Sistema Announces Financial and Operating Results for the Nine Months Ended September 30, 2005.MOSCOW, 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). -- Sistema AFK Sistema is a large Russian holding company, headed by business oligarch Vladimir Yevtushenkov. In March 2006, Yevtushenkov controlled 62% of the shares in Sistema.[1] (LSE LSE - Language Sensitive Editor :SSA (Serial Storage Architecture) A fault tolerant peripheral interface from IBM that transfers data at 80 and 160 Mbytes/sec. SSA uses SCSI commands, allowing existing software to drive SSA peripherals, which are typically disk drives. ), the largest private sector consumer services Consumer Services refers to the formulation, deformulation, technical consulting and testing of most consumer products, such as food, herbs, beverages, vitamins, pharmaceuticals, cosmetics, hair products, household cleaners, [paints, plastics, metals, waxes, coatings, minerals, company in Russia and the CIS Cis (sĭs), same as Kish (1.) (1) (CompuServe Information Service) See CompuServe. (2) (Card Information S , today announced its unaudited consolidated US GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). financial results for the nine months ended September September: see month. 30, 2005. HIGHLIGHTS --Consolidated revenues grew 31% to US$ 5.4 billion --OIBDA(a) increased 25% to US$ 2.3 billion --Operating income up 19% to US$ 1.6 billion --Net income grew 29% to US$ 434 million --Total consolidated assets increased 57% to US$ 12.1 billion Vladimir Vladimir (vlədyē`mĭr), city (1989 pop. 350,000), capital of Vladimir region, W central European Russia, on the Klyazma River. A rail junction, it has industries producing machinery, chemicals, cotton textiles, and plastics. Evtushenkov, President and Chief Executive Officer of Sistema, commented on the nine month results: "Once again we are pleased to report strong overall financial results as we continue to fulfill ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. our commitments to investors. Sistema's various existing business segments have continued to perform well, and we are also pleased with the results of those operating assets Operating Assets Another term for working capital. which are new to our Group. We will continue to add to our portfolio on a selective basis as well as to effect disposals, partially or entirely, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. market opportunities. Our strategy for 2006 will continue to be driven by these goals whilst at all times seeking to deliver attractive performance for our shareholders." FINANCIAL SUMMARY (US$ millions) 9m 2005 9m 2004 Growth FY 2004 Revenues 5,410.6 4,135.9 31% 5,711.3 Operating income 1,553.4 1,306.5 19% 1,664.7 Margin 29% 32% - 29% Net Income 434.2 336.7 29% 411.2 OIBDA 2,302.3 1,847.2 25% 2,464.6 Margin 42% 45% - 43% (a)OIBDA OIBDA Operating Income Before Depreciation & Amortization is 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. Please see Appendix for full definition of OIBDA and its reconciliation to operating income. FINANCIAL AND OPERATING REVIEW Sistema's consolidated revenues increased by 31% period-on-period to US$ 5.4 billion in the nine month period ended September 30, 2005, from US$ 4.1 billion in the same period of 2004. This growth was mainly organic - revenues from existing businesses grew by US$ 1.121 billion, or 27%. The consolidation of Gorizont A Russian satellite that was placed in a geostationary orbit for communications purposes. RT, Sibintertelecom, Barash, Kvant Kvant (Russian: Квант for "quantum") may refer to one of the following.
The Telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. segment represented 79.3% of total aggregated revenues for the period, compared with 81% in the same period of last year, while the contribution of the Technology segment to the Group's aggregated revenues increased to 12.1% from 7.7% for the same period last year. Sistema also continued to expand its business outside of Russia, capturing continued strong growth in the economies of the CIS countries There are two lists concerning CIS countries:
 `krān, ykrān`), Ukr. Ukraina, republic (2005 est. pop. for the nine months of 2005 were US$ 1,129 million, which is
close to 20% of Sistema's total revenues.Consolidated OIBDA increased by 24.6% period-on-period to US$ 2.3 billion from US$ 1.8 billion for the first nine month period of 2004. The OIBDA margin decreased to 42.5% for the reporting period, compared to 44.6% for the same period of 2004, both through some margin contraction contraction, in physics contraction, in physics: see expansion. contraction, in grammar contraction, in writing: see abbreviation. contraction - reduction in the Telecommunications segment, and the growth of the proportion of lower-margin segments in total revenues. Sistema's operating income increased by 19% to US$ 1.6 billion from US$ 1.3 billion in the same period for the previous year. Importantly, in the first nine months of 2005 Sistema continued to benefit from ongoing growth in scale and profitability of the Group's non-telecom businesses. MTS (1) See Microsoft Transaction Server. (2) (Modular TV System) The stereo channel added to the NTSC standard, which includes the SAP audio channel for special use. 1. MTS - Message Transport System. 2. contributed US$ 1.3 billion, or 83%, of the Group's aggregated operating income in the nine month period ended September 30, 2005, vs. 90% in the first nine months of 2004. Group net income increased by 29% period-on-period to US$ 434.2 million for the nine months ended September 30, 2005, from US$ 336.7 million for same period in 2004, with net income margin declining slightly to 8.0% from 8.1%. Our total 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. 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. increased to US$ 3.0 billion as at September 30, 2005 from US$ 2.0 billion as at the same date last year, while current debt remained virtually unchanged at US$ 562.8 million (vs. US$ 563.0 million as at September 30, 2004). The ratio of total debt to annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. OIBDA as of September 30, 2005, stood at 1.2x vs. 1.0x at the end of the first nine months of the previous year. In the reporting period, Sistema invested US$ 1.6 billion in capital expenditures (excluding acquisitions), which is a 55% increase compared with US$ 1.1 billion in the first nine months of 2004. Telecommunications Revenues from the Telecommunications segment grew by 28% period-on-period to US$ 4.3 billion from US$ 3.4 billion. MTS' revenues grew by 28% or US$ 813.2 million to US$ 3.7 billion, reflecting continued subscriber growth in Russia and the CIS. Combined revenues of Comstar, MTU-Inform, Telmos, MTU-Intel and Golden Line, now united under the umbrella of Comstar UTS (Universal Timesharing System) Amdahl's version of Unix System V. Release 4.0 is POSIX compliant. , grew by 16% to US$ 243.4 million from US$ 209.0 million in the first nine months of 2004, with operating income increasing by almost 12% to US$ 49.3 million from US$ 44.1 million. MGTS MGTS Message Generator Traffic Simulator MGTS Message Generation Test System demonstrated a 31% growth in its top line to US$ 466.8 million from US$ 357.3 million in the first nine months of 2004. The company's operating income increased by 135% to US$ 159 million from US$ 67.8 million for the same period in 2004. This growth in revenues and profitability was driven by an increase in regulated tariffs This is a list of tariffs and trade legislation:
regulated - controlled or governed according to rule or principle or law; "well regulated industries"; "houses with regulated temperature" 2. value-added services A value-added service (VAS) is a telecommunications industry term for non-core services or, in short, all services beyond standard voice calls and fax transmissions. (including broadband Internet access Broadband Internet access, often shortened to just "broadband", is high speed Internet access—typically contrasted with dial-up access over modem. Dial-up modems are generally only capable of a maximum bitrate of 56 kbit/s (kilobits per second) and require the full use of a services), and the effects of the monetization Monetization The securitization of the gross revenues of a contract. of social benefits. Technology Technology remained one of Sistema's fastest-growing segment in the first nine months of 2005, with revenues more than doubling in the period to US$ 652.8 million from US$ 319.8 million in the first nine months of 2004, and operating income