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Perion Completes Accretive Acquisition of SweetPacks

  Perion Completes Accretive Acquisition of SweetPacks

                    Company Will Exceed Full-Year Guidance

Business Wire

TEL AVIV, Israel -- December 03, 2012

Perion Network Ltd. (NASDAQ: PERI) today announced that it has closed its
previously announced acquisition of SweetIM (a.k.a. “SweetPacks”), a consumer
internet company that produces a variety of free, fun and safe apps for
everyday use.

“After three weeks of working closely with the SweetPacks management team, we
are even more convinced that this acquisition will help take Perion to the
next level and we are now focused on executing the integration plan,”
commented Josef Mandelbaum, Perion’s Chief Executive Officer.

Mr. Mandelbaum continued, “Based on the continued strength of our organic
business, and the incremental contribution of one month of SweetPacks, we will
exceed our full-year guidance, and are well positioned for significant growth
in both revenue and profitability in 2013. This acquisition will provide us
with meaningful scale and increased profitability and will strengthen our
competitive advantage.”

Perion made an initial payment of $10 million in cash and 1.99 million Perion
shares to the shareholders of SweetPacks on November 30, 2012. A second
payment of $7.5 million in cash is due 12 months after closing. A third,
conditional payment of $7.5 million in cash is due 18 months after closing,
subject to certain milestones and achievements.

Previous guidance on a  non-GAAP basis for 2012 was: revenues of $55 million,
EBITDA of $12 million and Net Income of $9 million.

About Perion Network Ltd.,

Perion Network, Ltd. (NASDAQ: PERI) is a global internet consumer software
company that develops applications to make the online experience of its users
simple, safe and enjoyable. Perion’s two main award winning consumer brands
are: IncrediMail and Smilebox. Together these products have had over 150
million downloads. IncrediMail is a streamlined e-mail and Facebook
application with an easy-to-use interface that allows for more personalized
communications sold in over 100 countries in 8 languages, and Smilebox is a
leading photo sharing and social expression product and service that lets
customers quickly turn life's moments into digital creations to share and
connect with friends and family in a fun and personal way. Perion’s
applications are monetized through a freemium model. Free versions of our
applications are monetized primarily through our toolbar which generates
search revenue, and advertising revenue generated through impressions, while a
more advanced feature rich version is available with a premium upgrade. Perion
also offers and develops a range of products for mobile phones and tablets to
answer its users' increasing mobile demands. For more information on Perion
please visit www.perion.com.

Non-GAAP measures

Non-GAAP financial measures consist of GAAP financial measures adjusted to
exclude: Valuation adjustment on acquired deferred product revenues,
amortization of acquired intangible assets, share-based compensation expenses,
acquisition related expenses, deferred finance expenses and non-recurring tax
benefits. Perion also uses Adjusted EBITDA as a non-GAAP financial performance
measurement. Adjusted EBITDA is calculated by adding back to net income:
Valuation adjustment on acquired deferred product revenues, acquisition
related expenses, interest, taxes, stock-based compensation, depreciation and
amortization and one-time expenses (credits). The purpose of such adjustments
is to give an indication of performance exclusive of non-cash charges and
other items that are considered by management to be outside of core operating
results. Our non-GAAP financial measures are not meant to be considered in
isolation or as a substitute for comparable GAAP measures, and should be read
only in conjunction with our consolidated financial statements prepared in
accordance with GAAP. Our management regularly uses our supplemental non-GAAP
financial measures internally to understand, manage and evaluate our business
and make operating decisions. These non-GAAP measures are among the primary
factors management uses in planning for and forecasting future periods.
Business combination accounting rules requires us to recognize a legal
performance obligation related to a revenue arrangement of an acquired entity.
The amount assigned to that liability should be based on its fair value at the
date of acquisition. The non-GAAP adjustment is intended to reflect the full
amount of such revenue. We believe this adjustment is useful to investors as a
measure of the ongoing performance of our business. We believe these non-GAAP
financial measures provide consistent and comparable measures to help
investors understand our current and future operating cash flow performance.
These non-GAAP financial measures may differ materially from the non-GAAP
financial measures used by other companies.

Forward Looking Statements

This press release contains historical information and forward-looking
statements within the meaning of The Private Securities Litigation Reform Act
of 1995 with respect to the business, financial condition and results of
operations of the Company. The words “believe,” “expect,” “intend,” “plan,”
“should” and similar expressions are intended to identify forward-looking
statements. Such statements reflect the current views, assumptions and
expectations of the Company with respect to future events and are subject to
risks and uncertainties. In addition, the financial information set forth in
this press release is not an indication of the future financial results of the
Company following the consummation of the acquisition. Many factors could
cause the actual results, performance or achievements of the Company to be
materially different from any future results, performance or achievements that
may be expressed or implied by such forward-looking statements, or financial
information, including, among others, potential litigation associated with the
transaction, risks that the proposed transaction disrupts current plans and
operations and the potential difficulties in employee retention as a result of
the proposed transaction and in integrating the acquired business, the
distraction of management and the Company resulting from the proposed
transaction, changes in the markets in which the Company operates and in
general economic and business conditions, loss of key customers and
unpredictable sales cycles, competitive pressures, market acceptance of new
products, inability to meet efficiency and cost reduction objectives, changes
in business strategy and various other factors, whether referenced or not
referenced in this press release. Various other risks and uncertainties may
affect the Company and its results of operations, as described in reports
filed by the Company with the Securities and Exchange Commission from time to
time, including its annual report on Form 20-F for the year ended December 31,
2011. The Company does not assume any obligation to update these
forward-looking statements.

Source: Perion Network Ltd.

Contact:

Perion Investor Relations
Deborah Margalit
+972-3-7696100
investors@perion.com
or
Hayden/MS-IR LLC
Brett Maas / Miri Segal-Scharia
646-536-7331 / 917-607-8654
Brett@haydenir.com / msegal@ms-ir.com
 
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