- Second quarter revenue of $533.2
million
- Second quarter net loss attributable to
Intelsat S.A. of $23.8 million
- Second quarter Adjusted EBITDA of
$417.9 million or 78 percent of revenue
- $8.2 billion contracted backlog
- Intelsat reaffirms 2017 Guidance
- Intelsat 35e began in-orbit testing on
July 24, 2017; expected in-service in third quarter 2017
Intelsat S.A. (NYSE: I), operator of the world’s first
Globalized Network and leader in integrated satellite
communications, today announced financial results for the three
months ended June 30, 2017.
Intelsat reported total revenue of $533.2 million and a net loss
attributable to Intelsat S.A. of $23.8 million for the three months
ended June 30, 2017.
Intelsat reported EBITDA1, or earnings before net interest,
loss/(gain) on early extinguishment of debt, taxes and depreciation
and amortization, of $407.3 million and Adjusted EBITDA1 of $417.9
million, or 78 percent of revenue, for the three months ended June
30, 2017.
Intelsat’s Chief Executive Officer, Stephen Spengler, said, “Our
second quarter 2017 revenue of $533 million, and Adjusted EBITDA of
$418 million, are in line with our June guidance update. We are
making progress on sales of Intelsat EpicNG services with several
new contracts on Intelsat 33e now completed, demonstrating that our
new satellites are delivering superior performance for our service
provider customers. The introduction of new Intelsat EpicNG enabled
services, such as our operationally-efficient wireless solutions
for 2G and 3G network extensions, expands our market opportunities
as we continue to deploy the Intelsat EpicNG network. Progress on
these optimized managed services, plus continued development of
distributor relationships, support our return to growth as we
complete our network deployment.”
Mr. Spengler continued, “The Intelsat 35e satellite mission is
successfully progressing, with in-orbit testing now underway. The
third quarter launch of Intelsat 37e, the fifth satellite in the
Intelsat EpicNG fleet, is our last launch planned for 2017. By the
end of this year, we expect to achieve in-orbit resilience across a
substantial portion of the Intelsat EpicNG fleet, creating an
infrastructure that will unlock new applications for
satellite-based solutions, connecting people and devices
everywhere.”
Second Quarter 2017 Business Highlights
Intelsat provides critical communications infrastructure to
customers in the network services, media and government sectors.
Our customers use our services for broadband connectivity to
deliver fixed and mobile telecommunications, enterprise, video
distribution and fixed and mobile government applications. For
additional details regarding the performance of our customer sets,
see our Quarterly Commentary.
Network Services
Network services revenue was $214.9 million (or 40 percent of
Intelsat’s total revenue) for the three months ended June 30, 2017;
a decrease of 6 percent compared to the three months ended June 30,
2016.
Media
Media revenue was $222.2 million (or 42 percent of Intelsat’s
total revenue) for the three months ended June 30, 2017; an
increase of 5 percent compared to the three months ended June 30,
2016.
Government
Government revenue was $86.0 million (or 16 percent of
Intelsat’s total revenue) for the three months ended June 30, 2017;
a decline of 8 percent compared to the three months ended June 30,
2016.
Average Fill Rate
Intelsat’s average fill rate on our approximately 2,100
station-kept wide-beam 36 MHz equivalent transponders was 78
percent at June 30, 2017, consistent with 78 percent as of March
31, 2017. Separately, our fleet includes approximately 675 36 MHz
equivalent units of high-throughput Intelsat EpicNG capacity.
Satellite Launches
Intelsat 35e, the fourth of our Intelsat EpicNG next generation
high-throughput satellites, was successfully launched on July 5,
2017. In-orbit testing has begun, and the satellite is expected to
enter service at 325.5°W in the third quarter of 2017.
The Company’s last anticipated satellite launch for 2017 is
Intelsat 37e. This satellite, which will replace Intelsat 901 in
the Atlantic Ocean region, is planned for launch in the third
quarter of 2017 on an Arianespace, Ariane 5 rocket.
Contracted Backlog
At June 30, 2017, Intelsat’s contracted backlog, representing
expected future revenue under existing contracts with customers,
was $8.2 billion, as compared to $8.5 billion at March 31,
2017.
