** **

**UNITED STATES**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington, D.C.  20549**

 

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**FORM10-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** |
|                                                                                                                         |
| **Commission File Number: 001-32495**                                                                                        |

 

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**NEWSKIES SATELLITES HOLDINGS LTD.**

(Exact name of Registrant as specified in itscharter)

 

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| **Bermuda**                      | ** ** | **98-0439657**          |
|----------------------------------|------------|-------------------------|
| (State  or other jurisdiction of |       | (I.R.S. Employer        |
| Incorporation  or Organization)  |       | Identification  Number) |

** **

**Canon’s Court**

**22 Victoria Street**

**Hamilton HM12**

**Bermuda**

(Address, including zip code, of Registrant’s Principal ExecutiveOffices)

** **

**(441) 295-1433**

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days.       o  Yes    ý  No

 

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

 

As of July 31, 2005, 32,288,731 ordinary shares of our common stockwere outstanding.

 

 

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**NEWSKIES SATELLITES HOLDINGS LTD**

**TABLEOF 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                                                                                    |

 

 

 

1

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#  

# **INTRODUCTION**

 

In this quarterly report, all references to “NewSkies,” “the Company,” “we,” “us,” “our” and “ours” refer to New SkiesSatellites Holdings Ltd. and its subsidiaries, unless the context otherwiserequires or it is otherwise indicated.

 

# **SPECIAL NOTE REGARDING FORWARD-LOOKINGSTATEMENTS**

 

Certain statements in this quarterly reportare not historical facts and are “forward-looking statements” within themeaning of the U.S. federal securities laws. The Private Securities LitigationReform Act of 1995 provides a “safe harbor” for certain forward-lookingstatements as long as such information is identified as forward-looking and isaccompanied by meaningful cautionary statements identifying important factorsthat could cause actual results to differ materially from those projected inthe information.  We intend that forwardlooking statements contained in this report be covered by the safe harborscreated under the U.S. federal securities laws. Words such as “believes,” “expects,”“estimates,” “may,” “intends,” “will,” “should” or “anticipates” and similarexpressions or their negatives identify forward-looking statements.

 

Forward-looking statements, such as thestatements regarding our ability to develop and expand our business, ourability to manage costs, our ability to exploit and respond to technologicalinnovation, the effects of laws and regulations (including tax laws andregulations) and legal and regulatory changes, the opportunities for strategicbusiness combinations and the effects of consolidation in our industry on usand our competitors, our anticipated future revenues, our anticipated capitalspending (including for future satellite procurements), our anticipatedfinancial resources, our expectations about the future operational performanceof our satellites (including their projected operational lives), the expectedstrength of and growth prospects for our existing customers and the marketsthat we serve, and other statements contained in this report regarding mattersthat are not historical facts, involve predictions. Statements of that sortinvolve known and unknown risks, uncertainties and other factors that may causeour 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:

 

•                  thelevel and type of demand for our services and for the products and servicesprovided by our customers to third parties, including the extent to whichchanges in demand and our competitive position as well as the creditworthinessof our customers may result in changes to our contractual backlog for futureservices and in pricing pressure and overcapacity in the markets in which wecompete;

 

•                  problemswith respect to the construction, launch or in-orbit performance of ourexisting and future satellites, including possible future losses on satellitesthat are not fully covered by insurance, or with the performance of our ground-basedfacilities, including with the performance of our Satellite Operations Center;

 

•                  ourability to attract sufficient funding to meet our future capital anddebt-repayment requirements;

 

•                  ourability, and the ability of our subsidiaries, to pay dividends;

 

•                  competitionand our competitiveness vis-à-vis other providers of satellite and ground-basedservices;

 

•                  thepace and effects of industry consolidation;

 

•                  thecontinued availability of insurance on commercially reasonable terms, and theeffects of any insurance exclusions;

 

•                  changingtechnology;

 

•                  changesin our business strategy or development plans;

 

•                  ourability to attract and retain qualified personnel;

 

2

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•                  worldwideeconomic, geopolitical and business conditions and risks associated with doingbusiness on a global basis;

 

•                  controlby certain investment funds affiliated with The Blackstone Group (the “investmentfunds”); and

 

•                  legal,regulatory, and tax developments, including changes in domestic andinternational governmental regulation.

 

We caution you that the foregoing list ofimportant factors is not exclusive. These risks and uncertainties could causeactual results to vary materially from future results indicated, expressed orimplied in any forward-looking statements. In addition, in light of theserisks and uncertainties, the matters referred to in the forward-lookingstatements may not in fact occur. We undertake no obligation to update orrevise 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 HOLDINGS LTD.**

### **CONDENSED CONSOLIDATED BALANCE SHEETS(UNAUDITED)**

***(in thousandsof U.S. dollars, except per share data)***

 

 
| ** **                                                                                                                              | ** ** | **As of**             | ** ** | **As of**         | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|-------------------|------------|
| ** **                                                                                                                              | ** ** | **December 31, 2004** | ** ** | **June 30, 2005** | ** ** |
| **Assets**                                                                                                                              |       |                  |       |              |       |
| **Current assets**                                                                                                                      |       |                  |       |              |       |
| Cash and cash equivalents                                                                                                               |       | $                     | 37,974     |              | $          | 40,891 |   |
| 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                |       | 10,033            |       |
| **Total current assets**                                                                                                                |       | 84,936                |       | 87,327            |       |
| Communications, plant and other property, net                                                                                           |       | 895,906               |       | 683,774           |       |
| Deferred tax assets                                                                                                                     |       | 17,362                |       | 20,844            |       |
| Debt issuance costs and other assets                                                                                                    |       | 32,109                |       | 21,846            |       |
| Restricted cash                                                                                                                         |       | —                |       | 30,000            |       |
| **TOTAL ASSETS**                                                                                                                        |       | $                     | 1,030,313  |              | $          | 843,791 |   |
| ** **                                                                                                                              |       |                  |       |              |       |
| **Liabilities and Shareholders’ Equity**                                                                                           |       |                  |       |              |       |
| **Current liabilities**                                                                                                                 |       |                  |       |              |       |
| Accounts payable and accrued liabilities                                                                                                |       | $                     | 28,381     |              | $          | 29,357 |   |
| Accrued interest                                                                                                                        |       | 4,880                 |       | 7,094             |       |
| Dividends payable                                                                                                                       |       | —                |       | 8,524             |       |
| Income taxes payable                                                                                                                    |       | 20,480                |       | 19,782            |       |
| Deferred tax liabilities                                                                                                                |       | 10,848                |       | 7,969             |       |
| Deferred revenues and other liabilities                                                                                                 |       | 21,031                |       | 23,029            |       |
| Satellite performance incentives                                                                                                        |       | 6,332                 |       | 5,340             |       |
| **Total current liabilities**                                                                                                           |       | 91,952                |       | 101,095           |       |
| 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           |       |
| Preferred equity securities subject to mandatory redemption                                                                             |       | 164,327               |       | —            |       |
| **Total liabilities**                                                                                                                   |       | 1,042,100             |       | 652,107           |       |
|                                                                                                                                    |       |                  |       |              |       |
| **Shareholders’ Equity (Deficit)**                                                                                                 |       |                  |       |              |       |
| Ordinary shares (57,142 shares authorized, par value $35.00; 43,312  shares issued and outstanding as of December 31, 2004)             |       | 1,516                 |       | —            |       |
| Preferred shares (250,000,000 shares authorized, par value $0.01;  none issued)                                                         |       | —                |       | —            |       |
| Ordinary shares (500,000,000 shares authorized, par value $0.01;  32,288,731 shares issued and outstanding as of June 30, 2005)         |       | —                |       | 323               |       |
| Additional paid in capital                                                                                                              |       |                  |       | 296,602           |       |
| Accumulated deficit                                                                                                                     |       | (13,973               | )          | (105,651          | )          |
| Accumulated other comprehensive income                                                                                                  |       | 670                   |       | 410               |       |
| **Total shareholders’ equity (deficit)**                                                                                           |       | (11,787               | )          | 191,684           |       |
| **TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY**                                                                                     |       | $                     | 1,030,313  |              | $          | 843,791 |   |

 

See notes to condensedconsolidated financial statements.

