News Release
Intelsat Reports Fourth Quarter and Fiscal Year 2013 Results
-
Fourth quarter revenue of
$642.8 million ; fiscal year 2013 revenue of$2,603.6 million -
Fourth quarter net income attributable to
Intelsat S.A. of$72.6 million ; 2013 fiscal year net loss of$255.7 million -
Debt prepayment of
$100 million in the fourth quarter of 2013; total 2013 debt decline of$617 million -
$10.1 billion contracted backlog provides visibility for future revenue and cash flow
For the year ended
“During the 2013 fourth quarter, we saw solid bookings and renewals in
our media and network services businesses, and we also furthered our
presence in the broadband mobility sector. Backlog at year-end 2013 was
“Performance overall continued to reflect two trends affecting our
revenue growth, including the on-going effects of reduced U.S.
government spending and the oversupply environment in
“We also expect solid cash flows as we manage costs carefully, harvest efficiencies in our capital spending plans, and benefit from reduced interest expense. This anticipated performance will leave us in a good position to continue to de-lever our balance sheet as we position for longer-term organic growth.”
Fourth Quarter 2013 Business Highlights
Network Services
Network Services comprised 47 percent of Intelsat’s total fourth quarter
2013 revenue, and at
Media
Media comprised 34 percent of the company’s revenue for the quarter
ended
Government
Government comprised 18 percent of our revenue for the quarter ended
Average Fill Rate
Intelsat’s average fill rate on our approximately 2,175 station-kept
transponders was 77 percent at
Satellite Launches
Contracted Backlog
At
Debt Prepayment and Other Financing Activities
As previously disclosed, in
On
Financial Results for the Three Months ended
On-Network revenue generally includes revenue from any services delivered via our satellite or ground network. Off-Network and Other revenue generally includes revenue from transponder services, Mobile Satellite Services (“MSS”) and other satellite-based transmission services using capacity procured from other operators, often in frequencies not available on our network. Off-Network and Other Revenue also includes revenue from consulting and other services and sales of customer premises equipment.
Total On-Network Revenue decreased by
-
Transponder services decreased by
$8.3 million , primarily due to a$4.9 million decrease in revenue from capacity sold for government applications in theNorth America region and a$3.5 million decrease in revenue from capacity sold to media customers largely in theNorth America andAfrica andMiddle East regions. -
Managed services increased by
$0.8 million , largely due to a$2.1 million net increase in revenue from network services customers for new broadband services for mobility applications, primarily in theNorth America andEurope regions. This increase was partially offset by a$1.4 million decrease in revenue from media customers due to lower demand for occasional use services.
Total Off-Network and Other Revenue decreased by
-
Transponder, MSS and other off-network services reported an aggregate
decrease of
$9.6 million , primarily due to a decline in sales of off-network transponder services and sales of customer premises equipment, both of which are primarily related to government applications. -
Satellite-related services reported an aggregate decline of
$7.5 million , primarily due to decreased revenue from government professional services and flight operations support for third party satellites.
For the three month period ended
Direct costs of revenue decreased by
Selling, general and administrative expenses decreased by
Depreciation and amortization expense decreased by
Interest expense, net consists of the gross interest expense we
incur less the amount of interest we capitalize related to capital
assets under construction and less interest income earned. As of
The decrease in interest expense, net was principally due to the following:
-
a net decrease of
$69.7 million as a result of our debt offerings, debt prepayments and redemptions in 2013 and 2012; -
a net decrease of
$5.0 million as a result of the decrease in the interest rate under the Intelsat Jackson Secured Credit Agreement; and -
an increase of
$2.5 million resulting from lower capitalized interest of$12.7 million compared to$15.2 million for the three months endedDecember 31, 2012 , resulting from decreased levels of satellites and related assets under construction.
