-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GfcJ8CdolZ3+3XKPn5IM46F12QdjeATdH3B6Wn714ONVYu1nJsYuCTYqKr8kmUkD Do4YhE5txUfJJEh3v+DC7A== 0000899078-03-000363.txt : 20030612 0000899078-03-000363.hdr.sgml : 20030612 20030612144802 ACCESSION NUMBER: 0000899078-03-000363 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030612 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ELSCINT LTD CENTRAL INDEX KEY: 0000032522 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08781 FILM NUMBER: 03742076 BUSINESS ADDRESS: STREET 1: 13 MOZES STREET CITY: TEL AVIV ISRAEL STATE: L3 ZIP: 67442 BUSINESS PHONE: 01197236086011 MAIL ADDRESS: STREET 1: 13 MOZES STREET CITY: TEL AVIV ISRAEL STATE: L3 ZIP: 67442 6-K 1 june2003-6k.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------- FORM 6-K Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934 For the Month of June 2003 ----------------------- ELSCINT LIMITED (Translation of Registrant's Name into English) 13 Mozes Street, Tel Aviv 67442, Israel (Address of Principal Corporate Offices) Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F: [X] Form 20-F [ ] Form 40-F 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 [X] No Attached hereto as Exhibit 1 and incorporated by reference herein is the Registrant's press release dated June 2, 2003. Attached hereto as Exhibit 2 and incorporated by reference herein are the Registrant's financial statements for the quarter ended March 31, 2003. 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, thereunto duly authorized. ELSCINT LIMITED (Registrant) By: /s/ Rachel Lavine ---------------------------------- Name: Rachel Lavine Title: President Dated: June 3, 2003. EXHIBIT INDEX Exhibit No. Description 1. Press release dated June 2, 2003. 2. Financial statements for the quarter ended March 31, 2003. EX-1 3 ex1tojune2003.txt EXHIBIT 1 Elscint Ltd. Reports First Quarter 2003 Results Monday June 2, 11:46 am ET TEL AVIV, Israel, June 2 /PRNewswire-FirstCall/ -- Elscint Ltd. (NYSE: ELT - News), a subsidiary of Elbit Medical Imaging Ltd. (Nasdaq: EMITF - News), today announced its results for the quarter ended March 31, 2003. First Quarter Results Consolidated revenues for the first quarter of 2003 were NIS 43.5 million (US$9.3 million) compared with NIS 43.0 million reported in the corresponding quarter last year. Revenues include NIS 3.4 million (US$0.7 million) from the lease of the Bernard Shaw Hotel to a third party for a period of twenty-five years. Revenues from operating and managing hotels decreased to NIS 40.0 million (US$8.5 million) compared to NIS 42.0 million in the same quarter last year. This decrease is attributed mainly to discontinuing operations at the Bernard Shaw hotel at the beginning of the year, as a consequence of leasing the property, and to the closing of the Bucuresty Hotel in Romania for renovation. The decrease was offset, in part, by the increase in revenues generated by the Victoria London Hotel and Sherlock Holmes Hotel in London, as well as an increase in the exchange rate of the Euro and the British Pound against the NIS. Gross profit for the first quarter of 2003 was NIS 14.8 million (US$3.1 million) compared with NIS 11.9 million in the corresponding quarter of 2002. The increase in gross profit is principally derived from an increase in the gross profit of the Victoria London Hotel and Sherlock Holmes Hotel in London, as well as the commencement of the lease of the Bernard Shaw Hotel. Operating loss in the first quarter of 2003 was NIS 6.8 million (US$1.4 million) compared with NIS 10.1 million for the first quarter of last year. This decrease is mainly due to the increase in gross profit mentioned above. Net loss from continuing operations for the first quarter of 2003 was NIS 18.1 million (US$3.9 million), or NIS 1.08 (US$0.23) basic loss per share, compared with net income of NIS 10.3 million, or NIS 0.62 basic earnings per share, for the same quarter last year. The loss from continuing operation results primarily from finance expenses, net of NIS 6.0 million (US$1.3 million), compared with finance income, net of NIS 20.0 million in the same quarter of last year. This decrease is attributed mainly to exchange rate and inflation fluctuation. Net income from discontinuing operations for the first quarter of 2003 was NIS 4.2 million (US$0.9 million), or NIS 0.25 (US$0.05) basic earnings per share, compared to NIS 6.1 million or NIS 0.36 basic earnings per share, for the first quarter last year. This decrease is attributed mainly to gains of the subassemblies segment reported in the first quarter of 2002. The Company sold this segment in December 2002, and therefore the profit from this segment is not included in the first quarter of 2003. Net loss for the first quarter of 2003 was NIS 13.9 million (US$3.0 million), or NIS 0.83 (US$0.18) basic loss per share, compared with net income of NIS 16.4 million, or NIS 0.98 basic earnings per share, for the same quarter last year. Elscint Limited has interests in hotels