o
|
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
|
x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Title of Each Class | Name of Each Exchange On Which Registered |
Ordinary Shares, NIS 1 par value
|
Tel Aviv Stock Exchange
|
American Depositary Shares | NASDAQ Global Market |
U.S. GAAP x
|
International Financial Reporting Standards as issued
by the International Accounting Standards Board o
|
Other o
|
Report of Independent Registered Public Accounting Firm
|
F-1
|
|
Consolidated Balance Sheets at December 31, 2010 and 2009
|
F-4
|
|
Consolidated Statements of Operations for the Years Ended December 31, 2010, 2009 and 2008
|
F-6
|
|
Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2010, 2009 and 2008
|
F-7
|
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2010, 2009 and 2008
|
F-8
|
|
Notes to Consolidated Financial Statements
|
F-13
|
Exhibit
No.
|
|||||
1.1
|
Memorandum of Association (1)
|
||||
1.2
|
Articles of Association as amended on December 28, 2005 (2)
|
||||
2.1
|
Depositary Agreement by and among Formula Systems (1985) Ltd., Bank of New York Mellon and the holders of the American Depositary Shares of Formula Systems (1985) Ltd. (1)
|
||||
4.1
|
Form of Letter of Indemnification, dated December 28, 2005 (2)
|
||||
4.2
|
English translation of Formula Systems (1985) Ltd. Employees and Office Holders Share Option Plan (2008)(3)
|
||||
8
|
List of Subsidiaries*
|
||||
12.1
|
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) under the Exchange Act**
|
||||
13.1
|
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b)/Rule 15d-14(b) under the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
|
||||
15.1
|
Consent of Kost, Forer, Gabbay & Kasierer, a member of Ernst & Young Global *
|
||||
15.2
|
Consent of Levy Cohen and Co. *
|
||||
15.3
|
Consent of Levy Cohen and Co. *
|
||||
15.4
|
Consent of Verstegen accountants en adviseurs*
|
||||
15.5
|
Consent of KDA Audit Corporation*
|
||||
15.6
|
Consent of Maria Negyessy*
|
||||
15.7
|
Consent of Ziv Haft, registered certified public accountants (Isr.) BDO member firm**
|
||||
15.8
|
Letter dated June 14, 2011 of Ziv Haft, registered certified public accountants (Isr.) BDO member firm, required to be filed under Item 16F(a)(3) of this annual report**
|
By:
|
/s/Guy Bernstein
|
June 14, 2011
|
Guy Bernstein
|
Date
|
|
Chief Executive Officer
|
Exhibit
No.
|
|||||
1.1
|
Memorandum of Association (1)
|
||||
1.2
|
Articles of Association as amended on December 28, 2005 (2)
|
||||
2.1
|
Depositary Agreement by and among Formula Systems (1985) Ltd., Bank of New York Mellon and the holders of the American Depositary Shares of Formula Systems (1985) Ltd. (1)
|
||||
4.1
|
Form of Letter of Indemnification, dated December 28, 2005 (2)
|
||||
4.2
|
English translation of Formula Systems (1985) Ltd. Employees and Office Holders Share Option Plan (2008)(3)
|
||||
8
|
List of Subsidiaries*
|
||||
12.1
|
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) under the Exchange Act**
|
||||
13.1
|
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b)/Rule 15d-14(b) under the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
|
||||
15.1
|
Consent of Kost, Forer, Gabbay & Kasierer, a member of Ernst & Young Global *
|
||||
15.2
|
Consent of Levy Cohen and Co. *
|
||||
15.3
|
Consent of Levy Cohen and Co. *
|
||||
15.4
|
Consent of Verstegen accountants en adviseurs*
|
||||
15.5
|
Consent of KDA Audit Corporation*
|
||||
15.6
|
Consent of Maria Negyessy*
|
||||
15.7
|
Consent of Ziv Haft, registered certified public accountants (Isr.) BDO member firm**
|
||||
15.8
|
Letter dated June 14, 2011 of Ziv Haft, registered certified public accountants (Isr.) BDO member firm, required to be filed under Item 16F(a)(3) of this annual report**
|
Page
|
||
Report Of Independent Registered Public Accounting Firms:
|
F-2 - F-4
|
|
Consolidated Financial Statements:
