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 August 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 August 2013 and incorporated by reference herein is the Registrant's immediate report dated August 15, 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: August 15, 2013

 

 
 

 

 

PRESS RELEASE

Formula Systems Reports Second Quarter Results for 2013 with Net Income of $4.9 Million, an Increase of 21% Year over Year

 

Second Quarter Revenues Increased by 8% Year-Over-Year to $201.2

 

Or Yehuda, Israel, August 15, 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 second quarter of 2013.

 

Financial Highlights for the Second Quarter Ended June 30, 2013

 

·Revenues for the second quarter ended June 30, 2013, increased 8% to $201.2 million compared to $186.1 million in the same period last year.

 

·Operating income for the second quarter ended June 30, 2013, increased 11% to $15.4 million, compared to $13.9 million in the same period last year; Non-GAAP operating income for the second quarter ended June 30, 2013, decreased 1% to $17.7 million, compared to $17.8 million in the same period last year.

 

·Net income for the second quarter ended June 30, 2013, increased 21% to $4.9 million (or $0.34 per fully diluted share) compared to $4.0 million (or $0.28 per fully diluted share) in the same period last year. Non-GAAP Net income for the second quarter ended June 30, 2013, increased 2% to $6.1 million compared to $6.0 million in the same period last year.

 

·On June 10, 2013, we declared a cash dividend in the amount of US $0.37 per share and in the aggregate amount of approximately US $5.5 million paid on July 2, 2013.

 

Financial Highlights for the Six-Month Period Ended June 30, 2013

 

·Revenues for the six-month period ended June 30, 2013, increased 7% to $389.9 million compared to $364.4 million in the same period last year.

 

·Operating income for the six-month period ended June 30, 2013, increased 3% to $28.6 million compared to $27.8 million in the same period last year; Non-GAAP operating income for the six-month period ended June 30, 2013, decreased 3% to $34.5 million compared to $35.5 million in the same period last year.

 

·Net income for the six-month period ended June 30, 2013, decreased 23% to $9.1 million (or $0.64 per fully diluted share) compared to $11.8 million (or $0.84 per fully diluted share) in the same period last year; Net income in 2012 included a net gain of $3.4 million resulting from the remeasurement of the Company’s investments, attributable to regaining controlling interest in Sapiens. Non-GAAP net income for the six-month period ended June 30, 2013, decreased 21% to $12.4 million compared to $15.7 million in the same period last year

 

·Formula’s consolidated cash and short term and long term investments in marketable securities totaled approximately $127.2 million, as of June 30, 2013.

 

·Total equity on June 30, 2013 was $479.8 million, representing 53% of the total balance sheet.

 

Comments of Management

 

Commenting on the results, Guy Bernstein, CEO of Formula Systems, said, “I am happy to report the second quarter results which reflect continuing strong financial performance across all of our subsidiaries, a direct result of our effective resource management and long-term growth strategy. During this quarter, Matrix has improved its gross profit, operating profit and net income by rapidly responding to changing market conditions and declared a cash dividend of approximately NIS16.8 million (or NIS0.28 per share). Sapiens reached record quarterly revenues of $33.1 million thanks to increasing demand for its solutions across its major markets and continues to make investments in its business to keep its market-leading position. Magic which continued its double-digit growth rate by winning new and repeat business and expanding its professional service activities has just announced a dividend for the first half of 2013 in the amount of approximately $3.4 million (or $0.09 per share) reflecting its strong financial position.”

 

 
 

 

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;

 

·Unwinding of discount in connection with liabilities due to acquisitions; and

 

·Related tax effect of the above items.

 

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   Six months ended 
   June 30,   June 30, 
   2013   2012   2013   2012 
   Unaudited   Unaudited 
Revenues   201,158    186,124    389,928    364,429 
Cost of revenues   152,710    142,017    296,120    278,353 
                     
Gross profit   48,448    44,107    93,808    86,076 
Research and development costs, net   3,873    2,772    7,980    5,211 
Selling, general and administrative expenses   29,121    27,506    57,241    53,113 
Other income (expenses), net   (11)   74    (2)   74 
                     
Operating income   15,443    13,903    28,585    27,826 
                     
Financial income (expenses), net   (2,091)   (2,265)   (3,566)   (3,759)
                     
Income before taxes on income   13,352    11,638    25,019    24,067 
Taxes on income   2,253    1,610    4,039    3,652 
                     
Income after taxes   11,099    10,028    20,980    20,415 
Equity in gains (losses) of affiliated companies, net   (34)   -    (23)   3,719 
                     
