Title of each class
|
Name of each exchange on which registered
|
||
Ordinary Shares, par value NIS 0.331/3 per share
|
Nasdaq Global Select Market
|
U.S. GAAP x
|
International Financial Reporting Standards as issued by the International Accounting Standards Board o
|
Other o
|
Page
|
||
Report of Independent Registered Public Accounting Firm
|
F-2
|
|
Consolidated Balance Sheets
|
F-3-F-4
|
|
Consolidated Statements of Income
|
F-5
|
|
Statements of Comprehensive Income Changes in Equity
|
F-6
|
|
Statement of Changes in Equity
|
F-7-F-8
|
|
Consolidated Statements of Cash Flows
|
F-9
|
|
Notes to Consolidated Financial Statements
|
F-11-F-42
|
Description of Document
|
|
1.1
|
Amended and Restated Articles of Association of the Company (1)
|
1.2
|
Form of Memorandum of Association of the Company (English Translation) (1)
|
2.1
|
Shareholders Agreement, dated May 18, 1998, by and between Moked Ituran Ltd., Moked Services, Information, Management, Investments, Yehuda Kahane Ltd., F.K. Generators and Equipment Ltd., Gideon Ezra, Ltd., Efraim Sheratzky, and Yigal Shani (English translation). (1)
|
2.2
|
Form of Amendment to Shareholders Agreement dated May 18, 1998, by and between Moked Ituran Ltd., Moked Services, Information, Management and Investments, Yehuda Kahane Ltd., F.K. Generators and Equipment Ltd., Gideon Ezra, Ltd., Efraim Sheratzky and/or T.S.D. Holdings Ltd., and Yigal Shani and/or G.N.S. Holdings Ltd. (English translation). (1)
|
4.1
|
Agreement dated January 23, 2007, between E-Com Global Electronic Commerce Ltd. and Gil Sheratzky (English translation) (4)
|
4.2
|
Agreement with an Independent Contractor, dated February 1, 2003, by and between the Registrant, Izzy Sheratzky, and A. Sheratzky Holdings Ltd. (English translation). (1)
|
4.3
|
Agreement with an Independent Contractor, dated September 5, 2002, by and between the Registrant, Eyal Sheratzky, and A. Sheratzky Holdings Ltd., addendum thereof, dated October 28, 2002, and resolution of the Registrant's shareholders dated February 24, 2004 (English translation). (1)
|
4.4
|
Agreement with an Independent Contractor, dated September 5, 2002, by and between the Registrant, Nir Sheratzky, and A. Sheratzky Holdings Ltd., addendum thereof, dated October 28, 2002, and resolution of the Registrant's shareholders dated February 24, 2004 (English translation). (1)
|
4.5
|
Addendum No. 2 dated December 13, 2007 (effective January 8, 2003) and Addendum No. 3 dated April 6, 2011 to the agreement between the Company and A. Sheratzky Holdings Ltd., and Nir Sheratzky (4)
|
4.6
|
Addendum No. 2 dated December 13, 2007 (effective January 8, 2003) and Addendum No. 3 dated April 6, 2011 to the agreement between the Company and A. Sheratzky Holdings Ltd., and Eyal Sheratzky (4)
|
4.7
|
Addendum No. 1 dated April 6, 2011 to the agreement between the Company and A. Sheratzky Holdings Ltd. and Izzy Sheratzky (4)
|
4.8
|
Consulting Services Agreement, dated March 23, 1998, by and between the Registrant and Yehuda Kahane Ltd., including addendum thereof, as of May 25, 2003 (English translation). (1)
|
4.9
|
Unprotected Lease Agreement, dated February 7, 2002, by and between Mofari Ltd. and the Registrant and addendum thereof, dated February 19, 2002 (English translation) (1)
|
4.10
|
Lease Agreement, dated May 29, 2002, by and between Rinat Yogev Nadlan and Ituran Cellular Communication Ltd. (English translation). (1)
|
4.11
|
Deed of undertaking and indemnification, dated November 12, 2000, executed by the Registrant to the benefit of Bank Hapoalim, B.M. on behalf of Ituran Localizacao e Controle (English translation). (1)
|
4.12
|
Indenture, dated August 6, 2001, by the Registrant for the benefit of Bank Hapoalim, B.M. (English translation). (1)
|
4.13
|
Indenture, dated January 29, 2002, by the Registrant for the benefit of Bank Hapoalim, B.M. (floating lien) (English translation). (1)
|
4.14
|
Indenture, dated January 29, 2002, by the Registrant for the benefit of Bank Hapoalim, B.M. (English translation). (1)
|
4.15
|
Deed of undertaking for repayment of loan, dated May 20, 2004, made by the Registrant in favor of Bank Hapoalim, B.M. (English translation). (1)
|
4.16
|
Lease Agreement, dated March 16, 2000, by and between Teleran Localizacao e Controle Ltda. and T4U Holding B.V., and addendum thereof, dated May 31, 2000. (1)
|
4.17
|
Lease Agreement, dated November 23, 2001, by and between Ituran de Argentina S.A. and El Sr. Mario Galuppo (English translation). (1)
|
4.18
|
Lease Agreement, dated September 7, 2001, by and between Ituran de Argentina S.A. and El Sr. Gustavo Eduardo Bazan (English translation). (1)
|
4.19
|
Form of Directors' Letter of Indemnity (English translation). (1)
|
4.20
|
Agreement with Mapa dated April 26, 2007 (2)
|
4.21
|
Share Purchase Agreement between dated as of November 15, 2007 by and between Ituran Location and Control Ltd., Telematics Wireless Ltd. and ST Electronics (Info-Comm Systems) Pte Ltd. (3)
|
4.22
|
Frame Product and Services Purchase Agreement dated January 1, 2008 by and between Ituran Location and Control Ltd. and Telematics Wireless Ltd. (3)
|
4.23
|
Radio Location System License Agreement, dated July 13, 2004, by and between Teletrac, Inc., and Telematics Wireless Ltd. (1)
|
8
|
List of significant subsidiaries*
|
12.1
|
Certification by chief executive officer as required by Rule 13a-14(a)
|
12.2
|
Certification by person serving in the capacity of chief financial officer as required by Rule 13a-14(a)
|
13.1
|
Certification by co-chief executive officers as required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code
|
13.2
|
Certification by person serving in the capacity of chief financial officer as required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code
|
(1)
|
Incorporated by reference to Registrant’s Registration Statement on Form F-1 (File No. 333-128028) filed on September 23, 2005.
|
(2)
|
Filed as an exhibit to the annual report on Form 20-F for the year ended December 31, 2006 and incorporated herein by reference.
|
(3)
|
Filed as an exhibit to the annual report on Form 20-F for the year ended December 31, 2007 and incorporated herein by reference.
|
(4)
|
Filed as an exhibit to the annual report on Form 20-F for the year ended December 31, 2010 and incorporated herein by reference.
|
Page
|
|
F-2
|
|
Consolidated Financial Statements:
|
|
F-3
|
|
F-5
|
|
F-6
|
|
F-7
|
|
F-9
|
|
F-11
|
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE STOCKHOLDERS OF
ITURAN LOCATION AND CONTROL LTD.
|
Fahn Kanne & Co.
Head Office
23 Menachem Begin Road
Tel-Aviv 66184, ISRAEL
P.O.B. 36172, 61361
|
US dollars
|
||||||||
December 31,
|
||||||||
(in thousands)
|
2012
|
2011
|
||||||
Current assets
|
||||||||
Cash and cash equivalents
|
29,453 | 35,270 | ||||||
Investments in marketable securities
|
- | 68 | ||||||
Accounts receivable (net of allowance for doubtful accounts)
|
26,190 | 25,294 | ||||||
Loan to former employee
|
- | 340 | ||||||
Other current assets (Note 2)
|
15,399 | 15,165 | ||||||
Inventories (Note 3)
|
14,747 | 10,881 | ||||||
85,789 | 87,018 | |||||||
Long-term investments and other assets
|
||||||||
Deposit in Escrow (Note 12A1)
|
4,939 | 4,888 | ||||||
Investments in affiliated company (Note 4A)
|
160 | 207 | ||||||
Investments in other company (Note 4B)
|
82 | 80 | ||||||
Other non-current assets (Note 5)
|
1,890 | 2,216 | ||||||
Deferred income taxes (Note 16)
|
4,174 | 5,568 | ||||||
Funds in respect of employee rights upon retirement
|
5,515 | 4,741 | ||||||
16,760 | 17,700 | |||||||
Property and equipment, net (Note 6)
|
34,156 | 40,870 | ||||||
Intangible assets, net (Note 7)
|
2,591 | 3,355 | ||||||
Goodwill (Note 8)
|
8,043 | 8,514 | ||||||
Total assets
|
147,339 | 157,457 |
The accompanying notes are an integral part of the consolidated financial statements.
