<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
------------------------
COMMISSION FILE NUMBER 1-14180
------------------------
LORAL SPACE & COMMUNICATIONS LTD.
600 Third Avenue
New York, New York 10016
Telephone (212) 697-1105
Jurisdiction of incorporation: Bermuda
IRS identification number: 13-3867424
------------------------
The registrant has filed all reports required to be filed by section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months or
such shorter period and has been subject to such filing requirements for the
past 90 days.
As of August 12, 1996, there were 183,592,308 shares of Loral Space &
Communications Ltd. common stock outstanding.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
PART 1. FINANCIAL INFORMATION
LORAL SPACE & COMMUNICATIONS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
-------------------
1996 1995
------- -------
<S> <C> <C>
Management fee from affiliate.......................................... $ 1,538 $ 857
Costs and expenses..................................................... 3,686 688
Interest income........................................................ 8,146 --
Allocated interest expense............................................. -- 2,546
------- -------
Income (loss) before income taxes and equity in net loss of
affiliates........................................................... 5,998 (2,377)
Provision (benefit) for income taxes................................... 720 (868)
------- -------
Income (loss) before equity in net loss of affiliates.................. 5,278 (1,509)
Equity in net loss of affiliates....................................... (3,977) (2,507)
------- -------
Net income (loss)...................................................... $ 1,301 $(4,016)
======= =======
Weighted average number of common and equivalent shares outstanding.... 217,472 170,488
======= =======
Earnings (loss) per share.............................................. $ 0.01 $ (0.02)
======= =======
</TABLE>
See notes to condensed consolidated financial statements.
1
<PAGE> 3
LORAL SPACE & COMMUNICATIONS LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
(Unaudited)
<TABLE>
<CAPTION>
MARCH
JUNE 30, 31,
1996 1996
-------- --------
<S> <C> <C>
(NOTE)
ASSETS
Current assets:
Cash and cash equivalents.......................................... $590,535 $ --
Other assets....................................................... 18,417 --
-------- --------
Total current assets................................................. 608,952 --
Property, plant and equipment, net................................... 23,080 --
Investment in affiliates............................................. 337,720 339,272
Other assets......................................................... 23,606 9,800
Deferred income taxes................................................ -- 5,312
-------- --------
$993,358 $354,384
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY/INVESTED EQUITY
Current liabilities:
Accounts payable................................................... $ 2,344 $ --
Accrued expenses................................................... 838 --
Income taxes payable............................................... 720 --
-------- --------
Total current liabilities............................................ 3,902 --
Deferred income taxes................................................ 5,650 --
Long-term liabilities................................................ 9,762 --
Shareholders' equity/invested equity:
Invested equity.................................................... -- 354,384
Series A convertible preferred stock, par value $.01; authorized
150,000,000 shares, 45,896,977 shares issued and outstanding at
June 30, 1996................................................... 459 --
Common stock, par value $.01; authorized 750,000,000 shares, issued
and outstanding 183,592,308 shares at June 30, 1996............. 1,836 --
Paid-in capital.................................................... 970,448 --
Retained earnings.................................................. 1,301 --
-------- --------
Total shareholders' equity/invested equity........................... 974,044 354,384
-------- --------
$993,358 $354,384
======== ========
</TABLE>
- ---------------
Note: The March 31, 1996 balance sheet has been derived from the audited
financial statements at that date.
See notes to condensed consolidated financial statements.
