G. WILLI-FOOD INTERNATIONAL LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
-------- -------- -------- --------
2 0 0 8 2 0 0 7 2 0 0 8 2 0 0 7
-------- -------- -------- --------
NIS US DOLLARS (*)
------------------------ ------------------------
(IN THOUSANDS)
--------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents 46,712 61,649 13,936 18,391
Marketable securities 32,413 31,267 9,670 9,328
Trade receivables 77,188 63,728 23,027 19,012
Other receivables and prepaid expenses 9,406 4,374 2,806 1,305
Inventories 33,469 29,166 9,985 8,701
-------- -------- -------- --------
TOTAL CURRENT ASSETS 199,188 190,184 59,424 56,737
-------- -------- -------- --------
FIXED ASSETS
Cost 54,447 44,569 16,243 13,296
Less: accumulated depreciation and amortization 11,658 8,355 3,478 2,492
-------- -------- -------- --------
42,789 36,214 12,765 10,804
-------- -------- -------- --------
OTHER ASSETS
Goodwill 8,164 1,795 2,436 536
Deferred expenses 10,731 10,815 3,201 3,226
Intangible assets 2,806 103 837 31
Deferred tax 404 356 121 106
-------- -------- -------- --------
22,105 13,069 6,595 3,899
======== ======== ======== ========
264,082 239,467 78,784 71,440
======== ======== ======== ========
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES
Short-term loans 14,053 5,978 4,193 1,783
Trade payables 40,981 33,961 12,226 10,132
Related parties 2,475 3,945 738 1,177
Other payables and accrued expenses 13,527 3,655 4,035 1,090
-------- -------- -------- --------
TOTAL CURRENT LIABILITIES 71,036 47,539 21,192 14,182
-------- -------- -------- --------
LONG TERM LIABILITIES
Long term loan 953 - 284 -
Deffered tax 38 118 11 35
Accrued severance pay 598 163 179 49
-------- -------- -------- --------
TOTAL LONG TERM LIABILITIES 1,589 281 474 84
-------- -------- -------- --------
WARRANTS TO ISSUE SHARES 101 1,040 31 310
-------- -------- -------- --------
SHAREHOLDERS' EQUITY
Ordinary shares NIS 0.10 par value
(authorized - 50,000,000 shares, issued and
outstanding
- 10,267,893 shares 1,113 1,113 332 332
Additional paid-in capital 59,303 59,056 17,692 17,618
Foreign currency translation reserve (863) (414) (257) (123)
Retained earnings 118,842 112,233 35,454 33,482
Minority Interest 12,961 18,619 3,866 5,555
-------- -------- -------- --------
191,356 190,607 57,087 56,864
======== ======== ======== ========
264,082 239,467 78,784 71,440
======== ======== ======== ========
(*) Convenience translation into U.S. dollars
F - 2
G. WILLI-FOOD INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS THREE MONTHS SIX MONTHS
----------------------------- ------------------------------ -----------------------------
ENDED JUNE 30, ENDED JUNE 30,
------------------------------------------------------------------- -----------------------------
2 0 0 8 2 0 0 7 2 0 0 8 2 0 0 7 2 0 0 8 2 0 0 7
----------- ----------- ----------- ----------- ----------- -----------
NIS US DOLLARS (*)
------------------------------------------------------------------- -----------------------------
I N T H O U S A N D S (EXCEPT PER SHARE AND SHARE DATA)
--------------------------------------------------------------------------------------------------------
Sales 185,481 127,216 79,036 55,771 55,334 37,952
Cost of sales 138,659 93,439 62,271 42,601 41,366 27,876
----------- ----------- ----------- ----------- ----------- -----------
GROSS PROFIT 46,822 33,777 16,765 13,170 13,968 10,076
----------- ----------- ----------- ----------- ----------- -----------
Selling expenses 17,538 12,316 8,436 6,312 5,232 3,674
General and administrative