|
US dollars
|
||||||||
December 31,
|
||||||||
(in thousands, except share data)
|
2012
|
2011
|
||||||
Current liabilities
|
||||||||
Credit from banking institutions (Note 9)
|
221 | 390 | ||||||
Accounts payable
|
9,524 | 9,319 | ||||||
Deferred revenues
|
9,526 | 7,869 | ||||||
Other current liabilities (Note 10)
|
22,373 | 20,966 | ||||||
41,644 | 38,544 | |||||||
Long-term liabilities
|
||||||||
Long term Loans (Note 11(
|
- | 173 | ||||||
Liability for employee rights upon retirement
|
7,915 | 6,865 | ||||||
Provision for contingencies
|
3,864 | 4,250 | ||||||
Other non-current liabilities
|
460 | 753 | ||||||
Deferred revenues
|
806 | 728 | ||||||
Deferred income taxes (Note 16)
|
643 | 792 | ||||||
13,688 | 13,561 | |||||||
Contingent liabilities, liens and guarantees (Note 12)
|
||||||||
Equity:
|
||||||||
Stockholders’ equity (Note 13)
|
||||||||
Share capital – ordinary shares of NIS 0.33⅓ par value:
|
1,983 | 1,983 | ||||||
Authorized – December 31, 2012 and 2011 – 60,000,000 shares
|
||||||||
Issued and outstanding – December 31, 2012 and 2011 – 23,475,431 shares
|
||||||||
Additional paid- in capital
|
71,927 | 71,927 | ||||||
Accumulated other comprehensive income
|
11,984 | 14,153 | ||||||
Retained earning
|
32,187 | 43,185 | ||||||
Treasury stock at cost – December 31, 2012 and 2011 – 2,507,314 shares
|
(30,054 | ) | (30,054 | ) | ||||
Stockholders’ equity
|
88,027 | 101,194 | ||||||
Non-controlling interests
|
3,980 | 4,158 | ||||||
Total equity
|
92,007 | 105,352 | ||||||
Total liabilities and equity
|
147,339 | 157,457 |
The accompanying notes are an integral part of the consolidated financial statements.
|
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands except earnings per share)
|
2012
|
2011
|
2010
|
|||||||||
Revenues:
|
||||||||||||
Location-based services
|
114,565 | 120,410 | 108,101 | |||||||||
Wireless communications products
|
35,753 | 39,757 | 39,724 | |||||||||
150,318 | 160,167 | 147,825 | ||||||||||
Cost of revenues:
|
||||||||||||
Location-based services
|
46,371 | 50,977 | 42,137 | |||||||||
Wireless communications products
|
29,786 | 29,758 | 33,037 | |||||||||
76,157 | 80,735 | 75,174 | ||||||||||
Gross profit
|
74,161 | 79,432 | 72,651 | |||||||||
Research and development expenses
|
669 | 631 | 481 | |||||||||
Selling and marketing expenses
|
8,489 | 8,543 | 8,675 | |||||||||
General and administrative expenses
|
33,439 | 34,984 | 31,671 | |||||||||
Other expenses, net (Note 14)
|
1,617 | 8,691 | 1,156 | |||||||||
Operating income
|
29,947 | 26,583 | 30,668 | |||||||||
Other (expenses) income, net (Note 12A2)
|
6,755 | (819 | ) | (14,745 | ) | |||||||
Financing income, net (Note 15)
|
987 | 2,100 | 139 | |||||||||
Income before income tax
|
37,689 | 27,864 | 16,062 | |||||||||
Income tax (Note 16)
|
(11,690 | ) | (5,655 | ) | (6,286 | ) | ||||||
Share in losses of affiliated companies, net
|
(39 | ) | (23 | ) | (3 | ) | ||||||
Net income for the year
|
25,960 | 22,186 | 9,773 | |||||||||
Less: Net income attributable to non-controlling interest
|
(1,080 | ) | (908 | ) | (1,071 | ) | ||||||
Net income attributable to the Company
|
24,880 | 21,278 | 8,702 | |||||||||
Basic and diluted earnings per share attributable to Company’s stockholders (Note 17)
|
1.19 | 1.01 | 0.42 | |||||||||
Basic and diluted weighted average number of shares outstanding
|
20,968 | 20,968 | 20,968 |
The accompanying notes are an integral part of the consolidated financial statements.
|
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2012
|
2011
|
2010
|
|||||||||
Net income for the year
|
25,960 | 22,186 | 9,773 | |||||||||
Other comprehensive income:
|
||||||||||||
Foreign currency translation adjustments
|
(2,286 | ) | (9,448 | ) | 5,295 | |||||||
Unrealized loss in respect of derivative financial instruments designated for cash flow hedge, net
|
- | - | (103 | ) | ||||||||
Realized losses in respect of derivative instrument designated for cash flow hedge
|
- | - | 225 | |||||||||
Other comprehensive income (loss)
|
(2,286 | ) | (9,448 | ) | 5,417 | |||||||
Comprehensive income
|
23,674 | 12,738 | 15,190 | |||||||||
Less: comprehensive income attributable to non-controlling interests
|
(963 | ) | (533 | ) | (1,298 | ) | ||||||
Comprehensive income attributable to the Company
|
22,711 | 12,205 | 13,892 |
The accompanying notes are an integral part of the consolidated financial statements.
|
(in thousands)
|
||||||||||||||||||||||||||||||||
COMPANY STOCKHOLDERS
|
||||||||||||||||||||||||||||||||
Ordinary shares
|
||||||||||||||||||||||||||||||||
Number
of shares
|
Share capital amount
|
Additional paid in capital
|
Accumulated other comprehensive income
|
Retained earnings
|
Treasury
stock
|
Non-controlling interests
|
Total
|
|||||||||||||||||||||||||
US dollars (except for number of shares)
|
||||||||||||||||||||||||||||||||
Balance as of January 1, 2010
|
23,476 | 1,983 | 73,554 | 18,036 | 66,607 | (30,054 | ) | 3,717 | 133,843 | |||||||||||||||||||||||
Changes during 2010:
|
||||||||||||||||||||||||||||||||
Net income
|
- | - | - | - | 8,702 | - | 1,071 | 9,773 | ||||||||||||||||||||||||
Other comprehensive income
|
- | - | - | 5,190 | - | - | 227 | 5,417 | ||||||||||||||||||||||||
Acquisition of non-controlling interests
|
- | - | (1,627 | ) | - | - | - | (623 | ) | (2,250 | ) | |||||||||||||||||||||
Dividend paid
|
- | - | - | - | (31,620 | ) | - | - | (31,620 | ) | ||||||||||||||||||||||
Balance as of December 31, 2010
|
23,476 | 1,983 | 71,927 | 23,226 | 43,689 | (30,054 | ) | 4,392 | 115,163 | |||||||||||||||||||||||
Changes during 2011:
|
||||||||||||||||||||||||||||||||
Net income
|
- | - | - | - | 21,278 | - | 908 | 22,186 | ||||||||||||||||||||||||
Other comprehensive income
|
- | - | - | (9,073 | ) | - | - | (375 | ) | (9,448 | ) | |||||||||||||||||||||
Dividend paid to non-controlling interest
|
- | - | - | - | - | - | (767 | ) | (767 | ) | ||||||||||||||||||||||
Dividend paid
|
- | - | - | - | (21,782 | ) | - | - | (21,782 | ) | ||||||||||||||||||||||
Balance as of December 31, 2011
|
23,476 | 1,983 | 71,927 | 14,153 | 43,185 | (30,054 | ) | 4,158 | 105,352 |
The accompanying notes are an integral part of the consolidated financial statements.
|
(in thousands)
|
||||||||||||||||||||||||||||||||
COMPANY STOCKHOLDERS
|
||||||||||||||||||||||||||||||||
Ordinary shares
|
||||||||||||||||||||||||||||||||
Number
of shares
|
Share capital amount
|
Additional paid in capital
|
Accumulated other comprehensive income
|
Retained earnings
|
Treasury
stock
|
Non-controlling interests
|
Total
|
|||||||||||||||||||||||||
US dollars (except for number of shares)
|
||||||||||||||||||||||||||||||||
Balance as of January 1, 2012
|
23,476 | 1,983 | 71,927 | 14,153 | 43,185 | (30,054 | ) | 4,158 | 105,352 | |||||||||||||||||||||||
Changes during 2012:
|
||||||||||||||||||||||||||||||||
Net income
|
- | - | - | - | 24,880 | - | 1,080 | 25,960 | ||||||||||||||||||||||||
Other comprehensive income
|
- | - | - | (2,169 | ) | - | - | (117 | ) | (2,286 | ) | |||||||||||||||||||||
Dividend paid to non-controlling interest
|
- | - | - | - | - | - | (1,141 | ) | (1,141 | ) | ||||||||||||||||||||||
Dividend paid
|
- | - | - | - | (33,308 | ) | - | (33,308 | ) | |||||||||||||||||||||||
Dividend declared
|
- | - | - | - | (2,570 | ) | - | - | (2,570 | ) | ||||||||||||||||||||||
Balance as of December 31, 2012
|
23,476 | 1,983 | 71,927 | 11,984 | 32,187 | (30,054 | ) | 3,980 | 92,007 |
The accompanying notes are an integral part of the consolidated financial statements.
