- Revenues of NIS 1.7B with 5.1% Increase in Same Store Sales
Yields 26.2% Gross Profit, 4.8% Operating Margin and 46.3% Increase
in Net Income - ROSH HA'AYIN, Israel, May 21 /PRNewswire-FirstCall/
-- Blue Square-Israel Ltd. (NYSE and TASE: BSI) today announced
results for the first quarter ended March 31, 2007. All financial
results are reported according to Israeli GAAP (Generally Accepted
Accounting Principles). - Net income for the first quarter: NIS
42.5 million, or NIS 1.05 per ADS (NIS 0.97 per fully diluted ADS),
a 46.3% increase compared to NIS 29.1 million, or NIS 0.75 per ADS
(NIS 0.70 per fully diluted ADS), in the first quarter of 2006. -
Dividends: On April 19, 2007, the Company paid a dividend in the
amount of NIS 60 million (U.S. $14.4 million), or NIS 1.45 per
share (approximately U.S. $0.35 per ADS). - BSI's CEO, Mr. Gil
Unger, to lead the expansion of the Alon Group's retail activities
into Europe: At the Company's Board of Directors meeting held
today, Mr. Gil Unger announced that after completing nearly four
years as the Company's President and CEO, a challenging period
during which the Company completed a strategic re-organization and
achieved a significant improvement in its revenues and
profitability, he has asked the Board to reassign him to a new
challenge. He will soon begin devoting all of his efforts to the
launch of the Alon Group's retail activities in Europe. He will
continue in his present position until Blue Square's new CEO is
named, and afterwards will continue in an advisory role to help the
Company develop its strategies. Results for the First Quarter
Revenues: The Company's revenues for the first quarter of 2007
increased by 10.2% to NIS 1,693.5 million (U.S. $407.6 million)(a)
compared to NIS 1,536.7 million in the first quarter of 2006. The
growth in sales reflects the quarter's 5.1% increase in Same Store
Sales ("SSS"), the significant increase in selling space
contributed by new stores opened and the timing of the Passover
holiday, which fell in the first quarter of 2007 but the second
quarter of 2006. Gross Profit: Gross profit for the first quarter
of 2007 increased by 13.1% to NIS 443.6 million (U.S. $106.8
million) compared to NIS 392.1 million in the first quarter of
2006. This reflected the quarter's higher revenues together with
its successful pricing policies and improved supplier contract
conditions. Gross margin for the period increased to 26.2% from
25.5% in the first quarter of 2006. Selling, General, and
Administrative Expenses: The Company's Selling, General, and
Administrative expenses for the first quarter of 2007 increased by
11.3% to NIS 363.1 million (U.S. $87.4 million) compared to NIS
326.1 million in the first quarter of 2006, reflecting expenses
related to the opening of new stores during the year, an increase
in employee wages and the launch of the Company's "You" customer
loyalty club. EBITDA (Earnings before Interest, Taxes,
Depreciation, and Amortization): EBITDA for the first quarter of
2007 was NIS 113 million (U.S. $27.2 million), an increase of 14.2%
compared with NIS 99 million in the first quarter of 2006. EBITDA
margin for the quarter was 6.7% compared with 6.4% in the first
quarter of 2006. Operating Income: Operating income for the first
quarter of 2007 increased by 22% to NIS 80.5 million (U.S. $19.4
million) compared to NIS 66.0 million in the first quarter of 2006,
reflecting the increased revenues and higher gross margin for the
period. Operating margin for the period increased to 4.8% from 4.3%
in the first quarter of 2006. Financial Expenses: Financial
expenses for the first quarter of 2007 decreased by 42.8% to NIS
8.0 million (U.S. $1.9 million) compared to NIS 14.0 million in the
first quarter of 2006. This reduction is mainly due to the
reduction in the Company's average level of debt due to the IPO of
the Company's BSRE real estate subsidiary, which was completed
during the third quarter of 2006. It also reflects the effect of
the quarter's negative inflation of 0.44% on the "Known" CPI index,
a phenomenon which decreased the financial expenses associated with
the Company's index-linked loans and debentures, compared with a
0.1% increase in the "Known" CPI index in the first quarter of
