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FOR IMMEDIATE RELEASE

Hughes Communications Announces Fourth Quarter and Full Year 2010 Results

Record New Consumer Activations
Record Adjusted EBITDA


Germantown, Md., March 3, 2011—Hughes Communications, Inc. (NASDAQ: HUGH) (“Hughes”), the global leader in broadband satellite network solutions and services, today announced its financial results for the fourth quarter and full year ended December 31, 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.

Fourth Quarter 2010 Financial Highlights:

 
·
Consolidated revenues of $281 million for growth of 7% over the fourth quarter of 2009.

 
·
Strong Consumer business growth:
 
–
Record subscriber gross adds of 59,000 and net adds of 20,000 for growth of 29% and 40% respectively over the fourth quarter of 2009.
 
–
Revenue increased by 13% and services revenue by 17% over the fourth quarter of 2009.
 
–
Consumer ARPU increased to $75 from $72 in the fourth quarter of 2009.
 
–
Churn of 2.27%.

 
·
Record Adjusted EBITDA of $71 million, an increase of 25% over the fourth quarter of 2009.

 
·
Operating income of $32 million for a 61% growth over the fourth quarter of 2009; Net Income attributable to stockholders of $16.9 million, compared to $2.4 million in the fourth quarter of 2009; earnings per share of $0.74 in the fourth quarter of 2010 compared to $0.11 in the fourth quarter of 2009, both on a fully diluted basis.

 
·
New orders of $307 million for a 13% growth over the fourth quarter of 2009, with major orders from CVS, Carter’s, GTECH, Row 44, Footlocker, T.J.Maxx, Shell, Denny’s, and Barrett Xplore in our North America broadband business; ADB, Avanti, BP, Camelot, Telespazio, Global Crossing, Telemar, Tecban, Central Bank of India, BEL India, and State Bank of India in our International broadband business; and Boeing and THURAYA in our Mobile Satellite business.

Full Year Ended December 31, 2010 Financial Highlights:

 
·
Consolidated total revenues of $1,043 million for a 3% growth over the full year ended December 31, 2009, or 6% growth excluding revenues from the discontinued contract with Telematics.

 
·
Consolidated services revenues of $791 million for a growth of 11% over the full year ended December 31, 2009, or 14% excluding revenue from the discontinued contract with Telematics.


 
1
 

 
·
Continued strong growth in consumer business over the full year ended December 31, 2009:
 
-
Revenue of $477 million, up 14%; service revenue up 19%.
 
-
Subscriber gross adds of 213,000 and net adds of 74,000.
 
-
Total subscriber base of 578,000 as of December 31, 2010, for a growth of 15% over the subscriber base as of December 31, 2009.
 
-
Churn of 2.1%.

 
·
Record Adjusted EBITDA of $227 million for a growth of 30% over the full year ended December 31, 2009.

 
·
Net Income attributable to stockholders of $22.8 million and earnings per share (fully diluted) of $1.00 compared to a net loss of $52.7 million and a loss of $2.46 per share in the full year ended December 31, 2009.

 
·
Strong liquidity with cash, cash equivalents, and marketable securities of $183 million as of December 31, 2010.

 
·
New orders of $1,297 million for a growth of 27% over the full year ended December 31, 2009, resulting in a record non-consumer backlog of $1,064 million, a 27% growth over the backlog at December 31, 2009.

Set forth below are tables highlighting certain of Hughes’ and HNS’ results for the three and twelve months ended December 31, 2010 and 2009.
 
 
Hughes Communications, Inc.
  
     
Three Months
    
Twelve Months
  
     
Ended December 31,
    
Ended December 31,
  
 
(Dollars in thousands)
  
2010
    
2009
    
2010
    
2009
  
                           
 
Revenue
                        
 
     North America Broadband
   $ 191,187     $ 175,306     $ 733,750     $ 690,279  
 
     International Broadband
     62,520       60,961       205,607       203,886  
 
     Telecom Systems
     22,528       25,069       95,069       112,500  
 
     HTS Satellite
     3,317       -       3,317       -  
 
     Corporate and Other
     1,932       904       5,584       3,034  
 
     Total
   $ 281,484     $ 262,240     $ 1,043,327     $ 1,009,699  
                                   
 
Operating income (loss)
                                
 
     North America Broadband
   $ 24,347     $ 16,400     $ 67,884     $ (7,991 )
 
