<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
------------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1993
------------------------
Commission File Number 1-4238
------------------------
LORAL CORPORATION
600 Third Avenue
New York, New York 10016
Telephone: (212) 697-1105
State of incorporation: New York
IRS identification number: 13-1718360
------------------------
The registrant has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and
has been subject to such filing requirements for the past 90 days.
As of January 28, 1994, there were 83,069,695 shares of Loral Corporation
Common Stock outstanding.
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<PAGE> 2
PART I -- FINANCIAL INFORMATION
LORAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
--------------------- -------------------------
1993 1992 1993 1992
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Sales........................................ $902,003 $941,141 $2,588,087 $2,361,343
Costs and expenses........................... 804,051 864,774 2,341,557 2,168,667
-------- -------- ---------- ----------
Operating income............................. 97,952 76,367 246,530 192,676
Interest and investment income............... 1,957 2,795 4,044 11,713
Interest expense............................. 9,525 14,164 25,455 38,920
-------- -------- ---------- ----------
Income before taxes, minority interest and
equity in net income of affiliate.......... 90,384 64,998 225,119 165,469
Income taxes................................. 34,346 24,012 83,122 61,383
-------- -------- ---------- ----------
Income before minority interest and equity in
net income of affiliate.................... 56,038 40,986 141,997 104,086
Minority interest............................ (2,586)
Equity in net income of affiliate............ 907 431 2,016 196
-------- -------- ---------- ----------
Income before cumulative effect of changes in
accounting................................. 56,945 41,417 144,013 101,696
Cumulative effect of changes in accounting,
net of income taxes of $97,122............. (233,377)
-------- -------- ---------- ----------
Net income (loss)............................ 56,945 41,417 144,013 (131,681)
Retained earnings, beginning of period....... 525,435 399,281 460,288 589,733
Dividends.................................... (11,602) (9,690) (33,523) (27,044)
-------- -------- ---------- ----------
Retained earnings, end of period............. $570,778 $431,008 $ 570,778 $ 431,008
-------- -------- ---------- ----------
-------- -------- ---------- ----------
Weighted average number of common shares
outstanding................................ 83,888 79,134 83,644 75,027
-------- -------- ---------- ----------
-------- -------- ---------- ----------
Earnings per share:
Primary:
Income before cumulative effect of changes
in accounting........................... $ .68 $ .52 $ 1.72 $ 1.36
Cumulative effect of changes in
accounting.............................. (3.11)
-------- -------- ---------- ----------
Net income (loss).......................... $ .68 $ .52 $ 1.72 $ (1.75)
-------- -------- ---------- ----------
-------- -------- ---------- ----------
Fully diluted:
Income before cumulative effect of changes
in accounting........................... $ .68 $ .51 $ 1.72 $ 1.32
Cumulative effect of changes in
accounting.............................. (3.07)
-------- -------- ---------- ----------
Net income (loss).......................... $ .68 $ .51 $ 1.72 $ (1.75)
-------- -------- ---------- ----------
-------- -------- ---------- ----------
Cash dividends per common share.............. $ .14 $ .125 $ .405 $ .37
-------- -------- ---------- ----------
-------- -------- ---------- ----------
</TABLE>
See notes to condensed consolidated financial statements.