|
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2012
|
2011
|
2010
|
|||||||||
Cash flows from operating activities
|
||||||||||||
Net income for the year
|
25,960 | 22,186 | 9,773 | |||||||||
Adjustments to reconcile net income to net cash from operating activities:
|
||||||||||||
Depreciation, amortization and impairment of goodwill
|
14,671 | 17,801 | 15,875 | |||||||||
Exchange differences on principal of deposit and loans, net
|
55 | (429 | ) | 839 | ||||||||
Gains in respect of trading marketable securities
|
(2 | ) | (27 | ) | (5 | ) | ||||||
Increase in liability for employee rights upon retirement
|
888 | 854 | 667 | |||||||||
Share in losses of affiliated companies, net
|
39 | 23 | 3 | |||||||||
Deferred income taxes
|
1,698 | (2,224 | ) | (1,159 | ) | |||||||
Capital losses (gains) on sale of property and equipment, net
|
23 | 63 | (299 | ) | ||||||||
Decrease (increase) in accounts receivable
|
(300 | ) | 3,649 | (4,669 | ) | |||||||
Decrease (increase) in other current assets
|
2,023 | (1,784 | ) | (3,728 | ) | |||||||
Increase in inventories
|
(3,609 | ) | (2,985 | ) | (73 | ) | ||||||
Decrease in accounts payable
|
(372 | ) | (180 | ) | (3,810 | ) | ||||||
Increase in deferred revenues
|
1,532 | 1,550 | 1,752 | |||||||||
Increase (decrease) in other current liabilities
|
(2,445 | ) | 7,355 | 3,568 | ||||||||
Write-off of account receivable in respect of sale of subsidiary
|
(484 | ) | - | - | ||||||||
Litigation obligation (litigation obligation adjustment)
|
(7,462 | ) | - | 14,745 | ||||||||
Net cash provided by operating activities
|
32,215 | 45,852 | 33,479 | |||||||||
Cash flows from investment activities
|
||||||||||||
Increase in funds in respect of employee rights upon retirement, net of withdrawals
|
(662 | ) | (563 | ) | (662 | ) | ||||||
Capital expenditures
|
(9,676 | ) | (16,161 | ) | (18,344 | ) | ||||||
Intangible assets expenditures
|
- | (74 | ) | (90 | ) | |||||||
Deposit in escrow
|
- | 8,223 | - | |||||||||
Deposit
|
(291 | ) | 384 | (52 | ) | |||||||
Proceeds from sale of property and equipment
|
319 | 614 | 1,286 | |||||||||
Investments in marketable securities
|
- | - | (2,664 | ) | ||||||||
Sale of marketable securities
|
70 | 1,418 | 5,552 | |||||||||
Repayment of loan to a former employee
|
355 | - | - | |||||||||
Company no longer consolidated (Appendix A)
|
326 | - | - | |||||||||
Adjustment of proceeds received from sale of subsidiary
|
- | (4,650 | ) | - | ||||||||
Net cash used in investment activities
|
(9,559 | ) | (10,809 | ) | (14,974 | ) | ||||||
Cash flows from financing activities
|
||||||||||||
Short term credit from banking institutions, net
|
(310 | ) | 299 | 46 | ||||||||
Repayment of long term loans
|
(44 | ) | (46 | ) | (18 | ) | ||||||
Acquisition of non-controlling interests
|
- | - | (2,250 | ) | ||||||||
Dividend paid
|
(33,308 | ) | (21,782 | ) | (31,620 | ) | ||||||
Dividend paid to non-controlling interest
|
(1,141 | ) | (767 | ) | - | |||||||
Settlement of litigation obligation in connection with financing transaction
|
7,462 | (22,419 | ) | - | ||||||||
Net cash used in financing activities
|
(27,341 | ) | (44,715 | ) | (33,842 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents
|
(1,132 | ) | (1,732 | ) | 1,198 | |||||||
Net decrease in cash and cash equivalents
|
(5,817 | ) | (11,404 | ) | (14,139 | ) | ||||||
Balance of cash and cash equivalents at beginning of year
|
35,270 | 46,674 | 60,813 | |||||||||
Balance of cash and cash equivalents at end of year
|
29,453 | 35,270 | 46,674 |
US dollars
|
||||||||
Year ended December 31,
|
||||||||
(in thousands)
|
2012
|
2011
|
||||||
Working capital (excluding cash and equivalents and inventory), net
|
130 | - | ||||||
Account receivable in respect of sale of subsidiary
|
430 | - | ||||||
Property and equipment , net
|
(750 | ) | - | |||||
Intangible assets
|
(136 | ) | - | |||||
(326 | ) | - |
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2012
|
2011
|
2010
|
|||||||||
Interest paid
|
518 | 470 | 85 | |||||||||
Income taxes paid, net of refunds
|
8,950 | 9,007 | 10,475 |
NOTE 1
|
-
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
|
A.
|
General
|
|
1.
|
Operations
|
|
a.
|
Ituran Location and Control Ltd. (the “Company”) commenced operations in 1994. The Company and its subsidiaries (the “Group”) are engaged in the provision of location-based services and machine-to-machine wireless communications products for use in stolen vehicle recovery, fleet management and other applications.
|
|
b.
|
Regarding litigation with respect to the sale of the subsidiary Telematics Wireless Ltd., see Note 12A1.
|
|
c.
|
Regarding the district court decision with respect to Leonardo P.L.’s claim, see Note 12A2.
|
|
d.
|
Regarding the tax dispute in Brazil, see Note 12A3.
|
|
2.
|
Functional currency and translation to the reporting currency
|
Exchange rate
of one US dollar
|
Israeli CPI(*)
|
|||||||||||
NIS
|
Real
|
|||||||||||
At December 31,
|
||||||||||||
2012
|
3.733 | 2.0435 |
112.15 points
|
|||||||||
2011
|
3.821 | 1.8758 |
110.34 points
|
|||||||||
2010
|
3.549 | 1.6662 |
108.00 points
|
|||||||||
Increase (decrease) during the year:
|
||||||||||||
2012
|
(2.30 | )% | (8.94 | )% | 1.6 | % | ||||||
2011
|
7.66 | % | 12.57 | % | 2.2 | % | ||||||
2010
|
(5.99 | )% | (4.31 | )% | 2.7 | % |
|
(*)
|
Based on the Index for the month ending on each balance sheet date, on the basis of 2008 average 100.
|
NOTE 1
|
-
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
|
|
A.
|
General (cont.)
|
3.
|
Basis of presentation
|
|
4.
|
Use of estimates in the preparation of financial statements
|
B.
|
Principles of consolidation
|
|
C.
|
Cash and cash equivalents
|
|
D.
|
Deposits in escrow
|
|
E.
|
Marketable securities
|
NOTE 1
|
-
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
|
|
E.
|
Marketable securities (cont.)
|
|
F.
|
Treasury stock
|
|
G.
|
Allowance for doubtful accounts
|
|
H.
|
Inventories
|
|
I.
|
Investment in affiliated companies
|
|
J.
|
Investment in other companies
|
NOTE 1
|
-
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
|
|
K.
|
Derivatives
|
|
L.
|
Property and equipment
|
|
1.
|
Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are depreciated on the straight-line method over the shorter of the estimated useful life of the property or the duration of the lease.
|
|
2.
|
Rates of depreciation:
|
%
|
|
Operating equipment (mainly 20%-33%)
|
6.5-33
|
Office furniture, equipment and computers
|
7-33
|
Buildings
|
2.5
|
Vehicles
|
15
|
Leasehold improvements
|
Duration of the lease which
is less or equal to useful life.
|
|
M.
|
Impairment of long-lived assets
|
NOTE 1
|
-
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
|
|
N.
|
Income taxes
|
|
O.
|
Goodwill and intangible assets
|
NOTE 1
|
-
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
|
|
O.
|
Goodwill and intangible assets (cont.)
|
Years
|
|
GIS database
|
10
|
Customer base
|
5
|
Brand name
|
15
|
Other
|
3-10
|
|
P.
|
Contingencies
|
|
Q.
|
Funds in respect of, and liability for employee rights upon retirement
|
|
The Company's liability for employee rights upon retirement with respect to its Israeli employees is calculated, pursuant to Israeli severance pay law, based on the most recent salary of each employee multiplied by the number of years of employment, as of the balance sheet date. Employees are entitled to one month's salary for each year of employment, or a portion thereof. The Company makes monthly deposits to insurance policies and severance pay funds. The liability of the Company is fully provided for.
|
|
The deposited funds include profits or losses accumulated up to the balance sheet date. The deposited funds may be withdrawn upon the fulfillment of the obligation pursuant to Israeli severance pay laws or labor agreements. The value of the deposited funds is based on the cash surrender value of these policies, and includes profits or losses.
|
|
The liability for employee rights upon retirement in respect of the employees of the non-Israeli subsidiaries of the Company, is calculated on the basis of the labor laws of the country in which the subsidiary is located and is covered by an appropriate accrual.
|
|
Severance expenses for the years ended December 31, 2012, 2011 and 2010, amounted to US$ 1,204,000, US$ 1,172,000 and US$ 770,000, respectively.
|
NOTE 1
|
-
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
|
|
R.
|
Revenue recognition
|
|
1.
|
Revenues from sales are recognized when title and risk of loss of the product pass to the customer (usually upon delivery).
|
|
2.
|
The Company applies the provisions of ASC Topic 605-25, "Revenue Recognition - Multiple-Element Arrangements", as amended. ASC Topic 605-25 provides guidance on how to account for arrangements that involve the delivery or performance of multiple products, services and/or rights to use assets. For such arrangements, each element of the contract is accounted for as a separate unit when it provides the customer value on a stand-alone basis and if an arrangement includes a right of return relative to a delivered item, delivery or performance of the undelivered item or items is considered probable and substantially in the control of the Company. According to ASC 605-25, as amended, when neither "vendor specific objective evidence" of selling price, nor third party price exists, the Company is required to develop a best estimate of the selling price of the deliverables and the entire arrangement consideration is allocated to the deliverables based on the relative selling prices.
|
|
3.
|
Deferred revenues include unearned amounts received from customers (mostly for the provision of installation and subscription services) but not yet recognized as revenues. Such deferred revenues are recognized as described in paragraph 2, above.
|
|
4.
|
Sale and leaseback transactions
The Company accounts for sale and leaseback transactions in accordance with the provisions of ASC Topic 840-40, "Sale-Leaseback Transactions".
