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 2009
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 Q4 & Full Year 2008 Results
dated February 26, 2009.
ITEM 1
Press Release Source: Internet Gold
Internet Gold Reports Q4 & Full Year 2008 Results
Thursday February 26, 2:26 am ET
Record Quarter & Year for 012 Smile.Communications;
Smile.Media Stabilizes with Positive Adjusted EBITDA
PETACH TIKVA, Israel, February 26 /PRNewswire-FirstCall/ -- Internet Gold Golden
Lines Ltd., (NASDAQ Global Market and TASE: IGLD) today reported its financial
results for the fourth quarter and full year ended December 31, 2008.
Highlights
- Strong revenues and EBITDA: Q4 revenues up 10% to NIS 314M; adjusted
EBITDA up 20% to NIS 64M.
- Strong operating cash flow: NIS 50M in Q4, NIS 195M in 2008.
- 012 Smile.Communications delivers another quarter and full year of
records across all parameters despite challenging macro markets.
- Smile.Media returns to stability, achieves positive adjusted EBITDA.
- Share and bond buy-back programs continue.
(in millions of NIS) Q4'08 Q3'08* Q2'08 Q1'08 Q4'07 2008* 2007
Revenues 314 294 281 280 284 1,169 1,176
Gross Profit 97 89 91 92 90 369 374
EBIT 34 29 29 27 19 119 113
Adjusted EBITDA 64 60 61 60 54 245 240
Net Income (loss) 1 (22) (8) 1 79 (28) 124
*Excluding one-time impact from MSN transaction
Financial Results for the Fourth Quarter
Revenues: Revenues for the fourth quarter of 2008 were NIS 313.8 million (US
$82.5 million), a 10% increase compared with NIS 284.5 million in the fourth
quarter of 2007, and a 7% sequential increase compared with NIS 293.8 million in
the third quarter of 2008. The increased revenues reflect the record results
delivered by 012 Smile.Communications, together with the modest contribution of
Smile.Media.
Adjusted EBITDA: Adjusted EBITDA for the fourth quarter of 2008 was NIS 64.3
million (US $17.0 million), a 20% increase compared with NIS 53.6 million for
the fourth quarter of 2007, reflecting the record adjusted EBITDA recorded by
Smile.Communications. For more information regarding the use of non-GAAP
financial measures, please see the notes in this press release.
Financing Expenses (Net): Financing expenses (net) for the fourth quarter
totaled NIS 12.6 million (US $3.3 million) compared with NIS 12.9 million in the
fourth quarter of 2007 and NIS 47.5 million in the third quarter of 2008. Of the
fourth quarter 2008 expenses, NIS 10.7 million (US $2.8 million) was associated
with interest payable on the Company's bonds. In addition, as a result of the
current global economic crisis, the market price of certain of the Company's
investments has decreased, leading the Company to mark these investments to
market. This resulted in a loss of NIS 26.0 million (US $6.8 million) during the
quarter that was recorded as financial expense and is a non cash expenses.
Net Results: On a U.S. GAAP basis, the Company recorded net income for the
fourth quarter of 2008 of NIS 1.1 million (US $0.3 million), or NIS 0.05 (US
$0.01) per share. This compared to a net loss of NIS (8.5) million, or NIS
(0.40) per share, for the third quarter of 2008. In the fourth quarter of 2007,
the Company reported a net income of NIS 79 million, or NIS 3.4 per share,
reflecting the contribution of a NIS 120 million one-time gross capital gain
associated with the IPO of its subsidiary, 012 Smile.Communications.
Financial Results for 2008
Revenues for the twelve months ended December 31, 2008 were NIS 1,169 million
($307 million) compared to NIS 1,176 million for 2007. Operating income for the
year reached NIS 131.5 million (US $34.6 million), a 16% increase compared with
NIS 113 million for 2007. Adjusted EBITDAb for the year reached NIS 266 million
(US $70.0 million), an 11% increase compared with NIS 240 million for 2007. Net
loss for 2008 was NIS (14.9) million (US ($3.9 ) million), or NIS (0.69) (US
($0.18)) per share.
