"The affair of the agreement with the Peled-Givony group, which weighed so heavily on Formula Systems (Nasdaq:FORTY) stock, is behind me now," Formula chairman Danny Goldstein commented, as the group published its second-quarter statement for 2002. "Now, I hope, we can focus on improving the efficiency of the Formula group companies without that cloud hovering over our heads."

TheMarker: Is anybody else looking at taking over Formula?

Goldstein:

That question isn't relevant any more, since we have an agreement with the Peled-Givony group regarding the controlling interest, which expires in three months. We have an agreement, but the group doesn't really exist any more. Even if we wanted, we couldn't hold negotiations with potential buyers.

In any case I feel comfortable with the 23% my brother Gad and I hold in Formula, and the truth is that Im pretty sick of control over the company being the only thing people talk about.

What about the financial results of the group? Do you see the software sector picking up?

To say it's recovering would be excessive, at this stage. I see stability, from the perspective of the level of business presented by our subsidiaries. Revenues are not declining any more.

But Formula's sales dropped 23% to $71 million.

In the parallel quarter, Formula's results were consolidated with Formula Vision. If that is factored in, it certainly isn't a drop in revenues.

How can the group improve its results? It can't streamline infinitely.

First of all, there are always ways to cut costs, beyond what we did over the last year. Streamlining included cutting the absurd salaries workers received, and dismissals For instance, we delisted Comsoft and merged it into New Applicom, thus increasing the merged company's turnover while reducing costs. The name of the game today is correct management of costs at our group companies.

Any thoughts on mergers and acquisitions?

Formula constantly looks at M&A possibilities. We only look at big companies, as the operations of small companies are handled by Formula Vision but we haven't reached the stage of negotiations (with any of the companies checked).

When do you foresee a market rally?

I do not see the Israeli economy picking up in the coming days or months. I think 2002 will be one of the economy's worst years, but that 2003 may bring recovery.