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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15a-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

Report on Form 6-K dated October 29, 2002

Partner Communications Company Ltd.

(Translation of Registrant’s Name Into English)

8 Amal Street
Afeq Industrial Park
Rosh Ha’ayin 48103
Israel

(Address of Principal Executive Offices)

(Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.)

Form 20-F [X] Form 40-F [ ]

         (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): 82- _____________)

This Form 6-K is incorporated by reference into the Company’s Registration Statement on Form F-3 filed with the Securities and Exchange Commission on December 26, 2001 (Registration No. 333-14222).

Enclosure:   Press Release dated October 29, 2002 re: Partner Communications Announces Third Quarter 2002 Results; Posts Net Income of NIS 51.2 Million, Attaching the Full Financial Report.

 

 

Partner Communications Announces

Third Quarter 2002 Results;

Posts Net Income of NIS 51.2 million

Rosh Ha’ayin, Israel, October 29th, 2002 – Partner Communications Company Ltd. (NASDAQ and TASE: PTNR; LSE: PCCD) today announced its results for the third quarter ended September 30, 2002 (Q3 2002).

Highlights:

  •   Revenues for Q3 2002 rose to NIS 1,071.4 million (US$ 220.0 million), up 24% from Q3 2001.
 
  •   EBITDA for Q3 2002 rose to NIS 291.8 million (US$ 59.9 million), up 53% from Q3 2001.
 
  •   Operating income for Q3 2002 rose to NIS 162.4 million (US$ 33.3 million) up from NIS 48.2 million in Q3 2001.
 
  •   Net income for Q3 2002 rose to NIS 51.2 million (US$ 10.5 million) compared to a net loss of NIS 88.2 million in Q3 2001.
 
  •   Subscriber base rose to 1,758,000, compared to 1,300,000 at the end of Q3 2001.
 
  •   Market share increased to an estimated 28%, up from 25% in Q3 2001.
 
  •   ARPU and average minutes of use per subscriber continued to be stable. ARPU at NIS 187 (US$ 38.4) and 279 minutes of use compared to ARPU of NIS 185 and 284 minutes of use in Q2 2002.
 
  •   Average cost of acquiring a new subscriber was NIS 495 (US$ 101.7) as compared to NIS 463 in Q2 2002.

Commenting on Q3 2002 results, Amikam Cohen, Partner’s CEO said: “We are delighted to report that despite the economic slowdown, the competition in the cellular market, and the political tension, we continued the trend of growing our top line revenues and profitability. Our strong marketing, customer service, network strategies and our dedication to offering our customers attractive rate plans, a wide range of handsets, worldwide services and an expanding variety of value added services, enabled us to achieve our performance goals.”

 

 

Financial Review

Revenues for Q3 2002, driven primarily by subscriber growth, grew to NIS 1,071.4 million (US$ 220.0 million) from NIS 867.3 million in Q3 2001, an increase of 24%, and from NIS 991.6 million in Q2 2002, an increase of 8%.

Cost of revenues for Q3 2002 increased to NIS 804.5 million (US$ 165.2 million), from NIS 699.0 million in Q3 2001, an increase of 15%, and from NIS 742.6 million in Q2 2002, an increase of 8%. The increase in cost of revenues was driven primarily by higher interconnect charges related to increased usage as well as by increased retention activities.

Selling and marketing expenses for Q3 2002 were NIS 68.1 million (US$ 14.0 million), down from NIS 81.0 million in Q3 2001, a decrease of 16%. Compared to Q2 2002, selling and marketing expenses were lower by NIS 8.0 million or 10.5%.

General and administrative expenses for Q3 2002 were NIS 36.4 million (US$ 7.5 million), down from NIS 39.2 million in Q3 2001, a decrease of 7%, and up from NIS 34.9 million in Q2 2002, an increase of 4%.

Operating income for Q3 2002 increased to NIS 162.4 million (US$ 33.3 million), from NIS 48.2 million in Q3 2001, an increase of 237% and from NIS 138.0 million in Q2 2002, an increase of 18%. Operating income for Q3 2002 as a percentage of revenues was 15% as compared to 6% in Q3 2001 and 14% in Q2 2002. The increases in operating and net income from Q3 2001 are due in part to the decrease in license amortization charges (approximately NIS 30 million) resulting from the extension of the Company’s license to 2022.

 

 

EBITDA for Q3 2002 was NIS 291.8 million (US$ 59.9 million), an increase of NIS 100.8 million from NIS 191.0 million in Q3 2001 and an increase of NIS 25 million from NIS 266.8 million in Q2 2002. EBITDA as a percentage of revenues increased to 27.2% up from 22.0% in Q3 2001 and slightly higher than the EBITDA percentage achieved in Q2 2002, 26.9%.

Financial expenses for Q3 2002 were NIS 111.1 million (US$ 22.8 million), compared to NIS 127.5 million in Q3 2001, a decrease of NIS 16.4 million, and down from NIS 112.7 million in Q2 2002. Financial expenses were lower than Q3 2001 primarily due to the lower quarterly devaluation of the shekel (2.1% vs. 4.6% in Q3 2001).

Net income for Q3 2002 was NIS 51.2 million (US$ 10.5 million) or NIS 0.28 per ADS, or per share traded on the Tel Aviv Stock Exchange compared to a loss of NIS 88.2 million or NIS 0.49 per ADS for Q3 2001. Net income for this quarter was twice that of the previous quarter (NIS 25.2 million).

Funding Review

In Q3 2002, cash flow from operating activities net of investing activities was NIS 24.4 million (US$ 5.0 million), compared to negative cash flow of NIS 46.6 million in Q3 2001 and positive cash flow of NIS 80.4 million in Q2 2002. The decrease in cash flow in the current quarter compared to Q2 2002 is primarily due to the semi-annual interest payment on our 13% subordinated US Dollar denominated notes.

Capital expenditures, excluding license, were NIS 124.3 million (US$ 25.5 million) in Q3 2002, down from NIS 184.4 million in Q2 2002. Current capital expenditures are focused on increasing capacity and maintaining network quality.

