##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For
the transition period
from to
 Commission file number: 0-27423
 
 Golden Telecom, Inc.
  DELAWARE
    
    51-0391303(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 Representative Office Golden TeleServices, Inc.1 Kozhevnichesky ProezdMoscow, Russia
    
    115114(Address of principal executive office)
    
    (Zip Code)
 (011-7-495) 797-9300
 þ o
  þ o o
 o þ




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TABLE OF CONTENTS
 PagePART I.FINANCIAL INFORMATIONItem 1 Financial Statements (Unaudited)
    
    
    3Condensed Consolidated Balance Sheets as of December 31, 2006
and September 30, 2007 (Unaudited)
    
    
    3Condensed Consolidated Statements of Operations for the Three and
Nine Months Ended September 30, 2006 and 2007 (Unaudited)
    
    
    5Condensed Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 2006 and 2007 (Unaudited)
    
    
    6Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    7Item 2 Managements Discussion and Analysis of Financial Condition and
Results of Operations *
    
    
    22Item 3 Quantitative and Qualitative Disclosures About Market Risk
    
    
    46Item 4 Controls and Procedures
    
    
    46PART II. OTHER INFORMATION
    
    
    47Item 1 Legal Proceedings
    
    
    47Item 1A Risk Factors
    
    
    47Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    47Item 3 Defaults Upon Senior Securities
    
    
    47Item 4 Submission of Matters to a Vote of Security Holders
    
    
    47Item 5 Other information
    
    
    48Item 6 Exhibits
    
    
    48Signatures
    
    
    49Certification of PEO Pursuant to Section 302Certification of PFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906
  
 *
    
    Please refer to the special note regarding forward-looking statements in this section. 2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements (Unaudited)
 GOLDEN TELECOM, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)
(Unaudited)
 December 31,
    
    
    September 30,2006
    
    
    2007ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    18,413
    
    
    $
    121,379Accounts receivable, net of allowance for doubtful accounts of
$25,224 and $29,841 at December 31, 2006 and September 30, 2007, respectively
    
    
    147,719
    
    
    
    211,451VAT receivable
    
    
    21,486
    
    
    
    35,822Prepaid expenses
    
    
    11,371
    
    
    
    16,947Taxes receivable, excluding VAT
    
    
    6,466
    
    
    
    3,723Notes receivable
    
    
    379
    
    
    
    1,274Deferred tax asset
    
    
    11,098
    
    
    
    23,817Inventory
    
    
    7,682
    
    
    
    12,223Due from affiliates and related parties
    
    
    1,227
    
    
    
    1,789Other current assets
    
    
    5,564
    
    
    
    12,257TOTAL CURRENT ASSETS
    
    
    231,405
    
    
    
    440,682Property and equipment, net of accumulated depreciation of $352,765
and $452,414 at December 31, 2006 and September 30, 2007, respectively
    
    
    552,341
    
    
    
    891,223Goodwill and intangible assets:Goodwill
    
    
    180,539
    
    
    
    293,222Intangible assets, net of accumulated amortization of $90,314 and $114,742 at
December 31, 2006 and September 30, 2007, respectively
    
    
    116,545
    
    
    
    236,907Net goodwill and intangible assets
    
    
    297,084
    
    
    
    530,129Investments in and advances to ventures
    
    
    11,886
    
    
    
    14,598Notes receivable
    
    
    2,500
    
    
    
    20,801Restricted cash
    
    
    233
    
    
    
    Other non-current assets
    
    
    11,741
    
    
    
    16,857TOTAL ASSETS
    
    $
    1,107,190
    
    
    $
    1,914,290
  3




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GOLDEN TELECOM, INC.
 CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)
(Unaudited)
 December 31,
    
    
    September 30,2006
    
    
    2007LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIESAccounts payable and accrued expenses
    
    $
    146,058
    
    
    $
    256,931VAT payable
    
    
    2,725
    
    
    
    11,237Debt maturing within one year
    
    
    12,305
    
    
    
    4,780Current capital lease obligation
    
    
    753
    
    
    
    2,559Deferred revenue
    
    
    21,634
    
    
    
    27,576Due to affiliates and related parties
    
    
    4,505
    
    
    
    5,718Liability for acquisition
    
    
    378
    
    
    
    Other current liabilities
    
    
    233
    
    
    
    246TOTAL CURRENT LIABILITIES
    
    
    188,591
    
    
    
    309,047Long-term debt, less current portion
    
    
    29
    
    
    
    225,156Long-term deferred tax liability
    
    
    29,268
    
    
    
    74,486Long-term deferred revenue
    
    
    36,951
    
    
    
    47,289Long-term capital lease obligations
    
    
    1,591
    
    
    
    8,882Other non-current liabilities
    
    
    2,321
    
    
    
    2,188TOTAL LIABILITIES
    
    
    258,751
    
    
    
    667,048Minority interest
    
    
    31,263
    
    
    
    93,118SHAREHOLDERS EQUITYPreferred stock, $0.01 par value (10,000,000 shares
authorized; none issued and outstanding at December 31, 2006
and September 30, 2007)
    
    
    
    
    
    
    Common stock, $0.01 par value (100,000,000 shares authorized;
36,673,015 and 40,314,522 shares issued and outstanding at December 31,
2006 and September 30, 2007, respectively)
    
    
    367
    
    
    
    403Additional paid-in capital
    
    
    674,993
    
    
    
    848,133Retained earnings
    
    
    66,744
    
    
    
    181,613Accumulated other comprehensive income
    
    
    75,072
    
    
    
    123,975TOTAL SHAREHOLDERS EQUITY
    
    
    817,176
    
    
    
    1,154,124TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    1,107,190
    
    
    $
    1,914,290
  4




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GOLDEN TELECOM, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
(Unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2007
    
    
    2006
    
    
    2007REVENUE:Telecommunication services
    
    $
    227,144
    
    
    $
    347,488
    
    
    $
    599,033
    
    
    $
    895,948Revenue from affiliates and related parties
    
    
    1,573
    
    
    
