2008-08-06 15:17:00
Hughes Communications, Inc. Announces Record Second Quarter 2008 Results
Revenues Increase 13% over Second Quarter 2007 to $266 million
Adjusted EBITDA Increases 22% to $38 million
Consumer Gross Adds Increase 21%, Net Adds 32%
New Order Bookings Increase 51% to $333 million
GERMANTOWN, Md., Aug. 6 /EMWNews/ -- Hughes
Communications, Inc. (Nasdaq: HUGH) ("Hughes"), the global leader in
broadband satellite network solutions and services, today announced
financial results for the quarter ended June 30, 2008. Hughes' consolidated
operations are classified into four reportable segments: North America
VSAT; International VSAT; Telecom Systems; and Corporate and Other. The
North America VSAT, International VSAT, and Telecom Systems segments
represent all the operations of Hughes Network Systems, LLC ("HNS"),
Hughes' principal operating subsidiary.
"Hughes had an outstanding quarter, setting new records for second
quarter revenue, adjusted EBITDA, and new orders," said Pradman Kaul,
president and chief executive officer of Hughes. "Revenues increased by 13%
over the second quarter of 2007 to $266 million. The key contributors to
revenue growth were our Consumer business and the International VSAT
segment. New consumer activations increased by a strong 21% and net
consumer adds by an even stronger 32% in the second quarter of 2008 over
the second quarter of 2007. Churn in the second quarter was 2.3%, the same
as in the second quarter of 2007. ARPU increased to $66 in the second
quarter of 2008 from $62 in the second quarter of 2007. The overall effect
of these was that consumer services revenue increased to $80 million in the
second quarter of 2008, a strong 23% growth over the second quarter of
2007."
"Revenue in the International VSAT segment grew by a strong 43% over
the second quarter of 2007 to $65 million, driven primarily by our European
service subsidiary and international equipment exports from the U.S. For
the second quarter of 2008, adjusted EBITDA* was an impressive $38 million
for a growth of 22% over the second quarter of 2007."
Kaul continued, "We also set a second quarter record for new orders by
booking new orders of $333 million in the second quarter of 2008, including
significant orders from BP, Blockbuster, Social Security Administration,
and American General Finance in our North America enterprise business. Our
International enterprise business received significant orders from the
African Development Bank, Micro Tech, PT Abhimata, UNIP, Telemar Brazil,
the Spanish lottery service provider STL, Telefonica, and Afsat. Our mobile
satellite business was awarded a significant order for over $100 million by
Globalstar."
For the six month period ended June 30, 2008, revenues increased to
$503 million for a growth of 10% and adjusted EBITDA increased to $67
million for a growth of 19% over the six months ended June 30, 2007. We
booked new orders of $619 million during the six month period ended June
30, 2008, an increase of 25% over the six month period ended June 30, 2007.
This has resulted in an all-time high, non-consumer order backlog of $869
million as of June 30, 2008, a 35% growth over the backlog at June 30,
2007.
* Adjusted EBITDA is defined as EBITDA further adjusted to exclude
certain adjustments. EBITDA is defined as earnings (losses) before
interest, income taxes, depreciation, amortization, and equity incentive
compensation. See "Reconciliation of Non-GAAP Financial Measures to GAAP
Financial Measures."
Set forth below are tables highlighting certain of our results for the
three and six months ended June 30, 2008 and June 30, 2007:
Hughes Communications, Inc.
