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
|
Large Accelerated Filer o | Accelerated Filer x | Non-accelerated filer o |
U.S. GAAP x
|
International Financial Reporting Standards as issued
by the International Accounting Standards Board o
|
Other o
|
IV
|
||
IV
|
||
1
|
||
1
|
||
1
|
||
A.
|
SELECTED FINANCIAL DATA
|
1
|
B.
|
CAPITALIZATION AND INDEBTEDNESS
|
4
|
C.
|
REASONS FOR THE OFFER AND USE OF PROCEEDS
|
4
|
D.
|
RISK FACTORS
|
4
|
15
|
||
A.
|
HISTORY AND DEVELOPMENT OF THE COMPANY
|
15
|
B.
|
BUSINESS OVERVIEW
|
17
|
C.
|
ORGANIZATIONAL STRUCTURE
|
27
|
D.
|
PROPERTY, PLANTS AND EQUIPMENT
|
28
|
29
|
||
29
|
||
A.
|
OPERATING RESULTS
|
29
|
B.
|
LIQUIDITY AND CAPITAL RESOURCES
|
41
|
C.
|
RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES
|
45
|
D.
|
TREND INFORMATION
|
45
|
E.
|
OFF-BALANCE SHEET ARRANGEMENTS
|
45
|
F.
|
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
|
45
|
G.
|
SAFE HARBOR
|
45
|
46
|
||
A.
|
DIRECTORS AND SENIOR MANAGEMENT
|
46
|
B.
|
COMPENSATION
|
50
|
C.
|
BOARD PRACTICES
|
53
|
D.
|
EMPLOYEES
|
57
|
E.
|
SHARE OWNERSHIP
|
60
|
61
|
||
A.
|
MAJOR SHAREHOLDERS
|
61
|
B.
|
RELATED PARTY TRANSACTIONS
|
63
|
C.
|
INTERESTS OF EXPERTS AND COUNSEL
|
69
|
69
|
||
A.
|
CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
|
69
|
B.
|
SIGNIFICANT CHANGES
|
71
|
72
|
||
A.
|
OFFER AND LISTING DETAILS
|
72
|
B.
|
PLAN OF DISTRIBUTION
|
73
|
C.
|
MARKETS
|
73
|
D.
|
SELLING SHAREHOLDERS
|
73
|
E.
|
DILUTION
|
73
|
F.
|
EXPENSES OF THE ISSUE
|
73
|
73
|
||
A.
|
SHARE CAPITAL
|
73
|
B.
|
MEMORANDUM AND ARTICLES OF ASSOCIATION
|
74
|
C.
|
MATERIAL CONTRACTS
|
82
|
D.
|
EXCHANGE CONTROLS
|
82
|
E.
|
TAXATION
|
82
|
F.
|
DIVIDENDS AND PAYING AGENTS
|
90
|
G.
|
STATEMENT BY EXPERTS
|
90
|
H.
|
DOCUMENTS ON DISPLAY
|
90
|
I.
|
SUBSIDIARY INFORMATION
|
91
|
91
|
||
92
|
||
92
|
||
92
|
||
93
|
||
98
|
||
98
|
||
98
|
||
98
|
||
98
|
||
98
|
||
98
|
||
99
|
||
99
|
||
99
|
||
99
|
||
99
|
ITEM 1.
|
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
|
ITEM 2.
|
OFFER STATISTICS AND EXPECTED TIMETABLE
|
ITEM 3.
|
KEY INFORMATION
|
|
A.
|
SELECTED FINANCIAL DATA
|
Year Ended December 31,
|
||||||||||||||||||||
2015
|
2014
|
2013
|
2012
|
2011
|
||||||||||||||||
In USD
|
||||||||||||||||||||
In thousands, except per share amounts
|
||||||||||||||||||||
Revenues:
|
||||||||||||||||||||
Location based services
|
127,683 | 133,692 | 126,951 | 114,565 | 120,410 | |||||||||||||||
Wireless communications products
|
47,945 | 48,435 | 43,216 | 35,753 | 39,757 | |||||||||||||||
Total Revenues
|
175,628 | 182,127 | 170,167 | 150,318 | 160,167 | |||||||||||||||
Cost of Revenues:
|
||||||||||||||||||||
Location based services
|
46,823 | 46,852 | 44,850 | 44,974 | 49,731 | |||||||||||||||
Wireless communication products
|
38,924 | 38,142 | 36,015 | 29,786 | 29,758 | |||||||||||||||
Total cost of revenues
|
85,747 | 84,994 | 80,865 | 74,760 | 79,489 | |||||||||||||||
Gross profit
|
89,881 | 97,133 | 89,302 | 75,558 | 80,678 | |||||||||||||||
Research and development expenses
|
2,401 | 2,526 | 2,414 | 2,066 | 1,877 | |||||||||||||||
Selling and marketing expenses
|
9,303 | 9,264 | 9,715 | 8,489 | 8,543 | |||||||||||||||
General and administrative expenses
|
37,801 | 38,617 | 34,483 | 33,439 | 34,984 | |||||||||||||||
Other expenses (income), net
|
(268 | ) | 856 | 4,760 | 1,617 | 8,691 | ||||||||||||||
Operating Income
|
40,644 | 45,870 | 37,930 | 29,947 | 26,583 | |||||||||||||||
Other income (expenses), net
|
- | - | (166 | ) | 6,755 | (819 | ) | |||||||||||||
Financing income, net
|
1,189 | 1,704 | 238 | 987 | 2,100 | |||||||||||||||
Income before income tax
|
41,833 | 47,574 | 38,002 | 37,689 | 27,864 | |||||||||||||||
Income tax
|
(12,822 | ) | (14,246 | ) | (12,447 | ) | (11,690 | ) | (5,655 | ) | ||||||||||
Share in losses of affiliated companies, net
|
(2,439 | ) | (421 | ) | (1 | ) | (39 | ) | (23 | ) | ||||||||||
Net income for the year
|
26,572 | 32,907 | 25,554 | 25,960 | 22,186 | |||||||||||||||
Less: net income attributable to non-controlling interest
|
(1,601 | ) | (2,478 | ) | (1,792 | ) | (1,080 | ) | (908 | ) | ||||||||||
Net income attributable to Company stockholders
|
24,971 | 30,429 | 23,762 | 24,880 | 21,278 | |||||||||||||||
Earning per share
|
||||||||||||||||||||
Basic
|
$ | 1.19 | $ | 1.45 | $ | 1.13 | $ | 1.19 | $ | 1.01 | ||||||||||
Diluted
|
$ | 1.19 | $ | 1.45 | $ | 1.13 | $ | 1.19 | $ | 1.01 | ||||||||||
Weighted average number of shares outstanding
|
||||||||||||||||||||
Basic
|
20,968 | 20,968 | 20,968 | 20,968 | 20,968 | |||||||||||||||
Diluted
|
20,968 | 20,968 | 20,968 | 20,968 | 20,968 |
Year Ended December 31,
|
||||||||||||||||||||
2015
|
2014
|
2013
|
2012
|
2011
|
||||||||||||||||
In USD
|
||||||||||||||||||||
In thousands, except per share amounts
|
||||||||||||||||||||
Cash & Cash Equivalent; deposit in escrow (short and long term) and investment in trading marketable securities
|
29,051 | 40,780 | 46,679 | 34,392 | 40,226 | |||||||||||||||
Working Capital
|
50,124 | 56,910 | 57,259 | 44,145 | 48,474 | |||||||||||||||
Total Assets
|
142,003 | 152,337 | 160,542 | 147,339 | 157,457 | |||||||||||||||
Total Liabilities
|
54,182 | 57,754 | 65,057 | 55,332 | 52,105 | |||||||||||||||
Retained Earnings
|
57,739 | 49,067 | 38,831 | 32,187 | 43,185 | |||||||||||||||
Stockholders Equity
|
83,698 | 90,696 | 90,918 | 88,027 | 101,194 | |||||||||||||||
Dividend declared per share
|
0.76 | 0.93 | 0.86 | 0.81 | 1.23 |
Year Ended December 31,
|
||||||||||||||||||||
2015
|
2014
|
2013
|
2012
|
2011
|
||||||||||||||||
(unaudited)
|
||||||||||||||||||||
Subscribers of our location-based services(1)
|
948,000 | 817,000 | 741,000 | 667,000 | 623,000 | |||||||||||||||
Average monthly churn rate
|
3.3 | % | 3 | % | 2.9 | % | 3 | % | 3.2 | % |
|
B.
|
CAPITALIZATION AND INDEBTEDNESS
|
|
C.
|
REASONS FOR THE OFFER AND USE OF PROCEEDS
|
|
D.
|
RISK FACTORS
|
n
|
accepting vehicle location and recovery technology as a preferred security product;
|
n
|
requiring or providing a premium discount for using location and recovery services and products;
|
n
|
mandating or encouraging use of our SVR services and AVL products, or similar services and products, for vehicles with the same or similar threshold values and for the same or similar required duration of use; and
|
n
|
with respect to insurance companies in Brazil and Argentina, deciding to lease SVR services and AVL products from us directly.
|
n
|
the rate of car theft or consumer concern over vehicle safety is high;
|
n
|
satisfactory radio frequencies are available to us that allow us to operate our business in an uninterrupted manner; and
|
n
|
insurance companies or owners of cars believe that the value of cars justifies incurring the expense associated with the deployment of SVR services.
|
n
|
the gain or loss of significant orders or customers;
|
n
|
recruitment or departure of key personnel;
|
n
|
the announcement of new products or service enhancements by us or our competitors;
|
n
|
quarterly variations in our or our competitors' results of operations;
|
n
|
announcements related to litigation;
|
n
|
changes in earnings estimates, investors' perceptions, recommendations by securities analysts or our failure to achieve analysts' earning estimates;
|
n
|
developments in our industry; and
|
n
|
general market conditions and other factors unrelated to our operating performance or the operating performance of our competitors.
|
INFORMATION ON THE COMPANY
|
|
A.
|
HISTORY AND DEVELOPMENT OF THE COMPANY
|
|
B.
|
BUSINESS OVERVIEW
|
1)
|
Traditional products, such as locks, alarms and traditional immobilizers. These devices are limited in their effectiveness as most can be disarmed easily and typically require the driver to activate the device upon leaving the vehicle. Also, unmonitored alarms that set off sirens are routinely ignored by people as the incidence of false alarms has been historically high. Furthermore, these products can only help in preventing theft and not in recovering the vehicle once it is stolen.
|
2)
|
More sophisticated products that include some form of remote monitoring and communication. This category can be further separated into devices that simply provide information on the general direction of the vehicle and those that enable the location, tracking and recovery of the vehicle in real time.
|
Security
|
Transportation
|
Telecommunication services
|
Government
|
|||
Vehicle tracking
|
Fleet management
|
Maintenance vehicle tracking
|
Government vehicle tracking
|
|||
Driver Behavior and Accident Notification
|
Parcel tracking
|
|||||
Personal tracking
|
Public transit
|
|||||
Asset tracking
|
n
|
Terrestrial network triangulation uses the wireless signals transmitted by an end-unit in the vehicle and received by a network of land-based wireless antennas (base stations) installed in the relevant coverage region in order to determine the precise location of the transmitter.
|
|
n
|
GPS-based systems utilize specially designed GPS devices in the vehicle that receive data from three or more satellites in order to determine the location of the device. Once located, GPS-based systems require a cellular or another wireless network to communicate with a remote control center.
|
n
|
Network-based cellular systems utilize signals between the wireless device and the cellular operator’s network of land-based antennas in order to triangulate the location of the relevant device. These systems require two-way communication between the device and antennas and, therefore, both a transmitter and receiver need to be installed in the vehicle.
|
|
n
|
RF-based homing systems utilize direction-finding technology based on a tracking signal transmitted by the end-unit in the vehicle, which is activated by a unique radio signal from the tracking unit once the vehicle is reported stolen.
|
|
·
|
the ability to locate the fleet's vehicles;
|
|
·
|
continuous data communication with the fleet's vehicles;
|
|
·
|
real-time vehicle status indicators: speed, distance driven, direction of travel, driver name, motion start/stop, engine start/stop, speeding, diagnostic alerts, driver behavior and more;
|
|
·
|
recording of determined events and analysis of data over time to improve driving and vehicle use;
|
|
·
|
remote monitoring and processing of data, such as temperature control in refrigerated or chilled compartments, time stamp, tire pressure and heat and other complementary data;
|
|
·
|
connection to standard organization systems;
|
|
·
|
accident notification;
|
|
·
|
driver's behavior; and
|
|
·
|
task management optimization.
|
n
|
Base Site: a radio receiver, which includes a processor and a data computation unit to collect and send data to and from transponders and send that data to control centers as part of the terrestrial infrastructure of the location system;
|
|
n
|
Control Center: a center consisting of software used to collect data from various base sites, conduct location calculations and transmit location data to various customers and law enforcement agencies;
|
n
|
GPS/GPRS-based products: navigation and tracking devices installed in vehicles; and
|
|
n
|
SMART: a portable transmitter installed in vehicles (including motorcycles) that sends a signal to the base site, enabling the location of vehicles, equipment or an individual;
|
Country
|
Services offered
|
Products sold
|
||
Israel
|
SVR
|
AVL
|
||
Fleet Management
|
||||
Value-added services
|
||||
Brazil
|
SVR
|
AVL
|
||
Fleet Management
|
||||
Value-added services
|
||||
Argentina
|
SVR
|
AVL
|
||
Fleet Management
|
||||
United States
|
SVR
|
AVL
|
||
Fleet Management
|
||||
Value-added services
Asset protection to Auto Lenders
|
n
|
Israel: We commenced operations in Israel in 1995 and we had approximately 381,000 subscribers as of December 31, 2015. We maintain 103 base stations in Israel, which provide complete coverage within the country. We also operate throughout Israel in providing fleet management services through GPS/GPRS based products and services.
|
|
|
n
|
Brazil: We commenced operations in Brazil in 2000 and we had approximately 368,000 subscribers as of December 31, 2015. We currently provide RF based products and services only in the metropolitan areas of Sao Paulo, Campinas, Americans and Rio de Janeiro, where we maintain 140 base stations; however we operate throughout Brazil in providing GPS/GPRS based products and services.
|
n
|
Argentina: We commenced operations in Argentina in 2002 and we had approximately 169,000 subscribers as of December 31, 2015. We currently provide RF based products and services only in the metropolitan area of Buenos Aires, where we maintain 43 base sites; however, we also operate throughout Argentina in providing GPS/GPRS based products and services for fleet management.
|
|
n
|
United States: We commenced operations in the United States in 2000. We provide GPS/GPRS products and services throughout the United States. As of December 31, 2015, we had approximately 30,000 subscribers for our location-based services in the United States.
|
n
|
Israel. Our primary competitors in Israel are Pointer and Skylock Ltd.
|
n
|
Brazil. Brazil is a highly fragmented market with many companies selling competing products and services (including immobilizers and other less-sophisticated vehicle security systems). Our main competitors in Brazil are Sascar, Zatix and AutoTrack.
|
|
n
|
Argentina. Argentina is also a highly fragmented market with many companies selling competing products and services (including immobilizers and other less-sophisticated vehicle security systems). Our main competitors in Argentina are LoJack Corporation and Megatrans S.A..
|
|
n
|
United States. In the United States, there are several major companies offering various theft protection and recovery products that compete with our product and service offerings, including LoJack Corporation, OnStar Corporation, Spireon (which also includes SysLocate and GoldStar), PassTime, Guide Point, Sky Patrol, Sky Guard, I-Metrik SVR and Position Plus.
|
n
|
erection and operating permits from the Israeli Ministry of the Environment;
|
n
|
permits from the Israeli Civil Aviation Authority, in certain cases;
|
n
|
permits from the Israeli Defense Forces;
|
n
|
approval from Israel's Land Administration and/or from Civil Administration in the Territories, which usually also involves payment for the land use rights; and
|
n
|
building permits from local or regional zoning authorities in Israel and Brazil.
|
n
|
a permit from Anatel (National Agency for Telecommunication)
|
n
|
a permit from IBAMA (Environment national agency) and/or state EPAs
|
n
|
Municipal permits
|
n
|
a permit from the fire department.
|
n
|
and a permit from COMAR (Aviation authorities)
|
|
C.
|
ORGANIZATIONAL STRUCTURE
|
Name of Subsidiary
|
Country of Incorporation
|
Proportion of
Ownership Interest
|
||||
Ituran USA Holdings Inc.
|
USA
|
100
|
%
|
|||
Ituran USA Inc.
|
USA
|
88.5
|
%*
|
|||
Ituran de Argentina S.A.
|
Argentina
|
100
|
%
|
|||
Ituran Sistemas de Monitoramento Ltda.
|
Brazil
|
98
|
%**
|
|||
Ituran Instalacoes Ltda.
|
Brazil
|
98
|
%
|
|||
Teleran Holding Ltda.
|
Brazil
|
99.99
|
%
|
|||
Ituran servicos Ltda.
|
Brazil
|
98
|
%
|
|||
E.R.M. Electronic Systems Limited
|
Israel
|
51
|
%
|
|||
Mapa Mapping & Publishing Ltd.
|
Israel
|
100
|
%
|
|
D.
|
PROPERTY, PLANTS AND EQUIPMENT
|
ITEM 4.A.
|
UNRESOLVED STAFF COMMENTS
|
ITEM 5:
|
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
|
|
A.
|
OPERATING RESULTS
|
As of December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Israel
|
381,000 | 340,000 | 310,000 | |||||||||
Brazil
|
368,000 | 298,000 | 262,000 | |||||||||
Argentina
|
169,000 | 158,000 | 145,000 | |||||||||
United States
|
30,000 | 21,000 | 24,000 | |||||||||
Total(1)
|
948,000 | 817,000 | 741,000 |
(1)
|
All numbers provided are rounded, and therefore totals may be slightly different than the results obtained by adding the numbers provided.
|
Year ended December 31,
|
||||||||||||||||||||||||
2015
|
2014
|
2013
|
||||||||||||||||||||||
In USD, in Millions
|
||||||||||||||||||||||||
Location
based
services
|
Wireless
communications
products
|
Location
based
services
|
Wireless
communications
products
|
Location
based
services
|
Wireless
communications
products
|
|||||||||||||||||||
Israel
|
54.4 | 34.2 | 56 | 33.5 | 51.5 | 31.8 | ||||||||||||||||||
Brazil
|
56.1 | 2.3 | 63.6 | 2.9 | 60.3 | 3.2 | ||||||||||||||||||
Argentina
|
15.9 | 1.4 | 12.5 | 1.3 | 13.6 | 1.6 | ||||||||||||||||||
United States
|
1.3 | 6.5 | 1.6 | 6 | 1.6 | 3.3 | ||||||||||||||||||
Others
|
- | 3.5 | - | 4.7 | - | 3.3 | ||||||||||||||||||
Total(1)
|
127.7 | 47.9 | 133.7 | 48.4 | 127.0 | 43.2 |
|
1.
|
Revenues from sales are recognized when title and risk of loss of the product pass to the customer (usually upon delivery).
|
|
2.
|
We apply 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, we are 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.
Revenues from SVR services subscription fees and from installation services, sold to customers within a single contractually binding arrangement were accounted for revenue recognition purposes as a single unit of accounting in accordance with ASC Topic 605-25, since the installation services element was determined not to have a value on a stand-alone basis to the customer. Accordingly, the entire contract fee for the two deliverables is recognized ratably on a straight-line basis over the subscription period.
|
|
3.
|
Amounts earned by our Brazilian subsidiary earns commissions for arranging a bundle transaction of SVR services subscription and installation services together with insurance services to be supplied by a third party insurance company, such commissions are recognized ratably on a straight-line basis over the subscription period, since the amount allocated to the company, as an agent, is contingent upon the delivery of the SVR services. As the insurance company is the primary obligor of the insurance component, the company recognizes only the net amounts as revenues, after deduction of amounts related to the insurance component.
|
|
4.
|
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.
|
|
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.
|
Years
|
|
GIS database
|
10
|
Brand name
|
15
|
Other
|
3-10
|
Year Ended December 31,
|
||||||||||||
%
|
||||||||||||
Consolidated statements of operations data:
|
2015
|
2014
|
2013
|
|||||||||
Revenues:
|
||||||||||||
Location based services
|
72.7 | 73.4 | 74.6 | |||||||||
Wireless communications products
|
27.3 | 26.6 | 25.4 | |||||||||
Total Revenues
|
100 | 100 | 100 | |||||||||
Cost of Revenues:
|
||||||||||||
Location based services
|
26.7 | 25.7 | 26.4 | |||||||||
Wireless communication products
|
22.1 | 21 | 21.1 | |||||||||
Total cost of revenues
|
48.8 | 46.7 | 47.5 | |||||||||
Gross profit
|
51.2 | 53.3 | 52.5 | |||||||||
Operating Expenses:
|
||||||||||||
Research and development expenses
|
1.4 | 1.4 | 1.4 | |||||||||
Selling and marketing Expenses
|
5.3 | 5.1 | 5.7 | |||||||||
General and administrative expenses, net
|
21.5 | 21.2 | 20.3 | |||||||||
Other expenses (income), net
|
(0.1 | ) | 0.4 | 2.8 | ||||||||
Total operating expenses
|
28.1 | 28.1 | 30.2 | |||||||||
Operating Income
|
23.1 | 25.2 | 22.3 | |||||||||
Other income (expenses)
|
---- | ---- | (0.1 | ) | ||||||||
Financing income, net
|
0.7 | 0.9 | 0.1 | |||||||||
Income before income tax
|
23.8 | 26.1 | 22.3 | |||||||||
Income tax
|
(7.3 | ) | (7.8 | ) | (7.3 | ) | ||||||
Share in losses of affiliated companies, net
|
(1.4 | ) | (0.2 | ) | - | |||||||
Net income for the year
|
15.1 | 18.1 | 15.0 | |||||||||
Less: net income attributable to non-controlling interests
|
(0.9 | ) | (1.4 | ) | (1.0 | ) | ||||||
Net income attributable to company stockholders
|
14.2 | 16.7 | 14.0 |
Year Ended December 31,
|
||||||||||||||||||||||||
2013
|
2014
|
2015
|
||||||||||||||||||||||
Actual
|
At 2012
exchange
rates(1)
|
Actual
|
At 2013
exchange
rates(1)
|
Actual
|
At 2014
exchange
rates(1
|
|||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||
Revenues
|
$ | 170,167 | $ | 174,879 | $ | 182,127 | $ | 193,977 | $ | 175,628 | $ | 209,186 | ||||||||||||
Gross profit
|
89,302 | 91,937 | 97,133 | 103,871 | 89,881 | 107,375 | ||||||||||||||||||
Operating income
|
37,930 | 39,630 | 45,870 | 49,437 | 40,647 | 50,749 |
|
B.
|
LIQUIDITY AND CAPITAL RESOURCES
|
|
1.
|
Foreign Exchange Market:
|
|
a.
|
Since December 10, 2015, the dollar and other currencies float free, and any citizen or company is authorized to purchase up to the equivalent of US$ 2,000,000 per month.
|
|
b.
|
As a consequence of the previous action, the Dollar Exchange Rate increase from 9 pesos per US$ to 13 pesos per US$ until the end of 2015.
|
|
c.
|
Exchange rate variations apply to all transactions in foreign currency at the price of the day (Collections and payments abroad, purchase of foreign exchange, etc.).
|
|
2.
|
Importation:
|
|
a.
|
The Importing Authorization System (DJAI) was replaced by a new Information System called SIMI. The main difference is that any good can be imported freely without the requirement of prior government authorization.
|
|
b.
|
The importation of Services and their payment is also unregulated.
|
|
c.
|
Both type of imports (goods and services) request previous registration and compliance with Transferring Prices and Tax regulations.
|
|
3.
|
Dividends:
|
|
a.
|
Paying abroad dividends to shareholders is not possible.
|
|
b.
|
Since September 23, 2013, there is an additional rate of 10% Income Tax applied on dividends payments that should be withheld at source.
|
Year ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
(In thousands)
|
||||||||||||
Net cash provided by operating activities
|
35,914 | 37,731 | 46,697 | |||||||||
Net cash used in investing activities
|
(25,706 | ) | (13,244 | ) | (15,466 | ) | ||||||
Net cash used in financing activities
|
(18,659 | ) | (22,426 | ) | (17,547 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents
|
(2,951 | ) | (5,340 | ) | (1,440 | ) | ||||||
Net increase (decrease) in cash and cash equivalents
|
(11,402 | ) | (3,279 | ) | 12,244 |
|
-
|
An increase in other current and non-current assets in amount of $3.9 million
|
|
-
|
An increase of equity loss in amount of $2 million.
|
|
-
|
An increase in other current and non-current liabilities in amount of $3 million
|
|
-
|
An increase in accounts receivables in amount of $2 million.
|
|
-
|
A decrease in the net income for the year, excluding depreciation, amortization and impairment of goodwill and excluding a gain from sale a subsidiary in an amount of approximately $7.5 million.
|
|
-
|
A decrease in the outstanding inventory in amount of $1.4 million.
|
|
-
|
An increase in accounts payable of $2.1 million.
|
|
-
|
An increase in liability for employee rights upon retirement in amount of $0.9 million.
|
|
-
|
A decrease in deferred revenues in amount of $0.9 million.
|
|
-
|
an increase in the net income for the year, excluding depreciation, amortization and impairment of goodwill in an amount of approximately $3.4 million;
|
|
-
|
an increase in other current and non-current assets in a total amount pf approximately $5.3 million;
|
|
-
|
a decrease in current and non-current liabilities in a total amount of approximately $6.8 million;
|
|
C.
|
RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES
|
|
D.
|
TREND INFORMATION
|
|
E.
|
OFF-BALANCE SHEET ARRANGEMENTS
|
|
F.
|
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
|
Payments due by period
|
||||||||||||||||||||
Contractual obligations
|
Total
|
Less than 1 year
|
1-3 years
|
3-5 years
|
After 5 years
|
|||||||||||||||
(In USD thousands)
|
||||||||||||||||||||
Operating leases
|
6,320 | 1,613 | 2,178 | 1,314 | 1,215 | |||||||||||||||
Long-term loans
|
- | - | - | - | - | |||||||||||||||
Purchase Obligations
|
21,273 | 8,773 | 12,500 | - | - | |||||||||||||||
Total
|
27,593 | 10,386 | 14,678 | 1,314 | 1,215 |
|
G.
|
SAFE HARBOR
|
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
|
|
A.
|
DIRECTORS AND SENIOR MANAGEMENT
|
Name
|
Age
|
Position
|
||
Izzy Sheratzky
|
69
|
President and director
|
||
Yehuda Kahane
|
71
|
Director
|
||
Ze'ev Koren
|
70
|
Chairman of the Board of Directors and an independent director
|
||
Efraim Sheratzky
|
63
|
Director
|
||
Eyal Sheratzky
|
47
|
Co-Chief Executive Officer and Director
|
||
Nir Sheratzky
|
44
|
Co-Chief Executive Officer and Director
|
||
Gil Sheratzky
|
38
|
CEO of our Subsidiary, International Activity and Business Development Officer and a Director
|
||
Yoav Kahane(1)(2)
|
42
|
Director and an independent director
|
||
Yigal Shani
|
71
|
Director
|
||
Israel Baron(1)(2)(3) +
|
62
|
External Director
|
||
Gidon Kotler(1)(2)(3)
|
75
|
External Director
|
||
Tal Sheratzky- Jaffa
|
38
|
Director and an independent director
|
||
Ami Saranga
|
52
|
Deputy Chief Executive Officer
|
||
Eli Kamer
|
49
|
Executive Vice President, Finance; Chief Financial Officer
|
||
Guy Aharonov
|
50
|
General Counsel
|
||
Udi Mizrahi
|
44
|
VP Finance
|
n
|
Prior to the time a shareholders meeting of our company takes place, a separate meeting of the shareholders of Moked will be convened.
|
|
n
|
At the Moked shareholders meeting, all matters included in our meeting’s agenda will be discussed and voted on.
|
n
|
The required quorum in the Moked meeting will be any number of shareholders actually present. The resolutions will be adopted by a majority of the votes present and voting, based on the relative shareholdings in Moked, with the exception of Moked Services, Information, Management and Investments, which is entitled to 41.5% of the voting rights..
|
|
n
|
With respect to director elections, every Moked shareholder holding at least 3.5% of Moked’s shares is entitled to designate one director in our annual shareholders meeting. Each Moked shareholder holding over 10% of Moked’s shares may nominate an additional director for every additional 10% of Moked shares held by him or her in excess of the initial 10%. For the purpose of nominating additional directors, shareholdings may be aggregated.
|
n
|
Upon the expiration of the term of office of our class A directors, each of Moked Services, Information and Investment, provided it holds at least 40% of the voting rights (together with the 3.5% of the voting rights held by F.K. Generators and Equipment), Yehuda Kahane Ltd., provided it holds at least 20% of the voting rights, F.K. Generators and Equipment, provided it holds at least 20% of the voting rights, and Yigal Shani or G.N.S. Holdings, provided either of them holds at least 3.5% of the voting rights, shall be entitled to require Moked to appoint one director to class A. Upon the expiration of the term of office of our class B directors, each of Moked Services, Information and Investment, provided it holds at least 40% of the voting rights (together with the 3.5% of the voting rights held by F.K. Generators and Equipment), and Yehuda Kahane, provided it holds at least 20% of the voting rights, and F.K. Generators and Equipment, provided it holds at least 20% of the voting rights, shall be entitled to require Moked to appoint one director to class B. Upon the expiration of the term of office of our class C directors, (i) Moked Services, Information and Investment, provided it holds at least 36.5% of the voting rights shall be entitled to require Moked to appoint two directors and (ii) Efraim Sheratzky or T.S.D. Holdings, provided either of them holds at least 3.5% of the voting rights, shall be entitled to require Moked to appoint one director to class C.
|
n
|
Moked has agreed to vote all of its shares at our shareholders meetings in accordance with the resolutions adopted at the Moked shareholders meeting or, with regard to director elections, as described above. In the event of a tie with respect to a certain issue, Moked has agreed to vote its shares against the relevant resolution at our shareholders meeting.
|
n
|
Moked’s shareholders have a right of first refusal on any sale of our shares by Moked. This right does not apply to open market sales by Moked of up to 2% of the issued share capital of our company in any given calendar year.
|
n
|
According to Moked’s articles of association, each of the shareholders of Moked may direct Moked to dispose of a portion of Moked’s holdings in our company that corresponds to such shareholders’ proportional holdings in Moked and to distribute the proceeds of such disposition to such directing shareholders.
|
|
B.
|
COMPENSATION
|
Management fees
|
Wage
|
Social components
|
Car value
|
Bonus (results based)
|
Bonus (Share yield based)
|
Total
|
||||||||||||||||||||||
Compensation components (in thousand US Dollars)
|
||||||||||||||||||||||||||||
Izzy Sheratzky (President)
|
695 | - | - | - | 1,042 | - | 1,737 | |||||||||||||||||||||
Eyal Sheratzky (Co-Chief Executive Officer)
|
540 | - | - | - | 810 | - | 1,350 | |||||||||||||||||||||
Nir Sheratzky (Co-Chief Executive Officer)
|
540 | - | - | - | 810 | - | 1,350 | |||||||||||||||||||||
Gil Sheratzky (CEO of our Subsidiary. International Activity and Business Development Officer)*
|
354 | - | - | - | 531 | - | 885 | |||||||||||||||||||||
Ami Saranga (Deputy Chief Executive Officer)
|
- | 209 | 43 | 33 | 38 | - | 323 | |||||||||||||||||||||
Total of our 5 highest paid officers
|
2,129 | 209 | 43 | 33 | 3,231 | - | 5,645 |
|
C.
|
BOARD PRACTICES
|
n
|
such majority includes at least the majority of the shares held by all non-controlling shareholders or those having personal interest in the nomination, except personal interest which is not resulting from connections with controlling shareholders, present and voting at such meeting; or
|
n
|
the total number of shares voted against the election of the external director and held by shareholders other than controlling shareholders or those having personal interest in the nomination, except personal interest which is not resulting from connections with controlling shareholders, must not exceed 2% of the shares whose holders are entitled to vote at any meeting of shareholders.
|
|
1.
|
Transaction that is neither extraordinary, nor insignificant.
|
|
(1)
|
Transaction which is higher than 4.5% of the equity of the company according its last combined financial reports which were published prior to the approval of the transaction.
|
|
(2)
|
Transaction that involves risks or significant exposure beyond mere monetary liabilities or obligations.
|
|
(3)
|
Transaction in which the company enters a new activity field or exits from an existing activity field.
|
|
2.
|
Insignificant transaction:
|
|
3.
|
General rules:
|
|
(1)
|
Any transaction with a controlling shareholder or any transaction that a controlling shareholder has an interest in, will be brought before the Audit Committee, which will determine its type and decide on case by case basis on defining it as an insignificant transaction or other kind of transaction, and will decide on its review and on its approval.
|
|
(2)
|
According the adopted criteria, transactions with Tzivtit Insurance Agency (1998) Ltd. and with Rinat Yogev Nadlan Ltd. shall be classified as Insignificant transactions. If the extent of such transactions will remain similar during the following years, our management shall be deemed qualified to approve such transactions and to report them to the Audit Committee.
|
|
(3)
|
Every year the criteria for classifying transactions as set up above shall be brought for reapproval by the Audit Committee.
|
n
|
a person (or a relative of a person) who holds more than 5% of the company's shares or voting rights;
|
n
|
a person (or a relative of a person) who has the power to appoint a director or the general manager of the company;
|
n
|
an executive officer, director or other affiliate of the company; or
|
n
|
a member of the company's independent accounting firm.
|
|
D.
|
EMPLOYEES
|
Year Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
By area of activity:
|
||||||||||||
Control Center
|
379 | 401 | 361 | |||||||||
Research and Development
|
39 | 54 | 33 | |||||||||
Sales and Marketing
|
125 | 127 | 110 | |||||||||
Technical support and IT
|
296 | 271 | 254 | |||||||||
Finance, Administration and Management
|
232 | 209 | 216 | |||||||||
Private enforcement and operations
|
393 | 395 | 356 | |||||||||
Manufacturing
|
80 | 65 | 62 | |||||||||
Total
|
1,544 | 1,522 | 1,392 | |||||||||
By geographic location (out of total):
|
||||||||||||
Israel
|
719 | 703 | 628 | |||||||||
Brazil
|
612 | 617 | 550 | |||||||||
Argentina
|
182 | 162 | 183 | |||||||||
United States
|
31 | 40 | 31 | |||||||||
Total
|
1,544 | 1,522 | 1,392 |
|
E.
|
SHARE OWNERSHIP
|
Name of Director/Officer(1)
|
Number of
Ordinary Shares
Beneficially Owned (2)
|
Percentage of beneficial ownership(3)
|
||||||
Izzy Sheratzky(4)
|
4,146,747 | 19.8 | ||||||
Professor Yehuda Kahane (5)
|
1,622,021 | 7.7 | ||||||
Zeev Koren
|
- | - | ||||||
Efraim Sheratzky (6)
|
277,466 | 1.3 | ||||||
Yigal Shani (7)
|
311,010 | 1.5 | ||||||
Eyal Sheratzky
|
- | - | ||||||
Nir Sheratzky
|
- | - | ||||||
Gil Sheratzky
|
- | - | ||||||
Yoav Kahane
|
- | - | ||||||
Tal Sheratzky- Jaffa
|
* | * | ||||||
Israel Baron
|
- | - | ||||||
Gidon Kotler
|
- | - | ||||||
Ami Saranga
|
- | - | ||||||
Eli Kamer
|
- | - | ||||||
Guy Aharonov
|
- | - | ||||||
Udi Mizrahi
|
* | * |
*
|
Own less than one percent of our shares.
|
(1)
|
This table includes only current directors and officers that beneficially hold our shares.
|
(2)
|
‘Beneficial ownership’ is determined in accordance with the rules of the Securities and Exchange Commission (as defined in Rule 13d – 3 under the Securities Exchange Act of 1934) and shares deemed beneficially owned by virtue of the right of any person or group to acquire such ordinary shares within 60 days are treated as outstanding only for the purposes of determining the percent owned by such person or group. To our knowledge, the persons and entities named in the table above are believed to have sole voting and investment power with respect to all ordinary shares shown as owned by them, except as described below.
