MILPITAS, Calif., Aug. 14, 2007 (PRIME NEWSWIRE) -- Globalstar, Inc. (Nasdaq:GSAT), a leading provider of mobile satellite voice and data services to businesses, government and individuals, today announced its financial and operational results for the three and six months ended June 30, 2007.
"During the second quarter Globalstar made a substantial series of announcements regarding our space and ground network infrastructure highlighted by the launch of four satellites at the end of May," said Jay Monroe, Chairman and CEO of Globalstar, Inc. "The introduction of new Simplex data modem products and the expansion of our data coverage in Australia and New Zealand were complemented by the announcement that Singapore Telecommunications Limited has contracted to operate a Globalstar satellite gateway and to distribute Globalstar voice and data services in the rapidly growing Southeast Asia maritime region."
Mr. Monroe added, "Currently we are preparing to launch four additional satellites later this year, and our second-generation constellation development continues to be on schedule. Our satellite contractor Thales Alenia Space has also just submitted a plan, which we are evaluating, that could result in the acceleration of the deliveries of our second-generation satellites by up to four months. We are also introducing a number of innovative Simplex data products and services both domestically and abroad. Last week Globalstar wholly-owned subsidiary Spot Inc. introduced a revolutionary satellite product known as the SPOT(tm) Satellite Messenger. This consumer-oriented and innovative handheld personal safety device allows users to send their GPS coordinates and selected messages to notify friends and family of their location and status, and to send for emergency assistance in time of need.
The Simplex data satellite tracking and monitoring services are used for everything from tracking individuals and material assets to aviation flight-following applications. Simplex represents one of the fastest growing areas of Globalstar's business plus it operates over the portion of the satellite constellation that is fully operational, reliable and stable in supporting these services.
Mr. Monroe also added, "With regards to our ATC spectrum, we have continued discussions with several companies interested in offering new and innovative ATC products and services to various markets."
Company Highlights in Q2 2007 Included:
* Second-Generation Constellation and Current Space Segment:
-- Globalstar launched four spare satellites on May 29th. These
satellites, plus four additional spacecraft being prepared for
launch later this year, will be used to augment the current
Globalstar constellation.
-- In early April Globalstar announced a EUR 9 million
(approximately US$12 million) agreement with Thales Alenia
Space, formerly known as Alcatel Alenia Space, for the upgrade
of the Company's Satellite Operations Control Center, its backup
ground control facility and its satellite control gateways.
* International Expansion of Satellite Coverage:
-- Globalstar announced that it entered into a strategic alliance
with Singapore Telecommunications Limited (SingTel), to
construct and operate a Globalstar gateway ground station and
expand Globalstar's satellite coverage in Southeast Asia and the
surrounding maritime shipping region.
-- The Company announced the expansion of its satellite Simplex
data coverage to include all of Australia, New Zealand and the
surrounding maritime region.
* Simplex Data Products and Services:
-- Globalstar announced the launch of Globalstar Simplex data
service to customers throughout Central America and the
surrounding maritime region.
-- The SingTel agreement noted above also paves the way for both
companies to deliver tracking and trace solutions for the
maritime and logistics industries in Southeast Asia and the
surrounding maritime region using the Globalstar Simplex data
network.
-- Globalstar announced that GE's Asset Intelligence division, a
leading provider of intelligence-based mobile asset management
solutions for the transportation industry, extended its Value
Added Reseller (VAR) agreement with Globalstar to 2010.
-- Globalstar Simplex data integrator Guardian Mobility Corporation
launched a new group of satellite data modems known as the
Tracer 3 Product Family. The new satellite data modems are
designed to communicate via the Globalstar satellite Simplex
data network, and are capable of providing data monitoring and
GPS-based asset tracking information to customers from remote
regions.
