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10-Q - FORM 10-Q: QUARTERLY REPORT FOR THE PERIOD ENDED SEPTEMBER 30, 2012 - HOTEL OUTSOURCE MANAGEMENT INTERNATIONAL INCform10-q.htm
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EX-31.2 - CERTIFICATION OF HOMI?S CFO PURSUANT TO RULE13A- 14(A) - HOTEL OUTSOURCE MANAGEMENT INTERNATIONAL INCexhibit31_2.htm
EX-31.1 - CERTIFICATION OF HOMI?S CEO PURSUANT TO RULE13A- 14(A) - HOTEL OUTSOURCE MANAGEMENT INTERNATIONAL INCexhibit31_1.htm
EX-32.1 - CERTIFICATION OF HOMI?S CEO AND CFO REQUIRED BY RULE 13A-14(B) - HOTEL OUTSOURCE MANAGEMENT INTERNATIONAL INCexhibit32_1.htm
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Significant Accounting Policies (Policies)
9 Months Ended
Sep. 30, 2012
Significant Accounting Policies [Abstract]  
Basis of Presentation
a.
Basis of Presentation
 
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments (consisting of normal and recurring adjustments) necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ended December 31, 2012. The accompanying interim consolidated financial statements and the notes thereto should be read in conjunction with the Company's audited consolidated financial statements as of and for the year ended December 31, 2011 included in the Company's Form 10-K filed March 30, 2012.
 
Use of Estimates
 
b.
Use of Estimates
 
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The reported amounts of revenues and expenses during the reporting period may be affected by the estimates and assumptions management is required to make. Estimates that are critical to the accompanying consolidated financial statements relate principally to depreciation and recoverability of long lived assets. The markets for the Company’s products are characterized by intense price competition, rapid technological development, evolving standards and short product life cycles; all of which could impact the future realization of its assets. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the period that they are determined to be necessary. It is at least reasonably possible that management’s estimates could change in the near term with respect to these matters.
 
Financial Statements in U.S. dollars
 
c.
Financial Statements in US dollars
 
The majority of the Company's sales are in U.S. dollars or in dollar linked currencies. In addition, the majority of the Company's financing is received in U.S. dollars. Accordingly, the Company has determined the U.S. dollar as the currency of its primary economic environment and thus, its functional and reporting currency. Non-dollar transactions and balances have been remeasured into US dollars. All transaction gains and losses from the re-measurement of monetary balance sheet items denominated in non-dollar currencies are reflected in the statements of operations as financial income or expenses, as appropriate.
 
The financial statements of foreign subsidiaries, whose functional currency is not the U.S. dollar, have been translated into U.S. dollars. All balance sheet accounts have been translated using the exchange rates in effect at the balance sheet date. Statements of operations amounts have been translated using the average exchange rate for the period. The translation differences are attributed to the capital reserve from translation differences.
Concentrations of Credit Risk and Fair Value of Financial Instruments
d.
Concentrations of Credit Risk and Fair Value of Financial Instruments (con.)
 
The financial instruments of the Company consist mainly of cash and cash equivalents, short-term bank deposits, trade receivables, other accounts receivable, short-term bank credit, trade payables, other accounts payable and notes payable to shareholders and others.
 
In view of their short term nature, the fair value of the financial instruments included in working capital of the Company is usually identical, or close, to their carrying values. The fair values of long-term notes payable also approximates their carrying values, since such notes bear interest at rates that management believes is approximately the same as prevailing market rates.
 
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, and trade receivables. The majority of the Company's cash and cash equivalents are invested in interest bearing U.S. dollar and U.S. dollar-linked instruments or in NIS and Euro interest bearing deposits with major Israeli, U.S. and European banks. Such deposits in the United States may be in excess of insured limits and are not insured in other jurisdictions. Management believes that the financial institutions that hold the Company's investments are financially sound, and accordingly, minimal credit risk exists with respect to these investments.
 
Exchange rates
e.
Exchange rates
 
 
Exchange and linkage differences are charged or credited to operations as incurred.
 
 
Exchange rates and the Consumer Price Index ("CPI") in Israel:
 
 
Exchange rates:
 
   
September 30,
   
December 31,
 
   
2012
   
2011
 
New Israeli Shekel (NIS)
  $ 0.256     $ 0.262  
Euro (EU)
  $ 1.295     $ 1.292  
Australian Dollar (AU$)
  $ 1.045     $ 1.015  
Pound Sterling (GBP)
  $ 1.622     $ 1.542  
Canadian Dollar (CAN$)
  $ 1.021     $ 0.979  
Consumer Price Index ("CPI")
    122.93       120.38  
                 
   
Nine Months Ended
September 30,
 
Increase (Decrease) in Rate of Exchange:
    2012       2011  
NIS
    (2.4 )%     (4.6 )%
EU
    0.2 %     1.8 %
AU$
    3.0 %     (2.5 )%
GBP
    5.2 %     0.9 %
CAN$
    4.3 %     (2.6 )%
Consumer Price Index ("CPI")
    2.1 %     1.1 %
 
 
Implementation of New Accounting Standards
f.
Implementation of new accounting Standards
 
In July 2010, the FASB issued an update to ASC 310, "Receivables," that requires enhanced and additional disclosures that will provide financial statement users with greater transparency about a reporting entity's allowance for credit losses and the credit quality of its financial receivables. The new and amended disclosure requirements focus on such areas as nonaccrual and past due financing receivables, allowance for credit losses related to financing receivables, impaired loans, credit quality information and modifications. The ASU requires an entity to disaggregate new and existing disclosures based on how it develops its allowance for credit losses and how it manages credit exposures. For public entities, the disclosures as of the end of a reporting period are effective for interim and annual reporting periods ending on or after December 15, 2010. The disclosures about activity that occurs during a reporting period are effective for interim and annual reporting periods beginning on or after December 15, 2010.
 
In January 2011, the FASB issued an additional update to ASC 310 which temporarily delayed the effective date of the disclosures in regard to troubled debt restructuring abovementioned. Currently, that guidance is anticipated to be effective for interim and annual periods ending after June 15, 2011. The adoption of this Standard does not have an effect on the Company.