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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 2017


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 2015 and incorporated by reference herein is the Registrant's immediate report dated  March 16, 2017.


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 16, 2017



PRESS RELEASE

Formula Systems Reports Full-Year Results for 2016 with Record-Breaking Revenues and Operating Income

Or Yehuda, Israel, March 16, 2017 – Formula Systems (1985) Ltd. (NASDAQ: FORTY), a global information technology holding company engaged, through its subsidiaries and affiliates, in providing software consulting services and computer-based business solutions and developing proprietary software products, today announced its results for the fourth quarter and the full year ended December 31, 2016, in accordance with International Financial Reporting Standards (IFRS).


Financial Highlights for the Fourth Quarter of 2016

Consolidated Revenues for the fourth quarter ended December 31, 2016, increased by 19.3% to a record-breaking $302.3 million, compared to $253.4 million in the same period last year.

Consolidated operating income for the fourth quarter ended December 31, 2016, increased by 9.3% to $22.9 million, compared to $21.0 million in the same period last year.  

Consolidated net income attributable to Formula’s shareholders for the fourth quarter ended December 31, 2016, increased by 3.6% to $5.9 million, or $0.40 per fully diluted share, compared to $5.7 million, or $0.39 per fully diluted share, in the same period last year.

As of December 31, 2016, Formula held 50.0%, 48.9%, 47.3% and 50% of the outstanding ordinary shares of Matrix IT, Sapiens International Corporation N.V, Magic Software Enterprises Ltd. and TSG IT Advanced Systems, respectively.



Financial Highlights for the Year Ended December 31, 2016

Consolidated revenues for the year ended December 31, 2016, increased by 13.9% to a record-breaking $1.1 billion, compared to $973.2 million for last year.

Consolidated operating income for the year ended December 31, 2016, increased by 16.7% to a record-breaking $88.5 million, compared to $75.9 million for last year.  

Consolidated net income attributable to Formula’s shareholders for the year ended December 31, 2016, increased by 13.2% to $22.4 million, or $1.49 per fully diluted share, compared to $19.8 million, or $1.33 per fully diluted share, for last year.

Consolidated cash, short-term and long-term investments in marketable securities and bank deposits totaled approximately $292.9 million as of December 31, 2016.  

Total consolidated equity as of December 31, 2016, was $723.8 million (representing 53.3% of the total balance sheet).

As of December 31, 2016, Formula was in compliance with all of its financial covenants under the debentures issued by Formula in September 2015 and under loans granted from other financial institutions.





Comments of Management


Commenting on the results, Guy Bernstein, CEO of Formula Systems, said, “We are very pleased to report another quarter and full year of strong growth and performance across our entire portfolio. Sapiens delivered double-digit growth across all of its offerings and territories, with revenues up 16.5% year over year to a record breaking $216.2 million (on a non-GAAP basis), exceeding its guidance, and non-GAAP operating income reaching a record-breaking $29.6 million for the year. While Sapiens’ recently announced acquisition of StoneRiver Inc. significantly expands its presence in North America, the company is also continuing to grow organically, with increased sales of existing solutions, and new offices in Copenhagen and Istanbul. Sapiens is very optimistic about its continued growth, providing 2017 full-year revenue guidance of $270-$280 million, reflecting an annual growth rate of 25%-30%. Matrix had a record-breaking year in 2016, achieving double-digit growth in all major financial indicators, including revenues, operating income and net income. Matrix is continuing its focus on high-growth sectors including cyber, cloud, mobile, Big Data and digital solutions and is confident that it can continue its momentum in 2017. Magic exceeded its revenue guidance, reporting record-breaking 2016 revenues of $202 million, reflecting 15% growth year over year, and record operating cash flow of $28.1 million, an increase of 43% year over year. Magic’s high visibility to its business, together with its diversified portfolio, make it very positive about its ability to accelerate growth and ramp up operating profit in 2017. In light of this, Magic provided 2017 full-year revenue guidance in the range of $225-$230 million, reflecting annual growth of 12-14%.”

