Completion of Deploying the Company's Branches in an Accurate Chain
Structure and Adjusted to the Market Condition ROSH HA'AYIN,
Israel, November 25 /PRNewswire-FirstCall/ -- - Expansion of the
Private Brand "Mega ", Reaching 6% of the Sales, Starting to Yield
Fruits Blue Square Reports stability in the Operating Profit
Despite the Increased Competition and One-Time Expenses The
Successful Launch of the Loyalty Club Resulted in the Enrollment of
350,000 New Club Members in the Third Quarter and in the Aggregate
the Club has 500,000 Members. The Company Announces the
Commencement of the Second Stage in the Development of "Eden Teva
Market" Chain Planning to Open "Eden" Branches in the Company
Stores Under the Concept of "Store Within a Store" Blue
Square-Israel Ltd. (NYSE and TASE: BSI) today announced its
financial results for the third quarter and nine months ended
September 30, 2009. Results for the third quarter of 2009 Revenues
for the third quarter of 2009 were NIS 1,925.5 million (U.S.(A)
$512.4 million), compared to NIS 1,936.2 million in the
corresponding quarter of 2008 - a decrease of 0.6 %. Supermarket
same store sales (SSS) for the period decreased by 2.5% (compared
to a decrease of 6.8% in sales in SSS in the first half) due to the
recession in the market, increased competition and erosion of the
sales prices in HD chains. On the other hand, the decrease in sales
was offset by the net addition of nine new stores during the last
12-month period of approximately 8,000 square meters; Gross Profit
of the third quarter of 2009 amounted to NIS 533.2 million (U.S. $
141.9 million) (27. 7 % of revenues) compared to gross profit of
NIS 538.8 million (27.8% of revenues) in the corresponding quarter
of 2008. The decrease in the gross profit margin derives from an
increase in the relative scope of sales of the HD chains of total
sales that were offset from the improvement of trade agreements and
supplier discounts and from the contribution of the private brand
of "Mega", which already accounts for 6% of total sales. Selling,
General, and Administrative Expenses for the third quarter of 2009
amounted to NIS 474.4 million (U.S. $ 126.2 million) (24.6% of
revenues) compared to NIS 478.8 million (24.7% of revenues) in the
corresponding period, a decrease of 0.9%. The decrease reflects the
effect of efficiency measures taken by the company during the
quarter which was mitigated by 1)increased expenses associated with
the net addition of nine new stores, including the expenses
associated with the accelerated opening of five branches of the
"Eden Teva Market" format during the last twelve months 2)
enrollment costs of a new phase of the "You" club 3) costs deriving
from the increase in the expenses of the private brand 4) increase
of the CPI, which affects expenses of rental fees and municipal
taxes. Operating Income (before changes in fair value of investment
property and other gains and losses) in the third quarter of 2009
amounted to NIS 58.7 million (U.S $ 15.6 million) (3.1% of
revenues) compared to the operating income of NIS 60.0 million
(3.1% of revenues) in the corresponding period. Changes in fair
value of Investment Property: In the third quarter of 2009, the
Company recorded gain from appreciation of investment property in
the amount of NIS 6.7 million (U.S $ 1.8 million). In the
corresponding period of the previous year, no change in the value
of investment property was recorded. Other Gains and Losses, Net:
In the third quarter of 2009, the Company recorded other expenses,
net of NIS 4.9 million (U.S. $ 1.3 million), compared to net income
of NIS 11.1 million in the corresponding period. The expenses this
quarter included costs of NIS 2.4 million (U.S $ 0.6 million)
relating to the transaction of transferring real estate properties
from Mega Retail Ltd. to Blue Square Real Estate and costs
associated with the synergy of headquarters in BEE group amounting
to NIS 0.8 million (U.S $ 0.2 million). In the corresponding
quarter, mainly derives from decrease in holding rate in companies
held by BEE Group due to reorganization. Operating Income before
financing in the third quarter of 2009 was NIS 60.5 million (U.S. $
16.1 million) (3.1% of revenues) compared to operating income of
NIS 71.1 million (3.7% of revenues) in the third quarter of 2008.
Financial Expenses (net) for the third quarter of 2009 were NIS
44.7 million (U.S. $11.9 million) compared to financial expenses
(net) of NIS 50.1 million in the corresponding quarter of the
previous year. The decrease in financial expenses in this quarter
compared to the corresponding quarter last year mainly derives from
financial income from derivative financial instruments that
contributed in this quarter an income of NIS 7.0 million (U.S $1.9
million) compared to an expense of NIS 6.4 million in the
corresponding quarter last year and from financial income from
marketable securities that contributed this quarter an income of
NIS 3 million compared to an expense of NIS 3 million in the
corresponding quarter. The decrease in the financial expenses was
offset mainly as a result of the increase in financial expenses on
long term loans and debentures in the amount of NIS 15.6 million
this quarter compared to the corresponding quarter. Taxes on Income
for the third quarter 2009, tax benefit amounted to NIS 13.9
million (U.S. $3.7 million) (net of tax benefit in respect of the
changes in tax rates as detailed below of NIS 20.3 million the
effective tax rate was 40.9% compared to a statutory tax rate of
26%) compared to tax expenses of NIS 8.9 million (effective tax
rate of 42.6% compared to a statutory tax rate of 27%) in the
corresponding quarter. The change of tax expenses in the
corresponding quarter to tax benefit this quarter mainly derives
from recording tax benefit due to the decrease in deferred tax
liabilities following the change in tax rates, as a result of the
legislation of the Law for Economic Efficiency (Legislation
Amendments for the Implementation of Economic Plan for 2009- 2010)
5769 - 2009, which prescribed, among others, the gradual decrease
of corporate tax rate down to 18% in the 2016 tax year and onwards.
