REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Title of each class
|
Trading symbol(s)
|
Name of each exchange on which registered
|
|
|
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Large accelerated filer ☐
|
|
Non-accelerated filer ☐
|
Emerging growth company
|
|
International Financial Reporting Standards as issued
by the International Accounting Standards Board ☐
|
Other ☐
|
iv | ||
iv | ||
1 | ||
1 | ||
1 | ||
A. |
RESERVED |
|
B. |
CAPITALIZATION AND INDEBTEDNESS |
1 |
C. |
REASONS FOR THE OFFER AND USE OF PROCEEDS |
1 |
D. |
RISK FACTORS |
1 |
9 | ||
A. |
HISTORY AND DEVELOPMENT OF THE COMPANY |
9 |
B. |
BUSINESS OVERVIEW |
10 |
C. |
ORGANIZATIONAL STRUCTURE |
21 |
D. |
PROPERTY, PLANTS AND EQUIPMENT |
21 |
23 | ||
23 | ||
A. |
OPERATING RESULTS |
23 |
B. |
LIQUIDITY AND CAPITAL RESOURCES |
31 |
C. |
RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES |
34 |
D. |
TREND INFORMATION |
34 |
E. |
OFF-BALANCE SHEET ARRANGEMENTS |
34 |
35 | ||
A. |
DIRECTORS AND SENIOR MANAGEMENT |
35 |
B. |
COMPENSATION |
39 |
C. |
BOARD PRACTICES |
43 |
D. |
EMPLOYEES |
47 |
E. |
SHARE OWNERSHIP |
49 |
50 | ||
A. |
MAJOR SHAREHOLDERS |
50 |
B. |
RELATED PARTY TRANSACTIONS |
52 |
C. |
INTERESTS OF EXPERTS AND COUNSEL |
56 |
56 | ||
A. |
CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION |
56 |
B. |
SIGNIFICANT CHANGES |
57 |
57 | ||
A. |
OFFER AND LISTING DETAILS |
57 |
B. |
PLAN OF DISTRIBUTION |
57 |
C. |
MARKETS |
57 |
D. |
SELLING SHAREHOLDERS |
57 |
E. |
DILUTION |
57 |
F. |
EXPENSES OF THE ISSUE |
57 |
57 | ||
A. |
SHARE CAPITAL |
57 |
B. |
MEMORANDUM AND ARTICLES OF ASSOCIATION |
57 |
C. |
MATERIAL CONTRACTS |
65 |
D. |
EXCHANGE CONTROLS |
65 |
E. |
TAXATION |
65 |
F. |
DIVIDENDS AND PAYING AGENTS |
73 |
G. |
STATEMENT BY EXPERTS |
73 |
H. |
DOCUMENTS ON DISPLAY |
73 |
I. |
SUBSIDIARY INFORMATION |
73 |
J. |
ANNUAL REPORT TO SECURITY HOLDERS |
73 |
73 | ||
74 | ||
74 | ||
74 | ||
74 | ||
77 | ||
77 | ||
77 | ||
77 | ||
77 | ||
78 | ||
78 | ||
78 | ||
78 | ||
ITEM 16I. |
78 | |
ITEM 16J. | 79 | |
ITEM 16K. | CYBERSECURITY |
79 |
80 | ||
80 | ||
81 |
ITEM 1. |
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
ITEM 2. |
OFFER STATISTICS AND EXPECTED TIMETABLE |
ITEM 3. |
KEY INFORMATION |
◾ |
accepting vehicle location and recovery technology as a preferred security product; |
◾ |
requiring or providing a premium discount for using location and recovery services and products; and |
◾ |
mandating or encouraging use of our SVR services and telematics products, or similar
services and products, for vehicles with the same or similar threshold values and for the same or similar required duration of use.
|
◾ |
the rate of car theft or consumer concern over vehicle safety is high; |
◾ |
satisfactory radio frequencies are available to us for our RF technology, that allows us to operate our business in an uninterrupted
manner; and |
◾ |
insurance companies, car manufacturers or car owners belief in the value of vehicles justifying incurring the expenses associated
with the deployment of SVR services. |
◾ |
the gain or loss of significant orders or customers; |
◾ |
recruitment or departure of key personnel; |
◾ |
the announcement of new products or service enhancements by us or our competitors; |
◾ |
quarterly variations in our or our competitors’ results of operations; |
◾ |
announcements related to litigation; |
◾ |
changes in earnings estimates, investors’ perceptions, recommendations by securities analysts or our failure to achieve analysts’
earnings estimates; |
◾ |
developments in our industry; and |
◾ |
general market conditions and other factors unrelated to our operating performance or the operating performance of our competitors.
|
ITEM 4. |
INFORMATION ON THE COMPANY |
A. |
HISTORY AND DEVELOPMENT OF THE COMPANY |
B. |
BUSINESS OVERVIEW |
• |
the ability to locate the fleet’s vehicles; |
• |
continuous data communication with the fleet’s vehicles; |
• |
real-time vehicle status indicators: speed, distance driven, direction of travel, driver name, motion start/stop, engine start/stop,
speeding, diagnostic alerts, driver behaviour and more; |
• |
recording of determined events and analysis of data over time to improve driving and vehicle use; |
• |
remote monitoring and processing of data, such as temperature control in refrigerated or chilled compartments, time stamp, tire pressure
and heat and other complementary data; |
• |
connection to standard organization systems; |
• |
accident notification; |
• |
task management optimization. |
■ |
Base Site: a radio receiver, which includes a processor and a data computation unit to collect
and send data to and from transponders and send that data to control centers as part of the terrestrial infrastructure of the location
system; |
■ |
Control Center: a center consisting of software used to collect data from various base sites,
conduct location calculations and transmit location data to various customers and law enforcement agencies; |
■ |
GPS/GPRS-based products: navigation and tracking devices installed in vehicles; and
|
■ |
SMART: a portable transmitter installed in vehicles (including motorcycles) that sends a signal
to the base site, enabling the location of vehicles, equipment or an individual. |
Country |
|
Services offered |
|
Products sold |
Israel
|
|
SVR,
Fleet Management,
Value-added services, including:
Connected Car,
UBI |
|
Telematics Products |
Brazil
|
|
SVR,
Fleet Management,
Value-added services, including:
Connected Car |
|
Telematics Products |
|
|
|
|
|
Mexico, Ecuador, Colombia |
|
SVR,
Fleet Management, |
|
Telematics Products |
|
|
Value-added services, including: |
|
|
|
|
Connected Car |
|
|
United States |
|
SVR, |
|
Telematics Products |
|
|
Fleet Management, |
|
|
|
|
Value-added services, including: Asset protection to Auto Lenders |
|
|
Argentina
|
SVR,
Fleet Management,
Value-added services, including:
Connected Car |
Telematics Products
|
■ |
Israel: We commenced operations in Israel in 1995 and we had approximately 814,000 subscribers
as of December 31, 2023. The operations in Israel were expended through M& A transactions with local companies (following the RTH
Transaction) as well as organic growth. We operate throughout Israel in providing services through GPS/GPRS and RF based products and
services. |
◾ |
Brazil: We commenced operations in Brazil in 2000 and we had approximately 672,000 subscribers
as of December 31, 2023. The operations were expended through organic growth. We currently provide RF based products and services only
in the metropolitan areas of Sao Paulo, Campinas, Americans and Rio de Janeiro. However, we operate throughout Brazil in providing GPS/GPRS
based products and services. |
■ |
Argentina: We commenced operations in Argentina in 2002. We currently provide to our
current customers (not for new installations) RF based products and services only in the metropolitan area of Buenos Aires. However, we
also operate throughout Argentina in providing GPS/GPRS based products and services. |
■ |
United States: We commenced operations in the United States in 2000. We provide GPS/GPRS
products and services throughout the United States. |
■ |
Mexico: We acquired the operations in Mexico in September 2018 as part of the RTH Transaction.
We currently provide GPS/GPRS based products and services. |
■ |
Ecuador: We acquired the operations in Ecuador in September 2018 as part of the RTH Transaction.
We currently provide GPS/GPRS based products and services. |
■ |
Colombia: We acquired the operations in Colombia in September 2018 as part of the RTH
Transaction. We currently provide GPS/GPRS based products and services. |
◾ |
Israel. Our primary competitors in Israel are Pointer and Skylock Ltd. |
◾ |
Brazil. Brazil is a highly fragmented market with many companies selling competing products
and services (including immobilizers and other less-sophisticated vehicle security systems). Our main competitors in Brazil are Sascar,
Zatix, CEABS, Car Systems, Sat-Company, 3S. |
◾ |
Argentina. Argentina is a highly fragmented market with many companies selling competing
products and services (including immobilizers and other less-sophisticated vehicle security systems). Our main competitors in Argentina
are LoJack Corporation, Pointer Argentina S.A., Prosegur S.A. and Megatrans S.A. |
◾ |
United States. In the United States, there are several major companies offering various
theft protection and recovery products that compete with our product and service offerings, including LoJack Corporation, OnStar Corporation,
Advantage GPS/Procon Analytics, Sarekon GPS, Calamp, Spireon (which also includes SysLocate and GoldStar), PassTime, Guide Point, Icon
and I-Metrik SVR. |
◾ |
Colombia. Colombia is a highly fragmented
market. Main companies operate under the satellite/cellular infrastructure. Our main competitors are LoJack Corporation (under Detekor
Brand), Prosegur, SATRACK (Local Company). |
◾ |
Mexico. Mexico is a highly fragmented market in tracking and satellite location services,
in which there are multiple companies dedicated to providing comprehensive satellite tracking, fleet management and vehicle recovery solutions
with GPS technology through the marketing of similar devices and technologies to ours, highly specialized in fleet management. The direct
competitors are LoJack Corporation, Encontrack S.A. and Pointer Recuperación S.A. |
◾ |
Ecuador. Ecuador is highly fragmented market.
Main companies operate under the satellite/cellular infrastructure. Our main competitors
are Hunter (Lojack Corporation), Tracklink and Carsync. |
• |
Israel: Pointer Telocation, ISR, Traffilog and Skylock; |
• |
United States: GPS Insight, Trimble, Network Fleet, Street Eagle, FleetMatics, Navtrack, Teletrac,
Trim Track, FleetBoss, PassTime, Verizon, AT&T, Geotab, Fleet-Complete,Sprint, Zubie, and Spireon; |
• |
Brazil: Sascar, Zatix, CEABS, 3S and GolSat; |
• |
Argentina: LoJack Corporation, Megatrans S.A., Sitrac S.A., American Tracer, Ubicar S.A.,
Sky Cop. and YPF S.A.; |
• |
Mexico: LoJack Corporation, Encotrack, Easytrack, Geotab and Tracker; |
• |
Ecuador: Hunter (LoJack Corporation), Tracklink, Carsync and Sherlock; |
• |
Colombia: Satrack, Detector and Prosegur.
