6-K 1 newskies-6k_1105.txt As filed with the Securities and Exchange Commission on November 5, 2003 FORM 6-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 of The Securities Exchange Act of 1934 New Skies Satellites N.V. Rooseveltplantsoen 4 2517 KR The Hague The Netherlands Indicate by check mark whether the registrant files or will file annual reports under cover 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.... If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): .............................N/A................ New Skies Satellites Logo New Skies Reports Solid Third Quarter 2003 Performance THE HAGUE, Netherlands, November 5, 2003 - New Skies Satellites N.V. (AEX, NYSE: NSK), the global satellite communications company, today reported financial results for the three- and nine-month periods ended September 30, 2003. Revenues for the quarter were $54.1 million, EBITDA (adjusted)(1) (earnings before interest, taxes, depreciation and amortization) was $30.1 million, both up 11% from the third quarter in the previous year, and net income was $2.7 million. Highlights ----------------------------------------------------------------------------------- 3 months ended 9 months ended September 30 September 30 US$ millions 2003 2002 2003 2002 ---- ---- ---- ---- (except per share amounts) Revenues $54.1 $48.7 $160.8 $149.7 Net income (loss) 2.7 3.5 9.4 (9.1)(2) EBITDA (adjusted) 30.1 27.0 89.7 82.5 EBITDA (adjusted) margin 56% 55% 56% 55% Basic and diluted earnings per share 0.02 0.03 0.08 (0.07)(2) -----------------------------------------------------------------------------------