     International Broadband
     6,520       5,168       10,571       15,120  
 
     Telecom Systems
     2,149       3,485       14,183       14,227  
 
     HTS Satellite
     (573 )     (37 )     (3,350 )     (37 )
 
     Corporate and Other
     (937 )     (5,427 )     (3,664 )     (9,007 )
 
     Total
   $ 31,506     $ 19,589     $ 85,624     $ 12,312  
                                   
 
Net income (loss) attributable to HCI stockholders
   $ 16,880     $ 2,367     $ 22,787     $ (52,693 )
                                   
 
Adjusted EBITDA*
   $ 70,778     $ 56,482     $ 226,771     $ 173,929  
                                   
 
New Orders
   $ 307,462     $ 271,470     $ 1,296,604     $ 1,022,922  
                                   

 
2
 
 
 
Hughes Network Systems, LLC
  
     
Three Months
    
Twelve Months
  
     
Ended December 31,
    
Ended December 31,
  
 
(Dollars in thousands)
  
2010
    
2009
    
2010
    
2009
  
                           
 
Revenue
                        
 
     North America Broadband
   $ 191,187     $ 175,306     $ 733,750     $ 690,279  
 
     International Broadband
     62,520       60,961       205,607       203,886  
 
     Telecom Systems
     22,528       25,069       95,069       112,500  
 
     HTS Satellite
     3,317       -       3,317       -  
 
     Total
   $ 279,552     $ 261,336     $ 1,037,743     $ 1,006,665  
                                   
 
Operating income (loss)
                                
 
     North America Broadband
   $ 24,347     $ 16,400     $ 67,884     $ (7,991 )
 
     International Broadband
     6,520       5,168       10,571       15,120  
 
     Telecom Systems
     2,149       3,485       14,183       14,227  
 
     HTS Satellite
     (573 )     (37 )     (3,350 )     (37 )
 
     Total
   $ 32,443     $ 25,016     $ 89,288     $ 21,319  
                                   
 
Net income (loss) attributable to HNS
   $ 17,361     $ 7,229     $ 25,393     $ (44,905 )
                                   
 
Adjusted EBITDA*
   $ 71,095     $ 55,922     $ 228,645     $ 174,647  
                                   
 
New Orders
   $ 304,916     $ 270,742     $ 1,290,331     $ 1,020,324  
                                   
 
*
For the definition of Adjusted EBITDA, see “Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures” below.

Recent Highlights:

 
·
EchoStar Corporation (NASDAQ: SATS) and Hughes announced an agreement pursuant to which EchoStar will acquire all of the outstanding equity of Hughes and its subsidiaries including its principal operating subsidiary, HNS, valued at approximately $2 billion, including debt.
 
 
·
HNS was awarded a contract valued at over US $27 million from Star Satellite Communications Company PJSC, a wholly owned subsidiary of Al Yah Satellite Communications Company PrJSC (Yahsat) based in the United Arab Emirates for the sale of satellite system equipment. 
 
 
·
HNS was selected by Boeing to provide the Ground Communications Network (GCN) for the MEXSAT Satellite Based Network (SBN) system. HNS will supply system design and development engineering, fabrication and development of gateways, factory integration, and test of all subsystems, as well as site installation and final delivery into service.
 
 
·
Leading children’s apparel brand, Carter’s, Inc., has agreed to a major network upgrade to deliver stronger security, better performance, and in-store wireless connectivity to be provided by HNS.  This major upgrade to all of the nearly 500 retail sites provides significant new functionality.
 
 
·
HNS announced its managed Voice-over-IP (VoIP) solution for the government market. Using the new Hughes ActiveQoS™ technology, Hughes can provide superior voice quality over affordable broadband, eliminating the need for agencies to invest in expensive, leased line Multiprotocol Label Switching (MPLS) networks.
 
 
·
HNS shipped more than 327,000 broadband satellite terminals in 2010, the most ever in one year, bringing its cumulative number shipped worldwide to more than 2.5 million.
 
 
·
HNS announced the launch of its new M2M (machine-to-machine) broadband service that enables the utility, energy, and other industries with remote unmanned equipment to extend faster network intelligence to their entire infrastructure, regardless of hard-to-reach locations or environmental conditions.
 
3
 
 
 
·
HNS placed fourth among the Global Top Twenty operators worldwide on the World Teleport Association’s annual Top Teleport Operator Rankings for 2010.
 
