CAESARSTONE SDOT-YAM LTD.
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Date: November 4, 2015
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By:
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/s/ Yair Averbuch | |
Name: Yair Averbuch | |||
Title: Chief Financial Officer |
Exhibit
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Description
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99.1
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Press release titled “Caesarstone Reports Record Third Quarter 2015 Results,” dated November 4, 2015.
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·
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Revenue Up 11% to a Record $136.8 million; up 23.8% on a Constant Currency Basis
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·
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Net Income attributable to Controlling Interest of $19.8 million
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·
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Diluted EPS of $0.56; Adjusted diluted EPS of $0.69
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·
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Tightens Full Year Revenue and Adjusted EBITDA Guidance
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Caesarstone Sdot-Yam Ltd. and its subsidiaries
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Condensed consolidated balance sheets
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As of
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||||||||
U.S. dollars in thousands
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September 30,
2015
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December 31,
2014
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(Unaudited)
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(Audited)
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ASSETS
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CURRENT ASSETS:
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Cash and cash equivalents and short-term bank deposits
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$ | 52,594 | $ | 54,327 | ||||
Trade receivables, net
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61,161 | 56,217 | ||||||
Other accounts receivable and prepaid expenses
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28,646 | 22,729 | ||||||
Inventories
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94,290 | 80,212 | ||||||
Total current assets
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236,691 | 213,485 | ||||||
LONG-TERM ASSETS:
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||||||||
Severance pay fund
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3,557 | 3,744 | ||||||
Other receivables long-term
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9,336 | 759 | ||||||
Total long-term assets
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12,893 | 4,503 | ||||||
PROPERTY, PLANT AND EQUIPMENT, NET
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219,034 | 172,993 | ||||||
OTHER ASSETS
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7,651 | 10,059 | ||||||
GOODWILL
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35,235 | 37,960 | ||||||
Total assets
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$ | 511,504 | $ | 439,000 | ||||
LIABILITIES AND EQUITY
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CURRENT LIABILITIES:
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Short-term bank credit
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$ | 6,770 | $ | - | ||||
Short-term loans from related parties
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2,521 | 2,748 | ||||||
Trade payables
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52,061 | 59,430 | ||||||
Account payables to related parties
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810 | 1,227 | ||||||
Accrued expenses and other liabilities
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28,725 | 25,774 | ||||||
Total current liabilities
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90,887 | 89,179 | ||||||
LONG-TERM LIABILITIES:
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Long-term loan and financing leaseback from a related party
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8,535 | 8,993 | ||||||
Legal settlements and loss contingencies long-term
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13,397 | - | ||||||
Accrued severance pay
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4,221 | 4,217 | ||||||
Long-term warranty provision
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1,002 | 1,145 | ||||||
Deferred tax liabilities, net
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5,354 | 4,935 | ||||||
Share-based payment
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592 | 805 | ||||||
Total long-term liabilities
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33,101 | 20,095 | ||||||
REDEEMABLE NON-CONTROLLING INTEREST
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8,479 | 8,715 | ||||||
COMMITMENTS AND CONTINGENT LIABILITIES
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EQUITY:
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Ordinary shares
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369 | 369 | ||||||
Additional paid-in capital
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141,183 | 139,964 | ||||||
Accumulated other comprehensive loss
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(2,783 | ) | (534 | ) | ||||
Retained earnings
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240,268 | 181,212 | ||||||
Total equity
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379,037 | 321,011 | ||||||
Total liabilities and equity
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$ | 511,504 | $ | 439,000 |
Caesarstone Sdot-Yam Ltd. and its subsidiaries
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Condensed consolidated statements of income
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Three months ended
September 30,
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Nine months ended
September 30,
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U.S. dollars in thousands (except per share data)
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2015
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2014
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2015
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2014
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||||||||||||
(Unaudited)
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(Unaudited)
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(Unaudited)
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(Unaudited)
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|||||||||||||
Revenues
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$ | 136,816 | $ | 123,284 | $ | 372,154 | $ | 333,762 | ||||||||
Cost of revenues
