Consolidated Financial Statements as of December 31, 2012
Contents
Page
The Board of Directors and Shareholders of
Eltek Ltd.
We have audited the accompanying consolidated balance sheets of Eltek Ltd. and its Subsidiaries (the “Company”) as of December 31, 2012 and 2011 and the related consolidated statements of comprehensive income (loss), changes in shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 2012. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2012 and 2011, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2012, in conformity with U.S. generally accepted accounting principles.
/s/ Somekh Chaikin
Somekh Chaikin
Certified Public Accountants (Isr.)
Member firm of KPMG International
Tel-Aviv, Israel,
Eltek Ltd. and its Subsidiaries
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Assets
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Current assets
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Cash
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2 |
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1,935 |
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892 |
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Trade accounts receivable, net of allowance for doubtful
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accounts
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6,662 |
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8,885 |
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Inventories
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3 |
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5,244 |
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4,434 |
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Prepaid expenses and other current assets
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417 |
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355 |
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14,258 |
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14,566 |
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Assets held for employees' severance benefits
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9 |
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47 |
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39 |
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Fixed assets, net
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4 |
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9,075 |
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7,746 |
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Goodwill
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5 |
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69 |
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518 |
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Total assets
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23,449 |
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22,869 |
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The accompanying notes are an integral part of these consolidated financial statements.
Eltek Ltd. and its Subsidiaries
Consolidated Balance Sheets
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Liabilities and shareholders’ equity
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Current liabilities
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Short-term credit and current maturities of long-term debt
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6 |
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5,105 |
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4,856 |
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Accounts payable:
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Trade
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6,110 |
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6,456 |
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Related parties
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16 |
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1,336 |
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1,046 |
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Other current liabilities
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7 |
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4,419 |
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3,995 |
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16,970 |
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16,353 |
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Long-term liabilities
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Long-term debt, excluding current maturities
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8 |
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728 |
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1,604 |
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Employee severance benefits
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9 |
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215 |
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150 |
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Total long-term liabilities
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943 |
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1,754 |
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Commitments and contingent liabilities
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10 |
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Shareholders’ equity
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11 |
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Ordinary shares, NIS 0.6 par value
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Authorized 50,000,000 shares, issued and
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outstanding 6,610,107 shares as of December 31, 2012
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and 2011
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1,384 |
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1,384 |
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Additional paid-in capital
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14,328 |
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14,328 |
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Cumulative foreign currency translation adjustments
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2,713 |
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2,622 |
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Capital reserves
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695 |
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695 |
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Accumulated deficit
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(13,708 |
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(14,398 |
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Total Eltek Ltd. shareholders’ equity
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5,412 |
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4,631 |
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Non-controlling interest
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124 |
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131 |
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Total equity
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5,536 |
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4,762 |
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Total liabilities, shareholders’ equity and non-
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controlling interest
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23,449 |
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22,869 |
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| /s/ Arieh Reichart |
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/s/ Amnon Shemer |
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/s/ Erez Meltzer |
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Arieh Reichart
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Amnon Shemer
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Erez Meltzer
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President, Chief Executive Officer
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Vice President, Finance and Chief Financial Officer
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Chairman of the Board of Directors
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The accompanying notes are an integral part of these consolidated financial statements.
Eltek Ltd. and its Subsidiaries
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$ in thousands
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(except loss per share data)
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Revenues
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12 |
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45,646 |
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46,830 |
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37,514 |
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Cost of revenues
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16B |
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(37,836 |
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(38,101 |
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(32,690 |
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Gross profit
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7,810 |
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8,729 |
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4,824 |
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Operating expenses
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Selling, general and administrative expenses
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(6,040 |
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(6,155 |
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(6,033 |
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Impairment on goodwill
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(481 |
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- |
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- |
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Operating profit (loss)
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1,289 |
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2,574 |
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(1,209 |
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Financial expenses, net
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13 |
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(543 |
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(740 |
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(609 |
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Other income, net
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2 |
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12 |
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2 |
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Profit (loss) before income tax expense
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748 |
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1,846 |
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(1,816 |
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Income tax expense
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14 |
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(52 |
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(31 |
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(19 |
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Net profit (loss)
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696 |
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1,815 |
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(1,835 |
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Net (profit) loss attributable to non-controlling
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Interest
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(6 |
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31 |
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113 |
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Net profit (loss) attributable to Eltek Ltd.
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690 |
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1,846 |
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(1,722 |
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Basic and diluted net profit (loss) per ordinary
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share attributable to Eltek Ltd. shareholders
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0.1 |
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0.28 |
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(0.26 |
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Weighted average number of ordinary
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shares used to compute basic and diluted net
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profit (loss) per ordinary share attributable to
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Eltek Ltd. shareholders
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6,610,107 |
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6,610,107 |
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6,610,107 |
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Other comprehensive income (loss):
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Foreign currency translation adjustments
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78 |
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(377 |
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20 |
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Comprehensive income (loss)
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|
774 |
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1,438 |
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(1,815 |
) |
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Comprehensive income (loss) attributable to
|
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non-controlling interest
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(7 |
) |
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(44 |
) |
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(135 |
) |
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Comprehensive income (loss) attributable to
|
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|
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Eltek Ltd.
|
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|
781 |
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1,482 |
|
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(1,680 |
) |
The accompanying notes are an integral part of these consolidated financial statements.
