Attached files
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| 8-K - FORM 8-K - Hughes Communications, Inc. | form8_k.htm |
FOR IMMEDIATE RELEASE
Hughes Communications Announces Fourth Quarter and Full Year 2010 Results
Record New Consumer Activations
Record Adjusted EBITDA
Germantown, Md., March 3, 2011—Hughes Communications, Inc. (NASDAQ: HUGH) (“Hughes”), the global leader in broadband satellite network solutions and services, today announced its financial results for the fourth quarter and full year ended December 31, 2010. Hughes’ consolidated operations are classified into five reportable segments: North America Broadband, International Broadband, Telecom Systems, HTS Satellite, and Corporate and Other. The North America Broadband, International Broadband, Telecom Systems, and HTS Satellite segments represent all the operations of Hughes Network Systems, LLC (“HNS”), Hughes’ principal operating subsidiary.
Fourth Quarter 2010 Financial Highlights:
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Consolidated revenues of $281 million for growth of 7% over the fourth quarter of 2009.
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Strong Consumer business growth:
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–
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Record subscriber gross adds of 59,000 and net adds of 20,000 for growth of 29% and 40% respectively over the fourth quarter of 2009.
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Revenue increased by 13% and services revenue by 17% over the fourth quarter of 2009.
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Consumer ARPU increased to $75 from $72 in the fourth quarter of 2009.
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Churn of 2.27%.
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Record Adjusted EBITDA of $71 million, an increase of 25% over the fourth quarter of 2009.
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Operating income of $32 million for a 61% growth over the fourth quarter of 2009; Net Income attributable to stockholders of $16.9 million, compared to $2.4 million in the fourth quarter of 2009; earnings per share of $0.74 in the fourth quarter of 2010 compared to $0.11 in the fourth quarter of 2009, both on a fully diluted basis.
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New orders of $307 million for a 13% growth over the fourth quarter of 2009, with major orders from CVS, Carter’s, GTECH, Row 44, Footlocker, T.J.Maxx, Shell, Denny’s, and Barrett Xplore in our North America broadband business; ADB, Avanti, BP, Camelot, Telespazio, Global Crossing, Telemar, Tecban, Central Bank of India, BEL India, and State Bank of India in our International broadband business; and Boeing and THURAYA in our Mobile Satellite business.
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Full Year Ended December 31, 2010 Financial Highlights:
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Consolidated total revenues of $1,043 million for a 3% growth over the full year ended December 31, 2009, or 6% growth excluding revenues from the discontinued contract with Telematics.
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Consolidated services revenues of $791 million for a growth of 11% over the full year ended December 31, 2009, or 14% excluding revenue from the discontinued contract with Telematics.
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Continued strong growth in consumer business over the full year ended December 31, 2009:
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Revenue of $477 million, up 14%; service revenue up 19%.
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Subscriber gross adds of 213,000 and net adds of 74,000.
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Total subscriber base of 578,000 as of December 31, 2010, for a growth of 15% over the subscriber base as of December 31, 2009.
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Churn of 2.1%.
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Record Adjusted EBITDA of $227 million for a growth of 30% over the full year ended December 31, 2009.
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Net Income attributable to stockholders of $22.8 million and earnings per share (fully diluted) of $1.00 compared to a net loss of $52.7 million and a loss of $2.46 per share in the full year ended December 31, 2009.
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Strong liquidity with cash, cash equivalents, and marketable securities of $183 million as of December 31, 2010.
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New orders of $1,297 million for a growth of 27% over the full year ended December 31, 2009, resulting in a record non-consumer backlog of $1,064 million, a 27% growth over the backlog at December 31, 2009.
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Set forth below are tables highlighting certain of Hughes’ and HNS’ results for the three and twelve months ended December 31, 2010 and 2009.
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Hughes Communications, Inc.