|
||
Balance Sheets
|
F-5 - F-6
|
|
Statements of Income
|
F-7
|
|
Statements of Changes in Shareholders' Equity
|
F-8 - F-9
|
|
Statements of Cash Flows
|
F-10 - F-13
|
|
Notes to Financial Statements
|
F-14 - F-63
|
Kost Forer Gabbay & Kasierer
3 Aminadav St.
Tel-Aviv 67067, Israel
Tel: 972 (3)6232525
Fax: 972 (3)5622555
www.ey.com/il
|
/s/ Kost, Forer, Gabbay & Kasierer | |
Tel-Aviv, Israel
|
KOST, FORER, GABBAY & KASIERER
|
March 18, 2011
|
A Member of Ernst & Young Global
|
Kost Forer Gabbay & Kasierer
3 Aminadav St.
Tel-Aviv 67067, Israel
Tel: 972 (3)6232525
Fax: 972 (3)5622555
www.ey.com/il
|
Kost Forer Gabbay & Kasierer
3 Aminadav St.
Tel-Aviv 67067, Israel
Tel: 972 (3)6232525
Fax: 972 (3)5622555
www.ey.com/il
|
/s/ Kost, Forer, Gabbay & Kasierer | |
Tel-Aviv, Israel
|
KOST, FORER, GABBAY & KASIERER
|
March 18, 2011
|
A Member of Ernst & Young Global
|
December 31,
|
||||||||
2010
|
2009
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
110,508 | 100,205 | ||||||
Marketable securities (Note 4)
|
38,170 | 44,171 | ||||||
Short-term deposits
|
24 | 13,838 | ||||||
Trade receivables (net of allowances for doubtful debts of $ 3,781 and $ 4,750 as of December 31, 2010 and 2009, respectively)
|
154,366 | 130,237 | ||||||
Other current assets (Note 16a)
|
23,140 | 22,448 | ||||||
Inventories
|
5,601 | 2,439 | ||||||
Total assets attributed to discontinued operations
|
- | 27 | ||||||
331,809 | 313,365 | |||||||
LONG-TERM INVESTMENTS:
|
||||||||
Marketable Securities (Note 4)
|
2,828 | 7,381 | ||||||
Deferred taxes (Note 15b)
|
13,135 | 9,499 | ||||||
Investments in affiliated company (Note 6)
|
3,209 | 3,710 | ||||||
Prepaid expenses and other assets
|
5,493 | 3,423 | ||||||
24,665 | 24,013 | |||||||
SEVERANCE PAY FUND
|
55,286 | 44,131 | ||||||
PROPERTY, PLANTS AND EQUIPMENT, NET (Note 7)
|
12,411 | 9,989 | ||||||
NET INTANGIBLE ASSETS (Note 9)
|
33,101 | 27,534 | ||||||
GOODWILL (Note 8)
|
166,495 | 147,407 | ||||||
|
623,767 | 566,439 |
December 31,
|
||||||||
2010
|
2009
|
|||||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Liabilities to banks (Note 16b)
|
6,684 | 10,055 | ||||||
Trade payables
|
53,177 | 43,777 | ||||||
Deferred revenue
|
26,845 | 25,206 | ||||||
Employees and payroll accrual
|
40,704 | 32,029 | ||||||
Other accounts payable (Note 16c)
|
30,693 | 26,994 | ||||||
Dividend payable
|
- | 6,694 | ||||||
Liability in respect of business combinations
|
3,963 | 210 | ||||||
Debentures (Note 11)
|
15,927 | 14,639 | ||||||
Liabilities attributed to discontinued operations
|
- | 314 | ||||||
177,993 | 159,918 | |||||||
LONG-TERM LIABILITIES:
|
||||||||
Debentures (Note 11)
|
31,854 | 43,918 | ||||||
Deferred taxes (Note 15e)
|
2,654 | 2,207 | ||||||
Customer advances
|
3,520 | 1,116 | ||||||
Liabilities to banks and others (Note 10)
|
3,154 | 8,556 | ||||||
Liability in respect of business combinations
|
4,758 | 1,517 | ||||||
Accrued severance pay
|
65,450 | 53,893 | ||||||
111,390 | 111,207 | |||||||
COMMITMENTS AND CONTINGENCIES (Note 13)
|
||||||||
SHAREHOLDERS' EQUITY (Note 14):
|
||||||||
Formula shareholders' equity:
|
||||||||
Share capital - ordinary shares of NIS 1 par value
Authorized - December 31, 2010 and 2009 - 25,000,000 shares; Issued: December 31, 2010 - 13,620,780 and 2009 - 13,224,780 shares)
|
3,807 | 3,736 | ||||||
Additional paid-in capital
|
136,222 | 131,631 | ||||||
Retained earnings
|
58,441 | 60,048 | ||||||
Other accumulated comprehensive loss
|
(596 | ) | (7,115 | ) | ||||
Treasury shares (24,780 shares as of December 31, 2010 and 2009)
