Key 2007 annual highlights included;
* Launch of eight satellites
* Acceleration of second-generation satellite deliveries
* Commitments to construct gateways in Asia and Africa
* Finalization of contract to launch second-generation
satellites beginning next year
* Introduction of the SPOT Satellite Messenger
* Signing of ATC implementation agreement with Open Range
Communications
* Continued subscriber growth
MILPITAS, Calif., March 12, 2008 (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 twelve month periods ended December 31, 2007.
2007 Major Operational Company Highlights: * In April the Company signed an agreement with Thales Alenia Space (formerly Alcatel Alenia Space) to provide upgrades to the Globalstar satellite control network facilities, which are required to support the 15-year planned mission duration of the Globalstar second-generation satellite constellation. * Globalstar launched a total of eight spare satellites during the year to enhance service quality for voice and duplex data customers. These satellites will also be integrated into the second-generation constellation scheduled for launch beginning in the second half of 2009. * In May Globalstar entered into an agreement with Singapore Telecommunications Limited to construct a gateway and expand Globalstar's satellite coverage throughout parts of Southeast Asia. Construction of the Singapore Gateway began in October 2007. * During the summer Globalstar expanded its satellite Simplex data coverage to include all of Australia, New Zealand and the surrounding maritime region. * In September Globalstar signed a launch agreement with Arianespace for the launch of Globalstar's second-generation satellite constellation beginning in the second half of 2009. * In September Globalstar signed an agreement with Radyne Corporation business unit AeroAstro, to purchase Appliques to further expand Globalstar's Simplex data geographic coverage in Asia and Latin America. * In October Globalstar entered into an agreement with Open Range Communications, Inc. permitting Open Range to deploy service in rural markets under Globalstar's Ancillary Terrestrial Component (ATC) authority. The agreement is contingent on various conditions, including Globalstar's receipt of final authority from the Federal Communications Commission (FCC) to use an expanded portion of its licensed spectrum for ATC and Open Range's securing financing for its system. * In early November the FCC released a Notice of Proposed Rule Making proposing to expand Globalstar's authorized spectrum for ATC services in the United States from the current 11 MHz to as much as 19.275 MHz. * In November Globalstar's subsidiary SPOT Inc. announced the availability of the SPOT Satellite Messenger(tm), a revolutionary and affordable satellite consumer product designed to address the safety concerns of people around the world. SPOT messaging and tracking functions enable users to send messages to friends, family or emergency responders, and enabling the subscriber and his or her designated friends, family and employer to track the location of the SPOT Satellite Messenger on Google Maps(tm). * In December Globalstar signed an agreement with Globaltouch West Africa Limited for Globaltouch to offer Globalstar satellite voice and data services in Nigeria and parts of Western Africa and for Globalstar to purchase a minority investment in Globaltouch. A new satellite gateway ground station will be located in Kaduna, Nigeria and will be owned and operated by Globaltouch. * In December Thermo Funding Company LLC and Globalstar entered into an amended and restated credit agreement, pursuant to which Globalstar may borrow up to $150 million of which $50 million was drawn at year end and the balance was borrowed in January and February of 2008.
"In 2007 we continued to demonstrate customer growth by adding over 21,300 new subscribers throughout the year, thus remaining the largest North American-based MSS provider," said Jay Monroe, Chairman and CEO of Globalstar, Inc. Mr. Monroe added, "Signing the contract for next year's scheduled launches of our initial second-generation satellites takes us another step closer to offering our customers advanced Globalstar products and services while planning the future of our long-term space segment through to at least 2025."
Mr. Monroe continued, "As we predicted, 2007 saw a number of major Simplex data integrator product announcements, including the introduction of the SPOT Satellite Messenger. We were overwhelmed by the way the outdoor recreational and general media have received the unveiling of this award-winning, revolutionary and affordable satellite consumer personal location and messaging device, and we anticipate further integrated Simplex products to be introduced in the future."
