Hughes Network Systems, LLC - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - FORM 8-K - Hughes Network Systems, LLC	form8_k.htm

FOR IMMEDIATE RELEASE

Hughes Communications Announces Second Quarter 2010 Results

Record Adjusted EBITDA of $52 Million

Consumer Business Continues Impressive Growth

Germantown, Md., August 4, 2010—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, 2010. Hughes’ consolidated operations are classified into five reportable segments: North America Broadband; International Broadband; Telecom Systems; HTS Satellite; and Corporate; and Other. The North America Broadband, International Broadband, Telecom Systems, and HTS Satellite segments represent all the operations of Hughes Network Systems, LLC (“HNS”), Hughes’ principal operating subsidiary.

Second Quarter 2010 Financial Highlights:

·	Record Adjusted EBITDA of $52 million, an increase of 29% over the second quarter of 2009.

·	Consumer business continues impressive performance:

–	Total revenue increased by 13% and services revenue by 18% over the second quarter of 2009.

–	Strong second quarter subscriber gross adds of 47,000 and net adds of 15,000.

–	Consumer ARPU increased to $73 from $70 in the second quarter of 2009.

–	Churn improved to 2.0% from 2.3% in the second quarter of 2009.

·	Consolidated total revenues of $252 million for a 2% increase over the second quarter of 2009, excluding revenues from the terminated Telematics contract. Total revenues of $256 million in the second quarter of 2009.

·	Consolidated services revenues of $193 million for a growth of 16% over the second quarter of 2009, excluding revenues from the terminated Telematics contract; 11% growth in total revenues.

·	Operating income of $18 million compared to an operating loss of $31 million in the second quarter of 2009, which included a $44 million one-time charge as a result of Chapter 11 filing by Sea Launch.

·	New orders of $201 million, with major orders from Best Buy, State of Texas, Conoco Phillips, GTECH, Halliburton, Row 44, and Burger King in our North America Broadband business; and Avanti, Camelot, Afsat, TIM, Martins, Telemar, BEL/NavyNet, and JSC Iskra in our International Broadband business.

·	Positive net cash from operating activities of $30 million, a growth of 54% over the second quarter of 2009.

Six Months Ended June 30, 2010 Financial Highlights;

·	Adjusted EBITDA of $95 million for a growth of 30% over the six months ended June 30, 2009.

·	Strong growth in Consumer business over the six months ended June 30, 2009:

-	Total revenue up 14%, service revenue up 20%.

-	Subscriber gross adds of 105,000 and net adds of 41,000

-	Total subscriber base of 545,500 as of June 30, 2010, for a growth of 15% over the subscriber base as of June 30, 2009.

·	Consolidated total revenues of $495 million for a 3% growth, excluding revenues from the terminated Telematics contract. Consolidated total revenues of $496 million, the same as in the six-month period ended June 30, 2009.

·	Consolidated services revenues of $381 million for a growth of 18% over the six months ended June 30, 2009, excluding revenues from the Telematics contract. Consolidated total services revenue growth of 14%.

·	New orders of $440 million resulting in a non-consumer backlog of $755 million as of June 30, 2010.

·	Strong liquidity with cash, cash equivalents and marketable securities of $222 million as of June 30, 2010.

Set forth below are tables highlighting certain of Hughes’ and HNS’ results for the three- and six-months ended June 30, 2010 and 2009.

Hughes Communications, Inc.
		Three Months						Six Months
		Ended June 30,						Ended June 30,
	(Dollars in thousands)	2010			2009			2010			2009

	Revenue
	North America Broadband	$	178,024		$	175,242		$	352,019		$	340,850
	International Broadband		47,853			50,520			91,309			95,404
	Telecom Systems		25,456			29,344			50,148			58,606
	HTS Satellite		-			-			-			-
	Corporate and Other		1,035			721			2,085			1,182
	Total	$	252,368		$	255,827		$	495,561		$	496,042

	Operating income (loss)
	North America Broadband	$	12,821		$	(36,770	)	$	22,437		$	(35,020	)
	International Broadband		2,549			5,105			1,393			6,336
	Telecom Systems		4,663			2,611			8,371			8,100
	HTS Satellite		(928	)		-			(1,786	)		-
	Corporate and Other		(1,147	)		(2,207	)		(1,893	)		(2,314	)
	Total	$	17,958		$	(31,261	)	$	28,522		$	(22,898	)

