B.O.S. Better On-line Solutions Ltd. Announces Financial Results for the Fourth Quarter and Year End 2004.TERADYON, Israel Israel, in the Bible Israel (ĭz`rēəl, ĭz`rāəl) [as understood by Hebrews,=he strives with God], according to the book of Genesis, name given to Jacob as eponymous ancestor of the Hebrews, the chosen people of God. -- B.O.S. Better On-line Solutions Ltd. (the "Company" or "BOS") (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :BOSC)(TASE TASE Tel Aviv Stock Exchange TASE The All Seeing Eye TASE Tactical Air Support Element TASE Thrust Assessment Support Environment TASE Telecontrol Application Service Elements (IEC communications protocol) :BOSC) announced today its financial results for the fourth quarter and year ended December December: see month. 31, 2004. Financial results of Continuing Segments Revenues for the fourth quarter of 2004 were $4,239 thousands, an increase of 178% compared to revenues of $1,526 thousands for the fourth quarter of 2003. Gross profit for the fourth quarter of 2004 was $1,558 thousands, or 36.7% of revenues, compared to $1,132 thousands, or 74.2% of revenues, for the fourth quarter of 2003. Net loss for the fourth quarter of 2004 was $620 thousands (or -$0.13 per share), compared to net income of $36 thousands (or $0.01 per share) for the fourth quarter of 2003. Revenues for the year 2004 were $8,282 thousands, an increase of 44.5% compared to revenues of $5,728 thousands for the year 2003. Gross profit for the year 2004 was $3,674 thousands, or 44.3% of revenues, compared to $4,273 thousands, or 74.6% of revenues, for the year 2003. Net loss for the year 2004 was $2,044 thousands (or -$0.44 per share), compared to net loss of $2,057 thousands (or -$0.56 per share) for the year 2003. Both periods (fourth quarter and year end) include operating results from the date of acquisition of the majority of the assets of Quasar Communication Systems Ltd. on September September: see month. 29, 2004 and a controlling stake of Odem ODEM Order of Our Lady of Mercy (religious order) Electronic Technologies 1992 Ltd on November November: see month. 18, 2004. For comparison purpose, the stand-alone (jargon) stand-alone - Capable of operating without other programs, libraries, computers, hardware, networks, etc. Exactly what is absent is presumed to be obvious from context. "We only run Windows on stand-alone PCs because it's too dangerous to run it on networked ones." operating results of BOS were as follows: Revenues for the fourth quarter of 2004 were $1,790 thousands, an increase of 17.3% compared to revenues of $1,526 thousands for the fourth quarter of 2003. Gross profit for the fourth quarter of 2004 was $1,043 thousands, or 58.3% of revenues, compared to $1,132 thousands, or 74.2% of revenues, for the fourth quarter of 2003. The main reason for the decrease is a change in the Company's product mix towards products with lower gross margins. Net loss for the fourth quarter of 2004 was $578 thousands (or -$0.14 per share), compared to a net income of $36 thousands (or $0.01 per share) for the fourth quarter of 2003. Revenues for the year 2004 were $5,833 compared to revenues of $5,728 thousands for the year 2003. Gross profit for the year 2004 was $3,159 thousands, or 54.2% of revenues, compared to $4,273 thousands, or 74.6% of revenues, for the year 2003. The main reason for the decrease is a change in the Company's product mix towards products with lower gross margins. Net loss for the year 2004 was $2,002 thousands (or -$0.48 per share), compared to net loss of $2,057 thousands (or -$0.56 per share) in the year 2003. As of December 31, 2004, the Company's balance sheet shows liquid financial resources (cash, cash equivalents and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has ) of $5.6 million and loans (long and short term) of $3.2 million. The Company's consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge are being filed with the Securities and Exchange Commission on Form 6-K. Adiv Baruch Baruch, in the Bible Baruch (bər  k`, bā`rk), in the Bible. , BOS' CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. stated:
"Year 2004 reflects the results of the implementation of our decision to grow the Company through M&As. The full effect of the Odem acquisition will be fully consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: in year 2005 (versus one and a half months in 2004). We have begun year 2005 in a stronger position than we were in 2004." Edouard Cukierman, Chairman of B.O.S. stated: "We had to overcome many hurdles throughout the year, while bringing new management on board and implementing the M&A strategy beginning in the second half of 2004. I have confidence that with the successful acquisition of Odem and the size of the company today we will continue to grow the business and expand the company." Financial results of Discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: Segment The Company discloses the financial information related to its US subsidiary, Pacific Information Systems, Inc. in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with accounting standards for "discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. ". There was no significant operation in the discontinued segment in the quarter and year ended December 31, 2004. About BOS BOS (www.boscorporate.com) which is traded on the NASDAQ (NASDAQ: BOSC) and on Tel-Aviv stock exchange (TASE: BOSC), was established in 1990. Through its subsidiary BOScom Ltd. it develops and markets three types of products under the BOSaNOVA brand: --A communications products line (www.boscom.com) provides innovative VoIP solutions to companies and organizations; --A connectivity A generic term for connecting devices to each other in order to transfer data back and forth. It often refers to network connections, which embraces bridges, routers, switches and gateways as well as backbone networks. products line (www.bosweb.com) provides