|
◾ |
erection and operating permits from the Israeli Ministry of the Environment; |
◾ |
permits from the Israeli Civil Aviation Authority, in certain cases; |
◾ |
permits from the Israeli Defence Forces; |
◾ |
approval from Israel’s Land Administration and/or from Civil Administration in the Territories, which usually also involves
payment for the land use rights; and |
◾ |
building permits from local or regional zoning authorities in Israel and Brazil. |
• |
a permit from Anatel (National Agency for Telecommunication) |
• |
a permit from IBAMA (Environment national agency) and/or state EPAs |
• |
municipal permits |
• |
a permit from the fire department; and |
• |
a permit from COMAR (aviation authorities). |
Name of Subsidiary |
|
Country of Incorporation |
|
Proportion of Ownership Interest |
|
|
|
|
|
Ituran USA Holdings Inc |
|
USA |
|
100% |
Ituran USA Inc |
|
USA |
|
85.80% |
Ituran de Argentina S.A. |
|
Argentina |
|
100% |
Ituran Sistemas de Monitoramento Ltda
|
|
Brazil |
|
98.75% |
Ituran Instalacoes Ltda |
|
Brazil |
|
98.75% |
Teleran Holding Ltda |
|
Brazil |
|
99.99% |
Ituran servicos Ltda |
|
Brazil |
|
98.75% |
E.R.M. Electronic Systems Limited |
|
Israel |
|
49.5%1
|
Mapa Mapping & Publishing Ltd |
|
Israel |
|
100% |
Ituran Spain Holding S.L |
|
Spain |
|
100% |
Ituran Road Track Monitaramento de Veiculos LTDA
|
|
Brazil |
|
100% |
Ituran Road Track Argentina, S.A. |
|
Argentina |
|
100% |
Global Telematics Solutions HK, Limited
|
|
Hong Kong |
|
100% |
Road Track De Colombia S.A.S |
|
Colombia |
|
100% |
Road Track Ecuador, S.A. |
|
Ecuador |
|
100% |
Ituran Chile S.A. |
Chile |
100% | ||
Ituran Uruguay S.A.S |
Uruguay |
100% | ||
Road Track Mexico S.A. De C.V |
|
Mexico |
|
100% |
Road Track HK Telematics Limited |
|
Hong Kong |
|
100% |
E.D.T.E – Drive Technology Ltd
|
|
Israel |
|
100% |
Ituran Tech Ltd |
|
Israel |
|
100% |
D. |
PROPERTY, PLANTS AND EQUIPMENT |
ITEM 4. A. |
UNRESOLVED STAFF COMMENTS |
ITEM 5 |
OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
A. |
OPERATING RESULTS |
2023 |
2022 |
2021 |
||||||||||
Israel |
814,000 |
738,000 |
653,000 |
|||||||||
Brazil |
672,000 |
558,000 |
453,000 |
|||||||||
Others |
766,000 |
770,000 |
775,000 |
|||||||||
|
||||||||||||
Total(1)
|
2,252,000 |
2,066,000 |
1,881,000 |
|
2023 |
2022 |
2021 |
|||||||||||||||||||||
|
Telematics
services |
Telematics
products |
Telematics
services |
Telematics
products |
Telematics
services |
Telematics
products |
||||||||||||||||||
Israel |
104.4 |
49.9 |
103.3 |
48.0 |
96.5 |
44.1 |
||||||||||||||||||
Brazil |
83.8 |
2.0 |
66.7 |
2.4 |
55.2 |
2.6 |
||||||||||||||||||
Others |
46.4 |
33.5 |
39.6 |
33.1 |
37.9 |
34.6 |
||||||||||||||||||
|
||||||||||||||||||||||||
Total(1)
|
234.6 |
85.4 |
209.6 |
83.5 |
189.6 |
81.3 |
• |
Identification of the contract, or contracts, with a customer; |
• |
Identification of the performance obligations in the contract; |
• |
Determination of the transaction price; |
• |
Allocation of the transaction price to the performance obligations in the contract; and |
• |
Recognition of revenue when, or as, we satisfy a performance obligation. |
Consolidated statements of operations data: |
2023 |
2022 |
2021 |
|||||||||
Revenues: |
||||||||||||
Telematics services |
73.3 |
71.5 |
70.0 |
|||||||||
Telematics product |
26.7 |
28.5 |
30.0 |
|||||||||
Total Revenues |
100 |
100 |
100 |
|||||||||
Cost of Revenues: |
||||||||||||
Telematics services |
30.8 |
30.8 |
30.8 |
|||||||||
Telematics products |
21.3 |
22.3 |
22.0 |
|||||||||
Total cost of revenues |
52.1 |
53.1 |
52.8 |
|||||||||
Gross profit |
47.9 |
46.9 |
47.2 |
|||||||||
Operating Expenses: |
||||||||||||
Research and development expenses |
5.3 |
5.7 |
5.2 |
|||||||||
Selling and marketing Expenses |
4.3 |
4.5 |
4.9 |
|||||||||
General and administrative expenses, net
|
17.7 |
16.6 |
17.0 |
|||||||||
Impairment of goodwill |
-- |
- |
- |
|||||||||
Impairment of intangible assets and other expenses (income), net |
-- |
- |
(0.1 |
) | ||||||||
Total operating expenses
|
27.3 |
26.8 |
27.0 |
|||||||||
Operating Income |
20.6 |
20.1 |
20.2 |
|||||||||
Other income expenses, net |
- |
- |
(0.1 |
) | ||||||||
Financing income, net |
(0.5 |
) |
(2.0 |
) |
(2.0 |
) | ||||||
Income before income tax |
20.1 |
18.1 |
18.1 |
|||||||||
Income tax |
(4.2 |
) |
(4.4 |
) |
(4.4 |
) | ||||||
Share in gains (losses) of affiliated companies, net
|
(0.2 |
) |
(0.2 |
) |
(0.1 |
) | ||||||
Net income for the year |
15.7 |
13.5 |
13.6 |
|||||||||
Less: net income attributable to non-controlling interests |
(0.7 |
) |
(0.8 |
) |
(1.0 |
) | ||||||
Net income attributable to company stockholders
|
15.0 |
12.7 |
12.6 |
Year ended December 31, |
||||||||||||||||||||||
2021 |
2022 |
2023 |
||||||||||||||||||||
Actual |
At 2020 exchange rates |
Actual |
At 2021 exchange rates |
Actual |
At 2022 exchange rates |
|||||||||||||||||
(In thousands of US$) |
||||||||||||||||||||||
270,884 |
264,507 |
293,072 |
296,752 |
319,978 |
329,420 |
|||||||||||||||||
127,838 |
125,090 |
137,562 |
139,120 |
153,161 |
158,291 |
|||||||||||||||||
54,615 |
53,595 |
58,774 |
59,218 |
65,955 |
67,422 |
B. |
LIQUIDITY AND CAPITAL RESOURCES |
1. |
Remittance tax (Impuesto a la Salida de Divisas) - Remittance tax of 5% is imposed on the transfer of money abroad in cash or through
pay checks, transfers, or courier of any nature carried out with or without the mediation of the Ecuadorian financial system, including
transfer from foreign bank accounts. Dividends are exempt from this tax, under certain considerations. |
2. |
Labor profit sharing - Although it is not considered a tax, companies are obligated to pay 15% of their pre-tax earnings to their
employees. This payment is considered a deductible expense for CIT computation purposes. |
|
Year ended December 31, |
|||||||||||
|
2023 |
2022 |
2021 |
|||||||||
|
(In thousands) |
|||||||||||
|
||||||||||||
Net cash provided by operating activities |
77,218 |
45,118 |
55,790 |
|||||||||
Net cash used in investing activities |
(17,229 |
) |
(27,354 |
) |
(18,524 |
) | ||||||
Net cash used in financing activities |
(32,934 |
) |
(36,360 |
) |
(58,666 |
) | ||||||
Effect of exchange rate changes on cash and cash equivalents |
(1,471 |
) |
(3,860 |
) |
(477 |
) | ||||||
Net increase/decrease in cash and cash equivalents |
25,584 |
(22,456 |
) |
(21,877 |
) |
C. |
RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES |
D. |
TREND INFORMATION |
E. |
OFF-BALANCE SHEET ARRANGEMENTS |
A. |
DIRECTORS AND SENIOR MANAGEMENT |
Name |
Age |
Position |
|
|
|
Izzy Sheratzky |
77 |
President and director |
Yehuda Kahane |
79 |
Director |
Ze’ev Koren |
79 |
Chairman of the Board of Directors and an independent director |
Efraim Sheratzky |
71 |
Director |
Eyal Sheratzky |
55 |
Co-Chief Executive Officer and Director |
Nir Sheratzky |
52 |
Co-Chief Executive Officer and Director |
Gil Sheratzky |
46 |
CEO of our Subsidiary, International Activity and Business Development Officer and a Director |
Yoav Kahane(1)(2) |
50 |
Director and an independent Director |
Yigal Shani |
79 |
Director |
Israel Baron (1)(2)(3) +
|
70 |
External Director |
Gidon Kotler (1)(2)(3) |
83 |
External Director |
Tal Sheratzky- Jaffa |
46 |
Director and an independent director |
Ami Saranga |
60 |
Deputy Chief Executive Officer |
Eli Kamer |
57 |
Executive Vice President, Finance; Chief Financial Officer |
Guy Aharonov |
58 |
General Counsel |
Udi Mizrahi |
52 |
Deputy Chief Executive Officer International Operation and VP of Finance |
Country of Principal Executive Offices |
Israel | ||||
Foreign Private Issuer |
Yes | ||||
Disclosure Prohibited under Home Country Law |
No | ||||
Total Number of Directors |
12 | ||||
Part I: Gender Identity |
Female |
Male |
Non-Binary |
Did Not Disclose Gender | |
Directors |
1 |
11 |
|
| |
Part II: Demographic Background |
| ||||
Underrepresented Individual in Home Country Jurisdiction |
0 | ||||
LGBTQ+ |
0 | ||||
Did Not Disclose Demographic Background |
0 |
B. |
COMPENSATION |
Management fees |
Wage |
Social components |
Car value |
Bonus (results based) |
Bonus (Share yield based) |
Total |
||||||||||||||||||||||
Compensation components (in thousand US Dollars) |
||||||||||||||||||||||||||||
Izzy Sheratzky (President) |
789 |
- |
- |
- |
1,049 |
504 |
2,342 |
|||||||||||||||||||||
Eyal Sheratzky (Co-Chief Executive Officer |
614 |
- |
- |
- |
854 |
392 |
1,860 |
|||||||||||||||||||||
Nir Sheratzky (Co-Chief Executive Officer) |
614 |
- |
- |
- |
854 |
392 |
1,860 |
|||||||||||||||||||||
Gil Sheratzky (CEO of our Subsidiary. International Activity and Business Development Officer) |
439 |
- |
- |
- |
610 |
280 |
1,329 |
|||||||||||||||||||||
Shachar Sheratzky (Vice president, head of our business division) |
208 |
38 |
23 |
233 |
- |
502 |
||||||||||||||||||||||
Total of our 5 highest paid officers $7,893,000 |
C. |
BOARD PRACTICES |
◾ |
Such majority includes at least the majority of the shares held by all non-controlling shareholders or those having personal interest
in the nomination, except personal interest which is not resulting from connections with controlling shareholders, present and voting
at such meeting; or |
◾ |
The total number of shares voted against the election of the external director and held by shareholders other than controlling shareholders
or those having personal interest in the nomination, except personal interest which is not resulting from connections with controlling
shareholders, must not exceed 2% of the shares whose holders are entitled to vote at any meeting of shareholders. |
1. |
Transaction that is neither extraordinary, nor insignificant. |
(1) |
Transaction which is higher than 4.5% of the equity of the company according to its last combined financial reports which were published
prior to the approval of the transaction. |
(2) |
Transaction that involves risks or significant exposure beyond mere monetary liabilities or obligations. |
(3) |
Transaction in which the company enters a new activity field or exits from an existing activity field. |
2. |
Insignificant transaction: |
3. |
General rules: |
(1) |
Any transaction with a controlling shareholder or any transaction that a controlling shareholder has an interest in, will be brought
before the Audit Committee, which will determine its type and decide on case by case basis on defining it as an insignificant transaction
or other kind of transaction, and will decide on its review and on its approval. |
(2) |
According to the adopted criteria, transactions with Tzivtit Insurance Agency (1998) Ltd. and with Rinat Yogev Nadlan Ltd. shall
be classified as insignificant transactions. If the extent of such transactions will remain similar during the following years, our management
shall be deemed qualified to approve such transactions and to report them to the Audit Committee. |
(3) |
Every year the criteria for classifying transactions as set up above shall be brought for re-approval by the Audit Committee.
|
◾ |
a person (or a relative of a person) who holds more than 5% of the company’s shares or voting rights; |
◾ |
a person (or a relative of a person) who has the power to appoint a director or the general manager of the company; |
◾ |
an executive officer, director or other affiliate of the company; or |
◾ |
a member of the company’s independent accounting firm. |
D. |
EMPLOYEES |
|
Year Ended December 31, |
|||||||||||
|
2023 |
2022 |
2021 |
|||||||||
By area of activity: |
||||||||||||
Control Center |
380 |
385 |
520 |
|||||||||
Research and Development |
167 |
159 |
136 |
|||||||||
Sales and Marketing |
103 |
92 |
84 |
|||||||||
Technical support and IT |
491 |
501 |
489 |
|||||||||
Finance, Administration and Management
|
321 |
356 |
375 |
|||||||||
Private enforcement and operations |
1,196 |
1,075 |
1,041 |
|||||||||
Manufacturing |
183 |
168 |
169 |
|||||||||
Total
|
2,841 |
2,736 |
2,814 |
|||||||||
|
||||||||||||
By geographic location (out of total): |
||||||||||||
Israel |
906 |
795 |
864 |
|||||||||
Brazil |
865 |
861 |
782 |
|||||||||
Others |
1,070 |
1,080 |
1,168 |
|||||||||
Total
|
2,841 |
2,736 |
2,814 |
E. |
SHARE OWNERSHIP |
Name of Director/Officer (1) |
Number of Ordinary Shares Beneficially Owned (2) |
Percentage of
beneficial ownership (3) |
|||||
Izzy Sheratzky (4)
|
4,077,317 |
20.50 |
|||||
Professor Yehuda Kahane (5)
|
1,451,137 |
7.29 |
|||||
Zeev Koren |
- |
- |
|||||
Efraim Sheratzky (6)
|
219,408 |
1.09 |
|||||
Yigal Shani (7)
|
223,052 |
1.12 |
|||||
Eyal Sheratzky |
- |
- |
|||||
Nir Sheratzky |
- |
- |
|||||
Gil Sheratzky |
- |
- |
|||||
Yoav Kahane |
- |
- |
|||||
Tal Sheratzky-Jaffa |
2,403 |
* |
0.01 |
* | |||
Israel Baron |
- |
- |
|||||
Gidon Kotler |
105 |
* |
* |
||||
Ami Saranga |
- |
- |
|||||
Eli Kamer |
- |
- |
|||||
Guy Aharonov |
- |
- |
|||||
Udi Mizrahi |
- |
- |
|||||
Shahar Sheratzky |
- |
- |
(1) |
This table includes only current directors and officers that beneficially hold our shares. |
(2) |
Beneficial ownership’ is determined in accordance with the rules of the Securities and Exchange Commission (as defined in Rule
13d – 3 under the Exchange Act) and shares deemed beneficially owned by virtue of the right of any person or group to acquire such
ordinary shares within 60 days are treated as outstanding only for the purposes of determining the percent owned by such person or group.
