UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
Dated as of November 5, 2002
NETIA HOLDINGS S.A.
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(Translation of registrant's name into English)
UL.POLECZKI 13
02-822 WARSAW, POLAND
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(Address of principal executive office)
[Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.]
Form 20-F |X| Form 40-F |_|
[Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.] Yes |_| No |X|
2
EXPLANATORY NOTE
Attached is the following item:
1. Press Release, dated November 5, 2002.
This current report on Form 6-K is hereby incorporated by reference into our
Registration Statement on Form F-3 filed with the Securities and Exchange
Commission on May 9, 2001 (File No. 333-13480).
-1 -
FOR IMMEDIATE RELEASE
Contact: Anna Kuchnio (IR)
+48-22-330-2061
Jolanta Ciesielska (Media)
+48-22-330-2407
Netia
- or -
Alexandra Jones
Taylor Rafferty, London
+44-(0)20-7936-0400
- or -
Jeff Zelkowitz
Taylor Rafferty, New York
212-889-4350
NETIA HOLDINGS S.A. REPORTS 2002 THIRD QUARTER RESULTS
WARSAW, Poland - November 5, 2002 - Netia Holdings S.A. ("Netia") (WSE: NET),
Poland's largest alternative provider of fixed-line telecommunications services
(in terms of value of generated revenues), today announced unaudited financial
results for the third quarter and the nine months ended September 30, 2002.
FINANCIAL HIGHLIGHTS:
REVENUES for Q3 2002 were PLN 152.4m (US$36.7m), a year-on-year increase of 11%.
Year-to-date revenues were PLN 450.4m (US$108.6m), a year-on-year increase of
14%.
ONE NON-CASH EXCEPTIONAL ITEM of PLN 108.7m (US$ 26.2m) affected financial
results for Q3 2002, related to a provision for impairment of fixed assets
(27,350 connected lines and 100,975 ports installed on telecommunication
switches).
ADJUSTED EBITDA (before the provision for impairment of fixed assets) for Q3
2002 was PLN 48.7m (US$ 11.7m), representing an adjusted EBITDA margin of 31.9%.
Year-to-date adjusted EBITDA before the above item improved to PLN 121.0m (US$
29.2m), with an adjusted EBITDA margin of 26.9%.
CASH at September 30, 2002 was PLN 374.1m (US$90.2m), excluding restricted
investments of PLN 56.8m (US$13.7m).
CONSOLIDATED SHAREHOLDERS' EQUITY at the end of Q3 2002 was negative PLN
1,166.0m or US$281.1m.
THE RESTRUCTURING AGREEMENT relating to Netia's debt restructuring, entered into
by Netia, Telia AB, certain companies controlled by Warburg Pincus & Co, certain
financial creditors and the ad hoc committee of noteholders on March 5, 2002
(the "Restructuring Agreement"), continues to be implemented. Pursuant to the
Restructuring Agreement, Netia's existing notes and certain creditor's claims
under certain currency swap agreements will be exchanged for the new notes with
an aggregate principal amount of EUR 50m to be issued by Netia Holdings B.V.,
2
Netia's Dutch finance subsidiary, and Netia's ordinary shares representing 91%
of Netia's share capital immediately post-restructuring. The existing Netia
shareholders will retain 9% ownership of post-restructuring share capital and
will receive warrants to acquire shares representing 15% of Netia's
post-restructuring share capital. Additionally, up to 5% of the
post-restructuring share capital, excluding shares to be issued upon exercise of
the warrants to be issued to the existing shareholders will be issued under a
key employee stock option plan.
ALL NECESSARY SHARE AND WARRANT ISSUANCES in Netia's restructuring have been
approved by its shareholders. On October 25, 2002, Netia filed with the Polish
Securities and Exchange Commission ("Polish SEC") an updated version of the
prospectus, filed previously in April 2002, relating to the issuance and
registration of new shares pursuant to the Restructuring Agreement. The updated
prospectus is currently being reviewed by the Polish SEC.
ARRANGEMENTPROCEEDINGS IN POLAND. The majority of creditors of Netia, Netia
Telekom S.A. ("Telekom") and Netia South Sp. z o.o. ("South"), representing over
95%, 98% and 100% of total value of claims, respectively, voted in favor of the
arrangement plans. The Polish court approved the arrangement plan for Netia and
Telekom on August 9, 2002 and June 25, 2002, respectively. The approval of the
arrangement plan for South is still pending.