Mr. Monroe stated, "Globalstar had a challenging second quarter however we continued to show an increased number of subscribers. Globalstar ended the quarter with approximately 278,000 subscribers, a net increase of about 41,000 from the number of subscribers we had at the end of the second quarter last year. We believe the issues related to our two-way communications services and the continued concerns about the service life of our satellites resulted in quarterly decreases in net income, adjusted EBITDA and service revenue."
Second quarter service revenue was $20.0 million compared to $21.5 million during the same period in 2006. For the first six months of 2007, service revenue was $37.5 million compared to $42.2 million during the same period in 2006.
Net loss for the second quarter of 2007 was $12.7 million compared to $0.8 million in the same period of 2006. In the second quarter of 2007, Globalstar recognized a $17.3 million non-cash asset impairment charge related to a write-down of its first-generation phone and accessory inventory. Globalstar ended the second quarter of 2007 with an operating loss of $15.9 million, and an Adjusted EBITDA of $5.5 million compared to operating income of $1.8 million, and an Adjusted EBITDA of $5.9 million during the same period in 2006. (For details concerning Adjusted EBITDA, please see the chart titled "Definition of Terms and Reconciliation of Non-GAAP Financial Measures" found later in this release.)
Net loss for the first six months of 2007 was $12.2 million compared to net income of $21.7 million in the same period of 2006. Results for the six months ended June 30, 2007 also included the $17.3 million non-cash asset impairment charge noted above. Globalstar ended the first six months of 2007 with an operating loss of $16.5 million and Adjusted EBITDA of $10.1 million compared to operating income of $5.7 million and Adjusted EBITDA of $13.7 million during the same period of 2006. Net income in the first six months of 2006 included a $21.4 million gross income tax benefit related to the Company's conversion to a corporation ($17.5 million, net of income tax expense).
Key financial performance measures (see the chart titled "Definition of Terms and Reconciliation of Non-GAAP Financial Measures" found later in this release) for the three and six months ended June 30, 2007 were as follows:
* Gross additions during the second quarter of 2007 and the six-month period ended June 30, 2007 were approximately 12,500 and 25,000, respectively, compared to approximately 35,100 and 47,300, respectively during the same periods in 2006. Subscriber growth during the second quarter of 2006 was due largely to the strength of sales in advance of the 2006 hurricane season.
* Net additions during the second quarter of 2007 and the six-month period ended June 30, 2007 were approximately 6,100 and 14,900, respectively, compared to approximately 32,600 and 40,500, respectively, during the same periods in 2006.
* The average monthly Churn Rate during the second quarter of 2007 increased to approximately 1.7 percent per month compared to 0.8 percent per month during the same period in 2006. The average monthly Churn Rate during the first six months of 2007 increased to approximately 1.4 percent per month compared to 1.1 percent per month during the same period in 2006.
* Total revenue in the second quarter of 2007 was $25.8 million compared to $38.4 million during the same period in 2006. Total revenue in the first six months of 2007 was $49.0 million compared to $68.7 million during the same period in 2006. This is primarily due to lower subscriber equipment sales during the first six months of 2007 compared to the same period in 2006. Influencing factors include the abnormally strong second quarter sales in 2006 in advance of the hurricane season and the decreased sales in 2007 as a result of concerns regarding the constellation.
Conference Call Note
As previously announced, Globalstar will conduct a conference call scheduled for August 14, 2007 at 5:00 p.m. Eastern Time to discuss the second quarter 2007 results.
Details are as follows:
Earnings Dial: 866.202.3048 (U.S. and Canada), 617.213.8843
Call: (International) and participant pass code 77036630.
Audio A replay of the earnings call will be available for a
Replay: limited time and can be heard after 7:00 p.m. ET on
August 14, 2007. Dial: 888-286-8010 (U.S. and Canada),
617-801-6888 (International) and pass code 89781034.
An audio replay will also be posted on the Company
website at www.globalstar.com
About Globalstar, Inc.
