RISHON LEZION, Israel, March 30, 2009 (GLOBE NEWSWIRE) -- B.O.S. Better Online Solutions Ltd. ("BOS" or the "Company") (Nasdaq:BOSC), a leading provider of comprehensive Mobile and RFID Solutions and Supply Chain Solutions with operations in Israel and the U.S., today reported its results for the fourth quarter and fiscal year ended December 31, 2008.
Financial highlights for the fourth quarter and year ended December 31, 2008 (NON-GAAP Pro-forma):
* Revenue for the three months ended December 31, 2008 increased by 60% to $11.5 million compared to $7.2 million in the same period in 2007. Revenue for fiscal 2008 was $52.9 million compared to $23.8 million for fiscal 2007; * Non cash expenses of $3.7 million were recorded in the fourth quarter of 2008 which was primarily due to impairment of Goodwill, impairment of investment in other companies and inventory write offs; * Cost reduction plan implemented in the first quarter of 2009, included reduction of workforce by 19% (29 employees), reduction of payroll and related benefits by up to 15% and the discontinuance of non profitable product lines;
Edouard Cukierman, Chairman, said: "Our Mobile and RFID Solutions and Supply Chain Solutions continue to demonstrate their ability to increase efficiency and reduce the costs of our customers' business processes, which is especially important in difficult economic times."
Shalom Daskal, CEO, added: "Despite the challenging financial and market conditions we continue to see that BOS' Mobile and RFID Solutions and Supply Chain Solutions are being sought out by our customers."
In November 2007, BOS acquired Summit, a New Jersey based Supply Chain Solutions company with major international aviation and aerospace customers. In March 2008, BOS acquired the assets of Dimex Systems, an Israeli-based integrator of AIDC solutions based on RFID and bar code technology. These acquisitions significantly increased revenue and operating expenses in 2008 compared to 2007.
Revenue for 2008, on a proforma basis, as if the acquisition of Dimex had occurred on January 1, 2008, amounted to $52.9 million compared to $23.8 million in 2007. International sales accounted for 40% of revenue in 2008 compared to 33% in 2007. Sales to North and South America accounted for 24% of revenue in 2008 compared to 23% in 2007.
EBITDA for 2008 was negative and amounted to $869,000 compared to negative EBITDA of $363,000 in 2007. EBITDA for the three months ended December 31, 2008 was negative and amounted to $1,571,000 compared to negative EBITDA of $373,000 in comparable period in 2007.
As of December 31, 2008, cash and cash equivalents were $1.6 million, short term bank loans amounted to $10.3 million and long term bank loans were $2.3 million.
Review of results on a GAAP basis:
Revenue for fiscal 2008 was $50.8 million, a 114% increase over revenue in the comparable period in 2007.
Revenue for the fourth quarter of 2008 amounted to $11.5 million compared to $13.4 million in the third quarter of 2008, a 14% decrease. The fourth quarter decrease in revenue combined with an inventory write-off of $339,000, reduced our gross margin rate to 11.5% in the fourth quarter of 2008 compared to 22% in the previous quarter.
Operating expenses for 2008 and for the fourth quarter of 2008 include impairment of goodwill in the amount of $1.9 million, as a result of the overall global economic conditions and its impact on our business operations.
Other expenses in 2008 amounted to $1.4 million and $6.2 million in 2007, which in both periods primarily represent impairment of investments in companies in which we hold less than 20% and we plan to liquidate those investments.
Mr. Daskal stated that: "Following the integration of the operations of Summit and Dimex Systems with BOS' existing operations, we have implemented a cost reduction plan, which included reduction of our workforce by 19% (29 employees), reduction of payroll and related benefits by up to 15% and the discontinuance of non profitable product lines."
Mr. Cukierman concluded: "As a result of the integration of Summit and Dimex Systems with BOS, I am confident that BOS will be better positioned to achieve its full potential."
About BOS
B.O.S. Better Online Solutions Ltd. ("BOS") was established in 1990. BOS's operations consist of:
(i) Fully integrated Mobile and RFID Solutions that are offered either as stand alone products or as full Solutions combined of: (a) Hardware Devices - RFID and Mobile Infrastructure with an automatic identification and data collection equipment based on RFID and barcode technology; (b) RFID Middleware - A proprietary software Server intended to receive data from RFID hardware, process it and transfer it to the Software Applications; and (c) RFID enabled Software Applications - PointAct application platform for implementation of various business organizational processes; (ii) Supply Chain Solutions - reselling RFID, electronic systems and components for military and aerospace manufacturers
BOS is traded on NASDAQ Global Market and on the Tel-Aviv Stock Exchange. BOS' website address is http://www.boscorporate.com.
