Formula Systems Reports Third Quarter 2004 Results
Wednesday November 24, 12:01 am ET
HERZLIYA, Israel, Nov. 24 /PRNewswire-FirstCall/ -- Formula Systems Ltd. (Nasdaq:FORTY - News), a leading provider of information technology products, solutions and services, announced today results for the third quarter ending September 30, 2004.
Revenues for the nine months ended September 30, 2004 totaled $329.4 million as compared to $270.1 million in the same period last year, an increase of 22%. Operating income for the period was $10.4 million compared to $6.2 million in the same period last year, an increase of 69%. In the nine months that ended September 30, 2004 Formula reported a net income of $5.0 million, or $0.46 per share compared to $167,000 or $0.02 per share in the same period last year.
Revenues for the third quarter ended September 30, 2004 were $110.1 million. Operating income for the third quarter was $3.9 million and net income totaled $334,000, or $0.02 per share.
In the first quarter of 2004 Formula acquired 59% of Formula Vision Technologies (F.V.T) ordinary shares by way of private placement and is consolidating Formula Vision's results.
Gad Goldstein, President of Formula Systems commented: "We are encouraged by the fact that the third quarter operational results, which are typically impacted by summer vacations and Jewish holidays, exceeded first and second quarter of 2004. Based on that and on preliminary indicators from the vast majority of our operational subsidiaries, we expect the fourth quarter to maintain the positive trend."
About Formula
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.
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.
FORMULA SYSTEMS (1985) LTD.
(An Israeli corporation)
CONSOLIDATED BALANCE SHEETS
September December
30, 2004 31, 2003
(Unaudited)
U.S. $
(in thousands)
CURRENT ASSETS:
Cash and cash equivalents 76,886 93,456
Short-term investments 34,034 8,773
Trade receivables 116,838 93,298
Other accounts receivable 27,400 18,846
Inventories 4,324 2,635
259,482 217,008
LONG-TERM INVESTMENTS, LOANS AND
RECEIVABLES:
Loans and other investments 8,630 3,308
Investments in affiliates 23,474 3,373
32,104 6,681
DEBENTURES - 80,246
SEVERANCE PAY FUND 12,189 11,113
FIXED ASSETS, NET 26,475 25,756
OTHER ASSETS, NET 248,947 188,111
579,197 528,915
CURRENT LIABILITIES:
Liabilities to banks and others 79,007 66,543
Trade payables 39,900 31,327
Other accounts payable 81,804 71,092
Debentures 34,640 15,340
Customer advances, net of work in progress 1,923 -
237,274 184,302
LONG-TERM LIABILITIES:
Debentures 23,855 50,983
Provision for losses in formerly owned 1,971 1,971
investee
Deferred taxes 921 942
Customer advances 1,373 2,312
Liabilities to banks and others 22,378 21,900
Liability due to activity acquisition 2,052 2,149
Accrued severance pay 17,478 15,642
Unrealized gain 5,016 4,459
75,044 100,358
MINORITY INTEREST 88,224 68,251
SHAREHOLDERS' EQUITY 178,655 176,004
579,197 528,915
FORMULA SYSTEMS (1985) LTD.
(An Israeli corporation)
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
Nine months Three months
ended ended
September 30, September 30,
2004 2003 2004 2003
U.S.$ U.S.$
(in thousands, except per share data)
Revenues 329,408 270,058 110,054 92,464
Cost of revenues 205,808 170,591 69,761 57,256
Gross profit 123,600 99,467 40,293 35,208
Research and development
costs, net 19,282 13,039 6,391 3,957
Selling, general and
administrative expenses 89,529 76,354 28,542 25,050
Depreciation and amortization 4,358 3,919 1,473 1,337
Operating income 10,431 6,155 3,887 4,864
Financial expenses, net (7,922) (2,890) (2,590) (1,855)
2,509 3,265 1,297 3,009
Gain on realization of
investments 6,615 1,284 811 64
Other income (expenses), net (867) 631 (175) (155)
Income before taxes on income 8,257 5,180 1,933 2,918
Taxes on income 2,707 2,011 831 531
5,550 3,169 1,102 2,387
Equity in losses of affiliated
companies, net (1,353) (733) (731) (200)
Minority interest in losses
(profits), net 788 (2,269) (37) (1,549)
Net income 4,985 167 334 638
Earnings (loss) per share:
Basic 0.46 0.02 0.02 0.06
Diluted 0.41 0.02 0.01 0.06
Weighted average number of shares
outstanding:
Basic 10,800 10,000 10,800 10,000
Diluted 10,800 10,000 10,800 10,000
 
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