 
·
HNS’ HN9400 dual band satellite router received a 2010 Satellite Spotlight Product of the Year Award from Technology Marketing Corp. Spearheading the industry’s move to high capacity Ka-band satellite systems, the Hughes HN9400 is the newest member of its market-leading family of routers, designed to deliver the maximum performance on today’s Ku- or Ka-band platforms, while being future-proof for next generation, high-throughput systems.
 
To summarize, Pradman Kaul, president and CEO, said, “The highlight in the fourth quarter was the stand-out performance by our consumer business. We activated nearly 59,000 new subscribers in Q4, an all-time quarterly record, while also increasing ARPU. We added a net of 74,000 subscribers in 2010 and we recorded over $1 billion of new orders in 2010, as a result of which our non-consumer backlog was a healthy $1.1 billion at year end 2010. The construction of our Jupiter™ satellite is proceeding well and is on-time and on-budget; we are on track to launch Jupiter in the first half of 2012.”

Commenting on Hughes’ financial performance, Grant Barber, executive vice president and CFO said, “The momentum from the third quarter of 2010 in delivering strong profitability continued in the fourth quarter of 2010. In FY 2010, Hughes’ Adjusted EBITDA was an all-time high of $227 million, Net Income attributable to stockholders was $22.8 million, and we delivered EPS of $1.00 in 2010, a significant turnaround from the loss of $2.46 in 2009. This profitability expansion coupled with effective working capital management resulted once again in delivering an impressive $149 million of cash from operating activities in 2010 and we ended the year with strong consolidated cash, cash equivalents, and marketable securities of $183 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
    
Twelve Months
  
     
Ended December 31,
    
Ended December 31,
  
 
(Dollars in thousands)
  
2010
    
2009
    
2010
    
2009
  
                           
 
Net income (loss) attributable to HCI stockholders
   $ 16,880     $ 2,367     $ 22,787     $ (52,693 )
 
Add:
                                
 
    Equity incentive plan compensation
     1,835       1,898       7,514       7,371  
 
    Interest expense
     13,216       16,994       59,345       64,119  
 
    Income tax expense
     1,380       1,656       5,716       2,446  
 
    Depreciation and amortization
     35,974       29,522       131,586       102,731  
 
    Long-term incentive/retention cash plan
     -       -       -       1,538  
 
    Sea Launch impairment
     -       -       -       44,400  
 
    Data Synapse impairment
     -       -       -       1,000  
 
    HTI investment impairment
     -       5,239       -       5,239  
 
    Class action settlement
     1,866       -       1,866       -  
 
Less:
                                
 
    Interest income
     (373 )     (1,194 )     (2,043 )     (2,222 )
 
Adjusted EBITDA*
   $ 70,778     $ 56,482     $ 226,771     $ 173,929  
                                   


 
4
 

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

 
Hughes Network Systems, LLC
  
     
Three Months
    
Twelve Months
  
     
Ended December 31,
    
Ended December 31,
  
 
(Dollars in thousands)
  
2010
    
2009
    
2010
    
2009
  
                           
 
Net income (loss) attributable to HNS
   $ 17,361     $ 7,229     $ 25,393     $ (44,905 )
 
Add:
                                
 
    Equity incentive plan compensation
     1,754       1,816       7,187       6,933  
 
    Interest expense
     13,211       16,988       59,324       64,094  
 
    Income tax expense
     1,360       1,661       5,691       2,436  
 
    Depreciation and amortization
     35,827       29,351       130,954       102,139  
 
    Long-term incentive/retention cash plan
     -       -       -       1,538  
 
    Sea Launch impairment
     -       -       -       44,400  
 
    Class action settlement
     1,866       -       1,866       -  
 
Less:
                                
 
    Interest income
     (284 )     (1,123 )     (1,770 )     (1,988 )
 
Adjusted EBITDA*
   $ 71,095     $ 55,922     $ 228,645     $ 174,647  
                                   
 
The condensed consolidated financial statements of Hughes and HNS for the periods ended December 31, 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.