    2,903
    
    
    
    4,792
    
    
    
    7,851TOTAL REVENUE
    
    
    228,717
    
    
    
    350,391
    
    
    
    603,825
    
    
    
    903,799OPERATING COSTS AND EXPENSES:Access and network services (excluding depreciation
and amortization)
    
    
    128,153
    
    
    
    202,004
    
    
    
    327,154
    
    
    
    523,732Selling, general and administrative (excluding
depreciation and amortization)
    
    
    37,505
    
    
    
    63,316
    
    
    
    104,955
    
    
    
    157,099Depreciation and amortization
    
    
    26,389
    
    
    
    39,212
    
    
    
    72,961
    
    
    
    100,182TOTAL OPERATING COSTS AND EXPENSES
    
    
    192,047
    
    
    
    304,532
    
    
    
    505,070
    
    
    
    781,013INCOME FROM OPERATIONS
    
    
    36,670
    
    
    
    45,859
    
    
    
    98,755
    
    
    
    122,786OTHER INCOME (EXPENSE):Equity in earnings of ventures
    
    
    350
    
    
    
    672
    
    
    
    1,021
    
    
    
    404Gain on sale of MCT Corp.
    
    
    
    
    
    
    41,283
    
    
    
    
    
    
    
    41,283Interest income
    
    
    185
    
    
    
    1,424
    
    
    
    988
    
    
    
    2,852Interest expense
    
    
    (91
    )
    
    
    (2,792
    )
    
    
    (241
    )
    
    
    (5,857
    )Foreign currency gains
    
    
    73
    
    
    
    10,954
    
    
    
    1,648
    
    
    
    12,547TOTAL OTHER INCOME
    
    
    517
    
    
    
    51,541
    
    
    
    3,416
    
    
    
    51,229Income before income taxes and minority interest
    
    
    37,187
    
    
    
    97,400
    
    
    
    102,171
    
    
    
    174,015Income taxes
    
    
    11,110
    
    
    
    19,599
    
    
    
    31,880
    
    
    
    44,435Minority interest
    
    
    1,848
    
    
    
    3,426
    
    
    
    3,951
    
    
    
    6,223Income before cumulative effect of a change in
accounting principle
    
    
    24,229
    
    
    
    74,375
    
    
    
    66,340
    
    
    
    123,357Cumulative effect of a change in accounting principle,
net of tax of $52
    
    
    
    
    
    
    
    
    
    
    681
    
    
    
    NET INCOME
    
    $
    24,229
    
    
    $
    74,375
    
    
    $
    65,659
    
    
    $
    123,357Basic earnings per share of common stock:Income before cumulative effect of a change in
accounting principle
    

    $
    0.66
    
    
    $
    1.85
    
    
    $
    1.82
    
    
    $
    3.22Cumulative effect of a change in
accounting principle
    
    
    
    
    
    
    
    
    
    
    0.02
    
    
    
    Net income per share  basic
    
    $
    0.66
    
    
    $
    1.85
    
    
    $
    1.80
    
    
    $
    3.22Weighted average common shares  basic
    
    
    36,633
    
    
    
    40,237
    
    
    
    36,570
    
    
    
    38,274Diluted earnings per share of common stock:Income before cumulative effect of a change in
accounting principle
    
    $
    0.66
    
    
    $
    1.84
    
    
    $
    1.81
    
    
    $
    3.21Cumulative effect of a change in
accounting principle
    
    
    
    
    
    
    
    
    
    
    0.02
    
    
    
    Net income per share  diluted
    
    $
    0.66
    
    
    $
    1.84
    
    
    $
    1.79
    
    
    $
    3.21Weighted average common shares  diluted
    
    
    36,723
    
    
    
    40,369
    
    
    
    36,699
    
    
    
    38,402Cash dividends per common share
    
    $
    
    
    
    $
    
    
    
    $
    0.40
    
    
    $
    
  5




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GOLDEN TELECOM, INC.
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
 Nine Months EndedSeptember 30,2006
    
    
    2007OPERATING ACTIVITIES:Net income
    
    $
    65,659
    
    
    $
    123,357Adjustments to Reconcile Net Income to Net Cash Provided by
Operating Activities:Depreciation
    
    
    57,493
    
    
    
    80,827Amortization
    
    
    15,468
    
    
    
    19,355Equity in earnings of ventures
    
    
    (1,021
    )
    
    
    (404
    )Minority Interest
    
    
    3,951
    
    
    
    6,223Gain on sale of MCT Corp.
    
    
    
    
    
    
    (41,283
    )Foreign currency gain
    
    
    (1,648
    )
    
    
    (12,547
    )Bad debt expense
    
    
    6,964
    
    
    
    5,404Deferred tax benefit
    
    
    (3,451
    )
    
    
    (14,211
    )Stock based compensation expense
    
    
    4,626
    
    
    
    18,984Cumulative effect of a change in accounting principle, net of tax of $52
    
    
    681
    
    
    
    Other
    
    
    677
    
    
    
    551Changes in assets and liabilities:Accounts receivable
    
    
    (49,948
    )
    
    
    (43,309
    )Accounts payable and accrued expenses
    
    
    32,345
    
    
    
    (11,932
    )VAT, net
    
    
    (5,609
    )
    
    
    2,299Other changes in assets and liabilities
    
    
    3,669
    
    
    
    1,459NET CASH PROVIDED BY OPERATING ACTIVITIES
    
    
    129,856
    
    
    
    134,773INVESTING ACTIVITIES:Purchases of property and equipment and intangible assets
    
    
    (122,687
    )
    
    
    (160,976
    )Acquisitions, net of cash acquired
    
    
    (17,674
    )
    
    
    (118,254
    )Proceeds from sale of MCT Corp.
    
