BLUEPHOENIX SOLUTIONS, LTD. 
By HERZLIYA,
Non-GAAP Operating Results
For the fourth quarter of 2007, BluePhoenix reported revenues on a
Non-GAAP pro forma basis of
Operating income on a Non-GAAP pro forma basis for the fourth quarter was
Net income on a Non-GAAP pro forma basis for the fourth quarter was a
record high of
GAAP Operating Results
Fourth quarter revenue as calculated on a GAAP basis was
Non-GAAP Pro Forma Results Q4/2007 Q3/2007 Q4/2006
Sales 22,730 21,087 16,058
Operating profit 4,216 3,933 1,666
Net Income 4,250 3,250 1,444
GAAP Results Q4/2007 Q3/2007 Q4/2006
Sales 24,397 22,952 18,290
Operating profit (8,123) 1,449 2,365
Net Income (7,298) 742 1,378
Non-GAAP pro forma results exclude MainSoft results in the reported periods, impairment of goodwill related to Mainsoft, restructuring, acquisition related and integration charges, amortization and capitalization of intangible assets, the effect of stock-based compensation and non-cash financial and other expenses mainly related to convertible debentures. Reconciliation between GAAP and Non-GAAP operating results and net income is provided below.
"We are very satisfied with another strong quarter," said Arik Kilman, CEO of BluePhoenix Solutions. "We are continuing to see increasing demand for our modernization solutions in both the U.S. and European markets. We start off 2008 debt-free with a stronger balance sheet, a strong backlog, a growing pipeline and excellent prospects for a successful year."
Other Financial Highlights
- Company cash flow from operating activities in the fourth quarter was
- DSOs in the fourth quarter of 2007 decreased to 91 from 113 in the third quarter of 2007 and 110 in the second quarter of 2007;
- Cash and cash equivalents increased to
- The company has no financial debt as of
- Shareholder's equity increased by
Business Highlights
The following business highlights were announced during the quarter:
- Successful completion of
- Largest contract to date with U.S. government organization to migrate and modernize ADABAS/Natural applications and database to Java/Oracle;
- Key contract to convert PowerBuilder applications to Java for a leading global telecommunications company;
- First stage of a modernization deal with one of Europe's largest insurance conglomerates to assess potential for application consolidation;
- New service offering for post modernization offshore application
development and enhancement to be delivered via service center in
- New automated solution for financial organizations to overhaul the symbology used in representing listed option contracts in line with the Options Symbology Initiative (OSI);
- ASNA breaking the one million mark of sales of Datagate licenses with over 4,000 developers having moved from System i to RPG for .net on Microsoft's Visual Studio.
Conference Call Details
Arik Kilman, Chief Executive Officer, Varda Sagiv, Chief Financial
Officer and
In the US: (800)-230-1096 and outside the US: (612)-332-0720. Callers should reference "BluePhoenix Fourth Quarter and Year End Results" to the AT&T conference call operator.
An automated replay of the conference call will be available from
The replay will be available from
Non-GAAP
To supplement BluePhoenix' consolidated financial statements presented in accordance with GAAP, BluePhoenix provides Non-GAAP operating income (loss), Non-GAAP net income (loss) and Non-GAAP net income (loss) per share data. 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 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."