in Western Europe, in hotel development projects principally in Western and Central Europe and in the commercial and entertainment center at Herzlia Marina in Israel. This release contains certain forward-looking statements which involve known and unknown risks, uncertainties or other factors not under the Company's control which may cause actual results, performance or achievements of the Company to be materially different from the results, performance or other expectations implied by these forward-looking statements. These factors include, but are not limited to, those detailed in the Company's periodic filings with the Securities and Exchange Commission. ELSCINT LIMITED AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED BALANCE SHEETS (1) ADJUSTED TO THE NIS OF MARCH 2003 Convenience translation March 31, December 31, March 31, 2003 *2002 2002 2003 (Unaudited) (Audited) (Unaudited) U.S.$ Adjusted NIS (thousands) (thousands) ASSETS Current Assets Cash and cash equivalents 95,084 258,452 93,679 20,287 Short-term investments and deposits 160,903 160,583 158,736 34,330 Accounts receivable - trade, net 18,724 17,085 19,153 3,995 Other accounts receivable and prepaid expenses 23,244 19,732 21,927 4,959 Hotels inventories 2,394 3,039 3,133 511 300,349 458,891 296,628 64,082 Long-term Accounts and Investments Investments, loans and long-term receivables, net 343,808 369,517 355,236 73,353 Investments in affiliated company 28,683 - 32,764 6,120 Venture capital investment - 29,931 - - 372,491 399,448 388,000 79,473 Fixed Assets, Net 1,707,568 1,434,609 1,650,459 364,320 Other Assets, Net 14,603 11,121 12,330 3,116 Assets Related to Discontinuing Operation 31,103 174,016 115,026 6,636 2,426,114 2,478,085 2,462,443 517,627 * Reclassified. (1) Prepared in accordance with Israeli GAAP. ELSCINT LIMITED AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED BALANCE SHEETS (1) ADJUSTED TO THE NIS OF MARCH 2003 Convenience translation March 31, December 31, March 31, 2003 *2002 2002 2003 (Unaudited) (Audited) (Unaudited) U.S.$ Adjusted NIS (thousands) (thousands) LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Short-term credits 233,093 460,144 536,436 49,732 Accounts payable - trade 25,299 20,103 23,247 5,398 Accrued liabilities 87,877 67,877 87,834 18,749 Advance from customer in respect of project in progress, net - 606 - - 346,269 548,730 647,517 73,879 Long-term Liabilities Long-term debts 927,896 619,632 632,772 197,972 Deferred income tax liability 9,936 18,941 11,029 2,120 Liability for employee severance benefits, net 673 322 517 144 938,505 638,895 644,318 200,236 Liabilities Related to Discontinuing Operations 98,783 215,803 111,417 21,076 Minority interest 30,369 28,873 29,799 6,479 Contingencies and Commitments (see Note 4) Shareholders' Equity 1,012,188 1,045,784 1,029,392 215,957 2,426,114 2,478,085 2,462,443 517,627 * Reclassified. (1) Prepared in accordance with Israeli GAAP. ELSCINT LIMITED AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENT OF OPERATION (1) ADJUSTED TO THE NIS OF MARCH 2003 Convenience Translation March 31, December 31, March 31, 2003 *2002 2002 2003 (Unaudited) (Audited) (Unaudited) U.S.$ Adjusted NIS (thousands) (thousands) Revenues Operating and managing hotels 40,048 42,071 212,297 8,544 Hotel leasing 3,494 - - 745 Revenue from long-term contracts - 945 1,550 - 43,542 43,016 213,847 9,289 Cost of revenues Hotels operations and management 28,060 30,202 136,827 5,987 Cost of long-term contracts - 883 1,430 - Depreciation of leased hotel 669 - - 143 28,729 31,085 138,257 6,130 Gross profit 14,813 11,931 75,590 3,159 Hotels' depreciation, amortization and other operation expenses 13,264 13,411 63,175 2,830 Initial expenses, net 1,175 1,596 1,821 251 General and administrative expenses 7,169 7,050 32,433 1,529 21,608 22,057 97,429 4,610 Operating loss (6,795) (10,126) (21,839) (1,451) Finance (expenses) income, net (5,973) 20,064 13,152 (1,274) Other expenses, net (3,072) (28) (22,086) (655) (Loss) income before income taxes (15,840) 9,910 (30,773) (3,380) Income taxes 1,359 361 5,363 290 (Loss) income after income taxes (14,481) 10,271 (25,410) (3,090) The Company's share in loss of affiliated company (3,662) - (2,925) (781) Minority interest in loss of a subsidiary, net 72 8 903 15 Net (loss) income from continuing Operations (18,071) 10,279 (27,432) (3,856) Net income from discontinuing operation 4,190 6,077 91,402 894 Net (loss) income (13,881) 16,356 63,970 (2,962) * Reclassified. (1) Prepared in accordance with Israeli GAAP. ELSCINT LIMITED AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED STATEMENT OF OPERATION (1) ADJUSTED TO THE NIS OF MARCH 2003 Convenience Translation March 31, December 31, March 31, 2003 * 2002 2002 2003 (Unaudited) (Audited) (Unaudited) U.S.