growing by more than 10 times to US$ 143.1 million from US$ 13.9 million. The acquisition of Kvant and Videophone (1) (VideoPhone) A line of videophones (definition #1 below) from AT&T that were introduced in the early 1990s and later pulled off the market due to poor sales. The first models came with a price tag above $1,000, and a pair were needed. See Picturephone. and consolidation of Mediatel (previously not included in Technology) contributed US$ 33.1 million to the increase in revenues, while organic growth came mainly from the infocommunication technology business with 342% growth to US$ 210.0 million from US$ 47.6 million in revenue and 653% increase in operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. to $125.6 million from $16.7 million. System integration and hardware distribution business revenue increased by 51% to $312.9 million from $206.4 million, while operating profit increased by more than 30 times to $9.4 million from $0.3 million for the same period last year. Consumer electronics business showed 217% growth to US$ 89.1 million from US$ 28.1 million in revenue and 148% increase in operating income to $1.2 million for the first nine months 2005 from 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 $2.6 million for the first nine months 2004. The revenues of the semiconductor design and manufacturing business declined by 8% to US$ 38.3 million against US$ 41.6 million, however, operating income increased by 129% to $9.7 million from $4.2 million for the same period last year, making this business line the second-largest contributor to the segment's operating income. Insurance Revenues for the Insurance segment increased by 58.3% period-on-period to US$ 287.2 million from US$ 181.6 million on the back of a 68.7% increase in gross premiums written When a non-life insurance company closes a contract to provide insurance against loss, the revenues (premiums) expected to be received over the life of the contract are called gross premiums written. to US$ 438.0 million from US$ 259.6 million in the first nine months of 2004 and continuing enhanced returns on the investment portfolio managed by Allianz-ROSNO Asset Management. Operating income for the segment rose to US$ 19.5 million from US$ 11.4 million as a result of continued improvements in operating efficiencies during the reporting period. Banking The Banking segment revenues grew by 57% period-on-period to US$ 77.3 million from US$ 49.2 million in the first nine months of 2004. The growth in revenues was primarily attributable to interest on loans to customers, which increased by 65%. However, operating costs operating costs npl → gastos mpl operacionales increased at a higher rate due to the increase in loan servicing Loan servicing is the process by which a mortgage bank or subservicing firm collects the timely payment of interest and principal from borrowers. The level of service varies depending on the type loan and the terms negotiated between the firm and the investor seeking their services. cost, which reduced operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: to 12.3% from 29.2% in the first nine months of 2004. Real Estate Revenues in the real estate business are recognized upon completion of development projects. Revenues for the nine month period ended September 30, 2005, as for the previous reporting period to June June: see month. 30, 2005, showed a decrease compared with the nine months ended September 30, 2004. For the first nine months of this year revenues decreased by US$ 53.9 million to US$ 27.9 million, which represents a 66% decline compared to the same period in 2004. The reason for the decrease is the continued high level of work in progress which resulted in no sales of completed premises during the reporting period. Consequently, operating income for the period decreased to US$ 8.4 million from US$ 26.9 million in the same period of 2004. Retail Revenues for the retail business more than doubled to US$ 103.1 million, for the nine month period ended September 30, 2005 from US$ 50.9 million for the same period in 2004. The increase was mostly generated by revenues of our new retail outlets retail outlet n → punto de venta retail outlet n → point m de vente retail outlet retail n → . Another component of growth was consolidation of companies previously not included in our consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge , such as NeuKoln with revenues of US$ 9.7 million, and DM-Orel previously accounted for by the equity method with revenues of US$ 2.3 million. The acquisition of Chudo-Ostrov-Neva, S-Toys and Virastay-ka contributed US$ 7.6 million, US$ 8.6 million and US$ 0.7 million in revenues, respectively. Operating income during the reporting period increased marginally by 0.85% to US$ 4.74 million, compared with US$ 4.69 million in the nine month period ended September 30, 2004. The total number of Detsky Mir stores as at September 30, 2005 stood at 35, and this number further increased to 47 as at December December: see month. 