PETACH TIKVA, Israel, November 19 /PRNewswire-FirstCall/ -- Internet Gold Golden Lines Ltd., (NASDAQ Global Market and TASE: IGLD) today reported its financial results for the third quarter of 2009.
Highlights
- Strong operating cash flow of NIS 62 million
- NIS 141 million decrease in net outstanding financial debt compared to
year-end 2008
- Smile.Media continues to achieve positive cash flow and bottom line
profitability
- Share buy-back program completed successfully
- Company's 75.3%-owned subsidiary, 012 Smile Communications Ltd.,
continues process of acquiring the controlling stake in Bezeq, Israel's
largest telecommunications provider. Transaction expected to close as
planned
- 012 Smile Communications signed an agreement with a wholly owned
subsidiary of Ampal-American Israel Corporation to sell its
telecommunications business.
012 Smile.Communications: Excellent performance delivered while pursuing its growth strategy
- Total revenues increased by 4% to NIS 294 million (US $78
million)
- Broadband segment revenues increased by 6%
- International Long Distance (ILD) segment revenues up on
both a quarter-by-quarter and year-over-year basis
- Operating income increased by 11% to NIS 37 million (US $10
million)
- Net income increased by 19% to NIS 15 million (US $4.0
million) or NIS 0.59 per share (US $0.16 per share)
- Total of 134,000 local telephony lines as of the end of the
quarter
- Cash flow from operations for the quarter increased by 36%
to NIS 64 million (US$17 million)
Financial Results for the Third Quarter
Revenues: Revenues for the third quarter of 2009 were NIS 310 million (US $82.5 million), a 5.4% increase compared with NIS 294 million in the third quarter of 2008. The revenues were attributable primarily to the results of 012 Smile.Communications together with the minor contribution of Smile Media.
Adjusted EBITDA: Adjusted EBITDA for the third quarter of 2009 was NIS 69 million (US $18.4 million). This was a 14% decrease compared to NIS 80.4 million for the third quarter of 2008, which included a NIS 12.8 million one-time gain arising from the sale of Smile Media's interest in MSN Israel. Excluding the income relating to the MSN transaction, adjusted EBITDA for the third quarter of 2009 increased by 2% compared to the parallel quarter of 2008. For more information regarding the use of non-GAAP financial measures, please see the notes in this press release.
Financial Expenses, Net: Financial expenses net, for the third quarter of 2009 totaled NIS 36.5 million (US $9.7 million) compared with NIS 47.5 million in the third quarter of 2008. Financial expenses, net, for the third quarter of 2009 included: (1) NIS 5.9 million (US $1.6 million) associated with the period's decrease of the shekel-dollar exchange rate; (2) NIS 35.5 million (US $9.4 million) associated with the Company's bonds, reflecting the period's 2.4% increase in the Israeli CPI; and (3) financial income of NIS 5.4 million (US $1.4 million) associated with the mark-to-market of certain marketable securities whose values have increased as a result of the global improvement in the capital markets.
Net Income: On a U.S. GAAP basis, net income for the third quarter of 2009 was NIS 2.8 million (US $0.7 million), or NIS 0.16 (US $0.04) per share on a fully diluted basis. This compares to a net loss of NIS 8.5 million, or NIS 0.4 loss per share on a fully diluted basis for the third quarter of 2008.
Capital Resources
The Company's cash, cash equivalents and marketable securities as of September 30, 2009 were NIS 676 million (US $180 million). Total assets as of September 30, 2009 were approximately NIS 2.0 billion (U.S. $535 million) and total bank debt was NIS 56 million (U.S. $15 million). Shareholders' equity as of September, 30 2009 was NIS 422 million ($112 million), representing 21% of total assets.
Comments of Management
Commenting on the results, Eli Holtzman, Internet Gold's CEO, said, "We are pleased to report another strong quarter, demonstrating the success of our telecommunications brands in a marketplace that continues to grow and strengthen. With great results, 012 Smile.Communications continues to generate significant cash flow, enabling us to continue decreasing our financial debt and to fund the next phase of our growth."