1
<PAGE> 3
LORAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
(Unaudited)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1993 1993
------------ ----------
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents........................................ $ 203,206 $ 116,902
Receivables (Note 3)............................................. 848,327 809,060
Inventories (Note 3)............................................. 235,540 324,714
Deferred income taxes............................................ 60,212 74,406
Other current assets............................................. 20,144 40,135
---------- ----------
Total current assets............................................... 1,367,429 1,365,217
---------- ----------
Property, plant and equipment...................................... 1,317,117 1,271,457
Less, accumulated depreciation and amortization.................. 574,046 489,765
---------- ----------
743,071 781,692
---------- ----------
Cost in excess of net assets acquired, less amortization........... 545,625 537,155
Investment in and long-term advances to affiliate.................. 139,033 137,017
Deferred income taxes.............................................. 19,191 36,845
Other assets and prepaid pension cost.............................. 376,636 370,152
---------- ----------
$3,190,985 $3,228,078
---------- ----------
---------- ----------
LIABILITIES and SHAREHOLDERS' EQUITY:
Current liabilities:
Current portion of debt.......................................... $ 6,833 $ 43,209
Accounts payable, trade.......................................... 130,533 151,344
Customer advances................................................ 92,396 102,452
Accrued employment costs......................................... 154,250 173,759
Income taxes..................................................... 42,735 60,440
Other current liabilities........................................ 246,662 223,509
---------- ----------
Total current liabilities.......................................... 673,409 754,713
---------- ----------
Postretirement benefits............................................ 616,586 622,048
Other liabilities.................................................. 169,237 172,658
Long-term debt..................................................... 423,835 490,806
Shareholders' equity:
Common stock, $.25 par value..................................... 20,941 10,429
Capital surplus.................................................. 757,190 753,208
Retained earnings................................................ 570,778 460,288
---------- ----------
1,348,909 1,223,925
Less:
Treasury stock, at cost....................................... 19,519 19,777
Unearned compensation......................................... 19,704 15,928
Cumulative translation adjustment............................. 1,768 367
---------- ----------
Total shareholders' equity......................................... 1,307,918 1,187,853
---------- ----------
$3,190,985 $3,228,078
---------- ----------
---------- ----------
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE> 4
LORAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
DECEMBER 31,
-----------------------
1993 1992
--------- ---------
<S> <C> <C>
Operating activities:
Net income (loss).................................................. $ 144,013 $(131,681)
Cumulative effect of changes in accounting......................... 233,377
Depreciation and amortization...................................... 111,366 112,467
Minority interest.................................................. 2,586
Equity in net income of affiliate.................................. (2,016) (196)
Deferred income taxes.............................................. 33,999
Changes in operating assets and liabilities:
Receivables..................................................... (18,371) (89,821)
Inventories..................................................... 76,343 47,543
Other current assets............................................ 20,159 (4,169)
Other assets.................................................... (23,229) (16,915)
Accounts payable and accrued liabilities........................ (38,144) (26,634)
Income taxes.................................................... (17,881) 12,550
Postretirement benefits and other liabilities................... (7,383) 12,656
Other........................................................... (114)
--------- ---------
Net cash from operating activities................................. 278,742 151,763
--------- ---------
Investing activities:
Acquisition of businesses, net of cash acquired.................... (25,767) (262,736)
Purchase price adjustment.......................................... 9,000
Advances to affiliate.............................................. (3,895) (4,062)
Investment in affiliate............................................ (9,500)
Proceeds from sale of stock of affiliate........................... 12,198
Investment in other assets......................................... (44,000)
Proceeds from notes receivable..................................... 20,935
Capital expenditures, net.......................................... (53,162) (49,564)
--------- ---------
(61,889) (348,664)
--------- ---------
Financing activities:
Net (payments) borrowings under revolving credit facilities
and commercial paper............................................ (265,531) 153,000
Proceeds from borrowings........................................... 200,000 2,746
Payments of debt................................................... (37,816) (10,175)
Dividends paid..................................................... (33,523) (27,044)
Proceeds from common stock issuance for stock options and
employee benefit plans.......................................... 6,321 32,121
Purchase of treasury stock......................................... (2,644)
--------- ---------
(130,549) 148,004
--------- ---------
Net increase (decrease) in cash and cash equivalents............... 86,304 (48,897)
Cash and cash equivalents, beginning of period..................... 116,902 191,113
--------- ---------
Cash and cash equivalents, end of period........................... $ 203,206 $ 142,216
--------- ---------
--------- ---------
Supplemental information:
Interest paid during the period................................. $ 21,665 $ 34,804
--------- ---------
--------- ---------
Income taxes paid during the period, net of refunds............. $ 62,166 $ 40,898
--------- ---------
--------- ---------
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 5
LORAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited condensed consolidated financial statements have
been prepared by the Company pursuant to the rules of the Securities and
Exchange Commission ("SEC") and, in the opinion of the Company, include all
adjustments (consisting of normal recurring accruals) necessary for a fair
presentation of financial position, results of operations and cash flows.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such SEC rules. The
Company believes that the disclosures made are adequate to make the
information presented not misleading. The condensed consolidated statements
of operations for the three and nine months ended December 31, 1993 are not
necessarily indicative of the results to be expected for the full year. It
is suggested that these financial statements be read in conjunction with
the audited financial statements and notes thereto included in the
Company's latest annual report.
2. ACQUISITIONS:
Effective June 1, 1992, the Company acquired the minority partner's 41%
equity interest in Loral Aerospace Holdings, Inc. ("LAH") through the
issuance of 12,313,810 shares of Loral Common Stock and 627.3 shares of LAH
Series S Preferred Stock.
