Formula Systems Turns a Tidy Profit

Formula Systems (TASE: FORT, Nasdaq: FORTY) yesterday announced net profits of $3 million in the fourth quarter of 2003 against net losses of $8.1 million in the parallel. Compared to the third quarter, Formula Systems' net increased 363 percent.

Controlling shareholder Dan Goldstein took the opportunity yesterday to criticize his detractors over the Formula Vision deal. Apparently Goldstein has taken over two months of knocks over Formula's buying 60 percent of Formula Vision Technologies in exchange for waiving a $35 million debt that FVT owed to Formula. "The test of results has proved that I was right," said Goldstein. "I hope that all those who criticized the Formula Vision deal will now eat their hat!"

Actually investors quite took to the deal, sending Formula stock up 42 percent since the acquisition was announced in December, and Formula Vision up 55 percent. "In contrast to the sharp criticism I have had to suffer from the press," Goldstein continued, "I haven't received even one phone call from Formula investors. They understood that this didn't hurt the share. Some of them don't understand that on occasion in the world of business, a deal can be worthwhile for both sides. For some reason, they assume that if one side is profiting, then the other must be losing.

"In the past decade I have done nothing against the interests of the shareholders. I have not conducted any interested party deal, and I have not given myself any options or bonuses like other managers."

The software group, controlled by brothers Dan and Gad Goldstein, reported yesterday that its fourth-quarter revenues reached $96.8 million, up 27 percent, while sales for the year 2003, topped $367 million, an increase of 29 percent. After seeing an operating loss of $6.7 million in 2002, the group proudly posted operating profits of $11.8 million in 2003.