Three Months Six Months
Ended June 30, Ended June 30,
(Dollars in thousands) 2008 2007 2008 2007
Revenue
North America VSAT $161,241 $150,775 $318,031 $302,340
International VSAT 65,469 45,921 110,065 89,417
Telecom Systems 38,780 37,413 74,414 65,083
Corporate and Other 152 249 292 400
Total $265,642 $234,358 $502,802 $457,240
Operating income
North America VSAT $3,271 $10,619 $8,293 $19,120
International VSAT 7,267 4,780 7,700 5,738
Telecom Systems 6,611 4,844 11,200 8,385
Corporate and Other (1,086) (1,210) (1,824) (2,654)
Total $16,063 $19,033 $25,369 $30,589
Net income $1,827 $9,632 $2,483 $12,572
Adjusted net income* $3,927 $10,637 $14,174 $14,594
EBITDA* $36,852 $30,766 $57,774 $55,146
Adjusted EBITDA* $37,562 $30,826 $67,004 $56,383
New Orders $332,541 $219,523 $618,946 $496,882
Hughes Network Systems, LLC
Three Months Six Months
Ended June 30, Ended June 30,
(Dollars in thousands) 2008 2007 2008 2007
Revenue
North America VSAT $161,241 $150,775 $318,031 $302,340
International VSAT 65,469 45,921 110,065 89,417
Telecom Systems 38,780 37,413 74,414 65,083
Total $265,490 $234,109 $502,510 $456,840
Operating income
North America VSAT $3,271 $10,619 $8,293 $19,120
International VSAT 7,267 4,780 7,700 5,738
Telecom Systems 6,611 4,844 11,200 8,385
Total $17,149 $20,243 $27,193 $33,243
Net income $2,634 $11,178 $4,092 $15,486
EBITDA* $37,818 $31,921 $59,492 $57,335
Adjusted EBITDA* $38,528 $31,981 $68,722 $58,572
New Orders $332,389 $219,274 $618,654 $496,483
* For the definitions of Adjusted Net Income, EBITDA, and Adjusted
EBITDA, see "Reconciliation of Non-GAAP Financial Measures to GAAP
Financial Measures" below.
Selected Highlights
-- Hughes announced on May 21, 2008 that the public offering of
2,239,600 shares of its common stock priced at $50 per share. In the
offering, Hughes sold 2,000,000 shares and certain selling stockholders,
including members of its senior management, sold a total of 239,600 shares.
Hughes intends to use the net proceeds from the sale of its shares for the
acquisition of a satellite or general corporate purposes.
-- HNS announced that it has increased the speeds of three of its
popular HughesNet(R) consumer service plans -- Home, Pro, and ProPlus,
giving new subscribers an even faster broadband connection at the same low
prices. The Home plan now features download speeds of up to 1 Mbps. The Pro
and ProPlus plans feature download speeds of up to 1.2 and 1.6 Mbps,
respectively.
-- HNS announced the availability of the fastest consumer broadband
satellite Internet access plans ever offered. The new service plans, Elite,
ElitePlus, and ElitePremium, give rural Americans access to speeds more
comparable with terrestrial broadband services utilizing affordable
consumer equipment. The Elite plan features download speeds of up to 2Mbps,
ElitePlus features download speeds of up to 3Mbps and ElitePremium features
download speeds of up to 5Mbps.
-- HNS signed an agreement with Globalstar, Inc. (Nasdaq: GSAT) under
which Hughes will design, manufacture and implement the next-generation
Radio Access Network (RAN) comprising gateway equipment initially at
Globalstar's locations worldwide with an option to expand to 30 locations,
and will design, manufacture, and deliver satellite air interface chips to
be a part of the User Terminal Subsystem (UTS). The initial contract is
valued at $100.8 million.
-- HNS announced that Sistemas Tecnicos de Loterias del Estado (STL)
has awarded Hughes Networks Systems Ltd., a wholly owned subsidiary of HNS
located in the UK, a contract to provide a geographically redundant HN
System Network Operations Center (NOC), 2800 HN7700S broadband satellite
routers, and support/maintenance services for five years. STL provides
information technology and telecommunications services to the Entidad
Publico Empresarial Loterias y Apuestas del Estado Espanol (LAE), the
Spanish state lottery authority.
-- HNS was selected as prime contractor by the Social Security
Administration (SSA) to provide operational support services for its
interactive video training network and has received an initial task order
for $4 million. The SSA has the option to extend the work for four
additional years. If the SSA exercises this option and the option to
procure the necessary equipment, this contract could be worth over $40
million in the next five years.
-- Hughes Communications India, Ltd. (HCIL), a subsidiary of Hughes,
signed an agreement with SAHAJ SREI e-Village Limited to supply 17,000
VSATs to be installed at rural kiosks across multiple states in India. HCIL
will provide the VSAT equipment enabling G2C (government to consumer)
services and other services such as Internet access and interactive and
online education. SREI Sahaja e-Village LTD, a subsidiary of SREI
Infrastructure Finance Limited, is focused on bridging the digital divide
between rural and urban India, under the National E-Governance Plan of the
Government of India. With this order, the number of kiosks installed and
orders in backlog is approximately 30,000.
