--------------------------------------------------------------------------------
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 2002
ROBOGROUP T.E.K. LTD.
(Name of Registrant)
Rechov Hamelacha 13, Afeq Industrial Estate, Rosh HaAyin 48091 Israel
(Address of Principal Executive Office)
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 [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(7):
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 [ ] No [X]
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-
_
6-K Items
1. RoboGroup T.E.K. Ltd. Directors' Report and Interim Consolidated Financial
Statements for the Nine Months Ended September 30, 2002.
ITEM 1
[GRAPHIC OMITTED][GRAPHIC OMITTED]
(Unaudited)
Interim Consolidated Financial Statements
At September 30, 2002
Page
Directors' Report for the Nine Months Periods ended September 30, 2002.........2
Balance Sheets................................................................10
Statement of Operations.......................................................11
Statement of Changes in Shareholders' Equity..................................12
Statement of Cash Flows.......................................................14
Notes to the Interim Financial Statements.....................................17
RoboGroup T.E.K. Limited
Directors' Report
for the Nine Months Periods ended September 30, 2002
We are pleased to present the Directors' Report on the financial condition of
the Company for the nine months ended September 30, 2002.
RoboGroup T.E.K. Limited and its Business Environment
RoboGroup T.E.K. Limited (hereinafter: "RoboGroup") and its subsidiaries will be
referred to in this Directors' Report as the "Company".
The Company operates through three business sectors. One sector focuses on the
traditional business activities of the Company - the education field. This
sector includes the Company's research and development sections, the operations
section, the marketing and sales of the Company's products as well as products
manufactured by third parties to the training and education markets in Israel
and worldwide. In the third quarter of 2002, our e-learning activities were
added to the Education Sector. This reflects the close relationship between the
two activities, since our e-learning operations are based on content that was
developed in the Education Sector during the last 20 years. The second sector
includes the activity of our subsidiary, Yaskawa Eshed Technology Ltd.
(hereinafter "YET"), which is engaged in the development and manufacture of
motion control products for the industrial market. The third sector manages new
activities of the Company, including the activities of our subsidiaries MemCall
LLC and MemCall Ltd. (hereinafter "MemCall").
The Education Sector
In October 2001, the Education Sector began to implement a cost cutting plan
aimed at improving its profitability. The plan covered all the entities in the
sector, excluding the e-learning activities, including our U.S. subsidiary and
Computras. Management of the Education Sector expects that following the
implementation of the plan expenses will be reduced by over US$ 1 million in
2002. Implementation of the plan has resulted in reduced expenses of
approximately US$ 750 thousand in the first nine months of 2002, as compared to
the comparable period in the previous year.
In December 2001, the Company signed an agreement to provide an e-learning
training system in consideration of over US$ 4 million. This e-learning system
will include content packages relating to the Company's principal field of
expertise in the development and production of technology training systems. The
project is expected to take up to two years, with the first delivery having been
made during the third quarter of 2002 in which the company recognized revenues
for the first time. The company is striving to complete the project in 2003. The
Company believes that the successful completion of the project may provide the
foundation for a product line in the e-learning field.
During the third quarter of 2002, the Company continued to invest in the
e-learning field and is negotiating for new projects in a number of countries
worldwide.
YET
During the third quarter of 2002, YET delivered approximately US$ 800,000 of
development services to Yaskawa Electric Corporation (hereinafter "YEC"). The
approved working plan for YET for 2002 forecasts a pre-tax profit of
approximately US$ 1.75 million. Based on the progress of ongoing R&D projects
and related revenues, YET's management predicts that the forecast will be met.
In September 2001 the shareholders of YET reached an agreement whereby YET will
start to develop new independent marketing channels for the sale of its products
and will develop products that will be sold under the YET brand name. During the
third quarter of 2002 YET continued with the advanced stages of the development
of XtraDrive (Advanced Server Driver), which will be sold under the YET brand
name. YET has also initiated preliminary marketing activities with the
cooperation of YEC in Europe and the U.S. in order to establish its presence in
these markets. YET has initiated negotiations with a European company in regard
to a private label agreement.
During the third quarter of 2002 YET continued to market YEC's products in
Israel for the purpose of developing new customer relationships with companies
in the printing industry and other industries.
In the third quarter of 2002 and through the date of this report, YET made
preliminary sales (in immaterial amounts) of XtraDrive to several clients in
Europe and in the U.S., as well as preliminary sales (also in immaterial
amounts) of the YEC product line in Israel.
In May 2000, RoboGroup entered into a service agreement with YET under which YET
pays RoboGroup for services and management fees. The sum of each year's payments
is determined annually by mutual consent. Under the January 2002 service
agreement for the year ending December 31, 2002, YET will pay RoboGroup
approximately NIS 1.2 million for services and management fees.
The Business Enterprises Division
During 2002, the company has concentrated its business development efforts on
the promotion of the activities of MemCall. Until the third quarter of 2002,
this division also included the Company's e-learning activities, which were
transferred to the Education Sector in third quarter).
MemCall
MemCall is engaged in the development of a new technology which, if successful,
would in the estimation of its managers substantially reduce the time for
locating and retrieving data in computers and communications networks. The new
technology is expected to result in the development of electronic chips.
During the first three quarters of 2002 MemCall continued its capital raising
efforts with external entities. The condition of the networking market, which
has experienced a substantial decrease in sales, is substantially reducing the
current market for MemCall. In addition, the condition of the capital markets
continues to be difficult and consequently, MemCall's management cannot estimate
if and when it will be possible to raise funds for its activities. The date when
the first MemCall products will be ready cannot be determined until the capital
raising process is successfully completed.
During July 2002 MemCall received approval from the Office of the Chief
Scientist of the State of Israel for a total research and development grant of
NIS 4.6 million, which is 50% of its total approved budget of NIS 9.2 million.
The approved budget, which was based on a development plan that was previously
submitted by MemCall, is for the period between January 1, 2002 through December
31, 2002.
