SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15a-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
Report on Form 6-K dated November 9, 2010
Partner Communications Company Ltd.
(Translation of Registrant’s Name Into English)
8 Amal Street
Afeq Industrial Park
Rosh Ha’ayin 48103
Israel
(Address of Principal Executive Offices)
(Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.)
Form 20-F Form 40-F o
(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)
Yes o No x
(If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- )
This Form 6-K is incorporated by reference into the Company’s Registration Statements on Form S-8 filed with the Securities and Exchange Commission on December 4, 2002 (Registration No. 333-101652), September 5, 2006 (Registration No. 333-137102) and on September 11, 2008 (Registration No. 333-153419)
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Enclosure:
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Partner Communications Reports Third Quarter 2010 Results
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· EBITDA OF NIS 641 MILLION,
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AN INCREASE OF 12.5%
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· FREE CASH FLOW OF NIS 487 MILLION,
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AN INCREASE OF 61.8%
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· DIVIDEND DECLARED FOR Q3 2010:
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NIS 1.93 PER SHARE, IN TOTAL APPROX. NIS 300 MILLION
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Q3 2010 Highlights (compared with Q3 2009)
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Total Revenues: NIS 1,650 million (US$ 450 million), an increase of 4.8%
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Service Revenues: NIS 1,447 million (US$ 395 million), an increase of 4.2%
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Operating Profit: NIS 476 million (US$ 130 million), an increase of 18.7%
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Net Income: NIS 309 million (US$ 84 million), an increase of 17.5%
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EBITDA1: NIS 641 million (US$ 175 million), an increase of 12.5%
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EBITDA Margin: 38.8% of total revenues compared with 36.2%
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Free Cash Flow 2: NIS 487 million (US$ 133 million), an increase of 61.8%
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Subscriber Base: 37,000 net additions in the quarter, to reach 3.133 million, including 1.491 million 3G subscribers
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Dividend Declared: NIS 1.93 (53 US cents) per share or ADS (in total of approximately NIS 300 million or US$ 82 million) for Q3 2010
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Rosh Ha’ayin, Israel, November 9, 2010 – Partner Communications Company Ltd. ("Partner" or the "Company") (NASDAQ and TASE: PTNR), a leading Israeli communications operator, announces today its results for the third quarter of 2010. Partner reported total revenues of NIS 1.650 billion (US$ 450 million) in Q3 2010, EBITDA of NIS 641 million (US$ 175 million) and net income of NIS 309 million (US$ 84 million).
Commenting on the results, Partner's CEO, Mr. Yacov Gelbard said:
"Partner continues to achieve excellent financial results. However, we are not taking our achievements for granted and that is why we took two significant steps this quarter to ensure that our profitability continues to grow in the coming years: first, by signing an agreement with Ericsson for the upgrade of our network, and second, by entering into an agreement for the purchase of 012 Smile, a leading Israeli operator of international telecommunication services, internet services and local fixed line telecommunication services.
Since Partner was founded, it has led the communications market in Israel in establishing the first GSM network in Israel as well as establishing the first third generation network that was launched in Israel. The network upgrade agreement signed with Ericsson will enable Partner to upgrade its technological abilities and to establish the first fourth generation network in Israel. The new network is intended to meet Partner's needs with respect to its cellular and fixed line networks and will bring a significant improvement and enhancement in the level of Partner's network performances and the services that Partner provides today and in the coming years.
The purchase of 012 Smile is yet another important step in Partner’s strategy to focus on its core cellular business while 012 Smile will continue to focus on its current core businesses. 012 Smile's operational and financial performances have demonstrated impressive improvements. We are convinced that this transaction will increase competition in the market for the benefit of the consumers. As a result of the purchase, Partner’s mid-term consolidated EBITDA is expected to increase annually by approximately NIS 350 million.
2
In our core cellular business, we are currently formulating a strategic plan to mitigate the impact of the reduction of interconnect tariffs. The measures Partner may take include, among others: cost cutting, operational efficiency improvements and repackaging of our product offerings."
3
Key Financial and Operational Parameters
| Q3 2010 | Q3 2009 |
Q3'10 vs. Q3'09
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Revenues (NIS millions)
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1,650 | 1,575 | +4.8 | % | ||||||||
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Operating Profit (NIS millions)
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476 | 401 | +18.7 | % | ||||||||
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Net Income (NIS millions)
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309 | 263 | +17.5 | % | ||||||||
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Cash flow from operating activities net of investing activities (NIS millions)
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487 | 301 | +61.8 | % | ||||||||
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EBITDA (NIS millions)
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641 | 570 | +12.5 | % | ||||||||
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Subscribers (end of period, in thousands)
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3,133 | 3,008 | +4.2 | % | ||||||||
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Quarterly Churn Rate (%)
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5.0 | 4.2 | +0.8 | |||||||||
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Average Monthly Usage per Subscriber (minutes)
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361 | 369 | -2.2 | % | ||||||||
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Average Monthly Revenue per Subscriber (NIS)
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151 | 153 | -1.3 | % | ||||||||
Financial Review
Net revenues totaled NIS 1,650 million (US$ 450 million) in Q3 2010, increasing by 4.8% compared with NIS 1,575 million in Q3 2009.
Service revenues in Q3 2010 reached NIS 1,447 million (US$ 395 million), compared with NIS 1,389 million in Q3 2009, an increase of 4.2%. The increase mainly reflected an approximate 4.2% growth in the cellular subscriber base and the growth in the use of data and content services, as well as an increase in roaming activity. The 80% increase in fixed line segment service revenues also contributed to the higher service revenues, from NIS 15 million in Q3 2009 to NIS 27 million (US$ 7 million) in Q3 2010, primarily attributable to the growth of the ISP and fixed line telephony services.
