UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 10, 2012
GLOBALSTAR, INC.
(Exact name of registrant as specified in its charter)
| Delaware (State or Other Jurisdiction of Incorporation) |
001-33117 (Commission File Number) |
41-2116508 (IRS Employer |
| 300 Holiday Square Blvd. Covington, LA | 70433 |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (985) 335-1500
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On May 10, 2012, Globalstar, Inc. issued a press release to report 2012 first quarter financial results. The text of the press release is furnished as Exhibit 99.1 to this Form 8-K.
Item 7.01 Regulation FD Disclosure.
During Globalstar’s previously announced conference call at 5 p.m. Eastern Time on May 10, 2012, written presentation materials will be used and will be available on the company’s website. The text of the presentation materials is furnished as Exhibit 99.2 to this Form 8-K.
The information in this Current Report on Form 8-K and the Exhibits attached hereto is furnished pursuant to the rules and regulations of the Securities and Exchange Commission and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
99.1 Press release dated May 10, 2012
99.2 Presentation materials dated May 10, 2012
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
| GLOBALSTAR, INC. | |
| /s/ James Monroe III | |
| James Monroe III | |
| Chairman and | |
| Chief Executive Officer |
Date: May 10, 2012
Exhibit 99.1
NEWS
For Immediate Release
GLOBALSTAR
ANNOUNCES RESULTS FOR FIRST QUARTER 2012 –
REPORTS CONTINUED GROWTH IN ADJUSTED EBITDA
Key Highlights:
| · | Globalstar reports positive Adjusted EBITDA for the second consecutive quarter and a substantial increase over the same period in 2011 |
| · | SPOT™ service revenue increases approximately 27 percent from the first quarter of 2011 to the first quarter of 2012 |
| · | Globalstar continues deployment of new satellites and expects call connection rates for key markets to reach more than 80 percent this summer as four additional second-generation satellites are scheduled to be placed into service from May through July |
Covington, LA. — (May 10, 2012) – Globalstar, Inc. (NASDAQ:GSAT) today announced its financial results for the three-month period ended March 31, 2012.
FINANCIAL RESULTS
| Three Months Ended March 31 | ||||||||
| 2012 | 2011 | |||||||
| (in thousands) | ||||||||
| Revenue | $ | 16,738 | $ | 18,254 | ||||
| Adjusted EBITDA (1) | 1,362 | (2,520 | ) | |||||
(1) Refer to definition of Adjusted EBITDA later in this release and a reconciliation of Adjusted EBITDA to net loss for the periods.
Revenue
Globalstar reported revenue of $16.7 million in the first quarter of 2012 compared to $18.3 million in the first quarter of 2011. Excluding one-time nonrecurring revenue of $2.0 million from the termination of the Company’s Open Range partnership recognized in the first quarter of 2011, revenue increased by $0.5 million, or 3 percent, in the first quarter of 2012.
The primary driver of the revenue increase in 2012 was SPOT service revenue, which grew by $1.1 million, or 27 percent, in the first quarter of 2012 compared to 2011. As expected, Duplex service revenue was lower in the first quarter of 2012 compared to the same period in 2011, but was in line with revenue in the last quarter of 2011. The Company anticipates Duplex revenue growth later this year as additional second-generation satellites are scheduled to be placed into service.
The Company expects call connection rates in key markets to increase substantially in the near-term as four new second-generation satellites are scheduled to be placed into service over the next three months. With these additional satellites in operation, call connection rates are anticipated to increase to over 80 percent by August. The Company projects further increases as additional satellites are placed into service throughout the remainder of the year. The Company expects increasing service levels to drive both usage and new subscriber additions.
Revenue from subscriber equipment sales in the first quarter of 2012 was $4.1 million, substantially unchanged from the same period in 2011.
Adjusted EBITDA
Globalstar reported positive Adjusted EBITDA of $1.4 million for the first quarter of 2012 compared to negative Adjusted EBITDA of $2.5 million in the same period in 2011. This represented an increase of $3.9 million over the first quarter of 2011. The improvement in Adjusted EBITDA resulted from an increase in revenue of $0.5 million (excluding the one-time nonrecurring revenue from the termination of the Company’s Open Range partnership) and a decrease in operating expenses of $3.4 million (excluding EBITDA adjustments). The decrease of approximately 21 percent in operating expenses was due largely to the implementation of a more focused business strategy, as well as the continuation of operational improvements and streamlining initiatives introduced in late 2011. The Company reported expense reductions in the quarter throughout its major operating areas.