expenses 13,901 8,566 7,752 4,088 4,147 2,555
Other (income)
expense 1,981 (9) 1,981 (9) 591 (3)
----------- ----------- ----------- ----------- ----------- -----------
Total operating expenses 33,420 20,873 18,169 10,391 9,970 6,226
----------- ----------- ----------- ----------- ----------- -----------
OPERATING INCOME
(LOSS) 13,402 12,904 (1,404) 2,779 3,998 3,850
Financial income 2,026 2,534 1,207 1,743 605 756
Financial expense 3,465 3,025 936 1,143 1,034 902
----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before
taxes on income 11,963 12,413 (1,133) 3,379 3,569 3,704
Taxes on income 3,750 2,861 312 193 1,119 854
----------- ----------- ----------- ----------- ----------- -----------
INCOME (LOSS) AFTER TAXES ON
INCOME 8,213 9,552 (1,445) 3,186 2,450 2,850
=========== =========== =========== =========== =========== ===========
RELATED TO:
Company Shareholders' 6,609 7,455 (1,986) 2,332 1,972 2,224
Minority interest 1,604 2,097 541 854 478 626
----------- ----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS) 8,213 9,552 (1,445) 3,186 2,450 2,850
=========== =========== =========== =========== =========== ===========
Earnings per share data:
Earnings per share:
Basic 0.64 0.73 (0.19) 0.23 0.19 0.22
=========== =========== =========== =========== =========== ===========
Diluted 0.64 0.73 (0.19) 0.23 0.19 0.22
=========== =========== =========== =========== =========== ===========
Shares used in computing basic
and diluted earnings per
ordinary share: 10,267,893 10,267,893 10,267,893 10,267,893 10,267,893 10,267,893
=========== =========== =========== =========== =========== ===========
(*) Convenience translation into U.S. dollars
F - 3
G. WILLI-FOOD INTERNATIONAL LTD.
CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
FOREIGN
ADDITIONAL CURRENCY
SHARE PAID-IN TRANSLATION RETAINED SHAREHOLDERS' MINORITY
CAPITAL CAPITAL DJUSTMENTS EARNINGS NIS EQUITY INTEREST TOTAL
-------- -------- -------- -------- -------- -------- --------
NIS
-----------------------------------------------------------------------------------------------------
(IN THOUSANDS)
-----------------------------------------------------------------------------------------------------
BALANCE - JANUARY 1, 2007 1,113 59,056 - 109,891 170,060 14,750 184,810
Foreign currency translation reserve - - (414) - (414) (201) (615)
Purchase of subsidiary - - - - - 1,919 1,919
Purchase of additional shares in
subsidiary - - - - - (146) (146)
Net income for the period - - - 2,342 2,342 2,297 4,639
-------- -------- -------- -------- -------- -------- --------
BALANCE - DECEMBER 31, 2007 1,113 59,056 (414) 112,233 171,988 18,619 190,607
Foreign currency translation reserve - - (449) - (449) (310) (759)
Purchase of subsidiary - - - - - 2,545 2,545
Purchase of additional shares in
subsidiary - 247 - - 247 (9,497) (9,250)
Net income for the period - - - 6,609 6,609 1,604 8,213
-------- -------- -------- -------- -------- -------- --------
BALANCE - JUNE 30, 2008 1,113 59,303 (863) 118,842 178,395 12,961 191,356
======== ======== ======== ======== ======== ======== ========
F - 4
G. WILLI-FOOD INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS THREE MONTHS SIX MONTHS
---------------------- ---------------------- ----------------------
ENDED JUNE 30, ENDED JUNE 30,
---------------------------------------------------- ----------------------
2 0 0 8 2 0 0 7 2 0 0 8 2 0 0 7 2 0 0 8(*) 2 0 0 7(*)
------- ------- ------- ------- ------- -------
NIS US DOLLARS
---------------------------------------------------- ----------------------
(IN THOUSANDS)
