NEW YORK, Aug. 7 /PRNewswire-FirstCall/ -- Loral Space & Communications Inc. today reported its financial results for the three and six months ended June 30, 2006.
Total consolidated revenue for the second quarter, driven by continued robust new awards for satellite construction contracts at Space Systems/Loral (SS/L), rose 41 percent to $193 million from $137 million in the same period last year. For the first half of 2006, Loral's revenue totaled $365 million, a 36 percent increase over the $269 million reported in the first six months of 2005.
Loral's second quarter Adjusted EBITDA (1) was $17 million, a 66 percent improvement over last year's second quarter, driven primarily by increased sales at SS/L and lower expenses at Loral's fixed satellite services (FSS) unit, Loral Skynet. First half 2006 Adjusted EBITDA totaled $28 million, a 79 percent increase over first half 2005 Adjusted EBITDA of $16 million.
Loral's loss from continuing operations for the second quarter was $11 million, versus $19 million in the second quarter of 2005. For the first half of 2006, Loral's loss from continuing operations was $27 million, compared to $45 million for the same period in 2005.
As of June 30, 2006, Loral had $342 million in cash and cash equivalents. Loral's net funded backlog at the end of the quarter was $1.4 billion.
"Loral's progress continues to be reflected in our improved results, notably at our satellite manufacturing business, which is experiencing a significant increase in business," said Michael B. Targoff, Loral's chief executive officer. "SS/L's reliable, technologically advanced high-power satellites continue to be the satellite of choice for the demanding requirements of today's communications networks and new direct-to-user and mobile satellite services applications.
"Our fixed satellite services business is a long-term driver of value at the company and Loral Skynet's steady and predictable results form a solid foundation as we explore further strategic and growth opportunities in the industry."
Loral emerged from bankruptcy on November 21, 2005 and its financial statements reflect fresh-start accounting effective October 1, 2005. Comparisons to second quarter 2005 financial information throughout this release refer to the results of Loral prior to its emergence. All undisputed pre-petition claims payable in cash and chapter 11 expenses have been satisfied with the exception of $3 million to be paid later in 2006. In addition, after giving effect to the next distribution of stock on or about October 1, 2006, Loral will have distributed 99 percent of the 20 million shares of common stock and 99 percent of the $200 million in Loral Skynet preferred stock issued under its Plan of Reorganization. The remaining stock will be distributed quarterly upon resolution of outstanding disputed claims.
Business Unit Review
Satellite Manufacturing
Benefiting from new orders and a strong backlog, SS/L second quarter 2006 revenues before eliminations rose to $163 million, a 53 percent improvement over the second quarter of 2005. For the first half, revenues at SS/L totaled $303 million, an increase of 47 percent from the first six months of 2005.
SS/L's Adjusted EBITDA before eliminations in the second quarter was $12 million, versus $6 million in the year-ago quarter. SS/L's increase in Adjusted EBITDA was driven primarily by increased sales from satellite construction contracts signed in 2005 and 2006.
During the second quarter, SS/L booked three new satellite construction contracts: AsiaSat 5 for Asia Satellite Telecommunications Company Limited (AsiaSat), Sirius FM-5 for Sirius Satellite Radio and a new 1300-class satellite for a subsidiary of EchoStar Communications Corporation. Together with Telstar 11N in the first quarter, SS/L has booked a total of four new awards to date in 2006. As a result, backlog at SS/L at June 30, 2006 rose to $1.1 billion, including intercompany backlog of $163 million. Intercompany backlog includes the Telstar 11N satellite being built for Loral Skynet. At year-end 2005, SS/L's backlog totaled $815 million, with intercompany backlog of $0.3 million.
SS/L continued an active 2006 launch schedule in the quarter with the successful launches of Satmex-6 and Galaxy 16, bringing the total number of launches of SS/L-built satellites in 2006 to three. Two additional SS/L-built satellites are scheduled for launch this year, beginning with DIRECTV-9S in the fall.
Satellite Services
Despite the sale of its business television and teleport businesses, Loral Skynet's revenues before eliminations for the quarter were $38 million, remaining level with revenues in the year-ago period and up slightly from the first quarter of 2006. For the first half of the year, revenues before eliminations totaled $74 million, compared to $73 million for the same period in 2005.
In the second quarter, Adjusted EBITDA before eliminations was $14 million compared to $12 million in the second quarter of 2005. Utilization on Loral Skynet's satellite fleet at the end of the second quarter was 75 percent compared to 66 percent at the end of the second quarter of 2005.
