Unassociated Document


    
       

      Exhibit
10.1

       

      

       

      PRESS
RELEASE

       

      
        Magic
Software Reports Strong Results for Q1 2010: Revenues of $19.7M;

        Net
Income More than Doubles to $2.1M (Non-GAAP) and $1.9M
(GAAP)

      

      


      Or-Yehuda, Israel, April 26,
2010 – Magic
Software Enterprises Ltd. (NASDAQ: MGIC), a
global provider of application platforms
and business and
process integration solutions, today announced its financial results for
the first quarter ended March 31, 2010.

       

      Financial
Highlights for the First Quarter

       

      
        	
                ·

              	
                Operating
      income on a non-GAAP and GAAP basis more than doubled to $2.0 million and
      $1.8
      million respectively, compared to the first quarter of
      2009.

              


      

      
         

        
          	
                  ·

                	
                        
                    Net
      income increased twofold to $2.1 million (non-GAAP) and $1.9 million
      (GAAP), compared to the first quarter of
      2009.

                  

                


        

      

       

      
        	
                ·

              	
                Revenues
      reached $19.7 million; an increase of 43% compared to the first quarter of
      2009.

              


      

       

      
        	
                ·

              	
                Operating
      cash flow for the quarter amounted to $6.7
  million.

              


      

       

      
        	
                ·

              	
                Total
      cash and cash
      equivalents,
      short-term bank deposits and short term investments in marketable
      securities as of March 31, 2010 amounted to $24.6
  million.

              


      

      


      For the
quarter ended March 31, 2010, total revenues were $19.7 million, with net income
of $1.9 million, or $0.06 per diluted share. This compares with revenues of
$13.8 million and net income of $0.7 million, or $0.02 per diluted share, for
the same period last year.

       

      Operating
income was $1.8 million for the first quarter of 2010. This compares to
operating income of $0.7 million for the same period last year.

       

      Total
cash and cash equivalents,
short-term bank deposits and short term investments in marketable securities as
of March 31, 2010 was $24.6 million following the payment of a cash dividend
during the first quarter of approximately $16.0 million (or $0.50 per share),
and an $8.0 million payment towards the purchase of the assets of an IT services
company. This compares to $41.9 million as of December 31, 2009.

      


      Management
Commentary

       

      “We are
pleased to report strong revenues and operating income for the quarter resulting
from the growing demand for our software solutions. The number of new customers
using our products increased during the quarter and we improved sales of
software licenses,” said Guy Bernstein, acting chief executive officer of Magic
Software. “Additionally, our most recent acquisition of the assets of an IT
services company positively impacted the quarter and contributed to both our top
and bottom lines.”

       

      “The
operational changes implemented in 2009 and our technology roadmap enables us to
offer enterprise customers, ISVs and other partners a significant competitive
advantage in their markets. As the cloud market continues to mature, we are well
positioned to play a leading role, offering effective technologies for building,
deploying and integrating client/server, mobile, rich internet and cloud-based
applications,” concluded Mr. Bernstein.

       

      Summary
of the Quarter

       

      
        	
                ·

              	
                Increased number
      of new customers and license sales for uniPaaS and iBOLT worldwide,
      with improved sales in Japan and the
US.

              


      

       

      
        	
                ·

              	
                Emphasis
      on projects that use both uniPaaS and iBOLT platforms grew, particularly
      in mobile
      applications and specific industry
      verticals. Examples include Vishay
      Intertechnology, a Fortune 1000
      company that acquired both uniPaaS and
      iBOLT
      to build and deliver a single unified customer-facing
      interface.

              


      


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      
        	
                ·

              	
                Gained
      significant media exposure for our mobile enterprise
      application platform from publications including IT Advisor and
      Channel
      PRO.

              


      

       

      
        	
                ·

              	
                Customer
      and media attention for our cloud-enabled application platform offering
      increased, including coverage from well-respected IT media publications
      including The
      Sunday Times and Business Cloud
      9.

              


      

       

      
        	
                ·

              	
                Signed
      new iBOLT partners including Forza
      Consulting in the Netherlands, Ábaco in
      Portugal, and both AZTEKA and
      Accantum
      in Germany.

              


      

       

      
        	
                ·

              	
                Acquired
      the assets of a US-based IT services company through our subsidiary CoreTech to
      expand our customer penetration in the US
  market.

              


      

      


      Non-GAAP
Financial Measures

       

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

      


      
        	
                 
      

              	
                -

              	
                In-process
      research and development capitalization and amortization
    and;

              


      

       

      
        	
                 
      

              	
                -

              	
                Equity-based
      compensation expense.

