Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2017shares | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | MAGIC SOFTWARE ENTERPRISES LTD |
Entity Central Index Key | 876,779 |
Trading Symbol | MGIC |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Document Type | 20-F |
Document Period End Date | Dec. 31, 2017 |
Document Fiscal Year Focus | 2,017 |
Document Fiscal Period Focus | FY |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Accelerated Filer |
Entity Common Stock, Shares Outstanding | 44,488,578 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
CURRENT ASSETS: | ||
Cash and Cash Equivalents, at Carrying Value | $ 76,076 | $ 75,314 |
Short-term bank deposits | 732 | 2 |
Marketable securities (Note 4) | 14,138 | 12,506 |
Trade receivables (net of allowance for doubtful accounts of $ 2,160 and $ 3,852 at December 31, 2016 and 2017, respectively) | 82,051 | 62,047 |
Other accounts receivable and prepaid expenses (Note 6) | 8,643 | 8,487 |
Total current assets | 181,640 | 158,356 |
LONG-TERM RECEIVABLES: | ||
Severance pay fund | 3,226 | 2,568 |
Deferred tax asset (Note 13) | 2,990 | 3,548 |
Other long-term receivables | 2,015 | 1,680 |
Total long-term receivables | 8,231 | 7,796 |
PROPERTY AND EQUIPMENT, NET (Note 7) | 3,468 | 3,065 |
INTANGIBLE ASSETS, NET (Note 8) | 51,011 | 56,180 |
GOODWILL (Note 9) | 98,189 | 91,002 |
Total assets | 342,539 | 316,399 |
CURRENT LIABILITIES: | ||
Short term debt (Note 10) | 9,771 | 5,645 |
Trade payables | 12,185 | 8,393 |
Accrued expenses and other accounts payable (Note 11) | 27,789 | 20,290 |
Liabilities due to acquisition activities | 3,906 | 6,478 |
Deferred revenues and customer advances | 5,586 | 3,882 |
Total current liabilities | 59,237 | 44,688 |
LONG TERM LIABILITIES: | ||
Long term debt (Note 12) | 27,814 | 29,756 |
Long term liabilities due to acquisition activities (Note 3) | 581 | 3,379 |
Deferred tax liability (Note 13) | 11,331 | 12,494 |
Accrued severance pay | 4,174 | 3,443 |
Total noncurrent liabilities | 43,900 | 49,072 |
COMMITMENTS AND CONTINGENCIES (Note 17) | ||
REDEEMABLE NON-CONTROLLING INTEREST (Note 2) | 25,839 | 25,998 |
EQUITY (Note 14): | ||
Ordinary shares of NIS 0.1 par value - Authorized: 50,000,000 shares at December 31, 2016 and 2017; Issued and Outstanding: 44,355,770 and 44,488,578 shares at December 31, 2016 and 2017, respectively | 1,040 | 1,036 |
Additional paid-in capital | 183,445 | 182,785 |
Accumulated other comprehensive income (loss) | 83 | (7,428) |
Retained earnings | 25,713 | 19,825 |
Total equity attributable to Magic Software Enterprises shareholders | 210,281 | 196,218 |
Non-controlling interests | 3,282 | 423 |
Total equity | 213,563 | 196,641 |
Total liabilities, redeemable non-controlling interest and equity | $ 342,539 | $ 316,399 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Trade receivables net of allowance for doubtful accounts | $ 3,852 | $ 2,160 |
Ordinary stock, par value | $ 0.1 | $ 0.1 |
Ordinary stock, shares authorized | 50,000,000 | 50,000,000 |
Ordinary stock, shares issued | 44,488,578 | 44,355,770 |
Ordinary stock, shares outstanding | 44,488,578 | 44,355,770 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues (Note 19): | |||
Software | $ 21,644 | $ 19,626 | $ 21,598 |
Maintenance and technical support | 30,386 | 25,885 | 22,908 |
Consulting services | 206,110 | 156,135 | 131,524 |
Total revenues | 258,140 | 201,646 | 176,030 |
Cost of revenues: | |||
Software | 9,564 | 8,674 | 7,836 |
Maintenance and technical support | 3,888 | 2,952 | 2,466 |
Consulting services | 161,709 | 121,756 | 102,919 |
Total cost of revenues | 175,161 | 133,382 | 113,221 |
Gross profit | 82,979 | 68,264 | 62,809 |
Operating costs and expenses: | |||
Research and development, net (Note 16a) | 6,942 | 5,839 | 4,888 |
Selling and marketing | 27,244 | 23,776 | 23,062 |
General and administrative | 22,837 | 17,562 | 13,425 |
Total operating costs and expenses | 57,023 | 47,177 | 41,375 |
Operating income | 25,956 | 21,087 | 21,434 |
Financial expense, net (Note 16b) | 1,711 | 430 | 685 |
Other income, net | 8 | ||
Income before taxes on income | 24,245 | 20,657 | 20,757 |
Taxes on income (Note 13) | 6,331 | 3,949 | 3,681 |
Net income | 17,914 | 16,708 | 17,076 |
Net income attributable to redeemable non-controlling interests | 1,536 | 4,520 | 639 |
Net income attributable to non-controlling interests | 936 | 281 | 239 |
Net income attributable to Magic Software Enterprises Shareholders | $ 15,442 | $ 11,907 | $ 16,198 |
Net earnings per share attributable to Magic Software Enterprises' shareholders (Note 18): | |||
Basic earnings per share | $ 0.35 | $ 0.27 | $ 0.37 |
Diluted earnings per share | $ 0.35 | $ 0.27 | $ 0.36 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Statement of Other Comprehensive Income [Abstract] | |||
Net income | $ 17,914 | $ 16,708 | $ 17,076 |
Other comprehensive income (loss), net of tax | |||
Foreign currency translation adjustments, net | 10,134 | (1,006) | (1,611) |
Unrealized gain from derivative instruments, net | 9 | ||
Unrealized gain (loss) from available-for-sale securities | (4) | (11) | 156 |
(Gain) loss reclassified into earnings from marketable securities | (94) | 16 | |
Total other comprehensive (loss), net of tax | 10,036 | (1,001) | (1,446) |
Total comprehensive income | 27,950 | 15,707 | 15,630 |
Comprehensive income attributable to redeemable non-controlling interests | 4,007 | 4,211 | 572 |
Comprehensive income attributable to non-controlling interests | 990 | 322 | 208 |
Comprehensive income attributable to Magic Software Enterprises' shareholders | $ 22,953 | $ 11,174 | $ 14,850 |
Statements of Changes in Shareh
Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands | Total | Share capital | Additional paid-in capital | Accumulated other comprehensive income (loss) | Retained earnings | Non-controlling interests |
Beginning balance at Dec. 31, 2014 | $ 187,724 | $ 1,029 | $ 182,114 | $ (5,347) | $ 7,269 | $ 2,659 |
Beginning balance, Shares at Dec. 31, 2014 | 44,174,217 | |||||
Issuance of shares | (50) | (50) | ||||
Exercise of stock options | 419 | $ 6 | 413 | |||
Exercise of stock options, Shares | 161,003 | |||||
Stock-based compensation | 234 | 220 | 14 | |||
Acquisition of non-controlling interests (Note 3) | (1,744) | (1,708) | (36) | |||
Dividend | (8,535) | (7,788) | (747) | |||
Other comprehensive income (loss) | (1,379) | (1,348) | (31) | |||
Net income | 16,437 | 16,198 | 239 | |||
Ending balance at Dec. 31, 2015 | 193,106 | $ 1,035 | 180,989 | (6,695) | 15,679 | 2,098 |
Ending balance, Shares at Dec. 31, 2015 | 44,335,220 | |||||
Exercise of stock options | 41 | $ 1 | 40 | |||
Exercise of stock options, Shares | 20,550 | |||||
Stock-based compensation | 152 | 103 | 49 | |||
Exercise of stock options in a subsidiary | (292) | 1,012 | (1,304) | |||
Acquisition of non-controlling interests (Note 3) | (3) | 641 | (644) | |||
Dividend | (7,859) | (7,761) | (98) | |||
Other comprehensive income (loss) | (692) | (733) | 41 | |||
Net income | 12,188 | 11,907 | 281 | |||
Ending balance at Dec. 31, 2016 | 196,641 | $ 1,036 | 182,785 | (7,428) | 19,825 | 423 |
Ending balance, Shares at Dec. 31, 2016 | 44,355,770 | |||||
Exercise of stock options | 586 | $ 4 | 582 | |||
Exercise of stock options, Shares | 132,808 | |||||
Stock-based compensation | 78 | 78 | ||||
Redeemable non-controlling interests reclassification to non-controlling interests | 2,440 | 2,440 | ||||
Dividend | (10,125) | (9,554) | (571) | |||
Other comprehensive income (loss) | 7,565 | 7,511 | 54 | |||
Net income | 16,378 | 15,442 | 936 | |||
Ending balance at Dec. 31, 2017 | $ 213,563 | $ 1,040 | $ 183,445 | $ 83 | $ 25,713 | $ 3,282 |
Ending balance, Shares at Dec. 31, 2017 | 44,488,578 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | |||
Net income | $ 17,914 | $ 16,708 | $ 17,076 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 13,611 | 11,608 | 9,885 |
Stock-based compensation | 78 | 152 | 234 |
Amortization of marketable securities premium and accretion of discount | 218 | 257 | 249 |
Loss (gains) reclassified into earnings from marketable securities | (94) | 16 | |
Increase in trade receivables, net | (15,752) | (2,571) | (8,756) |
Increase in other long term and short term accounts receivable and prepaid expenses | (1,773) | (56) | (1,669) |
Increase in trade payables | 3,604 | 1,426 | 1,866 |
Change in value of loans | 3,200 | ||
Increase (decrease) in accrued expenses and other accounts payable | 4,435 | 1,553 | (196) |
Increase (decrease) in deferred revenues | 1,175 | (180) | 684 |
Change in deferred taxes, net | (1,108) | (958) | 245 |
Net cash provided by operating activities | 25,508 | 27,955 | 19,618 |
Cash flows from investing activities: | |||
Capitalized software development costs | (3,771) | (4,224) | (3,847) |
Purchase of property and equipment | (1,400) | (799) | (1,109) |
Cash paid in conjunction with acquisitions, net of acquired cash | (6,890) | (31,436) | (9,182) |
Proceeds from maturity and sale of marketable securities | 4,225 | 2,643 | |
Proceeds from short-term bank deposits | 8,467 | 2,654 | |
Investment in marketable securities and short-term bank deposits | (5,766) | (9,401) | (5,153) |
Short term loan to a related-party | 1,183 | (1,183) | |
Change in loans to employees and other deposits, net | (49) | 5 | |
Net cash used in investing activities | (12,419) | (35,982) | (16,632) |
Cash flows from financing activities: | |||
Proceeds from exercise of options by employees | 586 | 41 | 419 |
Dividend paid | (9,359) | (7,761) | (7,788) |
Dividend paid to non-controlling interests | (571) | (456) | (392) |
Dividend paid to redeemable non-controlling interests | (5,312) | (1,574) | |
Short-term credit, net | 936 | (2,840) | |
Purchase of non-controlling interest | (352) | (1,300) | |
Long term loan received | 8,535 | 31,356 | |
Repayment of long-term loans | (8,190) | (34) | |
Net cash provided by (used in) financing activities | (14,312) | 22,190 | (11,935) |
Effect of exchange rate changes on cash and cash equivalents | 1,985 | (1,037) | (1,378) |
Increase (decrease) in cash and cash equivalents | 762 | 13,126 | (10,327) |
Cash and cash equivalents at the beginning of the year | 75,314 | 62,188 | 72,515 |
Cash and cash equivalents at end of the year | 76,076 | 75,314 | 62,188 |
Non-cash activities: | |||
Deferred acquisition payment | 652 | 2,035 | 355 |
Contingent acquisition consideration | 4,771 | 1,048 | |
Dividend declared and not yet paid | 195 | ||
Dividend in Redeemable Non-controlling interest | 692 | 1,579 | 2,294 |
Dividend in Non-controlling interest | 355 | ||
Cash paid during the year for: | |||
Income taxes | 5,373 | 4,510 | 2,386 |
Interest | $ 572 | $ 358 | $ 113 |
General
General | 12 Months Ended |
Dec. 31, 2017 | |
General [Abstract] | |
GENERAL | NOTE 1:- GENERAL Magic Software Enterprises Ltd., an Israeli company (“the Group” or “the Company”), is a global provider of: (i) proprietary application development and business process integration platforms that accelerate the planning, development, deployment and integration of on-premise, mobile and cloud business applications (“the Magic Technology”); (ii) selected packaged vertical software solutions; and (iii) a vendor of software services and IT outsourcing software services. Magic Technology enables enterprises to accelerate the process of delivering business solutions that meet current and future needs and allow customers to dramatically improve their business performance and return on investment. To complement its software products and to increase its traction with customers, the Group also offers a complete portfolio of software services in the areas of infrastructure design and delivery, application development, technology planning and implementation services, communications services and solutions, and supplemental IT professional outsourcing services. The Company reports its results on the basis of two reportable business segments: software services (which include proprietary and non-proprietary software solutions, maintenance and support and related services) and IT professional services (see Note 19 for further details). The principal markets of the Group are United States, Israel, Europe and Japan (see Note 19). For information about the Company’s holdings in subsidiaries and affiliates, see Appendix A to the consolidated financial statements. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Significant Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES The consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”), applied on a consistent basis, as follows: Use of estimates The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company’s management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The most significant assumptions are employed in estimates used in determining values of goodwill and identifiable intangible assets and their subsequent impairment analysis, redeemable non-controlling interests, revenue recognition, tax assets and tax positions, legal contingencies, research and development capitalization, contingent consideration related to acquisitions and stock-based compensation costs. Actual results could differ from those estimates. Financial statements in United States dollars A substantial portion of the revenues and expenses of the Company and of certain subsidiaries is generated in U.S. dollars (“dollar”). The Company’s management believes that the dollar is the currency of the primary economic environment in which the Company and certain subsidiaries operate. Thus, the functional and reporting currency of the Company and certain subsidiaries is the dollar. Accordingly, monetary accounts maintained in currencies other than the dollar are remeasured into dollars in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 830, “Foreign Currency Matters”. All transaction gains and losses of the remeasurement of monetary balance sheet items are reflected in the statements of income as financial income or expenses, as appropriate. Monetary accounts and transactions maintained in dollars are presented at their original amounts. For those foreign subsidiaries whose functional currency is not the dollar, all balance sheet amounts have been translated using the exchange rates in effect at each balance sheet date. Statement of income amounts have been translated using the average exchange rate prevailing during each year. Such translation adjustments are reported as a component of accumulated other comprehensive income (loss) in equity. Principles of consolidation The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. Intercompany balances and transactions, including profit from intercompany sales not yet realized outside the Group, have been eliminated upon consolidation. Changes in the parent’s ownership interest in a subsidiary with no change of control are treated as equity transactions, with any difference between the amount of consideration paid and the change in the carrying amount of the non-controlling interest, recognized in equity. Non-controlling interests of subsidiaries represent the non-controlling shareholders’ share of the total comprehensive income (loss) of the subsidiaries and fair value of the net assets upon the acquisition of the subsidiaries. The non-controlling interests are presented in equity separately from the equity attributable to the equity holders of the Company. Redeemable non-controlling interests are classified as mezzanine equity, separate from permanent equity, on the consolidated balance sheets and measured at each reporting period at the higher of their redemption amount or the non-controlling interest book value, in accordance with the requirements of ASC 810 “Consolidation” and ASC 480-10-S99-3A, “Distinguishing Liabilities from Equity”. The following table provides a reconciliation of the redeemable non-controlling interests for the year ended December 31, 2017: January 1, 2017 $ 25,998 Net income attributable to redeemable non-controlling interest 1,536 Redeemable non-controlling interests reclassification to non-controlling interests (2,440 ) Dividend in redeemable non-controlling interest (1,726 ) Foreign currency translation adjustments 2,471 December 31, 2017 $ 25,839 Out of the closing balance, an amount of $ 20,860 might be exercised during 2018. Cash and cash equivalents Cash and cash equivalents are short-term highly liquid investments that are readily convertible to cash with original maturities of three months or less, at acquisition. Cash and cash equivalents include amounts held primarily in NIS, dollar, Euro, Japanese Yen and British Pound. Short-term deposits and restricted deposits Short-term deposits include deposits with original maturities of more than three months and less than one year. Such deposits are presented at cost (including accrued interest) which approximates their fair value. Restricted deposits are used to secure certain of the Group’s ongoing projects and are classified under other receivables. Marketable securities The Company accounts for all its investments in marketable securities in accordance with ASC No. 320, “Investments – Debt and Equity Securities”. The Company classifies all of its marketable securities as available for sale and held for trading. Available for sale securities are carried at fair value, with the unrealized gains and losses, net of tax, reported in “accumulated other comprehensive income (loss)” in equity. Realized gains and losses on sale of investments are included in “financial income, net” and are derived using the specific identification method for determining the cost of securities. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization together with interest on securities is included in “financial income, net”. The Company recognizes an impairment charge when a decline in the fair value of its investments in debt securities below the cost basis of such securities is judged to be other-than-temporary. Factors considered in making such a determination include the duration and severity of the impairment, the reason for the decline in value, the potential recovery period and the Company’s intent to sell, including whether it is more likely than not that the Company will be required to sell the investment before recovery of cost basis. For securities that are deemed other-than-temporarily impaired, the amount of impairment is recognized in “net gain (impairment net of gains) on sale of marketable securities previously impaired” in the statements of income and is limited to the amount related to credit losses, while impairment related to other factors is recognized in other comprehensive income. Held for trading securities are measured at fair value through profit or loss. Property and equipment, net Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated by the straight-line method over the estimated useful lives of the assets, at the following annual rates: Years Computers and peripheral equipment 3 - 5 Office furniture and equipment 7 - 15 (mainly 7) Motor vehicles 7 Software 3 – 5 (mainly 5) Leasehold improvements are amortized using the straight-line method over the term of the lease (including option terms that are deemed to be reasonably assured) or the estimated useful life of the improvements, whichever is shorter. Business combinations The Company accounts for business combinations under ASC 805, “Business Combinations”. ASC 805 requires recognition of assets acquired, liabilities assumed, contingent consideration, non-controlling interest and redeemable non-controlling interest in the acquiree at the acquisition date, to be measured at their fair values as of that date. As required by ASC 820, “Fair Value Measurements and Disclosures” the Company applies assumptions, judgments and estimates that marketplace participants would consider in determining the fair value of assets acquired, liabilities assumed, non-controlling interest and redeemable non-controlling interest in the acquiree at the acquisition date. Any excess of the fair value of net assets acquired over purchase price and any subsequent changes in estimated contingencies are to be recorded in earnings. Acquisition related costs are expensed to the statements of income in the period incurred. The cumulative impact of measurement period adjustments, including the impact to prior periods, is recognized in the reporting period in which the adjustment is identified. During the years ended December 31, 2015, 2016 and 2017 the Company recorded $3, $665 and $300, with respect to changes in the fair value of contingent consideration liability, respectively. Research and development costs Research and development costs incurred in the process of software development before establishment of technological feasibility are charged to expenses as incurred. Costs incurred subsequent to the establishment of technological feasibility are capitalized according to the principles set forth in ASC 985-20, “Costs of Software to be Sold, Leased or Marketed”. The Company and its subsidiaries establish technological feasibility upon completion of a detailed program design or working model. ASC 985-20-35 requires that a product be amortized when the product is available for general release to customers. The Company considers a product to be available for general release to customers when the Company completes its internal validation of the product that is necessary to establish that the product meets its design specifications including functions, features, and technical performance requirements. Internal validation includes the completion of coding, documentation and testing that ensure bugs are reduced to a minimum. The internal validation of the product takes place a few weeks before the product is made available to the market. In certain instances, the Company enters into a short pre-release stage, during which the product is made available to a selected number of customers as a beta program for their own review and familiarization. Subsequently, the release is made generally available to customers from the Company’s download area. Once a product is considered available for general release to customers, the capitalization of costs ceases and amortization of such costs to “cost of sales” begins. Capitalized software costs are amortized on a product by product basis by the straight-line method over the estimated useful life of the software product (approximately 5 years, due to their high rates of acceptance, the continued reliance on these products by existing customers, and the demand for such products from prospective customers, all of which validate the Company’s expectations) which provides greater amortization expense compared to the revenue-curve method. The Company assesses the recoverability of these intangible assets on a regular basis by assessing the net realizable value of these intangible assets based on the estimated future gross revenues from each product reduced by the estimated future costs of completing and disposing of it, including the estimated costs of performing maintenance and customer support over its remaining economical useful life using internally generated projections of future revenues generated by the products, cost of completion of products and cost of delivery to customers over its remaining economical useful life. During the years ended December 31, 2015, 2016 and 2017, no such unrecoverable amounts were identified. Research and development costs incurred in the process of developing product enhancements are generally charged to expenses as incurred. Long-Lived Assets The Company’s long-lived, non-current