Wednesday September 13, 9:11 am Eastern Time

Magic Software Enterprises Signs Contract With IBM to Deliver Largest Hungarian E-Business Project to Date

IRVINE, Calif.--(BUSINESS WIRE) Magic Software Enterprises (Nasdaq:MGIC - news), a leading provider of state-of-the-art technology and business solutions, Wednesday announced that it has signed a contract with IBM to deliver a Magic-based back-office system for the largest Hungarian e-business project to date.

Magic's Hungarian subsidiary, Magic Hungary, will work with local IBM developers to seamlessly integrate the Magic system with IBM's other products, including DB2, MQSeries and Net.Commerce, to deliver the total business-to-business solution to Sunbooks Ltd., one of the largest book wholesalers in Hungary. Twelve of the 15 consultants assigned to the project will be Magic developers.

Sunbooks Systems (SBS)

The Sunbooks Ltd. solution, to be called Sunbooks Systems (SBS), will enable publishers, bookstores, schools and other institutions to conduct business over the Web. Basically, it will consist of three parts:

• A front-office system to be built by IBM, running under an AIX
• operating system and utilizing a DB2 database. This system will be
• responsible for processing all stock, such as books, CDs, etc.,
• and all orders.
• A logistics module to be based on Oracle technology. This
• system will provide the necessary inventory handling, as well as
• logistics capabilities.
• A back-office system to be built using Magic's highly
• productive application development technology that enables rapid
• development and deployment of applications that can be easily and
• seamlessly integrated with existing systems.

"The main reason IBM chose to work with Magic was because of its relatively easy and fast customization and integration capabilities for developing e-business solutions,"said Tamas Vilaghy, e-business services manager, IBM Global Services. "Partnering with Magic, we will be able to deliver one of the largest e-business solutions ever offered a customer in Hungary.''

The Magic system, which will run under Windows NT on an IBM Netfinity server, will be primarily message-driven to exclude human interaction and error, and will include financial and accounting functions. Sunbooks employees, however, also will be able to connect to the system via client terminals. Communication between the three systems will be message-driven utilizing IBM's MQSeries communication software.

"Magic is extremely excited about this opportunity to once again team up with IBM to bring powerful business-to-business e-business solutions to the marketplace,"said Jack Dunietz, chief executive officer of Magic. "It is just one more example where Magic can successfully integrate with other vendors' systems to provide companies the business applications they need to be more profitable.''

About Magic Software Enterprises

Magic Software Enterprises, a member of the Formula Group (Nasdaq:FORTY - news), 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 Ave., Irvine, Calif., 92614, telephone 949/250-1718, fax 949/250-7404, http://www.magic-sw.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.

Contact:
Magic Software Enterprises
Katharine Hanley, 949/250-1718, ext. 220
khanley@magic-sw.com