ClearWave Increases Net Income to $5.4 Million and EBITDA to $58.7 Million for Second Quarter.Business Editors AMSTERDAM, The Netherlands & MONTREAL--(BUSINESS WIRE)--Aug. 12, 2002 For the second quarter and first six months ended June 30, 2002 All amounts are in US$ unless otherwise stated ClearWave N.V. ("ClearWave" or the "Company") (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :TIWI TIWI Telesystem International Wireless Incorporated (Montreal, Quebec, Canada) ) (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :TIW Tiw (tē`  ), Norse Tyr (tür), ancient Germanic god. ) (TSX:TIW.UN), a subsidiary of Telesystem
International Wireless Inc. ("TIW"), today announced its
financial and operating results for the second quarter and first six
months ended June 30, 2002. The Company controls cellular operations in
Romania and the Czech Republic Czech Republic, Czech Česká Republika (2005 est. pop. 10,241,000), republic, 29,677 sq mi (78,864 sq km), central Europe. It is bordered by Slovakia on the east, Austria on the south, Germany on the west, and Poland on the north. .ClearWave achieved profitability for the fifth consecutive quarter, with a net income of $5.4 million, or $0.06 per share, for the second quarter, compared to $1.5 million, or $0.02 per share, for the corresponding period in 2001. The increased profitability reflects continued strength in Romania and improving financial performance in the Czech Republic. "Our strong performance in the second quarter demonstrates that we have built solid operating companies operating company A business that engages in transactions with outsiders. with sustainable businesses A business is sustainable if it has adapted its practices for the use of renewable resources and holds itself accountable for the environmental and human rights impacts of its activities. in both Romania and the Czech Republic," said Alexander Tolstoy, President and Chief Executive Officer of ClearWave. "Our revenues and profitability continue to grow in Romania and our Czech Republic cellular operations are rapidly improving their financial results now that we have reached a critical mass of over one million subscribers in that country." ClearWave recorded 240,700 net activations for the quarter to reach 3,408,300 total subscribers, a 70% increase compared to 2,002,400 subscribers at the end of the second quarter of 2001. On a proportionate pro·por·tion·ate adj. Being in due proportion; proportional. tr.v. pro·por·tion·at·ed, pro·por·tion·at·ing, pro·por·tion·ates To make proportionate. basis, ClearWave added for the quarter 122,500 net subscribers to reach 1,732,300 compared to 1,042,000 proportionate subscribers at the end of the second quarter of 2001, an increase of 66%. Service revenue increased 37% to $156.4 million compared to $114.0 million for the second quarter of 2001. Selling, general and administrative (SG&A) expenses declined to 28% of service revenues from 32% for the same period last year. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. before depreciation and amortization (EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ) increased 70% to $58.7 million compared to $34.6 million for the second quarter last year. Operating income was $23.4 million compared to $6.4 million for the same 2001 period. For the first six months, net income was $7.5 million, or $0.09 per share, compared to a net loss of $78,000, or $0.00 per share, for the same period in 2001. Service revenues were up 40% to $312.8 million compared to $223.8 million for the same period last year. EBITDA more than doubled to $111.7 million compared to $53.9 million for the first six months of 2001 and operating income reached $42.3 million, a strong turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. compared to an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $1.0 million for the same 2001 period. MobiFon S.A. - Romania MobiFon added 156,500 net subscribers for the second quarter for a total of 2,337,000, compared to 1,462,300 subscribers at the end of the same 2001 period, an increase of 60%. For the same quarter last year, MobiFon recorded 147,300 net additions. The pre-paid/post-paid mix at the end of the second quarter was 64/36 compared to 60/40 a year ago; the average monthly churn rate (1) The percentage of customers who cancel their online, cellphone or other subscription service during a certain time period. (2) The percentage of employees who leave the company during a certain time period. See churning. remained low at 1.55% for the quarter and 1.46% for the first six months and compared favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. to the 1.75% experienced during the first six months of 2001. As of June 30, 2002, MobiFon held an approximate 53.8% share of the cellular market in Romania compared to a market share of approximately 49% at the end of the second quarter 2001. Service revenues increased by 19% to $103.0 million, due to a larger subscriber base including a larger proportion of prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. subscribers, compared to $86.6 million for the second quarter last year,
while SG&A expenses were stable at 23% of service revenues for both
periods. EBITDA increased 20% to $55.9 million compared to $46.4 million
for the same period last year and EBITDA as a percent of service revenue
improved to 54.3% compared to 53.6% in the quarter ending June 30, 2001.
