COMSAT Reports 1999 Earnings; COMSAT Builds Foundation for Growth in Data Communications; INTELSAT Privatization Moves Forward.Business Editors/Hi-Tech Writers BETHESDA Bethesda, city, United States Bethesda, uninc. city (1990 pop. 62,936), Montgomery co., W central Md., an affluent residential and commercial suburb of Washington, D.C. The area was settled in the late 17th cent. , Md.--(BUSINESS WIRE)--Feb. 18, 2000 COMSAT Comsat: see Communications Satellite Corporation; communications satellite. (COMSAT General Corporation, Bethesda, MD) Formerly Communications Satellite Corporation, COMSAT was a private company that was created by the U.S. Corporation (NYSE NYSE See: New York Stock Exchange :CQ) today reported a consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: 1999 net loss of $2.6 million, or $0.05 per fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, due to the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of its investment in ICO ICO Icon (File Name Extension) ICO In Case Of ICO Information Commissioner's Office (UK) ICO Instituto de Crédito Oficial (Spain: Official Credit Institute) Global Communications (Holdings) Limited (&uot;ICO&uot;). During the second half of 1999 COMSAT recognized a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta $70.6 million loss from the write-off of its investment in ICO. ICO filed for Chapter 11 Bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most in August of 1999. Exclusive of the ICO write-off, COMSAT's net income for 1999 was $41.7 million or $0.79 per share, up $15.3 million, or $0.29 per share over 1998. Net income for 1998 was $26.4 million, or $0.50 per share. Revenues in 1999 were $618.3 million, up from $616.5 million in 1998. Earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
privatization Transfer of government services or assets to the private sector. State-owned assets may be sold to private owners, or statutory restrictions on competition between privately and publicly owned of Inmarsat Inmarsat: see Communications Satellite Corporation; communications satellite. (Inmarsat plc, London, www.inmarsat.com) A satellite communications company that provides voice and data services to the maritime, transportation and aeronautics markets as well . &uot;In 1999, COMSAT significantly strengthened its competitive position in the international telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. market by expanding its data communications data communications, application of telecommunications technology to the problem of transmitting data, especially to, from, or between computers. In popular usage, it is said that data communications make it possible for one computer to "talk" with another. services and products across all areas of the company,&uot; said COMSAT President and Chief Executive Officer Betty Bet´ty n. 1. A short bar used by thieves to wrench doors open. The powerful betty, or the artful picklock. - Arbuthnot. 2. C. Alewine. &uot;COMSAT is poised to capture continuing growth driven by the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the and data, as approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. forty percent of the company's 1999 revenues came from data communications. COMSAT also continued to take a leadership role in the successful privatization of two of the world's major satellite systems, INTELSAT and Inmarsat.&uot; In the fourth quarter of 1999, INTELSAT's member countries committed to implement an aggressive plan to achieve full privatization by April 2001. COMSAT currently owns 20.4% of INTELSAT. While the new privatized company will not immediately be publicly traded, an initial public offering is planned for 2002, subject to market conditions and the actual date of incorporation of the restructured INTELSAT. Earlier in the year, Inmarsat completed its privatization and is planning an initial public offering for 2001 subject to market conditions. COMSAT is the largest owner of Inmarsat with a 22.2% ownership stake. &uot;Privatization of these two satellite systems will allow them to compete more effectively in today's rapidly evolving marketplace,&uot; said Alewine. In September September: see month. 1999, Lockheed Martin For the former company, see . Lockheed Martin (NYSE: LMT) is a leading multinational aerospace manufacturer and advanced technology company formed in 1995 by the merger of Lockheed Corporation with Martin Marietta. concluded its tender offer to acquire 49% of COMSAT at $45.50 per share. To fulfill ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. the merger agreement, which will join COMSAT with a Lockheed Martin subsidiary, the remaining shares of COMSAT stock will be exchanged for Lockheed Martin stock on a one-for-one basis. This second phase is dependent upon securing federal legislation to lift the ownership caps on COMSAT stock and satisfaction of other conditions, including FCC (1) (Federal Communications Commission, Washington, DC, www.fcc.gov) The U.S. government agency that regulates interstate and international communications including wire, cable, radio, TV and satellite. The FCC was created under the U.S. approval. COMSAT World Systems (CWS CWS Chicago White Sox CWS College World Series CWS Church World Service CWS Child Welfare Services CWS Canadian Wildlife Service CWS Community Water System (EPA) CWS Canada-Wide Standard CWS Compressed Work Schedule ) posted segment income (before interest and taxes) of $137.1 million on $342.9 million in revenues for 1999, up from segment income of $113.1 million on revenues of $303.1 million in 1998. CWS' revenue and earnings growth continue to be driven by increased demand for Internet and other high-speed high-speed adj. 1. Operated or designed for operation at high speed: a high-speed food processor. 