HIGHEST - EVER REVENUES, OPERATING INCOME & NET INCOME
HERZLIA, Israel — November 7, 2006 — BluePhoenix Solutions (NASDAQ: BPHX - News), the leader in Enterprise IT Modernization, today reported record revenues and earnings for both the third quarter and nine months ended September 30, 2006.
For the first nine months of fiscal 2006, BluePhoenix reported record sales of $49.7 million, up 14% from $43.5 million in the same period a year ago. Operating income for the first nine months of 2006 rose 133% to $5.6 million, from $2.4 million in the first nine months of 2005. As a percentage of revenues, operating income for the first nine months nearly doubled to 11% from 6% in the comparable year prior period.
Adjusted net income for the first nine months of 2006, excluding non-cash financial expenses mainly related to convertible debentures, reached $4.2 million or $0.29 per share, from $1.4 million or $0.11 per share in the first nine months of 2005. Net income grew over threefold, reaching $3.3 million, or $0.24 per share, versus $980,000, or $0.07 per share, in the first three quarters of 2005.
BluePhoenix reported Q3 record sales of $17.1 million, up 14% from $15 million in the third quarter of 2005. Operating income for the third quarter-the sixth quarter of sequential top and bottom line growth-was a record $2 million, up 130% from $871,000 in the third quarter of 2005. As a percentage of revenues, third quarter operating income doubled to 12%, from 6 % in the third quarter of 2005.
Third quarter adjusted net income, excluding non-cash financial expenses mainly related to convertible debentures, rose to $1.5 million, or $0.10 per share, from $620,000, or $0.05 per share, in the third quarter of 2005. Net income grew 156% to $1.2 million, or $0.09 per share, from $485,000, or $0.03 per share, in the third quarter of 2005.
Arik Kilman, Chief Executive Officer of BluePhoenix Solutions, commented, "We are proud of the record operating results of our operations. As expected, our performance during 2006 is demonstrating the inherent strengths of our business strategy. The steady increase in revenues is mainly attributed to the broadening awareness and acceptance of the inevitability of IT system modernization. Our concept of modernizing the IT system with automated tools, in order to improve its 'heartbeat' is gaining momentum. A process that was perceived as an interesting technological solution is now recognized by leading industry analysts as a 'must' in order to facilitate the ongoing business growth of our customers."
"As expected, our infrastructure that combines local presence at our customers' sites, together with offshore competence centers, efficiently supports our customers' needs and drives our improving results. We continue to invest in the development of our automated modernization tools. The expanded range of our solutions and the proven high satisfaction of our customers has been the engine that generates the spiral growth," concluded Mr. Kilman.
BluePhoenix has scheduled a conference call on:
Tuesday, November 7th, 2006 at 10:00 A.M. EST (17:00 Israel Time).
Arik Kilman, Chief Executive Officer, and Iris Yahal, Chief Financial Officer will discuss the third quarter results and will be available to answer questions.
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)-332-0630
Callers should reference "BluePhoenix Solutions Third Quarter 2006" to the AT&T conference call operator.
An automated replay of the conference call will be available from November 7th 2:30 P.M. until November 9th at 11:59 P.M. (EST).
To access the replay, please call (USA) (800)-475-6701 (International) +1-(320)-365-3844 and enter the BluePhoenix Solutions access code of 847062.
The replay will also be available at any time on the BluePhoenix Web site: http://www.bphx.com/Investors/.
About BluePhoenix Solutions
BluePhoenix (NASDAQ: BPHX) is a leading global provider of modernization solutions for legacy information systems. Its unique suite of automated tools and services helps customers grow revenue, reduce costs, shorten time to market, and extend the ROI of their existing legacy systems. BluePhoenix is unique in addressing the full range of IT modernization through automated migration solutions that mitigate risk, minimize IT downtime, and preserve application business logic. BluePhoenix offerings help firms effectively plan and carry out strategic projects such as database, application, and platform migrations; SOA enablement; field transformations; system standardizations; application development; transformation of COBOL applications business rules to OO Java; and legacy application maintenance.
