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): FEBRUARY 20, 1998
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>
ITEM 5. OTHER EVENTS
- ---------------------
On February 20, 1998, the Corporation issued a press release
announcing, among other things, that the Corporation's Annual Meeting of
Shareholders has been scheduled for May 15, 1998. The press release also
announces the Corporation's 1997 earnings. A copy of the press release is
attached hereto as Exhibit 99.1 and incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
- ------------------------------------------
(c) Exhibits (listed according to the number assigned in Item 601 of
Regulation S-K).
EXHIBIT NO. DESCRIPTION
- ----------- -----------
99.1 Press Release dated February 20, 1998
<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/ ALAN KOROBOV
----------------
Alan Korobov
Controller
Date: February 20, 1998
<PAGE>
EXHIBIT INDEX
-------------
EXHIBIT NO. DESCRIPTION
- ----------- -----------
99.1 Press Release dated February 20, 1998
<PAGE>
FROM: COMSAT Corporation
6560 Rock Spring Drive
Bethesda, MD 20817
PHONE: 301 214 3442
FAX: 301 214 7130
DATE: February 20, 1998
For Immediate Release
COMSAT REPORTS 1997 EARNINGS
- -- Year of "Clean-Up" and "Catch-Up", Highlighted By Focus on Core Businesses,
Push for Regulatory Relief and Restructuring of INTELSAT --
BETHESDA, Md. - COMSAT Corporation (NYSE:CQ) today reported 1997 income
from continuing operations of $28.6 million, down from $36.2 million last
year, due mainly to the depreciation of new satellites. Revenues from
continuing operations in 1997 were $562.6 million, up 3.2% from $545.1
million in 1996. Earnings per share from continuing operations on a
fully-diluted basis were 57 cents, versus 74 cents the previous year.
Earnings before interest, taxes, depreciation and amortization (EBITDA) in
1997 increased to $266.2 million from $262.5 million a year earlier.
"1997 was a year of clean-up and catch-up," said Betty C. Alewine,
president and chief executive officer of COMSAT Corporation. "We are going
forward in 1998 as a smaller company, but with a stronger balance sheet.
Our satellite assets in the INTELSAT and Inmarsat systems continue to
generate strong cash flow and excellent EBITDA margins. And, our
international networking and technology businesses have the market position
and revenue backlog to continue growing at a rapid pace. Revenues from
COMSAT's networking services and technology businesses were up
substantially in 1997.
"In addition, during 1997, COMSAT took three major steps to continue
to improve shareholder value," said Alewine. "First, we spun off the
entertainment business and focused completely on our core businesses in
satellite services, networking services and technology. Second, we
aggressively pushed for regulatory relief and pro-competitive reform of the
Communications Satellite Act in order to compete and grow in the booming
international telecommunications industry. And third, just last week, we
accomplished what some thought impossible -- adoption of the plan to
privatize a portion of INTELSAT which will involve the transfer of six of
its satellites to an independent, publicly traded company. This plan is
expected to be approved during a meeting of the INTELSAT Assembly of
Parties (governments) in late March.
-- more --
<PAGE>
"The creation of a new commercial company from some of INTELSAT's
satellites will enable COMSAT shareholders to realize for the first time a
market valuation for their investment," Alewine continued. "And, the
granting of COMSAT's petition by the Federal Communications Commission will
remove antiquated, public utility-style regulation applied only to COMSAT
and free this company to catch up with the rest of the industry. Success
can then be measured on the basis of our ability to attract and retain
customers -- just like any other business."
Revenues from COMSAT's satellite services were $430.7 million in 1997,
down slightly from $433.9 million the previous year. This reduction results
from price cuts on long-term contracts with major telecommunications
companies, a decline in analog maritime services and lower revenues from
fiber optic cable restoration. These declines were nearly offset by
increased revenues from growing high-speed data and Internet services,
leases for mobile communications from the U.S. Navy and the Federal
Aviation Administration and sales of Planet 1TM, COMSAT's personal
satellite telephone service.
Total network services revenues were $170 million, up 19% from $142.5
million the previous year. "Particularly dramatic was the 54% revenue
growth in the company's international division," said Alewine. "In this
division, we are building on COMSAT's brand name, extensive international
operating experience and foreign data licenses to provide corporate
networks in high-growth regions of the world. With the addition of COMSAT
de Mexico, the company brought its total number of international operating
companies to 15."