These increases occurred despite the impact of the ongoing tariff erosion due to the highly competitive cellular market and also despite the lower airtime usage resulting from the shifting of part of the Jewish holiday season from the fourth quarter in 2009 to the third quarter in 2010.
4
Revenues in Q3 2010 from data and content services excluding SMS totaled NIS 160 million (US$ 44 million) or 11.1% of service revenues, increasing by 25.0% compared with NIS 128 million or 9.2% of service revenues in Q3 2009. SMS service revenues reached NIS 130 million (US$ 35 million) in Q3 2010, an increase of 36.8% compared with Q3 2009, and the equivalent of 9.0% of service revenues, compared with 6.8% in Q3 2009. The growth in content and data services (including SMS) partially reflected the continued growth in sales of bundled voice, SMS and data packages whereby the revenues are allocated according to the quantities offered in the packages.
Gross profit from services in Q3 2010 reached NIS 589 million (US$ 161 million), increasing by 8.5% from NIS 543 million in Q3 2009. The increase resulted from the higher service revenues partially offset by an increase in the cost of service revenues. Cost of service revenues increased primarily due to higher interconnect and roaming costs, as well an increase in amortization expenses of capitalized handsets from NIS 27 million in Q3 2009 to NIS 35 million in Q3 2010.
Equipment revenues totaled NIS 203 million (US$ 55 million) in Q3 2010, increasing by 9.1% from NIS 186 million in Q3 2009. The increase resulted from an increase in the average revenue per device sold, in part attributable to an increase in the proportion of smartphones and 3G devices sold, and was despite the decrease in the total number of devices sold. As a result of the increase, there was a significant reduction in the number of devices capitalized which in turn led to a reduction in the level of equipment revenues that were capitalized from NIS 58 million in Q3 2009 to NIS 17 million in Q3 2010.
The gross profit from equipment sales that were not capitalized was NIS 66 million (US$ 18 million) in Q3 2010, increasing by 127.6% from NIS 29 million in Q3 2009. The increase was attributable to a reduction in average device subsidies, reflecting both the increase in the average revenue per device sold and a decrease in the average cost per device sold. NIS 11 million of equipment subsidies were capitalized in Q3 2010, a decrease from NIS 36 million in Q3 2009.
5
Gross profit reached NIS 655 million (US$ 178 million) in Q3 2010, a 14.5% increase compared with NIS 572 million in Q3 2009. Gross profit for the fixed line business segment increased significantly from a gross loss of NIS 22 million in Q3 2009 to a gross profit of NIS 2 million (US$ 0.5 million) in Q3 2010.
Selling, marketing, general and administration expenses for Q3 2010 increased marginally by 1.1% to NIS 189 million (US$ 51 million), compared to NIS 187 million in Q3 2009. The increase largely reflected increases in selling costs and salary expenses, partially offset by a reduction in bad debts and doubtful accounts expenses. The total amount of selling expenses capitalized in Q3 2010 was NIS 6 million, unchanged from Q3 2009.
Other income, net, totaled NIS 10 million (US$ 3 million) in Q3 2010, a 37.5% decrease from NIS 16 million in Q3 2009. The decrease reflected a one time provision in the amount of approximately NIS 6 million made with respect to a lawsuit and a motion for the recognition of this lawsuit as a class action, filed against the Company.
Operating profit for Q3 2010 reached NIS 476 million (US$ 130 million), compared with NIS 401 million in Q3 2009, an increase of 18.7%. The fixed line segment contributed an operating loss of NIS 3 million (US$ 0.8 million) in Q3 2010, decreasing by 92.3% from an operating loss of NIS 39 million in Q3 2009.
EBITDA for Q3 2010 increased by 12.5% to NIS 641 million (US$ 175 million) from NIS 570 million in Q3 2009. As a percent of total revenues, EBITDA in Q3 2010 totaled 38.8%, compared with 36.2% in Q3 2009.
The fixed line segment contributed positive EBITDA for the first time in Q3 2010, of NIS 5 million (US$ 1.4 million), compared with a LBITDA3 (Loss before financial interest, taxes, depreciation, amortization and exceptional items) of NIS 32 million in Q3 2009.
6
Financial expenses, net in Q3 2010 were NIS 62 million (US$ 17 million), a marginal increase of 1.6% from NIS 61 million in Q3 2009. This reflected an increase in interest expenses resulting from the higher debt level which was partially offset by the lower linkage expenses due to both the decrease in CPI to a level of 1.2% in Q3 2010 compared with 2.4% in Q3 2009, and the reduction in the remaining amount of CPI-linked notes.
Q3 2010 net profit totaled NIS 309 million (US$ 84 million), increasing by 17.5% from NIS 263 million in Q3 2009.
Based on the average number of shares outstanding during Q3 2010, basic earnings per share or ADS, was NIS 1.99 (54 US cents) in Q3 2010, an increase of 16.4% from NIS 1.71 in Q3 2009.
Funding and Investing Review
Cash flows generated from operating activities, net of cash flows used for investing activities ('"Free Cash Flow"') in Q3 2010 reached NIS 487 million (US$ 133 million), compared with NIS 301 million in Q3 2009, an increase of 61.8%. The increase reflected an increase in cash generated from operations as well as a decrease in cash flows used for investing activities.
Cash generated from operations increased by 23.1% or NIS 107 million compared with Q3 2009, largely as a result of the higher net profit.
The decrease in cash flows used for investing activities mainly reflected a reduction in investment in fixed assets which decreased by 45.5% from NIS 112 million in Q3 2009 to NIS 61 million in Q3 2010. The reduction in investment in fixed assets was principally due to the impending upgrade of the company's networks. In addition, the decrease reflected the reduction in the amount of equipment expenses, net, that were capitalized, from NIS 42 million in Q3 2009 to NIS 17 million (US$ 4.6 million) in Q3 2010.