During August 2002, MemCall received NIS 2.1 million from the Office of the
Chief Scientist under the grant.
During September 2002, MemCall requested that the Office of the Chief Scientist
reduce the approved budget to NIS 7.1 million, based on itsforecast that
expenses by the end of 2002 will be lower than expected. To date, no reply has
been received from the Office of the Chief Scientist.
In the beginning of 2001, RoboGroup's Board of Directors established two
milestones with respect to completing an investment of US$ 2.5 million in
MemCall. On November 28, 2001, RoboGroup's Board acknowledged that MemCall had
achieved these milestones.
In May 2002, RoboGroup's Board of Directors approved an additional US$ 1 million
investment in MemCall, subject to MemCall meeting a number of additional
milestones by the end of 2002. The additional financing is being made pursuant
to a non-interest bearing convertible note that is payable by December 31, 2002,
and which at the option of RoboGroup may be converted into additional share
capital in MemCall.
Pursuant to this last resolution, RoboGroup's investment in MemCall is expected
to reach approximately US$ 3.5 million, consisting of US$ 2 million in equity,
and the balance in convertible debt.
RoboGroup's investment in MemCall during the first nine months of 2002 amounted
to approximately NIS 5 million (approximately US$ 1 million), net of the
deduction for the participation of the Chief Scientist. As of September 30, 2002
the total cumulative investment in MemCall was approximately US$ 2.5 million
(after deducting the Chief Scientist's participation). All of our investments in
MemCall have been expensed in the quarter in which they were made (see Note 4 of
the financial statements).
During the third quarter of 2002, a contract manufacturer delivered a
preliminary amount of "test chips" to Memcall. The testchip is a piece of
silicon designed to check basic functions in the planning of MemCall's first
product (GSP1) and is not a stand-alone product. In evaluating the testchip,
substantial problems were found in the manufacturing process of the contract
manufacturer and as a result, MemCall was only able to check some of the
functions intended for evaluation. Memcall is considering whether to continue
working with or replace the contract manufacturer.
During October 2002, MemCall recruited Ilan Shaari as Vice President, Products.
Mr. Shaari who has broad experience in the networking industry, will focus on
defining MemCall's products and technical communication with potential
customers.
RoboGroup's Building
The space in RoboGroup's building in Rosh Ha'Ayin that is not occupied by the
Company has been leased to three outside tenants. During the third quarter of
2002 the Company recorded approximately US$ 164,000 in rental revenues from
these tenants.
1. Exposure to Market Risks and their Management
a. Currency Risks
The majority of the Company's products are exported and, as a result, the
bulk of the Company's income is received in foreign currency. As a result,
the Company is exposed to risks stemming from changes in the exchange rates
of foreign currencies, primarily US Dollars and Japanese Yen. The Company
takes the following precautions in order to limit its exposure:
1. Daily monitoring of changes in the exchange rates of the various
currencies as well as developments that might have an impact on these
currencies.
2. A quarterly evaluation of the Company's position with respect to its
overall exposure to changes in the exchange rates of the various
currencies.
3. Taking foreign currency linked loans for financing its investment in
the Rosh Ha'Ayin building.
Notwithstanding these precautions, the Company cannot insure full
protection against foreign currency risks, and is exposed to exchange rate
fluctuations between the various foreign currencies themselves and between
the foreign currencies and the Israeli Shekel.
b. Interest and Index Risks
The Company does not enter into specific hedging contracts against the
exposure involved in changes of the Israeli interest and index rates.
However, the Company usually invests a portion of its monetary balances in
accordance with its periodic evaluations with respect to expected changes
in the Israeli interest and index rates.
c. Securities
The Company is exposed to fluctuations in the prices of securities that
make up its investment portfolio. The Company constantly monitors
developments in this area and conducts monthly evaluations of the
performance of the investment houses that manage the Company's securities
portfolio.
The Responsible Officer
The company's chief financial officer is responsible for managing the
Company's market risks.
Supervision and Application of Policy
Company management and the Board of Directors finance committee constantly
monitors the extent of the Company's exposure to market risks, and
determines if it is necessary to modify its risk management policy and, if
necessary, adopt protective measures.
As at September 30, 2002 and at December 31, 2001 the Company had no open
futures contracts. The Company did not enter into any futures transactions
during the first nine months of 2002.
RoboGroup T.E.K. Limited
Linked Balances
(Adjusted NIS in thousands September 30, 2002)
September 30, 2002 December 31, 2001
-------------------------------------------------------------- ---------------------------------------------------
Linked Linked Linked Linked to the Linked Linked
Consolidated to the to to the Unlinked Autonomous Total Japanese Yen to to the Unlinked Non- Total
Japanese foreign CPI NIS (K) subsidiary NIS (K) NIS (K) foreign CPI NIS (K) Monetary NIS
Yen currency NIS & currency NIS Items (K)
NIS (K) NIS (K)(1) (K) Non-Monetary NIS (K) (K)
Items (1)
---------------- ------- -------- ----------- ------ ---------- -------- --------- ------- ------- ------
Assets
Cash and cash 1,125 22,439 - 919 1,626 26,109 1,200 10,220 - *119 - 11,539
equivalents
Short-term - - - 1,905 - 1,905 - - - 2,178 - 2,178
investments
Trade - 5,669 46 4,416 9,421 19,552 127 15,617 328 9,200 - 25,272
receivables
Other 118 333 - 4,479 295 5,225 - 2,589 - 1,683 - 4,272
receivables
and debit
balances
Inventory - 808 - - 18,520 19,328 - - - - 17,807 17,807
Investments in - - - - 110 110 - - - - 110 110
other companies
Fix assets - - - - 39,326 39,326 - - - - 40,746 40,746
Goodwill - - - - 352 352 - - - - 418 418
Deferred taxes - - - - 780 780 - - - - 760 760
-------- ------ ------- -------- ----------- ------- ------ -------- ------ ------ ------ --------
-------- ------ ------- -------- ----------- ------- ------ -------- ------ ------ ------ --------
1,243 29,249 46 11,719 70,430 112,687 1,327 28,426 328 13,180 59,841 103,102
Liabilities
Short-term 1,364 1,087 2,102 9,197 - 13,750 11,724 5,596 1,641 4,916 - 23,877
bank credits
Trade payables 219 - - 5,341 3,097 8,657 - 2,717 - 8,495 - 11,212
Other payables - 6,170 - 9,014 1,180 16,364 31 940 - 9,538 - 10,509
and credit
balances
Long-term 6,520 8,183 7,748 - - 22,451 - - 9,371 - - 9,371
loans
Liability for - - 1,916 - - 1,916 - - 1,489 - - 1,489
termination of
employee/employer
relationship,
net
------- ----- ------- -------- ----------- ------ -------- -------- ------ ------ ----- --------
------- ----- ------- -------- ----------- ------ -------- -------- ------ ------ ----- --------
8,103 15,440 11,766 23,552 4,277 63,138 11,755 9,253 12,501 22,949 - 56,458
------- ----- ------- -------- ----------- ------ -------- -------- ------ ------ ----- --------
Excess of (6,860) 13,809 (11,720) (11,833) 66,153 49,549 (10,428) 19,173 (12,173) (9,769) 59,841 46,644
assets
(liabilities)
======= ====== ======= ======= =========== ====== ======== ========== ======== ======== ====== ======
(1) The foreign balances are mainly in Dollars.
