9th May 2007 17:52
Emblaze Ltd09 May 2007 Emblaze Ltd ('Emblaze' or 'the Group') BLUEPHOENIX SOLUTIONS REPORTS Q1 RECORD REVENUES OF $20 MILLION & $2 MILLION NON-GAAP NET INCOME • Ninth Quarter of Sequential Growth • Revenues up 25% to $20m (Q1 2006: $16m) • Continued Strong Cash Flow • Projected increase in revenues to $80m for full year 2007 (2006: $68m) Ra'anana, Israel, 10 May 2007 - Emblaze Ltd ("Emblaze or "the Group") (LSE: BLZ)announces that the Formula Group Company, BluePhoenix Solutions Ltd. (NASDAQ:BPHX), a leading provider of value driven modernization solutions for legacyinformation systems, today reported record financial results for the firstquarter ending March 31, 2007. For the first quarter of 2007, BluePhoenix reported record sales of $20 million,up 25 % from $16 million in the first quarter of 2006, and up 10 % as comparedto $18.3 million in the prior quarter. This was the ninth quarter of sequentialgrowth. Operating income on a non-GAAP basis for the first quarter was a record $ 2.5million, up 32% from $1.9 million in the first quarter of 2006 and up 13 % from$2.2 million in the prior quarter. The non-GAAP operating income excludes theamortization and capitalization of intangible assets, depreciation of propertyand the effect of Stock -Based compensation. As a percentage of revenues, the operating income for the first quarter was 12%. The operating expenses wereslightly impacted by the devaluation of the US Dollar as compared to the IsraeliShekel. Net income on a non-GAAP basis for the first quarter, excluding non-cashfinancial expenses mainly related to the convertible debentures, was a recordhigh of $2 million, or $0.13 per share, as compared to $1.4 million, or $0.10 per share, in the first quarter of 2006, and $1.65 million, or $0.11 per share, inthe prior quarter. First quarter GAAP based net income, was materially affected by the non-cashexpense related to the conversion of $3.2 million of the convertible debenturesinto shareholders capital thus reducing the overall debt of the company. The netGAAP based net income was $125,000, or $0.01 per share, as compared to $949,000,or $0.07 per share, in the first quarter of 2006. Guy Bernstein, CEO of Emblaze Ltd, said: "This is a tremendous result forBluePhoenix. It is a clear demonstration of the type of mature and profitablebusiness that we want in our portfolio for delivering shareholder value." "We are very proud of our results. The accelerated sequential growth of BluePhoenix is a constant proof and reassurance of our ability to identify the growing needs in the market and tailor our Company's structure to provide a uniquecombination of software tools and services that solve our customers' businessproblems through the implementation of our special software modernizationsolutions," stated Arik Kilman, Chief Executive Officer of BluePhoenix. Kilman continued, "Our revenues grew from $58 million in 2005 to $68 million in2006, and are expected to exceed $80 million in 2007. The first quarter had astrong cash flow: we generated a positive cash flow from operations of over $5million. In order to increase the momentum of growing profitably, together withthe expansion of the organization, we have started to implement a restructuringplan that is aimed at cutting the operational costs of the Company byapproximately $3 million on an annual basis. The one time restructuring plan isexpected to cost approximately $2 million. The implementation will include thereallocation of our delivery and Research and Development tasks to our low costoff-shore centers such as the one we are acquiring in St. Petersburg. This planwill gradually be further implemented, and start showing significant results inthe second half of 2007." Note to Editors About BluePhoenix Solutions (www.bphx.com) BluePhoenix Solutions (NASDAQ: BPHX) is a leading provider of value drivenmodernization solutions for legacy information systems. BluePhoenix's offeringincludes a comprehensive suite of tools and services from global IT assetassessment and impact analysis to automated database and application migration,rehosting and renewal. Leveraging over twenty years of best practice domainexpertise, BluePhoenix works closely with its customers to ascertain whichassets should be migrated, redeveloped or wrapped for reuse as services orbusiness processes, to protect and increase the value of their businessapplications and legacy systems with minimized risk and downtime. BluePhoenix's solutions serves companies from diverse industries and verticalmarkets such as automotive, banking and financial services, insurance,manufacturing and retail. Among its prestigious customers are: Aflac,DaimlerChrysler, Danish Commerce and Companies Agency, Europe Assistance, LawsonProducts, Los Angeles County Employees Retirement Association, Merrill Lynch,SDC Udvikling and TEMENOS. BluePhoenix has 13 offices in the U.S., UK, Denmark,Germany, Italy, Russia, Romania, Cyprus and Israel. SAFE HARBOR: Certain statements contained in this release may be deemedforward-looking statements, with respect to plans, projections, or futureperformance of the Company, the occurrence of which involves certain risks anduncertainties that could cause actual plans to differ materially from thesestatements. These risks and uncertainties include but are not limited to: marketdemand for the Company's tools, successful implementation of the Company'stools, competitive factors, the ability to manage the