On August 31, 1992, the Company, through its newly formed wholly-owned
subsidiary Loral Vought Systems Corporation ("LVS"), acquired certain
assets and assumed certain liabilities of the missile business of LTV
Aerospace and Defense Company for $254,250,000 in cash, including
acquisition costs.
These acquisitions have been accounted for as purchases. As such, the
condensed consolidated financial statements reflect the results of
operations of the acquired entity and the elimination of the minority
interest from the respective dates of acquisition. Had these acquisitions
occurred on April 1, 1992, the unaudited pro forma sales, income before
cumulative effect of changes in accounting and earnings per share before
cumulative effect of changes in accounting for the nine months ended
December 31, 1992 would have been: $2,790,800,000; $110,100,000; and $1.42,
respectively. The results, which are based on various assumptions, are not
necessarily indicative of what would have occurred had the acquisitions
been consummated as of April 1, 1992.
In April 1993, the Company acquired the advanced simulation business of
Bolt Beranek and Newman Inc. for $6,000,000 in cash plus acquisition costs.
In September 1993, the Company acquired certain assets and assumed certain
liabilities of Quintron Corporation for $20,577,000 in cash, subject to
adjustment, plus acquisition costs. These acquisitions are not expected to
have a material effect on the operations of the Company.
Performance under contracts in process at the dates of acquisition
contributed after-tax income of $32,909,000 and $31,839,000, net of
after-tax interest cost on debt related to the acquisitions, and
incremental amortization of cost in excess of net assets acquired of
$14,798,000 and $14,151,000 for the nine months ended December 31, 1993 and
1992, respectively.
4
<PAGE> 6
LORAL CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements -- (Continued)
3. RECEIVABLES AND INVENTORIES (IN THOUSANDS):
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1993 1993
------------ ---------
<S> <C> <C>
Receivables:
Receivables on U.S. Government and other long-term contracts:
Amounts billed................................................. $280,362 $ 291,332
Unbilled contract receivables, net of unliquidated progress
payments received of $695,599 and $696,547.................. 497,594 434,368
-------- ---------
777,956 725,700
Other receivables................................................ 59,644 76,528
Advances to affiliate............................................ 10,727 6,832
-------- ---------
Net receivables.................................................. $848,327 $ 809,060
-------- ---------
-------- ---------
</TABLE>
Unbilled contract receivables represent revenue earned but not yet billed
to the customer. The Company expects that substantially all such amounts
will be billed and collected within one year.
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1993 1993
------------ ---------
<S> <C> <C>
Inventories:
Raw materials.................................................... $ 20,927 $ 21,353
Work-in-process and finished goods............................... 38,433 37,597
Inventoried costs related to U.S. Government and
other long-term contracts...................................... 359,666 512,705
-------- ---------
Gross inventories................................................ 419,026 571,655
Less, unliquidated progress payments received, principally
related to long-term contracts................................. 183,486 246,941
-------- ---------
Net inventories.................................................. $235,540 $ 324,714
-------- ---------
-------- ---------
</TABLE>
4. DEBT:
On September 9, 1993, the Company issued $200,000,000 7% Senior Debentures
due 2023. These debentures are not callable and do not contain a sinking
fund provision.
On September 27, 1993, the Company filed a shelf registration statement to
issue up to $300,000,000 of debt securities.
5. INCOME TAXES:
On August 10, 1993, the Omnibus Budget Reconciliation Act of 1993 (the
"Act") was signed into law. One provision of the Act increased the Federal
corporate income tax rate from 34% to 35% retroactively to January 1, 1993.
As a result, the effective tax rate for the quarter ended December 31, 1993
increased to 38%. The impact of this provision on the results for the nine
months ended December 31, 1993 was not significant. The additional tax
benefit resulting from revaluing deferred tax assets at the higher tax rate
is substantially offset by the higher tax rate imposed on income. The
impact of other provisions of the Act is currently being evaluated.
5
<PAGE> 7
LORAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. SHAREHOLDERS' EQUITY:
On September 20, 1993, the shareholders approved an increase in the number
of authorized shares of Common Stock from 70,000,000 to 150,000,000.
On October 7, 1993, the Company completed a two-for-one stock split in the
form of a 100% stock distribution for shareholders of record on September
28, 1993.
All share and per share information have been adjusted to reflect the
two-for-one stock split.
