Sapiens Announces Q3 2008 Results With Net Income for the First Time After Several Years of Net Losses

    Highlights for Q3 2008

    - Revenue for the third quarter of 2008 reached $11 million, an increase
      of 5% compared to $10.5 million in the third quarter of 2007.
    - This is the eighth consecutive quarter of operating profit, which
      amounted, in the third quarter of 2008, to $709,000, a significant
      increase of 283% compared to $185,000 in the third quarter of 2007.
    - First time reporting net income of $375,000 after several years of
      losses.
    - Strong cash position with total cash and cash equivalents of $11.9
      million and Shareholders' equity of $22 million.
    - Cash flow from operations for the third quarter of 2008 is
      approximately $2 million.
    - Increase in pipe line from the insurance sector and renewing agreements
      with existing customers.

    Non-GAAP

    - Operating profit of $1,137,000, passing the $1 million milestone and a
      155% improvement compared to the third quarter of 2007.
    - Net income of $803,000, a significant improvement compared to a loss of
      $28,000 in the third quarter of 2007.

    U.S. GAAP

    - Operating profit of $709,000, a 283% increase compared to the third
      quarter of 2007.
    - Net income of $375,000, compared to a net loss of $288,000 in the third
      quarter of 2007.

Roni Al-Dor, President and CEO, commented "I am pleased to report on another strong quarter, in which we achieved on-track growth in our revenues, operating profit, and first time net income after several years of losses.

The efficiency measures we implemented in the company and the constant focus on improving our products and offering are coming to fruition resulting in net income of $803,000 on a Non-GAAP basis for the third quarter after several years of losses. In the last eight quarters, we showed constant improvement in our operational profit, which this quarter reached, on a Non-GAAP basis, a record of over $1 million.

In the third quarter, we generated $2 million in cash from operations thereby improving our financial position. Despite the general market climate, we are competing in several major promising opportunities inIsrael,USA, UK andJapan which we expect will become signed agreements in the near future. In addition, we see an increased interest in our insurance product line, namely, the Insight for Life and Pension, Insight for Policy and Claims and Insight for Re-Insurance. These achievements reinforce our strategy direction and the improved performance which will allow us to continue the growth momentum.

We have expanded our strategic avenues and are well positioned to pursue options for organic and/or inorganic growth. At the same time, while we are pleased with our financial momentum and remain optimistic regarding the future, we continue to closely monitor the economic climate and to consider ways to address the specific needs of our partners and customers."

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 nine months ended
    U.S GAAP basis      09/30/2008     09/30/2007    09/30/2008    09/30/2007
                        (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)

    Revenues              11,024          10,532       32,527        32,219
    Operating profit         709             185        1,711           496
    Net income (loss)        375            (288)      (1,351)       (1,408)
    Basic earning (loss)
    per share               0.02           (0.01)       (0.06)        (0.08)
    Diluted earning
    (loss) per share        0.02           (0.01)       (0.06)        (0.08)

    Non-GAAP basis

    Revenues              11,024          10,532       32,527        32,219
    Operating profit       1,137             445        2,348           386
    Net income (loss)        803             (28)        (714)       (1,518)
    Basic earning (loss)
    per share               0.04           (0.00)       (0.03)        (0.09)
    Diluted earning
    (loss) per share        0.04           (0.00)       (0.03)        (0.09)

U.S. GAAP results include amortization of capitalized software developments, capitalization of software development costs, 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.