Service Revenue for the fourth quarter of 2007 was $19.6 million compared to $22.2 million during the same period of 2006. During the fourth quarter of 2007, Globalstar recorded an operating loss of $7.8 million and Adjusted EBITDA of $3.9 million, compared to operating income of $1.1 million and Adjusted EBITDA of $10.0 million during the same period in 2006. Net loss for the fourth quarter of 2007 was $16.3 million, compared to a net loss of $0.7 million in the same period of 2006. The larger loss in the fourth quarter of 2007 was due primarily to non-cash charges of approximately $8.1 million related to the assumption of our credit facility by Thermo Funding, a non-cash stock compensation expense of $4.2 million, and a non-cash impairment charge related to certain first-generation inventory of approximately $1.9 million. Revenue was impacted by lower retail ARPU (average revenue per unit) related to the introduction of new lower priced airtime rate plans designed to retain customers and issues relating to the performance of our current satellite constellation for two-way communications services, and lower equipment sales. In addition, Globalstar also recorded an income tax expense of approximately $2.7 million. (For details concerning the calculation of Adjusted EBITDA, please see the chart titled "Definition of Terms and Reconciliation of Non-GAAP Financial Measures" found later in this release.)
Service Revenue for the year ended December 31, 2007 was $78.3 million compared to $92.0 million during 2006. During 2007 Globalstar recorded an operating loss of $24.6 million and Adjusted EBITDA of $21.8 million, compared to operating income of $15.7 million and Adjusted EBITDA of $33.8 million during 2006. Net loss in 2007 was $27.9 million compared to net income of $23.6 million in 2006. Results for the year ended December 31, 2007 included a $19.1 million non-cash asset impairment charge related to our first-generation inventory, a non-cash stock compensation expense of approximately $9.6 million, a non-cash charge of $8.1 million related to the assumption of our credit facility by Thermo Funding and lower ARPU previously mentioned. In addition, in 2006, we recognized a $14.1 million net deferred tax benefit.
Total revenue in the fourth quarter of 2007 was $23.7 million compared to $29.2 million during the same period in 2006. Total revenue in the year ended December 31, 2007 was $98.4 million compared to $136.7 million during 2006. Adjusted Revenue (adjusted for the Company's annual rate plans) in the fourth quarter was $24.4 million compared to $32.3 million during the same period in 2006. Total Adjusted Revenue (adjusted for the Company's annual rate plans) in the year ended December 31, 2007 was $102.2 million compared to $144.6 million during 2006. These decreases are attributable primarily to lower equipment sales and decreased ARPU in 2007 compared to 2006.
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 twelve months ended December 31, 2007 were as follows:
* Gross subscriber increases during the fourth quarter of 2007 and
the year ended December 31, 2007 were approximately 6,200 and
47,100, respectively, compared to approximately 11,600 and 81,500,
respectively, during the same periods in 2006.
* The annual average monthly retail churn rate in 2007 was
1.8 percent compared to 1.1 percent in 2006.
Conference Call Note
As previously announced, Globalstar will conduct a conference call scheduled for March 12, 2008 at 5:00 p.m. Eastern Time to discuss the annual and fourth quarter 2007 results.
Details are as follows:
Earnings Call: Dial: 800.561.2718 (U.S. and Canada),
617.614.3525 (International) and participant pass
code # 32411311
Audio Replay: A replay of the earnings call will be available
for a limited time and can be heard after
7:00 p.m. ET on March 12, 2008. Dial: 888.286.8010
(U.S. and Canada), 617.801.6888 (International)
and pass code # 58907514
About Globalstar, Inc.
