News Release
Intelsat Reports Third Quarter 2013 Results
-
Revenue of
$652 million , unchanged as compared to Q3 2012, on-network services grow by 1.7%, offset by declines in lower-margin off-network services -
Net income attributable to
Intelsat S.A. of$88 million includes a$29 million discrete tax benefit and compares to a Q3 2012 net loss of$35 million , Q3 diluted EPS of$0.75 -
Free cash flow from operations1 of
$333.4 million ; cash balance of$404 million as ofSeptember 30, 2013 -
Debt prepayment of
$100 million in the fourth quarter of 2013; total 2013 debt decline of$617 million December 31, 2012 throughOctober 31, 2013 -
$10.3 billion contracted backlog provides visibility for future revenue and cash flow -
Intelsat updates 2013 revenue guidance to reflect pressures in government services andAfrica region; revenue expected within one half percent of lower end of the previously established range; Adjusted EBITDA1 margin guidance maintained
“Despite the solid performance, we are managing through two trends
affecting our revenue growth and our operating expense profile. These
include revenue declines due to on-going effects of the U.S. government
reduced spending and budget sequestration. It also includes the impact
of fiber deployments and the oversupply environment in
McGlade continued, “While these issues will continue to influence
near-term results, our long-term outlook remains positive as we execute
on our two-phase strategy to deliver returns to equity investors: use
near-term improving cash flows to de-lever our balance sheet, while
positioning the company for organic growth upon the entry into service
of our new Intelsat EpicNG satellites beginning in 2016,
which support the growth plans for existing and future customers. During
the quarter, we announced the first customer for
Business Highlights
-
Intelsat’s network services business, which provides broadband
infrastructure for fixed and wireless telecommunications and
enterprise and mobility applications, accounted for 46 percent of
Intelsat’s total third quarter 2013 revenue, and at
$299.9 million , increased one percent as compared to the third quarter 2012. In the third quarter 2013, growth in transponder and managed services revenue for mobility, enterprise, and wireless telecommunications backhaul applications was offset by reduced revenue from channel services, which has been declining due to migration to fiber.-
Intelsat’s large and diversified infrastructure is used by leading
fixed and wireless telecommunications providers to extend their
service regions and enhance backbone networks. Demand is
especially strong in emerging regions, with subscriber growth,
expanding service territories, and data connectivity requirements
creating need for expanded 2G and 3G infrastructure. In the third
quarter,
Intelsat received multi-year, multi-transponder new and renewed contracts from a number of wireless operators inLatin America , includingConsorcio Ecuatoriano de Telecomunicaciones S.A. and Telefónica Móviles S.A.C. -
Subsequent to quarter end, GCI, the largest telecommunications
company in
Alaska , recently signed a long-term agreement for a portfolio of new and renewed C- and Ku-band services. GCI uses Intelsat’s capacity to provide telecommunications infrastructure throughoutAlaska , supporting critical distance learning and telemedicine solutions.
Mobility applications are a major source of new demand within our network services business, particularly for Ku-band spectrum. This business includes broadband connectivity for maritime and commercial aeronautical consumer networks. In the third quarter, new activity included:
-
Panasonic Avionics Corporation , a global leader in in-flight entertainment and communications, signed a long-term contract for services on theIntelsat 33e satellite, the second of Intelsat’s planned next generation EpicNG satellites expected to launch in 2016. As was announced inSeptember 2013 ,Panasonic Avionics will use the capacity to extend its global network fromEurope through theMiddle East and North andSouth East Asia , complementing theNorth America toEurope infrastructure provided by the previously contracted capacity onIntelsat 29e.
The business environment in
Africa is increasingly competitive with respect to network services applications. This region is characterized primarily by oversupply from traditional satellite operators and fiber alternatives, both of which serve to slow our aggregate network services revenue growth.Intelsat is closely monitoring our business in the region while continuing our focus on furthering our long-term strategic relationships with the continent’s most intensive users of satellite capacity. -
Intelsat’s large and diversified infrastructure is used by leading
fixed and wireless telecommunications providers to extend their
service regions and enhance backbone networks. Demand is
especially strong in emerging regions, with subscriber growth,
expanding service territories, and data connectivity requirements
creating need for expanded 2G and 3G infrastructure. In the third
quarter,
-
Intelsat’s media business, which provides satellite capacity and
terrestrial services for the transmission of entertainment, news,
sports and educational programming for approximately 300 broadcasters,
content providers and direct-to-home (“DTH”) platform operators
worldwide, accounted for 34 percent of our revenue for the quarter
ended
September 30, 2013 . Third quarter revenue of$221.8 million increased four percent as compared to the third quarter of 2012, as service volume increased for DTH and cable and broadcast program distribution applications.
