o
|
REGISTRATION STATEM
ENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|
x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
N/A
|
ISRAEL
|
(Translation of Registrant’s
name into English)
|
(Jurisdiction of incorporation
or organization)
|
Title of each class
|
Name of each exchange on which registered
|
|
Ordinary Shares, NIS 3.00 nominal value per share
|
NASDAQ Capital Market
|
Large accelerated filer
o
|
Accelerated filer
o
|
Non-accelerated filer
x
|
U.S. GAAP
x
|
International Financial Reporting Standards as issued by
the International Accounting Standards Board
o
|
Other
o
|
8
|
||
8
|
||
8
|
||
8
|
||
A.
|
SELECTED FINANCIAL DATA
|
8
|
B.
|
CAPITALIZATION AND INDEBTEDNESS
|
11
|
C.
|
REASONS FOR THE OFFER AND USE OF PROCEEDS
|
11
|
D.
|
RISK FACTORS
|
11
|
32
|
||
A.
|
HISTORY AND DEVELOPMENT OF THE COMPANY
|
32
|
B.
|
BUSINESS OVERVIEW
|
36
|
C.
|
ORGANIZATIONAL STRUCTURE
|
45
|
D.
|
PROPERTY, PLANTS AND EQUIPMENT
|
45
|
46
|
||
46
|
||
A.
|
OPERATING RESULTS
|
46
|
B.
|
LIQUIDITY AND CAPITAL RESOURCES
|
66
|
C.
|
RESEARCH AND DEVELOPMENT
|
69
|
D.
|
TREND INFORMATION
|
71
|
E.
|
OFF-BALANCE SHEET ARRANGEMENTS
|
74
|
F.
|
CONTRACTUAL OBLIGATIONS
|
75
|
76
|
||
A.
|
DIRECTORS AND SENIOR MANAGEMENT
|
76
|
B.
|
COMPENSATION
|
78
|
C.
|
BOARD PRACTICES
|
79
|
D.
|
EMPLOYEES
|
91
|
E.
|
SHARE OWNERSHIP
|
93
|
94
|
||
A.
|
MAJOR SHAREHOLDERS
|
94
|
B.
|
RELATED PARTY TRANSACTIONS
|
95
|
C.
|
INTERESTS OF EXPERTS AND COUNSEL
|
97 |
97
|
||
A.
|
CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
|
97
|
B.
|
SIGNIFICANT CHANGES
|
97
|
97
|
||
A.
|
OFFER AND LISTING DETAILS
|
97
|
B.
|
PLAN OF DISTRIBUTION
|
98
|
C.
|
MARKETS
|
98
|
D.
|
SELLING SHAREHOLDERS
|
98
|
E.
|
DILUTION
|
99
|
F.
|
EXPENSES OF THE ISSUE
|
99
|
99
|
||
A.
|
SHARE CAPITAL
|
99
|
B.
|
MEMORANDUM AND ARTICLES OF ASSOCIATION
|
99
|
C.
|
MATERIAL CONTRACTS
|
110
|
D.
|
EXCHANGE CONTROLS
|
112
|
E.
|
TAXATION AND GOVERNMENT PROGRAMS |
112
|
F.
|
DIVIDENDS AND PAYING AGENTS
|
118
|
G.
|
STATEMENT BY EXPERTS
|
118
|
H.
|
DOCUMENTS ON DISPLAY
|
118
|
I.
|
SUBSIDIARY INFORMATION
|
119
|
119
|
||
123
|
||
123
|
||
123
|
||
123
|
||
123
|
||
124
|
||
124
|
||
124
|
125
|
||
125
|
||
126
|
||
126
|
||
126
|
||
128
|
||
128
|
||
128
|
||
128
|
||
129
|
ITEM
1.
|
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
|
ITEM
2.
|
OFFER STATISTICS AND EXPECTED TIMETABLE
|
ITEM
3.
|
KEY INFORMATION
|
|
A.
|
SELECTED FINANCIAL DATA
|
2013
|
2012
|
2011
|
2010
|
2009
|
||||||||||||||||
Statement of Income Data:
|
||||||||||||||||||||
Revenues:
|
||||||||||||||||||||
Products
|
34,662 | 30,402 | 31,140 | 25,415 | 20,038 | |||||||||||||||
Services
|
63,195 | 54,430 | 54,778 | 48,448 | 45,287 | |||||||||||||||
Total Revenues
|
97,857 | 84,832 | 85,918 | 73,863 | 65,325 | |||||||||||||||
Cost of revenues:
|
||||||||||||||||||||
Products
|
20,763 | 17,988 | 18,283 | 14,175 | 10,774 | |||||||||||||||
Services
|
45,497 | 38,573 | 37,249 | 31,264 | 26,645 | |||||||||||||||
Amortization of intangible
assets
|
- | 181 | 1,498 | 978 | 976 | |||||||||||||||
Total Cost of Revenues
|
66,260 | 56,742 | 57,030 | 46,417 | 38,395 | |||||||||||||||
Gross profit
|
31,597 | 28,090 | 28,888 | 27,446 | 26,930 | |||||||||||||||
Operating Expenses:
|
||||||||||||||||||||
Research and development, net
|
3,244 | 2,716 | 3,082 | 2,532 | 2,817 | |||||||||||||||
Selling, general and administrative
expenses
|
21,340 | 18,299 | 20,382 | 16,503 | 15,037 | |||||||||||||||
Amortization of intangible assets
|
967 | 1,987 | 1,821 | 1,774 | 1,942 | |||||||||||||||
Impairment of intangible asset
|
- | - | 6,216 | - | 2,959 | |||||||||||||||
Total operating income (loss)
|
6,046 | 5,088 | (2,613 | ) | 6,637 | 4,175 | ||||||||||||||
Financial expenses, net
|
1,077 | 1,628 | 1,779 | 1,976 | 2,070 | |||||||||||||||
Other (income) expenses
|
(3,299 | ) | 5 | 77 | 21 | 16 | ||||||||||||||
Income (loss) before
tax on income
|
8,268 | 3,455 | (4,469 | ) | 4,640 | 2,089 | ||||||||||||||
Taxes on income
|
1,337 | 861 | 2,383 | 1,524 | 887 | |||||||||||||||
Income after taxes on income
|
6,931 | 2,594 | (6,852 | ) | 3,116 | 1,202 | ||||||||||||||
Equity in losses (gains) of affiliate
|
(340 | ) | (38 | ) | 1,634 | 1,158 | 677 | |||||||||||||
Net income (loss) from continuing operations
|
7,271 | 2,632 | (8,486 | ) | 1,958 | 525 | ||||||||||||||
Loss from discontinuing operations, net
|
- | 995 | - | - | - | |||||||||||||||
Net income (loss)
|
7,271 | 1,637 | (8,486 | ) | 1,958 | 525 | ||||||||||||||
Net income attributable to non-controlling interest
|
951 | 434 | 41 | 828 | 2,632 | |||||||||||||||
Net income (loss) attributable to Pointer Telocation Ltd. Shareholders
|
6,320 | 1,203 | (8,527 | ) | 1,130 | (2,107 | ) | |||||||||||||
Basic net earnings (loss) from continuing operations per share attributable to Pointer Telocation Ltd. shareholders
|
1.14 | 0.35 | (1.78 | ) | 0.24 | (0.44 | ) | |||||||||||||
Diluted net earnings (loss) from continuing operations per share attributable to Pointer Telocation Ltd. shareholders
|
1.10 | 0.35 | (1.79 | ) | 0.22 | (0.47 | ) | |||||||||||||
Basic weighted average number of shares
outstanding (in thousands)
|
5,558 | 5,166 | 4,789 | 4,768 | 4,753 | |||||||||||||||
Diluted weighted average number of shares
outstanding (in thousands)
|
5,697 | 5,166 | 4,789 | 4,834 | 4,753 | |||||||||||||||
Balance Sheet Data:
|
||||||||||||||||||||
Total assets
|
113,227 | 95,376 | 89,338 | 103,430 | 96,973 | |||||||||||||||
Net assets (liabilities) of continuing operations
|
37,110 | 29,748 | 26,594 | 36,868 | 33,809 | |||||||||||||||
Working capital (deficit)
|
(12,644 | ) | (10,523 | ) | (14,928 | ) | (15,093 | ) | (12,206 | ) | ||||||||||
Shareholders’ equity
|
42,639 | 35,346 | 31,801 | 43,646 | 41,479 | |||||||||||||||
Pointer Telocation Ltd. shareholders
|
37,110 | 29,748 | 26,594 | 36,868 | 33,809 | |||||||||||||||
Non-controlling interest
|
5,529 | 5,598 | 5,207 | 6,778 | 7,670 | |||||||||||||||
Share capital
|
3,878 | 3,871 | 3,353 | 3,280 | 3,266 | |||||||||||||||
Additional paid-in capital
|
120,996 | 120,290 | 119,147 | 118,512 | 118,348 |
2013
|
2012
|
2011
|
||||||||||
Revenues
|
||||||||||||
Products
|
35 | 36 | 36 | |||||||||
Services
|
65 | 64 | 64 | |||||||||
Total Revenues
|
100 | 100 | 100 | |||||||||
Cost of Revenues:
|
||||||||||||
Products
|
21.2 | 21.2 | 21 | |||||||||
Services
|
46.5 | 45.5 | 43 | |||||||||
Amortization of intangible
|
- | 0.2 | 2 | |||||||||
Total Cost of Revenues
|
67.7 | 66.9 | 66 | |||||||||
Gross profit
|
32.3 | 33.1 | 34 | |||||||||
Operating Expenses:
|
||||||||||||
Research and development costs, net
|
3.3 | 3.2 | 4 | |||||||||
Selling, general and administrative
expenses
|
21.8 | 21.6 | 24 | |||||||||
Total operating Expenses
|
26.1 | 24.8 | 28 | |||||||||
Amortization of intangible assets and Impairment of long lived assets
|
1 | 2.3 | 9 | |||||||||
Operating income (loss)
|
6.2 | 6 | (3 | ) | ||||||||
Financial expenses
|
1.1 | 2 | 2 | |||||||||
Other income (expenses)
|
3.4 | - | - | |||||||||
Income (loss) before
tax on income
|
8.4 | 4 | (5 | ) | ||||||||
Taxes on income
|
1.4 | 1 | 3 | |||||||||
Income (loss) after tax
|
7.1 | 3 | (8 | ) | ||||||||
Equity in losses of affiliate
|
- | - | 2 | |||||||||
Loss from discontinuing operations, net
|
- | 1 | ||||||||||
Net income (loss) attributable to non-controlling interest
|
1 | 0.5 | (10 | ) | ||||||||
Net income (loss) attributable to Pointer Telocation Ltd. Shareholders)
|
6.4 | 1.5 | (10 | ) |
|
B.
|
CAPITALIZATION AND INDEBTEDNESS
|
|
C.
|
REASONS FOR THE OFFER AND USE OF PROCEEDS
|
|
D.
|
RISK FACTORS
|
|
·
|
accepting vehicle location and recovery technology as a preferred security product;
|
|
·
|
with respect to insurance companies in Argentina, deciding to purchase or lease SVR services products from us directly; and
|
|
·
|
emergency home repair policy are sold as part of the policy coverage for houses and mortgages.
|
|
·
|
reduced control over delivery schedules, quality assurance, manufacturing yields and cost;
|
|
·
|
reduced manufacturing flexibility due to last moment quantity changes;
|
|
·
|
transportation delays;
|
|
·
|
political and economic disruptions;
|
|
·
|
the imposition of tariffs and export controls on such products;
|
|
·
|
work stoppages;
|
|
·
|
changes in government policies;
|
|
·
|
the loss of molds and tooling in the event of a dispute with a manufacturer; and
|
|
·
|
the loss of time, when attempting to switch from one assembly-manufacturer to another, thereby disrupting deliveries to customers.
|
|
·
|
longer sales cycles, especially upon entry into a new geographic market or engaging with new customers;
|
|
·
|
foreign exchange controls and licenses;
|
|
·
|
trade restrictions;
|
|
·
|
changes in tariffs;
|
|
·
|
currency fluctuations;
|
|
·
|
economic or political instability;
|
|
·
|
international tax aspects;
|
|
·
|
regulation requirements; and
|
|
·
|
greater difficulty in safeguarding intellectual property.
|
|
·
|
the laws of certain foreign countries may not adequately protect our proprietary rights to the extent that they are protected in other countries;
|
|
·
|
unauthorized third parties may attempt to copy or obtain and use the technology that we regard as proprietary;
|
|
·
|
if a competitor were to infringe on our proprietary rights, enforcing our rights may be time consuming and costly, diverting management’s attention and our resources;
|
|
·
|
measures like entering into non-disclosure agreements afford only limited protection; and
|
|
·
|
our competitors may independently develop or patent technologies that are substantially equivalent or superior to our technology, duplicate our technologies or design around our intellectual property rights.
|
|
·
|
changes in the global financial markets and U.S. and Israeli stock markets relating to turbulence
amid stock market volatility, tightening of credit markets, concerns of inflation and deflation, decreased consumer confidence, reduced corporate profits and capital spending, adverse business conditions and general liquidity concerns;
|
|
·
|
macro changes and changes in market share in the markets in which we provide services and products;
|
|
·
|
announcements of technological innovations or new products by us or our competitors;
|
|
·
|
developments or disputes concerning patents or proprietary rights;
|
|
·
|
publicity regarding actual or potential results relating to services rendered by us or our competitors;
|
|
·
|
regulatory development in the United States, Israel and other countries;
|
|
·
|
events or announcements relating to our collaborative relationship with others;
|
|
·
|
economic, political and other external factors;
|
|
·
|
period-to-period fluctuations in our operating results; and
|
|
·
|
substantial sales by significant shareholders of our ordinary shares which are currently or are in the process of being registered.
|
ITEM
4.
|
INFORMATION ON THE COMPANY
|
|
A.
|
HISTORY AND DEVELOPMENT OF THE COMPANY
|
|
B.
|
BUSINESS OVERVIEW
|
|
(i)
|
Asset tracking services
|
|
(ii)
|
Fleet management services
|
|
(iii)
|
SVR services
|
|
(iv)
|
Roadside assistance services (RSA)
|
|
(v)
|
Car sharing services
|
|
(vi)
|
Emergency home repair and other services
|
|
(i)
|
Fleet management products
|
|
(ii)
|
Asset tracking products
|
|
(iii)
|
Stolen vehicle retrieval (SVR) products
|
|
·
|
End units for installation in vehicles
- We offer an end unit with input and output capabilities, which may be installed in a vehicle or on any asset that may be mobilized from one location to another. The end unit’s inputs are connected to sensors that may be installed in the vehicle or on the asset. Data from these inputs may be transmitted to the CCC. The CCC may send commands to the end unit activating certain outputs. Installation and de-installation of end units in vehicles or on assets are performed by either employees or subcontractors of the operator, usually in designated installation centers. Assets may include cargo or equipment that might not have an independent source of energy, such as (but not limited to) containers, field equipment, construction equipment, trailers and various cargo.
|
|
·
|
Command & Control Center -
The CCC includes databases and software modules required for the execution of certain operations by the operator, as well as monitors to display data collected from the end units which is then analyzed in order to determine the location of the vehicle. The CCC connects to the end units via radio frequency or cellular communications and commands can be transmitted to the end units from the CCC using either a commercial paging system or cellular networks.
|
|
·
|
Communication Infrastructure
- Communication is accomplished by either the cellular network in each territory of operation or radio frequency infrastructure with base stations. These stations are dispersed throughout a specific territory and are connected to an existing communications infrastructure. Each base station is equipped with antennae which receives the end-unit’s signal and measures the angle from which the signal arrived for the purpose of locating the vehicle. These measurements together with additional data received from the end units is then converted into digital data and sent to the CCC. The location of the vehicle is established by either triangulation measurements from several base stations installed by the operator or by means of a GPS device contained within the vehicle.
|
|
·
|
a license for the operation of mobile garages under the Control of Commodities and Services (Vehicle Garages and Factories) Order, 5730-1970, which is valid until December 31, 2014; and
|
|
·
|
a license to rent self-drive vehicles under the Control of Commodities and Services (Tour Transport, Special Transport and Vehicle Rental) Order, 5745-1995, which is valid until December 31, 2014.
|
2013
|
2012
|
2011
|
||||||||||||||||||||||
% of our total sales
|
In thousands
|
% of our total sales
|
In thousands
|
% of our total sales
|
In thousands
|
|||||||||||||||||||
Services:
|
65 | 63,195 | 64 | 54,430 | 64 | 54,778 | ||||||||||||||||||
Products:
|
35 | 34,662 | 36 | 30,402 | 36 | 31,140 | ||||||||||||||||||
Total:
|
100 | 97,857 | 100 | 84,832 | 100 | 85,918 |
2013
|
2012
|
2011
|
||||||||||||||||||||||
% of our total sales
|
In thousands
|
% of our total sales
|
In thousands
|
% of our total sales
|
In thousands
|
|||||||||||||||||||
Israel
|
70 | 68,735 | 71 | 60,423 | 72 | 61,498 | ||||||||||||||||||
Latin America
|
17 | 16,422 | 15 | 12,611 | 15 | 12,856 | ||||||||||||||||||
Europe
|
9 | 8,928 | 12 | 10,289 | 12 | 10,275 | ||||||||||||||||||
Other
|
4 | 3,772 | 2 | 1,509 | 1 | 1,289 | ||||||||||||||||||
Total
|
100 | 97,857 | 100 | 84,832 | 100 | 85,918 |
|
C.
|
ORGANIZATIONAL STRUCTURE
|
JURISDICTION OF INCORPORATION
|
NAME OF SUBSIDIARY
|
Argentina
|
Pointer Localización y Asistencia S.A. (1)
|
Israel
|
Shagrir System Ltd. (2)
|
Mexico
|
Pointer Recuperacion Mexico S.A. (3)
|
Romania
|
S.C. Pointer S.R.L. (4)
|
Brazil
|
Pointer do Brazil Commercial S.A.(5)
|
Brazil
|
Pointer do Brasil Participações Ltda.(5)
|
USA
|
Pointer Telocation Inc. (6)
|
India
|
Pointer Telocation India (7)
|
Israel
|
Car2go Ltd. (8)
|
(1)
|
We hold 93% of the issued and outstanding shares of Pointer Argentina.
|
(2)
|
We hold 100% of the issued and outstanding shares of Shagrir.
|
(3)
|
We hold 74% of the issued and outstanding shares of Pointer Mexico.
|
(4)
|
Shagrir holds 65% of the issued and outstanding shares of S.C. Pointer S.R.L.
|
(5)
|
We hold 100% of the issued and outstanding shares of Pointer do Brasil Participações Ltda. We hold 100% of Pointer do Brazil Commercial S.A., of which 51.2% are held through of Pointer do Brasil Participações Ltda. and 48.8% are held directly by Pointer Telocation Ltd.
|
(6)
|
We hold 100% of the issued and outstanding shares of Pointer Telocation Inc.
|
(7)
|
We hold 100% of the issued and outstanding shares of Pointer Telocation India.
|
(8)
|
Shagrir holds 58.46% of the issued and outstanding shares of Car2Go Ltd. and is in the process of being issued additional shares which will bring its holdings to 62.31% of the issued and outstanding shares of Car2Go Ltd.
|
|
D.
|
PROPERTY, PLANTS AND EQUIPMENT
|
ITEM
4A.
|
UNRESOLVED STAFF COMMENTS
|
ITEM
5.
|
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
|
|
A.
|
OPERATING RESULTS
|
|
·
|
Continuing the growth, revenues and profitability of our products and services by the subsidiaries;
|
|
·
|
Enhancing the introduction and recognition of our new products, including the products of our Cellocator segment, into the markets;
|
|
·
|
Penetrating new markets, , through the products of our Cellocator segment, and strengthening our presence in existing markets by proposing a full scope of services;
|
|
·
|
Succeeding in selling diversified products in territories in which we already conduct activities;
|
|
·
|
penetrating new territories; and
|
|
·
|
Achieving operating profitability of our Pointer segment affiliates by increasing the number of subscribers using our technology and expanding the services generated by roadside assistance, emergency home repair services and car sharing.
|
Year ended
December 31,
|
||||||||
2013
|
2012
|
|||||||
Balance at beginning of the year
|
$ | 935 | $ | 1,444 | ||||
First time consolidation of Pointer Brazil
|
263 | - | ||||||
Deductions during the year
|
(364 | ) | (722 | ) | ||||
Charged to expenses
|
412 | 209 | ||||||
Foreign currency translation adjustment
|
24 | 4 | ||||||
Balance at end of year
|
$ | 1,270 | $ | 935 |
(a)
|
Tangible and Intangibles
Long-Lived Assets
|
(b)
|
Goodwill impairment test
|
2013
|
2012
|
2011
|
||||||||||
(in thousands of U.S.Dollars)
|
||||||||||||
Cellocator segment revenues
|
24,268 | 22,660 | 24,199 | |||||||||
Pointer segment revenues
|
81,990 | 68,540 | 68,709 | |||||||||
Intersegment adjustment
|
(8,401 | ) | (6,368 | ) | (6,990 | ) | ||||||
Total revenue
|
97,857 | 84,832 | 85,918 | |||||||||
Cellocator Segment operating profit (loss)
|
3,065 | 1,731 | (5,366 | ) | ||||||||
Pointer segments operating profit
|
4,890 | 3,015 | 2,512 | |||||||||
Inter-segments adjustment
|
(1,909 | ) | 342 | 241 | ||||||||
Total operating profit (loss)
|
6,046 | 5,088 | (2,613 | ) |
MONTH
|
LOW
1 U.S. Dollar =
|
HIGH
1 U.S. Dollar =
|
||
September 2013
|
3.504
|
3.632
|
||
October 2013
|
3.518
|
3.567
|
||
November 2013
|
3.519
|
3.569
|
||
December 2013
|
3.471
|
3.53
|
||
January 2014
|
3.483
|
3.507
|
||
February 2014
|
3.496
|
3.549
|
Period
|
Exchange
Rate
|
Devaluation/ (Revaluation)
|
||
January 1, 2009 – December 31, 2009
|
3.9326 NIS/$1
|
9.6%
|
||
January 1, 2010 – December 31, 2010
|
3.7330 NIS/$1
|
(5.1)%
|
||
January 1, 2011 – December 31, 2011
|
3.5781 NIS/$1
|
(4.1)%
|
||
January 1, 2012 – December 31, 2012
|
3.8559 NIS/$1
|
7.8%
|
||
January 1, 2013 – December 31, 2013
|
3.6008 NIS/$1
|
(6.6)%
|
Period
|
CPI
|
Positive Inflation
|
||
December 31, 2009
|
110.57
|
3.9%
|
||
December 31, 2010
|
113.51
|
2.7%
|
||
December 31, 2011
|
115.97
|
2.2%
|
||
December 31, 2012
|
117.87
|
1.6%
|
||
December 31, 2013
|
120.01
|
1.8%
|
Period
|
Exchange Rate
BRL/$1
|
Yearly Increase/
(Decrease)
|
||
December 31, 2010
|
1.6879
|
(3.9)%
|
||
December 31, 2011
|
1.8542
|
9.9%
|
||
December 31, 2012
|
2.059
|
11%
|
||
February 28, 2013
|
1.9625
|
(4.7)%
|
||
February 28, 2014
|
2.3754
|
21%
|
Period
|
Exchange Rate
ARG/$1
|
Yearly Increase/
(Decrease)
|
||
December 31, 2010
|
3.976
|
4.6%
|
||
December 31, 2011
|
4.304
|
8.2%
|
||
December 31, 2012
|
4.918
|
14.3%
|
||
February 28, 2013
|
5.0344
|
2.4%
|
||
February 28, 2014
|
7.7846
|
54.6%
|
|
B.