 
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About Hughes Communications, Inc.
Hughes Communications, Inc. (NASDAQ: HUGH) is the 100 percent owner of Hughes Network Systems, LLC. Hughes is the world’s leading provider of satellite broadband for home and office, delivering innovative network technologies, managed services, and solutions for enterprises and governments globally.  HughesNet® is the #1 high-speed satellite Internet service in the marketplace, with offerings to suit every budget. To date, Hughes has shipped more than 2.5 million systems to customers in over 100 countries, representing over 50 percent market share. Its products employ global standards approved by the TIA, ETSI, and ITU organizations, including IPoS/DVB-S2, RSM-A, and GMR-1.

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 US 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.
 
###

©2010 Hughes Communications, Inc. All rights reserved. Hughes, HughesNet, SPACEWAY, and Jupiter are trademarks of Hughes Network Systems, LLC.

 
Contact Information
 
Investor Relations Contact: Deepak V. Dutt,
Vice President, Treasurer and Investor Relations Officer
Email: deepak.dutt@hughes.com
Phone: 301-428-7010

Media Contact: Judy Blake,
Director, Marketing Communications
Email: judy.blake@hughes.com
Phone: 301-601-7330
Attachments

Hughes Communications, Inc.
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Cash Flows

Hughes Network Systems, LLC
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Cash Flows


 
6
 

HUGHES COMMUNICATIONS, INC.
Consolidated Balance Sheets
(Dollars in thousands, except per-share amounts)
(Unaudited)

   
December 31,
  
   
2010
    
2009
  
ASSETS
            
Current assets:
            
Cash and cash equivalents
   $ 138,131     $ 261,038  
Marketable securities
     44,532       47,188  
Receivables, net
     186,692       163,816  
Inventories
     57,819       60,244  
Prepaid expenses and other
     26,127       22,476  
Total current assets
     453,301       554,762  
Property, net
     774,052       602,403  
Capitalized software costs, net
     46,092       49,776  
Intangible assets, net
     11,440       14,524  
Goodwill
     5,093       5,093  
Other assets
     73,197       75,836  
Total assets
   $ 1,363,175     $ 1,302,394  
LIABILITIES AND EQUITY
                
Current liabilities:
                
Accounts payable
   $ 120,202     $ 119,461  
Short-term debt
     6,285       6,750  
Accrued liabilities and other
     128,790       131,774  
Total current liabilities
     255,277       257,985  
Long-term debt
     740,576       714,957  
Other long-term liabilities
     27,308       16,356  
Total liabilities
     1,023,161       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 December 31, 2010 and 2009
     -        -   
Common stock, $0.001 par value; 64,000,000 shares authorized;
21,834,787 shares and 21,633,539 shares issued and outstanding
as of December 31, 2010 and 2009, respectively
     22       22  
Additional paid in capital
     735,233       730,809  
Accumulated deficit
     (387,756 )     (410,543 )
Accumulated other comprehensive loss
     (18,449 )     (16,247 )
Total HCI stockholders' equity
     329,050       304,041  
Noncontrolling interests
     10,964       9,055  
Total equity
     340,014       313,096  
Total liabilities and equity
   $ 1,363,175     $ 1,302,394  



 
7
 

HUGHES COMMUNICATIONS, INC.
Consolidated Statements of Operations
(Dollars in thousands, except per-share amounts)
(Unaudited)

   
Year Ended December 31,
  
   
2010
    
2009
  
Revenues:
            
Services revenues
   $ 791,324     $ 712,592  
Hardware revenues
     252,003       297,107  
Total revenues
     1,043,327       1,009,699  
Operating costs and expenses:
                
Cost of services
     493,023       448,804  
Cost of hardware
     234,805       289,516  
Selling, general and administrative
     206,512       180,675  
Loss on impairments
     -       50,639  
Research and development
     20,279       22,296  
Amortization of intangible assets
     3,084       5,457  
Total operating costs and expenses
     957,703       997,387  
Operating income
     85,624       12,312  
Other income (expense):
                
Interest expense
     (59,345 )     (64,119 )
Interest income
     2,043       2,222  
Other income, net
     374       214  
Income (loss) before income tax expense and
equity in earnings (losses) of unconsolidated affiliates
     28,696       (49,371 )
Income tax expense
     (5,716 )     (2,446 )
Equity in earnings (losses) of unconsolidated affiliates
     -       170  
Net income (loss)
     22,980       (51,647 )
Net income attributable to the noncontrolling interests
     (193 )     (1,046 )
Net income (loss) attributable to HCI stockholders
   $ 22,787     $ (52,693 )
Income (loss) per share:
                
