[ 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 first quarter of 2012.

Financial Highlights for the first Quarter of 2012

Revenues for the first quarter ended March 31, 2012, increased by 14% to $178.3-million compared to $155.9-million in the same period last year.
Operating income for the first quarter ended March 31, 2012 increased by 13% to $13.9-million, compared to $12.3-million in the same period last year.
Net income for the first quarter ended March 31, 2012 increased by 87% to $7.8-million compared to $4.2-million in the same period last year. Net income included a net gain of $2.9 million resulting from the remeasurement of the Company's investments, primarily attributable to regaining the controlling interest in Sapiens.
Formula's consolidated cash and short-term and long-term investments in marketable securities totaled approximately $128.0 million, as of March 31, 2012.
Total equity on March 31, 2012 was $456.4 million, representing 53% of the total balance sheet.

Comments of Management

Commenting on the results, Guy Bernstein, CEO of Formula Systems, said: "These outstanding results reflect the strong start to the year made by Formula and its subsidiaries. Matrix reported record-breaking results for the first quarter of 2012, with substantial growth in all its activities, in particular in its core business as a leader in the provision of software solutions and services in Israel. Magic continued its success from 2011, with double-digit growth for the tenth consecutive quarter and very strong performance across the board in all of its regional centers of activity. Magic expects to continue its growth with new releases of its enterprise mobile and cloud-based technology. On January 27, 2012, Formula regained a controlling interest in Sapiens, demonstrating our firm belief in Sapiens' current and future performance. Following successful acquisitions, which have enhanced its product offering and expanded its global reach, Sapiens reported significant growth in the first quarter of 2012. We are confident that we can build on this impressive start to the year to achieve even greater success moving forward."

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 March 31, _______________________ 2012 2011 __________ __________ Unaudited _______________________ Revenues 178,305 155,916 Cost of revenues 136,336 119,716 _______________________ Gross profit 41,969 36,200 Research and development costs, net 2,439 1,685 Selling, general and administrative expenses 25,607 22,272 Other income, net - 31 _______________________ Operating income 13,923 12,274 Financial expenses, net 1,494 1,358 _______________________ Income before taxes on income 12,429 10,916 Taxes on income 2,042 2,176 _______________________ 10,387 8,740 Gain derived from consolidation of subsidiary and equity in gains (losses) of affiliated companies, net 3,719 -240 _______________________ Net income 14,106 8,500 Net income attributable to non-controlling interests 6,304 4,323 _______________________ Net income attributable to Formula's shareholders 7,802 4,177 Earnings per share: Basic 0.58 0.31 Diluted 0.56 0.30 Shares used in computing earnings per share : Basic 13,596 13,464 _______________________ Diluted 13,749 13,646 _______________________

FORMULA SYSTEMS (1985) LTD.

CONSOLIDATED CONDENSED BALANCE SHEETS

U.S. dollars in thousands

 March 31, December 31, ___________ ___________ 2012 2011 ___________ ___________ (Unaudited) (Unaudited) ___________ ___________ ASSETS CURRENT ASSETS: Cash and cash equivalents 110,665 88,172 Marketable securities 14,929 14,347 Short-term deposits 414 5,170 Trade receivables 188,333 163,219 Other accounts receivable 42,642 36,085 ___________ ___________ Total current assets 356,983 306,993 ___________ ___________ LONG-TERM INVESTMENTS: Marketable securities 2,752 2,746 Deferred Taxes 18,095 11,630 Investments in affiliated companyies 3,042 77,107 Prepaid expenses and other accounts receivable 2,729 3,885 ___________ ___________ Total long-Term Investments 26,618 95,368 ___________ ___________ SEVERANCE PAY FUND 62,712 49,507 ___________ ___________ PROPERTY, PLANTS AND EQUIPMENT, NET 21,033 19,165 ___________ ___________ NET INTANGIBLE ASSETS AND GOODWILL 388,123 198,188 ___________ ___________ TOTAL ASSETS 855,469 669,221 ___________ ___________ CURRENT LIABILITIES: Liabilities to banks 15,758 16,642 Debentures 15,970 31,472 Trade payables 49,412 40,344 Deferred revenues 53,327 22,653 Other accounts payable 84,051 70,054 Dividend payable to non controling interests 3,221 - ___________ ___________ Total current liabilities 221,739 181,165 ___________ ___________ LONG-TERM LIABILITIES: Liabilities to banks and others 40,975 34,459 Debentures 15,690 15,246 Deferred revenue 1,553 2,094 Other long-term pyables 10,700 9,258 Accrued severance pay 78,156 63,321 ___________ ___________ Total long-term liabilities 147,074 124,378 ___________ ___________ REDEEMABLE NON-CONTROLING INTEREST 30,283 11,469 ___________ ___________ EQUITY Formula shareholders' equity 233,616 218,668 Non-controlling interests 222,757 133,541 ___________ ___________ Total equity 456,373 352,209 ___________ ___________ TOTAL LIABILITIES AND EQUITY 855,469 669,221 ___________ ___________

Press Contact:

Formula Systems (1985) Ltd.

+972-3-5389487

[ ir@formula.co.il ]

SOURCE Formula Systems

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