Dividend
The Board of Directors has approved the distribution of a cash dividend (paid in NIS) for Q3 2010 in the amount of NIS 1.93 (US 53 cents) per share or ADS (a total of approximately NIS 300 million or US$ 82 million) to shareholders and ADS holders of record on December 8, 2010. The dividend is expected to be paid on December 22, 2010.
7
Operational Review
During Q3 2010, approximately 37,000 net new cellular subscribers joined the orange network. At quarter-end, the cellular subscriber base was approximately 3,133,000. This included approximately 2,278,000 postpaid subscribers (72.7% of the base) and 855,000 prepaid subscribers. The quarterly churn rate for Q3 2010 was 5.0% compared with 4.2% in Q3 2009, with the vast majority of the increase attributable to the higher churn of pre-paid subscribers and private post-paid subscribers with collection problems.
At quarter-end, there were approximately 1,491,000 3G subscribers. Total market share at the end of the quarter is estimated to be approximately 32%, no change from the previous quarter.
The average Minutes Of Use per subscriber ("MOU") was 361 minutes in Q3 2010, a decrease of 2.2% from 369 minutes in Q3 2009. This decrease reflects the shifting of part of the Jewish holiday season from the fourth quarter in 2009 to the third quarter in 2010, which had the effect of reducing the number of usage days by approximately 3% in Q3 2010 compared with Q3 2009. In addition, the continued growth in mobile data subscribers (data modem users) as a proportion of the subscriber base continues to reduce MOU since these subscribers do not use the voice services.
The Average Revenue Per User ("ARPU") was NIS 151 (US$ 41) in Q3 2010, compared with NIS 153 in Q3 2009, a decrease of 1.3%4. The decrease mainly reflected the ongoing airtime tariff erosion resulting from the competitive market conditions, as well as the lower usage as explained above.
8
Other
AGREEMENT FOR THE ACQUISITION OF 012 SMILE
On October 13, 2010, the Company entered into a share purchase agreement with Merhav-Ampal Energy Ltd. (the "Seller") and 012 Smile Telecom Ltd., an Israeli private company, wholly-owned by the Seller ("012 Smile"), according to which the Company shall acquire all of the outstanding shares of 012 Smile and shall assume certain loans from the Seller to 012 Smile for a purchase price of NIS 650 million (approximately $177 million) (the "012 Agreement"). As part of the 012 Agreement, Partner also agreed to guarantee long term bank loans of 012 Smile of approximately NIS 800 million (approximately $218 million).
The 012 Agreement includes an assignment by 012 Smile to the Seller of the right to receive payments due from a third party in the amount of NIS 42 million (approximately $11.5 million).
012 Smile is an Israeli operator of international telecommunication services and local telecommunication fixed services (including telephony services using VoB access) and is a provider of internet services.
The transaction is expected to be completed (closing date) within two to three months and is subject to customary closing conditions, including the regulatory approvals of the Israeli Ministry of Communications and the Israeli Antitrust Commissioner.
AGREEMENT FOR THE UPGRADE OF PARTNER'S EXISTING NETWORKS AND
THE DEPLOYMENT OF FOURTH GENERATION NETWORK IN ISRAEL
On October 25, 2010, the Company entered into an agreement with LM Ericsson Israel Ltd. ("Ericsson") for the upgrade of its existing networks and the deployment of fourth generation network in Israel (the "Network Upgrade Agreement"). The Network Upgrade Agreement includes the upgrade, replacement and the expansion of certain parts of the Company's existing cellular and fixed line networks and the maintenance of the networks, including enhancement of Partner's abilities with respect to the cellular and fixed line ISP services it provides. The commercial operation of the fourth generation network by Partner is subject to the allocation of the relevant frequencies by the Ministry of Communications.
9
The term of the Network Upgrade Agreement will be effective from the date of signature and until December 31, 2014, whereas the replacement of the Company's switches and radio equipment is scheduled to be carried out by the end of the year 2012.
The transaction will result in accelerated depreciation of the replaced equipment, throughout the replacement period, whereas the main impact of the accelerated depreciation will occur during the years 2011 and 2012. As of September 30, 2010, the fixed assets, which the Company intends to replace, minus the accumulated depreciation, are approximately US$ 40 million. The transaction will facilitate in the preplanning of the multi year budget.
The total net amount, following all discounts and settlements, some of which are conditioned, that Partner will be required to pay, in quarterly installments throughout the term of the Network Upgrade Agreement, for the capital expenditure and maintenance services is approximately US$ 100 million.
Outlook and Guidance
Commenting on the Company's results, Mr. Emanuel Avner, Partner's Chief Financial Officer said: "We are very pleased with the results of the third quarter of 2010, and in particular with the growth in service revenues including content services, despite the competitive market. The fixed line segment continues to make good progress, achieving positive EBITDA for the first time this quarter in line with our plans. Looking ahead, we reiterate our annual guidance for 2010.”
Conference Call Details
Partner will hold a conference call to discuss the Company’s third quarter results on Tuesday, November 9, 2010, at 17:00 Israel time (10AM EST). Please call the following numbers (at least 10 minutes prior to the scheduled time) in order to participate:
North America toll-free: +1.888.407.2553, International: +972.3.918.0609
10
This conference call will also be broadcasted live over the Internet and can be accessed by all interested parties through our investor relations web site at:
http://www.orange.co.il/investor_site/.
To listen to the broadcast, please go to the web site at least 15 minutes prior to the scheduled time to register, download and install any necessary audio software.
