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 2004
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 23% Revenue Growth, Commencing
International Telephony Services dated November 10, 2004.
Item 1
Press Release Source: Internet Gold
Internet Gold Reports 23% Revenue Growth, Commencing International Telephony
Services
Wednesday November 10, 7:06 am ET
Core Business Strengthens; Momentum Building in Subsidiaries; Successful Launch
of 015 International Telephony
PETACH TIKVA, Israel, November 10 /PRNewswire-FirstCall/ -- Internet Gold,
(Nasdaq: IGLD - News) today reported unaudited financial results for the third
quarter and first nine months of 2004.
Highlights
o Q3 revenues up 23% to $12.1 million, compared with the third quarter
of 2003
o Broadband subscriber base continues to rise: up 43% since January 2004
o Rapidly growing revenues from Value Added Services e-advertising and
e-commerce
o Successful launch of 015 International telephony, with ~28% mind share
achieved in 2 months
o Solid profitability despite initial heavy investment in 015 launch
activities
Financial Results
Revenues for the third quarter were NIS 54.3 million (US$ 12.1 million), an
increase of 23% compared with NIS 44.3 million in the third quarter of 2003, and
2% compared with NIS 53.2 million in the second quarter of 2004. Gross margins
for the quarter were 53.3%, above the Company's target of 50%. Net income for
the period was NIS 1.5 million (US$ 0.3 million), or NIS 0.08 (US$ 0.02) per
share, compared with NIS 6 million, or NIS 0.3 per share in the third quarter of
2003. The reduction in net income was attributed mainly to the company's
investment of NIS 7.2 million (US$ 1.6 million) in the set-up and initial
marketing campaign for the launch of its new 015 service.
Cash flow from operations in the third quarter was NIS 9.4 million (US$ 2.1
million) compared with NIS 8.9 million in the third quarter of 2003 and NIS 15.6
million in the second quarter of 2004.
"We are proud to report our 7th consecutive quarter of revenue growth, together
with continued solid profitability," commented Eli Holtzman, Internet Gold's
CEO. "The quarter was also a time of significant strategic development as we
moved forward with plans to diversify our product offering, capitalize on
emerging opportunities and expand our presence in Israel's fast-moving telecom
marketplace."
"We are pleased to have been able to maintain solid profitability despite the
initial expenses associated with our new 015 International Telephony business,
including $1.3 million invested in a multimedia launch and advertising campaign.
Our first-phase activities targeted the residential market, the largest and most
profitable sector. In just two months, 015 succeeded in capturing nearly 28%
mind share, an achievement that has validated our service concept and marketing
strategies. Our revenues for the third quarter were not significantly enhanced
by the new activity since much of the new traffic was generated at a low rate as
part of the launch promotion. However, we expect to realize appreciable revenues
in the fourth quarter of 2004, and to benefit from the full impact towards the
second half of 2005. As we prepare to introduce 015's prepaid, post-paid,
calling card and business-sector services, we are confident in our ability to
reach a 10% share of this significant market by the end of 2005. Such an
achievement will more than compensate for the service's short-term impact on our
profitability."
Mr. Holtzman concluded, "Our continued revenue growth is being driven by the
ongoing expansion of our broadband subscriber base, which has risen by 43% since
the beginning of the year, and the increasing momentum of our VAS, e-advertising
and e-commerce activities. As strong believers in these emerging markets, we are
positioning ourselves for leadership, both via an increased focus on our
subsidiaries and investee companies and through active consolidation of Israel's
Internet portal and e-commerce field. We believe these business areas will be
our primary growth engines in the future and the key to expanding the Group's
long-term shareholder value."
The Company's revenues for the first nine months of 2004 were NIS 158.5 million
(US$ 35.4 million), an increase of 20% compared with NIS 132.2 million for the
first nine months of 2003. Gross margins for the period were 56.1% compared to
46.6% in the same period of 2003. Net income for the first nine months of 2004
was NIS 13.1 million (US$ 2.9 million), or NIS 0.71 (US$ 0.16) per share,
compared with NIS 9.2 million, or NIS 0.50 per share for the first nine months
of 2003.
Cash flow from operations for the nine month period was NIS 36.5 million (US$
8.1 million) compared with NIS 17.7 million for the first nine months of 2003.
Review of Subsidiaries and Investee Companies
Gold Mind Ltd. (100% ownership, value-added services and rich Internet content):
Gold Mind's revenues for the first nine months of 2004 increased by 142%
compared to the first nine months of 2003. This strong performance reflects
rising demand for its Anti-Virus and Anti-Spam services as well as customized
on-line magazines/newsletters.
MSN Israel (50.1% ownership, e-advertising via MSN, MSN Messenger, Hotmail
Israel and MSN Search Israel): As of the end of the third quarter, MSN-Israel's
popular Messenger service had approximately 730,000 active users. Its revenues
for the first nine months of 2004 increased by 38% compared to the first nine
months of 2003.
Gold Trade (48.3% ownership, operates the P1000 e-commerce site) reached
positive EBITDA (earnings before interest, taxes, depreciation and amortization)
during Q3, reflecting a 27% rise of its e-commerce revenues in the first nine
months of 2004 as compared to the first nine months of 2003.
The Company's management will host an interactive teleconference to discuss the
results today (November 10, 2004) at 10:00 a.m. EST. To participate, please call
one of the following access numbers several minutes before the call begins:
+1-866-276-1485 from within the U.S. or Canada, +1-800-917-4256 from within the
U.K., or +972-3-925-5910 from international locations. The call will also be
broadcast live through the company's Website, www.igld.com, and will be
available there for replay during the next 30 days.