|
LIQUIDITY AND CAPITAL RESOURCES
|
|
C.
|
RESEARCH AND DEVELOPMENT
|
(i)
|
Introducing new products to market and advancing our products and
systems;
|
(ii)
|
Designing improvements to existing products and applications by
working closely with our customer support and product management department in order to implement suggestions and request received from our customers;
|
(iii)
|
Investing in improvements to our production methods and provision of
services in our operations department; and
|
|
D.
|
TREND INFORMATION
|
(i)
|
Analyze sensor inputs to determine for example, engine status, door status, brakes, and transmission;
|
(ii)
|
Analyze driving patterns, including determining acceleration, harsh braking, side turns or cornering, as well as driver’s hours of service and rest time;
|
(iii)
|
Analyze and monitor activity efficiency over time and space, plan better the way resources (human and vehicles) are utilized and maintained; and
|
(iv)
|
Trace various movable and or moving assets including cargo, field equipment, agriculture and construction equipment, which often do not have an onboard power supply.
|
(i)
|
Ongoing price reduction due to increasing competition as well as the economic weakness mainly in Europe;
|
(ii)
|
A growing demand for technology that monitors driver behavior and provides safety and remote diagnostics applications; and
|
(iii)
|
An increase in vehicle manufacturers' involvement in the unit market due to various legislative efforts in Europe being implemented that require installation of systems such as E-Call and ERA GLONASS.
|
|
E.
|
OFF-BALANCE SHEET ARRANGEMENTS
|
F.
|
CONTRACTUAL OBLIGATIONS
|
Contractual Obligations through
December 31, 2013 (in thousands USD)
|
Less
than 1
Year
|
1-3
Years
|
3-5
Years
|
More
than 5
Year
|
Total
|
||||||||||||||||
Short term debt and other current liabilities
|
1
|
10,643 | - | - | - | 10,643 | |||||||||||||||
Long-term debt obligations
|
2
|
- | 8,592 | 1,273 | 737 | 10,602 | |||||||||||||||
Accrued severance pay
|
3
|
- | - | - | 968 | 968 | |||||||||||||||
Management fees to DBSI
|
4
|
35 | - | - | - | 35 | |||||||||||||||
Operating lease obligations
|
5
|
1,681 | 1,545 | 1,348 | 1,046 | 5,620 | |||||||||||||||
Royalties to BIRD
|
6
|
- | - | - | 2,444 | 2,444 | |||||||||||||||
Total contractual obligations
|
12,359 | 10,137 | 2,621 | 5,195 | 30,312 |
|
A.
|
DIRECTORS AND SENIOR MANAGEMENT
|
Name
|
Age
|
Position with Company
|
Yossi Ben Shalom
|
58
|
Chairman of the Board of Directors
|
David Mahlab
|
57
|
President and CEO
|
Gil Oren
|
62
|
External Director
|
Zvi Rutenberg
|
58
|
External Director
|
Barak Dotan
|
46
|
Director
|
Alicia Rotbard
|
68
|
Director
|
Nir Cohen
|
41
|
Director
|
Zvi Fried
|
49
|
Chief Financial Officer
|
David Markus
|
40
|
Chief Technology Officer
|
Igor Rogov
|
39
|
VP R&D of the Cellocator Division
|
Noam Cimand
|
44
|
VP of Sales & Marketing
|
|
B.
|
COMPENSATION
|
|
C.
|
BOARD PRACTICES
|
|
·
|
an employment relationship;
|
|
·
|
a business or professional relationship maintained on a regular basis;
|
|
·
|
control; and
|
|
·
|
service as an office holder.
|
|
·
|
the majority also includes at least a majority of the shareholders who are not controlling shareholders and who do not have a personal interest in the matter as a result of an affiliation with a controlling shareholder, who are present and voting (abstentions are disregarded); or
|
|
·
|
that the non-controlling shareholders or shareholders who do not have a personal interest in the matter as a result of an affiliation with a controlling shareholder who are present and voted against the election hold 2% or less of the voting power of the company.
|
|
1.
|
To recommend to the board of directors as to the Compensation Policy for officers, as well as to recommend, once every three years to extend the compensation policy subject to receipt of the required corporate approvals;
|
|
2.
|
To recommend to the board of directors as to any updates to the Compensation Policy which may be required;
|
|
3.
|
To review the implementation of the Compensation Policy by the company;
|
|
4.
|
To approve transactions relating to terms of office and employment of certain company office holders, which require the approval of the compensation committee pursuant to the Israeli Companies Law; and
|
|
5.
|
To exempt, under certain circumstances, a transaction relating to terms of office and employment from the requirement of approval of the shareholders meeting.
|
|
(i)
|
the majority of the votes includes at least a majority of all the votes of shareholders who are not controlling shareholders of the company or who do not have a personal interest in the Compensation Policy and participating in the vote; abstentions shall not be included in the total of the votes of the aforesaid shareholders; or
|
|
(ii)
|
the total of opposing votes from among the shareholders described in subsection (i) above does not exceed 2% of all the voting rights in the company.
|
|
D.
|
EMPLOYEES
|
Israel
|
LATAM
|
Other
|
Total
|
|||||||||||||
2013
|
||||||||||||||||
Sales and Marketing
|
126 | 46 | 21 | 193 | ||||||||||||
Administration
|
47 | 28 | 2 | 77 | ||||||||||||
Research and Development
|
23 | - | - | 23 | ||||||||||||
Other
|
422 | 150 | 12 | 584 | ||||||||||||
Total
|
618 | 224 | 26 | 868 | ||||||||||||
2012
|
||||||||||||||||
Sales and Marketing
|
125 | 23 | 8 | 156 | ||||||||||||
Administration
|
47 | 19 | 2 | 68 | ||||||||||||
Research and Development
|
21 | - | - | 21 | ||||||||||||
Other
|
418 | 56 | 12 | 486 | ||||||||||||
Total
|
611 | 98 | 22 | 731 | ||||||||||||
2011
|
||||||||||||||||
Sales and Marketing
|
124 | 37 | 3 | 164 | ||||||||||||
Administration
|
44 | 20 | 2 | 66 | ||||||||||||
Research and Development
|
24 | - | - | 24 | ||||||||||||
Other
|
376 | 56 | 8 | 440 | ||||||||||||
Total
|
568 | 113 | 13 | 694 |
|
E.
|
SHARE OWNERSHIP
|
Name
|
Title/Office
|
As a % of Outstanding Ordinary Shares Beneficially Owned
(1)
|
Shares owned as of March 15, 2014
|
Shares underlying options/warrants that are exercisable prior to May 15, 2014
|
||||||||||
Yossi Ben Shalom
(2)
|
Chairman of Board of Directors
|
33.1 | % | 2,545,094 | 2,545,094 | |||||||||
David Mahlab
|
President and CEO
|
* | -- | 61,746 | ||||||||||
Barak Dotan
(2)
|
Director
|
33.1 | % | 2,545,094 | 2,545,094 | |||||||||
Alicia Rotbard
|
Director
|
* | -- | 1,500 | ||||||||||
Nir Cohen
|
Director
|
- | -- | -- | ||||||||||
Zvi Rutenberg
|
Director
|
- | -- | -- | ||||||||||
Gil Oren
|
Director
|
- | -- | -- | ||||||||||
Zvi Fried
|
Chief Financial Officer
|
* | -- | 2,500 | ||||||||||
All directors and officers as a group
|
33.95 | % | 2,545,094 | 2,610,840 |
(1)
|
The percentage of outstanding ordinary shares beneficially owned is based on 7,688,564 shares outstanding as of March 15, 2014. The number of shares beneficially owned by a person includes ordinary shares subject to options or warrants held by that person that are currently exercisable or exercisable within 60 days of March 15, 2014.
|
(2)
|
As office holders of DBSI Investment Ltd., Messrs. Yossi Ben Shalom and Barak Dotan may be considered to be the beneficial holders of the 33.1% of our issued and outstanding shares held by DBSI Investment Ltd.
|
ITEM
7.
|
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
|
|
A.
|
MAJOR SHAREHOLDERS
|
Name of Beneficial Owner
|
Percent of Outstanding Ordinary Shares Beneficially Owned*
|
Number of Ordinary Shares Beneficially Owned
*
|
||||||
DBSI Investment Ltd.
(1)
|
33.1 | % | 2,545,094 | |||||
Gandyr Investments Ltd.
(2)
|
11.2 | % | 858,000 |
*
|
The percentage of outstanding ordinary shares beneficially owned is based on 7,688,564 outstanding as of March 15, 2014. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission. The number of shares beneficially owned by a person includes ordinary shares subject to options or warrants held by that person that are currently exercisable or exercisable within 60 days of March 15, 2014. Such shares issuable pursuant to such options or warrants are deemed outstanding for computing the percentage ownership of the person holding such options but not deemed outstanding for the purposes of computing the percentage ownership of any other person. To our knowledge, the persons named in this table have sole voting and investment power with respect to all ordinary shares shown as owned by them
.
|
(1)
|
As office holders of DBSI Investment Ltd., Messrs. Barak Dotan and Yossi Ben Shalom may be considered to be the beneficial holders of the 33.1% of our outstanding shares held by DBSI.
|
(2)
|
Includes shares held by Gandyr Ltd., a wholly owned subsidiary of Gandyr Investments Ltd.
|
|
B.
|
RELATED PARTY TRANSACTIONS
|
|
C.
|
INTERESTS OF EXPERTS AND COUNSEL
|
ITEM
8.
|
FINANCIAL INFORMATION
|
|
A.
|
CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
|
|
B.
|
SIGNIFICANT CHANGES
|
ITEM
9.
|
THE OFFER AND LISTING
|
|
A.
|
OFFER AND LISTING DETAILS
|
Period
|
High
|
Low
|
||||||
Last 6 calendar months
|
||||||||
February 2014
|
10.34 | 9 | ||||||
January 2014
|
12.55 | 9.39 | ||||||
December 2013
|
11.84 | 6.86 | ||||||
November 2013
|
8.17 | 6.00 | ||||||
October 2013
|
6.00 | 5.40 | ||||||
September 2013
|
5.37 | 4.30 | ||||||
Financial quarters during the past two years
|
||||||||
Fourth Quarter 2013
|
11.84 | 5.40 | ||||||
Third Quarter 2013
|
5.72 | 4.00 | ||||||
Second Quarter 2013
|
4.23 | 2.74 | ||||||
First Quarter 2013
|
2.91 | 2.36 | ||||||
Fourth Quarter 2012
|
3.10 | 2.40 | ||||||
Third Quarter 2012
|
2.77 | 2.30 | ||||||
Second Quarter 2012
|
3.05 | 2.32 | ||||||
First Quarter 2012
|
4.00 | 2.71 | ||||||
Five most recent full financial years
|
||||||||
2013
|
11.84 | 2.36 | ||||||
2012
|
4.00 | 2.30 | ||||||
2011
|
6.42 | 3.20 | ||||||
2010
|
7.70 | 5.72 | ||||||
2009
|
7.00 | 2.73 |
|
B.
|
PLAN OF DISTRIBUTION
|
|
C.
|
MARKETS
|
|
D.
|
SELLING SHAREHOLDERS
|
|
E.
|
DILUTION
|
|
F.
|
EXPENSES OF THE ISSUE
|
ITEM
10.
|
ADDITIONAL INFORMATION
|
|
A.
|
SHARE CAPITAL
|
|
B.
|
MEMORANDUM AND ARTICLES OF ASSOCIATION
|
|
·
|
amendments to our Articles (other than modifications of shareholders rights as mentioned above);
|
|
·
|
appointment or termination of our auditors;
|
|
·
|
appointment and dismissal of directors;
|
|
·
|
approval of interested party acts and transactions requiring general meeting approval as provided in sections 255 and 268 to 275 of the Israeli Companies Law;
|
|
·
|
increase or reduction of our authorized share capital or the rights of shareholders or a class of shareholders- Sections 286 and 287 of the Israeli Companies Law;
|
|
·
|
any merger as provided in section 320 of the Israeli Companies Law; and
|
|
·
|
the exercise of the board of directors’ powers by a general meeting, if the board of directors is unable to exercise its powers and the exercise of any of its powers is vital for our proper management, as provided in section 52(a) of the Israeli Companies Law.
|
|
(a)
|
all of the directors are permitted to vote on the matter and attend the meeting in which the matter is considered; and
|
|
·
|
any amendment to the Articles of Association;
|
|
·
|
an increase of the company’s authorized share capital;
|
|
·
|
a merger; or
|
|
·
|
approval of interested party transactions that require shareholder approval as provided in sections 255 and 268 to 275 of the Israeli Companies Law.
|
|
·
|
Distribution of annual and quarterly reports to shareholders – Under Israeli law we are not required to distribute annual and quarterly reports directly to shareholders and the generally accepted business practice in Israel is not to distribute such reports to shareholders. We do however make our audited financial statements available to our shareholders prior to our annual general meeting and file quarterly financial results with the Securities Exchange Commission on Form 6-K.
|
|
·
|
Quorum – Under Israeli law, a company is entitled to determine in its articles of association the number of shareholders and percentage of holdings required for a quorum at a shareholders meeting. Our Articles provide that a quorum of two or more shareholders holding at least 25% of the voting rights in person or by proxy is required for commencement of business at a general meeting.
|
|
·
|
Approval of Related Party Transactions – All related party transactions are approved in accordance with the requirements and procedures for approval of interested party acts and transactions, set forth in sections 268 to 275 of the Israeli Companies Law, and the Regulations promulgated thereunder, which require audit committee approval and shareholder approval, as well as board approval, for specified transactions, rather than those approvals under the NASDAQ Listing Rules, which require approval by the audit committee or other independent body of our board. Provided that our executive officers do not serve on our board, Israeli law does not require nor do we engage in the recommendation to, or determination by, independent members of our board of the compensation of our executive officers. See also “
Item 10B– Additional Information
–
Memorandum and Articles of Association– "The Israeli Companies Law
", for further information on the approval of related party transactions.
|
|
·
|
Shareholder Approval – We seek shareholder approval for all corporate action requiring such approval in accordance with the requirements of the Israeli Companies Law, rather than the requirements for seeking shareholder approval under NASDAQ Listing Rule 5635.
|
|
·
|
Independence of Directors – A majority of our board of directors is not comprised of independent directors as defined in Rule 5605 of the NASDAQ Listing Rules. Our board contains two independent directors in accordance with the provisions contained in Sections 239-249 of the Israeli Companies Law. Israeli law does not require nor do our independent directors conduct, regularly scheduled meetings at which only they are present.
|
|
·
|
Nomination of our Directors – With the exception of our independent directors, our directors are elected for terms of one year or until the following annual meeting, by a general meeting of our shareholders. The nominations for director which are presented to our shareholders are generally made by our directors. Israeli law does not require the adoption of and our board has not adopted a formal written charter or board resolution addressing the nomination process and related matters.
|
|
·
|
Audit Committee- Our audit committee does not comply with all of the requirements of NASDAQ Listing Rule 5605 (though all members are independent as such term is defined under Rule 10A-3 of the Exchange Act of 1934, as amended). Rather, our audit committee complies with all of the requirements under Israeli law. Israeli law does not require and our board has not adopted a formal written audit committee charter.
|
|
·
|
Compensation Committee - We follow the provisions of the Israeli Companies Law with respect to matters in connection with the composition and responsibilities of our Compensation Committee, office holder compensation, and any required approval by the shareholders of such compensation. Israeli law, and our amended and restated articles of association, do not require that a Compensation Committee composed solely of independent members of our Board of Directors determine (or recommend to the board of directors for determination) an executive officer’s compensation, as required under NASDAQ’s recently adopted listing standards related to Compensation Committee independence and responsibilities; nor do they require that the Company adopts and files a compensation committee charter. Instead, our Compensation Committee has been established and conducts itself in accordance with provisions governing the composition of and the responsibilities of a Compensation Committee as set forth in the Israeli Companies Law. Furthermore, the compensation of office holders is determined and approved by our Compensation Committee and our Board of Directors, and in certain circumstances by our shareholders, either in consistency with our approved Compensation Policy or, in special circumstances in deviation therefrom, taking into account certain considerations set forth in the Israeli Companies Law. The requirements for shareholders approval of any office holder compensation, and the relevant majority or special majority for such approval, are all as set forth in the Israeli Companies Law. Thus, we will seek shareholders approval for all corporate actions with respect to office holder compensation requiring such approval under the requirements of the Israeli Companies Law, including seeking prior approval of the shareholders for the Compensation Policy and for certain office holder compensation, rather than seeking approval for such corporate actions in accordance with NASDAQ Listing Rules.
|
|
·
|
Equity Compensation Plans - We do not necessarily seek shareholder approval for the establishment of, and amendments to, stock option or equity compensation plans (as set forth in NASDAQ Listing Rule 5635(c)), as such matters are not subject to shareholders approval under Israeli law. We will attempt to seek shareholders approval for our stock option or equity compensation plans (and the relevant annexes thereto) to the extent required in order to ensure they are tax qualified for our employees in the United States. However, even if such approval is not received, then the stock option or equity compensation plans will continue to be in effect, but the Company will be unable to grant options to its U.S. employees that qualify as Incentive Stock Options for U.S. federal tax purpose. Our stock option or other equity compensation plans are also available to our non-U.S. employees, and provide features necessary to comply with applicable non-U.S. tax laws.
|
|
C.
|
MATERIAL CONTRACTS
|
|
D.
|
EXCHANGE CONTROLS
|
|
E.
|
TAXATION AND GOVERNMENT PROGRAMS
|
|
F.
|
DIVIDENDS AND PAYING AGENTS
|
|
G.
|
STATEMENT BY EXPERTS
|
|
H.
|
DOCUMENTS ON DISPLAY
|
|
I.
|
SUBSIDIARY INFORMATION
|
ITEM
11.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
|
Expected Maturity Dates
|
||||||||||||||||||||||||
Interest
|
2014
|
2015
|
2016
|
2017
|
2018 and thereafter
|
|||||||||||||||||||
In Thousands
|
||||||||||||||||||||||||
ASSETS:
|
||||||||||||||||||||||||
Cash - in U.S. Dollars
|
95 | - | - | - | - | |||||||||||||||||||
Cash- in NIS
|
1,911 | - | - | - | - | |||||||||||||||||||
Cash- In other currency:
|
1,424 | - | - | - | - | |||||||||||||||||||
LIABILITIES:
|
||||||||||||||||||||||||
Short-term bank credit in, or linked to, dollars
|
2.85-4 | 2,133 | - | |||||||||||||||||||||
Short-term bank credit in, or linked to, dollars
|
LIBOR + 4.25
|
500 | - | - | - | - | ||||||||||||||||||
Short-term bank credit in other currencies
|
37 | - | - | - | - | |||||||||||||||||||
Long-term loans (including current maturities) In U.S. Dollars:
|
LIBOR +2
|
600 | 667 | 667 | 666 | - | ||||||||||||||||||
In NIS
|
3.8-6.55 | 3,142 | 463 | 374 | 192 | 4,171 | ||||||||||||||||||
In NIS - variable interest
|
Prime + 0.9%-1.4%
|
3,564 | 3,404 | 2,453 | 415 | 9,835 | ||||||||||||||||||
In other currencies
|
6% | 667 |
ITEM
12.
|
DESCRIPTIONS OF SECURITIES OTHER THAN EQUITY SECURITIES
|
ITEM
13.
|
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
|
ITEM
14.
|
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
|
ITEM
15.
|
CONTROLS AND PROCEDURES
|
|
(a)
|
Evaluation of Disclosure Controls and Procedures
|
|
(b)
|
Management’s Report on Internal Control Over Financial Reporting
|
|
(c)
|
Attestation report of the registered public accounting firm.
|
|
(d)
|
Changes in Internal Control over Financial Reporting.
|
ITEM
16.
|
[RESERVED]
|
ITEM
16A.
|
AUDIT COMMITTEE FINANCIAL EXPERT.
|
ITEM
16B.
|
CODE OF ETHICS.
|
ITEM
16C.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES.
|
USD in thousands
|
||||||||
2013
|
2012
|
|||||||
Audit Fees(1)
|
223 | 211 | ||||||
Audit-Related Fees(2)
|
18 | 5 | ||||||
Tax Fees(3)
|
11 | 23 | ||||||
All Other Fees
|
9 | 14 |
ITEM
16D.
|
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES.
|
ITEM
16E.
|
PURCHASES OF EQUITY SECURITIES BY THE ISSUER ANDAFFILIATED PURCHASERS
|
ITEM
16F.
|
CHANGE IN THE REGISTRANT'S CERTIFYING ACCOUNTANT
|
ITEM
16G.
