Company Reports Another Quarter of Record Operating Cash Flow
PETACH TIKVA, Israel, August 13 /PRNewswire-FirstCall/ -- Internet
Gold Golden Lines Ltd., (NASDAQ Global Market and TASE: IGLD) today
reported its financial results for the second quarter of 2009.
Highlights - Strong revenues and EBITDA: Second quarter revenues up
10% to NIS 309 million; adjusted EBITDA up16% to NIS 71 million. -
Strong operating cash flow: NIS 58 million in Q2 2009. Net
outstanding financial debt as of June 30, 2009 decreased by NIS 133
million from the beginning of 2009. - 012 Smile.Communications:
Delivers excellent performance while continuing to investigate
growth opportunities - Record performance in EBITDA and cash flow
from operations - Broadband segment revenue increases by 14% -
International long distance (ILD) business up year-over-year and
quarter-over-quarter - Total of 120,000 local telephony lines as of
the end of the quarter and continues to grow - Smile.Media
continues to achieve stable growth in revenues, positive cash flow
and bottom line profitability. - Share and bond buy-back programs
continue. (in millions of NIS) Q2'09 Q2'08 Q1'09 vs. Q1'08 Revenues
309 281 10% Gross Profit 94 91 3% Operating Income 40 29 38%
Adjusted EBITDA 71 61 16% Net Income (Loss) 23 (8) 288% Financial
Results for the Second Quarter Revenues: Revenues for the second
quarter of 2009 were NIS 309 million (US $79 million), a 10%
increase compared with NIS 281 million in the second quarter of
2008. The increase in revenues reflects the results delivered by
012 Smile.Communications together with the modest contribution of
Smile.Media. Adjusted EBITDA: Adjusted EBITDA for the second
quarter of 2009 was NIS 71 million (US $18 million), a 16% increase
compared with NIS 61 million for the second quarter of 2008. For
more information regarding the use of non-GAAP financial measures,
please see the notes in this press release. Financial Expenses
(Income), Net: Financial income net, for the second quarter of 2009
totaled NIS 4.3 million (US $1.1 million) compared with NIS 32.6
million expenses in the second quarter of 2008. In the second
quarter of 2009, the Company recorded NIS 16 million (US $4
million) of financial expenses associated with the decrease of the
exchange rate of the US dollar against the NIS, and NIS 29 million
(US $7.4 million) expenses associated with the company bond series.
In addition, during the second quarter of 2009, the market price of
certain of the Company's investments increased as a result of the
global improvement in the capital markets. The Company has
classified these investments as marketable securities and is
required to mark these investments to market value. Net Results: On
a U.S. GAAP basis, the Company recorded net income for the second
quarter of 2009 of NIS 23.2 million (US $5.9 million), or NIS 1.26
(US $0.32) per share on a fully diluted basis. This compares to a
net loss of NIS 8 million, or NIS 0.37 per share on a fully diluted
basis for the second quarter of 2008. Capital Resources The
Company's cash, cash equivalents and marketable securities as of
June 30, 2009 were NIS 613 million (US $156 million). Total assets
as of June 30, 2009 were NIS 1,969 million (U.S. $503 million) and
total bank debt was NIS 36 million (U.S. $9.2 million).