New Skies CEO Dan Goldberg said: "I am pleased to report that the solid performance New Skies achieved in the first half of this year continued through the third quarter, with revenues, EBITDA (adjusted) and positive free cash flow significantly higher relative to the same period last year. Notwithstanding what continues to be a difficult market for satellite services, both revenues and EBITDA (adjusted) increased 11% compared to the third quarter, 2002. ------------ (1) See definition of EBITDA (adjusted) and "Reconciliation of EBITDA (adjusted) to net income (loss)" in "Note 1 of Notes to the consolidated quarterly financial information". (2) Net loss for the nine-month period ended September 30, 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 nine-month period ended September 30, 2002 was $14.3 million and the basic and diluted earnings per share was $0.11. "Additionally, given that the bulk of the payments associated with our two newest satellites - NSS-6 and NSS-7 - are behind us, we have moved into a strong free cash flow position. In this regard, we generated $25.9 million of positive free cash flow in the third quarter and $62.0 million for the first nine months of this year, compared to negative free cash flow of $10.9 million and $93.6 million, respectively, for the same periods last year. In addition, New Skies continues to have a healthy balance sheet, and indeed was debt free at the end of last quarter. As anticipated, increased depreciation expenses from our new satellites resulted in lower net income. "Although we have grown our business meaningfully throughout the year, there is no escaping the fact that market conditions remain challenging. An excess of satellite capacity in most markets and soft demand for communications services more broadly is resulting in significant competition among satellite operators and placing downward pressure on transponder rates. That said, we knew this would be the case at the outset of the year and fashioned our strategy accordingly. For this reason, I am pleased to say that New Skies in 2003 is on course to achieve results consistent with both the financial guidance ranges we gave at the outset of this year as well as record revenue performance." For the three and nine months ended September 30, 2003, New Skies achieved the following financial results: o Revenues for the three months ended September 30, 2003 grew 11 percent, or $5.4 million, to $54.1 million as compared to $48.7 million for the same period in 2002. For the first nine months of the year, revenues were $160.8 million, an increase of $11.1 million, or 7 percent, compared to $149.7 million in 2002. o Operating expenses, excluding depreciation, increased $2.3 million for the quarter, and $3.9 million for the nine months ended September 30, 2003, as compared to the same periods in 2002. These net increases are primarily due to increased in-orbit insurance costs and stock compensation expense(3), partially offset by savings arising from careful management of our discretionary costs. o Net income for the third quarter 2003 was $2.7 million compared to $3.5 million in the same period in the prior year. The decrease primarily relates to an increase in depreciation in the quarter of $4.4 million, predominantly stemming from the launch of the NSS-6 satellite. Net income for the nine-month period ended September 30, 2003 was $9.4 million compared to a net loss of $9.1 million in the same period in the prior year. Net loss for the nine months ended September 30, 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 nine-month period ended September 2002 was $14.3 million. ------------ (3) Effective January 1, 2003 New Skies adopted the fair value based method of accounting for stock compensation under SFAS 123. See Note 4 of Notes to the consolidated quarterly financial information. o In the third quarter 2003, EBITDA (adjusted) increased by $3.1 million, or 11 percent, to $30.1 million compared to $27.0 million for the same period in the prior year. EBITDA (adjusted) for the nine months ended September 30, 2003 was $89.7 million, as compared to $82.5 million for the same period in 2002, reflecting an increase of $7.2 million or 9 percent. o The company achieved a positive free cash flow (4) position of $25.9 million in the third quarter 2003 compared to negative free cash flow of $10.9 million in the same period in 2002. Free cash flow for the nine months ended September 30, 2003 was $62.0 million compared to negative cash flow of $93.6 million in the same period in the prior year. o Backlog at the end of the third quarter 2003 was $687 million, more than three times annual revenues, compared to $701 million in the same period last year, and to $700 million in the previous quarter of this year. Third quarter operating highlights o Government services continued to play an important role as New Skies signed significant contracts with Comsat Government Services (LMGT) and Lyman Brothers in the United States and with The Services Sound and Vision Corporation (SSVC), a registered charity set up to entertain and inform Britain's Armed Forces around the world, for the distribution of The British Forces Broadcasting Service in Great Britain. o Embratel, one of the largest telecommunications companies in Latin America, has expanded its capacity with New Skies for provisioning corporate and broadband Internet access throughout the region. o New Skies signed contracts with Datacom, a Bolivian provider of private telecommunications networks and subsidiary of Entel Bolivia and with CODETEL, one of the leading telecommunications companies in the Caribbean and Latin America. o New Skies provided occasional use video services for a number of major sporting events including the Pan American Games, the Real Madrid Asian tour and Formula One racing. o New Skies successfully completed its share repurchase program, acquiring a total of 13,057,024 ordinary shares at a total cost of approximately $54.0 million, reflecting an average price of $4.14. Approximately 93 percent of the repurchased shares came from New Skies' original shareholder base, including the stakes of Deutsche Telekom, KDDI Corporation, SingTel Optus, Singapore Telecom and Teleglobe. 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, data, voice, and Internet communications services to a range of telecommunications carriers, broadcasters, large corporations, Internet service providers and government organizations around the world. New Skies has five 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 7162 0125, passcode "New Skies". The call will also be webcast 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 and will also be archived on New Skies' website. The international dial in number is +44 20 8288 4459 and the UK freephone number is: 0500 637 880. Passcode:869872. In the unlikely event of a technical problem with the call, please dial the back-up number in the listen-only mode: +44 20 8400 6328, passcode "New Skies". For enquiries, please contact: Elizabeth Hess Corporate Communications, New Skies Satellites +31 70 306 4133 ehess@newskies.com +31 6 2906 2492 Boris Djordjevic Investor Relations, New Skies Satellites +31 70 306 4183 bdjordjevic@newskies.com Nina Pawlak , Brunswick (New York) +1 212 333 3810 npawlak@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, 2002. 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 September 30, 2003 and December 31, 2002 (In thousands of U.S. Dollars, except share data) --------------------------------------------------------------------------------------------------- September 30, December 31, 2003 2002 --------------- --------------- Assets (unaudited) Current Assets Cash and cash equivalents $ 20,579 $ 8,329 Trade receivables 42,482 39,109 Prepaid expenses and other assets 7,937 10,885 -------------- -------------- Total Current Assets 70,998 58,323 Communications, plant and other property, net 1,031,248 1,058,119 Deferred tax asset 9,124 10,087 Other assets 774 1,226 -------------- -------------- TOTAL $ 1,112,144 $ 1,127,755 ============== ============== Liabilities and Shareholders' Equity Current Liabilities Short-term debt $ - $ 10,000 Accounts payable and accrued liabilities 17,653 18,396 Income taxes payable 31,958 29,124 Deferred revenues and other liabilities 8,084 8,994 Satellite performance incentives 6,365 6,218 -------------- -------------- Total Current Liabilities 64,060 72,732 Long Term Liabilities 51,363 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; 130,575,241 and 130,570,241 shares issued, respectively) 6,026 6,026 Additional paid-in capital 978,486 977,506 Retained earnings 65,407 56,019 Unearned compensation (314) (685) Accumulated other comprehensive income (loss) 734 (492) Treasury stock, at cost (12,951,921 and 5,194,030 ordinary shares, respectively) (53,618) (19,341) -------------- -------------- Total Shareholders' Equity 996,721 1,019,033 -------------- -------------- TOTAL $ 1,112,144 $ 1,127,755 ============== ==============

