PETACH TIKVA, Israel, August 12 /PRNewswire-FirstCall/ -- 012
Smile.Communications (NASDAQ Global Market and TASE: SMLC), an
Israeli telecommunications service provider, today reported
financial results for the three and six month periods ended June
30, 2009. Results for the Second Quarter - Second quarter revenue
increased by 10% to NIS 291 million (US $74 million) - Broadband
segment revenue increased by 14% - International long distance
(ILD) business revenue up year-over-year and quarter-over-quarter -
Operating income increased by 25% to NIS 41 million (US $10
million) - Net income increased by 367% to NIS 26 million (US $6.6
million) or NIS 1.02 per share (US $0.26 per share) - Total of
120,000 local telephony lines as of the end of the quarter - Cash
flow from operations for the quarter increased by 30% to NIS 59
million (US $15 million) 012 Smile.Communications reported
quarterly revenues increased by 10% to NIS 291 million (US $74
million) for the quarter ended June 30, 2009, compared to NIS 264
million for the same period in 2008. Revenue from broadband
services increased 14% to NIS 150 million (US $38 million) for the
quarter ended June 30, 2009 compared to NIS 132 million for the
second quarter of 2008. Revenues from traditional voice services
for the quarter were NIS 141 million (US $36 million) compared to
NIS 132 million for the same period last year. Operating income for
the second quarter of 2009 increased to NIS 41 million (US $10
million) compared with NIS 33 million for the same period last
year. Operating income for the second quarter of 2009 benefited
from a one-time adjustment of NIS 3.8 million (US $1 million)
relating to the reversal of the majority of a loss provision taken
previously with respect to the Company's exposure in an ongoing
legal dispute, which is now moving towards settlement. Adjusted
EBITDA for the second quarter of 2009 increased to a record amount
of NIS 71 million (US $18 million) compared with NIS 63 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 June 30, 2009 increased
to NIS 26 million (US $6.6 million), or NIS 1.02 per fully diluted
share, compared to NIS 6 million, or NIS 0.22 per fully diluted
share, for the same period in 2008. The Company's net financial
debt decreased from NIS 302 million as of December 31, 2008 to NIS
176 million (US $45 million) as of June 30, 2009, reflecting the
positive cash flow generation of the Company. Ms. Stella Handler,
CEO of 012 Smile.Communications, said, "We are pleased to report
another strong quarter characterized by on-track performance across
all metrics. Financially, we have recorded significant growth in
revenues from both operating segments while reducing operating
expenses, enabling us to achieve strong profits across the board,
including a new record EBITDA. Strategically, we have achieved the
customer acquisition targets that we set for ourselves last year,
and continue to seek out the best path for entering Israel's mobile
market." Ms. Handler continued, "On the macro level, we are
encouraged by signs indicating that our markets are returning to a
growth phase. Government statistics show a clear rebound in
outgoing telephony traffic and our own ILD business is confirming
the trend. The implication is that we were minimally impacted by
the recession and are now ready to move to the next stage. With a
strong balance sheet, lean operations and positive cash flow, we
are well positioned to take advantage of growing markets and the
opportunities that they will produce." Conference Call Information
Management will host an interactive teleconference to discuss the
results today, August 12, 2009, at 09:00 a.m. EDT. To participate,
please call one of the following access numbers several minutes
before the call begins: 1-888-668-9141 from within the U.S.
0-800-917-5108 from within the U.K., 1-866-485-2399 from Canada or
+972-3-918-0610 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 no-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 June 30, 2009 have been
presented in thousands of U.S. dollars, translated at the
representative rate of exchange as of June 30, 2009 (NIS 3.919 =
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. 012 Smile.Communications Ltd. Consolidated Balance
Sheets Convenience translation into US Dollars $1 = NIS 3.919 June
30 December 31 June 30 2009 2008 2009 (Unaudited) (Audited)
(Unaudited) NIS thousands $ thousands Current assets Cash and cash
equivalents 60,910 60,652 15,542 Marketable securities 271,346
76,742 69,239 Trade receivables, net of allowance for doubtful
accounts of NIS 12,730 and NIS 11,739 at December 31, 2008 and June
30, 2009 205,674 203,009 52,481 Prepaid expenses and other current
assets 26,402 23,038 6,737 Deferred tax assets - 17,838 - Total
current assets 564,332 381,279 143,999 Long-term trade receivables
6,400 6,350 1,633 Marketable securities - 152,020 - Assets held for
employee severance benefits 16,577 16,499 4,230 Property and
equipment, net 173,757 169,406 44,337 Other assets, net 315,673
291,607 80,549 Other intangible assets, net 162,972 174,640 41,585
Goodwill 411,171 411,171 104,917 Total assets 1,650,882 1,602,972
421,250 The accompanying notes are an integral part of the combined
consolidated financial statements. 012 Smile.Communications Ltd.
