New Skies Reports Strong Full Year and Fourth Quarter Results; Company Announces Second Share Repurchase Program and Intention to Pay Dividend.Business Editors/High-Tech Writers THE HAGUE Hague , The or 's Gra·ven·ha·ge The de facto capital of the Netherlands, in the western part of the country near the North Sea. The Hague grew around a palace built c. , Netherlands--(BUSINESS WIRE)--Feb. 11, 2004 New Skies Satellites N.V. (AEX AEX See: Amsterdam Exchange , NYSE NYSE See: New York Stock Exchange : NSK NSK Not Specified By Kind NSK North Side Kings (band) NSK Noril'sk (Russia) NSK Neue Slovenische Kunst (German: New Slovenian Art; art collective) ), the global satellite communications company Communications Company is a communications unit of the United States Marine Corps. They are part of Combat Logistics Regiment 37 , 3rd Marine Logistics Group (3MLG) and III Marine Expeditionary Force (III MEF). The unit is based out of the Marine Corps Base Camp Smedley D. , today reported financial results for the fourth quarter and year ended December December: see month. 31, 2003. Revenues for the year were $214.9 million, EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (1) was $119.6 million, and net income was $11.8 million, or $0.10 per share on a fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis. New Skies also announced that it will seek shareholder approval for the distribution of a cash dividend for 2003 of $0.04 per ordinary share at its Annual General Meeting of Shareholders to be held on May 13, 2004. New Skies further announced that its Supervisory Board Supervisory board The board of directors that represents stakeholders in the governance of the corporation. has authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: the company to proceed with a second share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program of up to 10 percent of its currently outstanding shares, following the success of its first repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. program, completed last year. Highlights
3 months ended Year ended
December 31 December 31
US$ millions
(except per share amounts) 2003 2002 2003 2002
----- ------ ------ --------
Revenues $54.1 $ 50.8 $214.9 $200.5
Net income (loss) 2.4 4.4 11.8 (4.6)(2)
EBITDA (adjusted) 29.9 27.8 119.6 110.3
EBITDA (adjusted) margin 55% 55% 56% 55%
Basic and diluted earnings per share 0.02 0.03 0.10 (0.04)(2)
Free cash flow(3) 3.7 (25.8) 65.7 (119.4)
------------------------------------- ------ ------- ------- ---------
Commenting on the results, Chief Executive Officer Dan Goldberg said: "2003 was a strong year for New Skies on multiple levels. First, even though the market for satellite services was challenging throughout the year, New Skies achieved growth of 7% in revenues and 8% in EBITDA relative to 2002. It is important to note that this solid performance was strictly organic in nature, resulting from our ability to leverage our state-of-the-art global satellite fleet, the youngest in the industry. "Indeed, another significant accomplishment in 2003 was the entry into service of our high power NSS-6 satellite in the Indian Ocean Indian Ocean, third largest ocean, c.28,350,000 sq mi (73,427,000 sq km), extending from S Asia to Antarctica and from E Africa to SE Australia; it is c.4,000 mi (6,400 km) wide at the equator. It constitutes about 20% of the world's total ocean area. region and the repositioning repositioning Laparoscopic surgery The changing of a Pt's position during a procedure to improve access or visualization of the operative field, which may be linked to complications, as it changes anatomic planes of operation. Cf Laparoscopic surgery. of our NSS-5 satellite to the Pacific Ocean region, both of which were completed in the early part of last year. We already have made good progress in exploiting these new resources and continuing to do so is an important objective in 2004. Although the incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. depreciation charges associated with our two new satellites reduced net income for the year, these satellites will drive our growth - and profitability - over the mid to long term. "Perhaps most importantly Adv. 1. most importantly - above and beyond all other consideration; "above all, you must be independent" above all, most especially , the commercial inauguration INAUGURATION. This word was applied by the Romans to the ceremony of dedicating some temple, or raising some man to the priesthood, after the augurs had been consulted. It was afterwards applied to the installation (q.v. of NSS-5 and -6 marks the near completion of our committed capital investment program. As such, New Skies generated approximately $66 million in positive free cash flow in 2003, compared to negative free cash