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Contact: Katharine Hanley Director, IR/PR Magic Software Enterprises Ltd. (949) 250-1718 ext. 220 khanley@magicsoftware.com Guy Bernstein Vice President, Finance Magic Software Enterprises Ltd. 011-972-3-538-9224 gbernstein@magicsoftware.com MAGIC SOFTWARE ENTERPRISES ANNOUNCES 2001 REVENUE AND EARNINGS EXPECTATIONS OR YEHUDA, ISRAEL (April 5, 2001) - Magic Software Enterprises (Nasdaq: MGIC), a leading provider of state-of-the-art application development technology and business solutions, announced today its revenue and earnings expectations for the calendar year ending December 31, 2001. Revenues for 2001 are expected to be in the range of $90 million, while earnings before interest, taxes, depreciation and amortization charges (EBITDA) are expected to come in around $8 million for the year. These figures reflect anticipated quarter-to-quarter growth during 2001 in practically every area of the Company's business (software, applications and maintenance) despite an expected continuing weakness in the economic environment and the corresponding slowdown in corporate IT-related spending. They also factor in a drop in demand and anticipated longer-than-usual sales cycles in North America, which has become Magic's largest revenue producer in the recent past. "Many companies worldwide, particularly in the United States, have been postponing or cutting their expenditures on IT due to the current economic situation. Magic is just one more technology company being adversely impacted by this slowdown," said Menachem Hasfari, chief executive officer of Magic. "However, we are encouraged by recent positive response to our latest product offerings, particularly Magic eDeveloper(tm) and Magic eContact(tm). These products, which are designed to offer companies rapid application implementation, improved operating efficiencies, reduced costs and the ability to capitalize on new revenue opportunities, remain key to customers looking for a quick return on their software investment." "Because we are confident in our technology and our positioning in the market, we believe we will be able to at least match last year's results -- despite what appears to be a prolonged economic slowdown," added Hasfari. Magic also stated that it continues to work hard at every level to further mitigate the effects of this difficult environment. The Company is moving forward aggressively with plans to transform its operations and to explore other possible shareholder value-enhancing strategies. In addition, Magic announced preliminary results for the first quarter of 2001. Magic now anticipates revenues of approximately $20 million for the first quarter, with a corresponding EBITDA loss in the range of $2.5 million. Magic will host a conference call following release of its first quarter earnings during the second week of May to discuss quarterly results, as well as to elaborate further on its business model for 2001. About Magic Software Enterprises Magic Software Enterprises, a member of the Formula Group (Nasdaq: FORTY), develops, markets and supports software development and deployment technology that enables enterprises to accelerate the process of building and deploying applications that can be rapidly customized and integrated with existing systems. Magic technology, applications and professional services are available through a global network of subsidiaries, distributors and Magic solutions partners in approximately 50 countries. The Company's North American subsidiary is located at 1642 Kaiser Avenue, Irvine, Calif., 92614, telephone (949) 250-1718, fax (949) 250-7404, http://www.magicsoftware.com. The Formula Group is an international information technology company principally engaged, through its subsidiaries and affiliates, in providing software consulting services, developing proprietary software products and producing computer-based solutions. 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.