|
(259 | ) | (259 | ) | ||||
Total Formula shareholders' equity
|
197,615 | 188,041 | ||||||
Non-controlling interests
|
136,769 | 107,273 | ||||||
TOTAL SHAREHOLDERS' EQUITY
|
334,384 | 295,314 | ||||||
623,767 | 566,439 |
Year ended
December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
Revenues (Note 16g)
|
||||||||||||
Proprietary software products
|
98,498 | 88,815 | 92,560 | |||||||||
Software services
|
451,196 | 380,575 | 410,683 | |||||||||
Total revenues
|
549,694 | 469,390 | 503,243 | |||||||||
Cost of revenues
|
||||||||||||
Proprietary software products
|
46,297 | 43,057 | 43,246 | |||||||||
Software services
|
366,166 | 309,226 | 330,529 | |||||||||
Total cost of revenues
|
412,463 | 352,283 | 373,775 | |||||||||
Gross profit
|
137,231 | 117,107 | 129,468 | |||||||||
Research and development costs, net
|
5,503 | 4,430 | 6,564 | |||||||||
Selling, general and administrative expenses
|
84,510 | 77,322 | 90,451 | |||||||||
Other expenses (income), net
|
231 | (1,668 | ) | 580 | ||||||||
Operating income
|
46,987 | 37,023 | 31,873 | |||||||||
Financial expenses, net (Note 16d)
|
(4,371 | ) | (231 | ) | (5,908 | ) | ||||||
Losses on realization of investments, net
|
- | - | (337 | ) | ||||||||
Income before taxes on income
|
42,616 | 36,792 | 25,628 | |||||||||
Taxes on income (Note 15)
|
(6,544 | ) | (8,305 | ) | (3,279 | ) | ||||||
36,072 | 28,487 | 22,349 | ||||||||||
Equity in losses of affiliated company, net
|
(1,070 | ) | (335 | ) | (216 | ) | ||||||
Income from continuing operation
|
35,002 | 28,152 | 22,133 | |||||||||
Net income from discontinued operations (Note 17d)
|
- | 4,878 | 555 | |||||||||
Net income
|
35,002 | 33,030 | 22,688 | |||||||||
Net income Attributable to non-controlling interests
|
16,623 | 13,954 | 10,819 | |||||||||
Net income attributable to Formula's shareholders
|
18,379 | 19,076 | 11,869 | |||||||||
Amount attributable to Formula's shareholders
|
||||||||||||
Income from continuing operation
|
18,379 | 14,198 | 11,314 | |||||||||
Income from discontinued operation
|
- | 4,878 | 555 | |||||||||
18,379 | 19,076 | 11,869 | ||||||||||
Earnings per share generated from continuing operation:
|
||||||||||||
Basic
|
1.37 | 1.08 | 0.84 | |||||||||
Diluted
|
1.36 | 1.04 | 0.84 | |||||||||
Earnings per share generated from discontinued operations:
|
||||||||||||
Basic
|
- | 0.37 | 0.04 | |||||||||
Diluted
|
- | 0.36 | 0.04 | |||||||||
Total earnings per share:
|
||||||||||||
Basic
|
1.37 | 1.44 | 0.88 | |||||||||
Diluted
|
1.36 | 1.40 | 0.88 | |||||||||
Weighted average number of shares outstanding in thousands (Note 16h):
|
||||||||||||
Basic
|
13,382 | 13,200 | 13,200 | |||||||||
Diluted
|
13,523 | 13,564 | 13,200 |
Accumulated
|
Total
|
|||||||||||||||||||||||||||||||
Additional
|
other
|
Cost of
|
Formula '
|
Non-
|
||||||||||||||||||||||||||||
Share Capital
|
paid-in
|
Retained
|
comprehensive
|
treasury
|
shareholders'
|
controlling
|
||||||||||||||||||||||||||
Number
|
Amount
|
capital
|
earnings
|
loss
|
shares
|
Equity
|
interests
|
|||||||||||||||||||||||||
Balance as of January 1, 2008
|
13,200,000 | 3,736 | 132,545 | 69,229 | (6,863 | ) | (259 | ) | 198,388 | 107,915 | ||||||||||||||||||||||
Changes during 2008:
|
||||||||||||||||||||||||||||||||
Net Income
|
- | - | - | 11,869 | - | - | 11,869 | 10,819 | ||||||||||||||||||||||||
Unrealized loss from available - for-sale securities, net
|
- | - | - | - | (1,123 | ) | - | (1,123 | ) | (20 | ) | |||||||||||||||||||||
Adjustment for other than temporary impairment on marketable securities