Eltek Ltd. and its Subsidiaries
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Equity
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| |
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Accumulated
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attributed to
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Other
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Eltek
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Non-
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Ordinary
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Additional
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comprehensive
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Capital
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Accumulated
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Ltd. and
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controlling
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| |
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($ thousands, except number of shares)
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Balance as of January 1, 2010
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6,610,107 |
|
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|
1,384 |
|
|
|
14,328 |
|
|
|
2,944 |
|
|
|
695 |
|
|
|
(14,522 |
) |
|
|
4,829 |
|
|
|
310 |
|
|
|
5,139 |
|
| |
|
|
|
|
|
|
|
|
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|
Changes during the year
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
42 |
|
|
|
- |
|
|
|
- |
|
|
|
42 |
|
|
|
(22 |
) |
|
|
20 |
|
|
Net loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,722 |
) |
|
|
(1,722 |
) |
|
|
(113 |
) |
|
|
(1,835 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,680 |
) |
|
|
(135 |
) |
|
|
(1,815 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2010
|
|
|
6,610,107 |
|
|
|
1,384 |
|
|
|
14,328 |
|
|
|
2,986 |
|
|
|
695 |
|
|
|
(16,244 |
) |
|
|
3,149 |
|
|
|
175 |
|
|
|
3,324 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes during the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(364 |
) |
|
|
- |
|
|
|
- |
|
|
|
(364 |
) |
|
|
(13 |
) |
|
|
(377 |
) |
|
Net loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,846 |
|
|
|
1,846 |
|
|
|
(31 |
) |
|
|
1,815 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income ( loss)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,482 |
|
|
|
(44 |
) |
|
|
1,438 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2011
|
|
|
6,610,107 |
|
|
|
1,384 |
|
|
|
14,328 |
|
|
|
2,622 |
|
|
|
695 |
|
|
|
(14,398 |
) |
|
|
4,631 |
|
|
|
131 |
|
|
|
4,762 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes during the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
91 |
|
|
|
- |
|
|
|
- |
|
|
|
91 |
|
|
|
(13 |
) |
|
|
78 |
|
|
Net profit (loss)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
690 |
|
|
|
690 |
|
|
|
6 |
|
|
|
696 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
781 |
|
|
|
(7 |
) |
|
|
774 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2012
|
|
|
6,610,107 |
|
|
|
1,384 |
|
|
|
14,328 |
|
|
|
2,713 |
|
|
|
695 |
|
|
|
(13,708 |
) |
|
|
5,412 |
|
|
|
124 |
|
|
|
5,536 |
|
* Less than one thousand.
The accompanying notes are an integral part of these consolidated financial statements.
Eltek Ltd. and its Subsidiaries
| |
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
Net profit (loss)
|
|
|
696 |
|
|
|
1,815 |
|
|
|
(1,835 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net profit (loss) to net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
cash flows provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and Amortization
|
|
|
2,253
|
|
|
|
2,091 |
|
|
|
2,054 |
|
|
Capital gain on disposal of fixed assets, net
|
|
|
|
|
|
|
- |
|
|
|
(18 |
) |
|
Revaluation of long term loans
|
|
|
25 |
|
|
|
58 |
|
|
|
49 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in employee severance benefits, net
|
|
|
53 |
|
|
|
68 |
|
|
|
45 |
|
|
Decrease (increase) in trade receivables
|
|
|
2,339 |
|
|
|
(2,016 |
) |
|
|
(186 |
) |
|
Decrease (increase) in other receivables and prepaid
|
|
|
|
|
|
|
|
|
|
|
|
|
|
expenses
|
|
|
(58 |
) |
|
|
(68 |
) |
|
|
178 |
|
|
Increase in inventories
|
|
|
(670 |
) |
|
|
(487 |
) |
|
|
(138 |
) |
|
Increase in income tax payable
|
|
|
- |
|
|
|
8 |
|
|
|
- |
|
|
Increase (decrease) in trade payables
|
|
|
(147 |
) |
|
|
621 |
|
|
|
1,152 |
|
|
Increase in other liabilities and accrued expenses
|
|
|
281
|
|
|
|
324 |
|
|
|
203 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
4,772 |
|
|
|
2,414 |
|
|
|
1,504 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of fixed assets
|
|
|
(1,234 |
) |
|
|
(882 |
) |
|
|
(489 |
) |
|
Proceeds from sale of fixed assets
|
|
|
- |
|
|
|
- |
|
|
|
38 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(1,234 |
) |
|
|
(882 |
) |
|
|
(451 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in short- term credit
|
|
|
(192 |
) |
|
|
(802 |
) |
|
|
355 |
|
|
Repayment of long-term loans
|
|
|
(1,149 |
) |
|
|
(1,135 |
) |
|
|
(1,222 |
) |
|
Proceeds from long-term loans
|
|
|
- |
|
|
|
474 |
|
|
|
452 |
|
|
Repayment of credit from fixed asset payables
|
|
|
(1,049 |
) |
|
|
(539 |
) |
|
|
(400 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(2,390 |
) |
|
|
(2,002 |
) |
|
|
(815 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of translation adjustments
|
|
|
(105 |
) |
|
|
(151 |
) |
|
|
17 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
|
|
|
1,043 |
|
|
|
(621 |
) |
|
|
255 |
|
|
Cash at beginning of the year
|
|
|
892 |
|
|
|
1,513 |
|
|
|
1,258 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at end of the year
|
|
|
1,935 |
|
|
|
892 |
|
|
|
1,513 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax paid
|
|
|
43 |
|
|
|
55 |
|
|
|
- |
|
|
Interest paid
|
|
|
386 |
|
|
|
480 |
|
|
|
421 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of fixed assets not yet paid
|
|
|
1,212 |
|
|
|
1,377 |
|
|
|
124 |
|
The accompanying notes are an integral part of these consolidated financial statements.