As of the end of Q3 2002, the US dollar equivalent of $531 million was drawn from our $750 million bank facility, leaving the Company with additional availability of $219 million.

 

 

Commenting on the Company’s financial performance and funding situation, Alan Gelman, Partner’s Chief Financial Officer said; “We continued to improve across a broad range of financial and operating parameters, growing our revenues and operating income and generating free cash flow. Since we are generating free cash flow and have substantial availability within our bank facility, we are confident that we have sufficient resources to satisfy our investment requirements for our 3G network.”

Operational Review

During the quarter the Company’s net subscribers increased by 55,000 (43,000 post-paid subscribers and 12,000 prepaid subscribers).

The Company decided to refine its criteria for reporting active subscribers. Starting in Q3 2002, instead of including in churn only those subscribers who have not generated revenue for the Company for a period of the last six consecutive months, the Company will also include in churn those subscribers who have generated revenue for the Company in this period, where the only revenue generated by these subscribers was from incoming calls directed to their voice mail. This change caused a reduction in the reported number of active subscribers for Q3 2002 of 41,000 subscribers. Some of the additional churn provided for, relates to periods prior to Q3 2002.

The Company’s subscriber base reached 1,758,000 subscribers (1,244,000 post- paid and 514,000 prepaid), compared to 1,300,000 at the end of the third quarter of 2001 and 1,703,000 at the end of the second quarter of 2002. The application of the refined criteria for churn raised the Q3 2002 churn rate to 4.7%, instead of 2.3% if the refinement had not been made.

The Company’s market share was approximately 28% of the number of all cellular subscribers in Israel, up from 25% at the end of Q3 2001.

 

 

Average monthly usage per subscriber for the quarter was 279 minutes as compared to 316 minutes per month for Q3 2001, and 284 minutes per month for Q2 2002. Average monthly revenue per user (ARPU) was NIS 187 (US$ 38.4) as compared to NIS 213 per month for Q3 2001 and NIS 185 for the Q2 2002.

The average cost of acquiring new subscribers (SAC) in Q3 2002 was NIS 495 (US$ 101.7) as compared to NIS 395 in Q3 2001 and NIS 463 for Q2 2002. The Company expenses in full all subscriber acquisition and customer retention costs.

With regard to the outlook for Q4, Mr. Gelman stated: “We are seeing signs of the economic slowdown affecting consumer spending in our industry. Seasonal factors in Q4 2002 along with the continuing economic slowdown are likely to affect our top line revenues in Q4 2002. Therefore, we expect Q4 2002 revenues to be slightly lower than Q3 2002 revenues. In addition, we expect higher selling and marketing expenses driven by increasing competition, in line with the levels of the previous four quarters. Consequently, we expect lower operating income and net income in Q4 2002.”

Mr. Gelman added: “In accordance with the regulations mandated by the Israel Ministry of Communications, incoming call termination tariffs will be reduced by 10% beginning January 1st 2003 (from NIS 0.50 to NIS 0.45 per minute). This reduction will impact our top line revenues”.

Regarding the refinement of the Company’s churn policy, the Company expects its Q4 2002 churn rate to be below the level of 3%. Therefore, the Company expects its annual churn rate for 2002 to be approximately 10%, in line with guidance previously given.

 

 

Conference Call Details

Partner Communications will hold a conference call to discuss the company’s third quarter on Tuesday, October 29th, 2002, at 17:00 Israel local time (10:00 a.m. Eastern Daylight time). This conference call will be broadcasted live over the Internet and can be accessed by all interested parties through our investors’ web site at http://investors.partner.co.il. To listen to the broadcast, please go to the web site at least 15 minutes prior to the start of the call to register, download, and install any necessary audio software. For those unable to listen to the live broadcast, an archive of the call will be available shortly after the call ends via the Internet (at the same location as the live broadcast) until midnight on November 5th 2002.

About Partner Communications

Partner Communications Company Ltd. is the first Global System for Mobile Communications, or GSM, mobile telephone network operator in Israel. The Company commenced full commercial operations in January 1999 under the international orange™ brand name and, through its network, provides quality of service and a range of features to more than 1.750 million subscribers in Israel. Partner subscribers can use roaming services in 103 destinations using 246 GSM networks. The Company has been awarded a 3G license in 2002. Partner’s ADSs are quoted on NASDAQ under the symbol PTNR and on the London Stock Exchange (LSE) under the symbol PCCD. Its shares are quoted on the Tel Aviv Stock Exchange (TASE) under the symbol PTNR. (For further information: http://investors.partner.co.il).

Notes: Some of the information in this release contains forward-looking statements that involve risks and uncertainties within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about us.

Words such as “believe,” “anticipate,” “expect,” “intend,” “seek,” “will,” “plan,” “could,” “may,” “project,” “goal,” “target,” and similar expressions often identify forward-looking statements but are not the only way we identify these statements. Because such statements involve risks and uncertainties, actual results may differ materially from the results currently expected. Factors that could cause such differences include, but are not limited to:

  •   Uncertainties about the degree of growth in the number of consumers using wireless personal communications services and in the number of residents;
 
  •   The risks associated with the implementation of a third-generation network and business strategy, including risks relating to the operations of new systems and technologies, substantial expenditures required and potential unanticipated costs, uncertainties regarding the adequacy of suppliers on whom we must rely to provide both network and consumer equipment and consumer acceptance of the products and services to be offered;

 

 

  •   The impact of existing and new competitors in the market in which we compete, including competitors that may offer less expensive products and services, desirable or innovative products, technological substitutes, or have extensive resources or better financing;
 
  •   The introduction or popularity of new products and services, including pre-paid phone products, which could increase churn;
 
  •   The effects of vigorous competition in the market in which we operate and for more valuable customers, which may decrease prices charged, increase churn and change the customer mix, profitability and average revenue per user;
 
  •   The availability and cost of capital and the consequences of increased leverage;
 
  •   The risks and costs associated with the need to acquire additional spectrum for current and future services;
 
  •   The risks associated with technological requirements, technology substitution and changes and other technological developments;
 
  •   Fluctuations in exchange rates;
 
  •   The results of litigation filed or to be filed against us; and
 
  •   The possibility of the market in which we compete being impacted by changes in political, economic or other factors, such as monetary policy, legal and regulatory changes or other external factors over which we have no control;
 
  •   As well as the risk factors specified under the heading “Risk Factors” in our 2001 annual report on Form 20F filed with the SEC on April 30, 2002.

