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$)

Q2/2010

Q1/2010

Q2/2009
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$)

Q2/2010

Q1/2010

Q2/2009
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."

Conference Call

BluePhoenix will hold a conference call to discuss the results for the second quarter today, August 17, 2010, at 8:30 a.m. Eastern time. Management will host the presentation, followed by a question-and-answer period.

To participate in the call, dial the conference number 5-10 minutes prior to the start time.

Toll free (U.S.): 1+866-860-9642International: +972-3-918-0685

The call will be webcast live via a link available on the BluePhoenix website at www.bphx.com. A replay of the call will be available via the same link.

About BluePhoenix Solutions

BluePhoenix Solutions (NASDAQ: BPHX) is a leading provider of IT modernization software and services for enterprises. The BluePhoenix portfolio includes a comprehensive suite of products, tools and services for IT modernization, knowledge management, core banking business intelligence and additional value added IT services. Leveraging over 20 years of best-practice domain expertise, BluePhoenix works closely with its customers to ensure their enterprise computing environment is up to date and optimized for business results.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements contained in this release may be deemed forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and other Federal Securities laws. You can identify these and other forward-looking statements by the use of words such as “may,” “will,” “plans,” “believes,” “estimates,” “expects’, “predicts”, “intends,” the negative of such terms, or other comparable terminology. Because such statements deal with future events, plans, projections, or future performance of the Company, they are subject to various risks and uncertainties that could cause actual results to differ materially from the Company’s current expectations. These risks and uncertainties include but are not limited to: the failure to successfully defend claims brought against the Company; the effects of the global economic and financial crisis; market demand for the Company’s products; successful implementation of the Company’s products; changes in the competitive landscape, including new competitors or the impact of competitive pricing and products; the failure of the Company to successfully integrate acquired assets or entities under M&A transactions pursued by the Company into the Company’s business as anticipated; the failure to achieve the anticipated synergies from such acquisitions; the incurrence of unexpected liabilities relating to the mergers and acquisitions pursued by the Company from time to time; the ability to manage the Company’s growth; the ability to recruit and retain additional software personnel; the ability to develop new business lines; and such other risks and uncertainties as identified in BluePhoenix’s most recent Annual Report on Form 20-F and other reports filed by it with the SEC. Except as otherwise required by law, BluePhoenix undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

This press release is also available at www.bphx.com. All names and trademarks are their owners’ property.

 

BluePhoenix Solutions Ltd.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
     
Three months ended Six months ended
June 30, June 30,
2010   2009 2010 2009
Unaudited Unaudited
 

Revenues

$

16,167

$

19,050

$

33,515

$

39,550
 
Cost of revenues 9,216 10,579 19,429 21,540
                       

Gross profit
  6,951     8,471     14,086     18,010  
 
Research and development costs 1,430 2,650 4,058 6,232
Selling, general and administrative expenses 6,836 7,470 13,322 14,000
       

Total operating expenses
  8,266     10,120     17,380     20,232  
 

Operating loss

(1,315

)

(1,649

)

(3,294

)

(2,222

)
 
Financial expenses (income) , net   (561 )   48     (216 )   1,193  
 

Loss before taxes
  (754 )   (1,697 )   (3,078 )   (3,415 )
 
Taxes on income (benefit) 146 78 (77 ) 109
 

Net loss
  (900 )   (1,775 )   (3,001 )   (3,524 )
 
Net income attributable to noncontrolling interests   158     136     240     227  
 

Net loss attributable to BluePhoenix
 

($1,058

)
 

($1,911

)
 

($3,241

)
 

($3,751

)
 

Net loss per share:

Basic and diluted
  ($0.05 )   ($0.09 )   ($0.14 )   ($0.18 )
 

Shares used in per share calculation:
  23,496     20,879     23,433     20,889  
 

BluePhoenix Solutions Ltd.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(In thousands, except per share data)
       
Three months ended Six months ended
June 30, June 30,
2010 2009 2010 2009
Unaudited Unaudited
 
GAAP Gross Profit

$

6,951

$

8,471

$

14,086

$

18,010
Amortization of intangible assets 1,709 1,855 3,724 4,209
Expenses related to cost saving plan and one time charges   233     -     344     202  
Non-GAAP gross profit

$

8,893
 

$

10,326
 

$

18,154
 

$

22,421
 
 
 
GAAP operating loss

($1,315

)

($1,649

)

($3,294

)

($2,222

)
Amortization of intangible assets 1,709 1,855 3,724 4,209
Expenses related to cost saving plan and one time charges 517 510 856 1,108
Stock-based compensations   406     610     975     845  
Non-GAAP operating income

