(In thousands, except per share data)

(Unaudited)

		Three Months Ended								Six Months Ended
		June 30, 2010				June 30, 2009				June 30,  2010				June 30,  2009
						As Adjusted – Note 1								As Adjusted – Note 1
Revenue:
Service revenue		$	12,908			$	12,562			$	25,362			$	23,693
Subscriber equipment sales			4,714				3,154				7,831				7,186
Total revenue			17,622				15,716				33,193				30,879
Operating expenses:
Cost of services (exclusive of depreciation and amortization shown separately below)			6,974				7,961				14,592				18,369
Cost of subscriber equipment sales:
Cost of subscriber equipment sales			3,477				2,832				5,989				5,827
Cost of subscriber equipment sales — Impairment of assets			60				648				60				648
Total cost of subscriber equipment sales			3,537				3,480				6,049				6,475
Marketing, general, and administrative			10,122				11,408				18,334				25,385
Depreciation and amortization			5,973				5,468				11,863				10,892
Total operating expenses			26,606				28,317				50,838				61,121
Operating loss			(8,984	)			(12,601	)			(17,645	)			(30,242	)
Other income (expense):
Interest income			157				56				339				184
Interest expense			(1,182	)			(3,141	)			(2,592	)			(3,381	)
Derivative loss, net			(8,073	)			(797	)			(33,035	)			(797	)
Other			(1,132	)			2,529				(1,859	)			(1,446	)
Total other income (expense)			(10,230	)			(1,353	)			(37,147	)			(5,440	)
Loss before income taxes			(19,214	)			(13,954	)			(54,792	)			(35,682	)
Income tax expense (benefit)			35				(192	)			99				(162	)
Net loss		$	(19,249	)		$	(13,762	)		$	(54,891	)		$	(35,520	)
Loss per common share:
Basic		$	(0.07	)		$	(0.12	)		$	(0.20	)		$	(0.31	)
Diluted			(0.07	)			(012	)			(0.20	)			(0.31	)
Weighted-average shares outstanding:
Basic			282,080				116,580				278,752				113,959
Diluted			282,080				116,580				278,752				113,959

 

 

 

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Definition of Terms and Reconciliation of Non-GAAP Financial Measures

We utilize certain financial measures that are widely used in the telecommunications industry and are not calculated based on GAAP.  A reconciliation of these measures to GAAP and a discussion of certain other operating metrics used in the industry are presented below.

GLOBALSTAR, INC.

RECONCILIATION OF GAAP TO ADJUSTED

(Dollars in thousands, except ARPU)

(Unaudited)

		Three months ended								Six months ended
		June 30, 2010				June 30, 2009				June 30, 2010				June 30, 2009
Revenue
Service Revenue		$	12,908			$	12,562			$	25,362			$	23,693
Equipment Revenue			4,714				3,154				7,831				7,186
Total Revenue		$	17,622			$	15,716			$	33,193			$	30,879
Operating Expenses
Cost of Services			6,974				7,961				14,592				18,369
Cost of Subscriber Equipment			3,537				3,480				6,049				6,475
Marketing, General and Administrative			10,122				11,408				18,334				25,385
Depreciation & Amortization			5,973				5,468				11,863				10,892
Impairment of Assets			-				-				-				-
Total Operating Expenses		$	26,606			$	28,317			$	50,838			$	61,121
Operating Loss		$	(8,984	)		$	(12,601	)		$	(17,645	)		$	(30,242	)
Interest and Derivative Income/(Expense)			(9,098	)			(3,882	)			(35,288	)			(3,994	)
Gain on Extinguishment of Debt			-								-				-
Other Income/(Expense)			(1,132	)			2,529				(1,859	)			(1,446	)
Income Tax Expense (Benefit)			35				(192	)			99				(162	)
Net Loss		$	(19,249	)		$	(13,762	)		$	(54,891	)		$	(35,520	)
EBITDA  (1)		$	(4,143	)		$	(4,604	)		$	(7,641	)		$	(20,796	)
Impairment of Assets			60				648				60				648
Non-Cash Compensation			1,013				2,514				(726	)			5,646
2nd Generation Development			625				175				1,116				2,232
Other One Time Non Recurring Charges			981				474				3,155				659
Foreign Exchange and Other Loss/(Income)			1,132				(2,529	)			1,859				1,446
Adjusted EBITDA (2)		$	(332	)		$	(3,322	)		$	(2,177	)		$	(10,165	)
Adjusted EBITDA Margin			(2	)%			(21	)%			(7	)%			(33	)%
Retail ARPU (3)		$	23.11			$	25.80			$	23.23			$	24.44

