<PAGE>
Filed Pursuant to Rule 424(b)(2)
Registration File No.: 33-53741
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MAY 23, 1994)
$650,000,000
LORAL CORPORATION
[LOGO]
$250,000,000 7 5/8% SENIOR NOTES DUE JUNE 15, 2004
$400,000,000 8 3/8% SENIOR DEBENTURES DUE JUNE 15, 2024
------------
INTEREST PAYABLE JUNE 15 AND DECEMBER 15
------------
The 7 5/8% Senior Notes due 2004 (the "Notes") will mature on June 15, 2004
and the 8 3/8% Senior Debentures due 2024 (the "Debentures") will mature on
June 15, 2024. The Notes and the Debentures are not redeemable prior to
maturity and are not entitled to the benefit of a sinking fund.
The Notes and the Debentures will be represented by one or more Global
Securities ("Global Securities") registered in the name of The Depository Trust
Company (the "Depositary"), as Depositary, or its nominee. Beneficial interests
in Global Securities will be shown on, and transfers thereof will be effected
only through, records maintained by the Depositary and its participants. Except
as described in this Prospectus Supplement, Notes and Debentures in definitive
form will not be issued in exchange for Global Securities. The Notes and
Debentures will be listed on the New York Stock Exchange.
------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC (1) DISCOUNTS (2) COMPANY (1)(3)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note..................... 99.188% .650% 98.538%
- -------------------------------------------------------------------------------
Total...................... $247,970,000 $1,625,000 $246,345,000
- -------------------------------------------------------------------------------
Per Debenture................ 99.186% .875% 98.311%
- -------------------------------------------------------------------------------
Total...................... $396,744,000 $3,500,000 $393,244,000
- -------------------------------------------------------------------------------
<FN>
(1) Plus accrued interest, if any, from June 15, 1994 to date of delivery.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting expenses payable by the Company estimated at $600,000.
</TABLE>
----------------
The Notes and the Debentures offered by this Prospectus Supplement are
offered by the Underwriters subject to prior sale, withdrawal, cancellation or
modification of the offer without notice, to delivery to and acceptance by the
Underwriters and to certain further conditions. It is expected that the Global
Securities will be ready for delivery through the facilities of the Depositary
in New York, New York, on or about June 15, 1994.
----------------
LEHMAN BROTHERS
BEAR, STEARNS & CO. INC.
GOLDMAN, SACHS & CO.
LAZARD FRERES & CO.
J.P. MORGAN SECURITIES INC.
June 8, 1994
<PAGE>
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AND
THE DEBENTURES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK
STOCK EXCHANGE OR OTHERWISE. SUCH STABILIZATION, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
----------------
RECENT DEVELOPMENTS
Effective January 1, 1994, Loral Corporation ("Loral" or the "Company")
acquired Federal Systems Company ("Federal Systems"), a division of
International Business Machines Corporation, for $1,503,500,000 in cash, not
including acquisition costs. Federal Systems is a leading systems integrator
and supplier of advanced information technology products and services to
defense and non-defense agencies worldwide.
USE OF PROCEEDS
The estimated net proceeds of this offering are $638,989,000. Such
proceeds will be used by the Company to reduce outstanding commercial paper
issued to finance the Federal Systems acquisition.
CAPITALIZATION
The following table presents the consolidated capitalization of the
Company as of March 31, 1994, and as adjusted to give effect to the issuance
and sale of the Notes and the Debentures offered hereby, and assumes the net
proceeds from the issuance and sale will be used to reduce the Company's
outstanding commercial paper borrowings. See "Use of Proceeds."
<TABLE>
<CAPTION>
ACTUAL AS ADJUSTED
------------ -------------
(IN THOUSANDS)
<S> <C> <C>
CURRENT PORTION OF DEBT .................................. $ 173,928 $ 380
---------- ----------
LONG-TERM DEBT:
9 1/8 % Senior Debentures due 2022 ...................... 100,000 100,000
8 3/8 % Senior Debentures due 2023 ...................... 100,000 100,000
7% Senior Debentures due 2023 ........................... 200,000 200,000
Commercial paper ........................................ 1,200,000 734,559
Other ................................................... 24,061 24,061
Notes and Debentures offered hereby ..................... -- 650,000
---------- ----------
Total long-term debt ................................... 1,624,061 1,808,620
---------- ----------
Total debt ............................................ 1,797,989 1,809,000
SHAREHOLDERS' EQUITY ..................................... 1,381,306 1,381,306
---------- ----------
Total capitalization, including current portion of
debt ................................................. $3,179,295 $3,190,306
========== ==========
</TABLE>
The Company has a $1,200,000,000 revolving credit facility, expiring
February 1999, and a $500,000,000 revolving credit facility, expiring
February 1995. These facilities serve to back up the Company's commercial
paper borrowings.
