SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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F O R M 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of January 2008
TAT TECHNOLOGIES LTD.
(Name of Registrant)
P.O.BOX 80, Gedera 70750 Israel
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will
file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]
Indicate by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]
Indicate by check mark whether by furnishing the information
contained in this Form, the registrant is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the Securities
Exchange Act of 1934.
Yes [ ] No [X]
If "Yes" is marked, indicate below the file number assigned to
the registrant in connection with Rule 12g3-2(b): 82-_______
TAT Technologies Ltd.
6-K Items
1. Interim Condensed Consolidated Financial Statements of TAT
Technologies Ltd. as of June 30, 2007 and Management's Discussion and
Analysis of Financial Condition and Results of Operations for the six
months ended June 30, 2007.
ITEM 1
CONDENSED CONSOLIDATED BALANCE SHEETS
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U.S. dollars in thousands
June 30, December 31,
-------- ------------
2007 2006
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ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 7,076 $ 5,762
Short-term deposit - 1,533
Marketable securities 1,005 -
Trade receivables (net of allowance for
doubtful accounts of $113 and $280 at
June 30, 2007 and December 31, 2006, respectively) 15,540 13,569
Other accounts receivable and prepaid expenses 2,488 2,185
Inventories (Note 3) 26,653 24,928
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Total current assets 52,762 47,977
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LONG-TERM ASSETS:
Funds in respect of employee right upon retirement 3,748 3,625
Property, plant and equipment, net 8,136 7,235
Intangible assets, net 1,918 2,183
Goodwill 4,923 4,923
Other assets 1,374 294
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Total assets $ 2,861 $ 66,237
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The accompanying notes are an integral part of the condensed consolidated
financial statements.
CONDENSED CONSOLIDATED BALANCE SHEETS
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U.S. dollars in thousands (except share and per share data)
June 30, December 31,
-------- ------------
2007 2006
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term loans $ 8,398 $ 4,000
Trade payables 6,317 8,030
Parent company - current account 241 220
Other accounts payable and accrued expenses (Note 4) 5,881 5,984
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Total current liabilities 20,837 18,234
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LONG-TERM LIABILITIES:
Long-term loans, net of current maturities - 4,000
Liability in respect of employee rights upon retirement 3,730 3,676
Long-term deferred tax liability 592 607
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Total long-term liabilities 4,322 8,283
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COMMITMENTS AND CONTINGENT LIABILITIES
SHAREHOLDERS' EQUITY:
Share capital -
Ordinary shares of NIS 0.9 par value -
Authorized: 10,000,000 shares at
June 30, 2007 and December 31, 2006;
Issued and outstanding: 6,542,671
shares and 6,042,671 shares, at June 30, 2007
and December 31, 2006, respectively 2,201 2,094
Additional paid-in capital 39,067 35,704
Accumulated other comprehensive income 4 -
Accumulated earnings 6,430 1,922
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Total shareholders' equity 47,702 39,720
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Total liabilities and shareholders' equity $ 72,861 $ 66,237
======== =========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
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U.S dollars in thousands (except share and per share data)
Six Months Ended June 30,
2007 2006
----------- ------------
Revenues: 23,045 13,355
Sale of products (Note 5) 25,046 21,442
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48,091 34,797
Cost of revenues:
Sale of products 17,313 9,325
Services and other 16,877 16,134
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34,190 25,459
Gross profit 13,901 9,338
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Operating expenses:
Selling and marketing expenses 1,851 1,612
General and administrative expenses 5,688 3,328
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7,539 4,940
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Operating income 6,362 4,398
Financial expenses (109) (247)
Other income, net 18 24
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Income before income taxes 6,271 4,175
Income taxes 1,763 1,439
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Net income $ 4,508 $ 2,736
=========== ===========
Basic net income per share 0.70 0.45
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Diluted net income per share 0.69 0.45
=========== ===========
Weighted average number of shares - basic 6,403,782 6,042,671
=========== ===========
Weighted average number of shares - diluted 6,516,413 6,076,006
=========== ===========
The accompanying notes are an integral part of the condensed consolidated
financial statements
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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U.S. dollars in thousands
Six Months Ended June 30,
-------------------------------
2007 2006
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Cash flows from operating activities:
-------------------------------------
Net income 4,508 2,736
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 982 894
Gain on sale of property and equipment (13) (16)
Gain on sale of marketable securities (5) (12)
Provision for doubtful accounts (168) -
Changes in assets and liabilities:
Deferred income taxes, net (36) (77)
Increase in trade receivables (1,803) (1,668)
Increase in other accounts receivable and prepaid expenses (1,362) (477)
Decrease (increase) in inventories (1,725) 19
(Decrease) increase in trade payables (1,713) 171
Decrease in other accounts payable and accrued expenses (103) (476)
Accrued severance pay, net (69) 1