Net Loss
The Company reported a net loss of $24.5 million for the current quarter, compared to a net loss of $6.5 million in the first quarter of 2011, primarily due to an increase of $4.1 million in depreciation expense and a noncash derivative loss of $6.5 million compared to a derivative gain of $6.4 million in the same period in 2011. The higher depreciation charges resulted from the Company placing additional second-generation satellites into service over the last 12 months. The derivative loss resulted primarily from an increase in the Company’s stock price in the first quarter of 2012. Interest expense was also higher in the first quarter of 2012 compared to the same period in 2011 due to a reduction in capitalized interest.
* * * * * *
“Overall we are pleased with the results for the quarter. Revenue for the quarter was in line with our expectations, while Adjusted EBITDA exceeded our internal forecasted results” said Jay Monroe, Chairman and CEO of Globalstar, Inc. “We are working hard to translate our significantly improved service quality into Duplex sales growth and improved margins, while maintaining the cost discipline we put in place in late 2011. We continue to believe that we will experience positive revenue growth in the second half of the year.”
OPERATIONS AND OTHER MATTERS
Other items of interest in the quarter include the following:
| · | SPOT service revenue during the first quarter was approximately $5.3 million, an increase of approximately 27 percent compared to the same period in 2011. Due to the continued success of Globalstar’s SPOT Satellite GPS Messenger™ and related consumer products since their introduction in November 2007, Globalstar has received orders to ship over 370,000 SPOT retail devices to over 10,000 points of distribution in North America, Europe, Latin America, Australia and Southeast Asia. The award-winning devices have also been responsible for the initiation of more than 1,800 rescues around the world. |
| · | During the quarter Globalstar solidified its long-term supply chain for its SPOT and Simplex data-based asset tracking devices by completing the transition to new contract manufacturers. Previously announced shipment delays of SPOT devices, which negatively impacted hardware revenue early in the quarter, were largely resolved by the end of March. |
| · | During the first quarter, Globalstar continued to deploy its second-generation satellites and witnessed increased voice and data traffic on the network. Subscribers can expect further significant improvements in network coverage and service reliability throughout the remainder of 2012 as additional satellites are placed into service. The Company anticipates the fourth launch of the last six satellites for the second half of 2012, as Globalstar remains on track to become the first MSS provider to launch, deploy and utilize a second-generation constellation of LEO satellites to service new and existing customers around the world. |
| · | As announced in March 2012, Globalstar obtained an amendment to its COFACE Facility Agreement which, among other things, deferred the beginning of the repayment period by approximately one year to the second quarter of 2013. This amendment significantly improves the Company's liquidity position in 2012 and beyond. |
| · | During the quarter, ADS-B Technologies, LLC (ADS-B Tech) continued development of its ALAS Next Generation Air Traffic Surveillance product (ALAS). ALAS utilizes the Globalstar satellite network to provide real-time aircraft surveillance data from remote areas where a conventional line of sight connection to a terrestrial ADS-B ground station is not possible or impractical. In April, ADS-B Tech successfully demonstrated the capability of the system verifying the feasibility of space-based air traffic surveillance using Globalstar’s constellation of LEO satellites. Globalstar is pleased with the recent test results and the global revenue opportunity such an air traffic management system represents. Globalstar’s unique “bent-pipe” architecture and global network of ground stations provides the only satellite network that can handle the air traffic surveillance data both reliably and with no latency concerns. |
| · | Globalstar enthusiastically supported recommended actions by the U.S. Federal Communications Commission (FCC) regarding the proposed development of terrestrial broadband services utilizing the MSS 2 GHz band. The FCC further stated that it intends to address issues pertaining to the ATC rules for Globalstar’s Big LEO band in a separate proceeding at a later date. Mr. Monroe added, “As Globalstar completes the launch and deployment of its second-generation constellation, we look forward to participating in that future proceeding and anticipate receiving similar flexibility to offer terrestrial services within the Big LEO spectrum band.” |
* * * * * *
Conference Call Note
The earnings conference call scheduled for today, May 10, 2012 at 5:00 p.m. Eastern Time, will discuss the first-quarter results for 2012.