	Net income (loss) attributable to HCI stockholders	$	1,910		$	(47,742	)	$	(4,230	)	$	(52,438	)

	Adjusted EBITDA*	$	52,235		$	40,412		$	94,837		$	73,141

	New Orders	$	201,311		$	326,139		$	439,698		$	543,622

Hughes Network Systems, LLC
		Three Months						Six Months
		Ended June 30,						Ended June 30,
	(Dollars in thousands)	2010			2009			2010			2009

	Revenue
	North America Broadband	$	178,024		$	175,242		$	352,019		$	340,850
	International Broadband		47,853			50,520			91,309			95,404
	Telecom Systems		25,456			29,344			50,148			58,606
	HTS Satellite		-			-			-			-
	Total	$	251,333		$	255,106		$	493,476		$	494,860

	Operating income (loss)
	North America Broadband	$	12,821		$	(36,770	)	$	22,437		$	(35,020	)
	International Broadband		2,549			5,105			1,393			6,336
	Telecom Systems		4,663			2,611			8,371			8,100
	HTS Satellite		(928	)		-			(1,786	)		-
	Total	$	19,105		$	(29,054	)	$	30,415		$	(20,584	)

	Net income (loss) attributable to HNS	$	2,794		$	(45,710	)	$	(2,768	)	$	(50,564	)

	Adjusted EBITDA*	$	52,908		$	41,113		$	95,916		$	73,578

	New Orders	$	199,896		$	325,167		$	437,013		$	542,188

For the definition of Adjusted EBITDA, see “Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures” below.

Recent Highlights:

On May 27, 2010, HNS and Sea Launch entered into a Settlement Agreement to resolve the claim that HNS filed in the Sea Launch bankruptcy, whereby Sea Launch will irrevocably issue to HNS two credits, each in the amount of $22.2 million (the “Credits”), in satisfaction and discharge of HNS’ bankruptcy claim. The Credits may be used by HNS to defray the cost of up to two launches contracted by December 31, 2015, and scheduled to occur by December 31, 2017. In addition, subject to the terms and conditions of the Settlement Agreement, one or both Credits may be transferred to third parties. The bankruptcy court has approved the Settlement Agreement and it will become effective upon the effectiveness of the plan of reorganization, which is expected to occur later in 2010.

HNS earned an A+ rating from the Better Business Bureau (BBB) for its HughesNet® high-speed satellite Internet service. The A+ ranking is BBB’s highest, and is based on a company’s business practices and responsiveness to customer concerns, factoring in elements such as company longevity, size, and commitment to BBB standards.

·	HCIL Comtel, a subsidiary of HNS, was selected by Bharat Electronics Limited to provide a satellite network that will serve multiple communication needs for the Indian Navy. A contract was signed for four redundant HX NOCs for $4.7 million and is expected to be implemented early 2011.

HNS has been named the certified provider of secure managed broadband services for Chevron marketer and retailer stations nationwide, beginning July 2010. Marketers and retailers now have more options for broadband connectivity that is PCI-compliant and also provides the high performance needed to support new Web-based store applications.

HNS completed a successful demonstration of its advanced airborne video solution to a key government agency, confirming full D-1 video resolution at air-to-ground user data rates of over 2 Mbps. This new airborne video solution features speeds five times greater than what is currently available, delivering groundbreaking performance at an affordable cost.

Hughes Europe, a subsidiary of HNS, announced the sale of a sixth HX broadband satellite hub and an additional 2,000 HX broadband terminals to Bentley Walker, a leading international satellite Internet services provider, who is expanding its service footprint and extending its solutions to military personnel in Afghanistan and Iraq.

HNS was awarded an Indefinite Delivery Indefinite Quantity (IDIQ) contract by the State of Oregon to provide Hughes Broadband Internet and Access Continuity services via its SPACEWAY® 3 satellite system. The contract, available to state agencies, local governments, and school districts that are members of the Oregon Cooperative Purchasing Program, is for a term of three years and may be extended up to three additional years.

HNS announced the formation of HughesNet China Co., Ltd., a joint venture with China UnifiedNet, to provide managed network services in China. HughesNet China also entered into framework agreements with two leading Chinese telecom carriers to provide managed network services to their major enterprise customers, and rural education and emergency communications in the western provinces of China.