There were no material changes in the report by linkage basis as at December 31,
2001 and the report as at September 30, 2002.
RoboGroup TEK Ltd.
Backlog of Orders
The Company's backlog of orders as at September 30, 2002, was as follows:
o For the Company's products and third-party products that are marketed
by the Company: approximately NIS 19.8 million (approximately NIS 14.5
million at September 30, 2001).
2. The Financial Position of the Company
a. As at September 30, 2002, the Company had assets of approximately NIS
112.7 million, compared to assets of approximately NIS 103.1 million at
December 31, 2001. The increase is principally attributable to an
increase in cash of approximately NIS 14.6 million, which was offset
mainly by a decrease in the value of trade receivables of approximately
NIS 5.7 million.
b. The Company's shareholders' equity was approximately NIS 49.5 million
as at September 30, 2002, compared with approximately NIS 46.6 million
at December 31, 2001. The increase is principally attributable to the
Company's net income of approximately NIS 2 million for the reported
period, and an increase in currency translation adjustments of an
autonomous subsidiary that amounted to approximately NIS 0.9 million.
3. Operating Results
The Company's revenues for the first nine months of 2002 amounted to
approximately NIS 63.5 million, as compared to approximately NIS 66.9
million in the corresponding period in 2001.
The Company's revenues for the third quarter of 2002 amounted to
approximately NIS 27 million as compared to approximately NIS 23.3 million
in the corresponding period in 2001. The increase of approximately NIS 3.7
million was primarily attributable to the increase in revenues of the
Education Sector (mainly from the e-learning project).
The cost of the Company's revenues during the first nine months of 2002 was
approximately 47% of revenues as compared with approximately 60.5% in the
corresponding period in 2001. The improvement derived from an increase in
revenues from YET development projects that have a relatively high profit
margin, as well as from a change in the Company's sales mix.
The Company's operating expenses during the first nine months of 2002 were
approximately NIS 30.1 million as compared with approximately NIS 31
million in the corresponding period in 2001.
The main changes were as follows:
Net R&D expenditures for the first nine months of 2002 decreased by
approximately NIS 0.3 million compared with the corresponding period in
2001. This resulted mainly from a decrease in the development expenses of
the Education Sector of approximately NIS 1 million. This decrease was
offset primarily by an increase of approximately NIS 0.8 million in
investments in the development activities of MemCall, which amounted to NIS
3.9 million in the first nine months of 2002.
Marketing and sales costs for the first nine months of 2002 declined by
approximately NIS 1.1 million as compared with the corresponding period in
2001, due primarily to lower marketing expenses in the Education Sector.
General and administrative expenses for the first nine months of 2002
increased by approximately NIS 0.6 million in comparison to the
corresponding period of 2001, mainly as a result of increased expenses of
the Education Sector.
The income from operations in the first nine months of 2002 was
approximately NIS 3.4 million compared with a loss from operations of
approximately NIS 4.6 million in the corresponding period in 2001.
The Company's net financial income in the first nine months of 2002
amounted to approximately NIS 1.1 million compared with financial income of
approximately NIS 1 million in the corresponding period in 2001. The
financial expenses in the first nine months of 2002 derived mainly from the
rise in the rates of exchange of the US dollar.
The Company's other income in the first nine months of 2002 amounted to
approximately NIS 0.9 million versus approximately NIS 1.6 million in 2001.
This decrease resulted mainly from an increase in the building segment
expenses that amounted to approximately NIS 0.6 million.
The Company's income before taxes for the first nine months of 2002
amounted to approximately NIS 3.2 million compared to a loss of
approximately NIS 1.9 million in the corresponding period last year.
The Company's income before taxes for the first nine months of 2002,
excluding the approximately NIS 5 million investment in MemCall that was
charged to expenses, amounted to approximately NIS 8.2 million.
The company's net profit in the first nine months of 2002, amounted to
approximately NIS 2 million compared to net income loss of approximately
NIS 2.1 million in the corresponding period last year.
The company's net profit in the third quarter of 2002, amounted to
approximately NIS 4.2 million compared to net income loss of approximately
NIS 0.5 million in the corresponding period last year.