$ Adjusted NIS (thousands) (thousands) Basic (loss) earnings per ordinary share (NIS 0.05 par value) from: Continuing operations (1.08) 0.62 (1.64) (0.23) Discontinuing operation 0.25 0.36 5.47 0.05 (0.83) 0.98 3.83 (0.18) Diluted (loss) earnings per ordinary share (NIS 0.05 par value) from: Continuing operations (1.08) 0.54 (1.70) (0.23) Discontinuing operation 0.25 0.35 5.24 0.05 (0.83) 0.89 3.54 (0.18) * Reclassified. (1) Prepared in accordance with Israeli GAAP. EX-2 4 ex2tojune2003.txt Exhibit 2 ELSCINT LIMITED AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2003 (UNAUDITED) Elscint Limited and Subsidiary Companies Condensed Consolidated Financial Statements as of March 31, 2003 (Unaudited) - -------------------------------------------------------------------------------- CONTENTS Page -------- Review Report of Condensed Consolidated Financial Statements 2 Condensed Consolidated Balance Sheets 3-4 Condensed Consolidated Statements of Operations 5-6 Condensed Consolidated Statements of Shareholders' Equity 7-8 Condensed Consolidated Statements of Cash Flows 9-12 Notes to the Condensed Consolidated Financial Statements 13-17 The Board of Directors Elscint Limited Review report of unaudited condensed consolidated financial statements for the three-months period ended March 31, 2003 At your request, we reviewed the interim consolidated balance sheet of Elscint Limited and its subsidiaries as of March 31, 2003, and the related condensed consolidated statements of operations, shareholders' equity and cash flows for the three-months period then ended. Our review was made in accordance with the procedures prescribed by the Institute of Certified Public Accountants in Israel, and included, inter-alia, reading the aforementioned interim consolidated financial statements, reading the minutes of the Shareholders' Meetings and of the Board of Directors and its committees, and making inquiries of persons responsible for financial and accounting matters. The review reports of certain subsidiaries, including those consolidated by the proportionate consolidation method, whose assets as of March 31, 2003 constitute 74% of the total consolidated assets and whose revenues for the three months then ended constitute 100% of the total consolidated revenues, have been reviewed by other auditors. Furthermore, the data included in the financial statements relating to net asset value of the Company's investments in affiliate and to its equity in its operating results is based on the financial statements of such affiliate, which was reviewed by another auditor. The foregoing procedures, which are limited in scope, do not constitute an examination made in accordance with generally accepted auditing standards. Therefore, we do not express an opinion on the interim consolidated financial statements. In the course of our review, including the reading of the review reports of the other auditors referred to above, nothing came to our attention which would indicate the necessity of making material changes to the interim consolidated financial statements in order for them to be in conformity with generally accepted accounting principles in Israel. As discussed in Note 4 to the accompanying consolidated financial statements, the Company is defendant in lawsuits and was served with additional claims out of which two claims were filed in Israel with a request for a recognition as representative claims. Somekh Chaikin Certified Public Accountants (Isr.) Haifa, May 29, 2003
Elscint Limited and Subsidiary Companies Condensed Consolidated Balance Sheets - ----------------------------------------------------------------------------------------------------------------------------------- Adjusted to the NIS of March 2003 Convenience translation (Note 2B) March 31, December 31, March 31, 2003 * 2002 2002 2003 ---------- ------ ------------ (Unaudited) (Audited) (Unaudited) -------------------- ------------ -------------- U.S.$ Adjusted NIS (thousands) (thousands) -------------------------------------- -------------- ASSETS Current Assets Cash and cash equivalents 95,084 258,452 93,679 20,287 Short-term investments and deposits 160,903 160,583 158,736 34,330 Accounts receivable - trade, net 18,724 17,085 19,153 3,995 Other accounts receivable and prepaid expenses 23,244 19,732 21,927 4,959 Hotels inventories 2,394 3,039 3,133 511 ----------- ----------- ----------- ---------- 300,349 458,891 296,628 64,082 ----------- ----------- ----------- ---------- Long-term Accounts and Investments Investments, loans and long-term receivables, net 343,808 369,517 355,236 73,353 Investments in affiliated company 28,683 - 32,764 6,120 Venture capital investment - 29,931 - - ----------- ----------- ----------- ---------- 372,491 399,448 388,000 79,473 ----------- ----------- ----------- ---------- Fixed Assets, Net 1,707,568 1,434,609 1,650,459 364,320 ----------- ----------- ----------- ---------- Other Assets, Net 14,603 11,121 12,330 3,116 ----------- ----------- ----------- ---------- Assets Related to Discontinuing Operation 31,103 174,016 115,026 6,636 ----------- ----------- ----------- ---------- 2,426,114 2,478,085 2,462,443 517,627 =========== =========== =========== ========== * Reclassified.
