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