Magic Reports First Quarter 2014 Results with Revenues Increasing 23% Year over Year to $40.9 Million, and Net Income Increasin

  Magic Reports First Quarter 2014 Results with Revenues Increasing 23% Year  over Year to $40.9 Million, and Net Income Increasing 28% Year over Year to                                  $4.5 Million  Non-GAAP operating income increased 23% year over year to $6.4 million  PR Newswire  OR YEHUDA, Israel, May 7, 2014  OR YEHUDA, Israel, May 7, 2014 /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, 2014.  Financial Highlights for the First Quarter Ended March31, 2014    oRevenues for the first quarter increased 23% year over year to $40.9     million from $33.4 million in the same period last year.   oOperating income for the first quarter increased 28% to $6.0 million,     compared to $4.6 million in the same period last year; Non-GAAP operating     income for the first quarter increased 23% to $6.4 million, compared to     $5.2 million in the same period last year.   oNet income for the first quarter increased 28% to $4.5 million compared to     $3.5 million in the same period last year; Non-GAAP net income for the     first quarter increased 17% to $5.0 million, compared to $4.2 million in     the same period last year.   oOperating cash flow for the quarter amounted to $4.5 million.   oDuring the first quarter, we successfully raised net proceeds of     approximately $54.7 million in a public offering. As of March 31, 2014 our     total cash, cash equivalents and short-term investments amounted to $87.9     million.  Comments of Management  Guy Bernstein, Chief Executive Officer of Magic Software Enterprises, said, "I am very pleased to report another excellent quarter with strong performance across our products and professional services in all regions. Our revenue streams are growing in line with Magic's strategic development goals."  "This strong start to 2014 along with the additionalcapital from our recent public offering puts us on track to continue to create and deliver long-term shareholder value. We are confident in our growth strategy and are establishing revenue guidance in the range of $161million to $165million for the full-year 2014," added Bernstein.  Conference Call Details  Magic's Management will host an interactive conference today, May 7, at 10:00am Eastern Time (7:00am Pacific Time, 17:00 Israel Time). On the call, management will review and discuss the results, and will also be available to answer investors' questions.  To participate, please call one of the following teleconferencing numbers. Please begin placing your calls at least 10 minutes before the conference call commences. If you are unable to connect using the toll-free numbers, call the international dial-in number.  NORTH AMERICA: 1.888.407.2553  UK: 0 800 917 5108  ISRAEL: 03 918 0610  INTERNATIONAL: +972 3 918 0610  For those unable to listen to the live call, a replay of the call will be available for three months from the day after the call under the investor relations section of Magic's website.  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;   oChange in valuation of contingent consideration; and   oThe related tax effects of the above items.  Summary of Non-GAAP Financial Information  U.S. Dollars in thousands, except per share amounts                                                         Three months ended                                                        March 31,                                                        2014      2013                                                        Unaudited Non-GAAP Revenues                                               $ 40,949  $ 33,414 Gross profit                                           23,260    18,875 Operating income                                       6,408     5,231 Net income attributable to Magic Software shareholders 4,962     4,240 Basic earnings per share                               0.13      0.12 Diluted earnings per share                             0.12      0.11  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.  Please 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.  Forward Looking Statements  Some of the statements in this press release may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities and Exchange Act of 1934 and the United States Private Securities Litigation Reform Act of 1995. Words such as "will," "expects," "believes" and similar expressions are used to identify these forward-looking statements (although not all forward-looking statements include such words). These forward-looking statements, which may include, without limitation, projections regarding our future performance and financial condition, are made on the basis of management's current views and assumptions with respect to future events. Any forward-looking statement is not a guarantee of future performance and actual results could differ materially from those contained in the forward-looking statement. These statements speak only as of the date they were made, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. We operate in a changing environment. New risks emerge from time to time and it is not possible for us to predict all risks that may affect us. For more information regarding these risks and uncertainties as well as certain additional risks that we face, you should refer to the Risk Factors detailed in our Annual Report on Form 20-F for the year ended December 31, 2013 and subsequent reports and registration statements filed from time to time with the Securities and Exchange Commission.  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.  Press Contact: Tania Amar, VP Global Marketing Magic Software Enterprises Tel: +972 (0)3 538 9300 tania@magicsoftware.com    MAGIC SOFTWARE ENTERPRISES LTD. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME U.S. dollars in thousands (except per share data)                                                        Three months ended                                                        March 31,                                                        2014         2013                                                        Unaudited Revenues                                               $ 40,949    $ 33,414 Cost of Revenues                                       24,307       19,890 Gross profit                                          16,642       13,524 Research and development, net                          1,180        883 Selling, marketing and general and  administrative expenses                            9,509        8,000 Total operating costs and expenses                     10,689       8,883 Operating income                                      5,953        4,641 Financial expenses, net                                (139)        (398) Income before taxes on income                          5,814        4,243 Taxes on income                                        966          495 Net income                                             $  4,848   $  3,748 Net income attributable to non-controlling interests   (353)        (228) Net income attributable to Magic Software's            $  4,495   $  3,520 Shareholders Net earnings per share attributable to  Magic Software's shareholders: Basic                                                 $   0.11  $   0.10 Diluted                                                $   0.11  $   0.10 Weighted average number of shares used in  computing net earnings per share attributable to  Magic Software's shareholders:  Basic                                          39,505       36,594  Diluted                                        39,858       37,096    MAGIC SOFTWARE ENTERPRISES LTD. AND ITS SUBSIDIARIES RECONCILIATION OF GAAP AND NON-GAAP RESULTS STATEMENTS OF INCOME FOR COMPARATIVE PURPOSES U.S. dollars in thousands (except per share data)                                                           Three months ended                                                           March 31,                                                           2014       2013                                                           Unaudited GAAP gross profit                                         $ 16,642   $ 13,524 Amortization of capitalized software                      954        973 Amortization of other intangible assets                   46         45 Stock-based compensation                                  1          4 Non-GAAP gross profit                                     $ 17,643   $ 14,546 GAAP operating income                                     $  5,953  $  4,641 Gross profit adjustments                                  1,001      1,022 Amortization of other intangible assets                   910        689 Capitalization of software development                    (1,099)    (1,210) Change in valuation of contingent consideration           (400)      - Stock-based compensation                                  43         89 Non-GAAP operating income                                 $  6,408  $  5,231 GAAP net income attributable to Magic Software's          $  4,495  $  3,520 shareholders Operating income adjustments                              455        590 Unwinding of discount in connection with liabilities due  -          207 to acquisitions Amortization expenses attributed to redeemable            (37)       (30) non-controlling interests Deferred taxes on the above items                         49         (47) Non-GAAP net income attributable to Magic Software's      $  4,962  $  4,240 shareholders Non-GAAP basic net earnings per share  attributable to Magic Software shareholders            0.13       0.12 Weighted average number of shares used in  computing basic net earnings per share                39,505     36,594 Non-GAAP diluted net earnings per share  attributable to Magic Software shareholders            0.12       0.11 Weighted average number of shares used in  computing diluted net earnings per share               39,897     37,148    MAGIC SOFTWARE ENTERPRISES LTD. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands                                            March 31,         December 31,                                            2014              2013                                            Unaudited  ASSETS CURRENT ASSETS:  Cash and cash equivalents             $    87,419   $     35,134  Available-for-sale marketable         439               854 securities  Trade receivables, net                37,357            31,976  Other accounts receivable and prepaid 5,737             5,209 expenses Total current assets                       130,952           73,173 LONG-TERM RECEIVABLES:  Severance pay fund                     415               403  Other long-term receivables            3,888             3,792 Total long-term receivables                4,303             4,195 PROPERTY AND EQUIPMENT, NET               1,989             1,773 INTANGIBLE ASSETS AND GOODWILL, NET        87,467            87,862 TOTAL ASSETS                               $   224,711    $    167,003  LIABILITIES AND EQUITY CURRENT LIABILITIES:  Short-term debt                       $     1,055  $      1,055  Trade payables                       4,574             4,149  Accrued expenses and other accounts   16,140            16,937 payable  Deferred tax liability                1,979             2,567  Deferred revenues                    8,245             3,294 Total current liabilities                  31,993            28,002 NON-CURRENT LIABILITIES:  Long-term debt                        2,037             2,274  Long-term deferred tax liabilty       2,106             2,204  Liabilities due to acquisition        539               1,396 activities  Accrued severance pay            1,336             1,275 Total non-current liabilities              6,018             7,149 REDEEMABLE NON-CONTROLLING INTEREST        2,848             2,721 SHAREHOLDERS' EQUITY:  Magic Software Shareholders' equity     182,675           128,144  Non-controlling interests               1,177             987 Total shareholders' equity                 183,852           129,131 TOTAL LIABILITIES, REDEEMABLE              $   224,711    $    167,003 NON-CONTROLLING INTEREST AND EQUITY    SOURCE Magic Software Enterprises Ltd.  Website: http://www.magicsoftware.com  
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