Revenues Reach NIS 94.9M With Growing Operating Profit PETACH
TIKVA, Israel, May 11 /PRNewswire-FirstCall/ -- Internet Gold,
(Nasdaq NMS and TASE: IGLD) today reported financial results for
the quarter ended March 31, 2006. Highlights - Record revenues:
quarterly sales reach an all-time high of $20.3 million, up 40%
year-over-year and 17% compared with Q4 2005 - Growing profits:
operating and net income reach NIS 9.7 million and NIS 6.6 million,
respectively - Primary growth drivers: > smile.communications:
renewed growth in broadband subscriber base; ongoing expansion of
voice traffic hubbing revenues; ramp-up in number of large-scale IT
integration projects > smile.media: continued expansion of
portfolio of Internet media properties to address rising Internet
advertising budgets - Structural reorganization: as part of its
ongoing efforts to streamline its operations and create value, the
Group is reorganizing its business activities into two
subsidiaries: smile.communications Ltd. and smile.media Ltd.
Financial Results Revenues for the first quarter of 2006 reached a
record of NIS 94.9 million (US$ 20.3 million), an increase of 40%
compared with NIS 68.0 million in the first quarter of 2005 and 17%
compared with the fourth quarter of 2005. Operating income for the
quarter reached a record of NIS 9.7 million (US$ 2.1 million), an
increase of 19% compared to NIS 8.1 million in the first quarter of
2005 and 35% compared to the fourth quarter of 2005. Net income for
the quarter reached NIS 6.6 million (US $1.4 million), or NIS 0.36
(US$ 0.08) per share compared to NIS 6.6 million, or NIS 0.36 per
share, for the first quarter of 2005, and NIS 5.4 million, or NIS
0.29 per share, for the fourth quarter of 2005. Comments of
Management Commenting on the results, Eli Holtzman, Internet Gold's
CEO, said, "Following 19 consecutive quarters of profits and
positive cash flow, we are extremely pleased to report yet another
quarter of record revenues, an achievement which demonstrates our
expanding leadership in Israel's rapidly growing Internet space.
The rise in our revenues and profitability derives from the growth
of all our businesses as well as the success of the streamlining
measures put into place during the second half of 2005." Mr.
Holtzman continued, "We are currently reorganizing our business
activities into two focused subsidiaries: Smile.Communications Ltd.
for our service businesses (Internet access and related value-added
services, international telephony and business services), and
Smile.Media Ltd. for our media and e-Commerce businesses. This is a
strategic move designed to optimize the efforts of our specialized
management, helping us further improve the Group's financial
results, while creating significant shareholder value. "During the
first quarter, smile.communications benefited from a new wave of
2.5 Mbps Broadband Access subscribers, a development which we
believe will result in increased revenues and average revenues per
user later this year. International telephony,
smile.communications's second major revenue stream, continues to
benefit from ongoing market growth and is becoming an increasingly
significant player in the high-volume hubbing services marketplace.
smile.media is benefiting from a significant shift of Israeli
advertising budgets towards the Internet, a trend that we believe
will continue to build in the future. As a result of our
consolidation activities and effective marketing, advertising on
our portals now accounts for a significant portion of Israel's
total e-Advertising market and we are continuing our efforts to
expand our leadership position." Mr. Holtzman concluded, "Our plan
for 2006 includes the continued development of our communication
and media franchises with the goal of capitalizing fully on
promising new opportunities in our markets. In parallel, we have
begun actively evaluating a number of avenues for potential
international expansion. With a clear focus, favorable markets and
strong momentum, we are optimistic regarding our future prospects."
Business Segment Overview As part of the Group's ongoing efforts to
streamline its operations and optimize its marketing investments,
the Group has recently reorganized its business activities into
smile.communications and smile.media. smile.communications Ltd. :
includes the Group's Internet access, value-added services,
telephony and business services activities. - smile.net: the Group
carried out an extensive marketing campaign during the first
quarter, resulting in a 5% increase in its broadband subscriber
base together with strong sales of e-Safe Secured Internet Access
and Wi-Fi-upgrade services. - smile.015 - International Telephony:
revenues from the Group's high-volume hubbing services grew
dramatically during the first quarter, due primarily to the Group's
success in generating high telephony traffic from Israel to
specific international destinations. - smile.biz: continuously
increasing demand for IT infrastructure deployment and integration
services resulted in a 12% increase in revenues as compared with
the fourth quarter of 2005. smile.media Ltd.: includes the group's
e-Advertising / e-Content, and e-Commerce businesses. -
e-Advertising / Content: the Group's portal revenues grew by 47% on
a year-over-year basis and 39% compared with the fourth quarter of
2005, reflecting a growing share of Israel's total Internet
advertising market. As part of its ongoing consolidation efforts,
the Group made three acquisitions since January: > Seret cinema
portal: in January, the Group acquired a 51% interest in Seret
Ltd., a leading Israeli cinema portal. > Yahala Arab-language
portal: in March, the Group acquired a 51% interest in Yahala Ltd.,
one of Israel's largest Arab-language portals. > GPG advertising
network: in April, the Group acquired a 75% interest in GPG, an
e-advertising network which generates e-advertising revenues
through various portals. As of April 2006 the GPG Network portals
reached about 57 million page views. - smile.shops: revenues from
the Group's e-Commerce properties rose by 15% on a year-over-year
basis. About Internet Gold Internet Gold is Israel's leading IP
Group with a major presence across all Internet-related sectors.
