Formula Systems posts $2m Q2 net profit

President Gad Goldstein: Portfolio companies' positive trend led to a 34% increase in consolidated operating income compared to the first quarter of 2004." Globes correspondent

August 4, 2004

Formula Systems Nasdaq:FORTY; TASE:FORT) today announced results for the second quarter ending June 30, 2004.

Net profit in the second quarter of 2004 totaled $2 million or $0.19 per share as compared to a net profit of $553,000, or $0.06 per share in the second quarter of 2003. Net profit in the first half of 2004 totaled $4.7, or $0.43 per share million compared to a loss of $471,000, or ($0.05) per share in the same period last year.

Revenues for the second quarter ended June 30, 2004 were $110.3 million, an increase of 23% from $89.9 million in the comparable quarter of 2003. In the first half of 2004, Formula reported revenues of $219.4 million an increase of 24% from the same period last year.

Operating income in the second quarter of 2004 was $3.7 compared to $2.3 million in the second quarter of 2003, an increase of 62%. In the first six months of 2004 operating income was $6.5 million compared to 1.3 million in the comparable period of 2003.

In the first quarter of 2004 Formula acquired 59% of Formula Vision Technologies (F.V.T) ordinary shares by way of private placement and has begun to consolidate Formula Vision's results.

Formula Systems president Gad Goldstein said, "The positive trend that our portfolio companies showed at the beginning of the year has strengthened during this quarter and has enabled us to achieve an increase in the consolidated operating income of 34% compared to the first quarter of 2004. The results are encouraging and I believe that the positive trend will continue to grow during the second half of 2004."

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.