PETACH TIKVA, Israel, May 19 /PRNewswire-FirstCall/ -- 012
Smile.Communications (NASDAQ Global Market and TASE: SMLC), an
Israeli telecommunications service provider, today reported first
quarter financial results for the three-months ended March 31,
2009. - First quarter revenue increases 8% to NIS 284 million (US
$68 million) - Broadband segment revenue increases by 15% -
Operating income increases 32% to NIS 40 million (US $10 million) -
Net income increases 763% to NIS 49 million (US $12 million) or NIS
1.93 per share (US $0.46 per share) - Total of 105,000 local
telephony lines as of the end of the quarter - Cash flow from
operations for the quarter increases 24% to NIS 58 million (US $14
million) 012 Smile.Communications reported improved quarterly
revenues of NIS 284 million (US $68 million) for the quarter ended
March 31, 2009, compared to NIS 263 million for the same period in
2008, an 8% increase. Revenue from broadband services increased to
NIS 149 million (US $36 million) for the quarter ended March 31,
2009 compared to NIS 130 million for the first quarter of 2008, an
increase of 15%. Revenue from traditional voice services for the
quarter was NIS 136 million (US $32 million) compared to NIS 134
million for the same period last year. Operating income for the
first quarter of 2009 increased to NIS 40 million (US $10 million)
compared with NIS 31 million for the same period last year.
Operating income for the first quarter of 2009 benefited from a
one-time gain of NIS 5.4 million (US $1.3 million) from the
settlement of a long-term dispute between the Company and Bezeq,
Israel's incumbent telecommunications service provider. As part of
this settlement, an additional amount of NIS 2 million (US $0.5
million) was included in financial income. Adjusted EBITDA for the
first quarter of 2009 increased to NIS 69 million (US $16 million)
compared with NIS 62 million for the same period last year. For
more information regarding the use of non-GAAP financial measures,
please see the notes in this press release. Net income for the
quarter ended March 31, 2009 increased to a record NIS 49 million
(US $12 million), or NIS 1.93 per fully diluted share, compared to
NIS 6 million, or NIS 0.22 per fully diluted share, for the same
period in 2008, an increase of 763%. Excluding favorable exchange
rate differences, net income for the quarter ended March 31, 2009
would have been NIS 31 million (US $7 million). The Company's net
financial debt decreased from NIS 302 million as of December 31,
2008 to NIS 253 million (US $60 million) as of March 31, 2009,
reflecting the positive cash flow generation of the Company. Ms.
Stella Handler, CEO of 012 Smile.Communications, said, "For the
first quarter, we have delivered excellent results that demonstrate
the strength of the 012 Smile brand in the Israeli communications
market. The growth that we have achieved in our ongoing activities,
together with our strong cash flow, are enabling us to carry out a
significant expansion of our business, and positioning us to become
one of the Israeli communications markets' leading players." Ms.
Handler continued, "We are currently evaluating directions for
potential expansion, including the field of mobile communications."
Conference Call Information Management will host an interactive
teleconference to discuss the results today, May 19, 2009, at 09:00
a.m. EST. To participate, please call one of the following access
numbers several minutes before the call begins: 1-866-3455-855 from
within the U.S., 0-800-4048-418 from within the U.K., or
+972-3-918-0609 from other international locations. The call will
also be broadcast live through the company's Website,
http://www.012.net/, and will be available there for replay during
the next 30 days. Notes: Non-GAAP Measurements Reconciliation
between the Company's results on a GAAP and non-GAAP basis is
provided in a table immediately following the Consolidated
Statement of Operations (Non-GAAP Basis). Non-GAAP financial
measures consist of GAAP financial measures adjusted to exclude
amortization of acquired intangible assets, as well as certain
business combination accounting entries. The purpose of such
adjustments is to give an indication of our performance exclusive
of non-cash charges and other items that are considered by
management to be outside of our core operating results. Our
non-GAAP financial measures are not meant to be considered in
isolation or as a substitute for comparable GAAP measures, and
should be read only in conjunction with our consolidated financial
statements prepared in accordance with GAAP. Our management
regularly uses our supplemental non-GAAP financial measures
internally to understand, manage and evaluate our business and make
operating decisions. These non-GAAP measures are among the primary
factors management uses in planning for and forecasting future
periods. We believe these non-GAAP financial measures provide
consistent and comparable measures to help investors understand our
current and future operating cash flow performance. These non-GAAP
financial measures may differ materially from the non-GAAP
financial measures used by other companies. Reconciliation between
results on a GAAP and non-GAAP basis is provided in a table
immediately following the Consolidated Statement of Operations.