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Three Months
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Twelve Months
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Ended December 31,
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Ended December 31,
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(Dollars in thousands)
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2010
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2009
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2010
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2009
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Revenue
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North America Broadband
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$ | 191,187 | $ | 175,306 | $ | 733,750 | $ | 690,279 | |||||||||
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International Broadband
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62,520 | 60,961 | 205,607 | 203,886 | |||||||||||||
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Telecom Systems
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22,528 | 25,069 | 95,069 | 112,500 | |||||||||||||
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HTS Satellite
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3,317 | - | 3,317 | - | |||||||||||||
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Corporate and Other
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1,932 | 904 | 5,584 | 3,034 | |||||||||||||
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Total
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$ | 281,484 | $ | 262,240 | $ | 1,043,327 | $ | 1,009,699 | |||||||||
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Operating income (loss)
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North America Broadband
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$ | 24,347 | $ | 16,400 | $ | 67,884 | $ | (7,991 | ) | ||||||||
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International Broadband
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6,520 | 5,168 | 10,571 | 15,120 | |||||||||||||
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Telecom Systems
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2,149 | 3,485 | 14,183 | 14,227 | |||||||||||||
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HTS Satellite
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(573 | ) | (37 | ) | (3,350 | ) | (37 | ) | |||||||||
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Corporate and Other
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(937 | ) | (5,427 | ) | (3,664 | ) | (9,007 | ) | |||||||||
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Total
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$ | 31,506 | $ | 19,589 | $ | 85,624 | $ | 12,312 | |||||||||
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Net income (loss) attributable to HCI stockholders
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$ | 16,880 | $ | 2,367 | $ | 22,787 | $ | (52,693 | ) | ||||||||
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Adjusted EBITDA*
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$ | 70,778 | $ | 56,482 | $ | 226,771 | $ | 173,929 | |||||||||
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New Orders
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$ | 307,462 | $ | 271,470 | $ | 1,296,604 | $ | 1,022,922 | |||||||||
2
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Hughes Network Systems, LLC
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Three Months
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Twelve Months
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Ended December 31,
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Ended December 31,
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(Dollars in thousands)
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2010
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2009
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2010
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2009
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Revenue
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North America Broadband
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$ | 191,187 | $ | 175,306 | $ | 733,750 | $ | 690,279 | |||||||||
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International Broadband
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62,520 | 60,961 | 205,607 | 203,886 | |||||||||||||
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Telecom Systems
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22,528 | 25,069 | 95,069 | 112,500 | |||||||||||||
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HTS Satellite
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3,317 | - | 3,317 | - | |||||||||||||
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Total
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$ | 279,552 | $ | 261,336 | $ | 1,037,743 | $ | 1,006,665 | |||||||||
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Operating income (loss)
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North America Broadband
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$ | 24,347 | $ | 16,400 | $ | 67,884 | $ | (7,991 | ) | ||||||||
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International Broadband
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6,520 | 5,168 | 10,571 | 15,120 | |||||||||||||
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Telecom Systems
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2,149 | 3,485 | 14,183 | 14,227 | |||||||||||||
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HTS Satellite
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(573 | ) | (37 | ) | (3,350 | ) | (37 | ) | |||||||||
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Total
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$ | 32,443 | $ | 25,016 | $ | 89,288 | $ | 21,319 | |||||||||
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Net income (loss) attributable to HNS
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$ | 17,361 | $ | 7,229 | $ | 25,393 | $ | (44,905 | ) | ||||||||
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Adjusted EBITDA*
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$ | 71,095 | $ | 55,922 | $ | 228,645 | $ | 174,647 | |||||||||
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New Orders
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$ | 304,916 | $ | 270,742 | $ | 1,290,331 | $ | 1,020,324 | |||||||||
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*
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For the definition of Adjusted EBITDA, see “Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures” below.
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Recent Highlights:
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EchoStar Corporation (NASDAQ: SATS) and Hughes announced an agreement pursuant to which EchoStar will acquire all of the outstanding equity of Hughes and its subsidiaries including its principal operating subsidiary, HNS, valued at approximately $2 billion, including debt.
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HNS was awarded a contract valued at over US $27 million from Star Satellite Communications Company PJSC, a wholly owned subsidiary of Al Yah Satellite Communications Company PrJSC (Yahsat) based in the United Arab Emirates for the sale of satellite system equipment.
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HNS was selected by Boeing to provide the Ground Communications Network (GCN) for the MEXSAT Satellite Based Network (SBN) system. HNS will supply system design and development engineering, fabrication and development of gateways, factory integration, and test of all subsystems, as well as site installation and final delivery into service.
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Leading children’s apparel brand, Carter’s, Inc., has agreed to a major network upgrade to deliver stronger security, better performance, and in-store wireless connectivity to be provided by HNS. This major upgrade to all of the nearly 500 retail sites provides significant new functionality.
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HNS announced its managed Voice-over-IP (VoIP) solution for the government market. Using the new Hughes ActiveQoS™ technology, Hughes can provide superior voice quality over affordable broadband, eliminating the need for agencies to invest in expensive, leased line Multiprotocol Label Switching (MPLS) networks.
