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):
September 27, 1995
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).
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Item 5. Other Events
Attached to this report as Exhibit 20.1, and incorporated by reference
in this item, is a Press Release of the Corporation, distributed on
September 27, 1995, announcing that the Corporation expects operating
results in the third quarter to decline from the second quarter. The Press
Release also announces that the Corporation is restructuring elements of
all of its business units to lower costs and improve competitiveness for
the long term and will take pre-tax charges against earnings in the third
quarter. The statements concerning future anticipated results set forth in
Exhibit 20.1 are based on preliminary information, internal estimates and
management assumptions. The statements do not represent actual results and
are subject to change. The Corporation expects to announce its actual
results for the third quarter on October 20, 1995.
Attached to this report as Exhibit 20.2, and incorporated by reference
in this item, is a press release of COMSAT Entertainment Group ("CEG"), a
wholly-owned subsidiary of the Corporation, distributed on September 27,
1995, announcing that The Anschutz Corporation has given notice of its
decision to terminate its relationship to the Pepsi Center and that CEG
intends to continue its efforts to build a new arena in downtown Denver.
Item 7. Financial Statements and Exhibits
(c) Exhibits (listed according to the number assigned in
Item 601 of Regulation S-K).
Exhibit No. Description
20.1 Press Release of COMSAT Corporation
dated September 27, 1995.
20.2 Press Release of COMSAT Entertainment
Group dated September 27, 1995.
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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 and
Acting Chief Financial Officer
Date: September 28, 1995
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EXHIBIT INDEX
Exhibit No. Description
20.1 Press Release of COMSAT Corporation
dated September 27, 1995.
20.2 Press Release of COMSAT Entertainment
Group dated September 27, 1995.
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EXHIBIT 20.1
Sept. 27, 1995
For Immediate Release
COMSAT EXPECTS LOWER OPERATING RESULTS
IN THIRD QUARTER
Restructures Businesses to Improve Long-Term Competitiveness
BETHESDA, Md. -- COMSAT Corporation (NYSE: CQ) announced today
that it expects operating results in the third quarter to decline
from the second quarter. The projected decline primarily
reflects operating losses in COMSAT Entertainment Group (CEG),
lower profit margins in COMSAT RSI (CRSI), higher borrowing costs
and increased tax accruals. The company also said it is
strategically restructuring elements of all its business units to
lower costs and improve competitiveness for the long term and
will take pre-tax charges against earnings in the third quarter
of about $32 million or 46 cents per share. After taking these
charges, COMSAT expects to have a net loss for the quarter of $16
million or 33 cents per share. Final results will be announced
on October 20, 1995.
Excluding the third quarter restructuring and one-time
positive effects of about $15 million in the second quarter from
NBA expansion fees in CEG, a benefit plan accrual adjustment in
CRSI and a credit for over-accrual of prior year Inmarsat-related
costs, COMSAT's third quarter operating income is expected to
decline about $5 million.
The expected reduction in recurring CEG operating income of
about $3 million is attributable to costs associated with the
consolidation of the company's hotel video businesses, the
seasonal trend in COMSAT's Denver sports operation and the
addition of the NHL Colorado Avalanche. CRSI is also likely to
show a decline in recurring operating income of about $1 million
reflecting lower revenue and profit margins. With the exception
of COMSAT International Ventures (CIV) for which operating
losses are likely to increase by about $1 million in the third
quarter, the COMSAT International Communications (CIC) businesses
are each expected to remain steady in the third quarter.
- more -
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COMSAT RELEASE -- page two
"For some time we have recognized that our strategy of
pursuing long-term growth of shareholder value in both
communications and entertainment would entail the sacrifice of
some earnings in the near term," said COMSAT President and CEO
Bruce L. Crockett. "Although our restructuring is strategic in
nature, we anticipate that with lower costs and improved
competitiveness, we should start to see an improvement in our
results in the fourth quarter."
"As we continue on this strategic course in 1996, we will be
investing in both existing and new ventures overseas, starting up
the first personal satellite communications business and
maximizing asset value and cash flow in our entertainment
businesses," Crockett continued. "Our current restructuring is
part of this strategy and will position us for a more competitive
future."
Crockett said that every COMSAT business is affected by the
restructuring. As previously announced, the international
satellite communications businesses of COMSAT World Systems and
COMSAT Mobile Communications are being consolidated into a single
business unit, COMSAT International Communications, which also
includes the international ventures group. "This action
positions COMSAT for a future that includes the privatization of
INTELSAT and Inmarsat," said Crockett, as well as the evolution
of this business toward more specialized satellite services and
ultimately a mass market for personal satellite communications."
CIV is also reorganizing its operation in Belcom, the
company's Russian venture, which has not been performing as
expected. "The costs of the reorganization as well as losses
from new ventures are expected to result in somewhat higher than
expected CIV losses this year," said Crockett, "despite the
strong results in our Latin American ventures."
Crockett said that "the contracted backlog in Latin America
has reached about $90 million and is increasing rapidly."
Similarly, in the Indian market, COMSAT's start-up venture COMSAT
MAX has achieved more than $3 million in bookings in the first
two months of operation.
CIC will take charges totaling about $10 million in the third
quarter and eliminate 81 positions.
COMSAT Entertainment Group strategically restructured its on-
demand video operations by moving all its operations to a single
technology platform.
- more -
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COMSAT RELEASE -- page three
"This involved the consolidation of all our hotel related
businesses into On Command Video," said Crockett. "The operating
efficiencies associated with this merger should improve margins
in our hotel entertainment business which continues to grow by
about 10,000 rooms monthly," said Crockett. As a result of the
consolidation, CEG will reduce headcount by eight positions and
take third quarter charges of about $12 million. As previously
disclosed, Crockett said that COMSAT's plans to unlock the value
of its entertainment assets are proceeding on schedule, and an
announcement can be expected before the end of the year.
In the technology segment, "the restructuring should help
COMSAT RSI deliver better customer solutions and improve its
margins," said Crockett The business unit has combined its two
PCS and cellular antenna businesses into a single unit and merged
two satellite communications groups, eliminating duplicative
administrative and operating costs. CRSI accounts for about $7
million of the third quarter charges.
"COMSAT Laboratories also downsized its Satellite and Systems
Technologies group in the third quarter as part of the Labs'
strategy of converting more pure research into commercial
products," said Crockett. "This move resulted in a headcount
reduction of 17 and total charges of about $3 million."
COMSAT Corporation 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
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EXHIBIT 20.2
NEWS & INFORMATION
For Release: September 27, 1995
COMSAT TO CONTINUE DENVER ARENA DEVELOPMENT WITHOUT THE
ANSCHUTZ CORPORATION
DENVER, CO -- COMSAT Entertainment Group announced today that The Anschutz
Corporation has given notice of its decision to terminate its relationship
to the Pepsi Center, the proposed state-of-the-art arena project in downtown
Denver. At the same time, COMSAT stated that it has notified the City of
Denver that COMSAT intends to continue its efforts to build a new arena in
downtown Denver. Charlie Lyons, President of COMSAT Entertainment Group
said, "We intend to build a new arena in Denver, Colorado. COMSAT has two
professional sports teams in Denver and we will work diligently to construct
an arena and entertainment complex there for the Denver Nuggets and the
Colorado Avalanche to play in beginning not later than their 1998-1999
seasons."
COMSAT Entertainment Group is a wholly owned subsidiary of COMSAT
Corporation (NYSE: CQ).
# # #
Contact: Paul E. Jacobson
301.214.3731
[email protected]
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