The financial statements set forth below should be read in conjunction with the financial statements of Partner Communications for the quarter ended September 30th, 2002 and notes thereto that have been filed concurrently to the U.S. Securities and Exchange Commission on form 6-K.

The attached summary financial statements are prepared in accordance with U.S. GAAP.

The convenience translations of the Nominal New Israeli Shekel (NIS) figures into US Dollars were made at the rate of exchange prevailing at September 30th, 2002: US $1.00 equals NIS 4.871. The translations were made purely for the convenience of the reader.

Earnings before interest, taxes, depreciation, amortization, exceptional items and capitalization of intangible assets (‘EBITDA’) is presented because it is a measure commonly used in the telecommunications industry and is presented solely in order to improve the understanding of the Company’s operating results and to provide further perspective on these results. EBITDA, however, should not be considered as an alternative to operating income or income for the year as an indicator of the operating performance of the Company. Similarly, EBITDA should not be considered as an alternative to cash flows from operating activities as a measure of liquidity. EBITDA is not a measure of financial performance under generally accepted accounting principles and may not be comparable to other similarly titled measures for other companies. EBITDA

 

 

may not be indicative of the historic operating results of the Company; nor is it meant to be predictive of potential future results.

 

 

Contacts:

     
Mr. Alan Gelman
Chief Financial Officer
Tel: +972-67-814951
Fax:+972-67-815961
E-mail:alan.gelman@orange.co.il		   Dr. Dan Eldar
V.P. Carrier, Investor and International Relations
Tel:+972-67-814151
Fax:+972-67-814161
E-mail:dan.eldar@orange.co.il

 

 

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

CONDENSED CONSOLIDATED BALANCE SHEETS

                                         
                            Convenience translation into
            New Israeli shekels   U.S. dollars
           
 
            September 30,   December 31,   September 30,   December 31,
            2002   2001   2002   2001
           
 
 
 
            (Unaudited)   (Audited)   (Unaudited)   (Audited)
           
 
 
 
            In thousands
           
     
Assets
                                
CURRENT ASSETS:
                                
 
Cash and cash equivalents
     3,143       5,272       645       1,082  
 
Accounts receivable:
                                
   
Trade
     526,192       458,434       108,025       94,115  
   
Other
     62,167       42,930       12,763       8,813  
 
Inventories
     119,873       124,512       24,610       25,562  
 
 
    
     
     
     
 
       
Total current assets
     711,375       631,148       146,043       129,572  
 
 
    
     
     
     
 
INVESTMENTS AND LONG -TERM RECEIVABLES:
                                
 
Non-marketable securities
     3,530       8,244       725       1,692  
 
Security deposit
     110,849       100,869       22,757       20,708  
 
Accounts receivables — trade
             3,696               759  
 
Funds in respect of employee rights upon retirement
     38,379       28,160       7,879       5,781  
 
 
    
     
     
     
 
 
     152,758       140,969       31,361       28,940  
 
 
    
     
     
     
 
FIXED ASSETS, net of accumulated depreciation and amortization
     1,862,697       1,749,052       382,405       359,075  
 
 
    
     
     
     
 
LICENSE AND DEFERRED CHARGES, net of amortization
     1,279,520       1,112,959       262,681       228,487  
 
 
    
     
     
     
 
 
     4,006,350       3,634,128       822,490       746,074  
 
 
    
     
     
     
 

 

 

                                         
                            Convenience translation into
            New Israeli shekels   U.S. dollars
           
 
            September 30,   December 31,   September 30,   December 31,
            2002   2001   2002   2001
           
 
 
 
            (Unaudited)   (Audited)   (Unaudited)   (Audited)
           
 
 
 
            In thousands
           
   
Liabilities net of capital deficiency
                                
CURRENT LIABILITIES:
                                
 
Current maturities of long-term loans
             483,897               99,342  
 
Accounts payable and accruals:
                                
     
Trade
     503,748       524,642       103,418       107,707  
     
Other
     182,781       186,165       37,524       38,219  
 
 
    
     
     
     
 
       
Total current liabilities
     686,529       1,194,704       140,942       245,268  
 
 
    
     
     
     
 
LONG-TERM LIABILITIES:
                                
 
Bank loans, net of current maturities
     2,542,628       1,818,066       521,993       373,243  
 
Notes payable
     852,425       772,800       175,000       158,653  
 
Liability for employee rights upon retirement
     54,600       42,334       11,209       8,691  
 
 
    
     
     
     
 
       
Total long-term liabilities
     3,449,653       2,633,200       708,202       540,587  
 
 
    
     
     
     
 
       
Total liabilities
     4,136,182       3,827,904       849,144       785,855  
 
 
    
     
     
     
 
CAPITAL DEFICIENCY:
                                
 
Share capital — ordinary shares of NIS 0.01 par value: authorized — December 31, 2001 - 200,000,000 shares and September 30, 2002 - 235,000,000 shares;
                                
     
issued and outstanding — December 31, 2001 - 178,924,585 shares and September 30, 2002 - 181,422,564 shares
     1,814       1,789       372       367  
 
Capital surplus
     2,292,872       2,298,080       470,719       471,788  
 
Deferred compensation
     (8,859 )     (24,362 )     (1,819 )     (5,001 )
 
Accumulated deficit
     (2,415,659 )     (2,469,283 )     (495,926 )     (506,935 )
 
 
    
     
     
     
 
       
Total capital deficiency
     (129,832 )     (193,776 )     (26,654 )     (39,781 )
 
 
    
     
     
     
 
 
     4,006,350       3,634,128       822,490       746,074  
 
 
    
