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 Tel:+972-3-516-7620 Ms. Idit Azulay Internet Gold Tel:
+972-72-200-3848 DATASOURCE: Internet Gold CONTACT: For further
information, please contact: Mor Dagan - Investor Relations, /
Tel:+972-3-516-7620. Ms. Idit Azulay, Internet Gold, / Tel:
+972-72-200-3848
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