AGREEMENT WITH THE DISSENTINGCREDITORS who had previously objected to the
restructuring in the Polish arrangement proceedings and the ancillary
proceedings in the U.S. Bankruptcy Court was signed on October 21, 2002 (the
"Agreement"). The parties agreed to mutually release each other from any claims
they may have relating to Netia's restructuring in Poland, the Netherlands and
to Netia's investment account in the United States. Netia believes that the
Agreement will facilitate the consummation of the restructuring to the benefit
of all the Netia Group's customers and stakeholders.
COMPOSITION PROCEEDINGS IN THE NETHERLANDS. At the creditors' meetings of its
three Dutch finance subsidiaries held on October 28, 2002, all creditors present
cast their votes in favor of the composition plans of Netia Holdings B.V., Netia
Holdings II B.V. and Netia Holdings III B.V., respectively. The hearing on
verification of the votes and the approval of the composition plans will be held
on November 6, 2002.
THE LICENSE FEE PAYMENTS AMOUNTING TOAPPROXIMATELY EUR 33M, originally due in
November and December 2001, were deferred until December 31, 2002. In addition,
a deferral fee, payable on December 31, 2002, in the total amount of PLN 15.8m
for the re-scheduled license fee payments was imposed.
OPERATIONAL HIGHLIGHTS:
NETIA'S NATIONWIDE BACKBONE NETWORK is comprised of 3,580 km as of September 30,
2002.
SUBSCRIBER LINES decreased to 340,232 net of churn and disconnections, a
year-on-year decrease of 1%.
BUSINESS CUSTOMER LINES increased to 103,209, a year-on-year increase of 10%.
The business segment reached 30.3% of total subscriber lines while year-to-date
revenues from business customers accounted for 57% of telecom revenues as of
September 30, 2002.
NEW, MORE COMPETITIVE TARIFF PLANS FOR INTERNATIONALLONG-DISTANCE CONNECTIONS
were introduced on November 1, 2002.
AVERAGE REVENUEPER LINE decreased by 2% to PLN 120 in September 2002, compared
to PLN 122 in September 2001 as a result of price erosion. On the other hand,
revenue growth benefited from increased sales of data, carrier's carrier and
other non-direct voice services.
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HEADCOUNT decreased to 1,283 at September 30, 2002 from 1,639 at September 30,
2001 as a result of management's program of cost reduction initiated in August
2001.
OTHER HIGHLIGHTS:
WOJCIECH MADALSKI WAS APPOINTED CHIEF EXECUTIVE OFFICER AND PRESIDENT OF THE
MANAGEMENT BOARD OF NETIA HOLDINGS S.A., effective September 17, 2002.
EXTRAORDINARY SHAREHOLDERS' MEETING OF NETIA HOLDINGS S.A. held on August 30,
2002 adopted resolutions pursuant to which the mandates of its Supervisory Board
members appointed in 1999, i.e., Jan Guz, Donald Mucha and David Oertle, shall
expire in 2003 at Netia's Ordinary General Shareholders' Meeting to be convened
to approve its financial statements for the financial year 2002.
NETIA'S AMERICAN DEPOSITORY SHARES WERE DE-LISTED FROM THE NASDAQ STOCK MARKET,
effective October 15, 2002. Netia has requested a review of this decision by the
Nasdaq Listing and Hearing Review Council.
WOJCIECH MADALSKI, NETIA'S PRESIDENT AND CHIEF EXECUTIVE OFFICER commented:
"Third quarter revenues increased by 11% year-on-year as Netia continued to
expand its business customer base in a difficult economic environment. As a
result of this and cost reduction efforts our adjusted EBITDA margin continued
to increase. New efforts are being undertaken to strengthen Netia's sales and
marketing and customer service focus in order to drive top-line growth, taking
advantage of Netia's advanced technological infrastructure and service offering.
"We are targeting to complete Netia's restructuring by year-end 2002. This will
give Netia a solid capital structure for the future."
AVI HOCHMAN, CHIEF FINANCIAL OFFICER OF NETIA, added: "This has indeed been a
busy and productive quarter for the financial and operational restructuring of
Netia. We made significant progress in the process of restructuring Netia's
debt.
"We are also strengthening our balance sheet to reflect Netia's intensifying
focus on business customers in profitable urban areas. This resulted in a
decision to book an impairment charge in relation to a number of telephone lines
in other areas on which we do not expect to generate adequate returns.
"Lastly, our revenue growth initiatives are complemented by continuing programs
to increase efficiency and strengthen Netia's competitive position. This has
contributed significantly to the third quarter growth in positive adjusted
EBITDA to PLN 48.7m and an adjusted EBITDA margin increase to 31.9%."
