Foreign Filer Report • Feb 21, 2017
Foreign Filer Report
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| General Information | |||||
|---|---|---|---|---|---|
| Form Type* | 6-K | ||||
| Contact Name | Radmila Chernickina | ||||
| Contact Phone | 866-683-5252 | ||||
| Filer File Number | |||||
| Filer CIK* | 0000876779 [MAGIC SOFTWARE ENTERPRISES LTD] | ||||
| Filer CCC* | **** | ||||
| Confirming Copy | No | ||||
| Notify via Website only | No | ||||
| Return Copy | No | ||||
| SROS* | NASD | ||||
| Period* | 02-21-2017 | ||||
| (End General Information) |
| Document Information | |||
|---|---|---|---|
| File Count* | 2 | ||
| Document Name 1* | v460035_6k.htm | ||
| Document Type 1* | 6-K | ||
| Document Description 1 | Form 6-K | ||
| Document Name 2* | v460035_ex1-1.htm | ||
| Document Type 2* | EX-99.1 | ||
| Document Description 2 | Exhibit 1.1 | ||
| (End Document Information) | |||
| Notifications | ||||
|---|---|---|---|---|
| Notify via Website only | No | |||
| E-mail 1 | [email protected] | |||
| (End Notifications) |
For the month of February 2017
MAGIC SOFTWARE ENTERPRISES LTD.
(Name of Registrant)
5 HaPlada Street, Or-Yehuda, Israel 60218 (Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ________
This report on Form 6-K of MAGIC SOFTWARE ENTERPRISES Ltd. consists of the following documents, which are attached hereto and incorporated by reference herein:
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
MAGIC SOFTWARE ENTERPRISES LTD. (Registrant)
By: /s/ Amit Birk
Amit Birk VP, General Counsel
Date: February 21, 2017
Exhibit 1.1 Magic Delivers Record-Breaking Revenues of \$202 Million for 2016 with 15% Year over Year Growth
______________________
Exhibit 1.1
Or Yehuda, Israel, February 21, 2017 – Magic Software Enterprises Ltd. (NASDAQ and TASE: MGIC), a global provider of mobile and cloudenabled application and business integration platforms, announced today its financial results for the fourth quarter and full year ended December 31, 2016.
Net income attributable to Magic's shareholders for the fourth quarter was negatively impacted by an increase in valuation of contingent considerations related to acquisitions and by an increase in value of put options of redeemable non-controlling interests related to acquired operations amounting to \$3.1 million due to acquired operations outperforming their targets1.
Non-GAAP net income attributable to Magic's shareholders for the fourth quarter decreased 24% to \$4.3 million, or \$0.10 per fully diluted share, compared to \$5.6 million, or \$0.13 per fully diluted share, in the same period last year.
1 When a founder (minority shareholder) of an acquired operation is granted a PUT option to sell part or all of their remaining share interests during a certain period, the non-controlling interests are classified as redeemable non-controlling interests. Magic remeasures and accordingly adjusts the fair value of its redeemable non-controlling interests at the end of each reporting period based on the estimated present value of the consideration to be transferred upon the exercise of the put option.
Non-GAAP net income attributable to Magic's shareholders for the twelve-month period of 2016 decreased 10% to \$19.6 million, or \$0.44 per fully diluted share, compared to \$21.7 million, or \$0.49 per fully diluted share, in the same period last year.
"I am happy that we succeeded in exceeding our revenue guidance for the full year, achieving record-breaking revenues of \$202 million.
We were aware that our margins would be affected due to the software license renewal lifecycle, as some large enterprise customers are due to renew their software licenses starting next year and I am pleased that we succeeded in compensating for this.
The high visibility we have into the business, along with our diversified portfolio, and the upturn in the software license renewal lifecycle, make us very positive about our ability to accelerate growth and ramp up operating profits in 2017," added Bernstein.
Magic is providing guidance for 2017 full year revenues of between \$225 million to \$230 million, reflecting annual growth of 12% to 14%.
Magic's management will host a conference call today, February 21, at 10:00 am Eastern Standard Time (7:00 am Pacific Standard Time, 17:00 Israel Standard Time) to review and discuss Magic's results.
To participate, please call one of the following teleconferencing numbers. Please begin placing your calls at least 10 minutes before the conference call commences. If you are unable to connect using the toll-free numbers, call the international dial-in number.
NORTH AMERICA: +1-888-668-9141 UK: 0-800-917-5108 ISRAEL: 03-918-0609 ALL OTHERS: +972-3-918-0609
For those unable to join the live call, a replay of the call will be available for at least 3 months, under the investor relations section of Magic's website, www.magicsoftware.com.
This press release contains the following non-GAAP financial measures: Non-GAAP gross profit, Non-GAAP operating income, Non-GAAP net income attributed to Magic's shareholders and Non-GAAP basic and diluted earnings per share.
Magic believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to Magic's financial condition and results of operations. Magic's management uses these non-GAAP measures to compare the Company's performance to that of prior periods for trend analyses, for purposes of determining executive and senior management incentive compensation and for budgeting and planning purposes. These measures are used in financial reports prepared for management and in quarterly financial reports presented to the Company's board of directors. The Company believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company's financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.