Non-cash items in total interest expense, net were
Loss on early extinguishment of debt was
Other expense, net was
Provision for income taxes was
Cash paid for income taxes, net of refunds, totaled
EBITDA, Adjusted EBITDA, Net Income, Net Income per Diluted Common Share and Adjusted Net Income per Diluted Common Share
EBITDA was
Adjusted EBITDA was
Net income was
Net income per diluted common share was
Adjusted net income per diluted common share was
Revenue Comparison by Customer Set and Service Type | ||||||||||||
($ in thousands) |
||||||||||||
By Customer Set | ||||||||||||
Three Months Ended | Three Months Ended | |||||||||||
December 31, | December 31, | |||||||||||
2012 | 2013 | |||||||||||
Network Services | $ | 304,331 | 45 | % | $ | 300,002 | 47 | % | ||||
Media | 224,112 | 34 | % | 218,393 | 34 | % | ||||||
Government | 135,519 | 20 | % | 116,223 | 18 | % | ||||||
Other | 8,406 | 1 | % | 8,231 | 1 | % | ||||||
$ | 672,368 | 100 | % | $ | 642,849 | 100 | % | |||||
By Service Type | ||||||||||||
Three Months Ended | Three Months Ended | |||||||||||
December 31, | December 31, | |||||||||||
2012 | 2013 | |||||||||||
On-Network Revenues | ||||||||||||
Transponder services | $ | 502,433 | 75 | % | $ | 494,145 | 77 | % | ||||
Managed services | 73,096 | 11 | % | 73,941 | 12 | % | ||||||
Channel | 21,780 | 3 | % | 16,833 | 3 | % | ||||||
Total on-network revenues | 597,309 | 89 | % | 584,919 | 91 | % | ||||||
Off-Network and Other Revenues | ||||||||||||
Transponder, MSS and other off-network services | 53,477 | 8 | % | 43,870 | 7 | % | ||||||
Satellite-related services | 21,582 | 3 | % | 14,060 | 2 | % | ||||||
Total off-network and other revenues | 75,059 | 11 | % | 57,930 | 9 | % | ||||||
Total | $ | 672,368 | 100 | % | $ | 642,849 | 100 | % |
Free Cash Flow from (used in) Operations
Free cash flow used in operations1 was
Payments for satellites and other property and equipment during the
three months ended
Financial Outlook 2014
Today,
Revenue:
- stable year on year results in our media business, which will benefit from new capacity entering service in late 2014;
-
modest declines in our network services business, which faces
headwinds from competitive pressures in
Africa and on-going declines in the legacy channel and international trunking business; and - declines in our government business of 15-20 percent as compared to full year 2013, as a result of challenges due to reduced spending by the U.S. government.
Intelsat’s 2014 revenue guidance reflects the impacts noted above as well the impact from limited capacity expected to be placed into service in 2014.
Adjusted EBITDA Margin:
Capital Expenditures:
We expect capital expenditures ranges of:
-
2014:
$575 million to $650 million , consistent with prior guidance -
2015:
$775 million to $850 million , consistent with prior guidance -
2016:
$625 million to $700 million , introduced today.
Capital expenditure guidance for 2014 and 2015 assumes investment in
nine satellites in the manufacturing or design phase during the Guidance
Period. We expect to launch four satellites in 2014 and 2015, two
satellites in 2016, and will continue work on three remaining satellites
for which construction will extend beyond the Guidance Period. By the
conclusion of the Guidance Period in 2016, the number of transponder
equivalents is expected to increase by a compound annual growth rate
(CAGR) of 4.5 percent as a result of the launch of the satellites
covered by the Guidance Period. We will launch two of our new
Our capital expenditures guidance includes capitalized interest.
Prepayments: During the Guidance Period, we expect to receive customer prepayments under our existing customer service contracts.
We expect prepayment ranges of:
-
2014:
$75 million to $100 million , consistent with prior guidance -
2015:
$50 million to $75 million , an increase of$25 million to prior guidance - 2016: No prepayments are currently contracted for this period.
The annual classification of capital expenditure and prepayments could be affected by the timing of achievement of contract, satellite manufacturing, launch and other milestones.
Debt Reduction: Based upon the above revenue, Adjusted EBITDA,
capital expenditure and prepayment guidance,
- - - - - - - - - - - - - - - - - - -
1In this release, financial measures are presented both in accordance with GAAP and also on a non-GAAP basis. EBITDA, Adjusted EBITDA, free cash flow from (used in) operations, Adjusted diluted net income per common share and related margins included in this release are non-GAAP financial measures. Please see the consolidated financial information below for information reconciling non-GAAP financial measures to comparable GAAP financial measures.