 

4

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**NEW SKIES SATELLITES HOLDINGS LTD.**

### **CONDENSED CONSOLIDATED STATEMENTS OFOPERATIONS (UNAUDITED)**

***(in thousandsof U.S. dollars, except per share data)***

 

 
| ** **                                             | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|--------------------------------------------------------|------------|------------------------|------------|----------------------|------------|
| ** **                                             | ** ** | **June 30**            | ** ** | **June 30**          | ** ** |
| ** **                                             | ** ** | **Predecessor**        | ** ** | **Successor**        | ** ** | **Predecessor** | ** ** | **Successor** | ** ** |
| ** **                                             | ** ** | **2004**               | ** ** | **2005**             | ** ** | **2004** | ** ** | **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                  |       | 10,274               |       | 20,596 |   | 20,654 |   |
| 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                 |       | 61,017               |       | 103,856 |   | 109,868 |   |
| Gain arising on frequency coordination                 |       | 32,000                 |       | —               |       | 32,000 |   | 10,000 |   |
| **Operating Income (Loss)**                            |       | 30,704                 |       | (1,359               | )          | 31,252 |   | 18,026 |   |
| Interest expense, net                                  |       | 258                    |       | 17,038               |       | 588 |   | 35,886 |   |
| **Income (Loss) Before Income Tax  Expense (Benefit)** |       | 30,446                 |       | (18,397              | )          | 30,664 |   | (17,860 | ) |
| Income tax expense (benefit)                           |       | 10,961                 |       | (5,239               | )          | 11,039 |   | (5,091 | ) |
| **Net Income (Loss)**                                  |       | $                      | 19,485     |                 | $          | (13,158 | ) | $ | 19,625 |   | $ | (12,769 | ) |
| **Basic and Diluted Earnings  (Loss) per share:**      |       |                   |       |                 |       |   |   |   |   |
| Basic                                                  |       | $                      | 0.17       |                 | $          | (0.51 | ) | $ | 0.17 |   | $ | (0.57 | ) |
| Diluted                                                |       | $                      | 0.16       |                 | $          | (0.51 | ) | $ | 0.16 |   | $ | (0.57 | ) |

 

 See notes to condensed consolidated financialstatements.

 

5

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** **

**NEW SKIES SATELLITES HOLDINGS LTD.**

### **CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS (UNAUDITED)**

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

 

 
| ** **                                                    | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|---------------------------------------------------------------|------------|------------------------|------------|----------------------|------------|
| ** **                                                    | ** ** | **June 30**            | ** ** | **June 30**          | ** ** |
| ** **                                                    | ** ** | **Predecessor**        | ** ** | **Successor**        | ** ** | **Predecessor** | ** ** | **Successor** | ** ** |
| ** **                                                    | ** ** | **2004**               | ** ** | **2005**             | ** ** | **2004** | ** ** | **2005** | ** ** |
| Cash flows from operating activities:                         | ** ** | ** **             |       |                 |       |   |   |   |   |
| Net income (loss)                                             |       | $                      | 19,485     |                 | $          | (13,158 | ) | $ | 19,625 |   | $ | (12,769 | ) |
| Adjustments for non-cash items:                               |       |                   |       |                 |       |   |   |   |   |
| Depreciation                                                  |       | 25,775                 |       | 23,775               |       | 51,643 |   | 47,278 |   |
| Non-cash interest on preferred equity securities              |       | —                 |       | 887                  |       | — |   | 4,379 |   |
| Deferred taxes                                                |       | 529                    |       | (6,315               | )          | 775 |   | (6,353 | ) |
| 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                   | )          | 2,449                |       | 2,297 |   | 673 |   |
| Accounts payable and accrued liabilities                      |       | 2,025                  |       | 2,078                |       | 5,428 |   | 1,067 |   |
| Accrued interest                                              |       | —                 |       | (5,891               | )          | — |   | 2,214 |   |
| Income taxes payable                                          |       | 10,110                 |       | 465                  |       | 9,846 |   | (682 | ) |
| Other liabilities                                             |       | 1,906                  |       | 1,953                |       | 453 |   | 974 |   |
| **Net Cash Provided by Operating Activities**                 |       | 60,639                 |       | 18,096               |       | 90,211 |   | 55,236 |   |
| 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                 | )          | (70,385              | )          | (3,985 | ) | (70,385 | ) |
| Satellite performance incentives and other                    |       | (1,587                 | )          | (2,225               | )          | (3,159 | ) | (3,829 | ) |
| Repayments of senior long-term debt                           |       | —                 |       | (142,600             | )          | — |   | (231,440 | ) |
| Issue of preferred equity certificates                        |       | —                 |       | —               |       | — |   | 4,639 |   |
| Repayment of preferred equity securities                      |       | —                 |       | —               |       | — |   | (88,000 | ) |
| Proceeds from Initial Public Offering, net of expenses        |       | —                 |       | 202,313              |       | — |   | 202,313 |   |
| **Net Cash Used in Financing Activities**                     |       | (5,225                 | )          | (12,897              | )          | (6,403 | ) | (186,702 | ) |
| **Effect of exchange rate differences**                       |       | (274                   | )          | (36                  | )          | (285 | ) | (55 | ) |
| **Net increase in cash and cash equivalents**                 |       | 53,466                 |       | 4,150                |       | 79,664 |   | 2,917 |   |
| **Cash and cash equivalents, beginning of period**            |       | 49,451                 |       | 36,741               |       | 23,253 |   | 37,974 |   |
| **Cash and cash equivalents, end of period**                  |       | $                      | 102,917    |                 | $          | 40,891 |   | $ | 102,917 |   | $ | 40,891 |   |

 

See notes to condensedconsolidated financial statements.

 

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**NEW SKIES SATELLITES HOLDINGS LTD.**

### **NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

 

 

 

**1.     BASIS OF 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, New SkiesInvestments S.a.r.l. and its subsidiaries for the period up to and includingthe date of the internal restructuring discussed below, and New SkiesSatellites Holdings Ltd. and its subsidiaries for periods thereafter.

        New Skies Satellites Holdings Ltd. was formedon January 14, 2005 as a corporation organized under the laws of Bermuda.  The Company is currently controlled byinvestment funds affiliated with The Blackstone Group (the “investment funds”).

        New Skies Satellites Holdings Ltd. completedits Initial Public Offering on May 13, 2005 (the “NSS IPO”).  Immediately prior to the NSS IPO, the Companyperformed an internal restructuring pursuant to which pre-existing shareholdersindirectly contributed 100 percent of the equity, preferred equity certificatesand convertible preferred equity certificates of New Skies Satellites S.a.r.l.to New Skies Satellites Holdings Ltd.  AsNew Skies Satellites Holdings Ltd. did not trade prior to the restructuring,the balance sheet at December 31, 2004 represents that of New Skies InvestmentsS.a.r.l. and the results for the three and six month periods ended June 30,2005 represent the combination of the results of New Skies Investments S.a.r.land its subsidiaries for the period up to and including the date of therestructuring and those of New Skies Satellites Holdings Ltd. and itssubsidiaries for the periods thereafter (the “Successor”).

        On November 2, 2004, New Skies InvestmentsS.a.r.l, through its wholly owned subsidiaries, New Skies Holding B.V. and NewSkies Satellites B.V., purchased substantially all of the assets andliabilities of New Skies Satellites N.V. Prior to this transaction, New Skies Investments S.a.r.l did not trade.  Accordingly, the results for the three andsix month periods ended June 30, 2004 represent the results of New SkiesSatellites N.V. and its subsidiaries (the “Predecessor”).

        These unaudited interim condensedconsolidated financial statements have been prepared in accordance withgenerally accepted accounting principles for interim financial information andwith the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of theinformation and footnotes required by accounting principles generally acceptedin the United States for complete financial statements.  In theopinion of management, the unaudited interim consolidated financial statementshave been prepared on a basis consistent with the audited consolidatedfinancial statements and include all adjustments, which are of a normalrecurring nature, that management considers necessary for a fair statement ofthe Company’s consolidated financial position and results of operations for theinterim periods presented. The results of operations for the three and sixmonth periods ended June 30, 2005 are not necessarily indicative of the resultsthat may be expected for the year ending December 31, 2005.

The condensed consolidated balance sheet at December31, 2004 has been derived from the audited consolidated financial statements ofNew Skies Investments S.a.r.l. at that date but does not include all of theinformation and footnotes required by generally accepted accounting principlesfor complete financial statements.

        For further information, refer to the auditedconsolidated financial statements and footnotes thereto included in the Company’saudited consolidated financial statements for the year ended December 31, 2004included in the Company’s registration statement on Form S-1 (File No.333-122322) filed with the Securities and Exchange Commission (“SEC”),as such registration statement became effective on May 9, 2005.