Eltek Ltd. and its Subsidiaries
(All amounts in thousands of $, except where otherwise stated)
Note 1 - Organization and Summary of Significant Accounting Policies
A. General
Eltek Ltd. ("the Parent”) was incorporated in Israel in 1970, and the Parent’s shares have been publicly traded on the NASDAQ Capital Market since 1997. Eltek Ltd. and its subsidiaries (see below) are collectively referred to as “the Company”.
The Company manufactures, markets and sells custom made printed circuit boards (“PCBs”), including high density interconnect, flex-rigid and multi-layered boards. The principal markets of the Company are in Israel, Europe and North America.
The Company markets its product mainly to the medical technology, defense and aerospace, industrial, telecom and networking equipment, as well as to contract electronic manufacturers, among other industries, and its business is subject to numerous risks. The major risks include, but are not limited to, (1) the impact of currency exchange rates (mainly NIS/US$), (2) the Company’s success in implementing its sales and manufacturing plans, (3) the impact of competition from other companies, (4) the Company’s ability to receive regulatory clearance or approval to market its products or changes in regulatory environment, (5) domestic and global economic conditions and industry conditions, and (6) compliance with environmental laws and regulations. Further, the Company’s liquidity position, as well as its operating performance, may be negatively affected by other financial business factors, many of which are beyond its control.
Eltek Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
(All amounts in thousands of $, except where otherwise stated)
Note 1 - Organization and Summary of Significant Accounting Policies (cont’d)
A. General (cont’d)
Kubatronik Leiterplatten GmbH
In June 2002, the Parent established a wholly-owned subsidiary, EN-Eltek Netherlands 2002 B.V. ("EN-Eltek"), for the purpose of the acquisition of Kubatronik Leiterplatten GmbH (“Kubatronik”).
On June 10, 2002, the Parent acquired 76% of the shares of Kubatronik for the consideration of € 2.6 million ($2.4 million as of the date of acquisition). The acquisition resulted in the recognition of goodwill in the amount of €1.1 million ($1 million as of the date of acquisition) - see Note 5. Goodwill has subsequently been impaired by approximately $1 million and its balance as of December 31, 2012 is $69.
Pursuant to the acquisition agreement, the seller has until December 31, 2014, (at which time the period is automatically extended for additional consecutive two-year periods unless otherwise notified in writing by either party upon at least six months prior notice) the right to require the Parent to purchase ("Put Option"), and the Parent has the right to require the seller to sell to the Parent ("Call Option") the seller’s remaining 24% interest in Kubatronik. In May 2012, the seller exercised his option with respect to 3% of his remaining shares of Kubatronik for approximately Euro 69 ($89) for such shares and reduced his share in Kubatronik from 24% to 21%. The exercise price for the seller’s 21% interest in Kubatronik under the Put Option is Euro 483 ($628), and the exercise price for the seller’s remaining holdings in Kubatronik under the Call Option is Euro 513 ($667). The fair value of the above options is calculated based on the Binomial model. Changes in fair value are recorded in the Consolidated Statement of Operations. See Note 15.
Eltek USA Inc.
In 2007, the Parent established a wholly-owned subsidiary, Eltek USA Inc. for the purpose of sales, promotion and marketing in the North American market. Eltek USA Inc. commenced operations in 2008.
Eltek Europe GmbH
In 2008, the Parent established a wholly-owned subsidiary, Eltek Europe GmbH for the purpose of sales, promotion and marketing to certain customers in Europe. Eltek Europe GmbH commenced operations in 2009.
Eltek Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
(All amounts in thousands of $, except where otherwise stated)
Note 1 - Organization and Summary of Significant Accounting Policies (cont'd)
B. Basis of presentation
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").
The consolidated financial statements include the accounts of the Parent and its subsidiaries.
The Parent sells goods through its subsidiaries that function as distributors.
All intercompany transactions and balances were eliminated in consolidation.
C. Functional and reporting currency
The Parent’s functional currency is the New Israeli Shekel (“NIS”). Transactions denominated in foreign currencies are translated into NIS using the prevailing exchange rates at the date of the transactions. Gains and losses from the translation of foreign currency transactions are recorded in financial income or expenses.
The Company’s reporting currency is the U.S. dollar. Assets and liabilities are translated to the reporting currency using the exchange rate at the end of the year. Revenues and expenses are translated to the reporting currency using the average exchange rate for each quarter. Translation adjustments are reported separately as a component of accumulated other comprehensive income.
