Board of Directors Meeting Held in Nahariya as Show of Solidarity
With Northern Residents TEL AVIV, Israel, August 8
/PRNewswire-FirstCall/ -- Koor Industries Ltd. (NYSE:KOR), (the
"Company", "Koor") a leading Israeli holding company, reported
today its consolidated financial results for the second quarter and
the first six months ended June 30, 2006. Change in Control of Koor
Industries On July 3, 2006 Discount Investment Corporation, a
company controlled by IDB Development Corporation, completed the
acquisition of 30.9% of Koor from entities related to the Bronfman
family, and a company related to the family of Mr. Jonathan Kolber,
Koor's former CEO. IDB Development holds an additional 10% of Koor
directly; therefore the IDB Group holds a total of 41% of Koor. On
July 27, 2006 Mr. Raanan Cohen was nominated Chief Executive
Officer, replacing Mr. Jonathan Kolber who now serves as Chairman
of the Board. Raanan Cohen, Koor Industries' new Chief Executive
Officer said "I look forward to working together with the companies
and their respective managements with a view to growing the
businesses, while identifying new and lucrative opportunities. As
announced several days ago, we continue to seek to broaden and
diversify our financial resources through possible debentures
issuance to the public in Israel with a view to further enhancing
our portfolio." First Six Months 2006 Results Net income for the
first six months totaled $1.7 million or $0.16 per ordinary share
and $0.03 per American Depositary Share ("ADS") compared to $39.2
million or $2.39 per ordinary share and $0.48 per ADS last year.
Net income for the six months was affected by several one time
items outlined below and in the review of the second quarter. Net
income for the first six months included, in the first quarter
2006, the net impact of $8.6 million as a result of the initial
implementation of Israel accounting standard no. 22 (treatment of
financial instruments). Net income for the first quarter of 2005
included a $29.2 million capital gain from the sale of 15.9 million
Makhteshim Agan shares held by Koor. Second Quarter 2006 Results
Net loss for the second quarter totaled $21.3 million or $1.34 per
ordinary share and $0.27 per American Depositary Share ("ADS")
compared to net income of $14.6 million or $0.87 per ordinary share
and $0.17 per ADS last year. Results for the quarter were
negatively affected by several one time items primarily an $11.7
million expense representing Koor's share of the provisions
recorded at Telrad following reorganization measures, and a $5.9
million charge following the retirement of several of Koor's senior
managers and employees. In addition, Koor recorded $5.1 million in
charges mainly relating to the decline in fair value of certain
assets in the portfolio. Net income, excluding the impact of the
one-time items, totaled $1.4 million. Summarizing the quarter, Ran
Maidan, Chief Financial Officer of Koor Industries said: "This
quarter Makhteshim Agan continued to generate top line growth of
11% and substantial operating cash flow of $200 million, despite
the competitive business environment. ECI Telecom continued to
present revenue growth with a strong excess cash balance of $259
million. The one time events this quarter, mainly the restructuring
charges at Telrad and the expenses relating to the retirement of
several senior managers and employees at Koor, weighed heavily on
our results causing us to present a net loss. Looking ahead, we
believe that the measures adopted at Telrad will fortify the
company and increase its ability to compete." Results of Key
Holdings* Makhteshim-Agan Industries (33.7% end-Q2 2006, TASE:
MAIN, recorded according to equity method) Revenues for the first
six months increased 2% totaling $955.9 million compared to $933.5
million for the same period in 2005. Net profit for the six months
totaled $97.9 million, compared to $111.0 million for the first six
months of 2005. Revenues for the second quarter increased 11%
totaling $462.0 million compared to $416.5 million for the same
period in 2005. Net profit for the quarter totaled $40.2 million,
compared to $50.1 million for the second quarter of 2005. ECI
Telecom (28%, NASDAQ: ECIL, recorded according to equity method;
prepared in accordance with US GAAP) Revenues for the first six
months increased 11% totaling $332.3 million compared to $298.3
million in the first six months of 2005. Net profit for the six
months totaled $12.7 million, compared to $26.0 million in the same
period last year. Revenues for the second quarter increased 11%
totaling $170.3 million compared to $152.9 million in the second
quarter of 2005. Net profit for the quarter totaled $9.6 million,
compared to $15.6 million in the second quarter last year. Results
for the second quarter of 2006 include charges of an aggregate of
$3.9 million for share-based compensation, which did not impact the
results of the second quarter of 2005. Results for the second
quarter of 2005 included a one-time $10.4 million gain on the sale
of a receivable offset by several impairments which totaled $3.9
million. Elbit Systems (7.7%, NASDAQ: ESLT, recorded according to
cost method since Q2 2005) Revenues for the first six months of
2006 increased 43% totaling $679.2 million compared to $474.5
million for the same period in 2005. Net profit for the six months
totaled $29.5 million, compared to a $23.6 million for the first
six months of 2005. At the end of the second quarter Elbit's
order-backlog increased to $3.6 billion. Revenues for the second
quarter increased 41% totaling $344.8 million compared to $243.8
million for the same period in 2005. Net profit for the quarter
totaled $15.1 million, compared to $10.9 million for the second
quarter of 2005. Telrad Networks (61% - recorded according to
equity method in Q2 2006; proportionately consolidated in Q2 2005)
As part of an overall reorganization plan Telrad signed an
agreement for the retirement of a substantial number of unionized
employees and provided for the severance payments associated with
this agreement in the second quarter. The reorganization and the
associated one time charges also included management changes and
headquarter cutbacks. Revenues for the first six months of 2006
totaled $45.1 million, compared to $40.1 million for the same
period in 2005. Net loss from continuing operations for the six
months totaled $23.0 million, compared to a $16.5 million for the
same period in 2005. Revenues for the second quarter of 2006
totaled $20.6 million, compared to $20.3 million for the second
quarter in 2005. Net loss from continuing operations for the
quarter totaled $22.4 million, compared to a $1.6 million for the
second quarter in 2005. Net loss for the quarter included one time
charges amounting to $18.2 million following the restructuring
processes implemented at the end of the second quarter of 2006.
