The following table contains financial information that is derived from our unaudited interim financial statements for the three month period ended March 31, 2005 .
Three months ended
March 31,
(in thousands of US $, except per share data) 2005 2004
$ $
STATEMENTS OF INCOME AND CASH
FLOWS DATA:
Revenues 374,252 278,420
Operating income 83,922 50,210
Interest expense, net (22,796) (21,324)
Foreign exchange gain (loss) 30 (1,978)
Net gain on disposal of assets - 11,658
Net Income 34,412 15,683
Basic and diluted earnings per share 0.16 0.13
(in thousands of us$) As at March 31 As at December
2005 31, 2004
$ $
Balance sheet data:
Cash and cash equivalents, including
restricted short-term investments of
$27.8 million as of March 31, 2005
and December 31, 2004 243,841 272,102
Total assets 2,851,881 2,340,709
Long-term debt, including current portion 1,198,466 1,147,060
Share capital and additional paid-in-capital 2,446,030 1,926,511
Total shareholders' equity 1,298,789 748,481
Summary of quarterly results
Our operating results are subject to seasonal fluctuations that materially impact quarter-to-quarter operating results. Accordingly, one quarter's operating results are not necessarily indicative of what a subsequent quarter's operating results will be. In particular, this seasonality generally results in usage in the first quarter tending to be lower than in the rest of the year. Also in the first quarter, new customer acquisitions tend to be low which can result in reduced costs. Seasonal fluctuations also typically occur in the third quarter of each year because of higher usage in Romania and more roaming, as a result of the summer holidays, result in higher network revenue and operating profit. Furthermore, the fourth quarter typically has the largest number of subscriber additions and associated subscriber acquisition and activation related expenses, including marketing and promotional expenditures, which result in lower operating profits.
(in thousands of U.S. $, except per share data) Q1 Q4 Q3 Q2
2005 2004 2004 2004
$ $ $ $
Revenues 374,252 366,816 328,929 301,397
Net income 34,412 4,942 20,674 13,907
Basic and diluted earnings per share 0.16 0.03 0.14 0.10
(in thousands of U.S. $, except per share data) Q1 Q4 Q3 Q2
2005 2004 2004 2004
$ $ $ $
Revenues 278,420 277,787 257,217 32,163
Net income (loss) 15,683 (727) 3,075 6,500
Basic and diluted earnings (loss) per share 0.13 (0.01) 0.03 0.07
Non GAAP measures and operating data
We believe that OIBDA, referred to by some other telecommunication operators as EBITDA, provides useful information to investors because it is an indicator of the strength and performance for our ongoing business operations, including our ability to fund discretionary spending such as capital expenditures and other investments and our ability to incur and service debt. While depreciation and amortization are considered operating costs under generally accepted accounting principles, these expenses primarily represent the non-cash current period allocation of costs associated with long-lived assets acquired or constructed in prior periods. Our OIBDA calculation is commonly used as one of the bases for investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies within the wireless telecommunications industry. OIBDA has limitations as an analytical tool, and you should not consider it in isolation from, or as a substitute for, analysis of our results of operations, including our cash flows, as reported under GAAP. Some of the limitations of OIBDA as a measure are:
It does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
It does not reflect changes in, or cash requirements for, our working capital needs;
It does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;
Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and OIBDA does not reflect any cash requirements for such replacements;
It does not reflect foreign exchange gains or losses; and
Other companies in our industry may calculate this measure differently than we do, limiting its usefulness as a comparative measure.
We believe that average revenue per user (“ARPU”) provides useful information concerning the appeal of our rate plans and service offerings and our performance in attracting and retaining high value customers. ARPU excludes equipment revenues, revenues from other wireless networks' customers roaming on our network and miscellaneous revenues. OIBDA and ARPU should not be considered in isolation or as alternative measures of performance under GAAP. Average number of subscribers for the period is calculated as the average of each month's average number of subscribers.
Proportionate financial figures and other operational data represent the combination of our ultimate proportionate ownership at the end of each period presented in each of its investees and are not intended to represent any measure of performance in accordance with generally accepted accounting principles. Equity interest figures represent our direct and indirect ownership interests in our operations. For a reconciliation of proportionate operating income to operating income, refer to the supplementary financial information filed with our interim financial statements.
The following tables provide a reconciliation between OIBDA and net income:
Non GAAP measures and operating data
operating data from continuing operations Three months ended
(in thousands of U.S. $) March 31,
2005 2004
Net Income 34,412 15,683
Income taxes 14,118 12,754
Non-controlling interests 12,626 10,129
Net gain on disposal of assets - (11,658)
Foreign exchange (gain) loss (30) 1,978
Interest expense, net 22,796 21,324
Depreciation and amortization 62,601 57,274
Consolidated OIBDA 146,523 107,484
MobiFon 101,878 77,290
Oskar Mobil 50,520 34,361
Corporate & Others (5,875) (4,167)
Consolidated OIBDA 146,523 107,484
The following table provides a reconciliation between service revenues and ARPU for MobiFon and Oskar:
MobiFon Oskar
Three months ended Three
months ended
March 31, March 31,
2005 2004 2005 2004
Service revenues for the periods
(in $ thousands) 197,812 147,607 156,893 116,587
Average number of subscribers
for the period (in millions) 4.98 3.58 1.86 1.58
Average monthly service revenue
per subscriber for the period (in $) 13.24 13.57 28.07 24.60
Less: impact of excluding in
roaming and miscellaneous revenue (0.95) (0.99) (0.85) (0.87)
ARPU 12.29 12.76 27.22 23.72
Other selected operational data:
Technology Start-up Licensed Total Equity Equity Equity
Date of POPs Subscriber1 Interest POPs Subscribers
Operations (millions) (millions)
Romania GSM 1997 21.7 5,022,902 79.0% 17.1 3,968,093
Czech
Republic GSM 2000 10.2 1,892,278 100.0% 10.2 1,892,278
Total 31.9 6,915,180 27.3 5,860,371
(1) Subscriber figures include 3,273,187 and 964,147 prepaid subscribers in Romania and Czech Republic, respectively