The implication of the change in the tax rates were reflected in
the results of the third quarter of 2009 by a decrease in deferred
tax liability and a recognition in income from taxes in the amount
of NIS 20.3 million (U.S $ 5.4 million) out of which the portion
attributed to the company's shareholders is NIS 15.2 million (U.S $
4.0 million). Net Income for the third quarter of 2009 was NIS 29.6
million (U.S. $ 7.9 million) compared to net income of NIS 12.0
million in the third quarter of 2008. The increase in the net
income in this quarter compared to the corresponding quarter last
year derives from tax benefit offsetting decrease in operating
income, as mentioned above. The net income for the third quarter of
2009 attributable to shareholders, was NIS 25.1 million (U.S. $6.7
million), or NIS 0.57 per ADS (U.S. $ 0.15), while the portion
attributable to the share of minority interests was NIS 4.5 million
(U.S. $1.2 million). Cash Flows in the third quarter of 2009 Cash
Flows from Operating Activities: Net cash flows deriving from
operating activities in the third quarter of 2009 amounted to NIS
173.7 million (U.S. $ 46.2 million) compared to NIS 59.5 million in
the corresponding quarter last year. The increase in cash flows
from operating activities derives from increase in the negative
working capital balances, decrease in paid taxes and was offset
from decrease in operating income. Cash Flows from Investing
Activities: Net Cash flows proceeds from investing activities in
the third quarter of 2009 amounted to NIS 307.3 million (U.S. $81.8
million) compared to net cash flows of NIS 73.3 million used in
investing activities in the corresponding quarter last year. Cash
flows proceeds from investing activities in the third quarter of
2009 included mainly realization of short term deposits of NIS
389.3 million (U.S. $103.6 million) net of cash used in investing
activities for purchase of property and equipment, intangible
assets and investment property in a total amount of NIS 72.5
million (U.S. $19.3 million) and net investment in marketable
securities of NIS 12.2 million (U.S. $3.2 million). Cash used in
investing activities in the third quarter of 2008 mainly included
the purchase of property and equipment in a total amount of NIS
52.3 million and purchase shares of minority interests in
subsidiaries in the amount of NIS 35.4 million. Cash Flows from
Financing Activities: Net Cash flows used in financing activities
in the third quarter of 2009 amounted to NIS 167.4 million (U.S $
44.5 million) compared to net cash provided by financing activities
of NIS 98.8 million in the corresponding period last year. Cash
flows used in financing activities in the third quarter of 2009
included mainly decrease in short term credit of NIS 380.3 million
(U.S $ 101.2 million), repayment of long term loans of NIS 31.9
million (U.S $ 8.5 million), dividend paid to minority in
subsidiaries in the amount of NIS 7.3 million (U.S $ 1.9 million),
repayment of convertible debentures of NIS 13.3 million (U.S $ 3.5
million) and interest paid in the amount of NIS 35.2 million (U.S $
9.4 million) net of receipt of long term loans amounting to NIS 301
million (U.S $ 80.1 million). Cash flows provided by financing
activities in the third quarter of 2008 mainly included receipt of
long term loans of NIS 172.5 million and increase in short term
bank credit of NIS 25 million net of cash used in financing
activities for repayment of long term loans of NIS 56.5 million,
dividend paid to minority in subsidiaries of NIS 11 million and
interest paid in the amount of NIS 30.8 million. Comments of
Management Commenting on the financial results, Mr. Zeev
Vurembrand, Blue Square's President and CEO, said: "2009 is marked
by strategic measures with long term impact, which will shape the
image and performance of the company in the coming years: the
adjustment of the chains and the sub-brands through the
establishment of Mega Bool Chain, the entry into the private brand
segment and the launch of renewed loyalty club. In addition, during
2009 we performed a procedure of increasing operating efficiency
and structural change which costs were charged to statement of
operations. In "Teva Eden Market" we completed Stage A of opening
9-10 branches. In Stage B, we intend to open approximately 6 Eden
branches during the next two years inside the Mega branches, as a
store within a store. In BEE retail group, during the next two
quarters the synergy process of the headquarters will be finalized
and the new logistic center will commence its operations during the
second half of 2010. "Mega Bool" brand positions itself as a strong
and leading brand in the HD segment in shorter time than expected.
