Continuing Positive Momentum: Golden Telecom Reports Results for the First Quarter of 2003.Business Editors MOSCOW--(BUSINESS WIRE)--April 28, 2003 Golden Telecom, Inc.'s (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 : "GLDN") consolidated revenue in the first quarter of 2003 was $78.4 million and consolidated net income was $12.8 million. Although this quarter is traditionally the weakest of the year in the Russian Russian associated in some way with Russia. Russian blue a breed of cats with short, dense, silver-tipped blue-colored coat and vivid green eyes. wireline telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. industry due to seasonal factors, revenues continued to grow, and margins remained strong. Here are some of the highlights for the first quarter 2003 vs. the first quarter 2002: -- Consolidated revenues of $78.4 million - up 115% -- Consolidated 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 (1) of $27.6 million - up 144% -- Consolidated 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. of $17.2 million - up 225% -- Consolidated net income of $12.8 million - up 106% -- Consolidated net cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses of $19.7 million - up 156% Alexander Vinogradov Alexander Pavlovich Vinogradov (Russian: Александр Павлович Виноградов , Chief Executive Officer and President of Golden Telecom, Inc. commented: "We are pleased that our business continues to expand given that in Russia Russia, officially the Russian Federation, Rus. Rossiya, republic (2005 est. pop. 143,420,000), 6,591,100 sq mi (17,070,949 sq km). , the first quarter has fewer working days than in the other quarters. The business environment in Russia remains strong, in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite the difficult global environment, and the growth in our customer base reflects this strength. Both consumer and corporate sides of our business have done well, and our annual revenue growth rate, excluding the impact of the Sovintel acquisition late last year, is just under 20%. Company management continues to seek growth opportunities both inside and outside the company, and we remain tightly focused on delivering value to our shareholders." Stan STAN Stanchion STAN Stärke- und Ausrüstungsnachweis (German) Stan Standard Man (human patient simulator) STAN SEMCIP Technical Assistance Network STAN System Trace Audit Number STAN Star Trek Area Network Abbeloos, Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. of Golden Telecom, Inc. said: "We reported strong sales results across all major product lines and market segments. A net gain of nearly 700 new corporate customers was achieved during the first quarter and we signed a strategically important contract with VimpelCom in St Petersburg Petersburg, city (1990 pop. 38,386), politically independent and in no county, SE Va., on the Appomattox River; inc. 1850. A port of entry and an important tobacco market, it has industries producing chemicals, pharmaceuticals, furniture, structural steel, lumber, . Thirteen new multi-tenant In the Software as a Service (SaaS) software architecture, multi-tenant refers to the ability of the hosting site to support multiple organizations ("tenants") at the same time. Multi-tenancy is a key feature of a true SaaS architecture. business centers were signed up in the first quarter, and we had significant sales of numbering capacity to two Moscow Moscow, city, Russia Moscow (mŏs`kou, –kō), Rus. Moskva, city (1991 est. pop. 8,802,000), capital of Russia and of Moscow region and the administrative center of the Central district, W central European Russia, on the banks amounting to 2,000 new numbers. We also passed a major milestone in our dial-up Refers to using the regular "dial-up" telephone network to send data from a computer to a remote network or to a remote device. The computer's digital data are converted to analog signals in the same frequency range as human voice by a modem. internet operation, adding our 250,000th subscriber in Russia." David Stewart David Stewart may be:
