Sistema Financial Results for the Six Months Ended June 30, 2006.MOSCOW -- Sistema (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 six months ended June 30, 2006. HIGHLIGHTS * Consolidated revenues up 37% year on year to US$ 4.6 billion * OIBDA OIBDA Operating Income Before Depreciation & Amortization 1 up 16% year on year to US$ 1.7 billion * 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. up 10% year on year to US$ 1.04 billion * Net income up 36% year on year to US$ 310.1 million * Total consolidated assets up 49% year on year to US$ 17.3 billion * Earnings per share up 31% year on year to US$ 0.64 Alexander Goncharuk, President and Chief Executive Officer of Sistema, commented: "The company has demonstrated impressive results in the first half of 2006, and we are happy to see all of our target strategic goals for the period being met. This relates both to the financial results presented today, and to the key operational performance indicators". FINANCIAL SUMMARY [TABLE OMITTED] OPERATING REVIEW Sistema's consolidated revenues increased by 37% year on year, which reflected a solid performance by the Group's Telecommunications businesses and the rapid development of the Group's non-telecommunications operations. The non-telecommunications businesses accounted for 28% of Group consolidated revenues for the first half of the year, compared to 21% for the same period of 2005. The organic year on year and like for like growth was 29% and amounted to US$ 4,252.9 million in the first half of 2006, excluding businesses acquired or divested since the end of the first half of 2005. Group OIBDA increased by 16% year on year for the first six months ended June 30, 2006 with the lower OIBDA margin impacted by relative margin pressures in the wireless telecommunications business. The non-telecom segments showed lower margins compared to the Telecommunications segment due to their comparatively early stages of development. Consolidated depreciation and amortization expense was up by 28% year on year following the increase in depreciation in the Group's telecommunication segment. Selling,General and Administrative expenses rose by 61%, from US$ 574.4 million to US$ 924.9 million in the first half of 2006, as a result of the strong growth in the existing and newly acquired businesses. US$ 94 million, included in S,G&A expense, reflects the fair value of non-cash compensation to employees. Group operating income was up 10% year on year and included the net gain of US$ 121.6 million on the disposal of interest in certain subsidiaries, including 5% of SITRONICS stock. The effective tax rate increased from 30.9% to 37.2% year on year as a result of foreign exchange gains on non-ruble denominated 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. , which are taxable under Russian statutory law. The marginal decrease in minority interest reflects further consolidation of minority shares in the telecommunication segment, as well as the acquisition of an additional 2.3% of the outstanding shares of 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. in December 2005, offset by the decline of the Group's ownership in Comstar UTS (Universal Timesharing System) Amdahl's version of Unix System V. Release 4.0 is POSIX compliant. to 59% following its IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. . Net income for the first half of the year was up 36% year on year to US$ 310.1 million, from US$ 227.7 million. The weighted average number of shares outstanding increased year on year from 464,944,750 in 2005 to 481,342,813 in 2006, and the Group reported a 31% year on year increase in basic and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of from US$ 0.49 to US$ 0.64. Telecommunications2 (US$ millions) 1H 2006 1H 2005 Revenues 3,297.4 2,680.0 OIBDA 1,551.1 1,383.0 Operating Income 954.0 920.5 Net Income 570.9 620.8 The Telecommunications segment reported 23% year on year revenue growth and accounted for 72% of Group consolidated revenues for the first half of 2006, compared to 79% for the first half of 2005. The growth was primarily organic with neither MTS or Comstar UTS having made any scale acquisitions since the end of the first half of 2005. MTS continued to be the main contributor and accounted for 78% of the segment's year on year growth. MTS added 5.9 million subscribers during the first six months of 2006, of which the majority were in the Russian and Ukrainian markets, and reported 21% year on year revenue growth for the period from US$ 2.3 billion to US$ 2.8 billion. MTS results for the second quarter of 2006 showed an increase in ARPU (Average Revenue Per User) A calculation often used to determine the overall value of an application. It is also used to rate particular customers, especially in the wireless space, by comparing someone's account to the overall average. to US$ 7.5 from US$ 6.6 in the first quarter of 2006. Comstar UTS generated 28% year on year revenue growth from US$ 419.4 million to US$ 536.3 million, following continued increases in traditional fixed-line regulated revenues, as well as increasing demand for the ADSL See DSL. ADSL - Asymmetric Digital Subscriber Line