Q4 2013 Quarterly Commentary
As previously announced, beginning this quarter,
Conference Call Information
About
Intelsat Safe Harbor Statement: Some of the statements in this news
release constitute "forward-looking statements" that do not directly or
exclusively relate to historical facts. The forward-looking statements
made in this release reflect
Because actual results could differ materially from
Intelsat S.A. | ||||||||
Unaudited Consolidated Statements of Operations | ||||||||
($ in thousands, except per share amounts) | ||||||||
Three Months | Three Months | |||||||
Ended | Ended | |||||||
December 31, | December 31, | |||||||
2012 | 2013 | |||||||
Revenue | $ | 672,368 | $ | 642,848 | ||||
Operating expenses: | ||||||||
Direct costs of revenue (excluding depreciation and amortization) | 108,676 | 84,129 | ||||||
Selling, general and administrative | 52,366 | 48,806 | ||||||
Depreciation and amortization | 197,432 | 176,519 | ||||||
Losses on derivative financial instruments | 2,284 | 2,790 | ||||||
Total operating expenses | 360,758 | 312,244 | ||||||
Income from operations | 311,610 | 330,604 | ||||||
Interest expense, net | 318,685 | 244,750 | ||||||
Loss on early extinguishment of debt | (27,053 | ) | (1,295 | ) | ||||
Other income (expense), net | 10,853 | (686 | ) | |||||
Income (loss) before income taxes | (23,275 | ) | 83,873 | |||||
Provision for (benefit from) income taxes | (18,520 | ) | 10,258 | |||||
Net income (loss) | (4,755 | ) | 73,615 | |||||
Net income attributable to noncontrolling interest | (995 | ) | (984 | ) | ||||
Net income (loss) attributable to Intelsat S.A. | $ | (5,750 | ) | $ | 72,631 | |||
Net income (loss) per common share attributable to Intelsat S.A.: | ||||||||
Basic | $ | (0.07 | ) | $ | 0.69 | |||
Diluted | $ | (0.07 | ) | $ | 0.62 |
Intelsat S.A. | ||||||||
Consolidated Statements of Operations | ||||||||
(in thousands, except per share amounts) | ||||||||
Year Ended | Year Ended | |||||||
December 31, | December 31, | |||||||
2012 | 2013 | |||||||
Revenue | $ | 2,610,152 | $ | 2,603,623 | ||||
Operating expenses: | ||||||||
Direct costs of revenue (excluding depreciation and amortization) | 415,900 | 375,769 | ||||||
Selling, general and administrative | 204,025 | 288,467 | ||||||
Depreciation and amortization | 764,903 | 736,567 | ||||||
Losses on derivative financial instruments | 39,935 | 8,064 | ||||||
Gain on satellite insurance recoveries | - | (9,618 | ) | |||||
Total operating expenses | 1,424,763 | 1,399,249 | ||||||
Income from operations | 1,185,389 | 1,204,374 | ||||||
Interest expense, net | 1,270,848 | 1,114,197 | ||||||
Loss on early extinguishment of debt | (73,542 | ) | (368,089 | ) | ||||
Loss from previously unconsolidated affiliates | - | - | ||||||
Other income (expense), net | (10,128 | ) | (4,918 | ) | ||||
Loss before income taxes | (169,129 | ) | (282,830 | ) | ||||
Benefit from income taxes | (19,631 | ) | (30,837 | ) | ||||
Net loss | (149,498 | ) | (251,993 | ) | ||||
Net (income) loss attributable to noncontrolling interest | (1,639 | ) | (3,687 | ) | ||||
Net loss attributable to Intelsat S.A. | $ | (151,137 | ) | $ | (255,680 | ) | ||
Basic and diluted net loss per common share attributable to Intelsat S.A.: | $ | (1.82 | ) | $ | (2.70 | ) |
Intelsat S.A. | ||||||||||||||||
Unaudited Reconciliation of Net Income (Loss) to EBITDA | ||||||||||||||||
($ in thousands) | ||||||||||||||||
|
||||||||||||||||
Three Months | Three Months | |||||||||||||||
Ended | Ended | Year Ended | Year Ended | |||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||
2012 | 2013 | 2012 | 2013 | |||||||||||||
Net income (loss) | $ | (4,754 | ) | $ | 73,615 | $ | (149,498 | ) | $ | (251,993 | ) | |||||
Add (Subtract): | ||||||||||||||||
