FORM
6-K
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Report
of Foreign Private Issuer
Pursuant
to Rule 13a-16 or 15d-16 of
the
Securities Exchange Act of 1934
For March
2, 2009
Commission
File Number: 001-33271
CELLCOM
ISRAEL LTD.
10
Hagavish Street
Netanya,
Israel 42140
________________________________________________
(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
__X__ Form
40-F _____
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(1):
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(7):
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 _____ No
__X__
If “Yes”
is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): Not
Applicable
Index
1. Press
release
CELLCOM
ISRAEL ANNOUNCES
FOURTH
QUARTER AND FULL YEAR 2008 RESULTS
------------------------
Cellcom
Israel Concludes a Record Year
and
Presents 2008 Highest Revenues and Profitability Growth Rates in
the
Israeli
Cellular Market
Revenues for 2008 grew by 6.1%;
EBITDA1 up by 14.0%;
Net
income increased 12.6%2;
Cellcom Israel declares a fourth
quarter dividend of NIS 2.75 per share (totals
approx. NIS 270
million)
2008 Full
Year Highlights (compared to
2007):
|
§
|
Total Revenues (including
revenues of end-user equipment) increased 6.1% to NIS 6,417 million
($1,688 million)
|
|
§
|
Total Revenues from services
increased 4.7% to NIS 5,672 million ($1,492
million)
|
|
§
|
Revenues from content and value
added services (including SMS) increased 37%, reaching 11.9% of
services revenues
|
|
§
|
EBITDA1
increased 14.0% to NIS 2,406 million ($633 million); EBITDA margin1
37.5%, up from
34.9%
|
|
§
|
Operating income
increased 26.4% to NIS 1,684 million ($443
million)
|
|
§
|
Net income totaled NIS
985 million ($259 million), a 12.6% increase or a 20.2% increase compared
to 2007 net income after elimination of the one-time tax
provision release (of approximately NIS 56 million in
2007)
|
|
§
|
Subscriber base
increased by approx. 114,000, reaching approx. 3.187 million at the
end of 2008
|
|
§
|
3G subscriber base
increased approx. 312,000, reaching approx. 731,000 at the end of
2008
|
|
§
|
The Company declared
fourth quarter dividend of NIS 2.75 per share, bringing the
aggregate dividends distributed for 2008 to NIS 1,100 million (NIS 11.23
per share)
|
1 Please
view section "Use of Non-GAAP financial measures" at the end of this press
release.
Fourth
Quarter 2008 Highlights (compared to fourth quarter of
2007):
|
§
|
Total Revenues from services
increased 2.9% to NIS 1,424 million ($375
million)
|
|
§
|
Revenues from content and value
added services (including SMS) increased 42.2%, reaching 13.5% of
services revenues
|
|
§
|
Total Revenues (including
revenues of end-user equipment) totaled NIS 1,572 million ($413
million), a 0.8% decrease resulted from the seasonality effect and the
decrease in revenues of end-user
equipment
|
|
§
|
EBITDA increased
17.9% to NIS 566 million ($149 million); EBITDA margin
36.0%, up from
30.3%
|
|
§
|
Operating income
increased 39.4% to NIS 389 million ($102
million)
|
|
§
|
Net income increased
32.1% to NIS 243 million ($64
million)
|
|
§
|
Subscriber base
increased by approx. 30,000 subscribers during the fourth quarter,
approximately half of whom are
post-paid
|
|
§
|
3G Subscriber base
increased by approx. 52,000 subscribers during the fourth
quarter
|
Netanya, Israel – March 2, 2009 – Cellcom Israel Ltd. (NYSE: CEL
TASE: CEL) ("Cellcom Israel", the "Company"), announced today its financial
results for the fourth quarter and full year ended December 31, 2008. Revenues
for the fourth quarter and full year 2008 totaled NIS 1,572 million ($413
million) and NIS 6,417 million ($1,688 million), respectively; EBITDA for the
fourth quarter 2008 totaled NIS 566 million ($149 million), or 36.0% of total
revenues, and for full year 2008 totaled NIS 2,406 million ($633 million), or
37.5% of total revenues; and net income for the fourth quarter and full year
2008 reached NIS 243 million ($64 million) and NIS 985 million ($259 million),
respectively. Basic earnings per share for the fourth quarter and full year 2008
reached NIS 2.48 ($0.65) and NIS 10.08 ($2.65), respectively.
Commenting
on the results, Amos Shapira, Chief Executive Officer said, "This has been a record
year for Cellcom Israel, the beginning of which was characterized by the
implementation of number portability. I am proud to note that throughout 2008 we
presented the highest growth rate in the Israeli cellular market, increased our
revenue and subscriber market share, and further strengthened our leading market
position. Our intense activities, both in revenues and cost efficiencies,
contributed to our 6% revenue increase, 14% EBITDA increase and 26% increase in
operating income for the year, further confirming our position as the fastest
growing and highest EBITDA generating company in the sector. This trend
continued in the fourth quarter as we presented growth in revenues from services
and profitability, despite the continued price erosions. This year we also
presented a substantial increase in revenues from content and value added
services, reaching 11.9% of total service revenues. Furthermore, our landline
services directly drove an increase in revenues and profits, serving as an
additional growth driver for the Company.
We believe that in
the coming years, the major breakthrough in communication, entertainment and
information (infotainment) will take place in the Mobile Media, over cellular
networks. This has, and will always be, Cellcom's primary source of business.
