SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
F O R M 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2006
INTERNET GOLD-GOLDEN LINES LTD.
(Name of Registrant)
1 Alexander Yanai Street Petach-Tikva, Israel
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will
file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]
Indicate by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]
Indicate by check mark whether by furnishing the information
contained in this Form, the registrant 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-__________
Internet Gold-Golden Lines Ltd.
6-K Items
1. Press Release re Another Record Quarter for Internet Gold: Q3 Revenues
Above NIS 100 Million, Operating Income Doubles dated November 6,
2006.
ITEM 1
Press Release Source: Internet Gold
Another Record Quarter for Internet Gold: Q3 Revenues Above NIS 100 Million,
Operating Income Doubles
Monday November 6, 12:00 am ET
Record Results for Q3: Revenues Up 44% (YOY) to NIS 105 Million, Operating
Income Up 106% (YOY) to NIS 12 Million
012-Golden Lines Merger Is Pending Regulatory Approval and Continues on Track
PETACH TIKVA, Israel, November 6 /PRNewswire-FirstCall/ -- Internet Gold,
(Nasdaq and TASE: IGLD) today reported its financial results for the third
quarter and nine months ended September 30, 2006.
Highlights
- Record revenues: Q3 sales crossed the NIS 100 million milestone
- Record operating income: more than doubled compared with Q3 2005
- Strong growth in Smile.Communications: broadband customer base grew by 16,500
new subscribers during the quarter; International Long Distance traffic reached
a new high; continued strong demand for business services
- Smile.Media achieved slight growth despite difficult e-Advertising
environment: rise in e-Commerce revenues compensated for temporarily reduced
e-Advertising budgets during the war period
- Pending merger of 012-Golden Lines with Smile.Communications Ltd. continues to
progress on track: the Company is working closely with regulators to finalize
process as soon as possible.
Financial Results
Revenues for the third quarter of 2006 reached a new high of NIS 105.3 million
(US$ 24.5 million), an increase of 44% compared with NIS 73.3 million in the
third quarter of 2005, and 8% compared with the second quarter of 2006.
Operating income for the quarter reached a record of NIS 11.8 million (US$ 2.7
million), an increase of 106% compared to NIS 5.7 million in the third quarter
of 2005 and 4% compared to the second quarter of 2006.
Net income for the quarter reached NIS 7.0 million (US $1.6 million), or NIS
0.38 (US$ 0.09) per share, an increase of 327% compared to NIS 1.6 million, or
NIS 0.09 per share, for the third quarter of 2005, and 5% compared to the second
quarter of 2006.
The Company's net results for the third quarter were significantly impacted by
two one-time expenses:
- A provision of NIS 1.5 million (US $0.35 million) taken in respect of a
regulatory dispute (currently we plan to appeal) with Israel's Ministry of
Communications.
- A one-time expense of NIS 1.3 million (US $0.3 million) reflecting the legal
and other costs associated with the Company's reorganization and spin-off of
Smile.Media and Smile.Communications.
Comments of Management
Commenting on the results, Eli Holtzman, Internet Gold's CEO, said, "We are
extremely pleased to have delivered another quarter of record revenues and
operating profits despite the summer's wartime environment, which we feared
would negatively impact our business. Although it did reduce our e-Advertising
revenues, the rise in revenues generated by our e-Commerce properties and
International Telephony businesses more than compensated. In parallel, we
continue to benefit from the emergence of the Internet during this challenging
period as the most reliable source of up-to-date news and the most convenient
'place' to go for shopping and entertainment. In response, we focused on
effective marketing, and were rewarded with one of our strongest-ever quarters
of new-user subscriptions.
"The quarter was equally productive from a strategic point of view. We were
pleased to have completed the spin-off of our two fully-owned pure-play
subsidiaries, and later announced the 012-Golden Lines merger plan. These are
the critical first steps of a plan that we believe will build the Company to the
next level with a revenue base of more than a billion shekels per year and
increasing profitability. As such, we believe we are on a road that will create
significant value for our shareholders, customers and employees already in the
year ahead and over the long term."
Business Segment Overview
Smile.Communications Ltd.: During the third quarter, the continued growth of all
Smile.Communications' activities delivered a 10% increase in revenues compared
with the second quarter of 2006, and a 44% increase year-over-year compared with
the third quarter of 2005.
- Smile.Net - ISP: The Company's customer base grew by approximately 16,500
(net) new broadband subscribers during the third quarter, a reflection of the
success of its aggressive marketing efforts. Sales of Value-Added Services
(Anti-Virus, Anti-Spam and Safety Net) during the nine month period increased by
38% compared with the first nine months of 2005.