2. Taking place at high speed: a high-speed chase. 3. data applications. Improved results are also due to CWS' increased ownership in INTELSAT, and the change in the estimated useful lives of the INTELSAT satellites. Due to the write-off of the ICO investment, COMSAT Mobile Communications COMSAT mobile communications (CMC) is a telecommunications company which provides Mobile packet data service. It was formerly owned by Lockheed Martin Global Telecommunications (a subsidiary of Lockheed Martin) but is believed to have been acquired by Telenor of Norway in (CMC (Common Messaging Calls) A programming interface specified by the XAPIA as the standard messaging API for X.400 and other messaging systems. CMC is intended to provide a common API for applications that want to become mail enabled. 1. ) posted a segment loss of $52.2 million on revenues of $123.0 million for 1999, down from segment income of $31.9 million on revenues of $169.1 million in 1998. Exclusive of the ICO write-off, CMC's segment income for 1999 was $18.4 million. CMC's results reflect the continuing decline in analog traffic and an accounting change due to the privatization of the Inmarsat satellite system. &uot;As the leading service provider over the Inmarsat system, COMSAT Mobile Communications is strongly positioned to meet growing customer demand for advanced, secure and reliable mobile high-speed digital communications Transmitting text, voice and video in binary form. See communications. ,&uot; Alewine noted. &uot;In 2000, COMSAT Mobile will continue to use the proven technology and service reliability of the Inmarsat system to expand its global data service offerings with mobile ISDN ISDN in full Integrated Services Digital Network Digital telecommunications network that operates over standard copper telephone wires or other media. and mobile IP services.&uot; On-going Adj. 1. on-going - currently happening; "an ongoing economic crisis" ongoing current - occurring in or belonging to the present time; "current events"; "the current topic"; "current negotiations"; "current psychoanalytic theories"; "the ship's current position" economic uncertainty in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. is continuing to constrain con·strain tr.v. con·strained, con·strain·ing, con·strains 1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force. 2. growth in the international services market. Economic downturns in several international markets, including Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. , Argentina Argentina (ärjəntē`nə, Span. ärhāntē`nä), officially Argentine Republic, republic (2005 est. pop. 39,538,000), 1,072,157 sq mi (2,776,889 sq km), S South America. and Venezuela Venezuela (vĕnəzwā`lə, Span. vānāswā`lä), officially the Bolivarian Republic of Venezuela, republic (2005 est. pop. 25,375,000), 352,143 sq mi (912,050 sq km), N South America. have negatively impacted overall performance. The fifty percent devaluation devaluation, decreasing the value of one nation's currency relative to gold or the currencies of other nations. It is usually undertaken as a means of correcting a deficit in the balance of payments. of the Brazilian real The real (IPA: [xe'aw] or [ʁe'aɫ], symbol: R$, ISO 4217 code: BRL, plural: reais) is the currency of Brazil. It is also the name of the earliest Brazilian currency (see from the Colonial period to 1942. during 1999 had a substantial negative impact on COMSAT's revenues in Brazil. The Brazilian currency crisis also had a dampening effect in markets throughout Latin America. COMSAT International's (CI) revenues in 1999 were $108.6 million, down 4% from $113.3 million in 1998. EBITDA in 1999 was $11.0 million, down from $12.9 million in 1998. COMSAT International posted segment income of $100,000, versus a segment loss of $21.0 million in 1998, due to the sale of its Viatel investment. During 1999 and 1998 CI sold its investment in Viatel, Inc. This sale resulted in a gain in 1999 of $25.7 million and in 1998 of $14.6 million. In addition, CI recognized a non-cash impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. loss of $14.0 million in 1998 related to the long-lived long-lived adj. 1. Having a long life: a long-lived aunt. 2. Lasting a long time; persistent: a long-lived rumor. 