<PAGE> 1
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
-----------------
FORM 10-Q/A
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
GLOBALSTAR TELECOMMUNICATIONS LIMITED
Cedar House
41 Cedar Avenue
Hamilton HM12, Bermuda
Telephone: (441) 295-2244
Commission File Number 0-25456
Jurisdiction of incorporation: Bermuda
IRS identification number: 13-3795510
-----------------
GLOBALSTAR, L.P.
GLOBALSTAR CAPITAL CORPORATION
3200 Zanker Road
PO Box 640670
San Jose, CA 95164
Commission File Numbers: 333-25461
333-25461-01
Jurisdiction of incorporation: Delaware
IRS identification numbers: 13-3759824
13-3876323
The registrants have 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 or
such shorter period as the registrants were required to file such reports and
have been subject to such filing requirements for the past 90 days or such
shorter period.
As of October 31, 1997, there were 30,636,750 shares of Globalstar
Telecommunications Limited common stock outstanding.
==============================================================================
<PAGE> 2
This Amendment #1 to Form 10-Q filed on November 14, 1997 is being filed to
correct typographical errors in the Globalstar Telecommunications Limited,
Globalstar, L.P. and Globalstar Capital Corporation financial statements and
footnotes and to correct error in Exhibit 12.
<PAGE> 3
PART I. FINANCIAL INFORMATION
GLOBALSTAR TELECOMMUNICATIONS LIMITED
CONDENSED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
DECEMBER 31,
1996
SEPTEMBER 30, ------------
1997 (Note)
-------------
(Unaudited)
<S> <C> <C>
ASSETS
Investment in Globalstar, L.P.:
Redeemable preferred partnership interests........................ $ 302,826 $302,037
Ordinary partnership interests.................................... 303,568 158,038
Ordinary partnership warrants..................................... 12,210 22,601
-------- --------
Total assets.............................................. $ 618,604 $482,676
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Interest payable.................................................. $ 1,679 $ 1,679
Convertible preferred equivalent obligations ($310,000 principal
amount)........................................................... 301,147 300,358
Commitments and contingencies (Note 5)
Shareholders' equity:
Common stock, $1.00 par value, 200,000,000 and 60,000,000 shares
authorized (30,635,752 and 10,000,000 issued and outstanding)
at September 30, 1997 and December 31, 1996, respectively...... 30,635 10,000
Paid-in capital................................................... 318,626 175,750
Warrants.......................................................... 12,210 22,601
Accumulated deficit............................................... (45,693) (27,712)
-------- --------
Total shareholders' equity..................................... 315,778 180,639
-------- --------
Total liabilities and shareholders' equity................ $ 618,604 $482,676
======== ========
</TABLE>
- ---------------
Note: The December 31, 1996 balance sheet has been derived from audited
financial statements at that date.
See notes to condensed financial statements.
1
<PAGE> 4
GLOBALSTAR TELECOMMUNICATIONS LIMITED
CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- ---------------------
1997 1996 1997 1996
------- ------- -------- --------
<S> <C> <C> <C> <C>
Equity in net loss applicable to ordinary
partnership interests of Globalstar, L.P........ $ 7,278 $ 3,345 $ 17,981 $ 10,569
Dividend income on Globalstar, L.P. redeemable
preferred partnership interests................. (5,301) (5,300) (15,902) (12,019)
Interest expense on convertible preferred
equivalent obligations.......................... 5,301 5,300 15,902 12,019
------- ------- -------- --------
Net loss.......................................... $ 7,278 $ 3,345 $ 17,981 $ 10,569
======= ======= ======== ========
Net loss per share................................ $ 0.24 $ 0.17 $ 0.66 $ 0.53
======= ======= ======== ========
Weighted average shares used in computing net loss
per share....................................... 30,633 20,000 27,041 20,000
======= ======= ======== ========
</TABLE>
See notes to condensed financial statements.
2
<PAGE> 5
GLOBALSTAR TELECOMMUNICATIONS LIMITED
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
----------------------------------------
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
------------------ ------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $ (17,981) $ (10,569)
Equity in net loss of Globalstar, L.P..................... 17,981 10,569
Increase in redemption value of redeemable preferred
partnership interests.................................. (789) (595)
Dividends accrued on redeemable preferred partnership
interests in excess of cash received................... -- (1,676)
Amortization of convertible preferred equivalent
obligations issue costs................................ 789 595
Change in operating liability:
Interest payable....................................... -- 1,676
--------- ---------
Net cash provided by (used in) operating activities......... -- --
--------- ---------
Investing activities:
Purchase of warrants in Globalstar, L.P................... (12,210) --
Purchase of ordinary partnership interests in Globalstar,
L.P.................................................... (140,910) --
Purchase of redeemable preferred partnership interests in
Globalstar, L.P........................................ -- (299,500)
--------- ---------
Net cash used in investing activities....................... (153,120) (299,500)
--------- ---------
Financing activities:
Proceeds from issuance of warrants in connection with sale
of Globalstar, L.P.'s senior notes..................... 12,210 --
Proceeds from exercise of guarantee warrants.............. 110,911 --
Proceeds from exercise of GTL rights...................... 29,976 --
Proceeds from exercise of GTL stock options............... 23 --
Payment of debt offering costs............................ -- (10,500)
Sale of convertible preferred equivalent obligations...... -- 310,000
--------- ---------
Net cash provided by financing activities................... 153,120 299,500
--------- ---------
Net increase in cash and cash equivalents................... -- --
Cash and cash equivalents, beginning of period.............. -- --
--------- ---------
Cash and cash equivalents, end of period.................... $ -- $ --
========= =========
</TABLE>
See notes to condensed financial statements.