Globalstar offers satellite voice and data 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 anticipate further integrated Simplex products to be introduced in the future," 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, 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 share data)
Year Ended December 31,
--------------------------------------
2007 2006 2005
------------ ------------ ------------
Revenue:
Service revenue $ 78,313 $ 92,037 $ 81,472
Subscriber equipment sales 20,085 44,634 45,675
------------ ------------ ------------
Total revenue 98,398 136,671 127,147
------------ ------------ ------------
Operating expenses:
Cost of services (exclusive
of depreciation and
amortization shown
separately below) 27,775 28,091 25,432
Cost of subscriber
equipment sales 13,863 40,396 38,742
Marketing, general,
and administrative 49,146 43,899 37,945
Depreciation and amortization 13,137 6,679 3,044
Impairment of assets 19,109 1,943 114
------------ ------------ ------------
Total operating expenses 123,030 121,008 105,277
------------ ------------ ------------
Operating income (loss) (24,632) 15,663 21,870
------------ ------------ ------------
Other income (expense):
Interest income 3,170 1,172 242
Interest expense (9,023) (587) (269)
Interest rate derivative loss (3,232) (2,716) --
Other income (expense) 8,656 (3,980) (622)
------------ ------------ ------------
Total other income (expense) (429) (6,111) (649)
------------ ------------ ------------
Income (loss) before
income taxes (25,061) 9,552 21,221
Income tax expense (benefit) 2,864 (14,071) 2,502
------------ ------------ ------------
Net income (loss) $ (27,925) $ 23,623 $ 18,719
============ ============ ============
Earnings (loss) per
common share:
Basic $ (0.36) $ 0.37 $ 0.30
Diluted (0.36) 0.37 0.30
Weighted-average shares
outstanding:
Basic 77,169,138 63,709,763 61,855,668
Diluted 77,169,138 64,076,182 61,955,874
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 /1
(In thousands, except ARPU)
(Unaudited)
Three months ended December 31, 2007
--------------------------------------
Annual Plans
GAAP Adjustment Adjusted /1
------------ ------------ ------------
Revenue
Service Revenue $ 19,600 $ 667 $ 20,267
Equipment Revenue 4,119 -- 4,119
------------ ------------ ------------
Total Revenue $ 23,719 $ 667 $ 24,386
Operating Expenses
Cost of Services 7,347 -- 7,347
Cost of Subscriber Equipment 2,465 -- 2,465
Marketing, General
and Administrative 14,961 -- 14,961
Depreciation & Amortization 4,912 -- 4,912
Impairment of Assets 1,854 -- 1,854
------------ ------------ ------------
Total Operating Expenses $ 31,539 $ -- $ 31,539
------------ ------------ ------------
Operating Income/(Loss) $ (7,820) $ 667 $ (7,153)
Interest Income/(Expense) (9,550) -- (9,550)
Other Income/(Expense) 3,782 -- 3,782
Income Tax Expense (Benefit) 2,746 -- 2,746
------------ ------------ ------------
Net Income/(Loss) $ (16,334) $ 667 $ (15,667)
============ ============ ============
EBITDA $ 874 $ 667 $ 1,541
Impairment of Assets 1,854 -- 1,854
Non-Cash Stock Compensation 4,160 -- 4,160
Other One Time Non
Recurring Charges 80 -- 80
Foreign Exchange
Loss (Income) (3,782) -- (3,782)
Adjusted EBITDA $ 3,186 $ 667 $ 3,853
Adjusted EBITDA Margin 13% 16%
Retail ARPU $ 46.45 $ 1.33 $ 47.78
Three months ended December 31, 2006
--------------------------------------
Annual Plans
GAAP Adjustment Adjusted /1
------------ ------------ ------------
Revenue
Service Revenue $ 22,186 $ 3,081 $ 25,267
Equipment Revenue 7,049 -- 7,049
------------ ------------ ------------
Total Revenue $ 29,235 $ 3,081 $ 32,316
Operating Expenses
Cost of Services 7,508 -- 7,508
Cost of Subscriber Equipment 3,725 -- 3,725
Marketing, General
and Administrative 12,665 -- 12,665
Depreciation & Amortization 2,255 -- 2,255
Impairment of Assets 1,943 -- 1,943
------------ ------------ ------------
Total Operating Expenses $ 28,096 $ -- $ 28,096
------------ ------------ ------------
Operating Income/(Loss) $ 1,139 $ 3,081 $ 4,220