Basic
   $ 1.05     $ (2.46 )
Diluted
   $ 1.00     $ (2.46 )
Shares used in computation of per share data:
                
Basic
     21,606,162       21,393,151  
Diluted
     22,738,207       21,393,151  



 
8
 
HUGHES COMMUNICATIONS, INC.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

   
Year Ended December 31,
  
   
2010
    
2009
  
Cash flows from operating activities:
            
Net income (loss)
   $ 22,980     $ (51,647 )
Adjustments to reconcile net income (loss) to net cash flows
from operating  activities:
                
Depreciation and amortization
     131,586       102,731  
Amortization of debt issuance costs
     2,818       2,025  
Share-based compensation expense
     7,514       7,371  
Equity in (earnings) losses from unconsolidated affiliates
     -       (170 )
Loss on impairments
     -       50,639  
Other
     (56 )     535  
Change in other operating assets and liabilities, net of acquisition:
                
Receivables, net
     (22,371 )     41,584  
Inventories
     1,697       6,438  
Prepaid expenses and other
     1,721       5,369  
Accounts payable
     20,098       13,954  
Accrued liabilities and other
     (17,266 )     (27,447 )
Net cash provided by operating activities
     148,721       151,382  
Cash flows from investing activities:
                
Change in restricted cash
     1,211       223  
Purchases of marketable securities
     (105,692 )     (62,118 )
Proceeds from sales of marketable securities
     108,289       15,000  
Expenditures for property
     (282,819 )     (150,764 )
Expenditures for capitalized software
     (13,073 )     (12,772 )
Proceeds from sale of property
     205       397  
Cash acquired, consolidation of Hughes Systique Corporation
     -       828  
Long-term loan receivable
     -       (10,000 )
Other, net
     1,847       (830 )
Net cash used in investing activities
     (290,032 )     (220,036 )
Cash flows from financing activities:
                
Short-term revolver borrowings
     4,761       6,791  
Repayments of revolver borrowings
     (5,347 )     (7,861 )
Proceeds from exercise of stock options
     134       -  
Long-term debt borrowings
     31,602       147,849  
Repayment of long-term debt
     (6,252 )     (12,377 )
Debt issuance costs
     (7,140 )     (4,612 )
Net cash provided by financing activities
     17,758       129,790  
Effect of exchange rate changes on cash and cash equivalents
     646       (3,914 )
Net increase (decrease) in cash and cash equivalents
     (122,907 )     57,222  
Cash and cash equivalents at beginning of the period
     261,038       203,816  
Cash and cash equivalents at end of the period
   $ 138,131     $ 261,038  
Supplemental cash flow information:
                
Cash paid for interest, net of amounts capitalized
   $ 53,205     $ 60,410  
Cash paid for income taxes
   $ 7,521     $ 5,659  
Supplemental non-cash disclosures related to:
                
Capitalized software and property acquired, not paid
   $ 26,954     $ 26,946  
COFACE Guaranteed Facility
   $ 22,871          
Investment in Hughes Telematics, Inc.
           $ 13,000  
Consolidation of Hughes Systique Corporation
           $ 5,328  
 
 
9
 

HUGHES NETWORK SYSTEMS, LLC
Consolidated Balance Sheets
(In thousands, except per-share amounts)
(Unaudited)

   
December 31,
  
   
2010
    
2009
  
ASSETS
            
Current assets:
            
Cash and cash equivalents
   $ 80,800     $ 183,733  
Marketable securities
     6,675       31,126  
Receivables, net
     184,869       162,806  
Inventories
     57,819       60,244  
Prepaid expenses and other
     24,600       20,976  
Total current assets
     354,763       458,885  
Property, net
     773,652       601,964  
Capitalized software costs, net
     46,092       49,776  
Intangible assets, net
     10,738       13,488  
Goodwill
     2,661       2,661  
Other assets
     67,459       68,524  
Total assets
   $ 1,255,365     $ 1,195,298  
LIABILITIES AND EQUITY
                
Current liabilities:
                
Accounts payable
   $ 117,763     $ 117,513  
Short-term debt
     6,196       6,750  
Accrued liabilities and other
     133,383       133,926  
Total current liabilities
     257,342       258,189  
Long-term debt
     740,487       714,957  
Other long-term liabilities
     27,308       16,191  
Total liabilities
     1,025,137       989,337  
Commitments and contingencies
                