EBITDA is a non-GAAP financial measure generally defined as
earnings before interest, taxes, depreciation and amortization. We
define adjusted EBITDA as net income before financial income
(expenses), net, impairment and other charges, expenses recorded
for stock compensation in accordance with SFAS 123(R), income tax
expenses and depreciation and amortization. We present adjusted
EBITDA as a supplemental performance measure because we believe
that it facilitates operating performance comparisons from period
to period and company to company by backing out potential
differences caused by variations in capital structure (most
particularly affecting our interest expense given our recently
incurred significant debt), tax positions (such as the impact of
changes in effective tax rates or net operating losses) and the age
of, and depreciation expenses associated with, fixed assets
(affecting relative depreciation expense). Adjusted EBITDA should
not be considered in isolation or as a substitute for net income or
other statement of operations or cash flow data prepared in
accordance with GAAP as a measure of our profitability or
liquidity. Adjusted EBITDA does not take into account our debt
service requirements and other commitments, including capital
expenditures, and, accordingly, is not necessarily indicative of
amounts that may be available for discretionary uses. In addition,
adjusted EBITDA, as presented in this press release, may not be
comparable to similarly titled measures reported by other companies
due to differences in the way that these measures are calculated.
Convenience Translation to Dollars For the convenience of the
reader, the reported NIS figures of March 31, 2009 have been
presented in thousands of U.S. dollars, translated at the
representative rate of exchange as of March 31, 2009 (NIS 4.188 =
U.S. Dollar 1.00). The U.S. Dollar ($) amounts presented should not
be construed as representing amounts receivable or payable in U.S.
Dollars or convertible into U.S. Dollars, unless otherwise
indicated. Consolidated Balance Sheets Convenience translation into
U.S. dollars $1 = NIS 4.188 March 31 March 31 March 31 2009 2008
2009 (Unaudited) (Unaudited) (Unaudited) NIS thousands $ thousands
Current assets Cash and cash equivalents 6,980 229,755 1,667
Marketable securities 71,076 72,687 16,971 Trade receivables, net
204,203 197,868 48,759 Parent company receivable - 1,579 - Related
parties receivables - 2,088 - Prepaid expenses and other 46,402
27,632 11,080 current assets Deferred taxes 16,125 8,462 3,850
Total current assets 344,786 540,071 82,327 Investments Long-term
trade receivables 6,200 3,150 1,480 Assets held for employee 15,848
19,093 3,784 severance benefits Marketable securities 188,543 -
45,020 Total investments 210,591 22,243 50,284 Property and
equipment, net 170,856 166,176 40,797 Other assets, net 305,801
289,436 73,019 Other intangible assets, net 168,806 195,440 40,307
Goodwill 411,171 411,171 98,178 Total assets 1,612,011 1,624,537
384,912 Convenience translation into U.S. dollars $1 = NIS 4.188
March 31 March 31 March 31 2009 2008 2009 (Unaudited) (Unaudited)
(Unaudited) NIS thousands $ thousands Current liabilities
Short-term bank credit 21,170 61,080 5,055 Current maturities of
long-term obligations and debentures 57,657 80,634 13,767 Accounts
payable 140,221 142,156 33,482 Loan from the parent company 112,074
107,216 26,761 Related parties payables 750 - 179 Parent company
payables 1,739 - 415 Other payables and accrued expenses 123,429
128,249 29,472 Total current liabilities 457,040 519,335 109,131
Long-term liabilities Debentures 328,765 383,306 78,502 Long-term
obligations and other payables - 1,826 - Deferred taxes 33,353
27,730 7,963 Liability for employee severance benefits 31,811
