Net income on a non-GAAP basis for the fourth quarter of 2008 was $1.4 million, or $0.07 per diluted share compared to non-GAAP net loss of $1.4 million or $(0.06) per share for the third quarter of 2008, and non-GAAP net income of $4.25 million, or $0.21 per diluted share for the fourth quarter of 2007.
On a GAAP basis for the fourth quarter of 2008 the net loss was $1.4 million or $(0.06) per share, compared to a net loss of $6.8 million or $(0.32) per share in the third quarter of 2008 and a net loss of $7.3 million or $(0.38) per share in the fourth quarter of 2007. The GAAP results exclude the effects of any potential non-cash write-down to goodwill for which the annual impairment test is currently underway. (Please refer to the accompanying financial table for reconciliation of GAAP financial information to non-GAAP).
"We are encouraged by our performance in the fourth quarter. Despite a difficult macro economic environment, we ended the year with a healthy level of bookings which resulted in an increased backlog. We met our Q4 revenue guidance and were able to achieve an 11% non-GAAP operating margin and a non-GAAP EPS of $0.07." commented Yaron Tchwella, CEO of BluePhoenix Solutions. "Like many companies around the world we remain cautious about the macro-economic environment and its potential impact on IT spending. On the other hand, the downturn in the economy drives organizations around the world to focus, more than ever, on cost reduction initiatives. We believe that our proven return on investment model has us well-positioned to take advantage of emerging opportunities to help enterprises reduce their IT expenses."
Non-GAAP Results* (in thousands US$) Q4/2008 Q3/2008 Q4/2007
Sales 22,652 22,029 22,730
Operating profit (loss) 2,476 (170) 4,216
Net Income (loss) 1,429 (1,354) 4,250
GAAP Results* (in thousands US$)
(excludes any potential
write-down of goodwill) Q4/2008 Q3/2008 Q4/2007
Sales 22,652 22,029 22,730
Operating profit (loss) (838) (5,206) (343)
Net Income (loss) from continued operations (1,885) (6,390) 160
Net Income (loss) (1,376) (6,839) (7,298)
* Q4/2007 - reclassification of Mainsoft as
discontinued operation
Non-GAAP financial measures
The release includes non-GAAP diluted earnings per share and other non-GAAP financial measures, non-GAAP cost of revenues, non-GAAP research and development, non-GAAP selling, general and administrative, non-GAAP operating income, non-GAAP net income and non-GAAP net income (loss) per share. These non-GAAP measures exclude the following items:
- Amortization of purchased intangible assets;
- Capitalization of research and development costs;
- Equity-based compensation expense
- Restructuring expenses
- One time expenses related to cost saving plan
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."
Conference Call
A conference call discussing BluePhoenix' results for the fourth quarter of 2008, will take place today, February 17, 2009 at 8:30 a.m. (ET). Investors are invited to join the Company's teleconference by calling +1-800-762-8779 or international +1-480-248-5081 at 8:25 a.m. This call is being web cast by ViaVid Broadcasting and can be accessed at BluePhoenix's website at http://www.bluephoenixsolutions.com.
About BluePhoenix Solutions
BluePhoenix Solutions (NASDAQ: BPHX - News) 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, re-hosting, 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, CareFirst, Citigroup, Danish Commerce and Companies Agency, Desjardins, Los Angeles County Employees Retirement Association, Rural Servicios Informaticos, SDC Udvikling, TEMENOS, Toyota and Volvofinans. BluePhoenix has 14 offices in the USA, UK, Denmark, Germany, Italy, The Netherlands, Romania, Russia, Cyprus, South Korea, Australia, and Israel.
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. 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,
_______________________ ______________________
2008* 2007** 2008* 2007**
________________________ ______________________
Revenues $22,652 $22,730 $91,745 $81,222
Cost of revenues 12,035 10,972 46,032 36,529
________________________ ______________________
Gross profit 10,617 11,758 45,713 44,693
Research and
development costs, net 4,278 3,949 18,378 12,653
Selling, general and
administrative
expenses 7,177 8,152 32,359 28,370
Restructuring 694
_________________________ ______________________
Total operating
expenses 11,455 12,101 50,737 41,717
_________________________ ______________________
Operating income
(loss) (838) (343) (5,024) 2,976
Financial
expenses, net 1,199 281 2,237 4,343
Other income 125 759 398 892
_________________________ ______________________
Income (loss)
before taxes (1,912) 135 (6,863) (475)
Taxes on income
(benefit) (110) (330) 68
_________________________ ______________________
(1,912) 245 (6,533) (543)
Equity profit
(loss) in
affiliate (49) 35 (49) 35
Minority interest 76 (120) (179) (199)
_________________________ _______________________
Net income (loss)
from continued
operation ($1,885) $ 160 ($6,761) ($707)
_________________________ _______________________
Net income (loss)
from discontinued
operation 509 (7,458) (8,512) (7,489)
_________________________ _______________________
Net loss ($1,376) ($7,298) ($15,273) ($8,196)
========= ========= ========= =========
Net loss per share:
Basic ($0.06) ($0.38) ($0.72) ($0.48)
Diluted ($0.06) ($0.38) ($0.72) ($0.48)
Shares used in
per share
calculation:
Basic 21,230 19,286 21,196 17,145
Diluted 21,230 19,286 21,196 17,145
* Excludes any potential write-down of goodwill.
