N@N

BluePhoenix Solutions Reports Fourth Quarter Results

_{//science-technology.news-articles.net/content/2 .. ix-solutions-reports-fourth-quarter-results.html}
^{Published in Science and Technology on Monday, February 28th 2011 at 5:11 GMT by Market Wire}  

HERZLIYA, Israel--([ BUSINESS WIRE ])--BluePhoenix Solutions (NASDAQ: BPHX), the leader in value-driven legacy modernization, today announced financial results for the fourth quarter. Revenues for the fourth quarter of 2010 were $12 million compared to $11.6 million in the previous quarter, and compared to $19.5 million in the fourth quarter of 2009.

"In addition, we will continue to reduce our expenses by moving development activities to offshore locations. The result will be a smaller but more profitable company which will be the basis for organic growth."

Net income on a non-GAAP basis for the fourth quarter of 2010 was $(0.3) million or $(0.01) per share, compared to $0.4 million or $0.02 per share in the previous quarter, and compared to $1.3 million dollar or $0.06 per share in the fourth quarter of 2009.

On a GAAP basis for the fourth quarter of 2010 the net loss was $(14.8) million or ($0.62) per share, compared to net loss of $7.0 million or ($0.30) per share in the previous quarter, and compared to net loss of $9.1 million or ($0.40) per share for the fourth quarter of 2009.

aDuring the fourth quarter we made progress implementing our profitability and cash generation plan. We continue to focus on our core business, and as previously announced we sold our subsidiary ASNA. Our revenues came at the higher end of our guidance range. Going forward, we intend to focus on improving our profitability through concentrating our legacy modernization business to sell tools as well as focusing on other lines of business such as knowledge management,a commented Arik Kilman, CEO of BluePhoenix. aIn addition, we will continue to reduce our expenses by moving development activities to offshore locations. The result will be a smaller but more profitable company which will be the basis for organic growth.a

*including goodwill impairment recognized in 2009 annual report at the amount of $5,670

Notes:

(1) The annual impairment test is currently under way. The company expects it will be completed before the filing of its Annual Report on Form 20-F. At this point we expect a non-cash write-off in the range of $9M and $15M that will impact GAAP earnings and earnings per share for the quarter and year ended December 31, 2010 which will be reported in the company's Annual Report. Such a charge will not impact the non-GAAP financial information presented in this press release.

(2) Following the companya™s previous announcement about the sale of ASNA, a former subsidiary, this report includes the expense related to this sale.

(3) The results for the reported period cause the Company to be non-compliant with one of the covenants to the banks. The company is negotiating revised set of covenants which will reflect our current level of operations.

Please refer to the accompanying financial table for reconciliation of GAAP financial information to non-GAAP.

Non-GAAP financial measures

The release includes non-GAAP diluted earnings per share, non-GAAP gross profit, non-GAAP operating income, non-GAAP net income and other non-GAAP financial measures.

These non-GAAP measures exclude the following items:

• Amortization of purchased intangible assets;
• Stock-based compensation;
• Revaluation of warrants and issuance costs;
• Goodwill impairment;
• Expenses related to cost saving plan and one time charges;
• A loss related to the sale of ASNA Subsidiary;
• Onetime expenses related to a large project ended during Q4 2010 (as was previously disclosed).

The presentation of these non-GAAP financial measures should be considered in addition to BluePhoenix's 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's 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's core business operating results. BluePhoenix believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing BluePhoenix's performance. These non-GAAP financial measures also facilitate comparisons to BluePhoenix's 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 BluePhoenixa™s results for the fourth quarter of 2010, will take place today, February 28, 2011, at 8:30 a.m. (ET). Investors are invited to join the Companya™s teleconference by calling +866-860-9642 or international +972-3-918-0685 at 8:25 a.m. This call is being webcast live and can be accessed through the BluePhoenix website ([ http://www.bphx.com ]). Recording of the call will also be available at the BluePhoenix website.

About BluePhoenix Solutions

BluePhoenix Solutions (NASDAQ: BPHX) is the leading provider of value-driven legacy IT modernization 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, 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, Capita Group, CareFirst, Citigroup, Danish Commerce and Companies Agency, Desjardins, Los Angeles County Employees Retirement Association, Rabobank, Rural Servicios Informaticos, SDC Udvikling, TEMENOS, Toyota, and Volvofinans. BluePhoenix has offices in the USA, UK, Denmark, Italy, Romania, Russia, Cyprus, 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 asafe harbora 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 amay,a awill,a aplans,a abelieves,a aestimates,a aexpectsa™, apredictsa, aintends,a 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 Companya™s current expectations. These risks and uncertainties include but are not limited to: the failure to successfully defend claims brought against the Company; the effects of the global economic and financial crisis; market demand for the Companya™s products; successful implementation of the Companya™s products; changes in the competitive landscape, including new competitors or the impact of competitive pricing and products; the failure of the Company to successfully integrate acquired assets or entities under M&A transactions pursued by the Company into the Companya™s business as anticipated; the failure to achieve the anticipated synergies from such acquisitions; the incurrence of unexpected liabilities relating to the mergers and acquisitions pursued by the Company from time to time; the ability to manage the Companya™s growth; the ability to recruit and retain additional software personnel; the ability to develop new business lines; and such other risks and uncertainties as identified in BluePhoenixa™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 ownersa™ property.