4. Liquidity
a. The balance of cash, cash equivalents and securities portfolios at the
Company's disposal as at September 30, 2002 was approximately NIS 28
million as compared to approximately NIS 13.7 million at December 31,
2001.
b. Cash flows from current operations
In the first nine months of 2002 the Company had positive cash flow
from operations of approximately NIS 12.4 million compared to negative
cash flow of approximately NIS 4 million in the corresponding period in
2001. The positive cash flow in the 2002 period derived mainly from
receiving an advance payment in connection with the e-learning project.
c. Cash flows from investment operations
In the first nine months of 2002 the Company had negative cash flow of
approximately NIS 1 million from its investment operations as compared
to negative cash flow of approximately NIS 4.7 million in the
corresponding period in 2001. The principal portion of the deficit was
attributable to the Company's investment of approximately NIS 0.7
million in the Rosh Ha'Hayin building as compared to an investment of
approximately NIS 0.4 million in the corresponding period in the
previous year.
d. Cash flows from financing operations
In the first nine months of 2002 the Company had positive cash flow
from financing operations of approximately NIS 3.1 million as compared
to approximately NIS 5.5 million in the corresponding period in 2001.
The surplus was mainly due to an increase in credit from banking
institutions in the amount of approximately NIS 0.3 million and as a
result of a net increase of long term loans in the amount of
approximately NIS 2.8 million.
5. Sources of Financing
a. The Company had working capital of ? at September 30, 2002. The current
ratio as at September 30, 2002, was 1.86, compared with 1.34 as at
December 31, 2001. The quick ratio as at September 30, 2002, was 1.36,
compared with 0.95 as at December 31, 2001. The improvement in the
current ratio stems mainly from the conversion of a portion of the
Company's short term loans into long term loans.
b. The Company's shareholders' equity as at September 30, 2002 was
approximately NIS 49.5 million representing approximately 44% of the
Company's total balance sheet assets compared with NIS 46.6 million and
45%, respectively, as at December 31, 2001.
c. The average amount of credit granted to customers during the first
nine months of 2002 was approximately NIS 22.4 million, and the average
amount of credit received from suppliers and providers of services was
approximately NIS 9.9 million, compared with NIS 22.8 million and NIS
13.9 million, respectively, as at December 31, 2001.
d. The average amount of short-term credit received from banking
institutions during the first nine months of 2002 was approximately NIS
15.7 million, compared with approximately NIS 14.8 million during the
year 2001.
e. The average amount of long-term credit from banking institutions
during the first nine months of 2002 was approximately NIS 19 million,
compared with approximately NIS 16.5 million during the year 2001.
6. Option Plans for Employees, Directors and Interested Parties
During the nine months ended September 30, 2002 RoboGroup issued 2,000
ordinary shares as a result of the exercise of 2,000 stock options. These
stock options were allotted on February 9, 1998 to a trustee on behalf of
employees of the Company, and were exercisable in NIS for a sum equal to
US$ 0.50 per share.
As of the date of this report, 75,400 stock options that were allocated to
the trustee have not yet been exercised and 42,600 stock options have not
been issued.
7. Others
7.1 The company's stock purchasing by Robogroup LTD.
On November 17, 2002, the Company filed a request with the District Court of
Tel-Aviv for the authority to repurchase some of its own shares in accordance
with Sec. 303 to the Companies Law, 1999. The total amount of funds requested to
be used in connection with the repurchase program is NIS 2,140,000,
(approximately $450,000). The material creditors of the Company agreed to the
repurchase program. As of the date of this report, the court has not set a date
for the review of the Company's request.
7.2 General Shareholders Meeting
On November 12, 2002, the company announced the date of its Annual General
Shareholders Meeting, which will be held on December 10, 2002. The agenda and
instructions with regard to attending and voting in the Meeting were detailed in
the immediate disclosure that was filed with the Israeli Securities Authority
and SEC.
7.3 Name change of a subsidiary
On August 15, 2002, our subsidiary Robotec Technologies Ltd. received approval
from the Israeli Companies Registrar for its name to be changed to "Intelitek
Training Systems (1989) Ltd."
7.4 On November 25, 2002, RoboGroup's board of directors approved the cessation
of its employment relationship with Mr. Gideon Missulawin, a director and a
shareholder of RoboGroup, in accordance with an agreement between Mr. Missulawin
and RoboGroup dated 26.1.97. The employment relationship between Mr. Misulawin
and RoboGroup will end on January 2, 2003, in accordance with Mr. Missulawin's
waiver of a requirement for prior notice that was set forth in the agreement.
Mr. Missulawin will continue to serve as a director without remuneration.
7.5 Effective November 25, 2002, Ms. Anat Kats-Ifargan resigned as the
Company's CFO. Mr. Hanan Eibushitz began to serve as the Company's CFO on the
same day.
8. External factors
The changes in the world economy and the terrorist attacks in the U.S. on
September 11, 2001 impacted and continue to impact the stock prices on stock
exchanges throughout the world and in the U.S. in particular, and in this
context also affected the stock prices of RoboGroup's securities traded on the
Tel Aviv Stock Exchange as well as on the Nasdaq Stock Market.
The continued slowdown of the world economy and the terrorist attacks in the
U.S. on September 11, 2001, have also affected the Company's business in the
following markets:
o A slowdown has been observed in the market for motion control products
throughout the world. A more substantial slowdown was observed in the
upper segment of the market (e.g. machines for the semi-conductor
industries). YEC, which continues to be YET's sole substantial
customer, suffered a significant drop in sales. This has also
necessarily affected YET's business. The worldwide slowdown also had
an adverse impact on the development of YET's new marketing channels
in the U.S., Europe and the Far East.
o A substantial slowdown was observed in the networking market, which is
one of the central potential markets for MemCall products. This has
brought about a reduction in the potential market, a slower
penetration of new technologies and products into the market, as well
as a delay in investment activity in the market. The slowdown in the
target markets for MemCall products and the significant decline in
capital investments in new enterprises have had an adverse effect on
MemCall.
o In the global education market, institutional investments in education
infrastructures declined as a result of the lack of economic resources
for institutional entities in general and for the education
institutions in particular, due to the slowdown in the world economy
on the one hand and the increasing investments in security and safety
markets on the other hand. The decrease in financial resources
available for the products of the education division has brought about
a reduction of its potential sales.
o The security and economic environments in the State of Israel have
negatively influenced the Company's business. Due to the situation,
partners and customers from abroad are hesitant to travel and develop
their business in this region. The economic recession and the decrease
in the education budget have also hurt the potential market for the
Company's products in Israel.