Interest expense, net | 318,685 | 244,750 | 1,270,848 | 1,114,197 | ||||||||||||
Loss on early extinguishment of debt | 27,053 | 1,295 | 73,542 | 368,089 | ||||||||||||
Benefit from income taxes | (18,520 | ) | 10,258 | (19,631 | ) | (30,837 | ) | |||||||||
Depreciation and amortization | 197,432 | 176,519 | 764,903 | 736,567 | ||||||||||||
EBITDA | $ | 519,896 | $ | 506,437 | $ | 1,940,164 | $ | 1,936,023 | ||||||||
EBITDA Margin | 77.3 | % | 78.8 | % | 74.0 | % | 74.0 | % | ||||||||
Note:
EBITDA consists of earnings before net interest, loss on early extinguishment of debt, taxes and depreciation and amortization. Given our high level of leverage, refinancing activities are a frequent part of our efforts to manage costs of borrowing. Accordingly, we consider (gain) loss on early extinguishment of debt an element of interest expense. EBITDA is a measure commonly used in the FSS sector, and we present EBITDA to enhance the understanding of our operating performance. We use EBITDA as one criterion for evaluating our performance relative to that of our peers. We believe that EBITDA is an operating performance measure, and not a liquidity measure, that provides investors and analysts with a measure of operating results unaffected by differences in capital structures, capital investment cycles and ages of related assets among otherwise comparable companies. However, EBITDA is not a measure of financial performance under U.S. GAAP, and our EBITDA may not be comparable to similarly titled measures of other companies. EBITDA should not be considered as an alternative to operating income (loss) or net income (loss), determined in accordance with U.S. GAAP, as an indicator of our operating performance, or as an alternative to cash flows from operating activities, determined in accordance with U.S. GAAP, as an indicator of cash flows, or as a measure of liquidity.
Intelsat S.A. | ||||||||||||||||
Unaudited Reconciliation of Net Income (Loss) to | ||||||||||||||||
Adjusted EBITDA | ||||||||||||||||
($ in thousands) | ||||||||||||||||
Three Months | Three Months | |||||||||||||||
Ended | Ended | Year Ended | Year Ended | |||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||
2012 | 2013 | 2012 | 2013 | |||||||||||||
Net income (loss) | $ | (4,754 | ) | $ | 73,615 | $ | (149,498 | ) | $ | (251,993 | ) | |||||
Add (Subtract): | ||||||||||||||||
Interest expense, net | 318,685 | 244,750 | 1,270,848 | 1,114,197 | ||||||||||||
Loss on early extinguishment of debt | 27,053 | 1,295 | 73,542 | 368,089 | ||||||||||||
Benefit from income taxes | (18,520 | ) | 10,258 | (19,631 | ) | (30,837 | ) | |||||||||
Depreciation and amortization | 197,432 | 176,519 | 764,903 | 736,567 | ||||||||||||
EBITDA | 519,896 | 506,437 | 1,940,164 | 1,936,023 | ||||||||||||
Add (Subtract): | ||||||||||||||||
Compensation and benefits | 533 | 2,555 | 5,237 | 25,711 | ||||||||||||
Management fees | 6,265 | - | 25,062 | 64,239 | ||||||||||||
Losses on derivative financial instruments | 2,284 | 2,790 | 39,935 | 8,064 | ||||||||||||
Non-recurring and other non-cash items | (12,575 | ) | (1,962 | ) | 5,786 | (606 | ) | |||||||||
Adjusted EBITDA | $ | 516,403 | $ | 509,820 | $ | 2,016,184 | $ | 2,033,431 | ||||||||
Adjusted EBITDA Margin | 76.8 | % | 79.3 | % | 77.0 | % | 78.0 | % |
Note:
Adjusted EBITDA is not a measure of financial performance under U.S. GAAP and may not be comparable to similarly titled measures of other companies. Adjusted EBITDA should not be considered as an alternative to operating income (loss) or net income (loss), determined in accordance with U.S. GAAP, as an indicator of our operating performance, or as an alternative to cash flows from operating activities, determined in accordance with U.S. GAAP, as an indicator of cash flows, or as a measure of liquidity.
