TIW Reports Strong Fourth Quarter Results.MONTREAL Montreal (mŏn'trēôl`), Fr. Montréal (môNrāäl`), city (1991 pop. 1,017,666), S Que., Canada, on Montreal island, surrounded by St. Lawrence River and Rivière des Prairies. -- Telesystem International Wireless Inc. (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :TIW Tiw (tē`  ), Norse Tyr (tür), ancient Germanic god. )(NASDAQ NASDAQin full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :TIWI TIWI Telesystem International Wireless Incorporated (Montreal, Quebec, Canada) )
For the quarter and the year ended December 31, 2004
All amounts are in US$ unless otherwise stated
- Record subscriber growth
- Q4 Service Revenues of $344.7 million, up 32.9% from Q4-2003
- Q4 Operating Income of $60.2 million, up 46.4% from Q4-2003
- Q4 Net Income of $4.9 million vs. net loss of $0.7 million in
Q4-2003
Telesystem International Wireless Inc. ("TIW" or the "Company") (TSX:TIW)(NASDAQ:TIWI) today reported its results for the fourth quarter of 2004. Service revenues for the quarter reached $344.7 million compared to $259.4 million for the fourth quarter of 2003. Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: 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 (OIBDA OIBDA Operating Income Before Depreciation & Amortization )(1) increased 32.3% to $125.0 million compared to $94.5 million for the fourth quarter of 2003.Operating income for the quarter reached $60.2 million compared to $41.1 million for the fourth quarter of 2003. The growth in OIBDA and operating income reflects the rapid expansion of our subscriber subscriber, n the person, usually the employee, who represents the family unit in relation to the prepayment plan. Other family members are dependents. Also called certificate holders or enrollees. base in Romania Romania (rōmān`ēə, –yə) or Rumania (r –), republic (v), 91,699 sq mi (237,500 sq km), SE Europe. over the last twelve months and
significant subscriber growth and margin expansion in the Czech
Republic Czech Republic, Czech Česká Republika (2005 est. pop. 10,241,000), republic, 29,677 sq mi (78,864 sq km), central Europe. It is bordered by Slovakia on the east, Austria on the south, Germany on the west, and Poland on the north. .Net income for the quarter was $4.9 million, or $0.03 per
share on a basic and 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, compared to a net loss of $0.7 million, or $0.01 loss per share on a basic and fully diluted basis, for the fourth quarter 2003.The net income for the quarter ended December December: see month. 31, 2004 takes into consideration our 27.1% share of a loss of $25.7 million on early extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of debt at Oskar Mobil a.s., representing a loss of $0.04 per share on a basic and fully diluted basis.Net income for the year was $55.2 million, or $0.39 per basic share and $0.38 fully diluted per share, compared to a net income of $11.9 million, or $0.12 per basic share and $0.11 fully diluted per share, for the corresponding prior year period. (1)We use the term operating income before depreciation and amortization ("OIBDA") and average revenue per user ("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. ") which may not be comparable to similarly titled measures reported by other companies. We believe that OIBDA, referred to by some other telecommunication telecommunication Communication between parties at a distance from one another. Modern telecommunication systems—capable of transmitting telephone, fax, data, radio, or television signals—can transmit large volumes of information over long distances. operators as 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 , provides useful information to investors because it is an indicator of the strength and performance for 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 and other investments and our ability to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. 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 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 associated with long-lived long-lived adj. 1. Having a long life: a long-lived aunt. 2. Lasting a long time; persistent: a long-lived rumor. 3. 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 Communicating information, including data, text, pictures, voice and video over long distance. See communications. industry. We believe that ARPU provides useful information concerning the appeal of our rate plans and service offerings and our performance in attracting and retaining high value customers. ARPU excludes equipment revenues, revenues from other wireless networks' customers roaming The ability to use a communications device such as a cellphone or PDA and be able to move from one cell or access point to another without losing the connection. on our network and miscellaneous revenues. OIBDA and ARPU should not be considered in isolation or as alternative measures of performance under generally accepted accounting principles ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "). For the reconciliation of OIBDA to net income and for the reconciliation between service revenues and ARPU refer to the non GAAP measures and operating data section of this release. "We are pleased with our fourth quarter and year end results", said Bruno Ducharme, Chairman and Chief Executive Officer. "We are also very satisfied with the completion of our recently announced transaction to increase our equity interest in Oskar Holdings N.V. to 100%," added Mr. Ducharme. "In Romania, we continued to register record subscriber growth with 76.8% greater net additions in 2004 than for the 2003 year, resulting in strong service revenues growth. In the Czech Republic we continue to grow our postpaid post·paid adj. With the postage having been paid in advance. postpaid Adverb, adj with the postage prepaid Adj. 1. subscriber base, improve our margin and increase our share of total market service revenue" said Alexander Tolstoy, President and 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. . MANAGEMENT DISCUSSION AND ANALYSIS FOR THE QUARTER AND THE TWELVE-MONTH PERIOD ENDED DECEMBER 31, 2004 Management's discussion and analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial , dated February February: see month. 22, 2005, should be read in conjunction with the accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. unaudited 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 of TIW for the three months and year ended December 31, 2004 and should also be read in conjunction with the audited consolidated financial statements and Operating and Financial Review and Prospects contained in TIW's 2003 Annual Report for the year ended December 31, 2003. Additional information relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc TIW, including the company's annual report on Form 20-F and continuous disclosure documents, is available on SEDAR SEDAR System for Electronic Document Analysis and Retrieval SEDAR Southeast Data, Assessment, and Review at www.sedar.com under Telesystem International Wireless Inc. The financial information presented herein has been prepared on the basis of Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. GAAP. Please refer to Note 17 to our audited consolidated financial statements for the year ended December 31, 2003 for a summary of the differences between Canadian GAAP and 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. (U.S.) GAAP. Results of Operations We recorded net subscriber additions for the fourth quarter of 624,399 compared to 624,688 in the same period last year. The 2003 net additions included 21,118 subscribers added at Hexacom, our Indian affiliate, which was sold in Q1 2004. As of December 31, 2004, the total number of subscribers reached 6,741,428, up 29.5% compared to 5,206,983 at the end of the fourth quarter of 2003 of which 203,190 was with Hexacom. Consolidated service revenues increased 32.9% to $344.7 million compared to $259.4 million for the fourth quarter of 2003. Cost of service revenues increased to $98.3 million for the three months ended December 31, 2004 from $73.7 million for the three months ended December 31, 2003 but, as a percentage of service revenues, remained almost stable at 28.5% compared to 28.4% for the prior year comparative period. Equipment revenues rose to $22.2 million for the three months ended December 31, 2004 compared to $18.4 million for the same period in 2003 as a result of higher postpaid subscriber growth. Cost of equipment correspondingly rose to $43.5 million from $35.2 million for the three months ended December 31, 2004 and December 31, 2003 respectively. Included in the cost of equipment are costs of handsets and accessories sold, including subsidized sub·si·dize tr.v. sub·si·dized, sub·si·diz·ing, sub·si·diz·es 1. To assist or support with a subsidy. 