Including discontinued entertainment and manufacturing operations, the
company reported a 1997 net loss of $64.4 million, versus 1996 net income
of $8.6 million. On a fully diluted basis, the net loss was $1.29 per
share, versus net income of 18 cents per share the previous year. The 1997
net loss was driven exclusively by discontinued operations of Ascent
Entertainment Group, Inc., which was spun off to shareholders in June 1997,
and COMSAT RSI, the corporation's manufacturing business which is
anticipated to be sold in the first half of 1998.
In the fourth quarter of 1997, continuing operations revenues were
$141.4 million, compared with $142.3 million for the same period in 1996.
Income from continuing operations was $2.0 million, down from $8.5 million
in the fourth quarter of 1996. Fully diluted earnings per share from
continuing operations were 4 cents, compared to 17 cents a year ago.
-- more --
<PAGE>
The company had a net loss of $28.0 million in the fourth quarter, or
55 cents per share on a fully diluted basis, versus a net loss of $11.5
million, or 24 cents per share, in the same quarter of 1996. The increased
loss was due primarily to a $30 million charge for an increase in the
expected loss on disposal of COMSAT RSI.
COMSAT Corporation also announced today that its Board of Directors
set Friday, May 15, 1998, as the date for the 1998 annual meeting of COMSAT
shareholders. Advance notice of nominations and other proposed business to
be submitted by shareholders at the annual meeting is required within 10
days of this announcement, as outlined in the corporation's by-laws.
A more complete description of COMSAT's financial performance during
the fourth quarter and year 1997 is contained in the attached financial
highlights.
Some of the statements in this release are forward-looking and relate
to anticipated future events and operating results. Statements that look
forward in time are based on management's current expectations and
assumptions, which may be affected by the timing and outcome of pending
regulatory and legislative actions and by subsequent developments and
business conditions, and necessarily involve risks and uncertainties.
Therefore, there can be no assurance that actual future results will not
differ materially from anticipated results.
Readers should refer to the Corporation's disclosure documents filed
with the Securities and Exchange Commission, including the Corporation's
1996 Form 10-K and quarterly reports on Form 10-Q for the first three
quarters of 1997, for a more complete discussion of some of the important
factors that might affect these trends.
COMSAT Corporation (NYSE:CQ) is a global provider of satellite
services and digital networking services and technologies.
# # #
CONTACT:
Janet Dewar Vice President, Corporate Affairs (301) 214-3442
Gary Sharpe Director, investor Relations (301) 214-3244
<PAGE>
February 20, 1998
COMSAT Corporation
Financial Highlights
Fourth Quarter and Full-Year 1997
SUMMARY
- -------
During the second quarter of 1997, the corporation placed both Ascent
Entertainment Group and substantially all of COMSAT RSI in discontinued
operations. The attached financial information (unaudited) has been
restated to conform with discontinued-operations presentation.
All per-share amounts are presented on a fully diluted basis in accordance
with Statement of Financial Accounting Standards No. 128 "Earnings Per
Share" and, accordingly, all prior-period, per-share amounts have been
restated.
Revenues from continuing operations in the fourth quarter were $141.4
million, down 1% from the same period of 1996. Revenues from continuing
operations in 1997 totaled $562.6 million, up 3% from 1996. Fourth-quarter
revenues from fixed and mobile Satellite Services declined 5%, while
revenues from Network Services increased 9%, compared with the same period
of 1996.
Income from continuing operations before an extraordinary item in the
quarter was $2.0 million versus $8.5 million in the same period of 1996. On
a fully diluted basis, income from continuing operations before an
extraordinary item in the fourth quarter was 4 cents per share, compared
with 17 cents per share in the same quarter of 1996. For 1997, income from
continuing operations before an extraordinary item was $28.6 million,
compared with $36.2 million in 1996. Assuming dilution, income from
continuing operations before an extraordinary item in 1997 was 57 cents per
share, versus 74 cents per share in 1996.