assets are comprised mainly of goodwill, identifiable intangible assets and property, plants and equipment. Impairment of long-lived assets and intangible assets subject to amortization The Company’s long-lived assets are reviewed for impairment in accordance with ASC 360, “Property, Plant and Equipment” whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. As required by ASC 820, “Fair Value Measurements and Disclosures” the Company applies assumptions, judgments and estimates that marketplace participants would consider in determining the fair value of long-lived assets (or asset groups). Intangible assets with finite lives are amortized over their economic useful life using a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are consumed or otherwise used up. Acquired technology and non-compete were amortized on a straight line basis and customer relationships and backlog were amortized on an accelerated method basis over a period between 1 - 15 years based on the intangible assets identified. During the years ended December 31, 2015, 2016 and 2017, no impairment indicators were identified. Goodwill Goodwill represents the excess of the purchase price in a business combination over the fair value of the net tangible and intangible assets acquired. Under ASC 350, “Intangibles - Goodwill and Other”, goodwill is subject to an annual impairment test or more frequently if impairment indicators are present. Goodwill impairment is deemed to exist if the net book value of a reporting unit exceeds its estimated fair value. As of December 31, 2017, the Company operates in four reporting units within its operating segments. Goodwill reflects the excess of the consideration paid or transferred plus the fair value of contingent consideration and any non-controlling interest in the acquiree at the acquisition date over the fair values of the identifiable net assets acquired. ASC 350 allows an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. If the qualitative assessment does not result in a more likely than not indication of impairment, no further impairment testing is required. If it does result in a more likely than not indication of impairment, the two-step impairment test is performed. Alternatively, ASC 350 permits an entity to bypass the qualitative assessment for any reporting unit and proceed directly to performing the first step of the goodwill impairment test. The provisions of ASC 350 require that the quantitative two-step impairment test will be performed on goodwill at the level of the reporting units. In the first step, or “Step one”, the Company compares the fair value of each reporting unit to its carrying value. If the fair value exceeds the carrying value of the net assets, goodwill is considered not impaired, and the Company is not required to perform further testing. If the carrying value of the net assets exceeds the fair value, then the Company must perform the second step, or “Step two”, of the impairment test in order to determine the implied fair value of goodwill. To determine the fair value used in Step one, the Company uses discounted cash flows. If and when the Company is required to perform a Step two analysis, determining the fair value of its net assets and its off-balance sheet intangibles, then the Company would be required to make judgments that involve the use of significant estimates and assumptions. The Company determines the fair value of each reporting unit by using the income approach, which utilizes a discounted cash flow model, as it believes that this approach best approximates the reporting unit’s fair value. Judgments and assumptions related to revenue, operating income, future short-term and long-term growth rates, weighted average cost of capital, interest, capital expenditures, cash flows, and market conditions are inherent in developing the discounted cash flow model. The Company considers historical rates and current market conditions when determining the discount and growth rates to use in its analyses. If these estimates or their related assumptions change in the future, the Company may be required to record impairment charges for its goodwill. The Company performed an annual impairment tests as of December 31, of each of 2015, 2016 and 2017 and did not identify any impairment losses (see Note 9). Revenue recognition The Company derives its revenues from licensing the rights to use software (proprietary and non-proprietary), provision of related professional services, maintenance and technical support as well as from other software and IT professional services (either fixed price or based on time and materials (T&M)). The Company sells its products and services primarily through its direct sales force and indirectly through distributors and value added resellers. The Company accounts for its software sales in accordance with ASC 985-605, “Software Revenue Recognition”. Software license revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the vendor’s fee is fixed or determinable, no further obligation exists and collectability is probable. Maintenance and support includes annual maintenance contracts providing for unspecified upgrades for new versions and enhancements on a when-and-if-available basis for an annual fee. The right for an unspecified upgrade for new versions and enhancements on a when-and-if-available basis do not specify the features, functionality and release date of future product enhancements for the customer to know what will be made available and the general timeframe in which it will be delivered. Maintenance and support revenue included in multiple element arrangements is deferred and recognized on a straight-line basis over the term of the maintenance and support agreement. As required by ASC 985-605, the Company allocates revenues to the software component of its multiple-element arrangements using the residual method when vendor specific objective evidence (“VSOE”) of fair value exists for the undelivered elements of the support and maintenance agreements. VSOE is based on the price charged when an element is sold separately or renewed. Under the residual method, the fair value of the undelivered elements is deferred and the remaining portion of the arrangement fee is allocated to the delivered elements and is recognized as revenue. The Company generally does not grant a right of return to its customers. When a right of return exists, the Company defers revenue until the right of return expires, at which time revenue is recognized provided that all other revenue recognition criteria are met. Revenue from professional services related to both software and the IT professional services businesses consists of billable hours for services provided and is recognized as the services are rendered. Arrangements that include professional services bundled with licensed software and other software related elements, are evaluated to determine whether those services are essential to the functionality of other elements of the arrangement. When services are considered essential to the software, revenues under the arrangement are recognized using contract accounting based on ASC 605-35, “Construction-Type and Production-Type Contracts”, on a percentage of completion method based on inputs measures. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are first determined, in the amount of the estimated loss for the entire contract. During the years ended December 31, 2015, 2016 and 2017, no such estimated losses were identified. When professional services are not considered essential to the functionality of other elements of the arrangement, revenue allocable to the services is recognized as the services are performed, using VSOE of fair value. In most cases, the Company has determined that the services are not considered essential to the functionality of other elements of the arrangement. Deferred revenues include unearned amounts received under maintenance and support (mainly) and amounts received from customers for which revenues have not yet been recognized. Revenue from third-party sales is recorded at a gross or net amount according to certain indicators. The application of these indicators for gross and net reporting of revenue depends on the relative facts and circumstances of each sale and requires significant judgment. Accrued severance pay and retirement plans The Company’s and its Israeli subsidiaries’ obligation for severance pay with respect to their Israeli employees (for the period for which the employees were not included under Section 14 of the Severance Pay Law, 1963) is calculated pursuant to the Israeli Severance Pay Law based on the most recent salary of the employees multiplied by the number of years of employment as of the balance sheet date, and are presented on an undiscounted basis (referred to as the “Shut Down Method”). Employees are entitled to one month’s salary for each year of employment or a portion thereof. The Company’s obligation for all of its Israeli employees is fully provided for by monthly deposits with insurance policies and severance pay funds and by an accrual. The Group has a number of savings plans in the United States that qualify under Section 401(k) of the Internal Revenue Code. U.S. employees may contribute up to 100% of their pretax or post-tax salary, but not more than statutory limits. Matching contributions are discretionary and if made, are up to 3% of the participants annual contributions. When contributions are granted, they are invested in proportion to each participant’s voluntary contributions in the investment options provided under the plan. The carrying value of deposited funds includes profits (losses) accumulated up to the balance sheet date. The deposited funds may be withdrawn only upon the fulfillment of the obligations pursuant to the Israeli Severance Pay Law or labor agreements and are recorded as an asset in the Company’s consolidated balance sheet. The Company and its Israeli subsidiaries’ agreements with most of their Israeli employees are in accordance with Section 14 of the Severance Pay Law -1963, mandating that upon termination of such employees’ employment; all the amounts accrued in their insurance policies shall be released to them instead of severance compensation. Upon release of deposited amounts to the employee, no additional liability exists between the parties regarding the matter of severance pay and no additional payments are payable by the Company or its subsidiaries to the employee. Further, the related obligation and amounts deposited on behalf of such obligation are not stated on the balance sheet, as the Company and its subsidiaries are legally released from their obligations to employees once the deposit amounts have been paid. Severance expenses for the years ended December 31, 2015, 2016 and 2017 amounted to approximately $ 1,626, $ 2,248 and $ 3,748, respectively. Advertising expenses Advertising expenses are charged to selling and marketing expenses, as incurred. Advertising expenses for the years ended December 31, 2015, 2016 and 2017 amounted to $ 377, $ 423 and $ 384, respectively. Income taxes The Company and its subsidiaries account for income taxes in accordance with ASC 740, “Income Taxes”. ASC 740 prescribes the use of the “asset and liability” method whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value. Deferred tax assets and liabilities are classified as non-current. The Company utilizes a two-step approach for recognizing and measuring uncertain tax positions accounted for in accordance with an amendment of ASC 740 “Income Taxes.” Under the first step the Company evaluates a tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, based on its technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement with the tax authorities. The Company accrued interest and penalties related to unrecognized tax benefits in its provisions for income taxes. Basic and diluted net earnings per share Basic net earnings per share are computed based on the weighted average number of Ordinary shares outstanding during each year. Diluted net earnings per share are computed based on the weighted average number of Ordinary shares outstanding during each year, plus dilutive potential ordinary shares considered outstanding during the year, in accordance with ASC 260, “Earnings Per Share.” A portion of the outstanding stock options have been excluded from the calculation of the diluted earnings per share because such securities are anti-dilutive. The total weighted average number of Ordinary shares related to the outstanding options excluded from the calculations of diluted earnings per share was 66,646, 21,998 and 2,093 for the years ended December 31, 2015, 2016 and 2017, respectively. Stock-based compensation The Company accounts for stock-based compensation in accordance with ASC 718, “Compensation - Stock Compensation” which requires the measurement and recognition of compensation expense based on estimated fair values for all share-based payment awards made. ASC 718 requires companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company’s consolidated statement of income. The Company recognizes compensation expenses for the value of its awards, which have graded vesting based on the accelerated method over the requisite service period of each of the awards, net of estimated forfeitures. The Company uses the Binomial option-pricing model (“the Binomial model”) to estimate the fair value for any options granted. The Binomial model takes into account variables such as volatility, dividend yield rate, and risk-free interest rate and also allows for the use of dynamic assumptions and considers the contractual term of the option, the probability that the option will be exercised prior to the end of its contractual life, and the probability of termination or retirement of the option holder in computing the value of the option. The fair value of each option granted using the Binomial model, was estimated on the date of grant with the following assumptions: expected volatility was based upon actual historical stock price movements and was calculated as of the grant dates for different periods, since the Binomial model can be used for different expected volatilities for different periods. The risk-free interest rate was based on the yield from U.S. Treasury zero-coupon bonds with an equivalent term to the contractual term of the options. The expected term of options granted was derived from the output of the option valuation model and represented the period of time that options granted were expected to be outstanding. Estimated forfeitures were based on actual historical pre-vesting forfeitures. Since dividend payments are applied to reduce the exercise price of the option, the effect of the dividend protection was reflected by using an expected dividend assumption of zero. For awards with performance conditions, compensation cost is recognized over the requisite service period if it is ‘probable’ that the performance conditions will be satisfied. No grants were made to employees and directors in 2016 and 2017. During the years ended December 31, 2015, 2016 and 2017, the Company recognized stock-based compensation expense related to employee stock options in the amount of $ 234, $ 152 and $ 78, respectively, as follows: Year ended December 31, 2015 2016 2017 Cost of revenue $ 31 $ 15 $ 7 Research and development 48 17 8 Selling and marketing 137 71 - General and administrative 18 49 63 Total stock-based compensation expense $ 234 $ 152 $ 78 Concentrations of credit risk Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash and cash equivalents, short-term deposits, restricted cash, marketable securities, trade receivables and foreign currency derivative contracts. The Company’s cash and cash equivalents, short-term deposits and restricted cash are invested primarily in bank deposits with major banks worldwide, mainly in the United States and Israel, however, such cash and cash equivalents and short-term deposits in the United States may be in excess of insured limits and are not insured in other jurisdictions. The Company believes that since these deposits may be redeemed upon demand and since such institutions are of high rating they bear low risk. The Company’s marketable securities include investments in commercial and government bonds and foreign banks. The Company’s marketable securities are considered to be highly liquid and have a high credit standing (also refer to Note 4). In addition, management considered its portfolios in foreign banks to be well-diversified. The Company’s trade receivables are derived from sales to customers located primarily in the United States, Israel, Europe and Japan. The Company performs ongoing credit evaluations of its customers and has not experienced any material from any one customer since 2013. An allowance for doubtful accounts is determined with respect to those amounts that the Company has determined to be doubtful of collection. The expense related to doubtful accounts for the years ended December 31, 2015, 2016 and 2017 was $ 346, $ 437 and $ 1,164, respectively. From time to time the Company enters into foreign exchange forward contracts and option contracts intended to protect against the changes in value of forecasted non-dollar currency cash flows related to salary and related expenses. These derivative instruments are designed to offset the Company’s non-dollar currency exposure (see “Derivative instruments” below). Fair value measurements The Company accounts for certain assets and liabilities at fair value under ASC 820, “Fair Value Measurements and Disclosures”. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets; Level 2 - Includes other inputs that are directly or indirectly observable in the marketplace, other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets with insufficient volume or infrequent transactions, or other inputs that are observable (model-derived valuations in which significant inputs are observable), or can be derived principally from or corroborated by observable market data; Level 3 - Unobservable inputs which are supported by little or no market activity; The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize |
Business Combination, Significa
Business Combination, Significant Transaction and Sale of Business | 12 Months Ended |
Dec. 31, 2017 | |
Business Combination, Significant Transaction and Sale of Business [Abstract] | |
BUSINESS COMBINATION, SIGNIFICANT TRANSACTION AND SALE OF BUSINESS | NOTE 3:- BUSINESS COMBINATION, SIGNIFICANT TRANSACTION AND SALE OF BUSINESS a. On April 14, 2015, the Company acquired a 70% interest in Comblack IT Ltd. (“Comblack”), an Israeli-based company that specializes in software professional and outsourced management services mainly for mainframes and complex large-scale environments, for a total consideration of $1,821, of which $ 1,523 was paid upon closing and $ 298 which was payable contingent upon the acquired business meeting certain operational targets in 2015. The Company and the seller hold mutual Call and Put options respectively for the remaining 30% interest in Comblack. As a result of the Put option, the Company recorded redeemable non-controlling interest in the amount of $ 989. Acquisition related costs were immaterial. The acquisition was accounted for by the purchase method. The results of operations were included in the consolidated financial statements of the Company commencing April 1, 2015. The following table summarizes the estimated fair values of the assets acquired and liabilities at the date of acquisition: Net assets, excluding cash acquired $ (405 ) Non-controlling interest (989 ) Intangible assets 1,249 Goodwill 1,966 Total assets acquired net of acquired cash $ 1,821 In March 2016, the Company paid the seller the remaining contingent payments for meeting 2015 operational targets. As of December 31, 2017, the Comblack redeemable non-controlling interest amounted to $ 5,034. b. On June 30, 2015, the Company acquired a 70% interest in Infinigy Solutions LLC (“Infinigy”), a U.S.-based services company focused on expanding the development and implementation of technical solutions throughout the telecommunications industry with offices across the U.S., providing nationwide coverage and support for wireless engineering, deployment services, surveying, environmental service and project management, for a total consideration of $ 6,527, of which $ 5,600 was paid upon closing and $ 927 was payable contingent upon the acquired business meeting certain operational targets in 2016 and 2017. The Company and the seller hold mutual Call and Put options respectively for the remaining 30% interest in Infinigy. As a result of the Put option, the Company recorded redeemable non-controlling interest in the amount of $ 3,590. Acquisition related costs were immaterial. The acquisition was accounted for by the purchase method. The results of operations were included in the consolidated financial statements of the Company commencing July 1, 2015. The following table summarizes the estimated fair values of the assets acquired and liabilities at the date of acquisition: Net assets, excluding cash acquired $ 1,182 Non-controlling interest (3,590 ) Intangible assets 3,675 Goodwill 5,260 Total assets acquired net of acquired cash $ 6,527 In July 2016, the Company paid the seller $ 534 with respect to the acquired business meeting certain of its 2016 operational targets. In 2017, the acquired business did not meet its operational targets and therefore as of December 31, 2017, the seller is not entitled to any additional contingent payments. As of December 31, 2017, the Infinigy redeemable non-controlling interest amounted to $ 3,366. c. On July 11, 2016, the Company acquired a 60% interest in Roshtov Software Industries Ltd (“Roshtov”), an Israeli-based software company that is a market leader in Israel in patient record information systems, for a total cash consideration of $ 20,550, which was paid upon closing. The purchaser and the seller hold mutual Call and Put options respectively for the remaining 40% interest in Roshtov. As a result of the Put option, the Company recorded redeemable non-controlling interest in the amount of $ 14,012. Acquisition related costs were immaterial. The acquisition was accounted for by the purchase method. The results of operations were included in the consolidated financial statements of the Company commencing July 2016. The following table summarizes the estimated fair values of the assets acquired and liabilities at the date of acquisition: Net assets, excluding cash acquired $ 15 Non-controlling interest (14,012 ) Intangible assets 22,439 Deferred tax liability (5,610 ) Goodwill 17,718 Total assets acquired net of acquired cash $ 20,550 As of December 31, 2017, Roshtov redeemable non-controlling interest amount to $ 15,565. d. On October 31, 2016, the Company acquired a 100% interest in Shavit Software (2009) Ltd., an Israeli-based company that specializes in software professional and outsourced management services, for a total consideration of $ 6,836, of which $ 4,699 was paid upon closing, $ 2,137 (measured based on present value) was allocated to a deferred payment and contingent payment upon the acquired business meeting certain operational targets in 2017. The Company’s management believes the acquisition will broaden its professional service offering to its existing and new customers in Israel. Acquisition related costs were immaterial. The acquisition was accounted for by the purchase method. The results of operations were included in the consolidated financial statements of the Company commencing November 1, 2016. The following table summarizes the provisional estimated fair values of the assets acquired and liabilities at the date of acquisition: Net assets, excluding cash acquired $ 533 Intangible assets 3,489 Deferred tax liability (871 ) Goodwill 3,685 Total assets acquired net of acquired cash $ 6,836 In 2017, the Company paid the seller $ 924 with respect to deferred payment. The remaining obligation to the seller, allocated to deferred payment and contingent payment based on 2017 operational targets amounted to $2,405, which is included under the Company’s current “liabilities due to acquisition activities”. The amount was paid subsequent to the balance sheet date. e. During the years ended December 31, 2016 and 2017, the Company acquired additional activities whose influence on the financial statements of the Company was immaterial, for a total consideration of $ 8,884 and $ 1,050, respectively. The following table summarizes the provisional estimated fair values of the assets acquired and liabilities at the date of acquisitions: December 31, 2016 2017 (*) Net assets, excluding cash acquired $ 2,174 $ (1,822 ) Non-controlling interest (1,209 ) - Intangible assets 2,370 1,149 Deferred tax liability (493 ) - Goodwill 6,042 1,723 Total assets acquired net of acquired cash $ 8,884 $ 1,050 (*) The estimated fair values of the tangible and intangible assets referring to acquisition which were made in 2017 are provisional and are based on information that was available as of the acquisition date to estimate the fair value of these amounts. The Company’s management believes the information provides a reasonable basis for estimating the fair values of these amounts, but is waiting for additional information necessary to finalize those fair values. Therefore, provisional measurements of fair value reflected are subject to change. The Company expects to finalize the tangible and intangible assets valuation and complete the acquisition accounting as soon as practicable but no later than the measurement period. |
