New Skies Satellites logo
New Skies Reports First Quarter 2003 Earnings
THE HAGUE, Netherlands, May 7, 2003 - New Skies Satellites N.V. (AEX, NYSE:
NSK), the global satellite communications company, today reported financial
results for the three month period ended March 31, 2003. Revenues for the
quarter were $52.0 million, EBITDA(1) (earnings before interest, taxes,
depreciation and amortization) was $29.0 million, and net income was $3.6
million.
Highlights
=========================================================================
3 months ended
March 31
US$ millions 2003 2002
(except per share amounts) ------------------------
Revenues $52.0 $51.8
Net income (loss) 3.6 (17.0)(2)
EBITDA 29.0 28.6
EBITDA margin 56% 55%
Basic and diluted earnings per share 0.03 (0.13)(2)
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- ---------------
(1) See definition of EBITDA and "Reconciliation of EBITDA to net income" in
"Note 1 of Notes to the consolidated quarterly financial statements".
(2) Net loss for the three-month period ended March 31, 2002 included the
non-cash impact of the cumulative effect of change in accounting principle
of $23.4 million relating to goodwill. Excluding this goodwill charge, net
income for the first quarter last year was $6.4 million and the basic and
diluted earnings per share was $0.05.
Commenting on the quarter, New Skies CEO Dan Goldberg said:
"New Skies has delivered yet another solid quarter in terms of revenue,
EBITDA and net income results. Revenues and EBITDA are up slightly
relative to the same period last year and are up, respectively, 2.3
percent and 4.1 percent over the last quarter. As a result, we have
been able to grow our EBITDA margins over the period.
"The NSS-7 and NSS-6 satellites launched last year allowed us to
augment our fleet with new and desirable capacity, and have attracted a
number of key customers. Although we expect this capacity to drive our
growth and profitability going forward, the addition of these
satellites entails higher depreciation costs in comparison to prior
periods.
"We also successfully executed on our share buy back program, acquiring
approximately 12 million shares, or 92 percent of the total authorized
buy-back program. I am very pleased with the progress we have made to
date under the share repurchase program, an initiative that underscores
our confidence in the strength of our business, our optimism regarding
our prospects going forward, and our unwavering commitment to promote
shareholder value."
For the three-month period ended March 31, 2003, New Skies achieved the
following financial results:
o Revenues were $52.0 million, representing an increase of $0.2 million as
compared to $51.8 million for the same period in 2002.
o Operating expenses, excluding depreciation, decreased by $0.2 million from
$23.2 million to $23.0 million for the three-month period ended March 31,
2003. This decrease reflects our success in managing our costs in response
to the difficult business climate.
o As a result of the launch of the NSS-7 satellite in April 2002 and NSS-6
satellite in December 2002, we incurred a higher level of depreciation costs
in the first quarter 2003.
o Net income for the three-month period ended March 31, 2003 was $3.6 million
compared to a net loss of $17.0 million in the same period in the prior
year. Net income for the three-month period ended March 31, 2002 included
the non-cash impact of the cumulative effect of change in accounting
principle of $23.4 million relating to goodwill. Excluding this goodwill
charge, net income for the first quarter last year was $6.4 million.
o In the first quarter 2003, EBITDA(3) increased by $0.4 million, or 2
percent, to $29.0 million from $28.6 million achieved for the same period in
the prior year.
o Backlog at the end of the first quarter 2003 was $696 million, an increase
of $93 million, or 15 percent from $603 million at the end of the first
quarter 2002. However, backlog decreased $10 million or 1 percent compared
to the end of the previous quarter.
- ------------
(3) See definition of EBITDA and "Reconciliation of EBITDA to net income (loss)"
in "Note 1 of Notes to the consolidated quarterly financial statements".
First quarter operating highlights
o The Maritime Telecommunications Network (MTN), a leader in ship-to-shore
communications, signed for capacity on the NSS-5 Pacific Ocean region
satellite to allow MTN to link dozens of cruise liners and offshore energy
vessels located virtually anywhere throughout the Pacific Ocean with
terrestrial communications networks in the United States.
o Brazil's Adventist Television Network joined the NSS-806 video neighborhood
in support of their growing global distribution requirements.
o BT Broadcast Services doubled their capacity on the NSS-7 satellite to
support the expanding Media Overseas direct-to-home television platform
servicing West Africa.
o Additionally, New Skies and Intelsat Global Sales & Marketing, Ltd signed an
agreement during the quarter to use their existing orbital and satellite
resources at a single orbital location to expand their respective commercial
service offerings to the Americas, Europe, Africa and the Middle East.
About New Skies Satellites (AEX, NYSE: NSK)
New Skies Satellites is one of only four fixed satellite communications
companies with truly global satellite coverage, offering video, voice, data and
Internet communications services to a range of telecommunications carriers,
broadcasters, large corporations and Internet service providers around the
world. New Skies has six satellites in orbit, ground facilities around the world
and one additional spacecraft under construction. The company also has secured
certain rights to make use of additional orbital positions for future growth.
