<PAGE> 1
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, 1994
Commission file number 1-4238
LORAL MASTER SAVINGS PLAN
LORAL CORPORATION
600 Third Avenue
New York, New York 10016
<PAGE> 2
REQUIRED INFORMATION
The statements of net assets available for benefits as of December 31, 1994 and
1993, and the related statement of changes in net assets available for benefits
for the year ended December 31, 1994, 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: June 28, 1995 BY: STEPHEN L. JACKSON
-------------------------
Stephen L. Jackson
Plan Administrator
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REPORT OF INDEPENDENT ACCOUNTS
-------------------
To the Master Plan Committee of
Loral Corporation and Participants
of The Loral Master Savings Plan:
We have audited the accompanying statements of the net assets available for
benefits of the Loral Master Savings Plan (The "Plan") as of December 31, 1994
and 1993, and the related statement of changes in net assets available for
benefits for the year ended December 31, 1994. 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 benefits of the Plan as of
December 31, 1994 and 1993, and the changes in net assets available for benefits
for the year ended December 31, 1994 in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes at December 31, 1994 and reportable transactions for the
year ended December 31, 1994, 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 Fund information in the statement of net assets
available for benefits and the
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statement of changes in net assets available for benefits is presented for
purposes of additional analysis rather than to present the net assets available
for benefits and changes in net assets available for benefits of each fund. The
supplemental schedules and Fund Information 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 L.L.P.
New York, New York
June 28, 1995
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<PAGE> 5
LORAL MASTER SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
AT DECEMBER 31, 1994
(In thousands)
<TABLE>
<CAPTION>
Non-Participant
Directed Participant Directed
----------- -----------------------------------------------------------------------
Loral Loral IBM Fidelity Fidelity
Corporation Corporation Corporation Retirement Growth
Common Common Common Fidelity Fidelity Money &
Stock Stock Stock Magellan Ginnie Mae Market Income
Fund Fund Fund Fund Portfolio Trust Portfolio
----------- ----------- ----------- -------- ---------- ---------- ---------
Assets:
<S> <C> <C> <C> <C> <C> <C> <C>
Investments, at fair value
(Notes 1, 2 and 4) $ 24,260 $ 17,274 $ 4,243 $ 97,719 $ 17,398 $ 39,645 $ 50,401
Investments, at contract value
(Notes 1,2 and 4)
Receivables (Note 3):
Employer contributions 469 39 13 21 1
Participant contributions 105 455 112 184 36
Loans receivable from
participants (Note 6) 1,116 4,595 1,336 2,724 1,897
-------- -------- -------- -------- -------- -------- --------
Total assets 24,729 18,495 4,243 102,808 18,859 42,574 52,335
-------- -------- -------- -------- -------- -------- --------
Liabilities:
Forfeitures available to reduce future
employer contributions (Note 2) 187
-------- -------- -------- -------- -------- -------- --------
Net assets available for benefits $ 24,729 $ 18,495 $ 4,243 $102,808 $ 18,859 $ 42,387 $ 52,335
======== ======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Participant Directed
----------------------------------------------
Fidelity Fidelity Fidelity Fixed
Overseas Intermediate Asset Income
Fund Bond Fund Manager Fund Total
-------- ------------ -------- --------- --------
Assets:
<S> <C> <C> <C> <C> <C>
Investments, at fair value
(Notes 1, 2 and 4) $ 11,129 $ 783 $ 9,460 $272,312
Investments, at contract value
(Notes 1,2 and 4) $ 73,730 73,730
Receivables (Note 3):
Employer contributions 2 1 2 548
Participant contributions 35 6 38 971
Loans receivable from
participants (Note 6) 440 57 507 3,080 15,752
-------- -------- -------- -------- --------
Total assets 11,606 847 10,007 76,810 363,313
-------- -------- -------- -------- --------
Liabilities:
Forfeitures available to reduce future
employer contributions (Note 2) 187
-------- -------- -------- -------- --------
Net assets available for benefits $ 11,606 $ 847 $ 10,007 $ 76,810 $363,126
======== ======== ======== ======== ========
</TABLE>
See Notes to Financial Statements.
