SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q/A
(MARK ONE)
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from_____________ to ___________
Commission File No. 0-22531
PanAmSat Corporation*
(Exact Name of Registrant as Specified in its Charter)
Delaware 95-4607698
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
One Pickwick Plaza, Greenwich, CT. 06830
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: 203-622-6664
-----------------------------------------------------------------
(Former Name, Former Address and Former
Fiscal Year if Changed Since Last Report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
YES X** NO
As of September 30, 1997, an aggregate of 149,122,807 shares of the Company's
Common Stock were outstanding.
* PanAmSat Corporation ("PanAmSat" or the "Company") is the parent corporation
of PanAmSat International Systems, Inc. ("Old PanAmSat")(Commission File No.
0-26712; IRS Employer Identification No. 06-1407851), which was known as
"PanAmSat Corporation" until May 16, 1997, when it became a wholly owned
subsidiary of PanAmSat as a consequence of the combination of Old PanAmSat
and the commercial satellite business (the "Galaxy Business") of Hughes
Communications, Inc. ("HCI"), as more fully described herein. The Company
has applied the purchase method of accounting to the transaction with the
Galaxy Business as the acquiror.
** PanAmSat became subject to the reporting requirements of the Securities
Exchange Act of 1934 on May 6, 1997, upon the effectiveness of its
Registration Statement on Form 8-A, and has filed all reports required to be
filed since that date.
<PAGE>
EXPLANATORY NOTE
THIS 10-Q/A IS BEING FILED BY THE COMPANY TO AMEND THE FINANCIAL STATEMENTS
TO REFLECT DIVIDENDS ON PREFERRED STOCK OF ITS WHOLLY-OWNED SUBSIDIARY AS
MINORITY INTEREST. THE 10-Q REMAINS UNCHANGED IN ALL OTHER MATERIAL RESPECTS.
PanAmSat Corporation
For the Quarter Ended September 30, 1997
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
Consolidated Balance Sheets, September 30, 1997 (unaudited) and December 31,
1996.
Consolidated Statements of Operations for the Nine Months Ended September 30,
1997 and 1996(unaudited).
Consolidated Statements of Operations for the Three Months Ended September 30,
1997 and 1996 (unaudited).
Consolidated Statements of Cash Flows for the Nine Months Ended September 30,
1997 and 1996 (unaudited).
Notes to Consolidated Financial Statements.
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations.
PART II - OTHER INFORMATION
ITEM 6 - Exhibits and Reports on Form 8-K
Signature
Cautionary Statement For Purposes Of The "Safe Harbor"
Provisions Of The Private Securities Litigation Reform Act of 1995
This Quarterly Report contains historical information and forward-looking
statements. The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for certain forward-looking statements. When used in this Form
10-Q and the documents incorporated by reference herein, the words "estimate,"
"project," "anticipate," "expect," "believe" and other expressions used to
indicate future events are intended to identify forward-looking statements. Such
statements are subject to risks and uncertainties that could cause the Company's
actual results in future periods to be materially different from any future
performance suggested herein. Further, the Company operates in an industry
sector where securities values may be volatile and may be influenced by economic
and other factors beyond the Company's control. In the context of the
forward-looking information provided in this Quarterly Report and in other
reports, please refer to the discussions of risk factors detailed in, as well as
the other information contained in, the Company's other filings with the
Securities and Exchange Commission.
