Loral Reports Third Quarter 1999 Financial Results - Company Financial Information

Cambridge Telcom Report, Nov 1, 1999

Loral Space & Communications Tuesday reported results for the three months and nine months ended September 30, 1999.

"With segment revenues and EBITDA well ahead of last year's third quarter, Loral's performance remains on track to meet our previously stated expectations for the full year," stated Bernard L. Schwartz, Loral chairman and chief executive officer. "Looking ahead to next year, the leasing of transponder capacity on our newly expanded fixed satellite services fleet and the initiation of Globalstar service will be the major drivers of revenue and shareholder value.

"In 1999, five new satellites were added to our fixed satellite services fleet, doubling capacity from 202 to 431 transponders," Mr. Schwartz continued. "These additions significantly expand our revenue potential and provide a solid foundation for growth. The costs related to this new capacity, however, are being incurred now and, accordingly, have reduced EBITDA margins in the current period.

"Globalstar continues to hit its milestones following its successful service introduction this month at Telecom '99 in Geneva," Mr. Schwartz concluded. "There are 44 satellites in space, nine gateways in operation and 10,000 phones in the hands of our service providers. And the feedback we're getting from early users as to voice quality and call retention is very positive."

Financial Results for the Periods Ended September 30, 1999 Loral's segment revenues in the third quarter, before intercompany and affiliate eliminations, increased to $476 million, versus $363 million a year earlier, reflecting improved performance in each of the company's operational business segments.

Reported revenues for the quarter, after all eliminations, were $347 million, up 20 percent from the $290 million reported a year earlier.

For the first nine months of the year, segment revenues before eliminations rose 19 percent to $1.3 billion versus $1.1 billion a year earlier. After intercompany and affiliate eliminations, reported revenues for the first nine months of 1999 were $1.0 billion, a 24 percent increase over revenues of $833 million a year ago.

Segment EBITDA (earnings before interest, taxes, depreciation and amortization) for the three months ended September 30, 1999, prior to all eliminations and development and start-up costs, rose to $73 million, a 34 percent gain over the $54 million reported last year. Reported EBITDA, after all eliminations, was $36 million, an 80 percent increase over the $20 million in EBITDA reported a year earlier, reflecting increased contribution from all operating segments.

Segment EBITDA for the nine months ended September 30, 1999, prior to all eliminations and development and start-up costs, was $210 million, up 36 percent over the $155 million posted in the first nine months of 1998. Reported EBITDA for the first nine months, after all eliminations and development and start-up costs, rose 130 percent to $116 million versus EBITDA of $51 million reported for the first nine months last year.

For the first nine months of 1999, segment bookings before eliminations were $1.4 billion versus $1.3 billion last year, a 12 percent increase. At September 30, 1999, funded backlog, before eliminations, was $2.6 billion, up from $2.4 billion last year. Significantly, fixed satellite services represents $1.3 billion of that backlog, an increase of 44 percent over its backlog a year earlier. Funded backlog net of eliminations at September 30, 1999 was $2.0 billion, equal to last year.

Loral reported a smaller than expected net loss of $24 million for the quarter, or $0.08 per share, which includes a non-recurring tax benefit of $33.6 million, resulting from a recent change in the tax code. Last year's net loss for the quarter was $22 million or $0.08 per share, which included a one-time gain of $35 million on the sale by Loral of Globalstar common stock. For the first nine months, the company's net loss was $124 million or $0.43 per share versus $120 million or $0.45 a year ago.

Per share calculations are based on 290 million weighted shares of Loral common stock outstanding for the three-month and nine-month periods ended September 30, 1999,versus 289 million and 268 million for each of the respective periods a year earlier.

The company's cash balance on September 30, 1999, was $463 million, including approximately $50 million of cash restricted for interest payments on Loral Orion's outstanding debt and $147 million for the final payment on Apstar IIR next year. Loral's total debt of approximately $2.1 billion includes $957 million of Loral Orion debt, which is non-recourse to Loral.

Fixed Satellite Services (FSS) During the third quarter of 1999, FSS segment revenue increased 30 percent to $87 million from $67 million a year earlier. A portion of this increase, $8.5 million, is attributable to a transaction in which Loral Skynet acquired one transponder from Satmex (Satelites Mexicanos S.A. de C.V.), which is 49 percent owned by Loral.