Modsys International (MDSY) 8-K BluePhoenix Solutions Ltd. Reports Third Quarter 2014 Results

Exhibit 99.1

BluePhoenix Solutions Ltd. Reports Third Quarter 2014 Results

Friday, November 14, 2014 

SEATTLE, Washington — November 14, 2014 —BluePhoenix Solutions Ltd. (NASDAQ: BPHX) today announced third quarter 2014 results with revenue of $1.6M and operating loss of ($895K).

On a non-GAAP basis, operating expenses for third quarter 2014 were $1.3M which was $545K favorable versus prior year. Non-GAAP operating loss for third quarter 2014 was ($729K) which was ($134K) unfavorable compared to prior quarter. Included in the operating expenses are costs of $150K related to our anticipated merger with Sophisticated Business Systems, Inc., or Ateras. Without these costs, we would have non-GAAP operating loss of ($579K) which is $16K favorable versus prior quarter and $315K favorable versus prior year.

Matt Bell, BluePhoenix’s Chief Executive Office and President, commented, “We are excited about our anticipated merger with Ateras, which is expected to close shortly after the shareholder vote on November 18. The combined entity not only makes us bigger and serves a more global market but it broadens our technology and solution set.  The combined companies have synergies that we're excited to leverage as soon as the deal is officially closed.”

See related 8-K and 10-Q filings for additional details.

BluePhoenix will go over the following numbers during the quarterly conference call today at 4:30PM Eastern Daylight Savings Time. The call can be accessed by dialing 1- 888-505-4368 within the United States, or via local US number 1- 719-325-2435 if calling internationally, approximately five minutes prior to its scheduled commencement. The participant code for the call is 8020635.

GAAP Results (in thousands US$)	Q3 2014			Q2 2014			Q3 2013
Revenue		1,594			1,881			1,934
Operating loss		(895	)		(797	)		(1,151	)
Net loss		(848	)		(791	)		(1,184	)
Loss per share, diluted	$	(0.07	)	$	(0.07	)	$	(0.12	)

Non-GAAP Results (in thousands US$)	Q3 2014			Q2 2014			Q3 2013
Revenue		1,594			1,881			1,934
Operating loss		(729	)		(595	)		(894	)
Net loss		(730	)		(608	)		(898	)
Loss per share, diluted	$	(0.06	)	$	(0.05	)	$	(0.09	)

Non-GAAP financial measures

The release includes non-GAAP diluted earnings per share and other non-GAAP financial measures, including non-GAAP operating income and non-GAAP net income. These non-GAAP measures exclude the following items:

· Amortization of intangible assets;

· Stock-based compensation;

· Gain on sales of subsidiaries and Appbuilder;

· Revaluation of derivatives and discount amortization;

· Net loss from discontinued operation.

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 and gains 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. 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 “Unaudited Reconciliation of GAAP to Non-GAAP.”

About BluePhoenix Solutions
BluePhoenix Solutions Ltd. (NASDAQ: BPHX)provides legacy language and database translation. The BluePhoenix portfolio includes a comprehensive suite of tools and services for automated database and application migration. Leveraging over 20 years of best-practice domain expertise, BluePhoenix works closely with its customers to minimize risk and provide a clear path from legacy platforms like COBOL, Natural/Adabas and others to modern solutions like SQL, DB2, Java and more. BluePhoenix customers come from diverse industries and vertical markets such as automotive, banking and financial services, insurance, manufacturing, and retail. BluePhoenix has six offices in the United States, United Kingdom, Italy, Romania, and Israel.

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Forward-Looking Statements

This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on BluePhoenix’s management’s beliefs and assumptions and on information currently available to BluePhoenix’s management. All statements other than statements of historical facts are “forward-looking statements” for purposes of these provisions, including those relating to future events, our future financial performance and financial guidance or the closing of the Ateras merger. In some cases, you can identify forward-looking statements by terminology such as “may,” “might,” “will,” “should,” “expect,” “plan,” “anticipate,” “project,” “believe,” “estimate,” “predict,” “potential,” “intend” or “continue,” the negative of terms like these or other comparable terminology, and other words or terms of similar meaning in connection with any discussion of future operating or financial performance. These statements are only predictions. All forward-looking statements included in this document are based on information available to BluePhoenix on the date hereof, and BluePhoenix assumes no obligation to update any such forward-looking statements. Any or all forward-looking statements in this document may turn out to be wrong. Actual events or results may

Company Contact:

Rick Rinaldo, CFO

BluePhoenix Solutions

www.bphx.com

rrinaldo@bphx.com

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BluePhoenix Solutions Ltd.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	September 30,		December 31,
	2014		2013
	Unaudited		Audited
ASSETS
Current Assets:
Cash and cash equivalents	$	223	$	2,592
Restricted cash		12		35
Trade accounts receivable, net		2,401		1,960
Other current assets		258		239
Total Current Assets		2,894		4,826
Non-Current Assets:
Property and equipment, net		261		287
Goodwill		12,501		12,501
Total Non-Current Assets		12,762		12,788
TOTAL ASSETS	$	15,656	$	17,614
LIABILITIES AND EQUITY
Current Liabilities:
Short-term bank credit and others	$	611	$	40
Trade accounts payable		1,097		886
Deferred revenue		179		719
Other current liabilities		814		902
Total Current Liabilities		2,701		2,547
Non-Current Liabilities
Accrued severance pay, net		255		290
Loans from others		114		162
Derivative liabilities - warrants		218		311
Total Non-Current Liabilities		587		763
Total Equity		12,368		14,304
TOTAL LIABILITIES AND EQUITY	$	15,656	$	17,614