     
     
     
 

 

 

PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                                       
                                          Convenience
                                          translation into
          New Israeli shekels   U.S. dollars
         
 
          9 month   3 month   9 month   3 month
          period ended   period ended   period ended   period ended
          September 30,   September 30,   September   September
         
 
  30,   30,
          2002   2001   2002   2001   2002   2002
         
 
 
 
 
 
          (Unaudited)
         
          In thousands (except net income (loss) per share data)
         
REVENUES — net
     2,992,441       2,368,318       1,071,385       867,323       614,338       219,952  
COST OF REVENUES
     2,260,867       1,989,819       804,526       698,984       464,148       165,166  
 
    
     
     
     
     
     
 
GROSS INCOME
     731,574       378,499       266,859       168,339       150,190       54,786  
SELLING AND MARKETING EXPENSES
     222,810       215,453       68,085       80,956       45,742       13,978  
GENERAL AND ADMINISTRATIVE EXPENSES
     104,652       114,473       36,392       39,184       21,485       7,471  
 
    
     
     
     
     
     
 
OPERATING INCOME
     404,112       48,573       162,382       48,199       82,963       33,337  
FINANCIAL EXPENSES - net
     346,434       312,355       111,137       127,533       71,122       22,816  
LOSS ON IMPAIRMENT OF INVESTMENTS IN NON- MARKETABLE SECURITIES
     4,054       8,862               8,862       832          
 
    
     
     
     
     
     
 
NET INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLES
     53,624       (272,644 )     51,245       (88,196 )     11,009       10,521  
CUMULATIVE EFFECT, AT BEGINNING OF YEAR, OF A CHANGE IN ACCOUNTING PRINCIPLES
             3,483                                  
 
    
     
     
     
     
     
 
NET INCOME (LOSS) FOR THE PERIOD
     53,624       (269,161 )     51,245       (88,196 )     11,009       10,521  
 
    
     
     
     
     
     
 
NET INCOME (LOSS) PER SHARE :
                                                
 
Basic:
                                                
     
Before cumulative effect
     0.30       (1.52 )     0.28       (0.49 )     0.06       0.06  
     
Cumulative effect
             0.02                                  
 
    
     
     
     
     
     
 
     
Net income (loss)
     0.30       (1.50 )     0.28       (0.49 )     0.06       0.06  
 
    
     
     
     
     
     
 
   
Diluted — Net income (loss)
     0.29       (1.50 )     0.28       (0.49 )     0.06       0.06  
 
    
     
     
     
     
     
 
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING — in thousands:
                                                
   
Basic
     179,468,941       178,903,982       180,522,524       178,918,199       179,468,941       180,522,524  
 
    
     
     
     
     
     
 
   
Diluted
     183,394,227       178,903,982       183,382,954       178,918,199       183,394,227       183,382,954  
 
    
     
     
     
     
     
 

 

 

PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                               
                          Convenience
                          translation into
          New Israeli shekels   U.S. dollars
         
 
          9 month period   9 month
          ended   period ended
          September 30,   September 30,
         
   
          2002   2001   2002
         
 
 
          (Unaudited)   (Unaudited)
         
 
          In thousands   In thousands
         
 
CASH FLOWS FROM OPERATING ACTIVITIES:
                        
Net income (loss) for the period
     53,624       (269,161 )     11,009  
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
                        
   
Depreciation and amortization
     377,969       392,680       77,596  
   
Loss on impairment of investments in non-marketable securities
     4,054       8,862       832  
   
Amortization of deferred compensation related to employee stock option grants, net
     6,483       16,390       1,330  
   
Liability for employee rights upon retirement
     12,266       11,273       2,518  
   
Accrued interest and exchange and linkage differences on long-term liabilities
     113,277       46,177       23,255  
   
Accrued interest and exchange differences on security deposit
     (9,980 )     (5,180 )     (2,049 )
   
Amount carried to deferred charges
             (22 )        
   
Sundry
     1,248       665       256  
Changes in operating assets and liabilities:
                        
   
Increase in accounts receivable:
                        
     
Trade
     (64,062 )     (131,984 )     (13,148 )
     
Other
     (19,237 )     (3,655 )     (3,950 )
   
Increase (decrease) in accounts payable and accruals:
                        
     
Trade
     95       (18,822 )     20  
     
Other
     (2,026 )     48,465       (416 )
   
Decrease in inventories
     4,639       41,752       951  
 
    
     
     
 
Net cash provided by operating activities
     478,350       137,440       98,204  
 
    
     
     
 
CASH FLOWS FROM INVESTING ACTIVITIES:
                        
Purchase of fixed assets
     (472,294 )     (411,863 )     (96,960 )
Proceeds from sale of fixed assets
     3,932       1,246       807  
Investment in non-marketable securities
             (16,446 )        
Purchase of additional spectrum
     (207,635 )             (42,627 )
Funds in respect of employee rights upon retirement
     (10,219 )     (7,532 )     (2,098 )
 
    
     
     
 
Net cash used in investing activities
     (686,216 )     (434,595 )     (140,878 )
 
    
     
     
 
CASH FLOWS FROM FINANCING ACTIVITIES:
                        
   
Proceeds from exercise of stock options granted to employees
     3,837       42       788  
   
Long-term bank loans received
     1,349,326       1,207,119       277,012  
   
Repayment of long term bank loans
     (1,147,426 )     (901,000 )     (235,563 )
 
    
     
     
 
   
Net cash provided by financing activities
     205,737       306,161       42,237  
 
    
     
     
 
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
     (2,129 )     9,006       (437 )
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
     5,272       869       1,082  
 
    
     
     
 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
     3,143       9,875       645  
 
    
     
     
 
Supplementary information on investing activities not involving cash flows
                        

At September 30, 2002, trade payables include NIS 119,981,000 ($24,632,000) (unaudited) in respect of acquisition of fixed assets. This balance will be given recognition in these statements upon payment.