If you are unavailable to join live, the replay numbers are:
International: +972.3.925.5928
North America: +1.888.295.2634
Both the replay of the call and the webcast will be available from November 09, 2010 until November 16, 2010.
Forward-Looking Statements
This press release includes forward-looking statements within the meaning of Section 27A of the US Securities Act of 1933, as amended, Section 21E of the US Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. Words such as "believe", "anticipate", "expect", "intend", "seek", "will", "plan", "could", "may", "project", "goal", "target" and similar expressions often identify forward-looking statements but are not the only way we identify these statements. All statements other than statements of historical fact included in this press release regarding our future performance, plans to increase revenues or margins or preserve or expand market share in existing or new markets, reduce expenses and any statements regarding other future events or our future prospects, are forward-looking statements.
We have based these forward-looking statements on our current knowledge and our present beliefs and expectations regarding possible future events. These forward-looking statements are subject to risks, uncertainties and assumptions about Partner, consumer habits and preferences in cellular telephone usage, trends in the Israeli telecommunications industry in general, the impact of current global economic conditions and possible regulatory and legal developments. For a description of some of the risks we face, see "Item 3D. Key Information - Risk Factors", "Item 4. - Information on the Company", "Item 5. - Operating and Financial Review and Prospects", "Item 8A. - Consolidated Financial Statements and Other Financial Information - Legal and Administrative Proceedings" and "Item 11. - Quantitative and Qualitative Disclosures about Market Risk" in the Company's 2009 Annual Report (20-F) filed with the SEC. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this press release might not occur, and actual results may differ materially from the results anticipated. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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The financial results presented in this press release are preliminary un-audited financial results.
The results were prepared in accordance with IFRS, other than EBITDA which is a non-GAAP financial measure.
The financial information is presented in NIS millions and the figures presented are rounded accordingly.
The convenience translations of the Nominal New Israeli Shekel (NIS) figures into US Dollars were made at the rate of exchange prevailing at September 30, 2010: US $1.00 equals NIS 3.665. The translations were made purely for the convenience of the reader.
Use of Non-GAAP Financial Measures:
Earnings before financial interest, taxes, depreciation, amortization and exceptional items ('EBITDA') and Loss before financial interest, taxes, depreciation, amortization and exceptional items ('LBITDA') are presented because they are measures commonly used in the telecommunications industry and are presented solely to enhance the understanding of our operating results. These measures, however, should not be considered as an alternative to operating income or income for the year as indicators of our operating performance. Similarly, these measures should not be considered as alternatives to cash flow from operating activities as a measure of liquidity. EBITDA and LBITDA are not measures of financial performance under generally accepted accounting principles and may not be comparable to other similarly titled measures for other companies.
EBITDA and LBITDA may not be indicative of our historic operating results nor are they meant to be predictive of potential future results.
Reconciliation between our net cash flow from operating activities and EBITDA on a consolidated basis is presented in the attached summary financial results.
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About Partner Communications
Partner Communications Company Ltd. ("Partner") is a leading Israeli provider of telecommunications services (cellular, fixed-line telephony and internet services) under the orange™ brand. The Company provides mobile communications services to over 3 million subscribers in Israel. Partner’s ADSs are quoted on the NASDAQ Global Select Market™ and its shares are traded on the Tel Aviv Stock Exchange (NASDAQ and TASE: PTNR).
Partner is an approximately 45%-owned subsidiary of Scailex Corporation Ltd. ("Scailex"). Scailex's shares are traded on the Tel Aviv Stock Exchange under the symbol SCIX and are quoted on "Pink Quote" under the symbol SCIXF.PK. Scailex currently operates in two major domains of activity in addition to its holding in Partner: (1) the sole import, distribution and maintenance of Samsung mobile handset and accessories products primarily to the major cellular operators in Israel (2) management of its financial assets.
For more information about Scailex, see http://www.scailex.com.
For more information about Partner, see http://www.orange.co.il/investor_site.
Contacts:
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Mr. Emanuel Avner
Chief Financial Officer
Tel:+972-54-7814951
Fax:+972-54-7815961
E-mail:emanuel.avner@orange.co.il
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PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
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New Israeli shekels
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Convenience translation into U.S. dollars
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|||||||||||
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September 30,
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December 31,
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September 30,
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||||||||||
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2010
|
2009
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2010
|
||||||||||
|
(Unaudited)
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(Unaudited)
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(Unaudited)
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||||||||||
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In millions
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||||||||||||
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CURRENT ASSETS
|
||||||||||||
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Cash and cash equivalents
|
483 | 329 | 132 | |||||||||
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Trade receivables
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1,303 | 1,275 | 355 | |||||||||
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Other receivables
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34 | 31 | 9 | |||||||||
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Inventories
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115 | 158 | 31 | |||||||||
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Derivative financial instruments
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10 | 14 | 3 | |||||||||
| 1,945 | 1,807 | 530 | ||||||||||
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NON CURRENT ASSETS
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||||||||||||
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Trade Receivables
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568 | 474 | 155 | |||||||||
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Property and equipment, net
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1,969 | 2,064 | 537 | |||||||||
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Licenses and other intangible assets, net
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1,117 | 1,260 | 305 | |||||||||
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Deferred income taxes
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* | 14 | * | |||||||||
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Derivative financial instruments
|
- | 4 | - | |||||||||
| 3,654 | 3,816 | 997 | ||||||||||
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TOTAL ASSETS
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5,599 | 5,623 | 1,527 | |||||||||
* Representing an amount less than 1 million.