7. OTHER EVENTS:
On December 12, 1993, the Company signed a definitive agreement to purchase
substantially all the assets and liabilities of the Federal Systems Company
("Federal Systems"), a division of International Business Machines
Corporation. The purchase price of $1,575,000,000, subject to adjustment,
will be initially financed through bank borrowings.
Effective January 1, 1994, through the date of closing, expected to occur
during the first calendar quarter of 1994, Federal Systems will be operated
for the benefit of and at the risk of the Company.
6
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On August 31, 1992, the Company, through its newly formed wholly-owned
subsidiary Loral Vought Systems Corporation ("LVS"), acquired the missile
business of LTV Aerospace and Defense Company. The results of operations of LVS
are included from the date of acquisition. (See Note 2 to Condensed Consolidated
Financial Statements.) In March 1993, retroactive to April 1, 1992, the Company
adopted Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions" ("SFAS 106"). On
July 27, 1993, the Board of Directors declared a two-for-one stock split which
was distributed on October 7, 1993. All share and per share information have
been adjusted to reflect the two-for-one stock split. (See Note 6 to Condensed
Consolidated Financial Statements.)
On December 12, 1993, the Company signed a definitive agreement to purchase
substantially all the assets and liabilities of the Federal Systems Company
("Federal Systems"), a division of International Business Machines Corporation.
This transaction will impact the Company's results of operations and financial
condition commencing in the fourth quarter of fiscal year 1994. (See Note 7 to
Condensed Consolidated Financial Statements.)
COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED
DECEMBER 31, 1993 AND DECEMBER 31, 1992
Sales for the quarter ended December 31, 1993 decreased to $902,003,000
from $941,141,000 in the prior year. Net income increased to $56,945,000, or
$.68 per share, compared with $41,417,000, or $.52 per share, in the prior year.
Earnings per share for the quarter ended December 31, 1993, are based on
83,888,000 primary weighted average shares outstanding, compared with 79,134,000
in the prior year.
The sales decrease is attributable primarily to lower volume on the
AN/BSY-2 combat control system for the U.S. Navy's SSN-21 attack submarine,
Multiple Launch Rocket System (MLRS) for the U.S. Army, Sidewinder air-to-air
missiles, VT-1 missiles, sonar systems for Romeo-class submarines and ALQ-178
radar warning and electronic countermeasures systems for foreign F-16 aircraft;
offset by higher volume on the ALQ-131 receiver/processor for F-16 and F-111
radar jamming pods, F/A-18 Forward-Looking Infrared (FLIR) targeting and weapon
delivery system, MLRS for foreign customers and Vertical Launch Antisubmarine
Rocket (VLA).
Operating income increased to $97,952,000 from $76,367,000 in the prior
year. Operating income as a percentage of sales increased to 10.9% from 8.1%, as
a result of net improved margins due to operating efficiencies and favorable
sales mix for the acquired LVS business, primarily due to increased foreign
sales, and lower postretirement health care and life insurance costs due to
various plan amendments the Company adopted in March 1993.
Net interest expense decreased by $3,801,000 from the prior year, primarily
due to the benefits from continued strong cash flow and lower overall interest
costs due to lower market interest rates and a series of debt reshaping steps
initiated by the Company in the second half of last year.
As a result of the Omnibus Budget Reconciliation Act of 1993, the effective
tax rate for the quarter ended December 31, 1993 increased to 38% from 37% in
the prior year. (See Note 5 to Condensed Consolidated Financial Statements.)
FINANCIAL CONDITION
The Company improved its financial position with the debt (net of
cash) - equity ratio decreasing to .17:1 from .35:1 at March 31, 1993 and the
current ratio improving to 2.0:1 from 1.8:1 at March 31, 1993. The Company's
free cash flow (net cash from operating activities, less capital expenditures,
plus proceeds of stock purchases by employee benefit plans and exercises of
stock options) was $231,901,000 for the nine months ended December 31, 1993. The
Company expects positive cash flow for the remainder of the fiscal year before
any consideration of the impact of the Federal Systems acquisition.
7
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION -- (CONTINUED)
In continuing with the Company's debt reshaping program, in September 1993,
the Company issued $200,000,000 7% Senior Debentures due 2023 and filed a new
shelf registration statement to issue up to $300,000,000 of debt securities.
The Federal Systems purchase price of $1,575,000,000, subject to
adjustment, will be initially financed through bank facilities totalling
$1,700,000,000. These facilities will replace the Company's existing
$600,000,000 revolving credit agreement with a group of banks. Based on the
expected financial condition of the Company following the close of the
transaction, Management believes that the internal cash flows of the combined
operations will be adequate to fund the future growth of the Company while
servicing the interest and retiring the principal of the debt.