 

 

PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
RECONCILIATION OF EBITDA

                                                   
                                      Convenience   Convenience
                                      translation   translation
                                      into   into
      New Israeli shekels*   New Israeli shekels*   U.S. dollars**   U.S. dollars**
     
 
 
 
                                      9 month   3 month
                                      period   period
      9 month period ended   3 month period ended   ended   ended
      September 30   September 30   September 30   September 30
     
 
 
 
      2002   2001   2002   2001   2002   2002
     
 
 
 
 
 
      In thousands
     
 
Net Income (loss)
     53,624       (269,161 )     51,245       (88,196 )     11,009       10,521  
Adjustments required to reconcile EBITDA:
                                                
 
Financial expenses***
     341,060       306,992       109,321       125,728       70,019       22,443  
 
Depreciation and amortization
     377,969       392,680       128,976       137,462       77,596       26,478  
 
Amortization of stock option granted to employees
     6,483       16,390       136       7,154       1,330       28  
 
capital loss
     1,248               2,094               256       430  
 
Loss on impairment
     4,054       8,862               8,862       832          
 
Implementation of FAS 133****
             (3,483 )                                
 
 
    
     
     
     
     
     
 
 
EBITDA
     784,438       452,280       291,772       191,010       161,042       59,900  
 
 
    
     
     
     
     
     
 

*   The financial statements have been prepared on the basis of historical cost.
**   The convenience translation of the New Israeli Shekel (NIS) figures into US dollars was made at the exchange prevailing at September 30, 2002: US $1.00 equals NIS 4.871.
***   Financial expenses excluding any charge for the amortization of pre-launch financial costs, which are included in other depreciation and amortization charges stated above.
****   Cumulative effect, at beginning of year, of a change in accounting principles.

 

 

PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

                                   
      New Israeli shekels
      3 month period ended
     
      December 31   March 31   June 30   September 30,
      2001   2002   2002   2002
     
 
 
 
      (Unaudited)
     
      In thousands
     
REVENUES — net
     881,031       929,490       991,566       1,071,385  
COST OF REVENUES
     729,344       713,699       742,642       804,526  
 
    
     
     
     
 
GROSS INCOME
     151,687       215,791       248,924       266,859  
 
SELLING AND MARKETING EXPENSES
     77,507       78,633       76,092       68,085  
 
GENERAL AND ADMINISTRATIVE EXPENSES
     19,809       33,399       34,861       36,392  
 
    
     
     
     
 
OPERATING INCOME
     54,371       103,759       137,971       162,382  
FINANCIAL EXPENSES - net
     88,572       122,559       112,738       111,137  
LOSS ON IMPAIRMENT OF INVESTMENT IN MARKETABLE SECURITIES
             4,054                  
 
    
     
     
     
 
NET INCOME (LOSS) FOR THE PERIOD
     (34,201 )     (22,854 )     25,233       51,245  
 
    
     
     
     
 

 

 

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

Summary Operating Data

                   
      September 30,   September 30,
      2001   2002
     
 
Subscribers (in thousands)
     1,300       1,758  
Estimated share of total Israeli mobile telephone subscribers
     25 %     28 %
Churn rate in quarter
     1.7 %     4.7 %
Average monthly usage in quarter per subscriber (minutes)
     316       279  
 
Usage for Business subscribers
     N.A       533  
 
Usage for private subscribers
     N.A       257  
 
Usage for pre-paid subscribers
     N.A       160  
Average monthly revenue in quarter per subscriber, including in-roaming revenue (NIS)
     213       187  
 
ARPU for Business subscribers
     N.A       347  
 
ARPU for private subscribers
     N.A       172  
 
ARPU for pre-paid subscribers
     N.A       131  
Number of operational base stations (in parenthesis number of micro sites out of total number of base stations)
     1778  (657)     1986  (710)
Subscriber acquisition costs in quarter per subscriber (NIS)
     395       495  
Number of employees (full-time equivalent)
     2,517       2,648  

 

 

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

INTERIM FINANCIAL STATEMENTS

AT SEPTEMBER 30, 2002

(Unaudited)

 

 

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

CONDENSED CONSOLIDATED BALANCE SHEETS

                                       
                          Convenience translation into
          New Israeli shekels   U.S. dollars (see note 2b)
         
 
          September 30,   December 31,   September 30,   December 31,
          2002   2001   2002   2001
         
 
 
 
          (Unaudited)   (Audited)   (Unaudited)   (Audited)
         
 
 
 
          In thousands
         
Assets
                                
CURRENT ASSETS:
                                
 
Cash and cash equivalents
     3,143       5,272       645       1,082  
 
Accounts receivable:
                                
   
Trade
     526,192       458,434       108,025       94,115  
   
Other
     62,167       42,930       12,763       8,813  
 
Inventories
     119,873       124,512       24,610       25,562  
 
 
    
     
     
     
 
     
Total current assets
     711,375       631,148       146,043       129,572  
 
 
    
     
     
     
 
INVESTMENTS AND LONG -TERM RECEIVABLES:
                                
 
Non-marketable securities
     3,530       8,244       725       1,692  
 
Security deposit
     110,849       100,869       22,757       20,708  
 
Accounts receivables — trade
             3,696               759  
 
Funds in respect of employee rights upon retirement
     38,379       28,160       7,879       5,781  
 
 
    
     
     
     
 
 
     152,758       140,969       31,361       28,940  
 
 
    
     
     
     
 
FIXED ASSETS, net of accumulated depreciation and amortization
     1,862,697       1,749,052       382,405       359,075  
 
 
    
     
     
     
 
LICENSE AND DEFERRED CHARGES, net of amortization (note 1)
     1,279,520       1,112,959       262,681       228,487  
 
 
    
     
     
     
 
 
     4,006,350       3,634,128       822,490       746,074  
 
 
    
     
     
     
 

         Date of approval of the financial statements: October 29, 2002.