FINANCIAL INFORMATION
2002 YEAR TO DATE VS. 2001 YEAR TO DATE
REVENUES increased by 14% to PLN 450.4m (US$108.6m) during the nine-month period
ended September 30, 2002 compared to PLN 394.0m for the same period in 2001.
REVENUES FROM TELECOMMUNICATIONS SERVICES increased by 17% to PLN 436.7m
(US$105.3m) from PLN 372.9m in the corresponding period of 2001. The increase
was primarily attributable to an increase in the number of business lines and an
increase in business mix of lines as well as expansion of new products, such as
indirect domestic long distance, data transmission and wholesale services.
4
AN EXCEPTIONAL NON-CASH ITEM of PLN 108.7m (US$ 26.2m) impacted the financial
results for the period and was related to the provision for the impairment of
fixed assets. This provision relates to our investment in 27,350 connected lines
and 100,975 ports, which were located outside the main geographic areas of
strategic interest to Netia. The above provision follows the impairment of
goodwill and fixed assets of PLN 317.1m recorded in Q3 2001, as a continued
effort to solidify our balance sheet. The majority of ports affected by this
provision are associated with the past write-off of 70,200 connected lines.
ADJUSTED EBITDA (before the provision for impairment of fixed assets) increased
by 147% to PLN 121.0m (US$ 29.2m) for the first nine months of 2002 from PLN
48.9m for the same period in 2001. Adjusted EBITDA margin increased to 26.9%
from 12.4%. This increase was achieved thanks to a successful implementation of
Netia's cost reduction program in late 2001, part of our effort to preserve
cash, and increase revenues from new products.
"OTHER OPERATING EXPENSES" decreased by 12% to PLN 233.6m (US$56.3m) for the
nine-month period ended September 30, 2002, from PLN 265.5m for the
corresponding period in 2001. "Other operating expenses" represented 52% of
total revenues for the nine-month period ended September 30, 2002, compared to
67% for the same period in 2001, with salaries and benefits being the main item.
Salaries and benefits decreased year-on-year by 14% to PLN 89.8m (US$ 21.6m) for
the nine-month period ended September 30, 2002 from PLN 105.0m for the first
nine months of 2001, mainly as a result of the headcount reduction program. In
addition, "other operating expenses" recorded for the nine-month period ended
September 30, 2001 included an allowance for receivables from Millennium
Communications S.A. of PLN 16.9m.
INTERCONNECTION CHARGES were PLN 89.5m (US$21.6m) for the nine-month period
ended September 30, 2002 as compared to PLN 89.7m for the first nine months of
2001. Interconnection charges as a percentage of calling charges decreased to
29% from 34%, reflecting the increased proportion of traffic carried through
Netia's own backbone network.
DEPRECIATION OF FIXED ASSETS increased by 20% to PLN 152.2m (US$36.7m) from PLN
126.7m for the nine-month period ended September 30, 2001, as the construction
stage of additional parts of the network was completed.
AMORTIZATION OF OTHER INTANGIBLE ASSETS increased by 33% to PLN 54.8m (US$13.2m)
from PLN 41.1m for the nine-month period ended September 30, 2001, due to an
increased level of amortization of computer software costs associated with our
information technology systems.
NET FINANCIAL EXPENSES increased to PLN 634.4m (US$152.9m) for the nine-month
period ended September 30, 2002 from PLN 389.3m for this period in 2001, due to
foreign exchange losses resulting from the significant depreciation of the
Polish zloty against the euro and U.S. dollar during the first nine months of
2002 compared to relatively stable level of foreign exchange rates during the
same period of 2001. Additionally, interest costs on the notes issued by Netia
accrued through the whole nine-month period ended September 30, 2002 although
Netia ceased to pay interest on its notes in December 2001. In accordance with
Dutch law, the interest on notes accrues until the composition proceedings are
finalized. Upon completion of Dutch moratorium proceedings, financial costs
accrued during the period of the proceedings shall be reversed.
NET LOSS decreased by 5% to PLN 823.6m (US$198.5m), compared to a net loss of
PLN 862.8m for the first nine months of 2001. The loss for the period was
attributable to an increase in net financial expenses related mainly to
unrealized foreign exchange losses. However, a majority of the financial
expenses are non-cash items that do not impact Netia's cash flows. In addition,
5
the amount of net loss for the first nine months of 2001 was impacted by three
exceptional items totaling PLN 334.1m.