Company's growth, theability to recruit and retrain additional software personnel, and the ability todevelop new business lines. Non-GAAP Financial Measures To supplement BluePhoenix's consolidated financial statements presented inaccordance with GAAP, BluePhoenix provides non-GAAP net income (loss) andnon-GAAP net income (loss) per share data. The presentation of these non-GAAPfinancial measures should be considered in addition to BluePhoenix's GAAPresults and is not intended to be considered in isolation or as a substitute forthe financial information prepared and presented in accordance with GAAP.BluePhoenix's management believes that these non-GAAP financial measures providemeaningful supplemental information regarding its performance by excludingcertain charges, gains and tax effects that may not be indicative ofBluePhoenix's core business operating results. BluePhoenix believes that bothmanagement and investors benefit from referring to these non-GAAP financialmeasures in assessing BluePhoenix's performance. These non-GAAP financialmeasures also facilitate comparisons to BluePhoenix's historical performance andits competitors' operating results. BluePhoenix includes these non-GAAPfinancial measures because management believes they are useful to investors inallowing for greater transparency with respect to supplemental information usedby management in its financial and operational decision making. Non-GAAPmeasures are reconciled to comparable GAAP measures in the table entitled"Non-GAAP Calculation of Net Income (Loss) Excluding Special Items" followingthe text of this press release. Please refer to the Reconciliation of Selected Financial Metrics from GAAP toNon-GAAP tables below. About Emblaze Emblaze Ltd is a group of companies sharing a common mission to provide telecomoperators with technologies, products and solutions for next generationservices: Emblaze Mobile, a new breed in handsets design and manufacturing;ZONE-IP a provider of IP technologies and owner of Emblaze VCON, a leadingprovider of wireless video communications technologies and conferencingsolutions for operators and enterprise markets over IP networks; OrcaInteractive (LSE: ORCA), provider of Interactive Television IPTV middleware forVideo On Demand (VOD) and broadcast services, aimed at Telecom, cable and xDSLoperators; Emblaze SmartContent, developer of highly advanced technology forContent-Push over wireless and IP networks to mobile devices and personalcomputers; emoze, a free global Push Email service for mobile devices that willpush send your Emails and PIM data to you anywhere and to any device and VisualDefence (LSE: VDI), a provider of wireless and IP video solutions for militaryand homeland security markets; Formula Systems Ltd (NASDAQ:FORTY), is a globalsolutions provider of technology, software and IT solutions fortelecommunications companies, operators and a wide range of sectors. The FormulaSystems companies are trading on NASAQ: Magic Software Enterprises (MGIC),Sapiens International Corporation N.V. (SPNS), BluePhoenix Solutions (BPHX). Thefollowing companies are dually trading also on the Tel Aviv Stock Exchange(TASE): Formula Systems, Magic, Sapiens, BluePhoenix and Matrix Emblaze Group is traded on the London Stock Exchange (LSE: BLZ) since 1996.www.Emblaze.com NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data) Three months Ended March 31, 2007 2007 2006 2006 Non-GAAP Adj. GAAP Non-GAAP Adj. GAAP REVENUES 20,065 20,065 16,029 16,029 OPERATING EXPENSES Cost of revenue 6,522 6,522 5,142 5,142 Software development costs, net 4,930 4,930 3,772 3,772 Selling, General and Administrative expenses 6,128 6,128 5,236 5,236 Amortization of intangible assets, net (149) (149) (34) (34) Depreciation of property 199 199 194 194 Stock-based compensation 37 37 10 10 Total Operating Expenses 17,580 87 17,667 14,150 170 14,320 OPERATING INCOME 2,485 (87) 2,398 1,879 (170) 1,709 OPERATING MARGIN % 12% 12% 12% 11% Financial expenses, net (371) (1,635) (2,006) (493) (280) (773) Other income, net 14 14 INCOME BEFORE TAXES 2,114 (1,722) 392 1,400 (450) 950 Taxes on Income 118 118 45 45 1,996 (1,722) 274 1,355 (450) 905 Minority interest (1) (148) (149) 51 (7) 44 NET INCOME 1,995 (1,870) 125 1,406 (457) 949 EARNINGS PER SHARE: Basic 0.13 0.01 0.10 0.07 Diluted 0.13 0.01 0.10 0.07 WEIGHTED AVERAGE COMMON SHARESOUTSTANDING : Basic 14,874 14,874 13,699 13,699 Diluted 15,565 15,565 14,122 14,122 NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS continued.(In thousands, except per share data) Year Ended December 31, 2006 2006 Non-GAAP Adj. GAAP REVENUES 68,004 68,004 OPERATING EXPENSES Cost of revenue 21,343 21,343 Software development costs, net 16,941 16,941 Selling, General and Administrative expenses 21,130 21,130 Amortization of intangible assets, net (369) (369) Depreciation of property 979 979 Stock-based compensation 40 40 Total Operating Expenses 59,414 650 60,064 -OPERATING INCOME 8,590 (650) 7,940 OPERATING MARGIN % 13% 12% Financial expenses, net (2,301) (1,214) (3,515) Other income, net 282 282 INCOME BEFORE TAXES 6,571 (1,864) 4,707 Taxes on Income (282) (282) 6,853 (1,864) 4,989 Minority interest (282) (35) (317) NET INCOME 6,571 (1,899) 4,672 EARNINGS PER SHARE: Basic 0.47 0.34 Diluted 0.46 0.33 WEIGHTED AVERAGE COMMON SHARESOUTSTANDING : Basic 13,889 13,889 Diluted 14,371 14,371 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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