Marketable Securities
Marketable Securities | 12 Months Ended |
Dec. 31, 2017 | |
Marketable Securities [Abstract] | |
MARKETABLE SECURITIES | NOTE 4:- MARKETABLE SECURITIES The Group invests in marketable debt and equity securities, which were classified at fair value through profit or loss and as available-for-sale securities. The following is a summary of marketable securities: a. Composition: December 31, 2016 2017 Fair value through profit or loss (1) $ - $ 1,209 Available-for-sale 12,506 12,929 $ 12,506 $ 14,138 (1) The Group recognized trading gains in the amount of $ 10 during the year ended December 31, 2017. b. The following is a summary of marketable securities which are classified as available-for-sale: December 31, 2016 2017 Amortized cost Unrealized losses Unrealized gains Market value Amortized cost Unrealized losses Unrealized gains Market value Available-for-sale: Corporate bonds $ 12,348 $ (72 ) $ - $ 12,276 $ 12,987 $ (58 ) $ - $ 12,929 Equity funds 118 - 112 230 - - - - Total available-for-sale marketable securities $ 12,466 $ (72 ) $ 112 $ 12,506 $ 12,987 $ (58 ) $ - $ 12,929 Marketable securities with contractual maturities within one year and from one to three years are as follows: Amortized Unrealized gains Market cost Gains Losses value Due within one year $ 4,045 $ - $ (5 ) $ 4,040 Due after one year through three years $ 8,942 $ - $ (53 ) $ 8,889 Total $ 12,987 $ - $ (58 ) $ 12,929 The total fair value of marketable securities with outstanding unrealized losses as of December 31, 2017 amounted to $12,929, while the unrealized losses for these marketable securities amounted to $ 57. Of the $ 57 unrealized losses outstanding as of December 31, 2017, a portion of which in the amount of $ 25 was related to marketable securities that were in a loss position for more than 12 months and the remaining portion of $ 32 was related to marketable securities that were in a loss position for less than 12 months. The following is the change in the other comprehensive income of available-for-sale securities during 2016: Other Other comprehensive income from available-for-sale securities as of January 1, 2016 $ 35 Losses reclassified into earnings from marketable securities 16 Unrealized losses from available-for-sale securities (11 ) Other comprehensive income from available-for-sale securities as of December 31, 2016 $ 40 The following is the change in the other comprehensive income of available-for-sale securities during 2017: Other Other comprehensive income from available-for-sale securities as of January 1, 2017 $ 40 Gains reclassified into earnings from marketable securities (94 ) Unrealized losses from available-for-sale securities (4 ) Other comprehensive loss from available-for-sale securities as of December 31, 2017 $ (58 ) |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Measurements [Abstract] | |
FAIR VALUE MEASUREMENTS | NOTE 5:- FAIR VALUE MEASUREMENTS In accordance with ASC 820, the Company measures its investment in marketable securities and foreign currency derivative contracts at fair value. Generally equity funds are classified within Level 1, this is because these assets are valued using quoted prices in active markets. Foreign currency derivative contracts, certain corporate bonds and convertible bonds are classified within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments. Contingent consideration is classified within Level 3. The Company values the Level 3 contingent consideration using discounted cash flow of the expected future payments, whose inputs include interest rate. The Company’s financial assets measured at fair value on a recurring basis, excluding accrued interest components, consisted of the following types of instruments as of the following dates: December 31, 2016 Fair value measurements using input type Level 1 Level 2 Level 3 Total Assets: Corporate bonds $ - $ 12,276 $ - $ 12,276 Equity fund 230 - - 230 Total financial assets $ 230 $ 12,276 $ - $ 12,506 Liabilities: Contingent consideration $ - $ - $ 3,088 $ 3,088 Total financials liabilities $ - $ - $ 3,088 $ 3,088 December 31, 2017 Fair value measurements using input type Level 1 Level 2 Level 3 Total Assets: Corporate bonds $ - $ 12,929 $ - $ 12,929 Convertible bonds - 1,209 - 1,209 Total financial assets $ - $ 14,138 $ - $ 14,138 Liabilities: Contingent consideration $ - $ - $ 1,333 $ 1,333 Total financials liabilities $ - $ - $ 1,333 $ 1,333 Fair value measurements using significant unobservable inputs (Level 3): December 31, 2016 2017 Opening balance $ 1,220 $ 3,088 Increase in contingent consideration due to acquisitions 1,868 - Payment of contingent consideration (883 ) (2,109 ) Increase in fair value of contingent consideration 665 1,587 Decrease in fair value of contingent consideration - (1,287 ) Decrease in liability against other receivables - (118 ) Amortization of interest and exchange rate 218 172 Closing balance $ 3,088 $ 1,333 |
Other Accounts Receivable and P
Other Accounts Receivable and Prepaid Expenses | 12 Months Ended |
Dec. 31, 2017 | |
Other Accounts Receivable and Prepaid Expenses [Abstract] | |
OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES | NOTE 6:- OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES December 31, 2016 2017 Prepaid expenses $ 2,601 $ 2,659 Government authorities 3,426 4,900 Related parties 1,603 314 Other 857 770 $ 8,487 $ 8,643 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2017 | |
Property and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 7:- PROPERTY AND EQUIPMENT December 31, 2016 2017 Cost: Leasehold improvements $ 795 $ 918 Computers and peripheral equipment 14,059 14,842 Office furniture and equipment 3,111 3,778 Motor vehicles 1,186 1,237 Software 2,970 3,094 22,121 23,869 Accumulated depreciation: Leasehold improvements 356 429 Computers and peripheral equipment 13,518 14,194 Office furniture and equipment 2,244 2,471 Motor vehicles 366 447 Software 2,572 2,860 19,056 20,401 Depreciated cost $ 3,065 $ 3,468 Depreciation expenses amounted to $ 792, $ 893 and $ 1,046 for the years ended December 31, 2015, 2016 and 2017, respectively. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2017 | |
Intangible Assets/Goodwill [Abstract] | |
INTANGIBLE ASSETS | NOTE 8:- INTANGIBLE ASSETS a. Intangible assets: December 31, 2016 2017 Original amounts: Capitalized software costs $ 71,349 $ 75,126 Customer relationships 53,370 56,296 Backlog and non-compete agreement 2,712 2,712 Acquired technology 12,375 13,087 139,806 147,221 Accumulated amortization: Capitalized software costs 57,286 61,834 Customer relationships 21,684 27,967 Backlog and non-compete agreement 2,260 2,486 Acquired technology 2,396 3,923 83,626 96,210 Intangible assets, net $ 56,180 $ 51,011 b. Amortization expenses amounted to $ 9,093, $ 10,715 and $ 12,565 for the years ended December 31, 2015, 2016 and 2017, respectively. c. The estimated future amortization expense of intangible assets as of December 31, 2017 is as follows: 2018 $ 11,439 2019 9,698 2020 8,203 2021 6,585 2022 4,333 2023 and thereafter 10,753 $ 51,011 |
Goodwill
Goodwill | 12 Months Ended |
Dec. 31, 2017 | |
Intangible Assets/Goodwill [Abstract] | |
GOODWILL | NOTE 9:- GOODWILL Changes in the carrying amount of goodwill for the years ended December 31, 2016 and 2017 according to the Company’s reporting units are as follows (see also Note 19): IT Software Total As of January 1, 2016 $ 34,150 $ 29,158 $ 63,308 Business combination 9,113 17,717 26,830 Measurement period adjustments 389 - 389 Foreign currency translation adjustments 222 253 475 As of December 31, 2016 $ 43,874 $ 47,128 $ 91,002 Business combination 1,723 - 1,723 Measurement period adjustments 614 28 642 Foreign currency translation adjustments 2,192 2,630 4,822 As of December 31, 2017 $ 48,403 $ 49,786 $ 98,189 The Company performed an annual impairment tests as of December 31, of each of 2015, 2016 and 2017 and did not identify any impairment losses (see Note 2). |
Short Term Debt
Short Term Debt | 12 Months Ended |
Dec. 31, 2017 | |
Short Term Debt/Long Term Debt [Abstract] | |
SHORT TERM DEBT | NOTE 10:- SHORT TERM DEBT Interest Linkage rate December 31, basis % 2016 2017 Short-term credit from banks USD U.S Prime -0.2 $ 996 $ 2,125 Short-term credit from banks NIS 2 - 618 Short-term loans from banks NIS 1.6-2 155 259 Other 36 - Current maturities of long-term loans from financial institution NIS 2.6-3 4,458 6,769 $ 5,645 $ 9,771 |
Accrued Expenses and Other Acco
Accrued Expenses and Other Accounts Payable | 12 Months Ended |
Dec. 31, 2017 | |
Accrued Expenses and Other Accounts Payable [Abstract] | |
ACCRUED EXPENSES AND OTHER ACCOUNTS PAYABLE | NOTE 11:- ACCRUED EXPENSES AND OTHER ACCOUNTS PAYABLE December 31, 2016 2017 Employees and payroll accruals $ 11,245 $ 15,203 Accrued expenses 4,955 6,234 Government authorities 2,871 4,738 Other 1,219 1,614 $ 20,290 $ 27,789 |
Long Term Debt
Long Term Debt | 12 Months Ended |
Dec. 31, 2017 | |
Short Term Debt/Long Term Debt [Abstract] | |
LONG TERM DEBT | NOTE 12:- LONG TERM DEBT Linkage Interest December 31, basis rate 2016 2017 % Loan from banks and other NIS 2.6-5 $ 31,714 $ 34,447 (1) Dividend payable to redeemable non-controlling interest NIS 2,341 - Other long term debt 159 136 $ 34,214 $ 34,583 Current maturities NIS (4,458 ) (6,769 ) 29,756 27,814 (1) On November 2016, the Company obtained a loan in the amount of $ 31,356 linked to the New Israel Shekel from an Israeli financial institution. The principal amount of the loan is payable in seven equal annual installments with the final payment due on November 2, 2023 and bears a fixed interest rate of 2.60% per annum, payable in two semi-annual payments. Under the terms of the loan with the Israeli financial institution, the Company has undertaken to maintain the following financial covenants, as they will be expressed in its consolidated financial statements, as described: a. Total equity attributable to Magic Software Enterprises shareholders shall not be lower than $ 100,000 at all times; b. The Company’s consolidated cash and cash equivalent and marketable securities available for sales shall not be less than $ 10,000; c. The ratio of the Company’s consolidated total financial debts to consolidated total assets will not exceed 50%; d. The ratio of the Company’s total financial debts less cash, short-term deposits and short-term marketable securities to the annual EBITDA will not exceed 3.25 to 1; and e. The Company shall not create any pledge on all of its property and assets in favor of any third party without the financial institution’s consent. As of December 31, 2017, the Company was in compliance with the financial covenants. |
Taxes on Income
Taxes on Income | 12 Months Ended |
Dec. 31, 2017 | |
Taxes on Income [Abstract] | |
TAXES ON INCOME | NOTE 13:- TAXES ON INCOME a. Israeli taxation: 1. Corporate tax rate in Israel: The Israeli corporate income tax rate was 24% in 2017, 25% in 2016 and 26.5% in 2015. In December 2016, the Israeli Parliament approved the 2016 Amendment which reduced the corporate income tax rate to 24% (instead of 25%) effective from January 1, 2017 and to 23% effective from January 1, 2018. 2. Tax benefits under the Israeli Law for the Encouragement of Capital Investments, 1959 (“the Law”): Effective January 1, 2011, the Knesset enacted the Law for Economic Policy for 2011 and 2012 (Amended Legislation), and among other things, amended the Law, (“the Amendment”). According to the Amendment, a flat corporate tax rate of 16% was established for exporting industrial enterprises (over 25%). The reduced tax rate will not be program dependent and will apply to the “Preferred Enterprise’s” (as such term is defined in the Investment Law) entire “preferred income”. The Amendment also prescribes that any dividends distributed to individuals or foreign residents from the preferred enterprise’s earnings as above will be subject to tax at a rate of 20%. The Company and one of its Israeli subsidiaries have elected to apply the new incentives regime under the Amendment to their industrial activity in Israel, subject to meeting its requirements, starting in 2011. New Amendment- Preferred Technology Enterprise In December 2016, the Israeli Knesset passed Amendment 73 to the Investment Law which included a number of changes to the Investments Law regimes. Certain changes were scheduled to come into effect beginning January 1, 2017, provided that regulations are promulgated by the Finance Ministry to implement the “Nexus Principles” based on OECD guidelines recently published as part of the Base Erosion and Profit Shifting (BEPS) project. The regulations were approved on May 1, 2017 and accordingly, these changes have come into effect. Applicable benefits under the new regime include: Introduction of a benefit regime for “Preferred Technology Enterprises” granting a 12% tax rate in central Israel – on income deriving from Intellectual Property, subject to a number of conditions being fulfilled, including a minimal amount or ratio of annual R&D expenditure and R&D employees, as well as having at least 25% of annual income derived from exports. Preferred Technology Enterprise (“PTE”) is defined as an enterprise which meets the aforementioned conditions and for which total consolidated revenues of its parent company and all subsidiaries are less than NIS 10 billion. A 12% capital gains tax rate on the sale of a preferred intangible asset to a foreign affiliated enterprise, provided that the asset was initially purchased from a foreign resident at an amount of NIS 200 million or more. A withholding tax rate of 20% for dividends paid from PTE income (with an exemption from such withholding tax applying to dividends paid to an Israeli company). Such rate may be reduced to 4% on dividends paid to a foreign resident company, subject to certain conditions regarding percentage of foreign ownership of the distributing entity. Starting 2017, part of the Company’s taxable income in Israel is entitled to a preferred 12% tax rate under Amendment 73 to the Investment Law. 3. The Company’s Israeli entities have received final tax assessments for their Israeli tax return filings through the year 2013. 4. Tax benefits under the Law for the Encouragement of Industry (Taxes), 1969: The Company qualifies as an Industrial Company within the meaning of the Law for the Encouragement of Industry (Taxes), 1969 (the “Industrial Encouragement Law”). The Industrial Encouragement Law defines an “Industrial Company” as a company that is resident in Israel and that derives at least 90% of its income in any tax year, other than income from defense loans, capital gains, interest and dividends, from an enterprise whose major activity in a given tax year is industrial production. Under the Industrial Encouragement Law, the Company is entitled to amortization of the cost of purchased know-how and patents over an eight-year period for tax purposes as well as accelerated depreciation rates on equipment and buildings. Eligibility for the benefits under the Industrial Encouragement Law is not subject to receipt of prior approval from any governmental authority. 5. Foreign Exchange Regulations: Under the Foreign Exchange Regulations, the Company and some of its Israeli subsidiaries calculate their tax liability in U.S. Dollars according to certain orders. The tax liability, as calculated in U.S. Dollars is translated into NIS according to the exchange rate as of December 31 of each year. b. Non-Israeli subsidiaries: Non-Israeli subsidiaries are taxed according to the tax laws in their respective domiciles of residence. If earnings are distributed to Israel in the form of dividends or otherwise, the Company may be subject to additional Israeli income taxes (subject to an adjustment for foreign tax credits) and foreign withholding tax rates. Neither Israeli income taxes, foreign withholding taxes nor deferred income taxes were provided in relation to undistributed earnings of the non-Israeli subsidiaries. This is because the Company intends to permanently reinvest undistributed earnings in the foreign subsidiaries in which those earnings arose. If these earnings were distributed in the form of dividends or otherwise, the Company would be subject to additional Israeli income taxes (subject to an adjustment for foreign tax credits) and non-Israeli withholding taxes. The amount of the Company cash and cash equivalents that are currently held outside of Israel that would be subject to income taxes if distributed as dividends is $ 12,062. However, a determination of the amount of the unrecognized deferred tax liability for temporary difference related to those undistributed earnings of foreign subsidiaries is not practicable due to the complexity of the structure of our group of subsidiaries for tax purposes and the difficulty of projecting the amount of future tax liability. Tax Reform- United States of America The U.S. Tax Cuts and Jobs Act of 2017 (“TCJA”) was approved by the U.S. Congress on December 20, 2017 and signed into law by U.S. President Donald J. Trump on December 22, 2017. This legislation makes complex and significant changes to the U.S. Internal Revenue Code. Such changes include a reduction in the corporate tax rate and limitations on certain corporate deductions and credits, among other changes. The TCJA reduces the U.S. federal corporate income tax rate from 35% to 21% effective January 1, 2018. In addition, the TCJA makes certain changes to the depreciation rules and implements new limits on the deductibility of certain expenses and deduction. The Company’s subsidiaries in the United States do not have any foreign subsidiaries and, therefore, the remaining provisions of the TCJA have no material impact on the Company's results of operations. The Company re-measured its U.S. deferred tax assets and liabilities, based on the rates at which they are expected to reverse in the future. The estimated tax benefit recorded related to the re-measurement of the provisional net deferred taxes was approximately $ 428. The SEC staff has issued SAB 118 which will allow the Company to record provisional amounts during a measurement period. The Company has concluded that a reasonable estimate could be developed for the effects of the tax reform. However, due to the short time frame between the enactment of the reform and the year end, its fundamental changes, the accounting complexity, and the expected ongoing guidance and accounting interpretations over the next 12 months, the Company considers the accounting of the deferred tax re-measurement and other items to be incomplete. c. Net operating loss carryforwards: As of December 31, 2017, three Israeli subsidiaries of the Company had operating loss carryforwards of $ 15,336 (mainly Formula Telecom Solutions Ltd. (“FTS”) which account for $ 12,686), which can be carried forward to offset against taxable income in the future for an indefinite period. One of the Company’s subsidiaries in England had estimated total available tax loss carryforwards of $ 4,142 as of December 31, 2017, which can be carried forward to offset against future taxable income. d. Income before taxes on income: Year ended December 31, 2015 2016 2017 Domestic $ 18,350 $ 15,334 $ 19,442 Foreign 2,407 5,323 4,803 $ 20,757 $ 20,657 $ 24,245 e. Taxes on income: Taxes on income (tax benefit) consist of the following: Year ended December 31, 2015 2016 2017 Current: Domestic $ 3,466 $ 2,919 $ 5,928 Foreign 880 1,863 1,511 4,346 4,782 7,439 Deferred taxes: Domestic (500 ) (666 ) (1,160 ) Foreign (165 ) (167 ) 52 (665 ) (833 ) (1,108 ) Taxes on income $ 3,681 $ 3,949 $ 6,331 f. Deferred tax assets and liabilities: Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company and its subsidiaries deferred tax assets are as follows: December 31, 2016 2017 Net operating loss carryforwards $ 3,838 $ 4,355 Allowances, reserves and intangible assets 1,943 1,974 Deferred tax assets before valuation allowance 5,781 6,329 Less - valuation allowance (2,233 ) (3,339 ) Deferred tax assets, net $ 3,548 $ 2,990 December 31, 2016 2017 Long-term tax assets $ 3,548 $ 2,990 Long-term tax liabilities (12,494 ) (11,331 ) Net deferred tax liabilities $ (8,946 ) $ (8,341 ) Deferred tax liabilities are mainly in respect of certain property and equipment, acquired intangible assets and capitalized software costs. The Company has provided valuation allowances in respect of certain deferred tax assets resulting from operating losses carry forwards and other reserves and allowances due to uncertainty concerning realization of these deferred tax assets. g. Reconciliation of the theoretical tax expense to the actual tax expense: A reconciliation between the theoretical tax expense, assuming all income is taxed at the statutory tax rate applicable to income for an Israeli company (2015, 2016 and 2017 statutory tax rate 26.5%, 25% and 24%, respectively), and the actual tax expense as reported in the statements of income is as follows: Year ended December 31, 2015 2016 2017 Income before taxes, as reported in the consolidated statements of income $ 20,757 $ 20,657 $ 24,245 Statutory tax rate 26.5 % 25 % 24 % Theoretical tax expenses on the above amount at the Israeli statutory tax rate $ 5,501 $ 5,164 $ 5,819 Tax adjustment in respect of different tax rates (923 ) (1,214 ) 268 Deferred taxes on losses for which full valuation allowance was provided in the past 131 (455 ) 658 Tax-deductible costs, not included in the accounting costs (733 ) (342 ) (38 ) Tax benefits in respect of prior years, net (133 ) 1,262 (488 ) Nondeductible expenses 177 (232 ) 70 Uncertain tax position and other differences (339 ) (234 ) 42 Income tax $ 3,681 $ 3,949 $ 6,331 h. The Company applies ASC 740, “Income Taxes” with regards to tax uncertainties. During the years ended December 31, 2015, 2016 and 2017 the Company recorded $ 324, $ 159 and $ 300 (respectively) of tax expenses as a result of this application. A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows: Gross unrecognized tax benefits at January 1, 2015 $ 342 Increase in tax positions taken in prior years 469 Decrease in tax positions taken in prior years (145 ) Gross unrecognized tax benefits at December 31, 2015 666 Increase in tax positions taken in prior years 159 Decrease in tax positions taken in prior years - Gross unrecognized tax benefits at December 31, 2016 825 Increase in tax positions taken in prior years 300 Decrease in tax positions taken in prior years - Gross unrecognized tax benefits at December 31, 2017 $ 1,125 Although the Company believes that it has adequately provided for any reasonably foreseeable outcomes related to tax audits and settlement, there is no assurance that the final tax outcome of its tax audits will not be different from that which is reflected in the Company’s income tax provisions. Such differences could have a material effect on the Company’s income tax provision, cash flow from operating activities and net income in the period in which such determination is made. |