$

1,317
 

$

1,326
 

$

2,261
 

$

3,940
 
 
GAAP Net loss attributable to BluePhoenix ($1,058 ) ($1,911 ) ($3,241 ) ($3,751 )
Amortization of intangible assets 1,709 1,855 3,724 4,209
Expenses related to cost saving plan and one time charges 517 510 856 1,108
Stock-based compensations 406 610 975 845
Revaluation of warrants and issuance costs (1,448 ) 129 (2,017 ) 153
       
Non-GAAP Net income attributable to BluePhoenix

$

126
 

$

1,193
 

$

297
 

$

2,564
 
 

Shares used in diluted earnings per share calculation
  23,611     20,903     23,555     20,909  
 
Non - GAAP Diluted Earnings per share

$

0.01
 

$

0.06
 

$

0.01
 

$

0.12
 
 
BluePhoenix Solutions Ltd.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
       
June 30, December 31,
2010 2009*
Unaudited  
ASSETS
 
Current Assets:
 
Cash and cash equivalents $ 19,367 $ 22,328
Marketable securities 125 129
Trade accounts receivable 24,868 25,578
Other current assets   2,653   2,873
 
Total Current Assets   47,013   50,908
 
Non-Current Assets:
 
Investment in affiliated company 147 147
Property and equipment, net 1,743 1,890
Goodwill 52,385 51,990
Intangible assets and other, net   14,393   17,619
 
Total Non-Current Assets   68,668   71,646
 
 
TOTAL ASSETS $ 115,681 $ 122,554
 
LIABILITIES AND EQUITY
 
Current Liabilities:
 
Short-term bank credit $ 7,727 $ 2,490
Trade accounts payable 4,729 6,093
Deferred revenues 4,544 4,424
Other current liabilities   6,945   10,263
 
Total Current Liabilities   23,945   23,270
 
Non-Current Liabilities
 
Accrued severance pay, net 894 1,309
Loans from banks 9,817 12,887
Derivative liabilities - Warrants   396   2,414
 
Total Non-Current Liabilities   11,107   16,610
 
 
Total Equity   80,629   82,674
 
TOTAL LIABILITIES AND EQUITY $ 115,681 $ 122,554

 

* Derived from audited financial statements.
 
BluePhoenix Solutions Ltd.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
   
Three months ended Six months ended
June 30, June 30,
2010   2009 2010   2009
Unaudited Unaudited
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss ($900 ) ($1,775 ) ($3,001 ) ($3,524 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 1,905 2,111 4,126 4,708
Decrease in accrued severance pay, net (85 ) 33 (415 ) (256 )
Stock–based compensation 406 510 975 1,108
Deferred income taxes, net (150 ) (413 ) (150 ) (413 )
Change in fair value of warrants (1,448 ) - (2,018 ) -
 
Changes in operating assets and liabilities:
Reclassification adjustment to income on marketable securities - 375 21 207
Decrease (increase) in trade receivables 642 (1,470 ) 710 751
Decrease (increase) in other current assets (95 ) 627 177 555
Increase (decrease) in trade payables 309 907 (1,363 ) 797
Decrease in other accounts payable   (814 )   (847 )   (1,335 )   (2,648 )
 
Net cash provided by (used in) operating activities   (230 )   58     (2,273 )   1,285  
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (145 ) (70 ) (255 ) (207 )
Proceeds from sale of marketable securities 4 - 52 -
Additional consideration of previously acquired subsidiaries and activities (134 ) (5,641 ) (1,925 ) (7,063 )
Investment in newly-consolidated activity   -     -     (702 )   -  
Net cash used in investing activities   (275 )   (5,711 )   (2,830 )   (7,270 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Short term bank credit, net 1,982 (30 ) 4,982 -
Repayment of long-term loans (500 ) (253 ) (3,750 ) (511 )

Receipt of long term loans
1,000 - 1,000 -
Purchase of treasury shares - - - (83 )

Dividend paid to noncontrolling interest
  (90 )   -     (90 )   -  
 
Net cash provided by (used in) financing activities   2,392     (283 )   2,142     (594 )
 
TOTAL NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,887 (5,936 ) (2,961 ) (6,579 )
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD   17,480     29,665     22,328     30,308  
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 19,367   $ 23,729   $ 19,367   $ 23,729  

Copyright Business Wire 2010

More from Press Releases

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

21st Century Fox Scoops Up Local News Stations

21st Century Fox Scoops Up Local News Stations

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Three-Part FREE Webinar Series

Three-Part FREE Webinar Series

March 24 Full-Day Course Offering: Professional Approach to Trading SPX

March 24 Full-Day Course Offering: Professional Approach to Trading SPX