Loral Reports 2001 Second Quarter Results.Business EditorsNEW YORK--(BUSINESS WIRE)--August 8, 2001 Loral's quarterly conference call with chairman and chief executive officer, Bernard L. Schwartz Bernard Leon Schwartz (born December 12,1926, Brooklyn, New York) was the Chairman of the Board and CEO of Loral Space & Communications, Chairman and CEO of K&F Industries, Inc., Chairman and CEO of Loral Corp., and president and CEO of Globalstar. , will begin at 11 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT today. To participate, please dial (719) 457-2600 approximately 15 minutes prior to the scheduled start of the call, or access the listen-only simulcast of the call on 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 at www.loral Lo´ral n. 1. (Zool.) Of or pertaining to the lores. 2. Of or pertaining to lore . .com or www.vcall.com. Loral Space & Communications (NYSE NYSE See: New York Stock Exchange : LOR LOR Letter Of Reprimand (military) LoR Lord of the Rings (J.R.R. Tolkien) LOR Learning Object Repository LOR Linux.Org. ) today reported its financial results for the second quarter and six months ended June June: see month. 30, 2001. Highlights -- Loral's EBITDA rose 40 percent to $62 million versus the second quarter of last year; Loral Skynet's EBITDA was up 42 percent. -- Loral's cash and available credit at the end of the second quarter improved versus the prior quarter to $277 million, even after $88 million in capital spending and debt repayment. -- Net loss improved by $39 million versus last year's second quarter. Financial Results for the Periods Ended June 30, 2001 Loral's reported EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (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.
FSS Flight Service Station FSS Family Self-Sufficiency FSS Fixed Satellite Service FSS Forensic Science Service (Great Britain) business. Loral's EBITDA margins also rose, reaching 23 percent for the second quarter, up from 14 percent a year ago. The fixed satellite services segment continues to achieve steady year-over-year gains, and will be the primary source of Loral's revenue gains, EBITDA and cash flow in 2001 and beyond. The net loss applicable to common shareholders for the quarter was $0.29 per share compared to $0.37 per share in the second quarter last year. The current period contains a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. non-cash preferred dividend preferred dividend n. a payment of a corporation's profits to holders of preferred shares of stock. (See: preferred stock) charge of $29 million or $0.09 per share in connection with the April 2001 preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. exchange offers. Per share calculations are based on 327 million weighted average shares of common stock outstanding versus 296 million for the second quarter of 2000, the increase was attributable primarily to the issuance of common shares in the preferred stock exchange offers. Cash from operating activities for the first half of the year was $54 million. Liquidity (cash and available bank credit) totaled $277 million at the end of the second quarter compared to $269 million at the end of the first quarter, even after capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. of $59 million and debt repayment of $29 million. Other items produced $61 million in cash in the second quarter. The fixed satellite services segment continued its sales growth during the quarter, climbing to $134 million from $112 million last year. Despite this growth, Loral's total reported revenue for the second quarter declined to $275 million from $324 million, due primarily to a decline in satellite manufacturing and technology revenue. Loral's loss applicable to Globalstar activities was sharply reduced during the period to $9.5 million from $92 million in the year-ago quarter. Loral is currently spending approximately $8 million per quarter for its share of four Globalstar service provider franchises, which is expensed as incurred. This expense, expected to decline in the latter part of the year, will continue until Globalstar is restructured. Loral's Globalstar-related investments currently total $23 million. Bookings and 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. Satellite manufacturing gross bookings declined from an unusually robust $372 million in the second quarter of 2000 to $75 million in this year's second quarter. After the close of the quarter, Loral received authorizations to proceed (ATP ATP: see adenosine triphosphate. ATP in full adenosine triphosphate Organic compound, substrate in many enzyme-catalyzed reactions (see catalysis) in the cells of animals, plants, and microorganisms. ) on two satellite orders: SpainSat and XTAR-EUR, which, along with DirecTV 