Magic Reports Record-Breaking Results for the Fourth Quarter of 2013 with Revenues of $41.2 Million, an Increase of 15% Year over Year and Non-GAAP Operating Income of $6.8 Million, an Increase of 34% Year over Year Annual revenues for 2013 increased 15% year over year to a record-breaking result of $145.0 million; Non-GAAP operating income increased 22% to $22.7 million for the year PR Newswire OR YEHUDA, Israel, Feb. 12, 2014 OR YEHUDA, Israel, Feb. 12, 2014 /PRNewswire/ --Magic Software Enterprises Ltd. (NASDAQ and TASE: MGIC), a global provider ofmobileand cloud-enabledapplication andbusiness integration platforms, announced today its financial results for the fourth quarter and full year ended December31, 2013. Financial Highlights for the Fourth Quarter, 2013 oRevenues for the fourth quarter increased 15% year over year to $41.2million from $35.7million in the corresponding 2013 quarter. oNon-GAAP operating income increased 34% to $6.8million, compared to $5.1million in the same period last year. Operating income for the fourth quarter increased 28% to $5.4million, compared to $4.3million in the same period last year. oNon-GAAP net income increased 17% to $6.0million, compared to $5.1million in the same period last year. Net income for the fourth quarter increased 10% to $4.7million compared to $4.3million in the same period last year. Financial Highlights for the Full Year Ended December 31, 2013 oRevenues for the year ended December31, 2013 reached $145.0million, an increase of 15%, compared to $126.4million in 2012. oNon-GAAP operating income for2013 increased 22% to $22.7million, compared to $18.6million in 2012. Operating income for the year ended December31, 2013 increased 17% to $19.1million compared to $16.4million in theprior year. Operating income in 2013 was negatively impacted compared to 2012due tothe devaluation of the Japanese Yen and the appreciation of the New Israeli Shekel versus the U.S. Dollar by approximately $1 million. oNon-GAAP net income for 2013 increased 6% to $19.5million, compared to $18.3million in 2012. Net income for the year ended December31,2013 decreased 2% to $15.9million compared to $16.2million in theprior year. Net income for 2013 was negatively impacted by $0.5 million in non-cash tax expenses recorded with respect to utilization of deferred tax assets and by $0.5 million in financial expenses recorded as a result of unfavorable foreign currency exchange rates. In accordance with U.S. generally accepted accounting principles, the Company records deferred tax expenses on utilization of carry-forward tax losses. oTotal cash, cash equivalents and short-term investments as of December31,2013 amounted to $36.0million. oOperating cash flow for the year ended December31,2013 totaled $18million. Results oFor the fourth quarter ended December31,2013 total revenues were $41.2million, with net income of $4.7million, or $0.13 per fully diluted share. This compares with revenues of $35.7million and net income of $4.3million, or $0.12 per fully diluted share for the same period in 2012. oFor the fourth quarter of 2013, operating income was $5.4million. This compares to operating income of $4.3million for the same period in 2012. oFor the year ended December31,2013, total revenues were $145.0million, with net income of $15.9million, or $0.43 per fully diluted share. This compares with revenues of $126.4million and net income of $16.2million, or $0.44 per fully diluted share, for the same period in 2012. oOperating income for the year ended December31, 2013, was $19.1million. This compares to operating income of $16.4million for the same period in 2012. Comments of Management Guy Bernstein, Chief Executive Officer of Magic Software Enterprises, said, "2013 was a tremendous year for Magic with record sales and strong performance across all of our products and professional services in all regions. Our results demonstrate increasing customer demand for our products and services coupled with continued focus on operational discipline. Our award-winning enterprise mobility solution, integration platform and complementary software services are well-positioned for sustained growth as we enter 2014, in terms of both immediate sales and longer-term maintenance and support revenues." "We are continuing to strengthen our products and expand our services portfolio to help businesses meet the increasing demand of enterprise mobility, cloud and big data andhave expectations for accelerated growth in 2014," added Bernstein. Non-GAAP Financial Measures This release includes non-GAAP operating income, net income, basic and diluted earnings per share and other non-GAAP financial measures. These non-GAAP measures exclude the following items: oAmortization of purchased intangible assets; oIn-process research and development capitalization and amortization; oEquity-based compensation expense; oChange in valuation of contingent consideration; and oTherelated tax effects of the above items. Magic Software's management believes that the presentation of non-GAAP measures provides useful information to investors and management regarding financial and business trends relating to the Company's financial condition and results of operations as well as the net amount of cash generated by its business operations after taking into account capital spending required to maintain or expand the business. These non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. Magic Software believes that non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with Magic Software's results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Magic Software's results of operations in conjunction with the corresponding GAAP measures. Refer to the Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP tables below. About Magic Software Enterprises Magic Software Enterprises Ltd. (NASDAQ and TASE: MGIC) is a global provider of mobile and cloud-enabled application and business integration platforms. For more information, visit www.magicsoftware.com. 