|
- | - | - | - | 27 | - | 27 | 20 | ||||||||||||||||||||||||
Foreign Currency translation adjustments
|
- | - | - | - | 859 | - | 859 | 1,164 | ||||||||||||||||||||||||
Total comprehensive income
|
- | - | - | - | - | - | 11,632 | |||||||||||||||||||||||||
Gain from issuance of shares to third party in a development stage entity
|
- | - | 43 | - | - | - | 43 | 43 | ||||||||||||||||||||||||
Stock Based Compensation expenses
|
- | - | - | - | - | - | - | 1,161 | ||||||||||||||||||||||||
Changes in non-controlling interests due to holding changes
|
- | - | - | - | - | - | - | (9,483 | ) | |||||||||||||||||||||||
Exercise of employees stock options
|
- | - | - | - | - | - | - | 1,426 | ||||||||||||||||||||||||
Dividend to Formulas'' shareholders and to non-controlling interests in subsidiaries
|
- | - | - | (40,126 | ) | - | - | (40,126 | ) | (5,612 | ) | |||||||||||||||||||||
Balance as of December 31, 2008
|
13,200,000 | 3,736 | 132,588 | 40,972 | (7,100 | ) | (259 | ) | 169,937 | 107,433 | ||||||||||||||||||||||
Changes during 2009:
|
||||||||||||||||||||||||||||||||
Net Income
|
- | - | - | 19,076 | - | - | 19,076 | 13,954 | ||||||||||||||||||||||||
Unrealized gain from derivative instruments, net
|
- | - | - | - | 3 | - | 3 | 2 | ||||||||||||||||||||||||
Unrealized gain (loss) from available - for-sale securities, net
|
- | - | - | - | (66 | ) | - | (66 | ) | 74 | ||||||||||||||||||||||
Other temporary impairment
|
(250 | ) | (250 | ) | ||||||||||||||||||||||||||||
Foreign Currency translation adjustments
|
- | - | - | - | 298 | - | 298 | 413 | ||||||||||||||||||||||||
Total comprehensive income
|
19,061 | |||||||||||||||||||||||||||||||
Stock Based Compensation expenses
|
- | - | 308 | - | - | - | 308 | 1,333 | ||||||||||||||||||||||||
Non-controlling interests changes due to holding changes including exercise of employees stock options
|
- | - | (1,265 | ) | - | - | - | (1,265 | ) | (842 | ) | |||||||||||||||||||||
Dividend to non-controlling interests in subsidiaries
|
- | - | - | - | - | - | - | (15,094 | ) | |||||||||||||||||||||||
Balance as of December 31, 2009
|
13,200,000 | 3,736 | 131,631 | 60,048 | (7,115 | ) | (259 | ) | 188,041 | 107,273 |
Accumulated
|
Total
|
|||||||||||||||||||||||||||||||
Additional
|
other
|
Cost of
|
Formula '
|
Non-
|
||||||||||||||||||||||||||||
Share Capital
|
paid-in
|
Retained
|
comprehensive
|
treasury
|
shareholders'
|
controlling
|
||||||||||||||||||||||||||
Number
|
Amount
|
capital
|
earnings
|
loss
|
shares
|
Equity
|
interests
|
|||||||||||||||||||||||||
Changes during 2010:
|
||||||||||||||||||||||||||||||||
Net Income
|
- | - | - | 18,379 | - | - | 18,379 | 16,623 | ||||||||||||||||||||||||
Unrealized gain from derivative instruments, net
|
- | - | - | - | 4 | - | 4 | 3 | ||||||||||||||||||||||||
Unrealized gain (loss) from available - for-sale securities, net
|
- | - | - | - | 180 | - | 180 | (21 | ) | |||||||||||||||||||||||
Realized gain from available-for-sale securities
|
- | - | - | - | 250 | - | 250 | |||||||||||||||||||||||||
Foreign Currency translation adjustments
|
- | - | - | - | 6,085 | - | 6,085 | 4,793 | ||||||||||||||||||||||||
Total comprehensive income
|
6,519 | 24,898 | ||||||||||||||||||||||||||||||
Stock Based Compensation expenses
|
- | - | 458 | - | - | - | 458 | 1,006 | ||||||||||||||||||||||||
Exercise of employees stock options
|
396,000 | 71 | (71 | ) | - | - | - | - | - | |||||||||||||||||||||||
Non controlling interests changes due to holding changes including exercise of employees stock options
|