| Details are as follows: | |
| Earnings Call: |
Dial: 800.659.2037 (US and Canada), 617.614.2713 (International) and participant pass code 59674846 |
| Audio Replay: | A replay of the earnings call will be available for a limited time and can be heard after 7:00 p.m. ET on May 10, 2012. Dial: 888.286.8010 (US and Canada), 617.801.6888 (International) and pass code 38733658 |
About Globalstar, Inc. Globalstar is a leading provider of mobile satellite voice and data services. Globalstar offers these services to commercial customers and recreational consumers in more than 120 countries around the world. The Company's products include mobile and fixed satellite telephones, simplex and duplex satellite data modems, flexible airtime service packages and the SPOT family of mobile satellite consumer products including the SPOT Satellite GPS Messenger™. Many land based and maritime industries benefit from Globalstar with increased productivity from remote areas beyond cellular and landline service. Global customer segments include: oil and gas, government, mining, forestry, commercial fishing, utilities, military, transportation, heavy construction, emergency preparedness, and business continuity as well as individual recreational users. Globalstar data solutions are ideal for various asset and personal tracking, data monitoring and SCADA applications. Note that all SPOT products described in this press release are the products of Spot LLC, which is not affiliated in any manner with Spot Image of Toulouse, France or Spot Image Corporation of Chantilly, Virginia.
For more information regarding Globalstar, please visit Globalstar's web site at www.globalstar.com
###
For further media information:
Globalstar, Inc.
Dean Hirasawa
(985) 335-1505
Safe Harbor Language for Globalstar Releases
This press release contains certain statements such as, “The Company expects call connection rates in key markets to increase substantially in the near-term as four new second-generation satellites are scheduled to be placed into service over the next three months,” that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Forward-looking statements, such as the statements regarding our ability to develop and expand our business, our anticipated capital spending (including for future satellite procurements and launches), our ability to manage costs, our ability to exploit and respond to technological innovation, the effects of laws and regulations (including tax laws and regulations) and legal and regulatory changes, the opportunities for strategic business combinations and the effects of consolidation in our industry on us and our competitors, our anticipated future revenues, our anticipated financial resources, our expectations about the future operational performance of our satellites (including their projected operational lives), the expected strength of and growth prospects for our existing customers and the markets that we serve, commercial acceptance of our new Simplex products, including our SPOT satellite GPS messenger TM products, problems relating to the ground-based facilities operated by us or by independent gateway operators, worldwide economic, geopolitical and business conditions and risks associated with doing business on a global basis and other statements contained in this release regarding matters that are not historical facts, involve predictions.
Any forward-looking statements made in this press release speak as of the date made and are not guarantees of future performance. Actual results or developments may differ materially from the expectations expressed or implied in the forward-looking statements, and we undertake no obligation to update any such statements. Additional information on factors that could influence our financial results is included in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
GLOBALSTAR, INC.
RECONCILIATION OF GAAP NET LOSS TO ADJUSTED EBITDA
(Dollars in thousands)
(unaudited)
| Three Months Ended March 31 | ||||||||
| 2012 | 2011 | |||||||
| Net loss | $ | (24,525 | ) | $ | (6,466 | ) | ||
| Interest and derivative (gain) loss | 9,570 | (5,223 | ) | |||||
| Income tax (benefit) expense | 157 | 108 | ||||||
| Depreciation, amortization, and accretion | 14,735 | 10,611 | ||||||
| EBITDA | (63 | ) | (970 | ) | ||||
| Reduction in the value of long-lived assets and inventory | 328 | 376 | ||||||
| Stock compensation | 338 | 693 | ||||||
| Research and development | 115 | 469 | ||||||
| Severance | 43 | 66 | ||||||
| Foreign exchange and other | (132 | ) | (1,178 | ) | ||||
| Revenue recognized from Open Range lease termination | - | (1,976 | ) | |||||
| Thales arbitration expenses | 733 | - | ||||||
| Adjusted EBITDA (1) | $ | 1,362 | $ | (2,520 | ) | |||
| (1) | EBITDA represents earnings before interest, income taxes, depreciation, amortization, accretion and derivative (gains)/losses. Adjusted EBITDA excludes non-cash compensation expense, reduction in the value of assets, foreign exchange (gains)/losses, R&D costs associated with the development of new consumer products, and certain other significant charges. Management uses Adjusted EBITDA in order to manage the Company’s business and to compare its results more closely to the results of its peers. EBITDA and Adjusted EBITDA do not represent and should not be considered as alternatives to GAAP measurements, such as net income. These terms, as defined by us, may not be comparable to a similarly titled measures used by other companies. |
The Company uses Adjusted 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 Adjusted EBITDA for planning purposes, including the preparation of its annual operating budget. The Company believes that Adjusted 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, Adjusted 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 Adjusted 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 Adjusted EBITDA in isolation and also uses other measurements, such as net income, revenues and operating profit, to measure operating performance.