|
(3)
|
Amounts in this column are based on 23,475,431 ordinary shares outstanding as of March 31, 2016, less 2,507,314 treasury shares held by us.
|
(4)
|
Shares beneficially owned include: (a) 69,430 shares directly owned by Mr. Sheratzky and an entity wholly owned by him; (b) 4,075,952 shares owned by Moked Ituran Ltd., which Mr. Sheratzky is deemed to beneficially owns due to his shared voting and investment power over such shares in accordance with that certain shareholders agreement, dated May 18, 1998 as amended on September 6, 2005 and on September 17, 2014, among Moked Ituran and its shareholders, which we refer to as the Moked Shareholders Agreement. For further information concerning the Moked Shareholders Agreement see the discussion under Item 6.A. –Directors and Senior Management under the caption “Shareholders Agreement and Articles of Association of Moked Ituran Ltd.” above; (c) 1,365 shares that are directly held by Mr. Sheratzky’s wife, Maddie Sheratzky.
|
(5)
|
Shares beneficially owned include: (a) 66,264 shares directly owned by Professor Kahane jointly with his wife, Rivka Kahane; (b) 123,950 shares owned by Yehuda Kahane Ltd., which Professor Kahane may be considered to beneficially own by virtue of his shared voting and investment control of the company through his 50% shareholdings thereof, the other 50% being owned by his wife, Rivka Kahane; and (c) 1,431,807 shares owned by Moked Ituran Ltd., which Professor Kahane may be considered to beneficially own by virtue of his right to direct the disposition of such shares in accordance with Moked’s articles of association. Professor Kahane has shared voting and investment control over Yehuda Kahane Ltd., a holder of 26% of the shares of Moked Ituran.
|
(6)
|
Shares beneficially owned include: (a) 9,956 shares directly owned by Efraim Sheratzky, (b) 61,000 shares owned by Tzivtit Insurance Agency (1998) Ltd., which Efraim Sheratzky may be considered to beneficially own by virtue of his shared voting and investment control over such shares through his 50% ownership thereof, the other 50% of the shares held by Yigal Shani, and (c) 206,510 shares owned by Moked Ituran, which Mr. Sheratzky may be considered to beneficially own by virtue of his right to direct the disposition of such shares in accordance with Moked’s articles of association. Mr. Sheratzky may be considered to beneficially own such shares by virtue of his sole voting and investment control over his wholly owned G T.S.D. Holdings Ltd, the holder of 3.75% of Moked’s shares.
|
(7)
|
Shares beneficially owned include: (a) 43,500 shares directly owned by Yigal Shani, (b) 61,000 shares owned by Tzivtit Insurance Agency (1998) Ltd., which Yigal Shani may be considered to beneficially own by virtue of his shared voting and investment control over such shares through his 50% ownership thereof, the other 50% of the shares held by Efraim Sheratzky, and (c) 206,510 shares owned by Moked Ituran, which Mr. Shani may be considered to beneficially own by virtue of his right to direct the disposition of such shares in accordance with Moked’s articles of association. Mr. Shani may be considered to beneficially own such shares by virtue of his sole voting and investment control over his wholly owned G.N.S. Holdings, the holder of 3.75% of Moked’s shares
|
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
|
|
A.
|
MAJOR SHAREHOLDERS
|
Shareholder
|
Number of
Ordinary Shares
Beneficially Owned
|
% Voting
|
||||||
Moked Ituran Ltd. (1)
|
4,075,952 | 19.44 | ||||||
All directors and executive officers as a group(2).
|
4,453,014 | 21.24 | ||||||
Vulcan Value Partners(3)
|
2,630,231 | 12.54 | ||||||
Psagot Investments House Ltd.(4)
|
1,160,515 | 5.53 | ||||||
Migdal Insurance & Financial Holdings Ltd .(5)
|
1,594,078 | 7.6 | ||||||
Treasury shares
|
2,507,314 | - |
|
B.
|
RELATED PARTY TRANSACTIONS
|
·
|
"Target-based Cash Incentives"means a cash incentive awarded to the Executive Office Holders for the company's achievement of the following Profit-Before-Tax targets in each calendar year following the effective date of the above agreements, in which the Minimum Threshold (as defined below) has been achieved:
|
Company's Profit-Before-Tax Targets
(in USD thousands)
|
Level of Incentive - As a Percentage of the
Executive Office Holder's Annual Cost of Pay
|
24,001 - 27,500
|
20%
|
27,501-31,000
|
45%
|
31,001-35,000
|
75%
|
35,001-39,000
|
110%
|
Above 39,001
|
150%
|
·
|
Target-based Cash Incentives shall become payable upon the lapse of 30 days from the date of publication of the company's audited annual financial statements (the "Entitlement Date"); and such cash incentive shall be paid on such date. However, if an Executive Office Holder's Target-based Cash Incentives exceed an amount equal to 100% of such Executive Office Holder's annual Cost of Pay (the "100% Threshold"), then 20% of the amount by which the Target-based Cash Incentives exceed the 100% Threshold (the "Deferred Portion") shall not be paid on their Entitlement Date, but rather shall be deferred and paid in two equal installments on the first and second anniversary of the Entitlement Date, provided that the Minimum Threshold was achieved during the first calendar year (for the first installment) and during the second calendar year (for the second installment) following the Entitlement Date, respectively. The Deferred Portion shall be linked to the consumer price index known on the Entitlement Date.
|
·
|
The company may pay to the Executive Office Holders advances on account of expected Target-based Cash Incentives, based on the company's reviewed financial statements, prior to the Entitlement Date; provided that if on the Entitlement Date, it turns out that such advances exceed the Target-based Cash Incentives to which the Executive Office Holders are entitled, then the excess amounts shall be returned to the Company or shall be deducted from the payment of the remainder Target-based Cash Incentives on the Entitlement Date, as the case may be.
|
·
|
"Excess Return Cash Incentives" means a cash grant based on the company's Stock Yield as compared to the TA 100 Index's Yield, as set forth below. In the event that the company shall de-list from the Tel-Aviv Stock Exchange, then the company's board of directors and compensation committee shall select a comparable NASDAQ index for the purpose of this Excess Return Cash Incentive and the provisions hereof shall apply with respect thereto mutatis mutandis.
|
·
|
In the event that an Agreement is terminated during a calendar year, the company's compensation committee and board of directors shall determine the relative amounts out of the Target-based Cash Incentives and/or Excess Return Cash Incentives to which the relevant Executive Office Holder is entitled for the portion of the year during which the Agreement was in force; and these amounts shall be paid within 30 days after the termination of service/employment, as the case may be.
|
·
|
On the date of determination of each Executive Office Holder's entitlement for a Target-based Cash Incentive for a particular year, the company's compensation committee shall examine whether the total amount of grants to which Executive Officers are entitled with respect to such calendar year and which constitute variable components of their terms of services (the "Total Amount of Grants to Executive Officers"), exceed an amount equal to 10% of the Company's EBITDA for such year (the "EBITDA's Threshold"), as calculated in accordance with data extracted from the company's audited consolidated annual financial statements, after taking into account the Executive Officers' fixed compensation but excluding their variable compensation. In such event, the amount by which the Total Amount of Grants to Executive Officers exceeds the EBITDA's Threshold shall be referred to as the "Excess Amount".
|
·
|
In the event that the Total Amount of Grants to Executive Officers exceeds the EBITDA's Threshold, then the Target-based Cash Incentive and the Excess Return Cash Incentive to which an Executive Office Holder is entitled (together, the "Grants") shall be reduced by an amount equal to the Executive Office Holder's Rate of Grants (as defined below) out of the Excess Amount. The term "Executive Office Holder's Rate of Grants" means, with respect to a particular Executive Office Holder, the percentage which such Executive Office Holder's Grants constitute out of the Total Amount of Grants to Executive Officers.
|
·
|
The company's board of directors shall have the right, under special circumstances at its discretion, to reduce the amount of Grants to which the Executive Office Holders are entitled, upon a 60 days prior notice.
|
·
|
The Executive Office Holder shall be required to return any compensation paid to them on the basis of results included in financial statements that turned out to be erroneous and were subsequently restated in the company's financial statements published during the three year period following publication of the erroneous financial statements; to the extent they would not have been entitled to the compensation actually received had it been determined based on the restated financial statements. In such case, compensation amounts will be returned within 60 days from the date of publication of the restated financial statements, net of taxes that were withheld thereon. If the Executive Office Holder has a right to reclaim such tax payments with respect to Grants which were paid in excess, from the relevant tax authorities, then the Executive Office Holder shall reasonably act to reclaim such amounts from the tax authorities and upon their receipt, shall remit them to the company.
|
Executive Office Holders
|
Target-based Cash Incentive
|
Deferred Portion for the next 2 years
|
Total to be paid for 2015:
|
|||||||||
(In US$ thousands)
|
||||||||||||
Izzy Sheratzky
|
1,042 | (69 | ) | 973 | ||||||||
Eyal Sheratzky
|
810 | (54 | ) | 756 | ||||||||
Nir Sheratzky
|
810 | (54 | ) | 756 | ||||||||
Gil Sheratzky
|
579 | (39 | ) | 540 |
|
C.
|
INTERESTS OF EXPERTS AND COUNSEL
|
FINANCIAL INFORMATION
|
|
A.
|
CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
|
|
B.
|
SIGNIFICANT CHANGES
|
THE OFFER AND LISTING
|
|
A.
|
OFFER AND LISTING DETAILS
|
Price per
+-ordinary share ($)
|
||||||||
High
|
Low
|
|||||||
During the last six months
|
||||||||
March 2016
|
19.65 | 17.17 | ||||||
February 2016
|
18.59 | 16.62 | ||||||
January 2016
|
19.27 | 16.76 | ||||||
December 2015
|
20.25 | 17.88 | ||||||
November 2015
|
22.75 | 20.20 | ||||||
October 2015
|
22.36 | 20.22 | ||||||
During each fiscal quarter of 2014 and 2015 and the first quarter of 2016
|
||||||||
First Quarter 2016
|
19.65 | 16.62 | ||||||
Fourth Quarter 2015
|
22.75 | 17.88 | ||||||
Third Quarter 2015
|
25.94 | 20.54 | ||||||
Second Quarter 2015
|
25.00 | 22.49 | ||||||
First Quarter 2015
|
23.29 | 20.75 | ||||||
Fourth Quarter 2014
|
22.66 | 20.13 | ||||||
Third Quarter 2014
|
24.45 | 21.07 | ||||||
Second Quarter 2014
|
25.70 | 22.78 | ||||||
First Quarter 2014
|
25.40 | 21.35 | ||||||
During each of the five most recent full financial years:
|
||||||||
2015
|
25.94 | 17.88 | ||||||
2014
|
25.70 | 20.13 | ||||||
2013
|
21.64 | 13.77 | ||||||
2012
|
15.67 | 10.70 | ||||||
2011
|
18.30 | 11.65 |
Price per
ordinary share (NIS)
|
Price per
ordinary share ($)
|
|||||||||||||||
High
|
Low
|
High
|
Low
|
|||||||||||||
Annual:
|
||||||||||||||||
2015
|
98.86 | 70.00 | 25.95 | 17.95 | ||||||||||||
2014
|
89.93 | 74.02 | 25.75 | 21.29 | ||||||||||||
2013
|
75.71 | 51.60 | 21.81 | 13.82 | ||||||||||||
2012
|
57.85 | 42.10 | 15.28 | 10.72 | ||||||||||||
2011
|
65.09 | 42.00 | 18.09 | 11.81 | ||||||||||||
Quarterly:
|
||||||||||||||||
First Quarter 2016
|
74.71 | 64.34 | 19.09 | 16.55 | ||||||||||||
Fourth Quarter 2015
|
86.27 | 70.00 | 22.09 | 17.95 | ||||||||||||
Third Quarter 2015
|
98.86 | 79.85 | 25.95 | 20.29 | ||||||||||||
Second Quarter 2015
|
95.68 | 88.30 | 24.77 | 22.89 | ||||||||||||
First Quarter 2015
|
92.57 | 81.61 | 23.54 | 20.93 | ||||||||||||
Fourth Quarter 2014
|
88.30 | 76.23 | 22.51 | 20.18 | ||||||||||||
Third Quarter 2014
|
82.88 | 74.02 | 24.19 | 21.29 | ||||||||||||
Second Quarter 2014
|
89.93 | 80.12 | 25.75 | 23.24 | ||||||||||||
First Quarter 2014
|
89.60 | 75.72 | 25.67 | 21.67 | ||||||||||||
|
||||||||||||||||
Most recent six months:
|
||||||||||||||||
March 2016
|
74.00 | 66.47 | 19.65 | 17.10 | ||||||||||||
February 2016
|
73.21 | 64.34 | 18.74 | 16.55 | ||||||||||||
January 2016
|
74.71 | 66.04 | 19.09 | 16.74 | ||||||||||||
December 2015
|
78.04 | 70.00 | 20.12 | 17.95 | ||||||||||||
November 2015
|
86.27 | 75.55 | 22.09 | 20.00 | ||||||||||||
October 2015
|
85.50 | 78.28 | 22.21 | 20.17 |
|
B.
|
PLAN OF DISTRIBUTION
|
|
C.
|
MARKETS
|
|
D.
|
SELLING SHAREHOLDERS
|
|
E.
|
DILUTION
|
|
F.
|
EXPENSES OF THE ISSUE
|
ADDITIONAL INFORMATION
|
|
A.
|
SHARE CAPITAL
|
|
B.
|
MEMORANDUM AND ARTICLES OF ASSOCIATION
|
n
|
the majority must include at least the majority of the shares of disinterested shareholders voted at the meeting; or
|
n
|
the total number of shares of disinterested shareholders who voted against the transaction must not exceed 2% of the aggregate voting rights in the company.
|
n
|
represents at least 20% of a company’s actual voting power prior to the issuance of such securities, and that would increase the relative holdings of a 5% shareholder or that would cause any person to become a 5% shareholder the consideration for which (or a portion thereof) is not cash or securities listed on a recognized stock exchange, or is not at fair market value; or
|
|
n
|
results in a person becoming a controlling shareholder of the company.
|
n
|
an amendment to the company's articles of association;
|
n
|
an increase of the company's authorized share capital;
|
n
|
a merger; or
|
n
|
interested party transactions that require shareholder approval.
|
n
|
a private placement in which the company’s shareholders approved such holder owning 25% or more of the voting rights of the company (provided that there is no other shareholder that holds 25% or more of the voting rights of the company); or more than 45% of the voting rights of the company (provided that there is no other shareholder that holds 45% or more of the voting rights of the company); or
|
|
n
|
a purchase from an existing holder of 25% or more of the voting rights of the company that results in another person becoming a holder of 25% or more of the voting rights of the company; or
|
n
|
purchase from an existing holder of more than 45% of the voting rights of the company that results in another person becoming a holder of more than 45% of the voting rights of the company.
|
n
|
the transaction is not accompanied by an amendment to the acquirer's memorandum or articles of association;
|
n
|
the transaction does not contemplate the issuance of more than 20% of the voting rights of the acquirer that would result in any shareholder becoming a controlling shareholder; and
|
n
|
there is no "cross-ownership" of shares of the merging companies, as described above.
|
n
|
amendments to our articles of association;
|
n
|
appointment or termination of our auditors;
|
n
|
appointment and dismissal of external directors;
|
n
|
approval of acts and transactions requiring general meeting approval pursuant to the Israeli Companies Law;
|
n
|
increase or reduction of our authorized share capital;
|
n
|
a merger; and
|
n
|
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 required for our proper management.
|
•
|
Financial liability imposed on him or her in favor of another person pursuant to a judgment, settlement or arbitrator’s award approved by a court. However, if an undertaking to indemnify an office holder with respect to such liability is provided in advance then such an undertaking must be limited to events which, in the opinion of the board of directors, can be foreseen based on the company’s activities when the undertaking to indemnify is given, and to an amount or according to criteria determined by the board of directors as reasonable under the circumstances, and such undertaking shall detail the abovementioned events and amount or criteria.
|
•
|
Reasonable litigation expenses, including attorneys’ fees, incurred by the office holder as a result of an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (i) no indictment was filed against such office holder as a result of such investigation or proceeding, and (ii) no financial liability, such as a criminal penalty, was imposed upon him or her as a substitute for the criminal proceeding as a result of such investigation or proceeding or, if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal intent or in connection with monetary penalty.
|
•
|
Reasonable litigation expenses, including attorneys’ fees, incurred by the office holder or imposed by a court in proceedings instituted against him or her by the company, on its behalf or by a third party or in connection with criminal proceedings in which the office holder was acquitted or as a result of a conviction for an offense that does not require proof of criminal intent. Under the Israeli Companies Law, a company may obtain insurance for an office holder against liabilities incurred in his or her capacity as an office holder if and to the extent provided in the company’s articles of association.
|
•
|
A breach of duty of loyalty to the company, to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company.
|
•
|
A breach of duty of care to the company or to a third party, including a breach arising out of the negligent conduct of the office holder.
|
•
|
A financial liability imposed on the office holder in favor of a third party.
|
•
|
a breach of duty of loyalty, except to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company;
|
•
|
a breach of duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the office holder;
|
•
|
an act or omission committed with intent to derive illegal personal benefit; or
|
•
|
a fine, civil fine, monetary penalty or forfeit levied against the office holder.
|
|
C.
|
MATERIAL CONTRACTS
|
|
D.
|
EXCHANGE CONTROLS
|
|
E.
|
TAXATION
|
n
|
an individual citizen or resident of the United States;
|
n
|
a corporation or partnership created or organized in or under the laws of the United States or of any state of the United States or the District of Columbia (other than a partnership, including any entity treated as a partnership for U.S. tax purposes, that is not treated as a US person under any applicable Treasury regulations);
|
n
|
an estate, the income of which is subject to United States federal income taxation regardless of its source; or
|
n
|
a trust if the trust has elected validly to be treated as a US person for United States federal income tax purposes or if a US court is able to exercise primary supervision over the trust’s administration and one or more US persons have the authority to control all of the trust’s substantial decisions.
|
n
|
insurance companies;
|
n
|
dealers or traders in stocks, securities or currencies;
|
n
|
financial institutions and financial services entities;
|
n
|
real estate investment trusts;
|
n
|
regulated investment companies;
|
n
|
grantor trusts;
|
n
|
persons that receive ordinary shares as compensation for the performance of services;
|
n
|
tax-exempt organizations;
|
n
|
persons that hold ordinary shares as a position in a straddle or as part of a hedging, conversion or other integrated instrument;
|
n
|
individual retirement and other tax-deferred accounts;
|
n
|
expatriates of the United States;
|
n
|
persons having a functional currency that is not the US dollar; or
|
n
|
direct, indirect or constructive owners of 10% or more, by voting power or value, of our ordinary shares.
|
n
|
the stock of that corporation with respect to which the dividends are paid is readily tradable on an established securities market in the US, or
|
n
|
that corporation is eligible for benefits of a comprehensive income tax treaty with the US that includes an information exchange program and is determined to be satisfactory by the US Secretary of the Treasury. The Internal Revenue Service has determined that the US-Israel Tax Treaty is satisfactory for this purpose.
|
n
|
75% or more of its gross income consists of specified types of passive income, or
|
n
|
50% or more of the average value of its assets consists of passive assets, which generally means assets that generate, or are held for the production of, “passive income.”
|
n
|
Passive income for this purpose generally includes dividends, interest, royalties, rents and gains from commodities and securities transactions and includes amounts derived by reason of the temporary investment of funds. If we were classified as a PFIC, and you are a US Holder, you could be subject to increased tax liability upon the sale or other disposition of ordinary shares or upon the receipt of amounts treated as “excess distributions” (generally, your ratable portion of distributions in any year which are greater than 125% of the average annual distribution received by you either in the shorter of the three preceding years or your holding period). Under these rules, the excess distribution and any gain would be allocated ratably over our shareholders’ holding period for the ordinary shares, and the amount allocated to the current taxable year and any taxable year prior to the first taxable year in which we were a PFIC would be taxed as ordinary income. The amount allocated to each of the other taxable years would be subject to tax at the highest marginal rate in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed on the resulting tax allocated to such other taxable years. In addition, holders of stock in a PFIC may not receive a “step-up” in basis on shares acquired from a decedent. If any of our shareholders are US Holders who hold ordinary shares during a period when we are a PFIC, such shareholders be subject to the foregoing rules even if we cease to be a PFIC.
|
|
·
|
A reduced corporate tax rate for industrial enterprises, provided that more than 25% of their annual income is derived from export, which will apply to the enterprise’s entire preferred income so that in the tax years 2011-2012 the reduced tax rate will be 15% for preferred income derived from industrial facilities located in located in areas which are not classifies as area A. In the tax year 2013 the reduced tax rate was 12.5%.
|
|
·
|
The reduced tax rates will no longer be contingent upon making a minimum qualifying investment in productive assets.
|
|
·
|
A definition of “preferred income” was introduced into the Investments Law to include certain types of income that are generated by the Israeli production activity of a preferred enterprise.
|
|
·
|
Reducing the tax rate criterion: a company is considered CFC If the tax rate applicable to passive income does not exceed 15 % (instead of 20 %).
|
|
·
|
Sale of a security will be considered passive income, unless the holding duration is less than one year and it has been shown that the security served in a business.
|
|
·
|
Cancel the notional credit mechanism and replacing it with dividend deduction against the actual dividend distribution. Tax refund may be allowed under certain conditions.
|
|
·
|
Dividends derived from income that was taxed at a rate of at least 15% shall not be considered "passive income" under certain conditions.
|
|
F.
|
DIVIDENDS AND PAYING AGENTS
|
|
G.
|
STATEMENT BY EXPERTS
|
|
H.
|
DOCUMENTS ON DISPLAY
|
|
I.
|
SUBSIDIARY INFORMATION
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Year Ended December 31,
|
||||||||||||||||||||||||
2013
|
2014
|
2015
|
||||||||||||||||||||||
Actual
|
At 2012
exchange
rates(1)
|
Actual
|
At 2013
exchange
rates(1)
|
Actual
|
At 2014
exchange
rates(1)
|
|||||||||||||||||||
(In US$ thousands)
|
||||||||||||||||||||||||
Revenues
|
170,167 | 174,879 | 182,127 | 193,977 | 175,628 | 209,186 | ||||||||||||||||||
Gross profit
|
89,302 | 91,937 | 97,133 | 103,871 | 89,881 | 107,375 | ||||||||||||||||||
Operating income
|
37,930 | 39,630 | 45,870 | 49,437 | 40,644 | 50,749 |
ITEM 12.
|
DESCRIPTIONS OF SECURITIES OTHER THAN EQUITY SECURITIES
|
ITEM 13.
|
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
|
ITEM 14.A
|
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
|
ITEM 15.
|
CONTROLS AND PROCEDURES
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
ITURAN LOCATION AND CONTROL LTD. AND SUBSIDIARIES
|
Fahn Kanne & Co.
Head Office
Tel-Aviv 6721118, ISRAEL
PO Box 36172, 6136101
|
Gonzalo Urien Berri
Estudio Urien & Asociados
Buenos Aires, Argentina
|
February 17, 2016
|
ITEM 16.
|
[RESERVED]
|
ITEM 16A.
|
AUDIT COMMITTEE FINANCIAL EXPERT
|
ITEM 16B.
|
CODE OF ETHICS
|
ITEM 16C.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
2014
|
2015
|
|||||||
(in thousands, USD)
|
||||||||
Audit Fees (1)
|
290 | 242 | ||||||
Tax Fees (2)
|
24 | 0 | ||||||
Total
|
314 | 242 |
|
(1)
|
The audit fees for the years ended December 31, 2014 and 2015 respectively, were for professional services rendered for the audits of our annual consolidated financial statements, review of consolidated quarterly financial statements, statutory audits of Ituran.
|
|
(2)
|
Consists of all tax related services.
|
ITEM 16D.
|
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
|
ITEM 16E.
|
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
|
ITEM 16F.
|
CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
|
ITEM 16G.
|
CORPORATE GOVERNANCE
|
ITEM 16H.
|
MINE SAFETY DISCLOSURE
|
ITEM 17.
|
FINANCIAL STATEMENTS
|
ITEM 18.
|
FINANCIAL STATEMENTS
|
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
|
F-6
|
Statement of Changes in Equity
|
F-7-F-8
|
Consolidated Statements of Cash Flows
|
F-9-F-10
|
Notes to Consolidated Financial Statements
|
F-11-F-45
|
ITEM 19.
|
EXHIBITS
|
Description of Document
|
|
1.1
|
Amended and Restated Articles of Association of the Company
|
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)
|
2.3
|
Form of the second 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). (5)
|
4.1
|
Agreement dated January 23, 2007, between E-Com Global Electronic Commerce Ltd. and Gil Sheratzky (English translation) (3)
|
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 (3)
|
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 (3)
|
4.7
|
Addendum No. 1 dated April 6, 2011 to the agreement between the Company and A. Sheratzky Holdings Ltd. and Izzy Sheratzky (3)
|
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)
|
4.9(a)
|
Addendum to February 7, 2002 Unprotected Lease Agreement, by and between Mofari Ltd. and the Registrant, dated October 31, 2012. (6)
|
4.10
|
Lease Agreement, dated May 29, 2002, by and between Rinat Yogev Nadlan and Ituran Cellular Communication Ltd. (English translation). (1)( 4)
|
4.11
|
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)
|
4.12
|
Form of Directors' Letter of Indemnity (English translation). (6)
|
4.13
|
Frame Product and Services Purchase Agreement dated January 1, 2008 by and between Ituran Location and Control Ltd. and Telematics Wireless Ltd. (2) *
|
4.14
|
Radio Location System License Agreement, dated July 13, 2004, by and between Teletrac, Inc., and Telematics Wireless Ltd. (1)
|
4.15
|
Ituran Location & Control Compensation Policy, as approved on October 31, 2013 (6)
|
4.16
|
Service Agreement, dated as of February 1, 2014, by and among Ituran Location &Control Ltd., Izzy Sheratzky and A. Sheratzky Holdings Ltd. (English Translation). (6)
|
4.17
|
Service Agreement, dated as of February 1, 2014, by and among Ituran Location &Control Ltd., ORAS Capital Ltd. and Eyal Sheratzky. (6)
|
4.18
|
Service Agreement, dated as of February 1, 2014, by and among Ituran Location &Control Ltd., Galnir Management and Investments Ltd. and Nir Sheratzky. (6)
|
4.19
|
Service Agreement, dated as of February 1, 2014, by and among E-Com Global Electronic Commerce Ltd., ZERO-TO-ONE S.B.L. INVESTMENTS LTD. and Gil Sheratzky. (6)
|
8
|
List of significant subsidiaries
|
12.1
|
Certifications by co-chief executive officers 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
|
Certifications by the co-chief executive officers and the 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)
|
Filed as an exhibit to the Registrant’s Registration Statement on Form F-1 (File No. 333-128028) filed on September 23, 2005, and incorporated herein by reference.
|
|
(2)
|
Filed as an exhibit to the annual report on Form 20-F for the year ended December 31, 2007 and incorporated herein by reference.
|
|
(3)
|
Filed as an exhibit to the annual report on Form 20-F for the year ended December 31, 2010 and incorporated herein by reference.
|
|
(4)
|
The current lessee under this agreement is the Registrant.
|
|
(5)
|
Filed as an exhibit to Form 13G of Yehuda Kahane for the year ended December 31, 2014, filed on February 17, 2015, and incorporated herein by reference.
|
|
(6)
|
Filed as an exhibit to the annual report on Form 20-F for the year ended December 31, 2013 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
BOARD OF DIRECTORS AND STOCKHOLDERS
ITURAN LOCATION AND CONTROL LTD.
|
Fahn Kanne & Co.
Head Office
Tel-Aviv 6721118, ISRAEL
PO Box 36172, 6136101
|
US dollars
|
||||||||
December 31,
|
||||||||
(in thousands)
|
2015
|
2014
|
||||||
Current assets
|
||||||||
Cash and cash equivalents
|
27,016 | 38,418 | ||||||
Investment in marketable securities
|
2,035 | 2,362 | ||||||
Accounts receivable (net of allowance for doubtful accounts)
|
27,436 | 27,960 | ||||||
Other current assets (Note 2)
|
22,437 | 22,318 | ||||||
Inventories (Note 3)
|
12,781 | 12,164 | ||||||
91,705 | 103,222 | |||||||
Long-term investments and other assets
|
||||||||
Investments in affiliated company (Note 4A)
|
4,705 | 1,016 | ||||||
Investments in other company (Note 4B)
|
78 | 79 | ||||||
Other non-current assets (Note 5)
|
1,166 | 2,091 | ||||||
Deferred income taxes (Note 15)
|
2,279 | 2,886 | ||||||
Funds in respect of employee rights upon retirement
|
7,174 | 6,642 | ||||||
15,402 | 12,714 | |||||||
Property and equipment, net (Note 6)
|
31,514 | 31,908 | ||||||
Intangible assets, net (Note 7)
|
26 | 452 | ||||||
Goodwill (Note 8)
|
3,356 | 4,041 | ||||||
Total assets
|
142,003 | 152,337 |
US dollars
|
||||||||
December 31,
|
||||||||
(in thousands, except share data)
|
2015
|
2014
|
||||||
Current liabilities
|
||||||||
Credit from banking institutions (Note 9)
|
155 | - | ||||||
Accounts payable
|
10,466 | 11,658 | ||||||
Deferred revenues
|
9,210 | 9,401 | ||||||
Other current liabilities (Note 10)
|
21,750 | 25,253 | ||||||
41,581 | 46,312 | |||||||
Long-term liabilities
|
||||||||
Liability for employee rights upon retirement
|
10,637 | 10,229 | ||||||
Provision for contingencies
|
622 | - | ||||||
Deferred revenues
|
973 | 1,063 | ||||||
Deferred income taxes (Note 15)
|
- | 150 | ||||||
Other non-current
|
369 | - | ||||||
12,601 | 11,442 | |||||||
Contingent liabilities (Note 11)
|
||||||||
Equity:
|
||||||||
Stockholders’ equity (Note 12)
|
||||||||
Share capital – ordinary shares of NIS 0.33⅓ par value:
|
1,983 | 1,983 | ||||||
Authorized – December 31, 2015 and 2014 – 60,000,000 shares
|
||||||||
Issued and outstanding – December 31, 2015 and 2014 – 23,475,431 shares
|
||||||||
Additional paid- in capital
|
71,550 | 71,550 | ||||||
Accumulated other comprehensive income
|
(17,520 | ) | (1,850 | ) | ||||
Retained earnings
|
57,739 | 49,067 | ||||||
Treasury stock at cost – December 31, 2015 and 2014 – 2,507,314 shares
|
(30,054 | ) | (30,054 | ) | ||||
Stockholders’ equity
|
83,698 | 90,696 | ||||||
Non-controlling interests
|
4,123 | 3,887 | ||||||
Total equity
|
87,821 | 94,583 | ||||||
Total liabilities and equity
|
142,003 | 152,337 |
The accompanying notes are an integral part of the consolidated financial statements.
|
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands except earnings per share)
|
2015
|
2014
|
2013
|
|||||||||
Revenues:
|
||||||||||||
Location based services
|
127,683 | 133,692 | 126,951 | |||||||||
Wireless communications products
|
47,945 | 48,435 | 43,216 | |||||||||
175,628 | 182,127 | 170,167 | ||||||||||
Cost of revenues:
|
||||||||||||
Location based services
|
46,823 | 46,852 | 44,850 | |||||||||
Wireless communications products
|
38,924 | 38,142 | 36,015 | |||||||||
85,747 | 84,994 | 80,865 | ||||||||||
Gross profit
|
89,881 | 97,133 | 89,302 | |||||||||
Research and development expenses
|
2,401 | 2,526 | 2,414 | |||||||||
Selling and marketing expenses
|
9,303 | 9,264 | 9,715 | |||||||||
General and administrative expenses
|
37,801 | 38,617 | 34,483 | |||||||||
Other (income) expenses, net (Note 13)
|
(268 | ) | 856 | 4,760 | ||||||||
Operating income
|
40,644 | 45,870 | 37,930 | |||||||||
Other (expenses) income, net
|
- | - | (166 | ) | ||||||||
Financing income, net (Note 14)
|
1,189 | 1,704 | 238 | |||||||||
Income before income tax
|
41,833 | 47,574 | 38,002 | |||||||||
Income tax expenses (Note 15)
|
(12,822 | ) | (14,246 | ) | (12,447 | ) | ||||||
Share in losses of affiliated companies, net (Note 4A)
|
(2,439 | ) | (421 | ) | (1 | ) | ||||||
Net income for the year
|
26,572 | 32,907 | 25,554 | |||||||||
Less: Net income attributable to non-controlling interest
|
(1,601 | ) | (2,478 | ) | (1,792 | ) | ||||||
Net income attributable to the Company
|
24,971 | 30,429 | 23,762 | |||||||||
Basic and diluted earnings per share attributable to Company’s stockholders (Note 16)
|
1.19 | 1.45 | 1.13 | |||||||||
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)
|
2015
|
2014
|
2013
|
|||||||||
Net income for the year
|
26,572 | 32,907 | 25,554 | |||||||||
Other comprehensive loss, net of tax:
|
||||||||||||
Foreign currency translation adjustments
|
(14,703 | ) | (13,354 | ) | (2,754 | ) | ||||||
Unrealized gains (losses) in respect of derivative financial instruments designated for cash flow hedge
|
85 | 2,331 | (635 | ) | ||||||||
Reclassification of net gains realized to net income
|
(1,188 | ) | (29 | ) | 217 | |||||||
Other comprehensive loss, net of tax
|
(15,806 | ) | (11,052 | ) | (3,172 | ) | ||||||
Comprehensive income
|
10,766 | 21,855 | 22,382 | |||||||||
Less: comprehensive income attributable to non-controlling interests
|
(1,465 | ) | (1,884 | ) | (1,996 | ) | ||||||
Comprehensive income attributable to the Company
|
9,301 | 19,971 | 20,386 |
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, 2013
|
23,476 | 1,983 | 71,927 | 11,984 | 32,187 | (30,054 | ) | 3,980 | 92,007 | |||||||||||||||||||||||
Changes during 2013:
|
||||||||||||||||||||||||||||||||
Net income
|
- | - | - | - | 23,762 | - | 1,792 | 25,554 | ||||||||||||||||||||||||
Other comprehensive income (loss)
|
- | - | - | (3,376 | ) | - | - | 204 | (3,172 | ) | ||||||||||||||||||||||
Acquisition of none controlling interests
|
- | - | (377 | ) | - | - | - | (123 | ) | (500 | ) | |||||||||||||||||||||
Dividend paid to non-controlling interests
|
- | - | - | - | - | - | (1,286 | ) | (1,286 | ) | ||||||||||||||||||||||
Dividend paid
|
- | - | - | - | (13,502 | ) | - | - | (13,502 | ) | ||||||||||||||||||||||
Dividend declared
|
- | - | - | - | (3,616 | ) | - | - | (3,616 | ) | ||||||||||||||||||||||
Balance as of December 31, 2013
|
23,476 | 1,983 | 71,550 | 8,608 | 38,831 | (30,054 | ) | 4,567 | 95,485 | |||||||||||||||||||||||
Changes during 2014:
|
||||||||||||||||||||||||||||||||
Net income
|
- | - | - | - | 30,429 | - | 2,478 | 32,907 | ||||||||||||||||||||||||
Other comprehensive loss
|
- | - | - | (10,458 | ) | - | - | (594 | ) | (11,052 | ) | |||||||||||||||||||||
Dividend paid to non-controlling interests
|
- | - | - | - | - | - | (2,564 | ) | (2,564 | ) | ||||||||||||||||||||||
Dividend paid
|
- | - | - | - | (15,697 | ) | - | - | (15,697 | ) | ||||||||||||||||||||||
Dividend declared
|
- | - | - | - | (4,496 | ) | - | - | (4,496 | ) | ||||||||||||||||||||||
Balance as of December 31, 2014
|
23,476 | 1,983 | 71,550 | (1,850 | ) | 49,067 | (30,054 | ) | 3,887 | 94,583 |
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, 2015
|
23,476 | 1,983 | 71,550 | (1,850 | ) | 49,067 | (30,054 | ) | 3,887 | 94,583 | ||||||||||||||||||||||
Changes during 2015:
|
||||||||||||||||||||||||||||||||
Net income
|
- | - | - | - | 24,971 | - | 1,601 | 26,572 | ||||||||||||||||||||||||
Other comprehensive loss
|
- | - | - | (15,670 | ) | - | - | (136 | ) | (15,806 | ) | |||||||||||||||||||||
Dividend paid to non-controlling interests
|
- | - | - | - | - | - | (1,229 | ) | (1,229 | ) | ||||||||||||||||||||||
Dividend paid
|
- | - | - | - | (13,171 | ) | - | - | (13,171 | ) | ||||||||||||||||||||||
Dividend declared
|
- | - | - | - | (3,128 | ) | - | - | (3,128 | ) | ||||||||||||||||||||||
Balance as of December 31, 2015
|
23,476 | 1,983 | 71,550 | (17,520 | ) | 57,739 | (30,054 | ) | 4,123 | 87,821 |
The accompanying notes are an integral part of the consolidated financial statements.