D. Translation of foreign entity operations
The financial statements of foreign subsidiaries are translated into the Parent's functional currency as follows:
|
|
1.
|
Assets and liabilities are translated according to the exchange rate on the consolidated balance sheet date including goodwill arising from the acquisition of the subsidiary.
|
|
|
2.
|
Income and expense items are translated according to the weighted average exchange rate on a quarterly basis.
|
|
|
3.
|
The resulting exchange rate differences are classified as a separate item in shareholders’ equity.
|
Eltek Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
(All amounts in thousands of $, except where otherwise stated)
Note 1 - Organization and Summary of Significant Accounting Policies (cont'd)
E. Exchange rates and linkage bases
|
|
1.
|
Balances linked to the Israeli Consumer Price Index (“CPI”) are recorded pursuant to contractual linkage terms of the specific assets and liabilities.
|
| |
2.
|
Details of the CPI and the representative exchange rates are as follows:
|
| |
|
Israeli
|
|
|
Exchange rate
|
|
|
Exchange rate
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
For the year ended:
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
219.80 |
|
|
|
3.733 |
|
|
|
4.9206 |
|
|
December 31, 2011
|
|
|
216.26 |
|
|
|
3.821 |
|
|
|
4.938 |
|
|
December 31, 2010
|
|
|
211.67 |
|
|
|
3.549 |
|
|
|
4.738 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes during the year ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
1.6 |
|
|
|
(2.30 |
) |
|
|
(0.35 |
) |
|
December 31, 2011
|
|
|
2.2 |
|
|
|
7.66 |
|
|
|
4.22 |
|
|
December 31, 2010
|
|
|
2.7 |
|
|
|
(5.99 |
) |
|
|
(12.94 |
) |
F. Use of estimates
The preparation of the consolidated financial statements in accordance with U.S. GAAP requires the management of the Company to make estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from these estimates. Significant items subject to such estimates and assumptions include the useful lives of fixed assets, allowance for doubtful accounts, valuation of derivatives, deferred tax assets, inventory, goodwill, put/call options, income tax uncertainties and other contingencies.
G. Cash equivalents
Cash equivalents are highly-liquid investments which include short-term bank deposits with an original maturity of three months or less from deposit date and which are not restricted by a lien.
H. Trade accounts receivable
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Amounts collected on trade accounts receivable are included in net cash provided by operating activities in the Consolidated Statements of Cash Flows. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio.
Eltek Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
(All amounts in thousands of $, except where otherwise stated)
Note 1 - Organization and Summary of Significant Accounting Policies (cont'd)
H. Trade accounts receivable (cont’d)
The allowance for doubtful accounts receivable is calculated on the basis of specific identification of customer balances. The allowance is determined based on management’s estimate of the aged receivable balance considered uncollectible, based on historical experience, aging of the receivable and information available about specific customers, including their financial condition and volume of their operations.
The activity in the allowance for doubtful accounts for the three years ended December 31, 2012 is as follows:
| |
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Opening balance
|
|
|
93 |
|
|
|
340 |
|
|
|
347 |
|
|
Additions during the year
|
|
|
1 |
|
|
|
14 |
|
|
|
10 |
|
|
Write off of allowance
|
|
|
- |
|
|
|
(263 |
) |
|
|
(20 |
) |
|
Foreign currency translation adjustments
|
|
|
1 |
|
|
|
2 |
|
|
|
3 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Closing balance
|
|
|
95 |
|
|
|
93 |
|
|
|
340 |
|
I. Inventories
Inventories are recorded at the lower of cost or market value. Cost is determined on the weighted average basis for raw materials. For work in progress and finished goods, the cost is determined pursuant to calculation of accumulated actual direct and indirect costs.
J. Assets held for employees' severance payments
Assets held for employees' severance payments represent contributions to insurance policies and deposits to a central severance pay fund, and are recorded at their current redemption value.
K. Fixed assets
Fixed assets are stated at cost. Depreciation is computed by the straight-line method over the estimated useful lives of the assets at the following annual rates:
| |
|
|
|
|
Machinery and equipment
|
|
|
5-33 |
|
|
Leasehold improvements
|
|
|
6-14 |
|
|
Motor vehicles
|
|
|
15 |
|
|
Office furniture and equipment
|
|
|
6-33 |
|
Eltek Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
(All amounts in thousands of $, except where otherwise stated)
Note 1 - Organization and Summary of Significant Accounting Policies (cont'd)
K. Fixed assets (cont’d)
Machinery and equipment purchased under capital lease arrangements are recorded at the present value of the minimum lease payments at lease inception. Such assets and leasehold improvements are depreciated and amortized respectively, using the straight-line method over the shorter of the lease term or estimated useful life of the asset.
Long-lived assets, such as property, plant, and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.
L. Goodwill
Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Goodwill is reviewed for impairment at least annually. In September 2011, the FASB issued ASU 2011-08, Testing Goodwill for Impairment, which provides an entity the option to perform a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount prior to performing the two-step goodwill impairment test. If this is the case, the two-step goodwill impairment test is required. If it is more-likely-than-not that the fair value of a reporting unit is greater than its carrying amount, the two-step goodwill impairment test is not required. The Company adopted this guidance in 2011.