              


      

      


      Magic
Software’s management believes that the presentation of non-GAAP measures
provide 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

      Magic Software Enterprises
Ltd. (NASDAQ: MGIC) is a global provider of multi-channel and
cloud-enabled application platform solutions – including client/server, Rich
Internet Applications (RIA) and mobile - and business and process integration
solutions. Magic Software has 13 offices worldwide and a presence in over 50
countries with a global network of ISV’s, system integrators, value-added
distributors and resellers and consulting and OEM partners. The company’s
award-winning code-free solutions give partners and customers the power to
leverage existing IT resources, enhance business agility and focus on core
business priorities.  Magic Software’s technological approach, product
roadmap and corporate strategy are recognized by leading industry analysts.
Magic Software has partnerships with global IT leaders including SAP AG,
salesforce.com, IBM and Oracle. For more information about Magic Software and
its products and services, visit www.magicsoftware.com, and for more about
our industry related news, business issues and trends, read the Magic Software
Blog.

      


      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, the integration of newly acquired IT services assets
and other risk factors detailed in the Company's most recent annual report and
other filings with the Securities and Exchange Commission.

      


      Magic is
the trademark of Magic Software Enterprises Ltd. All other trademarks are the
trademarks of their respective owners.

      


      Contact:

      KCSA
Strategic Communications

      Marybeth
Csaby / Rob Fink

      Tel. +1 212-896-1236 / +1
212-896-1206

      Email:
magicsoftware@kcsa.com


      
        
           


        

        
           


          
            

          

        

        
           


        

      

      


      MAGIC
SOFTWARE ENTERPRISES LTD.

      CONSOLIDATED
STATEMENTS OF INCOME

      U.S.
dollars in thousands (except per share data)

       

      
        
          
            
              
                
                  
                    	 
      	 	
                            Three months period

                          	 
	 
      	 	
                            ended March 31,

                          	 
	 
      	 	
                            2010

                          	 	 	
                            2009

                          	 
	 
      	 	
                            Unaudited

                          	 
	
                            Revenues

                          	 	 	19,711	 	 	 	13,770	 
	
                            Cost
      of Revenues

                          	 	 	11,247	 	 	 	6,737	 
	
                            Gross
      profit

                          	 	 	8,464	 	 	 	7,033	 
	
                            Research
      and development, net

                          	 	 	631	 	 	 	339	 
	
                            Selling,
      marketing and general and administrative expenses

                          	 	 	6,079	 	 	 	5,954	 
	
                            Total
      operating costs and expenses

                          	 	 	6,710	 	 	 	6,293	 
	
                            Operating
      income

                          	 	 	1,754	 	 	 	740	 
	
                            Financial
      income, net

                          	 	 	113	 	 	 	64	 
	
                            Other
      income, net

                          	 	 	61	 	 	 	-	 
	
                            Income
      before taxes on income

                          	 	 	1,928	 	 	 	804	 
	
                            Taxes
      on income

                          	 	 	78	 	 	 	90	 
	
                            Net
      income

                          	 	 	1,850	 	 	 	714	 
	 
      	 	 	 	 	 	 	 	 
	
                            Net
      earnings per share attributable to Magic Software:

                          	 	 	 	 	 	 	 	 
	
                            Basic

                          	 	 	0.06	 	 	 	0.02	 
	
                            Diluted

                          	 	 	0.06	 	 	 	0.02	 
	 
      	 	 	 	 	 	 	 	 
	
                            Weighted
      average number of shares used in computing net earnings per
      share

                          	 	 	 	 	 	 	 	 
	
                            Basic

                          	 	 	31,942	 	 	 	31,894	 
	
                            Diluted

                          	 	 	32,351	 	 	 	31,938	 


                  

                

              

            

          

        

      


      
        
           


        

        
           


          
            

          

        

        
           


        

      

      


      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 period

                      	 
	 
      	 	
                        ended March 31,

                      	 
	 
      	 	
                        2010

                      	 	 	
                        2009

                      	 
	 
      	 	
                        Unaudited

                      	 
	 
      	 	 	 	 	 	 
	
                        GAAP
      operating income

                      	 	 	1,754	 	 	 	740	 
	
                        Amortization
      of capitalized software

                      	 	 	950	 	 	 	869	 
	
                        Capitalization
      of software development

                      	 	 	(711	)	 	 	(755	)
	
                        Stock-based
      compensation

                      	 	 	36	 	 	 	56	 
	
                        Total
      adjustments to GAAP

                      	 	 	275	 	 	 	170	 
	
                        Non-GAAP
      operating income

                      	 	 	2,029	 	 	 	910	 
	 
      	 	 	 	 	 	 	 	 
	
                        GAAP
      net income

                      	 	 	1,850	 	 	 	714	 
	
                        Total
      adjustments to GAAP as above

                      	 	 	275	 	 	 	170	 
	
                        Non-GAAP
      net income

                      	 	 	2,125	 	 	 	884	 
	 
      	 	 	 	 	 	 	 	 
	