|
CORPORATE GOVERNANCE
|
|
·
|
Under Israeli law we are not required to distribute annual and quarterly reports directly to shareholders, but we do however make our audited financial statements available to our shareholders prior to our annual general meeting and file quarterly financial results with the Securities Exchange Commission on Form 6-K.
|
|
·
|
As opposed to Rule 5620(c) of the NASDAQ Listing Rules, which sets forth a required quorum for a shareholders meeting, under Israeli law a company is entitled to determine in its articles of association the number of shareholders and percentage of holdings required for a quorum at a shareholders meeting. Our Articles, consistent with the Israeli Companies Law, provide that the quorum requirements for an adjourned meeting are the presence of a minimum of two shareholders present in person holding 25% of the voting power of the company.
|
|
·
|
All related party transactions are approved in accordance with the requirements and procedures for approval of interested party acts and transactions set forth in the Israeli Companies Law, and are not subject to the review process set forth in Rule 5630 of the NASDAQ Listing Rules. For a detailed discussion please see Item 10.B “Additional Information – NASDAQ Listing Rules and Home Country Practices".
|
|
·
|
We seek shareholder approval for all corporate action requiring such approval in accordance with the requirements of the Israeli Companies Law rather than under the requirements of the NASDAQ Listing Rules, including (but not limited to) the appointment or termination of auditors, appointment and dismissal of directors, approval of interested party acts and transactions requiring general meeting approval as discussed above and a merger.
|
|
·
|
A majority of our board of directors is not comprised of independent directors as defined in the NASDAQ Listing Rules, but our board of directors contains two external directors in accordance with the Israeli Companies Law. Israeli law does not require, nor do our external directors conduct, regularly scheduled meetings at which only they are present. In addition, with the exception of our external directors, our directors are elected for terms of one year or until the following annual meeting, by a general meeting of our shareholders. The nominations for director which are presented to our shareholders are also generally made by our directors. Israeli law does not require the adoption of and our board has not adopted a formal written charter or board resolution addressing the nomination process and related matters. Compensation of our directors and other officers is determined in accordance with Israeli law.
|
|
·
|
Our audit committee does not comply with all the requirements of Rule 5605 of the NASDAQ Marketplace Rules (though all members are independent as such term is defined under Rule 10A-3 of the Exchange Act of 1934, as amended). Rather, our audit committee complies with all of the requirements under Israeli law. Israeli law does not require and our board has not adopted a formal written audit committee charter. For further information please see “
Item 6 “Directors, Senior Management and Employees – Board Practices
”.
|
|
·
|
We follow the provisions of the Israeli Companies Law with respect to matters in connection with the composition and responsibilities of our compensation committee, office holder compensation, and any required approval by the shareholders of such compensation. Israeli law, and our amended and restated articles of association, do not require that a compensation committee composed solely of independent members of our board of directors determine (or recommend to the board of directors for determination) an executive officer’s compensation, as required under NASDAQ’s recently adopted listing standards related to compensation committee independence and responsibilities; nor do they require that the Company adopt and file a compensation committee charter. Instead, our compensation committee has been established and conducts itself in accordance with provisions governing the composition of and the responsibilities of a compensation committee as set forth in the Israeli Companies Law. Furthermore, the compensation of office holders is determined and approved by our compensation committee and our board of directors, and in certain circumstances by our shareholders, either in consistency with our previously approved Compensation Policy or, in special circumstances in deviation therefrom, taking into account certain considerations set forth in the Israeli Companies Law. The requirements for shareholder approval of any office holder compensation, and the relevant majority or special majority for such approval, are all as set forth in the Israeli Companies Law. Thus, we will seek shareholder approval for all corporate actions with respect to office holder compensation requiring such approval under the requirements of the Israeli Companies Law, including seeking prior approval of the shareholders for the Compensation Policy and for certain office holder compensation, rather than seeking approval for such corporate actions in accordance with NASDAQ Listing Rules.
|
|
·
|
We do not necessarily seek shareholder approval for the establishment of, and amendments to, stock option or equity compensation plans (as set forth in NASDAQ Listing Rule 5635(c)), as such matters are not subject to shareholder approval under Israeli law. We will attempt to seek shareholder approval for our stock option or equity compensation plans (and the relevant annexes thereto) to the extent required in order to ensure they are tax qualified for our employees in the United States. However, even if such approval is not received, then the stock option or equity compensation plans will continue to be in effect, but the Company will be unable to grant options to its U.S. employees that qualify as Incentive Stock Options for U.S. federal tax purpose. Our stock option or other equity compensation plans are also available to our non-U.S. employees, and provide features necessary to comply with applicable non-U.S. tax laws.
|
ITEM
18.
|
FINANCIAL STATEMENTS
|
ITEM
19.
|
EXHIBITS
|
1.1
|
Memorandum of Association incorporated herein by reference to Exhibit 3.1 to the Registration Statement on Form F-1, filed with the Commission on June 10, 1994 (registration number 33-76576).
|
1.2
|
Amended and Restated Articles of Association of the Registrant, incorporated herein by reference to Exhibit 1.2 to the Registrant's Form 20-F, filed with the Commission on March 29, 2012.
|
4.1
|
Letter Agreement, by and among Pointer (Eden Telecom Group) Ltd. and Bank Hapoalim Ltd., dated November 16, 2004, incorporated herein by reference to Exhibit 4.18 to the Registrant's Form 20-F, filed with the Commission on June 30, 2005.
|
4.2
|
English Summary of Purchase Agreement by and among Shagrir Systems Ltd., K.S. Operation Centers for Vehicles Ltd. and Shimon Barzilay dated October 11, 2011, as amended by an amendment dated January 1, 2012, incorporated herein by reference to Exhibit 4.7 to the Registrant's Form 20-F, filed with the Commission on March 29, 2012.
|
4.3
|
Subscription Agreement between the Company and DBSI dated April 23, 2012, incorporated herein by reference to Exhibit 4.3 to the Registrant's Form 20-F, filed with the Commission on March 19, 2013.
|
4.4
|
The Compensation Policy of the Registrant approved by the Shareholders on September 12, 2013, filed by us as Annex A to Proposal 3 of the Proxy Statement included as Exhibit 1 to the Form 6-K as filed with the Securities and Exchange Commission on August 1, 2013, and incorporated herein by reference.
|
4.5
|
Share Purchase Agreement dated as of January 13, 2014, between Pointer Telocation Ltd. and the selling shareholders listed therein incorporated herein by reference to Exhibit 10.1 to the Registrant's Form F-3, filed with the Commission on March 11, 2014.
|
4.6
|
Share Purchase Agreement dated as of January 13, 2014, between Pointer Telocation Ltd. and the selling shareholders listed therein incorporated herein by reference to Exhibit 10.2 to the Registrant's Form F-3, filed with the Commission on March 11, 2014.
|
4.7
|
Share Purchase Agreement dated as of September 16, 2013 between Pointer do Brasil Participações Ltda. And Bracco do Brasil Empreendimentos e Participações Ltda., (the “Brazil SPA”).
|
12.1
|
Certification by Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
|
12.2
|
Certification by Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
|
13.1
|
Certification by Chief Executive Officer pursuant to 18 U.S.C., Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
|
13.2
|
Certification by the Chief Financial Officer pursuant to 18 U.S.C., Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
|
14.1
|
Consent of Kost, Forer, Gabbay & Kasierer Certified Public Accountants (Israel).
|
14.2
|
Consent of Grant Thornton Argentina S.C. Certified Public Accountants (Argentina).
|
14.3
|
Consent of Baker Tilly Brasil Certified Public Accountants (Brazil -
Pointer Do Brasil Participações Ltda).
|
14.4
|
Consent of Baker Tilly Brasil Certified Public Accountants (Brazil -
Pointer Do Brasil Comercial S.A.
).
|
POINTER TELOCATION LIMITED
|
||
By: |
/s/ Yossi Ben Shalom
|
|
Yossi Ben Shalom
|
||
Chairman of the Board of Directors
|
Page
|
|
F-2
|
|
F-3 - F-4
|
|
F-5- F-6
|
|
F-7 - F-8
|
|
F-9 - F-11
|
|
F-12 - F-57
|
|
Kost Forer Gabbay & Kasierer
3 Aminadav St.
Tel-Aviv 6706703, Israel
|
Tel: +972-3-6232525
Fax: +972-3-5622555
ey.com
|
Tel-Aviv, Israel
|
/s/ KOST FORER GABBAY & KASIERER
|
March 27, 2014
|
A Member of Ernst & Young Global
|
December 31
,
|
||||||||
2013
|
2012
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$ | 3,349 | $ | 3,685 | ||||
Restricted cash
|
81 | 108 | ||||||
Trade receivables (net of allowance for doubtful accounts of $ 1,270 and $ 935 at December 31, 2013 and 2012, respectively)
|
19,793 | 16,215 | ||||||
Other accounts receivable and prepaid expenses (Note 3)
|
2,033 | 2,069 | ||||||
Inventories (Note 4)
|
6,038 | 3,982 | ||||||
Total current assets
|
31,294 | 26,059 | ||||||
LONG-TERM ASSETS:
|
||||||||
Long-term accounts receivable
|
546 | 582 | ||||||
Severance pay fund (Note 2r)
|
9,349 | 8,125 | ||||||
Property and equipment, net (Note 5)
|
13,975 | 10,364 | ||||||
Investment and long term loans to affiliate (Note 6)
|
- | 814 | ||||||
Other intangible assets, net (Note 7)
|
2,936 | 2,242 | ||||||
Goodwill (Note 8)
|
55,127 | 47,190 | ||||||
Total long-term assets
|
81,933 | 69,317 | ||||||
Total assets
|
$ | 113,227 | $ | 95,376 |
Year ended December 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Revenues (Note 19c):
|
||||||||||||
Products
|
$ | 34,662 | $ | 30,402 | $ | 31,140 | ||||||
Services
|
63,195 | 54,430 | 54,778 | |||||||||
Total
revenues
|
97,857 | 84,832 | 85,918 | |||||||||
Cost of revenues:
|
||||||||||||
Products
|
20,763 | 17,988 | 18,283 | |||||||||
Services
|
45,497 | 38,573 | 37,249 | |||||||||
Amortization and impairment of intangible assets (Note 1b)
|
- | 181 | 1,498 | |||||||||
Total cost of revenues
|
66,260 | 56,742 | 57,030 | |||||||||
Gross profit
|
31,597 | 28,090 | 28,888 | |||||||||
Operating expenses:
|
||||||||||||
Research and development
|
3,244 | 2,716 | 3,082 | |||||||||
Selling and marketing
|
10,398 | 9,067 | 8,932 | |||||||||
General and administrative
|
10,539 | 9,232 | 11,450 | |||||||||
Other general and administrative expenses
(
Note 1n)
|
403 | - | - | |||||||||
Amortization and impairment of intangible assets
|
967 | 1,987 | 1,821 | |||||||||
Impairment of goodwill
|
- | - | 6,216 | |||||||||
Total operating expenses
|
25,551 | 23,002 | 31,501 | |||||||||
Operating income (loss)
|
6,046 | 5,088 | (2,613 | ) | ||||||||
Financial expenses, net (Note 20a)
|
1,077 | 1,628 | 1,779 | |||||||||
Other (expenses) income, net (Note 20b)
|
3,299 | (5 | ) | (77 | ) | |||||||
Income (loss) before taxes on income
|
8,268 | 3,455 | (4,469 | ) | ||||||||
Taxes on income (Note 17)
|
1,337 | 861 | 2,383 | |||||||||
Income (loss) after taxes on income
|
6,931 | 2,594 | (6,852 | ) | ||||||||
Equity in losses (gains) of affiliate
|
(340 | ) | (38 | ) | 1,634 | |||||||
Income (loss) from continuing operations
|
7,271 | 2,632 | (8,486 | ) | ||||||||
Loss from discontinued operations, net
|
- | 995 | - | |||||||||
Net income (loss)
|
$ | 7,271 | $ | 1,637 | $ | (8,486 | ) |
Year ended December 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Other comprehensive income (loss):
|
||||||||||||
Currency translation adjustments of foreign operations
|
$ | 1,006 | $ | 299 | $ | (2,605 | ) | |||||
Realized currency translation adjustments of foreign operations
|
(50 | ) | ||||||||||
Realized income (losses) on derivatives designated as cash flow hedges
|
(24 | ) | 224 | (219 | ) | |||||||
Unrealized losses on derivatives designated as cash flow hedges
|
- | 14 | (162 | ) | ||||||||
Total comprehensive income (loss)
|
8,203 | 2,174 | (11,472 | ) | ||||||||
Profit (loss) from continuing operations attributable to:
|
||||||||||||
Equity holders of the parent
|
6,320 | 1,833 | (8,527 | ) | ||||||||
Non-controlling interests
|
951 | 799 | 41 | |||||||||
7,271 | 2,632 | (8,486 | ) | |||||||||
Loss from discontinued operations attributable to:
|
||||||||||||
Equity holders of the parent
|
- | 630 | - | |||||||||
Non-controlling interests
|
- | 365 | - | |||||||||
$ | - | $ | 995 | $ | - | |||||||
Total comprehensive income (loss) attributable to:
|
||||||||||||
Equity holders of the parent
|
$ | 6,649 | $ | 1,493 | $ | (10,982 | ) | |||||
Non-controlling interests
|
1,554 | 681 | (490 | ) | ||||||||
8,203 | 2,174 | (11,472 | ) | |||||||||
Earnings (loss) per share from continuing operations attributable to Pointer Telocation Ltd's shareholders (Note 16):
|
||||||||||||
Basic net earnings (loss) per share
|
||||||||||||
$ | 1.14 | $ | 0.35 | $ | (1.78 | ) | ||||||
Diluted net earnings (loss) per share
|
$ | 1.10 | $ | 0.35 | $ | (1.79 | ) |
Pointer Telocation Ltd's Shareholders
|
||||||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||||||
Number
of
|
Share
|
Additional paid-in
|
Other
comprehensive
|
Accumulated
|
Non-
controlling
|
Total
|
||||||||||||||||||||||
shares
|
capital
|
capital
|
income
|
deficit
|
interest
|
equity
|
||||||||||||||||||||||
Balance as of January 1, 2011
|
4,771,181 | $ | 3,280 | $ | 118,512 | $ | 3,292 | $ | (88,216 | ) | $ | 6,778 | $ | 43,646 | ||||||||||||||
Issuance of shares in respect of Stock-based compensation
|
88,843 | 73 | 208 | - | - | - | 281 | |||||||||||||||||||||
Stock-based compensation expenses
|
- | - | 515 | - | - | - | 515 | |||||||||||||||||||||
Dividend paid to non-controlling interest
|
- | - | - | - | - | (1,595 | ) | (1,595 | ) | |||||||||||||||||||
Exercise of options in subsidiary
|
- | - | (88 | ) | - | - | 88 | - | ||||||||||||||||||||
Sale of subsidiary
|
- | - | - | - | - | 426 | 426 | |||||||||||||||||||||
Other comprehensive income
|
- | - | - | (2,455 | ) | - | (531 | ) | (2,986 | ) | ||||||||||||||||||
Net income attributable to Non- controlling interest
|
- | - | - | - | - | 41 | 41 | |||||||||||||||||||||
Net loss attributable to Pointer shareholders
|
- | - | - | - | (8,527 | ) | - | (8,527 | ) | |||||||||||||||||||
Balance as of December 31, 2011
|
4,860,024 | 3,353 | 119,147 | 837 | (96,743 | ) | 5,207 | 31,801 | ||||||||||||||||||||
Issuance of shares and exercise of options, net
|
694,034 | 517 | 1,425 | - | - | - | 1,942 | |||||||||||||||||||||
Issuance of shares in respect of Stock-based compensation
|
1,500 | 1 | 4 | - | - | - | 5 | |||||||||||||||||||||
Purchase of subsidiary
|
- | - | - | - | - | 133 | 133 | |||||||||||||||||||||
Stock-based compensation expenses
|
- | - | 265 | - | - | - | 265 | |||||||||||||||||||||
Dividend paid to non-controlling interest
|
- | - | - | - | - | (1,215 | ) | (1,215 | ) | |||||||||||||||||||
Exercise of options in subsidiary
|
- | - | (323 | ) | 323 | - | ||||||||||||||||||||||
Purchase of non- controlling interest
|
- | - | (228 | ) | - | - | 228 | - | ||||||||||||||||||||
Sale of subsidiary
|
- | - | - | - | - | 241 | 241 | |||||||||||||||||||||
Other comprehensive income
|
- | - | - | 290 | - | 247 | 537 | |||||||||||||||||||||
Net income attributable to Non -controlling interest
|
- | - | - | - | - | 434 | 434 | |||||||||||||||||||||
Net income attributable to Pointer shareholders
|
- | - | - | - | 1,203 | - | 1,203 | |||||||||||||||||||||
Balance as of December 31, 2012
|
5,555,558 | 3,871 | 120,290 | 1,127 | (95,540 | ) | 5,598 | 35,346 | ||||||||||||||||||||
Issuance of shares in respect of Stock-based compensation
|
10,000 | 7 | 20 | - | - | - | 27 | |||||||||||||||||||||
Stock-based compensation expenses
|
- | - | 354 | - | - | 20 | 374 | |||||||||||||||||||||
Dividend payable to non-controlling interest
|
- | - | - | - | - | (1,311 | ) | (1,311 | ) | |||||||||||||||||||
Expiration of options in subsidiary
|
- | - | 332 | - | - | (332 | ) | - | ||||||||||||||||||||
Other comprehensive income
|
- | - | - | 329 | - | 603 | 932 | |||||||||||||||||||||
Net income attributable to Non -controlling interest
|
- | - | - | - | - | 951 | 951 | |||||||||||||||||||||
Net income attributable to Pointer shareholders
|
- | - | - | - | 6,320 | - | 6,320 | |||||||||||||||||||||
Balance as of December 31, 2013
|
5,565,558 | 3,878 | 120,996 | 1,456 | (89,220 | ) | 5,529 | 43,639 |
December 31,
|
||||||||
2013
|
2012
|
|||||||
Accumulated unrealized gain on derivative instruments
|
$ | - | $ | 24 | ||||
Accumulated foreign currency translation differences
|
1,456 | 1,103 | ||||||
Accumulated other comprehensive income
|
$ | 1,456 | $ | 1,127 |
Year ended December 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Cash flows from operating activities
:
|
||||||||||||
Net income (loss)
|
$ | 7,271 | $ | 1,637 | $ | (8,486 | ) | |||||
Adjustments required to reconcile net income (loss) to net cash provided by operating activities:
|
||||||||||||
Depreciation, amortization and impairment
|
4,049 | 5,551 | 12,710 | |||||||||
Gain from obtaining control in a subsidiary previously accounted for by the equity method
|
(3,299 | ) | - | - | ||||||||
Accrued interest and exchange rate changes of debenture and long-term loans
|
21 | 118 | 135 | |||||||||
Accrued severance pay, net
|
(397 | ) | 91 | 487 | ||||||||
Gain from sale of property and equipment, net
|
(195 | ) | (271 | ) | (95 | ) | ||||||
Equity in losses (gains) of affiliate
|
(340 | ) | (38 | ) | 1,634 | |||||||
Amortization of stock-based compensation
|
374 | 265 | 515 | |||||||||
Impairment loss of loan to minority shareholder in subsidiary
|
- | - | 489 | |||||||||
Decrease in restricted cash
|
27 | 15 | 10 | |||||||||
Increase in trade receivables, net
|
(1,270 | ) | (1,572 | ) | (1,462 | ) | ||||||
Decrease in other accounts receivable and prepaid expenses
|
148 | 46 | 373 | |||||||||
Decrease (increase) in inventories
|
(685 | ) | 732 | (731 | ) | |||||||
Deferred income taxes
|
1,272 | 847 | 170 | |||||||||
Decrease (increase) in long-term accounts receivable
|
(4 | ) | 234 | (177 | ) | |||||||
Increase in trade payables
|
1,290 | 960 | 452 | |||||||||
Increase (decrease) in other accounts payable and accrued expenses
|
1,449 | (274 | ) | 2,457 | ||||||||
Net cash provided by operating activities
|
9,711 | 8,341 | 8,481 | |||||||||
Cash flows from investing activities
:
|
||||||||||||
Purchase of property and equipment
|
(4,663 | ) | (4,033 | ) | (4,445 | ) | ||||||
Proceeds from sale of property and equipment
|
1,216 | 1,733 | 1,050 | |||||||||
Investment and loans/Repayments in affiliate
|
137 | (669 | ) | (1,740 | ) | |||||||
Acquisition of subsidiary (a)
|
(3,973 | ) | (251 | ) | - | |||||||
Purchase of business activity (b)
|
- | (3,125 | ) | - | ||||||||
Proceeds from sale of investments in previously consolidated subsidiaries (c)
|
- | - | 39 | |||||||||
Net cash used in investing activities
|
(7,283 | ) | (6,345 | ) | (5,096 | ) |
Year ended December 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Cash flows from financing activities:
|
||||||||||||
Receipt of long-term loans from banks
|
7,127 | 11,670 | 8,384 | |||||||||
Repayment of long-term loans from banks
|
(10,137 | ) | (12,253 | ) | (8,937 | ) | ||||||
Repayment of long-term loans from others
|
- | - | (1,071 | ) | ||||||||
Dividend paid to non-controlling interest
|
- | (1,215 | ) | (1,595 | ) | |||||||
Proceeds from issuance of shares and exercise of options, net of issuance costs
|
7 | 1,947 | 281 | |||||||||
Short-term bank credit, net
|
563 | (345 | ) | (1,002 | ) | |||||||
Net cash used in financing activities
|
(2,440 | ) | (196 | ) | (3,940 | ) | ||||||
Effect of exchange rate on cash and cash equivalents
|
(324 | ) | 417 | (210 | ) | |||||||
Increase (decrease) in cash and cash equivalents
|
(336 | ) | 2,217 | (765 | ) | |||||||
Cash and cash equivalents at the beginning of the year
|
3,685 | 1,468 | 2,233 | |||||||||
Cash and cash equivalents at the end of the year
|
$ | 3,349 | $ | 3,685 | $ | 1,468 |
(b)
|
Purchase of business activity:
|
||||||||||||
Working capital
|
$ | - | $ | 27 | $ | - | |||||||
Property and equipment
|
112 | ||||||||||||
Customer list
|
1,364 | ||||||||||||
Goodwill
|
- | 1,669 | - | ||||||||||
Accrued severance pay, net
|
- | (23 | ) | - | |||||||||
Employees accruals
|
- | (24 | ) | - | |||||||||
$ | - | $ | 3,125 | $ | - |
Year ended December 31,
|
|||||||||||||
2013
|
2012
|
2011
|
|||||||||||
(c)
|
Proceeds from sale of investments in previously consolidated subsidiaries:
|
||||||||||||
The subsidiaries' assets and liabilities at date of sale:
|
|||||||||||||
Working capital (excluding cash and cash equivalents)
|
$ | - | $ | 7 | $ | 32 | |||||||
Non-controlling interests
|
- | 241 | 426 | ||||||||||
Loss from sale of subsidiaries
|
- | (248 | ) | (110 | ) | ||||||||
Receivables for sale of investments in subsidiaries
|
- | - | (309 | ) | |||||||||
$ | - | $ | - | $ | 39 | ||||||||
(d)
|
Non-cash investing activity:
|
||||||||||||
Purchase of property and equipment
|
$ | 392 | $ | 90 | $ | 309 | |||||||
Purchase of property and equipment at finance lease
|
$ | 3 | $ | 17 | $ | 28 | |||||||
Dividend payable for non-controlling interest in a consolidated subsidiary
|
$ | 1,311 | $ | - | $ | - | |||||||
(e)
|
Supplemental disclosure of cash flow activity:
|
||||||||||||
Cash paid during the year for:
|
|||||||||||||
Interest
|
$ | 1,189 | $ | 1,528 | $ | 1,456 | |||||||
Income taxes
|
$ | 114 | $ | 52 | $ | 38 |
NOTE 1:-
|
GENERAL
|
|
a.
|
Pointer Telocation Ltd. ("the Company") was incorporated in Israel and commenced operations in July 1991. The Company conducts its operations through two main segments. Through its Cellocator segment, the Company designs, develops and produces leading mobile resource management products, including asset tracking, fleet management, and security products, for sale to third party operators providing mobile resource management services and to our Pointer segment. Through its Pointer segment, the Company acts as an operator by bundling its products together with a range of services, including stolen vehicle retrieval services and fleet management services, and also provides road-side assistance services in Israel for sale to insurance companies, fleets and individual customers.
|
|
The Company provides services, for the most part, in Israel, Argentina Mexico and Brazil, through its local subsidiaries and affiliates. Independent operators provide similar services in Latin America, Europe and other countries utilizing the Company's technology and operational know-how. The Company's shares are traded on the NASDAQ Capital Market.
