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TheStreet Open House

Internet Gold Reports Financial Results For The Second Quarter Of 2012

Stocks in this article: BCOM IGLD

Internet Gold's net loss attributable to shareholders for the second quarter totaled NIS 85 million ($ 22 million), compared to a net loss attributable to shareholders of NIS 33 million ($ 8 million) reported in the second quarter of 2011. This net loss reflects the impact of two significant expenses:

  • Amortization of tangible and identifiable intangible assets resulting from the Bezeq acquisition: According to the rules of business combination accounting, the total purchase price of the Bezeq acquisition was allocated to Bezeq’s tangible and identifiable intangible assets based on their estimated fair values as determined by an analysis performed by an independent valuation firm. The company's subsidiary, B Communications is amortizing certain of the acquired identifiable intangible assets in accordance with the economic benefit expected from such assets using an accelerated method of amortization.During the second quarter of 2012, Internet Gold's subsidiary, B Communications recorded amortization expenses related to the Bezeq purchase price allocation (“Bezeq PPA”) of NIS 305 million ($ 78 million), net. From the Bezeq acquisition date (April 14, 2010) until the end of the reporting quarter, B Communications amortized approximately 48% of the total Bezeq PPA. It expects to amortize an additional 9% in the last two quarters of 2012. B Communications' Bezeq PPA amortization expense is a non-cash expense that is subject to adjustment. If, for any reason, the Company finds it necessary or appropriate to make adjustments to amounts already expensed, it may result in significant changes to future financial statements.
  • Financial expenses: Internet Gold’s unconsolidated financial expenses for the second quarter totaled NIS 31 million ($ 8 million). These expenses consisted primarily of expenses related to the Company’s debentures, which totaled NIS 29 million ($ 7 million). The significant financial expenses recorded in the second quarter were due primarily to high CPI linkage expenses attributable to the 1.25% increase in the Israeli CPI, to which the Company’s debt is linked.

Internet Gold’s Unconsolidated Financial Results

    Quarter ended June 30,     Quarter ended June 30,
2012     2011 2012     2011
(NIS millions) (US$ millions)
Revenues - - - -
Financial expenses (31 ) (27 ) (8 ) (7 )
Other expenses (1 ) 2 * 1
Interest in Bcom's net loss (53 ) (8 ) (14 ) (2 )
Net loss (85 ) (33 ) (22 ) (8 )

* represent an amount less than US$1 million.

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