Excluding these charges, net loss for the quarter totaled $4.2
million, compared to $1.6 million in the second quarter of 2005.
The above-mentioned results for the second quarter and six months
exclude the results of Connegy, a Telrad subsidiary which was
divested during the first quarter of 2006, and whose results were
classified under `discontinued operations'. Including the results
of Connegy, Telrad's net loss for the six months totaled $22.7
million, compared to $17.9 million in the first six months last
year. As of June 30, 2006, loans to banks and institutional
investors of Koor Industries', and its wholly owned subsidiaries,
aggregated approximately NIS 1.8 billion ($413 million). Cash, cash
equivalents and short term deposits of the Company and its wholly
owned subsidiaries as of June 30, 2006, aggregated approximately
NIS 0.5 billion ($132 million). The net debt of the Company and its
wholly owned subsidiaries as of June 30, 2006, resulting from the
above, was approximately NIS 1.3 billion ($281 million). * Koor
Industries and its Key Holdings' results are presented as
published, and except as noted with respect to ECI Telecom, are
prepared in accordance with the Israeli GAAP. Differences may occur
during consolidation given accounting principles and currency
translation differences. * The results of the companies reporting
in New Israeli Shekels (NIS) were converted to US$ using the NIS$
conversion rate as at June 30, 2006 of NIS 4.44. Conference call
details: Date: August 9, 2006 Time: 09:00 am EDT (14:00 UK, 16:00
Israel) United States phone: 1-866-860-9642 Canada phone:
1-866-485-2399 UK phone: 0-800-917-9141 Israel or International:
+972-3-918-0609 Replay no. (until September 9, 2006):
1-866-276-1002 (US), +972-3-925-5929 (International) or on Koor's
website under `Investor Relations' - http://www.koor.com/ Financial
Tables Follow About Koor Koor Industries is a leading holding
company, focusing on high-growth, internationally-oriented, Israeli
companies. Koor actively invests in agrochemicals through
Makhteshim Agan Industries (TASE:MAIN); in telecommunications and
technology through its holdings in ECI Telecom (NASDAQ:ECIL),
Telrad Networks and ECtel (NASDAQ:ECTX); in the defense industry
through Elbit Systems (NASDAQ:ESLT); and start-ups through Koor
Corporate Venture Capital. Koor's ADSs (American Depositary Shares)
are traded on the New York Stock Exchange (NYSE:KOR) and Koor's
ordinary shares are traded on the Tel Aviv Stock Exchange
(TASE:KOR). For additional information on Koor please access our
website http://www.koor.com/. For further information, please
contact: Ran Maidan - Senior Vice President and Chief Financial
Officer, Koor Industries, Tel. +972-3-9008-310 or Fiona Darmon -
Vice President Investor Relations, Koor Industries, Tel.
