6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________

FORM 6-K

REPORT OF FOREIGN ISSUERPURSUANT TO RULE 13a-16 OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934

September 28, 2018

Commission File Number: 001-32618

Ituran Location and Control Ltd.

(Exact name of Registrant as specified in its Charter)

________________________

3 Hashikma Street, Azour 58001, Israel

(Address of Registrant’s principal executive offices)

________________________

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F ☒          Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b) (1):

Yes ☐          No ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b) (7):

Yes ☐          No ☒

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ☐          No ☒

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): ______

This Report of Foreign Private Issuer on Form 6-K (this “Form 6-K”) is being furnished by Ituran Location and Control  Ltd. (“Ituran”) to the Securities and Exchange Commission (the “SEC”) for the sole purposes of: (i) furnishing, as Exhibit 99.1 to this Form 6-K, unaudited interim consolidated financial statements of Ituran as of, and for the six month period ended June 30, 2018 (the “Financial Statements”); and (ii) furnishing, as Exhibit 99.2 to this Form 6-K, Management’s Discussion and Analysis of Financial Condition and Results of Operations, which discusses and analyzes Ituran's financial condition and results of operations as of, and for, the six month period ended June 30, 2018.

The foregoing six-month unaudited condensed interim consolidated financial statements of Ituran, together with the Management’s Discussion and Analysis of Financial Condition and Results of Operations covering that six month period, are incorporated by reference into Ituran registration statement on Form F-3 (File No. 333-222289).

Attached hereto as Exhibit 101 are the Financial Statements, formatted in XBRL (eXtensible Business Reporting Language), consisting of the following sub-exhibits:

Exhibit

Number           Document Description

EX-101.INS    XBRL Taxonomy Instance Document

EX-101.SCH   XBRL Taxonomy Extension Schema

EX-101.CAL   XBRL Taxonomy Extension Calculation Linkbase

EX-101.DEF   XBRL Taxonomy Extension Definition Linkbase

EX-101.LAB   XBRL Taxonomy Extension Label Linkbase

EX-101.PRE   XBRL Taxonomy Extension Presentation Linkbase

The XBRL related information in Exhibit 101 to this Form 6-K shall not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

ITURAN LOCATION & CONTROL LTD.
(Registrant)
By:	/s/ Eyal Sheratzky
	Name: Eyal Sheratzky
	Title:   Co-Chief Executive Officer

Date: September 28, 2018

EX-99.1

Exhibit 99.1

ITURAN LOCATION AND CONTROL LTD.

Condensed Consolidated Interim Financial Statements

as of June 30, 2018

ITURAN LOCATION AND CONTROL LTD.

Condensed Consolidated Interim Financial Statements

as of June 30, 2018

Table of Contents

	Page
Condensed Consolidated Interim Financial Statements:
Balance Sheets	F-2
Statements of Income	F-4
Statements of Comprehensive Income	F-5
Statements of Changes in Equity	F-6
Statements of Cash Flows	F-7
Notes to Condensed Consolidated Interim Financial Statements	F-8

ITURAN LOCATION AND CONTROL LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

	US dollars
	June 30,		December 31,
(in thousands)	2018		2017
	(unaudited)
Current assets
Cash and cash equivalents		36,106		36,906
Investment in marketable securities		1,319		3,559
Accounts receivable (net of allowance for doubtful accounts)		43,097		41,009
Other current assets		39,746		41,394
Inventories		13,526		14,244
		133,794		137,112
Long-term investments and other assets
Investments in affiliated companies		13,774		14,839
Investments in other companies		2,186		1,382
Other non-current assets		1,062		939
Deferred income taxes		6,450		8,398
Funds in respect of employee rights upon retirement		9,006		9,627
		32,478		35,185
Property and equipment, net		37,232		39,047
Intangible assets, net		77		38
Goodwill		3,587		3,777
Total assets		207,168		215,159

The accompanying notes are an integral part of the condensed consolidated financial statements.

F - 2

ITURAN LOCATION AND CONTROL LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

	US dollars
	June 30,		December 31,
(in thousands, except share data)	2018		2017
	(unaudited)
Current liabilities
Credit from banking institutions		3		48
Accounts payable		19,059		23,264
Deferred revenues		14,045		12,796
Other current liabilities		27,525		29,644
		60,632		65,752
Long-term liabilities
Liability for employee rights upon retirement		13,245		14,062
Provision for contingencies		513		400
Deferred revenues		612		1,241
Other non-current liabilities		402		475
		14,772		16,178
Stockholders’ equity		124,526		125,790
Non-controlling interests		7,238		7,439
Total equity		131,764		133,229
Total liabilities and equity		207,168		215,159

The accompanying notes are an integral part of the condensed consolidated financial statements.

F - 3

ITURAN LOCATION AND CONTROL LTD.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

	US dollars
	Six month period ended June 30,
(in thousands except per share data)	2018			2017
	(unaudited)
Revenues:
Location-based services		87,189			81,437
Wireless communications products		33,605			32,010
		120,794			113,447
Cost of revenues:
Location-based services		27,839			27,305
Wireless communications products		32,571			27,879
		60,410			55,184
Gross profit		60,384			58,263
Research and development expenses		2,099			1,768
Selling and marketing expenses		5,482			6,278
General and administrative expenses		22,590			22,391
Other expenses (income), net		(118	)		(143	)
Operating income		30,331			27,969
Financing income, net		568			841
Income before income tax		30,899			28,810
Income tax expenses		(8,510	)		(8,444	)
Share in gains of affiliated companies ,net		2,224			4,489
Net income for the period		24,613			24,855
Less: Net income attributable to non-controlling interests		(1,319	)		(1,415	)
Net income attributable to the Company		23,294			23,440
Basic and diluted earnings per share attributable to Company’s stockholders		1.11			1.12
Basic and diluted weighted average number of shares outstanding (in thousands)		20,968			20,968

The accompanying notes are an integral part of the condensed consolidated financial statements.

F - 4

ITURAN LOCATION AND CONTROL LTD.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	US dollars (except share data)
	Six month period ended June 30,
(in thousands)	2018			2017
	(unaudited)
Net income for the period		24,613			24,855
Other comprehensive income, net of tax:
Foreign currency translation adjustments		(13,164	)		4,461
Unrealized gains (losses) in respect of derivative financial instruments designated for cash flow hedge		1,126			-
Reclassification of net gains realized to net income		(29	)		-
Other comprehensive loss, net of tax		(12,067	)		4,461
Comprehensive income		12,546			29,316
Less: comprehensive income attributable to non-controlling interests		(771	)		(1,862	)
Comprehensive income attributable to the Company		11,775			27,454

The accompanying notes are an integral part of the condensed consolidated financial statements.

F - 5

ITURAN LOCATION AND CONTROL LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

	(in thousands)
	COMPANY STOCKHOLDERS
	Ordinary shares				Additional paid in capital		Accumulated other comprehensive income			Retained earnings			Treasury stock			Non- controlling interests			Total
	Number of shares		Share capital amount
US dollars (except for number of shares)
Balance as of January 1, 2018 as previously reported		23,476		1,983		71,550		(9,754	)		92,065			(30,054	)		7,439			133,229
Impact of change in accounting policy(Note 1E)		-		-		-		-			(2,972	)		-			-			(2,972	)
As adjusted balance as of January 1, 2018		23,476		1,983		71,550		(9,754	)		89,093			(30,054	)		7,439			130,257
Changes during 2018
Income for the period		-		-		-		-			23,294			-			1,319			24,613
Other comprehensive loss for the period		-		-		-		(11,519	)		-			-			(548	)		(12,067	)
Dividend paid to non-controlling interests		-		-		-		-			-			-			(972	)		(972	)
Dividend declared		-		-		-		-			(10,067	)		-			-			(10,067	)
Balance as of June 30, 2018 (unaudited)		23,476		1,983		71,550		(21,273	)		102,320			(30,054	)		7,238			131,764

The accompanying notes are an integral part of the condensed consolidated financial statements.