The cellular phone is the most common source of media, and the only one attached
to us at all times of the day. The future content and service user is
the mobile consumer known as the 'Consumer Everywhere'. Our technological
progress, visible through our HSPA network's speed, supports this trend. We are
already supplying our customers with 'Mobile Broadband' services at both similar
speed and quality as landline infrastructure, and this already served as a
growth driver in 2008.
Looking ahead, as a
cellular services provider, we will continue to focus our main efforts on our
core business, the mobile communication, while expanding and enhancing our
services and content supporting the advantage of Mobile Media, where Cellcom
Israel has the relative advantage vis-a-vis other media. Any additional activity
in any area of business is and will be monitored for synergies and contribution
to our core business. In conjunction with our ongoing efforts to drive revenue
growth, we will continue with our efficiency measures, critical in the
increasingly competitive cellular market."
Mr. Shapira further
said: "Cellcom Israel enters 2009 with the largest customer base in Israel, the
strongest free cash flow in the cellular market in Israel and a high and stable
credit rating. We are studying the challenges
ahead of us, primarily the global economy slowdown, alertly monitoring the
changes in the market and usage characteristics, adjusting our marketing plans
to the changing environment and keeping a tight rein on expenses while keeping
the required flexibility for a fast response. So far, we have witnessed an
effect on our revenues resulting from an ongoing decrease in incoming and
outgoing tourism.
Aside the
importance I place on focusing on our business strategy, I believe in the
importance of investing in the Company’s culture. I am proud to announce that
after opening additional three 'Cellcom Volume' music centers for youth, we now
have ten active Volume Centers throughout the country serving thousands of
youth".
Tal Raz, Chief Financial Officer
commented: "We are very pleased with the substantial increase in
profitability, despite the increasing competition in the industry, which led to
a price erosion of over 2% throughout the year, the global economic slowdown and
regulatory pressures. Our improved profitability mainly follows a 7%
quantitative increase
in airtime minutes, an extensive increase in revenues from content services,
higher landline telephony service revenues as well as ongoing cost efficiencies.
These improvements were partially offset by an increase in customer retention
expenses, as well as expenses associated with expanding our workforce primarily
at the beginning of 2008 following the introduction of number portability. On
the other hand, our ongoing efficiency measures assisted us in further reducing
our marketing, sales, administrative and general expenses as a percentage of
revenues, with expense levels remaining similar as in 2007, while revenues grew
by 6%. In 2008, we continued to generate a very strong Free Cash Flow, despite
the high first quarter expenditures following the introduction of number
portability. The higher free cash flow in the fourth
quarter is a direct
result of our improved financial performance, enabling us to distribute a fourth
quarter dividend of NIS 2.75
per share, or a total of approximately NIS 270 million. Over all, the
aggregate dividends distributed for 2008 totaled to NIS 1,100 million, or NIS 11.23 per share."
Main
Financial Highlights:
|
Million
NIS
|
%
of Revenues
|
%
Change
|
Million US$
(convenience
translation)
|
||||
|
2008
|
2007
|
2008
|
2007
|
2008
|
2007
|
||
|
Revenues –
Services
|
5,672
|
5,415
|
88.4%
|
89.5%
|
4.7%
|
1,492
|
1,424
|
|
Revenues -
Equipment
|
745
|
635
|
11.6%
|
10.5%
|
17.3%
|
196
|
167
|
|
Total
revenues
|
6,417
|
6,050
|
100.0%
|
100.0%
|
6.1%
|
1,688
|
1,591
|
|
Cost of
revenues - Services
|
2,570
|
2,577
|
40.0%
|
42.6%
|
(0.3%)
|
676
|
678
|
|
Cost of
revenues - Equipment
|
832
|
800
|
13.0%
|
13.2%
|
4.0%
|
219
|
210
|
|
Total
cost of revenues
|
3,402
|
3,377
|
53.0%
|
55.8%
|
0.7%
|
895
|
888
|
|
Gross
Profit
|
3,015
|
2,673
|
47.0%
|
44.2%
|
12.8%
|
793
|
703
|
|
Marketing and
Sales Expenses
|
701
|
685
|
10.9%
|
11.3%
|
2.3%
|
185
|
180
|
|
General and
Administration Expenses
|
659
|
653
|
10.3%
|
10.8%
|
0.9%
|
173
|
172
|
|
Other
(Income) Expenses, net
|
(29)
|
3
|
(0.4%)
|
0.1%
|
(8)
|
1
|
|
|
Operating
income
|
1,684
|
1,332
|
26.2%
|
22.0%
|
26.4%
|
443
|
350
|
|
Financing
Costs, net
|
(310)
|
(147)
|
(4.8%)
|
(2.4%)
|
110.9%
|
(82)
|
(38)
|
|
Income
before Income Tax
|
1,374
|
1,185
|
21.4%
|
19.6%
|
15.9%
|
361
|
312
|
|
Income
Tax
|
389
|
310
|
6.1%
|
5.1%
|
25.5%
|
102
|
82
|
|
Net
Income
|
985
|
875
|
15.3%
|
14.5%
|
12.6%
|
259
|
230
|
|
Cash
Flow from Operating Activities, net of Investing
Activities
|
1,217
|
1,260
|
19.0%
|
20.8%
|
(3.4%)
|
320
|
331
|
Key
Performance Indicators:
|
2008
|
2007
|
%
Change
|
2008
|
2007
|
|
|
Million
NIS
|
Million
US$
(convenience
translation)
|
||||
|
EBITDA
|
2,406
|
2,110
|
14.0%
|
633
|
555
|
|
EBITDA, as
percent of Revenues
|
37.5%
|
34.9%
|
7.4%
|
||
|
Subscribers
end of period (in
thousands)
|
3,187
|
3,073
|
3.7%
|
||
|
Estimated
Market Share3
|
34.7%
|
34.4%
|
0.9%
|
||
|
Churn Rate
(in %)
|
18.9%
|
16.3%
|
16.0%
|
||
|
Average
Monthly MOU (in minutes)
|
350
|
348
|
0.6%
|
||
|
Monthly ARPU
(in NIS)
|
149
|
150
|
(0.7%)
|
39.2
|
39.5
|
Presentation of Financial
statements
This is the first
year in which we prepare our consolidated annual financial statements in
accordance with International Financial Reporting Standards (“IFRS"), as issued
by the International Accounting Standards Board ("IASB"), and IFRS 1-“First Time
Adoption of International Financial Reporting Standards”. Up to and including
our financial statements for the year ended December 31, 2007, we prepared our
consolidated financial statements in accordance with Israeli GAAP. The influence
of the transition to IFRS (from financial statements prepared in accordance with
Israeli GAAP) on the our financial statements for the year ended December 31,
2007, our results of operations and our cash flows for that year is detailed in
note 31 to our consolidated annual financial statements included in our annual
report (20-F).
