Formula Systems (1985) Ltd. (NASDAQ: [ FORTY ]) a leading provider of software consulting services, computer-based business solutions, and proprietary software products, today announced its results for the fourth quarter of 2011 and the full fiscal year ended December-31, 2011.

Financial Highlights for the Fourth Quarter of 2011

Revenues for the fourth quarter ended on December 31, 2011, increased by 2.6% year over year to $157.3-million compared to $153.3-million in the same period last year. The acquisition by Sapiens International Corporation N.V (NASDAQ and TASE: SPNS) of IDIT I.D.I. Technologies Ltd. and FIS Software Ltd. Consummated on August 21, 2011, resulted in Formula's loss of its controlling interest in Sapiens and the deconsolidation of Sapiens' results from Formula's reports. Since August 21, 2011, the Company recorded Sapiens' results under the 'equity in gains of affiliated company' line in accordance with the equity method. Results for the corresponding quarter in 2010 included Sapiens' results on a consolidated basis for the full quarter.
Operating income for the fourth quarter ended December 31, 2011 decreased by 18.5% year over year to $10.7-million, compared to $13.1-million in the same period last year. The decrease resulted primarily from Formula's loss of control in Sapiens.
Net income for the fourth quarter decreased by 15.5% year over year to $4.1-million compared to $4.9-million in the respective period last year.

Financial Highlights for the Full Year Ended December 31, 2011

Revenues for the fiscal year ended December 31, 2011, increased by 17% to $640.6-million compared to $549.7-million in 2010. The acquisition by Sapiens of IDIT I.D.I. Technologies Ltd. and FIS Software Ltd. consummated on August 21, 2011, resulted in Formula's loss of its controlling interest in Sapiens and the deconsolidation of Sapiens' results from Formula's reports. Since August 21, 2011, the Company recorded Sapiens' results under the 'equity in gains of affiliated company' line in accordance with the equity method. Results for 2010 included Sapiens' results on a consolidated basis for the full year. Excluding Sapiens' results, revenues increased by 21% compared to 2010.
Operating income for the fiscal year ended December 31, 2011, increased by 4% to $49.2-million compared to $47.2-million in 2010. Excluding Sapiens' results, operating income increased by 11% compared to 2010.
Net income for the fiscal year ended December 31, 2011, increased by 134% to $43.0-million compared to $18.4-million in 2010. Net income for 2011 included income of $25.8 million recorded in connection with the consummation of the acquisition by Sapiens of IDIT I.D.I. Technologies Ltd and FIS Software Ltd.
Formula's consolidated cash and short-term and long-term investments in marketable securities totaled approximately $111.0 million, as of December 31, 2011, of which Formula's standalone net cash and short-term and long-term investments totaled $1.7 million.
Total equity on December 31, 2011 was $354.8 million, representing 53% of the total balance sheet.
On January 27, 2012, the Company consummated the purchase of Sapiens common shares, resulting in the Company's interest in Sapiens' outstanding common share increasing to 52.1%, restoring the Company's controlling interest in Sapiens.

Comments of Management

Commenting on the results, Guy Bernstein, CEO of Formula Systems, said: "The Formula group has concluded 2011 seeing the growth and improved operational performance of Matrix, Magic, and Sapiens. We achieved significant increase in the group's recorded profit, despite the deconsolidation of Sapiens' results (due to its merger with IDIT and FIS). In the first quarter of 2012 we have restored our controlling interest in Sapiens through our acquisition of shares in the company. Magic also continue strengthening its standing after purchasing BluePhoenix's AppBuilder activity. Therefore, we enter 2012 with optimism regarding the performance of our three main companies, which are continuing to increase their revenues organically, while also constantly pursuing opportunities for M&A activities that will accelerate growth in the future."

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.

For more information, visit [ http://www.formulasystems.com ].

