Formula Systems Reports Second Quarter Results

    HERZLIYA, Israel, August 25 /EMWNews/ -- Formula Systems

(1985) Ltd. (NASDAQ: FORTY) a leading provider of information technology

products, solutions and services, announced today results for the six

months and second quarter of 2008.



    Revenues for the second quarter totaled $151.5 million an increase of

24% compared to $122.2 million in the second quarter of 2008.



    Revenues for the six months ended June 30, 2008 totaled $287.3 million

compared to $235.7 million in the same period of 2007, an increase of 22%.



    Operating income in the second quarter of 2008 increased 47% to $9.0

million compared to $6.1 million in the same quarter of 2007.



    Operating income in the first half of 2008 was $15.5 million compared

to $12.3 million in the first half of 2008, an increase of 26%.



    Net income generated from continuing operation in the six months ended

June 30, 2008 was $7.3 million compared to $6.4 million in the same period

of 2007.



    Our cash and short term investments totaled approximately $203 million

as of June 30, 2008 and our current ratio was 2.4.



    Shareholder's equity on June 30, 2008 totaled $207 million, reflecting

$15.7 per share.



    In April 2008, Formula distributed a cash dividend of approximately $10

million, or $0.76 per share.



    Guy Bernstein, CEO of Formula, commented: "In the second quarter we

continued the constant growth trend in the group's activity. All our

subsidiaries contributed positively to our increasing operational results:

Magic moved from operating loss in the first quarter to an impressive

operating profit in the second quarter, Sapiens reported a seventh

consecutive quarter of operational profit and our primary asset, Matrix,

continued to grow both in revenues and in operating profit.



    Mr. Bernstein concluded: I can state with confidence that the Formula

group is well equipped with the resources to explore new acquisitions,

compatible with our strategy and current portfolio of companies."

    About Formula



    Formula Systems Ltd. is a global information technology company

principally engaged, through its subsidiaries and affiliates, in providing

software consulting services, developing proprietary software products and

providing computer-based business solutions.



    Statements made in this press release that are not historical facts are

forward-looking statements. Such statements involve various risks that may

cause actual results to differ materially. These risks and uncertainties

include, but are not limited to: market demand for the company's products,

dependence on strategic partners, integration of new business, successful

implementation of Formula's products, economic and competitive factors,

international market conditions, management of growth, technological

developments, the ability to finance operations and other factors which are

detailed in Formula's Securities and Exchange Commission filings, including

its most recent report on Form 20-F. Formula undertakes no obligation to

publicly release any revision to any forward-looking statement.






                           FORMULA SYSTEMS (1985) LTD.

                            (An Israeli corporation)



    CONSOLIDATED BALANCE SHEETS



                                                                    December

                                                    June 30,              31,

                                                       2008             2007

                                                 (Unaudited)        (Audited)

                                                             U.S. $

                                                        (in thousands)

    CURRENT ASSETS:

    Cash and cash

    equivalents..................................   146,522          161,504

    Short-term

    investments..................................    56,974           40,276

    Trade

    receivables..................................   153,550          139,478

    Other accounts

    receivable...................................    26,919           34,822



    Inventories..................................     2,890            3,157



                                                    386,855          379,237



    LONG-TERM INVESTMENTS, LOANS AND RECEIVABLES:

    Loans and other

    investments..................................    11,371           14,849

    Investments in

    affiliates...................................     3,794            3,792



                                                     15,165           18,641



    SEVERANCE PAY

    FUND.........................................    44,503           36,851



    FIXED ASSETS,

    NET..........................................    16,923           15,794



    OTHER ASSETS,

    NET..........................................   189,176          162,060



    TOTAL ASSETS ATTRIBUTED TO DISCONTINUED

    OPERATIONS...................................        35               41



                                                    652,657          612,624



    CURRENT LIABILITIES:

    Liabilities to banks and

    others.......................................    16,358           26,954

    Trade

    payables.....................................    51,661           57,099

    Other accounts

    payable......................................    90,995           73,072



    Debentures...................................     3,924             3,524



                                                    162,938           160,649



    LONG-TERM LIABILITIES:



    Debentures...................................    82,700            71,880

    Deferred

    taxes........................................     3,617             3,276

    Customer

    advances.....................................     1,963             2,181

    Liabilities to banks and

    others.......................................    22,802            23,685

    Liability in respect of the acquisition of

    activities...................................     1,195             1,373

    Accrued severance

    pay..........................................    54,197            42,774

                                                    166,474           145,169



    TOTAL LIABILITIES ATTRIBUTED TO DISCONTINUED

    OPERATIONS...................................       438               503



    MINORITY

    INTEREST.....................................   115,767           107,915



    SHAREHOLDERS'

    EQUITY.......................................   207,040           198,388



                                                    652,657           612,624







                           FORMULA SYSTEMS (1985) LTD.

                            (An Israeli corporation)

                   UNAUDITED CONSOLIDATED STATEMENTS OF INCOME



                                               Six months     Three months

                                                 ended           ended

                                                June 30,        June 30,

                                             2008    2007     2008     2007

                                                 U.S.$              U.S.$

                                        (in thousands, except per share data)





    Revenues............................. 287,264 235,720   151,479 122,170



    Cost of

    revenues............................. 217,200 177,522   115,451  92,784

    Gross

    profit...............................  70,064  58,198    36,028  29,386

    Research and development costs, net..   2,838   2,367     1,404   1,156

    Selling, general and administrative

    expenses.............................  49,942  41,881    24,751  21,211

    Depreciation and amortization........   1,792   1,622       871     892



    Operating

    income...............................  15,492  12,328     9,002   6,127

    Financial expenses,

    net..................................     541   1,268       566     717



                                           14,951  11,060     8,436   5,410

    Gain on realization of investments...    (292)  1,965       (18)  1,866

    Other expenses,

    net..................................     421     435       377     178



    Income before taxes on income........  14,238  12,590     8,041   7,098

    Taxes on

    income...............................   1,082     968       611     260



                                           13,156  11,622     7,430   6,838

    Equity in losses of affiliated

    companies, net.......................     390     364       115     213

    Minority interest in profits,

    net..................................   5,484   4,816     3,078   2,465



    Income from continuing operation.....   7,282   6,442     4,237   4,160

    Income from discontinued operations         -  19,063         -  18,381



    Net income                              7,282  25,505     4,237  22,541



    Earnings per share generated from continued operation :



    Basic................................   0.55    0.49      0.32    0.32



    Diluted..............................   0.54    0.49      0.32    0.31



    Earnings per share generated from discontinuing operation :



    Basic................................      -    1.44         -    1.39



    Diluted..............................      -    1.44         -    1.39



    Weighted average number of shares outstanding:



    Basic................................ 13,200  13,200    13,200  13,200



    Diluted.............................. 13,200  13,200    13,200  13,200

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