Contracts with media customers in the third quarter andOctober 2013 included:-
Discovery Communications , the world’s #1 nonfiction media company, recently signed an agreement for capacity for new and renewed transponder services on theIntelsat 19 satellite, expanding the distribution of its programming.Intelsat 19 hosts the leading video neighborhood in thePacific Ocean region, and reaches more than 37 million Pay TV subscribers. -
Deutsche Telecom affiliate Slovak Telecom, the largest telecom
company operating in
Slovakia , signed a long-term agreement for multiple transponders at theIntelsat 1 West neighborhood, which is a leading hot-spot forEastern Europe media applications. Slovak Telecom will use the capacity to provide DTH services. -
Globecast France, signed a long-term renewal for multiple
transponders on
Intelsat 903 for use in providing DTH services distributed byOrange to the French Caribbean islands. -
The European Broadcasting Union (“EBU”), signed a long-term commitment for capacity on our video distribution neighborhood at 304.5◦ East, on theIntelsat 805 satellite that will be replaced byIntelsat 34 when it launches in 2015.Intelsat 805, with its high penetration of cable headends, will provide the EBU with transmission capacity to support its coverage of various sports events scheduled to take place inLatin America from 2014 to 2016.
-
-
Intelsat’s government business, which provides highly customized,
secure commercial satellite-based solutions to value-added service
providers, government and military customers, accounted for 19 percent
of our revenue for the quarter ended
September 30, 2013 . Third quarter revenue of$121.7 million decreased ten percent as compared to third quarter 2012 results, with the majority of the decline in lower-margin off-network revenue.-
Two previously awarded, but protested, contracts have been
resolved in the favor of our
Intelsat General Corporation subsidiary and its prime contractors. The two awards under the Custom SatCom Solutions contract feature the provisioning of over 350 MHz of on-network capacity on nineIntelsat satellites providing various regional coverages, as well as use of the IntelsatOneSM ground infrastructure. Implementation of both networks will span a 4-month period with all services activated byDecember 2013 . Intelsat’s capacity is used to provide broadband infrastructure for use in regional and global networks.
With respect to the effects of sequestration, the pace of RFP issuance and awards remains slower than usual and customers continue to consolidate services and evaluate requirements. Visibility remains limited for the government business for the balance of 2013 and into 2014.
Intelsat expects limited short-term effects directly related to theOctober 2013 U.S. government shutdown. -
Two previously awarded, but protested, contracts have been
resolved in the favor of our
-
In
October 2013 ,Intelsat prepaid$100 million of debt under our Intelsat Jackson secured term loan facility for a 2013 year-to-date total reduction of debt of$617 million . Intelsat’s cash balance atSeptember 30, 2013 was$404 million . -
Intelsat’s average fill rate on our approximately 2,175 station-kept
transponders was 78 percent at
September 30, 2013 . No significant fleet changes occurred during the period. -
Intelsat has no satellite launches planned for the balance of 2013. Our next launch planned for second half of 2014 isIntelsat 30, the first of two satellites providing services for DTH service provider DirecTV-Latin America.
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 revenue for the three months ended
On-Network Revenue increased by
-
Transponder services—an aggregate increase of
$7.9 million , primarily due to an$8.1 million increase in revenue from capacity sold to media customers largely in theLatin America andCaribbean , theAsia-Pacific and theAfrica andMiddle East regions for DTH and programming-distribution applications. An additional$2.4 million of the increase reflects growth in revenue from network services customers for wireless telecommunications infrastructure primarily in theLatin America andCaribbean region, and for enterprise network applications in theAsia-Pacific andNorth America andEurope regions, offset by declines in theAfrica andMiddle East region. Also, revenues from government applications declined by$2.6 million due to pressures from the U.S. government budget sequestration. -
Managed services—an aggregate increase of
$7.3 million , largely due to a$5.8 million increase in revenue from network services customers for new broadband services for mobility applications, primarily in theEurope andNorth America regions, wireless telecommunications backhaul infrastructure in theAsia-Pacific region , and a$1.8 million increase in revenue from hybrid infrastructure solutions sold to government customers. -
Channel—an aggregate decrease of
$5.3 million related to the continued migration of international point-to-point satellite traffic to fiber optic cable, a trend that we expect will continue.
