Magic Reports First Quarter 2013 Results with Double-digit Year over Year Growth in Revenues and Operating Income

  Magic Reports First Quarter 2013 Results with Double-digit Year over Year
                   Growth in Revenues and Operating Income

Revenues for the first quarter increased 11% year over year to $33.4 million;
Non-GAAP operating income increased 12% to $5.2 million

PR Newswire

OR YEHUDA, Israel, May 7, 2013

OR YEHUDA, Israel, May 7, 2013 /PRNewswire/ --Magic Software Enterprises Ltd.
(NASDAQ and TASE: MGIC), a global provider ofmobileand
cloud-enabledapplication andbusiness integration platforms, announced today
its financial results for the quarter ended March31, 2013.

Financial Highlights for the First Quarter, 2013:

  oRevenues for the first quarter increased 11% year over year to
    $33.4million from $30.0million.
  oNon-GAAP operating income for the first quarter increased 12% to
    $5.2million, compared to $4.7million in the same period last year;
    Operating income increased 10% to $4.6million, compared to $4.2million
    in the same period last year.
  oNon-GAAP net income for the first quarter decreased 7% to $4.2 million,
    compared to $4.6million in the same period last year; Net income
    decreased 16% to $3.5million compared to $4.2million in the same period
    last year. Decrease in net income was mainly attributable to tax expenses
    recorded with respect to utilization of deferred tax assets; in accordance
    with U.S. accounting principles, the Company records deferred tax expenses
    on utilization of carry-forward tax losses.
  oOperatingcashflowforthequarteramountedto$6.0million.
  oTotal cash, cash equivalents and short-term investments as of March31,
    2013, amounted to $37.6million.

Results

  oFor the first quarter ended March31, 2013, total revenues were
    $33.4million, with net income of $3.5million, or $0.10 per fully diluted
    share. This compares with revenues of $30.0million and net income of
    $4.2million, or $0.11 per fully diluted share for the same period last
    year.
  oFor the first quarter of 2013, operating income was $4.6million. This
    compares to operating income of $4.2million for the same period a year
    ago.

Comments of Management

Guy Bernstein, Chief Executive Officer of Magic Software Enterprises, said, "I
am pleased to report that after an excellent 2012, Magic is continuing its
solid growth track in 2013, with double-digit growth in our operations. We
continue to experience positive sales momentum for our software and
professional services offerings, led by improvements in European markets,
increasing demand for migration services and a growing number of large-scale
projects."

"Looking ahead we expect to continue to execute our growth strategy by
enhancing our application development and integration platforms and expanding
our professional services offeringsto better serve increasing business needs
for enterprise mobility and cloud computing," added Bernstein.

Non-GAAP Financial Measures

This release includes non-GAAP operating income, net income, basic and diluted
earnings per share and other non-GAAP financial measures. These non-GAAP
measures exclude the following items:

  oAmortization of purchased intangible assets
  oIn-process research and development capitalization and amortization
  oEquity-based compensation expense
  oUnwinding of discount in connection with liabilities due to acquisitions
  oAnd the related tax effects of the above items

Magic Software's management believes that the presentation of non-GAAP
measures provides useful information to investors and management regarding
financial and business trends relating to the Company's financial condition
and results of operations as well as the net amount of cash generated by its
business operations after taking into account capital spending required to
maintain or expand the business.

These non-GAAP financial measures are not in accordance with, or an
alternative for, generally accepted accounting principles and may be different
from non-GAAP financial measures used by other companies. In addition, these
non-GAAP financial measures are not based on any comprehensive set of
accounting rules or principles. Magic Software believes that non-GAAP
financial measures have limitations in that they do not reflect all of the
amounts associated with Magic Software's results of operations as determined
in accordance with GAAP and that these measures should only be used to
evaluate Magic Software's results of operations in conjunction with the
corresponding GAAP measures.

Refer to the Reconciliation of Selected Financial Metrics from GAAP to
Non-GAAP tables below.

About Magic Software Enterprises
Magic Software Enterprises Ltd. (NASDAQ and TASE: MGIC) is a global provider
of mobile and cloud-enabled application and business integration platforms.

For more information, visit www.magicsoftware.com.

Press Contact:

Tania Amar, VP Global Marketing
Magic Software Enterprises
Tel: +972 (0)3 538 9300
tania@magicsoftware.com

Except for the historical information contained herein, the matters discussed
in this news release include forward-looking statements that may involve a
number of risks and uncertainties. Actual results may vary significantly based
upon a number of factors including, but not limited to, risks in product and
technology development, market acceptance of new products and continuing
product conditions, both here and abroad, release and sales of new products by
strategic resellers and customers, and other risk factors detailed in the
Company's most recent annual report and other filings with the Securities and
Exchange Commission. These forward-looking statements are made only as of the
date hereof, and the Company undertakes no obligation to update or revise the
forward-looking statements, whether as a result of new information, future
events or otherwise.

