Sapiens Announces First Quarter 2005 Results; Reports Losses on Its Wa

    Business Editors/High-Tech Editors

    RESEARCH TRIANGLE PARK, N.C.--(BUSINESS WIRE)--May 10, 2005--Sapiens International Corporation N.V. (Nasdaq:SPNS) and (TASE:SPNS) announced today unaudited financial results for its fiscal 2005 first quarter ended March 31, 2005. For the quarter, the company posted revenues of $10.1 million compared with $12.0 million in the fourth quarter of 2004. Gross profit was $3.5 million, with gross profit margin of 34.6%, compared with 36.4% in the fourth quarter of 2004. The Company reported an operating loss of $2.3 million, compared with an operating loss of $0.8 million in the fourth quarter of 2004. Net loss for the quarter was $2.6 million, compared with a net loss of $1.7 million in the fourth quarter of 2004.
    Itzick Sharir, President and Chief Executive Officer of Sapiens, commented: "As we had projected at the end of 2004, the first quarter of 2005 represents low revenues as a result of the long sale-cycle in the insurance industry and seasonally low first quarter revenues. In addition, we recorded a one-time expense of $0.76 million relating to previously announced restructuring costs.
    "We continue to believe in our financial projections and our plans to return to operational profitability in the coming quarters, as a result of growing revenues coupled with reduced expenses, highlighted by the recent restructuring.
    "Our Sapiens INSIGHT(TM) suite of insurance solutions continues to gain market recognition. Sapiens INSIGHT(TM) has been praised by analysts for its innovation and has been categorized as a leading solution for the insurance industry. We believe that we are finally seeing the early signs of market penetration, as we gain access to new customers in the industry. We continue to make progress in our long-term business turn-around and we thank our customers, shareholders, investors and employees for their continued confidence and support, in spite of the short term complexity."

    (Tables Follow)

    Sapiens' management will host a teleconference at 8:45 a.m. EST on May 10, 2005, to discuss the results and the company's outlook.

    Please call the following dial-in numbers to participate:

    United States 1-866-860-9642
    United Kingdom 0-800-917-5108
    International +972-3-918-0600
    Israel 03-918-0600

    Please call 10 minutes prior to the start time.

    About Sapiens

    Sapiens International Corporation N.V. (Nasdaq:SPNS) and (TASE:SPNS), a member of the Formula Group (Nasdaq:FORTY) and (TASE:FORT), is a leading global provider of proven IT solutions that modernize business processes and enable insurance organizations to adapt quickly to change. Sapiens' innovative solutions are widely recognized for their ability to cost-effectively align IT with the business demands for speed, flexibility and efficiency. Sapiens operates through its subsidiaries in North America, United Kingdom, EMEA and Asia Pacific and has partnerships with market leaders such as IBM and EDS. Sapiens' clients include AXA, Liverpool Victoria, Menora, Norwich Union, OneBeacon, Principal Financial Group, Abbey National, ING and Occidental Fire & Casualty, among others.
    For more information, please visit http://www.sapiens.com.

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

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

For the three months ended -------------------------- 03/31/2005 03/31/2004 ----------- ----------- Revenues Products $ 4,952 $ 7,721 Consulting and other services 5,150 4,844 ----------- ----------- Total revenues 10,102 12,565 ----------- -----------

Cost of revenues Products 3,758 4,373 Consulting and other services 2,869 2,456 ----------- ----------- Total cost of revenues 6,627 6,829 ----------- -----------

Gross Profit 3,475 5,736

Operating expenses Research and development, net 628 522 Selling, marketing, general and administrative 4,379 5,563 Restructuring expenses 758 ----------- ------------

Operating Loss (2,290) (349)

Financial expenses, net (371) (650) Other income (expenses), net (a) 43 (345) ----------- -----------

Net Loss $ (2,618) $ (1,344) =========== ===========

Basic and diluted earnings (loss) per share (b) $ (0.23) $ (0.13) =========== ===========

Weighted average number of shares used to compute Basic earnings (loss) per share 11,449 10,747 Diluted earnings (loss) per share (b) 11,449 10,747

Note a: Includes taxes and minority interest b: Due to the net loss in 2004 and 2005 the inclusion of dilutive securities would be antidilutive.

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

31-03-05 31-12-04 --------- --------- Assets

Cash and cash equivalents $ 8,018 $ 10,942 Short-term investments 9,171 11,156 --------- --------- 17,189 22,098 --------- --------- Trade receivables, net 9,417 10,029 Other current assets 4,930 4,013 --------- --------- Total current assets 31,536 36,140 --------- ---------

Property and equipment, net 2,157 2,382 Other assets, net 30,107 30,212 --------- --------- Total assets $ 63,800 $ 68,734 ========= =========

Liabilities and shareholders' equity

Short-term bank credit and current maturities of long-term debt $ 19,459 $ 20,873 Trade payables 1,778 2,718 Other liabilities and accrued expenses 8,350 8,558 Deferred revenue 4,447 3,224 --------- --------- Total current liabilities 34,034 35,373 --------- ---------

Long-term debt and other liabilities 2,488 3,035 Convertible debentures, warrants and options 18,314 18,246 Shareholders' equity 8,964 12,080

--------- --------- Total liabilities and shareholders' equity $ 63,800 $ 68,734 ========= =========

Note: Certain prior year's amounts have been reclassified to conform with current year presentation

--30--AR/se*

CONTACT: Sapiens International Chief Financial Officer Elior Brin, +1-877-554-2426 +972-8-938-2721 IR.Sapiens@sapiens.com or Chief Executive Officer Itzick Sharir, +1-877-554-2426 +972-8-938-2721 IR.Sapiens@sapiens.com

KEYWORD: NORTH CAROLINA ISRAEL INTERNATIONAL AFRICA/MIDDLE EAST INDUSTRY KEYWORD: SOFTWARE NETWORKING HARDWARE BANKING CONFERENCE CALLS EARNINGS SOURCE: Sapiens International Corporation N.V.

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