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 May 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 Announces Strong Q1 Results: Revenues
Increase by 224% to NIS 301M; With Non-GAAP EBITDA of NIS 63M dated
May 15, 2007.
ITEM 1
Press Release Source: Internet Gold
Internet Gold Announces Strong Q1 Results: Revenues Increase by 224% to NIS
301M; With Non-GAAP EBITDA of NIS 63M
Tuesday May 15, 2:53 am ET
First Quarter After Acquisition of 012 Golden Lines Yields Good Synergy Which is
Expected to Grow and Reach Full Effect by End of 2007
PETACH TIKVA, Israel, May 15 /PRNewswire-FirstCall/ -- Internet Gold,
(NASDAQ NMS and TASE: IGLD) today reported its financial results for the
quarter ended March 31, 2007.
On December 31, 2006, Internet Gold's 012 Smile.Communications Ltd. completed
the acquisition of 012 Golden Lines. As such, Internet Gold's results for the
first quarter of 2007 include the contribution of 012 Golden Lines for the first
time. To assist investors in making relevant comparisons the Company has made
reference to non-GAAP pro-forma Q1 2006 results, which consist of the sum of
Internet Gold's results and 012 Golden Lines' results for the period. To
supplement the consolidated financial statements presented in accordance with
generally accepted accounting principles ("GAAP") and the pro forma information,
the Company also uses certain other non-GAAP measures to enhance overall
understanding of its current financial performance and prospects for the future.
These non-GAAP measures and pro-forma results are provided for information
purposes only and are not presented in accordance with generally accepted
accounting principles.
Highlights for the quarter (year over year):
- 224% increase in revenue to NIS 300.7 million (US$ 72.4 million)
- 292% increase in non-GAAP EBITDA to NIS 63.1 million (US$ 15.2 million)
- 305% increase in non-GAAP operating income to NIS 39.3 million (US$ 9.5
million)
- 162% increase in earnings per share to NIS 0.94 (US$ 0.23)
Financial Results for the First Quarter
Revenues for the first quarter of 2007 reached NIS 300.7 million (US$ 72.4
million), an increase of 224% compared with NIS 92.9 million recorded in the
first quarter of 2006 and a 157% increase compared with the fourth quarter of
2006. The first quarter revenues were 19% higher than the combined revenues of
Internet Gold and 012 Golden Lines on a pro forma basis in the first quarter of
2006.
Non-GAAP operating income for the quarter reached NIS 39.3 million (US$ 9.5
million), a nearly four-fold increase compared with NIS 9.7 million recorded in
the first quarter of 2006, and a 193% increase compared with the fourth quarter
of 2006. Non-GAAP operating income increased by 48% in the first quarter of 2007
compared to the combined non-GAAP operating income of Internet Gold and 012
Golden Lines on a pro forma basis in the first quarter of 2006.
Non-GAAP operating margin for the first quarter of 2007 rose to13% compared to
10% recorded in the first quarter of 2006 and 11% in the fourth quarter of 2006.
If the operating income of Internet Gold and 012 Golden Lines had been combined
for the first quarter of 2006, its operating margin on a non-GAAP pro forma
basis would have been 11%.
GAAP operating income for the first quarter reached NIS 33.6 million (US$ 8.1
million). GAAP operating margin for the first quarter of 2007 was 11%.GAAP
operating income for the first quarter of 2006 reached NIS 9.7 million and its
GAAP operating margin was 10%. GAAP operating income for the forth quarter of
2006 reached NIS 13.4 million and its GAAP operating margin was 11%.
The difference between GAAP and non-GAAP operating income is a result of the
exclusion of amortization expenses related to the acquired intangible assets
from 012 in the first quarter of 2007. Non-GAAP results exclude the amortization
of acquired intangible assets from 012 of NIS 5.7 million net of taxes of NIS
4.1 million, in the first quarter of 2007. Out of the total purchase price paid
for the acquisition of 012 Golden Lines, a total of approximately NIS 200
million was assigned to certain intangible assets which are generally amortized
on a straight-line basis over their useful lives, generally 5 to 10 years. The
purchase price allocation for the acquisition of 012 is preliminary and is
subject to revision as more detailed analyses are completed and additional
information on the fair value of assets and liabilities becomes available. Any
change in the fair value of the net assets of the acquired company will change
the amount of the purchase price allocable to goodwill.
Net income for the first quarter of 2007 was NIS 18.5 million (US$4.5 million),
or NIS 0.94 (US$ 0.23) per share, an increase of 162% compared with NIS 6.6
million, or NIS 0.36 per share, for the first quarter of 2006, and an increase
of 207% compared with the fourth quarter of 2006. Net income increased by 24%
compared to the non-GAAP pro forma net income of Internet Gold and 012 Golden
Lines for the first quarter of 2006.
Non-GAAP EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)
for the quarter reached NIS 63.1 million (US$ 15.2 million), an increase of 292%
compared with the first quarter of 2006 and 212% compared with the fourth
quarter of 2006.