CASH USED IN INVESTING ACTIVITIES decreased by 61% to PLN 221.1m (US$53.3m) for
the nine-month period ended September 30, 2002, from PLN 570.3m for the same
period of 2001, in accordance with the revised business plan approved in late
2001, aimed at preserving cash.
CASH AND CASH EQUIVALENTS at September 30, 2002 amounting to PLN 374.1m
(US$90.2m) were available to fund Netia's operations. Netia also had deposits in
an investment account of PLN 56.8m (US$13.7m) at September 30, 2002 established,
subject to conditions, to service the interest payments on its 2000 Senior Notes
in June 2002. These deposits are expected to be transferred to the Company in
accordance with the Restructuring Agreement at the completion of the
restructuring.
Q3 2002 VS. Q2 2002
REVENUES increased by 1% to PLN 152.4m (US$36.7m) for Q3 2002 compared to PLN
151.4m for Q2 2002. This increase was attributable to a 2% increase in
telecommunications revenues to PLN 149.1m (US$35.9m) in Q3 2002 from PLN 146.9m
in Q2 2002 and a 27% decrease in other revenues, representing the operations of
Uni-Net, a joint venture with Motorola offering radio trunking services, to PLN
3.3m (US$0.8m) for Q3 2002 from PLN 4.5m in Q2 2002.
ADJUSTED EBITDA for Q3 2002 increased by 15% to PLN 48.7m (US$11.7m) from PLN
42.2m in Q2 2002. Adjusted EBITDA margin increased to 31.9% for Q3 2002 from
27.9% for Q2 2002. The increase in adjusted EBITDA and adjusted EBITDA margin
was mainly a result of the strict cost control policy implemented in late 2001
and increase in revenues from new products.
NET LOSS amounted to PLN 328.1m (US$79.1m) in Q3 2002, compared to a net loss of
PLN 250.0m in Q2 2002. The increase in net loss was mainly due to the impairment
charge of PLN 108.7m (US$26.2m) related to the exceptional item recorded in Q3
2002.
OPERATIONAL REVIEW
CONNECTED LINES at September 30, 2002 amounted to 503,358 lines. The number of
connected lines decreased in comparison with the numbers reported for Q2 2002
and Q3 2001 due to provision for impairment of 27,350 connected lines.
SUBSCRIBER LINES IN SERVICE decreased by 1% to 340,232 at September 30, 2002
from 343,634 at September 30, 2001 and by 1% from 342,145 at June 30, 2002. The
number of subscriber lines is net of customer churn and disconnections by Netia
of defaulting payers, which amounted to 8,257 and 5,341, respectively, for Q3
2002 and 19,599 and 18,550, respectively, for the first nine months of 2002. The
recorded churn was mostly due to the deterioration of Polish economic
conditions, which affected our customers and customers moving outside the
coverage of Netia's network.
BUSINESS LINES AS A PERCENTAGE OF TOTAL SUBSCRIBER LINES reached 30.3%, up from
27.3% at September 30, 2001 and 29.8% at June 30, 2002, reflecting the
intensified focus on the corporate and SME market segments. Business customers
accounted for all net additions in the quarter while the residential segment saw
net disconnections. Revenues from business customers accounted for 57% of
telecommunications revenues for the nine-month period ended September 30, 2002.
6
BUSINESS CUSTOMER LINES IN SERVICE increased by 10% to 103,209 at September 30,
2002 from 93,713 at September 30, 2001 and by 1% from 101,997 at June 30, 2002.
AVERAGE MONTHLY REVENUE PER LINE decreased by 2% to PLN 120 (US$ 29) for
September 2002, compared to PLN 122 for September 2001 and decreased by 2% from
PLN 123 for June 2002.
AVERAGE MONTHLY REVENUE PER BUSINESS LINE amounted to PLN 226 (US$ 54) for
September 2002, representing a 7% decrease from PLN 243 for September 2001 and a
4% decrease from PLN 236 for June 2002.
AVERAGE MONTHLY REVENUE PER RESIDENTIAL LINE amounted to PLN 73 (US$ 18) for
September 2002, representing a 4% decrease from PLN 76 for September 2001 and a
1% decrease from PLN 74 for June 2002.
NEW, ATTRACTIVE TARIFF PLANS FOR INTERNATIONAL LONG-DISTANCE CONNECTIONS were
introduced on November 1, 2002, to replace the current tariffs for these
services offered both on standard lines and on Voice over Internet Protocol
("VoIP") technology.