     
 
Amikam Cohen
Chief Executive Officer		    
Alan Gelman
Chief Financial Officer

 

 

                                       
                          Convenience translation into
          New Israeli shekels   U.S. dollars (see note 2b)
         
 
          September 30,   December 31,   September 30,   December 31,
          2002   2001   2002   2001
         
 
 
 
          (Unaudited)   (Audited)   (Unaudited)   (Audited)
         
 
 
 
          In thousands
         
Liabilities net of capital deficiency
                                
CURRENT LIABILITIES:
                                
 
Current maturities of long-term loans (note 3)
             483,897               99,342  
 
Accounts payable and accruals:
                                
   
Trade
     503,748       524,642       103,418       107,707  
   
Other
     182,781       186,165       37,524       38,219  
 
 
    
     
     
     
 
     
Total current liabilities
     686,529       1,194,704       140,942       245,268  
 
 
    
     
     
     
 
LONG-TERM LIABILITIES:
                                
 
Bank loans, net of current maturities (note 3)
     2,542,628       1,818,066       521,993       373,243  
 
Notes payable
     852,425       772,800       175,000       158,653  
 
Liability for employee rights upon retirement
     54,600       42,334       11,209       8,691  
 
 
    
     
     
     
 
     
Total long-term liabilities
     3,449,653       2,633,200       708,202       540,587  
 
 
    
     
     
     
 
     
Total liabilities
     4,136,182       3,827,904       849,144       785,855  
 
 
    
     
     
     
 
CAPITAL DEFICIENCY:
                                
 
Share capital — ordinary shares of NIS 0.01 par value: authorized — December 31, 2001 - 200,000,000 shares and September 30, 2002 - 235,000,000 shares;
issued and outstanding — December 31, 2001 - 178,924,585 shares and September 30, 2002 - 181,422,564 shares
     1,814       1,789       372       367  
 
Capital surplus
     2,292,872       2,298,080       470,719       471,788  
 
Deferred compensation
     (8,859 )     (24,362 )     (1,819 )     (5,001 )
 
Accumulated deficit
     (2,415,659 )     (2,469,283 )     (495,926 )     (506,935 )
 
 
    
     
     
     
 
     
Total capital deficiency
     (129,832 )     (193,776 )     (26,654 )     (39,781 )
 
 
    
     
     
     
 
 
     4,006,350       3,634,128       822,490       746,074  
 
 
    
     
     
     
 

The accompanying notes are an integral part of these condensed financial statements.

 

 

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                                       
                                          {Convenience translation into}
          New Israeli shekels   U.S. dollars (see note 2b)
         
 
          9 month   3 month   9 month   3 month
          period ended   period ended   period ended
          September 30,   September 30,   September 30,
         
 
 
          2002   2001   2002   2001   2002   2002
         
 
 
 
 
 
          (Unaudited)
         
          In thousands (except net income (loss) per share data)
         
REVENUES — net
     2,992,441       2,368,318       1,071,385       867,323       614,338       219,952  
COST OF REVENUES
     2,260,867       1,989,819       804,526       698,984       464,148       165,166  
 
    
     
     
     
     
     
 
GROSS INCOME
     731,574       378,499       266,859       168,339       150,190       54,786  
SELLING AND MARKETING EXPENSES
     222,810       215,453       68,085       80,956       45,742       13,978  
GENERAL AND ADMINISTRATIVE EXPENSES
     104,652       114,473       36,392       39,184       21,485       7,471  
 
    
     
     
     
     
     
 
OPERATING INCOME
     404,112       48,573       162,382       48,199       82,963       33,337  
FINANCIAL EXPENSES - net
     346,434       312,355       111,137       127,533       71,122       22,816  
LOSS ON IMPAIRMENT OF INVESTMENTS IN NON-MARKETABLE SECURITIES
     4,054       8,862               8,862       832          
 
    
     
     
     
     
     
 
NET INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLES
     53,624       (272,644 )     51,245       (88,196 )     11,009       10,521  
CUMULATIVE EFFECT, AT BEGINNING OF YEAR, OF A CHANGE IN ACCOUNTING PRINCIPLES
             3,483                                  
 
    
     
     
     
     
     
 
NET INCOME (LOSS) FOR THE PERIOD
     53,624       (269,161 )     51,245       (88,196 )     11,009       10,521  
 
    
     
     
     
     
     
 
NET INCOME (LOSS) PER SHARE :
                                                
 
Basic:
                                                
     
Before cumulative effect
     0.30       (1.52 )     0.28       (0.49 )     0.06       0.06  
     
Cumulative effect
             0.02                                  
 
    
     
     
     
     
     
 
     
Net income (loss)
     0.30       (1.50 )     0.28       (0.49 )     0.06       0.06  
 
    
     
     
     
     
     
 
   
Diluted — Net income (loss)
     0.29       (1.50 )     0.28       (0.49 )     0.06       0.06  
 
    
     
     
     
     
     
 
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING — in thousands:
                                                
   
Basic
     179,468,941       178,903,982       180,522,524       178,918,199       179,468,941       180,522,524  
 
    
     
     
     
     
     
 
   
Diluted
     183,394,227       178,903,982       183,382,954       178,918,199       183,394,227       183,382,954  
 
    
     
     
     
     
     
 

The accompanying notes are an integral part of these condensed financial statements.

 

 

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

CONDENSED CONSOLIDATED STATEMENT

OF CHANGES IN CAPITAL DEFICIENCY

                                           
      Share   Capital   Deferred   Accumulated        
      Capital   Surplus   Compensation   Deficit   Total
     
 
 
 
 
      In thousands
     
New Israeli shekels (note 2b)
                                        
BALANCE AT JANUARY 1, 2002 (audited)
     1,789       2,298,080       (24,362 )     (2,469,283 )     (193,776 )
CHANGES DURING THE 9 MONTHS ENDED SEPTEMBER 30, 2002 (unaudited):
                                        
 
Exercise of options granted to employees
     25       3,812                       3,837  
 
Amortization of deferred compensation related to employee stock option grants, net of deferred compensation with respect to employee stock options forfeited
             (9,020 )     15,503               6,483  
 
Net income for the period
                             53,624       53,624  
 
    
     
     
     
     
 