flow of approximately $119 million in 2002. Following the launch of our NSS-8 satellite, which we now expect will occur early next year, we anticipate a significant period of time without further large capital expenditures, which we believe will result in substantial positive free cash flow in the years to come. "Our positive cash flow and continued debt free balance sheet have allowed us to focus on finding ways to return cash to our shareholders in a manner that promotes shareholder value more broadly and maintains our strategic flexibility. The share buyback Buyback The buying back of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies will buyback shares either to increase the value of shares still available (reducing supply), or to eliminate any threats by shareholders who may program that we completed last year - in which we repurchased 10% of our then outstanding shares at an average price of $4.14 per share - was our first concrete step in this regard. "Given the success of that program, we are pleased to announce today our intention to seek shareholder approval to pay our first dividend, as well as the fact that our Supervisory Board has approved a follow-on fol·low-on adj. Following as a related or consequent aspect or development: "Such contracts involve follow-on sales of maintenance services" Christian Science Monitor. share repurchase program. The decision to do so is a clear reflection of our confidence in our commercial prospects going forward, our financial strength, and our unwavering commitment to promote shareholder value. "Looking ahead, we anticipate that 2004 will be another difficult year for commercial satellite operators, and our guidance for 2004 takes this into account. Specifically, as we stated previously, excess satellite capacity in many markets and persistent soft demand for communications services have resulted in strong competition among operators and downward pressure on transponder A receiver/transmitter on a communications satellite. It receives a microwave signal from earth (uplink), amplifies it and retransmits it back to earth at a different frequency (downlink). A satellite has several transponders. rates. "Accordingly, we expect revenue, EBITDA and net income in 2004 to be by and large consistent with our 2003 results. Further, assuming most of the remaining milestone payments associated with our NSS-8 satellite come due in early 2005, we anticipate another year of positive free cash flow, which we expect will be somewhere in the range of $30 million to $50 million. "In sum, we enter 2004 with the youngest global satellite fleet in the industry, a large contractual backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. made up of a well-balanced well-bal·anced adj. 1. Evenly proportioned, balanced, or regulated. 2. Mentally stable; sensible or sound. well-balanced Adjective sensible and emotionally stable Adj. and well-diversified customer base, a focused and dedicated team, and strong cash flows and a healthy balance sheet that can be used to further enhance shareholder value." Financial highlights For the year and three-month period ended December 31, 2003, New Skies achieved the following financial results: -- Revenues for the full year 2003 grew 7 percent, or $14.4 million, to $214.9 million as compared to $200.5 million in 2002. Revenues for the three-month period ended December 31, 2003 were $54.1 million, an increase of $3.3 million, or 6 percent, compared to $50.8 million for the same period in 2002. -- Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , excluding depreciation, increased $5.1 million for the year and $1.2 million for the quarter, as compared to the same periods in 2002. These net increases are primarily due to increased in-orbit insurance costs and stock compensation expense (4), partially offset by savings arising from careful management of our discretionary costs. -- Net income for the year ended December 31, 2003 was $11.8 million compared to a net loss of $4.6 million in 2002. Net loss for the year ended December 31, 2002 included the non-cash impact of the cumulative effect of change in accounting principle of $23.4 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc goodwill. Excluding this goodwill charge, net income for 2002 was $18.7 million. Notwithstanding an increase in depreciation of $19.3 million in 2003, stemming primarily from the launch of the NSS-6 satellite, net income decreased $6.9 million. Net income for the fourth quarter 2003 was $2.4 million compared to $4.4 million in the same period in the prior year. -- EBITDA (adjusted) (earnings before interest, taxes, depreciation and amortization) for the year ended December 31, 2003 was $119.6 million, as compared to $110.3 million in 2002, reflecting an increase of $9.3 