----------------------------------------------------------------------------------
CASH FLOWS - OPERATING ACTIVITIES
Net income (loss) 8,213 9,552 (1,445) 3,186 2,450 2,850
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization 2,266 819 1,173 538 676 244
Deferred income taxes (128) (69) (290) 111 (38) (21)
Gain on disposition of fixed assets - (9) - (9) - (3)
Unrealized loss (gain) on marketable securities 306 (813) (204) (860) 91 (243)
Revaluation of loans from banks 31 - 158 - 9 -
CHANGES IN ASSETS AND LIABILITIES:
Decrease (Increase) in:
Trade accounts receivable (18) (13,662) 22,018 5,189 (5) (4,076)
Receivables and other current assets (3,923) 512 (713) 2,998 (1,170) 153
Inventory (1,681) (3,950) 18,056 8,442 (501) (1,178)
Deferred expenses 106 27 52 27 31 8
Increase (Decrease) in:
Trade accounts payable (4,070) 12,460 (10,839) (1,365) (1,214) 3,717
Payables and other current liabilities 5,161 (3,160) (2,335) 1,388 1,540 (943)
warrants to issue shares of subsidiary (939) 2,498 (626) 879 (280) 745
Accrued severance pay, net 84 (102) 66 (106) 25 (30)
------- ------- ------- ------- ------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,408 4,103 25,071 20,418 1,614 1,223
------- ------- ------- ------- ------- -------
(*) Convenience translation into U.S. dollars.
F - 5
G. WILLI-FOOD INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS THREE MONTHS SIX MONTHS
---------------------- ---------------------- ----------------------
ENDED JUNE 30, ENDED JUNE 30,
---------------------------------------------------- ----------------------
2 0 0 8 2 0 0 7 2 0 0 8 2 0 0 7 2 0 0 8(*) 2 0 0 7(*)
------- ------- ------- ------- ------- -------
NIS US DOLLARS
---------------------------------------------------- ----------------------
(IN THOUSANDS)
----------------------------------------------------------------------------------
CASH FLOWS - INVESTING ACTIVITIES
Proceeds from realization (purchase) of
marketable securities, net (1,452) (17,757) (1,823) (15,731) (433) (5,298)
Purchase of additional shares in subsidiary (9,250) - - - (2,760) -
Purchase of subsidiary (7,108) (15,400) (880) (804) (2,120) (4,594)
Additions to fixed assets (1,714) (9,068) (723) (1,787) (511) (2,705)
Additions to intangible assets (50) - (50) - (15) -
Long term deposit, net (35) - 13 - (10) -
Proceeds on disposition of fixed assets - 9 - 9 - 3
------- ------- ------- ------- ------- -------
NET CASH USED IN INVESTING ACTIVITIES (19,609) (42,216) (3,463) (18,313) (5,849) (12,594)
------- ------- ------- ------- ------- -------
CASH FLOWS - FINANCING ACTIVITIES
Short-term bank credit, net - - (140) - - -
Short-term bank payments (2,403) - (2,041) - (717) -
Short-term bank borrowings 1,951 6,374 1,198 141 582 1,901
------- ------- ------- ------- ------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES (452) 6,374 (983) 141 (135) 1,901
------- ------- ------- ------- ------- -------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS IN SUBSIDIARY (284) (218) (102) (66) (85) (65)
======= ======= ======= ======= ======= =======
Net change in cash and cash equivalents (14,937) (31,957) 20,523 2,180 (4,455) (9,535)
Cash and cash equivalents at beginning of year 61,649 91,398 26,189 57,261 18,391 27,268
------- ------- ------- ------- ------- -------
Cash and cash equivalents at end of year 46,712 59,441 46,712 59,441 13,936 17,733
======= ======= ======= ======= ======= =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Acquisition of intangible assets on credit 1,950 - 1,950 - 582 -
======= ======= ======= ======= ======= =======
(*) Convenience translation into U.S. dollars.