Off-Network and Other Revenue decreased by
-
Transponder, MSS and other off-network services—an aggregate
decrease of
$10.4 million , primarily due to declines in services for government applications, including reduced sales of off-network transponder services, customer premises equipment and mobile satellite services (“MSS”). -
Satellite-related services— an aggregate decrease of
$2.6 million , primarily due to decreased revenue from flight operations support for third-party satellites and government professional services.
Changes in operating expenses, interest expense, net, and other significant income-statement items are described below.
-
Direct costs of revenue decreased by
$9.2 million , or 9%, to$93.7 million for the three months endedSeptember 30, 2013 , as compared to the three months endedSeptember 30, 2012 . The decrease was primarily due to$5.3 million in lower cost of MSS and off-network fixed satellite services (“FSS”) capacity purchased primarily related to solutions sold to our government customer set, a decrease of$3.8 million in cost of sales for customer premises equipment, and$2.9 million in staff-related expense. These decreases were partially offset by an increase of$4.1 million in costs related to a joint venture. -
Selling, general and administrative expenses increased by
$9.2 million to$56.3 million for the three months endedSeptember 30, 2013 as compared to the three months endedSeptember 30, 2012 . The increase was principally due to an$11.0 million increase in bad debt expense due to collection challenges with a limited number of customers, primarily in theAfrica andMiddle East region. Also contributing to the increase was an incremental$3.0 million in staff-related expenses, primarily share-based compensation costs, partially offset by a decrease of$5.3 million in professional fees. -
Depreciation and amortization expense decreased by
$6 .1 million to$185.9 million for the three months endedSeptember 30, 2013 , as compared to the three months endedSeptember 30, 2012 . This decrease was primarily due to a net decrease of$20.1 million in depreciation expense due to the timing of certain satellites becoming fully depreciated and changes in estimated remaining useful lives of certain satellites, and a decrease of$2.4 million in amortization expense primarily due to changes in the expected pattern of consumption of amortizable intangible assets, largely offset by an increase of$16.6 million in depreciation expense resulting from the impact of satellites placed into service during 2012. -
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
September 30, 2013 , we also held interest rate swaps with an aggregate notional amount of$1 .6 billion to economically hedge the variability in cash flow on a portion of the floating-rate term loans under our senior secured credit facilities. The swaps have not been designated as hedges for accounting purposes. Interest expense, net decreased by$63.3 million , or 20%, to$249.4 million for the three months endedSeptember 30, 2013 , as compared to$312.7 million for the three months endedSeptember 30, 2012 . The decrease in interest expense, net was principally due to the following:-
a net decrease of
$67.9 million in interest expense as a result of our debt offerings, debt prepayments and redemptions in 2013; -
a net decrease of
$7.9 million in interest expense as a result of the decrease in the interest rate under the Intelsat Jackson Secured Credit Agreement; and -
a net decrease of
$6.1 million in interest expense as a result of our debt offerings and redemptions in 2012; partially offset by -
an increase of
$20.7 million resulting from lower capitalized interest of$10.8 million for the three months endedSeptember 30, 2013 , as compared to$31.5 million for the three months endedSeptember 30, 2012 , resulting from decreased levels of satellites and related assets under construction.
Non-cash items in interest expense, net were
$5.9 million for the three months endedSeptember 30, 2013 , primarily for amortization of deferred financing fees incurred as a result of new or refinanced debt and the amortization and accretion of discounts and premiums. -
a net decrease of
-
Loss on early extinguishment of debt was
$3.1 million for the three months endedSeptember 30, 2012 with no comparable amount for the three months endedSeptember 30, 2013 . The 2012 loss included the write-off of unamortized debt issuance costs in connection with the prepayment of$112.2 million ofNew Dawn Satellite Company, Ltd. debt from cash proceeds of an insurance claim. -
Other expense, net was
$0.4 million for the three months endedSeptember 30, 2013 , as compared to$22 .0 million for the three months endedSeptember 30, 2012 . The 2012 third quarter included$21.0 million of expenses related to the expiration of an unconsummated third-party investment commitment. -
Our benefit from income taxes was
$30.3 million for the three months endedSeptember 30, 2013 , as compared to a benefit of$1.5 million for the three months endedSeptember 30, 2012 . The difference was principally due to a discrete benefit related to foreign tax credits that we recognized in the three months endedSeptember 30, 2013 . -
Cash paid for income taxes, net of refunds, totaled
$5.8 million and$7.6 million for the three months endedSeptember 30, 2013 and 2012, respectively.