2
<PAGE> 4
LORAL SPACE & COMMUNICATIONS LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
---------------------
1996 1995
-------- --------
<S> <C> <C>
Operating activities:
Net income (loss).................................................. $ 1,301 $ (4,016)
Equity in net loss of affiliates................................... 3,977 2,507
Tax benefit of Globalstar partnership losses....................... -- 1,602
Deferred taxes..................................................... -- (839)
Depreciation....................................................... 491 --
Changes in operating assets and liabilities........................ (15,393) --
-------- --------
Net cash used in operating activities................................ (9,624) (746)
-------- --------
Investing activities
Payment for Globalstar option territory............................ -- (9,800)
Investment in affiliates........................................... (2,425) (2,083)
Capital expenditures, net.......................................... (115) --
-------- --------
Cash used in investing activities.................................... (2,540) (11,883)
-------- --------
Financing activities:
Proceeds from Distribution......................................... 612,274 --
Transaction expenses related to the Distribution................... (12,000) --
Advances from Loral Corporation prior to the Distribution.......... 2,425 12,629
-------- --------
Cash provided by financing activities................................ 602,699 12,629
-------- --------
Increase in cash and cash equivalents................................ 590,535 --
Cash and cash equivalents -- beginning of period..................... -- --
-------- --------
Cash and cash equivalents -- end of period........................... $590,535 $ --
======== ========
Non-cash investing activities:
Assets transferred from Loral Corporation at the Distribution...... $ 36,622
========
Liabilities assumed from Loral Corporation at the Distribution..... $ 15,650
========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 5
LORAL SPACE & COMMUNICATIONS LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1) FORMATION OF LORAL SPACE & COMMUNICATIONS LTD.
Loral Space & Communications Ltd. (the "Company" or "Loral SpaceCom")
manages and is the largest equity owner of both Globalstar, L.P.
("Globalstar") and Space Systems/Loral, Inc. ("SS/L") and has a minority
non-controlling equity investment in K & F Industries, Inc. ("K & F"). The
Company will also act as a Globalstar service provider in Canada, Brazil
and Mexico, and is evaluating additional satellite-based service
opportunities. Loral SpaceCom was formed to effectuate the distribution of
Loral Corporation's ("Loral") space and telecommunications businesses (the
"Distribution") to shareholders of Loral and holders of options to purchase
Loral common stock pursuant to a merger agreement (the "Merger") dated
January 7, 1996 between Loral and Lockheed Martin Corporation ("Lockheed
Martin"). Certain other assets of Loral were transferred to Loral SpaceCom
at the Distribution.
The Distribution of approximately 183.6 million shares of Loral SpaceCom
common stock was made on April 23, 1996. In connection with the
Distribution, Lockheed Martin contributed $612 million in cash to the
Company. Of the amount contributed, $344 million represented the purchase
of a 20% fully-diluted equity interest in the Company in the form of Loral
SpaceCom Series A convertible preferred stock. Such stock is subject to
certain voting limitations, restrictions on transfer and standstill
provisions.
2) BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared by Loral SpaceCom pursuant to the rules of the Securities and
Exchange Commission ("SEC") and, in the opinion of the Company, include all
adjustments necessary for a fair presentation of results of operations,
financial position and cash flows. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such SEC rules. The Company believes that
the disclosures made are adequate to keep the information presented from
being misleading. The results of operations for the three months ended June
30, 1996 are not necessarily indicative of the results to be expected for
the full year. It is suggested that these financial statements be read in
conjunction with the audited financial statements and notes thereto
included in the Company's latest Annual Report on Form 10-K. References to
Loral SpaceCom or the Company prior to the Distribution refer to the space
and communications operations of Loral Corporation.
The results of operations for the three months ended June 30, 1995, include
allocations and estimates of certain expenses of Loral SpaceCom based upon
estimates of actual services performed by Loral on behalf of Loral
SpaceCom. The amount of corporate office expenses for the three months
ended June 30, 1995 has been estimated based primarily on the allocation
methodology prescribed by government regulations pertaining to government
contractors, which management of Loral SpaceCom believes is a reasonable
allocation method.
For the three months ended June 30, 1995 interest was allocated to Loral
SpaceCom based upon Loral's historical weighted average debt cost applied
to the average investment in affiliates, which management of Loral believes
to be a reasonable allocation method. Interest related to the investment in
Globalstar prior to the commencement of operations of Loral SpaceCom has
been capitalized.