NEW TARIFF PACKAGES FOR INDIRECT DOMESTIC LONG-DISTANCE (CUSTOMERS OF NETIA 1
SP. Z O.O. ("NETIA 1")) AND ISDN SERVICES were introduced on June 1, 2002. These
new packages supplement the current Netia tariff offerings, providing
easy-to-understand tariff plans with the usage time measured on a per-second
basis. As of October 15, 2002, the ISDN Multi service customers on the
per-second tariff can also choose to pay their bills for analog and ISDN Duo
connections according to this plan.
NETIA 1055 INTERNET TELEPHONY SERVICE, which offers cheaper international calls
based on VoIP technology, was launched on July 1, 2002. The new service
complements Netia's existing service offerings of Netia 1, a provider of
indirect domestic long-distance service through Netia's prefix (1055).
CONNECTIONS TO MOBILE networks at competitive pricing levels were offered to
Netia 1055 customers as of August 1, 2002, further enhancing Netia's indirect
domestic long-distance services.
INTERNET FLAT RATE SERVICE was launched for Netia directly and non-directly
connected users of Internet dial-up access as well as for Netia customers using
ISDN Duo lines on April 16, 2002, June 17, 2002, and July 5, 2002, respectively.
The new service enables a specified number of hours of Internet access each
month for a flat rate.
NETIA'S NATIONWIDE BACKBONE NETWORK connecting Poland's largest urban areas now
stretches to 3,580 kilometers and consists of 2,470 kilometers of fiber and
1,110 kilometers of leased lines. Netia is constructing additional
infrastructure, planned for completion in 2002, of approximately 960 kilometers.
HEADCOUNT at September 30, 2002 was 1,283, compared to 1,639 at September 30,
2001 and 1,323 at June 30, 2002. During 2001 Netia made announcements on
headcount reductions of approximately 20%, and finalization of this program is
being carried out.
THE NUMBER OF ACTIVE LINES IN SERVICE PER EMPLOYEE increased by 26% to an
average of 270 in Q3 2002, from 215 in Q3 2001. The number of active lines in
service per employee in the first nine months of 2002 increased by 24% to an
average of 261 compared to 211 in the same period last year.
7
MONTHLY AVERAGE TELECOMMUNICATIONS REVENUE PER EMPLOYEE increased by 43% to PLN
39,451 in Q3 2002 from PLN 27,523 in Q3 2001. Monthly average telecommunications
revenue per employee in the nine months ended September 30, 2002 increased by
43% to PLN 37,276 compared to PLN 26,078 for the same period last year.
LICENSE PAYMENTS. The Polish Minister of Infrastructure decided on June 28, 2002
to postpone the payment of license fee installments of certain Netia operating
subsidiaries, originally due in November and December 2001, until December 31,
2002. Previously, on November 30, 2001 and January 19, 2002, the Minister of
Infrastructure announced his decision to postpone the payment of these
installments until January 20, 2002 and June 30, 2002, respectively. The current
total amount of these installments is approximately EUR 33 million. A deferral
fee of PLN 15.8m is due in December 2002. Netia submitted claims to the
competent Polish regulatory authorities seeking to confirm expiry, cancellation
or deferral of its remaining license fee obligations, following the regulatory
changes introduced with the enactment of the new Telecommunications Act on
January 1, 2001.
CHANGES IN CAPITAL BASE OF NETIA 1, a provider of indirect domestic
long-distance services. Netia Holdings S.A. and the Warsaw electric utility,
Stoen S.A. ("Stoen"), agreed on July 2, 2002 that Stoen will acquire 133,233
existing shares of Netia in exchange for Stoen's 87,332 shares in Netia 1. The
agreement was entered into pursuant to the Netia 1 consortium agreement and as a
consequence of changes in the new Polish telecom law effective as of January 1,
2001, abolishing the foreign ownership restrictions on telecom operators in
Poland. As a result of the transaction, the Netia group companies jointly own an
89% stake in Netia 1. The remaining 11% stake is owned by Telia AB.
THE POLISH CHAMBER OF COMMERCE ARBITRATION COURT (THE "ARBITRATION COURT")
DISMISSED THE DIRECT CLAIMS OF MILLENNIUM COMMUNICATIONS S.A. ("MILLENNIUM") AND
NEWMAN FINANCE CORPORATION against Netia for: (i) declaration of the Share
Subscription Agreement dated August 8, 2000 void and ineffective and (ii)
payment of PLN 11.5m by Netia. The Arbitration Court also dismissed Netia's
counter-claim for damages in the amount of PLN 8.5m. Netia intends to petition
the proper court of law to set aside the Arbitration Court's ruling, claiming,
among other things, material breaches of material law and arbitration procedures
by the Arbitration Court. A separate litigation by Netia against Millennium for
the repayment of a loan in the amount of PLN 11.5m is still pending before the
District Court in Warsaw.