20, 2005. Media Media business revenues grew by 96.1% to US$ 56.7 million during the nine month period ended September 30, 2005 compared to US$ 28.9 million for the same period in the previous year, primarily owing to owing to prep. Because of; on account of: I couldn't attend, owing to illness. owing to prep → debido a, por causa de regional expansion and an acquisition. The newly acquired group of companies ESTA ESTA Electronic System for Travel Authorization (Department of Homeland Security) ESTA Entertainment Services and Technology Association ESTA Energy Systems Trade Association ESTA European Security Transport Association , a cable television operator, contributed US$ 4.7 million to the revenues growth. Thema Production, a film producing company, previously excluded from Media operating results, had revenues of US$ 1.6 million in the nine month period ended September 30, 2005. The segment's aggregated operating losses increased to US$ 1.6 million in the nine month period ended September 30, 2005 from US$ 1.1 million in the nine month period ended September 30, 2004 (this includes operating income of US$ 1.2 million generated by ESTA). ACQUISITIONS AND DIVESTITURES In August 2005, Sistema Mass Media acquired 100% minus 1 share of ESTA for a cash consideration of approximately US$ 8.6 million. ESTA operates cable TV networks in Tver Tver (tvĕr), formerly Kalinin (kəlyē`nyĭn), city (1989 pop. 451,000), capital of Tver region, central European Russia, at the confluence of the Volga and Tver rivers. , Kaluga Kaluga (kəl `gə), city (1989 pop. 311,000), capital of Kaluga region, central European Russia, on the Oka River. and three cities The Three Cities is a collective description of the three fortified cities of Cospicua, Vittoriosa, and Senglea on the Island of Malta, which are enclosed by the massive line of fortification created by the Knights of St John, the Cottonera Lines. in the Arkhangelsk Region (Severodvinsk, Koryazhma and Mirny). Sistema Mass Media acquired 50.05% of the company's shares from individual investors and 49.95% from the European Bank for Reconstruction and Development European Bank for Reconstruction and Development Bank targeted at Eastern Europe and the former Soviet Union. . In August 2005, Sistema acquired minority shareholdings in seven energy companies in the Republic of Bashkortostan against an advance payment of US$ 502.9 million and subsequently increased its stake in five of these seven companies in October as discussed below. In September 2005, Sistema's fixed-line telecommunications provider subsidiary Comstar United TeleSystems acquired a 45% equity stake in Metrocom, a leading alternative fixed-line telecommunications company See telecom company. in St. Petersburg, for a total cash consideration of US$ 12.2 million. In addition, Sistema refinanced the loan of US$ 10.0 million previously obtained by Metrocom with the support of Antel Holdings Ltd. The stake has been acquired from Antel Holdings Ltd., a subsidiary of MENATEP Group. The remaining 55% of Metrocom is held by the St. Petersburg City Property Management Committee (KUGI). RECENT EVENTS In September 2005, the ordinary shares of Comstar United TeleSystems were admitted to the Moscow Stock Exchange (MSE MSE Mouse (computer) MSE Materials Science & Engineering MSE Mean Squared Error MSE Mean Square Error MSE Master of Science in Engineering MSE Manufacturing Systems Engineering MSE Mechanically Stabilized Earth ) under the symbol CMST CMST Capacitated Minimum Spanning Tree (problem) CMST Characterization, Monitoring, and Sensor Technology CMST Center for Mathematics, Science, and Technology . In October 2005, Sistema increased its stakes in five out of seven energy companies in the Republic of Bashkortostan in which it had acquired minority shareholdings in August. Sistema increased its voting stake in OAO OAO Orbiting Astronomical Observatory OAO Over and Out OAO One And Only OAO Ontario Association of Orthodontists OAO Owned and Operated OAO Ontario Association of Optometrists OAO Opticians Association of Ohio OAO Orthogonalized Atomic Orbital Novoil from 19.9% to 28.17%, in OAO Ufimsky NPZ from 19.9% to 25.52%, in OAO Ufaneftekhim from 19.9% to 22.43%, in OAO Ufaorgsintez from 19.9% to 24.87% and in OAO Bashneft from 19.9% to 25%, while at the same time reaching an agreement to cancel the acquisition of a 10.08% stake in OAO Bashkirenergo. In November 2005, Sistema reached an agreement with Oboronprom to sell its 100% stake in Kamov-Holding, official distributor of Kamov helicopters, and the owner of 49.46% of Kamov, designer and manufacturer of helicopters, for a total cash consideration of US$ 11.8 million. In November 2005, Sistema completed the consolidation of its fixed-line telecommunications operators under Comstar United TeleSystems. As a result of this consolidation, Comstar UTS now owns majority stakes in Sistema's fixed-line businesses, including 99% of