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82,729 | 69,358 | 220,147 | 193,027 | ||||||||||||
Gross profit
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54,087 | 53,926 | 152,007 | 140,735 | ||||||||||||
Operating expenses:
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Research and development
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630 | 616 | 2,059 | 1,929 | ||||||||||||
Marketing and selling
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14,116 | 13,540 | 44,474 | 41,107 | ||||||||||||
General and administrative
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9,904 | 8,542 | 27,012 | 25,647 | ||||||||||||
Legal settlements and loss contingencies, net
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4,719 | - | 4,719 | - | ||||||||||||
Total operating expenses
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29,369 | 22,698 | 78,264 | 68,683 | ||||||||||||
Operating income
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24,718 | 31,228 | 73,743 | 72,052 | ||||||||||||
Finance expenses, net
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106 | (1,029 | ) | 2,397 | 1,956 | |||||||||||
Income before taxes on income
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24,612 | 32,257 | 71,346 | 70,096 | ||||||||||||
Taxes on income
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4,193 | 4,838 | 11,280 | 10,428 | ||||||||||||
Net income
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$ | 20,419 | $ | 27,419 | $ | 60,066 | $ | 59,668 | ||||||||
Net income attributable to non-controlling interest
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(613 | ) | (874 | ) | (1,010 | ) | (1,647 | ) | ||||||||
Net income attributable to controlling interest
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$ | 19,806 | $ | 26,545 | $ | 59,056 | $ | 58,021 | ||||||||
Basic net income per ordinary share
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$ | 0.56 | $ | 0.76 | $ | 1.68 | $ | 1.66 | ||||||||
Diluted net income per ordinary share
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$ | 0.56 | $ | 0.75 | $ | 1.67 | $ | 1.64 | ||||||||
Weighted average number of ordinary shares used in computing basic income per ordinary share
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35,294,755 | 34,999,925 | 35,238,001 | 34,875,423 | ||||||||||||
Weighted average number of ordinary shares used in computing diluted income per ordinary share
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35,464,130 | 35,333,542 | 35,468,422 | 35,379,125 |
Caesarstone Sdot-Yam Ltd. and its subsidiaries
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Selected Condensed consolidated statements of cash flows (Unaudited)
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Nine months ended
September 30,
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U.S. dollars in thousands
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2015
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2014
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Cash flows from operating activities:
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Net income
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$ | 60,066 | $ | 59,668 | ||||
Adjustments required to reconcile net income to net cash provided by operating activities:
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Depreciation and amortization
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15,628 | 12,740 | ||||||
Share-based compensation expense
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608 | 1,942 | ||||||
Accrued severance pay, net
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191 | 67 | ||||||
Changes in deferred tax, net
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(2,116 | ) | (2,400 | ) | ||||
Capital gains
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- | - | ||||||
Legal settlements and loss contingencies, net
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4,719 | - | ||||||
Increase in trade receivables
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(4,944 | ) | (15,097 | ) | ||||
Increase in other accounts receivable and prepaid expenses
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(2,288 | ) | (5,004 | ) | ||||
Increase in inventories
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(14,078 | ) | (17,839 | ) | ||||
Decrease in trade payables
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(9,484 | ) | (2,163 | ) | ||||
Decrease in warranty provision
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(506 | ) | (503 | ) | ||||
Increase in accrued expenses and other liabilities including related parties
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3,637 | 1,638 | ||||||
Net cash provided by operating activities
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51,433 | 33,049 | ||||||
Cash flows from investing activities:
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Settlement of contingent liability in connection with Prema Asia acquisition
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- | (150 | ) | |||||
Purchase of property, plant and equipment
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(57,542 | ) | (42,429 | ) | ||||
Decrease in long term deposits
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131 | 788 | ||||||
Net cash used in investing activities (*)
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(57,411 | ) | (41,791 | ) | ||||
Cash flows from financing activities:
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Changes in short-term bank credit and loans, net
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6,770 | (4,068 | ) | |||||
Repayment of a financing leaseback related to Bar-Lev transaction
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(819 | ) | (899 | ) | ||||
Net cash provided by (used in) financing activities
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5,951 | (4,967 | ) | |||||
Effect of exchange rate differences on cash and cash equivalents
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(1,706 | ) | (792 | ) | ||||
Decrease in cash and cash equivalents and short-term bank deposits
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(1,733 | ) | (14,501 | ) | ||||
Cash and cash equivalents and short-term bank deposits at beginning of the period
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54,327 | 92,248 | ||||||
Cash and cash equivalents and short-term bank deposits at end of the period
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$ | 52,594 | $ | 77,747 | ||||
Non - cash investing:
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Changes in trade payables balances related to purchase of fixed assets
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2,115 | 5,252 |
(*) Cash used in investing activities does not include changes in bank deposits as such balance is included in the “cash and cash equivalents and short term bank deposits” line at the beginning and end of the period.
