New Skies Sat (NYSE:NSE)
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Second Quarter Revenues up 16 Percent to $59.7 Million, Adjusted
EBITDA Increased 31 Percent to $38.6 Million
New Skies Satellites Holdings Ltd. ("New Skies") (NYSE:NSE), the
global satellite communications company, today reported financial
results for the three- and six-month periods ended June 30, 2005.
Revenues for the quarter were $59.7 million, up 16 percent over the
same period in the prior year, net loss was $13.2 million and Adjusted
EBITDA(a) was $38.6 million, up 31 percent over the same period in the
prior year.
Commenting on the results, New Skies CEO, Dan Goldberg, said:
"New Skies had an exceptionally busy and productive second
quarter. With respect to our financial performance, I am pleased to
report that we increased revenues 16 percent relative to the same
period last year, primarily a reflection of the fact that we sold a
significant amount of capacity over the last twelve months. Indeed,
the utilization of our state-of-the-art satellite fleet grew from 52
percent to 61 percent in that period. In the last quarter we secured a
number of important commercial opportunities for data and IP services
in Central Asia, the Middle East, Africa and Asia; video services in
Southeast Asia, the Indian subcontinent, and Latin America; and
government services around the world.
Importantly, the combination of strong top line growth and
meaningful cost savings from our continued efforts to enhance our
operational efficiency resulted in a 31 percent increase in Adjusted
EBITDA on a year-on-year basis. Underscoring the largely fixed cost
nature of our operations, Adjusted EBITDA margins grew from 57 percent
to 65 percent in this period. Notwithstanding the strong growth in
revenue and Adjusted EBITDA, we had a net loss for the quarter of
$13.2 million as a result of higher interest charges arising from the
debt we put in place to finance the acquisition of New Skies
Satellites N.V. by affiliates of The Blackstone Group as well as a
one-time fee associated with our initial public offering.
In addition to our strong financial performance, I am pleased that
we completed in May our initial public offering on the New York Stock
Exchange. The IPO allowed us both to broaden our shareholder base and
further reduce our outstanding debt. In this regard, the IPO proceeds,
the cash returned to us from Boeing as a result of the renegotiation
of the NSS-8 program, and our operating cash flows enabled us to
reduce our debt by over $230 million - 31 percent of the total debt
outstanding at the outset of the year - in the first six months of
this year. And in addition to our emphasis on deleveraging, the
commencement last month of our quarterly dividend payments reflects
our strong commitment to returning value to shareholders.
I am also pleased to inform you that in July we reached an
agreement with SES Global S.A. affiliates relating to certain orbital
slot coordination matters. Under its terms, New Skies agreed not to
bring an FSS satellite into use at the 125 degrees west longitude
location in order to ensure that SES will be able to operate its own
satellite at this location without interference. In return, SES will
make a total payment to New Skies of $9.5 million, which we expect to
receive early this month. This payment will be reflected in our third
quarter results.
In sum, our strong year-to-date performance - including our
increased capacity utilization rate and meaningful top line and margin
growth - is a reflection of the dedication of the entire New Skies
team to deliver the highest quality services possible, the customer
community's recognition of our powerful and flexible satellites, and
our relentless pursuit of enhanced operating efficiency. I am pleased
with the progress we have made in the first six months of this year
and our prospects going forward."
Financial highlights:
For the three- and six- month periods ended June 30, 2005, New
Skies achieved the following financial results:
-- Revenues for the three months ended June 30, 2005 were $59.7
million, an increase of $8.4 million, or 16 percent, from
$51.3 million in the same period in 2004. For the first six
months of the year, revenues were $117.9 million, up $14.8
million, or 14 percent, compared to $103.1 million in 2004.
These amounts exclude proceeds arising from the resolution of
certain orbital slot coordination matters. The revenue growth
was primarily due to an increase in the overall satellite
fleet fill rate to 61 percent as of June 30, 2005 compared to
52 percent as of June 30, 2004.
-- On-going operating expenses, comprised of Cost of Operations
and Selling, General and Administrative costs, decreased by
$2.1 million, or 9 percent, in the quarter primarily as a
result of reductions in third party teleport and other
operating expenditures.
For the six month period, our Cost of Operations and Selling,
General and Administrative costs decreased by $5.5 million, or 11
percent, as compared to the same period in 2004. Reduction was driven
by lower third party teleport costs, in-orbit insurance and overall
operating expenditures.