3. BelCom assets. Exclusive of the gains on the sale of Viatel and the impairment loss, CI's 1999 segment loss was $25.6 million versus $21.6 million in 1998. &uot;COMSAT InternationaI's new GlobalWay(SM) service platform, introduced in September 1999, provides the first integrated, fully-interconnected regional network for Latin America,&uot; said Alewine. &uot;The breakthrough capability of GlobalWay as an intra-regional network has established CI as an Internet Protocol-oriented service provider, offering a wide range of data communications solutions from virtual private networks (VPN (Virtual Private Network) A private network that is configured within a public network (a carrier's network or the Internet) in order to take advantage of the economies of scale and management facilities of large networks. ) to such Internet-related offerings as web hosting Making a Web site available on the Internet. Many ISPs host a few personal Web pages for an individual at no additional cost above the monthly service fee, but the address is subordinate to the ISP; for example, www.friendlyisp.com/pat_smith. and web farming services for major Internet Service Providers Internet service provider (ISP) Company that provides Internet connections and services to individuals and organizations. For a monthly fee, ISPs provide computer users with a connection to their site (see data transmission), as well as a log-in name and password. (ISP's) in foreign markets. COMSAT International will expand GlobalWay service in 2000 to further strengthen its market position.&uot; Revenues at COMSAT Laboratories were $54.1 million in 1999, up 28% from $42.3 million in 1998. Revenues from products increased by 159% to $9.4 million. Much of the growth in product revenues is attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the release of COMSAT Laboratories' LINKWAY(TM) satellite networking products. &uot;The Labs growth in revenues reflects the strong market acceptance of the LINKWAY(TM) networking products, and the overall success of commercializing the Labs technology expertise,&uot; said Alewine. &uot;The recent recognition by the Society of Satellite Industry Professionals (SSIP SSIP Shuttle Student Involvement Program (NASA) SSIP Sensor System Improvement Program SSIP Savings and Stock Investment Plan SSIP Space Science Student Involvement Program (now NSIP) ) of LINKWAY as the best new satellite networking ground technology of 1999 is another important statement about the market potential of the LINKWAY(TM) family of products.&uot; In the fourth quarter of 1999, the Corporation's consolidated net loss was $8.2 million or $0.15 per share, down from net income of $11.9 million or $0.22 per share in the same period of 1998. In the fourth quarter, Inmarsat wrote-off its investment in ICO and the corporation recognized $34.6 million as its pre-tax share of the loss. Excluding the ICO write-off, net income for the fourth quarter of 1999 was $12.7 million, up from $11.9 million in the same period in 1998. Revenues in the fourth quarter of 1999 were $162.2 million, nearly identical to the $162.3 million in revenues in the fourth quarter of 1998. Alewine concluded by saying, &uot;Across all lines of business, COMSAT is sharply focused on meeting our customers' growing demand for high-speed data communications. The company is well positioned competitively as a result of COMSAT's proven strength in applying advanced technology and its well-earned well-earned adj [rest] → merecido well-earned adj [rest] → bien mérité(e) well-earned well adj [rest reputation for providing high quality, reliable service to match the fast-evolving needs of the telecommunications marketplace.&uot; Some of the statements in this news release are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. and relate to anticipated future operating results. Forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. are based on COMSAT management's current expectations and assumptions, which may be affected by the timing and outcome of pending or prospective regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. and legislative actions, by the proposed merger of the corporation with Lockheed Martin Corporation, by developments concerning the privatization of INTELSAT, by international business conditions (e.g., foreign currency devaluation Currency devaluation A deliberate downward adjustment in the official exchange rates established, or pegged, by a government against a specified standard, such as another currency or gold. and economic instability instability /in·sta·bil·i·ty/ (-stah-bil´i-te) lack of steadiness or stability. detrusor instability in foreign markets), by the responsiveness responsiveness Medtalk The ability to respond to a stimulus. See Airway responsiveness. of customers to new and existing service offerings by the corporation and competing service providers, and by other subsequent developments and business conditions, and necessarily involve risks and uncertainties. Therefore, there can be no assurance that actual future results will not differ materially from