The losses from discontinued operations were $30.0 million in the fourth
quarter and $89.1 million in 1997, compared with losses of $20.0 million
and $27.6 million in the respective periods of 1996. On a fully diluted
basis, the per- share losses from discontinued operations were 59 cents in
the quarter and $1.78 in 1997, versus 41 cents and 56 cents in the
respective periods of 1996.
The net loss for the quarter was $28.0 million, compared with a net loss of
$11.5 million in the same period a year ago. On a fully diluted basis, the
net loss in the quarter was 55 cents per share, versus a net loss of 24
cents per share in the fourth quarter of 1996. For 1997, the net loss was
$64.4 million versus net income of $8.6 million in 1996. Assuming dilution,
the net loss was $1.29 per share in 1997, compared with net income of 18
cents per share in 1996. The 1997 net loss includes an extraordinary loss
for early extinguishment of debt of $3.9 million, or 8 cents per share on a
fully diluted basis.
Page 1 of 6
<PAGE>
Satellite Services
- ------------------
World Systems revenues declined 13% in the fourth quarter to $63.6
million and 4% for the year to $262.9 million, compared to the same
periods in 1996. Increased revenues from growing demand for high-speed
data and Internet services were offset by declines in full-time voice
revenues and lower fiber-optic cable restoration revenues. The lower
voice revenues stemmed primarily from rate reductions early in the
year in long-term carrier contracts with AT&T, MCI and Sprint, the
division's largest international customers. Division earnings before
interest, taxes, depreciation and amortization (EBITDA) decreased 11%
in the quarter to $48.0 million and increased 1% for the year to
$197.8 million, compared with the respective periods in 1997. EBITDA
margins were 75% for both periods, versus 74% and 72%, respectively,
for the 1996 periods. World Systems operating income was down 25% in
the quarter to $22.8 million and 4% for the year to $100.4 million,
compared with the same periods of 1996. Federal Communications
Commission regulations limit the amount that World Systems can earn.
Division 1997 results also reflect increased depreciation from placing
in service three INTELSAT satellites during the year. The increase was
partially offset by improved earnings realized on carrier-to-carrier
contracts and recovery of certain litigation costs.
Mobile Communications revenues were up 9% in quarter and 4% for the
year to $41.7 million and $167.8 million, respectively, from the same
periods in 1996. The improvement reflects sales of Planet 1TM
terminals and Planet 1SM service which began in the fourth quarter of
1996. The increases were partially offset by lower analog telephone
transmissions and lower volume in a bulk-service contract. Division
EBITDA was up 68% in the quarter and 4% for the year to $20.3 million
and $80.3 million, respectively. EBITDA margins were 49% for the
fourth quarter and 48% in 1997, versus 31% and 48% in the same periods
of 1996. Mobile operating income was $5.4 million in the quarter and
$23.1 million for 1997, versus an operating loss of $700,000 and
income of $31.9 million, respectively, in 1996. The division's lower
1997 operating income stems from increased depreciation expense
associated with three Inmarsat-3 satellites placed in service during
1996 and early 1997, and increased costs related to the start-up of
Planet 1TM service. The unfavorable operating income comparison
reflects the division's slightly higher market share and service
revenues in 1996.
Network Services
- ----------------
COMSAT International provides corporate data networking services to
approximately 650 customers from more than 5,000 points in developing
countries. Revenues increased 49% in the quarter and 54% for the year
to $27.2 million and $89.7 million, compared with the same periods in
1996. Revenue increases were driven primarily by advances in CI
operations in Argentina, Brazil, Colombia and Venezuela. Division
EBITDA was $3.8 million in the quarter and $11.6 million for the year,
compared with break-even and negative levels in the respective periods
last year.