If the two-step goodwill impairment test is required, first, the fair value of the reporting unit is compared with its carrying amount (including goodwill). If the fair value of the reporting unit is less than its carrying amount, an indication of goodwill impairment exists for the reporting unit and the entity must perform step two of the impairment test (measurement). Under step two, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation and the residual fair value after this allocation is the implied fair value of the reporting unit goodwill. Fair value of the reporting unit is determined using a discounted cash flow analysis. If the fair value of the reporting unit exceeds its carrying amount, step two does not need to be performed.
The Company performs its impairment review of goodwill on an annual basis and if a triggering event occurs between annual impairment tests. For 2012, the Company performed a qualitative assessment of goodwill based on a valuation for the Kubatronik, utilizing a forecast of expected cash inflows and cash outflows and determined that the fair value of Kubatronik was lower than its carrying value. As a result, the Company recorded an impairment loss of $481 in 2012. Based on a similar qualitative assessment of Kubatronik, no impairment loss was recorded for 2011. See Note 5.
Eltek Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
(All amounts in thousands of $, except where otherwise stated)
Note 1 - Organization and Summary of Significant Accounting Policies (cont'd)
M. Income taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to unrecognized tax benefits in interest expense and penalties in selling, general and administrative expense.
N. Revenue recognition
The Company recognizes revenue upon shipment of the product and after the customer takes ownership and assumes risk of loss, collection of the corresponding receivable is probable, persuasive evidence of an arrangement exists, and the sales price is fixed or determinable. Commission income is accounted for on the accrual basis.
O. Earnings (loss) per ordinary share
Diluted earnings per ordinary share calculation is similar to basic earnings per share except that the weighted average of ordinary shares outstanding is increased to include the number of additional ordinary shares that would have been outstanding if the outstanding options had been exercised, to the extent that these options had a diluted effect. The Company does not presently have such dilutive instruments.
P. Derivative financial instruments
The Company utilizes derivative financial instruments principally to manage market risks and reduce its exposure resulting from fluctuations in foreign currency exchange rates. The Company holds put/call options with the minority shareholder of Kubatronik for the purchase/sale of the minority holding in Kubatronik (see Note 15). Derivatives and the put/call options are adjusted to fair value through income.
Changes in fair value are recognized in the consolidated statements of operations as a financing item.
The fair value of derivative financial instruments is determined on the basis of their market values or the quotations of financial institutions. In the absence of a market value or financial institution quotation the fair value is determined on the basis of a valuation model.
Eltek Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
(All amounts in thousands of $, except where otherwise stated)
Note 1 - Organization and Summary of Significant Accounting Policies (cont'd)
Q. Concentration of credit risk
Financial instruments that may subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents and trade accounts receivable. Cash and cash equivalents are deposited with major financial institutions in Israel, Europe and the United States.
The Company performs ongoing credit evaluations of the financial condition of its customers. The risk of collection associated with trade receivables is reduced by the large number and geographical dispersion of the Company's customer base, and the Company’s policy of obtaining credit evaluations of the financial condition of certain customers, requiring collateral or security with respect to certain receivables, or purchase of insurance for certain other receivables.
R. Commitments and contingencies
Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.
S. Fair value measurements
The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:
|
|
·
|
Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.
|
|
|
·
|
Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.
|
|
|
·
|
Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.
|
In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The new standard does not extend the use of fair value but, rather, provides guidance about how fair value should be applied where it is already required or permitted under IFRS or U.S. GAAP. For U.S. GAAP, most of the changes are clarifications of existing guidance or wording changes to align with IFRS. The ASU also requires additional disclosures for nonpublic entities to provide quantitative information about significant unobservable inputs used for all Level 3 measurements and a description of the valuation process used. The provisions of the ASU are effective for annual or interim reporting periods beginning after December 15, 2011. The Company adopted the provisions of the ASU in 2012. The adoption of ASU 2011-04 did not have a material effect on the Company’s consolidated financial statements. See Note 15.
Eltek Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
(All amounts in thousands of $, except where otherwise stated)
Note 1 - Organization and Summary of Significant Accounting Policies (cont'd)
T. Recently issued accounting standards (cont’d)
In December 2011, the FASB issued ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. ASU 2011-11 requires an entity to disclose information about offsetting and related arrangements to enable users of financial statements to understand the effect of those arrangements on its financial position, and to allow investors to better compare financial statements prepared under U.S. GAAP with financial statements prepared under International Financial Reporting Standards (IFRS). The new standards are effective for annual periods beginning January 1, 2013, and interim periods within those annual periods. Retrospective application is required. The Company does not expect the new standards to have a significant impact on its consolidated financial statements.