8
Key Figures
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PLN'000 YTD 02 YTD 01 3Q02 2Q02 1Q02 4Q01 3Q01
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Revenues 450,372 393,983 152,396 151,416 146,560 144,868 136,789
Adjusted EBITDA*** 121,028 48,872 48,689 42,249 30,090 29,294 17,745
Margin % 26.9% 12.4% 31.9% 27.9% 20.5% 20.2% 13.0%
Net loss before FX (509,662) (788,881) (237,506) (130,078) (142,078) (516,166) (495,795)
Net profit / (loss) after FX (823,548) (862,808) (328,131) (250,010) (245,407) (286,409) (761,020)
Net debt** 3,271,657 2,775,926 3,271,657 3,201,760 3,063,715 2,862,423 2,775,926
EBIT (194,677) (470,959) (133,136) (24,567) (36,974) (57,940) (383,261)
- ------------------------------------------------------------------------------------------------------------------------------
US$'000* YTD 02 YTD 01 3Q02 2Q02 1Q02 4Q01 3Q01
- ------------------------------------------------------------------------------------------------------------------------------
Revenues 108,570 94,977 36,738 36,502 35,331 34,923 32,976
Adjusted EBITDA*** 29,176 11,781 11,738 10,185 7,254 7,062 4,278
Margin % 26.9% 12.4% 31.9% 27.9% 20.5% 20.2% 13.0%
Net loss before FX (122,863) (190,174) (57,255) (31,358) (34,251) (124,431) (119,521)
Net profit / (loss) after FX (198,532) (207,996) (79,102) (60,270) (59,160) (69,044) (183,458)
Net debt** 788,693 669,188 788,693 771,843 738,565 690,040 669,188
EBIT (46,930) (113,533) (32,095) (5,922) (8,913) (13,968) (92,392)
* The US$ amounts shown in this table and in the entire document have been
translated using the exchange rate of PLN 4.1482 = US$1.00, the average rate
announced by the National Bank of Poland at September 30, 2002. These figures
are included for the convenience of the reader only.
** Net debt is defined as current maturities of long-term debt less cash and
restricted investments.
*** We define EBITDA as net income/(loss) as measured by IAS or U.S. GAAP,
adjusted for depreciation and amortization, net financial expense, income taxes,
minority interest, share of losses of equity investments and other losses and
gains on dilution. EBITDA for 2001 and 2002 has been further adjusted for
impairment of goodwill, provisions for fixed assets, effects of default on
long-term debt and cancellation of swap transactions and is therefore defined as
Adjusted EBITDA. We believe EBITDA and related measures of cash flow from
operating activities serve as useful supplementary financial indicators in
measuring the operating performance of telecommunication companies. EBITDA is
not an IAS or U.S. GAAP measure and should not be considered as an alternative
to IAS or U.S. GAAP measures of net income/(loss) or as an indicator of
operating performance or as a measure of cash flows from operations under IAS or
U.S. GAAP or as an indicator of liquidity. You should note that EBITDA is not a
uniform or standardized measure and the calculation of EBITDA, accordingly, may
vary significantly from company to company, and by itself provides no grounds
for comparison with other companies.
9
Key operational indicators
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3Q02* 2Q02 1Q02 4Q01 3Q01
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Network data
Number of connected lines (cumulative) 503,358 529,658 527,562 526,402 519,035
Subscriber data
Subscriber lines (cumulative) 340,232 342,145 342,288 343,802 343,634
Total net additions (1,913) (143) (1,514) 168 5,296
Business net additions 1,212 1,434 2,569 4,281 5,721
Business subscribers (cumulative) 103,209 101,997 100,563 97,994 93,713
Business mix of total subscriber lines 30.3% 29.8% 29.4% 28.5% 27.3%
Average monthly revenue per line (PLN) 120^ 123^ 130 122 122
Average monthly revenue per business line (PLN) 226^ 236^ 251 225 243
Average monthly revenue per residential line (PLN) 73 74 79 81 76
^ Average monthly revenue per line and per business line excludes the revenues
from carrier's carrier services.
* The number of connected lines reported for Q3 2002 has been recalculated in
order to reflect the impairment of 27,350 lines due to the future limited
utilization of certain existing parts of Netia's local access network.