F - 6
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL
The unaudited Condensed Interim Consolidated Financial Statements should be
read in conjunction with the audited consolidated financial statements and
notes for the year ended December 31, 2007 included in the Company's Annual
Report on Form 20-F.
The Company's consolidated financial results are presented in accordance
with International Financial Reporting Standards ("IFRS"). In prior years
the Company prepared its financial reports in accordance with generally
accepted accounting principles in Israel ("IL GAAP"). The Company recasted
the comparative amounts included in this financial results to IFRS.
NOTE 2 - DIFFERENCES BETWEEN IFRS AND U.S. GAAP
A. In accordance with U.S. GAAP, SFAS No. 115, changes in trading
securities should be presented in the statement of cash flows as part
of the operating activities. The following table provides a
reconciliation of the Statements of Cash flows for the six and three
month periods ended June 30, 2008 and June 30, 2007 in accordance with
U.S. GAAP:
SIX MONTHS THREE MONTHS SIX MONTH
ENDED JUNE, 30 ENDED JUNE, 30 ENDED JUNE, 30
---------------------- ---------------------- ----------------------
2 0 0 8 2 0 0 7 2 0 0 8 2 0 0 7 2 0 0 8 (*) 2 0 0 7 (*)
------- ------- ------- ------- ------- -------
NIS US DOLLARS US DOLLARS
---------------------------------------------------- ------- -------
(IN THOUSANDS)
----------------------------------------------------------------------------------
Net cash provided by operating
activities before adjustment 5,408 4,103 25,071 20,418 1,614 1,223
Adjustment (1,452) (17,757) (1,823) (15,731) (433) (5,298)
------- ------- ------- ------- ------- -------
Net cash provided by (used in)
operating activities after
adjustment 3,956 (13,654) 23,248 4,687 1,181 (4,075)
======= ======= ======= ======= ======= =======
Net cash used in investing
activities before adjustment (19,609) (42,216) (3,463) (18,313) (5,849) (12,594)
Adjustment 1,452 17,757 1,823 15,731 433 5,298
------- ------- ------- ------- ------- -------
Net cash used in investing
activities before adjustment (18,157) (24,459) (1,640) (2,582) (5,416) (7,296)
======= ======= ======= ======= ======= =======
B. In July 2006, the FASB issued FASB Interpretation No. 48, "Accounting
for Uncertainty in Income Taxes, an interpretation of FASB Statement
No. 109" (FIN 48). FIN 48 clarifies the accounting for uncertainty in
income taxes by prescribing the recognition threshold a tax position
is required to meet before being recognized in the financial
statements. It also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods,
disclosure, and transition. FIN 48 is effective for fiscal years
beginning after December 15, 2006 and was adopted by the Company in
2007.
A reconciliation of the beginning and ending amount of unrecognized
tax Benefit is as follows:
F - 8
G. WILLI-FOOD INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - DIFFERENCES BETWEEN ISRAELI AND U.S. GAAP (CONT.)
B. (CONT.)
JUNE 30, DECEMBER 31,
2008 2007
--- ---
NIS
-------------
(IN THOUSANDS)
-------------
Beginning balance as of the beginning of the year 639 229
Additions:
Tax positions for current year - 410
--- ---
Ending balance 639 639
=== ===
Total Interest and penalties relating to unrecognized tax benefit for
the year were not material.
In accordance to the company policy interest expenses related to tax
authorities are classified in financial expenses and penalties related
to tax authorities are classified in general and administration
expenses
(*) Convenience translation into U.S. dollars
C. In accordance with IFRS IAS 32 (the local GAAP of the Company starting
January 1, 2008) options which their exercise price is linked to the
Israeli CPI has to be classified as liabilities and subsequently
marked to market through earnings. Under US GAAP EITF 00-19, these
options can be classified in equity, initially measured at fair value.
