6-K 1 zk63146.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 November, 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-


Pointer Telocation Announces Record High Revenues for Third Quarter 2006
  — Revenues from international operations in Q3 2006 - up 62%
  — Improved profitability and EBITDA

Givatayim, Israel -November 22nd, 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 third quarter of 2006.

Financial Highlights:

Revenues: Pointer’s revenues for the third quarter of 2006 increased 7.2% to $11.2 million compared to $10.4 million, in the comparable period in 2005. Revenues for the first nine months of 2006 increased 14.4% to $31.0 million, compared with $27.1 million in the same period of 2005.

Pointer’s revenues from its international non-domestic operations increased 62% in Q3 2006 as compared to Q3 2005 and 25.9% in the nine months period ended September 30, 2006 as compared to the same period in 2005. This increase is mainly attributed to the increase in sales to one customer. The increase in total revenues in the first nine months of 2006 as compared to the comparable period in 2005 is also attributable to the fact that revenues in the first nine months of 2005 included only seven months of revenues derived from the acquisition of the road-side assistance and towing business of Shagrir Towing Services completed on February 28, 2005.

Gross Profit: For the third quarter of 2006, gross profit increased 5% to $4.1 million as compared to $3.9 million in Q3 2005. For the first nine months of 2006, gross profit increased by 13.4% to $11.4 million as compared to $10.0 million in the same period in 2005. As a percentage of revenues, gross profit was 36.6% and 36.7%, in Q3 2006 and the first nine months of 2006, respectively, as compared to 37.4% and 37.0% in the comparable periods in 2005.

Operating Income: Pointer’s operating income increased 45.7% to $1.4 million in Q3 2006, compared to $932 thousand for the same quarter of 2005. In the first nine months of 2006 Pointer recorded a significant increase in operating income to $4 million, compared to operating income of $182 thousand for the comparable period of 2005. The increase in operating income in the first nine months of 2006 includes a one time net income of $1.3 million associated with an agreement signed with a Latin American customer, offset by a $350 thousand impairment of long-lived assets.

Net Profit: Pointer improved its bottom-line results recording a net profit of $449 thousand or $0.14 per share in the third quarter of 2006, as compared to a net loss of $348 thousand or $(0.14) per share in the third quarter of 2005. For the first nine months of 2006, Pointer recorded a net profit of $1.1 million or $0.39 per share as compared to a net loss of $2.7 million or $(1.18) per share in the comparable period of 2005. During this quarter Pointer continued to consolidate 100% of the net profit of its Israeli subsidiary Shagrir Motor Vehicle Systems, even though its current holding is 56.6%. Pointer’s management expects to consolidate Shagrir’s results based on actual holdings, from the fourth quarter of 2006.

EBITDA: Pointer’s EBITDA increased to $2.4 million in the third quarter of 2006, as compared to $2.3 million in the third quarter of 2005. In the first nine months of 2006 EBITDA increased 81.2% to $7.6 million as compared to $4.2 million in the same period in 2005.

Total Shareholder’s Equity increased during the third quarter of 2006 to $15.9 million.

Danny Stern, Pointer’s Chief Executive Officer, said: “We are very pleased with the excellent financial results of the third quarter of 2006, notably in the growth in domestic and international revenues, the continuous improvement in profitability and our strong EBITDA and cash flow, all of which reflect the strength of our business model. We are continuing to increase our products and services offering and remain focused on laying the building blocks for continuous growth in 2007.”

Conference Call Information:

Pointer’s management will host two conference calls with the investment community today, November 22nd, 2006 in Hebrew at 15:30 (GMT +2) and in English at 9:30 EST.

To listen to the conference calls, please dial:
From the US: 1-800-994-4498
From Israel: 03-9180609

A replay of the conference call will be available through November 23rd, 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.