tr.v. re·it·er·at·ed, re·it·er·at·ing, re·it·er·ates To say or do again or repeatedly. See Synonyms at repeat. re·it our guidance given in previous statements, that we expect 2003 revenues to be in the region of $320-$340 million, 2003 EBITDA(1) to be in the region of $100-$120 million, and 2003 capital expenditures to be in the region of $55-65 million." More First Quarter 2003 Results: Our first quarter 2003 results are not directly compatible with the first quarter of the prior year because of the consolidation of Sovintel since September September: see month. 2002. Consolidated revenues were $78.4 million - up 115% compared to the first quarter of 2002, and up 2% compared to the fourth quarter of 2002. Competitive Local Exchange Carrier (CLEC (Competitive Local Exchange Carrier) An organization offering local telephone service that is not one of the traditional telephone companies. The Telecommunications Act of 1996 allowed competition to the incumbent telcos (ILECs), enabling new companies (CLECs) ) business line consolidated revenues were $51.2 million - up 379% compared to the first quarter of 2002, and up 3% compared to the previous quarter. Data and Internet business line consolidated revenues were $21.0 million - up 15% compared to the first quarter of 2002, and down 2% compared to the previous quarter. Internet subscribers increased to 278,823 - up 45% from 191,688 subscribers at the end of the first quarter of 2002, and up 15% from 242,155 at the end of the previous quarter. Most of the growth is outside Moscow and St Petersburg - Golden Telecom has Russia's leading pan-national internet service provider Internet service provider (ISP) Company that provides Internet connections and services to individuals and organizations. For a monthly fee, ISPs provide computer users with a connection to their site (see data transmission), as well as a log-in name and password. , ROL ROL In currencies, this is the abbreviation for the Romanian Leu. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. . Consolidated Long Distance business line revenues were $5.0 million - up 16% compared to the first quarter of 2002 and down 4% compared to the previous quarter. Consolidated Mobile Services revenues were $3.2 million - down 3% compared with the first quarter of 2002 and up 3% compared to the previous quarter. Consolidated EBITDA(1) was $27.6 million - up 144% from $11.3 million in the first quarter of 2002, and up 12% compared to the previous quarter. Consolidated EBITDA(1), as a percentage of consolidated revenue was 35%, up from 31% in the first quarter of 2002, and up from 32% in the previous quarter. The increase is largely the result of our continuing effort to control costs and a more effective use of available network capacity. Consolidated income tax for the first quarter was $4.2 million - up from $1.3 million for the first quarter of 2002 and up from $0.8 million for the fourth quarter of 2002. During the fourth quarter, income tax expense was reduced by $3.6 million due to the recognition of carry-forward See Loss Carry-Back. tax losses at the level of our Russian and Ukrainian subsidiaries. Net income for the first quarter was $12.8 million - up 106% compared to a net income of $6.2 million in the first quarter of 2002 and down 2% compared to net income of $13.0 million reported in the previous quarter. Net income per common share on a fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis in the first quarter of 2003 was $0.47 compared to net income per share of $0.27 for the first quarter of 2002, and net income per share of $0.48 in the fourth quarter of 2002. The diluted weighted average number of shares outstanding in the first quarter of 2003 was 27.4 million compared to 22.7 million in the first quarter of 2002, and 27.2 in the fourth quarter of 2002. As of March 31, 2003 the Company had outstanding 27.2 million shares of common stock. Golden Telecom, Inc. closed the first quarter of 2003 with a total of $69.3 million in consolidated cash. On March 4, 2003, Standard and Poor's Noun 1. Standard and Poor's - a broadly based stock market index Standard and Poor's Index Ratings Services Ratings Service A company, such as Moody's or Standard & Poor's, that rates various debt and preferred stock issues for safety of payment of principal, interest, or dividends. assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. a "BB-" 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. credit rating to Golden Telecom, Inc. On March 18, 2003, Moody's Moody's Corporation (NYSE: MCO) is the holding company for Moody's Investors Service which performs financial research and