Consolidated Balance Sheets Convenience translation into US Dollars
$1 = NIS 3.919 June 30 December 31 June 30 2009 2008 2009
(Unaudited) (Audited) (Unaudited) NIS thousands $ thousands
Liabilities and shareholders' equity Current liabilities Current
maturities of long-term obligations 62,256 99,295 15,886 Accounts
payable 127,876 141,055 32,630 Loan from the parent company 112,635
111,344 28,741 Other payables and accrued expenses 136,631 115,339
34,864 Parent company payable 2,271 1,410 579 Related parties
payables 433 2,228 110 Deferred tax liabilities 1,428 - 364 Total
current liabilities 443,530 470,671 113,174 Long-term liabilities
Debentures 334,783 385,919 85,426 Long-term obligations and other
payables - 143 - Deferred tax liabilities 28,671 25,535 7,316
Liability for employee severance benefits 33,196 32,430 8,470 Total
long-term liabilities 396,650 444,027 101,212 Shareholders' equity
Ordinary shares NIS 0.1 par value 2,536 2,536 647 Additional
paid-in capital 614,777 612,009 156,871 Accumulated other
comprehensive income (loss) 29,996 (14,645) 7,654 Retained earnings
163,393 88,374 41,692 Total shareholders' equity 810,702 688,274
206,864 Total liabilities and shareholders' equity 1,650,882
1,602,972 421,250 012 Smile.Communications Ltd. Combined and
Consolidated Statements of Operations Convenience translation into
US Dollars $1 = NIS 3.919 Six month period ended Three month period
ended Six month period ended June 30 June 30 June 30 2009 2008 2009
2008 2009 (Unaudited) (Unaudited) (Unaudited)(Unaudited) (Unaud-
ited) NIS thousands $ thousands Revenue 290,905 263,607 575,305
526,964 146,799 Cost and operating expenses: Cost of revenue
201,821 177,367 395,394 354,057 100,892 Selling and marketing
35,304 36,048 73,097 74,564 18,652 General and administrative
12,739 15,479 25,360 28,281 6,471 Impairment and other charges -
1,903 - 6,705 - Total operating expenses 249,864 230,797 493,851
463,607 126,015 Operating income 41,041 32,810 81,454 63,357 20,784
Financial (income) expenses 5,222 24,758 (22,041) 47,345 (5,624)
Income before income taxes 35,819 8,052 103,495 16,012 26,408
Income tax expense, net 9,853 2,486 28,480 4,764 7,267 Net income
25,966 5,566 75,015 11,248 19,141 Earnings per share Basic and
diluted earnings per share 1.02 0.22 2.96 0.44 0.76 Weighted
average number of ordinary shares used in calculation of basic and
diluted earnings per share 25,346,272 25,360,000 25,351,023
25,360,000 25,351,023 012 Smile.Communications Ltd. Combined and
Consolidated Statements of Cash Flows Convenience translation into
US Dollars $1 = NIS 3.919 Six month period Three month period ended
Six month period ended ended June 30 June 30 June 30 2009 2008 2009
2008 2009 (Unaudited) (Unaudited) (Unaudited)(Unaudited) (Unaud-
ited) NIS thousands $ thousands Cash flows from operating
activities: Net income 25,966 5,566 75,015 11,248 19,141
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 28,405 26,963
55,742 53,506 14,224 Stock-based compensation 1,239 950 2,478 950
632 Deferred tax expenses (benefit) 5,295 298 8,282 (65) 2,113
Accrued interest on debentures 4,624 5,958 5,420 11,239 1,383
Increase (decrease) in allowance for doubtful accounts, net - 178
(991) 178 (253) Increase (decrease) in employee severance benefits,
net 656 464 688 (944) 175 Linkage and interest differences on
long-term obligations, exchange rate difference and other 3,464
19,401 (245) 38,323 (63) Realized and unrealized income on
marketable securities, net (22,455) (4,075) (23,969) (4,506)