To our knowledge, the persons and entities named in the table above are believed to have sole voting and investment power with respect
to all ordinary shares shown as owned by them, except as described below. |
(3) |
Amounts in this column are based on 23,475,431 ordinary shares issued as of April 10, 2024, less 3,581,851 treasury shares
held by us. |
(4) |
Shares beneficially owned include: (a) 4,075,952 shares owned by Moked Ituran Ltd., which Mr. Sheratzky is deemed to beneficially
owns due to his shared voting and investment power over such shares in accordance with those certain shareholders agreement, dated May
18, 1998 as amended on September 6, 2005 and on September 17, 2014, among Moked Ituran and its shareholders, which we refer to as the
Moked Shareholders Agreement. For further information concerning the Moked Shareholders Agreement see the discussion under Item 6.A. –
Directors and Senior Management under the caption “Shareholders Agreement and Articles of Association of Moked Ituran Ltd.”
above; (b) 1,365 shares that are directly held by Mr. Sheratzky’s wife, Maddie Sheratzky. |
(5) |
Shares beneficially owned include: (a) 13,264 shares directly owned by Professor Kahane jointly with his wife, Rivka Kahane;(b) 5,782
shares owned by Yehuda Kahane Ltd., which Professor Kahane may be considered to beneficially own by virtue of his shared voting and investment
control of the company through his 50% shareholdings thereof, the other 50% being owned by his wife, Rivka Kahane; and (c) 1,432,091 shares
owned by Moked Ituran Ltd., which Professor Kahane may be considered to beneficially own by virtue of his right to direct the disposition
of such shares in accordance with Moked’s articles of association. Professor Kahane has shared voting and investment control over
Yehuda Kahane Ltd., a holder of 35.13% of the shares of Moked Ituran. |
(6) |
Shares beneficially owned include: (a) 3,356 shares directly owned by Efraim Sheratzky, (b) 18,500 shares owned by Tzivtit Insurance
Agency (1998) Ltd., which Efraim Sheratzky may be considered to beneficially own by virtue of his shared voting and investment control
over such shares through his 50% ownership thereof, the other 50% of the shares held by Yigal Shani, and (c) 206,552 shares owned by Moked
Ituran, which Mr. Sheratzky may be considered to beneficially own by virtue of his right to direct the disposition of such shares in accordance
with Moked’s articles of association. Mr. Sheratzky may be considered to beneficially own such shares by virtue of his sole voting
and investment control over his wholly owned G T.S.D. Holdings Ltd, the holder of 3.75% of Moked’s shares. |
(7) |
Shares beneficially owned include: (a) 10,000 shares directly owned by Yigal Shani, (b) 18,500 shares owned by Tzivtit Insurance
Agency (1998) Ltd., which Yigal Shani may be considered to beneficially own by virtue of his shared voting and investment control over
such shares through his 50% ownership thereof, the other 50% of the shares held by Efraim Sheratzky, and (c) 206,552 shares owned by Moked
Ituran, which Mr. Shani may be considered to beneficially own by virtue of his right to direct the disposition of such shares in accordance
with Moked’s articles of association. Mr. Shani may be considered to beneficially own such shares by virtue of his sole voting and
investment control over his wholly owned G.N.S. Holdings, the holder of 3.75% of Moked’s shares. |
F. |
DISCLOSURE OF REGISTRANT’S ACTION TO RECOVER ERRENOUSLY AWARDED COMPENSATION. |
ITEM 7. |
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
A. |
MAJOR SHAREHOLDERS |
Shareholder |
Number of
Ordinary
Shares
Beneficially
Owned |
% Voting |
||||||
Moked Ituran Ltd. (1) |
4,075,952 |
20.47 |
||||||
All directors and executive officers as a group (2).
|
4,125,227 |
20.74 |
||||||
Vulcan Value Partners (3)
|
1,681,329 |
8.45 |
||||||
FMR LLC. (4) |
1,228,293 |
6.174 |
||||||
Renaissance Technologies LLC. (5)
|
1,123,800 |
5.65 |
||||||
Ibex Investors LLC(6)
|
1,168,815 |
5.9 |
||||||
Treasury shares |
3,581,851 |
B. |
RELATED PARTY TRANSACTIONS |
• |
“Target-based Cash Incentives” means a cash incentive awarded to the Executive Office Holders for the company’s
achievement of the following Profit-Before-Tax targets in each calendar year following the effective date of the above agreements, in
which the Minimum Threshold (as defined below) has been achieved: |
Company’s Profit-Before-Tax Targets (in USD thousands) |
Level of Incentive - As a Percentage of the
Executive Office Holder’s Annual Cost of Pay |
24,001 - 27,500 |
20% |
27,501-31,000 |
45% |
31,001-35,000 |
75% |
35,001-39,000 |
110% |
Above 39,001 |
150% |
• |
Target-based Cash Incentives shall become payable upon the lapse of 30 days from the date of publication of the company’s audited
annual financial statements (the “Entitlement Date”); and such cash incentive shall
be paid on such date. However, if an Executive Office Holder’s Target-based Cash Incentives exceed an amount equal to 100% of such
Executive Office Holder’s annual Cost of Pay (the “100% Threshold”), then 20%
of the amount by which the Target-based Cash Incentives exceed the 100% Threshold (the “Deferred
Portion”) shall not be paid on their Entitlement Date, but rather shall be deferred and paid in two equal instalments on
the first and second anniversary of the Entitlement Date, provided that the Minimum Threshold was achieved during the first calendar year
(for the first instalment) and during the second calendar year (for the second instalment) following the Entitlement Date, respectively.
The Deferred Portion shall be linked to the consumer price index known on the Entitlement Date. |
• |
The company may pay to the Executive Office Holders advances on account of expected Target-based Cash Incentives, based on the company’s
reviewed financial statements, prior to the Entitlement Date; provided that if on the Entitlement Date, it turns out that such advances
exceed the Target-based Cash Incentives to which the Executive Office Holders are entitled, then the excess amounts shall be returned
to the Company or shall be deducted from the payment of the remainder Target-based Cash Incentives on the Entitlement Date, as the case
may be. |
• |
“Excess Return Cash Incentives” means a cash grant based on the company’s
Stock Yield as compared to the Russell 2000 Index’s Yield, as set forth below. |
• |
In the event that an Agreement is terminated during a calendar year, the company’s compensation committee and board of directors
shall determine the relative amounts out of the Target-based Cash Incentives and/or Excess Return Cash Incentives to which the relevant
Executive Office Holder is entitled for the portion of the year during which the Agreement was in force; and these amounts shall be paid
within 30 days after the termination of service/employment, as the case may be. |
• |
On the date of determination of each Executive Office Holder’s entitlement for a Target-based Cash Incentive for a particular
year, the company’s compensation committee shall examine whether the total amount of grants to which Executive Officers are entitled
with respect to such calendar year and which constitute variable components of their terms of services (the “Total Amount of Grants
to Executive Officers”), exceed an amount equal to 10% of the Company’s EBITDA for such year (the “EBITDA’s Threshold”),
as calculated in accordance with data extracted from the company’s audited consolidated annual financial statements, after taking
into account the Executive Officers’ fixed compensation but excluding their variable compensation. In such event, the amount by
which the Total Amount of Grants to Executive Officers exceeds the EBITDA’s Threshold shall be referred to as the “Excess
Amount”. |
• |
In the event that the Total Amount of Grants to Executive Officers exceeds the EBITDA’s Threshold, then the Target-based Cash
Incentive and the Excess Return Cash Incentive to which an Executive Office Holder is entitled (together, the “Grants”) shall
be reduced by an amount equal to the Executive Office Holder’s Rate of Grants (as defined below) out of the Excess Amount. The term
“Executive Office Holder’s Rate of Grants” means, with respect to a particular Executive Office Holder, the percentage
which such Executive Office Holder’s Grants constitute out of the Total Amount of Grants to Executive Officers. |
• |
The company’s board of directors shall have the right, under special circumstances at its discretion, to reduce the amount
of Grants to which the Executive Office Holders are entitled, upon a 60 days prior notice. |
• |
The Executive Office Holder shall be required to return any compensation paid to them on the basis of results included in financial
statements that turned out to be erroneous and were subsequently restated in the company’s financial statements published during
the three year period following publication of the erroneous financial statements; to the extent they would not have been entitled to
the compensation actually received had it been determined based on the restated financial statements. In such case, compensation amounts
will be returned within 60 days from the date of publication of the restated financial statements, net of taxes that were withheld thereon.