4
<PAGE> 6
LORAL SPACE & COMMUNICATIONS LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3) INVESTMENT IN AFFILIATES
Investment in affiliates is summarized as follows (in thousands):
<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
1996 1996
-------- ---------
<S> <C> <C>
SS/L............................................................. $146,426 $ 144,051
Globalstar....................................................... 191,294 195,221
K & F............................................................ 23,890 22,937
Deferred K & F Gain.............................................. (23,890) (22,937)
-------- ---------
$337,720 $ 339,272
======== ========
</TABLE>
Equity in net income (loss) of affiliates consists of (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
--------------------
1996 1995
------- -------
<S> <C> <C>
SS/L............................................................. $ 2,375 $ 754
Globalstar....................................................... (6,352) (4,863)
Tax benefit of Globalstar partnership losses..................... -- 1,602
------- -------
($3,977) ($2,507)
======= =======
</TABLE>
The following table represents the summary of results of operations of Lord
SpaceCom's affiliates for the three months ended June 30, 1996 and June 30,
1995 (in thousands):
<TABLE>
<CAPTION>
JUNE 30, 1996 JUNE 30, 1995
-------------------------------- --------------------------------
GLOBALSTAR SS/L K & F GLOBALSTAR SS/L K & F
---------- -------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues....................... $ -- $307,599 $ 71,537 $ -- $171,375 $ 62,293
Operating income (loss)........ (17,452) 14,426 15,062 (17,457) 6,115 9,127
Net income (loss).............. (14,373) 8,070 5,270 (12,749) 2,306 (1,299)
Net loss applicable to ordinary
partnership interests........ (19,688) -- -- (12,749) -- --
</TABLE>
5
<PAGE> 7
LORAL SPACE & COMMUNICATIONS LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4) RECENTLY ADOPTED FINANCIAL ACCOUNTING PRONOUNCEMENTS
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" ("SFAS
121"), which is required to be adopted for fiscal years beginning after
December 15, 1995. SFAS 121 establishes the accounting standards for the
impairment of long-lived assets, certain intangible assets and cost in
excess of net assets acquired to be held and used, and for long-lived
assets and certain intangible assets to be disposed of. The Company has
adopted SFAS 121 and such adoption did not have any effect on its results
of operations or financial position.
In October 1995, the Financial Accounting Standards Board issued Statement
No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), which is
required to be adopted by fiscal 1996. SFAS 123 establishes accounting and
disclosure requirements using a fair value based method of accounting for
stock-based employee compensation plans (including stock arrangements by
investors for the benefit of their investees). Under SFAS 123 the Company
may either adopt the new fair value based accounting method or continue the
intrinsic value based method and provide pro forma disclosures of net
income and earnings per share as if the accounting provisions of SFAS 123
had been adopted. The Company has adopted SFAS 123 and elected to continue
the intrinsic value based method of accounting for stock-based employee
compensation plans and provide the required pro forma disclosures;
therefore, the adoption of SFAS 123 did not have any effect on Loral
SpaceCom's reported results of operations.
5) SUBSEQUENT EVENT
On August 9, 1996 certain partnerships affiliated with Lehman Brothers
Holdings Inc., exchanged all of their shares of Series S Redeemable
Preferred Stock of SS/L (Bermuda) Ltd., representing an effective 18.3%
economic interest in SS/L for 7,500,000 newly issued shares of Loral
SpaceCom common stock, 267,256 shares of Globalstar Telecommunications
Limited common stock previously held by a Loral SpaceCom subsidiary and $4
million in cash. As a result of this transaction, Loral SpaceCom has
increased its effective economic interest in SS/L to 51%.
6
<PAGE> 8
LORAL SPACE & COMMUNICATIONS LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
This quarterly report on Form 10-Q contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. In addition,
from time to time, the Company 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 by or with the approval of an authorized 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 which, have been described in the section of the
Company's Annual Report on Form 10-K for the year ended March 31, 1996,
entitled, "Certain Factors That May Effect Future Results -- Company" and other
documents the Company files from time to time with the Securities and Exchange
Commission including the Company's quarterly reports on Form 10-Q and current
reports on Form 8-K, and shareholders are specifically referred to these
documents with regard to factors and conditions that may affect future results.
LORAL SPACE & COMMUNICATIONS LTD.
