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 February 2007
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 Internet Gold Reports Record Results for the Quarter
and Year Ended December 31, 2006 dated February 26, 2007.
ITEM 1
Press Release Source: Internet Gold
Internet Gold Reports Record Results for the Quarter and Year
Ended December 31, 2006
Monday February 26, 4:07 am ET New Records Set Across-The-Board:
Fourth Quarter Revenues Up 45% (YOY) to NIS 117.3M
Operating Income Climbs 88% (YOY) to NIS 13.4M
Annual Revenues Up 39% (YOY) to NIS 414.4M
Operating Income increases by 61% (YOY) to NIS 46.6M
PETACH TIKVA, Israel, Feb. 26 /PRNewswire-FirstCall/ -- Internet Gold, (Nasdaq:
IGLD and TASE: IGLD) today reported its financial results for the quarter and
year ended December 31, 2006.
Highlights
-- Record results across all parameters: The Company achieved record
revenues, operating income and cash flow for the fourth quarter and for
the year ended December 31, 2006.
-- Smile.Communications: Reported continued strong increase in broadband
subscriber base and ongoing growth in international telephony business.
-- Smile.Media: Reported an increase in market share of Israel's sharply
rising e-Advertising and e-Commerce markets.
-- Merger with 012 Golden Lines: On December 31, 2006 the Company completed
its acquisition of 012 Golden Lines and is now in the process of
integrating 012 Golden Lines into its 100% owned subsidiary,
Smile.Communications Ltd. The merger will give Internet Gold more than
NIS 1.2 billion in revenues for 2007, significantly increase its
profitability and cash flow from operations in the coming years and pave
its entry into Israel's more than NIS 5 billion domestic telephony
market.
Financial Results for the Fourth Quarter
Revenues for the fourth quarter of 2006 reached a new high of NIS 117.3 million
(US$ 27.8 million), an increase of 45% compared with NIS 81.1 million in the
fourth quarter of 2005 and a 12% increase compared with the third quarter of
2006. Operating income for the quarter reached a record of NIS 13.4 million (US$
3.2 million), an increase of 88% compared with NIS 7.1 million in the fourth
quarter of 2005 and a 13% increase compared with the third quarter of 2006. Net
income for the quarter was NIS 6.1 million (US $1.4 million), or NIS 0.33 (US$
0.08) per share. This includes the effect of a one-time non-cash charge of NIS
9.8 million (US$ 2.3 million) relating to the merger of Smile.Communications and
012 Golden Lines.
Excluding this non-cash expense, net income for the quarter reached a record NIS
15.9 million (US $3.8 million), or NIS 0.86 (US$ 0.20) per share, an increase of
194% compared with NIS 5.4 million, or NIS 0.29 (US$ 0.07) per share, for the
fourth quarter of 2005, and an increase of 127% compared with the third quarter
of 2006.
Financial Results for 2006
For the full year period, revenues rose by 39%, reaching a record of NIS 414.4
million (US$ 98.1 million) compared with NIS 297.7 million in 2005. Operating
income for the year reached a new high of NIS 46.6 million (US$ 11 million), a
61% increase compared to NIS 28.9 million in 2005. Net income for the year was
NIS 26.5 million (US $6.3 million), or NIS 1.44 (US$ 0.34) per share. This
includes one-time charges of NIS 12.6 million (US$ 3 million), most of which
relates to charges made in connection with the merger of Smile.Communications
and 012 Golden Lines as discussed above.
Excluding these one-time expenses, net income for the year was NIS 39.1 million
(US $9.3 million), or NIS 2.1 (US$ 0.50) per share, an increase of 114% compared
with NIS 18.3 million, or NIS 0.99 per share, in 2005. Cash flow from operations
for 2006 increased by 64% to a record NIS 70.3 million (US$ 16.6 million)
compared with NIS 42.8 million for 2005. The above financial results for 2006 do
not include the operations of 012 Golden Lines because its acquisition took
place on the last day of the year, December 31, 2006. The Company's consolidated
balance sheet as of December 31, 2006 is not presented due to the fact that the
Company is in the process of completing the required purchase accounting
regarding its acquisition of 012 Golden Lines as of December 31, 2006.