BALANCE AT SEPTEMBER 30, 2002 (unaudited)
     1,814       2,292,872       (8,859 )     (2,415,659 )     (129,832 )
 
    
     
     
     
     
 
Convenience translation into U.S. dollars (note 2b)
                                        
BALANCE AT JANUARY 1, 2002 (audited)
     367       471,788       (5,001 )     (506,935 )     (39,781 )
CHANGES DURING THE 9 MONTHS ENDED SEPTEMBER 30, 2002 (unaudited):
                                        
 
Exercise of options granted to employees
     5       783                       788  
 
Amortization of deferred compensation related to employee stock option grants, net of deferred compensation with respect to employee stock options forfeited
             (1,852 )     3,182               1,330  
 
Net income for the period
                             11,009       11,009  
 
    
     
     
     
     
 
BALANCE AT SEPTEMBER 30, 2002 (unaudited)
     372       470,719       (1,819 )     (495,926 )     (26,654 )
 
    
     
     
     
     
 

The accompanying notes are an integral part of these condensed financial statements.

 

 

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 
                            Convenience
                            translation into
                            U.S. dollars
            New Israeli shekels   (see note 2b)
           
 
            9 month period   9 month
            ended   period ended
            September 30,   September 30,
           
 
   
            2002   2001   2002
           
 
 
            (Unaudited)   (Unaudited)
           
 
            In thousands   In thousands
           
 
CASH FLOWS FROM OPERATING ACTIVITIES:
                        
 
Net income (loss) for the period
     53,624       (269,161 )     11,009  
 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
                        
     
Depreciation and amortization
     377,969       392,680       77,596  
     
Loss on impairment of investments in non-marketable securities
     4,054       8,862       832  
     
Amortization of deferred compensation related to employee stock option grants, net
     6,483       16,390       1,330  
     
Liability for employee rights upon retirement
     12,266       11,273       2,518  
     
Accrued interest and exchange and linkage differences on long-term liabilities
     113,277       46,177       23,255  
     
Accrued interest and exchange differences on security deposit
     (9,980 )     (5,180 )     (2,049 )
     
Amount carried to deferred charges
             (22 )        
     
Sundry
     1,248       665       256  
 
Changes in operating assets and liabilities:
                        
     
Increase in accounts receivable:
                        
       
Trade
     (64,062 )     (131,984 )     (13,148 )
       
Other
     (19,237 )     (3,655 )     (3,950 )
     
Increase (decrease) in accounts payable and accruals:
                        
       
Trade
     95       (18,822 )     20  
       
Other
     (2,026 )     48,465       (416 )
     
Decrease in inventories
     4,639       41,752       951  
 
 
    
     
     
 
 
Net cash provided by operating activities
     478,350       137,440       98,204  
 
 
    
     
     
 
CASH FLOWS FROM INVESTING ACTIVITIES:
                        
 
Purchase of fixed assets
     (472,294 )     (411,863 )     (96,960 )
 
Proceeds from sale of fixed assets
     3,932       1,246       807  
 
Investment in non-marketable securities
             (16,446 )        
 
Purchase of additional spectrum
     (207,635 )             (42,627 )
 
Funds in respect of employee rights upon retirement
     (10,219 )     (7,532 )     (2,098 )
 
 
    
     
     
 
 
Net cash used in investing activities
     (686,216 )     (434,595 )     (140,878 )
 
 
    
     
     
 
CASH FLOWS FROM FINANCING ACTIVITIES:
                        
   
Proceeds from exercise of stock options granted to employees
     3,837       42       788  
   
Long-term bank loans received
     1,349,326       1,207,119       277,012  
   
Repayment of long term bank loans
     (1,147,426 )     (901,000 )     (235,563 )
 
 
    
     
     
 
   
Net cash provided by financing activities
     205,737       306,161       42,237  
 
 
    
     
     
 
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
     (2,129 )     9,006       (437 )
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
     5,272       869       1,082  
 
 
    
     
     
 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
     3,143       9,875       645  
 
 
    
     
     
 

Supplementary information on investing activities not involving cash flows

At September 30, 2002, trade payables include NIS 119,981,000 ($24,632,000) (unaudited) in respect of acquisition of fixed assets. This balance will be given recognition in these statements upon payment.

The accompanying notes are an integral part of these condensed financial statements.

 

 

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2002

(Unaudited)

1.   Nature of operations
 
    Partner Communications Company Ltd. (“the Company”), operates a mobile telecommunications network based upon the Global System for Mobile Communications (“GSM”) Standard in Israel.
 
    In December 2001, the Company was awarded additional spectrum (2G band (1800MHz) and 3G band (1900MHz and 2100MHz)). Following the award of the above spectrum, the Company’s license was amended and extended through 2017. During June 2002, the Minister of Communications amended and extended the license through 2022.
 
    In consideration for the above additional spectrum the Company has committed to pay NIS 180 million ($37 million) for the 2G spectrum in two installments (payable by the end of 2003) and NIS 220 million ($45 million) for the 3G spectrum in five installments through 2006. Out of the abovementioned amounts, approximately NIS 208 million (approximately $43 million) was paid during the nine-month period ended September 30, 2002.
 
    Following the above amendments, the amortized balance of the Company’s existing license as well as the cost of the additional spectrum put into service are amortized on a straight-line basis as follows: as of March 31, 2002 — over the period ending in 2017; as of April 1, 2002 — over the period ending in 2022.
 
2.   Basis of presentation:

  a.   The condensed consolidated interim financial statements at September 30, 2002 and for the nine-month and three-month periods then ended (“the interim financial statements”) have been prepared in condensed form, in accordance with accounting principles generally accepted for interim financial statements. The generally accepted accounting principles applied in preparation of the interim statements are consistent with those applied in preparation of the annual financial statements; nevertheless, the interim financial statements do not include all the information and notes required for annual financial statements.
 
      In management’s opinion, interim financial statements reflect all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the financial information, in accordance with generally accepted accounting principles, for the period presented. Results for interim periods are not necessarily indicative of the results to be expected for the entire year.