With over 250,000 activated satellite voice and data units, Globalstar offers satellite services to commercial and recreational users in more than 120 countries around the world. The company's voice and data 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 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 "Currently we are preparing to launch four additional satellites later this year and our second-generation constellation development continues to be on schedule," 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 Globalstar's control, including demand for the Company's products and services; problems relating to the construction, launch or in-orbit performance of its existing and future satellites, problems relating to the ground-based facilities operated by it or by independent gateway operators; its ability to attract sufficient additional funding if needed to meet its future capital requirements; 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; its 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 the Company undertakes no obligation to update any such statements. Additional information on factors that could influence Globalstar's financial results is included in its filings with the Securities and Exchange Commission, including its 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
(In thousands, except share data)
(Unaudited)
Three Months Ended Six Months Ended
------------------------ ------------------------
June 30, June 30, June 30, June 30,
2007 2006 2007 2006
----------- ----------- ----------- -----------
Revenue:
Service
revenue $ 19,984 $ 21,508 $ 37,450 $ 42,202
Subscriber
equipment
sales 5,853 16,891 11,541 26,539
----------- ----------- ----------- -----------
Total
revenue 25,837 38,399 48,991 68,741
----------- ----------- ----------- -----------
Operating
expenses:
Cost of
services
(exclusive of
depreciation
and
amortization
shown
separately
below) 6,738 7,341 13,121 13,888
Cost of
subscriber
equipment
sales 4,557 17,254 8,008 25,769
Marketing,
general, and
administrative 10,634 10,726 22,116 20,691
Depreciation
and
amortization 2,537 1,308 4,961 2,698
Impairment of
assets 17,255 -- 17,255 --
----------- ----------- ----------- -----------
Total
operating
expenses 41,721 36,629 65,461 63,046
----------- ----------- ----------- -----------
Operating income
(loss) (15,884) 1,770 (16,470) 5,695
----------- ----------- ----------- -----------
Other income
(expense):
Interest
income 691 199 1,519 366
Interest
expense (385) (88) (696) (108)
Interest rate
derivative
gain 1,910 -- 1,546 --
Other (187) (1,423) 1,047 (1,760)
----------- ----------- ----------- -----------
Total other
income
(expense) 2,029 (1,312) 3,416 (1,502)
----------- ----------- ----------- -----------
Income (loss)
before income
taxes (13,855) 458 (13,054) 4,193
Income tax
expense
(benefit) (1,168) 1,292 (811) (17,459)
----------- ----------- ----------- -----------
Net income
(loss) $ (12,687) $ (834) $ (12,243) $ 21,652
=========== =========== =========== ===========
Earnings
(loss)
per common
share:
Basic $ (0.17) $ (0.01) $ (0.16) $ 0.35
Diluted (0.17) (0.01) (0.16) 0.35
Weighted-
average
shares
outstanding:
Basic 75,656,992 61,968,046 74,660,368 61,957,906
Diluted 75,656,992 61,968,046 74,660,368 62,287,618
Definition of Terms and Reconciliation of Non-GAAP Financial Measures
The company utilizes 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 /a
(In thousands, except ARPU)
(Unaudited)
Three months ended June 30, 2007
---------------------------------
Annual
Plans Adjusted
GAAP Adjustment /a
--------- ---------- ---------
Unaudited
Revenue