Corporate Development and Capital Structure
Activities
On June 1, 2017, Intelsat S.A. announced that (i) the offers to
exchange certain outstanding senior unsecured notes of its indirect
wholly-owned subsidiaries, Intelsat Jackson Holdings S.A.
(“Intelsat Jackson”), Intelsat Connect Finance S.A., and Intelsat
(Luxembourg) S.A., and (ii) solicitations of consents to amend the
indentures governing such notes expired pursuant to their terms on
May 31, 2017. Following the termination of the exchange offers and
consent solicitations, on June 2, 2017, Intelsat received
termination notices from WorldVu Satellites Limited (“OneWeb”) and
SoftBank Group Corp. (“SoftBank”), terminating the Combination
Agreement, dated as of February 28, 2017, between Intelsat and
OneWeb, and the Share Purchase Agreement, dated as of the same
date, between Intelsat and SoftBank.
Separately, on July 5, 2017, Intelsat Jackson completed an
offering of $1.5 billion aggregate principal amount of 9.75% Senior
Notes due 2025, and used the net proceeds from the sale of the
notes, along with other available cash, to satisfy and discharge
all $1.5 billion aggregate principal amount of Intelsat Jackson’s
senior notes due in 2019, and to pay related fees and expenses.
Financial Results for the Three Months Ended June 30,
2017
On-Network revenues generally include revenue from any services
delivered via our satellite or ground network. On-Network services
also include revenues from our channel services product, which are
not detailed here as they are immaterial in size and we no longer
actively market these services. Off-Network and Other Revenues
generally include 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
Revenues also include revenue from consulting and other services
and sales of customer premises equipment.
Total On-Network Revenues reported a decline of $7.9
million to $485.9 million, as compared to the three months ended
June 30, 2016:
- Transponder services reported an
aggregate increase of $1.7 million, primarily due to a
$15.8 million increase in revenue from media customers,
partially offset by a $15.6 million decrease in revenue from
network services customers. The increase in media revenue resulted
primarily from growth in direct-to-home (“DTH”) television services
in Latin America and Africa, partially offset by non-renewals
related to the end of life of certain satellites. The network
services decline was due to non-renewals of services for
point-to-point and other services in Europe, Africa, the Middle
East and Latin America, some related to the challenging economic
environment in Russia. The network services decline was also due to
lower pricing on renewing wide-beam services for enterprise and
wireless infrastructure related to activity from customers in
Africa.
- Managed services reported an
aggregate decrease of $8.2 million, largely due to a net decrease
of $4.3 million in revenue from managed services for government
applications, primarily related to the previously announced
termination of a contract; a $2.7 million decline from network
services customers for point-to-point trunking applications, which
are switching to fiber alternatives; and a decrease of $6.6 million
from media customers for managed video solutions. The decreases
were partially offset by an increase of $5.6 million in revenue
from network services customers for broadband services, primarily
for air and maritime mobility applications.
Total Off-Network and Other Revenues reported an
aggregate decline of $0.9 million, or a decrease of 2 percent, to
$47.4 million, as compared to the three months ended June 30,
2016:
- Transponder, MSS and other
Off-Network services reported an aggregate decrease of $1.8
million, primarily resulting from the previously announced
termination of a government contract.
- Satellite-related services
reported a slight aggregate increase of $1.0 million, primarily due
to increased revenue from support for third-party satellites.
For the three months ended June 30, 2017, changes in operating
expenses, interest expense, net, and other significant income
statement items are described below.
Direct costs of revenue (excluding depreciation and
amortization) increased by $1.0 million, or 1 percent, to $79.4
million, as compared to the three months ended June 30, 2016. This
reflects an increase of $4.9 million largely due to higher direct
costs associated with our satellite-related services business and
costs associated with a third-party payload, and an increase of
$1.9 million in expenses primarily related to ground network
enhancements for our media business. These increases were partially
offset by a decrease of $4.1 million related to lower third-party
costs for off-network services sold by our government business and
a $2.9 million decrease in staff-related expenses.
Selling, general and administrative expenses declined by
$12.0 million, or 20 percent, to $47.2 million, as compared to the
three months ended June 30, 2016. The decrease was primarily due to
a $17.5 million improvement in bad debt expense primarily related
to increased collections from a delinquent account and a $2.9
million decline in staff-related expenses. The decreases were
partially offset by a $9.7 million increase in professional fees
primarily due to the Company’s liability management initiatives and
other costs related to the now terminated SoftBank and OneWeb
transactions.