-- America's Emergency Network, Inc. (AEN), a wholly owned subsidiary
of Brampton Crest International, Inc. (OTC Bulletin Board: BRCI), announced
that it has entered into an agreement with HNS under which HNS will provide
the broadband satellite backbone of AEN's pioneering
satellite-video-Internet emergency communications network using HughesNet
service, powered by our SPACEWAY(TM) 3 satellite system.
-- Automotive Broadcasting Network(TM) (ABN), a private auto retailing
television network, selected the HughesNet Managed Digital Media Service to
distribute video content to automotive dealerships across the US. The
Automotive Broadcasting Network is a subscription-based service providing
high-quality, family-friendly entertainment programming from CBS not
normally available during business hours, as well as clips and segments
from CBS news and talk programs, to each dealer site.
-- HNS announced that it will provide advanced SPACEWAY 3 broadband
satellite equipment and services to broadband provider Barrett Xplore Inc.
of New Brunswick, Canada. The contract includes satellite capacity on
SPACEWAY 3, a gateway earth station, and remote terminals. Barrett Xplore
will offer the broadband satellite services to the Canadian market under
its Xplornet brand.
-- HNS announced the introduction of enhanced capabilities for its
innovative HX System that facilitate Ku-band satellite delivery of mobile
broadband services on vehicles, ships, trains, and planes. The new
capabilities leverage the innovative and compact HX broadband satellite
system to satisfy key mobility-specific requirements.
To summarize, Kaul said, "We are very pleased with our financial
performance in the second quarter of 2008. Our consumer business continues
to show strong growth, and the robust orders in previous quarters in the
international business have started to yield strong revenue growth.
Consumers are being added to SPACEWAY 3 as planned and we expect to see the
margin expansion in the coming months. I am especially pleased with our new
orders performance in the second quarter and the resulting strong backlog,
which has strengthened our position for the periods ahead. We also raised
$94 million of net proceeds from our equity offering in May 2008 and
appreciate very much the faith and confidence that our new and existing
shareholders have placed on us."
Commenting on Hughes' financial performance, Grant Barber, executive
vice president and chief financial officer, said, "Our Adjusted EBITDA and
EBITDA showed strong growth in the second quarter of 2008 over the second
quarter of 2007. Hughes' GAAP net income in the quarter was $1.8 million or
$0.09 per share compared with $9.6 million or $0.50 per share on a fully
diluted basis in the second quarter of 2007. The variance is primarily due
to SPACEWAY 3 satellite and network construction costs being depreciated
starting in the second quarter of 2008 with the launch of commercial
service on SPACEWAY 3 in April 2008. This is in line with our expectations.
The successful equity offering has strengthened our balance sheet and our
consolidated cash and marketable securities improved to $191.1 million at
June 30, 2008."
Reconciliation of Non-GAAP Financial Measures to GAAP Financial
Measures
The following table reconciles the differences between Hughes' net
income as determined under United States of America generally accepted
accounting principles (GAAP), Adjusted Net Income, EBITDA, and Adjusted
EBITDA.
Hughes Communications, Inc.
Three Months Six Months
Ended June 30, Ended June 30,
(Dollars in thousands) 2008 2007 2008 2007
Net income $1,827 $9,632 $2,483 $12,572
Add:
Equity incentive
plan compensation 1,390 1,005 2,461 2,022
Long-term cash
incentive retention
program 710 - 9,230 -
Adjusted net income $3,927 $10,637 $14,174 $14,594
Net income $1,827 $9,632 $2,483 $12,572
Add:
Equity incentive
plan compensation 1,390 1,005 2,461 2,022
Interest expense 13,902 11,872 23,210 23,310
Income tax expense 1,195 164 1,835 684
Depreciation and
amortization 19,405 10,981 30,115 22,524
Less:
Interest income (867) (2,888) (2,330) (5,966)
EBITDA $36,852 $30,766 $57,774 $55,146
Add:
Long-term cash
incentive retention
program 710 - 9,230 -
Restructuring charge - 60 - 1,237
Adjusted EBITDA $37,562 $30,826 $67,004 $56,383
The following table reconciles the differences between HNS' net income
as determined under GAAP, EBITDA, and Adjusted EBITDA:
Hughes Network Systems, LLC
Three Months Six Months
Ended June 30, Ended June 30,
(Dollars in thousands) 2008 2007 2008 2007
Net income $2,634 $11,178 $4,092 $15,486
Add:
Equity incentive
plan compensation 1,240 767 2,165 1,294
Interest expense 13,902 11,870 23,210 23,308
Income tax expense
(benefit) 1,184 (131) 1,813 389
Depreciation and
amortization 19,405 10,981 30,115 22,524
Less:
Interest income (547) (2,744) (1,903) (5,666)
EBITDA $37,818 $31,921 $59,492 $57,335
Add:
Long-term cash
incentive retention
program 710 - 9,230 -
Restructuring charge - 60 - 1,237
Adjusted EBITDA $38,528 $31,981 $68,722 $58,572
The financial statements of Hughes and HNS for the three and six months
ended June 30, 2008 and June 30, 2007 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 the
following supplemental non-GAAP financial measures: Adjusted Net Income,
EBITDA, and Adjusted EBITDA. Adjusted Net Income excludes from GAAP net
income the effects of equity incentive plan compensation and the accrual of
long-term cash incentive retention program, which was adopted in April 2005
in connection with the acquisition of HNS. EBITDA is defined as earnings
(loss) before interest, income taxes, depreciation, amortization and equity
incentive plan compensation. Adjusted EBITDA is defined as EBITDA further
adjusted to exclude certain adjustments. We believe these non-GAAP
financial measures provide 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 these non-GAAP measures
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 these
non-GAAP financial measures provide 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' 91/2% Senior Notes due 2014.