Equity
Equity | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
EQUITY | NOTE 14:- EQUITY a. The Ordinary shares of the Company are listed on the NASDAQ Global Select Market in the United States and are traded on the Tel-Aviv Stock Exchange in Israel. b. Stock Option Plans: Under the Company’s 2007 Stock Option Plan, as amended (“the 2007 Plan”), options may be granted to employees, officers, directors and consultants of the Company and its subsidiaries. Pursuant to the original 2007 Stock Option Plan, the Company reserved 1,500,000 Ordinary shares for issuance. In 2012, the Company increased the number of Ordinary shares reserved for issuance under the 2007 Plan by additional 1,000,000 Ordinary shares. On December 31, 2015 the Company’s Board of Directors increased the amount of Ordinary shares reserved for issuance under the 2007 Plan by additional 250,000 Ordinary shares and extended the 2007 Plan by 10 years whereas it will expire on August 1, 2027. As of December 31, 2017, an aggregate of 1,000,000 Ordinary shares of the Company are available for future grants under the 2007 Plan. Each option granted under the 2007 Plan is exercisable for a period of ten years from the date of the grant of the option The exercise price for each option is determined by the Board of Directors and set forth in the Company’s award agreement. Unless determined otherwise by the Board of Directors, the option exercise price shall be equal to or higher than the share market price at the grant date. The options generally vest over 3-4 years. Any option that is forfeited or canceled before expiration becomes available for future grants under the 2007 Plan. A summary of employee option activity under the 2007 Plan as of December 31, 2017 and changes during the year ended December 31, 2017 are as follows: Number of options Weighted Weighted Aggregate Outstanding at January 1, 2017 473,367 $ 4.58 5.10 $ 991 Granted - $ - Exercised (132,808 ) $ 4.40 Forfeited (31,250 ) $ 6.18 Outstanding at December 31, 2017 309,309 $ 4.38 3.97 $ 1,237 Exercisable at December 31, 2017 258,059 $ 3.84 3.45 $ 1,171 The aggregate intrinsic value in the table above represents the total intrinsic value that would have been received by the option holders had all option holders exercised their options on December 31, 2017. This amount is changed based on the market value of the Company’s Ordinary shares. Total intrinsic value of options exercised during the years ended December 31, 2015, 2016 and 2017 was $ 210, $ 112 and $ 502, respectively. As of December 31, 2017, there was $ 11 of unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plans. This cost is expected to be recognized over a period of approximately one year. The options outstanding as of December 31, 2017, have been separated into ranges of exercise price categories, as follows: Exercise price Options Weighted Weighted Options Weighted of exercisable options In $ 1.01-2 20,000 0.98 $ 1.12 20,000 $ 1.12 2.01-3 87,667 2.25 $ 2.31 87,667 $ 2.31 3.01-4 109,142 3.77 $ 4.00 109,142 $ 4.00 5.01-6 6,250 5.61 $ 6.00 - $ - 6.01-7 31,250 6.87 $ 6.89 - $ - 8.01-9 55,000 6.35 $ 8.01 41,250 $ 8.01 309,309 3.97 $ 4.38 258,059 $ 3.84 c . Accumulated other comprehensive income (loss): December 31, 2015 2016 2017 Accumulated realized and unrealized gain (loss) on available-for-sale securities, net $ 35 $ 40 $ (58 ) Accumulated foreign currency translation adjustments (6,756 ) (7,494 ) 115 Accumulated unrealized gain on derivative instruments, net 26 26 26 Total other comprehensive income (loss) $ (6,695 ) $ (7,428 ) $ 83 d . On September 4, 2012, the Company’s Board of Directors adopted a dividend distribution policy, subject to any applicable law. According to this policy, each year the Company will distribute a dividend of up to 50% of its annual distributable profits. It is possible that the Board of Directors will decide, subject to the conditions stated above, to declare additional dividend distributions. The Company’s Board of Directors may at its discretion and at any time, change, the rate of dividend distributions and/or not to distribute a dividend, whether as a result of a one-time decision or a change in policy, all at its discretion. In respect to the policy mentioned above, from September 10, 2012 through September 4, 2014 the Company declared accumulated cash dividend distributions of $ 0.525 per share ($ 20,111 in the aggregate). On February 5, 2015, the Company declared a dividend distribution of $ 0.081 per share ($ 3,582 in the aggregate) which was paid on March 11, 2015. On August 12, 2015, the Company declared a dividend distribution of $ 0.095 per share ($ 4,204 in the aggregate) which was paid on September 10, 2015. On February 21, 2016, the Company declared a dividend distribution of $ 0.09 per share ($ 3,991 in the aggregate) which was paid on March 17, 2016. On August 14, 2016, the Company declared a dividend distribution of $ 0.085 per share ($ 3,770 in the aggregate) which was paid on September 22, 2016. On February 22, 2017, the Company declared a dividend distribution of $ 0.085 per share ($ 3,775 in the aggregate) which was paid on April 5, 2017. On August 9, 2017, the Company’s Board of Directors decided to amend the dividend distribution policy announced on September 5, 2012. According to the Company’s amended policy, each year the Company will distribute a dividend of up to 75% of its annual distributable profits. The Company’s Board of Directors may at its discretion and at any time, change, whether as a result of a one-time decision or a change in policy, the rate of dividend distributions and/or decide not to distribute a dividend, all at its discretion. On August 13, 2017, the Company declared a dividend distribution of $ 0.13 per share ($ 5,779 in the aggregate) which was paid on September 13, 2017. Subsequent to the balance sheet date, on February 28, 2018, the Company declared a dividend distribution of $ 0.13 per share ($ 5,784 in the aggregate, see also Note 20). e . On November 2014, a subsidiary of the Company granted to one of its executive officers, options exercisable for 1,167 Ordinary shares in the subsidiary that are exercisable if the subsidiary meets certain operational financial results. The exercise price of the options was NIS 1 per share. Total fair value of the grant was calculated based on the subsidiary’s fair value on the grant date and totaled NIS 5,910 thousand (NIS 5 thousand per share). On October 2015, the options were exercised and 1,167 Ordinary shares of the subsidiary were issued. |
Related Parties Transactions
Related Parties Transactions | 12 Months Ended |
Dec. 31, 2017 | |
Related Parties Transactions [Abstract] | |
RELATED PARTIES TRANSACTIONS | NOTE 15:- RELATED PARTIES TRANSACTIONS Agreements with controlling shareholder and its affiliates: The Company has in effect agreements with affiliated companies pursuant to which the Company has rendered services amounting to approximately $1,638, $3,950 and $2,511, in aggregate for the years ended December 31, 2015, 2016 and 2017, respectively and acquired services and hardware amounting to approximately $231, $102 and $165 for the years ended December 31, 2015, 2016 and 2017, respectively. As of December 31, 2016 and 2017, the Company had trade payables balances due to its related parties in amount of approximately $107 and $64. In addition, as of December 31, 2016 and 2017, the Company had trade and other receivables balances due from its related parties in amount of approximately $1,909 and $931. |
Selected Statements of Income D
Selected Statements of Income Data | 12 Months Ended |
Dec. 31, 2017 | |
Selected Statements of Income Data [Abstract] | |
SELECTED STATEMENTS OF INCOME DATA | NOTE 16:- SELECTED STATEMENTS OF INCOME DATA a. Research and development costs, net: Year ended December 31, 2015 2016 2017 Total costs $ 8,735 $ 10,063 $ 10,713 Less - capitalized software costs (3,847 ) (4,224 ) (3,771 ) Research and development, net $ 4,888 $ 5,839 $ 6,942 b. Financial income (expenses), net: Bank charges and interest from loans offset by interest from short term deposits $ 64 $ (199 ) $ (1,124 ) Interest expenses related to liabilities in connection with acquisitions - (257 ) (62 ) Interest income from marketable securities, net of amortization of premium on marketable securities 231 240 284 Loss arising from foreign currency translation and other (980 ) (214 ) (809 ) Financial income(expenses), net $ (685 ) $ (430 ) $ (1,711 ) |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 17:- COMMITMENTS AND CONTINGENCIES a. Lease commitments: Certain of the motor vehicles, facilities and equipment of the Company and its subsidiaries are rented under long-term operating lease agreements. Future minimum lease commitments under non-cancelable operating leases as of December 31, 2017, are as follows: 2018 $ 2,523 2019 1,116 2020 626 2021 and thereafter 553 $ 4,818 Rent expenses for the years ended December 31, 2015, 2016 and 2017 were approximately $ 2,045, $ 2,204 and $ 2,729, respectively. The Company leases motor vehicles under a cancelable lease agreement. The Company has an option to be released from this lease agreement, which may result in penalties of up to $ 48. The Company and its subsidiaries currently occupy approximately 165,646 square feet of space based on a lease agreements as of December 31, 2017. The Group has diverse liability for the lease agreements varying from six months to five years. As of December 31, 2017, the aggregated amount of lease commitment in all locations mentioned above is approximately $ 4,396. b. Guarantees and Collaterals: As of December 31, 2017, the Company has provided performance bank guarantees in the amount of $516 as security for the performance of various contracts with customers. As of December 31, 2017, the Company has restricted bank deposits of $ 419 in favor of the issuing banks. c. From time to time, the Company and/or its subsidiaries are subject to legal, administrative and regulatory proceedings, claims, demands and investigations in the ordinary course of business, including claims with respect to intellectual property, contracts, employment and other matters. The Company accrues a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable. These accruals are reviewed and adjusted to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular matter. Lawsuits have been brought against the Company in the ordinary course of business. The Company intends to defend itself vigorously against those lawsuits. d. In August 2009, an Israeli software company and one of its owners initiated an arbitration proceeding against the Company and one of its subsidiaries, claiming an alleged breach of a non-disclosure agreement between the parties, or the First Arbitration. The software company sought damages in the amount of approximately NIS 52 million (approximately $13.4 million). The arbitrator rendered his decision in January 2015 and determined that we should pay damages in the amount of $2.4 million. In September 2016, the same software company filed a lawsuit seeking damages of NIS 34,106 against the Company and one its subsidiaries, in an arbitration proceeding taking place between the parties (the “Lawsuit”). In the Lawsuit, the software company claims that warning letters that the Company sent to its clients in Israel and abroad, warning those clients against the possibility that the conversion procedure offered by the software company may amount to an infringement of the Company’s copyrights (the “Warning Letters”), as well as other alleged actions, have caused the software company damages resulting from loss of potential business. The Lawsuit is based on rulings given in the First Arbitration proceeding that was held between the parties in which it was decided that the Warning Letters constituted a breach of a non-disclosure agreement (NDA) signed between the parties, and upon damages that were awarded to the software company for the years 2009-2010. The software company claims that it was granted permission in the First Arbitration to seek damages relating to the years 2011 onwards in separate proceedings. On January 23, 2017, the Company filed its statement of defense, maintaining, on various grounds, that the Lawsuit must be rejected, both in limine and on its merits. The software company filed its response on April 2, 2017. Both sides have submitted witness statements, as well as expert opinions relating to both financial issues, technical issues and Google Ads issues. In view of the nature of the claims - both factual and legal - that were raised in the proceedings; in view of the likelihood of an expert-based ruling; and given the stage of the proceedings, where the witnesses and experts are yet to be cross-examined, it is impossible to properly evaluate the prospect of the Lawsuit being successful. In February 2018, Comm-IT Ltd., a subsidiary of the Company commenced an action against a customer for payment of an overdue amount in the Supreme Court of the State of New York, New York County. In April 2018, the customer filed an answer in the action that included counterclaims asserting causes of action for breach of contract, fraud, and trespass to chattel. Based on the Company’s review of the allegations asserted in the counterclaims, it appears that the allegations do not have merit. |
Net Earnings Per Share
Net Earnings Per Share | 12 Months Ended |
Dec. 31, 2017 | |
Net Earnings Per Share [Abstract] | |
NET EARNINGS PER SHARE | NOTE 18:- NET EARNINGS PER SHARE The following table sets forth the computation of basic and diluted net earnings per share: Year ended December 31, 2015 2016 2017 Numerator for basic and diluted earnings per share - net income available to Magic shareholders $ 16,198 $ 11,907 $ 15,442 Weighted average Ordinary shares outstanding: Denominator for basic net earnings per share 44,247,556 44,347,083 44,435,671 Effect of dilutive securities 204,510 168,953 161,548 Denominator for diluted net earnings per share 44,452,066 44,516,036 44,597,219 Basic earnings per share $ 0.37 $ 0.27 $ 0.35 Diluted earnings per share $ 0.36 $ 0.27 $ 0.35 |
Segment Geographical Informatio
Segment Geographical Information and Major Customers | 12 Months Ended |
Dec. 31, 2017 | |
Segment Geographical Information and Major Customers [Abstract] | |
SEGMENT GEOGRAPHICAL INFORMATION AND MAJOR CUSTOMERS | NOTE 19:- SEGMENT GEOGRAPHICAL INFORMATION AND MAJOR CUSTOMERS a. The Company reports its results on the basis of two reportable business segments: software services (which include proprietary and none proprietary software technology) and IT professional services. The Company evaluates segment performance based on revenues and operating income of each segment. The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies. This data is presented in accordance with ASC 280, “Segment Reporting.” Headquarters’ general and administrative costs have not been allocated between the different segments. Software services The Company develops markets, sells and supports a proprietary and none proprietary application platform, software applications, business and process integration solutions and related services. IT professional services The Company offers advanced and flexible IT services in the areas of infrastructure design and delivery, application development, technology planning and implementation services, communications services and solutions, as well as supplemental outsourcing services. There are no significant transactions between the two segments. b. The following is information about reported segment results of operation: Software services IT professional services Unallocated expense Total 2015 Total revenues $ 67,271 $ 108,759 $ - $ 176,030 Expenses 52,963 98,384 3,249 154,596 Segment operating income (loss) $ 14,308 $ 10,375 $ (3,249 ) $ 21,434 Depreciation and amortization $ 6,562 $ 3,042 $ 281 $ 9,885 Software services IT professional services Unallocated expense Total 2016 Total revenues $ 70,834 $ 130,812 $ - $ 201,646 Expenses 58,847 118,414 3,298 180,559 Segment operating income (loss) $ 11,987 $ 12,398 $ (3,298 ) $ 21,087 Depreciation and amortization $ 7,531 $ 3,769 $ 308 $ 11,608 2017 Total revenues $ 77,100 $ 181,040 $ - $ 258,140 Expenses 63,649 164,558 3,977 232,184 Segment operating income (loss) $ 13,451 $ 16,482 $ (3,977 ) $ 25,956 Depreciation and amortization $ 9,242 $ 4,100 $ 269 $ 13,611 c. The Company’s business is divided into the following geographic areas: Israel, Europe, United States, Japan and other regions. Total revenues are attributed to geographic areas based on the location of the customers. The following table presents total revenues classified according to geographical destination for the years ended December 31, 2015, 2016 and 2017: Year ended December 31, 2015 2016 2017 Israel $ 36,401 $ 58,079 $ 91,917 Europe 29,084 23,642 26,635 United States 92,577 100,470 123,113 Japan 10,092 11,226 9,253 Other 7,876 8,229 7,222 $ 176,030 $ 201,646 $ 258,140 d. The Company’s long-lived assets are located as follows: December 31, 2016 2017 Israel $ 110,213 $ 111,217 Europe 1,302 1,289 United States 30,777 32,223 Japan 4,887 5,008 Other 3,068 2,931 $ 150,247 $ 152,668 e. The Company does not allocate its assets to its reportable segments; accordingly, asset information by reportable segments is not presented. f. In 2015, 2016 and 2017, the Company had one major customer, included in the IT professional services segment, which accounted for 11%, 9% and 13% of the group revenues, respectively. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 20:- SUBSEQUENT EVENTS a. On February 28, 2018, the Company declared a dividend distribution of $ 0.13 per share ($ 5,784 in the aggregate) which was paid on March 26, 2018. The dividend distribution relates to the Company’s earnings in the second half of 2017. |
Significant Accounting Polici28
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Significant Accounting Policies [Abstract] | |
Use of estimates | Use of estimates The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company’s management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The most significant assumptions are employed in estimates used in determining values of goodwill and identifiable intangible assets and their subsequent impairment analysis, redeemable non-controlling interests, revenue recognition, tax assets and tax positions, legal contingencies, research and development capitalization, contingent consideration related to acquisitions and stock-based compensation costs. Actual results could differ from those estimates. |
Financial statements in United States dollars | Financial statements in United States dollars A substantial portion of the revenues and expenses of the Company and of certain subsidiaries is generated in U.S. dollars (“dollar”). The Company’s management believes that the dollar is the currency of the primary economic environment in which the Company and certain subsidiaries operate. Thus, the functional and reporting currency of the Company and certain subsidiaries is the dollar. Accordingly, monetary accounts maintained in currencies other than the dollar are remeasured into dollars in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 830, “Foreign Currency Matters”. All transaction gains and losses of the remeasurement of monetary balance sheet items are reflected in the statements of income as financial income or expenses, as appropriate. Monetary accounts and transactions maintained in dollars are presented at their original amounts. For those foreign subsidiaries whose functional currency is not the dollar, all balance sheet amounts have been translated using the exchange rates in effect at each balance sheet date. Statement of income amounts have been translated using the average exchange rate prevailing during each year. Such translation adjustments are reported as a component of accumulated other comprehensive income (loss) in equity. |
Principles of consolidation | Principles of consolidation The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. Intercompany balances and transactions, including profit from intercompany sales not yet realized outside the Group, have been eliminated upon consolidation. Changes in the parent’s ownership interest in a subsidiary with no change of control are treated as equity transactions, with any difference between the amount of consideration paid and the change in the carrying amount of the non-controlling interest, recognized in equity. Non-controlling interests of subsidiaries represent the non-controlling shareholders’ share of the total comprehensive income (loss) of the subsidiaries and fair value of the net assets upon the acquisition of the subsidiaries. The non-controlling interests are presented in equity separately from the equity attributable to the equity holders of the Company. Redeemable non-controlling interests are classified as mezzanine equity, separate from permanent equity, on the consolidated balance sheets and measured at each reporting period at the higher of their redemption amount or the non-controlling interest book value, in accordance with the requirements of ASC 810 “Consolidation” and ASC 480-10-S99-3A, “Distinguishing Liabilities from Equity”. The following table provides a reconciliation of the redeemable non-controlling interests for the year ended December 31, 2017: January 1, 2017 $ 25,998 Net income attributable to redeemable non-controlling interest 1,536 Redeemable non-controlling interests reclassification to non-controlling interests (2,440 ) Dividend in redeemable non-controlling interest (1,726 ) Foreign currency translation adjustments 2,471 December 31, 2017 $ 25,839 Out of the closing balance, an amount of $ 20,860 might be exercised during 2018. |
Cash and cash equivalents | Cash and cash equivalents Cash and cash equivalents are short-term highly liquid investments that are readily convertible to cash with original maturities of three months or less, at acquisition. Cash and cash equivalents include amounts held primarily in NIS, dollar, Euro, Japanese Yen and British Pound. |