EBITDA, Adjusted EBITDA and Other Financial Metrics
EBITDA of
At
Revenue Comparison by Customer Set and Service Type | ||||||||||||
($ in thousands) |
||||||||||||
By Customer Set | ||||||||||||
Three Months Ended | Three Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2012 | 2013 | |||||||||||
Network Services | $ | 297,050 | 45 | % | $ | 299,862 | 46 | % | ||||
Media | 212,584 | 32 | % | 221,823 | 34 | % | ||||||
Government | 135,336 | 21 | % | 121,708 | 19 | % | ||||||
Other | 9,976 | 2 | % | 8,451 | 1 | % | ||||||
$ | 654,946 | 100 | % | $ | 651,844 | 100 | % | |||||
By Service Type | ||||||||||||
Three Months Ended | Three Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2012 | 2013 | |||||||||||
On-Network Revenues | ||||||||||||
Transponder services | $ | 487,035 | 74 | % | $ | 494,947 | 76 | % | ||||
Managed services | 69,751 | 11 | % | 77,008 | 12 | % | ||||||
Channel | 22,744 | 4 | % | 17,471 | 3 | % | ||||||
Total on-network revenues | 579,530 | 89 | % | 589,426 | 90 | % | ||||||
Off-Network and Other Revenues | ||||||||||||
Transponder, MSS and other off-network services | 60,844 | 9 | % | 50,443 | 8 | % | ||||||
Satellite-related services | 14,572 | 2 | % | 11,975 | 2 | % | ||||||
Total off-network and other revenues | 75,416 | 12 | % | 62,418 | 10 | % | ||||||
Total | $ | 654,946 | 100 | % | $ | 651,844 | 100 | % | ||||
Free Cash Flow From Operations
Free cash flow from operations1 was
Financial Outlook 2013 with Updated Revenue Guidance
Today,
Our 2013 capital expenditure guidance for the three calendar years 2013
through 2015 (the “Guidance Period”) is unchanged, and assumes
investment in ten satellites in the manufacturing or design phase during
the Guidance Period, including one destroyed in a launch failure in
Consistent with prior guidance, we expect our capital expenditures to
range from
During the Guidance Period, we expect to receive significant customer
prepayments under our existing customer service contracts, for which we
are confirming existing guidance. Significant prepayments are currently
expected to range from
The annual classification of capital expenditure and prepayments could be affected by the timing of achievement of contract, satellite manufacturing, launch and other milestones.
- - - - - - - - - - - - - - - -
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 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.
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
INTELSAT S.A. | ||||||||
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
($ in thousands, except per share amounts) | ||||||||
Three Months | Three Months | |||||||
Ended | Ended | |||||||
September 30, | September 30, | |||||||
2012 | 2013 | |||||||
Revenue | $ | 654,946 | $ | 651,844 | ||||
Operating expenses: | ||||||||
Direct costs of revenue (excluding depreciation and amortization) | 102,908 | 93,716 | ||||||
Selling, general and administrative | 47,070 | 56,289 | ||||||
Depreciation and amortization | 191,972 | 185,891 | ||||||
Losses on derivative financial instruments | 12,037 | 7,866 | ||||||
Total operating expenses | 353,987 | 343,762 | ||||||
Income from operations | 300,959 | 308,082 | ||||||
Interest expense, net | 312,739 | 249,409 | ||||||
Loss on early extinguishment of debt | (3,106 | ) | - | |||||
Other expense, net | (21,980 | ) | (396 | ) | ||||
Income (loss) before income taxes | (36,866 | ) | 58,277 | |||||
Benefit from income taxes | (1,517 | ) | (30,297 | ) | ||||
Net income (loss) | (35,349 | ) | 88,574 | |||||
Net income attributable to noncontrolling interest | (81 | ) | (776 | ) | ||||
Net income (loss) attributable to Intelsat S.A. | $ | (35,430 | ) | $ | 87,798 | |||
Net income (loss) per common share attributable to Intelsat S.A.: | ||||||||
Basic | $ | (0.43 | ) | $ | 0.83 | |||
Diluted | $ | (0.43 | ) | $ | 0.75 |
INTELSAT S.A. | ||||||||