2. To secure the assistance of by granting a subsidy. handsets, as well as the costs of SIM cards SIM card abbr (= subscriber identity module card) → carte f SIM SIM card n (Tel) (= Subscriber Identity Module card) → SIM-Karte f , the majority of which are provided to new subscribers as part of the cost of acquiring such new subscribers. Selling, general and administrative expenses were $100.0 million, 29.0% of service revenue, in the fourth quarter of 2004 as compared to $74.4 million, 28.7% of service revenue, in 2003. The increase in selling, general and administrative expense is largely attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to additional costs incurred for acquiring and servicing a significantly higher number of subscribers, especially in the postpaid segment. Also included in the expenses for the fourth quarter of 2004 is a non-cash stock based compensation expense of $5.0 million as compared to $0.3 million of the corresponding period of 2003. As a result of the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. , we recorded OIBDA for the fourth quarter of 2004 of $125.0 million compared to OIBDA of $94.5 million for the same period last year. OIBDA as a percentage of service revenue for the three month period was 36.3% compared to 36.4% in the same period of 2003. Depreciation and amortization increased to $64.8 million for the three months ended December 31, 2004, from $53.4 million for the same period in 2003, due primarily to a higher tangible asset Tangible Asset An asset that has a physical form such as machinery, buildings and land. Notes: This is the opposite of an intangible asset such as a patent or trademark. Whether an asset is tangible or intangible isn't inherently good or bad. base, amortization of $1.8 million of fair value increments related to 2004 acquisitions of shares in our subsidiaries and write-offs in the amounts of $5.3 million compared to $0.7 million last year.The revenue growth and lower depreciation costs as a percentage of service revenue resulted in an operating income of $60.2 million compared to $41.1 million for the same period last year, an increase of 46.4%. Interest expense, net of interest income, for the three months ended December 31, 2004 was $22.7 million compared to $22.3 million for the same quarter of 2003, primarily due to the higher effective cost of debt and higher level of average debt at Oskar Mobil, partly offset by the repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan of long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. at MobiFon S.A. and an increase in financial income from $0.7 million in the fourth quarter of 2003 to $1.4 million in the fourth quarter of this year.The fourth quarter 2004 results also include a $25.7 million loss on early extinguishment of debt at Oskar Mobil a.s in connection with its senior credit facility refinancing Refinancing An extension and/or increase in amount of existing debt. .We recorded a foreign exchange gain of $3.1 million for the three months ended December 31, 2004 compared to a gain of $0.7 million for the same period in 2003. Income tax expense for the quarter was $18.9 million as compared to $14.2 million for the same quarter in 2003. Income tax expense consists primarily of Romanian income taxes.The Romanian government has announced a further reduction in the corporate income tax rate from 19% previously announced to 16% effective January January: see month. 1, 2005.The Romanian statutory income tax rate was 25% for 2004. As a result of the foregoing, net income for the fourth quarter of 2004 amounted to $4.9 million or $0.03 per share on a basic and fully diluted basis compared to a net loss of $0.7 million or $0.01 loss per share on a basic and fully diluted basis for the fourth quarter of 2003. For the year 2004 as a whole, consolidated service revenues increased 32.2% to $1.2 billion compared to $914.9 million for the same period last year. Cost of service revenues increased to $356.1 million for the year ended December 31, 2004 from $268.2 million for the year ended December 31, 2003 but was stable, as a percentage of service revenues, at 29.4% versus 29.3% for 2003. Selling, general and administrative expenses were $317.3 million for the twelve months ended December 31, 2004 compared to $234.9 million for the same period in 2003. The increase in selling, general and administrative expense is largely attributable to additional costs incurred for acquiring and servicing a significantly higher number of subscribers and stock based compensation charges of $12.6 million.As a result of the aforementioned, OIBDA for the year ended December 31, 2004 was $487.3 million compared to $374.6 million for the same period in 2003. Depreciation and amortization for the year ended December 31, 2004 increased to $233.0 million from $204.7 million for the same period in 2003, due primarily to a higher tangible asset base, amortization of $2.1 million of fair value increments related to our acquisitions of shares in our subsidiaries and write-offs in the amounts of $10.1 million compared to $6.7 million for the twelve months ended December 31, 2003. Operating income increased 49.7% to $254.3 million from $169.9 million for the same period last year. Net income for the year ended December 31, 2004 was $55.2 million, or $0.39 per basic share and $0.38 fully diluted per share, compared to a net income of $11.9 million, or $0.12 per basic share and $0.11 fully diluted per share, for the corresponding prior year period. The 2004 net income includes a gain of $11.7 million on the disposal of our shares in Hexacom, our Indian affiliate, in the first quarter and our share of the loss on early extinguishment of debt at Oskar mentioned above, while the 2003 net income included a gain of $19.4 million on the sale of a minority interest in MobiFon and an $8.8 million loss related to our discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: Brazilian cellular operations which were disposed dis·pose v. dis·posed, dis·pos·ing, dis·pos·es v.tr. 1. To place or set in a particular order; arrange. 2. of on March 26, 2003. MobiFon S.A. - Romania MobiFon S.A. ("MobiFon" or its trade mark, "Connex Con`nex´ v. t. 1. To connect. "), added 540,567 net subscribers for the fourth quarter for a total of 4,910,312, compared to net additions of 494,961 in the fourth quarter of 2003 and total subscribers of 3,457,042 at the end of the same 2003 period. This represents an increase of 42.0% in total number of subscribers over the last 12 months. Connex's subscriber growth for the last quarter of 2004 was an all-time all-time adj. Exceeding all others up to the present time: an all-time speed skating record. all-time Adjective Informal record for the Company. As of December 31, 2004, we estimate that MobiFon had a 48.0% share of the cellular market in Romania. Connex's net postpaid subscriber additions during the period represented 40.9% of its overall subscriber additions, a very positive result especially for this period of the year. As of December 31, 2004, postpaid subscribers accounted for 34.3% of MobiFon's total subscriber base as compared to 33.5% at the end of last quarter and 37.4% at the end of the fourth quarter of 2003. The Romanian mobile market continued to show significant growth. During the past 12 months, we estimate cellular telephony Meaning "sound over distance," it refers to electronically transmitting the human voice. In the beginning, telephony dealt only with analog signals in the circuit-switched networks of the telephone companies. market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" in Romania increased to 47% from 33% at the end of 2003. Service revenues reached $192.9 million compared to $145.1 million for the fourth quarter of 2003. This record $47.8 million increase in service revenues translated into a 32.9% year over year growth rate. This growth was largely attributable to a 44.6% increase in average number of subscribers partly offset by a decline in average revenue per user. The monthly average revenue per user ("ARPU")1 for the fourth quarter was $12.75 compared to $13.94 for the same period of last year, with the decrease being primarily the result of the addition of more than 1.4 million subscribers during the last 12 months, more than 0.5 million of which were added during the last three months, with a lower usage profile compared to the existing average subscriber base. Cost of services as a percent of service revenue increased to 21.8% from 20.7% in the fourth quarter of 2003. This increase is primarily a result of higher interconnection in·ter·con·nect v. in·ter·con·nect·ed, in·ter·con·nect·ing, in·ter·con·nects v.intr. To be connected with each other: The two buildings interconnect. v.tr. costs associated with a higher proportion of traffic terminating on other operators' networks and higher regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. spectrum fees which are primarily related to the newly introduced universal service fee, $1.8 million of which was booked during the fourth quarter of 2004.Selling, general and administrative expenses increased from 24.6% of service revenues for the three months ended December 31, 2003 to 27.4% for the latest three month period primarily due to higher selling and marketing expenses as a percentage of service revenue.This increase was triggered by greater customer acquisition activity during the quarter and a higher emphasis on advertising and commissioning as opposed op·pose v. op·posed, op·pos·ing, op·pos·es v.tr. 1. To be in contention or conflict with: oppose the enemy force. 