Accordingly, with respect of a certain leaseback transaction that was determined to be an operating lease and involving the use of more than a minor part but less than substantially all of the asset sold, the entire profit on the sale was deferred and amortized in proportion to rental payments over the term of the lease. There was no recognition of any profit at the date of the sale since the present value of the minimum lease payments exceeded the amount of the profit.
|
|
5.
|
Extended warranty
Revenues from extended warranty which are provided for a monthly fee and are sold separately are recognized over the duration of the warranty periods.
|
NOTE 1
|
-
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
|
|
S.
|
Warranty costs
|
|
T.
|
Research and development costs
|
|
1.
|
Research and development costs (other than computer software related expenses) are expensed as incurred.
|
|
2.
|
Software Development Costs
ASC Topic 985-20, "Costs of Software to Be Sold, Leased, or Marketed" requires capitalization of certain software development costs subsequent to the establishment of technological feasibility. Research and development costs incurred in the process of developing product improvements or new products, are generally expensed as incurred, net of grants received from the Government of Israel for development of approved projects. Costs incurred by the Company between the establishment of technological feasibility and the point at which the product is ready for general release are usually insignificant.
|
|
U.
|
Advertising costs
|
|
V.
|
Earnings per share
|
NOTE 1
|
-
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
|
|
W.
|
Fair value measurements (cont.)
|
|
X.
|
Deferred installation expenses
|
NOTE 1
|
-
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
|
|
Y.
|
Reclassification
|
|
Certain comparative figures have been reclassified to conform to the current year presentation. Such reclassifications did not have any impact on the Company's equity, net income or cash flows.
|
|
Z.
|
Recently issued accounting pronouncements
|
|
1.
|
Effective January 1, 2012, the Company adopted retrospectively the provisions of Accounting Standard Update No. 2011-05, “Comprehensive Income (Topic 220) - Presentation of Comprehensive Income” (“ASU 2011-05”). ASU 2011-05 eliminated the option to present the components of other comprehensive income as part of the statement of equity and requires an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements (as applied by the Company).
The adoption of ASU 2011-05 did not have a material impact on the consolidated financial statements but resulted in a change in the presentation manner of other comprehensive income items.
|
|
2.
|
In February 2013, the FASB issued Accounting Standard Update No. 2013-02 “Comprehensive Income (Topic 220) “Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income” (ASU 2013-02). ASU 2013-02 requires an entity to provide information about amounts reclassified out of accumulated other comprehensive income.
According to ASU 2013-02, significant items that are required under U.S. GAAP to be reclassified to net income in their entirety shall be presented by the respective line items of net income either on the face of the financial statements or in the footnotes. Items that are not required under U.S. GAAP to be reclassified to net income in their entirety, will be required to be cross-referenced to other disclosures required under U.S. GAAP that provide additional detail about those amounts.
ASU 2013-02 is effective for public entities prospectively for annual and interim reporting periods beginning after December 15, 2012 (fiscal year 2013 for the Company).
The adoption of ASU 2013-02 is not expected to have a material impact on the financial position or results of operations of the Company, but might result in disclosure of additional information about amounts reclassified out of accumulated other comprehensive income.
|
NOTE 1
|
-
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
|
|
Z.
|
Recently issued accounting pronouncements (cont.)
|
NOTE 2
|
-
|
OTHER CURRENT ASSETS
|
US dollars
|
||||||||
December 31,
|
||||||||
(in thousands)
|
2012
|
2011
|
||||||
Prepaid expenses and others
|
6,094 | 3,221 | ||||||
Government institutions
|
3,156 | 4,974 | ||||||
Deferred installation expenses
|
2,647 | 3,133 | ||||||
Deferred income taxes (*)
|
2,497 | 2,772 | ||||||
Advances to suppliers
|
865 | 954 | ||||||
Employees
|
135 | 103 | ||||||
Related parties
|
5 | 8 | ||||||
15,399 | 15,165 |
|
(*)
|
See Note 16.
|
NOTE 3
|
-
|
INVENTORIES
|
US dollars
|
||||||||
December 31,
|
||||||||
(in thousands)
|
2012
|
2011
|
||||||
Finished products
|
12,222 | 9,496 | ||||||
Raw materials
|
2,525 | 1,289 | ||||||
Work in progress
|
- | 96 | ||||||
14,747 | 10,881 |
NOTE 4
|
-
|
INVESTMENTS IN AFFILIATED AND OTHER COMPANY
|
|
A.
|
Investment in affiliated company
|
|
B.
|
Investment in other company
|
NOTE 5
|
-
|
OTHER NON-CURRENT ASSETS
|
US dollars
|
||||||||
December 31,
|
||||||||
(in thousands)
|
2012
|
2011
|
||||||
Government institutions
|
700 | 1,459 | ||||||
Deferred installation expenses
|
540 | 406 | ||||||
Deposits
|
650 | 351 | ||||||
1,890 | 2,216 |
NOTE 6
|
-
|
PROPERTY AND EQUIPMENT, NET
|
|
A.
|
Property and equipment, net consists of the following:
|
US dollars
|
||||||||
December 31,
|
||||||||
(in thousands)
|
2012
|
2011
|
||||||
Operating equipment (*)
|
49,793 | 66,695 | ||||||
Office furniture, equipment and computers
|
22,976 | 21,183 | ||||||
Land
|
1,022 | 1,022 | ||||||
Buildings
|
2,731 | 3,067 | ||||||
Vehicles
|
3,389 | 3,196 | ||||||
Leasehold improvements
|
2,640 | 2,528 | ||||||
82,551 | 97,691 | |||||||
Less – accumulated depreciation and amortization (**)
|
(48,395 | ) | (56,821 | ) | ||||
34,156 | 40,870 |
|
(*)
|
As December 31, 2012 and 2011, an amount of US$ 28.8 million and US$ 45.2 million is subject to operating lease transactions, respectively.
|
|
(**)
|
As at December 31, 2012 and 2011, an amount of US$ 14.2 million and US$ 25.5 million is subject to operating lease transactions, respectively.
|
|
B.
|
In the years ended December 31, 2012, 2011 and 2010, depreciation expense was US$ 13.3 million, US$ 16.1 million and US$ 14.7 million, respectively and additional equipment was purchased in an amount of US$ 9.7 million, US$ 16.5 million and US$ 18.6 million, respectively.
|
|
C.
|
After deduction of the cost and the accumulated depreciation of items fully depreciated.
|
NOTE 7
|
-
|
INTANGIBLE ASSETS, NET
|
|
A.
|
Intangible assets, net, consists of the following:
|
US dollars
|
||||||||||||||||
December 31,
|
December 31,
|
|||||||||||||||
(in thousands)
|
2012
|
2012
|
2012
|
2011
|
||||||||||||
Original amount
|
Accumulated amortization
|
Unamortized balance
|
Unamortized balance
|
|||||||||||||
GIS database
|
4,052 | (2,253 | ) | 1,799 | 2,148 | |||||||||||
Customer base
|
1,191 | (1,191 | ) | - | 180 | |||||||||||
Brand name
|
1,230 | (460 | ) | 770 | 839 | |||||||||||
Others (*)
|
5,719 | (5,697 | ) | 22 | 188 | |||||||||||
12,192 | (9,601 | ) | 2,591 | 3,355 |
|
Amortization of intangible assets amounted to US$ 703,000 US$ 818,000 and US$ 1,059,000 for the years ended December 31, 2012, 2011 and 2010, respectively. As of December 31, 2012, the estimated aggregate amortization of intangible assets for the next five years is as follows: 2013 – US$ 473,000; 2014 – US$ 473,000; 2015 – US$ 473,000, 2016 – US$ 473,000, 2017 – US$ 272,000.
|
NOTE 8
|
-
|
GOODWILL
|
|
A.
|
The changes in the carrying amount of goodwill for the years ended December 31, 2012 and 2011 are as follows:
|
US dollars
|
||||||||||||
Location based services
|
Wireless communications products
|
Total
|
||||||||||
(in thousands)
|
||||||||||||
Balance as of January 1, 2011
|
5,503 | 4,576 | 10,079 | |||||||||
Changes during 2011:
|
||||||||||||
Impairment
|
(904 | ) | - | (904 | ) | |||||||
Translation differences
|
(334 | ) | (327 | ) | (661 | ) | ||||||
Balance as of December 31, 2011
|
4,265 | 4,249 | 8,514 | |||||||||
Changes during 2012:
|
||||||||||||
Impairment (See B. below)
|
(672 | ) | - | (672 | ) | |||||||
Translation differences
|
99 | 102 | 201 | |||||||||
Balance as of December 31, 2012
|
3,692 | 4,351 | 8,043 |
|
B.
|
During 2012, 2011 and 2010, the Company recorded an amount of US$ 672,000, US$ 904,000 and US$ 157,000, respectively, as impairment with respect to goodwill.
|
|
The impairment amount was included in "other expenses, net". See Note 14.
|
NOTE 9
|
-
|
CREDIT FROM BANKING INSTITUTIONS
|
|
A.