Operating income rose 26% to $35.2 million compared to $27.9 million for
the second quarter in 2001.For the first six months, service revenues increased 21% to $198.9 million compared to $164.6 million for the same period last year. EBITDA increased 25% to $108.5 million compared to $86.6 million for the 2001 period. Operating income rose 32% to $67.1 million compared to $51.0 million for the first six months of 2001. Subsequent to June 30, 2002, MobiFon paid $15.5 million to its shareholders, representing the second installment of a dividend declared in the first quarter of this year. The third installment will be paid in October 2002, subject to MobiFon meeting certain financial tests at the September quarter end. The total amount of the dividend declared is approximately $27.6 million, of which ClearWave's total share is approximately $17.5 million. Cesky Mobil a.s. - Czech Republic Cesky Mobil added 84,200 net subscribers for the second quarter, to reach 1,071,300 subscribers, an increase of 98% compared to 540,100 subscribers at the end of the second quarter of 2001. Cesky Mobil estimates it held a 14% share of the national cellular market as of June 30, 2002, compared to a 10% share at the same time last year. During the past 12 months, management estimates cellular penetration in the Czech Republic increased to 75.3% from 54.1% at the end of the second quarter of 2001 when Cesky Mobil recorded net additions of 137,200 subscribers. The Company's pre-paid/post-paid mix as of June 30, 2002 was 73/27 compared to 67/33 at June 30, 2001; this change in mix is primarily attributable to the strong growth in prepaid subscribers experienced during the last quarter of 2001 and the first quarter of 2002. Service revenues nearly doubled to $53.5 million compared to $27.5 million for the second quarter of 2001. Cesky Mobil recorded EBITDA of $3.6 million, its second consecutive quarter of positive EBITDA, compared to negative EBITDA of $11.0 million for the same period last year. This improvement reflects the revenue impact of rapid subscriber growth and economies of scale. SG&A expenses declined to 38% of service revenues compared to 56% for the same period last year. Operating loss improved to $10.9 million compared to $20.7 million for the second quarter of 2001. For the first six months, service revenues doubled to reach $96.2 million compared to $48.1 million for the same period in 2001. EBITDA reached $4.5 million compared to negative EBITDA of $30.2 million for the first six months of last year, an improvement of $34.7 million. Operating loss declined to $23.5 million compared to $49.5 million for the same period in 2001. Liquidity and Capital Resources Operating activities provided cash of $46.1 million for the second quarter and $73.7 million for the first six months, compared to cash used of $31.2 million and $53.2 million, respectively for the same periods in 2001. The primary factors contributing to the higher six month operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. were $57.8 million higher operating income before depreciation and amortization and an $81.7 million decrease in working capital needs. Acquisitions of property, plant and equipment totaled $53.7 million for the second quarter and $107.5 million for the first six months of 2002, compared to $38.1 million and $69.3 million, respectively, for the same periods in 2001. The increase in both 2002 periods compared to the previous year reflects the fact that in 2001, Cesky Mobil's site expansion program occurred nearly entirely during the last quarter of the year while, in 2002, it is evenly distributed throughout the year. Additionally in 2002, payments relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc prior periods' capital expenditures of approximately $20 million were made. Financing activities provided cash of $0.4 million for the second quarter and $36.0 million for the first half of 2002, after taking into account the repayment of $24.4 million of long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. by MobiFon during the latest quarter. In line with plans, Cesky Mobil drew $14.4 million from its long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. syndicated Euro and Czech Koruna The Czech koruna (koruna means "crown") has been the currency of the Czech Republic since February 8, 1993 when it and its Slovak counterpart both replaced the Czechoslovak koruna at par. Now 1 CZK is worth around 1.19 – 1.25 SKK. denominated credit facility in the second quarter. The undrawn un·draw tr.v. un·drew , un·drawn , un·draw·ing, un·draws To draw to one side, as a curtain. Adj. 1. undrawn - not represented in a drawing undelineated - not represented accurately or precisely amount available under this credit facility is Euro 68.2 million and Koruna 951.6 million (total of approximately $100 million). Total indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. at the end of the second quarter was $707 million, comprised of $238 million at MobiFon and $469 million at Cesky Mobil. Cesky Mobil's indebtedness includes $42.8 million payable to network equipment vendors and $45 