Key 2008 highlights included:
* Consumer market breakthrough with SPOT Satellite GPS Messenger
helps boost subscriber growth by over 60,000 net new subscribers
* Manufacture of second-generation satellites
* FCC expansion of Globalstar's ATC spectrum authority
* Expansion of Simplex data coverage in Southeast Asia and Alaska
* Signing next-generation ground core-network contract with Ericsson
MILPITAS, Calif., March 31, 2009 (GLOBE NEWSWIRE) -- Globalstar, Inc. (Nasdaq:GSAT), a leading provider of mobile satellite voice and data services to businesses, governments and individuals, today announced its operational and financial results for the three- and twelve-month periods ended December 31, 2008.
2008 Major Company Highlights:
* Globalstar exhibited substantial subscriber growth during 2008.
The Company completed the year with 344,330 subscribers, 60,204
more than it had at December 31, 2007. The Company's net new
subscribers in 2008 increased by 182% over the 21,324 net
subscribers added during 2007, due to an increase in Simplex and
SPOT Satellite GPS Messenger subscribers.
* Globalstar became the first mobile satellite services (MSS)
provider to successfully distribute a product to the mainstream
retail consumer market. The SPOT Satellite GPS Messenger won
numerous industry awards throughout 2008, including The Wall
Street Journal Technology Innovation Award, in the category of
consumer electronics. Globalstar completed the year with orders
to ship more than 120,000 units to the more than 7,500 SPOT points
of distribution in North America, Europe, Latin America, Australia
and New Zealand.
* In August Globalstar announced that satellite manufacturer Thales
Alenia Space had begun production assembly, integration and
testing of the first Globalstar second-generation flight model
satellites. The new satellites, scheduled for delivery beginning
later this year, will be used to provide Globalstar's next-
generation of advanced mobile satellite voice and data services
beyond 2025.
* In April the U.S. Federal Communications Commission (FCC) issued a
Report & Order expanding Globalstar's authority to offer Ancillary
Terrestrial Component services (ATC) in the United States in
conjunction with its mobile satellite services. As a consequence
of the FCC decision Globalstar is now permitted to use 19.275 MHz
of its spectrum for ATC services. In October the FCC granted
Globalstar the additional authority it needed to deploy the first
ever ATC system with its partner, Open Range Communications, Inc.
* In October Globalstar announced its gateway located in Singapore
was operational. The new gateway provides Globalstar satellite
Simplex data coverage throughout Singapore, Malaysia, and
significant portions of Indonesia, and much of the surrounding
maritime region. Singapore Telecommunications Limited (SingTel)
has commenced operating the gateway located at SingTel's Seletar
Satellite earth Station facility.
* During the summer Globalstar announced that it had expanded its
satellite Simplex data coverage to include all of Alaska, the
Aleutian Islands and the surrounding maritime regions including t
the Gulf of Alaska and portions of both the north Pacific and
south Arctic Oceans.
* In October Globalstar signed a $22.7 million agreement with
Ericsson Federal Inc. to develop, implement and maintain a ground
interface or core network system to be installed at Globalstar's
satellite gateway ground stations. The new ground network
architecture is designed to be backward compatible for current
Globalstar subscribers and to support increased data speeds in a
flexible all IP configuration. Products and services supported are
expected to include:
-- push to talk and multicasting
-- advanced messaging capabilities such as multimedia messaging
or MMS
-- mobile video applications
-- geo-location services
-- multi-band and multi-mode handsets and data devices
-- GPS integration
* The Company's total revenue, net loss and net loss per share for
2008 were $86.1 million, $68.0 million and $.79, respectively,
compared to $98.4 million, $27.9 million and $.36, respectively,
for 2007. Globalstar's consolidated statement of income and other
financial and operating information appear below in this press
release.
"We believe that Globalstar is only months away from taking delivery of the first of our second-generation satellites, paving the way for the return of high quality Globalstar satellite services for customers of our legacy voice and duplex data products," said Jay Monroe, Chairman and Chief Executive Officer, Globalstar, Inc. Mr. Monroe added, "In 2010 we expect to complete the deployment of the initial phase of our second-generation constellation that is designed to provide high quality advanced satellite services beyond 2025. Most importantly, we expect that completing the deployment of our satellites on schedule will provide us with nearly a six-year second-generation head start based on the current plans of our present primary MSS competitor."