14
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New Israeli shekels
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Convenience translation into U.S. dollars
|
|||||||||||
|
September 30,
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December 31,
|
September 30,
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||||||||||
|
2010
|
2009
|
2010
|
||||||||||
|
(Unaudited)
|
(Audited)
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(Unaudited)
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||||||||||
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In millions
|
||||||||||||
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CURRENT LIABILITIES
|
||||||||||||
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Current maturities of notes payable, other liabilities and bank borrowings
|
1,005 | 752 | 274 | |||||||||
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Trade payables
|
665 | 777 | 181 | |||||||||
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Parent group - trade
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35 | 34 | 10 | |||||||||
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Other payables
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246 | 238 | 67 | |||||||||
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Deferred revenue
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50 | 56 | 14 | |||||||||
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Dividend payable
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290 | - | 79 | |||||||||
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Provisions
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13 | 34 | 4 | |||||||||
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Derivative financial instruments
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- | 4 | - | |||||||||
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Income tax liability
|
23 | 20 | 6 | |||||||||
| 2,327 | 1,915 | 635 | ||||||||||
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NON CURRENT LIABILITIES
|
||||||||||||
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Notes payable
|
1,829 | 1,379 | 499 | |||||||||
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Bank borrowings
|
750 | 300 | 205 | |||||||||
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Liability for employee rights upon retirement, net
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47 | 38 | 13 | |||||||||
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Dismantling and restoring sites obligation
|
23 | 23 | 6 | |||||||||
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Other liabilities
|
9 | 6 | 2 | |||||||||
| 2,658 | 1,746 | 725 | ||||||||||
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TOTAL LIABILITIES
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4,985 | 3,661 | 1,360 | |||||||||
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EQUITY
|
||||||||||||
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Share capital - ordinary shares of NIS 0.01
par value: authorized - December 31,2009,
and September 30, 2010 – 235,000,000 shares;
issued and outstanding -
|
||||||||||||
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December 31, 2009 – 154,440,136 shares
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||||||||||||
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September 30, 2010 – 154,942,745 shares
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2 | 2 | 1 | |||||||||
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Capital surplus
|
1,091 | 2,483 | 297 | |||||||||
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Accumulated deficit
|
(128 | ) | (172 | ) | (35 | ) | ||||||
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Treasury shares, at cost - December 31, 2009 and September 30, 2010 4,467,990 shares
|
(351 | ) | (351 | ) | (96 | ) | ||||||
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Total Equity
|
614 | 1,962 | 167 | |||||||||
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TOTAL LIABILITIES AND EQUITY
|
5,599 | 5,623 | 1,527 | |||||||||
* Representing an amount less than 1 million.
15
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
New Israeli shekels
|
Convenience translation
into U.S. dollars
|
|||||||||||||||||||||||
|
9 month
period ended
September 30
|
3 month
period ended
September 30
|
9 month
period ended
September 30,
|
3 month
period ended
September 30,
|
|||||||||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
2010
|
2010
|
|||||||||||||||||||
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||||||||
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In millions (except per share data)
|
||||||||||||||||||||||||
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Revenues
|
4,913 | 4,501 | 1,650 | 1,575 | 1,341 | 450 | ||||||||||||||||||
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Cost of revenues
|
2,973 | 2,773 | 995 | 1,003 | 812 | 272 | ||||||||||||||||||
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Gross profit
|
1,940 | 1,728 | 655 | 572 | 529 | 178 | ||||||||||||||||||
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Selling and marketing expenses
|
347 | 292 | 112 | 107 | 95 | 30 | ||||||||||||||||||
