Formula Systems (FORTY)

[midastouch017]

NASDAQ:BPHX) BluePhoenix Solutions, Ltd., (NASDAQ:FORTY)
Formula Systems (1985) Ltd.

BluePhoenix Solutions Reports FY2005 Second Quarter & Midyear
Results
- Aug 9, 2005 06:41 AM (BusinessWire)
- http://finance.lycos.com/home/news/story.asp?story=51013930


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HERZLIA, Israel--(BUSINESS WIRE)--Aug. 9, 2005--BluePhoenix
Solutions Ltd. (Nasdaq:BPHX):


-- First Half 2005 versus First Half 2004: EBITDA at $4.2 Million
vs. $3.5 Million

-- Current Pipeline and Backlog Expected to Generate Strong
Orders and Revenues Starting in Second Half of 2005


BluePhoenix Solutions Ltd. (Nasdaq:BPHX), the leader in Enterprise
IT Modernization, today reported it results for the second quarter and
first six months ending June 30, 2005.


For the first half of fiscal 2005, BluePhoenix reported sales of
$28.5 million, up 1% from $28.3 million in the same period a year ago.
First half 2005 EBITDA (earnings before interests, taxes, depreciation
and amortization of intangible assets) was $4.2 million as compared to
$3.5 million in the first six months of 2004. First half adjusted net
income -- excluding amortization of intangible assets, depreciation
and non-cash financial expenses mainly related to the convertible
debentures -- was $3.7 million, or $0.26 per share, as compared to
$3.9 million, or $0.28 per share in the first half of 2004.


On a GAAP basis, the operating income for the first half of 2005
was $1.5 million as compared to $2.0 million in the first half of
2004. Net income was $0.5 million as compared to $1.9 million
respectively. The results of the second quarter and first six months
of 2005 were affected by an increased rate of amortization of
intangible assets as well as the rapid decrease of the Euro currency
versus the US dollar. The Euro currency was devaluated by 9.4% in the
first half of 2005 as compared to 3.9% in the first six months of
2004.


Second quarter results were, as expected, in the range of the
first quarter. Revenues were $14.4 million, a slight increase over
$14.2 million in the first quarter of 2005. Second quarter EBITDA rose
to $2.2 million, from $2.1 million in the first quarter. Adjusted net
income -- excluding amortization of intangible assets, depreciation
and non-cash financial expenses mainly related to the convertible
debentures -- was $1.9 million, or $0.13 per share, as compared to
$1.8 million, or $0.13 per share, in the first quarter this year.


On a GAAP basis, operating income for the second quarter of 2005
was $718,000, as compared to $815,000 in the first quarter of 2005.
Net income was $186,000, or $0.01 per share, as compared to $309,000
or $0.02 per share, respectively.


"As we expected, the 2005 second quarter results were in the same
range as the first quarter. We believe that the pipeline generated in
the first half of this year will materialize into orders that will
generate revenue growth starting from the second half of this year,"
said Arik Kilman, Chief Executive Officer of BluePhoenix Solutions
Ltd. "We have closed 17 deals with new customers for our modernization
solutions during the first half of 2005 at a total value of $10
million. The lead generation created through our marketing efforts is
expected to add about 20 new deals to the backlog in the second half
of the year. The current pipeline consists of both new pilot projects
as well as second phase contracts, which are based on the successful
delivery of the initial projects with those customers," added Mr.
Kilman.


"We have built our leadership position in the $20 billion IT
Modernization market on our proprietary comprehensive suite of mature
automated tools, considered to be unique in their wide range of
technological capabilities. Having passed the market and technological
barriers, we now expect to clearly see visible improvements in both
top and bottom line results. In the second quarter we have further
aligned our cost structure for greater efficiencies. As a result of
all of these developments, our operating results, as reflected in both
revenues and EBITDA, are expected to markedly improve in the second
half of this year. We look forward to reporting to you on our progress
in the months ahead," concluded Mr. Kilman.


Reconciliation of As-Adjusted results:

As adjusted operating income H1-2005 H1-2004 Q2-2005 Q1-2005
------------------------------------ -------- -------- ------- -------
US $ Thousands
------------------------------------ ---------------------------------
EBITDA 4,234 3,542 2,175 2,059
Amortization of intangible
assets (2,124) (879) (1,187) (937)
Depreciation (577) (695) (270) (307)
-------- -------- ------- -------
Operating Income (GAAP) 1,533 1,968 718 815
======== ======== ======= =======
------------------------------------ -------- -------- ------- -------

------------------------------------ -------- -------- ------- -------
As adjusted Net profit H1-2005 H1-2004 Q2-2005 Q1-2005
------------------------------------ -------- -------- ------- -------
US $ Thousands
------------------------------------ ---------------------------------
Adjusted Net Profit 3,685 3,884 1,854 1,831
Amortization of intangible
assets (2,124) (879) (1,187) (937)
Depreciation (577) (695) (270) (307)
Non- cash financial expenses, mainly
related to debentures (489) (433) (211) (278)
-------- -------- ------- -------
Net Profit (GAAP) 495 1,877 186 309
------------------------------------ ======== ======== ======= =======


Arik Kilman, BluePhoenix CEO, and Iris Yahal, Chief Financial
Officer, will review and discuss the 2005 second quarter results, and
will be available to answer investor questions in a conference call on
Tuesday, August 9th, 2005, at 11:00 A.M. EST /6:00 P.M. Israel time.


Interested parties are invited to participate by calling one of
the telephone numbers listed below, five to ten minutes prior to the
start of the conference call. Callers should reference "BluePhoenix
Second Quarter Results" to the AT&T conference call operator.


In the US call: 800-553-5275

Outside the US call: [phone]


An automated replay of the conference call will be available from
August 9th, 02:00 P.M. until August 11th, at 11:59 P.M. (EST).


To access the replay please call (USA) 800-475-6701 or
(International) [phone], and enter the access code: 790780.


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, Migration,
Transformation, 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), an international Information Technology company
principally engaged in providing software products, solutions, and
services in various vertical markets.

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