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HNS shipped more than 327,000 broadband satellite terminals in 2010, the most ever in one year, bringing its cumulative number shipped worldwide to more than 2.5 million.
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HNS announced the launch of its new M2M (machine-to-machine) broadband service that enables the utility, energy, and other industries with remote unmanned equipment to extend faster network intelligence to their entire infrastructure, regardless of hard-to-reach locations or environmental conditions.
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HNS placed fourth among the Global Top Twenty operators worldwide on the World Teleport Association’s annual Top Teleport Operator Rankings for 2010.
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HNS’ HN9400 dual band satellite router received a 2010 Satellite Spotlight Product of the Year Award from Technology Marketing Corp. Spearheading the industry’s move to high capacity Ka-band satellite systems, the Hughes HN9400 is the newest member of its market-leading family of routers, designed to deliver the maximum performance on today’s Ku- or Ka-band platforms, while being future-proof for next generation, high-throughput systems.
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To summarize, Pradman Kaul, president and CEO, said, “The highlight in the fourth quarter was the stand-out performance by our consumer business. We activated nearly 59,000 new subscribers in Q4, an all-time quarterly record, while also increasing ARPU. We added a net of 74,000 subscribers in 2010 and we recorded over $1 billion of new orders in 2010, as a result of which our non-consumer backlog was a healthy $1.1 billion at year end 2010. The construction of our Jupiter™ satellite is proceeding well and is on-time and on-budget; we are on track to launch Jupiter in the first half of 2012.”
Commenting on Hughes’ financial performance, Grant Barber, executive vice president and CFO said, “The momentum from the third quarter of 2010 in delivering strong profitability continued in the fourth quarter of 2010. In FY 2010, Hughes’ Adjusted EBITDA was an all-time high of $227 million, Net Income attributable to stockholders was $22.8 million, and we delivered EPS of $1.00 in 2010, a significant turnaround from the loss of $2.46 in 2009. This profitability expansion coupled with effective working capital management resulted once again in delivering an impressive $149 million of cash from operating activities in 2010 and we ended the year with strong consolidated cash, cash equivalents, and marketable securities of $183 million.”
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
The following table reconciles the differences between Hughes’ Net Income (Loss), as determined under United States of America Generally Accepted Accounting Principles (GAAP), and Adjusted EBITDA.
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Three Months
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Twelve Months
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Ended December 31,
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Ended December 31,
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(Dollars in thousands)
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2010
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2009
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2010
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2009
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Net income (loss) attributable to HCI stockholders
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$ | 16,880 | $ | 2,367 | $ | 22,787 | $ | (52,693 | ) | ||||||||
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Add:
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Equity incentive plan compensation
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1,835 | 1,898 | 7,514 | 7,371 | |||||||||||||
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Interest expense
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13,216 | 16,994 | 59,345 | 64,119 | |||||||||||||
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Income tax expense
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1,380 | 1,656 | 5,716 | 2,446 | |||||||||||||
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Depreciation and amortization
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35,974 | 29,522 | 131,586 | 102,731 | |||||||||||||
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Long-term incentive/retention cash plan
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- | - | - | 1,538 | |||||||||||||
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Sea Launch impairment
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- | - | - | 44,400 | |||||||||||||
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Data Synapse impairment
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- | - | - | 1,000 | |||||||||||||
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HTI investment impairment
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- | 5,239 | - | 5,239 | |||||||||||||
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Class action settlement
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1,866 | - | 1,866 | - | |||||||||||||
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Less:
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Interest income
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(373 | ) | (1,194 | ) | (2,043 | ) | (2,222 | ) | |||||||||
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Adjusted EBITDA*
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$ | 70,778 | $ | 56,482 | $ | 226,771 | $ | 173,929 | |||||||||
4
The following table reconciles the differences between HNS’ Net Income (Loss), as determined under GAAP, and Adjusted EBITDA.