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<PAGE> 6
LORAL MASTER SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
AT DECEMBER 31, 1993
(In thousands)
<TABLE>
<CAPTION>
Non-Participant
Directed Participant Directed
----------- -------------------------------------------------------------
Loral Loral
Corporation Corporation Fidelity
Common Common Fidelity Fidelity Retirement
Stock Stock Magellan Ginnie Mae Money Market
Fund Fund Fund Portfolio Trust Total
----------- ----------- -------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments, at fair value
(Notes 1, 2 and 4) $20,814 $15,226 $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 21,958 16,222 72,475 23,348 31,260 165,263
------- ------- ------- ------- ------- --------
Liabilities:
Forfeitures available to reduce future
employer contributions (Note 2) 3 1 154 158
------- ------- ------- ------- ------- --------
Net assets available for benefits $21,958 $16,222 $72,472 $23,347 $31,106 $165,105
======= ======= ======= ======= ======= ========
</TABLE>
See Notes to Financial Statements.
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LORAL MASTER SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
YEAR ENDED DECEMBER 31, 1994
(In thousands)
<TABLE>
<CAPTION>
Non-Participant
Directed Participant Directed
----------- -------------------------------------------------------------------
Loral Loral IBM Fidelity
Corporation Corporation Corporation Retirement
Common Common Common Fidelity Fidelity Money
Stock Stock Stock Magellan Ginnie Mae Market
Fund Fund Fund Fund Portfolio Trust
----------- ----------- ----------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Additions:
Contributions (Note 3):
Employer $ 4,811 $ 405 $ 527 $ 166 $ 266
Participant 1,336 10,329 1,819 3,603
Investment income (Notes 2 and 6):
Interest income 79 277 64 136
Dividend income 337 249 2,650 1,141 1,353
Net appreciation (depreciation) in
fair value of investments (Note 2) (157) 209 $ 563 (2,889) (1,495)
------- ------- ------ -------- ------- -------
4,991 2,278 563 10,894 1,695 5,358
Benefit payments (Note 5) (1,340) (1,156) (177) (5,014) (1,726) (3,140)
Administrative expenses (Note 8) (3) (4) (35) (22) (77)
Transfers among funds, net (877) 1,155 (605) (2,346) (6,128) (1,781)
Transfer from Prior Plan (Note 1) 4,462 26,837 1,693 10,921
Net assets available for benefits
beginning of year 21,958 16,222 72,472 23,347 31,106
------- ------- ------ -------- ------- -------
Net assets available for benefits
end of year $24,729 $18,495 $4,243 $102,808 $18,859 $42,387
======= ======= ====== ======== ======= =======
</TABLE>
<TABLE>
<CAPTION>
Participant Directed
------------------------------------------------------------
Fidelity
Growth
& Fidelity Fidelity Fidelity Fixed
Income Overseas Intermediate Asset Income
Portfolio Fund Bond Fund Manager Fund Total
--------- -------- ------------ -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Additions:
Contributions (Note 3):
Employer $ 19 $ 31 $ 4 $ 27 $ 6,256
Participant 4,349 1,572 93 1,399 $ 5,167 29,667
Investment income (Notes 2 and 6):
Interest income 70 22 1 22 2,548 3,219
Dividend income 3,183 186 52 280 9,431
Net appreciation (depreciation) in
fair value of investments (Note 2) (1,399) (355) (69) (627) (6,219)
------- ------- ----- ------ ------- -------
6,222 1,456 81 1,101 7,715 42,354
Benefit payments (Note 5) (1,117) (300) (103) (385) (1,888) (16,346)
Administrative expenses (Note 8) (5) (4) (15) (165)
Transfers among funds, net 2,708 4,317 869 4,632 (1,944)
Transfer from Prior Plan (Note 1) 44,527 6,133 4,663 72,942 172,178
Net assets available for benefits
beginning of year 165,105
------- ------- ----- ------ ------- -------
Net assets available for benefits
end of year $52,335 $11,606 $ 847 $10,007 $76,810 $363,126
======= ======= ===== ======= ======= ========
</TABLE>
See Notes to Financial Statements.
