Q2 07 Earnings Release 08 09
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FOR IMMEDIATE RELEASE
Hughes Communications, Inc. Announces Second Quarter 2007 Results
Revenues Increase 12% over Second Quarter 2006 to $234 Million;
EBITDA More than Doubles to $31 Million;
Net Income Increases to $10 Million and Earnings per Share to $0.50
Germantown, Md., August 10, 2007—Hughes Communications, Inc. (NASDAQ: HUGH) (“Hughes”), the
global leader in broadband satellite network solutions and services, today announced financial results for the
second quarter ended June 30, 2007. Hughes' consolidated operations are classified into three reportable
segments: VSAT; Telecom Systems; and Parent and Other. The VSAT and Telecom Systems segments
represent all the operations of Hughes Network Systems, LLC (“HNS”), Hughes’ principal operating
subsidiary. The Parent and Other segment includes the financial results of Hughes Corporate, Electronic
System Products, Inc., and investments in the other companies that were contributed from SkyTerra
Communications, Inc. (“SkyTerra”), Hughes' predecessor, prior to the Skyterra/Hughes spin-off in February
2006.
Hughes Network Systems, LLC (HNS)
“HNS once again delivered strong all-round financial performance in the second quarter of 2007, setting new
records for second quarter revenue, operating income, EBITDA, and net income,” said Pradman Kaul,
president and chief executive officer. “Revenues increased by 12% over the second quarter of 2006 to $234
million and operating income increased by 449% to a strong $20 million from $4 million. EBITDA more
than doubled to $32 million, and net income increased to $11 million compared to a loss of $4 million in the
second quarter of 2006. Adjusted EBITDA also increased by 12% to $32 million in the second quarter of
2007.
“The consumer/SMB and mobile satellite businesses continued to be the key contributors to our revenue
growth,” said Kaul. “Over 30,000 new subscribers were activated in the second quarter of 2007, resulting in
the consumer/SMB subscriber base growing to 353,000 at June 30, 2007 for a growth of 18% over the
subscriber base at June 30, 2006. Revenue from our mobile satellite business showed strong growth of 88%
to $35 million in the second quarter of 2007 over the second quarter of 2006. Our North American and
International enterprise businesses continued their steady revenue contribution with combined growth of 3%
over the second quarter of 2006.”
Kaul continued, “We booked new orders of $219 million in the second quarter of 2007 including significant
orders from Barrett Xplore, Foot Locker, Yum Brands, Kmart, Shell Oil, Weis Markets, Jiffy Lube and
T.J.Maxx in our North America enterprise business. In our International enterprise business, we were
awarded significant orders by World Bank, Micro Tech, Telmex and BP. The Mobile Satellite business was
awarded major orders by TerreStar, ICO, and Thuraya.”
“For the six months ended June 30, 2007, HNS revenue grew by 13% to $457 million, EBITDA by 88% to
$57 million, Adjusted EBITDA by 27% to $59 million, and net income to $15 million compared to a loss of
$4 million in the same period in 2006. New orders for all segments were robust. Total new orders for the first
six months of 2007 were $496 million, a growth of 28% over the same period in 2006.”
2
Set forth below is a table highlighting certain of HNS' results for the three- and six-month periods ended June
30, 2007 and 2006:
(Dollars in thousands) 2007 2006 2007 2006
Revenue
VSAT 196,696$ 183,856$ 391,757$ 365,164$
Telecom Systems 37,413 24,647 65,083 40,131
Total 234,109$ 208,503$ 456,840$ 405,295$
Operating income (loss)
VSAT 15,399$ (1,778)$ 24,858$ 5,454$
Telecom Systems 4,844 5,466 8,385 7,217
Total 20,243$ 3,688$ 33,243$ 12,671$
Net income (loss) 11,178$ (4,428)$ 15,486$ (4,234)$
EBITDA* 31,921$ 14,256$ 57,335$ 30,519$
Adjusted EBITDA* 31,981$ 28,526$ 58,572$ 46,244$
Hughes Network Systems, LLC
Three Months
Ended June 30, Six Months
Ended June 30,
* For the definitions of EBITDA and Adjusted EBITDA, see “Reconciliation of
Non-GAAP Financial Measures to GAAP Financial Measures” below.