million or 8 percent. EBITDA for the three-month period ended December 31, 2003 was $29.9 million as compared to $27.8 million for the same period in 2002. -- The company achieved a positive free cash flow position of $65.7 million for the year ended December 31, 2003 compared to negative free cash flow of $119.4 million in 2002. Free cash flow for the three months ended December 31, 2003 was $3.7 million compared to negative cash flow of $25.8 million in the same period in the prior year. -- Backlog at the end of the fourth quarter 2003 was $672 million, more than three times annual revenues, compared to $706 million at the end of December 2002, and $687 million at the end of the previous quarter of this year. -- 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. Operating highlights -- The year began with NSS-5, previously located at 338.5 degrees east longitude longitude (lŏn`jĭt  d'), angular distance on the earth's surface measured along any latitude line such as the equator east or west of the prime meridian. and repositioned to 183 degrees east longitude,becoming available for service in the Pacific Ocean Region. NSS-6, a state of the art, high-powered high-pow·ered also high-pow·er adj. Having great power or energy; dynamic: She's on a high-powered career track. high-powered Adjective 1. Ku-Band See satellite bands. satellite serving the Indian Subcontinent Indian subcontinent, region, S central Asia, comprising the countries of Pakistan, India, and Bangladesh and the Himalayan states of Nepal, and Bhutan. Sri Lanka, an island off the southeastern tip of the Indian peninsula, is often considered a part of the subcontinent. , the Middle East, Asia and Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. , entered commercial service in February February: see month. . -- Significant new contracts signed during the year include: -- For video service, the European Broadcasting Union “EBU” redirects here. For other uses, see EBU (disambiguation). The European Broadcasting Union (EBU; French: L'Union Européenne de Radio-Télévision ("UER") , BT Broadcast Services, the Services Sound and Vision Corporation, Telediffusion d'Algerie, Casablanca Casablanca (kă'səblăng`kə, kă'zə–, Span. kä'säbläng`kä), Arab. Dar-al-Baida, city (1994 est. pop. 2,940,623), W Morocco, on the Atlantic Ocean. and the Adventist Adventist Member of any of a group of Protestant churches that arose in the U.S. in the 19th century and believe that the Second Coming of Christ is close at hand. Adventism was founded during a period marked by millennialism by William Miller (1782–1849), a former U. Television Network. -- For data, IP and voice services, Embratel, Star One, Reliance Infocomm, the Maritime INTEREST, MARITIME. By maritime interest is understood the profit of money lent on bottomry or respondentia, which is allowed to be greater than simple interest because the capital of the lender is put in jeopardy. Telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. Network, FalconStream, Datacom, CODETEL, and TRANSAT JSCo. -- Government services played an important role throughout the year as New Skies signed significant contracts with Comsat Government Services, AT&T, Lyman Brothers, and Spacelink. -- New Skies built on its strategy of partnering with industry-leading teleports by signing an agreement with Hong Kong-based REACH, Asia's largest international telecoms carrier and teleport Verb 1. teleport - transport by dematerializing at one point and assembling at another science fiction - literary fantasy involving the imagined impact of science on society transport - move something or somebody around; usually over long distances operator. Dividend information Upon adoption at the Annual General Meeting of Shareholders to be held on May 13, 2004: Ordinary shares / Euronext Amsterdam Exchange Amsterdam Exchange (AEX) Exchange that comprises the AEX-Effectenbeurs, the AEX-Optiebeurs (formerly the European Options Exchange or EOE) and the AEX-Agrarische Termijnmarkt. The ordinary shares listed on the Euronext Amsterdam Exchange will be traded ex-dividend Ex-Dividend The trading of shares when a declared dividend belongs to the seller rather than the buyer. Notes: A stock trades ex-dividend on or after the ex-dividend date (ex-date). as of May 17, 2004. The dividend after deduction deduction, in logic, form of inference such that the conclusion must be true if the premises are true. For example, if we know that all men have two legs and that John is a man, it is then logical to deduce that John has two legs. of the appropriate Netherlands withholding tax The amount legally deducted from an employee's wages or salary by the employer, who uses it to prepay the charges imposed by the government on the employee's yearly earnings. rate will be