MTU-Inform, 100% of Telmos, 100% of MTU-Intel (including 100% of Golden Line) and 55.62% of MGTS. Acquisition was effected through additional share issuance by Comstar UTS. Upon completion of restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). Sistema and its 100%-owned subsidiaries own 79.3% of Comstar UTS shares; MGTS and its 100%-owned subsidiary own 20.7% of Comstar UTS shares. Following this restructuring, in December 2005 Comstar UTS launched a public share purchase offer to the holders of MGTS ordinary shares at RUR 490 per share (equivalent to approximately US$ 17.065 at the official exchange rate as of the announcement date). In November 2005, Sistema Mass Media acquired a 74% stake in Cifrovoe Teleradioveshanie (CTV CTV Canadian Television (Network Limited) ), a digital television broadcasting company Noun 1. broadcasting company - a company that manages tv or radio stations company - an institution created to conduct business; "he only invests in large well-established companies"; "he started the company in his garage" , for a cash consideration of approximately US$ 7 million. Earlier this month, Sistema's CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. and controlling shareholder, Vladimir Evtushenkov, distributed a part of his stake representing total of 1% of outstanding shares to the company's directors and top management. In this way, Mr. Evtushenkov made a personal contribution towards the incentive program for the company's Board members and top executives. Sistema is the largest private sector consumer services company in Russia and the CIS, with over 50 million customers. Sistema develops and manages market-leading businesses in selected service-based industries, including telecommunications, technology, insurance, banking, real estate, retail and media. Founded in 1993, the company reported revenues of US$ 5.4 billion for the first nine months of 2005, and total assets of US$ 12.1 billion as at September 30, 2005. Sistema's shares are listed under the symbol "SSA" on the London Stock Exchange London Stock Exchange London marketplace for securities. It was formed in 1773 by a group of stockbrokers who had been doing business informally in local coffeehouses. , under the symbol "AFKS" on the Russian Trading System Russian Trading System (RTS) An electronic system in Russia, like the Nasdaq system on which the majority of Russian equities trading is conducted. (RTS (Request To Send) An RS-232 signal sent from the transmitting station to the receiving station requesting permission to transmit. Contrast with CTS. 1. (operating system) RTS - run-time system. 2. ), and under the symbol "SIST" on the Moscow Stock Exchange (MSE). Some of the information in this press release may contain projections or other 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. regarding future events or the future financial performance of Sistema. You can identify forward looking statements by terms such as "expect," "believe," "anticipate," "estimate," "intend," "will," "could," "may" or "might" the negative of such terms or other similar expressions. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We do not intend to update these statements to reflect events and circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or occurring after the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, general economic conditions, our competitive environment, risks associated with operating in Russia, rapid technological and market change in our industries, as well as many other risks specifically related to Sistema and its operations. APPENDIX - NON-GAAP FINANCIAL MEASURES This results statement includes financial information prepared 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 United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. 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 (US GAAP), as well as other non-GAAP financial information. The non-GAAP financial information should be considered as an addition to, but not as a substitute for, information prepared in accordance with US GAAP. OIBDA is operating income before depreciation and amortization and the OIBDA margin is defined as OIBDA as a percentage of net revenues. These measures are included in this results statement in order to provide additional information regarding the Group's ability to meet future debt service payments, capital expenditure and working capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. , and as a metric to evaluate profitability. OIBDA is not a measure of financial performance under US GAAP, and is not an alternative to net income as a measure of operating performance, or to cash flows from operating activities as a measure of liquidity. While depreciation and amortization are considered operating costs under GAAP, these items primarily represent the non-cash current period allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as of costs arising from the acquisition or development of