SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 21, 1994
COMSAT Corporation
------------------
(Exact name of Registrant as specified in Charter)
District of Columbia 1-4929 52-0781863
---------------------- ---------- -------------
(State or other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification
Number)
6560 Rock Spring Drive, Bethesda, MD 20817
--------------------------------------- --------
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code: (301) 214-3000
Not applicable.
---------------
(Former name or former address, if changed since last report).
Page 1 of 12 pages -- Exhibit Index on page 4.
<PAGE>
Item 5. Other Events
Attached to this report as Exhibit 20(a), and incorporated
by reference in this item, is a Press Release of the Corporation,
distributed on October 21, 1994, describing the Corporation's
financial results for the quarter ending September 30, 1994.
Attached to this report as Exhibit 20(b), and incorporated
by reference in this item, is a Press Release of the Corporation,
distributed on October 31, 1994, describing certain strategic
initiatives of the Corporation.
Item 7. Financial Statements and Exhibits
(c) Exhibits (listed according to the number assigned in
Item 601 of Regulation S-K).
Exhibit No. Description
20(a) Press Release dated October 21, 1994.
20(b) Press Release dated October 31, 1994.
Page 2 of 12
<PAGE>
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 hereunto duly authorized.
COMSAT Corporation
By: /s/ Allen E. Flower
---------------------
Allen E. Flower
Controller
Date: November 4, 1994
Page 3 of 12
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
20(a) Press Release dated October 21, 1994. 5
20(b) Press Release dated October 31, 1994. 11
Page 4 of 12
<PAGE>
Exhibit 20(a)
COMSAT Corporation FROM: COMSAT Corporation
NEWS RELEASE 6560 Rock Spring Drive
Bethesda, MD 20817
PHONE: 301 214 3658
FAX: 301 214 7130
DATE: October 21, 1994
For Immediate Release
_____________________
COMSAT REPORTS 12 PERCENT INCREASE IN REVENUES,
EARNINGS FOR 3RD QUARTER UP 10 PERCENT
BETHESDA, Md. -- COMSAT Corporation today reported
third quarter 1994 revenues of $200.8 million, or 12 percent
over results for the same period a year earlier. Earnings
for third quarter were 45 cents per share, up 10 percent
over 1993 third quarter results.
"We're pleased with our results in the third quarter,
particularly the return of growth in the Mobile
Communications segment," said Bruce L. Crockett, president
and CEO of COMSAT Corporation. "However, because of the
softness in the first half of the year, we will not achieve
our goal of 10 percent earnings growth for the year."
In the third quarter, COMSAT Mobile Communications
revenues grew to $51.3 million from $47.3 million a year
earlier as the number of digital terminals in the
marketplace grew to more than 3,000. With more terminals in
operation and conflicts in Haiti and Rwanda, traffic
increased 16 percent. Operating income increased 11 percent
to $13.9 million, from $12.6 million a year earlier, as a
result of the growth in traffic.
In the Entertainment segment, which includes COMSAT
Video Enterprises and the Denver Nuggets, revenues grew 24
percent to $33.0 million in the third quarter compared to
$26.6 million a year ago. Operating income
Page 5 of 12
<PAGE>
increased 20 percent to $2.9 million, from $2.4 million a
year earlier. The total number of installed and backlog
hotel rooms for the On Command Video service reached 362,000
in the third quarter, compared to 168,000 for the same
period a year ago.
"The third quarter marks COMSAT's climb to the market-
leading position for supplying on-demand entertainment
services to hotels in the U.S.," said Crockett. "And we are
now in the process of taking the on-demand service
international."
Revenues in the International Communications segment,
which includes COMSAT World Systems and COMSAT International
Ventures, were $67.2 million, compared to $61.7 million a
year ago -- as lower prices have led to an increase in
demand. Operating income was $24.0 million, compared to
$22.5 million a year ago.
In the Technology Services segment, which includes
COMSAT RSI and COMSAT Laboratories, revenues in the third
quarter increased 18 percent to $53.7 million, compared to
$45.5 million for the same period a year earlier. Operating
income fell from $3.2 million a year earlier to $2.0 million
due to additional transaction costs from the Radiation
Systems acquisition in the second quarter this year and
business-interruption insurance proceeds that were part of
the third quarter results last year.
"We've used this quarter to consolidate and solidify
our market strategies and we expect to see additional
bookings for COMSAT RSI in the near future," said Crockett.
Page 6 of 12
<PAGE>
In other business, the Board of Directors declared a
regular quarterly dividend of 19.5 cents, payable December
12, 1994, to shareholders of record November 11, 1994. This
is the 97th consecutive quarterly dividend declared by the
corporation.
COMSAT Corporation (NYSE: CQ) is a global
provider of communications and entertainment products and
services.
