UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
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
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 June 30, 2000, an aggregate of 149,617,587 shares of the Company's Common
Stock were outstanding.
<PAGE>
Cautionary Statement for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act of 1995
This Quarterly Report on Form 10-Q contains certain forward-looking statements.
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for certain forward-looking statements. When used in this Quarterly Report on
Form 10-Q, the words "estimate," "plan," "project," "anticipate," "expect,"
"intend," "outlook," "believe" and other similar expressions are intended to
identify forward-looking statements and information. The Company identifies the
following important factors which could cause the Company's actual results to
differ materially from any results which might be projected, forecasted,
estimated or budgeted by the Company in forward-looking information: (i) risks
of launch failures, launch delays and in-orbit failures or reduced performance,
(ii) risks of government regulation, (iii) risks of doing business
internationally, (iv) risks of uninsured loss, (v) risks associated with the
Company's Internet initiative and (vi) litigation. Such factors are more fully
described in "Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations" of this Quarterly Report on Form 10-Q and
under the caption "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1999. Reference is also made to such
other risks and uncertainties detailed from time to time in the Company's
filings with the Securities and Exchange Commission. The Company cautions that
the foregoing list of important factors is not exclusive. Furthermore, 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.
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PANAMSAT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the Three Months Ended June 30, 2000 and 1999
(In Thousands, Except Share Data)
<TABLE>
<CAPTION>
June 30, June 30,
2000 1999
----------- -----------
<S> <C> <C>
REVENUES:
Operating leases, satellite services and other $ 192,691 $ 194,421
Outright sales and sales-type leases 129,558 5,961
----------- -----------
Total revenues 322,249 200,382
----------- -----------
OPERATING COSTS AND EXPENSES:
Cost of outright sales and sales-type leases 40,524 -
Leaseback expense, net of deferred gains - 7,696
Depreciation and amortization 81,618 68,473
Direct operating costs 36,913 25,685
Selling, general and administrative expenses 23,400 16,136
----------- -----------
Total operating costs and expenses 182,455 117,990
----------- -----------
INCOME FROM OPERATIONS 139,794 82,392
INTEREST EXPENSE, net 32,104 28,295
----------- -----------
INCOME BEFORE INCOME TAXES 107,690 54,097
INCOME TAXES 48,461 23,532
----------- -----------
NET INCOME $ 59,229 $ 30,565
----------- -----------
NET INCOME PER COMMON SHARE - basic $ 0.40 $ 0.20
----------- -----------
NET INCOME PER COMMON SHARE - diluted $ 0.39 $ 0.20
----------- -----------
Weighted average common shares outstanding 150,005,960 149,304,802
----------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
3
<PAGE>
PANAMSAT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the Six Months Ended June 30, 2000 and 1999
(In Thousands, Except Share Data)
<TABLE>
<CAPTION>
June 30, June 30,
2000 1999
----------- -----------
<S> <C> <C>
REVENUES:
Operating leases, satellite services and other $ 392,718 $ 381,803
Outright sales and sales-type leases 228,635 12,088
----------- -----------
Total revenues 621,353 393,891
----------- -----------
OPERATING COSTS AND EXPENSES:
Cost of outright sales and sales-type leases 85,776 -
Leaseback expense, net of deferred gains - 15,391
Depreciation and amortization 155,285 136,207
Direct operating costs 68,807 50,923
Selling, general and administrative expenses 44,411 30,663
----------- -----------
Total operating costs and expenses 354,279 233,184
----------- -----------
INCOME FROM OPERATIONS 267,074 160,707
INTEREST EXPENSE, net 56,557 52,684
----------- -----------
INCOME BEFORE INCOME TAXES 210,517 108,023
INCOME TAXES 94,733 46,990
----------- -----------
NET INCOME $ 115,784 $ 61,033
----------- -----------
NET INCOME PER COMMON SHARE - basic and diluted
$ 0.77 $ 0.41
----------- -----------
Weighted average common shares outstanding 150,112,916 149,430,623
----------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
4
<PAGE>
PANAMSAT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $144,147 $117,259
Accounts receivable-net 59,219 41,941
Net investment in sales-type leases 27,380 21,814
Prepaid expenses and other (principally prepaid insurance) 39,098 26,808
Deferred income taxes 17,458 17,353
Insurance claim receivable - 33,359
----------- -----------
Total current assets 287,302 258,534