Service Revenue $ 19,984 $ 1,149 $ 21,133
Equipment Revenue 5,853 -- 5,853
-------- -------- --------
Total Revenue $ 25,837 $ 1,149 $ 26,986
Operating Expenses
Cost of Services 6,738 -- 6,738
Cost of Subscriber
Equipment 4,557 -- 4,557
Marketing, General
and Administrative 10,634 -- 10,634
Depreciation &
Amortization 2,537 -- 2,537
Impairment of Assets 17,255 -- 17,255
-------- -------- --------
Total Operating
Expenses $ 41,721 $ -- $ 41,721
-------- -------- --------
Operating Income/
(Loss) $(15,884) $ 1,149 $(14,735)
Interest Income/
(Expense) 2,216 -- 2,216
Other Income/
(Expense) (187) -- (187)
Income Tax Expense
(Benefit) (1,168) -- (1,168)
-------- -------- --------
Net Income/(Loss) $(12,687) $ 1,149 $(11,538)
======== ======== ========
EBITDA $(13,534) $ 1,149 $(12,385)
Non-Cash Stock
Compensation 484 -- 484
Other One Time Non
Recurring Charges 17,255 -- 17,255
Foreign Exchange Loss 187 -- 187
Adjusted EBITDA $ 4,392 $ 1,149 $ 5,541
Adjusted EBITDA
Margin 17% 21%
Retail ARPU $ 47.50 $ 2.81 $ 50.31
-------- -------- --------
Three months ended June 30, 2006
---------------------------------
Annual
Plans Adjusted
GAAP Adjustment /a
--------- ---------- ---------
Unaudited
Revenue
Service Revenue $ 21,508 $ 2,842 $ 24,350
Equipment Revenue 16,891 -- 16,891
-------- -------- --------
Total Revenue $ 38,399 $ 2,842 $ 41,241
Operating Expenses
Cost of Services 7,341 -- 7,341
Cost of Subscriber
Equipment 17,254 -- 17,254
Marketing, General
and Administrative 10,726 -- 10,726
Depreciation &
Amortization 1,308 -- 1,308
Impairment of Assets -- -- --
-------- -------- --------
Total Operating
Expenses $ 36,629 $ -- $ 36,629
-------- -------- --------
Operating Income/
(Loss) $ 1,770 $ 2,842 $ 4,612
Interest Income/
(Expense) 111 -- 111
Other Income/
(Expense) (1,423) -- (1,423)
Income Tax Expense
(Benefit) 1,292 -- 1,292
-------- -------- --------
Net Income/(Loss) $ (834) $ 2,842 $ 2,008
======== ======== ========
EBITDA $ 1,655 $ 2,842 $ 4,497
Non-Cash Stock
Compensation -- -- --
Other One Time Non
Recurring Charges -- -- --
Foreign Exchange Loss 1,423 -- 1,423
Adjusted EBITDA $ 3,078 $ 2,842 $ 5,920
Adjusted EBITDA
Margin 8% 14%
Retail ARPU $ 56.49 $ 8.71 $ 65.20
-------- -------- --------
Six months ended June 30, 2007
---------------------------------
Annual
Plans Adjusted
GAAP Adjustment /a
--------- ---------- ---------
Unaudited
Revenue
Service Revenue $ 37,450 $ 3,673 $ 41,123
Equipment Revenue 11,541 -- 11,541
-------- -------- --------
Total Revenue $ 48,991 $ 3,673 $ 52,664
Operating Expenses
Cost of Services 13,121 -- 13,121
Cost of Subscriber
Equipment 8,008 -- 8,008
Marketing, General
and Administrative 22,116 -- 22,116
Depreciation &
Amortization 4,961 -- 4,961
Impairment of Assets 17,255 -- 17,255
-------- -------- --------
Total Operating
Expenses $ 65,461 $ -- $ 65,461
-------- -------- --------
Operating Income/
(Loss) $(16,470) $ 3,673 $(12,797)
Interest Income/
(Expense) 2,369 -- 2,369
Other Income/
(Expense) 1,047 -- 1,047
Income Tax Expense
(Benefit) (811) -- (811)
-------- -------- --------
Net Income/(Loss) $(12,243) $ 3,673 $ (8,570)
======== ======== ========
EBITDA $(10,462) $ 3,673 $ (6,789)
Non-Cash Stock
Compensation 724 -- 724
Other One Time Non
Recurring Charges 17,255 -- 17,255
Foreign Exchange Loss (1,047) -- (1,047)
Adjusted EBITDA $ 6,470 $ 3,673 $ 10,143
Adjusted EBITDA
Margin 13% 19%
Retail ARPU $ 45.11 $ 4.70 $ 49.81
-------- -------- --------
Six months ended June 30, 2006
---------------------------------
Annual
Plans Adjusted
GAAP Adjustment /a
--------- ---------- ---------
Unaudited
Revenue