connectivity solutions for IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) computers, from intermediate computers to personal computers and LAN (Local Area Network) A communications network that serves users within a confined geographical area. The "clients" are the user's workstations typically running Windows, although Mac and Linux clients are also used. networks; and --Software utilities products line (www.printbos.com) provides solutions for the design, distribution and management documents for a range of operating systems Operating systems can be categorized by technology, ownership, licensing, working state, usage, and by many other characteristics. In practice, many of these groupings may overlap. , including mainframe mainframe Digital computer designed for high-speed data processing with heavy use of input/output units such as large-capacity disks and printers. They have been used for such applications as payroll computations, accounting, business transactions, information retrieval, and UNIX UNIX Operating system for digital computers, developed by Ken Thompson of Bell Laboratories in 1969. It was initially designed for a single user (the name was a pun on the earlier operating system Multics). . In addition BOS supplies cellular adapters based on products of Quasar Communication Systems Ltd, whose assets were acquired by BOS, and design components and services through the ODEM Division, based on Odem Electronic Technologies 1992 Ltd in which a controlling stake was also recently acquired. The forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or 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, except share and per share data
December 31,
-----------------
2004 2003
------- -------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,578 $ 3,872
Marketable securities 2,324 1,014
Trade receivables 4,557 1,075
Other accounts receivable and prepaid expenses 722 317
Inventories 3,086 961
------- -------
Total current assets 13,267 7,239
------- -------
LONG-TERM ASSETS:
LONG TERM MARKETABLE SECURITIES 757 1,862
------- -------
SEVERANCE PAY FUND 1,143 684
------- -------
INVESTMET IN AN AFFILIATED COMPANY 2,472 2,780
------- -------
OTHER ASSETS 395 -
------- -------
PROPERTY, PLANT AND EQUIPMENT, NET 1,019 598
------- -------
GOODWILL 1,569 741
------- -------
CUSTOMER LIST, NET 1,389 -
------- -------
OTHER INTANGIBLE ASSETS, NET 471 -
------- -------
ASSETS RELATED TO DISCONTINUED OPERATIONS 3 119
------- -------
$22,485 $14,023
======= =======
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands, except share and per share data
December 31,
-------------------
2004 2003
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short term loans from banks $ 1,354 $ -
Current maturities of long-term bank loans and
convertible note 643 -
Trade payables 3,845 464
Employees and payroll accruals 664 404
Deferred revenues 364 378
Accrued expenses and other liabilities 1,141 911
-------- --------
Total current liabilities 8,011 2,157
-------- --------
LONG-TERM LIABILITIES:
Bank loans (net of current maturities) 54 -
Convertible note (net of current maturities) 1,151 -
Put option issued to minority shareholders in a
subsidiary 359 -
Deferred taxes 348 -
Accrued severance pay 1,468 951
-------- --------
Total long-term liabilities 3,380 951
-----
MINORITY INTEREST IN A SUBSIDIARY 809 -
======== ========
LIABILITIES RELATED TO DISCONTINUED OPERATIONS 237 374
======== ========
COMMITMENTS AND CONTINGENT LIABILITIES
SHAREHOLDERS' EQUITY:
Share capital 4,823 4,309
Additional paid-in capital 44,426 43,247
Deferred stock-based compensation (174) -
Accumulated other comprehensive income 31 -
Treasury shares: 0 Ordinary shares at December
31, 2004 and 5,383 Ordinary shares at December
31, 2003 - (150)
Accumulated deficit (39,058) (36,865)
-------- --------
Total shareholders' equity 10,048 10,541
-------------------------- -------- --------
Total liabilities and shareholder's equity $ 22,485 $ 14,023
----- ======== ========
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except per share data
Three months ended Year ended
December 31, December 31,
-------------------------------------
2004 2003 2004 2003
-------- -------- ------- -------
Revenues $ 4,239 $ 1,526 $ 8,282 $ 5,728
Cost of revenues 2,681 394 4,608 1,794
Non recurring royalty reversal
(Note 17a) - - - 339
-------- -------- ------- -------
Gross profit 1,558 1,132 3,674 4,273
-------- -------- ------- -------
Operating costs and expenses:
Research and development 737 442 2,296 2,129
Less - grants and
participation (122) (80) (492) (283)
Sales and marketing 773 244 1,706 2,178
General and administrative 553 297 1,705 1,317
Restructuring and related
costs - 86 - 678
-------- -------- ------- -------
Total operating costs and
expenses 1,941 989 5,215 6,019
-------- -------- ------- -------
Operating income (loss) (383) 143 (1,541) (1,746)
Financial income (expenses), net (107) 27 (158) 109
Other income (expenses) - (9) - 45
-------- -------- ------- -------
Loss before taxes on income (490) 161 (1,699) (1,592)
Taxes on income (20) - (20) -
Equity in losses of an
affiliated company (93) (125) (308) (465)
Minority interest in earnings of
a subsidiary (17) - (17) -
-------- -------- ------- -------
Income (loss) from continuing
operations (620) 36 (2,044) (2,057)
Income (loss) related to
discontinued operations 9 (78) (9) 2,036
-------- -------- ------- -------
Net loss $ (611) $ (42) $(2,053) $ (21)
======== ======== ======= =======
Basic and diluted net loss per
share from continuing
operations $ (0.13) $ 0.01 $ (0.44) $ (0.56)
======== ======== ======= =======
Basic and diluted net income
(loss) per share from
discontinued operations $ 0.00 $ (0.02) $ 0.00 $ 0.55
======== ======== ======= =======
Basic and diluted net loss of
NIS 4.00 par value per share $ (0.13) $ (0.01) $ (0.44) $ (0.01)
======== ======== ======= =======
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