S-2
<PAGE>
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
The following table presents summary consolidated financial information of
the Company for each of the five years in the period ended March 31, 1994,
and has been derived from and should be read in conjunction with the audited
financial statements for those years. The pro forma operating data and ratio
of earnings to fixed charges give effect to the acquisition of Federal
Systems as if it occurred on April 1, 1993, and has been derived from the
Unaudited Pro Forma Condensed Consolidated Statement of Income included in
the Company's Form 8-K/A dated May 12, 1994. The pro forma balance sheet data
gives effect as of March 31, 1994 to the issuance of the Notes and the
Debentures offered hereby.
<TABLE>
<CAPTION>
PRO FORMA
1994(A)
(UNAUDITED) 1994(B) 1993(C) 1992 1991(D) 1990
----------- ---------- ---------- ---------- ---------- ----------
(IN MILLIONS, EXCEPT PER SHARE AND RATIO AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Sales ....................................... $5,853.7 $4,008.7 $3,335.4 $2,881.8 $2,126.8 $1,274.3
Operating income ............................ 480.3 401.4 296.3 292.2 215.5 148.7
Income from continuing operations before
extraordinary item and cumulative effect
of changes in accounting ................... 228.0 228.3 159.1 121.8 90.4 77.5
Net income (loss) ........................... 228.0 228.3 (92.1) 121.8 90.4 78.2
Earnings per share (primary)(e):
Income from continuing operations before
extraordinary item and cumulative effect
of changes in accounting .................. 2.72 2.72 2.06 2.00 1.78 1.54
Net income (loss) .......................... 2.72 2.72 (1.20) 2.00 1.78 1.55
Weighted average shares outstanding
(primary)(e) ............................... 83.9 83.9 77.0 61.0 50.9 50.4
CASH FLOW DATA:
Cash dividends paid per common share(e) .... $ .545 $ .495 $ .47 $ .43 $ .39
Depreciation and amortization ............... 178.2 154.0 128.6 104.6 78.7
Capital expenditures, net ................... 96.5 89.0 74.1 86.1 59.5
BALANCE SHEET DATA:
Total assets ................................ $5,187.2 $5,176.2 $3,228.1 $2,685.5 $2,532.2 $1,544.8
Working capital ............................. 728.0 554.4 610.5 630.0 457.7 312.6
Total debt .................................. 1,809.0 1,798.0 534.0 577.4 821.2 437.6
Shareholders' equity ........................ 1,381.3 1,381.3 1,187.9 997.3 672.0 584.5
Book value per common share(e) .............. $ 16.60 $ 16.60 $ 14.44 $ 15.72 $ 13.14 $ 11.65
RATIO OF EARNINGS TO FIXED CHARGES
(UNAUDITED) ................................. 3.37x 6.42x 4.74x 4.22x 3.30x 3.49x
<FN>
- ---------------
(a) The pro forma operating data and ratio of earnings to fixed charges
give effect to the acquisition of Federal Systems as if it occurred on
April 1, 1993. The pro forma balance sheet data gives effect as of
March 31, 1994 to the issuance of the Notes and the Debentures offered
hereby.
(b) Reflects the acquisition of Federal Systems effective January 1, 1994,
which had substantial effect on the balance sheet data in 1994.
(c) Reflects (i) the acquisition of the missile business of LTV Aerospace
and Defense Company effective August 31, 1992 and (ii) the acquisition
of the minority partners' equity interest in Loral Aerospace Holdings,
Inc. ("LAH"), effective June 1, 1992, through the issuance of
12,313,810 shares of the Company's common stock and 627.3 shares of
Series S Preferred Stock of LAH.
Effective April 1, 1992, the Company adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions" ("SFAS 106") and Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." Prior
years' results have not been restated to reflect these accounting
changes.
Net income (loss) includes (i) a non-operating extraordinary charge
(loss on extinguishment of debt) of $28.2 million pre-tax, $17.8
million after-tax, or $.23 per share, and (ii) a non-recurring charge
of $330.5 million pre-tax, $233.4 million after-tax, or $3.03 per
share, as the cumulative effect of the accounting change for SFAS 106.
(d) Reflects the acquisition of Ford Aerospace Corporation effective
October 1, 1990, which had substantial effect on the operating and
balance sheet data in 1991.
(e) Adjusted to reflect two-for-one stock split distributed October 7,
1993.