million in unrealized losses Unrealized Loss A loss that results from holding onto an asset rather than cashing it in and officially taking the loss. Notes: Let's say you own a stock that is down 50%, but you haven't sold it to realize the loss yet. This is said to be an unrealized loss. associated with derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. financial instrument positions. In addition, at the corporate level, ClearWave has outstanding loans of $107.9 million due to TIW and affiliated companies Affiliated Companies A situation that occurs when one company owns a minority interest (less than 50%) in another company. Also refers to companies that are related to each other in some way. Notes: An affiliated company is sometimes referred to as a subsidiary. . As of June 30, 2002, the current business plans of both MobiFon and Cesky Mobil were fully funded and, on a consolidated basis, ClearWave held cash and cash equivalents of $59.5 million. At the corporate level, following the end of the quarter, the Company received $9.8 million from MobiFon, representing its share of the second installment of a dividend declared on March 27, 2002. The Company will use the proceeds for general corporate purposes and also intends to use available cash resources at the corporate level to repay amounts due to its parent TIW and its affiliates. TIW reports a going concern uncertainty in its financial statements. In the event that TIW's creditors enforce their claims over the Company's shares and advances, uncertainty may arise regarding the timing for repayment of these advances. Subsequent Event Following the end of the quarter, MobiFon announced it had mandated the European Bank for Reconstruction and Development European Bank for Reconstruction and Development Bank targeted at Eastern Europe and the former Soviet Union. (EBRD EBRD See: European Bank for Reconstruction and Development ) to act as the lead arranger Lead arranger The senior tier of arranger of a $300 million senior loan facility. The proposed 6 year senior loan financing consists of an EBRD Loan of up to $230 million, including an EBRD A-Loan of up to $120 million and an EBRD B-Loan of up to $110 million jointly arranged and underwritten by ABN AMRO ABN AMRO Algemene Bank Nederland-Amsterdam Roterdam Bank (Dutch bank) Bank NV and Bank Austria Bank Austria Creditanstalt is a Central and Eastern European bank, 96.35% owned by UniCredit Group. BA-CA's history goes as far back as 1855, the year the Creditanstalt was founded. Creditanstalt. Two parallel loans of $35 million each from Export Development Canada Export Development Canada (EDC) is Canada's export credit agency and a Crown corporation that provides financing and risk management services to Canadian exporters and investors in up to 200 markets worldwide. and Nordic Investment Bank The Nordic Investment Bank (NIB) is an investment bank and multilateral development bank owned by eight nordic and northern european countries. The owners are Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway and Sweden. are also expected to be part of the financing. MobiFon intends to use the proceeds from the loan to repay all existing indebtedness and to fund its continued growth. The loan package is subject to the completion of certain conditions including the negotiation and execution of definitive agreements and the receipt of certain approvals. Conference Call The conference call with analysts on the second quarter 2002 results will be part of the TIW conference call. It will be made available via an audio web cast from TIW's Internet site. The web cast is scheduled to begin at 9:00 a.m. EDST EDST Eastern Daylight Savings Time EDST Extended Daylight Saving Time EDST Enterprise Desktop Support Technician EDST Edge-Disjoint Spanning Tree EDST Engineering Design System Technology (San Jose, California) on Tuesday, August 13, 2002 (at http://www.tiw.ca). A replay of the conference call can also be heard between 12:00 p.m. on August 13 and 11:59 p.m. on September 13. To access the replay facility, dial (416) 695-5800 and you will be instructed to enter the access code: 1233533. Forward-looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This news release may contain certain forward-looking statements that reflect the current views and/or expectations of the Company with respect to its performance, business and future events. Such statements are subject to a number of risks, uncertainties and assumptions. Actual results and events may vary significantly. About ClearWave N.V. and TIW TIW, through its subsidiary ClearWave N.V., is a leading cellular operator in Central and Eastern Europe The term "Central and Eastern Europe" came into wide spread use, replacing "Eastern bloc", to describe former Communist countries in Europe, after the collapse of the Iron Curtain in 1989/90. with over 3.4 million managed subscribers. ClearWave is the market leader in Romania through MobiFon S.A. and is active in the Czech Republic through Cesky Mobil a.s. TIW's shares are listed on the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. ("TIW") and NASDAQ ("TIWI").