6,258 | - | - | - | 6,258 | 16,068 | ||||||||||||||||||||||||||
Acquisition of non-controlling interests
|
(2,054 | ) | (2,054 | ) | (1,711 | ) | ||||||||||||||||||||||||||
Dividend to Formula's shareholders and to non-controlling interests in subsidiaries
|
- | - | - | (19,986 | ) | - | (19,986 | ) | (7,265 | ) | ||||||||||||||||||||||
Balance as of December 31, 2010
|
13,596,000 | 3,807 | 136,222 | 58,441 | (596 | ) | (259 | ) | 197,615 | 136,769 |
Year ended
December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
Accumulated unrealized loss from available - for-sale securities
|
(954 | ) | (1,384 | ) | (1,068 | ) | ||||||
Accumulated currency translation adjustments
|
351 | (5,734 | ) | (6,032 | ) | |||||||
Accumulated Unrealized gain from derivative instruments
|
7 | 3 | - | |||||||||
Accumulated other comprehensive income (loss)
|
596 | (7,115 | ) | (7,100 | ) |
Year ended
December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Net income
|
35,002 | 33,030 | 22,688 | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||
Impairment and write down of other investments and fixed assets
|
- | 59 | 502 | |||||||||
Impairment of available for sale marketable securities
|
292 | 143 | - | |||||||||
Equity in losses of affiliated company
|
1,070 | 335 | 216 | |||||||||
Depreciation and amortization
|
15,451 | 14,605 | 13,082 | |||||||||
Amortization of convertible debt discount, increase in value and current interest
|
1,728 | - | - | |||||||||
Increase (decrease) in accrued severance pay, net
|
(148 | ) | (1,618 | ) | 4,984 | |||||||
Gain from sale of operation and subsidiaries
|
(146 | ) | (4,389 | ) | - | |||||||
Loss (gain) from sale of property, plants and equipment
|
1 | (2,219 | ) | (341 | ) | |||||||
Loss (gain) on realization of shareholdings and operations
|
- | - | 337 | |||||||||
Stock-based compensation expenses
|
1,464 | 1,641 | 1,505 | |||||||||
Changes in financial liabilities, net
|
325 | (202 | ) | 4,950 | ||||||||
Loss (gain) from repurchase of convertible debt, net
|
- | 2 | (218 | ) | ||||||||
Changes in value of long term loans and deposits, net
|
64 | (210 | ) | (129 | ) | |||||||
Changes in deferred taxes, net
|
(3,355 | ) | 665 | (1,881 | ) | |||||||
Change in liability in respect of business combinations
|
265 | 458 | (558 | ) | ||||||||
Loss (gain) from sale and decrease (increase) in value of marketable securities classified as trading
|
630 | (2,609 | ) | 1,481 | ||||||||
Proceeds from derivatives
|
2,423 | - | - | |||||||||
Changes in operating assets and liabilities:
|
||||||||||||
Decrease (increase) in inventories
|
(3,007 | ) | 340 | 446 | ||||||||
Decrease (increase) in trade receivables
|
(9,500 | ) | 13,057 | (8,241 | ) | |||||||
Decrease (increase) in other accounts receivable
|
(1,129 | ) | 12,478 | 3,914 | ||||||||
Increase (decrease) in trade payables
|
5,666 | 1,604 | (2,602 | ) | ||||||||
Increase (decrease) in other accounts payable
|
925 | (12,875 | ) | 6,674 | ||||||||
Increase in customer advances
|
5,351 | 1,345 | 575 | |||||||||
Net cash provided by operating activities
|
53,372 | 55,640 | 47,384 |
Year ended
December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
Cash flows from investing activities:
|
||||||||||||
Acquisition of newly-consolidated subsidiaries and activities (Appendix C)
|
(13,975 | ) | (1,262 | ) | (13,633 | ) | ||||||
Proceeds from realization of investment in previously-consolidated subsidiaries (Appendix D)
|
- | 3,482 | - | |||||||||
Proceeds from sale of activity in a consolidated company
|