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES
 
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands

September 30,
2006
 December 31,
2005
Unaudited
 
    ASSETS            
   
CURRENT ASSETS:  
  Cash and cash equivalents   $ 2,928   $ 1,696  
  Trade receivables (net of allowance for doubtful accounts of $ 430 at  
    September 30, 2006 and $ 363 at December 31, 2005)    8,634    6,576  
  Other accounts receivable and prepaid expenses    786    505  
  Inventories    1,299    1,389  
   
Total current assets    13,647    10,166  
   
LONG-TERM ASSETS:  
  Long-term accounts receivable    188    219  
  Severance pay fund    3,433    2,989  
  Property and equipment, net    7,306    7,319  
  Goodwill    39,033    36,924  
  Other intangible assets, net    8,865    9,597  
   
Total long-term assets    58,825    57,048  
   
Total assets   $ 72,472   $ 67,214  

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES
 
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share and per share data)

September 30,
2006
 December 31,
2005
Unaudited
 
    LIABILITIES AND SHAREHOLDERS' EQUITY            
   
CURRENT LIABILITIES:  
  Short-term bank credit and current maturities of long-term loans   $ 12,059   $ 9,949  
  Trade payables    4,885    3,904  
  Deferred revenues and customer advances    7,592    6,477  
  Other accounts payable and accrued expenses    3,845    3,835  
   
Total current liabilities    28,381    24,165  
   
LONG-TERM LIABILITIES:  
  Long-term loans from banks    14,603    16,211  
  Long-term loans from shareholders and others    9,164    12,082  
  Accrued severance pay    4,401    3,951  
   
Total long-term liabilities    28,168    32,244  
   
SHAREHOLDERS' EQUITY:  
  Share capital -  
    Ordinary shares of NIS 3 par value  
      Authorized :8,000,000 shares at September 30, 2006 and December  
      31, 2005; Issued and outstanding: 3,171,234 and 2,479,020 shares  
      at September 30, 2006 and December 31, 2005, respectively    2,105    1,680  
  Additional paid-in capital    103,285    100,707  
  Deferred stock-based compensation    -    (1 )
  Accumulated other comprehensive loss    (159 )  (1,138 )
  Accumulated deficit    (89,308 )  (90,443 )
   
Total shareholders' equity    15,923    10,805  
   
Total liabilities and shareholders' equity   $ 72,472   $ 67,214  

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES
 
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)

Nine months ended
September 30,
 Three months ended
September 30,
 Year ended
December 31,
2005
2006
 2005
 2006
 2005
Unaudited
 
Revenues:                        
  Products   $ 7,167   $ 6,784   $ 3,035   $ 2,337   $ 8,856  
  Services    23,795    20,284    8,133    8,078    28,108  
   
Total revenues    30,962    27,068    11,168    10,415    36,964  
   
Cost of revenues:  
  Products    4,114    4,467    1,632    1,391    5,727  
  Services    15,497    12,592    5,446    5,127    17,587  
   
Total cost of revenues    19,611    17,059    7,078    6,518    23,314  
   
Gross profit    11,351    10,009    4,090    3,897    13,650  
   
Operating expenses:  
  Research and development, net    826    669    282    230    892  
  Selling and marketing    2,753    2,835    964    905    3,693  
  General and administrative    3,361    4,341    1,086    1,168    5,644  
  Amortization of intangible  
    assets    1,330    1,982    400    662    2,462  
   
Total operating expenses    8,270    9,827    2,732    2,965    12,691  
   
Other income, net    (1,292 )  -    -    -    -  
Impairment of long-lived assets    350    -    -    -    -  
   
Operating income (loss)    4,023    182    1,358    932    959  
Financial expenses, net    2,234    2,872    653    1,280    4,027  
Other income (expenses), net    (15 )  (19 )  (10 )  -    341  
   
Income (loss) before taxes on  
  income    1,774    (2,709 )  695    (348 )  (2,727 )
Taxes on income    639    -    246    -    -  
   
Net income (loss )   $ 1,135   $ (2,709 ) $ 449   $ (348 ) $ (2,727 )
   