GLOBALSTAR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
(unaudited)
| Three Months Ended March 31 | ||||||||
| 2012 | 2011 | |||||||
| Revenues: | ||||||||
| Service revenues | $ | 12,627 | $ | 14,199 | ||||
| Subscriber equipment sales | 4,111 | 4,055 | ||||||
| Total revenue | 16,738 | 18,254 | ||||||
| Operating expenses: | ||||||||
| Cost of services (exclusive of depreciation, amortization, and accretion shown separately below) | 5,360 | 7,061 | ||||||
| Cost of subscriber equipment sales | 2,723 | 2,783 | ||||||
| Cost of subscriber equipment sales - reduction in the value of inventory | 249 | 91 | ||||||
| Reduction in the value of long-lived assets | 79 | 285 | ||||||
| Marketing, general, and administrative | 8,522 | 10,183 | ||||||
| Depreciation, amortization, and accretion | 14,735 | 10,611 | ||||||
| Total operating expenses | 31,668 | 31,014 | ||||||
| Loss from operations | (14,930 | ) | (12,760 | ) | ||||
| Other income (expense): | ||||||||
| Interest income and expense, net of amounts capitalized | (3,050 | ) | (1,212 | ) | ||||
| Derivative gain (loss) | (6,520 | ) | 6,435 | |||||
| Other | 132 | 1,179 | ||||||
| Total other income (expense) | (9,438 | ) | 6,402 | |||||
| Loss before income taxes | (24,368 | ) | (6,358 | ) | ||||
| Income tax expense | 157 | 108 | ||||||
| Net loss | $ | (24,525 | ) | $ | (6,466 | ) | ||
| Loss per common share: | ||||||||
| Basic | $ | (0.07 | ) | $ | (0.02 | ) | ||
| Diluted | (0.07 | ) | (0.02 | ) | ||||
| Weighted-average shares outstanding | ||||||||
| Basic | 357,418 | 293,053 | ||||||
| Diluted | 357,418 | 293,053 | ||||||
GLOBALSTAR, INC.
SCHEDULE OF SELECTED OPERATING METRICS
(Dollars in thousands, except subscriber and ARPU data)
(unaudited)
| Three Months Ended March 31 | ||||||||||||||||
| 2012 | 2011 | |||||||||||||||
| Service | Equipment | Service | Equipment | |||||||||||||
| Revenue | ||||||||||||||||
| Duplex | $ | 4,200 | $ | 545 | $ | 5,109 | $ | 614 | ||||||||
| SPOT | 5,311 | 947 | 4,167 | 1,644 | ||||||||||||
| Simplex | 1,310 | 2,030 | 1,221 | 1,179 | ||||||||||||
| IGO | 187 | 231 | 358 | 400 | ||||||||||||
| Other | 1,619 | 358 | 3,344 | 218 | ||||||||||||
| $ | 12,627 | $ | 4,111 | $ | 14,199 | $ | 4,055 | |||||||||
| Average Subscribers | ||||||||||||||||
| Duplex | 91,207 | 95,483 | ||||||||||||||
| SPOT | 206,530 | 157,261 | ||||||||||||||
| Simplex | 144,177 | 131,903 | ||||||||||||||
| IGO | 42,982 | 50,891 | ||||||||||||||
| ARPU (1) | ||||||||||||||||
| Duplex | $ | 15.35 | $ | 17.83 | ||||||||||||
| SPOT | 8.57 | 8.83 | ||||||||||||||
| Simplex | 3.03 | 3.09 | ||||||||||||||
| IGO | 1.45 | 2.34 | ||||||||||||||
| (1) | Average monthly revenue per unit (ARPU) measures service revenues per month divided by the average number of 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. |
Exhibit 99.2
First Quarter 2012 Earnings Call Presentation May 10, 2012
Globalstar Introduction Safe Harbor Language This presentation contains certain statements that are “forward-looking statements”within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Forward-looking statements, such as the statements regarding our ability to develop and expand our b usiness, our anticipated capital spending (including for future satellite procurements and launches), our ability to manage costs, our ability to exploit and respond to technological innovation, the eff ects of laws and regulations (including tax laws and regulations) and legal a nd regulatory changes, the opportunities for strategic business combinations and the effects of consolidation in our industry on us and our competitors, our anticipated future revenues, our an ticipated financial resources, our expectations about the future launches and operational performance of our satellites (including their p rojected operational lives), the expected strength of and growth prospect s for our existing customers and the markets that we serve, comm ercial acceptance of our new Simplex products, including our SPOT family of products, problems relating to the ground-based facilities operated by us or by independent gateway operators, worldwide economic, g eopolitical and business conditions and risks associated with do ing business on a global basis and other statements contained in thi s presentation regarding matters that are not historical facts, involve predictions. Any forward-looking statements made in this presentation speak as of the date made and are not guarantees of future performance. Actual results or developments may differ materially from the expectati ons expressed or implied in the forward -looking statements, and we undertake no obligation to update any such statements. Additiona l information on factors that could influence our financial resu lts is included in our filings with the Securities and Exchange Commiss ion, including our Annual Report on Form 10 -K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
