Pointer Telocation Revenue Continues to Grow in Q3 2008

Revenue Increased 65.7% to $58.6M in the First Nine Months of 2008




ROSH HA'AYIN, Israel, November 13  /PRNewswire-FirstCall/ -- Pointer Telocation Ltd. (Nasdaq Capital Market: PNTR, Tel-Aviv Stock Exchange: PNTR) - a leading provider of Automatic Vehicle Location (AVL) technology, stolen vehicle retrieval services, fleet management, car & driver safety, public safety, vehicle security, asset management and road side assistance, announced today its financial results for the first nine months and third quarter of 2008.

Financial Highlights:

Revenues: Pointer's revenues for the third quarter of 2008 increased by 68%, to $20.7 million, from $12.3 million in the comparable period in 2007. In the first nine months of 2008, revenues were $58.6 million, a 65.7% increase over the same period of 2007. Pointer's revenues from services in the third quarter and the first nine months of 2008 were 58% and 59%, respectively, of total revenues, as compared with 72% and 74% for these periods in 2007 respectively. International activities for the third quarter of 2008 were 31.5% of total revenue compared to 13.7% in the comparable period in 2007.

Gross Profit: For the third quarter of 2008, gross profit increased 76.2% to $7.7 million from $4.3 million in the third quarter of 2007. As a percentage of revenues, gross profit was 37% in the third quarter of 2008, as compared to 35% in the third quarter of 2007. In the first nine months of 2008, gross profit increased 75.1% to $22.3 million from $12.7 million in the first nine months of 2007. Gross margin for the first nine months of 2008 was 38%, as compared to 36% for the first nine months of 2007.

Operating Income: Pointer's operating income increased 145% to $2.3 million in the third quarter of 2008, compared to operating income of $0.9 million for the third quarter of 2007. Operating margin was 11% in the third quarter of 2008, as compared to approximately 7.6% in the third quarter of 2007. In the first nine months of 2008, operating income increased 160% to $7.1 million, compared to $2.7 million for the same period of 2007. Operating margin for the first nine months of 2008 was 12%, compared to 7.7% for the first nine months of 2007.

Minority share: For the third quarter of 2008 and nine months ended September 30, 2008, Pointer reported a $431 thousand and $1.3 million minority share in the operations of Shagrir, compared to $178 thousand and $0.9 million in the comparable periods of 2007. Pointer holds 56.6% interest in Shagrir.

Net Income: Pointer presents net income of $0.7 million during the third quarter of 2008, as compared to net income of $3 thousand in the third quarter of 2007. For the first nine months of 2008, Pointer recorded net income of $2.3 million, compared to net loss of $565 thousand in the same period of 2007.

Non GAAP net income: Pointer recorded non-GAAP net income of $1.6 million during the third quarter of 2008, as compared to non-GAAP net income of $497 thousand in the third quarter of 2007. For the first nine months of 2008, Pointer's non-GAAP net income was $5.8 million, compared to non-GAAP net income of $1 million in the same period of 2007. Non-GAAP net income is defined as net income excluding certain non-cash expenses, including amortization of acquired intangible assets, deferred income tax, impairment of long-lived assets and a onetime non-cash expense relating to a loan discount in the amount of $0.7 million as part of a loan replacement which we reported in the second quarter of 2008.

EBITDA: Pointer's EBITDA for the third quarter of 2008 and for the first nine months of 2008 was $3.8 million and $11.9 million, respectively, as compared to $1.9 million and $5.8 million in the comparable periods of 2007.

Total Shareholders' Equity: Pointer's total shareholders' equity increased by 18% during the first nine months of 2008 to $38 million.

Danny Stern, Pointer CEO, said: "Pointer continued to grow during the third quarter. We recently launched a new asset management product, which is expected to enhance sales in new untapped markets targeted by the company. Our products are designed to improve customers' ability to be efficient in vehicle utilization and energy consumption, and therefore are properly suited for a market that is savings driven. The company is closely monitoring changes in the car industry and volatility in exchange rates relating to the recent financial crisis, which currently impact our visibility into the coming months' performance. We are preparing ourselves to adjust our expenditures to revenues. However, on the other hand, we also see this period as an opportunity for business initiatives, since the company is positioned very well globally. Our cash generative business yielded nine month EBITDA of $11.9 million, and these earnings enable us to maintain our R&D efforts and to enhance our competitive advantages", concluded Mr. Stern.