To summarize, Pradman Kaul, president and CEO said, “Once again, our consumer business led the way with strong gross adds combined with lower churn and increased ARPU, all of which resulted in strong services revenue growth in the second quarter of 2010. Services revenue from the enterprise segments also continued to show solid growth. Our strategy of focusing new consumer activations on SPACEWAY 3 continues; we had approximately 326,000 subscribers on SPACEWAY 3 as of June 30, 2010. Development work on our Jupiter™ satellite and the launch vehicle build are on track and we are making good progress in our assessment of strategic initiatives. We are very pleased with our second quarter accomplishments and are positioned well for the rest of 2010 and beyond.”

Commenting on Hughes’ financial performance, Grant Barber, executive vice president and CFO said, “The strategy of expanding margins through the satellite ownership model continues to play out very well, as evidenced by the strong growth in our operating income and Adjusted EBITDA in the second quarter of 2010. This gross margin expansion coupled with effective working capital management resulted in impressive growth in cash from operating activities. We ended the quarter with strong consolidated cash, cash equivalents and marketable securities of $222 million.”

Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures

The following table reconciles the differences between Hughes’ Net Income (Loss), as determined under United States of America Generally Accepted Accounting Principles (GAAP), and Adjusted EBITDA.

Hughes Communications, Inc.
		Three Months						Six Months
		Ended June 30,						Ended June 30,
	(Dollars in thousands)	2010			2009			2010			2009

	Net income (loss) attributable to HCI stockholders	$	1,910		$	(47,742	)	$	(4,230	)	$	(52,438	)
	Add:
	Equity incentive plan compensation		1,918			1,841			3,789			3,624
	Interest expense		15,520			15,554			31,630			29,390
	Income tax expense (benefit)		1,565			479			2,784			(176	)
	Depreciation and amortization		31,978			24,437			62,111			46,330
	Long-term incentive/retention cash plan		-			650			-			1,538
	Sea Launch impairment		-			44,400			-			44,400
	Data Synapse impairment		-			1,000			-			1,000
	Less:
	Interest income		(656	)		(207	)		(1,247	)		(527	)
	Adjusted EBITDA*	$	52,235		$	40,412		$	94,837		$	73,141

The following table reconciles the differences between HNS’ Net Income (Loss), as determined under GAAP, and Adjusted EBITDA.

Hughes Network Systems, LLC
		Three Months						Six Months
		Ended June 30,						Ended June 30,
	(Dollars in thousands)	2010			2009			2010			2009

	Net income (loss) attributable to HNS	$	2,794		$	(45,710	)	$	(2,768	)	$	(50,564	)
	Add:
	Equity incentive plan compensation		1,795			1,712			3,627			3,349
	Interest expense		15,515			15,550			31,620			29,379
	Income tax expense (benefit)		1,563			462			2,780			(206	)
	Depreciation and amortization		31,815			24,219			61,784			46,079
	Long-term incentive/retention cash plan		-			650			-			1,538
	Sea Launch impairment		-			44,400			-			44,400
	Less:
	Interest income		(574	)		(170	)		(1,127	)		(397	)
	Adjusted EBITDA*	$	52,908		$	41,113		$	95,916		$	73,578

The condensed consolidated financial statements of Hughes and HNS for the periods ended June 30, 2010 and 2009 are attached to this press release.

Note on Use of Non-GAAP Financial Measures

Hughes provides non-GAAP financial data in addition to providing financial results in accordance with GAAP. This press release includes Adjusted EBITDA as a supplemental non-GAAP financial measure. Adjusted EBITDA is defined as earnings (loss) before interest, income taxes, depreciation, amortization, equity incentive plan compensation, long-term incentive/retention cash plan, and other adjustments permitted by the debt instruments of HNS. We believe this non-GAAP financial measure provides useful information to both management and investors by excluding specific expenses that we believe are not indicative of our core operating results. Internally, we use this non-GAAP measure in our review of the performance of management and in the performance of our business and operations. Management also uses Adjusted EBITDA of HNS for purposes of determining the payments to be made in connection with the long-term cash incentive retention program. Externally, we believe that investors may find this non-GAAP financial information useful in their assessment of our operating performance. In addition, we believe that this non-GAAP financial measure provides information that is useful to investors in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportionately positive or negative impact on results in any particular period. Adjusted EBITDA of HNS is also used in calculating covenant compliance under HNS’ credit agreements and the indenture governing HNS’ 9½% Senior Notes due 2014, issued in 2006 and 2009.