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. (Nasdaq and TASE: SPNS), a member of Formula Group (Nasdaq: FORTY and TASE: FORT), which is a member of the Emblaze Group (LSE: BLZ.L) 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 inNorth America, theUnited Kingdom, EMEA andAsia 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)

                                            9/30/2008           12/31/2007
                                           (Unaudited)          (Audited)
    Assets

    Cash and cash equivalents               $ 11,891             $ 13,125
    Trade receivables, net                     7,845                7,549
    Other current assets                       2,963                1,881
    Total current assets                      22,699               22,555

    Property and equipment, net                1,160                1,219
    Other assets, net                         29,410               28,758

    Total assets                            $ 53,269             $ 52,532

    Liabilities and shareholders'
    equity

    Short-term bank credit and
    current maturities of long-term
    debt and convertible debentures          $ 5,379              $ 9,456
    Trade payables                             1,681                1,088
    Other liabilities and accrued
    expenses                                  10,340               8,375
    Deferred revenue                           6,271                4,203
    Total current liabilities                 23,671               23,122

    Long-term debt and other long-term
    liabilities                                1,574                1,132
    Convertible debentures and warrants        5,855                6,428
    Shareholders' equity                      22,169               21,850

    Total liabilities and shareholders'
    equity                                  $ 53,269             $ 52,532





                   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 nine months ended
                         09/30/2008    09/30/2007    09/30/2008    09/30/2007
                         Unaudited      Unaudited     Unaudited    Unaudited

    Revenues             $ 11,024       $ 10,532       $ 32,527    $ 32,219

    Cost of revenues      $ 6,649        $ 6,573       $ 19,447    $ 20,498

    Gross Profit            4,375          3,959         13,080      11,721

    Operating expenses
    Research and
    development, net        $ 885          $ 703        $ 2,532     $ 1,679
    Selling, marketing,
    general and
    administrative        $ 2,781        $ 3,071        $ 8,837     $ 9,546

    Operating Profit          709            185          1,711         496

    Financial expenses,
    net                     $ 299          $ 515        $ 2,484     $ 1,631
    Other expenses
    (income), net (a)        $ 35          $ (42)         $ 578       $ 273

    Net Income (Loss)       $ 375         $ (288)      $ (1,351)   $ (1,408)

    Earning (loss) per
    share

    Basic                  $ 0.02        $ (0.01)       $ (0.06)    $ (0.08)
    Diluted                $ 0.02        $ (0.01)       $ (0.06)    $ (0.08)

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

    Basic                  21,541         20,853         21,541      17,095
    Diluted                21,545         20,853         21,541      17,095


    Note a: Includes taxes, equity losses, minority interest and capital
    losses due to repurchase of debentures.




                   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 nine months ended
                         09/30/2008    09/30/2007    09/30/2008    09/30/2007
                         (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
    GAAP operating
    profit                    709           185           1,711         496
    Amortization of
    intangibles             1,233         1,059           3,235       3,127
    Capitalization of
    software development
    costs                    (855)         (849)         (2,713)     (3,324)
    Stock-based compensation   50            50             115          87
    Total adjustments to
    GAAP                      428           260             637        (110)
    Non-GAAP operating
    profit                  1,137           445           2,348         386

    GAAP net income (loss)    375          (288)         (1,351)     (1,408)
    Total adjustments to
    GAAP as above             428           260             637        (110)
    Non-GAAP net income
    (loss)                    803           (28)           (714)     (1,518)

    Non-GAAP basic earnings
    (loss) per share         0.04         (0.00)          (0.03)      (0.09)

    Non-GAAP diluted
    earnings (loss) per
    share                    0.04         (0.00)          (0.03)      (0.09)

    Weighted average number
    of ordinary shares
    used in computing basic
    net earnings (loss)
    per ordinary share     21,541        20,853          21,541      17,095

    Weighted average
    number of ordinary
    shares used in
    computing diluted net
    earnings (loss) per
    ordinary share         21,545        20,853          21,541      17,095



    For Additional Information:

    Roni Giladi
    Chief Financial Officer
    Sapiens International
    Tel: +972-8-938-2721
    E-mail: IR.Sapiens@sapiens.com

    Roni Al-Dor
    Chief Executive Officer
    Sapiens International
    Tel: +972-8-938-2721
    E-mail: IR.Sapiens@sapiens.com

SOURCE Sapiens Technologies

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