</TABLE>
S-3
<PAGE>
<PAGE>
BUSINESS
GENERAL
Loral is a leading supplier of defense electronic systems, components and
services to U.S. and allied defense departments. The Company's principal
business areas are: electronic combat; training and simulation; command,
control, communications and intelligence ("C(3)I")/reconnaissance; tactical
weapons; systems integration; and space systems. The Company has achieved an
incumbent position on a wide range of existing programs through internal
growth and development and a series of acquisitions focused on its core
technologies. Loral's business strategy is to emphasize upgrades of existing
weapons systems, concentrate on further developing its core of advanced
technologies, generate an increasing proportion of its sales from foreign
customers and selectively extend the Company's proprietary technologies into
non-military applications, such as systems integration, satellite-based
telecommunications, medical diagnostic imaging systems, network management,
data archiving, and information systems and services.
PRODUCTS
ELECTRONIC COMBAT
Loral is a leading producer of systems that detect, jam and deceive
hostile radars and radar and infrared guided weapons and detect and analyze
surface and submarine threats. Loral's electronic combat systems are used in
the protection of U.S. and allied aircraft and antisubmarine warfare,
antisurface warfare, airborne early warning, and for electronic support
measures.
Loral manufactures the ALR-56 family of advanced, programmable radar
warning systems. The ALR-56C and ALR-56M are utilized aboard U.S. Air Force
and allied F-15 and F-16 jet fighter aircraft, respectively. Loral has sold
its Rapport II and III (ALQ-178) fully integrated airborne radar warning and
electronic jamming systems to Israel, Belgium and Turkey for the F-16, and
has developed an advanced version called the ALQ-202.
Loral supplies the Forward-Looking Infrared (FLIR) targeting and weapon
delivery pod aboard U.S. and allied F/A-18 strike jets. This system permits
aircrews to deliver smart weapons to selectively identified high value
targets through laser rangers and target designators.
Loral is the prime contractor for the U.S. Navy's LAMPS MK III helicopter
for antisubmarine warfare, antisurface warfare and airborne early warning,
and for a similar system, the EH101/Merlin, for the United Kingdom's Ministry
of Defence. The Company also produces the Electronic Support Measures system
for the U.S. Air Force's B-2 stealth bomber; a day/night adverse weather
missions system for the MC-130H Combat Talon II aircraft; and the central
computer for the F-15.
Loral's AAR-47 uses infrared sensing technologies to warn U.S. Navy and
Marine helicopters of hostile missile threats. Loral's ALQ-157, Matador and
Challenger infrared countermeasures systems emit infrared energy pulses that
counter heat-seeking missiles by directing them away from aircraft, naval
vessels and armored ground vehicles. Loral also produces antenna assemblies
and systems for airborne warning aboard tactical aircraft, such as the E-2C.
TRAINING AND SIMULATION
Loral's training systems provide simulated, realistic battlefield
environments that assist air, land and sea forces in achieving and
maintaining combat readiness as well as aiding in the establishment and
validation of requirements for new systems and upgrades. Loral produces a
variety of simulators, including weapons systems simulators, virtual reality
simulators, and distributed interactive simulators.
Loral's operational flight and weapons systems trainers simulate F-15 and
F-15E jet aircraft avionics under combat conditions. Loral is also developing
a comprehensive family of weapons systems trainers, courseware and mission
rehearsal devices for the Special Operations Forces Aircrew Training System
(SOF-ATS). The Company has a contract to assess pilot training requirements
for the U.S. Air Force's new F-22 fighter. Loral is developing full mission
simulators that combine flight weapon systems and mission training for
Sweden's JAS-39 multi-role combat aircraft.
S-4
<PAGE>
<PAGE>
Loral's Multiple Integrated Laser Engagement System (MILES) is at the
forefront of a family of laser-based training systems, including the
Air-to-Ground Engagement System (AGES), the Precision Gunnery Training System
(PGTS), Simulated Area Weapons Effect (SAWE), Precision Range Integrated
Maneuver Exercise (PRIME) and Mobile Automated INSTRUMENTATION SUITE (MAIS).
These systems are used to train and evaluate ground combat troops and
military equipment. The equipment simulates the effect of weapons fire
through eye-safe, encoded laser beams. Detector cells and electronic decoding
systems replicate target vulnerability. Data is transmitted to a central
station to allow review of combat performance.
Loral is a principal developer of netted simulators for the U.S. Army.
Loral operates and maintains simulator networks for ground vehicle and
airborne platform training at Fort Knox and Fort Rucker under the Army's
Advanced Distributed Simulation Technology Program. These simulators are
linked to each other and to combat training ranges, including ranges operated
by the Company.
Loral's Close Combat Tactical Trainer (CCTT) provides the U.S. Army with a
computer-based trainer that simulates vehicles, weapon systems and dismounted
infantry in a virtual battlefield environment. The Company is prime
contractor for the MATBAT tank gunnery training system to provide realistic
battlefield conditions for the Israeli Defense Forces.
Loral has developed for the U.S. Navy a laser-guided training round, which
simulates the operation of the Paveway II bomb, providing live-fire training
for A-6 and F/A-18 aircrews at one-fifth the cost of an actual round.