anticipated results. Readers should refer to COMSAT's disclosure documents filed with the Securities and Exchange Commission, including the corporation's recent Forms 10-K and 10-Q, for specific details on some of the factors that may affect operating results. COMSAT expressly disclaims any obligation to update forward looking statements. COMSAT Corporation (NYSE: CQ) is a leading provider of global satellite services and digital networking services, products, and technology. enterhold COMSAT Corporation Financial Highlights Fourth Quarter and Full Year 1999 SUMMARY Revenue in the fourth quarter was $162.2 million, essentially unchanged from the fourth quarter of 1998. Revenue in 1999 totaled $618.3 million, up $1.8 million from 1998. Revenue growth in COMSAT World Systems and COMSAT Laboratories was offset by revenue declines in COMSAT Mobile and COMSAT International. Net loss for the fourth quarter and all of 1999 was $8.2 million ($0.15 per fully diluted share) and $2.6 million ($0.05 per share), respectively, versus net income of $11.9 million ($0.22 per share) and $26.4 million ($0.50 per share) for the comparative periods of 1998. In the fourth quarter of 1999, Inmarsat wrote off its investment in ICO Global Communications (Holdings) Limited (ICO) and the corporation recognized $34.6 million as its pre-tax share of the loss. The corporation wrote off its $36.0 million direct investment in ICO in the third quarter of this year. Excluding the ICO write-offs, net income for the quarter and year were $12.7 million ($0.24 per share) and $41.7 million ($0.79 per share), respectively. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the fourth quarter of 1999 was $54.8 million, a decrease of $17.1 million from the same period of last year. For 1999, EBITDA was $226.9 million, down $66.5 million from 1998. EBITDA levels for the quarter and year reflect the change in accounting associated with the privatization of Inmarsat. BUSINESS SEGMENT INFORMATION The corporation reports operating results and financial data in four segments: COMSAT World Systems (CWS), COMSAT Mobile Communications (CMC), COMSAT International (CI) and COMSAT Laboratories (Labs). The corporation evaluates the performance of its operating segments based on segment income (loss) before taxes and interest costs. COMSAT SATELLITE SERVICES World Systems revenue was up 18% in the fourth quarter to $90.6 million and 13% for the year to $342.9 million, compared to the same periods in 1998. Higher revenue from the growing demand for Internet services and other high-speed data traffic and COMSAT's increased ownership in INTELSAT were partially offset by a slight decline in traditional voice communications. Segment income for the quarter was $38.9 million, versus 1998 segment income of $33.9 million. Excluding a fourth quarter 1998 $4.3 million settlement gain with ICO, CWS segment income increased $9.3 million. During the third quarter of 1999, CWS extended the depreciable depreciable Of, relating to, or being a long-term tangible asset that is subject to depreciation. lives of its share of costs on INTELSAT satellites. The change was based on current estimates of the satellites' useful lives. This change in estimate had the effect of increasing CWS segment income by $5.5 million in the fourth quarter and $10.5 million for the year. In addition, improvements stem from increased INTELSAT ownership, lower operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. and revenue growth. For 1999, World Systems segment income was $137.1 million, compared to $113.1 million in 1998. Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 5% in the quarter to $60.2 million and 6% for the year to $232.7 million, compared with the respective periods in 1998. EBITDA margins were 66% for the fourth quarter and 68% for the year, versus 75% for the quarter and 72% for 1998. The margins are lower than in 1998, reflecting CWS' changing revenue mix, from higher margin voice service to higher growth, but lower margin data services. Mobile Communications revenue was down 30% for the quarter and 27% for the year to $31.6 million and $123.0 million, respectively, from the same periods in 1998. Reporting Inmarsat results using the equity method of accounting lowered CMC revenue by $6.2 million compared to the fourth quarter of 1998, and by $17.6 million compared to 1998. The remainder of the revenue decrease was primarily the result of lower analog telephone traffic, principally caused by lower usage in the U.S. Government sector and lower amounts of carrier traffic. CMC segment loss for the quarter and year were $29.9 million and $52.2 million, compared to segment income of $7.9 million and $31.9 million for the same respective periods in 1998. CMC results include the write-off of direct and indirect ICO investments during the third and fourth quarters of 1999. Exclusive of the write-off of ICO, CMC segment income was $4.7 million for the quarter and $18.4 million for the year, due to lower revenue, interest costs of $4.3 million and income taxes of $3.5 million in Inmarsat equity income. Prior to 1999, the corporation's share of Inmarsat's interest costs was reported in &uot;Interest costs, net of amounts capitalized&uot; and taxes were reported in &uot;Income tax expense.