Loral SpaceCom manages and is the largest equity owner of both Globalstar
and SS/L. The Company will also act as a Globalstar service provider in Canada,
Brazil and Mexico, and is evaluating additional satellite-based service
opportunities. These include: ventures to provide "direct-to-home" ("DTH")
television service in certain regions of the world (such as SS/L's joint venture
with Mabuhay Philippine Satellite Corp. to provide DTH service to the
Philippines), CyberStar, a proposed high-speed satellite-delivered
communications system designed to provide users with communications services
such as desktop video-conferencing, high-data rate computer networking and data
transmission; traditional fixed satellite services to provide telephony, video
conferencing, transmission to television networks and cable head-ends and remote
news and sports feeds. The Compny recently received allocations from the FCC for
several orbital slots to enable such satellite-based services.
Loral SpaceCom was formed to effectuate the distribution of Loral's space
and telecommunications businesses(the "Distribution") to shareholders of Loral
and holders of options to purchase Loral common stock pursuant to a merger
agreement dated January 7, 1996 between Loral and Lockheed Martin. The
distribution of approximately 183.6 million shares of Loral SpaceCom common
stock was made on April 23, 1996. In connection with the Distribution, Lockheed
Martin contributed $612 million in cash to the Company. Of the amount
contributed, $344 million represented the purchase of a 20% fully-diluted equity
interest in the Company in the form of Loral SpaceCom Series A convertible
preferred stock. Such stock is subject to certain voting limitations,
restrictions on transfer and standstill provisions.
Loral SpaceCom records its investments in Globalstar and SS/L using the
equity method of accounting. Accordingly, Loral SpaceCom's results of operations
reflect its proportionate share of the results of operations of its affiliates
on an equity basis. References to Loral SpaceCom or the Company prior to the
Distribution refer to the space and communications operations of Loral
Corporation.
Future operating results of Loral SpaceCom will be dependent on a number of
factors including the results of operations of Globalstar and SS/L, the level of
corporate operating expenses, the utilization of the available cash balances and
the extent of interest income or other investment income. Loral SpaceCom
currently anticipates having net income for the period ending December 31, 1996.
RESULTS OF OPERATIONS
The results of operations for the three months ended June 30, 1995, include
allocations and estimates of certain expenses of Loral SpaceCom based upon
estimates of actual services performed by Loral on behalf of Loral SpaceCom. The
amount of corporate office expenses for the three months ended June 30, 1995
have been estimated based primarily on the allocation methodology prescribed by
government regulations
7
<PAGE> 9
LORAL SPACE & COMMUNICATIONS LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION -- (CONTINUED)
pertaining to government contractors, which management of Loral SpaceCom
believes is a reasonable allocation method.
For the three months ended June 30, 1995 interest was allocated to Loral
SpaceCom based upon Loral's historical weighted average debt cost applied to the
average investment in affiliates, which management of Loral believes to be a
reasonable allocation method. Interest related to the investment in Globalstar
prior to the commencement of Loral SpaceCom's operations has been capitalized.
The results of operations reflect net income of $1.3 million for the
quarter ended June 30, 1996 versus a net loss of $4.0 million for the same
period in 1995. The increase in net income was primarily the result of an
increase in interest income due to investment of cash proceeds from the
Distribution and no allocated interest expense. The increase in interest income
was partially offset by an increase in operating expenses. The increase in
operating expenses was a result of the Company operating on a stand alone basis
without the benefit of economies of scale as part of Loral Corporation.
The equity in net loss of affiliates for the three months ended June 30,
1996 and 1995 was $4.0 million and $2.5 million, respectively, primarily due to
Loral SpaceCom's proportionate share of Globalstar's development costs loss
offset by the proportionate share of SS/L's income (see Note 3 to the Condensed
Consolidated Financial Statements.
Loral SpaceCom is subject to U.S. Federal, state and local tax at regular
rates on any U. S. source income. For the three months ended June 30, 1996, the
Company recorded a provision of $.7 million. For the year ended March 31, 1996,
the Company's operations were included in the consolidated tax returns of Loral
Corporation. For the three months ended June 30, 1995, the tax benefit of $.9
million was computed as if Loral SpaceCom was a separate taxpayer.
