Formula Systems Announces Second Quarter Results


Improved Results Over First Quarter of 2003

Friday August 22, 4:04 pm ET

HERZLIYA, Israel, August 22, 2003/PRNewswire-FirstCall/ -- Formula Systems Ltd. (Nasdaq:FORTY - News), a leading provider of information technology products, solutions and services, is pleased to announce its financial results for the second quarter ended June 30, 2003.

Revenues in the second quarter of 2003 totaled $89.9 million compared to $87.7 million in the first quarter. Operating income increased to $2.3 million compared to an operating loss of $1.0 million in the first quarter of 2003. Net income for the second quarter of 2003 amounted to $553,000 compared to a net loss of $1.0 million in the first quarter of 2003.

Second Quarter Highlights in our subsidiaries

  • Sapiens International Corporation N.V. (Nasdaq: SPNS - News)
    Sapiens reported overall improvement in its results compared to the first quarter of 2003 and expects the third and fourth quarters to reflect continued improvements in results. Sapiens has experienced a very positive market feedback and increased interest in its new offering to the Insurance Industry - Sapiens INSIGHT(TM) Solutions suite.

  • BluePhoenix Solutions (Formerly: Crystal Systems Solutions) (Nasdaq: BPHX - News)
    The completion of the integration between Crystal Systems and BluePhoenix Solutions, resulted in streamlined and enhanced capabilities while increasing BluePhoenix overall efficiency. During the quarter BluePhoenix added new strategic partners that increased its exposure to new markets, such as its agreement with IBM Japan.

  • Magic Software Enterprises (Nasdaq: MGIC - News)
    Magic continued its momentum from the first quarter of the year and has once again delivered strong results. Magic's newly released version 9.4 of eDeveloper has received an excellent response from its customers and from the market in general. Magic's new IBOLT Integration Suite has also received a warm reception from leading industry analysts, existing and potential customers.

  • Matrix IT
    During the quarter Matrix continued its efforts to complete the merger with its subsidiaries, completed the acquisition of New Applicom and disposed of low margin operations, all part of its long term merger plan. These efforts resulted in a substantial increase in the gross margin and in EBITDA compared to the first quarter.

    Matrix believe that the successful merger combined with a cost reduction plan will enable the company to become the largest IT company in Israel with critical mass, operating efficiency and a unified corporate structure and identity.

  • NextSource Inc.
    During the first quarter NextSource released version two of its People Blue Book, the one source for solutions to all of a company's human capital management needs. As of today NextSource has completed sales of this version to four Fortune 500 customers.

Gad Goldstein, President of Formula, commented: "As previously stated, our efforts in the first half of the year were mainly directed to help our subsidiaries regain operational profitability and positive cash flow. The combined efforts together with the managements of our subsidiaries resulted in an improvement of over $3 million in the aggregate operating results between the first and the second quarter. We are encouraged by the results and we will persevere with our efforts to increase efficiency while focusing on a return to growth pattern in our subsidiaries. Based on the results already achieved we expect a stronger and better second half of 2003."

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.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
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.

Gad Goldstein, President, Formula Systems (1985) Ltd.,
Tel: 011-972-9959-8800

Dennis S. Dobson, for Formula Systems Ltd.