    
    
    
    
    
    41,283Restricted cash
    
    
    335
    
    
    
    233Loans made
    
    
    (5,906
    )
    
    
    (19,995
    )Other investing
    
    
    (1,295
    )
    
    
    1,675NET CASH USED IN INVESTING ACTIVITIES
    
    
    (147,227
    )
    
    
    (256,034
    )FINANCING ACTIVITIES:Net proceeds from exercise of employee stock options
    
    
    2,429
    
    
    
    836Cash dividends paid
    
    
    (14,622
    )
    
    
    Proceeds from debt
    
    
    598
    
    
    
    291,242Repayment of debt
    
    
    (315
    )
    
    
    (85,698
    )Issuance of
common stock
    
    
    
    
    
    
    20,416Other financing
    
    
    (1,748
    )
    
    
    (5,768
    )NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
    
    
    (13,658
    )
    
    
    221,028Effect of exchange rate changes on cash and cash equivalents
    
    
    1,032
    
    
    
    3,199Net increase (decrease) in cash and cash equivalents
    
    
    (29,997
    )
    
    
    102,966Cash and cash equivalents at beginning of period
    
    
    67,176
    
    
    
    18,413CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    37,179
    
    
    $
    121,379
  6




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GOLDEN TELECOM, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Note 1: Basis of Presentation
   Note 2: Summary of Significant Accounting Policies and Recent Accounting Pronouncements
 Summary of Significant Accounting Policies
  Accounting for Uncertainty in Income Taxes
 Accounting for Uncertainty in Income Taxes  an
interpretation of SFAS No. 109
  (in thousands)Balance at January 1, 2007
    
    $
    8,555Additions based on tax positions related to the
current year (including additions related to the
acquisition of ZAO Cortec in May 2007 of $9,157)
    
    
    11,118Additions of tax positions of prior years
    
    
    500Reductions of tax positions of current years
    
    
    (6,286
    )Settlements
    
    
    Balance at September 30, 2007
    
    $
    13,887
  7




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GOLDEN TELECOM, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
    Income Taxes
 Accounting for Income Taxes. Interim Financial Reporting,
 Comparative Figures
  Recent Accounting Pronouncements
 Income Statement Presentation of Taxes Collected from Customers and Remitted to Government
Authorities
 How Taxes Collected from Customers and Remitted to Governmental
Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net Presentation).
 8




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GOLDEN TELECOM, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 Fair Value Measurements
 Fair Value Measurements
 Fair Value Option
 The Fair Value Option for Financial Assets
and Financials Liabilities  Including an Amendment of FASB Statement No. 115
 Note 3: Comprehensive Income
 Reporting Comprehensive Income Foreign Currency Translation
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2006
    
    
    2007
    
    
    2006
    
    
    2007(in thousands)Net income
    
    $
    24,229
    
    
    $
    74,375
    
    
    $
    65,659
    
    
    $
    123,357Foreign currency translation adjustment
    
    
    55,609
    
    
    
    33,516
    
    
    
    55,609
    
    
    
    48,903Comprehensive income
    
    $
    79,838
    
    
    $
    107,891
    
    
    $
    121,268
    
    
    $
    172,260
 Note 4: Intangible Assets
  As of December 31, 2006
    
    
    As of September 30, 2007(in thousands)Weighted Average
    
    
    
    
    
    
    Accumulated
    
    
    
    
    
    
    AccumulatedAmortization Lives
    
    
    Cost
    
    
    Amortization
    
    
    Cost
    
    
    AmortizationIntangible assets:Telecommunications service contracts
    
    10 years
    
    $
    119,433
    
    
    $
    (49,450
    )
    
    $
    140,397
    
    
    $
    (60,814
    )Contract-based customer relationships
    
    5 years
    
    
    42,104
    
    
    
    (28,578
    )
    
    
    52,848
    
    
    
    (35,486
    )Licenses
    
    10 years
    
    
    26,948
    
    
    
    (4,295
    )
    
    
    99,204
    
    
    
    (4,840
    )Brand name
    
    10 years
    
    
    
    
    
    
    
    
    
    
    36,016
    
    
    
    (3,438
    )Other intangible assets
    
    6 years
    
    
    18,374
    
    
    
    (7,991
    )
    
    
    23,184
    
    
    
    (10,164
    )Total
    
    
    
    
    
    $
    206,859
    
    
    $
    (90,314
    )
    
    $
    351,649
    
    
    $
    (114,742
    )
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GOLDEN TELECOM, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  Note 5: Net Income Per Share
   Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2006
    
    
    2007
    
    
    2006
    
    
    2007(in thousands, except per share data)Income before cumulative effect of a change in
accounting principle
    
    $
    24,229
    
    
    $
    74,375
    
    
    $
    66,340
    
    
    $
    123,357Weighted average outstanding of:Common stock shares
    
    
    36,633
    
    
    
    40,237
    
    
    
    36,570
    
    
    
    38,274Dilutive effect of:Employee stock options
    
    
    90
    
    
    
    132
    
    
    
    129
    
    
    
    128Common stock and common stock equivalents
    
    
    36,723
    
    
    
    40,369
    
    
    
    36,699
    
    
    
    38,402Net income per share before cumulative effect of a change
in accounting principle:Basic
    
    $
    0.66
    
    
    $
    1.85
    
    
    $
    1.82
    
    
    $
    3.22Diluted
    
    $
    0.66
    
    
    $
    1.84
    
    
    $
    1.81
    
    
    $
    3.21
 Note 6: Business Combinations and Investment Transactions
   10




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GOLDEN TELECOM, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 Business Combinations Goodwill and Other
Intangible Assets
   Business Combinations
 11




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GOLDEN TELECOM, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 May 31, 2007(in thousands)ASSETS:Current assets
    
    $
    31,586Property and equipment
    
    
    161,798Intangible assets
    
    
    50,549Goodwill
    
    
    95,208Other assets
    
    
    14,356Total assets
    
    $
    353,497LIABILITES:Current liabilities
    
    $
    93,206Non-current liabilities
    
    
    27,770Net assets
    
    $
    232,521Less: Minority interest in net assets acquired
    
    
    (35,740
    )Total purchase consideration and transaction costs
    
    $
    196,781Consideration and transaction costs:GTI shares consideration
    
    
    142,130Cash consideration
    
    
    8,205Loan refinancing
    
    
    45,000Direct transaction costs
    
    
    1,446Total purchase consideration and transaction costs
    
    $
    196,781
   12




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GOLDEN TELECOM, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2006
    