----------------------------- -----------------------------
Gideon Missulawin Rafael Aravot
Director Chairman of the Board & CEO
Date of approval of the financial statements: November 25, 2002
Balance Sheets
(Adjusted NIS in thousands, September 2002)
September 30, December 31,
----------------------------------------------------------- ------------------
2002 2002 2001 2001
US$ (K) * NIS (K) NIS (K) NIS (K)
(Unaudited) (Unaudited) (Unaudited) (Audited)
------------------ ------------------- ------------------- ------------------
Current assets
Cash and cash equivalents 5,360 26,109 12,448 11,539
Short term investments 391 1,905 2,211 2,178
Accounts receivable 4,014 19,552 22,502 25,272
Receivables and debit balances 1,073 5,225 3,436 4,272
Inventories 3,968 19,328 19,125 17,807
------------------ ------------------- ------------------- ------------------
14,806 72,119 59,722 61,068
------------------ ------------------- ------------------- ------------------
------------------ ------------------- ------------------- ------------------
Investments and long term
balances
Accounts receivable - - 171 -
Investments in other companies 23 110 110 110
------------------ ------------------- ------------------- ------------------
23 110 281 110
------------------ ------------------- ------------------- ------------------
------------------ ------------------- ------------------- ------------------
160 780 770 760
Deferred taxes
------------------ ------------------- ------------------- ------------------
------------------ ------------------- ------------------- ------------------
Fixed assets, net 8,073 39,326 40,568 40,746
------------------ ------------------- ------------------- ------------------
------------------ ------------------- ------------------- ------------------
Goodwill 72 352 445 418
------------------ ------------------- ------------------- ------------------
------------------ ------------------- ------------------- ------------------
------------------ ------------------- ------------------- ------------------
23,134 112,687 101,786 103,102
================== =================== =================== ==================
Current liabilities
Credit from banks 2,823 13,750 23,692 23,877
Trade payables 1,777 8,657 10,471 11,212
Payables and credit balances 3,359 16,364 10,697 10,509
------------------ ------------------- ------------------- ------------------
7,959 38,771 44,860 45,598
------------------ ------------------- ------------------- ------------------
------------------ ------------------- ------------------- ------------------
Long term liabilities
Loans from banks 4,609 22,451 9,674 9,371
Liability for termination of
employee/employer relationship, 393 1,916
net 1,622 1,489
------------------ ------------------- ------------------- ------------------
5,002 24,367 11,296 10,860
------------------ ------------------- ------------------- ------------------
------------------ ------------------- ------------------- ------------------
Shareholders' equity
Share capital 2,395 11,664 11,660 11,663
Capital funds and capital 9,528 46,410 45,368 45,515
surplus
Accumulated deficit (1,539) (7,498) (9,169) (9,507)
------------------ ------------------- ------------------- ------------------
10,384 50,576 47,859 47,671
Less - loans provided for
purchase of shares - - (1,202) -
Treasury shares (211) (1,027) (1,027) (1,027)
------------------ ------------------- ------------------- ------------------
10,173 49,549 45,630 46,644
------------------ ------------------- ------------------- ------------------
------------------ ------------------- ------------------- ------------------
------------------ ------------------- ------------------- ------------------
23,134 112,687 101,786 103,102
================== =================== =================== ==================
*Convenience Translation into US Dollars
================================== ========================================= =======================================
Gideon Missulawin Rafael Aravot Hanan Eibushitz
Director Chairman of the Board & CEO Chief Financial Officer
Date of approval of financial statement: November 25, 2002.
The accompanying notes form an integral part of the interim financial
statements.
Statement of Operations
(Adjusted NIS in thousands for September 2002, except share data)
Nine month period ended Three month period ended Year ended
September 30, September 30, December 31,
------------------------------------------ ---------------------------- ---------------
2002 2002 2001 2002 2001 2001
US$ (K)* NIS (K) NIS (K) NIS (K) NIS (K) NIS (K)
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
------------- ------------ -------------- ------------- -------------- ---------------
Revenues** 13,031 63,475 66,907 27,014 23,241 87,999
Costs of revenues** 6,151 29,961 40,491 10,819 12,973 52,520
------------- ------------ -------------- ------------- -------------- ---------------
------------- ------------ -------------- ------------- -------------- ---------------
Gross profit 6,880 33,514 26,416 16,195 10,268 35,479
------------- ------------ -------------- ------------- -------------- ---------------
------------- ------------ -------------- ------------- -------------- ---------------
Operating expenses
Research and
development
expenses, net** 1,989 9,686 10,030 3,339 3,912 12,633
Marketing and
selling expenses
2,275 11,082 12,203 4,010 4,040 16,210
Administrative and
general
Expenses 1,917 9,338 8,741 3,432 2,866 12,904
------------- -------------- ------------- --------------
------------- ------------ -------------- ---------------
6,181 30,106 30,974 10,781 10,818 41,747
------------- ------------ -------------- ------------- -------------- ---------------
------------- ------------ -------------- ------------- -------------- ---------------
------------- ------------ -------------- ------------- -------------- ---------------
------------- ------------ -------------- ------------- -------------- ---------------
Operating profit 699 3,408 (4,558) 5,414 (550) (6,268)
(loss) Income
Financial income
(expense), net (227) (1,106) 1,019 (858) (251) 1,970
Other income
183 890 1,600 (173) 447 2,768
------------- ------------ -------------- ------------- -------------- ---------------
------------- ------------ -------------- ------------- -------------- ---------------
Income (Loss) before 655 3,192 (1,939) 4,383 (354) (1,530)
taxes on income
Taxes on income (243) (1,183) (163) (207) (163) (909)
------------- ------------ -------------- ------------- -------------- ---------------
------------- ------------ -------------- ------------- -------------- ---------------
Net income (loss) 412 2,009 (2,102) 4,176 (517) (2,439)
============= ============ ============== ============= ============== ===============
============= ============ ============== ============= ============== ===============
Income (Loss) per
share 0.04 0.19 (0.20) 0.39 (0.05) (0.23)
============= ============ ============== ============= ============== ===============
============= ============ ============== ============= ============== ===============
Number of shares in
the calculation of 10,729,831 10,729,831 10,727,831 10,729,831 10,727,831 10,727,831
loss per share
============= ============ ============== ============= ============== ===============
*Convenience Translation into US Dollars.