Financial
Review
Revenues for 2008 totaled NIS 6,417 million
($1,688 million), a 6.1% increase compared to NIS 6,050 million ($1,591 million)
in 2007. The increase in revenues resulted both from a 4.7% increase in revenues
from services, reaching NIS 5,672 million ($1,492 million) compared to NIS 5,415
million ($1,424 million) in 2007, as well as from a 17.3% increase in handset
and accessories’ revenues, which increased from NIS 635 million ($167 million) in
2007, to NIS 745 million ($196 million) in 2008. The increase in revenues from
services is attributed mainly to a significant increase in revenues from
land-line and transmission services, as well as a 37.0% increase in revenues
from content and value added services (including SMS), which totaled in 2008 NIS
674 million ($177 million), representing 11.9% of
revenues from services. The increase in revenues from services was partially
offset by the regulatory reduction of interconnect tariffs in
March 2008 and the continued airtime price erosion. The increase in handset and
accessories’ revenues primarily resulted from an increase in the average handset sale price due
to the larger amount of advanced 3G handsets in the mix of handsets sold in
2008. This increase was offset in part by a decrease in the total amount of
handsets sold during 2008, resulting from more aggressive sales campaigns
launched in 2007 compared to 2008.
Revenues for the fourth
quarter of 2008 totaled NIS 1,572 million ($413 million), a 0.8% decrease
compared to NIS 1,584 million ($417 million) in the fourth quarter last year.
The decrease in revenues resulted mainly from a 26% decrease in handset and
accessories’ revenues from NIS 200 million ($53
million) in the fourth quarter last year, to NIS 148 million ($39 million) in
the fourth quarter 2008, due to a decrease in the total amount of handsets sold
during the fourth quarter of 2008. This decrease was partially offset by a 2.9%
increase in revenues from services, to NIS 1,424 million ($375 million) compared
to NIS 1,384 million ($364 million) in the fourth quarter last year. The
increase in revenues from services during the fourth quarter is attributed
mainly to an increase of 42.2% in revenues from content and value added services
(including SMS) in the fourth quarter 2008, compared to the fourth quarter last
year, to NIS 192 million ($50 million), representing
13.5% of revenues from services.
Revenues from
services also benefited from a significant increase in land-line and
transmission services. The increase in revenues from services was partially
offset by the reduction of interconnect tariffs, a reduction in revenues from
roaming services due to a reduction in incoming and outgoing tourism, and the
ongoing airtime price erosion. Revenues from services in the fourth quarter were
adversely affected by the seasonality, as the whole Jewish Holiday season,
characterized by a reduced usage, occurred during the fourth quarter and in
weekdays, while the holiday season last year was spread over the third and
fourth quarters.
Cost of revenues for 2008
totaled NIS 3,402 million ($895 million), compared to NIS 3,377 million ($888
million) in 2007, an increase of 0.7%. The increase primarily resulted from an
increase in interconnect expenses due to increased usage, as well as an increase
in cost of content and value-added services also due to increased usage. The
increase also resulted from an increase in handsets cost due to a higher average
cost of handsets sold during 2008, as a result of the larger amount of 3G
advanced handsets sold during the year. The increase in handsets cost was
partially offset by increased efficiency in handset procurement. The increase in
cost of revenues was offset in part by a decrease in depreciation expenses and
in royalties paid to the Ministry of Communications due to the reduction in the
rate of royalties.
Cost of revenues for the
fourth quarter 2008 totaled NIS 848 million ($223 million), compared to NIS 960
million ($252 million) in the fourth quarter last year, a decrease of 11.7%. The
decrease in the quarterly cost of revenues primarily resulted from a 31%
decrease in handsets cost due to a lower amount of handsets sold during the
fourth quarter of 2008 and a decrease in depreciation expenses. These decreases
were partially offset by an increase in cost of content and value-added services
due to increased usage.
Gross profit margin for 2008 increased
further reaching to 47.0%, compared to 44.2% last year. Gross profit for 2008
totaled NIS 3,015 million ($793 million), a 12.8% increase compared to NIS 2,673
million ($703 million) in 2007. Gross profit margin for the fourth quarter
2008 increased to 46.1% from 39.4% in the fourth quarter last year. Gross profit
for the fourth quarter 2008 totaled NIS 724 million ($190 million), a 16.0%
increase compared to NIS 624 million ($164 million), in the fourth quarter last
year. Both annual and quarterly gross profit margins benefited from a
significant decrease in handset subsidizing.
