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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
Commission file number 1-4238
LORAL MASTER SAVINGS PLAN
LORAL CORPORATION
600 Third Avenue
New York, New York 10016
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REQUIRED INFORMATION
The combined statements of net assets available for Plan benefits as of
December 31, 1993 and 1992, and the related combined statement of changes in
net assets available for Plan benefits for the year ended December 31, 1993,
together with the Report and Consent of Independent Accountants, are attached
and filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Master
Plan Committee has duly caused this annual report to be signed by the
undersigned thereunto duly authorized.
LORAL MASTER SAVINGS PLAN
-------------------------------
Plan
Date: April 15, 1994 BY: STEPHEN L. JACKSON
--------------------------------
Stephen L. Jackson
Plan Administrator
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Master Plan Committee of
Loral Corporation and Participants
of The Loral Master Savings Plan:
We have audited the combined statements of net assets available for plan
benefits of the Loral Master Savings Plan (the "Plan") at December 31, 1993 and
1992, and the related combined statement of changes in net assets available for
plan benefits for the year ended December 31, 1993. These financial statements
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits at December
31, 1993 and 1992, and the changes in net assets available for plan benefits
for the year ended December 31, 1993 in conformity with generally accepted
accounting principles.
2
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Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of the Loral
Master Savings Plan, which are included on pages 11 through 13, are presented
for the purpose of additional analysis and are not a required part of the basic
financial statements, but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The supplemental
schedules have been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
COOPERS & LYBRAND
New York, New York
April 12, 1994
3
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LORAL MASTER SAVINGS PLAN
COMBINED STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AT DECEMBER 31, 1993
(In thousands)
<TABLE>
<CAPTION>
Loral Fixed Money
Company Equity Income Market
Stock Fund Fund Fund Fund Total
---------- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C>
Assets:
Investments, at fair value
(Notes 1, 2 and 4) $36,040 $68,615 $22,227 $28,905 $155,787
Receivables (Note 3):
Employer contributions 1,144 46 18 25 1,233
Participant contributions 95 504 176 205 980
Loans receivable from participants (Note 6) 901 3,310 927 2,125 7,263
------- ------- ------- ------ -------
Total assets 38,180 72,475 23,348 31,260 165,263
------- ------- ------- ------ -------
Liabilities:
Accrued liabilities
Forfeitures available to reduce future
employer contributions (Note 2) 3 1 154 158
------- ------- ------- ------ -------
Total liabilities 0 3 1 154 158
------- ------- ------- ------ -------
Net assets available for plan benefits $38,180 $72,472 $23,347 $31,106 $165,105
======= ======= ======= ======= ========
</TABLE>
See Notes to Combined Financial Statements.
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LORAL MASTER SAVINGS PLAN
COMBINED STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AT DECEMBER 31, 1992
(In thousands)
<TABLE>
<CAPTION>
Loral Fixed Money
Company Equity Income Market
Stock Fund Fund Fund Fund Total
---------- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C>
Assets
Investments, at fair value
(Notes 1, 2 and 4) $22,055 $50,814 $19,766 $30,218 $122,853
Receivables (Note 3):
Employer contributions 442 41 20 34 537
Participant contributions 71 450 188 253 962
Loans receivable from participants (Note 6) 602 2,414 1,013 2,211 6,240
------- ------- ------- ------- -------
Total assets 23,170 53,719 20,987 32,716 130,592
------- ------- ------- ------- -------
Liabilities
Accrued liabilities 52 23 13 191 279
Forfeitures available to reduce future
employer contributions (Note 2) 5 240 245
------- ------- ------- ------- -------
Total liabilities 52 23 18 431 524
------- ------- ------- ------- -------
Net assets available for plan benefits $ 23,118 $ 53,696 $ 20,969 $ 32,285 $130,068
======= ======= ======= ======= =======
</TABLE>
See Notes to Combined Financial Statements.
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LORAL MASTER SAVINGS PLAN
COMBINED STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1993
(In thousands)
<TABLE>
<CAPTION>
Loral Fixed Money
Company Equity Income Market
Stock Fund Fund Fund Fund Total
---------- ------ ------ ------ -----
<S> <C> <C> <C> <C> <C>
Additions:
Contributions (Note 3):
Employer $ 2,491 $ 525 $ 219 $ 330 $ 3,565
Participant 1,020 5,819 2,405 2,891 12,135
Investment income
(Notes 2, 4 and 6):
Interest income 58 206 70 140 474
Dividend income 494 6,363 1,727 876 9,460
Net appreciation (depreciation)
in fair value of investments (Note 2) 13,849 6,602 (465) 19,986
-------- -------- -------- -------- --------
17,912 19,515 3,956 4,237 45,620
Withdrawals (Note 5) (1,764) (3,786) (2,031) (2,876) (10,457)
Administrative expenses (Note 8) (5) (28) (22) (71) (126)
Transfers among funds, net (1,081) 3,075 475 (2,469)
Net assets available for plan benefits
beginning of year 23,118 53,696 20,969 32,285 130,068
-------- -------- -------- -------- --------
Net assets available for plan benefits
end of year $ 38,180 $ 72,472 $ 23,347 $ 31,106 $165,105
======== ======== ======== ======== ========
</TABLE>
See Notes to Combined Financial Statements.