"Throughout a challenging 2008, we continued to show resilience and tremendous Simplex subscriber growth as Globalstar became the first mobile satellite services provider to market successfully an award-winning product into the mainstream retail consumer market," said Thomas Colby, Chief Operating Officer, Globalstar, Inc. Mr. Colby added, "Despite the global economic downturn, and following negative fourth quarter growth just one year ago, Globalstar rebounded by adding more than 16,000 net subscribers compared to the same quarter in 2007. Thanks to the innovation and consumer appeal of our high quality, reliable Globalstar Simplex products such as the SPOT satellite messenger and our voice and duplex data customer retention programs, we once again completed the year with the largest customer base of any mobile satellite voice and data services provider."
Post Quarter Information:
* On March 25, 2009, Globalstar announced that Coface, the export
credit agency acting on behalf of the French government, has
advised Globalstar that it intends to provide long-term credit
insurance to facilitate a proposed $574 million credit facility.
Banks who have received initial credit committee approvals in
relation to the credit facility include BNP Paribas, Natixis, and
Societe Generale, which would act as mandated lead arrangers (BNP
Paribas is acting as Coface Agent). The credit facility and
receipt of funding by Globalstar is subject to completion of
documentation and satisfaction of closing conditions and there can
be no assurance at this time that any such closing will actually
occur.
* The principal closing conditions include the conversion into
equity at closing of senior secured term and revolving credit
loans to Globalstar from its principal stockholder Thermo Funding
Company LLC and the receipt by Globalstar of additional equity and
contingent equity in an amount of approximately $100 million, most
of which is expected to be provided by Thermo Funding.
* Globalstar intends to use the financing to solidify its long-term
space system by funding the manufacture and delivery of the
Globalstar second-generation satellites by Thales Alenia Space as
well as the launch of those satellites by launch services provider
Arianespace. The financing would also be used to facilitate
certain long-lead items connected with the accelerated delivery of
the Company's second-generation satellites, the completion of
Globalstar's next-generation ground facilities and the design of
Globalstar's next-generation of satellite interface chipsets.
* Later today Globalstar will file its Annual Report on Form 10-K
for the year ended December 31, 2008. This filing will be
available for review on Globalstar's website at www.globalstar.com
by clicking on "Corporate Site," "Investor Relations" and "SEC
Filings," or on the Securities and Exchange Commission's web site
at www.sec.gov. Stockholders may also receive a hard copy of the
Form 10-K upon request. As required under NASDAQ Marketplace Rule
4350(b)(1)(B), Globalstar is also announcing that the Annual
Report on Form 10-K will include an audit opinion with a "going
concern" explanatory paragraph due to the need for substantial
additional financing.
Conference Call Note
Globalstar plans to hold an investor conference call upon the closing of the credit facility described above Globalstar will release dial-in information and details once the call is scheduled.
About Globalstar, Inc.
With over 325,000 subscribers, Globalstar is a leading provider of mobile satellite voice and data services. Globalstar offers these services to commercial and recreational users in more than 120 countries around the world. The Company's products include mobile and fixed satellite telephones, simplex and duplex satellite data modems and flexible service packages. Many land based and maritime industries benefit from Globalstar with increased productivity from remote areas beyond cellular and landline service. Global customer segments include: oil and gas, government, mining, forestry, commercial fishing, utilities, military, transportation, heavy construction, emergency preparedness, and business continuity as well as individual recreational users. Globalstar data solutions are ideal for various asset and personal tracking, data monitoring and SCADA applications.
For more information regarding Globalstar, please visit Globalstar's web site at www.globalstar.com
Safe Harbor Language for Globalstar Releases
This press release contains certain statements such as, "We believe that Globalstar is only months away from taking delivery of the first of our second-generation satellites, paving the way for the return of high quality Globalstar satellite services for customers of our legacy voice and duplex data products," that are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control, including demand for our products and services, including commercial acceptance of our new Simplex products, including SPOT Satellite Messenger, and the ability to retain and migrate our two-way communications services subscribers to our second-generation constellation when it is deployed; problems relating to the construction, launch or in-orbit performance of our existing and future satellites; including the effects of the degrading ability of our first-generation satellite constellation to support two-way communication; problems relating to the ground-based facilities operated by us or by independent gateway operators; our ability to attract sufficient additional funding to meet our future capital requirements including deployment of our second-generation constellation; competition and its competitiveness vis-a-vis other providers of satellite and ground-based communications products and services; the pace and effects of industry consolidation; the continued availability of launch insurance on commercially reasonable terms, and the effects of any insurance exclusions; changes in technology; our ability to continue to attract and retain qualified personnel; worldwide economic, geopolitical and business conditions and risks associated with doing business on a global basis; and legal, regulatory, and tax developments, including changes in domestic and international government regulation.