|
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2015
|
2014
|
2013
|
|||||||||
Cash flows from operating activities
|
||||||||||||
Net income for the year
|
26,572 | 32,907 | 25,554 | |||||||||
Adjustments to reconcile net income to net cash from operating activities:
|
||||||||||||
Depreciation, amortization and impairment of goodwill and other intangibles
|
11,962 | 12,219 | 16,196 | |||||||||
Gain from sale of subsidiary, net (Appendix A)
|
(951 | ) | - | - | ||||||||
Losses of sale affiliated company
|
- | - | 166 | |||||||||
Exchange differences on principal of deposit and loans, net
|
- | (23 | ) | 317 | ||||||||
Gains in respect of trading marketable securities
|
(666 | ) | (133 | ) | - | |||||||
Increase in liability for employee rights upon retirement
|
717 | 1,655 | 1,095 | |||||||||
Share in losses of affiliated companies, net
|
2,439 | 421 | 1 | |||||||||
Deferred income taxes
|
(85 | ) | (737 | ) | (1,812 | ) | ||||||
Capital (gain) losses on sale of property and equipment, net
|
(31 | ) | (270 | ) | 19 | |||||||
Decrease (increase) in accounts receivable
|
117 | (1,864 | ) | (609 | ) | |||||||
Decrease (increase) in other current and non-current assets
|
(879 | ) | (4,749 | ) | 580 | |||||||
Decrease (increase) in inventories
|
(658 | ) | 783 | 1,354 | ||||||||
Increase (decrease) in accounts payable
|
(1,176 | ) | 927 | 1,446 | ||||||||
Increase (decrease) in deferred revenues
|
(246 | ) | 749 | (227 | ) | |||||||
Increase (decrease) in other current and non-current liabilities
|
(1,201 | ) | (4,154 | ) | 2,617 | |||||||
Net cash provided by operating activities
|
35,914 | 37,731 | 46,697 | |||||||||
Cash flows from investment activities
|
||||||||||||
Increase in funds in respect of employee rights upon retirement, net of withdrawals
|
(804 | ) | (708 | ) | (718 | ) | ||||||
Capital expenditures
|
(18,724 | ) | (14,976 | ) | (14,216 | ) | ||||||
Investment in affiliated company
|
(5,966 | ) | (1,400 | ) | ||||||||
Investment in marketable securities
|
(11 | ) | (2,771 | ) | - | |||||||
Deposit in escrow
|
- | 5,005 | - | |||||||||
Proceeds from (Investment in) long - term deposit
|
(341 | ) | (283 | ) | 217 | |||||||
Proceeds from sale of property and equipment
|
406 | 489 | 651 | |||||||||
Sale of subsidiary (Appendix A)
|
(266 | ) | - | - | ||||||||
Net cash used in investment activities
|
(25,706 | ) | (13,244 | ) | (15,466 | ) | ||||||
Cash flows from financing activities
|
||||||||||||
Short term credit from banking institutions, net
|
160 | (38 | ) | (7 | ) | |||||||
Repayment of long term loans
|
- | (182 | ) | |||||||||
Acquisition of non-controlling interests
|
- | (500 | ) | - | ||||||||
Dividend paid
|
(17,590 | ) | (19,324 | ) | (16,072 | ) | ||||||
Dividend paid to non-controlling interests
|
(1,229 | ) | (2,564 | ) | (1,286 | ) | ||||||
Net cash used in financing activities
|
(18,659 | ) | (22,426 | ) | (17,547 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents
|
(2,951 | ) | (5,340 | ) | (1,440 | ) | ||||||
|
|
|
||||||||||
Net increase (decrease) in cash and cash equivalents
|
(11,402 | ) | (3,279 | ) | 12,244 | |||||||
Balance of cash and cash equivalents at beginning of year
|
38,418 | 41,697 | 29,453 | |||||||||
Balance of cash and cash equivalents at end of year
|
27,016 | 38,418 | 41,697 |
The accompanying notes are an integral part of the consolidated financial statements.
|
US dollars
|
||||
Year ended December 31,
|
||||
(in thousands)
|
2015
|
|||
Working capital (excluding cash and cash equivalents), net
|
(1,797 | ) | ||
Receivables from sale of subsidiary
|
582 | |||
Funds in respect of employee rights upon retirement
|
250 | |||
Property and equipment , net
|
23 | |||
Liability for employee rights upon retirement
|
(275 | ) | ||
Gain from sale of subsidiary
|
951 | |||
(266 | ) |
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2015
|
2014
|
2013
|
|||||||||
Interest paid
|
203 | 397 | 254 | |||||||||
Income taxes paid, net of refunds
|
10,181 | 15,078 | 9,280 |
NOTE 1
|
-
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
|
A.
|
General
|
|
1.
|
Operations
|
Exchange rate
of one US dollar
|
Israeli CPI(*)
|
|||||||||||
NIS
|
Real
|
|||||||||||
At December 31,
|
||||||||||||
2015
|
3.902 | 3.9048 |
112.82 points
|
|||||||||
2014
|
3.889 | 2.6562 |
113.96 points
|
|||||||||
2013
|
3.471 | 2.3426 |
114.18 points
|
|||||||||
Increase (decrease) during the year:
|
||||||||||||
2015
|
0.33 | % | 47.01 | % | (1.0) | % | ||||||
2014
|
12.04 | % | 13.39 | % | (0.2) | % | ||||||
2013
|
(7.02) | % | (14.63) | % | 1.8 | % |
(*)
|
Based on the Index for the month ending on each balance sheet date, on the basis of 2008 average 100.
|
|
3.
|
Basis of presentation
|
NOTE 1
|
-
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
|
|
A.
|
General (cont.)
|
|
4.
|
Use of estimates in the preparation of financial statements
|
|
B.
|
Principles of consolidation
|
|
C.
|
Cash and cash equivalents
|
|
D.
|
Marketable securities
|
|
E.
|
Treasury stock
|
NOTE 1
|
-
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
|
|
F.
|
Allowance for doubtful accounts
|
|
G.
|
Inventories
|
|
H.
|
Investment in affiliated companies
|
|
I.
|
Investment in other company
|
|
J.
|
Derivatives
|
NOTE 1
|
-
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
|
|
K.
|
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.
|
|
L.
|
Impairment of long-lived assets
|
|
The Group’s long-lived assets (including finite-lived intangible assets) are reviewed for impairment, 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 an asset to the future undiscounted cash flows expected to be generated by the asset. 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 asset exceeds its fair value (see also Note 1N and Note 7).
|
|
M.
|
Income taxes
|
|
N.
|
Goodwill and intangible assets
|
|
1.
|
Goodwill represents the excess of the purchase price over the fair value of the identifiable net assets acquired in business combinations accounted for in accordance with the "purchase method" and is allocated to reporting units at acquisition. Goodwill is not amortized but rather tested for impairment at least annually in accordance with the provisions of ASC Topic 350, "Intangibles - Goodwill and Other". The Company performs its goodwill annual impairment test for the reporting units at December 31 of each year, or more often if indicators of impairment are present.
|
NOTE 1
|
-
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
|
|
N.
|
Goodwill and intangible assets (cont.)
|
|
1.
|
(cont.)
|
NOTE 1
|
-
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
|
|
N.
|
Goodwill and intangible assets (cont.)
|
|
2.
|
Intangible assets with finite lives are amortized using the straight-line basis over their useful lives, to reflect the pattern in which the economic benefits of the intangible assets are consumed or otherwise used up, as follows
|
Years
|
|||
GIS database
|
10 | ||
Brand name
|
15 | ||
Other
|
3-10 |
|
O.
|
Contingencies
|
|
P.
|
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, 2015, 2014 and 2013, amounted to US$ 1,386,000 US$ 1,460,000 and US$ 882,000, respectively.
|
|
Q.
|
Revenue recognition
|
|
1.
|
Revenues from sales are recognized when title and risk of loss of the product pass to the customer (usually upon delivery).
|
NOTE 1
|
-
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
|
|
Q.
|
Revenue recognition (cont.)
|
|
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.
|
Amounts earned by the Brazilian subsidiary for arranging a bundle transaction of SVR services subscription and installation services together with insurance services to be supplied by a third party insurance company, are recognized ratably on a straight-line basis over the subscription period, since the amount allocated to the company, is contingent upon the delivery of the SVR services. As the insurance company is the primary obligor of the insurance component, the company recognizes only the net amounts as revenues, after deduction of amounts related to the insurance component.
|
|
4.
|
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.
|
|
5.
|
Extended warranty
|
|
R.
|
Warranty costs
|
|
S.
|
Research and development costs
|
|
1.
|
Research and development costs (other than computer software related expenses) are expensed as incurred.
|
2.
|
Software Development Costs
|
NOTE 1
|
-
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
|
|
T.
|
Advertising costs
|
|
U.
|
Earnings per share
|
|
V.
|
Fair value measurements
|
NOTE 1
|
-
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
|
|
W.
|
Deferred installation expenses and prepaid expenses
|
|
X.
|
Stock-based compensation
|
|
Y.
|
Reclassification
|
|
Certain comparative figures have been reclassified to conform to the current year presentation. Such reclassifications did not have any significant impact on the Company's equity, net income or cash flows.
|
NOTE 1
|
-
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
|
|
Z.
|
Recently issued accounting pronouncements
|
1.
|
Accounting pronouncements not yet effective
|
NOTE 1
|
-
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
|
|
Z.
|
Recently issued accounting pronouncements (cont.)
|
1.
|
Accounting pronouncements not yet effective (cont.)
|
NOTE 2
|
-
|
OTHER CURRENT ASSETS
|
US dollars
|
||||||||
December 31,
|
||||||||
(in thousands)
|
2015
|
2014
|
||||||
Prepaid expenses and others
|
10,960 | 9,779 | ||||||
Government institutions
|
1,910 | 2,694 | ||||||
Deferred installation expenses
|
2,403 | 2,485 | ||||||
Deferred income taxes (*)
|
2,752 | 3,649 | ||||||
Advances to suppliers
|
84 | 324 | ||||||
Employees
|
389 | 343 | ||||||
Forward Exchange Contracts
|
1,063 | 1,580 | ||||||
Others
|
2,876 | 1,464 | ||||||
22,437 | 22,318 |
(*)
|
See Note 15.
|
NOTE 3
|
-
|
INVENTORIES
|
US dollars
|
||||||||
December 31,
|
||||||||
(in thousands)
|
2015
|
2014
|
||||||
Finished products
|
8,833 | 8,845 | ||||||
Raw materials
|
3,948 | 3,319 | ||||||
12,781 | 12,164 |
NOTE 4
|
-
|
INVESTMENTS IN AFFILIATED AND OTHER COMPANY
|
|
A.
|
Investment in affiliated companies
|
US dollars
|
||||||||
December 31,
|
||||||||
(in thousands)
|
2015
|
2014
|
||||||
Investment in Bringg (see 1 below)
|
3,082 | 1,016 | ||||||
IRT (see 2 below)
|
1,662 | - | ||||||
Other
|
(39 | ) | - | |||||
4,705 | 1,016 |
|
1.
|
BRINGG Delivery Technologies Ltd. ("BRINGG") Formerly Overvyoo Ltd
|
|
2.
|
ITURAN ROAD TRACK MONITORAMENTO De Veiculos Ltda. ("IRT")
|
NOTE 4
|
-
|
INVESTMENTS IN AFFILIATED AND OTHER COMPANY (cont.)
|
|
B.
|
Investment in other company
|
NOTE 5
|
-
|
OTHER NON-CURRENT ASSETS
|
US dollars
|
||||||||
December 31,
|
||||||||
(in thousands)
|
2015
|
2014
|
||||||
Forward Exchange Contracts
|
- | 984 | ||||||
Government institutions
|
- | 73 | ||||||
Deferred installation expenses
|
488 | 459 | ||||||
Deposits
|
678 | 575 | ||||||
1,166 | 2,091 |
NOTE 6
|
-
|
PROPERTY AND EQUIPMENT, NET
|
|
A.
|
Property and equipment, net consists of the following:
|
US dollars
|
||||||||
December 31,
|
||||||||
(in thousands)
|
2015
|
2014
|
||||||
Cost :
|
||||||||
Operating equipment (*)
|
43,740 | 46,947 | ||||||
Office furniture, equipment and computers
|
24,790 | 23,858 | ||||||
Land
|
1,022 | 1,022 | ||||||
Buildings
|
1,845 | 1,855 | ||||||
Vehicles
|
3,810 | 3,412 | ||||||
Leasehold improvements
|
3,616 | 3,088 | ||||||
78,823 | 80,182 | |||||||
Less – accumulated depreciation and amortization (**)
|
(47,309 | ) | (48,274 | ) | ||||
Total property and equipment, net
|
31,514 | 31,908 |
|
(*)
|
As December 31, 2015 and 2014, an amount of US$ 26 million and US$ 26 million is subject to operating lease transactions, respectively.
|
|
(**)
|
As at December 31, 2015 and 2014, an amount of US$ 10.4 million and US$ 10.4 million is subject to operating lease transactions, respectively.
|
NOTE 6
|
-
|
PROPERTY AND EQUIPMENT, NET (cont.)
|
|
B.
|
In the years ended December 31, 2015, 2014 and 2013, depreciation expense was US$ 10.9 million, US$ 11.2 million and US$ 11.1 million, respectively and additional equipment was purchased in an amount of US$ 18.7 million, US$ 15 million and US$ 14.2 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, consist of the following:
|
US dollars
|
||||||||||||||||
December 31,
|
December 31,
|
|||||||||||||||
(in thousands)
|
2015
|
2015
|
2015
|
2014
|
||||||||||||
Original amount
|
Accumulated amortization and impairment charges
|
Unamortized balance
|
Unamortized balance
|
|||||||||||||
GIS database
|
3,876 | 3,876 | - | 295 | ||||||||||||
Brand name
|
1,177 | 1,177 | - | 132 | ||||||||||||
Others
|
5,472 | 5,446 | 26 | 25 | ||||||||||||
10,525 | 10,499 | 26 | 452 |
|
Amortization and impairment of intangible assets amounted to US$ 430,000, US$ 231,000 and US$ 367,000 for the years ended December 31, 2015, 2014 and 2013, respectively. As of December 31, 2015, the estimated aggregate amortization of intangible assets for the next five years is as follows: 2016-26,000 and thereafter – 0.
|
|
B.
|
Due to the deteriorating results of a certain Israeli subsidiary and the current expectation of management for further decrease its anticipated performance, during 2015 and 2014, the Company recorded an impairment charge for its intangible assets which directly relate to the operations of the subsidiary (which represent a reporting unit).
|
|
In order to determine the fair value of such intangible assets, the Company, based on a valuation performed by the management, with the assistance of a third party appraiser, utilized the "Relief from Royalties" valuation method. Accordingly, certain assumptions and judgments were made in order to determine the future income from which royalties will be derived from and in order to determine the appropriate rate of royalties and rate of discount.
|
|
As a result of the above, the Company recorded in 2015 and 2014, an impairment loss in an amount of US$ 236,000 and US$ 33,500, respectively, with respect to the GIS database and in 2015 and 2014, an amount of US$ 19,000 and US$ 9,500, respectively, with respect to the Brand name totaling an aggregate impairment charge of US$ 255,000 in 2015 and an aggregate impairment charge of US$ 43,000 in 2014.
|
NOTE 8
|
-
|
GOODWILL
|
|
A.
|
The changes in the carrying amount of goodwill for the years ended December 31, 2015 and 2014 are as follows:
|
US dollars
|
||||||||||||
Location based services
|
Wireless communications products
|
Total
|
||||||||||
(in thousands)
|
||||||||||||
Balance as of January 1, 2014 (*)
|
1,730 | 3,703 | 5,433 | |||||||||
Changes during 2014:
|
||||||||||||
Impairment (see B. below)
|
- | (879 | ) | (879 | ) | |||||||
Translation differences
|
(186 | ) | (327 | ) | (513 | ) | ||||||
Balance as of December 31, 2014
|
1,544 | 2,497 | 4,041 | |||||||||
Changes during 2015:
|
||||||||||||
Impairment (See B. below)
|
- | (674 | ) | (674 | ) | |||||||
Translation differences
|
(5 | ) | (6 | ) | (11 | ) | ||||||
Balance as of December 31, 2015
|
1,539 | 1,817 | 3,356 |
|
(*)
|
The accumulated amount of impairment loss as of December 31, 2013, December 31, 2014 and December 31, 2015 was US$ 5,545,000, US$ 6,424,000 and US$ 7,098,000, respectively.
|
|
B.
|
During 2015, 2014 and 2013, the Company recorded an amount of US$ 674,000 US$ 879,000 and US$ 3,093,000, respectively, as impairment with respect to goodwill.
|
|
The impairment amount was included in "other expenses, net". See Note 13.
|
|
The Company performed its annual impairment test as of December 31, 2015 and recorded goodwill impairment in the total amount of US$ 0.7 million in connection with certain reporting unit which is a part of the Wireless communications products segment and operates in the internet portal in the field of local travel and recreation. The impairment was recorded primarily due to a significant decline in current and future forecasted revenues and profitability margins of the GIS services offered by an Israeli subsidiary resulting from the continued weakness in the cellular industry in Israel that has suffered from recent regulatory changes and also the continuing popularity of navigation applications and tools developed by competitors which are offered for no charge. The impairment was based on valuation performed by the management using the assistance of a third party appraiser in accordance with the income approach. The significant assumptions used for the assessment were 2 years of projected net cash flows, a discount rate of 20% and a long-term growth rate of 0% (See Note 1V regarding fair value measurements).
|
|
The Company performed its annual impairment test as of December 31, 2014 and recorded goodwill impairment in the total amount of US$ 0.9 million in connection with two reporting units within the Location based services segment operating in the internet portal in the field of local travel and recreation. The impairment was based on valuation performed by the management using the assistance of a third party appraiser in accordance with the income approach. The significant assumptions used for the assessment were 3 years of projected net cash flows, a discount rate of 16.9% and a long-term growth rate of 0% (See Note 1V regarding fair value measurements).
|
NOTE 9
|
-
|
CREDIT FROM BANKING INSTITUTIONS
|
NOTE 10
|
-
|
OTHER CURRENT LIABILITIES
|
|
Composition:
|
US dollars
|
||||||||
December 31,
|
||||||||
(in thousands)
|
2015
|
2014
|
||||||
Accrued expenses
|
7,439 | 7,919 | ||||||
Accrued payroll and related taxes
|
4,255 | 5,692 | ||||||
Government institutions
|
5,742 | 6,009 | ||||||
Related party
|
2 | 98 | ||||||
Accrued dividend
|
3,128 | 4,639 | ||||||
Others
|
1,184 | 896 | ||||||
21,750 | 25,253 |
NOTE 11
|
-
|
CONTINGENT LIABILITIES
|
|
A.
|
Claims
|
|
1.
|
On July 13, 2010 the State Revenue Services of São Paulo issued a tax deficiency notice against our subsidiary in Brazil, Ituran Sistemas de Monitoramento Ltda., claiming that the vehicle tracking and monitoring services provided by our 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 our subsidiary during the period between August 2005 and December 2007. At the time of serving the notice upon us, the tax deficiency notice was in the amount of R$36,499,984 (approximately US$22.1 million at the time) plus interest in the amount of R$30,282,420 (approximately US$18.2 million at the time) and penalties in the amount of R$66,143,446 (approximately US$40.0 million at the time). As of December 31, 2014, the aggregate sum claimed pursuant to the tax deficiency notice (principal amount, interest and penalties) was estimated on December 2014, at R$220,000,000 (approximately US$82.7 million). The decision of the administration first level was unfavorable to us and we have filed an appeal to the Administrative Court of Appeals in São Paulo. On March 2, 2012 the Administrative Court of the State of São Paulo dismissed the State Revenue Services of São Paulo's claims and resolved in our favor. The State of São Paulo filed an administrative appeal to a full bench session at the Administrative Court which has been dismissed on December 20, 2014 and such a decision is non-appealable.
|
NOTE 11
|
-
|
CONTINGENT LIABILITIES (cont.)
|
|
A.
|
Claims (cont.)
|
|
2.
|
On June 24, 2010 the Brazilian Internal Revenue Service issued a tax assessment that claimed the ayment, at the time of filing the tax assessment, of R$5,567,032 (approximately US$ 3,120,000 at the time) including interest and penalties, following the offsetting on October 1, 2005 of an amount of approximately US$ 2.1 million of a receivable held by Ituran Beheer BV, a Dutch legal entity held by us, against accumulated losses of our subsidiary Ituran Sistemas de Monitamento Ltda, which originatedfrom a technology transfer agreement executed by and between Ituran Brazil and OGM Investments B.V. (also a Dutch company held by us). The decision of the administrative court of the first level was unfavourable to us and therefore we have filed an appeal to the Administrative Court of Appeals in São Paulo.
In October 2013, we were notified that the Administrative Court of Appeal has partially accepted our administrative defense in order to reduce the percentage of penalty imposed on us. Subsequently, Ituran Brazil filed a Special Appeal to the Superior Court of Tax Appeals, an administrative venue. The Special Appeal lodged by Ituran Brazil was not accepted by the Superior Court of Tax Appeals. Ituran Brazil will have to challenge the tax assessment before a Federal Court of Law. Based on the legal opinion of the subsidiary’s Brazilian legal counsel, the company believes that such claim is without merit and the company will continue to vigorously defend ourselves in the appeal proceedings and accordingly no provision has been made. As of December 31, 2015, the aggregate sum claimed pursuant to the tax assessment (principal amount, interest and penalties) is estimated at R$11.3 million (approximately $2.89 million which amount is considered as the reasonable possible loss).
|
|
3.
|
On July 22, 2015, Brazilian Federal Communication Agency – Anatel issued an additional tax assessment for FUST contribution (contribution on telecommunication services) levied on the monitoring services rendered by us regarding the year of 2011 and January 2012 in amount of R$ 2, 888,677 (approximately US$ 760,000) including interest and penalties. This amount added up to the previous FUST tax assessments for the years 2007 and 2008 which was issued on October 20, 2011, and including interest and penalties, on December 31, 2015 amounts to R$ 3,936,339 (approximately US$ 1 million) and to FUST tax assessment for the year 2010 which including interest and penalties, on December 31, 2015 amounts to R$ 2,950,417 (approximately US$ 700,000). Due to the such last tax assessment, on December 31, 2015, the aggregate amount claimed by Anatel increased to approximately R$ 9.8 million (approximately US$ 2.6 million). The reason Anatel demand the payment of FUST from us is the fact that in order to provide monitoring services we need to operate telecommunication equipment in a given radio frequency. We hold a telecommunication license from Anatel (for information on our licenses see item 4B. "Information on the company" – "Business overview" under the caption "Regulatory Environment"). The authorities have construed that we render telecommunication services and FUST should be levied in relation to Net Revenues. Based on the legal opinion of the subsidiary’s Brazilian legal counsel we believe that such claim is without merit, the interpretation of the legislation is mistaken, given that we don’t render telecommunication services, but rather services of monitoring goods and persons for security purposes, accordingly no provision has been made. We have filed our defense for the years 2007 and 2008 on December 2011. Our Defense for the year 2010 was filed on November 2014 and our defense for the year 2011 (and January 2012) was filed on February 2016. We are currently awaiting the Lower Court decision on all the aforementioned FUST claims.
|
NOTE 11
|
-
|
CONTINGENT LIABILITIES (cont.)
|
|
A.
|
Claims (cont.)
|
|
4.
|
On October 10, 2015, Brazilian Federal Communication Agency - Anatel – issued an additional tax assessment for FUNTELL contribution (contribution to Fund for the Technological Development of Telecommunication) levied on the monitoring services rendered by us regarding the year of 2011 which on December 31, 2015 amounts to R$ 1,007,453 (approximately US$ 253,000) including interest and penalties. This amount added up to the previous FUNTELL tax assessments for the year 2007, which was issued on July 13, 2011, and including interest and penalties, on December 31, 2015 amounts to R$ 778,598 (approximately US$ 195,000), to FUNTELL tax assessment for the year 2008 which including interest and penalties, on December 31, 2015 amounts to R$ 770,580 (approximately US$ 193,000) and to FUNTELL tax assessment for the year 2010 which including interest and penalties, on December 31, 2015 amounts to R$ 1,033,363 (approximately US$ 260,000). Due to the such last tax assessment, on December 31, 2015, the aggregate amount claimed by Anatel increased to approximately R$ 3.6 million (approximately US$ 0.92 million). The reason Anatel demand the payment of FUNTELL from us is the fact that in order to provide monitoring services we need to operate telecommunication equipment in a given radio frequency. We hold a telecommunication license from Anatel (for information on our licenses see item 4B. "Information on the company" – "Business overview" under the caption "Regulatory Environment"). The authorities have construed that we render telecommunication services and FUNTEL should be levied in relation to Net Revenues. Based on the legal opinion of the subsidiary’s Brazilian legal counsel we believe that such claim is without merit, the interpretation of the legislation is mistaken, given that we don’t render telecommunication services, but rather services of monitoring goods and persons for security purposes, accordingly no provision has been made. We have filed our defenses as follows: for the year 2007 on July 2011, for the year 2008 on June 2011, for the year 2010 on December 2014 and for the year 2011 on October 2015. We are currently awaiting the Lower Court decision on all the aforementioned FUNTELL claims.
|
|
5.
|
On July 13, 2015 we 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, 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. In addition the plaintiff claims that the Company offers to customers who are not required by insurance companies to install location and recovery systems in their vehicles, a discounted warrantee service to their location and recovery systems. The plaintiff claims in addition to the above, that such actions raise additional claims against the Company such as negotiations without good faith, executing contract without good faith, breach of contract, unjust enrichment, breach of consumer protection laws, tort laws, and breach of statutory duty. The lawsuit is yet to be approved as a class action. The total amount claimed if the lawsuit is approved as a class action was estimated by the plaintiff to be approximately NIS 300 million (approximately USD 77 million). Our defense against the approval of the class action lawsuit was file on January 3rd, 2016. The plaintiff has responded to the company's defense on February 29, 2016.
Based on an opinion of its legal counsels, at this preliminary stage, the Company is unable to assess the lawsuit's chances of success and / or and reasonably possible range of loss, if any. However, according to the legal counsel opinion, based on the documents of the claim, the Company has good defense arguments in respect of claims made by the plaintiff and the chances that the suit will not be approved as a class action suit are higher than it will be approved. Therefore, the Company has not made any provision in its consolidated financial statements in respect to this claim. A class action lawsuit based on similar claims, against the Company, which was filed on form 6-K on March 22, 2011, was dismissed by the court on the request of both parties, on March 5, 2012 for a small compensation to the plaintiff and his attorneys, in a total amount of NIS 30,000 (approximately USD 7,900). Such dismissal of a similar class action lawsuit may have a positive effect on the Company ability in its defense against the current lawsuit. That being said, if the Company's efforts are unsuccessful this could result in a very significant costs to the Company and could adversely affect its financial position and the results of its operations.
|
|
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 this Note above) that are material, individually or in the aggregate, to the consolidated financial statements as a whole.
|
NOTE 11
|
-
|
CONTINGENT LIABILITIES (cont.)
|
|
B.
|
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.
|
|
C.
|
Commitments
|
|
1.
|
As of December 31, 2015, minimum future rentals under operating leases of buildings and base station sites for periods in excess of one year were as follows: 2016 – US$ 1.6 million, 2017 – US$ 1.2 million, 2018 – US$ 1 million, 2019 – US$ 0.9 million and 2020 – US$ 0.4 million.
|
|
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), 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 was 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.
|
NOTE 12
|
-
|
STOCKHOLDERS’ EQUITY
|
|
A.
|
Share capital
|
|
1.
|
Composition:
|
December 31, 2015 and 2014
|
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.
|
As of December 31, 2015, 2014 and 2013, 2,507,314 ordinary shares representing 10.7% of the share capital of the Company is held by the Group as treasury shares.
|
|
5.
|
Shares of the Company held by the Group have no voting rights.
|
|
6.
|
On February 24, 2015 the company issued a press release announcing that its Board of Directors has resolved to act to voluntarily delist it’s ordinary shares from trading on the Tel Aviv Stock Exchange. The Company was informed that such delisting will be effective as of May 25, 2016 with the last trading date on the Tel Aviv Stock Exchange being May 23, 2016.
|
|
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 (presented as a separate item in the statement of changes in equity) must be deducted from the amount of retained earnings.
|
|
2.
|
On February 21, 2012, the board of directors of the Company revised its dividend policy so that dividends will be declared and distributed on a quarterly basis in an amount not less than 50% of its net profits, calculated on the basis of the interim financial statements.
|
|
3.
|
Dividends are declared and paid in NIS. Dividends paid to stockholders outside Israel are converted into dollars on the basis of the exchange rate prevailing at the date of declaration. See also B1, above.
|
|
4.
|
During 2012, the Company declared dividends totaling an amount of approximately US$ 36.1 million (NIS 135.4 million). These dividends were paid during 2012 and January 2013.
|
|
5.
|
During 2013, the Company declared dividends totaling an amount of approximately US$ 17.2 million (NIS 61.1 million). These dividends were paid during 2013 and January 2014.
|
|
6.
|
During 2014, the Company declared dividends totaling an amount of approximately US$ 20.5 million (NIS 72.4 million). These dividends were paid during 2014 and January 2015.
|
|
7.
|
During 2015, the Company declared dividends in an amount of approximately US$ 16.5 million (NIS 63.4 million). These dividends were paid during 2015 and January 2016.
|
|
8.
|
In February 2016, the Company declared a dividend in the amount of US 0.31 dollar per share, totaling approximately US$ 6.5 million (NIS 25.4. million). The dividend was paid in April 2016.
|
NOTE 13
|
-
|
OTHER (INCOME) EXPENSES, NET
|
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2015
|
2014
|
2013
|
|||||||||
Adjustment of purchase price of subsidiary sold
|
(101 | ) | - | 200 | ||||||||
Impairment of goodwill and intangible assets (2)
|
929 | 922 | 4,620 | |||||||||
Gain on sale of subsidiary (1)
|
(951 | ) | - | - | ||||||||
Other
|
(145 | ) | (66 | ) | (60 | ) | ||||||
(268 | ) | 856 | 4,760 |
(1)
|
On December 31, 2015, the Company sold its entire holding in the subsidiary Mapa Internet Ltd. for a total consideration of NIS 2.3 million (approximately US$ 600,000).
|
(2)
|
See Notes 7, 8 and 1N.
|
NOTE 14
|
-
|
FINANCING INCOME, NET
|
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2015
|
2014
|
2013
|
|||||||||
Short-term interest expenses, commissions and other
|
(64 | ) | 309 | (1,201 | ) | |||||||
Gains in respect of marketable securities
|
666 | 133 | - | |||||||||
Interest expenses in respect of long-term loans
|
- | - | (4 | ) | ||||||||
Interest income in respect of deposits
|
773 | 982 | 1,998 | |||||||||
Exchange rate differences and others, net
|
(186 | ) | 280 | (555 | ) | |||||||
1,189 | 1,704 | 238 |
NOTE 15
|
-
|
INCOME TAX
|
|
A.
|
Taxes on income included in the statements of income:
|
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2015
|
2014
|
2013
|
|||||||||
Income taxes (tax benefit):
|
||||||||||||
Current taxes:
|
||||||||||||
In Israel
|
6,279 | 7,564 | 6,060 | |||||||||
Outside Israel
|
6,089 | 7,630 | 8,194 | |||||||||
12,368 | 15,194 | 14,254 | ||||||||||
Deferred taxes:
|
||||||||||||
In Israel
|
(121 | ) | (471 | ) | (503 | ) | ||||||
Outside Israel
|
206 | (432 | ) | (1,309 | ) | |||||||
85 | (903 | ) | (1,812 | ) | ||||||||
Taxes in respect of prior years:
|
||||||||||||
In Israel
|
369 | - | - | |||||||||
Outside Israel
|
- | (45 | ) | 5 | ||||||||
369 | (45 | ) | 5 | |||||||||
12,822 | 14,246 | 12,447 |
NOTE 15
|
-
|
INCOME TAX (cont.)
|
|
B.
|
Measurement of results for tax purposes under the Income Tax (Inflationary Adjustments) Law, 1985 (the “Inflationary Adjustment Law”)
|
|
C.
|
The Law for the Encouragement of Capital Investments, 1959 (the "Investment Law")
|
|
1.
|
On December, 2010, the Israeli parliament approved an amendment to the Investments Law, effective as of January 1, 2011, which introduces a new status of "Preferred Company" and "Preferred Enterprise". The amendment allows enterprises meeting certain required criteria to enjoy grants as well as tax benefits. The amendment also introduces certain changes to the map of geographic development areas for purposes of the Investments Law, which will take effect in future years. The amendment generally abolishes the previous tax benefit routes that were afforded under the Investment Law, specifically the tax-exemption periods previously allowed, and introduces new tax benefits for industrial enterprises meeting the criteria of the law, which include among others the following:
|
|
2.
|
As of December 31, 2015, only one Israeli subsidiary is entitled to a "Preferred Company" status pursuant to the investment law.
|
|
D.
|
Israeli corporate tax rates
|
|
E.
|
Non-Israeli subsidiaries
|
|
Non-Israeli subsidiaries are taxed according to the tax laws and rates in their country of residence.
|
NOTE 15
|
-
|
INCOME TAX (cont.)
|
|
F.
|
Use of assumptions and judgments
|
|
G.
|
Tax assessments
|
|
H.
|
Carry forward foreign tax credits and tax losses
|
|
I.
|
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)
|
2015
|
2014
|
2013
|
|||||||||
Pretax income
|
41,833 | 47,574 | 38,002 | |||||||||
Statutory tax rate
|
26.5 | % | 26.5 | % | 25 | % | ||||||
Tax computed at the ordinary tax rate
|
11,086 | 12,607 | 9,500 | |||||||||
Nondeductible expenses (income)
|
526 | 10 | 1,365 | |||||||||
Losses in respect of which no deferred taxes were generated (including changes in valuation allowance)
|
831 | (304 | ) | 137 | ||||||||
Deductible financial expenses recorded to other comprehensive income
|
(439 | ) | (365 | ) | (312 | ) | ||||||
Tax adjustment in respect of different tax rates
|
1,411 | 1,662 | 1,877 | |||||||||
Taxes in respect of withholding at the source from royalties and dividends
|
78 | 615 | 817 | |||||||||
Adjustment in respect of tax rate deriving from “approved enterprises”
|
(405 | ) | (558 | ) | (467 | ) | ||||||
Others
|
(266 | ) | 579 | (470 | ) | |||||||
12,822 | 14,246 | 12,447 |
|
J.
|
Summary of deferred taxes
|
US dollars
|
||||||||
Year ended
December 31,
|
||||||||
(in thousands)
|
2015
|
2014
|
||||||
Deferred taxes included in other current assets:
|
||||||||
Provision for employee related obligations
|
145 | 130 | ||||||
Provision for legal obligation and other
|
2,607 | 3,519 | ||||||
2,752 | 3,649 |
NOTE 15
|
-
|
INCOME TAX (cont.)
|
|
J.
|
Summary of deferred taxes (cont.)