On January 17, 2012, the Company announced that its Board of Directors has resolved to act to delist the Company's ordinary shares from trading on the Tel Aviv Stock Exchange effective as of April 17, 2012.
|
|
b.
|
In 2011, the changes in the economic conditions and forecasted results of the Company's Cellocator segment led the Company to test the implied value of the Cellocator segment's goodwill in accordance with ASC 350 "Intangibles - Goodwill and Others". As a result of the impairment test, the Company determined that the implied value attributable to Cellocator goodwill and development technology intangible assets should be lower by $ 6,216 and $ 520, respectively. These amounts were recorded in the 2011 Consolidated Statement of Operation under the captions "Impairment of goodwill" and "Amortization and impairment of intangible assets", respectively. See also notes 2g and 2i.
|
|
c.
|
The Company holds 54.48% of the share capital of Shagrir Systems Ltd. ("Shagrir"). Shagrir is engaged in the field of road side assistance, towing services and stolen vehicle recovery in Israel (see note 21a).
|
|
d.
|
In June 2008, Shagrir incorporated a Romanian company, S.C. Pointer S.R.L. ("Pointer Romania"), to provide road-side assistance and towing services in Romania. Shagrir held 50% of the share capital of Pointer Romania. On January 1, 2012, Shagrir signed an agreement with the Romanian shareholder, pursuant to which he transferred to Shagrir 15% of the issued share capital of the Romanian subsidiary. As a result, Shagrir holds 65% of the share capital of Pointer Romania. The changes in the non- controlling interest presented as additional paid in capital.
|
|
e.
|
The Company holds 93% of the share capital of Pointer Localization Y Asistencia SA's (formerly: Tracsat S.A.) ("Pointer Argentina"). Pointer Argentina is the operator of the Company's systems and products that provides fleet management and stolen vehicle recovery services in Buenos Aires, Argentina.
|
NOTE 1:-
|
GENERAL (Cont.)
|
|
f.
|
The Company holds 74% of the share capital of Pointer Recuperation de Mexico S.A. de C.V. ("Pointer Mexico"), the remaining 26% of the share capital being held by local Mexican partners. Pointer Mexico provides fleet management and stolen vehicle recovery services to its customers in Mexico as well as distributing the Company's products.
|
|
g.
|
In August 2008 the Company incorporated a company in Brazil by the name of Pointer do Brasil Comercial S.A. ("Pointer Brazil"). Pointer Brazil provides location, tracking and fleet management vehicles services to its customers in Brazil. As of October 13
th
, 2013 Company held 48.8% of the share capital in Pointer Brazil.
|
|
In July 2013, the Company incorporated a wholly-owned subsidiary in Brazil at the name of Pointer do Brasil Participações Ltda. ("Pointer Brazil Holdings").
|
|
On October 14, 2013, the Company acquired the remaining 51.2% of the issued share capital of Pointer Brazil from Bracco do Brasil Empreendimentos e Participações Ltda. ("Bracco") through Pointer Brazil Holdings. Following the completion of the transaction, the Company holds 100% of the issued share capital of Pointer Brazil.
|
|
In consideration for the shares, the Company paid to Bracco approximately $ 4.3 million in cash and agreed to repay loans to Bracco and a local bank, over a period of eighteen months, in an aggregate amount of approximately $ 1.2 million.
The acquisition was accounted for under the purchase method of accounting as determined by ASC Topic 805, "Business Combinations". Accordingly, the preliminary purchase price was allocated to the assets acquired and liabilities assumed based on their fair values at the date of acquisition. The company's interest in Pointer Brazil immediately before obtaining control, was remeasured at fair value as of the acquisition date. The Company recognized gain at the amount of $3,299 from the remeasurement of the previously held investment in current period earnings included in Other income.
The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date:
|
Working capital, net
|
$ | 130 | ||
Property and equipment
|
2,486 | |||
Other intangible assets
|
1,690 | |||
Goodwill
|
4,894 | |||
Long term loans from bank and others
|
(1,342 | ) | ||
Fair value of investment in subsidiary previously accounted for by the equity method
|
(3,885 | ) | ||
$ | 3,973 |
|
Unaudited pro forma condensed results of operations
The following represents the unaudited pro forma condensed results of operations for the years ended December 31, 2012 and 2013 assuming that the acquisitions of Pointer Brazil occurred on January 1, 2012. The pro forma information is not necessarily indicative of the results of operations, which actually would have occurred had the acquisitions been consummated on those dates, nor does it purport to represent the results of operations for future periods
:
|
NOTE 1:-
|
GENERAL (Cont.)
|
Unaudited
|
||||||||
2013
|
2012
|
|||||||
Revenues
|
$ | 104,238 | $ | 91,414 | ||||
Net income
|
$ | 6,269 | $ | 1,763 | ||||
Earnings per share from continuing operations attributable to Pointer Telocation Ltd's shareholders:
|
||||||||
Basic net earnings per share
|
$ | 1.13 | $ | 0.35 | ||||
Diluted net earnings per share
|
$ | 1.10 | $ | 0.35 |
|
h.
|
In October 2008, the Company established a wholly-owned subsidiary in the United States, Pointer Telocation Inc.
|
|
i.
|
On May 15, 2009, the Company's subsidiary Shagrir acquired ownership of 51% of the ordinary shares of Car2go Ltd., which is engaged in car sharing and motor vehicle rental.
|
|
On February 28, 2012, Shagrir signed an agreement with the non-controlling shareholder of Car2go, pursuant to which Shagrir invested NIS 3,000 in cash or in services in consideration for 3,087 of Car2go's Ordinary shares. Following the issuance, Shagrir holds 58.46% of Car2go. However, the terms of the agreement provide that if there is no additional investment in Car2go by a third party within two years from signing, Shagrir's holding may increase to 62.3%. The transaction was accounted as an equity transaction.
|
|
j.
|
On June 28, 2010, Shagrir, together with an Israel partner (hereinafter the "minority shareholder") entered into an agreement for the establishment of an Israeli company named Rider from the Shagrir Group Ltd. ("Rider") for providing outsourcing services to insurance companies and others. The minority shareholder holds 33% and serves as Rider's CEO.
|
|
In 2012, Shagrir recorded as part of its general and administrative expenses an impairment loss of the loan granted by Rider to the minority shareholder in the amount of NIS 1.75 million ($ 489), due to the fact that Rider will not meet the milestones pursuant to the agreement.
|
|
During 2011, Shagrir signed an agreement to sell its entire holdings in Rider to Native Nehoray Ltd. ("Nehoray") at par value. In addition, Shagrir sold to Nehoray the rights to receive payments from a loan that Shagrir had provided to Rider in the amount of NIS 4,779 thousands including interest and linkage to the Israeli CPI for NIS 1,293 thousands. As a result of the agreement, the Company recorded a capital loss in the amount of NIS 393 thousands ($ 110).
|
NOTE 1:-
|
GENERAL (Cont.)
|
|
k.
|
Discontinued operations:
|
|
In November 2011, Shagrir, together with T.M.C Transportation Ltd. ("TMC"), signed an agreement for the establishment of a limited partnership, TMC Systems, LP ("the partnership"). Shagrir hold 51% of the partnership's capital. The activities of TMC transferred to the partnership. The partnership commenced its activity
on January 1, 2012.
|
|
The partnership engages in solutions for the management, control and collection of travel fares from taxis and transportation service fleets.
|
|
Shagrir granted a shareholders' loan to the partnership in an amount of NIS 2.5 million.
This loan carries
an
annual
interest rate of prime
plus
4%.
|
|
During 2012 the partnership recorded Impairment of goodwill and intangible assets related to this operation in the amount of $348.
|
|
On August 1, 2012, Shagrir signed an agreement to sell the partnership entire share capital to Gastech mobile communication solution LTD ("Gastecg") for its par value. In
addition, Shagrir sold the rights to receive payments from a loan which Shagrir had provided to the partnership in the amount of NIS 2.5 million including interest and linkage to the Israeli CPI for NIS 1. As a result the partnership's results presented as loss
from discontinued operations on consolidated statement of income and comprehensive income.
|
|
Below are the results of operations of TMC that presented net as a discontinued operation:
|
Period ended August 1,
2012
|
||||
Revenues
|
3 | |||
Cost of revenues
|
143 | |||
Gross loss
|
(140 | ) | ||
Operating expenses:
|
||||
Sales and marketing
|
60 | |||
General and administrative
|
181 | |||
Impairment of goodwill and intangible asset
|
348 | |||
Operating (loss)
|
(729 | ) | ||
Financial expense, net
|
18 | |||
Net loss
|
(747 | ) |
|
(*)
|
As a result of the partnership's sale a loss was recorded in the amount of $ 248, and consider to be a loss on discontinued operation.
|
|
(**)
|
Cash flow from discontinued operation was immaterial and as such no discontinued operation presented on the cash flow statement.
|
NOTE 1:-
|
GENERAL (Cont.)
|
|
l.
|
On November 11, 2011, Shagrir, entered into an agreement to acquire the activities of K.S Operation Centers Ltd. ("K.S") in consideration for an aggregate amount of NIS 12 million,
to be paid in two installments. The first installment was paid in January 2012, and the second was paid in January 2013.
Consummation of the transaction is contingent on meeting certain administrative conditions and obtaining the Anti-trust Commissioner's approval. Shagrir closed the transaction in January 2012.
|
|
K.S is engaged in the operation of car repair garages, providing bodywork and paint services, as well as engaging in the sale of spare parts for motor vehicles.
The acquisition-date fair value of the consideration transferred totaled to $ 3,125 in cash.
The acquisition was accounted for under the purchase method of accounting as determined by ASC Topic 805, "Business Combinations". Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their fair values at the date of acquisition.
|
Working capital
|
$ | 27 | ||
Property and equipment
|
112 | |||
Customer list
|
1,364 | |||
Goodwill
|
1,669 | |||
Accrued severance pay, net
|
(23 | ) | ||
Employees accruals
|
(24 | ) | ||
$ | 3,125 |
|
The customer list is subject to an estimated useful life of 8 years, and amortized based on the accelerated method.
|
|
m.
|
In May 2012, the Company established a wholly-owned subsidiary in India, Pointer Telocation India Private Limited.
|
|
n.
|
In December 2013, the Company recorded a one-time $0.4 million other general and administrative expense related to the termination cost of the former general manager's employment with the Company's subsidiary.
|
|
o.
|
On September 12, 2013, a shareholders meeting of the Company approved a compensation Policy for the Company's directors and officers. The Compensation Policy includes, among other issues prescribed by the Israeli Companies Law, a framework for establishing the terms of office and employment of the office holders, and guidelines with respect to the structure of the variable pay of office holders. The Compensation Policy includes a compensation, bonus and benefits strategy for office holders which is designed in order to reward performance, maintain a reasonable wage structure throughout the organization and to reinforce a culture in order to promote the long-term success of the Company.
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES
|
|
a.
|
Use of estimates:
|
|
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The most significant assumptions are employed in estimates used in determining values of intangible assets, tax assets and tax liabilities, warranty costs and stock-based compensation costs. Actual results could differ from those estimates.
|
|
b.
|
Financial statements in U.S. dollars:
|
|
The majority of the Company's revenues is generated in or linked to U.S. dollars ("dollar"). In addition, a substantial portion of the Company's costs is incurred in dollars. The Company's management believes that the dollar is the currency of the primary economic environment in which the Company operates. Thus, the functional and reporting currency of the Company is the dollar.
|
|
For those subsidiaries whose functional currency has been determined to be their local currency (For Pointer Argentina- the Argentinean peso; for Pointer Mexico- the Mexican peso; for Shagrir, Car2Go and Rider - the new Israeli shekel ("NIS"); for Pointer Inc. - the dollar; for Pointer Romania- the ROL; for Pointer do Brazil S.A. and Pointer Brazil Holdings- the Brazilian Real), assets and liabilities are translated at year-end exchange rates and statement of operations items are translated at average exchange rates prevailing during the year. Such translation adjustments are recorded as a separate component, other comprehensive income (loss), in shareholders' equity (deficiency).
|
|
Transactions and balances of the Company and certain subsidiaries, which are denominated in other currencies, have been remeasured into dollars in accordance with principles set forth in ASC 830, "Foreign Currency Matters". All exchange gains and losses from the remeasurements mentioned above, are reflected in the statement of operations as financial expenses or income, as appropriate.
|
|
c.
|
Principles of consolidation:
|
|
The consolidated financial statements include the accounts of the Company and its subsidiaries.
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
Intercompany transactions and balances including profits from intercompany sales not yet realized outside the Company have been eliminated upon consolidation.
|
|
Changes in the parent's ownership interest in a subsidiary with no change of control are treated as equity transactions, rather than step acquisitions or dilution gains or losses. Losses of partially owned consolidated subsidiaries shall be continued to be allocated to the non-controlling interests even when their investment was already reduced to zero.
|
|
The Company applies ASC 810-10, "Consolidation", which provides a framework for identifying Variable Interest Entities ("VIEs") and determining when a company should include the assets, liabilities, non-controlling interests and results of activities of a VIE in its consolidated financial statements. According to ASC 810-10, the Company shall consolidate a VIE when it has both (1) the power to direct the economically significant activities of the entity and (2) the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to the variable interest entity. The determination as to whether the Company should consolidate a VIE is evaluated continuously as changes to existing relationships or future transactions occur.
|
|
The Company's assessment of whether an entity is a VIE and the determination of the primary beneficiary is a matter of judgment and involves the use of significant estimates and assumptions. Such assessment involves estimation of whether an entity can finance its current activities until it reaches profitability, without additional subordinated financial support.
|
|
Pointer Romania is considered to be a VIE. As Shagrir has both the power to direct the economically significant activities of Pointer Romania, and the obligation to absorb losses and the right to receive benefits that could potentially be significant to Pointer.
Romania, Shagrir is considered to be the primary beneficiary. Pointer Romania is consolidated in the Company's financial statements.
|
|
d.
|
Cash equivalents:
|
|
Cash equivalents are short-term highly liquid investments that are readily convertible to cash with original maturities of three months or less at the date acquired.
|
|
e.
|
Inventories: |
|
Inventories are stated at the lower of cost or market value. Cost is determined using the "moving average" cost method. Inventory consists of raw materials, work in process and finished products. Inventory write-offs are provided to cover risks arising from slow-moving items, technological obsolescence, excess inventories, and for market prices lower than cost. In 2013, 2012 and 2011, the Company and its subsidiaries wrote off approximately $ 102, $ 337 and $ 304, respectively. The write-offs are included in cost of revenues.
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
f.
|
Property and equipment: |
|
Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated by the straight-line method over the estimated useful lives of the assets at the following annual rates:
|
%
|
||
Installed products
|
20-33
|
|
Computers and electronic equipment
|
10 - 33 (mainly 33)
|
|
Office furniture and equipment
|
6 - 15
|
|
Motor vehicles
|
15 - 20 (mainly 20)
|
|
Network installation
|
10 - 33
|
|
Buildings
|
6.67
|
|
Leasehold improvements
|
Over the term of the lease
including the option term
|
|
g.
|
Goodwill:
|
|
Goodwill reflects the excess of the purchase price of the acquired activities over the fair value of net assets acquired. Pursuant to ASC 350, "Intangibles - Goodwill and Other", goodwill is not amortized but rather tested for impairment at least annually, at the reporting unit level.
|
|
The Company identified several reporting units based on the guidance of ASC 350.
|
|
ASC 350 prescribes a two-phase process for impairment testing of goodwill. The first phase screens for impairment, while the second phase (if necessary) measures impairment.
|
|
Goodwill impairment is deemed to exist if the net book value of a reporting unit exceeds its estimated fair value. In such case, the second phase is then performed, and the Company measures impairment by comparing the carrying amount of the reporting unit's goodwill to the implied fair value of that goodwill. An impairment loss is recognized in an amount equal to the excess.
|
|
In September 2011, the FASB amended the guidance on the annual testing of goodwill for impairment. The amended guidance will allow companies to assess qualitative factors to determine if it is more likely than not that goodwill might be impaired and whether it is necessary to perform the two-step goodwill impairment test required under current accounting standards. The guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted.
|
|
The Company performed its annual impairment test for the goodwill in connection with the Cellocator reporting unit and the Pointer reporting unit as of December 31, 2013 and no impairment losses were identified. The material assumptions used for the income
approach for 2013 were 5 years of projected net cash flows, a discount rate of 18% and a long-term growth rate of 3%. (See also Note 2t regarding fair value measurement).
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
No impairment losses were identified in the year 2012 for the continuing operations.
As for the discontinued operations, the Company recorded goodwill impairment of $ 247 in connection with the Pointer reporting unit (see Note 1k.)
|
|
The material assumptions used for the income approach for 2012 were 5 years of projected net cash flows, a discount rate of 17% and a long-term growth rate of 3%. (See also Note 2t regarding fair value measurement).
|
|
In 2011, the Company recorded goodwill impairment in the total amount of $ 6,216 in connection with the Cellocator reporting unit. No Impairment losses were identified for the Pointer reporting unit in 2011.
|
|
The material assumptions used for the income approach for 2011 were 5 years of projected net cash flows, a discount rate of 17% and a long-term growth rate of 3%. (See also Note 2t regarding fair value measurement).
|
|
h.
|
Identifiable intangible assets:
|
|
Intangible assets consist of the following: a brand name, customers' related intangibles, developed technology and acquired patents. Intangible assets are amortized over their useful life using a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are consumed or otherwise used up. Intangible assets are stated at amortized cost.
|
|
The brand names are amortized over a two to nine years period.
|
|
The customers' related intangibles are amortized over a five- to nine-year period.
|
|
The developed technology is amortized over a five-year period.
|
|
Backlog is amortized over a three-year period.
|
|
Non-competition agreement is amortized over a three-year period.
|
|
Reacquired rights are amortized over a five-month period.
|
|
Patents are amortized over an eight-year period.
|
|
Customer related intangibles are amortized based on the accelerated method. For customer related intangibles in respect with the Brazil transaction during 2013, the Company used the straight line method, the differences from the accelerated method were immaterial.
|
|
The other intangibles are amortized based on straight line method over the periods above mentioned.
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
i.
|
Impairment of long-lived assets:
|
|
The Company's long lived assets are reviewed for impairment in accordance with ASC 360-10-35, "Property, Plant, and Equipment- Subsequent Measurement" whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to the future undiscounted cash flows expected to be
generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. In 2011, the Company
amortized $ 520 of the development technology intangible assets acquired from Cellocator Ltd. in September 2007
from a carrying amount of $ 701 to a fair value of $ 181. The circumstances leading to the impairment are attributed to the obsolescence of older Cellocator technology. The impairment was recorded under the caption of "cost of revenues" in the consolidated statement of operations. Assumptions in the fair value
assessment included: the impact of changes in economic conditions and the revenue forecast for the Cellocator segment. See also Note 2t regarding fair value measurement.
|
|
No impairment losses were identified in 2013 and 2012 for the continuing operations, as for the discontinued operations see note 1k.
|
|
j.
|
Provision for warranty:
|
|
The Company and its subsidiaries generally grant a one-year to three-year warranty for their products. The Company and its subsidiaries estimate the costs that may be incurred under its basic limited warranty and records a liability in the amount of such costs at the time which product revenue is recognized. Factors that affect the warranty liability include the number of installed units, historical and anticipated rates of warranty claims and cost per claim. The Company and its subsidiaries periodically assess the adequacy of its recorded warranty liabilities and adjust the amounts as necessary. Changes in the Company's and its subsidiaries' product liabilities (which are included in other accounts
payable and accrued expenses and other long term liabilities' captions in the Balance Sheet) during 2013 and 2012 are as follows:
|
Year ended
December 31,
|
||||||||
2013
|
2012
|
|||||||
Balance, beginning of the year
|
$ | 661 | $ | 690 | ||||
Warranties issued during the year
|
699 | 521 | ||||||
Settlements made during the year
|
(446 | ) | (387 | ) | ||||
Expirations
|
(184 | ) | (174 | ) | ||||
Foreign currency translation adjustment
|
36 | 11 | ||||||
Balance end of year
|
$ | 766 | $ | 661 |
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
k.
|
Revenue recognition:
|
|
The Company and its subsidiaries generate revenues from the provision of services, subscriber fees and sales of systems and products, mainly in respect of road-side assistance services, automobile repair and towing services, stolen vehicle recovery, fleet management and other value added services. To a lesser extent, revenues are also derived from technical support services.