SATELLITES AND OTHER PROPERTY AND
EQUIPMENT-Net 3,185,496 3,140,014
NET INVESTMENT IN SALES-TYPE LEASES 262,539 146,147
GOODWILL-Net of amortization 2,336,099 2,368,579
DEFERRED CHARGES 91,517 71,435
----------- -----------
TOTAL ASSETS $ 6,162,953 $ 5,984,709
----------- ------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
5
<PAGE>
PANAMSAT CORPORATION
CONSOLIDATED BALANCE SHEETS - (continued)
(In Thousands, Except Share Data)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
----------- ------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 96,343 $ 122,094
Deferred revenues 11,213 21,049
----------- -----------
Total Current Liabilities 107,556 143,143
DUE TO AFFILIATES (principally 1,818,964 1,797,163
merger-related indebtedness)
LONG-TERM DEBT 796,598 817,814
DEFERRED INCOME TAXES 391,361 306,922
DEFERRED CREDITS AND OTHER (principally
customer deposits and deferred revenue) 106,902 103,678
----------- -----------
TOTAL LIABILITIES 3,221,381 3,168,720
----------- -----------
COMMITMENTS AND CONTINGENCIES
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
STOCKHOLDERS' EQUITY:
Common Stock, $0.01 par value -- 400,000,000
shares authorized; 149,617,587 and 149,351,786
outstanding at June 30, 2000 and December 31, 1999, respectively 1,496 1,493
Additional paid-in-capital 2,519,448 2,509,652
Retained earnings 420,628 304,844
----------- -----------
Total stockholders' equity 2,941,572 2,815,989
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,162,953 $ 5,984,709
----------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
7
<PAGE>
PANAMSAT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Months Ended June 30, 2000 and 1999
(In Thousands)
<TABLE>
<CAPTION>
June 30, June 30,
2000 1999
----------- -----------
<S> <C> <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net income $115,784 $ 61,033
Adjustments to reconcile net income to
net cash provided by operating activities:
Gross profit on sales and sales-type leases (131,407) -
Depreciation and amortization 155,285 136,207
Deferred income taxes 84,334 51,230
Amortization of gains on sale-leasebacks - (10,762)
Amortization of debt issuance costs 3,054 3,055
Provision for uncollectable receivables (1,489) (680)
Changes in assets and liabilities:
Collections on investments in sales-type leases 12,981 11,069
Operating leases and other receivables 23,460 (8,871)
Prepaid expenses and other assets (35,426) (37,327)
Accounts payable and accrued liabilities (4,790) 24,178
Accrued operating leaseback expense - (18,624)
Deferred gains and revenues (11,391) 5,605
----------- -----------
Net cash provided by operating activities 210,395 216,113
----------- -----------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (including capitalized interest) (208,165) (333,903)
Early buy-out of sale-leasebacks - (141,253)
Net book value of satellites recovered through insurance 36,200 5,110
----------- -----------
Net cash used in investing activities (171,965) (470,046)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
New borrowings 26,100 760,000
Repayments of long-term debt (44,300) (675,000)
Repayments of incentive obligations (3,141) (3,047)
Stock issued in connection with employee benefit plans 9,799 1,186
----------- -----------
Net cash (used in)/provided by financing activities (11,542) 83,139
----------- -----------
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
26,888 (170,794)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
117,259 177,542
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD
$ 144,147 $6,748
----------- -----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash received for interest $ 2,603 $ 2,369
----------- -----------
Cash paid for interest $ 89,894 $ 78,959
----------- -----------
Cash paid for taxes $ 26,078 $ 9,261
----------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
9
<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 six month periods ended June 30, 2000 and 1999
have been made. Certain prior period amounts have been reclassified to
conform with the current year's presentation. Operating results for the
three and six months ended June 30, 2000 and 1999 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 the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1999 (the "Form 10-K").
(2) New Accounting Pronouncement
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities."
SFAS No. 133 requires all derivates to be recorded as either assets or
liabilities and the instruments to be measured at fair value. Gains or
losses resulting from changes in the values of those derivatives are to
be recognized immediately or deferred depending on the use of the
derivative and whether or not it qualifies as a hedge. PanAmSat will
adopt SFAS No. 133 by January 1, 2001, as required and management is
currently assessing the impact of this statement.