Selling, Marketing, General and
Administration Expenses ("SG&A Expenses") for 2008 totaled NIS 1,360
million ($358 million), an increase of 1.6% compared to NIS 1,338 million ($352
million) in 2007. The SG&A Expenses in the full year 2008 were mainly
affected by an increase in salaries and related expenses resulting from the
expansion of our services and sales teams at the end of 2007 and the beginning
of 2008, as part of our preparation for the implementation of number portability
and our
strategy to
constantly improve service level and customer satisfaction. Customer retention
expenses also increased during 2008. Following the expansion of marketing of
innovative new plans with guaranteed revenues during 2007 and according to
accounting standards, we are required to defer sales commissions related to
acquisition and retention of subscribers with guaranteed revenues and to
recognize such commissions as intangible assets, to be amortized over the
expected life of such subscribers' guaranteed revenues. We commenced deferring
these commissions in the fourth quarter of 2007. The deferred sales
commissions in 2008 amounted to approximately NIS 60 million compared to
approximately NIS 21 million in 2007. Amortization of deferred sales commissions
increased in 2008 to approximately NIS 36 million compared to approximately NIS
2 million in 2007. The increase in SG&A Expenses also resulted from an
increase in bad debts and doubtful accounts expenses, mainly following number
portability, which allows subscribers to switch to another cellular operator
without settling their outstanding debt. We cannot rule out that the increase in
bad debt and doubtful accounts may also have been influenced by the global
economic slowdown. The increase was partially offset by a decrease in
depreciation expenses.
SG&A Expenses for the
fourth quarter 2008 totaled NIS 348 million ($92 million), an increase of 1.2%
from NIS 344 million ($90 million) in the fourth quarter 2007. The increase
resulted primarily from an increase in bad debts and doubtful accounts expenses
and an increase in salaries and related expenses due to the recruitment of
workers previously retained through subcontractors, which were partially offset
by a decrease in depreciation expenses, consulting fees and employees'
recruitment expenses.
Operating income for 2008
increased 26.4%, reaching NIS 1,684 million ($443 million), compared to NIS
1,332 million ($350 million) in 2007. Operating income for the fourth quarter
2008 increased 39.4%, reaching NIS 389 million ($102 million), compared to NIS
279 million ($73 million) in the fourth quarter last year.
EBITDA for 2008 increased
14.0%, reaching NIS 2,406 million ($633 million), compared to NIS 2,110 million
($555 million) in 2007. EBITDA, as a percent of revenues, increased to 37.5% in
2008, compared to 34.9% in 2007. EBITDA for the fourth quarter 2008 increased
17.9%, reaching NIS 566 million ($149 million), compared to NIS 480 million
($126 million) in the fourth quarter 2007. EBITDA for the fourth quarter 2008,
as a percent of revenues, totaled to 36.0%, compared to 30.3% in the fourth
quarter last year.
Financing Costs, net for 2008
totaled NIS 310 million ($82 million) compared to NIS 147 million ($39 million)
in 2007. The significant increase in financing costs resulted primarily from an
increase in interest expense and expenses from the linkage to the Israeli
Consumer Price Index (CPI), associated with our debentures, due to the increase
in our outstanding indebtedness following the issuance of two new series of
debentures in October 2007 and the further issuance in February 2008, as well as
the
increased inflation
in 2008 of 4.5%, compared to 2.8% in 2007. The increase also resulted from
embedded derivatives expenses in 2008 compared to embedded derivatives income in
2007. This increase was partially offset by a decrease in interest expenses
pursuant to our credit facility which was voluntarily prepaid in full in March
2008.
Financing Costs, net for the
fourth quarter 2008 totaled NIS 47 million ($12 million), compared to
NIS 15 million ($4 million) in the fourth quarter last year, a 213%
increase. This increase resulted mainly from a decrease in interest income
relating to our short term deposits and an increase in expenses resulting from
foreign currency differences relating to trade payables balances due to a higher
depreciation of the NIS against the US dollar in the fourth quarter of 2008
compared to the fourth quarter last year. The increase is also attributed to an
increase in interest expenses associated with our debentures due to the increase
in our outstanding indebtedness. The increase in financing expenses in the
fourth quarter was partially offset by the lack of interest expenses related to
our credit facility fully prepaid in March 2008 compared to interest expenses in
the fourth quarter last year and CPI linkage income associated with our
debentures compared to no CPI linkage income in the fourth quarter last
year.
Net
Income for 2008 totaled
NIS 985 million ($259 million), compared to NIS 875 million ($230 million) in
2007, a 12.6% increase or a 20.2% increase compared to 2007 net income
after elimination of the
one-time tax provision release of approximately NIS 56 million in 2007. Net
income for the fourth quarter 2008 increased 32.1%, reaching NIS 243 million
($64 million), compared to NIS 184 million ($48 million) in the fourth quarter
last year. Basic earnings per
share for 2008 totaled NIS
10.08 ($2.65), compared to NIS 8.97 ($2.36) in 2007. Basic earning per share for
the fourth quarter 2008 totaled NIS 2.48 ($0.65), compared to NIS 1.89 ($0.50)
in the fourth quarter 2007.