31,550 7,596 Total long-term liabilities 393,929 444,412 94,061
Total liabilities 850,969 963,747 203,192 Shareholders' equity and
parent company investment 761,042 660,790 181,720 Total
liabilities, shareholders' equity and parent company investment
1,612,011 1,624,537 384,912 Consolidated Statements of Operations
Convenience translation into dollars $1 = NIS 4.188 Three-month
period ended Three-month period March 31 ended March 31 2009 2008
2009 (Unaudited) (Unaudited) (Unaudited) NIS thousands $ thousands
Revenues 284,400 263,357 67,908 Costs and expenses Cost of revenues
193,573 176,690 46,221 Selling and marketing expenses 37,793 38,516
9,024 General and administrative expenses 12,621 12,802 3,014
Impairment and other charges - 4,802 - Total costs and expenses
243,987 232,810 58,259 Income from operations 40,413 30,547 9,649
Financial (income) expenses, net (27,263) 22,587 (6,510) Income
before tax expenses 67,676 7,960 16,159 Tax expenses 18,627 2,278
4,447 Net income 49,049 5,682 11,712 Income (loss) per share Basic
and diluted earnings per share (in NIS) 1.93 0.22 0.46 Weighted
average number of ordinary shares used in calculation of basic and
diluted earnings per share 25,355,687 25,360,000 25,355,687
Reconciliation Table of Non-GAAP Measures (NIS in thousands)
Convenience translation into dollars $1 = NIS 4.188 Three-month
period ended Three-month period March 31 ended March 31 2009 2008
2009 (Unaudited) (Unaudited) (Unaudited) NIS thousands $ thousands
GAAP operating income 40,413 30,547 9,649 Adjustments Amortization
of acquired intangible assets 5,834 6,820 1,394 Non-recurring
expenses - 4,802 - Expenses recorded for stock based compensation
in accordance with SFAS 123(R) 1,239 - 296 Non-GAAP adjusted
operating income 47,486 42,169 11,339 GAAP tax expenses (benefit),
net 18,627 2,278 4,447 Adjustments Amortization of acquired
intangible assets Included in tax expenses, net 1,487 1,841 355
Non-GAAP tax expenses, net 20,114 4,119 4,802 Net income as
reported 49,049 5,682 11,712 Taxes on income 18,627 2,278 4,447
Non-recurring expenses - 4,802 - Expenses recorded for stock based
compensation in accordance with SFAS 123(R) 1,239 - 296 Financial
(income) expenses (27,263) 22,587 (6,510) Depreciation and
amortization 27,337 26,543 6,528 Adjusted EBITDA 68,989 61,892
16,473 Condensed Consolidated Statements of Cash Flows Convenience
translation into U.S. dollars $1 = NIS 4.188 Three-month
Three-month Three-month period ended period ended period ended
March 31 March 31 March 31 2009 2008 2009 (Unaudited) (Unaudited)
(Unaudited) NIS thousands $ thousands Cash flows from operating
activities: Net income 49,049 5,682 11,712 Adjustments to reconcile
net income to net cash provided by operating activities 8,632
41,030 2,061 Net cash provided by operating activities 57,681
46,712 13,773 Cash flows from investing activities: Purchase of
property and equipment and other assets (20,952) (12,718) (5,003)
Investment in marketable securities, net (124) (72,256) (29) Net
cash used in investing activities (21,076) (84,974) (5,032) Net
cash provided by (used in) financing activities (96,025) 54,961
(22,929) Changes in cash and cash equivalents (59,420) 16,699
(14,188) Effect of exchange rate changes 5,748 (16,839) 1,373 Cash
and cash equivalents at beginning of the year 60,652 229,895 14,482
Cash and cash equivalents at end of year 6,980 229,755 1,667
Investor relations contacts: Mor Dagan - Investor Relations / Tel:
+972-3-516-7620 Garth Russell - KCSA Strategic Communications /
Tel: +1-212-896-1250 DATASOURCE: 012 Smile.communications Ltd.
CONTACT: Investor relations contacts: Mor Dagan - Investor
Relations, / Tel: +972-3-516-7620. Garth Russell - KCSA Strategic
Communications, / Tel: +1-212-896-1250
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