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Net cash (used in) provided by operating activities (1,507) 1,095
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Cash flows used in investing activities:
----------------------------------------
Proceeds from sale of available-for-sale securities 1,004 1,182
Proceeds from sale of property and equipment 13 62
Change in bank deposits, net 1,533 (2,024)
Purchase of property and equipment (1,618) (954)
Purchase of available-for-sale securities (2,000) (1,093)
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Net cash used in investing activities (1,068) (2,827)
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The accompanying notes are an integral part of the condensed consolidated
financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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U.S. dollars in thousands
Six Months Ended June 30,
-------------------------------
2007 2006
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Cash flows used in financing activities:
----------------------------------------
Short-term bank credit, net 398 -
Repayment of debt - (1,000)
Cash dividend - (1,209)
Parent company - current account 21 131
Issuance of shares 3,470 -
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Net cash provided by (used in) financing activities 3,889 (2,078)
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Increase (decrease) in cash and cash equivalents 1,314 (3,810)
Cash and cash equivalents at the beginning of period 5,762 6,983
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Cash and cash equivalents at the end of period 7,076 3,173
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Supplemental disclosure of cash activities:
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Interest
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Income taxes (180) 843
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The accompanying notes are an integral part of the condensed consolidated
financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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U.S. dollars in thousands
NOTE 1 - GENERAL
a. TAT Technologies Ltd., an Israeli corporation, together with its U.S.
subsidiaries ("the Company"), is principally engaged in the
manufacture and sale of a broad range of heat transfer equipment used
in mechanical and electronic systems on-board commercial and
military aircraft and in a variety of other electronic equipment. The
Company is also engaged in the remanufacture, overhaul and repair of
heat transfer equipment and other aircraft components manufactured by
the Company and in maintenance, repair and overhaul of auxiliary
power units, propellers, landing gears and related components. In
addition, the Company is also engaged in the design, development and
manufacture of aviation accessories. These accessories include fuel
components, such as valves and pumps, secondary power systems,
various instrumentation and electronic assemblies. The Company has
few long-term service contracts for the maintenance and overhaul of
certain airplane parts and equipment. The principal markets of the
Company are Israel, Europe and the United States. The Company
sells its products mainly to the aircraft industry.
The Company parent company is TAT Industries Ltd., an Israeli
corporation whose shares are listed on the Tel-Aviv Stock Exchange
("TAT" or "the parent company"). TAT holds 47.75% out of the
Company's shares, as of June 30, 2007.
b. The Company has a wholly-owned U.S. subsidiary: Limco - Airepair Inc.
("Limco"), which owned 100% of Piedmont Aviation Component Services
LLC ("Piedmont"). On February 28, 2007, the Company established a new
Delaware corporation: Limco-Piedmont Inc. and Limco established a new
Delaware corporation: Limco Airepair Inc. (Limco Delaware). On March
2, 2007, all assets, except Limco's membership interest in Piedmont
Aviation Component Services, LLC, and all liabilities were assumed by
Limco Delaware. On March 5, 2007 Limco merged with Limco-Piedmont
Inc. As part of the merger, the Company received 9,000,000 shares of
Limco-Piedmont Inc. for its 37,500 shares of Limco.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies applied in the annual
consolidated financial statements of the Company as of December
31,2006 are applied consistently in this unaudited interim
consolidated financial statements.
NOTE 3 - INVENTORIES
Inventories are composed of the following:
June 30, December 31,
--------------------------------
2007 2006
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Raw materials and components $ 11,881 $ 11,748
Work in progress 13,897 12,311
Spare parts 650 795
Finished goods 135 74
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$ 26,653 $ 24,928
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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U.S. dollars in thousands
NOTE 4 - OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES
June 30, December 31,
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2007 2006
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Employees and payroll accruals $2,513 $2,876
Government authorities 92 19
Related parties 335 266
Deferred revenue 166 223
Liability with respect to non-compete agreement 254 360
Warranty provision 779 776
Sales rebates - 184
Accrued royalties 175 378
Other accrued expenses 1,567 902
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$5,881 $5,984
====== ======
NOTE 5 - SEGMENT GEOGRAPHICAL INFORMATION
The following presents total revenues, based on the location of the
end customers, for the six months ended June 30, 2007 and 2006:
Six months ended June 30,
----------------------------
2007 2006
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Total Total
revenues revenues
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Israel $ 4,018 $ 2,883
Asia 1,002 1,044
United States 32,196 21,703
Europe 8,796 8,036
Other 2,079 1,131
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$ 48,091 $ 34,797
============= =============
Six months Ended June 30, 2007 Compared with Six months Ended June 30, 2006
Revenues. Total revenues increased by $48.1 million for the six months
ended June 30, 2007 from $34.8 million for the six months ended June 30, 2006,
an increase of 38.2%.