    
    2007
    
    
    2006
    
    
    2007(unaudited)(in thousands, except per share data)Revenue
    
    $
    249,689
    
    
    $
    350,391
    
    
    $
    663,855
    
    
    $
    955,359Income before cumulative effect of
a change in accounting principle
    
    
    23,670
    
    
    
    74,375
    
    
    
    65,510
    
    
    
    124,695Cumulative effect of a change in
accounting principle
    
    
    
    
    
    
    
    
    
    
    (681
    )
    
    
    Net income
    
    $
    23,670
    
    
    $
    74,375
    
    
    $
    64,829
    
    
    $
    124,695Basic earnings per share of common stock:Income before cumulative effect of
a change in accounting principle
    
    $
    0.59
    
    
    $
    1.85
    
    
    $
    1.65
    
    
    $
    3.01Cumulative effect of a change in
accounting principle
    
    
    
    
    
    
    
    
    
    
    0.02
    
    
    
    Net income per share  basicWeighted average common shares  basic
    
    $
    0.59
    
    
    $
    1.85
    
    
    $
    1.63
    
    
    $
    3.01Diluted earnings per share of common stock:Income before cumulative effect of
a change in accounting principle
    
    $
    0.59
    
    
    $
    1.84
    
    
    $
    1.64
    
    
    $
    3.00Cumulative effect of a change in
accounting principle
    
    
    
    
    
    
    
    
    
    
    0.02
    
    
    
    Net income per share  dilutedNet income per share  diluted
    
    $
    0.59
    
    
    $
    1.84
    
    
    $
    1.62
    
    
    $
    3.00
  Business Combinations" Goodwill and Other Intangible
Assets"
   13




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##### Table of Contents



Note 7: Shareholders Equity
 Common Stock
     Note 8: Stock Option and Stock Appreciation Rights Plans
    14




---



##### Table of Contents



GOLDEN TELECOM, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
   WeightedAverageExercise
    
    AggregateSARs
    
    Price
    

Intrinsic Value(in thousands)Outstanding at January 1,
2006
    
    
    1,251,800
    
    
    $
    29.19SARs granted
    
    
    177,000
    
    
    
    27.94SARs exercised
    
    
    
    
    
    
    SARs expired
    
    
    
    
    
    
    SARs forfeited
    
    
    (106,400
    )
    
    
    28.91Outstanding at September 30,
2006
    
    
    1,322,400
    
    
    
    29.04
    
    
    $
    1,604Exercisable at September 30,
2006
    
    
    66,667
    
    
    $
    29.83
    
    
    $
    28
 WeightedAverageExercise
    
    AggregateSARs
    
    Price
    

Intrinsic Value(in thousands)Outstanding at January 1,
2007
    
    
    1,293,800
    
    
    $
    29.05SARs granted
    
    
    
    
    
    
    SARs exercised
    
    
    (758,134
    )
    
    
    28.40SARs expired
    
    
    
    
    
    
    SARs forfeited
    
    
    (56,100
    )
    
    
    28.74Outstanding at September 30,
2007
    
    
    479,566
    
    
    
    30.13
    
    
    $
    11,352Exercisable at September 30,
2007
    
    
    2,000
    
    
    $
    27.48
    
    
    $
    53
  15




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##### Table of Contents



GOLDEN TELECOM, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  WeightedAverageExercise
    
    AggregateStock options
    
    Price
    

Intrinsic Value(in thousands)Outstanding at January 1,
2006
    
    
    373,012
    
    
    $
    14.31Stock options granted
    
    
    
    
    
    
    Stock options exercised
    
    
    (177,358
    )
    
    
    13.70Stock options expired
    
    
    
    
    
    
    Stock options forfeited
    
    
    
    
    
    
    Outstanding at September 30,
2006
    
    
    195,654
    
    
    
    14.85
    
    
    $
    3,043Exercisable at September 30,
2006
    
    
    195,654
    
    
    $
    14.85
    
    
    $
    3,043
 WeightedAverageExercise
    
    AggregateStock options
    
    Price
    

Intrinsic Value(in thousands)Outstanding at January 1,
2007
    
    
    157,915
    
    
    $
    13.82Stock options granted
    
    
    1,549,015
    
    
    
    55.81Stock options exercised
    
    
    (55,300
    )
    
    
    14.81Stock options expired
    
    
    
    
    
    
    Stock options forfeited
    
    
    (12,320
    )
    
    
    36.90Outstanding at September 30,
2007
    
    
    1,639,310
    
    
    
    53.16
    
    
    $
    44,808Exercisable at September 30,
2007
    
    
    450,499
    
    
    $
    44.57
    
    
    $
    16,180
  Note 9: Commitments, Contingencies and Other Matters
 Tax Matters
   16




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##### Table of Contents



GOLDEN TELECOM, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
  Taxes Other Than Income Tax
  Russian Environment and Current Economic Situation
  Net Assets Position in Accordance with Statutory Requirements
   Other Commitments and Contingencies
  17




---



##### Table of Contents



GOLDEN TELECOM, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
    Other Matters
    18




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##### Table of Contents



GOLDEN TELECOM, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
   Note 10: Segment Information
 Line of Business Data
 Disclosures
about Segments of an Enterprise and Related Information"
 Adjustments to ReconcileBusiness Segment toConsolidated ResultsBusiness
    
    Carrier
    
    
    
    
    
    
    
    
    
    Corporate,
    
    Business
    
    
    
    
    
    Equityand
    
    and
    
    Consumer
    
    Mobile
    
    Other &
    
    Segment
    
    Consolidated
    
    Method
    
    AffiliateCorporate
    
    Operator
    
    Internet
    
    Services
    
    Eliminations
    
    Total
    
    Results
    
    Ventures
    
    Adjustments(in thousands)Three Months Ended
September 30, 2006Revenue from external
customers
    