If the Executive Office Holder has a right to reclaim such tax payments with respect to Grants which were paid in excess, from the relevant
tax authorities, then the Executive Office Holder shall reasonably act to reclaim such amounts from the tax authorities and upon their
receipt, shall remit them to the company. |
Executive Office Holders |
Target-based Cash Incentive |
Deferred Portion for the next 2 years |
Deferred Portion from last 2 years |
Total to be paid for 2022: |
||||||||||||
|
In US$ thousands |
|||||||||||||||
Izzy Sheratzky |
1,049 |
(73 |
) |
73 |
1,049 |
|||||||||||
Eyal Sheratzky |
854 |
(57 |
) |
57 |
854 |
|||||||||||
Nir Sheratzky |
854 |
(57 |
) |
57 |
854 |
|||||||||||
Gil Sheratzky |
610 |
(41 |
) |
41 |
610 |
C. |
INTERESTS OF EXPERTS AND COUNSEL |
ITEM 8. |
FINANCIAL INFORMATION |
A. |
CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION |
B. |
SIGNIFICANT CHANGES |
ITEM 9. |
THE OFFER AND LISTING |
A. |
LISTING DETAILS AND MARKET PRICE INFORMATION |
B. |
PLAN OF DISTRIBUTION |
C. |
MARKETS |
D. |
SELLING SHAREHOLDERS |
E. |
DILUTION |
F. |
EXPENSES OF THE ISSUE |
ITEM 10. |
ADDITIONAL INFORMATION |
A. |
SHARE CAPITAL |
B. |
MEMORANDUM AND ARTICLES OF ASSOCIATION |
◾ |
the majority must include at least the majority of the shares of disinterested shareholders voted at the meeting; or |
◾ |
the total number of shares of disinterested shareholders who voted against the transaction must not exceed 2% of the aggregate voting
rights in the company. |
◾ |
an amendment to the company’s articles of association; |
◾ |
an increase of the company’s authorized share capital; |
◾ |
a merger; or |
◾ |
interested party transactions that require shareholder approval. |
◾ |
a private placement in which the company’s shareholders approved such holder owning 25% or more of the voting rights of the
company (provided that there is no other shareholder that holds 25% or more of the voting rights of the company); or more than 45% of
the voting rights of the company (provided that there is no other shareholder that holds 45% or more of the voting rights of the company);
or |
◾ |
a purchase from an existing holder of 25% or more of the voting rights of the company that results in another person becoming a holder
of 25% or more of the voting rights of the company; or |
◾ |
purchase from an existing holder of more than 45% of the voting rights of the company that results in another person becoming a holder
of more than 45% of the voting rights of the company. |
• |
There is a limitation on acquisition of any level of control of the company, or |
• |
The acquisition of any level of control requires the purchaser to offer a tender offer to the public. |
◾ |
the transaction is not accompanied by an amendment to the acquirer’s memorandum or articles of association; |
◾ |
the transaction does not contemplate the issuance of more than 20% of the voting rights of the acquirer that would result in any
shareholder becoming a controlling shareholder; and |
◾ |
there is no “cross-ownership” of shares of the merging companies, as described above. |
◾ |
amendments to our articles of association; |
◾ |
appointment or termination of our auditors; |
◾ |
appointment and dismissal of external directors; |
◾ |
approval of acts and transactions requiring general meeting approval pursuant to the Israeli Companies Law; |
◾ |
increase or reduction of our authorized share capital; |
◾ |
a merger; and |
◾ |
the exercise of the Board of Directors’ powers by a general meeting, if the Board of Directors is unable to exercise its powers
and the exercise of any of its powers is required for our proper management. |
• |
Financial liability imposed on him or her in favor of another person pursuant to a judgment, settlement or arbitrator’s award
approved by a court. However, if an undertaking to indemnify an office holder with respect to such liability is provided in advance then
such an undertaking must be limited to events which, in the opinion of the board of directors, can be foreseen based on the company’s
activities when the undertaking to indemnify is given, and to an amount or according to criteria determined by the board of directors
as reasonable under the circumstances, and such undertaking shall detail the abovementioned events and amount or criteria. |
• |
Reasonable litigation expenses, including attorneys’ fees, incurred by the office holder as a result of an investigation or
proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (i) no
indictment was filed against such office holder as a result of such investigation or proceeding, and (ii) no financial liability,
such as a criminal penalty, was imposed upon him or her as a substitute for the criminal proceeding as a result of such investigation
or proceeding or, if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal
intent or in connection with monetary penalty. |
• |
Reasonable litigation expenses, including attorneys’ fees, incurred by the office holder or imposed by a court in proceedings
instituted against him or her by the company, on its behalf or by a third party or in connection with criminal proceedings in which the
office holder was acquitted or as a result of a conviction for an offense that does not require proof of criminal intent. Under the Israeli
Companies Law, a company may obtain insurance for an office holder against liabilities incurred in his or her capacity as an office holder
if and to the extent provided in the company’s articles of association. |
• |
A breach of duty of loyalty to the company, to the extent that the office holder acted in good faith and had a reasonable basis to
believe that the act would not prejudice the company. |
• |
A breach of duty of care to the company or to a third party, including a breach arising out of the negligent conduct of the office
holder. |
• |
A financial liability imposed on the office holder in favor of a third party. |
• |
a breach of duty of loyalty, except to the extent that the office holder acted in good faith and had a reasonable basis to believe
that the act would not prejudice the company; |
• |
a breach of duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the office
holder; |
• |
an act or omission committed with intent to derive illegal personal benefit; or |
• |
a fine, civil fine, monetary penalty or forfeit levied against the office holder. |
C. |
MATERIAL CONTRACTS |
D. |
EXCHANGE CONTROLS |
E. |
TAXATION |
◾ |
an individual citizen or resident of the United States; |
◾ |
a corporation or partnership created or organized in or under the laws of the United States or of any state of the United States
or the District of Columbia (other than a partnership, including any entity treated as a partnership for U.S. tax purposes, that is not
treated as a US person under any applicable Treasury regulations); |
◾ |
an estate, the income of which is subject to United States federal income taxation regardless of its source; or |
◾ |
a trust if the trust has elected validly to be treated as a US person for United States federal income tax purposes or if a US court
is able to exercise primary supervision over the trust’s administration and one or more US persons have the authority to control
all of the trust’s substantial decisions. |
◾ |
insurance companies; |
◾ |
dealers or traders in stocks, securities or currencies; |
◾ |
financial institutions and financial services entities; |
◾ |
real estate investment trusts; |
◾ |
regulated investment companies; |
◾ |
grantor trusts; |
◾ |
persons that receive ordinary shares as compensation for the performance of services; |
◾ |
tax-exempt organizations; |
◾ |
persons that hold ordinary shares as a position in a straddle or as part of a hedging, conversion or other integrated instrument;
|
◾ |
individual retirement and other tax-deferred accounts; |
◾ |
expatriates of the United States; |
◾ |
persons having a functional currency that is not the US dollar; or |
◾ |
direct, indirect or constructive owners of 10% or more, by voting power or value, of our ordinary shares. |
◾ |
the stock of that corporation with respect to which the dividends are paid is readily tradable on an established securities market
in the US, or |
◾ |
that corporation is eligible for benefits of a comprehensive income tax treaty with the US that includes an information exchange
program and is determined to be satisfactory by the US Secretary of the Treasury. The Internal Revenue Service has determined that the
US-Israel Tax Treaty is satisfactory for this purpose. |
◾ |
75% or more of its gross income consists of specified types of passive income, or |
◾ |
50% or more of the average value of its assets consists of passive assets, which generally means assets that generate, or are held
for the production of, “passive income.” |
◾ |
Passive income for this purpose generally includes dividends, interest, royalties, rents and gains from commodities and securities
transactions and includes amounts derived by reason of the temporary investment of funds. If we were classified as a PFIC, and you are
a US Holder, you could be subject to increased tax liability upon the sale or other disposition of ordinary shares or upon the receipt
of amounts treated as “excess distributions” (generally, your ratable portion of distributions in any year which are greater
than 125% of the average annual distribution received by you either in the shorter of the three preceding years or your holding period).
Under these rules, the excess distribution and any gain would be allocated rateably over our shareholders’ holding period for the
ordinary shares, and the amount allocated to the current taxable year and any taxable year prior to the first taxable year in which we
were a PFIC would be taxed as ordinary income. The amount allocated to each of the other taxable years would be subject to tax at the
highest marginal rate in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit
would be imposed on the resulting tax allocated to such other taxable years. In addition, holders of stock in a PFIC may not receive a
“step-up” in basis on shares acquired from a decedent. If any of our shareholders are US Holders who hold ordinary shares
during a period when we are a PFIC, such shareholders be subject to the foregoing rules even if we cease to be a PFIC. |
• |
The reduced tax rates will no longer be contingent upon making a minimum qualifying investment in productive assets. |
• |
A definition of “preferred income” was introduced into the Investments Law to include certain types of income that are
generated by the Israeli production activity of a preferred enterprise. |
• |
Reducing the tax rate criterion: a company is considered CFC If the tax rate applicable to passive income does not exceed 15 % (instead
of 20 %). |
• |
Sale of a security will be considered passive income, unless the holding duration is less than one year and it has been shown that
the security served in a business. |
• |
Cancel the notional credit mechanism and replacing it with dividend deduction against the actual dividend distribution. Tax refund
may be allowed under certain conditions. |
• |
Dividends derived from income that was taxed at a rate of at least 15% shall not be considered “passive income” under
certain conditions. |
F. |
DIVIDENDS AND PAYING AGENTS |
G. |
STATEMENT BY EXPERTS |
H. |
DOCUMENTS ON DISPLAY |
I. |
SUBSIDIARY INFORMATION |
J. |
ANNUAL REPORT TO SECURITY HOLDERS |
ITEM 11.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
|
Year Ended December 31, |
|||||||||||||||||||||||
|
2021 |
2022 |
2023 |
|||||||||||||||||||||
|
Actual |
At 2020
exchange rates (1) |
Actual |
At 2021
exchange rates (1) |
Actual |
At 2022
exchange rates (1) |
||||||||||||||||||
|
(In US$ thousands) |
|||||||||||||||||||||||
Revenues |
270,884 |
264,507 |
293,072 |
296,752 |
234,541 |
329,420 | ||||||||||||||||||
Gross profit |
126,482 |
123,734 |
137,562 |
139,120 |
153,161 |
158,291 |
||||||||||||||||||
Operating income |
54,615 |
53,595 |
58,774 |
59,218 |
65,955 |
67,422 |
ITEM 12. |
DESCRIPTIONS OF SECURITIES OTHER THAN EQUITY SECURITIES |
ITEM 13. |
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
ITEM 14. |
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
ITEM15. |
CONTROLS AND PROCEDURES |
|
|
Fahn Kanne & Co. |
|
|
Head Office |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
|
32 Hamasger Street |
|
|
Tel-Aviv 6721118, |
Board of Directors and Stockholders |
|
ISRAEL |
|
|
PO Box 36172, 6136101 |
ITURAN LOCATION AND CONTROL LTD. |
|
|
|
|
T +972 3 7106666 |
|
|
F +972 3 7106660 |
|
|
www.gtfk.co.il |
ITEM16. |
[RESERVED] |
ITEM16A.
|
AUDIT COMMITTEE FINANCIAL EXPERT |
ITEM16B.
|
CODE OF ETHICS |
ITEM16C. |
PRINCIPAL ACCOUNTANT FEES AND SERVICES |
|
2023 |
2022 |
||||||
|
(in thousands, USD) |
|||||||
Audit Fees (1)
|
596 |
581 |
||||||
Tax Fees (2)
|
17 |
13 |
||||||
Total
|
613 |
594 |
(1) |
The audit fees for the years ended December 31, 2023 and 2022 respectively, were for professional services rendered for the audits
of our annual consolidated financial statements, review of consolidated quarterly financial statements and statutory audits. |
(2) |
Consists of all tax related services. |
ITEM 16D. |
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
|
ITEM 16E. |
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
Period |
Total number of shares purchased |
Average price paid per share |
Total number of shares purchased as part of
publicly announced plans or programs |
Maximum Approximate Value that May Yet to
Be Purchased Under the Program |
March 2023 |
53,558 |
22.40 |
1,199,971 |
12,075,963 |
April 2023 |
48,118 |
21.66 |
1,117,933 |
10,958,030 |
May 2023 |
55,102 |
21.77 |
1,199,776 |
9,758,254 |
June 2023 |
49,418 |
24.28 |
1,199,977 |
8,558,277 |
July 2023 |
50,336 |
25.17 |
1,267,171 |
7,291,106 |
August 2023 |
22,612 |
27.78 |
628,260 |
6,662,846 |
Total 2023
|
282,644 |
6,613,088 |
6,662,846 |
ITEM 16F. |
CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT |
ITEM 16G. |
CORPORATE GOVERNANCE |
ITEM 16H. |
MINE SAFETY DISCLOSURE |
ITEM 16I. |
DISCLOSURE REGARDING FOREIGN JURISDICTION THAT PREVENT INSPECTIONS |
ITEM 16J. |
Insider Trading Policies |
ITEM 16K. |
Cybersecurity
|
1. |
Cybersecurity risk management is an integral part of our overall enterprise risk management program. We face certain cybersecurity
risks due to: (1) the substantial level of harm that could occur to us, our customers and business partners in case we suffer impacts
of a material cybersecurity incident; (2) the networks and systems we must defend against cybersecurity attacks; (3) the use of our systems,
products and processes and (4) our use of third-party products and services. |
2. |
We are committed to maintaining robust governance and oversight of these risks and to implement mechanisms, controls, technologies,
and processes designed to help us assess, identify, and manage these risks. |
3. |
We have not experienced a cybersecurity threat or incident that resulted in or is reasonably likely to result in a material adverse
impact to our business or operations. With that, there can be no guarantee that we will not experience such an incident in the future.