Loral operates and maintains the U.S. Navy's and Air Force's primary pilot
training ranges and electronic warfare ranges, provides instructors for
classroom training, and supplies sophisticated avionics and undersea
simulators. Loral's Simulator Device Development Support program is upgrading
electronic warfare simulators at the Naval Weapons Center at China Lake.
COMMAND, CONTROL, COMMUNICATIONS AND INTELLIGENCE/RECONNAISSANCE
Loral offers systems integration, operations management and engineering
services, post-deployment systems support, military satellite communication
terminals, information processing and display hardware, information
management software, secure tactical communications instruments and telemetry
equipment to address a broad spectrum of strategic and tactical C(3)I
requirements.
Loral is the principal technical support contractor for the Space Defense
Operations Center at Cheyenne Mountain for the U.S. Space Command, which
monitors orbiting space systems to alert the U.S. and its allies to potential
attack. Loral is producing the Rapid Execution and Combat Targeting system,
which is modernizing the Minuteman missile launch control centers. Loral is
also providing engineering support, systems integration, and operations and
maintenance for the worldwide Air Force Satellite Control Network. Loral is
developing the communications element of the All-Source Analysis System, a
tactical intelligence fusion system that will receive, process and display
battlefield information to tactical commanders on a near real-time basis.
Loral provides hardware support, software maintenance, sustaining
engineering and on-site operational services in support of the U.S. Air
Force's Global Positioning System. Loral is also responsible for system
development, software maintenance, and engineering support for the U.S. Air
Force's fixed and mobile Launch Detection System.
Loral produces mil-spec and ruggedized general-purpose computers and
processors used in military systems, such as ground-launched and sea-launched
cruise missiles, the Trident AFLOAT System and the MILSTAR communications
programs. Loral also produces the Associative Processor (ASPRO), a parallel
processing computer for command and control aboard the E-2C aircraft and for
over-the-horizon targeting by U.S. submarines. Loral supplies antisubmarine
warfare and combat control systems for submarines and surface ships,
including the AN/BSY-1 combat system for the U.S. Navy's SSN 688 class attack
submarines and portions of the AN/BSY-2 combat control system for the Navy's
SSN-21 attack submarines, the Combat Control System MK3 for the Royal
Australian Navy's Type 471 SSK submarines, and elements of the SQQ-89 surface
ship ASW combat control system.
S-5
<PAGE>
<PAGE>
Loral's information and graphics display systems provide interactive
access to real-time information on ground and shipboard platforms as well as
aircraft, such as the E-2C, P-3C, S-3, F-14 and other U.S. Navy aircraft.
Loral's EMR and instrumentation telemetry systems include airborne
transmitters, receivers, data links, transponders and signal encoders, which
are used in tracking, ranging, data acquisition and command and control for
operations of space vehicles and missiles. Loral's instrumentation products,
primarily the System 500, provide high-speed real-time processing in testing
and analyzing data from advanced avionics as well as from missile and
satellite sources.
Loral's reconnaissance systems utilize advanced electronics imaging,
communications and information processing technologies to provide integrated
tactical battlefield information and navigation and targeting capability in
airborne platforms for the U.S. Air Force, Navy and Marines. Loral employs
mercury cadmium telluride, platinum silicide and charge-coupled device
technologies required for the infrared ("IR") and electro optical ("EO")
focal plane arrays that are at the heart of night vision and all-weather
cameras. Loral's sensing and imaging products are a major component of the
Advanced Tactical Air Reconnaissance System (ATARS), the Long-Range Oblique
Photography System (LOROPS), the F-3050 tactical reconnaissance pod and a
tactical reconnaissance system for German Tornado aircraft.
Loral also manufactures and sells commercial data and voice recorders, the
indestructible "black boxes" mandated by the FAA for commercial and general
aviation aircraft.
Loral is producing the Medical Diagnostic Imaging System, which extends
the Company's high-volume data storage and retrieval technologies into the
medical marketplace for DoD, VA and commercial hospitals.
TACTICAL WEAPONS
Loral produces the Multiple Launch Rocket System (MLRS) for the U.S. Army.
This weapon system spreads submunitions over a one kilometer area and was
used extensively in Operation Desert Storm. Loral also produces the Army
Tactical Missile System (ATACMS). Fired from the MLRS launcher, ATACMS
provides a long range tactical missile. Loral will also test a long-range
ship-fired version of ATACMS so the U.S. Navy can evaluate the missile for
fire support missions. MLRS has substantial international markets, and has
been purchased by France, Germany, the United Kingdom, Italy, the
Netherlands, Turkey, Bahrain and Japan. The Company also expects an
international market for ATACMS.
