01—Abstract
Summary
Summary of the 10-K/A filed April 30, 2013. Cited figures are marked; the original filing is the authoritative source.
This Form 10-K/A (Amendment No. 1) for Globalstar, Inc. for fiscal year 2012 does not contain full financial statements or results of operations.
It was filed to add Part III information (directors, executive compensation, security ownership, related-party transactions, and auditor fees) that was not included in the original 10-K filed March 15, 2013, to update the cover page and exhibit index, and to provide currently dated SOX Section 302 certifications. Investors should read it alongside the original filing for financial performance and risk disclosures. The filing confirms a concentrated ownership and governance profile.
James Monroe III and affiliated Thermo entities beneficially own about 69.9% of voting common stock (about 70.8% for all directors and executive officers as a group), and Thermo-related lenders hold significant convertible notes and warrants. The company had 354.6 million voting and 135.0 million nonvoting common shares outstanding as of March 1, 2013, and its non-affiliate market value was about $36.6 milliona at June 30, 2012, which classifies it as a smaller reporting company. Governance items include a Class C board seat that has gone unfilled since 2011 and one late Section 16(a) filing by Mr. Monroe.
Compensation disclosures show modest executive pay levels and an incentive structure tied to Adjusted EBITDA. The 2012 key employee bonus pool was funded at $272,000,b based on Adjusted EBITDA of about $10.1 million against a $9.0 million budget target, with payouts to be made in stock.
Related-party dealings with Thermo Funding remain material, including the historical conversion of about $180 millionc in secured debt into equity, a $60 million contingent equity account, and a $25 million subordinated loan accruing 12% interest that is capitalized. Crowe Horwath audit fees were $539,266 for 2012.
02—Key points
Key Highlights
- This is a Part III and cover-page amendment only; it contains no new financial statements, revenue, or net income figures, so it should not be used alone for financial performance analysis.
- Controlling-shareholder concentration: James Monroe III and affiliated Thermo entities beneficially own about 69.9% of voting common stock, and directors and executive officers as a group hold about 70.8%.
- Share structure: 354,551,816 voting and 135,000,000 nonvoting common shares were outstanding as of March 1, 2013; non-affiliate public float was about $36.6 million at June 30, 2012.
- Smaller reporting company status, with a 2012 key employee bonus pool of $272,000 tied to Adjusted EBITDA of about $10.1 million versus a $9.0 million budget threshold.
- Thermo-related debt and equity arrangements remain significant, including a $25 million subordinated loan at 12% PIK interest, a $60 million contingent equity account, and convertible notes held by Thermo affiliates.
- Frank J. Bell II joined as President of Global Sales and Marketing in October 2012 under an employment agreement with a $250,000 base salary and options vesting on performance and stock-price triggers, with a $2.50 price acceleration threshold.
- Governance items to watch: one Class C board seat has been vacant since the 2011 annual meeting, one Section 16(a) report by Mr. Monroe was filed late, and Crowe Horwath audit fees were $539,266 for 2012.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2012, Globalstar lost $1.47.
- Revenue$76.3M100.0%
- Cost of revenue−$13.3M17.4%
- Gross profit$63.0M82.6%
- Operating costs−$158.0M207.1%
- Operating income−$95.0M124.5%
- Interest, other & tax−$17.2M22.5%
- Net income−$112.2M147.0%
04—Financials
Financial Highlights
Figures from 10-K/AFY2012filed April 30, 2013Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $76.32M$72.83M | +4.8% |
| Cost of Revenue | $13.28M$11.93M | +11.3% |
| Gross Profit | $63.04M$60.90M | +3.5% |
| R&D Expenses | $300K$1.90M | −84.2% |
| SG&A Expenses | $27.50M$33.82M | −18.7% |
| Operating Expenses | $171.31M$146.06M | +17.3% |
| Operating Income | -$94.99M-$73.23M | −29.7% |
| Net Income | -$112.20M-$54.92M | −104.3% |
| EPS (Basic) | $-4.35$-2.70 | −61.1% |
| EPS (Diluted) | $-4.35$-2.70 | −61.1% |
| Shares Outstanding (Basic) | 25.90M19.94M | +29.9% |
| Shares Outstanding (Diluted) | 25.90M19.94M | +29.9% |
05—Questions
Frequently Asked Questions
Does this 10-K/A contain Globalstar's 2012 financial results?
No. The amendment states that it updates the cover page and exhibit index, adds Part III information, and provides currently dated certifications. Financial statements and results of operations are not restated or included, so investors should refer to the original Form 10-K filed March 15, 2013 for revenue, earnings, and balance sheet data.
How much control do insiders and affiliates have over Globalstar?
Substantial control. James Monroe III and affiliated entities, including Globalstar Satellite, L.P., FL Investment Holdings, and Thermo Funding, beneficially own about 69.9% of voting common stock. Their holdings include shares issuable on conversion of nonvoting stock and exercise of warrants. Ownership is capped at 70% by the terms of the nonvoting stock and warrants, which limits conversions that would push Thermo above that threshold.
What was the 2012 executive bonus structure and what did it pay out?
A key employee bonus pool equal to 25% of Adjusted EBITDA above the $9.0 million 2012 budget was established. Based on Adjusted EBITDA of about $10.1 million, the pool totaled $272,000. Payments are to be made in stock rather than cash to conserve cash, and the Compensation Committee retains discretion over Adjusted EBITDA adjustments. Named executives Anthony Navarra and L. Barbee Ponder IV are each receiving $20,000 in stock, and the CEO receives no cash compensation.
What related-party financing obligations to Thermo should investors be aware of?
Thermo Funding converted about $180 million of secured debt into a Series A preferred share in 2009, which then converted into 109.4 million voting and 16.75 million nonvoting common shares. Other arrangements include a $60 million contingent equity account that can be drawn to meet debt service needs at 80% of the average closing price, a 10% annual availability fee payable in warrants, a $25 million subordinated loan at 12% interest capitalized into principal, and $31.4 million of convertible notes held by Thermo affiliates at 8% and 5%. Thermo also received $528,525 of contributed officer services and about $180,062 of expense reimbursements in 2012.
06—Continue