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BluePhoenix Solutions Ltd.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Three months ended						Nine months ended
	September 30,						September 30,
	2014			2013			2014			2013
	Unaudited						Unaudited
Revenue	$	1,594		$	1,934		$	5,346		$	6,495
Cost of revenue		1,042			1,044			3,053			3,222
Gross profit		552			890			2,293			3,273
Research and development costs		168			352			693			1,048
Selling, general and administrative expenses		1,279			1,689			4,152			4,804
Gain on sales of subsidiaries and Appbuilder		-			-			-			(786	)
Total operating expenses		1,447			2,041			4,845			5,066
Operating loss		(895	)		(1,151	)		(2,552	)		(1,793	)
Financial income (expense), net		58			(25	)		93			(67	)
Loss before taxes		(837	)		(1,176	)		(2,459	)		(1,860	)
Taxes on income		11			8			29			59
Net loss from continued operation		(848	)		(1,184	)		(2,488	)		(1,919	)
Net loss from discontinued operation		-			-			-			399
Net loss		(848	)		(1,184	)		(2,488	)		(2,318	)
Net results attributed to noncontrolling interests		(70	)		56			(35	)		277
Loss attributed to BluePhoenix shareholders	$	(778	)	$	(1,240	)	$	(2,453	)	$	(2,595	)
Loss per share:
From continued operation- basic and diluted	$	(0.07	)	$	(0.12	)	$	(0.21	)	$	(0.21	)
From discontinued operation- basic and diluted		-			-			-			(0.03	)
Attributed to the shareholders	$	(0.07	)	$	(0.12	)	$	(0.21	)	$	(0.24	)
Shares used in per share calculation:
Basic and diluted		11,497			10,735			11,460			10,687

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UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(In thousands, except per share data)

	Three months ended						Nine months ended
	September 30,						September 30,
	2014			2013			2014			2013
	Unaudited						Unaudited
GAAP gross profit	$	552		$	890		$	2,293		$	3,273
Amortization of intangible assets		-			42			-			157
Non-GAAP gross profit	$	552		$	932		$	2,293		$	3,430
GAAP operating loss	$	(895	)	$	(1,151	)	$	(2,552	)	$	(1,793	)
Amortization of intangible assets		-			42			-			157
Stock-based compensation		166			215			552			467
Gain on sales of subsidiaries and Appbuilder		-			-			-			(786	)
Non-GAAP operating loss	$	(729	)	$	(894	)	$	(2,000	)	$	(1,955	)
GAAP net loss attributed to BluePhoenix	$	(778	)	$	(1,240	)	$	(2,453	)	$	(2,595	)
Amortization of intangible assets		-			42			-			157
Stock-based compensation		166			215			552			467
Gain on sales of subsidiaries and Appbuilder		-			0			-			(786	)
Revaluation of derivatives and discount amortization		(48	)		29			(94	)		(7	)
Net loss from discontinued operation		-			-			-			399
Non-GAAP net loss attributed to BluePhoenix	$	(660	)	$	(954	)	$	(1,995	)	$	(2,365	)
Shares used in diluted earnings per share calculation		11,497			10,735			11,460			10,687
Non - GAAP diluted loss per share	$	(0.06	)	$	(0.09	)	$	(0.17	)	$	(0.22	)

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BluePhoenix Solutions Ltd.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

		Three months ended						Three months ended
		September 30,						September 30,
		2014			2013			2014			2013
		Unaudited						Unaudited
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(848	)	$	(1,184	)	$	(2,488	)	$	(2,318	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		18			62			68			266
Decrease in accrued severance pay, net		(12	)		(3	)		(35	)		(14	)
Stock–based compensation		166			215			552			467
Change in fair value of derivatives		(48	)		29			(93	)		(7	)
Gain on sales of subsidiaries and Appbuilder		-			-			-			(414	)
Changes in operating assets and liabilities:
Decrease (increase) in trade receivables		(50	)		528			(441	)		761
Decrease (increase) in other current assets		64			43			4			(19	)
Increase (decrease) in trade payables		193			25			211			(288	)
Increase (decrease) in other current liabilities and deferred revenues		(165	)		112			(628	)		53
Net cash used in operating activities		(682	)		(173	)		(2,850	)		(1,513	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(5	)		-			(42	)		(9	)
Proceeds from sales of subsidiaries and Appbuilder		-			-			-			800
Net cash provided by (used in) investing activities		(5	)		-			(42	)		791
CASH FLOWS FROM FINANCING ACTIVITIES:
Short term bank credit		523			(67	)		523			(216	)
Exercise of warrants		-			40			-			40
Net cash used in financing activities		523			(27	)		523			(176	)
NET CASH DECREASE IN CASH AND CASH EQUVIALETS		(164	)		(200	)		(2,369	)		(898	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		387			1,862			2,592			2,560
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	223		$	1,662		$	223		$	1,662

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