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General and administrative expenses
|
232 | 222 | 77 | 80 | 63 | 21 | ||||||||||||||||||
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Other income
|
40 | 55 | 10 | 16 | 11 | 3 | ||||||||||||||||||
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Operating profit
|
1,401 | 1,269 | 476 | 401 | 382 | 130 | ||||||||||||||||||
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Finance income
|
11 | 22 | 11 | 7 | 3 | 3 | ||||||||||||||||||
|
Finance expenses
|
147 | 157 | 73 | 68 | 40 | 20 | ||||||||||||||||||
|
Finance costs, net
|
136 | 135 | 62 | 61 | 37 | 17 | ||||||||||||||||||
|
Profit before income tax
|
1,265 | 1,134 | 414 | 340 | 345 | 113 | ||||||||||||||||||
|
Income tax expenses
|
326 | 287 | 105 | 77 | 89 | 29 | ||||||||||||||||||
|
Profit for the period
|
939 | 847 | 309 | 263 | 256 | 84 | ||||||||||||||||||
|
Earnings per share
|
||||||||||||||||||||||||
|
Basic
|
6.07 | 5.51 | 1.99 | 1.71 | 1.65 | 0.54 | ||||||||||||||||||
|
Diluted
|
6.01 | 5.48 | 1.98 | 1.70 | 1.64 | 0.54 | ||||||||||||||||||
|
Weighted average number of shares outstanding (in thousands)
|
||||||||||||||||||||||||
|
Basic
|
154,802 | 153,671 | 154,902 | 153,902 | 154,802 | 154,902 | ||||||||||||||||||
|
Diluted
|
156,170 | 154,525 | 155,738 | 154,827 | 156,170 | 155,738 | ||||||||||||||||||
16
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
New Israeli shekels
|
Convenience translation
into U.S. dollars
|
|||||||||||||||||||||||
|
9 month
period ended
September 30
|
3 month
period ended
September 30
|
9 month
period ended
September 30,
|
3 month
period ended
September 30,
|
|||||||||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
2010
|
2010
|
|||||||||||||||||||
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||||||||
|
In millions
|
||||||||||||||||||||||||
|
Profit for the period
|
939 | 847 | 309 | 263 | 256 | 84 | ||||||||||||||||||
|
Other comprehensive income (losses)
|
||||||||||||||||||||||||
|
Actuarial gains (losses) on defined benefit plan
|
- | 8 | - | (1 | ) | - | - | |||||||||||||||||
|
Income taxes relating to actuarial gains (losses) on defined benefit plan
|
- | (2 | ) | - | - | - | - | |||||||||||||||||
|
Other comprehensive income (losses) for the period, net of income tax
|
- | 6 | - | (1 | ) | - | - | |||||||||||||||||
|
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD
|
939 | 853 | 309 | 262 | 256 | 84 | ||||||||||||||||||
17
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| New Israeli shekels |
Convenience translation
into U.S. dollars
|
|||||||||||||||||||||||
| 9 month
period ended
September 30
|
3 month
period ended
September 30
|
9 month
period ended
September 30,
|
3 month
period ended
September 30,
|
|||||||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | 2010 | 2010 | |||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||
| In millions (except per share data) | ||||||||||||||||||||||||
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||||||||||||||
|
Cash generated from operations (Appendix)
|
1,715 | 1,615 | 682 | 547 | 468 | 186 | ||||||||||||||||||
|
Income tax paid
|
(308 | ) | (290 | ) | (111 | ) | (83 | ) | (84 | ) | (30 | ) | ||||||||||||
|
Net cash provided by operating activities
|
1,407 | 1,325 | 571 | 464 | 384 | 156 | ||||||||||||||||||
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||||||||||||||
|
Acquisition of property and equipment
|
(209 | ) | (429 | ) | (61 | ) | (112 | ) | (57 | ) | (17 | ) | ||||||||||||
|
Acquisition of intangible assets
|
(78 | ) | (167 | ) | (23 | ) | (46 | ) | (21 | ) | (6 | ) | ||||||||||||
|
Interest received
|
3 | - | 1 | * | 1 | * | ||||||||||||||||||
|
Proceeds from derivative financial instruments,
net
|
6 | 31 | (1 | ) | (5 | ) | 2 | * | ||||||||||||||||
|
Net cash used in investing activities
|
(278 | ) | (565 | ) | (84 | ) | (163 | ) | (75 | ) | (23 | ) | ||||||||||||
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||||||||||||||
|
Proceeds from exercise of stock options granted to employees
|
8 | 24 | 1 | 12 | 2 | * | ||||||||||||||||||
|
Dividend paid
|
(637 | ) | (471 | ) | (19 | ) | (237 | ) | (174 | ) | (5 | ) | ||||||||||||
|
Capital reduction
|
(1,400 | ) | - | (382 | ) | |||||||||||||||||||
|
Repayment of capital lease
|
(2 | ) | (6 | ) | (1 | ) | (1 | ) | (1 | ) | * | |||||||||||||
|
Interest paid
|
(60 | ) | (68 | ) | (3 | ) | (22 | ) | (16 | ) | (1 | ) | ||||||||||||
|
Current borrowing received
|
988 | - | 270 | |||||||||||||||||||||
|
Current borrowing repaid
|
(988 | ) | (20 | ) | (270 | ) | ||||||||||||||||||
|
Proceeds from non-current bank borrowing
|
500 | - | 136 | |||||||||||||||||||||
|
Proceeds from issuance of notes payable, net of issuance costs
|
990 | - | 270 | |||||||||||||||||||||
|
Repayment of notes payable
|
(374 | ) | (370 | ) | (187 | ) | (102 | ) | ||||||||||||||||
|
Net cash used in financing activities
|
(975 | ) | (911 | ) | (22 | ) | (435 | ) | (267 | ) | (6 | ) | ||||||||||||
|
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
154 | (151 | ) | 465 | (134 | ) | 42 | 127 | ||||||||||||||||
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
329 | 184 | 18 | 167 | 90 | 5 | ||||||||||||||||||