The accompanying notes are an integral part of the financial statements. 3
Elscint Limited and Subsidiary Companies Condensed Consolidated Balance Sheets - ----------------------------------------------------------------------------------------------------------------------------------- Adjusted to the NIS of March 2003 Convenience translation (Note 2B) March 31, December 31, March 31, 2003 * 2002 2002 2003 ---------- -------- ------------ ----------- (Unaudited) (Audited) (Unaudited) ---------------------- ------------ ----------- U.S.$ Adjusted NIS (thousands) (thousands) --------------------------------------- ----------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Short-term credits 233,093 460,144 536,436 49,732 Accounts payable - trade 25,299 20,103 23,247 5,398 Accrued liabilities 87,877 67,877 87,834 18,749 Advance from customer in respect of project in progress, net - 606 - - ----------- ----------- ----------- ---------- 346,269 548,730 647,517 73,879 ----------- ----------- ----------- ---------- Long-term Liabilities Long-term debts 927,896 619,632 632,772 197,972 Deferred income tax liability 9,936 18,941 11,029 2,120 Liability for employee severance benefits, net 673 322 517 144 ----------- ----------- ----------- ---------- 938,505 638,895 644,318 200,236 ----------- ----------- ----------- ---------- Liabilities Related to Discontinuing Operations 98,783 215,803 111,417 21,076 ----------- ----------- ----------- ---------- Minority interest 30,369 28,873 29,799 6,479 ----------- ----------- ----------- ---------- Contingencies and Commitments (see Note 4) Shareholders' Equity 1,012,188 1,045,784 1,029,392 215,957 ----------- ----------- ----------- ---------- 2,426,114 2,478,085 2,462,443 517,627 =========== =========== =========== ========== * Reclassified. Date: May 31, 2003 /s/ A.R. Goren /s/ R. Lavine /s/ U. Levin ---------------------------------- ----------------------- --------------------------- A.R. Goren R. Lavine U. Levin Chairman of the Board of Directors President C.F.O
The accompanying notes are an integral part of the financial statements. 4
Elscint Limited and Subsidiary Companies Condensed Consolidated Statements of Operations - ----------------------------------------------------------------------------------------------------------------------------------- Adjusted to the NIS of March 2003 Convenience translation (Note 2B) March 31, December 31, March 31, 2003 * 2002 2002 2003 -------- --------- ------------ ------------ (Unaudited) (Audited) (Unaudited) ---------------------- ------------ ------------ U.S.$ Adjusted NIS (thousands) (thousands) --------------------------------------- ------------ Revenues Operating and managing hotels 40,048 42,071 212,297 8,544 Hotel leasing 3,494 - - 745 Revenue from long-term contracts - 945 1,550 - ----------- ----------- ----------- ---------- 43,542 43,016 213,847 9,289 ----------- ----------- ----------- ---------- Cost of revenues Hotels operations and management 28,060 30,202 136,827 5,987 Cost of long-term contracts - 883 1,430 - Depreciation of leased hotel 669 - - 143 ----------- ----------- ----------- ---------- 28,729 31,085 138,257 6,130 ----------- ----------- ----------- ---------- Gross profit 14,813 11,931 75,590 3,159 Hotels' depreciation, amortization and other operation expenses 13,264 13,411 63,175 2,830 Initial expenses, net 1,175 1,596 1,821 251 General and administrative expenses 7,169 7,050 32,433 1,529 ----------- ----------- ----------- ---------- 21,608 22,057 97,429 4,610 ----------- ----------- ----------- ---------- Operating loss (6,795) (10,126) (21,839) (1,451) Finance (expenses) income, net (5,973) 20,064 13,152 (1,274) Other expenses, net (3,072) (28) (22,086) (655) ----------- ----------- ----------- ---------- (Loss) income before income taxes (15,840) 9,910 (30,773) (3,380) Income taxes 1,359 361 5,363 290 ----------- ----------- ----------- ---------- (Loss) income after income taxes (14,481) 10,271 (25,410) (3,090) The Company's share in loss of affiliated company (3,662) - (2,925) (781) Minority interest in loss of a subsidiary, net 72 8 903 15 ----------- ----------- ----------- ---------- Net (loss) income from continuing Operations (18,071) 10,279 (27,432) (3,856) ----------- ----------- ----------- ---------- Net income from discontinuing operation 4,190 6,077 91,402 894 ----------- ----------- ----------- ---------- Net (loss) income (13,881) 16,356 63,970 (2,962) =========== =========== =========== ========== * Reclassified.
The accompanying notes are an integral part of the financial statements. 5
Elscint Limited and Subsidiary Companies Condensed Consolidated Statements of Operations - ----------------------------------------------------------------------------------------------------------------------------------- Adjusted to the NIS of March 2003 Convenience Translation (Note 2B) March 31, December 31, March 31, 2003 * 2002 2002 2003 -------- -------- ------------ ------------- (Unaudited) (Audited) (Unaudited) ----------------------- ------------ ------------- U.S.$ Adjusted NIS (thousands) (thousands) ---------------------------------------- ------------- Basic (loss) earnings per ordinary share (NIS 0.05 par value) from: Continuing operations (1.08) 0.62 (1.64) (0.23) Discontinuing operation 0.25 0.36 5.47 0.05 ---------- --------- ---------- ---------- (0.83) 0.98 3.83 (0.18) ========== ========= ========== ========== Diluted (loss) earnings per ordinary share (NIS 0.05 par value) from: Continuing operations (1.08) 0.54 (1.70) (0.23) Discontinuing operation 0.25 0.35 5.24 0.05 ---------- --------- ---------- ---------- (0.83) 0.89 3.54 (0.18) ========== ========= ========== ========== * Reclassified.