146 | 105 | - | |||||||||
Proceeds from sale of affiliates company
|
- | - | 150 | |||||||||
Proceeds from sale of subsidiary's operation
|
- | - | 15,506 | |||||||||
Changes in restrictions on short term deposit
|
- | 4,040 | (4,040 | ) | ||||||||
Restricted short term deposit, net
|
400 | - | - | |||||||||
Purchase of property and equipment
|
(5,348 | ) | (2,713 | ) | (4,055 | ) | ||||||
Proceeds from (investment in) marketable securities, net
|
12,246 | 3,064 | (6,795 | ) | ||||||||
Proceeds from sale of property, plants and equipment
|
446 | 5,666 | 1,011 | |||||||||
Investment in and loans to affiliates and other companies
|
(1,160 | ) | - | (187 | ) | |||||||
Other investments
|
(282 | ) | - | (756 | ) | |||||||
Payments to former shareholders of consolidated company
|
(121 | ) | (6,455 | ) | (5,973 | ) | ||||||
Changes in short term deposits, net
|
13,445 | (11,945 | ) | (1,659 | ) | |||||||
Proceeds from long term bank deposits
|
- | 139 | 3,090 | |||||||||
Capitalization of software development and other costs
|
(9,186 | ) | (6,960 | ) | (6,683 | ) | ||||||
Purchase of non-controlling interests in subsidiaries
|
- | - | (16,983 | ) | ||||||||
Net cash used in investing activities
|
(3,389 | ) | (12,839 | ) | (41,007 | ) |
Year ended
December 31,
|
||||||||||||
2010
|
2009
|
2008
|
||||||||||
Cash flows from financing activities:
|
||||||||||||
Exercise of employees stock options in subsidiaries
|
1,850 | 1,224 | 876 | |||||||||
Dividend paid to non-controlling interests in subsidiaries
|
(13,959 | ) | (8,400 | ) | (5,612 | ) | ||||||
Dividend to Formula's shareholders
|
(19,986 | ) | (29,964 | ) | (10,162 | ) | ||||||
Short-term bank credit, net
|
(229 | ) | (247 | ) | (15,151 | ) | ||||||
Repayment of long-term loans from banks and others
|
(7,574 | ) | (8,616 | ) | (10,855 | ) | ||||||
Receipt (payment) of short-term loans
|
(3,381 | ) | 1,580 | (750 | ) | |||||||
Share issuance in a subsidiary to non-controlling interest, net
|
20,290 | - | - | |||||||||
Purchase of non-controlling interests
|
(3,768 | ) | (3,774 | ) | - | |||||||
Proceeds from SWAP transactions
|
- | 1,061 | - | |||||||||
Repayment and repurchase of debenture
|
(15,927 | ) | (5,824 | ) | (18,128 | ) | ||||||
Net cash used in financing activities
|
(42,684 | ) | (52,960 | ) | (59,782 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents
|
3,004 | (238 | ) | 2,481 | ||||||||
Net increase (decrease) in cash and cash equivalents
|
10,303 | (10,397 | ) | (50,924 | ) | |||||||
cash and cash equivalents at beginning of year(*)
|
100,205 | 110,602 | 161,526 | |||||||||
Cash and cash equivalents at end of year (*)
|
110,508 | 100,205 | 110,602 |
Year ended
December 31,
|
|||||||||||||
2010
|
2009
|
2008
|
|||||||||||
a. |
Supplemental cash flow information::
|
||||||||||||
Cash paid in respect of:
|
|||||||||||||
Interest
|
3,847 | 4,064 | 5,077 | ||||||||||
Income tax
|
7,356 | 4,444 | 5,192 | ||||||||||
b. |
Non-cash activities:
|
||||||||||||
Dividend payable to Formula's shareholders and to non-controlling interests in subsidiaries
|
- | 6,694 | 29,964 | ||||||||||
Assets retirement obligation
|
- | 275 | - | ||||||||||
Receivables from sale of property
|
- | 450 | - | ||||||||||
c. |
Acquisition of newly-consolidated subsidiaries and activities:
|
||||||||||||
Assets and liabilities of subsidiaries consolidated as of acquisition date:
|
|||||||||||||
Working capital (other than cash and cash equivalents)
|
(3,341 | ) | - | (6,209 | ) | ||||||||
Property and equipment
|
(304 | ) | - | (543 | ) | ||||||||
