Formula Systems Announces Second Quarter Results
Improved Results Over First Quarter of 2003
Friday August 22, 4:04 pm ET
HERZLIYA, Israel, August 22, 2003/PRNewswire-FirstCall/ -- Formula Systems Ltd. (Nasdaq:FORTY - News), a leading provider of information technology products, solutions and services, is pleased to announce its financial results for the second quarter ended June 30, 2003.
Revenues in the second quarter of 2003 totaled $89.9 million compared to $87.7 million in the first quarter. Operating income increased to $2.3 million compared to an operating loss of $1.0 million in the first quarter of 2003. Net income for the second quarter of 2003 amounted to $553,000 compared to a net loss of $1.0 million in the first quarter of 2003.
Second Quarter Highlights in our subsidiaries
Gad Goldstein, President of Formula, commented: "As previously stated, our efforts in the first half of the year were mainly directed to help our subsidiaries regain operational profitability and positive cash flow. The combined efforts together with the managements of our subsidiaries resulted in an improvement of over $3 million in the aggregate operating results between the first and the second quarter. We are encouraged by the results and we will persevere with our efforts to increase efficiency while focusing on a return to growth pattern in our subsidiaries. Based on the results already achieved we expect a stronger and better second half of 2003."
Formula Systems Ltd., is a global information technology company principally engaged, through its subsidiaries and affiliates, in providing software consulting services, developing proprietary software products and providing computer-based business solutions.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
Statements made in this press release that are not historical facts are forward-looking statements. Such statements involve various risks that may cause actual results to differ materially. These risks and uncertainties include, but are not limited to: market demand for the company's products, dependence on strategic partners, integration of new business, successful implementation of Formula's products, economic and competitive factors, international market conditions, management of growth, technological developments, the ability to finance operations and other factors which are detailed in Formula's Securities and Exchange Commission filings, including its most recent report on Form 20-F. Formula undertakes no obligation to publicly release any revision to any forward-looking statement.
CONTACT:
Gad Goldstein, President, Formula Systems (1985) Ltd.,
Tel: 011-972-9959-8800
Dennis S. Dobson, for Formula Systems Ltd.
203-255-7902
FORMULA SYSTEMS (1985) LTD.
(An Israeli corporation)
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2003 2002
U.S. $
(in thousands)
CURRENT ASSETS:
Cash and cash equivalents 89,367 90,561
Short-term investments 15,459 12,101
Trade receivables 85,382 67,642
Other accounts receivable 26,813 19,642
Inventories 3,952 3,590
220,973 193,536
LONG-TERM INVESTMENTS, LOANS AND RECEIVABLES:
Loans and other investments 3,474 3,400
Investments in affiliates 5,374 22,659
8,848 26,059
DEBENTURES 83,283 75,951
SEVERANCE PAY FUND 9,458 8,262
FIXED ASSETS, NET 27,780 25,045
OTHER ASSETS, NET 180,453 139,744
530,795 468,597
CURRENT LIABILITIES:
Credit from banks and others 88,031 87,752
Trade payables 31,998 26,811
Other accounts payable 78,006 60,172
Restructuring accrual 991 2,661
199,026 177,396
LONG-TERM LIABILITIES:
Debentures 50,440 33,726
Provision for losses in formerly owned investee 2,512 2,512
Deferred taxes 957 871
Customer advances 2,289 491
Liabilities to banks and others 25,689 7,556
Liability due to activity acquisition 2,126 2,334
Accrued severance pay 14,194 12,048
Unrealized gain 6,793 6,184
105,000 65,722
MINORITY INTEREST 66,450 72,130
SHAREHOLDERS' EQUITY 160,319 153,349
530,795 468,597
FORMULA SYSTEMS (1985) LTD.
(An Israeli corporation)
CONSOLIDATED STATEMENTS OF INCOME
Six months ended Three months ended
June 30, June 30,
2003 2002 2003 2002
U.S.$ U.S.$
(in thousands, except per share data)
Revenues 177,594 143,566 89,872 70,335
Cost of revenues 113,335 92,167 56,377 45,269
Gross profit 64,259 51,399 33,495 25,066
Research and development
costs, net 9,082 8,472 4,410 4,190
Selling, general and
administrative expenses 51,304 39,571 25,445 19,770
Depreciation and
amortization 2,582 2,097 1,328 1,077
Operating income 1,291 1,259 2,312 29
Financial income
(expenses), net (1,035) 2,962 (496) 1,735
256 4,221 1,816 1,764
Gain on realization of
investments 1,220 3,450 828 3,682
Other income (expenses),
net 786 5 300 (383)
Income before taxes on
income 2,262 7,676 2,944 5,063
Taxes on income 1,480 842 787 516
782 6,834 2,157 4,547
Equity in losses of
affiliated companies,
net (533) (351) (357) (188)
Minority interest in
profits, net (720) (1,830) (1,247) (1,370)
Net income (loss) (471) 4,653 553 2,989
Earnings per share -
basic and fully-diluted:
Net earnings (loss) (0.05) 0.45 0.06 0.29
 
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