    $
    129,723
    
    
    $
    87,830
    
    
    $
    11,340
    
    
    $
    2,428
    
    
    $
    
    
    
    $
    231,321
    
    
    $
    228,717
    
    
    $
    (4,683
    )
    
    $
    2,079Intersegment revenue
    
    
    
    
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    (14
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating income (loss)
    
    
    35,564
    
    
    
    9,774
    
    
    
    (2,723
    )
    
    
    152
    
    
    
    (5,030
    )
    
    
    37,737
    
    
    
    36,670
    
    
    
    (1,067
    )
    
    
    Identifiable assets
    
    
    589,160
    
    
    
    407,521
    
    
    
    83,270
    
    
    
    9,852
    
    
    
    (11,328
    )
    
    
    1,078,475
    
    
    
    1,048,774
    
    
    
    (29,701
    )
    
    
    Capital expenditures
    
    
    25,382
    
    
    
    10,880
    
    
    
    6,894
    
    
    
    2,412
    
    
    
    2
    
    
    
    45,570
    
    
    
    44,450
    
    
    
    (1,120
    )
    
    
    
 Adjustments to ReconcileBusiness Segment toConsolidated ResultsBusiness
    
    Carrier
    
    
    
    
    
    
    
    
    
    Corporate,
    
    Business
    
    
    
    
    
    Equityand
    
    and
    
    Consumer
    
    Mobile
    
    Other &
    
    Segment
    
    Consolidated
    
    Method
    
    AffiliateCorporate
    
    Operator
    
    Internet
    
    Services
    
    Eliminations
    
    Total
    
    Results
    
    Ventures
    
    Adjustments(in thousands)Three Months Ended
September 30, 2007Revenue from external
customers
    
    $
    191,117
    
    
    $
    132,518
    
    
    $
    22,776
    
    
    $
    7,479
    
    
    $
    
    
    
    $
    353,890
    
    
    $
    350,391
    
    
    $
    (4,885
    )
    
    $
    1,386Intersegment revenue
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating income (loss)
    
    
    52,010
    
    
    
    12,806
    
    
    
    (5,606
    )
    
    
    (695
    )
    
    
    (11,906
    )
    
    
    46,609
    
    
    
    45,859
    
    
    
    (750
    )
    
    
    Identifiable assets
    
    
    864,222
    
    
    
    571,489
    
    
    
    418,645
    
    
    
    54,585
    
    
    
    43,978
    
    
    
    1,952,919
    
    
    
    1,914,290
    
    
    
    (38,629
    )
    
    
    Capital expenditures
    
    
    41,594
    
    
    
    16,820
    
    
    
    28,216
    
    
    
    (289
    )
    
    
    758
    
    
    
    87,099
    
    
    
    84,112
    
    
    
    (2,987
    )
    
    
    
 19




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##### Table of Contents



GOLDEN TELECOM, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 Adjustments to ReconcileBusiness Segment toConsolidated ResultsBusiness
    
    Carrier
    
    
    
    
    
    
    
    
    
    
    
    
    
    Business
    
    
    
    
    
    Equityand
    
    and
    
    Consumer
    
    Mobile
    
    Corporate &
    
    Segment
    
    Consolidated
    
    Method
    
    AffiliateCorporate
    
    Operator
    
    Internet
    
    Services
    
    Eliminations
    
    Total
    
    Results
    
    Ventures
    
    Adjustments(in thousands)Nine Months Ended
September 30, 2006Revenue from external
customers
    
    $
    346,155
    
    
    $
    221,651
    
    
    $
    35,842
    
    
    $
    7,639
    
    
    $
    
    
    
    $
    611,287
    
    
    $
    603,825
    
    
    $
    (12,772
    )
    
    $
    5,310Intersegment revenue
    
    
    
    
    
    
    35
    
    
    
    
    
    
    
    
    
    
    
    (35
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating income (loss)
    
    
    92,580
    
    
    
    24,205
    
    
    
    (2,419
    )
    
    
    1,187
    
    
    
    (13,952
    )
    
    
    101,601
    
    
    
    98,755
    
    
    
    (2,846
    )
    
    
    Identifiable assets
    
    
    589,160
    
    
    
    407,521
    
    
    
    83,270
    
    
    
    9,852
    
    
    
    (11,328
    )
    
    
    1,078,475
    
    
    
    1,048,774
    
    
    
    (29,701
    )
    
    
    Capital expenditures
    
    
    68,505
    
    
    
    28,280
    
    
    
    14,856
    
    
    
    8,073
    
    
    
    31
    
    
    
    119,745
    
    
    
    117,910
    
    
    
    (1,835
    )
    
    
    
 Adjustments to ReconcileBusiness Segment toConsolidated ResultsBusiness
    
    Carrier
    
    
    
    
    
    
    
    
    
    
    
    
    
    Business
    
    
    
    
    
    Equityand
    
    and
    
    Consumer
    
    Mobile
    
    Corporate &
    
    Segment
    
    Consolidated
    
    Method
    
    AffiliateCorporate
    
    Operator
    
    Internet
    
    Services
    
    Eliminations
    
    Total
    
    Results
    
    Ventures
    
    Adjustments(in thousands)Nine Months Ended
September 30, 2007Revenue from external
customers
    
    $
    506,591
    
    
    $
    348,533
    
    
    $
    46,494
    
    
    $
    12,982
    
    
    $
    
    
    
    $
    914,600
    
    
    $
    903,799
    
    
    $
    (14,634
    )
    
    $
    3,833Intersegment revenue
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating income (loss)
    
    
    133,033
    
    
    
    31,222
    
    
    
    (15,264
    )
    
    
    (1,351
    )
    
    
    (23,994
    )
    
    
    123,646
    
    
    
    122,786
    
    
    
    (860
    )
    
    
    Identifiable assets
    
    
    864,222
    
    
    
    571,489
    
    
    
