20-f

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


F O R M 6-K

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

For the month of March, 2003

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 _____

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



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: April 1, 2003






PERIODIC REPORT

FOR THE YEAR 2002





(As required in accordance with the Israel Securities Act, 1968)

 




PERIODIC REPORT FOR THE YEAR 2002



Name of Company: RoboGroup T.E.K. Ltd.
 
Company Reg. No.: 52-003498-4
 
Address: 13 Hamelacha Street, Afeq Industrial Park, Rosh Ha'Ayin 48091, Israel
  (Regulation 25A)
 
Tel: 03-9004111
  (Regulation 25A)
 
Fax: 03-9030994
  (Regulation 25A)
 
Balance Sheet Date: December 30, 2002
  (Regulation 9)
 
Report Date: March 30, 2003

REGULATION 9: FINANCIAL REPORTS

  The Annual Financial Statements of the Company dated December 31, 2002 are attached to the periodic report.

REGULATION 10: DIRECTORS’ REPORT ON THE STATE OF THE COMPANY

  The Directors’ Report is attached to the Financial Statements.

REGULATION 10A: SUMMARY OF THE QUARTERLY PROFIT AND LOSS STATEMENTS

  Summary of the Profit and Loss Statements of the Company are attached to the Directors’Report.

REGULATION 10C: USE OF THE PROCEEDS OF THE SECURITY ISSUE WITH RESPECT TO THE
PROSPECTUS

  None

1



REGULATION 11: LIST OF INVESTMENTS IN SUBSIDIARIES AND IN RELATED COMPANIES AS
OF BALANCE SHEET DATA

COMPANY NAME *







TYPE OF
SHARE






NO. OF
SHARES






TOTAL
AMOUNT
OF PAR
VALUE




COST
ADJUSTED
AS OF
31.12.02
NIS (K)



BALANCE
SHEET
VALUE
ADJUSTED
AS OF
31.12.02
NIS (K)

% HOLDING
IN CAPITAL,
% OF VOTING
POWER AND
RIGHT TO
APPOINT
DIRECTORS

BALANCE OF
LOANS TO
SUBSIDIARIES
AS OF
31.12.02
NIS (K) (**)


Intelitek Inc. Reg.US$ 100 500  US$ 50,000 12,522  10,912  100% 4,622
 
Eshed Robotec B.V Reg.HFL 1000 40  HFL 40,000 109  (617) 100% -
 
Robotec Technologies Reg.NIS 1.00 (1)101  NIS 101 (3,480) 100% 3,805
Ltd.
 
Robotec Industries Reg.NIS 1.00 (2)99  NIS 99 100% -
Ltd.
 
Computras Reg.NIS 0.001 12,600  NIS 12.6 (540) 100% -
Computerized Voting NIS 0.001 200  NIS 0.2        
Training Systems Ltd. Def.NIS 0.001 4,375  NIS 4.375        
 
Computras Marketing Reg.NIS 1.00 100  NIS 100 1,018  (305) 100% -
Training Systems Mgmt.NIS 1.00 100  NIS 100        
(1988) Ltd.
 
Yaskawa Eshed Reg.NIS 1.00 3,000  NIS 3,000 2,912  10,316  50% -
Technology Ltd.
 
MemCall Ltd. Reg.NIS 1.00 200  NIS 200 82% 6,158
 
MemCall LLC Participation units 1,248,000  - 82  82  82% -
 
MemCall Inc. Reg.US$ 0.01 10,000  US$ 100 82% -
 
Sim-Lev Ltd. Mgmt.NIS 10 NIS 80 27  (183) 100% -
  Reg.NIS 10 169  NIS 1,690        


(1)     One share is held in trust.

(2)     One additional share held by Robotec Technologies Ltd.

(*)     All the shares of the subsidiary companies are not traded on a Stock Exchange.

(**)   The loans granted to the subsidiaries by the Company are as follows:

a.     In May 2002, the Company’s Board of Directors decided to convert loans given by the Company to its subsidiary Intelitek Inc. (the balance of which was, at that time, approximately US$ 2.5 million) into share capital in Intelitek.

b.     A loan to Robotec Technologies Ltd., linked to the consumer price index, or carrying the interest rate charged by Bank Mercantile Discount Ltd. on “on-call” loans — whichever is higher.

c.     A loan to Eshed Robotec B.V., linked to the Dutch Florin or to the consumer price index – whichever is higher..

2



REGULATION 12: CHANGES IN INVESTMENTS IN SUBSIDIARIES AND RELATED COMPANIES
DURING THE PERIOD OF THE REPORT

DATE OF
CHANGE

ESSENCE OF THE
CHANGE

COMPANY
NAME

TYPE OF
SHARES

TOTAL
AMOUNT OF
PAR VALUE

NOMINAL
COST
(NIS) (K)

ADJUSTED
COST
(NIS) (K)

18.3.2003 Transfer of shares MemCall Inc. Reg. US$ 0.01 US$ 100    
 
  Dissolution of Edusol-it Reg. US$ 1 US$ 2    
  company Educational        
    Solutions Pte Ltd.        


REGULATION 13: INCOME OF SUBSIDIARIES AND RELATED COMPANIES AND INCOME OF THE
CORPORATION RECEIVED FROM THEM TO BALANCE SHEET DATE


COMPANY NAME








PROFIT
(LOSS)
BEFORE
TAX
(NIS) (K)




PROFIT
(LOSS)
AFTER
TAX
(NIS) (K)




THE
COMPANY'S
SHARE IN
PROFIT
(LOSS) AFTER
TAX
(NIS) (K)

DIVIDENDS
UNTIL
31.12.02






MGMT FEES
ADJUSTED
UNTIL31.12.02
(NIS) (K)





INTEREST
ADJUSTED
UNTIL
31.12.02
(NIS)




INTEREST,
DIVIDENDS
MGMT FEES
TILL 26.3.03





Intelitek Inc. 219  219  377  - -
Eshed Robotec B.V (125) (125) (125) - 328  -
Robotec Technologies
Ltd. (15) (86) (229) - -
Robotec Industries Ltd. - -
Computras
Computerized Training
Systems Ltd. 295  295  362  - -
Computras Marketing - -
Training Systems
(1988) Ltd.
Yaskawa Eshed 3,927  2,927  3,595  - 338  -
Technology Ltd.
MemCall Ltd. - 514  -
MemCall LLC (6,590) (6,590) (6,590) - -
MemCall Inc. - -
Sim-Lev Ltd. - -

3



REGULATION 14: LIST OF LOAN BALANCES GIVEN TO DATE OF BALANCE SHEET, IF
PROVIDING LOANS IS ONE OF THE MAIN FUNCTIONS OF THE CORPORATION

  Provision of loans is not one of the Company’s main functions.

REGULATION 20: TRADING ON THE TEL AVIV STOCK EXCHANGE - SECURITIES REGISTERED
FOR TRADE - TIMES AND REASONS FOR HALTING TRADE

  In the year of the report 3,000 ordinary shares, par value NIS 0.5 were registered for trading, following the exercise of options that were issued to employees of the Company and its subsidiaries pursuant to the Company’s employee stock option plan of 1998.

  In December 2002, the Tel Aviv Stock Exchange Ltd. approved in principle the listing for trade of 1,270,000 Ordinary Shares of the Company issuable upon the exercise of (unregistered) options. The options were allotted in March 2003 to directors of the Company and to a trustee for directors and employees of the Company and its subsidiaries.

  During the reported period there has been no halt in trading on the Tel Aviv Stock Exchange.

REGULATION 21: PAYMENT TO SENIOR OFFICERS (nis k)

1. Chief Executive Officer 764 
2. Managing Director 934 
3. Managing Director 874 
4. General Manager of a business sector 513 
5. General Manager of a business sector 540 

REGULATION 22: SALARIES AND BENEFITS

  The salaries of the directors and the expenses associated with them (which do not exceed the normal) which were paid or which incurred a liability to pay for the year 2002 (adjusted) were NIS 3,645 thousand.

REGULATION 24: SHARES AND CONVERTIBLE SECURITIES HELD BY INTERESTED PARTIES IN
THE CORPORATION, IN THE SUBSIDIARIES, OR IN RELATED COMPANIES
CLOSE TO THE DATE OF THE REPORT

INTERESTED PARTY






I.D. NO. -
COMPANY REG.
NO.




TYPE OF
SECURITY





SECURITY NO.
IN THE TEL
AVIV STOCK
EXCHANGE(2)



NO. OF SHARES
HELD ON
MARCH 30, 2003




% HELD IN
CAPITAL,
VOTING AND
RIGHT TO
APPOINT
DIRECTORS

Arie Kraus (4)(5) 053919072 Reg. NIS 0.5 0266015 762,177(6) 6.79%
Noam Kra-Oz(4)(5) 052240322 Reg. NIS 0.5 0266015 706,478(6) 6.29%
Gideon Missulawin 05924886(3) Reg. NIS 0.5 0266015 745,287  6.64%
Rafael Aravot(5) 052294170 Reg. NIS 0.5 0266015 878,042  7.82%
Menachem Zenziper(5) 007517949 Reg. NIS 0.5 0266015 1,232,960  10.98%
Haim Schleifer 052052040 Reg. NIS 0.5 0266015 701,412  6.24%
David Israel Rosen(5) 101939594 Reg. NIS 0.5 0266015 812,500  7.23%

4



(2) A part of the shares held by interested parties are traded over the counter in the United States.

(3) Passport number.

(4) Arie Kraus and Noam Kra-Oz are brothers.

(5) Holdings together with family member.

(6) Arie Kraus and Noam Kra-oz hold together 3,273 shares.

Remarks:

  1. On March 13, 2003, 1,270,000 registered options were allotted to directors and to the trustee for directors and employees of the Company and its subsidiaries. The options may be exercised into 1,270,000 ordinary registered shares of par value NIS 0.5 of the Company in consideration of a cash payment in NIS equal to US$ 0.91 per option, and in accordance with the terms of and on the dates determined in the stock option plan for employees and directors. The plan was approved by the Company’s general shareholders meeting on December 17, 2002. The directors of the Company hold options under the said plans as follows:

Director's name
Number of options
Holdings after full
dilution*

Percentage of holdings
after full dilution*

Rafael Aravot 90,000  968,042  7.69%
Haim Schleifer 90,000  791,412  6.29%
Noam Kra-Oz 90,000  796,478  6.33%
Gideon Missulawin 50,000  795,287  6.32%
Menachem Zenziper 50,000  1,282,960  10.19%
Arie Kraus 50,000  812,177  6.45%
Tami Gottlieb 50,000  50,000  0.39%
Amiram Dagan 50,000  50,000  0.39%
Alex Tal 50,000  50,000  0.39%

*     In this respect, “full dilution” means assuming that 75,400 options which were allotted to a trustee under the 1998 stock option plan for employees of the Company and its subsidiaries, that have not been exercised as of the date of this report; 12,500 options allotted in 2001 to an interested party in the company; and 1,270,000 options allotted pursuant to the 2003 stock option plan for directors and employees, are all exercised. 2. The aforesaid interested parties do not hold shares and/or convertible securities of the Company’s subsidiaries.

3.     The Company holds 494,321 of its own shares.

REGULATION 26: THE COMPANY DIRECTORS

1.

1. Name:                RAFAEL ARAVOT - I.D. No. 052294170

2. Date of Birth:    1954

3. Address:           9, Oranim Street, Ramat Ilan, Givat Shmuel

4. Citizenship:      Israeli

5. Membership in Directors Committees: Financial committee and MemCall committee.

6. Outside Director: No

7. Whether employed by the Company, subsidiaries, related companies or interested party: Yes

8. Date appointed to Board of Directors: 9.22.1982

9. Education and duties in the previous five years as well as additional companies in which he serves as director:
Graduate in Mechanical Engineering. Master's in Business Administration
Managing Director of the Company. Starting February 2001, Chief Executive Officer of the Company and Chairman of the Company's Board of Directors.
Director of Yaskawa Eshed Technology Ltd; Director of MemCall Ltd. and MemCall LLC.

10. Family relationship to an interested party in the Company: No

5



2.

1. Name:               ACHINOAM KRA-OZ I.D. No. 052240322

2. Date of Birth:   1954

3. Address:          80 Herzl Street, Raanana

4. Citizenship:      Israeli

5. Membership in Directors Committees: No

6. Outside Director : No

7. Whether employed by the Company, subsidiaries, related companies or interested party: Yes

8. Date appointed to Directorship: 12.12.83

9. Education and duties in the previous five years as well as additional companies in which he serves as director:
Graduate in Pharmacy. Joint Managing Director - Marketing of the Company. Starting February 2001 a Managing Director of the Company; Director of Intelitek Inc., Director of Yaskawa Eshed Technology Ltd, Director of Computras Computerized Training Systems Ltd., and Computras Marketing Training Systems (1988) Ltd., Director of Robotec Technologies Ltd., Director of Eshed

10. Robotec B.V.
Family relationship to an interested party in the Company: Yes - brother of Arie Kraus

3.