In conclusion, we began to see the fruits of the strategy, which
was first implemented a year ago and we expect that the new actions
will continue to impact the results of the company in the coming
quarters". Additional Information 1. As of September 30, 2009, the
Company operated 203 supermarkets in the following formats: Mega In
Town -119; Mega Bool - 47; Mega - 11; Shefa Shuk - 17; Eden Teva
Market - 9. 2. EBITDA (Earnings before Interest, Taxes,
Depreciation, and Amortization) In the first nine months of 2009,
the EBITDA was NIS 311.7 million (U.S. $ 83 million) (5.6 % of
revenues) compared to NIS 344.0 million (6.1% of revenues) in the
corresponding period of last year. In the third quarter of 2009,
amounted to NIS 106.5 million (U.S. $ 28.4 million) (5.5 % of
revenues) compared to NIS 104.3 million (5.4% of revenues) in the
corresponding quater of last year. As of September 30, 2009, the
ratio of its net financial obligations to EBITDA was 3.6 and the
ratio of its unpledged property and equipment to the net financial
obligations was 1.7. Use of financial measures that are not in
accordance with Generally Accepted Accounting Principles EBITDA is
a measure that is not in accordance with Generally Accepted
Accounting Principles (Non- GAAP) and is defined as income before
financial income (expenses) net, other gain (losses) net, changes
in fair value of investment property, taxes, depreciation and
amortization. It is presented because it is a measure commonly used
in the retail industry and is presented as an additional
performance measure, since it enables comparisons of operating
performances between periods and companies while neutralizing
potential differences resulting from changes in capital structures,
taxes, age of property and equipment and its related depreciation
expenses. EBITDA, however, should not be considered as an
alternative to operating income or income for the year as an
indicator of our operating performance. Similarly, EBITDA should
not be considered as an alternative to cash flow from operating
activities as a measure of liquidity. EBITDA is not a measure of
financial performance under Generally Accepted Accounting
Principles (GAAP) and may not be comparable to other similarly
titled measures for other companies. EBITDA may not be indicative
of our historic operating results nor is it meant to be predictive
of potential future results. Reconciliation between our income for
the period and EBITDA is presented in the attached condensed
financial reports. 3. On October 1, 2009, Standard & Poors
Maalot ratified the rating of ilA+ for the debentures Series A and
B of the company and updated the rating forecast from stable to
negative. Data in NIS (millions) Data Q3 2009 Q3 2008 1-9 2009 1-9
2008 Sales 1,925.5 1,936.2 5,534.2 5,675.8 Gross profit 533.2 538.8
1,538.0 1,569.9 % Gross profit 27.7% 27.8% 27.8% 27.7% Operating
profit (before increase in fair value of real estate) 58.7 60.0
179.6 221.0 % Operating profit (before increase in fair value of
real estate) 3.1% 3.1% 3.2% 3.9% Financial expenses 44.7 50.1 92.0
98.6 Net income 29.6 12.0 79.4 114.3 Events During the third
Quarter of 2009 Reorganization of real estate activity - transfer
of real estate properties to the subsidiary Blue Square Real Estate
Ltd. In September 2009, the reorganization plan of the real estate
activity of the company and its centralization under the subsidiary
(78.45%) Blue Square Real Estate (BSRE), was completed under which
the real estate properties of the subsidiary Mega Retail Ltd. (
formerly Blue Square Chain Investment & Properties Ltd) (Mega
Retail), were transferred to BSRE. Within the approval of the
property transfer transaction the following were approved as well:
1. Lease agreement to lease the transferred properties that are not
leased to third parties to Mega Retail for ten years from the
closing date of the purchase agreement and an option to the lessee
to extend the lease agreement for five additional years, and, 2. An
agreement to extend the term of the existing lease agreements
between Mega Retail and BSRE to an identical period (ten years from
the closing date of the purchase agreement and an option to the
lessee to extend the lease agreement for five additional years).
The completion of the transaction was performed as a of split
pursuant to Section 105 to the Income Tax Ordinance which confers
upon Mega Retail an exemption from the payment of land appreciation
tax at this stage and its deferment under the split agreement with
BSRE until the realization of the properties (as far as realized)
or by the depreciation rate of the depreciable properties by BSRE.
In addition, the payment of purchase tax for the transaction will
be at a reduced tax rate of 0.5%. The company and the subsidiaries,
Mega Retail and BSRE will be subject to the restrictions prescribed
by the provisions regarding the split pursuant to Section 105 to
the Ordinance. BSRE pledged certain of the transferred properties
as collateral for a loan taken in order to finance the transaction.
Transaction costs including purchase tax were recorded as expense
in the statement of operations. Results for the first nine months
of 2009 Revenues for the first nine months of 2009 were NIS 5,534.2
million (U.S $1,472.6 million), compared to NIS 5,675.8 million in
the corresponding period of 2008 - a decrease of 2.5 %. Supermarket
same store sales (SSS) for the period decreased by 5.5% due to the
recession and increased competition and erosion of prices in HD
chains. On the other hand, the decrease in sales was offset by the
net addition of nine new stores during the 12-month period of
approximately 8,000 square meters. Gross Profit in the first nine
months of 2009 amounted to NIS 1538.0 million (U.S. $ 409.3
million) (27.8 % of revenues) compared to gross profit of NIS
1,569.9 million (27.7% of revenues) in the corresponding period of
2008. The increase in the gross profit derives from an increase in
sales of BEE group characterized with relatively higher gross
profit margins relative to the acceptable gross profit in the area
of food retailing. In addition, the gross profit increased from
trade agreements, some of which relate to the establishment of Mega
Bool chain that offset the effect of the planned erosion in the
gross profit margin as a result of establishing the chain. Selling,
General, and Administrative Expenses in the first nine months of
2009 amounted to NIS 1,358.4 million (U.S. $ 361.4 million) (24.5%
of revenues) compared to NIS 1,348.9 million (23.8% of revenues) in
