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Internet Gold Reports Financial Results For The Third Quarter Of 2013

Internet Gold – Golden Lines Ltd. (NASDAQ Global Market: IGLD)(TASE: IGLD) today reported its financial results for the third quarter ended September 30, 2013.

Bezeq’s Results: For the third quarter of 2013, the Bezeq Group reported revenues of NIS 2.4 billion ($ 679 million) and operating profit of NIS 721 million ($ 204 million). Bezeq’s EBITDA for the third quarter totaled NIS 1.05 billion ($ 297 million), representing an EBITDA margin of 44%. Net income for the period attributable to Bezeq's shareholders totaled NIS 449 million ($ 127 million). Bezeq's cash flow from operating activities during the period totaled NIS 1.1 billion ($ 323 million).

Cash Position: As of September 30, 2013, Internet Gold’s unconsolidated cash and cash equivalents totaled NIS 279 million ($ 79 million), its unconsolidated gross debt was NIS 1.1 billion ($ 301 million) and its unconsolidated net debt was NIS 786 million ($ 222 million).

Internet Gold's Unconsolidated Balance Sheet Data*
In millions Convenience
translation into
U.S. dollars
(Note A)
September 30, September 30, September 30, December 31,
2013 2013 2012 2012
Short term liabilities 144 41 147 138
Long term liabilities 921 260 1,023 895
Total liabilities 1,065 301 1,170 1,033
Cash and cash equivalents 279 79 312 179
Total net debt 786 222 858 854

* Does not include the balance sheet of B Communications.

Dividend from Bezeq: On September 15, 2013, Internet Gold's subsidiary, B Communications Ltd., received two dividend payments from Bezeq which together totaled NIS 455 million ($ 129 million). These dividend payments included a current dividend of NIS 300 million ($ 85 million), representing B Communications’ share of Bezeq’s net profit for the first half of 2013, and a special dividend of NIS 155 million ($ 44 million), representing B Communications’ share of the sixth and last installment of the special dividend declared by Bezeq and approved by its shareholders in 2011.

Internet Gold’s Third Quarter Financial Results

Internet Gold's consolidated revenues for the third quarter of 2013 were NIS 2.4 billion ($ 679 million), a 3.8% decrease compared with NIS 2.5 billion reported in the third quarter of 2012. For both the current and the prior-year periods, Internet Gold’s consolidated revenues consisted entirely of Bezeq’s revenues.

During the third quarter of 2013, B Communications recorded net amortization expenses related to its Bezeq purchase price allocation (“Bezeq PPA”) of NIS 198 million ($ 56 million) in its consolidated financial statements. From April 14, 2010, the date of the acquisition of its interest in Bezeq, until June 30, 2013, B Communications has amortized approximately 57% of the total Bezeq PPA. The Bezeq PPA amortization expense is a non-cash expense that is subject to adjustment. If, for any reason, B Communications finds it necessary or appropriate to make adjustments to amounts already expensed, it may result in significant changes to its audited financial reports, as well as to future financial statements.

Internet Gold’s financial expenses, net: Internet Gold’s unconsolidated net financial expenses for the third quarter of 2013 totaled NIS 41 million ($ 12 million) compared with NIS 17 million in the third quarter of 2012. These expenses included NIS 29 million ($ 8 million) in payments to holders of the Company’s publicly-traded debentures, and a NIS 16 million ($ 3 million) non-cash expense related to the revaluation of Nurisha Holdings Ltd.’s option to purchase B Communications shares, which, in accordance with IAS 39, must be revalued each quarter until it vests in the second quarter of 2014. As non-cash items, any expense or income resulting from this revaluation do not affect the Company’s cash-flow. In addition, financial expenses were impacted by the third quarter’s 0.45% increase in inflation rates as compared to the third quarter of 2012, which increased payments due to the Company’s bond holders.

These expenses were partially offset by financial income of NIS 4 million that resulted from the Company’s marketable securities.

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