Selected Highlights
• The SPACEWAY
™
3 satellite arrived at the Arianespace launch facility in Kourou, French Guiana,
where the Ariane 5 heavy launcher will launch the satellite into geosynchronous transfer orbit. The
scheduled launch date is August 14, 2007. The SPACEWAY 3 satellite will operate in the globally
assigned Ka-band spectrum and will be used to provide a new range of satellite broadband services
to enterprise, consumer, and government customers throughout North America.
• HNS announced a breakthrough in broadband network management—a fully integrated, enterprise-
wide performance and fault management tool for both satellite and landline (DSL, T1) broadband
technologies—the HughesNet
®
Customer Gateway. Available exclusively to HughesNet Managed
Services customers, the HughesNet Customer Gateway offers a single interface for monitoring and
managing any broadband technology deployed within an organization.
• Frost and Sullivan awarded HNS the North American Vertical Market Penetration Leadership Award
for managed network services for the retail sector. This award recognizes HNS for its ability to
provide solutions and support that meet customers' specific infrastructure management needs.
• HNS is a member of Sprint's winning team for the recently awarded U.S. General Services
Administration (GSA) Networx Enterprise contract. HNS will provide managed network access and
Internet services via broadband satellite as a subcontractor in support of federal mission-critical
telecommunications requirements.
• HNS announced the general availability in Europe of HughesNet Managed Network Services. This
suite of fully-managed virtual private network (VPN) solutions for multi-site enterprise networks
offers customers the choice of broadband access technologies at each site, whether DSL, satellite,
private line, or in a combination.
3
• For the seventh consecutive year, HNS has been awarded the Workplace Excellence Seal of
Approval from the Alliance for Workplace Excellence. In addition to the Workplace Excellence
award, the company was also given the Wellness Trailblazer award. Both awards are given to
members of the Maryland business community dedicated to establishing a workplace culture that
allows employees to achieve success at work, at home, and in the community.
• On August 8, 2007, Hughes Communications, Inc. filed a shelf registration statement on Form S-3 to
register equity and debt securities of Hughes Communications, Inc. and debt securities of Hughes
Network Systems, LLC, and HNS Finance, its wholly owned subsidiary, as co-issuers, with the SEC.
Any proceeds received from the sale of these securities will be used for capital expenditures,
acquisitions, working capital and other general corporate purposes.
Hughes Communications, Inc. (Hughes)
Certain financial information for Hughes for the three- and six- months ended June 30, 2007 and 2006 is
shown below.
(Dollars in thousands) 2007 2006 2007 2006
Revenue
VSAT 196,696$ 183,856$ 391,757$ 365,164$
Telecom Systems 37,413 24,647 65,083 40,131
Parent and Other 249 158 400 240
Total 234,358$ 208,661$ 457,240$ 405,535$
Operating income (loss)
VSAT 15,399$ (1,778)$ 24,858$ 5,454$
Telecom Systems 4,844 5,466 8,385 7,217
Parent and Other (1,210) (310) (2,654) (2,534)
Total 19,033$ 3,378$ 30,589$ 10,137$
Net income (loss) 9,632$ (4,396)$ 12,572$ (59,940)$
EBITDA* 30,766$ 14,447$ 55,146$ 28,313$
Hughes Communications, Inc.
Three Months
Ended June 30, Six Months
Ended June 30,
* For the definition of EBITDA, see “Reconciliation of Non-GAAP Financial
Measures to GAAP Financial Measures” below.
The net loss for the six months ended June 30, 2006 includes a tax charge of approximately $51.3 million recorded in
the first quarter of 2006, primarily related to the SkyTerra/Hughes spin-off. As Hughes is the accounting successor to
SkyTerra, the taxes associated with the separation are included in Hughes' results for the quarter ended March 31, 2006
and a portion of the deferred tax assets were utilized to satisfy the tax expense resulting from the taxable gain.
