BluePhoenix Solutions Announces Decision to Sell Its Holdings in Mainsoft Subsidiary
Share:
BluePhoenix to Record a One-Time Non-Cash, Charge of $7 Million in Q4, 2007 as Impairment of Goodwill Related to Mainsoft Acquisition
Mainsoft Results Will be Reported as Discontinued Operations; As Such, BluePhoenix Will Provide Non-GAAP Financial Statements Excluding Mainsoft Results Starting Q4, 2007
BluePhoenix is Raising Projections for Non-GAAP 2008 EPS by 1-2 Cents as a Result of Excluding of Mainsoft, Expects 2008 GAAP and Non-GAAP Revenues to Decrease by $5 -$7 Million, Excluding Mainsoft
HERZLIYA, Israel, January 24 -- BluePhoenix Solutions (NASDAQ: BPHX), the leader in
value-driven legacy modernization, today announced its decision to sell its holdings in its subsidiary Mainsoft Corporation, in which it holds 58%. This move follows a strategic shift in Mainsoft's product development and marketing strategy outside of BluePhoenix's core business focus.
Subsequent to an evaluation obtained by BluePhoenix from an external accounting firm, BluePhoenix will take one-time non-cash charge of $7M as a result of impairment of goodwill. Going forward, BluePhoenix will treat the results of Mainsoft as discontinued operations, and will provide financial results on a non-GAAP basis, excluding the impact of discontinued operations, beginning for Q4 2007. BluePhoenix might take additional non-cash charges upon the actual sale of its interest in Mainsoft.
BluePhoenix expects that, on a non-GAAP basis, the projections for 2008 will reflect increased operating margins, cash flow and year-over-year revenue growth. Guidance for 2008 non-GAAP EPS excluding Mainsoft results is raised by one to two cents higher compared to EPS guidance of $1.01 to $1.05 based on consolidation of Mainsoft results. 2008 revenues excluding Mainsoft results are expected to decrease by $5 million to
$7 million.
The Company is unable to provide GAAP EPS projections for 2008 since it is unable to project the net income of Mainsoft for 2008. GAAP 2008 revenues excluding Mainsoft results are expected to decrease by $5 million to $7 million.
"It is time to sell our holdings in this subsidiary in order to focus on the opportunities we have created in our core market for legacy modernization," said Arik Kilman CEO of BluePhoenix. "Mainsoft's product development and marketing strategy have moved outside of our focus area and there is less synergy between the two companies."
"Our legacy modernization business continues to grow and creates further opportunities for us," continued Kilman. "Focusing on our core business will enable us to improve our revenues growth, cash flow and profit."
As previously announced, BluePhoenix will report its fourth quarter and year-end results on January 31st, 2008 before the market opens.
The Company will host a conference call at 10am EST on the same day.
For more information regarding the call please visit: http://www.bphx.com/?pageID=622.
About BluePhoenix Solutions
BluePhoenix Solutions (NASDAQ: BPHX) is a leading provider of value-driven modernization solutions for legacy information systems.
BluePhoenix offerings include 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, Citigroup, DaimlerChrysler, Danish Commerce and Companies Agency, Lawson Products, Los Angeles County Employees Retirement Association, Merrill Lynch, Rabobank, Rural Servicios Informaticos, SDC Udvikling, and TEMENOS. BluePhoenix has 15 offices in the USA, UK, Denmark, Germany, Italy, France, The Netherlands, Romania, Russia, Cyprus, South Korea, Australia, and Israel.
Source: BluePhoenix Solutions Ltd.
Company Contact: Varda Sagiv, BluePhoenix Solutions, +972-9-9526110, vsagiv@bphx.com;
Investor Contact, Paul Holm, H.L. Lanzet, +1-212-888-4570, paulmholm@gmail.com