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Hughes Network Systems, LLC
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Three Months
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Twelve Months
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Ended December 31,
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Ended December 31,
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(Dollars in thousands)
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2010
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2009
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2010
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2009
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Net income (loss) attributable to HNS
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$ | 17,361 | $ | 7,229 | $ | 25,393 | $ | (44,905 | ) | ||||||||
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Add:
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Equity incentive plan compensation
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1,754 | 1,816 | 7,187 | 6,933 | |||||||||||||
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Interest expense
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13,211 | 16,988 | 59,324 | 64,094 | |||||||||||||
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Income tax expense
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1,360 | 1,661 | 5,691 | 2,436 | |||||||||||||
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Depreciation and amortization
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35,827 | 29,351 | 130,954 | 102,139 | |||||||||||||
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Long-term incentive/retention cash plan
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- | - | - | 1,538 | |||||||||||||
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Sea Launch impairment
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- | - | - | 44,400 | |||||||||||||
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Class action settlement
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1,866 | - | 1,866 | - | |||||||||||||
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Less:
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Interest income
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(284 | ) | (1,123 | ) | (1,770 | ) | (1,988 | ) | |||||||||
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Adjusted EBITDA*
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$ | 71,095 | $ | 55,922 | $ | 228,645 | $ | 174,647 | |||||||||
The condensed consolidated financial statements of Hughes and HNS for the periods ended December 31, 2010 and 2009 are attached to this press release.
Note on Use of Non-GAAP Financial Measures
Hughes provides non-GAAP financial data in addition to providing financial results in accordance with GAAP. This press release includes Adjusted EBITDA as a supplemental non-GAAP financial measure. Adjusted EBITDA is defined as earnings (loss) before interest, income taxes, depreciation, amortization, equity incentive plan compensation, long-term incentive/retention cash plan, and other adjustments permitted by the debt instruments of HNS. We believe this non-GAAP financial measure provides useful information to both management and investors by excluding specific expenses that we believe are not indicative of our core operating results. Internally, we use this non-GAAP measure in our review of the performance of management and in the performance of our business and operations. Management also uses Adjusted EBITDA of HNS for purposes of determining the payments to be made in connection with the long-term cash incentive retention program. Externally, we believe that investors may find this non-GAAP financial information useful in their assessment of our operating performance. In addition, we believe that this non-GAAP financial measure provides information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionately positive or negative impact on results in any particular period. Adjusted EBITDA of HNS is also used in calculating covenant compliance under HNS’ credit agreements and the indenture governing HNS’ 9½% Senior Notes due 2014, issued in 2006 and 2009.
Adjusted EBITDA is not a recognized term under GAAP. This non-GAAP measure does not represent net income or cash flows from operations, as these terms are defined under GAAP and should not be considered as an alternative to net income as an indicator of operating performance or to cash flows as a measure of liquidity. Additionally, this non-GAAP measure is not intended to be a measure of cash flow available to management for discretionary use, as such measure does not consider certain cash requirements, such as capital expenditures (including expenditures on VSAT operating lease hardware and capitalized software development costs), tax payments, debt service requirements (including VSAT operating lease hardware), and payments under the long-term cash incentive retention program. Adjusted EBITDA, as presented herein, is not necessarily comparable to similarly titled measures reported by other companies. Any analysis of non-GAAP financial measures should be used only in conjunction with results presented in accordance with GAAP.
5
About Hughes Communications, Inc.
Hughes Communications, Inc. (NASDAQ: HUGH) is the 100 percent owner of Hughes Network Systems, LLC. Hughes is the world’s leading provider of satellite broadband for home and office, delivering innovative network technologies, managed services, and solutions for enterprises and governments globally. HughesNet® is the #1 high-speed satellite Internet service in the marketplace, with offerings to suit every budget. To date, Hughes has shipped more than 2.5 million systems to customers in over 100 countries, representing over 50 percent market share. Its products employ global standards approved by the TIA, ETSI, and ITU organizations, including IPoS/DVB-S2, RSM-A, and GMR-1.
Headquartered outside Washington, DC, in Germantown, Maryland, USA, Hughes maintains sales and support offices worldwide. For more information, please visit www.hughes.com.
Safe Harbor Statement under the US Private Securities Litigation Reform Act of 1995
This press release may contain statements that are forward looking, as that term is defined by the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, discussions regarding industry outlook and Hughes’ expectations regarding the performance of its business, its future liquidity and capital resource needs, its strategic plans, and objectives. These forward-looking statements are based on management’s beliefs, as well as assumptions made by, and information currently available to, management. When used in this release, the words “believe,” “anticipate,” “estimate,” “expect,” “intend,” “project,” “plans,” and similar expressions and the use of future dates are intended to identify forward-looking statements. Although management believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made. These statements are subject to certain risks, uncertainties, and assumptions, including, but not limited to, the following: risks related to Hughes’ substantial leverage and restrictions contained in its debt agreements, technological developments, its reliance on providers of satellite transponder capacity, changes in demand for Hughes’ services and products, competition, industry trends, regulatory changes, foreign currency exchange rate fluctuations, and other risks identified and discussed under the caption “Risk Factors” in Hughes’ Annual Report on Form 10-K for the year ended December 31, 2009, filed with the Securities and Exchange Commission on March 3, 2010, and in the other documents Hughes files with the Securities and Exchange Commission from time to time.