 

 

7

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**2.     DESCRIPTION OF BUSINESS**

**       ***Acquisition of New SkiesSatellites N.V.*

         OnNovember 2, 2004, New Skies Satellites B.V. purchased substantially all of theassets and liabilities of New Skies Satellites N.V. (the “Acquisition”). NewSkies Satellites B.V. acquired these assets and liabilities for cashconsideration of $958.0 million and direct acquisition costs of $24.8 million,for a total purchase price of $982.8 million.  Managementhas performed a preliminary allocation of the purchase price to the assets andliabilities acquired, which the Company believes is reasonable, but is subjectto revision upon completion of an independent valuation study, which isexpected to be finalized in the third quarter of 2005. The amounts that NewSkies Satellites B.V. may record based on the final assessment anddetermination of fair values may differ significantly from those based on thepreliminary purchase price allocation. The amounts allocated to communications,plant and other property may be revised and depreciation and useful lives mayultimately differ from those used in these interim condensed consolidatedfinancial statements, either of which could have a material impact on thefinancial position and results of operations of New Skies Satellites B.V.Additionally, a portion of the purchase price may ultimately be allocated toidentifiable intangible assets, which also could have a material impact on thefinancial position and results of operations of New Skies Satellites B.V.

        In connection with the Acquisition, theinvestment funds contributed $153.0 million in the form of preferredequity certificates and $8.5 million in the form of convertible preferredequity certificates in New Skies Investments S.a.r.l. (see Note 11). In addition, New Skies Satellites B.V. enteredinto senior secured credit facilities, consisting of a $460.0 million termloan 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 9 1/8 Senior Subordinated Notes due 2012 to fund theAcquisition (see Note 9). Immediately preceding the NSS IPO, the Company performed an internalrestructuring pursuant to which pre-existing shareholders indirectlycontributed 100 percent of the equity, preferred equity certificates andconvertible preferred equity certificates ofNew Skies Investments S.a.r.l. to New Skies Satellites Holding Ltd. Dueto this reorganization, the investment funds and management became owners of100% of the equity of the Company. As a result, New Skies Investments S.a.r.l.,New Skies Holding B.V. and New Skies Satellites B.V. became indirect wholly-ownedsubsidiaries of the Company.

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

        In the first quarter of 2005, New SkiesSatellites B.V. entered into an amended agreement for NSS-8, pursuant to whichthe manufacturer refunded to New Skies Satellites B.V. all constructionpayments that had been made to date.  InFebruary 2005, New Skies Satellites B.V. used this refund, along withcash-on-hand, to pay down $88.8 million under its term loan facility and tomake an indirect repayment of $88.0 million of the preferred equitycertificates held by the existing shareholders of New Skies InvestmentsS.a.r.l.

        In the first quarter of 2005, New SkiesSatellites B.V.’s senior secured credit agreement was amended to increase thelevel of permitted dividends and to make the other changes described in Item 2,“Management’s Discussion and Analysis of Financial Condition and Results ofOperations —Liquidity and Capital Resources”. The amended credit facilities allow for the payment of dividends by NewSkies Satellites B.V. and New Skies Holding B.V. of up to $65 million for 2005and annual dividends thereafter in an amount equal to 105% of the amountpermitted only 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 NewSkies Satellites B.V.’s debt to Adjusted EBITDA is below certain thresholds atthe time of payment.  The amount ofdividends available will also be reduced by certain shareholder and otherpayments made by New Skies Satellites B.V. This amendment became effective upon the consummation of the NSS IPOthat occurred on May 13, 2005.

        Pursuant to the amendment to the seniorsecured credit agreement, the amounts allowed for additional dividendsincreased (i) from $95.0 million to $100.0 million (to allow for thedistribution paid in connection with the amended NSS-8 agreement, as discussedabove) and (ii) from $10.0 million to $20.0 million, increasing to $30.0million if the Total Leverage Ratio of New Skies Satellites B.V. is equal to orless than 5.0x.

 

8

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        In connection with the NSS IPO, New SkiesSatellites B.V. also amended the terms of its Subordinated Shareholder PIKLoans to provide for the option to make payments of principal and interest incash or in-kind in order to accommodate the payment of dividends by New SkiesSatellites B.V., which will allow the Company to pay dividends to itsshareholders going forward.

***       ****Initial Public Offering*

        On May 13, 2005, the Company completed thesale of 11.9 million newly issued ordinary shares, equivalent to approximately37% of the total currently issued and outstanding ordinary shares, in aninitial 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 Company’s principal asset isits equity interest in its operating subsidiary, New Skies Satellites B.V.

        The Company provided New Skies SatellitesB.V. with $137.3 million of the NSS IPO net proceeds by way of an indirectshareholder loan. New Skies Satellites B.V. used $131.2 million of thesefunds, together with $11.4 million of cash-on-hand, to repay$142.6 million of its term loan facility and the remaining$6.1 million of these funds to pay a fee to Blackstone Management PartnersIV L.L.C. in connection with the termination of the transaction and monitoringfee agreement.

        During the second quarter of 2005, theCompany used $43.2 million of the net proceeds from the NSS IPO and $27.5million from the net proceeds of the exercise of the underwriters’overallotment option to pay a dividend to the existing, pre-IPO shareholders includingmanagement.

        In connection with the NSS IPO, theCompany granted options to some of New Skies Satellites B.V.’s employees,including its senior executives, to purchase shares of our common stock.  See Note 12 and Item 2, “Management’sDiscussion and Analysis of Financial Condition and Results of Operations —StockCompensation.”

 **      ***Dividend Policy*

The board of directors of the Company has adopted a dividend policywhich reflects an intention to distribute a substantial portion of the cashgenerated by its business in excess of operating expenses and working capitalrequirements, interest and capital expenditures as regular quarterly dividendsto its shareholders.

On June 20, 2005, the Company declared a partial, quarterly cashdividend for the period from May 13, 2005 to June 30, 2005, in the amount of$0.252146 per share, reflecting a total of $8.1 million based on 32.3 millionshares outstanding as of June 30, 2005.

**       ***Offersto Exchange Senior Floating Rate Notes and Senior Subordinated Notes*

        On June 8, 2005, New Skies Satellites B.V.filed a registration statement on Form S-4 in which it offered to exchange$160,000,000 principal amount of its Senior Floating Rate Notes due 2011, whichhave been registered under the Securities Act of 1933, for any and all of itsoutstanding $160,000,000 Senior Floating Rate 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 the Securities Act of 1933, for any and all ofits outstanding $125,000,000 91/8% SeniorSubordinated Notes due 2012.  Theexchange offers expired on July 9, 2005. All outstanding notes were tendered in the exchange offers.  New Skies Satellites B.V. conducted theexchange offers in order to satisfy certain of its obligations under theregistration rights agreements entered into in connection with the placement ofthe outstanding notes.  The terms of theexchange notes issued in the exchange offers are substantially identical to theoutstanding notes, except that the exchange notes are freely tradeable.  New Skies Satellites B.V. did not receive anycash proceeds from the issuance of the exchange notes in the exchange offers.

 

**3.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

        The Company’s significant accounting policiesare summarized in its audited consolidatedfinancial statements for the year ended December 31, 2004 included in its registrationstatement on Form S-1 (File No. 333-122322)filed with the SEC, as such registration statement became effective on May 9,2005.  There have been no materialchanges to the Company’s significant accounting policies since that date.

 

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*Recently Issued But NotYet Adopted Accounting Standard*

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.

 

**4.     EARNING (LOSS) PER SHARE**

***       ***Basic net earnings(loss) per share is computed by dividing net income (loss) by theweighted average ordinary shares outstanding. For the purpose of calculatingthe weighted average shares outstanding for the three and six month  periods endedJune 30, 2005, the effects of the internal restructuring completed immediatelyprior to the NSS IPO are deemed to have occurred at the beginning of eachperiod presented, and reflect 18.5 million shares.

        Dilutedearnings (loss) per share reflects the potential dilution that could occur ifpotentially dilutive securities, such as stock options, convertible securitiesand contracts that may be settled in cash or stock, were converted to shares asof the beginning of the period, if dilutive. For the purpose of calculatingdiluted loss per share in 2005, approximately 1.5 million potentially dilutiveshares relating to outstanding stock options have been excluded from thecalculation of adjusted weighted average shares outstanding as their inclusionwould have had an anti-dilutive effect due to the net loss in that period.

        Asummary of the weighted average number of shares and incremental shares used inthe calculation of earnings (loss) per share follows:

 
| ** **                            | ** ** | **Three Months Ended  June 30** | ** ** | **Six Months Ended  June 30** | ** ** |
|---------------------------------------|------------|---------------------------------|------------|-------------------------------|------------|
| ** **                            | ** ** | **Predecessor  2004**           | ** ** | **Successor  2005**           | ** ** | **Predecessor  2004** | ** ** | **Successor  005** | ** ** |
| Weighted average shares  outstanding: |       |                            |       |                          |       |   |   |   |   |
| Basic                                 |       | 118,034,480                     |       | 26,030,937                    |       | 117,856,339 |   | 22,281,079 |   |
| Diluted                               |       | 119,777,004                     |       | 26,030,937                    |       | 119,568,242 |   | 22,281,079 |   |

 

**5.     COMPREHENSIVE INCOME (LOSS)**

        Comprehensive income (loss) includes net income (loss) and translationadjustments that were recognized directly in equity. Translation adjustments of$(0.7) million and $(0.2) million for the three months ended June 30, 2004 and2005, respectively, and $(0.6) million and $(0.3) million for the six monthsended June 30, 2004 and 2005, respectively, were incurred and consequently,comprehensive income in these periods is equal to $18.8 million, $(13.4)million, $19.0 million and $(13.1) million, respectively.

