Sapiens Announces Q2 2008 Results

CARY, North Carolina, August 13 /PRNewswire-FirstCall/ -- Sapiens International Corporation N.V. , a member of the Emblaze/Formula Group , today announced its results of operations for the second quarter of 2008.

Highlights for Q2 2008 and H1 2008 - Revenue in the second quarter of 2008 reached $11 million, a 3% increase from the second quarter of 2007. - The second quarter of 2008 shows seventh consecutive quarter of operating profit with $579,000, a significant increase of 257% from the second quarter of 2007. - Cash flow from operations in the second quarter of 2008 is approximately $2.4 million. - Operational profit for the first six months of the year is $ 1 million. - During the first six months of the year, the company generated $2.8 million in cash flow from operations, reaching total cash equivalents and short term investments on hand of $12 million. - Sapiens is enjoying an increasing pipeline of potential deals with major customers' world wide. U.S. GAAP - Operating profit of $579,000, a 257% increase from the second quarter of 2007 and a 37% increase from the first quarter of 2008. Non-GAAP - Operating profit of $689,000, a turn around from the operating loss of $57,000 in the second quarter of 2007, and a 32% increase from $522,000 in the first quarter of 2007.

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

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 For the six months ended ended U.S GAAP basis 06/30/2008 06/30/2007 06/30/2008 06/30/2007 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues 11,012 10,680 21,503 21,687 Operating 579 162 1,002 311 profit Net loss (526) (715) (1,726) (1,120) Basic and 0.02 0.05 0.08 0.07 diluted loss per share NonGAAP Revenues 11,012 10,680 21,503 21,687 Operating 689 (57) 1,211 (59) profit (loss) Net loss (416) (934) (1,517) (1,490) Basic and 0.02 0.06 0.07 0.10 diluted loss per share

Roni Al-Dor, President and CEO, commented, "Today we reported our seventh consecutive quarter of operating profit, which proves our strategy direction and improving performance. In the last six months we achieved a significant improvement in the aggregate of $1 million in operational profit and $2.8 million in cash flow from operations. The net loss is a result of financial expenses relating to the Company's debentures due to the evaluation of the New Israeli Shekel exchange rate against the U.S. Dollar. Neutralizing this exchange rate decrease, Sapiens would be reporting net income today. However, despite the drop in the U.S Dollar/New Israeli Shekel exchange rate, we reported an operational profit of $579,000, an improvement compared with the first quarter of 2008 and the second quarter of 2007. In addition, we improved our pipe line, competing in a few major tenders and face several promising opportunities which we expect will become signed agreements in 2008.

Mr. Al-Dor added, "We thank our customers, our investors and our employees for the good news we reported today."

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.

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. 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 International

Sapiens International Corporation N.V. , a member of Formula Group , which is a member of the Emblaze Group is a leading global provider of proven IT solutions that modernize business processes and enable 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, and has partnerships with market leaders such as IBM and EDS. Sapiens' clients include AXA, ING, Liverpool Victoria, Menora Mivtachim, Norwich Union, Occidental Fire & Casualty, OneBeacon, Principal Financial Group, Santam and Texas Farm Bureau among others. 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) 06/30/2008 12/31/2007 (Unaudited) ( Audited) Assets Cash and cash equivalents $ 8,990 $ 13,125 Short-term investments 3,000 - Trade receivables, net 9,397 7,549 Other current assets 2,287 1,881 Total current assets 23,674 22,555 Property and equipment, net 1,229 1,219 Other assets, 30,485 28,758 net Total assets $ 55,388 $ 52,532 Liabilities and shareholders' equity Short-term bank credit and current maturities of long-term debt and $ 7,539 $ 9,456 convertible debentures Trade 1,872 1,088 payables Other liabilities and accrued 10,166 8,375 expenses Deferred 6,066 4,203 revenue Total current liabilities 25,643 23,122 Other long-term liabilities 1,740 1,132 Convertible debentures 5,885 6,428 Shareholders' equity 22,120 21,850 Total liabilities and shareholders' $ 55,388 $ 52,532 equity - - SAPIENS INTERNATIONAL CORPORATION N.V. Condensed Consolidated Statements of Operations (U.S. Dollars in thousands, except per share amounts) For the three months For the six months ended ended 06/30/2008 06/30/2007 06/30/2008 06/30/2007 Unaudited Unaudited Unaudited Unaudited Revenues $ 11,012 $ 10,680 $ 21,503 $ 21,687 Cost of $ 6,542 $ 6,849 $ 12,798 $ 13,925 revenues Gross Profit 4,470 3,831 8,705 7,762 Operating expenses Research and $ 857 $ 486 $ 1,647 $ 976 development, net Selling, $ 3,034 $ 3,183 $ 6,056 $ 6,475 marketing, general and administrative Operating 579 162 1,002 311 Profit Financial $ 1,002 $ 692 $ 2,185 $ 1,116 expenses, net Other expenses, $ 103 $ 185 $ 543 $ 315 net (a) Net Loss $ 526 $ 715 $ 1,726 $ 1,120 Basic and $ 0.02 $ 0.05 $ 0.08 $ 0.07 diluted net loss per share (b) Weighted average shares used to compute - basic and diluted 21,541 15,514 21,541 15,184 net loss per share (b) Note a: Includes taxes, equity losses, minority interest and capital due to repurchase of debentures. b: Due to the net loss in 2007 and 2008 the inclusion of dilutive securities would be antidilutive. SAPIENS INTERNATIONAL CORPORATION N.V. Reconcilation of GAAP to Non-GAAP results (U.S. Dollars in thousands, except per share amounts) For the three months For the six months ended ended 06/30/2008 06/30/2007 06/30/2008 06/30/2007 (Unaudited) (Unaudited) (Unaudited) (Unaudited) GAAP operating 579 162 1,002 311 profit Amortization 1,042 885 2,002 2,068 of intangibles Capitalization (982) (1,134) (1,858) (2,475) of software development Stock-based 50 30 65 37 compensation Total 110 (219) 209 (370) adjustments to GAAP Non-GAAP 689 (57) 1,211 (59) operating profit (loss) GAAP net loss (526) (715) (1,726) (1,120) Total 110 (219) 209 (370) adjustments to GAAP as above Non-GAAP net (416) (934) (1,517) (1,490) loss Non-GAAP basic 0.02 0.06 0.07 0.10 net loss per share Weighted average 21,541 15,514 21,541 15,184 number of ordinary shares used in computing basic and diluted net loss per ordinary share For additional information: Roni Giladi Roni Al-Dor Chief Financial Officer Chief Executive Officer Sapiens International Sapiens International Tel: +972-8-938-2721 Tel: +972-8-938-2721 E-mail: IR.Sapiens@sapiens.com E-mail: IR.Sapiens@sapiens.com