F - 6

ITURAN LOCATION AND CONTROL LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	US dollars
	Six month period ended June 30,
(in thousands)	2018			2017
	(unaudited)
Cash flows from operating activities
Net income for the period		24,613			24,855
Adjustments to reconcile net income to net cash from operating activities:
Depreciation amortization and impairment of goodwill		6,689			6,467
Gain in respect of trading marketable securities		(341	)		(67	)
Increase (decrease) in liability for employee rights upon retirement		(73	)		488
Share in gains of affiliated companies, net		(2,224	)		(4,489	)
Deferred income taxes		1,819			220
Capital losses (gains) on sale of property and equipment, net		69			(61	)
Increase in accounts receivable		(5,754	)		(5,517	)
Increase in other current assets		(3,979	)		(5,811	)
Decrease (increase) in inventories		15			(1,464	)
Increase (decrease) in accounts payable		(1,863	)		1,487
Increase (decrease) in deferred revenues		(1,927	)		2,236
Increase (decrease) in other current liabilities		2,854			(1,068	)
Net cash provided by operating activities		19,898			17,276
Cash flows from investment activities
Decrease (Increase) in long-term funds in respect of employee rights upon retirement, net of withdrawals		153			(363	)
Capital expenditures		(9,982	)		(6,749	)
Investments in affiliated companies		(1,250	)		(97	)
Investments in marketable securities		(22,375	)		(3,189	)
Sale of marketable securities		24,046			2,119
Investments in other companies		(897	)		(1,061	)
Deposit		(205	)		38
Proceeds from loans to affiliated company		3,262			562
Proceeds from sale of property and equipment		216			181
Net cash used in investment activities		(7,032	)		(8,559	)
Cash flows from financing activities
Short term credit from banking institutions, net		(33	)		(7	)
Dividend paid		(10,067	)		(12,581	)
Dividend paid to non-controlling interest		(972	)		(752	)
Net cash used in financing activities		(11,072	)		(13,340	)
Effect of exchange rate changes on cash and cash equivalents		(2,594	)		652
Net increase (decrease) in cash and cash equivalents		(800	)		(3,971	)
Balance of cash and cash equivalents at beginning of the period		36,906			31,087
Balance of cash and cash equivalents at end of the period		36,106			27,116

Supplementary information on investing activities not involving cash flows:

In April 2018, the Company declared a dividend in an amount of US$ 5 million. The dividend was paid in July 2018.

The accompanying notes are an integral part of the condensed consolidated financial statements.

F - 7

ITURAN LOCATION AND CONTROL LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

NOTE 1         -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements were prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP").

A. Company

Ituran Location and Control Ltd. (the “Company”) commenced operations in 1994.  The Company and its subsidiaries (the “Group”) are engaged in the provision of location-based services and machine-to-machine wireless communications products for use in stolen vehicle recovery, fleet management and other applications.

B. Basis of presentation

The accompanying condensed consolidated financial statements and related notes should be read in conjunction with our consolidated financial statements and related notes contained in our Annual Report on Form 20-F for the fiscal year ended December 31, 2017 (“fiscal 2017”).  The condensed consolidated interim financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) related to interim financial statements.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. The financial information contained herein is unaudited; however, management believes all adjustments have been made that are necessary to present fairly the results for the interim periods.  All such adjustments are of a normal and recurring nature. Certain reclassifications from the prior year presentation have been made to conform to the current period presentation.

Results of operations for the six and three month periods ended June 30, 2018 are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2018.

The consolidated balance sheet as of December 31, 2017 was derived from the audited financial statements at that date but does not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements.

C. Significant accounting policies

Other than described in paragraph E below, there have been no changes in the Company’s significant accounting policies that were disclosed in the Annual Report on Form 20-F for the fiscal year ended December 31, 2017. See our Annual Report on Form 20-F for the year ended December 31, 2017, for a discussion of significant accounting policies and estimates.

D. Stock-based compensation

The Company measures and recognizes compensation expense for cash bonuses to senior employees.  The cash grant described as "Excess Return Cash Incentive" for certain senior employees, in effect for calendar years 2017-2020 and which is based on the company's Stock Yield as compared to the Russell 2000 Index's Yield, is considered as based, or partly based, on the price of the Company’s shares and accordingly, was accounted for in accordance with ASC 718 -30, "Compensation-Stock Compensation - Awards Classified as Liabilities". The Company determined that the cash bonus for each of the years 2017-2020, represent separate award with a 1-year requisite service period each.

Accordingly, the awards are measured at the grant date at their fair value and remeasured at the end of each reporting period through settlement, with changes in the fair value recognized as compensation cost over the requisite service period. The compensation expense for each of the years is recognized on a separate basis during the respective requisite service period of each year.

The fair value of the award is estimated using the Monte-Carlo-pricing model. The effect of market conditions is reflected in the fair value measurements.

F - 8

ITURAN LOCATION AND CONTROL LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (cont.)

NOTE 1   -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

D. Stock-based compensation (cont.)

The following data and assumptions were used for the measurement at June 30, 2018:

Risk free rates: (*)
Annual rate (%)	0.14
Daily rate (%)	0.00058
Standard deviation:
Russell 2000 daily yields volatility (%)	1.004
The Company common stock daily yields volatility (%)	1.498
Number of iteration	50,000

(*) The risk free rates used in the model are the risk free rates for 0.50 years non linked deposits, taken from "Mirvah Hogen" data base for June 2018.

The total fair value estimation of the cash incentive valuation was approximately US$ 82 thousand.

During the six month period ended June 30, 2018, the Company recorded expenses in the amount of US$ 43 thousand.

E. Recently issued accounting pronouncements

Accounting Standard Update 2014-09, “Revenue from Contracts with Customers”

Commencing January 1, 2018 the Company adopted 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 ASU 2014-09 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 an amendment to ASU 2014-09, introduced by Accounting Standard 2015-14, “Revenue from contracts with Customers – Deferral of the Effective Date”, for a public entity, the amendments in ASU 2014-09 became 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).

The Company has established a process of evaluation of the impact of ASU 2014-09 on its revenue streams and selling contracts and transactions, if any, and on its financial reporting and disclosures, business processes, systems and controls. In such evaluation, management has considered, among other things, the opinion of third party professional accounting advisors.

Based on its evaluation, management concluded that the standard did not have significant effect on the timing of recognizing revenues from SVR services subscription fees, as such services are recognized monthly, or on the timing of recognizing revenues from sales of wireless communications products.However, the standard affected the timing of revenues from certain warranty services related to wireless communications products that the Company provides for periods beyond the period required by law (i.e. one year). Under the previous GAAP, such revenues were regarded as standard warranties as they are not separately priced and the company’s business practice is to provide a three-year warranty as a standard to certain customers.

F - 9

 

ITURAN LOCATION AND CONTROL LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (cont.)

NOTE 1     -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

E. Recently issued accounting pronouncements (cont.)

Accounting Standard Update 2014-09, “Revenue from Contracts with Customers” (cont.)

Under the new guidance, the warranty services exceeding one year are considered as a separate performance obligation (‘a service-type warranty’) and a portion of the transaction price, is allocated to such service, based on the standalone selling price of the warranty. The total amount of revenue recognized from these contracts will not change. However, the revenue allocated to the warranty services is deferred and recognized over the related warranty period on a straight-line basis.

As a result of the above change the company recorded deferred revenues related to the service type warranty as a cumulative adjustment to retained earnings in an amount of approximately US$3 million (net of tax) as of January 1, 2018.

In addition, management has determined that the previous accounting treatment of deferred installation expenses, prepaid and similar expenses will not change significantly, as such expenses are considered under the new guidance as incremental costs of obtaining contracts which are expected to be recovered, Accordingly, they are accounted for as an asset as before.

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 lessee‘s 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.

F - 10

ITURAN LOCATION AND CONTROL LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (cont.)

NOTE 1     -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

E. Recently issued accounting pronouncements (cont.)

Accounting Standards Update No. 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment”

In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04").

ASU 2017-04 eliminate Step 2 from the goodwill impairment test, to simplify the subsequent measurement of goodwill. In accordance with the new guidance, the annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable.

The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary.

The amendments should be applied on a prospective basis. The nature of and reason for the change in accounting principle should be disclosed upon transition.

A public business entity that is a U.S. Securities and Exchange Commission (SEC) filer should adopt the amendments for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019.

Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.

Management does not believe that the provisions of ASU 2017-04 will have a significant effect on its consolidated financial statements.

Accounting Standards Update No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”

In June 2016, The FASB has issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”).

The ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations.

ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates.

Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances.

ASU 2016-13 requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements.

In addition, ASU 2016-13 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.

ASU 2016-13 is effective for SEC filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 (i.e., January 1, 2020, for calendar year entities).

F - 11

ITURAN LOCATION AND CONTROL LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (cont.)

NOTE 1     -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

E. Recently issued accounting pronouncements (cont.)

Accounting Standards Update No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (cont.)

Early application will be permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.

The Company is in the process of assessing the impact, if any, of ASU 2016-13 on its consolidated financial statements.

Accounting Standards Update 2017-12 “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities”

In August 2017, the FASB issued ASC Update 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. (ASU 2017-12)”

ASU 2017-12, amends the hedge accounting recognition and presentation requirements in ASC 815 in order to (1) improve the transparency and understandability of information conveyed to financial statement users about an entity’s risk management activities by better aligning the entity’s financial reporting for hedging relationships with those risk management activities and (2) reduce the complexity of and simplify the application of hedge accounting by preparers.

ASU 2017-12 eliminates the concept of separately recognizing periodic hedge ineffectiveness for cash flow and net investment hedges. Accordingly, the impact of both the effective and ineffective components of a hedging relationship will be recognized in the same financial reporting period and in the same income statement line item. Also, the guidance in ASU 2017-12 includes certain targeted improvements to existing guidance on quantitative and qualitative assessments of initial and ongoing hedge effectiveness.