New Skies is headquartered in The Hague, The Netherlands, and has offices in
Beijing, Hong Kong, Johannesburg, New Delhi, Sao Paulo, Singapore, Sydney and
Washington, D.C. Additional information is available at www.newskies.com.
Conference call:
CEO Dan Goldberg and CFO Andrew Browne will host a conference call today at 5
p.m. (CET). To listen in please dial +44 20 8240 8240, passcode "New Skies".
The call will also be broadcast live on the New Skies web site at:
http://www.newskies.com/ir .
The conference call will be available for replay, 24 hours a day for the
subsequent 5 working days. The international dial in number is + 44 (0) 20 8288
4459 and the UK freephone number is 0500 637 880. Passcode: 201652.
If, for any reason, there is a problem with the connection for the call, please
dial the alternative number in the listen-only mode: (44) 20 8515 2310, passcode
"New Skies".
For more information, please contact:
Elizabeth Hess,
Corporate Communications, New Skies Satellites +31 70 306 4133
ehess@newskies.com
Boris Djordjevic,
Investor Relations, New Skies Satellites +31 70 306 4183
bdjordjevic@newskies.com
Frank De Maria, Brunswick (New York) +1 212 333 3810
fdemaria@brunswickgroup.com
Pamela Small, Brunswick (London) +44 20 7404 5959
psmall@brunswickgroup.com
Safe Harbor
Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S.
Securities Exchange Act of 1934 provide a "safe harbor" for forward-looking
statements made by an issuer of publicly traded securities and persons acting on
its behalf. New Skies Satellites N.V. has made certain forward-looking
statements in this document in reliance on those safe harbors. A forward-looking
statement concerns the company's or management's intentions or expectations, or
are predictions of future performance. These statements are identified by words
such as "intends", "expects", "anticipates", "believes", "estimates", "may",
"will", "should" and similar expressions. By their nature, forward-looking
statements are not a matter of historical fact and involve risks and
uncertainties that could cause New Skies' actual results to differ materially
from those expressed or implied by the forward-looking statements for a number
of reasons. Factors which may affect the future performance of New Skies
include: delays or problems in the construction or launch of future satellites;
technical performance of in-orbit satellites and earth-based infrastructure;
increased competition and changes in technology; growth of and access to the
company's target markets; legal and regulatory developments affecting the
company's business; and worldwide business and economic conditions, among other
things. These risks and other risks affecting New Skies' business are described
in the company's periodic filings with the U.S. Securities and Exchange
Commission, including but not limited to New Skies' Annual Report on Form 20-F
for the year ended December 31, 2001. Copies of these filings may be obtained by
contacting the SEC. New Skies disclaims any obligation to update the
forward-looking statements contained in this document.
New Skies Satellites N.V. and Subsidiaries
Consolidated balance sheets
March 31, 2003 and December 31, 2002
(In thousands of U.S. Dollars, except share data)
- ----------------------------------------------------------------------------------------------------
March 31, December 31,
2003 2002
---------------- ----------------
Assets (unaudited)
Current Assets
Cash and cash equivalents $ 3,479 $ 8,329
Trade receivables 41,952 39,109
Prepaid expenses and other assets 8,544 10,885
------------ ------------
Total Current Assets 53,975 58,323
Communications, plant and other property, net 1,051,089 1,058,119
Deferred tax asset 9,758 10,087
Other assets 1,117 1,226
------------ ------------
TOTAL $ 1,115,939 $ 1,127,755
============ ============
Liabilities and Shareholders' Equity
Current liabilities
Short-term debt $ 25,000 $ 10,000
Accounts payable and accrued liabilities 19,215 18,396
Income taxes payable 29,881 29,124
Deferred revenues and other liabilities 6,100 8,994
Satellite performance incentives 6,706 6,218
------------ ------------
Total Current Liabilities 86,902 72,732
Long Term Liabilities 34,746 35,990
Shareholders' Equity
Governance preference shares (227,530,000 shares
authorized, par value (euro)0.05; none issued) - -
Cumulative preferred financing shares (22,753,000 shares
authorized, par value(euro)0.05; none issued) - -
Ordinary Shares (204,777,000 shares authorized, par value
(euro)0.05; 130,570,241 shares issued) 6,026 6,026
Additional paid-in capital 977,400 977,506
Retained earnings 59,598 56,019
Unearned compensation (511) (685)
Accumulated other comprehensive loss (221) (492)
Treasury stock, at cost (11,964,496 and 5,194,030
ordinary shares, respectively) (48,001) (19,341)
------------ ------------
Total Shareholders' Equity 994,291 1,019,033
------------ ------------
TOTAL $ 1,115,939 $ 1,127,755
============ ============
New Skies Satellites N.V. and Subsidiaries
Consolidated statements of income
Three-month period ended March 31, 2003 and 2002 (Unaudited)
(In thousands of U.S. dollars, except share data)
Three-month period ended
March 31
2003 2002
---- ----
Revenues $ 52,011 $ 51,793
------------- -------------
Operating expenses:
Cost of operations 12,580 12,989
Selling, general and administrative 10,434 10,239
Depreciation 22,925 18,652
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Total Operating Expenses 45,939 41,880
------------- -------------
Operating Income 6,072 9,913
Interest expense (income) and other, net 480 (106)
------------- -------------
Income Before Income Tax Expense 5,592 10,019
Income tax expense (2,013) (3,607)
------------- -------------
Income Before Cumulative Effect of Change in
Accounting Principle 3,579 6,412
Cumulative effect of change in accounting principle,
relating to goodwill, net of taxes (4) - (23,375)
------------- -------------
Net Income (Loss) $ 3,579 $ (16,963)
============= =============
Basic and Diluted Earnings Per Share:
Income Before Cumulative Effect of Change in
Accounting Principle $ 0.03 $ 0.05
Cumulative effect of change in accounting principle - (0.18)
------------- -------------
Basic and Diluted Earnings Per Share $ 0.03 $ (0.13)
============= =============
- ---------------------
(4) See Note 2 of "Notes to the consolidated quarterly financial statements".