2006. Taxes on Income: Taxes on income for the first quarter of
2007 were NIS 22.5 million (U.S. $5.4 million), an increase of
27.9% compared to NIS 17.6 million in 2006, representing a tax rate
of 31.0% compared to 34.3% for the first quarter of 2006. This
reflected the rise in the Company's Income before Taxes on Income,
offset partially by the reduction of the Company's nominal tax rate
in line with amendments to the Income Tax Ordinance enacted in July
2004 and August 2005. These ordinances provide for a gradual
reduction in the rate of corporate tax. As a result, the Company's
corporate tax will be reduced during the next four years as
follows: 2008 - 27%; 2009 - 26%; 2010 and thereafter - 25%. Net
Income: The Company's net income for the first quarter of 2007
increased by 46.3% to NIS 42.5 million (U.S. $10.2 million), or NIS
1.05 per ADS (U.S. $0.25) (NIS 0.97 per fully diluted ADS) compared
to NIS 29.1 million, or NIS 0.75 per ADS (NIS 0.70 per fully
diluted ADS), for the first quarter of 2006. Shareholder's Equity -
Following the IASB's issuance of Israel Accounting Standard No.16 -
"Investment Property" in February 2007, the Company has elected to
account for its investment property in accordance with the fair
value model. To account for the difference between the fair value
of the investment property as of January 1, 2007 and its
depreciated cost at that date, a charge in the amount of NIS 50.6
million (U.S. $12.2 million) net (after taxes and commitments) was
applied to Retained Earnings. - During the first quarter of 2007,
Company debentures with a par value of NIS 47.5 million were
converted into 1,582,149 shares. Accordingly, the amount of NIS
49.1 million (U.S $11.8 million) was added to Shareholder's Equity.
Other Operating Data - The Company's Same Store Sales for the first
quarter of 2007 increased by 5.1%. - Sales per square meter for the
quarter increased by 5.2% compared to the first quarter of 2006,
reaching NIS 4,978 (US $1,198) per square meter. - During the first
quarter of 2007, the Company opened two Mega stores, adding a net
total of 8,200 square meters to the chain. Comments of Management
Commenting on the results, Mr. Gil Unger, Blue Square's President
and CEO, said, "The first quarter was another period of satisfying
growth, demonstrating once again the soundness of our strategies
and the success of our execution in a marketplace that continues to
be extremely competitive. After delivering record results in 2006,
we have reported another quarter of rising revenues and profits. We
are particularly proud to have achieved a 5.1% increase in Same
Store Sales, a testament to the success of our brand management and
innovative marketing programs. In addition, we are pleased that our
economic pricing policies and efficiency measures have paid off
with an operating margin of 4.8%, a strong level according to
international standards." Mr. Unger continued, "We are continuing
with an aggressive expansion program with the goal of bringing all
three of our store formats within the shopping range of every
Israeli consumer. During the first quarter, we opened two new Mega
branches in regions where our presence had been lacking, adding
approximately 8,000 square meters to the chain, and expect to open
a total of 8-10 new stores in 2007. As part of the continued
expansion of our 'Non-Food' activities, we increased our holding in
Kfar HaSha'ashuim by an additional 10% (to a total of 60% holding)
and Kfar HaSha'ashuim acquired 86% of Verdinon Textile, a
TASE-traded home textile company. We are also pleased with the
initial success of our 'You' credit card/loyalty plan marketing
efforts and our Company-owned gas stations, both of which are
beginning to contribute to our results." Mr. Unger concluded,
"Taken as a whole, we are working to take full advantage of our
strong brands and positioning as one of Israel's leading food
retailer. Our work plan for the coming quarters includes continued
expansion, diversification and efficiency, efforts that we believe
will enable us to continue building our top line and bottom line
results for the benefit of our shareholders and the entire Blue
Square family." NOTE A: Convenience Translation to Dollars The
convenience translation of New Israeli Shekel (NIS) into U.S.