Basic and diluted net earnings  
  (loss) per share   $ 0.39   $ (1.18 ) $ 0.14   $ (0.14 ) $ (1.17 )

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES
 
CONDENSED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
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
 
Balance as of January 1, 2005      1,704,505   $ 1,145   $ 94,127   $ (117 ) $ (353 ) $ (87,716 )      $ 7,086  
  Issuance of shares and warrants, 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  
  Deferred stock-based compensation    -    -    (1 )  1    -    -         -  
  Amortization of deferred stock-based compensation    -    -    100    -    -    -         100  
  Exercise of warrants and options    692,214    425    2,479    -    -    -         2,904  
  Comprehensive income:  
    Foreign currency translation adjustments    -    -    -    -    979    -   $ 979    979  
    Net income    -    -    -    -    -    1,135    1,135    1,135  
  Total comprehensive income                                 $ 2,114       
Balance as of September 30, 2006 (unaudited)    3,171,234   $ 2,105   $ 103,285   $-   $ (159 ) $ (89,308 )      $ 15,923  
 
Balance as of January 1, 2005    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    -    -    -    125    -    -         125  
  Exercise of warrants    31,818    22    118    -    -    -         140  
  Comprehensive loss:  
    Foreign currency translation adjustments    -    -    -    -    (927 )  -   $ (927 )  (927 )
    Net loss    -    -    -    -    -    (2,709 )  (2,709 )  (2,709 )
  Total comprehensive loss                                 $ (3,636 )     
Balance as of September 30, 2005 (unaudited)    2,458,910   $ 1,667   $ 100,646   $ (2 ) $ (1,280 ) $ (90,425 )      $ 10,606  

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES
 
CONDENSED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
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
 
 Balance as of July 1, 2006 (unaudited)      3,095,124   $ 2,076   $ 103,091   $ -   $ (635 ) $ (89,757 )      $ 14,775  
   Amortization of deferred stock-based compensation    -    -    31    -    -    -         31  
   Exercise of warrants    76,110    29    163    -    -    -         192  
   Comprehensive loss:  
     Foreign currency translation adjustments    -    -    -    -    476    -   $ 476    476  
     Net income    -    -    -    -    -    449    449    449  
   Total comprehensive income                                 $ 925       
 Balance as of September 30, 2006 (unaudited)    3,171,234   $ 2,105   $ 103,285   $ -   $ (159 ) $ (89,308 )   $15,923  
   
 Balance as of July 1, 2005 (unaudited)    2,458,910   $ 1,667   $ 100,646   $ (13 ) $ (1,223 ) $ (90,077 )      $ 11,000  
   Amortization of deferred stock-based compensation    -    -    -    11    -    -         11  
   Comprehensive loss:  
     Foreign currency translation adjustments    -    -    -    -    (57 )  -   $ (57 )  (57 )
     Net loss    -    -    -    -    -    (348 )  (348 )  (348 )
   Total comprehensive loss                                       $ (405 )      
 Balance as of September 30, 2005 (unaudited)    2,458,910   $ 1,667   $ 100,646   $ (2 ) $ (1,280 ) $ (90,425 )      $ 10,606  

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES
 
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands

Nine months ended
September 30,
 Three months ended
September 30,
 Year ended
December 31,
2005
2006
 2005
 2006
 2005
Unaudited
 