New Skies Satellites N.V. and subsidiaries
Consolidated statements of cash flows
Three-month period ended March 31, 2003 and 2002 (unaudited)
(In thousands of U.S. Dollars)
- --------------------------------------------------------------------------------------------------
Three-month period ended
March 31
2003 2002
---- ----
Cash flows from operating activities:
Net income (loss) $ 3,579 $ (16,963)
Adjustments for non-cash items:
Depreciation 22,925 18,652
Cumulative effect of change in accounting principle - 23,375
Deferred taxes 329 328
Amortization of unearned stock compensation 358 128
Changes in operating assets and liabilities:
Trade receivables (2,816) 769
Prepaid expenses and other assets 2,356 1,580
Accounts payable and accrued liabilities 713 968
Income taxes payable 776 3,120
Other liabilities (3,059) 4,996
------------- -------------
Net Cash Provided By Operating Activities 25,161 36,953
------------- -------------
Cash flows from investing activities:
Payments for communication, plant and other
property (15,434) (101,286)
------------- -------------
Net Cash Used In Investing Activities (15,434) (101,286)
------------- -------------
Cash flows from financing activities:
Short-term borrowings 15,000 -
Treasury stock acquired (28,950) -
Satellite performance incentives and other (523) (82)
------------- -------------
Net Cash Used In Financing Activities (14,473) (82)
------------- -------------
Effect of exchange rate differences (104) 60
------------- -------------
Net change in cash and cash equivalents (4,850) (64,355)
Cash and cash equivalents, beginning of period 8,329 138,268
------------- -------------
Cash and cash equivalents, end of period $ 3,479 $ 73,913
============= =============
Cash payments for interest (net of amounts capitalized) were nil for the
three-month periods ended March 31, 2003 and 2002. Income taxes paid amounted to
$1.0 million and $0.2 million for the three-month periods ended March 31, 2003
and 2002, respectively.
New Skies Satellites N.V. and subsidiaries
Notes to the consolidated quarterly financial statements
Three-month period ended March 31, 2003 and 2002 (unaudited)
(1) Reconciliation of EBITDA to net income (loss)
New Skies believes earnings before interest, taxes, depreciation and
amortization (EBITDA) is a measure of performance used by some investors,
equity analysts and others to make informed investment decisions. EBITDA is
not presented as an alternative measure of operating results or cash flow
from operations, as determined in accordance with generally accepted
accounting principles in the U.S. EBITDA as presented herein may not be
comparable to similarly titled measures reported by other companies. EBITDA
is reconciled to net income (loss) as follows:
(in thousands of U.S. dollars) Q1 2003 Q1 2002
--------- ---------
Net income (loss) $ 3,579 $ (16,963)
Cumulative effect of change in accounting principle - 23,375
Income tax expense 2,013 3,607
Interest expense (income) and other, net 480 (106)
Depreciation and amortization 22,925 18,652
--------- ---------
EBITDA $ 28,997 $ 28,565
========= =========
(2) Cumulative effect of change in accounting principle
The Company adopted the new accounting standard, SFAS 142, Goodwill and
Other Intangible Assets, as of January 1, 2002, which resulted in a
one-time non-cash write-down of $23.4 million of goodwill relating to the
acquisition of NSN Pty Ltd in Australia in March 2000.
(3) Stock based compensation
Effective January 1, 2003, New Skies adopted the fair value based method of
accounting for stock compensation under SFAS 123, Accounting for
Stock-Based Compensation, transitioning via the prospective method. The
following table illustrates the effect on net income and earnings per share
if New Skies had applied the fair value recognition provisions of SFAS 123
for all stock-based compensation awards.
(in thousands of U.S. dollars, except
earnings per share data) Q1 2003 Q1 2002
--------- ---------
Net income (loss), as reported $ 3,579 $ (16,963)
Add: Stock-based employee compensation expense
included in reported net income, net of taxes 242 116
Less: Total stock-based employee compensation
expense determined under fair value based method
for all awards, net of taxes (1,362) (1,279)
--------- ---------
Pro forma net income (loss) $ 2,459 $ (18,126)
========= =========
Earnings per share:
Basic and diluted, as reported $ 0.03 $ (0.13)
Basic and diluted, pro forma 0.02 (0.14)