SES NEW SKIES - New Skies Satellites Reports Strong Fourth Quarter and Full Year Results

New Skies Satellites Reports Strong Fourth Quarter and Full Year Results

12 February 2001

Full year 2000 revenues increased by 46% to $198.3 million,
with EBITDA growing by 70% to $116.5 million and diluted earnings per share increasing to $0.29 from ($0.02).

The Hague, The Netherlands – February 12, 2001. New Skies Satellites N.V. (AEX, NYSE: NSK), the global satellite communications company, today reported strong results for the three month period and year ended December 31, 2000. The Company completed the development of its corporate infrastructure and enjoyed significant revenue growth throughout the year, as a provider of both satellite and value-added communications services.

Highlights

Year Ended
December 31, 3 months ended
December 31,
US$m 2000 1999 2000 1999
Revenues $198.3 $135.5 $49.4 $36.2
Operating income 46.6 (3.5) 10.2 (10.0)
Net income 31.7 (2.2) 8.4 (6.6)
EBITDA 116.5 68.4 28.2 6.0
Earnings (loss) per share 0.29 (0.02) 0.07 (0.07)

Full year 2000 results

Commenting on today's announcement, Robert W. Ross, Chief Executive Officer of New Skies said:

“2000 was an important year for New Skies with the successful completion of our IPO, the launch of new, value added services, and the rapid growth in our revenues. We delivered on our strategy of offering a wider range of integrated communications solutions through the establishment of mediaports and other terrestrial facilities strategically located around the world. This allowed us to broaden our client base to include a higher proportion of service integrators and end users with sales at higher rates.

“To respond to the growing demand for our services, New Skies will increase satellite capacity significantly with the launch of the NSS-7 satellite later this year and the launch of the NSS-6 satellite in late 2002. We are also developing mediaports in two additional key locations and implementing additional digital platforms as we fill the six digital platforms established in 2000.

“With our core infrastructure complete and sales forces now substantially in place and fully operational, we expect another strong year of revenue growth.”

For the full year ended December 31, 2000, the company achieved revenue growth of $62.8 million, or 46%, to $198.3 million compared to $135.5 million for 1999. This considerable growth is attributed to an increase in fill rate of the station-kept satellite fleet from 58% to 63% and the success in migrating the inherited inventory of below-average price contracts to more market-based rates. The impact of a one-time cancellation payment of $19.7 million, as reported previously in the third quarter, and the subsequent resale of substantially all of this capacity further enhanced the growth for the year.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for 2000 increased to $116.5 million, up $48.1 million, or 70%, from $68.4 million for 1999. Excluding the one-time exceptional charge recorded in the fourth quarter 1999 relating to the KTV satellite contract termination, EBITDA increased by $32.6 million, or 39%, and excluding the one-time cancellation payment received in the third quarter 2000, EBITDA increased $12.9 million, or 15%.

Net income for the year was $31.7 million or $0.29 per diluted earnings per share, compared to a net loss of $2.2 million and $0.02 loss per share in 1999.

Fourth Quarter 2000 Highlights

In the fourth quarter 2000, New Skies recorded revenues of $49.4 million, compared to $36.2 million in the same period last year, reflecting growth of approximately 37%, or $13.2 million. The revenue growth in the quarter is the result of successful exploitation of available capacity further enhanced by market driven pricing of new business.

EBITDA for the fourth quarter 2000 increased to $28.2 million, from $6.0 million for the fourth quarter 1999. Excluding the one-time exceptional charge recorded in the fourth quarter 1999 relating to the KTV satellite contract termination, EBITDA increased by $6.7 million, or 31%.

Net income for the fourth quarter 2000 was $8.4 million, or $0.07 per diluted earnings per share, compared to a net loss of $6.6 million and $0.07 loss per share for the same period in the previous year.

Highlights for the year

 Successfully completed our Initial Public Offering (IPO) of 30,120,900 shares on both the Euronext Amsterdam N.V. and New York Stock Exchange yielding total net proceeds of $256 million. The offering price was $9.00 per ADS and €10.30 per ordinary share.

 Completed the successful syndication of a $300 million, 5-year unsecured revolving credit facility.