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Caesarstone Sdot-Yam Ltd. and its subsidiaries (Unaudited)
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Three months ended
September 30,
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Nine months ended
September 30,
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U.S. dollars in thousands
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2015
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2014
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2015
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2014
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Reconciliation of Net Income to Adjusted EBITDA:
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Net income
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$ | 20,419 | $ | 27,419 | $ | 60,066 | $ | 59,668 | ||||||||
Finance expenses, net
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106 | (1,029 | ) | 2,397 | 1,956 | |||||||||||
Taxes on income
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4,193 | 4,838 | 11,280 | 10,428 | ||||||||||||
Depreciation and amortization
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6,030 | 4,196 | 15,628 | 12,740 | ||||||||||||
Legal settlements and loss contingencies (a)
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4,719 | - | 4,719 | - | ||||||||||||
Excess cost of acquired inventory (b)
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- | 123 | - | 231 | ||||||||||||
Share-based compensation expense (c)
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745 | 524 | 1,146 | 1,942 | ||||||||||||
Follow-on offering expenses (d)
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- | - | - | 657 | ||||||||||||
Provision for employees fringe benefits (e)
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- | - | - | 939 | ||||||||||||
Settlement with the tax authorities (f)
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- | (134 | ) | (134 | ) | |||||||||||
Adjusted EBITDA (Non-GAAP)
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$ | 36,212 | $ | 35,937 | $ | 95,236 | $ | 88,427 |
(a)
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Consists of legal settlements expenses and loss contingencies, net, related to silicosis claims.
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(b)
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Consists of charges to cost of goods sold for the difference between the higher carrying cost of the inventory of two of the Company's subsidiaries- Caesarstone USA's inventory at the time of its acquisition and inventory that was purchased from its distributor and Caesarstone Australia Pty Limited's inventory that was purchased from its distributor, and the standard cost of the Company's inventory- which adversely impacts the Company's gross margins until such inventory is sold. The majority of the inventory acquired from
Caesarstone USA was sold in 2011, and the majority of the inventory acquired from the Australian distributor was sold in 2012.
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(c)
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Share-based compensation includes expenses related to stock options granted to employees of the Company.
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In addition, includes expenses for phantom awards granted and related payroll expenses as a result of exercises.
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(d)
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Consists of direct expenses related to a follow-on offering that closed in June 2014.
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(e)
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Relates to an adjustment of provision for taxable employee fringe benefits as a result of a settlement with the Israel Tax Authority and with the National Insurance Intitute of Israel.
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(f)
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Relates to a refund of Israeli value added tax (VAT) associated with a bad debt from 2007.