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©2010 Hughes Communications, Inc. All rights reserved. Hughes, HughesNet, SPACEWAY, and Jupiter are trademarks of Hughes Network Systems, LLC.
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Contact Information
Investor Relations Contact: Deepak V. Dutt,
Vice President, Treasurer and Investor Relations Officer
Email: deepak.dutt@hughes.com
Phone: 301-428-7010
Media Contact: Judy Blake,
Director, Marketing Communications
Email: judy.blake@hughes.com
Phone: 301-601-7330
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Attachments
Hughes Communications, Inc.
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Hughes Network Systems, LLC
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
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6
HUGHES COMMUNICATIONS, INC.
Consolidated Balance Sheets
(Dollars in thousands, except per-share amounts)
(Unaudited)
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December 31,
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2010
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2009
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ASSETS
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Current assets:
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Cash and cash equivalents
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$ | 138,131 | $ | 261,038 | ||||
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Marketable securities
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44,532 | 47,188 | ||||||
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Receivables, net
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186,692 | 163,816 | ||||||
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Inventories
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57,819 | 60,244 | ||||||
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Prepaid expenses and other
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26,127 | 22,476 | ||||||
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Total current assets
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453,301 | 554,762 | ||||||
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Property, net
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774,052 | 602,403 | ||||||
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Capitalized software costs, net
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46,092 | 49,776 | ||||||
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Intangible assets, net
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11,440 | 14,524 | ||||||
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Goodwill
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5,093 | 5,093 | ||||||
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Other assets
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73,197 | 75,836 | ||||||
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Total assets
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$ | 1,363,175 | $ | 1,302,394 | ||||
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LIABILITIES AND EQUITY
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Current liabilities:
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Accounts payable
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$ | 120,202 | $ | 119,461 | ||||
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Short-term debt
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6,285 | 6,750 | ||||||
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Accrued liabilities and other
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128,790 | 131,774 | ||||||
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Total current liabilities
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255,277 | 257,985 | ||||||
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Long-term debt
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740,576 | 714,957 | ||||||
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Other long-term liabilities
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27,308 | 16,356 | ||||||
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Total liabilities
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1,023,161 | 989,298 | ||||||
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Commitments and contingencies
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Equity:
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Hughes Communications, Inc. ("HCI") stockholders' equity:
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Preferred stock, $0.001 par value; 1,000,000 shares authorized and no
shares issued and outstanding as of December 31, 2010 and 2009
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- | - | ||||||
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Common stock, $0.001 par value; 64,000,000 shares authorized;
21,834,787 shares and 21,633,539 shares issued and outstanding
as of December 31, 2010 and 2009, respectively
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22 | 22 | ||||||
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Additional paid in capital
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735,233 | 730,809 | ||||||
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Accumulated deficit
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(387,756 | ) | (410,543 | ) | ||||
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Accumulated other comprehensive loss
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(18,449 | ) | (16,247 | ) | ||||
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Total HCI stockholders' equity
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329,050 | 304,041 | ||||||
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Noncontrolling interests
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10,964 | 9,055 | ||||||
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Total equity
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340,014 | 313,096 | ||||||
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Total liabilities and equity
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$ | 1,363,175 | $ | 1,302,394 | ||||
7
HUGHES COMMUNICATIONS, INC.