The transition guidance in ASU 2017-12 requires an entity to apply the amendments using a modified retrospective approach to hedging relationships that exist as of the date of adoption by recording a cumulative-effect adjustment to the opening balance of retained earnings as of the most recent period presented. Entities must apply the new and modified disclosure requirements prospectively from the date of adoption.

For public business entities, the guidance in ASU 2017-12 is effective for fiscal years beginning after December 15, 2018 and for interim periods within those fiscal years. For all other entities, the guidance is effective for fiscal years beginning after December 15, 2019 and for interim periods within fiscal years beginning after December 15, 2020. Early application of the guidance is permitted, including in an interim reporting period. If adopting the guidance in an interim reporting period, an entity must reflect the effect of the adoption as of the beginning of the fiscal year that includes the interim reporting period in which the guidance is adopted.

The Company is evaluating the impact of the amendments on its consolidated financial statements.

F.      Reclassified Amounts

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications did not have material effect on the reported results of operations, shareholder’s deficit or cash flows.

NOTE 2        -     EVENTS DURING THE REPORTING PERIOD

In February 2018, the Company declared a dividend in the amount of US$ 0.24 per share, totaling approximately 5 million US$ (NIS 17.8 million).  The dividend was paid in April 2018.

In April 2018, the Company declared a dividend in the amount of US$ 0.24 per share, totaling approximately 5 million US$ (NIS 18.2 million).  The dividend was paid in July 2018.

F - 12

ITURAN LOCATION AND CONTROL LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (cont.)

NOTE 3         -     SEGMENT REPORTING

A. General information:

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 Group sells products to customers in Israel, United States and others.

B. Information about reported segment profit or loss and assets:

	US dollars
(in thousands)	Location based services		Wireless communications products		Total
Six month period ended June 30, 2018 (unaudited)
Revenues		87,189		33,605		120,794
Operating income		29,433		898		30,331
Expenditures for assets		6,802		282		7,084
Depreciation and amortization		4,517		218		4,735
Six month period ended June 30, 2017 (unaudited)
Revenues		81,437		32,010		113,447
Operating income		25,487		2,482		27,969
Expenditures for assets		2,846		250		3,096
Depreciation and amortization		4,847		133		4,980

As of June 30, 2018 (unaudited)
Assets	77,364	17,666	95,030
Goodwill	1,645	1,942	3,587
As of December 31, 2017
Assets	95,384	17,192	112,576
Goodwill	1,732	2,045	3,777

F - 13

ITURAN LOCATION AND CONTROL LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (cont.)

NOTE 3      -     SEGMENT REPORTING (cont.)

C. Information about reported segment profit or loss and assets:

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, 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.

D. Reconciliations of reportable segment revenues, profit or loss, and assets, to the enterprise’s consolidated totals:

	US dollars
	Six month period ended June 30,
(in thousands)	2018		2017
	(unaudited)
Total revenues of reportable segment and consolidated revenues		120,794		113,447
Operating income
Total operating income for reportable segments		30,331		27,969
Unallocated amounts:
Financing income, net		568		841
Consolidated income before taxes on income		30,899		28,810

	US dollars
	Six month period ended June 30,
(in thousands)	2018		2017
	(unaudited)
Other significant items
Total expenditures for assets of reportable segments		7,084		3,096
Unallocated amounts		2,717		3,159
Consolidated total expenditures for assets		9,801		6,255
Total depreciation and amortization for reportable segments		4,735		4,980
Unallocated amounts		1,954		1,487
Consolidated total depreciation and amortization		6,689		6,467

F - 14

ITURAN LOCATION AND CONTROL LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (cont.)

NOTE 3 -    SEGMENT REPORTING (cont.)

D. Reconciliations of reportable segment revenues, profit or loss, and assets, to the enterprise’s consolidated totals (cont.):

	US dollars
	June 30,		December 31,
(in thousands)	2018		2017
	(unaudited)
Assets
Total assets for reportable segments (*)		98,617		116,353
Other unallocated amounts:
Current assets		68,350		59,412
Investments in affiliated and other companies		15,960		16,221
Property and equipment, net		15,005		15,092
Other unallocated amounts		9,236		8,081
Consolidated total assets (at period end)		207,168		215,159

(*) Including goodwill.

E. Geographic information

	Revenues
	US dollars
	Six month period ended June 30,
(in thousands)	2018		2017
	(unaudited)
Israel		62,410		56,859
United States		4,184		4,040
Brazil		45,198		42,333
Argentina		6,307		7,906
Others		2,695		2,309
Total		120,794		113,447

F - 15

ITURAN LOCATION AND CONTROL LTD.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (cont.)

NOTE 3 -    SEGMENT REPORTING (cont.)

E. Geographic information (cont.)

	Property and equipment, net
	US dollars
	June 30,		December 31,
(in thousands)	2018		2017
	(unaudited)
Israel		16,580		16,757
United States		169		118
Brazil		17,813		17,969
Argentina		2,670		4,203
Total		37,232		39,047

- 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

During the six month periods ended June 30, 2018 and 2017, there were no sales exceeding 10% of total revenues to any of the Company's customers.

NOTE 4 -     FAIR VALUE OF FINANCIAL INSTRUMENTS

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.

The Company’s financial assets (liabilities) measured at fair value on a recurring basis, consisted of the following types of instruments as of June 30, 2018 and December 31, 2017:

	US Dollars
	June 30, 2018
(in thousands)	Level 1		Level 2		Level 3
Trading securities		1,319		-		-
Derivatives designated as hedging instruments		-		845		-
Total		1,319		845		-

F - 16

ITURAN LOCATION AND CONTROL LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)

NOTE 4 -    FAIR VALUE OF FINANCIAL INSTRUMENTS (cont.)

	US Dollars
	December 31, 2017
(in thousands)	Level 1		Level 2			Level 3
Trading securities		3,559		-			-
Derivatives designated as hedging instruments		-		(580	)		-
Total		3,559		(580	)		-

NOTE 5 -    SUBSEQUENT EVENTS

A. On July 24, 2018 the company announced the acquisition of the majority of the shares of Road Track Holding S.L, a telematics’ company operating primarily in the Latin American region.

The company will pay the shareholders of Road Track Holding S.L $91.7 million for 81.3% of the company valuing the company at approximately $113 million. Of this, $75.7 million will be paid in cash, through a debt facility provided by the companies lending bank. An additional $12 million will be paid in the company shares. The remaining $4 million will be paid out of the company’s equity as a bonus over the coming three years to the senior management of Road Track Holding S.L who will remain with the company through the end of that period. The final acquisition price may be subject to downward adjustments depending on the full year 2018 performance of the Road Track business. Following three years of joint operations, the company will purchase the remainder of Road Track’s shares at a price based on a valuation that will be made at that time.

On September 13, 2018, the company issued a press release announcing the closing of the aforementioned acquisition of the majority of the shares of Road Track Holding S.L.A

B. In August 2018, the Company declared a dividend in an amount of US$ 5 million. The dividend will be paid in October 2018

F - 17

EX-99.2

Exhibit 99.2

ITURAN LOCATION AND CONTROL LTD

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

For the Six Months Ended June 30, 2018

Comparison of Period to Period Results of Operations

	US dollars
	Six month period ended June 30,
(in thousands except per share data)	2018			2017
	(unaudited)
Revenues:
Location-based services		87,189			81,437
Wireless communications products		33,605			32,010
		120,794			113,447
Cost of revenues:
Location-based services		27,839			27,305
Wireless communications products		32,571			27,879
		60,410			55,184
Gross profit		60,384			58,263
Research and development expenses		2,099			1,768
Selling and marketing expenses		5,482			6,278
General and administrative expenses		22,590			22,391
Other expenses (income), net		(118	)		(143	)
Total operating expenses		30,053			30,294
Operating income		30,331			27,969
Financing income, net		568			841
Income before income tax		30,899			28,810
Income tax expenses		(8,510	)		(8,444	)
Share in gains of affiliated companies ,net		2,224			4,489
Net income for the period		24,613			24,855
Less: Net income attributable to non-controlling interests		(1,319	)		(1,415	)
Net income attributable to the Company		23,294			23,440

	US dollars
	Six month period ended June 30,
(in thousands except per share data)	2018			2017
	(unaudited) (as a% of revenues)
Revenues:
Location-based services		72.2	%		71.8	%
Wireless communications products		27.8	%		28.2	%
		100	%		100	%
Cost of revenues:
Location-based services		23.0			24.1
Wireless communications products		27.0			24.6
		50.0			48.7
Gross profit		50.0			51.3
Research and development expenses		1.7			1.6
Selling and marketing expenses		4.5			5.5
General and administrative expenses		18.7			19.7
Other expenses (income), net		(0.1	)		(0.1	)
Total Operating Expenses , net		24.8			26.7
Operating income		25.2			24.6
Financing income, net		0.5			0.7
Income before income tax		25.7			25.3
Income tax expenses		(7.1	)		(7.4	)
Share in gains of affiliated companies ,net		1.8			4.0
Net income for the period		20.4			21.9
Less: Net income attributable to non-controlling interests		(1.1	)		(1.2	)
Net income attributable to the Company		19.3	%		20.7	%

Comparison of the Six Months Ended June 30, 2018 and 2107

Revenues      

Total revenues increased from $113.4 million in the six month period ended June 30, 2017, to $120.8 million in the six month period ended June 30, 2018, or 6.5%. This increase consisted of an increase of $5.8 million from subscription fees from our location-based services and an increase of $1.6 million from sales of our wireless communications products.

