Sapiens Reports 25% Revenue Growth in Q4 2010 Reaching $14.7M; 2010 Non-GAAP Operating Profit Reached $8.3M

CARY, North Carolina, February 22, 2011 /PRNewswire-FirstCall/ -- Sapiens International Corporation N.V. (NASDAQ and TASE: SPNS), a global provider of innovative software solutions and a member of the Formula Group (NASDAQ: FORTY and TASE: FORT), announced today its results of operations for the fourth quarter and full year ended December 31, 2010.

    (Logo: http://www.newscom.com/cgi-bin/prnh/20100811/HS4909 )


    2010 Fourth Quarter Results from Operations

    - Revenues for the fourth quarter of 2010 reached $14.67
      million, a 25% increase over revenues announced in Q4 2009.

    - Operating profit reached $1.94 million, a 28% growth when
      compared to Q4 of 2009.

    - Net income reached $1.71 million, 36% increase compared to
      Q4 of 2009.

    Year-to-Date Results

    - Revenues for 2010 reached $52.24 million, a 14% increase
      over revenues in 2009.

    - Operating profit reached $6.71 million, a 26% growth when
      compared to 2009.

    - Net income reached $6.15 million, a 46% increase compared to
      2009.

Balance Sheet and Liquidity

As of December 31, 2010, the Company's consolidated cash and cash equivalents totaled $ 16.18 million, demonstrating financial strength and stability with total shareholders' equity of $ 34.12 million which represents 62% of the total balance sheet.

Growth of revenue and profit are attributed to organic expansion of the company's business globally, including expansion of business with existing clients, a testimony to their confidence in Sapiens and its team. In addition, the acquisition of Harcase, a provider of Policy Administration solutions for the insurance industry, also contributed to the Company's growth.

"We are very proud of our achievements in 2010. Our non-GAAP basis operating profit for 2010 reached $8.31 million, representing 15.8% of our total revenue. We were focused on growth in 2010 and this remains a key focus for 2011." Roni Al-Dor, President and CEO of Sapiens International Corporation commented. "During 2010, we completed the acquisition of Harcase and integrated RapidSure into our insurance solutions portfolio. We expanded our investments in sales, marketing and R&D, and grew our business through expanding our strong client base."

"As we enter 2011", continued Al-Dor, "we will continue to establish our leadership in the market. Recently we signed a major deal with one of the largest financial institutions in the US, and this is expected to be reflected in our 2011 and 2012 results."

Reconciliation between U.S. GAAP and Non-GAAP results is summarized in the following table. For a complete reconciliation, please refer to the tables at the end of this release.

    U.S. Dollars in thousands, except per share amounts

                          For the three months ended    For the year ended
    U.S GAAP basis        12/31/2010     12/31/2009  12/31/2010   12/31/2009
                          (Unaudited)    (Unaudited) (Unaudited)    (Audited)
    Revenues                  14,667        11,767      52,235       45,695
    Operating profit           1,938         1,512       6,711        5,341
    Net income                 1,706         1,262       6,152        4,201
    Basic earnings per share    0.08          0.06        0.28         0.19
    Diluted earnings per share  0.07          0.06        0.27         0.19

    NonGAAP
    Revenues                  14,667        11,767      52,235       45,695
    Operating profit           2,408         2,118       8,306        6,531
    Net income                 2,152         1,868       7,688        5,391
    Basic earnings per share    0.10          0.09        0.34         0.25
    Diluted earnings per share  0.09          0.09        0.34         0.25

U.S. GAAP results include amortization of capitalized software developments, capitalization of software development costs, amortization related to new acquisition and stock-based compensation expenses.

Comment Regarding Non-GAAP

Sapiens' management believes that the presentation of non-GAAP measures can enhance the understanding of the company's ongoing economic performance, and provides useful information to investors regarding financial and business trends relating to the company's financial condition and results of operations. Sapiens therefore uses internally the non-GAAP information to evaluate and manage the Company's operations.

These 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. Sapiens believes that non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with Sapiens' results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Sapiens' results of operations in conjunction with the corresponding GAAP measures.

Please refer to the Reconciliation of GAAP to Non-GAAP Results at the end of this release.

About Sapiens

Sapiens International Corporation N.V. is a leading global provider of business solutions for the insurance industry, helping modernize business processes and enabling insurance organizations to adapt quickly to change. Sapiens' innovative solutions are widely recognized for their ability to cost-effectively align IT with the business demands for speed, flexibility and efficiency. Sapiens operates through its subsidiaries in North America, the United Kingdom, EMEA and Asia Pacific. For more information, please visit http://www.sapiens.com.