Shareholders' equity as of June, 30 2009 was NIS 419 million ($107
million), representing 21% of total assets. The Company's current
ratio as of June, 30 2009 was 2.1, while the ratio of net debt to
EBITDA was 1.2, which is within the target range established by
management. Comments of Management Commenting on the results, Eli
Holtzman, Internet Gold's CEO, said, "The second quarter was,
again, a strong quarter for our group. The primary driver of our
results remains our communications segment which has achieved
superb operating results in all parameters as a leader in the
Israeli communications market. 012 Smile continued to build its
core business and expand its base of VOB domestic telephony
subscribers. We are also pleased that our media segment presented
an additional quarter of stable growth with net and operating
profitability. In parallel, our strong cash position enhances the
financial stability of our group, creating the strong platform we
need to move forward with our growth strategy." Mr. Holtzman
continued, "Taken as a whole, we are optimistic about new
opportunities in our growing communication market and believe that
we are in a good position to go after new opportunities, taking our
company to the next level." Business Segments 012
Smile.Communications Ltd. (NASDAQ and TASE: SMLC): 012
Smile.Communications reported improved quarterly revenues of NIS
291 million (US $74 million) for the quarter ended June 30, 2009,
compared to NIS 264 million for the same period in 2008, a 10%
increase. Revenue from broadband services increased to NIS 150
million (US $38 million) for the quarter ended June 30, 2009
compared to NIS 132 million for the second quarter of 2008, an
increase of 14%. Revenue from traditional voice services for the
quarter was NIS 141 million (US $36 million) compared to NIS 132
million for the same period last year. Operating income for the
second quarter of 2009 increased to NIS 41 million (US $10.5
million) compared with NIS 33 million for the same period last
year. Operating income for the second quarter of 2009 benefited
from a one-time gain of NIS 3.8 million (US $1 million) from a
decrease in provision for contingent liabilities as a result of a
change in the status of a legal dispute. Adjusted EBITDA for the
second quarter of 2009 increased to a record NIS 71 million (US $18
million) compared with NIS 63 million for the same period last
year. Smile.Media Ltd.: Smile.Media delivered another consecutive
quarter of operating income and net income during the second
quarter of 2009. The segment's revenues for the second quarter were
NIS 18 million (US $4.6 million), derived primarily from its
e-commerce businesses. The subsidiary's operating income for the
second quarter of 2009 reached NIS 0.7 million (US $0.2 million)
compared with a loss of NIS 2 million for the same period last
year. Net income for quarter ended June 30, 2009 increased to NIS
0.3 million (US $85,000) compared to a loss, of NIS 3 million for
the same period in 2008, Adjusted EBITDA for the second quarter of
2009 increased to NIS 1.1 million (US $0.3 million) compared with a
loss of NIS 0.2 million for the same period last year. Other:
During the second quarter of 2009, Internet Gold incurred operating
expenses of approximately NIS 1.3 million (US $0.33 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
venture and M&A opportunities. Buyback Programs - Share
Repurchase Program: The Company repurchased 423,374 of its ordinary
shares during the quarter ended June 30, 2009. The total number of
Internet Gold shares repurchased through the Company's share
repurchase programs as of June 30, 2009 reached 5,366,668 shares,
bringing the number of total outstanding shares as of June 30, 2009
to 18,151,738. From June 30, 2009 to August 10, 2009, an additional
72,391 shares were repurchased, reducing the total number of
outstanding shares to 18,079,347 as of August 10, 2009. - Bond
Repurchase Program: The Company did not repurchase any of its bonds
during the quarter or to date. As of June 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 June 30, 2009 have been presented in thousands of U.S. dollars,
translated at the representative rate of exchange as of June 30,
2009 (NIS 3.919 = 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
Internet Gold is one of Israel's leading communications groups with
a major presence across all Internet-related sectors. Its 74.79%
owned 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
3.919 June 30 December 31 June 30 2009 2008 2009 (Unaudited)
(Audited) (Unaudited) NIS thousands $ thousands Current assets Cash
and cash equivalents 136,481 86,090 34,826 Marketable securities
476,340 214,895 121,546 Trade receivables, net 219,349 217,796
55,971 Related parties receivable 2,215 1,729 565 Prepaid expenses
and other 29,193 27,046 7,449 current assts Deferred tax assets 808
26,116 206 Total current assets 864,386 573,672 220,563 Investments