About BluePhoenix Solutions
BluePhoenix Solutions (NASDAQ: BPHX) is a leading provider of value-driven modernization solutions for legacy information systems. BluePhoenix offerings include a comprehensive suite of tools and services from global IT asset assessment and impact analysis to automated database and application migration, rehosting, and renewal. 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. Among its prestigious
customers are: Aflac, DaimlerChrysler, Danish Commerce and Companies Agency,
SAFE HARBOR: Certain statements contained in this release may be deemed forward-looking statements, with respect to plans, projections, or future performance of the Company, the occurrence of which involves certain risks and uncertainties that could cause actual plans to differ materially from these statements. These risks and uncertainties include but are not limited to: market demand for the Company's tools, successful implementation of the Company's tools, competitive factors, the ability to manage the Company's growth, the ability to recruit and retrain additional software personnel, and the ability to develop new business lines and other risks detailed from time to time in the Company's 20-F Annual Report Risk Factors section as well as in other filings with the Securities and Exchange Commission. This press release is also available at http://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 Year ended
December 31, December 31,
2007 2006 2007 2006
Unaudited
Revenues $24,397 $18,290 $88,398 $68,004
Cost of revenues 11,529 7,674 38,661 28,515
Gross profit 12,868 10,616 49,737 39,489
Software development
costs, net 4,735 2,587 14,109 9,400
Selling, general and
administrative expenses 9,272 5,664 32,820 22,149
Goodwill impairment 6,989 -- 6,989 --
Restructuring -- -- 694 --
Total operating expenses 20,996 8,251 54,612 31,549
Operating income (loss) (8,128) 2,365 (4,875) 7,940
Financial expenses, net (293) (1,068) (4,343) (3,515)
Other income, net 759 -- 892 282
Income (loss) before
taxes (7,662) 1,297 (8,326) 4,707
Taxes on income (benefit) (110) (336) 68 (282)
(7,552) 1,633 (8,394) 4,989
Equity in earnings of
affiliated
company 35 35
Minority interest 219 (255) 163 (317)
Net income (loss) ($7,298) $1,378 ($8,196) $4,672
Basic earnings (loss)
per share $(0.38) 0.10 $(0.48) $0.34
Diluted earnings (loss)
per share $(0.38) 0.09 $(0.48) $0.33
Common shares
outstanding 19,286 14,092 17,145 13,889
Common shares assuming
dilution 20,717 14,640 18,276 14,371
RECONCILIATION OF GAAP TO NON-GAAP (*)
(In thousands, except per share data)
Three months ended Year ended
December 31, December 31,
2007 2006 2007 2006
Unaudited Unaudited
GAAP revenue $24,397 $18,290 $88,398 $68,004
Discountinued operations 1,667 2,232 7,176 6,629
Non-GAAP Revenue $22,730 $16,058 $81,222 $61,375
GAAP gross profit $12,868 $10,616 $49,737 $39,489
Acquisition related and
integration charges 267 -- 982 --
Amortization of intangible
assets 3,822 1,580 9,512 5,651
Discountinued operations (1,086) (1,829) (5,020) (5,759)
3,003 (249) 5,474 (108)
Non-GAAP Gross profit $15,871 $10,367 $55,211 $39,381
GAAP operating income
(loss) ($8,128) $2,365 ($4,875) $7,940
Restructuring -- -- 694 --
Acquisition related and
integration charges 385 -- 1,853 --
Amortization of intangible
assets 3,822 1,580 9,512 5,651
Impairment of goodwill and
discountinued operations 7,770 (724) 7,791 (1,113)
Capitalization of software
development costs (334) (1,848) (3,944) (5,685)
Depreciation of property
(**) -- 283 178 753
Stock-based compensations 701 10 1,024 40
One time non-cash executive
compensation related to the
Formula saleof shareholdings in
BluePhoenix, offset against
paid-in capital. -- -- 1,769 --
Total adjustments to GAAP
operating income 12,344 (699) 18,877 (354)
Non-GAAP Operating income $4,216 $1,666 $14,002 $7,586
GAAP net income (loss) ($7,298) $1,378 ($8,196) $4,672
Restructuring -- -- 694 --
Acquisition related and
integration charges 385 -- 1,853 --
Amortization of intangible
assets 3,822 1,580 9,512 5,651
Impairment of goodwill and
discountinued operations 7,426 (291) 7,432 (311)
Capitalization of software
development costs (334) (1,848) (3,944) (5,685)
Depreciation of property