Page 2 of 6
<PAGE>
EBITDA margins for the 1997 periods were 14% and 13%, respectively. CI
operating losses in the quarter and year-to-date were $3.5 million and
$14.0 million, versus losses of $5.2 million and $17.3 million in the
same periods of 1996. The division's contracted revenue backlog at
December 30, 1997 was $323 million, up from $220 million at year-end
1996.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
COMSAT INTERNATIONAL
OPERATING COMPANIES INFORMATION (UNAUDITED)
(In millions)
1997 1996
---------------- ---------------
QTR 4 YTD QTR 4 YTD
----- ----- ----- -----
REVENUES
- --------
Existing companies
Americas $21.7 $73.2 $15.1 $47.5
Europe 2.2 8.1 1.5 7.1
---------------- ----------------
Total existing companies 23.9 81.3 16.6 54.6
New companies 3.3 8.4 1.7 3.5
---------------- ----------------
Total revenues $27.2 $89.7 $18.3 $58.1
================ ================
1997 1996
---------------- ---------------
QTR 4 YTD QTR 4 YTD
----- ----- ----- -----
EBITDA
- ------
Existing companies
Americas $7.4 $25.8 $6.2 $17.4
Europe - 0.3 (2.3) (6.4)
---------------- ----------------
Total existing companies 7.4 26.1 3.9 11.0
New companies (0.2) (3.8) (1.5) (4.3)
---------------- ----------------
EBITDA before CI Corporate 7.2 22.3 2.4 6.7
CI Corporate (3.4) (10.7) (2.8) (9.2)
---------------- ----------------
Total EBITDA: $3.8 $11.6 ($0.4) ($2.5)
================ ================
Notes:
1 Existing companies in Americas include Argentina (100%), Bolivia (100%), Brazil (100%), and Guatemala (100%).
Existing companies in Europe include BelCom (100%) and Turkey IBS (85%). Numbers in parenthesis indicate COMSAT ownership.
2 New companies include Colombia (100%), Peru (65%), Venezuela (100%), Turkey VSAT (51%), and China (55%) and Mexico (100%).
3 CI's share of India revenue not consolidated for accounting purposes is $0.6, $1.9 for 4Q and YTD 1996 and $0.8, $1.2
for 4Q and YTD 1997, respectively.
4 EBITDA (earnings before interest, income taxes, depreciation, and amortization) is calculated by adding depreciation
and amortization and operating income (loss).
Page 3 of 6
</TABLE>
<PAGE>
COMSAT Laboratories Revenues were down 25% in the quarter and 17% for
the year to $9.6 million and $36.3 million, compared with the
respective periods of 1996. The 1996 revenues include $7.8 million
from an agreement resolving patent- infringement disputes. Excluding
revenues from the patent disputes, 1997 revenues were up 1%, primarily
due to technical consulting revenues. Labs operating losses in the
quarter and for the year were $700,000 and $2.0 million, respectively,
versus operating income of $600,000 and $7.1 million in the same
periods of 1996. Labs operating income in 1996 included $7.8 million
from an agreement resolving patent-infringement disputes. Division
results now include the operating results of the corporation's
spacecraft construction monitoring business, previously reported in
CRSI. Laboratories external revenue backlog at December 31, 1997
increased 33% from year-end 1996 levels to $28.4 million.
Government Programs posted small operating losses in the quarter and
for the year on revenues of $10.5 million and $44.0 million,
respectively. Division EBITDA for the year declined to break-even from
$5.6 million in 1996. The division's 1997 results reflect the
decommissioning in 1996 of a Marisat satellite used by the U.S. Navy
in 1996 and a decline in Bosnia-related traffic.
Discontinued Operations
- -----------------------
COMSAT's discontinued operations are comprised of the results of Ascent
Entertainment Group (NASDAQ:GOAL) through June 27, 1997, and substantially
all of COMSAT RSI (CRSI).
COMSAT owned 80.67%, or 24 million shares, of Ascent. COMSAT's Ascent
shares were distributed to COMSAT shareholders as a special, tax-free
dividend. The loss from the discontinued operations of Ascent totaled $29.1
million during 1997 and $28.1 million for 1996.
As previously disclosed, the corporation expects to sell CRSI in at least
two pieces. One of those pieces is JEFA Wireless Systems, a subsidiary of
CRSI. COMSAT has entered into an agreement to sell substantially all of the
assets of JEFA. Due primarily to losses anticipated on the separate
disposition of JEFA assets, the corporation recorded a charge in
discontinued operations in the third quarter of $30.2 million, net of tax,
or 60 cents per share on a fully diluted basis. The third-quarter charge
also included adjustments in the estimated cost to complete certain
long-term contracts in CRSI.
