FORM 6-K

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Report of Foreign Private Issuer

 

Pursuant to Rule 13a-16 or 15d-16

 

of the Securities Exchange Act of 1934

 

For the Month of March 2013

 

FORMULA SYSTEMS (1985) LTD.

(Translation of Registrant's Name into English)

 

5 HaPlada st., Or-Yehuda, Israel

(Address of Principal Executive Offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F

 

Form 20-F ...X... Form 40-F .......

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes ..... No ..X..

 

If "Yes" is marked indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ....................

 

Attached to Registrant's Form 6-K for the month of March 2013 and incorporated by reference herein is the Registrant's immediate report dated March 14, 2013.

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to signed on its behalf by the undersigned, thereunto duly authorized.

 

FORMULA SYSTEMS (1985) LTD.

(Registrant)

 

By:/s/ Guy Bernstein

Guy Bernstein CEO

dated: March 14, 2013

 

 
 

 

PRESS RELEASE

Formula Systems Reports Fourth Quarter and Full Year Results for 2012

 

Fourth Quarter Revenues Increased by 26% Year-Over-Year to $198.3 Million; Non-GAAP Net Income for the Fourth Quarter Increased 83% to $10.0 Million

 

Or Yehuda, Israel, March 14, 2013 – Formula Systems (1985) Ltd. (NASDAQ: FORTY) a leading provider of software consulting services, computer-based business solutions, and proprietary software products, today announced its results for the fourth quarter and full year of 2012.

 

Financial Highlights for the Year Ended December 31, 2012

 

·Revenues for the year ended December 31, 2012, increased 16% to $744.7 million compared to $640.6 million in the year ended December 31, 2011.

 

·Operating income for the year ended December 31, 2012, increased 15% to $57.0 million compared to $49.5 million in the year ended December 31, 2011. Non-GAAP operating income for the year ended December 31, 2012, increased 29% to $72.8 million compared to $56.4 million in the year ended December 31, 2011.

 

·Net income for the year ended December 31, 2012, increased 40% to $24.0 million, or $1.72 per fully diluted share, compared to $17.2 million, or $1.3 per fully diluted share, in the year ended December 31, 2011, excluding income of $25.8 million recorded in the year ended December 31, 2011 in connection with the acquisition by Sapiens International Corporation N.V. of IDIT I.D.I Technologies Ltd and FIS Software Ltd. Non-GAAP net income for the year ended December 31, 2012, increased 49% to $32.0 million compared to $21.6 million in the year ended December 31, 2011, excluding $25.8 million recorded in the year ended December 31, 2011 in connection with the foregoing acquisition by Sapiens.

 

·Consolidated cash and short term and long term investments in marketable securities totaled approximately $126.4 million as of December 31, 2012.

 

·Total equity on December 31, 2012 was $468.5 million (representing 53% of the total balance sheet).

 

Financial Highlights for the Fourth Quarter Ended December 31, 2012

 

·Revenues for the fourth quarter ended December 31, 2012, increased 26% to $198.3 million compared to $157.3 million in the same period of 2011.

 

·Operating income for the fourth quarter ended December 31, 2012, increased 42% to $15.1 million, compared to $10.7 million in the same period of 2011. Non-GAAP operating income for the fourth quarter ended December 31, 2012, increased 55% to $20.3 million, compared to $13.1 million in the same period of 2011;

 

·Net income for the fourth quarter ended December 31, 2012, increased 82% to $7.5 million, or $0.53 per fully diluted share, compared to $4.1 million, or $0.30 per fully diluted share, in the same period of 2011. Non-GAAP net income for the fourth quarter ended December 31, 2012, increased 83% to $10.0 million compared to $5.5 million in the same period of 2011.

 

Comments of Management

Commenting on the results, Guy Bernstein, CEO of Formula Systems, said, “We are very pleased with our 2012 fourth quarter and full year results, during which all of our businesses grew in both their top and bottom lines accompanied with strong cash flow from their ongoing operations. Looking at 2012, Sapiens launched its newest product suit and its new innovative Decision management solution designated to top tier financial institutions, continued closing new deals with tier one customers in its target markets in North America, UK, Europe and APAC and finished the year scoring record high revenue and profit. Magic, with its powerful and versatile enterprise-grade application development and integration solutions continued to further enhance its offering by strengthening its relationships with partners and vendors in the enterprise mobility and enterprise software ecosystems, like Samsung, SAP, Salesforce.com, Oracle JDE,IBM and Microsoft SharePoint. Matrix, despite the challenging economic climate and increased pressure on margins, showed growth from both new and existing customers, continuing the expansion of its offerings in fields such as information security, fraud risk and fraud prevention solutions, allowing it to extend its services to customers outside of Israel.”

 

“Looking forward, We believe that we are well positioned to continue our growth track in 2013” concluded 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:

 

·Amortization of intangible assets derived from acquisitions;

 

 
 

 

·Research and development capitalization and related amortization;

 

·Share-based compensation; and

 

·Related tax effect.

 

Formula’s management believes that the purpose of such adjustments is to give an indication of Formula’s performance exclusive of non-cash charges and other items that are considered by management to be outside of Formula's core operating results.

 

This 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. Formula believes that non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with Formula’s results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Formula’s results of operations in conjunction with the corresponding GAAP measures. Please refer to the Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP tables below.

 

About Formula

Formula Systems (1985) 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.

 

For more information, visit www.formulasystems.com.

 

Press Contact:

 

Formula Systems (1985) Ltd.

+972-3-5389487

ir@formula.co.il

 

Except for any historical information contained herein, matters discussed in this press release might include forward-looking statements that involve a number of risks and uncertainties. Regarding any financial statements, actual results might 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 locally and abroad, release and sales of new products by strategic resellers and customers, and other risk factors detailed in Formula'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.