Consolidated Statements of Operations
(Dollars in thousands, except per-share amounts)
(Unaudited)
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Year Ended December 31,
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2010
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2009
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Revenues:
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Services revenues
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$ | 791,324 | $ | 712,592 | ||||
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Hardware revenues
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252,003 | 297,107 | ||||||
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Total revenues
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1,043,327 | 1,009,699 | ||||||
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Operating costs and expenses:
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Cost of services
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493,023 | 448,804 | ||||||
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Cost of hardware
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234,805 | 289,516 | ||||||
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Selling, general and administrative
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206,512 | 180,675 | ||||||
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Loss on impairments
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- | 50,639 | ||||||
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Research and development
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20,279 | 22,296 | ||||||
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Amortization of intangible assets
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3,084 | 5,457 | ||||||
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Total operating costs and expenses
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957,703 | 997,387 | ||||||
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Operating income
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85,624 | 12,312 | ||||||
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Other income (expense):
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Interest expense
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(59,345 | ) | (64,119 | ) | ||||
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Interest income
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2,043 | 2,222 | ||||||
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Other income, net
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374 | 214 | ||||||
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Income (loss) before income tax expense and
equity in earnings (losses) of unconsolidated affiliates
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28,696 | (49,371 | ) | |||||
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Income tax expense
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(5,716 | ) | (2,446 | ) | ||||
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Equity in earnings (losses) of unconsolidated affiliates
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- | 170 | ||||||
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Net income (loss)
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22,980 | (51,647 | ) | |||||
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Net income attributable to the noncontrolling interests
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(193 | ) | (1,046 | ) | ||||
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Net income (loss) attributable to HCI stockholders
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$ | 22,787 | $ | (52,693 | ) | |||
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Income (loss) per share:
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Basic
|
$ | 1.05 | $ | (2.46 | ) | |||
|
Diluted
|
$ | 1.00 | $ | (2.46 | ) | |||
|
Shares used in computation of per share data:
|
||||||||
|
Basic
|
21,606,162 | 21,393,151 | ||||||
|
Diluted
|
22,738,207 | 21,393,151 | ||||||
8
HUGHES COMMUNICATIONS, INC.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
|
Year Ended December 31,
|
||||||||
|
2010
|
2009
|
|||||||
|
Cash flows from operating activities:
|
||||||||
|
Net income (loss)
|
$ | 22,980 | $ | (51,647 | ) | |||
|
Adjustments to reconcile net income (loss) to net cash flows
from operating activities:
|
||||||||
|
Depreciation and amortization
|
131,586 | 102,731 | ||||||
|
Amortization of debt issuance costs
|
2,818 | 2,025 | ||||||
|
Share-based compensation expense
|
7,514 | 7,371 | ||||||
|
Equity in (earnings) losses from unconsolidated affiliates
|
- | (170 | ) | |||||
|
Loss on impairments
|
- | 50,639 | ||||||
|
Other
|
(56 | ) | 535 | |||||
|
Change in other operating assets and liabilities, net of acquisition:
|
||||||||
|
Receivables, net
|
(22,371 | ) | 41,584 | |||||
|
Inventories
|
1,697 | 6,438 | ||||||
|
Prepaid expenses and other
|
1,721 | 5,369 | ||||||
|
Accounts payable
|
20,098 | 13,954 | ||||||
|
Accrued liabilities and other
|
(17,266 | ) | (27,447 | ) | ||||
|
Net cash provided by operating activities
|
148,721 | 151,382 | ||||||
|
Cash flows from investing activities:
|
||||||||
|
Change in restricted cash
|
1,211 | 223 | ||||||
|
Purchases of marketable securities
|
(105,692 | ) | (62,118 | ) | ||||
|
Proceeds from sales of marketable securities
|
108,289 | 15,000 | ||||||
|
Expenditures for property
|
(282,819 | ) | (150,764 | ) | ||||
|
Expenditures for capitalized software
|
(13,073 | ) | (12,772 | ) | ||||
|
Proceeds from sale of property
|
205 | 397 | ||||||
|
Cash acquired, consolidation of Hughes Systique Corporation
|
- | 828 | ||||||
|
Long-term loan receivable
|
- | (10,000 | ) | |||||
|
Other, net
|
1,847 | (830 | ) | |||||
|
Net cash used in investing activities
|
(290,032 | ) | (220,036 | ) | ||||
|
Cash flows from financing activities:
|
||||||||
|
Short-term revolver borrowings
|
4,761 | 6,791 | ||||||
|
Repayments of revolver borrowings
|
(5,347 | ) | (7,861 | ) | ||||
|
Proceeds from exercise of stock options
|
134 | - | ||||||
|
Long-term debt borrowings
|
31,602 | 147,849 | ||||||
|
Repayment of long-term debt
|
(6,252 | ) | (12,377 | ) | ||||
|
Debt issuance costs
|
(7,140 | ) | (4,612 | ) | ||||
|
Net cash provided by financing activities
|
17,758 | 129,790 | ||||||
|
Effect of exchange rate changes on cash and cash equivalents
|
646 | (3,914 | ) | |||||
|
Net increase (decrease) in cash and cash equivalents
|
(122,907 | ) | 57,222 | |||||
|
Cash and cash equivalents at beginning of the period
|
261,038 | 203,816 | ||||||
|
Cash and cash equivalents at end of the period
|
$ | 138,131 | $ | 261,038 | ||||
|
Supplemental cash flow information:
|
||||||||
|
Cash paid for interest, net of amounts capitalized
|
$ | 53,205 | $ | 60,410 | ||||
|
Cash paid for income taxes
|
$ | 7,521 | $ | 5,659 | ||||
|
Supplemental non-cash disclosures related to:
|
||||||||
|
Capitalized software and property acquired, not paid
|
$ | 26,954 | $ | 26,946 | ||||
|
COFACE Guaranteed Facility
|
$ | 22,871 | ||||||
|
Investment in Hughes Telematics, Inc.