Such incidents, whether successful or not, could result in our incurring significant costs related to, for example, rebuilding our internal
systems, implementing additional threat protection measures, providing modifications or replacements to our products and services, defending
against litigation, responding to regulatory inquiries or actions, paying damages or taking other remedial steps with respect to third
parties, as well as incurring significant reputational harm. |
4. |
In addition, these threats are constantly evolving, thereby increasing the difficulty of successfully defending against them or implementing
adequate preventative measures. We have seen a worldwide increase in cyberattack volume, frequency, and sophistication and we constantly
expand our cybersecurity budget in accordance with such increase We constantly seek to detect and investigate unauthorized attempts and
attacks against our network, products, and services, and to prevent their occurrence and recurrence where practicable through changes
or updates to our internal processes and tools and changes or updates to our products and services. however, we remain potentially vulnerable
to known or unknown threats. In some instances, we, our suppliers and customers can be unaware of a threat or incident or effects.
|
5. |
Further, there is increasing regulation regarding responses to cybersecurity incidents, including reporting to regulators, which
could subject us to additional liability and reputational harm. |
6. |
We aim to incorporate industry best practices throughout our cybersecurity program. Our cybersecurity strategy focuses on implementing
effective and efficient controls, technologies, and other processes to assess, identify, and manage material cybersecurity risks. Our
cybersecurity program is designed to be aligned with applicable industry standards and is assessed annually by independent third-party
auditors. We have processes in place to assess, identify, manage, and address material cybersecurity threats and incidents. These include,
among other things: ongoing security awareness training for employees; mechanisms to detect and monitor unusual network activity and containment
and incident response tools. |
7. |
We are actively seeking benchmarking and awareness of best practices. We monitor issues that are internally discovered or externally
reported that may affect our products and have processes to assess those issues for potential cybersecurity impact or risk. We also have
a process in place to manage cybersecurity risks associated with third-party service providers. We impose security requirements upon our
suppliers and intends to broaden such security requirements globally in the near future, including, inter
alia: maintaining an effective security management program; abiding by information handling and asset management requirements;
and notifying us in the event of any known or suspected cyber incident. |
8. |
Our Board of Directors has oversight of cybersecurity risk, which it manages as part of our enterprise risk management program. That
program is utilized in making decisions with respect to company priorities, resource allocations, and oversight structures. The Board
of Directors is assisted by the Audit Committee, which reviews our cybersecurity program with management and reports to the Board of Directors,
and also assisted by the Company’s Vice Presidents of Information Technology (VPIT), Chief Information Security Officers (CISO’s),
Data Protection Officer (DPO) and Ituran IT Director International. Cybersecurity reviews by the Audit Committee or the Board of Directors
generally occur at least once annually, or more frequently as determined to be necessary or advisable. |
9. |
Our cybersecurity program is run by our CISO’s, who reports to our VPIT’s. Our CISO’s is informed about and monitors
prevention, detection, mitigation, and remediation efforts through regular communication and reporting from professionals in the information
security team, many of whom hold cybersecurity certifications such as a Certified Information Systems Security Professional or Certified
Information Security Manager and using technological tools and software and results from third party audits. Our CISO’s and VPIT’s
have extensive experience assessing and managing cybersecurity programs and cybersecurity risk. Our CISO’s and VPIT’s regularly
report directly to the Audit Committee or the Board of Directors on our cybersecurity program and efforts to prevent, detect, mitigate,
and remediate issues. In addition, we have an escalation process in place to inform senior management and the Board of Directors of material
issues. |
|
Description of Document |
|
|
97.1. | Policy Relating to Recovery of Erroneously Awarded Compensation. |
19. | Insider Trading Policy. |
(1) |
Filed as an exhibit to the Registrant’s Registration Statement on Form F-1 (File No. 333-128028) filed on September 23, 2005
and incorporated herein by reference.2
|
(2) |
Filed as an exhibit to the annual report on Form 20-F for the year ended December 31, 2007 and incorporated herein by reference.
|
(3) |
Filed as an exhibit to the annual report on Form 20-F for the year ended December 31, 2010 and incorporated herein by reference.
|
(4) |
The current lessee under this agreement is the Registrant. |
(5) |
Filed as an exhibit to Form 13G of Yehuda Kahane for the year ended December 31, 2014, filed on February 17, 2015, and incorporated
herein by reference. |
(6) |
Filed as an exhibit to the annual report on Form 20-F for the year ended December 31, 2013 and incorporated herein by reference.
|
(7) |
Filed as an exhibit to the annual report on Form 20-F for the year ended December 31, 2016 and incorporated herein by reference.
|
By: /s/ Eyal Sheratzky |
/s/ Nir Sheratzky |
||
Eyal Sheratzky |
Nir Sheratzky |
||
Co-Chief Executive Officers |
Page
|
|
Report of Independent Registered Public Accounting Firm (PCAOB ID
|
F-2
|
Consolidated Financial Statements:
|
|
F-4
|
|
F-6
|
|
F-7
|
|
F-8
|
|
F-9
|
|
F-11
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
ITURAN LOCATION AND CONTROL LTD.
|
Fahn Kanne & Co.
Head Office
32 Hamasger Street
Tel-Aviv 6721118, ISRAEL
PO Box 36172, 6136101
T +972 3 7106666
F +972 3 7106660
www.gtfk.co.il
|
Critical Audit Matter (cont.)
US dollars
|
||||||||
December 31,
|
||||||||
(in thousands)
|
2023
|
2022
|
||||||
Current assets
|
||||||||
Cash and cash equivalents
|
|
|
||||||
Investment in marketable securities
|
|
|
||||||
Accounts receivable (net of allowance for doubtful accounts)
|
|
|
||||||
Other current assets (Note 2)
|
|
|
||||||
Inventories (Note 3)
|
|
|
||||||
|
|
|||||||
Long-term investments and other assets
|
||||||||
Investments in affiliated companies (Note 4A)
|
|
|
||||||
Investments in other companies (Note 4B)
|
|
|
||||||
Other non-current assets (Note 5)
|
|
|
||||||
Deferred income taxes (Note 15)
|
|
|
||||||
Funds in respect of employee rights upon retirement
|
|
|
||||||
|
|
|||||||
|
||||||||
Property and equipment, net (Note 6)
|
|
|
||||||
Operating lease right of use assets, net (Note 7)
|
|
|
||||||
Intangible assets, net (Note 8)
|
|
|
||||||
Goodwill (Note 9)
|
|
|
||||||
Total assets
|
|
|
US dollars
|
||||||||
December 31,
|
||||||||
(in thousands, except share data)
|
2023
|
2022
|
||||||
Current liabilities
|
||||||||
Credit from banking institutions (Note 10A)
|
|
|
||||||
Accounts payable
|
|
|
||||||
Deferred revenues
|
|
|
||||||
Other current liabilities (Note 11)
|
|
|
||||||
|
|
|||||||
Long-term liabilities
|
||||||||
Deferred income taxes (Note 15)
|
|
|
||||||
Loan from bank institution (Note 10B)
|
|
|
||||||
Liability for employee rights upon retirement
|
|
|
||||||
Deferred revenues
|
|
|
||||||
Operating lease liabilities, non-current (Note 7)
|
|
|
||||||
Other non-current liabilities
|
|
|
||||||
|
|
|||||||
Commitments and contingent liabilities (Note 12)
|
||||||||
Equity:
|
||||||||
Stockholders’ equity (Note 13)
|
||||||||
Share capital – ordinary shares of NIS
|
|
|
||||||
Authorized – December 31, 2023 and 2022 –
|
||||||||
Issued and outstanding – December 31, 2023 and 2022 –
|
||||||||
Additional paid- in capital
|
|
|
||||||
Accumulated other comprehensive loss
|
(
|
)
|
(
|
)
|
||||
Retained earnings
|
|
|
||||||
Treasury stock at cost – December 31, 2023 –
|
(
|
)
|
(
|
)
|
||||
Stockholders’ equity
|
|
|
||||||
Non-controlling interests
|
|
|
||||||
Total equity
|
|
|
||||||
Total liabilities and equity
|
|
|
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands except earnings per share)
|
2023
|
2022
|
2021
|
|||||||||
Revenues:
|
||||||||||||
Telematics services
|
|
|
|
|||||||||
Telematics products
|
|
|
|
|||||||||
|
|
|
||||||||||
Cost of revenues:
|
||||||||||||
Telematics services
|
|
|
|
|||||||||
Telematics products
|
|
|
|
|||||||||
|
|
|
||||||||||
Gross profit
|
|
|
|
|||||||||
Research and development expenses
|
|
|
|
|||||||||
Selling and marketing expenses
|
|
|
|
|||||||||
General and administrative expenses
|
|
|
|
|||||||||
Other expenses (income), net (Note 8)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Operating income
|
|
|
|
|||||||||
Other income (expenses), net
|
|
|
(
|
)
|
||||||||
Financing expenses, net (Note 14)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Income before income tax
|
|
|
|
|||||||||
Income tax expenses (Note 15)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Share in losses of affiliated companies, net (Note 4A)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Net income for the year
|
|
|
|
|||||||||
Less: Net income attributable to non-controlling interest
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Net income attributable to the Company
|
|
|
|
|||||||||
Basic and diluted earnings per share attributable to Company’s stockholders (Note 16)
|
|
|
|
|||||||||
Basic and diluted weighted average number of shares outstanding
|
|
|
|
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2023
|
2022
|
2021
|
|||||||||
Net income for the year
|
|
|
|
|||||||||
Other comprehensive income (loss), net of tax:
|
||||||||||||
Unrealized losses in respect of derivative financial instruments designated for cash flow hedge
|
(
|
)
|
|
|
||||||||
Foreign currency translation adjustments
|
|
(
|
)
|
(
|
)
|
|||||||
Other comprehensive income (loss), net of tax
|
|
(
|
)
|
(
|
)
|
|||||||
Comprehensive income
|
|
|
|
|||||||||
Less: comprehensive income attributable to non-controlling interests
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Comprehensive income attributable to the Company
|
|
|
|
(in thousands)
|
||||||||||||||||||||||||||||||||
COMPANY STOCKHOLDERS
|
||||||||||||||||||||||||||||||||
Ordinary shares
|
||||||||||||||||||||||||||||||||
Number
of shares |
Share capital amount
|
Additional paid - in capital
|
Accumulated other comprehensive loss
|
Retained earnings
|
Treasury
stock |
Non-controlling interests
|
Total
|
|||||||||||||||||||||||||
US dollars (except for number of shares)
|
||||||||||||||||||||||||||||||||
Balance as of January 1, 2021
|
|
|
|
(
|
)
|
|
(
|
)
|
|
|
||||||||||||||||||||||
Changes during 2021:
|
||||||||||||||||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
|
-
|
|
|
||||||||||||||||||||||||
Other comprehensive income (loss)
|
-
|
-
|
-
|
(
|
)
|
-
|
-
|
|
(
|
)
|
||||||||||||||||||||||
Dividend paid to non-controlling interests
|
-
|
-
|
-
|
-
|
-
|
-
|
(
|
)
|
(
|
)
|
||||||||||||||||||||||
Dividend paid
|
-
|
-
|
-
|
-
|
(
|
)
|
-
|
-
|
(
|
)
|
||||||||||||||||||||||
Dividend declared
|
-
|
-
|
-
|
-
|
(
|
)
|
-
|
-
|
(
|
)
|
||||||||||||||||||||||
Purchase of treasury shares (*)
|
-
|
-
|
(
|
)
|
(
|
)
|
||||||||||||||||||||||||||
Stock-based compensation in a subsidiary company
|
-
|
-
|
|
-
|
-
|
-
|
-
|
|
||||||||||||||||||||||||
Balance as of December 31, 2021
|
|
|
|
(
|
)
|
|
(
|
)
|
|
|
||||||||||||||||||||||
Changes during 2022:
|
||||||||||||||||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
|
-
|
|
|
||||||||||||||||||||||||
Other comprehensive loss
|
-
|
-
|
-
|
(
|
)
|
-
|
-
|
(
|
)
|
(
|
)
|
|||||||||||||||||||||
Dividend paid
|
-
|
-
|
-
|
-
|
(
|
)
|
-
|
-
|
(
|
)
|
||||||||||||||||||||||
Dividend declared
|
-
|
-
|
-
|
-
|
(
|
)
|
-
|
-
|
(
|
)
|
||||||||||||||||||||||
Purchase of treasury shares (*)
|
-
|
-
|
-
|
-
|
-
|
(
|
)
|
-
|
(
|
)
|
||||||||||||||||||||||
Stock-based compensation in a subsidiary company
|
-
|
-
|
|
-
|
-
|
-
|
-
|
|
||||||||||||||||||||||||
Balance as of December 31, 2022
|
|
|
|
(
|
)
|
|
(
|
)
|
|
|
||||||||||||||||||||||
Changes during 2023:
|
||||||||||||||||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
|
-
|
|
|
||||||||||||||||||||||||
Other comprehensive income (loss)
|
-
|
-
|
-
|
|
-
|
-
|
(
|
)
|
|
|||||||||||||||||||||||
Dividend paid to non-controlling interests
|
-
|
-
|
-
|
-
|
-
|
-
|
(
|
)
|
(
|
)
|
||||||||||||||||||||||
Dividend paid
|
-
|
-
|
-
|
-
|
(
|
)
|
-
|
-
|
(
|
)
|
||||||||||||||||||||||
Dividend declared
|
-
|
-
|
-
|
-
|
(
|
)
|
-
|
-
|
(
|
)
|
||||||||||||||||||||||
Purchase of treasury shares (*)
|
-
|
-
|
-
|
-
|
-
|
(
|
)
|
-
|
(
|
)
|
||||||||||||||||||||||
Stock-based compensation in a subsidiary company
|
-
|
-
|
|
-
|
-
|
-
|
-
|
|
||||||||||||||||||||||||
Balance as of December 31, 2023
|
|
|
|
(
|
)
|
|
(
|
)
|
|
|
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2023
|
2022
|
2021
|
|||||||||
Cash flows from operating activities
|
||||||||||||
Net income for the year
|
|
|
|
|||||||||
Adjustments to reconcile net income to net cash from operating activities:
|
||||||||||||
Depreciation and amortization
|
|
|
|
|||||||||
Interest and exchange rate on long term credit
|
|
|
(
|
)
|
||||||||
Loss in respect of trading marketable securities and other investments
|
|
|
|
|||||||||
Increase in liability for employee rights upon retirement
|
|
|
|
|||||||||
Share in losses of affiliated companies, net
|
|
|
|
|||||||||
Deferred income taxes
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Capital loss (gain) on sale of property and equipment, net
|
|
(
|
)
|
(
|
)
|
|||||||
Increase in accounts receivable
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Decrease (increase) in other current and non-current assets
|
(
|
)
|
(
|
)
|
|
|||||||
Decrease (Increase) in inventories
|
|
(
|
)
|
(
|
)
|
|||||||
Increase (decrease) in accounts payable
|
(
|
)
|
|
|
||||||||
Increase in deferred revenues
|
|
|
|
|||||||||
Increase in obligation to purchase non-controlling interests
|
|
|
|
|||||||||
Increase (decrease) in other current and non-current liabilities
|
|
(
|
)
|
|
||||||||
Net cash provided by operating activities
|
|
|
|
|||||||||
Cash flows from investment activities
|
||||||||||||
Increase in funds in respect of employee rights upon retirement,
net of withdrawals |
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Capital expenditures
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Investment in affiliated company
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Investment in marketable securities
|
|
(
|
)
|
|
||||||||
Investments in (repayment of) long - term deposit
|
(
|
)
|
|
(
|
)
|
|||||||
Investments in other companies, net
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Proceeds from sale of property and equipment
|
|
|
|
|||||||||
Sale of marketable securities
|
|
|
|
|||||||||
Net cash used in investment activities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Cash flows from financing activities
|
||||||||||||
Repayment of long-term loan
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Settlement of obligation to purchase non-controlling interests
|
|
|
(
|
)
|
||||||||
Short term credit from banking institutions
|
|
|
|
|||||||||
Acquisition of company shares
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Dividend paid
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Dividend paid to non-controlling interests
|
(
|
)
|
|
(
|
)
|
|||||||
Net cash used in financing activities
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Effect of exchange rate changes on cash and cash equivalents
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Net change in cash and cash equivalents
|
|
(
|
)
|
(
|
)
|
|||||||
Balance of cash and cash equivalents at beginning of year
|
|
|
|
|||||||||
Balance of cash and cash equivalents at end of year
|
|
|
|
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2023
|
2022
|
2021
|
|||||||||
Interest paid
|
|
|
|
|||||||||
Income taxes paid, net of refunds
|
|
|
|
ITURAN LOCATION AND CONTROL LTD.