and pay-TV offerings.3. These broadband data and video services accounted for 18% of Comstar UTS's total alternative fixed-line revenues for the period, compared to only 11% a year ago. Segment OIBDA was up 12% year on year, with the lower year on year OIBDA margin of 47% (52%) resulting from the decrease in margin in the wireless telecommunications business. MTS's OIBDA for the period increased by 10% year on year from US$ 1.2 billion to US$ 1.3 billion. Comstar UTS reported a 26% year on year increase in OIBDA from US$ 173.5 million to US$ 218.7 million. The year on year fall in segment net income was due to the lower contribution from MTS of US$ 479.1 million (US$ 536.3 million), which was impacted by increasing service costs in the Company and, as a result, a declining net margin. Comstar UTS meanwhile reported almost doubling net income year on year, from US$ 49.6 million to US$ 97.4 million. Technology (US$ millions) 1H 2006 1H 2005 Revenues 696.6 426.5 OIBDA 80.6 115.4 Operating Income 62.4 109.9 Net Income 33.7 64.6 The Technology segment generated 63% year on year revenue growth for the period and accounted for 12% of Group revenues, compared with 8% for the same period of 2005. The growth was primarily driven by the Telecom Solutions business, which accounted for 51%, or US$ 352.2 million (US$ 166.1 million), of segment revenues and included the newly acquired Intracom Telecom. Improved profitability levels in the segment were distorted in the second quarter of 2006 as a result of the consolidation of Intracom Telecom. Intracom Telecom was acquired on the last day of the reporting period, with the resulting consolidation effect that the business' revenues and expenses were consolidated for the entire first six months of the year, whilst the earnings for the period prior to the acquisition of the controlling interest controlling interest The ownership of a quantity of outstanding corporate stock sufficient to control the actions of the firm. Controlling interest often involves ownership of significantly less than 51% of a firm's outstanding stock because many owners fail are reported in minority interests and are not therefore included in the operating income for the period. Thus, Intracom Telecom accounted for US$ 217.0 million of the increase in Technology segment revenues and for US$ 21.1 of the increase in its OIBDA. Real Estate (US$ millions) 1H 2006 1H 2005 Revenues 106.5 33.7 OIBDA 44.4 3.9 Operating Income 42.7 3.2 Net Income 9.3 3.5 Sistema Hals revenues have tripled year on year in the first half of 2006, which was primarily due to the sale of the Pokrovka 40, an office and hotel complex, for approximately US$ 75.0 million. OIBDA was up more than 10 times, from US$ 3.9 to US$ 44.4 million primarily due to the sale of the premises described above. The June 30, 2006, report from Cushman&Wakefield Styles&Riabokobylko valued 88 properties/projects in the portfolio, with 100% share of freehold and leasehold interest held by Sistema Hals in each property, at US$ 1 865 403 000, and attributable value (excluding minority interest) at US$ 1 509 534 000. Insurance (US$ millions) 1H 2006 1H 2005 Revenues 280.8 197.9 Gross Premiums Written 411.0 317.9 Net Premiums Earned 255.8 183.2 Net Income 17.3 7.9 Key Ratios Loss ratio (53.5) (57.1) Expense Ratio (38.9) (36.8) Combined Ratio (92.3) (93.9) Revenues for the Rosno insurance business increased by 42% year on year in the first half of 2006 and reflected the expansion of the client base and the overall positive development in the Russian insurance market. 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. increased by 29% year on year with voluntary medical insurance premiums up 72%, automotive insurance premiums up 74%, and non-life insurance premiums up 59%. Allianz-Rosno Asset Management increased its assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. from US$ 441.4 million to US$ 467.5 year on year, which included particularly strong growth in third party funds. The growth in premiums and investment returns resulted in a more than doubling of net income year on year. Banking (US$ millions) 1H 2006 1H 2005 Revenues 87.8 45.8 Operating Income 8.6 3.1 Net Income 3.7 1.2 The Moscow Bank for Reconstruction and Development (MBRD) reported an almost doubling of revenues year on year, following a doubling of the bank's loan portfolio and increasing interest income from the retail banking operations. The acquisition of Sistema's leasing companies in March 2006 also contributed US$ 5.1 million to the year on year growth. The bank increased its interest income from non-group clients following the expansion of the retail business to 12 branches and 41 mini-offices. Both the operating and net income margins increased year on year. Retail (US$ millions) 1H 2006 1H 2005 Revenues 117.9 45.2 OIBDA (7.4) 4.6 Operating Income (8.3) 3.8 Net Income (9.8) 2.3 Detsky Mir, the specialist children's goods retailer, more than doubled its revenues year on year following the opening of seven new retail stores during the first half of the year and the opening of 28 new outlets since the end of the first half of 2005. These 28 stores contributed US$ 21.4 