B.O.S. Better Online Solutions Reports Fiscal 2008 Fourth Quarter and Year-End Financial Results

Revenue Increase by 60% Year-Over-Year


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)
                        ==========  ========== ==========  ==========


            

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