3
<PAGE> 6
GLOBALSTAR TELECOMMUNICATIONS LIMITED
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. The accompanying unaudited condensed financial statements have been prepared
by Globalstar Telecommunications Limited (the "Company" or "GTL") 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 keep the
information presented from being misleading. The results of operations for the
three and nine months ended September 30, 1997 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 on
Form 10-K.
2. ORGANIZATION AND BUSINESS
On November 23, 1994, GTL was incorporated as an exempted company under the
Companies Act 1981 of Bermuda. On February 14, 1995, the Company completed an
initial public offering of 20,000,000 shares of common stock (as adjusted for
two-for-one stock split, see Note 3) resulting in net proceeds of $185,750,000.
Effective February 22, 1995, the Company purchased 21.3% of the ordinary
partnership interests of Globalstar, L.P. ("Globalstar"), with the net proceeds
of the initial public offering. GTL's financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America.
The Company's sole business is acting as a general partner of Globalstar, a
development stage limited partnership, which is building and is preparing to
launch and operate a worldwide, low-earth orbit satellite-based wireless digital
telecommunications system.
At September 30, 1997, GTL held 29.3% of the ordinary partnership interests
and 100% of the Redeemable Preferred Partnership Interests in Globalstar, see
Note 4. The Company accounts for its investment in Globalstar on an equity
accounting basis, recognizing its allocated share of net loss in the period
incurred. The Company's allocated share of Globalstar's net loss applicable to
ordinary partnership interests from the period February 22, 1995 through
September 30, 1997 was $45,693,000.
3. SHAREHOLDERS' EQUITY
On May 28, 1997, GTL issued a two-for-one stock split to shareholders of
record on May 12, 1997 in the form of a 100% stock dividend. Accordingly, all
GTL share and per share amounts have been restated to reflect the stock split.
Prior to the two-for-one stock split, GTL's equity securities and convertible
securities were represented by equivalent Globalstar partnership interests on a
one-for-one basis. Globalstar's partnership interests were not affected by the
GTL stock split and, accordingly, GTL's equity securities and convertible
securities are now represented by equivalent Globalstar partnership interests on
a two-for-one basis.
4. EXERCISE OF THE GUARANTEE WARRANTS AND THE GTL RIGHTS
On March 25, 1997, holders of warrants issued in connection with the
Globalstar credit agreement exercised warrants to purchase 8,370,636 shares of
GTL common stock for $13.25 per share (as adjusted for two-for-one stock split,
see Note 3). GTL received proceeds of approximately $110.9 million. On May 5,
1997, GTL received approximately $30.0 million as a result of the exercise of
rights issued to shareholders to purchase 2,262,336 shares of GTL common stock
for $13.25 per share (as adjusted for two-for-one stock split, see Note 3). GTL
used the proceeds from the warrants and rights to purchase 5,316,486 Globalstar
ordinary partnership interests for $26.50 per interest, increasing GTL's
holdings of Globalstar's ordinary partnership interests from 10,000,000 (21.3%)
to 15,316,486 (29.3%).
4
<PAGE> 7
GLOBALSTAR TELECOMMUNICATIONS LIMITED
NOTES TO CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
5. SENIOR NOTES AND WARRANTS
On February 13, 1997, GTL and Globalstar sold units consisting of $500
million aggregate principal amount of Globalstar's 11 3/8% Senior Notes due 2004
and warrants to purchase 2,064,500 shares of GTL common stock (as adjusted for
two-for-one stock split, see Note 3) in a private offering. The notes are senior
in right of payment to the redeemable preferred partnership interests, may not
be redeemed prior to February 2002 and are subject to a prepayment premium prior
to 2004. Interest is paid semi-annually.
The warrants are exercisable on or after February 19, 1998 at a price of
$34.7875 per share (as adjusted for two-for-one stock split, see Note 3) and
expire on February 15, 2004. The warrants represent approximately 1.7% of
Globalstar's total partnership interests on a fully diluted basis. Any proceeds
from the exercise of the warrants will be used to purchase Globalstar ordinary
partnership interests.
On June 13, 1997, Globalstar sold $325 million principal amount of 11 1/4%
Senior Notes due 2004 in a private offering. The notes are senior in right of
payment to Globalstar's Redeemable Preferred Partnership Interests, may not be
redeemed prior to June 2002 and are subject to a prepayment premium prior to
2004. Interest is paid semi-annually.
The indentures for the notes contain certain covenants that among other
things limit the ability of Globalstar to incur additional debt, issue preferred
stock, or pay dividends and certain distributions. In certain limited
circumstances involving a change of control of Globalstar, as defined, each note
is redeemable at the option of the holder for 101% of the principal amount plus
accrued interest.
Globalstar will use the net proceeds of approximately $786 million from the
offerings, for the construction and deployment of the Globalstar System.
6. STOCK OPTION TRANSACTIONS
The Company and Globalstar have agreed that upon the exercise of options
under the GTL 1994 Stock Option Plan by optionees who are employees of
Globalstar or any of its controlling entities, Globalstar will issue to the
Company one Globalstar ordinary partnership interest for every two shares of
common stock issued to the optionee (as adjusted for two-for-one stock split,
see Note 3). During the third quarter, the Company issued 2,780 shares of common
stock to optionees at a price of $8.3125 per share. The Company purchased 1,390
Globalstar ordinary partnership interests with the proceeds from the issuance of
the common stock.
7. SUBSEQUENT EVENTS
On October 29, 1997, Globalstar sold $325 million principal amount of
10 3/4% Senior Notes due 2004 in a private offering. The notes are senior in
right of payment to Globalstar's Redeemable Preferred Partnership Interests, may
not be redeemed prior to November 2002 and are subject to a prepayment premium
prior to 2004. Interest is payable semi-annually.
