BluePhoenix Solutions (NASDAQ: BPHX) reported financial results for the second quarter of 2010 ended June 30, 2010. Revenues in the second quarter were $16.2 million, as compared to $17.3 million in the previous quarter and $19 million in the second quarter of 2009.

Net income on a non-GAAP basis in the second quarter of 2010 was $0.13 million or $0.01 per diluted share, compared to $0.2 million or $0.01 per diluted share in the previous quarter, and $1.2 million dollar or $0.06 per diluted share in the second quarter of 2009.

On a GAAP basis for the second quarter of 2010, net loss was $1.1 million or ($0.05) per share, as compared to a net loss of $2.2 million or ($0.09) per share in the previous quarter, and a net loss of $1.9 million or ($0.09) per share in the second quarter of 2009 (please refer to the accompanying financial table for reconciliation of GAAP financial information to non-GAAP).

“During the second quarter, we made progress on our plan that we outlined last quarter,” commented Arik Kilman, CEO of BluePhoenix. “Our revenues and non-GAAP earnings per share came in at the higher end of our guidance range, we generated positive cash flow from operations excluding payments for our cost savings plan, and we sold a portion of our consulting business.”

“Going forward, we will focus on improving our profitability through concentrating on sales of tools in our IT modernization business, as well as focus on other lines of business, including knowledge modernization. We expect the result will be a smaller, but more profitable company, and one which forms the basis for organic growth."

Non-GAAP Results (in thousands US$)



Sales 16,167 17,348 19,050
Operating profit 1,317 944 1,326
Net Income 126 170 1,193
Earnings per share, diluted $0.01 $0.01 $0.06

GAAP Results (in thousands US$)



Sales 16,167 17,348 19,050
Operating profit (loss) (1,315) (1,979) (1,649)
Net Income (loss) (1,058) (2,183) (1,911)
Earnings per share, diluted ($0.05) ($0.09) ($0.09)

Non-GAAP financial measures

The release includes non-GAAP financial measures, including 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 and capitalized software;
  • Stock-based compensation;
  • One time expenses related to cost saving plan and one time charges;
  • Revaluation of warrants and issuance costs;

The presentation of these non-GAAP financial measures should be considered in addition to BluePhoenix's 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's core business operating results. BluePhoenix believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the company’s performance. These non-GAAP financial measures also facilitate comparisons to the company’s historical performance and its competitors' operating results. 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 "Reconciliation of GAAP to Non-GAAP."