- Smile.015 - International Telephony: Telephony revenues grew significantly
during the quarter. This reflected both the wartime environment, which boosted
telephone traffic, and the ongoing organic growth of Israel's International Long
Distance (ILD) market. In fact, during the first half of 2006, Israel's overall
ILD traffic increased by 12% compared to the comparable period in 2005.
- Smile.Biz - Business Services: The Group's business service revenues for the
nine-month period were up 23% compared with the parallel period of 2005. This
reflected the Company's success in capturing market share for its value-added IT
infrastructure deployment and integration services, and the continued strong
growth of its sales of corporate communication packages.
Smile.Media Ltd.: Despite the temporary slowdown of Israel's entire Media
industry during the war in Lebanon, Smile.Media's third quarter revenues rose by
approximately 1% compared with the second quarter of 2006. This reflected the
strong growth in e-Commerce revenues, which more than compensated for the
decline in e-Advertising revenues. For the nine-month period, Smile.Media's
revenues rose by 33% compared with the parallel period in 2005.
- e-Advertising / Content: During the third quarter, revenues from the Group's
12 portal properties declined by less than 5% compared to the second quarter of
2006. This reflected the temporary slowdown in the e-Advertising market during
the war period. On a year-over-year basis, the Group's e-Advertising revenues
rose by 35%.
- Smile.Shops: Third quarter revenues from the Group's e-Commerce properties
rose by 33% compared to the second quarter of 2006, reflecting an increase of
all online activities during the war months. For the nine month period,
e-Commerce sales were up by 21% compared to the first nine months of 2005.
About Internet Gold
Internet Gold is Israel's leading IP Group with a major presence across all
Internet-related sectors. Its Smile.Communications segment offers a variety of
Internet access and related value-added services, international telephony and
enterprise/IT integration services. Its Smile.Media segment manages a growing
portfolio of Internet portals and e-Commerce sites.
Internet Gold has entered into an agreement to acquire 60% of the control and
equity in 012 Golden Lines Ltd ("012") based on a valuation of US$ 140 million.
012 is a major Internet Service Provider with revenues of $ 138.8 million in
2005 and is also a leader in Israel's Voice Over Broadband domestic telephony.
The agreement is subject to the approval of both boards of directors and the
relevant regulatory authorities. According to the agreement, following the
acquisition, 012 will merge with IGLD's Smile.Communications activities.
Internet Gold is part of the Eurocom communications group. Its shares trade on
the Nasdaq Global Market and on the Tel Aviv Stock Exchange.
For additional information about Internet Gold, please visit its investors' site
at www.igld.com.
NOTE A: Convenience Translation to Dollars
For the convenience of the reader, the reported NIS figures of September 30,
2006 have been presented in thousands of U.S. dollars, translated at the
representative rate of exchange as of September 30, 2006 (NIS 4.302 = U.S.
Dollar 1.00). The U.S. Dollar ($) amounts presented should not be construed as
representing amounts receivable or payable in U.S. Dollars or convertible into
U.S. Dollars, unless otherwise indicated.
Certain statements made herein that use the words "estimate," "project,"
"intend," "expect," "believe" and similar expressions are intended to identify
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements involve known
and unknown risks and uncertainties which could cause the actual results,
performance or achievements of the Company to be materially different from those
which may be expressed or implied by such statements, including, among others,
changes in general economic and business conditions and specifically, decline in
demand for the Company's services, inability to timely develop and introduce new
technologies, services and applications and loss of market share and pressure on
prices resulting from competition. For additional information regarding these
and other risks and uncertainties associated with the Company's business,
reference is made to the Company's Annual Report filed with the Securities and
Exchange Commission and its other reports as filed from time to time with the
Securities and Exchange Commission.
For further information, please contact:
Lee Roth
KCSA Worldwide
+1-212-896-1209
In Israel:
Mor Dagan
Investor Relations
+972-3-516-7620
Ms. Idit Azulay, Internet Gold
+972-3-939-9848
idita@co.zahav.net.il
Consolidated Balance Sheets
Convenience
translation
into
U.S.
dollars
September September December September
30 30 31 30
2006 2005 2005 2006
(Unaudited) (Unaudited) (Audited) (Unaudited)
New Israeli Shekels - in thousands US$ in
thousands
Current assets
Cash and cash equivalents 261,322 260,124 265,488 60,744
Short-term investments 883 1,156 804 205
Trade receivables, net 78,380 67,160 67,988 18,219
Other receivables 19,955 13,421 12,201 4,639
Deferred taxes 732 1,359 1,111 170
Total current assets 361,272 343,220 347,592 83,977
Investments
Deferred taxes 139 40 40 32
Other investments 200 275 275 46
339 315 315 78
Property and equipment, net 37,509 38,340 36,222 8,719
Other assets and deferred
charges 114,506 119,508 117,889 26,617
Assets allocated to
discontinued operations - 150 - -
Total assets 513,626 501,533 502,018 119,391
Internet Gold - Golden Lines Ltd.