Depreciation and amortization expense increased slightly
by $0.4 million, or 0.2 percent, to $177.5 million, as compared to
the three months ended June 30, 2016.
Interest expense, net consists of the interest expense we
incur offset by interest income earned and the amount of interest
we capitalize related to assets under construction. Interest
expense, net increased by $13.1 million, or 5.6 percent, to $248.1
million for the three months ended June 30, 2017, as compared to
$235.0 million in the three months ended June 30, 2016. This
increase was principally due to a net increase of $13.4 million
from lower capitalized interest for the three months ended June 30,
2017, primarily resulting from a decreased number of satellites and
related assets under construction.
The non-cash portion of total interest expense, net was $12.1
million for the three months ended June 30, 2017, due to the
amortization of deferred financing fees and the accretion and
amortization of discounts and premiums.
Other income/(expense), net was $0.7 million for the
three months ended June 30, 2017, as compared to other expense, net
of $0.8 million for the three months ended June 30, 2016. The
increase of $1.5 million was primarily due to a $1.0 million
increase in income related to our business conducted in Brazilian
reais.
Provision for income taxes was $4.4 million for the three
months ended June 30, 2017, as compared to $5.5 million for the
three months ended June 30, 2016. The decrease was principally due
to lower income for the three months ended June 30, 2017. Cash paid
for income taxes, net of refunds, totaled $2.5 million for the
three months ended June 30, 2017, as compared to $2.5 million for
the three months ended June 30, 2016.
Net Income, Net Income per Diluted Common Share attributable
to Intelsat S.A., EBITDA and Adjusted EBITDA
Net loss attributable to Intelsat S.A. was $23.8 million
for the three months ended June 30, 2017, compared to net income
attributable to Intelsat S.A. of $116.4 million for the same period
in 2016.
Net loss per diluted common share attributable to Intelsat
S.A. was $0.20 for the three months ended June 30, 2017,
compared to net income per diluted common share of $0.98 for the
same period in 2016.
EBITDA was $407.3 million for the three months ended June
30, 2017, compared to $403.6 million for the same period in
2016.
Adjusted EBITDA increased 2 percent to $417.9 million for
the three months ended June 30, 2017, or 78 percent of revenue,
compared to $410.7 million, or 76 percent of revenue, for the same
period in 2016.
Intelsat management has reviewed the data pertaining to the use
of the Intelsat network, and is providing revenue information with
respect to that use by customer set and service type in the
following tables. Intelsat management believes this provides a
useful perspective on the changes in revenue and customer trends
over time.
By Customer Set ($ in thousands)
Three Months EndedJune
30,
Three Months EndedJune
30,
2016 2017 Network
Services $ 228,338 42% $ 214,895 40%
Media 210,992 39%
222,161 42%
Government 93,567 17% 86,030 16%
Other
9,086 2% 10,143 2% $ 541,983 100% $ 533,229 100%
By Service Type
Three Months EndedJune
30,
Three Months EndedJune
30,
2016 2017 On-Network Revenues
Transponder services $ 384,438 71% $ 386,170 72% Managed services
106,821 20% 98,629 19% Channel services 2,490 0%
1,051 0% Total on-network revenues 493,749 91% 485,850 91%
Off-Network and Other Revenues Transponder, MSS and other
off-network services 35,861 7% 34,056 6% Satellite-related services
12,373 2% 13,323 3% Total off-network and other
revenues 48,234 9% 47,379 9% Total $ 541,983 100% $
533,229 100%
Free Cash Flow (Used in) Operations
Net cash provided by operating activities was $50.8 million for
the three months ended June 30, 2017, and free cash flow (used in)
operations1 was $76.0 million for the same period. Free cash flow
from (used in) operations is defined as net cash provided by
operating activities, less payments for satellites and other
property and equipment (including capitalized
interest). Payments for satellites and other property and
equipment during the three months ended June 30, 2017 was $126.8
million.