|
$ | 13,000 | ||||||
|
Consolidation of Hughes Systique Corporation
|
$ | 5,328 | ||||||
9
HUGHES NETWORK SYSTEMS, LLC
Consolidated Balance Sheets
(In thousands, except per-share amounts)
(Unaudited)
|
December 31,
|
||||||||
|
2010
|
2009
|
|||||||
|
ASSETS
|
||||||||
|
Current assets:
|
||||||||
|
Cash and cash equivalents
|
$ | 80,800 | $ | 183,733 | ||||
|
Marketable securities
|
6,675 | 31,126 | ||||||
|
Receivables, net
|
184,869 | 162,806 | ||||||
|
Inventories
|
57,819 | 60,244 | ||||||
|
Prepaid expenses and other
|
24,600 | 20,976 | ||||||
|
Total current assets
|
354,763 | 458,885 | ||||||
|
Property, net
|
773,652 | 601,964 | ||||||
|
Capitalized software costs, net
|
46,092 | 49,776 | ||||||
|
Intangible assets, net
|
10,738 | 13,488 | ||||||
|
Goodwill
|
2,661 | 2,661 | ||||||
|
Other assets
|
67,459 | 68,524 | ||||||
|
Total assets
|
$ | 1,255,365 | $ | 1,195,298 | ||||
|
LIABILITIES AND EQUITY
|
||||||||
|
Current liabilities:
|
||||||||
|
Accounts payable
|
$ | 117,763 | $ | 117,513 | ||||
|
Short-term debt
|
6,196 | 6,750 | ||||||
|
Accrued liabilities and other
|
133,383 | 133,926 | ||||||
|
Total current liabilities
|
257,342 | 258,189 | ||||||
|
Long-term debt
|
740,487 | 714,957 | ||||||
|
Other long-term liabilities
|
27,308 | 16,191 | ||||||
|
Total liabilities
|
1,025,137 | 989,337 | ||||||
|
Commitments and contingencies
|
||||||||
|
Equity:
|
||||||||
|
Hughes Network Systems, LLC ("HNS") equity:
|
||||||||
|
Class A membership interests
|
176,099 | 177,933 | ||||||
|
Class B membership interests
|
- | - | ||||||
|
Retained earnings
|
61,487 | 36,094 | ||||||
|
Accumulated other comprehensive loss
|
(15,682 | ) | (13,987 | ) | ||||
|
Total HNS' equity
|
221,904 | 200,040 | ||||||
|
Noncontrolling interest
|
8,324 | 5,921 | ||||||
|
Total equity
|
230,228 | 205,961 | ||||||
|
Total liabilities and equity
|
$ | 1,255,365 | $ | 1,195,298 | ||||
10
HUGHES NETWORK SYSTEMS, LLC
Consolidated Statements of Operations
(In thousands)
(Unaudited)
|
Year Ended December 31,
|
||||||||
|
2010
|
2009
|
|||||||
|
Revenues:
|
||||||||
|
Services revenues
|
$ | 785,740 | $ | 709,558 | ||||
|
Hardware revenues
|
252,003 | 297,107 | ||||||
|
Total revenues
|
1,037,743 | 1,006,665 | ||||||
|
Operating costs and expenses:
|
||||||||
|
Cost of services
|
491,465 | 448,767 | ||||||
|
Cost of hardware
|
234,805 | 289,516 | ||||||
|
Selling, general and administrative
|
199,156 | 175,203 | ||||||
|
Loss on impairment
|
- | 44,400 | ||||||
|
Research and development
|
20,279 | 22,296 | ||||||
|
Amortization of intangible assets
|
2,750 | 5,164 | ||||||
|
Total operating costs and expenses
|
948,455 | 985,346 | ||||||
|
Operating income
|
89,288 | 21,319 | ||||||
|
Other income (expense):
|
||||||||
|
Interest expense
|
(59,324 | ) | (64,094 | ) | ||||
|
Interest income
|
1,770 | 1,988 | ||||||
|
Other income (loss), net
|
- | (334 | ) | |||||
|
Income (loss) before income tax expense
|
31,734 | (41,121 | ) | |||||
|
Income tax expense
|
(5,691 | ) | (2,436 | ) | ||||
|