Its smile.communications segment offers a variety of Internet
access and related value-added services, international telephony
and enterprise/IT integration services. Its smile.media segment
manages a growing portfolio of Internet portals and e-Commerce
sites. Internet Gold is part of the Eurocom Communications Group.
Its shares trade under the symbol IGLD on the Nasdaq National
Market and the Tel Aviv Stock Exchange. For additional information
about Internet Gold, please visit its investors' site at
http://www.igld.com/. NOTE A: Convenience Translation to Dollars
For the convenience of the reader, the reported NIS figures of
March 31, 2006 have been presented in thousands of U.S. dollars,
translated at the representative rate of exchange as of March 31,
2006 (NIS 4.665 = 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:
Marybeth Csaby KCSA Worldwide +1-212-896-1236 In Israel: Meirav
Be'eri Investor Relations +972-3-516-7620 Ms. Idit Azulay, Internet
Gold +972-3-939-9848 Consolidated Balance Sheets Convenience
translation into US Dollars NIS 4.665=US$1 March 31 March 31
December 31 March 31 2006 2005 2005 2006 (Unaudited) (Unaudited)
(Audited) (Unaudited) NIS (in thousands) US$ thousands Current
assets Cash and cash 264,095 64,173 265,488 56,612 equivalents
Short-term investment 1,213 - 804 260 Trade receivables, net 75,395
59,922 67,988 16,161 Other receivables 14,372 9,989 12,201 3,081
Deferred taxes 497 2,081 1,111 107 Total current assets 355,572
136,165 347,592 76,221 Investments Deferred taxes 107 35 40 23
Long-term investments 75 75 75 16 Minority's share in surplus of
liabilities over assets in consolidated 95 - - 20 subsidiary Other
investments 200 - 200 43 477 110 315 102 Property and equipment,
35,594 40,274 36,222 7,630 net Other assets and 110,292 114,400
117,889 23,642 deferred charges Assets allocated to - 2,152 - -
discontinued operation Total assets 501,935 293,101 502,018 107,595
Consolidated Balance Sheets Convenience translation into US Dollars
NIS 4.665=US$1 March 31 March 31 December March 31 31 2006 2005
2005 2006 (Unaudited) (Unaudited) (Audited) (Unaudited) NIS (in
thousands) US$ thousands Current liabilities Short-term bank loans
8,063 11,426 12,684 1,728 Accounts payable 63,118 70,593 55,987
13,530 Other payables 28,293 14,233 24,922 6,065 Total current
liabilities 99,474 96,252 93,593 21,323 Long-term liabilities
Long-term loans and other long-term obligations 27,204 61,306
33,570 5,831 Liability for termination of employer- employee
relations, net 7,324 6,588 7,506 1,570 Convertible debentures
203,703 - 218,676 43,666 Total long-term liabilities 238,231 67,894
259,752 51,067 Liabilities allocated to discontinued operation -
434 - - Shareholders' equity Ordinary shares 197 197 197 42
Additional paid in capital 216,864 215,040 216,864 46,487 Proceeds
from options, debentures and warrants 15,612 - 6,675 3,347
Accumulated deficit (68,443) (86,716) (75,063) (14,671) Total
shareholders' equity 164,230 128,521 148,673 35,205 Total
liabilities and 501,935 293,101 502,018 107,595 shareholders'
equity Consolidated Statements of Operations Convenience
translation into US Dollars NIS 4.665=US$1 Three month Three-month
period Year ended period ended ended March 31 December March 31 31
2006 2005 2005 2006 (Unaudited)(Unaudited)(Audited)(Unaudited) NIS
thousands (except per share US$ data) thousands Revenues 94,860
68,015 297,707 20,334 Costs and expenses: Cost of revenues 58,970
33,540 159,943 12,641 Selling and marketing expenses 17,938 18,934
75,710 3,845 General and administrative 8,294 7,442 33,156 1,778
expenses Total costs and expenses 85,202 59,916 268,809 18,264
Income from operations 9,658 8,099 28,898 2,070 Financing expenses,
net 2,558 649 9,403 548 Other income, net (23) (35) (237) (5) Net
income after financing 7,123 7,485 19,732 1,527 expenses Tax
expenses 598 857 1,451 128 Minority's share in consolidated (95) -
- (20) subsidiary Net income 6,620 6,628 18,281 1,419 Income per
share, basic and diluted Net income per NIS 0.01 par value of
shares (in NIS) 0.36 0.36 0.99 0.08 Weighted average number of
shares outstanding (in thousands) 18,432 18,432 18,432 18,432
DATASOURCE: Internet Gold CONTACT: For further information, please
contact: Marybeth Csaby, KCSA Worldwide, +1-212-896-1236. In
Israel: Meirav Be'eri, Investor Relations, +972-3-516-7620, Ms.
Idit Azulay, Internet Gold, +972-3-939-9848,
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