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Pegasus Communications Corporation Reports Second Quarter 2003 Results
Business Editors/High-Tech Writers
BALA CYNWYD, Pa.--(BUSINESS WIRE)--Aug. 12, 2003--Pegasus Communications Corporation (NASDAQ:PGTV) today reported financial results for the three and six month periods ended June 30, 2003. (Amounts and changes specified are for the three and six months ended June 30, 2003 compared to the same corresponding periods in the prior year, unless indicated otherwise.)
Results of Operations
Three Months Ended June 30, 2003
Consolidated net revenues decreased $9.8 million, or 4%, to $214.2 million. Consolidated loss from operations decreased $4.7 million, or 72%, to $1.8 million. The Company's net loss applicable to common shares increased $6.6 million, or 17%, to $45.4 million. Net cash provided by operating activities decreased $11.0 million, or 39%, to $17.3 million.
Direct broadcast satellite net revenues decreased $10.6 million, or 5%, to $205.8 million. EBITDA for the direct broadcast satellite business decreased $2.4 million, or 4%, to $52.2 million. EBITDA for the direct broadcast satellite business as a percentage of direct broadcast satellite net revenues remained at 25%. Free cash flow for the direct broadcast satellite business increased $4.3 million, or 11%, to $43.0 million.
Six Months Ended June 30, 2003
Consolidated net revenues decreased $18.5 million, or 4%, to $427.3 million. Consolidated loss from operations decreased $13.1 million, or 64%, to $7.5 million. The Company's net loss applicable to common shares increased $10.2 million, or 13%, to $88.8 million. Net cash provided by operating activities decreased $14.3 million, or 60%, to $9.4 million.
Direct broadcast satellite net revenues decreased $19.8 million, or 5%, to $411.4 million. EBITDA for the direct broadcast satellite business increased $1.5 million, or 1%, to $104.8 million. EBITDA for the direct broadcast satellite business as a percentage of direct broadcast satellite net revenues increased to 25% from 24%. Free cash flow for the direct broadcast satellite business increased $12.9 million, or 18%, to $83.9 million.
Conference Call
A conference call to discuss this news release and other matters of interest will be held at 9:00 AM ET on Wednesday, August 13, 2003. The earnings conference call can be accessed by dialing (. A webcast of the conference call can also be accessed over the Internet through Pegasus Communications' website at www.pgtv.com. The call will be hosted by Marshall W. (Mark) Pagon, Chairman and Chief Executive Officer; Howard E. Verlin, Executive Vice President; Rory, J. Lindgren, Executive Vice President of Operations; and Joseph W. Pooler, Senior Vice President of Finance. A telephone replay of the conference call will be available approximately two hours after the conference call concludes and will continue until 11:59 PM ET on August 21, 2003. The telephone replay can be accessed by calling ( and entering the pass code: 1901961.
About Pegasus
Pegasus Communications Corporation (www.pgtv.com) provides digital satellite television to rural households throughout the United States. We are the 10th largest pay television company in the United States. Pegasus also owns and/or operates television stations affiliated with CBS, FOX, UPN, and The WB networks.
Safe Harbor
Any statements which are not historical facts are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995, and will be considered forward-looking statements. Such forward- looking statements may be identified with words such as "we expect", "we predict", "we believe", "we project", "we anticipate", and similar expressions.
Pegasus' actual results may differ materially from those expressed or indicated by forward-looking statements. There can be no assurance that these future events, including pending transactions, will occur as anticipated or that the Company's results will be as estimated.
Factors which can affect our performance and future events are described in our filings with the Securities and Exchange Commission, and include the following: general economic and business conditions, nationally, internationally, and in the regions in which we operate; catastrophic events, including acts of terrorism; relationships with and events affecting third parties like DirecTV, Inc. and the National Rural Telecommunications Cooperative; litigation with DirecTV, Inc.; the potential sale of DirecTV, Inc.; demographic changes; existing government regulations and changes in, or the failure to comply with, government regulations; competition, including the provision of local channels by a competing direct satellite provider in markets where DirecTV does not offer local channels; the loss of any significant numbers of subscribers or viewers; changes in business strategy or development plans; the cost of pursuing new business initiatives; an expansion of land-based communications systems; technological developments and difficulties; our ability to obtain intellectual property licenses and to avoid committing intellectual property infringement; our ability to attract and retain qualified personnel; our significant indebtedness; and the availability and terms of capital to fund the expansion of our businesses.