Negotiations to sell substantially all of the remainder of CRSI are
continuing and, based on the range of sales prices and terms being
discussed, the estimated loss on disposal of CRSI was increased in the
fourth quarter by $30 million, net of tax, or 59 cents per share on a fully
diluted basis. The loss on disposal included provisions to write down
JEFA's and CRSI's assets to their net realizable values and an estimate of
operating losses to their disposal. The corporation's
Page 4 of 6
<PAGE>
objective is to dispose of JEFA by the end of the first quarter of 1998 and
complete the sale of CRSI during the first half of 1998. The timing and
estimated proceeds of those sales could be adversely affected by factors
that are not wholly within the corporation's control, such as negotiation
of definitive agreements on mutually acceptable terms. The Ascent and CRSI
transactions are major components of COMSAT's previously announced
strategic restructuring plan.
COMSAT Consolidated
- -------------------
General & Administrative expenses from continuing operations were $5.2
million in the fourth quarter, down from $5.5 million in the same
quarter of 1996. For the year, G&A expenses totaled $23.2 million,
down from $23.9 million in 1996.
Research & Development expenses in 1997 totaled $9.3 million, versus $11.5
million in 1996.
Interest and Other Income/Expense, Net for the year was a net expense of
$3.1 million, compared with a net expense of $7.4 million in 1996. The
improvement stems primarily from increased interest income and the
impact of the sale of equity investments.
Gain on Sale of Land in the third quarter of 1997 was $4.2 million, net of
tax. The company sold its Clarksburg, Maryland office building and
surrounding land for $45.75 million in an all-cash transaction. COMSAT
also entered into a 10- year lease with the new owner to continue to
occupy the building, which houses COMSAT Laboratories. The
sale-leaseback of the office building has been accounted for as a
financing transaction.
Interest Expense, Net of Amounts Capitalized in 1997 was $42.0 million, up
$7.3 million from last year. The increase stems primarily from reduced
interest capitalized due to the completion of several satellite
projects.
Income Tax Expense for the year totaled $15.6 million, down from $28.9
million in 1996. The income-tax expense reflects a lower effective tax
rate due to a decrease in non-deductible losses.
Extraordinary Loss From Early Extinguishment of Debt, Net of Tax represents
costs incurred from the corporation's repurchase in the first half of
1997 of $89.5 million of its 8.125% notes and $10 million of its 7.7%
medium-term notes.
Page 5 of 6
<PAGE>
Weighted Average Shares Outstanding, assuming dilution, at the end of 1997
were 50.0 million, up about 1 million from the end of 1996. The
corporation adopted SFAS No. 128 "Earnings Per Share" in the fourth
quarter of 1997 and, accordingly, has restated earnings-per-share
amounts for all prior periods presented. EPS assuming dilution
includes the effect of stock options, restricted stock awards and
units.
Cash and Liquidity
- ------------------
Cash and Cash Equivalents totaled $5.8 million at the end of the year,
compared with $7.7 million at the end of 1996.
Short-term Borrowings and current maturities of long-term debt totaled
$163.3 million at December 31, 1997, compared with $31.8 million at
year-end 1996. The increase is due largely to the corporation's use of
commercial paper to retire a portion of its 8.125% notes.
Long-term Debt declined by $116.4 million to $462 million due to the
retirement of the 8.125% notes and a smaller share of INTELSAT debt as
a result of a reduction of World Systems' ownership of INTELSAT from
19.1% to 18.0% in March 1997.