1. Name:                HAIM SCHLEIFER - I.D. No. 052052040

2. Date of Birth:    1954

3. Address:           40 Ha-histadrut Street, Herzlia

4. Citizenship:       Israeli

5. Membership in Directors Committees: Member of the MemCall committee.

6. Outside Director : No

7. Whether employed by the Company, subsidiaries, related companies or interested party: Yes

8. Date appointed to Directorship: 9.22.1982

9. Education and duties in the previous five years as well as additional companies in which he serves as director:
Graduate in Electronics Engineering. Master's Degree in Business Administration.
Joint Managing Director R&D and Pedagogical Dept of the Company, starting February 2001
Managing Director of the Company, Director of Eshed Robotec B.V., Director of MemCall Ltd. and of MemCall LLC.

10. Family relationship to an interested party in the Company: No

4.

1. Name:                 GIDEON MISSULAWIN Passport No. 405924886

2. Date of Birth:     1940

3. Address:            20A Shpinoza Street, Ra'anana

4. Citizenship:        South African

5. Membership in Directors Committees: Member of the financial committee

6. Outside Director: No

7. Whether employed by the Company, subsidiaries, related companies or interested party: No

8. Date appointed to Directorship: 12.12.1983

9. Education and duties in the previous five years as well as additional companies in which he serves as director:
Graduate in Chemical Engineering, Master's Degree in Business Administration.
Until February 2001 Active Chairman of the Company's Board, Director in Vernon Investments Company Ltd., Director in NewCorp. Ltd. and a number of foreign companies, mainly in South Africa, some of which are family companies

10. Family relationship to an interested party in the Company: No

6



5.

1. Name:                 MENACHEM ZENZIPER I.D. No. 007517949

2. Date of Birth:    1944

3. Address:           40 Yehuda Hanassi Street, Tel Aviv

4. Citizenship:       Israeli

5. Membership in Directors Committees: Member of the financial committee

6. Outside Director: No

7. Whether employed by the Company, subsidiaries, related companies or interested party: No

8. Date appointed to Directorship: 12.12.1983

9. Education and duties in the previous five years as well as additional companies in which he serves as director:
Graduate in Industrial Engineering and Management. Master's Degree in Management Science.
Financial Director of the Company, Director of Zenziper Company for Import of Grain and Fodder Ltd.

10. Family relationship to an interested party in the Company: No

6.

1. Name:                ARIE KRAUS I.D. No. 053919072

2. Date of Birth:   1956

3. Address:          54 Pinkas Street, Tel Aviv

4. Citizenship:      Israeli

5. Membership in Directors Committees: Member of the MemCall Committee.

6. Outside Director: No

7. Whether employed by the Company, subsidiaries, related companies or interested party: No

8. Date appointed to Directorship: 12.12.1983

9. Education and duties in the previous five years as well as additional companies in which he serves as director:
Graduate in Production Engineering ..Formerly - coordinator of the Company's building project. Up to 1997 Manager at Shivrug Ltd. Director of MemCall Ltd. and MemCall LLC. Family relationship to an interested party in the Company: Brother of Ahinoam Kra-Oz

10.

7.

1. Name:                ALEX TAL I.D. No. 67165803

2. Date of Birth:   1946

3. Address:          30 Ha'hagana Street, Herzeliya.

4. Citizenship:      Israeli

5. Membership in Directors Committees: Member of the audit committee.

6. Outside Director: No

7. Whether employed by the Company, subsidiaries, related companies or interested party: No

8. Date appointed to Directorship: 1.15.2001

9. Education and duties in the previous five years as well as additional companies in which he serves as director:
From 1996 until January 2000 - Commander of Israel Navy . Formerly the manager of the business enterprise sector of the Company. Also serves as a director in several companies, Marine &

10. oceanography advisor at Elul company and V.P Marine & Oceanography of Athena company Family relationship to an interested party in the Company: No

8.

1. Name:                TAMI GOTTLIEB I.D. No. 54584198

2. Date of Birth:   1957

3. Address:          10 Hasharon St, Raanana

4. Citizenship:      Israeli

5. Membership in Directors Committees: Member of audit committee and financial committee

6. Outside Director : Yes

7. Whether employed by the Company, subsidiaries, related companies or interested party: No

8. Date appointed to Directorship: 2.28.2002

9. Education and duties in the previous five years as well as additional companies in which she serves as director:
Graduate in International Relations of the Hebrew University in Jerusalem; Master in Economics from the University of Indiana, USA; Manager in Investec Clali - Management and Underwriting Ltd.;
Independent business development, investment banking and financial consultant; Outside Director of Baran group LTD. , "Dan" Public Transportation Ltd, Credit Information Association Ltd., Leasing Building Company Ltd., Carmel Investments Group ltd., Director of Emilia Development Ltd., T.R.A. Radio Tel Aviv Ltd., Incredimail Ltd, The company for management of the provident funds of Discount

10. Mercantile Bank.
Family relationship to an interested party in the Company: No

7



9.

1. Name:                 AMIRAM DAGAN I.D. No. 52731510

2. Date of Birth:   1954

3. Address:          40, Ha'Arbel St, Alfei Menashe

4. Citizenship:      Israeli

5. Membership in Directors Committees: Member of Audit Committee

6. Outside Director: Yes

7. Whether employed by the Company, subsidiaries, related companies or interested party: No

8. Date appointed to Directorship: 2.28.2002

9. Education and duties in the previous five years as well as additional companies in which he serves as director:
Graduate of the Technion in Haifa , Master in Political Science and National Security from the University of Haifa, Master in Business Administration from Tel Aviv University. Was commander of Israel Air Force Systems Department, Vice President in Nice Systems Ltd., Presently - V.P. for Development and Operation of the Hetz Hakesef Company.

10. Family relationship to an interested party in the Company: No

REGULATION 26A: senior officer of the corporation (not included in rule 26)

(1) Name:                 MOSHE TUR-NER - I.D. No. 051638708

Date of Birth:   1952

Job Function:    Joint General Manager of the Education Sector of the Company.

Job Function in subsidiary company or interested party: General Manager of the subsidiary Robotec Technologies Ltd., Director of Robotec Technologies Ltd., Intelitek Inc. and Computras Computerized Training Systems Ltd.
Not related to any other officer or interested party.

Education: Master's Degree in Business Administration.

Experience: From February 1995 until April 2000 - General Manager of Robotec Technologies Ltd.
1994 - General Manager of the Elbit subsidiary Elbit ATI
1990-1993 - VP Operations of the recycling division of Hadera Paper Works
Appointed as Joint General Manager of the Education Sector of the Company: 4.1.2000.

(2) Name:                ELDAD CHERESHNIA I.D. No. 56127590

Date of Birth:   1959

Job Function:    Joint General Manager of the Education Sector of the Company.
Job Function in subsidiary company or interested party: Director of Robotec Technologies Ltd., Intelitek Inc., and Computras Computerized Training Systems Ltd.
Not related to any other officer or interested party.

Education: Graduate in Computer Science and Mathematics

Experience: Until April 2000 Company's VP International Marketing.
1988-1995: General Manager of Robotec Technologies Ltd., a subsidiary of the Company
Appointed Joint General Manager of the Educational Sector of the Company: 4.1.2000

(3) Name:                JOSEF BIRAN - I.D. No. 008767402

Date of Birth:    1946

Job Function:    General Manager of the subsidiary Yaskawa Eshed Technology Ltd.
Job Function in subsidiary company or interested party: General Manager of the subsidiary Yaskawa Eshed Technology Ltd.
Not related to any other officer or interested party.

Education: Graduate in Mechanical Engineering, Master of Business Administration.

Experience: Until 12.31.96 - Vice President R&D and Operations of the Company.
1994-1996 - Company's Development Manager.
1991-1994 - Development Manager of Electric Fuel.
Appointed General Manager of Yaskawa Eshed Technology Ltd - 12.31.1996.

8



(4) Name:                HANAN EIBUSHITZ - I.D. No. 5407473

Date of Birth:   1956

Job Function:     Chief Financial Officer
Job Function in subsidiary company or interested party: CFO of RoboGroup T.E.K. Ltd. and all of its subsidiaries
Not related to any other officer or interested party.

Education: Graduate in Industrial Engineering and Management, Master of Business

Administration
Experience: VP Finance of Elbit Vision Systems
Appointed CFO: 11.25.2002

(5) Name:                OPHRA LEVY-MILDWORTH I.D. No. 023872807

Date of Birth:   1968

Job Function:     Legal Counsel and Company's Secretary
Job Function in subsidiary company or interested party: Legal Counsel and Secretary of RoboGroup T.E.K Ltd. and all its subsidiaries.
Not related to any other officer or interested party.

Education: Graduate in Law and Economics

Experience: Associate in the law firm of Lahav, Litvak-Abadi & Co.
Date appointed Legal Counsel and Company Secretary: 2.15.2001

REGULATION 27: COMPANY ACCOUNTANTS

  Chaikin, Cohen, Rubin and Gilboa, Kiryat Atidim, Building 4, Tel Aviv.

REGULATION 29: DIRECTORS’ RECOMMENDATIONS AND RESOLUTIONS

  1. In accordance with the decision of the Company’s Board of Directors, the Company filed a motion with the Tel Aviv District Court in November 2002 to approve a distribution by way of a purchase of the Company’s shares, pursuant to Section 303 of the Israeli Companies Law, 1999. The amount of distribution approved by the Board of Directors and sought to be approved by the Court is NIS 2,140 thousand. At the date of the report, the hearing of the said motion had not yet concluded.

  2. On November 11, 2002 the Company’s Board of Directors decided to approve a stock option plan for directors and employees of the Company and its subsidiaries. In the plan, up to 1,270,000 registered options which may be exercised into 1,270,000 ordinary registered shares of par value NIS 0.5 of the Company will be allotted in a private placement. 570,000 of the options were allotted to directors in the Company in an extraordinary private placement. The allotment of the said options was approved by the Company’s general shareholders meeting on December 17, 2002.

  3. On November 11, 2002, the Company’s Board of Directors decided to approve the giving of letters of indemnification and exemption from liability to the directors and officers of the Company, whose names are listed in the Company’s periodic report for the year 2001. The Company’s general shareholders meeting approved the giving of the letters of indemnification and exemption from liability on 12.17.2002.

Date:March 30, 2003 RoboGroup T.E.K. Ltd.

9



SIGNATORY FUNCTION

1.RAFAEL ARAVOT CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
_________________

2. HAIM SCHLEIFER JOINT MANAGING DIRECTOR
AND DIRECTOR
_________________

10





RoboGroup T.E.K. Ltd.



Financial StatementsDecember
31, 2002

 



Director's Report F-3
Financial Statements:
Report of Independent Certified Public Accountants F-18
Balance Sheets F-19
Statements of Operations F-21
Statement of Changes in Shareholders' Equity F-22
Statements of Cash Flow F-23
Notes to the Financial Statements F-26
Appendix to Financial Statements F-72

 



RoboGroup T.E.K. Limited

Directors’ Report for 2002

Directors’ Report for the Year ended December 31, 2002

We are pleased to present the Directors’ Report on the financial condition of the Company for the year ended December 31, 2002.

RoboGroup T.E.K. Limited and its Business Environment

RoboGroup T.E.K. Limited, its subsidiaries and related companies
RoboGroup T.E.K. Limited (“RoboGroup”) has seven wholly owned subsidiaries:

  a) Intelitek Inc., (“Intelitek”), a company incorporated in Delaware, USA (formerly Eshed Robotec Inc.), is mainly engaged in the development, manufacture, marketing, sales, technical support and maintenance of CNC products, a product line that was purchased from Davenport Industries LLC, and markets them under the name of Light Machines. Intelitek is also engaged in the marketing, sales, technical support and maintenance of RoboGroup’s products in North America.

  b) Robotec Technologies Ltd. (“RTL”), a company incorporated in Israel, is engaged in the marketing, distribution, installation and maintenance of RoboGroup’s products and other companies’ products for the scientific and technological training market in Israel.

  c) Computras Computerized Training Systems Ltd. (“Computras”), a company incorporated in Israel, is engaged in the development, production and marketing of educational software and training software.

  d) Computras Marketing Training Systems (1988) Ltd., a company incorporated in Israel, is engaged in the marketing of educational software for training purposes.

  e) Eshed Robotec B.V., a company incorporated in the Netherlands, is engaged in making investments in new fields of activity.

  f) Robotec Industries Ltd., a company incorporated in Israel in 1993, is currently inactive.

  g) Sim-Lev Ltd., a company incorporated in Israel, is engaged in the development of simulation software for PLC controllers.

