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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A
AMENDMENT NO. 2 TO CURRENT REPORT ON FORM 8-K
DATED MARCH 20, 1998
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MARCH 20, 1998
LORAL SPACE & COMMUNICATIONS LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
ISLANDS OF BERMUDA 1-14180 13-3867424
(STATE OR OTHER (COMMISSION (IRS EMPLOYER
JURISDICTION OF FILE NUMBER) IDENTIFICATION
INCORPORATION) NUMBER)
C/O LORAL SPACECOM CORPORATION
600 THIRD AVENUE, NEW YORK, NEW YORK 10016
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 697-1105
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AMENDMENT NO. 2
The Registrant hereby amends the following items, financial statements,
exhibits or other portions of its Current Report on Form 8-K dated March 20,
1998, as set forth below:
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(b) PRO FORMA FINANCIAL INFORMATION
Unaudited Pro Forma Condensed Consolidated Statement of Operations of
Loral Space & Communications Ltd. for the three months ended March 31,
1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed by the undersigned hereunto
duly authorized.
LORAL SPACE & COMMUNICATIONS LTD.
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(Registrant)
Date: June 16, 1998 by /s/ MICHAEL P. DEBLASIO
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Michael P. DeBlasio
First Senior Vice President -- Finance
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PRO FORMA FINANCIAL DATA
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
The following unaudited pro forma condensed consolidated statement of
operations for the three months ended March 31, 1998 gives effect to the
acquisition by Loral of Orion Network Systems, Inc. ("Orion") on March 20, 1998.
Orion's balance sheet is reflected in Loral's consolidated balance sheet at
March 31, 1998 included in Loral's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998. Loral's consolidated statement of operations will reflect
the results of Orion commencing April 1, 1998. The unaudited pro forma condensed
consolidated statement of operations, which assumes that the Orion acquisition
occurred on January 1, 1997, reflects the purchase method of accounting and the
adjustments and assumptions described in the accompanying notes.
The pro forma adjustments are based upon preliminary estimates of fair
values which, except for debt, are based on historical values of assets and
liabilities. Actual adjustments will be based on final appraisals and other
analyses of fair values, which are not expected to result in material
adjustments. The carrying value of Orion's debt was increased to reflect a fair
value adjustment of $148.6 million based on quoted market prices at March 31,
1998. The unaudited pro forma condensed consolidated statement of operations
should be read in conjunction with the audited and unaudited consolidated
financial statements and notes of Loral and Orion. The unaudited pro forma
condensed consolidated statement of operations data may not be indicative of the
results that actually would have occurred if the acquisition had taken place on
January 1, 1997, or future results.
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LORAL SPACE & COMMUNICATIONS LTD.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
PERIOD COVERED:
Loral and Orion January 1 -- March 31, 1998
<TABLE>
<CAPTION>
PRO FORMA
LORAL ORION ADJUSTMENTS PRO FORMA
-------- -------- ----------- -----------
(NOTES 1 AND 2)
<S> <C> <C> <C> <C>
Revenues...................................... $295,213 $ 18,790 $ -- $314,003
Costs and expenses............................ 294,231 42,429 (9,116)(a)(b) 327,544
-------- -------- ------- --------
Operating income (loss)..................... 982 (23,639) 9,116 (13,541)
Interest income (expense), net................ 6,946 (15,764) 4,631(b) (4,187)
Other expense................................. -- (288) -- (288)
-------- -------- ------- --------
Pre-tax income (loss)....................... 7,928 (39,691) 13,747 (18,016)
Income taxes.................................. 3,063 -- (7,952)(c) (4,889)
-------- -------- ------- --------
Income (loss) before equity in net loss of
affiliates............................... 4,865 (39,691) 21,699 (13,127)
Equity in net loss of affiliates.............. (20,370) -- 2,744(d) (17,626)
Minority interest............................. 62 -- -- 62
-------- -------- ------- --------
Net loss.................................... (15,443) (39,691) 24,443 (30,691)
Preferred dividends and accretion, net of
forfeitures................................. 11,606 (1,387) 1,387(b) 11,606
-------- -------- ------- --------
Net loss attributable to common shares...... $(27,049) $(38,304) $23,056 $(42,297)
======== ======== ======= ========
Loss per share (Note 3):
Basic....................................... $ (0.11) $ (0.16)
======== ========
Diluted..................................... $ (0.11) $ (0.16)
======== ========
Weighted average shares outstanding:
Basic....................................... 249,336 267,236
======== ========
Diluted..................................... 249,336 267,236
======== ========
</TABLE>
See notes to unaudited pro forma condensed consolidated statement of operations.