For a detailed reconciliation of GAAP to non-GAAP financial information and for
more information regarding the use of non-GAAP financial measures, please see
the table titled "Reconciliation between GAAP and non-GAAP Statements of
Operations" as well as the notes contained in this press release.
Balance Sheet
The Company's cash, cash equivalents and investments as of December 31, 2008
were NIS 581 million (US $153 million). Total assets as of the end of the year
were NIS 1,940 million (U.S. $510 million) and total bank debt was NIS 52
million (U.S. $13.7 million). Shareholders' equity as of the end of 2008 was NIS
334 million ($88.0 million), representing 17.2% of total assets. Current ratio
as of December, 31 2008 was 1.3, while the ratio of net debt to EBITDA was 1.8,
which is within the Company's target range.
Comments of Management
Commenting on the results, Eli Holtzman, Internet Gold's CEO, said, "The fourth
quarter was a strong end to an active though challenging year. The primary
driver of our results remains our communications segment, which has achieved
record results as it continues to expand the breadth of its services for the
stable and resilient Israeli communications market. We are also pleased to have
been able to bring our media segment back to positive adjusted EBITDA, an
achievement that demonstrates the new stability of the company following last
year's transaction with MSN. In parallel, our strong cash position enhances the
financial stability of our Group, giving us the platform we need to move forward
with our growth strategy."
Mr. Holtzman continued, "With a strong belief that our shares and bonds are
undervalued given our long-term prospects, we continue to execute on our
buy-back programs. At the same time, we continue seeking out the right M&A
target while maintaining careful control over expenses."
Business Segments
012 Smile.Communications Ltd. (NASDAQ and TASE: SMLC): 012 Smile.Communications
delivered record results for both the fourth quarter and the 2008 year as a
whole, marked by new highs for revenues, adjusted EBITDA, operating profit
(EBIT) and net income. These results were achieved as 012 Smile.Communications
continued its penetration of Israel's domestic telephony market and prepared for
entry into the mobile market. Revenues for the fourth quarter of 2008 were NIS
298 million (US $78 million), a 10% increase compared with NIS 271 million for
the fourth quarter of 2007, and a 6% sequential increase compared with NIS 282
million for the third quarter of 2008.
The subsidiary's adjusted EBITDA for the fourth quarter was NIS 66 million
($17.3 million), a 10% increase compared with the fourth quarter of 2007, and a
5% increase compared with the third quarter of 2008. Adjusted EBITDA margin was
22.0%. For more information regarding the use of non-GAAP financial
measurements, please see the notes contained in this press release.
Smile.Media Ltd.: Smile.Media delivered a modest revenue increase and
contributed to the Company's adjusted EBITDA during the fourth quarter. The
segment's revenues for the fourth quarter were NIS 16.1 million (US $4.2
million), derived primarily from its e-commerce businesses. Its adjusted EBITDA
for the quarter was NIS 190,000 (US $50,000).
Other: During the third quarter, Internet Gold incurred operating expenses of
approximately NIS 1.5 million (US $0.4 million). These expenses were primarily
for the continued investigation of potential joint venture and M&A
opportunities, and 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.
Buyback Programs
- Share Buyback Program: The total number of Internet Gold shares
repurchased through all outstanding share repurchase programs as of
December 31, 2008 reached 3,864,481 shares, bringing the number of total
outstanding shares as of December 31, 2008 to 19,653,925. From December
31, 2008 to date, an additional 891,104 shares have been repurchased,
reducing the total number of outstanding shares to 18,762,821 as of
February 25, 2009.
- Bond Buyback Program: On November 25, 2008, the Company's Board of
Directors announced that it had authorized the repurchase of up to NIS 100
million of the Company's Series B bonds. In addition, the Company
authorized the repurchase of up to NIS 50 million of the Series A bonds of
its subsidiary, 012 Smile.Communications. In parallel, the Board of
Directors of 012 Smile.Communications approved a NIS 100 million buyback
of its Series A bonds.