7S, are expected to go to contract and be recorded as bookings in the third quarter. Backlog for the satellite manufacturing and technology segment was $1.4 billion, compared to $1.6 billion a year ago. For the FSS segment, an increase in gross bookings was more than offset by de-bookings arising largely from the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of two customer contracts. In one case, Loral reduced the length of a lease agreement and allowed a reduction in the number of transponders leased under a multi-year contract. In the second case, Loral reduced the length of a lease agreement from 13 years to eight. In both instances Loral received appropriate compensation in exchange for meeting its customers' requirements. These transactions have no material effect on 2001 revenue or EBITDA expectations. FSS backlog remains higher than the year-ago level: $2.2 billion vs. $1.9 billion. In light of the timing of SS/L's bookings, the company has revised its revenue and EBITDA projections for Loral for the year and now expects reported revenues and EBITDA of $1.0 billion and $240 million, respectively. The continued softness in the Internet business globally led to a decrease in data services segment bookings to $19 million in gross bookings versus $108 million in the second quarter of 2000. Overall, Loral ended the quarter with a net funded backlog of $2.8 billion, equivalent to the year-ago level. Business Unit Review Fixed Satellite Services (FSS) FSS is Loral's largest cash generator generator, in electricity, machine used to change mechanical energy into electrical energy. It operates on the principle of electromagnetic induction, discovered (1831) by Michael Faraday. and primary growth business. In spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite the downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. in the telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. industry, the segment achieved record revenues and EBITDA during the quarter, illustrating the value of its long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. contracts and well-established customer relationships. During this period Loral saw a continuation of first quarter market conditions: steady demand in most market sectors and some softness in others, principally North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. C-band and Asian Ku-band. Loral's transponder A receiver/transmitter on a communications satellite. It receives a microwave signal from earth (uplink), amplifies it and retransmits it back to earth at a different frequency (downlink). A satellite has several transponders. pricing remains stable for most regions and frequency bands. The Global Alliance fleet is well positioned to match capacity to demand and, based on its current long-term contracts, expects continued stability in utilization and revenue in the near term. Segment revenues for the quarter were $134 million, up 19 percent compared to $112 million last year. Segment EBITDA was $90 million, up 28 percent from $70 million in the second quarter of 2000. The EBITDA margin increased to 67 percent from 62 percent in the second quarter of 2000. Fleet utilization of 73 percent at June 30, 2001 was consistent with the utilization rate last quarter. (Both figures exclude Europe*Star, which initiated service during the first quarter of the year.) Construction continues on three satellites for Skynet and one satellite for Satmex. With its current fleet at near-full capacity, Satmex already has backlog of over $50 million on Satmex 6, scheduled for launch in early 2003. The capacity take-up rate at Europe*Star, majority-owned by Loral partner, Alcatel, lags expectations. After the close of the quarter, the company announced its plan to market X-band and Ka-band services to U.S. and allied governments using capacity on the previously noted XTAR-EUR (to be built for a venture 56-percent-owned by Loral) and SpainSat satellites, now under construction at SS/L SS/L Space Systems/Loral (Palo Alto, CA) SS/L Space Station/Loral . Using the two new satellites, the plan addresses the fast-growing bandwidth needs at military and civilian governmental agencies - a market with significant commercial potential not previously pursued by the company. Satellite Manufacturing and Technology Segment revenue of $212 million represented a decline from the second quarter of 2000, due to slow bookings. Segment EBITDA declined to $16 million from $25 million in the same period last year. The EBITDA margin for the quarter was 7.5 percent; Loral anticipates that by year-end, margins will recover to the target range of eight to ten percent of revenues. Year to date, the manufacturing segment has booked one satellite and has received authorizations to proceed (ATPs) on three, expected to be booked next quarter. The company expects to book as many as six satellite awards this year, but the unpredictable timing of these bookings will have an impact on revenues in 2001. Accordingly, segment revenue expectations have been trimmed from $1.0 billion to $800 million for the year. The company is aggressively managing SS/L's costs to maintain its 2001 EBITDA margin target. During the quarter, SS/L launched Intelsat 901, the first of seven satellites manufactured by SS/L for the Intelsat IX series to be launched over the next two years. The satellite, handed over to Intelsat just after its launch in June, is currently undergoing routine in-orbit testing and will be placed in service in the coming weeks. The next SS/L-built satellite in this series, Intelsat 902, has been shipped to Arianespace's Kourou, French Guiana French Guiana (gēăn`ə, –än`–), Fr. La Guyane française, officially Department of Guiana, French overseas department (2005 est. pop. , spaceport space·port n. An installation for sheltering, testing, maintaining, and launching spacecraft. in preparation for launch on an Ariane-4 rocket in late August. Construction of Intelsat 903 at SS/L's facility in Palo Alto, California “Palo Alto” redirects here. For other uses, see Palo Alto (disambiguation). Palo Alto (IPA: /ˌpæloʊˈʔæltoʊ/, from Spanish: palo: "stick" and alto: "high", i.e. , is approaching completion in preparation for a late-2001 launch. Intelsat 904, 905, 906 and 907 all are under construction and scheduled for launch in 2002. Intelsat 901 is the twenty-fifth satellite delivered by SS/L to the international satellite operator since 1976. With the delivery of the Intelsat-IX series, SS/L will have built 31 spacecraft spacecraft Vehicle designed to operate, with or without a crew, in a controlled flight pattern above Earth's lower atmosphere. Since streamlining is not needed in the high vacuum of this environment, a spacecraft's shape is designed according to its mission (see for Intelsat, nearly half of its fleet, and significantly more than any other manufacturer. After the quarter ended, SS/L successfully launched GOES-M, the latest in a line of advanced U.S. weather satellites built for the National Oceanographic and Atmospheric atmospheric /at·mos·pher·ic/ (at?mos-fer´ik) of or pertaining to the atmosphere. atmospheric of or pertaining to the atmosphere. Administration (NOAA NOAA abbr. National Oceanic and Atmospheric Administration Noun 1. NOAA - an agency in the Department of Commerce that maps the oceans and conserves their living resources; predicts changes to the earth's environment; ) and NASA NASA: see National Aeronautics and Space Administration. NASA in full National Aeronautics and Space Administration Independent U.S. . The satellite's mission is to monitor hurricanes, severe thunderstorms thunderstorms a storm characterized by thunder and lightning caused by strong rising air currents; identified as agents of animal disease because of their involvement causing (1) spasmodic colic; (2) lightning strike; (3) injuries of cattle acquired in stampedes initiated by storms. , flash floods and other severe weather. GOES-M is the fifth of five satellites built for NOAA/NASA by SS/L, the first of which was launched in 1994. SS/L plans to launch a total of five to six satellites for customers in 2001, including DirecTV-5, built for DirecTV, Inc., a unit of Hughes Electronics. Loral also will continue to deliver critical components, such as batteries and power electronics, for installation on the International Space Station. Significant progress was made during the quarter to resolve several outstanding issues at SS/L. The Alcatel suit has proceeded to arbitration arbitration Process of resolving a dispute or a grievance outside a court system by presenting it for decision to an impartial third party. Both sides in the dispute usually must agree in advance to the choice of arbitrator and certify that they will abide by the , and is not expected to result in monetary damages Monetary damages, in civil law, refers to compensation given to an injured party by a liable party. Monetary damages may be restitution, a penalty, or both. . A settlement with PanAmSat concerning claims made on the SS/L-built PAS-8 satellite was finalized See finalization. during the quarter as anticipated and reflected in prior results. None of the Loral-built satellites affected by solar array anomalies several months ago have experienced any performance losses. For satellites under construction, Loral has modified its manufacturing processes to prevent similar occurrences; customers and insurance underwriters have been briefed on the modifications, and all satellite construction continues. Data Services The slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in demand for data services from Internet-related businesses continued through the second quarter. Accordingly, and as discussed in previous reports, the company has undertaken cost reductions that it expects will lead to profitability in the fourth quarter. As a result, segment EBITDA improved during the quarter to a loss of $4 million from a loss of $11 million in the second quarter of last year. Revenue for the segment was $26 million, down from $29 million in the second quarter of last year. During the quarter, Loral CyberStar was awarded a multiyear contract to provide very small aperture terminal (communications) Very Small Aperture Terminal - (VSAT) A kind of ground station used to contact a communications satellite such as INMARSAT. (VSAT (Very Small Aperture satellite Terminal) A small earth station for satellite transmission that handles up to 56 Kbits/sec of digital transmission. VSATs that handle the T1 data rate (up to 1.544 Mbits/sec) are called "TSATs. ) services to Global Crossing -- one of the world's largest telecommunications service providers A Telecommunications Service Provider or TSP is a type of Communications Service Provider that has traditionally provided telephone and similar services. This category includes ILECs, CLECs, and mobile wireless companies. -- in support of its contract to develop a virtual private network (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. ) for the UK government's Foreign and Commonwealth Offices worldwide. The Norway-based Christian Church, PalmaTV, NetLink and Brigade brigade Military unit commanded by a brigadier general or a colonel and composed of two or more subordinate units, such as regiments or battalions. Two or more brigades make up a division. Global Network also signed on as CyberStar customers during the quarter. Outlook Overall, Loral expects to deliver 2001 reported EBITDA of approximately $240 million - almost double that of last year - and revenue as reported of approximately $1.0 billion, driven by the strength of the FSS business worldwide. Capital spending for the year is projected to approach $280 million, including $220 million for the construction of satellites. Loral expects to end 2001 with more than $225 million in cash and available credit. FSS segment full-year revenues and EBITDA are expected in the range of $540 to $550 million and $350 to $360 million, respectively, reflecting only a modest impact from general telecommunications industry weakness. As reported above, as a result of the timing of SS/L bookings, Loral has adjusted its manufacturing revenue expectation to $800 million for the year with EBITDA margins remaining in the eight to ten percent range. For data services, revenue expectation remains in the $100 to $110 million range, and EBITDA is expected to turn positive in the fourth quarter. Loral Space & Communications is a high technology company that concentrates primarily on satellite manufacturing and satellite-based services. For more information, visit Loral's web site at www.loral.com. This document contains 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. within the meaning of Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Exchange Act of 1934, as amended. In addition, from time to time, Loral Space & Communications Ltd. or its representatives have made or may make forward-looking statements, orally or in writing. Such forward-looking statements may be included in, but are not limited to, various filings made by the company with the Securities and Exchange Commission, press releases or oral statements made with the approval of an authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: executive officer of the company. Actual results could differ materially from those projected or suggested in any forward-looking statements as a result of a wide variety of factors and conditions. These factors and conditions have been described in the section of the company's annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended December 31, 2000, entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: "Certain Factors That May Affect Future Results," and the company's other filings with the Securities and Exchange Commission. With regard to forward-looking statements concerning Loral CyberStar, Inc. and its business, financial condition, results of operations and prospects, the factors and conditions which could materially affect these statements are described in the section of Loral CyberStar's annual report on Form 10-K for the fiscal year ended December 31, 2000, entitled "Certain Factors That May Affect Future Results." The reader is specifically referred to these documents regarding the factors and conditions that may affect future results.