The indenture for the notes contains certain covenants that, among other
things, limit the ability of Globalstar to incur additional debt, issue
preferred stock, or pay dividends and certain distributions. In certain limited
circumstances involving a change of control of Globalstar, as defined, each note
is redeemable at the option of the holder at 101% of the principal amount plus
accrued interest.
Globalstar will use the net proceeds of approximately $320 million for the
construction and deployment of the Globalstar System.
On November 11, 1997, Globalstar announced that it has rescheduled the
launch of its first four satellites to the first week of February 1998. The
eight-week postponement was adopted to allow for further testing and rehearsals
of the tracking, telemetry and control (TT&C) ground equipment that will monitor
the launch and
5
<PAGE> 8
GLOBALSTAR TELECOMMUNICATIONS LIMITED
NOTES TO CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
deployment of the Globalstar satellites. The postponement was adopted in order
to assure an adequate period of time to complete testing of Globalstar's TT&C
function prior to the initial launch and was not related to any segment
performance issue. All other elements of the project including system design,
satellite and CDMA technology, gateway design and handset production remain on
schedule and meet or exceed critical performance criteria.
Globalstar now expects to begin commercial service no later than in the
first quarter of 1999 following the launch of 44 satellites during 1998. The
remaining 12 satellites will be launched in early 1999 as scheduled.
The first four Globalstar satellites are at the Cape Canaveral launch site
and four additional satellites for the second launch have successfully completed
integration and testing. In addition, satellite and major subsystem assembly,
integration and testing necessary for the first Zenit launch is underway.
The first four Globalstar gateways are completed and ready to support the
first launch. Progress on the construction of an additional 34 gateways
continues as originally scheduled.
6
<PAGE> 9
GLOBALSTAR, L.P.
(A DEVELOPMENT STAGE LIMITED PARTNERSHIP)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except partnership interest data)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
<S> <C> <C>
(UNAUDITED) (NOTE)
<CAPTION>
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................................... $ 350,059 $ 21,180
Other current assets.............................................. 25,972 606
---------- --------
Total current assets...................................... 376,031 21,786
Property and equipment, net......................................... 2,067 1,720
Globalstar System Under Construction:
Space segment..................................................... 1,039,209 730,513
Ground segment.................................................... 305,377 160,520
---------- --------
1,344,586 891,033
Additional satellite spares......................................... 80,011 --
Deferred FCC license costs.......................................... 10,066 8,690
Deferred financing costs............................................ 15,867 19,577
Other assets........................................................ 806 107
---------- --------
Total assets.............................................. $ 1,829,434 $942,913
========== ========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable.................................................. $ 3,853 $ 4,401
Payable to affiliates............................................. 111,285 63,937
Accrued expenses.................................................. 4,208 6,929
Accrued interest on senior notes.................................. 17,773 --
---------- --------
Total current liabilities................................. 137,119 75,267
Deferred revenues................................................... 23,652 23,652
Vendor financing liability.......................................... 186,470 130,694
Borrowings under long-term revolving credit facility................ -- 96,000
Deferred interest payable........................................... 411 77
Senior notes payable ($500,000 principal amount).................... 474,582 --
Senior notes payable ($325,000 principal amount).................... 302,814 --
Commitments and contingencies (Note 7)
Redeemable preferred partnership interests (4,769,230 outstanding
$310,000 redemption value)........................................ 302,826 302,037
Ordinary partners' capital:
Ordinary partnership interests (52,317,876 and 47,000,000
outstanding at September 30, 1997 and December 31, 1996,
respectively).................................................. 389,350 292,585
Warrants.......................................................... 12,210 22,601
---------- --------
Total ordinary partners' capital............................... 401,560 315,186
---------- --------
Total liabilities and partners' capital................... $ 1,829,434 $942,913
========== ========
</TABLE>
- ---------------
Note: The December 31, 1996 balance sheet has been derived from audited
consolidated financial statements at that date.
See notes to condensed consolidated financial statements.
7
<PAGE> 10
GLOBALSTAR, L.P.
(A DEVELOPMENT STAGE LIMITED PARTNERSHIP)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per interest data)
(Unaudited)
<TABLE>
<CAPTION>
CUMULATIVE
THREE MONTHS ENDED NINE MONTHS ENDED MARCH 23, 1994
SEPTEMBER 30, SEPTEMBER 30, (COMMENCEMENT OF
------------------ ------------------ OPERATIONS) TO
1997 1996 1997 1996 SEPTEMBER 30, 1997
------- ------- ------- ------- ------------------
<S> <C> <C> <C> <C> <C>
Operating expenses:
Development costs..................... $20,013 $ 7,257 $47,823 $32,397 $174,108
Marketing, general and
administrative..................... 6,237 4,687 17,790 12,400 60,783
------- ------- ------- ------- --------
Total operating expenses...... 26,250 11,944 65,613 44,797 234,891
Interest income......................... 6,690 1,522 13,799 6,050 33,950
------- ------- ------- ------- --------
Net loss................................ 19,560 10,422 51,814 38,747 200,941
Preferred distribution and related
increase in redeemable preferred
partnership interests................. 5,300 5,300 15,901 12,019 33,224
------- ------- ------- ------- --------
Net loss applicable to ordinary
partnership interests................. $24,860 $15,722 $67,715 $50,766 $234,165
======= ======= ======= ======= ========
Net loss per ordinary partnership
interest.............................. $ 0.48 $ 0.33 $ 1.34 $ 1.08
======= ======= ======= =======
Weighted average interests used in
computing net loss per ordinary
partnership interest.................. 52,317 47,000 50,520 47,000
======= ======= ======= =======
</TABLE>
See notes to condensed consolidated financial statements.
8
<PAGE> 11
GLOBALSTAR, L.P.