-- Stock-based compensation recorded in accordance with Statement
of Financial Accounting Standards No. 123 was $9.6 million and
$13.2 million for the three- and six-month periods ended June
30, 2005, respectively, compared to $0.7 and $1.4 million,
respectively, in the same periods in 2004.
-- Sponsor monitoring agreement fees for the quarter were $6.6
million and $6.9 million for the six-month period ended June
30, 2005. These amounts are inclusive of a $6.1 million charge
in connection with the termination of the agreement upon
completion of the Company's Initial Public Offering.
-- The gain on frequency coordination reflects a one-time payment
from SES Global S.A. affiliates of $10.0 million in the first
quarter 2005. In 2004, we received a one-time payment from
Intelsat LLC of $32.0 million following the successful
resolution of certain longstanding frequency coordination
matters.
-- Interest expense, net was $17.0 million and $35.9 million for
the three- and six-month periods ended June 30, 2005,
respectively, compared to $0.3 million and $0.6 million,
respectively, in the same periods in 2004. The net increase
was due to the addition of new debt in respect of the purchase
of the assets and liabilities of New Skies Satellites N.V. by
affiliates of The Blackstone Group. Also included are non-cash
charges of $5.2 million and $8.6 million, for the three- and
six-month periods ended June 30, 2005, respectively, related
to the accelerated amortization of debt issuance costs
associated with the early repayment of a portion of our term
loan facility.
-- Net loss for the second quarter of 2005 was $13.2 million
compared to net income of $19.5 million in the same period in
the prior year. For the six-month period net loss was $12.8
million compared to net income of $19.6 million in the same
period in 2004.
-- In the second quarter of 2005, Adjusted EBITDA was $38.6
million, compared to $29.4 million for the same period in the
prior year, reflecting an increase of $9.2 million, or 31
percent. Adjusted EBITDA margin increased to 65 percent from
57 percent in the same period in the prior year. Adjusted
EBITDA for the six months ended June 30, 2005 increased $17.5
million, or 30 percent, to $75.4 million, as compared to $57.9
million for the same period in 2004. The Adjusted EBITDA
margin for the six-month period ended June 30, 2005 was 64
percent compared to 56 percent in the same period in 2004.
-- Backlog at the end of the second quarter of 2005 was $555
million, approximately three times annual revenues, compared
to $649 million in the same period last year and $558 million
at the end of the first quarter of 2005.
-- Total long-term debt as of June 30, 2005 was $513.6 million,
reflecting a total paydown of $231.4 million for the first six
months of the year, thus reducing long-term third party
debt(b) to Adjusted EBITDA(c) from 6.2x as of December 31,
2004 to 3.7x as of June 30, 2005.
-- During the quarter, the Company also declared a partial,
quarterly cash dividend for the period from May 13, 2005 to
June 30, 2005, in the amount of $0.252146 per share, with an
intended level of $1.8525 per share for the first four full
fiscal quarters following the Initial Public Offering.
Initial Public Offering
On May 10, 2005, New Skies completed the sale of 11.9 million
newly issued ordinary shares, equivalent to 37 percent of the total
currently issued and outstanding ordinary shares in an initial public
share offering that generated gross proceeds of $196.4 million. The
sale of an additional 1.8 million shares, consisting of shares used to
cover over-allotments, was completed on May 27, 2005.
About New Skies Satellites (NYSE:NSE)
New Skies Satellites is one of only four fixed satellite
communications companies with global satellite coverage, offering
data, video, Internet and voice communications services to a range of
telecommunications carriers, broadcasters, large corporations,
Internet service providers and government entities around the world.
New Skies has five satellites in orbit, one spacecraft under
construction (NSS-8) and ground facilities around the world. New Skies
Satellites Holdings Ltd. is headquartered in Hamilton, Bermuda, and
has subsidiaries with offices in The Hague, Hong Kong, New Delhi, Sao
Paulo, Singapore, Sydney and Washington, D.C.
(a) See definition of Adjusted EBITDA and the related
reconciliations in Note 2 of "Notes to the consolidated quarterly
financial information".
(b) Long-term third party debt includes borrowings under the
senior secured credit facilities and fixed floating rate notes,
amounting to $745.0 million and $513.6 million as of December 31, 2004
and June 30, 2005, respectively.