Loral has developed the Extended Range Interceptor missile (ERINT), a
kinetic energy, high-altitude anti-missile missile that destroys its target
through force of impact without explosives. The system has been selected by
the U.S. Army for its PAC-3 Theater Missile Defense upgrade of the Patriot
Missile System. Loral is also developing the LOSAT missile, a low-cost
kinetic energy antitank missile.
Loral's EO and IR sensors, processing technologies and advanced algorithms
are employed in a wide range of tactical weapons and weapons guidance
systems. Loral's IR sensors have been selected for the Theater High-Altitude
Area Defense (THAAD) anti-tactical missile detection and interception system.
Loral's guidance programs include the Digital Scene Matching Area
Correlation (DSMAC) system, which permits Tomahawk cruise missiles to direct
themselves for long distances over enemy terrain, complete missile guidance
control units for air-defense systems and gyro-optic assemblies for thermal
imaging missiles, and air-to-ground weapons. Loral is also a prime contractor
for sales to certain U.S. allies of the Chaparral air-defense system, for
which it manufactures the entire missile and fire control system. Loral also
produces the Sidewinder air-to-air missile; the AIM 9M and the AIM 9P.
Loral is under contract from the U.S. Marine Corps to develop a
short-range antitank weapon, the Predator, which is a man-portable
fire-and-forget weapon system. The Company's Vertical Launch Antisubmarine
Rocket (VLA) is in production for the U.S. Navy and Japan.
SYSTEMS INTEGRATION
Loral is a leading provider of systems integration services focused on
integrating complex hardware and software systems. Loral serves the U.S.
Department of Defense and a broad range of federal and foreign government
organizations, including the Federal Aviation Administration, the U.S.
Department of Justice, the Internal Revenue Service and the U.S. Postal
Service.
S-6
<PAGE>
<PAGE>
Among Loral's programs is the Advanced Automation System ("AAS"), the
next-generation air traffic control system for the Federal Aviation
Administration ("FAA"). As part of an ongoing FAA review of the AAS program,
the FAA recently announced a scope reduction in the program which will likely
reduce Loral's annual revenues on this program from approximately $350
million to approximately $200 million per year over the next five years,
absent further revisions to the contract. The program reduction is not
expected to have a material adverse effect on the results of operations or
financial position of the Company. See Note 8 to Consolidated Financial
Statements included in the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1994.
Loral is also under contract to produce a number of systems for non-DoD
government agencies, including the Document Processing System that will image
and store tax returns and correspondence for the Internal Revenue Service, a
bar code-based mail sorting system for the U.S. Postal Service, network and
database systems for the administrative offices of the U.S. Courts and an
image processing system for the U.S. Environmental Protection Agency to allow
its regional offices across the country to convert paper documents into
digitized data stored on optical disks.
Loral has developed systems for managing and tracking the nationwide real
estate inventory of the Resolution Trust Corporation (RTC) and is currently
supporting RTC's wide area networks and telecommunications efforts. Loral is
the prime contractor for the U.S. Army's Sustaining Base Information Services
program, which is a comprehensive information support system that will be
used for all Army base management information and administrative processing.
This includes personnel management, payroll, financial accounting and
control, authorization documentation, supply and services and medical records
management.
SPACE SYSTEMS
Loral and Space Systems/Loral, Inc. ("SS/L"), an unconsolidated affiliate,
both participate in various aspects of space technology and systems. Loral
provides engineering services supporting mission control systems for both
manned and unmanned space flight and develops and manufactures scientific
instruments, sensors, cameras and power systems for space systems
applications. SS/L produces geosynchronous satellites and subsystems for
telecommunications and earth sensing and is the prime contractor for the
Globalstar L.P. ("Globalstar") low-earth-orbit mobile telecommunications
system.
Loral designs, develops and integrates systems for the Space Shuttle's
on-board hardware and flight control software. Loral also provides systems
engineering, safety engineering, reliability and engineering support to
Johnson Space Center, and is modernizing its Mission Systems Control in
support of manned space missions, including the Space Shuttle.
In space science, Loral is developing the Atmospheric Infrared Sounder
(AIRS), a scientific instrument that will fly on NASA's Earth Observing
System platform in the next century. At NASA's Goddard Space Flight Center,
Loral is developing the computer system to store, archive and distribute data
collected from the EOSDIS system.
SS/L designs and fabricates geostationary and low-earth-orbiting
satellites for space communications and remote earth sensing. SS/L's INTELSAT
VII satellite will carry international telephone traffic for the
International Telecommunications Satellite consortium. The first of a series
of nine satellites was launched in October, 1993. SS/L is the prime
contractor for a series of Geostationary Operational Environmental Satellites
(GOES), which are being built to conduct imaging of clouds and the earth's
surface and sounding of water vapor fields, and to monitor the space
environment, collect data from terrestial sensors and relay aircraft and
maritime distress signals. The first GOES satellite was launched in April
1994. SS/L has supplied Japan's Space Communications Corporation with the
Superbird communications satellites, and is building two N-STAR satellites
for Nippon Telegraph and Telephone of Japan. SS/L also has a contract to
supply two direct-to-home broadcast television satellites to TEMPO, a
subsidiary of Tele-Communications, Inc.