Subsequent changes in values are not recognized as long as the options
still meet the criteria for classification in equity.
SIX MONTHS THREE MONTHS SIX MONTH
ENDED JUNE, 30 ENDED JUNE, 30 ENDED JUNE, 30
-------------------- -------------------- --------------------
2 0 0 8 2 0 0 7 2 0 0 8 2 0 0 7 2 0 0 8 (*) 2 0 0 7 (*)
------ ------ ------ ------ ------ ------
NIS US DOLLARS US DOLLARS
----------------------------------------------- ------ ------
(IN THOUSANDS)
--------------------------------------------------------------------------
Net income (loss)
before adjustment 8,213 9,552 (1,445) 3,186 2,450 2,850
Adjustment (685) 2,141 (457) 658 (204) 639
------ ------ ------ ------ ------ ------
Net income (loss)
after adjustment 7,528 11,693 (1,902) 3,844 2,246 3,489
====== ====== ====== ====== ====== ======
F - 9
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
The Company is an Israeli-based company engaged, directly and through
subsidiaries, in the design, import, manufacturing, marketing and distribution
of a broad range of food products purchased from over 120 suppliers worldwide
and marketed throughout Israel, and to a much lesser extent, the areas
administered by the Palestinian Authority. The products imported by the Company
are marketed in Israel and sold to over 2,000 customers, including supermarket
chains in the organized market, private supermarket chains, mini-markets,
wholesalers, manufacturers and institutional consumers. The Company also sells
its products outside Israel to a variety of customers around the world (U.S.,
Canada, England, Belgium, France, Switzerland, Australia, South America, Mexico,
Argentina and Chile), mainly by its subsidiary Baron and Kirkeby.
The Company was incorporated in Israel in January 1994 and commenced operations
in February 1994.
Since the beginning of last year, the Company has taken steps to expand its
business inside and outside of Israel. In January 2008, the company purchased
51% of the interests of Shamir Salads (2006) Ltd. - an Israeli manufacturer and
distributor of pre-packaged chilled kosher Mediterranean dips and spreads in
Israel and abroad, and in February 2008, the Company's subsidiary Gold Frost
purchased 51% of the interests from the owners of a dairy distributor in Denmark
Kirkeby International Foods A/S.
The financial information below reflects the operations of the Company and its
subsidiaries on a consolidated basis.
SIX MONTHS ENDED JUNE 30, 2008
SALES
Revenues for the six-month period ended June 30, 2008 increased 45.8% to NIS
185.5 million (US $55.3 million) compared to revenues of NIS 127.2 million (US
$38.0 million) in the six-month period ended June 30, 2007. The increase in
revenues was driven by the Company's organic growth in the home market and its
expansion of new business units as mentioned above.
GROSS PROFIT
Gross profit for the six-month period ended June 30, 2008 increased 38.6% to NIS
46.8 million (US $14 million), or 25.2% of sales, compared to gross profit of
NIS 33.8 million (US $10.1 million) for the six-month period ended June 30,
2007, or 26.6% of sales.
SELLING AND MARKETING EXPENSES
Sales and marketing expenses for the six-month period ended June 30, 2008
increased 42.4% to NIS 17.5 million (US $5.2 million) compared to NIS 12.3
million (US $3.7 million) in the six-month period ended June 30, 2007. The
increase was mainly due to the consolidation of our new business units.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the six-month period ended June 30, 2008
increased 62.3% to NIS 13.9 million (US $4.1 million) compared to NIS 8.6
million (US $2.6 million) in the six-month period ended June 30, 2007. The
increase was mainly due to the consolidation of our new business units and due
to the transitional activities related to the closing down of WF Kosher Food
Distributors Ltd. - Laish Israeli ("WF LAISH"), in the amount of approximately
NIS 2.6 million (US $0.8 million).