Short-term deposits and restricted deposits | Short-term deposits and restricted deposits Short-term deposits include deposits with original maturities of more than three months and less than one year. Such deposits are presented at cost (including accrued interest) which approximates their fair value. Restricted deposits are used to secure certain of the Group’s ongoing projects and are classified under other receivables. |
Marketable securities | Marketable securities The Company accounts for all its investments in marketable securities in accordance with ASC No. 320, “Investments – Debt and Equity Securities”. The Company classifies all of its marketable securities as available for sale and held for trading. Available for sale securities are carried at fair value, with the unrealized gains and losses, net of tax, reported in “accumulated other comprehensive income (loss)” in equity. Realized gains and losses on sale of investments are included in “financial income, net” and are derived using the specific identification method for determining the cost of securities. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization together with interest on securities is included in “financial income, net”. The Company recognizes an impairment charge when a decline in the fair value of its investments in debt securities below the cost basis of such securities is judged to be other-than-temporary. Factors considered in making such a determination include the duration and severity of the impairment, the reason for the decline in value, the potential recovery period and the Company’s intent to sell, including whether it is more likely than not that the Company will be required to sell the investment before recovery of cost basis. For securities that are deemed other-than-temporarily impaired, the amount of impairment is recognized in “net gain (impairment net of gains) on sale of marketable securities previously impaired” in the statements of income and is limited to the amount related to credit losses, while impairment related to other factors is recognized in other comprehensive income. Held for trading securities are measured at fair value through profit or loss. |
Property and equipment, net | Property and equipment, net Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated by the straight-line method over the estimated useful lives of the assets, at the following annual rates: Years Computers and peripheral equipment 3 - 5 Office furniture and equipment 7 - 15 (mainly 7) Motor vehicles 7 Software 3 – 5 (mainly 5) Leasehold improvements are amortized using the straight-line method over the term of the lease (including option terms that are deemed to be reasonably assured) or the estimated useful life of the improvements, whichever is shorter. |
Business combinations | Business combinations The Company accounts for business combinations under ASC 805, “Business Combinations”. ASC 805 requires recognition of assets acquired, liabilities assumed, contingent consideration, non-controlling interest and redeemable non-controlling interest in the acquiree at the acquisition date, to be measured at their fair values as of that date. As required by ASC 820, “Fair Value Measurements and Disclosures” the Company applies assumptions, judgments and estimates that marketplace participants would consider in determining the fair value of assets acquired, liabilities assumed, non-controlling interest and redeemable non-controlling interest in the acquiree at the acquisition date. Any excess of the fair value of net assets acquired over purchase price and any subsequent changes in estimated contingencies are to be recorded in earnings. Acquisition related costs are expensed to the statements of income in the period incurred. The cumulative impact of measurement period adjustments, including the impact to prior periods, is recognized in the reporting period in which the adjustment is identified. During the years ended December 31, 2015, 2016 and 2017 the Company recorded $3, $665 and $300, with respect to changes in the fair value of contingent consideration liability, respectively. |
Research and development costs | Research and development costs Research and development costs incurred in the process of software development before establishment of technological feasibility are charged to expenses as incurred. Costs incurred subsequent to the establishment of technological feasibility are capitalized according to the principles set forth in ASC 985-20, “Costs of Software to be Sold, Leased or Marketed”. The Company and its subsidiaries establish technological feasibility upon completion of a detailed program design or working model. ASC 985-20-35 requires that a product be amortized when the product is available for general release to customers. The Company considers a product to be available for general release to customers when the Company completes its internal validation of the product that is necessary to establish that the product meets its design specifications including functions, features, and technical performance requirements. Internal validation includes the completion of coding, documentation and testing that ensure bugs are reduced to a minimum. The internal validation of the product takes place a few weeks before the product is made available to the market. In certain instances, the Company enters into a short pre-release stage, during which the product is made available to a selected number of customers as a beta program for their own review and familiarization. Subsequently, the release is made generally available to customers from the Company’s download area. Once a product is considered available for general release to customers, the capitalization of costs ceases and amortization of such costs to “cost of sales” begins. Capitalized software costs are amortized on a product by product basis by the straight-line method over the estimated useful life of the software product (approximately 5 years, due to their high rates of acceptance, the continued reliance on these products by existing customers, and the demand for such products from prospective customers, all of which validate the Company’s expectations) which provides greater amortization expense compared to the revenue-curve method. The Company assesses the recoverability of these intangible assets on a regular basis by assessing the net realizable value of these intangible assets based on the estimated future gross revenues from each product reduced by the estimated future costs of completing and disposing of it, including the estimated costs of performing maintenance and customer support over its remaining economical useful life using internally generated projections of future revenues generated by the products, cost of completion of products and cost of delivery to customers over its remaining economical useful life. During the years ended December 31, 2015, 2016 and 2017, no such unrecoverable amounts were identified. Research and development costs incurred in the process of developing product enhancements are generally charged to expenses as incurred. |
Long-Lived Assets | Long-Lived Assets The Company’s long-lived, non-current assets are comprised mainly of goodwill, identifiable intangible assets and property, plants and equipment. |
Impairment of long-lived assets and intangible assets subject to amortization | Impairment of long-lived assets and intangible assets subject to amortization The Company’s long-lived assets are reviewed for impairment in accordance with ASC 360, “Property, Plant and Equipment” whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. As required by ASC 820, “Fair Value Measurements and Disclosures” the Company applies assumptions, judgments and estimates that marketplace participants would consider in determining the fair value of long-lived assets (or asset groups). Intangible assets with finite lives are amortized over their economic useful life using a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are consumed or otherwise used up. Acquired technology and non-compete were amortized on a straight line basis and customer relationships and backlog were amortized on an accelerated method basis over a period between 1 - 15 years based on the intangible assets identified. During the years ended December 31, 2015, 2016 and 2017, no impairment indicators were identified. |
Goodwill | Goodwill Goodwill represents the excess of the purchase price in a business combination over the fair value of the net tangible and intangible assets acquired. Under ASC 350, “Intangibles - Goodwill and Other”, goodwill is subject to an annual impairment test or more frequently if impairment indicators are present. Goodwill impairment is deemed to exist if the net book value of a reporting unit exceeds its estimated fair value. As of December 31, 2017, the Company operates in four reporting units within its operating segments. Goodwill reflects the excess of the consideration paid or transferred plus the fair value of contingent consideration and any non-controlling interest in the acquiree at the acquisition date over the fair values of the identifiable net assets acquired. ASC 350 allows an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. If the qualitative assessment does not result in a more likely than not indication of impairment, no further impairment testing is required. If it does result in a more likely than not indication of impairment, the two-step impairment test is performed. Alternatively, ASC 350 permits an entity to bypass the qualitative assessment for any reporting unit and proceed directly to performing the first step of the goodwill impairment test. The provisions of ASC 350 require that the quantitative two-step impairment test will be performed on goodwill at the level of the reporting units. In the first step, or “Step one”, the Company compares the fair value of each reporting unit to its carrying value. If the fair value exceeds the carrying value of the net assets, goodwill is considered not impaired, and the Company is not required to perform further testing. If the carrying value of the net assets exceeds the fair value, then the Company must perform the second step, or “Step two”, of the impairment test in order to determine the implied fair value of goodwill. To determine the fair value used in Step one, the Company uses discounted cash flows. If and when the Company is required to perform a Step two analysis, determining the fair value of its net assets and its off-balance sheet intangibles, then the Company would be required to make judgments that involve the use of significant estimates and assumptions. The Company determines the fair value of each reporting unit by using the income approach, which utilizes a discounted cash flow model, as it believes that this approach best approximates the reporting unit’s fair value. Judgments and assumptions related to revenue, operating income, future short-term and long-term growth rates, weighted average cost of capital, interest, capital expenditures, cash flows, and market conditions are inherent in developing the discounted cash flow model. The Company considers historical rates and current market conditions when determining the discount and growth rates to use in its analyses. If these estimates or their related assumptions change in the future, the Company may be required to record impairment charges for its goodwill. The Company performed an annual impairment tests as of December 31, of each of 2015, 2016 and 2017 and did not identify any impairment losses (see Note 9). |
Revenue recognition | Revenue recognition The Company derives its revenues from licensing the rights to use software (proprietary and non-proprietary), provision of related professional services, maintenance and technical support as well as from other software and IT professional services (either fixed price or based on time and materials (T&M)). The Company sells its products and services primarily through its direct sales force and indirectly through distributors and value added resellers. The Company accounts for its software sales in accordance with ASC 985-605, “Software Revenue Recognition”. Software license revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the vendor’s fee is fixed or determinable, no further obligation exists and collectability is probable. Maintenance and support includes annual maintenance contracts providing for unspecified upgrades for new versions and enhancements on a when-and-if-available basis for an annual fee. The right for an unspecified upgrade for new versions and enhancements on a when-and-if-available basis do not specify the features, functionality and release date of future product enhancements for the customer to know what will be made available and the general timeframe in which it will be delivered. Maintenance and support revenue included in multiple element arrangements is deferred and recognized on a straight-line basis over the term of the maintenance and support agreement. As required by ASC 985-605, the Company allocates revenues to the software component of its multiple-element arrangements using the residual method when vendor specific objective evidence (“VSOE”) of fair value exists for the undelivered elements of the support and maintenance agreements. VSOE is based on the price charged when an element is sold separately or renewed. Under the residual method, the fair value of the undelivered elements is deferred and the remaining portion of the arrangement fee is allocated to the delivered elements and is recognized as revenue. The Company generally does not grant a right of return to its customers. When a right of return exists, the Company defers revenue until the right of return expires, at which time revenue is recognized provided that all other revenue recognition criteria are met. Revenue from professional services related to both software and the IT professional services businesses consists of billable hours for services provided and is recognized as the services are rendered. Arrangements that include professional services bundled with licensed software and other software related elements, are evaluated to determine whether those services are essential to the functionality of other elements of the arrangement. When services are considered essential to the software, revenues under the arrangement are recognized using contract accounting based on ASC 605-35, “Construction-Type and Production-Type Contracts”, on a percentage of completion method based on inputs measures. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are first determined, in the amount of the estimated loss for the entire contract. During the years ended December 31, 2015, 2016 and 2017, no such estimated losses were identified. When professional services are not considered essential to the functionality of other elements of the arrangement, revenue allocable to the services is recognized as the services are performed, using VSOE of fair value. In most cases, the Company has determined that the services are not considered essential to the functionality of other elements of the arrangement. Deferred revenues include unearned amounts received under maintenance and support (mainly) and amounts received from customers for which revenues have not yet been recognized. Revenue from third-party sales is recorded at a gross or net amount according to certain indicators. The application of these indicators for gross and net reporting of revenue depends on the relative facts and circumstances of each sale and requires significant judgment. |
Accrued severance pay and retirement plans | Accrued severance pay and retirement plans The Company’s and its Israeli subsidiaries’ obligation for severance pay with respect to their Israeli employees (for the period for which the employees were not included under Section 14 of the Severance Pay Law, 1963) is calculated pursuant to the Israeli Severance Pay Law based on the most recent salary of the employees multiplied by the number of years of employment as of the balance sheet date, and are presented on an undiscounted basis (referred to as the “Shut Down Method”). Employees are entitled to one month’s salary for each year of employment or a portion thereof. The Company’s obligation for all of its Israeli employees is fully provided for by monthly deposits with insurance policies and severance pay funds and by an accrual. The Group has a number of savings plans in the United States that qualify under Section 401(k) of the Internal Revenue Code. U.S employees may contribute up to 100% of their pretax or post-tax salary, but not more than statutory limits. Matching contributions are discretionary and if made, are up to 3% of the participants annual contributions. When contributions are granted, they are invested in proportion to each participant’s voluntary contributions in the investment options provided under the plan. The carrying value of deposited funds includes profits (losses) accumulated up to the balance sheet date. The deposited funds may be withdrawn only upon the fulfillment of the obligations pursuant to the Israeli Severance Pay Law or labor agreements and are recorded as an asset in the Company’s consolidated balance sheet. The Company and its Israeli subsidiaries’ agreements with most of their Israeli employees are in accordance with Section 14 of the Severance Pay Law -1963, mandating that upon termination of such employees’ employment; all the amounts accrued in their insurance policies shall be released to them instead of severance compensation. Upon release of deposited amounts to the employee, no additional liability exists between the parties regarding the matter of severance pay and no additional payments are payable by the Company or its subsidiaries to the employee. Further, the related obligation and amounts deposited on behalf of such obligation are not stated on the balance sheet, as the Company and its subsidiaries are legally released from their obligations to employees once the deposit amounts have been paid. Severance expenses for the years ended December 31, 2015, 2016 and 2017 amounted to approximately $ 1,626, $ 2,248 and $ 3,748, respectively. |
Advertising expenses | Advertising expenses Advertising expenses are charged to selling and marketing expenses, as incurred. Advertising expenses for the years ended December 31, 2015, 2016 and 2017 amounted to $ 377, $ 423 and $ 384, respectively. |
Income taxes | Income taxes The Company and its subsidiaries account for income taxes in accordance with ASC 740, “Income Taxes”. ASC 740 prescribes the use of the “asset and liability” method whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value. Deferred tax assets and liabilities are classified as non-current. The Company utilizes a two-step approach for recognizing and measuring uncertain tax positions accounted for in accordance with an amendment of ASC 740 “Income Taxes.” Under the first step the Company evaluates a tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, based on its technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement with the tax authorities. The Company accrued interest and penalties related to unrecognized tax benefits in its provisions for income taxes. |
Basic and diluted net earnings per share | Basic and diluted net earnings per share Basic net earnings per share are computed based on the weighted average number of Ordinary shares outstanding during each year. Diluted net earnings per share are computed based on the weighted average number of Ordinary shares outstanding during each year, plus dilutive potential ordinary shares considered outstanding during the year, in accordance with ASC 260, “Earnings Per Share.” A portion of the outstanding stock options have been excluded from the calculation of the diluted earnings per share because such securities are anti-dilutive. The total weighted average number of Ordinary shares related to the outstanding options excluded from the calculations of diluted earnings per share was 66,646, 21,998 and 2,093 for the years ended December 31, 2015, 2016 and 2017, respectively. |
Stock-based compensation | Stock-based compensation The Company accounts for stock-based compensation in accordance with ASC 718, “Compensation - Stock Compensation” which requires the measurement and recognition of compensation expense based on estimated fair values for all share-based payment awards made. ASC 718 requires companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company’s consolidated statement of income. The Company recognizes compensation expenses for the value of its awards, which have graded vesting based on the accelerated method over the requisite service period of each of the awards, net of estimated forfeitures. The Company uses the Binomial option-pricing model (“the Binomial model”) to estimate the fair value for any options granted. The Binomial model takes into account variables such as volatility, dividend yield rate, and risk-free interest rate and also allows for the use of dynamic assumptions and considers the contractual term of the option, the probability that the option will be exercised prior to the end of its contractual life, and the probability of termination or retirement of the option holder in computing the value of the option. The fair value of each option granted using the Binomial model, was estimated on the date of grant with the following assumptions: expected volatility was based upon actual historical stock price movements and was calculated as of the grant dates for different periods, since the Binomial model can be used for different expected volatilities for different periods. The risk-free interest rate was based on the yield from U.S. Treasury zero-coupon bonds with an equivalent term to the contractual term of the options. The expected term of options granted was derived from the output of the option valuation model and represented the period of time that options granted were expected to be outstanding. Estimated forfeitures were based on actual historical pre-vesting forfeitures. Since dividend payments are applied to reduce the exercise price of the option, the effect of the dividend protection was reflected by using an expected dividend assumption of zero. For awards with performance conditions, compensation cost is recognized over the requisite service period if it is ‘probable’ that the performance conditions will be satisfied. No grants were made to employees and directors in 2016 and 2017. During the years ended December 31, 2015, 2016 and 2017, the Company recognized stock-based compensation expense related to employee stock options in the amount of $ 234, $ 152 and $ 78, respectively, as follows: Year ended December 31, 2015 2016 2017 Cost of revenue $ 31 $ 15 $ 7 Research and development 48 17 8 Selling and marketing 137 71 - General and administrative 18 49 63 Total stock-based compensation expense $ 234 $ 152 $ 78 |