(A DEVELOPMENT STAGE LIMITED PARTNERSHIP)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
CUMULATIVE
NINE MONTHS ENDED MARCH 23, 1994
SEPTEMBER 30, (COMMENCEMENT OF
---------------------- OPERATIONS) TO
1997 1996 SEPTEMBER 30, 1997
--------- --------- ------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss.............................................................. $ (51,814) $ (38,747) $ (200,941)
Deferred revenues..................................................... -- 1,739 23,652
Stock compensation transactions....................................... 969 -- 1,286
Depreciation and amortization......................................... 4,412 4,412 10,783
Changes in operating assets and liabilities:
Other current assets................................................ (25,366) (140) (25,972)
Other assets........................................................ (699) -- (806)
Accounts payable.................................................... (1,708) 2,513 1,510
Payable to affiliates............................................... 3,286 (9,972) 4,597
Accrued expenses.................................................... (2,721) (423) 4,208
--------- --------- -----------
Net cash used in operating activities................................... (73,641) (40,618) (181,683)
--------- --------- -----------
Investing activities:
Globalstar System under construction.................................. (450,097) (354,900) (1,341,130)
Payable to affiliates for Globalstar System under construction........ 44,062 33,065 97,888
Capitalized interest payable.......................................... 18,107 -- 18,184
Accounts payable...................................................... 1,160 (521) 1,835
Vendor financing liability............................................ 55,776 68,317 186,470
--------- --------- -----------
Cash used for Globalstar System....................................... (330,992) (254,039) (1,036,753)
Additional satellite spares........................................... (80,011) -- (80,011)
Purchases of property and equipment................................... (1,049) (665) (3,991)
Deferred FCC license costs............................................ (1,376) (1,125) (7,831)
Purchases of investments.............................................. -- -- (126,923)
Maturity of investments............................................... -- -- 126,923
--------- --------- -----------
Net cash used in investing activities................................... (413,428) (255,829) (1,128,586)
--------- --------- -----------
Financing activities:
Net proceeds from issuance of $500,000 11 3/8% Senior Notes........... 472,090 -- 472,090
Proceeds from warrants issued in connection with $500,000 11 3/8%
Senior Notes........................................................ 12,210 -- 12,210
Net proceeds from issuance of $325,000 11 1/4% Senior Notes........... 301,850 -- 301,850
Proceeds from exercise of warrants.................................... 140,887 -- 140,887
Proceeds from sale of partnership interests associated with exercise
of stock options.................................................... 23 -- 23
Deferred financing costs.............................................. -- (250) (2,125)
Proceeds of capital subscriptions receivable.......................... -- -- 282,441
Payment of accrued capital raising costs.............................. -- -- (2,400)
Sale of partnership interests to GTL.................................. -- -- 185,750
Sale of redeemable preferred partnership interests to GTL............. -- 299,500 299,500
Distributions on redeemable preferred partnership interests........... (15,112) (9,795) (29,945)
Prepaid interest on redeemable preferred partnership interests........ -- 47 47
Borrowings under long-term revolving credit facility.................. 65,000 10,000 171,000
Repayment of borrowings under long-term revolving credit facility..... (161,000) (10,000) (171,000)
--------- --------- -----------
Net cash provided by financing activities............................... 815,948 289,502 1,660,328
--------- --------- -----------
Net increase in cash and cash equivalents............................... 328,879 (6,945) 350,059
Cash and cash equivalents, beginning of period.......................... 21,180 71,602 --
--------- --------- -----------
Cash and cash equivalents, end of period................................ $ 350,059 $ 64,657 $ 350,059
========= ========= ===========
Noncash transactions:
Payable to affiliates................................................. $ 9,308
===========
Accrual of capital raising costs...................................... $ 2,400
===========
Deferred FCC license costs............................................ $ 2,235
===========
Warrants issued in exchange for debt guarantee........................ $ 22,601
===========
Increase in redemption value of preferred partnership interests....... $ 789 $ 2,271 $ 3,326
========= ========= ===========
Increase in carrying value of senior notes............................ $ 3,456 $ 3,456
========= ===========
</TABLE>
See notes to condensed consolidated financial statements.
9
<PAGE> 12
GLOBALSTAR, L.P.
(A DEVELOPMENT STAGE LIMITED PARTNERSHIP)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited condensed consolidated financial statements have
been prepared by Globalstar, L.P. ("Globalstar") pursuant to the rules of the
Securities and Exchange Commission ("SEC") and, in the opinion of Globalstar,
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. Globalstar believes
that the disclosures made are adequate to keep the information presented from
being misleading. The results of operations for the three and nine months ended
September 30, 1997 are not necessarily indicative of the results to be expected
for the full year. It is suggested that these consolidated financial statements
be read in conjunction with the audited consolidated financial statements and
notes thereto included in the Annual Report on Form 10-K for Globalstar
Telecommunications Limited ("GTL").
2. ORGANIZATION AND BUSINESS
Globalstar, founded by Loral Space & Communications Ltd. ("Loral") and
QUALCOMM Incorporated ("Qualcomm"), is building, and is preparing to launch and
operate a worldwide, low-earth orbit satellite-based wireless digital
telecommunications system (the "Globalstar System").
Globalstar, a Delaware limited partnership with a December 31 fiscal year
end, was formed in November 1993. It had no activities until March 23, 1994,
when it received capital subscriptions for $275 million and commenced
operations. The accompanying condensed consolidated financial statements reflect
the operations of Globalstar from that date.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Development Stage Company
Globalstar is devoting substantially all of its present efforts to the
design, licensing, construction, testing and financing of the Globalstar System,
and establishing its business. Its planned principal operations have not
commenced. Accordingly, Globalstar is a development stage company as defined in
Statement of Financial Accounting Standards No. 7 "Accounting and Reporting by
Development Stage Enterprises."