Persons are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Non-GAAP Measures
It is important to note that EBITDA for the direct broadcast satellite business and free cash flow for the direct broadcast satellite business are supplemental non-GAAP measures.
EBITDA for the direct broadcast satellite business is defined as direct broadcast satellite revenue less direct broadcast satellite operating expenses (excluding depreciation and amortization and contract termination fee reversal). EBITDA for the direct broadcast satellite business is not, and should not be considered, an alternative to income from operations, net income, or any other measure for determining our operating performance, as determined under generally accepted accounting principles. Although EBITDA is a common measure used by other companies, our calculation of EBITDA for the direct broadcast satellite business may not be comparable with that of others.
Free cash flow for the direct broadcast satellite business is defined as EBITDA for the direct broadcast satellite business less direct broadcast satellite deferred subscriber acquisition costs and direct broadcast satellite capital expenditures. Free cash flow for the direct broadcast satellite business is not, and should not be considered, an alternative to cash provided by or used for operating activities, or any other measure for determining our liquidity, as determined under generally accepted accounting principles. Although free cash flow is a common measure used by other companies, our calculation of free cash flow for the direct broadcast satellite business may not be comparable with that of others.
Reconciliations of EBITDA for the direct broadcast satellite business and free cash flow for the direct broadcast satellite business to their comparable GAAP measures are included in the attached financial tables. Supplemental detail supporting these reconciliations, can be found in the investor relations section of our website (www.pgtv.com).
(Please see financial tables below)
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PEGASUS COMMUNICATIONS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except (a))
(unaudited)
Three Months Ended Six Months Ended
Jun 30 Jun 30
------------------- -------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Net revenues:
Direct broadcast satellite $205,823 $216,447 $411,369 $431,171
Broadcast television and other
operations 8,354 7,572 15,926 14,577
--------- --------- --------- ---------
Total net revenues 214,177 224,019 427,295 445,748
Operating expenses:
Direct broadcast satellite
Programming 92,483 96,016 185,739 192,334
Other subscriber related
expenses 40,550 49,086 85,225 100,827
--------- --------- --------- ---------
Direct operating expenses
(excluding depreciation
and amortization shown
below) 133,033 145,102 270,964 293,161
Promotions and incentives 3,595 2,027 6,473 3,770
Advertising and selling 6,572 7,820 12,298 16,121
General and administrative 5,913 6,865 12,286 14,782
Depreciation and
amortization 40,843 41,487 82,829 80,937
--------- --------- --------- ---------
Total direct broadcast
satellite 189,956 203,301 384,850 408,771
Broadcast television and other
operations, net (including
depreciation and amortization
of $562, $873, $1,316, and
$1,792, respectively) 7,755 7,803 15,586 15,285
Corporate and development
expenses (including
depreciation and amortization
of $4,005, $7,972, $8,070,
and $15,915, respectively) 7,837 12,948 15,921 26,435
Other operating expenses, net 10,465 6,456 18,475 15,921
--------- --------- --------- ---------
Loss from operations (1,836) (6,489) (7,537) (20,664)
Interest expense (35,614) (36,310) (72,165) (72,362)
Interest income 167 218 317 436
Loss on impairment of
marketable securities - (3,063) - (3,063)
Other nonoperating income, net 1,173 113 2,527 1,239
Equity in earnings (losses) of
affiliates 220 173 (2,902) 349
Net benefit (expense) for
income taxes (138) 17,251 (138) 35,602
Income (loss) from
discontinued operations (2,567) (1,761) 4,616 (3,145)
Preferred stock dividends (6,830) (8,954) (13,486) (16,943)
--------- --------- --------- ---------
Net loss applicable to
common shares $(45,425) $(38,822) $(88,768) $(78,551)
========= ========= ========= =========
Weighted average number of
common shares outstanding 5,666 6,031 5,686 6,000
Basic and diluted per
common share amounts (a) $(8.01) $(6.44) $(15.61) $(13.09)
Certain amounts for 2002 have been reclassified for comparative
purposes.