the corresponding period, an increase of 0.7%. The increase
reflects increase in expenses deriving from 1) net addition of 9
new stores, part of which relate to accelerated opening of 5
branches of the "Eden Teva Market" during the last 12 months 2)
costs associated with launch of "Mega Bool" chain. 3) enrollment
costs of a new phase of the "You" club 4) increase of the CPI,
which affects expenses of rental fees and municipal taxes. On the
other hand, the company took efficiency measures which resulted in
decrease in payroll and related expenses. This decrease was offset
in one time costs of NIS 9 million. Operating Income (before
changes in fair value of investment property and other gains and
losses) in the first nine months of 2009 amounted to NIS 179.6
million (U.S $ 47.8 million) (3.2% of revenues) compared to the
operating income of NIS 221.0 million (3.9% of revenues) in the
corresponding period. The decrease in operating income was effected
by the decrease in sales and increase in selling and administrative
expenses, as mentioned above. Changes in fair value of Investment
Property in the first nine months of 2009, the Company recorded
gain from appreciation of investment property of NIS 8.4 million
(U.S $ 2.2 million) compared to NIS 18.0 million in the
corresponding period of the previous year. Other Gains and Losses,
Net in the first nine months of 2009, the Company recorded other
expenses, net of NIS 5.6 million (U.S. $ 1.5 million), compared to
other expenses of NIS 9.3 million in the corresponding period of
the previous year. The expenses included, in this period, provision
for impairment of property and equipment in Dr. Baby stores in the
amount of NIS 3.7 million (U.S. $ 1.0 million) and costs of NIS 2.4
million (U.S. $ 0.6 million) related to the transaction of
transferring real estate properties from Mega Retail to BSRE and
were offset by the capital gain in the amount of NIS 0.3 million
(U.S. $ 0.1 million) from selling 1.55% of the shares of Blue
Square Real Estate for NIS 10.1 (U.S. $ 2.7 million) and from
capital gain of NIS 2.8 million (U.S. $ 0.7 million) from the
purchase of 8% of Naaman shares held by minority. In the
corresponding period, income mainly included gain from decrease in
holding rate in companies held by BEE group due to the
reorganization. Operating Income before financing in the first nine
months of 2009, was NIS 182.4 million (U.S. $ 48.5 million) (3.3%
of revenues) compared to operating income of NIS 248.3 million
(4.4% of revenues) in the corresponding period in 2008. Financial
Expenses (net) in the first nine months of 2009 were NIS 92.0
million (U.S. $24.5 million) compared to financial expenses (net)
of NIS 98.6 million in the corresponding period of the previous
year. The decrease in financial expenses in the current period
compared to the corresponding period last year mainly derives from
the effect of the change in the value of derivative financial
instruments that contributed in the current period to an income of
NIS 25 million (U.S $6.6 million) compared to an income of NIS 8.3
million in the corresponding period last year net of increase in
the net financial debt of the company in the current period
compared to the corresponding period last year which resulted in
increase in short term financial expenses by NIS 10.7 million (U.S
$2.8 million) in the current period compared to the corresponding
period last year. Taxes on Income in the first nine months of 2009
were NIS 10.9 million (U.S. $2.9 million) (12.1% effective tax rate
compared to a statutory tax rate of 26%) compared to NIS 35.4
million (effective tax rate of 23.7% compared to a statutory tax
rate of 27%) in the corresponding period. The decrease in the
effective tax rate in this period compared to the corresponding
period last year derives mainly from recording tax benefit due to
the decrease in deferred tax liabilities following the change in
tax rates, as a result of the legislation of the Law for Economic
Efficiency (Legislation Amendments for the Implementation of
Economic Plan for 2009- 2010) 5769 - 2009, which prescribed, among
others, the gradual decrease of corporate tax rate down to 18% in
the 2016 tax year and onwards. The implication of the change in the
tax rates were reflected in the results of this period by decrease
in deferred tax liability and recognition in income from taxes in
the amount of NIS 20.3 million (U.S $ 5.4 million) out of which the
portion attributed to the company's owners is NIS 15.2 million (U.S
$ 4.0 million). Net Income for the first nine months of 2009 was
NIS 79.4 million (U.S. $ 21.1 million) compared to net income of
NIS 114.3 million in the corresponding period of 2008. The decrease
in the net income in the first nine months of the year compared to
the corresponding period last year derives from a decrease in
operating income and a decrease in income from appreciation of
investment property net of a decrease in income tax expenses, as
mentioned above. The net income for the first nine months of 2009,
attributable to shareholders, was NIS 64.7 million (U.S. $17.2
million), or NIS 1.49 per ADS (U.S. $ 0.40), while the portion
attributable to the share of minority interests was NIS 14.7
million (U.S. $3.9 million). Cash Flows in the first nine months of
2009 Cash Flows from Operating Activities: Net cash flows deriving
from operating activities in the first nine months of 2009 amounted
to NIS 331.7 million (U.S. $ 88.2 million) compared to NIS 337.7
million in the corresponding period last year. The decrease in cash
flows from operating activities derives mainly from a decrease in
operating income, and part of which was offset from a decrease in
net taxes paid. Cash Flows from Investing Activities: Net Cash
flows used in investing activities in the first nine months of 2009
amounted to NIS 169.2 million (U.S. $45 million) compared to net
cash flows of NIS 111.8 million used in investing activities in the
corresponding period last year. Cash flows used in investing
activities in the first nine months of 2009 included mainly
purchase of property and equipment, intangible assets and
investment property of NIS 177.4 (U.S $ 47.3 million) and net
investment in marketable securities of NIS 9.4 million (U.S $ 2.5
million) net of cash flows proceeds from realization of property
and equipment and investment property in a total amount of NIS 7.7
million (U.S.$2 million) and proceeds from realization of
investment in a subsidiary in the amount of NIS 10.1 million (U.S.