dollars was made at the rate of exchange prevailing at March 31,
2007: U.S. $1.00 equals NIS 4.155. 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 178 supermarkets under
different formats, each offering varying levels of service and
pricing. This press release may contain forward-looking statements,
within the meaning of the Private Securities Litigation Reform Act
of 1995, with respect to the Company's business, financial
condition, prospects and operating results. These statements are
based on current expectations and projections that involve a number
of risks and uncertainties. Actual results could differ materially
from those anticipated in these forward-looking statements as a
result of various factors, including risk of market acceptance, the
effect of economic conditions, the impact of competitive pricing,
supply constraints, the effect of the Company's accounting
policies, as well as certain other risks and uncertainties which
are detailed in the Company's Annual Report on Form 20-F and other
filings with the Security and Exchange Commission. Forward-looking
statements speak only as of the date on which they are made and the
Company undertakes no commitment to revise or update any forward-
looking statement in order to reflect events or circumstances after
the date any such statement is made. Contact: Blue Square-Israel
Ltd. Dror Moran, CFO Toll-free telephone from U.S. and Canada:
888-572-4698 Telephone from rest of world: 972-3-928-2220 Fax:
972-3-928-2299 Email: BLUE SQUARE - ISRAEL LTD. CONDENSED
CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2007 Convenience
translation(a) December 31, March 31 March 31, 2006 2006 2007 2007
(Audited) (Unaudited) (Unaudited) NIS U.S. dollars In thousands A s
s e t s CURRENT ASSETS: Cash and cash equivalents 186,454 20,159
127,522 30,691 Marketable securities 65,287 - 64,831 15,603 Deposit
in bank 526,459 - 531,866 128,006 Trade receivables 672,605 652,234
766,134 184,388 Other accounts receivable 119,028 252,689 290,962
70,034 Inventories 392,583 428,048 459,740 110,647 Total current
assets 1,962,416 1,353,130 2,241,055 539,369 INVESTMENTS AND LONG
TERM RECEIVABLES: Restricted deposit - 506,051 - - Investments in
associated companies 4,762 3,612 5,386 1,296 Other long-term
receivables 2,618 2,892 16,426 3,953 7,380 512,555 21,812 5,249
FIXED ASSETS, NET OF ACCUMULATED DEPRECIATION AND AMORTIZATION
**1,771,397 **1,746,661 1,753,044 421,912 INVESTMENT PROPERTY***
**222,057 **211,295 *281,149 **67,665 DEFERRED TAXES 16,789 *21,741
15,939 3,836 INTANGIBLE ASSETS AND DEFERRED CHARGES, NET **91,694
**89,157 92,399 22,238 4,071,333 3,934,539 4,405,398 1,060,269 *
Reclassified **After retrospective application of change in
accounting policy. ***As of March 31, 2007, presented based on the
fair value model and as of March 31, 2006 presented at cost. BLUE
SQUARE - ISRAEL LTD. CONDENSED CONSOLIDATED BALANCE SHEET AS OF
MARCH 31, 2007 Convenience translation(a) December 31, March 31
March 31, 2006 2006 2007 2007 (Audited) (Unaudited) (Unaudited) NIS
U.S. dollars In thousands Liabilities and shareholders' equity
CURRENT LIABILITIES: Credit and loans from banks 211,152 367,119
155,813 37,501 Current maturities of debentures 53,706 68,258
37,347 8,988 Trade payables 945,007 957,657 997,549 240,084 Other
accounts payable and accrued expenses 409,153 485,637 561,513