(Tables to Follow)
- 10 -
Income statement (according to IAS), unaudited
====================================================================================================================================
(PLN in thousands unless otherwise stated)
Time periods: YTD 02 YTD 01 3Q02 2Q02
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Telecommunications revenue 436,691 372,894 149,060 146,874
Other revenue 13,681 21,089 3,336 4,542
Total revenues 450,372 393,983 152,396 151,416
Interconnection charges (89,532) (89,738) (29,982) (30,168)
Cost of equipment (6,172) (6,805) (2,032) (2,063)
Other operating expenses (233,640) (265,512) (71,693) (76,936)
Adjusted EBITDA 121,028 48,872 48,689 42,249
Margin (%) 26.9% 12.4% 31.9% 27.9%
Provision for receivables subject to court settlements 0 (16,944) 0 0
Depreciation of fixed assets (152,191) (126,664) (54,905) (48,513)
Amortization of intangible assets (54,825) (41,145) (18,231) (18,303)
Amortization and impairment of goodwill 0 (238,217) 0 0
Impairment provision for fixed assets (108,689) (96,861) (108,689) 0
EBIT (194,677) (470,959) (133,136) (24,567)
Margin (%) -43.22% -119.5% -87.4% -16.2%
Net financial income / (expenses) (634,397) (389,324) (202,113) (224,607)
Loss before tax (829,074) (860,283) (335,249) (249,174)
Tax charges (2,218) (4,426) (893) (676)
Minority share in (profit)/loss of subsidiaries 7,744 1,901 8,011 (160)
Net loss (823,548) (862,808) (328,131) (250,010)
Margin (%) -182.9% -219.0% -215.3% -165.1%
Loss per share (not in thousands) (26.69) (28.00) (10.61) (8.11)
Weighted average number of shares outstanding (not in 30,854,382 30,817,291 30,927,353 30,817,291
thousands)
Note to financial expenses
Net Interest Expense (320,511) (286,082) (111,488) (104,675)
Net Foreign Exchange gains / (losses) (313,886) (73,927) (90,625) (119,932)
Fair value losses on cross currency swap transactions 0 (29,315) 0 0
- 11 -
BALANCE SHEET (ACCORDING TO IAS, unaudited)
================================================================================================================================
(PLN in thousands unless otherwise stated)
Time Periods SEPTEMBER 30, 2002 DECEMBER 31, 2001
--------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents 374,100 486,946
Restricted investments 56,802 47,500
Accounts receivable
Trade, net 87,402 91,838
Government 6,122 15,179
Other, net 6,649 3,510
Inventories 1,548 1,708
Prepaid expenses 9,737 9,358
Total current assets 542,360 656,039
Investments 1,061 1,949
Fixed assets, net 2,278,213 2,454,309
Computer software, net 104,195 82,944
Licenses, net 647,272 695,149
Other long term assets 60,999 13,957
Total non-current assets 3,091,740 3,248,308
TOTAL ASSETS 3,634,100 3,904,347
Current maturities of long term debt 3,702,559 3,396,869
Short term liabilities for licenses 190,793 165,613
Accounts payable and accruals
Trade 77,056 170,779
Liability connected with swaps cancellation 203,882 224,907
Accruals and other 491,583 163,561
Deferred income 7,520 7,495
Total current liabilities 4,673,393 4,129,224
Long term liabilities for licenses 109,640 92,764
Total non-current liabilities 109,640 92,764
Minority interest 17,064 25,607
Share capital 203,285 203,285
Share premium 1,713,865 1,713,865
Treasury shares (2,812) (3,611)
Accumulated deficit (3,080,335) (2,256,787)
Total shareholders' deficit (1,165,997) (343,248)
TOTAL LIABILITIES AND DEFICIT 3,634,100 3,904,347
-12-
Cash flow statement (according to IAS), unaudited
================================================================================================================================
(PLN in thousands unless otherwise stated)
TIME PERIODS: YTD 02 YTD 01 3Q02 2Q02
--------------------------------------------------------------------------------------------------------------------------------
Net Loss (823,548) (862,808) (328,131) (250,010)
Adjustment to reconcile net loss to net cash provided by
operating activities
Depreciation and amortization of goodwill 207,016 185,747 73,136 66,816
Amortization of discount on notes 0 95,009 0 0
Minority interest (7,744) (1,901) (8,011) 160
Interest expense accrued on long term debt 314,951 232,372 109,520 102,436
Interest expense accrued on license liabilities 15,890 12,009 5,387 5,534
Impairment of goodwill 0 220,279 0 0
Impairment provision for fixed assets 108,689 96,861 108,689 0
Allowance for debtors subject to court settlements 0 16,944 0 0