The Company and its subsidiaries sell the systems primarily through their direct sales force and indirectly through resellers. Sales consummated by the Company's sales forces and sales to resellers are considered sales to end-users.
|
|
Revenues from the sale of systems and products are recognized in accordance with Staff Accounting Bulletin ("SAB") No. 104, "Revenue Recognition" ("SAB No. 104"), when delivery has occurred, persuasive evidence of an agreement exists, the vendor's fee is fixed or determinable, no further obligation exists and collectability is reasonably assured.
|
|
Service revenues including subscriber fees are recognized as services are performed, over the term of the agreement.
|
|
Deferred revenue includes amounts received under maintenance and support contracts, and amounts received from customers but not yet recognized as revenues.
|
|
In accordance with ASC 605-25, "Multiple-Element Arrangements", revenue from certain arrangements may include multiple elements within a single contract. The Company's accounting policy complies with the requirements set forth in ASC 605-25, relating to the separation of multiple deliverables into individual accounting units with determinable fair values. The Company considers the sale of products and subscriber fees to be separate units of accounting.
|
|
When a sales arrangement contains multiple elements, such as hardware and services, the Company allocates revenue to each element based on a selling price hierarchy. The selling price for each deliverable is based on its vendor specific objective evidence
("VSOE"), if available, third party evidence ("TPE") if VSOE is not available, or estimated selling price ("ESP") if neither VSOE nor TPE is available.
|
|
The company uses ESP to allocate the elements.
|
|
Revenues from stolen vehicle recovery services are recognized upon success, when the related stolen vehicle is recovered, and such recovery is approved by the customer or ratably over the term of the agreement.
|
|
Revenues generated from technical support services, installation and de-installation are recognized when such services are rendered.
|
|
Generally, the Company does not grant rights of return. The Company follows ASC 605-15-25 "sales of product when right of return exists". Based on the Company's experience, no provision for returns was recorded.
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
l.
|
Research and development costs:
|
|
Research and development costs are charged to expenses as incurred.
|
|
m.
|
Advertising expenses:
|
|
Advertising expenses are charged to the statement of operations as incurred. Advertising expenses for the years ended December 31, 2013, 2012 and 2011 were $ 1,365, $ 1,071 and $ 992, respectively.
|
|
n.
|
Income taxes:
|
|
The Company accounts for income taxes and uncertain tax positions in accordance with ASC 740, "Income Taxes". This guidance prescribes the use of the liability method whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to amounts that are more likely than not to be realized.
|
|
The Company established reserves for uncertain tax positions based on the evaluation of whether or not the Company's uncertain tax position is "more likely than not" to be sustained upon examination. As of December 31, 2013, the Company did not have any liability for uncertain tax positions. The Company's policy is to recognize, if any, tax related interest as interest expenses and penalties as general and administrative expenses. For the year ended December 31, 2013, the Company did not have any interest and penalties associated with tax positions.
|
|
o.
|
Basic and diluted net earnings (loss) per share:
|
|
Basic and diluted net earnings (loss) per share are computed based on the weighted average number of ordinary shares outstanding during the year. Diluted net earnings (loss) per share further include the dilutive effect of stock options outstanding during the year, in accordance with ASC 260, "Earnings Per Share". Part of the Company's outstanding stock options and warrants has been excluded from the calculation of the diluted earnings (loss) per share because such securities are anti-dilutive. The total weighted average number of pointer shares related to the outstanding options and warrants excluded from the calculations of diluted earnings (loss) per share was 0, 0 and 41,375 and for the years ended December 31, 2013, 2012 and 2011, respectively.
|
|
p.
|
Accounting for stock-based compensation:
|
|
The Company applies ASC 718, "Compensation - Stock Compensation". In accordance with ASC 718, all grants of employee equity based stock options are recognized in the financial statements based on their grant date fair values. The fair value of graded vesting options, as measured at the date of grant, is charged to expenses, based on the accelerated
attribution method over the requisite service period of each of the awards, net of estimated forfeitures.
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
As required by ASC 718, forfeitures are estimated at the time of grant, based on actual historical pre-vesting forfeitures, and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates.
|
|
During the years ended December 31, 2013, 2012 and 2011, the Company recognized stock-based compensation expenses related to employee stock options in the amounts of $ 374, $ 265 and $ 515, respectively.
|
|
According to ASC 718, a change in any of the terms or conditions of the Company's stock options is accounted for as a modification. Therefore, if the terms of an award are modified, the Company calculates incremental compensation costs as the excess of the fair value of the modified option over the fair value of the original option immediately before its terms are modified, measured based on the share price and other pertinent factors existing at the modification date. For vested options, the Company recognizes any incremental compensation cost immediately in the period the modification occurs, whereas for unvested options, the Company recognizes, over the new requisite service period, any incremental compensation cost due to the modification and any remaining unrecognized compensation cost for the original award over its term.
|
|
q.
|
Data related to options to purchase the Company shares:
|
|
1.
|
The fair value of the Company's stock options granted to employees and directors for the years ended December 31, 2013, 2012 and 2011 was estimated using the Black-Scholes-Merton option-pricing model, with the following weighted average assumptions:
|
Year ended
December 31,
|
||||||
2013
|
2012
|
2011
|
||||
Risk free interest rate
|
0.56%-1.31%
|
-
|
2%
|
|||
Dividend yield
|
0%
|
-
|
0%
|
|||
Expected volatility
|
44.75%-49.48%
|
-
|
75%
|
|||
Expected term (in years)
|
2.63-4.5
|
-
|
5
|
|||
Forfeiture rate
|
2%
|
-
|
2%
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
The Black-Scholes-Merton option-pricing model requires a number of assumptions, of which the most significant are expected stock price volatility and the expected option term. Expected volatility was calculated based upon actual historical stock price movements. The expected option term represents the period that the Company's stock options are expected to be outstanding and was determined for plain vanilla options, based on the simplified method permitted by SAB 107 and extended by SAB 110 as the average of the vesting period and the contractual term.
|
|
The Company adopted SAB 110 and continues to apply the simplified method until enough historical experience is available to provide a reasonable estimate of the expected term for stock option grants. In a few limited cases the Company did not use the simplified method in measuring the fair value of modified awards, either when the options were deeply out of the money immediately before the modification or when the Company accelerated the vesting and extended the exercise period after an employee's resignation. Since in both instances the entire remaining contractual term of the options was relatively short, we assumed that the expected life to be the entire remaining contractual term.
|
|
The risk-free interest rate is based on the yield from U.S. Treasury bill with accordance to the expected term of the options.
|
|
The Company has historically not paid dividends and has no foreseeable plans to pay dividends and therefore uses an expected dividend yield of zero in the option pricing model. The Company is required to estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company uses historical data to estimate pre-vesting option forfeitures and record share-based compensation expense only for those awards that are expected to vest.
|
|
2.
|
Data related to options to purchase Shagrir shares:
In July, 2011, 903 options granted under Shagrir's employee share option plan were exercised to purchase ordinary shares of Shagrir. As a result, the holdings in Shagrir were diluted and as of December 31, 2011 the Company held approximately 55.99% of the issued and outstanding share capital of Shagrir.
|
|
In January 2012, 2,480 options were exercised, thereby diluting the Company's holding to approximately 54.48% of the issued and outstanding share capital of Shagrir. There currently remain no exercisable options to purchase ordinary shares of Shagrir. The capital contribution from shareholders in the amount of $ (323) presented in the Additional paid in capital.
|
|
On January 15, 2014, the Company acquired the 45.5% interest in Shagrir Systems Ltd. ("Shagrir") that it did not previously own. The Company now own 100% of the fully consolidated share capital of Shagrir (see note 21a).
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
r.
|
Severance pay:
|
|
The liability of the Company and its subsidiaries in Israel for severance pay is calculated pursuant to Israel's Severance Pay Law based on the most recent salary of the employees multiplied by the number of years of employment as of balance sheet date and are presented on an undiscounted basis (the "Shut Down Method"). Employees are entitled to one month's salary for each year of employment, or a portion thereof. The liability for the Company and its subsidiaries in Israel is fully provided by monthly deposits with insurance policies and by accrual. The value of these policies is recorded as an asset in the Company's balance sheet.
|
|
The deposited funds may be withdrawn only upon the fulfillment of the obligation pursuant to Israel's Severance Pay Law or labor agreements. The value of the deposited funds is based on the cash surrendered value of these policies, and includes profits or losses accumulated to balance sheet date.
Some of the company's employees are subject to Section 14 of the Severance Pay Law and the General Approval of the Labor Minister dated June 30, 1998, issued in accordance to the said Section 14, mandating that upon termination of such employees’ employment, all the amounts accrued in their insurance policies shall be released to them. The severance pay liabilities and deposits covered by these plans are not reflected in the balance sheet as the severance pay risks have been irrevocably transferred to the severance funds.
The Company reclassified $ 909 in the comparative figures as of December 31, 2012 in order to reflect the Company's assets and liabilities in respect with severance pay for employees under the above mentioned Section 14.
Severance pay expenses for the years ended December 31, 2013, 2012 and 2011 were $ 1,150, $ 952 and $ 1,297, respectively.
|
|
s.
|
Concentrations of credit risk:
|
|
Financial instruments that potentially subject the Company and its subsidiaries to concentrations of credit risk consist principally of cash and cash equivalents, trade receivables, trade payables and derivatives.
|
|
The Company's cash and cash equivalents are invested primarily in deposits with major banks worldwide, mainly in Israel. However, deposits in the U.S. may be in excess of insured limits and are not insured in other jurisdictions. Generally, these deposits may be redeemed upon demand and, therefore, bear low risk. Management believes that the financial institutions that hold the Company's investments have a high credit rating.
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
The Company's trade receivables include amounts billed to clients located mainly in Israel, Latin America and Europe. Management periodically evaluates the collectability of its trade receivables to reflect the amounts estimated to be collectible. An allowance is determined in respect of specific debts whose collection, in management's opinion, is doubtful. In 2013, 2012 and 2011, the Company recorded expenses in respect of such debts in the amount of $ 412, $ 209 and $ 206, respectively. As for major customers, see Note 19d.
|
|
Changes in the allowance for doubtful accounts during 2013 and 2012 are as follows:
|
Year ended
December 31,
|
||||||||
2013
|
2012
|
|||||||
Balance at beginning of the year
|
$ | 935 | $ | 1,444 | ||||
First time consolidation of Pointer Brazil
|
263 | - | ||||||
Deductions during the year
|
(364 | ) | (722 | ) | ||||
Charged to expenses
|
412 | 209 | ||||||
Foreign currency translation adjustment
|
24 | 4 | ||||||
Balance at end of year
|
$ | 1,270 | $ | 935 |
|
The Company entered into foreign exchange forward contracts ("derivative instruments") intended to protect against the revaluation in value of forecasted non-dollar currency cash flows. These derivative instruments are designed to effectively hedge the Company's non-dollar currency exposure (see Note 2u below).
|
|
t.
|
Fair value measurements:
|
|
The following methods and assumptions were used by the Company and its subsidiaries in estimating fair value disclosures for financial instruments:
|
|
The carrying amounts reported in the balance sheet for cash and cash equivalents, trade receivables, other accounts receivable, short-term bank credit, trade payables and other accounts payable approximate their fair values due to the short-term maturities of such instruments.
|
|
Amounts recorded for long-term loans approximate fair values. The fair value was estimated using discounted cash flow analysis, based on the Company's incremental borrowing rates for similar type of borrowing arrangements.
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
The Company accounts for certain assets and liabilities at fair value under ASC 820, "Fair Value Measurements and Disclosures". Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:
|
|
Level 1 -
|
Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets;
|
|
Level 2 -
|
Significant other observable inputs based on market data obtained from sources independent of the reporting entity;
|
|
Level 3 -
|
Unobservable inputs which are supported by little or no market activity (for example cash flow modeling inputs based on assumptions).
|
|
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company categorized each of its fair value measurements in one of these three levels of hierarchy.
|
|
Assets and liabilities measured at fair value on a recurring basis are comprised of foreign currency forward contracts with a fair value of $ 0 and $ 24 as of December 31, 2013 and 2012, respectively, and are classified as level 2.
|
|
The Company also measures certain financial assets, including equity method investments, at fair value on a nonrecurring basis. These assets are adjusted to fair value when they are deemed to be other-than-temporarily impaired. During 2013, and 2012 no other-than-temporary impairments were identified in relation to equity method investments.
|
|
Assets and Liabilities that are measured at Fair Value on a Nonrecurring Basis subsequent to their initial recognition:
|
|
During 2011, such measurements of fair value related solely to an impairment loss of goodwill reducing its carrying amount from $ 8,750 to a fair value of $ 2,534 and impairment loss of development technology intangible assets, reducing its carrying amount from $ 701 to a fair value of $ 181. The Company used an income approach for measuring the fair value of the goodwill. See Note 2g and 2i for significant assumptions. As the fair value was measured using significant unobservable assumptions, the goodwill was classified as level 3 in ASC 820 fair value hierarchy.
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
u.
|
Derivatives and hedging activities:
|
|
ASC 815, "Derivatives and Hedging" requires the Company to recognize all of its derivative instruments as either assets or liabilities on the balance sheet at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge or a hedge of a net investment in a foreign operation.
|
|
For derivative instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive income and reclassified into earnings in the line item associated with the hedged transaction in the period or periods during which the hedged transaction affects earnings. The remaining gain or loss on the derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item, if any, is recognized immediately in financial income/expense in the statement of operations.
|
|
The Company entered into derivative instrument arrangements (forward contracts) to hedge a portion of anticipated new Israeli shekel ("NIS") payroll payments. As of December 31, 2011 the Company had forward exchange contracts for the acquisition of approximately NIS 13,951 thousand in consideration for $ 3,860 that matured during 2012. These derivative instruments are designated as cash flows hedges, as defined by ASC 815, as amended, and are all highly effective as hedges of these expenses when the salary is recorded. The effective portion of the derivative instruments is included in payroll expenses in the statements of income. The company excludes forward to spot differences from the OCI and recognizes such gains or losses in financial expenses. During 2012, there were no gains or losses recognized in earnings for hedge ineffectiveness.
|
|
v.
|
Equity affiliates:
|
|
The Company recognizes investment in equity affiliates under ASC 323, "Investments - Equity Method and Joint Ventures". The Company recognizes its proportionate share of the income of equity affiliates. Losses of equity affiliates are recognized to the extent of our investment, advances, financial guarantees and other commitments to provide financial support to the investee. Any losses in excess of this amount are deferred and reduce the amount of future earnings of the equity investee recognized by the Company.
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
w.
|
Discontinued operations:
|
|
Under ASC 205, "Presentation of Financial Statements - Discontinued Operation" when a component of an entity, as defined in ASC 205, has been disposed of or is classified as held for sale, the results of its operations, including the gain or loss on its disposal are classified as discontinued operations and the assets and liabilities of such component are classified as assets and liabilities attributed to discontinued operations; that is, provided that the operations, assets and liabilities and cash flows of the component have been eliminated from the Company's consolidated operations and the Company will no longer have any significant continuing involvement in the operations of the component.
|
|
x.
|
Recently issued Accounting Standards in 2013:
|
|
In February 2013, the Financial Accounting Standards Board (FASB) issued ASU 2013-02, "Comprehensive Income (Topic 220), Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income" (ASU 2013-02), which is effective for annual and interim reporting periods beginning after December 15, 2012. This guidance requires companies to report, in one place, information about reclassifications out of accumulated other comprehensive income (AOCI). Companies are also required to present reclassifications by component when reporting changes in AOCI balances. For significant items reclassified out of AOCI to net income in their entirety in the period, companies must report the effect of the reclassifications on the respective line items in the statement where net income is presented. In certain circumstances, this can be done on the face of that statement. Otherwise, it must be presented in the notes. For items not reclassified to net income in their entirety in the period, companies must cross-reference in a note to other required disclosures.
|
|
The Company adopted this standard as of the beginning of fiscal year 2013. The effect of the adoption of the new standard on the financial results of the Company for the year ended December 31, 2013 was immaterial and resulted in broader disclosure.
|
|
In March 2013, FASB issued ASU 2013-05, "Foreign Currency Matters (Topic 830), Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity" (ASU 2013-05), which is effective for annual reporting periods beginning after December 15, 2013. These amendments specify that a cumulative translation adjustment (CTA) should be released into earnings when an entity ceases to have a controlling financial interest in a subsidiary or group of assets within a consolidated
foreign entity and the sale or transfer results in the complete or substantially complete liquidation of the foreign entity. For sales of an equity method investment that is a foreign entity, a pro rata portion of the CTA attributable to the investment would be recognized in earnings when the investment is sold. When an entity sells either a part or all of its investment in a consolidated foreign entity, the CTA would be recognized in earnings only if the sale results in the parent no longer having a controlling financial interest in the foreign entity. In addition, the CTA should be recognized in earnings in a business combination achieved in stages (i.e., a step acquisition). The Company is currently
assessing the impact of the revised guidance for fiscal years beginning after December 15, 2013.
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
In July 2013, the Financial Accounting Standards Board ("FASB") issued a new accounting standard that will require the presentation of certain unrecognized tax benefits as reductions to deferred tax assets rather than as liabilities in the Consolidated Balance Sheets when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The company will be required to adopt this new standard on a prospective basis in the first quarter of fiscal 2015; however, early adoption is permitted as is a retrospective application. The company is currently evaluating
the timing, transition
method and impact of this new standard on its Consolidated Financial Statements.
|
NOTE 3:-
|
OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES
|
December 31,
|
||||||||
2013
|
2012
|
|||||||
Government authorities
|
$ | 432 | $ | 366 | ||||
Employees
|
55 | 113 | ||||||
Prepaid expenses
|
1,386 | 1,294 | ||||||
Foreign currency derivatives
|
- | 24 | ||||||
Others (1)
|
160 | 272 | ||||||
$ | 2,033 | $ | 2,069 |
|
(1)
|
The balance as of December 31, 2013 and 2012, includes the amounts of $ 65 and $ 84, respectively, which are receivable from Nehoray in accordance to the loan sold (see note 1j)
|
NOTE 4:-
|
INVENTORIES
|
December 31,
|
||||||||
2013
|
2012
|
|||||||
Raw materials
|
$ | 2,189 | $ | 2,060 | ||||
Work in process
|
232 | 135 | ||||||
Finished goods
|
3,617 | 1,787 | ||||||
$ | 6,038 | $ | 3,982 |
NOTE 5:-
|
PR
O
PERTY AND EQUIPMENT
|
|
a.
|
Composition:
|
December 31,
|
||||||||
2013
|
2012
|
|||||||
Cost:
|
||||||||
Installed products
|
$ | 6,898 | $ | 4,640 | ||||
Computers and electronic equipment
|
8,612 | 6,831 | ||||||
Office furniture and equipment
|
943 | 756 | ||||||
Motor vehicles
|
11,692 | 11,412 | ||||||
Network installation
|
4,431 | 4,228 | ||||||
Buildings
|
558 | 510 | ||||||
Leasehold improvements
|
2,922 | 1,460 | ||||||
36,056 | 29,837 | |||||||
Accumulated depreciation:
|
||||||||
Installed products
|
4,464 | 3,786 | ||||||
Computers and electronic equipment
|
6,743 | 5,534 | ||||||
Office furniture and equipment
|
629 | 528 | ||||||
Motor vehicles
|
4,839 | 4,732 | ||||||
Network installation
|
4,219 | 3,973 | ||||||
Buildings
|
60 | 46 | ||||||
Leasehold improvements
|
1,127 | 874 | ||||||
22,081 | 19,473 | |||||||
Depreciated cost
|
$ | 13,975 | $ | 10,364 |
|
b.
|
Depreciation expenses for the years ended December 31, 2013, 2012 and 2011 were
$ 3,083, $ 3,030 and $ 3,174, respectively.
|
NOTE 6:-
|
INVESTMENT AND LONG TERM LOANS TO AFFILIATE
|
|
a.
|
In August 2008 the Company incorporated a company in Brazil by the name of Pointer do Brazil S.A. ("Pointer Brazil"). As of December 31, 2012, the Company held 48.8% of the share capital in Pointer Brazil.
|
December 31,
|
||||||||
2013
|
2012
|
|||||||
Invested in equity
|
$ | - | $ | 3,830 | ||||
Accumulated foreign currency translation differences
|
- | (153 | ) | |||||
Accumulated net loss
|
- | (3,430 | ) | |||||
Total investment in affiliate
|
$ | - | $ | 247 |
|
b.
|
In October 2013,
the Company acquired the remaining 51.2% of the share capital in Pointer Brazil, and since then it is a wholly-owned subsidiary (see note 1g.)
|
|
c.
|
Loans to Pointer Brazil
|
|
During 2012 the Company Lend to Pointer Brazil loans in amounts of $434 and $ 286 linked to the Brazilian real. The loans
carry an
annual interest of 21% and 6% respectively. As of December 31, 2012 the outstanding amount of the loans was $567.
|
NOTE 7:-
|
OTHER INTANGIBLE ASSETS, NET
|
|
a.