|
Composition:
|
US dollars
|
||||||||
December 31,
|
||||||||
(in thousands)
|
2012
|
2011
|
||||||
Revolving credit – in NIS
|
45 | 347 | ||||||
Current maturities of long-term loans
|
176 | 43 | ||||||
221 | 390 |
|
B.
|
Lines of credit
|
|
Unutilized short-term lines of credit of the Group as of December 31, 2012, aggregated to US$ 0.5 million.
|
|
C.
|
Liens – see Note 12B.
|
NOTE 10
|
-
|
OTHER CURRENT LIABILITIES
Composition:
|
US dollars
|
||||||||
December 31,
|
||||||||
(in thousands)
|
2012
|
2011
|
||||||
Accrued expenses (*)
|
10,092 | 11,800 | ||||||
Employees and institutions in respect thereof
|
4,463 | 3,363 | ||||||
Government institutions
|
4,260 | 5,062 | ||||||
Related party
|
125 | 47 | ||||||
Accrued dividend
|
2,570 | - | ||||||
Others
|
863 | 694 | ||||||
22,373 | 20,966 |
|
(*)
|
As of December 31, 2012 and 2011 includes approximately US$5.8 million and US$7.9 million respectively, regarding the legal fees resulting from the claim described in Note 12A3.
|
NOTE 11
|
-
|
LONG-TERM LOANS FROM BANKING INSTITUTIONS
|
|
A.
|
Composition:
|
Interest
rates as of
|
US dollars
|
|||||||||||
December 31,
|
December 31,
|
|||||||||||
(in thousands)
|
2012
|
2012
|
2011
|
|||||||||
%
|
||||||||||||
In NIS (unlinked)
|
4.75 | % | 176 | 216 | ||||||||
Less- current maturities
|
- | (176 | ) | (43 | ) | |||||||
- | 173 |
NOTE 12
|
-
|
CONTINGENT LIABILITIES, LIENS AND GUARANTEES
|
|
A.
|
Claims
|
|
1.
|
On December 31, 2007, the Company completed the sale of the subsidiary, Telematics Wireless Ltd. (Telematics), to a third party (hereinafter: the "Purchaser"). Pursuant to the sale transaction, the Company sold its entire shareholdings of Telematics to the purchaser, for an amount of US$ 80 million (based on a specified enterprise value of Telematics). The Company was required to deposit an amount of US$5 million in order to secure any adjustments to the purchase price, as further described below (the “Adjustment Escrow Amount”). In addition, the Company was required to deposit an amount of US$ 7.5 million in an escrow account in order to ensure certain representations and warranties towards the Purchaser (the “Escrow Amount”). The Adjustment Escrow Amount and the Escrow Amount were deposited in escrow in January 2008, after receipt of the entire consideration from the purchaser.
In 2008, the Company received a notice from the Purchaser (ST (Infocomm) Ltd. ("ST")), claiming that based on Telematics’ performance parameters, the purchase price needs to be decreased by an amount of approximately US$ 10 million (out of which $3 million was recognized as a provision according to management estimate as of the date of such claim. The Company rejected the Purchaser's claims and requested that certain amounts be released from the Adjustment Escrow Amount in accordance with the terms of the agreement with the purchaser. On February 10, 2011 the Arbitrator delivered his determination according to which, the Purchaser's main claims for adjustments to the purchase price were rejected and based on Telematics’ 2007 financial statements, the purchase price should be reduced by approximately US$4.4 million. The Arbitrator determined that an amount of US$572,000 including interest accrued thereon was to be released from escrow and be available to the Company. The remainder funds held in the Adjustment Escrow Amount remained in escrow as of that date until October 2011, when an agreement between the parties determined that the sum of US$4.4 million (and interest accrued thereon) be released from the Adjustment Escrow Amount to the purchaser and that the Company shall waive its claims with regard to the adjustment of the purchase price. In addition, an amount of US$3 million was released to the Company from the second escrow account (in which originally the sum of US$7.5 million out of the purchase price was deposited), without derogating from the purchaser's claims for indemnification under the purchase agreement.
In October 2011, an amount of US$ 4.65 million was released to ST. The remainder of US$ 4.9 million of the Escrow Amount shall remain in escrow until ST's arbitration is resolved.
On December 21, 2009, the Company also received from ST a letter seeking indemnification for an alleged breach of certain representations by the Company under the purchase agreement, claiming damages in an amount of approximately US$ 4.3 million. ST's letter also included an allegation in respect of a possible and additional breach of representation in an additional amount of approximately US$ 4.3 million. The Company and ST entered into arbitration proceedings in Israel in which ST claims damages in the amount of approximately US$ 10.3 million (which amount is considered as the reasonably possible loss amount). Currently, the parties are undergoing discovery proceedings following the filing of a statement of claim and statement of defense on the part of ST and the Company respectively. A preliminary arbitration meeting took place on April 17, 2013. Due to the early stages of proceedings, it is difficult to assess the Company's chances of success, however, based on the assessment of its legal counsel, management believes that the claims made by ST as stated in their letter have no merits and intend to vigorously defend themselves against such claims. Therefore, no provision amount was recognized with respect to ST's claims.
|
NOTE 12
|
-
|
CONTINGENT LIABILITIES, LIENS AND GUARANTEES (cont.)
|
|
A.
|
Claims (cont.)
|
|
2.
|
The Company was involved in litigation with Leonardo L.P. (hereinafter: "Leonardo"), a US-based hedge fund, arising out of a financial transaction entered into between the Company and Leonardo in February 2000 as described in the Company's annual report for the year 2011. On June 13, 2011, the district court in its decision accepted one of Leonardo's claims and ordered the Company to pay the sum of approximately US$9.6 million, to be paid in accordance with the exchange rate in NIS at the date of the occurrence of the "triggering event", plus interest and linkage differences by law and in addition legal expenses in the sum of NIS 1.2 million (approximately US$0.3 million at that time), which total approximately the sum of NIS 78.7 million (approximately US$22.7 million at that time). The Company filed an appeal with the Supreme Court, in which it appealed the district court's decision dated June 13, 2011 as well as the legal expenses and costs which they were ordered to pay according to the district court's decision. Leonardo counter-appealed the district court's decision in dismissing Leonardo's three alternative claims in addition to the court's decision to apply interest by law and not default interest under the terms of the financial transaction between Leonardo and the Company as well as the legal expenses and costs which they were ordered to pay.
|
|
3.
|
On July 13 2010, the State Revenue Services of São Paulo issued a tax deficiency notice against the subsidiary in Brazil, Ituran Sistemas de Monitoramento Ltda. (the "subsidiary"), claiming that the vehicle tracking and monitoring services provided by the subsidiary should be classified as telecommunication services and therefore subject to the imposition of State Value Added Tax – ICMS, resulting in an imposition of 25% state value added tax on all revenues of the subsidiary during the period between August 2005 and December 2007. The tax deficiency notice was in the amount, at the time of serving upon the subsidiary the notice of R$36,499,984 (approximately US$22.1 million) plus interest in the amount of R$30,282,420 (approximately US$18.2 million) and penalties in the amount of R$66,143,446 (approximately US$40 million). As of December 31, 2012, the aggregate sum claimed pursuant to the tax deficiency notice (principal amount, interest and penalties) is estimated at R$195,600,000 (approximately $95.0 million). The decision of the administration first level was unfavorable to the subsidiary and the subsidiary has filed an appeal to the Administrative Court of Appeals in São Paulo.
|
NOTE 12
|
-
|
CONTINGENT LIABILITIES, LIENS AND GUARANTEES (cont.)
|
|
A.
|
Claims (cont.)
|
|
3.
|
(cont.)
|
|
4.
|
On June 24, 2010, the Brazilian Internal Revenue Service issued a tax assessment that claimed a payment of R$ 7,571,164 (approximately US$ 4.18 million which is considered as the reasonably possible loss amount), including interest and penalties due to the offsetting on October 1, 2005, of a receivable amount held by a Dutch subsidiary of the Company (Ituran Beheer BV) and its Brazilian subsidiary (Ituran Sistemas de Monitamento Ltda). The decision of the administration first level held in May 2011, was unfavorable to the subsidiary and therefore the subsidiary has filed an appeal to the Administrative Court of Appeals in São Paulo and await the decision of the Administrative Court of Appeal. Management believes, based on the legal opinion of the subsidiary's Brazilian legal counsel that such claim is without merit and will continue to vigorously defend itself in the appeal proceedings. As of December 31, 2012, the aggregate sum claimed pursuant to the tax deficiency notice (principal amount, interest and penalties) is estimated at R$8.6 million (approximately $4.2 million). As a result of the above as of December 31, 2012, no provision has been made with respect to the Brazilian IRS claim.
|
|
5.
|
On March 21, 2011, the Company received a purported class action lawsuit which was filed against the Company in the District Court of Central Region in Tel-Aviv, by one plaintiff who is a subscriber of the Company, alleging that the Company (see Note 12C), which was declared a monopoly under the Israeli Restrictive Trade Practices Law, 1988, unlawfully abused its power as a monopoly and discriminated between its customers. The plaintiff claims that the alleged discrimination resulted from the Company charging higher monthly subscription fees from customers who are obliged by insurance company requirements to install location and recovery systems in their vehicles than the monthly subscription fees that are charged from customers who are not required by insurance companies to install location and recovery systems in their vehicles.
|
|
6.