analysis on commercial and government entities. The company also ranks the credit-worthiness of borrowers using a standardized ratings scale. Ratings Services assigned a "B2" senior implied rating to Golden Telecom, Inc. The legal merger of two wholly owned Russian operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. was completed on April 15, 2003. All assets, liabilities, rights and obligations of Teleross were transferred to Sovintel as of this date. About Golden Telecom (www.goldentelecom.com) Golden Telecom, Inc., NASDAQ: "GLDN" is a leading facilities-based provider of integrated telecommunications and Internet services in major population centers throughout Russia and other countries of the Commonwealth of Independent States Commonwealth of Independent States (CIS), community of independent nations established by a treaty signed at Minsk, Belarus, on Dec. 8, 1991, by the heads of state of Russia, Belarus, and Ukraine. Between Dec. 8 and Dec. (CIS Cis (sĭs), same as Kish (1.) (1) (CompuServe Information Service) See CompuServe. (2) (Card Information S ). The Company offers competitive local exchange carrier services using its overlay network A logical network that runs on top of another network. For example, peer-to-peer networks are overlay networks on the Internet. They use their own addressing system for determining how files are distributed and accessed, which provides a layer on top of the Internet's IP addressing. in Moscow, Kiev Kiev (kē`ĕf), Ukrainian Kyyiv, Rus. Kiyev, city (1990 est. pop. 2,600,000) and municipality with the status of a region (oblast), capital of Ukraine and of Kiev region, a port on the Dnieper River. , St. Petersburg and Nizhny Novgorod Nizhny Novgorod (nyēsh`nyī nôf`gərəd), formerly Gorky or Gorki, city (1989 pop. ; data and long-distance long-dis·tance adj. 1. Covering a long distance: a long-distance runner; operating under long-distance supervision. 2. services using a fiber optic and satellite-based network - including 149 combined access points in Russia and other countries of the CIS; dedicated and dial-up Internet access See dial-up. to businesses and consumers; Internet content through numerous web brands powered by its ROL portal; and mobile services. This press release presents measures not derived in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting , including EBITDA(1), and pro-forma combined revenue(4). Such measures should not be considered substitutes for any measures derived in accordance with generally accepted accounting principles, and may also be inconsistent with similar measures presented by other companies. Reconciliation of these non-GAAP measures to the most nearly comparable GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). measures, if applicable, is presented in the attached pages. Statements made in this press release are forward looking and are made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Securities Litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. Reform Act of 1995. Such statements include our predictions regarding our expected revenue, EBITDA(1) and capital expenditures in 2003. It is important to note that such statements involve risks and uncertainties, which may cause results to differ materially from those set forth in these statements. Such risks and uncertainties include, but are not limited to, changes in timing for the deployment of additional networks which may affect our capital expenditure, potential acquisitions, and political, economic and regulatory developments in Russia, Ukraine Ukraine (y  `krān, ykrān`), Ukr. Ukraina, republic (2005 est. pop. and
Kazakhstan Kazakhstan or Kazakstan (kä'zäkstän`), officially Republic of Kazakhstan, republic (2005 est. pop. 15,186,000), c.1,050,000 sq mi (2,719,500 sq km), central Asia. and increasing competition that may limit growth
opportunities. Additional information concerning factors that could
cause results to differ materially from those in the forward looking
statements is contained in the Company's filings with the U.S.
Securities and Exchange Commission including the Company's periodic
reports on Form 8-K Form 8-KThe form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. filed during 2003 and the Company's annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December December: see month. 31, 2002. Golden Telecom, Inc. Condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. , Consolidated Statements of Operations (unaudited) (Amounts in millions, except per share data)