 

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**6.     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-progress relates primarily tosatellites under construction and related launch services.

        In January 2005, the Company entered into anamended agreement for NSS-8, which (among other things) amended the satellite’scontractual delivery deadline and the payment terms.  Under the prior agreement, NSS-8 wasscheduled 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.

        Upon acceptance of a spacecraft from asatellite manufacturer, the net present value of performance incentive paymentsis recorded as a part of the historical cost of the satellite.

 

**7.     CONTRACTUAL COMMITMENTS**

        In further development and operation of theCompany’s global commercial communications satellite system, significantadditional expenditures are anticipated. At June 30, 2005, the New Skies Satellites B.V. had a contract for theconstruction, development and launch of the NSS-8 satellite with futurecommitted payments on this program.  Suchcommitments (“satellite incentives”) totaled $378.5 million at June 30, 2005,including interest that will be accrued thereon, that are scheduled to fall dueover the anticipated operating life of this satellite, to the extent that thesatellite operates successfully throughout its contractual design life.

        The Company has recorded a liability of $5.2million at June 30, 2005 representing the present value, at a weighted averagediscount rate of 7.7%, for incentive payments on the NSS-5, NSS-703 and NSS-806satellites.  Incentive payments of $1.1million, $1.4 million, $1.4 million, $0.9 million, $0.5 million and $0.4million are due for the six months ending December 31, 2005 and for the yearsending 2006, 2007, 2008, 2009 and 2010, respectively.

        The Company has recorded an additionalliability of $28.4 million at June 30, 2005 representing incentive payments,before interest, on the NSS-6 and NSS-7 satellites requiring payments of $3.5million in each of the five years ending December 31, 2009 and $17.4 million inthe years thereafter.  A variableinterest charge equivalent to LIBOR plus 1% on the outstanding principal willalso be incurred on these payments.

 

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**8.     INCOME TAXES**

        The Company has yet to conclude itsdiscussions with the Dutch tax authorities regarding the final tax obligationof its Predecessor, New Skies Satellites N.V. Such obligation was a liability assumed by New Skies Satellites B.V. inconnection with the Acquisition, and accordingly, New Skies Satellites B.V.recorded a 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 the preliminarypurchase price allocation and would not be expected to impact earnings.

        Certain countries within which the Companyoperates have sought to impose withholding taxes or income taxes on paymentsfrom customers in those countries, notwithstanding the existence of taxtreaties that the Company believes do not permit the imposition of suchtaxes.  In particular, the Government ofIndia has characterized payments made by Indian-based customers and certainpayments made by non-resident customers in India as “royalty payments”. TheGovernment of India has assessed taxes on these payments for the period April1999 to March 2002 and may in the future assess taxes on these payments forsubsequent periods.  New Skies SatellitesB.V. has appealed the assessment in accordance with applicable procedures forhandling disputed tax assessments. However, New Skies Satellites B.V. believes it is probable that a losshas been incurred and has recorded an accrual totaling $5.0 million as of June30, 2005, representing management’s best estimate of the amounts of thewithholding tax obligations that have accrued through June 30, 2005. There wereno material developments in these proceedings during the three and six monthperiods ended June 30, 2005.

        For further information on these matters, seeNote 6 to the Notes to Consolidated Financial Statements included in theCompany’s registration statement on Form S-1 (FileNo. 333-122322) filed with the SEC, as suchregistration statement became effective on May 9, 2005.

 

**9.     FINANCING ARRANGEMENTS**

**       **AtJune 30, 2005, senior long-term debt consisted of the following (in thousandsof U.S. dollars):

 

| Senior Secured Credit Facilities                       |   | $       | 228,560 |   |
|--------------------------------------------------------|--------|---------|---------|--------|
| $160 million Senior  Floating Rate Notes due 2011      |   | 160,000 |    |
| $125 million 9 1/8% 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 its revolvingcredit facility against which $4.3million of standby letters of credit had been drawn.

**       ***Senior Secured Credit Facilities*

*       *Concurrentwith the consummation of the Acquisition, the Company, through its wholly ownedsubsidiary, New Skies Satellites B.V., entered into senior secured creditfacilities consisting of a $460 million senior secured term loan facility thatmatures in May 2011 and a $75 million senior secured revolving credit facilitythat matures in November 2010.  Duringthe first half of 2005, New Skies Satellites B.V. prepaid $231.4 million of theterm loan borrowings and entered into an amendment to the credit facilitiesthat, among other things, increased the revolving credit facility to $125.0million.  See Note 2.  At maturity any outstanding borrowings on thefacilities must be repaid in full. Borrowings under the facilities bear interest at an adjustable ratebased on LIBOR for the associated period of draw-down plus an applicablemargin.  The facilities are subject tocustomary covenant requirements and restrictions, including a maximum leverageratio and a minimum interest coverage ratio.

 

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At June 30, 2005, a one-month draw-down under the senior secured creditfacilities would bear interest at 5.6% per annum.  In addition, a commitment fee of 0.375% ispaid on the unused revolving credit amount. At June 30, 2005 there was $228.6 million outstanding on the seniorsecured term loan facility and no amounts outstanding under the senior securedrevolving credit facility.

        *Senior Floating Rate Notes due 2011*

        In connection with the Acquisition, theCompany, through its wholly owned subsidiary, New Skies Satellites B.V., issued$160 million aggregate principal amount of Floating Rate Notes due 2011.  The notes bear interest at a rate per annum,reset semi-annually, equal to LIBOR plus 51/8%. The notes rank equally in right of payment to all existing and futuresenior indebtedness; rank senior in right of payment to all the Company’sexisting and future senior subordinated indebtedness and subordinatedindebtedness and rank subordinated in right of payment to the Company’s securedindebtedness.  Early redemption ispermitted 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 July9, 2005, New Skies Satellites B.V. concluded an exchange offer pursuant towhich all outstanding Senior Floating Rate Notes due 2011 were exchanged forSenior Floating Rate Notes due 2011 that been registered under the SecuritiesAct of 1933.  See Note 2.  At June 30, 2005, the $160 million ofoutstanding notes bore an interest rate of 8.5% per annum.

        91/8%*Senior Subordinated Notes due 2012*

        In connection with the Acquisition, theCompany through its wholly owned subsidiary, New Skies Satellites B.V., issued$125 million aggregate principal amount of 91/8% Senior Subordinated Notes due 2012.  The notes rank junior in right of payment toall existing and future senior indebtedness; rank equal in right of payment toall the Company’s existing and future senior subordinated indebtedness and ranksubordinated in right of payment to the Company’s secured indebtedness.  Early redemption is permitted without penaltyon or after November 1, 2007.  Redemptionprior to this date is subject to a reducing premium of a maximum of 4.6% of theprincipal amount.  The notes are subjectto customary covenant requirements and restrictions.  On July 9, 2005, New Skies Satellites B.V.concluded an exchange offer pursuant to which all outstanding SeniorSubordinated Notes due 2012 were exchanged for Senior Subordinated Notes due2012 that have been registered under the Securities Act of 1933.  See Note 2. At June 30, 2005, all $125 million of issued notes were outstanding.

 

**10.  SHARE CAPITAL**

        At December 31, 2004,ordinary shares relate to those of New Skies Investment S.a.r.l.  As part of the reorganization that occurredin connection with the NSS IPO, New Skies Satellites Holdings Ltd. indirectlyacquired the shares of New Skies Investments S.a.r.l. and became the Group’sultimate parent company.  At June 30,2005, the Company had 32,288,731 shares issued and outstanding.

 

**11.  PREFERRED EQUITY SECURITIES SUBJECT TOMANDATORY REDEMPTION**

*       *OnNovember 2, 2004, the investment funds contributed to New Skies InvestmentsS.a.r.l. aggregate proceeds of $153.0 million in the form of 4,371,428preferred equity certificates and $8.5 million in the form of 242,857convertible preferred equity certificates. The preferred equity certificates rank behind the rights of all othercreditors of New Skies Investments S.a.r.l. The yield accrues on the certificates at a rate of 11.25% perannum.  The convertible preferred equitycertificates also rank behind the rights of all other creditors of New SkiesInvestments S.a.r.l.  The yield accrueson the certificates at a rate of 3.25% per annum.