6
Elscint Limited and Subsidiary Companies Condensed Consolidated Statements of Shareholders' Equity - ----------------------------------------------------------------------------------------------------------------------------------- Adjusted to the NIS of March 2003 Loans to Cumulative Employees foreign For currency Purchase of Total Share Capital translation Retained Company's shareholders' capital surplus adjustments earnings shares equity -------- -------- ------------ --------- ------------ ------------- Adjusted NIS (thousands) ------------------------------------------------------------------------------ Balance as of January 1, 2003 (audited) 5,449 741,196 39,120 255,930 (12,303) 1,029,392 Changes during the period (unaudited) Loss for the period - - - (13,881) - (13,881) Foreign currency translation adjustment - - (3,323) - - (3,323) Interest on loan to employees net of erosion - 85 - - (85) - -------- -------- -------- --------- --------- ----------- Balance as of March 31, 2003 (unaudited) 5,449 741,281 35,797 242,049 (12,388) 1,012,188 ======== ======== ======== ========= ========= =========== Balance as of January 1, 2002 (audited) 5,454 741,984 3,434 280,455 (13,096) 1,018,231 Changes during the period (unaudited) Net income for the period - - - 16,356 - 16,356 Foreign currency translation adjustment - - 11,197 - - 11,197 Erosion net of interest on loans to employees - (110) - - 110 - -------- -------- -------- --------- --------- ----------- Balance as of March 31, 2002 (unaudited) 5,454 741,874 14,631 296,811 (12,986) 1,045,784 ======== ======== ======== ========= ========= ===========
The accompanying notes are an integral part of the financial statements. 7
Elscint Limited and Subsidiary Companies Condensed Consolidated Statements of Operations - ----------------------------------------------------------------------------------------------------------------------------------- Adjusted to the NIS of March 2003 Loans to Cumulative employs foreign for currency Purchase Total Share Capital translation Retained of company's shareholders' capital surplus adjustments earnings shares Equity --------- -------- ------------ ---------- ------------- -------------- Adjusted NIS (thousands) -------------------------------------------------------------------------------------- Balance as of January 1, 2002 (audited) 5,454 741,984 3,434 280,455 (13,096) 1,018,231 Changes during the year (unaudited) Net income for the period - - - 63,970 - 63,970 Foreign currency translation adjustment - - 35,686 - - 35,686 Incentive shares which were returned to pool (2) (712) - - 714 - Erosion net of interest on loan to employees (3) (76) - - 79 - Dividends * - - - (88,495) - (88,495) --------- --------- --------- ---------- --------- ----------- Balance as of December 31, 2002 (audited) 5,449 741,196 39,120 255,930 (12,303) 1,029,392 ========= ========= ========= ========== ========= =========== * Not including a dividend in the amount of NIS 3,456 thousand, in respect of shares which are held by employees which was recorded as an expense in the statement of operations.
The accompanying notes are an integral part of the financial statements. 8
Elscint Limited and Subsidiary Companies Condensed Consolidated Statements of Cash Flows - ----------------------------------------------------------------------------------------------------------------------------- Adjusted to the NIS of March 2003 Convenience translation (Note 2B) March 31, December 31, March 31, 2003 * 2002 2002 2003 --------- --------- ------------ ----------- (Unaudited) (Audited) (Unaudited) ---------------------- ------------ ----------- U.S.$ Adjusted NIS (thousands) (thousands) --------------------------------------- ----------- Cash Flows from Operating Activities: Net (loss) income (13,881) 16,356 63,970 (2,962) Adjustments to reconcile net (loss) income to net cash provided by operating activities from continuing operations (A) 15,418 (12,719) (60,114) 3,290 ---------- --------- --------- --------- Net cash provided by Operating activities from continuing operations 1,537 3,637 3,856 328 Net cash (used in) provided by Operating activities from discontinuing operation (7,919) (17,059) 24,791 (1,690) ---------- --------- --------- --------- Net Cash (used in) Provided by Operating Activities (6,382) (13,422) 28,647 (1,362) ---------- --------- --------- --------- Cash Flows from Investing activities: Proceeds from sale of fixed assets 1,520 - 407 324 Purchase of fixed assets and other assets (78,626) (29,751) (178,039) (16,775) Purchase of venture capital investment - (48) (4,920) - Proceeds from sale of long-term investments and loans - 1,106 3,485 - (Purchase of) proceeds from short - term investments and loans, net (4,926) 145 1,923 (1,051) Purchase of long-term investments and loans - - (688) - ---------- --------- --------- --------- Net cash used in investing activities from continuing operations (82,032) (28,548) (177,832) (17,502) Net cash provided by (used in) investing activities from discontinuing operation 83,396 (521) (2,423) 17,793 ---------- --------- --------- --------- Net Cash Provided by (used in) Investing Activities 1,364 (29,069) (180,255) 291 ---------- --------- --------- --------- * Reclassified.
The accompanying notes are an integral part of the financial statements. 9
Elscint Limited and Subsidiary Companies Condensed Consolidated Statements of Cash Flows - ----------------------------------------------------------------------------------------------------------------------------------- Adjusted to the NIS of March 2003 Convenience translation (Note 2B) March 31, December 31, March 31, 2003 * 2002 2002 2003 -------- -------- ------------ ------------- (Unaudited) (Audited) (Unaudited) --------------------- ------------ ------------- U.S.$ Adjusted NIS (thousands) (thousands) -------------------------------------- ------------- Cash Flows from Financing Activities: Proceeds from long-term debts 6,549 4,005 4,713 1,397 Payments of long-term debt (5,047) (4,185) (144,941) (1,077) Dividend distributed - - (88,495) - Issuance share to minority in a subsidiary company - - 559 - Change in short-term credits, net 4,806 4,505 175,002 1,026 ----------- -------- --------- --------- Net Cash Provided by (used in) Financing Activities from continuing operations 6,308 4,325 (53,162) 1,346 ----------- -------- --------- --------- Net effect of exchange rate changes on cash 115 413 2,244 25 ----------- -------- --------- --------- Net increase (decrease) in cash and cash equivalents 1,405 (37,753) (202,526) 300 Cash and Cash Equivalents at Beginning of period 93,679 296,205 296,205 19,987 ----------- -------- --------- --------- Cash and Cash Equivalents at End of Period 95,084 258,452 93,679 20,287 =========== ======== ========= ========= * Reclassified.