In addition, RoboGroup owns 50% of the share capital of Yaskawa Eshed Technology Ltd. (“YET”), a company incorporated in Israel and jointly owned, by RoboGroup and the Japanese company Yaskawa Electric Corporation (“YEC”). YET develops and manufactures motion control products for the industrial market, which are mainly marketed by YEC, and also sells development services to YEC in that field.

F-3



RoboGroup T.E.K. Limited

Directors’ Report for 2002

RoboGroup further holds an 82% interest in MemCall LLC, MemCall Inc. and MemCall Ltd. (collectively “MemCall”), through its Netherlands subsidiary, Eshed Robotec B.V. The Memcall companies were incorporated in 2001 in the U.S. and in Israel, respectively.

RoboGroup and its subsidiaries will be referred to in this Directors’ Report as the “Company”.

The Company and Its Business Environment

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 around the world and in Israel. The second sector includes the subsidiary YET, which is engaged in the development and manufacture of motion control products for the industrial market. The third sector comprises the startup company MemCall, which is developing new technology designed to shorten the length of time required to locate and retrieve information in computers and communications networks.

The Education Sector

In 2002, the Education Sector continued to implement and execute a cost cutting plan that was initated in the last quarter of 2001. The plan covered all the entities in the sector, including our U.S. subsidiary and Computras. The plan was implemented in full in accordance with the work plan for 2002.

In April 2002, RoboGroup entered into an agreement to supply training systems for advanced production technologies to a vocational school network in South America, in an amount of approximately US$ 2 million. This transaction was the follow-on to an earlier transaction of RoboGroup which was completed several years ago, within which systems were supplied to 18 schools in the network. The delivery of the systems was completed in the third quarter of 2002.

In the third quarter of 2002, our e-learning activities were added to the Education Sector. In December 2001, the Company signed an agreement to provide an e-learning training system in consideration of over US$ 4 million. The e-learning system that is being developed under this agreement includes 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 be completed in the first half of 2003. The first delivery in the project was made in the third quarter of 2002, and the Company started recognizing revenues from this project. An additional delivery was made in the fourth quarter of 2002. The Company believes that the successful completion of the project may provide the foundation for a product line in the e-learning field.

In December 2002, Robogroup signed an agreement with Mentergy Ltd. for the acquisition of assets relating to the TrainNet activity (an interactive distance learning product via satellite or broadband communications). Pursuant to the agreement, the Company acquired, among other things, proprietary rights to the software, the right to use the name TrainNet and production files and engineering documentation for the product. The Company regards this transaction as an additional step in the expansion of its activities in the growing field of distance learning and e-learning. The Company believes that the combination between the acquired product and the products developed by the Company will provide its customers with unique solutions for distance learning.

F-4



RoboGroup T.E.K. Limited

Directors’ Report for 2002

In the first quarter of 2003, the Company signed several contracts with customers with regard to the TrainNet product.

Computras

In 2002, Computras was integrated into the operations of the Education Sector, and has undergone extensive cutbacks for the purpose of adjusting to the Israeli business environment, as an integrator of learnware in educational institutions and as the training franchisee for the “Computer for Every Child” project.

YET

In 2002, YET delivered approximately US$ 4.2 million of products and services to YEC. The working plan approved by the Board of Directors of YET for 2002 forecasted a pre-tax profit of approximately US$ 1.75 million. YET’s pre-tax profits for the year 2002 amounted to approximately US$ 1.6 million (approximately NIS 7.4 million).

In mid 2001, the shareholders of YET reached an agreement whereby YET would start to develop new independent marketing channels for the sale of its products and develop products that will be sold under the YET brand name. In 2002 the basic development of the XtraDrive (Advanced Server Driver) was completed and YET continued with the advanced stages of the development of the XtraDrive, which will be sold under the YET brand name.

In 2002, YET also initiated marketing activities with the cooperation of YEC in Europe and the U.S. in order to establish a presence in these markets and entered into negotiations with a European company and U.S. companies in regard to private label agreements. In addition, YET continued to market YEC’s products in Israel during 2002.

Since YEC’s marketing system in Europe is undergoing fundamental changes, the progress of the building of a marketing system that is related to YEC has been delayed. In early 2003, YET began looking for independent distributors to market its products in Europe.

In early 2003, it was made clear to YET that YEC would not distribute YET products in the U.S., and that YET will have to establish an independent marketing network there. Action on this matter has been started.

In 2002, YET made preliminary sales (in immaterial amounts) of the XtraDrive product 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.

F-5



RoboGroup T.E.K. Limited

Directors’ Report for 2002

In May 2000, RoboGroup entered into a service agreement with YET under which YET pays RoboGroup for services and management fees. The sum of the payment is determined annually by mutual consent. In January 2002 a service agreement was signed between RoboGroup and YET for 2002, under which YET paid RoboGroup approximately NIS 1.2 million for services and management fees. In January 2003 a service agreement was signed between RoboGroup and YET for 2003, under which YET will pay RoboGroup approximately NIS 0.9 million for services and management fees.

MemCall

MemCall is engaged in the development of a new search technology which, would potentially reduce the time for locating and retrieving data in computers and communications networks. The result of the new technology is expected to be a development of electronic semiconductor chips.

In 2002, MemCall continued its efforts to raise capital from outside sources. The depressed condition of the global networking market has significantly reduced MemCall’s market potential. In addition, the condition of the capital markets is still bad, and MemCall’s management is therefore unable to estimate whether, when or under what conditions it will be able to raise capital for its operations.

In early 2001, RoboGroup’s Board of Directors determined two milestones for completing an investment of US$ 2.5 million in MemCall. In November 2001, RoboGroup’s Board of Directors acknowledged that MemCall met the two milestones.

In May 2002, RoboGroup’s Board of Directors approved an additional US$ 1 million investment in MemCall, subject to several milestones being met by the end of 2002. In January 2003, RoboGroup’s Board of Directors approved an additional investment of US$ 0.75 million, while examining the investment during the course of the period in accordance with MemCall’s progress toward the milestones that were determined. The additional financing pursuant to these two resolutions will be provided in accordance with MemCall’s letter of undertaking which provides, among other things, that the sum of the investment will be either repaid by MemCall on specified dates or, alternatively, converted into additional share capital in MemCall at RoboGroup’s discretion.

Accordingly, RoboGroup’s investment in MemCall is expected to total approximately US$ 4.25 million, of which US$ 2 million was invested in the form of share capital, and the balance in the form of a US$ 2.25 million convertible loan.

RoboGroup’s investment in MemCall in 2002 amounted to the total sum of approximately NIS 7.6 million (US$ 1.6 million) net, after deduction of the Chief Scientist’s contribution, as specified below. RoboGroup’s aggregate investment in MemCall, as of December 31, 2002, amounted to approximately US$ 3.3 million. All of the investments in MemCall are recorded by the Company as current expenses in the quarter in which they were made (with regard to R&D expenses, see Note 5 to the financial statements).

F-6



RoboGroup T.E.K. Limited

Directors’ Report for 2002

In addition to the above-mentioned resolution regarding the enlargement of the investment, RoboGroup’s Board of Directors passed the following resolutions in January 2003 regarding the continued operation of MemCall: (a) To transfer MemCall’s headquarters to the State of California in the U.S.A. where, to the Company’s best knowledge, the largest concentration of MemCall’s target markets is located; (b) To change MemCall’s business model, while emphasizing strategic alliances with leading manufacturers/marketers in the global silicon market; (c) To appoint Mr. Bill Eichen, a California resident, as CEO and a director of MemCall; Who will also be the director of Memcall; and (d) To implement a reorganization plan, which includes staff reductions. In addition, MemCall will continue to develop its technology and intellectual assets.

MemCall’s retiring CEO, Mr. Alon Shacham, will continue to contribute to the company as an outside consultant. In addition, Mr. Amnon Yacoby was appointed as Chairman of MemCall’s Board of Directors succeeding Mr. Rafael Aravot.

In the third quarter of 2002, MemCall received the approval of the Office of the Chief Scientist of the Israeli Ministry of Industry and Trade (the “Chief Scientist”) for a grant in the total sum of approximately NIS 4.6 million, which constitutes 50% of a total budget of approximately NIS 9.2 million which was approved for MemCall by the Chief Scientist pursuant to a development plan that was submitted by the company under the R&D Law. The approved budget is for the period January-December 2002. MemCall has asked for, and received, the Chief Scientist’s approval to extend the period of this budget until the end of March 2003, the total sum amounted to NIS 8 million while NIS 4 million or 50% out of the budget were given as grant. Until the date of this report, MemCall received the total sum of NIS 3.6 million.

In the third quarter of 2002, MemCall received a preliminary quantity of test chips from an outside contractor who manufactured the chips for the company . The test chip is a piece of silicon (a chip), designed to test basic functions in the planning of MemCall’s first planned product (GSP1), and is not a product in itself. The examination process of the test chips that were received revealed significant problems with the outside manufacturer’s production process. The result of these problems was that only a certain percentage of the functions which should have been tested, were actually tested by MemCall. MemCall intends to develop other manufacturing partnerships as the program develops.

RoboGroup’s Building

The space in RoboGroup’s building in Rosh Ha’Ayin that is not occupied by the Company is leased to three outside tenants. In 2002, the Company recorded a total of approximately US$ 600 thousand in rental payments from these tenants.

F-7



RoboGroup T.E.K. Limited

Directors’ Report for 2002

Active Markets

The Education Sector

The majority of the products developed and manufactured by the Company are for export. The Company markets such products through a network of dozens of sub-agents throughout the world (The agent for the U.S. and Canada is a subsidiary).

The Company markets its products and complementary products to the technological and scientific educational market in Israel though its subsidiaries RTL and Computras.

The Company’s e-learning products are marketed both to the educational sector, such as education ministries, school networks and universities, and the private sector, such as companies and organizations that need to perform internal employee training.

YET

Until the middle of 2001, YET only operated in the Japanese market, selling its products exclusively through YEC. Following a resolution passed by YET’s Board of Directors in the middle of 2001 to open its markets to additional external customers, YET recruited a manager of marketing and business development to develop the marketing channels in the U.S., a manager of marketing and business development to develop the marketing channels in Europe and the Far East, and a sales and marketing officer for developing marketing channels in Israel.

In 2002, YET initiated marketing activities with the cooperation of YEC in Europe and the U.S. in order to penetrate these markets with a product developed by the Company. In addition, YET continued marketing YEC products in Israel. YET is seeking independent distributors to market its products in Europe and has begun to establish an independent marketing network in the U.S.

Customers and Risk Factors

The Education Sector

The main market for the Education Sector’s products is educational institutions and research and development institutes, which purchase the products for educational purposes. The budgets of such institutions are influenced by decisions of external administrative bodies (government education authorities, local educational departments, etc.).

F-8



RoboGroup T.E.K. Limited

Directors’ Report for 2002

In addition, the products developed by the Education Sector are directed at a narrow section of the educational market, i.e., the market for science and technology education.

The Education Sector operates in the hi-tech industry, which is characterized by technological innovation. In order to maintain the Company’s position in this field, it must invest resources in upgrading existing products and developing new products, with the risk that other manufacturers, some of which have greater resources than the Company, will preempt the Company in the development of competitive systems.

Approximately 12% of the Education Sector’s total sales in 2002 were to a large number of clients in the Israeli market, including municipal authorities and educational institutions, which are mostly funded by the Israeli Ministry of Education. Consequently, the scope and structure of the portion of the Israeli Ministry of Education budget that is devoted to the purchase of science and technology equipment in the Israeli market has a large effect on the Education Sector’s sales in Israel.

YET

So long as the only or major customer of YET products is YEC, which holds 50% of YET’s shares, this is a risk for YET. With the opening of new global marketing channels for YET’s products, the aforesaid risk to YET’s activity is expected to diminish.

Competition

The Education Sector

Competition in the Israeli market. To the best of the Company’s knowledge, one other Israeli company competes with the Company with respect to certain of its independently-manufactured product lines.

Competition worldwide. The Company has competitors in all the markets in which it exports its products. The Company’s competitors are local manufacturers, although certain manufacturers who compete with the Company operate worldwide, some of which have greater financial resources than the Company.

The Company’s ability to compete successfully is dependent on the quality and pricing of its products in comparison with those of its competitors, as well as the resources that are available to the Company for investment in development and marketing.

YET

Significant competition exists both in Israel and worldwide for the motion control products developed by YET from large competitors such as Siemens, Mitsubishi, Rockwell and others.

F-9



RoboGroup T.E.K. Limited

Directors’ Report for 2002

Suppliers

Products manufactured by the Company are adjusted to components made by various manufacturers (for example, motors, transmissions, electronic components, etc.). Should the prices of these components to which the Company’s products have been adjusted increase significantly, or for some reason should the Company be unable to purchase them and be forced to effect changes in its systems to adjust them to new components, the Company believes this adjustment will not involve significant development costs.