New Skies Satellites N.V. and Subsidiaries Consolidated statements of income Three-month periods ended September 30, 2003 and 2002 (Unaudited) (In thousands of U.S. dollars, except share data) Three-month period ended September 30 2003 2002 ---- ---- Revenues $ 54,135 $ 48,722 -------------- -------------- Operating expenses: Cost of operations 13,965 12,504 Selling, general and administrative 10,113 9,243 Depreciation 25,560 21,142 -------------- -------------- Total Operating Expenses 49,638 42,889 -------------- -------------- Operating Income 4,497 5,833 Interest expense and other, net 314 314 -------------- -------------- Income Before Income Tax Expense 4,183 5,519 Income tax expense 1,505 1,987 -------------- -------------- Net Income $ 2,678 $ 3,532 ============== ============== Basic and Diluted Earnings Per Share $ 0.02 $ 0.03 ============== ============== Nine-month periods ended September 30, 2003 and 2002 (Unaudited) (In thousands of U.S. Dollars, except share data) Nine-month period ended September 30 2003 2002 ---- ---- Revenues $ 160,796 $ 149,682 -------------- -------------- Operating expenses: Cost of operations 39,659 38,014 Selling, general and administrative 31,420 29,194 Depreciation 74,186 59,774 -------------- -------------- Total Operating Expenses 145,265 126,982 -------------- -------------- Operating Income 15,531 22,700 Interest expense and other, net 863 341 -------------- -------------- Income Before Income Tax Expense 14,668 22,359 Income tax expense 5,280 8,050 -------------- -------------- Income Before Cumulative Effect of Change In Accounting Principle (A) 9,388 14,309 Cumulative effect of change in accounting principle, relating to goodwill, net of taxes - (23,375) -------------- -------------- Net Income (Loss) $ 9,388 $ (9,066) ============== ============== Basic and Diluted Earnings Per Share: Income Before Cumulative Effect of Change In Accounting Principle $ 0.08 $ 0.11 Cumulative effect of change in accounting principle - (0.18) -------------- -------------- Basic and diluted earnings per share $ 0.08 $ (0.07) ============== ==============

(A) 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 in respect of the acquisition of the New Skies Networks subsidiary in Australia in March 2000. New Skies Satellites N.V. and subsidiaries Consolidated statements of cash flows Nine-month periods ended September 30, 2003 and 2002 (unaudited) (In thousands of U.S. Dollars) --------------------------------------------------------------------------------------------------- Nine-month period ended September 30 2003 2002 -------------- -------------- Cash flows from operating activities: Net income (loss) $ 9,388 $ (9,066) Adjustments for non-cash items: Depreciation 74,186 59,774 Cumulative effect of change in accounting principle - 23,375 Deferred taxes 963 984 Stock compensation expense 1,615 715 Changes in operating assets and liabilities: Trade receivables (3,276) 198 Prepaid expenses and other assets 3,071 4,536 Accounts payable and accrued liabilities (1,082) (3,471) Income taxes payable 3,143 5,455 Other liabilities (1,528) 4,895 -------------- -------------- Net Cash Provided By Operating Activities 86,480 87,395 -------------- -------------- Cash flows from investing activities: Payments for communication, plant and other property (24,505) (181,013) -------------- -------------- Net Cash Used In Investing Activities (24,505) (181,013) -------------- -------------- Cash flows from financing activities: Repayment of short-term borrowings (10,000) - Treasury stock acquired (34,676) - Stock options exercised 135 - Satellite performance incentives and other (5,563) (2,616) -------------- -------------- Net Cash Used In Financing Activities (50,104) (2,616) -------------- -------------- Effect of exchange rate differences 379 (74) -------------- -------------- Net change in cash and cash equivalents 12,250 (96,308) Cash and cash equivalents, beginning of period 8,329 138,268 -------------- -------------- Cash and cash equivalents, end of period $ 20,579 $ 41,960 ============== ============== Cash payments for interest (net of amounts capitalized) were nil for the nine-month periods ended September 30, 2003 and 2002. Income taxes paid amounted to $2.2 million and $2.1 million for the nine-month periods ended September 30, 2003 and 2002, respectively.