2. to equipment subsidies compared to the same quarter in 2003.Excluded from our selling and marketing expenses is the excess of cost of equipment sold over equipment revenues which represented 6.8% of our service revenue for the quarter down from 8.1% for the corresponding period last year. OIBDA increased 25.5% to $84.8 million compared to $67.6 million for the same period last year. OIBDA as a percentage of service revenue decreased to 44.0% compared to 46.6% for the same period last year, consistent with greater costs incurred in acquiring significantly more new subscribers.Operating income for the quarter rose 29.6% to $53.2 million compared to $41.1 million for the fourth quarter of 2003. For the year ended December 31, 2004, service revenues increased 29.6% to $686.3 million compared to $529.5 million for the same period last year, consistent with the 42.4% increase in average number of subscribers partially offset by the lower ARPU. The monthly ARPU for the year ended December 31, 2004, was $12.96 compared to $14.35 for the same period of last year, with the decrease being the result of the addition of more than 1.4 million subscribers during the last 12 months, which was 76.8% higher than the 2003 subscriber net additions.Furthermore, prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. represented 65.0% of the average
subscriber base in 2004 compared to 63.9% in 2003.For the year 2004 as a whole, cost of services as a percent of service revenue increased to 21.4% from 19.8% in 2003. This increase is primarily a result of higher interconnection costs associated with a higher proportion of traffic terminating on other operators' networks and higher regulatory spectrum fees which are primarily related to the newly introduced universal service fee, $3.4 million of which was booked during 2004. Selling, general and administrative expenses increased from 22.4% of service revenues for 2003 to 23.7% for the year 2004 primarily due to higher selling and marketing expenses in support of the significant customer acquisition activity during the year. Net subscriber additions for the year 2004 as a whole were significantly greater than for the same period last year at 1,453,270 versus 821,834. OIBDA for the year ended December 31, 2004, increased 22.7% to $344.9 million compared to $281.2 million for the 2003 period.OIBDA as a percentage of service revenue decreased to 50.3% for the year 2004 compared to 53.1% in 2003, consistent with greater costs incurred in acquiring significantly more new subscribers and retaining high value subscribers during the period.Operating income rose 32.4% to $226.0 million compared to $170.7 million for the year ended December 31, 2003. Oskar Mobil a.s. (formerly known as Cesky Mobil a.s.)- Czech Republic Oskar Mobil a.s. ("Oskar Mobil" or its trade mark "Oskar") added 83,832 subscribers in the fourth quarter to reach 1,831,116, an increase of 18.4% in total number of subscribers compared to 1,546,751 subscribers at the end of the fourth quarter of 2003.In the Czech Republic, our focus on postpaid growth continued to be successful with postpaid subscribers representing 86.2% of net additions during the quarter.Although total net subscriber additions in the fourth quarter of 2004 were 22.8% lower than in the same period of 2003, net additions of postpaid subscribers increased by 9.1% to 72,280.As a result, our prepaid/postpaid mix as of December 31, 2004 was 52.1/47.9 compared to 57.5/42.5 at of December 31, 2003.We estimate we held a 17.0% share of the national cellular subscriber market as of December 31, 2004, compared to a 15.9% share at the same time last year.Also 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. our estimate, we had a 20.8% share of the national cellular service revenue during the fourth quarter of 2004 compared to 18.9% for the same period in 2003. During the past 12 months, we estimate cellular penetration in the Czech Republic increased to 105% from 95% at the end of December 2003. Service revenues increased 32.8% to $151.7 million compared to $114.2 million for the fourth quarter of 2003 due to a 19.9% increase in average subscribers and a 10.7% increase in the ARPU as expressed in U.S. Dollar.The local currency service revenue for the fourth quarter reached Czech Koruna The Czech koruna (koruna means "crown") has been the currency of the Czech Republic since February 8, 1993 when it and its Slovak counterpart both replaced the Czechoslovak koruna at par. Now 1 CZK is worth around 1.19 – 1.25 SKK. 3,641 million, an 18.2% increase versus Czech Koruna 3,080 million for the same period last year.The ARPU decreased from Czech Koruna 666 ($24.70) in the fourth quarter of 2003 to Czech Koruna 656 ($27.35) for the same period this year. However the average exchange rate between the U.S. Dollar and the Czech Koruna during the fourth quarter of 2004 was 12.1% higher than for the same period in 2003.The 1.5% decrease in the local currency ARPU is primarily driven by the reduction in interconnection rates. Although the interconnect (1) To attach one device to another. (2) A physical port (plug, socket) or wireless port (transmitter, receiver) used to attach one device to another. rate decrease reduces the ARPU, it also reduces interconnection costs. Cost of services as a percent of service revenue decreased to 37.1% from 38.2% in the fourth quarter of 2003.This decrease results from lower average interconnection rates amongst mobile operators, from greater on-net Connected to the Internet, or connected to a LAN or WAN. Contrast with off-net. and incoming Incoming is a 3-D shooter developed by Rage Software and published by Interplay. The PC version was released in late 1998, and the Dreamcast version, a launch title for the console, was released in 1998 in Japan and in 1999 in the rest of the world. traffic as a percentage of total traffic and from lower site costs as a percentage of service revenue.The decrease in cost of services as a percentage of service revenue in 2004 could have been more pronounced had the fourth quarter 2003 results not benefited from a reduction in estimated interconnection costs related primarily to prior periods amounting to $5.2 million, or 4.6% of service revenue.Selling, general and administrative expenses decreased to 26.7% of service revenues compared to 29.7% for the same period last year mainly as a result of the growth in revenue more than offsetting incremental costs Costs which are additional costs to the Service appropriations that would not have been incurred absent support of the contingency operation. See also financial management. to expand the sales network and to support business initiatives. Selling, general and administrative expenses decreased to 26.7% of service revenues compared to 29.7% for the same period last year mainly as a result of the growth in revenue more than offsetting incremental costs to expand the sales network and to support business initiatives. We recorded OIBDA in the Czech Republic of $46.8 million for the quarter compared to OIBDA of $31.6 million for the same period last year, representing a 48.0% increase.When excluding the positive impact of the appreciation of the Czech Koruna against the U.S. Dollar and the aforementioned interconnection cost reduction recognized in 2003, the OIBDA improvement would be of 57.8%.OIBDA as a percentage of service revenue for the quarter reached 30.8% compared to 27.7% in the fourth quarter of 2003.This improvement reflects the revenue impact of solid subscriber growth, our focus on postpaid growth and economies of scale realized as fixed costs fixed costs, n.pl the costs that do not change to meet fluctuations in enrollment or in use of services (e.g., salaries, rent, business license fees, and depreciation). are spread over a larger subscriber base.We achieved an operating income of $13.6 million in the Czech Republic for the fourth quarter of 2004, compared to an operating income of $4.8 million for the fourth quarter of 2003. For the year ended December 31, 2004, service revenues increased 35.8% to $523.3 million compared to $385.4 million for the same period in 2003 consistent with the 24.4% increase in average number of subscribers and the 9.0% increase in ARPU as expressed in U.S. Dollars.The local currency service revenue for the year 2004 reached Czech Koruna 13,388 million, a 23.7% increase versus Czech Koruna 10,820 million for the same period last year.ARPU for the year ended December 31, 2004, was Czech Koruna 640 ($25.02) compared