Intelsat S.A. | ||||||||||||||||
Unaudited Adjusted Diluted Net Income (Loss) per Common Share | ||||||||||||||||
($ in thousands) | ||||||||||||||||
Three Months | Three Months | |||||||||||||||
Ended | Ended | Year Ended | Year Ended | |||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||
2012 | 2013 | 2012 | 2013 | |||||||||||||
Numerator (in thousands): | ||||||||||||||||
Net income (loss) attributable to Intelsat S.A. | $ | (5,750 | ) | $ | 72,631 | $ | (151,137 | ) | $ | (255,680 | ) | |||||
Add (Subtract): | ||||||||||||||||
Compensation and benefits | 533 | 2,555 | 5,237 | 25,711 | ||||||||||||
Management fees | 6,265 | - | 25,062 | 64,239 | ||||||||||||
Losses on derivative financial instruments | 2,284 | 2,790 | 39,935 | 8,064 | ||||||||||||
Loss on early extinguishment of debt | 27,053 | 1,295 | 73,542 | 368,089 | ||||||||||||
Amortization | 22,945 | 20,578 | 91,781 | 82,311 | ||||||||||||
Non-recurring and other non-cash items | (12,575 | ) | (1,962 | ) | 5,786 | (606 | ) | |||||||||
Income tax effect of adjustments above & other discrete items |
(13,408 | ) | - | (8,738 | ) | (33,782 | ) | |||||||||
Adjusted net income attributable to Intelsat S.A. | 27,347 | 97,887 | 81,468 | 258,346 | ||||||||||||
Denominator (in millions): | ||||||||||||||||
Basic weighted average shares outstanding | 83.0 | 105.7 | 83.0 | 98.5 | ||||||||||||
Weighted average dilutive shares outstanding: | ||||||||||||||||
Preferred shares | - | 9.6 | - | 6.6 | ||||||||||||
Employee compensation related shares including options and restricted share units |
0.6 | 1.1 | 0.7 | 0.9 | ||||||||||||
Adjusted diluted weighted average shares outstanding | 83.6 | 116.4 | 83.7 | 106.0 | ||||||||||||
Adjusted diluted net income per common share attributable to Intelsat S.A. |
$ | 0.33 | $ | 0.84 | $ | 0.97 | $ | 2.44 |
Note:
Management evaluates financial performance in part based on adjusted
diluted net income per common share attributable to
(1) | Reflects non-cash expenses incurred relating to our equity compensation plans and a portion of the expenses related to our defined benefit retirement plan and other postretirement benefits. | |
(2) | Reflects expenses incurred in connection with the monitoring fee agreement, dated February 4, 2008. In connection with the Initial Public Offering in April 2013, the monitoring fee agreement was terminated. | |
(3) | Represents (i) the changes in the fair value of the undesignated interest rate swaps and (ii) the difference between the amount of floating rate interest we receive and the amount of fixed rate interest we pay under such swaps, both of which are recognized in operating income. | |
(4) | The 2013 loss related to the repayment of debt in connection with various 2013 refinancings, redemptions, prepayments and offerings. The 2012 loss related to the repayment of debt in connection with the 2012 Intelsat Jackson tender offers and redemptions. | |
(5) | Intangible assets are amortized based on the expected pattern of consumption. We recorded amortization expense related to our backlog and other and customer intangible assets. | |
(6) | Reflects certain non-recurring gains and losses and non-cash items, including the following: costs associated with charges related to costs and expenses in connection with an unconsummated third-party investment commitment and its expiration in 2012; expenses related to the initial public offering, severance and retention payments; costs related to the 2013 Second Jackson Credit Agreement Amendment; the total impairment of an immaterial investment in 2013; costs associated with a 2013 intercompany reorganization and other non-recurring projects. These costs were partially offset by non-cash income related to the recognition of deferred revenue on a straight-line basis for certain prepaid capacity service contracts for 2012 to 2013; non-cash income related to the WildBlue settlement in 2012; a pre-tax gain related to the 2012 sale of the Washington, D.C. building where our U.S. administrative headquarters are located and the gain on satellite insurance recoveries in 2013. | |