paid on May 21, 2004 to holders of shares listed on the Euronext Amsterdam Exchange, registered at the close of business as of May 14, 2004. American Depository Receipts American Depository Receipt n. called in the banking trade an ADR, it is a receipt issued by American banks to Americans as a substitute for actual ownership of shares of foreign stocks. / New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. The ADR's will be traded ex-dividend on the New York Stock Exchange as of May 17, 2004. The dividend after deduction of the appropriate Netherlands withholding tax rate will be paid on June 4, 2004 to holders of American Depository Receipts (ADR's) listed on the New York Stock Exchange, registered at the close of business as of May 19, 2004. Share repurchase information Under the share repurchase program, depending on market conditions, New Skies may repurchase from time to time up to 10 percent of currently outstanding shares in the market at prevailing market prices as and when trades are executed. 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 Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the communications services to a range of telecommunications carriers, broadcasters, large corporations, Internet service providers Internet service provider (ISP) Company that provides Internet connections and services to individuals and organizations. For a monthly fee, ISPs provide computer users with a connection to their site (see data transmission), as well as a log-in name and password. and government organizations around the world. New Skies has five satellites in orbit, ground facilities around the world and one additional spacecraft spacecraft Vehicle designed to operate, with or without a crew, in a controlled flight pattern above Earth's lower atmosphere. Since streamlining is not needed in the high vacuum of this environment, a spacecraft's shape is designed according to its mission (see under construction. The company also has secured certain rights to make use of additional orbital orbital Mathematical expression, called a wave function, that describes properties characteristic of no more than two electrons near an atomic nucleus or molecule. An orbital can be considered a three-dimensional region in which there is a 95% probability of finding an positions for future growth. New Skies is headquartered in The Hague, the Hague, The (hāg), Du. 's Gravenhage or Den Haag, Fr. La Haye, city (1994 pop. 445,279), administrative and governmental seat of the Kingdom of the Netherlands, capital of South Holland prov., W Netherlands, on the North Sea. Netherlands, and has offices in Beijing, Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. , New Delhi New Delhi (dĕl`ē), city (1991 pop. 294,149), capital of India and of Delhi state, N central India, on the right bank of the Yamuna River. , Sao Paulo, Singapore, Sydney and Washington, D.C. Additional information is available at www.newskies.com. Conference call: CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Dan Goldberg and CFO See Chief Financial Officer. Andrew Browne Andrew Browne (born 14 May, 1984) is an Australian rules footballer. He plays as a rover and began his football career at Claremont. Fremantle Dockers Andrew Browne was educated at Christ Church Grammar School, excelling at both cricket and football. will host a conference call today at 5 p.m. (CET CET abbr. Central European Time CET Central European Time CET n abbr (= Central European Time) → hora de Europa central CET abbr ). To listen in please dial +44 20 7162 0025, 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 (for the UK only on free phone number: 0500 637 880) Passcode: 889712. In the unlikely event of a technical problem with the call, please dial the back-up number in the listen-only mode: +44 20 8515 2343, passcode "New Skies". Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. 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 forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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. (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 year ended December 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 2002 was $18.7 million and the basic and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of was $0.14. (3) See definition of free cash flow and "Reconciliation of net cash provided by operating activities to free cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses " in Note 2 of Notes to the consolidated quarterly financial information. (4) Effective January 1, 2003 New Skies adopted the fair value based method of accounting for stock compensation under SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 123. See Note 4 of Notes to the consolidated quarterly financial information.
