TATTF » Topics » Impact of Currency Fluctuation and of Inflation

This excerpt taken from the TATTF 20-F filed Jun 25, 2009.

Impact of Currency Fluctuation and of Inflation

        TAT reports its financial results in dollars and receives payment in dollars or dollar-linked NIS for all of its sales while it incurs a portion of its expenses, principally salaries and related personnel expenses, in NIS. Additionally, certain assets, as well as a portion of its liabilities, are denominated in NIS. Therefore, the dollar cost of its operations is influenced by the extent to which any inflation in Israel is offset on a lagging basis, or is not offset by the devaluation of the NIS in relation to the U.S. dollar. When the rate of inflation in Israel exceeds the rate of devaluation of the NIS against the U.S. dollar, the dollar cost of operations in Israel increases. If the dollar cost of operations in Israel increases, its dollar-measured results of operations will be adversely affected. TAT cannot assure you that TAT will not be materially and adversely affected in the future if inflation in Israel exceeds the devaluation of the NIS against the dollar or if the timing of the devaluation lags behind inflation in Israel.

50



        The following table presents information about the rate of inflation in Israel, the rate of devaluation (appreciation) of the NIS against the U.S. dollar, and the rate of inflation of Israel adjusted for the devaluation:

Year ended       
December 31,       

Israeli inflation
rate%

NIS
appreciation
(devaluation)
rate%

Israeli inflation
adjusted for
appreciation
(devaluation) %

 
2003       (1.9 )  7.6    5.7  
2004     1.2    1.6    2.8  
2005     2.4    (6.8 )  (4.4 )
2006     (0.1 )  8.2    8.1  
2007     3.4    9.0    12.4  
2008     3.8    1.1    4.9  

        A devaluation of the NIS in relation to the U.S. dollar has the effect of reducing the U.S. dollar amount of any of its expenses or liabilities which are payable in NIS, unless these expenses or payables are linked to the U.S. dollar. This devaluation also has the effect of decreasing the U.S. dollar value of any asset which consists of NIS or receivables payable in NIS, unless the receivables are linked to the U.S. dollar. Conversely, any increase in the value of the NIS in relation to the U.S. dollar has the effect of increasing the U.S. dollar value of any unlinked NIS assets and the U.S. dollar amounts of any unlinked NIS liabilities and expenses. During the years 2007 and 2008, the NIS appreciated against the U.S. dollar, which resulted in a significant increase in the U.S. dollar cost of TAT’s NIS expenses. Such trend was reversed during the first three months of 2009 since the U.S. dollar strongly devaluated compared to the NIS.

        Because exchange rates between the NIS and the dollar fluctuate continuously, exchange rate fluctuations and especially larger periodic devaluations will have an impact on TAT’s profitability and period-to-period comparisons of its results. The effects of foreign currency re-measurements are reported in TAT’s consolidated financial statements in current operations. TAT cannot assure you that in the future its results of operations may not be materially adversely affected by currency fluctuations.

This excerpt taken from the TATTF 20-F filed Jun 30, 2008.

Impact of Currency Fluctuation and of Inflation

          We report our financial results in dollars and receive payment in dollars or dollar-linked NIS for all of our sales while we incur a portion of our expenses, principally salaries and related personnel expenses, in NIS. Additionally, certain assets, as well as a portion of our liabilities, are denominated in NIS. Therefore, the dollar cost of our operations is influenced by the extent to which any inflation in Israel is offset on a lagging basis, or is not offset, by the devaluation of the NIS in relation to the dollar. When the rate of inflation in Israel exceeds the rate of devaluation of the NIS against the dollar, the dollar cost of our operations in Israel increase. If the dollar cost of our operations in Israel increases, our dollar-measured results of operations will be adversely affected. We cannot assure you that we will not be materially and adversely affected in the future if inflation in Israel exceeds the devaluation of the NIS against the dollar or if the timing of the devaluation lags behind inflation in Israel.

37



          The following table presents information about the rate of inflation in Israel, the rate of devaluation (appreciation) of the NIS against the U.S. dollar, and the rate of inflation of Israel adjusted for the devaluation:

 

 

 

 

 

 

 

 

 

 

 

Year ended
December 31,

 

Israeli inflation
rate%

 

NIS appreciation (devaluation) rate%

 

Israeli inflation
adjusted for
appreciation (devaluation)%

 


 


 


 


 

 

 

 

 

 

 

 

 

2003

 

(1.9

)

 

7.6

 

5.8

 

 

2004

 

1.2

 

 

1.6

 

2.8

 

 

2005

 

2.4

 

 

(6.8

)

 

(4.3

)

 

2006

 

(0.1

)

 

8.2

 

8.1

 

 

2007

 

3.4

 

 

9.0

 

12.4

 

 

          A devaluation of the NIS in relation to the dollar has the effect of reducing the dollar amount of any of our expenses or liabilities which are payable in NIS, unless these expenses or payables are linked to the dollar. This devaluation also has the effect of decreasing the dollar value of any asset which consists of NIS or receivables payable in NIS, unless the receivables are linked to the dollar. Conversely, any increase in the value of the NIS in relation to the dollar has the effect of increasing the dollar value of any unlinked NIS assets and the dollar amounts of any unlinked NIS liabilities and expenses. During 2007, the NIS appreciated against the U.S. dollar, which resulted in a significant increase in the U.S. dollar cost of our NIS expenses. This trend continued during the first three months of 2008 with further devaluation of the U.S. dollar compared to the NIS.