<PAGE>
PanAmSat Corporation
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 311,898 $ 29
Operating lease, sale and contract
receivables, net 54,354 21,742
Net investment in sales type leases 25,621 20,634
Prepaid expenses and other current assets 15,384 23,313
Deferred income taxes 36,799 46,989
----------- ------------
TOTAL CURRENT ASSETS 444,056 112,707
SATELLITES AND OTHER PROPERTY AND
EQUIPMENT, AT COST 1,835,646 744,610
Less: Accumulated Depreciation and
Amortization (561,453) (340,717)
----------- ------------
1,274,193 403,893
MARKETABLE SECURITIES 242,545 0
SATELLITE SYSTEMS UNDER DEVELOPMENT 1,187,175 316,332
NET INVESTMENT IN SALES TYPE LEASES 332,070 320,610
INTANGIBLE ASSETS, NET OF AMORTIZATION 2,496,977 72,896
DEFERRED INCOME TAXES 170,913 0
DEFERRED COSTS AND OTHER ASSETS 69,971 49,078
----------- ------------
TOTAL ASSETS $ 6,217,900 $ 1,275,516
----------- ------------
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements
<PAGE>
PanAmSat Corporation
CONSOLIDATED BALANCE SHEETS - (continued)
(in thousands, except share data)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
----------- ------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 4,487 $ 0
Accounts payable and accrued liabilities 62,457 24,459
Accrued in-orbit performance insurance 16,885 26,481
Deferred gains on sales and leasebacks 42,871 42,871
Deferred revenue 13,938 5,424
----------- ------------
TOTAL CURRENT LIABILITIES 140,638 99,235
DUE TO AFFILIATES (PRINCIPALLY MERGER-RELATED
INDEBTEDNESS) 1,798,747 0
LONG-TERM DEBT 1,120,881` 0
ACCRUED OPERATING LEASEBACK AND
CONTRACT EXPENSES 78,692 107,841
DEFERRED INCOME TAXES 236,829 0
DEFERRED REVENUE 102,827 31,596
DEFERRED GAINS ON SALES AND LEASEBACKS 202,599 234,751
----------- ------------
TOTAL LIABILITIES $ 3,681,213 $ 473,423
----------- ------------
COMMITMENTS AND CONTINGENCIES
PARENT COMPANY'S NET INVESTMENT 0 802,093
STOCKHOLDERS' EQUITY:
Common Stock, $0.01 par value 400,000,000
shares authorized, 149,122,807 shares issued
and outstanding 1,491 0
Additional paid-in-capital 2,500,854 0
Retained earnings 34,342 0
----------- ------------
Total Stockholders' Equity 2,536,687 0
----------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,217,900 $ 1,275,516
----------- ------------
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements
<PAGE>
PanAmSat Corporation
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Nine Months Ended September 30, 1997 and 1996
(in thousands)
<TABLE>
<CAPTION>
September 30, September 30
1997 1996
----------- ------------
<S> <C> <C>
REVENUES:
Outright sales and sales type leases $ 61,559 $ 137,333
Operating leases, satellite services and other 370,501 232,080
----------- ------------
432,060 369,413
OPERATING EXPENSES:
Cost of outright sales and sales type leases 20,476 44,634
Leaseback expense, net of deferred gain 46,395 44,414
Depreciation and amortization 94,423 42,924
Direct operating costs 27,263 26,762
Selling, general and administrative expenses 43,127 20,798
----------- ------------
231,684 179,532
----------- ------------
INCOME FROM OPERATIONS 200,376 189,881
INTEREST EXPENSE, NET (15,599) (3,827)
OTHER INCOME 385 2,528
----------- ------------
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 185,162 188,582
INCOME TAXES 83,172 70,718
MINORITY INTEREST 17,676 0
----------- ------------
NET INCOME $ 84,314 $ 117,864
----------- ------------
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements
<PAGE>
PanAmSat Corporation
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three Months Ended September 30, 1997 and 1996
(in thousands)
<TABLE>
<CAPTION>
September 30, September 30,
1997 1996
----------- ------------
<S> <C> <C>
REVENUES:
Outright sales and sales type leases $ 9,375 $ 53,123
Operating leases, satellite services and other 160,940 63,744
----------- ------------
170,315 116,867
OPERATING EXPENSES:
Cost of outright sales and sales type leases - 18,114
Leaseback expense, net of deferred gain 15,512 10,771
Depreciation and amortization 48,850 13,070
Direct operating costs 10,916 4,856
Selling, general and administrative expenses 24,271 6,719
----------- ------------
99,549 53,530
----------- ------------
INCOME FROM OPERATIONS 70,766 63,337
INTEREST INCOME, NET 1,088 718
OTHER INCOME 0 382
----------- ------------
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 71,854 64,437
INCOME TAXES 35,435 24,164
MINORITY INTEREST 11,891 0
----------- ------------
NET INCOME $ 24,528 $ 40,273
----------- ------------
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements
<PAGE>