Adjusted EBITDA is not a recognized term under GAAP. This non-GAAP measure does not represent net income or cash flows from operations, as these terms are defined under GAAP and should not be considered as an alternative to net income as an indicator of operating performance or to cash flows as a measure of liquidity. Additionally, this non-GAAP measure is not intended to be a measure of cash flow available to management for discretionary use, as such measure does not consider certain cash requirements, such as capital expenditures (including expenditures on VSAT operating lease hardware and capitalized software development costs), tax payments, debt service requirements (including VSAT operating lease hardware), and payments under the long-term cash incentive retention program. Adjusted EBITDA, as presented herein, is not necessarily comparable to similarly titled measures reported by other companies. Any analysis of

non-GAAP financial measures should be used only in conjunction with results presented in accordance with GAAP.

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 global standards approved by the TIA, ETSI, and ITU standards organizations, including IPoS/DVB-S2, RSM-A, and GMR-1. To date, Hughes has shipped more than 2.2 million systems to customers in over 100 countries.

Headquartered outside Washington, DC, in Germantown, Maryland, USA, Hughes maintains sales and support offices worldwide. For more information, please visit www.hughes.com.

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. 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, 2009, filed with the Securities and Exchange Commission on March 3, 2010, and in the other documents Hughes files with the Securities and Exchange Commission from time to time.

###

Contact Information	Attachments

Investor Relations Contact: Deepak V. Dutt,	Hughes Communications, Inc.
Vice President, Treasurer and Investor Relations Officer	Condensed Consolidated Balance Sheets
Email: deepak.dutt@hughes.com	Condensed Consolidated Statements of Operations
Phone: 301-428-7010	Condensed Consolidated Statements of Cash Flows

Media Contact: Judy Blake,	Hughes Network Systems, LLC
Director, Marketing Communications	Condensed Consolidated Balance Sheets
Email: judy.blake@hughes.com	Condensed Consolidated Statements of Operations
Phone: 301-601-7330	Condensed Consolidated Statements of Cash Flows

HUGHES COMMUNICATIONS, INC.

Condensed Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

(Unaudited)

	June 30,			December 31,
	2010			2009
ASSETS
Current assets:
Cash and cash equivalents	$	162,027		$	261,038
Marketable securities		60,408			47,188
Receivables, net		160,339			163,816
Inventories		58,349			60,244
Prepaid expenses and other		24,677			22,476
Total current assets		465,800			554,762
Property, net		666,174			602,403
Capitalized software costs, net		47,896			49,776
Intangible assets, net		12,963			14,524
Goodwill		5,093			5,093
Other assets		72,447			75,836
Total assets	$	1,270,373		$	1,302,394
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	101,607		$	119,461
Short-term debt		6,778			6,750
Accrued liabilities and other		123,452			131,774
Total current liabilities		231,837			257,985
Long-term debt		713,019			714,957
Other long-term liabilities		19,079			16,356
Total liabilities		963,935			989,298
Commitments and contingencies
Equity:
Hughes Communications, Inc. ("HCI") stockholders' equity:
Preferred stock, $0.001 par value; 1,000,000 shares authorized and no
shares issued and outstanding as of June 30, 2010 and December 31, 2009		-			-
Common stock, $0.001 par value; 64,000,000 shares authorized;
21,638,836 shares and 21,633,539 shares issued and outstanding
as of June 30, 2010 and December 31, 2009, respectively		22			22
Additional paid in capital		734,552			730,809
Accumulated deficit		(414,773	)		(410,543	)
Accumulated other comprehensive loss		(22,036	)		(16,247	)
Total HCI stockholders' equity		297,765			304,041
Noncontrolling interests		8,673			9,055
Total equity		306,438			313,096
Total liabilities and equity	$	1,270,373		$	1,302,394

HUGHES COMMUNICATIONS, INC.

