BluePhoenix Solutions Reports Second Quarter 2012 Results

BluePhoenix Solutions (NASDAQ: BPHX), the leader in value-driven legacy modernization, announced financial results for the second quarter of 2012 on September 6 th after the closing bell. Revenue for the second quarter of 2012 was $4.2 million compared to $3.6 million in the previous quarter, a 17.7% increase.

BluePhoenix has been going through a major restructuring effort on gaining control over their balance sheet and positioning the company for growth in their core business of Legacy Modernization. As a result, two noncore businesses which had a negative impact on the companies financials were sold; Liacom in April and Knowledge Management Systems business in June. BluePhoenix has lowered fixed costs significantly by reducing headcount from a peak of 730 employees in January 2010 to only 105 in the core Legacy Modernization business as of today.

Matt Bell, CEO of BluePhoenix said, “We are proud the company increased revenue, is nearly debt free, lowered fixed costs, is building cash and is in control of our balance sheet for the first time in many years. Our projected expenses for 2012 will be $10.8 million and we are forecasting to breakeven. We think we can continue to reduce expenses by another 10% reinvesting that money in sales and marketing to set ourselves up for significant growth in 2013.”

About BluePhoenix Solutions

BluePhoenix Solutions Ltd. (NASDAQ: BPHX) is the leading provider of legacy IT modernization conversion solutions. The BluePhoenix portfolio includes a comprehensive suite of tools and services from global IT asset assessment and impact analysis to automated database and application migration. Leveraging over 20 years of best-practice domain expertise, BluePhoenix works closely with its customers to ascertain which assets should be migrated, redeveloped, or wrapped for reuse as services or business processes, to protect and increase the value of their business applications and legacy systems with minimized risk and downtime.

BluePhoenix provides modernization solutions to companies from diverse industries and vertical markets such as automotive, banking and financial services, insurance, manufacturing, and retail. BluePhoenix has 9 offices in the USA, UK, Italy, Romania, Russia, and Israel.

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 effects of the global economic and financial trends; 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; 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.

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