Satellite services backlog at June 30, 2006 was $426 million, including intercompany backlog of $19 million. At year-end 2005, satellite services backlog was $453 million, including intercompany backlog of $20 million.
During the quarter, Skynet continued its success in marketing Ku-band on its Telstar 14/Estrela do Sul 1 satellite to customers in Brazil and South America, traditionally a C-band market. Skynet recently announced deals with Vicom, a subsidiary of COMSAT International, for banking and lottery services in Brazil, and with Chile's Empresa Nacional de Telecomunicaciones S.A. (ENTEL) for video distribution, Internet access and data transmission services.
A full discussion of Loral's results is contained in the company's Form 10-Q, filed today with the Securities and Exchange Commission (SEC) and available on Loral's web site at http://www.loral.com/ or from the SEC at http://www.sec.gov/.
Loral Space & Communications is a satellite communications company. It owns and operates a fleet of telecommunications satellites used to broadcast video entertainment programming, distribute broadband data, and provide access to Internet services and other value-added communications services. Loral also is a world-class leader in the design and manufacture of satellites and satellite systems for commercial and government applications including direct-to-home television, broadband communications, wireless telephony, weather monitoring and air traffic management. For more information, visit Loral's web site at http://www.loral.com/.
This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In addition, Loral Space & Communications Inc. or its representatives have made or may make forward-looking statements, orally or in writing, which may be included in, but are not limited to, various filings made from time to time with the Securities and Exchange Commission, press releases or oral statements made with the approval of an authorized executive officer of the company. Actual results could differ materially from those projected or suggested in any forward-looking statements as a result of a wide variety of factors and conditions. Many of these factors and conditions are described under the caption "Risk Factors" in each of the company's annual report on Form 10-K for the fiscal year ended December 31, 2005 and its quarterly reports on Form 10-Q for subsequent periods. The reader is specifically referred to these documents, as well as the company's other filings with the Securities and Exchange Commission.
(1) The common definition of EBITDA is "Earnings Before Interest, Taxes, Depreciation and Amortization". In evaluating financial performance, we use revenues and operating income (loss) before depreciation and amortization, including amortization of stock option compensation, and reorganization expenses due to bankruptcy ("Adjusted EBITDA") as the measure of a segment's profit or loss. Adjusted EBITDA is equivalent to the common definition of EBITDA before: reorganization expenses due to bankruptcy; gain on discharge of pre-petition obligations and fresh-start adjustments; gain (loss) on investments; other income (expense); equity in net income (losses) of affiliates; and minority interest, net of tax. Interest expense has been excluded from Adjusted EBITDA to maintain comparability with the performance of competitors using similar measures with different capital structures. During the period we were in chapter 11, we only recognized interest expense on the actual interest payments we made. During this period, we did not make any further interest payments on our debt obligations after March 17, 2004, the date we repaid our secured bank debt. Reorganization expenses due to bankruptcy were only incurred during the period we were in chapter 11. These expenses have been excluded from Adjusted EBITDA to maintain comparability with our results during periods we were not in chapter 11 and with the results of competitors using similar measures. Adjusted EBITDA should be used in conjunction with U.S. GAAP financial measures and is not presented as an alternative to cash flow from operations as a measure of our liquidity or as an alternative to net income as an indicator of our operating performance.
We believe the use of Adjusted EBITDA along with U.S. GAAP financial measures enhances the understanding of our operating results and is useful to investors in comparing performance with competitors, estimating enterprise value and making investment decisions. Adjusted EBITDA allows investors to compare operating results of competitors exclusive of depreciation and amortization, net losses of affiliates and minority interest. Adjusted EBITDA is a useful tool given the significant variation that can result from the timing of capital expenditures, the amount of intangible assets recorded, the differences in assets' lives, the timing and amount of investments, and effects of investments not managed by us. Adjusted EBITDA as used here may not be comparable to similarly titled measures reported by competitors. We also use Adjusted EBITDA to evaluate operating performance of our segments, to allocate resources and capital to such segments, to measure performance for incentive compensation programs, and to evaluate future growth opportunities.
A full reconciliation of Adjusted EBITDA to net loss is included in the accompanying tables to this report and also in Loral's quarterly report on Form 10-Q, available on the company's web site at http://www.loral.com/ or on the SEC's EDGAR service at http://www.sec.gov/.
LORAL SPACE & COMMUNICATIONS INC.