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. CONSOLIDATED CONDENSED STATEMENTS OF INCOME U.S. dollars in thousands (except per share data) Three months ended Year ended December 31, December 31, _________________________________________ 2011 2010 2011 2010 _________________________________________ Unaudited Unaudited _________________________________________ Revenues 157,329 153,337 640,617 549,694 Cost of revenues 123,739 115,133 492,886 412,463 _________________________________________ Gross profit 33,590 38,204 147,731 137,231 Research and development costs, net 488 1,510 5,148 5,503 Selling, general and administrative expenses 22,400 23,566 93,340 84,510 _________________________________________ Operating income 10,702 13,128 49,243 47,218 Financial expenses, net 1,541 1,617 6,500 4,371 _________________________________________ 9,161 11,511 42,743 42,847 Other income (expenses), net -24 -379 207 -231 Income before taxes on income 9,137 11,132 42,950 42,616 Taxes on income -89 1,455 5,689 6,544 _________________________________________ 9,226 9,677 37,261 36,072 Gain derived from deconsolidation of subsidiary and equity in gains (losses) of affiliated companies, net 424 -421 25,870 -1,070 _________________________________________ Net income 9,650 9,256 63,131 35,002 Net income attributable to non-controlling interests 5,534 4,386 20,169 16,623 Net income attributable to _________________________________________ Formula's shareholders 4,116 4,870 42,962 18,379 Net earnings per share atributable Formula: Basic 0.31 0.36 3.17 1.37 Diluted 0.30 0.36 3.11 1.36 Weighted average number of shares in thousands used in computing net earnings per share: Basic 13,563 13,431 13,514 13,382 _________________________________________ Diluted 13,678 13,530 13,669 13,523 _________________________________________

 FORMULA SYSTEMS (1985) LTD. CONSOLIDATED CONDENSED BALANCE SHEETS U.S. dollars in thousands December 31, December 31, 2011 2010 (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents 88,172 110,508 Marketable securities 14,347 38,170 Short-term deposits 5,170 24 Trade receivables 163,219 154,366 Other accounts receivable 33,635 23,140 Inventories 2,450 5,601 _________________________ Total current assets 306,993 331,809 _________________________ LONG-TERM INVESTMENTS: Marketable securities 3,264 2,828 Deferred Taxes 11,630 13,135 Investments in affiliated company 79,202 3,209 Prepaid expenses and other assets 3,885 5,493 _________________________ Total long-Term Investments 97,981 24,665 _________________________ SEVERANCE PAY FUND 49,507 55,286 _________________________ PROPERTY, PLANTS AND EQUIPMENT, NET 19,165 12,411 _________________________ NET INTANGIBLE ASSETS AND GOODWILL 198,188 199,596 _________________________ _________________________ TOTAL ASSETS 671,834 623,767 _________________________ CURRENT LIABILITIES: Liabilities to banks 13,120 6,684 Trade payables 40,060 53,177 Deferred revenues 22,653 26,845 Employees and payroll accrual 40,814 40,704 Other accounts payable 27,693 30,693 Dividend payable to non controling interests 29 - Liability in respect of business combinations 3,718 3,963 Debentures 31,472 15,927 _________________________ Total current liabilities 179,559 177,993 _________________________ LONG-TERM LIABILITIES: Debentures 15,246 31,854 Deferred taxes 4,836 2,654 Customer advances 2,094 3,520 Liabilities to banks and others 37,985 3,154 Liability in respect of business combinations 2,502 4,758 Accrued severance pay 63,321 65,450 _________________________ Total long-term liabilities 125,984 111,390 _________________________ REDEEMABLE NON-CONTROLING INTEREST 11,469 - _________________________ EQUITY Formula shareholders' equity 221,281 197,615 Non-controlling interests 133,541 136,769 _________________________ Total equity 354,822 334,384 _________________________ TOTAL LIABILITIES AND EQUITY 671,834 623,767 _________________________

Contact:
Formula Systems (1985) Ltd.
+972-3-5389487
[ ir@formula.co.il ]

SOURCE Formula Systems

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Formula Systems Reports Fiscal Year Results for 2011 with an Increase of 17% in Revenues and an Increase of 134% in Net Income

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