Operating
Review
New Subscribers – at the end
of 2008 the Company had approximately 3.187 million subscribers. During 2008 the
Company added approximately 114,000 net new subscribers and in the fourth
quarter 2008 the Company added approximately 30,000 net new subscribers. The
number of 3G subscribers at the end of 2008 reached approximately 731,000
subscribers, representing 22.9% of the Company’s total subscriber
base.
The annual Churn
Rate in 2008 was 18.9% up
from 16.3% in 2007. The churn rate for the fourth quarter 2008 decreased from
5.3% in the first quarter of 2008 and 4.4% in the fourth quarter last year to
4.3%. The increase in churn rate is attributed to the implementation of number
portability in December 2007, in line with expectations and the experience in
other countries, which primarily consists of lower contribution pre-paid subscribers
and subscribers with collection problems. The increased churn of pre-paid
subscribers had a negligible impact on the Company's
results.
Average monthly
subscriber Minutes of Use
("MOU") in 2008 totaled 350 minutes, compared to 348 minutes in 2007, an
increase of 0.6%. MOU for the fourth quarter 2008 totaled 338 minutes, compared
to 352 minutes in the fourth quarter last year. The sharp decrease in MOU in the
fourth quarter compared with the fourth quarter last year is attributed
primarily to the seasonality, as the whole Jewish Holiday season, characterized
by a reduction in usage, occurred during the fourth quarter and in weekdays,
while the holiday season last year was spread over the third and fourth
quarters.
The monthly Average Revenue per User
(ARPU) for 2008 totaled NIS 149 ($39.2), compared to NIS 150 ($39.5) in
2007, a decrease of 0.7%.
ARPU for the fourth quarter 2008 decreased 1.3% and totaled NIS 147 ($38.6),
compared to NIS 149 ($39.2) in the fourth quarter last year. The reduction in
ARPU in the fourth quarter compared with the fourth quarter last year is
attributed primarily to seasonality, as explained above.
Financing
and Investment Review
Cash
Flow
The Company
continues to generate, on an ongoing basis, significant levels of free cash
flow, as a result of increased revenues and cost efficiencies.
Free cash flow (Cash provided by operating activities, net of cash used in
investing activities) for 2008 totaled NIS 1,217 million ($320 million),
compared to NIS 1,260 million ($331 million) generated in 2007. The decrease
resulted mainly from the higher expenditure related to the expansion in the
Company's workforce and the increase in
customer retention and acquisition costs, especially at the beginning of 2008
following the introduction of number portability in December 2007 as well as
from a one time catch up payment in the amount of NIS 70 million for 2007
accrued tax liability made at the beginning of 2008. Free cash flow for the
fourth quarter 2008 amounted to NIS 366 million ($96 million), up from NIS 236
million ($62 million) in the fourth quarter last year. The increase in the
fourth quarter 2008 compared with the fourth quarter last year resulted mainly
from the higher expenditure related to the expansion of our workforce and the
increase in handsets purchases during the fourth quarter of 2007 due to our
preparation for number portability implemented in December 2007. The Company is
currently considering raising additional debt in an amount of approximately NIS
300 million, in order to maintain a net debt to EBITDA ratio of 1.5-2, as is
customary in the sector; the proceeds of which to be used for general corporate
purposes (including refinancing of outstanding debt and continued dividend
distribution as customary in the Company, subject to the Company's board
decision).
Shareholders'
Equity
Shareholders'
Equity as of December 31, 2008, primarily consisting of accumulated
undistributed retained earnings, totaled NIS 342 million ($90
million).
Investment in Fixed
Assets
During 2008 the
Company invested NIS 556 million ($146 million) in fixed assets and intangible
assets (including, among others, deferred commissions and investments in
information systems and software), compared to NIS 573 million ($151 million) in
2007.
Dividend
On March 1, 2009,
the Company's board of directors declared a cash dividend in the amount of NIS
2.75 per share, and in the aggregate amount of approximately NIS 270
million (the equivalent of approximately $0.66 per share and approximately $65
million in the aggregate, based on the representative rate of exchange on
February 27, 2009; The actual US$ amount for dividend paid in US$ will be
converted from NIS based upon the representative rate of exchange published by
the Bank of Israel on March 26, 2009), subject to withholding tax described
below. The dividend will be payable to all of the Company’s shareholders of
record at the end of the trading day in the NYSE on March 16, 2009. The payment
date will be March 30, 2009. In accordance with the Israeli tax law, the Company
will deduct at source 20% of the dividend amount payable to each shareholder, as
aforesaid, subject to applicable exemptions. Further, the dividend per share
that the Company will pay for the fourth quarter of 2008 does not reflect the
level of dividends that may be paid for future quarterly periods, which can
change at any time in accordance with the Company’s dividend policy. Dividend
declaration is not guaranteed and is subject to the Company's board of
directors’ sole discretion, as detailed in the Company's annual report for the
year ended December 31, 2008 on Form 20-F, under “Item 8 - Financial Information
- Dividend Policy”.
Conference
Call Details
The Company will be
hosting a conference call on Monday, March 2, 2009 at 09:00 am EST, 04:00 pm
Israel time, and 02:00 pm UK time. On the call, management will review and
discuss the results, and will be available to answer questions. To participate,
please either access the live webcast on the Company's website, or call one of
the following teleconferencing numbers below. Please begin placing
your calls at least 10 minutes before the conference call commences. If you are
unable to connect using the toll-free numbers, please try the international
dial-in number.
|
US Dial-in
Number: 1 866 345 5855
|
UK Dial-in
Number: 0 800 404 8418
|
|
Israel
Dial-in Number: 03 918 0609
|
International
Dial-in Number: +972 3 918
0609
|
at: 09:00 am Eastern Time; 06:00 am Pacific Time; 2:00 pm UK Time;
4:00 pm Israel Time
To access the live webcast of the conference
call, please access the investor relations section of Cellcom Israel's website:
www.cellcom.co.il. After the call, a replay of the call will be
available under the same investor relations section.