These new programs are in addition to the Company's existing NIS 112 million
convertible bond buyback program announced on January 28, 2008. During the
fourth quarter, the Company utilized NIS 1.5 million ($0.4 million) for the
repurchase of its convertible bonds, bringing the total value of convertible
bonds repurchased since the initiation of the January 28, 2008 program to NIS
11.0 million par value. As a result of conversions of the convertible bonds, the
repurchases made and the redemption of 12.5% of these bonds, NIS 91.8 million
par value of the bonds remain outstanding out of an original issuance of NIS 220
million par value. In addition, the Company had utilized NIS 4.2 million ($1.1
million) par value during the fourth quarter in the repurchase of its Series B
bonds.
Conference Call Information
Management will host an interactive teleconference to discuss the results today,
February 26, 2008, at 10:00 a.m. EST (17:00 Israel time). To participate, please
call one of the following access numbers several minutes before the call begins:
1-888-723-3164 from within the U.S. or 1-866-485-2399 from within Canada,
0-808-101-2717 from within the U.K., or +972 3 918-0610 from other international
locations. The call will also be broadcast live through the company's Website,
http://www.igld.com, and will be available there for replay during the next 30
days.
NOTE A: Convenience Translation to Dollars
For the convenience of the reader, the reported NIS figures of December 31, 2008
have been presented in thousands of U.S. dollars, translated at the
representative rate of exchange as of December 31, 2008 (NIS 3.8020 = U.S.
$1.00). The U.S. Dollar ($) 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.
NOTE B: Non-GAAP Financial Measurements
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 on periods or companies of changes in effective tax rates or net
operating losses or, most recently, our provision for tax expenses) and the age
of, depreciation expenses associated with, fixed assets (affecting relative
depreciation expense) and expenses recorded for stock compensation in accordance
with SFAS 123(R). 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.
Note C: Reconciliation Between 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 72.68% 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.
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.
Internet Gold - Golden Lines Ltd.
Consolidated Balance Sheets
Convenience
translation
into
U.S.
dollars
$1=NIS
3.802
December 31 December 31
2008 2007 2008
(Unaudited) (Audited) (Unaudited)
NIS NIS $ thousands
thousands thousands
Current assets
Cash and cash equivalents 86,081 601,926 22,641
Marketable securities 215,552 162,884 56,694
Trade receivables, net 217,532 224,616 57,215
Other receivables 30,232 26,446 7,952
Deferred taxes 19,078 9,707 5,018
Total current assets 568,475 1,025,579 149,520
Investments
Long-term trade receivables 6,350 3,460 1,670
Deferred taxes 57 192 15
Assets held for employee
severance benefits 17,793 20,639 4,680
Investments in investee companies 91 291 24
Marketable securities 279,823 - 73,599
Total investment 304,114 24,582 79,988
Property and equipment, net 171,154 163,949 45,017
Other assets, net 478,982 519,865 125,981
Goodwill 417,608 417,608 109,839
Total assets 1,940,333 2,151,583 510,345
Current liabilities
Short-term bank credit 42,954 77,998 11,298
Current maturities of
long-term obligations 11,238 10,734 2,956
Accounts payable 195,995 209,626 51,550
Current maturities of convertible
debentures 17,675 15,354 4,649
Current maturities of debentures 100,142 - 26,339
Other current liabilities 74,254 91,131 19,530
Total current liabilities 442,258 404,843 116,322
Long term liabilities