Location-based services segment

Revenues in our location-based services segment increased by $5.8 million from $81.4 million in the six month period ended June 30, 2017, to $87.2 million in the six month period ended June 30, 2018, or 7.1% mainly due to an increase in our average semiannual number of subscribers from 1,084,000 in the six month period ended June 30, 2017, to 1,180,000 in the six month period ended June 30, 2018, which was offset by the negative impact of the exchange rate fluctuations in an amount of $4.0 million. The significant strengthening of the US Dollar versus the Brazilian Real and the Argentinean Peso during the six months ended June 30, 2018 versus the comparable period of 2017 reduced the revenue level in US Dollars.

Excluding the negative impact of the exchange rate fluctuations the revenues in our location-based services would have increased by $9.8 million or 12.0%.

Wireless communications products segment         

Revenues in our wireless communications products segment increased from $32.0 million in the six month period ended June 30, 2017, to $33.6 million in the six month period ended June 30, 2018, or 5%. The increase of $1.6 million is primarily due to an increase of $0.6 million in our products' sales, and a positive effect of exchange rates fluctuation in an amount of $1.0 million.

Cost of revenues         

Total cost of revenues increased from $55.2 million in the six month period ended June 30, 2017, to $60.4 million in the six month period ended June 30, 2018, or 9.4%.This increase consisted of an increase of $0.5 million in the location based services segment and an increase of $4.7 million in the wireless communication product segment. As a percentage of total revenues, cost of revenues increased from 48.7% in the six month period ended June 30, 2017, to 50.0% in the six month period ended June 30, 2018.

Location-based services segment

Cost of revenues for our location-based services segment increased from $27.3 million in the six month period ended June 30, 2017, to $27.8 million in the six month period ended June 30, 2018, or 1.8%. As a percentage of total revenues for this segment, cost of revenues decreased from 33.5% in the six month period ended June 30, 2017, to 31.9% in the six month period ended June 30, 2018.

Wireless communications products segment

Cost of revenues for our wireless communications products segment increased from $27.9 million in the six month period ended June 30, 2017, to $32.6 million in the six month period ended June 30, 2018, or 16.8%. This increase was mainly due to a mix favoring more complex products being sold supporting our service revenues and also due to a change in the product sales mixture. As a percentage of total revenues for this segment, cost of revenues increased from 87.1% in the six month period ended June 30, 2017, to 96.9% in the six month period ended June 30, 2018.

Operating expenses

Research and development

Our research and development expenses increased from $1.8 million in the six month period ended June 30, 2017, to $2.1 million in the six month period ended June 30, 2018. As a percentage of total revenues, research and development expenses increased slightly from 1.6% in the six month period ended June 30, 2017, to 1.7% in the six month period ended June 30, 2018. There was no material changein the research and development expenses.

Selling and marketing         

Our selling and marketing expenses decreased from $6.3 million in the six month period ended June 30, 2017, to $5.5 million in the six month period ended June 30, 2018.  As a percentage of total revenues, selling and marketing expenses decreased from 5.5% in the six month period ended June 30, 2017, to 4.5% in the six month period ended June 30, 2018. There was no material change in the selling and marketing expenses.

General and administrative         

General and administrative expenses increased slightly from $22.4 million in the six month period ended June 30, 2017, to $22.6 million in the six month period ended June 30, 2018, or 0.9%. As a percentage of total revenues, general and administrative expenses decreased from 19.7 % in the six month period ended June 30, 2017, to 18.7% in the six month period ended June 30, 2018. There was no material change in the selling and marketing expenses.

Other expenses (income), net

Other income, net in the six month period ended June 30, 2017, were $143 thousand compared with $118 thousand in the six month period ended June 30, 2018. There was no material change in the other income, net

Operating income      

Total operating income increased from $28.0 million in the six month period ended June 30, 2017, to $30.3 million in the six month period ended June 30, 2018, or 8.2%. This increase of approximately $2.3 million reflects an increase of $3.9 million in the operating income in the location-based segment and a decrease of $1.6 million in the operating income in the wireless communication products segment.

Location-based services segment         

Operating income in our location-based services segment increased from $25.5 million in the six month period ended June 30, 2017, to $29.4 million in the six month period ended June 30, 2018, or 15.3%. This increase was mainly due to an increase in our average semiannual number of subscribers

Wireless communications products segment         

Operating income in our wireless communications products segment decreased from an operating income of $2.5 million in the six month period ended June 30, 2017, to an operating income of 0.9 million in the six month period ended June 30, 2018. This decrease in mainly due to a mix favoring more complex products being sold in order to support our service revenues and also due to a change in the product sales mixture

Financing income, net      

Financing income, net, were $841 thousand in the six month period ended June 30, 2017, compared with an income of $568 thousand in the six month period ended June 30, 2018. There was no material change in the financing income, net.

Income Tax        

Income Tax increased slightly from $8.4 million in the six month period ended June 30, 2017, to $8.5 million in the six month period ended June 30, 2018, or 1.2%. As a percentage of income before tax on income expense tax decreased from 29.3 % in the six month period ended June 30, 2017, to 27.5% in the six month period ended June 30, 2018, primarily due to a change in the income before tax mix among the group's companies.

The following table presents the major components of net cash flows for the periods presented:

	US dollars
	Six month period ended June 30,
(in thousands)	2018			2017
	(unaudited)
Net cash provided by operating activities		19,898			17,276
Net cash used in investment activities		(7,032	)		(8,559	)
Net cash used in financing activities		(11,072	)		(13,340	)

Six month period ended June 30 2018 and June 30 2017

Net cash provided by operating activities

Our operating activities provided cash of $17.3 million in in the six month period ended June 30, 2017, and $19.9 million in the six month period ended June 30, 2018.

The increase of approximately $2.6 million in cash from operation activities in the six month period ended June 30, 2018, as opposed to the six month period ended June 30, 2017, was mainly due to an increase of $2.1 million in income before income tax.

Net cash used in investment activities

Net cash used in investment activities in the six months ended June 30, 2018 was $7.0 million which was primarily attributed to our capital expenditure of $10.0 million which was offset by proceed from loans to affiliated companies and investment in affiliated and other companies, net of $1.1 million and a sale of marketable securities, net (include investment in marketable securities) of $1.7 million.

Net cash used in investment activities in the six months ended June 30, 2017 was $8.6 million which was primarily attributed to our capital expenditure of $6.7 million and invest in marketable securities, net (include sale of marketable securities) of $1.1 million and invested in affiliated and other companies, net (include proceed from loans to affiliated companies) of $0.6 million.

Net cash used in financing activities

Net cash used in financing activities in the six months ended June 30, 2018 was $11.1 million which was primarily attributed to a dividend paid to our shareholders in the amount of $10.1 million and a dividend paid to non-controlling interest in the amount of $1.0 million.

Net cash used in financing activities in the six months ended June 30, 2017 was $13.3 million which was primarily attributed to a dividend paid to our shareholders in the amount of $12.6 million and a dividend paid to non-controlling interest in the amount of $0.7 million.

XML

Document And Entity Information	6 Months Ended
	Jun. 30, 2018
Document And Entity Information [Abstract]
Document Type	6-K
Amendment Flag	false
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Entity Registrant Name	Ituran Location & Control Ltd.
Entity Central Index Key	0001337117
Entity Filer Category	Accelerated Filer
Current Fiscal Year End Date	--12-31

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Current assets
Cash and cash equivalents	$ 36,106	$ 36,906
Investment in marketable securities	1,319	3,559
Accounts receivable (net of allowance for doubtful accounts)	43,097	41,009
Other current assets	39,746	41,394
Inventories	13,526	14,244
Total current assets	133,794	137,112
Long-term investments and other assets
Investments in affiliated companies	13,774	14,839
Investments in other companies	2,186	1,382
Other non-current assets	1,062	939
Deferred income taxes	6,450	8,398
Funds in respect of employee rights upon retirement	9,006	9,627
Total non-current assets	32,478	35,185
Property and equipment, net	37,232	39,047
Intangible assets, net	77	38
Goodwill	3,587	3,777
Total assets	207,168	215,159
Current liabilities
Credit from banking institutions	3	48
Accounts payable	19,059	23,264
Deferred revenues	14,045	12,796
Other current liabilities	27,525	29,644
Total current liabilities	60,632	65,752
Long-term liabilities
Liability for employee rights upon retirement	13,245	14,062
Provision for contingencies	513	400
Deferred revenues	612	1,241
Other non-current liabilities	402	475
Total non-current liabilities	14,772	16,178
Stockholders' equity
Stockholders' equity	124,526	125,790
Non-controlling interests	7,238	7,439
Total equity	131,764	133,229
Total liabilities and equity	$ 207,168	$ 215,159