NOTE 1 | - | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
A. |
General
|
1. |
Operations
|
Ituran Location and Control Ltd. (the “Company”) commenced operations in 1994. The Company and its subsidiaries (the “Company”) are engaged in the provision of Location based Telematics services and machine-to-machine Telematics products for use in stolen vehicle recovery, fleet management and other applications.
On September 13, 2018, the Company closed the acquisition of
On September 22, 2021 the Company purchased the remaining
|
2. |
Functional currency and translation to the reporting currency
The functional currency of the Company and its subsidiaries located in Israel (except those that are held through the subsidiary “Road track”) is the New Israeli Shekel (“NIS”), which is the local currency in which those entities operate. The functional currency of the foreign subsidiaries located in Brazil, Mexico and Colombia is the local currency in each country and the functional currency of the rest of the subsidiaries (including Argentinian subsidiaries that operates in highly inflationary economy) is the US Dollar. Regarding the Argentinian subsidiaries see below.
The consolidated financial statements of the Company and all of its subsidiaries were translated into U.S. dollars in accordance with the standards of the Financial Accounting Standards Board ("FASB"). Accordingly, assets and liabilities were translated from local currencies to U.S. dollars using yearend exchange rates, and income and expense items were translated at average exchange rates during the year.
Gains or losses resulting from translation adjustments (which result from translating an entity’s financial statements into U.S. dollars if its functional currency is different than the U.S. dollar) are reported in other comprehensive income and are reflected in equity, under “accumulated other comprehensive income (loss)”. Translation gains and losses resulting from changes in exchange rates used in the translation of intercompany balances that are long term investment nature (i.e. which their settlement is not planned or anticipated) are also included in other comprehensive income (loss).
When an economy in which a foreign entity of the Company operates, becomes highly inflationary environment (an economy with a cumulative inflation rate of approximately 100% or more over a three-year period, such as the Company's subsidiaries in Argentina), the financial statements of that foreign entity are remeasured as if its functional currency is the reporting currency of its parent.
Balances denominated in, or linked to foreign currency are stated on the basis of the exchange rates prevailing at the balance sheet date. For foreign currency transactions included in the statement of income, the exchange rates applicable on the relevant transaction dates are used. Transaction gains or losses arising from changes in the exchange rates used in the translation of such balances are carried to financing income or expenses as applicable.
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 1 | - | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
A. |
General (cont.)
|
2. |
Functional currency and translation to the reporting currency (cont.)
|
The following table presents data regarding the dollar exchange rate of relevant currencies and the Israeli CPI: |
Exchange rate
of one US dollar
|
Israeli CPI(*)
|
||||||||
NIS
|
Brazilian
Real
|
||||||||
At December 31,
|
|||||||||
2023
|
|
|
|
||||||
2022
|
|
|
|
||||||
2021
|
|
|
|
||||||
Increase (decrease) during the year:
|
|||||||||
2023
|
|
(
|
|
||||||
2022
|
|
(
|
|
||||||
2021
|
(
|
|
|
(*) |
|
3. |
Basis of presentation
The consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).
|
4. |
Use of estimates in the preparation of financial statements
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from the estimates.
As applicable to these consolidated financial statements, the most significant estimates and assumptions relate to legal contingencies, valuation of goodwill and other intangible assets and revenue recognition and related deferred expenses (contract costs).
|
5. |
Iron Swords War
In October 2023, the Israeli government declared a state of war in response to an attack on civilians at its southern border. Subsequently, additional attacks were launched towards northern Israel. The new security situation has led to several challenges, including some disruptions in supply chains, a shortage of personnel due to mobilization for reserve duty, and fluctuations in foreign currency exchange rates relative to the Israeli shekel.
Regional tensions involving Houthis attacks on commercial ships have recently intensified, affecting shipping operation at the Red Sea. This could lead to delays in shipments as well as increased shipping costs.
The Company has taken measures to ensure the safety of its employees and business partners, as well as the communities in which it operates, in order to minimize any potential impact on its business, including avoidance of disruption to operation in its facilities in Israel.
As of today, the security situation in recent months had a non-material impact on the Company’s business results. However, since the developments related to the war situation, as well as its duration, are unpredictable, the Company has no ability to estimate the extent of the war’s potential impact on its future business and results. The Company continuously monitors the developments and will take all necessary actions to minimize any negative consequences to its operations and assets.
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 1 | - | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
B. |
Principles of consolidation
|
C. |
Cash and cash equivalents
|
D. |
Marketable securities
|
E. |
Treasury stock
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 1 | - | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
F. |
Allowance for doubtful accounts
|
G. |
Inventories
|
H. |
Investment in affiliated companies
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 1 | - | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
I. |
Investment in other companies
|
J. |
Derivatives
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 1 | - | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
K. |
Property and equipment
|
1. |
Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are depreciated on the straight-line method over the shorter of the estimated useful life of the property or the duration of the lease.
|
2. |
Rates of depreciation:
|
%
|
|||
Operating equipment (mainly
|
|
||
Office furniture, equipment and computers
|
|
||
Buildings
|
|
||
Vehicles
|
|
||
Leasehold improvements
|
is less or equal to useful life. |
L. |
Impairment of long-lived assets
|
M. |
Income taxes
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 1 | - | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
N. |
Goodwill and intangible assets
|
1. |
Goodwill represents the excess of the purchase price over the fair value of the identifiable net assets acquired in business combinations accounted for in accordance with the "purchase method" and is allocated to reporting units at acquisition. Goodwill is not amortized but rather tested for impairment at least annually in accordance with the provisions of ASC Topic 350, "Intangibles - Goodwill and Other". Commencing fiscal 2021, the annual goodwill assessment as of December 31, each year.
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 1 | - | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
N. |
Goodwill and intangible assets (cont.)
|
1. |
(cont.)
|
2. |
Intangible assets with finite live are amortized using the straight-line basis over their useful lives, to reflect the pattern in which the economic benefits of the intangible assets are consumed or otherwise used up.
|
|
Years
|
||
Technology services
|
|
||
Other |
O. |
Contingencies
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 1 | - | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
P. |
Funds in respect of, and liability for employee rights upon retirement
|
Q. |
Revenue recognition |
|
1. |
Identification of the contract, or contracts, with a customer;
|
2. |
Identification of the performance obligations in the contract;
|
3. |
Determination of the transaction price;
|
4. |
Allocation of the transaction price to the performance obligations in the contract; and
|
5. |
Recognition of revenue when, or as, the Company satisfies a performance obligation.
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 1 | - | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
Q. |
Revenue recognition (cont.)
|
1. |
Revenues from sales of Automatic Vehicle Location ("AVL") products are recognized when the control of the product passed to the customer (usually upon delivery).
|
2. |
Revenues from provision of SVR services are recognized over time, as the customers simultaneously receive and consume the benefits provided by the Company performance as the Company performs.
|
3. |
For arrangements that involve the delivery or performance of multiple products (mostly, AVL products), services (such as SVR services) and/or rights to use assets, the Company analyzes whether the goods or services that were promised to the customer are distinct. A good or service promised to a customer is considered ‘distinct’ if both of the following criteria are met: 1. The customer can benefit from the good or service, either on its own or together with other resources that are readily available to the customer; and, 2. The Company’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract. When the above criteria are met, the revenue recognition for the related products and/or services are recognized as described in 1 and 2 above, as applicable.
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 1 | - | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
Q. |
Revenue recognition (cont.)
|
4. |
Amounts earned by certain Brazilian subsidiary for arranging a bundle transaction of SVR services subscription and installation services together with insurance services to be supplied by a third party insurance company, are recognized ratably on a straight-line basis over the subscription period (see 2 above), since the amount allocated to the Company (for the SVR services subscription, installation services and for arranging the transaction), is contingent upon the delivery of the SVR services. As the insurance company is acting as a principal with respect to the insurance component, the Company recognized only the net amounts as revenues, after deduction of amounts related to the insurance component.
|
5. |
Deferred revenues include unearned amounts received from customers (mostly for the provision of installation, future subscription services and extended warranty) but not yet recognized as revenues. Such deferred revenues are recognized as described in paragraph 2 above or paragraph 6 below, as applicable. For the year ended December 31, 2023, the Company recognized revenue of approximately US$
|
6. |
Extended warranty - In the majority of countries, in which the Company operates, the statutory warranty period is one year, and the extended warranty covers periods beyond year one. Revenues from extended warranty include warranty services which were sold separately for a monthly fee, or warranty services that were determined to represent a separate performance obligation and were sold together with an AVL unit. Such revenues are recognized over the duration of the warranty periods.
|
7. |
Payment terms – The vast majority of the company's payment terms are between 30 to 90 days.
|
R. |
Warranty costs
|
S. |
Research and development costs
|
1. |
Research and development costs (other than computer software related expenses) are expensed as incurred.
|
2. |
Software Development Costs
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 1 | - | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
T. |
Advertising costs
|
U. |
Earnings per share
|
V. |
Fair value measurements
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 1 | - | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
W. |
Contract costs and prepaid expenses
|
The contract costs are amortized over the estimated life of the related subscription arrangements by the straight-line method. Costs that do not meet the aforementioned criteria, are recognized immediately as expenses.
|
Prepaid expenses, consist mainly of amounts paid by certain Brazilian subsidiary to insurance companies as a prepaid insurance on behalf of its customers as part of bundle transactions of SVR services together with insurance services to be supplied by a third-party insurance company. Under such transactions, the customers are required accordingly to pay to the Brazilian subsidiary a monthly fee for all the bundled services (see Note 1Q regarding the revenue recognition of such bundle transactions). The insurance companies are obligated to refund any unearned insurance amounts to the Brazilian subsidiary in the event of termination of the transaction by the customers. The prepaid expenses are amortized over the contractual life of the insurance service with the insurance company (usually 12 months) by the straight-line method. The amortization is netted against the monthly receipts from customers for the bundled services.
|
X. |
Stock-based compensation
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 1 | - | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
Y. |
Obligation to purchase non-controlling interests
|
Z. |
Leases
|
1. |
The lease transfers ownership of the underlying asset to the lessee by the end of the lease term.
|
2. |
The lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise.
|
3. |
The lease term is for the major part of the remaining economic life of the underlying asset (Generally, 75% or more of the remaining economic life of the underlying assets).
|
4. |
The present value of the sum of the lease payments and any residual value guaranteed by the lessee equals or exceeds substantially all of the fair value of the underlying asset (Generally, 90% or more of the fair value of the underlying asset).
|
5. |
The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term.