$2.6 million). Cash flows used in investing activities in the first
nine months of 2008 included mainly purchase of property and
equipment, intangible assets and investment property amounting to
NIS 208 million, net proceeds in marketable securities in the
amount of NIS 11.1 million and investment in subsidiary in the
amount of NIS 35.4 million, net of proceeds from realization short
term deposits of NIS 101 million and interest received of NIS 12.3
million. Cash Flows from Financing Activities: Net Cash flows
deriving from financing activities in the first nine months of 2009
amounted to NIS 198.6 million (U.S $ 52.9 million) compared to net
cash provided by financing activities of NIS 31.4 million in the
corresponding period last year. Cash flows deriving from financing
activities in the first nine months of 2009 included mainly
increase in short term credit of NIS 96.2 million (U.S $ 25.6
million) and receipt of long term loans of NIS 307.5 million (U.S $
81.8 million) net of cash flows used for repayment of long term
loans of NIS 98.2 million (U.S $ 26.1 million) repayment of
convertible debentures of NIS 13.3 million (U.S $ 3.5 million)
dividend paid to minority in subsidiary in the amount of NIS 13.5
million (U.S $ 3.6 million) and paid interest of NIS 81 million
(U.S $ 21.6 million). Net Cash flows deriving from financing
activities in the first nine months of 2008 included mainly receipt
of long term loans of NIS 186.2 million and short term bank credit
of NIS 41.6 million, net of repayment of long term loans of NIS
102.6 million, interest paid of NIS 70.5 million and dividend paid
to minority in subsidiaries of NIS 22 million. NOTE A: Convenience
Translation to Dollars The convenience translation of New Israeli
Shekel (NIS) into U.S. dollars was made at the exchange rate
prevailing at September 30, 2009: U.S. $1.00 equals NIS 3.758. The
translation was made solely for the convenience of the reader. Blue
Square is a leading retailer in Israel. A pioneer of modern food
retailing in the region, Blue Square currently operates 204
supermarkets under different formats, each offering varying levels
of service and pricing. This press release contains forward-looking
statements within the meaning of safe harbor provisions of the U.S.
Private Securities Litigation Reform Act of 1995. Forward-looking
statements may include, but are not limited to, plans or
projections about our business and our future revenues, expenses
and profitability. Forward-looking statements may be, but are not
necessarily, identified by the use of forward-looking terminology
such as "may," "anticipates," "estimates," "expects," "intends,"
"plans," "believes," and words and terms of similar substance.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual events,
results, performance, circumstance and achievements to be
materially different from any future events, results, performance,
circumstance and achievements expressed or implied by such
forward-looking statements. These risks, uncertainties and other
factors include, but are not limited to, the following: the effect
of the recession in Israel on the sales in our stores and on our
profitability; our ability to compete effectively against
low-priced supermarkets and other competitors; quarterly
fluctuations in our operating results that may cause volatility of
our ADS and share price; risks associated with our dependence on a
limited number of key suppliers for products that we sell in our
stores; the effect of an increase in minimum wage in Israel on our
operating results; the effect of any actions taken by the Israeli
Antitrust Authority on our ability to execute our business strategy
and on our profitability; the effect of increases in oil, raw
material and product prices in recent years; the effects of damage
to our reputation or to the reputation to our store brands due to
reports in the media or otherwise; and other risks, uncertainties
and factors disclosed in our filings with the U.S. Securities and
Exchange Commission, including, but not limited to, risks,
uncertainties and factors identified under the heading "Risk
Factors" in our Annual Report on Form 20-F for the year ended
December 31, 2008. You are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date
of this press release. Except for our ongoing obligations to
disclose material information under the applicable securities laws,
we undertake no obligation to update the forward-looking
information contained in this press release. BLUE SQUARE - ISRAEL
LTD. CONDENSED INTERIM CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER
30, 2009 (UNAUDITED) Convenience translation(a) December September
30, September 31, 2008 2008 2009 30, 2009 __________ _________
__________ __________ Audited Unaudited __________
_________________________________ NIS U.S.dollars
___________________________________ ___________ A s s e t s In
thousands _______________________________________________ CURRENT
ASSETS: Cash and cash equivalents 95,325 313,738 445,085 118,437
Marketable securities 171,849 176,964 188,909 50,268 Bank deposits
206 650 864 230 Trade receivables 729,970 896,191 798,286 212,423
Other accounts receivable 87,624 408,558 292,066 77,718 Derivative
financial instruments - - 1,513 403 Income taxes receivable 74,446
67,339 84,520 22,491 Inventories 497,080 511,755 534,628 142,264
__________ _________ __________ __________ 1,656,500 2,375,195
2,345,871 624,234 __________ _________ __________ __________
NON-CURRENT ASSETS: Investment in associates 4,915 4,930 4,787
1,274 Derivative financial instruments 5,248 850 21,106 5,616