($2.5) $1.4 ($3.0) ($2.5) ($2.0) ($1.5) ($1.0) ($0.5) $0.0 $0.5 $1.0 $1.5 $2.0 First Quarter Highlights Key Financial Metric –Continued Positive Adjusted EBITDA • Globalstar continued to report positive Adjusted EBITDA in Q1 2012 • Adjusted EBITDA was $1.4 million compared to a negative Adjusted EBITDA of $2.5 million during the same period in 2011 • This improvement was due to the continuation of changes in the Company’s operations and marketing strategies which reduced its general and administrative (MG&A) expenses • The improved cost structure of the Company is generally sustainable for the future and will increase the ability to leverage the future cash flow generation profile of the Company Q1 11 –Q1 12 Adjusted EBITDA ($ mil) Q1 11 Q1 12 3
Q1-2012 Highlight Globalstar Announces Amendment to COFACE Loan Facility • In the first quarter of 2011 Globalstar was pleased to announce an amendment to its $586.3 million senior secured COFACE facility agreement which significantly extends the initial repayment date and makes further adjustments to certain facility financial and operating covenants • Pursuant to the amendment, the first repayment date will now be as late as June 2013 instead of June 2012 • The amendment provides Globalstar with the added flexibility to complete the four launches of our new satellite constellation, restore network coverage and begin duplex revenue generation prior to beginning principal facility payments 4
Q1-2012 Highlight –Improved Coverage Additional Satellites Deployed • Globalstar continued to deploy its second-generation constellation throughout the quarter further improving its voice and duplex data network • The Company expects to place four additional previously launched satellites into service over the next three months and to conduct a fourth launch of six satellites in the second half of 2012 • Call connection rate is expected to range between 80-90 percent in key markets by mid summer 2012 • With high quality service soon to be restored, Globalstar expects customers to begin to transfer to higher ARPU plans and its competitive offering to begin to attract high value new subscribers 5
“We are pleased with the April test results which proved the technical feasibility of the system using today’s Globalstar technology. This is a proven product concept usingexisting Globalstar satellites which are already in orbit.” –Jay Monroe, CEO, Globalstar, Inc. • During the quarter, ADS-B Technologies, LLC (ADS-B Tech) continued development of its space-based ALAS Next Generation Air Traffic Surveillance system • ALAS utilizes the Globalstar satellite network to provide real-time aircraft surveillance data from remote areas • In April, ADS-B Tech successfully demonstrated the capability of the system verifying the feasibility of space-based air traffic surveillance using Globalstar’s constellation of LEO satellites • The test using Globalstar’s unique “bent-pipe”architecture and ground network, “demonstrated conclusively that highly accurate, reliable and low latency surveillance is now possible at any altitude and over any terrain from virtually anywhere on earth.” (1) ADS-B Flight Testing in Alaska Space-Based NextGen Air Traffic Management Opportunity ADS-B Technologies ALAS Surveillance (1) Source: ADS-B Technologies LLC, May 2012 6
Globalstar is at an Inflection Point… Low Cost Second-Gen Satellite and Ground Network Delivers true mobile connectivity (voice and data) to the more than one billion people who live, work, or play outside of cellular reach Daily capacity for 34 billion text messages, M2M transmissions or other small bit messages or 19 million voice or data minutes Offers the industry’s lowest cost and best voice quality x Breakthrough Mass Market Products SPOT and derivative consumer products seeing rapid take up (awarded CES “Design & Engineering Award”) Provides valuable connectivity during emergencies and to outdoormarket, at a price point that appeals to the consumer x Valuable Spectrum Assets Non replicable 25.225 MHz of globalspectrum with 19.275 MHz authorized for terrestrial broadband use in the U.S., subject to meeting certain gating requirements Lease transaction for satellite spectrum previously approved by the FCC and other governmental agencies x 7
