated Statement of Operations
(US Dollars in Thousands)
Three Months ended Six Months ended
June 30, June 30,
2001 2000 2001 2000
Revenues
Software sales $ 4,579 $ 6,565 $ 9,865 $16,273
Applications 3,066 3,207 4,937 6,534
Maintenance 3,106 2,727 5,872 5,588
Consultancy &
other services 9,439 7,559 19,531 13,314
Total Revenues $20,190 $20,058 $40,205 $41,709
Cost of Revenues
Software sales $ 1,023 $ 985 $ 2,062 $ 1,926
Applications 639 479 1,104 904
Maintenance 1,053 1,056 2,138 2,159
Consultancy & other
services 6,088 4,712 13,678 8,353
Total Cost of
Revenues $ 8,803 $ 7,232 $18,982 $13,342
Gross Profit $11,387 $12,826 $21,223 $28,367
Research &
development, net 1,808 1,587 3,649 2,590
Sales, marketing,
and general
& administrative
expenses 10,344 9,855 20,792 18,814
Depreciation 497 386 985 495
Amortization 1,076 748 2,197 1,083
Restructuring costs &
non-recurring expenses 0 0 3,300 0
Operating Income (Loss) $(2,338) $ 250 $(9,700) $ 5,385
Financial (income)
expenses, net 4 (1,258) 34 (1,407)
Impairment expense 0 2,219
Income (Loss) before
taxes (2,342) 1,508 (11,953) 6,792
Taxes on income 193 149 255 251
Income (Loss)
before minority
Interest (2,535) 1,360 (12,208) 6,541
Minority interest in
losses (income) of
subsidiaries (483) 606 (218) (570)
Equity in earnings
(losses) of
Affiliate 0 (57) 0 (57)
Net Income $(3,018) $1,908 $(12,426) $5,914
Basic Earnings
per Share $ (0.10) $ 0.06 $ (0.42) $ 0.21
Diluted Earnings
per Share $ (0.10) $ 0.06 $ (0.41) $ 0.20
Weighted Avg. Shares
Outstanding (000) 29,568 29,963 29,533 28,677
Diluted Weighted Avg.
Shares Outstanding
(000) 30,269 31,281 30,390 29,994
Consolidated Balance Sheets
(US Dollars in Thousands)
June 30 December 31
2001 2000
(Unaudited)
Assets
Current Assets
Cash and cash equivalents $ 35,267 $ 42,627
Accounts receivable:
Trade receivables 21,923 22,904
Related parties 392 278
Other receivables and
prepaid expenses 6,286 5,827
Inventory 391 402
Total Current Assets $ 64,259 $ 72,038
Long-term deposit $ 0 $ 436
Severance pay fund 1,469 2,042
Investments in
affiliated companies 471 250
Fixed assets, net 9,632 11,050
Other assets, net 49,084 52,179
Total Assets $124,915 $137,995
Liabilities
Current Liabilities
Short-term bank debt $ 696 $ 1,462
Trade payables 4,793 5,610
Accrued expenses and
other liabilities 18,546 15,998
Total Current Liabilities $ 24,035 $ 23,070
Long-term loans $ 341 $ 1,758
Accrued severance pay 1,898 3,511
Minority interests 1,410 251
Shareholders' Equity
Share capital 806 781
Capital surplus 114,686 114,459
Treasury stock (5,424) (5,424)
Retained earnings (12,837) (411)
Total Shareholders' Equity $ 97,231 $109,405
$124,915 $137,995
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