Mr. Holtzman continued, "We are very excited about the rapid progress being made towards 012 Smile's acquisition of a controlling stake in Bezeq The Israel Telecommunication Corp., Israel's largest telecommunications provider (TASE: BZEQ). Earlier this week we announced that 012 Smile.Communications signed an agreement with a wholly owned subsidiary of Ampal-American Israel Corporation (Nasdaq: AMPL) to sell its ongoing telecommunications business for NIS 1.2 billion, or approximately $318 million. With this agreement in place, we believe 012 Smile is on track to close the Bezeq transaction prior to April 25, 2010."
"Following the closing of the Bezeq transaction," concluded Mr. Holtzman, "Internet Gold will become the undisputed leader of Israel's telecommunications industry, a goal towards which we have been moving steadily for nearly two decades and which we believe will lead to significantly increased shareholder value."
Business Segments
012 Smile.Communications Ltd. (NASDAQ and TASE: SMLC):
012 Smile.Communications reported improved quarterly revenues of NIS 294 million (US $78 million) for the quarter ended September 30, 2009, compared to NIS 282 million for the same period in 2008, a 4% increase. Revenue from broadband services increased to NIS 148 million (US $39 million) for the third quarter of 2009 compared to NIS 140 million for the third quarter of 2008, an increase of 6%. Revenue from traditional voice services for the quarter was NIS 146 million (US $38.9 million) compared to NIS 142 million for the same period last year.
Operating income for the third quarter of 2009 increased to NIS 37.3 million (US $ 10 million) compared with NIS 33.8 million for the same period last year.
Adjusted EBITDA for the third quarter of 2009 increased to a record NIS 69.7 million (US $18.5 million) compared with NIS 62.6 million for the same period last year.
Smile.Media Ltd.: Smile.Media delivered another consecutive quarter of operating and net income. The segment's revenues for the third quarter were NIS 16.4 million (US $4.4 million), derived primarily from its e-commerce businesses. The subsidiary's operating income for the third quarter of 2009 reached NIS 0.4 million (US $0.1 million) compared with NIS 9.6 million for the same period last year, which result included NIS 12.8 million of income from the sale of its interest in MSN Israel.
Other: During the third quarter of 2009, Internet Gold incurred operating expenses of approximately NIS 1.3 million (US $0.35 million). These expenses were primarily for activities related to the Company's listing on public securities exchanges, including expenses such as investor relations, Sarbanes Oxley compliance, insurance and legal expenses and for the continued investigation of potential joint ventures and M&A opportunities.
Buyback Programs
Share Repurchase Program: The Company repurchased 111,191 of its ordinary shares during the quarter ended September 30, 2009. The total number of Internet Gold shares repurchased through the Company's share repurchase programs as of September 30, 2009 reached 5,477,859 shares, bringing the total number of outstanding shares as of September 30, 2009 to 18,040,547 shares. This represents the successful completion of the buyback program approved by the Company's Board of Directors.
- Bond Repurchase Program: The Company did not repurchase any of its
bonds during the quarter or to date. As of September 30, 2009, NIS
78,724,338 par value of Series A bonds and NIS 417,285,630 par value of
Series B bonds, remain outstanding.
Notes:
Non-GAAP Measurements Reconciliation between the Company's results on a GAAP and non-GAAP basis is provided in a table immediately following the Consolidated Statement of Operations (Non-GAAP Basis). Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude amortization of acquired intangible assets, as well as certain business combination accounting entries. The purpose of such adjustments is to give an indication of our performance exclusive of non-cash charges and other items that are considered by management to be outside of our core operating results. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.
Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. We believe these non-GAAP financial measures provide consistent and comparable measures to help investors understand our current and future operating cash flow performance. These non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies. Reconciliation between results on a GAAP and non-GAAP basis is provided in a table immediately following the Consolidated Statement of Operations.
EBITDA is a non-GAAP financial measure generally defined as earnings before interest, taxes, depreciation and amortization. We define adjusted EBITDA as net income before financial income (expenses), net impairment and other charges, income attributable to non-controlling interest, expenses recorded for stock compensation in accordance with SFAS 123(R), income tax expenses and depreciation and amortization. We present adjusted EBITDA as a supplemental performance measure because we believe that it facilitates operating performance comparisons from period to period and company to company by backing out potential differences caused by variations in capital structure (most particularly affecting our interest expense given our recently incurred significant debt), tax positions (such as the impact of changes in effective tax rates or net operating losses) and the age of, and depreciation expenses associated with, fixed assets (affecting relative depreciation expense). Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations or cash flow data prepared in accordance with GAAP as a measure of our profitability or liquidity. Adjusted EBITDA does not take into account our debt service requirements and other commitments, including capital expenditures, and, accordingly, is not necessarily indicative of amounts that may be available for discretionary uses. In addition, adjusted EBITDA, as presented in this press release, may not be comparable to similarly titled measures reported by other companies due to differences in the way that these measures are calculated.
