**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C.  20549**

 

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**FORM 10-Q**

 

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**(Mark One)**

 
| **ý** | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**                                                                                                                                                                                                                                                                                    |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |                                                                                                                                                                                                                                                                                                                                                                                      |
| ** ** | **For the quarterly period ended June 30,  2005**                                                                                                                                                                                                                                                                                                                                    |
|       |                                                                                                                                                                                                                                                                                                                                                                                      |
| **or**     |
|       |                                                                                                                                                                                                                                                                                                                                                                                      |
| **o**      | **TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT OF 1934**                                                                                                                                                                                                                                                                                  |
|       |                                                                                                                                                                                                                                                                                                                                                                                      |
|       | **For the transition period from                                to                             ** |

 

**CommissionFile Number:  333-123420**

 

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**NEW SKIESSATELLITES B.V.**

(Exactname of Registrant as specified in its charter)

 
| **The Netherlands**                                                              | ** ** | **20-1814083**          |
|----------------------------------------------------------------------------------|------------|-------------------------|
| (State or  other jurisdiction of                                                 |       | (I.R.S.  Employer       |
| Incorporation  or Organization)                                                  |       | Identification  Number) |
|                                                                             |       |                    |
| **Rooseveltplantsoen 4**                                                         |
| **2517 KR The Hague**                                                            |
| **The Netherlands**                                                              |
| (Address,  including zip code, of Registrant’s Principal Executive Offices) |
|                                                                             |       |                    |
| **(31) 70-306-4100**                                                             |
| (Registrant’s  telephone number, including area code)                       |

 

Indicate bycheck mark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrantwas required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days.  oYes  ýNo

 

Indicate bycheck mark whether the registrant is an accelerated filed (as defined in Rule 12b-2of the Exchange Act).  o Yes  ý No

 

As of July 31,2005, 18,200 ordinary shares of our common stock were outstanding.

 

 

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**NEW SKIES SATELLITES B.V.**

 

**TABLE OF CONTENTS**

 
| Introduction                                       |                                                                                        |
|----------------------------------------------------|---------------------------------------------------------------------------------------------|
|                                               |                                                                                        |   |
| Special  Note Regarding Forward-Looking Statements |                                                                                        |
|                                               |                                                                                        |   |
| Part I – Financial  Information          |                                                                                        |
|                                               |                                                                                        |   |
| Item 1.                                            | Financial  Statements                                                                       |   |
|                                               |                                                                                        |   |
|                                               | Condensed  Consolidated Balance Sheets (Unaudited)                                          |   |
|                                               |                                                                                        |   |
|                                               | Condensed  Consolidated Statements of Operations (Unaudited)                                |   |
|                                               |                                                                                        |   |
|                                               | Condensed  Consolidated Statements of Cash Flows (Unaudited)                                |   |
|                                               |                                                                                        |   |
|                                               | Notes to  Condensed Consolidated Financial Statements (Unaudited)                           |   |
|                                               |                                                                                        |   |
| Item 2.                                            | Management’s Discussion and Analysis of  Financial Condition and Results of Operations |   |
|                                               |                                                                                        |   |
| Item  3.                                           | Quantitative and Qualitiative Disclosure  About Market Risk                                 |   |
|                                               |                                                                                        |   |
| Item  4.                                           | Controls and Procedures                                                                     |   |
|                                               |                                                                                        |   |
| Part II – Other Information                   |                                                                                        |
|                                               |                                                                                        |   |
| Item 1.                                            | Legal Proceedings                                                                           |   |
|                                               |                                                                                        |   |
| Item 2.                                            | Unregistered Sales of Equity Securities and  Use of Proceeds                                |   |
|                                               |                                                                                        |   |
| Item 3.                                            | Defaults Upon Senior Securities                                                             |   |
|                                               |                                                                                        |   |
| Item 4.                                            | Submission of Matters to a Vote of Security  Holders                                        |   |
|                                               |                                                                                        |   |
| Item 5.                                            | Other Information                                                                           |   |
|                                               |                                                                                        |   |
| Item 6.                                            | Exhibits                                                                                    |   |

 

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# **INTRODUCTION**

#  

In thisquarterly report, all references to “New Skies,” “the Company,” “we,” “us,” “our”and “ours” refer to New Skies Satellites B.V. and its subsidiaries, unless thecontext otherwise requires or it is otherwise indicated.

 

# **SPECIAL NOTE REGARDING FORWARD-LOOKING S**TATEMENTS

#  

Certainstatements in this quarterly report are not historical facts and are “forward-lookingstatements” within the meaning of the U.S. federal securities laws. The PrivateSecurities Litigation Reform Act of 1995 provides a “safe harbor” for certainforward-looking statements as long as such information is identified asforward-looking and is accompanied by meaningful cautionary statementsidentifying important factors that could cause actual results to differmaterially from those projected in the information.  We intend that forward looking statementscontained in this report be covered by the safe harbors created under the U.S.federal securities laws. Words such as “believes,” “expects,” “estimates,” “may,”“intends,” “will,” “should” or “anticipates” and similar expressions or theirnegatives identify forward-looking statements.

 

Forward-lookingstatements, such as the statements regarding our ability to develop and expandour business, our ability to manage costs, our ability to exploit and respondto technological innovation, the effects of laws and regulations (including taxlaws and regulations) and legal and regulatory changes, the opportunities forstrategic business combinations and the effects of consolidation in ourindustry on us and our competitors, our anticipated future revenues, ouranticipated capital spending (including for future satellite procurements), ouranticipated financial resources, our expectations about the future operationalperformance of our satellites (including their projected operational lives),the expected strength of and growth prospects for our existing customers andthe markets that we serve, and other statements contained in this report regardingmatters that are not historical facts, involve predictions. Statements of thatsort involve known and unknown risks, uncertainties and other factors that maycause our actual results, performance or achievements or industry results to bematerially different from any future results, performance or achievementsexpressed or implied by any statements of that sort. These risks anduncertainties include, among other things:

 

•                  the level and type of demand for our services andfor the products and services provided by our customers to third parties,including the extent to which changes in demand and our competitive position aswell as the creditworthiness of our customers may result in changes to ourcontractual backlog for future services and in pricing pressure andovercapacity in the markets in which we compete;

 

•                  problems with respect to the construction, launch orin-orbit performance of our existing and future satellites, including possiblefuture losses on satellites that are not fully covered by insurance, or withthe performance of our ground-based facilities, including with the performanceof our Satellite Operations Center;

 

•                  our ability to attract sufficient funding to meetour future capital and debt-repayment requirements;

 

•                  competition and our competitiveness vis-à-vis otherproviders of satellite and ground-based services;

 

•                  the pace and effects of industry consolidation;

 

•                  the continued availability of insurance oncommercially reasonable terms, and the effects of any insurance exclusions;

 

•                  changing technology;

 

•                  changes in our business strategy or developmentplans;

 

•                  our ability to attract and retain qualifiedpersonnel;

 

•                  worldwide economic, geopolitical and businessconditions and risks associated with doing business on a global basis;

 

2

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•                  control by certain investment funds affiliated withThe Blackstone Group (the “investment funds”); and

 

•                  legal, regulatory, and tax developments, includingchanges in domestic and international governmental regulation.

 

We caution youthat the foregoing list of important factors is not exclusive. These risks anduncertainties could cause actual results to vary materially from future resultsindicated, expressed or implied in any forward-looking statements. In addition,in light of these risks and uncertainties, the matters referred to in theforward-looking statements may not in fact occur. We undertake no obligation toupdate or revise publicly any forward-looking statement as a result of newinformation, future events or otherwise, except as otherwise required by law.

 

3

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# **PART I – FINANCIAL INFORMATION**

#  

## **ITEM 1.**                                                     FINANCIAL STATEMENTS.

##  

**NEW SKIES SATELLITES B.V.**

### **CONDENSED CONSOLIDATED BALANCESHEETS (UNAUDITED)**

***(in thousands of U.S. dollars, except pershare data)***

 
| ** **                                                                                                                                         | ** ** | **As of****December 31, 2004** | ** ** | **As of  June 30, 2005** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------|------------|-------------------------------|------------|
| **Assets**                                                                                                                                         |       |                                |       |                          |       |
| **Current  assets**                                                                                                                                |       |                                |       |                          |       |
| Cash and  cash equivalents                                                                                                                         |       | $                                   | 37,958     |                          | $          | 40,467 |   |
| Trade  receivables, net of allowance for doubtful accounts of $7,262 and $8,199 as  of December 31, 2004 and June 30, 2005, respectively |       | 36,371                              |       | 36,403                        |       |
| Prepaid  expenses and other assets                                                                                                                 |       | 10,591                              |       | 9,699                         |       |
| **Total current  assets**                                                                                                                          |       | 84,920                              |       | 86,569                        |       |
| Communications,  plant and other property, net                                                                                                     |       | 895,906                             |       | 683,774                       |       |
| Deferred tax  assets                                                                                                                               |       | 17,754                              |       | 22,547                        |       |
| Debt  issuance costs and other assets                                                                                                              |       | 32,109                              |       | 21,846                        |       |
| Restricted  cash                                                                                                                                   |       | —                              |       | 30,000                        |       |
| **TOTAL  ASSETS**                                                                                                                                  |       | $                                   | 1,030,689  |                          | $          | 844,736 |   |
|                                                                                                                                               |       |                                |       |                          |       |
| **Liabilities  and Shareholders’ Deficiency**                                                                                                 |       |                                |       |                          |       |
| **Current  liabilities**                                                                                                                           |       |                                |       |                          |       |
| Accounts  payable and accrued liabilities                                                                                                          |       | $                                   | 28,380     |                          | $          | 29,354 |   |
| Accrued  interest                                                                                                                                  |       | 4,880                               |       | 7,094                         |       |
| Income taxes  payable                                                                                                                              |       | 20,480                              |       | 19,775                        |       |
| Deferred tax  liabilities                                                                                                                          |       | 10,848                              |       | 7,969                         |       |
| Deferred  revenues and other liabilities                                                                                                           |       | 21,008                              |       | 23,029                        |       |
| Satellite  performance incentives                                                                                                                  |       | 6,332                               |       | 5,340                         |       |
| **Total  current liabilities**                                                                                                                     |       | 91,928                              |       | 92,561                        |       |
| Deferred  revenues and other liabilities                                                                                                           |       | 10,224                              |       | 9,178                         |       |
| Satellite  performance incentives                                                                                                                  |       | 30,597                              |       | 28,274                        |       |
| Term loan  facility                                                                                                                                |       | 460,000                             |       | 228,560                       |       |
| Fixed and  floating rate notes                                                                                                                     |       | 285,000                             |       | 285,000                       |       |
| Subordinated  shareholder PIK loan                                                                                                                 |       | 155,884                             |       | 164,610                       |       |
| Other  subordinated shareholder loans                                                                                                              |       | —                              |       | 48,242                        |       |
| **Total  liabilities**                                                                                                                             |       | 1,033,633                           |       | 856,425                       |       |
|                                                                                                                                               |       |                                |       |                          |       |
| **Shareholders’  deficiency**                                                                                                                 |       |                                |       |                          |       |
| Ordinary  shares                                                                                                                                   |       | 23                                  |       | 23                            |       |
| Additional  paid in capital                                                                                                                        |       | 10,000                              |       | 17,740                        |       |
| Accumulated  deficit                                                                                                                               |       | (13,637                             | )          | (29,862                       | )          |
| Accumulated  other comprehensive income                                                                                                            |       | 670                                 |       | 410                           |       |
| **Total  shareholders’ deficiency**                                                                                                           |       | (2,944                              | )          | (11,689                       | )          |
| **TOTAL  LIABILITIES AND SHAREHOLDERS’ DEFICIENCY**                                                                                           |       | $                                   | 1,030,689  |                          | $          | 844,736 |   |

 

See notes to condensedconsolidated financial statements.