(7) | Represents the income tax impact of the various adjustments as well as certain non-recurring expenses or benefits including the following: a significant tax benefit related to U.S. foreign tax credits due to an internal subsidiary reorganization in 2013, the 2012 benefit recorded to adjust the basis of certain assets that had generated excluded extraterritorial income in prior years and the tax expense related to the valuation allowance on our Washington, D.C. net operating loss carry forwards in 2012 when we entered into a lease for our new U.S. administrative headquarters in McLean, Virginia. | |
(8) | Adjusted net income attributable to Intelsat S.A. used to calculate adjusted diluted net income per common share attributable to Intelsat S.A. for the year ended December 31, 2013 assumes conversion of our Series A preferred shares into common shares since the impact of such assumed conversion is dilutive. The adjusted net income attributable to Intelsat S.A. excludes the impact of dividends declared on our preferred shares, and the adjusted diluted weighted average shares outstanding assume the conversion of the preferred shares into common shares. |
Intelsat S.A. | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
(in thousands, except share amounts) | ||||||||
As of | As of | |||||||
December 31, | December 31, | |||||||
2012 | 2013 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 187,485 | $ | 247,790 | ||||
Receivables, net of allowance of $23,583 in 2012 and $35,289 in 2013 | 282,214 | 236,347 | ||||||
Deferred income taxes | 94,779 | 44,475 | ||||||
Prepaid expenses and other current assets | 38,708 | 34,624 | ||||||
Total current assets | 603,186 | 563,236 | ||||||
Satellites and other property and equipment, net | 6,355,192 | 5,805,540 | ||||||
Goodwill | 6,780,827 | 6,780,827 | ||||||
Non-amortizable intangible assets | 2,458,100 | 2,458,100 | ||||||
Amortizable intangible assets, net | 651,087 | 568,775 | ||||||
Other assets | 417,454 | 413,192 | ||||||
Total assets | $ | 17,265,846 | $ | 16,589,670 | ||||
LIABILITIES AND SHAREHOLDERS' DEFICIT | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 178,961 | $ | 145,186 | ||||
Taxes payable | 9,366 | 9,526 | ||||||
Employee related liabilities | 46,590 | 28,227 | ||||||
Accrued interest payable | 367,686 | 186,492 | ||||||
Current portion of long-term debt | 57,466 | 24,418 | ||||||
Deferred satellite performance incentives | 21,479 | 22,703 | ||||||
Deferred revenue | 84,066 | 84,185 | ||||||
Other current liabilities | 72,715 | 72,840 | ||||||
Total current liabilities | 838,329 | 573,577 | ||||||
Long-term debt, net of current portion | 15,846,728 | 15,262,996 | ||||||
Deferred satellite performance incentives, net of current portion | 172,663 | 153,904 | ||||||
Deferred revenue, net of current portion | 834,161 | 888,239 | ||||||
Deferred income taxes | 286,673 | 202,638 | ||||||
Accrued retirement benefits | 299,187 | 196,856 | ||||||
Other long-term liabilities | 300,195 | 246,127 | ||||||
Shareholders' deficit: | ||||||||
Common shares; nominal value $0.01 per share (1) | 832 | 1,060 | ||||||
5.75% Series A mandatory convertible junior non-voting preferred shares; nominal value $0.01 per share; aggregate liquidation preference of $172,500 ($50 per share) | - | 35 | ||||||
Paid-in capital (1) | 1,519,429 | 2,099,218 | ||||||
Accumulated deficit | (2,759,593 | ) | (3,015,273 | ) | ||||
Accumulated other comprehensive loss | (118,428 | ) | (60,393 | ) | ||||
Total shareholders' deficit | (1,357,760 | ) | (975,353 | ) | ||||