 


Transition to International Financial Reporting Standards (“IFRS”)

In accordance with Formula’s May 2016 announcement that it will report its financial results under IFRS as of January 1, 2016 (date of adoption), the Company’s Consolidated Statements of Financial Position and Consolidated Statements of Profit or Loss for the fourth quarter and full year ended December 31, 2016 and the comparative periods of 2015 are also reported under IFRS.

The main difference between IFRS and US GAAP reporting, as it applies to the Company, relates to the consolidation of the results of operations of subsidiaries. Under US GAAP, companies are evaluated for consolidation purposes based on voting interests, to determine whether the reporting entity controls and therefore consolidates them. Under US GAAP, the majority voting interest holder of a company (i.e., ownership of more than 50% of the outstanding voting shares of an entity) consolidates the results of that company. Upon transitioning to reporting based on IFRS, the Company consolidated the results of operations of Sapiens International Corporation N.V. and Magic Software Enterprises Ltd. over which it has effective control (“de facto control”), as required under IFRS (even where it is not the majority voting interest holder). “De facto control” exists when the Company’s rights in such entities are sufficient to give it the practical ability to direct the relevant activities of such entities even where it does not have more than 50% of the voting power therein. The Company believes that consolidating the results of operations of entities over which it has “de facto control” provides more consistency in accounting treatment and financial reporting over future periods, whether or not the Company's interest in these entities exceeds 50% (but provided that, and for as long as, it has “de facto control” over such entities). The concept of “de facto control” does not exist under US GAAP. The Company believes that this change provides shareholders with information that better reflects the Company's operations through the subsidiaries that it effectively controls.  





About Formula

Formula Systems (1985) Ltd. is a global information technology company engaged, through its subsidiaries and affiliates, in providing software consulting services and computer-based business solutions and developing proprietary software products.

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,

 

2016

 

2015

 

2016

 

2015

 

Unaudited

 

Unaudited

Revenues

302,314

 

253,375

 

1,108,621

 

973,194

Cost of revenues

233,959

 

189,601

 

849,840

 

741,270

 

 

 

 

 

 

 

 

Gross profit

68,355

 

63,774

 

258,781

 

231,924

Research and development costs, net

6,881

 

3,910

 

22,328

 

15,123

Selling, general and administrative expenses

38,552

 

38,895

 

147,953

 

140,935

 

 

 

 

 

 

 

 

Operating income

22,922

 

20,969

 

88,500

 

75,866

Financial expenses, net

(3,301)

 

(2,161)

 

(11,586)

 

(9,533)

 

 

 

 

 

 

 

 

Income before taxes on income

19,621

 

18,808

 

76,914

 

66,333

Taxes on income

5,763

 

4,517

 

21,163

 

15,984

Income after taxes

13,858

 

14,291

 

55,751

 

50,349

Equity in gains of affiliated companies, net

(442)

 

                -

 

349

 

5

 

 

 

 

 

 

 

 

Net income

13,416

 

14,291

 

56,100

 

50,354

Change in redeemable non-controlling interests

781

 

(460)

 

2,571

 

864

Net income attributable to non-controlling interests

6,690

 

9,013

 

31,084

 

29,661

 

 

 

 

 

 

 

 

Net income attributable to Formula's shareholders

5,945

 

5,738

 

22,445

 

19,829

 

 

 

 

 

 

 

 

Earnings per share (basic)

0.42

 

0.40

 

1.58

 

1.41

Earnings per share (diluted)

0.40

 

0.39

 

1.49

 

1.33

 

 

 

 

 

 

 

 

Number of shares used in computing earnings per share (basic)

14,267,339

 

14,124,492

 

14,213,719

 

14,071,210

Number of shares used in computing earnings per share (diluted)

15,529,192

 

14,666,577

 

15,525,261

 

14,665,365

 

 

 

 

 

 

 

 



 

FORMULA SYSTEMS (1985) LTD.