Accordingly, Hughes does not expect this expense to have an impact on its cash from operations.
4
To summarize, Kaul said, “We are very pleased that we have once again delivered strong financial results in
the second quarter of 2007 after an equally strong first quarter. This performance, combined with a strong
order backlog, has positioned us well for revenue growth. I am also delighted to inform you that our
SPACEWAY 3 satellite is at the launch site in French Guiana awaiting its launch on August 14, 2007. We
are looking forward to a successful launch and to commencing HughesNet
commercial service using
SPACEWAY 3 approximately six months thereafter. We expect that SPACEWAY 3 will substantially
reduce our costs and open up new revenue opportunities going forward in the enterprise and consumer/SMB
markets.”
Commenting on the financial performance, Grant Barber, executive vice president and chief financial officer
said, “Our revenue and profitability showed strong growth in all operating segments in the second quarter of
2007 over the same period in 2006, and is reflected in the earnings per share for Hughes of $0.50 on a fully
diluted basis compared to a loss of $0.23 in the same period in 2006. For the six-month period ended June
30, 2007, Hughes delivered earnings per share of $0.65 compared to a loss of $4.24 per share in the same
period in 2006. We generated cash from operations of $33 million during the six months ended June 30,
2007 compared to $15 million in the six months ended June 30, 2006, and we closed the second quarter of
2007 with a healthy consolidated cash and marketable securities position of $221 million.”
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
The following table reconciles the differences between HNS' net income as determined under United States
of America generally accepted accounting principles (GAAP), EBITDA and Adjusted EBITDA.
(Dollars in thousands) 2007 2006 2007 2006
Net income (loss) 11,178$ (4,428)$ 15,486$ (4,234)$
Add:
Interest expense 11,870 10,346 23,308 19,740
Income tax (benefit) expense (131) 500 389 987
Depreciation and amortization 10,981 10,086 22,524 17,216
Equity incentive plan compensation 767 93 1,294 152
Less:
Interest income (2,744) (2,341) (5,666) (3,342)
EBITDA 31,921$ 14,256$ 57,335$ 30,519$
Add:
Inventory provision related to shift to Broadband focus - 11,879 - 11,879
HughesNet branding costs - 902 - 1,454
Restructuring charge 60 - 1,237 -
Benefits/insurance programs sponsored by DIRECTV - 653 - 1,306
Legal settlement and related fees - pre-April 2005 Acquisition - 586 - 586
Management fee to Hughes Communications, Inc. - 250 - 500
Adjusted EBITDA 31,981$ 28,526$ 58,572$ 46,244$
Hughes Network Systems, LLC
Three Months
Ended June 30, Six Months
Ended June 30,
5
The following table reconciles the differences between Hughes’ net income as determined under GAAP and
EBITDA:
(Dollars in thousands) 2007 2006 2007 2006
Net income (loss) 9,632$ (4,396)$ 12,572$ (59,940)$
Add:
Interest expense 11,872 10,388 23,310 21,489
Income tax expense 164 500 684 51,821
Depreciation and amortization 10,981 10,086 22,524 17,216
Equity incentive plan compensation 1,005 467 2,022 1,510
Less:
Interest income (2,888) (2,598) (5,966) (3,783)
EBITDA 30,766$ 14,447$ 55,146$ 28,313$
Hughes Communications, Inc.
Three Months
Ended June 30, Six Months
Ended June 30,
The financial statements of Hughes and HNS for the three- and six-month periods ended June 30, 2007 and
2006 are attached to this press release.