Conference Call Information:

Pointer Telocation's management will host a conference call with the investment community to review and discuss the financial results:

Conference call will take place today, November 13th, 2008 on 9:30 AM EST, 16:30 Israel time.

To listen to the call, please dial in to one of the following teleconferencing numbers. Please begin placing your call at least 5 minutes before the conference call commences.

                          From USA: [phone]

                          From Israel: 03-918-0610

                       International: [phone]




A replay of the conference call will be available through November 14th, 2008 on the Company's website at http://www.pointer.com/.

Reconciliation between results on a GAAP and Non-GAAP basis.

To supplement the consolidated financial statements presented in accordance with generally accepted accounting principles ("GAAP"), the Company uses non-GAAP measures of net income and EBITDA. A reconciliation between results in a GAAP and Non-GAAP basis is provided in a table immediately following the Condensed Interim Consolidated Statements of Cash Flows. Net income is adjusted from results based on GAAP to exclude amortization of acquired intangible assets and deferred income tax, as well as certain business combination accounting entries and a non-cash expense due to a loan discount as part of a loan replacement. These non-GAAP financial measures are provided to enhance overall understanding of the Company's current financial performance and prospects for the future. Specifically, the Company believes the non-GAAP results provide useful information to both management and investors as these non-GAAP results exclude amortization of acquired intangible assets and deferred income tax, as well as certain business combination accounting entries, and a one-time non-cash expense due to a loan discount, that the Company believes are not indicative of our core operating results. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read in conjunction with our consolidated financial statements prepared in accordance with GAAP.

Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. We believe that these non-GAAP measures help investors to understand our current and future operating cash flow and performance, especially as our three most recent acquisitions have resulted in amortization and non-cash items that have had a material impact on our GAAP profits. These non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies.

Pointer also uses EBITDA as a non-GAAP financial performance measurement. EBITDA is calculated by adding back to net income interest, taxes, depreciation, amortization and minority interest. EBITDA is provided to investors to complement results provided in accordance with GAAP, as management believes the measure helps illustrate underlying operating trends in the Company's business and uses the measure to establish internal budgets and goals, manage the business and evaluate performance. EBITDA should not be considered in isolation or as a substitute for comparable measures calculated and presented in accordance with GAAP. A reconciliation of EBITDA to GAAP measures is also provided in a table following the Condensed Interim Consolidated Statements of Cash Flows accompanying this press release.

About Pointer Telocation:

Pointer Telocation is a leading provider of technology and services to the automotive and insurance industries, offering a set of services including Road Side Assistance, Stolen Vehicle Recovery and Fleet Management. Pointer has a growing client list with products installed in over 400,000 vehicles across the globe: the UK, Greece, Mexico, Argentina, Russia, Croatia, Germany, Czech Republic, Latvia, Turkey, Hong Kong, Singapore, India, Costa Rica, Norway, Venezuela, Hungary, Israel and more. Cellocator, a Pointer Products Division, is a leading AVL (Automatic Vehicle Location) solutions provider for stolen vehicle retrieval, fleet management, car & driver safety, public safety, vehicle security and more. In 2004, Cellocator was selected as the official security and location equipment supplier for the Olympic Games in Athens. For more information: http://www.pointer.com/

Safe Harbor Statement

This press release contains forward-looking statements with respect to the business, financial condition and results of operations of Pointer and its affiliates. These forward-looking statements are based on the current expectations of the management of Pointer, only, and are subject to risk and uncertainties relating to changes in technology and market requirements, the company's concentration on one industry in limited territories, decline in demand for the company's products and those of its affiliates, inability to timely develop and introduce new technologies, products and applications, and loss of market share and pressure on pricing resulting from competition, which could cause the actual results or performance of the company to differ materially from those contemplated in such forward-looking statements. Pointer undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. For a more detailed description of the risks and uncertainties affecting the company, reference is made to the company's reports filed from time to time with the Securities and Exchange Commission.

  CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
  U.S. dollars in thousands

                                                 September 30, December 31,
                                                     2008          2007
                                                   Unaudited
  ASSETS

  CURRENT ASSETS:
  Cash and cash equivalents                           $ 2,447       $ 1,200
  Trade receivables, net                                16,234       11,756
  Other accounts receivable and prepaid
  expenses                                               2,703        2,001
  Inventories                                            3,419        2,657

  Total current assets                                  24,803       17,614

  LONG-TERM ASSETS:
  Long-term accounts receivable and deferred
  expenses                                                 612          337
  Severance pay fund                                     5,540        4,866
  Property and equipment, net                            8,975        7,708
  Deferred income taxes                                  1,058          941
  Other intangible assets, net                          16,431       18,058
  Goodwill                                              55,598       50,712

  Total long-term assets                                88,214       82,622

  Total assets                                       $ 113,017    $ 100,236


  CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
  U.S. dollars in thousands (except share and per share data)

                                                 September 30, December 31,
                                                     2008          2007
                                                   Unaudited
  LIABILITIES AND SHAREHOLDERS' EQUITY

  CURRENT LIABILITIES:
  Short-term bank credit and current maturities
  of long-term loans                                   $ 9,062     $ 10,564
  Trade payables                                        10,725        8,001
  Deferred revenues and customer advances               10,563        8,253
  Other accounts payable and accrued expenses            5,184        6,123

  Total current liabilities                             35,534       32,941

  LONG-TERM LIABILITIES:
  Long-term loans from banks                            24,135       18,460
  Long-term loans from shareholders and others           3,321        5,767
  Other long-term liabilities                              245           89
  Accrued severance pay                                  6,856        5,730
  Convertible debentures                                     -        1,979

                                                        34,557       32,025

  MINORITY INTEREST                                      4,865        3,067

  SHAREHOLDERS' EQUITY                                  38,061       32,203

  Total liabilities and shareholders' equity         $ 113,017    $ 100,236


  INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
  U.S. dollars in thousands (except share and per share data)

                                                                      Year
                        Nine months ended      Three months ended    ended
                                                                   December
                          September 30,          September 30,        31,
                         2008        2007       2008        2007      2007
                                        Unaudited
  Revenues:
  Products
                       $ 24,029     $9,172     $ 8,708     $ 3,400 $ 15,821
  Services               34,567     26,184      12,003       8,921   35,806

  Total revenues         58,596     35,356      20,711      12,321   51,627

  Cost of revenues:
  Products               12,837      5,850       4,725       2,184    9,414
  Services               22,757     16,759       8,084       5,759   23,034
  Amortization of
  intangible assets         735         33         245          33      277

  Total cost of
  revenues               36,329     22,642      13,054       7,976   32,725

  Gross profit           22,267     12,714       7,657       4,345   18,902

  Operating expenses:
  Research and
  development, net        1,792      1,126         621         451    1,675
  Selling and
  marketing               5,408      3,360       1,931       1,117    4,934
  General and
  administrative          6,130      4,255       2,210       1,444    6,209
  Amortization of
  intangible assets       1,818      1,238         583         391    1,877

  Total operating
  expenses               15,148      9,979       5,345       3,403   14,695

  Operating income        7,119      2,735       2,312         942    4,207
  Financial expenses,
  net                     3,252      2,044       1,077         659    2,814
  Other income
  (expenses), net            19       (17)           -        (32)     (12)

  Income before taxes
  on income               3,886        674       1,235         251    1,381
  Taxes on income           320        357          90          70      353

  Net income (loss)
  before minority
  interest                3,566        317       1,145         181    1,028
  Minority interest       1,303        882         431         178    1,366

  Net income
  (loss)                $ 2,263     $ (565)      $ 714         $ 3  $ (338)