The accompanying notes are an integral part of the financial statements. 10
Elscint Limited and Subsidiary Companies Condensed Consolidated Statements of Cash Flows - ----------------------------------------------------------------------------------------------------------------------------------- Adjusted to the NIS of March 2003 Convenience translation (Note 2B) March 31, December 31, March 31, 2003 * 2002 2002 2003 ------- -------- ------------ ----------- (Unaudited) (Audited) (Unaudited) ---------------------- ------------ ----------- U.S.$ Adjusted NIS (thousands) (thousands) --------------------------------------- ----------- A. Adjustments to reconcile net (loss) income to net cash provided by operating activities from continuing operations: Income and expenses not involving cash flow: Discontinuing operation (4,190) (6,077) (91,402) (894) Depreciation and amortization 9,101 8,851 55,369 1,943 The Company's share in loss of affiliated company 3,662 - 2,925 781 Decrease in value of investments not of a temporary nature - - 4,043 - Capital loss - - 172 - Exchange differences on investments and loans, net 521 (18,328) (22,571) 111 Changes in liability for employee severance benefits, net 143 (53) 85 31 (Profit) loss from evaluation of marketable securities (114) 36 480 (24) Changes in deferred income taxes (1,915) 313 (5,810) (409) Minority interest in loss of a subsidiary, net (72) (8) (903) (15) Changes in assets and liabilities: Decrease (increase) in: Accounts receivable - trade, net 580 (1,692) (1,300) 124 Other accounts receivable and prepaid expenses (1,236) (2,003) (5,977) (264) Hotel inventories 766 538 914 163 Increase (Decrease) in: Accounts payable-trade 4,482 (852) (1,888) 956 Accrued liabilities 2,878 7,500 5,404 614 Advance from customer in respect of project progress, net - (944) (1,550) - Deposits from renters 812 - 1,895 173 ---------- --------- --------- ------- 15,418 (12,719) (60,114) 3,290 ========== ========= ========= ======= * Reclassified.
The accompanying notes are an integral part of the financial statements. 11
Elscint Limited and Subsidiary Companies - ----------------------------------------------------------------------------------------------------------------------------------- Condensed Consolidated Statements of Cash Flows Convenience translation (Note 2B) March 31, December 31, March 31, 2003 * 2002 2002 2003 -------- -------- ------------ ----------- (Unaudited) (Audited) (Unaudited) ---------------------- ------------ ----------- U.S.$ Adjusted NIS (thousands) (thousands) --------------------------------------- ----------- B. Supplemental Schedule of Non-Cash Transactions and Investing Activities Purchase of fixed assets against increase in accounts payable 26,566 19,391 35,245 5,668 ======== ======== ======== ======= Purchase of other assets against increase in accounts payable 1,212 - 1,260 259 ======== ======== ======== =======
The accompanying notes are an integral part of the financial statements. 12 Note 1 - General The accompanying unaudited financial statements do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months period ending March 31, 2003, are not necessarily indicative of the results that may be expected for the year ending December 31, 2003. For further information, refer to the consolidated financial statements and footnotes thereto for the year ended December 31, 2002. These financial statements should be read in conjunction with the annual audited financial statements of the Company as of December 31, 2002 and their accompanying notes. Note 2 - Significant Accounting Policies A. The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") in Israel for interim financial information. All significant accounting policies have been applied consistently with the year ended December 31, 2002. B. Financial Statements in adjusted Israeli currency and Israeli GAAP i. The financial statements are prepared on the basis of the historical cost convention, adjusted for changes in the general purchasing power of the Israeli currency (New Israeli Shekel - "NIS") based on the changes in the Israeli consumer price index (CPI). Comparative data in the statements were adjusted to the NIS of March 2003. Below is data regarding the CPI and the U.S. dollar exchange rate: Exchange rate of one U.S. dollar CPI ------------- -------- March 31, 2003 4.687 116.02 March 31, 2002 4.668 110.66 December 31, 2002 4.737 115.12 Changes during the period: January 1, 2003 - March 31, 2003 (1.06%) 0.78% January 1, 2002 - March 31, 2002 5.71% 2.37% January 1, 2002 - December 31, 2002 7.27% 6.49% ii.The adjusted financial statements as of March 31, 2003 and for the three months period then ended have been translated into U.S. dollars using the representative exchange rate as of that date (U.S.$ 1 = NIS 4.687). The translation was made solely for the convenience of the reader. The dollar amounts so presented in these financial statements should not be construed as representing amounts receivable or payable in dollars or convertible into dollars, unless otherwise indicated. 13 Note 2 - Significant Accounting Policies (cont'd) C. Effect of new accounting standards not yet implemented 1. In July 2001, the Israel Accounting Standard Board ("The Board") published the following two Standards: (a) Accounting Standard No. 12 - Discontinuance of Adjustment of Financial Statements. Pursuant to this standard, the adjustment of financial statements will be discontinued as of January 1, 2003. In December 2002, the Israel Accounting Standards Board published Standard No. 17 which postponed the implementation of Standard No. 12 until January 1, 2004. Therefore, the adjustment of the financial statements will be discontinued as of January 1, 2004. The Company will continue preparing adjusted financial statements in accordance with Opinion 36 of the Institute of Certified Public Accountants in Israel until December 31, 2003. The adjusted amounts to be included in the financial statements as of December 31, 2003 will constitute the starting point for the nominal financial statements as of January 1, 2004. (b) Accounting Standard No.13 - Effect of Changes in the Rates of Exchange of Foreign Currency. This standard deals with translation of transactions in foreign currency and translation of financial statements of outside activities for the purpose of their inclusion in the financial statements of the reporting entity, and supersedes the provisions of Clarifications 8 and 9 to Opinion 36 which will be discontinued upon the entry into effect of Accounting Standard No. 12 described above. Implementation of Standards No. 12 and No. 13 may have a significant effect on the Company's financial statements. The extent of the effect will depend upon the rate of inflation, the changes in the exchange rate, the composition of the assets and the Company's sources of financing. 