long term assets in prior periods. OIBDA is commonly used as a criterion for evaluation of operating performance by credit and equity investors and analysts. The calculation of OIBDA may be different from the calculation used by other companies and comparability may therefore be limited. OIBDA can be reconciled to the Group's consolidated statements as follows: US$ thousands 9m 2005 9m 2004 FY 2004 Operating Income 1,553,433 1,306,545 1,664,706 Add depreciation and amortization 748,829 540,679 799,885 OIBDA 2,302,262 1,847,224 2,464,591 JSFC JSFC Joint Stock Financial Corporation JSFC Johnson Space Flight Center JSFC Joint Space Fundamentals Course JSFC Joint Strike Fighter Competition JSFC Java System Foundation Classes JSFC JavaServer Faces Compilation SISTEMA AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Amounts in thousands of U.S. dollars, except share and per share amounts)
January 01, January 01, FY 2004
2005 2004 -
-September September
30, 30,
2005 2004
Sales $ 5,056,002 $ 3,914,312 $ 5,392,827
Revenues from financial services 354,581 221,608 318,459
----------- ----------- -----------
TOTAL REVENUES 5,410,583 4,135,920 5,711,286
----------- ----------- -----------
Cost of sales, exclusive of
depreciation and amortization
shown separately below (1,950,179) (1,440,155) (2,020,124)
Financial services related costs,
exclusive of depreciation and
amortization shown separately
below (258,541) (149,378) (201,631)
----------- ----------- -----------
TOTAL COST OF SALES (2,208,720) (1,589,533) (2,221,755)
----------- ----------- -----------
Selling, general and
administrative expenses (928,736) (679,629) (1,009,716)
Depreciation and amortization (748,829) (540,679) (799,885)
Other operating expenses, net (28,583) (30,614) (44,529)
Equity in net income of investees 54,381 12,942 27,121
Gain/(loss) on disposal of
interests in subsidiaries 3,337 (1,862) 2,184
----------- ----------- -----------
OPERATING INCOME 1,553,433 1,306,545 1,664,706
----------- ----------- -----------
Interest income 56,857 17,370 18,061
Interest expense, net of amounts
capitalized (189,892) (163,316) (213,943)
Currency exchange and translation
(loss)/gain (14,412) 9,496 12,620
----------- ----------- -----------
Income before income tax, minority
interests and cumulative effect
of a change in accounting
principle 1,405,986 1,170,095 1,481,444
----------- ----------- -----------
Income tax expense (404,092) (326,141) (445,731)
----------- ----------- -----------
Income before minority interests
and cumulative effect of a change
in accounting principle 1,001,894 843,954 1,035,713
----------- ----------- -----------
Minority interests (567,673) (471,761) (589,014)
----------- ----------- -----------
Income before cumulative effect of
a change in accounting principle 434,221 372,193 446,699
----------- ----------- -----------
Cumulative effect of a change in
accounting principle (net of
income tax effect of nil) - (35,472) (35,472)
----------- ----------- -----------
NET INCOME $ 434,221 $ 336,721 $ 411,227
=========== =========== ===========
Weighted average number of common
shares outstanding 9,417,216 8,100,000 8,100,000
Earnings per share, basic and
diluted 46.1 41.6 50.8
JSFC SISTEMA AND SUBSIDIARIES UNAUDITED 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 thousands of U.S. dollars, except share amounts)
September September December
30, 30, 31,
2005 2004 2004
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 939,502 $ 308,547 $ 503,747
Short-term investments 475,888 178,964 207,293
Loans to customers and banks, net 657,242 291,629 379,310
Insurance-related receivables 168,924 95,230 130,278
Accounts receivable, net 450,774 292,956 327,921
Other receivables and prepaid
expenses, net 822,613 540,328 583,074
Inventories 355,860 228,275 276,832
Deferred tax assets, current
portion 103,238 68,334 73,592
----------- ---------- ----------
Total current assets 3,974,041 2,004,263 2,482,047
----------- ---------- ----------
Property, plant and equipment, net 5,346,450 3,990,929 4,435,215
Advance payments for non-current
assets 479,165 161,782 181,281
Long-term receivables 5,291 1,208 4,513
Long-term investments 519,019 54,554 45,911
Investments in affiliated companies 285,830 194,643 206,520
Goodwill 224,134 114,630 174,341
Licenses, net 627,036 692,460 750,933
Other intangible assets, net 536,775 435,128 467,160
Debt issuance costs, net 25,591 24,025 27,267
Deferred tax assets 38,930 5,307 3,482
----------- ---------- ----------
TOTAL ASSETS $12,062,262 $7,678,929 $8,778,670
=========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 485,026 $ 331,752 $ 361,016
Bank deposits and notes issued 364,012 239,819 326,861
Insurance-related liabilities 516,407 240,613 344,460
Taxes payable 251,443 151,556 117,888
Deferred tax liabilities, current
portion 15,338 5,252 22,071
Accrued expenses, subscriber
prepayments and other current
liabilities 997,893 643,323 737,394
Short-term notes payable 127,908 60,556 221,103