COMPARISON OF RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED
DECEMBER 31, 1993 AND DECEMBER 31, 1992
Sales for the nine months ended December 31, 1993, totaled $2,588,087,000,
compared with $2,361,343,000 in the prior year. Net income for the nine months
ended December 31, 1993 increased to $144,013,000, or $1.72 per share, compared
with $101,696,000, or $1.36 per share, in the prior year before the cumulative
effect of adopting SFAS 106.
Earnings per share are based on 83,644,000 primary weighted average shares
outstanding, compared with 75,027,000 in the prior year.
The sales increase was attributable to the results of the acquired LVS
business. Sales also includes higher volume on the ALQ-131 receiver/processor
for F-16 and F-111 radar jamming pods, Vertical Launch Antisubmarine Rocket
(VLA) and ALR-56M radar warning systems; offset by lower volume on Sidewinder
air-to-air missiles, ALQ-178 radar warning and electronic countermeasures
systems for foreign F-16 aircraft, Special Operations Forces Aircrew Training
System (SOF-ATS), Simulated Area Weapons Effect (SAWE) training system and
Chaparral air-defense system.
Operating income increased to $246,530,000 from $192,676,000 in the prior
year. Operating income as a percentage of sales increased to 9.5% from 8.2%, as
a result of net improved margins due to operating efficiencies and favorable
sales mix for the acquired LVS business, primarily due to increased foreign
sales, lower pension costs resulting from acquired pension plans and lower
postretirement health care and life insurance costs due to various plan
amendments the Company adopted in March 1993.
Net interest expense decreased by $5,796,000 from the prior year, primarily
due to the benefits from continued strong cash flow and lower overall interest
costs due to lower market interest rates and a series of debt reshaping steps
initiated by the Company in the second half of last year, offset by the impact
of debt incurred as a result of the acquisition of LVS and non-recurring gains
on certain investments in the prior year.
The impact of the Omnibus Budget Reconciliation Act of 1993 was not
significant. (See Note 5 to Condensed Consolidated Financial Statements.)
The minority interest charge was eliminated effective June 1, 1992, due to
the Company's acquisition of the minority partner's interest in LAH. (See Note 2
to Condensed Consolidated Financial Statements.)
As a result of adopting SFAS 106, the Company recorded charges in the prior
year effective April 1, 1992, net of minority interest, for the cumulative
effect of the accounting change of $330,499,000 pre-tax, $233,377,000 after-tax,
or $3.11 per share.
8
<PAGE> 10
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following exhibits are filed as part of this report:
<TABLE>
<S> <C>
Exhibit 11.1 Computation of Earnings per Common Share for the three months ended
December 31, 1993 and 1992
Exhibit 11.2 Computation of Earnings per Common Share for the nine months ended
December 31, 1993 and 1992
Exhibit 12 Computation of Ratio of Earnings to Fixed Charges for the nine months
ended December 31, 1993 and 1992
</TABLE>
(b) Reports on Form 8-K
<TABLE>
<CAPTION>
DATE OF REPORT ITEM REPORTED
-------------------- -------------------------------------------------------------
<S> <C>
December 12, 1993 ITEM 5 -- OTHER EVENTS
The Registrant signed a definitive agreement to purchase
substantially all the assets and liabilities of the Federal
Systems Company, a division of International Business
Machines Corporation.
</TABLE>
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 thereunto duly authorized.