(3) Satellite Developments
Reference is made to "Item 1. - Business - Overview -- The Satellites; -
Satellite Procurement and Launch Arrangements" and "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations
- Satellite Deployment Plan and Planned Satellites" in the Form 10-K for
a detailed description of the Company's satellite network and satellite
deployment plan.
In April 2000, PanAmSat commenced service on the Galaxy XI satellite.
During the second quarter of 2000, PanAmSat successfully launched and
commenced service on the Galaxy IVR satellite and completed the planned
retirement of SBS-4. On July 28, 2000, PanAmSat successfully launched
PAS-9, which brought the Company's total fleet of satellites to 21.
PanAmSat currently expects to launch PAS-1R in the fourth quarter of
2000 and PAS-10 in the first quarter of 2001.
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<PAGE>
PANAMSAT CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Company's selected operating data shown below are not necessarily indicative
of future results.
SELECTED OPERATING DATA
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
---- ---- ---- ----
(unaudited; in thousands) (unaudited; in thousands)
<S> <C> <C> <C> <C>
Operating leases, satellite services and other $192,691 $194,421 $392,718 $381,803
Outright sales and sales-type leases 129,558 5,961 228,635 12,088
Total revenues 322,249 200,382 621,353 393,891
Cost of outright sales and sales-type leases 40,524 - 85,776 -
Leaseback expense, net of deferred gains - 7,696 - 15,391
Depreciation and amortization 81,618 68,473 155,285 136,207
Direct operating and SG&A costs 60,313 41,821 113,218 81,586
Income from operations 139,794 82,392 267,074 160,707
Interest expense, net 32,104 28,295 56,557 52,684
Income taxes 48,461 23,532 94,733 46,990
</TABLE>
11
<PAGE>
PANAMSAT CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Revenues. Revenues were $322.2 million for the three months ended June 30,
2000, compared to revenues of $200.4 million for the same period in 1999.
Revenues included $123.4 million of new sales-type lease transactions executed
during the second quarter of 2000 for which there were no comparable
transactions in 1999. Revenues, excluding new sales-type leases, decreased $1.6
million, or 1%, to $198.8 million for the three months ended June 30, 2000 from
$200.4 million for the same period in 1999. Revenues for the six months ended
June 30, 2000 were $621.4 million, an increase of $227.5 million, or 58%, from
$393.9 million for the same period in 1999. Revenues for the six months ended
June 30, 2000 included $217.2 million of new sales and sales-type lease
transactions for which there were no comparable transactions in 1999. Revenues,
excluding sales and sales-type leases, increased $10.3 million, or 3%, to $404.2
million for the six months ended June 30, 2000 from $393.9 million for the same
period in 1999. These changes are principally a result of changes in the types
of service agreements that the Company provides.
Revenues can be analyzed based on the type of service offered. The Company
provides video services which are primarily full-time, part-time and occasional
satellite services for the transmission of news, sports, entertainment and
educational programming worldwide. The Company also provides telecommunications
services which support satellite-based networks that relay voice, video and data
communications within individual countries, throughout regions and on a global
basis. Video services revenues, excluding the revenue from new sales-type lease
activity, were $133.5 million for the three months ended June 30, 2000, a
decrease of 6% from the same period in 1999. Video services revenues, excluding
the revenue from new sales-type lease activity, were $274.8 million for the six
months ended June 30, 2000, a decrease of 2% from the same period in 1999. The
decrease in video services revenues for the three and six month periods ended
June 30, 2000 was due primarily to the conversion of several operating lease
agreements into new sales-type lease agreements during 2000 and the previously
reported termination of a contract for a direct-to-home platform in India.
Telecommunications services revenues were $52.3 million for the three months
ended June 30, 2000, an increase of 11% from the same period in 1999.
Telecommunications services revenues, excluding the revenue from outright sales
activity, were $103.8 million for the six months ended June 30, 2000, an
increase of 13% from the same period in 1999. The increase in telecommunications
services revenues for the three and six month periods ended June 30, 2000 was
due primarily to the growth in data and Internet-related service agreements.