 

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**NEW SKIES SATELLITES B.V.**

### **CONDENSED CONSOLIDATED STATEMENTSOF OPERATIONS (UNAUDITED)**

***(in thousands of U.S. dollars)***

 
| ** **                                             | ** ** | **Three Months Ended  June 30** | ** ** | **Six Months Ended  June 30** | ** ** |
|--------------------------------------------------------|------------|--------------------------------------|------------|------------------------------------|------------|
| ** **                                             | ** ** | **Predecessor  2004**                | ** ** | **Successor  2005**                | ** ** | **Predecessor  2004** | ** ** | **Successor  2005** | ** ** |
|                                                   |       |                                 |       |                               |       |   |   |   |   |
| **Revenues  from telecommunication services**          |       | $                                    | 51,253     |                               | $          | 59,658 |   | $ | 103,108 |   | $ | 117,894 |   |
| **Operating  expenses:**                               |       |                                 |       |                               |       |   |   |   |   |
| Depreciation                                           |       | 25,775                               |       | 23,775                             |       | 51,643 |   | 47,278 |   |
| Cost of  operations:                                   |       |                                 |       |                               |       |   |   |   |   |
| General                                                |       | 13,623                               |       | 10,770                             |       | 27,375 |   | 21,829 |   |
| Stock-based  compensation                              |       | 87                                   |       | 1,113                              |       | 164 |   | 1,477 |   |
| Selling,  general and administrative:                  |       |                                 |       |                               |       |   |   |   |   |
| General                                                |       | 9,569                                |       | 10,276                             |       | 20,596 |   | 20,639 |   |
| Stock-based  compensation                              |       | 649                                  |       | 8,522                              |       | 1,232 |   | 11,692 |   |
| Transaction  related expenses                          |       | 2,846                                |       | —                             |       | 2,846 |   | — |   |
| Monitoring  agreement fees                             |       | —                               |       | 6,563                              |       | — |   | 6,938 |   |
| **Total  Operating Expenses**                          |       | 52,549                               |       | 61,019                             |       | 103,856 |   | 109,853 |   |
| Gain arising  on frequency coordination                |       | 32,000                               |       | —                             |       | 32,000 |   | 10,000 |   |
| **Operating  Income (Loss)**                           |       | 30,704                               |       | (1,361                             | )          | 31,252 |   | 18,041 |   |
| Interest  expense, net                                 |       | 258                                  |       | 21,630                             |       | 588 |   | 40,733 |   |
| **Income (Loss)  Before Income Tax Expense (Benefit)** |       | 30,446                               |       | (22,991                            | )          | 30,664 |   | (22,692 | ) |
| Income tax  expense (benefit)                          |       | 10,961                               |       | (6,566                             | )          | 11,039 |   | (6,467 | ) |
| **Net  Income (Loss)**                                 |       | $                                    | 19,485     |                               | $          | (16,425 | ) | $ | 19,625 |   | $ | (16,225 | ) |

 

See notes to condensedconsolidated financial statements.

 

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**NEW SKIES SATELLITES B.V.**

### **CONDENSED CONSOLIDATED STATEMENTSOF CASH FLOWS (UNAUDITED)**

***(in thousands of U.S. dollars)***

 
| ** **                                                    | ** ** | **Three Months Ended****June 30** | ** ** | **Six Months Ended****June 30** | ** ** |
|---------------------------------------------------------------|------------|----------------------------------------|------------|--------------------------------------|------------|
| ** **                                                    | ** ** | **Predecessor  2004**                  | ** ** | **Successor  2005**                  | ** ** | **Predecessor  2004** | ** ** | **Successor  2005** | ** ** |
| Cash flows  from operating activities:                        |       |                                   |       |                                 |       |   |   |   |   |
| Net income  (loss)                                            |       | $                                      | 19,485     |                                 | $          | (16,425 | ) | $ | 19,625 |   | $ | (16,225 | ) |
| Adjustments  for non-cash items:                              |       |                                   |       |                                 |       |   |   |   |   |
| Depreciation                                                  |       | 25,775                                 |       | 23,775                               |       | 51,643 |   | 47,278 |   |
| Non-cash  interest on PIK and other shareholder loans         |       | —                                 |       | 5,294                                |       | — |   | 9,633 |   |
| Deferred  taxes                                               |       | 529                                    |       | (7,766                               | )          | 775 |   | (7,664 | ) |
| Non-cash  stock-based compensation expense                    |       | 736                                    |       | 4,206                                |       | 1,396 |   | 7,739 |   |
| Amortization  of debt issuance costs                          |       | 160                                    |       | 6,284                                |       | 321 |   | 10,777 |   |
| Changes in  operating assets and liabilities:                 |       |                                   |       |                                 |       |   |   |   |   |
| Trade  receivables                                            |       | 301                                    |       | 1,363                                |       | (1,573 | ) | (61 | ) |
| Prepaid  expenses and other assets                            |       | (388                                   | )          | 2,869                                |       | 2,297 |   | 995 |   |
| Accounts  payable and accrued liabilities                     |       | 2,025                                  |       | 2,131                                |       | 5,428 |   | 1,066 |   |
| Accrued  interest                                             |       | —                                 |       | (5,891                               | )          | — |   | 2,214 |   |
| Income taxes  payable                                         |       | 10,110                                 |       | 650                                  |       | 9,846 |   | (689 | ) |
| Other  liabilities                                            |       | 1,906                                  |       | 1,953                                |       | 453 |   | 996 |   |
| **Net Cash  Provided by Operating Activities**                |       | 60,639                                 |       | 18,443                               |       | 90,211 |   | 56,059 |   |
|                                                          |       |                                   |       |                                 |       |   |   |   |   |
| Cash flows  from investing activities:                        |       |                                   |       |                                 |       |   |   |   |   |
| Payments for  communication, plant and other property         |       | (1,674                                 | )          | (1,013                               | )          | (3,859 | ) | (3,562 | ) |
| Reimbursement  of NSS-8 construction costs                    |       | —                                 |       | —                               |       | — |   | 168,000 |   |
| Increase in  restricted cash                                  |       | —                                 |       | —                               |       | — |   | (30,000 | ) |
| **Net Cash  Provided by (Used in) Investing Activities** |       | (1,674                                 | )          | (1,013                               | )          | (3,859 | ) | 134,438 |   |
|                                                          |       |                                   |       |                                 |       |   |   |   |   |
| Cash flows  from financing activities:                        |       |                                   |       |                                 |       |   |   |   |   |
| Stock  options exercised                                      |       | 347                                    |       | —                               |       | 741 |   | — |   |
| Dividend  paid                                                |       | (3,985                                 | )          | —                               |       | (3,985 | ) | — |   |
| Satellite  performance incentives                             |       | (1,587                                 | )          | (2,180                               | )          | (3,159 | ) | (3,828 | ) |
| Repayments  of senior long-term debt                          |       | —                                 |       | (142,600                             | )          | — |   | (231,440 | ) |
| Borrowings  under shareholder loans                           |       | —                                 |       | 145,043                              |       | — |   | 145,043 |   |
| Payments  under shareholder loans                             |       | —                                 |       | (9,208                               | )          | — |   | (97,708 | ) |
| **Net Cash  Used in Financing Activities**                    |       | (5,225                                 | )          | (8,945                               | )          | (6,403 | ) | (187,933 | ) |
| **Effect  of exchange rate differences**                      |       | (274                                   | )          | (35                                  | )          | (285 | ) | (55 | ) |
| **Net  increase in cash and cash equivalents**                |       | 53,466                                 |       | 8,450                                |       | 79,664 |   | 2,509 |   |
| **Cash and  cash equivalents, beginning of period**           |       | 49,451                                 |       | 32,017                               |       | 23,253 |   | 37,958 |   |
| **Cash and  cash equivalents, end of period**                 |       | $                                      | 102,917    |                                 | $          | 40,467 |   | $ | 102,917 |   | $ | 40,467 |   |

 

See notes to condensedconsolidated financial statements.

 

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**NEW SKIES SATELLITES B.V.**

### **NOTES TO CONDENSED CONSOLIDATEDFINANCIAL STATEMENTS (UNAUDITED)**

 

**1.****                                      BASISOF PRESENTATION**

 

Referencesmade to the “Company” or “New Skies” shall mean New Skies Satellites N.V. andits subsidiaries for the period up to and including November 1, 2004 andNew Skies Satellites B.V. and its subsidiaries for periods thereafter.

 

New SkiesSatellites B.V. was formed on September 7, 2004 as a corporation organizedunder the laws of the Netherlands.  TheCompany is currently controlled by investment funds affiliated with TheBlackstone Group (the “investment funds”).

 

Theaccompanying condensed consolidated financial statements have been prepared onthe basis of the consolidated results of New Skies Satellites B.V. andsubsidiaries following the acquisition of substantially all of the assets andassumption of substantially all of the liabilities of New Skies Satellites N.V.(the “Acquisition”).  Accordingly, theaccompanying consolidated financial statements have been prepared by presentingthe results for the periods prior to the Acquisition of New Skies SatellitesN.V. (labeled as “Predecessor”) with those for the period subsequent to the Acquisition(labeled as “Successor”).

 

Theseunaudited interim condensed consolidated financial statements have beenprepared in accordance with generally accepted accounting principles forinterim financial information and with the instructions to Form 10-Q and Article 10of Regulation S-X.  Accordingly, they donot include all of the information and footnotes required by accountingprinciples generally accepted in the United States for complete financialstatements.  In the opinion ofmanagement, the unaudited interim consolidated financial statements have beenprepared on a basis consistent with the audited consolidated financialstatements and include all adjustments, which are of a normal recurring nature,that management considers necessary for a fair statement of the Company’s consolidatedfinancial position and results of operations for the interim periods presented.The results of operations for the three and six month periods ended June 30,2005 are not necessarily indicative of the results that may be expected for theyear ending December 31, 2005.

 

Thecondensed consolidated balance sheet at December 31, 2004 has been derivedfrom the audited consolidated financial statements at that date but does notinclude all of the information and footnotes required by generally acceptedaccounting principles for complete financial statements.

 

For furtherinformation, refer to the audited consolidated financial statements andfootnotes thereto included in the Company’s audited consolidated financialstatements for the year ended December 31, 2004 included in the Company’s registrationstatement on Form S-4 (File No. 333-123420) filed with the Securitiesand Exchange Commission (“SEC”), as such registration statement becameeffective on June 8, 2005.

 

**2.****                                      DESCRIPTIONOF BUSINESS**

 

*Acquisition of New Skies Satellites N.V.*

 

The Companypurchased substantially all of the assets and liabilities of New SkiesSatellites N.V. on November 2, 2004. The Company acquired these assets andliabilities for cash consideration of $958.0 million and direct acquisitioncosts of $24.8 million, for a total purchase price of $982.8 million.  Management has performed a preliminaryallocation of the purchase price to the assets and liabilities acquired, whichthe Company believes is reasonable, but is subject to revision upon completionof an independent valuation study, which is expected to be finalized in thethird quarter of 2005. The amounts that the Company may record based on thefinal assessment and determination of fair values may differ significantly fromthose based on the preliminary purchase price allocation. The amounts allocatedto communications, plant and other property may be revised and depreciation anduseful lives may ultimately differ from those used in these interim condensedconsolidated financial statements, either of which could

 

7

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have amaterial impact on the financial position and results of operations of theCompany. Additionally, a portion of the purchase price may ultimately beallocated to identifiable intangible assets, which also could have a materialimpact on the financial position and results of operations of the Company.

 

In connectionwith the Acquisition, the investment funds contributed $153.0 million inthe form of a subordinated shareholder PIK loan (see Note 9). In addition, theCompany entered into senior secured credit facilities, consisting of a $460.0 millionterm loan facility and a $75.0 million revolving credit facility, issued$160.0 million aggregate principal amount of Floating Rate Notes due 2011and issued $125.0 million aggregate principal amount of 91/8%Senior Subordinated Notes due 2012 to fund the Acquisition (see Note 8).