        On February 25, 2005, New Skies Investments S.a.r.l. issuedand indirectly sold 125,608 preferred equity certificates and 6,972 convertiblepreferred equity certificates to New Skies (Cayman) Ltd., which is owned by thesix members of New Skies Satellites B.V.’s executive management committee, for$4.6 million. In addition, following the receipt of the NSS-8 milestone refund,$88.0 million of the preferred equity certificates were also repaid in thefirst quarter of 2005. See Note 2.

 

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        Immediately prior to the NSS IPO, the Companyperformed an internal restructuring pursuant to which pre-existing shareholderscontributed 100 percent of the equity, preferred equity certificates andconvertible preferred equity certificates, including all interest accruedthereon, of New Skies Investments S.a.r.l. to the Company.  The amount contributed totaled $86.9 millionand is shown as an addition to Additional Paid-in Capital of the Company.

 

**12.  STOCK-BASED COMPENSATION**

        During the three month period ended June 30, 2005and in conjunction with the NSS IPO and the underwriters’ election to exercisetheir overallotment option, the Company granted options to New Skies SatellitesB.V.’s employees to acquire shares of the Company’s common stock pursuant tothe Company’s Stock Incentive Plan. The aggregate stock-basedcompensation associated with these awards is approximately $21.7 million, reflecting the estimated fair valueof the options at the date of grant. The non-cash stock-basedcompensation is being recognized as an operating expense over the vestingperiod 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 the Company’s shares by theinvestment funds.

        Options were also granted in conjunction withthe NSS IPO and the underwriters’ election to exercise their overallotmentoptions that vested upon issuance and were immediately exercised, allowing NewSkies Satellites B.V.’s employees to acquire 115,075 shares of the Company’scommon stock.

        The Company’s optionholders also received abonus in the second quarter of 2005 of approximately $4.3 million from cash onhand as a consequence of the underwriters decision toexercise their overallotment option.

        All options must be exercised or forfeitedupon vesting. At June 30, 2005, all options had exercise prices ofapproximately $3.05 and weighted average remaining contractual lives of threeyears.  No options were exerciseable atJune 30, 2005.  Upon the payment ofdividends by the Company, options will be adjusted to take into account thatthe optionholder will not receive the benefit of that dividend.

        The Company recognized $9.6 million and $13.2million of stock-based compensation expense for the three and six month periodsended June 30, 2005 under the Stock Incentive Plan.  For the three and six month periods ended June 30, 2004 stock-based compensation was$0.7 million and $1.4 million, respectively.

 

**13.  SUBSEQUENT EVENT**

        In July 2005, New Skies Satellites B.V.reached an agreement with SES Global S.A. affiliates (“SES”) relating toorbital slot coordination matters.  Underits terms, New Skies Satellites B.V. 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, SESmade a total payment to the Company of $9.5 million in August 2005, which willbe used to further reduce New Skies Satellites B.V.’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 FINANCIALCONDITION AND RESULTS OF OPERATIONS.

 

***       ****Thefollowing discussion and analysis of our financial condition and results ofoperations should be read in conjunction with our consolidated financialstatements and related notes included elsewhere in this report and with ourmanagement’s discussion and analysis included in our registration statement onForm S-1 (File No. 333-122322) filedwith the SEC, as such registration statement became effective on May 9, 2005. This discussion contains forward-lookingstatements. Please see “Special Note Regarding Forward-Looking Statements”and the Risk Factors included in our registration statement on Form S-1 for adiscussion of certain of the uncertainties, risks and assumptions associatedwith these statements.*

***        Referencesmade to the “Company”, “New Skies”, “we” or “our” shall mean New SkiesSatellites N.V. and its subsidiaries for the period up to and includingNovember 1, 2004, New Skies Investments S.a.r.l. and its subsidiaries up to thedate of the restructuring, and New Skies Satellites Holdings Ltd. and itssubsidiaries thereafter.***

 

***Management Overview***

        We are a global satellite communicationscompany that owns and operates five in-orbit satellites and has one additionalsatellite under construction.  We providesatellite-based transponder capacity for the transmission of data services,video services, Internet-related services and voice services.  We also offer ground-based services inconjunction with our satellite capacity in order to provide our customers withend-to-end communications services for certain applications.

        Overall, the business climate for thethree and 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.

        New Skies Satellites Holdings Ltd. commenced trading on May10, 2005, three days before the Company successfully completed its initialpublic offering (the “NSS IPO”). Immediately prior to the NSS IPO, the Companyperformed an internal restructuring pursuant to which pre-existing shareholderscontributed 100 percent of the equity, preferred equity certificates andconvertible preferred equity certificates of New Skies Satellites S.a.r.l. toNew Skies Satellites Holdings Ltd.  Asdiscussed in Note 1 to the Condensed Consolidated Financial Statements, becauseNew Skies Satellites Holdings Ltd. did not trade prior to the restructuring,the results for the three and six month periods ended June 30, 2005 representthe combination of the results of New Skies Investments S.a.r.l. and its subsidiariesfor the period up to and including the date of the restructuring and those ofNew Skies Satellites Holdings Ltd. and its subsidiaries for the periodsthereafter (the “Successor”).

        On November 2, 2004, New Skies Investments S.a.r.l., throughits wholly owned subsidiaries, New Skies Holding B.V. and New Skies SatellitesB.V., purchased substantially all of the assets and liabilities of New SkiesSatellites N.V. (the “Acquisition”). Prior to this transaction, New SkiesInvestments S.a.r.l. did not trade. Accordingly, the results for the three andsix month periods ended June 30, 2004 represent the results of New SkiesSatellites N.V. and its subsidiaries (the “Predecessor”).

 

 

***Revenues***

        We earn revenues by providing transpondercapacity, or a combination of transponder capacity and terrestrial facilitiesand services, to customers around the globe to allow them to transmit andreceive signals using our satellites.

 

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We provide transponder capacity on both a fixed term and occasional usebasis.  For the three and six monthperiods ended June 30, 2004 and 2005, we derived our telecommunication servicesrevenues from the following geographic regions (based on the billing addressesof 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 | % |

 

        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 to experiencegeographic diversity of our revenues going forward.

        The table below presents our estimate, basedon our analysis of information provided by our customers, of the percentage ofour revenues from telecommunication services for the three and six month periodsended June 30, 2004 and 2005 that were attributable to each of the three broadcategories of content for which our customers used our services: data and voicetransmissions for government and corporate communications networks andinternational carriers; video transmissions for broadcasting, cable, and otherentertainment media; and the transmission of Internet content for Internetservice 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 table above shows, our revenuescontinued to be balanced across these three categories of demand.  Based on an analysis of information providedby our customers, we estimate that during both the three and six month periodsended June 30, 2005, we derived approximately one-third of our revenues fromservices to customers where the ultimate end user was a governmental entity.

*** ***

***Results of Operations***

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

***       ****Revenues.*  Our revenues from telecommunication servicesfor the 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 from telecommunication services for the six month periodended June 30, 2005 were $117.9 million, an increase of $14.8 million, or 14%,as compared to $103.1 million for the same period in 2004.

 

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        Our revenue growth during the three and sixmonth periods ended June 30, 2005 was primarily due to an increase in theoverall satellite fleet fill rate to 61% as of June 30, 2005 compared to 52% asof June 30, 2004.  This growth in fillrate was principally driven by increased demand for NSS-6 capacity serving theIndian subcontinent, central Asia, and the Middle East, and from restorationservices provided to Intelsat on NSS-5 commencing in the first quarter 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 primarilydue to the preliminary fair value adjustment of our fixed asset base thatoccurred 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.

        The decrease in our cost of operationsresulted from reductions in third party teleport and satellite capacityprocurements as well as overall reductions in other operating expendituresoffset, in part, by an increase in stock-based compensation expense.

*        Selling, general andadministrative.* For the quarter ended June 30, 2005, our selling, general andadministrative 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.

         Theincrease in each period primarily resulted from the stock-based compensationexpense recorded in accordance with Statement of Financial Accounting Standards(“SFAS”) No. 123 of $8.5 million and $11.7 million for the three and six monthperiods ended June 30, 2005, respectively, compared to $0.6 million and $1.2million, respectively, in the 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 Satellites N.V.directly incurred $2.8 million of transaction-related expenses for the threeand six month periods ended June 30, 2004.