Annual report for
2008
Cellcom Israel will
be filing its annual report for the year ended December 31, 2008 (on form 20-F)
with the US Securities and Exchange Commission today, March 2, 2009. The annual
report will be available for download at the Cellcom Israel's website in the
investor relations section of Cellcom Israel's website: www.cellcom.co.il.
Cellcom Israel will furnish a hard copy to any shareholder who so requests,
without charge. Such requests may be sent through the Company's website or by
sending a postal mail request to Cellcom Israel Ltd., 10 Hagavish Street,
Netanya, Israel (attention: Chief Financial Officer).
About
Cellcom Israel
Cellcom Israel
Ltd., established in 1994, is the leading Israeli cellular provider; Cellcom
Israel provides its approximately 3.187 million subscribers (as at December 31,
2008) with a broad range of value added services including cellular and landline
telephony, roaming services for tourists in Israel and for its subscribers
abroad and additional services in the areas of music, video, mobile office etc.,
based on Cellcom Israel's technologically advanced infrastructure. The Company
operates an HSPA 3.5 Generation network enabling advanced high speed broadband
multimedia services, in addition to GSM/GPRS/EDGE and TDMA networks. Cellcom
Israel offers Israel's broadest and largest customer service infrastructure
including telephone customer service centers, retail stores, and service and
sale centers, distributed nationwide. Through its broad customer service network
Cellcom Israel offers its customers technical support, account information,
direct to the door parcel services, internet and fax services, dedicated centers
for the hearing impaired, etc. As of 2006, Cellcom Israel, through its wholly
owned subsidiary Cellcom Fixed Line Communications L.P., provides landline
telephone communication services in Israel, in addition to data communication
services. Cellcom Israel's shares are traded both on the New York Stock Exchange
(CEL) and the Tel Aviv Stock Exchange (CEL). For additional information please
visit the Company's website www.cellcom.co.il
Forward-Looking
Statements
The following
information contains, or may be deemed to contain forward-looking statements (as
defined in the U.S. Private Securities Litigation Reform Act of 1995 and the
Israeli Securities Law, 1968). In some cases, you can identify these statements
by forward-looking words such as “may,” “might,” “will,” “should,” “expect,”
“plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or
“continue,” the negative of these terms and other comparable
terminology. These forward-looking statements, which are subject to
risks, uncertainties and assumptions about us, may include projections of our
future financial results, our anticipated growth strategies and anticipated
trends in our business. These statements are only predictions based
on our current expectations and projections about future
events. There are important factors that could cause our actual
results, level of activity, performance or achievements to differ materially
from the results, level of activity, performance or achievements expressed or
implied by the forward-looking statements. Factors that could cause such
differences include, but are not limited to: changes to the terms of our
license, new legislation or decisions by the regulator affecting our operations,
the outcome of legal proceedings to which we are a party, particularly class
action lawsuits, our ability to maintain or obtain permits to construct and
operate cell sites, and other risks and uncertainties detailed from time to time
in our filings with the U.S. Securities and Exchange Commission, including under
the caption “Risk Factors” in our Annual Report for the year ended December 31,
2008.
Although we believe
the expectations reflected in the forward-looking statements contained herein
are reasonable, we cannot guarantee future results, level of activity,
performance or achievements. Moreover, neither we nor any other
person assumes responsibility for the accuracy and completeness of any of these
forward-looking statements. We assume no duty to update any of these
forward-looking statements after the date hereof to conform our prior statements
to actual results or revised expectations, except as otherwise required by
law.
The Company
prepares its financial statements in accordance with International Financial
Reporting Standards (IFRS), as issued by the International Accounting Standards
Board (IASB). Unless noted specifically otherwise, the dollar denominated
figures were converted to US$ using a convenience translation based on the
US$\New Israeli Shekel (NIS) conversion rate of NIS 3.802 =
US$1 as published by the Bank of Israel on December 31, 2008.
Use
of non-GAAP financial measures
EBITDA is a non-GAAP measure
and is defined as income before financial income (expenses), net; other income
(expenses), net; income tax; depreciation and amortization. This is an accepted
measure in the communications industry. The Company presents this measure as an
additional performance measure as the Company believes that it enables us to
compare operating performance between periods and companies, net of any
potential differences which may result from differences in capital structure,
taxes, age of fixed assets and related depreciation expenses. EBITDA should not
be considered in isolation, or as a substitute for operating income, any other
performance measures, or cash flow data, which were prepared in accordance with
Generally Accepted Accounting Principles as measures of profitability or
liquidity. EBITDA does not take into account debt service requirements, or other
commitments, including capital expenditures, and therefore, does not necessarily
indicate the amounts that may be available for the Company's use. In addition,
EBITDA may not be comparable to similarly titled measures reported by other
companies, due to differences in the way these measures are calculated. See the
reconciliation between the net income and the EBITDA presented at the end of
this Press Release.
Free cash flow is a non-GAAP
measure and is defined as the net cash provided by operating activities minus
the net cash used in investing activities. See the reconciliation note at the
end of this Press Release.
|
Company Contact
Shiri
Israeli
Investor
Relations Coordinator
investors@cellcom.co.il
Tel: +972 52
998 9755
|
Investor Relations Contact
Ehud Helft /
Ed Job
CCGK Investor
Relations
ehud@gkir.com
/ ed.job@ccgir.com
Tel: (US) 1
866 704 6710 / 1 646-213-1914
|
Financial
Tables Follow
Cellcom
Israel Ltd.
