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012 Smile.Communications Reports Record EBITDA of NIS 71 Million
PETACH TIKVA,
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
Operating income for the second quarter of 2009 increased to
Adjusted EBITDA for the second quarter of 2009 increased to a record
amount of
Net income for the quarter ended
The Company's net financial debt decreased from
Ms.
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,
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
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
mor@km-ir.co.il / Tel: +972-3-516-7620
Garth Russell - KCSA Strategic Communications
grussell@kcsa.com / Tel: +1-212-896-1250
SOURCE 012 Smile.communications Ltd.