Globalstar Addressable Market Connectivity to nearly one billion people who live in areas not covered by cellular service The majority of the world’s land mass is without terrestrial cellular coverage (1) Over a billion people work in industries that may require them to be outside cellular reach, such as: – Oil and gas – Transportation – Forestry, etc. Over 150 million adventure trips taken annually (2) Provides alternative network access in areas of political instability Provides public safety with needed connectivity when cellular service is down due to – Overloaded / failed infrastructure – Natural disasters Enables basic services, NGOs, emergency response and business continuity Provide Needed Connectivity When Cellular Service Fails Connect People Who Work or Play Outside Cellular Coverage Reach Places or People Outside Cellular Coverage Provides low cost alternative to international roaming charges when traveling abroad – Traditional cellular companies can charge upwards of $2 –$3 per minute versus Globalstar unlimited usage plans which charge as little as $0.10 per minute for worldwide coverage (3) The international roaming market is expected to reach $67 billion by 2015 (4) Provide a Low Cost Alternative to International (High Cost) Roaming Source: Adventure Tourism Market Report by George Washington University, Adventure Travel Trade Association, Xola Consulting, Informa Telecoms & Media. (1) CIA World Factbook, as of 2008. (2) Adventure Tourism Market Report by George Washington University, Adventure Travel Trade Association, Xola Consulting. Statistic based on survey conducted with participants in Latin America, North America and Europe. (3) Based on $40 / month unlimited plan and 400 minutes per month of usage. (4) Per Informa Telecoms & Media. 8
Globalstar Spectrum and Network Network Capacity is Fungible Across User Types Globalstar’s second-generation constellation and network have the capacity to accommodate 34 billion text messages, M2M transmissions or other small-bit messages or 19 million voice or data minutes per day. Globalstar’s network architecture (bent-pipe, all IP-based) allows for a flexible and cost efficient use of the network. (1) Assumes average message size of 45 characters 9
Globalstar Distribution Strategy Designed to Support Consumer Take Up PC manufacturers sell ~200 million laptops annually Microsoft has a Windows install base exceeding 800 million while Android has over 300 million Handset makers sold over 300 million smartphones in 2010 Illustrative Wireless Carrier Partners Select Existing Distribution Channels Potential Technology Partners Technology companies represent an additional distribution channel, due to the near global connectivity Globalstar can provide Source: IDC; Wall Street Research Many logos above are trademarks of respective companies Globalstar could potentially work with domestic and international carriers to establish satellite/terrestrial partnerships – Lowest cost of service significantly expands addressable market for new products and services – Wireless carriers have already demonstrated interest in resale partnerships Historically the mobile satellite industry has relied on indirect sales channels such as dealers / resellers to distribute products to predominately enterprise users Globalstar revolutionized the sector with its push into the consumer segment, now with over 10,000 points of retail distribution 10
Wideband 3D Spectrogram 40.75662 deg -73.97485 deg (48 th Street –Park Avenue) START: 0.003 GHz STOP: 3.0 GHz Anritsu MS2721A / Broadband Omni + + GS 1600 Amplitude (dBm) Frequency (GHz) Time (sec) 0.003 3.0 0 3600 GS 2400 4G network protocols exploit aggressive modulation techniques to provide high data speeds. However, as signal modulation becomes more efficient, it also becomes more susceptible to the deleterious impact of RF noise and interference. This is why a small amount of low noise and interference spectrum can carry significantly more data than a much larger parcel of noise and interference limited spectrum. Noise and Interference Directly Impact Network Capacity Globalstar Bands Exhibit Extremely Low Noise and Interference Characteristics + 11
Spectrum Opportunity –FCC Projected Spectrum Requirement 547 120 20 60 10 90 847 Available Today Broadcast TV WCS AWS D Block MSS Spectrum Projected 2015 “The FCC should accelerate terrestrial deployment in 90 megahertzof Mobile Satellite Spectrum (MSS)….The FCC should grant licensees flexibility under the ATC regime in the 2.4 GHz Big LEO band (Globalstar), already being used for terrestrial broadband deployments, to make this spectrum permanently suitable for terrestrial broadband service, subject to appropriate safeguards to promote the publicinterest.” –FCC National Broadband Plan, March 2010 Source: National Broadband Plan (1) Subject to meeting certain gating requirements (MHz) Globalstar Opportunity: 19.275 MHz of spectrum is already allotted for terrestrial use in the US (ATC) (1) 12
Building a Foundation for Growth and Improved Profitability 13