Except for historical information contained herein, the matters set forth in this release are forward-looking statements that are dependent on certain risks and uncertainties, including such factors, among others, as market acceptance, market demand, pricing, changing regulatory environment, changing economic conditions, risks in new product and service development, the effect of the Company's accounting policies, specific system configurations and software needs of individual customers and other risk factors detailed in the Company's SEC filings.

                      SAPIENS INTERNATIONAL CORPORATION N.V.
                     Condensed Consolidated Balance Sheets
                         (U.S. Dollars in thousands)

                                                      31/12/2010  31/12/2009

                                                      (Unaudited)   (Audited)
    Assets

     Cash and cash equivalents                           $16,182     $11,172
     Trade receivables, net                                5,511       5,132
     Other current assets                                  3,031       3,008
     Total current assets                                 24,724      19,312

     Property and equipment, net                           1,161         897
     Other assets, net                                    29,184      25,565

    Total assets                                         $55,069     $45,774

    Liabilities and shareholders' equity

     Trade payables                                       $1,693      $1,197
     Other liabilities and accrued expenses               11,646      10,199
     Deferred revenue                                      6,517       6,991
     Total current liabilities                            19,856      18,387

     Long-term debt and other long-term liabilities        1,095         972
     Shareholders' equity                                 34,118      26,415

    Total liabilities and shareholders' equity           $55,069     $45,774

    *) Sapiens issued and outstanding share capital as December 31,
       2010 are 22,413,710 and 22,062,916 respectively.



                           SAPIENS INTERNATIONAL CORPORATION N.V.
                       Condensed Consolidated Statements of Operations
                    (U.S. Dollars in thousands, except per share amounts)

                    For the three months ended        For the year ended
                    12/31/2010     12/31/2009      12/31/2010     12/31/2009

                     Unaudited      Unaudited       Unaudited        Audited

    Revenues           $14,667        $11,767         $52,235        $45,695
    Cost of
    revenues           $ 8,176         $7,388         $29,921        $26,571
    Gross Profit         6,491          4,379          22,314         19,124

    Operating
    expenses
    Research and
    development,
    net                   $979           $950          $3,293         $2,735
    Selling,
    marketing,
    general and
    administrative      $3,574         $1,917         $12,310        $11,048
    Operating
    Profit               1,938          1,512           6,711          5,341

    Financial
    expenses, net         $307          $ 132           $ 364           $880
    Other expenses
    (income), net       $(117)          $ 118           $ 177           $260

    Net Income          $1,748         $1,262          $6,170         $4,201

    Attributetable
    to
    non-controlling
    interest               $42             $-             $18             $-
    Net income
    attributable to
    Sapiens             $1,706         $1,262          $6,152         $4,201

    Earnings per
    share
    Basic                $0.08          $0.06           $0.28          $0.19
    Diluted              $0.07          $0.06           $0.27          $0.19

    Weighted
    average number
    of shares used
    to computation
    of earnings
    (loss) per
    share

    Basic               22,059         21,591          21,912         21,591
    Diluted             22,842         21,593          22,499         21,592




                             SAPIENS INTERNATIONAL CORPORATION N.V.
                          Reconciliation of GAAP to Non-GAAP results
                     (U.S. Dollars in thousands, except per share amounts)

                          For the three months ended      For the year ended
                           12/31/2010   12/31/2009    12/31/2010  12/31/2009
                           (Unaudited)  (Unaudited)   (Unaudited) (Unaudited)
    GAAP operating profit       1,938        1,512         6,711       5,341
    Amortization of
    intangibles assets
    and compensation
    related to
    acquisition                   444                        701
    Amortization of
     capitalized software       1,563        1,352         5,869       4,623
    Capitalization of
     software development      (1,622)        (851)       (5,387)     (3,692)
    Stock-based compensation       85          105           412         259
    Total adjustments to GAAP     470          606         1,595       1,190
    Non-GAAP operating profit   2,408        2,118         8,306       6,531

    GAAP net income             1,706        1,262         6,152       4,201
    Total adjustments to
     GAAP as above                470          606         1,595       1,190
    Deferred taxes related to
     acquisition                  (20)                                   (55)
    Non-GAAP net income         2,156        1,868         7,692       5,391

    Non-GAAP basic earnings
     per share                   0.10         0.09          0.35        0.25
    Non-GAAP diluted earnings
     per share                   0.09         0.09          0.34        0.25

    Weighted average number of shares
    used to computation of earnings
    per share
    Basic                      22,059       21,591        21,912      21,591
    Diluted                    22,842       21,593        22,499      21,592



    For More Information

    Roni Giladi
    Chief Financial Officer
    Sapiens International
    Tel: +972-8-938-2721
    E-mail: [email protected]

    Roni Al-Dor
    Chief Executive Officer
    Sapiens International
    Tel: +972-8-938-2721
    E-mail: [email protected]

SOURCE Sapiens International Corporation N.V