PETACH TIKVA, Israel, Feb. 18 /PRNewswire-FirstCall/ -- Internet Gold today reported unaudited financial results for fourth-quarter and full-year 2003.
Key Highlights: -- Broadband customer base increased 221% in 2003. Significantly higher than market growth rate. -- Sales in fourth-quarter 2003 increased to NIS 47.5 million (US$10.8 million), a 7% growth compared with the previous quarter. -- Gross profit in fourth-quarter 2003 advanced to NIS 25.1 million (US$5.7 million), a 17% increase over same quarter 2002. -- Cash flow from operations advanced to NIS 11.6 million (US$2.7 million), a 41% increase over the same quarter in 2002. -- Gold Mind, Internet Gold''s wholly owned subsidiary, reported a 44% boost in sales of value-added services, compared with the previous quarter. -- MSN Israel, Internet Gold''s successful partnership with Microsoft, reported a 59% increase in e-advertising activity and portal business in 2003. -- MSN Israel reported a 33% boost in operating profit as compared with the previous quarter.
Internet Gold''s CEO, Eli Holtzman, commented, "We are very pleased to report another successful year during which we sustained good financial results while increasing our broadband market share. This is an exceptional achievement in light of our extremely competitive market environment and despite sharp price decreases. Looking ahead into 2004, both our management and market analysts trust that the competitive peak is behind us. Market prices have remained stable in the past quarter and we look forward to gradually increasing prices, which will assist us in achieving our ambitious goals for 2004."
"Our innovative advertising campaigns, launched in the fourth quarter and designed to further strengthen the Internet Gold brand in the face of sharp competition, helped increase our broadband subscriber base by 28% in the fourth quarter. The larger broadband base was one of two key drivers for our fourth-quarter revenue increase. We will build on this success, emphasizing that Internet Gold is Israel''s most innovative provider of broadband service and complementary content."
"Gold Mind Ltd., our wholly owned subsidiary specializing in development and sales of value added services and rich Internet content, successfully achieved a 44% increase in sales in the fourth quarter of 2003 compared with the previous quarter. A major part of this success is attributable to the sale of our anti-virus service, which is already in use by almost half of our broadband subscribers. Shortly, we plan to bring to market an anti-spam system, which we believe will join our successful anti-virus service as another important growth driver."
"A significant factor in our higher quarterly revenue is the new comprehensive network solutions we are offering to our businesses customers, including integration, VPDN, and hosting services. We are pleased at the response to these advanced technology offerings for businesses of every size, and our marketing department is getting the word out that Internet Gold is about much more than simply fast Internet access."
"Another optimistic development," Mr. Holtzman said, "is the sharp upturn in the Israeli interactive advertising market overall, which increased 50% in 2003. MSN Israel, Internet Gold''s partnership with Microsoft, exceeded that figure, posting a 59% revenue increase in 2003, thus further increasing its market share. For the fourth quarter, MSN Israel reported a 33% increase in operating profit. MSN Israel also reported a 56% quarterly increase in sales of MSN Search, an independent Microsoft Hebrew-language search engine that utilizes the search-engine platform developed by Microsoft Corp. Part of MSN Israel''s growth is attributable to its increasing penetration in the field of subscriber services which grew to represent 12% of total revenues in the quarter as compared with 6% of total revenues in previous quarter"
Mr. Holtzman concluded: "As I review Internet Gold''s achievements in 2003, I can proudly say that our strategy of aggressively penetrating the Israeli broadband market has continued to pay off as our broadband customer base grew and our market share increased significantly. The value-added services that we continuously develop and market as well as our rich and growing selection of broadband content are becoming more and more a significant growth driver, and we believe that VAS will be among our company''s main future growth engines. Based on market conditions, we are optimistic about Internet Gold''s prospects for 2004."
Financial results
Internet Gold''s revenues totaled NIS 47.5 million (US$10.8 million) in fourth-quarter 2003, compared with NIS 44.3 million (US$10.1 million) in the previous quarter and NIS 47.5 million (US$ 10.8 million) for the year-earlier period. Revenues for all of 2003 were NIS 179.6 million (US$41.0 million) compared with NIS 184.3 million (US$ 42.1 million) for 2002.