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<PAGE> 8
LORAL MASTER SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. Plan Description
The Loral Master Savings Plan (the "Plan") includes the following
individual qualified defined contribution 401(k) plans of certain
divisions and subsidiaries of Loral Corporation (the "Company"): the Loral
Corporation Deferred Income Savings Plan, the Loral Electro-Optical
Systems, Inc. 401(k) Matching Contribution Plan, the Conic Corporation
Deferred Income Retirement Plan, the Loral/Rolm Mil-Spec Corp. Retirement
Income Savings Plan, the Frequency Sources, Inc. 401(k) Retirement Savings
Plan, the Narda-Western Operations 401(k) Deferred Income Retirement Plan
and the Narda Microwave Supplemental Retirement Savings Plan (the
"Individual Plans"). Effective July 1, 1994, the Company established
another Individual Plan, the Loral Federal Systems Deferred Income
Retirement Plan (the "LFS Plan"), pursuant to the purchase of
substantially all the assets and liabilities of IBM Federal Systems
Company. At that date, certain participants of the IBM Corporation Tax
Deferred Savings Plan (the "Prior Plan") became participants of the Plan
and the Prior Plan transferred cash and assets equal to the
participants' balances in the Prior Plan.
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 eight
investment options: Loral Corporation Common Stock and seven mutual funds
managed by Fidelity Management and Research Company. In addition,
participants in the LFS Plan can direct their investment to the Fixed
Income Fund.
The Fixed Income Fund comprises guaranteed investment contracts with
various financial institutions and the Fidelity Short-term Interest Fund.
Fidelity Management Trust Company is the investment manager for the Fixed
Income Fund and as such, places investment contracts with various
financial institutions. The Plan's investment in the Fixed Income Fund
represents an unsecured obligation of the financial institution that
issued the investment contract. There are certain limitations, as defined
in the LFS Plan document, with respect to transfers to or from the Fixed
Income Fund. Pending the purchase of the investment contracts,
participants' contributions are invested in the Fidelity Short-term
Interest Fund.
The IBM Corporation Common Stock Fund is a carry-over fund from the Prior
Plan and contributions and reinvestment of dividends into the fund are not
permitted. Effective December 31, 1995 the IBM Common Stock Fund will be
discontinued and any remaining balance in the fund will be transferred to
the Fidelity Retirement Money Market Trust.
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LORAL MASTER SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
(Continued)
Complete descriptions of the Plan and the Individual Plans, including
eligibility requirements and vesting provisions, are contained in the Plan
and the Individual Plan documents.
2. Summary of Significant Accounting Policies
Valuation of Investments
Investments in Loral Corporation Common Stock and IBM Corporation Common
Stock are valued at the last reported quoted market price on the last
business day of the year.
Investments in the Fidelity mutual funds are valued at quoted market prices
which represent the net asset value per share as reported by Fidelity
Management and Research Company.
Investments in the Fixed Income Fund are stated at contract value as
reported by the issuer. Contract value represents the principal amount
placed with the issuer, plus interest at the contract rate, less
withdrawals and expenses.
Loans receivable from participants are valued at cost which approximates
fair value.
The Plan presents in the statement of changes in net assets available for
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.
Benefits Payable
Benefits pertaining to 1994 and 1993, which were paid in 1995 and 1994,
were approximately $4,866,000 and $504,000, respectively. These payments
are reported as liabilities on Form 5500.
-8-
<PAGE> 10
LORAL MASTER SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
(Continued)
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, 1994 were approximately
$180,000.
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, 1994 and 1993, there were approximately 13,300 and 4,100
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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<PAGE> 11
LORAL MASTER SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
(Continued)
4. Investments
Plan investments at December 31, 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
(In thousands)
--------------
<S> <C> <C>
Investments at fair value:
Loral Corporation Common Stock $ 41,534* $ 36,040*
IBM Corporation Common Stock 4,243*
Fidelity Magellan Fund 97,719* 68,615*
Fidelity Ginnie Mae Portfolio 17,398* 22,227*
Fidelity Retirement Money Market Trust 39,645* 28,905*
Fidelity Growth & Income Portfolio 50,401*
Fidelity Overseas Fund 11,129*
Fidelity Intermediate Bond Fund 783
Fidelity Asset Manager 9,460*
-------- --------
$272,312 $155,787
======== ========
Investments at contract value:
Fixed Income Fund $ 73,730*
========
</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 FINANCIAL STATEMENTS
(Continued)
5. Benefit Payments
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 Plan filed a request with the Internal Revenue Service on March 31,
1995, for determination 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 Plan Administrator believes the Plan is
a qualified plan under the IRC.