Note 2 - Cash
| |
|
|
|
| |
|
|
|
|
|
|
|
Denominated in U.S. dollars
|
|
|
431 |
|
|
|
204 |
|
|
Denominated in NIS
|
|
|
872 |
|
|
|
196 |
|
|
Denominated in Euro
|
|
|
632 |
|
|
|
492 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
1,935 |
|
|
|
892 |
|
Note 3 - Inventories
| |
|
|
|
| |
|
|
|
|
|
|
|
Raw materials
|
|
|
2,078 |
|
|
|
2,185 |
|
|
Work-in-process
|
|
|
2,270 |
|
|
|
1,475 |
|
|
Finished products
|
|
|
896 |
|
|
|
774 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
5,244 |
|
|
|
4,434 |
|
Eltek Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
(All amounts in thousands of $, except where otherwise stated)
Note 4 - Fixed Assets, Net
| |
|
|
|
| |
|
|
|
|
|
|
|
Machinery and equipment
|
|
|
36,424 |
|
|
|
34,678 |
|
|
Leasehold improvements
|
|
|
8,558 |
|
|
|
8,149 |
|
|
Motor vehicles
|
|
|
102 |
|
|
|
99 |
|
|
Office furniture and equipment
|
|
|
1,530 |
|
|
|
1,481 |
|
| |
|
|
|
|
|
|
|
|
|
Fixed assets
|
|
|
46,614 |
|
|
|
44,407 |
|
| |
|
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
(37,539 |
) |
|
|
(36,661 |
) |
| |
|
|
|
|
|
|
|
|
|
Fixed assets less accumulated depreciation
|
|
|
9,075 |
|
|
|
7,746 |
|
Depreciation expense for the years ended December 31, 2012, 2011 and 2010 were $1,772, $2,091 and $2,054 respectively.
Note 5 - Goodwill
Changes in the carrying amount of goodwill for the years ended December 31, 2012 and 2011 are as follows:
| |
|
|
|
| |
|
|
|
|
|
|
|
Balance at the beginning of the year
|
|
|
518 |
|
|
|
530 |
|
|
Increase due to increase in holding
|
|
|
20 |
|
|
|
- |
|
|
Impairment on goodwill
|
|
|
(481 |
) |
|
|
- |
|
|
Effect of translation adjustments
|
|
|
12 |
|
|
|
(12 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
69 |
|
|
|
518 |
|
Note 6 - Short-Term Credit and Current Maturities of Long-Term Debt
Banks
| |
|
Annual
|
|
|
|
|
| |
|
interest rate at
|
|
|
|
|
|
|
|
| |
|
December 31
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
In NIS (linked to the Prime rate)
|
|
|
5.25 - 7.0 |
|
|
|
3,774 |
|
|
|
3,795 |
|
|
In U.S. dollars
|
|
|
3.81 - 4.41 |
|
|
|
110 |
|
|
|
110 |
|
|
Current maturities of long-term
|
|
|
|
|
|
|
|
|
|
|
|
|
|
debt from banks (Note 8)
|
|
|
|
|
|
|
1,221 |
|
|
|
951 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
5,105 |
|
|
|
4,856 |
|
Eltek Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
(All amounts in thousands of $, except where otherwise stated)
Note 7 – Other Current Liabilities
| |
|
|
|
| |
|
|
|
|
|
|
|
Accrued payroll and related benefits
|
|
|
1,177 |
|
|
|
1,064 |
|
|
Provision for vacation and other employee benefits
|
|
|
1,642 |
|
|
|
1,321 |
|
|
Net written put option (Note 1A)
|
|
|
497 |
|
|
|
366 |
|
|
Accrued expenses
|
|
|
859 |
|
|
|
1,022 |
|
|
Other liabilities
|
|
|
244 |
|
|
|
222 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
4,419 |
|
|
|
3,995 |
|
Note 8 - Long-Term Debt, Excluding Current Maturities
Banks and others
| |
|
Annual
|
|
|
|
|
| |
|
interest rate at
|
|
|
|
|
| |
|
December 31
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
Linkage terms
|
|
|
|
|
|
|
|
|
|
U.S. dollar
|
|
|
1.88 - 5 |
|
|
|
1,133 |
|
|
|
950 |
|
|
NIS - linked to the CPI
|
|
|
4.5 - 6.5 |
|
|
|
- |
|
|
|
57 |
|
|
Euro
|
|
|
2.17 - 3 |
|
|
|
95 |
|
|
|
554 |
|
|
NIS - linked to the Prime rate
|
|
|
P+0.9 - P+3
|
|
|
|
980 |
|
|
|
472 |
|
|
NIS - not linked
|
|
|
7.6 - 8.4 |
|
|
|
- |
|
|
|
746 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
2,208 |
|
|
|
2,779 |
|
|
Less - current maturities (banks and others)
|
|
|
|
|
|
|
(1,480 |
) |
|
|
(1,175 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
728 |
|
|
|
1,604 |
|
|
|
Minimum future payments at December 31, 2012 due under the long term debt is as follows:
|
| |
|
Long-Term
|
|
| |
|
|
|
|
First year
|
|
|
1,480 |
|
|
Second year
|
|
|
259 |
|
|
Third year and thereafter
|
|
|
469 |
|
| |
|
|
|
|
| |
|
|
2,208 |
|
Eltek Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
(All amounts in thousands of $, except where otherwise stated)
Note 8 - Long-Term Debt, Excluding Current Maturities (cont’d)
Long-term debt (excluding current maturities) includes capital leases in the amounts of $650 and $330 for the years ended December 31, 2012 and 2011, respectively.
