Incredimail 2009 Annual Report Download - page 94

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INCREDIMAIL LTD .
AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash
and cash equivalents, short-term bank deposits, marketable securities and trade receivables.
The majority of the Company’s cash and cash equivalents and short term bank deposits are invested mainly in dollar
instruments with major banks in Israel and the U.S.. Deposits in the U.S. may be in excess of insured limits and are
not insured in other jurisdictions. Generally, these deposits may be redeemed upon demand and, therefore, bear
minimal risk.
The Company’s marketable securities consist of investment-grade corporate debentures and government debentures.
The Company’s investment policy, approved by the Investment Committee, limits the amount the Company may
invest in any one type of investment or issuer, thereby reducing credit risk concentrations.
The Company is subject to a low amount of credit risk with respect to sales of the Company’
s software products and
content database, as these sales are primarily obtained through credit card sales. The Company’
s major customer is
financially sound, and the Company believes low credit risk is associated with this customer. To date, the Company
has not experienced any material bad debt losses.
The Company's liability for severance pay is calculated pursuant to Israel's Severance Pay Law based on its
employees' most recent monthly salaries, multiplied by the number of years of their employment, or a portion thereof,
as of the balance sheet date. This liability is fully provided for by monthly deposits in insurance policies and by an
accrual.
The deposited funds include profits (losses) accumulated up to the balance sheet date. The deposited funds may be
withdrawn only upon the fulfillment of the obligation pursuant to Israel's Severance Pay Law or labor agreements.
The Company's agreements with employees in Israel, joining the Company since February 2, 2008, are in accordance
with section 14 of the Severance Pay Law, 1963, where the Company's contributions for severance pay shall be
instead of its severance liability. Upon contribution of the full amount of the employee's monthly salary, and release
of the policy to the employee, no additional calculations shall be conducted between the parties regarding the matter
of severance pay and no additional payments shall be made by the Company to the employee. Further, the related
obligation and amounts deposits on behalf of such obligation are not stated on the balance sheet, as they are legally
released from obligation to employees once the deposit amounts have been paid.
Severance expenses for the years ended December 31, 2007, 2008 and 2009 amounted to $499,000, $715,000
and $362,000, respectively.
Basic net earnings (loss) per Ordinary shares are computed based on the weighted average number of Ordinary shares
outstanding during each year. Diluted net earnings (loss) per Ordinary share are computed based on the weighted
average number of Ordinary shares outstanding during each year, plus dilutive potential Ordinary shares considered
outstanding during the year, in accordance with ASC 260, "Earnings Per Share" (formerly SFAS No. 128).
NOTE 2:
-
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
p.
Concentrations of credit risk:
q.
Severance pay:
r.
Net earnings (loss) per Ordinary share:
F-13