Prepaid expenses in respect of operating lease 192,426 195,186
189,526 50,433 Other long term receivables 1,554 4,158 1,394 371
Property and equipment, net 1,701,222 1,673,245 1,765,853 469,892
Investment property 434,232 409,297 437,354 116,379 Intangible
assets and deferred charges 404,422 345,116 402,775 107,178
Deferred taxes 44,508 36,695 43,647 11,614 __________ _________
__________ __________ 2,788,527 2,669,477 2,866,442 762,757
__________ _________ __________ __________ Total assets 4,445,027
5,044,672 5,212,313 1,386,991 __________ _________ __________
__________ BLUE SQUARE - ISRAEL LTD. CONDENSED INTERIM CONSOLIDATED
BALANCE SHEET AS OF SEPTEMBER 30, 2009 (UNAUDITED) Convenience
transla tion(a) December September 30, September 31, 2008 2008 2009
30, 2009 __________ ________ _________ __________ Audited Unaudited
U.S. dollars __________________________________________ In
thousands __________________________________________ Liabilities
and shareholders' equity CURRENT LIABILITIES: Credit and loans from
banks and others 210,901 213,739 309,643 82,396 Current maturities
of debentures and convertible debentures 25,999 21,501 75,811
20,173 Trade payables 1,006,386 1,197,281 1,199,366 319,150 Other
accounts payable *426,217 613,380 617,291 164,261 Income taxes
payable 6,933 5,846 4,061 1,081 Dividend payable - 150,000 - -
Provisions for other liabilities 43,397 36,756 42,920 11,421
__________ ________ _________ __________ 1,719,833 2,238,503
2,249,092 598,482 __________ ________ _________ __________
LONG-TERM LIABILITIES: Loans from banks, net of current maturities
341,586 339,672 542,400 144,332 Convertible debentures, net of
current maturities 130,525 134,320 141,004 37,521 Debentures, net
of current maturities 985,844 1,009,180 953,256 253,660 Other
liabilities 39,925 35,160 23,503 6,254 Derivatives financial
instruments *21,074 6,316 8,361 2,225 Liabilities in respect of
employee benefits, net 49,911 39,125 48,757 12,974 Deferred taxes
60,327 54,864 43,063 11,459 __________ ________ _________
__________ 1,629,192 1,618,637 1,760,344 468,425 __________
________ _________ __________ Total liabilities 3,349,025 3,857,140
4,009,436 1,066,907 __________ ________ _________ __________
SHAREHOLDERS' EQUITY: Share capital - Ordinary shares of NIS 1 par
value 57,094 57,094 57,438 15,284 Additional paid-in capital
1,018,405 1,018,405 1,030,259 274,151 Other reserves (261) 1,176
10,904 2,902 Accumulated deficit (154,719) (161,407) (81,089)
(21,578) __________ ________ _________ __________ 920,519 915,268
1,017,512 270,759 Minority interest 175,483 272,264 185,365 49,325
__________ ________ _________ __________ Total equity 1,096,002
1,187,532 1,202,877 320,084 __________ ________ _________
__________ Total liabilities and shareholders' equity 4,445,027
5,044,672 5,212,313 1,386,991 ========== ======== =========
========== (*) Reclassified, under the application of IAS1(R). The
company classified financial liabilities at fair value through the
statements of operations from current liabilities to long term
liabilities. BLUE SQUARE - ISRAEL LTD. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS FOR THE NINE AND THREE MONTHS PERIODS
ENDED SEPTEMBER 30, 2009 For the Year ended Three months December
Ended September 30, 31, 2008 2008 2009 __________ _________
_________ Audited Unaudited __________ ____________________ NIS
________________________________ In thousands (except share and per
share data) ________________________________ Revenues from sales,
net 7,429,121 1,936,236 1,925,473 Cost of sales 5,369,149 1,397,451
1,392,320 __________ _________ _________ Gross profit 2,059,972
538,785 533,153 Selling, general and administrative expenses
1,794,720 478,815 474,420 __________ _________ _________ Operating
profit before changes in fair value of investment property and
other gains and losses 265,252 59,970 58,733 Other gains 12,233
11,841 - Other losses 14,716 734 4,927 Changes in fair value of
investment property, net 19,06 - 6,650 __________ _________
_________ Operating profit 281,836 71,078 60,456 Finance income
60,700 10,738 18,405 Finance expenses (166,295) (60,874) (63,138)
Share in losses of associates (33) (1) (40) __________ _________
_________ Income before taxes on income 176,208 20,940 15,683 Taxes
on income (tax benefit) 43,806 8,941 (13,887) __________ _________
_________ Income for the period 132,402 11,999 29,570 ==========
========= ========= Attributable to: Equity holders of the parent
104,586 6,536 25,114 __________ _________ _________ Minority
interests 27,816 5,463 4,456 __________ _________ _________ Net
income per Ordinary share attributed to Company shareholders or
ADS: Basic 2.41 0.15 0.57 __________ _________ _________ Fully
diluted 1.62 0.15 0.49 __________ _________ _________ Weighted
average number of shares or ADS used for computation of income per
share: Basic 43,372,819 43,372,819 43,717,058 __________ _________
_________ Fully diluted 45,037,692 43,372,819 44,597,479 __________
_________ _________ For the Convenience Nine months translation(a)
Ended September 30, for the 2008 2009 nine months ended September
30, 2009 _________ _________ ____________ Unaudited Unaudited
____________________________________________ NIS U.S. dollars
____________________________________________ In thousands (except
share and per share data) Revenues from sales, net 5,675,797
5,534,212 1,472,648 Cost of sales 4,105,935 3,996,225 1,063,391
_________ _________ ____________ Gross profit 1,569,862 1,537,987
409,257 Selling, general and administrative expenses 1,348,865
1,358,401 361,469 _________ _________ ____________ Operating profit