# # #
CONTACT: Joe Tomkowicz media relations (301) 214-3658
Mike Troiano investor relations (301) 214-3244
Page 7 of 12
<PAGE>
COMSAT CORPORATION
CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
(In millions except per share amounts)
[CAPTION]
<TABLE>
For The Three Months Ended For The Nine Months Ended
---------------------------- ---------------------------
September 30, September 30, September 30, September 30,
1994 1993 1994 1993
------ ------ ------ ------
<S> <C> <C> <C> <C>
REVENUES $200.8 $179.3 $609.1 $559.8
------ ------ ------ ------
OPERATING EXPENSES:
Cost of Services 106.1 94.7 333.5 305.8
Depreciation and Amortization 42.6 34.9 122.9 104.2
Research and Development 4.3 4.0 11.2 11.3
General and Administrative 5.9 5.7 16.6 16.3
Merger and Integration Costs 0.5 - 4.7 -
------ ------ ------ ------
Total Operating Expenses 159.4 139.3 488.9 437.6
OPERATING INCOME 41.4 40.0 120.2 122.2
INTEREST AND OTHER INCOME, NET 1.1 3.5 2.8 5.8
INTEREST EXPENSE, NET OF AMOUNTS CAPITALIZE (7.4) (5.4) (18.6) (19.1)
------ ------ ------ ------
INCOME BEFORE TAXES AND CUMULATIVE
EFFECT OF ACCOUNTING CHANGE 35.1 38.1 104.4 108.9
INCOME TAX EXPENSE (13.7) (18.7) (41.2) (45.9)
------ ------ ------ ------
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE 21.4 19.4 63.2 63.0
CUMULATIVE EFFECT OF ACCOUNTING
CHANGE FOR INCOME TAXES - - - 1.9
------ ------ ------ ------
NET INCOME $21.4 $19.4 $63.2 $64.9
====== ====== ====== ======
EARNINGS PER SHARE:
Before Cumulative Effect of Accounting
Change $0.45 $0.41 $1.34 $1.34
Cumulative Effect of Accounting Change - - - 0.04
------ ------ ------ ------
Net Income $0.45 $0.41 $1.34 $1.38
====== ====== ====== ======
AVERAGE SHARES 47.5 47.1 47.3 47.0
</TABLE>
Note: In June 1994, the corporation consummated a merger with Radiation
Systems, Inc. (RSi). The merger has been treated as a "pooling of
interests" for accounting purposes. Accordingly, these financial
statements have been retroactively restated for all periods to include RSi.
Page 8 of 12
<PAGE>
COMSAT CORPORATION
OPERATING RESULTS BY BUSINESS SEGMENT (UNAUDITED)
(In millions)
[CAPTION]
<TABLE>
1993 1994
-------------------------------------- ----------------------------------
QTR 1 QTR 2 QTR 3 QTR 4 TOTAL QTR 1 QTR 2 QTR 3 TOTAL
-------------------------------------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES (1)
INTERNATIONAL COMMUNICATIONS $ 64.9 $ 63.5 $ 61.7 $ 59.8 $249.9 $ 63.9 $ 63.9 $ 67.2 $195.0
MOBILE COMMUNICATIONS 50.0 47.2 47.3 45.5 190.0 44.0 46.1 51.3 141.4
ENTERTAINMENT (2) 33.9 26.8 26.6 34.5 121.8 40.4 38.5 33.0 111.9
TECHNOLOGY SERVICES (3) 48.5 51.3 45.5 56.9 202.2 55.3 61.6 53.7 170.6
ELIMINATIONS AND OTHER (2) (2.6) (3.0) (1.8) (2.2) (9.6) (3.1) (2.3) (4.4) (9.8)
-------------------------------------- ----------------------------------
TOTAL REVENUES $194.7 $185.8 $179.3 $194.5 $754.3 $200.5 $207.8 $200.8 $609.1
====================================== ==================================
1993 1994
-------------------------------------- ----------------------------------
QTR 1 QTR 2 QTR 3 QTR 4 TOTAL QTR 1 QTR 2 QTR 3 TOTAL
-------------------------------------- ----------------------------------
OPERATING INCOME (LOSS) (1)
INTERNATIONAL COMMUNICATIONS $ 28.1 $ 25.4 $ 22.5 $ 13.8 $ 89.8 $ 22.3 $ 24.3 $ 24.0 $ 70.6
MOBILE COMMUNICATIONS 13.2 11.7 12.6 11.3 48.8 10.2 9.7 13.9 33.8
ENTERTAINMENT (2) 1.3 0.5 2.4 2.3 6.5 1.8 4.7 2.9 9.4
TECHNOLOGY SERVICES (3), (4) 1.9 4.1 3.2 2.9 12.1 3.4 4.1 2.0 9.5
OTHER (2) (3.7) (0.3) (0.7) (0.9) (5.6) (0.8) (0.9) (1.4) (3.1)
-------------------------------------- ----------------------------------
TOTAL OPERATING INCOME $ 40.8 $ 41.4 $ 40.0 $ 29.4 $151.6 $ 36.9 $ 41.9 $ 41.4 $120.2
====================================== ==================================
</TABLE>
(1) Revenues and operating income for the Technology Services segment have
been restated to include the operations of RSi. Quarterly operating
income (loss) for each segment has also been restated to reallocate
indirect expenses.