(Increase)/decrease in long term assets 0 1,425 0 0
Foreign exchange (gains) / losses 317,397 78,273 88,412 125,199
Change in working capital 20,052 71,155 24,473 (931)
Net cash provided by operating activities 152,703 145,365 73,475 49,204
Purchase of fixed assets and computer software (221,071) (513,881) (56,299) (72,710)
(Increase) / decrease of investments 0 8,500 0 0
Purchase of minority interest 0 (60,883) 0 0
Payments for licenses 0 (3,998) 0 0
Net cash used in investing activities (221,071) (570,262) (56,299) (72,710)
Payment of interest on long term debt 0 (55,220) 0 0
Increase of restricted cash 0 (7,135) 0 0
Payments related to restructuring (46,739) 0 (13,851) (12,401)
Payment for cancellation of swap transactions (29,279) 0 0 0
Net cash used in financing activities (76,540) (62,355) (13,851) (12,401)
Effect of exchange rate change on cash and cash equivalents 31,540 (12,210) 5,838 11,645
Net change in cash & cash equivalents (112,846) (499,462) 9,163 (24,262)
Cash & cash equivalents at the beginning of the period 486,946 1,142,850 364,937 389,199
Cash & cash equivalents at the end of the period 374,100 643,388 374,100 364,937
Netia management will hold a conference call tommorow, Wednesday, November 6 to
review the results at 3:30 PM (UK) / 4:30 PM (Continent) / 10:30 AM (Eastern).
To register for the call and obtain dial in numbers please contact Alex Jones at
Taylor Rafferty London on +44 (0) 20 7936 0400 or Abbas Qasim at Taylor Rafferty
New York on 212 889 4350.
13
Some of the information contained in this news release contains forward-looking
statements. Readers are cautioned that any such forward-looking statements are
not guarantees of future performance and involve risks and uncertainties, and
that actual results may differ materially from those in the forward-looking
statements as a result of various factors. For a more detailed description of
these risks and factors, please see the Company's filings with the Securities
and Exchange Commission, including its Annual Report on Form 20-F filed with the
Commission on March 28, 2002, its Current Report on Form 6-K filed with the
Commission on April 3, 2002, its Current Reports on Forms 6-K filed with the
Commission on May 6, 2002, its Current Report on Form 6-K filed with the
Commission on May 7, 2002, its Current Report on Form 6-K filed with the
Commission on May 20, 2002, its Current Report on Form 6-K filed with the
Commission on May 24, 2002, its Current Report on Form 6-K filed with the
Commission on June 28, 2002, its Current Report on Form 6-K filed with the
Commission on July 2, 2002, its Current Report on Form 6-K filed with the
Commission on July 31, 2002, and its Current Report on Form 6-K filed with the
Commission on August 2, 2002, its Current Reports on Form 6-K filed with the
Commission on August 6, 2002, its Current Report on Form 6-K filed with the
Commission on August 9, 2002, its Current Report on Form 6-K filed with the
Commission on August 15, 2002 its Current Report on Form 6-K filed with the
Commission on August 16, 2002, its Current Report on Form 6-K filed with the
Commission on August 28, 2002, its Current Report on Form 6-K filed with the
Commission on August 30, 2002, its Current Report on Form 6-K filed with the
Commission on September 16, 2002, its Current Report on Form 6-K filed with the
Commission on September 20, 2002, its Current Report on Form 6-K filed with the
Commission on September 24, 2002, its Current Report on Form 6-K filed with the
Commission on October 1, 2002, its Current Report on Form 6-K filed with the
Commission on October 15, 2002 and its Current Report on Form 6-K filed with the
Commission on October 17, 2002, its Current Report on Form 6-K filed with the
Commission on October 22, 2002, its Current Report on Form 6-K filed with the
Commission on October 25, 2002 and its Current Report on Form 6-K filed with the
Commission on November 1, 2002. The Company undertakes no obligation to publicly
update or revise any forward-looking statements.
# # #
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: November 5, 2002
NETIA HOLDINGS S.A.
By: /S/ AVRAHAM HOCHMAN
----------------------------
Name: Avraham Hochman
Title: Chief Financial Officer
Vice President, Finance
By: /S/ EWA DON-SIEMION
-----------------------------
Name: Ewa Don-Siemion
Title: Vice President, Legal