Globalstar may encounter problems, delays and expenses, many of which may
be beyond Globalstar's control. These may include, but are not limited to,
problems related to technical development of the system, testing, regulatory
compliance, manufacturing and assembly, the competitive and regulatory
environment in which Globalstar will operate, marketing problems and costs and
expenses that may exceed current estimates. There can be no assurance that
substantial delays in any of the foregoing matters would not delay Globalstar's
achievement of profitable operations.
Notes Payable
Interest accrues on the $500 million and $325 million principal amount
Senior Notes at 11 3/8% and 11 1/4% per annum, respectively. Globalstar is
increasing the carrying value of the senior notes payable to their ultimate
redemption value.
Reclassifications
Certain reclassifications have been made to conform prior amounts to the
current period presentation.
10
<PAGE> 13
GLOBALSTAR, L.P.
(A DEVELOPMENT STAGE LIMITED PARTNERSHIP)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. GLOBALSTAR SYSTEM UNDER CONSTRUCTION
Total System Cost
On November 11, 1997, Globalstar announced that it has rescheduled the
launch of its first four satellites to the first week of February 1998. The
eight-week postponement was adopted to allow for further testing and rehearsals
of the tracking, telemetry and control (TT&C) ground equipment that will monitor
the launch and deployment of the Globalstar satellites. The postponement was
adopted in order to assure an adequate period of time to complete testing of
Globalstar's TT&C function prior to the initial launch and was not related to
any segment performance issue. All other elements of the project including
system design, satellite and CDMA technology, gateway design and handset
production remain on schedule and meet or exceed critical performance criteria.
Globalstar now expects to begin commercial service no later than in the
first quarter of 1999 following the launch of 44 satellites during 1998. The
remaining 12 satellites will be launched in early 1999 as scheduled.
The first four Globalstar satellites are at the Cape Canaveral launch site
and four additional satellites for the second launch have successfully completed
integration and testing. In addition, satellite and major subsystem assembly,
integration and testing necessary for the first Zenit launch is underway.
The first four Globalstar gateways are completed and ready to support the
first launch. Progress on the construction of an additional 34 gateways
continues as originally scheduled.
Globalstar's current budgeted expenditures for the design, construction and
deployment of the Globalstar System, including working capital, cash interest on
anticipated borrowings and operating expenses after giving effect to the
rescheduled launch is approximately $2.7 billion. Most of the ground segment
costs are incurred under a cost-plus contract with Qualcomm. As a result of
added enhanced capabilities, additional test requirements and cost growth in the
development of the ground system, ground segment costs have increased. As a
result of cost containment and arrangements with Qualcomm for $100 million of
contract payment deferrals, Globalstar expects the total ground segment
expenditure to be $710 million, net of such deferrals, through the In-Service
Date.
In addition, Globalstar has agreed to purchase from SS/L eight additional
spare satellites at a cost estimated at $175 million. Further, in order to
accelerate the deployment of gateways around the world Globalstar has agreed to
finance approximately $80 million of the cost of up to 32 of the 38 initial
gateways ordered by Globalstar service providers. Globalstar expects to recover
its investment in this gateway financing program from the resale of the gateways
to service providers.
Actual amounts may vary from these estimates and additional funds would be
required in the event of unforeseen delays, cost overruns, launch failures or
other technological risks or adverse regulatory developments, or to meet
unanticipated expenses.
As of October 31, 1997, Globalstar has raised or received financing
commitments for approximately $2.6 billion.
5. PARTNERSHIP INTERESTS
On May 28, 1997, GTL issued a two-for-one stock split. Prior to the
two-for-one stock split, GTL's equity securities and convertible securities were
represented by equivalent Globalstar partnership interests on a one-for-one
basis. Globalstar's partnership interests were not affected by the GTL stock
split and, accordingly, GTL's equity securities and convertible securities are
now represented by equivalent Globalstar partnership interests on a two-for-one
basis.
11
<PAGE> 14
GLOBALSTAR, L.P.
(A DEVELOPMENT STAGE LIMITED PARTNERSHIP)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. EXERCISE OF GUARANTEE WARRANTS AND GTL RIGHTS
On March 25, 1997, holders of warrants issued in connection with the
Globalstar credit agreement exercised warrants to purchase 8,370,636 shares of
GTL common stock for $13.25 per share (as adjusted for two-for-one stock split,
see Note 5). GTL received proceeds of approximately $110.9 million. On May 5,
1997, GTL received proceeds of approximately $30.0 million as a result of the
exercise of rights to purchase 2,262,336 shares of GTL common stock for $13.25
per share (as adjusted for two-for-one stock split, see Note 5). GTL used the
proceeds from the warrants and the rights to purchase 5,316,486 Globalstar
ordinary partnership interests for $26.50 per interest, increasing GTL's
holdings of Globalstar's ordinary partnership interests from 21.3% to 29.3%.
7. SENIOR NOTES AND WARRANTS
On February 13, 1997, GTL and Globalstar sold units consisting of $500
million aggregate principal amount of Globalstar's 11 3/8% Senior Notes due 2004
and warrants to purchase 2,064,500 shares of GTL common stock (as adjusted for
two-for-one stock split, see Note 5) in a private offering. The notes are senior
in right of payment to the redeemable preferred partnership interests, and may
not be redeemed prior to February 2002 and are subject to a prepayment premium
prior to 2004. Interest is paid semi-annually.
The warrants are exercisable on or after February 19, 1998 at a price of
$34.7875 per share (as adjusted for two-for-one stock split, see Note 5) and
expire on February 15, 2004. The warrants represent approximately 1.7% of
Globalstar's total partnership interests on a fully diluted basis. Any proceeds
from the exercise of the warrants will be used to purchase Globalstar ordinary
partnership interests.