 

*Prepayment of Credit Facility and Shareholder Loans; Amendment ofCredit Facilities*

 

In the firstquarter 2005, the Company entered into an amended agreement for NSS-8, pursuantto which the manufacturer refunded to the Company all construction paymentsthat had been made to date.  In February 2005,the Company used this refund, along with cash-on-hand, to pay down $88.8million under the term loan facility and to make an $88.5 milliondistribution to its direct parent and shareholder, New Skies Holding B.V.,resulting in a corresponding net reduction in amounts owed under theshareholder loans outstanding.

 

In the firstquarter of 2005, the Company’s senior secured credit agreement was amended toincrease the level of permitted dividends and to make the other changesdescribed in Item 2, “Management’s Discussion and Analysis of FinancialCondition and Results of Operations —Liquidity and Capital Resources”.  The amended credit facilities allow for thepayment of dividends by the Company and New Skies Holding B.V. of up to $65million for 2005 and annual dividends thereafter in an amount equal to 105% ofthe amount permitted to be paid in the immediately preceding fiscal year.  Such dividends will be permitted only so longas no events of default exist under the credit agreement and provided that theCompany’s debt to Adjusted EBITDA is below certain thresholds at the time ofpayment.  The amount of dividendsavailable will also be reduced by certain shareholder and other payments madeby the Company.  This amendment becameeffective upon the consummation of the Initial Public Offering (“NSS IPO”) ofNew Skies Holdings Ltd. (“Holdings”), our ultimate parent company, thatoccurred on May 13, 2005 (as further discussed below).

 

Pursuant tothe amendment to the senior secured credit agreement, the amounts allowed foradditional dividends increased (i) from $95.0 million to $100.0 million(to allow for the distribution paid in connection with the amended NSS-8agreement, as discussed above) and (ii) from $10.0 million to $20.0million, increasing to $30.0 million if the Company’s Total Leverage Ratio isequal to or less than 5.0x.

 

In connectionwith the NSS IPO, the Company also amended the terms of the SubordinatedShareholder PIK Loans to provide for the option to make payments of principaland interest in cash or in-kind in order to accommodate the payment ofdividends by the Company to Holdings, which will allow Holdings to paydividends to its shareholders going forward.

 

*Initial Public Offering*

 

On May 13,2005, Holdings completed the sale of 11.9 million newly issued ordinary shares,equivalent to approximately 37% of the total currently issued and outstandingordinary shares, in an initial public offering. The sale of an additional 1.8 million shares, consisting of sharesissued to cover overallotments, was completed on May 27, 2005.  The principal asset of Holdings, which is aholding company and has no direct operations, is its equity interest in theCompany.

 

Holdings providedthe Company with $137.3 million of the NSS IPO net proceeds by way of anindirect shareholder loan. We used $131.2 million of these funds, togetherwith $11.4 million of cash-on-hand, to repay $142.6 million of the termloan facility and the remaining $6.1 million of these funds to pay a feeto Blackstone Management Partners IV L.L.C. in connection with the terminationof the transaction and monitoring fee agreement.

 

Prior to theconsummation of the NSS IPO, Holdings completed an internal restructuringpursuant to which the investment funds and management contributed 100% of theequity, preferred equity certificates and convertible preferred equitycertificates of New Skies Investments S.a.r.l. (our previous ultimate holdingcompany) to Holdings. Due to this reorganization, the investment funds andmanagement became

 

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owners of 100%of the equity of Holdings. As a result, New Skies Investments S.a.r.l., NewSkies Holding B.V. and the Company became indirect wholly-owned subsidiaries ofHoldings.

 

In connectionwith the NSS IPO, Holdings granted options to some of the Company’s employees,including its senior executives, to purchase shares of its common stock.  See Note 10 and Item 2, “Management’s Discussionand Analysis of Financial Condition and Results of Operations —StockCompensation.”

 

*Dividend Policy*

 

The board of directors of Holdings hasadopted a dividend policy which reflects an intention to distribute asubstantial portion of the cash generated by its business in excess ofoperating expenses and working capital requirements, interest and capitalexpenditures as regular quarterly dividends to its shareholders.

 

*Offers to ExchangeSenior Floating Rate Notes and Senior Subordinated Notes*

 

On June 8,2005, the Company filed a registration statement on Form S-4 in which theCompany offered to exchange $160,000,000 principal amount of its SeniorFloating Rate Notes due 2011, which have been registered under the SecuritiesAct of 1933, for any and all of its outstanding $160,000,000 Senior FloatingRate Notes due 2011 and to exchange $125,000,000 principal amount of its 91/8%Senior Subordinated Notes due 2012, which have been registered under theSecurities Act of 1933, for any and all of its outstanding $125,000,000 91/8%Senior Subordinated Notes due 2012.  Theexchange offers expired on July 9, 2005. All outstanding notes were tendered in the exchange offers.  The Company conducted the exchange offers inorder to satisfy certain of its obligations under the registration rightsagreements entered into in connection with the placement of the outstandingnotes.  The terms of the exchange notesissued in the exchange offers are substantially identical to the outstandingnotes, except that the exchange notes are freely tradeable.  The Company did not receive any cash proceedsfrom the issuance of the exchange notes in the exchange offers.

 

**3.****                                      SUMMARYOF SIGNIFICANT ACCOUNTING POLICIES**

 

The Company’s significantaccounting policies are summarized in its audited consolidated financialstatements for the year ended December 31, 2004 included its registrationstatement on Form S-4 (File No. 333-123420) filed with the SEC, assuch registration statement became effective on June 8, 2005.  There have been no material changes to theCompany’s significant accounting policies since that date.

 

*Recently Issued But Not Adopted AccountingStandard*

 

In May 2005, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (“SFAS”) No. 154, “Accounting Changes and Error Corrections” (“SFAS 154”) which replaces Accounting Principles Board Opinion No. 20, “Accounting Changes”, and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements.” This statement applies to all voluntary changes in accounting principle and changes resulting from the adoption of a new accounting pronouncement that do not specify transition requirements. SFAS 154 requires retrospective application to prior periods’ financial statements for changes in accounting principle unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. SFAS 154 also requires that retrospective application of a change in accounting principle be limited to the direct effects of the change. Indirect effects of a change in accounting principle should be recognized in the period of the accounting change. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005 with early implementation permitted for accounting changes and corrections of errors made in fiscal years beginning after the date this statement was issued. SFAS 154 is effective for the Company as of January 1, 2006 and is not expected to have a material impact on the Company’s consolidated financial statements.

 

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**4.****                                     ****COMPREHENSIVEINCOME (LOSS)**

 

Comprehensiveincome (loss) includes net income (loss) and translation adjustments that wererecognized directly in equity. Translation adjustments of $(0.7) million and$(0.2) million for the three months ended June 30, 2004 and 2005,respectively, and $(0.6) million and $(0.3) million for the six months ended June 30,2004 and 2005, respectively, were incurred and consequently, comprehensiveincome (loss) in these periods is equal to $18.8 million, $(16.6) million, $19.0million and $(16.5) million, respectively.

 

**5.****                                      COMMUNICATIONS,PLANT AND OTHER PROPERTY**

 

Communications,plant and other property consisted of the following (in thousands of U.S.dollars):

 
| ** **                        | ** ** | **December 31,  2004** | ** ** | **June 30,  2005** | ** ** |
|-----------------------------------|------------|-----------------------------|------------|-------------------------|------------|
| Spacecraft  and launch costs      |       | $                           | 684,348    |                    | $          | 684,348 |   |
| Construction-in-progress          |       | 171,684                     |       | 4,565                   |       |
| Communications  support and other |       | 35,883                      |       | 35,252                  |       |
| Buildings                         |       | 20,013                      |       | 22,909                  |       |
|                              |       | 911,928                     |       | 747,074                 |       |
| Less:  accumulated depreciation   |       | 16,022                      |       | 63,300                  |       |
| Total                             |       | $                           | 895,906    |                    | $          | 683,774 |   |

 

Construction-in-progressrelates primarily to satellites under construction and related launch services.

 

In January 2005,the Company entered into an amended agreement for NSS-8, which (among otherthings) amended the satellite’s contractual delivery deadline and the paymentterms.  Under the prior agreement, NSS-8was scheduled to enter commercial service in the first quarter of 2005.  Consistent with the terms of the amendedagreement, NSS-8 is projected to be launched in the second half of 2006 and toenter commercial service approximately 90 days after launch.  In consideration for the agreement toincrease the purchase price and to amend the delivery deadline, themanufacturer agreed to refund all construction payments made to date, amountingto $168.0 million.  The entire purchaseprice, including $30.0 million that has been placed in escrow, will be paid assatellite performance incentives, subject to satisfactory performance of thesatellite during its contractual design life, and the Company will providecommercially reasonable security to Boeing with respect to unpaid incentives.

 

Uponacceptance of a spacecraft from a satellite manufacturer, the net present valueof performance incentive payments is recorded as a part of the historical costof the satellite.

 

**6.****                                      CONTRACTUALCOMMITMENTS**

 

In furtherdevelopment and operation of the Company’s global commercial communicationssatellite system, significant additional expenditures are anticipated.  At June 30, 2005, the Company had acontract for the construction, development and launch of the NSS-8 satellitewith future committed payments on this program. Such commitments (“satellite incentives”) totaled $378.5 million at June 30,2005, including interest that will be accrued thereon, that are scheduled tofall due over the anticipated operating life of this satellite, to the extentthat the satellite operates successfully throughout its contractual design life.

 

The Companyhas recorded a liability of $5.2 million at June 30, 2005 representing thepresent value, at a weighted average discount rate of 7.7%, for incentivepayments on the NSS-5, NSS-703 and NSS-806 satellites.  Incentive payments of $1.1 million, $1.4million, $1.4 million, $0.9 million, $0.5 million and $0.4 million are due forthe six months ending December 31, 2005 and for the years ending 2006,2007, 2008, 2009 and 2010, respectively.

 

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The Companyhas recorded an additional liability of $28.4 million at June 30, 2005representing incentive payments, before interest, on the NSS-6 and NSS-7satellites requiring payments of $3.5 million in each of the five years ending December 31,2009 and $17.4 million in the years thereafter. A variable interest charge equivalent to LIBOR plus 1% on theoutstanding principal will also be incurred on these payments.

 

**7.****                                      INCOMETAXES**

 

The Companyhas yet to conclude its discussions with the Dutch tax authorities regardingthe final tax obligation of its Predecessor, New Skies Satellites N.V.  Such obligation was a liability assumed by theCompany in connection with the Acquisition, and accordingly, the Company recordeda provision for income tax liabilities of $20.0 million at the date ofAcquisition.  The Company believes thatthis adequately covers the liability assumed with respect to the predecessor’stax liability.  However, as thesediscussions are expected to be finalized on or before November 2005, anysubsequent adjustment to the corporate tax liability would be made in thepreliminary purchase price allocation and would not be expected to impactearnings.

 

Certaincountries within which the Company operates have sought to impose withholdingtaxes or income taxes on payments from customers in those countries,notwithstanding the existence of tax treaties that the Company believes do notpermit the imposition of such taxes.  Inparticular, the Government of India has characterized payments made byIndian-based customers and certain payments made by non-resident customers inIndia as “royalty payments”. The Government of India has assessed taxes on thesepayments for the period April 1999 to March 2002 and may in thefuture assess taxes on these payments for subsequent periods.  The Company has appealed the assessment inaccordance with applicable procedures for handling disputed taxassessments.  However, the Company believesit is probable that a loss has been incurred and have recorded an accrualtotaling $5.0 million as of June 30, 2005, representing management’s bestestimate of the amount of the withholding tax obligations that have accruedthrough June 30, 2005. There were no material developments in these proceedingsduring the three and six month periods ended June 30, 2005.

 

For furtherinformation on these matters, see Note 6 to the Notes to Consolidated FinancialStatements included in the Company’s registration statement on Form S-4(File No. 333-123420) filed with the SEC, as such registration statementbecame effective on June 8, 2005.