Net income   11,065    10,028    20,957    24,134 
Change in redeemable non controlling interests   605    1,343    1,357    1,343 
Net income attributable to non-controlling interests   5,579    4,666    10,479    10,970 
                     
Net income attributable to Formula's shareholders   4,881    4,019    9,121    11,821 
                     
Earnings per share (basic)   0.36    0.30    0.67    0.87 
Earnings per share (diluted)   0.34    0.28    0.64    0.84 
                     
Number of shares used in computing earnings per share (basic)   13,654,478    13,596,000    13,625,239    13,596,000 
Number of shares used in computing earnings per share (diluted)   14,094,366    13,808,000    13,921,454    13,778,000 

  

 

 
 

 

FORMULA SYSTEMS (1985) LTD.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
U.S. dollars in thousands (except per share data)

 

 

   Three months ended   Six months ended 
   June 30,   June 30, 
   2013   2012   2013   2012 
   Unaudited   Unaudited 
                 
GAAP operating income   15,443    13,903    28,585    27,826 
Amortization of capitalized software and other intangible assets   4,215    4,784    8,983    9,493 
Capitalization of software development   (3,001)   (2,026)   (5,319)   (4,128)
Stock-based compensation   1,078    1,169    2,223    2,357 
Total adjustments to GAAP   2,292    3,927    5,887    7,722 
Non-GAAP operating income   17,735    17,830    34,472    35,548 
                     
                     
GAAP net income attributable to Formula's shareholders   4,881    4,019    9,121    11,821 
Amortization of capitalized software and other intangible assets   4,215    4,784    8,983    9,493 
Capitalization of software development   (3,001)   (2,026)   (5,319)   (4,128)
Stock-based compensation   1,078    1,169    2,223    2,357 
Non-controlling interest in amortization intangible assets   (672)   (1,437)   (2,032)   (2,841)
Unwinding of discount in connection with liabilities due to acquisitions   8    -    215    - 
Deferred taxes on the above items   (402)   (530)   (815)   (1,006)
Total adjustments to GAAP   1,226    1,960    3,255    3,875 
Non-GAAP net income attributable to Formula's shareholders   6,107    5,979    12,376    15,696 
                     
                     
Non-GAAP earnings per share (basic)   0.45    0.44    0.91    1.15 
Weighted average number of shares used in                    
   computing earnings per share (basic)   13,654,478    13,596,000    13,625,239    13,596,000 
                     
Non-GAAP earnings per share (diluted)   0.41    0.41    0.84    1.07 
Weighted average number of shares used in                    
   computing earnings per share (diluted)   14,718,782    14,719,000    14,718,782    14,719,000 

 

 

 
 

 

FORMULA SYSTEMS (1985) LTD.
CONSOLIDATED CONDENSED BALANCE SHEETS
U.S. dollars in thousands

 

 

   June 30,   December 31, 
   2013   2012 
   (Unaudited)     
ASSETS          
CURRENT ASSETS:          
Cash and cash equivalents   110,550    111,238 
Marketable securities   16,177    14,866 
Trade receivables   195,030    201,886 
Other accounts receivable   46,655    41,012 
Total current assets   368,412    369,002 
           
LONG-TERM INVESTMENTS:          
Marketable securities   426    331 
Deferred Taxes   14,537    13,618 
Investments in affiliated companyies   3,223    3,022 
Prepaid expenses and other accounts receivable   11,095    5,285 
Total  long-Term Investments   29,281    22,256 
           
SEVERANCE PAY FUND   68,831    66,799 
           
PROPERTY, PLANTS AND EQUIPMENT, NET   22,860    21,459 
           
NET INTANGIBLE ASSETS AND GOODWILL   412,000    401,404 
           
TOTAL  ASSETS   901,384    880,920 
           
CURRENT LIABILITIES:          
Liabilities to banks   22,220    23,607 
Debentures   -    15,735 
Trade payables   48,033    51,943 
Deferred revenues   46,200    33,998 
Other accounts payable   95,624    98,009 
Total current liabilities   212,077    223,292 
           
LONG-TERM LIABILITIES:          
Liabilities to banks and others   74,420    64,659 
Deferred revenue   5,861    1,346 
Other long-term payables   21,322    19,010 
Accrued severance pay   84,548    81,832 
Total long-term liabilities   186,151    166,847 
           
REDEEMABLE NON-CONTROLING INTEREST   23,371    22,363 
           
EQUITY          
Formula shareholders' equity   251,114    245,067 
Non-controlling interests   228,671    223,351 
Total equity   479,785    468,418 
           
TOTAL LIABILITIES AND EQUITY   901,384    880,920