ClearWave N.V.
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SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
(in thousands of US dollars,
except operating and per share data)
---------------------------------------------------------------------
---------------------------------------------------------------------
Three months ended Six months ended
June 30, June 30,
2002 2001 2002 2001
$ $ $ $
---------------------------------------------------------------------
(Unaudited) (Unaudited)
STATEMENTS OF INCOME (LOSS)
AND CASH FLOWS DATA: (3)
Revenues 165,982 119,750 312,783 223,816
Operating Income (loss) 23,384 6,400 42,329 (990)
Interest expense, net (16,705) (16,979) (35,115) (29,456)
Foreign exchange gain 7,467 1,572 9,257 379
Income taxes 8,662 - 15,491 -
Minority interest (43) 10,504 6,557 29,989
Net income (loss) 5,441 1,497 7,537 (78)
Basic and diluted net income
(loss) per share 0.06 0.02 0.09 (0.00)
Acquisitions of property,
plant and equipment (53,677) (38,066) (107,485) (69,327)
Increase of ownership in
subsidiaries - - - (23,239)
OPERATING DATA: (3)
Operating income before
depreciation
and amortization (5) (58,689) (34,608) 111,699 53,881
As of June 30, 2002 As of December 31, 2001
$ $
----------------------------------------------------------------------
(unaudited)
BALANCE SHEET DATA: (3)
Cash and cash equivalents 59,481 54,982
Total assets 1,329,010 1,192,116
Long-term debt, including
current portion (1) 704,048 651,606
Funded capital (2) 185,332 185,332
Total shareholders' equity 168,484 134,042
OVERVIEW OF OPERATIONS
(as of June 30, 2002)
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----------------------------------------------------------------------
Start-up Licensed Total Equity Equity
Date of POPs Subscri- Equity POPs Subscri
Technology Operations (millions) -bers(4) Interest (millions)-bers(6)
----------------------------------------------------------------------
Central/
Eastern
Europe
Cellular
Romania GSM Q2 1997 22.5 2,337,000 63.5% 14.3 1,484,900
Czech
Republic GSM Q1 2000 10.3 1,071,300 23.1% 2.38 247,400
----------------------------------------------------------------------
----------------------------------------------------------------------
32.8 3,408,300 16.7 1,732,300
(1) Includes long-term derivative financial instrument position
(2) Proceeds from share issuance and share premium.
(3) The results of Mobifon (Romania) and Cesky Mobil (Czech
Republic) are fully consolidated.
(4) Figures include 1,395,818 and 725,467 prepaid subscribers in
Romania and Czech Republic, respectively, but excludes ISP
subscribers.
(5) The company uses the term operating income (loss) before
depreciation and amortization (or EBITDA) which may not be
comparable to similarly titled measures reported by other
companies. Operating income (loss) before depreciation and
amortization should not be considered in isolation or as an
alternative measurement of operating performance or liquidity
to net loss, operating loss, cash flows from operating
activities or any other measure of performance under GAAP. The
Company believes that operating income (loss) before
depreciation and amortization is viewed as relevant
supplemental measure of performance in the wireless
telecommunications industry.
(6) Proportional financial figures and other operational data
represent the combination of ClearWave's ultimate
proportionate ownership in each of its subsidiaries and is not
intended to represent any measure of performance in accordance
with generally accepted accounting principles.
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