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 1 | - | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
AA. |
Recently issued accounting pronouncements
|
AB. |
Recently issued accounting pronouncements, not yet adopted
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
AB. |
Recently issued accounting pronouncements, not yet adopted (cont.)
|
NOTE 2 | - | OTHER CURRENT ASSETS |
US dollars
|
||||||||
December 31,
|
||||||||
(in thousands)
|
2023
|
2022
|
||||||
Prepaid expenses (*)
|
|
|
||||||
Government institutions
|
|
|
||||||
Deferred contract costs (*)
|
|
|
||||||
Advances to suppliers
|
|
|
||||||
Employees
|
|
|
||||||
Others
|
|
|
||||||
|
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 3 | - | INVENTORIES |
US dollars
|
||||||||
December 31,
|
||||||||
(in thousands)
|
2023
|
2022
|
||||||
Finished products
|
|
|
||||||
Raw materials
|
|
|
||||||
|
|
NOTE 4 | - | INVESTMENTS IN AFFILIATED AND OTHER COMPANIES |
A. |
Investment in affiliated companies
|
US dollars
|
||||||||
December 31,
|
||||||||
(in thousands)
|
2023
|
2022
|
||||||
Bringg
|
|
|
||||||
Lumax
|
|
|
||||||
Ituran MOB
|
|
|
||||||
Cellutrack
|
|
|
||||||
|
|
B. |
Investment in other companies
|
NOTE 5 | - | OTHER NON-CURRENT ASSETS |
US dollars
|
||||||||
December 31,
|
||||||||
(in thousands)
|
2023
|
2022
|
||||||
Deferred contract costs (*)
|
|
|
||||||
Deposits
|
|
|
||||||
|
|
(*) |
See Note 1W.
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 6 | - | PROPERTY AND EQUIPMENT, NET |
A. |
Property and equipment, net consists of the following:
|
US dollars
|
||||||||
December 31,
|
||||||||
(in thousands)
|
2023
|
2022
|
||||||
Cost:
|
||||||||
Operating equipment (*)
|
|
|
||||||
Office furniture, equipment and computers
|
|
|
||||||
Land
|
|
|
||||||
Buildings
|
|
|
||||||
Vehicles
|
|
|
||||||
Leasehold improvements
|
|
|
||||||
|
|
|||||||
Less – accumulated depreciation (**)
|
(
|
)
|
(
|
)
|
||||
Total property and equipment, net
|
|
|
(*) |
As of December 31, 2023 and 2022, an amount of US$
|
(**) |
As of December 31, 2023 and 2022, an amount of US$
|
B. |
During the years ended December 31, 2023, 2022 and 2021, depreciation expenses were US$
|
NOTE 7 | - | LEASES |
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 7 | - | LEASES (cont.) |
|
US dollars
|
|||
|
Year Ended
|
|||
(in thousands)
|
December 31, 2023
|
|||
Operating annual lease cost:
|
||||
Office and warehouse space
|
|
|||
Base stations
|
|
|||
Vehicle
|
|
|||
Others
|
|
|||
|
|
|||
Weighted Average Remaining Lease Term (years):
|
||||
Office space
|
|
|||
Base stations
|
|
|||
Vehicle
|
|
|||
Others
|
|
|||
|
||||
Weighted Average Discount Rate (%):
|
||||
Office space
|
|
|||
Base stations
|
|
|||
vehicle
|
|
|||
Others
|
|
|
US dollars
|
|||
|
Year Ended
|
|||
(in million)
|
December 31, 2023
|
|||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|||
Operating cash flows from operating leases
|
|
US dollars
|
|||
(in thousands)
|
December 31, 2023
|
|||
|
||||
Period:
|
||||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
2028
|
|
|||
Thereafter
|
|
|||
Total operating lease payments
|
|
|||
Less: imputed interest
|
(
|
)
|
||
Present value of lease liabilities
|
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 8 | - | INTANGIBLE ASSETS, NET |
US dollars
|
||||||||||||||||||||||||
December 31,
|
Year ended December 31,
|
December 31,
|
||||||||||||||||||||||
2021
|
2022
|
2022
|
||||||||||||||||||||||
(in thousands)
|
Opening balance
|
Impairment
|
Amortization (*)
|
Additions
|
Translation differences
|
Closing balance
|
||||||||||||||||||
Costumer relationship
|
|
|
(
|
)
|
|
|
|
|||||||||||||||||
Technology
|
|
|
(
|
)
|
|
(
|
)
|
|
||||||||||||||||
Others
|
|
|
(
|
)
|
|
|
|
|||||||||||||||||
|
|
(
|
)
|
|
(
|
)
|
|
US dollars
|
||||||||||||||||||||||||
December 31,
|
Year ended December 31,
|
December 31,
|
||||||||||||||||||||||
2022
|
2023
|
2023
|
||||||||||||||||||||||
(in thousands)
|
Opening balance
|
Impairment
|
Amortization (*)
|
Additions
|
Translation differences
|
Closing balance
|
||||||||||||||||||
Costumer relationship
|
|
|
(
|
)
|
|
|
|
|||||||||||||||||
Technology
|
|
|
(
|
)
|
|
(
|
)
|
|
||||||||||||||||
Others
|
|
|
(
|
)
|
|
|
|
|||||||||||||||||
|
|
(
|
)
|
|
(
|
)
|
|
(*) |
As of December 31, 2023, the estimated aggregate amortization of intangible assets for the next five years is as follows: 2024- US$
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 9 | - | GOODWILL |
US dollars
|
||||||||||||
Telematics
services
|
Telematics products
|
Total
|
||||||||||
(in thousands)
|
||||||||||||
Balance as of January 1, 2022
|
|
|
|
|||||||||
Changes during 2022:
|
||||||||||||
Translation differences
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Balance as of December 31, 2022 (*)
|
|
|
|
|||||||||
Changes during 2023:
|
||||||||||||
Translation differences
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Balance as of December 31, 2023 (*)
|
|
|
|
(*) |
The accumulated amount of goodwill impairment loss as of December 31, 2023, and 2022 was US$
|
NOTE 10 | - | CREDIT FROM BANKING INSTITUTIONS |
A. |
Short term loans:
|
US dollars
|
||||||||
December 31,
|
||||||||
(in thousands)
|
2023
|
2022
|
||||||
Short-term loans - linked to the Mexican Pezo
|
|
|
||||||
Current maturities of long-term loan and credit line utilized (Note 10B)
|
|
|
||||||
|
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 10 | - | CREDIT FROM BANKING INSTITUTIONS (cont.) |
B. |
Long term loan:
|
• |
Equity to total assets Ratio - The Ratio will not be less than
|
• |
Total equity - Total equity will not be less than $
|
• |
Net debt to EBITDA Ratio - The Ratio will not exceed 4.
|
• |
EBITDA - EBITDA will not be less than $
|
C. |
Maturity dates:
|
US dollars
|
||||
December 31,
|
||||
(in thousands)
|
2023
|
|||
First year
|
|
|||
Second year
|
|
|||
|
D. | Lines of credit: |
NOTE 11 | - | OTHER CURRENT LIABILITIES |
Composition:
|
||||||||
US dollars | ||||||||
December 31,
|
||||||||
(in thousands)
|
2023
|
2022
|
||||||
Accrued expenses
|
|
|
||||||
Accrued payroll and related taxes
|
|
|
||||||
Government institutions
|
|
|
||||||
Accrued dividend
|
|
|
||||||
Operating lease liabilities, current
|
|
|
||||||
Others
|
|
|
||||||
|
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 12 | - | CONTINGENT LIABILITIES |
A. |
Claims
|
1. |
During year 2016 Brazilian Federal Communication Agency – Anatel issued a tax assessment for FUST contribution (contribution on telecommunication services) levied on the monitoring services rendered by us and additional tax assessment for FUNTELL contribution (contribution to Fund for the Technological Development of Telecommunication) levied on the monitoring services rendered by us regarding all for the period 2007-2012.Total amounts of approximately R$
|
2. |
Claims are filed against the Company and its subsidiaries from time to time during the ordinary course of business, usually with respect to civil, labor and commercial matters. The Company's management believes, based on its legal counsels' assessment, that the provision for contingencies recognized in the balance sheet is sufficient and that currently there are no claims (other than those described in this Note above) that are material, to the consolidated financial statements as a whole.
|
B. |
The Company was declared a monopoly under the Israeli Antitrust Law, 1988, in the market for the provision of systems for the location of vehicles in Israel. Under Israeli law, a monopoly is prohibited from taking certain actions, such as predatory pricing and the provision of loyalty discounts, which prohibitions do not apply to other companies. The Israeli Competition Authority may further declare that the Company has abused its position in the market. Any such declaration in any suit in which it is claimed that the Company engages in anticompetitive conduct may serve as prima facie evidence that the Company is either a monopoly or that it has engaged in anticompetitive behavior. Furthermore, it may be ordered to take or refrain from taking certain actions, such as setting maximum prices, in order to protect against unfair competition.
|
C. |
Commitments
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 13 | - | STOCKHOLDERS’ EQUITY |
A. |
Share capital:
|
1. |
Composition:
|
December 31, 2023 and 2022
|
Registered
|
Issued and outstanding
|
||||||
Ordinary shares of NIS
|
|
|
2. |
In September 2005, the Company registered its ordinary shares for trade in the United States.
|
3. |
The Ordinary shares of the Company confer upon their holders the right to receive notice to participate and vote in general meetings of the Company and the right to receive dividends, if and when, declared.
|
4. |
On July 21, 2021, the board of directors approved to continue the share buyback program that was approved on May 21, 2019 (total amount that was approved on May 21, 2019, was
|
5. |
Treasury stock have no voting rights.
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 13 | - | STOCKHOLDERS’ EQUITY (cont.) |
B. |
Retained earnings
|
1. |
In determining the amount of retained earnings available for distribution as a dividend, the Israeli Companies Law stipulates that the cost of the Company’s shares acquired either by the Company or its subsidiary (presented as a separate item in the consolidated balance sheet and the statement of changes in equity) must be deducted from the amount of retained earnings.
|
2. |
Dividends are declared and paid in NIS. Dividends paid to stockholders outside Israel are converted into dollars on the basis of the exchange rate prevailing at the date of declaration.
|
3. |
During May 2020 (As part of the steps the Company did in order to cope with Covid-19), the Company's board of directors unanimously approved a freeze on the dividend distribution policy until further notice.
|
4. |
On March 3, 2021, the board of directors unanimously approved the unfreeze of the dividend policy and approved the distribution of a cash dividend in the amount of $
|
5. |
On March 3, 2021, the board of directors also approved a dividend policy of $
|
6. |
In November 2023 our Board decided to resume to a $
|
7. |
In February 2024 the board of directors approved the increase of quarterly dividend to $
|
8. |
During the years ended December 31, 2023, 2022 and 2021, the Company declared dividends in the amount of US$
|
NOTE 14 | - | FINANCING EXPENSES, NET |
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2023
|
2022
|
2021
|
|||||||||
Short-term interest expenses commissions and other
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Loss in respect of marketable securities and other investments
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Interest expenses in respect of long-term loans
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Interest income in respect of deposits
|
|
|
|
|||||||||
Income related to taxes positions
|
|
|
|
|||||||||
Exchange rate differences and others, net
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Expenses in respect of changes in obligation to purchase non-controlling interests (*)
|
|
|
(
|
)
|
||||||||
(
|
)
|
(
|
)
|
(
|
)
|
(*) |
See Note 1Y
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 15 | - | INCOME TAX |
A. |
Taxes on income included in the statements of income:
|
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2023
|
2022
|
2021
|
|||||||||
Income taxes (tax benefit):
|
||||||||||||
Current taxes:
|
||||||||||||
In Israel
|
|
|
|
|||||||||
Outside Israel
|
|
|
|
|||||||||
|
|
|
||||||||||
Deferred taxes:
|
||||||||||||
In Israel
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Outside Israel
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
(
|
)
|
(
|
)
|
(
|
)
|
|||||||
Taxes in respect of prior years:
|
||||||||||||
In Israel
|
|
(
|
)
|
|
||||||||
Outside Israel
|
|
|
|
|||||||||
|
(
|
)
|
|
|||||||||
|
|
|
B. |
Measurement of results for tax purposes under the Income Tax (Inflationary Adjustments) Law, 1985 (the “Inflationary Adjustment Law”)
|
C. | The Law for the Encouragement of Capital Investments, 1959 (the "Investment Law") |
1. |
On December 22, 2016, the Israeli parliament passed the Law for Economic Efficiency (Legislative Amendments for Achieving Budget Objectives in the Budget Years 2017 and 2018) – 2016 (hereinafter – the “Economic Efficiency Law”) and on December 29, 2016, the Law was publicized in the Official Gazette. The Economic Efficiency Law, among other things, reduced the tax rate applicable to a preferred enterprise located in Development Zone A from
|
2. |
As of December 31, 2023, one Israeli subsidiary (located in areas other than Development Zone A) is entitled to a "Preferred Company " status pursuant to the investment law and subject to 16% corporate tax rate.