Three Months Ended:
---------------------------
3/31/02 3/31/03
-------- ---------
Revenues $ 36.4 $ 78.4
Operating costs and expenses:
Access and network services
(excluding depreciation and
amortization) 15.4 37.3
Selling, general and administrative
(excluding depreciation and
amortization) 9.7 13.5
Depreciation and amortization 6.0 10.4
----------- -----------
Operating income 5.3 17.2
Other income (expense):
Equity in earnings of ventures 1.7 0.1
Foreign currency gain (loss) ( 0.3 ) 0.2
Interest income (expense), net ( 0.1 ) ( 0.4 )
Minority interest ( 0.1 ) ( 0.1 )
----------- -----------
Total other income (expense) 1.2 ( 0.2 )
Income before income taxes 6.5 17.0
Income taxes 1.3 4.2
----------- -----------
Income before cumulative effect of a
change in accounting principle $ 5.2 $ 12.8
Cumulative effect of a change in
accounting principle 1.0 --
----------- -----------
Net Income $ 6.2 $ 12.8
=========== ===========
Basic earnings per share of common
stock:
Income before cumulative effect of
a change in accounting principle $ 0.24 $ 0.47
Cumulative effect of a change in
accounting principle 0.04 --
----------- -----------
Basic earnings per share $ 0.28 $ 0.47
=========== ===========
Weighted average common shares - basic 22.5 27.1
----------- -----------
Diluted earnings per share of common
stock:
Income before cumulative effect of
a change in accounting principle $ 0.23 $ 0.47
Cumulative effect of a change in
accounting principle 0.04 --
----------- -----------
Diluted earnings per share $ 0.27 $ 0.47
=========== ===========
Weighted-average common shares -
diluted 22.7 27.4
----------- -----------
Golden Telecom, Inc. Condensed, Consolidated Balance Sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. (Amounts in millions)
12/31/02 3/31/03
--------- -----------
(audited) (unaudited)
--------- -----------
ASSETS
Current assets
Cash and cash equivalents $ 59.6 $ 69.3
Accounts receivable, net 46.2 51.1
Prepaid expenses and other assets 21.6 23.8
----------- -------------
Total current assets 127.4 144.2
Property and equipment, net 166.1 167.8
Goodwill, net 71.7 71.7
Intangible assets, net 56.0 55.6
Restricted cash and other assets 14.6 12.4
----------- -------------
TOTAL ASSETS $ 435.8 $ 451.7
=========== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 48.3 $ 48.6
Debt maturing within one year and capital
lease obligations 10.8 18.3
Other current liabilities 11.9 13.1
----------- -------------
Total current liabilities 71.0 80.0
Long-term debt and capital lease obligations 29.7 21.6
Other liabilities 25.4 26.0
----------- -------------
TOTAL LIABILITIES 126.1 127.6
Minority interest 2.2 2.2
SHAREHOLDERS' EQUITY
Common stock 0.3 0.3
Additional paid-in capital 446.2 447.8
Accumulated deficit ( 139.0 ) ( 126.2 )
----------- -------------
TOTAL SHAREHOLDERS' EQUITY 307.5 321.9
----------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 435.8 $ 451.7
=========== =============
Golden Telecom, Inc. Condensed, Consolidated Statements of Cash Flows (unaudited) (Amounts in millions)
Three Months Ended:
----------------------
3/31/02 3/31/03
-------- --------
NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES $ 7.7 19.7
INVESTING ACTIVITIES
Purchase of property, equipment and intangible
assets ( 4.6 ) ( 11.8 )
Restricted cash 1.4 0.2
Proceeds from investments available for sale 6.0 --
Purchase of investments available for sale ( 2.0 ) --
Other investing 2.3 0.6
---------- ----------
NET CASH (USED BY) PROVIDED BY INVESTING
ACTIVITIES 3.1 ( 11.0 )
FINANCING ACTIVITIES
Repayments of debt ( 1.7 ) ( 0.1 )
Net proceeds from exercise of employee stock
options 0.8 1.4
Other financing -- ( 0.4 )
---------- ----------
NET CASH (USED BY) PROVIDED BY FINANCING
ACTIVITIES ( 0.9 ) 0.9
Effects of exchange rate changes on cash and
cash equivalents ( 0.1 ) 0.1
---------- ----------
Net increase in cash and cash equivalents 9.8 9.7
Cash and cash equivalents at beginning of period 37.4 59.6
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 47.2 $ 69.3
========== ==========
Golden Telecom, Inc. Line-of-Business Statistics (unaudited) (Amounts in millions) The following table presents our line of business information for the last five quarters.