Note:
EBITDA is defined as earnings (loss) before interest, income taxes, depreciation, amortization and equity
incentive plan compensation. Adjusted EBITDA is used in calculating covenant compliance under HNS'
credit agreements and the indenture governing HNS’ 9½% Senior Notes due 2014. Adjusted EBITDA is
defined as EBITDA further adjusted to exclude certain adjustments. EBITDA and Adjusted EBITDA are not
recognized terms under GAAP. EBITDA and Adjusted EBITDA do not represent net income or cash flows
from operations, as these terms are defined under GAAP, and should not be considered as alternatives to net
income as an indicator of operating performance or to cash flows as a measure of liquidity. Additionally,
EBITDA and Adjusted EBITDA are not intended to be measures of cash flow available to management for
discretionary use, as such measures do not consider certain cash requirements such as capital expenditures
(including expenditures on VSAT operating lease hardware and capitalized software development costs), tax
payments, and debt service requirements (including VSAT operating lease hardware). EBITDA and Adjusted
EBITDA as presented herein are not necessarily comparable to similarly titled measures reported by other
companies. EBITDA and Adjusted EBITDA are presented herein because HNS and Hughes use such
information in their review of the performance of management and in the performance of their business. In
addition, information concerning Adjusted EBITDA is being presented because it reflects important
components included in the financial covenants under the senior note indenture and HNS' credit agreements.
About Hughes Communications, Inc.
Hughes Communications, Inc. (NASDAQ: HUGH) is the 100 percent owner of Hughes Network Systems,
LLC. Hughes is the global leader in providing broadband satellite networks and services for enterprises,
governments, small businesses, and consumers. HughesNet encompasses all broadband solutions and
managed services from Hughes, bridging the best of satellite and terrestrial technologies. Its broadband
satellite products are based on the IPoS (IP over Satellite) global standard, approved by the TIA, ETSI, and
ITU standards organizations. To date, Hughes has shipped more than 1.2 million systems to customers in
over 100 countries.
Headquartered outside Washington, D.C., in Germantown, Maryland, USA, Hughes maintains sales and
support offices worldwide. For more information, please visit www.hughes.com.
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Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995
This press release may contain statements that are forward looking, as that term is defined by the Private Securities
Litigation Reform Act of 1995. These statements include, but are not limited to, discussions regarding industry outlook
and Hughes’ expectations regarding the performance of its business, its future liquidity and capital resource needs, its
strategic plans and objectives and the ability to launch and deploy SPACEWAY 3. These forward-looking statements
are based on management's beliefs, as well as assumptions made by, and information currently available to,
management. When used in this release, the words “believe,” “anticipate,” “estimate,” “expect,” “intend,” “project,”
“plans” and similar expressions and the use of future dates are intended to identify forward-looking statements.
Although management believes that the expectations reflected in these forward-looking statements are reasonable, it can
give no assurance that these expectations will prove to have been correct. You are cautioned not to place undue reliance
on any forward-looking statements, which speak only as of the date made. These statements are subject to certain risks,
uncertainties and assumptions, including, but not limited to, the following: risks related to Hughes’ substantial leverage
and restrictions contained in its debt agreements, technological developments, its reliance on providers of satellite
transponder capacity, changes in demand for Hughes’ services and products, competition, industry trends, regulatory
changes, foreign currency exchange rate fluctuations and other risks identified and discussed under the caption “Risk
Factors” in Hughes’ Annual Report on Form 10-K for the year ended December 31, 2006 filed with the Securities and
Exchange Commission on March 26, 2007 and in the other documents Hughes files with the Securities and Exchange
Commission from time to time.
###
©Hughes Communications, Inc. All rights reserved. Hughes, HughesNet, IPoS, and SPACEWAY are trademarks of Hughes
Network Systems, LLC. DIRECTV and DIRECWAY are registered trademarks of The DIRECTV Group, Inc.
Contact Information
Investor Relations Contact: Deepak V. Dutt,
Vice President, Treasurer and Investor Relations Officer
Email: ddutt@hns.com
Phone: 301-428-7010
Media Contact: Judy Blake,
Director, Marketing Communications
Email: jblake@hns.com
Phone: 301-601-7330
Attachments
Hughes Communications, Inc.