Comments of Management
Commenting on the results, Eli Holtzman, Internet Gold's CEO, said, "We are
proud to report record results across the board, with the new highs we have set
for our revenues, operating profit, net profit and cash flow representing an
outstanding end to the best year in our history. Our results reflect the superb
performance of our subsidiaries, both of which continue to gain market share in
all their business segments while significantly improving their profitability."
"Our primary focus for the next few months will be to carry out our merger and
integrate the operations of the merged company, a move which will immediately
more than double our revenues to over 1.2 billion shekels per year while
contributing significant cost savings which will come into effect gradually as
the merger plans are executed. We trust that the full effect of the merger
synergies will be materialized towards the end of 2007. In parallel, having
recently received a permanent license to expand our successful Voice over
Broadband domestic telephony business, we will broaden our marketing to address
our customer base, in both the residential and business sectors, in order to
build a significant market share quickly. Given that Israel's domestic telephony
market is valued at more than NIS 5 billion per year and that Israel's Ministry
of Communications will put a 'number portability' policy into effect towards the
end of 2007, we believe this telephony broadband service offers us significant
incremental revenue potential."
Mr. Holtzman concluded, "Taken as a whole, we are proud of the Company's
outstanding performance and excited by market developments. For the year ahead,
we will continue to investigate strategic actions that we believe will create
additional value for our shareholders.
Our 100% owned subsidiary, Smile.Communications Ltd. intends to restructure the
debt incurred in connection with the 012 Golden Lines Ltd. acquisition,
including refinancing a portion of the debt. In preparation for these
activities, Smile.Communications recently received an A1 rating from "Moody's"
affiliated rating agency in Israel with respect to a private debt placement in
Israel."
Business Segment Overview
Smile.Communications: Revenues for 2006 increased by 39% compared with 2005,
reaching NIS 343 million (US $81.2 million) compared with NIS 246.6 million in
2005. Operating income for 2006 increased by 57% compared with 2005, reaching
NIS 32.1 million (US $7.6 million) compared with NIS 20.5 million in 2005.
-- Smile.Net - ISP: As of December 31, 2006, the Company's broadband
customer base grew by 29% as compared with number of subscribers at the
end of 2005.
-- Smile.015 - International Telephony: For the full year period, revenues
from the international telephony business grew by 135% compared with
2005.
-- Smile.Biz - Business Services: The Group's business service revenues for
the twelve-month period rose 21% compared with the parallel period of
2005.
Smile.Media : Revenues for 2006 increased by 40% compared with 2005, reaching
NIS 71.4 million (US $16.9 million) compared with NIS 51.1 million in 2005.
Operating income for 2006 increased by 73%, reaching NIS 14.5 million (US $3.4
million) compared with NIS 8.4 million in 2005.
-- e-Advertising: On a year-over-year basis, the Group's e-Advertising
revenues rose by 47% compare to 2005.
-- e-Commerce / Content: On a year-over-year basis, e-Commerce revenues were
up by 15% compare to 2005.
Expected Impact of the 012 Golden Lines acquisition and merger on the Company
Internet Gold, through its 100% ownership of Smile.Communications, has become a
major player in the Israeli fast growing communications market with an
approximate one-third share in both the ISP market and international long
distance ("ILD") market.