Consolidated
Three months ended:
--------------------------------------------------------
3/31/02 6/30/02 9/30/02 12/31/02 3/31/03
-------- -------- -------- --------- --------
Revenues
CLEC $ 10.7 $ 11.4 $ 19.7 $ 49.7 $ 51.2
Data and
Internet 18.2 20.0 19.2 21.5 21.0
Long distance 4.3 4.6 4.6 5.2 5.0
Mobile
services 3.3 3.3 3.3 3.1 3.2
Eliminations ( 0.1 ) ( 0.1 ) ( 0.5 ) ( 2.7 ) ( 2.0 )
---------- ---------- ---------- ----------- ----------
Total
revenues $ 36.4 $ 39.2 $ 46.3 $ 76.8 $ 78.4
EBITDA(1)
CLEC $ 5.4 $ 5.2 $ 8.2 $ 18.9 $ 20.4
Data and
Internet 6.2 6.0 5.5 5.3 6.4
Long distance 0.1 ( 0.2 ) -- 0.4 --
Mobile
services 1.2 1.6 1.8 1.6 1.8
Corporate ( 1.6 ) ( 1.2 ) ( 1.5 ) ( 1.5 ) ( 1.0 )
---------- ---------- ---------- ----------- ----------
Total
EBITDA(1) $ 11.3 $ 11.4 $ 14.0 $ 24.7 $ 27.6
Depreciation and
amortization
CLEC $ 1.4 $ 1.0 $ 2.5 $ 5.4 $ 5.4
Data and Internet 2.4 2.9 2.7 2.9 2.8
Long distance 1.4 1.4 1.3 1.3 1.3
Mobile services 0.7 0.6 0.6 0.8 0.7
Corporate 0.1 0.3 0.2 0.1 0.2
------- ------- ------- -------- --------
Total depreciation and
amortization
$ 6.0 $ 6.2 $ 7.3 $ 10.5 $ 10.4
Operating income
CLEC $ 4.0 $ 4.2 $ 5.7 $ 13.5 $ 15.0
Data and Internet 3.8 3.1 2.8 2.4 3.6
Long distance ( 1.3 ) ( 1.6 ) ( 1.3 ) ( 0.9 ) ( 1.3 )
Mobile services 0.5 1.0 1.2 0.8 1.1
Corporate ( 1.7 ) ( 1.5 ) ( 1.7 ) ( 1.6 ) ( 1.2 )
------- ------- ------- -------- --------
Total operating income
$ 5.3 $ 5.2 $ 6.7 $ 14.2 $ 17.2
Pro forma Combined Revenue(4)
Three months ended:
--------------------------------------------------------
3/31/02 6/30/02 9/30/02 12/31/02 3/31/03
-------- -------- -------- --------- --------
Pro forma
combined
revenues $ 65.6 $ 70.1 $ 76.2 $ 76.7 $ 78.5
Equity method
ventures ( 33.4 ) ( 36.6 ) ( 34.7 ) ( 1.2 )( 1.2 )
Affiliate
adjustments 4.2 5.7 4.8 1.3 1.1
---------- ---------- ---------- ----------- ----------
Total
consolidated
revenues $ 36.4 $ 39.2 $ 46.3 $ 76.8 $ 78.4
The following table presents selected operating data(2) related to our consolidated and non-consolidated ventures at and for the periods shown:
Three Months Ended:
---------------------------------
9/30/02 12/31/02 3/31/03
-------- --------- --------
Points of presence 149 149 149
Total voice minutes (millions)
Local 167.0 270.5 277.2
Domestic long distance 92.6 104.2 116.2
International outgoing 55.5 53.2 60.6
Incoming 101.8 118.1 116.7
Dial-up Internet access
subscribers(3) 191,707 242,155 278,823
Total active cellular subscribers 35,576 35,386 35,308
Total employees - consolidated
entities 1,722 1,708 1,753
Total employees - non-consolidated
entities 104 104 116
Notes to data for Golden Telecom: 1. EBITDA is defined as operating income plus depreciation and amortization. This non-generally accepted accounting principle (GAAP) is a measure of a company's performance commonly used in the telecommunications industry, but should not be construed as an alternative to operating income/(loss) determined in accordance with GAAP as an indicator of operating performance or as an alternative to cash from operating activities determined in accordance with GAAP as a measure of liquidity. A reconciliation of EBITDA to income from operations is included in our line of business statistics. 2. MCT See Microsoft certification. Corp. is not included in the operating data shown. 3. Dial-up Internet subscribers is the number of users (or logins)who have logged on to the system during the month in question, regardless of whether they are enabled or disabled at month end. It specifically excludes "on-trial" users, free users and internal users. 4. Pro-forma combined revenue is a non-GAAP measure and is defined as the consolidated revenue of Golden Telecom, Inc. plus the revenues of 100% of Sovintel and a number of non-consolidated regional joint ventures for all periods referenced. |
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