Condensed Consolidated Balance Sheets
Condensed Consolidated Statements of Operations
Condensed Consolidated Statements of Cash Flows
Hughes Network Systems, LLC
Condensed Consolidated Balance Sheets
Condensed Consolidated Statements of Operations
Condensed Consolidated Statements of Cash Flows
7
HUGHES COMMUNICATIONS, INC.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
June 30,
2007
December 31,
2006
ASSETS
Current assets:
Cash and cash equivalents 175,972$ 106,933$
Marketable securities 44,891 107,320
Receivables, net 181,946 180,955
Inventories 61,104 61,280
Prepaid expenses and other 45,234 39,947
Total current assets 509,147 496,435
Property, net 378,760 312,497
Capitalized software costs, net 44,780 41,159
Intangible assets, net 27,592 30,663
Other assets 107,999 50,890
Total assets 1,068,278$ 931,644$
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable 67,861$ 59,391$
Short-term borrowings and current portion of long-term debt 21,545 27,210
Accrued liabilities 143,326 124,586
Due to affiliates 9,437 13,119
Total current liabilities 242,169 224,306
Long-term debt 578,174 469,190
Other long-term liabilities 9,660 18,079
Total liabilities 830,003 711,575
Commitments and contingencies
Minority interests 4,521 4,680
Stockholders' Equity:
Preferred stock, $0.001 par value; 1,000,000 shares authorized and no
shares issued and outstanding at June 30, 2007 and December 31, 2006 - -
Common stock, $0.001 par value; 64,000,000 shares authorized;
19,135,572 shares and 19,000,622 shares issued and outstanding
as of June 30, 2007 and December 31, 2006, respectivel
y
19 19
Additional paid in capital 629,062 626,927
Accumulated deficit (397,836) (410,408)
Accumulated other comprehensive income (loss) 2,509 (1,149)
Total stockholders' equity 233,754 215,389
Total liabilities and stockholders' equity 1,068,278$ 931,644$
8
HUGHES COMMUNICATIONS, INC.
Condensed Consolidated Statements of Operations
(In thousands, except share and per share amounts)
(Unaudited)
2007 2006 2007 2006
Revenues:
Services 129,373$ 107,726$ 249,147$ 213,042$
Hardware sales 104,985 100,935 208,093 192,493
Total revenues 234,358 208,661 457,240 405,535
Operating costs and expenses:
Cost of services 86,940 75,071 167,174 147,353
Cost of hardware products sold 85,352 89,159 172,518 163,018
Selling, general and administrative 37,280 33,546 75,546 68,516
Research and development 4,218 6,309 8,342 14,246
Amortization of intangibles 1,535 1,198 3,071 2,265
Total operating costs and expenses 215,325 205,283 426,651 395,398
Operating income 19,033 3,378 30,589 10,137
Other (expense) income :
Interest expense (11,872) (10,388) (23,310) (21,489)
Interest income 2,888 2,598 5,966 3,783
Other income, net 39 756 140 756
Income (loss) before income taxes expense; minority
interests in net (earnings) losses of subsidiaries; equity in losses
of unconsolidated affiliates; and discontinued operations 10,088 (3,656) 13,385 (6,813)
Income tax expense (164) (500) (684) (51,821)
Minority interests in net (earnings) losses of subsidiaries (125) (122) 158 249
Equity in losses of unconsolidated affiliates (167) (118) (287) (1,753)
Income (loss) from continuing operations 9,632 (4,396) 12,572 (60,138)
Discontinued operations:
Loss from discontinued operations - - - (42)
Gain on sale of discontinued operations - - - 240
Net income (loss) 9,632 (4,396) 12,572 (59,940)
Cumulative dividends and accretion of convertible preferred stock
to liquidation value - - - (1,454)
Net income (loss) attributable to common stockholders 9,632$ (4,396)$ 12,572$ (61,394)$
Basic net earnings (loss) per common share:
Continuing operations 0.51$ (0.23)$ 0.67$ (4.25)$
Discontinued operations - - - 0.01