New Skies Satellites N.V. and Subsidiaries
Consolidated balance sheets
December 31, 2003 and 2002
(In thousands of U.S. Dollars, except share data)
December 31, December 31,
2003 2002
------------ ------------
Assets
Current Assets
Cash and cash equivalents $ 23,253 $ 8,329
Trade receivables 41,870 39,109
Prepaid expenses and other assets 14,782 11,111
------------ ------------
Total Current Assets 79,905 58,549
Communications, plant and other property, net 1,026,580 1,058,119
Deferred tax assets 8,748 10,087
Other assets 603 1,226
------------ ------------
TOTAL ASSETS $ 1,115,836 $ 1,127,981
============ ============
Liabilities and Shareholders' Equity
Current Liabilities
Short-term debt $ - $ 10,000
Accounts payable and accrued liabilities 17,518 18,396
Income taxes payable 32,346 29,350
Deferred revenues and other liabilities 8,138 8,994
Satellite performance incentives 6,429 6,218
------------ ------------
Total Current Liabilities 64,431 72,958
Long Term Liabilities 49,615 35,990
Shareholders' Equity
Governance preference shares (227,530,000
shares authorized, par value EUR0.05; none
issued) - -
Cumulative preferred financing shares
(22,753,000 shares authorized, par value
EUR0.05; none issued) - -
Ordinary Shares (204,777,000 shares
authorized, par value EUR0.05; 117,668,652
and 130,570,241 shares issued, respectively) 5,431 6,026
Additional paid-in capital 926,109 977,506
Retained earnings 67,854 56,019
Unearned compensation (179) (685)
Accumulated other comprehensive income (loss) 2,575 (492)
Treasury stock, at cost (5,194,030 ordinary
shares) - (19,341)
------------ ------------
Total Shareholders' Equity 1,001,790 1,019,033
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,115,836 $ 1,127,981
============ ============
New Skies Satellites N.V. and Subsidiaries
Consolidated statements of income
Years ended December 31, 2003 and 2002
(In thousands of U.S. Dollars, except share data) Years ended
December 31
2003 2002
--------- ---------
Revenues $214,900 $200,524
--------- ---------
Operating expenses:
Cost of operations 53,219 50,714
Selling, general and administrative 42,063 39,490
Depreciation 99,899 80,574
--------- ---------
Total Operating Expenses 195,181 170,778
--------- ---------
Operating Income 19,719 29,746
Interest expense and other, net 1,227 510
--------- ---------
Income Before Income Tax Expense 18,492 29,236
Income tax expense 6,657 10,506
--------- ---------
Income Before Cumulative Effect of Change In
Accounting Principle (A) 11,835 18,730
Cumulative effect of change in accounting
principle, relating to goodwill, net of taxes - (23,375)
--------- ---------
Net Income (Loss) $11,835 $ (4,645)
========= =========
Basic and Diluted Earnings (Loss) Per Share:
Income Before Cumulative Effect of Change In
Accounting Principle $ 0.10 $ 0.14
Cumulative effect of change in accounting
principle - (0.18)
--------- ---------
Basic and diluted earnings (loss) per share $ 0.10 $ (0.04)
========= =========
Three-month periods ended December 31, 2003 and 2002 (Unaudited)
(In thousands of U.S. dollars, except share data)
Three-month
period ended
December 31
2003 2002
-------- --------
Revenues $54,104 $50,842
-------- --------
Operating expenses:
Cost of operations 13,560 12,700
Selling, general and administrative 10,643 10,296
Depreciation 25,713 20,802
-------- --------
Total Operating Expenses 49,916 43,798
-------- --------
Operating Income 4,188 7,044
Interest expense and other, net 364 167
-------- --------
Income Before Income Tax Expense 3,824 6,877
Income tax expense 1,377 2,457
-------- --------
Net Income $ 2,447 $4,420
======== ========
Basic and Diluted Earnings Per Share $ 0.02 $ 0.03
======== ========
(A) The Company adopted the new accounting standard, SFAS 142, "Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. " as of January 1, 2002, which resulted in a one-time non-cash write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. 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
Years ended December 31, 2003 and 2002
(In thousands of U.S. Dollars)
Years ended
December 31
2003 2002
-------- ---------
Cash flows from operating activities:
Net income (loss) $11,835 $(4,645)
Adjustments for non-cash items:
Depreciation 99,899 80,574
Cumulative effect of change in accounting
principle - 23,375
Deferred taxes 939 1,420
