6-K 1 zk62283.htm 6-K

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

F O R M  6 – K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of March, 2006

POINTER TELOCATION LTD.

1 Korazin Street
Givatayim, 53583
Israel

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

Form 20-F x Form 40-F o

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

Yes o No x

If “Yes” is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82-

For Immediate Release

Pointer Telocation Reports its Financial Results for 2005
— $37 Million Record High Revenues – 237% Revenue Growth
— First Year of Operating Profit

Updates Guidance for 2006 Results

Givatayim, Israel; March 1st, 2006. Pointer Telocation Ltd. (Nasdaq Capital Markets: PNTR), a leading provider of services to insurance companies and car owners, including road side assistance, towing and stolen vehicle retrieval services in Israel, Argentina and Mexico, reported its financial results for the year ended December 31, 2005.

Financial Highlights:

Revenues: Pointer’s revenues increased by 237% to a record 37 million in 2005 from $11 million in 2004. This increase in revenue is attributed mainly to the acquisition of Shagrir Motor Vehicle Systems, a leading provider of services to insurance companies and automobile owners in Israel. Revenues from operations in Israel accounted for 89.8% of Pointer’s revenues in 2005 as compared to 72.4% in 2004. Revenues from other geographical territories increased by approximately 25%, mainly due to expanded operations in Argentina and Russia.

In 2005, service revenues were 76% of total revenues, as compared to 49% in 2004. This fact reflects the tendency of shifting the business from a focus on the sale of technology to the provision of services.

Gross profit: Gross profit increased in 2005 to $13.7 million or 36.9% of revenues, as compared to $3.4 million or 30.7% in 2004. This increase in gross profit is attributable mainly to the acquisition of Shagrir Motor Vehicle Systems. The increase in gross profit was also affected, to a lesser extent, by the increase in revenues in other geographical territories but was offset partially by the losses of operations in Mexico, which commenced in March 2005.

Operating expenses: In 2005, operating expenses increased by 102% to $12.7 million from $6.3 million in 2004. This increase is mainly due to the consolidation of Shagrir Motor Vehicles and included an increase of $1.5 million in the amortization of intangible assets to a total of $2.5 million in 2005 from $932 thousand in 2004. To a lesser extent, the increase in operating expenses was affected by an increase of 85% in R&D expenses and an increase in the Mexican subsidiary’s operating expenses.

Operating Profit (loss): As a result of the foregoing, Pointer is reporting a first time operating profit totaling approximately $1 million in 2005, compared to an operating loss of $2.9 million in 2004.

Net Loss: For the full year of 2005, net loss and net loss per share were reduced by 28% and 55% respectively to $2.7 million or $(1.17) per share compared to $3.8 million or $(2.58) per share in 2004.

EBITDA: Pointer’s EBITDA improved to $6.4 million in 2005, as compared to a negative EBITDA of $438 thousand in 2004.

Commenting on the 2005 financial results, Danny Stern, CEO, said: “In 2005, we had concluded the first stage in our strategic repositioning to become a leading provider of value-added services to insurance companies. We currently have a substantial presence in five countries, and we offer an extensive and diversified range of services and customers.”

“We are very pleased with our financial results which exceeded our expectations. The improved operating margin reflects the nature of our new business structure, which enables us to capitalize on economies of scale and to start presenting higher operating profits, after many years of operating losses. We are strengthening our positioning in all the markets and expect double-digit growth in our annual revenues abroad,” concluded Mr. Stern.

Yossi Ben Shalom, Chairman of the Board said: “2005 has been Pointer’s turnaround year, with record revenues and operating profit. As promised to our shareholders, Pointer is now a stronger company with a solid revenue base that presents year-to-year growth in revenues, operational profitability and strong EBITDA. We are looking forward to further accomplishing our goals and to achieve additional growth. ”

We are updating our guidance for Pointer’s 2006 revenues to approximately $40 million, primarily as a result of our growth in Israel and a double-digit growth in our operations abroad. We expect in 2006 to generate over $3.5 million in operating profits, $8.0 million in EBITDA and to reach profitability in the second half of 2006,” concluded Mr. Ben Shalom.

Conference Call Information:

Pointer’s management will host two conference calls with the investment community today, March 1st, in Hebrew on 15:00 Israel time and in English on 9:00 EST.

To listen to the conference calls, please dial:
From the US: 1-866-229-7198
From Israel: 03-9180609

A replay of the conference call will be available through March 2nd, 2006 on the Company’s website at www.pointer.com.