 

**8.****                                      FINANCINGARRANGEMENTS**

 

At June 30,2005, senior long-term debt consisted of the following (in thousands of U.S.dollars):

 

| Senior  Secured Credit Facilities                            |   | $       | 228,560 |   |
|--------------------------------------------------------------|--------|---------|---------|--------|
| $160 million  Senior Floating Rate Notes due 2011            |   | 160,000 |    |
| $125 million  91¤8%  Senior Subordinated Notes due 2012 |   | 125,000 |    |
| Total senior  long-term debt                                 |   | $       | 513,560 |   |

 

In addition,at June 30, 2005 the Company had $125.0 million available under itsrevolving credit facility against which $4.3 million of standby letters ofcredit had been drawn.

 

*Senior Secured Credit Facilities*

 

Concurrentwith the consummation of the Acquisition, the Company entered into seniorsecured credit facilities consisting of a $460 million senior secured term loanfacility that matures in May 2011 and a $75 million senior securedrevolving credit facility that matures in November 2010.  During the first half of 2005, the Companyprepaid $231.4 million of the term loan borrowings and entered into anamendment to the credit facilities that, among other things, increased therevolving credit facility to $125.0 million. See Note 2.  At maturity anyoutstanding borrowings on the facilities must be repaid in full.  Borrowings under the facilities bear interestat an adjustable rate based on LIBOR for the associated period of draw-downplus

 

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an applicablemargin.  The facilities are subject tocustomary covenant requirements and restrictions, including a maximum leverageratio and a minimum interest coverage ratio.

 

At June 30,2005, a one-month draw-down under the senior secured credit facilities wouldbear interest at 5.6% per annum.  Inaddition, a commitment fee of 0.375% is paid on the unused revolving credit amount.  At June 30, 2005 there was $228.6million outstanding on the senior secured term loan facility and no amountsoutstanding under the senior secured revolving credit facility.

 

*Senior Floating Rate Notes due 2011*

 

In connectionwith the Acquisition, the Company issued $160 million aggregate principalamount of Floating Rate Notes due 2011. The notes bear interest at a rate per annum, reset semi-annually, equalto LIBOR plus 51/8%.  The notes rank equally in right of payment toall existing and future senior indebtedness; rank senior in right of payment toall the Company’s existing and future senior subordinated indebtedness andsubordinated indebtedness and rank subordinated in right of payment to theCompany’s secured indebtedness.  Earlyredemption is permitted without penalty on or after November 1, 2006.  Redemption prior to this date is subject to areducing premium of a maximum of 2% of the principal amount.  The notes are subject to customary covenantrequirements and restrictions.  On July 9,2005, the Company concluded an exchange offer pursuant to which all outstandingSenior Floating Rate Notes due 2011 were exchanged for Senior Floating RateNotes due 2011 that have been registered under the Securities Act of 1933.  See Note 2. At June 30, 2005, the $160 million of outstanding notes bore aninterest rate of 8.5% per annum.

 

*9*1/8*% Senior SubordinatedNotes due 2012*

 

In connectionwith the Acquisition, the Company issued $125 million aggregate principalamount of 91/8% Senior Subordinated Notesdue 2012.  The notes rank junior in rightof payment to all existing and future senior indebtedness; rank equal in rightof payment to all the Company’s existing and future senior subordinatedindebtedness and rank subordinated in right of payment to the Company’s securedindebtedness.  Early redemption ispermitted without penalty on or after November 1, 2007.  Redemption prior to this date is subject to areducing premium of a maximum of 4.6% of the principal amount.  The notes are subject to customary covenantrequirements and restrictions.  On July 9,2005, the Company concluded an exchange offer pursuant to which all outstandingSenior Subordinated Notes due 2012 were exchanged for Senior Subordinated Notesdue 2012 that been registered under the Securities Act of 1933.  See Note 2. At June 30, 2005, all $125 million of issued notes wereoutstanding.

 

**9.****                                      SUBORDINATEDSHAREHOLDER LOANS**

 

In connectionwith the Acquisition, the Company received a loan with a $153.0 millionaggregate principal amount from New Skies Holding B.V., the Company’s directparent (“Subordinated shareholder PIK loan”). Interest accrues at the rate of 11.5% per annum on a cumulative basis,payable on maturity on April 1, 2014. The loan is subordinated to all current and future indebtedness of theCompany.  At June 30, 2005, $164.6million of this Subordinated shareholder PIK loan including accrued interest wasoutstanding.

 

In addition,at June 30, 2005, $48.2 million of other subordinated shareholder loans,including accrued interest, were outstanding. These comprised $99.1 million, including accrued interest thereon, that wasindirectly due from Holdings following a $88.5 million distribution made out ofthe proceeds of the NSS-8 refund and $9.2 million of expenses paid on behalf ofHoldings offset by indirectly received loans totaling $147.3 million fromHoldings, including interest accrued thereon, primarily from the proceedsgenerated from the NSS IPO.  These fundswere used, in part, to repay $131.2 million of the Company’s senior long-termdebt and the fee arising from the termination of the monitoring agreement withBlackstone Management Partners IV L.L.C. The other subordinated shareholder loans all mature on December 31,2014 and accrue interest at the rate of 11.5% per annum on a cumulative basis.

 

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**10.****                               STOCK-BASEDCOMPENSATION**

 

During the threemonth period ended June 30, 2005 and in conjunction with the NSS IPO andthe underwriters’ election to exercise their overallotment option, Holdingsgranted options to the Company’s employees to acquire shares of Holdings commonstock pursuant to Holdings’ Stock Incentive Plan. The aggregate stock-basedcompensation associated with these awards is approximately $21.7 million,reflecting the estimated fair value of the options at the date of grant. Thenon-cash stock-based compensation is being recognized as an operating expenseover the vesting period of the options. Certain of the options will vest basedsolely on continued employment over the next four years and the remainingoptions will vest upon the achievement of performance goals over the next fourto seven years or imputed returns realized on sales of Holdings shares by theinvestment funds.

 

Options werealso granted in conjunction with the NSS IPO and the underwriters’ election toexercise their overallotment option that vested upon issuance and wereimmediately exercised, allowing the Company’s employees to acquire 115,075 sharesof Holdings’ common stock.

 

The Company’s optionholdersalso received a bonus in the second quarter of 2005 of approximately $4.3million from cash on hand as a consequence of the underwriters’ decision toexercise their overallotment option.

 

All optionsmust be exercised or forfeited upon vesting. At June 30, 2005, all optionshad exercise prices of approximately $3.05 and weighted average remainingcontractual lives of three years.  Nooptions were exerciseable at June 30, 2005.  Upon the payment of dividends by Holdings,options will be adjusted to take into account that the optionholder will notreceive the benefit of that dividend.

 

The Companyrecognized $9.6 million and $13.2 million of stock-based compensation expensefor the three and six month periods ended June 30, 2005 under the Stock IncentivePlan.  For the three and six month periodsended June 30, 2004 stock-based compensation was $0.7 million and $1.4million, respectively.

 

**11.****                               SUBSEQUENTEVENT**

 

In July 2005,the Company reached an agreement with SES Global S.A. affiliates (“SES”) relatingto orbital slot coordination matters. Under its terms, the Company agreed not to bring a fixed satelliteservice satellite into use at its 125 degrees west longitude location in orderto ensure that SES will be able to operate its own satellite at this locationwithout interference.  In return, SES madea total payment to the Company of $9.5 million in August 2005, which willbe used to further reduce the Company’s outstanding debt.  This payment will be reflected in the Company’sresults for the three and nine month periods ending September 30, 2005.

 

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| **ITEM 2.** | **MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND  RESULTS OF OPERATIONS.** |
|-------------|--------------------------------------------------------------------------------------------------|

 

*The followingdiscussion and analysis of our financial condition and results of operationsshould be read in conjunction with our consolidated financial statements andrelated notes included elsewhere in this report and with our management’sdiscussion and analysis included in our registration statement on Form S-4(File No. 333-123420) filed with the SEC, as such registration statement becameeffective on June 8, 2005. This discussion contains forward-lookingstatements. Please see “Special Note Regarding Forward-Looking Statements” andthe Risk Factors included in our registration statement on Form S-4  for a discussion of certain of theuncertainties, risks and assumptions associated with these statements.*

 

***References made to the “Company”,“New Skies”, “we” or “our” shall mean New Skies Satellites N.V. and itssubsidiaries for the period up to and including November 1, 2004 and NewSkies Satellites B.V. and its subsidiaries for periods thereafter.***

 

***Management Overview***

 

We are aglobal satellite communications company that owns and operates five in-orbitsatellites and has one additional satellite under construction.  We provide satellite-based transponder capacityfor the transmission of data services, video services, Internet-relatedservices and voice services.  We alsooffer ground-based services in conjunction with our satellite capacity in orderto provide our customers with end-to-end communications services for certainapplications.

 

Overall, the business climate for the threeand six month periods ended June 30, 2005, while improving somewhat, onbalance remained difficult. However, because pricing was relatively stablethroughout these periods at approximately $1.2 million per 36 MHz-equivalenttransponder, the growth in our fill rate from 52% at June 30, 2004 to 61% atJune 30, 2005 resulted in a 16% revenue growth over this period.

 

As discussed in Note 1 to the Condensed ConsolidatedFinancial Statements, the Company’s consolidated financial statements have beenprepared on the basis of the consolidated results of New Skies Satellites B.V.and subsidiaries following the acquisition of substantially all of the assetsand assumption of substantially all of the liabilities of New Skies SatellitesN.V. (the “Acquisition”). Accordingly, the results for the periods prior to theacquisition of New Skies Satellites N.V. have been labeled as “Predecessor” andthose for the period subsequent to the Acquisition have been labeled as “Successor”.

 

***Revenues***

 

We earnrevenues by providing transponder capacity, or a combination of transpondercapacity and terrestrial facilities and services, to customers around the globeto allow them to transmit and receive signals using our satellites.  We provide transponder capacity on both afixed term and occasional use basis.  Forthe three and six month periods ended June 30, 2004 and 2005, we derivedour telecommunication services revenues from the following geographic regions (basedon the billing addresses of our customers):

 
| ** **                    | ** ** | **Three Months Ended June 30** | ** ** | **Six Months Ended June 30** | ** ** |
|-------------------------------|------------|-------------------------------------|------------|-----------------------------------|------------|
| **Region**                    | ** ** | **Predecessor  2004**               | ** ** | **Successor  2005**               | ** ** | **Predecessor  2004** | ** ** | **Successor  2005** | ** ** |
| North America                 |       | 36                                  | %          | 42                                | %          | 35 | % | 41 | % |
| Europe                        |       | 21                                  |       | 20                                |       | 21 |   | 21 |   |
| India, Middle East and Africa |       | 22                                  |       | 19                                |       | 22 |   | 18 |   |
| Latin America                 |       | 13                                  |       | 11                                |       | 13 |   | 10 |   |
| Asia Pacific                  |       | 8                                   |       | 8                                 |       | 9 |   | 10 |   |
| Total                         |       | 100                                 | %          | 100                               | %          | 100 | % | 100 | % |

 

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Generally, the region within which a customerpurchases services provides a reasonable indication of the location where theservices are used. However, some of our customers may purchase capacity toprovide services outside of their home country and, as a result,this distribution may not reflect actual traffic flow on our satellites. Basedon our analysis of market trends, we believe that we will continue toexperience geographic diversity of our revenues going forward.