to Czech Koruna 644 ($22.95) in 2003.In April 2004, the regulatory body announced a new mobile voice terminating interconnection rate of Czech Koruna 3.19 per minute compared to Czech Koruna 3.66 which had a negative impact on the ARPU but also reduced interconnection costs for the quarter and year ended December 31, 2004. Cost of services as a percent of service revenue for the year 2004 decreased to 40.0% from 42.4% for 2003.This decrease results primarily from lower average interconnection rates amongst mobile operators and from greater on-net and incoming traffic as a percentage of total traffic.The 2003 results benefited from a reduction of estimated interconnection costs of $8.4 million or 2.2% of service revenue of which $4.8 million was related to prior periods.Selling, general and administrative expenses decreased to 25.8% of service revenues compared to 27.5% for the previous year mainly as a result of lower selling and marketing expenses as a percentage of service revenue. OIBDA reached $162.0 million in 2004 compared to OIBDA of $103.3 million for 2003, representing a 56.8% increase, consistent with the revenue impact of solid subscriber growth, our focus on postpaid growth and the economies of scale realized as fixed costs are spread over a larger subscriber base.OIBDA as a percentage of service revenue for 2004 reached 31.0% compared to 26.8% in 2003.The average exchange rate between the U.S. Dollar and the Czech Koruna during the year 2004 was 9.9% higher than for 2003 and when excluding this positive currency appreciation effect and the aforementioned interconnection cost reduction recognized in 2003, the year over year improvement in OIBDA would be 50.1%.Operating income reached $47.9 million compared to $9.2 million for the same period in 2003. Corporate and Other Unallocated expenses for corporate and other activities were $6.6 million for the fourth quarter of 2004 compared to $4.7 million for the same period last year and $19.6 million for the year ended December 31, 2004 compared to $10.0 million for the same period in 2003.In the fourth quarter of 2003, we adopted the fair value based method of accounting for stock-based compensation on a prospective basis and, accordingly, the fair value method has been applied to all grants on or after January 1, 2003.As a result, consolidated selling, general and administrative expenses for the fourth quarter and year ended December, 2004 include stock based compensation cost of $5.0 million and $12.6 million respectively of which $3.8 million and $8.8 million is included within corporate and other activities, while the corresponding period of 2003 had compensation costs for the year amounting to $0.3 million.On May 4, 2004, TIW's shareholders approved a Restricted Share Unit ("RSU RSU Restricted Stock Unit RSU Rogers State University (Claremore, Oklahoma) RSU Rifiuti Solidi Urbani (Italiano) RSU Rappresentanza Sindacale Unitaria (Italian Group of Unions) ") plan under which 870,071 RSU's were outstanding as of December 31, 2004 and were included in the determination of stock based compensation.Furthermore, 2003 results included our share of net income from our Indian operation, which was disposed of at the end of 2003, of $1.4 million and $4.0 million for the three and twelve months ended December 31, 2003. Accordingly, unallocated expenses for corporate excluding the effect of stock-based compensation and our 2003 share of net income from our Indian operation was $2.8 million and $10.8 million for the fourth quarter and year ended December 31, 2004, respectively compared to $5.8 million and $13.7 million for the same periods in 2003, respectively. Liquidity and Capital Resources Operating activities provided cash of $129.8 million and $382.4 million for the three month and twelve month periods ended December 31, 2004, respectively, compared to $80.8 million and $252.8 million for the corresponding 2003 periods.For the fourth quarter and on a year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. basis, the primary factor contributing to the higher operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. was the increase in OIBDA. Investing activities used cash of $66.3 million for the quarter ended December 31, 2004 compared to a use of cash of $55.1 million during the same period in 2003.Our investing activities include the acquisition of property, plant and equipment of $55.1 million for both the three-month period ended December 31, 2004 and December 31, 2003.For the twelve months ending December 31 2004, investing activities used cash of $297.2 million compared to $145.5 million for the same period of 2003.Acquisitions of property, plant and equipment, which consisted mostly in expenditures required to increase the capacity of our networks, were $228.4 million during the twelve months ending December 31 of this year compared to $188.3 million for the corresponding period last year.Investing activities for the twelve months ended December 31, 2004 also include the 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 sale of our direct investment in Hexacom during the first quarter which amounted to $21.8 million and $6.6 million in connection with the repatriation Repatriation The process of converting a foreign currency into the currency of one's own country. Notes: If you are American, converting British Pounds back to U.S. dollars is an example of repatriation. of funds previously held in trust. These proceeds were offset by the use of $97.2 million of cash as part of the consideration given for the acquisition of additional interests in our subsidiaries including $11.3 million paid during the fourth quarter of 2004 in connection with the third quarter acquisition of a 15.46% non 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 in MobiFon.During the 2003 period, the Company received net proceeds of $41.5 million from the sale of a minority interest in MobiFon. Financing activities used cash of $55.0 million for the fourth quarter of 2004 and of $45.3 million year to date compared to provided cash of $31.9 million and used cash of $41.7 million for the fourth quarter and twelve months ended December 31, 2003.The uses of cash for financing activities in the year ended December 31, 2004 were $30.0 million of scheduled repayments of MobiFon's senior credit facility, $7.5 million of which occurred during the fourth quarter, the early redemption of $2.3 million of MobiFon Holding's senior notes, $576.1 million of repayments of Oskar Mobil's old senior credit facility in connection with scheduled repayment and its refinancing in October October: see month. 2004, $39.8 million distributed to minority shareholders of MobiFon, $7.8 million of which was distributed during the fourth quarter, $21.9 million of deferred financing costs and $35.6 million of hedge settlement on debt extinguishment in connection with the refinancing of Oskar Mobil.These uses were partially offset by $78.1 million of proceeds from issuances of our common shares, $2.0 million of which was received during the fourth quarter in connection with the exercise of employee stock options and $582.7 million of issuance of long-term debt at Oskar Mobil arising from the October refinancing.During the year ended December 31, 2003, uses of cash for financing activities included $223.9 million in repayment of long-term debt, $74.6 million distributed to minority shareholders of which $15.1 million occurred in the fourth quarter, $47.4 million representing a full payment in the first quarter of 2003 of TIW's senior bank facility, $28.1 million in additions to restricted cash, and $13.2 million of deferred financing costs of which $0.3 million occurred in the fourth quarter.These uses were partially offset by $317.1 million in proceeds from issuance of long term debt of which $38.1 million was received in the fourth quarter and $18.9 million from the issuance of subsidiaries' shares to non-controlling interests. Cash, cash equivalents and restricted short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments totaled $272.1 million as of December 31, 2004, including $124.2 million at the corporate level, which included $27.8 million in restricted short term investments. As of December 31, 2004, total consolidated 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. was $1.1 billion, of which $224.4 million was at the corporate level, $270.0 million at MobiFon and $652.6 million at Oskar Mobil.As of December 31, 2004 corporate net debt defined as debt at the corporate level minus cash and short-term investment at the corporate level was $100.2 million compared to $150.9 million at December 31, 2003. In December 2003, we accepted a binding offer to sell our 27.5% direct equity interest in Hexacom for proceeds of $22.5 million.We provided our co-shareholders in Hexacom with the required notices to trigger certain rights of first refusal provided for in the Hexacom Shareholders' Agreement shareholders' agreement n. an employment