Cash flows from operating activities:                        
Net income (loss)   $ 1,135   $ (2,709 ) $ 449   $ (348 ) $ (2,727 )
Adjustments to reconcile net income (loss) to  
   net cash provided by operating activities:  
   Depreciation and amortization    3,498    3,869    1,147    1,307    4,997  
   Accrued interest and exchange rate  
      changes of convertible debenture and  
      long-term loans    451    1,629    69    925    1,961  
   Accrued severance pay, net    (46 )  425    (23 )  (175 )  484  
   Loss (gain) from sale of property and  
      equipment, net    (39 )  (180 )  (113 )  (65 )  (299 )
   Gain from realization of investment in  
      subsidiary, net    -    -    -    -    (359 )
   Amortization of deferred stock-based  
      compensation    100    125    31    11    126  
   Decrease (increase) in trade  
      receivables, net    (1,589 )  1,721    (980 )  (10 )  2,581  
   Decrease (increase) in other accounts  
      receivable and prepaid expenses    (203 )  1,954    (51 )  (7 )  2,301  
   Decrease (increase) in inventories    200    (33 )  145    (119 )  (144 )
   Write-off of inventories    69    -    -    -    199  
   Decrease (increase) in other long-term  
      accounts receivable    48    (30 )  (3 )  5    (20 )
   Increase in trade payables    683    329    398    213    (359 )
   Decrease in other accounts payable and  
      accrued expenses    491    (2,145 )  (512 )  (564 )  (2,962 )
   
Net cash provided by operating activities    4,798    4,955    557    1,173    5,779  
   
Cash flows from investing activities:  
Purchase of property and equipment    (2,118 )  (1,354 )  (1,244 )  (214 )  (2,020 )
Proceeds from short-term bank deposits    -    15    -    -    15  
Proceeds from sale of property and equipment    779    316    353    123    519  
Proceeds from realization of investment in  
   subsidiary    -    -    -    -    6,241  
Acquisition of activities and assets of  
   Shagrir Towing Services Ltd. And Shagrir  
   (1985) Ltd. (a)    -    (43,847 )  -    (90 )  (43,847 )
   
Net cash used in investing activities    (1,339 )  (44,870 )  (891 )  (181 )  (39,092 )
   
Cash flows from financing activities:  
Receipt of long-term loans from banks    -    16,066    -    -    16,066  
Repayment of long-term loans from banks    (1,628 )  (1,079 )  (401 )  (810 )  (2,035 )
Receipt of long-term loans from shareholders  
   and others    131    21,093    -    158    21,136  
Repayment of long-term loans from others    (3,447 )  -    (450 )  -    (6,241 )
Proceeds from issuance of shares and exercise  
   of options and warrants, net    2,904    6,105    192    -    6,176  
Short-term bank credit, net    (174 )  (481 )  418    (440 )  (401 )
   
Net cash provided by (used in) financing  
   activities    (2,214 )  41,704    (241 )  (1,092 )  34,701  
   
Effect of exchange rate on cash and cash  
   equivalents    (13 )  124    17    45    233  
   
Increase (decrease) in cash and cash  
   equivalents    1,232    1,913    (558 )  (55 )  1,621  
Cash and cash equivalents at beginning of  
   period    1,696    75    3,486    2,043    75  
   
Cash and cash equivalents at end of period   $ 2,928   $ 1,988   $ 2,928   $ 1,988   $ 1,696  
   
Supplemental disclosure of cash flow  
   transaction:   
Cash paid during the period for interest   $ 1,695   $ 1,057   $ 243   $ 393   $ 1,200  

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES
 
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands

Nine months ended
September 30,
 Three months ended
September 30,
 Year ended
December 31,
2005
2006
 2005
 2006
 2005
Unaudited
 
(a)    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   $-   $ (90 ) $ 4,568  
       Property and equipment    -    (5,760 )  -    -    (5,760 )
       Customer list    -    (8,558 )  -    -    (8,558 )
       Brand name    -    (1,920 )  -    -    (1,920 )
       Goodwill    -    (31,652 )  -    -    (31,652 )
       Long-term loan    -    (1,175 )  -    -    (1,175 )
       Accrued severance pay, net    -    6    -    -    6  
   
     -    (44,491 )  -    (90 )  (44,491 )
       Fair value of shares, options and  
          warrants issued    -    644    -    -    644  
   
    $-   $ (43,847 ) $-   $ (90 ) $ (43,847 )

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: November 22, 2006