|
US dollars
|
||||||||
Year ended
December 31,
|
||||||||
(in thousands)
|
2015
|
2014
|
||||||
Long-term deferred income taxes:
|
||||||||
Provision for employee related obligations
|
718 | 678 | ||||||
Carry forward tax losses and foreign tax credit
|
4,321 | 4,321 | ||||||
Temporary differences, net
|
1,237 | 1,010 | ||||||
6,276 | 6,009 | |||||||
Valuation allowance
|
(3,997 | ) | (3,273 | ) | ||||
2,279 | 2,736 |
US dollars
|
||||||||
Year ended
December 31,
|
||||||||
(in thousands)
|
2015
|
2014
|
||||||
Deferred income taxes included in long-term investments and other assets
|
2,279 | 2,886 | ||||||
Deferred income taxes included in long-term liabilities
|
- | (150 | ) | |||||
2,279 | 2,736 |
|
K.
|
Income before income taxes is composed as follows:
|
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2015
|
2014
|
2013
|
|||||||||
The Company and its Israeli subsidiaries
|
23,987 | 26,021 | 17,296 | |||||||||
Non-Israeli subsidiaries
|
17,846 | 21,553 | 20,706 | |||||||||
41,833 | 47,574 | 38,002 |
|
L.
|
Uncertain tax positions
|
US dollars
|
||||
(in thousands)
|
||||
Balance at January 1, 2014
|
472 | |||
Translations differences related to the current year
|
(51 | ) | ||
Balance at December 31, 2014
|
421 | |||
Decrease related tax positions of prior years
|
(419 | ) | ||
Translations differences related to the current year
|
(2 | ) | ||
Balance at December 31, 2015
|
- |
NOTE 16
|
-
|
EARNINGS PER SHARE
|
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2015
|
2014
|
2013
|
|||||||||
Net income attributable to stockholder's used for the computation of basic and diluted earnings per share
|
24,971 | 30,429 | 23,762 |
Number of shares
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2015
|
2014
|
2013
|
|||||||||
Weighted average number of shares used in the computation of basic and diluted earnings per share
|
20,968 | 20,968 | 20,968 |
NOTE 17
|
-
|
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 2015, US$ 304 thousand and US$ 168 thousand, respectively (In 2014 US$ 324 thousand and US$ 189 thousand, respectively.)
|
|
Tzivtit Insurance is entitled to commissions in an aggregate amount of NIS 309 thousand (US$ 79 thousand) to be paid to Tzivtit Insurance by the insurance company on account of these policies. (US$ 52 thousand and US$ 80 thousand in 2014 and 2013, respectively.)
|
B.
|
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 exceeded 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 remained in force and effect until May 11, 2014.
|
|
See section F below with respect to the approval of a new service agreement with A. Sheratzky Holdings during February 2014.
|
NOTE 17
|
-
|
RELATED PARTIES (cont.)
|
|
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$ 12,500 and US$ 12,600), 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 exceeded 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 remained in force and effect until May 11, 2014.
|
|
See section F below with respect to the approval of a new service agreement with A. Sheratzky Holdings during February 2014.
|
|
The aggregate amounts paid to A. Sheratzky Holdings in 2015, 2014 and 2013 (including with respect to B. above but excluding amounts paid to A. Sheratzky Holdings under the new service agreement, described in F. below), were approximately US$ 0, US$ 793,000 and US$ 3,470,000, respectively (all numbers include value added tax).
|
|
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$ 3,900) a month, linked to the Israeli Consumer Price Index. The aggregate amount paid to Professor Kahane in each of the years 2015, 2014 and 2013 was approximately US$ 57,000, US$ 62,000 and US$ 59,000, 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. Gil Sheratzky as CEO of that company, in consideration of monthly payments in the amount of NIS 25,000 (US$ 6,400), 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. Gil 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.
|
|
See section F below with respect to the approval of a new service agreement with A. Sheratzky Holdings during February 2014.
|
|
F.
|
In February 2014, following the approval of the Company's general meeting of shareholders on January 28, 2014, the Company entered into new service agreements, setting forth the terms of service of its President and Co-Chief Executive Officers in compliance with the Company's compensation policy for office holders; and E-Com entered into a service agreement setting forth the terms of service of its Chief Executive Officer in compliance with the Company's compensation policy for officer holders. The principal terms of these agreements are as follows:
|
NOTE 17
|
-
|
RELATED PARTIES (cont.)
|
|
F.
|
(cont.)
|
NOTE 17
|
-
|
RELATED PARTIES (cont.)
|
|
F.
|
(cont.)
|
|
Mr. Nir Sheratzky shall provide his services as an independent contractor through Galnir Management and Investments Ltd., which shall be entitled to a monthly payment of NIS 175,000 (or $45,000) plus VAT, linked to the consumer price index for December 2013. At the request of the service provider, part of the fixed monthly pay may be granted through benefits, such as the provision of a company car for the use of Mr. Nir Sheratzky and the payment of its maintenance costs and the cost of tax resulting therefrom. The fixed monthly pay shall also include Mr. Sheratzky's entitlement for a 25 days' vacation and sick days as provided by law. The service provider shall also be entitled to payment or reimbursement of expenses, including hosting expenses and subsistence allowance abroad. The service provider shall be entitled to Target-based Cash Incentives and Excess Return Cash Incentives as detailed below. The agreement shall be in force for a period of 3 years and may be terminated upon 180 days' advance notice of termination; however, the Company may terminate the agreement without an advance notice and without compensation if the following shall occur: (a) Mr. Nir Sheratzky is convicted of a criminal offense involving moral turpitude; (b) a final court ruling (without the possibility of appeal) determines that Mr. Nir Sheratzky has breached his fiduciary duty towards the Company; (c) a final court ruling (without the possibility of appeal) determines that Mr. Nir Sheratzky has materially breached the agreement through the unauthorized disclosure of Company's secrets or competition with the Company.
|
NOTE 17
|
-
|
RELATED PARTIES (cont.)
|
|
F.
|
(cont.)
|
|
•
|
"Target-based Cash Incentives" means a cash incentive awarded to the Executive Office Holders for the Company's achievement of the following Profit-Before-Tax targets in each calendar year following the effective date of the above agreements, in which the Minimum Threshold (as defined below) has been achieved:
|
(in USD thousands)
|
Level of Incentive - As a Percentage of the Executive Office Holder's Annual Cost of Pay
|
24,001 - 27,500
|
20%
|
27,501-31,000
|
45%
|
31,001-35,000
|
75%
|
35,001-39,000
|
110%
|
Above 39,001
|
150%
|
|
•
|
In the event that an Agreement is terminated during a calendar year, the Company's compensation committee and board of directors shall determine the relative amounts out of the Target-based Cash Incentives and/or Excess Return Cash Incentives to which the relevant Executive Office Holder is entitled for the portion of the year during which the Agreement was in force; and these amounts shall be paid within 30 days after the termination of service/employment, as the case may be.
|
|
•
|
On the date of determination of each Executive Office Holder's entitlement for a Target-based Cash Incentive for a particular year, the Company's compensation committee shall examine whether the total amount of grants to which Executive Officers are entitled with respect to such calendar year and which constitute variable components of their terms of services (the "Total Amount of Grants to Executive Officers"), exceed an amount equal to 10% of the Company's EBITDA for such year (the "EBITDA's Threshold"), as calculated in accordance with data extracted from the Company's audited consolidated annual financial statements, after taking into account the Executive Officers' fixed compensation but excluding their variable compensation. In such event, the amount by which the Total Amount of Grants to Executive Officers exceeds the EBITDA's Threshold shall be referred to as the "Excess Amount".
|
NOTE 17
|
-
|
RELATED PARTIES (cont.)
|
|
F.
|
(cont.)
|
|
•
|
In the event that the Total Amount of Grants to Executive Officers exceeds the EBITDA's Threshold, then the Target-based Cash Incentive and the Excess Return Cash Incentive to which an Executive Office Holder is entitled (together, the "Grants") shall be reduced by an amount equal to the Executive Office Holder's Rate of Grants (as defined below) out of the Excess Amount. The term "Executive Office Holder's Rate of Grants" means, with respect to a particular Executive Office Holder, the percentage which such Executive Office Holder's Grants constitute out of the Total Amount of Grants to Executive Officers.
|
|
•
|
The Company's board of directors shall have the right, under special circumstances at its discretion, to reduce the amount of Grants to which the Executive Office Holders are entitled, upon a 60 days prior notice.
|
|
•
|
The Executive Office Holder shall be required to return any compensation paid to them on the basis of results included in financial statements that turned out to be erroneous and were subsequently restated in the Company's financial statements published during the three year period following publication of the erroneous financial statements; to the extent they would not have been entitled to the compensation actually received had it been determined based on the restated financial statements. In such case, compensation amounts will be returned within 60 days from the date of publication of the restated financial statements, net of taxes that were withheld thereon. If the Executive Office Holder has a right to reclaim such tax payments with respect to Grants which were paid in excess, from the relevant tax authorities, then the Executive Office Holder shall reasonably act to reclaim such amounts from the tax authorities and upon their receipt, shall remit them to the Company. In 2014 and 2015 Executive Offices Holders were entitle to Target based cash incentives at the maximum rate of (150%).
|
|
G.
|
On January 28, 2014, the Company's general meeting of the of shareholders re-approved the terms of engagement of Mr. Avner Kurz as a consultant to Ituran Sistemas de Monitoramento Ltda, a Brazilian subsidiary of the Company, in accordance with an agreement dated February 23, 2012. Pursuant to the terms of this agreement, Mr. Kurz provided consultation services to the Brazilian subsidiary as an independent contractor, including services concerning: general strategy of the subsidiary, developing connections with the private market, infrastructure development and in any other area as is required from time to time. In addition, he was in direct contact with the chief executive officer of the subsidiary and its office holders, he was directly reporting to the Company's president and advised him regarding the aforementioned; Mr. Kurz undertook to stay at least eight times per year in Brazil at the subsidiary's offices and to invest no less than twenty monthly hours in providing the services; the term of the agreement automatically renews every two years, although each party may terminate it with a 180 days prior notice; and in consideration for the services described above, the Brazilian subsidiary paid Mr. Kurz a monthly amount of $8,000, against the receipt of a tax invoice; and Mr. Kurz was entitled to receive a cellular phone and reimbursement of related expenses from the Company, payable against receipts The aggregate amounts paid to Mr Kurz by virtue of this agreement for each of the years 2014 and 2013 were approximately $80,000 and $81,105, respectively. The agreement with Mr. Kurz was terminated on September 15, 2014 as the date of his resignation from the board.
|
NOTE 18
|
-
|
SEGMENT REPORTING
|
|
A.
|
General information:
|
|
B.
|
Information about reported segment profit or loss and assets:
|
US dollars
|
||||||||||||
(in thousands)
|
Location based services
|
Wireless communications products
|
Total
|
|||||||||
Year ended December 31, 2015
|
||||||||||||
Revenues
|
127,683 | 47,945 | 175,628 | |||||||||
Operating income
|
38,328 | 2,316 | 40,644 | |||||||||
Assets
|
62,236 | 10,463 | 72,699 | |||||||||
Goodwill
|
1,539 | 1,817 | 3,356 | |||||||||
Expenditures for assets
|
14,478 | 393 | 14,871 | |||||||||
Depreciation and amortization
|
8,636 | 152 | 8,788 | |||||||||
Impairment of goodwill and intangible assets
|
- | 929 | 929 | |||||||||
Year ended December 31, 2014
|
||||||||||||
Revenues
|
133,692 | 48,435 | 182,127 | |||||||||
Operating income (loss)
|
42,603 | 3,267 | 45,870 | |||||||||
Assets
|
63,795 | 11,094 | 74,889 | |||||||||
Goodwill
|
1,544 | 2,497 | 4,041 | |||||||||
Expenditures for assets
|
12,574 | 598 | 13,172 | |||||||||
Depreciation and amortization
|
8,920 | 148 | 9,068 | |||||||||
Impairment of goodwill and intangible assets
|
34 | 888 | 922 | |||||||||
Year ended December 31, 2013
|
||||||||||||
Revenues
|
126,951 | 43,216 | 170,167 | |||||||||
Operating income
|
38,470 | (540 | ) | 37,930 | ||||||||
Assets
|
66,300 | 10,564 | 76,864 | |||||||||
Goodwill
|
1,730 | 3,703 | 5,433 | |||||||||
Expenditures for assets
|
12,312 | 264 | 12,576 | |||||||||
Depreciation and amortization
|
9,360 | 358 | 9,718 | |||||||||
Impairment of goodwill and intangible assets
|
2,816 | 1,804 | 4,620 |
NOTE 18
|
-
|
SEGMENT REPORTING (cont.)
|
|
C.
|
Information about reported segment profit or loss and assets:
|
|
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)
|
2015
|
2014
|
2013
|
|||||||||
Total revenues of reportable segment and consolidated revenues
|
175,628 | 182,127 | 170,167 | |||||||||
Operating income
|
||||||||||||
Total operating income for reportable segments
|
40,644 | 45,870 | 37,930 | |||||||||
Unallocated amounts:
|
||||||||||||
Other income (expenses) income
|
- | - | (166 | ) | ||||||||
Financing income, net
|
1,189 | 1,704 | 238 | |||||||||
Consolidated income before taxes on income
|
41,833 | 47,574 | 38,002 | |||||||||
Assets
|
||||||||||||
Total assets for reportable segments (*)
|
76,055 | 78,930 | 82,297 | |||||||||
Other unallocated amounts:
|
||||||||||||
Current assets
|
46,119 | 57,159 | 61,530 | |||||||||
Investments in affiliated and other companies
|
4,783 | 1,095 | 1,511 | |||||||||
Property and equipment, net
|
8,730 | 7,786 | 8,644 | |||||||||
Other unallocated amounts
|
6,316 | 7,367 | 6,560 | |||||||||
Consolidated total assets (at year end)
|
142,003 | 152,337 | 160,542 | |||||||||
Other significant items
|
||||||||||||
Total expenditures for assets of reportable segments
|
14,871 | 13,172 | 12,576 | |||||||||
Unallocated amounts
|
3,676 | 2,021 | 1,387 | |||||||||
Consolidated total expenditures for assets
|
18,547 | 15,193 | 13,963 | |||||||||
Total depreciation, amortization and impairment for reportable segments
|
9,717 | 9,990 | 14,338 | |||||||||
Unallocated amounts
|
2,245 | 2,229 | 1,858 | |||||||||
Consolidated total depreciation and amortization
|
11,962 | 12,219 | 16,196 |
|
(*)
|
Including goodwill.
|
NOTE 18
|
-
|
SEGMENT REPORTING (cont.)
|
|
E.
|
Geographic information
|
Revenues
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2015
|
2014
|
2013
|
|||||||||
Israel
|
88,556 | 90,061 | 83,331 | |||||||||
United States
|
7,811 | 7,568 | 4,876 | |||||||||
Brazil
|
58,403 | 66,462 | 63,454 | |||||||||
Argentina
|
17,324 | 13,792 | 15,190 | |||||||||
Others
|
3,534 | 4,244 | 3,316 | |||||||||
Total
|
175,628 | 182,127 | 170,167 |
Property and equipment, net
|
||||||||||||
December 31,
|
||||||||||||
(in thousands)
|
2015
|
2014
|
2013
|
|||||||||
Israel
|
9,934 | 8,563 | 9,051 | |||||||||
United States
|
73 | 120 | 155 | |||||||||
Brazil
|
17,228 | 17,801 | 19,178 | |||||||||
Argentina
|
4,279 | 5,424 | 4,162 | |||||||||
Total
|
31,514 | 31,908 | 32,546 |
|
-
|
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 19
|
-
|
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, marketable securities and derivatives.
|
|
Most of the Group’s cash and cash equivalents, deposits in short-term investments (and investments in trading marketable securities), as of December 31, 2015 and 2014, were deposited with major banks (mostly in Israel) with high credit rating. 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, Brazil, Argentina 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.
|
|
The company entered into foreign exchange forward contracts intended to protect against the increase in the purchase price of forecasted inventory purchases dominated in currencies other then the functional currency of the purchasing entity.
|
NOTE 19
|
-
|
FINANCIAL INSTRUMENTS AND RISKS MANAGEMENT (cont.)
|
|
B.
|
Foreign exchange risk management
|
Asset derivatives
|
||||||
As of December 31, 2015
|
Thousands of US dollars
|
|||||
Balance sheet location
|
Fair
value
|
|||||
Derivatives designated as hedging instruments:
|
||||||
Foreign exchange contracts
|
Other current Assets
|
1,063 |
Liability derivatives
|
||||||
As of December 31, 2014
|
Thousands of US dollars
|
|||||
Balance sheet location
|
Fair
value
|
|||||
Derivatives designated as hedging instruments:
|
||||||
Foreign exchange contracts
|
Other current Assets
|
1,580 | ||||
Other no current Assets
|
984 | |||||
2,564 |
Derivatives designated as hedging instruments
|
Location of loss recognized in income
|
Amount of gain recognized in income
|
||||
Year ended December 31, 2015
|
Thousands of US dollars
|
|||||
Foreign exchange contracts
|
Cost of revenues
|
1,616 |
Derivatives designated as hedging instruments
|
Location of loss recognized in income
|
Amount of gain recognized in income
|
||||
Year ended December 31, 2014
|
Thousands of US dollars
|
|||||
Foreign exchange contracts
|
Cost of revenues
|
39 |
NOTE 19
|
-
|
FINANCIAL INSTRUMENTS AND RISKS MANAGEMENT (cont.)
|
|
C.
|
Fair value of financial instruments
|
December 31, 2015
|
||||||||||||
(in thousands)
|
Level 1
|
Level 2
|
Level 3
|
|||||||||
Trading securities
|
2,035 | |||||||||||
Derivatives designated as hedging instruments
|
- | 1,063 | - |
December 31, 2014
|
||||||||||||
(in thousands)
|
Level 1
|
Level 2
|
Level 3
|
|||||||||
Trading securities
|
2,362 | |||||||||||
Derivatives designated as hedging instruments
|
- | 2,564 | - |
ITURAN LOCATION AND CONTROL LTD.
(Registrant)
By: /s/ Eyal Sheratzky /s/ Nir Sheratzky
————————— —————————
Eyal Sheratzky Nir Sheratzky
Co-Chief Executive Officers
|
1.
|
Definition and Interpretation
|
1.1
|
The following terms in these Articles of Association shall have the respective meanings ascribed to them below:
|
Articles
|
The Articles of Association of the Company, as set forth herein and or as amended, from time to time.
|
Board
|
The Board of Directors of the Company.
|
Business Day
|
Sunday to Thursday, inclusive, with the exception of holidays and officials days of rest in the State of Israel.
|
Company
|
איתוראן איתור ושליטה בע"מ
Ituran Location and Control Ltd.
|
Companies Law
|
The Israeli Companies Law, 1999, as may be amended from time to time, and any law replacing it.
|
Companies Regulations
|
Regulations issued pursuant to the Companies Law.
|
Law
|
The provisions of any law as defined in the Interpretation Law, 1981.
|
General Manager
|
The general manager of the Company pursuant to the Companies Law, which is known also by the term Chief Executive Officer or CEO.
|
Ordinary Majority
|
More than fifty percent (50%) of the votes of the Shareholders who are entitled to vote and who voted in a General Meeting in person, by means of a proxy or by means of a proxy card.
|
Securities Law
|
The Securities Law, 1968, as may be amended from time to time, and any law replacing it.
|
Securities Regulations
|
Regulations issued pursuant to the Securities Law.
|
Shareholder
|
Anyone registered as a shareholder in the Shareholder Register of the Company, or anyone who is a bearer of a share deed of the Company; or anyone person who is a shareholder according to the Companies Law.
|
Special Majority
|
A majority of at least three quarters (75%) of the votes of the Shareholders who are entitled to vote and who voted in a General Meeting, in person, by means of a proxy or by means of a proxy card.
|
The Company
|
Ituran Location and Control Ltd., or any other name by which it will be called, in the event of the Company replacing or changing its name.
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In writing
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In script, in print, by means of a typewriter, photocopying, telex, cable, facsimile, electronic mail or in any other legible form, or which is produced in any other visual substitute for writing, including a combination of two or more methods, and “signed” shall be understood accordingly.
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1.2
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Unless the subject or the context otherwise requires, each word and expression not specifically defined herein and defined in the Companies Law as in effect on the date when these Articles or any amendment hereto, as the case maybe first became effective, shall have the same meaning herein, and to the extent that no meaning is attached to it in the Companies Law, the meaning ascribed to it in the Companies Regulations, and if no meaning is ascribed thereto in the Companies Regulations, the meaning ascribed to it in the Securities Law or Securities Regulations; words and expressions importing the singular shall include the plural and vice versa; words and expressions importing the masculine gender shall include the feminine gender and vice versa; and words and expressions importing persons shall include corporate entities.
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1.3
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The captions in these Articles are for convenience only and shall not be deemed a part hereof or affect the construction of any provision hereof.
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1.4
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The specific provisions of these articles supersede the provisions of the companies Law to the extent permitted under the companies Law with respect to any matter that is not specifically addressed in these articles, the provisions of the companies Law shall govern.
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2. Public Company
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3. The Purpose and objectives of the Company
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4. Limited Liability
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5. Share Capital
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5.1
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The authorized share capital of the Company is 20 million New Israeli Shekels (NIS Twenty Million Shekels) divided into 60 million Ordinary Shares NIS 0.331/3 par value each.
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5.2
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The ordinary shares of the Company confer on the holders thereof rights to receive notice of, attend, and vote in meetings of the shareholders, rights to receive dividends, rights to receive a distribution of assets upon liquidation and certain other rights all as specified in these Articles.
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6. Increase of Share Capital
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6.1
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The Company may, from time to time, by a resolution of the General Meeting adopted by an Ordinary Majority, whether or not all the shares then authorized have been issued, and whether or not all the shares theretofore issued have been called up for payment, increase its share capital by the creation of new shares. Any such increase shall be in such amount and shall be divided into shares of such nominal value, and such shares shall confer such rights and preferences, and shall be subject to such restrictions, as such resolution of the General Meeting shall provide.
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6.2
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Except to the extent otherwise provided in such resolution of the General Meeting, such new shares shall be subject to all the provisions applicable to the shares of the original capital.
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7. Special Rights; Modifications of Rights
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7.1
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Without prejudice to any special rights previously conferred upon the holders of existing shares in the Company, the Company may, from time to time, by a resolution of the Board, issue shares with such preferred or deferred rights or rights of redemption or other special rights and/or restrictions, whether with respect to liquidation, dividends, voting, conversion, repayment of share capital or otherwise, as may be stipulated in such resolution.
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7.2
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If at any time the issued share capital is divided into different classes of shares, the rights attached to any class, unless otherwise provided by these Articles, may be modified or abrogated by the Company, by a resolution of the General Meeting adopted by an Ordinary Majority, subject to the consent of the holders of more than fifty percent (50%) of the issued shares of such class or the sanction of a resolution of a separate General Meeting of the holders of the shares of such class adopted by an Ordinary Majority, except if no rights in the Company are attached to that class of shares other than the receipt of their par value on a winding-up of the Company (“Deferred Shares”) and unless the issue terms of those shares provide otherwise.
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7.3
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Unless otherwise provided by these Articles, the increase of the authorized number of shares of an existing class of shares, or the issuance of additional shares thereof or the creation of a new class of shares identical to an existing class of shares in all respects, shall not be deemed, for purposes of this Article 7, to modify or abrogate the rights attached to the previously issued shares of such class or of any other class.
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8. Consolidation. Subdivision. Cancellation and Reduction of Share Capital
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8.1
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The Company may, from time to time, by a resolution of the General Meeting adopted by an Ordinary Majority (subject, however, to the provisions of Articles 7.2 and 7.3 hereof and to the Companies Law):
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8.1.1
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Consolidate and divide all or any of its issued or unissued share capital into shares of larger nominal value than its existing shares;
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8.1.2
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Subdivide its shares, issued or unissued, or any of them, into shares of smaller nominal value than is fixed by these Articles, subject to the provisions of the Companies Law, and the resolution whereby any share is subdivided may determine that, as among the holders of the shares resulting from such subdivision, one or more of the shares may, as compared with the others, have any such preferred or deferred rights or rights of redemption or other special rights, or be subject to any such restrictions, as the Company has power to attach to unissued or new shares.
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8.1.3
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Cancel any shares which, at the date of the adoption of such resolution of the General Meeting, have not been allotted, so long as the Company is not under an obligation to allot these shares, and diminish the amount of its share capital by the amount of the shares so cancelled; or
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8.1.4
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Reduce its share capital in any manner, subject to any authorization or consent required by Law.
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8.2
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With respect to any consolidation of issued shares into shares of larger nominal value, and with respect to any other action which may result in fractional shares, the Board may settle any difficulty which may arise with regard thereto, as it deems appropriate, including,inter alia, resort to one or more of the following actions:
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8.2.1
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Determine, as to the holder of shares so consolidated, which issued shares shall be consolidated into each share of larger nominal value;
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8.2.2
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Allot, in contemplation of or subsequent to such consolidation or other action, such shares or fractional shares sufficient to preclude or remove fractional share holdings;
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8.2.3
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Redeem, in the case of redeemable shares, and subject to applicable Law, such shares or fractional shares sufficient to preclude or remove fractional share holdings;
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8.2.4
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Cause the transfer of fractional shares by certain Shareholders to other Shareholders so as to most expediently preclude or remove any fractional shareholdings, and cause the transferees to pay the transferors the fair value of the fractional shares so transferred, and the Board is hereby authorized to act as agent for the transferors and transferees with power of substitution for purposes of implementing the provisions of this Article 8.2.4.
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9. Issuance of Share Certificates: Replacement of Lost Certificates
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9.1
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Share certificates shall be issued under the seal or stamp of the Company and shall bear the signature of a Director, or of any other person or persons so authorized by the Board.
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9.2
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Each Shareholder shall be entitled to one numbered certificate for all the shares of any class registered in his name, and if the Board so approves, to several certificates, each for one or more of such shares. Each certificate may specify the serial numbers of the shares represented thereby and may also specify the amount paid up thereon.
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9.3
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A share certificate registered in the names of two or more persons shall be delivered to the person first named in the Shareholder Register in respect of such co-ownership (“the first Co-Owner”).
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9.4
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If a share certificate is defaced, lost or destroyed, it may be replaced, upon payment of such fee, and upon the furnishing of such evidence of ownership and such indemnity, as the Board may deem appropriate.
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10.
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Registered Holder
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11.
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Issuance of Shares and other Securities
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11.1
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The unissued shares from time to time shall be under the control of the Board, which shall have the power to allot shares or otherwise dispose of them to such persons, on such terms and conditions (includinginter alia terms relating to calls as set forth in Article 13 (“Calls on Shares”) hereof), and either at par or at a premium, or, subject to the provisions of the Companies Law, at a discount, and at such times, as the Board may deem appropriate, and the power to give to any person the option to acquire from the Company any shares, either at par or at a premium, or, subject as aforesaid, at a discount, during such time and for such consideration as the Board may deem appropriate.
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11.2
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The Board may determine to issue a series of bonds or other debt securities, as part of its authority or to take a loan on behalf of the Company, and within the limits of such authority.
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11.3
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The Shareholders of the Company at any given time shall not have any preemptive right or priority or any other right whatsoever with respect to the acquisition of securities of the Company. The Board, in its sole discretion, may decide to offer securities of the Company first to existing Shareholders or to anyone or more of them.
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11.4
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The Company is entitled to pay a commission (including underwriting fees) to any person, in consideration for underwriting services, or the marketing or distribution of securities of the Company, whether reserved or unreserved, as determined by the Board. Payments, as stated in this Article 11.4, may be paid in cash or in Securities of the Company, or in a combination thereof or in any other manner.
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12.
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Payment in Installments
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13. Calls on Shares
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13.1
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The Board may, from time to time, make such calls as it may deem appropriate upon Shareholders in respect of any sum unpaid in respect of shares held by such Shareholders which is not, by the terms of issuance thereof or otherwise, payable at a fixed time, and each Shareholder shall pay the amount of every call so made upon him (and of each installment thereof if the same is payable in installments), to the person(s) and at the time(s) and place(s) designated by the Board, as any such time(s) may be thereafter extended and/or such person(s) or place(s) changed. Unless otherwise stipulated in the resolution of the Board (and in the notice referred to in Article13.2), each payment in response to a call shall be deemed to constitute a pro rata payment on account of all shares in respect of which such call was made.
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13.2
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Notice of any call shall be given in writing to the applicable Shareholder(s) not less than fourteen (14) days prior to the time of payment, specifying the time and place of payment, and designating the person to whom such payment shall be made; provided, however, that before the time for any such payment, the Board may, by notice in writing to such Shareholder(s), revoke such call in whole or in part, extend such time, or alter such designated person and/or place. In the event of a call payable in installments, only one notice thereof need be given.
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13.3
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If, by the terms of allotment of any share or otherwise, any amount is made payable at any fixed time, every such amount shall be payable at such time as if it were a call duly made by the Board and of which due notice had been given, and all the provisions herein contained with respect to calls shall apply to each such amount.
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13.4
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Any amount unpaid in respect of a call shall bear interest from the date on which it is payable until actual payment thereof, at such rate (not exceeding the then prevailing debitory rate charged by leading commercial banks in Israel), and at such time(s) as the Board may prescribe.
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13.5
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Upon the allotment of shares, the Board may provide for differences among the allottees of such shares as to the amount of calls and/or the times of payment thereof
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13.6
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The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof and all interest payable thereon.
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14. Prepayment
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15. Forfeiture and Surrender
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15.1
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If any Shareholder fails to pay any amount payable in respect of a call, or interest thereon as provided herein, on or before the day fixed for payment of the same, the Company, by resolution of the Board, may at any time thereafter, so long as such amount or interest remains unpaid, forfeit all or any of the shares in respect of which such call had been made. Any expense incurred by the Company in attempting to collect any such amount or interest, including, inter alia, attorneys’ fees and costs of suit, shall be added to, and shall, for all purposes (including the accrual of interest thereon), constitute a part of the amount payable to the Company in respect of such call.
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15.2
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Upon the adoption of a resolution of forfeiture, the Board shall cause notice thereof to be given to the Shareholder whose shares are the subject of such forfeiture, which notice shall state that, in the event of the failure to pay the entire amount so payable within a period stipulated in the notice (which period shall not be less than fourteen (14) days and which may be extended by the Board), such shares shall be ipso facto forfeited, provided, however, that, prior to the expiration of such period, the Board may nullify such resolution of forfeiture, but no such nullification shall estop the Board from adopting a further resolution of forfeiture in respect of the non-payment of such amount.
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15.3
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Whenever shares are forfeited as herein provided, all distributions theretofore declared in respect thereof and not actually paid or distributed shall be deemed to have been forfeited at the same time.
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15.4
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The Company, by resolution of the Board, may accept the voluntary surrender of any share.
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15.5
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Any share forfeited or surrendered as provided herein shall become the property of the Company, and the same, subject to the provisions of these Articles, may be sold, re-allotted or otherwise disposed of as the Board deems appropriate.
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15.6
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Any Shareholder whose shares have been forfeited or surrendered shall cease to be a Shareholder in respect of the forfeited or surrendered shares, but shall, notwithstanding, be liable to pay, and shall forthwith pay, to the Company, all calls, interest and expenses owing upon or in respect of such shares at the time of forfeiture or surrender, together with interest thereon from the time of forfeiture or surrender until actual payment, at the rate prescribed in Article 13.4 above, and the Board, in its discretion, may enforce the payment of such moneys, or any part thereof, but shall not be under any obligation to do so. In the event of such forfeiture or surrender, the Company, by resolution of the Board, may accelerate the date(s) of payment of any or all amounts then owing by the Shareholder in question (but not yet due) in respect of all shares owned by such Shareholder, solely or jointly with another, and in respect of any other matter or transaction whatsoever.
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15.7
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The Board may at any time, before any share so forfeited or surrendered shall have been sold, re-allotted or otherwise disposed of, nullify the forfeiture or surrender on such conditions as it deems appropriate, but no such nullification shall estop the Board from re-exercising its powers of forfeiture pursuant to this Article15.
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16. Lien
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16.1
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Except to the extent the same may be waived or subordinated in writing, the Company shall have a first and paramount lien upon all the shares registered in the name of each Shareholder which are not fully paid up (without regard to any equitable or other claim or interest in such shares on the part of any other person), and upon the proceeds of the sale thereof, for the amount payable to the Company in respect of such unpaid shares, solely or jointly with another, to or with the Company, whether the period for the payment, fulfillment or discharge thereof shall have actually arrived or not. Such lien shall extend to all distributions from time to time declared in respect of such shares. Unless otherwise provided, the registration by the company of a transfer of shares shall be deemed to be a waiver on the part of the company of the lien (if any) existing on such shares immediately prior to such transfer.
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16.2
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The Board may cause the Company to sell any shares subject to such lien when any such debt, liability or engagement has matured, in such manner as the Board may deem appropriate, but no such sale shall be made unless such debt, liability or engagement has not been satisfied within fourteen (14) days after written notice of the Company’s intention to sell shall have been served on such Shareholder, his executors, administrators or assignees.
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16.3
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The net proceeds of any such sale, after payment of the costs thereof, shall be applied in or toward satisfaction of the debts, liabilities or engagements of such Shareholder in connection with such unpaid shares (whether or not the same have matured), or any specific part of the same (as the Board may determine), and the balance, if any, shall be paid to the Shareholder, his executors, administrators or assigns.
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17. Sale after Forfeiture or Surrender or in Enforcement of Lien
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18. Redeemable Shares
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19. Transfer of Shares
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19.1
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No transfer of shares shall be registered unless the Company receives a deed of transfer or other proper instrument of transfer (in form and substance satisfactory to the Board), together with any share certificate(s). Until the transferee has been registered in the Shareholders Register in respect of the shares so transferred, the Company may continue to regard the transferor as the owner thereof. The Board may, from time to time, prescribe a reasonable fee for registration of a transfer. A Deed of Transfer shall be in the following form or in any substantially similar form, including any such form as is acceptable to the transfer agent for the Company’s shares, or in any form otherwise approved by the board.
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The Transferee
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The Transferor
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Name:
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Name:
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Signature:
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Signature:
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Witness to Signature
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Witness to Signature
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Name:
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Name:
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Signature:
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Signature:
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19.2
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The transfer of shares which were not fully paid for, or shares on which the Company has a lien, shall have no validity unless approved by the Board, which may, in its absolute discretion and without giving any reason thereto, decline the registration of such transferor impose conditions on the transfer.
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19.3
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The board may suspend the registration of transfers for such periods as it deems appropriate, and no such transfers shall be registered during any period in which the shareholders is so closed, provided such periods shall not exceed 30 days each year and provided that no such suspension shall take place in any 14 days precluding the recode date for any general meeting or to any distribution.
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19.4
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Upon the death of a Shareholder
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19.4.1
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In case of a share registered in the names of two or more holders, the Company may recognize the survivor(s) as the sole owner(s) thereof.
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19.4.2
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Any person becoming entitled to a share in consequence of the death of any person, upon producing evidence of the grand of probate or letters of administration or deceleration of succession (or such other evidence as the Board of Directors may reasonably deem sufficient that he sustains the character in respect of which he proposes to act under this Article or of his title), shall be registered as a shareholder in respect of such shares, or may, subject to the regulations as to transfer herein contained, transfer such share.
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19.5
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The Company may recognize the receiver or liquidator of any corporate Shareholder in liquidation or dissolution, or the receiver or trustee in bankruptcy of any Shareholder, as being entitled to the shares registered in the name of such Shareholder, after receipt of evidence to the entitlement thereto, as determined by the Board.
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19.6
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A person acquiring a right in shares as a result of being a custodian, administrator of the estate, executor of a will or the heir of a Shareholder, or a receiver, liquidator or a trustee in a liquidation, dissolution or bankruptcy of a Shareholder or according to another provision of Law, is entitled, after producing evidence of his right to the satisfaction of the Board, to be registered as the Shareholder or to transfer such shares to another person, subject to the provisions of this Article 19.
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20. Bearer Share
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21. Annual Meeting
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22. Extraordinary Meetings
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22.1
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All General Meetings other than Annual Meetings shall be referred to as “Extraordinary Meetings”.