Management of the Company does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company's financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, management presents non-GAAP financial measures in connection with GAAP results. Magic urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company's business.
Non-GAAP measures used in this press release are included in the financial tables of this release. These non-GAAP measures exclude the following items:
Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included in the financial tables of this release.
Magic Software Enterprises Ltd. (NASDAQ and TASE: MGIC) is a global provider of mobile and cloud-enabled application and business integration platforms.
For more information, visit www.magicsoftware.com.
Some of the statements in this press release may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities and Exchange Act of 1934 and the United States Private Securities Litigation Reform Act of 1995. Words such as "will," "expects," "believes" and similar expressions are used to identify these forward-looking statements (although not all forward-looking statements include such words). These forward-looking statements, which may include, without limitation, projections regarding our future performance and financial condition, are made on the basis of management's current views and assumptions with respect to future events. Any forward-looking statement is not a guarantee of future performance and actual results could differ materially from those contained in the forward-looking statement. These statements speak only as of the date they were made, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. We operate in a changing environment. New risks emerge from time to time and it is not possible for us to predict all risks that may affect us. For more information regarding these risks and uncertainties as well as certain additional risks that we face, you should refer to the Risk Factors detailed in our Annual Report on Form 20-F for the year ended December 31, 2015 and subsequent reports and filings made from time to time with the Securities and Exchange Commission.
Magic is a registered trademark of Magic Software Enterprises Ltd. All other product and company names mentioned herein are for identification purposes only and are the property of, and might be trademarks of, their respective owners.
Press Contact:
Stephanie Myara, PR Manager Magic Software Enterprises [email protected]
| Three months ended | Twelve months ended | |||||||
|---|---|---|---|---|---|---|---|---|
| December 31, | December 31, | |||||||
| 2016 | 2015 | 2016 | 2015 | |||||
| Unaudited | Unaudited | |||||||
| Revenues | \$ | 55,141 | \$ | 47,856 | \$ | 201,646 | \$ | 176,030 |
| Cost of Revenues | 37,178 | 30,955 | 133,282 | 113,221 | ||||
| Gross profit | 17,963 | 16,901 | 68,364 | 62,809 | ||||
| Research and development, net | 1,793 | 1,163 | 5,839 | 4,888 | ||||
| Selling, marketing and general and | ||||||||
| administrative expenses | 11,033 | 10,765 | 40,839 | 36,465 | ||||
| Increase in valuation of contingent | ||||||||
| consideration related to acquisitions | 828 | - | 828 | 22 | ||||
| Total operating costs and expenses | 13,654 | 11,928 | 47,506 | 41,375 | ||||
| Operating income | 4,309 | 4,973 | 20,858 | 21,434 | ||||
| Financial expenses, net | (302) | (96) | (201) | (677) | ||||
| Income before taxes on income | 4,007 | 4,877 | 20,657 | 20,757 | ||||
| Taxes on income | 649 | 1,150 | 3,949 | 3,681 | ||||
| Net income | \$ | 3,358 | \$ | 3,727 | \$ | 16,708 | \$ | 17,076 |
| Change in current redeemable non-controlling interests | (915) | 9 | (2,258) | (639) | ||||
| Net income attributable to non-controlling interests | (55) | (58) | (281) | (239) | ||||
| Increase in value of put options of redeemable | ||||||||
| non-controlling interests | (2,262) | - | (2,262) | - | ||||
| Net income attributable to Magic's shareholders | \$ | 126 | \$ | 3,678 | \$ | 11,907 | \$ | 16,198 |
| Net earnings per share | ||||||||
| Basic | \$ | - | \$ | 0.08 | \$ | 0.27 | \$ | 0.37 |
| Diluted | \$ | - | \$ | 0.08 | \$ | 0.27 | \$ | 0.36 |
| Weighted average number of shares used in | ||||||||
| computing net earnings per share | ||||||||
| Basic | 44,356 | 44,295 | 44,347 | 44,248 | ||||
| Diluted | 44,530 | 44,456 | 44,516 | 44,452 |
U.S. Dollars in thousands (except per share amounts)
| Three months ended December 31, |
Twelve months ended December 31, |