YET is dependent on YEC as a supplier of components for its XtraDrive product.

Exposure to and Management of Market Risks

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 of the nature of the Company’s operations, the Company is subject to risks from changes in the exchange rates of foreign currencies (mainly US$ and Japanese YEN). The Company undertakes 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 factors that are bound to influence such currencies.

2. An evaluation of the Company’s quarterly position with respect to the general exposure to changes in the various currencies.

3. Establishing foreign currency linked loans for the financing of its investments in its building.

Notwithstanding these precautions, the Company cannot insure full protection against foreign currency risks, and the Company is exposed to exchange rate fluctuations between various foreign currencies and between the foreign currencies and the Israeli shekel.

b. Interest and Index Risks

Although the majority of the Company’s income is in foreign currency, the Company does not enter into specific hedging contracts against the exposure due to changes of interest and index rates. However, the Company is accustomed to investing a portion of its monetary balances in accordance with its periodic evaluations with respect to expectations in the areas of interest and index.

In 2002, the Company reduced its monetary balances that are invested in securities. As of December 31, 2002, the balance of the Company’s securities portfolio was of immaterial value. In the event the Company will decide to increase its investment in securities in the future, it will be exposed to fluctuations in the prices of securities in its investment portfolio.

F-10



RoboGroup T.E.K. Limited

Directors’ Report for 2002

c. The Responsible Officer

The Company’s chief financial officer is responsible for managing the Company’s market risks.

d. Supervision and Application of Policy

Company management and the finance committee of the Board of Directors constantly monitors the extent of the Company’s exposure to market risks, and decides accordingly if it is necessary to modify its risk management policy and, if necessary, adopt protective measures.

e. As of December 31, 2002 the Company had no outstanding futures contracts. The Company did not enter into any futures contracts in 2002.

Donations

The Company does not have a policy with respect to donations and is not committed to make any donations in the future.

Backlog of Orders

The Company’s backlog of orders at December 31, 2002 consists of approximately NIS 20.7 million compared to approximately NIS 19.6 million as of December 31, 2001.

2. The Financial Position of the Company

  a) The Company’s assets as of December 31, 2002 totaled approximately NIS 106.2 million, compared to approximately NIS 102.6 million at December 31, 2001.

  The increase in the Company’s assets resulted from a rise in cash and cash equivalents in the total sum of approximately NIS 13.3 million, which was mostly offset against a decrease in customer balances in the sum of NIS 5.2 million, a decrease in inventories in the total sum of approximately NIS 0.6 million, and a decrease in short term investments in the total sum of approximately NIS 1.7 million.

  b) The Company’s equity was approximately NIS 50 million as of December 31, 2002, compared with approximately NIS 46.4 million as of December 31, 2001. The increase in equity derived mainly from a profit in the amount of approximately NIS 3.4 million in 2002.

F-11



RoboGroup T.E.K. Limited

Directors’ Report for 2002

3. Financial Results

Following are the financial results of the Company on a quarterly basis and the year ended December 31, 2002 compared with the year ended December 31, 2001, adjusted to the NIS of December 2002 (in thousands of shekels).

1/02
2/02
3/02
4/02
2002
2001
Revenues, net 15,194  21,092  26,890  24,643  87,819  87,597 
 
Cost of revenues 9,084  9,966  10,769  12,391  42,210  52,281 






Gross profit 6,110  11,126  16,121  12,252  45,609  35,316 
 
Operating expenses
Research and development, net 3,782  2,534  3,324  3,361  13,001  12,576 
Marketing and selling expenses 3,493  3,544  3,992  3,485  14,514  16,136 
General and administrative expenses 3,171  2,707  3,416  4,599  13,893  12,844 






  10,446  8,785  10,732  11,445  41,408  41,556 






Operating income (loss) (4,336) 2,341  5,389  807  4,201  (6,240)
 
Financial income (expense), net 708  (954) (854) (329) (1,429) 1,962 
Other income (expense) 446  611  (172) 787  1,672  2,755 






Income (loss) before taxes (3,182) 1,998  4,363  1,265  4,444  (1,523)
 
Taxes on income * (184) (787) (206) 106  (1,071) (905)






Net income (loss) (3,366) 1,211  4,157  1,371  3,373  (2,428)






(*) Restated

F-12



RoboGroup T.E.K. Limited

Directors’ Report for 2002

Profit and Loss Development

The Company’s revenues in 2002 totaled approximately NIS 87.8 million, compared with approximately NIS 87.6 million in 2001. The increase in revenues in 2002 was attributable to an increase in revenues in the education field from an e-learning project for which revenues of approximately NIS 11.3 million were recognized this year and from an increase of approximately NIS 4.5 million in revenues from development services of a proportionately consolidated company. On the other hand, the Company’s revenues from the sale of Light Machine products decreased by approximately NIS 3.5 million, and the sales of the products of a proportionately consolidated company decreased by approximately NIS 11.6 million.

The gross profit from the Company’s products and other products that are marketed by the Company was, in 2002, approximately 52% of revenues, as compared with approximately 40% in 2001. The increase in the gross profit rate resulted mainly from a different product mix and an increase in revenues from development services and royalties of a proportionately consolidated company. Operating expenses in 2002 totaled approximately NIS 41.4 million as compared with approximately NIS 41.6 million in 2001.

In 2002, research and development expenses, net, increased by approximately NIS 0.4 million, compared with 2001, mainly as a result of increased investments in the development activities of MemCall which totaled approximately NIS 6.1 million in 2002, compared with approximately NIS 5.1 million in 2001. In addition the investments in the development activities of e-learning increased in the amount of NIS 0.4 million, and the development expenses of YET increased by NIS 0.9 million. On the other hand, the investments in the development activities of the Education Sector decreased by approximately NIS 1.9 million Marketing and selling expenses in 2002 decreased by approximately NIS 1.6 million compared with 2001, mainly due to a decrease in the marketing and selling expenses of the Education Sector.

General and administrative expenses in 2002 increased by approximately NIS 1 million compared with 2001, mainly due to salary provisions for directors.

Profits from ordinary operations in 2002 totaled approximately NIS 4.4 million compared with a loss from ordinary operations that totaled approximately NIS 1.5 million in 2001.

The Company’s financing expenses, net, in 2002 totaled approximately NIS 1.4 million, compared with financing income of approximately NIS 2 million in 2001. The financing expenses derived mainly from interest and the erosion of loans in the amount of approximately NIS 2 million which were borrowed for financing the building, and differences in exchange rates which were offset mainly by charges in respect of interest in the current operation of the Company. Other income in 2002 amounted to approximately NIS 1.7 million compared with other income of approximately NIS 2.8 million in 2001. The decrease in other income in the amount of approximately NIS 1.1 million was mainly due to a decrease in net income from leasing space in RoboGroup’s building of approximately NIS 1.1 million in 2002. The Company’s net profit in 2002 was approximately NIS 3.4 million as compared with a loss of approximately NIS 2.4 million in 2001. The net income of approximately NIS 3.4 million resulted mainly from the Education Sector, in the sum of approximately NIS 7.3 million, income from the building in the sum of approximately NIS 2.1 million, and the profits of a proportionately consolidated company in the sum of approximately NIS 1.6 million, which were partly offset by investments in the development activity of MemCall in the sum of approximately NIS 7.6 million.

F-13



RoboGroup T.E.K. Limited

Directors’ Report for 2002

4. Liquidity

a) The balance of the Company’s cash, cash equivalents and securities at December 31, 2002 was approximately NIS 24.8 million as compared to approximately NIS 11.5 million at December 31, 2001.

b) Cash flows derived from current operations:

  In 2002, the Company had a surplus from current operations of approximately NIS 13.6 million as compared to a deficit from current operations of approximately NIS 4.5 million in 2001.

c) Cash flows applied to investment operations:

  In 2002, the Company invested approximately NIS 2.2 million in fixed assets as compared to approximately NIS 2.8 million in 2001. Of this amount, approximately NIS 1.3 million was invested in RoboGroup’s building in 2002 as compared to approximately NIS 0.7 million in 2001.

d) Cash flows derived from financing operations:

  In 2002, the Company had a surplus in cash from financing operations in the amount of approximately NIS 0.4 million as compared to a surplus of approximately NIS 5.7 million in 2001. The surplus from financing operations in 2002 resulted mainly from a increase in long term loans.

5. Sources of Financing

a) The Company has positive working capital. The current ratio was 1.88 at December 31, 2002, compared with 1.31at the end of 2001. The Company’s quick ratio was 1.41 at December 31, 2002 compared with 0.95 at December 31, 2001.

b) The Company’s shareholders’ equity of approximately NIS 50 million at December 31, 2002, accounted for approximately 47% of its total balance sheet and served the Company as a principal source of financing in comparison to shareholders’ equity of approximately NIS 46.4 million that accounted for approximately 45% of its balance sheet at December 31, 2001.

c) The average amount of credit provided to the Company’s customers was approximately NIS 22.6 million and the average credit the Company obtained from its suppliers and service providers was approximately NIS 10 million, in 2002 as compared with approximately NIS 22.8 million and approximately NIS 13.8 million, respectively, at December 31, 2001.

F-14



RoboGroup T.E.K. Limited

Directors’ Report for 2002

d) The average amount of short-term credit from the bank was approximately NIS 18.4 million in 2002 as compared with approximately NIS 14.8 million at December 31, 2001.

e) The average amount of long-term bank credit was approximately NIS 15.3 million in 2002 as compared with approximately NIS 16.4 million at December 31, 2001.

6. Option Plans for Employees, Directors and Interested Parties

  6.1. During the period January 2002 to February 2003, RoboGroup issued 3,000 ordinary registered shares of par value NIS 0.5 each of the Company, as a result of the exercise of 3,000 stock options. RoboGroup’s stock options were allotted on February 9, 1998 to a trustee on behalf of employees of the Company and its subsidiaries, and are exercisable in consideration for a cash payment in NIS equal to US$ 0.50 per option..

  As of the date of this report, 75,400 stock options remained in the hands of the employees of RoboGroup and its subsidiaries that have not yet been exercised into RoboGroup shares. At this time, 42,600 stock options remain in the hands of RoboGroup and have not yet been issued to the employees of RoboGroup or its subsidiaries.

  6.2. On March 13, 2003, 773,500 options were allotted to the trustee for directors and employees of the Company and its subsidiaries, that are exercisable in consideration of a cash payment in NIS equal to US$ 0.91 per option.This plan was approved by RoboGroup’s Board of Directors in November 2002 and by the general shareholders meeting of the Company on December 17, 2002. The options will be exercisable for 10 years, starting January 1, 2003, and will be subject to the lock-up provisions under Section 102 of the Israeli Income Tax Ordinance.

  6.3. In addition to the allotment described in Section 6.2, on March 13, 2003, 190,000 options were allotted to RoboGroup’s directors that are exercisable in consideration of a cash payment in NIS equal to US$ 0.91 per option (the “Directors Plan”). The Directors Plan was approved by RoboGroup’s Board of Directors in November 2002 and by the general shareholders meeting of the Company on December 17, 2002. The terms governing the exercise and holding of the options in the Directors Plan are identical to the terms of the employee stock option plan, subject to the provisions of any law.

F-15



RoboGroup T.E.K. Limited

Directors’ Report for 2002

7. Undertaking of Indemnification and realese from Liability

  In November 2002, RoboGroup’s Board of Directors approved that undertakings of indemnification and realese from liability be given to RoboGroup’s directors and officers. This resolution was approved by the general shareholders meeting of the Company on December 17, 2002. According to the letters of indemnification, the Company undertook irrevocably to indemnify each and every recipient of the indemnification against any liability or expense incurred by him or her due to an act, including an omission, made by them in their capacity as officers of the Company, or as a result of an act made by them as an officer or employee of another corporation, which they assumed as a result of their being officers of the Company. The letters of indemnification are subject to the provisions of the law and of the Company’s Articles of Association. The amount of the indemnification under the letters of indemnification to all the recipients cumulatively, will not exceed an amount in NIS equal to US$ 4 million for a single event.

8. Motion to Approve a Distribution

  In November 2002, RoboGroup filed a motion with the Tel Aviv District Court to approve a distribution by way of a purchase of Company shares, pursuant to Section 303 of the Israeli Companies Law, 1999. The sum of the distribution requested to be approved was NIS 2,140 thousand. The Company’s principal creditors have consented to the distribution in principle. According to the instructions of the District Court, RoboGroup has retained an independent CPA to provide an opinion on the Company’s solvency.