XML

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Revenues:
Location-based services	$ 87,189	$ 81,437
Wireless communications products	33,605	32,010
Total revenues	120,794	113,447
Cost of revenues:
Location-based services	27,839	27,305
Wireless communications products	32,571	27,879
Total cost of revenues	60,410	55,184
Gross profit	60,384	58,263
Research and development expenses	2,099	1,768
Selling and marketing expenses	5,482	6,278
General and administrative expenses	22,590	22,391
Other expenses (income), net	(118)	(143)
Operating income	30,331	27,969
Financing income, net	568	841
Income before income tax	30,899	28,810
Income tax expenses	(8,510)	(8,444)
Share in gains of affiliated companies, net	2,224	4,489
Net income for the period	24,613	24,855
Less: Net income attributable to non-controlling interests	(1,319)	(1,415)
Net income attributable to the Company	$ 23,294	$ 23,440
Basic and diluted earnings per share attributable to Company's stockholders	$ 1.11	$ 1.12
Basic and diluted weighted average number of shares outstanding (in thousands)	20,968	20,968

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Statement of Comprehensive Income [Abstract]
Net income for the period	$ 24,613	$ 24,855
Other comprehensive income, net of tax:
Foreign currency translation adjustments	(13,164)	4,461
Unrealized gains (losses) in respect of derivative financial instruments designated for cash flow hedge	1,126
Reclassification of net gains realized to net income	(29)
Other comprehensive loss, net of tax	(12,067)	4,461
Comprehensive income	12,546	29,316
Less: comprehensive income attributable to non-controlling interests	(771)	(1,862)
Comprehensive income attributable to the Company	$ 11,775	$ 27,454

XML

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - 6 months ended Jun. 30, 2018 - USD ($) $ in Thousands	Ordinary shares [Member]	Ordinary shares [Member] Adjustment [Member]	Additional Paid In Capital [Member]	Additional Paid In Capital [Member] Adjustment [Member]	Accumulated Other Comprehensive Income [Member]	Accumulated Other Comprehensive Income [Member] Adjustment [Member]	Retained Earnings [Member]	Retained Earnings [Member] Adjustment [Member]	Treasury Stock [Member]	Treasury Stock [Member] Adjustment [Member]	Non-controlling Interest [Member]	Non-controlling Interest [Member] Adjustment [Member]	Total	Adjustment [Member]
Balance at Dec. 31, 2017	$ 1,983	$ 1,983	$ 71,550	$ 71,550	$ (9,754)	$ (9,754)	$ 92,065	$ 89,093	$ (30,054)	$ (30,054)	$ 7,439	$ 7,439	$ 133,229	$ 130,257
Balance, shares at Dec. 31, 2017	23,476	23,476
Impact of change in accounting policy (Note 1E)							(2,972)						(2,972)
Changes during period:
Income for the period							23,294				1,319		24,613
Other comprehensive loss for the period					(11,519)						(548)		(12,067)
Dividend paid to non-controlling interests											(972)		(972)
Dividend paid													(5,000)
Dividend declared							(10,067)						(10,067)
Balance at Jun. 30, 2018	$ 1,983		$ 71,550		$ (21,273)		$ 102,320		$ (30,054)		$ 7,238		$ 131,764
Balance, shares at Jun. 30, 2018	23,476

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Cash flows from operating activities
Net income for the period	$ 24,613	$ 24,855
Adjustments to reconcile net income to net cash from operating activities:
Depreciation amortization and impairment of goodwill	6,689	6,467
Gain in respect of trading marketable securities	(341)	(67)
Increase (decrease) in liability for employee rights upon retirement	(73)	488
Share in gains of affiliated companies, net	(2,224)	(4,489)
Deferred income taxes	1,819	220
Capital losses (gains) on sale of property and equipment, net	69	(61)
Increase in accounts receivable	(5,754)	(5,517)
Increase in other current assets	(3,979)	(5,811)
Decrease (increase) in inventories	15	(1,464)
Increase (decrease) in accounts payable	(1,863)	1,487
Increase (decrease) in deferred revenues	(1,927)	2,236
Increase (decrease) in other current liabilities	2,854	(1,068)
Net cash provided by operating activities	19,898	17,276
Cash flows from investment activities
Decrease (Increase) in long-term funds in respect of employee rights upon retirement, net of withdrawals	153	(363)
Capital expenditures	(9,982)	(6,749)
Investments in affiliated companies	(1,250)	(97)
Investments in marketable securities	(22,375)	(3,189)
Sale of marketable securities	24,046	2,119
Investments in other companies	(897)	(1,061)
Deposit	(205)	38
Proceeds from loans to affiliated company	3,262	562
Proceeds from sale of property and equipment	216	181
Net cash used in investment activities	(7,032)	(8,559)
Cash flows from financing activities
Short term credit from banking institutions, net	(33)	(7)
Dividend paid	(10,067)	(12,581)
Dividend paid to non-controlling interest	(972)	(752)
Net cash used in financing activities	(11,072)	(13,340)
Effect of exchange rate changes on cash and cash equivalents	(2,594)	652
Net increase (decrease) in cash and cash equivalents	(800)	(3,971)
Balance of cash and cash equivalents at beginning of the period	36,906	31,087
Balance of cash and cash equivalents at end of the period	36,106	$ 27,116
Supplementary information on investing activities not involving cash flows:
Dividend paid	$ 5,000

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1         -    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements were prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP").

A. Company

Ituran Location and Control Ltd. (the “Company”) commenced operations in 1994.  The Company and its subsidiaries (the “Group”) are engaged in the provision of location-based services and machine-to-machine wireless communications products for use in stolen vehicle recovery, fleet management and other applications.

B. Basis of presentation

The accompanying condensed consolidated financial statements and related notes should be read in conjunction with our consolidated financial statements and related notes contained in our Annual Report on Form 20-F for the fiscal year ended December 31, 2017 (“fiscal 2017”).  The condensed consolidated interim financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) related to interim financial statements.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. The financial information contained herein is unaudited; however, management believes all adjustments have been made that are necessary to present fairly the results for the interim periods.  All such adjustments are of a normal and recurring nature. Certain reclassifications from the prior year presentation have been made to conform to the current period presentation.

Results of operations for the six and three month periods ended June 30, 2018 are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2018.

The consolidated balance sheet as of December 31, 2017 was derived from the audited financial statements at that date but does not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements.

C. Significant accounting policies

Other than described in paragraph E below, there have been no changes in the Company’s significant accounting policies that were disclosed in the Annual Report on Form 20-F for the fiscal year ended December 31, 2017. See our Annual Report on Form 20-F for the year ended December 31, 2017, for a discussion of significant accounting policies and estimates.

D. Stock-based compensation

The Company measures and recognizes compensation expense for cash bonuses to senior employees.  The cash grant described as "Excess Return Cash Incentive" for certain senior employees, in effect for calendar years 2017-2020 and which is based on the company's Stock Yield as compared to the Russell 2000 Index's Yield, is considered as based, or partly based, on the price of the Company’s shares and accordingly, was accounted for in accordance with ASC 718 -30, "Compensation-Stock Compensation - Awards Classified as Liabilities". The Company determined that the cash bonus for each of the years 2017-2020, represent separate award with a 1-year requisite service period each.

Accordingly, the awards are measured at the grant date at their fair value and remeasured at the end of each reporting period through settlement, with changes in the fair value recognized as compensation cost over the requisite service period. The compensation expense for each of the years is recognized on a separate basis during the respective requisite service period of each year.

The fair value of the award is estimated using the Monte-Carlo-pricing model. The effect of market conditions is reflected in the fair value measurements.

The following data and assumptions were used for the measurement at June 30, 2018:

Risk free rates: (*)
Annual rate (%)	0.14
Daily rate (%)	0.00058
Standard deviation:
Russell 2000 daily yields volatility (%)	1.004
The Company common stock daily yields volatility (%)	1.498
Number of iteration	50,000

(*) The risk free rates used in the model are the risk free rates for 0.50 years non linked deposits, taken from "Mirvah Hogen" data base for June 2018.

The total fair value estimation of the cash incentive valuation was approximately US$ 82 thousand.

During the six month period ended June 30, 2018, the Company recorded expenses in the amount of US$ 43 thousand.

E. Recently issued accounting pronouncements

Accounting Standard Update 2014-09, “Revenue from Contracts with Customers”

Commencing January 1, 2018 the Company adopted 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 ASU 2014-09 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 an amendment to ASU 2014-09, introduced by Accounting Standard 2015-14, “Revenue from contracts with Customers – Deferral of the Effective Date”, for a public entity, the amendments in ASU 2014-09 became 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).

The Company has established a process of evaluation of the impact of ASU 2014-09 on its revenue streams and selling contracts and transactions, if any, and on its financial reporting and disclosures, business processes, systems and controls. In such evaluation, management has considered, among other things, the opinion of third party professional accounting advisors.