|
Other intangible assets, net:
|
December 31,
|
||||||||
2013
|
2012
|
|||||||
Cost:
|
||||||||
Patents
|
$ | 639 | $ | 639 | ||||
Developed technology
|
4,890 | 4,890 | ||||||
Customer related intangible
|
18,723 | 16,947 | ||||||
Backlog
|
205 | - | ||||||
Reacquired rights
|
210 | - | ||||||
Non-competition agreement
|
251 | - | ||||||
Brand name
|
4,683 | 4,514 | ||||||
29,601 | 26,990 | |||||||
Accumulated amortization:
|
||||||||
Patents
|
639 | 639 | ||||||
Developed technology (see note 2i)
|
4,890 | 4,890 | ||||||
Customer related intangible
|
16,873 | 15,514 | ||||||
Backlog
|
17 | - | ||||||
Reacquired rights
|
111 | - | ||||||
Non-competition agreement
|
22 | - | ||||||
Brand name
|
4,114 | 3,705 | ||||||
26,665 | 24,748 | |||||||
Amortized cost
|
$ | 2,936 | $ | 2,242 |
NOTE 7:-
|
OTHER INTANGIBLE ASSETS, NET (Cont.)
|
|
b.
|
Amortization and impairment expenses for the years ended December 31, 2013 were $967, in 2012 $ 2,168 from continuing operation and $349 from discontinued operation, and in 2011 $ 2,799.
|
|
c.
|
Estimated amortization expenses for the years ending:
|
December 31,
|
||||
2014
|
906 | |||
2015
|
766 | |||
2016
|
925 | |||
2017
|
176 | |||
2018
|
163 | |||
$ | 2,936 |
NOTE 8:-
|
GOODWILL
|
December 31,
|
||||||||
2013
|
2012
|
|||||||
Goodwill, beginning of the year
|
$ | 47,190 | $ | 44,493 | ||||
Additions in respect of acquisitions
|
4,894 | 1,972 | ||||||
Impairment of Goodwill (see note 2g and 1k)
|
- | (297 | ) | |||||
Foreign currency translation adjustments
|
3,043 | 1,022 | ||||||
Goodwill, end of year
|
$ | 55,127 | $ | 47,190 |
NOTE 9:-
|
SHORT-TERM BANK CREDIT AND CURRENT MATURITIES OF LONG-TERM LOANS FROM BANKS, SHAREHOLDERS AND OTHERS
|
Interest rate
|
December 31,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
%
|
||||||||||||||||
Short-term bank credit and loans:
|
||||||||||||||||
In USD
|
2.85 - 4 | 3 - 4 | $ | 2,133 | $ | 1,566 | ||||||||||
In, or linked to, dollars
|
LIBOR + 4.25
|
LIBOR + 4.25
|
500 | 500 | ||||||||||||
In other currencies
|
16-17 | 37 | 20 | |||||||||||||
2,670 | 2,086 | |||||||||||||||
Current maturities of long-term loans from banks, shareholders and others:
|
||||||||||||||||
In, or linked to, dollars
|
LIBOR + 2
|
LIBOR + 2
|
600 | 800 | ||||||||||||
In NIS linked to CPI
|
2.1-5.48 | - | 488 | |||||||||||||
In NIS
|
5.45-7.39 | - | 4,371 | |||||||||||||
In NIS - variable interest
|
Prime + 0.9-1.4
|
Prime + 0.9-1.4
|
3,564 | 3,384 | ||||||||||||
In NIS
|
3.8 - 6.55 | - | 3,142 | - | ||||||||||||
In other currencies
|
6 - 17 | 667 | - | |||||||||||||
7,973 | 9,043 | |||||||||||||||
$ | 10,643 | $ | 11,129 | |||||||||||||
Unutilized credit lines
|
$ | 6,306 | $ | 6,485 |
NOTE 10:-
|
OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES
|
December 31,
|
||||||||
2013
|
2012
|
|||||||
Employees and payroll accruals
|
$ | 6,205 | $ | 4,733 | ||||
Government authorities
|
930 | 416 | ||||||
Provision for warranty
|
528 | 446 | ||||||
Accrued expenses
|
1,726 | 1,564 | ||||||
Related party
|
53 | 52 | ||||||
Dividend payable to non-controlling interests
|
1,311 | - | ||||||
Others
|
15 | 40 | ||||||
$ | 10,768 | $ | 7,251 |
NOTE 11:-
|
LONG-TERM LOANS FROM BANKS
|
|
a.
|
Composition:
|
Interest rate
|
December 31,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
%
|
||||||||||||||||
In, or linked to, dollars (see c below )
|
3.71 |
LIBOR + 2
|
$ | 2,600 | $ | 1,400 | ||||||||||
In NIS linked to CPI
|
2.1-5.48 | - | 488 | |||||||||||||
In NIS - variable interest
|
Prime+ 0.9 -1.4
|
Prime+ 0.9 - 1.4
|
9,835 | 9,432 | ||||||||||||
In NIS
|
5.45-7.39 | 5.45-7.39 | 4,171 | 7,055 | ||||||||||||
16,606 | 18,375 | |||||||||||||||
Less - current maturities
|
7,306 | 9,031 | ||||||||||||||
Less - discount
|
- | 5 | ||||||||||||||
$ | 9,301 | $ | 9,339 |
|
b.
|
As of December 31, 2013, the aggregate annual maturities of the long-term loans are as follows:
|
2014 (current maturities)
|
7,306 | |||
2015
|
4,535 | |||
2016
|
3,493 | |||
2017
|
1,272 | |||
16,606 |
|
c.
|
In respect of the bank loans provided to the Company for the purpose of funding the 2007 acquisition transaction, pursuant to which the Company acquired the activities and assets of Cellocator Ltd. ("Cellocator") and the acquisition of Pointer Brazil (see note 1g) and utilize of credit facilities, the Company is required to meet certain financial covenants as follows:
|
|
1.
|
The ratio of the shareholders equity to the total consolidated assets will not be less than 20% and the shareholders equity will not be less than $ 20,000, starting December 31, 2007.
|
|
2.
|
The ratio of the Company and its subsidiaries' debt (debt to banks, convertible debenture and loans from others that are not subordinated to the bank less cash) to the annual EBITDA will not exceed 4 in 2010 and thereafter.
|
|
3.
|
The ratio of Pointer Telocation Ltd.'s debt (debt to banks, convertible debenture and loans from others was not subordinated to the bank less cash) to the annual EBITDA will not exceed 4.2 in 2013-2014, 3.5 in 2015, 3 in 2016 and 2.5 in 2017 and thereafter.
|
|
As of December 31, 2013 the Company is in compliance with the financial covenants of its bank loan.
|
NOTE 11:-
|
LONG-TERM LOANS FROM BANKS (Cont.)
|
|
d.
|
Under the credit facility (in respect of the loans denominated in NIS) from the bank, Shagrir is required to meet financial covenants.
The financial covenants are:
|
|
1.
|
The ratio of the debt to the bank to the annual EBITDA will not exceed 5.5.
|
|
2.
|
The ratio of the annual EBITDA to the current maturities (the loan principal plus interest) of long-term loans from the bank will not be less than 1, at any time.
|
|
3.
|
The shareholders' equity, including loans from shareholders, will not be less than NIS 50 million, at any time
|
|
4.
|
Shagrir shall not declare any distribution of dividends without the prior written consent of the bank.
|
|
As of December 31, 2013, Shagrir is in compliance with the financial covenants of its credit facility.
|
NOTE 12:-
|
LONG-TERM LOANS FROM OTHERS
|
|
a.
|
Long-term loans from others - composition:
|
Interest rate
|
December 31,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
%
|
||||||||||||||||
In NIS linked to CPI (see c1 below)
|
4 | 4 | $ | 384 | $ | 169 | ||||||||||
In Euro (see c2 and c3 below)
|
8-16 | 8-16 | 9 | 31 | ||||||||||||
In U.S. dollars (see c4 below)
|
- | - | 737 | 737 | ||||||||||||
In other currencies (see c5 below)
|
6 | - | 838 | - | ||||||||||||
1,968 | 937 | |||||||||||||||
Less - current maturities
|
667 | 12 | ||||||||||||||
$ | 1,301 | $ | 925 |
NOTE 12:-
|
LONG-TERM LOANS FROM SHAREHOLDERS AND OTHERS (Cont.)
|
|
b.
|
As of December 31, 2013, the aggregate annual maturities of the long-term loans from shareholders and others are as follow:
|
2014 (current maturities)
|
667 | |||
2015
|
564 | |||
2016
|
- | |||
2017
|
- | |||
Thereafter
|
737 | |||
1,968 |
|
c.
|
1.
|
During 2008-2009, Shagrir's subsidiary received loan in an amount of $ 140 from its other non-controlling shareholders. The loan bears an annual interest rate of 4% and is linked to the Israeli CPI. According to the purchase agreement the loans will be repaid only after Shagrir's subsidiary will repay in full the loan it received from Shagrir. As of December 31, 2013, the balance of the loan is $ 191.
|
|
2.
|
In July 2013, Shagrir's subsidiary received a loan from its supplier in the amount of NIS $ 216 for the purchase of 9 cars. As of December 31, 2013 the balance of the loan is $ 193. The loan bears an annual interest rate of prime +3.8%.
|
|
3.
|
During August and October 2008, and March 2010, Pointer Romania signed a vehicle capital lease agreement. The liability bears an annual interest rate of 8-16%. The loan will be repaid in 36 equal monthly payments.
|
|
4.
|
In September 2008, Pointer Romania received a loan of EURO 25thousands from its Romanian shareholder. The loan bears an annual interest rate of 2%. During 2013 the Romanian subsidiary paid EURO 6 thousands of the loan balance
|
|
5.
|
The loan balance of Pointer Brazil to Bracco (a former shareholder of Pointer Brazil) as of 31
st
December is $838. The loan bears an annual interest rate of 6% and will be repaid over a period of eighteen months, million (see note 1g).
|
|
6.
|
The loan balance of Pointer Brazil to Bracco (a former shareholder of Pointer Brazil) as of 31
st
December is $875. The loan bears an annual interest rate of 6% and will be repaid over a period of eighteen months, million. (see note 1g.)
|
NOTE 13:-
|
OTHER LONG-TERM LIABILITIES
|
December 31,
|
||||||||
2013
|
2012
|
|||||||
Provision for warranty
|
$ | 238 | $ | 215 | ||||
Deferred taxes
|
5,381 | 3,405 | ||||||
Deferred revenues
|
93 | 145 | ||||||
$ | 5,712 | $ | 3,765 |
NOTE 14:-
|
COMMITMENTS AND CONTINGENT LIABILITIES
|
|
a.
|
Charges:
|
|
1.
|
As collateral for its liabilities, the Company has recorded floating charges on all of its assets, including the intellectual property and equipment, in favor of banks.
|
|
2.
|
Shagrir's subsidiary recorded a first priority floating charge on all of its assets in favor of the bank.
|
|
b.
|
Collateral:
|
|
1.
|
To secure Shagrir's obligations for providing services to several of its customers, Shagrir provided such customers with a bank guarantee in the amount of about $ 2,321 in effect between January 2009 and January 2016.
|
|
2.
|
The Company obtained bank guarantees in the amount of $ 255 in favor of its lessor and customs.
|
|
3.
|
As of December 31, 2013 and 2012, the use of $ 81 and $ 108, respectively, has been restricted following B.C.R.A. (Central Bank of Argentina) regulations, until the company completes the registration with local authorities of certain capital contributions.
|
|
c.
|
Royalties:
|
|
The Company has undertaken to pay royalties to the BIRD Foundation ("BIRD"), at the rate of 5% on sales proceeds of products developed with the participation of BIRD up to the amount received, linked to the U.S. dollar. The contingent obligation as of December 31, 2013 is $ 2,444. No royalties were accrued or paid during 2013, 2012 and 2011.
|
NOTE 14:-
|
COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)
|
|
d.
|
Lease commitments:
|
2014
|
$ | 1,681 | ||
2015
|
1,545 | |||
2016
|
1,348 | |||
2017
|
1,046 | |||
$ | 5,621 |
|
e.
|
Litigation:
|
|
1.
|
As of December 31, 2013, several claims were filed against Shagrir, mainly by customers. The claims are in an amount aggregating to approximately $ 2,350. The substance of the claims is the malfunction of Shagrir's products, which occurred during the ordinary course of business. Shagrir's management, based on the opinion of its legal counsel, is of the opinion that no material costs will arise to Shagrir in respect to these claims.
|
|
f.
|
Commitments:
|
|
1.
|
The Company and DBSI Investment Ltd. ("DBSI"), an equity owner in the Company (see Note 18), have entered into a management services agreement pursuant to which DBSI shall provide management services in consideration of annual management fees of $ 180 for a period of three years commencing on August 1, 2011.
|
|
2.
|
Shagrir entered into a management services agreement with its shareholders, pursuant to which the shareholders will grant management services to Shagrir, in consideration of NIS 1,000 per year linked to CPI. This amount is split between the Company (NIS 120) and the other shareholders of Shagrir.
|
|
3.
|
Under the credit facility from the Bank, Shagrir and the Company are required to meet financial covenants (see Note 11c and 11d).
|
NOTE 15:-
|
EQUITY
|
|
a.
|
Ordinary shares:
|
|
Ordinary shares confer upon their holders voting rights, the right to receive cash dividends and the right to participate in the distribution of excess assets upon liquidation of the Company.
|
|
b.
|
Issued and outstanding share capital:
|
|
1.
|
In January 2007, the Company completed a round of financing for the aggregate amount of $ 4,675, out of which, an amount of $ 2,586 was received as of December 31, 2006, in consideration for 425,000 of the Company's ordinary shares at a price per share of $ 11.0. Under the terms of the investment agreements, the investors were issued warrants to purchase up to 212,500 ordinary shares of the Company, with an exercise price of $ 13.0 per share. As of December 31, 2011 the warrants expired.
|
|
2.
|
On April 2, 2007, the Company entered into and consummated a share purchase agreement with a group of United States institutional investors for the purchase of 805,000 of the Company's ordinary shares for an aggregate price of approximately $ 8,500. Pursuant to the transaction, the investors were also issued warrants to purchase 402,500 of the Company's ordinary shares, such that for each one share purchased, the investors were entitled to a warrant to purchase half a share. The warrants are exercisable into ordinary shares, at an exercise price per share of $ 12.6 and will be exercisable for a period of five years.
|
|
3.
|
On July 18, 2008, the Company consummated a private placement of 140,056 of its ordinary shares to DBSI Investments Ltd., our principal shareholder, for an aggregate price of $ 1,000.
|
|
4.
|
On June 19, 2012, pursuant to the approval of the shareholders of the Company, DBSI purchased 50,000 ordinary shares of the Company at a price per share of $ 2.95, for a total purchase price of $ 147.5 in a private placement (the "Private Placement"). Following the consummation of the Private Placement, DBSI's holdings increased to 2,237,191 ordinary shares, constituting 45.55% of the outstanding ordinary shares of the Company.
|
|
5.
|
On July 26, 2012, the Company completed a rights offering to the Company's ordinary shareholders of rights to purchase an aggregate of 644,034 ordinary shares of the Company for the subscription price of $2.90, per ordinary share (the "Rights Offering"). The Rights Offering was fully subscribed and accordingly, 644,034 ordinary were issued to ordinary shareholders of the Company for aggregate gross proceeds of $1.867 million. Following the Rights Offering, DBSI's ownership interest increased to 49.86% of the outstanding ordinary shares of the Company.
|
|
6.
|
On March 9 2014, the Company completed a round of financing for the aggregate amount of $ 10.44 million, in consideration for 1.13 million of the Company's ordinary shares at a price per share of $ 9.25.
|
NOTE 15:-
|
EQUITY (Cont.)
|
|
c.
|
Options:
|
|
1.
|
In November 2003 the Company adopted an Employee Share Option Plan (2003) (the "2003 Plan"). The Board of Directors of the Company approves, from time to time, increases to the number of shares reserved under the 2003 Plan. To date, the options under the 2003 Plan are and have been granted in accordance with Section 102 to the Israeli Income Tax Ordinance in the Capital Gains Track, all subject to the provisions of the Israeli Income Tax Ordinance. The grant of options is subject to the approval of the Board of Directors of the Company. The exercise price of the options shall be determined by the Board of Directors in its discretion, provided that the price per share is not less than the nominal value of each share. The options usually vest over a period of four years and are valid for a period of five years from the date of grant. The 2003 Plan terminated at the end of November 2013.
|
|
2.
|
On November 30, 2011, the Board of Directors approved an amendment to the 2003 Plan whereby in the event a cash dividend is paid out to the Company’s shareholders, the Board of Directors may adjust the exercise price of any options granted prior to the record date of the dividend distribution but not exercised as of such date.
|
|
3.
|
A summary of employee option activity under the Company's Stock Option Plans as of December 31, 2013 and changes during the year ended December 31, 2013 are as follows:
|
Number of options
|
Weighted-average exercise price
|
Weighted- average remaining contractual term
(in years)
|
Aggregate intrinsic value (in thousands)
|
|||||||||||||
Outstanding at
January 1, 2013
|
271,984 | 6.81 | ||||||||||||||
Granted
|
312,984 | 3.38 | ||||||||||||||
Exercised
|
(10,000 | ) | 3.38 | |||||||||||||
Forfeited
|
(5,000 | ) | 6.81 | |||||||||||||
Cancelled
|
(262,984 | ) | 6.81 | |||||||||||||
Outstanding at December 31, 2013
|
306,984 | $ | 3.4 | 4.51 | $ | 2,592 | ||||||||||
Exercisable at December 31, 2013
|
4,188 | $ | 5.11 | 3.3 | $ | 28 | ||||||||||
Vested and expected to vest at December 31, 2013
|
300,928 | $ | 3.47 | 4.61 | $ | 2,543 |
NOTE 15:-
|
EQUITY (Cont.)
|
|
4.
|
A summary of the status of the Company's employee stock options as of December 31, 2013, 2012 and 2011, and changes during the years then ended, are as follows:
|
Year ended December 31,
|
||||||||||||||||||||||||
2013
|
2012
|
2011
|
||||||||||||||||||||||
Weighted
|
Weighted
|
Weighted
|
||||||||||||||||||||||
average
|
Average
|
average
|
||||||||||||||||||||||
Amount
|
exercise
|
Amount
|
exercise
|
Amount
|
exercise
|
|||||||||||||||||||
of options
|
price
|
of options
|
price
|
of options
|
price
|
|||||||||||||||||||
Options outstanding at beginning of year
|
271,984 | $ | 6.81 | 321,016 | $ | 6.28 | 168,500 | $ | 3.49 | |||||||||||||||
Granted
|
312,984 | $ | 3.38 | - | $ | - | 256,984 | $ | 6.91 | |||||||||||||||
Exercised
|
(10,000 | ) | $ | 3.38 | (1,500 | ) | $ | 3.14 | (88,468 | ) | $ | 3.14 | ||||||||||||
Forfeited
|
(5,000 | ) | $ | 6.81 | - | $ | - | - | $ | - | ||||||||||||||
Forfeited
|
(262,984 | ) | $ | 6.81 | (47,532 | ) | $ | 3.48 | (16,000 | ) | $ | 4.46 | ||||||||||||
Options outstanding at end of year
|
306,984 | $ | 3.4 | 271,984 | $ | 6.81 | 321,016 | $ | 6.28 | |||||||||||||||
Options exercisable at end of year
|
4,188 | $ | 5.11 | 158,824 | $ | 6.81 | 56,532 | $ | 3.68 |
NOTE 15:-
|
EQUITY (Cont.)
|
Options outstanding
|
Options exercisable
|
|||||||||||||||||||||
Range of exercise price
|
Number outstanding at
December 31, 2013
|
Weighted average remaining contractual life
|
Weighted average exercise price
|
Number exercisable at
December 31, 2013
|
Weighted average exercise price
|
|||||||||||||||||
Years
|
||||||||||||||||||||||
3.38 | 305,484 | 4.53 | $ | 3.38 | 2,188 | $ | 4.7 | |||||||||||||||
7.00 | 1,500 | 1.78 | $ | 7.00 | 2,000 | $ | 1.78 | |||||||||||||||
306,984 | 4.51 | $ | 3.4 | 4,188 | $ | 3.3 |
|
5.
|
On October 13, 2010, the Board of Directors resolved to issue to one of our directors options exercisable to 3,000 of the company's ordinary shares, pursuant to the plan, which will vest in three equal annual installments over a period of three years, commencing as of date of the grant, at an exercise price of $ 7.00 per share.
|
|
6.
|
In January 2011, the Board of Directors appointed the Company's new Chief Executive Officer (CEO) effective as of February 1, 2011. Under the terms of his employment, the new CEO was granted 246,984 options at an exercise price of $7.00, in accordance with 2003 option plan, which will vest over a three year period, according to the vesting dates as stipulated in the employment agreement, commencing upon the effective date of his employment. The new CEO will also be entitled to an annual performance bonus of up to one year's salary which will be calculated in accordance with certain fixed criteria relating to the company's growth and profitability in the year preceding payment of the bonus.
In lieu of the above-mentioned options, on September 12, 2013 the Shareholders resolved to grant to the Company's Chief Executive Officer options to purchase 246,984 Ordinary Shares of the Company with an exercise price per share of $3.38, reflecting the average closing price of the share during a 90 day period preceding the date on which the Board of Directors approved the Compensation Policy of the Company, July 8, 2013. The options shall vest over a period of two years, such that at the end of each three month period from the date of the Shareholders resolution, the Chief Executive Officer shall be entitled to one eighth of the options. The exercise price of the options shall be adjusted for stock dividend. The fair value of the new options measured at $599 as of the grant day.
|
|
7.
|
On August 31, 2011, the Board of Directors resolved to issue to the Company's Chief Financial Officer, options exercisable to 10,000 of the company's ordinary shares, pursuant to the plan, which will vest in four equal annual installments over a period of four years, commencing as of date of the grant, at an exercise price of $ 4.80 per share.
