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VimpelCom Reports 94% Increase in Fourth Quarter Earnings


  • Annual Subscriber Growth Exceeds 150%

 

Moscow and New York (April 21, 1997) - Open Joint Stock Company Vimpel-Communications ("VimpelCom") (NYSE: VIP) today reported increased earnings and continued strong subscriber growth on its Moscow D-AMPS cellular network for the fourth quarter of 1996 and for the twelve months ended December 31, 1996. The company also reported that the development of its PCS (GSM-1800) business is on schedule and commercial service is expected to begin in the second quarter of 1997.

For the fourth quarter of 1996, VimpelCom reported total operating revenues of $67.1 million, a 70% increase over the $39.5 million in total operating revenues reported in the last quarter of 1995. For the fourth quarter of 1996, total net operating revenues (net of revenue-based taxes) were $64.0 million, a 68% increase over the $38.0 million in net operating revenues reported in the same quarter of 1995. Operating income for the fourth quarter of 1996 rose to $18.7 million, up 96% compared with the $9.5 million in operating income reported in the same period of 1995. Net income for the quarter ended December 31, 1996, was $10.5 million, or $0.58 per share ($0.44 per ADS), a 94% increase over the net income of $5.4 million, or $0.33 per share ($0.25 per ADS), earned in the fourth quarter of 1995. Each ADS represents 0.75 of one share of common stock.

For the year ended December 31, 1996, VimpelCom reported total operating revenues of $213.2 million compared with total operating revenues of $100.9 million for 1995, an increase of 111 %. Net operating revenues (net of revenue-based taxes) for 1996 were $204.2 million, a 110% increase over the $97.1 million in net operating revenues reported in 1995. Service revenue for 1996 increased to approximately 73% of net operating revenues compared with approximately 55% of net operating revenues in 1995. The Company reported operating income of $70.5 million in 1996, which includes the effect of a nonrecurring, one-time compensation charge of $4.9 million incurred in the first quarter of 1996, and represents a 55% increase over the $45.4 million in operating income reported in 1995. Without this one-time charge, operating income in 1996 would have increased by 66% compared with 1995. Net income for the year ended December 31, 1996, was $44.9 million, or $2.59 per share ($1.94 per ADS), a 63% increase over the net income of $27.6 million, of $1.58 per share ($1.19 per ADS), earned in 1995. Without the one-time $4.9 million compensation charge, net income in 1996 would have increased by 80%.

 

As of December 31, 1996, VimpelCom had over 56,500 subscribers in the Moscow License Area, representing a growth of 26% over the approximately 45,000 subscribers at the end of the third quarter of 1996, and a growth of over 150% compared with the approximately 22,500 subscribers reported at the end of 1995. Commenting on today's announcement, Dmitri Zimin, President and Chief Executive Officer of VimpelCom, said: "We are very gratified by these results, because they reflect a historic year for VimpelCom. We completed the first listing by a Russian company on the New York Stock Exchange, and also maintained our dominant market position in the expanding wireless market in Moscow. In 1997, we will continue to concentrate on further expanding our D-AMPS service in Moscow and the surrounding regions, and introduce our new GSM-1800 service, which will significantly increase the variety of services offered to our customers and,over the long term, develop the wireless mass market."

For the fourth quarter of 1996, EBITDA remained strong, reaching $22.1 million, 111% higher than the $10.5 million in the fourth quarter of 1995. EBITDA for the year ended December 31, 1996, was $85.9 million, a 77% increase over the EBITDA of $48.5 million reported in 1995. EBITDA for the year ended 1996 excludes the $4.9 million non-recurring compensation charge incurred in the first quarter of 1996. The EBITDA margin for the year ended December 31, 1996, was 42%, a decrease from the 50% margin in 1995. This decrease for the year was due mainly to higher operating expenses.

Selling, general and administrative expenses substantially increased to $50.7 million for the year ended December 31, 1996, from the $15.0 million in 1995. For the fourth quarter of 1996, selling, general and administrative expenses increased to $21.2 million from the $8.4 million reported in the same quarter a year ago. These increases resulted primarily from the overall increase in the level of business activity in 1996 compared with 1995 and the build out of support infrastructure and other customer-related and administrative facilities.

 

Overall capital expenditure in 1996 was approximately $120 million as the Company continued to build out its D-AMPS network and started the development of its GSM-1800 network. As a result, depreciation and amortization charges in 1996 increased to $10.5 million compared with $3.1 million in 1995. The Company plans to increase capital expenditure in 1997 in order to increase the capacity and extend the geographic coverage in the license areas of its AMPS network. In addition, in 1997 VimpelCom plans to add capacity to its new GSM-l800 network and extend the coverage in Moscow and the surrounding regions. The Company expects that overall capital expenditure for 1997 will be approximately $148 million.