Interest Income/(Expense) 598 -- 598
Other Income/(Expense) (2,136) -- (2,136)
Income Tax Expense (Benefit) 331 -- 331
------------ ------------ ------------
Net Income/(Loss) $ (730) $ 3,081 $ 2,351
============ ============ ============
EBITDA $ 1,258 $ 3,081 $ 4,339
Impairment of Assets 1,943 -- 1,943
Non-Cash Stock Compensation 1,185 -- 1,185
Other One Time Non
Recurring Charges 396 -- 396
Foreign Exchange
Loss (Income) 2,136 -- 2,136
Adjusted EBITDA $ 6,918 $ 3,081 $ 9,999
Adjusted EBITDA Margin 24% 31%
Retail ARPU $ 50.78 $ 6.51 $ 57.29
Year ended December 31, 2007
--------------------------------------
Annual Plans
GAAP Adjustment Adjusted /1
------------ ------------ ------------
Revenue
Service Revenue $ 78,313 $ 3,832 $ 82,145
Equipment Revenue 20,085 -- 20,085
------------ ------------ ------------
Total Revenue $ 98,398 $ 3,832 $ 102,230
Operating Expenses
Cost of Services 27,775 -- 27,775
Cost of Subscriber Equipment 13,863 -- 13,863
Marketing, General
and Administrative 49,146 -- 49,146
Depreciation & Amortization 13,137 -- 13,137
Impairment of Assets 19,109 -- 19,109
------------ ------------ ------------
Total Operating Expenses $ 123,030 $ -- $ 123,030
------------ ------------ ------------
Operating Income/(Loss) $ (24,632) $ 3,832 $ (20,800)
Interest Income/(Expense) (9,085) -- (9,085)
Other Income/(Expense) 8,656 -- 8,656
Income Tax Expense (Benefit) 2,864 -- 2,864
------------ ------------ ------------
Net Income/(Loss) $ (27,925) $ 3,832 $ (24,093)
============ ============ ============
EBITDA $ (2,839) $ 3,832 $ 993
Impairment of Assets 19,109 -- 19,109
Non-Cash Stock Compensation 9,570 -- 9,570
Other One Time Non
Recurring Charges 813 -- 813
Foreign Exchange Loss
(Income) (8,656) -- (8,656)
Adjusted EBITDA $ 17,997 $ 3,832 $ 21,829
Adjusted EBITDA Margin 18% 21%
Retail ARPU $ 46.26 $ 2.29 $ 48.55
Year ended December 31, 2006
--------------------------------------
Annual Plans
GAAP Adjustment Adjusted /1
------------ ------------ ------------
Revenue
Service Revenue $ 92,037 $ 7,899 $ 99,936
Equipment Revenue 44,634 -- 44,634
------------ ------------ ------------
Total Revenue $ 136,671 $ 7,899 $ 144,570
Operating Expenses
Cost of Services 28,091 -- 28,091
Cost of Subscriber Equipment 40,396 -- 40,396
Marketing, General and
Administrative 43,899 -- 43,899
Depreciation & Amortization 6,679 -- 6,679
Impairment of Assets 1,943 -- 1,943
------------ ------------ ------------
Total Operating Expenses $ 121,008 $ -- $ 121,008
------------ ------------ ------------
Operating Income/(Loss) $ 15,663 $ 7,899 $ 23,562
Interest Income/(Expense) (2,131) -- (2,131)
Other Income/(Expense) (3,980) -- (3,980)
Income Tax Expense (Benefit) (14,071) -- (14,071)
------------ ------------ ------------
Net Income/(Loss) $ 23,623 $ 7,899 $ 31,522
============ ============ ============
EBITDA $ 18,362 $ 7,899 $ 26,261
Impairment of Assets 1,943 -- 1,943
Non-Cash Stock Compensation 1,185 -- 1,185
Other One Time Non
Recurring Charges 396 -- 396
Foreign Exchange Loss
(Income) 3,980 -- 3,980
Adjusted EBITDA $ 25,866 $ 7,899 $ 33,765
Adjusted EBITDA Margin 19% 23%
Retail ARPU $ 58.91 $ 5.55 $ 64.46
/1 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 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.
(3) 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.
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,
2007 2006 2007 2006
--------- --------- --------- ---------
Subscribers
(End of Period) 284,126 262,802 284,126 262,802
Net Subscriber
Additions/(Losses) (1,142) 7,073 21,324 66,834
Retail Churn 2.0% 1.2% 1.8% 1.1%
ARPU
Retail
GAAP $ 46.45 $ 50.78 $ 46.26 $58.91
Adjusted $ 47.78 $ 57.29 $ 48.55 $64.46
Wholesale
GAAP $ 4.89 $ 8.38 $ 4.12 $8.39
Cash Capital expenditures $ 41,437 $ 47,586 $169,989 $107,544
Available liquidity /1 $218,425
Note:
/1 Includes cash on hand ($37.5 million) and restricted cash
($80.9 million), and available liquidity from our credit facility
with Thermo Funding Company ($100.0 million) at December 31, 2007.