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22.2
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The Board may, whenever it deems appropriate, convene an Extraordinary Meeting at such time and place, within or outside of the State of Israel, as may be determined by the Board, and shall be obliged to do so upon the demand in writing of one of the following:
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22.2.1
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Any two Directors or a quarter of the Directors, whichever is lower; or
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22.2.2
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One or more Shareholders, holding alone or together at least five percent (5%) of the issued share capital of the Company, and at least one percent (1%) of the voting rights in the company; or
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22.2.3
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One or more Shareholders holding at least five percent (5%) of the voting rights in the company. The demand shall set forth the reasons for convening of the meeting and shall be delivered to the registered office of the Company.
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22.3
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The Board, upon demand to convene an Extraordinary Meeting in accordance with Article 22.2.2 above, shall announce the convening of the General Meeting within twenty one (21) days from the receipt of a demand in that respect; provided, however, that the date fixed for the Extraordinary Meeting shall not be more than thirty five (35) days from the date of the announcement of the Extraordinary Meeting, or such other period as may be permitted by the Companies Law or Companies Regulations.
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23. Class Meetings
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24. Notice of General Meetings
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24.1
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The Company is not required to give notice under section 69(b) of the Companies Law, to the extent that such section is in effect.
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24.2
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General Meeting requires prior notice of at least 21 days.
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25. The Agenda of General Meetings
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25.1
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The agenda of General Meetings shall be determined by the Board and shall also include issues for which an Extraordinary Meeting is being convened in accordance with Article 22 above, or as otherwise may be required in accordance with the provisions of the Companies Law.
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25.2
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The General Meeting shall only adopt resolutions on issues or act upon items which are on its agenda.
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25.3
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The General Meeting is entitled to accept or reject a proposed resolution which is on the agenda of the General Meeting. Subject to applicable Law, the General Meeting may adopt a resolution which is different from the description thereof included in the announcement of the General Meeting, provided that such resolution is not materially different from the proposed resolution.
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25.4
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Any Shareholder entitled to be present and vote in a General Meeting may bring any proposal with respect to any of the matters on the agenda of such General Meeting, provided however the Shareholder submits his written proposal specifying his intention to present it to the General Meeting at the Company’s Registered office, within three (3) days of the announcement of the convening of the General Meeting.
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26. Quorum
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26.1
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No business shall be transacted at a General Meeting, or at any adjournment thereof, unless a lawful quorum is present when the meeting proceeds to business.
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26.2
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Subject to the requirements of the Companies Law, the rules of Nasdaq National Market and any other exchange on which the Company’s securities are or may become quoted or listed, and the provisions of these Articles, any two or more Shareholders (not in default in payment of any sum referred to in Article 13 hereof), present in person or by proxy, or who have delivered to the Company proxy card indicating their manner of voting, and who hold or represent shares conferring in the aggregate at least thirty-three and one-third percent (33 1/3%) of the voting power of the Company, shall constitute a lawful quorum at General Meetings. A Shareholder or his proxy, who also serves as a proxy for other Shareholder(s), shall be regarded as two or more Shareholders, in accordance with the number of Shareholders he is representing.
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26.3
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If within an hour from the time appointed for the General Meeting a quorum is not present, the meeting, if convened by the Board upon demand under Article 22.2 or, if not convened by the Board, if convened by the persons making or court demanding in accordance with the provisions of the Companies Law, shall be dissolved, but in any other case it shall stand adjourned to the same day in the next week, at the same time and place, or to such day and at such time and place as the Chairman may determine with the consent of the holders of a majority of the voting power represented at the meeting in person or by proxy and voting on the question of adjournment. No business shall be transacted at any adjourned meeting except business which might lawfully have been transacted at the meeting as originally called. At such adjourned meeting, any number of Shareholders present in person or by proxy or by proxy card, shall constitute a lawful quorum.
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27. Chairman
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28. Adjourned Meeting
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29. Adoption of Resolutions at General Meetings
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29.1
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Except with respect to matters which require the approval of a special majority under the Companies Law or these Articles, all resolutions of the General Meeting, shall be deemed adopted if approved by an Ordinary Majority. A resolution of the General Meeting approving an amendment to the "Appointment of Directors" (Article 40 of these Articles) shall be deemed adopted only if approved by Special Majority.
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29.2
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Every matter submitted to a General Meeting shall be decided by a show of hands, but if a written ballot is demanded by any Shareholder present in person, by proxy or by proxy card and entitled to vote at the meeting, the same shall be decided by such ballot. A written ballot may be demanded before the proposed resolution is voted upon or immediately after the declaration by the Chairman of the results of the vote by a show of hands. If a vote by written ballot is taken after such declaration, the results of the vote by a show of hands shall be of no effect, and the proposed resolution shall be decided by such written ballot. The demand for a written ballot may be withdrawn at any time before the same is conducted, in which event another Shareholder may then demand such written ballot. The demand for a written ballot shall not prevent the continuance of the meeting for the transaction of business other than the question on which the written ballot has been demanded.
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29.3
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A declaration by the Chairman of the meeting that a resolution has been adopted unanimously, or adopted by a particular majority, or rejected, and an entry to that effect in the minute book of the Company, shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favor of or against such resolution.
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30. Power to Adjourn
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31. Voting Power
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32. Voting Rights
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32.1
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No Shareholder shall be entitled to vote at any General Meeting (or be counted as a part of the lawful quorum thereat), unless all calls and other sums then payable by him in respect of his shares in the Company have been paid.
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32.2
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A company or other corporate entity being a Shareholder of the Company may authorize any person to be its representative at any General Meeting. Any person so authorized shall be entitled to exercise on behalf of such Shareholder all the power which the latter could have exercised if it were an individual shareholder. Upon the request of the Chairman of the General Meeting, written evidence of such authorization (in form acceptable to the Chairman) shall be delivered to him.
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32.3
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Any Shareholder entitled to vote may vote either personally (or, if the Shareholder is a company or other corporate entity, by a representative authorized pursuant to Article 32.2) or by proxy (subject to Article 34 below), or by proxy card.
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32.4
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The Board may determine, in its discretion, matters that may be voted upon at the meeting by proxy card in addition to the matters listed in section 87to the Companies Law.
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32.5
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If two or more persons are registered as joint holders of any share, the vote of the senior who tenders a vote, in person, by proxy or by proxy card, shall be accepted to the exclusion of the vote(s) of the other joint holder(s), and for this purpose seniority shall be determined by the order in which the names stand in the Shareholder Register.
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32.6
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Personal Interest in Resolutions
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33. The Record Date with Respect to Participation and Voting
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34. Voting by Means of a Proxy
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34.1
|
A Shareholder is entitled to appoint by deed of authorization a proxy (who is not required to be a Shareholder of the Company) to participate and vote in his stead, whether at a certain General Meeting or generally at General Meetings of the Company (e.g, until the occurrence of such date or event as is specified in the deed of authorization), whether personally, by proxy or by means of a proxy card.
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34.2
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In the event that the deed of authorization is not limited to a certain General Meeting, then the deed of authorization, which was deposited prior to a certain General Meeting, shall also be good for other General Meetings thereafter, subject to the terms of the deed of authorization. This Article 34 shall also apply to a Shareholder which is a corporation, appointing a person to participate and vote in a General Meeting in its stead.
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35. A Deed of Authorization
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35.1
|
The deed of authorization shall be in writing and shall be substantially in the form specified below, or in any usual or common form or in such other form as may be approved by the Board. It shall be duly signed by the appointer or his duly authorized attorney or, if such appointer is a company or other corporate entity, under its common seal or stamp or the hand of its duly authorized agent(s) or attorney(s). signed by the appointing shareholder or by his attorney duly authorized in writing, and shall be in the following form or any form similar thereto:
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35.2
|
The deed of authorization (and the power of attorney or other authority, if any, under which such instrument has been signed) shall either be delivered to the Company (at its registered office, or at its principal place of business, or at the office of its registrar and/or transfer agent or at such place as the Board may specify) not less than twenty four (24) hours before the time fixed for the meeting, at which the person named in the deed of authorization proposes to vote, or presented to the Chairman at such meeting.
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36. Effect of Death of Appointer or Revocation of Appointment
|
|
37. The Disqualification of Proxy Cards and Deed of Authorization
|
37.1
|
If there is a reasonable suspicion that they are forged or falsified;
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37.2
|
If they are not duly executed or completed, as set forth in Article 35.1 above, if applicable
|
37.3
|
If they are given with respect to shares for which one or more proxy cards or deeds of authorization have been given and not withdrawn;
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37.4
|
If more than one choice is marked for the same resolution; or
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37.5
|
With respect to resolutions which require that the majority for their adoption include a certain percentage of those not having a personal interest in the approval of the resolution, where it was not marked, or otherwise notified to the Company, whether or not the relevant Shareholder has a personal interest.
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38. The Authority of the Board
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38.1
|
The authority of the Board is as specified in the Companies Law and in the provisions of these Articles. Without derogating from the generality of the aforesaid, The management of the business of the Company shall be vested in the Board, which may exercise all such powers and do all such acts and things as the Company is authorized to exercise and do, and are not hereby or by law required to be exercised or done by the company in a General Meeting. The authority conferred on the Board by this Article 38 shall be subject to the provisions of the Companies Law, of these Articles and any regulation or resolution consistent with these Articles adopted from time to time by the Company in a General Meeting, provided, however, that no such regulation or resolution shall invalidate any prior act done by or pursuant to a decision of the Board which would have been valid if such regulation or resolution had not been adopted.
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38.2
|
Without derogating from the generality of Articles 38.1 above, the Board’s authority shall include the following:
|
38.2.1
|
The Board may, from time to time, in its discretion, cause the Company to borrow or secure the payment of any sum or sums of money for the purposes of the Company, and may secure or provide for the repayment of such sum or sums in such manner, at such times and upon such terms and conditions in all respects as it deems appropriate, including, without limitation, by the issuance of bonds, perpetual or redeemable debentures or other securities, or any mortgages, charges, or other liens on the undertaking or the whole or any part of the property of the Company, both present and future, including its uncalled or called but unpaid capital.
|
38.2.2
|
Subject to the provisions of Article 35 below and subject to the provisions of any applicable law, the Board may, from time to time, set aside any amount(s) out of the profits of the Company as a reserve or reserves for any purpose(s) which the Board, in its sole discretion, shall deem appropriate, and may invest any sum so set aside in any manner and from time to time deal with and vary such investments, and dispose of all or any part thereof, and employ any such reserve or any part thereof in the business of the Company without being bound to keep the same separate from other assets of the Company, and may subdivide or re-designate any reserve or cancel the same or apply the funds therein for another purpose, all as the Board may from time to time deem appropriate.
|
38.2.3
|
Subject to the provisions of any Law, the Board may, from time to time, authorize any person to be the representative of the Company with respect to those objectives with such powers, discretions and authorities subject to those conditions and for that time period, as the Board deems appropriate, and any such appointment may contain such provisions for the protection and convince of persons dealing with such representative as the board may deem it and may also grant any such representative the authority to delegate any or all of the authorities, powers and discretions vested in him by the Board.
|
38.2.4
|
The Board may, at any time in its sole discretion, adopt protective measures to prevent or delay a coercive takeover of the company, including without limitation the adoption of a “Shareholder Rights Plan”.
|
|
39. Board Meetings
|
39.1
|
Convening Meetings of the Board
|
39.1.1
|
The Chairman of the Board may convene a meeting of the Board at any time; provided that a meeting of the Board be convened at least once every three (3) months.
|
39.1.2
|
The Chairman of the Board shall convene a meeting of the Board at any time or in any event that such meeting is required by the provisions of the Companies Law.
|
39.2
|
Notice of a Meeting of the Board
|
39.2.1
|
Any notice with respect to a meeting of the Board may be given orally or in writing, so long as the notice is given at least seven (7) days prior to the date fixed for the meeting, unless all members of the Board or their Alternate Directors (as described in Article 41 below) or their representatives agree on a shorter time period. Such notice shall be delivered personally, by mail, or transmitted via facsimile or e-mail or through another means of communication, to the address, facsimile number or to the e-mail address or to an address where messages can be delivered through other means of communication, as the case may be, as the Director or its alternate informed the Company in advance.
|
39.2.2
|
A notice with respect to a meeting of the Board shall include the venue, date and time of the meeting of the Board, the issues on its agenda and any other material that the Chairman of the Board requests to be included in the notice with respect to the meeting.
|
39.3
|
The Agenda of Board Meetings
|
39.3.1
|
Matters for which the meeting is required to be convened in accordance with the Companies Law;
|
39.3.2
|
Any matter requested by a Director or by the Chief Executive Officer to be included in the agenda of the meeting within at least 24 hours (taking into account the nature of the matter) prior to the meeting;
|
39.3.3
|
Any other matter determined by the Chairman of the Board.
|
39.4
|
Quorum
|
39.5
|
Conducting a Meeting through Means of Communication
|
39.6
|
Voting in the Board
|
39.7
|
Written Resolution
|
|
40. The Appointment of Directors
|
40.1
|
The Number of Directors
|
40.2
|
Classes & Term of Directors Office
|
40.3
|
Directors Generally
|
40.3.1
|
Subject to the provisions of the Companies Law, a Director may hold another position in the Company.
|
40.3.2
|
A company or other corporate entity may serve as a Director in the Company.
|
40.3.3
|
The Board shall include External Directors as may be required to comply with the requirements of the Companies Law, and shall include Independent Directors as may be required to comply with the Nasdaq Stock Market or any other securities exchange on which the securities of the Company are or may become quoted or listed.
|
40.4
|
The Election of Directors and their Terms of Office
|
40.4.1
|
Directors (other than the External Directors) shall be elected only at Annual Meetings, unless other provided in these Articles, and shall so serve until the expiration of their term of office pursuant to these Articles. A Director whose office is terminated shall be eligible for re-election (subject to the provisions of the Companies Law applicable to External Directors). The Annual Meeting and in the case of External Directors also the Extraordinary Meeting, at the time of election of a Director, shall classify such Director to Class A, Class B or Class C as set forth above, subject however to the provisions of the Companies Law.
|
40.4.2
|
The Annual Meeting may elect any person(s) as Director(s) if such person served as a Director up until the date of the Annual Meeting, if such person was nominated by the Board or if such person was elected by a Shareholder in accordance with Article 40.4.1 above.
|
40.4.3
|
The Annual Meeting at a Special Majority shall be entitled to remove from office any Director.
|
40.4.4
|
The Board of Directors may elect any person or persons as a Director(s), to fill an office which became vacant to the same class of directors and the same duration of office which would have been applicable to the Director whose office became vacant, had his/her office would not have been terminated.
|
40.4.5
|
In addition to the aforesaid, and subject to the provisions of the Companies Law with respect to External Directors, the office of a Director shall vacate with the occurrence of one or more of the events listed in section 228 of the Companies Law (with the exception of section 230 of the Companies Law which shall not apply) as well as in the event the Director dies, is declared by the court to be incapable or, in the event of a company or another corporate entity upon adaptation of a resolution for its voluntary liquidation or the issuance of a liquidation order.
|
40.4.6
|
(a) Notwithstanding anything to the contrary herein, the term of a Director may commence on a date later than the date of the Shareholders Resolution electing said Director, if so specified in said Shareholders Resolution. (b) The election and removal of External Directors shall be governed by the Companies Law, provided, however, that the company shall not have more than three “External Directors”.
|
|
41. Alternate Directors and Representative of a Director that is a Company
|
41.1
|
Alternate Directors
|
41.1.1
|
Subject to the provisions of the Companies Law, any Director may, by written notice to the Company, appoint an alternate for himself (in these Articles, an “Alternate Director”), dismiss such Alternate Director and appoint another Alternate Director in place of any Alternate Director appointed by him whose office has been vacated for any reason whatsoever, whether for a certain meeting or a certain period of time or generally. Any notice given to the Company pursuant to this Article shall be in writing, delivered to the Company and signed by the appointing or dismissing Director, and shall become effective on the date fixed therein, or upon the delivery thereof to the Company, whichever is later.
|
41.1.2
|
Anyone who is not qualified to be appointed as a Director and/or anyone serving as a Director or as an existing Alternate Director may not be appointed and may not serve as an Alternate Director.
|
41.2
|
Representative of a Director that is a Company
|
41.2.1
|
A Director that is a company or other corporate entity shall appoint an individual, qualified to be appointed as a Director in the Company, in order to serve on its behalf, either for a certain meeting or for a certain period of time or generally and such company or other entity may also dismiss that individual and appoint another in his stead (hereinafter: “Director’s Representatives”). Any notice given to the Company pursuant to this Article shall be in writing, delivered to the Company and signed by the appointing or dismissing body, and shall become effective on the date fixed therein, or upon the delivery thereof to the Company, whichever is later.
|
41.2.2
|
Subject to Article 41.2.1, any person, whether or not a Director may serve as a Director’s Representative. One person may act as a Director’s Representative of several Directors, and in such event he shall have a number of votes (and shall be treated as the number of persons for purposes of establishing a quorum) equal to the number of Directors for whom he acts as a Director’s Representative. If a Director’s Representative is also a Director in his own right, his rights as a Director’s Representative shall be in addition to his rights as a Director.
|
41.3
|
Provisions with Respect to Alternate Directors and Director’s Representatives
|
41.3.1
|
An Alternate Director and a Director’s Representative shall have all the authority of the Director who appointed him, provided, however, that an appointment by such alternate or a representative for himself may only be made in compliance with the provisions of the Companies Law, provided further that an Alternate Director and a Director’s Representative shall have no standing at any meeting of the Board or any committee thereof while the Director who appointed him is present.
|
41.3.2
|
The office of an Alternate Director or a Director’s Representative shall be vacated under the circumstances,mutatis mutandis, set forth in Article 40.4.5, and such office shall ipso facto be vacated if the Director who appointed such Alternate Director or Director’s Representative ceases to be a Director.
|
|
42. Continuing Directors in the Event of Vacancies
|
|
43. Personal Interest of a Director
|
|
44. Committees of the Board of Directors
|
44.1
|
Subject to the provisions of the Companies Law, the Board may delegate its authorities or any part of thereof to committees, as it deems appropriate, and it may from time to time cancel the delegation of any such authority. Any such committee shall, in the exercise of the powers delegated, fulfill all of the instructions given to it from time to time by the Board.
|
44.2
|
Subject to the provisions of the Companies Law, the rules of the Nasdaq National Market or any other exchange on which the Company’s securities are or may become quoted or listed, each committee of the Board shall consist of at least two (2) Directors, of which at least one shall be an External Director; provided that the audit committee shall consist of at least three (3) Directors, and all of the External Directors of the Company shall be members of it and the majority of its members shall be Independent Directors ("Bilti Talui") as defined in the Companies Law; and provided that the Remuneration Committee shall consist of at least three (3) Directors, and all External Directors of the Company shall be members of it and shall consist a majority of such committee and its other members shall be directors whose service terms in office are determined pursuant to Section 244 of the Companies Law.
|
44.3
|
The provisions of these Articles with respect to meetings of the Board shall apply, mutatis mutandis, to the meetings and discussions of each committee of the Board, so far as they are not superseded by any regulations adopted by the Board under this Article, and provided that the lawful quorum for the meetings of the committee, as stated, shall be at least a majority of the members of the committee, unless otherwise Required by Law.
|
45A.
|
Approval of Certain Related Party Transactions
|
|
45. Chairman of the Board
|
45.1
|
Appointment
|
45.1.1
|
The Board shall choose one of its members to serve as the Chairman of the Board. Unless otherwise provided in the appointing resolution, the Chairman of the Board shall serve until otherwise resolved by the Board.
|
45.1.2
|
In the event that the Chairman of the Board ceases to serve as a Director in the Company, the Board, in its first meeting held thereafter, shall appoint one of its members to serve as a new Chairman who will serve in his position for the term set in the appointment resolution, and if no period is set, until the appointment of a new Chairman, as provided in this Article.
|
45.1.3
|
In the event that the Chairman of the Board is absent from a meeting of the Board within fifteen (15) minutes of the time fixed for the meeting, or if he is unwilling to preside at the meeting, the Board shall appoint one of the Directors present to preside at the meeting.
|
45.2
|
Authority
|
45.2.1
|
The Chairman of the Board shall preside over meetings of the Board and shall sign the minutes of the meetings.
|
45.2.2
|
In the event of deadlock vote, the Chairman of the Board shall not have an additional or casting vote.
|
45.2.3
|
The Chairman of the Board is entitled, at all times, at his initiative or pursuant to a resolution of the Board, to require reports from the General Manager in matters pertaining to the business affairs of the Company.
|
45.2.4
|
The Chairman of the Board shall not serve as the General Manager of the Company, unless he is appointed in accordance with the provisions of the Companies Law.
|
45.2.5
|
The Chairman of the Board shall not serve as a member of the audit committee.
|
|
46. Validity of Acts despite Defects
|
|
47. Minutes
|
47.1
|
minutes of each General Meeting and of each meeting of the Board shall be recorded and duly entered in books provided for that purpose. Such minutes shall set forth all resolutions adopted at the meeting and, with respect to minutes of board meetings, the names of the persons present at the meeting
|
47.2
|
Any minutes as aforesaid, if purporting to be signed by the Chairman of the meeting or by the Chairman of the next succeeding meeting, shall constitute prima facie evidence of the matters recorded therein.
|
|
48. The General Manager
|
48.1
|
The Board shall appoint a General Manager, and may appoint more than one General Manager. Subject to Article 45.2.4, the General Manager may be a Director. Such appointment(s) may be either for a fixed term or without any limitation of time, and the Board of Directors may from time to time (subject to the provisions of the Companies Law and of any contract between any such person and the Company) fix his or their salaries and emoluments, remove or dismiss him or them from office and appoint another or others in his or their place or places.
|
48.2
|
The Authority of the General Manager
|
48.2.1
|
The General Manager is responsible for the day-to-day management of the affairs of the Company within the framework of the policies set by the Board and subject to its instructions.
|
48.2.2
|
The General Manager shall have all managerial and operational authorities, which were not conferred by Law or pursuant to these Articles to any other organ of the Company, and he shall be under the supervision of the Board.
|
48.2.3
|
In the event the Board appoints more than one General Manager, the Board may determine the respective positions and functions of the General Managers and allocate their authorities as the Board may deem appropriate.
|
48.2.4
|
The Board may assume the authority granted to the General Manager, either with respect to a certain issue or for a certain period of time.
|
48.2.5
|
In the event that the General Manager is unable to exercise his authority, the Board may exercise such authority in his stead, or authorize another to exercise such authority.
|
48.2.6
|
The General Manager, with the approval of the Board, may delegate to his subordinates any of his authority.
|
|
49. Internal Auditor
|
49.1
|
The Board shall appoint an internal auditor to the Company in accordance with the proposal of the audit committee and with the provisions of the Companies Law. The internal auditor shall report to the Chairman of the Board, the General Manager and the Chairman of the audit committee, all to the extent required by Law.
|
49.2
|
The internal auditor shall file with the Audit Committee (after consulting with the Chairman of the Board) a proposal for an annual or other periodic work plan, which shall be approved by the Audit Committee, subject to any changes it deems appropriate.
|
|
50. Other Officers of the Company
|
50A.
|
Limitations on the Eligibility of the Company’s Officeholders
|
(a)
|
The chairman of the Board and one third of the members of the Board, provided that these officers are authorized to discuss and decide on the subject of security.
|
(b)
|
The CEO, his deputy and their substitutes.
|
(c)
|
The deputy in charge of engineering.
|
(d)
|
Legal Counsel, his deputy and substitute.
|
(e)
|
The head of security and his staff.
|
50.A.1
|
Such person is a citizen and resident of the State of Israel; and
|
50.A.2
|
Such person received security approval from the General Security Service (“Shabak”), that there is no objection to their appointment.
|
|
51. The Auditor
|
51.1
|
The Shareholders at the Annual Meeting shall appoint an auditor for a period until the close of the following Annual Meeting or for a period not to extend beyond the close of the third Annual Meeting following the Annual Meeting in which he was appointed. Subject to the provisions of the Companies Law, the General Meeting is entitled at any time to terminate the service of the auditor.
|
51.2
|
The Board shall fix the compensation of the auditor of the Company for his auditing activities, and shall also fix the compensation of the auditor for additional services, if any, which are not auditing activities, and, in each case, shall report thereon to the Annual Meeting.
|
|
52. General
|
|
53. Dividend and Bonus Shares
|
53.1
|
Right to Dividend or Bonus Shares
|
53.1.1
|
A shareholder shall be entitled to receive dividends or bonus shares, upon the resolution of the Company in accordance with Article 53.2 below, consistent with the rights attached to the shares held by such Shareholder.
|
53.1.2
|
The Shareholders entitled to receive dividends or bonus shares shall be those who are Shareholders on the date of the resolution approving the distribution or allotment, or on such later date, as may be determined in such resolution.
|
53.2
|
Resolution of the Company with Respect to a Dividend or Bonus Shares
|
53.3
|
Specific Dividend
|
53.4
|
Deductions from Dividends
|
53.5
|
Retention of Dividends
|
53.5.1
|
The Board may retain any dividend, bonus shares or other moneys payable or property distributable in respect of a share on which the Company has a lien, and may apply the same in or toward satisfaction of the debts, liabilities, or engagements in respect of which the lien exists.
|
53.5.2
|
The Board may retain any dividend, bonus shares or other moneys payable or property distributable in respect of a share in respect of which any person is, under Article 19.5, entitled to become a Shareholder, or which any person is, under said Articles, entitled to transfer, until such person shall become a Shareholder in respect of such share or shall transfer the same.
|
53.6
|
Mechanics of Payment
|
53.7
|
An Unclaimed Dividend
|
53.8
|
Receipt from a Joint Holder
|
53.9
|
Manner of Capitalization of Profits and the Distribution of Bonus Shares
|
53.10
|
The Board may settle, as it deems fit, any difficulty arising with regard to the distribution of bonus shares, distributions referred to in Articles 53.2 and 53.9 hereof or otherwise, and in particular, to issue certificates for fractions of shares and sell such fractions of shares in order to pay their consideration to those entitled thereto, to set the value for the distribution of certain assets and to determine that cash payments shall be paid to the Shareholders on the basis of such value, or that fractions whose value is less than NIS 1.00 shall not be taken into account. The Board may pay cash or convey these certain assets to a trustee in favor of those people who are entitled to a dividend or to a capitalized fund, as the Board shall deem appropriate.
|
53.11
|
The provisions of this chapter shall also apply to the distribution of Securities.
|
|
54. Acquisition of Shares
|
54.1
|
The Company is entitled to acquire or to finance an acquisition, directly or indirectly, of shares of the Company or securities convertible or exercisable into shares of the Company, including incurring an obligation to take any of these actions, subject to the fulfillment of the conditions of a permitted distribution under the Companies Law. In the event that the Company so acquired any of its shares, any such share shall become a dormant share, and shall not confer any rights, so long as it held by the Company.
|
54.2
|
A subsidiary or another company controlled by the Company is entitled to acquire or finance an acquisition, directly or indirectly, of shares of the Company or securities convertible or exercisable into shares of the Company, or incur an obligation with respect thereto, to the same extent that the Company may make a distribution, subject to the terms of, and in accordance with the Companies Law. In the event a subsidiary or such controlled company so acquired any of the Company’s shares, any such share shall not confer any voting rights, so long as it is held by such subsidiary or controlled company.
|
|
55. Definition
|
|
56. Insurance of Office Holders
|
56.1
|
The Company may, to the extent permitted by the Companies Law, enter into a contract for the insurance of the liability of an Office Holder of the Company, in respect of a liability imposed on him as a result of an act done by him in his capacity as an Office Holder of the Company, in any of the following:
|
56.1.1
|
A breach of his duty of care to the Company or to another person;
|
56.1.2
|
A breach of his duty of loyalty to the Company, provided that the Office Holder acted in good faith and had reasonable grounds to assume that such act would not harm the Company;
|
56.1.3
|
A financial liability imposed on him in favor of another person.
|
56.1.4
|
A payment which he is obligated to make to an injured party as set forth in Section 52(BBB)(a)(1)(a) of the Securities Law;
|
56.1.5
|
Expenses that he incurred in connection with a proceeding under Chapters H'3, H'4 or I'l of the Securities Law, Sections 363a-363c of the Companies Law and Chapter G1 of the Antitrust Law, 1988, including reasonable legal expenses, which term includes attorney fees.
|
|
57. Indemnification of Office Holders
|
57.1
|
The Company may, to the extent permitted by the Companies Law, indemnify an Office Holder of the Company for liability or expense he incurs as a result of an act done by him in his capacity as an Office Holder of the Company, as follows:
|
57.1.1
|
A financial liability imposed on him in favor of another person by a court judgment, including a settlement judgment or an arbitrator’s award approved by a court;
|
57.1.2
|
reasonable litigation expenses, including attorneys’ fees, expended by an Office Holder pursuant to an investigation or a proceeding commenced against him by a competent authority and that was terminated without an indictment and without having a monetary charge imposed on him in exchange for a criminal procedure (as such terms are defined in the Companies Law), or that was terminated without an indictment but with a monetary charge imposed on him in exchange for a criminal procedure in a crime that does not require the finding of criminal intent, or in connection with a financial sanction.
|
57.1.3
|
reasonable litigation expenses, including attorneys’ fees, expended by an Office Holder or charged to him by a court, in a proceeding filed against him by the Company or on its behalf or by another person, or in a criminal charge from which he was acquitted, or in a criminal charge of which he was convicted of a crime which does not require a finding of criminal intent.
|
57.1.4
|
A payment which an Office Holder is obligated to make to an injured party as set forth in Section 52(BBB)(a)(1)(a) of the Securities Law.
|
57.1.5
|
Expenses that an Office Holder incurred in connection with a proceeding under Chapters H'3, H'4 or I'l of the Securities Law, Sections 363a-363c of the Companies Law and Chapter G1 of the Antitrust Law, 1988 including reasonable legal expenses, which term includes attorney fees.
|
57.2
|
The Company may indemnify an Office Holder of the Company pursuant to this Article 57 retrospectively, and may also undertake in advance to indemnify an Office Holder of the Company with respect to matters set forth in Articles 57.1.1, 57.1.2, 57.1.3, 57.1.4 and 57.1.5 provided that an undertaking with respect to matters set forth in Article 57.1.1 is limited to events of a kind which the Board believes can be anticipated in light of the Company’s activities at the time of such undertaking, and in an amount or criteria that the Board determines is reasonable under the circumstances, and that the indemnification undertaking will specify the events of that the Board believes can be anticipated in light of the Company’s activities at the time of such undertaking, and the amount or criteria that the Board determines is reasonable under the circumstances.
|
57.3
|
Indemnification pursuant to this Article 57 shall not exceed the rate of twenty five percent (25%) of the Company’s capital, calculated based on the Company’s most recent consolidated financial statements published prior to the actual indemnification.
|
|
58. General
|
|
59. Liquidation
|
59.1
|
Subject to applicable Law and to the rights of shares with special rights upon liquidation, the assets of the Company available for distribution among the Shareholders shall be distributed to them in proportion to the amount paid or credited as paid on the par value of their respective holdings of the shares in respect of which such distribution is being made.
|
59.2
|
In the event that the Company is liquidated, whether voluntarily or otherwise, the liquidator, with the approval of a General Meeting, may make a distribution in kind to the Shareholders of all or part of the property of the Company, and he may, with the approval of the General Meeting, deposit any part of the property of the Company with trustees in favor of the Shareholders, as the liquidator with the aforementioned approval, deems appropriate and subject to applicable law.
|
|
60. Books of Account
|
|
61. Audit
|
|
62. Rights of Signature. Stamp and Seal
|
62.1
|
The Board shall be entitled to authorize any person or persons (who may not be Directors) to act and sign on behalf of the Company, and the acts and signature of such person(s) on behalf of the Company shall bind the Company insofar as such person(s) acted and signed within the scope of his or their authority.
|
62.2
|
The Company shall have at least one official stamp.
|
62.3
|
The Board may provide for a seal. If the Board so provides, it shall also provide for the safe custody thereof. Such seal shall not be used except by the authority of the Board and in the presence of the person(s) authorized to sign on behalf of the Company, who shall sign every instrument to which such seal is affixed.
|
|
63. Notices
|
63.1
|
Any written notice or other document may be served by the Company upon any Shareholder either personally or by sending it by prepaid registered mail (airmail if sent to a place outside Israel) addressed to such Shareholder at his address as described in the Shareholder Register or such other address as he may have designated in writing for the receipt of notices and other documents. Any written notice or other document may be served by any Shareholder upon the Company by tendering the same in person to the corporate secretary or the General Manager of the Company at the principal office of the Company or by sending it by prepaid registered mail (airmail if posted outside Israel) to the Company at its registered office. Any such notice or other document shall be deemed to have been served two (2) Business Days after it has been posted (seven (7) Business Days if sent internationally), or when actually received by the addressee if sooner than two days or seven days, as the case may be, after it has been posted, or when actually tendered in person, to such Shareholder (or to the corporate secretary or the General Manager), provided, however, that notice may be sent by cablegram, telex, facsimile or other electronic means and confirmed by registered mail as aforesaid, and such notice shall be deemed to have been given twenty four (24) hours after such cablegram, telex, facsimile or other electronic communication has been sent or when actually received by such Shareholder (or by the Company), whichever is earlier. If a notice is, in fact, received by the addressee, it shall be deemed to have been duly served, when received, notwithstanding that it was defectively addressed or failed, in some respect, to comply with the provisions of this Article 63.1. Unless otherwise provided in these Articles, the provisions of this Article 63.1 shall also apply to written notices permitted or required to be given by the Company to any Director or by any Director to the Company.
|
63.2
|
All notices to be given to the Shareholders shall, with respect to any share held by persons jointly, be given to whichever of such persons is named first in the Shareholder Register, and any notice so given shall be sufficient notice to the holders of such share.
|
63.3
|
Any Shareholder whose address is not described in the Shareholder Register, and who shall not have designated in writing an address for the receipt of notices, shall not be entitled to receive any notice from the Company.
|
63.4
|
Any Shareholder and any Director may waive his right to receive notices generally or during a specific time period and he may consent that a General Meeting of the Company or a meeting of the Board, as the case may be, shall be convened and held notwithstanding the fact that he did not receive a notice with respect thereto, or notwithstanding the fact that the notice was not received by him within the required time, in each case subject to the provisions of any Law prohibiting any such waiver or consent.
|
Name of Subsidiary
|
Country of Incorporation
|
|
Ituran USA Holdings Inc.
|
USA
|
|
Ituran USA Inc.
|
USA
|
|
Ituran de Argentina S.A.
|
Argentina
|
|
Ituran Sistemas de Monitoramento Ltda.
|
Brazil
|
|
Ituran Instalacoes Ltda.
|
Brazil
|
|
Teleran Holding Ltda.
|
Brazil
|
|
E.R.M. Electronic Systems Limited
|
Israel
|
|
Mapa Mapping & Publishing Ltd.
|
Israel
|
|
Ituran servicos Ltda.
|
Brazil
|
/s/ Eyal Sheratzky
|
||||
Eyal Sheratzky
|
||||
Co-Chief Executive Officer
|
/s/ Nir Sheratzky
|
||||
Nir Sheratzky
|
||||
Co-Chief Executive Officer
|
/s/ Eli Kamer
|
||||
Eli Kamer
|
||||
Chief Financial Officer
|
/s/ Eyal Sheratzky
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/s/ Nir Sheratzky
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Eyal Sheratzky
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Nir Sheratzky
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Co-Chief Executive Officer
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Co-Chief Executive Officer
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/s/ Eli Kamer
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Eli Kamer
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Chief Financial Officer
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Document And Entity Information |
12 Months Ended |
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Dec. 31, 2015
shares
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Document And Entity Information [Abstract] | |
Document Type | 20-F |
Amendment Flag | false |
Document Period End Date | Dec. 31, 2015 |
Document Fiscal Year Focus | 2015 |
Document Fiscal Period Focus | FY |
Entity Registrant Name | Ituran Location & Control Ltd. |
Entity Central Index Key | 0001337117 |
Entity Filer Category | Accelerated Filer |
Current Fiscal Year End Date | --12-31 |
Entity Well-known Seasoned Issuer | No |
Entity Current Reporting Status | Yes |
Entity Voluntary Filers | No |
Entity Common Stock, Shares Outstanding | 23,475,431 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - ₪ / shares |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
CONSOLIDATED BALANCE SHEETS [Abstract] | ||
Common stock, par value | ₪ 0.3333 | ₪ 0.3333 |
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares issued | 23,475,431 | 23,475,431 |
Common stock, shares outstanding | 23,475,431 | 23,475,431 |
Treasury stock, shares | 2,507,314 | 2,507,314 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract] | |||
Net income for the year | $ 26,572 | $ 32,907 | $ 25,554 |
Other comprehensive loss, net of tax: | |||
Foreign currency translation adjustments | (14,703) | (13,354) | (2,754) |
Unrealized gains (losses) in respect of derivative financial instruments designated for cash flow hedge | 85 | 2,331 | (635) |
Reclassification of net gains realized to net income | (1,188) | (29) | 217 |
Other comprehensive loss, net of tax | (15,806) | (11,052) | (3,172) |
Comprehensive income | 10,766 | 21,855 | 22,382 |
Less: comprehensive income attributable to non-controlling interests | (1,465) | (1,884) | (1,996) |
Comprehensive income attributable to the Company | $ 9,301 | $ 19,971 | $ 20,386 |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Thousands |
Total |
Ordinary shares [Member] |
Additional paid in capital [Member] |
Accumulated other comprehensive income [Member] |
Retained earnings [Member] |
Treasury stock [Member] |
Non-controlling interests [Member] |
---|---|---|---|---|---|---|---|
Balance at Dec. 31, 2012 | $ 92,007 | $ 1,983 | $ 71,927 | $ 11,984 | $ 32,187 | $ (30,054) | $ 3,980 |
Balance, shares at Dec. 31, 2012 | 23,476 | ||||||
Changes during period: | |||||||
Net income | 25,554 | $ 23,762 | 1,792 | ||||
Other comprehensive income (loss) | (3,172) | $ (3,376) | 204 | ||||
Acquisition of non-controlling interests | (500) | $ (377) | (123) | ||||
Dividend paid to non-controlling interests | (1,286) | $ (1,286) | |||||
Dividend paid | (13,502) | $ (13,502) | |||||
Dividend declared | (3,616) | (3,616) | |||||
Balance at Dec. 31, 2013 | 95,485 | $ 1,983 | $ 71,550 | $ 8,608 | 38,831 | $ (30,054) | $ 4,567 |
Balance, shares at Dec. 31, 2013 | 23,476 | ||||||
Changes during period: | |||||||
Net income | 32,907 | $ 30,429 | 2,478 | ||||
Other comprehensive income (loss) | (11,052) | $ (10,458) | (594) | ||||
Dividend paid to non-controlling interests | (2,564) | $ (2,564) | |||||
Dividend paid | (15,697) | $ (15,697) | |||||
Dividend declared | (4,496) | (4,496) | |||||
Balance at Dec. 31, 2014 | 94,583 | $ 1,983 | $ 71,550 | $ (1,850) | 49,067 | $ (30,054) | $ 3,887 |
Balance, shares at Dec. 31, 2014 | 23,476 | ||||||
Changes during period: | |||||||
Net income | 26,572 | $ 24,971 | 1,601 | ||||
Other comprehensive income (loss) | (15,806) | $ (15,670) | (136) | ||||
Dividend paid to non-controlling interests | (1,229) | $ (1,229) | |||||
Dividend paid | (13,171) | $ (13,171) | |||||
Dividend declared | (3,128) | (3,128) | |||||
Balance at Dec. 31, 2015 | $ 87,821 | $ 1,983 | $ 71,550 | $ (17,520) | $ 57,739 | $ (30,054) | $ 4,123 |
Balance, shares at Dec. 31, 2015 | 23,476 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. General
1. Operations The Group operates through subsidiaries in Brazil and Argentina, which generates revenues in their respective local currencies. The local currencies of such countries have been subject to significant fluctuations in recent years and the exchange rate of the Brazilian Real to the US Dollar (the presentation currency of the Group) was decreased significantly during fiscal year 2015. The functional currency of the Company and its subsidiaries located in Israel is the New Israeli Shekel (NIS), which is the local currency in which those entities operate. The functional currency of the foreign subsidiaries of the Group is their respective local currency. The consolidated financial statements of the Company and all of its subsidiaries were translated into U.S. dollars in accordance with the standards of the Financial Accounting Standards Board ("FASB"). Accordingly, assets and liabilities were translated from local currencies to U.S. dollars using yearend exchange rates, and income and expense items were translated at average exchange rates during the year. Gains or losses resulting from translation adjustments (which result from translating an entity's financial statements into U.S. dollars if its functional currency is different than the U.S. dollar) are reported in other comprehensive income and are reflected in equity, under accumulated other comprehensive income (loss). Balances denominated in, or linked to foreign currency are stated on the basis of the exchange rates prevailing at the balance sheet date. For foreign currency transactions included in the statement of income, the exchange rates applicable on the relevant transaction dates are used. Transaction gains or losses arising from changes in the exchange rates used in the translation of such balances are carried to financing income or expenses as applicable. The following table presents data regarding the dollar exchange rate of relevant currencies and the Israeli CPI:
3. Basis of presentation
The consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP).