 

The tablebelow presents our estimate, based on our analysis of information provided by ourcustomers, of the percentage of our revenues from telecommunication servicesfor the three and six month periods ended June 30, 2004 and 2005 that wereattributable to each of the three broad categories of content for which ourcustomers used our services: data and voice transmissions for government andcorporate communications networks and international carriers; videotransmissions for broadcasting, cable, and other entertainment media; and thetransmission of Internet content for Internet service providers and others.

 
| ** **              | ** ** | **Three Months Ended  June 30** | ** ** | **Six Months Ended  June 30** | ** ** |
|-------------------------|------------|--------------------------------------|------------|------------------------------------|------------|
| **Services**            | ** ** | **Predecessor  2004**                | ** ** | **Successor  2005**                | ** ** | **Predecessor  2004** | ** ** | **Successor  2005** | ** ** |
| Data and voice services |       | 47                                   |       | 56                                 |       | 47 |   | 55 |   |
| Video services          |       | 36                                   |       | 30                                 |       | 35 |   | 32 |   |
| IP services             |       | 17                                   |       | 14                                 |       | 18 |   | 13 |   |
| Total                   |       | 100                                  | %          | 100                                | %          | 100 | % | 100 | % |

 

As the tableabove shows, our revenues continued to be balanced across these threecategories of demand.  Based on ananalysis of information provided by our customers, we estimate that during boththe three and six month periods ended June 30, 2005, we derivedapproximately one-third of our revenues from services to customers where theultimate end user was a governmental entity.

 

***Results of Operations***

 

***Three and six month periods ended June 30, 2005 compared to thethree and six month periods ended June 30, 2004***

 

*Revenues.*  Our revenues from telecommunication services forthe three month period ended June 30, 2005 were $59.7 million, an increaseof $8.4 million, or 16%, as compared to $51.3 million for the same period in2004.  Our revenues fromtelecommunication services for the six month period ended June 30, 2005were $117.9 million, an increase of $14.8 million, or 14%, as compared to$103.1 million for the same period in 2004.

 

Our revenuegrowth during the three and six month periods ended June 30, 2005 wasprimarily due to an increase in the overall satellite fleet fill rate to 61% asof June 30, 2005 compared to 52% as of June 30, 2004. This growth infill rate was principally driven by increased demand for NSS-6 capacity servingthe Indian subcontinent, central Asia, and the Middle East, and fromrestoration services provided to Intelsat on NSS-5 commencing in the firstquarter of 2005.

 

*Depreciation*.  Depreciation expense decreased by$2.0 million, or 8%, to $23.8 million for the three month periodended June 30, 2005 from $25.8 million for the same period last year.Depreciation expense decreased by $4.3 million, or 8%, to$47.3 million for the six month period ended June 30, 2005 from$51.6 million for the same period last year.

 

In both cases,the net decrease was primarily due to the preliminary fair value adjustment ofour fixed asset base that occurred in connection with the Acquisition.

 

*Cost of operations.*  Our cost of operations for the three monthperiod ended June 30, 2005 decreased by $1.8 million, or 13%, to $11.9million from $13.7 million for the same period in 2004.  Our cost of operations for the six monthperiod ended June 30, 2005 decreased by $4.2 million, or 15%, to $23.3million from $27.5 million for the same period in 2004.

 

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The decreasein our cost of operations resulted from reductions in third party teleport and satellitecapacity procurements as well as overall reductions in other operatingexpenditures offset, in part, by increases in stock-based compensation expense.

 

*Selling, general and administrative.*  For the quarter ended June 30, 2005, ourselling, general and administrative expenses increased $8.6 million, or 84%,to $18.8 million from $10.2 million in the same period in 2004.  For the six month period ended June 30,2005, our selling, general and administrative expenses increased $10.5 million,or 48%, to $32.3 million from $21.8 million in the same period in2004.

 

The increase ineach period primarily resulted from the stock-based compensation expense recordedin accordance with Statement of Financial Accounting Standards (“SFAS”) No. 123of $8.5 million and $11.7 million for the three and six month periods ended June 30,2005, respectively, compared to $0.6 million and $1.2 million, respectively, inthe same periods in 2004.

 

*Transaction-related expenses.***We did not incur any transaction-related expenses duringthe three and six month periods ended June 30, 2005. New Skies SatellitesN.V. directly incurred $2.8 million of transaction-related expenses for thethree and six month periods ended June 30, 2004.

 

Theseexpenditures related to financial advisory fees and expenses, legal costs andaccounting fees in connection with the sale of substantially all the assets andliabilities of New Skies Satellites N.V. on November 2, 2004.

 

*Monitoring agreement fees.** *In connection withthe Acquisition, Blackstone Management Partners IV L.L.C. entered into atransaction fee and monitoring agreement with the Company relating to certainmonitoring, advisory and consulting services for a period of ten years ending November 2,2014. In connection with the NSS IPO, Blackstone Management Partners IV L.L.C.terminated this agreement. As contemplated by this agreement, the Company paid,in the second quarter of 2005, a termination fee to Blackstone ManagementPartners IV L.L.C. of $6.1 million from the proceeds of the NSS IPO. Inaddition, the company paid $0.4 million and $0.8 million for these services duringthe three and six month periods ended June 30, 2005, respectively. No suchcosts were incurred in the equivalent periods during 2004.

 

*Gain arising on frequency coordination.*  In the first quarter of 2005, we received aone-time payment of $10.0 million from SES Global affiliates following thesuccessful resolution of certain frequency coordination matters, whichpositively affected our operating income for the six month period ended June 30,2005. Similarly, in the second quarter of 2004, we received a one-time paymentof $32.0 million from Intelsat LLC following the successful resolution ofcertain frequency coordination matters, which also positively affected ouroperating income for the three and six month periods ended June 30, 2004.

 

*Interest expense, net.*Interest expense, net was $21.6 million and $40.7 million for the three and sixmonth periods ended June 30, 2005, respectively, compared to $0.3 millionand $0.6 million, respectively, in the same period in 2004.  The net increase was due to the addition ofnew debt used in the financing of the Acquisition.

 

*Income tax expense(benefit).* Our income tax benefit for the quarter ended June 30, 2005 was $6.6 millioncompared to income tax expense of $11.0 million for the quarter ended June 30,2004. Our effective income tax rate for the quarter ended June 30, 2005 decreasedto 28.5% as compared to 36% in the same period in 2004. Our income tax benefit forthe six month period ended June 30, 2005 was $6.5 million, compared to incometax expense of $11.0 million for the same period in 2004.  Our effective income tax rate for the periodwas 28.5%, as compared to 36% in the same period in 2004.

 

In both cases,the decrease in our effective tax rate was primarily due to the reduction in thestatutory rate of taxation in The Netherlands, our tax jurisdiction, from 34.5%to 30.0%.

 

***Backlog***

 

At June 30,2005, we had a contractual backlog for future services of $555.0 million, with$105.9 million of payments scheduled to fall due during the second half of2005, $139.0 million for 2006, $97.9 million for 2007, $62.5 million for 2008,$44.1 million for 2009 and $105.6 million for 2010 and thereafter.

 

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***Liquidity and Capital Resources***

 

Historically,our principal sources of liquidity have been cash flow provided by operatingactivities and amounts available under our revolving credit facility.

 

Based upon ourcurrent level of operations, we believe that our cash from operatingactivities, together with available borrowings under our revolving creditfacility, will be adequate to meet our anticipated requirements for theforeseeable future.

 

If we do notgenerate sufficient cash flow provided by operating activities to satisfy ourdebt service obligations, we may have to undertake alternative financing plans,such as refinancing or restructuring our indebtedness, selling assets, reducingor delaying capital investments or seeking to raise additional capital.  Our ability to restructure or refinance ourdebt will depend on the capital markets and our financial condition at suchtime.  Any refinancing of our debt couldbe at higher interest rates and may require us to comply with more onerouscovenants, which could further restrict our business operations.  In addition, the terms of existing or futuredebt instruments, including the senior secured credit facilities and theindentures governing the notes, may restrict us from adopting some of thesealternatives.  Furthermore, theinvestment funds do not have any obligation to provide us with debt or equityfinancing in the future.  Our inabilityto generate sufficient cash flow to satisfy our debt service obligations, or torefinance our obligations on commercially reasonable terms, would have anadverse effect, which could be material, on our business, financial position,results of operations and cash flows, as well as on our ability to satisfy ourobligations in respect of the notes and the senior secured credit facilities.

 

In connectionwith our purchase of New Skies Satellites N.V. in November 2004, weentered into senior secured credit facilities, consisting of a $460.0 millionterm loan facility and a $75.0 million revolving credit facility.  During the quarter ended March 31, 2005,we repaid $88.8 million of borrowings under our term loan facility using proceedsof the NSS-8 satellite construction milestone payment refund and cash-on-hand and,during the quarter ended June 30, 2005, we repaid $142.6 million ofborrowings under our term loan facility from a loan indirectly received fromHoldings out of the proceeds of the NSS IPO and from cash on hand.  See Note 2 to Condensed ConsolidatedFinancial Statements (Unaudited).

 

In connectionwith the NSS IPO (as discussed below) and effective upon its consummation, andas a result of the prepayments made to date, we amended our senior securedcredit facilities to, among other things:

 

•                  increasethe amount of permitted dividends (see Note 2 to Condensed ConsolidatedFinancial Statements (Unaudited));

 

•                  eliminatethe requirement that we repay the term loans under the senior secured creditfacilities with excess cash flow;

 

•                  reducethe maximum required total leverage ratio covenant;

 

•                  lowerthe applicable margins for the term loan facility;

 

•                  permitthe payment of the management fee to Blackstone Management Partners IV L.L.C.in connection with the termination of the transaction and monitoring feeagreement;

 

•                  conformthe change of control definition to the change of control definition in theindentures governing the notes; and

 

•                  increasethe revolving credit facility from $75.0 million to $125.0 million.

 

As of June 30,2005, we had $513.6 million outstanding in aggregate senior indebtedness, withan additional $125.0 million of available borrowings under our revolving creditfacility (excluding outstanding letters of credit, which reduce the amountavailable under the revolving credit facility).

 

Our creditfacilities require us to maintain certain financial covenants and also subjectus to certain restrictive covenants. As of June 30, 2005, we were incompliance with all of such covenants.

 

17

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On May 13, 2005, Holdings, which is ourultimate parent company, completed the sale of 11.9 million newly issued ordinaryshares, equivalent to approximately 37% of the total currently issued andoutstanding ordinary shares in an initial public offering.  The sale of an additional 1.8 million shares,consisting of shares issued to cover overallotments, was completed on May 27,2005.  The principal asset of Holdings,which is a holding company and has no direct operations, is its equity interestin us.

 

Holdingsprovided us with $137.3 million of the NSS IPO net proceeds by way of anindirect shareholder loan. As noted above, we used $131.2 million of thesefunds, together with $11.4 million of cash-on-hand, to repay$142.6 million of our term loan facility.

 

***Dividend Policy***

 

The board ofdirectors of Holdings has adopted a dividend policy which reflects an intentionto distribute a substantial portion of the cash generated by our business inexcess of operating expenses and working capital requirements, interest andcapital expenditures as regular quarterly dividends to its shareholders. Inconnection with the NSS IPO, we amended our senior secured credit facilitiesand Subordinated Shareholder PIK Loan to, among other things, permit greaterflexibility to pay dividends to Holdings’ shareholders.

 

***Sources and Uses ofCash***

 
| ** **                                           | ** ** | **Three Months Ended  June 30** | ** ** | **Six Months Ended  June 30** | ** ** |
|------------------------------------------------------|------------|--------------------------------------|------------|------------------------------------|------------|
| **(In thousands of US dollars)**                     | ** ** | **Predecessor****2004**              | ** ** | **Successor****2005**              | ** ** | **Predecessor****2004** | ** ** | **Successor****2005** | ** ** |
|                                                 |       |                                 |       |                               |       |   |   |   |   |
| Net cash provided by operating activities            |       | $                                    | 60,639     |                               | $          | 18,443 |   | $ | 90,211 |   | $ | 56,059 |   |
| Net cash (used in) provided by investing  activities |       | (1,674                               | )          | (1,013                             | )          | (3,859 | ) | 134,438 |   |
| Net cash used in financing activities                |       | (5,225                               | )          | (8,945                             | )          | (6,403 | ) | (187,933 | ) |
|                                                      |            |                                      |            |                                    |            |  |  |  |  |  |  |  |  |

 

Net cashprovided by operating activities for the three and six month periods ended June 30,2005 totaled $18.4 million and $56.1 million, respectively, compared to $60.6million and $90.2 million for the same periods in 2004.  We had cash and cash equivalents ofapproximately $40.5 million as of June 30, 2005, and net trade receivablesof $36.4 million, of which $26.8 million, or approximately 74%, were current orless than 30 days overdue.