(c) Adjusted EBITDA for the four-quarter period ended December 31,
2004 and June 30, 2005 was $120.5 million and $138.1 million,
respectively.
Conference call:
CEO Dan Goldberg and CFO Andrew Browne will host a conference call
today at 11:00 a.m. (EST). To listen in please dial +1 888 222 0364,
passcode "New Skies." International dial-in number is +1 334 323 6203.
The call will also be webcast live on the New Skies web site at:
http://www.newskies.com/investors.htm.
The conference call will be available for replay, 24 hours a day
for the subsequent 5 working days and will also be archived on New
Skies' website. The dial-in number for the replay is +1 888 365 0240
or +1 954 334 0342 for international callers. Passcode: 670970.
Safe Harbor
Section 27A of the U.S. Securities Act of 1933 and Section 21E of
the U.S. Securities Exchange Act of 1934 provide a "safe harbor" for
forward-looking statements made by an issuer of publicly traded
securities and persons acting on its behalf. New Skies Satellites
Holdings Ltd. has made certain forward-looking statements in this
document in reliance on those safe harbors. A forward-looking
statement concerns the company's or management's intentions or
expectations, or are predictions of future performance. These
statements are identified by words such as "intends", "expects",
"anticipates", "believes", "estimates", "may", "will", "should" and
similar expressions. By their nature, forward-looking statements are
not a matter of historical fact and involve risks and uncertainties
that could cause New Skies' actual results to differ materially from
those expressed or implied by the forward-looking statements for a
number of reasons. Factors which may affect the future performance of
New Skies include: delays or problems in the construction or launch of
future satellites; technical performance of in-orbit satellites and
earth-based infrastructure; increased competition and changes in
technology; growth of and access to the company's target markets;
legal and regulatory developments affecting the company's business;
and worldwide business and economic conditions, among other things.
These risks and other risks affecting New Skies' business are
described in the company's periodic filings with the U.S. Securities
and Exchange Commission, including but not limited to New Skies'
Registration Statement on Form S-1 (File No. 333-122322). Copies of
these filings may be obtained by contacting the SEC. New Skies
disclaims any obligation to update the forward-looking statements
contained in this document.
-0-
*T
New Skies Satellites Holdings Ltd. and Subsidiaries
Consolidated Balance Sheets
June 30, 2005 and December 31, 2004 (unaudited)
(In thousands of U.S. Dollars, except share data)
June 30, December 31,
2005 2004
---------- -----------
Assets
Current Assets
Cash and cash equivalents $ 40,891 $ 37,974
Trade receivables 36,403 36,371
Prepaid expenses and other assets 10,033 10,591
---------- -----------
Total Current Assets 87,327 84,936
Communications, plant and other property, net 683,774 895,906
Deferred tax asset 20,844 17,362
Restricted cash 30,000 -
Debt issuance costs 21,846 32,109
---------- -----------
TOTAL $843,791 $1,030,313
========== ===========
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable and accrued liabilities $ 29,357 $ 28,381
Accrued interest 7,094 4,880
Dividends payable 8,524 -
Income taxes payable 19,782 20,480
Deferred tax liabilities 7,969 10,848
Deferred revenues and other liabilities 23,029 21,031
Satellite performance incentives 5,340 6,332
---------- -----------
Total Current Liabilities 101,095 91,952
Deferred revenues and other liabilities 9,178 10,224
Satellite performance incentives 28,274 30,597
Preferred equity securities subject to mandatory
redemption - 164,327
Long-term debt 513,560 745,000
---------- -----------
Total Liabilities 652,107 1,042,100
---------- -----------
Shareholders' Equity (Deficit)
Ordinary Shares(1) (57,142 shares authorized,
par value $35.00; 43,312 shares issued as of
December 31, 2004) - 1,516
Preferred Shares (250,000,000 shares authorized,
par value $0.01; none issued) - -
Ordinary Shares(D) (500,000,000 shares
authorized, par value $0.01; 32,288,731 shares
issued as of June 30, 2005) 323 -
Additional paid-in capital 296,602 -
Accumulated deficit (105,651) (13,973)
Accumulated other comprehensive income 410 670
---------- -----------
Total Shareholders' Equity (Deficit) 191,684 (11,787)
---------- -----------
TOTAL $843,791 $1,030,313
======================
See notes to the consolidated quarterly financial information
(D) At December 31, 2004, ordinary shares relate to New Skies
Investment S.a.r.l. As part of the reorganization that occurred on May
10, 2005, New Skies Satellites Holdings Ltd. indirectly acquired the
shares of New Skies Investments S.a.r.l. and became the Group's
ultimate parent company. At June 30, 2005, 32,288,731 shares were
issued and outstanding.