4. Use of estimates in the preparation of financial statements
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from the estimates. As applicable to these consolidated financial statements, the most significant estimates and assumptions relate to legal contingencies, revenue recognition and related deferred expenses, goodwill impairment assessment, deferred taxes and tax liabilities and uncertainties. B. Principles of consolidation
The consolidated financial statements include the accounts of the Company and all of its subsidiaries. In these financial statements, the term subsidiary refers to a company over which the Company exerts control (ownership interest of more than 50%), and the financial statements of which are consolidated with those of the Company. Significant intercompany transactions and balances are eliminated upon consolidation; profits from intercompany sales, not yet realized outside of the Group, are also eliminated. Non-controlling interests are presented in equity. Changes in the Company ownership interest in a subsidiary while the control is retained are accounted for as equity transactions and accordingly no gain or loss is recognized in consolidated net income or comprehensive income. Upon such transaction, the carrying amount of the noncontrolling interest is adjusted to reflect the change in its ownership interest in the subsidiary and any difference between the fair value of the consideration received or paid and the amount by which the noncontrolling interest was adjusted is recognized in additional paid-in capital. C. Cash and cash equivalents
The Group considers all highly liquid investments, which include short-term bank deposits that are not restricted as to withdrawal or use, and short-term debentures, with original periods to maturity not exceeding three months, to be cash equivalents.
D. Marketable securities
The Company accounts for investments in marketable securities in accordance with ASC Topic 320-10, "Investments - Debt and Equity Securities" (ASC Topic 320-10). Management determines the appropriate classification of its investments in marketable securities at the time of purchase and reassesses such determination at each balance sheet date. The investments in marketable securities covered by ASC Topic 320-10 that were held by the Company during the reported periods were designated by management as trading securities. Trading securities are stated at market value. The changes in market value are charged to financing income or expenses. Trading gains for the years 2015 and 2014 amounted to approximately US$ 666,000 and US$ 133,000 respectively. Trading gains for the year 2013 were insignificant.
E. Treasury stock
Company shares held by the Company and its subsidiary are presented as a reduction of equity, at their cost, under the caption Treasury Stock. Gains and losses upon sale of these shares, net of related income taxes, are recorded as additional paid in capital.
F. Allowance for doubtful accounts
The allowance for doubtful accounts is determined with respect to amounts the Group has determined to be doubtful of collection. In determining the allowance for doubtful accounts, the Company considers, among other things, its past experience with customers, the length of time that the balance is post due, the customer's current ability to pay and available information about the credit risk on such customers. See also Note 19A. The allowance in respect of accounts receivable at December 31, 2015 and 2014 was US$ 2,063,000 and US$ 2,391,000, respectively.
G. Inventories
Inventories are stated at the lower of cost or market. Cost is determined as follows: raw materials and finished products mainly on the basis of first-in, first-out (FIFO).
H. Investment in affiliated companies
Investments in companies in which the Group has significant influence (ownership interest of between 20% and 50%) but less than controlling interests, are accounted for by the equity method. Income on intercompany sales, not yet realized outside of the Group, was eliminated. The Company also reviews these investments for impairment whenever events indicate the carrying amount may not be recoverable. In accordance with ASC Topic 323-10-40-1, a change in the Company's proportionate share of an investee's equity, resulting from issuance of shares by the investee to third parties, is accounted for as if the Company had sold a proportionate share of its investment. Any gain or loss resulting from an investee's share issuance is recognized in earnings. Management evaluates investments in affiliated companies, for evidence of other-than-temporary declines in value. Such evaluation is dependent on the specific facts and circumstances and includes analysis of relevant financial information (e.g. budgets, business plans, financial statements, etc.). During 2015 and 2014, no impairment was identified. Investments in companies in which the company no longer has significant influence, are classified as "investments in other companies". See I. below.
I. Investment in other company
Non-marketable investment in other company in which the Company does not have a controlling interest nor significant influence are accounted for at cost, net of write down for any permanent decrease in value.
J. Derivatives
The group applies the provisions of ASC Topic 815, "Derivatives and Hedging". In accordance with ASC Topic 815, all the derivative financial instruments are recognized as either assets or liabilities on the balance sheet at fair value. The accounting for changes in the fair value of a derivative financial 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 derivative financial 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. From time to time the Company carries out transactions involving foreign exchange derivative financial instruments (mainly forward exchange contracts) which are designed to hedge the cash flows expected to be paid with respect to forecasted monthly purchases of inventory, denominated in currencies other than the functional currency of the Company. Such transactions were designated as hedging instruments on the date that the Company entered into such derivative contracts, and qualify as cash flow hedges under ASC Topic 815.
The effective portion of the changes in fair value of the derivative instruments designated for hedging purposes are reported as other comprehensive income (loss), net of tax under the caption "unrealized gains (losses) in respect of derivative financial instruments designated for cash flow hedge" and are reclassified to the statements of income when the hedged transaction realizes. During the reporting periods, the gains or losses that were recognized in earnings for hedge ineffectiveness were insignificant. All other derivatives which do not qualify for hedge accounting, or which have not been designated as hedging instruments, are recognized in the balance sheet at their fair value, with changes in the fair value carried to the statements of income as incurred in financing income (expenses), net. See also Note 19B for further information.
K. 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:
L. Impairment of long-lived assets
The Group's long-lived assets (including finite-lived intangible assets) are reviewed for impairment, 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 an asset to the future undiscounted cash flows expected to be generated by the asset. 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 asset exceeds its fair value (see also Note 1N and Note 7).
M. Income taxes
The Group accounts for income taxes in accordance with ASC Topic 740-10, "Income Taxes". According to this guidance, deferred income taxes are determined utilizing the asset and liability method based on the estimated future tax effects of differences between the financial accounting and the tax bases of assets and liabilities under the applicable tax law. Deferred tax balances are computed using the tax rates expected to be in effect at the time when these differences reverse. Valuation allowances in respect of the deferred tax assets are provided for if, based upon the weight of available evidence, it is more likely than not that all or a portion of the deferred income tax assets will not be realized.
US GAAP provides that the tax effects from an uncertain tax position can be recognized in the financial statements only if the position is "more-likely-than-not" to be sustained were to be challenged by a taxing authority. The assessment of a tax position is based solely on the technical merits of the position, without regard the likelihood that the tax position may be challenged. If an uncertain tax position meets the "more-likely-than-not" threshold, the largest amount of tax benefit that is greater than 50% likely to be recognized upon ultimate settlement with the taxing authority is recorded. See also Note 15L. The Company recognizes interest as interest expenses (among financing expenses) and penalties, if any, related to unrecognized tax benefits in its provision for income tax.
N. Goodwill and intangible assets
1. Goodwill represents the excess of the purchase price over the fair value of the identifiable net assets acquired in business combinations accounted for in accordance with the "purchase method" and is allocated to reporting units at acquisition. Goodwill is not amortized but rather tested for impairment at least annually in accordance with the provisions of ASC Topic 350, "Intangibles - Goodwill and Other". The Company performs its goodwill annual impairment test for the reporting units at December 31 of each year, or more often if indicators of impairment are present. As required by ASC Topic 350, the Company chooses either to perform a qualitative assessment whether the two-step goodwill impairment test is necessary or proceeds directly to the two-step goodwill impairment test. Such determination is made for each reporting unit on a stand-alone basis. The qualitative assessment includes various factors such as macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, earnings multiples, gross margin and cash flows from operating activities and other relevant factors. When the Company chooses to perform a qualitative assessment and determines that it is more likely than not (more than 50 percent likelihood) that the fair value of the reporting unit is less than its carrying value, then the Company proceeds to the two-step goodwill impairment test. If the Company determines Otherwise, no further evaluation is necessary. When the Company decides or is required to perform the two-step goodwill impairment test, the Company compares the fair value of the reporting unit to its carrying value ("step 1"). If the fair value of the reporting unit exceeds the carrying value of the reporting unit net assets (including the goodwill allocated to such reporting unit), goodwill is considered not to be impaired, and no further testing is required. If the carrying value exceeds the fair value of the reporting unit, then the implied fair value of goodwill is determined by subtracting the fair value of all the identifiable net assets from the fair value of the reporting unit. An impairment loss is recorded for the excess, if any, of the carrying value of the goodwill allocated to the reporting unit over its implied fair value ("step 2"). There are a number of generally accepted methods used for valuing a reporting unit: The income approach' utilizes discounted forecasted cash flows, the Market approach which utilize pricing multiples of business entities with publicly traded securities whose business and financial risks are comparable to those of the reporting unit being valued and the Asset - based approach' which establishes a value based on the cost of reproducing or replacing the asset being valued. These methods described may be used alone or in combination with one another. The Company applies assumptions that market participants would consider in determining the fair value of each reporting unit and the fair value of the identifiable assets and liabilities of the reporting units, as applicable. The Company performed a qualitative assessment for two reporting units as of December 31, 2015 and 2014, and concluded that the qualitative assessment did not result in a more likely than not indication of impairment, and therefore no further impairment testing was required, with respect to such units. For other reporting units (two in 2014, one in 2015), operating in Israel, the Company elected to bypass the qualitative assessment and proceeded directly to performing the first step of the goodwill impairment test. In order to determine the fair value of such reporting units, the Company utilized the "income approach". According to the income approach expected future cash flows are discounted to their present value using an appropriate rate of return. Judgments and assumptions related to future cash flows (projected revenues, operating expenses, and capital expenditures), future short-term and long-term growth rates, and weighted average cost of capital, which are based on management's internal assumptions, and believed to be similar to those that would be utilized by market participants under the circumstances and to represent both the specific risks associated with the business, and capital market conditions, are inherent in developing the discounted cash flow model. During 2015, 2014 and 2013, the Company recorded a goodwill impairment loss in an amount of US$ 674,000, US$ 879,000 and US$ 3,093,000, respectively. See Note 8. 2. Intangible assets with finite lives are amortized using the straight-line basis over their useful lives, to reflect the pattern in which the economic benefits of the intangible assets are consumed or otherwise used up, as follows
Recoverability of intangible assets is measured as described in Note 1L above. During 2015, the Company recorded an intangible assets impairment loss in an amount of US$ 255,000. See Note 7.
O. Contingencies
The Company and its subsidiaries are involved in certain legal proceedings that arise from time to time in the ordinary course of their business and in connection with certain agreements with third parties. Except for income tax contingencies, the Company records accruals for contingencies to the extent that the management concludes that the occurrence is probable and that the related liabilities are estimable. Legal expenses associated with contingencies are expensed as incurred. P. 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, 2015, 2014 and 2013, amounted to US$ 1,386,000 US$ 1,460,000 and US$ 882,000, respectively.
Q. Revenue recognition
Revenues are recognized when delivery has occurred and, where applicable, after installation has been completed, there is persuasive evidence of an arrangement, the fee is fixed or determinable and collection of the related receivable is reasonably assured and no further obligations exist. In cases where delivery has occurred but the required installation has not been performed, the company does not recognize the revenues until the installation is completed. The Company's revenues are recognized as follows: 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. Revenues from SVR services subscription fees and from installation services, sold to customers within a single contractually binding arrangement were accounted for revenue recognition purposes as a single unit of accounting in accordance with ASC Topic 605-25, since the installation services element was determined not to have a value on a stand-alone basis to the customer. Accordingly, the entire contract fee for the two deliverables is recognized ratably on a straight-line basis over the subscription period. 3. Amounts earned by the Brazilian subsidiary for arranging a bundle transaction of SVR services subscription and installation services together with insurance services to be supplied by a third party insurance company, are recognized ratably on a straight-line basis over the subscription period, since the amount allocated to the company, is contingent upon the delivery of the SVR services. As the insurance company is the primary obligor of the insurance component, the company recognizes only the net amounts as revenues, after deduction of amounts related to the insurance component. 4. 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. 5. Extended warranty
R. Warranty costs
The Company provides a standard warranty for its products to end-users at no extra charge. The Company estimates the costs that may be incurred under its warranty obligation and records a liability at the time the related revenues are recognized. Among the factors affecting the warranty liability are the number of installed units and historical percentages of warranty claims. The Company periodically assesses the adequacy of the recorded warranty liability and adjusts the amount to the extent necessary. To date, warranty costs and the related liabilities have not been material.
S. 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.
T. Advertising costs
Advertising costs are expensed as incurred.
Advertising expenses for the years ended December 31, 2015, 2014 and 2013 amounted to US$ 6.8 million, US$ 6.7 million and US$ 7.6 million, respectively. Advertising expenses are presented among "selling and marketing expenses".
U. Earnings per share
Basic earnings per share are computed by dividing net income attributable to the common shares, by the weighted average number of shares outstanding during the year, net of the weighted average number of treasury stock. In computing diluted earnings per share, basic earnings per share are adjusted to reflect the effect of any potential dilutive ordinary shares. During the reporting periods there were no such potential shares.
V. Fair value measurements
The Company measures fair value and discloses fair value measurements for financial and non-financial assets and liabilities. Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market based measurement that is required to be determined based on the assumptions that market participants would use to determine the price of an asset or a liability.
As a basis for considering such assumptions, the fair value accounting standard establishes the following fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: Level 1 - Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2 - Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. Level 3 - Unobservable inputs are used when little or no market data is available. Level 3 inputs are considered as the lowest priority under the fair value hierarchy. In determining fair value, companies are required to utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as to consider counterparty credit risk in the assessment of fair value. Regarding the fair value measurements of financial assets and liabilities and the fair value hierarchy of such measurements, see Note 19C. The Company also measures certain non-financial assets, consisting mainly goodwill and intangible assets at fair value on a nonrecurring basis. These assets are adjusted to fair value when they are considered to be impaired (see 1N and 1L above). As of December 31, 2015, the Company measured the fair value of goodwill with a total carrying amount of US$ 0.7 million (before the recognition of an impairment loss) that is allocated to one reporting unit. As a result of the above impairment test, the Company recorded an impairment loss of goodwill in an amount of US$ 0.7 million, to its implied fair value of US$ 0 million. The fair value measurement of the non-financial assets is classified as level 3. As of December 31, 2014, the Company measured the fair value of goodwill with a total carrying amount of US$ 1.5 million (before the recognition of an impairment loss) that was allocated to two reporting units. As a result of the above impairment test, the Company recorded an impairment loss of goodwill in amount of US$ 0.9 million, to its implied fair value of US$ 0.7 million. The fair value measurement of the non-financial assets is classified as level 3.
W. Deferred installation expenses and prepaid expenses
Direct installation expenses incurred at the inception of specific subscription arrangements in Brazil with specific customers, to enable the Company's subsidiary in Brazil to perform under the terms of the arrangement (i.e. directly attributable to obtaining a specific subscriber), which their costs can be measured reliably, are capitalized and presented as "Deferred installation expenses" within the balances "Other current assets" and "Other non-current assets", as applicable. Such installation activities has determined not to represent separate earnings process for revenue recognition purposes in accordance with the principles of ASC Topic 605-25, "Multiple-Element Arrangements" as they has been determined not to have a value on a stand-alone basis to the customer. The deferred expenses that are capitalized are limited to the higher of value of the amount of nonrefundable deferred revenue, if any or to the amount of the minimum contractual subscription revenue, net of direct costs. The deferred expenses are amortized over the estimated life of the related subscription arrangements by the straight-line method (usually 20 months). Costs that do not meet the aforementioned criteria, are recognized immediately as expenses.
X. Stock-based compensation
Y. Reclassification
Certain comparative figures have been reclassified to conform to the current year presentation. Such reclassifications did not have any significant impact on the Company's equity, net income or cash flows.
Z. Recently issued accounting pronouncements
1. Accounting pronouncements not yet effective
Accounting Standard Update 2014-09, "Revenue from Contracts with Customers"
In May 2014, the FASB issued Accounting Standard Update 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). ASU 2014-09 outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ASU 2014-09 also requires entities to disclose sufficient information, both quantitative and qualitative, to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. An entity should apply the amendments in this ASU using one of the following two methods: 1. Retrospectively to each prior reporting period presented with a possibility to elect certain practical expedients, or, 2. Retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. If an entity elects the latter transition method, it also should provide certain additional disclosures. An entity should apply the amendments in this ASU using one of the following two methods: 1. Retrospectively to each prior reporting period presented with a possibility to elect certain practical expedients, or, 2. Retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. If an entity elects the latter transition method, it also should provide certain additional disclosures. In accordance with a recent amendment to ASU 2014-09, introduced by Accounting Standards Update 2015-11, "Revenue from Contracts with Customers - Deferral of the Effective Date", for a public entity, the amendments in ASU 2014-09 are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period (the first quarter of fiscal year 2018 for the Company). Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is in the process of assessing the impact, if any, of ASU 2014-09 on its consolidated financial statements.
Accounting Standard Update 2015-11, "Simplifying the Measurement of Inventory"
In July, 2015, The FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory (Topic 330) ("ASU 2015-11").
ASU 2015-11 outlines that inventory within the scope of its guidance be measured at the lower of cost and net realizable value. Inventory measured using last-in, first-out (LIFO) and the retail inventory method (RIM) are not impacted by the new guidance. Prior to the issuance of ASU 2015-11, inventory was measured at the lower of cost or market (where market was defined as replacement cost, with a ceiling of net realizable value and floor of net realizable value less a normal profit margin).
For a public entity, the amendments in ASU 2015-11 are effective, in a prospective manner, for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period (the first quarter of fiscal year 2017 for the Company). Early adoption is permitted as of the beginning of an interim or annual reporting period.
The Company is in the process of assessing the impact, if any, of ASU 2015-11 on its consolidated financial statements.
Accounting Standards Update 2015-17, "Income Taxes: Balance Sheet Classification of Deferred Taxes"
In November 2015, the FASB has issued Accounting Standards Update (ASU) No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which changes how deferred taxes are classified on organizations' balance sheet.
The ASU eliminates the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, all deferred tax assets and liabilities will be required to be classified as noncurrent.
The amendments apply to all organizations that present a classified balance sheet. For public companies, the amendments are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods (i.e., in the first quarter of 2017 for calendar year-end companies).
Early adoption is permitted for all entities as of the beginning of an interim or annual reporting period.
The guidance may be applied either prospectively, for all deferred tax assets and liabilities, or retrospectively (i.e., by reclassifying the comparative balance sheet). If applied prospectively, entities are required to include a statement that prior periods were not retrospectively adjusted. If applied retrospectively, entities are also required to include quantitative information about the effects of the change on prior periods.
The Company does not believe this ASU will have a significant impact on its consolidated financial statements.
Accounting Standards Update 2016-02, "Leases"
In February, 2016, the FASB issued its new lease accounting guidance in Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842).
Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: 1. A lease liability, which is a lessees obligation to make lease payments arising from a lease, measured on a discounted basis; and, 2. A right-of-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term.
Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing.
Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years (i.e., January 1, 2019, for a calendar year Company). Early application is permitted for all public business entities upon issuance.
Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach.
The Company is in the process of assessing the impact, if any, of ASU 2016-02 on its consolidated financial statements. |
OTHER CURRENT ASSETS |
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OTHER CURRENT ASSETS | NOTE 2 - OTHER CURRENT ASSETS
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INVENTORIES |
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INVENTORIES | NOTE 3 - INVENTORIES
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INVESTMENTS IN AFFILIATED AND OTHER COMPANY |
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INVESTMENTS IN AFFILIATED AND OTHER COMPANY | NOTE 4 - INVESTMENTS IN AFFILIATED AND OTHER COMPANY
A. Investment in affiliated companies
1. BRINGG Delivery Technologies Ltd. ("BRINGG") Formerly Overvyoo Ltd
In December 2013, the Company invested $1.4 million in Bringg delivery technologies Ltd. (formerly Overvyoo Ltd.), an Israeli start-up company developing solutions for the management of mobile/field workforce. In January and July, 2015 the Company invested additional amounts of $1.1 million and US$ 2 million, respectively. During November 2015, additional investors which are not related to Ituran, invested in Bringg, which reduced the percentage of our Bringg capital we own. Following such investment, the Company now holds 41.18% of Bringg's share capital. Management has determined that the difference between the cost of the investment and the Company's share in the net assets of the investee relates to in process R&D of the investee.
2. TURAN ROAD TRACK MONITORAMENTO De Veiculos Ltda. ("IRT")
In February 2015 IRT was established and is held 50% by the company.
B. Investment in other company
Locationet Systems Ltd. (Locationet)
The Company holds 10.64% of the shares of Locationet.
The balance of the Company's investment in Locationet as of December 31, 2015 and 2014 was US$ 78,000 and US$ 79,000 respectively. |
OTHER NON-CURRENT ASSETS |
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OTHER NON-CURRENT ASSETS | NOTE 5 - OTHER NON-CURRENT ASSETS
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PROPERTY AND EQUIPMENT, NET |
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PROPERTY AND EQUIPMENT, NET | NOTE 6 - PROPERTY AND EQUIPMENT, NET
A. Property and equipment, net consists of the following:
B. In the years ended December 31, 2015, 2014 and 2013, depreciation expense was US$ 10.9 million, US$ 11.2 million and US$ 11.1 million, respectively and additional equipment was purchased in an amount of US$ 18.7 million, US$ 15 million and US$ 14.2 million, respectively.
C. After deduction of the cost and the accumulated depreciation of items fully depreciated. |
INTANGIBLE ASSETS, NET |
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INTANCIBLE ASSETS, NET | NOTE 7 - INTANGIBLE ASSETS, NET
A. Intangible assets, net, consist of the following:
Amortization and impairment of intangible assets amounted to US$ 430,000, US$ 231,000 and US$ 367,000 for the years ended December 31, 2015, 2014 and 2013, respectively. As of December 31, 2015, the estimated aggregate amortization of intangible assets for the next five years is as follows: 2016-26,000 and thereafter 0.
B. Due to the deteriorating results of a certain Israeli subsidiary and the current expectation of management for further decrease its anticipated performance, during 2015 and 2014, the Company recorded an impairment charge for its intangible assets which directly relate to the operations of the subsidiary (which represent a reporting unit).
In order to determine the fair value of such intangible assets, the Company, based on a valuation performed by the management, with the assistance of a third party appraiser, utilized the "Relief from Royalties" valuation method. Accordingly, certain assumptions and judgments were made in order to determine the future income from which royalties will be derived from and in order to determine the appropriate rate of royalties and rate of discount. As a result of the above, the Company recorded in 2015 and 2014, an impairment loss in an amount of US$ 236,000 and US$ 33,500, respectively, with respect to the GIS database and in 2015 and 2014, an amount of US$ 19,000 and US$ 9,500, respectively, with respect to the Brand name totaling an aggregate impairment charge of US$ 255,000 in 2015 and an aggregate impairment charge of US$ 43,000 in 2014. The impairment was included in "other expenses, net" (see Note 13). |
GOODWILL |
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GOODWILL | NOTE 8 - GOODWILL
A. The changes in the carrying amount of goodwill for the years ended December 31, 2015 and 2014 are as follows:
B. During 2015, 2014 and 2013, the Company recorded an amount of US$ 674,000 US$ 879,000 and US$ 3,093,000, respectively, as impairment with respect to goodwill.
The impairment amount was included in "other expenses, net". See Note 13. The Company performed its annual impairment test as of December 31, 2015 and recorded goodwill impairment in the total amount of US$ 0.7 million in connection with certain reporting unit which is a part of the Wireless communications products segment and operates in the internet portal in the field of local travel and recreation. The impairment was recorded primarily due to a significant decline in current and future forecasted revenues and profitability margins of the GIS services offered by an Israeli subsidiary resulting from the continued weakness in the cellular industry in Israel that has suffered from recent regulatory changes and also the continuing popularity of navigation applications and tools developed by competitors which are offered for no charge. The impairment was based on valuation performed by the management using the assistance of a third party appraiser in accordance with the income approach. The significant assumptions used for the assessment were 2 years of projected net cash flows, a discount rate of 20% and a long-term growth rate of 0% (See Note 1V regarding fair value measurements). The Company performed its annual impairment test as of December 31, 2014 and recorded goodwill impairment in the total amount of US$ 0.9 million in connection with two reporting units within the Location based services segment operating in the internet portal in the field of local travel and recreation. The impairment was based on valuation performed by the management using the assistance of a third party appraiser in accordance with the income approach. The significant assumptions used for the assessment were 3 years of projected net cash flows, a discount rate of 16.9% and a long-term growth rate of 0% (See Note 1V regarding fair value measurements). See also Note 1O. |
CREDIT FROM BANKING INSTITUTIONS |
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CREDIT FROM BANKING INSTITUTIONS [Abstract] | |
CREDIT FROM BANKING INSTITUTIONS | NOTE 9 - CREDIT FROM BANKING INSTITUTIONS
Lines of credit
Unutilized short-term lines of credit of the Group as of December 31, 2015, aggregated to US$ 0.5 million. |
OTHER CURRENT LIABILITIES |
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OTHER CURRENT LIABILITIES | NOTE 10 - OTHER CURRENT LIABILITIES
Composition:
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CONTINGENT LIABILITIES |
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CONTINGENT LIABILITIES [Abstract] | |
CONTINGENT LIABILITIES | NOTE 11 - CONTINGENT LIABILITIES A. Claims 1. On July 13, 2010 the State Revenue Services of São Paulo issued a tax deficiency notice against our subsidiary in Brazil, Ituran Sistemas de Monitoramento Ltda., claiming that the vehicle tracking and monitoring services provided by our 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 our subsidiary during the period between August 2005 and December 2007. At the time of serving the notice upon us, the tax deficiency notice was in the amount of R$36,499,984 (approximately US$22.1 million at the time) plus interest in the amount of R$30,282,420 (approximately US$18.2 million at the time) and penalties in the amount of R$66,143,446 (approximately US$40.0 million at the time). As of December 31, 2014, the aggregate sum claimed pursuant to the tax deficiency notice (principal amount, interest and penalties) was estimated on December 2014, at R$220,000,000 (approximately US$82.7 million). The decision of the administration first level was unfavorable to us and we have filed an appeal to the Administrative Court of Appeals in São Paulo. On March 2, 2012 the Administrative Court of the State of São Paulo dismissed the State Revenue Services of São Paulo's claims and resolved in our favor. The State of São Paulo filed an administrative appeal to a full bench session at the Administrative Court which has been dismissed on December 20, 2014 and such a decision is non-appealable. Furthermore, it is noted that the effect of aforesaid decision is limited to the period of August 2005 up to December 2007. It is possible that the State of São Paulo may issue us additional tax deficiency notices regarding the past 5 year period. However, we maintain our position, based among other things on the results of the aforesaid legal proceedings, that if such tax deficiency notices are issued in future, our chances of success in defending its position are overwhelmingly favorable. 2. On June 24, 2010 the Brazilian Internal Revenue Service issued a tax assessment that claimed the payment, at the time of filing the tax assessment, of R$5,567,032 (approximately US$ 3,120,000 at the time) including interest and penalties, following the offsetting on October 1, 2005 of an amount of approximately US$ 2.1 million of a receivable held by Ituran Beheer BV, a Dutch legal entity held by us, against accumulated losses of our subsidiary Ituran Sistemas de Monitamento Ltda, which originated from a technology transfer agreement executed by and between Ituran Brazil and OGM Investments B.V. (also a Dutch company held by us). The decision of the administrative court of the first level was unfavourable to us and therefore we have filed an appeal to the Administrative Court of Appeals in São Paulo. 3. On July 22, 2015, Brazilian Federal Communication Agency Anatel issued an additional tax assessment for FUST contribution (contribution on telecommunication services) levied on the monitoring services rendered by us regarding the year of 2011 and January 2012 in amount of R$ 2,888,677 (approximately US$ 760,000) including interest and penalties. This amount added up to the previous FUST tax assessments for the years 2007 and 2008 which was issued on October 20, 2011, and including interest and penalties, on December 31, 2015 amounts to R$ 3,936,339 (approximately US$ 1 million) and to FUST tax assessment for the year 2010 which including interest and penalties, on December 31, 2015 amounts to R$ 2,950,417 (approximately US$ 700,000). Due to the such last tax assessment, on December 31, 2015, the aggregate amount claimed by Anatel increased to approximately R$ 9.8 million (approximately US$ 2.6 million). The reason Anatel demand the payment of FUST from us is the fact that in order to provide monitoring services we need to operate telecommunication equipment in a given radio frequency. We hold a telecommunication license from Anatel (for information on our licenses see item 4B. "Information on the company" "Business overview" under the caption "Regulatory Environment"). The authorities have construed that we render telecommunication services and FUST should be levied in relation to Net Revenues. Based on the legal opinion of the subsidiary's Brazilian legal counsel we believe that such claim is without merit, the interpretation of the legislation is mistaken, given that we don't render telecommunication services, but rather services of monitoring goods and persons for security purposes, accordingly no provision has been made. We have filed our defense for the years 2007 and 2008 on December 2011. Our Defense for the year 2010 was filed on November 2014 and our defense for the year 2011 (and January 2012) was filed on February 2016. We are currently awaiting the Lower Court decision on all the aforementioned FUST claims. 4. On October 10, 2015, Brazilian Federal Communication Agency - Anatel issued an additional tax assessment for FUNTELL contribution (contribution to Fund for the Technological Development of Telecommunication) levied on the monitoring services rendered by us regarding the year of 2011 which on December 31, 2015 amounts to R$ 1,007,453 (approximately US$ 253,000) including interest and penalties. This amount added up to the previous FUNTELL tax assessments for the year 2007, which was issued on July 13, 2011, and including interest and penalties, on December 31, 2015 amounts to R$ 778,598 (approximately US$ 195,000), to FUNTELL tax assessment for the year 2008 which including interest and penalties, on December 31, 2015 amounts to R$ 770,580 (approximately US$ 193,000) and to FUNTELL tax assessment for the year 2010 which including interest and penalties, on December 31, 2015 amounts to R$ 1,033,363 (approximately US$ 260,000). Due to the such last tax assessment, on December 31, 2015, the aggregate amount claimed by Anatel increased to approximately R$ 3.6 million (approximately US$ 0.92 million). The reason Anatel demand the payment of FUNTELL from us is the fact that in order to provide monitoring services we need to operate telecommunication equipment in a given radio frequency. We hold a telecommunication license from Anatel (for information on our licenses see item 4B. "Information on the company" "Business overview" under the caption "Regulatory Environment"). The authorities have construed that we render telecommunication services and FUNTEL should be levied in relation to Net Revenues. Based on the legal opinion of the subsidiary's Brazilian legal counsel we believe that such claim is without merit, the interpretation of the legislation is mistaken, given that we don't render telecommunication services, but rather services of monitoring goods and persons for security purposes, accordingly no provision has been made. We have filed our defenses as follows: for the year 2007 on July 2011, for the year 2008 on June 2011, for the year 2010 on December 2014 and for the year 2011 on October 2015. We are currently awaiting the Lower Court decision on all the aforementioned FUNTELL claims. 5. On July 13, 2015 we 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, 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. In addition the plaintiff claims that the Company offers to customers who are not required by insurance companies to install location and recovery systems in their vehicles, a discounted warrantee service to their location and recovery systems. The plaintiff claims in addition to the above, that such actions raise additional claims against the Company such as negotiations without good faith, executing contract without good faith, breach of contract, unjust enrichment, breach of consumer protection laws, tort laws, and breach of statutory duty. The lawsuit is yet to be approved as a class action. The total amount claimed if the lawsuit is approved as a class action was estimated by the plaintiff to be approximately NIS 300 million (approximately USD 77 million). Our defense against the approval of the class action lawsuit was file on January 3rd, 2016. The plaintiff has responded to the company's defense on February 29, 2016.