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LORAL MASTER SAVINGS PLAN
NOTES TO COMBINED FINANCIAL STATEMENTS
1. Plan Description
The combined financial statements of the Loral Master Savings Plan (the
"Plan") include several individual qualified defined contribution 401(k)
plans (the "Individual Plans") of certain divisions and subsidiaries of
Loral Corporation (the "Company").
The Plan is a defined contribution 401(k) plan designed to provide
eligible employees with tax advantaged long-term savings for retirement.
Participants are able to direct their investment to a combination of four
funds: the Loral Company Stock Fund; the Equity Fund; the Fixed Income
Fund; and the Money Market Fund. Effective January 1, 1994, participants
can elect to direct their investment to four additional funds: The Growth
and Income Fund; the Asset Manager Fund; the Overseas Fund; and the
Intermediate Bond Fund.
Complete descriptions of the Plan and the Individual Plans, including
eligibility requirements and vesting provisions, are contained in the Plan
documents.
2. Summary of Significant Accounting Policies
Valuation of Investments
Investments in the Loral Company Stock Fund are valued at the last
reported sales price on the last business day of the year.
Investments in the Equity Fund, the Fixed Income Fund and the Money Market
Fund are valued at the net asset value per share as reported by the
representative fund manager.
The Plan presents in the statement of changes in net assets available for
plan benefits the net appreciation or depreciation in the fair value of
its investments which consists of realized gains or losses and the
unrealized appreciation or depreciation on those investments.
Investment Transactions and Investment Income
Investment transactions are accounted for on a trade date basis. Dividend
income is recorded on the ex-dividend date. Interest income is accrued as
earned.
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LORAL MASTER SAVINGS PLAN
NOTES TO COMBINED FINANCIAL STATEMENTS
(Continued)
Withdrawals Payable
Withdrawal claims pertaining to 1993 which were paid in 1994 were
approximately $504,000. These payments are reported as a liability on
Form 5500.
Forfeitures
Participants vest in the Employer Contribution in accordance with the
provisions of each Individual Plan. Non-vested Employer Contributions are
forfeited upon termination or withdrawal. These amounts are used to
reduce future Employer Contributions. Forfeitures for the year ended
December 31, 1993 were approximately $176,000.
Reclassifications
Certain reclassifications have been made to conform prior year amounts to
the current year presentation.
3. Contributions
All active participants may contribute 2% to 6% of their cash
compensation, as defined, to the Plan as a "Basic Contribution." In
addition, participants who are making Basic Contributions at the maximum
rate may elect to contribute an additional amount ranging up to 11% of
their cash compensation as a "Voluntary Contribution", subject to Internal
Revenue Code ("IRC") limitations. Participants' contributions vest
immediately and can only be withdrawn pursuant to the appropriate
provisions of the IRC.
The Company will contribute amounts ranging from 20% to 100% of the
participants' Basic Contribution in accordance with the provisions of the
Individual Plans as an Employer Contribution. The amount of the
contribution, the type of the contribution, the allocation to the various
investment funds and limits on the contributions credited to a participant
are governed by the Individual Plan documents.
As of December 31, 1993 and 1992, there were approximately 4,100 and 4,000
participants in the Plan, respectively, some of whom have elected to
invest in more than one fund.
Although the Company has not expressed an intent to do so, the Company can
discontinue its contributions and or terminate the Plan at any time,
subject to the provisions of the Employee Retirement Income Security Act
of 1974 ("ERISA"). In the event of a discontinuance and or termination of
the Plan, participants will become 100 percent vested and the net assets
of the Plan will be allocated among the participants and their
beneficiaries in accordance with the provisions of ERISA.
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LORAL MASTER SAVINGS PLAN
NOTES TO COMBINED FINANCIAL STATEMENTS
(Continued)
4. Investments
Plan investments at December 31, 1993 and 1992 were as follows:
<TABLE>
<CAPTION>
Face Amount Fair
or Shares Value Cost
----------- ------ ----
(In thousands)
<S> <C> <C> <C>
1993:
Loral Company Stock Fund:
Loral Corporation Common Stock 954,706 $ 36,040 * $ 18,052
Equity Fund:
Fidelity Magellan Fund 968,457 68,615 * 59,876
Fixed Income Fund:
Fidelity Ginnie Mae Portfolio 2,046,686 22,227 * 22,067
Money Market Fund:
Fidelity Retirement Money
Market Trust 28,904,733 28,905 * 28,905
------- -------
$155,787 $128,900
======= =======
1992:
Loral Company Stock Fund:
Loral Corporation Common Stock 479,443 $ 22,055 * $ 16,068
Equity Fund:
Fidelity Magellan Fund 806,439 50,814 * 47,421
Fixed Income Fund:
Fidelity Ginnie Mae Portfolio 1,785,568 19,766 * 19,012
Money Market Fund:
Fidelity Retirement Money
Market Trust 30,218,287 30,218 * 30,218
------- -------
$122,853 $112,719
======= =======
</TABLE>
* Represents greater than 5% of net assets available for plan benefits at
beginning of the year.