*T
-0-
*T
New Skies Satellites Holdings Ltd. and Subsidiaries
Consolidated Statements of Income
Three- and six-month periods ended June 30, 2005 and 2004 (unaudited)
(In thousands of U.S. Dollars, except per share data)
Three-month periods ended Six-month periods ended
June 30 June 30
--------------------------- ---------------------------
Successor(E) Predecessor(E) Successor(E) Predecessor(E)
------------ -------------- ------------ --------------
2005 2004 2005 2004
------------ -------------- ------------ --------------
Revenues $59,658 $51,253 $117,894 $103,108
Operating
expenses:
Depreciation 23,775 25,775 47,278 51,643
Cost of
operations 10,770 13,623 21,829 27,375
Selling,
general and
administrative 10,274 9,569 20,654 20,596
Stock-based
compensation 9,635 736 13,169 1,396
Monitoring
agreement fees 6,563 - 6,938 -
Transaction
related
expenses - 2,846 - 2,846
------------ -------------- ------------ --------------
Total Operating
Expenses 61,017 52,549 109,868 103,856
Gain on
frequency
coordination - 32,000 10,000 32,000
------------ -------------- ------------ --------------
Operating
Income (Loss) (1,359) 30,704 18,026 31,252
Interest
expense, net 17,038 258 35,886 588
------------ -------------- ------------ --------------
Income (Loss)
Before Income
Tax Expense (18,397) 30,446 (17,860) 30,664
Income tax
expense
(benefit) (5,239) 10,961 (5,091) 11,039
------------ -------------- ------------ --------------
Net Income
(Loss) $(13,158) $19,485 $(12,769) $19,625
============ ============== ============ ==============
Earnings (Loss)
Per Share(3)
Basic $(0.51) $0.17 $(0.57) $0.17
Diluted $(0.51) $0.16 $(0.57) $0.16
Weighted
Average Shares
Outstanding(3)
Basic 26,030,937 118,034,480 22,281,079 117,856,339
Diluted 26,030,937 119,777,004 22,281,079 119,568,242
See notes to the consolidated quarterly financial information
*T
(E) New Skies Satellites Holdings Ltd. commenced trading on May
10, 2005, the date upon which the Company successfully completed its
Initial Public Offering (the "IPO"). Immediately prior to the IPO, the
Company performed an internal restructuring pursuant to which
pre-existing shareholders indirectly contributed 100 percent of the
equity and preferred equity certificates of New Skies Satellites
S.a.r.l. to New Skies Satellites Holdings Ltd.. As New Skies
Satellites Holdings Ltd. did not trade prior to the restructuring, the
results for the quarter and the six-month period ended June 30, 2005
represent the combination of the results of New Skies Investments
S.a.r.l for the period up to and including the date of the
restructuring and those of New Skies Satellites Holdings Ltd. for the
periods thereafter (the "successor").
On November 2, 2004, New Skies Investments S.a.r.l, through its
wholly owned subsidiaries New Skies Holding B.V. and New Skies
Satellites B.V., purchased substantially all of the assets and
liabilities 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 quarter and the six-month period ended June 30, 2004 represent
the results of New Skies Satellites N.V. (the "predecessor").