million in new sales, or 18% of total revenues, while the wholesale company C-Toys accounted for US$ 26.9 million or 23% of the Company's total revenue for the period. The Company's profitability was adversely affected during the period of rapid expansion: Detsky Mir now has 48 stores in 19 Russian cities, compared to only 20 a year ago. This additional scale will enable the company to benefit from increased purchasing and sales synergies and will allow it to secure the footprint in the prime segment of the retail market. Media (US$ millions) 1H 2006 1H 2005 Revenues 45.6 93.5 OIBDA 9.9 3.9 Operating Income 2.8 0.5 Net Loss (0.2) (1.5) Sistema Mass Media's results reflected the transfer of the MTU-Intel and Golden Line businesses to the Telecommunications segment. The two businesses contributed US$ 51.3 million of revenues in the first half of 2005. US$ 26.1 million of the division's revenues for the first half of 2006 were generated by companies acquired since the beginning of 2005, whilst US$ 68.6 million of the first half 2005 revenues were accounted for by companies that were subsequently sold or transferred to other Group reporting segments. The division's operating profitability however improved by US$ 2.3 million year on year primarily due to the consolidation of the results of United Cable Network acquired in February 2006 which contributed US$ 3.5 million to the Segment's operating income. FINANCIAL HIGHLIGHTS Sistema generated a 16% year on year increase in 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 from US$ 584.8 million to US$ 677.8 million for the first half of the year. The increase was primarily related to organic business growth and increased profitability. Net cash used in investing activities was US$ 2.0 billion in the first half of 2006 and reflected marginally increased capital expenditure of US$ 999.7 billion, compared to US$ 981.5 million in the prior year, as well as the purchase of businesses for a total combined consideration of US$ 394.9 million. Cash flow from financing activities Cash Flow from Financing Activities A category in the cash flow statement that accounts for external activities such as issuing cash dividends, adding or changing loans, or issuing and selling more stock. amounted to US$ 2.0 billion in the first half of 2006 and reflected US$ 977 million of net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). from the Comstar UTS initial public offering, which took place in February 2006. The Group's net debt amounted to US$ 4.5 billion at the end of the first half of 2006, compared to US$ 2.5 billion as at June 30, 2005 and US$ 3.9 billion as at December 31, 2005. The Group's increase in borrowings included US$ 285.0 million of debt consolidated as a result of the acquisition of Intracom Telecom, US$ 160.0 million of proceeds from the MBRD bond offering in March and June 2006, and the US$ 200.0 million raised by the Sitronics Finance bond offering in February 2006. ACQUISITIONS AND DIVESTITURES In Technology segment, Sitronics acquired 51% of voting stake of Intracom Telecom, a provider of telecommunications solutions and services in the Eastern Europe Eastern Europe The countries of eastern Europe, especially those that were allied with the USSR in the Warsaw Pact, which was established in 1955 and dissolved in 1991. and Middle East. The total cash consideration for the deal is US$150.6 million, including US$ 43.9 million payable upon due diligence Research; analysis; your homework. This term has caught on in all industries, because it sounds so "wired." Who would want to do analysis or research when they can do due diligence. See wired. completion. Additionally, Sitronics entered into a put option agreement to acquire the remaining 49.0% of common shares of Intracom Telecom. Comstar UTS announced an unconditional purchase offer for MGTS MGTS Message Generator Traffic Simulator MGTS Message Generation Test System ordinary shares in December 2005. Comstar UTS acquired 3,363,332 MGTS shares during the first two months of 2006, equivalent to 4.21% of the outstanding ordinary shares, for a total cash consideration of RUR 1,600 million (equivalent to US$ 59.1 million as at June 30, 2006). Comstar UTS purchased an additional 3.82% of MGTS common stock from minority shareholders for US$ 71.5 million in March 2006. As a result, Comstar UTS's voting and economic interests in MGTS have increased to 53.0%. Comstar UTS also purchased 100% of Astelit, an alternative fixed-line telecommunications company See telecom company. , for US$ 7.8 million in June 2006. Astelit holds licences to provide integrated fixed-line services across 51 Russian regions to large corporate customers, and has over 200 km of its own fiber optic infrastructure in city centres. Astelit has subsequently been rebranded as M-Telecom. ROSNO acquired a 51% stake in Medexpress, which is a provider of voluntary medical insurance in the North-western region of the Russian Federation Russian Federation: see Russia. , for US$ 6.6 million in January 2006. The Group plans to further develop Medexpress' operations and use its distribution network as an additional sales channel for ROSNO products. Sistema