Formula Systems (1985) Ltd. — Interim / Quarterly Report 2008

May 27, 2008

FOR IMMEDIATE RELEASE

Formula Systems Reports First Quarter Results

Herzliya, Israel – May 27, 2008 – Formula Systems (1985) Ltd. (NASDAQ: FORTY) a leading provider of information technology products, solutions and services, announced today results for the first quarter of 2008.

Revenues for the first quarter totaled $135.8 million an increase of 20% compared to $113.5 million in the first quarter of 2007.

Operating income in the first quarter of 2007 was $6.5 million compared to $6.2 million in the same quarter of 2007.

Net income generated from continuing operation in the first quarter of 2008 was $3.0 million compared to net income generated from continuing operation of $2.3 million in the first quarter of 2007.

Our cash and short time investments totaled approximately $207 million as of March 31, 2008. and our current ratio was 2.5.

In April 2008, Formula distributed a cash dividend of approximately $10 million, or $0.76 per share.

Guy Bernstein, CEO of Formula, commented: "I am pleased with the constant growth of the Group activity especially in light of the turbulent times. Our first quarter revenues represents well over $500 million for the whole year. Well equipped with the necessary resources, we will continue to explore acquisitions outside the Group while focusing on increasing internal synergies, cross selling and joint ventures within the group."

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.

Contact: Israel: Naamit Salomon , CFO , Formula Systems Ltd .

+972-9-959-8800

CONSOLIDATED BALANCE SHEETS

CURRENT ASSETS:Cash and cash equivalents....................................................................................Short-term investments.........................................................................................Marketable securities available for sale................................................................Trade receivables..................................................................................................Other accounts receivable.....................................................................................Assets attributed to discontinued operations ........................................................Inventories............................................................................................................LONG-TERM INVESTMENTS & DEPOSITES , LOANS ANDRECEIVABLES:Loans and other investments ................................................................................Investments in affiliates........................................................................................SEVERANCE PAY FUND................................................................................FIXED ASSETS, NET........................................................................................OTHER ASSETS, NET......................................................................................CURRENT LIABILITIES:Liabilities to banks and others..............................................................................Trade payables......................................................................................................Other accounts payable.........................................................................................Debentures............................................................................................................Liabilities attributed to discontinued operations...................................................LONG-TERM LIABILITIES:Debentures............................................................................................................Unrealized Gain....................................................................................................Deferred taxes.......................................................................................................Customer advances...............................................................................................Liabilities to banks and others..............................................................................Liability in respect of the acquisition of activities................................................Accrued severance pay.........................................................................................MINORITY INTEREST....................................................................................SHAREHOLDERS’ EQUITY...........................................................................	March 31,2008December 31,2007U.S.$	March 31,2008December 31,2007U.S.$	December 31,2007
		(in thousands)161,166161,50445,46738,7319621,545141,023139,67623,19133,22235413,5033,157375,347377,87614,99014,3773,6563,68218,64618,05938,43536,85116,42015,794172,845162,653621,693611,23316,82526,48152,71756,17276,38172,5214,1023,725465503150,490159,40276,17271,67992853,6233,2761,9902,18124,17923,6841,2991,37446,33443,249153,689145,528109,033107,915208,481198,388621,693611,233

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

Revenues.............................................................................................Cost of revenues .................................................................................Gross profit.........................................................................................Research and development costs, net..................................................Selling, general and administrative expenses .....................................Depreciation and amortization............................................................Restructuring and non-recurring costs................................................Operating income................................................................................Financial income (expenses), net........................................................Gain (loss)on realization of investments.............................................Other expenses, net.............................................................................Income before taxes on income ..........................................................Taxes on income.................................................................................Equity in losses of affiliated companies, net.......................................Minority interest in profits, net...........................................................Income from continuing operation......................................................Income from discontinued operationsNet incomeEarnings per share generated from continued operation :Basic .................................................................................................................Diluted ..............................................................................................................Earnings per share generated from discontinuing operation :Basic ................................................................................................................Diluted ..............................................................................................................Weighted average number of shares outstanding:Basic ...................................................................................................Diluted ................................................................................................		Three months endedMarch 31,	Three months endedMarch 31,
		2008**2007 **U.S.$	**2007 **
		(in thousands, except per sharedata)135,785113,550101,74984,73834,03628,8121,4341,21125,19120,432921839-1296,4906,20125(551)6,5155,650(274)99(44) (257)6,1975,4924717085,7264,784(275)(151)2,4062,3513,0452,282-6823,0452,9640.230.190.230.19-0.03-0.0313,20013,20013,20013,200