    418,645
    
    
    
    54,585
    
    
    
    43,978
    
    
    
    1,952,919
    
    
    
    1,914,290
    
    
    
    (38,629
    )
    
    
    Capital expenditures
    
    
    113,685
    
    
    
    49,033
    
    
    
    49,727
    
    
    
    3,335
    
    
    
    1,518
    
    
    
    217,298
    
    
    
    208,502
    
    
    
    (8,796
    )
    
    
    
 Geographic Data
   Corporate,OtherCountries &
    
    ConsolidatedRussia
    
    Ukraine
    
    Eliminations
    
    Results(in thousands)Three months ended
September 30, 2006Revenue
    
    $
    205,174
    
    
    $
    21,539
    
    
    $
    2,004
    
    
    $
    228,717Long-lived assets
    
    
    737,559
    
    
    
    63,091
    
    
    
    13,311
    
    
    
    813,961
 Corporate,OtherCountries &
    
    ConsolidatedRussia
    
    Ukraine
    
    Eliminations
    
    Results(in thousands)Three months ended
September 30, 2007Revenue
    
    $
    323,678
    
    
    $
    28,137
    
    
    $
    (1,424
    )
    
    $
    350,391Long-lived assets
    
    
    1,341,931
    
    
    
    96,739
    
    
    
    34,938
    
    
    
    1,473,608
 20




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##### Table of Contents



GOLDEN TELECOM, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
(Unaudited)
 Corporate,OtherCountries &
    

    ConsolidatedRussia
    
    

Ukraine
    
    

    Eliminations

    


Result(in thousands)Nine months ended
September 30, 2006Revenue
    
    $
    539,654
    
    
    $
    58,593
    
    
    $
    5,578
    
    
    $
    603,825Long-lived assets
    
    
    737,559
    
    
    
    63,091
    
    
    
    13,311
    
    
    
    813,961
 Corporate,OtherCountries &
    
    
    ConsolidatedRussia
    
    

Ukraine
    
    
    Eliminations
    
    

Result(in thousands)Nine months ended
September 30, 2007Revenue
    
    $
    829,016
    
    
    $
    76,314
    
    
    $
    (1,531
    )
    
    $
    903,799Long-lived assets
    
    
    1,341,931
    
    
    
    96,739
    
    
    
    34,938
    
    
    
    1,473,608
 Note 11: Supplemental Cash Flow Information
  Nine months ended September 30,2006
    
    
    
    

    
    2007(in thousands)Capitalized leased assets
    
    $
    
    
    
    
    

    
    
    $
    15,272Issuance of
common stock in connection with an acquisition
    
    
    
    
    
    

    
    
    
    
    142,130
 Note 12: Sale of MCT Corp.
  21




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##### Table of Contents



ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
   
    
    Business and Corporate Services (BCS)Using our fiber optic and satellite-based
networks in and between major metropolitan areas of Russia, Ukraine and other countries of
the CIS, we provide business and corporate services including voice and data services to
corporate clients across all geographical markets and all industry segments, other than
telecommunications operators;
    
    Carrier and Operator Services.Using our fiber optic and satellite-based networks in and
between major metropolitan areas of Russia, Ukraine and other countries of the CIS, we
provide a range of carrier and operator services including voice and data services to
foreign and Russian telecommunications and mobile operators;
    
    Consumer Internet Services.Using our fiber optic and satellite-based networks, we
provide Internet access to the consumer market and web content offered through a family of
Internet portals throughout Russia, Ukraine, Kazakhstan, and Uzbekistan; and
    
    Mobile Services. Using our mobile networks in Moscow, Kiev and Odessa we provide mobile
services with value-added features, such as voicemail, roaming and messaging services on a
subscription and prepaid basis.
     22




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Recent Acquisitions
       23




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##### Table of Contents



Regulatory Developments
   24




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##### Table of Contents



Other Developments
  25




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##### Table of Contents



26




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##### Table of Contents



Highlights and Outlook
        27




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##### Table of Contents



28




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##### Table of Contents



Critical Accounting Policies
  Revenue recognition policie
 29




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##### Table of Contents



Allowance for doubtful accounts policies
 Long-lived asset recovery policies
 Goodwill and assessment of impairment Goodwill and Other Intangible Assets
 Valuation allowance for deferred tax asset
 Business segment information
 Functional currency Foreign
Currency Translation .
 Stock-based compensation;
 30




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##### Table of Contents



Critical Accounting Estimates
  Allowance for doubtful accounts;
 Tax provisions; Accounting for Contingencies Accounting for Uncertainty in Income Taxes  an
interpretation of FASB Statement No. 109 Accounting for Income Taxes
 Useful lives of property and equipment and certain intangible assets;
 Business combinations; Business Combinations
 Results of Operations
   The discussion of our results of operations is organized as follows:
 
    
    Consolidated Results.Consolidated Results of Operations for the Three Months Ended September
30, 2007, compared to the Consolidated Results of Operations for the Three Months Ended
September 30, 2006
    
    Consolidated Results.Consolidated Results of Operations for the Nine Months Ended September
30, 2007, compared to the Consolidated Results of Operations for the Nine Months Ended
September 30, 2006
    
    Consolidated Financial Position.Consolidated Financial Position at September 30, 2007,
compared to Consolidated Financial Position at December 31, 2006
 31




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##### Table of Contents



Consolidated Results  Consolidated Results of Operations for the Three Months Ended September 30,
2007, Compared to the Consolidated Results of Operations for the Three Months Ended September 30,
2006
 Revenue
  Consolidated Revenue
    
    
    Consolidated RevenueFor the Three Months
    
    
    For the Three MonthsEnded September 30, 2006
    
    
    Ended September 30, 2007(in millions)REVENUEBusiness and Corporate Services
    
    $
    129.5
    
    
    $
    190.9Carrier and Operator Services
    
    
    85.5
    
    
    
    129.2Consumer Internet Services
    
    
    11.3
    
    
    
    22.8Mobile Services
    
    
    2.4
    
    
    