Statements of Operations
(In millions)
Revenues
Successor Predeccessor Successor Predeccessor
Registrant Registrant Registrant Registrant
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
Satellite Services $ 37.9 $ 37.5 $ 74.1 $ 73.4
Satellite Manufacturing 163.3 106.6 302.6 206.2
Segment revenues 201.2 144.1 376.7 279.6
Eliminations (8.3) (7.3) (11.8) (10.5)
Revenues as reported $192.9 $136.8 $364.9 $269.1
Adjusted EBITDA
Successor Predeccessor Successor Predeccessor
Registrant Registrant Registrant Registrant
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
Satellite Services $ 14.1 $ 11.8 $ 26.7 $ 20.9
Satellite Manufacturing 11.8 6.2 17.6 10.5
Corporate expenses (1) (7.3) (6.7) (14.2) (12.4)
Segment Adjusted EBITDA
before eliminations 18.6 11.3 30.1 19.0
Eliminations (1.5) (1.0) (2.3) (3.5)
Adjusted EBITDA $ 17.1 $ 10.3 $ 27.8 $ 15.5
Reconciliation of Adjusted EBITDA to Net Loss (in millions)
Successor Predeccessor Successor Predeccessor
Registrant Registrant Registrant Registrant
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
Adjusted EBITDA $ 17.1 $ 10.3 $ 27.8 $ 15.5
Depreciation and
amortization (17.6) (20.0) (34.5) (43.6)
Reorganization expenses
due to bankruptcy (1) - (7.0) - (12.6)
Operating loss from
continuing operations (0.5) (16.7) (6.7) (40.7)
Interest and investment
income 5.0 2.0 9.6 3.8
Interest expense (5.5) (1.5) (10.7) (2.4)
Other income (expense) (0.1) - 0.9 (0.6)
Income tax provision (2.4) (1.8) (5.0) (3.5)
Equity in net losses of
affiliates (1.9) (0.8) (3.3) (1.6)
Minority interest (2) (6.0) - (12.0) -
Loss from continuing
operations (11.4) (18.8) (27.2) (45.0)
Gain on sale of
discontinued operations,
net of taxes - 11.4 - 11.4
Net loss $(11.4) $(7.4) $(27.2) $(33.6)
(1) Reorganization expenses due to bankruptcy are only reflected during
the period we were in chapter 11. After the adoption of fresh-start
accounting on October 1, 2005, continuing expenses related to the
remaining bankruptcy related matters are included in Corporate
expenses and totaled $2 million and $3 million for the three and six
months ended June 30, 2006, respectively.
(2) Represents the dividend accrual for the Loral Skynet Series A
non-convertible preferred stock.
LORAL SPACE & COMMUNICATIONS INC.
Supplemental Financial Data
(In millions)
Successor Predeccessor Successor Predeccessor
Registrant Registrant Registrant Registrant
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
BOOKINGS
Fixed satellite
services $ 34.5 $ 56.3 $ 64.6 $106.0
Satellite
manufacturing and
technology 456.8 418.3 611.0 520.9
Intercompany
eliminations (41.8) (0.1) (172.8) (0.2)
Total bookings 449.5 474.5 502.8 626.7
Debookings (3.9) (25.5) (18.1) (46.5)
NET BOOKINGS $445.6 $449.0 $484.7 $580.2
June 30, 2006 December 31, 2005
FUNDED BACKLOG
Fixed satellite services $ 425.8 $ 453.4
Satellite manufacturing and technology 1,123.5 815.0
Total funded backlog 1,549.3 1,268.4
Intercompany eliminations (181.5) (20.4)
NET FUNDED BACKLOG $1,367.8 $1,248.0
Condensed Balance Sheets
(In millions)
June 30, 2006 December 31, 2005
Cash and equivalents $ 341.9 $ 275.8
Accounts receivable, net and
Contracts-in-process 141.3 132.9
Other current assets 84.2 83.0
Total current assets 567.4 491.7
Property, plant & equipment, net 506.7 520.5
Goodwill 346.3 340.1
Other assets 314.4 326.7
Total assets $1,734.8 $1,679.0
Customer advances and billings in
excess of costs and profits $ 260.6 $ 173.0
Other current liabilities 130.0 147.2
Total current liabilities 390.6 320.2
Long-term debt 128.1 128.2
Other long-term liabilities 414.7 403.4
Total liabilities 933.4 851.8
Minority interest 200.0 200.0
Shareholders' equity 601.4 627.2
Total liabilities and shareholders' equity $1,734.8 $1,679.0