133,473 Dividend payable - 50,000 60,000 16,111 Total current
liabilities 1,619,018 1,928,671 1,812,222 436,157 LONG-TERM
LIABILITIES: Long-term loans from banks and other liabilities, net
of current maturities 112,574 667,074 177,422 42,701 Debentures,
net of current maturities 827,558 136,012 827,350 199,122
Convertible debentures, net of current maturities 214,794 184,365
182,089 43,824 Deferred income taxes 30,198 *25,928 42,516 12,233
Liability for employee rights, net of amount funded 35,527 31,269
35,687 8,589 Total long-term liabilities 1,220,651 1,044,648
1,265,064 306,469 MINORITY INTEREST 239,142 116,845 252,959 60,881
SHAREHOLDERS' EQUITY: Share capital - Ordinary shares of NIS 1 par
value 53,414 52,671 54,996 13,236 Additional paid-in capital
737,756 714,796 785,288 188,999 Retained earnings: Dividend
declared subsequent to balance sheet date 60,000 30,000 - -
Unappropriated 141,752 46,908 234,869 56,527 Total shareholders
equity 992,922 844,375 1,075,153 258,762 4,071,733 3,934,539
4,405,398 1,060,269 * Reclassified BLUE SQUARE - ISRAEL LTD.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTH
PERIOD ENDED MARCH 31, 2007 Convenience translation(a) for the
Three Three months months Year ended ended ended December 31, March
31, March 31, 2006 2006 2007 2007 (Audited) (Unaudited) (Unaudited)
NIS U.S. dollars In thousands (except share and per share data)
Sales 6,515,035 1,536,669 1,693,456 407,571 Cost of sales 4,812,952
1,144,611 1,249,851 300,807 Gross profit 1,702,083 392,058 443,605
106,764 Selling, general and administrative expenses 1,396,877
326,096 363,103 87,390 Operating income 305,206 65,962 80,502
19,374 Financial expenses, net 42,368 14,003 8,013 1,929 262,838
51,959 72,489 17,445 Other income (expenses), net 78,022 (710) 116
28 Income before taxes on income 340,860 51,249 72,605 17,473 Taxes
on income 96,660 17,575 22,477 5,410 Income after taxes on income
244,200 33,674 50,128 12,063 Share in profits of associated
companies, net 1,284 149 625 150 Minority interest in profits of
subsidiaries, net 31,573 4,756 8,232 (1,980) Net income for the
period 213,911 29,067 42,521 10,233 Net income per Ordinary share
or ADS: Basic 5.46 0.75 1.05 0.25 Fully diluted 4.92 0.70 0.97 0.23
Weighted average number of shares or ADS used for computation of
income per share: Basic 39,207,214 38,950,091 40,331,448 40,331,448
Fully diluted 44,939,831 44,666,545 44,996,647 44,996,647 BLUE
SQUARE - ISRAEL LTD. SELECTED OPERATING DATA Convenience
translation(a) for the three For the months three months ended
ended March 31, March 31, 2006 2007 2007(a) NIS NIS U.S.$ Sales (in
millions) 1,537 1,693 408 Operating income (in millions) 66 81 19
EBITDA (in millions) 99 113 27 EBITDA margin 6.4% 6.7% NA Increase
(decrease) in same store sales* 6.9% 5.1% NA Number of stores at
end of period 170 177 NA Stores opened during the period 2 2 NA
Stores closed during the period - - NA Total square meters at end
of period 314,800 331,504 NA Square meters added during the period,
net 2,729 8,200 NA Sales per square meter 4,731 4,978 1,198 Sales
per employee (in thousands) 237 234 56 * Compared with the same
period in the prior fiscal year. DATASOURCE: Blue Square-Israel
Ltd. CONTACT: Dror Moran, CFO, Blue Square-Israel Ltd., Toll-free
telephone from U.S. and Canada: 888-572-4698, Telephone from rest
of world: 972-3-928- 2220, Fax: 972-3-928-2299,
Copyright