 

 
 

 

FORMULA SYSTEMS (1985) LTD.                
CONSOLIDATED CONDENSED STATEMENTS OF INCOME            
U.S. dollars in thousands (except per share data)                
                 
   Three months ended   Year ended 
   December 31,   December 31, 
   2012   2011   2012   2011 
   Unaudited   Unaudited     
Revenues   198,267    157,329    744,731    640,617 
Cost of revenues   149,858    123,739    564,803    492,886 
                     
Gross profit   48,409    33,590    179,928    147,731 
Research and development costs, net   3,416    488    12,349    5,148 
Selling, general and administrative expenses   29,869    22,400    110,758    93,340 
Other income (expenses), net   12    (24)   174    207 
                     
Operating income   15,136    10,678    56,995    49,450 
                     
Financial expenses, net   (1,841)   (1,541)   (6,672)   (6,500)
                     
Income before taxes on income   13,295    9,137    50,323    42,950 
Taxes on income (tax benefit)   1,413    (89)   6,583    5,689 
                     
Income after taxes   11,882    9,226    43,740    37,261 
Equity in gains of affiliated companies, net   25    424    3,744    25,870 
                     
Net income   11,907    9,650    47,484    63,131 
Change in redeemable non controlling interests   (3,689)   -    (898)   - 
Net income attributable to non-controlling interests   8,110    5,534    24,352    20,169 
                     
Net income attributable to Formula's shareholders   7,486    4,116    24,030    42,962 
                     
Earnings per share (basic)   0.55    0.31    1.78    3.17 
Earnings per share (diluted)   0.53    0.30    1.72    3.11 
                     
Number of shares used in computing earnings per share (basic)   13,596    13,563    13,596    13,514 
Number of shares used in computing earnings per share (diluted)   13,853    13,674    13,790    13,669 

 

 
 

 

                 
                 
FORMULA SYSTEMS (1985) LTD.                
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION            
U.S. dollars in thousands (except per share data)                
   Three months ended   Year ended 
   December 31,   December 31, 
   2012   2011   2012   2011 
   Unaudited   Unaudited 
                 
GAAP operating income   15,136    10,678    56,995    49,450 
Amortization of capitalized software and other intangible assets   6,429    2,686    19,539    10,713 
Capitalization of software development   (2,444)   (1,376)   (8,433)   (8,299)
Stock-based compensation   1,206    1,140    4,680    4,551 
Total adjustments to GAAP   5,191    2,450    15,786    6,965 
Non-GAAP operating income   20,327    13,128    72,781    56,415 
                     
                     
GAAP net income attributable to Formula's shareholders   7,486    4,116    24,030    42,962 
Amortization of capitalized software and other intangible assets   6,429    2,686    19,539    10,713 
Capitalization of software development   (2,444)   (1,376)   (8,433)   (8,299)
Stock-based compensation   1,206    1,140    4,680    4,551 
Non-controlling interest in amortization intangible assets   (1,875)   (823)   (5,759)   (1,878)
Taxes on the above items   (786)   (283)   (2,043)   (680)
Total adjustments to GAAP   2,530    1,344    7,984    4,407 
Non-GAAP net income attributable to Formula's shareholders   10,016    5,460    32,014    47,369 
                     
                     
Non-GAAP earnings per share (basic)   0.55    0.40    2.38    3.51 
Weighted average number of shares used in                    
   computing earnings per share (basic)   13,596    13,530    13,596    13,514 
                     
Non-GAAP earnings per share (diluted)   0.53    0.40    2.31    3.47 
Weighted average number of shares used in                    
   computing earnings per share (diluted)   13,853    13,674    13,790    13,669 

 

 
 

 

FORMULA SYSTEMS (1985) LTD.        
CONSOLIDATED CONDENSED BALANCE SHEETS    
U.S. dollars in thousands        
   December 31,   December 31, 
   2012   2011 
   (Unaudited)     
ASSETS          
CURRENT ASSETS:          
Cash and cash equivalents   111,238    88,172 
Marketable securities   14,866    14,347 
Short-term deposits   -    5,170 
Trade receivables   201,886    163,219 
Other accounts receivable   41,012    36,085 
Total current assets   369,002    306,993 
           
LONG-TERM INVESTMENTS:          
Marketable securities   331    2,746 
Deferred Taxes   13,618    11,630 
Investments in affiliated companies   3,022    77,107 
Prepaid expenses and other accounts receivable   5,406    3,885 
Total  long-term investments   22,377    95,368 
           
SEVERANCE PAY FUND    66,799    49,507 
           
PROPERTY, PLANTS AND EQUIPMENT, NET    21,459    19,165 
           
NET INTANGIBLE ASSETS AND GOODWILL   401,404    200,104 
           
TOTAL  ASSETS   881,041    671,137 
           
CURRENT LIABILITIES:          
Liabilities to banks   23,607    16,642 
Debentures   15,735    31,472 
Trade payables   51,943    40,344 
Deferred revenues   33,998    24,001 
Other accounts payable   97,848    70,204 
Total current liabilities   223,131    182,663 
           
LONG-TERM LIABILITIES:          
Liabilities to banks and others   64,587    34,459 
Debentures   121    15,246 
Deferred revenue   1,346    2,094 
Other long-term payables   19,243    9,697 
Accrued severance pay   81,832    63,321 
Total long-term liabilities   167,129    124,817 
           
REDEEMABLE NON-CONTROLING INTEREST   22,283    11,469 
           
EQUITY           
Formula shareholders' equity   245,052    218,668 
Non-controlling interests   223,446    133,520 
Total equity   468,498    352,188 
           
TOTAL LIABILITIES AND EQUITY   881,041    671,137