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
483 | 33 | 483 | 33 | 132 | 132 | ||||||||||||||||||
* Representing an amount less than 1 million
18
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Appendix - Cash generated from operations and supplemental information
|
New Israeli shekels
|
Convenience translation
into U.S. dollars
|
|||||||||||||||||||||||
|
9 month
period ended
September 30
|
3 month
period ended
September 30
|
9 month
period ended
September 30,
|
3 month
period ended
September 30,
|
|||||||||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
2010
|
2010
|
|||||||||||||||||||
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||||||||
|
In millions (except per share data)
|
||||||||||||||||||||||||
|
Cash generated from operations:
|
||||||||||||||||||||||||
|
Profit for the period
|
939 | 847 | 309 | 263 | 256 | 84 | ||||||||||||||||||
|
Adjustments for net income for the period:
|
||||||||||||||||||||||||
|
Depreciation and amortization
|
489 | 414 | 161 | 163 | 133 | 44 | ||||||||||||||||||
|
Amortization of deferred compensation related to employee stock option grants, net
|
17 | 15 | 5 | 5 | 5 | 1 | ||||||||||||||||||
|
Liability for employee rights upon
retirement, net
|
9 | 1 | 6 | 1 | 3 | 2 | ||||||||||||||||||
|
Finance costs, net
|
39 | 74 | 27 | 49 | 11 | 7 | ||||||||||||||||||
|
Gain from change in fair value of derivative financial instruments
|
(2 | ) | (22 | ) | (9 | ) | (7 | ) | (1 | ) | (2 | ) | ||||||||||||
|
Interest paid
|
60 | 68 | 3 | 22 | 16 | 1 | ||||||||||||||||||
|
Interest received
|
(3 | ) | (1 | ) | * | (1 | ) | * | ||||||||||||||||
|
Deferred income taxes
|
14 | 42 | 6 | 2 | 5 | 2 | ||||||||||||||||||
|
Income tax paid
|
308 | 290 | 111 | 83 | 84 | 30 | ||||||||||||||||||
|
Capital loss on sale of property and
equipment
|
- | 2 | 2 | - | ||||||||||||||||||||
|
Changes in operating assets and liabilities:
|
||||||||||||||||||||||||
|
Decrease (increase) in accounts receivable:
|
||||||||||||||||||||||||
|
Trade
|
(122 | ) | (166 | ) | 29 | (100 | ) | (33 | ) | 8 | ||||||||||||||
|
Other
|
(3 | ) | (11 | ) | (2 | ) | (12 | ) | (1 | ) | (1 | ) | ||||||||||||
|
Increase (decrease) in accounts payable and
accruals:
|
||||||||||||||||||||||||
|
Parent group- trade
|
1 | (1 | ) | 13 | (1 | ) | * | 4 | ||||||||||||||||
|
Trade
|
(77 | ) | 104 | (40 | ) | 82 | (21 | ) | (11 | ) | ||||||||||||||
|
Other
|
27 | - | 56 | 37 | 7 | 15 | ||||||||||||||||||
|
Provisions
|
(21 | ) | 28 | 7 | - | (6 | ) | 2 | ||||||||||||||||
|
Deferred revenue
|
(6 | ) | 3 | 1 | 1 | (2 | ) | * | ||||||||||||||||
|
Income tax payable
|
3 | (51 | ) | (12 | ) | (16 | ) | 1 | (3 | ) | ||||||||||||||
|
Increase in inventories
|
43 | (22 | ) | 12 | (27 | ) | 12 | 3 | ||||||||||||||||
|
Cash generated from operations:
|
1,715 | 1,615 | 682 | 547 | 468 | 186 | ||||||||||||||||||
* Representing an amount less than 1 million
At September 30, 2010 and 2009, trade payables include NIS 144 million ($39 million) (unaudited) and NIS 165 million (unaudited) in respect of acquisition of fixed assets, respectively. These balances will be given recognition in these statements upon payment.
19
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
RECONCILIATION BETWEEN OPERATING CASH FLOWS AND EBITDA
|
New Israeli shekels
|
Convenience translation
into U.S. dollars
|
|||||||||||||||||||||||
|
9 month
period ended
September 30
|
3 month
period ended
September 30
|
9 month
period ended
September 30,
|
3 month
period ended
September 30,
|
|||||||||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
2010
|
2010
|
|||||||||||||||||||
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||||||||
|
In millions
|
||||||||||||||||||||||||
|
Net cash provided by operating activities
|
1,407 | 1,325 | 571 | 464 | 384 | 156 | ||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Liability for employee rights upon retirement
|
(9 | ) | (1 | ) | (6 | ) | (1 | ) | (2 | ) | (2 | ) | ||||||||||||
|
Accrued interest and exchange and linkage differences on long-term liabilities
|
(92 | ) | (141 | ) | (28 | ) | (70 | ) | (25 | ) | (7 | ) | ||||||||||||
|
Increase (decrease) in accounts receivable:
|
||||||||||||||||||||||||
|
Trade
|
122 | 166 | (29 | ) | 100 | 33 | (8 | ) | ||||||||||||||||
|
Other, including derivative financial instruments
|
5 | 33 | 11 | 19 | 1 | 3 | ||||||||||||||||||
|
Decrease (increase) in accounts payable and accruals:
|
||||||||||||||||||||||||
|
Trade
|
77 | (104 | ) | 40 | (82 | ) | 21 | 11 | ||||||||||||||||
|
Shareholder – current account
|
(1 | ) | 1 | (13 | ) | 1 | (4 | ) | ||||||||||||||||
|
Other
|
(26 | ) | (65 | ) | (32 | ) | (18 | ) | ||||||||||||||||
|
Income tax paid
|
308 | 290 | 111 | 83 | 84 | 30 | ||||||||||||||||||
|
Increase (decrease) in inventories
|
(43 | ) | 22 | (12 | ) | 27 | (12 | ) | (3 | ) | ||||||||||||||
|
Increase in Assets Retirement Obligation
|
(1 | ) | 1 | |||||||||||||||||||||
|
Financial Expenses
|
133 | 130 | 61 | 61 | 36 | 17 | ||||||||||||||||||
|
EBITDA
|
1,906 | 1,696 | 641 | 570 | 520 | 175 | ||||||||||||||||||
* The convenience translation of the New Israeli Shekel (NIS) figures into US dollars was made at the exchange prevailing at September 30, 2010 : US $1.00 equals 3.665 NIS.