Equity:
                
Hughes Network Systems, LLC ("HNS") equity:
                
Class A membership interests
     176,099       177,933  
Class B membership interests
     -       -  
Retained earnings
     61,487       36,094  
Accumulated other comprehensive loss
     (15,682 )     (13,987 )
Total HNS' equity
     221,904       200,040  
Noncontrolling interest
     8,324       5,921  
Total equity
     230,228       205,961  
Total liabilities and equity
   $ 1,255,365     $ 1,195,298  




 
10
 

HUGHES NETWORK SYSTEMS, LLC
Consolidated Statements of Operations
(In thousands)
(Unaudited)

   
Year Ended December 31,
  
   
2010
    
2009
  
Revenues:
            
Services revenues
   $ 785,740     $ 709,558  
Hardware revenues
     252,003       297,107  
Total revenues
     1,037,743       1,006,665  
Operating costs and expenses:
                
Cost of services
     491,465       448,767  
Cost of hardware
     234,805       289,516  
Selling, general and administrative
     199,156       175,203  
Loss on impairment
     -       44,400  
Research and development
     20,279       22,296  
Amortization of intangible assets
     2,750       5,164  
Total operating costs and expenses
     948,455       985,346  
Operating income
     89,288       21,319  
Other income (expense):
                
Interest expense
     (59,324 )     (64,094 )
Interest income
     1,770       1,988  
Other income (loss), net
     -       (334 )
Income (loss) before income tax expense
     31,734       (41,121 )
Income tax expense
     (5,691 )     (2,436 )
Net income (loss)
     26,043       (43,557 )
Net income attributable to the noncontrolling interest
     (650 )     (1,348 )
Net income (loss) attributable to HNS
   $ 25,393     $ (44,905 )






 
11
 

HUGHES NETWORK SYSTEMS, LLC
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

   
Year Ended December 31,
  
   
2010
    
2009
  
Cash flows from operating activities:
            
Net income (loss)
   $ 26,043     $ (43,557 )
Adjustments to reconcile net income (loss) to net cash flows
from operating activities:
                
Depreciation and amortization
     130,954       102,139  
Amortization of debt issuance costs
     2,818       2,025  
Share-based compensation expense
     839       899  
Loss on impairment
     -       44,400  
Other
     (67 )     546  
Change in other operating assets and liabilities, net of acquisition:
                
Receivables, net
     (21,558 )     52,538  
Inventories
     1,697       6,438  
Prepaid expenses and other
     1,065       4,721  
Accounts payable
     19,607       15,580  
Accrued liabilities and other
     (14,241 )     (22,858 )
Net cash provided by operating activities
     147,157       162,871  
Cash flows from investing activities:
                
Change in restricted cash
     1,165       (108 )
Purchases of marketable securities
     (29,280 )     (41,080 )
Proceeds from sales of marketable securities
     53,693       10,000  
Expenditures for property
     (282,589 )     (150,702 )
Expenditures for capitalized software
     (13,073 )     (12,772 )
Proceeds from sale of property
     206       397  
Long-term loan receivable
     -       (10,000 )
Other, net
     1,462       (755 )
Net cash used in investing activities
     (268,416 )     (205,020 )
Cash flows from financing activities:
                
Short-term revolver borrowings
     4,761       6,791  
Repayments of revolver borrowings
     (5,347 )     (7,861 )
Long-term debt borrowings
     31,548       147,849  
Repayments of long-term debt
     (6,244 )     (12,375 )
Debt issuance costs
     (7,140 )     (4,612 )
Net cash provided by (used in) financing activities
     17,578       129,792  
Effect of exchange rate changes on cash and cash equivalents
     748       (4,172 )
Net increase (decrease) in cash and cash equivalents
     (102,933 )     83,471  
Cash and cash equivalents at beginning of the period
     183,733       100,262  
Cash and cash equivalents at end of the period
   $ 80,800     $ 183,733  
Supplemental cash flow information:
                
Cash paid for interest, net of amounts capitalized
   $ 53,184     $ 60,386  
Cash paid for income taxes
   $ 7,517     $ 5,619  
Supplemental non-cash disclosures related to:
                
Capitalized software and property acquired, not paid
   $ 26,954     $ 26,946  
COFACE Guaranteed Facility
   $ 22,871          


 
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