BluePhoenix Solutions (NASDAQ:BPHX), the leader in value-driven legacy modernization, today announced financial results for the first quarter. Revenues for the first quarter of 2010 were $17.3 million compared to $19.5 million in the previous quarter, and compared to $20.5 million in the first quarter of 2009.

Net income on a non-GAAP basis for the first quarter of 2010 was $0.2 million or $0.01 per diluted share, compared to $1.3 million or $0.06 per diluted share in the previous quarter, and compared to $1.4 million dollar or $0.07 per diluted share in the first quarter of 2009.

On a GAAP basis for the first quarter of 2010 the net loss was $2.2 million or ($0.09) per share, compared to net a loss of $9.1 million or ($0.40) per share in the previous quarter, and compared to a net loss of $1.8 million or ($0.09) per share for the first quarter of 2009. (Please refer to the accompanying financial table for reconciliation of GAAP financial information to non-GAAP).

“While we are disappointed with the financial results of the first quarter, we have started implementing a plan that will lead us to sustainable profitable growth,” commented Arik Kilman, CEO of BluePhoenix. “This plan includes:

- Selling certain non-core, less profitable consulting businesses while maintaining the focus on higher margin legacy and knowledge modernization

- Increase emphasis on cash flow from operations through continued expense controls as well as improving contractual terms

- Focus on relationships with strategic technology and system integration partners which will result in increased backlog and revenues.”

Non-GAAP Results (in thousands US$)
 

Q1/2010
 

Q4/2009
 

Q1/2009
Sales 17,348 19,539 20,500
Operating income 944 1,733 2,614
Net Income 170 1,293 1,371
Earnings per share, diluted $ 0.01 $ 0.06 $ 0.07
 

GAAP Results (in thousands US$)
Q1/2010 Q4/2009 Q1/2009
Sales 17,348 19,539 20,500
Operating income (loss) (1,979 ) (10,622)* (573 )
Net Income (loss) (2,183 ) (9,140)* (1,840 )
Earnings per share, diluted ($0.09 ) ($0.40)* ($0.09 )
 

* Including $5,670 for impairment of goodwill

Non-GAAP financial measures

The release includes non-GAAP diluted earnings per share and other non-GAAP financial measures, non-GAAP gross profit, non-GAAP operating income, non-GAAP net income and non-GAAP diluted earnings per share. These non-GAAP measures exclude the following items:
  • Amortization of purchased intangible assets;
  • Stock-based compensation
  • One time expenses related to cost saving plan and one time charges
  • Goodwill impairment
  • Revaluation of warrants and issuance costs

The presentation of these non-GAAP financial measures should be considered in addition to BluePhoenix' GAAP results and is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. BluePhoenix' management believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance by excluding certain charges, gains and tax effects that may not be indicative of BluePhoenix' core business operating results. BluePhoenix believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing BluePhoenix' performance. These non-GAAP financial measures also facilitate comparisons to BluePhoenix' historical performance. BluePhoenix includes these non-GAAP financial measures because management believes they are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision-making. Non-GAAP measures are reconciled to comparable GAAP measures in the table entitled "Unaudited Reconciliation of GAAP to Non-GAAP."