Financial Outlook 2017
Today, Intelsat reaffirmed the 2017 revenue and Adjusted EBITDA
guidance issued on June 16, 2017, in which the Company expects the
following:
Revenue: Intelsat forecasts full-year 2017 revenue to be
in a range of $2.150 billion to $2.180 billion.
Adjusted EBITDA: Intelsat forecasts Adjusted EBITDA
performance for the full-year 2017 to be in a range of $1.640
billion to $1.670 billion.
Capital Expenditures: On June 16, 2017, Intelsat issued
its 2017 capital expenditure guidance ranges for the three calendar
years 2017 through 2019 (the “Guidance Period”):
- 2017: $500 million to $550
million;
- 2018: $400 million to $475 million;
and
- 2019: $400 million to $500
million.
Our capital expenditure guidance includes capitalized interest.
The net number of transponder equivalents is expected to increase
by a compound annual growth rate (“CAGR”) of 10 percent as a result
of the net new capacity entering service between January 1, 2017
and December 31, 2019. This reflects the incremental capacity
related to the launches of the Intelsat EpicNG high-throughput
satellites, five of which are expected to enter service during the
Guidance Period, net of satellites de-orbited or moved to inclined
service. Capital expenditure incurrence is subject to timing of
achievement of contract, satellite manufacturing, launch and other
milestones.
Cash Taxes: We expect annual cash taxes to be
approximately $30 million to $35 million.
1In this release, financial measures are presented both in
accordance with U.S. GAAP and also on a non-U.S. GAAP basis.
EBITDA, Adjusted EBITDA (or “AEBITDA”), free cash flow from (used
in) operations and related margins included in this release are
non-U.S. GAAP financial measures. Please see the consolidated
financial information below for information reconciling non-U.S.
GAAP financial measures to comparable U.S. GAAP financial measures.
Q2 2017 Quarterly Commentary
Intelsat provides a detailed quarterly commentary on the
Company’s business trends and performance. Please visit
www.intelsat.com/investors for management’s commentary on the
Company’s progress against its operational priorities and financial
outlook.
Conference Call Information
Intelsat management will hold a public conference call at 8:30
a.m. ET on Thursday, July 27, 2017 to discuss the Company’s second
quarter financial results for the period ended June 30, 2017.
Access to the live conference call will also be available via the
Internet at www.intelsat.com/investors. To participate on the live
call, participants should dial +1 844-834-1428 from North America,
and +1 920-663-6274 from all other locations. The participant pass
code is 29827054.
Participants will have access to a replay of the conference call
through August 3, 2017. The replay number for North America is +1
855-859-2056, and for all other locations is +1 404-537-3406. The
participant pass code for the replay is 29827054.
About Intelsat
Intelsat S.A. (NYSE: I) operates the world’s first Globalized
Network, delivering high-quality, cost-effective video and
broadband services anywhere in the world. Intelsat’s Globalized
Network combines the world’s largest satellite backbone with
terrestrial infrastructure, managed services and an open,
interoperable architecture to enable customers to drive revenue and
reach through a new generation of network services. Thousands of
organizations serving billions of people worldwide rely on Intelsat
to provide ubiquitous broadband connectivity, multi-format video
broadcasting, secure satellite communications and seamless mobility
services. The end result is an entirely new world, one that allows
us to envision the impossible, connect without boundaries and
transform the ways in which we live. For more information, visit
www.intelsat.com.
Intelsat Safe Harbor Statement:
Some of the information and statements contained in this
Earnings Release and certain oral statements made from time to time
by representatives of Intelsat constitute "forward-looking
statements" that do not directly or exclusively relate to
historical facts. When used in this earnings release, the words
“may,” “will,” “might,” “should,” “expect,” “plan,” “anticipate,”
“project,” “believe,” “estimate,” “predict,” “intend,” “potential,”
“outlook,” and “continue,” and the negative of these terms, and
other similar expressions are intended to identify forward-looking
statements and information. Forward-looking statements include: our
statements regarding certain plans, expectations, goals,
projections, anticipations, estimations, predictions, intentions,
outlook and beliefs about our expectation that the launches of our
satellites in the future will position us for growth; our plans for
satellite launches in the near to mid-term; our guidance regarding
our expectations for our revenue performance and Adjusted EBITDA
performance; our capital expenditure guidance over the next several
years; our belief that the scale of our fleet can reduce the
financial impact of satellite or launch failures and protect
against service interruptions; our belief that the diversity of our
revenue and customer base allow us to recognize trends across
regions and capture new growth opportunities; our expectation that
developing differentiated services and investing in new technology
will allow us to unlock essential opportunities; our expectations
as to the increased number of transponder equivalents on our fleet
over the next several years; and our expectations as to the level
of our cash tax payments in the future.