Gross profit for the fourth quarter increased to NIS 25.1 million (US$5.7 million) from 21.5 million (US$4.9 million) in the previous quarter and NIS 21.4 million (US$4.9 million) in the comparable quarter in 2002. Gross profit for 2003 increased to NIS 86.8 million (US$19.8 million) from NIS 84.8 million for 2002 (US $19.4 million). The increase from a year earlier stems mainly from lower international and local communication costs.
Cash flow from operations in the fourth quarter advanced to NIS 11.6 million (US$2.7 million) from NIS 8.8 million (US$2.0 million) in the previous quarter and from NIS 8.2 million (US$1.9 million) in fourth-quarter 2002.
Fourth-quarter sales and marketing expenses totaled NIS 12.0 million (US$2.7 million) versus NIS 9.8 million (US$2.2 million) in the previous quarter and NIS 9.3 million (US$2.1 million) in fourth-quarter 2002. The increase is due to Internet Gold''s advertising campaigns, over TV, radio and the Internet to counter the sharp competition in Israel''s broadband Internet market. For all of 2003, sales and marketing expenses reached NIS 41.4 million (US$9.5 million) compared with NIS 37.1 million (US$8.5 million) in 2002.
Operating income for the fourth quarter totaled NIS 7.2 million (US$1.6 million), compared with NIS 6.2 million (US$1.4 million) for the third quarter and NIS 8 million (US$1.8 million) for the comparable period in 2002. Operating income for full-year 2003 was NIS 23.5 million (US$5.4 million), compared with NIS 26.4 million (US$6.0 million) for 2002.
Fourth-quarter net income was NIS 5.1million (US$1.2 million), or NIS 0.28 (US$ 0.06) per share, compared with NIS 6 million (US$1.4 million), or NIS0.33 (US$0.08) per share, in the third quarter, and NIS 4.5 million (US$1.0 million), or NIS 0.24 (US$0.05) per share, for the year-earlier period.
Net income for 2003 totaled NIS 14.3 million (US$3.3 million), or NIS 0.78 (US$0.18) per share, compared with NIS 20 million (US$4.6 million), or NIS 1.08(US$0.25) per share, for 2002.
Conference Call Details
Internet Gold''s management will conduct a teleconference today at 10:30 a.m. EST. To participate, please dial 866-500-4953 in the United States and .3-925-5910 internationally, several minutes prior to the start of the conference. The call will also be available as a live Webcast on the company''s Website, www.igld.com/, and will be archived for 30 days.
About Internet Gold
Internet Gold is a leading Internet service provider in Israel. The Company provides a wide array of Internet services tailored to the needs of residential and business subscribers, including Internet access and related value-added services, as well as content through its portals. The Company provides the full variety of Internet access services including Broadband access via DSL lines and Cables, dial-up and private lines. Internet Gold operates the leading portal in Israel through its MSN Israel subsidiary (50.1%) with Microsoft Corp. and is a leading e-Commerce provider in Israel through its e-Commerce joint venture, Gold Trade (48.3%). In addition, Internet Gold has two wholly owned subsidiaries, Gold Mind focusing on Internet value added services and Internet Gold International specializing in international internet and communication services. For additional information about Internet Gold, please visit our Website at www.igld.com/.
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.