Use of Non-GAAP Financial Information
BOS reports financial results in accordance with U.S. GAAP and herein provides some non-GAAP measures. These non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures. These non-GAAP measures are intended to supplement the Company's presentation of its financial results that are prepared in accordance with GAAP. The Company uses the non-GAAP measures presented to evaluate and manage the Company's operations internally. The Company is also providing this information to assist investors in performing additional financial analysis that is consistent with financial models developed by research analysts who follow the Company. The reconciliation set forth below is provided in accordance with Regulation G and reconciles the non-GAAP financial measures with the most directly comparable GAAP financial measures.
Safe Harbor Regarding Forward Looking Statements
The forward-looking statements contained herein reflect management's current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties that could cause the actual results to differ materially from those in the forward-looking statements, all of which are difficult to predict and many of which are beyond the control of BOS. These risk factors and uncertainties include, amongst others, the dependency of sales being generated from one or few major customers, the uncertainty of our being able to maintain current gross profit margins, inability to keep up or ahead of technology and to succeed in a highly competitive industry, inability to maintain marketing and distribution arrangements and to expand our overseas markets, uncertainty with respect to the prospects of legal claims against BOS, the effect of exchange rate fluctuations and general worldwide economic conditions; and additional risks and uncertainties detailed in BOS's periodic reports and registration statements filed with the U.S. Securities Exchange Commission. BOS undertakes no obligation to publicly update or revise any such forward-looking statements to reflect any change in its expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (U.S. dollars in thousands, except per share amounts) Year ended Three months ended December 31, December 31, ------------------- ------------------- 2008 2007 2008 2007 -------- -------- -------- -------- Revenues $ 50,849 $ 23,774 $ 11,527 $ 7,192 Cost of revenues 40,850 19,099 10,201 6,075 -------- -------- -------- -------- Gross profit 9,999 4,675 1,326 1,117 -------- -------- -------- -------- Operating costs and expenses: Research and development 844 636 196 273 Sales and marketing 9,712 3,811 2,718 1,341 General and administrative 2,029 1,980 658 606 Impairment of goodwill 1,873 -- 1,873 -- -------- -------- -------- -------- Total operating costs and expenses 14,458 6,427 5,445 2,220 -------- -------- -------- -------- Operating loss (4,459) (1,752) (4,119) (1,103) Financial expenses, net (636) (469) (99) (47) Other expenses, net (1,448) (6,233) (1,202) (5,596) -------- -------- -------- -------- Loss before taxes on income (6,543) (8,454) (5,420) (6,746) Taxes on income (tax benefit) (403) 9 48 (70) -------- -------- -------- -------- Loss from continuing operations $ (6,140) $ (8,463) $ (5,468) $ (6,676) Income (loss) related to discontinued operations (260) 67 (22) (170) -------- -------- -------- -------- Net loss $ (6,400) $ (8,396) $ (5,490) $ (6,846) ======== ======== ======== ======== Basic and diluted net loss per share from continuing operations $ (0.51) $ (0.98) $ (0.44) $ (0.67) ======== ======== ======== ======== Diluted net earnings (loss) per share from discontinued $ (0.02) $ 0.01 $ -- $ 0.02 ======== ======== ======== ======== Basic and diluted loss per share $ (0.53) $ (0.97) $ (0.44) $ (0.69) ======== ======== ======== ======== CONDENSED CONSOLIDATED BALANCE SHEET (U.S. dollars in thousands) December December 31, 2008 31, 2007 ---------------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 1,637 $ 4,271 Trade receivables, net 13,314 9,114 Other accounts receivable and prepaid expenses 1,155 945 Inventories 10,346 8,321 ------- ------- Total current assets 26,452 22,651 ------- ------- LONG-TERM ASSETS: Severance pay fund 652 687 Investment in other companies 882 2,494 Deferred tax 452 42 ------- ------- Total long-term assets 1,986 3,223 ------- ------- PROPERTY, PLANT AND EQUIPMENT, NET 1,128 719 OTHER INTANGIBLE ASSETS, NET 2,418 1,678 GOODWILL 5,361 2,861 ------- ------- Total assets $37,345 $31,132 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short-term bank loans and current maturities $10,299 $ 5,028 Trade payables 6,458 5,258 Employees and payroll accruals 843 552 Deferred revenues 826 116 Accrued expenses and other liabilities 3,111 1,290 ------- ------- Total Current Liabilities 21,537 12,244 ------- ------- LONG-TERM LIABILITIES: Long-term bank loans, net of current maturities 2,256 3,286 Deferred taxes 541 366 Accrued severance pay 929 798 Other long-term liabilities 838 -- ------- ------- Total long-term liabilities 4,564 4,450 ------- ------- SHAREHOLDERS' EQUITY 11,244 14,438 ------- ------- Total liabilities and shareholder's equity $37,345 $31,132 ======= ======= RECONCILIATION OF NON-GAAP FINANCIAL RESULTS CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (U.S. dollars