EX-99 4 psc_form8kexhibit992-020404.txt PEGASUS SATELLITE COMMUNICATIONS F8K EXHIBIT 992 Exhibit 99.2 Pegasus Satellite Communications, Inc. Reports Selected Fourth Quarter Results Bala Cynwyd, PA, February 3, 2004 - Pegasus Communications Corporation ("PCC") (NASDAQ: PGTV) today announced that its subsidiary, Pegasus Satellite Communications, Inc. ("PSC"), reported selected unaudited financial results for the three month period ended December 31, 2003. (Amounts and changes specified are for the three months ended December 31, 2003 compared to the same corresponding period in the prior year, unless indicated otherwise.) Direct broadcast satellite ("DBS") net revenues decreased $4.5 million, or 2.1%, to $212.8 million. DBS operating profit before depreciation and amortization increased $6.1 million, or 11.2%, to $59.9 million. DBS operating profit before depreciation and amortization as a percentage of DBS net revenues increased to 28.2% from 24.8%. DBS free cash flow increased $10.5 million, or 26.0%, to $50.7 million. PSC consolidated cash as of December 31, 2003 totaled $27.0 million and cash and liquidity, including $17.5 million available under our existing revolving credit arrangement, totaled $44.5 million. PCC consolidated cash as of December 31, 2003 totaled $82.9 million, and cash and liquidity, including $17.5 million available under our existing revolving credit arrangement, totaled $100.4 million. Non-GAAP Measure It is important to note that DBS free cash flow is a supplemental non-GAAP measure. DBS free cash flow is defined as DBS operating profit before depreciation and amortization less DBS deferred subscriber acquisition costs and DBS capital expenditures. We use DBS free cash flow: 1. as a measurement of liquidity generated by the DBS business and cash available to: a. fund our debt service; b. potentially fund equity dividends; and c. potentially fund other development projects. 2. in assessing our enterprise value and its growth thereof over time, especially as benchmarked against comparable companies in the industry; and 3. in measuring our leverage at various points throughout our capital structure, and improvements made to it over time, especially as benchmarked against comparable companies in the industry. We believe that investors, analysts, lenders, and other interested parties who follow our industry use DBS free cash flow for the same reasons that we do. Investors, analysts, lenders, and other interested parties who follow our industry rely on DBS free cash flow measures to make informed decisions, especially by benchmarking against comparable companies in the industry. Our ability to reinvest in the DBS business via investments in deferred SAC and capital expenditures, fund debt service of the enterprise, potentially fund equity dividends, and potentially fund other development projects is largely dependent upon our ability to generate DBS free cash flow. We believe that the limitation associated with the use of DBS free cash flow, as compared to net increase (decrease) in cash and cash equivalents, is the number of adjustments included in DBS free cash flow. However, we believe this limitation is not significant and mitigated by the fact that we reconcile DBS free cash flow to net increase (decrease) in cash and cash equivalents in our earnings press release and on our website. DBS free cash flow is not, and should not be considered, an alternative to net increase (decrease) in cash and cash equivalents, or any other measure for determining our liquidity, as determined under generally accepted accounting principles. Although free cash flow is a common measure used by other companies, our calculation of DBS free cash flow may not be comparable with that of others. A reconciliation of DBS free cash flow to its comparable GAAP measures is included in the attached financial tables. Supplemental detail supporting this reconciliation, can be found in the investor relations section of our website (www.pgtv.com). About Pegasus The Company provides digital satellite television to rural households throughout the United States. The Company also owns and/or operates television stations affiliated with CBS, FOX, UPN, and The WB networks. PEGASUS SATELLITE COMMUNICATIONS DBS OPERATING PROFIT BEFORE DEPRECIATION AND AMORTIZATION (in thousands) (unaudited) Three Months Ended Dec 31 2003 2002 ---- ---- DBS net revenues $ 212,832 $ 217,322 DBS operating expenses (excluding depreciation and amortization) (152,884) (163,424) ------------ ------------ DBS operating profit before depreciation and amortization $ 59,948 $ 53,898 ============ ============ DBS Operating profit before depreciation and amortization % to DBS net revenues 28.2% 24.8% PEGASUS SATELLITE COMMUNICATIONS DBS FREE CASH FLOW (in thousands) (unaudited) Three Months Ended Dec 31 2003 2002 ---- ---- DBS operating profit before depreciation and amortization $ 59,948 $ 53,898 Deferred subscriber acquisition costs (4,136) (6,767) DBS equipment capitalized and other capital expenditures (5,135) (6,916) ---------- ---------- DBS free cash flow (1) $ 50,677 $ 40,215 ========== ========== (1) DBS free cash flow is defined as DBS operating profit before depreciation and amortization less DBS deferred subscriber acquisition costs and DBS capital expenditures. DBS free cash flow is not, and should not be considered, an alternative to net increase (decrease) in cash and cash equivalents, or any other measure for determining our liquidity, as determined under generally accepted accounting principles. Although free cash flow is a common measure used by other companies, our calculation of DBS free cash flow may not be comparable with that of others. DBS free cash flow is reconciled to our net increase (decrease) to cash and cash equivalents on our website (www.pgtv.com). PEGASUS SATELLITE COMMUNICATIONS SELECTED DBS SEGMENT DATA (in thousands, except *) (unaudited) Three Months Ended Dec 31, 2003 2002 ---- ---- Subscribers - beginning of period 1,200 1,341 Gross additions 33 47 Churn (78) (80) ---------- ----------- Net subscriber loss (45) (33) ---------- ----------- Subscribers - end of period 1,155 1,308 ========== =========== Subscribers - average 1,180 1,323 Average revenue per subscriber, per month (ARPU)* $60.14 $54.75 Expensed subscriber acquisition costs per gross subscriber addition * $246 $230 Total subscriber acquisition costs per gross subscriber addition * $518 $521 Contact Information: Andrew Smith Pegasus Communications Corporation (610) 934-7000 andrew.smith@pgtv.com