In lieu of the above-mentioned options, on July 8, 2013 the Board of Directors resolved to grant to the Company's Chief Finance Officer options to purchase 20,000 Ordinary Shares of the Company with an exercise price per share of $3.38, reflecting the average closing price of the share during a 90 day period preceding
the date on which the Board of Directors approved the Compensation Policy of the Company, July 8, 2013. The options shall vest over a period of two years, such that at the end of each three month period from the date of the Board of Directors resolution, the Chief Finance Officer shall be entitled to one eighth of the options. The fair value of the new options measured at $31 as of the grant day.
|
NOTE 15:-
|
EQUITY (Cont.)
|
|
8.
|
On July 8, 2013, the Board of Directors resolved to issue to the Company's employees, options exercisable to 41,000 of the company's ordinary shares, pursuant to the plan, which will vest in four equal annual installments over a period of four years, commencing as of date of the grant, at an exercise price of $ 3.38 per share.
|
|
9.
|
In December 2013 the Company adopted an Employee Share Option Plan (2013) (the "2013 Plan"). The Board of Directors of the Company approved 376,712 of shares reserved under the 2013 Plan. To date, the options under the 2013 Plan are granted in accordance with Section 102 to the Israeli Income Tax Ordinance in the Capital Gains Track, all subject to the provisions of the Israeli Income Tax Ordinance. The grant of options is subject to the approval of the Board of Directors of the Company. The exercise price of the options shall be determined by the Board of Directors in its discretion, provided that the price per share is not less than the nominal value of each share, or to the extent required pursuant to applicable law or to qualify for favorable tax treatment, not less than 100% of the closing price of the share on the market on the date of grant or average of the closing price within a specific time frame prior to the grant as determined by the Board of
Directors or a committee of the Board of Directors. Generally, options vest over a period of four years are valid for a period of seven years from the date of grant.
As of December 31, 2013, 376,712 options are available for future grant under the 2013 Plan.
|
|
10.
|
For restricted shares units grant to employees after balance sheet date see note 21c.
|
|
d.
|
Dividends:
Any dividend distributed by the Company will be declared and paid in dollars, subject to statutory limitations. The Company's policy is not to declare dividends out of tax exempt earnings.
During 2012, Shagrir distributed dividends in an amount of approximately $ 2,669, out of which $ 1,215 was paid to non-controlling interests.
On December 2013, Shagrir declared dividend in an amount of approximately $ 2,881, out of which $ 1,311 is payable to non-controlling interests.
|
NOTE 16:-
|
NET EARNINGS (LOSS) PER SHARE
|
Year ended
December 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Numerator:
|
||||||||||||
Numerator for basic net earnings per share - Net income (loss) from continuing operations
|
$ | 6,320 | $ | 1,833 | $ | (8,527 | ) | |||||
Effect of diluting securities
|
- | - | (33 | ) | ||||||||
Numerator for diluted net earnings per share - Net income (loss) from continuing operations
|
$ | 6,320 | $ | 1,833 | $ | (8,560 | ) | |||||
Denominator:
|
||||||||||||
Denominator for basic net earnings per share - weighted-average number of shares outstanding (in thousands)
|
5,558 | 5,166 | 4,789 | |||||||||
Denominator for diluted net earnings per share - adjusted weighted average shares and assumed exercises (in thousands)
|
5,697 | 5,166 | 4,789 | |||||||||
Basic net earnings (loss) per share from continuing operations
|
$ | 1.14 | $ | 0.35 | $ | (1.78 | ) | |||||
Diluted net earnings (loss) per share from continuing operations
|
$ | 1.10 | $ | 0.35 | $ | (1.79 | ) |
Year ended
December 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Numerator:
|
||||||||||||
Numerator for basic net earnings per share - Net loss from discontinuing operations
|
$ | - | $ | (630 | ) | $ | - | |||||
Numerator for diluted net earnings per share - Net loss from continuing operations
|
$ | - | $ | (630 | ) | $ | - | |||||
Denominator:
|
||||||||||||
Denominator for basic net earnings per share - weighted-average number of shares outstanding (in thousands)
|
- | 5,166 | - | |||||||||
Denominator for diluted net earnings per share - adjusted weighted average shares and assumed exercises (in thousands)
|
- | 5,166 | - | |||||||||
Basic net loss per share from discontinuing operations
|
$ | - | $ | (0.12 | ) | $ | - | |||||
Diluted net loss per share from discontinuing operations
|
$ | - | $ | (0.12 | ) | $ | - |
NOTE 17:-
|
INCOME TAXES
|
|
a.
|
Israeli Corporate Income Tax Rates
Corporate tax rates in Israel were 24% in 2011, 25% in 2012and 25% in 2013.
In December 2011 the Knesset passed the Law for the Tax Burden Reform (Amended Legislation) – 2011 ("the Tax Burden Reform"), which came into effect on January 1, 2012. Pursuant to the Tax Burden Reform, the corporate tax rate is scheduled to remain at a rate of 25% for future tax years. In view of this increase in the corporate tax rate to 25% in 2012, the real capital gains tax rate and the real betterment tax rate were also increased accordingly.
Corporate tax rates in Mexico were 30% in 2011, 2012 and 2013.
Corporate tax rates in Brazil were 34% in 2011, 2012 and 2013.
Corporate tax rates in Argentina were 35% in 2011, 2012 and 2013.
On August 5, 2013, the "Knesset" issued the Law for Changing National Priorities (Legislative Amendments for Achieving Budget Targets for 2013 and 2014), 2013 ("the Budget Law"), which consists, among others, of fiscal changes whose main aim is to enhance the collection of taxes in those years.
These changes include, among others, increasing the corporate tax rate from 25% to 26.5%, cancelling the reduction in the tax rates applicable to privileged enterprises (9% in development area A and 16% elsewhere) and, in certain cases, increasing the rate of dividend withholding tax within the scope of the Law for the Encouragement of Capital Investments to 20% effective from January 1, 2014. There are also other changes such as taxation of revaluation gains effective from August 1, 2013. The provisions regarding
revaluation gains will become effective only after the publication of regulations defining what should be considered as "retained earnings not subject to corporate tax" and regulations that set forth provisions for avoiding double taxation of overseas assets. As of the date of approval of these financial statements, these regulations have not been issued.
The deferred tax balances included in the financial statements as of December 31, 2013 are calculated according to the new tax rates that were substantially enacted as of the reporting date and, therefore, comply with the above changes, as applicable to the Company.
The net effect of the Tax Burden Reform on the deferred tax balances of the Company was recognized in the period of enactment (fourth quarter of 2011). The implementation of the Tax Burden Reform by the Company increased deferred tax liabilities by approximately $ 1,174. The adjustment of the deferred tax balances resulted in a decrease in net income in 2011 of approximately $ 1,174, which was recorded in taxes on income and a decrease in the net profit approximately $ 1,174.
|
NOTE 17:-
|
INCOME TAXES (Cont.)
|
|
b.
|
Tax benefits under the Law for the Encouragement of Industry (Taxation), 1969:
The Company has the status of an "industrial company", as defined by this law. According to this status and by virtue of regulations published thereunder, the Company is entitled to claim a deduction of accelerated depreciation on equipment used in industrial activities, as determined in the regulations issued under the Inflationary Law. The Company is also entitled to amortize a patent or rights to use a patent or intellectual property that are used in the enterprise's development or advancement, to deduct issuance expenses for shares listed for trading, and to file consolidated financial statements under certain conditions.
|
|
c.
|
The Law for the Encouragement of Capital Investments, 1959 ("the Law"):
On August 5, 2013, the "Knesset" issued the Law for Changing National Priorities (Legislative Amendments for Achieving Budget Targets for 2013 and 2014), 2013 which consists of Amendment 71 to the Law for the Encouragement of Capital Investments ("the Amendment"). According to the Amendment, the tax rate on preferred income form a preferred enterprise in 2014 and thereafter will be 16% (in development area A - 9%).
The Amendment also prescribes that any dividends distributed to individuals or foreign residents from the preferred enterprise's earnings as above will be subject to tax at a rate of 20%.
The Company has evaluated the effect of the adoption of the Amendment on its financial statements, and as of the date of the approval of the financial statements, the Company believes that it will not apply the Amendment. Accordingly, the Company has not adjusted its deferred tax balances as of December 31, 2013. The Company's may change its position in the future.
|
|
d.
|
Income (loss) before taxes on income:
|
Year ended
December 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Domestic
|
$ | 10,116 | $ | 4,145 | $ | (2,556 | ) | |||||
Foreign
|
(1,848 | ) | (690 | ) | (1,913 | ) | ||||||
$ | 8,268 | $ | 3,455 | $ | (4,469 | ) |
NOTE 17:-
|
INCOME TAXES (Cont.)
|
|
e.
|
Deferred taxes:
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes, and amounts used for income tax purposes. Significant components of the deferred tax liabilities and assets of the Company and its subsidiaries are as follows:
|
|
1.
|
Provided in respect of the following:
|
December 31,
|
||||||||
2013
|
2012
|
|||||||
Reserves and accruals
|
$ | 771 | $ | 615 | ||||
Carryforward tax losses
|
32,007 | 26,928 | ||||||
Other temporary differences
|
1,727 | 1,620 | ||||||
Total deferred tax assets before valuation allowance
|
$ | 34,505 | $ | 29,163 | ||||
Valuation allowance (3)
|
(30,410 | ) | (26,095 | ) | ||||
Net deferred tax assets
|
$ | 4,096 | $ | 3,068 | ||||
Goodwill and other intangible assets
|
(9,290 | ) | (6,244 | ) | ||||
Other temporary differences
|
(214 | ) | (227 | ) | ||||
Total deferred tax liabilities
|
$ | (9,504 | ) | $ | (6,471 | ) | ||
Total deferred tax Liabilities
|
$ | (5,408 | ) | $ | (3,405 | ) |
|
2.
|
Deferred taxes are included in the consolidated balance sheets, as follows:
|
December 31,
|
||||||||
2013
|
2012
|
|||||||
Long-term Liabilities
|
$ | (5,408 | ) | $ | (3,405 | ) | ||
$ | (5,408 | ) | $ | (3,405 | ) |
|
3.
|
The Company and its subsidiaries (except Shagrir) have provided valuation allowances in respect of deferred tax assets resulting from tax losses carryforward and other temporary differences. Since the Company and its subsidiaries (except for Shagrir) have a history of losses, it is more likely than not that the deferred taxes regarding the losses carryforward and other temporary differences will not be realized in the foreseeable future.
|
NOTE 17:-
|
INCOME TAXES (Cont.)
|
|
4.
|
Reconciling items between the statutory tax rate of the Company and the effective tax rate:
|
Year ended December 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Income (loss) before taxes, as reported in the consolidated statements of operations
|
$ | 8,268 | $ | 3,455 | $ | (4,469 | ) | |||||
Statutory tax rate
|
25 | % | 25 | % | 24 | % | ||||||
Theoretical tax expenses on the above amount at the Israeli statutory tax rate
|
$ | 2,067 | $ | 864 | $ | (1,072 | ) | |||||
Tax adjustment in respect of different tax rates in subsidiaries and changes in tax rates
|
307 | 34 | 1,064 | |||||||||
Operating carryforward losses for which a valuation allowance was provided
|
454 | 302 | 2,219 | |||||||||
Realization of carryforward tax losses for which a valuation allowance was provided and change in valuation allowance in respect of deferred taxes
|
(799 | ) | (501 | ) | - | |||||||
Profit raise from gaining control in subsidiary previously treated by the equity method
|
(825 | ) | - | - | ||||||||
Nondeductible expenses and other permanent differences
|
133 | 160 | 172 | |||||||||
$ | 1,337 | $ | 861 | $ | 2,383 |
|
f.
|
Carryforward tax losses and deductions:
Carryforward tax losses of the Company totaled approximately $ 88,530 (including a capital loss in the amount of approximately $ 34,667) as of December 31, 2013. The carryforward tax losses have no expiration date.
Carryforward tax losses of Pointer Argentina are approximately $ 278 as of December 31, 2013. The carryforward tax losses will expire from 2014 to 2016.
Carryforward tax losses of Shagrir totaled approximately $ 16,134 as of December 31, 2013. The carryforward tax losses have no expiration date.
Carryforward tax losses of Pointer Mexico totaled approximately $ 8,853 as of December 31, 2013. The carryforward tax losses will expire from 2014 to 2022.
Carryforward tax losses of Pointer Brazil totaled approximately $ 3,525 as of December 31, 2013. The carryforward tax losses have no expiration date.
|
NOTE 17:-
|
INCOME TAXES (Cont.)
|
|
g.
|
Final tax assessments:
Tax assessments for the Company and Shagrir are considered final as of the 2009 tax year.
Tax assessments for Pointer Mexico are considered final as of the 2007 tax year.
Tax assessments for Pointer Argentina are considered final as of the 2009 tax year.
|
|
h.
|
Taxes on income (tax benefit) included in the consolidated statements of operations:
|
Year ended
December 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Current
|
$ | 65 | $ | 14 | $ | 5 | ||||||
Deferred
|
1,272 | 847 | 2,378 | |||||||||
$ | 1,337 | $ | 861 | $ | 2,383 | |||||||
Domestic
|
$ | 1,320 | $ | 847 | $ | 2,378 | ||||||
Foreign
|
17 | 14 | 5 | |||||||||
$ | 1,337 | $ | 861 | $ | 2,383 |
NOTE 18:-
|
BALANCES AND TRANSACTIONS WITH RELATED PARTIES
|
|
a.
|
Balances with related parties:
|
December 31,
|
||||||||
2013
|
2012
|
|||||||
Other accounts payable and accrued expenses:
|
||||||||
DBSI (see Note 14f(2))
|
$ | 53 | $ | 52 |
|
b.
|
Transactions with related parties:
|
Year ended
December 31,
|
||||||||||||
2013
|
2012
|
2011
|
||||||||||
Sales to affiliate (see Note 1g)
|
$ | 596 | $ | 1,187 | $ | 410 | ||||||
Management fees to DBSI (see Note 14f(2))
|
$ | 180 | $ | 180 | $ | 180 | ||||||
Sales to related parties
|
$ | 41 | $ | 63 | $ | 65 | ||||||
Purchase from related parties
|
$ | 2,219 | $ | 484 | $ | 5 |
NOTE 19:-
|
SEGMENT, CUSTOMER AND GEOGRAPHIC INFORMATION
|
|
a.
|
General:
Commencing January 2008, the Company has two reportable segments that are related to continuing operations: the Cellocator segment and the Pointer segment.
The Cellocator segment designs, develops and produces leading mobile resource management products, including asset tracking, fleet management and security products for sale to third party operators providing mobile resource management services.
The Pointer segment acts as an operator by bundling the products of the Cellocator segment together with a range of services, including stolen vehicle retrieval services and fleet management services, and also provides road-side assistance services for sale to insurance companies, fleets and individual customers.
During 2008, as a result of the 2007 acquisition transaction in which the Company acquired Cellocator and following the determination of the CODM (chief operating decision maker), which is the Company's Chief Executive Officer, to control and manage the results of the Company's business by means of two segments, the Company began to produce discrete operating results of two business units, the Cellocator segment and the Pointer segment.
The Company evaluates performance and allocates resources based on operating profit or loss. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies.
|
NOTE 19:-
|
SEGMENT, CUSTOMER AND GEOGRAPHIC INFORMATION (Cont.)
|
|
b.
|
The following presents segment results of operations for the year ended December 31, 2013:
|
Cellocator segment
|
Pointer segment
|
Total
|
||||||||||
Segments revenues
|
$ | 24,268 | $ | 81,990 | $ | 106,258 | ||||||
Intersegments revenues
|
(8,401 | ) | - | (8,401 | ) | |||||||
Revenues from external customers
|
$ | 15,867 | $ | 81,990 | $ | 97,857 | ||||||
Segments operating profit
|
$ | 3,065 | $ | 4,890 | $ | 7,955 | ||||||
Segments assets
|
$ | 36,513 | $ | 78,930 | $ | 115,443 | ||||||
Depreciation, amortization and impairment expenses
|
$ | 291 | $ | 3,758 | $ | 4,049 | ||||||
Expenditures for assets
|
$ | 135 | $ | 4,528 | $ | 4,663 |
Segments operating income
|
$ | 7,955 | ||
Intercompany adjustments on intersegment sales
|
(1,909 | ) | ||
Operating income
|
$ | 6,046 | ||
Segments assets
|
$ | 115,443 | ||
Intercompany elimination
|
(1,779 | ) | ||
Total assets
|
$ | 113,664 |
NOTE 19:-
|
SEGMENT, CUSTOMER AND GEOGRAPHIC INFORMATION (Cont.)
|
|
b.
|
The following presents segment results of operations for the year ended December 31, 2012:
|
Cellocator segment
|
Pointer segment
|
Total
|
||||||||||
Segments revenues
|
$ | 22,660 | $ | 68,540 | $ | 91,200 | ||||||
Intersegments revenues
|
(6,368 | ) | - | (6,368 | ) | |||||||
Revenues from external customers
|
$ | 16,292 | $ | 68,540 | $ | 84,832 | ||||||
Segments operating profit
|
$ | 1,731 | $ | 3,015 | $ | 4,746 | ||||||
Segments assets
|
$ | 12,522 | $ | 85,003 | $ | 97,525 | ||||||
Depreciation, amortization and impairment expenses
|
$ | 561 | $ | 4,985 | $ | 5,546 | ||||||
Expenditures for assets
|
$ | 156 | $ | 3,877 | $ | 4,033 |
Segments operating income
|
$ | 4,746 | ||
Intercompany adjustments on intersegment sales
|
342 | |||
Operating income
|
$ | 5,088 | ||
Segments assets
|
$ | 97,525 | ||
Intercompany elimination
|
(1,240 | ) | ||
Total assets
|
$ | 96,285 |
NOTE 19:-
|
SEGMENT, CUSTOMER AND GEOGRAPHIC INFORMATION (Cont.)
|
|
The following presents segment results of operations for the year ended December 31, 2011:
|
Cellocator segment
|
Pointer segment
|
Total
|
||||||||||
Segments revenues
|
$ | 24,199 | $ | 68,709 | $ | 92,908 | ||||||
Intersegments revenues
|
(6,990 | ) | - | (6,990 | ) | |||||||
Revenues from external customers
|
$ | 17,209 | $ | 68,709 | $ | 85,918 | ||||||
Segments operating profit (loss)
|
$ | (5,366 | ) | $ | 2,512 | $ | (2,854 | ) | ||||
Segments assets
|
$ | 16,780 | $ | 74,146 | $ | 90,926 | ||||||
Depreciation, amortization and impairment expenses
|
$ | 8,224 | $ | 4,486 | $ | 12,710 | ||||||
Expenditures for assets
|
$ | 247 | $ | 4,198 | $ | 4,445 |
Segments operating income
|
$ | (2,854 | ) | |
Intercompany adjustments on intersegment sales
|
241 | |||
Operating income
|
$ | (2,613 | ) | |
Segments assets
|
$ | 90,926 | ||
Intercompany elimination
|
(1,588 | ) | ||
Total assets
|
$ | 89,338 |
NOTE 19:-
|
SEGMENT, CUSTOMER AND GEOGRAPHIC INFORMATION (Cont.)
|
|
c.
|
Summary information about geographical areas:
|
Year ended
December 31,
|
|||||||||||||
2013
|
2012
|
2011
|
|||||||||||
1. |
Revenues *):
|
||||||||||||
Israel
|
$ | 68,735 | $ | 60,423 | $ | 61,498 | |||||||
Latin America
|
16,422 | 12,611 | 12,856 | ||||||||||
Europe
|
8,928 | 10,289 | 10,275 | ||||||||||
Other
|
3,772 | 1,509 | 1,289 | ||||||||||
$ | 97,857 | $ | 84,832 | $ | 85,918 |
|
*)
|
Revenues are attributed to geographic areas based on the location of the end-customers.
|
December 31,
|
|||||||||||||
2013
|
2012
|
2011
|
|||||||||||
2. |
Long-lived assets:
|
||||||||||||
Israel
|
$ | 68,832 | $ | 58,200 | $ | 56,735 | |||||||
Argentina
|
779 | 1,203 | 1,179 | ||||||||||
Mexico
|
381 | 386 | 445 | ||||||||||
Brazil
|
2,475 | - | - | ||||||||||
Other
|
8 | 7 | 3 | ||||||||||
$ | 72,475 | $ | 59,796 | $ | 58,362 |
|
d.
|
In 2013, 2012 and 2011, none of our customer accounted above 10% of the Company's revenues.
|
NOTE 20:-
|
SELECTED STATEMENTS OF OPERATIONS DATA
|
Year ended
December 31,
|
|||||||||||||
2013
|
2012
|
2011
|
|||||||||||
a. |
Financial expenses, net:
|
||||||||||||
Income:
|
|||||||||||||
Interest on short-term bank deposits
|
$ | 42 | $ | 21 | $ | 15 | |||||||
Interest on long-term loans to affiliate
|
21 | 67 | - | ||||||||||
Foreign currency transaction adjustments
|
922 | 138 | - | ||||||||||
Other
|
- | 14 | |||||||||||
985 | 226 | 29 | |||||||||||
Expenses:
|
|||||||||||||
Bank charges and interest expenses
|
1,335 | 1,631 | 1,620 | ||||||||||
Foreign currency transaction adjustments
|
652 | 171 | 93 | ||||||||||
Interest on long-term loans to others
|
39 | 24 | 64 | ||||||||||
Interest on debenture
|
- | - | 31 | ||||||||||
Other
|
36 | 28 | - | ||||||||||
2,062 | 1,854 | 1,808 | |||||||||||
$ | 1,077 | $ | 1,628 | $ | 1,779 | ||||||||
b. |
Other expenses (income), net:
|
||||||||||||
Capital loss (gain)
|
$ | - | $ | 5 | $ | (33 | ) | ||||||
Profit raise from gaining control in subsidiary previously account for by the equity method
|
(3,299 | ) | - | - | |||||||||
Loss from sale of subsidiaries
|
- | - | 110 | ||||||||||
$ | (3,299 | ) | $ | 5 | $ | 77 |
NOTE 21:-
|
SUBSEQUENT EVENTS
|
a.
|
On January 15, 2014, the Company acquired the 45.5% interest in Shagrir Systems Ltd. ("Shagrir") that it did not previously own. As a result, the Company owns 100% of the share capital of Shagrir. In consideration for the acquired interest in Shagrir: (i) the Company paid an aggregate of $ 7.8 million using credit facilities from banking institutions and (ii) issued 994,357 Ordinary Shares to Shagrir’s selling shareholders. In order to finance the transaction Shagrir has been provided a loan of $ 11.5 million from two banks.
|
b.
|
On March 9 2014, the Company completed a round of financing for the aggregate amount of $ 10.44 million, in consideration for 1.13 million of the Company's ordinary shares at a price per share of $ 9.25.