Page 6 of 6
<PAGE>
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COMSAT CORPORATION
CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
(In millions, except per share amounts)
For the Quarters Ended For the Years Ended
December 31, December 31,
---------------------- -------------------
1997 1996 1997 1996
-------- -------- -------- --------
REVENUES $141.4 $142.3 $562.6 $545.1
-------- -------- -------- --------
Operating expenses:
Cost of services 66.6 68.1 263.9 247.1
Depreciation and amortization 48.7 42.1 184.2 155.3
Research and development 3.1 3.9 9.3 11.5
General and administrative 5.2 5.5 23.2 24.0
-------- -------- -------- --------
Total operating expenses 123.6 119.6 480.6 437.9
-------- -------- -------- --------
OPERATING INCOME 17.8 22.7 82.0 107.2
Interest and other income (expense), net (3.7) (0.1) (3.1) (7.4)
Interest expense, net of amounts
capitalized (11.0) (8.9) (42.0) (34.7)
Gain on sale of land - - 7.3 -
-------- -------- -------- --------
Income from continuing operations
before taxes and extraordinary item 3.1 13.7 44.2 65.1
Income tax expense (1.1) (5.2) (15.6) (28.9)
-------- -------- -------- --------
INCOME FROM CONTINUING OPERATIONS
BEFORE EXTRAORDINARY ITEM 2.0 8.5 28.6 36.2
Loss from discontinued operations
(net of tax) (30.0) (20.0) (89.1) (27.6)
-------- -------- -------- --------
Income (loss) before extraordinary item (28.0) (11.5) (60.5) 8.6
Extraordinary loss from early
extinguishment of debt (net of tax) - - (3.9) -
-------- -------- -------- --------
NET INCOME (LOSS) ($28.0) ($11.5) ($64.4) $8.6
======== ======== ======== ========
EARNINGS (LOSS) PER COMMON SHARE-BASIC
Income from continuing operations
before extraordinary item $0.04 $0.18 $0.58 $0.76
Discontinued operations (0.61) (0.42) (1.82) (0.58)
Extraordinary loss - - (0.08) -
-------- -------- -------- --------
Net Income (loss) ($0.57) ($0.24) ($1.32) $0.18
======== ======== ======== ========
EARNINGS (LOSS) PER COMMON SHARE
-ASSUMING DILUTION
Income from continuing operations
before extraordinary item $0.04 $0.17 $0.57 $0.74
Discontinued operations (0.59) (0.41) (1.78) (0.56)
Extraordinary loss - - (0.08) -
-------- -------- -------- --------
Net Income (loss) ($0.55) ($0.24) ($1.29) ($0.18)
======== ======== ======== ========
Average shares-basic 49.3 48.2 48.9 47.9
Average shares-assuming dilution 50.7 49.2 50.0 48.9
</TABLE>
NOTE:
The condensed consolidated income statements have been restated to reflect
Ascent Entertainment Group and substantially all of the operations of
COMSAT RSI as discontinued operations as of June 30, 1997. The Corporation
adopted SFAS No. 128, "Earnings Per Share" in the fourth quarter of 1997,
and accordingly, has restated earnings per share amounts for all prior
periods presented.
-more-
<PAGE>
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COMSAT CORPORATION
OPERATING RESULTS BY BUSINESS SEGMENT (UNAUDITED)
(In millions)
1997 1996
------------------------------------------------ -----------------------------------------------
QTR 1 QTR 2 QTR 3 QTR 4 TOTAL QTR 1 QTR 2 QTR 3 QTR 4 TOTAL
------------------------------------------------ -----------------------------------------------
REVENUES
- --------
Satellite Services
World Systems $66.8 $66.5 $66.0 $63.6 $262.9 $65.6 $67.5 $67.1 $72.8 $273.0
Mobile Communications 38.6 43.3 44.2 41.7 167.8 42.1 40.5 39.9 38.4 160.9
------------------------------------------------ -----------------------------------------------
Total Satellite Services 105.4 109.8 110.2 105.3 430.7 107.7 108.0 107.0 111.2 433.9
------------------------------------------------ -----------------------------------------------
Network Services
International 16.4 21.0 25.1 27.2 89.7 11.9 12.3 15.6 18.3 58.1
Laboratories 8.1 9.7 8.9 9.6 36.3 6.5 7.5 16.9 12.8 43.7
Government Programs 11.0 11.3 11.2 10.5 44.0 7.1 10.6 10.8 12.2 40.7
------------------------------------------------ -----------------------------------------------
Total Network Services 35.5 42.0 45.2 47.3 170.0 25.5 30.4 43.3 43.3 142.5