OTHER EXPENSE
Other expense for the six-month period ended June 30, 2008 was due to a final
arbitration award entered against the Company for damages in the amount of NIS
2.0 million ($0.6 million) in connection with a dispute with the Vitaroz Corp.
OPERATING INCOME
Operating income for the six-month period ended June 30, 2008 increased 3.9% to
NIS 13.4 million (US $4.0 million) from NIS 12.9 million (US $3.9 million)
reported in the six-month period ended June 30, 2007.
FINANCIAL INCOME (EXPENSE)
Financial income for the six-month period ended June 30, 2008 decreased 20% to
NIS 2.0 million (US $0.6 million) compared to NIS 2.5 million (US $0.8 million)
in the six-month period ended June 30, 2007. Financial expense for the six-month
period ended June 30, 2008 increased 14.5% to NIS 3.5 million (US $1.0 million)
compared to NIS 3.0 million (US $0.9 million) in the six-month period ended June
30, 2007. The decrease in financial income and the increase in financial expense
were mainly due to the loss from marketable securities opposite to a profit in
the comparable period last year.
TAXES ON INCOME
Taxes on income for the six-month period ended June 30, 2008 amounted to NIS 3.8
million (US $1.1 million) compared to NIS 2.9 million (US $0.9 million) in the
six-month period ended June 30, 2007.
NET INCOME
Net income for the six-month period ended June 30, 2008 decreased 14% to NIS 8.2
million (US $2.5 million), or 4.4% of sales, from NIS 9.6 million (US $2.9
million), or 7.5% of sales, for the six-month period ended June 30, 2007.
LIQUIDITY AND CAPITAL RESOURCES
For the six-month period ended June 30, 2008 cash and cash equivalents decreased
from approximately NIS 61.6 million (US $18.4 million) at December 31, 2007 to
approximately NIS 46.7 million (US $13.9 million) as of June 30, 2008.
For the six-month period ended June 30, 2008, the Company generated a positive
cash flow from operating activities of approximately NIS 5.4 million (US $1.6
million) compared to NIS 4.1 million (US $1.2 million) in the six-month period
ended June 30, 2007. This increase was mainly due to increase in depreciation
and amortization of approximately NIS 2.3 million (US $0.7 million) (compared to
NIS 0.8 million (US $0.2 million) in the six-month period ended June 30, 2007)
and to unrealized loss on marketable securities of NIS 0.3 million (US$0.1
million) (compared to unrealized gain on marketable securities of NIS 0.8
million (US $0.2 million).
During the six-month period ended June 30, 2008, the Company utilized a cash
flow of NIS 19.6 million (US $5.8 million) from investing activities (compared
to NIS 42.2 million (US $12.6 million) in the six-month period ended June 30,
2007). This decrease was mainly from the purchase of marketable securities, net
of NIS 1.5 million (US $0.4 million) (compared to NIS 17.8 million (US $5.3
million) in the six-month period ended June 30, 2007) and due to a lower
investment in fixed assets in the amount of NIS 1.7 million (US $0.5 million)
(compared to NIS 9.1 million (US $2.7 million) in the six-month period ended
June 30, 2007).
During the six-month period ended June 30, 2008, the Company utilized a cash
flow of NIS 0.5 million (US $0.1 million) from financing activities mainly due
to short term bank borrowing of NIS 2.0 million (US $0.6 million) (compared to
NIS 6.4 million (US $1.9 million) generated in the six-month period ended June
30, 2007).
THREE MONTHS ENDED JUNE 30, 2008
SALES
Revenues for the three-month period ended June 30, 2008 increased 41.7% to NIS
79.0 million (US $23.6 million) compared to revenues of NIS 55.8 million (US
$16.6 million) in the three-month period ended June 30, 2007. The increase in
revenues was driven by the Company's organic growth in the home market and its
expansion of new business units.