(An
Israeli Corporation)
Condensed
Consolidated Balance Sheets
|
December
31
2007
|
December
31
2008
|
Convenience
translation
Into
U.S.
dollar
December
31
2008
|
||||||||||
|
NIS
millions
|
NIS
millions
|
US$ millions | ||||||||||
|
Current
assets
|
||||||||||||
|
Cash and cash
equivalents
|
911 | 275 | 72 | |||||||||
|
Trade
receivables
|
1,385 | 1,478 | 389 | |||||||||
|
Other
receivables, including derivatives
|
96 | 112 | 30 | |||||||||
|
Inventory
|
245 | 119 | 31 | |||||||||
|
Total
current assets
|
2,637 | 1,984 | 522 | |||||||||
|
Non-
current assets
|
||||||||||||
|
Long-term
receivables
|
575 | 602 | 158 | |||||||||
|
Property,
plant and equipment, net
|
2,335 | 2,159 | 568 | |||||||||
|
Intangible
assets, net
|
685 | 675 | 178 | |||||||||
|
Total
non- current assets
|
3,595 | 3,436 | 904 | |||||||||
|
Total
assets
|
6,232 | 5,420 | 1,426 | |||||||||
|
Current
liabilities
|
||||||||||||
|
Short-term
credit
|
353 | 329 | 87 | |||||||||
|
Trade
payables and accrued expenses
|
953 | 677 | 178 | |||||||||
|
Current tax
liabilities
|
122 | 65 | 17 | |||||||||
|
Provisions
|
91 | 47 | 13 | |||||||||
|
Other current
liabilities, including derivatives
|
384 | 385 | 101 | |||||||||
|
Total
current liabilities
|
1,903 | 1,503 | 396 | |||||||||
|
Non-
current liabilities
|
||||||||||||
|
Long-term
loans from banks
|
343 | - | - | |||||||||
|
Debentures
|
2,983 | 3,401 | 895 | |||||||||
|
Provisions
|
14 | 17 | 4 | |||||||||
|
Other
long-term liabilities
|
3 | 1 | - | |||||||||
|
Deferred
taxes
|
149 | 156 | 41 | |||||||||
|
Total
non- current liabilities
|
3,492 | 3,575 | 940 | |||||||||
|
Shareholders’
equity
|
||||||||||||
|
Share
capital
|
1 | 1 | - | |||||||||
|
Cash flow
hedge reserve
|
(33 | ) | (11 | ) | (3 | ) | ||||||
|
Retained
earnings
|
869 | 352 | 93 | |||||||||
|
Total
shareholders’ equity
|
837 | 342 | 90 | |||||||||
|
Total
liabilities and shareholders’ equity
|
6,232 | 5,420 | 1,426 | |||||||||
Cellcom
Israel Ltd.
(An
Israeli Corporation)
Condensed
Consolidated Statements of Income
|
Convenience
translation
Into
U.S.
dollar
|
||||||||||||
| Year ended December 31 |
Year
ended
December
31
|
|||||||||||
| 2007 | 2008 | 2008 | ||||||||||
| NIS millions | NIS millions | US$ millions | ||||||||||
|
Revenues
|
6,050 | 6,417 | 1,688 | |||||||||
|
Cost of
revenues
|
3,377 | 3,402 | 895 | |||||||||
|
Gross
profit
|
2,673 | 3,015 | 793 | |||||||||
|
Selling and
marketing expenses
|
685 | 701 | 185 | |||||||||
|
General and
administrative expenses
|
653 | 659 | 173 | |||||||||
|
Other
(income) expenses, net
|
3 | (29 | ) | (8 | ) | |||||||
|
Operating
income
|
1,332 | 1,684 | 443 | |||||||||
|
Financing
expenses
|
(287 | ) | (393 | ) | (104 | ) | ||||||
|
Financing
income
|
140 | 83 | 22 | |||||||||
|
Financing
costs, net
|
(147 | ) | (310 | ) | (82 | ) | ||||||
|
Income
before income tax
|
1,185 | 1,374 | 361 | |||||||||
|
Income
tax
|
310 | 389 | 102 | |||||||||
|
Net
income
|
875 | 985 | 259 | |||||||||
|
Earnings
per share
|
||||||||||||
|
Basic earnings per share in
NIS
|
8.97 | 10.08 | 2.65 | |||||||||
|
Diluted earnings per share
in
NIS
|
8.89 | 9.92 | 2.61 | |||||||||
|
Weighted-average
number of shares used in the
|
||||||||||||
|
calculation
of basic earnings per share
|
||||||||||||
|
(in
thousands)
|
97,500 | 97,721 | 97,721 | |||||||||
|
Weighted-average
number of shares used in the
|
||||||||||||
|
calculation
of diluted earnings per share
|
||||||||||||
|
(in
thousands)
|
98,441 | 99,280 | 99,280 | |||||||||
Cellcom
Israel Ltd.