Magic is a registered trademark of Magic Software Enterprises Ltd. All other
product and company names mentioned herein are for identification purposes
only and are the property of, and might be trademarks of, their respective
owners.



 MAGIC SOFTWARE ENTERPRISES LTD.
 CONSOLIDATED STATEMENTS OF INCOME
 U.S. dollars in thousands (except per share data)
                                                       Three months ended
                                                       March 31,
                                                       2013        2012
                                                       Unaudited
 Revenues                                              33,414      30,042
 Cost of Revenues                                      19,890      16,917
 Gross profit                                         13,524      13,125
 Research and development, net                         883         906
 Selling, marketing and general and
  administrative expenses                           8,000       7,994
 Total operating costs and expenses                    8,883       8,900
 Operating income                                     4,641       4,225
 Financial income (expenses), net                      (398)       36
 Income before taxes on income                         4,243       4,261
 Taxes on income                                       495         44
 Net income                                            3,748       4,217
 Change in redeemable non-controlling interests        (95)        -
 Net income attributable to non-controlling interests  (133)       (6)
 Net income attributable to Magic's shareholders       3,520       4,211
 Net earnings per share
 Basic                                                0.10        0.12
 Diluted                                               0.10        0.11
 Weighted average number of shares used in
  computing net earnings per share
  Basic                                         36,594      36,413
                                                                   .
  Diluted                                       37,096      37,170





  MAGIC SOFTWARE ENTERPRISES LTD.
  RECONCILIATION BETWEEN GAAP AND NON-GAAP
  STATEMENTS OF INCOME FOR COMPARATIVE PURPOSES
  U.S. dollars in thousands (except per share data)
                                                           Three months ended
                                                           March 31,
                                                           2013       2012
                                                           Unaudited
  GAAP operating income                                    4,641      4,225
  Amortization of capitalized software and other           1,707      1,422
  intangible assets
  Capitalization of software development                   (1,210)    (1,122)
  Stock-based compensation                                 93         154
  Total adjustments to GAAP                                590        454
  Non-GAAP operating income                                5,231      4,679
  GAAP net income                                         3,520      4,211
  Amortization of capitalized software and other           1,707      1,422
  intangible assets
  Capitalization of software development                   (1,210)    (1,122)
  Stock-based compensation                                 93         154
  Unwinding of discount in connection with liabilities due 207        -
  to acquisitions
  Amortization expenses attributed to redeemable           (30)       -
  non-controlling interests
  Deferred taxes on the above items                        (47)       (94)
  Total adjustments to GAAP                               720        360
  Non-GAAP net income                                      4,240      4,571
  Non-GAAP basic net earnings per share                   0.12       0.13
  Weighted average number of shares used in
   computing basic net earnings per share               36,594     36,413
  Non-GAAP diluted net earnings per share                 0.11       0.12
  Weighted average number of shares used in
   computing diluted net earnings per share              37,148     37,301



 MAGIC SOFTWARE ENTERPRISES LTD.
 CONSOLIDATED BALANCE SHEETS
 U.S. dollars in thousands
                                                      March 31,  December 31,
                                                      2013       2012
                                                      Unaudited
 ASSETS
 CURRENT ASSETS:
  Cash and cash equivalents                      36,741     37,744
  Available-for-sale marketable securities        880        890
  Trade receivables, net                          29,461     28,367
  Other accounts receivable and prepaid expenses 5,864      6,696
 Total current assets                                 72,946     73,697
 LONG-TERM RECEIVABLES:
  Severance pay fund                               352        351
  Other long-term receivables                      2,819      2,287
 Total other long-term receivables                    3,171      2,638
 PROPERTY AND EQUIPMENT, NET                         1,898      1,898
 IDENTIFIABLE INTANGIBLE ASSETS AND
  GOODWILL, NET                                    75,008     74,005
 TOTAL ASSETS                                         153,023    152,238
 LIABILITIES AND EQUITY
 CURRENT LIABILITIES:
  Trade payables                                 4,720      4,722
  Accrued expenses and other accounts payable   13,659     17,537
  Deferred tax liabilities                        2,351      2,355
 Deferred revenues                              9,082      4,160
 Total current liabilities                            29,812     28,774
 NON CURRENT LIABILITIES:
  Long term liabilities                           1,831      750
  Liability due to acquisition activities         1,418      1,192
  Accrued severance pay                      1,253      1,245
 Total non-current liabilities                        4,502      3,187
 Redeemable non- controlling interest                 2,179      2,160
 EQUITY:
  Magic Shareholders' equity                        115,982    117,786
  Non-controlling interests                         548        331
 Total equity                                         116,530    118,117
 TOTAL LIABILITIES AND EQUITY                         153,023    152,238



SOURCE Magic Software Enterprises Ltd.

Website: http://www.magicsoftware.com
 
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