LORAL CORPORATION
--------------------------------------
Registrant
Date: February 11, 1994 MICHAEL P. DEBLASIO
--------------------------------------
Michael P. DeBlasio
Senior Vice President -- Finance
(Principal Financial Officer)
and
Registrant's Authorized Officer
9
<PAGE> 11
EXHIBIT INDEX
Exhibit 11.1 Computation of Earnings per Common Share for the three months
ended December 31, 1993 and 1992
Exhibit 11.2 Computation of Earnings per Common Share for the nine months
ended December 31, 1993 and 1992
Exhibit 12 Computation of Ratio of Earnings to Fixed Charges for the
nine months ended December 31, 1993 and 1992
<PAGE> 1
EXHIBIT 11.1
LORAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
-------------------
1993 1992
------- -------
<S> <C> <C>
Primary:
Net income applicable to common shares................................. $56,945 $41,417
------- -------
------- -------
Shares:
Weighted average common shares outstanding.......................... 82,583 77,286
Common equivalent shares applicable to stock options................ 1,305 1,848
------- -------
Average number of shares outstanding and common equivalent shares... 83,888 79,134
------- -------
------- -------
Primary earnings per common share and common equivalent share............ $ .68 $ .52
------- -------
------- -------
Fully Diluted:
Net Income............................................................. $56,945 $41,417
Adjustment to interest expense, net of the tax effect thereon
attributable to convertible debt.................................... 1,107
------- -------
Adjusted net income.................................................... $56,945 $42,524
------- -------
------- -------
Shares:
Average number of common shares as adjusted for primary
computation........................................................ 83,888 79,134
Incremental increase to shares under stock options where the
quarter's ending market price is higher than the average market
price during the quarter........................................... 225 94
Shares issuable for convertible debt................................ 4,484
------- -------
Average number of shares outstanding on a fully diluted basis....... 84,113 83,712
------- -------
------- -------
Earnings per common share assuming full dilution......................... $ .68 $ .51
------- -------
------- -------
</TABLE>
10
<PAGE> 1
EXHIBIT 11.2
LORAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
DECEMBER 31,
---------------------
1993 1992
-------- ---------
<S> <C> <C>
Primary:
Income before cumulative effect of changes in accounting.............. $144,013 $ 101,696
Cumulative effect of changes in accounting............................ (233,377)
-------- ---------
Net income (loss) applicable to common shares......................... $144,013 $(131,681)
-------- ---------
-------- ---------
Shares:
Weighted average common shares outstanding......................... 82,475 73,918
Common equivalent shares applicable to stock options............... 1,169 1,109
-------- ---------
Average number of shares outstanding and common equivalent
shares............................................................ 83,644 75,027
-------- ---------
-------- ---------
Primary earnings per common share and common equivalent share:
Income before cumulative effect of changes in accounting.............. $ 1.72 $ 1.36
Cumulative effect of changes in accounting............................ (3.11)
-------- ---------
$ 1.72 $ (1.75)
-------- ---------
-------- ---------
Fully Diluted:
Income before cumulative effect of changes in accounting.............. $144,013 $ 101,696
Adjustment to interest expense, net of the tax effect thereon
attributable to convertible debt................................... 3,331
-------- ---------
Adjusted income before cumulative effect of changes in accounting..... 144,013 105,027
Cumulative effect of changes in accounting............................ (233,377)
-------- ---------
Adjusted net income (loss)............................................ $144,013 $(128,350)
-------- ---------
-------- ---------
Shares:
Average number of common shares as adjusted for primary
computation....................................................... 83,644 75,027
Incremental increase to shares under stock options where the
quarter's ending market price is higher than the average market
price during the quarter.......................................... 125 74
Shares issuable for convertible debt............................... 4,500
-------- ---------
Average number of shares outstanding on a fully diluted basis...... 83,769 79,601
-------- ---------
-------- ---------
Earnings per common share assuming full dilution:
Income before cumulative effect of changes in accounting.............. $ 1.72 $ 1.32
Cumulative effect of changes in accounting............................ (3.07)
-------- ---------
$ 1.72 $ (1.75)*
-------- ---------
-------- ---------
</TABLE>
- ---------------
* The impact of the cumulative effect of changes in accounting on the fully
diluted calculation is antidilutive, resulting in the net fully diluted amount
equalling the net primary amount.
11
<PAGE> 1
EXHIBIT 12
LORAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
DECEMBER 31,
---------------------
1993 1992
-------- --------
<S> <C> <C>
Earnings:
Income before taxes, minority interest and equity in net income of
affiliate......................................................... $225,119 $165,469
Add:
Interest expense.................................................. 25,249 36,668
Amortization of debt expense...................................... 206 2,252
Amortization of capitalized interest.............................. 1,064 753
Interest component of rent expense................................ 12,555 11,495
-------- --------
Earnings............................................................. $264,193 $216,637
-------- --------
-------- --------
Fixed charges:
Interest expense..................................................... $ 25,249 $ 36,668
Amortization of debt expense......................................... 206 2,252
Capitalized interest................................................. 181 26
Interest component of rent expense................................... 12,555 11,495
-------- --------
Fixed charges........................................................ $ 38,191 $ 50,441
-------- --------
-------- --------
Ratio of earnings to fixed charges..................................... 6.92x 4.29x
</TABLE>
12
