For the years ended December 31, (US $000's)
2005 2004 Movement 2004 2003 Movement
Interest income 4,124 4,318 (194 ) 4,318 5,507 (1,189 )
Interest expense (29,387 ) (1,203 ) (28,184 ) (1,203 ) (12,010 ) 10,807
Foreign currency exchange gain/(loss), net 37,968 (574 ) 38,542 (574 ) (10,023 ) 9,449
Other income/(expense) (4,705 ) (698 ) (4,007 ) (698 ) (2,458 ) 1,760
Provision for income taxes (16,691 ) (11,089 ) (5,602 ) (11,089 ) (3,760 ) (7,329 )
Minority interest in income of
consolidated subsidiaries (8,908 ) (4,106 ) (4,802 ) (4,106 ) (676 ) (3,430 )
Equity in income of unconsolidated
affiliates 8,238 10,619 (2,381 ) 10,619 3,629 6,990
Discontinued operations (513 ) 2,524 (3,037 ) 2,524 370,213 (367,689 )
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Interest income decreased by US$ 0.2 million in 2005 compared to 2004. Interest income decreased by US$ 1.2 million in
2004 compared to 2003 primarily as a result of a higher average cash balance in 2003 compared to 2004 and investments in short-term securities.
Interest expense increased by US$ 28.2 million in 2005 compared to 2004 primarily as a result of the issuance of our Senior
Notes (see Part II, Item 8, Note 5, "Senior Notes" in our Annual Report on Form 10-K for the year ended December 31, 2005, as amended by our Form 10-K/A filed with the Securities and Exchange Commission on March 15, 2006, which is
incorporated by reference into this prospectus). Interest expense decreased by US$ 10.8 million in 2004 compared to 2003.
Foreign currency gain/(loss): The foreign currency exchange gain of US$ 37.9 million compared to a loss of US$
0.6 million in 2004. The gain arose primarily as a result of the translation of the Euro-denominated Senior Notes into US dollars at December 31, 2005.
The foreign currency exchange loss in 2004 was US$ 0.6 million compared to US$ 10.0 million in 2003. The reduction was primarily due to the fact that we had retired in August 2003 the Euro-denominated portion of the senior notes we had issued in 1997.
Other expense: The expense of US$ 4.7 million in 2005 was primarily a result of a US$ 3.4 million fee incurred to secure
bridge financing for our acquisition of the TV NOVA (Czech Republic) group in May 2005. We did not ultimately utilize this bridge financing.
Provision for income taxes: Provision for income taxes was US$ 16.7 million in 2005, US$ 11.1 million in 2004 and US$
3.8 million in 2003. The increase in 2005 and 2004 is, in both cases, primarily due to our operations having higher taxable profits. In addition, the 2005 charge includes a deferred tax credit of US$ 5.1 million with respect to the impairment of our Croatian operations (For further information see Part II, Item 8, Note 4, "Goodwill and Intangible Assets, Impairment" in our Annual Report on Form 10-K for the year ended December 31, 2005, as amended by our Form 10-K/A filed with the
Securities and Exchange Commission on March 15, 2006, which is incorporated by reference into this prospectus) offset by a provision for income taxes of US$ 8.0 million in respect of our newly acquired Czech Republic operations. For further information on taxes, see Part II, Item 8, Note 14, "Income Taxes" in our Annual Report on Form 10-K for the year ended December 31, 2005, as amended by our Form 10-K/A filed with the Securities and Exchange Commission on March 15, 2006, which is incorporated by reference into this prospectus.
Minority interest in income of consolidated subsidiaries: Minority interest in the income of consolidated subsidiaries
was US$ 8.9 million in 2005 compared to US$ 4.1 million in 2004 and US$ 0.7 million in 2003. This is as a result of higher profitability of our Romanian and Ukrainian operations.
Equity in income of unconsolidated affiliates: As explained in "Business" above, some of our broadcasting licenses are
held by unconsolidated affiliates which we account for using the equity method. 73
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Equity in income of unconsolidated affiliates was US$ 8.2 million for 2005 compared to US$ 10.6 million for 2004 and US$ 3.6 million for 2003 as detailed below:
For the years ended December 31, (US $000's)
2005 2004 Movement 2004 2003 Movement
Slovak Republic operations $ 8,240 $ 10,382 $ (2,142 ) $ 10,382 $ 4,521 $ 5,861
Romanian operations (2 ) 237 (239 ) 237 (215 ) 452
Slovenian operations — — — — (677 ) 677
Equity in income of unconsolidated
affiliates $ 8,238 $ 10,619 $ (2,381 ) $ 10,619 $ 3,629 $ 6,990
Discontinued operations: The amounts charged to the consolidated statements of operations in respect of discontinued
operations are as follows:
For the years ended December 31, (US $000's)
2005 2004 Movement 2004 2003 Movement
Gain on disposal of discontinued operations $ 164 $ 146 18 $ 146 $ 384,213 (384,067 )
Tax on disposal of discontinued operations (677 ) 2,378 (3,055 ) 2,378 (14,000 ) 16,378
Discontinued operations $ (513 ) $ 2,524 (3,037 ) $ 2,524 $ 370,213 (367,689 )
On June 19, 2003, our Board of Directors decided to withdraw from operations in the Czech Republic. On October 23, 2003 we sold our 93.2% participation interest in CNTS, our former Czech operating company, for US$ 53.2 million.
The revenues and expenses of our former Czech operations and the award income and related legal expenses have therefore all been treated as discontinued operations for each year.
The amounts charged to discontinued operations in 2005 largely represent additional payments we expect to make to the Dutch tax authorities pursuant to the agreement we entered into on February 9, 2004.
For additional information, see Part II, Item 8, Note 18, "Discontinued Operations" in our Annual Report on Form 10-K for the year ended December 31, 2005, as amended by our Form 10-K/A filed with the Securities and Exchange Commission on March 15, 2006, which is incorporated by reference into this prospectus.
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