CIMATRON LIMITED

STATEMENTS OF CASH FLOWS

(US Dollars in thousands)

Three months ended

March 31,

2014

2013

Cash flows from operating activities:

Net income 

$           661

$           604

Adjustments to reconcile net income 

   to net cash provided by (used in) operating activities:

Depreciation and amortization

239

293

Increase in accrued severance pay

62

86

Stock based compensation

149

-

Deferred taxes, net

(77)

(90)

Changes in assets and liabilities:

Increase in accounts receivable and prepaid expenses

(258)

(1,194)

Decrease in inventory

5

-

Decrease (increase) in deposits with insurance companies and severance pay fund

6

(110)

Increase in trade payables, accrued expenses and other liabilities

2,425

280

Net cash provided by (used in) operating activities

3,212

(131)

Cash flows from investing activities:

Proceeds from sale of property and equipment

-

7

Purchase of property and equipment

(65)

(49)

Net cash used in investing activities

(65)

(42)

Cash flows from financing activities:

Short-term bank credit

509

5,658

Purchase of non-controlling interest

(92)

-

Cash distribution to shareholders

-

(7,874)

Net cash provided by (used in) financing activities

417

(2,216)

Net increase (decrease) in cash and cash equivalents

3,564

(2,389)

Effect of exchange rate changes on cash

(2)

(88)

Cash and cash equivalents at beginning of period

13,052

11,903

Cash and cash equivalents at end of period

$      16,614

$        9,426

Appendix A - Non-cash transactions

                   Purchase of property on credit

$            20

$              5