 Contracted with Lockheed Martin and Arianespace for the construction and launch of the NSS-6 satellite, which will be optimized for intra-regional Internet communications and which New Skies expects will begin commercial service in the Asia-Pacific region during the fourth quarter of 2002.

 Increased the fill rate on New Skies station-kept satellites to 63% at the end of December 31, 2000 from 48% on November 30, 1998, the date Intelsat transferred assets to New Skies, reflecting New Skies’ ability to successfully exploit the capacity of our satellite assets and execute on our strategic plan.

 Assumed payload operations of our five in-orbit satellites, which previously had been provided by INTELSAT under contract. New Skies also implemented our 24-hour, 7-days a week customer service operations at the New Skies Washington DC mediaport.

 Launched our first value added service, IPsyssm, which provides high-performance Internet connectivity to Internet service providers and telecommunications carriers worldwide using a high-bandwidth DVB (Digital Video Broadcast) or SCPC (Single Channel per Carrier) stream. Six DVB platforms were established and presently serve Central Europe, South and East Africa, Central Africa, India, Asia and Latin America.

 Sold almost 500 Mbps of IPsys services since product launch in May to a host of important Internet Service Providers (ISPs) including Satyam Infoway Ltd., India’s largest private ISP and e-Commerce company, and Impsat Brazil, a leading provider of Internet services throughout Latin America.

 Continued to gain market access around the world, adding countries such as: Argentina, Bolivia, Brazil, Canada, Gabon, Honduras, Kazakhstan, Nicaragua, Paraguay, and Uruguay.

 Leased more than 500 satellite circuits to customers for occasional use traffic, much of it generated during the Sydney Olympics.

 Acquired AAPT Sat-Tel Pty. Ltd., one of Australia’s leading satellite system integrators and network service providers. Renamed New Skies Networks Pty Ltd., the company provides an excellent gateway to Australia. New Skies Networks operates six teleports in the major Australian cities, and a suite of value added service products provides Internet access services to a number of Australian ISPs, and VSAT services to both commercial and government entities.

For further information please contact:

New Skies Satellites
Elizabeth Hess, VP, Corporate Communications +31 (0) 70 306 4133
ehess@newskies.com
Smithfield Financial
Nicholas Bastin +44 (0) 20 7360 4900

Note to editors
About New Skies Satellites

New Skies is a global satellite communications company with five satellites in geosynchronous orbit and ground facilities around the world. New Skies has two new satellites under construction, one due for launch in late 2001 and the second in late 2002.

Headquartered in The Hague, The Netherlands, and with offices in London, New Delhi, São Paulo, Singapore, Sydney and Washington, DC, New Skies is one of only three fixed satellite services companies with truly global satellite coverage.

New Skies offers video, voice, data and Internet communications services to a range of telecommunications carriers, broadcasters and Internet service providers around the world.

In line with its growth strategy, New Skies has secured rights to make use of six additional orbital positions and continues to broaden and diversify its customer base and to expand its provision of value-added, bundled communications services.

- Ends -

New Skies Satellites N.V. and Subsidiaries
Consolidated Balance Sheets
December 31, 2000 and 1999
(In thousands of U.S. Dollars, except share data)
December 31,
2000 1999
Assets

Current Assets
Cash and cash equivalents $ 232,898 $ 34,062
Trade receivables 47,016 38,154
Deferred tax asset - 3,806
Prepaid expenses and other 7,343 9,448
Total Current Assets 287,257 85,470

Communications, plant and other property, net 685,413 631,451
Deferred tax asset 12,823 13,960
Other receivables 51,452 51,452
Goodwill,net and other assets 27,672 -

TOTAL $ 1,064,617 $ 782,333

Liabilities and Shareholders’ Equity

Current Liabilities

Accounts payable and accrued liabilities $ 20,905 $ 8,567
Income taxes 5,170 -
Note payable - 22,000
Deferred revenues 8,586 4,359
Satellite performance incentives 4,372 4,125
Total Current Liabilities 39,033 39,051

Deferred revenues 4,388 4,843
Satellite performance incentives 15,639 19,278
Total Liabilities 59,060 63,172

