B.O.S. Better Online Solutions Ltd. Reports Results for the Fourth Quarter and Year 2005 Reflecting a Fourth Quarter Breakeven
TERADYON, Israel–(BUSINESS WIRE)–March 27, 2006–B.O.S. Better Online Solutions Ltd. (the “Company” or “BOS”) (NASDAQ: BOSC – News ; TASE:BOSC) reported today its results for the fourth quarter and year ended December 31, 2005.
Edouard Cukierman, Chairman of BOS stated: “After an extended period of losses, we broke-even in the fourth quarter of 2005. We are pleased with the transactions we consummated in 2005. We were able to restructure the company, sell and merge those divisions which were not our growth engines and generated a loss of over $2.4M in 2005, and strengthen our position going forward, on the basis of two profitable divisions: Odem and Connectivity.”
Revenues for the fourth quarter of 2005 increased to $6.3M from $4.2M in the fourth quarter of 2004. Gross profit for the fourth quarter of 2005 represented a gross margin of 19.3%, compared to 36.7% in the fourth quarter of the year 2004. The increase in revenues and decrease in gross margin rate is attributed mainly to the consolidation, starting from November 18, 2004, of the results of operation of Odem Electronic Technologies 1992 Ltd. (“Odem”) (related to the Electronic Component division).
Profit from continuing operations for the fourth quarter of year 2005 amounted to $22 thousands compared to a loss of $620 thousands for the fourth quarter of 2004.
Other income for the fourth quarter of 2005 includes capital gain of $779 thousands that related to the sale of the Communication division to IP Gear, a subsidiary of Qualmax Inc. (Pink Sheets: QMXI – News ). The operating loss of the Communication division amounted to $517 thousands in the fourth quarter of the year 2005.
Revenues for the year 2005 were $27M, an increase of 226% compared to $8.3M in the year 2004. The increase in revenues attributed mainly to the consolidation of Odem’s results of operation since November 18, 2004.
Operating loss for the year 2005 amounted to $2.1M compared to loss of $1.5M in the year 2004. The operating loss for year 2005 attributed by the Communication division, which was sold, amounted to $2.4M.
Other income for year 2005 includes capital gain amounted to $1.1M that related to the sale of the Communication division in December 2005 and the sale of the Software Utilities product line in September 2005.
Equity in losses of an affiliated company, Surf Communication Solutions Ltd., amounted to $1.75M in the year 2005 as compared to $308 thousands in year 2004. The equity loss in the year 2005 includes a cost of $1.4M related to the impairment of the investment in Surf.
Minority interest in the earnings of a subsidiary (Odem) amounted to $223 thousands in the year 2005 as compared to $17 thousands in the year 2004. In November 2005 the Company increased its holding in Odem to 100%.
Loss from continuing operations for the year 2005 amounted to $3.6M (or -$0.64 per share) compared to a loss of $2M (or -$0.44 per share), in the year 2004.
As of December 31, 2005, the Company’s balance sheet shows financial resources (cash, cash equivalents and marketable securities) of $3.7M and loans (long and short term) of $3.6M.
The Company’s audited consolidated financial statements as of December 31, 2005, are being filed with the Securities and Exchange Commission on Form 6-K.
Adiv Baruch , BOS’s CEO commented: “In the last two years the company completed several financing and M&A transactions. As a result, it is now well positioned to enhance profitability with its core assets as well as to develop new businesses and create future growth.”
About BOS
B.O.S. Better Online Solutions Ltd. (the “Company” or “BOS”) (NASDAQ:BOSC; TASE:BOSC) was established in 1990. Through its wholly owned subsidiaries, BOS activities are focused on two divisions:
Connectivity division, with products marketed under the BOSaNOVA brand name. These products deliver instant and transparent connectivity from IBM iSeries computers to personal computers, thin clients and browsers.
Electronic Components division, based on Odem Electronic Technologies 1992 Ltd., providing solutions in RFID, semiconductors, electronic components, CCD, imaging, networking, telecom and automation.
BOS, www.boscorporate.com is traded on NASDAQ and on the Tel-Aviv stock exchange.
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, including, but not limited to, those risks and uncertainties detailed in BOS’ 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.