(6,116) Changes in assets and liabilities, net of effects of
acquisition: Trade receivables including non current portion
(1,671) 1,299 (1,724) (1,295) (440) Prepaid expenses and other
current assets 20,001 6,368 (3,364) (157) (858) Other assets, net
109 125 215 233 55 Accounts payable (20,144) (9,792) (21,318)
(39,708) (5,440) Receivables (payables) from parent company and
related parties, net 215 1,359 (934) 5,303 (238) Other payables and
accrued expenses 13,202 (9,650) 21,292 17,819 5,434 Net cash
provided by operating activities 58,906 45,412 116,587 92,124
29,749 Cash flows from investing activities: Purchase of property
and equipment and other assets (14,991) (10,779) (35,943) (23,497)
(9,171) Investment in trading marketable securities (82,998)
(126,398) (113,028) (198,654) (28,841) Proceeds from sale of
marketable securities 124,029 36,917 153,935 36,917 39,279 Net cash
provided by (used in) investing activities 26,040 (100,260) 4,964
(185,234) 1,267 012 Smile.Communications Ltd. Combined and
Consolidated Statements of Cash Flows (cont'd) Convenience
translation into US Dollars $1 = NIS 3.919 Six month period Three
month period ended Six month period ended ended June 30 June 30
June 30 2009 2008 2009 2008 2009 (Unaudited) (Unaudited)
(Unaudited)(Unaudited) (Unaud- ited) NIS thousands $ thousands Cash
flows from financing activities: Changes in short-term bank credit,
net (21,170) (61,080) - (2,407) - Payments in respect of long-term
finance arrangement (9,511) (9,260) (26,551) (12,972) (6,775)
Purchase of treasury shares at cost (273) - (468) - (119) Repayment
of debentures - - (99,960) - (25,507) Net cash used in financing
activities (30,954) (70,340) (126,979) (15,379) (32,401) Changes in
cash and cash equivalents 53,992 (125,188) (5,428) (108,489)
(1,385) Effect of exchange rate changes (62) (10,489) 5,686
(27,328) 1,451 Cash and cash equivalents at beginning of the year
6,980 229,755 60,652 229,895 15,476 Cash and cash equivalents at
end of year 60,910 94,078 60,910 94,078 15,542 012
Smile.Communications Ltd. Reconciliation Table of Non-GAAP Measures
Convenience translation into US Dollars $1 = NIS 3.919 Six month
period Three month period ended Six month period ended ended June
30 June 30 June 30 2009 2008 2009 2008 2009 (Unaudited) (Unaudited)
(Unaudited)(Unaudited) (Unaud- ited) NIS thousands $ thousands GAAP
operating income 41,041 32,810 81,454 63,357 20,784 Adjustments
Amortization of acquired intangible assets 5,606 6,820 11,440
13,640 2,919 Other charges - 1,903 - 6,705 - Expenses recorded for
stock compensation in accordance with SFAS 123(R) 1,239 950 2,478
950 632 Non-GAAP adjusted operating income 47,886 42,483 95,372
84,652 24,335 GAAP tax expenses, net 9,853 2,486 28,480 4,764 7,267
Adjustments Amortization of acquired intangible assets Included in
tax expenses, net 1,487 1,842 2,974 3,683 759 Non-GAAP tax
expenses, net 11,340 4,328 31,454 8,447 8,026 Net income as
reported 25,966 5,566 75,015 11,248 19,141 Taxes on income 9,853
2,486 28,480 4,764 7,267 Other charges - 1,903 - 6,705 - Expenses
recorded for stock compensation in accordance with SFAS 123(R)
1,239 950 2,478 950 632 Financial (income) expenses 5,222 24,758
(22,041) 47,345 (5,624) Depreciation and amortization 28,405 26,963
55,742 53,506 14,224 Adjusted EBITDA 70,685 62,626 139,674 124,518
35,640 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: Mor Dagan - Investor Relations,
/ Tel: +972-3-516-7620; Garth Russell - KCSA Strategic
Communications, / Tel: +1-212-896-1250
Copyright