in thousands, except per share amounts) Three months ended December 31, --------------------------------------------------- 2008 2007 -------------------------------------- ------------ GAAP (as reported) Adjustments Non-GAAP Non-GAAP --------------------------------------------------- Revenues $ 11,527 $ -- $ 11,527 $ 7,192 Gross profit 1,326 339a,5b 1,670 1,708 Operating costs and expenses: Research and development 196 -- 196 273 Sales and marketing 2,718 (108)b, 2,575 1,227 (35)c General and administrative 658 (110)c 548 600 Impairment of goodwill 1,873 (1,873) -- -- -------------------------------------- ------------ Total operating costs and expenses 5,445 (2,126) 3,319 2,100 -------------------------------------- ------------ Operating loss (4,119) 2,470 (1,649) (392) Financial expenses, net (99) -- (99) (47) Other expenses, net (1,202) 1,202d -- (8) -------------------------------------- ------------ Loss before taxes on income (5,420) 3,672 (1,748) (447) Taxes on income (tax benefit) (48) 13b (35) 24 -------------------------------------- ------------ Loss from continuing operations $ (5,468) $ (3,685) $ (1,783) $ (423) Loss related to discontinued operations (22) -- (22) -- -------------------------------------- ------------ Net loss $ (5,490) $ (3,685) $ (1,805) $ (423) ====================================== ============ Basic net loss per share $ (0.44) $ (0.14) $ (0.04) ============ ============ ============ Diluted net earnings per share from discontinued operations $ -- $ -- $ -- Diluted net loss per share $ (0.44) $ (0.14) $ (0.04) ============ ============ ============ Weighted average number of shares used in computing basic net income per share 12,379,656 12,379,656 9,939,099 ============ ============ ============ Weighted average number of shares used in computing diluted net income per share 12,379,656 12,379,656 9,939,099 ============ ============ ============ Notes to the reconciliation: a - Inventory write off. b - Amortization of intangible assets and its related tax benefit. c - Stock based compensation. d - Impairment in related with investment in Companies. RECONCILIATION OF NON-GAAP FINANCIAL RESULTS CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (U.S. dollars in thousands, except per share amounts) Twelve months ended December 31, ----------------------------------------------- 2008 2007 ----------------------------------------------- GAAP (as reported) Adjustments Non-GAAP Non-GAAP ----------------------------------- ----------- Revenues $ 50,849 $ 2,075e $ 52,924 $ 23,774 339a,55b, Gross profit 9,999 521e 10,914 5,270 Operating costs and expenses: Research and development 844 -- 844 636 (395)b, Sales and marketing 9,712 (165)c, 9,582 3,309 430e General and administrative 2,029 (416)c 1,613 1,761 Impairment of goodwill 1,873 (1,873) -- ----------------------------------- ----------- Total operating costs and expenses 14,458 (2,419) 12,039 5,706 ----------------------------------- ----------- Operating income (loss) (4,459) 3,334 (1,125) (436) Financial expenses, net (636) (15)e (621) (469) Other expenses, net (1,448) 1,448d -- (34) ----------------------------------- ----------- Loss before taxes on income (6,543) 4,797 (1,746) (939) Taxes on income (tax benefit) 403 (85)b 318 (103) ----------------------------------- ----------- Income (loss) from continuing operations $ (6,140) $ 4,712 $ (1,428) $ (1,042) Income related to discontinued operations (260) -- (260) -- ----------------------------------- ----------- Net loss $ (6,400) $ 4,712 $ (1,688) $ (1,042) =================================== =========== Basic net loss per share $ (0.51) $ (0.12) $ (0.12) =========== =========== =========== Diluted net loss per share from discontinued operations $ (0.02) $ (0.02) $ -- =========== =========== =========== Diluted net loss per share $ (0.53) $ (0.14) $ (0.12) =========== =========== =========== Weighted average number of shares used in computing basic net income (loss) per share 11,979,216 11,979,216 8,651,661 =========== =========== =========== Weighted average number of shares used in computing diluted net income (loss) per share 11,979,216 11,979,216 8,651,661 =========== =========== =========== Notes to the reconciliation: ---------------------------- a - Inventory write off. b - Amortization of intangible assets and its related tax benefit. c - Stock based compensation d - Impairment in related with investment in Companies. e - Gives effect to the acquisition by BOS of the assets of Dimex System Ltd ("Dimex"), which closed in March 2008, as if it had occurred, on January 1, 2008. RECONCILIATION OF NON-GAAP FINANCIAL RESULTS CONDENSED EBITDA FROM CONTINUING OPERATIONS (U.S. dollars in thousands, except per share amounts) Three months ended Twelve months ended December 31, December 31, ---------------------- ---------------------- 2008 2007 2008 2007 ---------- ---------- ---------- ---------- Net loss Non-GAAP from continuing operations $ (1,783) $ (423) $ (1,428) $ (1,042) Non GAAP adjustment: Financial expenses, net 99 47 621 469 Depreciation 78 27 256 107 Tax on income 35 (24) (318) 103 ---------- ---------- ---------- ---------- EBITDA $ (1,571) $ (373) (869) (363) ========== ========== ========== ==========