agreement among the shareholders of a small corporation permitting a shareholder to take a management position with the corporation without any claim of conflict of interest or self-dealing against the shareholder/manager. .During the first quarter of 2004, our co-shareholders exercised their right of first refusal Right of First Refusal In general, the right of a person or company to purchase something before the offering is made available to others. Notes: For example, a football team may have the right of first refusal on a player's contract. and paid the $22.5 million purchase price as stipulated in the December 12, 2003 binding offer.As a result, we realized a gain on disposal of our investment in Hexacom of $11.7 million in the three month period ended March 31, 2004. On March 25, 2004, the shareholders of MobiFon approved dividends amounting to Lei 4.6 trillion One thousand times one billion, which is 1, followed by 12 zeros, or 10 to the 12th power. See space/time. (mathematics) trillion - In Britain, France, and Germany, 10^18 or a million cubed. In the USA and Canada, 10^12. ($138 million).The dividends do not become payable to shareholders until conditions for shareholder distributions are met under the MobiFon's senior credit agreements. In April, July July: see month. and October 2004, an aggregate of $39.8 million of such dividends were distributed to non-controlling interests.As at December 31, 2004, the amount payable to non-controlling interests based on the conditions of such loan agreements, was $3.2 million and is included with total current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. . On March 25, 2004, we sold 7 million common shares at $9.50 per share from treasury for gross proceeds of $66.5 million and net proceeds of $62.7 million.On March 31, 2004, the underwriters of the offering exercised the over-allotment option that they had been awarded to purchase an additional 1,050,000 common shares at a price of $9.50 per share from treasury.The over-allotment option closed on April 5, 2004 resulting in net proceeds of $9.5 million. On March 17, 2004, we acquired 5.9% of MobiFon and 2.9% of Oskar Holdings N.V., formerly known as TIW Czech N.V., from EEIF Melville B.V., Emerging Markets Partnership c.v. and EEIF Czech N.V., in exchange for the issuance of 14,621,714 of our common shares. Pursuant to the term of the sale, the selling shareholders of MobiFon had the right to receive 5.9% of the dividends paid in 2004 relating to MobiFon 2003 earnings up to an aggregate maximum of $5.2 million, all of which had been paid as of December 31, 2004. In March 2004, we acquired 10,942,625 shares of our subsidiary ClearWave from two institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. for an aggregate consideration of $139.9 million, consisting of 10,874,731 of our common shares and $ 35.7 million in cash.On May 25, 2004, we launched an offer to all remaining minority shareholders of ClearWave to purchase the 186,560 shares they owned, representing a 0.2% interest in ClearWave's equity, for Cdn$16.64 ($12.48) in cash per share.The offer was extended to July 15, 2004 and 176,851 of the ClearWave shares were tendered under the offer for aggregate consideration of $2.2 million.The shares acquired through these transactions represent a 13.0% equity interest and a 4.6% voting interest Voting interest in business and accounting is a percentage of voting stock owned. This notion is different from economic interest that refers to a percentage of all the equity issued, including preferred stock, warrants, and so on. in ClearWave and as a result our direct and indirect equity and voting interest in ClearWave increased to 99.99% and 100.0%, respectively, resulting in a 63.5% ultimate equity interest in MobiFon and a 27.1% ultimate equity interest in Oskar Mobil. On September September: see month. 15, 2004 we acquired 15.46% of MobiFon from certain private equity investors for a combination of cash and of our common shares.We acquired 25,185,168 shares of MobiFon in exchange for 28,358,499 of our shares, representing an exchange ratio of 1.126, and an additional 4,203,310 shares of MobiFon for $36.6 million in cash.We increased our indirect ownership in MobiFon from 63.5% to 79.0%.Pursuant to the terms of the sale, the selling shareholders also had the right to receive up to Lei 260.2 billion ($7.9 million) of the dividends declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. in March 2004 but unpaid as of September 15, 2004 of which $5.7 million was paid in October, 2004 and the remainder is included with accrued liabilities Accrued liabilities are liabilities which have occurred, but have not been paid or logged under accounts payable during an accounting period; in other words, obligations for goods and services provided to a company for which invoices have not yet been received. as of December 31, 2004. The terms of the agreement restrict the ability of the Selling Shareholders and certain permitted distributees of the Selling Shareholders to resell re·sell tr.v. re·sold , re·sell·ing, re·sells 1. To sell again. 2. To sell (a product or service) to the public or to an end user, especially as an authorized dealer. or otherwise dispose of dis·pose v. dis·posed, dis·pos·ing, dis·pos·es v.tr. 1. To place or set in a particular order; arrange. 2. their TIW shares for a period of 12 months following closing of the transaction, other than for certain permitted transfers among affiliated entities. Other than pursuant to their right to piggy-back on certain registered offerings, no more than 16.6% of the total TIW shares received by the Selling Shareholders can be disposed of three months after completion, an additional 16.7% six months after completion, a further 16.7% nine months after completion and the remaining 50% on the first anniversary of completion. These 2004 acquisitions of shares of MobiFon, Oskar Holdings and ClearWave were accounted for using the purchase method.Accordingly, the aggregate consideration of $602.2 million was allocated to the fair value of the assets acquired and liabilities assumed based on management's best estimate of such fair values determined using generally accepted valuation methodologies.The aggregate purchase price for the above transactions as well as the acquisition of 1.2% of ClearWave and 3.62% of Oskar Mobil which occurred in the fourth quarter of 2003 and for which approximately $9.2 million and $4.9 million of goodwill was recorded respectively, exceeded the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of net assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. acquired by $545.2 million which was preliminarily allocated to goodwill in the amount of $543.0 million and $2.2 million to other fair value net increments. In August 2004, 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 the terms governing gov·ern v. gov·erned, gov·ern·ing, gov·erns v.tr. 1. To make and administer the public policy and affairs of; exercise sovereign authority in. 2. MobiFon Holdings' 12.5% Senior Notes, we made an offer to acquire up to $15.6 million in principal of the notes at a purchase price equal to the principal amount of the notes plus accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. and unpaid interest. Pursuant to this offer, we retired $2.3 million of principal amount of Senior Notes plus accrued interest Accrued Interest The interest that has accumulated on a bond since the last interest payment up to but not including the settlement date. There are two methods for calculating accrued interest: 1) 360-day year method, used for corporate and municipal bonds. . On October 13, 2004 our subsidiary, Oskar Mobil issued, in a private placement, 325 million euro ($442.6 million) Senior Notes ("the Oskar Notes") due 2011. The Oskar Notes bear interest at 7.5%, payable semi-annually in arrears Adv. 1. in arrears - in debt; "he fell behind with his mortgage payments"; "a month behind in the rent"; "a company that has been run behindhand for years"; "in arrears with their utility bills" behindhand, behind beginning in April 2005. Net proceeds from the offering of the Oskar Notes were approximately 313.1 million euro (representing $384.2 million at issue date), after deducting underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. discounts and other related expenses. The Oskar Notes are callable Callable Applies mainly to convertible securities. Redeemable by the issuer before the scheduled maturity under specific conditions and at a stated price, which usually begins at a premium to par and declines annually. at our option after October 2008 at decreasing redemption prices Redemption price See: Call price redemption price 1. The price at which an open-end investment company will buy back its shares from the owners. In most cases, the redemption price is the net asset value per share. 