                        Non-GAAP
      basic net earnings per share

                      	 	 	0.07	 	 	 	0.03	 
	
                        Weighted
      average number of shares used in computing basic net earnings per
      share

                      	 	 	31,942	 	 	 	31,894	 
	 
      	 	 	 	 	 	 	 	 
	
                        Non-GAAP
      diluted net earnings per share

                      	 	 	0.07	 	 	 	0.03	 
	
                        Weighted
      average number of shares used in computing diluted net earnings per
      share

                      	 	 	32,401	 	 	 	31,947	 


              

            

          

        

      


      
        
           


        

        
           


          
            

          

        

        
           


        

      

      


      MAGIC
SOFTWARE ENTERPRISES LTD.

      CONSOLIDATED
BALANCE SHEETS

      U.S.
dollars in thousands

       

      
        
          
            	 
      	 	
                    March 31,

                  	 	 	
                    December 31,

                  	 
	 
      	 	
                    2010

                  	 	 	
                    2009

                  	 
	 
      	 	
                    (Unaudited)

                  	 	 	
                    (Unaudited)

                  	 
	 
      	 	 	 	 	 	 
	
                    ASSETS

                  	 	 	 	 	 	 
	
                    CURRENT
      ASSETS:

                  	 	 	 	 	 	 
	
                    Cash
      and cash equivalents

                  	 	 	19,372	 	 	 	24,350	 
	
                    Short-term
      bank deposits

                  	 	 	1,549	 	 	 	13,838	 
	
                    Available-for-sale
      marketable securities

                  	 	 	3,706	 	 	 	3,680	 
	
                    Trade
      receivables, net

                  	 	 	17,649	 	 	 	12,004	 
	
                    Other
      accounts receivable and prepaid expenses

                  	 	 	3,196	 	 	 	3,869	 
	
                    Current
      assets of discontinued operation

                  	 	 	26	 	 	 	27	 
	
                    Total current
    Assets

                  	 	 	45,498	 	 	 	57,768	 
	 
      	 	 	 	 	 	 	 	 
	
                    LONG-TERM
      RECEIVABLES:

                  	 	 	 	 	 	 	 	 
	
                    Severance
      pay fund

                  	 	 	313	 	 	 	404	 
	
                    Other
      Long-term receivables

                  	 	 	794	 	 	 	749	 
	
                    Total other long-term
      receivables

                  	 	 	1,107	 	 	 	1,153	 
	 
      	 	 	 	 	 	 	 	 
	
                    PROPERTY
      AND EQUIPMENT, NET

                  	 	 	1,801	 	 	 	1,762	 
	
                    IDENTIFIABLE
      INTANGIBLE ASSETS, NET

                  	 	 	9,894	 	 	 	10,133	 
	
                    GOODWILL

                  	 	 	24,485	 	 	 	16,735	 
	 
      	 	 	 	 	 	 	 	 
	
                    TOTAL
      ASSETS

                  	 	 	82,785	 	 	 	87,551	 
	 
      	 	 	 	 	 	 	 	 
	
                    LIABILITIES
      AND EQUITY

                  	 	 	 	 	 	 	 	 
	 
      	 	 	 	 	 	 	 	 
	
                    CURRENT
      LIABILITIES:

                  	 	 	 	 	 	 	 	 
	
                    Short-term
      credit and current maturities of long term loans

                  	 	 	30	 	 	 	43	 
	
                    Trade
      payables

                  	 	 	2,698	 	 	 	2,662	 
	
                    Accrued
      expenses and other accounts payable

                  	 	 	10,476	 	 	 	25,159	 
	
                    Deferred
      revenues

                  	 	 	6,825	 	 	 	1,569	 
	
                    Current
      liabilities of discontinued operation

                  	 	 	294	 	 	 	314	 
	
                    Total current
      liabilities

                  	 	 	20,323	 	 	 	29,747	 
	 
      	 	 	 	 	 	 	 	 
	
                    NON
      CURRENT LIABILITIES:

                  	 	 	 	 	 	 	 	 
	
                    Long-term
      loans

                  	 	 	7	 	 	 	10	 
	
                    Liability
      due to aqusiotion activities

                  	 	 	3,150	 	 	 	-	 
	
                    Accrued
      severance pay

                  	 	 	519	 	 	 	606	 
	
                    Total non-current
      Liabilities

                  	 	 	3,676	 	 	 	616	 
	 
      	 	 	 	 	 	 	 	 
	
                    EQUITY

                  	 	 	58,786	 	 	 	57,188	 
	 
      	 	 	 	 	 	 	 	 
	
                    TOTAL
      LIABILITIES AND EQUITY

                  	 	 	82,785	 	 	 	87,551