&uot; As a result of privatization, Inmarsat now recognizes income taxes in net operating results. CMC's EBITDA was down 82% in the quarter and down 80% for the year to $4.2 million and $19.1 million, respectively. EBITDA margins were 13% for the fourth quarter and 16% in 1999, versus 52% for the quarter and 56% for 1998. CMC's EBITDA was significantly affected by the Inmarsat privatization, since Inmarsat's operating results are now reported as equity income. On April 15, 1999, Inmarsat completed its privatization. As a result, COMSAT now uses the equity method of accounting to report its 22.2% ownership in the new company. Prior to 1999, the corporation used the pro rata [Latin, Proportionately.] A phrase that describes a division made according to a certain rate, percentage, or share. In a Bankruptcy case, when the debtor is insolvent, creditors generally agree to accept a pro rata share of what is owed to them. method of consolidation to report its share of Inmarsat's operating results. With the pro rata method of consolidation, the corporation reported its share of Inmarsat's revenue (net of space segment costs paid to Inmarsat), costs of services, depreciation and amortization and interest costs in the respective categories of its income statement. The corporation now reports its proportionate pro·por·tion·ate adj. Being in due proportion; proportional. tr.v. pro·por·tion·at·ed, pro·por·tion·at·ing, pro·por·tion·ates To make proportionate. share of Inmarsat's net operating results as equity income in the &uot;Other income (expense)&uot; category of its income statement. Space segment charges paid to Inmarsat are now reported in costs of services. Although presenting Inmarsat as an equity investment has reduced the corporation's operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , the corporation's net loss has not been affected. COMSAT INTERNATIONAL COMSAT International (CI) revenue decreased 12% in the fourth quarter and 4% for the year to $27.4 million and $108.6 million respectively, compared with the same periods in 1998. Revenue decreases were driven primarily by Brazil, and were due to the 50% devaluation of the Brazilian Real during 1999. Performance of CI-Brazil more than offset revenue increases in Argentina, Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. and Colombia Colombia (kəlŭm`bēə, Span. kōlōm`byä), officially Republic of Colombia, republic (2005 est. pop. 42,954,000), 439,735 sq mi (1,138,914 sq km), NW South America. Bogotá is the capital and largest city. . CI's segment loss for the fourth quarter of 1999 was $11.8 million, compared to segment income of $5.8 million in the fourth quarter of 1998. CI segment income for 1999 was $100,000, versus a loss of $21.0 million for 1998. CI results include gains realized from the sale of its investment in Viatel, Inc. of $14.6 million, $13.1 million and $12.6 million in the fourth quarter of 1998, and first and second quarters of 1999, respectively. In the third quarter of 1998, CI recorded a non-cash impairment loss of $14.0 million related to the write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of long-lived BelCom assets, namely goodwill, plant and equipment. Absent the BelCom impairment and gains from the sale of stock, CI's 1999 segment loss was $11.8 million for the quarter and $25.6 for the year as compared to segment losses of $8.2 million and $21.6 million for the comparable periods of 1998. Division EBITDA totaled $11.0 million in 1999, and EBITDA was negative $2.8 million in the fourth quarter. This compares to EBITDA of $0.4 million in the fourth quarter of 1998 and $12.9 million for the year in 1998. EBITDA margin for 1999 was 10% and 11% for 1998.
COMSAT International
Operating Companies Information (unaudited)
(in millions)
1999 1998
4Q99 YTD 4Q98 YTD
Revenue
Americas $24.9 $99.1 $28.8 $102.9
Asia/Europe 2.5 9.5 2.5 10.4
------ ------ ------ ------
Total Revenue $27.4 $108.6 $31.3 $113.3
1999 1998
4Q99 YTD 4Q98 YTD
EBITDA
Americas $2.7 $25.1 $5.3 $28.5
Asia/Europe (3.0) (4.0) (1.3) (4.3)
------ ------ ------ ------
EBITDA before CI Corporate (0.3) 21.1 4.0 24.2
CI Corporate (2.5) (10.1) (3.6) (11.3)
------ ------ ------ ------
Total EBITDA $(2.8) $11.0 $0.4 $12.9
Notes:
1. Americas include Argentina (100%), Guatemala (100%), Colombia
(100%), Brazil (100%), Venezuela (100%). Asia/Europe include
BelCom (100%), Turkey IBS (85%), China (62%) and Turkey VSAT
(64%). Numbers in parenthesis indicate COMSAT ownership.
2. CI share of India revenue not consolidated for accounting
purposes is: $1.3 and $4.6 for 4Q99 and YTD99 and $1.0 and $3.4
for 4Q98 and YTD98 respectively.
3. EBITDA (earnings before interest, taxes, depreciation, and
amortization) is calculated by adding depreciation and
amortization, impairment of long-lived assets and operating
income (loss).