Based on its evaluation, management concluded that the standard did not have significant effect on the timing of recognizing revenues from SVR services subscription fees, as such services are recognized monthly, or on the timing of recognizing revenues from sales of wireless communications products.However, the standard affected the timing of revenues from certain warranty services related to wireless communications products that the Company provides for periods beyond the period required by law (i.e. one year). Under the previous GAAP, such revenues were regarded as standard warranties as they are not separately priced and the company’s business practice is to provide a three-year warranty as a standard to certain customers.

Under the new guidance, the warranty services exceeding one year are considered as a separate performance obligation (‘a service-type warranty’) and a portion of the transaction price, is allocated to such service, based on the standalone selling price of the warranty. The total amount of revenue recognized from these contracts will not change. However, the revenue allocated to the warranty services is deferred and recognized over the related warranty period on a straight-line basis.

As a result of the above change the company recorded deferred revenues related to the service type warranty as a cumulative adjustment to retained earnings in an amount of approximately US$3 million (net of tax) as of January 1, 2018.

In addition, management has determined that the previous accounting treatment of deferred installation expenses, prepaid and similar expenses will not change significantly, as such expenses are considered under the new guidance as incremental costs of obtaining contracts which are expected to be recovered, Accordingly, they are accounted for as an asset as before.

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 lessee‘s 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.

Accounting Standards Update No. 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment”

In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04").

ASU 2017-04 eliminate Step 2 from the goodwill impairment test, to simplify the subsequent measurement of goodwill. In accordance with the new guidance, the annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable.

The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary.

The amendments should be applied on a prospective basis. The nature of and reason for the change in accounting principle should be disclosed upon transition.

A public business entity that is a U.S. Securities and Exchange Commission (SEC) filer should adopt the amendments for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019.

Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.

Management does not believe that the provisions of ASU 2017-04 will have a significant effect on its consolidated financial statements.

Accounting Standards Update No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”

In June 2016, The FASB has issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”).

The ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations.

ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates.

Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances.

ASU 2016-13 requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements.

In addition, ASU 2016-13 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.

ASU 2016-13 is effective for SEC filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 (i.e., January 1, 2020, for calendar year entities).

Early application will be permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.

The Company is in the process of assessing the impact, if any, of ASU 2016-13 on its consolidated financial statements.

Accounting Standards Update 2017-12 “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities”

In August 2017, the FASB issued ASC Update 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. (ASU 2017-12)”

ASU 2017-12, amends the hedge accounting recognition and presentation requirements in ASC 815 in order to (1) improve the transparency and understandability of information conveyed to financial statement users about an entity’s risk management activities by better aligning the entity’s financial reporting for hedging relationships with those risk management activities and (2) reduce the complexity of and simplify the application of hedge accounting by preparers.

ASU 2017-12 eliminates the concept of separately recognizing periodic hedge ineffectiveness for cash flow and net investment hedges. Accordingly, the impact of both the effective and ineffective components of a hedging relationship will be recognized in the same financial reporting period and in the same income statement line item. Also, the guidance in ASU 2017-12 includes certain targeted improvements to existing guidance on quantitative and qualitative assessments of initial and ongoing hedge effectiveness.

The transition guidance in ASU 2017-12 requires an entity to apply the amendments using a modified retrospective approach to hedging relationships that exist as of the date of adoption by recording a cumulative-effect adjustment to the opening balance of retained earnings as of the most recent period presented. Entities must apply the new and modified disclosure requirements prospectively from the date of adoption.

For public business entities, the guidance in ASU 2017-12 is effective for fiscal years beginning after December 15, 2018 and for interim periods within those fiscal years. For all other entities, the guidance is effective for fiscal years beginning after December 15, 2019 and for interim periods within fiscal years beginning after December 15, 2020. Early application of the guidance is permitted, including in an interim reporting period. If adopting the guidance in an interim reporting period, an entity must reflect the effect of the adoption as of the beginning of the fiscal year that includes the interim reporting period in which the guidance is adopted.

The Company is evaluating the impact of the amendments on its consolidated financial statements.

F.      Reclassified Amounts

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications did not have material effect on the reported results of operations, shareholder’s deficit or cash flows.

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EVENTS DURING THE REPORTING PERIOD

6 Months Ended

Jun. 30, 2018

Events During Reporting Period [Abstract]

EVENTS DURING THE REPORTING PERIOD

NOTE 2 -     EVENTS DURING THE REPORTING PERIOD

In February 2018, the Company declared a dividend in the amount of US$ 0.24 per share, totaling approximately 5 million US$ (NIS 17.8 million).  The dividend was paid in April 2018.

In April 2018, the Company declared a dividend in the amount of US$ 0.24 per share, totaling approximately 5 million US$ (NIS 18.2 million).  The dividend was paid in July 2018.

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SEGMENT REPORTING

6 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

SEGMENT REPORTING

NOTE 3         -     SEGMENT REPORTING

A. General information:

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 Group sells products to customers in Israel, United States and others.

B. Information about reported segment profit or loss and assets:

	US dollars
(in thousands)	Location based services		Wireless communications products		Total
Six month period ended June 30, 2018 (unaudited)
Revenues		87,189		33,605		120,794
Operating income		29,433		898		30,331
Expenditures for assets		6,802		282		7,084
Depreciation and amortization		4,517		218		4,735
Six month period ended June 30, 2017 (unaudited)
Revenues		81,437		32,010		113,447
Operating income		25,487		2,482		27,969
Expenditures for assets		2,846		250		3,096
Depreciation and amortization		4,847		133		4,980

As of June 30, 2018 (unaudited)
Assets	77,364	17,666	95,030
Goodwill	1,645	1,942	3,587
As of December 31, 2017
Assets	95,384	17,192	112,576
Goodwill	1,732	2,045	3,777

C. Information about reported segment profit or loss and assets:

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, 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.

D. Reconciliations of reportable segment revenues, profit or loss, and assets, to the enterprise’s consolidated totals:

	US dollars
	Six month periodended June 30,
(in thousands)	2018		2017
	(unaudited)
Total revenues of reportable segment and consolidated revenues		120,794		113,447
Operating income
Total operating income for reportable segments		30,331		27,969
Unallocated amounts:
Financing income, net		568		841
Consolidated income before taxes on income		30,899		28,810

	US dollars
	Six month period ended June 30,
(in thousands)	2018		2017
	(unaudited)
Other significant items
Total expenditures for assets of reportable segments		7,084		3,096
Unallocated amounts		2,717		3,159
Consolidated total expenditures for assets		9,801		6,255
Total depreciation and amortization for reportable segments		4,735		4,980
Unallocated amounts		1,954		1,487
Consolidated total depreciation and amortization		6,689		6,467

	US dollars
	June 30,		December 31,
(in thousands)	2018		2017
	(unaudited)
Assets
Total assets for reportable segments (*)		98,617		116,353
Other unallocated amounts:
Current assets		68,350		59,412
Investments in affiliated and other companies		15,960		16,221
Property and equipment, net		15,005		15,092
Other unallocated amounts		9,236		8,081
Consolidated total assets (at period end)		207,168		215,159

(*) Including goodwill.

E. Geographic information

	Revenues
	US dollars
	Six month periodended June 30,
(in thousands)	2018		2017
	(unaudited)
Israel		62,410		56,859
United States		4,184		4,040
Brazil		45,198		42,333
Argentina		6,307		7,906
Others		2,695		2,309
Total		120,794		113,447

	Property andequipment, net
	US dollars
	June 30,		December 31,
(in thousands)	2018		2017
	(unaudited)
Israel		16,580		16,757
United States		169		118
Brazil		17,813		17,969
Argentina		2,670		4,203
Total		37,232		39,047

- 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

During the six month periods ended June 30, 2018 and 2017, there were no sales exceeding 10% of total revenues to any of the Company's customers.

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FAIR VALUE OF FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 4 -     FAIR VALUE OF FINANCIAL INSTRUMENTS

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.

The Company’s financial assets (liabilities) measured at fair value on a recurring basis, consisted of the following types of instruments as of June 30, 2018 and December 31, 2017:

	US Dollars
	June 30, 2018
(in thousands)	Level 1		Level 2		Level 3
Trading securities		1,319		-		-
Derivatives designated as hedging instruments		-		845		-
Total		1,319		845		-

	US Dollars
	December 31, 2017
(in thousands)	Level 1		Level 2			Level 3
Trading securities		3,559		-			-
Derivatives designated as hedging instruments		-		(580	)		-
Total		3,559		(580	)		-

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2018

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 5 -    SUBSEQUENT EVENTS

A. On July 24, 2018 the company announced the acquisition of the majority of the shares of Road Track Holding S.L, a telematics’ company operating primarily in the Latin American region.

The company will pay the shareholders of Road Track Holding S.L $91.7 million for 81.3% of the company valuing the company at approximately $113 million. Of this, $75.7 million will be paid in cash, through a debt facility provided by the companies lending bank. An additional $12 million will be paid in the company shares. The remaining $4 million will be paid out of the company’s equity as a bonus over the coming three years to the senior management of Road Track Holding S.L who will remain with the company through the end of that period. The final acquisition price may be subject to downward adjustments depending on the full year 2018 performance of the Road Track business. Following three years of joint operations, the company will purchase the remainder of Road Track’s shares at a price based on a valuation that will be made at that time.