9. General Meeting of the Company’s Shareholders

  An annual general meeting of RoboGroup’s shareholders was held on December 17, 2002. The General Meeting approved the reelection of RoboGroup’s directors, approved the award of a grant to two managers and directors of the Company, in the total sum of US$ 80,000, approved the Company’s stock option plans for employees and directors as mentioned above, approved the undertaking of indemnification and exemption from liability for directors and officers as mentioned above, and the appointment of the Company’s CPAs.

10. 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 affected the Company’s business in the following markets:

F-16



RoboGroup T.E.K. Limited

Directors’ Report for 2002

  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 customer,suffered a significant drop in the sales of these product lines. This has also affected YET’s business.

  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 venture capital investments in new enterprises have had an adverse effect on MemCall.

  In the global education market, institutional investments in education infrastructures declined as a result of thelack 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 Sector has brought about a reduction of its potential sales.

  The Israeli education market has suffered for some time from a shortage in resources for investment in infrastructures, educational software and laboratories for science and technology education. The additional cutbacks in the education budget are expected to substantially reduce the investments in these fields.

______________________
Rafael Aravot
Chairman of the Board and CEO
______________________
Haim Schleifer
Director and Joint General Manager

Date: March 30, 2003

Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995: This release contains forward-looking statements, which express the beliefs and expectations of management. Such statements are based on current plans, estimates and expectations and involve a number of known and unknown risks and uncertainties that could cause the Company’s future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause or contribute to such differences include the impact of pharmaceutical industry regulation, the difficulty of predicting FDA and other regulatory authority approvals, the regulatory environment and changes in the health policies and structure of various countries, acceptance and demand for new pharmaceutical products and new therapies, the impact of competitive products and pricing, the availability and pricing of ingredients used in the manufacture of pharmaceutical products, uncertainties regarding market acceptance of innovative products, newly launched, currently being set or in development, the impact of constructing of clients, reliance on a strategy of acquiring companies and on strategic alliances, exposure to product liability claims, dependence on patent and other protections for our innovative products, fluctuations in currency, exchange and interest rates, operating results, and other factors that are discussed in the Company’s Annual Report on Form 20-F and the Company’s other filings with the U.S. Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

F-17



Chaikin, Cohen, Rubin & Gilboa.

Atidim Technology Park, Bldg. 4,
P.O.B. 58143 Tel-Aviv 61580, Israel
Tel: 03-6489858 Fax: 972-3-6489946
E-mail: accounting@ccrcpa.co.il

 

 

 


Certified Public Accountants (Isr.)

INDEPENDENT AUDITORS’ REPORT
To the Shareholders of RoboGroup T.E.K LTD.

We have audited the accompanying balance sheets of RoboGroup T.E.K LTD. (hereinafter - the Company) as of December 31, 2002 and 2000, and the consolidated balance sheets as of the same dates and the related statements of operations, statements of changes in shareholders’ equity and statements of cash flows - for each of the three years ended December 31, 2002. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements, based on our audit.

We have not audited the financial statements of the consolidated companies whose joint assets represent approximately 29% and 24% of the total consolidated assets as of December 31, 2002 and 2000 respectively and whose joint revenues represent approximately 41%, 24%, and 38% of the total consolidated revenues for the years ended December 31, 2002, 2000 and 1999 respectively. The financial statements of those companies were audited by other independent public accountants whose reports have been furnished to us and our opinion, insofar as it relates to amounts included for those companies, is based solely on the reports of those other public accountants.

We conducted our audit in accordance with generally accepted auditing standards, including those prescribed by the Auditors (Mode of Performance) Regulations, 1973. Those standards require that we plan and perform the audit to obtain reasonable assurance that 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 statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, based on our examination and on the reports of the other public accountants referred to above, the above mentioned financial statements present fairly, in all material respects, the financial position - of the Company and consolidated - as of December 31, 2002 and 2000 and the results of operations, changes in shareholders’ equity, and cash flows - of the Company and consolidated - for each of the three years ended December 31, 2002, in conformity with accounting principles generally accepted in Israel and in the United States (as applicable to the financial statements of the Company, such accounting principles are practically identical in the said countries, save for the measurement in terms of a constant purchasing power, which became an accepted accounting practice in Israel during a period of hyperinflation and save for certain matters summarized in note 28). It is also our opinion that the above mentioned financial statements have been prepared in conformity with the Securities Regulations (Preparation of Annual Financial Statements), 1993.

As explained in note 2, the above mentioned financial statements are presented in adjusted values adjusted to changes in the general purchasing power of the Israeli currency, in accordance with opinions of the institute of Certified Public Accountants in Israel.

/s/ Chaikin Cohen Rubin

Chaikin Cohen Rubin

& Gilboa

Certified Public Accountants (Isr.)

 

Tel-Aviv, March 30, 2003

F-18




RoboGroup T.E.K. Limited

Balance Sheets

(Adjusted NIS in Thousands, to December 2002)

 

 

 

 

 

Consolidated

 

Company

 

 

 

 

 

 


 


 

 

 

 

Note

 

 

Convenience Translation into
U.S.$
2002
U.S.$(K)

 

 

Dec 31, 2002
NIS (K)

 

 

Dec 31, 2001
NIS (K)

 

 

Dec 31, 2002
NIS (K)

 

 

Dec 31, 2001
NIS (K)

 

 

 

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current  assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

5,235

 

 

24,800

 

 

11,487

 

 

16,525

 

 

5,146

 

Short-term investments

 

 

3

 

 

105

 

 

498

 

 

2,168

 

 

498

 

 

2,168

 

Trade receivables

 

 

4

 

 

4,225

 

 

20,012

 

 

25,156

 

 

6,613

 

 

3,168

 

Other receivables and debit
balances

 

 

5, 19a

 

 

540

 

 

2,560

 

 

4,253

 

 

5,678

 

 

6,573

 

Inventories

 

 

6

 

 

3,352

 

 

15,881

 

 

(**)16,521

 

 

4,438

 

 

4,523

 

 

 

 

 

 



 



 



 



 



 

 

 

 

 

 

 

13,457

 

 

63,752

 

 

59,585

 

 

33,752

 

 

21,578

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in investee and
other companies

 

 

7

 

 

23

 

 

110

 

 

110

 

 

25,578

 

 

29,527

 

 

 

 

 

 



 



 



 



 



 

 

 

 

 

 

 

23

 

 

110

 

 

110

 

 

25,578

 

 

29,527

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed assets

 

 

9

 

 

8,621

 

 

40,839

 

 

(**)41,766

 

 

36,685

 

 

37,559

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred taxes

 

 

25

 

 

163

 

 

774

 

 

756

 

 

357

 

 

359

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other assets

 

 

10

 

 

145

 

 

687

 

 

415

 

 

332

 

 

 

 

 

 

 

 



 



 



 



 



 

 

 

 

 

 

 

22,409

 

 

106,162

 

 

102,632

 

 

96,704

 

 

89,023

 

 

 

 

 

 



 



 



 



 



 

(*) Convenience translation into U.S. Dollars
(**) 
Reclassified

The accompanying notes are an integral part of the financial statements.

F-19




RoboGroup T.E.K. Limited

Balance Sheets

(Adjusted NIS in Thousands, to December 2002)

 

 

 

Consolidated

 

Company

 

 

 

 


 


 

 

 

 

Note

 

 

Convenience Translation into
U.S.$
Dec 31, 2002
U.S.$(K)

 

 

Dec 31, 2002
NIS (K)

 

 

Dec 31, 2001
NIS (K)

 

 

Dec 31, 2002
NIS (K)

 

 

Dec 31, 2001
NIS (K)

 

 

 

 

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit from banks

 

 

11

 

 

2,732

 

 

12,946

 

 

23,768

 

 

12,763

 

 

23,613

 

 

Trade payables

 

 

12

 

 

1,844

 

 

8,737

 

 

11,161

 

 

3,897

 

 

3,075

 

 

Other payables and credit
balances

 

 

13

 

 

2,591

 

 

12,272

 

 

10,461

 

 

8,198

 

 

5,382

 

 

 

 

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

7,167

 

 

33,955

 

 

45,390

 

 

24,858

 

 

32,070

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans from banks

 

 

14

 

 

4,490

 

 

21,269

 

 

9,328

 

 

21,269

 

 

9,328

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liability for termination of
employee/employer relationship,
net

 

 

15

 

 

212

 

 

1,006

 

 

1,482

 

 

645

 

 

1,193

 

 

 

 

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

4,702

 

 

22,275

 

 

10,810

 

 

21,914

 

 

10,521

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments, contingent
liabilities and pledges

 

 

16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share capital

 

 

17

 

 

2,451

 

 

11,611

 

 

11,610

 

 

11,611

 

 

11,610

 

 

Authorized capital as at December
     31, 2002 and 2001  was
     25,000,000 shares of NIS 0.5 par
     value of  which 11,224,152 and
     11,221,152 shares were issued
     and outstanding on December
     31, 2002 and 2001 respectively

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital reserves

 

 

 

 

 

9,591

 

 

45,434

 

 

45,308

 

 

45,434

 

 

45,308

 

 

Accumulated deficit

 

 

 

 

 

(1,286)

 

 

(6,091)

 

 

(9,464)

 

 

(6,091)

 

 

(9,464)

 

 

Shares purchased at  cost

 

 

 

 

 

(216)

 

 

(1,022)

 

 

(1,022)

 

 

(1,022)

 

 

(1,022)

 

 

 

 

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

10,540

 

 

49,932

 

 

46,432

 

 

49,932

 

 

46,432

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 



 



 



 



 

 

 

 

 

 

 

 

22,409

 

 

106,162

 

 

102,632

 

 

96,704

 

 

89,023

 

 

 

 

 

 

 



 



 



 



 



 

 


/s/ Haim Schleifer

 

/s/ Rafael Aravot

 


 

Haim Schleifer

 

 

Rafael Aravot,

 

Director and Joint General Manager

 

 

Chairman of the Board and CEO

Date of approval of the financial statements:  March 30, 2003

The accompanying notes are an integral part of the financial statements.
(*) Convenience translation into U.S. Dollars

F-20




RoboGroup T.E.K. Limited

Statement of Operations

(Adjusted NIS in Thousands, Except Income per NIS 1 of Par Value of Shares)

 

 

 

 

 

 

Consolidated year ended

 

 

Company year ended

 

 

 

 

 

 

 


 

 


 

 

 

 

Note

 

 

Convenience
Translation
 into U.S.$
Dec 31,
2002
U.S.$(K)

 

 

Dec 31,
2002
NIS (K)

 

 

Dec 31,
2001
NIS (K)

 

 

Dec 31,
2000
NIS (K)

 

 

Dec 31,
2002
NIS (K)

 

 

Dec 31,
 2001
NIS (K)

 

 

Dec 31,
2000
NIS (K)

 

 

 

 

 

 

 


 

 


 

 


 

 


 

 


 

 


 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

22

 

 

18,539

 

 

87,819

 

 

87,597

 

 

67,952

 

 

39,559

 

 

24,398

 

 

26,819

 

Cost of revenues

 

 

23

 

 

8,911

 

 

42,210

 

 

52,281

 

 

38,593

 

 

19,374

 

 

13,164

 

 

13,469

 

 

 

 

 

 

 


 

 


 

 


 

 


 

 


 

 


 

 


 

Gross profit

 

 

 

 

 

9,628

 

 

45,609

 

 

35,316

 

 

29,359

 

 

20,185

 

 

11,234

 

 

13,350

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development
expenses, net

 

 

24

 

 

2,745

 

 

13,001

 

 

12,576

 

 

7,154

 

 

3,062

 

 

3,811

 

 

4,302

 

Marketing and selling expenses

 

 

24

 

 

3,064

 

 

14,514

 

 

16,136

 

 

10,864

 

 

3,599

 

 

3,441

 

 

3,136

 

Administrative and general
expenses

 

 

24

 

 

2,933

 

 

13,893

 

 

12,844

 

 

10,390

 

 

7,566

 

 

7,579

 

 

6,950

 

 

 

 

 

 

 


 

 


 

 


 

 


 

 


 

 


 

 


 

 

 

 

 

 

 

8,742

 

 

41,408

 

 

41,556

 

 

28,408

 

 

14,227

 

 

14,831

 

 

14,388

 

 

 

 

 

 

 


 

 


 

 


 

 


 

 


 

 


 

 


 

Operating income (loss)

 

 

 

 

 

886

 

 

4,201

 

 

(6,240)

 

 

951

 

 

5,958

 

 

(3,597)

 

 

(1,038)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial income (expenses), net

 

 

24

 

 

(302)

 

 

(1,429)

 

 

1,962

 

 

1,482

 

 

(2,146)

 

 

3,079

 

 

52

 

Other expenses income, net

 

 

24

 

 

353

 

 

1,672

 

 

2,755

 

 

1,438

 

