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 2012

 

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 2012 and incorporated by reference herein is the Registrant's immediate report dated August 15, 2012.

 

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, 2012

 

 
 

 

PRESS RELEASE

 

Formula Systems Reports Record-breaking Revenues of $186 Million for the Second Quarter of 2012, with 12% Growth Year-over-Year

 

Second Quarter Non-GAAP Net Income Increased by 19% Year-Over-Year to Reach $7.6 Million

 

Or Yehuda, Israel, August 15, 2012 – 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 2012.

 

Financial Highlights for the Six-Month Period Ended June 30, 2012

 

·Revenues for the six-month period ended June 30, 2012, increased 13% to $364.4 million compared to $321.8 million in the same period last year.

 

·Operating income for the six-month period ended June 30, 2012, increased 8% to $27.8 million compared to $25.7 million in the same period last year; Non-GAAP operating income for the six-month period ended June 30, 2012, increased 21% to $35.4 million compared to $29.2 million in the same period last year.

 

·Net income for the six-month period ended June 30, 2012, increased 29% to $11.8 million compared to $9.2 million in the same period last year; Non-GAAP net income for the six-month period ended June 30, 2012, increased 49% to $18.5 million compared to $12.4 million in the same period last year

 

·Formula’s consolidated cash and short term and long term investments in marketable securities totaled approximately $126.0 million, as of June 30, 2012.

 

·Total equity on June 30, 2012 was $448.7 million, representing 54% of the total balance sheet.

 

Financial Highlights for the Second Quarter Ended June 30, 2012

 

·Revenues for the second quarter ended June 30, 2012, increased 12% to $186.1 million compared to $165.9 million in the same period last year. Revenues for the second quarter of 2012 were negatively affected mainly by the devaluation of the U.S. dollar versus the New Israeli Shekel and the Euro in the amount of approximately $16.1 million in comparison to the same period last year.

 

·Operating income for the second quarter ended June 30, 2012, increased 3% to $13.9 million, compared to $13.5 million in the same period last year. Operating income for the second quarter of 2012 was negatively affected by the devaluation of the U.S. dollar versus the New Israeli Shekel in the amount of approximately $0.6 million in comparison to the same period last year; Non-GAAP operating income for the second quarter ended June 30, 2012, increased 20% to $17.9 million, compared to $15.0 million in the same period last year.

 

·Net income for the second quarter ended June 30, 2012, decreased 20% to $4.0 million compared to $5.0 million in the same period last year. Net income for the second quarter of 2012 was negatively affected mainly by the devaluation of the U.S. Dollar versus the New Israeli Shekel and the Euro in the amount of approximately $0.6 million in comparison to the same period last year; Non-GAAP Net income for the second quarter ended June 30, 2012, increased 19% to $7.6 million compared to $6.4 million in the same period last year.

 

Results

 

·For the six-month period ended June 30, 2012, total revenues were $364.4 million, with net income of $11.8 million, or $0.84 per fully diluted share. This compares with revenues of $321.8 million and net income of $9.2 million, or $0.65 per fully diluted share, for the same period last year.

 

 
 

 

·For the second quarter ended June 30, 2012, total revenues were $186.1 million, with net income of $4.0 million, or $0.28 per fully diluted share. This compares with revenues of $165.9 million and net income of $5.0 million, or $0.35 per fully diluted share, for the same period last year.

 

Comments of Management

 

Commenting on the results, Guy Bernstein, CEO of Formula Systems, said: “The first half of 2012 was a very successful period for Formula, reflecting the continued strong performance of our subsidiaries, Matrix, Sapiens, and Magic. Despite an uncertain climate in the enterprise software industry and in the global economy in general, we continued to set new records for revenue and maintained our profitability. Moving forward, we plan to continue to nurture and strengthen our relationships with our customers and partners, developing our product portfolios and our business models to provide greater added value.”