Comments of Management
Commenting on the results, Eli Holtzman, Internet Gold's CEO, said, "The first
quarter was an excellent period for Internet Gold from every perspective. The
successful merger has tripled our revenues as compared with the first quarter of
2006 and quadrupled our operating income. The Internet Gold Group was successful
in exhibiting high growth performance and we plan to continue focusing our
efforts on generating growth into the future."
Overview of the Company's Principal Subsidiaries:
012 Smile.Communications Ltd.: Revenues for Q1 2007 increased by 258% compared
with Q1 2006, reaching NIS 280.6 million (US $67.5 million). Non-GAAP operating
income for Q1 2007 increased by 549% compared with Q1 2006, reaching NIS 37
million (US $8.9 million), representing a non-GAAP operating margin of 13%.
Non-GAAP EBITDA for the period was 21%. Operating income for Q1 2007 was NIS
31.3 million (US $7.5 million), representing an operating margin of 11%. This
compared to operating income of NIS 5.7 million and an operating margin of 7% in
the first quarter of 2006.
- Broadband data: As of the end of the first quarter, the Company's broadband
customer base had reached nearly 500,000 subscribers.
- Traditional voice services: For the first quarter of 2007, revenues from the
Company's international telephony business grew by 413% compared with the first
quarter of 2006 and 14% compared with the revenues of Internet Gold and 012
Golden Lines on a pro forma basis in Q1 2006.
- Good progress with merger: During Q1, 012 Smile.Communications began executing
its merger plan, and has begun realizing synergies as projected. The effect of
the merger's synergies is projected to increase in the coming quarters and to
reach its full effect by the end of 2007.
- Successful bond offering: Recently, 012 Smile.Communications Ltd. completed a
private placement of NIS 425 million of debt to institutional investors in
Israel.
Commenting on the results, Ms. Stella Handler, CEO of Internet Gold's 100% owned
subsidiary 012 Smile.Communications, said, "I am extremely pleased with our
results this first quarter. While we are investing extra resources in driving
forward an efficient and smooth merger process, we have continued our focus on
the successful operation of all our business lines and were able to perform
extremely well.
"During the first quarter, we received a full operating license and have
finalized our marketing plans for launching our new Voice over Broadband (VOB)
domestic telephony services. We believe that our strong positioning across
Israel's ISP and international long distance ('ILD') markets, which connects us
directly to more than 700,000 customers, will enable us to establish a strong
market share quickly and to benefit over the long term from the expansion and
deregulation of the domestic market. We trust that this new market for us, which
is currently worth over one billion dollars in Israel, will indeed present our
next significant growth driver."
Smile.Media Ltd.: Revenues for the first quarter of 2007 increased by 39%
compared with the corresponding period of 2006, reaching NIS 20.1 million (US
$4.8 million). Operating income for Q1 2007 reached NIS 3.5 million (US $0.8
million). Non GAAP EBITDA margin for the period was 23%.
- e-Advertising: On a year-over-year basis, the Group's e-Advertising revenues
for the quarter rose by 30%.
- e-Commerce: On a year-over-year basis, the Group's e-Commerce revenues were up
by 80% compared to the first quarter of 2006.
Commenting on the results of the Smile.Media subsidiary, Mr. Holtzman concluded,
"We continue to believe strongly in the long-term potential of the interactive
advertising and e-Commerce markets, and have begun executing an aggressive
strategy designed to assure that we retain the leadership position we have built
over the past several years. To this end, we are expanding Smile.Media's
management team and investigating interesting opportunities in Israel as well as
in several emerging countries in order to solidify our leadership position in
these markets.
Increase in Number of IGLD Shares:Outstanding:
In April 2005, Internet Gold completed an offering in Israel of NIS 220 million
of convertible bonds that was scheduled to repaid during the period April 2008
through 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 ($9.60) per share until March 2008, at
which time the conversion price will increase to NIS 50 ($12.0). The exercise
price of the warrants is currently NIS 41 ($10), 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 March 31, 2007, bond and warrant holders had converted NIS 40.9 million
($9.8 million) of the bonds into 1,023,525 ordinary shares and exercised 835,487
warrants. Subsequent to March 31, 2007 and through May 9, 2007, bond holders had
converted an additional NIS 48.2 million ($11.6 million) of the bonds into
1,205,011 ordinary shares and warrants to purchase an additional 198,089
ordinary shares had been exercised, with the Company receiving NIS 8.1 million
($2.0 million) in proceeds from the exercise of the warrants.
Reconciliation Between the Results on a GAAP and Non-GAAP Basis
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.
About Internet Gold
Internet Gold is one of Israel's leading communications groups with a major
presence across all Internet-related sectors. Its 012 Smile.Communications 100%
owned subsidiary is one of Israel's major Internet and International Telephony
service providers, and one of its largest providers of enterprise/IT integration
services. Its 100% owned Smile.Media subsidiary manages a growing portfolio of
Internet portals and e-Commerce sites.
Internet Gold is part of the Eurocom Communications Group and 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.
