Formula Systems Reports First Quarter Results

Company Reports Continuing Profits Growth

HERZLIYA, Israel, May 19 /PRNewswire-FirstCall/ -- Formula Systems (1985)
Ltd. (NASDAQ: FORTY) a leading provider of information technology products,
solutions and services, announced today results for the first quarter of 2009.
Revenues for the first quarter totaled $135.7 million compared to $135.8
million in the first quarter of 2008.
Operating income in the first quarter of 2009 was $8.0 million compared
to $6.5 million in the same quarter of 2008, an increase of 24%.
Net income in the first quarter of 2009 was $3.4 million compared to net
income of $3.0 million in the first quarter of 2008.
Our consolidated cash and short term investments totaled approximately
$135 million as of March 31, 2009 and our current ratio was 1.9.
In January 2009, Formula distributed a cash dividend of approximately $30
million, or $2.27 per share.
Guy Bernstein, CEO of Formula, commented: "The first quarter results
reflect the efforts that were made in the fourth quarter of 2008 throughout
the group's companies to adjust expenses in order to increase efficiency and
competitively to meet the economic challenges.
I believe that our subsidiaries can generate better operational profits
from a given revenue. While seeking more opportunities in the company and at
the subsidiaries level, we will continue to maintain focus on cost control.
I am encouraged by the first quarter results and maintain a cautiously
optimistic view for the whole year."
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
March 31, 31,
2009 2008
(Unaudited) (Audited)
___________ ___________
U.S. $
__________________________
(in thousands)
CURRENT ASSETS:
Cash and cash
equivalents................................ 85,462 110,602
Short-term
investments................................ 49,453 46,158
Trade
receivables................................ 135,026 158,166
Other accounts
receivable................................. 16,908 16,104

Inventories................................ 2,595 2,772
Total assets attributed to discontinued
operations.................................. 29 31
_______ _______
289,473 333,833
_______ _______
LONG-TERM INVESTMENTS, LOANS AND RECEIVABLES:
Loans and other
investments................................. 14,324 15,844
Investments in
affiliates.................................. 3,390 3,694
_______ _______
17,714 19,538
_______ _______
SEVERANCE PAY
FUND........................................ 36,828 38,105
_______ _______
FIXED ASSETS,
NET......................................... 13,873 15,228
_______ _______
OTHER ASSETS,
NET......................................... 177,060 189,918
_______ _______
534,948 596,622
======= =======
CURRENT LIABILITIES:
Liabilities to banks and
others...................................... 11,749 10,731
Trade
payables.................................... 50,394 57,240
Other accounts
payable..................................... 80,906 79,768
Dividend
payable..................................... - 29,964
Liability in respect of the acquisition of
subsidiaries................................ 6,180 6,954

Debentures.................................. 4,483 5,157
Total liabilities attributed to discontinued
operations.................................. 355 372
_______ _______
154,067 190,186
_______ _______
LONG-TERM LIABILITIES:

Debentures.................................. 50,475 56,004
Deferred
taxes....................................... 3,815 4,502
Customer
advances.................................... 862 1,093
Liabilities to banks and
others...................................... 13,110 16,640
Liability in respect of the acquisition of
activity.................................... 1,137 1,010
Accrued severance
pay......................................... 47,396 49,817
_______ _______
116,795 129,066
_______ _______
SHAREHOLDERS' _______ _______
EQUITY...................................... 264,086 277,370
_______ _______
534,948 596,622
_______ _______

FORMULA SYSTEMS (1985) LTD.

(An Israeli corporation)

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

Three months ended
March 31,
____________________
2009 2008
________ ________
U.S.$
____________________
(in thousands,
except per share
data)

Revenues.................................... 135,741 135,785
Cost of
revenues.................................... 105,565 101,749
_______ _______
Gross
profit...................................... 30,176 34,036
Research and development costs,
net......................................... 1,143 1,434
Selling, general and administrative
expenses.................................... 20,235 25,191
Depreciation and
amortization................................ 750 921
_______ _______
Operating
income...................................... 8,048 6,490
Financial income (expenses),
net......................................... 1,758 25
_______ _______
9,806 6,515
Gain (loss) on realization of
investments................................. - (274)
Other expenses,
net......................................... (180) (44)
_______ _______
Income before taxes on
income...................................... 9,626 6,197
Taxes on
income...................................... 2,954 471
_______ _______
6,672 5,726
Share in gains (losses) of associated companies,
net............................. 33 (275)

Net _______ _______
Income...................................... 6,705 5,451
Attributable to non-controlling
interest.................................... 3,292 2,406
_______ _______
Net income attributable to Formula 3,413 3,045
======= =======
Earnings per share:

Basic....................................... 0.26 0.23

Diluted..................................... 0.26 0.23

Weighted average number of shares outstanding:

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

Diluted..................................... 13,238 13,200

Contact:

Israel:
Naamit Salomon, CFO, Formula Systems Ltd. +972-9-959-8800.

SOURCE Formula Systems Ltd.

Contact: Israel: Naamit Salomon, CFO, Formula Systems Ltd. +972-9-959-8800.