LIQUIDITY AND CAPITAL RESOURCES
Loral SpaceCom commenced operations on April 23, 1996 with $612 million of
unrestricted cash. Loral SpaceCom intends to utilize its existing capital base
and access to the capital markets to support the financing requirements of
Globalstar and SS/L and to finance new business opportunities in satellite based
communications either directly or through Globalstar and SS/L. It is anticipated
that Globalstar will directly access the capital markets to satisfy its
financing requirements, and may further seek financial support from its
strategic partners, including the Company. The Company believes that SS/L's
existing credit facilities are adequate to meet SS/L's present financing
requirements. Globalstar and SS/L are currently financed without recourse to
Loral SpaceCom other than the indemnification provided to Lockheed Martin in
connection with Lockheed Martin's guarantee under the Globalstar credit
agreement.
Globalstar and SS/L have no history of paying dividends and are not
expected to pay dividends in the near future. The Globalstar and the SS/L credit
facilities impose restrictions on Globalstar's and SS/L's ability to pay
distributions or dividends to its partners and stockholders. In addition,
Globalstar does not expect to make distributions prior to the time it commences
full commercial operations. It is anticipated that Loral SpaceCom will fund its
operating requirements from interest income generated from the temporary
investment of cash balances and the receipt of SS/L management fees.
As part of its investment in Globalstar, Loral SpaceCom, as a founding
service provider, acquired exclusive service provider rights to Mexico and
Brazil. Further, in June 1995, Loral SpaceCom paid Globalstar an initial $9.8
million for exclusive provider rights to Canada. Loral SpaceCom, in joint
venture with local telephony service providers and international
telecommunications businesses, intends to establish Globalstar service
operations in such territories.
Cash Used and Provided. Cash used in operating activities for the three
months ended June 30, 1996, and 1995 was $9.6 million and $.7 million,
respectively, primarily due to the items discussed above in Results of
Operations and increases in other assets.
8
<PAGE> 10
LORAL SPACE & COMMUNICATIONS LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION -- (CONTINUED)
Cash used in investing activities for the three months ended June 30, 1996
and 1995 was $2.5 million and $11.9 million, respectively, primarily due to the
purchase of $2.5 million principal amount of GTL Convertible Preferred
Equivalent Obligations in April 1996, and the initial payment of $9.8 million
for the Globalstar Canadian service provider rights and additional capitalized
interest in 1995.
Net cash provided by financing activities for the three months ended June
30, 1996 and 1995 was $602.7 million and $12.6 million, respectively,
representing the proceeds from the Distribution and advances from Loral
Corporation offset by cash paid for transaction expenses related to the
Distribution in 1996 and advances from Loral Corporation to fund the
above-mentioned activities in 1995.
Investment in Globalstar. At June 30, 1996 Loral SpaceCom's investment in
Globalstar was $191.3 million. Additionally, Loral SpaceCom holds an indirect
1.4% interest in Globalstar through its ownership of SS/L.
Investment in SS/L. The company currently holds 32.7% of the economic
interest in SS/L. A subsidiary of Loral SpaceCom is paid a management fee from
SS/L based on SS/L's total adjusted revenues. As discussed in Note 5 to the
Condensed Consolidated Financial Statements, Loral SpaceCom's economic interest
in SS/L will increase to 51%.
Other Business Opportunities. As discussed previously, Loral SpaceCom is
currently evaluating several new business initiatives. These ventures are in
formative stages and there can be no assurances that they will be further
developed or licensed, or that the necessary capital to complete such ventures
will be available.
SUMMARY RESULTS OF OPERATIONS OF AFFILIATES
GLOBALSTAR, L.P. RESULTS OF OPERATIONS
Globalstar is a development stage partnership and has not commenced
commercial service operations. The net loss applicable to ordinary partnership
interests for the three months ended June 30, 1996 increased to $19.7 million
from $12.7 million for the comparable period in the prior year. The increase in
the net loss is a result of lower interest income and the preferred distribution
on the redeemable preferred partnership interests of $5.3 million allocated to
the ordinary partnership interests. Development costs and marketing, general and
administrative expenses remained at a constant level in each period. Globalstar
is expending significant funds for the design, construction, testing and
deployment of the Globalstar System and expects such losses to continue through
commencement of revenue generating service operations.
Interest income for the three months ended June 30, was $3.1 million and
$4.7 million, in 1996 and 1995, respectively. Interest income decreased as a
result of lower average cash balances outstanding.