2. starting at 103.75% of the principal amount of the Oskar Notes. Concurrent At the same time. It implies that multiple processes are taking place simultaneously. See concurrent operation. with the issuance of the Oskar Notes, Oskar Mobil proceeded with an initial draw of CZK CZK In currencies, this is the abbreviation for the Czech Koruna. 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. 3,964 million and 24 million euro (in aggregate approximately $184.0 million at the draw date with repayments of $24.5 million, $49.1 million and $110.4 million scheduled in 2007, 2008 and thereafter, respectively) from a new senior credit facility. The new senior credit facility consists of a CZK5,033.6 million and 40.0 million euro (approximately $279.5 million in aggregate) five year amortizing tranche Tranche One of several related securities offered at the same time. Tranches from the same offering usually have different risk, reward, and/or maturity characteristics. tranche A class of bonds. A maturing in 2009, and amortizing from March 2007, and a CZK1,573 million (approximately $70.3 million) six year tranche B repayable in full at maturity. The indebtedness under the new senior credit facility ranks pari passu [Latin, By an equal progress; equably; ratably; without preference.] Used especially to describe creditors who, in marshalling assets, are entitled to receive out of the same fund without any precedence over each other. PARI PASSU. By the same gradation. with the Oskar Notes as to security. The new senior credit facility is available for drawing, on a revolving basis, until October 2006. The net proceeds from the issuance of 325 million euro of the Oskar Notes, together with the net proceeds from our initial drawdown Drawdown The peak to trough decline during a specific record period of an investment or fund. It is usually quoted as the percentage between the peak to the trough. Notes: under the new senior credit facility of CZK3,964 million and 24 million euro, were approximately $560.7 million, after deducting underwriting discounts and other related expenses. The Company used the net proceeds along with cash on hand, to repay in full and cancel (character) Cancel - (CAN, Control-X) ASCII character 24. the existing Oskar Mobil senior credit facility, in the amounts of CZK 5,402.8 million and 290.6 million euro (in aggregate $567.1 million) and to terminate Terminate (terminat.exe) was a shareware modem terminal and host program for MS-DOS and compatible operating systems developed from the early to the late 1990s by the Dane Bo Bendtsen. The last release (5. certain currency and interest rate hedging agreements.As a result of the retirement of the current bank facility and the unwinding of the related hedging agreements, the Company recognized a loss on early extinguishment of debt and related hedges of approximately $25.7 million during the fourth quarter consisting of the unrealized loss Unrealized Loss A loss that results from holding onto an asset rather than cashing it in and officially taking the loss. Notes: Let's say you own a stock that is down 50%, but you haven't sold it to realize the loss yet. This is said to be an unrealized loss. on such hedging contracts of $17.3 million and the unamortized deferred financing costs of $8.4 million. In connection with the unwinding of existing hedges an amount of 29.0 million euro ($35.6 million), consisting of the fair value of the unwound un·wound v. Past tense and past participle of unwind. unwound unwind hedges, was paid to counterparties Counterparties The parties on either side of an interest rate swap or a currency, equity or commodity swap, or to an options or futures position. . As a result of this refinancing, our consolidated annual principal repayments of long-term debt for 2005, 2006, 2007, 2008 and thereafter consist of $45.0M, $61.0M, $103.0M, $145.9M and $787.1M, respectively. On January 12, 2005 we completed the transaction to increase our equity and voting interest in Oskar Holdings N.V. from 27.1% and 52.7%, respectively, to 100%, in exchange for approximately 46 million of our shares.Oskar Holdings holds 99.87% of Oskar Mobil a.s. The 72.9% equity interest in Oskar Holdings was acquired from certain private equity investors, which include funds advised or managed by ABN AMRO ABN AMRO Algemene Bank Nederland-Amsterdam Roterdam Bank (Dutch bank) Capital, Advent International Advent International - a long-established and leading global private equity investor Background Advent was founded in 1984 by Peter Brooke and Clint Harris to focus on international private equity investing. Corporation, AlpInvest Partners, EMP EMP abbr. electromagnetic pulse Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , the
European Bank for Reconstruction and Development European Bank for Reconstruction and DevelopmentBank targeted at Eastern Europe and the former Soviet Union. , JP Morgan Morgan, American family of financiers and philanthropists. Junius Spencer Morgan, 1813–90, b. West Springfield, Mass., prospered at investment banking. Partners, Mediatel Capital and Part'Com. Funds advised or managed by JP Morgan Partners and EMP Europe, two significant shareholders of TIW, received respectively 17.4 million and 7.0 million of the TIW shares issued in the transaction. The terms of the agreement restrict the selling shareholders' ability to resell or otherwise dispose of their TIW shares for a period of 12 months following closing of the transaction. Partial releases from this lock-up lock-up n (= prison) → cárcel f (= cell); jaula; (also: lock-up garage) → jaula, cochera lock-up will occur on the first business day in each successive period of 45 days starting January 12, 2005, as to 5%, 5%, 18.75%, 18.75%, 7.5%, 7.5%, 18.75% and 18.75%, respectively, of their TIW shares on each release date.This transaction increased the number of TIW common shares issued and outstanding from approximately 169.2 million common shares to 215.2 million. We expect to have future capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. , particularly in relation to the expansion and the addition of capacity to our cellular networks for the payment of our Romanian UMTS (Universal Mobile Telecommunications System) The GSM implementation of the 3G wireless phone system. Part of IMT-2000, UMTS provides service in the 2 GHz band and offers global roaming and personalized features. license and buildout The construction and implementation of a system. For example, "network buildout" implies constructing the network and going online. of a related UMTS network and for the servicing of our debt. We also expect additional capital requirements should we be successful in securing a UMTS license in the Czech Republic.We intend to finance such future capital requirements mainly from cash and cash equivalents on hand, short-term investments, drawings on Oskar Mobil's new senior credit facility and cash flows from operating activities. The Romanian Ministry for Communications and Information Technology (MCTI) previously announced a tender process for the so called 3G or UMTS mobile licenses.Four 15 year licenses were on offer for $35 million each.The tender process closed on October, 29, 2004 and the Ministry announced that they had received two bids, one from Orange SA and one from MobiFon.In November November: see month. 2004, the Romanian government announced that MobiFon and Orange were both successful in their application.As a result, MobiFon will be required to pay a total of $35 million to the Romanian government, of which $10.5 million is payable within 120 days from the date we were notified of the license grant being November 23, 2004 and the remainder in five annual installments of $4.9 million, commencing in 2006.MobiFon will also be required to honor As a verb, to accept a bill of exchange, or to pay a note, check, or accepted bill, at maturity. To pay or to accept and pay, or, where a credit so engages, to purchase or discount a draft complying with the terms of the draft. certain license conditions, including coverage requirements.As of December 31, 2004, we had not yet received license documentation. On December 15, 2004, the Czech government adopted a cabinet decision in which it mandated the Czech Telecommunications Office, ("CTU CTU Colorado Technical University CTU Czech Technical University in Prague CTU Counter Terrorist Unit CTU Clinical Trials Unit CTU Catholic Theological Union CTU Chicago Teachers Union CTU Computer Training Unit CTU Control Unit ") to organize a tender to issue a UMTS license.The cabinet instructed the CTU to first offer the license to Oskar Mobil, for a price of CZK 2 billion ($89.4 million), under conditions to be negotiated and, failing which, to offer the license to the highest bidder HIGHEST BIDDER, contracts. He who, at an auction, offers the greatest price for the property sold. 2. The highest bidder is entitled to have the article sold at his bid, provided there has been no unfairness on his part. , but with a reserve price of no less than CZK 2 billion.On February 2, 2005, Oskar Mobil submitted an offer to the CTU and Ministry of Informatics Same as information technology and information systems. The term is more widely used in Europe. for its consideration.The CTU is currently evaluating the offer. Selected consolidated financial data On June June: see month. 