Eliminations and other (7.4) (9.4) (10.1) (11.2) (38.1) (5.0) (5.7) (8.4) (12.2) (31.3)
------------------------------------------------ -----------------------------------------------
TOTAL REVENUES $133.5 $142.4 $145.3 $141.4 $562.6 $128.2 $132.7 $141.9 $142.3 $545.1
================================================ ===============================================
1997 1996
------------------------------------------------ -----------------------------------------------
QTR 1 QTR 2 QTR 3 QTR 4 TOTAL QTR 1 QTR 2 QTR 3 QTR 4 TOTAL
------------------------------------------------ -----------------------------------------------
OPERATING INCOME (LOSS)
- -----------------------
Satellite Services
World Systems $28.1 $27.2 $22.3 $22.8 $100.4 $25.6 $24.1 $24.4 $30.5 $104.6
Mobile Communications 5.5 5.4 6.8 5.4 23.1 13.9 11.4 7.3 (0.7) 31.9
------------------------------------------------ -----------------------------------------------
Total Satellite Services 33.6 32.6 29.1 28.2 123.5 39.5 35.5 31.7 29.8 136.5
------------------------------------------------ -----------------------------------------------
Network Services
International (4.5) (2.1) (3.9) (3.5) (14.0) (3.9) (4.6) (3.6) (5.2) (17.3)
Laboratories (0.1) (0.2) (1.0) (0.7) (2.0) (1.0) (0.9) 8.4 0.6 7.1
Government Programs 0.3 0.5 (0.3) (0.9) (0.4) 0.6 1.5 1.4 1.6 5.1
------------------------------------------------ -----------------------------------------------
Total Network Services (4.3) (1.8) (5.2) (5.1) (16.4) (4.3) (4.0) 6.2 (3.0) (5.1)
------------------------------------------------ -----------------------------------------------
Total segment operating income 29.3 30.8 23.9 23.1 107.1 35.2 31.5 37.9 26.8 131.4
General and administrative
expenses (5.8) (6.8) (5.4) (5.2) (23.2) (7.1) (5.5) (5.9) (5.5) (24.0)
Other (0.3) (0.6) (0.9) (0.1) (1.9) (0.7) 0.2 (1.1) 1.4 (0.2)
------------------------------------------------ -----------------------------------------------
TOTAL OPERATING INCOME $23.2 $23.4 $17.6 $17.8 $82.0 $27.4 $26.2 $30.9 $22.7 $107.2
================================================ ===============================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COMSAT CORPORATION
OPERATING RESULTS BY BUSINESS SEGMENT (UNAUDITED)
(In millions)
1997 1996
------------------------------------------------ -----------------------------------------------
QTR 1 QTR 2 QTR 3 QTR 4 TOTAL QTR 1 QTR 2 QTR 3 QTR 4 TOTAL
------------------------------------------------ -----------------------------------------------
DEPRECIATION AND AMORTIZATION
- -----------------------------
Satellite Services
World Systems $23.8 $23.8 $24.6 $25.2 $97.4 $21.8 $22.9 $23.4 $23.6 $91.7
Mobile Communications 13.3 14.2 14.8 14.9 57.2 9.7 11.0 11.7 12.8 45.2
------------------------------------------------ -----------------------------------------------
Total Satellite Services 37.1 38.0 39.4 40.1 154.6 31.5 33.9 35.1 36.4 136.9
------------------------------------------------ -----------------------------------------------
Network Services
International 5.5 5.9 6.9 7.3 25.6 2.9 3.1 4.0 4.8 14.8
Laboratories 0.2 0.3 0.2 0.3 1.0 0.2 0.3 0.2 0.3 1.0
Government Programs 0.1 0.1 0.1 0.1 0.4 0.2 0.1 0.1 0.1 0.5
------------------------------------------------ -----------------------------------------------
Total Network Services 5.8 6.3 7.2 7.2 27.0 3.3 3.5 4.3 5.2 16.3
Other 0.5 0.6 0.6 0.9 2.6 0.5) 0.5 0.6 0.5 2.1
------------------------------------------------ -----------------------------------------------
Total depreciation
and amortization $43.4 $44.9 $47.2 $48.7 $184.2 $35.3 $37.9 $40.0 $42.1 $155.3
================================================ ===============================================
1997 1996
------------------------------------------------ -----------------------------------------------
QTR 1 QTR 2 QTR 3 QTR 4 TOTAL QTR 1 QTR 2 QTR 3 QTR 4 TOTAL
------------------------------------------------ -----------------------------------------------
EBITDA
- ------