    7.5TOTAL REVENUE
    
    $
    228.7
    
    
    $
    350.4
  Consolidated Revenue
    
    
    Consolidated RevenueFor the Three Months
    
    
    For the Three MonthsEnded September 30, 2006
    
    
    Ended September 30, 2007(in millions)REVENUEMoscow
    
    $
    144.8
    
    
    $
    242.5Northwest region of Russia
    
    
    19.0
    
    
    
    29.0Other regions of Russia and CIS
    
    
    49.3
    
    
    
    69.9Ukraine
    
    
    21.5
    
    
    
    28.3Eliminations
    
    
    (5.9
    )
    
    
    (19.3
    )TOTAL REVENUE
    
    $
    228.7
    
    
    $
    350.4
 Business and Corporate Services.
   32




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##### Table of Contents



(in whole numbers)
    
    2006
    
    2007
    
    % ChangeSovintel BCS Moscow customer statistics on September 30:Total clients
    
    
    23,416
    
    
    
    24,280
    
    
    
    4
    %Business centers
    
    
    886
    
    
    
    997
    
    
    
    13
    %Trade centers
    
    
    84
    
    
    
    119
    
    
    
    42
    %Hotels
    
    
    52
    
    
    
    54
    
    
    
    4
    %Direct inward dialing lines
    
    
    134,000
    
    
    
    141,737
    
    
    
    6
    %Ethernet / Metropolitan Ethernet Network connections
    
    
    2,371
    
    
    
    2,816
    
    
    
    19
    %High speed Internet active contracts
    
    
    834
    
    
    
    1,574
    
    
    
    89
    %
  .
  Carrier and Operator Services.
    Consumer Internet Services.
 33




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##### Table of Contents



Mobile
Services.
 Expenses
  Consolidated Expenses
    
    
    Consolidated ExpensesFor the Three Months
    
    
    For the Three MonthsEnded September 30, 2006
    
    
    Ended September 30, 2007(in millions)COST OF REVENUEBusiness and Corporate Services
    
    $
    56.5
    
    
    $
    85.0Carrier and Operator Services
    
    
    60.6
    
    
    
    95.4Consumer Internet Services
    
    
    9.7
    
    
    
    15.6Mobile Services
    
    
    1.4
    
    
    
    4.6Corporate
    
    
    
    
    
    
    1.4TOTAL COST OF REVENUE
    
    
    128.2
    
    
    
    202.0Selling, general and administrative
    
    
    37.5
    
    
    
    63.3Depreciation and amortization
    
    
    26.4
    
    
    
    39.2Equity in earnings of ventures
    
    
    (0.3
    )
    
    
    (0.7
    )Interest income
    
    
    (0.2
    )
    
    
    (1.4
    )Interest expense
    
    
    0.1
    
    
    
    2.8Foreign currency gain
    
    
    (0.1
    )
    
    
    (11.0
    )Minority interest
    
    
    1.8
    
    
    
    3.4Provision for income taxes
    
    
    11.1
    
    
    
    19.6
 Cost of Revenue
  Business and Corporate Services.
    34




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##### Table of Contents



Carrier and Operator Services.
    Consumer Internet Services.
 Mobile Services.
 Selling, General and Administrative
  Depreciation and Amortization
  Equity in Earnings of Ventures
  35




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##### Table of Contents



Gain on Sale of MCT Corp
  Interest Income
  Interest Expense
  Foreign Currency Gain
  Minority Interest
  Provision for Income Taxes
  Net Income and Net Income per Share
    36




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##### Table of Contents



Consolidated Results  Consolidated Results of Operations for the Nine Months Ended September 30,
2007, compared to the Consolidated Results of Operations for the Nine Months Ended September 30,
2006
 Revenue
  Consolidated Revenue
    
    
    Consolidated RevenueFor the Nine Months
    
    
    For the Nine MonthsEnded September 30, 2006
    
    
    Ended September 30, 2007(in millions)REVENUEBusiness and Corporate Services
    
    $
    345.7
    
    
    $
    505.9Carrier and Operator Services
    
    
    214.7
    
    
    
    338.4Consumer Internet Services
    
    
    35.7
    
    
    
    46.5Mobile Services
    
    
    7.7
    
    
    
    13.0TOTAL REVENUE
    
    $
    603.8
    
    
    $
    903.8
  Consolidated Revenue
    
    
    Consolidated RevenueFor the Nine Months
    
    
    For the Nine MonthsEnded September 30, 2006
    
    
    Ended September 30, 2007(in millions)REVENUEMoscow
    
    $
    378.6
    
    
    $
    594.7Northwest region of Russia
    
    
    53.5
    
    
    
    81.5Other regions of Russia and CIS
    
    
    128.6
    
    
    
    190.6Ukraine
    
    
    58.6
    
    
    
    76.3Eliminations
    
    
    (15.5
    )
    
    
    (39.3
    )TOTAL REVENUE
    
    $
    603.8
    
    
    $
    903.8
 Business and Corporate Services.
      Carrier and Operator Services.
 37




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##### Table of Contents



Consumer Internet Services.
 Mobile Services.
 Expenses
  Consolidated Expenses
    
    
    Consolidated ExpensesFor the Nine Months
    
    
    For the Nine MonthsEnded September 30, 2006
    
    
    Ended September 30, 2007(in millions)COST OF REVENUEBusiness and Corporate Services
    
    $
    148.5
    
    
    $
    227.4Carrier and Operator Services
    
    
    149.2
    
    
    
    250.0Consumer Internet Services
    
    
    25.6
    
    
    
    36.6Mobile Services
    
    
    3.9
    
    
    
    8.3Corporate
    
    
    
    
    
    
    1.4TOTAL COST OF REVENUE
    
    
    327.2
    
    
    
    523.7Selling, general and administrative
    
    
    104.9
    
    
    
    157.1Depreciation and amortization
    
    
    72.9
    
    
    
    100.2Equity in (earnings)/ losses
of ventures
    
    
    (1.0
    )
    