Based on an opinion of its legal counsels, at this preliminary stage, the Company is unable to assess the lawsuit's chances of success and / or and reasonably possible range of loss, if any. However, according to the legal counsel opinion, based on the documents of the claim, the Company has good defense arguments in respect of claims made by the plaintiff and the chances that the suit will not be approved as a class action suit are higher than it will be approved. Therefore, the Company has not made any provision in its consolidated financial statements in respect to this claim. A class action lawsuit based on similar claims, against the Company, which was filed on form 6-K on March 22, 2011, was dismissed by the court on the request of both parties, on March 5, 2012 for a small compensation to the plaintiff and his attorneys, in a total amount of NIS 30,000 (approximately USD 7,900). Such dismissal of a similar class action lawsuit may have a positive effect on the Company ability in its defense against the current lawsuit. That being said, if the Company's efforts are unsuccessful this could result in a very significant costs to the Company and could adversely affect its financial position and the results of its operations. 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 this Note above) that are material, individually or in the aggregate, to the consolidated financial statements as a whole.
B. 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.
C. Commitments 1. As of December 31, 2015, minimum future rentals under operating leases of buildings and base station sites for periods in excess of one year were as follows: 2016 US$ 1.6 million, 2017 US$ 1.2 million, 2018 US$ 1 million, 2019 US$ 0.9 million and 2020 US$ 0.4 million. The leasing fees expensed in each of the years ended December 31, 2015, 2014 and 2013, were US$ 2.5 million, US$ 2.5 million and US$ 2.5 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), 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 was 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, 2015, the Company is obliged to purchase from Telematics products in an aggregate amount of approximately US$ 19.5 million (2016 US$ 7 million, 2017 US$ 6.5 million and 2018 US$ 6 million). |
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STOCKHOLDERS' EQUITY |
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OTHER (INCOME) EXPENSES, NET |
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OTHER (INCOME) EXPENSES, NET [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER (INCOME) EXPENSES, NET | NOTE 13 - OTHER (INCOME) EXPENSES, NET
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FINANCING INCOME, NET |
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FINANCING INCOME, NET [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FINANCING INCOME, NET | NOTE 14 - FINANCING INCOME, NET
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INCOME TAX |
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INCOME TAX [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAX |
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EARNINGS PER SHARE |
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EARNINGS PER SHARE [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE |
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RELATED PARTIES |
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RELATED PARTIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RELATED PARTIES |
24,001 - 27,500 20% 27,501-31,000 45% 31,001-35,000 75% 35,001-39,000 110%
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SEGMENT REPORTING |
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SEGMENT REPORTING [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT REPORTING |
The operations of the Group are conducted through two different core activities: Location based services and Wireless communications products. These activities also represent the reportable segments of the Group.
The reportable segments are viewed and evaluated separately by Company management, since the marketing strategies, processes and expected long term financial performances of the segments are different.
Location based services:
The Location based services segment consists predominantly of regionally- based stolen vehicle recovery (SVR) services, fleet management services and value-added services comprised of personal advanced locater services and concierge services.
The Group provides Location based services in Israel, Brazil, Argentina and the United States.
Wireless communications products:
The wireless communications product segment consists of short and medium range two-way machine-to-machine wireless communications products that are used for various applications, including automatic vehicle location, and automatic vehicle identification.
The evaluation of performance is based on the operating income of each of the two reportable segments.
Accounting policies of the segments are the same as those described in the accounting policies applied in the consolidated financial statements.
Due to the nature of the reportable segments, there have been no inter-segment sales or transfers during the reported periods.
Financing expenses, net, non-operating other expenses, net, taxes on income and the share of the Company in losses of affiliated companies were not allocated to the reportable segments, since these items are carried and evaluated on the enterprise level.
During 2015, 2014 and 2013 there were no sales exceeding 10% of total revenues to none of our customers. |
FINANCIAL INSTRUMENTS AND RISKS MANAGEMENT |
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FINANCIAL INSTRUMENTS AND RISKS MANAGEMENT [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FINANCIAL INSTRUMENTS AND RISKS MANAGEMENT |
Financial instruments that potentially subject the Company and its subsidiaries to concentrations of credit risk consist principally of cash and cash equivalents, accounts receivables, marketable securities and derivatives.
Most of the Group's cash and cash equivalents, deposits in short-term investments (and investments in trading marketable securities), as of December 31, 2015 and 2014, were deposited with major banks (mostly in Israel) with high credit rating. 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, Brazil, Argentina 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.
The company entered into foreign exchange forward contracts intended to protect against the increase in the purchase price of forecasted inventory purchases dominated in currencies other then the functional currency of the purchasing entity.
The Group operates internationally, which gives rise to exposure to market risks mainly from changes in exchange rates of foreign currencies in relation to the functional currency of each of the entities of the Group. During 2013 and 2014 the Company entered into foreign currency forward transactions in order to protect itself against the risk that the eventual cash flows resulting from anticipated transactions (mainly purchases of inventory), denominated in currencies other than the functional currency, will be affected by changes in exchange rates. As of December 31, 2015, 7 transactions originated in 2014 were remained outstanding.
During 2013, 2014 and 2015, all the financial derivatives were designated and accounted for as hedging instruments.
The following table summarizes a tabular disclosure of (a) fair values of derivative instruments in the balance sheets and (b) the effect of derivative instruments in the statements of income:
Fair values of derivative instruments:
Amounts reclassified to statement of income:
As of December 31, 2015, the notional amount of forward exchange contracts with respect to cash flow hedge of anticipated transactions amounted to US$ 10.5 million (US$ 1.5 million per month for the next 7 months).
The Company measures fair value and discloses fair value measurements for financial assets and liabilities. Fair value is an exit price, representing the amount that would be received to sell an asset or the amount that would be paid to transfer a liability in an orderly transaction between market participants.
The Company measured cash equivalents, marketable securities and derivative financial instruments at fair value. Such financial instruments are measured at fair value, on a recurring basis. The measurement of cash equivalents are classified within Level 1. The fair value of derivatives generally reflects the estimated amounts that the Company would receive or pay to terminate the contracts at the reporting dates, based on the prevailing currency prices and the relevant interest rates. Such measurement is classified within Level 2.
The fair value of the financial instruments included in the working capital of the Group (cash and cash equivalents, deposit in escrow, accounts receivable, accounts payable and other current assets and liabilities) approximates their carrying value, due to the short-term maturity of such instruments.
See also Note 1V.
The Company's financial assets measured at fair value on a recurring basis, consisted of the following types of instruments as of December 31, 2015 and 2014:
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policy) |
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operations | 1. Operations The Group operates through subsidiaries in Brazil and Argentina, which generates revenues in their respective local currencies. The local currencies of such countries have been subject to significant fluctuations in recent years and the exchange rate of the Brazilian Real to the US Dollar (the presentation currency of the Group) was decreased significantly during fiscal year 2015. The functional currency of the Company and its subsidiaries located in Israel is the New Israeli Shekel (NIS), which is the local currency in which those entities operate. The functional currency of the foreign subsidiaries of the Group is their respective local currency. The consolidated financial statements of the Company and all of its subsidiaries were translated into U.S. dollars in accordance with the standards of the Financial Accounting Standards Board ("FASB"). Accordingly, assets and liabilities were translated from local currencies to U.S. dollars using yearend exchange rates, and income and expense items were translated at average exchange rates during the year. Gains or losses resulting from translation adjustments (which result from translating an entity's financial statements into U.S. dollars if its functional currency is different than the U.S. dollar) are reported in other comprehensive income and are reflected in equity, under accumulated other comprehensive income (loss). Balances denominated in, or linked to foreign currency are stated on the basis of the exchange rates prevailing at the balance sheet date. For foreign currency transactions included in the statement of income, the exchange rates applicable on the relevant transaction dates are used. Transaction gains or losses arising from changes in the exchange rates used in the translation of such balances are carried to financing income or expenses as applicable. The following table presents data regarding the dollar exchange rate of relevant currencies and the Israeli CPI:
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Basis of presentation | 3. Basis of presentation
The consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP). |
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Use of estimates in the preparation of financial statements | 4. Use of estimates in the preparation of financial statements
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from the estimates. As applicable to these consolidated financial statements, the most significant estimates and assumptions relate to legal contingencies, revenue recognition and related deferred expenses, goodwill impairment assessment, deferred taxes and tax liabilities and uncertainties. |
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Principles of consolidation | B. Principles of consolidation
The consolidated financial statements include the accounts of the Company and all of its subsidiaries. In these financial statements, the term subsidiary refers to a company over which the Company exerts control (ownership interest of more than 50%), and the financial statements of which are consolidated with those of the Company. Significant intercompany transactions and balances are eliminated upon consolidation; profits from intercompany sales, not yet realized outside of the Group, are also eliminated. Non-controlling interests are presented in equity. Changes in the Company ownership interest in a subsidiary while the control is retained are accounted for as equity transactions and accordingly no gain or loss is recognized in consolidated net income or comprehensive income. Upon such transaction, the carrying amount of the noncontrolling interest is adjusted to reflect the change in its ownership interest in the subsidiary and any difference between the fair value of the consideration received or paid and the amount by which the noncontrolling interest was adjusted is recognized in additional paid-in capital. |
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Cash and cash equivalents | C. Cash and cash equivalents
The Group considers all highly liquid investments, which include short-term bank deposits that are not restricted as to withdrawal or use, and short-term debentures, with original periods to maturity not exceeding three months, to be cash equivalents. |
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Marketable securities | D. Marketable securities
The Company accounts for investments in marketable securities in accordance with ASC Topic 320-10, "Investments - Debt and Equity Securities" (ASC Topic 320-10). Management determines the appropriate classification of its investments in marketable securities at the time of purchase and reassesses such determination at each balance sheet date. The investments in marketable securities covered by ASC Topic 320-10 that were held by the Company during the reported periods were designated by management as trading securities. Trading securities are stated at market value. The changes in market value are charged to financing income or expenses. Trading gains for the years 2015 and 2014 amounted to approximately US$ 666,000 and US$ 133,000 respectively. Trading gains for the year 2013 were insignificant. |
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Treasury stock | E. Treasury stock
Company shares held by the Company and its subsidiary are presented as a reduction of equity, at their cost, under the caption Treasury Stock. Gains and losses upon sale of these shares, net of related income taxes, are recorded as additional paid in capital. |
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Allowance for doubtful accounts | F. Allowance for doubtful accounts
The allowance for doubtful accounts is determined with respect to amounts the Group has determined to be doubtful of collection. In determining the allowance for doubtful accounts, the Company considers, among other things, its past experience with customers, the length of time that the balance is post due, the customer's current ability to pay and available information about the credit risk on such customers. See also Note 19A. The allowance in respect of accounts receivable at December 31, 2015 and 2014 was US$ 2,063,000 and US$ 2,391,000, respectively. |
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Inventories | G. Inventories
Inventories are stated at the lower of cost or market. Cost is determined as follows: raw materials and finished products mainly on the basis of first-in, first-out (FIFO). |
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Investment in affiliated companies | H. Investment in affiliated companies
Investments in companies in which the Group has significant influence (ownership interest of between 20% and 50%) but less than controlling interests, are accounted for by the equity method. Income on intercompany sales, not yet realized outside of the Group, was eliminated. The Company also reviews these investments for impairment whenever events indicate the carrying amount may not be recoverable. In accordance with ASC Topic 323-10-40-1, a change in the Company's proportionate share of an investee's equity, resulting from issuance of shares by the investee to third parties, is accounted for as if the Company had sold a proportionate share of its investment. Any gain or loss resulting from an investee's share issuance is recognized in earnings. Management evaluates investments in affiliated companies, for evidence of other-than-temporary declines in value. Such evaluation is dependent on the specific facts and circumstances and includes analysis of relevant financial information (e.g. budgets, business plans, financial statements, etc.). During 2015 and 2014, no impairment was identified. Investments in companies in which the company no longer has significant influence, are classified as "investments in other companies". See I. below. |
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Investment in other company | I. Investment in other company
Non-marketable investment in other company in which the Company does not have a controlling interest nor significant influence are accounted for at cost, net of write down for any permanent decrease in value. |
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Derivatives | J. Derivatives
The group applies the provisions of ASC Topic 815, "Derivatives and Hedging". In accordance with ASC Topic 815, all the derivative financial instruments are recognized as either assets or liabilities on the balance sheet at fair value. The accounting for changes in the fair value of a derivative financial 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 derivative financial 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. From time to time the Company carries out transactions involving foreign exchange derivative financial instruments (mainly forward exchange contracts) which are designed to hedge the cash flows expected to be paid with respect to forecasted monthly purchases of inventory, denominated in currencies other than the functional currency of the Company. Such transactions were designated as hedging instruments on the date that the Company entered into such derivative contracts, and qualify as cash flow hedges under ASC Topic 815.
The effective portion of the changes in fair value of the derivative instruments designated for hedging purposes are reported as other comprehensive income (loss), net of tax under the caption "unrealized gains (losses) in respect of derivative financial instruments designated for cash flow hedge" and are reclassified to the statements of income when the hedged transaction realizes. During the reporting periods, the gains or losses that were recognized in earnings for hedge ineffectiveness were insignificant. All other derivatives which do not qualify for hedge accounting, or which have not been designated as hedging instruments, are recognized in the balance sheet at their fair value, with changes in the fair value carried to the statements of income as incurred in financing income (expenses), net. See also Note 19B for further information. |
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Property and equipment | K. 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:
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Impairment of long-lived assets | L. Impairment of long-lived assets
The Group's long-lived assets (including finite-lived intangible assets) are reviewed for impairment, 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 an asset to the future undiscounted cash flows expected to be generated by the asset. 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 asset exceeds its fair value (see also Note 1N and Note 7). |
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Income taxes | M. Income taxes
The Group accounts for income taxes in accordance with ASC Topic 740-10, "Income Taxes". According to this guidance, deferred income taxes are determined utilizing the asset and liability method based on the estimated future tax effects of differences between the financial accounting and the tax bases of assets and liabilities under the applicable tax law. Deferred tax balances are computed using the tax rates expected to be in effect at the time when these differences reverse. Valuation allowances in respect of the deferred tax assets are provided for if, based upon the weight of available evidence, it is more likely than not that all or a portion of the deferred income tax assets will not be realized.
US GAAP provides that the tax effects from an uncertain tax position can be recognized in the financial statements only if the position is "more-likely-than-not" to be sustained were to be challenged by a taxing authority. The assessment of a tax position is based solely on the technical merits of the position, without regard the likelihood that the tax position may be challenged. If an uncertain tax position meets the "more-likely-than-not" threshold, the largest amount of tax benefit that is greater than 50% likely to be recognized upon ultimate settlement with the taxing authority is recorded. See also Note 15L. The Company recognizes interest as interest expenses (among financing expenses) and penalties, if any, related to unrecognized tax benefits in its provision for income tax. |
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Goodwill and intangible assets | N. Goodwill and intangible assets
1. Goodwill represents the excess of the purchase price over the fair value of the identifiable net assets acquired in business combinations accounted for in accordance with the "purchase method" and is allocated to reporting units at acquisition. Goodwill is not amortized but rather tested for impairment at least annually in accordance with the provisions of ASC Topic 350, "Intangibles - Goodwill and Other". The Company performs its goodwill annual impairment test for the reporting units at December 31 of each year, or more often if indicators of impairment are present. As required by ASC Topic 350, the Company chooses either to perform a qualitative assessment whether the two-step goodwill impairment test is necessary or proceeds directly to the two-step goodwill impairment test. Such determination is made for each reporting unit on a stand-alone basis. The qualitative assessment includes various factors such as macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, earnings multiples, gross margin and cash flows from operating activities and other relevant factors. When the Company chooses to perform a qualitative assessment and determines that it is more likely than not (more than 50 percent likelihood) that the fair value of the reporting unit is less than its carrying value, then the Company proceeds to the two-step goodwill impairment test. If the Company determines Otherwise, no further evaluation is necessary. When the Company decides or is required to perform the two-step goodwill impairment test, the Company compares the fair value of the reporting unit to its carrying value ("step 1"). If the fair value of the reporting unit exceeds the carrying value of the reporting unit net assets (including the goodwill allocated to such reporting unit), goodwill is considered not to be impaired, and no further testing is required. If the carrying value exceeds the fair value of the reporting unit, then the implied fair value of goodwill is determined by subtracting the fair value of all the identifiable net assets from the fair value of the reporting unit. An impairment loss is recorded for the excess, if any, of the carrying value of the goodwill allocated to the reporting unit over its implied fair value ("step 2"). There are a number of generally accepted methods used for valuing a reporting unit: The income approach' utilizes discounted forecasted cash flows, the Market approach which utilize pricing multiples of business entities with publicly traded securities whose business and financial risks are comparable to those of the reporting unit being valued and the Asset - based approach' which establishes a value based on the cost of reproducing or replacing the asset being valued. These methods described may be used alone or in combination with one another. The Company applies assumptions that market participants would consider in determining the fair value of each reporting unit and the fair value of the identifiable assets and liabilities of the reporting units, as applicable. The Company performed a qualitative assessment for two reporting units as of December 31, 2015 and 2014, and concluded that the qualitative assessment did not result in a more likely than not indication of impairment, and therefore no further impairment testing was required, with respect to such units. For other reporting units (two in 2014, one in 2015), operating in Israel, the Company elected to bypass the qualitative assessment and proceeded directly to performing the first step of the goodwill impairment test. In order to determine the fair value of such reporting units, the Company utilized the "income approach". According to the income approach expected future cash flows are discounted to their present value using an appropriate rate of return. Judgments and assumptions related to future cash flows (projected revenues, operating expenses, and capital expenditures), future short-term and long-term growth rates, and weighted average cost of capital, which are based on management's internal assumptions, and believed to be similar to those that would be utilized by market participants under the circumstances and to represent both the specific risks associated with the business, and capital market conditions, are inherent in developing the discounted cash flow model. During 2015, 2014 and 2013, the Company recorded a goodwill impairment loss in an amount of US$ 674,000, US$ 879,000 and US$ 3,093,000, respectively. See Note 8. 2. Intangible assets with finite lives are amortized using the straight-line basis over their useful lives, to reflect the pattern in which the economic benefits of the intangible assets are consumed or otherwise used up, as follows
Recoverability of intangible assets is measured as described in Note 1L above. During 2015, the Company recorded an intangible assets impairment loss in an amount of US$ 255,000. See Note 7. |
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Contingencies | O. Contingencies
The Company and its subsidiaries are involved in certain legal proceedings that arise from time to time in the ordinary course of their business and in connection with certain agreements with third parties. Except for income tax contingencies, the Company records accruals for contingencies to the extent that the management concludes that the occurrence is probable and that the related liabilities are estimable. Legal expenses associated with contingencies are expensed as incurred. |
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Funds in respect of, and liability for employee rights upon retirement | P. 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, 2015, 2014 and 2013, amounted to US$ 1,386,000 US$ 1,460,000 and US$ 882,000, respectively. |
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Revenue recognition | Q. Revenue recognition
Revenues are recognized when delivery has occurred and, where applicable, after installation has been completed, there is persuasive evidence of an arrangement, the fee is fixed or determinable and collection of the related receivable is reasonably assured and no further obligations exist. In cases where delivery has occurred but the required installation has not been performed, the company does not recognize the revenues until the installation is completed. The Company's revenues are recognized as follows: 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. Revenues from SVR services subscription fees and from installation services, sold to customers within a single contractually binding arrangement were accounted for revenue recognition purposes as a single unit of accounting in accordance with ASC Topic 605-25, since the installation services element was determined not to have a value on a stand-alone basis to the customer. Accordingly, the entire contract fee for the two deliverables is recognized ratably on a straight-line basis over the subscription period. 3. Amounts earned by the Brazilian subsidiary for arranging a bundle transaction of SVR services subscription and installation services together with insurance services to be supplied by a third party insurance company, are recognized ratably on a straight-line basis over the subscription period, since the amount allocated to the company, is contingent upon the delivery of the SVR services. As the insurance company is the primary obligor of the insurance component, the company recognizes only the net amounts as revenues, after deduction of amounts related to the insurance component. 4. 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. 5. Extended warranty |
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Warranty costs | R. Warranty costs
The Company provides a standard warranty for its products to end-users at no extra charge. The Company estimates the costs that may be incurred under its warranty obligation and records a liability at the time the related revenues are recognized. Among the factors affecting the warranty liability are the number of installed units and historical percentages of warranty claims. The Company periodically assesses the adequacy of the recorded warranty liability and adjusts the amount to the extent necessary. To date, warranty costs and the related liabilities have not been material. |
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Research and development costs | S. 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. |
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Advertising costs | T. Advertising costs
Advertising costs are expensed as incurred.
Advertising expenses for the years ended December 31, 2015, 2014 and 2013 amounted to US$ 6.8 million, US$ 6.7 million and US$ 7.6 million, respectively. Advertising expenses are presented among "selling and marketing expenses". |
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Earnings per share | U. Earnings per share
Basic earnings per share are computed by dividing net income attributable to the common shares, by the weighted average number of shares outstanding during the year, net of the weighted average number of treasury stock. In computing diluted earnings per share, basic earnings per share are adjusted to reflect the effect of any potential dilutive ordinary shares. During the reporting periods there were no such potential shares. |
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Fair value measurements | V. Fair value measurements
The Company measures fair value and discloses fair value measurements for financial and non-financial assets and liabilities. Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market based measurement that is required to be determined based on the assumptions that market participants would use to determine the price of an asset or a liability.
As a basis for considering such assumptions, the fair value accounting standard establishes the following fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: Level 1 - Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2 - Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. Level 3 - Unobservable inputs are used when little or no market data is available. Level 3 inputs are considered as the lowest priority under the fair value hierarchy. In determining fair value, companies are required to utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as to consider counterparty credit risk in the assessment of fair value. Regarding the fair value measurements of financial assets and liabilities and the fair value hierarchy of such measurements, see Note 19C. The Company also measures certain non-financial assets, consisting mainly goodwill and intangible assets at fair value on a nonrecurring basis. These assets are adjusted to fair value when they are considered to be impaired (see 1N and 1L above). As of December 31, 2015, the Company measured the fair value of goodwill with a total carrying amount of US$ 0.7 million (before the recognition of an impairment loss) that is allocated to one reporting unit. As a result of the above impairment test, the Company recorded an impairment loss of goodwill in an amount of US$ 0.7 million, to its implied fair value of US$ 0 million. The fair value measurement of the non-financial assets is classified as level 3. As of December 31, 2014, the Company measured the fair value of goodwill with a total carrying amount of US$ 1.5 million (before the recognition of an impairment loss) that was allocated to two reporting units. As a result of the above impairment test, the Company recorded an impairment loss of goodwill in amount of US$ 0.9 million, to its implied fair value of US$ 0.7 million. The fair value measurement of the non-financial assets is classified as level 3. |
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Deferred installation expenses and prepaid expenses | W. Deferred installation expenses and prepaid expenses
Direct installation expenses incurred at the inception of specific subscription arrangements in Brazil with specific customers, to enable the Company's subsidiary in Brazil to perform under the terms of the arrangement (i.e. directly attributable to obtaining a specific subscriber), which their costs can be measured reliably, are capitalized and presented as "Deferred installation expenses" within the balances "Other current assets" and "Other non-current assets", as applicable. Such installation activities has determined not to represent separate earnings process for revenue recognition purposes in accordance with the principles of ASC Topic 605-25, "Multiple-Element Arrangements" as they has been determined not to have a value on a stand-alone basis to the customer. The deferred expenses that are capitalized are limited to the higher of value of the amount of nonrefundable deferred revenue, if any or to the amount of the minimum contractual subscription revenue, net of direct costs. The deferred expenses are amortized over the estimated life of the related subscription arrangements by the straight-line method (usually 20 months). Costs that do not meet the aforementioned criteria, are recognized immediately as expenses. |
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Stock-based compensation | X. Stock-based compensation
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Reclassification | Y. Reclassification
Certain comparative figures have been reclassified to conform to the current year presentation. Such reclassifications did not have any significant impact on the Company's equity, net income or cash flows. |
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Recently issued accounting pronouncements | Z. Recently issued accounting pronouncements
1. Accounting pronouncements not yet effective
Accounting Standard Update 2014-09, "Revenue from Contracts with Customers"
In May 2014, the FASB issued Accounting Standard Update 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). ASU 2014-09 outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ASU 2014-09 also requires entities to disclose sufficient information, both quantitative and qualitative, to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. An entity should apply the amendments in this ASU using one of the following two methods: 1. Retrospectively to each prior reporting period presented with a possibility to elect certain practical expedients, or, 2. Retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. If an entity elects the latter transition method, it also should provide certain additional disclosures. An entity should apply the amendments in this ASU using one of the following two methods: 1. Retrospectively to each prior reporting period presented with a possibility to elect certain practical expedients, or, 2. Retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. If an entity elects the latter transition method, it also should provide certain additional disclosures. In accordance with a recent amendment to ASU 2014-09, introduced by Accounting Standards Update 2015-11, "Revenue from Contracts with Customers - Deferral of the Effective Date", for a public entity, the amendments in ASU 2014-09 are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period (the first quarter of fiscal year 2018 for the Company). Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is in the process of assessing the impact, if any, of ASU 2014-09 on its consolidated financial statements.
Accounting Standard Update 2015-11, "Simplifying the Measurement of Inventory"
In July, 2015, The FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory (Topic 330) ("ASU 2015-11").
ASU 2015-11 outlines that inventory within the scope of its guidance be measured at the lower of cost and net realizable value. Inventory measured using last-in, first-out (LIFO) and the retail inventory method (RIM) are not impacted by the new guidance. Prior to the issuance of ASU 2015-11, inventory was measured at the lower of cost or market (where market was defined as replacement cost, with a ceiling of net realizable value and floor of net realizable value less a normal profit margin).
For a public entity, the amendments in ASU 2015-11 are effective, in a prospective manner, for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period (the first quarter of fiscal year 2017 for the Company). Early adoption is permitted as of the beginning of an interim or annual reporting period.
The Company is in the process of assessing the impact, if any, of ASU 2015-11 on its consolidated financial statements.
Accounting Standards Update 2015-17, "Income Taxes: Balance Sheet Classification of Deferred Taxes"
In November 2015, the FASB has issued Accounting Standards Update (ASU) No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which changes how deferred taxes are classified on organizations' balance sheet.
The ASU eliminates the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, all deferred tax assets and liabilities will be required to be classified as noncurrent.
The amendments apply to all organizations that present a classified balance sheet. For public companies, the amendments are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods (i.e., in the first quarter of 2017 for calendar year-end companies).
Early adoption is permitted for all entities as of the beginning of an interim or annual reporting period.
The guidance may be applied either prospectively, for all deferred tax assets and liabilities, or retrospectively (i.e., by reclassifying the comparative balance sheet). If applied prospectively, entities are required to include a statement that prior periods were not retrospectively adjusted. If applied retrospectively, entities are also required to include quantitative information about the effects of the change on prior periods.
The Company does not believe this ASU will have a significant impact on its consolidated financial statements.
Accounting Standards Update 2016-02, "Leases"
In February, 2016, the FASB issued its new lease accounting guidance in Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842).
Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: 1. A lease liability, which is a lessees obligation to make lease payments arising from a lease, measured on a discounted basis; and, 2. A right-of-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term.
Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing.
Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years (i.e., January 1, 2019, for a calendar year Company). Early application is permitted for all public business entities upon issuance.
Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach.