  Basic net earnings
  (loss) per share       $ 0.49    $ (0.14)     $ 0.15      $ 0.00 $ (0.08)

  Diluted net
  earnings (loss) per
  share                  $ 0.48    $ (0.14)     $ 0.15      $ 0.00 $ (0.08)



  INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
  U.S. dollars in thousands

                                                                      Year
                       Nine months ended       Three months ended    ended
                                                                   December
                         September 30,           September 30,        31,
                       2008         2007       2008         2007      2007
                                       Unaudited
  Cash flows from
  operating
  activities:

  Net income (loss)  $ 2,263       $ (565)      $ 714          $ 3  $ (338)
  Adjustments
  required to
  reconcile net
  income (loss) to
  net cash provided
  by operating
  activities:
  Depreciation,
  amortization and
  impairment            5,036        3,415      1,613        1,096    5,273
  Accrued interest
  and exchange rate
  changes of
  convertible
  debenture and
  long-term loans       1,214          694       (30)          509      750
  Accrued severance
  pay, net                365         (80)        198         (89)     (70)
  Gain from sale of
  property and
  equipment, net        (133)        (149)         25         (10)    (182)
  Amortization of
  deferred
  stock-based
  compensation            226          366         86           60      783
  Minority interest
  in earning of
  subsidiary            1,303        1,241        431          387    1,366
  Increase in trade
  receivables, net    (3,313)      (1,648)    (1,039)          346  (1,172)
  Increase in other
  accounts
  receivable and
  prepaid expenses      (551)        (559)        175         (11)    (421)
  Decrease
  (increase) in
  inventories         (1,088)        (317)      (821)        (448)    (395)
  Decrease
  (increase) in
  long-term
  accounts
  receivable and
  deferred expenses        49           31          1           33    (141)
  Write-off of
  inventories              75          150         75          135      150
  Increase in
  deferred income
  taxes                     -            -          -            -    (174)
  Increase in trade
  payables              1,958          756      1,821          293      730
  Increase
  (decrease) in
  other accounts
  payable and
  accrued expenses        163        1,839    (1,418)          276    1,855

  Net cash provided
  by operating
  activities            7,567        5,174      1,831        2,580    8,014

  Cash flows from
  investing
  activities:

  Purchase of
  property and
  equipment           (2,537)      (2,106)      (761)        (336)  (2,638)
  Proceeds from
  sale of property
  and equipment           512          759        133          258      860
  Increase in
  long-term
  accounts
  receivable            (247)            -       (19)            -        -
  Acquisition of
  Cellocator (a)            -     (16,332)          -     (16,332) (16,571)
  Acquisition of
  other intangible
  assets                    -        (135)          -            -    (117)

  Net cash used in
  investing
  activities          (2,272)     (17,814)      (647)     (16,410) (18,466)

  Cash flows from
  financing
  activities:

  Receipt of
  long-term loans
  from banks            9,254        5,000      2,155        5,000    5,000
  Repayment of
  long-term loans
  from banks          (2,727)      (3,392)      (639)      (1,446)  (4,347)
  Repayment of
  long-term loans
  from shareholders
  and others         (10,394)      (2,024)    (1,526)        (684)  (2,767)
  Proceeds from
  issuance of
  shares and
  exercise of
  warrants, net         1,000        9,588      1,000          (5)    9,588
  Short-term bank
  credit, net         (1,137)        (441)      (512)          406  (1,752)

  Net cash provided
  by (used in)
  financing
  activities          (4,004)        8,731        478        3,271    5,722

  Effect of
  exchange rate on
  cash and cash
  equivalents            (44)         (61)        247        (113)       80

  Increase in cash
  and cash
  equivalents           1,247      (3,970)      1,909     (10,672)  (4,650)
  Cash and cash
  equivalents at
  the beginning of
  the period            1,200        5,850        538       12,552    5,850

  Cash and cash
  equivalents at
  the end of the
  period              $ 2,447      $ 1,880    $ 2,447      $ 1,880  $ 1,200


  CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
  U.S. dollars in thousands

                              Nine months           Three months       Year
                                 ended                 ended          ended
                                                                   December
                             September 30,         September 30,       31,
                           2008        2007      2008        2007      2007
                                          Unaudited
  (a) Acquisition of
      Cellocator:

      Fair value of
      assets acquired and
      liabilities assumed
      at date of
      acquisition:


      Working capital     $ -    $ (1,220)      $ -    $ (1,220) $ (1,323)
      Property and
      equipment             -        (151)        -        (151)     (151)
      Customer
      relationships         -      (3,876)        -      (3,876)   (3,943)
      Brand name            -      (1,749)        -      (1,749)   (1,775)
      Developed
      Technology            -      (4,886)        -      (4,886)   (4,890)
      Goodwill              -      (8,645)        -      (8,645)   (8,750)
      Accrued severance
      pay, net              -          107        -          107        20

                            -     (20,420)        -     (20,420)  (20,812)

      Fair value of
      shares issued         -        1,428        -        1,428     1,430
      Fair value of
      convertible
      debentures            -        1,952        -        1,952     1,951
      Accrued expenses      -          708        -          708       860

                            -        4,088        -        4,088     4,241


                          $ -   $ (16,332)      $ -    $ (16,332) $(16,571)


  Reconciliation Tables of Non-GAAP Measures
  U.S. dollars in thousands
  Reconciliation of GAAP net income to non-GAAP net income is as follows:

                                                                      Year
                        Nine months ended      Three months ended    ended
                                                                   December
                          September 30,          September 30,        31,
                         2008        2007       2008        2007      2007
                                        Unaudited

  Net income (loss)
  as reported           $ 2,263     $ (565)       $ 714        $ 3  $ (338)

  Amortization of
  intangible assets
  and impairment of
  long-lived assets       2,553      1,241         828         424    2,154

  Loan Discount             704          -           9           -        -

  Taxes on income           320        357          90          70      353

  Non-GAAP Net income
                        $ 5,840    $ 1,033     $ 1,641       $ 497  $ 2,169


  Reconciliation of GAAP net income to EBITDA


To supplement the consolidated financial statements presented in accordance with generally accepted accounting principles ("GAAP"), the Company uses EBITDA as a non-GAAP financial performance measurement. EBITDA is calculated by adding back to net income interest, taxes, depreciation, amortization and minority interest. EBITDA is provided to investors to complement results provided in accordance with GAAP, as management believes the measure helps illustrate underlying operating trends in the Company's business and uses the measure to establish internal budgets and goals, manage the business and evaluate performance. EBITDA should not be considered in isolation or as a substitute for comparable measures calculated and presented in accordance with GAAP. Reconciliation of the GAAP to non-GAAP operating results is as follows:

  CONDENSED EBITDA
  US dollars in thousands

                                                                      Year
                        Nine months ended      Three months ended    ended
                                                                   December
                          September 30,          September 30,        31,
                         2008        2007       2008        2007      2007
                                        Unaudited

  Net income (loss)                      $
  as reported           $ 2,263      (565)       $ 714         $ 3  $ (338)

  Non GAAP
  adjustment:
  Financial expenses,
  net                     3,252      2,044       1,077         659   2,814
  Taxes on income           320        357          90          70     353
  Depreciation and
  amortization            4,719      3,061       1,525       1,002   4,787
  Minority interest       1,303        882         431         178   1,366

  EBITDA                                 $
                       $ 11,857      5,779     $ 3,837     $ 1,912 $ 8,982


  Contact:

  Zvi Fried, V.P. and Chief Financial Officer
  Tel: [phone]
  E-mail: 

  Yael Nevat, Commitment-IR.com
  Tel: [phone]
  E-mail: 

DATASOURCE: Pointer Telocation Ltd



CONTACT:  Contact: Zvi Fried, V.P. and Chief Financial Officer, Tel.;

[phone], E-mail: ; Yael Nevat, Commitment-IR.com,

Tel: [phone], E-mail: 

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