|
c.
|
On March 27, 2014, the Board of Directors resolved to issue to certain of the Company's employees, restricted shares units ("RSUs"), pursuant to which 41,800 of the Company's ordinary shares may be issued pursuant to the plan. The RSUs will vest in four equal annual installments over a period of four years, commencing as of the date of the grant, at an exercise price of NIS 3.00 per share.
|
1.
|
We have audited the accompanying balance sheets of POINTER DO BRASIL COMERCIAL S.A. ("the Company") as of 30
th
. September 2013 and 31
st
. December 2012, and the related statements of comprehensive income, changes in shareholders’ equity and cash flows for the nine months period ended in 30
th
. September 2013 and for the years ended in 31
st
. December 2012 and 31
st
. December 2011, accompanied by explanatory notes, expressed in US Dollars. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
|
2.
|
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provide a reasonable basis for our opinion.
|
3.
|
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the company as of 30
th
. September 2013 and 31
st
. December 2012 and the results of its comprehensive income, changes in shareholders’ equity and its cash flows for the nine months period ended in 30
th
. September 2013 and for the years ended in 31
st
. December 2012 and 31
st
. December 2011 in conformity with U.S. generally accepted accounting principles.
|
4.
|
Without qualifying our opinion, we stress the fact that the statements of comprehensive income, of changes in equity and of cash flows, are being presented by comparing the nine-month period ended 30
th
September 2013 with fiscal years (twelve-month periods) ended 31
st
. December 2011 and 2012. Our unqualified opinion on those statements were dated 21
st
March 2012 and 21
st
. May 2013, respectively.
|
Nine months ended September 30, |
Year ended
December 31,
|
Year ended
December 31,
|
||||||||||||||
Note
|
2013
|
2012
|
2011
|
|||||||||||||
Revenues – Services Rendered
|
$ | 6,977 | $ | 7,623 | $ | 3,802 | ||||||||||
Cost of Services Rendered
|
(4,143 | ) | (4,810 | ) | (3,833 | ) | ||||||||||
Gross profit
|
2,834 | 2,813 | (31 | ) | ||||||||||||
Operating expenses:
|
||||||||||||||||
Selling and marketing
|
(605 | ) | (458 | ) | (994 | ) | ||||||||||
General and administrative
|
(1,309 | ) | (1,557 | ) | (2,065 | ) | ||||||||||
Operating income
|
920 | 798 | (3,090 | ) | ||||||||||||
Financial and other expenses, net
|
14 | (108 | ) | (231 | ) | (55 | ) | |||||||||
Income before taxes on income
|
812 | 567 | (3,145 | ) | ||||||||||||
Taxes on income
|
13 | (204 | ) | (324 | ) | - | ||||||||||
Net Income (Loss)
|
608 | 243 | (3,145 | ) |
Share capital
|
Accumulated other comprehensive
income
|
Retained earnings
|
Total
|
|||||||||||||
Balance as of January 1
st
, 2011
|
4,330 | (150 | ) | (3,212 | ) | 968 | ||||||||||
Issuance of shares
|
2,937 | - | - | 2,937 | ||||||||||||
Comprehensive income:
|
||||||||||||||||
Foreign currency translation adjustments
|
- | 517 | - | 517 | ||||||||||||
Net loss
|
- | - | (3,145 | ) | (3,145 | ) | ||||||||||
Balance as of 31
st
. December 2011
|
7,267 | 367 | (6,357 | ) | 1,277 | |||||||||||
Comprehensive income:
|
||||||||||||||||
Foreign currency translation adjustments
|
(116 | ) | - | (116 | ) | |||||||||||
Net income
|
243 | 243 | ||||||||||||||
Balance as of 31
st
. December 2012
|
7,267 | 251 | (6,114 | ) | 1,404 | |||||||||||
Comprehensive income:
|
||||||||||||||||
Foreign currency translation adjustments
|
(146 | ) | (146 | ) | ||||||||||||
Net income
|
608 | 608 | ||||||||||||||
Balance as of 30
th.
September 2013
|
7,267 | 105 | (5,506 | ) | 1,866 |
Nine months ended
September 30,
2013
|
Year ended December 31, 2012
|
Year ended December 31, 2011
|
||||||||||
Net income
|
$ | 608 | $ | 243 | $ | (3,145 | ) | |||||
Adjustments required to reconcile net income to net cash provided by operating activities:
|
||||||||||||
Depreciation
|
532 | 653 | 332 | |||||||||
Decrease (increase) in trade receivables, net
|
141 | (1,093 | ) | (432 | ) | |||||||
Decrease (increase) in other accounts receivable and prepaid expenses
|
(33 | ) | 19 | (102 | ) | |||||||
Decrease (increase) in inventories
|
(507 | ) | (199 | ) | (609 | ) | ||||||
Increase in trade payables
|
(151 | ) | 115 | 1,324 | ||||||||
Increase (decrease) in other accounts payable and accrued expenses
|
149 | 491 | 733 | |||||||||
Decrease (increase) in other long term liabilities
|
(74 | ) | (12 | ) | (25 | ) | ||||||
Net cash provided by (used in) operating activities
|
665 | 217 | (1,924 | ) | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||
Purchase of property and equipment
|
(569 | ) | (1,297 | ) | (2,068 | ) | ||||||
Net cash used in investing activities
|
(569 | ) | (1,297 | ) | (2,068 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||
Receipt of long-term loans from banks
|
- | 1,956 | 472 | |||||||||
Receipt of long-term loans from shareholders
|
114 | - | (45 | ) | ||||||||
Repayment of long-term loans from banks
|
(120 | ) | (486 | ) | 3,609 | |||||||
Net cash provided by financing activities
|
(6 | ) | 1,470 | 4,036 | ||||||||
Effect of exchange rate changes on cash and cash equivalents
|
8 | (44 | ) | (41 | ) | |||||||
Change in cash and cash equivalents
|
98 | 346 | 3 | |||||||||
Cash and cash equivalents at the beginning of the period
|
682 | 336 | 333 | |||||||||
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
|
780 | 682 | 336 |
1.
|
GENERAL
|
2.
|
SIGNIFICANT ACCOUNTING PRACTICES
|
a.
|
Use of estimates:
|
b.
|
Financial statements in U.S. Dollars:
|
c.
|
Cash equivalents:
|
d.
|
Inventories:
|
e.
|
Allowance for doubtful accounts
|
f.
|
Property and equipment:
|
%
|
||
Computers and software
|
20-33
|
|
Office furniture and equipment
|
20
|
|
Motor vehicles
|
20
|
|
Installed products
|
20
|
|
Leasehold improvements
|
20
|
g.
|
Provision for warranty:
|
h.
|
Revenue recognition:
|
i.
|
Deferred income taxes:
|
3.
|
TRADE RECEIVABLES
|
September 30,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
Accounts receivable from customers
|
789 | 925 | ||||||
Accounts receivable from shareholders (Pointer Telocation Ltd)
|
108 | 118 | ||||||
Allowance for doubtful accounts
|
(263 | ) | (282 | ) | ||||
Trade receivables, net
|
634 | 761 |
September 30,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
Prepaid expenses
|
230 | 171 | ||||||
Taxes receivable
|
- | 40 | ||||||
Advances to suppliers
|
- | 4 | ||||||
Employees
|
2 | 3 | ||||||
232 | 218 |
September 30,
|
December 31,
|
|||||||||||||||||||
2013
|
2012
|
|||||||||||||||||||
Acquisition cost
|
Accumulated
depreciation
|
Net
|
Net
|
Annual depreciation
rate %
|
||||||||||||||||
Computers and SW
|
823 | (369 | ) | 454 | 460 | 20-33 | ||||||||||||||
Office furniture and equipment
|
51 | (29 | ) | 22 | 23 | 20 | ||||||||||||||
Motor vehicles
|
36 | (26 | ) | 10 | 17 | 20 | ||||||||||||||
Installed products
|
3,005 | (997 | ) | 2,008 | 2,182 | 20 | ||||||||||||||
3,915 | (1,421 | ) | 2,494 | 2,682 |
Changes in Acquisition Cost in the nine months ended 30
th
September 2013:
|
December 31,
2012
|
September 30, 2013
|
|||||||||||||||||||
Acquisition Cost
|
Foreign Exchange Effect
|
New Acquisitions
|
Sales & Write-Offs
|
Ending Balance
|
||||||||||||||||
Computers and SW
|
750 | (63 | ) | 136 | - | 823 | ||||||||||||||
Office furniture and equipment
|
45 | (4 | ) | 10 | - | 51 | ||||||||||||||
Motor vehicles
|
39 | (3 | ) | 0 | - | 36 | ||||||||||||||
Installed products
|
2,818 | (236 | ) | 437 | (14 | ) | 3,005 | |||||||||||||
3,652 | (306 | ) | 583 | (14 | ) | 3,915 |
September 30, 2013
|
December 31, 2012
|
|||||||
Pointer Telocation Ltd. (note 3)
|
108 | 118 | ||||||
Total Intercompany Accounts Receivable
|
108 | 118 |
b. Trade Payables
|
September 30, 2013
|
December 31, 2012
|
|||||||
Pointer Telocation Ltd. (note 9)
|
17 | 7 | ||||||
Total Intercompany Accounts Payable
|
17 | 7 |
c. Interest Paid
|
September 30, 2013
|
December 31, 2012
|
December 31, 2011
|
||||||||||
Pointer Telocation Ltd.
|
39 | 17 | - | |||||||||
Total of Paid Interests on Intercompany Loans
|
39 | 17 | - |
Interest rate
|
September 30,
|
December 31,
|
||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
% (Nominal APR)
|
||||||||||||||||
Bradesco
|
17 | % | 17 | % | 28 | 12 | ||||||||||
HSBC
|
16 | % | 16 | % | 16 | 57 | ||||||||||
Santander
|
12 | % | 12 | % | 281 | 377 | ||||||||||
325 | 446 | |||||||||||||||
Less - current maturities
|
(141 | ) | (170 | ) | ||||||||||||
Long-term
|
184 | 276 |
Interest rate
|
September 30,
|
December 31,
|
||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
% (Nominal APR)
|
||||||||||||||||
Pointer Telocation Ltd.
|
14 | % | 14 | % | 462 | 316 | ||||||||||
Bracco do Brasil Ltda.
|
6 | % | 6 | % | 977 | 1,169 | ||||||||||
1,439 | 1,485 | |||||||||||||||
Less - current maturities
|
(126 | ) | (774 | ) | ||||||||||||
Long-term
|
1,313 | 711 |
September 30,
2013
|
December 31,
2012
|
|||||||
Pointer Telocation Ltd.
|
7 | 7 | ||||||
Others | 1,180 | 1,456 | ||||||
Total Trade payables
|
1,197 | 1,463 |
September 30,
2013
|
December 31,
2012
|
|||||||
Payroll accruals
|
453 | 200 | ||||||
Tax liability
|
121 | 240 | ||||||
Deferred revenue
|
464 | 578 | ||||||
Installation, commission expenses and other accrued expenses
|
196 | 174 | ||||||
Total other current liabilities
|
1,234 | 1,192 |
12.
|
SHAREHOLDER´S EQUITY
|
a.
|
Ordinary shares:
|
b.
|
Issued and outstanding share capital as at 30
TH
.September 2013:
|
Shares
|
Thousands of US$ equivalents
|
|||||||||||||||
Shareholder
|
Subscribed
|
Subscribed
|
Paid-In Capital
|
Unpaid Capital
|
||||||||||||
Bracco do Brasil Empreendimentos e Participações Ltda.
|
7.680.000 | 4,094 | 3,774 | 320 | ||||||||||||
Pointer Telocation Ltd.
|
7.320.000 | 3,902 | 3,493 | 409 | ||||||||||||
Total
|
15.000.000 | 7,996 | 7,267 | 729 |
September 30,
2013
|
December 31,
2012
|
December 31,
2011
|
||||||||||
Deferred tax assets:
|
||||||||||||
NOLs at the tax rate
|
1,254 | 1,538 | 1,401 | |||||||||
Other temporary differences
|
26 | 96 | 53 | |||||||||
Gross deferred tax asset before valuation allowance
|
1,280 | 1,634 | 1,454 | |||||||||
Valuation allowance
|
(1,280 | ) | (1,634 | ) | (1,454 | ) | ||||||
Net deferred tax assets
|
- | - | - |
September 30,
2013
|
December 31,
2012
|
December 31,
2011
|
||||||||||
Income (loss) before taxes, as reported in the consolidated statements of operations
|
812 | 567 | (3,145 | ) | ||||||||
Statutory tax rate
|
34 | % | 34 | % | 34 | % | ||||||
Nominal tax expense on the above amount at the Brazilian statutory tax rate
|
276 | 193 | (1,069 | ) | ||||||||
Nondeductible temporal expenses and other
|
18 | 550 | - | |||||||||
Operating carryforward losses for which a valuation allowance was provided in prior years (see above)
|
(90 | ) | (419 | ) | 1,069 | |||||||
204 | 324 | - |
Nine months ended
September 30,
2013
|
||||||
a. |
Financial expenses, net:
|
|||||
Income:
|
||||||
Interest on short-term bank deposits
|
43 | |||||
Foreign currency transaction adjustments
|
- | |||||
Other
|
21 | |||||
64 | ||||||
Expenses:
|
||||||
Bank charges and interest expenses
|
25 | |||||
Foreign currency transaction adjustments
|
5 | |||||
Interest on long-term loans to others
|
130 | |||||
Other
|
12 | |||||
172 | ||||||
108 |
1.
|
Pointer do Brasil Participações Ltda.
, a company organized under the laws of Brazil, headquartered in São Paulo, State of São Paulo, at Av. Brigadeiro Faria Lima, 1355, 17º andar, sala 1715, CEP 01452-919, registered at CNPJ/MF under No. 18.519.697/0001-77, hereby represented by its legal representative, Gustavo Silva Ladeira (“
Buyer
“); and
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2.
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Bracco do Brasil Empreendimentos e Participações Ltda.
, a company organized under the laws of Brazil, headquartered in São Paulo, State of São Paulo, at Rua Ostenda, nº 79, 3º Andar, Vila Vermelha registered at CNPJ/MF under No. 10.686.562/0001-94, hereby represented by its legal representative, Roseli Maria Cáceres (“
Seller
“);
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1.
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Pointer do Brasil Comercial S.A.
, a corporation organized under the laws of Brazil, headquartered at Rua Ostenda, nº 79, Vila Vermelha, São Paulo-SP, registered at the CNPJ/MF under No. 10.426.974/0001-95, hereby represented by its legal representative, Henrique Vogler (“
Company
”);
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2.
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Pointer Telocation Ltd.
, a company organized under the laws of Israel, headquartered at 14 Hamelacha St. Rosh Haayin 48091, Israel, registered at CNPJ/MF under No. 10.231.692/0001-31, hereby represented by its legal representative, Karin Alvo (”
Pointer Israel
”);
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3.
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Jacitara Holding Participações Ltda.
, a company organized under the laws of Brazil, headquartered at Av. Presidente Vargas, 734, Cidade Nova I, Indaiatuba-SP, registered at the CNPJ/MF under No. 14.766.292/0001-82, hereby represented by its legal representative, Josué Eraldo da Silva (“
Jacitara
”);
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4.
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Josué Eraldo da Silva
, a Brazilian citizen, divorced, businessman, bearer of the Identity Card RG No. 19.707.348-7 SSP/SP and registered at the CPF/MF under No. 082.003.288-30, resident and domiciled at Rua Nove de Julho, 1010, apt. 22, Centro, Indaiatuba-SP (“
Josué
”);
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5.
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Roseli Maria Caceres
, a Brazilian citizen, married, businesswoman, bearer of the Identity Card RG No. 8.540.453 SSP/SP and registered at the CPF/MF under No. 032.296.208-01, resident and domiciled at Rua José Monteiro Filho, 270, apt. 111, Vila Suzana, São Bernardo do Campo-SP (“
Roseli
”);
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6.
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Therezinha de Jesus Marques Moura
, a Brazilian citizen, married, businesswoman, bearer of the Identity Card RG No. 4.463.451-1 SSP/SP and registered at the CPF/MF under No. 152.814.068-09, resident and domiciled at Rua Professor Pedreira de Freitas, 69, apt. 51, Tatuapé, São Paulo –SP (“
Therezinha
”);
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7.
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Cyro Buonavoglia
, Brazilian citizen, widow, businessman, bearer of the Identity Card RG No. 4.121.199-6 SS/SP and registered at the CPF/MF under No. 124.201.408-00, resident and domiciled at Rua Curitiba, 195, apto. 101, Moema, São Paulo –SP (“
Cyro
”);
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8.
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Buonny Emprendimentos e Participações Ltda.
, a company organized under the laws of Brazil, headquartered at Alameda dos Guatás, nº 191, 2nd floor, suíte 26, Saúde, São Paulo-SP, registered at the CNPJ/MF under No. 06.260.557/0001-48, hereby represented by its legal representative, Cyro Buonavoglia (“
Buonny
”).
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9.
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Eicon Controles Inteligentes de Negócios Ltda.
, a company organized under the laws of Brazil, headquartered at Rua Ostenda, nº 79, Vila Vermelha, São Paulo-SP, registered at the CNPJ/MF under No. 53.174.058/0001-18, hereby represented by its legal representative, Luiz Alberto Rodrigues (“
Eicon
”).
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1.
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Purchase and Sale
.
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1.
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Transaction Value
.
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2.
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Closing
.
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3.
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Seller Representations and Warranties
.
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4.
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Buyer’s Representations and Warranties
.
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5.
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Acts on Closing
.
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6.
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No Competition and No Solicitation
.
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7.
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Indemnification
.
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8.
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Miscellaneous
.
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9.
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Arbitration
.
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by/pp.
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Pointer do Brasil Participações Ltda.
Gustavo Silva Ladeira
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by/pp.
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Bracco do Brasil Empreendimentos e Participações Ltda.
Roseli Maria Cáceres
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by/pp.
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Pointer do Brasil Participações Ltda.
Gustavo Silva Ladeira
|
by/pp.
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Bracco do Brasil Empreendimentos e Participações Ltda.
Roseli Maria Cáceres
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Jurisdiction
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Name of Subsidiary
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Argentina
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Pointer Localización y Asistencia S.A.(1)
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Israel
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Shagrir Systems Ltd. (2)
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Mexico
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Pointer Recuperacion Mexico S.A. (3)
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Romania
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S.C. Pointer S.R.L. (4)
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Brazil
|
Pointer do Brasil Participações Ltda.
Pointer do Brazil Commercial S.A.(5)
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USA
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Pointer Telocation Inc. (6)
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India
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Pointer Telocation India (7)
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Israel
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Car2Go Ltd. (8)
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(1)
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We hold 93% of the issued and outstanding shares of Pointer Argentina.
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(2)
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We hold 100% of the issued and outstanding shares of Shagrir.
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(3)
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We hold 74% of the issued and outstanding shares of Pointer Mexico.
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(4)
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Shagrir holds 65% of the issued and outstanding shares of S.C. Pointer S.R.L.
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(5)
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We hold 100% of the issued and outstanding shares of Pointer do Brasil Participações Ltda. We hold 100% of Pointer do Brazil Commercial S.A., of which 51.2% are held through of Pointer do Brasil Participações Ltda. and 48.8% are held directly by Pointer Telocation Ltd.
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(6)
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We hold 100% of the issued and outstanding shares of Pointer Telocation Inc.
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(7)
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We hold 100% of the issued and outstanding shares of Pointer Telocation India.
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(8)
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Shagrir holds 58.46% of the issued and outstanding shares of Car2Go Ltd. and is in the process of being issued additional shares which will bring its holdings to 62.31% of the issued and outstanding shares of Car2Go Ltd.
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March 27, 2014
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/s/ David Mahlab
David Mahlab
Chief Executive Officer
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March 27, 2014
|
/s/ Zvi Fried
Zvi Fried
Chief Financial and Principal Accounting Officer
|
1.
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the Report fully complies with the requirements of section 13(a) of
the Securities Exchange Act of 1934; and
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2.
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the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
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March 27, 2014
|
/s/ David Mahlab
David Mahlab
Chief Executive Officer
|
1.
|
the Report fully complies with the requirements of section 13(a) of
the Securities Exchange Act of 1934; and
|
2.
|
the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
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March 27, 2014
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/s/ Zvi Fried
Zvi Fried
Chief Financial and Principal Accounting Officer
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Kost Forer Gabbay & Kasierer
3 Aminadav St.
Tel-Aviv 6706703, Israel
|
Tel: +972-3-6232525
Fax: +972-3-5622555
ey.com
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Tel-Aviv, Israel
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/s/ Kost, Forer, Gabbay & Kasierer
|
March 27, 2014
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A Member of Ernst & Young Global
|
Audit • Tax • Advisory
|
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Grant Thornton Argentina S.R.L.
|
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Av. Corrientes 327 3° Piso
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CP 1043, Buenos Aires, Argentina
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T (54-11) 4105-0000
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F (54-11) 4105-0100
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www.GrantThornton.com
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We consent to the incorporation by reference in the Registration Statement Form F-3 (No. 333-111019, No. 333-119998, No. 333-126257, No. 333-143399, No. 333- 167144, 333-187384 and 333-194483) and related Prospectuses and on Form S-8 (No. 333-173155, No. 333-118897, No. 333-113420, No. 333-141306 and No. 333-139717) pertaining to the Employees’ Stock Option Plan of Pointer Telocation Ltd., of our report dated 26th February 2014, with respect to the financial statements of
POINTER DO BRASIL PARTICIPAÇÕES LTDA
., included in the Annual Report (Form 20-F) of Pointer Telocation Ltd., for the year ended 31st December 2013, filed with the Securities and Exchange Commission.
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São Paulo, Brazil, 26
th
. March 2014.
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RICARDO JULIO RODIL
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Partner
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BAKER TILLY BRASIL
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AUDITORES INDEPENDENTES S/S
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Avenida Engenheiro Luiz Carlos Berrini, 1461 - 4º e 12º andares - Cidade Monções
CEP:
04571-011 - São Paulo, SP - Tel.: (11)5504-3800 e Fax: (11)5504-3805
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