Satellite Services
World Systems $51.9 $51.0 $46.9 $48.0 $197.8 $47.4 $47.0 $47.8 $54.1 $196.3
Mobile Communications 18.8 19.6 21.6 20.3 80.3 23.6 22.4 19.0 12.1 77.1
------------------------------------------------ -----------------------------------------------
Total Satellite Services 70.7 70.6 68.5 68.3 278.1 71.0 69.4 66.8 66.2 273.4
------------------------------------------------ -----------------------------------------------
Network Services
International 1.0 3.8 3.0 3.8 11.6 (1.0) (1.5) 0.4 (0.4) (2.5)
Laboratories 0.1 0.1 (0.8) (0.4) (1.0) (0.8) (0.6) 8.6 0.9 8.1
Government Programs 0.4 0.6 (0.2) (0.8) 0.0 0.8 1.6 1.5 1.7 5.6
------------------------------------------------ -----------------------------------------------
Other (5.6) (6.8) (5.7) (4.4) (22.5) (7.3) (4.8) (6.4) (3.6) (22.1)
------------------------------------------------ -----------------------------------------------
Total EBITDA $66.6 $68.3 $64.8 $66.5 $266.2 $62.7 $64.1 $70.9 $64.8 $262.5
================================================ ===============================================
</TABLE>
NOTE:
EBITDA (earnings before interest, income taxes, depreciation and
amortization) is calculated by adding depreciation and amortization and
operating income (loss). Other includes G&A expenses and Other from the
Operating income (loss) section.
<PAGE>
COMSAT CORPORATION
CONDENSED BALANCE SHEETS (UNAUDITED)
(In millions)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
December 31, December 31,
1997 1996
------------ ------------
CURRENT ASSETS:
Receivables $147.6 $134.0
Other current assets 28.1 26.0
Net assets of discontinued operations 142.5 378.2
------------ ------------
Total current assets 318.2 538.2
PROPERTY, NET 1359.3 1323.0
OTHER ASSETS 217.3 236.1
------------ ------------
TOTAL ASSETS $1894.8 $2097.3
============ ============
CURRENT LIABILITIES:
Short-term borrowings $163.3 $31.8
Other current liabilities 133.3 130.8
------------ ------------
Total current liabilities 296.6 162.6
------------ ------------
LONG-TERM DEBT 462.0 578.4
OTHER NONCURRENT LIABILITIES 349.9 314.5
PREFERRED SECURITIES ISSUED BY SUBSIDIARY 200.0 200.0
STOCKHOLDERS' EQUITY 586.3 841.8
------------ ------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $1894.8 $2097.3
============ ============
</TABLE>
NOTE:
The condensed consolidated balance sheets have been restated to reflect
Ascent Entertainment Group and COMSAT RSI as discontinued operations.
--more--
<PAGE>
COMSAT CORPORATION
CONDENSED CASH FLOW STATEMENTS (UNAUDITED)
(In millions)
For The Years Ended
--------------------------
December 31, December 31,
1997 1996
------------ ------------
OPERATING ACTIVITIES:
Net income (loss) ($64.4) $8.6
Adjustments to reconcile net
income (loss) to net cash
provided by continuing operations 277.2 182.9
Changes in assets and liabilities 0.9 38.2
Other (8.1) 2.1
------------ ------------
Net cash provided by operating
activities of continuing operations 205.6 231.8
Net cash used by discontinued operations (36.9) (35.0)
------------ ------------
Net cash provided by operating activities 168.7 196.8
------------ ------------
INVESTING ACTIVITIES:
Purchase of property and equipment (254.3) (267.3)
Proceeds from sale of land and
investments 37.5 26.1
Other (4.2) 7.4
------------ ------------
Net cash used in investing activities (221.0) (233.8)
------------ ------------
FINANCING ACTIVITIES:
Net short-term borrowings 131.5 18.0
Repayment of long term debt (114.9) (9.8)
Dividends paid (17.0) (37.7)
Other 50.8 (37.7)
------------ ------------
Net cash provided (used) by
financing activities 50.4 (67.2)
------------ ------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (1.9) (104.2)
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 7.7 111.9
------------ ------------
CASH AND CASH EQUIVALENTS, END OF YEAR $5.8 $7.7
============ ============
NOTE:
Ascent Entertainment Group, Inc. common shares were distributed to COMSAT
shareholders in a non-cash dividend in June 1997.
# # #