    
    0.4Interest income
    
    
    (1.0
    )
    
    
    (2.9
    )Interest expense
    
    
    0.2
    
    
    
    5.9Foreign currency gain
    
    
    (1.6
    )
    
    
    (12.5
    )Minority interest
    
    
    3.9
    
    
    
    6.2Provision for income taxes
    
    
    31.9
    
    
    
    44.4Cumulative effect of a change in
accounting principle, net of tax
    
    $
    0.7
    
    
    $
    
 Cost of Revenue
  Business and Corporate Services.
 38




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##### Table of Contents



Carrier and Operator Services.
    Consumer Internet Services.
  Mobile Services.
 Selling, General and Administrative
  39




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##### Table of Contents



Depreciation and Amortization
  Equity in Earnings of Ventures
  Gain on Sale of MCT Corp
  Interest Income
  Interest Expense
  Foreign Currency Gain
  Minority Interest
  Provision for Income Taxes
  Cumulative Effect of a Change in Accounting Principle
  Net Income and Net Income per Share
  40




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##### Table of Contents



Consolidated Financial Position  Significant Changes in Consolidated Financial Position at
September 30, 2007, compared to Consolidated Financial Position at December 31, 2006
 Cash and Cash Equivalents
  Property and Equipment
  Accounts Receivable
  Goodwill
  Intangible Assets
  Long-Term Debt
  Minority Interest
  41




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##### Table of Contents



Stockholders Equity
  Income Taxes
  Liquidity
and Capital Resources
  Consolidated Cash Flows
    
    
    Consolidated Cash FlowsFor the Nine Months
    
    
    For the Nine MonthsEnded September 30, 2006
    
    
    Ended September 30, 2007(in millions)CASH FLOWSProvided by operating activities
    
    $
    129.9
    
    $
    134.8Used in investing activities
    
    
    (147.2
    )
    
    (256.0)(Used in) provided by financing
activities
    
    
    (13.7
    )
    
    221.0Effect of exchange rate changes
    
    
    1.0
    
    
    3.2Net (decrease) increase in cash
and cash equivalents
    
    $
    (30.0
    )
       $
    103.0
     42




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##### Table of Contents



43




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##### Table of Contents



Credit Rating Agency
    
    Rating
    
    
    OutlookStandard & Poors
    
    BB
    
    StableMoodys
    
    Ba3
    
    Stable
   Contractual Obligations
  Payments Due by Period (3)(in thousands)Less
    
    
    1  3
    
    
    4 - 5Total
    
    
    than 1 year
    
    
    years
    
    
    years
    
    
    ThereafterLong-term debt
    
    $
    270,145
    
    
    $
    17,497
    
    
    $
    165,744
    
    
    $
    86,904
    
    
    $
    Capital lease obligations
    
    
    11,582
    
    
    
    2,585
    
    
    
    8,997
    
    
    
    
    
    
    
    Non-cancelable lease obligations
    
    
    45,867
    
    
    
    13,795
    
    
    
    25,934
    
    
    
    5,640
    
    
    
    498Purchase obligations (1)
    
    
    78,757
    
    
    
    33,717
    
    
    
    32,592
    
    
    
    9,562
    
    
    
    2,886Other long-term liabilities (2)
    
    
    2,188
    
    
    
    
    
    
    
    2,188
    
    
    
    
    
    
    
    Total
    
    $
    408,539
    
    
    $
    67,594
    
    
    $
    235,455
    
    
    $
    102,106
    
    
    $
    3,384
 
 (1)
    
    Purchase obligations primarily include our contractual legal obligations for the future
purchase of equipment, interconnect, and satellite transponder capacity.(2)
    
    Other long-term liabilities primarily include obligations related to the SARs we have
granted.(3)
    
    Amounts include interest.(4)
    
    FIN No. 48 liabilities of $13.9 million are excluded from the
Contractual Obligations table because we are not able to make a
reasonable reliable estimate of the period of cash settlement with
the respective taxing authority. 44




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##### Table of Contents



Special Note Regarding Forward Looking Statements
     45




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
 Evaluation of disclosure controls and procedures.
  
    
    Revenue recognition;
    
    Financial statement close process;
    
    Inventory and fixed asset management; and
    
    Lack of qualified US GAAP finance personnel.
    
    
    Commenced a review of the revenue reporting, financial statement close and inventory
and fixed asset management practices followed at Corbina; and
    
    Engaged independent consultants to assist management in identifying and resolving
issues.
  Changes in internal controls over financial reporting.
  46




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
 Investing in our common stock involves a high degree of risk. You should carefully consider
the following risk factors and all other information contained in this Quarterly Report on Form
10-Q and our Annual Report on Form 10-K filed with the SEC on March 16, 2007 before purchasing our
common stock. The risks and uncertainties described below are not the only ones that we face.
Additional risks and uncertainties of which we are unaware, or that we currently deem immaterial,
may also become important factors that affect us. Any of the following risks could adversely affect
our business, financial condition and results of operations. In such case, the trading price of our
common stock could decline, and you could lose some or all of your investment.
 Failure to install our transmitter on Ostankino television tower in Moscow could disrupt our
television and media business plans
  We may encounter difficulties in integrating Corbina into our operations and in further developing
the business
  Our significant shareholders may have other interests which conflict with our own interests
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  47




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##### Table of Contents



Item 5. Other Information
  
 Item 6. Exhibits
 Designation
    
    Description31.1
    
    Certification of the Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.31.2
    
    Certification of the Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.32.1
    
    Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 48




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##### Table of Contents



SIGNATURES
  GOLDEN TELECOM, INC.(Registrant)By:
    
    /s/ BORIS SVETLICHNYName:
    
    Boris SvetlichnyTitle:
    
    Senior Vice-President, Chief Financial Officer and Treasurer(Principal Financial Officer)By:
    
    /s/ MICHAEL D. WILSONName:
    
    Michael D. WilsonTitle:
    
    Vice-President and Corporate Controller(Principal Accounting Officer)
  49