Basic net earnings (loss) per common share 0.51$ (0.23)$ 0.67$ (4.24)$
Diluted net earnings (loss) per common share:
Continuing operations 0.50$ (0.23)$ 0.65$ (4.25)$
Discontinued operations - - - 0.01
Diluted net earnings (loss) per common share 0.50$ (0.23)$ 0.65$ (4.24)$
Basic weighted average common shares outstanding 18,862,337 18,795,289 18,852,783 14,483,198
Diluted weighted average common shares outstanding 19,209,312 18,795,289 19,212,199 14,483,198
June 30, June 30,
Three Months Ended Six Months Ended
9
HUGHES COMMUNICATIONS, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
2007 2006
Cash flows from operating activities:
Net income (loss) 12,572$ (59,940)$
Adjustments to reconcile net income (loss) to cash flows from
operating activities:
Loss on discontinued operations - 42
Depreciation and amortization 22,767 17,564
Equity plan compensation expense 2,022 1,510
Minority interests (158) (193)
Equity in losses from unconsolidated affiliates 287 1,806
Gain on disposal of assets (285) (222)
Deferred income taxes (705) 48,347
Change in other operating assets and liabilities, net of acquisitions:
Receivables, net 1,988 26,412
Inventories 817 17,241
Prepaid expenses and other (5,401) 1,081
Accounts payable 9,148 (16,878)
Accrued liabilities and other (10,478) (21,711)
Net cash provided by continuing operations 32,574 15,059
Net cash used in discontinued operations - (9)
Net cash provided by operating activities 32,574 15,050
Cash flows from investing activities:
Change in restricted cash 406 (506)
Sale (purchases) of marketable investments, net 62,514 (44,091)
Expenditures for property (119,383) (37,950)
Expenditures for capitalized software (6,949) (8,768)
Proceeds from sale of property 716 155
Acquisitions/divestitures, net of cash received - 12,870
Other, net - (54)
Net cash used in investing activities (62,696) (78,344)
Cash flows from financing activities:
Net increase (decrease) in notes and loans payable 358 (1,261)
Debt borrowings from Apollo - 100,000
Debt repayments to Apollo - (100,000)
Proceeds from rights offering - 100,000
Distribution to SkyTerra - (8,911)
Payment of dividends on preferred stock - (1,394)
Proceeds from exercise of stock options and warrants 113 1,966
Long-term debt borrowings 115,662 453,944
Repayment of long-term debt (13,226) (341,603)
Debt issuance costs (2,044) (11,136)
Net cash provided by financing activities 100,863 191,605
Effect of exchange rate changes on cash and cash equivalents (1,702) 107
Net increase in cash and cash equivalents 69,039 128,418
Cash and cash equivalents at beginning of the period 106,933 21,964
Cash and cash equivalents at end of the period 175,972$ 150,382$
Supplemental cash flow information:
Cash paid for interest 26,005$ 16,215$
Cash paid for income taxes 2,173$ 3,213$
Supplemental disclosure of non-cash financing activities:
Net liability distributed to SkyTerra, net of cash -$ 48,113$
Six Months Ended
June 30,
10
HUGHES NETWORK SYSTEMS
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
June 30,
2007
December 31,
2006
ASSETS
Current assets:
Cash and cash equivalents 171,521$ 99,098$
Marketable securities 38,196 103,466
Receivables, net 181,668 180,694
Inventories 61,104 61,280
Prepaid expenses and other 44,049 39,175
Total current assets 496,538 483,713
Property, net 378,760 312,497
Capitalized software costs, net 44,780 41,159
Intangible assets, net 27,592 30,663
Other assets 93,714 44,358
Total assets 1,041,384$ 912,390$
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable 66,682$ 57,781$
Short-term borrowings and current portion of long-term debt 21,545 27,210
Accrued liabilities 142,013 123,576
Due to affiliates 9,933 13,592