Loral has contracts to supply video systems and provide systems
engineering and integration for Space Station Freedom, and SS/L has contracts
to supply subsystems and components, including power systems, for Space
Station Freedom.
S-7
<PAGE>
<PAGE>
Loral is the managing general partner of Globalstar, an international
venture formed to design and operate a global satellite communications system
in conjunction with the following strategic partners, who have collectively
committed to invest $275 million of initial equity capital toward a total
$1.8 billion funding requirement: Alcatel N.V.; Alenia Spazio, S.p.A.; DACOM
Corporation; Hyundai Electronics Industries Company; QUALCOMM Incorporated;
Vodafone Group; and AirTouch Communications (formerly PacTel). Globalstar
will deploy and operate a worldwide, low-earth-orbit mobile satellite-based
communications system using CDMA technology. The system, employing a
constellation of 48 satellites, subject to receiving local licensing
authority such as is pending before the Federal Communications Commission, is
expected to be operational in 1998 and will offer low-cost worldwide digital
wireless telecommunications services, including voice, data, paging,
facsimile and geolocation services, to telephones and data terminals in areas
currently underserved or not served by existing telecommunications systems.
The system will allow existing cellular carriers to extend and enhance their
provision of telecommunications services to new and current users.
CUSTOMERS
Substantially all of the Company's products are sold to agencies of the
United States Government, primarily the Department of Defense, to foreign
government agencies or to prime contractors or subcontractors thereof. In
fiscal 1994, approximately 90% of the Company's sales was derived directly or
indirectly from defense contracts for end use by the United States and
foreign governments. Sales to domestic customers represented 86% of total
revenue in fiscal 1994 and 1993. Sales to the U.S. Army, Air Force and Navy
accounted for 23%, 18% and 11%, respectively, of the Company's consolidated
sales for fiscal 1994, and 21%, 22% and 9%, respectively, for fiscal 1993.
The majority of the Company's remaining domestic sales were to prime
contractors for end use by the U.S. Government and other U.S. Government
agencies.
For information concerning international programs and sales to foreign
governments, see "Foreign Sales" below.
BACKLOG
Funded backlog at March 31, 1994, including the funded backlog of Federal
Systems ($3.2 billion at the effective date of acquisition, January 1, 1994),
was approximately $6.5 billion, compared with $3.9 billion at March 31, 1993.
Approximately 55% of the backlog at March 31, 1994 is expected to be shipped
during fiscal 1995.
Of the backlog at March 31, 1994, approximately $3.5 billion was directly
or indirectly for defense contracts for end use by the U.S. Government and an
additional $530 million for contracts to other U.S. Government agencies.
Backlog for the U.S. Army, Air Force and Navy accounted for 17%, 13% and 9%,
respectively, of total backlog at March 31, 1994.
Approximately $2.5 billion of the backlog consisted of orders by foreign
governments and contractors, primarily for defense contracts in various
allied nations, representing 38% of total backlog at March 31, 1994.
RESEARCH AND DEVELOPMENT
The Company employs scientific, engineering and other personnel to improve
its existing product lines and to develop new products and technologies in
the same or related fields. The largest portion of this work is performed
under specific U.S. Government contracts. At March 31, 1994, the Company
employed approximately 10,800 engineers (of whom 2,750 held advanced
degrees), of which approximately 1,230 (including 360 holding advanced
degrees) devote all or part of their effort to Company- sponsored research
projects.
S-8
<PAGE>
<PAGE>
The amounts of research and development performed under customer-funded
contracts and Company-sponsored research projects, including bid and proposal
costs, for the three most recent fiscal years were as follows:
<TABLE>
<CAPTION>
CUSTOMER- COMPANY-
FUNDED SPONSORED TOTAL
---------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
1994 ......................... $843,964 $172,604 $1,016,568
1993 ......................... 488,450 124,718 613,168
1992 ......................... 326,626 122,903 449,529
</TABLE>
PERSONNEL
At March 31, 1994, the Company employed approximately 32,600 persons. A
significant part of its operations is dependent upon professional, technical
and engineering personnel whose tenure is not generally secured by employment
contracts. The Company has agreements with labor organizations representing
certain hourly employees.