Adjusted Net Income, EBITDA, and Adjusted EBITDA are not recognized
terms under GAAP. These non-GAAP measures do not represent net income or
cash flows from operations, as these terms are defined under GAAP, and
should not be considered as alternatives to net income as an indicator of
operating performance or to cash flows as a measure of liquidity.
Additionally, these non-GAAP measures are not intended to be measures of
cash flow available to management for discretionary use, as such measures
do 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 Net Income, EBITDA, and Adjusted
EBITDA as presented herein are 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.
About Hughes Communications, Inc.
Hughes Communications, Inc. (Nasdaq: HUGH) is the 100 percent owner of
Hughes Network Systems, LLC. Hughes is the global leader in providing
broadband satellite networks and services for enterprises, governments,
small businesses, and consumers. HughesNet encompasses all broadband
solutions and managed services from Hughes, bridging the best of satellite
and terrestrial technologies. Its broadband satellite products are based on
global standards approved by the TIA, ETSI, and ITU standards
organizations, including IPoS/DVB-S2, RSM-A, and GMR-1. To date, Hughes has
shipped more than 1.5 million systems to customers in over 100 countries.
Headquartered outside Washington, DC, in Germantown, Maryland, USA,
Hughes maintains sales and support offices worldwide. For more information,
please visit http://www.hughes.com.
Safe Harbor Statement under the U.S. 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, 2007 filed with the Securities and
Exchange Commission on March 10, 2008 and in the other documents Hughes
files with the Securities and Exchange Commission from time to time.
(C)2008 Hughes Communications, Inc. All rights reserved. Hughes,
HughesNet, IPoS, and SPACEWAY are trademarks of Hughes Network Systems,
LLC. DIRECTV and DIRECWAY are registered trademarks of The DIRECTV Group,
Inc.
HUGHES COMMUNICATIONS, INC.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
June 30, December 31,
2008 2007
ASSETS
Current assets:
Cash and cash equivalents $179,107 $134,092
Marketable securities 11,991 17,307
Receivables, net 197,569 209,943
Inventories 79,790 65,754
Prepaid expenses and other 35,260 43,720
Total current assets 503,717 470,816
Property, net 500,812 479,976
Capitalized software costs, net 49,995 47,582
Intangible assets, net 25,952 22,513
Goodwill 2,658 -
Other assets 120,015 108,950
Total assets $1,203,149 $1,129,837
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 75,185 $ 72,440
Short-term debt 11,713 14,795
Accrued liabilities 163,748 177,932
Due to affiliates 1,258 12,621
Total current liabilities 251,904 277,788
Long-term debt 579,861 577,761
Other long-term liabilities 6,011 6,526
Total liabilities 837,776 862,075
Commitments and contingencies
Minority interests 5,489 5,401
Stockholders' Equity:
Preferred stock, $0.001 par value;
1,000,000 shares authorized and no
shares issued and outstanding at June
30, 2008 and December 31, 2007 - -
Common stock, $0.001 par value;
64,000,000 shares authorized;
21,356,409 shares and 19,195,972
shares issued and outstanding
as of June 30, 2008 and December 31,
2007, respectively 21 19
Additional paid in capital 725,938 631,300
Accumulated deficit (364,385) (366,868)
Accumulated other comprehensive gain
(loss):
Foreign currency translation
adjustments 3,233 3,305
Unrealized loss on hedging instruments (5,052) (5,482)
Unrealized gain on securities 129 87
Total stockholders' equity 359,884 262,361
Total liabilities and
stockholders' equity $1,203,149 $1,129,837
HUGHES COMMUNICATIONS, INC.