** Presented after reclassification of Mainsoft Inc. as discontinued
operation.
Unaudited Reconciliation of GAAP to Non-GAAP Results
(In thousands, except per share data)
Three months ended December 31,
______________________________________________
2008 2008 2007
______________________________________________
GAAP (a) Adjustments Non-GAAP Non-GAAP
______________________________________________
Revenues $22,652 $22,652 $22,730
Cost of revenues 12,035 (2,637) (b) 9,398 6,859
Gross profit 10,617 2,637 13,254 15,871
Research and development
costs, net 4,278 4,278 4,283
Selling, general and
administrative expenses 7,177 (677) (c) 6,500 7,372
______________________________________________
Total operating expenses 11,455 (677) 10,778 11,655
______________________________________________
Operating income (loss) (838) 3,314 2,476 4,216
Financial expenses, net 1,199 1,199 298
Other income 125 125 307
Income (loss) before taxes (1,912) 3,314 1,402 4,225
Taxes on income (benefit) (110)
(1,912) 3,314 1,402 4,335
Equity profit (loss) in
affiliate (49) (49) 35
Minority interest 76 76 (120)
______________________________________________
Net income (loss) from
continued operation ($1,885) $ 3,314 $ 1,429 $ 4,250
______________________________________________
Net loss from discontinued
operation 509 (509)
______________________________________________
Net income (loss) ($1,376) $ 2,805 $ 1,429 $ 4,250
========= ========= ========= =========
Net (loss) income per
share:
Diluted ($0.06) $ 0.07 $ 0.21
Shares used in per share
calculation 21,230 21,230 20,717
______________________________________________
Notes:
(a) Excludes any potential write-down of goodwill
(b) Amortization of intangible
assets.
(c) Stock-based compensation.
Year 2008 Year 2007
____________________________________ _________
GAAP (a) Adjustments Non-GAAP Non-GAAP
______________________________________________
Revenues $91,745 $91,745 $81,222
Cost of revenues 46,032 (9,110) (b) 36,922 26,011
______________________________________________
Gross profit 45,713 9,110 54,823 55,211
Research and development
costs, net 18,378 18,378 16,597
Selling, general and
administrative expenses 32,359 (2,825) (c) 27,196 24,612
(2,338) (d)
______________________________________________
Total operating expenses 50,737 (5,163) 45,574 41,209
______________________________________________
Operating income (loss) (5,024) 14,273 9,249 14,002
Financial expenses, net 2,237 2,237 2,589
Other income 398 398 434
______________________________________________
Income (loss) before taxes (6,863) 14,273 7,410 11,847
Taxes on income (benefit) (330) (330) 68
______________________________________________
(6,533) 14,273 7,740 11,779
Equity profit (loss) in
affiliate (49) (49) 35
Minority interest (179) (179) 658
Net income (loss) from
continued operation ($6,761) $ 14,273 $ 7,512 $ 12,472
______________________________________________
Net loss from discontinued
operation (8,512) 8,512
______________________________________________
Net income (loss) ($15,273) $ 22,785 $ 7,512 $ 12,472
========= ========= ========= =========
Net (loss) income per share:
Diluted ($0.72) $ 0.34 $ 0.68
Shares used in per share
calculation 21,196 21,919 18,276
Notes:
(a) Excludes any potential write-down of goodwill
(b) Amortization of intangible assets.
(c) Stock-based compensation.
(d) One-time expenses due to global cost savings plan
BluePhoenix Solutions Ltd.