FOREIGN SALES
Loral products currently sold in the international marketplace include the
ALQ-178 Rapport, ALR-56C, ALR-56M, FLIR targeting and weapon delivery system
for the F/A-18 strike jet, EH 101/Merlin, AAR-47, Challenger, Matador, E-2C
displays, shipboard chaff and flare countermeasures, Romeo submarine sonar,
Multiple Launch Rocket System, Vertical Launch Antisubmarine Rocket, guidance
control systems for the Sidewinder missile, Chaparral air-defense system,
F-3050 tactical reconnaissance pod, JAS-39 full mission simulator, MILES,
TCM-620 tactical communications system and air traffic control systems.
Through SS/L, Loral is also supplying the INTELSAT VII, Superbird and N-Star
satellites for the international marketplace. Certain other Loral programs
have export potential, including ATACMS, the ASPRO computer, tactical
displays, LOROPS and AIRS.
Foreign sales accounted for approximately 14% of the Company's sales in
fiscal 1994 and 1993. Foreign sales and income are subject to changes in
United States and foreign government policies, regulations, embargoes and
international hostilities. Foreign sales generally require export licenses
granted on a case-by-case basis by the United States Department of State. The
exchange risk inherent in foreign contracts not denominated in the U.S.
dollars is mitigated by currency hedging where deemed appropriate.
Foreign sales comprise the following:
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Export sales:
Asia ................................. $227,312 $190,125 $151,435
Europe ............................... 106,546 128,707 148,295
Middle East .......................... 91,049 119,401 213,473
Other ................................ 28,289 26,733 75,831
-------- -------- --------
453,196 464,966 589,034
Foreign operations, principally Europe 111,416 12,535 5,779
-------- -------- --------
Total foreign sales ................... $564,612 $477,501 $594,813
======== ======== ========
</TABLE>
S-9
<PAGE>
<PAGE>
DESCRIPTION OF NOTES AND DEBENTURES
The following description of the particular terms of the Notes and the
Debentures offered hereby (referred to in the Prospectus as the "Offered Debt
Securities") supplements and, to the extent inconsistent therewith, replaces,
insofar as such description relates to the Notes and the Debentures, the
description of the Debt Securities set forth in the Prospectus, to which
description reference is hereby made.
GENERAL
The Notes and the Debentures are senior, unsecured general obligations of
the Company, will rank pari passu with all other unsecured and unsubordinated
indebtedness of the Company. The Notes will be limited to $250,000,000
aggregate principal amount and the Debentures to $400,000,000 aggregate
principal amount. The Notes will mature on June 15, 2004 and the Debentures
on June 15, 2024. The Notes and the Debentures will bear interest at the
respective rates per annum shown on the cover page of this Prospectus
Supplement (computed on the basis of a 360-day year of twelve 30-day months)
from June 15, 1994, payable semi-annually on June 15 and December 15 of each
year (each an "Interest Payment Date"), commencing December 15, 1994, to the
person in whose name such securities (or any predecessor security) are
registered at the close of business on June 1 and December 1, as the case may
be, next preceding such Interest Payment Date. The Notes and the Debentures
will not be redeemable by the Company prior to their stated maturity and will
not be entitled to the benefit of a sinking fund.
DEFEASANCE AND DISCHARGE AND COVENANT DEFEASANCE
The provisions of the Indenture relating to defeasance and discharge and
defeasance of certain covenants as described under "Description of Debt
Securities--Defeasance" set forth in the Prospectus will apply to the Notes
and the Debentures.
GLOBAL SECURITIES
The Notes and the Debentures will be issued in the form of one or more
Global Securities. The Global Securities will be deposited with, or on behalf
of, the Depositary, and registered in the name of the Depositary or a nominee
thereof. Unless and until they are exchanged in whole or in part for Notes or
Debentures in definitive form, no Global Securities may be transferred except
as a whole by the Depositary to a nominee of such Depositary or by a nominee
of such Depositary to such Depositary or another nominee of such Depositary
or by such Depositary or any such nominee to a successor of such Depositary
or a nominee of such successor.
The Depositary has advised the Company and the Underwriters as follows:
The Depositary is a limited purpose trust company organized under the Banking
Law of the State of New York, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered pursuant to the provisions of
section 17A of the Securities Exchange Act of 1934, as amended. The
Depositary was created to hold securities of its participants and to
facilitate the clearance and settlement of securities transactions among its
participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical
movement of securites certificates. The Depositary's participants include
securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations, some of whom (and/or their
representatives) own the Depositary. Access to the Depositary's book-entry
system is also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
A further description of the Depositary's procedures with respect to
Global Securities is set forth in the Prospectus under "Description of Debt
Securities--Global Securities."
The Depositary has confirmed to the Company, the Underwriter and the
Trustee that it intends to follow such procedures.