Mass Media and ECU GEST GEST - Generic Expert System Tool acquired 90% and 10% respectively of JIR JIR Juventud de Izquierda Revolucionaria JIR Journal of Irreproducible Results JIR Journal of Improbable Results JIR Jumper for Infra Red Broadcast and JIR Inc., which are the owners of 100% of United Cable Networks ("UCN UCN Universidad Católica del Norte (Chile) UCN University College of the North (The Pas, Manitoba, Candad) UCN Ultra Cold Neutron UCN Unión del Centro Nacional "), for a total cash consideration of US$ 145.9 million in February 2006. UCN is a pay-TV and broadband service provider An ISP, telephone company, cable company or other carrier that offers high-speed communications to homes and businesses, typically for Internet access. Cable modems, DSL and T1 lines are the common technologies. See broadband, cable modem, DSL and T1. with 724,000 subscribers in 17 metropolitan areas across the Russian Federation. Sistema Mass Media sold its ownership in Gazeta Metro in June 2006 for US$ 1.9 million in cash. Sistema Mass Media acquired GK Sendi, which is an internet provider Internet provider - Internet Service Provider in Nizhny Novgorod Nizhny Novgorod (nyēsh`nyī nôf`gərəd), formerly Gorky or Gorki, city (1989 pop. , and Informservis, which is a cable television operator in the same region, for US$ 6.3 million in January 2006. The Group intends to use these acquisitions to further develop its digital TV and broadband networks  This article or section needs copy editing for grammar, style, cohesion, tone and/or spelling.You can assist by [ editing it] now. in the regions. Detsky Mir completed the acquisition of 99% of Tireks Development, which owns a 30% stake in Group subsidiary Dom Igrushki, for a cash consideration of US$ 2.4 million in March 2006. Intourist purchased a 20% equity interest in Cosmos Hotel for approximately US$ 20.8 million in March 2006, and now controls the Company with a 63.4% shareholding. Concern RTI RTI - Return from interrupt acquired a 50% plus one share interest in UralEleketro, and a 100% stake in UralElektro-K, for a combined cash consideration of US$ 5.4 million in March 2006. Both companies manufacture electronic equipment. RECENT EVENTS FOLLOWING THE END OF THE REPORTING PERIOD In October 2006, Sistema acquired a 66% controlling stake through directed new share issue in WaveCrest Group Enterprises Ltd. ("WaveCrest"). WaveCrest is a global communications service provider A Communications Service Provider or CSP is a company that transports information electronically. The term encompasses public and private companies in the wireline, wireless, Internet, cable, satellite, and managed services businesses. offering wholesale (operator) and retail (residential) telephony services, using conventional circuit-switched and Internet protocol See Internet and TCP/IP. (networking) Internet Protocol - (IP) The network layer for the TCP/IP protocol suite widely used on Ethernet networks, defined in STD 5, RFC 791. IP is a connectionless, best-effort packet switching protocol. (IP) telephony. MTS acquired a 75% controlling stake in Dagtelecom from Glaxen Corp. for $14.7 million in July 2006. Dagtelecom is the GSM-900 mobile services provider in the Republic of Dagestan, in the south of Russia, with a population of 2.6 million, and has 1.7 million subscribers. Intourist Overseas Limited purchased a 51% stake in Tatilya Turizm Seyahat Insaat, a Turkish travel operator, for US$ 0.3 million in July 2006. The Group acquired a 81.25% share in ZAO ZAO Zakrytoe Aktsionernoe Obschestvo (Russian: Closed Joint Stock Corporation) ZAO Zenith Angle Offset ZAO Aluminium Doped Zinc Oxide (material for producton of organic light-emitting diodes) Sahles, the owner of controlling stakes in the entities that together comprise the Perm Motors Group for US$ 122 million in August 2006. Perm Motors is one of Russia's largest manufacturers of jet aircraft engines and industrial turbines. In July 2006, the Group disposed of Glorely, a subsidiary holding 35% interest in Sistema-Invest, the owner of the Group's energy companies in the Republic of Bashkortostan for a total cash consideration of $201.0 million. In July-September 2006, Sistema Mass Media acquired several cable television operators in various Russian regions, namely 74% share in Smolensk-based "Teleradiotekhnika" for $1.2 million, 100% share in Voronezh-based "Elecom-service" for $1.0 million, 100% share in "Telesat" located in Nizhny Tagil for $0.4 million, 74% share in a group of operators based in Ivanovo for $7.1 million, 55% share in "Electronica This article or section needs copy editing for grammar, style, cohesion, tone and/or spelling.You can assist by [ editing it] now. " in Balakovo for $0.8 million and 90% share in "Sallak" based in Krasnodar for $0.2 million. These acquisitions contibuted to the Group's expansion in the regional cable television market. In August 2006, the Group sold for $20.0 million its 8% interest in MTK MTK Maa- ja Metsätaloustuottajain Keskusliitto Mtk ry (Central Union of Agricultural Producers and Forest Owners) MTK Montauk MTK Magyar Testgyakorlók Köre (Hungarian soccer team) ("KOMKOR") together