Revenues from MRO services increased to $25 million for the six months
ended June 30, 2007 from $21.4 million for the six months ended June 30, 2006,
an increase of 16.8% .
Revenues from OEM sales increased to $9.8 million for the six months
ended June 30, 2007 from $8.9 million for the six months ended June 30, 2006, an
increase of 10.1%. The organic growth in our OEM product revenues is primarily a
result of increased sales to existing customers.
Parts services revenues increased by 200.0% to $13.2 million for the
six months ended June 30, 2007 from $4.4 million for the six months ended June
30, 2006, when we acquired the parts business of Piedmont. The organic growth in
parts sales is attributable to increased purchases by Piedmont's existing
customers and the recruitment of four new customers that required parts for the
general overhaul of their aircraft.
Cost of revenues. Cost of revenues increased to $34.2 million for the
six months ended June 30, 2007 from $25.5 million for six months ended June 30,
2006, an increase of 34.1%, principally as a result of the inclusion of the
costs associated with Piedmont's revenues.
Cost of revenues MRO services. Cost of revenues increased to $16.9 million
for the six months ended June 30, 2007 from $16.1 million for the six months
ended June 30, 2006, an increase of 5.0%, principally as a result of the
inclusion of the costs associated with Piedmont's revenues.
Cost of revenues OEM products. Cost of revenues increased to $6.5 million
for the six months ended June 30, 2007 from $5.9 million for the six months
ended June 30, 2006, an increase of 10.2%, principally as a result of the
increase in revenues.
Cost of revenues parts services. Cost of revenues increased to $10.8
million for the six months ended June 30, 2007 from $3.4 million for the six
months ended June 30, 2006, an increase of 217.6%, principally as a result of
the inclusion of the costs associated with Piedmont's revenues.
Selling and marketing expenses. Selling and marketing expenses
increased to $1.9 million for the six months ended June 30, 2007 from $1.6
million for the six months ended June 30, 2006, an increase of 18.7%. Our
selling and marketing expenses as a percentage of revenues increased to 3.9% for
the six months ended June 30, 2007 from 4.6% for the six months ended June 30,
2006.
General and administrative expenses. General and administrative
expenses increased to $5.7 million for the six months ended June 30, 2007 from
$3.3 million for the six months ended June 30, 2006, an increase of 72.7%.
General and administrative expenses as a percentage of revenues decreased to
11.8% for the six months ended June 30, 2007 from 9.5% for the six months ended
June 30, 2006, primarily as a result of our reorganization of Piedmont's
operational structure from five business units to three business units and
management's efforts to streamline the number of levels of management at
Piedmont after the acquisition.
Operating income. Operating income in the six months ended June 30,
2007 increased 43.1% to $6.3 million, or 13.1% of revenues, compared to $4.4
million in the six months ended June 30, 2006, or 12.6% of revenues.
Financial income (expenses), net. We incurred financial expenses of
$109,000 in the six months ended June 30, 2007 compared to financial expenses of
$247,000 in the six months ended June 30, 2006. These interest expenses relate
to the loans we incurred in connection with the purchase of Piedmont.
Other Income. We had other income of $18,000 in the six months ended
June 30, 2007 compared to other income of $24,000 in the six months ended June
30, 2006. Other income resulted from our sale of marketable securities and
equipment.
Income taxes. Our total income tax expense for six months ended June
30, 2007 amounted to $1.7 million, compared to $1.4 million in the six months
ended June 30, 2006. As a result of the increased profitability of our
subsidiaries in the U.S., our effective tax rate increased in six months ended
June 30, 2007 to 28.1% from 34.4% in the six months ended June 30, 2006.
Net income. In the year six months ended June 30, 2007, we had net
income of $4.5 million, compared with net income of $2.7 million in the six
months ended June 30, 2006.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TAT TECHNOLOGIES LTD.
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(Registrant)
By: /s/Israel Ofen
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Israel Ofen
Executive Vice President and
Chief Financial Officer
Date: January 3, 2008