Concentrations of credit risk | Concentrations of credit risk Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash and cash equivalents, short-term deposits, restricted cash, marketable securities, trade receivables and foreign currency derivative contracts. The Company’s cash and cash equivalents, short-term deposits and restricted cash are invested primarily in bank deposits with major banks worldwide, mainly in the United States and Israel, however, such cash and cash equivalents and short-term deposits in the United States may be in excess of insured limits and are not insured in other jurisdictions. The Company believes that since these deposits may be redeemed upon demand and since such institutions are of high rating they bear low risk. The Company’s marketable securities include investments in commercial and government bonds and foreign banks. The Company’s marketable securities are considered to be highly liquid and have a high credit standing (also refer to Note 4). In addition, management considered its portfolios in foreign banks to be well-diversified. The Company’s trade receivables are derived from sales to customers located primarily in the United States, Israel, Europe and Japan. The Company performs ongoing credit evaluations of its customers and has not experienced any material from any one customer since 2013. An allowance for doubtful accounts is determined with respect to those amounts that the Company has determined to be doubtful of collection. The expense related to doubtful accounts for the years ended December 31, 2015, 2016 and 2017 was $ 346, $ 437 and $ 1,164, respectively. From time to time the Company enters into foreign exchange forward contracts and option contracts intended to protect against the changes in value of forecasted non-dollar currency cash flows related to salary and related expenses. These derivative instruments are designed to offset the Company’s non-dollar currency exposure (see “Derivative instruments” below). |
Fair value measurements | Fair value measurements The Company accounts for certain assets and liabilities at fair value under ASC 820, “Fair Value Measurements and Disclosures”. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets; Level 2 - Includes other inputs that are directly or indirectly observable in the marketplace, other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets with insufficient volume or infrequent transactions, or other inputs that are observable (model-derived valuations in which significant inputs are observable), or can be derived principally from or corroborated by observable market data; Level 3 - Unobservable inputs which are supported by little or no market activity; The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company categorized each of its fair value measurements in one of these three levels of hierarchy. Assets and liabilities measured at fair value on a recurring basis are comprised of marketable securities, foreign currency forward contracts and contingent consideration of acquisitions (see Note 5). The carrying amounts reported in the balance sheet for cash and cash equivalents, short term bank deposits, trade receivables, other accounts receivable, short-term bank credit, trade payables and other accounts payable approximate their fair values due to the short-term maturities of such instruments. |
Comprehensive income (loss) | Comprehensive income (loss) The Company accounts for comprehensive income (loss) in accordance with ASC 220, “Comprehensive Income.” This Statement establishes standards for the reporting and display of comprehensive income and its components in a full set of general purpose financial statements. Comprehensive income (loss) generally represents all changes in equity during the period except those resulting from investments by, or distributions to, shareholders. The Company determined that its items of other comprehensive income (loss) relate to gain and loss on foreign currency translation adjustments, unrealized gain and loss on derivative instruments designated as hedges and unrealized gain and loss on available-for-sale marketable securities. |
Derivative instruments | Derivative instruments A material portion of the Company’s revenues, expenses and earnings is exposed to changes in foreign exchange rates. Depending on market conditions, foreign exchange risk is also managed through the use of derivative financial instruments. These financial instruments serve to protect net income against the impact of the translation into U.S. dollars of certain foreign exchange-denominated transactions. The derivative instruments hedge or offset exposures to Euro, Japanese Yen and NIS exchange rate fluctuations. ASC 815, “Derivatives and Hedging,” requires companies to recognize all of their derivative instruments as either assets or liabilities in their balance sheet at fair value. Derivative instruments that are designated and qualify as hedges of forecasted transactions (i.e., cash flow hedges) are carried at fair value with the effective portion of a derivative’s gain or loss recorded in other comprehensive income and subsequently recognized in earnings in the same period or periods in which the hedged forecasted transaction affects earnings. For derivative instruments that are not designated and qualified as hedging instruments, the gains or losses on the derivative instruments are recognized in current earnings during the period of the change in fair values. The derivative instruments used by the Company are designed to reduce the market risk associated with the exposure of its underlying transactions to fluctuations in currency exchange rates. The Company occasionally has instituted a foreign currency cash flow hedging program in order to hedge against the risk of overall changes in future cash flows. This program mainly relates to hedging portions of the Group forecasted expenses denominated in NIS with currency forwards contracts and put and call options. These forward and option contracts are designated as cash flow hedges. For derivative instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item, if any, is recognized in current earnings during the period of change. For derivative instruments not designated as hedging instruments, the gain or loss is recognized in current earnings during the period of change. At December 31, 2016 and 2017, the Company did not have any cash flow hedges. The following table present gains and losses of related hedged items: Statements Gain recognized in the statements of income of Year ended December 31, income item 2015 2016 2017 Derivatives not designated as hedging: Foreign exchange forward contracts “Financial income (expense), net” 69 4 (5 ) Total derivatives $ 69 $ 4 $ (5 ) |
Recently adopted accounting pronouncement | Recently adopted accounting pronouncement Effective as of January 1, 2017, the Company adopted Accounting Standards Update 2016-09, “Compensation—Stock Compensation (Topic 718)” (“ASU 2016-09”). ASU 2016-09 permits entities to make an accounting policy election related to how forfeitures will impact the recognition of compensation cost for stock-based compensation: to estimate the total number of awards for which the requisite service period will not be rendered or to account for forfeitures as they occur. Upon adoption of ASU 2016-09, the Company elected to continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period. Therefore, the adoption of this guidance did not have any impact on the Company’s financial statements. |
Recently issued accounting pronouncements | Recently issued accounting pronouncements In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09), an updated standard on revenue recognition and issued subsequent amendments to the initial guidance in March 2016, April 2016, May 2016 and December 2016 within ASU 2016-08, 2016-10, 2016-12 and 2016-20, respectively. The core principle of the new standard is for companies to recognize revenue to depict the transfer of goods and services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods and services. In addition, the new standard requires expanded disclosures. The Company established an implementation team to analyze the potential impact the standard will have on its consolidated financial statements and related disclosures as well as its business processes, systems and controls. This includes reviewing revenue contracts across all revenue streams and evaluating potential differences that would result from applying the requirements under the standard. The Company adopted the new standard on January 1, 2018 using the Modified Retrospective Adoption Transition Method. The Company has completed its evaluation of the Standard and does not expect a material change in its pattern of revenue recognition. In February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842), whereby, lessees will be required to recognize for all leases at the commencement date a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. A modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements must be applied. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Companies may not apply a full retrospective transition approach. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018. Early application is permitted. The Company is evaluating the potential impact of this pronouncement. In June 2016, the FASB Issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The new standard requires financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The standard will be effective for the Company beginning January 1, 2020, with early adoption permitted. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial Statements In November 2016, the FASB issued Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (ASU 2016-18), which requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This ASU is effective for annual and interim periods beginning after December 15, 2017. The Company expects no material impact on its consolidated financial statements of cash flows. In January 2017, the FASB issued ASU 2017-04 (ASU 2017-04): Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates step two of the goodwill impairment test and specifies that goodwill impairment should be measured by comparing the fair value of a reporting unit with its carrying amount. Additionally, the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets should be disclosed. ASU 2017-04 is effective for annual or interim goodwill impairment tests performed in fiscal years beginning after December 15, 2019, and early adoption is permitted. The Company does not expect this ASU to have a material effect on its consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The amendments in this update provide a more robust framework to use in determining when a set of assets and activities is a business. Because the current definition of a business is interpreted broadly and can be difficult to apply, stakeholders indicated that analyzing transactions is inefficient and costly and that the definition does not permit the use of reasonable judgment. The amendments provide more consistency in applying the guidance, reduce the costs of application, and make the definition of a business more operable. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2017. The Company is currently evaluating the impact of adopting this new guidance on its consolidated financial statements, but it is not expected to have a material impact. |
Significant Accounting Polici29
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Significant Accounting Policies [Abstract] | |
Schedule of reconciliation of the redeemable non-controlling interests | January 1, 2017 $ 25,998 Net income attributable to redeemable non-controlling interest 1,536 Redeemable non-controlling interests reclassification to non-controlling interests (2,440 ) Dividend in redeemable non-controlling interest (1,726 ) Foreign currency translation adjustments 2,471 December 31, 2017 $ 25,839 |
Schedule of property and equipment, net | Years Computers and peripheral equipment 3 - 5 Office furniture and equipment 7 - 15 (mainly 7) Motor vehicles 7 Software 3 – 5 (mainly 5) |
Schedule of stock-based compensation expense related to employee stock options | Year ended December 31, 2015 2016 2017 Cost of revenue $ 31 $ 15 $ 7 Research and development 48 17 8 Selling and marketing 137 71 - General and administrative 18 49 63 Total stock-based compensation expense $ 234 $ 152 $ 78 |
Schedule of gains and losses of related hedged items | Statements Gain recognized in the statements of income of Year ended December 31, income item 2015 2016 2017 Derivatives not designated as hedging: Foreign exchange forward contracts “Financial income (expense), net” 69 4 (5 ) Total derivatives $ 69 $ 4 $ (5 ) |
Business Combination, Signifi30
Business Combination, Significant Transaction and Sale of Business (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Business Acquisition [Line Items] | |
Summary of estimated fair values of the assets acquired and liabilities | December 31, 2016 2017 (*) Net assets, excluding cash acquired $ 2,174 $ (1,822 ) Non-controlling interest (1,209 ) - Intangible assets 2,370 1,149 Deferred tax liability (493 ) - Goodwill 6,042 1,723 Total assets acquired net of acquired cash $ 8,884 $ 1,050 (*) The estimated fair values of the tangible and intangible assets referring to acquisition which were made in 2017 are provisional and are based on information that was available as of the acquisition date to estimate the fair value of these amounts. The Company’s management believes the information provides a reasonable basis for estimating the fair values of these amounts, but is waiting for additional information necessary to finalize those fair values. Therefore, provisional measurements of fair value reflected are subject to change. The Company expects to finalize the tangible and intangible assets valuation and complete the acquisition accounting as soon as practicable but no later than the measurement period. |
Comblack IT Ltd. [Member] | |
Business Acquisition [Line Items] | |
Summary of estimated fair values of the assets acquired and liabilities | Net assets, excluding cash acquired $ (405 ) Non-controlling interest (989 ) Intangible assets 1,249 Goodwill 1,966 Total assets acquired net of acquired cash $ 1,821 |
Infinigy Solutions LLC [Member] | |
Business Acquisition [Line Items] | |
Summary of estimated fair values of the assets acquired and liabilities | Net assets, excluding cash acquired $ 1,182 Non-controlling interest (3,590 ) Intangible assets 3,675 Goodwill 5,260 Total assets acquired net of acquired cash $ 6,527 |
Roshtov Software Industries Ltd [Member] | |
Business Acquisition [Line Items] | |
Summary of estimated fair values of the assets acquired and liabilities | Net assets, excluding cash acquired $ 15 Non-controlling interest (14,012 ) Intangible assets 22,439 Deferred tax liability (5,610 ) Goodwill 17,718 Total assets acquired net of acquired cash $ 20,550 |
Shavit Software (2009) Ltd. [Member] | |
Business Acquisition [Line Items] | |
Summary of estimated fair values of the assets acquired and liabilities | Net assets, excluding cash acquired $ 533 Intangible assets 3,489 Deferred tax liability (871 ) Goodwill 3,685 Total assets acquired net of acquired cash $ 6,836 |
Marketable Securities (Tables)
Marketable Securities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Marketable Securities [Abstract] | |
Summary of marketable securities | December 31, 2016 2017 Fair value through profit or loss (1) $ - $ 1,209 Available-for-sale 12,506 12,929 $ 12,506 $ 14,138 (1) The Group recognized trading gains in the amount of $ 10 during the year ended December 31, 2017. |
Summary of marketable securities classified as available-for-sale | December 31, 2016 2017 Amortized Unrealized losses Unrealized Market value Amortized Unrealized losses Unrealized Market value Available-for-sale: Corporate bonds $ 12,348 $ (72 ) $ - $ 12,276 $ 12,987 $ (58 ) $ - $ 12,929 Equity funds 118 - 112 230 - - - - Total $ 12,466 $ (72 ) $ 112 $ 12,506 $ 12,987 $ (58 ) $ - $ 12,929 |
Schedule of marketable securities with contractual maturities | Amortized Unrealized gains Market cost Gains Losses value Due within one year $ 4,045 $ - $ (5 ) $ 4,040 Due after one year through three years $ 8,942 $ - $ (53 ) $ 8,889 Total $ 12,987 $ - $ (58 ) $ 12,929 |
Schedule of changes in other comprehensive income of available for sale securities | The following is the change in the other comprehensive income of available-for-sale securities during 2016: Other Other comprehensive income from available-for-sale securities as of January 1, 2016 $ 35 Losses reclassified into earnings from marketable securities 16 Unrealized losses from available-for-sale securities (11 ) Other comprehensive income from available-for-sale securities as of December 31, 2016 $ 40 The following is the change in the other comprehensive income of available-for-sale securities during 2017: Other Other comprehensive income from available-for-sale securities as of January 1, 2017 $ 40 Gains reclassified into earnings from marketable securities (94 ) Unrealized losses from available-for-sale securities (4 ) Other comprehensive loss from available-for-sale securities as of December 31, 2017 $ (58 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Measurements [Abstract] | |
Schedule of financial assets measured at fair value on a recurring basis | December 31, 2016 Fair value measurements using input type Level 1 Level 2 Level 3 Total Assets: Corporate bonds $ - $ 12,276 $ - $ 12,276 Equity fund 230 - - 230 Total financial assets $ 230 $ 12,276 $ - $ 12,506 Liabilities: Contingent consideration $ - $ - $ 3,088 $ 3,088 Total financials liabilities $ - $ - $ 3,088 $ 3,088 December 31, 2017 Fair value measurements using input type Level 1 Level 2 Level 3 Total Assets: Corporate bonds $ - $ 12,929 $ - $ 12,929 Convertible bonds - 1,209 - 1,209 Total financial assets $ - $ 14,138 $ - $ 14,138 Liabilities: Contingent consideration $ - $ - $ 1,333 $ 1,333 Total financials liabilities $ - $ - $ 1,333 $ 1,333 |
Schedule of fair value measurements using significant unobservable inputs | December 31, 2016 2017 Opening balance $ 1,220 $ 3,088 Increase in contingent consideration due to acquisitions 1,868 - Payment of contingent consideration (883 ) (2,109 ) Increase in fair value of contingent consideration 665 1,587 Decrease in fair value of contingent consideration - (1,287 ) Decrease in liability against other receivables - (118 ) Amortization of interest and exchange rate 218 172 Closing balance $ 3,088 $ 1,333 |
Other Accounts Receivable and33
Other Accounts Receivable and Prepaid Expenses (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Other Accounts Receivable and Prepaid Expenses [Abstract] | |
Schedule of other accounts receivable and prepaid expenses | December 31, 2016 2017 Prepaid expenses $ 2,601 $ 2,659 Government authorities 3,426 4,900 Related parties 1,603 314 Other 857 770 $ 8,487 $ 8,643 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property and Equipment [Abstract] | |
Schedule of property and equipment | December 31, 2016 2017 Cost: Leasehold improvements $ 795 $ 918 Computers and peripheral equipment 14,059 14,842 Office furniture and equipment 3,111 3,778 Motor vehicles 1,186 1,237 Software 2,970 3,094 22,121 23,869 Accumulated depreciation: Leasehold improvements 356 429 Computers and peripheral equipment 13,518 14,194 Office furniture and equipment 2,244 2,471 Motor vehicles 366 447 Software 2,572 2,860 19,056 20,401 Depreciated cost $ 3,065 $ 3,468 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Intangible Assets/Goodwill [Abstract] | |
Schedule of intangible assets | December 31, 2016 2017 Original amounts: Capitalized software costs $ 71,349 $ 75,126 Customer relationships 53,370 56,296 Backlog and non-compete agreement 2,712 2,712 Acquired technology 12,375 13,087 139,806 147,221 Accumulated amortization: Capitalized software costs 57,286 61,834 Customer relationships 21,684 27,967 Backlog and non-compete agreement 2,260 2,486 Acquired technology 2,396 3,923 83,626 96,210 Intangible assets, net $ 56,180 $ 51,011 |
Schedule of estimated future amortization expense of intangible assets | 2018 $ 11,439 2019 9,698 2020 8,203 2021 6,585 2022 4,333 2023 and thereafter 10,753 $ 51,011 |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Intangible Assets/Goodwill [Abstract] | |
Summary of changes in the carrying amount of goodwill | IT Software Total As of January 1, 2016 $ 34,150 $ 29,158 $ 63,308 Business combination 9,113 17,717 26,830 Measurement period adjustments 389 - 389 Foreign currency translation adjustments 222 253 475 As of December 31, 2016 $ 43,874 $ 47,128 $ 91,002 Business combination 1,723 - 1,723 Measurement period adjustments 614 28 642 Foreign currency translation adjustments 2,192 2,630 4,822 As of December 31, 2017 $ 48,403 $ 49,786 $ 98,189 |
Short Term Debt (Tables)
Short Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Short Term Debt/Long Term Debt [Abstract] | |
Schedule of short term debt | Interest Linkage rate December 31, basis % 2016 2017 Short-term credit from banks USD U.S Prime -0.2 $ 996 $ 2,125 Short-term credit from banks NIS 2 - 618 Short-term loans from banks NIS 1.6-2 155 259 Other 36 - Current maturities of long-term loans from financial institution NIS 2.6-3 4,458 6,769 $ 5,645 $ 9,771 |
Accrued Expenses and Other Ac38
Accrued Expenses and Other Accounts Payable (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accrued Expenses and Other Accounts Payable [Abstract] | |
Schedule of accrued expenses and other accounts payable | December 31, 2016 2017 Employees and payroll accruals $ 11,245 $ 15,203 Accrued expenses 4,955 6,234 Government authorities 2,871 4,738 Other 1,219 1,614 $ 20,290 $ 27,789 |
Long Term Debt (Tables)
Long Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Short Term Debt/Long Term Debt [Abstract] | |
Schedule of long term debt | Linkage Interest December 31, basis rate 2016 2017 % Loan from banks and other NIS 2.6-5 $ 31,714 $ 34,447 (1) Dividend payable to redeemable non-controlling interest NIS 2,341 - Other long term debt 159 136 $ 34,214 $ 34,583 Current maturities NIS (4,458 ) (6,769 ) 29,756 27,814 (1) On November 2016, the Company obtained a loan in the amount of $ 31,356 linked to the New Israel shekel from an Israeli financial institution. The principal amount of the loan is payable in seven equal annual installments with the final payment due on November 2, 2023 and bears a fixed interest rate of 2.60% per annum, payable in two semi-annual payments. |
Taxes on Income (Tables)
Taxes on Income (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Taxes on Income [Abstract] | |
Schedule of income before income tax | Year ended December 31, 2015 2016 2017 Domestic $ 18,350 $ 15,334 $ 19,442 Foreign 2,407 5,323 4,803 $ 20,757 $ 20,657 $ 24,245 |
Schedule of taxes on income (tax benefit) | Year ended December 31, 2015 2016 2017 Current: Domestic $ 3,466 $ 2,919 $ 5,928 Foreign 880 1,863 1,511 4,346 4,782 7,439 Deferred taxes: Domestic (500 ) (666 ) (1,160 ) Foreign (165 ) (167 ) 52 (665 ) (833 ) (1,108 ) Taxes on income $ 3,681 $ 3,949 $ 6,331 |
Schedule of deferred tax assets and liabilities | December 31, 2016 2017 Net operating loss carryforwards $ 3,838 $ 4,355 Allowances, reserves and intangible assets 1,943 1,974 Deferred tax assets before valuation allowance 5,781 6,329 Less - valuation allowance (2,233 ) (3,339 ) Deferred tax assets, net $ 3,548 $ 2,990 |
Schedule of deferred tax liabilities | December 31, 2016 2017 Long-term tax assets $ 3,548 $ 2,990 Long-term tax liabilities (12,494 ) (11,331 ) Net deferred tax liabilities $ (8,946 ) $ (8,341 ) |
Schedule of effective income tax rate reconciliation | Year ended December 31, 2015 2016 2017 Income before taxes, as reported in the consolidated statements of income $ 20,757 $ 20,657 $ 24,245 Statutory tax rate 26.5 % 25 % 24 % Theoretical tax expenses on the above amount at the Israeli statutory tax rate $ 5,501 $ 5,164 $ 5,819 Tax adjustment in respect of different tax rates (923 ) (1,214 ) 268 Deferred taxes on losses for which full valuation allowance was provided in the past 131 (455 ) 658 Tax-deductible costs, not included in the accounting costs (733 ) (342 ) (38 ) Tax benefits in respect of prior years, net (133 ) 1,262 (488 ) Nondeductible expenses 177 (232 ) 70 Uncertain tax position and other differences (339 ) (234 ) 42 Income tax $ 3,681 $ 3,949 $ 6,331 |