|
Claims are filed against the Company and its subsidiaries from time to time during the ordinary course of business, usually with respect to civil, labor and commercial matters. The Company's management believes, based on its legal counsels' assessment, that the provision for contingencies recognized in the balance sheet is sufficient and that currently there are no claims (other than those described in the Notes above) that are material, individually or in the aggregate, to the consolidated financial statements as a whole.
|
NOTE 12
|
-
|
CONTINGENT LIABILITIES, LIENS AND GUARANTEES (cont.)
|
|
B.
|
Liens
|
|
C.
|
The Company was declared a monopoly under the Israeli Restrictive Trade Practices Law, 1988, in the market for the provision of systems for the location of vehicles in Israel. Under Israeli law, a monopoly is prohibited from taking certain actions, such as predatory pricing and the provision of loyalty discounts, which prohibitions do not apply to other companies. The Israeli Antitrust Authority may further declare that the Company has abused its position in the market. Any such declaration in any suit in which it is claimed that the Company engages in anticompetitive conduct may serve as prima facie evidence that the Company is either a monopoly or that it has engaged in anticompetitive behavior. Furthermore, it may be ordered to take or refrain from taking certain actions, such as setting maximum prices, in order to protect against unfair competition.
|
|
D.
|
Commitments
|
|
1.
|
As of December 31, 2012, minimum future rentals under operating leases of buildings for periods in excess of one year were as follows: 2013 – US$ 1.9 million; 2014 – US$ 0.5 million; 2015 – US$ 0.3 million, 2016 – US$ 0.1 million and 2017 – US$ 30 thousand.
The leasing fees expensed in each of the years ended December 31, 2012, 2011 and 2010, were US$ 2.8 million, US$ 2.9 million and US$ 2.8 million, respectively.
|
|
2.
|
In January 2008, the Company entered into a 10 year Frame Product and Service Purchase Agreement with Telematics, pursuant to which (after the completion of the sale of Telematics, described in Note 12A1, above), the Company and Telematics shall purchase from each other certain products and services as detailed in the agreement for a price and subject to other conditions as detailed in the agreement. In addition, each of the Company and Telematics undertook toward one another not to compete in each other's exclusive markets in the area of RF vehicle location and tracking RF technology or similar RF terrestrial location systems and technology. The agreement is for a term of 10 years, following which it shall be renewed automatically for additional consecutive 12 month periods, unless nonrenewal notice is sent by one of the parties to the other. Pursuant to the agreement, each of Telematics and Ituran granted the other party a license to use certain technology in connection with the products and services purchased from each other, which license survives the termination or expiration of the agreement.
As of December 31, 2012 and 2011, the Company is obliged to purchase from Telematics products in an aggregate amount of approximately US$ 1.5 million and US$ 8.9 million, respectively.
|
NOTE 13
|
-
|
STOCKHOLDERS’ EQUITY
|
|
A.
|
Share capital
|
|
1.
|
Composition:
|
December 31, 2012 and 2011
|
Registered
|
Issued and fully paid
|
||||||
Ordinary shares of NIS 0.33⅓ each
|
60,000,000 | 23,475,431 |
|
2.
|
Since May 1998, the Company has been trading its shares on the Tel-Aviv Stock Exchange (“TASE”). On September 2005, the Company registered its Ordinary shares for trade in the United States.
|
|
3.
|
The Ordinary shares of the Company confer upon their holders the right to receive notice to participate and vote in general meetings of the Company and the right to receive dividends, if and when, declared.
|
|
4.
|
On July 17, 2006, the Board of Directors of the Company authorized the repurchase of ordinary shares up to US$ 10 million. On January 24, 2008 the Company's board of directors authorized an increase of an additional $10 million. On May 20, 2008, the Company's board of directors authorized another increase of additional $10 million up to an aggregate amount of $30 million.
As of December 31, 2012, the Company repurchased 2,507,314 ordinary shares for an aggregate amount of US$ 27.1 million.
|
|
5.
|
As of December 31, 2012, 2011 and 2010, 10.7% of the share capital of the Company is held by the Group as treasury shares.
|
|
6.
|
Shares of the Company held by the Group have no voting rights.
|
|
B.
|
Retained earnings
|
|
1.
|
In determining the amount of retained earnings available for distribution as a dividend, the Israeli Companies Law stipulates that the cost of the Company’s shares acquired by the Company and its subsidiaries (that are presented as a separate item in the statement of changes in stockholders’ equity) must be deducted from the amount of retained earnings.
|
|
2.
|
On November 2009, the board of directors of the Company revised the dividend policy to provide for an annual dividend distribution from 25% of net income to an amount not less than 50% of its net income on the basis of the results of the Company each year, on condition that such distribution would not prevent the Company from meeting its existing and future commitments when they come due.
|
|
3.
|
On February 21, 2012, the board of directors of the Company revised its dividend policy so that their dividends will be declared and distributed on a quarterly basis in an amount not less than 50% of their net profits, calculated on the basis of the interim financial statements.
|
|
4.
|
Dividends are declared and paid in NIS. Dividends paid to stockholders outside Israel may be converted into dollars on the basis of the exchange rate prevailing at the date of declaration. See also B1, above.
|
|
5.
|
In February 2010, the Company declared a dividend in an amount of US 1.5 dollar per share, totaling approximately US$ 31.6 million (NIS 117.2) on the basis of the results of the company for the year ended December 31, 2009. The dividend was paid in April 2010.
|
|
6.
|
In February 2011, the Company declared a dividend in the amount of US 1.00 dollar per share, totaling approximately US$ 21.8 million (NIS 78.8 million). The dividend was paid in April 2011.
|
NOTE 13
|
-
|
STOCKHOLDERS’ EQUITY (cont.)
|
|
B.
|
Retained earnings (cont.)
|
|
7.
|
In February 2012, the Company declared a dividend in the amount of US 1.23 dollar per share, totaling approximately US$ 25.8 million (NIS 96 million). The dividend was paid in April 2012.
|
|
8.
|
In May 2012, the Company declared a dividend in the amount of US 0.12 dollar per share, totaling approximately US$ 2.5 million (NIS 9.7 million) .the dividend was paid in June 2012.
|
|
9
|
In August 2012, the Company declared a dividend in the amount of US 0.24 dollar per share, totaling approximately US$ 5.2 million (NIS 20 million) .the dividend was paid in October.
|
|
10.
|
In November 2012, the Company declared a dividend in the amount of US 0.12 dollar per share, totaling approximately US$ 2.6 million (NIS 9.7 million). The dividend was paid in January 2013.
|
|
11.
|
In February 2013, the Company declared a dividend in the amount of US 0.33 dollar per share, totaling approximately US$ 7 million (NIS 25.4 million). The dividend was paid in April 2013.
|
NOTE 14
|
-
|
OTHER EXPENSES, NET
|
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2012
|
2011
|
2010
|
|||||||||
Adjustment of purchase price of subsidiary (1)
|
- | - | 975 | |||||||||
Impairment of goodwill (2)
|
672 | 904 | 157 | |||||||||
Legal expenses (3)
|
- | 7,863 | - | |||||||||
Write-off of account receivable in respect of sale of subsidiary (4)
|
484 | - | - | |||||||||
Other
|
461 | (76 | ) | 24 | ||||||||
1,617 | 8,691 | 1,156 |
|
(1)
|
See Note 12A1.
|
|
(2)
|
See Note 8.
|
|
(3)
|
See Note 12A3.
|
|
(4)
|
During April 2012, the Company sold its entire holding in the subsidiary Ituran Cellular Communication Ltd. for US$ 0.3 million in cash and for an additional amount of approximately US$ 0.5 million that was required to be paid soon thereafter. However, during late 2012, the acquirer entered into liquidation proceedings by its creditors and therefore due to the significant uncertainty regarding the collection of this debt, the entire amount was written-off.
|
NOTE 15
|
-
|
FINANCING INCOME, NET
|
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2012
|
2011
|
2010
|
|||||||||
Short-term interest expenses, commissions and other
|
(873 | ) | (224 | ) | (404 | ) | ||||||
Gains (losses) on derivative financial instruments
|
- | (314 | ) | 819 | ||||||||
Gains in respect of marketable securities
|
2 | 22 | 30 | |||||||||
Interest expenses in respect of long-term loans
|
(8 | ) | (12 | ) | (4 | ) | ||||||
Interest income in respect of deposit
|
1,770 | 1,817 | 1,168 | |||||||||
Exchange rate differences and others, net
|
96 | 811 | (1,470 | ) | ||||||||
987 | 2,100 | 139 |
NOTE 16
|
-
|
INCOME TAX
|
|
A.
|
Taxes on income included in the statements of income:
|
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2012
|
2011
|
2010
|
|||||||||
Income taxes (tax benefit):
|
||||||||||||
Current taxes:
|
||||||||||||
In Israel
|
4,896 | 2,003 | 3,191 | |||||||||
Outside Israel
|
6,013 | 6,530 | 5,396 | |||||||||
10,909 | 8,533 | 8,587 | ||||||||||
Deferred taxes:
|
||||||||||||
In Israel
|
(249 | ) | 1,425 | (1,877 | ) | |||||||
Outside Israel
|
1,204 | (3,564 | ) | 804 | ||||||||
955 | (2,139 | ) | (1,073 | ) | ||||||||
Taxes in respect of prior years:
|
||||||||||||
In Israel
|
(126 | ) | (739 | ) | (1,228 | ) | ||||||
Outside Israel
|
(48 | ) | - | - | ||||||||
(174 | ) | (739 | ) | (1,228 | ) | |||||||
11,690 | 5,655 | 6,286 |
|
B.