||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | ||||||
| Unaudited | Unaudited | Unaudited | Unaudited | ||||||
| Revenues | \$ 55,141 | 100% | \$ 47,856 | 100% | \$201,646 | 100% | \$176,030 | 100% | |
| Gross profit | 19,331 | 35.1% | 18,828 | 39.3% | 73,588 | 36.5% | 68,327 | 38.8% | |
| Operating income | 7,301 | 13.2% | 7,373 | 15.4% | 28,242 | 14.0% | 27,172 | 15.4% | |
| Net income attributable to | |||||||||
| Magic Software shareholders | 4,309 | 7.8% | 5,633 | 11.8% | 19,646 | 9.7% | 21,742 | 12.4% | |
| Basic earnings per share | \$ 0.10 |
\$ 0.13 |
\$ 0.44 |
\$ 0.49 |
|||||
| Diluted earnings per share | \$ 0.10 |
\$ 0.13 |
\$ 0.44 |
\$ 0.49 |
Three months ended Twelve months ended December 31, December 31, 2016 2015 2016 2015 Unaudited Unaudited GAAP gross profit \$ 17,963 \$ 16,901 \$ 68,364 \$ 62,809 Amortization of capitalized software and acquired technology 1,187 986 4,464 4,024 Amortization of other intangible assets 178 935 745 1,462 Stock-based compensation 3 6 15 32 Non-GAAP gross profit \$ 19,331 \$ 18,828 \$ 73,588 \$ 68,327 GAAP operating income \$ 4,309 \$ 4,973 \$ 20,858 \$ 21,434 Gross profit adjustments 1,368 1,927 5,224 5,518 Amortization of other intangible assets 1,646 1,072 5,441 3,742 Increase in valuation of contingent consideration related to acquisitions 828 - 828 22 Capitalization of software development (867) (1,032) (4,244) (4,086) Litigation and other acquisition costs - 341 - 341 Stock-based compensation 17 92 135 201 Non-GAAP operating income \$ 7,301 \$ 7,373 \$ 28,242 \$ 27,172 GAAP net income attributable to Magic's shareholders \$ 126 \$ 3,678 \$ 11,907 \$ 16,198 Operating income adjustments 2,992 2,400 7,384 5,738 Amortization expenses attributed to redeemable non-controlling interests (149) (262) (732) (381) Increase in value of put options of redeemable non-controlling interests 2,262 - 2,262 - Deferred taxes on the above items (922) (183) (1,175) 187 Non-GAAP net income attributable to Magic's shareholders \$ 4,309 \$ 5,633 \$ 19,646 \$ 21,742 Non-GAAP basic net earnings per share \$ 0.10 \$ 0.13 \$ 0.44 \$ 0.49 Weighted average number of shares used in computing basic net earnings per share 44,356 44,295 44,347 44,248 Non-GAAP diluted net earnings per share \$ 0.10 \$ 0.13 \$ 0.44 \$ 0.49 Weighted average number of shares used in computing diluted net earnings per share 44,534 44,456 44,519 44,460
| Date: 02/21/2017 05:42 AM | Vintage | Project: v460035 Form Type: 6-K |
|---|---|---|
| Client: v460035_MAGIC SOFTWARE ENTERPRISES LTD_6-K | File: v460035_ex1-1.htm Type: EX-99.1 Pg: 9 of 9 |
U.S. Dollars in thousands
| December 31, 2016 Unaudited |
December 31, 2015 |
|||
|---|---|---|---|---|
| ASSETS | ||||
| CURRENT ASSETS: | ||||
| Cash and cash equivalents | \$ | 75,314 | \$ | 62,188 |
| Short-term bank deposits | 2 | 2,677 | ||
| Available-for-sale marketable securities | 12,506 | 11,819 | ||
| Trade receivables, net | 62,047 | 52,374 | ||
| Other accounts receivable and prepaid expenses | 8,831 | 6,244 | ||
| Total current assets | 158,700 | 135,302 | ||
| LONG-TERM RECEIVABLES: | ||||
| Severance pay fund | 2,568 | 1,454 | ||
| Long-term deferred tax assets | 3,548 | 2,823 | ||
| Other long-term receivables | 1,680 | 1,088 | ||
| Total long-term receivables | 7,796 | 5,365 | ||
| PROPERTY AND EQUIPMENT, NET | 3,065 | 2,296 | ||
| IDENTIFIABLE INTANGIBLE ASSETS AND | ||||
| GOODWILL, NET | 147,452 | 96,883 | ||
| TOTAL ASSETS | \$ | 317,013 | \$ | 239,846 |
| LIABILITIES AND EQUITY | ||||
| CURRENT LIABILITIES: | ||||
| Short-term debt | \$ | 1,187 | \$ | 13 |
| Trade payables | 8,393 | 6,331 | ||
| Accrued expenses and other accounts payable | 20,573 | 17,283 | ||
| Liabilities due to acquisition activities | 6,195 | 638 | ||
| Deferred revenues | 4,227 | 4,092 | ||
| Total current liabilities | 40,575 | 28,357 | ||
| NON-CURRENT LIABILITIES: | ||||
| Long-term debt | 34,214 | 3,257 | ||
| Long-term deferred tax liability | 12,763 | 5,726 | ||
| Liabilities due to acquisition activities | 3,379 | 1,039 | ||
| Accrued severance pay | 3,443 | 2,616 | ||
| Total non-current liabilities | 53,799 | 12,638 | ||
| REDEEMABLE NON-CONTROLLING INTERESTS | 25,706 | 5,745 | ||
| EQUITY: | ||||
| Magic Software Enterprises equity | 194,739 | 191,008 | ||
| Non-controlling interests | 2,194 | 2,098 | ||
| Total equity | 196,933 | 193,106 | ||
| TOTAL LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY | \$ | 317,013 | \$ | 239,846 |
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