For the year ended December 31, 2012, financial covenants in respect of the Company’s credit facilities and long-term debt with one of the Company’s banks require the Company to maintain all of the following financial covenants: (i) maintaining the greater of adjusted shareholders’ equity of $2.1 million or 9% of its consolidated total assets; (ii) EBITDA of $3.0 million; and (iii) a debt service ratio of 1.5. For this purpose, shareholders’ equity excludes leasehold improvements and certain intangible assets. Debt service ratio is defined as annual EBITDA divided by annual repayments of debt including interest. As of December 31, 2012, the Company was in compliance with such covenants. For the year ending December 31, 2013 the Company must meet the following: (i) maintaining the greater of adjusted shareholders’ equity of $2.6 million or 12% of its consolidated total assets; (ii) EBITDA of $3.4 million; and (iii) a debt service ratio of 1.5. These amounts increase every year until December 31, 2016 when the Company must meet the following targets: (i) maintaining the greater of adjusted shareholders’ equity of $4.2 million or 20% of its consolidated total assets, (ii) EBITDA of $4.0 million and (iii) debt service ratio of 1.5.
Financial covenants in respect of the Company’s credit facilities and long-term debt with another bank require the Company to maintain the greater of shareholders’ equity, excluding certain intangible assets and prepaid expenses (except insurance premiums), of NIS 10 million ($2.6 million), or 11% of the Parent’s total assets (on a non-consolidated basis). As of December 31, 2012, the Company was in compliance with such covenants. As part of the Company's discussions with this bank for obtaining new lines of credits, the financial covenants may be amended including a possible requirement of the Parent's subsidiaries, Eltek Europe GmbH and Eltek USA Inc. to pledge all their assets towards, and to sign a letter of guaranty in favor of the bank.
As to pledges securing the loans, see Note 10A.
Note 9 - Employee Severance Benefits
Under Israeli law and labor agreements, the Parent is required to make severance and pension payments to their retired or dismissed employees and to employees leaving employment in certain other circumstances.
|
|
1.
|
The Parent has an approval from the Israeli Ministry of Labor and Social Welfare, pursuant to the terms of Section 14 of the Israeli Severance Pay Law, 1963, according to which the current deposits in the pension fund and/or with the insurance company exempt it from any additional obligation to the employees for whom such depository payments were made.
|
Eltek Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
(All amounts in thousands of $, except where otherwise stated)
Note 9 - Employee Severance Benefits (cont’d)
|
|
2.
|
The Parent’s employees participate in a pension plan or individual insurance policies are purchased. The Parent’s liability for severance obligations for the employees employed for one year or more is discharged by making regular deposits with a pension fund or the insurance policies. Under Israeli law, there is no liability for severance pay in respect of employees who have not completed one year of employment. The amount deposited with the pension fund or the insurance policies is based on salary components as prescribed in the existing labor agreement. The custody and management of the amounts so deposited are independent of the Parent and accordingly, such amounts funded and related liabilities are not reflected in the balance sheet.
|
For the non-management employees, the Parent deposits 72% of its liability for severance obligations with a pension fund for such employees, and upon completion of one year of employment with the Parent, it makes a one-time deposit with the pension fund for the remaining balance.
In 2011, the Parent made a transfer of funds from a central severance fund to individual funds in the name of the employees for the unfunded liability in respect of the employees, which pursuant to Section 14 of the Israeli Severance Pay Law, it discharged its liability in respect of such employees severance pay. As a result, the balance of assets held for employees severance pay was reduced, and the liability was reduced accordingly.
|
|
3.
|
Kubatronik owns an insurance policy and makes regular deposits with an insurance company for securing pension rights on behalf of one of its key employees. Such amounts deposited and the related liabilities are reflected in the consolidated balance sheet. In December 2012 the employee resigned from Kubatronik, however his pension entitlement up to the end of his employment with the Company continues.
|
In respect of its other employees, Kubatronik does not make any deposits for pension or retirement rights, since such deposits are not required under the German law.
|
|
4.
|
Expenses recorded in respect of the unfunded liability for employee severance payments for the years ended December 31, 2012, 2011, and 2010 are $57 $102 and $157, respectively.
|
Note 10 - Commitments and Contingent Liabilities
|
|
A.
|
Pledges and guarantees
|
|
|
1.
|
The Company has pledged certain items of its equipment and the rights to any insurance claims on such items to secure its indebtedness with banks, as well as floating liens on all of its remaining assets in favor of the banks.
|
|
|
2.
|
The Company has pledged certain items of its equipment as a guarantee for the implementation of its benefited enterprise. The Company has determined that it is in compliance with the conditions of the approval (see Note 14A).
|
|
|
3.
|
The Company has also pledged machines to secure its indebtedness to certain suppliers that provided financing to such equipment.
|
Eltek Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
(All amounts in thousands of $, except where otherwise stated)
Note 10 - Commitments and Contingent Liabilities (cont’d)
|
|
B.
|
Operating leases and other agreements
|
|
|
1.
|
The premises occupied by the Parent and Kubatronik are leased under two operating agreements that expire in February 2017 and June 2014, respectively.
|
|
|
2.
|
The Parent has signed several lease and maintenance agreements for production equipment with suppliers of equipment and software. Of such agreements, the main principal agreement expires in January 2015.
|
|
|
3.
|
Several production machines are leased by Kubatronik under operating agreements which will expire in June 2014.
|
|
|
4.
|
The Parent’s motor vehicles are leased under operating lease agreements, mainly for three-year terms.
|
|
|
5.
|
Minimum future payments at December 31, 2012 due under the above agreements over the next five years and thereafter are as follows:
|
| |
|
Premises
|
|
|
Other
|
|
| |
|
leases
|
|
|
agreements
|
|
|
First year
|
|
|
1,077 |
|
|
|
704 |
|
|
Second year
|
|
|
1,025 |
|
|
|
476 |
|
|
Third year
|
|
|
975 |
|
|
|
293 |
|
|
Fourth year
|
|
|
975 |
|
|
|
212 |
|
|
Fifth year and thereafter
|
|
|
456 |
|
|
|
109 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
4,508 |
|
|
|
1,794 |
|
Payments required under these agreements are charged to expense by the straight-line method over the periods of the respective leases.