(An
Israeli Corporation)
Condensed
Consolidated Statements of Cash Flows
|
Convenience
translation
Into
U.S.
dollar
|
||||||||||||
|
Year
ended December 31
|
Year
ended
December
31
|
|||||||||||
|
2007
|
2008
|
2008
|
||||||||||
|
NIS
|
NIS
|
US$
|
||||||||||
|
Cash
flows from operating activities:
|
||||||||||||
|
Net
income
|
875 | 985 | 259 | |||||||||
|
Adjustments
to reconcile net income to funds generated from
operations:
|
||||||||||||
|
Depreciation
|
619 | 570 | 150 | |||||||||
|
Amortization
|
156 | 181 | 48 | |||||||||
|
Reversal of
provision allowance
|
(10 | ) | - | - | ||||||||
|
Capital gain
on sale of land
|
- | (9 | ) | (2 | ) | |||||||
|
Loss (gain)
on sale of assets
|
4 | (9 | ) | (2 | ) | |||||||
|
Income tax
expense
|
310 | 389 | 102 | |||||||||
|
Financial
costs, net
|
147 | 310 | 82 | |||||||||
|
Share based
payments
|
29 | 28 | 7 | |||||||||
|
Changes
in operating assets and liabilities:
|
||||||||||||
|
Changes in
inventories
|
(114 | ) | 112 | 29 | ||||||||
|
Changes in
trade receivables (including long-term amounts)
|
(99 | ) | (117 | ) | (31 | ) | ||||||
|
Changes in
other receivables (including long-term amounts)
|
(24 | ) | (34 | ) | (9 | ) | ||||||
|
Changes in
trade payables and accrued expenses
|
188 | (271 | ) | (71 | ) | |||||||
|
Changes in
other liabilities (including long-term amounts)
|
92 | 99 | 26 | |||||||||
|
Payments for
derivative hedging contracts, net
|
(24 | ) | (38 | ) | (10 | ) | ||||||
|
Proceeds from
(payments for) derivative contracts, net
|
(16 | ) | 18 | 5 | ||||||||
|
Income tax
paid
|
(313 | ) | (451 | ) | (119 | ) | ||||||
|
Net
cash from operating activities
|
1,820 | 1,763 | 464 | |||||||||
|
Cash
flows from investing activities
|
||||||||||||
|
Acquisition
of property, plant, and equipment
|
(466 | ) | (429 | ) | (113 | ) | ||||||
|
Acquisition
of intangible assets
|
(97 | ) | (175 | ) | (46 | ) | ||||||
|
Payments
for derivative hedging contracts, net
|
(12 | ) | (17 | ) | (4 | ) | ||||||
|
Proceeds from
sales of property, plant and equipment
|
4 | 19 | 5 | |||||||||
|
Interest
received
|
23 | 17 | 4 | |||||||||
|
Investment in
long-term deposit
|
(12 | ) | 39 | 10 | ||||||||
|
Net
cash used in investing activities
|
(560 | ) | (546 | ) | (144 | ) | ||||||
|
Cash
flows from financing activities
|
||||||||||||
|
Proceeds from
(payments for) derivative contracts, net
|
(10 | ) | 31 | 8 | ||||||||
|
Repayments of
long-term loans from banks
|
(645 | ) | (648 | ) | (171 | ) | ||||||
|
Repayments of
Debentures
|
- | (125 | ) | (33 | ) | |||||||
|
Proceeds from
issuance of debentures, net of issuance costs
|
1,066 | 589 | 155 | |||||||||
|
Dividend
paid
|
(639 | ) | (1,525 | ) | (401 | ) | ||||||
|
Interest
paid
|
(177 | ) | (175 | ) | (46 | ) | ||||||
|
Net
cash used in financing activities
|
(405 | ) | (1,853 | ) | (488 | ) | ||||||
|
Changes
in cash and cash equivalents
|
855 | (636 | ) | (168 | ) | |||||||
|
Balance
of cash and cash equivalents at beginning of the period
|
56 | 911 | 240 | |||||||||
|
Balance
of cash and cash equivalents at end of the period
|
911 | 275 | 72 | |||||||||
Cellcom
Israel Ltd.
(An
Israeli Corporation)
Reconciliation
for Non-GAAP Measures
EBITDA
The following is a
reconciliation of net income to EBITDA:
|
Year
ended December
31,
|
||||||||||||
|
Convenience
translation
into US
dollar
|
||||||||||||
|
2007
NIS
millions
|
2008
NIS
millions
|
2008
US$
millions
|
||||||||||
|
Net
income
|
875 | 985 | 259 | |||||||||
|
Financing
expense (income), net
|
147 | 310 | 82 | |||||||||
|
Other
expenses (income)
|
3 | (29 | ) | (8 | ) | |||||||
|
Income
taxes
|
310 | 389 | 102 | |||||||||
|
Depreciation
and amortization
|
775 | 751 | 198 | |||||||||
|
EBITDA
|
2,110 | 2,406 | 633 | |||||||||
Free
Cash Flow
The following table
shows the calculation of free cash flow:
|
Year
ended December
31,
|
||||||||||||
|
Convenience
translation
into US
dollar
|
||||||||||||
|
2007
NIS
millions
|
2008
NIS
millions
|
2008
US$
millions
|
||||||||||
|
Cash flows
from operating activities
|
1,820 | 1,763 | 464 | |||||||||
|
Cash flows
from investing activities
|
(560 | ) | (546 | ) | (144 | ) | ||||||
|
Free Cash
Flow
|
1,260 | 1,217 | 320 | |||||||||
Signatures
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
|
CELLCOM
ISRAEL LTD.
|
||||||
|
Date:
|
March
2, 2009
|
By:
|
/s/
Liat Menahemi Stadler
|
|||
|
Name:
|
Liat
Menahemi Stadler
|
|||||
|
Title:
|
General
Counsel
|
|||||