Development costs for the three months ended June 30, was $13.8 million for
both 1996 and 1995, reflecting the development of certain technologies under
Globalstar's contract with Qualcomm and Globalstar's in-house engineering.
SPACE SYSTEMS/LORAL RESULTS OF OPERATIONS
Revenues for the quarter ended June 30, 1996 increased to $307.6 million
from $171.4 million for the same period in the prior year. Net income for the
quarter ended June 30, 1996 increased to $8.1 million compared with $2.3 million
in the prior year primarily as the result of higher revenue.
The increase in revenues was attributable primarily to higher volume on
commercial satellite programs, including the Globalstar program, the Pioneer
program and the Telstar program.
RECENTLY ADOPTED FINANCIAL ACCOUNTING PRONOUNCEMENTS
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" ("SFAS 121"),
which is required to be adopted for fiscal years beginning after December 15,
9
<PAGE> 11
LORAL SPACE & COMMUNICATIONS LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION -- (CONTINUED)
1995. SFAS 121 establishes the accounting standards for the impairment of
long-lived assets, certain intangible assets and cost in excess of net assets
acquired to be held and used, and for long-lived assets and certain intangible
assets to be disposed of. The Company has adopted SFAS 121 and such adoption did
not have any effect on its results of operations or financial position.
In October 1995, the Financial Accounting Standards Board issued Statement
No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), which is
required to be adopted by fiscal 1996. SFAS 123 establishes accounting and
disclosure requirements using a fair value based method of accounting for stock
based employee compensation plans (including stock arrangements by investors for
the benefit of their investees). Under SFAS 123 the Company may either adopt the
new fair value based accounting method or continue the intrinsic value based
method and provide pro forma disclosures of net income and earnings per share as
if the accounting provisions of SFAS 123 had been adopted. The Company has
adopted SFAS 123 and elected to continue the intrinsic value based method of
accounting for stock-based employee compensation plans and provide the required
pro forma disclosures; therefore, the adoption of SFAS 123 did not have any
effect on Loral SpaceCom's reported results of operations.
10
<PAGE> 12
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following exhibits are filed as part of this report:
<TABLE>
<S> <C> <C>
Exhibit 11 -- Computation of Earnings (Loss) per Share For the Three Months Ended
June 30, 1996 and 1995.
Exhibit 27 -- Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LORAL SPACE & COMMUNICATIONS LTD.
Registrant
Date: August 13, 1996 MICHAEL P. DEBLASIO
Senior Vice President -- Finance
(Principal Financial Officer)
and
Registant's Authorized Officer
11
<PAGE> 13
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ---------- -----------------------
11 COMPUTATION OF EARNINGS (LOSS)
PER SHARE
27 FINANCIAL DATA SCHEDULE
<PAGE> 1
EXHIBIT 11
LORAL SPACE & COMMUNICATIONS LTD.
COMPUTATION OF EARNINGS (LOSS) PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
---------------------
1996 1995
-------- --------
<S> <C> <C>
Primary:
Net income (loss) applicable to common shares...................... $ 1,301 $ (4,016)
======== ========
Shares:
Weighted average common shares outstanding...................... 181,473 170,488
Assumed conversion of Series A convertible preferred stock...... 34,801 --
Common equivalent shares applicable to stock options............ 1,198 *
-------- --------
Average number of shares outstanding and common equivalent
shares......................................................... 217,472 170,488
======== ========
Primary earnings (loss) per common share and common equivalent
share.............................................................. $ 0.01 $ (0.02)
======== ========
Fully Diluted:
Net income (loss) applicable to common shares...................... $ 1,301 $ (4,016)
======== ========
Shares:
Weighted average common shares as adjusted for primary
computation.................................................... 217,472 170,488
Incremental increase to shares under stock options where the
quarter's ending market price is higher than the average price
during the quarter............................................. -- *
-------- --------
Average number of shares outstanding on a fully diluted basis... 217,472 170,488
======== ========
Earnings (loss) per share assuming full dilution..................... $ 0.01 $ (0.02)
======== ========
</TABLE>
- ---------------
* Effect is antidilutive.
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF LORAL SPACE & COMMUNICATIONS LTD. FOR THE QUARTER
ENDED JUNE 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 590,535
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
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0
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