Expenses recorded under these agreements for the years ended December 31, 2012, 2011, and 2010 were $ 1,183, $1,519, and $1,330, respectively.
C. Indemnification agreement
The Parent entered into an indemnification agreement with its directors and officers and undertook to enter into the same agreement with future directors and officers, for losses incurred by a director or officer. Such indemnification amount is limited to the lesser of $2,000 or 25% of the Parent’s shareholders' equity.
Eltek Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
(All amounts in thousands of $, except where otherwise stated)
Note 10 - Commitments and Contingent Liabilities (cont’d)
D. Contingent Liabilities
Environmental Related Matters
On August 25, 2009, the Parent received a notice from the Petach Tikva Municipality claiming that random automatic wastewater samplings in proximity of its plant indicate high levels of metal concentrations which exceed the amounts permitted by law. The Municipality requested an explanation of such alleged violation and further informed the Parent that its environmental department had determined to initiate procedures against any plant that is not in compliance with the permitted concentrations. On September 16, 2009, the Parent sent a letter to the Municipality explaining that it had invested significant funds and resources each year in order to comply with all environmental legal requirements. The Parent further indicated that it had been and continued to be engaged in several projects to reduce salt and metal concentrations in its plant wastewater and that it constantly updates its procedures with respect to environmental matters. In addition, the Parent proposed to collaborate with the Municipality and conduct mutual tests to ensure maximum protection of the environment. To date, the Parent has not received a response from the Municipality to its letter dated September 16, 2009. If the Parent is found to be in violation of environmental laws, it could be liable for damages and costs of remedial actions and could also be subject to revocation of the permits necessary to conduct its business. Any such liability or revocation could have a material adverse effect on the Company’s business, financial condition and results of operations.
On May 4, 2010, the Parent received legal notice from the Magistrate's Court that the Public Council for the Prevention of Noise and Pollution in Israel (the “Public Council”) had filed a lawsuit against it and certain of its directors regarding several alleged environmental damages caused by its release of industrial waste water. On May 3, 2011, the Parent and its directors entered into a settlement agreement with the Public Council. The settlement agreement recognizes the significant improvement in the quality of the Parent’s wastewater and the contribution of the Public Council to this effort. The Public Council undertook not to take any action (civil, criminal, or administrative) against the Parent and its directors or file any complaint with any regulatory agency regarding the matter for a one year period from the date on which the Court approves the settlement. The Parent undertook to pay the Public Council NIS 75 ($22) (plus applicable V.A.T.) for its expenses. On May 4, 2011, the Court approved the settlement agreement and the settlement was given the effect of a judgment.
Eltek Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
(All amounts in thousands of $, except where otherwise stated)
Note 10 - Commitments and Contingent Liabilities (cont’d)
D. Contingent Liabilities (cont’d)
Employee Related Matters
Three lawsuits were filed against the Parent by an employee and two former employees regarding personal injuries that they allegedly had suffered during their employment with the Parent, seeking financial compensation of approximately $330 for past damages and an additional amount for future lost income, pain and suffering in such amount as the Court may determine. Four other employees notified the Parent that they also allegedly suffered personal injuries during their employment. Of these four employees, one is seeking compensation of $150 and the others did not state their claim amount. The Parent submitted the claims to its insurance company, which informed the Parent that it is reviewing the statements of claims without prejudicing its rights to deny coverage.
Note 11 - Shareholders' Equity
Authorized, issued and outstanding share capital in historical terms is as follows:
| |
|
Authorized
|
|
|
Issued and outstanding
|
|
| |
|
December 31
|
|
|
December 31
|
|
|
December 31
|
|
| |
|
2011 and 2012
|
|
|
2012
|
|
|
2011
|
|
|
Number of shares:
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares of par value NIS 0.6 each
|
|
|
50,000,000 |
|
|
|
6,610,107 |
|
|
|
6,610,107 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount in US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares of par value NIS 0.6 each
|
|
|
|
|
|
|
1,384,318 |
|
|
|
1,384,318 |
|
Eltek Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
(All amounts in thousands of $, except where otherwise stated)
Note 12 - Revenues
A. Customers who accounted for over 10% of the total consolidated revenues:
| |
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
Customer A - Sales of
|
|
|
|
|
|
|
|
|
|
|
manufactured products
|
|
|
17.2 |
% |
|
|
14.9 |
% |
|
|
13.7 |
% |
B. Revenues by geographic areas
| |
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
Israel
|
|
|
21,965 |
|
|
|
22,866 |
|
|
|
17,182 |
|
|
Europe
|
|