Net income (loss)
|
26,043 | (43,557 | ) | |||||
|
Net income attributable to the noncontrolling interest
|
(650 | ) | (1,348 | ) | ||||
|
Net income (loss) attributable to HNS
|
$ | 25,393 | $ | (44,905 | ) | |||
11
HUGHES NETWORK SYSTEMS, LLC
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
|
Year Ended December 31,
|
||||||||
|
2010
|
2009
|
|||||||
|
Cash flows from operating activities:
|
||||||||
|
Net income (loss)
|
$ | 26,043 | $ | (43,557 | ) | |||
|
Adjustments to reconcile net income (loss) to net cash flows
from operating activities:
|
||||||||
|
Depreciation and amortization
|
130,954 | 102,139 | ||||||
|
Amortization of debt issuance costs
|
2,818 | 2,025 | ||||||
|
Share-based compensation expense
|
839 | 899 | ||||||
|
Loss on impairment
|
- | 44,400 | ||||||
|
Other
|
(67 | ) | 546 | |||||
|
Change in other operating assets and liabilities, net of acquisition:
|
||||||||
|
Receivables, net
|
(21,558 | ) | 52,538 | |||||
|
Inventories
|
1,697 | 6,438 | ||||||
|
Prepaid expenses and other
|
1,065 | 4,721 | ||||||
|
Accounts payable
|
19,607 | 15,580 | ||||||
|
Accrued liabilities and other
|
(14,241 | ) | (22,858 | ) | ||||
|
Net cash provided by operating activities
|
147,157 | 162,871 | ||||||
|
Cash flows from investing activities:
|
||||||||
|
Change in restricted cash
|
1,165 | (108 | ) | |||||
|
Purchases of marketable securities
|
(29,280 | ) | (41,080 | ) | ||||
|
Proceeds from sales of marketable securities
|
53,693 | 10,000 | ||||||
|
Expenditures for property
|
(282,589 | ) | (150,702 | ) | ||||
|
Expenditures for capitalized software
|
(13,073 | ) | (12,772 | ) | ||||
|
Proceeds from sale of property
|
206 | 397 | ||||||
|
Long-term loan receivable
|
- | (10,000 | ) | |||||
|
Other, net
|
1,462 | (755 | ) | |||||
|
Net cash used in investing activities
|
(268,416 | ) | (205,020 | ) | ||||
|
Cash flows from financing activities:
|
||||||||
|
Short-term revolver borrowings
|
4,761 | 6,791 | ||||||
|
Repayments of revolver borrowings
|
(5,347 | ) | (7,861 | ) | ||||
|
Long-term debt borrowings
|
31,548 | 147,849 | ||||||
|
Repayments of long-term debt
|
(6,244 | ) | (12,375 | ) | ||||
|
Debt issuance costs
|
(7,140 | ) | (4,612 | ) | ||||
|
Net cash provided by (used in) financing activities
|
17,578 | 129,792 | ||||||
|
Effect of exchange rate changes on cash and cash equivalents
|
748 | (4,172 | ) | |||||
|
Net increase (decrease) in cash and cash equivalents
|
(102,933 | ) | 83,471 | |||||
|
Cash and cash equivalents at beginning of the period
|
183,733 | 100,262 | ||||||
|
Cash and cash equivalents at end of the period
|
$ | 80,800 | $ | 183,733 | ||||
|
Supplemental cash flow information:
|
||||||||
|
Cash paid for interest, net of amounts capitalized
|
$ | 53,184 | $ | 60,386 | ||||
|
Cash paid for income taxes
|
$ | 7,517 | $ | 5,619 | ||||
|
Supplemental non-cash disclosures related to:
|
||||||||
|
Capitalized software and property acquired, not paid
|
$ | 26,954 | $ | 26,946 | ||||
|
COFACE Guaranteed Facility
|
$ | 22,871 | ||||||
12