 

 

 

 

 

 

 

 

U.S. dollars in thousands

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

December 31,

 

 

 

 

 

 

2016

 

 

2015

 

 

 

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

 ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

238,161

 

 

249,141

 

 

 

Marketable securities

 

 

37,516

 

 

31,605

 

 

 

Short-term deposits

 

 

13

 

 

2,688

 

 

 

Trade receivables

 

 

308,338

 

 

257,631

 

 

 

Other accounts receivable

 

 

46,025

 

 

43,112

 

 

 

Inventories

 

 

3,953

 

 

4,807

 

 

Total current assets

 

 

634,006

 

 

588,984

 

 

 

 

 

 

 

 

 

 

 

 

LONG-TERM INVESTMENTS:

 

 

 

 

 

 

 

 

 

Marketable securities

 

 

17,228

 

 

30,875

 

 

 

Deferred taxes

 

 

15,227

 

 

16,347

 

 

 

Investments in an affiliated company

 

 

24,080

 

 

-

 

 

 

Prepaid expenses and other assets

 

 

14,390

 

 

11,506

 

 

Total long-term investments

 

 

70,925

 

 

58,728

 

 

 

 

 

 

 

 

 

 

 

 

PROPERTY, PLANTS AND EQUIPMENT, NET

 

 

26,130

 

 

22,003

 

 

 

 

 

 

    

 

 

NET INTANGIBLE ASSETS AND GOODWILL

 

 

627,605

 

 

545,677

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL  ASSETS

 

 

1,358,666

 

 

1,215,392

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

 

Liabilities to banks and others financial institutions

 

 

84,760

 

 

59,082

 

 

 

Debentures

 

 

3,274

 

 

213

 

 

 

Trade payables

 

 

80,114

 

 

68,051

 

 

 

Deferred revenues

 

 

37,375

 

 

39,694

 

 

 

Employee and payroll accruals  

 

 

89,152

 

 

76,653

 

 

 

Other accounts payable

 

 

43,785

 

 

41,676

 

 

 

Dividend payable to non-controlling interests

 

 

7,072

 

 

-

 

 

 

Liability related to business combinations

 

 

7,909

 

 

2,866

 

 

 

Redeemable non-controlling interests

 

 

6,073

 

 

4,673

 

 

Total current liabilities

 

 

359,514

 

 

292,908

 

 

 

 

 

 

 

 

 

 

 

 

LONG-TERM LIABILITIES:

 

 

 

 

 

 

 

 

 

Liabilities to banks and others financial institutions

 

 

115,080

 

 

103,808

 

 

 

Other long-term liabilities

 

 

12,380

 

 

7,811

 

 

 

Debentures

 

 

55,441

 

 

57,128

 

 

 

Deferred taxes

 

 

30,939

 

 

22,667

 

 

 

Customer advances

 

 

4,697

 

 

4,396

 

 

 

Liability related to business combinations

 

 

6,932

 

 

3,434

 

 

 

Liabilities related to capital lease

 

 

108

 

 

494

 

 

 

Accrued severance pay, net

 

 

6,174

 

 

3,389

 

 
 

Redeemable non-controlling interests

 

 

43,556

 

 

14,078

 

 

Total long-term liabilities

 

 

275,307

 

 

217,205

 

 

 

 

 

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

 

 

 

Formula shareholders' equity

 

 

336,390

 

 

329,899

 

 

 

Non-controlling interests

 

 

387,455

 

 

375,380

 

 

Total equity

 

 

723,845

 

 

705,279

 

 

TOTAL LIABILITIES AND EQUITY

 

 

1,358,666

 

 

1,215,392

 

 

FORMULA SYSTEMS (1985) LTD.

 

 

 

 

 

 

STANDALONE FINANCIAL DATA HIGHLIGHTS

 

 

 

 

 

U.S. dollars in thousands

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

 

 

 

 

2016

 

2015

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

Debentures

 

 

 

 

58,715

 

57,341

 

 

 

 

 

 

 

 

 

 

Other financial liabilities

 

 

 

46,564

 

52,623

 

 

 

 

 

 

 

 

 

 

Formula shareholders' equity

 

 

 

336,390

 

329,899

 

 

 

 

 

 

 

 

 

 

Cash, cash equivalents and short-term marketable securities

 

 

43,537

 

78,436

 

 

 

 

 

 

 

 

 

 

Fair market value of equity holdings in publicly traded subsidiaries

 

725,860

 

532,697