PanAmSat Reports First Quarter 2001 Financial Results
PanAmSat Corporation (NASDAQ:SPOT) today
reported financial results for the first quarter ended March 31, 2001. The
company generated total revenues of $205.2 million, earnings before net
interest expense, income taxes, depreciation and amortization (EBITDA) of
$140.0 million or 68 percent of total revenues, and approximately $400.0
million in new long-term service agreements during the quarter. Major
announcements and developments for PanAmSat include:
HBO and TBS, Inc., each an AOL Time Warner company, chose PanAmSat as their
primary satellite services provider for the delivery of television
programming through 2015.
Warner Bros. selected PanAmSat for the digital distribution of The WB
Television Network and Warner Brothers Domestic Television Distribution
services.
PanAmSat formed a strategic alliance with a Grupo Pegaso affiliate to
provide video, data and Internet services in Mexico.
PAS-1R Atlantic Ocean Region satellite began service in late February with
coverage throughout the Americas, Europe and Africa, and is expected to
provide significant growth opportunities for the Company.
PAS-10 Indian Ocean Region satellite was shipped to Kazakhstan in
preparation for its May 2001 launch from the Baikonur Cosmodrome aboard a
Proton launch vehicle.
Total revenues for the first quarter of 2001 were $205.2 million, compared
to revenues of $299.1 million for the first quarter of the prior year. This
decrease was primarily due to one-time outright sales and sales-type lease
revenues of $93.8 million which were recorded in the first quarter of 2000
for which there were no comparable transactions in 2001. Total sales and
sales-type lease revenues were $5.7 million for the quarter ended March 31,
2001, compared to $99.1 million for the same period in 2000. Operating lease
revenues, which were 97 percent of total revenues for the first quarter of
2001, decreased by 0.3 percent to $199.5 million from $200.0 million for the
same period in 2000.
The Company introduced a new financial metric to facilitate quarter over
quarter comparisons and to help clarify the reported results which accord
different accounting treatment to sales-type lease revenues and operating
lease revenues. This new metric, named the Converted Lease Metric, is the
sum of operating lease revenues plus the cash due from all PanAmSat
contracts that were previously reported as sales-type leases. For the first
quarter of 2001 and for the same period in 2000, the Converted Lease Metric
was approximately $211 million. The Converted Lease Metric should not be
considered as a measure of revenues or cash flows as determined in
accordance with Generally Accepted Accounting Principles (GAAP) in the
statements of income and cash flows.
The Company records certain contractual transactions as sales-type leases in
accordance with GAAP. Virtually all of the revenues from outright sales and
sales-type lease agreements are recognized at service commencement, whereas
revenues from operating lease agreements are recognized monthly over the
term of the agreement. While revenues from outright sales and sales-type
leases represent substantial long-term commitments for PanAmSat services,
they are subject to greater variation from period to period than are
operating lease revenues.
For the three months ended March 31, 2001, EBITDA was $140.0 million, or 68
percent of total revenues, compared to EBITDA of $200.9 million, or 67
percent of total revenues, for the same period in 2000. Excluding new
outright sales and sales-type lease activity in the first quarter of 2000,
EBITDA was $152.4 million or 74 percent of total revenues. The decrease in
EBITDA was principally due to outright sales and sales-type lease agreements
that were executed in the first quarter of 2000 for which there were no
comparable transactions in 2001, an increase in direct operating, and
selling, general and administrative (SG&A) costs resulting from the company’
s continued fleet expansion and increased investment in the new NET-36
initiative. Excluding new outright sales and sales-type lease activity and
operating costs relating to NET-36, EBITDA was $147.5 million or 72 percent
of total revenues for the three months ended March 31, 2001 and $153.3
million or 75 percent of total revenues for the same period in 2000.
Operating lease revenues from network services increased by 6 percent to
approximately $54.3 million for the first quarter of 2001, compared to the
same period in 2000. This increase was due primarily to growth in data and
Internet-related service agreements. Operating lease revenues from video
services decreased by 3.5 percent to $131.1 million during the first quarter
of 2001 due to customer conversions from operating lease agreements into new
sales-type lease agreements during the first half of 2000. Overall video
services revenues, excluding revenues from new sales-type lease activity,
decreased by 3 percent to $136.8 million in the first quarter of 2001 as
compared to the same period in 2000.
As of March 31, 2001, PanAmSat had contracts for satellite services
representing future payments (backlog) of approximately $6.2 billion,
compared to approximately $6.0 billion in the fourth quarter of 2000.
R. Douglas Kahn, PanAmSat’s president and chief executive officer, said:
“PanAmSat achieved solid financial results for the first quarter and signed
several new long-term service agreements which resulted in a substantial
increase to our backlog. Our new 10-year service agreement with HBO and TBS,
Inc. demonstrates our continuing ability to establish valuable long-term
relationships with our customers. It also reflects their confidence that
satellites will continue to offer the greatest value and efficiency in the
broadcasting of their content.
