Baran (BRANF) 6-K Current report (foreign)

EXHIBIT 1

BARAN GROUP LTD.

INTERIM REPORT
(UNAUDITED)

AT SEPTEMBER 30, 2002

TABLE OF CONTENTS

		Page
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - IN US $, ADJUSTED TO THE EXCHANGE RATE OF SEPTEMBER 2002
	Balance sheets		2-3
	Statements of income		4
	Statements of changes in shareholders’ equity		5-6
	Statements of cash flows		7-9
	Notes to financial statements		10-11

BARAN GROUP LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS
IN US $, ADJUSTED TO THE EXCHANGE RATE OF 30 SEPTEMBER 2002*

					September 30
									December 31,
					2002		2001		2001
					(Unaudited)				Audited
					In thousands
				Assets
CURRENT ASSETS:
	Cash and cash equivalents					27,219		32,729		45,949
	Short-term investments					19,742		1,088		1,047
	Accounts receivable:
		Trade and income receivable				49,674		**66,527		**56,702
		Other				11,246		**6,407		**8,236
	Inventories					2,681		3,858		**3,599
			Total current assets			110,562		110,609		115,533
INVESTMENTS AND LONG-TERM RECEIVABLES:
	Investments in investee companies					5,435		5,521		5,640
	Other investments and long-term accounts receivable					12,962		**3,117		**9,059
	Deferred income taxes					379		265		345
						18,776		8,903		15,044
LAND AND BUILDINGS FOR LEASE:
	Cost					17,284		13,812		15,213
	Less — accumulated depreciation and amortization					1,481		1,054		1,190
						15,803		12,758		14,023
FIXED ASSETS:
	Cost					25,309		23,956		24,119
	Less — accumulated depreciation and amortization					13,751		11,150		11,874
						11,558		12,806		12,245
OTHER ASSETS,net of accumulated amortization						1,402		**1,391		**1,031
			Total assets			158,101		146,467		157,876

     The accompanying notes are an integral part of these condensed financial statements.

2

					September 30
									December 31,
					2002		2001		2001
					(Unaudited)				Audited
					In thousands
			Liabilities and shareholders’ equity
CURRENT LIABILITIES:
	Short-term bank credit and bank loans					20,663		13,641		14,680
	Accounts payable and accruals:
		Trade				21,276		49,022		52,735
		Other				29,884		28,785		**32,617
	Proposed dividend							3,313
				Total current liabilities		71,823		94,761		100,032
LONG-TERM LIABILITIES:
	Liability for employee rights upon retirement, net of amount funded					1,087		764		987
	Bank loans, net of current maturities					34,735		4,692		7,146
	Long-term liabilities to minority shareholders, net of receivables due from minority shareholders					2,589		**2,987		**2,887
	Deferred income taxes					13		12		23
				Total long-term liabilities		38,424		8,455		11,043
				Total liabilities		110,247		103,216		111,075
MINORITY INTERESTS						1,477		**416		**1,458
SHAREHOLDERS’ EQUITY						46,377		42,835		45,345
				Total liabilities and shareholders’ equity		158,101		146,467		157,876

*	On the basis of changes in the Consumer Price Index.
**	Reclassified.

     The accompanying notes are an integral part of these condensed financial statements.

3

BARAN GROUP LTD.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
IN US $, ADJUSTED TO THE EXCHANGE RATE OF 30 SEPTEMBER 2002*

				For the						For the						For the
				nine months ended						three months ended						year ended
				September 30						September 30						December 31,
				2002			2001			2002			2001			2001
REVENUES:
	Construction projects and services				109,801			141,599			33,420			43,973			191,615
	Sale of products				28,025			10,716			11,175			4,153			19,093
	Lease of buildings				1,116			956			425			336			1,321
	Management fees from proportionately consolidated companies				1,262			320			116			69			484
			Total revenues		140,204			153,591			45,136			48,531			212,513
COST OF REVENUES:
	Construction projects and services				93,185			114,892			28,571			36,315			155,876
	Sale of products				25,465			10,081			9,737			3,675			18,801
	Lease of buildings				391			248			228			35			328
		Total cost of revenues			119,041			125,221			38,536			40,025			175,005
GROSS PROFIT					21,163			28,370			6,600			8,506			37,508
RESEARCH AND DEVELOPMENT EXPENSES,net					870			389			140			125			770
SELLING, MARKETING, GENERAL AND ADMINISTRATIVE EXPENSES:
	Selling and marketing, net				2,775			1,120			1,148			378			1,994
	General and administrative				8,229			8,217			2,698			2,753			12,415
OPERATING INCOME					9,289			18,644			2,614			5,250			22,329
FINANCIAL INCOME (EXPENSES),net					(3,452	)		1,151			(1,107	)		1,338			1,643
OTHER INCOME (EXPENSES),net					43			(1,394	)		(22	)		(485	)		(830	)
INCOME BEFORE TAXES ON INCOME					5,880			18,401			1,485			6,103			23,142
TAXES ON INCOME					2,592			7,232			625			2,496			9,353
INCOME AFTER TAXES ON INCOME					3,288			11,169			860			3,607			13,789
SHARE IN PROFITS (LOSSES) OF ASSOCIATED COMPANIES,net					103			128			46			(18	)		249
MINORITY INTERESTS IN LOSSES OF SUBSIDIARIES,net					494			285			152			105			121
NET INCOME FOR THE PERIOD					3,885			11,582			1,058			3,694			14,159