Balance Sheets - Consolidated Adjusted to NIS of December 2003 Convenience translation into US Dollars Consolidated Consolidated As at As at As at December 31 December 31 December 31 2003 2002 2003 (Unaudited) (Unaudited) (Unaudited) NIS thousands US$ thousands Current assets Cash and cash equivalents 81,891 85,145 18,701 Trade receivables, net 35,569 31,207 8,123 Other receivables 12,769 11,450 2,916 Deferred taxes 1,914 -- 437 Total current assets 132,143 127,802 30,177 Investments Investments in investee companies 1,550 4,159 354 Long-term loans -- 4,863 -- Deferred taxes 21 -- 5 1,571 9,022 359 Property and equipment, net 29,160 30,997 6,659 Other assets and deferred charges 51,130 1,231 11,676 Total assets 214,004 169,052 48,871 Internet Gold - Golden Lines Ltd. Adjusted to NIS of December 2003 Convenience translation into US Dollars Consolidated Consolidated As at As at As at December 31 December 31 December 31 2003 2002 2003 (Unaudited) (Unaudited) (Unaudited) NIS thousands US$ thousands Liabilities Current liabilities Short-term bank loans 5,259 10,457 1,201 Accounts payable 38,021 24,909 8,683 Other payables 12,607 11,532 2,879 Total current liabilities 55,887 46,898 12,763 Long-term liabilities Excess of liabilities over assets in investees 7,706 13,157 1,760 Long-term loans and other long-term obligations 27,389 1,330 6,255 Deferred revenues 23 118 5 Liability for severance pay, net 4,928 3,781 1,125 Total long-term liabilities 40,046 18,386 9,145 Shareholders'' equity Ordinary shares, NIS 0.01 par value (501,000,000 shares authorized; 18,431,500 shares issued and fully paid as at December 31, 2003) 197 197 45 Additional paid in capital 215,040 215,040 49,107 Accumulated deficit (97,166) (111,469) (22,189) Total shareholders'' equity 118,071 103,768 26,963 214,004 169,052 48,871 Internet Gold - Golden Lines Ltd. Statements of Operations - Consolidated Adjusted to NIS of December 2003 Consolidated Three months ended December 31 December 31 2003 2002 (Unaudited) (Unaudited) NIS thousands (except for per share data) Revenues 47,450 47,526 Costs and expenses: Cost of revenues 22,339 26,101 Selling and marketing expenses 12,009 9,271 General and administrative expenses 5,878 4,126 Total costs and expenses 40,226 39,498 Income (loss) from operations 7,224 8,028 Financing income (expenses), net (151) (1,642) Other (expenses) income, net 11 27 Net income (loss) after financing expenses 7,084 6,413 Income (expenses) tax (176) -- Net income (loss) after income tax 6,908 6,413 Company''s share in net loss of investees (1,813) (1,968) Minority interest in loss of a subsidiary -- -- Loss of a subsidiary which the Company does not intend to bear -- -- Net income (loss) from continued operations 5,095 4,445 Net loss from discontinued Operations -- -- Company''s share in loss of a subsidiary from discontinued operations -- -- Net income (loss) 5,095 4,445 Income (loss) per share, basic and diluted Net income (loss) per NIS 0.01 par value of shares (in NIS) from continuing operations 0.28 0.24 Net income (loss) per NIS 0.01 par value of shares (in NIS) from discontinued operations -- -- Net income (loss) per NIS 0.01 par value of shares (in NIS) 0.28 0.24 Weighted average number of shares outstanding (in thousands) 18,432 18,432 Convenience translation into US Dollars Consolidated Consolidated Year ended Year ended Year ended Year ended December 31 December 31 December 31 December 31 2003 2002 2001 2003 (Unaudited) (Unaudited) (Unaudited) (Unaudited) NIS thousands (except for per share data) US$ thousands Revenues 179,642 184,318 188,323 41,024 Costs and expenses: Cost of revenues 92,871 99,564 116,135 21,208 Selling and marketing expenses 41,393 37,125 51,299 9,453 General and administrative expenses 21,908 21,209 38,884 5,003 Total costs and expenses 156,172 157,898 206,318 35,664 Income (loss) from operations 23,470 26,420 (17,995) 5,360 Financing income (expenses), net (3,235) 2,151 7,308 (739) Other (expenses) income, net (2,592) (3) (2,332) (592) Net income (loss) after financing expenses 17,643 28,568 (13,019) 4,029 Income (expenses) tax 1,935 -- -- 442 Net income (loss) after income tax 19,578 28,568 (13,019) 4,471 Company''s share in net loss of investees (5,275) (2,187) (682) (1,205) Minority interest in loss of a subsidiary -- -- 963 -- Loss of a subsidiary which the Company does not intend to bear -- -- 383 -- Net income (loss) from continued operations 14,303 26,381 (12,355) 3,266 Net loss from discontinued Operations (8,843) Company''s share in loss of a subsidiary from discontinued operations -- (6,423) -- -- Net income (loss) 14,303 19,958 (21,198) 3,266 Income (loss) per share, basic and diluted Net income (loss) per NIS 0.01 par value of shares (in NIS) from continuing operations 0.78 1.43 (0.67) 0.18 Net income (loss) per NIS 0.01 par value of shares (in NIS) from discontinued operations -- (0.35) (0.48) -- Net income (loss) per NIS 0.01 par value of shares (in NIS) 0.78 1.08 (1.15) 0.18 Weighted average number of shares outstanding (in thousands) 18,432 18,432 18,432 18,432
Internet Gold
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