 

2,171

 

 

2,790

 

 

3,093

 

 

 

 

 

 

 


 

 


 

 


 

 


 

 


 

 


 

 


 

Income before taxes
on income

 

 

 

 

 

937

 

 

4,444

 

 

(1,523)

 

 

3,871

 

 

5,983

 

 

(2,272)

 

 

2,107

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxes on income

 

 

25

 

 

226

 

 

1,071

 

 

905

 

 

566

 

 

 

 

533

 

 

 

 

 

 

 

 

 


 

 


 

 


 

 


 

 


 

 


 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before
Company’s share of operating
results of Investee companies

 

 

 

 

 

711

 

 

3,373

 

 

(2,428)

 

 

3,305

 

 

5,983

 

 

1,739

 

 

2,107

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company’s share of (losses)
income of Investee companies

 

 

 

 

 

-

 

 

-

 

 

-

 

 

(1,034)

 

 

(2,610)

 

 

(4,167)

 

 

164

 

 

 

 

 

 

 


 

 


 

 


 

 


 

 


 

 


 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before accumulated
effect for prior years because of
changes in accounting policy

 

 

 

 

 

711

 

 

3,373

 

 

(2,428)

 

 

2,271

 

 

3,373

 

 

(2,428)

 

 

2,271

 

 

 

 

 

 

 


 

 


 

 


 

 


 

 


 

 


 

 


 

Accumulated effect for prior
years because of changes in
accounting policy

 

 

 

 

 

-

 

 

-

 

 

-

 

 

(2,182)

 

 

-

 

 

-

 

 

(2,182)

 

 

 

 

 

 

 


 

 


 

 


 

 


 

 


 

 


 

 


 

Net income (loss)

 

 

 

 

 

711

 

 

3,373

 

 

(2,428)

 

 

89

 

 

3,373

 

 

(2,428)

 

 

89

 

 

 

 

 

 

 


 

 


 

 


 

 


 

 


 

 


 

 


 

Net income (loss) per share
before accumulated effect for
prior years because of changes
in accounting policy

 

 

 

 

 

0.07

 

 

0.31

 

 

(0.21)

 

 

0.21

 

 

0.31

 

 

(0.21)

 

 

0.21

 

 

 

 

 

 

 


 

 


 

 


 

 


 

 


 

 


 

 


 

Net income (loss) per share

 

 

26

 

 

0.07

 

 

0.31

 

 

(0.21)

 

 

0.01

 

 

0.31

 

 

(0.21)

 

 

0.01

 

 

 

 

 

 

 


 

 


 

 


 

 


 

 


 

 


 

 


 

(*) Convenience translation into U.S. Dollars
The accompanying notes are an integral part of the financial statements.

F-21




RoboGroup T.E.K. Limited

Statement of Changes in Shareholders’ Equity

(Adjusted NIS in Thousands, to December 2002)

 

Number of
shares

 

Share capital
NIS

 

Premium
on shares
NIS

 

Capital
reserves
NIS

 

Shares
purchase cost
& Assigned
Loans
guaranteed by
company’s
shares

 

Accumulated
earnings
(deficit)
NIS

 

Total
NIS

 


 


 


 


 


 


 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2000

10,255,292

 

11,401

 

32,928

 

1,908

 

(2,610)

 

(7,125)

 

36,502

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on company’s shares
acquisition  (Note 17)

90,539

 

-

 

4,154

 

-

 

186

 

-

 

4,340

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of shares

120,000

 

65

 

5,215

 

-

 

-

 

-

 

5,280

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of options

231,800

 

126

 

507

 

-

 

-

 

-

 

633

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital fund due to surplus
from waiver of employee
benefits provisions by an
associated party

-

 

-

 

-

 

396

 

-

 

-

 

396

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Repayment of a loan for the
acquisition of shares

-

 

-

 

-

 

-

 

195

 

-

 

195

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

-

 

-

 

-

 

-

 

-

 

89

 

89

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 


 


 


 


 


 


Balance at December 31, 2000

10,697,631

 

11,592

 

42,804

 

2,304

 

(2,229)

 

(7,036)

 

47,435

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of options

30,200

 

18

 

59

 

-

 

-

 

-

 

77

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Repayment of a loan for the
acquisition of shares

-

 

-

 

141

 

-

 

1,207

 

-

 

1,348

Loss

-

 

-

 

-

 

-

 

-

 

(2,428)

 

(2,428)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 


 


 


 


 


 


Balance at December 31, 2001

10,727,831

 

11,610

 

43,004

 

2,304

 

(1,022)

 

(9,464)

 

46,432

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of options

3,000

 

1

 

4

 

-

 

-

 

-

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments on translation
of financial statement of an
autonomous consolidated
company

-

 

-

 

-

 

122

 

-

 

-

 

122

Net income

-

 

-

 

-

 

-

 

-

 

3,373

 

3,373

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 


 


 


 


 


 


Balance at December 31, 2002

10,730,831

 

11,611

 

43,008

 

2,426

 

(1,022)

 

(6,091)

 

49,932

 


 


 


 


 


 


 


The accompanying notes are an integral part of the financial statements.

F-22




RoboGroup T.E.K. Limited

Statement of Cash Flow

(Adjusted NIS in Thousands, to December 2002)

 

 

Consolidated year ended

 

Company year ended

 

 


 


 

 

Convenience Translation into U.S.$
Dec 31, 2002
U.S.$ (K)

 

Dec 31, 2002
NIS (K)

 

Dec 31, 2001
NIS (K)

 

Dec 31, 2000
NIS (K)

 

Dec 31, 2002
NIS (K)

 

Dec 31, 2001
NIS (K)

 

Dec 31, 2000
NIS (K)

 

 

 


 


 


 


 


 


 


 

Cash flows from current operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income  (loss)

 

711

 

3,373

 

(2,428)

 

89

 

3,373

 

(2,428)

 

89

 

Adjustments to reconcile net income to
net cash flows derived from current
operations (
Appendix A):

 

2,168

 

10,268

 

(2,081)

 

9,042

 

6,051

 

7,795

 

5,605

 

 

 


 


 


 


 


 


 


 

Net cash derived from current
operations  (applied to current
operations)

 

2,879

 

13,641

 

(4,509)

 

9,131

 

9,424

 

5,367

 

5,694

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows applied to investment
operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit given to consolidated
Companies

 

-

 

-

 

-

 

-

 

-

 

(10,061)

 

(12,127)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition of an operation
(Appendix D)

 

(130)

 

(617)

 

-

 

(10,831)

 

(617)

 

-

 

-

 

Investments in other companies

 

-

 

-

 

-

 

(661)

 

-

 

(430)

 

(857)

 

Acquisition of fixed assets

 

(467)

 

(2,213)

 

(2,800)

 

(8,520)

 

(2,046)

 

(1,848)

 

(7,405)

 

Proceeds from sales of fixed assets

 

119

 

563

 

190

 

668

 

1,383

 

-

 

668

 

Repayment from subsidiaries

 

-

 

-

 

-

 

-

 

1,339

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sale (Acquisition)  of short-term
investments

 

318

 

1,505

 

-

 

(64)

 

1,505

 

-

 

(64)

 

Deposit in provident fund for directors

 

-

 

-

 

(2,735)

 

-

 

-

 

(2,735)

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment in a partially consolidated
company, fully consolidated for the first
time (Appendix C)

 

-

 

-

 

-

 

(78)

 

-

 

-

 

(78)

 

 

 


 


 


 


 


 


 


 

Cash net derived from  (applied to)
investment operations

 

(160)

 

(762)

 

(5,345)

 

(19,486)

 

1,564

 

(15,074)

 

(19,863)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows derived from financing
operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (decrease) in short term credit
from banks, net

 

(73)

 

(348)

 

6,680

 

2,754

 

(393)

 

6,825

 

2,596

 

Long-term loans received

 

164

 

780

 

-

 

6,501

 

780

 

-

 

6,501

 

Repayment of  long –term loans

 

-

 

-

 

(2,382)

 

(2,292)

 

-

 

(2,354)

 

(2,261)

 

Consideration from share  issuance &
company’s sale of shares 

 

-

 

-

 

142

 

9,619

 

-

 

-

 

9,619

 

Loan repayment by interested parties to
acquire shares in the Company

 

-

 

-

 

1,207

 

195

 

-

 

1,207

 

195

 

Exercise of options by employees

 

1

 

4

 

77

 

510

 

4

 

77

 

510

 

 

 


 


 


 


 


 


 


 

Cash flows derived from financing
operations

 

92

 

436

 

5,724

 

17,287

 

391

 

5,755

 

17,160

 

 

 


 


 


 


 


 


 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (decrease) in cash and
cash equivalents

 

2,811

 

13,315

 

(4,130)

 

6,932

 

11,379

 

(3,952)

 

2,991

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at the
beginning of the year

 

2,424

 

11,487

 

15,617

 

8,685

 

5,146

 

9,098

 

6,107

 

 

 


 


 


 


 


 


 


 

Cash and cash equivalents at the
end of the year

 

5,235

 

24,802

 

11,487

 

15,617

 

16,525

 

5,146

 

9,098

 

 

 


 


 


 


 


 


 


 

(*) Convenience translation into U.S. Dollars

The accompanying notes are an integral part of the financial statements.

F-23



RoboGroup T.E.K. Limited

Statement of Cash Flow (Adjusted NIS in Thousands, to December 2002)

Appendix A: Adjustments to reconcile cash flows derived from current operations:

Consolidated year ended

Company year ended



     

Convenience
Translation
into U.S.$
Dec 31, 2002
U.S.$ (K)

   

Dec 31, 2002
NIS (K)

   

Dec 31, 2001
NIS (K)

   

Dec 31, 2000
NIS (K)

   

Dec 31, 2002
NIS (K)

   

Dec 31, 2001
NIS (K)

   

Dec 31, 2000
NIS (K)

 








Income and expenses not involving cash flows:

Company’s share in loss (income) from Investee companies

-

-

-

1,036

2,610

4,167

(164)

 

Depreciation and amortization

578

2,737

2,570

2,561

1,697

1,793

1,577

 

Increase (decrease) in liability for termination of employee/employer relationship

(100)

(476)

(18)

161

(548)

(99)

185

 

Write-down of loans

145

687

(513)

(1,269)

704

(320)

(943)

 

Decrease (increase) in value of

negotiable securities

36

169

(84)

798

169

(84)

798

 

Decrease (increase) in deferred tax receivable

(4)

(18)

(68)

(758)

2

-

-

 

Miscellaneous

19

90

-

124

28

-

118








674

3,189

1,887

2,653

4,662

5,457

1,571

Changes in assets and liabilities:

    

Decrease (increase) in trade
receivables

1,122

5,316

(4,663)

3,560

(3,272)

867

891

 

Decrease (increase) in debit balances
of consolidated companies

-

-

-

147

(578)

(512)

242

 

Decrease (increase in other
receivables and debit balances

357

1,693

(49)

322

1,473

1,360

2,326

 

Decrease (increase) in inventories

(**)147

(**)694

5,319

(4,254)

139

1,598

(1,687)

 

Increase (decrease) in trade payables

(514)

(2,435)

(5,361)

4,254

811

(849)

1,190

 

Increase (decrease) in other payables and  credit balances

382

1,811

786

2,360

2,816

(126)

1,072








1,494

7,079

(3,968)

6,389

1,389

2,338

4,034








2,168

10,268

(2,081)

9,042

6,051

7,795

5,605








Appendix B: Non-monetary events

Conversion of loans from long-term to short-term

-

-

10,946

-

-

10,946

-








Conversion of loans from short-term to long-term

2,823

13,374

-

-

13,374

-

-








A consolidated company converted a loan of  NIS 12,036 thousands to capital on January, 1 2002

(*)

Convenience translation into U.S. Dollars

(**)

Reclassified

The accompanying notes are an integral part of the financial statements.

F-24




RoboGroup T.E.K. Limited

Statement of Cash Flow (Adjusted NIS in Thousands, to December 2002)

Appendix C:

Investment in a related consolidated company that became fully consolidated  for the first time.


 

 

 

Consolidated
For year ended
December 31,2000

 

 

 


 

 

 

NIS (K)

 

 

 


 

Working capital net

 

308

 

Fixed assets

 

(162)

 

Long Term obligation

 

(26)

 

Goodwill

 

(198)

 

 

 


 

 

 

(78)

 

 

 


Appendix D:   Activities Acquisition

 

 

 

Consolidated
For year ended
December 31,

 

 

 


 

 

 

2002
NIS (K)

 

2000
NIS (K)

 

 

 


 


 

Working capital net

 

(285)

 

(9,906)

 

Other assets

 

(332)

 

-

 

Fixed assets

 

-

 

(562)

 

Goodwill

 

-

 

(363)

 

 

 


 


 

 

 

(617)

 

(10,831)

 

 

 


 


The accompanying notes are an integral part of the financial statements

F-25



RoboGroup T.E.K. Limited

 

Notes to Financial Statements

(Adjusted NIS in Thousands, to December 2002)


Note 1 – General

 

A.