Long-term loans and other long-term
obligations 760 32,265 200
Liability for termination of employer-
employee relations 34,671 35,918 9,119
Deferred taxes 46,439 59,104 12,215
Debentures 807,477 848,616 212,382
Convertible debentures 84,697 104,640 22,277
Total long term liabilities 974,044 1,080,543 256,193
Total liabilities 1,416,302 1,485,386 372,515
Minority interest 189,977 180,410 49,967
Shareholders' equity 334,054 485,787 87,863
Total liabilities and
shareholders' equity 1,940,333 2,151,583 510,345
Consolidated Statements of Operations
All amounts are in thousands except for per share data
Convenience
translation
into
U.S. dollars
$1=NIS 3.802
Year ended
Year ended December 31 December 31
2008 2007 2006 2008
(Unaudited) (Audited) (Audited) (Unaudited)
NIS thousands $ thousands
Revenues 1,168,720 1,175,946 408,359 307,396
Costs and expenses
Cost of revenues 799,834 802,296 252,413 210,372
Selling and marketing 172,200 176,246 75,576 45,292
General and administrative 71,062 69,843 33,957 18,691
Other expenses (income) (5,869) 14,589 12,813 (1,544)
Total costs and expenses 1,037,227 1,062,974 374,759 272,811
Income from operations 131,493 112,972 33,600 34,585
Financial expenses, net 115,228 57,537 20,861 30,307
Gain from issuance of shares in
subsidiary - (120,310) - -
Income before tax expenses 16,265 175,745 12,739 4,278
Tax expense 15,826 50,460 1,286 4,163
Income after tax expenses 439 125,285 11,453 115
Company's share in net loss of
unconsolidated investee - - (334) -
Minority interest in operations
of
consolidated subsidiaries (15,299) (1,267) (34) (4,023)
Net income (loss) (14,860) 124,018 11,085 (3,908)
Income (loss) per share, basic
Net income (loss) per share (0.69) 5.74 0.6 (0.18)
Weighted average number of shares
outstanding (in thousands) 21,551 21,617 18,438 21,551
Income (loss) per share, diluted
Net (loss) income per share (0.69) 5.00 0.6 (0.18)
Weighted average number of shares
outstanding (in thousands) 21,551 24,795 18,438 21,551
Reconciliation Table of Non-GAAP Measures
Convenience
translation
into
dollars
$1 = NIS
3.802
Year ended
Year ended December 31 December 31
2008 2007 2006 2008
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
NIS NIS NIS $ thousands
thousands thousands thousands
GAAP operating income 131,493 112,972 33,600 34,585
Adjustments
Amortization of acquired 27,280 31,938 - 7,175
intangible assets
Impairment and other charges 6,922 10,433 12,813 1,821
Other income (12,791) - - (3,364)
Other income in respect of
MSN transaction 12,791 - - 3,364
Stock compensation in
accordance with SFAS 123(R) 3,428 - - 902
Non-GAAP adjusted operating
income 169,123 155,343 46,413 44,483
GAAP tax expenses
(income), net 15,826 50,460 1,286 4,163
Adjustments
Amortization of acquired
intangible assets
Included in tax expenses, net 7,365 9,262 - 1,937
Non-GAAP tax expenses, net 23,191 59,722 1,286 6,100
Net income (loss)
as reported (14,860) 124,018 11,085 (3,908)
Minority interest in
operations of
consolidated subsidiaries 15,299 1,267 34 4,023
Gain from issuance of shares
in subsidiary - (120,310) - -
Tax expenses 15,826 50,460 1,286 4,163
Impairment and other charges 6,922 10,433 12,813 1,821
Other income (12,791) - - (3,364)
Other income in respect of
MSN transaction 12,791 - - 3,364
Stock compensation in accordance
with SFAS 123(R) 3,428 - - 902
Financial expenses, net 115,228 57,537 20,861 30,307
Depreciation and
amortization 123,928 116,848 31,179 32,595
Adjusted EBITDA 265,771 240,253 77,258 69,903
For further information, please contact:
Mor Dagan
Investor Relations
mor@km-ir.co.il
Tel:+972-3-516-7620
Ms. Idit Azulay
Internet Gold
idita@co.smile.net.il
Tel: +972-72-200-3848
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, 2009