        These expenditures related to financialadvisory fees and expenses, legal costs and accounting fees in connection withthe sale of substantially all the assets and liabilities of New SkiesSatellites 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 New Skies Satellites B.V. relatingto certain monitoring, advisory and consulting services for a period of tenyears ending November 2, 2014. In connection with the NSS IPO, BlackstoneManagement Partners IV L.L.C. terminated this agreement. As contemplated bythis agreement, New Skies Satellites B.V. paid, in the second quarter of 2005,a termination fee to Blackstone Management Partners IV L.L.C. of $6.1 millionfrom the proceeds of the NSS IPO. In addition, New Skies Satellites B.V. paid$0.4 million and $0.8 million for these services during the three and six monthperiods ended June 30, 2005, respectively. No such costs were incurred in theequivalent periods in 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 $17.0 million and $35.9 million for the three and sixmonth periods ended June 30, 2005, respectively, compared to $0.3 million and$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.

 

17

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        *Income tax expense (benefit).*  Our income tax benefit for the quarter endedJune 30, 2005 was $5.2 million compared to income tax expense of $11.0million for the quarter ended June 30, 2004. Our effective income tax rate forthe quarter ended June 30, 2005 decreased to 28.5% as compared to 36% in thesame period in 2004.  Our income taxbenefit for the six month period ended June 30, 2005 was $5.1 million, comparedto income tax 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 effectivetax rate was primarily due to the reduction in the statutory rate of taxationin The Netherlands, the tax jurisdiction of our primary operating subsidiary,from 34.5% to 30.0%.

***Backlog***

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

***Liquidity andCapital Resources***

        Historically, our principal sources of liquidityhave been cash flow provided by operating activities and amounts availableunder 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 not generate sufficient cash flowprovided by operating activities to satisfy our debt service obligations, wemay have to undertake alternative financing plans, such as refinancing orrestructuring our indebtedness, selling assets, reducing or delaying capitalinvestments 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 an adverseeffect, which could be material, on our business, financial position, resultsof 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 connection with our purchase of New SkiesSatellites N.V. in November 2004, New Skies Satellites B.V. entered into seniorsecured credit facilities, consisting of a $460.0 million term loan facilityand a $75.0 million revolving credit facility. During the quarter ended March 31, 2005, it repaid $88.8 million of borrowingsunder the term loan facility using proceeds of the NSS-8 satellite constructionmilestone payment refund and cash-on-hand and, during the quarter ended June30, 2005, it repaid $142.6 million of borrowings under the term loan facilityfrom a loan indirectly received from us out of the proceeds of the NSS IPO andfrom cash on hand.  See Note 2 toCondensed Consolidated Financial Statements (Unaudited).

        In connection with the NSS IPO (as discussedbelow) and effective upon its consummation, and as a result of the prepaymentsmade to date, New Skies Satellites B.V. amended its senior secured credit facilities to, among other things:

•                  increase theamount of permitted dividends (see Note 2 to Condensed Consolidated FinancialStatements (Unaudited));

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

•                  reduce themaximum required total leverage ratio covenant;

 

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•                  lower theapplicable margins for the term loan facility;

•                  permit thepayment of the management fee to Blackstone Management Partners IV L.L.C. inconnection with the termination of the transaction and monitoring feeagreement;

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

•                  increase therevolving credit facility from $75.0 million to $125.0 million.

        As of June 30, 2005, we had $513.6 millionoutstanding in aggregate senior indebtedness, with an additional $125.0 millionof available borrowings under our revolving credit facility (excludingoutstanding letters of credit, which reduce the amount available under therevolving credit facility).

        New Skies Satellites B.V.’s credit facilitiesrequire them to maintain certain financial covenants and also subject them tocertain restrictive covenants. As of June 30, 2005, they were in compliancewith all of such covenants.

        On May 13, 2005, we completed the sale of11.9 million newly issued ordinary shares, equivalent to approximately 37% ofthe total currently issued and outstanding ordinary shares in an initial publicoffering.  The sale of an additional 1.8million shares, consisting of shares issued to cover overallotments, wascompleted on May 27, 2005.  Our principalasset is our equity interest in New Skies Satellites B.V., the Group’s primaryoperating subsidiary.

***DividendPolicy***

        Our board of directors has adopted a dividendpolicy which reflects an intention to distribute a substantial portion of the cashgenerated by our business in excess of operating expenses and working capitalrequirements, interest and capital expenditures as regular quarterly dividendsto our shareholders. In connection with the NSS IPO, New Skies Satellites B.V. amendedits senior secured credit facilities to, among other things, permit greaterflexibility to pay dividends to 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     |                          | $          | 18,096 |   | $ | 90,211 |   | $ | 55,236 |   |
| Net cash (used in)  provided by investing activities |       | (1,674                          | )          | (1,013                        | )          | (3,859 | ) | 134,438 |   |
| Net cash used in financing  activities               |       | (5,225                          | )          | (12,897                       | )          | (6,403 | ) | (186,702 | ) |
|                                                      |            |                                 |            |                               |            |  |  |  |  |  |  |  |  |

 

        Net cash provided by operating activities forthe three and six month periods ended June 30, 2005 totaled $18.1 million and$55.2 million, respectively, compared to $60.6 million and $90.2 million forthe same periods in 2004.  We had cashand cash equivalents of approximately $40.9 million as of June 30, 2005, andnet trade receivables of $36.4 million, of which $26.8 million, orapproximately 74%, were current or less than 30 days overdue.

        Cash used in investing activities during thethree and six month periods ended June 30, 2005, was funded using cash flowfrom operating activities.  Net cash usedin investing activities totaled $1.0 million and $3.6 million in the three andsix month periods ended June 30, 2005, respectively, excluding $168.0 millionof satellite procurement milestone payments refunded to us in the first quarterof 2005 of which $30.0 million of cash was placed in escrow as part of theamended NSS-8 agreement.

 

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        Net cash used in financing activitiesincluded $231.4 million of repayments made against the senior long-term debt inthe six month period ended June 30, 2005 from both the NSS-8 refund referred toabove and from the net proceeds of the NSS IPO.

***ContractualObligations***

                The following table summarizes ourcontractual obligations, including related estimated interest payments based onactual applicable rates for fixed rate obligations and forward interest ratesfor the relevant period for variable rate obligations, and commercialcommitments 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 |   |
| 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                                         |       | $                          | 1,230.8    |   | $ | 57.7 |   | $ | 158.8 |   | $ | 122.3 |   | $ | 892.0 |   |

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(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 inNovember 2010. Borrowings under the facilities bear interest at anadjustable rate based on LIBOR for the associated period of draw-down plus anapplicable margin. At June 30, 2005, a one-month draw-down under the facilitieswould bear interest at 5.6% per annum. In addition, a commitment fee of 0.375%is paid on the unused revolving credit amount.

                        Theoutstanding senior floating rate notes bear interest at a rate per annum, resetsemi-annually, equal to LIBOR plus 51/8%. At June30, 2005, these notes accrued interest at a rate of 8.5% per annum.

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

(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-BalanceSheet Arrangements***

        We do not have any off-balance sheetarrangements as defined under SEC rules.

 

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***StockCompensation***

        During the three month period ended June 30,2005 and in conjunction with the NSS IPO and the underwriters’ election toexercise their overallotment option, the Company granted options to NewSkies Satellites B.V.’s employees to acquireshares of its common stock pursuant to the Company’s Stock Incentive Plan. Theaggregate stock-based compensation associated with these awards isapproximately $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 operatingexpense over the vesting period of the options. Certain of the options willvest based solely on continued employment over the next four years and theremaining options will vest upon the achievement of performance goals over thenext four to seven years or imputed returns realized on sales of our shares bythe investment funds.

        Options were also granted in conjunction withthe NSS IPO and the underwriters’ election to exercise their overallotmentoptions that vested upon issuance and were immediately exercised, allowing NewSkies Satellites B.V.’s employees to acquire115,075 shares of the Company’s common stock.

        Our optionholders also received a bonus inthe second quarter of 2005 of approximately $4.3 million from cash on hand as aconsequence of the underwriters' decision to exercise their overallotmentoption.

        All options must be exercised or forfeitedupon vesting. At June 30, 2005, all options had exercise prices ofapproximately $3.05 and weighted average remaining contractual lives of threeyears.  No options were exerciseable atJune 30, 2005.  Upon the payment ofdividends by the Company, options will be adjusted to take into account thatthe optionholder will not receive the benefit of that dividend.

        The Company recognized $9.6 million and $13.2million of stock-based compensation expense for the three and six month periodsended June 30, 2005 under the Stock Incentive Plan.  For the three and six month periods ended June 30, 2004, stock-based compensation was$0.7 million and $1.4 million, respectively.