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 15 | - | INCOME TAX (cont.) |
D. |
The Law for the Encouragement of Capital Investments, 1959, under the 2016 amendment (the "Investment Law")
|
1. |
In December 2016 new legislation amended the Investments Law (the "2016 amendment"). Under the 2016 amendment a new status of "Technological Preferred Enterprise" was introduced to the Investment Law.
Technological Preferred Enterprise – an enterprise which, amongst other condition, is part of a consolidated Company with consolidated revenues of less than NIS
|
2. |
As of December 31, 2023, two Israeli subsidiaries (located in areas other than Development Zone A) are entitled to a "Technological Preferred Enterprise" status pursuant to the investment (under the 2016 amendment) law and subject to
|
E. |
Israeli corporate tax rates
|
F. |
Non-Israeli subsidiaries
|
G. |
Use of assumptions and judgments
|
H. |
Tax assessments
|
I. |
Carry forward foreign tax credits and tax losses
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 15 | - | INCOME TAX (cont.) |
J. |
The following is reconciliation between the theoretical tax on pretax income, at the applicable Israeli tax rate, and the tax expense reported in the financial statements:
|
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2023
|
2022
|
2021
|
|||||||||
Pretax income
|
|
|
|
|||||||||
Statutory tax rate
|
|
%
|
|
%
|
|
%
|
||||||
Tax computed at the ordinary tax rate
|
|
|
|
|||||||||
Nondeductible expenses (income)
|
(
|
)
|
|
(
|
)
|
|||||||
Losses and timing differences in respect of which no deferred taxes assets were recognized
|
(
|
)
|
|
|
||||||||
Tax adjustment in respect of different tax rates
|
|
|
|
|||||||||
Adjustment in respect of tax rate deriving from “approved enterprises”
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Tax related to previous years
|
|
(
|
)
|
|
||||||||
Others
|
|
(
|
)
|
|
||||||||
|
|
|
K. |
Summary of deferred taxes
|
Composition:
|
||||||||
US dollars
|
||||||||
December 31,
|
||||||||
(in thousands)
|
2023
|
2022
|
||||||
Deferred taxes
|
||||||||
Provision for vacation, recreation and bad debt
|
|
|
||||||
Provision for other employee related obligations
|
|
|
||||||
Provision for deferred revenues/expenses and other obligations
|
|
|
||||||
Other temporary differences, net
|
|
|
||||||
|
|
US dollars
|
||||||||
December 31,
|
||||||||
(in thousands)
|
2023
|
2022
|
||||||
Deferred income taxes included in long-term investments and other assets
|
|
|
||||||
Deferred income taxes included in long-term liabilities
|
(
|
)
|
(
|
)
|
||||
|
|
L. |
Income before income taxes is composed as follows:
|
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2023
|
2022
|
2021
|
|||||||||
The Company and its Israeli subsidiaries
|
|
|
|
|||||||||
Non-Israeli subsidiaries
|
|
|
|
|||||||||
|
|
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 16 | - | EARNINGS PER SHARE |
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2023
|
2022
|
2021
|
|||||||||
Net income attributable to stockholder's used for the computation of basic and diluted earnings per share
|
|
|
|
Number of shares
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2023
|
2022
|
2021
|
|||||||||
Weighted average number of shares used in the computation of basic and diluted earnings per share
|
|
|
|
NOTE 17 | - | RELATED PARTIES |
A. |
The Tzivtit Insurance Ltd. (“Tzivtit Insurance”), owned by a director of the Company, served as the Company’s insurance agent and provides the Company with elementary insurance and managers insurance.
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 17 | - | RELATED PARTIES (cont.) |
B. |
In February 2014, following the approval of the Company's general meeting of shareholders on January 28, 2014, the Company entered into new service agreements, setting forth the terms of service of its President, Co-Chief Executive Officers and its International Activity and Business Development Officer, in compliance with the Company's compensation policy for office holders; and E-Com entered into a service agreement setting forth the terms of service of its Chief Executive Officer in compliance with the Company's compensation policy for officer holders. The principal terms of these agreements are as follows:
|
• |
"Target-based Cash Incentives" means a cash incentive awarded to the Executive Office Holders for the Company's achievement of the following Profit-Before-Tax targets in each calendar year following the effective date of the above agreements, in which the Minimum Threshold (as defined below) has been achieved:
|
Company's Profit-Before-Tax Targets
(In US$ thousands) (*)
|
Level of Incentive - As a Percentage of the Executive Office Holder's Annual Cost of Pay
|
|
24,001 - 27,500
|
|
|
27,501-31,000
|
|
|
31,001-35,000
|
|
|
35,001-39,000
|
|
|
Above 39,001
|
|
(*) |
As of December 31, 2023, the estimated aggregate amortization of intangible assets for the next five years is as follows: 2024- US$
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 17 | - | RELATED PARTIES (cont.) |
B. |
(cont.) |
• |
"Excess Return Cash Incentives" means that at the end of each calendar year, the Company shall examine the Company's Stock Yield since January 1 of such year or, with respect to the first year of such grant –
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 17 | - | RELATED PARTIES (cont.) |
B. |
(cont.) |
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2023
|
2022
|
2021
|
|||||||||
Izzy Sheratzky
|
|
|
|
|||||||||
Eyal Sheratzky
|
|
|
|
|||||||||
Nir Sheratzky
|
|
|
|
|||||||||
Gil Sheratzky
|
|
|
|
NOTE 18 | - | SEGMENT REPORTING |
A. |
General information:
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 18 | - | SEGMENT REPORTING (cont.) |
B. |
Information about reported segment profit or loss and assets:
|
US dollars
|
||||||||||||
(in thousands)
|
Telematics services
|
Telematics products
|
Total
|
|||||||||
Year ended December 31, 2023
|
||||||||||||
Revenues
|
|
|
|
|||||||||
Operating income
|
|
|
|
|||||||||
Assets
|
|
|
|
|||||||||
Goodwill
|
|
|
|
|||||||||
Expenditures for assets
|
|
|
|
|||||||||
Depreciation and amortization
|
|
|
|
|||||||||
Year ended December 31, 2022
|
||||||||||||
Revenues
|
|
|
|
|||||||||
Operating income
|
|
|
|
|||||||||
Assets
|
|
|
|
|||||||||
Goodwill
|
|
|
|
|||||||||
Expenditures for assets
|
|
|
|
|||||||||
Depreciation and amortization
|
|
|
|
|||||||||
Year ended December 31, 2021
|
||||||||||||
Revenues
|
|
|
|
|||||||||
Operating income
|
|
|
|
|||||||||
Assets
|
|
|
|
|||||||||
Goodwill
|
|
|
|
|||||||||
Expenditures for assets
|
|
|
|
|||||||||
Depreciation and amortization
|
|
|
|
C. |
Information about reported segment profit or loss and assets:
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 18 | - | SEGMENT REPORTING (cont.) |
D. |
Reconciliations of reportable segment revenues, profit or loss, and assets, to the enterprise’s consolidated totals:
|
US dollars
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2023
|
2022
|
2021
|
|||||||||
Total revenues of reportable segment and consolidated revenues
|
|
|
|
|||||||||
Operating income
|
||||||||||||
Total operating income for reportable segments
|
|
|
|
|||||||||
Unallocated amounts:
|
||||||||||||
Financing income, net
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
Other expense, net
|
|
|
(
|
)
|
||||||||
Consolidated income before taxes on income
|
|
|
|
|||||||||
Assets
|
||||||||||||
Total assets for reportable segments (*)
|
|
|
|
|||||||||
Other unallocated amounts:
|
||||||||||||
Current assets
|
|
|
|
|||||||||
Investments in affiliated and other companies
|
|
|
|
|||||||||
Property and equipment, net
|
|
|
|
|||||||||
Other unallocated amounts
|
|
|
|
|||||||||
Consolidated total assets (at year end)
|
|
|
|
|||||||||
Other significant items
|
||||||||||||
Total expenditures for assets of reportable segments
|
|
|
|
|||||||||
Unallocated amounts
|
|
|
|
|||||||||
Consolidated total expenditures for assets
|
|
|
|
|||||||||
Total depreciation, amortization and impairment for reportable segments
|
|
|
|
|||||||||
Unallocated amounts
|
|
|
|
|||||||||
Consolidated total depreciation, amortization and impairment
|
|
|
|
(*) |
Including goodwill.
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 18 | - | SEGMENT REPORTING (cont.) |
E. |
Geographic information
|
Revenues
|
||||||||||||
Year ended December 31,
|
||||||||||||
(in thousands)
|
2023
|
2022
|
2021
|
|||||||||
Israel
|
|
|
|
|||||||||
Brazil
|
|
|
|
|||||||||
Others
|
|
|
|
|||||||||
Total
|
|
|
|
Property and equipment, net
|
||||||||||||
December 31,
|
||||||||||||
(in thousands)
|
2023
|
2022
|
2021
|
|||||||||
Israel
|
|
|
|
|||||||||
Brazil
|
|
|
|
|||||||||
Others
|
|
|
|
|||||||||
Total
|
|
|
|
- |
Revenues were attributed to countries based on customer location.
|
- |
Property and equipment were classified based on major geographic areas in which the Company operates.
|
F. |
Major customers
|
G. |
Major product lines and timing of revenue recognition
|
US dollars
|
||||||||||||||||||||||||
Reportable segments result of operations
|
||||||||||||||||||||||||
(in thousands)
|
Year ended December 31, 2022
|
Year ended December 31, 2023
|
||||||||||||||||||||||
Telematics services
|
Telematics products
|
Total
|
Telematics services
|
Telematics products
|
Total
|
|||||||||||||||||||
At a point of time
|
|
|
|
|
|
|
||||||||||||||||||
Over a period of time
|
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
US dollars
|
||||||||||||
Reportable segments result of operations
|
||||||||||||
(in thousands)
|
Year ended December 31, 2021
|
|||||||||||
Telematics services
|
Telematics products
|
Total
|
||||||||||
At a point of time
|
|
|
|
|||||||||
Over a period of time
|
|
|
|
|||||||||
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 19 | - | FINANCIAL INSTRUMENTS AND RISKS MANAGEMENT |
A. |
Concentrations of credit risks
|
B. |
Foreign exchange risk management
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 19 | - | FINANCIAL INSTRUMENTS AND RISKS MANAGEMENT (cont.) |
B. |
Foreign exchange risk management (cont.)
|
Assets derivatives
|
|||||
As of December 31, 2023
|
Thousands of US dollars
|
||||
Balance sheet location
|
Fair
value
|
||||
Derivatives designated as hedging instruments:
|
|||||
Foreign exchange contracts
|
Other current liabilities
|
|
Derivatives designated
as hedging instruments
|
Location of loss recognized in income
|
Amount of gain
recognized in income
|
|||
Year ended December 31, 2023
|
Thousands of US dollars
|
||||
Foreign exchange contracts
|
Unrealized losses in respect of derivative financial instruments designated for cash flow hedge
|
|
ITURAN LOCATION AND CONTROL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 19 | - | FINANCIAL INSTRUMENTS AND RISKS MANAGEMENT (cont.) |
C. |
Fair value of financial instruments
|
December 31, 2023
|
||||||||||||
(in thousands)
|
Level 1
|
Level 2
|
Level 3
|
|||||||||
Derivatives designated as hedging instruments
|
|
|
|
|||||||||
Trading securities
|
|
|
|
|||||||||
Total
|
|
|
|
December 31, 2022
|
||||||||||||
(in thousands)
|
Level 1
|
Level 2
|
Level 3
|
|||||||||
Trading securities
|
|
|
|
|||||||||
Total
|
|
|
|
F - 48