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<SEC-DOCUMENT>0001171843-09-001099.txt : 20091104
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<ACCEPTANCE-DATETIME>20091104094717
ACCESSION NUMBER:		0001171843-09-001099
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20090930
FILED AS OF DATE:		20091104
DATE AS OF CHANGE:		20091104

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			MAGIC SOFTWARE ENTERPRISES LTD
		CENTRAL INDEX KEY:			0000876779
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-PREPACKAGED SOFTWARE [7372]
		IRS NUMBER:				330477418
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		6-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-19415
		FILM NUMBER:		091156467

	BUSINESS ADDRESS:	
		STREET 1:		5 HAPLADA STREET
		CITY:			OR YEHUDA ISRAEL
		STATE:			L3
		ZIP:			602
		BUSINESS PHONE:		97235389322

	MAIL ADDRESS:	
		STREET 1:		5 HAPLADA STREET
		CITY:			OR YEHUDA ISRAEL
		STATE:			L3
		ZIP:			602
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Note:</font> Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.</font></div>
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<br><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date:&#160;November 4&#160;, 2009</font></div>
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<html><head><title>Magic Software Reports Results for the Third Quarter of 2009</title></head><body><p align="right">EXHIBIT 99.1</p><h3 align="center">Magic Software Reports Results for the Third Quarter of 2009</h3><h4 align="center">Company Maintaining Profitability Despite Challenging Economic Conditions</h4><p>OR YEHUDA, Israel, Nov. 4, 2009 (GLOBE NEWSWIRE) -- Magic Software Enterprises Ltd. (Nasdaq:MGIC), a provider of application platforms and business and process integration solutions, today announced its financial results for the third quarter ended September 30, 2009. All references to $ are to U.S. Dollars.</p><p>
  <strong>Financial Highlights for the Quarter </strong>
</p><ul>
<li> Revenues for the third quarter were $13.5 million compared to $13.6 million in the second quarter of 2009. </li>
</ul><ul>
<li> Operating income in the third quarter was $0.8 million compared to $1.0 million in the second quarter of 2009. </li>
</ul><ul>
<li> Net income for the third quarter was $0.9 million, compared to $1.1 million in the second quarter of 2009. </li>
</ul><ul>
<li> Total cash, cash equivalents and short-term investments as of September 30, 2009 were $37 million, compared to $33 million as of December 31, 2008. </li>
</ul><p>
  <strong>Financial Highlights for the First Nine Months </strong>
</p><ul>
<li> Cash flow from operations for the first nine months of 2009 amounted to $4.3 million. </li>
</ul><ul>
<li> Revenues reached $40.9 million, compared to $46.9 million for the first nine months of 2008. </li>
</ul><ul>
<li> Operating income was $2.5 million, compared to $3.1 million for the first nine months of 2008. </li>
</ul><ul>
<li> Net income was $2.7 million, compared to $3.4 million for the first nine months of 2008. </li>
</ul><p>
  <strong>Comments of Management </strong>
</p><p>Guy Bernstein, Chairman of Magic Software, commented on the results: &quot;We are pleased to report an eleventh consecutive quarter of profitability for the company, which comes despite the continuing challenges in the global economy. Notwithstanding these challenges, we have been successful in obtaining new business this year, including twenty new customers in the U.S. alone. While cautiously encouraged by the reviving markets in the U.S. and Japan, we continue to exercise fiscal and operational restraint. To ensure ongoing stability and profitability, we continue to invest in our core growth engines.&quot;</p><p>
  <strong>Summary of the Quarter </strong>
</p><ul>
<li>Eyal Pfeifel has been appointed as the company's new CTO. Eyal brings with him previous Magic Software experience and 20 years in planning and managing large-scale and innovative technology projects.</li>
</ul><ul>
<li> The company's U.S. branch continues to gain new customers, and increased revenues and profits this quarter. </li>
</ul><ul>
<li> The company's Japanese branch also showed improved revenues and profitability thanks to careful planning, and provides a basis for cautious optimism in the Japanese market recovery. </li>
</ul><ul>
<li> The uniPaaS application platform continues to be adopted worldwide. The company is now implementing close to 100 uniPaaS RIA projects in Japan alone. </li>
</ul><ul>
<li>Other significant uniPaaS deals include uniPaaS RIA for KLAFS, Europe's leading sauna and spa manufacturer; and Bank Leumi, Israel's leading commercial bank, which is migrating 60 of its applications to uniPaaS.</li>
</ul><ul>
<li>The company has won a number of new iBOLT deals, including a SaaS/on-premise integration for Clinical Financial Services in the U.S.; a Lotus Notes integration for MintWave in Japan; a Salesforce.com/SAP R/3 integration for AVL in Austria; and a SAPR/3 integration for KLAFS in Germany. The company also entered into a new partnership agreement with nefos GmbH, a leading consulting partner for Salesforce.com, based in Zurich, Switzerland.</li>
</ul><ul>
<li>Magic Software's executives continue to speak at industry events, including the recent Software Business 2009 Conference and the 2009 Quest West Conference.</li>
</ul><ul>
<li>Magic Software joined Salesforce.com Foundation's 'Power of Us' partner program.</li>
</ul><ul>
<li>The company was ranked 250 among the World's Largest Software Companies by Software Magazine.</li>
</ul><ul>
<li>The company's uniPaaS and iBOLT solutions gained significant media coverage in the quarter from specialist IT media publications including IT-Business, banking technology, ebizQ, Channel Pro, ITBusinessEdge, ITWeb, manufacturing.net, SaaS Directory, BCW, Software Mag.com, and Retail Technology. For a full listing of our media coverage read here.</li>
</ul><ul>
<li>Magic Software was included in five Gartner and Forrester industry analyst reports this quarter. Magic Software's uniPaaS was recently added to Gartner's Magic Quadrant for Enterprise Application Servers, (Gartner Report, 24 September 2009, Yefim V. Natis, Massimo Pezzini, Kimihiko Iijima).</li>
</ul><p>
  <strong>Non-GAAP Financial Measures </strong>
</p><p>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:</p><ul>
<li>Amortization of purchased intangible assets;</li>
<li>In-process research and development capitalization and amortization and;</li>
<li>Equity-based compensation expense.</li>
</ul><p>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.</p><p>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 S
oftware's results of operations in conjunction with the corresponding GAAP measures.</p><p>Please refer to the Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP tables below.</p><p>
  <strong>About Magic Software </strong>
</p><p>Magic Software Enterprises Ltd. (Nasdaq:MGIC) is a global provider of multiple-mode application platform solutions -- including Full Client, Rich Internet Applications (RIA) or Software-as-a-Service (SaaS) modes -- and business and process integration solutions. Magic Software has offices in 10 countries and a presence in over 50, as well as 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 rel
ated news, business issues and trends, read the Magic Software Blog.</p><p>The Magic Software Enterprises Ltd. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5524</p><p>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.</p><table cellspacing="6" cellpadding="0" style=" border-collapse: separate; border-spacing: 6px "><tr><td colspan="6" style="font: 16px Arial; text-align: center"><strong>MAGIC SOFTWARE ENTERPRISE
S LTD.</strong></td></tr>
 <tr><td colspan="6" style="font: 16px Arial; text-align: center"><strong>CONSOLIDATED STATEMENTS OF OPERATIONS</strong></td></tr>
 <tr><td colspan="6" style="font: 16px Arial; text-align: center"><strong>U.S. dollars in thousands (except per share data)</strong></td></tr>
 <tr><td colspan="6" style="font: 12px Arial; text-align: center"><strong>(Unaudited)</strong></td></tr>
 <tr><td colspan="6"><br></td></tr>