(2) Beginning with the second quarter of 1994, the financial results for
COMSAT Video Enterprises, Inc., On Command Video Corporation, and the
Denver Nuggets are reported in the Entertainment segment. The Denver
Nuggets' results were previously reported in Eliminations and Other.
Results for prior quarters have been adjusted for this change.
(3) Revenues and operating income for the Technology Services segment
include business interruption insurance income of $0.9 million,
$1.3 million and $0.8 million in the first, second and third quarters
of 1993, respectively, and $4.8 million in the second quarter of 1994.
(4) Technology Services segment operating income includes charges for the
merger and integration costs of RSi totalling $4.2 million and
$0.5 million in the second and third quarters of 1994, respectively.
Page 9 of 12
<PAGE>
COMSAT CORPORATION
CONDENSED BALANCE SHEETS (UNAUDITED)
(In millions)
[CAPTION]
<TABLE>
September 30, December 30,
1994 1993
------------- ------------
<S> <C> <C>
CURRENT ASSETS:
RECEIVABLES $209.6 $210.2
OTHER CURRENT ASSETS 61.1 63.7
-------- --------
TOTAL CURRENT ASSETS 270.7 273.9
PROPERTY IN SERVICE, NET 1,021.6 993.1
PROPERTY UNDER CONSTRUCTION 377.0 339.3
OTHER ASSETS 212.7 167.2
-------- --------
TOTAL ASSETS $1,882.0 $1,773.5
======== ========
CURRENT LIABILITIES:
CURRENT NOTES PAYABLE $176.8 $124.1
OTHER CURRENT LIABILITIES 129.1 179.5
-------- --------
TOTAL CURRENT LIABILITIES 305.9 303.6
======== ========
LONG-TERM DEBT 443.3 410.6
OTHER NONCURRENT LIABILITIES 295.3 274.5
MINORITY INTEREST 25.1 21.4
STOCKHOLDERS' EQUITY 812.4 763.4
-------- --------
TOTAL LIABILITIES & STOCKHOLDERS'
EQUITY $1,882.0 $1,773.5
======== ========
</TABLE>
Note: In June 1994, the corporation consummated a merger with Radiation
Systems, Inc. (RSi). The merger has been treated as a "pooling
of interests" for accounting purposes. Accordingly, the December 31,
1993 balance sheet has been restated to include RSi.
Page 10 of 12
<PAGE>
Exhibit 20(b)
COMSAT Corporation FROM: COMSAT Corporation
NEWS RELEASE 6560 Rock Spring Drive
Bethesda, MD 20817
PHONE: 301 214 3658
FAX: 301 214 7130
DATE: October 31, 1994
For Immediate Release
_____________________
COMSAT ANNOUNCES PLANS FOR INVESTMENTS, START-UPS IN
INTERNATIONAL COMMUNICATIONS, ENTERTAINMENT
BETHESDA, Md. -- COMSAT Corporation (NYSE: CQ) today
outlined plans for growing its international communications
products and services business, global wireless offerings
and entertainment segment.
"We are determined to take advantage of the growth
opportunities that are before us -- both in our core
international communications business and in sports and
entertainment," said COMSAT President and CEO Bruce L.
Crockett. "Our ambitious growth plan will affect
profitability in the short term, but it is designed to
deliver long-term growth and dramatically increase
shareholder value."
Crockett said the company's aggressive strategy to
pursue additional investments and long-term growth
opportunities will result in earnings growth of less than 10
percent next year. "Our focus is growing long-term
shareholder value as we embark on a program of reinvestment
and new business start-ups," he said.
COMSAT will set out its strategic plan at an analysts
conference tomorrow (November 1, 1994) at the company's
corporate headquarters. Strategic plans that will be
announced include:
Plans to invest up to $200 million in international
ventures in 1995, concentrating on Asia and Europe, and
expanding in Latin America.
Page 11 of 12
<PAGE>
Investing $50 million in a laptop-size, mini-M mobile
service to fuel continued growth in mobile communications --
and provide a bridge from the current briefcase-size digital
terminal to the global handheld market at the end of the
century.
Additional investment in the proposed Inmarsat-P
global handheld service -- possibly up to 15 percent of the
total project cost -- depending on the commitment of other
key investors, the overall strategic plan for the $1.5
billion business and the timing of necessary U.S. government
approvals for COMSAT's participation.
"We're also leveraging our successes on the
entertainment side of the business through the acquisition
of Beacon Communications and a proposed new sports and
entertainment complex in Denver," said Crockett.
COMSAT last week announced an agreement to purchase
Beacon, a Los Angeles-based film and television production
company. The sports and entertainment complex will include
a new 19,000-seat arena for the NBA Denver Nuggets and
possibly a future professional hockey franchise.
Crockett also said COMSAT has many undervalued assets -
- like its investment share of INTELSAT and Inmarsat,
communications licenses for international ventures, the
Denver Nuggets franchise and real estate holdings -- that
will provide the building blocks for additional future
growth.
COMSAT Corporation is a global provider of
communications and entertainment products and services.
# # #
CONTACT:
Joe Tomkowicz COMSAT media relations (301) 214-3658
Mike Troiano COMSAT investor relations (301) 214-3244
Page 12 of 12
<PAGE>