 

Cash used ininvesting activities during the three and six month periods ended June 30,2005 was funded using cash flow from operating activities.  Net cash used in investing activities totaled$1.0 million and $3.6 million in the three and six month periods ended June 30,2005, respectively, excluding $168.0 million of satellite procurement milestonepayments refunded to us in the first quarter of 2005 of which $30.0 million ofcash was placed in escrow as part of the amended NSS-8 agreement.

 

Net cash usedin financing activities included $231.4 million of repayments made against oursenior long-term debt in the six month period ended June 30, 2005 fromboth the NSS-8 refund referred to above and from the net proceeds of the NSSIPO that were provided to us by way of shareholder loans.

 

18

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***Contractual Obligations***

 

The followingtable summarizes our contractual obligations, including related estimated interestpayments based on actual applicable rates for fixed rate obligations andforward interest rates for the relevant period for variable rate obligations,and commercial commitments as of June 30, 2005:

 
| ** **                                    | ** ** | **Payments Due by Period** | ** ** |
|-----------------------------------------------|------------|----------------------------|------------|
| **(In thousands of US Dollars)**              | ** ** | **Total**                  | ** ** | **Less than  one year** | ** ** | **1-3 years** | ** ** | **4-5 years** | ** ** | **After 5  years** | ** ** |
|                                          |       |                       |       |   |   |   |   |   |   |   |   |
| Long-term debt:                               |       |                       |       |   |   |   |   |   |   |   |   |
| Term loan facility(1)                         |       | $                          | 317.7      |   | $ | 16.9 |   | $ | 29.3 |   | $ | 30.3 |   | $ | 241.2 |   |
| Senior floating rate notes(1)                 |       | 256.4                      |       | 16.7 |   | 29.4 |   | 30.1 |   | 180.2 |   |
| Senior subordinated notes(1)                  |       | 210.5                      |       | 13.3 |   | 22.8 |   | 22.8 |   | 151.6 |   |
| Subordinated shareholder loans(1)             |       | 267.7                      |       | — |   | — |   | — |   | 267.7 |   |
| Operating leases                              |       | 2.9                        |       | 0.3 |   | 1.7 |   | 0.9 |   | — |   |
| Unconditional purchase obligations(2)         |       | 17.4                       |       | 3.3 |   | 7.8 |   | 2.7 |   | 3.6 |   |
| Conditional payment obligations(3)            |       | 47.4                       |       | 7.2 |   | 12.5 |   | 10.0 |   | 17.7 |   |
| Contingent conditional payment obligations(4) |       | 378.5                      |       | — |   | 55.3 |   | 25.5 |   | 297.7 |   |
| Total                                         |       | $                          | 1,498.5    |   | $ | 57.7 |   | $ | 158.8 |   | $ | 122.3 |   | $ | 1,159.7 |   |

 

----

(1)                                  Thesenior secured credit facilities consist of a $460.0 million seniorsecured term loan facility that matures in May 2011 and a$125.0 million senior secured revolving credit facility that matures in November 2010.Borrowings under the facilities bear interest at an adjustable rate based onLIBOR for the associated period of draw-down plus an applicable margin. At June 30,2005, a one-month draw-down under the facilities would bear interest at 5.6%per annum. In addition, a commitment fee of 0.375% is paid on the unusedrevolving credit amount.

 

The outstanding senior floating rate notes bear interest at a rate perannum, reset semi-annually, equal to LIBOR plus 51/8%.At June 30, 2005, these notes accrued interest at a rate of 8.5% perannum.

 

The outstanding senior subordinated notes bear interest at a rate of 91/8%.

 

The subordinated shareholder loans all have fixed repayment dates of December 31,2014, except the subordinated shareholder PIK loan which matures on April 1,2014. Shareholder loans bear interest at 11.5% per annum on a cumulative basis.

 

(2)                                  Unconditionalpurchase obligations reflect agreements for the procurement of fiber, satellitecapacity and teleport services.

 

(3)                                  Conditionalpayment obligations reflect the in-orbit performance incentives of our in-orbitsatellite fleet and are paid over the lifetime of the respective satellite.

 

(4)                                  Contingentconditional payment obligations reflect the in-orbit incentives of our NSS-8satellite, currently under construction. The payment obligation is contingentlypayable on the satisfactory performance of the spacecraft and is paid over itslifetime.

 

***Off-Balance Sheet Arrangements***

 

We do not haveany off-balance sheet arrangements as defined under SEC rules.

 

19

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***Stock Compensation***

 

During the threemonth period ended June 30, 2005 and in conjunction with the NSS IPO andthe underwriters’ election to exercise their overallotment option, Holdingsgranted options to our employees to acquire shares of its common stock pursuantto Holdings’ Stock Incentive Plan. The aggregate stock-based compensationassociated with these awards is approximately $21.7 million, reflectingthe estimated fair value of the options at the date of grant. The non-cashstock-based compensation is being recognized as an operating expense over thevesting period of the options. Certain of the options will vest based solely oncontinued employment over the next four years and the remaining options willvest upon the achievement of performance goals over the next four to sevenyears or imputed returns realized on sales of Holdings shares by the investmentfunds.

 

In addition,options were also granted in conjunction with the NSS IPO and the underwriters’election to exercise their overallotment option that vested upon issuance andwere immediately exercised, allowing our employees to acquire 115,075 shares ofHoldings’ common stock.

 

Ouroptionholders also received a bonus in the second quarter of 2005 ofapproximately $4.3 million from cash on hand as a consequence of theunderwriters’ decision to exercise their overallotment option.

 

All optionsmust be exercised or forfeited upon vesting. At June 30, 2005, all optionshad exercise prices of approximately $3.05 and weighted average remainingcontractual lives of three years.  Nooptions were exerciseable at June 30, 2005.  Upon the payment of dividends by Holdings,options will be adjusted to take into account that the optionholder will notreceive the benefit of that dividend.

 

The Companyrecognized $9.6 million and $13.2 million of stock-based compensation expensefor the three and six month periods ended June 30, 2005 under the StockIncentive Plan.  For the three and sixmonth periods ended June 30, 2004, stock-basedcompensation was $0.7 million and $1.4 million, respectively.

 

As a result ofthe non-cash stock-based compensation costs noted above, our operating expensesfor the three month period ended June 30, 2005 were, and we anticipatethat our operating expenses for 2005 will be, higher than for prior periods. Additionally,the recognition of the deferred stock-based compensation over the applicablevesting periods will result in non-cash expense in the respective periods,thereby reducing our earnings in those periods.

 

**Taxation**

 

We have yet toconclude our discussions with the Dutch tax authorities regarding the final taxobligation of our Predecessor, New Skies Satellites N.V. Such obligation was aliability assumed by us in connection with the Acquisition, and accordingly, werecorded a provision for income tax liabilities of $20.0 million at thedate of Acquisition. We believe that this adequately covers the liabilityassumed with respect to the Predecessor’s tax liability. However, as thesediscussions are expected to be finalized on or before November 2005, anysubsequent adjustment to the corporate tax liability would be made in thepreliminary purchase price allocation and would not be expected to impactearnings.

 

Certaincountries within which we operate have sought to impose withholding taxes orincome taxes on payments from customers in those countries, notwithstanding theexistence of tax treaties that we believe do not permit the imposition of suchtaxes. In particular, the Government of India has characterized payments madeby Indian-based customers and certain payments made by non-resident customersin India as “royalty payments”. The Government of India has assessed taxes on thesepayments and may in future assess taxes on these payments for subsequentperiods. We have appealed the tax assessment in accordance with applicableprocedures for handling disputed tax assessments.  However, we believe it is probable that aloss has been incurred and have recorded an accrual totaling $5.0 million as ofJune 30, 2005, representing management’s best estimate of the amount ofthe withholding tax obligations that have accrued through June 30, 2005.  There were nomaterial developments in this proceeding during the three month period ended June 30,2005.

 

20

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**RecentlyIssued But Not Yet Adopted Accounting Standards**

 

In May 2005, the Financial Accounting Standards Board issued SFAS No. 154, “Accounting Changes and Error Corrections” (“SFAS 154”) which replaces Accounting Principles Board Opinions No. 20, “Accounting Changes”, and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements.” This statement applies to all voluntary changes in accounting principle and changes resulting from the adoption of a new accounting pronouncement that do not specify transition requirements. SFAS 154 requires retrospective application to prior periods’ financial statements for changes in accounting principle unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. SFAS 154 also requires that retrospective application of a change in accounting principle be limited to the direct effects of the change. Indirect effects of a change in accounting principle should be recognized in the period of the accounting change. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005 with early implementation permitted for accounting changes and corrections of errors made in fiscal years beginning after the date this statement was issued. SFAS 154 is effective for us as of January 1, 2006 and is not expected to have a material impact on our consolidated financial statements.

 

21

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## **ITEM 3.**                                                     QUANTITATIVE AND QUALITIATIVE DISCLOSUREABOUT MARKET RISK.

## ** **

For adiscussion of the market risks affecting us, see “Management’s Discussion andAnalysis of Financial Condition and Results of Operations – Market Risk” in ourregistration statement on Form S-4 (File No. 333-123420) filed withthe SEC, as such registration statement became effective on June 8, 2005.

 

As of June 30,2005, senior debt consisted of fixed-rate borrowings of $125.0 million,$160.0 million of floating rate debt and $228.6 million outstandingunder our floating rate term loan facility. The potential effect of ahypothetical 10% adverse fluctuation in interest rates for one year on ourfixed rate borrowings outstanding at June 30, 2005 would be a reduction infair value of approximately $1.1 million. The potential effect of ahypothetical 10% adverse fluctuation in interest rates for one year on$160.0 million of floating rate debt and $228.6 million of floatingrate term loan facility at June 30, 2005 would be a reduction in cashflows of approximately $1.4 million and $1.2 million, respectively,and a reduction in net income of approximately $1.0 million and $0.9 million,respectively.

 

## **ITEM 4.**                                                     CONTROLS AND PROCEDURES.

## ** **

We maintain disclosure controls andprocedures that are designed to ensure that information required to bedisclosed in our report under the Securities Exchange Act of 1934, as amended(the “Exchange Act”), is recorded, processed, summarized and reported withinthe time periods specified in the Securities and Exchange Commission’s rules andforms, and that such information is accumulated and communicated to ourmanagement, including our Chief Executive Officer and Chief Financial Officer,as appropriate, to allow timely decisions regarding required disclosures. Anycontrols and procedures, no matter how well designed and operated, can provideonly reasonable assurance of achieving the desired control objectives. Ourmanagement, with the participation of our Chief Executive Officer and ChiefFinancial Officer, has evaluated the effectiveness of the design and operationof our disclosure controls and procedures as of June 30, 2005. Based uponthat evaluation and subject to the foregoing, our Chief Executive Officer andChief Financial Officer concluded that the design and operation of ourdisclosure controls and procedures provided reasonable assurance that thedisclosure controls and procedures are effective to accomplish theirobjectives.

 

In addition, there was no change in ourinternal control over financial reporting that occurred during the quarter endedJune 30, 2005 that has materially affected, or is reasonably likely tomaterially affect, our internal control over financial reporting.

 

22

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# **PART II – OTHER INFORMATION**

# ** **

## **ITEM 1.**                                                     LEGAL PROCEEDINGS.

## ** **

None.

 

## **ITEM 2.**                                                     UNREGISTERED SALES OF EQUITYSECURITIES AND USE OF PROCEEDS.

## ** **

None.

 

## **ITEM 3.**                                                     DEFAULTS UPON SENIOR SECURITIES.

## ** **

None.

 

## **ITEM 4.**                                                     SUBMISSION OF MATTERS TO A VOTEOF SECURITY HOLDERS.

## ** **

None.