Total current liabilities 240,173 222,159
Long-term debt 578,174 469,190
Other long-term liabilities 953 18,079
Total liabilities 819,300 709,428
Commitments and contingencies
Minority interests 4,476 4,659
Equity:
Class A membership interests 180,506 180,346
Class B membership interests - -
Retained earnings 34,588 19,102
Accumulated other comprehensive income (loss) 2,514 (1,145)
Total equity 217,608 198,303
Total liabilities and equity 1,041,384$ 912,390$
11
HUGHES NETWORK SYSTEMS
Condensed Consolidated Statements of Operations
(In thousands)
(Unaudited)
2007 2006 2007 2006
Revenues:
Services 129,124$ 107,568$ 248,747$ 212,802$
Hardware sales 104,985 100,935 208,093 192,493
Total revenues 234,109 208,503 456,840 405,295
Operating costs and expenses:
Cost of services 86,926 75,060 167,132 147,324
Cost of hardware products sold 85,352 89,159 172,518 163,018
Selling, general and administrative 35,835 33,089 72,534 65,771
Research and development 4,218 6,309 8,342 14,246
Amortization of intangibles 1,535 1,198 3,071 2,265
Total operating costs and expenses 213,866 204,815 423,597 392,624
Operating income 20,243 3,688 33,243 12,671
Other income (expense):
Interest expense (11,870) (10,346) (23,308) (19,740)
Interest income 2,744 2,341 5,666 3,342
Other income, net 39 475 91 480
Income before income tax benefit (expense), minority interests in net
(earnings) losses of subsidiaries and equity in earnings of
unconsolidated affiliates 11,156 (3,842) 15,692 (3,247)
Income tax benefit (expense) 131 (500) (389) (987)
Minority interests in net (earnings) losses of subsidiaries (109) (122) 183 (54)
Equity in earnings of unconsolidated affiliates -
36 - 54
Net income (loss) 11,178$ (4,428)$ 15,486$ (4,234)$
Three Months Ended
June 30,
Six Months Ended
June 30,
12
HUGHES NETWORK SYSTEMS
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
2007 2006
Cash flows from operating activities:
Net income (loss) 15,486$ (4,234)$
Adjustments to reconcile net income to cash flows
from operating activities:
Depreciation and amortization 22,767 17,564
Equity plan compensation expense 160 152
Minority interests (183) -
Gain on disposal of assets (285) -
Change in other operating assets and liabilities, excluding the
effect of the HCI Transaction:
Receivables, net 2,004 26,640
Inventories 817 17,241
Prepaid expenses and other (6,654) 1,590
Accounts payable 9,579 (16,115)
Accrued liabilities and other (10,755) (21,374)
Net cash provided by operating activities 32,936 21,464
Cash flows from investing activities:
Change in restricted cash 406 (506)
Sale (purchase) of marketable investments, net 65,649 (46,594)
Expenditures for property (119,383) (37,950)
Expenditures for capitalized software (6,949) (8,768)
Proceeds from sale of property 716 155
Other, net - 54
Net cash used in investing activities (59,561) (93,609)
Cash flows from financing activities:
Net increase (decrease) in notes and loans payable 358 (1,261)
Long-term debt borrowings 115,662 453,944
Repayment of long-term debt (13,226) (341,602)
Debt issuance costs (2,044) (11,136)
Net cash provided by financing activities 100,750 99,945
Effect of exchange rate changes on cash and cash equivalents (1,702) 104
Net increase in cash and cash equivalents 72,423 27,904
Cash and cash equivalents at beginning of the period 99,098 113,267
Cash and cash equivalents at end of the period 171,521$ 141,171$
Supplemental cash flow information:
Cash paid for interest 26,003$ 14,465$
Cash paid for income taxes 2,172$ 1,412$
Supplemental non-cash disclosure due to acquisition by
Hughes Communications, Inc.:
Increase in assets 51,471$
Increase in liabilities 40,118
Increase in net assets 11,353$
Six Months Ended
June 30,