COMSAT LABORATORIES COMSAT Laboratories revenue was up 60% in the quarter and 28% for the year to $16.6 million and $54.1 million, respectively. Technical consulting and product revenue drove growth in 1999. Segment income for the quarter was $1.3 million, versus a segment loss of $800,000 in the same period in 1998. Increased shipments of higher-margin Linkway products contributed to the improvement. For 1999, the Lab's segment loss was $800,000, compared to a segment loss of $3.5 million in 1998. The Labs' 1998 results included a $2.0 million non-cash write-off of an investment. Laboratories external revenue backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. at December December: see month. 31, 1999 increased 16% from year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 1998 levels to $58.8 million primarily as a result of a $30 million Astrolink network control center contract. COMSAT CONSOLIDATED GENERAL &ADMINISTRATIVE expenses totaled $24.7 million in 1999, down from $25.6 million in 1998. MERGER EXPENSES of $10.3 million and $5.5 million were incurred in 1999 and 1998, respectively, as a result of the proposed merger with Lockheed Martin Corporation. RESEARCH &DEVELOPMENT expenses in 1999 totaled $9.2 million, versus $7.9 million in 1998. OTHER INCOME (EXPENSE), NET for the year was expense of $26.9 million, compared with income of $12.5 million in 1998. The decline was due to the ICO write-off, offset somewhat by an increase in gains from the sale of investments and the change in accounting for the corporation's investment in the privatized Inmarsat. INTEREST COSTS, NET OF AMOUNTS CAPITALIZED Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. in 1999 was $37.2 million, $2.6 million lower than in 1998. The improvement was due to the corporation internally financing its operations during 1999 instead of utilizing its commercial paper program, as it had in 1998. In addition, CMC's share of Inmarsat's interest costs is now being reported within &uot;Other income (expense), net.&uot; INCOME TAX EXPENSE for the year was $600,000, versus an expense of $5.8 million in 1998. WEIGHTED AVERAGE SHARES OUTSTANDING were 52.7 million for 1999, compared to 53.3 million for 1998. Dilutive securities were excluded from the earnings per share computations due to the corporation's net loss in the fourth quarter and all of 1999. CASH AND LIQUIDITY CASH AND CASH EQUIVALENTS totaled $78.6 million at the end of the year, compared with $30.8 million at the end of 1998. CURRENT MATURITIES OF LONG-TERM DEBT Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. totaled $786,000 at December 31, 1999, compared with current maturities of long-term debt of $15.0 million at year-end 1998. LONG-TERM DEBT declined to $409.0 million as of December 31, 1999 from $446.8 million in 1998.
COMSAT CORPORATION
CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
(In millions, except per share amounts)
For the Quarter Ended For the Year Ended
December 31, December 31,
--------------------- ------------------
1999 1998 1999 1998
---- ---- ---- ----
Revenues $162.2 $162.3 $618.3 $616.5
--------- --------- --------- ---------
Operating expenses:
Cost of services 97.1 79.1 347.2 284.1
Depreciation and
amortization 39.3 55.4 164.8 219.9
Research and
development 3.1 1.9 9.2 7.9
General and
administrative 6.1 7.4 24.7 25.6
Impairment of
long-lived assets - - - 14.0
Merger costs 1.1 2.0 10.3 5.5
--------- --------- --------- ---------
Total operating
expenses 146.7 145.8 556.2 557.0
--------- --------- --------- ---------
Operating income 15.5 16.5 62.1 59.5
Other income
(expense), net (25.5) 17.4 (26.9) 12.5
Interest costs, net
of amounts
capitalized (8.7) (9.7) (37.2) (39.8)
--------- --------- --------- ---------
Income (loss) before
taxes (18.7) 24.2 (2.0) 32.2
Income tax benefit
(expense) 10.5 (12.3) (0.6) (5.8)
--------- --------- --------- ---------
Net income (loss) $ (8.2) $ 11.9 $ (2.6) $ 26.4
========= ========= ========= =========
Earnings (loss) per
common share:
Basic $ (0.15) $ 0.23 $ (0.05) $ 0.51
Assuming
dilution $ (0.15) $ 0.22 $ (0.05) $ 0.50
Average
shares-basic 53.0 52.3 52.7 51.7
Average
shares-assuming
dilution 53.0 53.9 52.7 53.3
COMSAT CORPORATION
OPERATING RESULTS BY BUSINESS SEGMENT (UNAUDITED)
(In millions)
1999
--------------------------------------------
QTR 1 QTR 2 QTR 3 QTR 4 TOTAL
--------------------------------------------
Revenues
--------
Satellite Services
World Systems $ 78.9 $ 86.3 $ 87.1 $ 90.6 $342.9
Mobile Communications 29.7 30.9 30.8 31.6 123.0
--------------------------------------------
Total 108.6 117.2 117.9 122.2 465.9
International 27.7 27.7 25.8 27.4 108.6
Laboratories 9.9 13.3 14.3 16.6 54.1
Eliminations and other (1.7) (2.3) (2.3) (4.0) (10.3)
--------------------------------------------
Total $144.5 $155.9 $155.7 $162.2 $618.3
============================================
1998
--------------------------------------------
QTR 1 QTR 2 QTR 3 QTR 4 TOTAL
--------------------------------------------
Revenues
--------
Satellite Services
World Systems $ 73.0 $ 76.2 $ 77.0 $ 76.9 $303.1
Mobile Communications 40.8 40.1 42.8 45.4 169.1