 

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 our 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 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, 
   2012   2011   2012   2011 
   Unaudited   Unaudited 
Revenues   186,124    165,875    364,429    321,791 
Cost of revenues   142,017    126,022    278,353    245,738 
Gross profit   44,107    39,853    86,076    76,053 
Research and development costs, net   2,772    1,535    5,211    3,220 
Selling, general and administrative expenses   27,506    24,993    53,113    47,265 
Other income, net   74    146    74    177 
Operating income   13,903    13,471    27,826    25,745 
Financial expenses, net   2,265    1,788    3,759    3,146 
Income before taxes on income   11,638    11,683    24,067    22,599 
Taxes on income   1,610    1,685    3,652    3,861 
    10,028    9,998    20,415    18,738 
Gain derived from consolidation of subsidiary and equity in gains (losses) of affiliated companies, net   -    103    3,719    (137)
Net income   10,028    10,101    24,134    18,601 
Change in redeemable non-controlling interests   1,343    -    1,343    - 
Net income attributable to non-controlling interests   4,666    5,089    10,970    9,412 
Net income attributable to Formula's shareholders   4,019    5,012    11,821    9,189 
                     
                     
Earnings per share (basic)   0.30    0.37    0.87    0.68 
Earnings per share (diluted)   0.28    0.35    0.84    0.65 
                     
                     
Number of shares used in computing earnings per share (basic)   13,596    13,497    13,596    13,481 
Number of shares used in computing earnings per share (diluted)   13,808    13,679    13,778    13,663 

 

 
 

 

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, 
   2012   2011   2012   2011 
   Unaudited   Unaudited 
GAAP operating income   13,903    13,471    27,826    25,745 
Amortization of capitalized software and other intangible assets   4,901    2,878    9,374    5,442 
Capitalization of software development   (2,026)   (2,579)   (4,128)   (5,023)
Stock-based compensation   1,169    1,188    2,357    3,009 
Total adjustments to GAAP   4,044    1,487    7,603    3,428 
Non-GAAP operating income   17,947    14,958    35,429    29,173 
                     
                     
GAAP net income attributable to Formula's shareholders   4,019    5,012    11,821    9,189 
Amortization of capitalized software and other intangible assets   4,901    2,878    9,374    5,442 
Capitalization of software development   (2,026)   (2,579)   (4,128)   (5,023)
Stock-based compensation   1,169    1,188    2,357    3,009 
Taxes on the above items   (463)   (128)   (904)   (226)
Total adjustments to GAAP   3,581    1,359    6,699    3,202 
Non-GAAP net income attributable to Formula's shareholders   7,600    6,371    18,520    12,391 
                     
                     
Non-GAAP earnings per share (basic)   0.55    0.43    1.35    0.89 
Number of shares used in computing earnings per share (basic)   13,596    13,497    13,596    13,481 
                     
Non-GAAP earnings per share (diluted)   0.53    0.45    1.31    0.86 
Number of shares used in computing earnings per share (diluted)   13,808    13,679    13,778    13,663 

 

 
 

 

FORMULA SYSTEMS (1985) LTD.

CONSOLIDATED CONDENSED BALANCE SHEETS

U.S. dollars in thousands

 

    June 30,     December 31,  
    2012     2011  
    (Unaudited)        
ASSETS                
                 
CURRENT ASSETS:                
  Cash and cash equivalents     108,863       88,172  
  Marketable securities     14,002       14,347  
  Short-term deposits     397       5,170  
  Trade receivables     180,003       163,219  
  Other accounts receivable     39,373       36,085  
Total current assets     342,638       306,993  
                 
LONG-TERM INVESTMENTS:                
  Marketable securities     2,762       2,746  
  Deferred Taxes     17,162       11,630  
  Investments in affiliated companies     2,850       77,107  
  Prepaid expenses and other accounts receivable     4,438       3,885  
Total long-Term Investments     27,212       95,368  
                 
SEVERANCE PAY FUND     60,420       49,507  
                 
PROPERTY, PLANTS AND EQUIPMENT, NET     20,263       19,165  
                 
NET INTANGIBLE ASSETS AND GOODWILL     377,155       198,188  
                 
TOTAL ASSETS     827,688       669,221  
                 
CURRENT LIABILITIES:                
  Liabilities to banks     15,068       16,642  
  Debentures     15,731       31,472  
  Trade payables     43,112       40,344  
  Deferred revenues     46,342       22,653  
  Other accounts payable     80,287       70,054  
Total current liabilities     200,540       181,165  
                 
LONG-TERM LIABILITIES:                
  Liabilities to banks and others     42,413       34,459  
  Debentures     15,027       15,246  
  Deferred revenue     1,752       2,094  
  Other long-term pyables     11,171       9,258  
  Accrued severance pay     77,387       63,321  
Total long-term liabilities     147,750       124,378  
                 
REDEEMABLE NON-CONTROLING INTEREST     30,691       11,469  
                 
EQUITY                
  Formula shareholders' equity     229,251       218,668  
  Non-controlling interests     219,456       133,541  
Total equity     448,707       352,209  
                 
TOTAL LIABILITIES AND EQUITY     827,688       669,221