Goodwill and intangible assets
|
(18,040 | ) | (1,262 | ) | (15,845 | ) | |||||||
Long-term liabilities
|
5,199 | - | 395 | ||||||||||
Other long term assets
|
717 | - | - | ||||||||||
Long term deferred tax liability
|
(173 | ) | - | 1,771 | |||||||||
Liability to formerly shareholders
|
- | - | 6,723 | ||||||||||
Non-controlling interests at acquisition date
|
1,967 | - | 75 | ||||||||||
Total
|
(13,975 | ) | (1,262 | ) | (13,633 | ) | |||||||
d. |
Proceeds from realization of investments in previously-consolidated subsidiaries:
|
||||||||||||
Working capital (other than cash and cash equivalents)
|
- | (2,259 | ) | - | |||||||||
Property and equipment
|
- | 144 | - | ||||||||||
Other assets, deferred expenses and long term payables
|
- | 1,337 | - | ||||||||||
Goodwill
|
- | 206 | - | ||||||||||
Adjustment to other comprehensive (loss) gain
|
- | (230 | ) | - | |||||||||
Gain from realization of investments in subsidiaries
|
- | 4,284 | |||||||||||
Total
|
- | 3,482 | - |
NOTE 1:-
|
GENERAL
|
|
a.
|
Formula Systems (1985) Ltd. ("Formula") was incorporated in Israel in 1985. Since 1991, Formula's shares have been traded on the Tel Aviv Stock Exchange ("TASE") and since 1997, through American Depositary Shares ("ADS") under the symbol FORTY on the Global Market in the United States ("NASDAQ"). Each ADS represents one ordinary share of Formula.
|
|
b.
|
The following table presents certain information regarding the control and ownership of Formula's significant subsidiaries, as of the dates indicated:
|
Percentage of ownership
and control
|
||||||||
December 31,
|
||||||||
2010
|
2009
|
|||||||
Name of subsidiary
|
||||||||
Matrix IT Ltd. ("Matrix")
|
50.1 | 50.1 | ||||||
Magic Software Enterprises Ltd. ("Magic")
|
51.7 | 58.1 | ||||||
Sapiens International Corporation N.V. ("Sapiens")
|
71.6 | 70.4 |
|
a.
|
The consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP").
|
|
b.
|
Use of estimates:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
c.
|
Financial statements in U.S. dollars:
|
|
d.
|
Principles of consolidation:
|
|
e.
|
Cash equivalents:
|
|
f.
|
Short-term deposits:
|
|
g.
|
Marketable securities:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
h.
|
Inventories:
|
|
i.
|
Investments in affiliates:
|
|
j.
|
Property, plant and equipment, net:
|
%
|
|||
Computers and equipment
|
7-33 (mainly 33%)
|
||
Motor vehicles
|
15 | ||
Buildings
|
2-4 | ||
Leasehold improvements
|
*-) |
|
*)
|
Over the shorter of the term of the lease or the estimated useful life of the asset.
|
|
k.
|
Intangible assets:
|
|
1.
|
Software development costs:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
2.
|
Other intangible assets:
|
%
|
||
Prepaid royalties
|
15 years
|
|
Distribution rights
|
5 years
|
|
Technology, usage rights and other intangible assets
|
3-8 years
|
|
l.
|
Impairment of long-lived assets and intangible assets subject to amortization:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
m.
|
Goodwill:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
n.
|
Business combinations:
|
|
o.
|
Variable interest entities:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
p.
|
Severance pay:
|
|
q.
|
Revenue Recognition:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
r.
|
Provision for warranty:
|
|
s.
|
Advertising costs:
|
|
t.
|
Income taxes:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
u.
|
Earnings per share:
|
|
v.
|
Treasury shares:
|
|
w.
|
Concentration of credit risks:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
x.
|
Share-based compensation:
|