GROSS PROFIT
Gross profit for the three-month period ended June 30, 2008 increased 27.3% to
NIS 16.8 million (US $5.0 million), or 21.2% of sales, compared to gross profit
of NIS 13.2 million (US $3.9 million) for the three-month period ended June 30,
2007, or 23.6% of sales. The global increase in the prices of raw food materials
overall, and in particular goods related to milk and dairy products, had a
negative impact on gross profit for the period.
SELLING AND MARKETING EXPENSES
Sales and marketing expenses for the three-month period ended June 30, 2008
increased 33.7% to NIS 8.4 million (US $2.5 million) compared to NIS 6.3 million
(US $1.9 million) in the three-month period ended June 30, 2007. The increase is
mainly due to the consolidation of our new business units.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the three-month period ended June 30,
2008 amounted to NIS 7.8 million (US $2.3 million) compared to NIS 4.1 million
(US $1.2 million) in the three-month period ended June 30, 2007. The increase
was mainly due to the consolidation of our new business units and due to the
transitional activities related to the closing down of WF Laish in the amount of
approximately NIS 2.6 million (US $0.8 million).
OTHER EXPENSE
Other expense for the three -month period ended June 30, 2008 was due to a final
arbitration award entered against the Company for damages in the amount of NIS
2.0 million ($0.6 million).
OPERATING INCOME (LOSS)
Operating loss for the three-month period ended June 30, 2008 amounted NIS 1.4
million (US $0.4 million) compared to operating income of NIS 2.8 million (US
$0.8 million) reported in the three-month period ended June 30, 2007.
FINANCIAL INCOME (EXPENSE)
Financial income for the rhree-month period ended June 30, 2008 decreased 30.8%
to NIS 1.2 million (US $0.4 million) compared to NIS 1.7 million (US $0.5
million) in the three-month period ended June 30, 2007. Financial expense for
the three-month period ended June 30, 2008 decreased 18.1% to NIS 0.9 million
(US $0.3 million) compared to NIS 1.1million (US $0.3 million) in the
three-month period ended June 30, 2007.
TAXES ON INCOME
Taxes on income for the three-month period ended June 30, 2008 amounted to NIS
0.3 million (US $0.1 million) compared to NIS 0.2 million (US $0.1 million) in
the three-month period ended June 30, 2007.
NET INCOME (LOSS)
Net loss for the three-month period ended June 30, 2008 amounted to NIS 1.4
million (US $0.4 million), compared to Net income of NIS 3.2 million (US $1.0
million) for the three-month period ended June 30, 2007.
LIQUIDITY AND CAPITAL RESOURCES
For the three-month period ended June 30, 2008, the Company generated a positive
cash flow from operating activities of approximately NIS 25.1 million (US $7.5
million) compared to NIS 20.4 million (US $6.1 million) in the three-month
period ended June 30, 2007. The increase was mainly due to an increase in
inventory of approximately NIS 18.1 million (US $5.4 million) (compared to NIS
8.4 million (US $2.5 million) in the three-month period ended June 30, 2007),
and by a increase in trade accounts receivables of approximately NIS 22.0
million (US $6.6 million) (compared to approximately NIS 5.2 million (US $1.5
million) in the three-month period ended June 30, 2007), offset by a decrease in
trade accounts payables of approximately NIS 10.8 million (US $3.2 million)
(compared to approximately NIS 1.4 million (US $0.4 million) in the three-month
period ended June 30, 2007).
During the three-month period ended June 30, 2008, the Company utilized a cash
flow of NIS 3.5 million (US $1.0 million) from investing activities (compared to
NIS 18.3 million (US $5.5 million) in the three-month period ended June 30,
2007), mainly from the purchase of marketable securities, net of NIS 1.8 million
(US $0.5 million) (compared to NIS 15.7 million (US $4.7 million) in the
three-month period ended June 30, 2007), and by lower investment in fixed assets
from NIS 1.8 million (US $0.5 million) in the three-month period ended June 30,
2007 to NIS 0.7 million (US $0.2 million) in the three-month period ended June
30, 2008.