S-10
<PAGE>
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement among
the Company, Lehman Brothers Inc., Bear, Stearns & Co. Inc., Goldman, Sachs &
Co., Lazard Freres & Co. and J.P. Morgan Securities Inc. (the
"Underwriters"), the Company has agreed to sell to the Underwriters, and each
of the Underwriters has severally agreed to purchase from the Company, the
principal amount of the Notes and the Debentures as set forth opposite its
name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
-----------------------------
NOTES DEBENTURES
-------------- -------------
<S> <C> <C>
Lehman Brothers Inc. ................ $ 50,000,000 $ 80,000,000
Bear, Stearns & Co. Inc. ............ 50,000,000 80,000,000
Goldman, Sachs & Co. ................ 50,000,000 80,000,000
Lazard Freres & Co. ................. 50,000,000 80,000,000
J.P. Morgan Securities Inc. ......... 50,000,000 80,000,000
------------ ------------
Total .......................... $250,000,000 $400,000,000
============ ============
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters thereunder are subject to approval of certain legal matters by
counsel and to various other conditions.
The Underwriters propose to offer the Notes and the Debentures directly to
the public initially at the respective public offering price set forth on the
cover page of this Prospectus Supplement and to certain dealers at such price
less a concession not in excess of 0.40% of the principal amount of the Notes
and 0.50% of the principal amount of the Debentures. The Underwriters may
allow and such dealers may reallow a concession not in excess of 0.25% of the
principal amount of the Notes and 0.25% of the principal amount of the
Debentures to certain other dealers. Afer the initial offering, the offering
price and other selling terms may be changed.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, and to
contribute to payments they may be required to make in respect thereof.
The Notes and the Debentures will be listed on the New York Stock
Exchange. The Company has been advised by the Underwriters that they
currently intend to make a market in the Notes and the Debentures, but that
they are not obligated to do so and may discontinue such market making at any
time without notice. The Company cannot predict the liquidity of any trading
market for the Notes and the Debentures.
The Underwriters and their affiliates may engage in transactions with and
perform services for the Company and its affiliates in the ordinary course of
their respective businesses, including, without limitation, commercial
banking and investment banking services.
Merchant banking partnerships affiliated with Lehman Brothers Holdings
Inc. (the "Lehman Partnerships") own 6,314,960 shares of the Company's common
stock, representing approximately 7.6% of the Company's common stock
outstanding as of May 1, 1994. The Lehman Partnerships also own 731.85 shares
of Series S Preferred Stock of Loral Aerospace Holdings, Inc. ("LAH"), the
Company's wholly-owned subsidiary, which represent an indirect 18.3%
beneficial interest in the equity of SS/L, LAH's 51%-owned affiliate. If the
Lehman Partnerships continue to hold Series S Preferred Stock after January
1, 1998, or after a change in control of Loral, they will have the right to
request that the Company purchase their Series S Preferred Stock at an
appraised fair market value ("Appraised Value"). In such event, the Company
may elect to purchase such Series S Preferred Stock at Appraised Value or, if
the Company elects not to purchase the stock, the Lehman Partnerships may
require the combined interests of the Company and the Lehman Partnerships in
SS/L to be sold to a third party. The Lehman Partnerships also have an
aggregate equity interest of approximately 62% in K&F Industries, Inc., a
corporation of which Bernard L. Schwartz, Chairman of the Board of Directors
and Chief Executive Officer of the Company, is a 35% stockholder, which
acquired the Company's Aircraft Braking Systems and Engineered Fabrics
divisions in April 1989.
S-11
<PAGE>
============================================================
NO DEALER, SALESMAN, OR OTHER PERSON HAS BEEN AUTHORIZED
TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT
CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY AGENT OR UNDERWRITER. THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION
TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF
THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE
MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
Page
----
<S> <C>
Recent Developments.................................... S-2
Use of Proceeds........................................ S-2
Capitalization......................................... S-2
Summary Consolidated Financial Information............. S-3
Business............................................... S-4
Description of Notes and Debentures.................... S-10
Underwriting........................................... S-11
PROSPECTUS
Available Information.................................... 2
Incorporation of Certain Information by Reference........ 2
The Company.............................................. 3
Use of Proceeds.......................................... 3
Ratio of Earnings to Fixed Charges....................... 3
Description of Securities................................ 3
Plan of Distribution..................................... 22
Legal Opinions........................................... 23
Experts.................................................. 24
</TABLE>
$650,000,000
LORAL CORPORATION
[LOGO]
$250,000,000
7 5/8% SENIOR NOTES
DUE JUNE 15, 2004
$400,000,000
8 3/8% SENIOR DEBENTURES
DUE JUNE 15, 2024
---------------
PROSPECTUS SUPPLEMENT
JUNE 8, 1994
---------------
LEHMAN BROTHERS
BEAR, STEARNS & CO. INC.
GOLDMAN, SACHS & CO.
LAZARD FRERES & CO.
J.P. MORGAN SECURITIES INC.
============================================================
<PAGE>