|
Measurement of results for tax purposes under the Income Tax (Inflationary Adjustments) Law, 1985 (the “Inflationary Adjustment Law”)
|
NOTE 16
|
-
|
INCOME TAX (cont.)
|
|
C.
|
The Law for the Encouragement of Capital Investments, 1959 (the "Investment Law")
|
|
1.
|
Commencing 2008, a certain Israeli subsidiary of the Company was granted "beneficiary enterprise" status as defined under the investment law. As such, the subsidiary was entitled to tax exemption for the duration of 2 years.
|
|
2.
|
In December 2010, the Israeli parliament passed the Economic Policy Law for 2011 and 2012 (Legislative Amendments) - 2011 which set out, among other things, amendments to the investment law, effective January 1, 2011. The amendment changes introduced a new status of "Preferred Company" and "Preferred Enterprise". Accordingly on the preferred revenues (as determined on the investment Law) applies uniform tax rates which are, in 2011 and 2012, 15%, in 2013 and 2014, 12.5%, and in 2015 and thereafter, 12%. The reduced tax rates will be granted for an unlimited period of time to a Preferred Enterprise that meets the conditions set out in the law.
|
|
3.
|
Due to the changes made in the Investment Law subsidiaries of the Company were entitled to reduce tax rate as detailed above in the 2011 tax year. Accordingly, the tax imposed on the subsidiaries preferred revenues for the year 2011 was set at a rate of 15%.
|
|
4.
|
As of December 31, 2012, only one Israeli subsidiary is entitled to a "Preferred Company" status pursuant to the investment law.
|
|
D.
|
Reduction in corporate tax rates
|
|
E.
|
Non-Israeli subsidiaries
|
|
Non-Israeli subsidiaries are taxed according to the tax laws and rates in their country of residence.
|
|
F.
|
Tax assessments
|
|
G.
|
Carry forward tax losses
|
NOTE 16
|
-
|
INCOME TAX (cont.)
|
|
H.
|
The following is a reconciliation between the theoretical tax on pretax income, at the applicable Israeli tax rate, and the tax expense reported in the financial statements:
|
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2012
|
2011
|
2010
|
|||||||||
Pretax income
|
37,689 | 27,864 | 16,062 | |||||||||
Statutory tax rate
|
25 | % | 24 | % | 25 | % | ||||||
Tax computed at the ordinary tax rate
|
9,422 | 6,687 | 4,016 | |||||||||
Nondeductible expenses
|
418 | 506 | 290 | |||||||||
Losses in respect of which no deferred taxes were generated (including reduction of deferred tax assets recorded in prior period)
|
1,087 | 757 | 2,028 | |||||||||
Deductible financial expenses recorded to additional paid-in capital
|
(244 | ) | 136 | (331 | ) | |||||||
Taxes in respect of prior years
|
(174 | ) | (739 | ) | (1,228 | ) | ||||||
Tax adjustment in respect of different tax rates
|
1,734 | 821 | 1,726 | |||||||||
Utilization of losses of prior years in respect of which no deferred taxes were generated
|
- | (1,292 | ) | (409 | ) | |||||||
Taxes in respect of withholding at the source from royalties and dividends
|
853 | 177 | 148 | |||||||||
Adjustment in respect of tax rate deriving from “approved enterprises”
|
(233 | ) | (801 | ) | - | |||||||
Others
|
(1,173 | ) | (597 | ) | 46 | |||||||
11,690 | 5,655 | 6,286 |
|
I.
|
Summary of deferred taxes
|
US dollars
|
||||||||
Year ended
December 31,
|
||||||||
(in thousands)
|
2012
|
2011
|
||||||
Deferred taxes included in other current assets:
|
||||||||
Provision for employee related obligations
|
115 | 97 | ||||||
Provision for legal obligation
|
2,382 | 2,675 | ||||||
2,497 | 2,772 |
NOTE 16
|
-
|
INCOME TAX (cont.)
|
|
I.
|
Summary of deferred taxes (cont.)
|
US dollars
|
||||||||
Year ended
December 31,
|
||||||||
(in thousands)
|
2012
|
2011
|
||||||
Long-term deferred income taxes:
|
||||||||
Provision for employee related obligations
|
534 | 450 | ||||||
Carry forward tax losses
|
3,188 | 3,892 | ||||||
Temporary differences, net
|
2,201 | 2,523 | ||||||
5,923 | 6,865 | |||||||
Valuation allowance
|
(2,392 | ) | (2,089 | ) | ||||
3,531 | 4,776 |
US dollars
|
||||||||
Year ended
December 31,
|
||||||||
(in thousands)
|
2012
|
2011
|
||||||
Deferred income taxes included in long-term investments and other assets
|
4,174 | 5,568 | ||||||
Deferred income taxes included in long-term liabilities
|
(643 | ) | (792 | ) | ||||
3,531 | 4,776 |
|
J.
|
Income before income taxes is composed as follows:
|
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2012
|
2011
|
2010
|
|||||||||
The Company and its Israeli subsidiaries
|
20,060 | 19,680 | (2,664 | ) | ||||||||
Non-Israeli subsidiaries
|
17,629 | 8,184 | 18,726 | |||||||||
37,689 | 27,864 | 16,062 |
NOTE 16
|
-
|
INCOME TAX (cont.)
|
|
K.
|
Uncertain tax positions
|
US dollars
|
||||
(in thousands)
|
||||
Balance at January 1, 2010
|
4,619 | |||
Translation differences
|
(276 | ) | ||
Decrease related to settlements (*)
|
(4,343 | ) | ||
Balance at January 1, 2011
|
- | |||
Additions based on tax positions related to the current year
|
1,504 | |||
Balance at December 31, 2011
|
1,504 | |||
Decrease related tax positions of prior years
|
(1,076 | ) | ||
Translations differences related to the current year
|
11 | |||
Balance at December 31, 2012
|
439 |
|
(*)
|
During October 2010, the Company signed a settlement agreement with the Israeli tax authorities, relating to an audit of its tax returns for the years 2002 through 2008. As a result, the Company decreased the entire amount of the unrecognized tax benefits which related to the tax uncertainties that were settled. The difference between the balance of the unrecognized tax benefits and the amount settled with the tax authorities (an amount of $1.23 million) was presented within taxes in respect of prior years, in fiscal year 2010.
|
NOTE 17
|
-
|
EARNINGS PER SHARE
|
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2012
|
2011
|
2010
|
|||||||||
Net income attributable to stockholder's used for the computation of basic and diluted earnings per share
|
24,880 | 21,278 | 8,702 |
Number of shares
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2012
|
2011
|
2010
|
|||||||||
Weighted average number of shares used in the computation of basic and diluted earnings per share (*)
|
20,968 | 20,968 | 20,968 |
|
(*)
|
Following the decision of the district court to accept Leonardo’s claim, the Company has excluded the impact of the shares issuable upon the assumed conversion of the capital notes with respect to the computation diluted earnings per share for fiscal year 2010 and thereafter. (See Note 12A2). Other than the capital notes, there are no potential shares in all reported periods.
|
NOTE 18
|
-
|
RELATED PARTIES
|
|
A.
|
The Tzivtit Insurance Ltd. (“Tzivtit Insurance”), owned by a director of the Company, serves as the Company’s insurance agent and provides the Company with elementary insurance and managers insurance.
|
|
In respect of these insurance services, Tzivtit Insurance is entitled to receive commissions at various rates, paid by the insurance company (which is not considered a related party).
|
|
With respect to basic insurance policies, and directors and offices insurance policies, the Company paid to the insurance company in 2012, US$ 280 thousand and US$ 189 thousand, respectively (In 2011 US$ 280 thousand and US$ 198 thousand, respectively.)
|
|
Tzivtit Insurance is entitled to commissions in an aggregate amount of NIS 278 thousand (US$ 72 thousand) to be paid to Tzivtit Insurance by the insurance company on account of these policies. (US$ 50 thousand and US$ 65 thousand in 2011 and 2010, respectively.)
|
|
C.
|
In February 2003, an agreement was signed between the Company and A. Sheratzky Holdings Ltd., a wholly-owned and controlled company belonging to Mr. Izzy Sheratzky, President and Director. The agreement includes, among other things, the cost of Mr. Izzy Sheratzky’s monthly employment in an amount of NIS 98,000 (US$ 25,000), entertainment expenses, car maintenance expenses, cellular phone, and entitlement to participate in the profits of the Company in an amount equal to 5% of the pretax income of the Company, plus the share of the Company in the income or losses of affiliated companies, on the basis of the audited consolidated financial statements.
The agreement is for a two-year period, with automatic two-year extensions, unless either of the parties gives 180 day advance notice of its intention to terminate the agreement.