 <tr><td valign="bottom" colspan="1" style="font: 12px Arial; text-align: center"><strong> </strong></td> <td valign="bottom" colspan="2" style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;"><strong>Three months   <br>       ended      <br>  September 30,</strong></td> <td valign="bottom" colspan="1" style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;"><strong>Three<br> months  <br> ended   <br>June 30,</strong></td> <td valign="bottom" colspan="2" style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;"><strong>Nine months<br>     ended<br>  September 30,</strong></td></tr>
 <tr><td valign="bottom" colspan="1" style="font: 12px Arial; text-align: center"><strong> </strong></td> <td valign="bottom" colspan="1" style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;"><strong>2009</strong></td> <td valign="bottom" colspan="1" style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;"><strong>2008</strong></td> <td valign="bottom" colspan="1" style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;"><strong>2009</strong></td> <td valign="bottom" colspan="1" style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;"><strong>2009</strong></td> <td valign="bottom" colspan="1" style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;"><strong>2008</strong></td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Revenues</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">13,504</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">15,809</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">13,595</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">40,869</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">46,909</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Cost of Revenues</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">6,625</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">6,648</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">6,443</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">19,805</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">20,216</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Gross profit</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;"><strong>6,879</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;"><strong>9,161</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;"><strong>7,152</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;"><strong>21,064</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;"><strong>26,693</strong></td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Research and development, net</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">358</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">676</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">260</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">957</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">1,697</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Selling, general and administrative expenses</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">5,709</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">6,873</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">5,937</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">17,600</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">21,922</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Total operating expenses, net</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">6,067</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">7,549</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">6,197</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">18,557</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">23,619</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Operating income</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;"><strong>812</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;"><strong>1,612</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;"><strong>955</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;"><strong>2,507</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;"><strong>3,074</strong></td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Financial income (expenses), net</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">154</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">123</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">(78)</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">140</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">482</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Other income (expenses), net</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">(63)</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">42</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">286</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">223</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">24</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Income before taxes on income</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">903</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">1,777</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">1,163</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">2,870</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">3,580</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Taxes on income</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">1</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">70</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">76</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">167</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">145</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Income after taxes on income</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">902</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">1,707</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">1,087</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">2,703</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">3,435</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Minority interest</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">--</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">(1)</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">--</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">--</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">(3)</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Equity in losses of affiliates</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">--</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">--</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">--</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">--</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">(8)</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Net income</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"><strong>902</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"><strong>1,706</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"><strong>1,087</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"><strong>2,703</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"><strong>3,424</strong></td></tr>
 <tr><td colspan="6"><br></td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Basic net earnings per share</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">0.03</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">0.05</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">0.03</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">0.08</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">0.11</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Diluted net earnings per share</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">0.03</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">0.05</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">0.03</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">0.08</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">0.11</td></tr>