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*T
New Skies Satellites Holdings Ltd. and Subsidiaries
Consolidated Statements of Cash Flows (unaudited)
Six-month periods ended June 30, 2005 and 2004
(In thousands of U.S. Dollars)
Six-month periods
ended June 30
---------------------
Successor Predecessor
--------- -----------
2005 2004
--------- -----------
Cash flows from operating activities:
Net income (loss) $(12,769) $19,625
Adjustments for non-cash items:
Depreciation 47,278 51,643
Deferred taxes (6,353) 775
Stock-based compensation expense 7,739 1,396
Interest on preferred equity securities 4,379 -
Amortization of debt issuance costs 10,777 321
Changes in operating assets and liabilities:
Trade receivables (61) (1,573)
Prepaid expenses and other assets 673 2,297
Accounts payable and accrued liabilities 1,067 5,428
Accrued interest 2,214 -
Income taxes payable (682) 9,846
Other liabilities 974 453
--------- -----------
Net Cash Provided By Operating Activities 55,236 90,211
--------- -----------
Cash flows from investing activities:
Payments for communication, plant and other
property (3,562) (3,859)
Reimbursement of NSS-8 construction costs 168,000 -
Increase in restricted cash (30,000) -
--------- -----------
Net Cash Provided by (Used In) Investing
Activities 134,438 (3,859)
--------- -----------
Cash flows from financing activities:
Repayment of long-term debt (231,440) -
Proceeds from Initial Public Offering, net of
expenses 202,313
Repayment of preferred equity securities (83,361) -
Dividends paid (70,385) (3,985)
Stock options exercised - 741
Satellite performance incentives and other (3,829) (3,159)
--------- -----------
Net Cash Used In Financing Activities (186,702) (6,403)
--------- -----------
Effect of exchange rate differences (55) (285)
--------- -----------
Net change in cash and cash equivalents 2,917 79,664
Cash and cash equivalents, beginning of year 37,974 23,253
--------- -----------
Cash and cash equivalents, end of period $40,891 $102,917
========= ===========
*T
Cash payments for interest (net of amounts capitalized) were $18.2
million and nil for the six-month periods ended June 30, 2005 and
2004. Income taxes paid amounted to $1.4 million and $1.1 million for
the six-month periods ended June 30, 2005 and 2004, respectively.
See notes to the consolidated quarterly financial information.
New Skies Satellites Holdings Ltd. and Subsidiaries
Notes to the consolidated quarterly financial information
(in thousands of U.S. dollars)
Three- and six-month periods ended June 30, 2005 and 2004 (unaudited)
(1) Basis of presentation
New Skies Satellites Holdings Ltd. commenced trading on May 10,
2005, the date upon which the Company successfully completed its
Initial Public Offering (the "IPO"). Immediately prior to the IPO, the
Company performed an internal restructuring pursuant to which
pre-existing shareholders contributed 100 percent of the equity and
preferred equity certificates of New Skies Satellites S.a.r.l. to New
Skies Satellites Holdings Ltd. As New Skies Satellites Holdings Ltd.
did not trade prior to the restructuring, the results for the quarter
and the six-month period ended June 30, 2005 represent the combination
of the results of New Skies Investments S.a.r.l for the period up to
and including the date of the restructuring and those of New Skies
Satellites Holdings Ltd. for the periods thereafter (the "successor").
On November 2, 2004, New Skies Investments S.a.r.l, through its
wholly owned subsidiaries New Skies Holding B.V. and New Skies
Satellites B.V., purchased substantially all of the assets and
liabilities 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 quarter and the six-month period ended June 30, 2004 represent
the results of New Skies Satellites N.V. (the "predecessor").
(2) Adjusted EBITDA
Adjusted EBITDA is defined as EBITDA (i.e. earnings before
interest, taxes, depreciation and amortization), further adjusted to
give effect to adjustments required in calculating covenant ratios and
compliance under the indentures governing the notes and the senior
secured credit facilities. We use Adjusted EBITDA to give effect to
adjustments required in calculating covenant ratios and compliance
under the indentures governing the notes and the senior secured credit
facilities. For instance, both the indentures governing the notes and
the senior secured credit facilities contain financial ratios that are
calculated by reference to Adjusted EBITDA. Non-compliance with the
financial ratio maintenance covenants contained in the senior secured
credit facilities could result in the requirement to immediately repay
all amounts outstanding under such facilities, while non-compliance
with the debt incurrence ratio contained in the indentures governing
the notes would prohibit us from being able to incur additional
indebtedness other than pursuant to specified exceptions. Adjusted
EBITDA is not presented as an alternative measure of operating results
or cash flows provided by operating activities, as determined in
accordance with accounting principles generally accepted in the U.S.
Adjusted EBITDA as presented in this release may not be comparable to
similarly titled measures reported by other companies. The following
table sets forth the reconciliation of net cash provided by operating
activities and net income (loss) to EBITDA and Adjusted EBITDA for the
periods indicated.