Schedule of unrecognized tax benefits | Gross unrecognized tax benefits at January 1, 2015 $ 342 Increase in tax positions taken in prior years 469 Decrease in tax positions taken in prior years (145 ) Gross unrecognized tax benefits at December 31, 2015 666 Increase in tax positions taken in prior years 159 Decrease in tax positions taken in prior years - Gross unrecognized tax benefits at December 31, 2016 825 Increase in tax positions taken in prior years 300 Decrease in tax positions taken in prior years - Gross unrecognized tax benefits at December 31, 2017 $ 1,125 |
Equity (Tables)
Equity (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Summary of employee option activity under the 2007 Plan | Number of options Weighted Weighted Aggregate Outstanding at January 1, 2017 473,367 $ 4.58 5.10 $ 991 Granted - $ - Exercised (132,808 ) $ 4.40 Forfeited (31,250 ) $ 6.18 Outstanding at December 31, 2017 309,309 $ 4.38 3.97 $ 1,237 Exercisable at December 31, 2017 258,059 $ 3.84 3.45 $ 1,171 |
Schedule of options outstanding | Exercise price Options Weighted Weighted Options Weighted of exercisable options In $ 1.01-2 20,000 0.98 $ 1.12 20,000 $ 1.12 2.01-3 87,667 2.25 $ 2.31 87,667 $ 2.31 3.01-4 109,142 3.77 $ 4.00 109,142 $ 4.00 5.01-6 6,250 5.61 $ 6.00 - $ - 6.01-7 31,250 6.87 $ 6.89 - $ - 8.01-9 55,000 6.35 $ 8.01 41,250 $ 8.01 309,309 3.97 $ 4.38 258,059 $ 3.84 |
Schedule of accumulated other comprehensive income (loss) | December 31, 2015 2016 2017 Accumulated realized and unrealized gain (loss) on available-for-sale securities, net $ 35 $ 40 $ (58 ) Accumulated foreign currency translation adjustments (6,756 ) (7,494 ) 115 Accumulated unrealized gain on derivative instruments, net 26 26 26 Total other comprehensive income (loss) $ (6,695 ) $ (7,428 ) $ 83 |
Selected Statements of Income42
Selected Statements of Income Data (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Selected Statements of Income Data [Abstract] | |
Schedule of research and development costs, net | Year ended December 31, 2015 2016 2017 Total costs $ 8,735 $ 10,063 $ 10,713 Less - capitalized software costs (3,847 ) (4,224 ) (3,771 ) Research and development, net $ 4,888 $ 5,839 $ 6,942 |
Schedule of financial income (expenses), net | Bank charges and interest from loans offset by interest from short term deposits $ 64 $ (199 ) $ (1,124 ) Interest expenses related to liabilities in connection with acquisitions - (257 ) (62 ) Interest income from marketable securities, net of amortization of premium on marketable securities 231 240 284 Loss arising from foreign currency translation and other (980 ) (214 ) (809 ) Financial income(expenses), net $ (685 ) $ (430 ) $ (1,711 ) |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies [Abstract] | |
Schedule of future minimum lease commitments under non-cancelable operating leases | 2018 $ 2,523 2019 1,116 2020 626 2021 and thereafter 553 $ 4,818 |
Net Earnings Per Share (Tables)
Net Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Net Earnings Per Share [Abstract] | |
Schedule of computation of basic and diluted net earnings per share | Year ended December 31, 2015 2016 2017 Numerator for basic and diluted earnings per share - net income available to Magic shareholders $ 16,198 $ 11,907 $ 15,442 Weighted average Ordinary shares outstanding: Denominator for basic net earnings per share 44,247,556 44,347,083 44,435,671 Effect of dilutive securities 204,510 168,953 161,548 Denominator for diluted net earnings per share 44,452,066 44,516,036 44,597,219 Basic earnings per share $ 0.37 $ 0.27 $ 0.35 Diluted earnings per share $ 0.36 $ 0.27 $ 0.35 |
Segment Geographical Informat45
Segment Geographical Information and Major Customers (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Segment Geographical Information and Major Customers [Abstract] | |
Schedule of reported segment results of operation | Software services IT professional services Unallocated expense Total 2015 Total revenues $ 67,271 $ 108,759 $ - $ 176,030 Expenses 52,963 98,384 3,249 154,596 Segment operating income (loss) $ 14,308 $ 10,375 $ (3,249 ) $ 21,434 Depreciation and amortization $ 6,562 $ 3,042 $ 281 $ 9,885 Software services IT professional services Unallocated expense Total 2016 Total revenues $ 70,834 $ 130,812 $ - $ 201,646 Expenses 58,847 118,414 3,298 180,559 Segment operating income (loss) $ 11,987 $ 12,398 $ (3,298 ) $ 21,087 Depreciation and amortization $ 7,531 $ 3,769 $ 308 $ 11,608 2017 Total revenues $ 77,100 $ 181,040 $ - $ 258,140 Expenses 63,649 164,558 3,977 232,184 Segment operating income (loss) $ 13,451 $ 16,482 $ (3,977 ) $ 25,956 Depreciation and amortization $ 9,242 $ 4,100 $ 269 $ 13,611 |
Schedule of total revenues classified according to geographical destination | Year ended December 31, 2015 2016 2017 Israel $ 36,401 $ 58,079 $ 91,917 Europe 29,084 23,642 26,635 United States 92,577 100,470 123,113 Japan 10,092 11,226 9,253 Other 7,876 8,229 7,222 $ 176,030 $ 201,646 $ 258,140 |
Schedule of long-lived assets | December 31, 2016 2017 Israel $ 110,213 $ 111,217 Europe 1,302 1,289 United States 30,777 32,223 Japan 4,887 5,008 Other 3,068 2,931 $ 150,247 $ 152,668 |
Significant Accounting Polici46
Significant Accounting Policies (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Significant Accounting Policies [Abstract] | |||
Redeemable non-controlling interests, Beginning | $ 25,998 | ||
Net income attributable to redeemable non-controlling interest | 1,536 | $ 4,520 | $ 639 |
Redeemable non-controlling interests reclassification to non-controlling interests | (2,440) | ||
Dividend in redeemable non-controlling interest | (1,726) | ||
Foreign currency translation adjustments | 2,471 | ||
Redeemable non-controlling interests, Ending | $ 25,839 | $ 25,998 |
Significant Accounting Polici47
Significant Accounting Policies (Details 1) | 12 Months Ended |
Dec. 31, 2017 | |
Computers and peripheral equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives (Years) | 3 years |
Office furniture and equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | (mainly 7) |
Motor vehicles [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives (Years) | 7 years |
Software [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | (mainly 5) |
Minimum [Member] | Office furniture and equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives (Years) | 7 years |
Minimum [Member] | Software [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives (Years) | 3 years |
Maximum [Member] | Office furniture and equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives (Years) | 15 years |
Maximum [Member] | Software [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives (Years) | 5 years |
Significant Accounting Polici48
Significant Accounting Policies (Details 2) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation expense | $ 78 | $ 152 | $ 234 |
Cost of revenue [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation expense | 7 | 15 | 31 |
Research and development [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation expense | 8 | 17 | 48 |
Selling and marketing [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation expense | 71 | 137 | |
General and administrative [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation expense | $ 63 | $ 49 | $ 18 |
Significant Accounting Polici49
Significant Accounting Policies (Details 3) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Derivatives not designated as hedging: | |||
Total derivatives | $ (5) | $ 4 | $ 69 |
Financial income (expense), net [Member] | |||
Derivatives not designated as hedging: | |||
Foreign exchange forward contracts | $ (5) | $ 4 | $ 69 |
Significant Accounting Polici50
Significant Accounting Policies (Details Textual) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017USD ($)Segmentsshares | Dec. 31, 2016USD ($)shares | Dec. 31, 2015USD ($)shares | |
Significant Accounting Policies (Textual) | |||
Changes in fair value of contingent consideration liability | $ 300 | $ 665 | $ 3 |
Employee's contribution percent | 100.00% | ||
Matching contributions, percentage | 3.00% | ||
Severance expenses | $ 3,748 | 2,248 | 1,626 |
Advertising expenses | $ 384 | $ 423 | $ 377 |
Income tax ultimate settlement, percentage | More than 50%. | ||
Ordinary shares excluded from the calculations of diluted earnings per share | shares | 2,093 | 21,998 | 66,646 |
Number of operating segments | Segments | 4 | ||
Stock-based compensation expense | $ 78 | $ 152 | $ 234 |
Expense related to doubtful accounts | $ 1,164 | $ 437 | $ 346 |
Short-term deposits maturity, term | Short-term deposits include deposits with original maturities of more than three months and less than one year. | ||
Closing balance description | Out of the closing balance, an amount of $ 20,860 might be exercised during 2018. | ||
Minimum [Member] | |||
Significant Accounting Policies (Textual) | |||
Capitalized computer software amortization, term | 4 years | ||
Intangible assets amortization period | 1 year | ||
Maximum [Member] | |||
Significant Accounting Policies (Textual) | |||
Capitalized computer software amortization, term | 5 years | ||
Intangible assets amortization period | 15 years |
Business Combination, Signifi51
Business Combination, Significant Transaction and Sale of Business (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | [1] | Dec. 31, 2016 | Oct. 31, 2016 | Jul. 11, 2016 | Jun. 30, 2015 | Apr. 14, 2015 |
Business Acquisition [Line Items] | |||||||
Net assets, excluding cash acquired | $ (1,822) | $ 2,174 | |||||
Non-controlling interest | (1,209) | ||||||
Intangible assets | 1,149 | 2,370 | |||||
Deferred tax liability | (493) | ||||||
Goodwill | 1,723 | 6,042 | |||||
Total assets acquired | $ 1,050 | $ 8,884 | |||||
Comblack IT Ltd. [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Net assets, excluding cash acquired | $ (405) | ||||||
Non-controlling interest | (989) | ||||||
Intangible assets | 1,249 | ||||||
Goodwill | 1,966 | ||||||
Total assets acquired | $ 1,821 | ||||||
Infinigy Solutions LLC [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Net assets, excluding cash acquired | $ 1,182 | ||||||
Non-controlling interest | (3,590) | ||||||
Intangible assets | 3,675 | ||||||
Goodwill | 5,260 | ||||||
Total assets acquired | $ 6,527 | ||||||
Roshtov Software Industries Ltd [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Net assets, excluding cash acquired | $ 15 | ||||||
Non-controlling interest | (14,012) | ||||||
Intangible assets | 22,439 | ||||||
Deferred tax liability | (5,610) | ||||||
Goodwill | 17,718 | ||||||
Total assets acquired | $ 20,550 | ||||||
Shavit Software Ltd [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Net assets, excluding cash acquired | $ 533 | ||||||
Intangible assets | 3,489 | ||||||
Deferred tax liability | (871) | ||||||
Goodwill | 3,685 | ||||||
Total assets acquired | $ 6,836 | ||||||
[1] | The estimated fair values of the tangible and intangible assets referring to acquisition which were made in 2017 are provisional and are based on information that was available as of the acquisition date to estimate the fair value of these amounts. The Company's management believes the information provides a reasonable basis for estimating the fair values of these amounts, but is waiting for additional information necessary to finalize those fair values. Therefore, provisional measurements of fair value reflected are subject to change. The Company expects to finalize the tangible and intangible assets valuation and complete the acquisition accounting as soon as practicable but no later than the measurement period. |
Business Combination, Signifi52
Business Combination, Significant Transaction and Sale of Business (Details Textual) - USD ($) $ in Thousands | Jul. 11, 2016 | Apr. 14, 2015 | Oct. 31, 2016 | Jul. 31, 2016 | Jun. 30, 2015 | Dec. 31, 2017 | Dec. 31, 2016 |
Business Combination Significant Transaction and Sale of Business (Textual) | |||||||
Business combination consideration paid transferred | $ 1,050 | $ 8,884 | |||||
Contingent payment upon operational targets | 2,405 | ||||||
Comblack IT Ltd. [Member] | |||||||
Business Combination Significant Transaction and Sale of Business (Textual) | |||||||
Business combination consideration paid transferred | $ 1,821 | ||||||
Payments upon closing of the business acquisition | 1,523 | ||||||
Contingent payment upon operational targets | $ 298 | ||||||
Business acquisition, remaining ownership percentage | 30.00% | ||||||
Ownership interest acquired | 70.00% | ||||||
Redeemable non-controlling interest | $ 989 | ||||||
Infinigy Solutions LLC [Member] | |||||||
Business Combination Significant Transaction and Sale of Business (Textual) | |||||||
Business combination consideration paid transferred | $ 6,527 | ||||||
Payments upon closing of the business acquisition | 5,600 | ||||||
Contingent payment upon operational targets | $ 927 | ||||||
Business acquisition, remaining ownership percentage | 30.00% | ||||||
Ownership interest acquired | 70.00% | ||||||
Redeemable non-controlling interest | $ 3,590 | 3,366 | |||||
Roshtov Software Industries Ltd [Member] | |||||||
Business Combination Significant Transaction and Sale of Business (Textual) | |||||||
Business acquired consideration | $ 20,550 | ||||||
Business acquisition, remaining ownership percentage | 40.00% | ||||||
Ownership interest acquired | 60.00% | ||||||
Redeemable non-controlling interest | $ 14,012 | 15,565 | |||||
Shavit Software (2009) Ltd. [Member] | |||||||
Business Combination Significant Transaction and Sale of Business (Textual) | |||||||
Business combination consideration paid transferred | $ 6,836 | ||||||
Payments upon closing of the business acquisition | $ 4,699 | ||||||
Ownership interest acquired | 100.00% | ||||||
Business acquisition, deferred payment | $ 2,137 | ||||||
Seller [Member] | Comblack IT Ltd. [Member] | |||||||
Business Combination Significant Transaction and Sale of Business (Textual) | |||||||
Redeemable non-controlling interest | 5,034 | ||||||
Seller [Member] | Infinigy Solutions LLC [Member] | |||||||
Business Combination Significant Transaction and Sale of Business (Textual) | |||||||
Business acquired consideration | $ 534 | ||||||
Seller [Member] | Shavit Software (2009) Ltd. [Member] | |||||||
Business Combination Significant Transaction and Sale of Business (Textual) | |||||||
Business acquisition, deferred payment | $ 924 |
Marketable Securities (Details)
Marketable Securities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | |
Marketable Securities [Abstract] | |||
Fair value through profit or loss | [1] | $ 1,209 | |
Available-for-sale | 12,929 | 12,506 | |
Marketable securities, Total | $ 14,138 | $ 12,506 | |
[1] | The Group recognized trading gains in the amount of $ 10 during the year ended December 31, 2017. |
Marketable Securities (Details
Marketable Securities (Details 1) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Available-for-sale: | ||
Amortized cost | $ 12,987 | $ 12,466 |
Unrealized losses | (58) | (72) |
Unrealized gains | 112 | |
Market value | 12,929 | 12,506 |
Corporate bonds [Member] | ||
Available-for-sale: | ||
Amortized cost | 12,987 | 12,348 |
Unrealized losses | (58) | (72) |
Unrealized gains | ||
Market value | 12,929 | 12,276 |
Equity funds [Member] | ||
Available-for-sale: | ||
Amortized cost | 118 | |
Unrealized losses | ||
Unrealized gains | 112 | |
Market value | $ 230 |
Marketable Securities (Detail55
Marketable Securities (Details 2) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Amortized cost | $ 12,987,000 | $ 12,466,000 |
Unrealized gains (losses), Gains | 112,000 | |
Unrealized gains (losses), Losses | (58,000) | (72,000) |
Market value | 12,929,000 | $ 12,506,000 |
Due within one year [Member] | ||
Amortized cost | 4,045,000 | |
Unrealized gains (losses), Gains | ||
Unrealized gains (losses), Losses | (5,000) | |
Market value | 4,040,000 | |
Due after one year through three years [Member] | ||
Amortized cost | 8,942 | |
Unrealized gains (losses), Gains | ||
Unrealized gains (losses), Losses | (53) | |
Market value | $ 8,889 |
Marketable Securities (Detail56
Marketable Securities (Details 3) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Marketable Securities [Abstract] | |||
Other comprehensive income from available-for-sale securities, Beginning | $ 40 | $ 35 | |
Losses/Gains reclassified into earnings from marketable securities | (94) | 16 | |
Unrealized losses from available-for-sale securities | (4) | (11) | |
Other comprehensive income/loss from available-for-sale securities, Ending | $ (58) | $ 40 | $ 35 |
Marketable Securities (Detail57
Marketable Securities (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Marketable Securities (Textual) | ||
Recognized trading gains, amount | $ 10 | |
Marketable securities with outstanding unrealized losses | 12,929 | $ 12,506 |
Unrealized losses for marketable securities | 58 | $ 72 |
More than 12 months [Member] | ||
Marketable Securities (Textual) | ||
Unrealized losses for marketable securities | 25 | |
Less than 12 months [Member] | ||
Marketable Securities (Textual) | ||
Unrealized losses for marketable securities | $ 32 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Assets: | ||
Corporate bonds | $ 12,929 | $ 12,276 |
Equity fund | 230 | |
Convertible bonds | 1,209 | |
Total financial assets | 14,138 | 12,506 |
Liabilities: | ||
Contingent consideration | 1,333 | 3,088 |
Total financials liabilities | 1,333 | 3,088 |
Fair value measurements using input type, Level 1 [Member] | ||
Assets: | ||
Corporate bonds | ||
Equity fund | 230 | |
Convertible bonds | ||
Total financial assets | 230 | |
Liabilities: | ||
Contingent consideration | ||
Total financials liabilities | ||
Fair value measurements using input type, Level 2 [Member] | ||
Assets: | ||
Corporate bonds | 12,929 | 12,276 |
Equity fund | ||
Convertible bonds | 1,209 | |
Total financial assets | 14,138 | 12,276 |
Liabilities: | ||
Contingent consideration | ||
Total financials liabilities | ||
Fair value measurements using input type, Level 3 [Member] | ||
Assets: | ||
Corporate bonds | ||
Equity fund | ||
Convertible bonds | ||
Total financial assets | ||
Liabilities: | ||
Contingent consideration | 1,333 | 3,088 |
Total financials liabilities | $ 1,333 | $ 3,088 |
Fair Value Measurements (Deta59
Fair Value Measurements (Details 1) - Level 3 [Member] - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Summary of fair value measurements by using significant unobservable inputs | ||
Opening balance | $ 3,088 | $ 1,220 |
Increase in contingent consideration due to acquisitions | 1,868 | |
Payment of contingent consideration | (2,109) | (883) |
Increase in fair value of contingent consideration | 1,587 | 665 |
Decrease in fair value of contingent consideration | (1,287) | |
Decrease in liability against other receivables | (118) | |
Amortization of interest and exchange rate | 172 | 218 |
Closing balance | $ 1,333 | $ 3,088 |
Other Accounts Receivable and60
Other Accounts Receivable and Prepaid Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Other Accounts Receivable and Prepaid Expenses [Abstract] | ||
Prepaid expenses | $ 2,659 | $ 2,601 |
Government authorities | 4,900 | 3,426 |
Related parties | 314 | 1,603 |
Other | 770 | 857 |
Other accounts receivable and prepaid expenses | $ 8,643 | $ 8,487 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Line Items] | ||
Cost: | $ 23,869 | $ 22,121 |
Accumulated depreciation: | 20,401 | 19,056 |
Depreciated cost | 3,468 | 3,065 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Cost: | 918 | 795 |
Accumulated depreciation: | 429 | 356 |
Computers and peripheral equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Cost: | 14,842 | 14,059 |
Accumulated depreciation: | 14,194 | 13,518 |
Office furniture and equipment[Member] | ||
Property, Plant and Equipment [Line Items] | ||
Cost: | 3,778 | 3,111 |
Accumulated depreciation: | 2,471 | 2,244 |
Motor vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Cost: | 1,237 | 1,186 |
Accumulated depreciation: | 447 | 366 |
Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Cost: | 3,094 | 2,970 |
Accumulated depreciation: | $ 2,860 | $ 2,572 |
Property and Equipment (Detai62
Property and Equipment (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Line Items] | |||
Depreciation | $ 1,046 | $ 893 | $ 792 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Finite-Lived Intangible Assets [Line Items] | ||
Original amounts: | $ 147,221 | $ 139,806 |
Accumulated amortization: | 96,210 | 83,626 |
Intangible assets, net | 51,011 | 56,180 |
Capitalized software costs [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Original amounts: | 75,126 | 71,349 |
Accumulated amortization: | 61,834 | 57,286 |
Customer relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Original amounts: | 56,296 | 53,370 |
Accumulated amortization: | 27,967 | 21,684 |
Backlog and non-compete agreement [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Original amounts: | 2,712 | 2,712 |
Accumulated amortization: | 2,486 | 2,260 |
Acquired technology [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Original amounts: | 13,087 | 12,375 |
Accumulated amortization: | $ 3,923 | $ 2,396 |
Intangible Assets (Details 1)
Intangible Assets (Details 1) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Intangible Assets/Goodwill [Abstract] | ||
2,018 | $ 11,439 | |
2,019 | 9,698 | |
2,020 | 8,203 | |
2,021 | 6,585 | |
2,022 | 4,333 | |
2023 and thereafter | 10,753 | |
Finite-Lived Intangible Assets, Net | $ 51,011 | $ 56,180 |
Intangible Assets (Details Text
Intangible Assets (Details Textual) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Intangible Assets/Goodwill [Abstract] | |||
Amortization expenses | $ 12,565 | $ 10,715 | $ 9,093 |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill [Line Items] | ||
Goodwill, Beginning, Balance | $ 91,002 | $ 63,308 |
Business combination | 1,723 | 26,830 |
Measurement period adjustments | 642 | 389 |
Foreign currency translation adjustments | 4,822 | 475 |
Goodwill, Ending, Balance | 98,189 | 91,002 |
IT professional services [Member] | ||
Goodwill [Line Items] | ||
Goodwill, Beginning, Balance | 43,874 | 34,150 |
Business combination | 1,723 | 9,113 |
Measurement period adjustments | 614 | 389 |
Foreign currency translation adjustments | 2,192 | 222 |
Goodwill, Ending, Balance | 48,403 | 43,874 |
Software services [Member] | ||
Goodwill [Line Items] | ||
Goodwill, Beginning, Balance | 47,128 | 29,158 |
Business combination | 17,717 | |
Measurement period adjustments | 28 | |
Foreign currency translation adjustments | 2,630 | 253 |
Goodwill, Ending, Balance | $ 49,786 | $ 47,128 |
Short Term Debt (Details)
Short Term Debt (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Short term debt, Total | $ 9,771 | $ 5,645 |
Short-term credit from banks [Member] | ||
Linkage basis | USD | |
Interest rate % | U.S Prime -0.2 | |
Short term debt, Total | $ 2,125 | 996 |
Short-term credit from banks one [Member] | ||
Linkage basis | NIS | |
Interest rate | 2.00% | |
Short term debt, Total | $ 618 | |
Short-term loans from banks [Member] | ||
Linkage basis | NIS | |
Short term debt, Total | $ 259 | 155 |