UNAUDITED RECONCILIATION OF NET INCOME (LOSS) TO EBITDA | ||||||||
($ in thousands) | ||||||||
Three Months | Three Months | |||||||
Ended | Ended | |||||||
September 30, | September 30, | |||||||
2012 | 2013 | |||||||
Net income (loss) | $ | (35,349 | ) | $ | 88,574 | |||
Add (Subtract): | ||||||||
Interest expense, net | 312,739 | 249,409 | ||||||
Loss on early extinguishment of debt | 3,106 | - | ||||||
Benefit from income taxes | (1,517 | ) | (30,297 | ) | ||||
Depreciation and amortization | 191,972 | 185,891 | ||||||
EBITDA | $ | 470,951 | $ | 493,577 | ||||
EBITDA Margin | 72 | % | 76 | % | ||||
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 | |||||||
September 30, | September 30, | |||||||
2012 | 2013 | |||||||
Net income (loss) | $ | (35,349 | ) | $ | 88,574 | |||
Add (Subtract): | ||||||||
Interest expense, net | 312,739 | 249,409 | ||||||
Loss on early extinguishment of debt | 3,106 | - | ||||||
Benefit from income taxes | (1,517 | ) | (30,297 | ) | ||||
Depreciation and amortization | 191,972 | 185,891 | ||||||
EBITDA | 470,951 | 493,577 | ||||||
Add (Subtract): | ||||||||
Compensation and benefits | 1,167 | 4,663 | ||||||
Management fees | 6,266 | - | ||||||
Losses on derivative financial instruments | 12,037 | 7,866 | ||||||
Non-recurring and other non-cash items | 20,711 | 2,318 | ||||||
Adjusted EBITDA | $ | 511,132 | $ | 508,424 | ||||
Adjusted EBITDA Margin | 78 | % | 78 | % | ||||
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. | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
($ in thousands) | ||||||||
As of | As of | |||||||
December 31, | September 30, | |||||||
2012 | 2013 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 187,485 | $ | 404,371 | ||||
Receivables, net of allowance of $23,583 in 2012 and $36,615 in 2013 | 282,214 | 265,539 | ||||||
Deferred income taxes | 94,779 | 94,389 | ||||||
Prepaid expenses and other current assets | 38,708 | 51,864 | ||||||
Total current assets | 603,186 | 816,163 | ||||||
Satellites and other property and equipment, net | 6,355,192 | 5,809,137 | ||||||
Goodwill | 6,780,827 | 6,780,827 | ||||||
Non-amortizable intangible assets | 2,458,100 | 2,458,100 | ||||||
Amortizable intangible assets, net | 651,087 | 589,354 | ||||||
Other assets | 417,454 | 409,395 | ||||||
Total assets | $ | 17,265,846 | $ | 16,862,976 | ||||
LIABILITIES AND SHAREHOLDERS' DEFICIT | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 178,961 | $ | 122,189 | ||||
Taxes payable | 9,366 | - | ||||||
Employee related liabilities | 46,590 | 31,768 | ||||||
Accrued interest payable | 367,686 | 413,936 | ||||||
Current portion of long-term debt | 57,466 | 56,598 | ||||||
Deferred satellite performance incentives | 21,479 | 21,703 | ||||||
Deferred revenue | 84,066 | 79,480 | ||||||
Other current liabilities | 72,715 | 70,926 | ||||||
Total current liabilities | 838,329 | 796,600 | ||||||
Long-term debt, net of current portion | 15,846,728 | 15,330,051 | ||||||
Deferred satellite performance incentives, net of current portion | 172,663 | 158,555 | ||||||
Deferred revenue, net of current portion | 834,161 | 880,370 | ||||||
Deferred income taxes | 286,673 | 267,347 | ||||||
Accrued retirement benefits | 299,187 | 271,072 | ||||||
Other long-term liabilities | 300,195 | 218,534 | ||||||
Shareholders' deficit: | ||||||||
Common shares (1) | 832 | 1,055 | ||||||
5.75% Series A mandatory convertible junior non-voting preferred shares | - | 35 | ||||||
Paid-in capital (1) | 1,519,429 | 2,093,993 | ||||||
Accumulated deficit | (2,759,593 | ) | (3,087,904 | ) | ||||
Accumulated other comprehensive loss | (118,428 | ) | (108,536 | ) | ||||
Total shareholders' deficit | (1,357,760 | ) | (1,101,357 | ) | ||||
Noncontrolling interest | 45,670 | 41,804 | ||||||
Total liabilities and shareholders' deficit | $ | 17,265,846 | $ | 16,862,976 | ||||
(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 | |||||||