Noncontrolling interest | 45,670 | 40,686 | ||||||
Total liabilities and shareholders' deficit | $ | 17,265,846 | $ | 16,589,670 | ||||
(1) Common shares and paid-in capital amounts reflect the retroactive impact of the Class A and Class B share reclassification into common shares and the share splits related to our Initial Public Offering. |
Intelsat S.A. | ||||||||||||||||
Unaudited Consolidated Statements of Cash Flows | ||||||||||||||||
($ in thousands) |
||||||||||||||||
Three Months | Three Months | |||||||||||||||
Ended | Ended | Year Ended | Year Ended | |||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||
2012 | 2013 | 2012 | 2013 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net income (loss) | $ | (4,754 | ) | $ | 73,615 | $ | (149,498 | ) | $ | (251,993 | ) | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 197,432 | 176,519 | 764,903 | 736,567 | ||||||||||||
Provision for doubtful accounts | 2,304 | 7,657 | 8,911 | 29,599 | ||||||||||||
Foreign currency transaction loss | 2,586 | 1,605 | 7,329 | 6,003 | ||||||||||||
(Gain) loss on disposal of assets | (12,622 | ) | 90 | (12,647 | ) | 338 | ||||||||||
Gain on satellite insurance recoveries | - | - | - | (9,618 | ) | |||||||||||
Share-based compensation | 3,604 | 2,449 | 6,825 | 25,289 | ||||||||||||
Deferred income taxes | (51,137 | ) | (26,305 | ) | (61,889 | ) | (65,347 | ) | ||||||||
Amortization of discount, premium, issuance costs and related costs | 14,590 | 5,812 | 57,305 | 46,026 | ||||||||||||
Interest paid-in-kind | - | - | 4,949 | - | ||||||||||||
Loss on early extinguishment of debt | 27,053 | 1,295 | 73,542 | 368,089 | ||||||||||||
Unrealized gains on derivative financial instruments | (9,015 | ) | (4,307 | ) | (9,004 | ) | (19,740 | ) | ||||||||
Termination of third-party commitment costs and expenses | (11,000 | ) | - | 10,000 | - | |||||||||||
Amortization of actuarial loss and prior service credits for retirement benefits | 3,627 | 4,903 | 14,506 | 19,613 | ||||||||||||
Other non-cash items | 42 | (423 | ) | (4,382 | ) | 234 | ||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Receivables | 4,976 | 21,535 | (3,559 | ) | 16,269 | |||||||||||
Prepaid expenses and other assets | (3,492 | ) | (6,780 | ) | (1,086 | ) | (6,117 | ) | ||||||||
Accounts payable and accrued liabilities | 69,805 | (202,083 | ) | 15,619 | (202,526 | ) | ||||||||||
Deferred revenue | 29,112 | 11,537 | 124,458 | 49,924 | ||||||||||||
Accrued retirement benefits | (5,175 | ) | (1,617 | ) | (26,627 | ) | (29,732 | ) | ||||||||
Other long-term liabilities | 4,480 | 13,697 | 1,655 | 4,014 | ||||||||||||
Net cash provided by operating activities | 262,416 | 79,199 | 821,310 | 716,892 | ||||||||||||
Cash flows from investing activities: | ||||||||||||||||
Payments for satellites and other property and equipment (including capitalized interest) | (150,915 | ) | (120,479 | ) | (866,016 | ) | (600,792 | ) | ||||||||
Proceeds from sale of building, net of fees | 82,415 | - | 82,415 | - | ||||||||||||
Proceeds from insurance settlements | - | - | - | 487,930 | ||||||||||||
Payment on satellite performance incentives from insurance proceeds | - | - | - | (19,199 | ) | |||||||||||
Other investing activities | - | - | - | (2,000 | ) | |||||||||||
Net cash used in investing activities | (68,500 | ) | (120,479 | ) | (783,601 | ) | (134,061 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||||||
Repayments of long-term debt | (985,798 | ) | (108,045 | ) | (2,474,811 | ) | (6,904,162 | ) | ||||||||
Repayment of notes payable to former shareholders | (369 | ) | - | (1,683 | ) | (868 | ) | |||||||||
Payment of premium on early extinguishment of debt | (26,443 | ) | - | (65,920 | ) | (311,224 | ) | |||||||||
Proceeds from issuance of long-term debt | 790,521 | - | 2,451,521 | 6,254,688 | ||||||||||||