Condensed Consolidated Balance Sheets
(In thousands)
December 31, December 31,
_______________________________
2008* 2007**
_______________________________
ASSETS
Current Assets:
Cash and cash equivalents $30,308 $22,571
Marketable securities 423 668
Trade accounts receivable 28,232 22,233
Other current assets 3,217 2,140
Assets attributed to discontinued
operation - 17,100
______________________________
Total Current Assets 62,180 64,712
Non-Current Assets:
Long-term trade receivable - 512
Investment in affiliated company 157 207
Property and equipment, net 2,493 2,313
Goodwill 65,334 49,683
Intangible assets and other, net 23,151 29,431
______________________________
Total Non-Current Assets 91,135 82,146
______________________________
TOTAL ASSETS $153,315 $146,858
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term bank credit $1,021 -
Convertible Debenture - 67
Trade accounts payable 5,133 3,673
Deferred revenues 5,541 5,453
Other current liabilities 18,125 16,365
Liabilities attributed to discontinued
operation - 7,146
______________________________
Total Current Liabilities 29,820 32,704
Non-Current Liabilities
Accrued severance pay, net 1,797 1,549
Loans from banks 15,048 135
______________________________
Total Non-Current Liabilities 16,845 1,684
______________________________
Minority interests 827 762
Shareholders' Equity 105,823 111,708
_______________________________
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $153,315 $146,858
========= =========
* Excludes any potential write-down of goodwill.
** Presented after reclassification of Mainsoft Inc. as discontinued
operation.
BluePhoenix Solutions Ltd.
Condensed Consolidated Statements of Cash Flows
(In thousands)
Three months ended Year ended
December 31, December 31,
__________________ ______________
2008* 2007** 2008* 2007**
__________________ ______________
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss ($1,376) ($7,298) ($15,273) ($8,196)
Adjustments to reconcile net
income to net cash provided by
operating activities:
Loss from discontinued
operation (509) 7,458 8,512 7,489
Minority interests in profits
of subsidiaries (76) 120 179 199
Share in loss (earnings) of an
affiliated company 49 (2) 49 (2)
Depreciation and amortization 2,879 4,126 10,107 10,407
Increase (decrease) in accrued
severance pay, net 278 (369) 248 (132)
Gain on sale of property 10 (5) 10 4
Change in value of long
term-loans and liabilities - 7 - 2,311
Stock-based and non cash
compensation 677 701 2,825 2,794
Decrease in provision for
losses in formerly
consolidated subsidiaries - (300) - (300)
Deferred income taxes, net (127) (1,025) (894) (1,025)
Tax benefit related to
exercise of stock options - 594 - 594
Changes in operating assets
and liabilities:
Marketable securities 29 (462) - 560
Decrease (increase) in trade
receivables (1,652) 5,615 (4,702) 4,213
Decrease (increase) in other
current assets 114 (231) (407) 936
Increase (decrease) in trade
payables 39 (1,468) 992 (601)
Decrease in other current
liabilities and deferred
revenues (1,286) (2,903) (744) (3,155)
__________________ _________________
Net cash provided by (used in)
operating activities (951) 4,558 902 16,096
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of property and
equipment (193) (451) (1,200) (1,029)
Proceeds from sale of property
and equipment 5 - 6 10
Proceeds from sale of
previously consolidated
subsidiary 1,700 1,700
Capitalization of research and
development costs - (359) - (3,944)
Additional consideration for
previously acquired
subsidiaries and purchase of
activity (1,844) 198 (7,869) (1,310)
Purchase of activity and
newly-consolidated
subsidiaries - (1,817) (2,269) (9,077)
Net cash used in investing
Activities (332) (2,429) (9,632) (15,350)
__________________ _________________
CASH FLOWS FROM FINANCING
ACTIVITIES:
Short-term bank credit, net - (3,497) - (936)
Repayment of long-term loans,
net - (28,590) - (20,609)
Receipt of long-term loans 69 16,069
Repayment of provision for
losses in formerly
consolidated subsidiary - (1,671) - (1,671)
Issuance of shares - 33,213 33,213
Purchase of Company's shares (1,018) - (1,609) -
Exercise of employee share
options and warrants - 372 2,007 3,761
__________________ _________________
Net cash provided by (used in)
financing activities (949) (173) 16,467 13,758
NET CASH PROVIDED BY (USED IN)
ONGOING OPERATION (2,232) 1,956 7,737 14,504
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 32,540 20,615 22,571 8,067
__________________ _________________
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $30,308 $22,571 $30,308 $22,571
========= ========= ========= =========
CASH FLOWS - DISCONTINUED
OPERATION:
Cash flow provided by (used (508) 1,246 (1,260) (367)
in) operating activity
Cash flow used in investment
activity - (1,415) (64) 25
__________________ _________________
NET CASH PROVIDED BY (USED IN)
DISCONTINUED OPERATION (508) (169) (1,324) (342)
__________________ _________________
* Excludes any potential write-down of goodwill.
** Presented after reclassification of Mainsoft Inc. as discontinued
operation.
Company Contact:
Varda Sagiv
BluePhoenix Solutions
+972-9-952-6100