 

## **ITEM 5.**                                                     OTHER INFORMATION.

## ** **

InJanuary 2005, Intelsat, Ltd. (“Intelsat”) announced that its IS-804satellite, a Lockheed Martin Series 7000 satellite, experienced anelectrical power system anomaly that caused the total loss of thespacecraft.  Lockheed Martin has not yetcompleted its investigation of this failure. It is our understanding thatLockheed Martin has not identified any workmanship issues associated with theIS-804 satellite. As a result, we understand that Lockheed Martin is evaluatingsystem design issues that could cause a failure under certain environmental andoperational conditions.  Such systemdesign issues could potentially affect other satellites of the same seriesmanufactured by Lockheed Martin, including two satellites owned by us.  However, Lockheed Martin has not isolated theroot cause of the Intelsat satellite failure or the probability of such causereoccurring on other satellites of the same series.  As a result, Lockheed Martin has not yetdetermined to what extent other satellites of the same series face an increasedrisk of failure or whether operating procedures should be implemented tomitigate, in whole or in part, any such risk.

 

## **ITEM 6.**                                                     EXHIBITS.

 
| **Exhibit****Number** | ** ** | **Description**                                                                                                                             |
|-----------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------|
| 2.1 (1)               |       | Acquisition Agreement among Neptune One  Holdings Ltd., Munaro Holdings B.V. and New Skies Satellites N.V., dated  June 5, 2004        |
| 3.1 (6)               |       | Deed of Incorporation of New Skies  Satellites B.V.                                                                                         |
| 3.2                   |       | Articles of Association of New Skies  Satellites B.V., as amended                                                                           |
| 4.1 (2)               |       | Indenture, dated November 2, 2004,  between New Skies Satellites B.V. and U.S. Bank National Association (Senior  Floating Rate Notes) |

 

23

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| 4.2 (2)   |   | Indenture, dated November 2, 2004,  between New Skies Satellites B.V. and U.S. Bank National Association (Senior  Subordinated Notes)                                                                                                                                                                                                                                                                                                                    |
|-----------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.1 (1)  |   | Credit Agreement, dated November 2,  2004, among New Skies Holding B.V., New Skies Satellites B.V., certain other  subsidiaries, the lenders party thereto from time to time, Deutsche Bank AG,  New York Branch, as Administrative Agent and as Collateral Agent for the  Lenders, ABN Amro Bank N.V., as Syndication Agent and Deutsche Bank  Securities Inc. and ABN Amro Incorporated, as Joint Lead Arrangers and  Joint Book Running Managers |
| 10.2 (1)  |   | Parent Guarantee and U.S. Pledge Agreement,  dated November 2, 2004, between New Skies Satellites B.V. and Deutsche  Bank AG, New York Branch                                                                                                                                                                                                                                                                                                            |
| 10.3 (1)  |   | Holdings Guarantee, dated November 2,  2004, between New Skies Holding B.V. and Deutsche Bank AG, New York Branch                                                                                                                                                                                                                                                                                                                                        |
| 10.4 (2)  |   | Equitable Charge of Shares, dated  November 2, 2004, between New Skies Satellites B.V. and Deutsche Bank  AG, New York Branch                                                                                                                                                                                                                                                                                                                            |
| 10.5 (1)  |   | Subordinated Intercompany Loan Agreement,  dated November 2, 2004, between New Skies Satellites B.V. and New Skies  Holding B.V.                                                                                                                                                                                                                                                                                                                         |
| 10.6 (1)  |   | Subordinated Intercompany Loan Agreement,  dated November 2, 2004, between New Skies Holding B.V. and New Skies  Investments S.à.r.l.                                                                                                                                                                                                                                                                                                               |
| 10.7 (1)  |   | Agreement of Undisclosed Pledge of Third  Party Accounts Receivable, dated November 2, 2004, between New Skies  Satellites B.V. and Deutsche Bank AG, New York Branch                                                                                                                                                                                                                                                                                    |
| 10.8 (1)  |   | Agreement of Disclosed Pledge of  Subordinated Intercompany Loan Receivables, dated November 2, 2004,  between New Skies Holding B.V. and Deutsche Bank AG, New York Branch                                                                                                                                                                                                                                                                              |
| 10.9 (1)  |   | Agreement of Disclosed Pledge of Bank  Accounts, dated November 2, 2004, between New Skies Satellites B.V. and  Deutsche Bank AG, New York Branch                                                                                                                                                                                                                                                                                                        |
| 10.10 (1) |   | Agreement of Non-Possessory Pledge of  Assets, dated November 2, 2004, between New Skies Satellites B.V. and  Deutsche Bank AG, New York Branch                                                                                                                                                                                                                                                                                                          |
| 10.11 (1) |   | Agreement of Disclosed Pledge of Insurance  Receivables, Subordinated Intercompany Loan Agreement, dated November 2,  2004, between New Skies Satellites B.V. and Deutsche Bank AG                                                                                                                                                                                                                                                                       |
| 10.12 (1) |   | Agreement of Pledge of Intellectual  Property Rights, dated November 2, 2004, between New Skies Satellites  B.V. and Deutsche Bank AG, New York Branch                                                                                                                                                                                                                                                                                                   |
| 10.13 (1) |   | Agreement and Deed of Mortgage and Pledge,  dated November 2, 2004, between New Skies Satellites B.V. and Deutsche  Bank AG, New York Branch                                                                                                                                                                                                                                                                                                             |
| 10.14 (1) |   | Agreement and Deed of Pledge of Shares in  New Skies Satellites MAR B.V., dated November 2, 2004, between New Skies  Satellites B.V. and Deutsche Bank AG, New York Branch                                                                                                                                                                                                                                                                               |
| 10.15 (1) |   | Agreement and Deed of Pledge of Shares in  Morharras B.V., dated November 2, 2004, between New Skies Satellites  B.V. and Deutsche Bank AG, New York Branch                                                                                                                                                                                                                                                                                              |
| 10.16 (1) |   | Agreement of Disclosed Pledge of  Intercompany Accounts Receivable, dated November 2, 2004, between New  Skies Satellites B.V. and Deutsche Bank AG, New York Branch                                                                                                                                                                                                                                                                                     |
| 10.17 (1) |   | Agreement and Deed of Pledge of Shares in  New Skies Satellites B.V., dated November 2, 2004, between New Skies  Holding B.V. and Deutsche Bank AG, New York Branch                                                                                                                                                                                                                                                                                      |
| 10.18 (2) |   | Transaction and Monitoring Fee Agreement,  dated November 2, 2004, between New Skies Satellites B.V. and Blackstone  Management Partners IV L.L.C.                                                                                                                                                                                                                                                                                                       |
| 10.19 (3) |   | Amended and Restated Employment Agreement,  dated October 5, 2004, between New Skies Satellites N.V. and  Daniel S. Goldberg                                                                                                                                                                                                                                                                                                                        |
| 10.20 (3) |   | Amended and Restated Employment Agreement,  dated November 1, 2004, between New Skies Satellites N.V. and  Andrew M. Browne                                                                                                                                                                                                                                                                                                                         |
| 10.21 (3) |   | Amended and Restated Employment Agreement,  dated November 1, 2004, between New Skies Satellites N.V. and  Scott J. Sprague                                                                                                                                                                                                                                                                                                                         |
| 10.22 (3) |   | Amended and Restated Employment Agreement,  dated November 1, 2004, between New Skies Satellites N.V. and  Michael C. Schwartz                                                                                                                                                                                                                                                                                                                      |
| 10.23 (3) |   | Amended and Restated Employment Agreement,  dated November 1, 2004, between New Skies Satellites N.V. and  Stephen J. Stott                                                                                                                                                                                                                                                                                                                         |
| 10.30 (2) |   | Agreement, dated April 29, 2004,  between New Skies Satellites N.V. and Intelsat LLC                                                                                                                                                                                                                                                                                                                                                                     |
| 10.31 (2) |   | Agreement, dated March 2, 2005,  between New Skies Satellites B.V. and SES Global Satellite                                                                                                                                                                                                                                                                                                                                                              |

 

24

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|             |   | Leasing Limited                                                                                                                                                                                                                                                                                                          |
|------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.32 (2)        |   | Satellite and In-orbit Insurance Policy  No. 875/A3F005932                                                                                                                                                                                                                                                          |
| 10.33 (2)        |   | Satellite and In-orbit Insurance Policy  No. 875/A4F024902                                                                                                                                                                                                                                                          |
| 10.34 (5) † |   | Term Sheet, dated February 17, 2005,  between New Skies Satellites B.V. and Intelsat Global Sales &  Marketing Ltd.                                                                                                                                                                                   |
| 10.35 (5) † |   | Composite Compiled Satellite Contract,  dated February 22, 2005, between New Skies Satellites B.V. and Boeing  Satellites Systems International, Inc. for NSS-8 Spacecraft and  Associated Equipment and Services, Contract No. NSS-20-03-01, as amended                                                  |
| 10.36 (4)        |   | First Amendment to Credit Agreement, dated  February 22, 2005, among New Skies Holding B.V., New Skies Satellites  B.V., the lenders party to the Credit Agreement named therein, Deutsche Bank  AG, New York Branch, as Administrative Agent and as Collateral Agent and ABN  Amro Bank N.V., as Syndication Agent |
| 10.37 (4)        |   | First Amendment to Agreement of  Non-Possessory Pledge of Assets, dated February 22, 2005, between New  Skies Satellites B.V., as Pledgor, and Deutsche Bank AG, New York Branch, as Pledgee                                                                                                                        |
| 10.38 (4)        |   | First Amendment to Agreement of Disclosed  Pledge of Bank Accounts, dated February 22, 2005, between New Skies  Satellites B.V., as Pledgor, and Deutsche Bank AG, New York Branch, as  Pledgee                                                                                                                     |
| 10.39 (4)        |   | First Amendment to Agreement of Undisclosed  Pledge of Third Party Accounts Receivable, dated February 22, 2005,  between New Skies Satellites B.V., as Pledgor, and Deutsche Bank AG, New York  Branch, as Pledgee                                                                                                 |
| 31.1             |   | Certification of Chief Executive Officer  pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the  Securities Exchange Act of 1934, as amended                                                                                                                                                          |
| 31.2             |   | Certification of Chief Financial Officer  pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the  Securities Exchange Act of 1934, as amended                                                                                                                                                          |
| 32.1 +           |   | Certification of Chief Executive Officer  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                            |
| 32.3 +           |   | Certification of Chief Financial Officer  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                            |

 

----

| (1)    | Incorporated by reference to the  Registration Statement on Form S-1 of New Skies Satellites Holdings Ltd.  (File No. 333-122322) filed on January 27, 2005.                      |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                             |
| (2)    | Incorporated by reference to Amendment No.  1 to the Registration Statement on Form S-1 of New Skies Satellites  Holdings Ltd. (File No. 333-122322) filed on March 9, 2005. |
|   |                                                                                                                                                                                             |
| (3)    | Incorporated by reference to Amendment No.  2 the Registration Statement on Form S-1 of New Skies Satellites  Holdings Ltd. (File No. 333-122322) filed on March 28, 2005.        |
|   |                                                                                                                                                                                             |
| (4)    | Incorporated by reference to Amendment No.  3 the Registration Statement on Form S-1 of New Skies Satellites  Holdings Ltd. (File No. 333-122322) filed on April 25, 2005.        |
|   |                                                                                                                                                                                             |
| (5)    | Incorporated by reference to Amendment No.  4 the Registration Statement on Form S-1 of New Skies Satellites  Holdings Ltd. (File No. 333-122322) filed on May 6, 2005.           |
|   |                                                                                                                                                                                             |
| (6)    | Incorporated by reference to Amendment No.  1 to the Registration Statement on Form S-4 of New Skies Satellites B.V.  (File No. 333-123420) filed on May 27, 2005.                     |

 

25

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| † | Confidential treatment has been granted for  portions of this document.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| +      | Pursuant to Commission Release No. 33-8212,  this certification will be treated as “accompanying” this Quarterly Report on  Form 10-Q and not “filed” as part of such report for purposes of Section 18  of the Exchange Act, or otherwise subject to the liability of Section 18  of the Exchange Act and this certification will not be deemed to be  incorporated by reference into any filing under the Securities Act of 1933,  as amended, or the Exchange Act, except to the extent that the registrant  specifically incorporates it by reference. |