before changes in fair value of investment property and other gains
and losses 220,997 179,586 47,788 Other gains 12,458 4,464 1,188
Other losses 3,160 10,029 2,669 Changes in fair value of investment
property, net 17,970 8,390 2,233 _________ _________ ____________
Operating profit 248,265 182,411 48,540 Finance income 41,651
46,689 12,424 Finance expenses (140,214) (138,649) (36,894) Share
in losses of associates (18) (128) (34) _________ _________
____________ Income before taxes on income 149,684 90,323 24,036
Taxes on income (tax benefit) 35,415 10,893 2,899 ____________
Income for the period 114,269 79,430 21,137 ========= =========
============ Attributable to: Equity holders of the parent 94,149
64,720 17,223 _________ _________ ____________ Minority interests
20,120 14,710 3,914 _________ _________ ____________ Net income per
Ordinary share attributed to Company shareholders or ADS: Basic
2.17 1.49 0.40 _________ _________ ____________ Fully diluted 1.85
1.49 0.40 _________ _________ ____________ Weighted average number
of shares or ADS used for computation of income per share: Basic
43,372,819 43,505,219 43,505,219 ____________ Fully diluted
45,037,693 43,505,219 43,505,219 _________ _________ ____________
(UNAUDITED) BLUE SQUARE - ISRAEL LTD. CONDENSED INTERIM
CONSOLIDATED STATEMENTS OF CASH FLOW FOR FOR THE NINE AND THREE
MONTHS PERIODS ENDED SEPTEMBER 30, 2009 (UNAUDITED) Convenience
transla tion(a) for the Year For the For the ended nine ended Nine
months Three months months December ended September 30, ended
September 30 September 31, 2008 2008 2009 2008 2009 30, 2009
________ ________ _______ _______ ______ ________ Audited Unaudited
Unaudited ________ ___________________________________ ________ NIS
U.S. dollars
___________________________________________________________ In
thousands
___________________________________________________________ CASH
FLOWS FROM OPERATING ACTIVITIES: Income before taxes on income
176,208 149,684 90,323 20,940 15,683 24,036 Income tax paid, net
(94,212) (81,773) (36,610) (33,729) (1,835) (9,742) Adjustments
required to reflect the cash flows from operating activities (a)
327,777 269,794 277,937 72,265 159,837 74,196 ________ ________
_______ _______ ______ ________ Net cash provided by operating
activities 409,773 337,705 331,650 59,476 173,685 88,490 ________
________ _______ _______ ______ ________ CASH FLOWS FROM INVESTING
ACTIVITIES: Purchase of property, plant and equipment
(211,646)(163,022)(155,653) (52,227) (63,214) (41,419) Purchase of
investment property (69,749) (36,380) (8,039) (48) (4,732) (2,139)
Purchase of minority shares in subsidiaries (186,403) (35,400)
(8,020) (35,400) - (2,134) Purchase of intangible assets (30,372)
(8,618) (13,717) - (4,525) (3,650) Proceeds from collection of
short-term bank deposits, net 102,531 101,015 (657) 589 389,343
(175) Proceeds from sale of property, plant and equipment 1,559
7,249 1,965 305 428 523 Proceeds from investment property 6,567 -
5,700 - - 1,517 Proceeds from sale of marketable securities 185,104
142,634 64,564 36,397 7,385 17,181 Investment in marketable
securities (169,747)(131,544) (73,917) (30,904) (19,578) (19,669)
Proceeds from sale of investment in subsidiary - - 10,074 - - 2,681
Interest received 17,778 12,261 8,464 8,019 2,135 2,252 ________
________ _______ _______ ______ ________ Net cash provided by (used
in) investing activities (354,378)(111,805)(169,236) (73,269)
307,242 (45,032) ________ ________ _______ _______ ______ ________
CASH FLOWS FROM FINANCING ACTIVITIES: Dividend paid to shareholders
(150,000) - - - - - Issuance of debentures 121,259 - - - - -
Dividend paid to minority shareholders of subsidiaries (22,077)
(22,077) (13,523)(10,960) (7,342) (3,598) Receipt of long-term
loans 231,398 186,221 307,500 172,512 301,000 81,826 Repayment of
long-term loans (130,571)(102,564) (98,225)(56,490) (31,864)
(26,137) Repayment of long term credit from trade payables (1,740)
(1,305) (1,305) (435) (435) (347) Repayment of convertible
debentures - - (13,297) - (13,269) (3,538) Short-term credit from
banks and others, net 15,689 41,603 96,214 24,958 (380,346) 25,603
Proceeds from exercise of options in a subsidiary - - 2,306 - - 614
Interest paid (89,244) (70,450)(81,049) (30,808) (35,170) (21,567)
________ ________ _______ _______ ______ ________ Net cash provided
by (used in) financing activities (25,286) 31,428 198,621 98,777
(167,426) 52,826 ________ ________ _______ _______ ______ ________
INCREASE IN CASH AND CASH EQUIVALENTS AND BANK OVERDRAFT 30,109
257,328 361,035 84,984 313,501 96,314 BALANCE OF CASH AND CASH
EQUIVALENTS AND BANK OVERDRAFT AT BEGINNING OF PERIOD 53,029 56,410
83,138 228,754 130,672 22,123 ________ ________ _______ _______
______ ________ BALANCE OF CASH AND CASH EQUIVALENTS AND BANK
OVERDRAFT AT END OF PERIOD 83,138 313,738 444,173 313,738 444,173
118,437 ======== ======== ======= ======= ====== ======== BLUE
SQUARE - ISRAEL LTD. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF
CASH FLOW FOR THE NINE AND THREE MONTHS PERIODS ENDED SEPTEMBER 30,
2009 (UNAUDITED) Convenience translation(a) Year For the For the
for the ended Nine months Three months nine months December ended
ended ended 31, September 30, September 30 September 30, 2008 2008
2009 2008 2009 2009 _________ ______ _______ ______ ______ _______
Audited Unaudited Unaudited _________
__________________________________ _________ NIS U.S. dollars
_______________________________________________________ In
thousands _______________________________________________________
(a) Adjustments required to reflect the cash flows from operating