**Restated
The accompanying notes form an integral part of the interim financial
statements.
Statement of Changes in Shareholders' Equity
(Adjusted NIS in thousands, September 2002)
Loans
guaranteed
by shares Accumulated
Capital Capital and earnings
Number of Share surplus funds treasury (deficit) Total
shares capital NIS (K) NIS (K) shares NIS (K) NIS (K)
NIS (K) NIS (K)
------------- ------------ ------------ ------------ ------------- ------------ ------------
For the nine-month period ended September 30, 2002 - unaudited
Balance at Jan. 1, 10,727,831 11,663 43,200 2,314 (1,027) (9,507) 46,643
2002
Exercise of options 2,000 1 4 - - - 5
Adjustments on
translation of - - - 892 - - 892
financial statement
of an autonomous
subsidiary
Net loss - - - - - 2,009 2,009
------------- ------------ ------------ ------------ ------------- ----- -------
Balance at
September 30, 2002 10,729,831 11,664 43,204 3,206 (1,027) (7,498) 49,549
============= ============ ============ ============ ============= ============ ============
For nine-month period ended September 30, 2001 - unaudited
Balance at Jan. 1, 10,697,631 11,644 42,998 2,317 (2,240) (7,067) 47,652
2001
Exercise of options 30,200 16 53 - - - 69
Repayment of loan for - - - - 11 - 11
the acquisition of
shares
Net loss - - - - - (2,102) (2,102)
------------- ------------ ------------ ------------ ------------- ------------ ------------
Balance at 10,727,831 11,660 43,051 2,317 (2,229) (9,169) 45,630
September 30, 2001
============= ============ ============ ============ ============= ============ ============
For the three-month period ended September 30, 2002 - unaudited
Balance at July.1, 10,729,831 11,664 43,204 2,805 (1,027) (11,674) 44,972
2002
Adjustments on
translation of - - - 401 - - 401
financial statement
of an autonomous
subsidiary
Net income - - - - - 4,176 4,176
------------- ------------ ------------ ------------ ------------- ------------ ------------
------------- ------------ ------------ ------------ ------------- ------------ ------------
Balance at 10,729,831 11,664 43,204 3,206 (1,027) (7,498) 49,549
September 30, 2002
============= ============ ============ ============ ============= ============ ============
For the three-month period ended September 30, 2001 - unaudited
Balance at July.1, 10,725,831 11,659 43,046 2,317 (2,229) (8,652) 46,141
2001
Exercise of options 2,000 1 5 - - - 6
Net loss - - - - - (517) (517)
------------- ------------ ------------ ------------ ------------- ------------ ------------
------------- ------------ ------------ ------------ ------------- ------------ ------------
Balance at 10,727,831 11,660 43,051 2,317 (2,229) (9,169) 45,630
September 30, 2001
============= ============ ============ ============ ============= ============ ============
The accompanying notes form an integral part of the interim financial statements
Statement of Changes in Shareholders' Equity- (cont.)
(Adjusted NIS in thousands, September 2002)
For the year ended December 31, 2001 - audited
Balance at Jan. 1, 10,697,631 11,645 43,000 2,314 (2,239) (7,068) 47,652
2001
Exercise of options 30,200 18 59 - - - 77
Repayment of loan for
the acquisition of - - 142 - 1,212 - 1,354
shares
Net loss - - - - - (2,439) (2,439)
------------- ------------ ------------ ------------ ------------- ------------ ------------
Balance at Dec. 31,
2001 10,727,831 11,663 43,201 2,314 (1,027) (9,507) 46,644
============= ============ ============ ============ ============= ============ ============
The accompanying notes form an integral part of the interim financial
statements.
Statement of Cash Flows
(Adjusted NIS in thousands, September 2002)
Nine month ended Three month ended
September 30, September 30, Year ended
December 31,
----------------------------------------------- -------------------------- -------------
2002 2002 2001 2002 2001 2001
US$ (K) * NIS (K) NIS (K) NIS (K) NIS (K) NIS (K)
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
--------------- -------------- -------------- -------------- ----------- -------------
Cash flows from current
operating activities
Net income (loss) 412 2,009 (2,102) 4,176 (517) (2,439)
Adjustments to reconcile
net income (loss) to net
cash flows derived from 2,133 10,392 (1,882) 5,301 (5,619) (2,090)
(applied to) operations
(Appendix A):
--------------- -------------- -------------- -------------- ----------- -------------
Net cash derived from
(applied to) operating 2,545 12,401 (3,984) 9,477 (6,136) (4,529)
activities
--------------- -------------- -------------- -------------- ----------- -------------
--------------- -------------- -------------- -------------- ----------- -------------
Cash flows from
investment activities
Acquisition of fixed
assets (213) (1,036) (2,063) (410) (648) (2,813)
Proceeds from the sale of
fixed assets 7 33 70 16 23 190
Deposit in a provident
fund on behalf of - - (2,747) - (2,747) (2,747)
directors
--------------- -------------- -------------- -------------- ----------- -------------
--------------- -------------- -------------- -------------- ----------- -------------
Net cash flow applied to
investment operations (206) (1,003) (4,740) (394) (3,372) (5,370)
--------------- -------------- -------------- -------------- ----------- -------------
--------------- -------------- -------------- -------------- ----------- -------------
Cash flows from financing
activities
Increase in short term 72 349 6,515 (1,453) 406 6,711
bank credits, net
Repayment of long term (208) (1,011) (1,111) (333) - (2,393)
loans
Long-term Loans received 776 3,780 - 3,780 64 -
Receipts on account of - - - - - 142
shares
Repayment of loans from -
an interested party - 10 - - 1,212
Exercise of options by
employees 1 5 69 - 10 77
--------------- -------------- -------------- -------------- ----------- -------------
Net cash derived from
financing activities 641 3,123 5,483 1,994 480 5,749
--------------- -------------- -------------- -------------- ----------- -------------
--------------- -------------- -------------- -------------- ----------- -------------
Adjustments on
translation of financial
statement of an
autonomous subsidiary 11 49 - 24 - -
--------------- -------------- -------------- -------------- ----------- -------------
Increase (decrease) in
cash and cash equivalents 2,991 14,570 (3,241) 11,101 (9,028) (4,150)
Cash and cash equivalents
at the beginning of the
period 2,369 11,539 15,689 15,008 21,476 15,689
--------------- -------------- -------------- -------------- ----------- -------------
--------------- -------------- -------------- -------------- ----------- -------------
Cash and cash equivalents
at the end of the period 5,360 26,109 12,448 26,109 12,448 11,539
=============== ============== ============== ============== =========== =============
*Convenience Translation into US Dollars . The accompanying notes form an integral part of the interim financial
statements.