 

**SIGNATURES**

 

Pursuant tothe requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.

 
|   | NEW SKIES  SATELLITES B.V.                     |
|--------|------------------------------------------------|
|   |                                           |
|   | August 15,  2005                          |
|   |                                           |
|   |                                           |
|   | /s/ Andrew M. Browne                           |   |
|   | Andrew M.  Browne                              |
|   | Chief  Financial Officer and Managing Director |
|   |  (Principal Financial Officer)            |
|   |                                           |
|   |                                           |
|   | /s/ Mary J. Dent                               |   |
|   | Mary J. Dent                                   |
|   | Authorized  U.S. Representative                |

 

26

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**EXHIBIT INDEX**

 
| **Exhibit****Number** | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|-----------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2.1 (1)               |       | Acquisition Agreement among Neptune One  Holdings Ltd., Munaro Holdings B.V. and New Skies Satellites N.V., dated  June 5, 2004                                                                                                                                                                                                                                                                                                                          |
| 3.1 (6)               |       | Deed of Incorporation of New Skies  Satellites B.V                                                                                                                                                                                                                                                                                                                                                                                                            |
| 3.2                   |       | Articles of Association of New Skies  Satellites B.V., as amended                                                                                                                                                                                                                                                                                                                                                                                             |
| 4.1 (2)               |       | Indenture, dated November 2, 2004,  between New Skies Satellites B.V. and U.S. Bank National Association (Senior  Floating Rate Notes)                                                                                                                                                                                                                                                                                                                   |
| 4.2 (2)               |       | Indenture, dated November 2, 2004,  between New Skies Satellites B.V. and U.S. Bank National Association (Senior  Subordinated Notes)                                                                                                                                                                                                                                                                                                                    |
| 10.1 (1)              |       | Credit Agreement, dated November 2,  2004, among New Skies Holding B.V., New Skies Satellites B.V., certain other  subsidiaries, the lenders party thereto from time to time, Deutsche Bank AG,  New York Branch, as Administrative Agent and as Collateral Agent for the  Lenders, ABN Amro Bank N.V., as Syndication Agent and Deutsche Bank  Securities Inc. and ABN Amro Incorporated, as Joint Lead Arrangers and  Joint Book Running Managers |
| 10.2 (1)              |       | Parent Guarantee and U.S. Pledge Agreement,  dated November 2, 2004, between New Skies Satellites B.V. and Deutsche  Bank AG, New York Branch                                                                                                                                                                                                                                                                                                            |
| 10.3 (1)              |       | Holdings Guarantee, dated November 2,  2004, between New Skies Holding B.V. and Deutsche Bank AG, New York Branch                                                                                                                                                                                                                                                                                                                                        |
| 10.4 (2)              |       | Equitable Charge of Shares, dated  November 2, 2004, between New Skies Satellites B.V. and Deutsche Bank  AG, New York Branch                                                                                                                                                                                                                                                                                                                            |
| 10.5 (1)              |       | Subordinated Intercompany Loan Agreement,  dated November 2, 2004, between New Skies Satellites B.V. and New Skies  Holding B.V.                                                                                                                                                                                                                                                                                                                         |
| 10.6 (1)              |       | Subordinated Intercompany Loan Agreement,  dated November 2, 2004, between New Skies Holding B.V. and New Skies  Investments S.à.r.l.                                                                                                                                                                                                                                                                                                               |
| 10.7 (1)              |       | Agreement of Undisclosed Pledge of Third  Party Accounts Receivable, dated November 2, 2004, between New Skies  Satellites B.V. and Deutsche Bank AG, New York Branch                                                                                                                                                                                                                                                                                    |
| 10.8 (1)              |       | Agreement of Disclosed Pledge of  Subordinated Intercompany Loan Receivables, dated November 2, 2004,  between New Skies Holding B.V. and Deutsche Bank AG, New York Branch                                                                                                                                                                                                                                                                              |
| 10.9 (1)              |       | Agreement of Disclosed Pledge of Bank Accounts,  dated November 2, 2004, between New Skies Satellites B.V. and Deutsche  Bank AG, New York Branch                                                                                                                                                                                                                                                                                                        |
| 10.10 (1)             |       | Agreement of Non-Possessory Pledge of  Assets, dated November 2, 2004, between New Skies Satellites B.V. and  Deutsche Bank AG, New York Branch                                                                                                                                                                                                                                                                                                          |
| 10.11 (1)             |       | Agreement of Disclosed Pledge of Insurance  Receivables, Subordinated Intercompany Loan Agreement, dated November 2,  2004, between New Skies Satellites B.V. and Deutsche Bank AG                                                                                                                                                                                                                                                                       |
| 10.12 (1)             |       | Agreement of Pledge of Intellectual  Property Rights, dated November 2, 2004, between New Skies Satellites  B.V. and Deutsche Bank AG, New York Branch                                                                                                                                                                                                                                                                                                   |
| 10.13 (1)             |       | Agreement and Deed of Mortgage and Pledge,  dated November 2, 2004, between New Skies Satellites B.V. and Deutsche  Bank AG, New York Branch                                                                                                                                                                                                                                                                                                             |
| 10.14 (1)             |       | Agreement and Deed of Pledge of Shares in  New Skies Satellites MAR B.V., dated November 2, 2004, between New Skies  Satellites B.V. and Deutsche Bank AG, New York Branch                                                                                                                                                                                                                                                                               |
| 10.15 (1)             |       | Agreement and Deed of Pledge of Shares in  Morharras B.V., dated November 2, 2004, between New Skies Satellites  B.V. and Deutsche Bank AG, New York Branch                                                                                                                                                                                                                                                                                              |
| 10.16 (1)             |       | Agreement of Disclosed Pledge of  Intercompany Accounts Receivable, dated November 2, 2004, between New  Skies Satellites B.V. and Deutsche Bank AG, New York Branch                                                                                                                                                                                                                                                                                     |
| 10.17 (1)             |       | Agreement and Deed of Pledge of Shares in  New Skies Satellites B.V., dated November 2, 2004, between New Skies  Holding B.V. and Deutsche Bank AG, New York Branch                                                                                                                                                                                                                                                                                      |
| 10.18 (2)             |       | Transaction and Monitoring Fee Agreement,  dated November 2, 2004, between New Skies Satellites B.V. and Blackstone  Management Partners IV L.L.C.                                                                                                                                                                                                                                                                                                       |

 

27

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| 10.19 (3)        |   | Amended and Restated Employment Agreement,  dated October 5, 2004, between New Skies Satellites N.V. and  Daniel S. Goldberg                                                                                                                                                                                   |
|------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.20 (3)        |   | Amended and Restated Employment Agreement,  dated November 1, 2004, between New Skies Satellites N.V. and  Andrew M. Browne                                                                                                                                                                                    |
| 10.21 (3)        |   | Amended and Restated Employment Agreement,  dated November 1, 2004, between New Skies Satellites N.V. and  Scott J. Sprague                                                                                                                                                                                    |
| 10.22 (3)        |   | Amended and Restated Employment Agreement,  dated November 1, 2004, between New Skies Satellites N.V. and  Michael C. Schwartz                                                                                                                                                                                 |
| 10.23 (3)        |   | Amended and Restated Employment Agreement,  dated November 1, 2004, between New Skies Satellites N.V. and  Stephen J. Stott                                                                                                                                                                                    |
| 10.30 (2)        |   | Agreement, dated April 29, 2004,  between New Skies Satellites N.V. and Intelsat LLC                                                                                                                                                                                                                                |
| 10.31 (2)        |   | Agreement, dated March 2, 2005,  between New Skies Satellites B.V. and SES Global Satellite Leasing Limited                                                                                                                                                                                                         |
| 10.32 (2)        |   | Satellite and In-orbit Insurance Policy  No. 875/A3F005932                                                                                                                                                                                                                                                          |
| 10.33 (2)        |   | Satellite and In-orbit Insurance Policy  No. 875/A4F024902                                                                                                                                                                                                                                                          |
| 10.34 (5) † |   | Term Sheet, dated February 17, 2005,  between New Skies Satellites B.V. and Intelsat Global Sales &  Marketing Ltd.                                                                                                                                                                                   |
| 10.35 (5) † |   | Composite Compiled Satellite Contract,  dated February 22, 2005, between New Skies Satellites B.V. and Boeing  Satellites Systems International, Inc. for NSS-8 Spacecraft and  Associated Equipment and Services, Contract No. NSS-20-03-01, as amended                                                  |
| 10.36 (4)        |   | First Amendment to Credit Agreement, dated  February 22, 2005, among New Skies Holding B.V., New Skies Satellites  B.V., the lenders party to the Credit Agreement named therein, Deutsche Bank  AG, New York Branch, as Administrative Agent and as Collateral Agent and ABN  Amro Bank N.V., as Syndication Agent |
| 10.37 (4)        |   | First Amendment to Agreement of  Non-Possessory Pledge of Assets, dated February 22, 2005, between New  Skies Satellites B.V., as Pledgor, and Deutsche Bank AG, New York Branch, as  Pledgee                                                                                                                       |
| 10.38 (4)        |   | First Amendment to Agreement of Disclosed  Pledge of Bank Accounts, dated February 22, 2005, between New Skies  Satellites B.V., as Pledgor, and Deutsche Bank AG, New York Branch, as  Pledgee                                                                                                                     |
| 10.39 (4)        |   | First Amendment to Agreement of Undisclosed  Pledge of Third Party Accounts Receivable, dated February 22, 2005,  between New Skies Satellites B.V., as Pledgor, and Deutsche Bank AG, New York  Branch, as Pledgee                                                                                                 |
| 31.1             |   | Certification of Chief Executive Officer  pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the  Securities Exchange Act of 1934, as amended                                                                                                                                                          |
| 31.2             |   | Certification of Chief Financial Officer  pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the  Securities Exchange Act of 1934, as amended                                                                                                                                                          |
| 32.1 +           |   | Certification of Chief Executive Officer  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                            |
| 32.3 +           |   | Certification of Chief Financial Officer  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                            |

 

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| (1)    | Incorporated by reference to the  Registration Statement on Form S-1 of New Skies Satellites Holdings Ltd.  (File No. 333-122322) filed on January 27, 2005.                      |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                             |
| (2)    | Incorporated by reference to Amendment No.  1 to the Registration Statement on Form S-1 of New Skies Satellites  Holdings Ltd. (File No. 333-122322) filed on March 9, 2005. |

 

28

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| (3)    | Incorporated by reference to Amendment No.  2 the Registration Statement on Form S-1 of New Skies Satellites  Holdings Ltd. (File No. 333-122322) filed on March 28, 2005.                                                                                                                                                                                                                                                                                                                                                                                                          |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (4)    | Incorporated by reference to Amendment No.  3 the Registration Statement on Form S-1 of New Skies Satellites  Holdings Ltd. (File No. 333-122322) filed on April 25, 2005.                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (5)    | Incorporated by reference to Amendment No.  4 the Registration Statement on Form S-1 of New Skies Satellites  Holdings Ltd. (File No. 333-122322) filed on May 6, 2005.                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (6)    | Incorporated by reference to Amendment No.  1 to the Registration Statement on Form S-4 of New Skies Satellites B.V.  (File No. 333-123420) filed on May 27, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| † | Confidential treatment has been granted for  portions of this document.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| +      | Pursuant to Commission Release No. 33-8212,  this certification will be treated as “accompanying” this Quarterly Report on  Form 10-Q and not “filed” as part of such report for purposes of Section 18  of the Exchange Act, or otherwise subject to the liability of Section 18  of the Exchange Act and this certification will not be deemed to be  incorporated by reference into any filing under the Securities Act of 1933,  as amended, or the Exchange Act, except to the extent that the registrant  specifically incorporates it by reference. |

 

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