** Financial expenses excluding any charge for the amortization of pre-launch financial costs.
20
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
SEGMENT INFORMATION
|
New Israeli Shekels
|
New Israeli Shekels
|
|||||||||||||||||||||||||||||||
|
Nine months ended September 30, 2010 (unaudited)
|
Nine months ended September 30, 2009 (unaudited)
|
|||||||||||||||||||||||||||||||
|
In millions
|
In millions
|
|||||||||||||||||||||||||||||||
|
Cellular segment
|
Fixed line segment
|
Reconciliation
for
consolidation
|
Consolidated
|
Cellular segment
|
Fixed line segment
|
Reconciliation
for
consolidation
|
Consolidated
|
|||||||||||||||||||||||||
|
Segment revenue - Services
|
4,130 | 76 | - | 4,206 | 4,011 | 36 | - | 4,047 | ||||||||||||||||||||||||
|
Inter-segment revenue - Services
|
14 | 41 | (55 | ) | - | 6 | 22 | (28 | ) | - | ||||||||||||||||||||||
|
Segment revenue - Equipment
|
688 | 19 | - | 707 | 442 | 12 | - | 454 | ||||||||||||||||||||||||
|
Total revenues
|
4,832 | 136 | (55 | ) | 4,913 | 4,459 | 70 | (28 | ) | 4,501 | ||||||||||||||||||||||
|
Segment cost of revenues - Services
|
2,376 | 98 | - | 2,474 | 2,292 | 81 | - | 2,373 | ||||||||||||||||||||||||
|
Inter-segment cost of revenues- Services
|
41 | 14 | (55 | ) | - | 22 | 6 | (28 | ) | - | ||||||||||||||||||||||
|
Segment cost of revenues - Equipment
|
471 | 28 | - | 499 | 372 | 28 | - | 400 | ||||||||||||||||||||||||
|
Cost of revenues
|
2,888 | 140 | (55 | ) | 2,973 | 2,686 | 115 | (28 | ) | 2,773 | ||||||||||||||||||||||
|
Gross profit (loss)
|
1,944 | (4 | ) | 1,940 | 1,773 | (45 | ) | 1,728 | ||||||||||||||||||||||||
|
Operating expenses
|
557 | 22 | 579 | 477 | 37 | 514 | ||||||||||||||||||||||||||
|
Other income
|
40 | - | 40 | 55 | - | 55 | ||||||||||||||||||||||||||
|
Operating profit (loss)
|
1,427 | (26 | ) | 1,401 | 1,351 | (82 | ) | 1,269 | ||||||||||||||||||||||||
|
Adjustments to presentation of EBITDA
|
||||||||||||||||||||||||||||||||
|
–depreciation and amortization
|
464 | 25 | 489 | 395 | 19 | 414 | ||||||||||||||||||||||||||
|
–other
|
16 | - | 16 | 13 | - | 13 | ||||||||||||||||||||||||||
|
EBITDA
|
1,907 | (1 | ) | 1,906 | 1,759 | (63 | ) | 1,696 | ||||||||||||||||||||||||
|
Reconciliation of EBITDA to profit before tax
|
||||||||||||||||||||||||||||||||
|
- Depreciation and amortization
|
489 | 414 | ||||||||||||||||||||||||||||||
|
- Finance costs, net
|
136 | 135 | ||||||||||||||||||||||||||||||
|
- Other
|
16 | 13 | ||||||||||||||||||||||||||||||
|
Profit before income tax
|
1,265 | 1,134 | ||||||||||||||||||||||||||||||
21
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
SEGMENT INFORMATION
|
New Israeli Shekels
|
New Israeli Shekels
|
|||||||||||||||||||||||||||||||
|
Three months ended September 30, 2010 (unaudited)
|
Three months ended September 30, 2009 (unaudited)
|
|||||||||||||||||||||||||||||||
|
In millions
|
In millions
|
|||||||||||||||||||||||||||||||
|
Cellular segment
|
Fixed line segment
|
Reconciliation
for
consolidation
|
Consolidated
|
Cellular segment
|
Fixed line segment
|
Reconciliation
for
consolidation
|
Consolidated
|
|||||||||||||||||||||||||
|
Segment revenue - Services
|
1,420 | 27 | - | 1,447 | 1,374 | 15 | - | 1,389 | ||||||||||||||||||||||||
|
Inter-segment revenue - Services
|
5 | 16 | (21 | ) | - | 3 | 9 | (12 | ) | - | ||||||||||||||||||||||
|
Segment revenue - Equipment
|
198 | 5 | - | 203 | 178 | 8 | - | 186 | ||||||||||||||||||||||||
|
Total revenues
|
1,623 | 48 | (21 | ) | 1,650 | 1,555 | 32 | (12 | ) | 1,575 | ||||||||||||||||||||||
|
Segment cost of revenues – Services
|
825 | 33 | - | 858 | 812 | 34 | - | 846 | ||||||||||||||||||||||||
|
Inter-segment cost of revenues- Services
|
16 | 5 | (21 | ) | - | 9 | 3 | (12 | ) | - | ||||||||||||||||||||||
|
Segment cost of revenues - Equipment
|
129 | 8 | - | 137 | 140 | 17 | - | 157 | ||||||||||||||||||||||||
|
Cost of revenues
|
970 | 46 | (21 | ) | 995 | 961 | 54 | (12 | ) | 1,003 | ||||||||||||||||||||||
|
Gross profit (loss)
|
653 | 2 | 655 | 594 | (22 | ) | 572 | |||||||||||||||||||||||||
|
Operating expenses
|
184 | 5 | 189 | 170 | 17 | 187 | ||||||||||||||||||||||||||
|
Other income
|
10 | - | 10 | 16 | - | 16 | ||||||||||||||||||||||||||
|
Operating profit (loss)
|
479 | (3 | ) | 476 | 440 | (39 | ) | 401 | ||||||||||||||||||||||||
|
Adjustments to presentation of EBITDA
|
||||||||||||||||||||||||||||||||
|
–depreciation and amortization
|
153 | 8 | 161 | 156 | 7 | 163 | ||||||||||||||||||||||||||
|
–other
|
4 | - | 4 | 6 | - | 6 | ||||||||||||||||||||||||||
|
EBITDA
|
636 | 5 | 641 | 602 | (32 | ) | 570 | |||||||||||||||||||||||||
|
Reconciliation of EBITDA to profit before tax
|
||||||||||||||||||||||||||||||||
|
- Depreciation and amortization
|
161 | 163 | ||||||||||||||||||||||||||||||
|
- Finance costs, net
|
62 | 61 | ||||||||||||||||||||||||||||||
|
- Other
|
4 | 6 | ||||||||||||||||||||||||||||||
|
Profit before income tax
|
414 | 340 | ||||||||||||||||||||||||||||||
22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Current Report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
Partner Communications Company Ltd.
|
|||
|
By:
|
/s/ Emanuel Avner | ||
|
Name: Emanuel Avner
|
|||
|
Title: Chief Financial Officer
|
|||
Dated: November 9, 2010
23