        As a result of the non-cash stock-basedcompensation costs noted above, our operating expenses for the three monthperiod ended June 30, 2005 were, and we anticipate that our operatingexpenses for 2005 will be, higher than for prior periods. Additionally, therecognition 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 to conclude our discussions withthe Dutch tax authorities regarding the final tax obligation of our Predecessor,New Skies Satellites N.V. Such obligation was a liability assumed by NewSkies Satellites B.V. in connection with theAcquisition, and accordingly, New Skies Satellites B.V. recorded a provision for income tax liabilitiesof $20.0 million at the date of Acquisition. We believe that this adequatelycovers the liability assumed with respect to the Predecessor’s tax liability.However, as these discussions are expected to be finalized on or beforeNovember 2005, any subsequent adjustment to the corporate tax liabilitywould be made in the preliminary purchase price allocation and would not beexpected to impact earnings.

        Certain countries within which we operatehave sought to impose withholding taxes or income taxes on payments fromcustomers in those countries, notwithstanding the existence of tax treatiesthat we believe do not permit the imposition of such taxes. In particular, theGovernment of India has characterized payments made by Indian-basedcustomers and certain payments made by non-resident customers in India as “royaltypayments”. The Government of India has assessed taxes on thesepayments for the period April 1999 to March 2002 and may in the future assesstaxes on these payments for subsequent periods. We have appealed the assessment in accordance with applicable proceduresfor handling disputed tax assessments. However, we believe it is probable that a loss has been incurred andhave recorded an accrual totaling $5.0 million as of June 30, 2005,representing management’s best estimate of the amounts of the withholding taxobligations that have accrued through June 30, 2005. There were no material developments in thisproceeding during the three month period ended June 30, 2005.

 

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***Recently Issued 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 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 us as of January 1, 2006 and is not expected to have a material impact on our consolidated financial statements.

 

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## **ITEM 3.**                                                     QUANTITATIVE AND QUALITIATIVE DISCLOSURE ABOUT MARKET RISK.

 

        For a discussion of the market risksaffecting us, see “Management’s Discussion and Analysis of Financial Conditionand Results of Operations — Market Risk” in our registration statement on FormS-1 (File No. 333-122322) filed withthe SEC, as such registration statement became effective on May 9, 2005.

        As of June 30, 2005, senior debt consisted offixed-rate borrowings of $125.0 million, $160.0 million offloating rate debt and $228.6 millionoutstanding under our floating rate term loan facility. The potential effect ofa hypothetical 10% adverse fluctuation in interest rates for one year on ourfixed rate borrowings outstanding at June 30, 2005 would be a reduction in fairvalue of approximately $1.1 million.The potential effect of a hypothetical 10% adverse fluctuation in interestrates for one year on $160.0 million of floating rate debt and$228.6 million of floating rate term loan facility at June 30, 2005 wouldbe a reduction in cash flows of approximately $1.4 million and $1.2 million, respectively, and a reduction innet income of approximately $1.0 millionand $0.9 million, respectively.

 

## **ITEM 4.**                                                     CONTROLSAND 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 rulesand forms, and that such information is accumulated and communicated to ourmanagement, including our President and Vice President, as appropriate, toallow timely decisions regarding required disclosures. Any controls andprocedures, no matter how well designed and operated, can provide onlyreasonable assurance of achieving the desired control objectives. Ourmanagement, with the participation of our President and Vice President, hasevaluated the effectiveness of the design and operation of our disclosurecontrols and procedures as of June 30, 2005. Based upon that evaluation andsubject to the foregoing, our President and Vice President concluded that thedesign and operation of our disclosure controls and procedures providedreasonable assurance that the disclosure controls and procedures are effectiveto accomplish their objectives.

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

 

 

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# **PART II — OTHERINFORMATION**

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

 

         None.

 

## **ITEM 2.**                                                     UNREGISTEREDSALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

        None.

 

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

## ** **

        None.

 

## **ITEM 4.**                                                     SUBMISSIONOF MATTERS TO A VOTE OF SECURITY HOLDERS.

 

        None.

 

## **ITEM 5.**                                                     OTHERINFORMATION.

 

*       *InJanuary 2005, Intelsat, Ltd. (“Intelsat”) announced that its IS-804 satellite,a Lockheed Martin Series 7000 satellite, experienced an electrical power systemanomaly that caused the total loss of the spacecraft. Lockheed Martin has notyet completed 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 the root cause of the Intelsat satellitefailure or the probability of such cause reoccurring on other satellites of thesame series.  As a result, LockheedMartin has not yet determined to what extent other satellites of the sameseries face an increased risk of failure or whether operating procedures shouldbe implemented to mitigate, 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  (5)            |       | Certificate of Incorporation and Memorandum of  Association of New Skies Satellites Holdings Ltd.                                                                                                                                                                                                                                                                                                                                                             |
| 3.2  (7)            |       | Amended and Restated Bye-Laws of New Skies Satellites  Holdings Ltd.                                                                                                                                                                                                                                                                                                                                                                                          |
| 4.1  (5)            |       | Form of Specimen Certificate of New Skies Satellites  Holdings Ltd. common stock                                                                                                                                                                                                                                                                                                                                                                              |
| 10.1  (2)           |       | 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 |

 

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| 10.2  (2)  |   | 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  (2)  |   | Holdings Guarantee, dated November 2, 2004,  between New Skies Holding B.V. and Deutsche Bank AG, New York Branch                                                                  |
| 10.4 (3)   |   | Equitable Charge of Shares, dated  November 2, 2004, between New Skies Satellites B.V. and Deutsche Bank  AG, New York Branch                                                      |
| 10.5 (2)   |   | Subordinated Intercompany Loan Agreement, dated  November 2, 2004, between New Skies Satellites B.V. and New Skies  Holding B.V.                                                   |
| 10.6 (2)   |   | Subordinated Intercompany Loan Agreement, dated  November 2, 2004, between New Skies Holding B.V. and New Skies  Investments S.à.r.l.                                         |
| 10.7 (2)   |   | 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 (2)   |   | 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 (2)   |   | 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 (2)  |   | 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 (2)  |   | 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 (2)  |   | 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 (2)  |   | 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 (2)  |   | 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 (2)  |   | 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 (2)  |   | 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 (2)  |   | 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 (3)  |   | 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) |   | Indenture, dated November 2, 2004, between New  Skies Satellites B.V. and U.S. Bank National Association (Senior Floating  Rate Notes)                                             |
| 10.20  (3) |   | Indenture, dated November 2, 2004, between New  Skies Satellites B.V. and U.S. Bank National Association (Senior Subordinated  Notes)                                              |
| 10.23 (7)  |   | Registration Rights Agreement for New Skies  Satellites Holdings Ltd.                                                                                                                   |
| 10.24 (7)  |   | New Skies Satellites 2005 Stock Incentive Plan                                                                                                                                          |
| 10.25 (4)  |   | Amended and Restated Employment Agreement, dated  October 5, 2004, between New Skies Satellites N.V. and Daniel S.  Goldberg                                                  |
| 10.26 (4)  |   | Amended and Restated Employment Agreement, dated  November 1, 2004, between New Skies Satellites N.V. and Andrew M.  Browne                                                   |
| 10.27 (4)  |   | Amended and Restated Employment Agreement, dated  November 1, 2004, between New Skies Satellites N.V. and Scott J.  Sprague                                                   |
| 10.28 (4)  |   | Amended and Restated Employment Agreement, dated  November 1, 2004, between New Skies Satellites N.V. and Michael C.  Schwartz                                                |
| 10.29 (4)  |   | Amended and Restated Employment Agreement, dated  November 1, 2004, between New Skies Satellites N.V. and Stephen J.  Stott                                                   |

 

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| 10.30 (3)             |   | Agreement, dated April 29, 2004, between  New Skies Satellites N.V. and Intelsat LLC                                                                                                                                                                                                                                |
|-----------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.31 (3)             |   | Agreement, dated March 2, 2005, between New  Skies Satellites B.V. and SES Global Satellite Leasing Limited                                                                                                                                                                                                         |
| 10.32 (1)             |   | Satellite and In-orbit Insurance Policy  No. 875/A3F005932                                                                                                                                                                                                                                                          |
| 10.33 (3)             |   | Satellite and In-orbit Insurance Policy  No. 875/A4F024902                                                                                                                                                                                                                                                          |
| 10.34 (6) † |   | Term Sheet, dated February 17, 2005,  between New Skies Satellites B.V. and Intelsat Global Sales &  Marketing Ltd.                                                                                                                                                                                   |
| 10.35 (6) † |   | 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 (5)             |   | 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 (5)             |   | 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 (5)             |   | 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 (5)             |   | 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 President pursuant to Rule  13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as  amended                                                                                                                                                                                            |
| 31.2                  |   | Certification of Vice President pursuant to Rule  13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as  amended                                                                                                                                                                                       |
| 32.1 +                |   | Certification of President pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of  2002                                                                                                                                                                                    |
| 32.2 +                |   | Certification of Vice President 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 onForm 20-F of New Skies Satellites N.V. (File No. 001-15130) filed on June30, 2004.