September 30, | September 30, | |||||||
2012 | 2013 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | (35,349 | ) | $ | 88,574 | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 191,972 | 185,891 | ||||||
Provision for doubtful accounts | 1,053 | 12,047 | ||||||
Foreign currency transaction loss | 2,450 | 414 | ||||||
Gain (loss) on disposal of assets | (71 | ) | 4 | |||||
Share-based compensation | 1,062 | 4,559 | ||||||
Deferred income taxes | (3,477 | ) | (32,097 | ) | ||||
Amortization of discount, premium, issuance costs and related costs | 13,676 | 5,951 | ||||||
Loss on early extinguishment of debt | 3,106 | - | ||||||
Unrealized (gains) losses on derivative financial instruments | (698 | ) | 841 | |||||
Termination of third-party commitment costs and expenses |
21,000 | - | ||||||
Other non-cash items | 3,854 | 4,467 | ||||||
Changes in operating assets and liabilities: | ||||||||
Receivables | (6,044 | ) | 7,268 | |||||
Prepaid expenses and other assets | 6,115 | 209 | ||||||
Accounts payable and accrued liabilities | (21,794 | ) | 196,252 | |||||
Deferred revenue | 7,445 | 8,829 | ||||||
Accrued retirement benefits | (4,987 | ) | (3,313 | ) | ||||
Other long-term liabilities | (2,000 | ) | (2,380 | ) | ||||
Net cash provided by operating activities | 177,313 | 477,516 | ||||||
Cash flows from investing activities: | ||||||||
Payments for satellites and other property and equipment (including capitalized interest) | (238,340 | ) | (144,105 | ) | ||||
Other investing activities | - | (1,000 | ) | |||||
Net cash used in investing activities | (238,340 | ) | (145,105 | ) | ||||
Cash flows from financing activities: | ||||||||
Repayments of long-term debt | (138,641 | ) | (20,254 | ) | ||||
Repayment of notes payable to former shareholders | (416 | ) | - | |||||
Payment of premium on early extinguishment of debt | (2 | ) | - | |||||
Proceeds from issuance of long-term debt | 190,000 | - | ||||||
Stock issuance costs | - | (306 | ) | |||||
Dividends paid to preferred shareholders | - | (2,755 | ) | |||||
Principal payments on deferred satellite performance incentives | (4,318 | ) | (4,157 | ) | ||||
Capital contribution from noncontrolling interest | 6,104 | 6,104 | ||||||
Dividends paid to noncontrolling interest | (2,109 | ) | (2,540 | ) | ||||
Other financing activities | - | 490 | ||||||
Net cash provided by (used in) financing activities | 50,618 | (23,418 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | (2,450 | ) | (414 | ) | ||||
Net change in cash and cash equivalents | (12,859 | ) | 308,579 | |||||
Cash and cash equivalents, beginning of period | 254,146 | 95,792 | ||||||
Cash and cash equivalents, end of period | $ | 241,287 | $ | 404,371 | ||||
Supplemental cash flow information: | ||||||||
Interest paid, net of amounts capitalized | $ | 325,354 | $ | 36,022 | ||||
Income taxes paid, net of refunds | 7,616 | 5,806 | ||||||
Supplemental disclosure of non-cash investing activities: | ||||||||
Accrued capital expenditures | $ | (51,624 | ) | $ | (3,831 | ) | ||
Restricted cash received | 23,901 | - | ||||||
Restricted cash paid | (118,032 | ) | - |
INTELSAT S.A. | ||||||||
UNAUDITED RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES | ||||||||
TO FREE CASH FLOW FROM (USED IN) OPERATIONS | ||||||||
($ in thousands) | ||||||||
Three Months Ended | Three Months Ended | |||||||
September 30, | September 30, | |||||||
2012 | 2013 | |||||||
Net cash provided by operating activities | $ | 177,313 | $ | 477,516 | ||||
Payments for satellites and other property and equipment (including capitalized interest) |
(238,340 | ) | (144,105 | ) | ||||
Free cash flow from (used in) operations | $ | (61,027 | ) | $ | 333,411 | |||
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.
Source:
Intelsat
Dianne VanBeber
Vice President, Investor Relations
and Communications
+1 202-944-7406
dianne.vanbeber@intelsat.com