RoboGroup T.E.K. Limited was incorporated in 1982 under the name of Eshed Robotec (1982) Ltd. The Company changed its name to its current name in May 2001. RoboGroup T.E.K. Limited is engaged in the development, manufacture and marketing of robotic and other products intended for training in industrial manufacturing technologies, including remote learning over the internet (e-learning). The Company has a number of Investee companies, the principal objects of which are marketing the Company’s products, marketing products in the fields of science, technology and computerization in the education market, production and marketing of computerized numerical control (CNC) machines for training and industry and software for the planning and the production by computer (CAD/CAM), development and marketing of new industrial technologies in the field of industrial motion control, and the development of a technology to shorten significantly the time taken to access and extract data from the memory of a computer (see Appendix to the Financial Statements).

 

B. Definitions

 

 

 

 

In these Financial Statements:

 

 

 

The Company

RoboGroup T.E.K. Limited.

 

 

 

 

Consolidated companies

Companies which are 70%-100% owned and controlled by the Company.

 

 

 

 

Proportionately consolidated

Jointly owned companies in which no shareholder has complete control and in which the Company has 50% ownership

 

 

 

 

Affiliated company

A company, not including a consolidated company or a proportionately consolidated company, the Company’s investment in which is included in the Company’s Financial Statements on an equity value basis.

 

 

 

 

Investee companies

Wholly and proportionately consolidated companies and affiliated companies.

 

 

 

 

Interested parties and Affiliates

As defined by the Israeli Securities Regulations (Preparation of Annual Financial Statements), 1993 and in Opinion No.29 of The Institute of Certified Public Accountants in Israel, respectively.

 

 

C.

Use of Estimates in Preparation of the Financial Statements

 

 

 

The preparation of Financial Statements according to generally accepted accounting principals, requires that the management prepare estimates and assumptions that effect the sums of assets and liabilities that are presented in the financial statements, on the presentation regarding conditional assets and contingent liabilities as of balance sheet dates, and the sums of income and expenses in the reported periods. The actual results may therefore differ from these estimates.

F-26



RoboGroup T.E.K. Limited

 

Notes to Financial Statements

(Adjusted NIS in Thousands, to December 2002)


Note 2 – Significant Accounting Policies

 

The principal accounting policies, which have been applied consistently with those of prior years, are as follows:

 

 

A.

  Adjusted Financial Statements

 

 

 

1. General

 

 

 

The financial statements are prepared on the basis of historical cost adjusted for changes in the general purchasing power of the Israeli currency, in accordance with an Opinion of The Institute of Certified Public Accountants in Israel.

 

 

 

Amounts in the financial statements, including comparative amounts, have been adjusted for changes in the Israeli Consumer Price Index (hereinafter – “CPI”) according to the CPI published for December 2002.

 

 

 

The term “cost” in these financial statements means cost in adjusted New Israeli Shekels (NIS).

 

 

 

The adjusted values of non-monetary items do not necessarily represent their economic values, but merely show their historical cost adjusted for changes in the purchasing power of the Israeli currency.

 

 

 

A summary of the Company’s nominal figures, on which the adjusted financial statements are based, is given in Note 27.

 

 

 

The adjusted consolidated financial statements at December 31, 2002 and for the year then ended, have been translated into U.S. dollars (hereinafter – the “dollar”) purely for the convenience of American readers. The translation was made according to the representative exchange rate of the dollar to NIS on December 31, 2002 (US$1 = NIS 4.737). The translated dollar amounts should not be construed as amounts receivable or payable in dollars or convertible into dollars.

 

 

2.

Adjustment policies and supplementary data:

 

 

 

A. Balance Sheets

 

 

 

Non-monetary items are adjusted for changes in the CPI from the month of the transaction to the month of the balance sheet. The following items are treated as non-monetary items: inventories; prepaid expenses; advances paid to suppliers, long-term investments; fixed assets; know-how and shareholders’ equity.

 

 

 

Monetary items are presented in the adjusted balance sheet in the same amounts as in the nominal value financial statements.

 

 

 

The equity value of the investment in affiliated companies is determined according to the adjusted financial statements of those companies.

F-27



RoboGroup T.E.K. Limited

Notes to Financial Statements
(Adjusted NIS in Thousands, to December 2002)

Note 2 - Significant Accounting Policies (cont’d)

 

 

2.

Adjustment policies and supplementary data (cont’d)

 

 

 

B. Statements of Operations:

 

 

 

Items in the statements of operations are adjusted for changes in the CPI as follows:

 

 

 

Amounts relating to non-monetary items (e.g. depreciation and changes in inventories) and certain provisions (e.g. liability for termination of employee/employer relationship) are adjusted on the same basis as the related balance sheet item.

 

 

 

Other revenue and expense items, except for financing items, are adjusted on the basis of changes in the CPI between the date of the transaction and balance sheet date.

 

 

 

The net financing item is separated from the other revenue and expense items and is expressed as real financing revenues and expenses, including the write-down of monetary items.

 

 

B.

  Principles of Consolidation

 

 

 

The consolidated financial statements include the financial statements of the Company and those of its subsidiaries (consolidated companies). These financial statements also include the Company’s portion (mainly 50%) of the assets, liabilities, income and expenses of companies owned jointly.

 

 

 

Significant inter-company balances and transactions (including unrealized internal profits) have been eliminated for the purpose of consolidation.

 

 

C.

  Recognition of Income

 

 

 

Revenues from the sales of products dependent on installation are recognized on the conclusion of the installation. For contracts under which the Company is entitled to revenue after the execution of defined stages of the transaction without a liability to complete, the revenue is recognized with the entitling delivery. Revenues from the sales of shelf products are recognized on delivery to the customer. Revenues from the execution of work ordered are recognized on its completion and only when there is no significant uncertainty of the customers’ acceptance of the goods and the receipt of the consideration.

 

 

 

Revenues from development services are recognized upon completion of the development, and in accordance with the terms of the related contracts.

 

 

 

Revenues from the grant of production licenses are recognized upon fulfilling the terms of the commitments under the contract.

 

 

 

Revenues from the sale of software rights are recognized when the rights are transferred to the customer, when payment has been determined, collection is probable and the Company has no liabilities due to the sale.

 

 

 

If substantial commitments exist for additional performance, such as software development, software adjustment, integration or installation, revenues are usually recognized in accordance with the percentage of completion, based on an estimate of the proportionate part of the work that has been performed.

F-28



RoboGroup T.E.K. Limited

Notes to Financial Statements
(Adjusted NIS in Thousands, to December 2002)

Note 2 - Significant Accounting Policies (cont’d)

 

 

D.

  Cash and Cash Equivalents

 

 

 

Cash and cash equivalents include cash balances and deposits with banks which have original maturities of three months or less.

 

 

E.

  Negotiable Securities

 

 

 

Securities are held for the short term as marketable securities and are stated at market value. Changes in value are included in other income and expenses.

 

 

 

The Company’s shares that were bought by the Company and by consolidated companies (treasury shares) are presented as a deduction from shareholders’ equity.

 

 

F.

  Inventories

 

 

 

Inventories are stated at the lower of cost or market. Cost is determined as follows:

 

 

 

Raw materials – by the moving average method. Work in progress and finished products: The raw materials component - by the moving average method.

 

 

 

Labor and production overheads component – on the basis of actual manufacturing costs.

 

 

 

Bought-in products – by the “first in, first out” method.

 

 

G.

  Investments in Investees and Other Companies

 

 

 

The investments in Investee companies are stated in the Company’s financial statements on an equity value basis.

 

 

 

The excess of cost of the investment in an Investee company over its net equity value on acquisition, which is not directly attributable, represents goodwill and is amortized over a period of three to ten years.

 

 

 

Investments in other companies, held as long-term investments, are presented at cost which, according to a management estimate, does not exceed their fair value.

 

 

H.

  Translation of Foreign Currency

 

 

 

Until December 31, 2001, all the consolidated companies operating abroad were an extension of the Company. Accordingly, their assets and liabilities has been translated into NIS at the exchange rates in effect on balance sheet date, except for non-monetary items which were translated at historical rates and adjusted for changes in the CPI.

 

 

 

Revenue and expense items were translated at the average monthly exchange rate in effect at the time of the transaction and adjusted for changes in the CPI.

 

 

 

Starting in 2002, because of changes in the nature of activity of a consolidated company abroad due to, among other things, the receipt of a commitment from banks in its jurisdiction to be given credit lines, and the growing trend an increase in the consolidated company’s activities that refer to output not originating from the parent company, the consolidated company became, in practice, an autonomous entity, and the U.S. dollar became its functional currency. Therefore, the subsidiary’s financial statements as of December 31, 2002 and for the year ending on that date have been translated according to closing rates, and translation differences in the sum of approximately NIS 122 thousands and have been attributed to a translation of foreign currency differences capital fund.

F-29



RoboGroup T.E.K. Limited

Notes to Financial Statements
(Adjusted NIS in Thousands, to December 2002)

Note 2 - Significant Accounting Policies (cont’d)

 

 

I.

  Customers  -  Allowance for doubtful debts

 

 

 

Provision for doubtful debts has been calculated on a specific basis, in respect to debts whose collection is in doubt.

 

 

J.

  Fixed Assets

 

 

 

Fixed assets are stated at cost. Company manufactured assets are valued at the cost of finished products of the same type less accumulated depreciation.

 

 

 

Financing costs of credit lines opened for financing the purchase of the building, in the period prior to its use, have been capitalized.

 

 

 

Depreciation is calculated according to the straight line method at the following rates, which are considered to be adequate to the depreciation of the assets over the course of their estimated useful lives:

     

               

 

 

%

   

                                        

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

Machinery and equipment (mainly 20%)

 

10-20

 

 

 

 

Office equipment and furniture (mainly 6%)

 

6-10

 

 

 

 

Computers and computerized equipment (mainly 33%)

 

20-33

 

 

 

 

Vehicles (mainly 20%)

 

15-20

 

 

 

 

Building  (mainly 2%)

 

2-4

 

 

K.

  Intangible Property

 

 

 

Intangible property includes mainly goodwill, know-how and rights to products. Goodwill represents the excess of cost of the investments in businesses and consolidated companies over their fair value at acquisition, amortized at annual rates over a period of three to ten years. Know-how and rights to products are amortized according to the straight line method on the basis of their estimated useful lifetime, which is approximately three years.

 

 

L.

  Deferred Taxes

 

 

 

Deferred taxes are based on timing differences between the reported amounts of assets and liabilities and the amounts taken into account in the determination of the company’s taxable income. The deferred tax is calculated according to the liability method. In this respect, the Company recognizes tax benefits receivable where the expectation of realization is more likely than not. Deferred tax is calculated at the tax rates which are expected to be in effect at the time of realization, as far as is known at the time of the preparation of the financial statements.

F-30



RoboGroup T.E.K. Limited

Notes to Financial Statements
(Adjusted NIS in Thousands, to December 2002)

Note 2 - Significant Accounting Policies (cont’d)

 

 

 

L. Deferred Taxes (cont’d)

 

 

 

The Company and a proportionately consolidated company have surpluses future tax benefits emanating from tax exempt income as an “approved enterprise”. The distribution of a dividend out of such income would give rise to the imposition of corporation tax at the rate of 20% in respect to that income. If such dividends are distributed, tax expenses will be recorded in the statement of operations. It is the intention of the Company and the proportionately consolidated company to reinvest its tax exempt income. Accordingly, there is no provision for deferred taxes in respect of tax exempt income.

 

 

 

In the calculation of deferred taxes, taxes which might be imposed upon the distribution of dividends by proportionately consolidated companies were not taken into account, because it is the Company’s policy not to distribute dividends which would increase the group’s tax liability.

 

 

M.

  Research and Development Costs

 

 

 

Research and development costs are charged to income as incurred and related grants are deducted from the related cost on an accrual basis.

 

 

N.

  Product Warranty

 

 

 

The provision is calculated specifically for the obligation relating to each individual product sold and usually for a period of one year from the date of sale.

 

 

O.

  Foreign Currency Hedging Transactions

 

 

 

The Company engages in forward foreign currency transactions in order to minimize the risks inherent in changes in exchange rates in respect of commitments to sell products in currencies other than U.S. or Israeli. Profits or losses arising from such changes in exchange rates are recorded in the statement of operations, as incurred, and the premium or discount resulting from such transactions is amortized over the term of the contract.

 

 

 

The Company has implemented the directives of FAS 133 and FAS 138, according to which any financial derivatives should be stated in the assets and liabilities of a balance sheet on the basis of fair value.