Revenues can also be analyzed based on the type of agreement. Revenues from
sales-type leases increased to $129.6 million for the three months ended June
30, 2000 from $6.0 million for the same period in 1999. Revenues from outright
sales and sales-type leases increased to $228.6 million for the six months ended
June 30, 2000 from $12.1 million for the same period in 1999. The increase in
revenues from outright sales
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<PAGE>
and sales-type leases for the three and six month periods is due primarily to
the revenues from new sales and sales-type lease transactions executed during
2000. Revenues from outright sales and sales-type leases represent substantial
long-term commitments for services, and revenues from this category of
transactions are subject to greater variation from period to period than are
operating lease revenues. Revenues from operating leases of transponders,
satellite services and other decreased $1.7 million, or 1%, to $192.7 million
for the three months ended June 30, 2000 from $194.4 million for the same period
in 1999. The primary factors contributing to the decrease, after giving effect
to increases in telecommunications revenue, were the conversion of several
operating lease agreements into new sales-type lease agreements in the second
quarter of 2000 and the previously reported termination of a contract for a
direct-to-home platform in India. Revenues from operating leases of
transponders, satellite services and other increased $10.9 million, or 3%, to
$392.7 for the six months ended June 30, 2000 from $381.8 million for the same
period in 1999. The increase in revenues from operating leases of transponders,
satellite services and other for the six month period ended June 30, 2000 is due
primarily to increased available transponder capacity on new satellites placed
in service since the first quarter of 1999 offset by the conversion of several
operating lease agreements into new sales-type lease agreements in 2000.
Cost of Outright Sales and Sales-Type Leases. Cost of outright sales and
sales-type leases were $40.5 million and $85.8 million for the three and six
months ended June 30, 2000, respectively, due to the execution of new sales and
sales-type lease agreements. There were no comparable costs for either period in
1999.
Leaseback Expense, Net of Deferred Gain. For the three and six months ended
June 30, 2000, the Company recorded no leaseback expense, net of deferred gain
as compared to $7.7 million and $15.4 million for the same periods in 1999,
respectively. The decrease is attributable to the exercise by the Company of
certain sale-leaseback early buy-out options during 1999.
Depreciation and Amortization. Depreciation and amortization increased
$13.1 million, or 19%, to $81.6 million for the three months ended June 30, 2000
from $68.5 million for the same period in 1999. Depreciation and amortization
for the six months ended June 30, 2000 increased $19.1 million, or 14%, to
$155.3 million from $136.2 million for the same period in 1999. The increase in
depreciation and amortization for the three and six month periods ended June 30,
2000 is due primarily to depreciation expense associated with the addition of
four new satellites placed in service and depreciation expense on transponders
acquired through the exercise of sale-leaseback early buy-outs.
Direct Operating and Selling, General and Administrative Costs. Direct
operating and selling, general and administrative costs increased $18.5 million,
or 44%, to $60.3 million for the three months ended June 30, 2000 from $41.8
million for the same period in 1999. Direct operating and selling, general and
administrative costs increased $31.6 million, or 39%, to $113.2 million for the
six months ended June 30, 2000 from $81.6 million for the same period in 1999.
The increases are due primarily to direct costs
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<PAGE>
associated with the addition of new satellites placed in service and costs
associated with the continued growth of the Company.
Income from Operations. Income from operations was $139.8 million for the
three months ended June 30, 2000 an increase of $57.4 million or 70%, from $82.4
million for the same period in 1999. Income from operations was $267.1 million
for the six months ended June 30, 2000 an increase of $106.4 million or 66%,
from $160.7 million for the same period in 1999. The increase in income from
operations for the three and six month periods ended June 30, 2000 is due
primarily to the gross profit associated with the new outright sales and
sales-type lease activity during 2000.
Interest Expense, Net. Interest expense, net increased $3.8 million, or
13%, to $32.1 million for the three months ended June 30, 2000, from $28.3
million for the same period in 1999. Interest expense, net increased $3.9
million, or 7%, to $56.6 million for the six months ended June 30, 2000, from
$52.7 million for the same period in 1999. These increases are due primarily to
an increase in interest rates during 2000.