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Caesarstone Sdot-Yam Ltd. and its subsidiaries (Unaudited)
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Three months ended
September 30,
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Nine months ended
September 30,
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U.S. dollars in thousands
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2015
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2014
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2015
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2014
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Reconciliation of net income attributable to controlling
interest to adjusted net income attributable to controlling interest:
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Net income attributable to controlling interest
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$ | 19,806 | $ | 26,545 | $ | 59,056 | $ | 58,021 | ||||||||
Legal settlements and loss contingencies (a)
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4,719 | - | 4,719 | - | ||||||||||||
Excess cost of acquired inventory (b)
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- | 123 | - | 231 | ||||||||||||
Share-based compensation expense (c)
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745 | 524 | 1,146 | 1,942 | ||||||||||||
Follow-on offering expenses (d)
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- | - | - | 657 | ||||||||||||
Provision for employees fringe benefits (e)
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- | - | - | 939 | ||||||||||||
Settlement with the tax authorities (f)
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- | (134 | ) | - | (134 | ) | ||||||||||
Tax adjustment (g)
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- | - | - | 342 | ||||||||||||
Total adjustments
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5,464 | 513 | 5,865 | 3,977 | ||||||||||||
Less tax on non-tax adjustments (h)
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866 | 90 | 927 | 523 | ||||||||||||
Total adjustments after tax
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4,598 | 423 | 4,938 | 3,454 | ||||||||||||
Adjusted net income attributable to controlling interest (Non-GAAP)
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$ | 24,404 | $ | 26,968 | $ | 63,994 | $ | 61,475 | ||||||||
Adjusted diluted EPS (i)
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$ | 0.69 | $ | 0.76 | $ | 1.80 | $ | 1.74 |
(a)
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Consists of legal settlements expenses and loss contingencies, net, related to silicosis claims.
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(b)
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Consists of charges to cost of goods sold for the difference between the higher carrying cost of the inventory of two of the Company's subsidiaries- Caesarstone USA's inventory at the time of its acquisition and inventory that was purchased from its distributor and Caesarstone Australia Pty Limited's inventory that was purchased from its distributor, and the standard cost of the Company's inventory- which adversely impacts the Company's gross margins until such inventory is sold. The majority of the inventory acquired from Caesarstone USA was sold in 2011, and the majority of the inventory acquired from the Australian distributor was sold in 2012.
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(c)
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Share-based compensation includes expenses related to stock options granted to employees of the Company. In addition, includes expenses for phantom awards granted and the related payroll expenses as a result of exercises.
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(d)
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Consists of direct expenses related to a follow-on offering that closed in June 2014.
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(e)
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Relates to an adjustment of provision for taxable employee fringe benefits as a result of a settlement with the Israel Tax Authority and with the National Insurance Intitute of Israel.
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||||||||
(f)
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Relates to a refund of Israeli value added tax (VAT) associated with a bad debt from 2007.
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(g)
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Tax adjustment as a result of tax settlement with the Israeli tax authorities.
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(h)
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Tax adjustments for the three and nine months ended September 30, 2015 and 2014 were based on the effective tax rates for these periods, respectively.
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(i)
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In calculating adjusted diluted (Non-GAAP) EPS, the diluted weighted average number of shares outstanding excludes the effects of share-based compensation expense in accordance with FASB ASC 718.
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Caesarstone Sdot-Yam Ltd. and its subsidiaries
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Geographic breakdown of revenues by region (Unaudited)
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Three months ended
September 30,
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Nine months ended
September 30,
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U.S. dollars in thousands
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2015
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2014
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2015
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2014
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USA
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$ | 61,685 | $ | 50,463 | $ | 166,792 | $ | 135,984 | ||||||||
Australia
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29,258 | 30,791 | 79,603 | 79,554 | ||||||||||||
Canada
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19,804 | 16,937 | 52,860 | 44,056 | ||||||||||||
Israel
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10,632 | 11,228 | 30,054 | 32,411 | ||||||||||||
Europe
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7,067 | 6,151 | 18,469 | 18,129 | ||||||||||||
Rest of World
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8,371 | 7,714 | 24,376 | 23,628 | ||||||||||||
$ | 136,816 | $ | 123,284 | $ | 372,154 | $ | 333,762 |