The forward-looking statements reflect Intelsat's intentions,
plans, expectations, anticipations, projections, estimations,
predictions, outlook, assumptions and beliefs about future events
and are subject to risks, uncertainties and other factors, many of
which are outside of Intelsat's control. Important factors that
could cause actual results to differ materially from the
expectations expressed or implied in the forward-looking statements
include known and unknown risks. Some of the factors that could
cause actual results to differ from historical results or those
anticipated or predicted by these forward-looking statements
include: risks associated with operating our in-orbit satellites;
satellite anomalies, launch failures, satellite launch and
construction delays and in-orbit failures or reduced performance;
potential changes in the number of companies offering commercial
satellite launch services and the number of commercial satellite
launch opportunities available in any given time period that could
impact our ability to timely schedule future launches and the
prices we pay for such launches; our ability to obtain new
satellite insurance policies with financially viable insurance
carriers on commercially reasonable terms or at all, as well as the
ability of our insurance carriers to fulfill their obligations;
possible future losses on satellites that are not adequately
covered by insurance; U.S. and other government regulation; changes
in our contracted backlog or expected contracted backlog for future
services; pricing pressure and overcapacity in the markets in which
we compete; our ability to access capital markets for debt or
equity; the competitive environment in which we operate; customer
defaults on their obligations to us; our international operations
and other uncertainties associated with doing business
internationally; potential adverse reactions or changes to business
or employee relationships resulting from the announcement or
termination of the now terminated combination of the businesses of
Intelsat and OneWeb pursuant to a Combination Agreement (the
“Merger”), and a cash investment by SoftBank pursuant to a Share
Purchase Agreement (the “SoftBank Investment”); competitive
responses to the now terminated Merger and SoftBank Investment;
diversion of management’s attention from ongoing business
operations and opportunities; and litigation. Known risks include,
among others, the risks described in Intelsat’s annual report on
Form 20-F for the year ended December 31, 2016, and its other
filings with the U.S. Securities and Exchange Commission, the
political, economic and legal conditions in the markets we are
targeting for communications services or in which we operate and
other risks and uncertainties inherent in the telecommunications
business in general and the satellite communications business in
particular. Because actual results could differ materially from
Intelsat's intentions, plans, expectations, anticipations,
projections, estimations, predictions, outlook, assumptions and
beliefs about the future, you are urged to view all forward-looking
statements with caution. Intelsat does not undertake any obligation
to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
INTELSAT S.A.
UNAUDITED CONSOLIDATED STATEMENTS OF
OPERATIONS
($ in thousands, except per share
amounts)
Three MonthsEndedJune 30,
2016
Three MonthsEndedJune 30,
2017
Revenue $ 541,983 $ 533,229 Operating expenses: Direct costs of
revenue (excluding depreciation and amortization) 78,414 79,431
Selling, general and administrative 59,166 47,175 Depreciation and
amortization 177,079 177,510 Total
operating expenses 314,659 304,116
Income from operations 227,324 229,113 Interest expense, net
234,987 248,100 Gain (loss) on early extinguishment of debt 131,402
(48 ) Other income (expense), net (829 ) 674
Income (loss) before income taxes 122,910 (18,361 ) Provision for
income taxes 5,498 4,439 Net income
(loss) 117,412 (22,800 ) Net income attributable to noncontrolling
interest (983 ) (995 ) Net income (loss) attributable
to Intelsat S.A. $ 116,429 $ (23,795 ) Net
income (loss) per common share attributable to Intelsat S.A.: Basic
$ 1.02 $ (0.20 ) Diluted $ 0.98 $ (0.20 )
INTELSAT S.A.