Income Taxes. Income taxes increased $25.0 million, or 106%, to $48.5
million for the three months ended June 30, 2000, from $23.5 million for the
same period in 1999. Income taxes increased $47.7 million, or 101%, to $94.7
million for the six months ended June 30, 2000, from $47.0 million for the same
period in 1999. The increase in income taxes for the three and six month periods
ended June 30, 2000 is due primarily to the gross profit from new outright sales
and sales-type lease activity.
Satellite Developments. Reference is made to "Item 1. - Business - Overview
- The Satellites; - Satellite Procurement and Launch Arrangements" and "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Satellite Deployment Plan and Planned Satellites" in the Form 10-K
for a detailed description of the Company's satellite network and satellite
deployment plan.
In April 2000, PanAmSat commenced service on the Galaxy XI satellite.
During the second quarter of 2000, PanAmSat successfully launched and commenced
service on the Galaxy IVR satellite and completed the planned retirement of
SBS-4. On July 28, 2000, PanAmSat successfully launched PAS-9, which brought the
Company's total fleet of satellites to 21. PanAmSat currently expects to launch
PAS-1R in the fourth quarter of 2000 and PAS-10 in the first quarter of 2001.
Financial Condition. In addition to a term loan in the amount of $1.725
billion from Hughes Electronics Corporation, an affiliate of the Company, at
June 30, 2000 the Company also had long-term indebtedness of $796.6 million
(comprised primarily of $750 million of public notes and $46.5 million of notes
assumed in connection with the exercise of an early buy-out opportunity under a
sale-leaseback transaction).
The significant cash outlays for the Company will continue to be primarily
capital expenditures related to the construction and launch of satellites, debt
service costs and potential acquisitions. The Company now has three satellites
under various stages of
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<PAGE>
development and intends to implement its Internet initiative, NET/36, for which
the Company has budgeted capital expenditures. As of June 30, 2000, the Company
will require approximately $220 million in remaining payments to construct,
insure and launch the satellites and plans to invest up to $250 million in
capital and operating expenses over the next two years to deploy NET/36. The
Company expects that the largest portion of its investment in NET/36 will be
used to deploy PanAmSat-owned antennas and servers at high-speed Internet
service providers, including cable headends and digital subscriber line provider
sites.
Assuming satellites in development are successfully launched, services on
the satellites commence on the schedule currently contemplated and NET/36 is
deployed as and when expected, the Company believes that amounts available under
its $500 million revolving credit facility with certain lenders and Citicorp
USA, Inc. as administrative agent (the "Revolving Credit Facility"), vendor
financing, future cash flow from operations and cash on hand will be sufficient
to fund its operations and its remaining costs for the construction and launch
of satellites currently under development for the next twelve months and for the
deployment of NET/36 for the next twenty-four months. There can be no assurance,
however, that the Company's assumptions with respect to costs for future
construction and launch of its satellites and costs to deploy NET/36 will be
correct, or that amounts available under the Revolving Credit Facility, vendor
financing, future cash flow from operations and cash on hand will be sufficient
to cover any shortfalls in funding for (i) launches caused by launch failures,
(ii) cost overruns, (iii) delays, (iv) capacity shortages, (v) NET/36 technical
integration problems, (vi) additional costs associated with NET/36 strategic
relationships or (vii) other unanticipated expenses. In addition, if the Company
were to consummate any strategic transactions or undertake any other projects
requiring significant capital expenditures, it may be required to seek
additional financing. If circumstances were to require the Company to incur
additional indebtedness, the ability of the Company to incur any such additional
indebtedness would be subject to the terms of the Company's outstanding
indebtedness. The failure to obtain such financing could have a material adverse
effect on the Company's operations and its ability to accomplish its business
plan.
Net cash provided by operating activities decreased to $210.4 million for
the six months ended June 30, 2000, from $216.1 million for the six months ended
June 30, 1999. The decrease in 2000 was primarily attributable to net changes in
working capital items which included income tax payments of $26.1 million in the
six months of 2000 as compared to $9.3 million for the comparable period in
1999.
Net cash used in investing activities decreased to $172.0 million for the
six months ended June 30, 2000, from $470.0 million for the six months ended
June 30, 1999. The decrease in 2000 was primarily attributable to lower capital
expenditures in 2000 for satellite systems under development and to no
comparable sale-leaseback early buy-out transactions in the first six months of
2000.