23, 2003, we amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. our share capital to implement a one for five (1:5) consolidation of our common shares.Following the consolidation, the number of issued and outstanding common shares was reduced from 467,171,850 to 93,432,101 while the number of issued and outstanding preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. remained unchanged at 35,000,000 but their conversion ratio was changed from 1 common share for each preferred share to 1 common share for 5 preferred shares.On March 25, 2004, the 35,000,000 issued and outstanding preferred shares were converted into 7,000,000 common shares.All share and per share amounts included in the selected consolidated data shown below have been adjusted to reflect the share consolidation. The following represents all equity shares, granted stock options and restricted share units outstanding and the number of common shares which the Company's equity subordinated debentures subordinated debenture An unsecured bond with a claim to assets that is subordinate to all existing and future debt. Thus, in the event that the issuer encounters financial difficulties and must be liquidated, all other claims must be satisfied before are convertible into as at February 18, 2005 and exclude the performance based restricted share units described in Note 5 to our fourth quarter 2004 interim financial statements and granted subsequent to this date:
Common Shares
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Common Voting Shares outstanding 215,195,625
Convertible instruments and other:
Outstanding granted employees
and director's stock options 4,820,353
Outstanding granted employees
and director's restricted share units 964,380
Convertible equity subordinated debentures 59,162
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221,039,520
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The following table contains financial information that is derived
from our unaudited interim financial statements for the three and
twelve month periods ended December 31, 2004.
Three months ended Twelve months ended
December 31, December 31,
(in thousands of U.S. $,
except per share data) 2004 2003 2004 2003
$ $ $ $
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STATEMENTS OF INCOME AND
CASH FLOWS DATA:
Revenues 366,816 277,787 1,275,562 967,085
Operating income 60,212 41,116 254,279 169,878
Interest expense, net (22,691) (22,314) (84,751) (91,163)
Loss on early
extinguishment of debt (25,693) - (25,693) -
Foreign exchange gain 3,113 666 3,730 4,666
Net gain on disposal
of assets - - 11,658 19,367
Income (loss) from
continuing operations 4,942 (727) 55,206 20,696
Loss from discontinued
operations - - - (8,811)
Net Income (loss) 4,942 (727) 55,206 11,885
Basic earnings(loss)
per share
From continuing
operations 0.03 (0.01) 0.39 0.21
From discontinued
operations - - - (0.09)
Net earnings 0.03 (0.01) 0.39 0.12
Diluted earnings(loss) per share
From continuing
operations 0.03 (0.01) 0.38 0.20
From discontinued
operations - - - (0.09)
Net earnings 0.03 (0.01) 0.38 0.11
Acquisitions of property
plant and equipment 55,051 55,064 228,424 188,330
As at December 31, As at December 31,
2004 2003
(in thousands of U.S. $) $ $
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BALANCE SHEET DATA:
Cash and cash equivalents,
including restricted
short-term investments of
$27.8 million as of
December 31, 2004 and
$28.1 million as
of December 31, 2003 272,102 224,822
Total assets 2,340,709 1,667,588
Long-term debt, including
current portion 1,147,060 1,121,411
Share capital and additional
paid-in-capital 1,926,511 1,327,574
Total shareholders' equity 748,481 91,773
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Summary of quarterly results
Our operating results are subject to seasonal fluctuations that
materially impact quarter-to-quarter operating results. Accordingly,
one quarter's operating results are not necessarily indicative of
what a subsequent quarter's operating results will be. In
particular, this seasonality generally results in usage in the first
quarter tending to be lower than in the rest of the year. Also in
the first quarter, new customer acquisitions tend to be low which can
result in reduced costs. Seasonal fluctuations also typically occur
in the third quarter of each year because of higher usage in Romania
and more roaming, as a result of the summer holidays, result in
higher network revenue and operating profit. Furthermore, the fourth
quarter typically has the largest number of subscriber additions and
associated subscriber acquisition and activation related expenses,
including marketing and promotional expenditures, which result in
lower operating profits.
(In thousands of U.S.$,
Except Q4 Q3 Q2 Q1
per share data) 2004 2004 2004 2004
$ $ $ $
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Revenues 366,816 328,929 301,397 278,420
Income from
continuing
operations 4,942 20,674 13,907 15,683
Net income 4,942 20,674 13,907 15,683
Basic earnings per share
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From continuing
operations 0.03 0.14 0.10 0.13
From discontinued
operations - - - -
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Net earnings 0.03 0.14 0.10 0.13
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Diluted earnings per share
---------------------------------------------------------------------
From continuing
operations 0.03 0.14 0.10 0.13
From discontinued
operations - - - -
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Net earnings 0.03 0.14 0.10 0.13
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(In thousands of U.S.$,
Except per share data) Q4 Q3 Q2 Q1
2003 2003 2003 2003
$ $ $ $
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Revenues 277,787 257,217 232,163 199,918
Income (loss) from
continuing operations (727) 3,075 6,500 11,848
Net income (loss) (727) 3,075 6,500 3,037
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Basic earnings (loss)
per share
---------------------------------------------------------------------
From continuing
operations (0.01) 0.03 0.07 0.12
From discontinued
operations - - - (0.09)
---------------------------------------------------------------------
Net earnings (loss) (0.01) 0.03 0.07 0.03
---------------------------------------------------------------------
Diluted earnings
(loss) per share
---------------------------------------------------------------------
From continuing
operations (0.01) 0.03 0.07 0.12
From discontinued
operations - - - (0.09)
---------------------------------------------------------------------
Net earnings (loss) (0.01) 0.03 0.07 0.03
---------------------------------------------------------------------
---------------------------------------------------------------------
Non GAAP measures and operating data
We believe that OIBDA, referred to by some other telecommunication
operators as EBITDA, provides useful information to investors because
it is an indicator of the strength and performance for our ongoing
business operations, including our ability to fund discretionary
spending such as capital expenditures and other investments and our
ability to incur and service debt. While depreciation and
amortization are considered operating costs under generally accepted
accounting principles, these expenses primarily represent the non-
cash current period allocation of costs associated with long-lived
assets acquired or constructed in prior periods. Our OIBDA
calculation is commonly used as one of the bases for investors,
analysts and credit rating agencies to evaluate and compare the
periodic and future operating performance and value of companies
within the wireless telecommunications industry. OIBDA has
limitations as an analytical tool, and you should not consider it in
isolation from, or as a substitute for, analysis of our results of
operations, including our cash flows, as reported under GAAP. Some of
the limitations of OIBDA as a measure are:
- It does not reflect our cash expenditures or future requirements
for capital expenditures or contractual commitments;
- It does not reflect changes in, or cash requirements for, our
working capital needs;
- It does not reflect the significant interest expense, or the cash
requirements necessary to service interest or principal payments,
on our debt;
- Although depreciation and amortization are non-cash charges, the
assets being depreciated and amortized will often have to be
replaced in the future, and OIBDA does not reflect any cash
requirements for such replacements;
- It does not reflect foreign exchange gains or losses; and
- Other companies in our industry may calculate this measure
differently than we do, limiting its usefulness as a comparative
measure.