UNAUDITED RECONCILIATION OF NET
INCOME/(LOSS) TO EBITDA
($ in thousands)
Three MonthsEndedJune 30,
2016
Three MonthsEndedJune 30,
2017
Net income (loss) $ 117,412 $ (22,800 ) Add (Subtract): Interest
expense, net 234,987 248,100 Loss (gain) on early extinguishment of
debt (131,402 ) 48 Provision for income taxes 5,498 4,439
Depreciation and amortization 177,079 177,510
EBITDA $ 403,574 $ 407,297
EBITDA Margin 74 % 76 %
Note:
Intelsat calculates a measure called EBITDA to assess the
operating performance of Intelsat S.A. EBITDA consists of earnings
before net interest expense, net gain (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 our costs of borrowing.
Accordingly, we consider gain on early extinguishment of debt an
element of interest expense. EBITDA is a measure commonly used in
the Fixed Satellite Services (“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 financial 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.
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 MonthsEndedJune 30,
2016
Three MonthsEndedJune 30,
2017
Net income (loss) $ 117,412 $ (22,800 ) Add (Subtract):
Interest expense, net 234,987 248,100 Loss (gain) on early
extinguishment of debt (131,402 ) 48 Provision for income taxes
5,498 4,439 Depreciation and amortization 177,079
177,510 EBITDA 403,574 407,297
Add: Compensation and benefits 5,504 4,453 Non-recurring and
other non-cash items 1,659 6,166
Adjusted EBITDA $ 410,737 $ 417,916
Adjusted EBITDA Margin 76 % 78 %
Note:
Intelsat calculates a measure called Adjusted EBITDA to assess
the operating performance of Intelsat S.A. Adjusted EBITDA consists
of EBITDA as adjusted to exclude or include certain unusual items,
certain other operating expense items and certain other adjustments
as described in the table above. Our management believes that the
presentation of Adjusted EBITDA provides useful information to
investors, lenders and financial analysts regarding our financial
condition and results of operations, because it permits clearer
comparability of our operating performance between periods. By
excluding the potential volatility related to the timing and extent
of non-operating activities, our management believes that Adjusted
EBITDA provides a useful means of evaluating the success of our
operating activities. We also use Adjusted EBITDA, together with
other appropriate metrics, to set goals for and measure the
operating performance of our business, and it is one of the
principal measures we use to evaluate our management’s performance
in determining compensation under our incentive compensation plans.
Adjusted EBITDA measures have been used historically by investors,
lenders and financial analysts to estimate the value of a company,
to make informed investment decisions and to evaluate performance.
Our management believes that the inclusion of Adjusted EBITDA
facilitates comparison of our results with those of companies
having different capital structures.
Adjusted EBITDA is not a measure of financial performance under
U.S. GAAP, and our Adjusted EBITDA 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, except per share
amounts)
As ofDecember
31,2016
As ofJune 30,2017
(unaudited) ASSETS Current assets: Cash and cash
equivalents $ 666,024 $ 508,843 Restricted cash - 18,055
Receivables, net of allowance of $54,744 in 2016 and $44,731 in
2017 203,036 196,347 Prepaid expenses and other current assets
55,908 55,987 Total current assets
924,968 779,232 Satellites and other property and equipment, net
6,185,842 6,114,442 Goodwill 2,620,627 2,620,627 Non-amortizable
intangible assets 2,452,900 2,452,900 Amortizable intangible
assets, net 391,838 370,711 Other assets 365,834
403,323 Total assets $ 12,942,009 $ 12,741,235
LIABILITIES AND SHAREHOLDERS' DEFICIT Current
liabilities: Accounts payable and accrued liabilities $ 215,987 $
129,848 Taxes payable 16,733 10,094 Employee related liabilities
50,178 27,086 Accrued interest payable 204,840 207,420 Current
portion of long-term debt - 96,482 Deferred satellite performance
incentives 23,455 28,240 Deferred revenue 157,684 155,448 Other
current liabilities 64,786 47,052 Total
current liabilities 733,663 701,670 Long-term debt, net of current
portion 14,198,084 14,124,687 Deferred satellite performance
incentives, net of current portion 210,706 222,620 Deferred
revenue, net of current portion 906,744 861,334 Deferred income
taxes 168,445 174,610 Accrued retirement benefits 186,284 178,683
Other long-term liabilities 148,081 137,067 Shareholders'
deficit: Common shares; nominal value $0.01 per share 1,180 1,190
Paid-in capital 2,156,911 2,166,397 Accumulated deficit (5,715,931
) (5,774,296 ) Accumulated other comprehensive loss (76,305
) (74,077 ) Total Intelsat S.A. shareholders' deficit
(3,634,145 ) (3,680,786 ) Noncontrolling interest 24,147
21,350 Total liabilities and shareholders'
deficit $ 12,942,009 $ 12,741,235
INTELSAT S.A.