 

 

 

There has not been any material activity in any financial derivatives since FAS 133 and FAS 138 were implemented.

 

 

P.

  Options to Employees

 

 

 

The Company has adopted U.S. Opinion APB 25 for the accounting treatment for a share option program for employees and director-shareholders.

 

 

 

Accordingly, Note 28 gives proforma data had the Company chosen to adopt U.S. Statement FAS 123 for the accounting treatment of benefits inherent in the above mentioned program.

F-31



RoboGroup T.E.K. Limited

Notes to Financial Statements
(Adjusted NIS in Thousands, to December 2002)

Note 2 - Significant Accounting Policies (cont’d)

 

 

Q.

  Changes in Accounting Policy for the Recognition of Income in the Statement of Operations

 

 

 

In December 1999, the SEC published SAB 101 “The Recognition of Income in Financial Statements” (hereinafter – the Standard), which summarized the  SEC’s commentaries regarding the application of generally accepted accounting principles with respect to the recognition of income in financial statements. The Company had initially adopted this Standard in its financial statements for the year ended December 31, 2001. The main effect on the Company due to adopting the Standard relates to the deferral of the recognition of income from the sale of some of the Company’s products until the date of their installation. Prior to the publication of the Standard, the Company recognized the income from these products on delivery to the customer. The change in accounting treatment is manifested in the statement of operations in the year 2000 by an accumulated effect at the beginning of the year, relating to prior years.

 

 

R.

  Earnings Per Share

 

 

 

The basic earnings per share are calculated on the basis of a weighted average of the issued and paid-up shares during the year, with no accounting for possible dilution.

 

 

 

The fully diluted earnings per share include the effect of a possible dilution from options given to employees.

 

 

S.

  Reclassification

 

 

 

Certain comparative figures have been reclassified in order to adjust the presentation of data in the reported year.

 

 

T.

  Application of New Accounting Standards and their Effect on the Financial Statements

 

 

 

In October 2001 the Israel Accounting Standards Board issued Israel Accounting Standard 12 which deals with discontinuing the adjustment of financial statements and Israel Accounting Standard 13 concerning the effect of changes in the rates of exchange of foreign currencies. Israel Accounting Standard 14, which deals with interim financial reporting, was published in August 2002, and Israel Accounting Standard 15, which concerns the impairment of assets, was published in December 2002.

 

 

 

Israel Accounting Standard 12 deals with discontinuing the adjustment of financial statements to inflation in Israel. Pursuant to this standard, the adjustment of financial statements to inflation in Israel will be discontinued as of January 1, 2003. The Company will continue to draw up adjusted financial statements until December 31, 2002 , pursuant to Opinion 36 of the Institute of Certified Public Accountants in Israel. The adjusted figures in the financial statements as of December 31, 2002 shall be the basis for financial statements in nominal terms as of January 1, 2003 ..

 

 

 

Israel Accounting Standard 13 permits a company  to continue adjusting its  financial statements to changes in foreign currency exchange rates pursuant to Section 29(a) of Opinion 36 of the Institute of Certified Public Accountants in Israel, until the Israel Accounting Standards Board publishes a new standard on the subject. This standard requires a disclosure of the reasons for the presentation of the financial statements in a foreign currency. The standard further requires a disclosure of the reasons for any change in the reporting currency.

F-32



RoboGroup T.E.K. Limited

Notes to Financial Statements
(Adjusted NIS in Thousands, to December 2002)

Note 2 - Significant Accounting Policies (cont’d)

 

 

 

On December 31, 2002, the Israel Accounting Standards Board decided, in Standard 17, to defer the effective dates of Standards 12 and 13 to January 1, 2004.

 

 

 

The objective of Standard 14, which deals with interim financial reporting, is to prescribe the minimum content of an interim financial report and to prescribe the principles for recognition and measurement in the financial statements for an interim period. This Standard, which is based on International Accounting Standard (IAS) No. 34, Interim Financial Reporting, supersedes Opinion 43 issued by the Institute of Certified Public Accountants in Israel, Interim Financial Reporting, and Opinion 60 which amends Opinion 43 with regard to the elimination of disclosures on nominal figures in interim financial statements. This Standard becomes operative for financial statements covering periods beginning on or after January 1, 2003.

 

 

 

Standard 15, which concerns the impairment of assets, is based on IAS No. 36, and prescribes the accounting treatment of an impairment of assets and of a reversal of such impairment, including investments in joint ventures that are not subsidiaries, goodwill which derives from the acquisition of subsidiaries and fair value adjustments. The Standard applies to financial statements for periods beginning on or after January 1, 2003. The effective date of Standard 15 was deferred by the Israel Accounting Standards Board to February 2, 2003.

 

 

 

In the Company’s estimation, the new accounting standards specified above will have no material effect on its results of operations, financial condition and cash flows.

 

 

U.

  Exchange Rates and Basis of Linkage

 

 

 

Balances in, or linked to, foreign currency are stated in the financial statements at the representative rates of exchange in effect at balance sheet date, as published by The Bank of Israel. Balances linked to the CPI are included in the balance sheets according to the latest index published prior to balance sheet date.

 

 

 

Hereunder are details of the index and dollar exchange rates:

     

              

 

   

Dollar Exchange Rates

  

Index

                

 

 

 

 


 


 

 

 

 

 

NIS

 

Points

 

 

 

 

 


 


 

 

 

 

 

 

 

 

 

 

 

At December 31, 2002

 

4.737

 

115.1

 

 

 

At December 31, 2001

 

4.416

 

108.1

 

 

 

At December 31, 2000

 

4.041

 

106.6

 

 

 

Rates of increase (decrease) in the years

 

in percentage %

 

 

 


 


 

 

 

2002

 

7.3%

 

6.48%

 

 

 

2001

 

9.2%

 

1.41%

 

 

 

2000

 

(2.7)%

 

-

 

F-33



RoboGroup T.E.K. Limited

Notes to Financial Statements
(Adjusted NIS in Thousands, to December 2002)


Note 3 -

Short-Term Investments


A. Composition


 

 

 

Consolidated and Company

 

     
 
 
 

 

 

 

Dec 31,  2002
U.S.$ (K) *

 

Dec 31, 2002
NIS (K)

 

Dec 31, 2001
NIS (K)

 

 

 

 


 


 


 

 

 

 

 

 

 

 

 

 

 

Negotiable securities

 

 

 

 

 

 

 

 

Shares

 

57

 

268

 

383

 

 

Bonds

 

22

 

105

 

439

 

 

Mutual participation funds

 

-

 

-

 

767

 

 

 

 


 


 


 

 

 

 

79

 

373

 

1,589

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

26

 

125

 

579

 

 

 

 


 


 


 

 

Total

 

105

 

498

 

2,168

 

 

 

 


 


 


 


B. Pledges - see Note 16 C



Note 4 -

Trade Receivables


 

 

Consolidated

 

Company

 

 

 


 


 

 

 

Dec 31,  2002
U.S.$ (K) *

 

Dec 31, 2002
NIS (K)

 

Dec 31, 2001
NIS  (K)

 

Dec 31, 2002
NIS (K)

 

Dec 31, 2001
NIS (K)

 

 

 


 


 


 


 


 

Customers:

 

 

 

 

 

 

 

 

 

 

 

Open accounts

 

4,355

 

20,625

 

25,727

 

6,311

 

3,007

 

Checks for collection

 

176

 

835

 

666

 

487

 

282

 

 

 


 


 


 


 


 

Total trade receivables

 

4,531

 

21,460

 

26,391

 

6,798

 

3,289

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Allowance for doubtful debts

 

(306)

 

(1,448)

 

(1,235)

 

(185)

 

(121)

 

 

 


 


 


 


 


 

 

 

4,225

 

20,012

 

25,156

 

6,613

 

3,168

 

 

 


 


 


 


 


 


(*) Convenience translation into U.S.$

F-34




RoboGroup T.E.K. Limited

Notes to Financial Statements
(Adjusted NIS in Thousands, to December 2002)


Note 5 -

Other Receivables and Debit Balances


 

 

Consolidated

 

Company

 

 

 


 


 

 

 

Dec 31, 2002
U.S.$ (K) *

 

Dec 31, 2002
NIS (K)

 

Dec 31, 2001
NIS  (K)

 

Dec 31, 2002
NIS (K)

 

Dec 31, 2001
NIS (K)

 

 

 


 


 


 


 


 

Loans to employees

 

23

 

107

 

164

 

54

 

152

 

Institutions

 

39

 

368

 

202

 

520

 

63

 

Deferred taxes

 

64

 

307

 

428

 

-

 

-

 

Consolidated companies

 

-

 

-

 

-

 

3,729

 

3,151

 

Others

 

414

 

1,778

 

3,459

 

1,375

 

3,207

 

 

 


 


 


 


 


 

 

 

540

 

2,560

 

4,253

 

5,678

 

6,573

 

 

 


 


 


 


 


 



Note 6 -

Inventories


 

 

Consolidated

 

Company

 

 

 


 


 

 

 

Dec 31,  2002
U.S.$(K) *

 

Dec 31, 2002
NIS (K)

 

Dec 31, 2001
NIS (K)

 

Dec 31, 2002
NIS (K)

 

Dec 31, 2001
NIS (K)

 

 

 


 


 


 


 


 

 

 

 

 

 

 

 

 

 

 

 

 

Raw materials

 

1,993

 

9,443

 

9,075

 

2,018

 

2,390

 

Work in process

 

516

 

2,443

 

1,234

 

635

 

194

 

Finished products

 

671

 

3,179

 

5,018

 

1,785

 

1,939

 

Bought-in finished products

 

172

 

815

 

1,194

 

-

 

-

 

 

 


 


 


 


 


 

 

 

3,352

 

15,880

 

16,521

 

4,438

 

4,523

 

 

 


 


 


 


 


 


(*) Convenience Translation into U.S.$

F-35



 
RoboGroup T.E.K. Limited

Notes to Financial Statements
(Adjusted NIS in Thousands, to December 2002)


Note 7 -

Investments in Investee and Other Companies


A. Composition


 

 

 

Consolidated

 

Company

 

 

 

 


 


 

 

 

 

Dec 31, 2002
U.S.$ (K) *

 

Dec 31, 2002
NIS (K)

 

Dec 31, 2001
NIS (K)

 

Dec 31, 2002
NIS (K)

 

Dec 31, 2001
NIS (K)

 

 

 

 


 


 


 


 


 

 

Investment in consolidated

 

 

 

 

 

 

 

 

 

 

 

 

companies:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of shares

 

 

 

 

 

 

 

13,759

 

1,723

 

 

Accumulated losses

 

 

 

 

 

 

 

(22,667)

 

(16,463)

 

 

 

 

 

 

 

 

 

 


 


 

 

 

 

 

 

 

 

 

 

(8,908)

 

(14,740)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term loans and debit

 

 

 

 

 

 

 

 

 

 

 

 

balances (1)

 

 

 

 

 

 

 

24,060

 

37,435

 

 

 

 

 

 

 

 

 

 


 


 

 

 

 

 

 

 

 

 

 

15,152

 

22,695

 

 

Investment in proportionally

 

 

 

 

 

 

 

 

 

 

 

 

consolidated companies

 

 

 

 

 

 

 

 

 

 

 

 

Cost of shares

 

 

 

 

 

 

 

2,912

 

2,912

 

 

Accumulated income

 

 

 

 

 

 

 

7,404

 

3,810

 

 

 

 

 

 

 

 

 

 


 


 

 

 

 

 

 

 

 

 

 

10,316

 

6,722

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment in other

 

 

 

 

 

 

 

 

 

 

 

 

companies

 

 

 

 

 

 

 

 

 

 

 

 

Cost of shares

 

23

 

110

 

110

 

110

 

110

 

 

 

 


 


 


 


 


 

 

 

 


 


 


 


 


 

 

 

 

23

 

110

 

110

 

25,578

 

29,527

 

 

 

 


 


 


 


 


 


(1)

 

Some of the balances are not linked and carry a variable interest – in 2002 approximately 14.3%.

(*)

 

Convenience translation into U.S.$

F-36



 
RoboGroup T.E.K. Limited

Notes to Financial Statements
(Adjusted NIS in Thousands, to December 2002)


Note 7 -

Investments in Investee and Other Companies (cont’d)


B. Supplementary Information


 

(1) In 2000 the Company, through a consolidated company, began establishing a company by the name of MemCall LLC (82% owned) (hereinafter: “MemCall”) that was registered in Delaware, USA in March 2001.

 

 

 

MemCall is engaged in the development of a technology which is applicable to a variety of computer systems, and which could significantly shorten the time required for the location and retrieval of data in a computer’s memory. The outcome of the new technology is expected to be the development of an el