	In adjusted $
EARNINGS PER SHARE —basic and diluted		0.50	1.52	0.14	0.48	1.85

*	On the basis of changes in the Consumer Price Index.
**	Reclassified.

     The accompanying notes are an integral part of these condensed financial statements.

4

BARAN GROUP LTD.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
IN US $, ADJUSTED TO THE EXCHANGE RATE OF 30 SEPTEMBER 2002*

					Differences from						Cost of
					translation of						Company
					foreign currency						shares held by the
	Share		Capital		financial statements			Retained			Company and its
	capital		surplus		of a subsidiary			earnings			subsidiaries			Total
	In thousands
BALANCE AT JANUARY 1, 2002(audited)		3,050		11,363		(12	)		31,765			(820	)		45,345
CHANGES DURING THE 9 MONTH PERIOD ENDED SEPTEMBER 30, 2002(unaudited):
Net income									3,885						3,885
Acquisition of Company shares by a subsidiary												(100	)		(100	)
Dividend									(2,752	)					(2,752	)
BALANCE AT SEPTEMBER 30, 2002(unaudited)		3,050		11,363		(12	)		32,897			(921	)		46,377
BALANCE AT JANUARY 1, 2001(audited)		3,009		11,363					24,345			(820	)		37,896
CHANGES DURING THE 9 MONTH PERIOD ENDED SEPTEMBER 30, 2001(unaudited):
Net income									11,582						11,582
Issuance of shares		10													10
Paid dividend									(3,341	)					(3,341	)
Proposed dividend									(3,313	)					(3,313	)
BALANCE AT SEPTEMBER 30, 2001(unaudited)		3,019		11,363					29,273			(820	)		42,835
BALANCE AT JULY 1, 2002(unaudited)		3,050		11,363		51			31,839			(820	)		45,482
CHANGES DURING THE 3 MONTH PERIOD ENDED SEPTEMBER 30, 2002(unaudited):
Net income									1,058						1,058
Acquisition of Company shares by a subsidiary												(100	)		(100	)
Differences from translation of foreign currency financial statements of a subsidiary						(63	)								(63	)
BALANCE AT SEPTEMBER 30, 2002(unaudited)		3,050		11,363		(12	)		32,897			(921	)		46,377

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BARAN GROUP LTD.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
IN US $, ADJUSTED TO THE EXCHANGE RATE OF 30 SEPTEMBER 2002*

					Differences from						Cost of
					translation of						Company
					foreign currency						shares held by the
	Share		Capital		financial statements			Retained			Company and its
	capital		surplus		of a subsidiary			earnings			subsidiaries			Total
	In thousands
BALANCE AT JULY 1, 2001(unaudited)		3,009		11,363					28,893			(820	)		42,444
CHANGES DURING THE 3 MONTH PERIOD ENDED SEPTEMBER 30, 2001(unaudited):
Net income									3,694						3,694
Issuance of shares				10											10
Proposed dividend									(3,313	)					(3,313	)
BALANCE AT SEPTEMBER 30, 2001(unaudited)		3,009		11,373					29,273			(820	)		42,835
BALANCE AT JANUARY 1, 2001(audited)		3,009		11,363					24,345			(820	)		37,896
CHANGES DURING THE YEAR ENDED DECEMBER 31, 2001(audited):
Net income									14,159						14,159
Issuance of restricted shares		41													41
Differences from translation of foreign currency financial statements of a subsidiary						(12	)								(12	)
Dividend									(6,739	)					(6,739	)
BALANCE AT DECEMBER 31, 2001(audited)		3,050		11,363		(12	)		31,765			(820	)		45,345

*  On the basis of changes in the Consumer Price Index.

The accompanying notes are an integral part of these condensed financial statements.

