HispanicBusiness

Provision for Income Taxes

Provision for income taxes decreased to $3.1 million for the three months ended September 30, 2012 as compared to $3.5 million for the three months ended September 30, 2011. The decrease is primarily due to lower net income during the three months ended September 30, 2012.

Net Earnings

Net earnings decreased to $12.4 million for the three months ended September 30, 2012 as compared to $13.9 million for the three months ended September 30, 2011. The Company attributes the decrease in earnings primarily to a decrease in sales offset by an increase in interest income paid by the Russian Ministry of Defense during the three month period ended September 30, 2012.

Results of Operations for the Nine Months Ended September 30, 2012

Revenues

Total revenues for the nine months ended September 30, 2012 decreased to $69.4 million, or 50%, as compared to $138.0 million for the nine months ended September 30, 2011. The decrease was a result of a decline we experienced mostly in our construction and development business in 2012 due to delayed profit recognition from the Marshal Rybalko project resulting from prolonged litigation with the Russian Ministry of Defense, offset by an increase in prices for apartments and commercial space.

Cost of Sales

Cost of sales decreased by $63.9 million, or 68%, to $30.0 million for the nine months ended September 30, 2012, from $93.9 million for the nine months ended September 30, 2011. Cost of sales decreased substantially during the first three quarters of 2012 as compared to 2011 primarily due to a decrease in revenues from our construction and development business. Cost of sales percentage decreased primarily due to the increase in prices for apartments and commercial space while costs remained constant, confirming the Company's view that the Russian Real estate market is on track for a sustainable recovery.

Selling, General and Administrative Expenses

Selling, general and administrative costs decreased by $3.2 million to approximately $2.8 million for the nine months ended September 30, 2012, as compared to approximately $6.0 million for the nine months ended September 30, 2011. This was primarily due to decreases in professional fees, administrative overhead and approximately $2.0 million of costs incurred in 2011 in connection with expenses incurred in the Middle East project that was discontinued during 2011.

Income from Operations

Income from operations decreased to approximately $36.6 million for the nine months ended September 30, 2012, from income of approximately $38.1 million for the comparable period in 2011, primarily due to decreases in sales offset by decreases in the cost of sales percentage and a decrease in overhead during the nine month period ended September 30, 2012.

Other Income

Other income was approximately $6.3 million for the nine months ended September 30, 2012, as compared with $1.7 million for the nine months ended September 30, 2011, primarily due to an increase in interest income of approximately $4.6 million paid by the Russian Ministry of Defense ordered by the appeal court in connection with the court ordered settlement.

Provision for Income Taxes

Provision for income taxes increased to $8.6 million for the nine months ended September 30, 2012 as compared to $7.9 million for the nine months ended September 30, 2011. The increase is primarily due to a higher net income during the nine months ended September 30, 2012.