 

 

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

SEPTEMBER 30, 2002

(Unaudited)

2.   Basis of presentation (continued):

  b.   The financial statements have been prepared on the basis of historical cost of Israeli currency. All figures in the interim financial statements are presented in nominal new Israeli shekels (“NIS”).
 
      The changes in the exchange rate of the U.S. dollar and the Israeli CPI are:
                   
      Exchange        
      rate of the        
      U.S. dollar   Israeli CPI
     
 
      %   %
     
 
Nine months ended September 30,
                
 
2002
     10.3       7.0  
 
2001
     7.8       2.0  
Three months ended September 30,
                
 
2002
     2.1       0.6  
 
2001
     4.6       0.9  
Year ended December 31, 2001
     9.3       1.4  

    The Nominal NIS figures at September 30, 2002 and December 31, 2001 and for the nine and three month periods ended at September 30, 2002 have been translated into U.S. dollars using the representative exchange rate of the U.S. dollar at September 30, 2002 ($ 1= 4.871 NIS). The translation was made solely for convenience. The translated U.S. dollar figures should not be construed as a representation that the Israeli currency amounts actually represent, or could be converted into, U.S. dollars.
 
3.   Long-term bank loans
 
    In April 2002, the Company’s credit facility has been amended to reflect Bank Hapoalim’s agreement to participate in the credit facility on the same terms as the other lending banks. Therefore, the relevant balances owed to Bank Hapoalim under the credit facility, which were recorded in the Company’s annual financial statements for the year ended December 31, 2001 as short-term liabilities are recorded in the balance sheet as of September 30, 2002 as long-term liabilities.

 

 

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

SEPTEMBER 30, 2002

(Unaudited)

4.   Contingent liabilities:

  a.   On October 28, 1999, an Israeli consumer organization lodged a claim against the Company, alleging a variety of consumer complaints and requested that this claim be recognized as a class action.
 
      While the amount of the claim was substantial, the ultimate liability could not be determined because of the considerable uncertainties that exist.
 
      On March 20, 2002, the Haifa District Court decided to strike the claim, because the consumer organization lost, on December 31, 2001, a special status required under Israeli law for consumer organizations to file class action claims.
 
      Another claim, involving a substantial amount, which was filed by a private consumer who had previously asked to join the above class action, may be brought again before the court. The court had previously frozen the proceedings of the private consumer’s claim, until a decision was made in the case filed by the consumer organization. On June 20, 2002, legal counsel representing the consumer organization informed the Company of his intention to resume these proceedings. At this stage, the Company and its legal counsel are unable to evaluate the probability of success of the claims, if and when re-opened, and therefore no provision has been made.
 
  b.   On July 8, 2001, Shakoland 890 (1996) Ltd. filed a claim against the Company for alleged violation of its exclusive supplier agreement. For filing purposes, the claim was set at NIS 18 million; however, this amount can be increased by the claimant.
 
      At this stage, the Company and its legal counsel are unable to evaluate the probability of success of the said litigation, and therefore no provision has been made.
 
  c.   On December 31, 2001, a claim was filed against the Company and other Israeli telecommunication companies together with a request to approve this claim as a class action. The claim is for airtime charged in respect of calls, which were terminated due to causes other than the termination of the call by the parties thereto. The amount of the claim against the Company is estimated at approximately NIS 21 million.
 
      At this stage, the Company and its legal counsel are unable to evaluate the probability of success of the claim, and therefore no provision has been made.
 
  d.   On March 20, 2002, the Company received a demand from one of the company’s former distributors, mainly for alleged violation of his exclusive distribution agreement.
 
      The amount of the demand against the Company is set at NIS 130 million for filing purposes, although the claimant states that his damages far exceed the above amount.

 

 

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

SEPTEMBER 30, 2002

(Unaudited)

4.   Contingent liabilities (continued):

      At this stage, the Company and its legal counsel are unable to evaluate the probability of success of such a demand if filed by the way of legal claim, and the amount of the claim, therefore no provision has been made.
 
  e.   On April 8, 2002, a claim was filed against the Company, together with a request to approve this claim as a class action, alleging a variety of consumer complaints.
 
      The amount of the claim against the Company is estimated at approximately NIS 545 million plus additional significant amounts related to other alleged damages.
 
      The claim is scheduled to be heard in February 2003. At this stage, the Company and its legal counsel are unable to evaluate the probability of success of the claim, and therefore no provision has been made.
 
  f.   On May 21, 2002, a claim was filed against the Company and other Israeli telecommunication companies together with a request to approve this claim as a class action. According to the applicants, the defendants have entered into agreements with commercial entities that offer the public various content services via calls to cellular telephone numbers. The applicants allege that, in actuality, the calls are not carried out by wireless but via a fixed line, an act that is in violation of the law and the license. Accordingly, the applicants claim that the defendants must refund the public all the amounts that were charged in connection with said content services agreements. The applicants did not know the amount for the class action, but estimate it at NIS 600 million.
 
      The claim is scheduled to be heard in January 2003. At this stage, the Company and its legal counsel are unable to evaluate the probability of success of the claim, and therefore no provision has been made.
 
  g.   The Company does not have building permits for many of its cell sites and as result is involved in numerous legal actions (including criminal proceedings against officers and directors) relating to this issue.
 
      Most of these proceedings have been settled under plea bargain arrangements, whereby the Company has paid fines of insignificant amounts.
 
      Management, based upon current experience and the opinion of legal counsel, does not believe that these legal actions will result in significant costs to the Company. The accounts do not include a provision in respect thereof.
 
  h.   The Company is a party to various claims arising in the ordinary course of its operations. Management, based upon the opinion of its legal counsel, is of the opinion that the ultimate resolution of these claims will not have a material effect on the financial position of the Company. The accounts do not include a provision in respect thereof.

 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Current Report to be signed on its behalf by the undersigned, thereunto duly authorized.

         
    Partner Communications Company Ltd.
         
    By        /s/ Alan Gelman                              
    Name:  Alan Gelman
    Title:    Chief Financial Officer

Dated: October 29, 2002