Debt issuance costs | (7,940 | ) | 103 | (27,384 | ) | (84,845 | ) | |||||||||
Proceeds from initial public offering | - | - | - | 572,500 | ||||||||||||
Stock issuance costs | - | - | - | (26,683 | ) | |||||||||||
Dividends paid to preferred shareholders | - | (2,480 | ) | - | (5,235 | ) | ||||||||||
Principal payments on deferred satellite performance incentives | (4,303 | ) | (3,953 | ) | (15,969 | ) | (17,503 | ) | ||||||||
Dividends paid to noncontrolling interest | (2,056 | ) | (2,102 | ) | (8,838 | ) | (8,671 | ) | ||||||||
Repurchase of redeemable noncontrolling interest | (8,744 | ) | - | (8,744 | ) | - | ||||||||||
Capital contribution from noncontrolling interest | - | - | 12,209 | 12,209 | ||||||||||||
Other financing activities | - | 2,781 | - | 3,271 | ||||||||||||
Net cash used in financing activities | (245,132 | ) | (113,696 | ) | (139,619 | ) | (516,523 | ) | ||||||||
Effect of exchange rate changes on cash and cash equivalents | (2,586 | ) | (1,605 | ) | (7,329 | ) | (6,003 | ) | ||||||||
Net change in cash and cash equivalents | (53,802 | ) | (156,581 | ) | (109,239 | ) | 60,305 | |||||||||
Cash and cash equivalents, beginning of period | 241,287 | 404,371 | 296,724 | 187,485 | ||||||||||||
Cash and cash equivalents, end of period | $ | 187,485 | $ | 247,790 | $ | 187,485 | $ | 247,790 | ||||||||
Intelsat S.A. |
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Unaudited Reconciliation of Net Cash Provided By Operating Activities |
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to Free Cash Flow from (Used in) Operations |
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($ in thousands) |
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Three Months Ended | Three Months Ended | Year Ended | Year Ended | |||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||
2012 | 2013 | 2012 | 2013 | |||||||||||||
Net cash provided by operating activities | $ | 262,416 | $ | 79,199 | $ | 821,310 | $ | 716,892 | ||||||||
Payments for satellites and other property and equipment (including capitalized interest) |
(150,915 | ) | (120,479 | ) | (866,016 | ) | (600,792 | ) | ||||||||
Free cash flow from (used in) operations | $ | 111,501 | $ | (41,280 | ) | $ | (44,706 | ) | $ | 116,100 | ||||||
Note: |
Free cash flow from (used in) operations consists of net cash provided by operating activities, less payments for satellites and other property and equipment (including capitalized interest). Free cash flow from (used in) operations excludes proceeds resulting from settlement of insurance claims, and is not a measurement of cash flow under GAAP. Intelsat believes free cash flow from (used in) operations is a useful measure of financial performance that shows a company’s ability to fund its operations. Free cash flow from (used in) operations is used by Intelsat in comparing its performance to that of its peers and is commonly used by analysts and investors in assessing performance. Free cash flow from (used in) operations does not give effect to cash used for debt service requirements and thus does not reflect funds available for investment or other discretionary uses. Free cash flow from (used in) operations is not a measure of financial performance under GAAP, and may not be comparable to similarly titled measures of other companies. You should not consider free cash flow from (used in) operations as an alternative to operating or net income, determined in accordance with GAAP, as an indicator of Intelsat’s operating performance, or as an alternative to cash flows from operating activities, determined in accordance with GAAP, as an indicator of cash flows or as a measure of liquidity. |
Source:
Intelsat
Dianne VanBeber
Vice President, Investor Relations
and Communications
+1 202-944-7406
dianne.vanbeber@intelsat.com