New Skies Satellites N.V. and subsidiaries Notes to the consolidated quarterly financial information Three- and nine month periods ended September 30, 2003 and 2002 (unaudited) (1) Reconciliation of EBITDA (adjusted) to net income (loss) New Skies believes earnings before interest, taxes, depreciation, amortization and other expenses, primarily financing costs relating to the $300 million revolving credit facility, (EBITDA adjusted) is a measure of performance used by some investors, equity analysts and others to make informed investment decisions. EBITDA (adjusted) 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 (adjusted) as presented herein may not be comparable to similarly titled measures reported by other companies. EBITDA (adjusted) is reconciled to net income (loss) as follows: (in thousands of U.S. dollars) Three-month period ended Nine-month period ended September 30, September 30, 2003 2002 2003 2002 -------- -------- -------- -------- Net income (loss) $ 2,678 $ 3,532 $ 9,388 $ (9,066) Cumulative effect of change in accounting principle (see note 3) - - - 23,375 Income tax expense 1,505 1,987 5,280 8,050 Interest expense 324 429 1,511 1,065 Interest expense capitalized (324) (429) (1,511) (1,065) Other 314 314 863 341 Depreciation 25,560 21,142 74,186 59,774 --------- --------- --------- --------- EBITDA (adjusted) $ 30,057 $ 26,975 $ 89,717 $ 82,474 ========= ========= ========= =========

(2) Reconciliation of net cash provided by operating activities to free cash flow from operations New Skies believes free cash flow from operations is a measure of performance used by some investors, equity analysts and others to make informed investment decisions. Free cash flow from operations is not presented as an alternative measure of cash flow from operations, as determined in accordance with generally accepted accounting principles in the U.S. Free cash flow from operations as presented herein may not be comparable to similarly titled measures reported by other companies. Free cash flow from operations is reconciled to net cash provided by operating activities as follows: (in thousands of U.S. dollars) Three-month period ended Nine-month period ended September 30, September 30, 2003 2002 2003 2002 -------- -------- -------- -------- Net cash provided by operating activities $ 30,217 $ 24,243 $ 86,480 $ 87,395 Payments for communication, plant and other property (4,295) (35,189) (24,505) (181,013) --------- --------- --------- --------- Free cash flow from operations $ 25,922 $(10,946) $ 61,975 $(93,618) ========= ========= ========= =========

(3) 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. (4) 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, Three-month period ended Nine-month period ended except earnings per share data) September 30, September 30, 2003 2002 2003 2002 -------- -------- -------- -------- Net income (loss), as reported $ 2,678 $ 3,532 $ 9,388 $ (9,066) Add: Stock-based employee compensation expense included in reported net income, net of taxes 458 222 1,124 565 Less: Total stock-based employee compensation expense determined under fair value based Method for all awards, net of taxes (1,212) (1,392) (3,844) (4,065) --------- --------- --------- --------- Pro forma net income (loss) $ 1,924 2,362 6,668 (12,566) ========= ========= ========= ========= Earnings per share: Basic and diluted, as reported $ 0.02 0.03 0.08 (0.07) ========= ========= ========= ========= Basic and diluted, pro forma $ 0.02 0.02 0.06 (0.10) ========= ========= ========= =========

(4) See definition of free cash flow and "Reconciliation of net cash provided by operating activities to free cash flow from operations" in Note 2 of Notes to the consolidated quarterly financial information. 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. New Skies Satellites N.V. By: /s/ Andrew Browne ---------------------------- Name: Andrew Browne Title: CFO and Management Board Member Date: November 5, 2003

NEW SKIES SATELLITES NV 6-K