PanAmSat Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Nine Months Ended September 30, 1997 and 1996
(in thousands)
<TABLE>
<CAPTION>
September 30, September 30,
1997 1996
----------- ------------
<S> <C> <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net income $ 84,314 $ 117,864
Adjustments to reconcile net income to
net cash provided by operating activities:
Cost of outright sales - 9,652
Gross profit on sales - type leases (33,572) (46,463)
Depreciation and amortization 94,423 42,924
Deferred income taxes (21,855) (34,745)
Amortization of gains on sales and leasebacks (32,152) (30,837)
Provision for uncollectible receivables (4,534) (2,382)
Accretion of interest on senior subordinated discount notes 16,997 -
Amortization of step-up in fair value of debt (11,364) -
Interest expense capitalized (57,070) -
Minority Interest 17,676 -
Changes in assets and liabilities, net of acquired assets and
liabilities:
Collections on investments in sales-type leases 21,659 26,527
Increase in operating lease and other
receivables (21,410) (21,217)
Decrease in prepaid expenses and other current assets 25,174 10,729
Decrease in accounts payable and accrued liabilities (44,247) (2,263)
Increase (decrease) in accrued in-orbit performance
insurance (9,596) 215
Increase (decrease) in accrued operating lease expense (29,149) 15,658
Decrease in deferred gains and revenues (3,097) (4,665)
----------- ------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (7,803) 80,997
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Old PanAmSat, net of cash acquired (1,018,669) -
Capital Expenditures (423,393) (224,415)
Proceeds from sale and leaseback of satellite transponders - 252,000
Proceeds from sale of marketable securities 50,628 -
Increase in other assets (9,921) -
----------- ------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (1,401,355) 27,585
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
New borrowings 1,725,000 -
Net distributions to Parent Company - (108,557)
Repayments of long-term debt (3,973) -
----------- ------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 1,721,027 (108,557)
----------- ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 311,869 25
CASH AND EQUIVALENTS, beginning of period 29 35
----------- ------------
CASH AND EQUIVALENTS, end of period $ 311,898 $ 60
----------- ------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash received for interest $ 10,455 $ 1,825
----------- ------------
Cash paid for interest $ 61,451 $ 12,180
----------- ------------
Cash paid for taxes $ 103,918 $ 70,718
----------- ------------
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements
<PAGE>
PanAmSat Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) General.
These unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Rule 10-01 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments which
are of a normal recurring nature necessary to present fairly the
financial position, results of operations and cash flows as of and
for the three and nine month periods ended September 30, 1997 and
1996 have been made. Operating results for the nine months ended
September 30, 1997 and 1996 are not necessarily indicative of the
operating results for the full year. For further information,
refer to the financial statements and footnotes thereto included
in PanAmSat's Registration Statement on Form S-4 filed with the
Securities and Exchange Commission on April 17, 1997.
(2) Business Combination.
Effective May 16, 1997, the combination of Old PanAmSat and the
Galaxy Business was completed (the "Combination"). Pursuant to the
Combination, the aggregate consideration paid to Old PanAmSat
shareholders consisted of approximately $1.5 billion in cash and
approximately 42.5 million shares of PanAmSat Common Stock.
Concurrent with the Combination and as an integral part thereof,
the Company sold its direct-to-home ("DTH") television rights in
certain foreign markets to an affiliate for $225 million (the "DTH
Options").
The Company has applied the purchase method of accounting to the
transaction with the Galaxy Business as the acquiror. The
acquisition value of $3.0 billion (including $225 million related
to the sale of the DTH Options) has been allocated to the assets
acquired and liabilities assumed based on preliminary estimates of
their respective fair values. Assets acquired totaled $1.9 billion
and liabilities assumed were $1.4 billion. A total of $2.5
billion, representing the excess of acquisition value over the
fair value of Old PanAmSat's net tangible assets, has been
allocated to intangible assets and is being amortized over 40
years.