Statement of Cash Flows - (cont.)
(Adjusted NIS in thousands, September 2002)
Appendix A: Adjustments to reconcile net income (loss) to net cash flows
derived from (applied to) operations
Year ended
Nine months ended Three months ended December 31,
September 30, September 30, 2001
--------------------------------------------- ---------------------------- ---------------
---------------------------- ---------------
2002 2002 2001 2002 2001 2001
US$ (K) * NIS (K) NIS (K) NIS (K) NIS (K) NIS (K)
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
--------------- -------------- ------------ ------------ -------------- ---------------
Income and expenses
not involving cash
flow
Depreciation
and amortization 541 2,635 2,120 717 802 2,583
Increase (decrease)
in liability for the
termination of
employee/employer 88 427 114 7 162 (18)
relationship, net
Decrease (increase) -
in short term - - (117) - 50
investment value
Write up (down) of
loans (34) (164) (1,481) (99) (277) (516)
Decrease (increase)
in value of 56 273 - 98 - (85)
securities
Decrease (increase)
in deferred taxes
receivable (17) (85) 303 53 4 (68)
Other 20 103 (46) 38 (2) -
--------------- -------------- ------------ ------------ -------------- ---------------
--------------- -------------- ------------ ------------ -------------- ---------------
654 3,189 893 814 739 1,896
--------------- -------------- ------------ ------------ -------------- ---------------
--------------- -------------- ------------ ------------ -------------- ---------------
Changes in assets and
liabilities
Decrease (increase)
in accounts receivable 1,253 6,102 (2,085) 6,757 (5,568) (4,684)
Decrease in debit
balances of partially
consolidated companies
- - (140) - (128) -
Decrease (increase)
in other receivables
and debit balances (180) (877) 574 1,107 433 (49)
Decrease (increase)
in inventories (243) (1,185) 4,025 144 919 5,343
Decrease (increase)
in trade payables (524) (2,555) (6,126) (4,655) (4,346) (5,386)
Increase (decrease)
in other payables
and credit balances 1,173 5,718 977 1,134 2,332 790
--------------- -------------- ------------ ------------ -------------- ---------------
--------------- -------------- ------------ ------------ -------------- ---------------
1,479 7,203 (2,775) 4,487 (6,358) (3,986)
--------------- -------------- ------------ ------------ -------------- ---------------
--------------- -------------- ------------ ------------ -------------- ---------------
--------------- -------------- ------------ ------------ -------------- ---------------
--------------- -------------- ------------ ------------ -------------- ---------------
2,133 10,392 (1,882) 5,301 (5,619) (2,090)
--------------- -------------- ------------ ------------ -------------- ---------------
*Convenience Translation into US Dollars
Statement of Cash Flow - (cont.)
(Adjusted NIS in thousands, September 2002)
Appendix B: Non-monetary events
Conversion of loans
from long-term to
short-term
Or conversion of
loans from
short-term to
long-term (2,746) (13,374) 12,631 - - 12,631
============== ============ ================ ============ ============ ============
*Convenience Translation into US Dollars
The accompanying notes form an integral part of the
interim financial statements.
Notes to the Interim Financial Statements
Note 1: General
(a) The accompanying financial statements were prepared as of September 30,
2002, and are for the three and nine-month periods then ended. These
financial statements should be read in conjunction with the Company's
annual financial statements as of December 31, 2001, and for the year
then ended, together with the notes thereto.
(b) These financial statements have been reviewed by the Company's
certified public accountants. The review was conducted in accordance
with the procedures established by the Institute of Certified Public
Accountants in Israel regarding interim periods. The review was limited
in scope and did not constitute an audit in accordance with generally
accepted auditing standards and therefore no opinion was expressed by
the Company's certified public accountants.
(c) In management's opinion all necessary adjustments were made in order to
present correctly these interim financial statements.
Note 2: Principal Accounting Policies
(a) The significant accounting policies have been applied on a consistent
basis with the annual financial statements of the previous year
(December 31, 2001), except for the following changes:
Due to certain developments in the operations of a US consolidated
subsidiary, consisting of a receipt of credit line commitments from
local banks in the US and a recurring tendency of increased sales of
products not produced by the Company, the US dollar currency has become
thatcompany's functional currency. Until December 31, 2001 this Company
operated as an extension of the Company, at which time it became an
autonomous entity. As a result, the financial statements of the Company
at September 30, 2002, and for the three and nine-month periods then
ended were translated according to the exchange rate in effect at the
period end, and the translation adjustments of approximately NIS 892
thousand were charged to a capital fund for translation differences.