On June 13, 1997, Globalstar sold $325 million principal amount of 11 1/4%
Senior Notes due 2004 in a private offering. The notes are senior in right of
payment to the redeemable preferred partnership interests, and may not be
redeemed prior to June 2002 and are subject to a prepayment premium prior to
2004. Interest is paid semi-annually.
The indentures for the notes contain certain covenants that, among other
things, limit the ability of Globalstar to incur additional debt, issue
preferred stock, or pay dividends and certain distributions. In certain limited
circumstances involving a change of control of Globalstar, as defined, each note
is redeemable at the option of the holder for 101% of the principal amount plus
accrued interest.
Globalstar will use the net proceeds of approximately $786 million from the
offerings for the construction and deployment of the Globalstar System.
8. STOCK OPTION TRANSACTIONS
The Company and Globalstar have agreed that upon the exercise of options
under the GTL 1994 Stock Option Plan by optionees who are employees of
Globalstar or any of its controlling entities, Globalstar will issue to the
Company one Globalstar ordinary partnership interest for every two shares of
common stock issued to the optionee (as adjusted for two-for-one stock split,
see Note 5). During the third quarter, the Company issued 2,780 shares of common
stock to optionees at a price of $8.3125 per share. The Company purchased 1,390
Globalstar ordinary partnership interests with the proceeds from the issuance of
the common stock.
9. SUBSEQUENT EVENTS
On October 29, 1997, Globalstar sold $325 million principal amount of
10 3/4% Senior Notes due 2004 in a private offering. The notes are senior in
right of payment to the redeemable preferred partnership interests and
12
<PAGE> 15
GLOBALSTAR, L.P.
(A DEVELOPMENT STAGE LIMITED PARTNERSHIP)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
may not be redeemed prior to November 2002 and are subject to a prepayment
premium prior to 2004. Interest is payable semi-annually.
The indenture for the notes contains certain covenants that, among other
things, limit the ability of Globalstar to incur additional debt, issue
preferred stock, or pay dividends and certain distributions. In certain limited
circumstances involving a change of control of Globalstar, as defined, each note
is redeemable at the option of the holder at 101% of the principal amount plus
accrued interest.
Globalstar will use the net proceeds of approximately $320 million for the
construction and deployment of the Globalstar System.
13
<PAGE> 16
GLOBALSTAR CAPITAL CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF GLOBALSTAR, L.P.)
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Receivable from Parent............................................. $ 1,000 $1,000
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
Commitments and Contingencies (Note 2)
Stockholder's equity
Common stock, par value $.10; 1,000 shares authorized, 100 shares
issued and outstanding........................................ $ 10 $ 10
Paid-in capital.................................................. 990 990
--------- ------- --
$ 1,000 $1,000
========= =========
</TABLE>
See notes to balance sheets.
14
<PAGE> 17
GLOBALSTAR CAPITAL CORPORATION
(A WHOLLY-OWNED SUBSIDIARY OF GLOBALSTAR, L.P.)
NOTES TO BALANCE SHEETS
1. ORGANIZATION
Globalstar Capital Corporation ("Globalstar Capital"), a wholly-owned
subsidiary of Globalstar, L.P. ("Globalstar") was formed on July 24, 1995 for
the primary purpose of serving as a co-issuer and co-obligor with respect to
certain debt obligations of Globalstar.
2. COMMITMENTS AND CONTINGENCIES
Globalstar Capital is a co-obligor on the following Globalstar borrowings:
11 3/8% $500 MILLION SENIOR NOTES DUE 2004
On February 13, 1997, Globalstar sold $500 million principal amount of its
11 3/8% Senior Notes due 2004 in a private offering. The notes are senior in
right of payment to Globalstar's Redeemable Preferred Partnership Interests, may
not be redeemed prior to February 2002 and are subject to a prepayment premium
prior to 2004. Interest is paid semi-annually.
11 1/4% $325 MILLION SENIOR NOTES DUE 2004
On June 13, 1997, Globalstar sold $325 million principal amount of its
11 1/4% Senior Notes due 2004 in a private offering. The notes are senior in
right of payment to Globalstar's Redeemable Preferred Partnership Interests, may
not be redeemed prior to June 2002 and are subject to a prepayment premium prior
to 2004. Interest is paid semi-annually.
The indentures for the 11 3/8% Senior Notes and the 11 1/4% Senior Notes
contain certain covenants that, among other things, limit the ability of
Globalstar to incur additional debt, issue preferred stock, or pay dividends and
certain distributions. In certain limited circumstances involving a change of
control of Globalstar, as defined, each note is redeemable at the option of the
holder for 101% of the principal amount plus accrued interest.
Globalstar Capital is a guarantor of a $250 million credit agreement
between Globalstar and a group of banks. At September 30, 1997, there were no
borrowings outstanding under this agreement. At December 31, 1996 approximately
$96 million was outstanding under this agreement.
3. SUBSEQUENT EVENT
On October 29, 1997, Globalstar Capital and Globalstar co-issued $325
million principal amount of 10 3/4% Senior Notes due 2004 under terms generally
consistent with the 11 3/8% Senior Notes and 11 1/4% Senior Notes.
15
<PAGE> 18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GTL is a holding company that acts as a general partner of Globalstar and
has no other business. The Company's sole asset is its investment in Globalstar
and GTL's results of operations reflect its share of the results of operations
of Globalstar on an equity accounting basis. Accordingly, management's
discussion and analysis addresses the financial condition and results of
operations of Globalstar.
