Formula Systems Announces the Sale of its Subsidiary nextSource

Expected Capital Gain of approximately $4 million

October 22, 2009

HERZLIYA, Israel, October 22 -- Formula Systems (1985) Ltd. (NASDAQ: FORTY - News; TASE: FORT)) a leading provider of information technology products, solutions and services, announced today the sale of its entire shareholdings in nextSource Inc..

The consideration of $12 million, is composed of cash and the release of pledged bank deposits. The resulting capital gains in the fourth quarter of 2009 are expected to reach approximately $4 million. nextSource's results will be classified in the company’s financial results as discontinued operations as of the third quarter of 2009.

Guy Bernstein, chief executive officer of Formula, commented: "The sale of nextSource helps to better align our core business, and enables us to focus on building our leadership position within our industry. The sale of our subsidiary has clearly demonstrated the inherent value that Formula offers stockholders in its portfolio. We expect the proceeds of this sale to provide us with the financial and operational flexibility to pursue more synergetic opportunities in our market."

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: stock market conditions, regulatory approvals, 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.

Contact:

Guy Bernstein, chief executive officer, Formula Systems Ltd.
+972-9-959-8800