--------------------------------------------
Total 113.8 116.3 119.8 122.3 472.2
International 25.1 27.1 29.8 31.3 113.3
Laboratories 9.0 11.5 11.4 10.4 42.3
Eliminations and other (3.2) (3.8) (2.6) (1.7) (11.3)
--------------------------------------------
Total $144.7 $151.1 $158.4 $162.3 $616.5
============================================
1999
--------------------------------------------
QTR 1 QTR 2 QTR 3 QTR 4 TOTAL
--------------------------------------------
Segment income (loss)(1)
------------------------
Satellite Services
World Systems $ 29.3 $ 32.0 $ 36.9 $ 38.9 $137.1
Mobile Communications(2) 4.8 4.1 (31.2) (29.9) (52.2)
--------------------------------------------
Total 34.1 36.1 5.7 9.0 84.9
International(3) 8.8 9.5 (6.4) (11.8) 0.1
Laboratories (1.5) (0.2) (0.4) 1.3 (0.8)
--------------------------------------------
Total segment income
(loss) 41.4 45.4 (1.1) (1.5) 84.2
General and
administrative expenses (5.2) (6.7) (6.7) (6.1) (24.7)
Merger costs (1.8) (2.1) (5.3) (1.1) (10.3)
Interest costs, net of
amounts capitalized (9.8) (9.6) (9.1) (8.7) (37.2)
Other income (expense),
net (4.5) (4.6) (3.6) (1.3) (14.0)
--------------------------------------------
Total (21.3) (23.0) (24.7) (17.2) (86.2)
--------------------------------------------
Total $ 20.1 $ 22.4 ($25.8) ($ 18.7) ($ 2.0)
============================================
1998
--------------------------------------------
QTR 1 QTR 2 QTR 3 QTR 4 TOTAL
--------------------------------------------
Segment income (loss)(1)
------------------------
Satellite Services
World Systems $ 26.0 $ 26.0 $ 27.2 $ 33.9 $113.1
Mobile Communications(2) 8.9 7.4 7.7 7.9 31.9
--------------------------------------------
Total 34.9 33.4 34.9 41.8 145.0
International(3) (4.4) (3.8) (18.6) 5.8 (21.0)
Laboratories (2.5) 0.1 (0.3) (0.8) (3.5)
--------------------------------------------
Total segment income
(loss) 28.0 29.7 16.0 46.8 120.5
General and
administrative expenses (5.8) (6.1) (6.3) (7.4) (25.6)
Merger costs - - (3.5) (2.0) (5.5)
Interest costs, net of
amounts capitalized (11.3) (12.7) (6.1) (9.7) (39.8)
Other income (expense),
net (5.4) (3.7) (4.8) (3.5) (17.4)
--------------------------------------------
Total (22.5) (22.5) (20.7) (22.6) (88.3)
--------------------------------------------
Total $ 5.5 $ 7.2 ($ 4.7) $24.2 $32.2
============================================
Notes:
(1) The corporation evaluates the performance of its operating
segments based on income (loss) before taxes and interest costs.
(2) Mobile Communication's third and fourth quarter of 1999 includes
a $36.0 million and $34.6 million non-cash write-off of its
direct investment and indirect investment, respectively, in ICO
Global Communications (Holdings) Limited.
(3) International's first and second quarters of 1999 and the fourth
quarter of 1998 includes a $13.1 million, $12.6 million, and
$14.0 million gain, respectively, from the sale of stock in
Viatel, Inc. International's third quarter of 1998 includes the
$14.0 million impairment of Belcom's long-lived assets.
COMSAT CORPORATION
OPERATING RESULTS BY BUSINESS SEGMENT (UNAUDITED)
(In millions)
1999
--------------------------------------------
QTR 1 QTR 2 QTR 3 QTR 4 TOTAL
--------------------------------------------
Depreciation and
Amortization
-----------------
Satellite Services
World Systems $ 26.2 $ 27.5 $ 22.8 $ 21.8 $ 98.3
Mobile Communications 5.1 5.0 4.8 4.8 19.7
--------------------------------------------
Total 31.3 32.5 27.6 26.6 118.0
International 9.8 10.0 9.9 10.9 40.6
Laboratories 0.3 0.3 0.3 0.4 1.3
Other 1.1 1.1 1.3 1.4 4.9
--------------------------------------------
Total $ 42.5 $ 43.9 $ 39.1 $ 39.3 $164.8
============================================
1998
--------------------------------------------
QTR 1 QTR 2 QTR 3 QTR 4 TOTAL
--------------------------------------------
Depreciation and
Amortization
-----------------
Satellite Services
World Systems $ 26.1 $ 29.1 $ 29.0 $ 28.1 $112.3
Mobile Communications 15.3 15.9 16.5 16.5 64.2
--------------------------------------------
Total 41.4 45.0 45.5 44.6 176.5
International 8.9 9.7 10.6 9.5 38.7
Laboratories 0.3 0.3 0.3 0.3 1.2
Other 0.9 0.6 1.0 1.0 3.5
--------------------------------------------
Total $ 51.5 $ 55.6 $ 57.4 $ 55.4 $219.9
============================================
1999
--------------------------------------------
QTR 1 QTR 2 QTR 3 QTR 4 TOTAL
--------------------------------------------
EBITDA
------
Satellite Services
World Systems $ 54.8 $ 58.6 $ 59.1 $ 60.2 $232.7
Mobile Communications 4.1 5.9 4.9 4.2 19.1
--------------------------------------------
Total 58.9 64.5 64.0 64.4 251.8
International 4.6 6.2 3.0 (2.8) 11.0
Laboratories (1.2) 0.2 (0.1) 1.7 0.6
Other (7.0) (9.0) (12.0) (8.5) (36.5)
--------------------------------------------
Total $ 55.3 $ 61.9 $ 54.9 $ 54.8 $226.9
============================================
Note:
EBITDA (earnings before interest, taxes, depreciation and
amortization) is calculated by adding depreciation and amortization,
impairment of long-lived assets and operating income (loss). Other
includes G& expenses, merger costs and Other from the Segment income
(loss) section.