Whereas the term of the agreement exceeds three years, under recent amendments to the Israeli Companies Law, the Company's audit committee, board of directors and shareholders have ratified and approved the agreement with A. Sheratzky, which according to current Israeli law will remain in force and effect until May 11, 2014.
|
|
C.
|
On September 5, 2002, the Company entered into independent contractor agreements with A. Sheratzky Holdings Ltd. and each of Eyal Sheratzky and Nir Sheratzky (the Co-CEO's of the Company), pursuance to which A. Sheratzky Holdings will provide management services to the Company through Eyal Sheratzky and Nir Sheratzky in consideration of monthly payments in the amount of NIS 48,892 and NIS 49,307 (US$ 13,100 and US$ 13,200), respectively, in addition to providing each of them a company car and reimbursement of certain business expenses. In January 2004, changes in the employment terms of the two Co-CEOs of the Company were approved, whereby in addition to the agreement detailed above, each would be entitled to an annual bonus equal to 1% of the pretax income of the Company, plus the share of the Company in the income or losses of affiliated companies, on the basis of the audited consolidated financial statements.
|
|
Whereas the term of the agreement exceeds three years, under recent amendments to the Israeli Companies Law, the Company's audit committee, board of directors and shareholders have ratified and approved the agreement with A. Sheratzky (including third addendum thereto that clarifies the nature of its role and services), which according to current Israeli law will remain in force and effect until May 11, 2014.
|
|
The aggregate expenses to A. Sheratzky Holdings in 2012, 2011 and 2010 (including with respect to B. above), were approximately US$ 2,691,000, US$ 2,618,000 and US$ 2,284,000, respectively.
|
NOTE 18
|
-
|
RELATED PARTIES (cont.)
|
|
D.
|
In accordance with an agreement with a related party (as amended), Prof. Yehuda Kahane, for financial consulting, the Company is required to pay the consultant monthly consulting fees of NIS 15,000 (US$ 4,300) a month, linked to the Israeli Consumer Price Index. The aggregate amount paid to Professor Kahane in each of the years 2012, 2011 and 2010 was approximately US$ 56,000, US$ 59,000 and US$ 55,000, respectively.
|
|
E.
|
On January 23, 2007, the Company's subsidiary, E-Com Global Electronic Commerce Ltd. ("E-Com "), signed an agreement with Gil Sheratzky for the employment of Mr. Sheratzky as CEO of that company, in consideration of monthly payments in the amount of NIS 25,000 (US$ 6,700), in addition to providing him a company car, managers insurance and education fund contribution (as customary in Israel) and reimbursement of certain business expenses. In his position, Mr. Sheratzky will report to the Co-CEO of the Company. The compensation paid to Gil Sheratzky includes a bonus in an amount equal to 2% of the annual increase in E-COM profits before tax (up to a maximum amount of 1% of that company's profits before tax), based on its audited consolidated financial statements for the relevant year, beginning January 1, 2007.
|
NOTE 19
|
-
|
SEGMENT REPORTING
|
|
A.
|
General information:
|
NOTE 19
|
-
|
SEGMENT REPORTING (cont.)
|
|
B.
|
Information about reported segment profit or loss and assets:
|
US dollars
|
||||||||||||||||
(in thousands)
|
Location based services
|
Wireless communications products
|
Other
|
Total
|
||||||||||||
Year ended December 31, 2012
|
||||||||||||||||
Revenues
|
114,565 | 35,753 | - | 150,318 | ||||||||||||
Operating income
|
29,604 | 343 | - | 29,947 | ||||||||||||
Assets
|
64,332 | 9,129 | - | 73,461 | ||||||||||||
Goodwill
|
3,692
|
4,351
|
- | 8,043 | ||||||||||||
Expenditures for assets
|
7,636 | 77 | - | 7,713 | ||||||||||||
Depreciation and amortization
|
11,472 | 130 | - | 11,602 | ||||||||||||
Year ended December 31, 2011
|
||||||||||||||||
Revenues
|
120,410 | 39,757 | - | 160,167 | ||||||||||||
Operating income
|
22,468 | 4,115 | - | 26,583 | ||||||||||||
Assets
|
71,100 | 7,696 | 990 | 79,786 | ||||||||||||
Goodwill
|
4,265 | 4,249 | - | 8,514 | ||||||||||||
Expenditures for assets
|
12,982 | 188 | - | 13,170 | ||||||||||||
Depreciation and amortization
|
14,376 | 127 | - | 14,503 | ||||||||||||
Year ended December 31, 2010
|
||||||||||||||||
Revenues
|
108,101 | 39,724 | - | 147,825 | ||||||||||||
Operating income
|
31,994 | (1,326 | ) | - | 30,668 | |||||||||||
Assets
|
71,101 | 9,255 | 1,454 | 81,810 | ||||||||||||
Goodwill
|
5,503 | 4,576 | - | 10,079 | ||||||||||||
Expenditures for assets
|
14,755 | 210 | - | 14,965 | ||||||||||||
Depreciation and amortization
|
12,470 | 89 | - | 12,559 |
|
C.
|
Information about reported segment profit or loss and assets:
|
NOTE 19
|
-
|
SEGMENT REPORTING (cont.)
|
|
D.
|
Reconciliations of reportable segment revenues, profit or loss, and assets, to the enterprise’s consolidated totals:
|
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2012
|
2011
|
2010
|
|||||||||
Total revenues of reportable segment and consolidated revenues
|
150,318 | 160,167 | 147,825 | |||||||||
Operating income
|
||||||||||||
Total operating income for reportable segments
|
29,947 | 26,583 | 30,668 | |||||||||
Unallocated amounts:
|
||||||||||||
Other income (expenses)
|
6,755 | (819 | ) | (14,745 | ) | |||||||
Financing income, net
|
987 | 2,100 | 139 | |||||||||
Consolidated income before taxes on income
|
37,689 | 27,864 | 16,062 | |||||||||
Assets
|
||||||||||||
Total assets for reportable segments (*)
|
81,504 | 88,300 | 91,889 | |||||||||
Other unallocated amounts:
|
||||||||||||
Current assets
|
48,512 | 50,339 | 75,396 | |||||||||
Investments in affiliated and other companies
|
242 | 287 | 306 | |||||||||
Property and equipment, net
|
9,187 | 9,278 | 9,795 | |||||||||
Other assets
|
2,500 | 3,108 | 4,178 | |||||||||
Other unallocated amounts
|
5,394 | 6,145 | 6,780 | |||||||||
Consolidated total assets (at year end)
|
147,339 | 157,457 | 188,344 | |||||||||
Other significant items
|
||||||||||||
Total expenditures for assets of reportable segments
|
7,713 | 13,170 | 14,965 | |||||||||
Unallocated amounts
|
2,320 | 3,065 | 3,715 | |||||||||
Consolidated total expenditures for assets
|
10,033 | 16,235 | 18,680 | |||||||||
Total depreciation and amortization for reportable segments
|
11,602 | 14,503 | 12,559 | |||||||||
Unallocated amounts
|
3,069 | 3,298 | 3,316 | |||||||||
Consolidated total depreciation and amortization
|
14,671 | 17,801 | 15,875 |
|
(*)
|
Including goodwill.
|
NOTE 19
|
-
|
SEGMENT REPORTING (cont.)
|
|
E.
|
Geographic information
|
Revenues
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2012
|
2011
|
2010
|
|||||||||
Israel
|
70,595 | 80,202 | 71,211 | |||||||||
United States
|
4,749 | 4,116 | 3,700 | |||||||||
Brazil
|
58,242 | 62,409 | 61,096 | |||||||||
Argentina
|
13,546 | 12,345 | 10,857 | |||||||||
Others
|
3,186 | 1,095 | 961 | |||||||||
Total
|
150,318 | 160,167 | 147,825 |
Property and equipment, net
|
||||||||||||
December 31,
|
||||||||||||
(in thousands)
|
2012
|
2011
|
2010
|
|||||||||
Israel
|
9,440 | 10,244 | 10,053 | |||||||||
United States
|
146 | 183 | 161 | |||||||||
Brazil
|
20,132 | 25,892 | 31,112 | |||||||||
Argentina
|
4,438 | 4,551 | 4,821 | |||||||||
Total
|
34,156 | 40,870 | 46,147 |
|
-
|
Revenues were attributed to countries based on customer location.
|
|
-
|
Property and equipment were classified based on major geographic areas in which the Company operates.
|
|
F.
|
Major customers
|
NOTE 20
|
-
|
FINANCIAL INSTRUMENTS AND RISKS MANAGEMENT
|
|
A.
|
Concentrations of credit risks
|
|
Financial instruments that potentially subject the Company and its subsidiaries to concentrations of credit risk consist principally of cash and cash equivalents, accounts receivables, derivatives and deposits in escrow.
|
|
Most of the Group’s cash and cash equivalents, deposits in escrow and short-term investments (including investments in trading marketable securities), as of December 31, 2012 and 2011, were deposited with major Israeli banks. The Company is of the opinion that the credit risk in respect of these balances is immaterial.
|
|
Most of the Group’s sales are made in Israel, South America and the United States, to a large number of customers, including insurance companies. Management periodically evaluates the collectability of the trade receivables to determine the amounts that are doubtful of collection and determine a proper allowance for doubtful accounts. Accordingly, the Group’s trade receivables do not represent a substantial concentration of credit risk.
|
NOTE 20
|
-
|
FINANCIAL INSTRUMENTS AND RISKS MANAGEMENT (cont.)
|
|
B.
|
Foreign exchange risk management
|
|
C.
|
Fair value of financial instruments
|
Buenos Aires, Argentina
|
Gustavo R. Chesta (Partner)
Estudio Urien & Asociados
|
February 12, 2013
|
ITURAN LOCATION AND CONTROL LTD.
(Registrant)
By: /s/ Eyal Sheratzky /s/ Nir Sheratzky
————————— —————————
Eyal Sheratzky Nir Sheratzky
Co-Chief Executive Officer
|