 

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

 

(3)                                                              Incorporated by reference to Amendment No. 1 to the RegistrationStatement on Form S-1 of New Skies Satellites Holdings Ltd. (FileNo. 333-122322) filed on March 9, 2005.

 

(4)                                                              Incorporated by reference to Amendment No. 2 the Registration Statementon Form S-1 of New Skies Satellites Holdings Ltd. (File No. 333-122322)filed on March 28, 2005.

 

(5)                                                              Incorporated by reference to Amendment No. 3 the Registration Statementon Form S-1 of New Skies Satellites Holdings Ltd. (File No. 333-122322)filed on April 25, 2005.

 

(6)                                                              Incorporated by reference to Amendment No. 4 the Registration Statementon Form S-1 of New Skies Satellites Holdings Ltd. (File No. 333-122322)filed on May 6, 2005.

 

(7)                                                              Incorporated byreference to the Current Report on Form 8-K of New Skies Satellites HoldingsLtd.(File No. 001-32495) filed on May 17, 2005.

 

26

----

 

†                                                                  Confidential treatment has been granted for portions of this document.

 

+                                                                 Pursuant to Commission Release No. 33-8212, this certification will betreated as “accompanying” this Quarterly Report on Form 10-Q and not “filed” aspart of such report for purposes of Section 18 of the Exchange Act, orotherwise subject to the liability of Section 18 of the Exchange Act and thiscertification will not be deemed to be incorporated by reference into anyfiling under the Securities Act of 1933, as amended, or the Exchange Act, exceptto the extent that the registrant specifically incorporates it by reference.

 

**SIGNATURES**

        Pursuant to the requirements of theSecurities Exchange Act of 1934, the registrant has duly caused this report tobe signed on its behalf by the undersigned thereunto duly authorized.

 

| NEW SKIES SATELLITES HOLDINGS LTD. |
|------------------------------------|
| August 15, 2005                    |
|                               |
|                               |
| /s/  Andrew M. Browne              |
| Andrew M. Browne                   |
| Vice President and Director        |
| (Principal Financial Officer)      |
|                               |
|                               |
|                               |
| /s/  Mary J. Dent                  |
| Mary J. Dent                       |
| Authorized U.S. Representative     |

 

 

 

27

----

 

**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 (5)             | Certificate  of Incorporation and Memorandum of Association of New Skies Satellites  Holdings Ltd.                                                                                                                                                                                                                                                                                                                                                            |
| 3.2 (7)             | Amended  and Restated Bye-Laws of New Skies Satellites Holdings Ltd.                                                                                                                                                                                                                                                                                                                                                                                          |
| 4.1 (5)             | Form  of Specimen Certificate of New Skies Satellites Holdings Ltd. common stock                                                                                                                                                                                                                                                                                                                                                                              |
| 10.1 (2)            | 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 (2)            | 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 (2)            | Holdings  Guarantee, dated November 2, 2004, between New Skies Holding B.V. and  Deutsche Bank AG, New York Branch                                                                                                                                                                                                                                                                                                                                       |
| 10.4 (3)            | Equitable Charge of Shares, dated  November 2, 2004, between New Skies Satellites B.V. and Deutsche Bank AG,  New York Branch                                                                                                                                                                                                                                                                                                                            |
| 10.5 (2)            | Subordinated Intercompany Loan Agreement, dated  November 2, 2004, between New Skies Satellites B.V. and New Skies  Holding B.V.                                                                                                                                                                                                                                                                                                                         |
| 10.6 (2)            | Subordinated Intercompany Loan Agreement, dated  November 2, 2004, between New Skies Holding B.V. and New Skies  Investments S.à.r.l.                                                                                                                                                                                                                                                                                                               |
| 10.7 (2)            | 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 (2)            | 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 (2)            | 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 (2)           | 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 (2)           | 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 (2)           | 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 (2)           | 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 (2)           | 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 (2)           | 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 (2)           | 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 (2)           | 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 (3)           | 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)           | Indenture,  dated November 2, 2004, between New Skies Satellites B.V. and U.S. Bank  National Association (Senior Floating Rate Notes)                                                                                                                                                                                                                                                                                                                   |
| 10.20 (3)           | Indenture,  dated November 2, 2004, between New Skies Satellites B.V. and U.S. Bank  National Association (Senior Subordinated Notes)                                                                                                                                                                                                                                                                                                                    |
| 10.23 (7)           | Registration Rights Agreement for New Skies  Satellites Holdings Ltd.                                                                                                                                                                                                                                                                                                                                                                                         |

 

28

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| 10.24 (7)             | New Skies Satellites 2005 Stock Incentive Plan                                                                                                                                                                                                                                                                           |
|-----------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.25 (4)             | Amended and Restated Employment Agreement, dated  October 5, 2004, between New Skies Satellites N.V. and Daniel S.  Goldberg                                                                                                                                                                                   |
| 10.26 (4)             | Amended and Restated Employment Agreement, dated  November 1, 2004, between New Skies Satellites N.V. and Andrew M.  Browne                                                                                                                                                                                    |
| 10.27 (4)             | Amended and Restated Employment Agreement, dated  November 1, 2004, between New Skies Satellites N.V. and Scott J.  Sprague                                                                                                                                                                                    |
| 10.28 (4)             | Amended and Restated Employment Agreement, dated  November 1, 2004, between New Skies Satellites N.V. and Michael C.  Schwartz                                                                                                                                                                                 |
| 10.29 (4)             | Amended and Restated Employment Agreement, dated  November 1, 2004, between New Skies Satellites N.V. and Stephen J.  Stott                                                                                                                                                                                    |
| 10.30 (3)             | Agreement, dated April 29, 2004, between  New Skies Satellites N.V. and Intelsat LLC                                                                                                                                                                                                                                |
| 10.31 (3)             | Agreement, dated March 2, 2005, between New  Skies Satellites B.V. and SES Global Satellite Leasing Limited                                                                                                                                                                                                         |
| 10.32 (1)             | Satellite and In-orbit Insurance Policy  No. 875/A3F005932                                                                                                                                                                                                                                                          |
| 10.33 (3)             | Satellite and In-orbit Insurance Policy  No. 875/A4F024902                                                                                                                                                                                                                                                          |
| 10.34 (6) † | Term Sheet, dated February 17, 2005,  between New Skies Satellites B.V. and Intelsat Global Sales &  Marketing Ltd.                                                                                                                                                                                   |
| 10.35 (6) † | 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 (5)             | 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 (5)             | 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 (5)             | 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 (5)             | 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 President pursuant to Rule  13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as  amended                                                                                                                                                                                            |
| 31.2                  | Certification of Vice President pursuant to Rule  13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as  amended                                                                                                                                                                                       |
| 32.1 +                | Certification of President pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of  2002                                                                                                                                                                                    |
| 32.2 +                | Certification of Vice President 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 onForm 20-F of New Skies Satellites N.V. (File No. 001-15130) filed on June30, 2004.

 

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

 

29

----

 

(3)                                                              Incorporated by reference to Amendment No. 1 to the RegistrationStatement on Form S-1 of New Skies Satellites Holdings Ltd. (FileNo. 333-122322) filed on March 9, 2005.

 

(4)                                                              Incorporated by reference to Amendment No. 2 the Registration Statementon Form S-1 of New Skies Satellites Holdings Ltd. (File No. 333-122322)filed on March 28, 2005.

 

(5)                                                              Incorporated by reference to Amendment No. 3 the Registration Statementon Form S-1 of New Skies Satellites Holdings Ltd. (File No. 333-122322)filed on April 25, 2005.

 

(6)                                                              Incorporated by reference to Amendment No. 4 the Registration Statementon Form S-1 of New Skies Satellites Holdings Ltd. (File No. 333-122322)filed on May 6, 2005.

 

(7)                                                              Incorporated byreference to the Current Report on Form 8-K of New Skies Satellites HoldingsLtd. (File No. 001-32495) filed on May 17, 2005.

 

†                                                                 Confidential treatment has been granted for portions of this document.

 

+                                                                 Pursuant to Commission Release No. 33-8212, this certification will betreated as “accompanying” this Quarterly Report on Form 10-Q and not “filed” aspart of such report for purposes of Section 18 of the Exchange Act, orotherwise subject to the liability of Section 18 of the Exchange Act and thiscertification will not be deemed to be incorporated by reference into anyfiling under the Securities Act of 1933, as amended, or the Exchange Act,except to the extent that the registrant specifically incorporates it byreference.

 

 

30

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