Condensed Consolidated Statements of Operations

(Dollars in thousands, except per share amounts)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2010			2009			2010			2009
Revenues:
Services revenues	$	193,190		$	173,383		$	381,130		$	335,748
Hardware sales		59,178			82,444			114,431			160,294
Total revenues		252,368			255,827			495,561			496,042
Operating costs and expenses:
Cost of services		123,396			111,059			239,109			217,729
Cost of hardware products sold		55,582			77,283			116,468			151,488
Selling, general and administrative		49,306			46,144			99,631			90,385
Loss on impairments		-			45,400			-			45,400
Research and development		5,355			5,698			10,270			11,049
Amortization of intangible assets		771			1,504			1,561			2,889
Total operating costs and expenses		234,410			287,088			467,039			518,940
Operating income (loss)		17,958			(31,261	)		28,522			(22,898	)
Other income (expense):
Interest expense		(15,520	)		(15,554	)		(31,630	)		(29,390	)
Interest income		656			207			1,247			527
Other loss, net		-			(345	)		-			(345	)
Income (loss) before income tax (expense) benefit and equity in earnings of unconsolidated affiliates		3,094			(46,953	)		(1,861	)		(52,106	)
Income tax (expense) benefit		(1,565	)		(479	)		(2,784	)		176
Equity in earnings of unconsolidated affiliates		-			-			-			170
Net income (loss)		1,529			(47,432	)		(4,645	)		(51,760	)
Net (income) loss attributable to the noncontrolling interests		381			(310	)		415			(678	)
Net income (loss) attributable to HCI stockholders	$	1,910		$	(47,742	)	$	(4,230	)	$	(52,438	)
Income (loss) per share:
Basic	$	0.09		$	(2.23	)	$	(0.20	)	$	(2.45	)
Diluted	$	0.08		$	(2.23	)	$	(0.20	)	$	(2.45	)
Shares used in computation of per share data:
Basic		21,499,944			21,365,794			21,490,479			21,362,250
Diluted		22,748,725			21,365,794			21,490,479			21,362,250

HUGHES COMMUNICATIONS, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Six Months Ended
	June 30,
	2010			2009
Cash flows from operating activities:
Net loss	$	(4,645	)	$	(51,760	)
Adjustments to reconcile net loss to net cash flows from operating activities:
Depreciation and amortization		62,111			46,330
Amortization of debt issuance costs		1,323			891
Share-based compensation expense		3,789			3,624
Equity in earnings from unconsolidated affiliates		-			(170	)
Loss on impairments		-			45,400
Other		46			365
Change in other operating assets and liabilities, net of acquisition:
Receivables, net		1,551			7,257
Inventories		1,046			(169	)
Prepaid expenses and other		356			4,887
Accounts payable		(18,805	)		3,635
Accrued liabilities and other		(3,941	)		(23,351	)
Net cash provided by operating activities		42,831			36,939
Cash flows from investing activities:
Change in restricted cash		144			112
Purchases of marketable securities		(66,031	)		-
Proceeds from sales of marketable securities		52,781			-
Expenditures for property		(121,389	)		(53,301	)
Expenditures for capitalized software		(6,170	)		(7,762	)
Proceeds from sale of property		264			93
Cash acquired, consolidation of Hughes Systique Corporation		-			828
Other, net		-			(75	)
Net cash used in investing activities		(140,401	)		(60,105	)
Cash flows from financing activities:
Short-term revolver borrowings		3,263			-
Repayments of revolver borrowings		(3,745	)		-
Net decrease in notes and loans payable		-			(78	)
Long-term debt borrowings		2,586			141,107
Repayment of long-term debt		(3,928	)		(5,505	)
Debt issuance costs		(1,734	)		(4,500	)
Net cash provided by (used in) financing activities		(3,558	)		131,024
Effect of exchange rate changes on cash and cash equivalents		2,117			(1,507	)
Net increase (decrease) in cash and cash equivalents		(99,011	)		106,351
Cash and cash equivalents at beginning of the period		261,038			203,816
Cash and cash equivalents at end of the period	$	162,027		$	310,167

Supplemental cash flow information:
Cash paid for interest	$	33,562		$	26,596
Cash paid for income taxes	$	4,594		$	2,467
Supplemental non-cash disclosures related to:
Capitalized software and property acquired, not paid	$	23,113
Investment in Hughes Telematics, Inc.				$	13,000
Consolidation of Hughes Systique Corporation				$	5,328

HUGHES NETWORK SYSTEMS, LLC

Condensed Consolidated Balance Sheets

(In thousands, except per share amounts)

(Unaudited)