The Company's consolidated results of operations have incorporated
Old PanAmSat's activity commencing upon the effective date of the
Combination. The unaudited pro forma information below presents
combined results of operations as if the Combination had occurred
at the beginning of the respective periods presented (excluding
the impact of the $225 million gain on the sale of the DTH Options
as well as certain professional and advisory fees incurred in
connection with the Combination totaling $33.1 million, both of
which are non-recurring items that are not indicative of the
<PAGE>
PanAmSat Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Company's ordinary course of business). The unaudited pro forma
information shown below is not necessarily indicative of the
results of operations of the combined company had the Combination
occurred at the beginning of the respective periods presented, nor
is it necessarily indicative of future results.
(in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
1997 1996 1997 1996
---- ---- ---- ----
Revenues $ 170,315 $ 183,794 $ 558,101 $ 547,047
Net income 25,866 17,781 68,866 44,390
Earnings per share 0.17 0.12 0.46 0.30
(3) New Accounting Pronouncement.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 128,
"Earnings per Share", which will be adopted by the Company in
fiscal 1998 as required by the statement. SFAS No. 128 simplifies
the standards for computing earnings per share required by APB
Opinion No. 15 "Earnings per Share." As the Company does not have
any common stock equivalents as of September 30, 1997, the Company
does not believe the adoption of SFAS No. 128 will have an impact
in the computation of earnings per share to be presented within
the Company's financial statements.
(4) Conversion of Old PanAmSat's 12 3/4% Preferred Stock.
On August 14, 1997, a triggering event occurred under the
Certificate of Designation for Old PanAmSat's 12 3/4% Preferred
Stock as a result of Old PanAmSat's attainment of certain
financial ratios for the quarter ended June 30, 1997. The
Certificate of Designation required that upon the occurrence of a
triggering event, Old PanAmSat would promptly exchange its 12 3/4%
Preferred Stock for 12 3/4% Senior Subordinated Notes. On
September 30, 1997, Old PanAmSat exchanged its 12 3/4% Preferred
Stock into 12 3/4% Senior Subordinated Notes. In connection with
the exchange, each share of 12 3/4% Preferred Stock was exchanged
for $1,000 of principal amount of 12 3/4% Senior Subordinated
Notes. Fractional shares were paid in cash. Dividends on shares of
12 3/4% Preferred Stock ceased to accrue on the exchange date, and
interest on the 12 3/4% Senior Subordinated Notes began to accrue
at that time.
(5) PAS-6 Placed in Service.
On August 8, 1997, the Company successfully launched its PAS-6
Atlantic Ocean Region Satellite, the first communications
satellite ever dedicated for direct-to-home ("DTH") television
services in Latin America. The entire PAS-6 payload, 36 Ku-band
transponders, is fully sold to Sky Latin America, one of the Latin
America JVs, which will use the satellite to beam hundreds of
television channels to its DTH service subscribers in Latin
America. PAS-6 reached its final orbital location at 43 degrees
West Longitude and commenced service on September 19, 1997 after
successful completion of its in-orbit testing. See Note 6 below.
(6) Subsequent Events.
On August 27, 1997, the Company successfully launched its PAS-5
Atlantic Ocean Region Satellite. Service of the PAS-5 Satellite
commenced on October 12, 1997.
<PAGE>
PanAmSat Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
An anomaly has been detected in PAS-6's solar arrays. The
satellite, which contains 36 Ku-band transponders, has experienced
several circuit failures in its solar arrays and may experience
additional failures in the future. The circuit failures will
require the Company to forego the use of some transponders
initially and to turn off additional transponders in later years.
The ability of transponders to provide transmission power for DTH
signal reception using 60-centimeter dishes is not affected.