Condensed Consolidated Statements of Operations
(In thousands, except share and per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Revenues:
Services $149,276 $129,373 $298,173 $249,147
Hardware sales 116,366 104,985 204,629 208,093
Total revenues 265,642 234,358 502,802 457,240
Operating costs and
expenses:
Cost of services 101,694 86,940 195,911 167,174
Cost of hardware
products sold 97,541 85,352 174,339 172,518
Selling, general
and administrative 41,501 37,280 90,656 75,546
Research and development 7,176 4,218 13,252 8,342
Amortization of
intangibles 1,667 1,535 3,275 3,071
Total operating costs
and expenses 249,579 215,325 477,433 426,651
Operating income 16,063 19,033 25,369 30,589
Other income (expense):
Interest expense (13,902) (11,872) (23,210) (23,310)
Interest income 867 2,888 2,330 5,966
Other income, net 58 39 89 140
Income before income
taxes expense; minority
interests in net (earnings)
losses of subsidiaries
and equity in losses
of unconsolidated
affiliates 3,086 10,088 4,578 13,385
Income tax expense (1,195) (164) (1,835) (684)
Minority interests in net
(earnings) losses of
subsidiaries (43) (125) (88) 158
Equity in losses of
unconsolidated affiliates (21) (167) (172) (287)
Net income $1,827 $9,632 $2,483 $12,572
Earnings per share:
Basic $0.09 $0.51 $0.13 $0.67
Diluted $0.09 $0.50 $0.13 $0.65
Shares used in computation
of per share data:
Basic 19,676,925 18,862,337 19,272,277 18,852,783
Diluted 20,071,971 19,209,312 19,673,602 19,212,199
HUGHES COMMUNICATIONS, INC.
Condensed Consolidated Statements Of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended
June 30,
2008 2007
Cash flows from operating activities:
Net income $2,483 $12,572
Adjustments to reconcile net income
to cash flows from operating activities:
Depreciation and amortization 30,810 22,767
Equity plan compensation expense 2,461 2,022
Minority interests 88 (158)
Equity in losses from unconsolidated
affiliates 172 287
Gain on disposal of assets - (285)
Deferred income taxes - (705)
Other 9 -
Change in other operating assets and
liabilities, net of acquisitions:
Receivables, net 12,341 1,988
Inventories (13,884) 817
Prepaid expenses and other (7,620) (4,273)
Accounts payable 4,577 9,148
Accrued liabilities and other (17,672) (11,606)
Net cash provided by operating
activities 13,765 32,574
Cash flows from investing activities:
Change in restricted cash (597) 406
Purchase of marketable securities (2,070) (5,679)
Proceed from sale of marketable
securities 7,390 68,193
Expenditures for property (43,842) (119,383)
Proceeds from sale of property 63 716
Expenditures for capitalized software (7,079) (6,949)
Acquisitions of Helius, net (10,540) -
Additional equity investment in
Hughes Systique Corporation (1,500) -
Long-term loan to Hughes Systique
Corporation (500) -
Net cash used in investing activities (58,675) (62,696)
Cash flows from financing activities:
Net increase in notes and loans
payable 661 358
Proceeds from equity offering 93,019 -
Proceeds from exercise of stock
options 75 113
Long-term debt borrowings 2,099 115,662
Repayment of long-term debt (8,895) (13,226)
Debt issuance costs - (2,044)
Net cash provided by financing
activities 86,959 100,863
Effect of exchange rate changes on
cash and cash equivalents 2,966 (1,702)
Net increase in cash and cash
equivalents 45,015 69,039
Cash and cash equivalents at
beginning of the period 134,092 106,933
Cash and cash equivalents at end of
the period $179,107 $175,972
Supplemental cash flow information:
Cash paid for interest $26,989 $26,005
Cash paid for income taxes $1,733 $2,173
HUGHES NETWORK SYSTEMS
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
June 30, December 31,
2008 2007
ASSETS
Current assets:
Cash and cash equivalents $80,843 $129,227
Marketable securities 8,204 11,224
Receivables, net 197,445 209,731
Inventories 79,790 65,754
Prepaid expenses and other 34,238 42,131
Total current assets 400,520 458,067