LORAL SPACE & COMMUNICATIONS LTD
STATEMENTS OF OPERATIONS
(In millions, except per share data)
Three Months Six Months
Ended June 30, Ended June 30,
-------------- --------------
2001 2000 2001 2000
---- ---- ---- ----
Segment Revenues:
Satellite manufacturing
and technology $ 212.0 $ 297.8 $ 413.1 $ 546.1
Fixed satellite services(1) 133.5 112.3 262.7 214.3
Data services 26.1 29.2 54.8 61.7
------- ------- ------- -------
Operating segment revenues 371.6 439.3 730.6 822.1
Intercompany and affiliate
eliminations (96.7) (115.0) (194.6) (179.8)
------- ------- ------- -------
Operating revenues as
reported $ 274.9 $ 324.3 $ 536.0 $ 642.3
======= ======= ======= =======
Segment EBITDA:
Satellite manufacturing and
technology $ 15.8 $ 25.3 $ 35.0 $ 51.7
Fixed satellite services(1) 89.5 69.9 173.4 131.9
Data services (3.6) (11.0) (13.6) (21.3)
Corporate expenses (12.5) (10.8) (21.9) (20.3)
------- ------- ------- -------
Segment EBITDA before
eliminations 89.2 73.4 172.9 142.0
Intercompany and affiliate
eliminations (27.0) (29.1) (52.5) (50.6)
------- ------- ------- -------
EBITDA as reported 62.2 44.3 120.4 91.4
Depreciation and amortization (55.4) (54.2) (109.7) (107.3)
------- ------- ------- -------
Operating income (loss) 6.8 (9.9) 10.7 (15.9)
Interest and investment
expense, net (40.1) (24.3) (82.1) (51.5)
Gain on investments - 37.6 - 52.7
------- ------- ------- -------
Pretax (loss) income (33.3) 3.4 (71.4) (14.7)
Income tax (provision) benefit - (1.4) 2.0 (8.2)
------- ------- ------- -------
(Loss) income after taxes (33.3) 2.0 (69.4) (22.9)
Loss applicable to Globalstar
activities (2) (9.5) (92.2) (22.6) (180.9)
Equity in affiliate losses
and other (11.9) (3.7) (21.7) (13.1)
------- ------- ------- -------
Net loss (54.7) (93.9) (113.7) (216.9)
Preferred dividends (40.7) (16.1) (56.8) (35.5)
------- ------- ------- -------
Net loss - common
shareholders $ (95.4) $(110.0) $(170.5) $(252.4)
======= ======= ======= =======
Weighted shares outstanding
- Basic and Diluted 326.9 295.9 312.8 294.6
======= ======= ======= =======
Loss per share - Basic and
Diluted $ (0.29) $ (0.37) $ (0.55) $ (0.86)
======= ======= ======= =======
(1) Includes 100% of Europe*Star's and Satmex's revenues and EBITDA
(Europe*Star commenced revenue service in 2001).
(2) The three and six months ending June 30, 2000, includes warrant
and dividend income, net of taxes related to Globalstar.
LORAL SPACE & COMMUNICATIONS LTD
Supplemental Financial Data
(In millions)
Three Months Six Months
Ended June 30, Ended June 30,
-------------- --------------
2001 2000 2001 2000
---- ---- ---- ----
BOOKINGS
Satellite manufacturing and
technology $ 75.0 $ 372.0 $ 218.0 $ 878.1
Fixed satellite services(1) 198.5 114.5 397.9 677.3
Data services 19.1 107.8 44.7 143.4
Intercompany and affiliate
eliminations 48.0 (381.6) (34.9) (633.6)
------ ------- ------- ---------
Total bookings 340.6 212.7 625.7 1065.2
Debookings (365.3)(a) (16.8) (441.3) (23.6)
------ ------- ------- ---------
Net bookings $(24.7) $ 195.9 $ 184.4 $ 1,041.6
======= ======== ======== ==========
(a) Includes $255 million as adjustments to ongoing contracts.
June 30, June 30,
2001 2000
-------- --------
FUNDED BACKLOG
Satellite manufacturing and technology $ 1,414.2 $ 1,627.9
Fixed satellite services(1) 2,180.4 1,945.1
Data services 150.1 300.2
--------- ---------
Total funded backlog 3,744.7 3,873.2
Intercompany and affiliate eliminations (927.7) (1,077.1)
--------- ---------
Net funded backlog $ 2,817.0 $ 2,796.1
========= =========
June 30, June 30,
2001 2000
----------------- ----------------
------- -------
CASH & UNUSED BANK CREDIT $ 277.2 $ 545.5
TOTAL DEBT (2) 2,418.5 1,949.1
EQUITY 1,436.3 2,852.6
(1) Includes 100% of Satmex and Europe*Star.
(2) Total debt includes $1.0 billion and $983 million of Loral
CyberStar debt as of June 30, 2001 and 2000, respectively, which
is non-recourse to Loral.
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