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NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
1. On March 20, 1998, Loral acquired all the outstanding stock, as
defined, of Orion in exchange for Loral Common Stock (the "Merger"). Loral
issued 17.9 million shares of its Common Stock and assumed existing Orion
options and warrants to purchase 1.9 million shares of Loral Common Stock
representing an aggregate purchase price of $469.0 million. The purchase price
was determined pursuant to the requirements of APB 16 and EITF 95-19.
This acquisition is being accounted for as a purchase. Pro forma
adjustments to the unaudited condensed consolidated statement of operations have
been calculated for the three months ended March 31, 1998. These unaudited pro
forma condensed consolidated statement of operations adjustments have been
prepared as if the acquisition of Orion had occurred on January 1, 1997. The
following facts and assumptions in notes (a) through (c) were used in
determining the pro forma effect of the acquisition of Orion:
(a) The estimated excess of purchase price over the net assets
acquired of $605.5 million is being amortized over 40 years, offset by
amortization included in Orion's historical statement of operations.
Orion's identifiable assets and liabilities used in the preparation of this
unaudited pro forma condensed consolidated statement of operations were
based on preliminary estimates of fair values which, except for debt, were
based on historical cost, pending the completion of an independent
valuation and allocation of their respective fair values, which are not
expected to result in material adjustments. The carrying value of Orion's
debt was increased to reflect a fair value adjustment of $148.6 million
based on quoted market prices at March 31, 1998.
(b) Other pro forma adjustments to the unaudited pro forma condensed
consolidated statement of operations include $0.5 million for amortization
of unearned compensation resulting from the difference between the purchase
price and exercise price of unvested stock options, $3.3 million for
decreased interest expense related to the adjustment to record Orion's debt
at fair value, $1.3 million for decreased interest expense due to
conversion of Orion's convertible debentures into Loral Common Stock in
connection with the Merger, $12.2 million for elimination of Merger related
expenses and $1.4 million for elimination of net forfeitures of preferred
dividends and accretion on Orion Preferred Stock converted in connection
with the Merger.
(c) A tax benefit was recorded as an adjustment to the unaudited pro
forma condensed consolidated statement of operations for the three months
ended March 31, 1998 related to the Orion loss which would have been
available to Loral on its US income tax return. A tax rate of 35% was
applied to Orion's loss, net of certain pro forma adjustments.
2. Other adjustments
(d) Loral's equity in the net loss of Satelites Mexicanos, S.A. de
C.V. ("SatMex") for the three months ended March 31, 1998 includes the
write-off of deferred financing costs related to debt which was refinanced
during February and March 1998. The refinanced debt was incurred during
1997 to finance the acquisition of a 49% indirect economic interest in
SatMex. Had the acquisition occurred on January 1, 1997, such fees would
have been expensed during 1997. An adjustment of $2.7 million has been
included in the unaudited pro forma condensed consolidated statement of
operations for the three months ended March 31, 1998 to reflect the pro
forma write-off of the deferred financing costs in the earlier period.
3. Basic earnings per share is computed based upon the weighted average
number of Loral common shares and the Loral Series A Preferred Stock
outstanding. Diluted earnings per share excludes the assumed conversion of the
Loral Series C Preferred Stock and other dilutive securities as the effect would
have been anti-dilutive. Both basic and diluted earnings per share computations
give pro forma effect to the shares issued for the Orion acquisition.
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NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
The following table presents the weighted average shares used in the pro
forma loss per share calculation (in thousands):
<TABLE>
<CAPTION>
BASIC DILUTED
------- -------
<S> <C> <C>
Shares -- historical financial statements................ 249,336 249,336
Issuance of shares to Orion shareholders................. 17,900 17,900
------- -------
Pro forma shares used in per share calculations.......... 267,236 267,236
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</TABLE>
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