Short-term loans from banks [Member] | Minimum [Member] | ||
Interest rate | 1.60% | |
Short-term loans from banks [Member] | Maximum [Member] | ||
Interest rate | 2.00% | |
Other [Member] | ||
Short term debt, Total | 36 | |
Current maturities of long-term loans from financial institution [Member] | ||
Linkage basis | NIS | |
Short term debt, Total | $ 6,769 | $ 4,458 |
Current maturities of long-term loans from financial institution [Member] | Minimum [Member] | ||
Interest rate | 2.60% | |
Current maturities of long-term loans from financial institution [Member] | Maximum [Member] | ||
Interest rate | 3.00% |
Accrued Expenses and Other Ac68
Accrued Expenses and Other Accounts Payable (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Accrued Expenses and Other Accounts Payable [Abstract] | ||
Employees and payroll accruals | $ 15,203 | $ 11,245 |
Accrued expenses | 6,234 | 4,955 |
Government authorities | 4,738 | 2,871 |
Other | 1,614 | 1,219 |
Accrued expenses and other accounts payable | $ 27,789 | $ 20,290 |
Long Term Debt (Details)
Long Term Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | |
Debt Instrument [Line Items] | |||
Loan from banks and other (NIS) | $ 34,447 | [1] | $ 31,714 |
Dividend payable to redeemable non-controlling interest (NIS) | 2,341 | ||
Other long term debt | 136 | 159 | |
Long-term Debt, Excluding Current Maturities | 34,583 | 34,214 | |
Current maturities (NIS) | (6,769) | (4,458) | |
Long-term Debt, Total | $ 27,814 | $ 29,756 | |
Long-term Debt [Member] | Maximum [Member] | |||
Debt Instrument [Line Items] | |||
Loans from banks in NIS, Interest rate | 5.00% | ||
Long-term Debt [Member] | Minimum [Member] | |||
Debt Instrument [Line Items] | |||
Loans from banks in NIS, Interest rate | 2.60% | ||
[1] | On November 2016, the Company obtained a loan in the amount of $ 31,356 linked to the New Israel shekel from an Israeli financial institution. The principal amount of the loan is payable in seven equal annual installments with the final payment due on November 2, 2023 and bears a fixed interest rate of 2.60% per annum, payable in two semi-annual payments. |
Long Term Debt (Details Textual
Long Term Debt (Details Textual) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Nov. 30, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Long Term Debt (Textual) | |||
Loan amount | $ 27,814 | $ 29,756 | |
Description of financial covenants | a. Total equity attributable to Magic Software Enterprises shareholders shall not be lower than $ 100,000 at all times; b. The Company’s consolidated cash and cash equivalent and marketable securities available for sales shall not be less than $ 10,000; c. The ratio of the Company’s consolidated total financial debts to consolidated total assets will not exceed 50%; d. The ratio of the Company’s total financial debts less cash, short-term deposits and short-term marketable securities to the annual EBITDA will not exceed 3.25 to 1; and e. The Company shall not create any pledge on all of its property and assets in favor of any third party without the financial institution’s consent. | ||
Long-term Debt [Member] | Israeli financial institution [Member] | |||
Long Term Debt (Textual) | |||
Loan amount | $ 31,356 | ||
Final payment due date | Nov. 2, 2023 | ||
Fixed interest rate | 2.60% |
Taxes on Income (Details)
Taxes on Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Taxes on Income [Abstract] | |||
Domestic | $ 19,442 | $ 15,334 | $ 18,350 |
Foreign | 4,803 | 5,323 | 2,407 |
Income before taxes on income | $ 24,245 | $ 20,657 | $ 20,757 |
Taxes on Income (Details 1)
Taxes on Income (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Current: | |||
Domestic | $ 5,928 | $ 2,919 | $ 3,466 |
Foreign | 1,511 | 1,863 | 880 |
Current Income Tax Expense (Benefit), Total | 7,115 | 4,782 | 4,346 |
Deferred taxes: | |||
Domestic | (1,160) | (666) | (500) |
Foreign | 52 | (167) | (165) |
Deferred Income Tax Expense (Benefit) | (1,108) | (833) | (665) |
Taxes on income | $ 6,331 | $ 3,949 | $ 3,681 |
Taxes on Income (Details 2)
Taxes on Income (Details 2) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Taxes on Income [Abstract] | ||
Net operating loss carryforwards | $ 4,355 | $ 3,838 |
Allowances, reserves and intangible assets | 1,974 | 1,943 |
Deferred tax assets before valuation allowance | 6,329 | 5,781 |
Less - valuation allowance | (3,339) | (2,233) |
Deferred tax assets, net | $ 2,990 | $ 3,548 |
Taxes on Income (Details 3)
Taxes on Income (Details 3) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Taxes on Income [Abstract] | ||
Long-term tax assets | $ 2,990 | $ 3,548 |
Long-term tax liabilities | (11,331) | (12,494) |
Net deferred tax liabilities | $ (8,341) | $ (8,946) |
Taxes on Income (Details 4)
Taxes on Income (Details 4) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Taxes on Income [Abstract] | |||
Income before taxes, as reported in the consolidated statements of income | $ 24,245 | $ 20,657 | $ 20,757 |
Statutory tax rate | 24.00% | 25.00% | 26.50% |
Theoretical tax expenses on the above amount at the Israeli statutory tax rate | $ 5,819 | $ 5,164 | $ 5,501 |
Tax adjustment in respect of different tax rates | 268 | (1,214) | (923) |
Deferred taxes on losses for which full valuation allowance was provided in the past | 658 | (455) | 131 |
Tax-deductible costs, not included in the accounting costs | (38) | (342) | (733) |
Tax benefits in respect of prior years, net | (488) | 1,262 | (133) |
Nondeductible expenses | 70 | (232) | 177 |
Uncertain tax position and other differences | 42 | (234) | (339) |
Income tax | $ 6,331 | $ 3,949 | $ 3,681 |
Taxes on Income (Details 5)
Taxes on Income (Details 5) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Taxes on Income [Abstract] | |||
Gross unrecognized tax benefits, Beginning balance | $ 825 | $ 666 | $ 342 |
Increase in tax positions taken in prior years | 300 | 159 | 469 |
Decrease in tax positions taken in prior years | (145) | ||
Gross unrecognized tax benefits, Ending balance | $ 1,125 | $ 825 | $ 666 |
Taxes on Income (Details Textua
Taxes on Income (Details Textual) - USD ($) $ in Thousands | Jan. 01, 2011 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Taxes on Income (Textual) | ||||||
Effective corporate tax rate | 24.00% | 25.00% | 26.50% | |||
Loss carryforwards | $ 15,336 | |||||
Withholding tax rate | 4.00% | |||||
Income tax expense | $ 300 | $ 159 | $ 324 | |||
Statutory tax rate | 24.00% | 25.00% | 26.50% | |||
Cash and cash equivalents | $ 75,314 | $ 76,076 | $ 75,314 | $ 62,188 | $ 72,515 | |
Capital gains tax rate, description | A 12% capital gains tax rate on the sale of a preferred intangible asset to a foreign affiliated enterprise, provided that the asset was initially purchased from a foreign resident at an amount of NIS 200 million or more. | |||||
Provision for net deferred taxes | $ 428 | |||||
Economic Policy for 2011 and 2012 (Amended Legislation) [Member] | ||||||
Taxes on Income (Textual) | ||||||
Tax benefits, description | According to the Amendment, a flat corporate tax rate of 16% was established for exporting industrial enterprises (over 25%). | |||||
Minimum [Member] | ||||||
Taxes on Income (Textual) | ||||||
Effective corporate tax rate | 21.00% | 23.00% | ||||
Maximum [Member] | ||||||
Taxes on Income (Textual) | ||||||
Effective corporate tax rate | 35.00% | 24.00% | ||||
Tax Amendment [Member] | ||||||
Taxes on Income (Textual) | ||||||
Tax benefits, description | The Company's taxable income in Israel is entitled to a preferred 12% tax rate | |||||
Non-Israel Subsidiaries [Member] | ||||||
Taxes on Income (Textual) | ||||||
Cash and cash equivalents | $ 12,062 | $ 12,062 | ||||
Industrial Companies [Member] | ||||||
Taxes on Income (Textual) | ||||||
Tax benefits, description | Law for the Encouragement of Industry (Taxes), 1969 (the "Industrial Encouragement Law"). The Industrial Encouragement Law defines an "Industrial Company" as a company that is resident in Israel and that derives at least 90% of its income in any tax year, other than income from defense loans, capital gains, interest and dividends, from an enterprise whose major activity in a given tax year is industrial production. Under the Industrial Encouragement Law, the Company is entitled to amortization of the cost of purchased know-how and patents over an eight-year period for tax purposes as well as accelerated depreciation rates on equipment and buildings. | |||||
Preferred Technology Enterprise [Member] | ||||||
Taxes on Income (Textual) | ||||||
Withholding tax rate | 20.00% | |||||
Statutory tax rate | 12.00% | 25.00% | ||||
Tax benefits, description | Total consolidated revenues of its parent company and all subsidiaries are less than NIS 10 billion. | |||||
Formula Telecom Solutions Ltd. [Member] | ||||||
Taxes on Income (Textual) | ||||||
Loss carryforwards | $ 12,686 | |||||
England [Member] | ||||||
Taxes on Income (Textual) | ||||||
Loss carryforwards | $ 4,142 |
Equity (Details)
Equity (Details) $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of options, Outstanding | shares | 328,059 |
Number of options, Exercisable | shares | 258,059 |
Weighted average exercise price, Outstanding | $ / shares | $ 4.58 |
Weighted average exercise price, Exercisable | $ / shares | $ 3.84 |
Weighted average remaining contractual term (in years), Outstanding | 3 years 11 months 19 days |
Employee option activity [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of options, Outstanding | shares | 473,367 |
Number of options, Granted | shares | |
Number of options, Exercised | shares | (132,808) |
Number of options, Forfeited | shares | (31,250) |
Number of options, Outstanding | shares | 309,309 |
Number of options, Exercisable | shares | 258,059 |
Weighted average exercise price, Outstanding | $ / shares | $ 4.58 |
Weighted average exercise price, Granted | $ / shares | |
Weighted average exercise price, Exercised | $ / shares | 4.40 |
Weighted average exercise price, Forfeited | $ / shares | 6.18 |
Weighted average exercise price, Outstanding | $ / shares | 4.38 |
Weighted average exercise price, Exercisable | $ / shares | $ 3.84 |
Weighted average remaining contractual term (in years), Outstanding | 5 years 1 month 6 days |
Weighted average remaining contractual term (in years), Outstanding | 3 years 11 months 19 days |
Weighted average remaining contractual term (in years), Exercisable | 3 years 5 months 12 days |
Aggregate intrinsic value, Outstanding | $ | $ 991 |
Aggregate intrinsic value, Outstanding | $ | 1,237 |
Aggregate intrinsic value, Exercisable | $ | $ 1,171 |
Equity (Details 1)
Equity (Details 1) | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options outstanding | shares | 328,059 |
Weighted average remaining contractual life (years) | 3 years 11 months 19 days |
Weighted average exercise price | $ / shares | $ 4.58 |
Options exercisable | shares | 258,059 |
Weighted average exercise price of exercisable options | $ / shares | $ 3.84 |
0-1 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options outstanding | shares | |
Weighted average exercise price | $ / shares | |
1.01-2 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options outstanding | shares | 20,000 |
Weighted average remaining contractual life (years) | 11 months 23 days |
Weighted average exercise price | $ / shares | $ 1.12 |
Options exercisable | shares | 20,000 |
Weighted average exercise price of exercisable options | $ / shares | $ 1.12 |
2.01-3 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options outstanding | shares | 87,667 |
Weighted average remaining contractual life (years) | 2 years 2 months 30 days |
Weighted average exercise price | $ / shares | $ 2.31 |
Options exercisable | shares | 87,667 |
Weighted average exercise price of exercisable options | $ / shares | $ 2.31 |
3.01-4 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options outstanding | shares | 109,142 |
Weighted average remaining contractual life (years) | 3 years 9 months 7 days |
Weighted average exercise price | $ / shares | $ 4 |
Options exercisable | shares | 109,142 |
Weighted average exercise price of exercisable options | $ / shares | $ 4 |
4.01-5 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options outstanding | shares | |
Weighted average exercise price | $ / shares | |
5.01-6 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options outstanding | shares | 18,750 |
Weighted average remaining contractual life (years) | 5 years 7 months 10 days |
Weighted average exercise price | $ / shares | $ 6 |
Options exercisable | shares | |
Weighted average exercise price of exercisable options | $ / shares | |
6.01-7 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options outstanding | shares | 37,500 |
Weighted average remaining contractual life (years) | 6 years 10 months 14 days |
Weighted average exercise price | $ / shares | $ 6.89 |
Options exercisable | shares | |
Weighted average exercise price of exercisable options | $ / shares | |
7.01-8 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options outstanding | shares | |
Weighted average exercise price | $ / shares | |
8.01-9 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options outstanding | shares | 55,000 |
Weighted average remaining contractual life (years) | 6 years 4 months 6 days |
Weighted average exercise price | $ / shares | $ 8.01 |
Options exercisable | shares | 41,250 |
Weighted average exercise price of exercisable options | $ / shares | $ 8.01 |
Equity (Details 2)
Equity (Details 2) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Equity [Abstract] | |||
Accumulated realized and unrealized gain (loss) on available-for-sale securities, net | $ (58) | $ 40 | $ 35 |
Accumulated foreign currency translation adjustments | 115 | (7,494) | (6,756) |
Accumulated unrealized gain on derivative instruments, net | 26 | 26 | 26 |
Total other comprehensive income (loss) | $ 83 | $ (7,428) | $ (6,695) |
Equity (Details Textual)
Equity (Details Textual) $ / shares in Units, ₪ / shares in Thousands, ₪ in Thousands, $ in Thousands | Aug. 13, 2017USD ($)$ / shares | Apr. 09, 2017 | Aug. 14, 2016USD ($)$ / shares | Aug. 12, 2015USD ($)$ / shares | Feb. 05, 2015USD ($)$ / shares | Feb. 28, 2018USD ($)$ / shares | Feb. 22, 2017USD ($)$ / shares | Feb. 21, 2016USD ($)$ / shares | Nov. 30, 2014ILS (₪)₪ / sharesshares | Aug. 19, 2014 | Dec. 31, 2017USD ($)shares | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($)shares | Dec. 31, 2007shares | Oct. 31, 2015shares | Sep. 04, 2014USD ($)$ / shares |
Equity (Textual) | ||||||||||||||||
Reserved ordinary shares for issuance | 1,167 | 1,167 | ||||||||||||||
Intrinsic value of options exercised | $ | $ 502 | $ 112 | $ 210 | |||||||||||||
Unrecognized compensation cost related to non-vested share-based compensation | $ | $ 11 | |||||||||||||||
Accumulated cash dividend distributions of per share | $ / shares | $ 0.13 | $ 0.085 | $ 0.095 | $ 0.081 | $ 0.085 | $ 0.09 | $ 0.525 | |||||||||
Aggregate dividend value | $ | $ 5,779 | $ 3,770 | $ 4,204 | $ 3,582 | $ 3,775 | $ 3,991 | $ 20,111 | |||||||||
Dividend paid date | Sep. 13, 2017 | Sep. 22, 2016 | Sep. 10, 2015 | Mar. 11, 2015 | Apr. 5, 2017 | Mar. 17, 2016 | Sep. 4, 2014 | |||||||||
Dividend distribution maximum percentage | 75.00% | |||||||||||||||
Fair value on grant date total | ₪ | ₪ 5,910 | |||||||||||||||
Exercise price of per share | ₪ / shares | ₪ 5 | |||||||||||||||
Subsequent Event [Member] | ||||||||||||||||
Equity (Textual) | ||||||||||||||||
Accumulated cash dividend distributions of per share | $ / shares | $ 0.13 | |||||||||||||||
Aggregate dividend value | $ | $ 5,784 | |||||||||||||||
Dividend paid date | Mar. 26, 2018 | |||||||||||||||
2007 Plan [Member] | ||||||||||||||||
Equity (Textual) | ||||||||||||||||
Reserved ordinary shares for issuance | 1,500,000 | |||||||||||||||
Additional ordinary shares | 250,000 | 1,000,000 | ||||||||||||||
Aggregate of ordinary shares for future grants | 1,000,000 | |||||||||||||||
Expiration period | 10 years | |||||||||||||||
Exercisable | 10 years | |||||||||||||||
2007 Plan [Member] | Minimum [Member] | ||||||||||||||||
Equity (Textual) | ||||||||||||||||
Options vest years | 3 years | |||||||||||||||
2007 Plan [Member] | Maximum [Member] | ||||||||||||||||
Equity (Textual) | ||||||||||||||||
Options vest years | 4 years | |||||||||||||||
Common Stock [Member] | ||||||||||||||||
Equity (Textual) | ||||||||||||||||
Public offering ordinary shares |
Related Parties Transactions (D
Related Parties Transactions (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Related Parties Transactions (Textual) | |||
Rendered services amount | $ 2,511 | $ 3,950 | $ 1,638 |
Acquired services and hardware amount | 165 | 102 | $ 231 |
Trade payables balances due to related parties amount | 107 | 64 | |
Trade and other receivables balances due from related parties amount | $ 1,909 | $ 931 |
Selected Statements of Income83
Selected Statements of Income Data (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Selected Statements of Income Data [Abstract] | |||
Total costs | $ 10,713 | $ 10,063 | $ 8,735 |
Less - capitalized software costs | (3,771) | (4,224) | (3,847) |
Research and development, net | $ 6,942 | $ 5,839 | $ 4,888 |
Selected Statements of Income84
Selected Statements of Income Data (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Selected Statements of Income Data [Abstract] | |||
Bank charges and interest from loans offset by interest from short term deposits | $ (1,124) | $ (199) | $ 64 |
Interest expenses related to liabilities in connection with acquisitions | (62) | (257) | |
Interest income from marketable securities, net of amortization of premium on marketable securities | 284 | 240 | 231 |
Loss arising from foreign currency translation and other | (809) | (214) | (980) |
Financial income(expenses), net | $ 1,711 | $ 430 | $ 685 |
Commitments and Contingencies85
Commitments and Contingencies (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Commitments and Contingencies [Abstract] | |
2,018 | $ 2,523 |
2,019 | 1,116 |
2,020 | 626 |
2021 and thereafter | 553 |
Total | $ 4,818 |
Commitments and Contingencies86
Commitments and Contingencies (Details Textual) $ in Thousands | 1 Months Ended | 12 Months Ended | |||||
Sep. 30, 2016ILS (₪) | Jan. 31, 2015USD ($) | Aug. 31, 2009USD ($) | Aug. 31, 2009ILS (₪) | Dec. 31, 2017USD ($)Squarefeet | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Commitments and Contingencies (Textual) | |||||||
Rent expenses | $ 2,729 | $ 2,204 | $ 2,045 | ||||
Lease agreement maximum penalties amount | $ 48 | ||||||
Square feet of space based on lease agreements | Squarefeet | 165,646 | ||||||
Aggregated amount of lease commitment | $ 4,396 | ||||||
Sought damages in amount | ₪ 34,106 | $ 13,400 | ₪ 52,000,000 | ||||
Damages plaintiffs amount | $ 2,400 | ||||||
Restricted bank deposits | $ 419 | ||||||
Lease agreements, description | The Group has diverse liability for the lease agreements varying from six months to five years. | ||||||
Customer Contracts [Member] | |||||||
Commitments and Contingencies (Textual) | |||||||
Bank guarantees amount | $ 516 |
Net Earnings Per Share (Details
Net Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Net Earnings Per Share [Abstract] | |||
Numerator for basic and diluted earnings per share - net income available to Magic shareholders | $ 15,442 | $ 11,907 | $ 16,198 |
Weighted average Ordinary shares outstanding: | |||
Denominator for basic net earnings per share | 44,435,671 | 44,347,083 | 44,247,556 |
Effect of dilutive securities | 161,548 | 168,953 | 204,510 |
Denominator for diluted net earnings per share | 44,597,219 | 44,516,036 | 44,452,066 |
Basic earnings per share | $ 0.35 | $ 0.27 | $ 0.37 |
Diluted earnings per share | $ 0.35 | $ 0.27 | $ 0.36 |
Segment Geographical Informat88
Segment Geographical Information and Major Customers (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Segment Reporting Information [Line Items] | |||
Total revenues | $ 258,140 | $ 201,646 | $ 176,030 |
Expenses | 232,184 | 180,559 | 154,596 |
Segment operating income (loss) | 25,956 | 21,087 | 21,434 |
Depreciation and amortization | 13,611 | 11,608 | 9,885 |
Software services [Member] | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 77,100 | 70,834 | 67,271 |
Expenses | 63,649 | 58,847 | 52,963 |
Segment operating income (loss) | 13,451 | 11,987 | 14,308 |
Depreciation and amortization | 9,242 | 7,531 | 6,562 |
IT professional services [Member] | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 181,040 | 130,812 | 108,759 |
Expenses | 164,558 | 118,414 | 98,384 |
Segment operating income (loss) | 16,482 | 12,398 | 10,375 |
Depreciation and amortization | 4,100 | 3,769 | 3,042 |
Unallocated expense [Member] | |||
Segment Reporting Information [Line Items] | |||
Total revenues | |||
Expenses | 3,977 | 3,298 | 3,249 |
Segment operating income (loss) | (3,977) | (3,298) | (3,249) |
Depreciation and amortization | $ 269 | $ 308 | $ 281 |
Segment Geographical Informat89
Segment Geographical Information and Major Customers (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenue, Major Customer [Line Items] | |||
Total revenues | $ 258,140 | $ 201,646 | $ 176,030 |
Israel [Member] | |||
Revenue, Major Customer [Line Items] | |||
Total revenues | 91,917 | 58,079 | 36,401 |
Europe [Member] | |||
Revenue, Major Customer [Line Items] | |||
Total revenues | 26,635 | 23,642 | 29,084 |
United States [Member] | |||
Revenue, Major Customer [Line Items] | |||
Total revenues | 123,113 | 100,470 | 92,577 |
Japan [Member] | |||
Revenue, Major Customer [Line Items] | |||
Total revenues | 9,253 | 11,226 | 10,092 |
Other [Member] | |||
Revenue, Major Customer [Line Items] | |||
Total revenues | $ 7,222 | $ 8,229 | $ 7,876 |
Segment Geographical Informat90
Segment Geographical Information and Major Customers (Details 2) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Segment Reporting Information [Line Items] | ||
long-lived assets | $ 152,668 | $ 150,247 |
Israel [Member] | ||
Segment Reporting Information [Line Items] | ||
long-lived assets | 111,217 | 110,213 |
Europe [Member] | ||
Segment Reporting Information [Line Items] | ||
long-lived assets | 1,289 | 1,302 |
United States [Member] | ||
Segment Reporting Information [Line Items] | ||
long-lived assets | 32,223 | 30,777 |
Japan [Member] | ||
Segment Reporting Information [Line Items] | ||
long-lived assets | 5,008 | 4,887 |
Other [Member] | ||
Segment Reporting Information [Line Items] | ||
long-lived assets | $ 2,931 | $ 3,068 |
Segment Geographical Informat91
Segment Geographical Information and Major Customers (Details Textual) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Segment Geographical Information and Major Customers (Textual) | |||
Concentration risk, Percentage | 13.00% | 9.00% | 11.00% |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Thousands | Aug. 13, 2017 | Aug. 14, 2016 | Aug. 12, 2015 | Feb. 05, 2015 | Feb. 28, 2018 | Feb. 22, 2017 | Feb. 21, 2016 | Aug. 19, 2014 | Sep. 04, 2014 |
Subsequent Events (Textual) | |||||||||
Dividend distribution of per share | $ 0.13 | $ 0.085 | $ 0.095 | $ 0.081 | $ 0.085 | $ 0.09 | $ 0.525 | ||
Aggregate dividend value | $ 5,779 | $ 3,770 | $ 4,204 | $ 3,582 | $ 3,775 | $ 3,991 | $ 20,111 | ||
Dividend paid date | Sep. 13, 2017 | Sep. 22, 2016 | Sep. 10, 2015 | Mar. 11, 2015 | Apr. 5, 2017 | Mar. 17, 2016 | Sep. 4, 2014 | ||
Subsequent Event [Member] | |||||||||
Subsequent Events (Textual) | |||||||||
Dividend distribution of per share | $ 0.13 | ||||||||
Aggregate dividend value | $ 5,784 | ||||||||
Dividend paid date | Mar. 26, 2018 |