Any forward-looking statements made in this press release speak as of the date made and are not guarantees of future performance. Actual results or developments may differ materially from the expectations expressed or implied in the forward-looking statements, and we undertake no obligation to update any such statements. Additional information on factors that could influence our financial results is included in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
GLOBALSTAR, INC
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(In thousands, except per share data)
Year Ended December 31,
-------------------------------
2008 2007 2006
--------- --------- ---------
Revenue:
Service revenue $ 61,794 $ 78,313 $ 92,037
Subscriber equipment sales 24,261 20,085 44,634
--------- --------- ---------
Total revenue 86,055 98,398 136,671
--------- --------- ---------
Operating expenses:
Cost of services (exclusive of
depreciation and amortization
shown separately below) 37,132 27,775 28,091
Cost of subscriber equipment sales:
Cost of subscriber equipment sales 17,921 13,863 40,396
Cost of subscriber equipment sales -
Impairment of assets 405 19,109 1,943
-------------------------------
Total cost of subscriber equipment
sales 18,326 32,972 42,339
Marketing, general, and
administrative 61,351 49,146 43,899
Depreciation and amortization 26,956 13,137 6,679
-------------------------------
Total operating expenses 143,765 123,030 121,008
--------- --------- ---------
Operating income (loss) (57,710) (24,632) 15,663
--------- --------- ---------
Other income (expense):
Interest income 4,713 3,170 1,172
Interest expense (6,779) (9,023) (587)
Interest rate derivative loss (3,259) (3,232) (2,716)
Other income (expense) (4,497) 8,656 (3,980)
--------- --------- ---------
Total other income (expense) (9,822) (429) (6,111)
--------- --------- ---------
Income (loss) before income taxes (67,532) (25,061) 9,552
Income tax expense (benefit) 480 2,864 (14,071)
--------- --------- ---------
Net income (loss) $ (68,012) $ (27,925) $ 23,623
========= ========= =========
Earnings (loss) per common share:
Basic $ (0.79) $ (0.36) $ 0.37
Diluted $ (0.79) $ (0.36) $ 0.37
Weighted-average shares outstanding:
Basic 86,405 77,169 63,710
Diluted 86,405 77,169 64,076
Definition of Terms and Reconciliation of Non-GAAP Financial Measures
We utilize certain financial measures that are widely used in the telecommunications industry and are not calculated based on GAAP. A reconciliation of these measures to GAAP and a discussion of certain other operating metrics used in the industry are presented below.
GLOBALSTAR, INC.