Except for the historical information contained herein, the matters
discussed in this Management's Discussion and Analysis of Financial Condition
and Results of Operations, and elsewhere in this Form 10-Q, are forward-looking
statements that involve risks and uncertainties, many of which may be beyond
Globalstar's control. These may include, but are not limited to, problems
relating to technical development of the system, testing, regulatory compliance,
manufacturing and assembly, the competitive and regulatory environment in which
Globalstar will operate, marketing problems and costs and expenses that may
exceed current estimates. The actual results that Globalstar achieves may differ
materially from any forward-looking statements due to such risks and
uncertainties. See the section of GTL's annual report on Form 10-K for the
fiscal year ended December 31, 1996 entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Certain Factors
That May Affect Future Results" and the section of Globalstar's prospectus dated
July 16, 1997, entitled "Risk Factors."
On November 11, 1997, Globalstar announced that it has rescheduled the
launch of its first four satellites to the first week of February 1998. The
eight-week postponement was adopted to allow for further testing and rehearsals
of the tracking, telemetry and control (TT&C) ground equipment that will monitor
the launch and deployment of the Globalstar satellites. The postponement was
adopted in order to assure an adequate period of time to complete testing of
Globalstar's TT&C function prior to the initial launch and was not related to
any segment performance issue. All other elements of the project including
system design, satellite and CDMA technology, gateway design and handset
production remain on schedule and meet or exceed critical performance criteria.
Globalstar now expects to begin commercial service no later than in the
first quarter of 1999 following the launch of 44 satellites during 1998. The
remaining 12 satellites will be launched in early 1999 as scheduled.
The first four Globalstar satellites are at the Cape Canaveral launch site
and four additional satellites for the second launch have successfully completed
integration and testing. In addition, satellite and major subsystem assembly,
integration and testing necessary for the first Zenit launch is underway.
The first four Globalstar gateways are completed and ready to support the
first launch. Progress on the construction of an additional 34 gateways
continues as originally scheduled.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1997, cash and cash equivalents increased to $350.1
million from $21.2 million at December 31, 1996. The net increase is a result of
the net proceeds of $773.9 million received from issuance of Globalstar's
11 1/4% and 11 3/8% Senior Notes, $12.2 million received from the sale of
warrants to GTL and, $140.9 million received from the exercise of the Guarantee
Warrants and GTL Rights by GTL, offset by expenditures for the Globalstar System
Under Construction of $331.0 million, expenditures for the additional spare
satellites of $80.0 million, net cash used in operating activities of $73.6
million, preferred distributions on the Redeemable Preferred Partnership
Interests of $15.1 million and net repayments of debt of $96.0 million.
Accounts payable, payables to affiliates and accrued expenses and interest
have increased by $61.8 million from $75.3 million at December 31, 1996 to
$137.1 million at September 30, 1997, as a result of the timing of payments to
Globalstar contractors and accrued interest on the senior notes.
Through September 30, 1997, Globalstar incurred costs of approximately $1.5
billion for the design and construction of the space and ground segments. Costs
incurred to date during fiscal year 1997 were approximately $504 million.
16
<PAGE> 19
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- CONTINUED
Globalstar's current budgeted expenditures for the design, construction and
deployment of the Globalstar System, including working capital, cash interest on
anticipated borrowings and operating expenses, after giving effect to the
rescheduled launch, are approximately $2.7 billion. Most of the ground segment
costs are incurred under a cost-plus contract with Qualcomm. As a result of
added enhanced capabilities, additional test requirements and cost growth in the
development of the ground system, ground segment costs have increased. As a
result of cost containment and arrangements with Qualcomm for $100 million of
contract payment deferrals, Globalstar expects the total ground segment
expenditure to be $710 million, net of such deferrals, through the In-Service
Date.
Globalstar has also agreed to purchase from SS/L eight additional spare
satellites at a cost estimated at $175 million. Further, in order to accelerate
the deployment of gateways around the world, Globalstar has agreed to finance
approximately $80 million of the cost of up to 32 of the 38 initial gateways
ordered by Globalstar service providers. Globalstar expects to recover its
investment in this gateway financing program from the resale of the gateways to
service providers.
As of October 31, 1997, Globalstar had raised or received financing
commitments for approximately $2.6 billion.
RESULTS OF OPERATIONS
Globalstar is a development stage partnership and has not commenced
commercial operations. For the period March 23, 1994 (commencement of
operations) to September 30, 1997, Globalstar has recorded cumulative net losses
applicable to ordinary partnership interests of $234.2 million. The net loss
applicable to ordinary partnership interests for the nine months ended September
30, 1997 increased to $67.7 million as compared to $50.8 million for the nine
months ended September 30, 1996. The net loss increased primarily as a result of
increased activity in the development of Globalstar user terminals, increased
in-house engineering and marketing efforts and a full nine months distribution
on the RPPI's in 1997, versus a distribution for seven months in 1996, as the
RPPI's were issued in March 1996, offset by increased interest income. The net
loss applicable to ordinary partnership interests for the three months ended
September 30, 1997 increased to $24.9 million from $15.7 million in the prior
year primarily due to increased activity in the development of Globalstar user
terminals and Globalstar's continuing in-house engineering and marketing
efforts. Globalstar is expending significant funds for the design, construction,
testing and deployment of the Globalstar System and expects such losses to
continue until commencement of commercial operations.
Globalstar has earned interest income of $34.0 million on cash balances and
short term investments since commencement of operations. Interest income during
the nine months ended September 30, 1997 was $13.8 million as compared to $6.1
million for the nine months ended September 30, 1996. Interest income during the
three months ended September 30, 1997 was $6.7 million as compared to $1.5
million for the three months ended September 30, 1996. Interest income for the
current period increased as a result of higher average cash balances outstanding
during 1997.