 <tr><td colspan="6"><br></td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Weighted average number of shares used in computing net earnings per share</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"> </td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"> </td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"> </td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"> </td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"> </td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left; white-space: nowrap;"/> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"> </td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"> </td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"> </td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"> </td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"> </td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">Basic</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">31,894</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">31,829</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">31,894</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">31,894</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">31,727</td></tr>
 <tr><td colspan="6"><br></td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">Diluted</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;"><strong>32,169</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;"><strong>32,159</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;"><strong>32,009</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;"><strong>32,038</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;"><strong>32,039</strong></td></tr>
 <tr><td colspan="6"><br></td></tr>
 <tr><td width="50%"><br></td> <td colspan="5" width="50%"><br></td></tr></table><table cellspacing="6" cellpadding="0" style=" border-collapse: separate; border-spacing: 6px "><tr><td colspan="5" style="font: 16px Arial; text-align: center"><strong>MAGIC SOFTWARE ENTERPRISES LTD.</strong></td></tr>
 <tr><td colspan="5" style="font: 16px Arial; text-align: center"><strong>RECONCILIATION BETWEEN GAAP AND NON-GAAP</strong></td></tr>
 <tr><td colspan="5" style="font: 16px Arial; text-align: center"><strong>STATEMENTS OF OPERATIONS FOR COMPARATIVE PURPOSES</strong></td></tr>
 <tr><td colspan="5" style="font: 16px Arial; text-align: center"><strong>U.S. dollars in thousands (except per share data)</strong></td></tr>
 <tr><td colspan="5"><br></td></tr>
 <tr><td valign="bottom" colspan="1" style="font: 12px Arial; text-align: center"><strong> </strong></td> <td valign="bottom" colspan="2" style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;"><strong>Three months   <br>    ended       <br> September 30,  <br>  (Unaudited)</strong></td> <td valign="bottom" colspan="2" style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;"><strong>Nine months<br>    ended<br> September 30,<br>  (Unaudited)</strong></td></tr>
 <tr><td valign="bottom" colspan="1" style="font: 12px Arial; text-align: center"><strong> </strong></td> <td valign="bottom" colspan="1" style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;"><strong>2009</strong></td> <td valign="bottom" colspan="1" style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;"><strong>2008</strong></td> <td valign="bottom" colspan="1" style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;"><strong>2009</strong></td> <td valign="bottom" colspan="1" style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;"><strong>2008</strong></td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">GAAP operating income</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">812</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">1,612</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">2,507</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">3,074</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Amortization of intangibles</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">950</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">767</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">2,700</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">1,817</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Capitalization of software development</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">(771)</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">(421)</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">(2,356)</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">(2,031)</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Stock-based compensation</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">64</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">(168)</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">189</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">412</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Total adjustments to GAAP</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;"><strong>243</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;"><strong>178</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;"><strong>533</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;"><strong>198</strong></td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Non-GAAP operating income</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;"><strong>1,055</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;"><strong>1,790</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;"><strong>3,040</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;"><strong>3,272</strong></td></tr>
 <tr><td colspan="5"><br></td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">GAAP net income</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"><strong>902</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"><strong>1,706</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"><strong>2,703</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"><strong>3,424</strong></td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Total adjustments to GAAP as above</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">243</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">178</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">533</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">198</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Non-GAAP net income</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">1,145</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">1,884</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">3,236</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">3,622</td></tr>
 <tr><td colspan="5"><br></td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Non-GAAP basic net earnings per share</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">0.04</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">0.06</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">0.10</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">0.11</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Weighted average number of shares used in computing basic net earnings per share</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">31,894</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">31,829</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">31,894</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">31,727</td></tr>
 <tr><td colspan="5"><br></td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Non-GAAP diluted net earnings per share</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">0.04</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">0.06</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">0.10</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">0.11</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Weighted average number of shares used in computing diluted net earnings per share</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">32,276</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">32,159</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">32,115</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">32,039</td></tr>
 <tr><td colspan="5"><br></td></tr>
 <tr><td width="50%"><br></td> <td colspan="4" width="50%"><br></td></tr></table><table cellspacing="6" cellpadding="0" style=" border-collapse: separate; border-spacing: 6px "><tr><td colspan="3" style="font: 16px Arial; text-align: center"><strong>MAGIC SOFTWARE ENTERPRISES LTD.</strong></td></tr>