Convenience Translation to Dollars For the convenience of the reader, the reported NIS figures of September 30, 2009 have been presented in thousands of U.S. dollars, translated at the representative rate of exchange as of September 30, 2009 (NIS 3.758 = U.S. Dollar 1.00). The U.S. Dollar ($) amounts presented should not be construed as representing amounts receivable or payable in U.S. Dollars or convertible into U.S. Dollars, unless otherwise indicated.
Forward-Looking Statements
This press release contains forward-looking statements that are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, general business conditions in the industry, changes in the regulatory and legal compliance environments in the industries it is engaged, the failure to manage growth and other risks detailed from time to time in Internet Gold's filings with the Securities Exchange Commission, including Internet Gold's Annual Report on Form 20-F. These documents contain and identify other important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. Stockholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update publicly or revise any forward-looking statement.
About Internet Gold - Golden Lines Ltd.
Internet Gold - Golden Lines Ltd. is one of Israel's leading communications groups with a major presence across all Internet-related sectors. Its subsidiary, 012 Smile.Communications Ltd., is one of Israel's major Internet and international telephony service providers, and one of the largest providers of enterprise/IT integration services. Its 100% owned subsidiary, Smile.Media Ltd., manages a portfolio of Internet portals and e-Commerce sites.
Consolidated Balance Sheets (in thousands)
Convenience
translation
into U.S.
dollars
$1 = NIS
3.758
September 30 December 31 September 30
2009 2008 2009
(Unaudited) (Audited) (Unaudited)
NIS thousands $ thousands
Current assets
Cash and cash equivalents 92,237 86,090 24,544
Marketable securities 583,747 214,895 155,335
Trade receivables, net 202,072 217,796 53,771
Related parties receivable 3,064 1,729 815
Prepaid expenses and other
current assets 23,910 27,046 6,363
Deferred tax assets 113 26,116 30
Total current assets 905,143 573,672 240,858
Investments
Long-term trade receivables 6,260 6,350 1,666
Marketable securities - 279,823 -
Assets held for employee
severance benefits 21,949 17,786 5,841
Deferred tax assets 42 57 11
Property and equipment, net 178,501 171,104 47,499
Other assets, net 326,475 302,934 86,875
Other intangible assets, 157,138 174,640 41,814
Goodwill 416,888 416,888 110,933
Total assets 2,012,396 1,943,254 535,497
Consolidated Balance Sheets (cont'd)
Convenience
translation
into U.S.
dollars
$1 = NIS
3.758
September 30 December 31 September 30
2009 2008 2009
(Unaudited) (Audited) (Unaudited)
NIS thousands $ thousands
Current liabilities
Short-term bank credit 52,910 42,738 14,079
Current maturities of
long-term obligations 4,203 11,238 1,118
Accounts payable 140,256 148,580 37,322
Current maturities of convertible
Debentures 16,442 17,516 4,375
Current maturities of debentures 87,969 100,142 23,409
Other payable and accrued
expenses 127,680 125,388 33,976
Related parties payable 3,145 3,223 837
Total current liabilities 432,605 448,825 115,116
Long term liabilities
Long-term obligations and
other payables - 760 -
Convertible debentures 73,692 84,857 19,609
Debentures 786,782 812,254 209,362
Deferred tax liabilities 48,256 46,856 12,841
Liability for employee
severance benefits 38,311 34,626 10,195
Total long term liabilities 947,041 979,353 252,007
Total liabilities 1,379,646 1,428,178 367,123
Shareholders' equity 421,729 324,604 112,222
Non-controlling interest 211,021 190,472 56,152
Total equity 632,750 515,076 168,374
Total liabilities and
shareholders' equity 2,012,396 1,943,254 535,497
Internet Gold - Golden Lines Ltd.