Long-term trade receivables 6,400 6,350 1,633 Marketable securities
- 279,823 - Assets held for employee 17,779 17,786 4,537 severance
benefits Deferred tax assets 55 57 14 Property and equipment, net
175,098 171,104 44,679 Other assets, net 325,768 302,934 83,125
Other intangible assets, net 162,972 174,640 41,585 Goodwill
416,888 416,888 106,376 Total assets 1,969,346 1,943,254 502,512
Consolidated Balance Sheets (cont'd) Convenience translation into
U.S. dollars $1 = NIS 3.919 June 30 December 31 June 30 2009 2008
2009 (Unaudited) (Audited) (Unaudited) NIS thousands $ thousands
Current liabilities Short-term bank credit 30,402 42,738 7,758
Current maturities of long-term obligations 6,632 11,238 1,692
Accounts payable 136,071 148,580 34,721 Current maturities of
convertible 15,521 17,516 3,960 debentures Current maturities of
debentures 75,654 100,142 19,304 Deferred tax liabilities 1,428 -
364 Other payable and accrued expenses 142,431 125,388 36,344
Related parties payable 606 3,223 155 Total current liabilities
408,745 448,825 104,298 Long term liabilities Long-term obligations
and other payables - 760 - Convertible debentures 71,493 84,857
18,243 Debentures 767,345 812,254 195,801 Deferred tax liabilities
58,748 46,856 14,991 Liability for employee severance benefits
35,294 34,626 9,005 Total long term liabilities 932,880 979,353
238,040 Total liabilities 1,341,625 1,428,178 342,338 Shareholders'
equity 418,689 324,604 106,836 Non-controlling interest 209,032
190,472 53,338 Total equity 627,721 515,076 160,174 Total
liabilities and shareholders' equity 1,969,346 1,943,254 502,512
Consolidated Statements of Operations Convenience translation into
dollars $1 = NIS 3.919 Six-month Three months period Six months
period period ended ended ended June 30 June 30 June 30 2009 2008
2009 2008 2009 (Unaudited)(Unaudited) (Unaudited)(Unaudited)
(Unaudited) NIS thousands NIS thousands $ thousands Revenue 308,618
281,423 610,275 561,055 155,722 Cost and operating expenses Cost of
revenue 214,738 190,240 420,897 378,562 107,399 Selling and
marketing 37,868 40,473 78,130 82,550 19,936 General and
administrative 15,579 19,567 31,229 36,844 7,969 Impairment and
other expenses, net - 2,062 - 6,922 - Total operating expenses
268,185 252,342 530,256 504,878 135,304 Operating income 40,433
29,081 80,019 56,177 20,418 Financial expenses (income), net
(4,268) 32,606 (31,701) 55,071 (8,089) Income (loss) before income
taxes 44,701 (3,525) 111,720 1,106 28,507 Income tax expenses
14,906 3,090 35,710 5,522 9,112 Income (loss) after income tax
expenses 29,795 (6,615) 76,010 (4,416) 19,395 Net income
attributable to non- controlling interest 6,588 1,497 19,960 3,047
5,093 Net income (loss) 23,207 (8,112) 56,050 (7,463) 14,302 Basic
earnings (loss) per share Basic earnings (loss) per share 1.26
(0.37) 3.01 (0.33) 0.77 Weighted average number of ordinary shares
used in calculation of basic earnings per share 18,367 21,845
18,644 22,388 18,644 Diluted earnings (loss) per share Diluted
earnings (loss) per share 1.26 (0.37) 2.93 (0.33) 0.75 Weighted
average number of shares used in calculation of diluted earnings
per share 18,367 21,845 20,218 22,388 20,218 Reconciliation Table
of Non-GAAP Measures (NIS in thousands) Convenience translation
into dollars $1 = NIS 3.919 Six-month Three months period Six
months period period ended ended ended June 30 June 30 June 30 2009
2008 2009 2008 2009 (Unaudited)(Unaudited) (Unaudited)(Unaudited)
(Unaudited) NIS thousands NIS thousands $ thousands GAAP operating
income 40,433 29,081 80,019 56,177 20,418 Adjustments Amortization
of acquired intangible assets 5,606 6,820 11,440 13,640 2,920
Impairment and other expenses, net - 2,062 - 6,922 - Stock
compensation in accordance with SFAS 123(R) 1,239 950 2,478 950 632
Non-GAAP adjusted operating income 47,278 38,913 93,937 77,689
23,970 GAAP tax expenses, net 14,906 3,090 35,710 5,522 9,112
Adjustments Amortization of acquired intangible assets Included in
tax expenses, net 1,487 1,841 2,974 3,683 759 Non-GAAP tax
expenses, net 16,393 4,931 38,684 9,205 9,871 Net income (loss) as
reported 23,207 (8,112) 56,050 (7,463) 14,302 Non-controlling
interest in operations of consolidated subsidiaries 6,588 1,497
19,960 3,047 5,093 Income tax expenses 14,906 3,090 35,710 5,522
9,112 Impairment and other expenses, net - 2,062 - 6,922 - Stock
compensation in accordance with SFAS 123(R) 1,239 950 2,478 950 632
Financial expenses (income), net (4,268) 32,606 (31,701) 55,071
(8,089) Depreciation and amortization 28,878 28,673 56,687 56,994
14,465 Adjusted EBITDA 70,550 60,766 139,184 121,043 35,515 For
further information, please contact: Ms. Idit Azulay, Internet Gold
/ Tel: +972-72-200-3848 DATASOURCE: Internet Gold CONTACT: For
further information, please contact: Ms. Idit Azulay, Internet
Gold, / Tel: +972-72-200-3848
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