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.
NOTE A: Convenience Translation to Dollars
For the convenience of the reader, the reported NIS figures of March 31, 2007
have been presented in thousands of U.S. dollars, translated at the
representative rate of exchange as of March 31, 2007 (NIS 4.155 = 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.
Consolidated Balance Sheets
Convenience
translation
into
into US
Dollars
NIS4.155=US$1
March 31 March 31 December 31 March 31
2007 2006 2006 2007
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
NIS (in US$ thousands
thousands)
Current assets
Cash and cash 73,358 264,095 320,479 17,655
equivalents
Short-term investment 418 1,213 883 101
Trade receivables, net 246,555 75,059 219,308 59,339
Other receivables 44,933 14,372 42,462 10,814
Deferred taxes 6,683 497 6,846 1,608
Assets allocated to 6,116 - 5,927 1,472
discontinued operations
Total current assets 378,063 355,236 595,905 90,989
Long-term receivables
and non current
assets 2,895 477 4,238 697
Property and equipment, 155,467 35,594 161,759 37,417
net
Other assets and 918,155 110,292 915,358 220,976
deferred charges
Total assets 1,454,580 501,599 1,677,260 350,079
Consolidated Balance Sheets - Cont.
Convenience
translation
into
into US
Dollars
NIS4.155=US$1
March 31 March 31 December 31 March 31
2007 2006 2006 2007
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
NIS (in US$ thousands
thousands)
Current liabilities
Short-term bank credit 366,021 8,063 372,039 88,092
Accounts payables 208,474 62,777 206,584 50,174
Other payables 59,496 28,293 51,900 14,319
Payables in respect of - - 584,000 -
acquisition of 012
Liabilities allocated to
discontinued operations - - 718 -
Total current liabilities 633,991 99,133 1,215,241 152,585
Long-term liabilities
Long-term loans and other
long-term
obligations 53,995 27,204 19,599 12,995
Liability for termination
of employer-
employee relations, net 14,207 7,324 14,844 3,419
Deferred tax liability 38,972 - 38,246 9,380
Debentures 270,674 - - 65,144
Convertible debentures 165,668 203,703 198,998 39,872
Total long-term
liabilities 543,516 238,231 271,687 130,810
Minority interest - - 89 -
Shareholders' equity
Ordinary shares 216 197 199 52
Additional paid in capital 307,111 232,476 238,776 73,913
Accumulated deficit (30,254) (68,438) (48,732) (7,281)
Total shareholders' equity 277,073 164,235 190,243 66,684
Total liabilities and
shareholders' equity 1,454,580 501,599 1,677,260 350,079
Consolidated Statements of Operations
Convenience
translation
into
into US
Dollars
NIS4.155=US$1
Three month
Three-month period ended Year ended period ended
March 31 December 31 March 31
2007 2006 2006 2007
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
NIS thousands (except per share data) US$ thousands
Revenues 300,676 92,845 413,559 72,365
Costs and expenses:
Cost of revenues 208,049 57,102 257,001 50,072
Selling and marketing
expenses 37,571 17,785 76,188 9,042
General and administrative 15,783 8,294 33,957 3,799
expenses
Amortization of acquired 5,705 - - 1,373
intangible assets
Total costs and expenses 267,108 83,181 367,146 64,286
Income from operations 33,568 9,664 46,413 8,079
Financing expenses, net 11,153 2,559 5,614 2,684
Other expenses (income),
net 460 (23) 12,813 111
Income before tax
expenses 21,955 7,128 27,986 5,284
Tax expenses 3,520 598 1,286 847
Minority's share (loss) in (44) (95) 34 (11)
consolidated subsidiary
Company's share in net
loss of investees 1 - 344 -
Net income 18,478 6,625 26,332 4,448
Income per share, basic
and diluted
Basic income per share 0.94 0.36 1.43 0.23
Diluted income per share 0.80 0.36 1.43 0.19
Weighted average number of
shares outstanding
(in thousands)
Basic income per share 19,658 18,432 18,438 19,658
Diluted income per share 24,928 18,432 18,438 24,928
Reconciliation Table of Non-GAAP Measures
Three-Month Period Ended
March 31,
2007 2006
(Unaudited)
(NIS In thousands)
GAAP operating income 33,568 9,664
Adjustments
Amortization of acquired intangible assets
Included In operating expenses 5,705 -
Non-GAAP operating income 39,273 9,664
GAAP tax expenses, net 3,520 598
Adjustments
Amortization of acquired intangible assets
Included In tax expenses, net 1,655 -
Non-GAAP tax expenses, net 5,175 598
Net Income As Reported 18,478 6,625
Minority Interest In Operations Of
Consolidated Subsidiaries (44) (95)
Company's Share In Net Income (Loss) Of
Investees 1 -
Taxes On Income 3,520 598
Other Expenses 460 (23)
Financial Expenses 11,153 2,559
Depreciation & Amortization 29,505 6,427
Non-GAAP EBITDA 63,073 16,091
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
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: May 15, 2007