(1)

EBITDA represents earnings before interest, income taxes, depreciation, amortization and derivative gains/(losses).  EBITDA does not represent and should not be considered as an alternative to GAAP measurements, such as net income, and the Company’s calculations thereof may not be comparable to similarly entitled measures reported by other companies.

 

 

 

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The Company uses EBITDA as a supplemental measurement of its operating performance because, by eliminating interest, taxes and the non-cash items of depreciation and amortization, the company believes it best reflects changes across time in the company’s performance, including the effects of pricing, cost control and other operational decisions.  The company’s management uses EBITDA for planning purposes, including the preparation of its annual operating budget.  The company believes that EBITDA also is useful to investors because it is frequently used by securities analysts, investors and other interested parties in their evaluation of companies in similar industries. As indicated, EBITDA does not include interest expense on borrowed money or depreciation expense on our capital assets or the payment of income taxes, which are necessary elements of the company’s operations.  Because EBITDA does not account for these expenses, its utility as a measure of the Company’s operating performance has material limitations.  Because of these limitations, the company’s management does not view EBITDA in isolation and also uses other measurements, such as net income, revenues and operating profit, to measure operating performance.

(2)

Adjusted EBITDA is further adjusted to exclude non-cash compensation expense, asset impairment charges, foreign exchange gains/(losses) and certain other one-time charges.  Management uses Adjusted figures for EBITDA in order to manage the Company’s business and to compare its results more closely to the results of its peers.

(3)

Average monthly revenue per unit (ARPU) measures service revenues per month divided by the average number of retail subscribers during that month.  Average monthly revenue per unit as so defined may not be similar to average monthly revenue per unit as defined by other companies in the Company’s industry, is not a measurement under GAAP and should be considered in addition to, but not as a substitute for, the information contained in the Company’s statement of income.  The Company believes that average monthly revenue per unit provides useful information concerning the appeal of its rate plans and service offerings and its performance in attracting and retaining high value customers.

 

 

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GLOBALSTAR, INC.

SCHEDULE OF SELECTED OPERATING METRICS

(Dollars in thousands, except ARPU)

(Unaudited)

		Three months ended								Six months ended
		June 30, 2010				June 30, 2009				June 30, 2010				June 30, 2009
Subscribers (End of Period)			412,295				371,483				412,295				371,483
Retail			106,682				112,113				106,682				112,113
IGO			60,978				69,491				60,978				69,491
Simplex			244,635				189,879				244,635				189,879
Net Subscriber Additions/(Losses)			18,259				14,613				21,701				27,153
Retail			(862	)			(1,618	)			(2,914	)			(3,258	)
IGO			(256	)			(3,773	)			(1,123	)			(4,272	)
Simplex			19,377				20,004				25,738				34,683
Retail Churn			0.9	%			1.3	%			1.0	%			1.3	%
ARPU
Retail		$	23.11			$	25.80			$	23.23			$	24.44
IGO		$	1.90			$	2.19			$	1.51			$	1.93
Simplex		$	6.85			$	5.53			$	6.65			$	5.40
Cash capital expenditures (in millions)		$	55.1			$	21.5			$	131.7			$	79.8
Liquidity at end of period /1		$	258,060

Note:

/1

Includes $87.2 million cash on hand, $34.3 million Debt Service Reserve Account, $12.5 million guarantee, $64.1 million available under the COFACE Facility, and $60.0 million Thermo contingent equity reserve account.

 

 

 

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