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*T
Reconciliation of Net Income (Loss) to EBITDA
Three-month Six-month periods
periods ended ended
June 30, June 30,
------------------ ------------------
2005 2004 2005 2004
--------- -------- --------- --------
Net income (loss) $(13,158) $19,485 $(12,769) $19,625
Income tax expense (benefit) (5,239) 10,961 (5,091) 11,039
Interest expense, net 17,038 258 35,886 588
Depreciation 23,775 25,775 47,278 51,643
--------- -------- --------- --------
EBITDA $22,416 $56,479 $65,304 $82,895
========= ======== ========= ========
*T
-0-
*T
Reconciliation of EBITDA to Adjusted EBITDA
Three-month
periods ended
June 30,
-----------------
2005 2004
-------- --------
EBITDA $22,416 $56,479
Gain arising on frequency coordination (a) - (32,000)
Transaction related expenses (b) - 2,846
Unused satellite capacity leased from third party (c) - 1,347
Costs related to stock-based compensation (d) 9,635 736
Monitoring fee paid to Blackstone Management Partners
IV L.L.C.(e) 6,563 -
-------- --------
Adjusted EBITDA $38,614 $29,408
======== ========
Six-month periods
ended
June 30,
-----------------
2005 2004
-------- --------
EBITDA $65,304 $82,895
Gain arising on frequency coordination (a) (10,000) (32,000)
Transaction related expenses (b) - 2,846
Unused satellite capacity leased from third party (c) - 2,715
Costs related to stock-based compensation (d) 13,169 1,396
Monitoring fee paid to Blackstone Management Partners
IV L.L.C.(e) 6,938 -
-------- --------
Adjusted EBITDA $75,411 $57,852
======== ========
*T
(a) Reflects a one-time payment from Intelsat LLC of $32.0 million
in 2004 and a one-time payment from SES Global affiliates of $10.0
million in 2005 following the successful resolution of certain
longstanding frequency coordination matters.
(b) Represents non-recurring costs incurred in connection with the
purchase of assets and liabilities of New Skies Satellites N.V.
(c) Reflects costs related to unused capacity on leased
transponders, with the underlying contract terminated in November
2004.
(d) Stock-based compensation includes $5.4 million of cash
payments made for bonuses and taxes due.
(e) Reflects the monitoring fee paid to Blackstone Management
Partners IV L.L.C., of which $6.1 million represents a payment for the
termination of this agreement in connection with the Company's Initial
Public Offering.
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*T
Reconciliation of Net Cash Provided by Operating Activities to Net
Income (Loss)
Three-month
periods ended
June 30,
------------------
2005 2004
--------- --------
Net cash provided by operating activities $18,096 $60,639
Depreciation (23,775) (25,775)
Deferred taxes 6,315 (529)
Stock-based compensation expense (4,205) (736)
Amortization of debt issuance costs (6,284) (160)
Change in operating assets and liabilities (2,422) (13,954)
Interest on preferred equity securities (883) -
--------- --------
Net Income (loss) $(13,158) $19,485
========= ========
Six-month periods
ended
June 30,
------------------
2005 2004
--------- --------
Net cash provided by operating activities $55,236 $90,211
Depreciation (47,278) (51,643)
Deferred taxes 6,353 (775)
Stock-based compensation expense (7,739) (1,396)
Amortization of debt issuance costs (10,777) (321)
Change in operating assets and liabilities (4,185) (16,451)
Interest on preferred equity securities (4,379) -
--------- --------
Net Income (loss) $(12,769) $19,625
========= ========
*T
(3) Earnings (Loss) per share
Basic net earnings (loss) per share is computed by dividing net
income (loss) by the weighted average ordinary shares outstanding. For
the purpose of calculating the weighted average shares outstanding for
the three- and six-month periods ended June 30, 2005, the effects of
the internal restructuring immediately prior to the Initial Public
Offering are deemed to have occurred at the beginning of the period,
and reflect 18.5 million shares.
Diluted earnings (loss) per share reflects the potential dilution
that could occur if potential dilutive securities, such as stock
options, convertible securities and contracts that may be settled in
cash or stock, were converted to shares as of the beginning of the
period, if dilutive. For the purpose of calculating diluted loss per
share in 2005, approximately 1.5 million potentially dilutive common
shares relating to outstanding stock options have been excluded from
the calculation of adjusted weighted average shares outstanding as
their inclusion would have had an anti-dilutive effect due to the net
loss in that period.