We believe that average revenue per user ("ARPU") provides useful
information concerning the appeal of our rate plans and service
offerings and our performance in attracting and retaining high value
customers. ARPU excludes equipment revenues, revenues from other
wireless networks' customers roaming on our network and miscellaneous
revenues. OIBDA and ARPU should not be considered in isolation or as
alternative measures of performance under GAAP. Average number of
subscribers for the period is calculated as the average of each
month's average number of subscribers.
Proportionate financial figures and other operational data represent
the combination of our ultimate proportionate ownership at the end of
each period presented in each of its investees and are not intended
to represent any measure of performance in accordance with generally
accepted accounting principles. Equity interest figures represent
our direct and indirect ownership interests in our operations. For a
reconciliation of proportionate operating income to operating income,
refer to the supplementary financial information filed with our
interim financial statements.
The following tables provide a reconciliation between OIBDA and net
income:
Non GAAP measures and operating data
Three months ended Twelve months ended
OPERATING DATA FROM December 31, December 31,
CONTINUING OPERATIONS
(in thousands of U.S.$)
2004 2003 2004 2003
--------------------------------------------------------------------
--------------------------------------------------------------------
Net Income (loss) 4,942 (727) 55,206 11,885
Loss from discontinued
operations - - - 8,811
Income taxes 18,921 14,165 63,535 52,840
Non - controlling
interests (8,922) 6,030 40,482 29,212
Net gain on disposal
of assets - - (11,658) (19,367)
Foreign exchange gain (3,113) (666) (3,730) (4,666)
Interest expense, net 22,691 22,314 84,751 91,163
Loss on early extin-
guishment of debt 25,693 - 25,693 -
Depreciation and
amortization 64,788 53,393 233,010 204,711
--------------------------------------------------------------------
Consolidated OIBDA 125,000 94,509 487,289 374,589
--------------------------------------------------------------------
--------------------------------------------------------------------
MobiFon 84,836 67,594 344,934 281,195
Oskar Mobil 46,779 31,602 161,995 103,344
Corporate & Others (6,615) (4,687) (19,640) (9,950)
--------------------------------------------------------------------
Consolidated OIBDA 125,000 94,509 487,289 374,589
--------------------------------------------------------------------
The following table provides a reconciliation between service
revenues and ARPU for MobiFon:
MobiFon
--------------------------------------------------------------------
Three months ended Twelve months ended
December 31, December 31,
2004 2003 2004 2003
--------------------------------------------------------------------
Service revenues for the
periods (in $thousands) 192,929 145,146 686,283 529,520
Average number of
subscribers for the
period (in millions) 4.64 3.21 4.05 2.84
Average monthly service
revenue per subscriber
for the period (in $) 13.86 15.07 14.13 15.52
Less: impact of
excluding in roaming and
miscellaneous revenue (1.11) (1.13) (1.17) (1.17)
--------------------------------------------------------------------
ARPU 12.75 13.94 12.96 14.35
--------------------------------------------------------------------
The following table provides a reconciliation between service
revenues and ARPU for Oskar Mobil:
Oskar Mobil
--------------------------------------------------------------------
Three months ended Twelve months ended
December 31, December 31,
2004 2003 2004 2003
--------------------------------------------------------------------
Service revenues for the
periods (in $thousands) 151,729 114,221 523,268 385,388
Average number of
subscribers for the
period (in millions) 1.79 1.49 1.68 1.35
Average monthly service
revenue per subscriber for
the period (in $) 28.27 25.51 25.97 23.79
Less: impact of excluding
in roaming and
miscellaneous revenue (0.92) (0.81) (0.95) (0.84)
-------------------------------------------------------------------
ARPU 27.35 24.70 25.02 22.95
-------------------------------------------------------------------
Other selected operational data:
Start-up Licensed
Date of POPs Total
Technology Operations (millions) Subscriber(1)
--------------------------------------------------------------------
Romania GSM 1997 21.7 4,910,312
Czech
Republic(2) GSM 2000 10.2 1,831,116
---------------------------------------------------------------------
Total 31.9 6,741,428
---------------------------------------------------------------------
Start-up Equity
Date of Equity POPs Equity
Technology Operations Interest (millions)Subscribers
---------------------------------------------------------------------
Romania GSM 1997 79.0% 17.1 3,879,146
Czech
Republic(2) GSM 2000 27.1% 2.8 496,232
--------------------------------------------------------------------
Total 19.9 4,375,378
--------------------------------------------------------------------
(1)Subscriber figures include 3,223,883 and 954,568 prepaid
subscribers in Romania and Czech Republic, respectively
(2)Pro forma for the acquisition of 72.9% of Oskar Holdings N.V. on
January 12, 2005, TIW's equity subscribers in the Czech Republic
is 1,831,116
Forward-looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This news release contains certain forward-looking statements concerning our future operations, economic performances, financial conditions and financing plans.These statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate in the 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 . However, whether actual results and developments will conform with our expectations and predictions is subject to a number of risks, uncertainties and assumptions. Consequently, all of the forward-looking statements made in news release are qualified by these cautionary statements, and there can be no assurance that the results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to or effects on us and our subsidiaries or their businesses or operations. We undertake no obligation and do not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable law. For all of these forward-looking statements, we claim the protection of the safe harbour for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Conference Call The conference call with analysts on the fourth quarter 2004 results will be made available via an audio web cast from TIW's Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the site.The web cast is scheduled to begin at 9:00 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy on Wednesday Wednesday: see week. , February 23, 2005 (atwww.tiw.ca).A replay of the conference call can also be heard between 2:00 p.m. on February 23 and 11:59 p.m. on March 23.To access the replay facility, dial (416) 695-5800 and you will be instructed to enter the access code: 3138850. About TIW TIW is a leading provider of wireless voice, data and short messaging See SMS. services in Central and Eastern Europe The term "Central and Eastern Europe" came into wide spread use, replacing "Eastern bloc", to describe former Communist countries in Europe, after the collapse of the Iron Curtain in 1989/90. with more than 6.7 million subscribers. TIW operates in Romania through MobiFon S.A. under the brand name Connex and in the Czech Republic through Oskar Mobil a.s. under the brand name Oskar. TIW's shares are listed on NASDAQ ("TIWI") and on the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. ("TIW"). TELESYSTEM INTERNATIONAL WIRELESS INC. (TSX:TIW) (NASDAQ:TIWI) |
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