Shareholders’ Equity

Governance preference shares (227,530,000 shares authorized, par value €0.05; none issued) -
-
Cumulative preferred financing shares (22,753,000 shares authorized, par value €0.05; none issued) -
-
Ordinary Shares (204,777,000 shares authorized, par value €0.05; 130,561,336 and 100,284,880 issued and outstanding, respectively)

6,026

5,110
Additional paid-in capital 976,177 718,542
Retained earnings (deficit) 27,596 (4,078)
Unearned compensation (1,347) (413)
Accumulated other comprehensive loss (2,895) -
Total Shareholders’ Equity 1,005,557 719,161

TOTAL $ 1,064,617 $ 782,333
New Skies Satellites N.V. and Subsidiaries
Consolidated Statements of Income
Years ended December 31, 2000 and 1999
(In thousands of U.S. Dollars, except share data)
Year ended
December 31,
2000 1999

Revenues $ 198,294 $ 135,544

Operating expenses:
Cost of operations 47,022 30,963
Selling, general and administrative 34,765 20,674
Termination of KTV satellite contract - 15,471
Depreciation and amortization 69,870 71,965
Total Operating Expenses 151,657 139,073

Operating Income (Loss) 46,637 (3,529)
Interest income, net (2,543) (169)
Income (Loss) Before Income Tax Expense (Benefit) 49,180 (3,360)

Income tax expense (benefit) 17,506 (1,176)
Net Income (Loss) 31,674 (2,184)

Basic and diluted earnings (loss) per share 1 $ 0.29 $ (0.02)

Three month periods ended December 31, 2000 and 1999 (Unaudited)
(In thousands of U.S. Dollars, except share data)
Three month period ended
December 31,
2000 1999

Revenues $ 49,424 $ 36,153

Operating expenses:
Cost of operations 12,401 8,264
Selling, general and administrative 8,862 6,427
Termination of KTV satellite contract - 15,471
Depreciation and amortization 17,945 16,040
Total Operating Expenses 39,208 46,202

Operating Income (Loss) 10,216 (10,049)
Interest (income) expense, net (3,259) 165
Income (Loss) Before Income Tax Expense (Benefit) 13,475 (10,214)

Income tax expense (benefit) 5,071 (3,575)
Net Income (Loss) 8,404 (6,639)

Basic and diluted earnings (loss) per share 1 $ 0.07 $ (0.07)

1 Earnings per share data for 1999 has been retroactively restated to reflect the 10:1 stock split approved at the June 2000 Annual Meeting of Shareholders.

New Skies Satellites N.V. and Subsidiaries
Consolidated Statements of Cash Flows
Years ended December 31, 2000 and 1999
(In thousands of U.S. Dollars)
Years ended
December 31,
2000 1999

Cash flows from operating activities:
Net income 31,674 (2,184)

Adjustments for non-cash items:
Depreciation and amortization 69,870 71,965
Deferred taxes 4,943 (1,176)
Termination of the KTV satellite contract - 15,471
Amortization of unearned stock compensation 1,757 108

Changes in operating assets and liabilities:
Trade receivables (7,932) (28,059)
Prepaid expenses and other 800 (1,834)
Accounts payable and accrued liabilities 9,291 4,076
Deferred revenues 2,288 1,881
Income tax payable 5,170 -
Net Cash Provided By Operating Activities 117,861 60,248

Cash flows from investing activities:
Payments for communication, plant and
other property (118,480) (73,058)
Acquisition of business (30,462) -
Net Cash Used In Investing Activities (148,942) (73,058)

Cash flows from financing activities:
Ordinary shares issued 255,860 -
Stock options exercised - 2,137
Proceeds of note payable and short-term borrowings 20,000 20,000
Repayment of note payable and short- term borrowings
(42,000) (20,000)
Satellite performance incentives (3,392) (2,038)
Net Cash Provided By Financing Activities 230,468 99

Effect of exchange rate differences (551) -

Net change in cash and cash equivalents 198,836 (12,711)
Cash and cash equivalents, beginning of period 34,062 46,773
Cash and cash equivalents, end of period $ 232,898 $ 34,062

Cash payments for interest (net of amounts capitalized) were $0.9 million in 2000, $0.3 million in 1999 and $1.8 million in 1998. No payments were made for income taxes in 2000, 1999 and 1998, respectively.