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
($ in thousands)
Three MonthsEndedJune 30,
2016
Three MonthsEndedJune 30,
2017
Cash flows from operating activities: Net income (loss) $
117,412 $ (22,800 ) Adjustments to reconcile net income (loss) to
net cash provided by operating activities: Depreciation and
amortization 177,079 177,510 Provision for doubtful accounts 10,342
(7,133 ) Foreign currency transaction (gain) loss (1,930 ) 1,238
Share-based compensation 5,504 4,452 Deferred income taxes (1,118 )
(1,230 ) Amortization of discount, premium, issuance costs and
related costs 5,855 12,087 (Gain) loss on early extinguishment of
debt (138,238 ) 48 Amortization of actuarial loss and prior service
credits for retirement benefits 841 822 Other non-cash items (868 )
13 Changes in operating assets and liabilities: Receivables (24,157
) 6,950 Prepaid expenses and other assets (18,150 ) 882 Accounts
payable and accrued liabilities 15,843 3,671 Accrued interest
payable (125,129 ) (82,498 ) Deferred revenue (30,885 ) (38,154 )
Accrued retirement benefits (2,239 ) (4,495 ) Other long-term
liabilities (1,610 ) (568 ) Net cash provided by
(used in) operating activities (11,448 ) 50,795
Cash flows from investing activities:
Payments for satellites and other property
and equipment (including capitalized interest)
(190,458 ) (126,792 ) Capital contributions to unconsolidated
affiliates (331 ) (13,173 ) Proceeds from insurance settlements
- 1,547 Net cash used in investing
activities (190,789 ) (138,418 )
Cash flows from
financing activities: Repayments of long-term debt (328,569 ) -
Debt issuance costs (5,853 ) - Dividends paid to preferred
shareholders (2,479 ) - Principal payments on deferred satellite
performance incentives (4,573 ) (6,087 ) Dividends paid to
noncontrolling interest (2,245 ) (2,220 ) Restricted cash for
collateral - (18,055 ) Net cash used in
financing activities (343,719 ) (26,362 ) Effect of
exchange rate changes on cash and cash equivalents 198
153 Net change in cash and cash equivalents
(545,758 ) (113,832 ) Cash and cash equivalents, beginning of
period 1,515,323 622,675 Cash and cash
equivalents, end of period $ 969,565 $ 508,843
Supplemental cash flow information: Interest paid, net of
amounts capitalized $ 354,610 $ 318,866 Income taxes paid, net of
refunds 2,492 2,496
Supplemental disclosure of non-cash
investing activities: Accrued capital expenditures $ 17,232 $
(22,519 )
Supplemental disclosure of non-cash financing
activities: Debt financing and restricted cash received $
480,200 $ - Restricted cash - letters of credit collateral - 18,055
INTELSAT S.A.
UNAUDITED RECONCILIATION OF NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES
TO FREE CASH FLOW FROM (USED IN)
OPERATIONS
($ in thousands)
Three MonthsEndedJune
30,2016
Three MonthsEndedJune
30,2017
Net cash provided by (used in) operating activities $
(11,448 ) $ 50,795
Payments for satellites and other property
and equipment (including capitalized interest)
(190,458 ) (126,792 ) Free cash flow provided by
(used in) operations $ (201,906 ) $ (75,997 )
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 is not a measurement of cash
flow under U.S. 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 financial
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 U.S. GAAP, and free cash flow from (used in) operations 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 income (loss) or net income (loss),
determined in accordance with U.S. GAAP, as an indicator of
Intelsat’s 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170727005351/en/
IntelsatDianne VanBeberVice President, Investor Relations and
Corporate Communications+1
703-559-7406dianne.vanbeber@intelsat.com
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