The Company is in the process of assessing the impact, if any, of ASU 2016-02 on its consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Relevant Exchange Rates of US Dollar and Israeli CPI |
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Schedule of Depreciation Rates |
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets Useful Lives |
|
OTHER CURRENT ASSETS (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER CURRENT ASSETS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Current Assets |
|
INVENTORIES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory |
|
INVESTMENTS IN AFFILIATED AND OTHER COMPANY (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENTS IN AFFILIATED AND OTHER COMPANY [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of investment in affiliated companies |
|
OTHER NON-CURRENT ASSETS (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER NON-CURRENT ASSETS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Non-Current Assets |
|
PROPERTY AND EQUIPMENT, NET (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY AND EQUIPMENT, NET [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment, Net |
|
INTANGIBLE ASSETS, NET (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INTANGIBLE ASSETS, NET [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets, Net |
|
GOODWILL (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill |
|
OTHER CURRENT LIABILITIES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER CURRENT LIABILITIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Other Current Liabilities |
|
STOCKHOLDERS' EQUITY (Tables) |
12 Months Ended | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||
STOCKHOLDERS' EQUITY [Abstract] | |||||||||||||||||||
Schedule of Common Stock |
|
OTHER (INCOME) EXPENSES, NET (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER (INCOME) EXPENSES, NET [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other (Income) Expenses, Net |
|
FINANCING INCOME, NET (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FINANCING INCOME, NET [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Financing Income, Net |
|
INCOME TAX (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAX [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Income Taxes |
|
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Schedule of Income Tax Reconciliation |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Deferred Taxes |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Income Before Income Taxes |
|
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Changes in Unrecognized Tax Benefits |
|
EARNINGS PER SHARE (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||
EARNINGS PER SHARE [Abstract] | |||||||||||||||||||||||||||||||||
Schedule of Net Income Used in Earnings Per Share |
|
||||||||||||||||||||||||||||||||
Schedule of Weighted Average Shares Used in Earnings Per Share |
|
RELATED PARTIES (Tables) |
12 Months Ended |
---|---|
Dec. 31, 2015 | |
RELATED PARTIES [Abstract] | |
Schedule of Target-based Cash Incentives | 24,001 - 27,500 20% 27,501-31,000 45% 31,001-35,000 75% 35,001-39,000 110% |
SEGMENT REPORTING (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT REPORTING [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Reportable Operating Segments |
|
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Reconciliation of Reporting Information from Segments to Consolidated Totals |
|
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Schedule of Revenues and Long-Lived Assets by Geographical Areas |
|
FINANCIAL INSTRUMENTS AND RISKS MANAGEMENT (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FINANCIAL INSTRUMENTS AND RISKS MANAGEMENT [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Values of Derivative Instruments | Fair values of derivative instruments:
Amounts reclassified to statement of income:
|
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Schedule of Financial Assets Measured at Fair Value on a Recurring Basis |
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Relevant Exchange Rates) (Details) |
12 Months Ended | |||||
---|---|---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013
₪ / $
BRL / $
|
||||
Israel [Member] | ||||||
Dollar Exchange Rate of Relevant Currencies [Line Items] | ||||||
Exchange rate of one US dollar | 3.902 | 3.889 | 3.471 | |||
Increase (decrease) during the year: Exchange rate of one US dollar | 0.33% | 12.04% | (7.02%) | |||
Brazil [Member] | ||||||
Dollar Exchange Rate of Relevant Currencies [Line Items] | ||||||
Exchange rate of one US dollar | 3.9048 | 2.6562 | 2.3426 | |||
Increase (decrease) during the year: Exchange rate of one US dollar | 47.01% | 13.39% | (14.63%) | |||
Israeli CPI [Member] | ||||||
Dollar Exchange Rate of Relevant Currencies [Line Items] | ||||||
Exchange rate of one US dollar | [1] | 112.82 | 113.96 | 114.18 | ||
Increase (decrease) during the year: Exchange rate of one US dollar | [1] | (1.00%) | (0.20%) | 1.80% | ||
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Depreciation Rates) (Details) |
12 Months Ended |
---|---|
Dec. 31, 2015 | |
Operating Equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Rate of depreciation | 6.50% |
Operating Equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Rate of depreciation | 33.00% |
Office Furniture, Equipment, And Computers [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Rate of depreciation | 7.00% |
Office Furniture, Equipment, And Computers [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Rate of depreciation | 33.00% |
Buildings [Member] | |
Property, Plant and Equipment [Line Items] | |
Rate of depreciation | 2.50% |
Vehicles [Member] | |
Property, Plant and Equipment [Line Items] | |
Rate of depreciation | 15.00% |
Leasehold Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Description of depreciation method | Duration of the lease which
is less or equal to useful life. |
Majority [Member] | Operating Equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Rate of depreciation | 20.00% |
Majority [Member] | Operating Equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Rate of depreciation | 33.00% |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Intangible Assets Useful Lives) (Details) |
12 Months Ended |
---|---|
Dec. 31, 2015 | |
GIS Database [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets finite lived, useful life | 10 years |
Brand Name [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets finite lived, useful life | 15 years |
Others [Member] | Minimum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets finite lived, useful life | 3 years |
Others [Member] | Maximum [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets finite lived, useful life | 10 years |
OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
||
---|---|---|---|---|
OTHER CURRENT ASSETS [Abstract] | ||||
Prepaid expenses and others | $ 10,960 | $ 9,779 | ||
Government institutions | 1,910 | 2,694 | ||
Deferred installation expenses | 2,403 | 2,485 | ||
Deferred income taxes | [1] | 2,752 | 3,649 | |
Advances to suppliers | 84 | 324 | ||
Employees | 389 | 343 | ||
Forward Exchange Contracts | 1,063 | 1,580 | ||
Others | 2,876 | 1,464 | ||
Other current assets, net | $ 22,437 | $ 22,318 | ||
|
INVENTORIES (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
INVENTORIES [Abstract] | ||
Finished products | $ 8,833 | $ 8,845 |
Raw materials | 3,948 | 3,319 |
Inventory, net | $ 12,781 | $ 12,164 |
INVESTMENTS IN AFFILIATED AND OTHER COMPANY (Schedule of Investment in Affiliated Companies) (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Schedule of Equity Method Investments [Line Items] | ||
Investment in affiliated companies | $ 4,705 | $ 1,016 |
BRINGG [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Investment in affiliated companies | 3,082 | $ 1,016 |
IRT [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Investment in affiliated companies | 1,662 | |
Other [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Investment in affiliated companies | $ (39) |
INVESTMENTS IN AFFILIATED AND OTHER COMPANY (Narrative) (Details) - USD ($) $ in Thousands |
1 Months Ended | 12 Months Ended | |||||
---|---|---|---|---|---|---|---|
Sep. 30, 2015 |
Jul. 31, 2015 |
Jan. 31, 2015 |
Dec. 31, 2013 |
Dec. 31, 2015 |
Feb. 28, 2015 |
Dec. 31, 2014 |
|
Schedule of Equity Method Investments [Line Items] | |||||||
Investments in other company | $ 78 | $ 79 | |||||
Locationet [Member] | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Ownership percentage, equity method | 10.64% | ||||||
BRINGG Delivery Technologies Ltd [Member] | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Ownership percentage, equity method | 41.18% | ||||||
Payments to equity interest | $ 2,000 | $ 1,100 | $ 1,400 | ||||
IRT [Member] | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Ownership percentage, equity method | 50.00% | ||||||
Payments to equity interest | $ 2,300 | ||||||
Agreement term | 1 year | ||||||
IRT [Member] | Libor [Member] | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Description of variable rate basis | Libor
|
||||||
Basis spread on variable rate | 3.50% |
OTHER NON-CURRENT ASSETS (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
OTHER NON-CURRENT ASSETS [Abstract] | ||
Forward Exchange Contracts | $ 984 | |
Government institutions | 73 | |
Deferred installation expenses | $ 488 | 459 |
Deposits | 678 | 575 |
Other non-current assets | $ 1,166 | $ 2,091 |
PROPERTY AND EQUIPMENT, NET (Narrative) (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
PROPERTY AND EQUIPMENT, NET [Abstract] | |||
Depreciation | $ 10.9 | $ 11.2 | $ 11.1 |
Additional equipment purchased | $ 18.7 | $ 15.0 | $ 14.2 |
PROPERTY AND EQUIPMENT, NET (Schedule of Property And Equipment, Net) (Details) - USD ($) $ in Thousands |
12 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
||||||
Property, Plant and Equipment [Line Items] | ||||||||
Cost | $ 78,823 | $ 80,182 | ||||||
Less - accumulated depreciation and amortization | [1] | (47,309) | (48,274) | |||||
Total property and equipment, net | 31,514 | 31,908 | $ 32,546 | |||||
Operating equipment, amount subject to lease transactions | 26,000 | 26,000 | ||||||
Accumulated depreciation and amortization subject to lease transactions | 10,400 | 10,400 | ||||||
Operating Equipment [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Cost | [2] | 43,740 | 46,947 | |||||
Office Furniture, Equipment, And Computers [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Cost | 24,790 | 23,858 | ||||||
Land [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Cost | 1,022 | 1,022 | ||||||
Buildings [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Cost | 1,845 | 1,855 | ||||||
Vehicles [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Cost | 3,810 | 3,412 | ||||||
Leasehold Improvements [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Cost | $ 3,616 | $ 3,088 | ||||||
|
INTANGIBLE ASSETS, NET (Narrative) (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
INTANGIBLE ASSETS, NET [Abstract] | |||
Amortization and impairment of intangible assets | $ 430,000 | $ 231,000 | $ 367,000 |
Estimated aggregate amortization of intangible assets - 2016 | 26,000 | ||
Estimated aggregate amortization of intangible assets - Therafter | 0 | ||
Finite-Lived Intangible Assets [Line Items] | |||
Impairment of intangible assets | 255,000 | ||
GIS Database [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Impairment of intangible assets | 236,000 | 33,500 | |
Brand Name [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Impairment of intangible assets | 19,000 | 9,500 | |
Location Based Services and Wireless Communications Products [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Impairment of intangible assets | $ 43,000 | ||
Wireless Communications Products [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Impairment of intangible assets | $ 255,000 |
INTANGIBLE ASSETS, NET (Schedule of Intangible Assets, Net) (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Original amount | $ 10,525 | |
Accumulated amortization and impairment charges | 10,499 | |
Unamortized balance | 26 | $ 452 |
GIS Database [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Original amount | 3,876 | |
Accumulated amortization and impairment charges | $ 3,876 | |
Unamortized balance | 295 | |
Brand Name [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Original amount | $ 1,177 | |
Accumulated amortization and impairment charges | $ 1,177 | |
Unamortized balance | 132 | |
Others [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Original amount | $ 5,472 | |
Accumulated amortization and impairment charges | 5,446 | |
Unamortized balance | $ 26 | $ 25 |
GOODWILL (Narrative) (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Goodwill [Line Items] | |||
Goodwill impairment loss | $ 674,000 | $ 879,000 | $ 3,093,000 |
Accumulated impairment loss | 7,098,000 | 6,424,000 | $ 5,545,000 |
Certain Reporting Units [Member] | |||
Goodwill [Line Items] | |||
Goodwill impairment loss | $ 700,000 | ||
Term used for projected net cash flows | 2 years | ||
Discount rate | 20.00% | ||
Growth rate | 0.00% | ||
Certain Reporting Unit One [Member] | |||
Goodwill [Line Items] | |||
Goodwill impairment loss | $ 900,000 | ||
Term used for projected net cash flows | 3 years | ||
Discount rate | 16.90% | ||
Growth rate | 0.00% |
GOODWILL (Schedule Of Goodwill) (Details) - USD ($) |
12 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|||||
Goodwill [Line Items] | |||||||
Goodwill, beginning balance | $ 4,041,000 | $ 5,433,000 | [1] | ||||
Impairment | (674,000) | (879,000) | $ (3,093,000) | ||||
Translation differences | (11,000) | (513,000) | |||||
Goodwill, ending balance | 3,356,000 | 4,041,000 | 5,433,000 | [1] | |||
Location Based Services [Member] | |||||||
Goodwill [Line Items] | |||||||
Goodwill, beginning balance | $ 1,544,000 | $ 1,730,000 | [1] | ||||
Impairment | |||||||
Translation differences | $ (5,000) | $ (186,000) | |||||
Goodwill, ending balance | 1,539,000 | 1,544,000 | 1,730,000 | [1] | |||
Wireless Communications Products [Member] | |||||||
Goodwill [Line Items] | |||||||
Goodwill, beginning balance | 2,497,000 | 3,703,000 | [1] | ||||
Impairment | (674,000) | (879,000) | |||||
Translation differences | (6,000) | (327,000) | |||||
Goodwill, ending balance | $ 1,817,000 | $ 2,497,000 | $ 3,703,000 | [1] | |||
|
CREDIT FROM BANKING INSTITUTIONS (Narrative) (Details) $ in Millions |
Dec. 31, 2015
USD ($)
|
---|---|
CREDIT FROM BANKING INSTITUTIONS [Abstract] | |
Unutilized short-term lines of credit | $ 0.5 |
OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
OTHER CURRENT LIABILITIES [Abstract] | ||
Accrued expenses | $ 7,439 | $ 7,919 |
Accrued payroll and related taxes | 4,255 | 5,692 |
Government institutions | 5,742 | 6,009 |
Related party | 2 | 98 |
Accrued dividend | 3,128 | 4,639 |
Others | 1,184 | 896 |
Total | $ 21,750 | $ 25,253 |
CONTINGENT LIABILITIES (Sao Paulo State Revenue Services) (Details) - Sao Paulo State Revenue Services [Member] $ in Millions |
12 Months Ended | |||
---|---|---|---|---|
Jul. 13, 2010
USD ($)
|
Jul. 13, 2010
BRL
|
Dec. 31, 2014
USD ($)
|
Dec. 31, 2014
BRL
|
|
Contingent Liabilities, Liens and Guarantees [Line Items] | ||||
Possible state value added tax rate | 25.00% | 25.00% | ||
Income tax deficiency notice, amount | $ 22.1 | BRL 36,499,984 | ||
Tax deficiency, penalties | 40.0 | 66,143,446 | ||
Tax deficiency, interest | $ 18.2 | BRL 30,282,420 | ||
Aggregate sum claimed pursuant to tax deficiency | $ 82.7 | BRL 220,000,000 |
CONTINGENT LIABILITIES (Brazilian Internal Revenue Service) (Details) |
12 Months Ended | ||||
---|---|---|---|---|---|
Jun. 24, 2010
USD ($)
|
Jun. 24, 2010
BRL
|
Oct. 01, 2005
USD ($)
|
Dec. 31, 2015
USD ($)
|
Dec. 31, 2015
BRL
|
|
Contingent Liabilities, Liens and Guarantees [Line Items] | |||||
Offsetting amount | $ 2,100,000 | ||||
Tax Assessment [Member] | Brazilian Internal Revenue Service [Member] | |||||
Contingent Liabilities, Liens and Guarantees [Line Items] | |||||
Amount of possible loss | $ 3,120,000 | BRL 5,567,032 | |||
Estimated amount of aggregate sum claimed pursuant to the tax assessment (principal amount, interest and penalties) | $ 2,890,000 | BRL 11,300,000 |
CONTINGENT LIABILITIES (Brazilian Federal Communication Agency - Anatel) (Details) |
12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Oct. 10, 2015
USD ($)
|
Oct. 10, 2015
BRL
|
Jul. 22, 2015
USD ($)
|
Jul. 22, 2015
BRL
|
Jul. 13, 2015
USD ($)
|
Jul. 13, 2015
ILS (₪)
|
Mar. 05, 2012
USD ($)
|
Mar. 05, 2012
ILS (₪)
|
Dec. 31, 2015
USD ($)
|
Dec. 31, 2015
BRL
|
|
Contingent Liabilities, Liens and Guarantees [Line Items] | ||||||||||
Amount of compensation to plaintiff | $ 7,900 | ₪ 30,000 | ||||||||
Unfavorable Regulatory Action [Member] | ||||||||||
Contingent Liabilities, Liens and Guarantees [Line Items] | ||||||||||
Total amount claimed | $ 77,000,000 | ₪ 300,000,000 | ||||||||
Unfavorable Regulatory Action - FUST contribution [Member] | ||||||||||
Contingent Liabilities, Liens and Guarantees [Line Items] | ||||||||||
Additional tax assessment | $ 760,000 | BRL 2,888,677 | ||||||||
Aggregate tax assessment | $ 2,600,000 | BRL 9,800,000 | ||||||||
Unfavorable Regulatory Action - FUST contribution [Member] | Tax assessments for the years 2007 and 2008 [Member] | ||||||||||
Contingent Liabilities, Liens and Guarantees [Line Items] | ||||||||||
Previous tax assessment | 1,000,000 | 3,936,339 | ||||||||
Unfavorable Regulatory Action - FUST contribution [Member] | Tax assessment for the year 2010 [Member] | ||||||||||
Contingent Liabilities, Liens and Guarantees [Line Items] | ||||||||||
Previous tax assessment | 700,000 | 2,950,417 | ||||||||
Unfavorable Regulatory Action - FUNTELL contribution [Member] | ||||||||||
Contingent Liabilities, Liens and Guarantees [Line Items] | ||||||||||
Additional tax assessment | $ 253,000 | BRL 1,007,453 | ||||||||
Aggregate tax assessment | 920,000 | 3,600,000 | ||||||||
Unfavorable Regulatory Action - FUNTELL contribution [Member] | Tax assessment for the year 2010 [Member] | ||||||||||
Contingent Liabilities, Liens and Guarantees [Line Items] | ||||||||||
Previous tax assessment | 260,000 | 1,033,363 | ||||||||
Unfavorable Regulatory Action - FUNTELL contribution [Member] | Tax assessment for the year 2007 [Member] | ||||||||||
Contingent Liabilities, Liens and Guarantees [Line Items] | ||||||||||
Previous tax assessment | 195,000 | 778,598 | ||||||||
Unfavorable Regulatory Action - FUNTELL contribution [Member] | Tax assessment for the year 2008 [Member] | ||||||||||
Contingent Liabilities, Liens and Guarantees [Line Items] | ||||||||||
Previous tax assessment | $ 193,000 | BRL 770,580 |
CONTINGENT LIABILITIES (Commitments) (Details) - USD ($) $ in Millions |
1 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Jan. 31, 2008 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
CONTINGENT LIABILITIES [Abstract] | ||||
Minimum future rentals under operating leases - 2016 | $ 1.6 | |||
Minimum future rentals under operating leases - 2017 | 1.2 | |||
Minimum future rentals under operating leases - 2018 | 1.0 | |||
Minimum future rentals under operating leases - 2019 | 0.9 | |||
Minimum future rentals under operating leases - 2020 | 0.4 | |||
Leasing fees | 2.5 | $ 2.5 | $ 2.5 | |
Term of Frame Product and Service Purchase Agreement | 10 years | |||
Term of any renewal period for Frame Product and Service Purchase Agreement | 12 months | |||
Aggregate amount obligated to purchase from Telematics | 19.5 | |||
Amount obligated to purchase from Telematics - 2016 | 7.0 | |||
Amount obligated to purchase from Telematics - 2017 | 6.5 | |||
Amount obligated to purchase from Telematics - 2018 | $ 6.0 |
STOCKHOLDERS' EQUITY (Narrative) (Details) $ / shares in Units, $ in Thousands, ₪ in Millions |
1 Months Ended | 12 Months Ended | 13 Months Ended | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 21, 2012 |
Feb. 29, 2016
USD ($)
|
Feb. 29, 2016
ILS (₪)
|
Dec. 31, 2015
USD ($)
shares
|
Dec. 31, 2014
USD ($)
shares
|
Dec. 31, 2013
USD ($)
shares
|
Dec. 31, 2012
USD ($)
|
Dec. 31, 2012
ILS (₪)
|
Jan. 31, 2016
USD ($)
|
Jan. 31, 2016
ILS (₪)
|
Jan. 31, 2015
USD ($)
|
Jan. 31, 2015
ILS (₪)
|
Jan. 31, 2014
USD ($)
|
Jan. 31, 2014
ILS (₪)
|
Feb. 28, 2016
$ / shares
|
Feb. 28, 2015 |
|
STOCKHOLDERS' EQUITY [Abstract] | ||||||||||||||||
Treasury stock acquired | shares | 2,507,314 | 2,507,314 | 2,507,314 | |||||||||||||
Percentage of outstanding stock in treasury stock | 10.70% | 10.70% | 10.70% | |||||||||||||
Dividend rate as a percentage of net profits | 50.00% | |||||||||||||||
Dividend paid | $ 6,500 | ₪ 25.4 | $ 13,171 | $ 15,697 | $ 13,502 | $ 36,100 | ₪ 135.4 | $ 16,500 | ₪ 63.4 | $ 20,500 | ₪ 72.4 | $ 17,200 | ₪ 61.1 | |||
Cash dividend declared, value per share | $ / shares | $ 0.31 | |||||||||||||||
Dividends payable date | 2016-04 |
STOCKHOLDERS' EQUITY (Schedule of Common Stock) (Details) - ₪ / shares |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
STOCKHOLDERS' EQUITY [Abstract] | ||
Ordinary shares, par value | ₪ 0.3333 | ₪ 0.3333 |
Ordinary shares, registered | 60,000,000 | 60,000,000 |
Ordinary shares, issued and fully paid | 23,475,431 | 23,475,431 |
OTHER (INCOME) EXPENSES, NET (Details) ₪ in Millions |
12 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015
USD ($)
|
Dec. 31, 2015
ILS (₪)
|
Dec. 31, 2014
USD ($)
|
Dec. 31, 2013
USD ($)
|
||||||||
OTHER (INCOME) EXPENSES, NET [Abstract] | |||||||||||
Adjustment of purchase price of subsidiary sold | $ (101,000) | [1] | [1] | $ 200,000 | |||||||
Impairment of goodwill and intangible assets (2) | [2] | 929,000 | $ 922,000 | $ 4,620,000 | |||||||
Gain on sale of subsidiary (1) | [1] | (951,000) | |||||||||
Other | (145,000) | $ (66,000) | $ (60,000) | ||||||||
Other expenses, net | (268,000) | $ 856,000 | $ 4,760,000 | ||||||||
Cash received from sale of subsidiary | $ 600,000 | ₪ 2.3 | |||||||||
|
FINANCING INCOME, NET (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
FINANCING INCOME, NET [Abstract] | |||
Short-term interest expenses, commissions and other | $ (64) | $ 309 | $ (1,201) |
Gains in respect of marketable securities | $ 666 | $ 133 | |
Interest expenses in respect of long-term loans | $ (4) | ||
Interest income in respect of deposits | $ 773 | $ 982 | 1,998 |
Exchange rate differences and others, net | (186) | 280 | (555) |
Financing income, net | $ 1,189 | $ 1,704 | $ 238 |
INCOME TAX (Narrative) (Details) ₪ in Millions, $ in Millions |
12 Months Ended | ||||
---|---|---|---|---|---|
Dec. 31, 2015
USD ($)
|
Dec. 31, 2014 |
Dec. 31, 2013 |
Aug. 04, 2014
USD ($)
|
Aug. 04, 2014
ILS (₪)
|
|
Income Taxes [Line Items] | |||||
Minimum percentage of annual income which is derived from export considered for application of reduced corporate tax rate | 25.00% | ||||
Tax rate applicable to the Company | 26.50% | 26.50% | 25.00% | ||
Reduction in tax rate applicable from 2016 and thereafter | 1.50% | ||||
Tax rate applicable from 2016 and thereafter | 25.00% | ||||
Israel [Member] | |||||
Income Taxes [Line Items] | |||||
Income tax liability for prior year tax assessments | $ 10.5 | ₪ 36 | |||
Carry forward tax losses | $ 1.2 | ||||
United States [Member] | |||||
Income Taxes [Line Items] | |||||
Carry forward tax losses | $ 3.9 | ||||
Carry forward tax losses, expiration | Dec. 31, 2022 | ||||
2012 [Member] | Scenario, Actual [Member] | |||||
Income Taxes [Line Items] | |||||
Tax rate applicable to the Company | 25.00% | ||||
Tax rate on capital gains | 25.00% | ||||
Tax rate applicable to betterment | 25.00% | ||||
2012 [Member] | Preferred Company [Member] | Investment Law, for enterprises located in zone A [Member] | |||||
Income Taxes [Line Items] | |||||
Tax rate applicable to the Company | 15.00% | ||||
2013 [Member] | Preferred Company [Member] | Investment Law, for enterprises located in zone A [Member] | |||||
Income Taxes [Line Items] | |||||
Tax rate applicable to the Company | 12.50% | ||||
2014 [Member] | Preferred Company [Member] | Investment Law, for enterprises located in zone A [Member] | |||||
Income Taxes [Line Items] | |||||
Tax rate applicable to the Company | 9.00% | ||||
2014 [Member] | Preferred Company [Member] | Investment Law, for enterprises located elsewhere [Member] | |||||
Income Taxes [Line Items] | |||||
Tax rate applicable to the Company | 16.00% |
INCOME TAX (Schedule of Components of Income Taxes) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
INCOME TAX [Abstract] | |||
Current taxes: In Israel | $ 6,279 | $ 7,564 | $ 6,060 |
Current taxes: Outside Israel | 6,089 | 7,630 | 8,194 |
Current taxes | 12,368 | 15,194 | 14,254 |
Deferred taxes: In Israel | (121) | (471) | (503) |
Deferred taxes: Outside Israel | 206 | (432) | (1,309) |
Deferred tax expense (benefit) | 85 | $ (903) | $ (1,812) |
Taxes in respect of prior years: In Israel | $ 369 | ||
Taxes in respect of prior years: Outside Israel | $ (45) | $ 5 | |
Taxes in respect of prior years | $ 369 | (45) | 5 |
Income tax expense (benefit) | $ 12,822 | $ 14,246 | $ 12,447 |
INCOME TAX (Schedule of Income Tax Reconciliation) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
INCOME TAX [Abstract] | |||
Pretax income | $ 41,833 | $ 47,574 | $ 38,002 |
Statutory tax rate | 26.50% | 26.50% | 25.00% |
Tax computed at the ordinary tax rate | $ 11,086 | $ 12,607 | $ 9,500 |
Nondeductible expenses (income) | 526 | 10 | 1,365 |
Losses in respect of which no deferred taxes were generated (including changes in valuation allowance) | 831 | (304) | 137 |
Deductible financial expenses recorded to other comprehensive income | (439) | (365) | (312) |
Tax adjustment in respect of different tax rates | 1,411 | 1,662 | 1,877 |
Taxes in respect of withholding at the source from royalties and dividends | 78 | 615 | 817 |
Adjustment in respect of tax rate deriving from "approved enterprises" | (405) | (558) | (467) |
Others | (266) | 579 | (470) |
Income tax expense (benefit) | $ 12,822 | $ 14,246 | $ 12,447 |
INCOME TAX (Summary of Deferred Taxes) (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
||
---|---|---|---|---|
INCOME TAX [Abstract] | ||||
Provision for employee related obligations, current | $ 145 | $ 130 | ||
Provision for legal obligation, current | 2,607 | 3,519 | ||
Deferred taxes included in other current assets | [1] | 2,752 | 3,649 | |
Provision for employee related obligations, non-current | 718 | 678 | ||
Carry forward tax losses and foreign tax credit, non-current | 4,321 | 4,321 | ||
Temporary differences, net, non-current | 1,237 | 1,010 | ||
Gross deferred income taxes, non-current | 6,276 | 6,009 | ||
Valuation allowance, non-current | (3,997) | (3,273) | ||
Deferred income taxes, non-current | $ 2,279 | $ 2,736 | ||
|
INCOME TAX (Schedule of Deferred Taxes Balance Sheet Location) (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Deferred Tax Assets, Net of Valuation Allowance, Noncurrent Classification [Abstract] | ||
Deferred income taxes included in long-term investments and other assets | $ 2,279 | $ 2,886 |
Deferred income taxes included in long-term liabilities | (150) | |
Deferred income taxes, non-current | $ 2,279 | $ 2,736 |
INCOME TAX (Schedule of Income Before Income Taxes) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
INCOME TAX [Abstract] | |||
The Company and its Israeli subsidiaries | $ 23,987 | $ 26,021 | $ 17,296 |
Non-Israeli subsidiaries | 17,846 | 21,553 | 20,706 |
Income before income tax | $ 41,833 | $ 47,574 | $ 38,002 |
INCOME TAX (Changes in Unrecognized Tax Benefits) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
INCOME TAX [Abstract] | ||
Balance | $ 421 | $ 472 |
Decrease related tax positions of prior years | (419) | |
Translations differences related to the current year | $ (2) | (51) |
Balance | $ 421 |
EARNINGS PER SHARE (Schedule of Net Income Used in Earnings Per Share) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
EARNINGS PER SHARE [Abstract] | |||
Net income attributable to stockholder's used for the computation of basic and diluted earnings per share | $ 24,971 | $ 30,429 | $ 23,762 |
EARNINGS PER SHARE (Schedule of Weighted Average Shares Used in Earnings Per Share) (Details) - shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
EARNINGS PER SHARE [Abstract] | |||
Weighted average number of shares used in the computation of basic and diluted earnings per share | 20,968 | 20,968 | 20,968 |
RELATED PARTIES (Details) |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2015
USD ($)
|
Dec. 31, 2015
ILS (₪)
|
Dec. 31, 2014
USD ($)
|
Dec. 31, 2013
USD ($)
|
|
Tzivtit Insurance [Member] | ||||
Related Party Transaction [Line Items] | ||||
Related party commission from insurance company | $ 79,000 | ₪ 309,000 | $ 52,000 | $ 80,000 |
A. Sheratzky Holdings [Member] | ||||
Related Party Transaction [Line Items] | ||||
Aggregate amounts paid | 0 | 793,000 | 3,470,000 | |
Basic Insurance Policies [Member] | Tzivtit Insurance [Member] | ||||
Related Party Transaction [Line Items] | ||||
Payments for insurance policies | 304,000 | 324,000 | ||
Directors And Officers Insurance Policies [Member] | Tzivtit Insurance [Member] | ||||
Related Party Transaction [Line Items] | ||||
Payments for insurance policies | 168,000 | 189,000 | ||
Izzy Sheratzky [Member] | A. Sheratzky Holdings [Member] | ||||
Related Party Transaction [Line Items] | ||||
Monthly cost | $ 25,000 | ₪ 98,000 | ||
Percentage of pretax income available based on employment agreement | 5.00% | 5.00% | ||
Term of agreement | 2 years | 2 years | ||
Term of automatic extension | 2 years | 2 years | ||
Notice required to terminate agreement | 180 days | 180 days | ||
Threshold term agreement for Israeli law | 3 years | 3 years | ||
Izzy Sheratzky [Member] | A. Sheratzky Holdings [Member] | President and Director [Member] | ||||
Related Party Transaction [Line Items] | ||||
Monthly cost | $ 57,700 | ₪ 225,000 | ||
Term of agreement | 3 years | 3 years | ||
Notice required to terminate agreement | 180 days | 180 days | ||
Vacation and sick days | 25 days | 25 days | ||
Payment to related party for services | $ 2,249,000 | 2,387,000 | ||
Eyal Sheratzky [Member] | A. Sheratzky Holdings [Member] | ||||
Related Party Transaction [Line Items] | ||||
Monthly cost | 12,500 | ₪ 48,892 | ||
Eyal Sheratzky [Member] | ORAS Capital Ltd. [Member] | ||||
Related Party Transaction [Line Items] | ||||
Monthly cost | $ 45,000 | ₪ 175,000 | ||
Term of agreement | 3 years | 3 years | ||
Notice required to terminate agreement | 180 days | 180 days | ||
Vacation and sick days | 25 days | 25 days | ||
Payment to related party for services | $ 1,565,000 | 1,552,000 | ||
Nir Sheratzky [Member] | A. Sheratzky Holdings [Member] | ||||
Related Party Transaction [Line Items] | ||||
Monthly cost | 12,600 | ₪ 49,307 | ||
Nir Sheratzky [Member] | Galnir Management and Investments Ltd. [Member] | ||||
Related Party Transaction [Line Items] | ||||
Monthly cost | $ 45,000 | ₪ 175,000 | ||
Term of agreement | 3 years | 3 years | ||
Notice required to terminate agreement | 180 days | 180 days | ||
Vacation and sick days | 25 days | 25 days | ||
Payment to related party for services | $ 1,802,000 | 1,418,000 | ||
Eyal Sheratzky And Nir Sheratzky[Member] | A. Sheratzky Holdings [Member] | ||||
Related Party Transaction [Line Items] | ||||
Percentage of pretax income available based on employment agreement | 1.00% | 1.00% | ||
Term of agreement | 3 years | 3 years | ||
Yehuda Kahane [Member] | ||||
Related Party Transaction [Line Items] | ||||
Monthly cost | $ 3,900 | ₪ 15,000 | ||
Aggregate amounts paid | 57,000 | 62,000 | 59,000 | |
Gil Sheratzky [Member] | ||||
Related Party Transaction [Line Items] | ||||
Aggregate amounts paid | 0 | 29,000 | 145,000 | |
Gil Sheratzky [Member] | E-Com Global Electronic Commerce Lt. [Member] | ||||
Related Party Transaction [Line Items] | ||||
Monthly cost | $ 6,400 | ₪ 25,000 | ||
Percentage of increase in profit available based on agreement | 2.00% | 2.00% | ||
Term of agreement | 3 years | 3 years | ||
Gil Sheratzky [Member] | ZERO-TO-ONE S.B.L. INVESTMENTS LTD. [Member] | ||||
Related Party Transaction [Line Items] | ||||
Monthly cost | $ 32,000 | ₪ 125,000 | ||
Term of agreement | 3 years | 3 years | ||
Notice required to terminate agreement | 2 months | 2 months | ||
Vacation and sick days | 25 days | 25 days | ||
Payment to related party for services | $ 1,175,000 | 948,000 | ||
Mr. Avner Kurz [Member] | ||||
Related Party Transaction [Line Items] | ||||
Aggregate amounts paid | $ 80,000 | $ 81,105 | ||
Mr. Avner Kurz [Member] | Ituran Sistemas de Monitoramento Ltda [Member] | ||||
Related Party Transaction [Line Items] | ||||
Monthly cost | $ 8,000 | |||
Term of automatic extension | 2 years | 2 years | ||
Notice required to terminate agreement | 180 days | 180 days | ||
Maximum [Member] | Eyal Sheratzky [Member] | ||||
Related Party Transaction [Line Items] | ||||
Percentage of pretax income available based on employment agreement | 1.00% | 1.00% |
RELATED PARTIES (Schedule of Target-based Cash Incentives) (Details) - Executive Offices Holders [Member] $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2015
USD ($)
| |
Minimum [Member] | |
Related Party Transaction [Line Items] | |
Profit-Before-Tax Targets | $ 24,000 |
Level of incentive | 15.00% |
Profit Before Tax Targets Range One [Member] | |
Related Party Transaction [Line Items] | |
Level of incentive | 20.00% |
Profit Before Tax Targets Range One [Member] | Minimum [Member] | |
Related Party Transaction [Line Items] | |
Profit-Before-Tax Targets | $ 24,001 |
Profit Before Tax Targets Range One [Member] | Maximum [Member] | |
Related Party Transaction [Line Items] | |
Profit-Before-Tax Targets | $ 27,500 |
Profit Before Tax Targets Range Two [Member] | |
Related Party Transaction [Line Items] | |
Level of incentive | 45.00% |
Profit Before Tax Targets Range Two [Member] | Minimum [Member] | |
Related Party Transaction [Line Items] | |
Profit-Before-Tax Targets | $ 27,501 |
Profit Before Tax Targets Range Two [Member] | Maximum [Member] | |
Related Party Transaction [Line Items] | |
Profit-Before-Tax Targets | $ 31,000 |
Profit Before Tax Targets Range Three [Member] | |
Related Party Transaction [Line Items] | |
Level of incentive | 75.00% |
Profit Before Tax Targets Range Three [Member] | Minimum [Member] | |
Related Party Transaction [Line Items] | |
Profit-Before-Tax Targets | $ 31,001 |
Profit Before Tax Targets Range Three [Member] | Maximum [Member] | |
Related Party Transaction [Line Items] | |
Profit-Before-Tax Targets | $ 35,000 |
Profit Before Tax Targets Range Four [Member] | |
Related Party Transaction [Line Items] | |
Level of incentive | 110.00% |
Profit Before Tax Targets Range Four [Member] | Minimum [Member] | |
Related Party Transaction [Line Items] | |
Profit-Before-Tax Targets | $ 35,001 |
Profit Before Tax Targets Range Four [Member] | Maximum [Member] | |
Related Party Transaction [Line Items] | |
Profit-Before-Tax Targets | $ 39,000 |
Profit Before Tax Targets Range Five [Member] | |
Related Party Transaction [Line Items] | |
Level of incentive | 150.00% |
Profit Before Tax Targets Range Five [Member] | Minimum [Member] | |
Related Party Transaction [Line Items] | |
Profit-Before-Tax Targets | $ 39,001 |
RELATED PARTIES (Narrative - Cash Incentives) (Details) - Executive Offices Holders [Member] $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2015
USD ($)
shares
| |
Related Party Transaction [Line Items] | |
Cash incentive award, terms | since the date of its approval (an "Examined Period"), as compared to the TA 100 Index's Yield over such Examined Period; and to the extent that the Company's Stock Yield exceeds the TA 100 Index's Yield for such period, each of the Executive Office Holders shall receive an amount equal to 50% of his monthly Cost of Pay for each 1% of excess return (in percentage points' terms), or a relative amount in the event of a partial excess return.
|
Percentage of monthly Cost of Pay for each 1% of excess return | 50.00% |
Excess return percentage | 1.00% |
Shares granted | shares | 0 |
Maximum payment term after the termination of service/employment | 30 days |
EBITDA''s Threshold (as a percent) | 10.00% |
Prior notice period for amount of grants under special circumstances | 60 days |
Maximum return period for compensation amounts | 60 days |
Minimum [Member] | |
Related Party Transaction [Line Items] | |
Level of incentive | 15.00% |
Profit before tax targets | $ | $ 24 |
SEGMENT REPORTING (Schedule of Segment Reporting Infomation by Segment) (Details) - USD ($) $ in Thousands |
12 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
||||||
Segment Reporting Information [Line Items] | ||||||||
Revenues | $ 175,628 | $ 182,127 | $ 170,167 | |||||
Operating income (loss) | 40,644 | 45,870 | 37,930 | |||||
Assets | 72,699 | 74,889 | 76,864 | |||||
Goodwill | 3,356 | 4,041 | 5,433 | [1] | ||||
Expenditures for assets | 14,871 | 13,172 | 12,576 | |||||
Depreciation and amortization | 8,788 | 9,068 | 9,718 | |||||
Impairment of goodwill and intangible assets | [2] | 929 | 922 | 4,620 | ||||
Location Based Services [Member] | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Revenues | 127,683 | 133,692 | 126,951 | |||||
Operating income (loss) | 38,328 | 42,603 | 38,470 | |||||
Assets | 62,236 | 63,795 | 66,300 | |||||
Goodwill | 1,539 | 1,544 | 1,730 | [1] | ||||
Expenditures for assets | 14,478 | 12,574 | 12,312 | |||||
Depreciation and amortization | $ 8,636 | 8,920 | 9,360 | |||||
Impairment of goodwill and intangible assets | 34 | 2,816 | ||||||
Wireless Communications Products [Member] | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Revenues | $ 47,945 | 48,435 | 43,216 | |||||
Operating income (loss) | 2,316 | 3,267 | (540) | |||||
Assets | 10,463 | 11,094 | 10,564 | |||||
Goodwill | 1,817 | 2,497 | 3,703 | [1] | ||||
Expenditures for assets | 393 | 598 | 264 | |||||
Depreciation and amortization | 152 | 148 | 358 | |||||
Impairment of goodwill and intangible assets | $ 929 | $ 888 | $ 1,804 | |||||
|
SEGMENT REPORTING (Reconciliation of Reporting Information from Segments to Consolidated Totals) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||||
---|---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|||
Segment Reporting Information [Line Items] | |||||
Total revenues of reportable segment and consolidated revenues | $ 175,628 | $ 182,127 | $ 170,167 | ||
Operating Income | |||||
Total operating income for reportable segments | $ 40,644 | $ 45,870 | 37,930 | ||
Financing income, net | (166) | ||||
Other income (expenses) | $ 268 | $ (856) | (4,760) | ||
Consolidated income before taxes on income | 41,833 | 47,574 | 38,002 | ||
Assets | |||||
Current assets | 91,705 | 103,222 | |||
Property and equipment, net | 31,514 | 31,908 | 32,546 | ||
Total assets | 142,003 | 152,337 | 160,542 | ||
Other significant items | |||||
Expenditures for assets | 14,871 | 13,172 | 12,576 | ||
Asset expenditures, reportable segments and unallocated amounts | 18,547 | 15,193 | 13,963 | ||
Depreciation, amortization and impairment for reportable segments | 8,788 | 9,068 | 9,718 | ||
Depreciation and amortization | 11,962 | 12,219 | 16,196 | ||
Reportable Segment [Member] | |||||
Operating Income | |||||
Total operating income for reportable segments | 40,644 | 45,870 | 37,930 | ||
Assets | |||||
Total assets | [1] | 76,055 | 78,930 | 82,297 | |
Other significant items | |||||
Expenditures for assets | 14,871 | 13,172 | 12,576 | ||
Depreciation, amortization and impairment for reportable segments | 9,717 | 9,990 | 14,338 | ||
Unallocated Amounts [Member] | |||||
Operating Income | |||||
Financing income, net | $ 1,189 | $ 1,704 | 238 | ||
Other income (expenses) | (166) | ||||
Assets | |||||
Current assets | $ 46,119 | $ 57,159 | 61,530 | ||
Investments in affiliated and other companies | 4,783 | 1,095 | 1,511 | ||
Property and equipment, net | 8,730 | 7,786 | 8,644 | ||
Other unallocated amounts | 6,316 | 7,367 | 6,560 | ||
Other significant items | |||||
Expenditure for assets unallocated amounts | 3,676 | 2,021 | 1,387 | ||
Depreciation and amortization, unallocated amounts | $ 2,245 | $ 2,229 | $ 1,858 | ||
|
SEGMENT REPORTING (Schedule of Revenue and Long-Lived Assets by Geographical Areas) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Revenues | $ 175,628 | $ 182,127 | $ 170,167 |
Property and equipment, net | 31,514 | 31,908 | 32,546 |
Israel [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Revenues | 88,556 | 90,061 | 83,331 |
Property and equipment, net | 9,934 | 8,563 | 9,051 |
United States [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Revenues | 7,811 | 7,568 | 4,876 |
Property and equipment, net | 73 | 120 | 155 |
Brazil [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Revenues | 58,403 | 66,462 | 63,454 |
Property and equipment, net | 17,228 | 17,801 | 19,178 |
Argentina [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Revenues | 17,324 | 13,792 | 15,190 |
Property and equipment, net | 4,279 | 5,424 | 4,162 |
Others [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Revenues | $ 3,534 | $ 4,244 | $ 3,316 |
FINANCIAL INSTRUMENTS AND RISKS MANAGEMENT (Narrative) (Details) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2015
USD ($)
item
|
Dec. 31, 2014
USD ($)
|
|
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivative, Number of Instruments Held | item | 7 | |
Level 1 [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Trading securities | $ 2,035 | $ 2,362 |
Level 2 [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Trading securities | ||
Level 3 [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Trading securities | ||
Foreign Exchange Contract [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivative notional amount | $ 10,500 | |
Derivative, term of contract | 7 months | |
Monthly notional amount | $ 1,500 | |
Designated as Hedging Instrument [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivative asset | $ 2,564 | |
Designated as Hedging Instrument [Member] | Level 1 [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivative asset | ||
Designated as Hedging Instrument [Member] | Level 2 [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivative asset | $ 1,063 | $ 2,564 |
Designated as Hedging Instrument [Member] | Level 3 [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivative asset | ||
Designated as Hedging Instrument [Member] | Other Current Assets [Member] | Foreign Exchange Contract [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivative asset | $ 1,063 | $ 1,580 |
Designated as Hedging Instrument [Member] | Other Noncurrent Assets [Member] | Foreign Exchange Contract [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Derivative asset | 984 | |
Cost of Sales [Member] | Designated as Hedging Instrument [Member] | Foreign Exchange Contract [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain recognized in income on derivatives | $ 1,616 | $ 39 |
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