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
December 31,
—————–
2005 2004
——– ——–
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $2,346 $2,578
Marketable securities 1,333 2,324
Trade receivables 5,199 4,557
Other accounts receivable and prepaid expenses 592 722
Inventories 3,323 3,086
——– ——–
Total current assets 12,793 13,267
——– ——–
LONG-TERM ASSETS:
Long term marketable securities – 757
Severance pay fund 937 1,143
Investment in an affiliated company 722 2,472
Investment in other companies 4,690 –
——– ——–
Total long-term assets 6,349 4,372
——– ——–
OTHER ASSETS 49 395
——– ——–
PROPERTY, PLANT AND EQUIPMENT, NET 667 1,019
——– ——–
GOODWILL 952 1,569
——– ——–
CUSTOMER LIST AND OTHER INTANGIBLE ASSETS, NET 1,836 1,860
——– ——–
ASSETS RELATED TO DISCONTINUED OPERATIONS – 3
——– ——–
$22,646 $22,485
======== ========
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
December 31,
—————–
2005 2004
——– ——–
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Short-term loans from banks $2,271 $1,354
Current maturities of long-term bank loans and
convertible note 354 643
Trade payables 3,367 3,845
Employees and payroll accruals 772 664
Deferred revenues 258 364
Accrued expenses and other liabilities 1,571 1,141
——– ——–
Total current liabilities 8,593 8,011
——– ——–
LONG-TERM LIABILITIES:
Bank loans (net of current maturities) 17 54
Convertible note (net of current maturities) 921 1,151
Put option issued to minority shareholders in a
subsidiary – 359
Deferred taxes 422 348
Accrued severance pay 1,190 1,468
——– ——–
Total long-term liabilities 2,550 3,380
——– ——–
MINORITY INTEREST IN A SUBSIDIARY – 809
——– ——–
LIABILITIES RELATED TO DISCONTINUED OPERATIONS 237 237
——– ——–
SHAREHOLDERS’ EQUITY:
Share capital
Ordinary shares of NIS 4.00 par value:
Authorized: 8,750,000 shares at December 31,
2005 and 2004; Issued and outstanding: 6,589,385
and 4,737,658 shares at December 31, 2005 and
2004, respectively; 6,432 4,823
Additional paid-in capital 47,588 44,426
Deferred stock-based compensation (112) (174)
Accumulated other comprehensive income 21 31
Accumulated deficit (42,663) (39,058)
——– ——–
Total shareholders’ equity 11,266 10,048
——– ——–
Total liabilities and shareholder’s equity $22,646 $22,485
======== ========
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except per share data
Three months
ended Year ended
December 31, December 31,
————— —————–
2005 2004 2005 2004
——- ——- ——– ——–
Revenues $6,252 $4,239 $27,053 $8,282
Cost of revenues 5,125 2,681 20,109 4,608
Reversal of royalties 84 – 84 –
——- ——- ——– ——–
Gross profit 1,211 1,558 7,028 3,674
——- ——- ——– ——–
Operating costs and expenses:
Research and development 524 737 2,608 2,296
Less – grants and participation (79) (122) (296) (492)
Sales and marketing 848 773 3,563 1,706
General and administrative 712 553 3,267 1,705
——- ——- ——– ——–
Total operating costs and expenses 2,005 1,941 9,142 5,215
——- ——- ——– ——–
Operating loss (794) (383) (2,114) (1,541)
Financial expenses, net (88) (107) (448) (158)
Other income, net 834 – 1,134 –
——- ——- ——– ——–
Loss before taxes on income (48) (490) (1,428) (1,699)
Taxes on income 93 (20) (204) (20)
——- ——- ——– ——–
Net income (loss) after taxes 45 (510) (1,632) (1,719)
Equity in losses of an affiliated
company (30) (93) (1,750) (308)
Minority interest in earnings of a
subsidiary 7 (17) (223) (17)
——- ——- ——– ——–
Income (loss) from continuing
operations 22 (620) (3,605) (2,044)
Income (loss) related to
discontinued operations – 9 – (9)
——- ——- ——– ——–
Net income (loss) $22 $(611) $(3,605) $(2,053)
======= ======= ======== ========
Basic and diluted net income (loss)
per share from continuing
operations $0.00 $(0.13) $(0.64) $(0.44)
======= ======= ======== ========
Basic and diluted net income per
share from discontinued operations $0.00 $0.00 $0.00 $0.00
======= ======= ======== ========
Basic and diluted net income (loss)
per share $0.00 $(0.13) $(0.64) $(0.44)
======= ======= ======== ========
SEGMENT INFORMATION
U.S. dollars in thousands
Three months ended December 31, 2005
———————————————————————-
Electronics Not
Connectivity Communication Components allocated Con-
solidated
———————————————————————-
Revenues $620 $ 679 $4,953 $ – $6,252
Gross profit $477 $ 208 $ 526 $ – $1,211
Operating profit
(loss) $138 $(517) $ (296) $(119) $ (794)
Three months ended December 31, 2004
———————————————————————-
Electronics Not
Connectivity Communication Components allocated Con-
solidated
———————————————————————-
Revenues $1,464 $ 867 $1,908 $ – $4,239
Gross profit $ 855 $ 376 $ 327 $ – $1,558
Operating profit
(loss) $ 123 $(397) $ 66 $(175) $ (383)
Year ended December 31, 2005
———————————————————————-
Electronics Not
Connectivity Communication Components allocated Con-
solidated
———————————————————————-
Revenues $3,926 $ 2,954 $20,253 $ (80) $27,053
Gross profit $2,425 $ 783 $ 3,820 $ – $ 7,028
Operating profit
(loss) $ 235 $(2,374) $ 727 $(702) $(2,114)
Year ended December 31, 2004
———————————————————————-
Electronics Not
Connectivity Communication Components allocated Con-
solidated
———————————————————————-
Revenues $5,011 $ 1,363 $1,908 $ – $ 8,282
Gross profit $2,933 $ 414 $ 327 $ – $ 3,674
Operating profit
(loss) $1,009 $(1,846) $ 66 $(770) $(1,541)
Contact:
Gelbart-Kahana Public Relations & Investors Relations
Mr. Emanuel Kahana, +972-3-6074717
info@gk-biz.com
Source: B.O.S. Better Online Solutions Ltd.