14 D. Implementation of recently issued accounting standard In February 2003, the Israeli Accounting Standards Board published Accounting Standard No. 15 - Decline in the Value of Assets. The standard provides procedures which a company must apply in order to ensure that its assets in the consolidated balance sheet, are not presented at an amount which is in excess of their recoverable value, which is the higher of the net selling price or the present value of the estimated future cash flows expected to be derived from use and disposal of the asset. In addition, the standard provides rules for presentation and disclosure with respect to assets whose value has declined. The Standard applies to financial statements for periods beginning January 1, 2003. The standard provides that in most cases the transition will be effected by means of the "from here on" method, however a loss from decline in value of an assets, in the amount of the difference between the book value on the commencement date of the standard and the recoverable amount as at that date, shall be charged to the statement of operations in the category "cumulative effect as at beginning of the year of change in accounting method" if and only if, the said loss was not recognized in the past solely due to the fact that the net non-discounted future cash flows were greater than the books value. Implementation of Standard No. 15 does not have a significant effect on the Company's financial statements as of March 31, 2003. 15 Note 3 - Business Segments and supplemental information
Three months ended March 31, 2003 ----------------------------------------------------------------------------------- Adjusted NIS (thousands) ----------------------------------------------------------------------------------- Operating and Commercial and managing hotels (1) entertainment center (2) Hotel leasing (3) Consolidated ------------------- ------------------------ ----------------- ------------ Revenues 40,048 - 3,494 43,542 =================== ======================== ================= ============ Operating income (loss) (4,613) (93) 2,825 (1,881) =================== ======================== ================= Unidentifiable expenses (4,914) ------------ Total operating loss (6,795) ============ (1) There is a seasonality in the hotels operation and management segment, which is reflected by a revenue increase at the second and third quarter of the year. (2) In April 2002, SLS (a subsidiary of the Company), entered into an agreement with a company controlled by the controlling interests in the Company (hereinafter - "CDPM"), in the framework of which CDPM committed to complete the construction of the commercial center, including, the development work, as defined in the agreement, for a final and absolute consideration of U.S. $57.7 million, which is to be paid based on the progress of the work ("the Work Consideration"). The amount of the Work Consideration was determined on the basis of a calculation of the amount of work remaining to be performed, as at March 1, 2002. In respect of each payment and/or expense paid by SLS to a sub-contractor, supplier, professional adviser or other entity as part of the implementation of the project from March 1, 2002 to the date CDPM commences work, the Work Consideration will be adjusted accordingly. From March 1, 2002 until March 31, 2003 SLS made such payments on account of implementation of the project in the total sum of U.S. $25.2 million. The work in the framework of the agreement does not include specific work, which was detailed in the agreement (mainly - planning, marketing, tolls and supervision), the cost of which is to be borne by SLS. In addition, the agreement provides, that CDPM is to bear the cost of adaptations for tenants, based on the specification detailed in the agreement and the consideration for adaptations which are not included in the specification, is to be determined based on a mechanism set forth in the agreement. In the framework of the agreement CDPM committed to deliver the Commercial Center to SLS in a state of being ready for operation, by March 2003. Actually, the date of operation of the commercial center had been postponed for reasons not related to CDPM. Until the date of publication of these financial statements the agreement had not yet been closed. Nevertheless, for the request of SLS, CDPM is actually assisting in construction and managing the project. Upon the closing of the agreement, SLS is to pay to CDPM an advance of $3 million, on account of the Work 16 Consideration and, concurrently, CDPM is to provide SLS with a bank guarantee, at the rate of 5% of the Work Consideration. In addition, SLS committed, as part of the agreement, to assign to CDPM all the rights and obligations, based on the agreements, which it signed with various suppliers, except for those specified in the agreement. The agreement includes a number of conditions, the breach of which is considered as a fundamental breach, which confers the remedies stated in the agreement. The agreement was approved by the General Meeting of the Company's shareholders. (3) In January 2003 SHH (a subsidiary of the Company) entered into an agreement with an external hotel company, according to which the hotel was leased for a period of 25 years in consideration for the payment of a fixed amount in each one of the first four years, which from the fifth year and until the end of the lease period is adjusted upwards at the rate of 2.5% per year. The lease payments are paid once a quarter in advance. The payments are guaranteed by a deposit in the amount of (pound) 2.5 million. The hotel company was granted an option to extend the lease by two additional periods of 15 years each.