<PAGE>
PanAmSat Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations. The Company's results of operations have
incorporated Old PanAmSat's activity commencing upon the effective
date of the Combination. Since this represents only four and a half
months of activity for Old PanAmSat, management has determined that
for comparative purposes, it would be more meaningful to present
the information shown below on a "pro forma" basis reflecting the
Combination as though it had occurred at the beginning of the
respective periods presented (excluding the impact of the $225
million gain on the sale of the DTH Options as well as certain
professional and advisory fees incurred in connection with the
Combination totaling $33.1 million, both of which are non-recurring
items that are not indicative of the Company's ordinary course of
business.) The pro forma results are not necessarily indicative of
the combined results that would have occurred had the Combination
actually occurred at the beginning of fiscal 1996.
<TABLE>
<CAPTION>
(unaudited; in thousands,
except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
(Proforma)
1997 1996 1997 1996
(Proforma)
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues
Outright sales and sales type leases $ 9,375 $ 53,123 $ 61,559 $ 137,333
Operating leases, satellite services and other
160,940 130,671 496,542 409,714
---------- ---------- ---------- -----------
Total Revenue 170,315 183,794 558,101 547,047
---------- ---------- ---------- -----------
Costs and Expenses
Cost of outright sales and sales
type leases - 18,114 20,476 44,634
Leaseback expense, net of deferred
gain 15,512 10,771 46,395 44,414
Direct operating and SG&A costs 33,387 28,924 95,277 95,687
---------- ---------- ---------- -----------
Total 48,899 57,809 162,148 184,735
---------- ---------- ---------- -----------
EBITDA 121,416 125,985 395,953 362,312
Depreciation and amortization 48,850 38,528 132,747 116,123
Interest expense, net (1,088) 39,487 63,150 110,300
Other income - (5,728) (385) (2,528)
---------- ---------- ----------- ------------
Income before income taxes and
minority interest 73,654 53,698 200,441 138,417
Income tax expense 35,897 25,391 97,022 63,482
Minority interest 11,891 10,526 34,553 30,545
---------- ---------- ---------- -----------
Net income $25,866 $ 17,781 $ 68,866 $44,390
------- ---------- ---------- -------
Earnings per share $ 0.17 $ 0.12 $ 0.46 $ 0.30
</TABLE>
<PAGE>
PanAmSat Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Proforma revenues for the three months ended September 30, 1997
were $170.3 million, a decrease of $13.5 million or 7% as compared
to the same period in 1996. Proforma revenues for the nine months
ended September 30, 1997 were $558.1 million, an increase of $11.1
million or 2% as compared to the same period in 1996. The decrease
in total revenues for the three month period was due primarily to
the inclusion of sales and sale-type leases during the same period
in 1996. The increase in total revenues for the nine month period
represents increases in the Company's operating lease/service
agreement revenue due to the addition of several new long-term
contracts as the Company continues to sell its available satellite
in-orbit transponder capacity, offset by a reduction in sales and
sales type lease revenue during 1997 as more customers opted for
operating leases/service agreements.
Proforma earnings before interest, taxes, depreciation and
amortization ("EBITDA") for the three months ended September 30,
1997 was $121.4 million, a decrease of $4.6 million or 4% as
compared to the same period in 1996. Proforma EBITDA for the nine
months ended September 30, 1997 was $396.0 million, an increase of
$33.7 million or 9% as compared to the same period in 1996. The
decrease in EBITDA for the three month period was due to the
decrease in total revenues. The increase in EBITDA for the nine
month period was due primarily to the increase in total revenues
offset by reduced cost of sales and sales type leases, and lower
SG&A costs reflecting reduced marketing activity on the Company's
Global Satellite System in anticipation of future satellite
launches.
Proforma interest expense, net for the three months ended
September 30, 1997 was $(1.1) million, a decrease of $40.6 million
or 103% as compared to the same period in 1996. Proforma interest
expense, net for the nine months ended September 30, 1997 was
$63.2 million, a decrease of $47.1 million or 43% as compared to
the same period in 1996. The decrease in interest expense, net for
the three and nine month periods was due to interest income earned
on the proceeds from the sale of the DTH options, coupled with
reduced interest expense reflecting larger amounts of interest
capitalized on the growth in the capitalized costs of satellites
under construction which are expected to be launched in 1997 and
1998.