About Pointer Telocation:
Pointer Telocation Ltd (www.pointer.com) provides range of services to insurance companies and automobile owners, including road-side assistance, vehicle towing, stolen vehicle retrieval, fleet management and other value added services. Pointer Telocation provides services, for the most part, in Israel, through its subsidiary Shagrir and in Argentina and Mexico through its local subsidiaries. Independent operators provide similar services in Russia and Venezuela utilizing Pointer’s technology and operational know-how.

Safe Harbor Statement

This press release contains forward-looking statements with respect to the business, financial condition and results of operations of Pointer and its affiliates. These forward-looking statements are based on the current expectations of the management of Pointer, only, and are subject to risk and uncertainties relating to changes in technology and market requirements, the company’s concentration on one industry in limited territories, decline in demand for the company’s products and those of its affiliates, inability to timely develop and introduce new technologies, products and applications, and loss of market share and pressure on pricing resulting from competition, which could cause the actual results or performance of the company to differ materially from those contemplated in such forward-looking statements. Pointer undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. For a more detailed description of the risks and uncertainties affecting the company, reference is made to the company’s reports filed from time to time with the Securities and Exchange Commission.

Contact:  
 
Ronen Stein, V.P. and Chief Financial Officer Yael Nevat, Commitment-IR.com
Tel.; 972-3-572 3111 Tel: 972-3-611 4466
E-mail: ronens@pointer.com E-mail: yael@commitment-IR.com

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES
(Formerly: Nexus Telocation Systems Ltd.)
 
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands

December 31,
2005
 2004
 
     ASSETS            
   
 CURRENT ASSETS:  
   Cash and cash equivalents   $ 1,696   $ 75  
   Short-term investments    -    15  
   Trade receivables (net of allowance for doubtful accounts of $ 363 and  
     $ 568 at December 31, 2005 and 2004, respectively)    6,576    3,828  
   Other accounts receivable and prepaid expenses    505    639  
   Inventories    1,389    1,343  
 
 Total current assets    10,166    5,900  
   
 LONG-TERM ASSETS:  
   Long-term accounts receivable    219    230  
   Severance pay fund    2,989    751  
   Property and equipment, net    7,319    2,670  
   Goodwill    36,924    13,154  
   Other intangible assets, net    9,597    2,808  
   
 Total long-term assets    57,048    19,613  
   
 Total assets   $ 67,214   $ 25,513  

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES
(Formerly: Nexus Telocation Systems Ltd.)
 
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share and per share data)

December 31,
2005
 2004
 
     LIABILITIES AND SHAREHOLDERS' EQUITY            
   
 CURRENT LIABILITIES:  
   Short-term bank credit and current maturities of long-term loans   $ 9,949   $ 7,064  
   Trade payables    3,904    3,055  
   Deferred revenues and customer advances    6,477    78  
   Other accounts payable and accrued expenses    3,835    2,401  
 
 Total current liabilities    24,165    12,598  
   
 LONG-TERM LIABILITIES:  
   Long-term loans from banks    16,211    4,423  
   Long-term loans from shareholders and others    12,082    149  
   Accrued severance pay    3,951    1,257  
   
     32,244    5,829  
 SHAREHOLDERS' EQUITY:  
   Share capital -  
     Ordinary shares of NIS 3 par value:  
       Authorized - 8,000,000 and 4,000,000 shares at December 31, 2005 and  
       2004, respectively; Issued and outstanding - 2,479,020 and 1,704,505  
       shares at December 31, 2005 and 2004, respectively    1,680    1,145  
   Additional paid-in capital    100,707    94,127  
   Deferred stock-based compensation    (1 )  (117 )
   Accumulated other comprehensive loss    (1,138 )  (353 )
   Accumulated deficit    (90,443 )  (87,716 )
   
 Total shareholders' equity    10,805    7,086  
   
 Total liabilities and shareholders' equity   $ 67,214   $ 25,513  

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES
(Formerly: Nexus Telocation Systems Ltd.)
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except per share data)

Year ended December 31,
2005
 2004
 2003
 
Revenues:                
  Products   $ 8,856   $ 5,594   $ 2,774  
  Services    28,108    5,375    2,376  
   
Total revenues    36,964    10,969    5,150  
   
Cost of revenues:  
  Products    5,727    4,297    2,099  
  Services    17,587    3,301    2,075  
   
Total cost of revenues    23,314    7,598    4,174  
   
Gross profit    13,650    3,371    976  
   
Operating expenses:  
  Research and development, net    892    482    664  
  Selling and marketing    3,693    1,644    621  
  General and administrative    5,518    2,775    1,343  
  Amortization of deferred stock-based compensation *)    126    465    400  
  Amortization of intangible assets    2,462    932    67  
   