On September 13, 2018, the company issued a press release announcing the closing of the aforementioned acquisition of the majority of the shares of Road Track Holding S.L.A

B. In August 2018, the Company declared a dividend in an amount of US$ 5 million. The dividend will be paid in October 2018

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Company

A. Company

Ituran Location and Control Ltd. (the “Company”) commenced operations in 1994.  The Company and its subsidiaries (the “Group”) are engaged in the provision of location-based services and machine-to-machine wireless communications products for use in stolen vehicle recovery, fleet management and other applications.

Basis of presentation

B. Basis of presentation

The accompanying condensed consolidated financial statements and related notes should be read in conjunction with our consolidated financial statements and related notes contained in our Annual Report on Form 20-F for the fiscal year ended December 31, 2017 (“fiscal 2017”).  The condensed consolidated interim financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) related to interim financial statements.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. The financial information contained herein is unaudited; however, management believes all adjustments have been made that are necessary to present fairly the results for the interim periods.  All such adjustments are of a normal and recurring nature. Certain reclassifications from the prior year presentation have been made to conform to the current period presentation.

Results of operations for the six and three month periods ended June 30, 2018 are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2018.

The consolidated balance sheet as of December 31, 2017 was derived from the audited financial statements at that date but does not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements.

Significant accounting policies

C. Significant accounting policies

Other than described in paragraph E below, there have been no changes in the Company’s significant accounting policies that were disclosed in the Annual Report on Form 20-F for the fiscal year ended December 31, 2017. See our Annual Report on Form 20-F for the year ended December 31, 2017, for a discussion of significant accounting policies and estimates.

Stock-based compensation

D. Stock-based compensation

The Company measures and recognizes compensation expense for cash bonuses to senior employees.  The cash grant described as "Excess Return Cash Incentive" for certain senior employees, in effect for calendar years 2017-2020 and which is based on the company's Stock Yield as compared to the Russell 2000 Index's Yield, is considered as based, or partly based, on the price of the Company’s shares and accordingly, was accounted for in accordance with ASC 718 -30, "Compensation-Stock Compensation - Awards Classified as Liabilities". The Company determined that the cash bonus for each of the years 2017-2020, represent separate award with a 1-year requisite service period each.

Accordingly, the awards are measured at the grant date at their fair value and remeasured at the end of each reporting period through settlement, with changes in the fair value recognized as compensation cost over the requisite service period. The compensation expense for each of the years is recognized on a separate basis during the respective requisite service period of each year.

The fair value of the award is estimated using the Monte-Carlo-pricing model. The effect of market conditions is reflected in the fair value measurements.

The following data and assumptions were used for the measurement at June 30, 2018:

Risk free rates: (*)
Annual rate (%)	0.14
Daily rate (%)	0.00058
Standard deviation:
Russell 2000 daily yields volatility (%)	1.004
The Company common stock daily yields volatility (%)	1.498
Number of iteration	50,000

(*) The risk free rates used in the model are the risk free rates for 0.50 years non linked deposits, taken from "Mirvah Hogen" data base for June 2018.

The total fair value estimation of the cash incentive valuation was approximately US$ 82 thousand.

During the six month period ended June 30, 2018, the Company recorded expenses in the amount of US$ 43 thousand.

Recently issued accounting pronouncements

E. Recently issued accounting pronouncements

Accounting Standard Update 2014-09, “Revenue from Contracts with Customers”

Commencing January 1, 2018 the Company adopted 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 ASU 2014-09 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 an amendment to ASU 2014-09, introduced by Accounting Standard 2015-14, “Revenue from contracts with Customers – Deferral of the Effective Date”, for a public entity, the amendments in ASU 2014-09 became 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).

The Company has established a process of evaluation of the impact of ASU 2014-09 on its revenue streams and selling contracts and transactions, if any, and on its financial reporting and disclosures, business processes, systems and controls. In such evaluation, management has considered, among other things, the opinion of third party professional accounting advisors.

Based on its evaluation, management concluded that the standard did not have significant effect on the timing of recognizing revenues from SVR services subscription fees, as such services are recognized monthly, or on the timing of recognizing revenues from sales of wireless communications products.However, the standard affected the timing of revenues from certain warranty services related to wireless communications products that the Company provides for periods beyond the period required by law (i.e. one year). Under the previous GAAP, such revenues were regarded as standard warranties as they are not separately priced and the company’s business practice is to provide a three-year warranty as a standard to certain customers.

Under the new guidance, the warranty services exceeding one year are considered as a separate performance obligation (‘a service-type warranty’) and a portion of the transaction price, is allocated to such service, based on the standalone selling price of the warranty. The total amount of revenue recognized from these contracts will not change. However, the revenue allocated to the warranty services is deferred and recognized over the related warranty period on a straight-line basis.

As a result of the above change the company recorded deferred revenues related to the service type warranty as a cumulative adjustment to retained earnings in an amount of approximately US$3 million (net of tax) as of January 1, 2018.

In addition, management has determined that the previous accounting treatment of deferred installation expenses, prepaid and similar expenses will not change significantly, as such expenses are considered under the new guidance as incremental costs of obtaining contracts which are expected to be recovered, Accordingly, they are accounted for as an asset as before.

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 lessee‘s 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.

Accounting Standards Update No. 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment”

In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04").

ASU 2017-04 eliminate Step 2 from the goodwill impairment test, to simplify the subsequent measurement of goodwill. In accordance with the new guidance, the annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable.

The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary.

The amendments should be applied on a prospective basis. The nature of and reason for the change in accounting principle should be disclosed upon transition.

A public business entity that is a U.S. Securities and Exchange Commission (SEC) filer should adopt the amendments for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019.

Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.

Management does not believe that the provisions of ASU 2017-04 will have a significant effect on its consolidated financial statements.

Accounting Standards Update No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”

In June 2016, The FASB has issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”).

The ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations.

ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates.

Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances.

ASU 2016-13 requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements.

In addition, ASU 2016-13 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration.

ASU 2016-13 is effective for SEC filers for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 (i.e., January 1, 2020, for calendar year entities).

Early application will be permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.

The Company is in the process of assessing the impact, if any, of ASU 2016-13 on its consolidated financial statements.

Accounting Standards Update 2017-12 “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities”

In August 2017, the FASB issued ASC Update 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. (ASU 2017-12)”

ASU 2017-12, amends the hedge accounting recognition and presentation requirements in ASC 815 in order to (1) improve the transparency and understandability of information conveyed to financial statement users about an entity’s risk management activities by better aligning the entity’s financial reporting for hedging relationships with those risk management activities and (2) reduce the complexity of and simplify the application of hedge accounting by preparers.

ASU 2017-12 eliminates the concept of separately recognizing periodic hedge ineffectiveness for cash flow and net investment hedges. Accordingly, the impact of both the effective and ineffective components of a hedging relationship will be recognized in the same financial reporting period and in the same income statement line item. Also, the guidance in ASU 2017-12 includes certain targeted improvements to existing guidance on quantitative and qualitative assessments of initial and ongoing hedge effectiveness.

The transition guidance in ASU 2017-12 requires an entity to apply the amendments using a modified retrospective approach to hedging relationships that exist as of the date of adoption by recording a cumulative-effect adjustment to the opening balance of retained earnings as of the most recent period presented. Entities must apply the new and modified disclosure requirements prospectively from the date of adoption.

For public business entities, the guidance in ASU 2017-12 is effective for fiscal years beginning after December 15, 2018 and for interim periods within those fiscal years. For all other entities, the guidance is effective for fiscal years beginning after December 15, 2019 and for interim periods within fiscal years beginning after December 15, 2020. Early application of the guidance is permitted, including in an interim reporting period. If adopting the guidance in an interim reporting period, an entity must reflect the effect of the adoption as of the beginning of the fiscal year that includes the interim reporting period in which the guidance is adopted.

The Company is evaluating the impact of the amendments on its consolidated financial statements.

Reclassified Amounts

F.      Reclassified Amounts

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications did not have material effect on the reported results of operations, shareholder’s deficit or cash flows.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Schedule of Stock-based compensation

The following data and assumptions were used for the measurement at June 30, 2018:

Risk free rates: (*)
Annual rate (%)	0.14
Daily rate (%)	0.00058
Standard deviation:
Russell 2000 daily yields volatility (%)	1.004
The Company common stock daily yields volatility (%)	1.498
Number of iteration	50,000

(*) The risk free rates used in the model are the risk free rates for 0.50 years non linked deposits, taken from "Mirvah Hogen" data base for June 2018.