Having begun full-scale operations in 1994, VimpelCom is now the largest provider of cellular telecommunications in Russia, marketing its services under the brand name "Bee Line". The Group's primary operating area includes the City of Moscow and Mosdow Region, which together cover a population of over 15 million people. The Group operates the only Digital Advanced Mobile Phone system ("D-AMPS") cellular system in the Moscow License Area, and has also been granted a license to provide Personal Communications Services ("PCS") in the Moscow License Area. VimpelCom completed an initial public offering of ADSs in November 1996 and is the first and only Russian company listed on the New York Stock Exchange.

 

For more information, contact
Valery Goldin
VimpelCom (Moscow)
7(095) 974-5888
vgoldin@beeline.msk.ru
John McInerney or Perry Hall
Dewe Rogerson Inc.
(212) 688-6840

Unaudited Consolidated Condensed Statements of Income

  Three months ended December 31 , Twelve months ended December 31 ,
  1996 1995 1996 1995
  (In thousands, except per share and per ADS amounts)
Operating revenues:        
Service revenues and connection fees US$ 57,530 US$ 28,642 US$ 173,188 US$ 73,164
Sales of handsets and accessories 9,350 10,865 35,316 27,753
Installation and equipment contracts 216 0 4,726 0
Total operating revenues 67,096 39,507 213,230 100,917
Less revenue-based taxes 3,055 1,486 9,061 3,794
         
Net operating revenues 64,041 38,021 204,169 97,123
         
Operating expenses:        
Service costs 11,366 6,922 38,501 11,671
Cost of handsets and accessories sold 6,608 7,720 21,988 17,492
Cost of installation and equipment contracts 445 0 4,680 0
Selling, general and administrative expenses 21,159 8,418 50,667 14,980
Provision for doubtful accounts 2,375 4,500 7,310 4,500
Depreciation and amortization 3,397 929 10,549 3,104
         
Total operating expenses 45,350 28,489 133,695 51,747
         
Operating income 18,691 9,532 70,474 45,376
         
Other income and expenses:        
Interest income 7,547 2,336 27,603 2,479
Interest expense (8,965) (3,892) (32,957) (6,298)
Net foreign exchange gain (loss) 570 (1,361) 267 (391)
         
Total other income and expense (848) (2,917) (5,087) (4,210)
         
Income before income taxes and minority interest 17,843 6,615 65,387 41,166
Provision for income taxes 7,336 1,204 20,477 13,545
Minority interest in net earnings of subsidiaries 14 0 14 0
         
Net income US$ 10,493 US$ 5,411 US$ 44,896 US$ 27,621
         
Net income per common share US$ 0.58 US$ 0.33 US$ 2.59 US$ 1.58
Net income per ADS equivalent US$ 0.44 US$ 0.25 US$ 1.94 US$ 1.19
Weighted average common shares outstanding (thousands) 17,981 16,397 17,333 17,481
EBITDA 22,088 10,461 85,923 48,480

 

Open Joint Stock Company Vimpel-Communications
Consolidated Balance Sheets

  December 31,
  1996 1995
  (In Thousands)
Assets    
Current assets:    
Cash and cash equivalents US$ 33,316 US$ 8,844
Short-term investments 15,638 11,075
Accounts receivable - trade, net of allowance for doubtful accounts of US$ 2,692 in 1995 and US$ 4,106 in 1996 28,119 10,219
Other receivabiles 13,295 9,661
Inventory 8,572 3,239
Total current assets 99,040 43,038
     
Property and equipment, net 179,808 70,233
Restricted cash - 2,519
Due from related parties 2,682 3,199
Other assets 17,359 3,609
     
Total assets US$ 298,889 US$ 122,598
     
Liabilities and shareholders' equity    
Current liabilities:    
Accounts payable US$ 11,903 US$ 3,586
Deferred income taxes 1,565 315
Customer deposits 37,765 10,244
Bank Loans 3,756 18,463
Equipment financing, current portion 6,139 7,847
Accrued liabilities 2,803 7,967
Total current liabilities 63,931 48,422
     
Deferred income taxes 23,774 9,668
Equipment financing, less current portion 61,818 20,509
Other long term liabilities - 602
     
Minority interest 2,791 -
     
Commitments and contingencies - -
     
Shareholders' equity

Convertible voting preferred stock (5 rubles nominal value per share), 10,000,000 shares authorized; 6,426,600 shares issued and outstanding in 1996

- -
Common stock (5 rubles nominal value per share), 90,000,000 shares authorized; 19,280,000 shares issued and outstanding in 1996; 12,660,000 shares issued and outstanding in 1995 including 346,000 treasury shares 86 80
Additional paid-in capital 64,340 6,064
Retained earnings 82,149 37,253
Total shareholders' equity 146,575 43,397
     
Total liabilities and shareholders' equity US$ 298,889 US$ 122,598



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