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 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. These forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. Magic is a registered trademark of Magic Software Enterprises Ltd. All other product and company names mentioned herein are for identification purposes only and are the property of, and might be trademarks of, their respective owners. Press Contact: Tania Amar, VP Global Marketing Magic Software Enterprises Tel: +972 (0)3 538 9300 firstname.lastname@example.org MAGIC SOFTWARE ENTERPRISES LTD. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME U.S. dollars in thousands (except per share data) Three months ended Year ended December 31, December 31, 2013 2012 2013 2012 Unaudited Unaudited Revenues $41,192 $35,730 $144,958 $126,380 Cost of Revenues 24,305 20,792 85,893 73,393 Gross profit 16,887 14,938 59,065 52,987 Research and development, net 925 813 3,706 2,947 Selling, marketing and general and 10,513 9,867 36,232 33,632 administrative Total operating expenses 11,438 10,680 39,938 36,579 Operating income 5,449 4,258 19,127 16,408 Financial (expenses) income, net (90) 193 (684) 10 Other (expenses) income, net (12) - (12) 136 Income before taxes on income 5,347 4,451 18,431 16,554 Taxes on income 441 52 1,575 94 Net income 4,906 4,399 16,856 16,460 Change in redeemable non-controlling (208) - (401) - interests Net income attributable to (8) (146) (575) (277) non-controlling interests Net income attributable to Magic's $4,690 $4,253 $15,880 $16,183 shareholders Net earnings per share Basic $0.13 $0.12 $0.43 $0.44 Diluted 0.13 0.12 0.43 0.44 Weighted average number of shares used in computing net earnings per share Basic 37,081 36,553 36,835 36,502 . Diluted 37,454 37,042 37,294 37,108 MAGIC SOFTWARE ENTERPRISES LTD. AND ITS SUBSIDIARIES RECONCILIATION OF GAAP AND NON-GAAP RESULTS U.S. dollars in thousands (except per share data) Three months ended Year ended December 31, December 31, 2013 2012 2013 2012 Unaudited Unaudited GAAP operating income $5,449 $4,258 $19,127 $16,408 Amortization of capitalized software and 2,212 2,376 7,722 6,687 other intangible assets Change in valuation of contingent 230 - 230 - consideration Capitalization of software (1,147) (1,625) (4,713) (4,969) development Stock-based compensation 70 75 325 515 Total adjustments to GAAP 1,365 826 3,564 2,233 Non-GAAP operating income $6,814 $5,084 $22,691 $18,641 GAAP net income attributable to $4,690 $4,253 $15,880 $16,183 Magic's shareholders Operating income adjustments 1,365 826 3,564 2,233 Unwinding of discount in connection with 45 - 310 - liabilities due to acquisitions Amortization expenses attributed to (49) - (164) - redeemable non-controlling interests Deferred taxes on the above items (80) 17 (83) (98) Total adjustments to GAAP 1,281 843 3,627 2,135 Non-GAAP net income $5,971 $5,096 $19,507 $18,318 Non-GAAP basic net earnings per $0.16 $0.14 $0.53 $0.50 share Weighted average number of shares used in computing basic net earnings per 37,081 36,553 36,835 36,502 share Non-GAAP diluted net earnings per $0.16 $0.14 $0.52 $0.49 share Weighted average number of shares used in computing diluted net earnings 37,487 37,091 37,337 37,198 per share MAGIC SOFTWARE ENTERPRISES LTD. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands December 31, December 31, 2013 2012 Unaudited ASSETS CURRENT ASSETS: Cash and cash equivalents $35,134 $37,744 Available-for-sale marketable securities 854 890 Trade receivables, net 31,976 28,367 Other accounts receivable and prepaid expenses 5,209 6,696 Total current assets 73,173 73,697 LONG-TERM RECEIVABLES: Severance pay fund 403 351 Other long-term receivables 3,792 2,287 Total long-term receivables 4,195 2,638 PROPERTY AND EQUIPMENT, NET 1,773 1,898 IDENTIFIABLE INTANGIBLE ASSETS AND GOODWILL, NET 86,529 74,721 TOTAL ASSETS 165,670 152,954 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short-term credit and current maturities of 1055 - long-term loans Trade payables 4,149 4,722 Accrued expenses and other accounts payable 16,937 17,188 Deferred tax liabilities 3,045 3,422 Deferred revenues 3,294 4,160 Total current liabilities 28,480 29,492 NON CURRENT LIABILITIES: Accrued severance pay 1,275 1,245 Loans 2,274 - Long term liabilities 1,726 750 Liability due to acquisition activities 1,396 1,192 Total non-current liabilities 6,671 3,187 Redeemable non- controlling interest 2,460 1,914 SHAREHOLDERS' EQUITY: Magic Shareholders' equity 127,072 117,786 Non-controlling interests 987 575 Total shareholders' equity 128,059 118,361 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $165,670 $152,954 SOURCE Magic Software Enterprises Ltd. Website: http://www.magicsoftware.com
Magic Reports Record-Breaking Results for the Fourth Quarter of 2013 with Revenues of $41.2 Million, an Increase of 15% Year
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