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 2005
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 Financial Results for Q3 2005
dated November 8, 2005.
Item 1
Press Release Source: Internet Gold
Internet Gold Reports Financial Results for Q3 2005
Tuesday November 8, 8:42 am ET
Revenue Growth of 35% YOY Reflecting Successful Expansion Into Internet Media
and International Telephony Businesses Focus for Third Quarter: Consolidation &
Efficiency PETACH TIKVA, Israel, November 8 /PRNewswire-FirstCall/ -- Internet
Gold, (Nasdaq: IGLD - News) today reported its financial results for the third
quarter ended September 30, 2005.
Highlights of the Quarter
- $15.9 million revenues, up 35% year-over-year
- Strongest growth drivers: Internet Advertising/Portal and International
Telephony businesses
- 'smile' re-branding program successful: will improve marketing efficiency
- Bottom-line impacted by re-branding, consolidation and efficiency program and
unusually high financing expenses
- Following completion of new VoIP activity implementation, company launched
consolidation/efficiency program to optimize customer service operations and
improve margins
Financial Results
Revenues for the third quarter were NIS 73.3 million (US$ 15.9 million), an
increase of 35% compared with NIS 54.3 million in the third quarter of 2004.
Gross margin for the quarter was to 46.6% reflecting marketing strategies
adopted to build market share in the competitive Internet Access and
International Telephony markets.
Operating income for the quarter reached NIS 5.7 million (US$ 1.2 million), an
increase of 200% compared to the parallel quarter of 2004.
Net income for the quarter was NIS 1.6 million (US $0.4 million), or NIS 0.09
(US$ 0.02) per share, reflecting unusually high financing expenses of NIS 3.5
million (US$ 0.8 million). The rise in financing expenses resulted from a 1.4%
rise in Israel's Consumer Price Index (CPI) for the quarter. This raised the
interest due on the Group's CPI-linked bonds, although the effect was mitigated
somewhat by the Group's successful hedging activities. Net income for the third
quarter of 2004 was NIS 1.5 million, or NIS 0.08 per share.
Comments of Management
"The growth of our business over the past twelve months reflects the successful
launch and build-out of our International Telephony business, which took place
exactly one year ago, and the continuous ramp-up of our Internet
Advertising/Portal and e-Commerce businesses, together with the ongoing
development of our core Internet access business," commented Eli Holtzman,
Internet Gold's CEO. "To build our leadership and market share in extremely
competitive markets, we have utilized aggressive pricing and marketing
strategies, and, during the last quarter, carried out a successful re-branding
program."
"During recent quarters, our team continued building and optimizing our new VoIP
operations. With all operating systems in place and functioning well, we have
now combined the call centers of our access and international telephony
businesses into a single facility with a unified support staff and consolidated
the engineering teams of our various activities. Most of these costly activities
were completed during the third quarter. We anticipate that this step will
reduce our costs significantly in the coming quarters and open up new
cross-sales opportunities within our existing customer base."
Mr. Holtzman continued, "On the Media side of the business, market trends
continue to operate in our favor. Internet advertising budgets continue to grow
dramatically, along with Internet usage and online purchases. Our acquisitions,
partnerships and marketing efforts over the past year have established Internet
Gold as a leading Internet Media Group, and we continue to expand our content
franchise. We believe our Internet Media and e-Commerce businesses will become
our strongest revenue and profit drivers over the long-term."
Overview of Business Segments
smile.net - access and access-related value added services: During the third
quarter, sales of the Group's Business Division grew by 11% compared to the
previous quarter, while revenues from the Group's WiFi based home networking
services grew by more than 70%.
smile.media - e-Advertising/Content: In line with its goal of expanding its
positioning as a primary Internet Media Group, during the third quarter, the
Group closed additional acquisitions and partnerships, expanding the range of
Internet media properties that it offers to potential advertisers:
- GetPrice: the Group's subsidiary, MSN-Israel, acquired a 51% interest in
getprice.co.il, one of Israel's most popular price comparison sites. Working
with GetPrice, MSN-Israel intends to establish a new price comparison site
called MSN-Compare.
- Hype/Tipo: the Group's subsidiary GoldMind acquired a 50.1% interest in
tipo.co.il, Israel's leading children's portal with approximately 30 million
page views per month.
- MSNJobs: in partnership with Redmatch, one of the world's fastest-growing
online job-search companies, MSN-Israel launched MSNJobs, a new Hebrew-language
job search site, at the end of September.
- Net-Express: by the end of the third quarter, the Group extended its strategic
partnership with Net-Express, the founder of netex.co.il, one of Israel's most
popular Hebrew language Internet search engines and web directory sites.
- Nirshamim: Revenues from Nirshamim, an acquisition completed earlier in 2005,
grew by 19% during the third quarter and the site achieved strong profitability.
smile.015 - International Telephony: Company has maintained its market share in
the residential segment while putting special emphasis on its business
customers. In conjunction with its ongoing marketing activity, the company
focused its marketing efforts on Israel's Russian-speaking populations,
resulting in a significant rise in costumers from this high-potential niche
market. During the third quarter, the Company expanded its base of international
carriers to allow for future growth.
smile.shops - e-Commerce: Q3 revenues of P-1000, the Group's e-Commerce
business, rose by 8% during the quarter compared to Q2, while operating income
rose by 12%. The Group continues to evaluate acquisition and consolidation
opportunities in the sector.
About Internet Gold
Internet Gold is a group of communications companies that provide Internet
access and related value-added services, international telephony, e-advertising,
content and e-Commerce services throughout Israel under the brand name "smile".
The broad range and popularity of these services have established Internet Gold
as one of Israel's leading Internet Communications groups.