activities: Income and expenses not involving cash flows:
Depreciation and amortization 153,882 117,804 123,814 41,744 45,048
32,947 Increase in fair value of investment property net (19,067)
(17,970) (8,390) - (6,650) (2,233) Share in losses of associated
Companies, net 33 18 128 1 40 34 Benefit component in grant of
employee options 8,175 5,253 8,472 2,587 2,853 2,254 Loss (gain)
from sale and disposal of property, plant and equipment and
provision for impairment of property, plant and equipment, net
5,989 (121) 3,983 104 1,787 1,060 Loss (gain) from changes in fair
value of derivative financial instruments (19,247) (8,278) (24,965)
6,350 (7,013) (6,643) Linkage differences on debentures, loans and
other long term liabilities 59,669 61,198 48,189 25,941 31,832
12,823 Capital loss (gain) from realization of investments in
subsidiaries (9,801) (10,055) 393 (11,658) - 105 Accrued severance
pay, net 263 (278) (1,154) (1,498) (862) (307) Decrease in value of
marketable securities deposit and long-term receivables, net 11,169
13,004 7,931 9,601 868 2,111 Interest paid, net 71,466 58,189
72,585 22,789 33,036 19,315 Changes in operating assets and
liabilities: Decrease (increase) in trade receivables and other
accounts receivable 59,967 (309,146) (276,601)
(248,613)(221,189)(73,603) Decreased (increase) in inventories
(43,136) (57,811) (36,985) (20,164) 155 (9,842) Increase (decrease)
in trade payables and other accounts payable 48,415 417,987 360,537
245,081 279,932 96,175 _________ ______ _______ ______ ______
_______ 327,777 269,794 277,937 72,265 159,837 74,196 =========
====== ======= ====== ====== ======= BLUE SQUARE - ISRAEL LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW FOR THE NINE
AND THREE MONTHS PERIODS ENDED SEPTEMBER 30, 2009 (UNAUDITED)
Convenience translation(a) For the For the for the Year Nine months
Three months nine months ended December ended ended ended 31,
September 30, September 30 September 30, 2008 2008 2009 2008 2009
2009 _________ _____ ______ ______ _____ _____ Audited Unaudited
Unaudited _________ ________________________________ _________ NIS
U.S. $ ______________________________________________________ In
thousands ______________________________________________________
(b) Supplementary information on investing and financing activities
not involving cash flows: Conversion of convertible debentures into
shares of subsidiaries 6,655 6,387 - 2,224 - - ======== =======
====== ======= ====== ======= Conversion of convertible debentures
into shares of the company - - 12,198 - 12,198 3,113 ========
======= ====== ======= ====== ======= Purchasing property, plant
and equipment on credit 14,797 10,169 10,201 10,169 10,201 2,714
======== ======= ====== ======= ====== ======= BLUE SQUARE - ISRAEL
LTD. SELECTED OPERATING DATA FOR THE NINE MONTH AND THREE MONTH
PERIOD ENDED SEPTEMBER 30, 2009 (UNAUDITED) Convenience
translation(a) For the nine For the three for the three months
ended months ended months ended September 30 September 30 September
30 ________________ ______________ 2008 2009 2008 2009 2009 NIS NIS
NIS NIS U.S.$ ______ ______ _____ _____ _______ (Unaudited)
______________________________________________ Sales (in millions)
5,676 5,534 1,936 1,925 512 Operating profit before changes in fair
value of investment property and other gains and losses 221 180 60
59 15.7 EBITDA (in millions) 344 312 104 107 28.4 EBITDA margin
6.1% 5.6% 5.4% 5.5% N.A Increase (decrease) in same store sales
3.1% (5.5%) 0.6% (2.5%) N.A Number of stores at end of period 194
203 194 203 N.A Stores opened during the period 9 10 4 3 N.A Stores
closed during the period - 1 - - N.A Total square meters at end of
period 356,300 364,300 356,300 364,300 N.A Square meters added
during the period, net 12,900 9,900 5,400 2,000 N.A Sales per
square meter 15,234 14,568 5,015 4,896 1,303 Sales per employee (in
724 759 235 259 69 thousands) BLUE SQUARE - ISRAEL LTD.
RECONCILIATION BETWEEN INCOME FOR THE PERIOD TO EBITDA FOR THE NINE
AND THREE MONTHS PERIODS ENDED SEPTEMBER 30, 2009 (UNAUDITED)
Conven ience transla tion(a) for the For the For the nine Year Nine
months Three months months ended ended ended ended December
September 30, September 30 September 31, 2008 2008 2009 2008 2009
30, 2009 _________ _______ ________ _______ _______ ________
Unaudited _____________________________________________________ NIS
U.S. $ ____________________________________________ ________ In
thousands _____________________________________________________
Income for the period 132,402 114,269 79,430 11,999 29,569 21,137
Taxes on income (tax benefit) 43,806 35,415 10,893 8,941 (13,885)
2,899 Finance income (60,700)(41,651) (46,689) (10,738) (18,405)
(12,424) Finance expenses 166,295 140,214 138,649 60,874 63,138
36,894 Other losses (gains) 2,483 (9,298) 5,565 (11,107) 4,927
1,481 Change in fair value of investment property (19,067) 17,970)
(8,390) - (6,650) (2,233) Depreciation and amortization 153,882
117,804 123,814 41,744 45,048 32,947 Benefit component in grant of
employee options 8,175 5,253 8,472 2,587 2,853 2,254 _________
_______ ________ _______ _______ ________ EBITDA 427,276 344,036
311,744 104,300 106,595 82,955 ========= ======= ======== =======
======= ======== Contact: Blue Square-Israel Ltd. Dror Moran, CFO
Toll-free telephone from U.S. and Canada: +1-888-572-4698 Telephone
from rest of world: +972-3-928-2220 Fax: +972-3-928-2299 Email:
DATASOURCE: Blue Square Israel Ltd CONTACT: Contact: Blue
Square-Israel Ltd., Dror Moran, CFO, Toll-free telephone from U.S.
and Canada: +1-888-572-4698, Telephone from rest of world:
+972-3-928-2220, Fax: +972-3-928-2299, Email:
Copyright