6

BARAN GROUP LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
IN US $, ADJUSTED TO THE EXCHANGE RATE OF 30 SEPTEMBER 2002*

	For the						For the						For the
	nine months ended						three months ended						year ended
	September 30						September 30						December 31,
	2002			2001			2002			2001			2001
	(Unaudited)						(Unaudited)						(Audited)
	In thousands
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income for the period		3,885			11,582			1,058			3,694			14,159
Adjustments required to reflect the cash flows from operating activities (A):		(24,744	)		3,278			(7,489	)		3,749			17,927
Net cash provided by (used in) operating activities		(20,859	)		14,860			(6,431	)		7,443			32,086
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets		(3,407	)		(2,494	)		(982	)		(601	)		(4,556	)
Grant of long-term loans		(5,289	)		(2,348	)		(115	)
Repayment of long-term loans														(2,294	)
Acquisition of companies consolidated for the first time (B)					(2,384	)					(2,384	)		(2,319	)
Investment in investee companies		(107	)		(207	)					(7	)		(207	)
Proceeds from sale of fixed assets		359			434			103			133			969
Decrease (increase) in short-term deposits, net		(8,463	)		1,169			(8,470	)		(73	)		1,244
Sale (purchase) marketable securities, net		(10,841	)		(88	)		11,084			23			(82	)
Acquisition of non-marketable securities		(115	)					(87	)					(54	)
Net cash provided by (used in) investing activities		(27,863	)		(5,918	)		1,533			(2,909	)		(7,299	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term loans		(1,190	)		(3,624	)		(379	)		(3,136	)		(5,677	)
Short-term bank credit — net		2,126			9,122			(6	)		7,992			7,526
Dividend paid		(2,752	)		(3,341	)								(6,739	)
Long-term bank loans received		31,890			981			610			449			5,374
Acquisition of Company shares by a subsidiary		(100	)					(100	)
Issuance of restricted shares					10						10			41
Net cash provided by financing activities		29,974			3,148			125			5,315			525
TRANSLATION DIFFERENCES ON CASH BALANCES OF A SUBSIDIARY OPERATING INDEPENDENTLY		18						1						(2	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(18,730	)		12,090			(4,772	)		9,849			25,310
BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		45,949			20,639			31,991			22,890			20,639
BALANCE OF CASH AND CASH EQUIVALENTS AT END OF PERIOD		27,219			32,729			27,219			32,739			45,949

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BARAN GROUP LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
IN US $, ADJUSTED TO THE EXCHANGE RATE OF 30 SEPTEMBER 2002*

	For the							For the						For the
	nine months ended							three months ended						year ended
	September 30							September 30						December 31,
	2002				2001			2002			2001			2001
	(Unaudited)							(Unaudited)						(Audited)
				In thousands
(A) Adjustments required to reflect the cash flows:
from operating activities:
Income and expenses not involving cash flows:
Minority interests in losses of subsidiaries- net		(494	)			(285	)		(152	)		(105	)		(121	)
Share in losses (profits) of associated companies, net of dividends received from those companies		180				174			66			17			55
Depreciation and amortization		2,392				1,525			890			505			2,291
Deferred income taxes — net		(467	)			(755	)		167			(452	)		545
Capital loss (gain):
On sale of fixed assets		61				(6	)		1			1			(17	)
Gain from issue to minority in consolidated subsidiaries		51
On cancellation of provision for anticipated loss due to a possible conversion of convertible securities issued by an associated company		(26	)
In respect of impairment in value of investment in an associated company						916									916
Increase in liability for employee rights upon retirement — net		101				138			(159	)		(40	)		244
Linkage differences on long-term loans		46				42			64			4			171
Linkage differences on (erosion of) long-term loans granted		(7	)			55			(130	)		55			(131	)
Decrease (increase) in value of short-term marketable securities — net		608				10			(465	)		6			(28	)
Write down of long-term loan						(83	)					(83	)
		2,445				1,731			282			(92	)		3,925
Changes in operating asset and liability items:
Decrease (increase) in accounts receivable:
Trade and income receivable		5,657				(12,561	)		1,450			(1,193	)		(6,226	)
Other		(2,514	)			2,197			(909	)		1,426			2,974
Increase (decrease) in accounts payable and accruals:
Trade		(32,624	)			17,298			(6,166	)		5,390			20,451
Other		(3,131	)			(5,650	)		(1,725	)		(2,097	)		(2,892	)
Increase in customer advances, net of inventory in respect of work in progress		(1,207	)			1,355			(1,071	)		1,369			(1,711	)
Decrease (increase) in inventories		944				(1,092	)		584			(1,054	)		1,406
Decrease in long-term receivables		5,686							66
		(27,189	)			1,547			(7,771	)		3,841			14,002
		(24,744	)			3,278			(7,489	)		3,749			17,927