Net cash used in financing activities was $11.5 million for the six months
ended June 30, 2000, compared to net cash provided by financing activities of
$83.1 million for
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<PAGE>
the six months ended June 30, 1999. The decrease in 2000 was primarily due to
lower net borrowings as a result of the lower level of cash required to fund
capital expenditures and early buy-out opportunities in 2000.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk. Other that as described below, there have been no material
changes regarding the Company's market risk position from the information
provided in the Form 10-K. The potential fair value change resulting from a
hypothetical 10% fluctuation in interest rates related to PanAmSat's sales-type
receivable balances would be approximately $9.8 million as of June 30, 2000.
16
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PANAMSAT CORPORATION
PART II - OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a) The Annual Meeting of Stockholders was held on June 1, 2000.
(b) (i) The Company's Certificate of Incorporation provides that nominees to the
Company's Board of Directors shall be elected to serve as directors until
the next annual meeting of stockholders or until their successors are
elected and have qualified. The nine nominees for director, Mr. Michael T.
Smith, Ms. Roxanne S. Austin, Mr. Patrick J. Costello, Mr. Dennis F.
Hightower, Mr. James M. Hoak, Mr. R. Douglas Kahn, Mr. Stephen R. Kahn, Mr.
Jack A. Shaw and Mr. Joseph R. Wright, Jr., were elected by plurality of the
votes cast by the holders of the Company's Common Stock voting thereon:
(A) Mr. Smith: 138,565,195 votes for and 124,683 votes withheld;
(B) Ms. Austin: 137,744,988 votes for and 944,890 votes withheld;
(C) Mr. Costello: 138,567,611 votes for and 122,267 votes withheld;
(D) Mr. Hightower: 137,611,701 votes for and 1,078,177 votes withheld;
(E) Mr. Hoak: 138,567,850 votes for and 122,028 votes withheld;
(F) Mr. R. Douglas Kahn: 138,565,318 votes for and 124,560 votes withheld;
(G) Mr. Stephen R. Kahn: 138,566,000 votes for and 123,878 votes withheld;
(H) Mr. Shaw: 138,564,852 votes for and 125,026 votes withheld;
(I) Mr. Wright: 138,568,509 votes for and 121,369 votes withheld;
(c) A proposal (designated Proposal 2 and set forth in the Company's Proxy
Statement), approved by the Board of Directors, to elect Deloitte & Touche
LLP as the Company's independent accountants for 2000, was approved by a
majority of the votes cast by the holders of the Company's Common Stock
voting thereon: 137,528,747 affirmative votes; 898,189 negative votes;
262,942 votes abstained.
(d) A proposal (designated Proposal 3 and set forth in the Company's Proxy
Statement),
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approved by the Board of Directors, to amend and restate the Corporation's
Long-Term Stock Incentive Plan, was approved by a majority of the votes cast
by the holders of the Company's Common Stock voting thereon: 136,787,478
affirmative votes; 1,613,237 negative votes; 289,163 votes abstained.
(e) A proposal (designated Proposal 4 and set forth in Company's Proxy
Statement), approved by the Board of Directors, to adopt the Company's 2000
Annual Incentive Plan, was approved by a majority of the votes cast by the
holders of the Company's Common Stock voting thereon: 134,409,157
affirmative votes; 276,438 negative votes; 293,610 votes abstained;
3,710,673 broker non-votes.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No.
3.2 Restated Bylaws of the Company.
10.33.3 Amendment to the PanAmSat Corporation Long-Term Stock Incentive
Plan, Established in 1997, is incorporated herein by reference to
Exhibit A to the Company's Definitive Proxy Statement filed on
April 28, 2000.
10.57.1 Amendment to the PanAmSat Corporation 1999 Non-Employee Directors
Compensation Deferral Plan, as amended and restated as of April
25, 2000.
10.62 PanAmSat Corporation Annual Incentive Plan 2000, is incorporated
herein by reference to Exhibit B to the Company's Definitive Proxy
Statement filed on April 28, 2000.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
The Company did not file any reports on Form 8-K during the
quarter for which this report is filed.
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SIGNATURE
Pursuant to the requirements of the Securities 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: August 14, 2000 /s/ Michael J. Inglese
----------------------------
Michael J. Inglese
Senior Vice President and
Chief Financial Officer
and a Duly Authorized
Officer of the Company
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