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