Proforma net income for the three months ended September 30, 1997
was $25.9 million, an increase of $8.1 million or 46% as compared
to the same period in 1996. Proforma net income for the nine
months ended September 30, 1997 was $68.9 million, an increase of
$24.5 million or 55% as compared to the same period in 1996. The
increase in net income for the three and nine month periods was
due primarily to the increase in EBITDA and the decrease in
interest expense, net.
<PAGE>
PanAmSat Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Financial Condition.
Effective May 16, 1997, the Combination of Old PanAmSat and the
Galaxy Business was completed. Pursuant to the Combination,
aggregate consideration paid to Old PanAmSat shareholders
consisted of approximately $1.5 billion in cash and approximately
42.5 million shares of PanAmSat Common Stock. The cash portion was
funded by a three year term loan in the amount of $1.725 billion
from Hughes Electronics Corporation ("HE"). (The Galaxy Business
was owned and operated by Hughes Communications, Inc. ("HCI")
which itself is an indirect, wholly owned subsidiary of HE). In
addition to the $1.725 billion loan, at September 30, 1997 the
Company also has long-term indebtedness of $1.195 billion
(including $73.7 million due to affiliates).
For as long as Old PanAmSat's existing indebtedness is
outstanding, Old PanAmSat will be subject to provisions contained
in the indentures governing such indebtedness that will
significantly limit Old PanAmSat's ability to pay dividends or
loan funds to the Company. As a result, the Company will be
restricted from using Old PanAmSat's cash flows to fund the
Company's capital expenditures. On September 30, 1997, the
Preferred Stock was converted into 12 3/4% Senior Subordinated
Notes. Dividends on the Preferred Stock ceased to accrue at such
time and interest began to accrue and is payable semi-annually
each October 15 and April 15 on the 12 3/4% Senior Subordinated
Notes.
The significant cash outlays for the Company will continue to be
primarily capital expenditures related to the construction and
launch of satellites and debt service costs. With the successful
launches of PAS-6 on August 8, 1997 and PAS-5 on August 27, 1997,
the Company now has eight satellites under various stages of
development for which the Company has budgeted capital
expenditures. See Note 6 to the Financial Statements above for
more information regarding subsequent events affecting PAS-6. The
Company will require approximately $900 million to complete the
construction, insurance and launch of PAS-7, PAS-8, Galaxy VIII-i,
Galaxy X, Galaxy XI, Galaxy XII, Galaxy XIII-i and Galaxy XIV-i.
This amount is expected to be funded from cash on hand and cash
flow from operations. In addition to funding new satellites, the
Company also expects to exercise its early buy-out options
<PAGE>
PanAmSat Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
under certain satellite sale-leaseback transactions entered into
in prior years which will require the Company to fund additional
outlays of approximately $152 million in 1998 and approximately
$366 million in 1999. Such additional outlays also are expected to
be funded from cash flow from operations.
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
27. Financial Data Schedule
(b) REPORTS ON FORM 8-K
None.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PanAmSat Corporation
Date: January 5, 1998 /s/Kenneth N. Heintz
Kenneth N. Heintz
Executive Vice President and
Chief Financial Officer
and a Duly Authorized
Officer of the Company
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the PanAmSat
Form 10-Q for the quarterly period ended September 30, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 311,898
<SECURITIES> 242,545
<RECEIVABLES> 55,378
<ALLOWANCES> (1,024)
<INVENTORY> 0
<CURRENT-ASSETS> 444,056
<PP&E> 1,835,646
<DEPRECIATION> (561,453)
<TOTAL-ASSETS> 6,217,900
<CURRENT-LIABILITIES> 140,638
<BONDS> 1,120,881
0
0
<COMMON> 1,491
<OTHER-SE> 2,535,196
<TOTAL-LIABILITY-AND-EQUITY> 6,217,900
<SALES> 170,315
<TOTAL-REVENUES> 170,315
<CGS> 0
<TOTAL-COSTS> 99,549
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,088
<INCOME-PRETAX> 71,854
<INCOME-TAX> 35,435
<INCOME-CONTINUING> 36,419
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,528
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