Convenience
translation
into
U.S.
dollars
September September December September
30 30 31 30
2006 2005 2005 2006
(Unaudited) (Unaudited) (Audited) (Unaudited)
New Israeli Shekels - in thousands US$ in
thousands
Current liabilities
Short-term bank loans 16,188 7,080 12,684 3,763
Accounts payable 57,731 65,784 55,987 13,419
Other payables 24,431 19,662 23,877 5,679
Accured liabilities from
marketable
securities - 398 1,045 -
Total current liabilities 98,350 92,924 93,593 22,861
Long-term liabilities
Long-term obligations under
lease agreement 22,035 41,148 33,570 5,122
Liability for termination of
employer-
employee relations, net 7,276 7,124 7,506 1,691
Long term obligation under
forward contract - 140 - -
Convertible debentures 208,148 216,632 218,676 48,384
Total long-term liabilities 237,459 265,044 259,752 55,197
Liabilities allocated to
discontinued operations - 265 - -
Shareholders' equity
Ordinary shares 197 197 197 45
Additional paid-in capital 216,864 215,040 216,864 50,410
Proceeds from option debentures
and warrants 15,612 8,499 6,675 3,629
Accumulated deficit (54,856) (80,436) (75,063) (12,751)
Total shareholders' equity 177,817 143,300 148,673 41,333
Total liabilities and 513,626 501,533 502,018 119,391
shareholders' equity
Internet Gold - Golden Lines Ltd.
Consolidated Statements of Operations
Nine month period ended Three month period ended
September 30 September 30
2006 2005 2006 2005
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
New Israeli Shekels - in thousands
Revenues 297,346 216,613 105,275 73,273
Costs and expenses:
Cost of revenues 182,274 113,372 65,112 39,159
Selling and
marketing expenses 56,679 57,589 19,533 20,023
General and
administrative 25,581 23,892 8,843 8,360
expenses
Total costs and 264,534 194,853 93,488 67,542
expenses
Income from 32,812 21,760 11,787 5,731
operations
Financing expenses, 8,627 7,838 1,809 3,523
net
Other (income)
expenses, net 2,792 (207) 2,825 (75)
Income after
financing expenses 21,393 14,129 7,153 2,283
Company's share in
net loss of
unconsolidated 240 - 27 -
investee
Minority interest in
operations
of consolidated (121) - (94) -
subsidiaries
Tax expenses 1,067 1,221 264 653
Net income 20,207 12,908 6,956 1,630
Income per share,
basic and diluted
Net income per
share (in NIS) 1.10 0.70 0.38 0.09
Weighted average
number
of shares
outstanding
(in thousands) 18,432 18,432 18,432 18,432
Consolidated Statements of Operations (continued...)
Convenience
translation
into
U.S. dollars
Nine month
Year ended period ended
December 31 September 30
2005 2006
(Audited) (Unaudited)
New Israeli US$ in
Shekels - in thousands
thousands
Revenues 297,707 69,118
Costs and expenses:
Cost of revenues 159,943 42,370
Selling and marketing
expenses 75,710 13,175
General and
administrative expenses 33,156 5,946
Total costs and expenses 268,809 61,491
Income from operations 28,898 7,627
Financing expenses, net 9,403 2,005
Other (income)
expenses, net (237) 649
Income after
financing expenses 19,732 4,973
Company's share in net
loss of unconsolidated investee - 56
Minority interest in
operations
of consolidated - (28)
subsidiaries
Tax expenses 1,451 248
Net income 18,281 4,697
Income per share, basic
and diluted
Net income per share (in NIS) 0.99 0.25
Weighted average number
of shares outstanding
(in thousands) 18,432 18,432
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
INTERNET GOLD-GOLDEN LINES LTD.
(Registrant)
By /s/Eli Holtzman
---------------
Eli Holtzman
Chief Executive Officer
Date: November 6, 2006