Total operating expenses    12,691    6,298    3,095  
   
Operating income (loss)    959    (2,927 )  (2,119 )
Financial expenses, net    4,027    758    1,105  
Other income (expenses), net    341    (42 )  (32 )
   
Loss before taxes on income    (2,727 )  (3,727 )  (3,256 )
Taxes on income    -    37    -  
   
Loss from continuing operations    (2,727 )  (3,764 )  (3,256 )
Gain from discontinued operations    -    -    8,524  
   
Net income (loss)   $ (2,727 ) $ (3,764 ) $ 5,268  
   
Basic and diluted loss per share from continuing operations   $ (1.17 ) $ (2.58 ) $ (3.81 )
Basic and diluted earnings per share from discontinued operations    -    -    9.96  
   
Basic and diluted net earnings (loss) per share   $ (1.17 ) $ (2.58 ) $ 6.15  
   
*)    Stock-based compensation relates to the following:  
   
       Research and development   $ -   $-   $ 125  
       General and administrative    126    465    275  
   
       Total   $ 126   $ 465   $ 400  

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES
(Formerly: Nexus Telocation Systems Ltd.)
 
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIENCY)
U.S. dollars in thousands (except share data)

Number of
shares
 Share
capital
 Additional
paid-in
capital
 Deferred
stock-based
compensation
 Accumulated
other
comprehensive
loss
 Accumulated
deficit
 Total
comprehensive
income
(loss)
 Total
shareholders'
equity
(deficiency)
 
 Balance as of January 1, 2003      112,899   $ 94   $ 77,373    -   $ (892 ) $ (89,220 )      $ (12,645 )
   Issuance of shares, net    868,045    570    3,172    -    -    -         3,742  
   Conversion of convertible debenture    164,356    109    614    -    -    -         723  
   Deferred stock-based compensation    -    -    966    (966 )  -    -         -  
   Amortization of deferred  
    stock-based compensation    -    -    -    400    -    -         400  
   Induced conversion of convertible  
    debenture    -    -    1,011    -    -    -         1,011  
   Issuance of warrants to a bank    -    -    103    -    -    -         103  
   Comprehensive income:  
     Foreign currency translation  
      adjustments    -    -    -    -    52    -   $ 52    52  
     Net income    -    -    -    -    -    5,268    5,268    5,268  
   Total comprehensive income                                 $ 5,320       
   
 Balance as of December 31, 2003    1,145,300    773    83,239    (566 )  (840 )  (83,952 )       (1,346 )
   Issuance of shares, warrants and  
    options for the acquisition of  
    additional interest in a  
    subsidiary, net    429,154    286    10,815    -    -    -         11,101  
   Deferred stock-based compensation    -    -    16    (16 )  -    -         -  
   Amortization of deferred  
    stock-based compensation    -    -    -    465    -    -         465  
   Exercise of warrants and options    130,051    86    57    -    -    -         143  
   Comprehensive loss:  
     Foreign currency translation  
      adjustments    -    -    -    -    487    -   $ 487    487  
     Net loss    -    -    -    -    -    (3,764 )  (3,764 )  (3,764 )
   Total comprehensive loss                                 $ (3,277 )     
   
 Balance as of December 31, 2004    1,704,505    1,145    94,127    (117 )  (353 )  (87,716 )       7,086  
   Issuance of shares, warrants and  
    options ,net    722,587    500    6,391    -    -    -         6,891  
   Deferred stock-based compensation    -    -    10    (10 )  -    -         -  
   Amortization of deferred  
    stock-based compensation    -    -    -    126    -    -         126  
   Exercise of warrants and stock  
    options    51,928    35    179    -    -    -         214  
   Comprehensive loss:  
     Foreign currency translation  
      adjustments    -    -    -    -    (785 )  -   $ (785 )  (785 )
     Net loss    -    -    -    -    -    (2,727 )  (2,727 )  (2,727 )
   Total comprehensive loss                                 $ (3,512 )     
   
 Balance as of December 31, 2005    2,479,020   $ 1,680   $ 100,707   $ (1 ) $ (1,138 ) $ (90,443 )      $ 10,805  

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES
(Formerly: Nexus Telocation Systems Ltd.)
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands

Year ended December 31,
2005
 2004
 2003
 
 Cash flows from operating activities:                
   Net income (loss)   $ (2,727 ) $ (3,764 ) $ 5,268  
   Adjustments required to reconcile net income (loss) to net  
     cash provided by (used in) operating activities:  
     Gain from discontinued operations    -    -    (8,524 )
     Depreciation and amortization    4,997    2,065    1,171  
     Accrued Interest and revaluation of convertible debenture  
       and long-term loans    1,961    (43 )  (54 )
     Accrued severance pay, net    484    28    (146 )
     Write-off of inventories    199    479    111  
     Loss (gain) from sale of property and equipment, net    (299 )  (56 )  21  
     Gain from realization of investment in subsidiary, net    (359 )  -    -  
     Amortization of deferred stock-based compensation    126    465    400  
     Induced conversion of convertible debenture    -    -    1,011  
     Decrease (increase) in trade receivables, net    2,581    (355 )  (265 )
     Decrease in other accounts receivable and prepaid expenses    2,301    289    111  
     Decrease (increase) in inventories    (144 )  291    196  
     Increase in other long-term accounts receivable    (20 )  (35 )  (26 )
     Increase (decrease) in trade payables    (359 )  1,238    (1,145 )
     Decrease in other accounts payable and accrued expenses    (2,962 )  (508 )  (261 )
   
 Net cash provided by (used in) operating activities    5,779    94    (2,132 )
   
 Cash flows from investing activities:  
   Purchase of property and equipment    (2,020 )  (873 )  (1,099 )
   Proceeds from short-term bank deposits    15    -    62  
   Proceeds from sale of property and equipment    519    58    -  
   Proceeds from realization of investment in subsidiary    6,241    -    -  
   Acquisition of additional interest in Shagrir Motor Vehicle  
     Systems, net of cash acquired (a)    -    10    -  
   Acquisition of activities and assets of Shagrir Towing  
     Services Ltd. and Shagrir (1985) Ltd. (b)    (43,847 )  -    -  
   
 Net cash used in investing activities    (39,092 )  (805 )  (1,037 )
   
 Cash flows from financing activities:  
   Receipt of long-term loans from banks    16,066    743    -  
   Repayment of long-term loans from banks    (2,035 )  (376 )  -  
   Receipt of long-term loans from shareholders and others    21,136    149    -  
   Repayment of long-term loans from others    (6,241 )  -    -  
   Repayment of convertible debenture    -    -    (300 )
   Issuance of warrants to a bank    -    -    103  
   Proceeds from issuance of shares and exercise of warrants, net    6,176    67    3,742  
   Short-term bank credit, net    (401 )  (504 )  253  
   
 Net cash provided by financing activities    34,701    79    3,798  
   
 Effect of exchange rate on cash and cash equivalents    233    (1 )  8  
 
 Increase (decrease) in cash and cash equivalents    1,621    (633 )  637  
 Cash and cash equivalents at the beginning of the year    75    708    71  
   
 Cash and cash equivalents at the end of the year   $ 1,696   $ 75   $ 708  
   
 Supplemental disclosure of cash flow transaction:  
   Cash paid during the year for interest   $ 1,200   $ 469   $ 229  

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES
(Formerly: Nexus Telocation Systems Ltd.)
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands

Year ended December 31,
2005
 2004
 2003
 
(a) Acquisition of additional interest in Shagrir Motor                
      Vehicle Systems:  
   
    Fair value of assets acquired and liabilities assumed at  
      date of acquisition:  
   
    Working capital   $-   $ (1,238 ) $-
    Long-term accounts receivable    -    (224 )  -  
    Property and equipment    -    (1,117 )  -  
    Customer list    -    (2,646 )  -  
    Brand name    -    (828 )  -  
    Goodwill    -    (12,638 )  -  
    Short-term bank credit    -    5,282    -  
    Long-term loan    -    1,890    -  
    Accrued severance pay, net    -    276    -  
   
     -    (11,243 )  -  
    Fair value of shares, options and warrants issued    -    11,253    -  
   
    $-   $ 10   $-  
   
(b) Acquisition of activities and assets of Shagrir Towing  
      Services Ltd. and Shagrir (1985) Ltd.:  
   
    Fair value of assets acquired and liabilities assumed at  
      date of acquisition:  
   
    Working capital   $ 4,568   $-   $-  
    Property and equipment    (5,760 )  -    -  
    Customer list    (8,558 )  -    -  
    Brand name    (1,920 )  -    -  
    Goodwill    (31,652 )  -    -  
    Long-term loan    (1,175 )  -    -  
    Accrued severance pay, net    6    -    -  
   
     (44,491 )  -    -  
    Fair value of shares, options and warrants issued    644    -    -  
   
    $ (43,847 ) $-   $-  
   
(c) Non-cash investing and financing activity:  
   
    Conversion of convertible debenture   $-   $-   $ 723  

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.

POINTER TELOCATION LTD.


BY: /S/ Yossi Ben Shalom
——————————————
Yossi Ben Shalom
Chairman of the Board of Directors

Date: March 2, 2006