Stock compensation expense 2,172 1,005
Changes in operating assets and liabilities:
Trade receivables (2,593) 2,981
Prepaid expenses and other assets (2,981) (1,727)
Accounts payable and accrued liabilities (1,414) (2,388)
Income taxes payable 3,019 6,894
Other liabilities (1,669) 4,501
-------- ---------
Net Cash Provided By Operating Activities 109,207 111,990
-------- ---------
Cash flows from investing activities:
Payments for communication, plant and other
Property (43,492) (231,400)
-------- ---------
Net Cash Used In Investing Activities (43,492) (231,400)
-------- ---------
Cash flows from financing activities:
Stock options exercised 359 -
Proceeds from short-term borrowings - 10,000
Repayment of short-term borrowings (10,000) -
Treasury stock acquired (34,676) (19,341)
Satellite performance incentives and other (6,959) (1,297)
-------- ---------
Net Cash Used In Financing Activities (51,276) (10,638)
-------- ---------
Effect of exchange rate differences 485 109
-------- ---------
Net change in cash and cash equivalents 14,924 (129,939)
Cash and cash equivalents, beginning of year 8,329 138,268
-------- ---------
Cash and cash equivalents, end of year $23,253 $8,329
======= ======
Cash payments for interest (net of amounts capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. ) were nil for the years ended December 31, 2003 and 2002. Income taxes paid amounted to $2.7 million and $2.1 million for the years ended December 31, 2003 and 2002, respectively. New Skies Satellites N.V. and subsidiaries Notes to the consolidated quarterly financial information Three-month period and years ended December 31, 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, reflecting primarily financing costs relating to the $300 million revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility, (EBITDA) 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 Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting 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 Year ended
ended December 31, December 31,
2003 2002 2003 2002
-------- -------- ------- -------
Net income (loss) $ 2,447 $ 4,420 $ 11,835 $ (4,645)
Cumulative effect of change in
accounting principle (see
note 3) - - - 23,375
Income tax expense 1,377 2,457 6,657 10,506
Interest expense 427 546 1,938 1,611
Interest expense capitalized (427) (546) (1,938) (1,611)
Other 364 167 1,227 510
Depreciation 25,713 20,802 99,899 80,574
-------- -------
EBITDA (adjusted) $29,901 $27,846 $119,618 $110,320
======== ======== ========= =========
(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 Year ended
ended December 31, December 31,
2003 2002 2003 2002
-------- --------- --------- ---------
Net cash provided by operating
activities $22,727 $ 24,595 $109,207 $ 111,990
Payments for communication,
plant and other property (18,987) (50,387) (43,492) (231,400)
-------- --------- --------- ----------
Free cash flow from operations $ 3,740 $(25,792) $ 65,715 $(119,410)
======== ========= ========= ==========
(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 NSN National Stock Number NSN Nokia Siemens Networks NSN National Storytelling Network NSN NATO Stock Number NSN New Substances Notification (CEPA) NSN National Student Number (NZ) NSN Never Say Never Pty Ltd PTY LTD Propriety Limited (company structure in Australia) 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 (loss) and earnings (loss) 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. Three-month
dollars, except earnings period ended Year ended
per share data) December 31, December 31
2003 2002 2003 2002
------- ------- -------- ---------
Net income (loss), as
reported $2,447 $4,420 $11,835 $(4,645)
Add: Stock-based employee
compensation expense
included in reported net
income, net of taxes 404 215 1,528 780
Less: Total stock-based
employee compensation
expense determined under
fair value based method
for all awards, net of
taxes (1,148) (1,358) (4,992) (5,209)
------- ------- -------- --------
Pro forma net income (loss) $1,703 $3,277 $8,371 $(9,074)
======= ======= ======== ========
Earnings per share:
Basic and diluted, as
reported $ 0.02 $ 0.03 $ 0.10 $ (0.04)
======= ======= ======== ========
Basic and diluted, pro
forma $ 0.01 $ 0.03 $ 0.07 $ (0.07)
======= ======= ======== ========
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