“Additionally, PanAmSat realized a major strategic objective through the
creation of PanAmSat de MÈxico, a new joint venture between PanAmSat and a
Grupo Pegaso affiliate formed to serve the growing Mexican
telecommunications market. With our extensive satellite coverage and depth
of experience serving the region, coupled with our partner’s knowledge of
the local market, PanAmSat de MÈxico will create new growth opportunities
for PanAmSat.
“Also during the quarter, the PAS-1R spacecraft commenced service over the
Atlantic Ocean Region, offering coverage of four continents. PAS-1R provides
both expansion and replacement capacity within our fleet and represents
unique growth opportunities for PanAmSat in 2001. In order to continue our
campaign to deploy more advanced and robust resources around the world, we
currently are preparing to launch our PAS-10 Indian Ocean Region spacecraft
from the Baikonur Cosmodrome next month.
“PanAmSat is also focused on introducing new service offerings that will
leverage the broadcast capabilities of our global satellite network. While
we have slowed the roll out of NET-36 to reflect current conditions in the
Internet marketplace, we remain confident in the long-term prospects for
video streaming services over the web. With our prudent approach, we believe
PanAmSat will be uniquely positioned to capture a significant share of this
emerging service opportunity, ” Mr. Kahn concluded.
FINANCIAL GUIDANCE FOR 2001
The company projects that its financial results for the second quarter of
2001 will be as follows: Core Business NET-36 Consolidated
Total Revenues $205 to $210 million Less than $1 million $205 to $210
million
Outright sales/sales-type leases No new sales or sales-type leases expected
N/A No new sales or sales-type leases expected
EBITDA margin or amount Low 70 percent range Approx. ($8) to $(10) million
Mid to high 60% range
Earnings per share N/A N/A Break even plus/minus $0.02
The company projects that its financial results for 2001 will be as follows:
Core Business NET-36 Consolidated
Total Revenues $950 million to $1 billion Approx. $5 to $10 million Approx.
$1 billion
Outright sales/sales-type leases as a percent of total revenue 10 to 15
percent N/A 10 to 15 percent
EBITDA margin or amount Low 70 percent range Approx. $(30) million Mid to
high 60% range
Capital expenditures $500 million to $550 million Less than $40 million $540
million to $590 million
Depreciation and amortization $410 million to $450 million $10 million to
$15 million $420 million to $465 million
Earnings per share N/A N/A $0.12 to $0.28
The Company revised its NET-36 total revenues guidance for the full year
2001 from a range of $15 to $25 million to a range of approximately $5 to
$10 million due to slower than anticipated growth in the Internet streaming
services market. However, PanAmSat also adjusted its EBITDA guidance for
NET-36 for the full year 2001 from a range of $(30) to $(40) million to
approximately $(30) million. The EBITDA loss is expected to be lower than
previously anticipated due to reduced NET-36 operating expenses. The Company
also revised its NET-36 capital expenditures guidance for the full year 2001
from a range of $70 to $80 million to less than $40 million, reflecting the
Company’s decision to slow infrastructure deployment. As a result of slower
infrastructure deployment, the Company also lowered its NET-36 depreciation
and amortization from a range of $20 to $30 million to a range of $10 to $15
million.
For more detailed information about our financial guidance and trends,
please visit the “Financial Guidance/Recent Presentations” page of the
Investor Relations section of our website located at
http://www.panamsat.com.
PanAmSat will hold a conference call at 11:00 a.m. Eastern Time April 16,
2001 to discuss its first quarter 2001 financial results as well as its
financial outlook for 2001. The dial-in number is 1-303-267-1000. To listen
to the call live via webcast, please visit http://www.panamsat.com or
http://www.vcall.com.
About NET-36T
NET-36, a PanAmSat company, provides a satellite-based Internet broadcast
network that leverages a global network of 20 geostationary-orbiting
satellites and PanAmSat’s heritage of fast, reliable, scalable and secure
video broadcast services. NET-36 enables the broadcast of digital and
streaming media to DSL providers, cable headends, ISPs and broadband
wireless providers worldwide. NET-36 ensures high-speed Internet subscribers
around the world receive media streams at the same high fidelity the content
provider intended it to be viewed – untainted by Internet congestion. For
more information, visit http://www.net-36.com.
About PanAmSat
PanAmSat Corporation is a leading provider of global video and data
broadcasting services via satellite. Operating a global network of 20
in-service spacecraft and seven technical facilities, the company delivers
entertainment and information to cable television systems, TV broadcast
affiliates, direct-to-home TV operators, Internet service providers,
telecommunications companies and corporations worldwide. PanAmSat will
expand its global fleet to 22 spacecraft by year-end 2001. PanAmSat is 81
percent owned by HUGHES Electronics Corporation. For more information on
PanAmSat, visit the company’s web site at www.panamsat.com.