RECONCILIATION OF GAAP TO ADJUSTED
(Dollars in thousands, except ARPU)
(Unaudited)
Three months ended Year ended
------------------ ------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2008 2007 2008 2007
-------- -------- -------- --------
Revenue
Service Revenue $ 12,961 $ 19,600 $ 61,794 $ 78,313
Equipment Revenue 5,436 4,119 24,261 20,085
-------- -------- -------- --------
Total Revenue $ 18,397 $ 23,719 $ 86,055 $ 98,398
Operating Expenses
Cost of Services 10,598 7,347 37,132 27,775
Cost of Subscriber Equipment 3,872 4,319 18,326 32,972
Marketing, General and
Administrative 12,749 14,961 61,351 49,146
Depreciation & Amortization 7,821 4,912 26,956 13,137
Impairment of Assets -- -- -- --
-------- -------- -------- --------
Total Operating Expenses $ 35,040 $ 31,539 $143,765 $123,030
-------- -------- -------- --------
Operating Income/(Loss) $(16,643) $ (7,820) $(57,710) $(24,632)
Interest Income/(Expense) (6,953) (9,550) (5,325) (9,085)
Other Income/(Expense) (6,084) 3,782 (4,497) 8,656
Income Tax Expense (Benefit) (1,754) 2,746 480 2,864
-------- -------- -------- --------
Net Income/(Loss) $(27,926) $(16,334) $(68,012) $(27,925)
======== ======== ======== ========
EBITDA $(14,906) $ 874 $(35,251) $ (2,839)
Impairment of Assets -- 1,854 405 19,109
Non-Cash Compensation 2,277 4,265 12,932 10,525
2nd Generation Development 589 -- 2,678 --
Other One Time Non Recurring
Charges -- 80 552 278
Foreign Exchange Loss (Income) 6,084 (3,782) 4,497 (8,656)
Adjusted EBITDA $ (5,956) $ 3,291 $(14,187) $ 18,417
Adjusted EBITDA Margin (32%) 14% (16%) 19%
Retail ARPU $ 28.71 $ 46.45 $ 35.19 $ 46.26
(1) Average monthly revenue per unit (ARPU) measures service
revenues per month divided by the average number of
retail subscribers during that month. Average monthly
revenue per unit as so defined may not be similar to
average monthly revenue per unit as defined by other
companies in the Company's industry, is not a
measurement under GAAP and should be considered in
addition to, but not as a substitute for, the
information contained in the Company's statement of
income. The Company believes that average monthly
revenue per unit provides useful information concerning
the appeal of its rate plans and service offerings and
its performance in attracting and retaining high value
customers.
(2) EBITDA represents earnings before interest,
income taxes, depreciation and amortization. EBITDA does
not represent and should not be considered as an
alternative to GAAP measurements, such as net income,
and the Company's calculations thereof may not be
comparable to similarly entitled measures reported by
other companies.
The Company uses EBITDA as a supplemental measurement of
its operating performance because, by eliminating
interest, taxes and the non-cash items of depreciation
and amortization, the company believes it best reflects
changes across time in the company's performance,
including the effects of pricing, cost control and other
operational decisions. The company's management uses
EBITDA for planning purposes, including the preparation
of its annual operating budget. The company believes
that EBITDA also is useful to investors because it is
frequently used by securities analysts, investors and
other interested parties in their evaluation of
companies in similar industries. As indicated, EBITDA
does not include interest expense on borrowed money or
depreciation expense on our capital assets or the
payment of income taxes, which are necessary elements of
the company's operations. Because EBITDA does not
account for these expenses, its utility as a measure of
the Company's operating performance has material
limitations. Because of these limitations, the company's
management does not view EBITDA in isolation and also
uses other measurements, such as net income, revenues
and operating profit, to measure operating performance.
(3) Adjusted EBITDA is further adjusted to exclude
non-cash compensation expense, asset impairment charges,
foreign exchange gains/(losses) and certain other
non-cash charges. Management uses Adjusted figures for
EBITDA in order to manage the Company's business and to
compare its results more closely to the results of its
peers.
GLOBALSTAR, INC.
SCHEDULE OF SELECTED OPERATING METRICS
(Dollars in thousands, except ARPU)
(Unaudited)
Three months ended Year ended
------------------ ------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2008 2007 2008 2007
-------- -------- -------- --------
Subscribers (End of Period) 344,330 284,126 344,330 284,126
Retail 115,371 118,747 115,371 118,747
IGO 73,763 87,930 73,763 87,930
Simplex 155,196 77,449 155,196 77,449
Net Subscriber
Additions/(Losses) 14,942 (1,142) 60,204 21,324
Retail (3,431) (2,595) (7,721) (6,218)
IGO (509) (4,346) (7,545) 472
Simplex 18,882 5,799 75,470 27,070
Retail Churn 1.7% 2.0% 1.6% 1.8%
ARPU
Retail $ 28.71 $ 46.45 $ 35.19 $ 46.26
IGO $ 2.17 $ 4.89 $ 3.26 $ 4.12
Simplex $ 4.82 $ 2.97 $ 4.48 $ 3.11
Cash capital expenditures $ 76,716 $ 41,437 $286,086 $169,989
Liquidity at end of period /1 $ 89,774
Note:
/1 Includes cash on hand ($12.4 million), Thales escrow
($43.5 million) and undrawn Thermo revolver ($33.9 million).