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SEGMENT REPORTING (Tables)

6 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

Schedule of Reportable Operating Segments

Information about reported segment profit or loss and assets:

	US dollars
(in thousands)	Location based services		Wireless communications products		Total
Six month period ended June 30, 2018 (unaudited)
Revenues		87,189		33,605		120,794
Operating income		29,433		898		30,331
Expenditures for assets		6,802		282		7,084
Depreciation and amortization		4,517		218		4,735
Six month period ended June 30, 2017 (unaudited)
Revenues		81,437		32,010		113,447
Operating income		25,487		2,482		27,969
Expenditures for assets		2,846		250		3,096
Depreciation and amortization		4,847		133		4,980

As of June 30, 2018 (unaudited)
Assets	77,364	17,666	95,030
Goodwill	1,645	1,942	3,587
As of December 31, 2017
Assets	95,384	17,192	112,576
Goodwill	1,732	2,045	3,777

Reconciliation of Reporting Information from Segments to Consolidated Totals

Reconciliations of reportable segment revenues, profit or loss, and assets, to the enterprise’s consolidated totals:

	US dollars
	Six month periodended June 30,
(in thousands)	2018		2017
	(unaudited)
Total revenues of reportable segment and consolidated revenues		120,794		113,447
Operating income
Total operating income for reportable segments		30,331		27,969
Unallocated amounts:
Financing income, net		568		841
Consolidated income before taxes on income		30,899		28,810

	US dollars
	Six month period ended June 30,
(in thousands)	2018		2017
	(unaudited)
Other significant items
Total expenditures for assets of reportable segments		7,084		3,096
Unallocated amounts		2,717		3,159
Consolidated total expenditures for assets		9,801		6,255
Total depreciation and amortization for reportable segments		4,735		4,980
Unallocated amounts		1,954		1,487
Consolidated total depreciation and amortization		6,689		6,467

	US dollars
	June 30,		December 31,
(in thousands)	2018		2017
	(unaudited)
Assets
Total assets for reportable segments (*)		98,617		116,353
Other unallocated amounts:
Current assets		68,350		59,412
Investments in affiliated and other companies		15,960		16,221
Property and equipment, net		15,005		15,092
Other unallocated amounts		9,236		8,081
Consolidated total assets (at period end)		207,168		215,159

(*) Including goodwill.

Schedule of Revenues and Long-Lived Assets by Geographical Areas

Geographic information

	Revenues
	US dollars
	Six month periodended June 30,
(in thousands)	2018		2017
	(unaudited)
Israel		62,410		56,859
United States		4,184		4,040
Brazil		45,198		42,333
Argentina		6,307		7,906
Others		2,695		2,309
Total		120,794		113,447

	Property andequipment, net
	US dollars
	June 30,		December 31,
(in thousands)	2018		2017
	(unaudited)
Israel		16,580		16,757
United States		169		118
Brazil		17,813		17,969
Argentina		2,670		4,203
Total		37,232		39,047

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Schedule of Company's Financial Assets

The Company’s financial assets (liabilities) measured at fair value on a recurring basis, consisted of the following types of instruments as of June 30, 2018 and December 31, 2017:

	US Dollars
	June 30, 2018
(in thousands)	Level 1		Level 2		Level 3
Trading securities		1,319		-		-
Derivatives designated as hedging instruments		-		845		-
Total		1,319		845		-

	US Dollars
	December 31, 2017
(in thousands)	Level 1		Level 2			Level 3
Trading securities		3,559		-			-
Derivatives designated as hedging instruments		-		(580	)		-
Total		3,559		(580	)		-

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Stock-based compensation) (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2018 USD ($) Number
Number of iteration | Number	50,000
Term for non linked deposits	6 months
Fair value estimation of cash incentive valuation	$ 82
Stock based compensation	$ 43
Annual rate [Member]
Risk free rates	0.14%	[1]
Daily rate [Member]
Risk free rates	0.00058%	[1]
Daily yields volatility [Member]
Standard deviation	1.004%
Common Stock Daily yields volatility [Member]
Standard deviation	1.498%

[1] The risk free rates used in the model are the risk free rates for 0.50 years non linked deposits, taken from "Mirvah Hogen" data base for June 2018.

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EVENTS DURING THE REPORTING PERIOD (Details) $ / shares in Units, ₪ in Thousands, $ in Thousands	1 Months Ended				6 Months Ended
	Apr. 30, 2018 USD ($) $ / shares	Apr. 30, 2018 ILS (₪)	Feb. 28, 2018 USD ($) $ / shares	Feb. 28, 2018 ILS (₪)	Jun. 30, 2018 USD ($)
Dividend paid | $	$ 5,000		$ 5,000		$ 5,000
Cash dividend declared, value per share | $ / shares	$ 0.24		$ 0.24
Dividends payable date	2018-07		2018-04
ILS [Member]
Dividend paid | ₪		₪ 18,200		₪ 17,800

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SEGMENT REPORTING (Schedule of Segment Reporting Infomation by Segment) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Segment Reporting Information [Line Items]
Revenues	$ 120,794	$ 113,447
Operating income	30,331	27,969
Assets	95,030		$ 112,576
Goodwill	3,587		3,777
Expenditures for assets	7,084	3,096
Depreciation and amortization	4,735	4,980
Location Based Services [Member]
Segment Reporting Information [Line Items]
Revenues	87,189	81,437
Operating income	29,433	25,487
Assets	77,364		95,384
Goodwill	1,645		1,732
Expenditures for assets	6,802	2,846
Depreciation and amortization	4,517	4,847
Wireless Communications Products [Member]
Segment Reporting Information [Line Items]
Revenues	33,605	32,010
Operating income	898	2,482
Assets	17,666		17,192
Goodwill	1,942		$ 2,045
Expenditures for assets	282	250
Depreciation and amortization	$ 218	$ 133

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SEGMENT REPORTING (Reconciliation of Reporting Information from Segments to Consolidated Totals) (Details) - USD ($) $ in Thousands		6 Months Ended
		Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Segment Reporting Information [Line Items]
Total revenues of reportable segment and consolidated revenues		$ 120,794	$ 113,447
Operating Income
Total operating income for reportable segments		30,331	27,969
Financing income, net		568	841
Consolidated income before taxes on income		30,899	28,810
Assets
Current assets		133,794		$ 137,112
Property and equipment, net		37,232		39,047
Total assets		207,168		215,159
Other significant items
Expenditures for assets		7,084	3,096
Asset expenditures, reportable segments and unallocated amounts		9,801	6,255
Depreciation, amortization and impairment for reportable segments		4,735	4,980
Depreciation and amortization, unallocated amounts		1,954	1,487
Depreciation and amortization		6,689	6,467
Reportable Segment [Member]
Assets
Total assets	[1]	98,617		116,353
Other significant items
Expenditure for assets unallocated amounts		2,717	3,159
Expenditures for assets		7,084	$ 3,096
Segment Reconciling Items [Member]
Assets
Current assets		68,350		59,412
Investments in affiliated and other companies		15,960		16,221
Property and equipment, net		15,005		15,092
Other unallocated amounts		$ 9,236		$ 8,081

[1] Including goodwill.

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SEGMENT REPORTING (Schedule of Revenue and Long-Lived Assets by Geographical Areas) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 120,794	$ 113,447
Property and equipment, net	37,232		$ 39,047
IL [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	62,410	56,859
Property and equipment, net	16,580		16,757
US [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	4,184	4,040
Property and equipment, net	169		118
BR [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	45,198	42,333
Property and equipment, net	17,813		17,969
AR [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	6,307	7,906
Property and equipment, net	2,670		$ 4,203
Other Foreign Countries [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 2,695	$ 2,309

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FINANCIAL INSTRUMENTS AND RISKS MANAGEMENT (Narrative) (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Fair Value, Inputs, Level 1 [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Trading securities	$ 1,319	$ 3,559
Derivative asset	1,319
Derivative liability		3,599
Fair Value, Inputs, Level 1 [Member] | Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative asset
Derivative liability
Fair Value, Inputs, Level 2 [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Trading securities
Derivative asset	845
Derivative liability		(580)
Fair Value, Inputs, Level 2 [Member] | Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative asset	845
Derivative liability		(580)
Fair Value, Inputs, Level 3 [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Trading securities
Derivative asset
Derivative liability
Fair Value, Inputs, Level 3 [Member] | Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative asset
Derivative liability

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SUBSEQUENT EVENTS (Details) - USD ($) $ in Thousands	1 Months Ended				6 Months Ended
	Aug. 31, 2018	Jul. 24, 2018	Apr. 30, 2018	Feb. 28, 2018	Jun. 30, 2018
Dividend paid			$ 5,000	$ 5,000	$ 5,000
Dividends payable date			2018-07	2018-04
Road Track Holding [Member] | Subsequent Event [Member]
Amount paid to shareholders		$ 91,700
Net value of acquisition		113,000
Amount paid in cash		75,700
Additional amount paid to company share		$ 12,000
Percentage of business acquired		81.30%
Dividend paid	$ 5,000
Dividends payable date	2018-08
Road Track Holding [Member] | Subsequent Event [Member] | Senior Management [Member]
Equity bonus announced over next three year		$ 4,000