	June 30,			December 31,
	2010			2009
ASSETS
Current assets:
Cash and cash equivalents	$	103,181		$	183,733
Marketable securities		25,020			31,126
Receivables, net		158,852			162,806
Inventories		58,349			60,244
Prepaid expenses and other		22,876			20,976
Total current assets		368,278			458,885
Property, net		665,796			601,964
Capitalized software costs, net		47,896			49,776
Intangible assets, net		12,103			13,488
Goodwill		2,661			2,661
Other assets		65,849			68,524
Total assets	$	1,162,583		$	1,195,298
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	100,068		$	117,513
Short-term debt		6,761			6,750
Accrued liabilities and other		125,328			133,926
Total current liabilities		232,157			258,189
Long-term debt		712,984			714,957
Other long-term liabilities		18,965			16,191
Total liabilities		964,106			989,337
Commitments and contingencies
Equity:
Hughes Network Systems, LLC ("HNS") equity:
Class A membership interests		178,381			177,933
Class B membership interests		-			-
Retained earnings		33,326			36,094
Accumulated other comprehensive loss		(19,079	)		(13,987	)
Total HNS' equity		192,628			200,040
Noncontrolling interest		5,849			5,921
Total equity		198,477			205,961
Total liabilities and equity	$	1,162,583		$	1,195,298

HUGHES NETWORK SYSTEMS, LLC

Condensed Consolidated Statements of Operations

(In thousands)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2010			2009			2010			2009
Revenues:
Services revenues	$	192,155		$	172,662		$	379,045		$	334,566
Hardware sales		59,178			82,444			114,431			160,294
Total revenues		251,333			255,106			493,476			494,860
Operating costs and expenses:
Cost of services		123,206			111,092			238,856			217,638
Cost of hardware products sold		55,582			77,283			116,468			151,488
Selling, general and administrative		47,402			44,301			96,082			88,098
Loss on impairment		-			44,400			-			44,400
Research and development		5,355			5,698			10,270			11,049
Amortization of intangible assets		683			1,386			1,385			2,771
Total operating costs and expenses		232,228			284,160			463,061			515,444
Operating income (loss)		19,105			(29,054	)		30,415			(20,584	)
Other income (expense):
Interest expense		(15,515	)		(15,550	)		(31,620	)		(29,379	)
Interest income		574			170			1,127			397
Other loss, net		-			(364	)		-			(364	)
Income (loss) before income tax (expense) benefit		4,164			(44,798	)		(78	)		(49,930	)
Income tax (expense) benefit		(1,563	)		(462	)		(2,780	)		206
Net income (loss)		2,601			(45,260	)		(2,858	)		(49,724	)
Net (income) loss attributable to the noncontrolling interest		193			(450	)		90			(840	)
Net income (loss) attributable to HNS	$	2,794		$	(45,710	)	$	(2,768	)	$	(50,564	)

HUGHES NETWORK SYSTEMS, LLC

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Six Months Ended
	June 30,
	2010			2009
Cash flows from operating activities:
Net loss	$	(2,858	)	$	(49,724	)
Adjustments to reconcile net loss to net cash flows from operating activities:
Depreciation and amortization		61,784			46,079
Amortization of debt issuance costs		1,323			891
Share-based compensation expense		448			439
Loss on impairment		-			44,400
Other		83			363
Change in other operating assets and liabilities, net of acquisition:
Receivables, net		2,028			18,720
Inventories		1,046			(169	)
Prepaid expenses and other		733			4,591
Accounts payable		(18,396	)		5,592
Accrued liabilities and other		(4,120	)		(15,419	)
Net cash provided by operating activities		42,071			55,763
Cash flows from investing activities:
Change in restricted cash		94			51
Purchases of marketable securities		(32,615	)		-
Proceeds from sales of marketable securities		38,615			-
Expenditures for property		(121,302	)		(53,296	)
Expenditures for capitalized software		(6,170	)		(7,762	)
Proceeds from sale of property		264			93
Net cash used in investing activities		(121,114	)		(60,914	)
Cash flows from financing activities:
Short-term revolver borrowings		3,263			-
Repayments of revolver borrowings		(3,745	)		-
Net decrease in notes and loans payable		-			(78	)
Long-term debt borrowings		2,533			141,107
Repayments of long-term debt		(3,927	)		(5,503	)
Debt issuance costs		(1,734	)		(4,500	)
Net cash provided by (used in) financing activities		(3,610	)		131,026
Effect of exchange rate changes on cash and cash equivalents		2,101			(1,741	)
Net increase (decrease) in cash and cash equivalents		(80,552	)		124,134
Cash and cash equivalents at beginning of the period		183,733			100,262
Cash and cash equivalents at end of the period	$	103,181		$	224,396
Supplemental cash flow information:
Cash paid for interest	$	33,551		$	26,588
Cash paid for income taxes	$	4,594		$	2,427
Supplemental non-cash disclosures related to:
Capitalized software and property acquired, not paid	$	23,113

Attached files

Hughes Network Systems, LLC Reports

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