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BARAN GROUP LTD.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
IN US $, ADJUSTED TO THE EXCHANGE RATE OF 30 SEPTEMBER 2002*

	For the 9			For the 3			For the
	months ended			months ended			year ended
	September 30			September 30			December 31
	2001			2001			2001
	Audited
	In thousands
(B) Acquisition of companies consolidated for the first time and a proportionately consolidated company fully consolidated:
Assets and liabilities of the consolidated companies at date of acquisition:
Working capital (excluding cash and cash equivalents)		(479	)		(479	)		(1,211	)
Fixed assets and other assets — net		(2,497	)		(2,497	)		(2,846	)
Agreements with customers		0			0			(532	)
Long-term liabilities		2,244			2,244			2,331
Minority interests in consolidated company at date of acquisition		416			416			1,163
Goodwill arising on acquisition		(2,067	)		(2,067	)		(1,224	)
		(2,384	)		(2,384	)		(2,319	)

* On the basis of changes in the Consumer Price Index.

Supplementary information on investing and financing activities not involving cash flows:

     The former shareholders of a subsidiary were entitled to a sum of 511,000 $ (adjusted NIS 2,452,000) as part of the agreements for the acquisition of the subsidiary, this amount is presented as a shareholders loan.

9

BARAN GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.	The interim financial statements at September 30, 2002 and for the nine-month and three-month periods then ended (the “interim financial statements”) were drawn up in condensed format, in accordance with accounting principles generally accepted in Israel (“Israeli GAAP”) for interim statements and in accordance with the Israeli Securities (Periodic and Immediate Reports) Regulations, 1970.
	The Israeli GAAP applied in preparation of the interim financial statements are consistent with those applied in preparation of the annual financial statements. Nevertheless, the interim financial statements do not include all the information and explanations required for annual financial statements.
2.	Following are data on the changes in the exchange rate of the U.S. dollar (the “dollar”) and in the Israeli CPI during the reporting periods:

	Exchange
	rate of one
	dollar		Israeli CPI
	%		%
Nine months ended September 30:
2002		10.3		7.0
2001		7.7		2.0
Three months ended September 30:
2002		2.1		0.6
2001		4.5		0.8
Year ended December 31, 2001		9.3		1.4

3.	In October 2001, the Israeli Accounting Standards Board (“IASB”) issued Israel Accounting Standard No. 12 — Discontinuance of Adjusting Financial Statements for inflation, which provided for the discontinuance of adjusting financial statements for the effects of inflation, as of January 1, 2003. On November 10, 2002, the professional committee of the IASB has resolved to postpone, by one year, the implementation of the above standard. Accordingly, an exposure draft for a new standard (No. 17) was issued on November 17, 2002 that, when approved, will postpone implementation of Standard No. 12 to January 1, 2004. Until the date of the implementation of Standard No. 12, the company will continue preparing inflation-adjusted financial statements in accordance with the pronouncements of the Institute of Certified Public Accountants in Israel.
4.	On November 13, (November 14 Israeli time), 2002, the Company completed its merger transaction with o2wireless Solutions Inc. (“o2”). Pursuant to the merger agreement, the Company merged o2 with one of the Company’s wholly owned subsidiaries, and in consideration o2’s shareholders had their shares converted into Company shares at the rate of 0.014919 shares in the Company for every o2 share held. Upon completion of the merger with o2, the Company has been registered for trading on the Nasdaq National Market System.
5.	On November 18, 2001, the Company in general meeting approved the payment of a stock dividend and the issue of marketable securities to interested parties of the Company. At the request of the Israeli Securities Authority, the Company froze the issue of the securities and the unpaid balance of the stock dividend (bonus). On July 11, 2002, the interested parties notified the Company that they are waiving their rights to the issue of shares and warrants, as well as to the payment of the unpaid bonuses.

10

BARAN GROUP LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)

6. On May 2, 2002, a customer filed a claim against a proportionately consolidated subsidiary, the Company’s share in which is 46.5%. Under the claim, the proportionately consolidated subsidiary and 4 other entities, jointly, are required to pay the customer approximately $ 1.83 million in respect of alleged damages caused during the installation of an appliance on April 22, 1999. The company has maximum insurance coverage of approximately $ 1 million. In addition, on April 24, 2002, a supplier filed a claim for $ 145,966 against the same company in respect of an alleged breach of an agreement for the provision of manpower services. At this stage, the proportionately consolidated subsidiary has not yet submitted its statements of defense in the above claims. In the opinion of the legal counsel of the proportionately consolidated subsidiary, the chances of being required to pay an amount in excess of the insurance coverage are not high nor is it possible to estimate the chances of the claim filed by the supplier. Accordingly, no provision has been made in the financial statements in respect of the above claims.

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