Beeline AR 2005 - VimpelCom

Notes to Consolidated Financial Statements
102 VimpelCom
Notes to Consolidated Financial Statements
ВымпелКом
Annual Report 2005 Годовой отчет 2005 103
Year ended December 31, 2004: Russia Kazakhstan Total
Total operating revenues
from external customers $ 2,067,920 $ 45,082 $ 2,113,002
Total intersegment revenues – – –
Depreciation and amortization 329,542 15,659 345,201
Operating income 672,105 2,061 674,166
Interest income 5,712 – 5,712
Interest expense 83,046 2,617 85,663
Income before income taxes
and minority interest 582,912 2,713 585,625
Income tax expense 154,127 873 155,000
Net income 428,786 1,839 430,625
Segment assets 4,178,221 602,020 4,780,241
Goodwill 207,808 160,396 368,204
Expenditures for long-lived assets $ 1,629,878 $ 42,707 $ 1,672,585
Year ended December 31, 2003: Russia Total
Total operating revenues from
external customers $ 1,329,653 $ 1,329,653
Total intersegment revenues – –
Depreciation and amortization 196,833 196,833
Operating income 416,397 416,397
Interest income 8,378 8,378
Interest expense 68,246 68,246
Income before income taxes and minority interest 358,295 358,295
Income tax expense 105,879 105,879
Net income 252,089 252,089
Segment assets 2,281,448 2,281,448
Goodwill 9,816 9,816
Expenditures for long-lived assets $ 770,456 $ 770,456
A reconciliation of VimpelCom’s total segment financial information to the
corresponding consolidated amounts follows:
Revenues
2005 2004 2003
Total operating revenues from
external customers for
reportable segments $ 3,211,118 $ 2,113,002 $ 1,329,653
Total intersegment revenues
for reportable segments 1,043 - -
Elimination of intersegment revenues (1,043) - -
Total consolidated operating
revenues $ 3,211,118 $ 2,113,002 $ 1,329,653
Net income (loss)
2005 2004 2003
Total net income for reportable
segments $ 618,529 $ 430,625 $ 252,089
Minority interest in net (income)
loss of subsidiaries (3,398) (80,229) (23,280)
Net income $ 615,131 $ 350,396 $ 228,809
Assets
December 31, December 31,
2005 2004
Total assets for reportable segments $ 6,364,692 $ 4,794,227
Elimination of intercompany receivables (57,656) (13,986)
Total consolidated assets $ 6,307,036 $ 4,780,241
Other significant items
Year ended December 31, 2005
Segment Consolidated
Totals Adjustments Totals
Depreciation and amortization $593,278 $- $593,278
Operating income 978,032 - 978,032
Interest income 11,305 (2,620) 8,685
Interest expense 150,068 (2,620) 147,448
Income before income taxes
and minority interest 840,430 - 840,430
Income tax expense 221,901 - 221,901
Expenditures for long-lived assets $ 1,635,345 $ - $ 1,635,345
Year ended December 31, 2004
Segment Consolidated
Totals Adjustments Totals
Depreciation and amortization $ 345,201 $ – $ 345,201
Operating income 674,166 – 674,166
Interest income 5,712 – 5,712
Interest expense 85,663 – 85,663
Income before income taxes
and minority interest 585,625 – 585,625
Income tax expense 155,000 – 155,000
Expenditures for long-lived assets $ 1,672,585 $ – $ 1,672,585
Year ended December 31, 2003
Segment Consolidated
Totals Adjustments Totals
Depreciation and amortization $ 196,833 $ – $ 196,833
Operating income 416,397 – 416,397
Interest income 8,378 – 8,378
Interest expense 68,246 – 68,246
Income before income taxes
and minority interest 358,295 – 358,295
Income tax expense 105,879 – 105,879
Expenditures for long-lived assets $ 770,456 $ – $ 770,456
23. Stock Based Compensation Plan
VimpelCom’s 2000 Stock Option Plan adopted on December 20, 2000 authorized the
grant of options to management personnel for up to 250,000 shares of VimpelCom’s
common stock. On April 22, 2005, the Board of Directors approved Amendment No. 1
to the amended and restated stock option plan in order to increase the maximum
aggregate number of shares authorized under the plan from 250,000 to 450,000 and
to extend the expiration date of the plan from December 31, 2006 to December 31,
2015. On June 22, 2005, new options in the amount of 181,000 were granted to
management personnel of VimpelCom. The following table summarizes the activity
for the plan.
Number of Options
2005 2004 2003
Options outstanding, beginning of year 86,750 98,625 148,375
Options granted 181,000 – 72,500
Options exercised (43,483) (11,875) (120,750)
Options forfeited (16,000) – (1,500)
Options outstanding, end of year 208,267 86,750 98,625
Options exercisable, end of year 35,767 51,750 44,625
No options expired in the years ended December 31, 2005, 2004 or 2003. The following table summarizes the weighted-average exercise prices of options for each of the
following groups of options as of December 31, 2005:
Options First options Second options Options
granted in 2000 granted in 2003 granted in 2003 granted in 2005 Total
The number of options outstanding 11,250 5,000 27,017 165,000 208,267
Exercise price of options outstanding $ 23.60 $ 52.40 $ 46.70 $ 136.89
The weighted-average remaining contractual
life of options outstanding (years) 1.0 1.0 1.0 3.5 1.7
The number of options currently exercisable 11,250 5,000 27,017 10,000 53,267
Exercise price of options currently exercisable $ 23.60 $ 52.40 $ 46.70 $ 136.89
The weighted average grant-date fair value of options granted the years ended December 31, 2005, 2004 and 2003 was:
2005 2004 2003
Per ADS Per ADS Per ADS
Per share equivalent Per share equivalent Per share equivalent
Equals the market
price on a grant date $– $– $ – $ – $ 16.76 $ 4.19
Exceeds the market price
on a grant date 215.44 53.86 – – – –
Less than the market
price on a grant date $– $– $ – $ – $ 45.42 $ 11.36