PEGASUS COMMUNICATIONS CORPORATION
EBITDA FOR THE DIRECT BROADCAST SATELLITE BUSINESS RECONCILIATION
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
Jun 30 Jun 30
------------------- -------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Direct broadcast satellite net
revenues $205,823 $216,447 $411,369 $431,171
Direct broadcast satellite
operating expenses (excluding
depreciation and amortization
and contract termination fee
reversal) (153,613) (161,814) (306,521) (327,834)
--------- --------- --------- ---------
EBITDA for the direct
broadcast satellite
business (1) 52,210 54,633 104,848 103,337
EBITDA for the direct broadcast
satellite business % to direct
broadcast satellite net
revenues 25% 25% 25% 24%
Direct broadcast satellite
depreciation and amortization (40,843) (41,487) (82,829) (80,937)
Contract termination fee
reversal (2) 4,500 - 4,500 -
Broadcast television and other
operations, net 599 (231) 340 (708)
Corporate and development
expenses (7,837) (12,948) (15,921) (26,435)
Other operating expenses, net (10,465) (6,456) (18,475) (15,921)
--------- --------- --------- ---------
Loss from operations (1,836) (6,489) (7,537) (20,664)
Interest expense (35,614) (36,310) (72,165) (72,362)
Interest income 167 218 317 436
Other nonoperating income
(loss), net 1,173 (2,950) 2,527 (1,824)
Equity in earnings (losses) of
affiliates 220 173 (2,902) 349
Net benefit (expense) for
income taxes (138) 17,251 (138) 35,602
Income (loss) from discontinued
operations (2,567) (1,761) 4,616 (3,145)
Preferred stock dividends (6,830) (8,954) (13,486) (16,943)
--------- --------- --------- ---------
Net loss applicable to common
shares $(45,425) $(38,822) $(88,768) $(78,551)
========= ========= ========= =========
(1) - EBITDA for the direct broadcast satellite business is defined as
direct broadcast satellite net revenues less direct broadcast
satellite operating expenses (excluding depreciation and
amortization and contract termination fee reversal). EBITDA for
the direct broadcast satellite business is not, and should not be
considered, an alternative to income from operations, net income,
or any other measure for determining our operating performance, as
determined under generally accepted accounting principles.
Although EBITDA is a common measure used by other companies, our
calculation of EBITDA for the direct broadcast satellite business
may not be comparable with that of others.
(2) - Represents the reversal of a contract termination fee previously
accrued in the third quarter 2002 (included in other subscriber
related expenses in our condensed consolidated statements of
operations).
PEGASUS COMMUNICATIONS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
Jun 30, Jun 30
------------------ ------------------
2003 2002 2003 2002
-------- --------- -------- ---------
Net cash provided by operating
activities $17,338 $28,366 $9,366 $23,675
Net cash provided by (used for)
investing activities 6,019 (9,392) 11,098 (16,839)
Net cash provided by (used for)
financing activities (4,414) 58,087 (8,771) (34,485)
-------- --------- -------- ---------
Net increase (decrease) in cash
and cash equivalents 18,943 77,061 11,693 (27,649)
Cash and cash equivalents,
beginning of period 52,564 39,963 59,814 144,673
-------- --------- -------- ---------
Cash and cash equivalents, end
of period $71,507 $117,024 $71,507 $117,024
======== ========= ======== =========
Certain amounts for 2002 have been reclassified for comparative
purposes.
PEGASUS COMMUNICATIONS CORPORATION
FREE CASH FLOW FOR THE DIRECT BROADCAST SATELLITE BUSINESS
(including reconciliation to net increase (decrease) to cash
and cash equivalents)
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
Jun 30 Jun 30
------------------ -------------------
2003 2002 2003 2002
-------- --------- --------- ---------
EBITDA for the direct broadcast
satellite business $52,210 $54,633 $104,848 $103,337
Deferred subscriber acquisition
costs (4,368) (7,719) (10,569) (17,326)
Direct broadcast satellite
equipment capitalized and other
capital expenditures (4,856) (8,204) (10,425) (15,078)
-------- --------- --------- ---------
Free cash flow for the direct
broadcast satellite
business (1) 42,986 38,710 83,854 70,933
Broadcast television and other
operations, net (excluding
depreciation and amortization) 1,161 642 1,656 1,084
Corporate and development
expenses (excluding
depreciation and amortization) (3,832) (4,976) (7,851) (10,520)
Cash interest expense, net (28,662) (29,226) (58,567) (58,455)
Other operating expenses, net (10,465) (6,456) (18,475) (15,921)
Direct broadcast satellite
equipment capitalized and other
capital expenditures 4,856 8,204 10,425 15,078
Other working capital
adjustments (2) 11,294 21,468 (1,676) 21,476
-------- --------- --------- ---------
Net cash provided by operating
activities 17,338 28,366 9,366 23,675
Net cash provided by (used for)
investing activities 6,019 (9,392) 11,098 (16,839)
Net cash provided by (used for)
financing activities (4,414) 58,087 (8,771) (34,485)
-------- --------- --------- ---------
Net increase (decrease) in cash
and cash equivalents 18,943 77,061 11,693 (27,649)
Cash and cash equivalents,
beginning of period 52,564 39,963 59,814 144,673
-------- --------- --------- ---------
Cash and cash equivalents, end
of period $71,507 $117,024 $71,507 $117,024
======== ========= ========= =========
(1) - Free cash flow for the direct broadcast satellite business is
defined as EBITDA for the direct broadcast satellite business less
direct broadcast satellite deferred subscriber acquisition costs
and direct broadcast satellite capital expenditures. Free cash
flow for the direct broadcast satellite business is not, and
should not be considered, an alternative to cash provided by or
used for operating activities, or any other measure for
determining our liquidity, as determined under generally accepted
accounting principles. Although free cash flow is a common measure
used by other companies, our calculation of free cash flow for the
direct broadcast satellite business may not be comparable with
that of others.