with additional 3% interest acquired from a related party after June 30, 2006. OTHER INFORMATION Conference call information The company will host a conference call today at 18.00 (Moscow local time), 15.00 (London local time), 10.00 (New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of local time). To participate in the conference call, please dial the following numbers: UK: +44 20 7138 0837 US: +1 718 354 1172 A replay facility will also be made available and may be accessed by dialing the following numbers and entering the replay access code - 5837451# UK: +44 20 7806 1970 US: +1 718 354 1112 For further information, please visit www.sistema.com. Sistema is the largest private sector consumer services company in Russia and the CIS, with over 50 million customers. Sistema develops and manages market-leading businesses in selected service-based industries, including telecommunications, technology, insurance, banking, real estate, retail and media. Founded in 1993, the company reported revenues of US$ 4.6 billion for the first half of 2006, and total assets of US$ 17.3 billion as at June 30, 2006. 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 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 ). 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 occurring after the date hereof 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. SISTEMA 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 AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (AMOUNTS IN THOUSANDS OF U.S. DOLLARS) [TABLE OMITTED] SISTEMA JSFC AND SUBSIDIARIES 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) [TABLE OMITTED] SISTEMA JSFC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (AMOUNTS IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE AMOUNTS) [TABLE OMITTED] SISTEMA JSFC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (AMOUNTS IN THOUSANDS OF U.S. DOLLARS) [TABLE OMITTED] SISTEMA JSFC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (AMOUNTS IN THOUSANDS OF U.S. DOLLARS) [TABLE OMITTED] SISTEMA JSFC AND SUBSIDIARIES SEGMENT NOTE (Amounts in thousands of U.S. dollars) [TABLE OMITTED] [TABLE OMITTED] Attachment A Non-GAAP financial measures. This press release includes financial information prepared in accordance with accounting principles generally accepted in the United States of America UNITED STATES OF AMERICA. The name of this country. The United States, now thirty-one in number, are Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Hampshire, , or US GAAP, as well as other financial measures referred to as non-GAAP. The non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with US GAAP. Operating Income Before Depreciation and Amortization (OIBDA) and OIBDA margin. OIBDA represents operating income before depreciation and amortization. OIBDA margin is defined as OIBDA as a percentage of our net revenues. Our OIBDA may not be similar to OIBDA measures of other companies; is not a measurement under accounting principles generally accepted in the 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. and should be considered in addition to, but not as a substitute for, the information contained in our consolidated statement of operations See Income statement. . We believe that OIBDA provides useful information to investors because it is an indicator of the strength and performance of our ongoing business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets , including our ability to fund discretionary spending such as capital expenditures, acquisitions of mobile operators and other investments and our ability to incur and service debt. While depreciation and amortization are considered operating costs operating costs npl → gastos mpl operacionales under 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 , 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 Credit Rating Agencies Firms that compile information on and issue public credit ratings for a large number of companies. to evaluate and compare the periodic and future operating performance and value of companies within the wireless telecommunications industry. OIBDA can be reconciled to our consolidated statements of operations as follows: [TABLE OMITTED] 1 OIBDA is defined as operating income before depreciation and amortization. See Attachment A for this statement for the whole definition of OIBDA and a reconciliation of OIBDA to operating income. 2 Here and further, in the comparison of period to period results of operations, in order to analyze changes, developments and trends in revenues by reference to individual segment revenues, revenues are presented on an aggregated basis, which is revenues after elimination of intra-segment (between entities in the same segment) transactions, but before inter-segment (between entities in different segments) eliminations, unless accompanied by the word "consolidated". Amounts attributable to individual companies, where appropriate, are shown prior to both intra-segment and inter-segment eliminations. 3 Here and further, in the comparison of period-to-period results, Comstar UTS's results include the results of MGTS. |
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