About HUGHES Electronics
HUGHES Electronics Corporation is a world-leading provider of digital
television entertainment, broadband services, satellite-based private
business networks, and global video and data broadcasting. HUGHES is a unit
of General Motors Corporation. The earnings of HUGHES are used to calculate
the earnings per share attributable to the General Motors Class H common
stock (NYSE: GMH).
NOTE: The Private Securities Litigation Reform Act of 1995 provides a “safe
harbor” for certain forward-looking statements so long as such information
is identified as forward-looking and is accompanied by meaningful cautionary
statements identifying important factors that could cause actual results to
differ materially from those projected in the information. When used in this
press release, the words “estimate,” “plan,” “project,” “anticipate,”
“expect,” “intend,” “outlook,” “believe,” and other similar expressions are
intended to identify forward-looking statements and information. Actual
results may differ materially from anticipated results as a result of
certain risks and uncertainties, which are more specifically set forth in
the “Financial Guidance/Recent Presentations” page of the Investor Relations
section of our website and the company’s annual report on Form 10-K for the
year ended December 31, 2000 on file with the Securities and Exchange
Commission. These risks and uncertainties include but are not limited to (i)
risks associated with technology (including, without limitation, satellite
launch and construction delays, launch failures and in-orbit failures), (ii)
regulatory risks, including the ability to obtain export licenses, (iii)
risks of uninsured loss, (iv) risks associated with the Company’s new
Internet initiatives, including, without limitation, typical risks
associated with entering a new and untested business segment, (v) risks of
doing business internationally, and (vi) litigation. PanAmSat cautions that
the foregoing list of important factors is not exclusive. Further, PanAmSat
operates in an industry sector where securities values may be volatile and
may be influenced by economic and other factors beyond the Company’s
control.
Summary of Operating Results
For the Three Months Ended March 31, 2001 and 2000 (Unaudited)
Amounts in thousands (except per share data)
3/31/01 3/31/00Revenues
Operating leases, satellite services
and other $ 199,503 $ 200,027
Outright sales and sales-type leases 5,724 99,077Total Revenues 205,227 299,104
Costs and Expenses
Cost of outright sales and
sales-type leases – 45,252
Direct operating costs 37,460 31,894
Selling, General & Administrative costs 27,718 21,011Total 65,178 98,157
EBITDA 140,049 200,947
Depreciation & amortization 98,896 73,667
Interest expense, net 32,308 24,453Income before income taxes 8,845 102,827
Income tax expense 3,848 46,272Net Income $ 4,997 $ 56,555
Earnings per share $ 0.03 $ 0.38
Weighted average common shares
outstanding 149.7 150.1
Summarized Balance Sheets
As of March 31, 2001 and December 31, 2000 (Unaudited)
Amounts in thousands
3/31/01 12/31/00
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 290,072 $ 129,345
Accounts receivable, net 81,924 77,871
Prepaid expenses and other 37,944 30,360
Deferred income taxes 4,605 3,220
Insurance claim receivable – 132,435TOTAL CURRENT ASSETS 414,545 373,231
SATELLITES AND OTHER PROPERTY AND
EQUIPMENT, Net 3,158,534 3,156,944
NET INVESTMENT IN SALES-TYPE
LEASES 202,301 221,039
GOODWILL – Net of amortization 2,287,379 2,303,619
DEFERRED CHARGES 135,131 123,518TOTAL ASSETS $ 6,197,890 $ 6,178,351
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES $ 124,530 $ 93,570
DUE TO AFFILIATES 1,725,000 1,725,000
LONG-TERM DEBT 750,000 796,542
DEFERRED INCOME TAXES 378,986 365,982
DEFERRED CREDITS AND OTHER 258,086 242,562TOTAL LIABILITIES 3,236,602 3,223,656
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY 2,961,288 2,954,695
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY $ 6,197,890 $ 6,178,351
Summarized Statements of Cash Flows
For the Three Months Ended March 31, 2001 and 2000 (Unaudited)
Amounts in thousands
3/31/01 3/31/00CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
Net Income $ 4,997 $ 56,555
Gross profit on outright sales
and sales-type leases – (48,538)
Depreciation and amortization 98,896 73,667
Changes in working capital and
other accounts 13,254 (4,299)NET CASH PROVIDED BY OPERATING
ACTIVITIES 117,147 77,385CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (67,218) (158,004)
Insurance proceeds from
satellite recoveries 132,435 33,836NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 65,217 (124,168)CASH FLOWS FROM FINANCING ACTIVITIES
Net repayments (21,216) (31,250)
Other (421) 2,194NET CASH USED IN FINANCING ACTIVITIES (21,637) (29,056)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 160,727 (75,839)CASH AND CASH EQUIVALENTS,
beginning of period 129,345 117,259CASH AND CASH EQUIVALENTS,
end of period $ 290,072 $ 41,420
