HERZLIA, Israel--(BUSINESS WIRE)--May 9, 2005-- BluePhoenix Solutions Ltd. (Nasdaq: BPHX - News), the leader in Enterprise IT Modernization, today announced financial results for first quarter of 2005.
Our operating results for the first quarter of 2005 were in line with the corresponding first quarter in 2004. Revenues were $14.1 million. Operating income was $815 thousand representing 6% operating margin, as compared to $987 thousand in the first quarter of 2004, representing an operating margin of 7%. Net income for the quarter was $309 thousand or $0.02 per fully diluted share, as compared to net profit of $1.1 or $0.08 per share in the first quarter of 2004. The decline in net profit is mainly attributable to non-cash financial expenses related to the $5 million convertible debentures and underlying warrants that were issued in 2004, and to valuation changes caused by the devaluation of the euro currency as compared to the US dollar.
"In this first quarter we received 9 new modernization deals, as compared to 11 during the last two quarters of 2004, thereby almost doubling the number of new deals won. These new projects are going to be delivered over the next four quarters. It is our main objective to further increase the deal flow, and benefit from the growth which is expected in the legacy modernization market. We believe that the demand for highly automated modernization solutions is going to grow. As repeatedly verified through our customers, they need a reliable process which reduces the risk of the change in the system, while increasing its productivity. Our automated tools are the right solution," said Arik Kilman, Chief Executive Officer.
"We have implemented a growth plan, which assumes an increased deal flow of small low margin orders, which is then going to be followed by larger full scale projects with higher margins. Our plan consists of a combination of rapid development efforts and increased marketing activities to improve the awareness of our unique wide range of solutions. These combined efforts, are expected to materialize into visible and measurable results in the near future," concluded Mr. Kilman.
Arik Kilman, BluePhoenix Chief Executive Officer, and Iris Yahal, Chief Financial Officer, will discuss the first quarter results, and will be available to answer questions in a conference call.
Conference Call Details:
The conference call will be held on Monday, May 9th, 2005 at 9:00 A.M. (EST)
Interested parties are welcome to call the telephone numbers listed below, 5-10 minutes prior to the start of the conference call.
In the US call: 877-209-0397
Outside the US call: (1) 612-332-1025
Callers should reference "BluePhoenix Solutions First Quarter Results 2005" to the AT&T conference call operator.
An automated replay of the conference call will be available from May 9th at 01:30 P.M. until May 11th at 11:59 P.M. (EST).
To access the replay call (USA) (800) 475-6701, (International) 1-(320) 365-3844, and enter the BluePhoenix Solutions access code of 781023.
About BluePhoenix Solutions
BluePhoenix Solutions leads the IT Modernization market by developing unique solutions that enable companies to automate the process of modernizing and upgrading their mainframe and distributed IT infrastructure, thus quickly and cost-effectively extending the ROI of their existing IT systems. The Company's comprehensive suite of tools and services (including technology for Understanding, Presentment, Migration, Remediation, and Redevelopment) reduces the cost of renovation and speeds up the renewal process. BluePhoenix has 12 offices throughout the world, including locations in the US, UK, Denmark, Germany, Italy, The Netherlands, Israel, and Australia.
The Company's major shareholder is the Formula Group (NASDAQ:FORTY - News), an international Information Technology company principally engaged in providing software products, solutions, and services in various vertical markets.
For more information, please visit our web site at www.bphx.com
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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. BluePhoenix Solutions Ltd.
(An Israeli Corporation)
Consolidated Statements of Operations
(in thousands, except per share amounts)
Three months ended Year ended
March 31, December 31,
2005 2004 2004
--------------------------------
Unaudited
Revenues $14,101 $14,139 $57,186
Cost of revenues 6,072 6,064 24,253
--------- -------- -------------
Gross profit 8,029 8,075 32,933
Software development costs, net 1,931 2,039 8,055
Selling, general and administrative
expenses 4,976 4,690 19,981
--------- -------- -------------
1,122 1,346 4,897
Depreciation 307 359 1,407
--------- -------- -------------
Operating income 815 987 3,490
Financial expenses, net (658) (173) (882)
Other income, net 31 233 1,087
--------- -------- -------------
Income before taxes 188 1,047 3,695
Taxes on income -- 5 260
--------- -------- -------------
188 1,042 3,435
Minority interest 121 159 (73)
Equity in losses of affiliated
companies -- (141) (516)
--------- -------- -------------
Net income 309 1,060 2,846
========= ======== =============
Basic earnings per share 0.02 0.08 0.21
--------- -------- =============
Diluted earnings per share 0.02 0.08 0.21
========= ======== =============
Common shares outstanding 13,554 13,475 13,523
========= ======== =============
Common shares assuming dilution 14,966 14,121 14,679
========= ======== =============
BluePhoenix Solutions Ltd.
(An Israeli Corporation)
Consolidated Balance Sheets
(in thousands)
March 31 December 31
2005 2004
-----------------------
Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $8,761 $9,363
Marketable securities 166 177
Accounts receivable:
Trade 16,305 15,814
Other 2,361 2,567
----------- -----------
Total current assets 27,593 27,921
----------- -----------
INVESTMENTS 350 --
----------- -----------
FIXED ASSETS
Cost 10,767 10,614
Less - accumulated depreciation 8,300 7,921
----------- -----------
Total fixed assets 2,467 2,693
----------- -----------
OTHER ASSETS, NET 61,493 60,268
----------- -----------
Total assets $91,903 $90,882
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank credit $7,739 $7,214
Accounts payable and accruals:
Trade 3,917 4,382
Deferred revenue 4,107 2,583
Other 6,469 7,385
----------- -----------
Total current liabilities 22,232 21,564
----------- -----------
LONG-TERM LIABILITIES:
Convertible debentures 4,127 5,149
Accrued severance pay, net 1,160 1,160
Provision for losses in formerly-consolidated
subsidiary 1,971 1,971
Loans from banks and others 7,417 7,537
----------- -----------
Total long-term liabilities 14,675 15,817
----------- -----------
MINORITY INTEREST 4,756 4,870
----------- -----------
SHAREHOLDERS' EQUITY 50,240 48,631
----------- -----------
Total liabilities and shareholders' equity $91,903 $90,882
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Contact:
BluePhoenix Solutions
Iris Yahal, +972-9-9526110
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