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LORAL MASTER SAVINGS PLAN
NOTES TO COMBINED FINANCIAL STATEMENTS
(Continued)
5. Withdrawals
Upon termination, participants receive the vested portion of their account
balance as soon as practicable after termination. Terminated participants
who have an account balance in excess of $3,500 may elect to leave their
account balance in the Plan and withdraw it at any time up to age 65.
Generally a 10% penalty will be imposed on certain withdrawals made before
the participant reaches age 59 1/2.
Assets in a participant's account may be withdrawn only for financial
hardship before termination of employment or before reaching age 59 1/2.
Financial hardship is determined pursuant to provisions of the IRC.
6. Loans
The Plan generally provides for loans to active participants. The maximum
loan generally allowed to each participant is the lesser of (1) $50,000
less the highest outstanding loan balance over the prior year or (2) 50%
of the vested value of the participant's account in the Plan. The minimum
loan amount is $1,000. The Individual Plan Administrative Committees
establish the interest rate and the repayment terms, both of which are
fixed for the term of the loan. The interest is based on the prime
interest rate, as defined, plus one percent. Repayment periods generally
range from one to four years, with a nine year maximum for loans used in
connection with the purchase of a principal residence, except for one of
the Individual Plans where repayment periods range from five to ten years.
Loan repayments are made through payroll deductions, with principal and
interest being credited to the participants' fund accounts. Repayment of
the entire balance is permitted at any time.
7. Tax Status
The Internal Revenue Service has determined that the Plan constitutes a
qualified plan under Section 401(a) of the IRC and is therefore exempt
from Federal income taxes under Section 501(a). The most recent
determination letter was issued on April 17, 1992.
Based upon present applicable laws and regulations, participants will not
be subject to Federal income tax on the Employer Contributions made on
their behalf or on the Plan earnings credited to their account until such
time as they are withdrawn.
8. Administrative Expenses
As provided for in the Individual Plan documents, certain administrative
expenses are paid by the Plan. The remaining expenses are paid by the
Company.
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LORAL MASTER SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1993
<TABLE>
<CAPTION>
FACE AMOUNT
OR FAIR
DESCRIPTION SHARES/UNITS VALUE COST
- - ----------- ------------ ----- ----
(in thousands) (in thousands)
<S> <C> <C> <C>
Loral Company Stock Fund:
Loral Corporation Common Stock 954,706 $ 36,040 $ 18,052
Equity Fund:
Fidelity Magellan Fund 968,457 68,615 59,876
Fixed Income Fund:
Fidelity Ginnie Mae Portfolio 2,046,686 22,227 22,067
Money Market Fund:
Fidelity Retirement Money
Market Trust 28,904,733 28,905 28,905
Participant Loans 7,262,512 7,263
-------- --------
TOTAL $163,050 $128,900
======== ========
</TABLE>
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LORAL MASTER SAVINGS PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1993
(In thousands)
<TABLE>
<CAPTION>
GAIN
PURCHASE SELLING COST OF (LOSS)
DESCRIPTION PRICE PRICE ASSET ON SALE
- - ----------- ----- ----- ----- -------
<S> <C>
Common Stock
Loral Corporation Common Stock $5,231
Equity Fund
Fidelity Magellan Fund 24,886
Fixed Income Fund
Fidelity Ginnie Mae Portfolio 8,503
Money Market Fund
Fidelity Retirement Money Market Trust 12,910
</TABLE>
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LORAL MASTER SAVINGS PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1993
(In thousands)
(Continued)
<TABLE>
<CAPTION>
Gain
Purchase Selling Cost of (Loss)
Description Price Price Asset on Sale
- - ----------- ----- ----- ----- -------
<S> <C> <C> <C>
Common Stock
Loral Corporation Common Stock $5,094 $3,246 $1,848
Equity Fund
Fidelity Magellan Fund 13,686 12,430 1,256
Fixed Income Fund
Fidelity Ginnie Mae Portfolio 5,577 5,448 129
Money Market Fund
Fidelity Retirement Money Market Trust 14,223 14,223
</TABLE>
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CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Loral Corporation on Form S-8 (File No. 33-8822) of our report dated April 12,
1994 on our audits of the combined financial statements and supplemental
schedules of the Loral Master Savings Plan as of December 31, 1993 and 1992,
and for the year ended December 31, 1993, which report is included in this
Annual Report on Form 11-K.
COOPERS & LYBRAND
New York, New York
April 12, 1994
14