The Internet Gold Group includes four subsidiaries. MSN-Israel, its 50.1% owned
joint-venture with Microsoft Corp. (49.9% owned), provides Microsoft-branded
Search, Instant Messaging, Hotmail and a variety of portal services. Internet
Gold International, a fully-owned subsidiary, provides international Internet
and communication services. GoldMind, a fully-owned subsidiary, provides
value-added services to Internet subscribers. GoldTrade, the Group's fully-owned
e-Commerce subsidiary, operates e-Commerce sites.
For additional information about Internet Gold, please visit its Website at
www.igld.com.
NOTE A: Convenience Translation to Dollars
For the convenience of the reader, the reported NIS figures of September 30,
2005 have been presented in U.S. Dollars thousands, translated at the
representative rate of exchange as of September 30, 2005 (NIS 4.598 = 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:
Ms. Idit Azulay, Internet Gold
+972-3-939-9848
idita@co.zahav.net.il
Consolidated Balance Sheets
Convenience
translation
into
U.S.
dollars
NIS
4.598=US$1
September 30 September 30 December September
31 30
2005 2004 2004 2005
(Unaudited) (Unaudited) (Audited) (Unaudited)
New Israeli Shekels - in US$ in
thousands thousands
Current assets
Cash and cash equivalents 260,124 85,674 75,637 56,573
Short term investments 1,156 - - 251
Trade receivables, net 67,160 44,612 52,682 14,608
Other receivables 13,421 10,318 8,948 2,919
Deferred taxes 1,359 377 2,564 296
Total current assets 343,220 140,981 139,831 74,647
Investments
Deferred taxes 40 16 22 9
Long-term investments 200 1,331 - 43
Long-term loans 75 - - 16
315 1,347 22 68
Property and equipment, net 38,340 36,419 40,583 8,338
Other assets and deferred charges 119,508 105,864 114,956 25,991
Assets allocated to discontinued 150 - 4,631 33
operation
Total assets 501,533 284,611 300,023 109,077
Convenience
translation
into
U.S.
dollars
NIS
4.598=US$1
September 30 September 30 December September
31 30
2005 2004 2004 2005
(Unaudited) (Unaudited) (Audited) (Unaudited)
New Israeli Shekels - in US$ in
thousands thousands
Current liabilities
Short-term bank loans 7,080 5,253 10,950 1,540
Accounts payable 65,784 69,967 73,383 14,307
Other payables 19,662 16,319 13,784 4,276
Accured liabilities from
marketable
securities 398 - - 87
Total current liabilities 92,924 91,539 98,117 20,210
Long-term liabilities
Long-term obligations under lease 41,148 45,894 72,117 8,949
agreement
Deferred revenues - 14 3 -
Liability for termination of
employer-
employee relations, net 7,124 5,816 6,240 1,549
Company's share in excess of
liabilities over assets in - 10,156 - -
investees
Long term term obligation under
forward
contract 140 - - 30
Convertible debentures 216,632 - - 47,114
Total long-term liabilities 265,044 61,880 78,360 57,642
Liabilities allocated to
discontinued
operation 265 - 1,653 58
Shareholders' equity
Ordinary shares 197 197 197 43
Additional paid in capital 223,539 215,040 215,040 48,617
Accumulated deficit (80,436) (84,045) (93,344) (17,493)
Total shareholders' equity 143,300 131,192 121,893 31,167
Total liabilities and 501,533 284,611 300,023 109,077
shareholders' equity
Consolidated Statements of Operations
Convenience
translation
into
U.S.
dollars
Nine month period Three month period Year NIS
ended ended ended 4.598=US$1
September 30 September 30 December Nine month
31 period
2005 2004 2005 2004 2004 September
30 2005
(Unaudited) (Unaudited) (Unaudited) (Unaudited)(Audited)(Unaudited)
New Israeli Shekels - in thousands US$ in
thousands
Revenues 216,613 158,467 73,273 54,292 219,577 47,110
Costs and
expenses:
Cost of
revenues 113,372 69,535 39,159 25,344 96,820 24,657
Selling and
marketing
expenses 57,589 52,747 20,023 20,462 73,155 12,525
General and
administra-
tive 23,892 17,883 8,360 6,572 24,258 5,196
expenses
Total costs
and 194,853 140,165 67,542 52,378 194,233 42,378
expenses
Income from 21,760 18,302 5,731 1,914 25,344 4,732
operations
Financing
expenses
(income),
net 7,838 (253) 3,523 (342) (122) 1,705
Other
(income) (207) 1,444 (75) (54) 1,077 (45)
expenses, net
Net income
after
financing
expenses 14,129 17,111 2,283 2,310 24,389 3,072
Tax expenses 1,221 1,541 653 240 (301) 266
(income)
Income after
tax 12,908 15,570 1,630 2,070 24,690 2,806
Company's
share in
net
loss of
investees - 503 - (104) 396 -
Net income from
continuing 12,908 15,067 1,630 2,174 24,294 2,806
operations
Company share in
loss of
investee from
discontinued - 1,946 - 694 4,763 -
operation
Net income 12,908 13,121 1,630 1,480 19,531 2,806
Income per
share,
basic
and diluted
Net income
per NIS
0.01
par value of
shares
(in NIS)
from
continuing 0.70 0.82 0.09 0.12 1.32 0.15
operations
Net loss per NIS
0.01 par
value of shares
(in NIS) from
discontinued - (0.11) - (0.04) (0.26) -
operations
Net income per NIS
0.01
par value of 0.70 0.71 0.09 0.08 1.06 0.15
shares (in NIS)
Weighted average
number
of shares
outstanding
(in
thousands) 18,432 18,432 18,432 18,432 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 8, 2005