          Because exchange rates between the NIS and the dollar fluctuate continuously, exchange rate fluctuations and especially larger periodic devaluations will have an impact on our profitability and period-to-period comparisons of our results. The effects of foreign currency re-measurements are reported in our consolidated financial statements in current operations. We cannot assure you that in the future our results of operations may not be materially adversely affected by currency fluctuations.

This excerpt taken from the TATTF 20-F filed Jul 5, 2007.

Impact of Currency Fluctuation and of Inflation

          The dollar cost of our operations is influenced by the extent to which any inflation in Israel is offset on a lagging basis, or is not offset by the devaluation of the NIS in relation to the dollar. When the rate of inflation in Israel exceeds the rate of devaluation of the NIS against the dollar, companies experience increases in the dollar cost of their operations in Israel. Unless offset by a devaluation of the NIS, inflation in Israel will have a negative effect on our profitability as we receive payment in dollars or dollar-linked NIS for all of our sales while we incur a portion of our expenses, principally salaries and related personnel expenses, in NIS.

33


          The following table presents information about the rate of inflation in Israel, the rate of devaluation (appreciation) of the NIS against the U.S. dollar, and the rate of inflation of Israel adjusted for the devaluation (appreciation):

 

 

 

 

 

 

 

 

 

 

 

 

Year ended
December 31,

 

 

Israeli inflation
rate%

 

Israeli devaluation
(appreciation
rate%)

 

Israeli inflation
adjusted for
devaluation%

 


 

 


 


 


 

 

 

 

 

 

 

 

 

 

 

 

 

2002

 

 

6.5

 

 

7.3

 

 

(0.8

)

 

2003

 

 

(1.9

)

 

(7.6

)

 

5.8

 

 

2004

 

 

1.2

 

 

(1.6

)

 

2.8

 

 

2005

 

 

2.4

 

 

6.8

 

 

(4.3

)

 

2006

 

 

(0.1

)

 

(8.2

)

 

8.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

          We cannot assure you that we will not be materially and adversely affected in the future if inflation in Israel exceeds the devaluation of the NIS against the dollar or if the timing of the devaluation lags behind inflation in Israel.

          A devaluation of the NIS in relation to the dollar has the effect of reducing the dollar amount of any of our expenses or liabilities which are payable in NIS, unless these expenses or payables are linked to the dollar. This devaluation also has the effect of decreasing the dollar value of any asset which consists of NIS or receivables payable in NIS, unless the receivables are linked to the dollar. Conversely, any increase in the value of the NIS in relation to the dollar has the effect of increasing the dollar value of any unlinked NIS assets and the dollar amounts of any unlinked NIS liabilities and expenses.

          Because exchange rates between the NIS and the dollar fluctuate continuously, with a historically declining trend in the value of the NIS, exchange rate fluctuations and especially larger periodic devaluations will have an impact on our profitability and period-to-period comparisons of our results. The effects of foreign currency re-measurements are reported in our consolidated financial statements in current operations.

This excerpt taken from the TATTF 20-F filed Jul 2, 2007.

Impact of Currency Fluctuation and of Inflation

          The dollar cost of our operations is influenced by the extent to which any inflation in Israel is offset on a lagging basis, or is not offset by the devaluation of the NIS in relation to the dollar. When the rate of inflation in Israel exceeds the rate of devaluation of the NIS against the dollar, companies experience increases in the dollar cost of their operations in Israel. Unless offset by a devaluation of the NIS, inflation in Israel will have a negative effect on our profitability as we receive payment in dollars or dollar-linked NIS for all of our sales while we incur a portion of our expenses, principally salaries and related personnel expenses, in NIS.

33


          The following table presents information about the rate of inflation in Israel, the rate of devaluation (appreciation) of the NIS against the U.S. dollar, and the rate of inflation of Israel adjusted for the devaluation (appreciation):

 

 

 

 

 

 

 

 

 

 

 

 

Year ended
December 31,

 

 

Israeli inflation
rate%

 

Israeli devaluation
(appreciation
rate%)

 

Israeli inflation
adjusted for
devaluation%

 


 

 


 


 


 

 

 

 

 

 

 

 

 

 

 

 

 

2002

 

 

6.5

 

 

7.3

 

 

(0.8

)

 

2003

 

 

(1.9

)

 

(7.6

)

 

5.8

 

 

2004

 

 

1.2

 

 

(1.6

)

 

2.8

 

 

2005

 

 

2.4

 

 

6.8

 

 

(4.3

)

 

2006

 

 

(0.1

)

 

(8.2

)

 

8.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

          We cannot assure you that we will not be materially and adversely affected in the future if inflation in Israel exceeds the devaluation of the NIS against the dollar or if the timing of the devaluation lags behind inflation in Israel.

          A devaluation of the NIS in relation to the dollar has the effect of reducing the dollar amount of any of our expenses or liabilities which are payable in NIS, unless these expenses or payables are linked to the dollar. This devaluation also has the effect of decreasing the dollar value of any asset which consists of NIS or receivables payable in NIS, unless the receivables are linked to the dollar. Conversely, any increase in the value of the NIS in relation to the dollar has the effect of increasing the dollar value of any unlinked NIS assets and the dollar amounts of any unlinked NIS liabilities and expenses.

          Because exchange rates between the NIS and the dollar fluctuate continuously, with a historically declining trend in the value of the NIS, exchange rate fluctuations and especially larger periodic devaluations will have an impact on our profitability and period-to-period comparisons of our results. The effects of foreign currency re-measurements are reported in our consolidated financial statements in current operations.

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