(**) -- 283 178 753
Stock-based compensations 701 10 1,024 40
One time non-cash executive
compensation related to the
Formula saleof shareholdings
in
BluePhoenix, offset against
paid-in capital. -- -- 1,769 --
Non-cash financial and other
expenses (452) 352 2,152 1,214
Minority interest -- (20) (2) (11)
Total adjustments to GAAP
net
income 11,548 66 20,668 1,651
Non-GAAP net income $4,250 $1,444 $12,472 $6,323
Non - GAAP Diluted Earning
per
share $0.21 $0.10 $0.68 $0.44
Shares used in diluted
Earning per
share calculation- GAAP 20,717 14,640 18,276 14,371
(*) The comperative numbers were adjusted to reflect discontinued
operations
(**) Was reconciled until March 31,2007
BluePhoenix Solutions Ltd.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, December 31,
2007 2006
ASSETS
Current Assets:
Cash and cash equivalents $25,962 $11,627
Marketable securities 668 1,053
Trade accounts receivable 24,216 26,489
Other current assets 2,481 3,096
Total Current Assets 53,327 42,265
Non-Current Assets:
Long-term trade receivable 512 1,390
Investment in affliated company 207 -
Property, net 2,534 2,147
Intengible assets, net 88,978 81,664
Total Non-Current Assets 92,231 85,201
TOTAL ASSETS $145,558 $127,466
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term credit from banks $- $609
Convertible debentures 67 4,482
Trade accounts payable 4,272 4,594
Deferred revenues 6,829 7,790
Other current liabilities 15,560 6,929
Total Current Liabilities 26,728 24,404
Non-Current Liabilities
Convertible debentures - 14,049
Accrued severance pay, net 1,802 1,718
Provision for losses in
formerly-consolidated
subsidiary - 1,971
Loans from banks and others 135 20,027
Minority interests 5,185 5,348
Total Non-Current Liabilities 7,122 43,113
Shareholders' Equity 111,708 59,949
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $145,558 $127,466
BluePhoenix Solutions Ltd.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year ended Three months ended
December 31,
2007 2007
CASH FLOWS FROM
OPERATING
ACTIVITIES:
Net loss ($8,196) ($7,298)
Adjustments to
reconcile net loss
to net cash
provided by
operating
activities:
Minority interests (163) (219)
in profits of
subsidiaries
Equity in earnings (2) (2)
of affiliated
company, net
Depreciation and 12,087 4,560
amortization
Goodwill 6,989 6,989
impairment
Decrease in (101) (355)
accrued severance
pay, net
Loss on sale of 4 (5)
property
Change in value of 2,311 7
long term-loans
and convertible
debentures
Stock-based and 2,794 701
non cash
compensations
Deferred income
taxes, net
Decrease of (300) (300)
provision for
losses in formaly
consolidated
subsidiary
Tax benefit 596 596
related to
exercise of stock
options
Deferred income (1,025) (1,025)
taxes, net
Changes in
operating assets
and liabilities:
Marketable 560 (462)
securities
Decrease in trade 4,469 4,878
receivables
Decrease in other 973 94
current assets
Decrease in trade (679) (1,495)
payables
Decrease in other (2,973) (2,473)
current
liabilities and
deferred revenues
Net cash provided 17,344 4,191
by operating
activities
CASH FLOWS FROM
INVESTING
ACTIVITIES:
Purchase of (1,086) (451)
property
Proceeds from sale 8 --
of property
Capitalization of (5,302) (334)
software
development costs
Additional
consideration of
previously
acquired
subsidiaries and
purchase of
activity (1,310) 198
Investment in
newly-consolidated
subsidiaries and
purchase of
new-activity (9,077) (1,817)
Net cash used in (16,767) (2,404)
investing
activities
CASH FLOWS FROM
FINANCING
ACTIVITIES:
Short-term bank (936) (3,497)
credit, net
Repayment of (20,609) (28,590)
long-term
loans,net
Repayment of (1,671) (1,671)
provision for
losses in formaly
consolidated
subsidiary
Issuance of 33,213 33,213
shares, net
Exercise of 3,761 372
employee share
options and
warrants
Net cash provided 13,758 (173)
by (used in)
financing
activities
NET INCREASE IN 14,335 1,614
CASH AND CASH
EQUIVALENTS
CASH AND CASH 11,627 24,348
EQUIVALENTS AT
BEGINNING OF
PERIOD
CASH AND CASH $25,962 $25,962
EQUIVALENTS AT END
OF PERIOD
Company Contact
Varda Sagiv
BluePhoenix Solutions
+972-9-9526100
vsagiv@bphx.com
Investor Contact
Paul Holm
H.L. Lanzet
+1-212-888-4570
paulmholm@gmail.com
SOURCE Bluephoenix Solutions Ltd