1998
--------------------------------------------
QTR 1 QTR 2 QTR 3 QTR 4 TOTAL
--------------------------------------------
EBITDA
------
Satellite Services
World Systems $ 51.8 $ 54.7 $ 55.8 $ 57.4 $219.7
Mobile Communications 23.1 23.1 23.9 23.8 93.9
--------------------------------------------
Total 74.9 77.8 79.7 81.2 313.6
International 3.3 4.7 4.5 0.4 12.9
Laboratories (0.3) 0.3 (0.2) (0.4) (0.6)
Other (6.7) (6.3) (10.2) (9.3) (32.5)
--------------------------------------------
Total $71.2 $76.5 $73.8 $71.9 $293.4
============================================
Note:
EBITDA (earnings before interest, taxes, depreciation and
amortization) is calculated by adding depreciation and amortization,
impairment of long-lived assets and operating income (loss). Other
includes G& expenses, merger costs and Other from the Segment income
(loss) section.
COMSAT CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions)
Dec. 31, Dec. 31,
1999 1998
--------- ---------
Current assets:
Cash $ 78.6 $ 30.8
Receivables 145.9 131.1
Other current assets 62.1 37.1
---------- ----------
Total current assets 286.6 199.0
Property and equipment, net 912.5 1,209.5
Investments 327.7 249.1
Other assets 120.9 133.2
---------- ----------
Total assets $1,647.7 $1,790.8
========== ==========
Current liabilities:
Current maturities of long-term debt $ 0.8 $ 15.0
Other current liabilities 144.8 125.8
---------- ----------
Total current liabilities 145.6 140.8
Long-term debt 409.0 446.8
Other noncurrent liabilities 295.4 344.2
Preferred securities issued by
subsidiary 200.0 200.0
Stockholders' equity 597.7 659.0
---------- ----------
Total liabilities &stockholders'
equity $1,647.7 $1,790.8
========== ==========
COMSAT CORPORATION
CONDENSED CASH FLOW STATEMENTS (UNAUDITED)
(In millions)
For The Years Ended
-------------------------
Dec. 31, Dec. 31,
1999 1998
--------- ---------
Operating activities:
Net income (loss) ($2.6) $26.4
Adjustments to reconcile net income
(loss) to net cash provided by
continuing operations 187.3 219.9
Changes in assets and liabilities (46.8) (25.3)
Other 6.4 (1.1)
---------- ----------
Net cash provided by operating
activities of continuing operations 144.3 219.9
Net cash provided (used) by
discontinued operations (7.2) 102.8
---------- ----------
Net cash provided by operating
activities 137.1 322.7
---------- ----------
Investing activities:
Purchase of property and equipment (115.2) (187.8)
Proceeds from sale of investments 33.6 19.9
Increase INTELSAT ownership (38.1) (0.7)
Distribution from Inmarsat 31.2 -
Other 10.3 2.6
---------- ----------
Net cash used in investing activities (78.2) (166.0)
Financing activities:
Common stock issued 7.4 46.5
Repayment of debt (7.9) (163.3)
Dividends paid (10.6) (10.4)
Other - (4.5)
---------- ----------
Net cash used by financing activities (11.1) (131.7)
---------- ----------
Net increase in cash and cash
equivalents 47.8 25.0
Cash and cash equivalents,
beginning of year 30.8 5.8
---------- ----------
Cash and cash equivalents, end of year $ 78.6 $ 30.8
========== ==========
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