 <tr><td colspan="3" style="font: 16px Arial; text-align: center"><strong>CONSOLIDATED BALANCE SHEETS</strong></td></tr>
 <tr><td colspan="3" style="font: 16px Arial; text-align: center"><strong>U.S. dollars in thousands</strong></td></tr>
 <tr><td colspan="3"><br></td></tr>
 <tr><td valign="bottom" colspan="1" style="font: 12px Arial; text-align: center"><strong> </strong></td> <td valign="bottom" colspan="1" style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;"><strong>September 30,<br>     2009       <br> (Unaudited)</strong></td> <td valign="bottom" colspan="1" style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;"><strong>December 31,<br>     2008</strong></td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left "><strong>ASSETS</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"> </td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"> </td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left; white-space: nowrap;"/> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"> </td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"> </td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left "><strong>CURRENT ASSETS:</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"> </td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"> </td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">Cash and cash equivalents</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">20,392</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">27,309</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">Short-term bank deposits</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">12,557</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">1,810</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">Available for sale marketable securities</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">3,905</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">3,469</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">Trade receivable, net</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">11,935</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">13,140</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">Other accounts receivable and prepaid expenses</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">2,567</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">1,933</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">Current assets of discontinued operation</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">32</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">31</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Total current Assets</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;"><strong>51,388</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;"><strong>47,692</strong></td></tr>
 <tr><td colspan="3"><br></td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">LONG-TERM INVESTMENTS:</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"> </td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"> </td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">Severance pay fund</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">385</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">316</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">Long-term lease deposits</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">267</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">235</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Total long-term investments</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"><strong>652</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"><strong>551</strong></td></tr>
 <tr><td colspan="3"><br></td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Property and equipment, net</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">4,911</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">5,436</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Goodwill</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">16,900</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">16,829</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Other intangible assets, net</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">10,311</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">10,656</td></tr>
 <tr><td colspan="3"><br></td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left "><strong>TOTAL ASSETS</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;"><strong>84,162</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;"><strong>81,164</strong></td></tr>
 <tr><td colspan="3"><br></td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left "><strong>LIABILITIES AND SHAREHOLDERS' EQUITY</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"> </td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"> </td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left; white-space: nowrap;"/> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"> </td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"> </td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left "><strong>CURRENT LIABILITIES:</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"> </td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"> </td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">Short-term credit and current maturities of long term loans</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">76</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">147</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">Trade payables</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">2,845</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">2,988</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 20.0px;">Deferred revenues</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">3,664</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">1,643</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">Accrued expenses and other accounts payable</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">6,616</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">8,691</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">Current liabilities of discontinued operation</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">391</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">372</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Total current liabilities</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;"><strong>13,592</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;"><strong>13,841</strong></td></tr>
 <tr><td colspan="3"><br></td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Long-term loans</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"><strong>17</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;"><strong>33</strong></td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Accrued severance pay</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">598</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">535</td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left ">Total non-current Liabilities</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;"><strong>615</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;"><strong>568</strong></td></tr>
 <tr><td colspan="3"><br></td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left "><strong>SHAREHOLDERS' EQUITY</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;"><strong>69,955</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;"><strong>66,755</strong></td></tr>
 <tr><td colspan="3"><br></td></tr>
 <tr><td style="font: 12px Arial; vertical-align: bottom; text-align: left "><strong>TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY</strong></td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">84,162</td> <td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">81,164</td></tr>
 <tr><td colspan="3"><br></td></tr>
 <tr><td width="50%"><br></td> <td colspan="2" width="50%"><br></td></tr></table><pre>CONTACT:  Magic Software Enterprises Ltd.
          Arita Mattsoff, VP Marketing
          +972 (0)3 538 9284
          ir@magicsoftware.com
</pre></body></html>



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