Operating Expenses. Globalstar's development costs since commencement of
operations were $174.1 million. Development costs during the nine months ended
September 30, 1997 were $47.8 million as compared to $32.4 million for the nine
months ended September 30, 1996. Development costs during the three months ended
September 30, 1997 were $20.0 million as compared to $7.3 million for the three
months ended September 30, 1996. Development costs for the current period
increased as a result of increased activity in the development of Globalstar
user terminals.
Marketing, general and administrative expenses since commencement of
operations were $460.8 million and were $17.8 million and $12.4 million for the
nine months ended September 30, 1997 and 1996, respectively. Marketing, general
and administrative expenses were $6.2 million and $4.7 million for the three
months ended September 30, 1997 and 1996, respectively. The increase in
marketing, general and administra-
17
<PAGE> 20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- CONTINUED
tive expenses is primarily the result of an increase in the number of employees
as Globalstar gears up for operations and increased advertising costs.
Depreciation. Globalstar intends to capitalize all costs, including
interest as applicable, associated with the design, construction and deployment
of the Globalstar System, except costs associated with the development of the
Globalstar user terminals and certain technologies under a cost sharing
arrangement with Qualcomm. Globalstar will not record depreciation expense on
the Globalstar System Under Construction until the commencement of commercial
operations, as assets are placed into service.
Income Taxes. Globalstar was organized as a limited partnership. As such,
no income tax provision (benefit) is included in the accompanying financial
statements since U.S. income taxes are the responsibility of its partners.
Generally, taxable income (loss), deductions and credits of Globalstar will be
passed through to its partners.
FINANCIAL ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 "Earnings Per Share" ("SFAS 128"),
which is required to be adopted for fiscal periods ending after December 15,
1997. SFAS 128 establishes the accounting standards for computing and presenting
earnings per share. GTL and Globalstar believe that the adoption of SFAS 128
will not have a material effect on the reported loss per share or loss per
interest of GTL or Globalstar, respectively.
18
<PAGE> 21
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:
Exhibit 12 -- Statement Regarding Computation of Ratios
Exhibit 27 -- Financial Data Schedule
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.
GLOBALSTAR TELECOMMUNICATIONS LIMITED
GLOBALSTAR, L.P.
GLOBALSTAR CAPITAL CORPORATION
------------------------------------------
Registrants
Nicholas C. Moren
------------------------------------------
Treasurer
(Principal Financial Officer)
and
Registrants' Authorized Officer
Date: November 14, 1997
19
<PAGE> 22
EXHIBIT INDEX
Exhibit 12 -- Statement Regarding Computation of Ratios
Exhibit 27.1 -- Financial Data Schedule
Exhibit 27.2 -- Financial Data Schedule
Exhibit 27.3 -- Financial Data Schedule
<PAGE> 1
EXHIBIT 12
STATEMENT REGARDING COMPUTATION OF RATIOS
(IN THOUSANDS, EXCEPT RATIOS)
GLOBALSTAR TELECOMMUNICATIONS LIMITED
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, 1997
------------------
<S> <C>
Earnings
Net loss............................................................... $(17,981)
Add:
Equity in loss of Globalstar, L.P............................ 17,981
Interest expense............................................. 15,902
---------
Earnings available to cover fixed charges................................... $ 15,902
=========
Fixed charges -- interest expense........................................... $ 15,902
=========
Ratio of earnings to fixed charges.......................................... 1x
=========
</TABLE>
- ---------------
(1) The earnings of GTL available to cover fixed charges, consist solely of
dividends from Globalstar, L.P. on the Redeemable Preferred Partnership
Interests held by GTL.
GLOBALSTAR, L.P.
DEFICIENCY OF EARNINGS TO COVER FIXED CHARGES
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, 1997
------------------
<S> <C>
Net loss.................................................................... $(51,814)
Capitalized interest........................................................ (60,747)
Dividends on Redeemable Preferred Partnership Interests..................... (15,901)
--------
Deficiency of earnings to cover fixed charges............................... $(128,462)
========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary consolidated financial information extracted from
the financial statements of Globalstar Telecommunications Limited for the
quarter ended September 30, 1997 and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<CIK> 0000933401
<NAME> GLOBALSTAR TELECOMMUNICATIONS LIMITED
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 618,604
<CURRENT-LIABILITIES> 1,679
<BONDS> 0
0
301,147
<COMMON> 30,635
<OTHER-SE> 285,143
<TOTAL-LIABILITY-AND-EQUITY> 618,604
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,902
<INCOME-PRETAX> (17,981)
<INCOME-TAX> 0
<INCOME-CONTINUING> (17,981)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17,981)
<EPS-PRIMARY> (0.66)
<EPS-DILUTED> (0.66)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary consolidated financial information extracted
from the financial statements of Globalstar, L.P. for the quarter ended
September 30, 1997 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0001037927
<NAME> GLOBALSTAR, L.P.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 350,059
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 25,972
<PP&E> 1,428,588
<DEPRECIATION> 1,924
<TOTAL-ASSETS> 1,829,434
<CURRENT-LIABILITIES> 137,119
<BONDS> 777,396
0
302,826
<COMMON> 401,560
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,829,434
<SALES> 0
<TOTAL-REVENUES> 13,799
<CGS> 65,613
<TOTAL-COSTS> 65,613
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (51,814)
<INCOME-TAX> 0
<INCOME-CONTINUING> (51,814)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (67,715)
<EPS-PRIMARY> (1.34)
<EPS-DILUTED> (1.34)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary consolidated financial information extracted
from the financial statements of Globalstar Capital Corporation for the quarter
ended September 30, 1997 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0001037991
<NAME> GLOBALSTAR CAPITAL CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1
<TOTAL-LIABILITY-AND-EQUITY> 1
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