Service Revenue $ 42,202 $ 5,266 $ 47,468
Equipment Revenue 26,539 -- 26,539
-------- -------- --------
Total Revenue $ 68,741 $ 5,266 $ 74,007
Operating Expenses
Cost of Services 13,888 -- 13,888
Cost of Subscriber
Equipment 25,769 -- 25,769
Marketing, General
and Administrative 20,691 -- 20,691
Depreciation &
Amortization 2,698 -- 2,698
Impairment of Assets -- -- --
-------- -------- --------
Total Operating
Expenses $ 63,046 $ -- $ 63,046
-------- -------- --------
Operating Income/
(Loss) $ 5,695 $ 5,266 $ 10,961
Interest Income/
(Expense) 258 -- 258
Other Income/
(Expense) (1,760) -- (1,760)
Income Tax Expense
(Benefit) (17,459) -- (17,459)
-------- -------- --------
Net Income/(Loss) $ 21,652 $ 5,266 $ 26,918
======== ======== ========
EBITDA $ 6,633 $ 5,266 $ 11,899
Non-Cash Stock
Compensation -- -- --
Other One Time Non
Recurring Charges -- -- --
Foreign Exchange Loss 1,760 -- 1,760
Adjusted EBITDA $ 8,393 $ 5,266 $ 13,659
Adjusted EBITDA
Margin 12% 18%
Retail ARPU $ 57.52 $ 8.36 $ 65.88
-------- -------- --------
(a) Annual Plans are adjusted to reflect revenue as though they were
monthly plans.
(1) Adjusted Service Revenue, Adjusted EBITDA and Adjusted APRU are
adjustments made to reflect the company's annual service pricing
plans that are adjusted and reported as though they were
Globalstar monthly service plans. Adjusted EBITDA is further
adjusted to exclude non-cash stock compensation expense, asset
impairment charges, foreign exchange gains/(losses) and certain
other non-cash charges. Management uses Adjusted figures for
service revenue, EBITDA, and ARPU in order to manage the
company's business and to compare its results more closely to
the results of its peers.
(2) Average monthly revenue per user (ARPU) measures service revenues
per month divided by the average number of retail subscribers
during that month. Average monthly revenue per user as so defined
may not be similar to average monthly revenue per user 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 user provides useful information concerning
the appeal of its rate plans and service offerings and its
performance in attracting and retaining high value customers.
(3) The company defines churn rate as the aggregate number of its
retail subscribers (excluding Simplex customers and customers of
the independent gateway operators) who cancel service during a
month, divided by the average number of retail subscribers during
the month. Others in the company's industry may calculate churn
rate differently. Churn rate 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 churn rate provides useful information
concerning customer satisfaction with its services and products.
(4) 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 the primary 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.
GLOBALSTAR, INC.
SCHEDULE OF SELECTED OPERATING METRICS
(Dollars in thousands, except ARPU)
(Unaudited)
Three months ended Six months ended
------------------- --------------------
June 30, June 30, June 30, June 30,
2007 2006 2007 2006
------- --------- -------- --------
Subscribers
(End of Period) 277,661 236,515 277,661 236,515
Additions 6,103 32,569 14,859 40,547
Retail Churn 1.7% 0.8% 1.4% 1.1%
ARPU
Retail
GAAP $ 47.50 $ 56.49 $ 45.11 $ 57.52
Adjusted $ 50.31 $ 65.20 $ 49.81 $ 65.88
Wholesale
GAAP $ 3.28 $ 8.48 $ 3.37 $ 8.38
Capital
expenditures $ 44,355 $ 38,201 $ 74,623 $ 42,480
Available
liquidity (a) $308,334
Note:
(a) Includes cash on hand ($10.1 million) and restricted cash
($54.8 million), committed amount of our credit facility
($150.0 million) and Thermo standby commitment ($93.4 million)
at June 30, 2007.