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, 1994
<TABLE>
<CAPTION>
FACE AMOUNT
OR FAIR/CONTRACT
DESCRIPTION SHARES/UNITS VALUE COST
- ----------- ------------ ----- ----
(In thousands) (In thousands)
<S> <C> <C> <C>
Loral Corporation Common Stock 1,096,625 $ 41,534 $ 25,344
IBM Common Stock 57,730 4,243 3,713
Fidelity Magellan Fund 1,462,857 97,719 92,707
Fidelity Ginnie Mae Portfolio 1,741,523 17,398 18,478
Fidelity Retirement Money Market Trust 39,645,349 39,645 39,645
Fidelity Growth & Income Portfolio 2,389,797 50,401 51,778
Fidelity Overseas Fund 407,654 11,129 11,496
Fidelity Intermediate Bond Fund 79,670 783 832
Fidelity Asset Manager 684,008 9,460 10,038
Fixed Income Fund:
Fidelity Short-term Interest Fund 1,956,414 1,956 1,956
Guaranteed Investment Contracts:
Citibank, 8.99%, due April 5, 1995 10,667,597 10,668 10,668
Continental Assurance, 7.04%,
due September 30, 1997 5,114,048 5,114 5,114
Metropolitan Life, 9.03%, due January 3, 1995 6,254,826 6,255 6,255
New York Life, 7.56%, due June 30, 1995 10,591,021 10,591 10,591
New York Life, 5.35%, due June 30, 1995 13,968,318 13,968 13,968
Peoples Security Life, 7.24%, due March 31, 1999 6,203,936 6,204 6,204
Prudential Insurance Company of America
7.03%, due July 5, 1995 10,553,421 10,553 10,553
Prudential Insurance Company of America
6.49%, due March 31, 1995 8,421,353 8,421 8,421
Participant Loans 15,752,391 15,752
-------- --------
TOTAL $361,794 $327,761
======== ========
</TABLE>
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<PAGE> 14
LORAL MASTER SAVINGS PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
(In thousands)
<TABLE>
<CAPTION>
Gain
Purchase Selling Cost of (Loss)
Description Price Price Asset on Sale
- ----------- -------- ------- ------- -------
<S> <C> <C> <C> <C>
Loral Corporation Common Stock $10,142
Fidelity Magellan Fund 48,667
Fidelity Ginnie Mae Portfolio 5,950
Fidelity Retirement Money Market Trust 24,742
Fidelity Growth & Income Portfolio 54,979
Fidelity Overseas Fund 12,954
Fidelity Intermediate Bond Fund 1,235
Fidelity Asset Manager 12,224
Fixed Income Fund 79,723
</TABLE>
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<PAGE> 15
LORAL MASTER SAVINGS PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
(In thousands)
(Continued)
<TABLE>
<CAPTION>
Gain
Purchase Selling Cost of (Loss)
Description Price Price Asset on Sale
- ----------- -------- ------- ------- -------
<S> <C> <C> <C> <C>
Loral Corporation Common Stock $ 4,700 $ 2,851 $1,849
IBM Common Stock 536 503 33
Fidelity Magellan Fund 16,675 15,836 839
Fidelity Ginnie Mae Portfolio 9,283 9,505 (222)
Fidelity Retirement Money Market Trust 14,002 14,002
Fidelity Growth & Income Portfolio 3,179 3,201 (22)
Fidelity Overseas Fund 1,469 1,456 13
Fidelity Intermediate Bond Fund 383 403 (20)
Fidelity Asset Manager 2,138 2,170 (32)
Fixed Income Fund 5,993 5,993
</TABLE>
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<PAGE> 16
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Loral Corporation on Form S-8 (File No. 33-55661) of our report dated June 28,
1995, on our audits of the financial statements and supplemental schedules of
the Loral Master Savings Plan as of December 31, 1994 and 1993, and for the
year ended December 31, 1994, which report is included in this Annual Report
on Form 11-K.
COOPERS & LYBRAND L.L.P.
New York, New York
June 28, 1995
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