Note 4 - Contingencies and Commitments A. Following are the legal claims that the Court has been asked to recognize as a representative claim. No material changes have occurred in these claims or in other claims since the last audited financial statements as of December 31, 2002. B. (1) On September 8, 1999, the Company was served with a claim and a motion for recognition of the claim as a representative claim. This claim was filed against the Company, Elbit Medical Imagine Ltd. ("EMI"), (the company's parent company), Elbit Medical Holding Ltd., Elron and six former directors of the Company. The motion was filed on behalf of all persons who were minority shareholders of the Company at the date of submission of the claim, as well as all minority shareholders of the Company who held Company's shares on February 18, 1999. The main allegation of the claim is that EMI, through the actions of the former directors of the Company, caused discrimination of the minority shareholders. The requested relief is approximately U.S.$ 603 thousand for the plaintiff and approximately U.S.$ 158 million for the damages to the represented group, plus legal expenses. Following the Court's decision in the claim mentioned in clause B.ii. below, the parties agreed to postpone the hearing of the case until a final decision will be given on the plaintiffs appeal in the other claim, as stated in clause B.2. below. Management, based on a legal advice received, is of the opinion that the ultimate outcome of this claim, the request for recognizing the claim as a representative claim and the effect, if any, this may have on the Company can not be estimated at this stage and thus no provision has been recorded in the financial statements. (2) On November 2, 1999, a claim and a motion for recognition of the claim as a representative claim were filed against the Company, EMI, Elbit Medical Holdings Ltd., Europe Israel (M.M.S) Ltd. ("EIL"), (indirect parent company of the Company), Control Centers, Marina Herzlia Limited Partnership 1998, Elron and 25 past and present directors in the above companies. The motion was served on behalf of those who held shares of the Company on September 6, 1999, and continued to hold such shares on the date of the claim, excluding the respondents. 17 The claimants allege that the minority shareholders of the Company have been discriminated as a result of the various activities carried out by its controlling shareholders and its Board of Directors. The remedy which has been requested by the claimants is that EMI be compelled to execute the alleged buy-out shares at U.S.$ 14 per share. Alternatively, the Company and/or EMI and or other shareholders in the Company be compelled to purchase the claimants' shares in the Company according to an external valuation, or alternatively that the claimants be paid compensation for the damages which they allegedly suffered and the annulment of certain transactions with controlling parties. On August 16, 2000, the District Court of Haifa dismissed the Application to recognize the claim as a Representative Claim. Notwithstanding the above, the claim itself remains. Some of the plaintiffs filed applications to the Israeli High Court for permission to file an appeal on this dismissal. In addition, the Government's Attorney General submitted his supportive position with the plaintiffs allegation to the Court. Following the company's claim that the Court's fees are inappropriate to these type of claim, on August 3, 2001, the District Court ordered the Plaintiffs to pay Courts' fees in respect of some parts of the claim, in the sum of NIS 20 million not later than September 10, 2001, otherwise their applications will be deleted, in respect to those parts of the claim for which the fees would not be paid. Note 4 - Contingencies and Commitments (cont'd) Following a request by the plaintiffs the Court decided to postpone the payment of the fees until further decision. In a hearing that took place on April 25, 2002, the District Court showed a strong tendency to accept the plaintiffs' view concerning the court fees. However, the Company's counsel strongly opposed such approach of the court, and in their opinion, succeeded in shaking the court's position with regard to its ability to cancel the previous decision of the court in the interim procedure or its ability to enable the plaintiffs to postpone the payment of these fees. The court decided to render its ruling regarding the court fees at a later date, which has not been determined as yet. Management, based on a legal advice received, is of the opinion that the ultimate outcome of the claim and the effect, if any, this may have on the Company, can not be estimated at this stage and thus no provision has been recorded in the financial statements. 18 On January 26, 2003, the Company received a letter from one of the insurers ("the Insurer") of EIL, EMI and the Company (the "Insured Companies"), that provides insurance to the Insured companies including insurance pertaining to this representative claim. In this letter, the Insurer made certain allegations against the Insured Companies, including, inter alia, that the Insured Companies breached their disclosure duties under section 6(a) to the Insurance Contract Law, 1981, by failing to disclose to the Insurer material information prior to the issuance of additional cover to the policy purchased by EIL (the "Policy"), effective as of July 1999 (the "Additional Cover"), and prior to the replacement of the Policy and the Additional Cover by the issuance of a new policy effective as of August 1999 (the "Replacement Cover"). The letter states that the Policy, Additional Cover and Replacement Cover issued by the Insurer will be cancelled unless the Insured Companies indicate the circumstances were different than those described in the letter. The Company legal counsel sent a reply on behalf of EIL, EMI and the Company on March 20, 2003, in which the allegations of the Insurer were rejected. As of the date of the issuance of the financial statements the company has not received an answer from the Insurer to the Company's letter. 19 -----END PRIVACY-ENHANCED MESSAGE-----