+972-3-9008-417 Forward looking statements in this release involve
a number of risks and uncertainties including, but not limited to,
international market conditions, domestic political factors,
technological developments, ability to finance operations, and
other factors which are detailed in the Company's SEC filings. The
Company does not undertake to (and expressly disclaims any
obligation to) update any such forward-looking statements. Koor
Industries Ltd. (AN ISRAELI CORPORATION) Condensed Consolidated
Statement of Operations Six Months Ended Three Months Twelve Months
Ended Ended June 30 June 30 December 31 2006 2005(i) 2006 2005(i)
2005 Unaudited Unaudited Audited Convenience translation (U.S.
dollars in thousands) Revenues and earnings Revenue from sales and
services 97,907 126,956 55,684 71,733 222,609 Group's equity in the
operating results of investee companies, net 13,634 (*)59,277 (793)
(*)38,575 (*)80,937 Other income, net 794 33,919 - 742 50,271
112,335 (*)220,152 54,891(*)111,050 (*)353,817 Cost and losses:
Cost of sales and services 74,832 104,381 42,552 57,012 180,553
Selling and marketing expenses 8,192 11,992 4,266 6,282 20,078
General and administrative expenses 21,463 (*)18,540 14,125
(*)9,901 (*)37,242 Financing expenses, net 15,988 21,937 10,686
13,582 41,206 Other expenses, net - - 267 - - 120,475 (*)156,850
71,896 (*)86,777 (*)279,079 Earnings (loss) before income tax
(8,140) (*)63,302 (17,005) (*)24,273 (*)74,738 Income tax (4,197)
(19,441) (3,925) (2,925) (18,176) (12,337) (*)43,861 (20,930)
(*)21,348 (*)56,562 Minority interest in consolidated companies'
results, net (618) 1,391 (1,245) 236 2,057 Net earnings (loss) from
continuing operations (12,955) (*)45,252 (22,175) (*)21,584
(*)58,619 Net earnings (loss) from discontinued operations 525
(5,394) 891 (6,962) 11,348 Cumulative effect as of the beginning of
the year of change in accounting method 14,088 (688) - - (688) Net
earnings (loss) for the period 1,658 (*)39,170 (21,284) (*)14,622
(*)69,279 Basic earnings (loss) per ordinary share (*)(**) (*)(**)
(*)(**) From continuing operations -0.74 2.78 -1.40 1.30 -0.17 From
discontinued operations 0.04 -0.35 0.06 -0.43 0.02 From cumulative
effect of change in accounting method 0.86 -0.04 - - 0.19 Net
earnings (loss) per share 0.16 2.39 -1.34 0.87 0.04 (*) Restated -
see Note 1B(4) in Koor Industries Consolidated Financial Statements
for the period January-June 2006 (Unaudited) (**) Restated - see
Note 1B(2) in Koor Industries Consolidated Financial Statements for
the period January-June 2006 (Unaudited) (i) See Note 3C relating
to discontinuance of proportional consolidation of Telrad Networks
in Koor Industries Consolidated Financial Statements for the period
January-June 2006 (Unaudited) Koor Industries Ltd. (AN ISRAELI
CORPORATION) Condensed Consolidated Balance Sheet as at June 30
December 31 2006 2005 2005 Unaudited Audited Assets Convenience
translation Current assets: (U.S. dollars in thousands) Cash and
cash equivalents 50,961 23,330 71,801 Short-term deposits and
investments 104,367 98,153 121,883 Trade receivables 21,257 23,870
21,068 Other accounts receivable 26,410 23,955 19,806 Inventories
and work in progress 19,050 21,419 20,475 Assets designated for
sale - 9,321 - Total current assets 222,045 200,048 255,033
Investments and long-term receivables Investments in affiliates
650,288 (*) 652,900 (*) 600,005 Other investments and receivables
132,989 99,789 123,201 783,277 752,689 723,206 Fixed assets, net
173,971 161,446 163,650 Intangible assets, deferred tax assets and
deferred expenses 4,888 2,526 4,383 Assets relating to discontinued
operations - 300,421 44,778 1,184,181 1,417,130 1,191,050
Liabilities and shareholders` equity Current liabilities Credit
from banks and others 13,962 112,966 61,290 Trade payables 21,537
24,693 20,632 Other payables 43,137 42,114 45,786 Customer advances
8,299 6,837 4,942 86,935 186,610 132,650 Long-term liabilities
Long-term bank loans 439,723 348,584 350,259 Other long-term loans
11,596 20,050 12,194 Debentures 89,714 85,542 88,030 Deferred taxes
2,366 18 18 Liability for employee severance benefits, net 946
2,008 869 544,345 456,202 451,371 Liabilities relating to
discontinued operations - 238,411 36,047 Minority Interest 15,973
8,921 12,777 Shareholders` equity 536,928 (*) 526,986 (*) 558,206
1,184,181 1,417,130 1,191,050 (*) Restated - see Note 1B(4) in Koor
Industries Consolidated Financial Statements for the period
January-June 2006 (Unaudited) DATASOURCE: Koor Industries Ltd
CONTACT: For further information, please contact: Ran Maidan -
Senior Vice President and Chief Financial Officer, Koor Industries,
Tel. +972-3-9008-310 or Fiona Darmon - Vice President Investor
Relations, Koor Industries, Tel. +972-3-9008-417
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