Total float of IGLD shares
In April 2005, Internet Gold completed an offering in Israel of NIS 220 million
of convertible bonds that should have been paid in April 2008 until April 2015
and warrants to purchase 2.5 million ordinary shares that are exercisable until
October 15, 2007. The bonds are convertible into ordinary shares at a conversion
price of NIS 40 ($9.50) per share until March 2008, at which time the conversion
price will increase to NIS 50 ($11.80). The exercise price of the warrants is
currently NIS 41.1 ($9.70), which price is linked to Israeli Consumer Price
Index. Beginning in the fourth quarter of 2006 holders of the bonds and warrants
began to convert their bonds and exercise the warrants. As at December 31, 2006,
bond holders had converted NIS 6.4 million ($1.5 million) of the bonds into
159,721 ordinary shares. Subsequent to December 31, 2006 and through February
21, 2007, bond holders had converted NIS 30 million ($7.1 million) of the bonds
into 750,182 ordinary shares and warrants to purchase 756,739 ordinary shares
had been exercised, with the Company receiving NIS 31.1 million ($7.4 million)
in proceeds from the exercise of the warrants.
About Internet Gold
Internet Gold is one of Israel's leading communications groups with a major
presence across all Internet-related sectors. Its Smile.Communications segment
is one of the country's major Internet and International Telephony service
providers, and one of its largest providers of enterprise/IT integration
services. Its Smile.Media segment manages a growing portfolio of Internet
portals and e-Commerce sites.
Internet Gold is part of the Eurocom communications group. Its shares trade on
the Nasdaq Global Market and on the Tel Aviv Stock Exchange.
For additional information about Internet Gold, please visit its investors' site
at www.igld.com.
NOTE A: Convenience Translation to Dollars
For the convenience of the reader, the reported NIS figures of December 31, 2006
have been presented in thousands of U.S. dollars, translated at the
representative rate of exchange as of December 31, 2006 (NIS 4.2250 = U.S.
Dollar 1.00). The U.S. Dollar ($) 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
Internet Gold - Golden Lines Ltd.
Statements of Operations - Consolidated
Convenience
translation
into US
Dollars
NIS4.225=US$1
Consolidated Consolidated
Consolidated Year Year Year Year ended
Three months ended ended ended ended Dec. 31
Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 2006
2006 2005 2006 2005 2004 (Unaudited)
(Unaudited)(Unaudited)(Unaudited)(Audited)(Audited) US$
NIS thousands (except for per share data) thousands
Revenues 117,274 81,094 414,391 297,707 219,577 98,081
Costs and
expenses:
Cost of revenues 75,703 46,571 257,662 159,943 96,820 60,985
Selling and
marketing
expenses 19,514 18,121 76,188 75,710 73,155 18,033
General and
administrative
expenses 8,625 9,264 33,957 33,156 24,258 8,037
Total costs
and expenses 103,842 73,956 367,807 268,809 194,233 87,055
Income from
operations 13,432 7,138 46,584 28,898 25,344 11,026
Financing
income
(expenses), net 2,997 (1,565) (5,614) (9,403) 122 (1,329)
Other (expenses)
income, net (10,023) 30 (12,813) 237 (1,077) (3,033)
Income from
continued
operations
before income
taxes 6,406 5,603 28,157 19,732 24,389 6,664
Tax expenses
(income) 219 230 1,286 1,451 (301) 304
Income after
tax expenses 6,187 5,373 26,871 18,281 24,690 6,360
Minority
interest in
operations of
consolidated
subsidiaries (90) - (34) - - (8)
Company's share
in net income
(loss) of
investees (26) - (334) - (396) (79)
Income from
continued
operations 6,071 5,373 26,503 18,281 24,294 6,273
Company's
share in loss
of a subsidiary
from discontinued
operations - - - - (4,763) -
Net income 6,071 5,373 26,503 18,281 19,531 6,273
Income (loss) per share,
basic and diluted
Net income per
NIS 0.01 par value
of shares (in NIS)
from continuing
operations 0.33 0.29 1.44 0.99 1.32 0.34
Net loss per
NIS 0.01 par
value of shares
(in NIS) from
discontinued
operations - - - - (0.26) -
Net income
per NIS 0.01
par value of
shares (in NIS) 0.33 0.29 1.44 0.99 1.06 0.34
Weighted average
number of shares
outstanding
(in thousands) 18,591 18,432 18,591 18,432 18,432 18,591
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: February 26, 2007