(2) - Additional information is included on our website
(www.pgtv.com).
PEGASUS COMMUNICATIONS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
Jun 30, Dec 31,
2003 2002
----------- -----------
Currents assets:
Cash and cash equivalents $71,507 $59,814
Accounts receivable, net
Trade 22,502 27,238
Other 6,736 9,521
Deferred subscriber acquisition costs, net 12,157 15,706
Prepaid expenses 9,656 8,204
Other current assets 6,878 7,730
----------- -----------
Total current assets 129,436 128,213
Property and equipment, net 83,552 85,062
Intangible assets, net 1,672,513 1,737,584
Other noncurrent assets 147,063 159,929
----------- -----------
Total $2,032,564 $2,110,788
=========== ===========
Current liabilities:
Current portion of long term debt $3,933 $5,752
Accounts payable 14,664 16,773
Accrued interest 34,228 35,526
Accrued programming fees 52,474 57,196
Accrued commissions and subsidies 40,082 40,191
Other accrued expenses 29,145 32,692
Other current liabilities 13,582 7,201
----------- -----------
Total current liabilities 188,108 195,331
Long term debt 1,290,661 1,283,330
Other noncurrent liabilities 45,351 46,169
----------- -----------
Total liabilities 1,524,120 1,524,830
----------- -----------
Commitments and contingent liabilities
Redeemable preferred stocks 216,794 209,211
Redeemable preferred stock of subsidiary 102,022 96,526
Minority interest 506 2,157
Common stockholders' equity:
Common stock 62 61
Other common stockholders' equity 189,060 278,003
----------- -----------
Total common stockholders' equity 189,122 278,064
----------- -----------
Total $2,032,564 $2,110,788
=========== ===========
Certain amounts for 2002 have been reclassified for comparative
purposes.
PEGASUS COMMUNICATIONS CORPORATION
SELECTED DIRECT BROADCAST SATELLITE SEGMENT DATA
(in thousands, except (a))
(unaudited)
Three Months Ended Six Months Ended
Jun 30, Jun 30,
2003 2002 2003 2002
-------- -------- -------- --------
Subscribers - beginning of period 1,276 1,377 1,308 1,519
Gross additions 32 50 71 115
Churn (75) (55) (146) (124)
-------- -------- -------- --------
Net subscriber loss (43) (5) (75) (9)
Subscriber reporting change - - - (138)
-------- -------- -------- --------
Subscribers - end of period 1,233 1,372 1,233 1,372
======== ======== ======== ========
Subscribers - average (1) 1,254 1,375 1,274 1,377
Average revenue per subscriber, per
month (ARPU) (a) (1) $54.69 $52.46 $53.82 $52.18
Expensed subscriber acquisition
costs per gross subscriber
addition (a) $322 $196 $266 $180
Total subscriber acquisition costs
per gross subscriber addition (a) $609 $498 $559 $459
(1) Average subscribers and ARPU for the six months ended June 30,
2002 are calculated on a pro forma basis, as if the change in
subscriber reporting methodology during the first quarter was made
on January 1, 2002.
CONTACT: Pegasus Communications Corporation
Andrew Smith,
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