Its solutions serve companies from numerous, diverse industries, such as automotive, banking and financial services, insurance, manufacturing, and retail. Among its prestigious customers are: Aflac, DaimlerChrysler, Lawson Products, Los Angeles County Employees Retirement Association, Merrill Lynch, RSI, SDC Udvikling, and TEMENOS. BluePhoenix has 10 offices in the USA, UK, Denmark, Germany, Italy, The Netherlands, Australia, Romania, Cyprus, and Israel.
For more information, please visit our Web site at: www.bphx.com.
Company Contact: Iris Yahal +972-9-9526110
(Tables to Follow)
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.
All names and trademarks are their owners' property.
Company Contact: Iris Yahal +972-9-9526110
Investor Relations Contact: Paul Holm (212) 496-7238
BLUEPHOENIX SOLUTIONS LTD.
(AN ISRAELI CORPORATION)
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three months ended Nine months ended Year ended
September 30, September 30, December 31,
2006 2005 2006 2005 2005
Unaudited Unaudited
Revenues $17,111 $15,005 $49,714 $43,504 $58,947
Cost of revenues 7,249 6,368 20,841 18,947 25,379
Gross profit 9,862 8,637 28,873 24,557 33,568
Software
development
costs, net 2,327 2,158 6,813 5,916 8,006
Selling,
general and
administrative
expenses 5,279 5,309 15,831 15,361 20,553
2,256 1,170 6,229 3,280 5,009
Depreciation 254 299 654 876 1,058
Operating
income 2,002 871 5,575 2,404 3,951
Financial
expenses, net (832) (290) (2,447) (1,521) (1,978)
Other income, net (10) 282 97 104
Income before
taxes 1,170 571 3,410 980 2,077
Taxes on
income 3 54 3 149
1,170 568 3,356 977 1,928
Minority
interest 72 (83) (62) 3 (139)
Net income $1,242 $485 $3,294 $980 $1,789
Adjusted Net
income(*) $1,502 $620 $4,156 $1,445 $2,345
Basic earnings
per share 0.09 0.04 0.24 0.07 0.13
Diluted
earnings per
share 0.09 0.03 0.23 0.07 0.13
Adjusted
Diluted
earnings per
share(*) 0.10 0.05 0.29 0.11 0.17
Common shares
outstanding 13,913 13,579 13,822 13,568 13,557
Common shares
assuming
dilution 14,446 13,978 14,333 13,990 13,960
*excluding non-cash financial expenses mainly related to convertible
debentures
BLUEPHOENIX SOLUTIONS LTD.
(AN ISRAELI CORPORATION)
CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31
2006 2005
Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $15,173 $10,791
Accounts receivable:
Trade 25,037 18,143
Other 2,955 2,495
Total current assets 43,165 31,429
LONG-TERM TRADE RECEIVABLES 948 ---
INVESTMENTS -- 370
PROPERTY AND EQUIPMENT, NET
Cost 11,874 11,465
Less - accumulated depreciation 9,885 9,305
1,989 2,160
OTHER ASSETS, NET 70,004 65,732
Total assets $116,106 $99,691
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term credit from banks
and others $8,174 $14,095
Accounts payable and accruals:
Trade 4,141 3,088
Deferred revenue 3,245 2,776
Other 6,846 6,924
Total current liabilities 22,406 26,883
LONG-TERM LIABILITIES:
Convertible debentures 18,646 4,342
Accrued severance pay, net 1,603 1,309
Provision for losses in
formerly-consolidated
subsidiary 1,971 1,971
Loans from banks and others 9,356 8,389
Total long-term liabilities 31,576 16,011
MINORITY INTEREST 5,094 5,031
Share capital
Capital surplus
Retained earnings
Cost of Company shares held
by subsidiaries (1,766,100
shares)
SHAREHOLDERS' EQUITY 57,030 51,766
Total liabilities and
shareholders' equity $116,106 $99,691