Property, net 500,812 479,976
Capitalized software costs, net 49,995 47,582
Intangible assets, net 25,952 22,513
Goodwill 2,658 -
Other assets 113,224 103,870
Total assets $1,093,161 $1,112,008
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $73,355 $69,497
Short-term debt 11,713 14,795
Accrued liabilities 163,112 177,136
Due to affiliates 1,591 13,473
Total current liabilities 249,771 274,901
Long-term debt 579,861 577,761
Other long-term liabilities 6,011 6,526
Total liabilities 835,643 859,188
Commitments and contingencies
Minority interests 5,420 5,350
Equity:
Class A membership interests 180,808 180,655
Class B membership interests - -
Retained earnings 72,995 68,903
Accumulated other comprehensive gain
(loss):
Foreign currency translation
adjustments 3,233 3,305
Unrealized loss on hedging
instruments (5,052) (5,482)
Unrealized gains on securities 114 89
Total equity 252,098 247,470
Total liabilities and equity $1,093,161 $1,112,008
HUGHES NETWORK SYSTEMS
Condensed Consolidated Statements Of Operations
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Revenues:
Services $149,124 $129,124 $297,881 $248,747
Hardware sales 116,366 104,985 204,629 208,093
Total revenues 265,490 234,109 502,510 456,840
Operating costs and expenses:
Cost of services 101,684 86,926 195,887 167,132
Cost of hardware products sold 97,541 85,352 174,339 172,518
Selling, general and
administrative 40,273 35,835 88,564 72,534
Research and development 7,176 4,218 13,252 8,342
Amortization of intangibles 1,667 1,535 3,275 3,071
Total operating costs and
expenses 248,341 213,866 475,317 423,597
Operating income 17,149 20,243 27,193 33,243
Other income (expense):
Interest expense (13,902) (11,870) (23,210) (23,308)
Interest income 547 2,744 1,903 5,666
Other income, net 58 39 89 91
Income before income tax (expense)
benefit and minority interests
in net (earnings) losses
of subsidiaries 3,852 11,156 5,975 15,692
Income tax (expense) benefit (1,184) 131 (1,813) (389)
Minority interests in net
(earnings) losses of subsidiaries (34) (109) (70) 183
Net income $2,634 $11,178 $4,092 $15,486
HUGHES NETWORK SYSTEMS
Condensed Consolidated Statements Of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended
June 30,
2008 2007
Cash flows from operating activities:
Net income $4,092 $15,486
Adjustments to reconcile net income
to cash flows from operating activities:
Depreciation and amortization 30,810 22,767
Equity plan compensation expense 153 160
Minority interests 70 (183)
Gain on disposal of assets - (285)
Other 5 -
Change in other operating assets and
liabilities, net of acquisition:
Receivables, net 12,253 2,004
Inventories (13,884) 817
Prepaid expenses and other (8,293) (5,526)
Accounts payable 5,690 9,579
Accrued liabilities and other (17,116) (11,883)
Net cash provided by operating
activities 13,780 32,936
Cash flows from investing activities:
Change in restricted cash (597) 406
Proceed from sale of marketable
investments 3,000 65,649
Expenditures for property (43,842) (119,383)
Expenditures for capitalized software (7,079) (6,949)
Proceeds from sale of property 63 716
Acquisition of Helius, Inc. (10,540) -
Net cash used in investing activities (58,995) (59,561)
Cash flows from financing activities:
Net increase in notes and loans
payable 661 358
Long-term debt borrowings 2,099 115,662
Repayment of long-term debt (8,895) (13,226)
Debt issuance costs - (2,044)
Net cash (used in) provided by
financing activities (6,135) 100,750
Effect of exchange rate changes on
cash and cash equivalents 2,966 (1,702)
Net (decrease) increase in cash and
cash equivalents (48,384) 72,423
Cash and cash equivalents at beginning
of the period 129,227 99,098
Cash and cash equivalents at end of
the period $80,843 $171,521
Supplemental cash flow information:
Cash paid for interest $26,989 $26,003
Cash paid for income taxes $1,711 $2,172
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