Consolidated Statements of Operations
Convenience
translation
into dollars
$1 = NIS
3.758
Three months Nine months Nine-month
period ended period ended period ended
September 30 September 30 September 30
2009 2008 2009 2008 2009
(Unaudited)(Unaudited)(Unaudited)(Unaudited)(Unaudited)
NIS thousands NIS thousands $ thousands
Revenue 309,816 293,846 920,091 854,901 244,835
Cost and operating
expenses
Cost of revenue 218,459 204,620 639,356 583,182 170,132
Selling and
marketing 38,446 43,446 116,576 125,996 31,020
General and
administrative 16,580 16,800 47,809 53,644 12,722
Impairment and
other - - - 6,922 -
expenses, net
Other income - (12,791) - (12,791) -
Total operating 273,485 252,075 803,741 756,953 13,874
expenses
Operating income 36,331 41,771 116,350 97,948 30,961
Financial expenses,
net 36,522 47,533 4,821 102,604 1,283
Income (loss) before (191) (5,762) 111,529 (4,656) 29,678
income taxes
Income tax expenses (6,699) (815) 29,011 4,707 7,720
(income)
Income (loss) after
income
tax expenses 6,508 (4,947) 82,518 (9,363) 21,958
Net income attributable
to non-
controlling interest 3,671 3,506 23,631 6,553 6,288
Net income (loss) 2,837 (8,453) 58,887 (15,916) 15,670
Basic earnings (loss)
per share
Basic earnings (loss) 0.16 (0.40) 3.19 (0.72) 0.85
per share
Weighted average number
of ordinary shares used
in calculation of
basic earnings per
share 18,077 21,191 18,453 21,986 18,453
Diluted earnings (loss)
per share
Diluted earnings (loss)
per share 0.16 (0.40) 3.19 (0.72) 0.85
Weighted average number
of shares used in
calculation of diluted
earnings per share 18,077 21,191 18,453 21,986 18,453
share
Reconciliation Table of Non-GAAP Measures (NIS in thousands)
Convenience
translation
into dollars
$1 = NIS
3.758
Three months Nine months Nine-month
period ended period ended period ended
September 30 September 30 September 30
2009 2008 2009 2008 2009
(Unaudited)(Unaudited)(Unaudited)(Unaudited)(Unaudited)
NIS thousands NIS thousands $ thousands
GAAP operating income 36,331 41,771 116,350 97,948 30,961
Adjustments
Amortization of acquired
intangible assets 5,720 6,820 17,160 20,460 4,566
Impairment and other
expenses, net - - - 6,922 -
Other income - (12,791) - (12,791) -
Other income in respect
of MSN transaction - 12,791 - 12,791 -
Stock compensation in
accordance with SFAS
123(R) 1,239 1,239 3,717 2,189 989
Non-GAAP adjusted
operating income 43,290 49,830 137,227 127,519 36,516
GAAP tax expenses, net (6,699) (815) 29,011 4,707 7,720
Adjustments
Amortization of acquired
intangible assets
Included in tax
expenses, net 8,787 1,841 11,761 5,523 3,129
Non-GAAP tax expenses,
net 2,088 1,026 40,772 10,230 10,849
Net income (loss) as
Reported 2,837 (8,453) 58,887 (15,916) 15,670
Non-controlling interest
in operations of
consolidated
subsidiaries 3,671 3,506 23,631 6,553 6,288
Income tax expenses
(income) (6,699) (815) 29,011 4,707 7,720
Impairment and other
expenses, net - - - 6,922 -
Other income - (12,791) - (12,791) -
Other income in respect
of MSN transaction - 12,791 - 12,791 -
Stock compensation in
accordance with SFAS
123(R) 1,239 1,239 3,717 2,189 989
Financial expenses, net 36,522 47,533 4,821 102,604 1,283
Depreciation and
Amortization 31,528 37,404 88,215 94,398 23,474
Adjusted EBITDA 69,098 80,414 208,282 201,457 55,424
start_table>
For further information, please contact: Ms. Idit Azulay, Internet Gold
idita@co.smile.net.il / Tel: +972-72-200-3848
Internet Gold - Golden Lines Ltd
SOURCE Internet Gold - Golden Lines Ltd