(b) The financial statements, including the comparison sums, have been
prepared according to the historical cost convention, adjusted for
changes in the purchasing power of the currency, on the basis of
changes in the Consumer Price Index ("CPI"). In the three and
nine-month periods ended September 30, 2002, the CPI increased by 7 %.
In the year ended December 31, 2001, the CPI increased by 1.4 %.
(c) The adjusted financial statements at September 30, 2002 and for the
three and nine-month periods then ended have been translated into US
dollars solely for the convenience of American readers. This
translation was made at the US dollar/New Israeli Shekel exchange rate
in effect on September 30, 2002, i.e. US$ 1 = NIS 4.871.
(d) Revenues from sales of software rights are generally recognized when
the software has been delivered to the customer, payment is fixed,
collectability is probable and there are no significant obligations
remaining. When other significant vendor obligations exist, such as
software development, customization, integration or installation,
revenues are generally recognized using the percentage of completion
basis using the estimate of work progress actually performed.
Notes to the Interim Financial Statements (cont.)
Note 3: Financial Information in Regard to Business Segments
(a) As of the third quarter of 2002, the e-learning project results are
presented in Segment A. (The results of the e- learning project in the
Company's annual financial statements as of December 31, 2002 were
presented in Segment C).
(b) There was no material change in the assets of the Company's business
segments since December 31, 2001.
(C) Details:
Nine month period ended September 30, 2002
-----------------------------------------------------------------------------------------
NIS (K)
-----------------------------------------------------------------------------------------
Segment A Segment B Segment C Segment D Adjustments Total
------------- --------------- -------------- ----------------------------- --------------
Sales to external
customers 56,946 6,656 - 4,223 (2,149) 65,676
Inter segment sales
- (128) - (2,073) - (2,201)
------------- --------------- -------------- ----------------------------- --------------
56,946 6,528 - 2,150 (2,149) 63,475
============= =============== ============== ============================= ==============
Segment income 5,132 1,027 (4,990) 840 - 2,009
(loss)
============= =============== ============== ============================= ==============
Nine month period ended September 30, 2002
-----------------------------------------------------------------------------------------
US$ (K)
-----------------------------------------------------------------------------------------
Segment A Segment B Segment C Segment D Adjustments Total
------------- --------------- -------------- ----------------------------- --------------
Sales to external
customers 11,689 1,367 - 868 (441) 13,483
Inter segment sales
- (25) - (427) - (452)
------------- --------------- -------------- ----------------------------- --------------
11,689 1,342 - 441 (441) 13,031
============= =============== ============== ============================= ==============
Segment income 919 211 (890) 172 - 412
(loss)
============= =============== ============== ============================= ==============
*Convenience Translation into US Dollars
** Restated
Notes to the Interim Financial Statements (cont.)
Note 3: Financial Information in Regard to Business Segments (cont.)
Nine month period ended September 30, 2001**
-----------------------------------------------------------------------------------------
NIS (K)
-----------------------------------------------------------------------------------------
Segment A Segment B Segment C Segment D Adjustments Total
------------- --------------- -------------- ----------------------------- --------------
Sales to external
customers 52,154 14,332 - 4,110 (1,450) 69,146
Inter segment sales
- (420) - (1,819) - (2,239)
------------- --------------- -------------- ----------------------------- --------------
52,154 13,912 - 2,291 (1450) 66,907
============= =============== ============== ============================= ==============
Segment income
(loss) (2,773) 2,896 (3,847) 1,622 - (2,102)
============= =============== ============== ============================= ==============
Three month period ended September 30, 2002
-----------------------------------------------------------------------------------------
NIS (K)
-----------------------------------------------------------------------------------------
Segment A Segment B Segment C Segment D Adjustments Total
------------- --------------- -------------- ----------------------------- --------------
Sales to external
customers 23,529 3,525 - 1,376 (1,162) 27,268
Inter segment sales
- (40) - (214) - (254)
------------- --------------- -------------- ----------------------------- --------------
23,529 3,485 - 1,162 (1,162) 27,014
============= =============== ============== ============================= ==============
Segment income 3,801 1,426 (953) (98) - 4,176
(loss)
============= =============== ============== ============================= ==============
Three month period ended September 30, 2001**
-----------------------------------------------------------------------------------------
NIS (K)
-----------------------------------------------------------------------------------------
Segment A Segment B Segment C Segment D Adjustments Total
------------- --------------- -------------- ----------------------------- --------------
Sales to external
customers 19,698 3,404 - 1,548 (725) 23,925
Inter segment sales
- (138) - (546) - (684)
------------- --------------- -------------- ----------------------------- --------------
19,698 3,266 - 1,002 (725) 23,241
============= =============== ============== ============================= ==============
Segment income
(loss) (488) 1,020 (686) (363) - (517)
============= =============== ============== ============================= ==============
*Convenience Translation into US Dollars
** Restated
Notes to the Interim Financial Statements (cont.)
Note 4: R & D Expenses
The following research and development expenses include investments in the
development of MemCall's new technology:
For the Nine-month period ended September 30, 2002 - Approximately 3.9 NIS million
For the Nine-month period ended September 30, 2001 - Approximately 4.15 NIS million
For the year ended December 31, 2001 - Approximately 6.4 NIS million
During May 2002, RoboGroup's Board of Directors approved an additional
investment of US$ 1 million in MemCall, subject to MemCall meeting a number of
additional milestones by the end of 2002.
Note 5: Contingent Liabilities
Against the company and their business partner, a law prosecution was claimed in
regards to sales commission for the sum of NIS 260 thousands. The company has
rejected all the prosecution claims and is expected to present a defense report.
The company estimates that there will not be any essential influence on their
business results.
SIGNATURES
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.
ROBOGROUP T.E.K. LTD.
(Registrant)
By: /s/ Rafael Aravot
------------------
Rafael Aravot
Chief Executive Officer
Date: November 26, 2002