Current portion of long-term debt 432,266 497,654 340,938
----------- ---------- ----------
Total current liabilities 3,190,293 2,170,525 2,471,731
----------- ---------- ----------
LONG-TERM LIABILITIES:
Capital lease obligations 5,000 2,138 3,412
Long-term debt 3,004,949 1,974,840 2,494,522
Subscriber prepayments, net of
current portion 177,920 133,209 156,233
Deferred tax liabilities 207,753 223,761 218,620
Postretirement benefit obligation 21,691 14,349 16,226
----------- ---------- ----------
Total long-term liabilities 3,417,313 2,348,297 2,889,013
----------- ---------- ----------
Deferred revenue 128,111 121,878 130,913
----------- ---------- ----------
TOTAL LIABILITIES 6,735,717 4,640,700 5,491,657
----------- ---------- ----------
Minority interests in equity of
subsidiaries 2,185,238 1,703,634 1,851,027
Commitments and contingencies - - -
SHAREHOLDERS' EQUITY:
Share capital 30,057 25,090 25,090
Additional paid-in capital 1,478,564 198,882 198,882
Retained earnings 1,589,871 1,089,898 1,164,404
Accumulated other comprehensive
income 42,815 20,725 47,610
----------- ---------- ----------
TOTAL SHAREHOLDERS' EQUITY 3,141,307 1,334,595 1,435,986
----------- ---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $12,062,262 $7,678,929 $8,778,670
=========== ========== ==========
JSFC SISTEMA AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands of U.S. dollars)
January 01, January 01, FY 2004
2005 2004 -
-September September
30, 30,
2005 2004
OPERATING ACTIVITIES:
Net income $ 434,221 $ 336,721 $ 411,227
Adjustments to reconcile net
income to net cash provided
by operations:
Depreciation and
amortization 748,829 540,679 799,885
(Gain)/loss on disposal of
property, plant and
equipment (552) 1,219 1,551
Long-term investments'
impairment - - 3,070
(Gain)/loss on disposal of
interests in subsidiaries (3,337) 1,862 1,862
Cumulative effect of a
change in accounting
principle - 35,472 35,472
Minority interests 567,673 471,761 589,014
Equity in net income of
investees (54,381) (12,942) (27,121)
Deferred income tax benefit (95,225) (31,410) (58,903)
Provision for doubtful
accounts receivable 36,829 15,179 29,809
Allowance for loan losses 4,962 (1,452) 13,810
Inventory obsolescence
charge 5,095 4,874 5,868
Changes in operating assets
and liabilities, net of
effects from purchase of
businesses:
Trading securities (212,042) 22,503 27,142
Loans to banks (152,710) 54,626 (25,661)
Insurance-related
receivables (38,646) (25,497) 31,111
Accounts receivable (156,400) (54,598) (101,567)
Other receivables and
prepaid expenses (238,160) 46,019 (3,929)
Inventories (72,088) (64,259) (112,269)
Accounts payable 115,750 37,045 54,110
Insurance-related
liabilities 171,947 59,627 51,985
Taxes payable 133,039 33,390 (1,997)
Accrued expenses,
subscriber prepayments and
other liabilities 146,889 19,552 171,966
Postretirement benefit
obligation 5,465 5,759 7,636
------------- ----------- -----------
Net cash provided by
operations 1,347,158 1,496,130 1,904,071
------------- ----------- -----------
INVESTING ACTIVITIES:
Purchase of property, plant
and equipment (1,409,491) (978,732) (1,498,098)
Purchase of intangible assets (171,741) (84,594) (164,577)
Purchase of businesses, net of
cash acquired (94,168) (196,860) (338,906)
Proceeds from disposal of
subsidiaries, net of cash
disposed 4,859 649 649
Purchase of long-term
investments (686,594) (68,394) (76,217)
Purchase of short-term
investments (692,550) (40,926) (142,696)
Proceeds from sale of short-
term investments 616,687 107,266 187,500
Proceeds from sale of
property, plant and equipment 3,263 5,050 7,807
Net increase in loans to
customers (124,778) (30,615) (39,898)
------------- ----------- -----------
Net cash used in
investing activities (2,554,513) (1,287,156) (2,064,436)
------------- ----------- -----------
FINANCING ACTIVITIES:
Principal payments on short-
term borrowings, net (94,120) (282,226) (263,981)
Net (decrease)/increase in
deposits from customers (12,321) 80,009 150,876
Net increase/(decrease) in
bank promissory notes issued 42,678 (14,947) 12,838
Proceeds from grants 924 2,913 3,285
Proceeds from long-term
borrowings, net of debt
issuance costs 911,398 623,774 9,445
Principal payments on long-
term borrowings (311,578) (513,319) 1,458,082
Principal payments on capital
lease obligations (6,150) (5,953) (868,347)
Payments to shareholders of
subsidiaries (163,618) (68,681) (7,924)
Proceeds from issuance of
common stock 1,284,649 - (108,165)
Dividends paid (8,752) (5,162) (5,162)
------------- ----------- -----------
Net cash provided
by/(used in) financing
activities $ 1,643,110 $ (183,592)$ 380,947
------------- ----------- -----------
INCREASE IN CASH AND CASH
EQUIVALENTS $ 435,755 $ 25,382 $ 220,582
CASH AND CASH EQUIVALENTS,
beginning of the period 503,747 283,165 283,165
------------- ----------- -----------
CASH AND CASH EQUIVALENTS, end
of the period $ 939,502 $ 308,547 $ 503,747
============= =========== ===========
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