About Internet Gold
Internet Gold is a communications company that provides Internet access and
related value-added services, international telephony, e-advertising, content
and e-Commerce services throughout Israel to both residential and business
customers.
Internet Gold's operations are carried out through four subsidiaries. Its
fully-owned subsidiary Internet Gold International specializes in the provision
of international Internet and communication services. Its fully-owned subsidiary
Gold Mind focuses on the provision of Internet value-added services. Through MSN
Israel, its joint-venture (50.1% ownership) with Microsoft Corp. (49.9%
ownership), the Company operates Israel's leading Internet portal. Through Gold
Trade, its e-Commerce joint venture (48.3% ownership), the Company has
established itself as one of Israel's leading e-Commerce providers.
For additional information about Internet Gold, please visit our Website at
www.igld.com.
Note A: Convenience Translation to Dollars
The convenience translation of the Adjusted New Israeli Shekel (NIS) into U.S.
dollars was made at the rate of exchange prevailing at September 30, 2004:
U.S. $1.00 equals NIS 4.482. The translation was made solely for the convenience
of the reader.
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 and its other reports as filed
from time to time with the Securities and Exchange Commission.
Internet Gold - Golden Lines Ltd.
Consolidated Balance Sheets
Convenience
translation into
U.S. dollars
NIS 4.482=US$1
September September December September
30 2004 30 2003 31 2003 30 2004
(Unaudited) (Unaudited) (Audited) (Unaudited)
New Israeli Shekels - in thousands US$ in
thousands
Current assets
Cash and cash equivalents 85,674 81,879 81,891 19,115
Trade receivables, net 44,612 31,886 35,570 9,953
Other receivables 10,318 8,637 12,769 2,303
Deferred taxes 377 1,195 1,914 84
Total current assets 140,981 123,597 132,144 31,455
Investments
Deferred taxes 16 916 21 4
Long-term investments 1,331 1,550 1,550 297
Long-term loans - 3,916 - -
1,347 6,382 1,571 301
Property and
equipment, net 36,419 28,234 29,160 8,126
Other assets and
deferred charges 105,864 53,209 51,130 23,620
Total assets 284,611 211,422 214,005 63,502
Internet Gold - Golden Lines Ltd.
Convenience
translation into
U.S. dollars
NIS 4.482=US$1
September September December September
30 2004 30 2003 31 2003 30 2004
(Unaudited) (Unaudited) (Audited) (Unaudited)
New Israeli Shekels - in thousands US$ in
thousands
Current liabilities
Short-term bank loans 5,253 7,784 5,259 1,172
Accounts payable 69,967 *35,505 *36,591 15,611
Other payables 16,319 *11,281 *14,037 3,641
Total current liabilities 91,539 54,570 55,887 20,424
Long-term liabilities
Long-term obligations
under lease agreement 45,894 33,248 27,389 10,240
Deferred revenues 14 40 23 3
Liability for termination
of employer- employee
relations, net 5,816 4,695 4,928 1,298
Company's share in excess
of liabilities over assets 10,156 5,892 7,707 2,266
in investees
Total long-term
liabilities 61,880 43,875 40,047 13,807
Shareholders' equity
Ordinary shares 197 197 197 44
Additional paid in capital 215,040 215,040 215,040 47,979
Accumulated deficit (84,045) (102,260) (97,166) (18,752)
Total shareholders' equity 131,192 112,977 118,071 29,271
Total liabilities and 284,611 211,422 214,005 63,502
shareholders' equity
* Reclassified
Internet Gold - Golden Lines Ltd.
Consolidated Statements of Operations
Nine month Three month
period ended period ended
September 30 September 30
2004 2003 2004 2003
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
New Israeli Shekels - in thousands
Revenues 158,467 132,192 54,292 44,332
Costs and
expenses:
Cost of revenues 69,535 70,532 25,344 22,797
Selling and
marketing
expenses 52,747 29,384 20,462 9,843
General and
administrative 17,883 16,029 6,572 5,477
expenses
Total costs and 140,165 115,945 52,378 38,117
expenses
Income from 18,302 16,247 1,914 6,215
operations
Financing expenses
(income), net (253) 3,084 (342) (3,696)
Other (income)
expenses, net 1,444 2,603 (54) 2,587
Net income after
financing expenses 17,111 10,560 2,310 7,324
Income tax 1,541 (2,111) 240 354
(benefit)
Net income after
income
tax 15,570 12,671 2,070 6,970
Company's share in
net
loss of investees 2,449 3,462 590 926
Net income 13,121 9,209 1,480 6,044
Income per share
Net income per NIS
0.01
par value of
shares
(in NIS) 0.71 0.50 0.08 0.33
Weighted average
number
of shares
outstanding 18,432 18,432 18,432 18,432
Convenience
translation into
U.S. dollars
Year Ended NIS 4.482=US$1
December September
31 2003 30 2004
(Audited) (Unaudited)
New Israeli Shekels - in thousands US$ in
thousands
Revenues 179,642 35,356
Costs and expenses:
Cost of revenues 92,871 15,514
Selling and marketing
expenses 41,393 11,769
General and
administrative 21,908 3,990
expenses
Total costs and 156,172 31,273
expenses
Income from operations 23,470 4,083
Financing expenses
(income), net 3,235 (56)
Other (income)
expenses, net 2,592 322
Net income after
financing expenses 17,643 3,817
Income tax (1,935) 344
(benefit)
Net income after
Income tax 19,578 3,473
Company's share in net
loss of investees 5,275 546
Net income 14,303 2,927
Income per share
Net income per NIS
0.01 par value of shares
(in NIS) 0.78 0.16
Weighted average
number of shares
outstanding 18,432 18,432
For further information, please contact:
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: November 10, 2004