01—Abstract
Summary
Summary of the 10-K filed March 11, 2014. Cited figures are marked; the original filing is the authoritative source.
Globalstar, Inc. reported revenues of $82.7 milliona for the fiscal year ended December 31, 2013, representing an 8% increase over the previous year, primarily driven by a significant rise in Duplex service revenue due to the completion of its second-generation satellite constellation in August 2013.
This operational improvement led to enhanced service levels and increased subscriber activity. The company also saw growth in its SPOT and Simplex service lines. Despite revenue growth, Globalstar incurred an operating loss of $87.4 millionb and a net loss of $591.1 million, heavily impacted by non-cash items including significant losses on extinguishment of debt and derivative instruments, largely due to changes in stock price.
The company's financial position remains challenging, with substantial debt and ongoing capital expenditure plans, though liquidity is supported by financial arrangements with Thermo and Terrapin. Key risk factors include reliance on these capital commitments, potential for continued operating losses, and the need for future capital, potentially complicated by debt covenants.
02—Key points
Key Highlights
- Total revenue increased by 8% to $82.7 million in 2013, driven by Duplex service revenue improvements following the completion of the second-generation satellite constellation.
- Duplex service revenue grew by 24% year-over-year, reflecting increased subscriber activations and a trend towards higher rate plans.
- The company reported a net loss of $591.1 million for 2013, significantly impacted by $109.1 million in losses on extinguishment of debt and $306.0 million in derivative losses.
- As of December 31, 2013, Globalstar had $17.4 million in cash and cash equivalents, with significant debt obligations totaling $665.2 million (long-term) and $4.0 million (current).
- Capital expenditures for the second-generation satellite constellation and ground infrastructure upgrades were substantial, with significant remaining commitments.
- Globalstar's common stock was delisted from the NASDAQ Stock Market and traded on the OTCQB, raising concerns about capital-raising ability and market liquidity.
- A material weakness was identified in internal controls related to the valuation of non-cash derivative liabilities, although management stated it was corrected before financial statement issuance.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2013filed March 11, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $82.71M$76.32M | +8.4% |
| Cost of Revenue | $13.62M$13.28M | +2.6% |
| Gross Profit | $69.09M$63.04M | +9.6% |
| R&D Expenses | $600K$300K | +100.0% |
| SG&A Expenses | $29.89M$27.50M | +8.7% |
| Operating Expenses | $170.11M$171.31M | −0.7% |
| Operating Income | -$87.40M-$94.99M | +8.0% |
| Net Income | -$591.12M-$112.20M | −426.9% |
| EPS (Basic) | $-14.40$-4.35 | −231.0% |
| EPS (Diluted) | $-14.40$-4.35 | −231.0% |
| Shares Outstanding (Basic) | 41.00M25.90M | +58.3% |
| Shares Outstanding (Diluted) | 41.00M25.90M | +58.3% |
05—Questions
Frequently Asked Questions
What is Globalstar's financial performance outlook based on this report?
While revenue saw a positive increase of 8% to $82.7 million in 2013, driven by the operational improvements from the second-generation satellite constellation, the company incurred substantial net losses. The significant losses on debt extinguishment and derivative instruments overshadowed the revenue growth, resulting in a net loss of $591.1 million. The company continues to face significant debt and capital expenditure requirements, making its path to profitability uncertain.
What are the key risks for investors to consider?
Key risks include the company's continued operating losses, its substantial debt burden, and reliance on ongoing capital commitments from Thermo and Terrapin. The delisting from NASDAQ and subsequent OTCQB trading also pose risks related to capital raising and stock liquidity. Furthermore, the material weakness identified in internal controls regarding derivative valuation, while reported as corrected, raises concerns about financial reporting accuracy and robustness.
How did the completion of the second-generation satellite constellation impact the business?
The completion of the second-generation satellite constellation by August 2013 was a significant operational achievement. It led to improved service levels, particularly for Duplex services, which in turn drove a 24% increase in Duplex service revenue and contributed to subscriber growth in SPOT and Simplex services. This operational enhancement is expected to support future revenue growth.
What is the company's debt situation and future liquidity outlook?
Globalstar has substantial long-term debt of $665.2 million as of December 31, 2013. While liquidity is supported by commitments from Thermo and Terrapin, the company faces significant principal and interest payments, particularly with restructured debt obligations. Future liquidity will depend on operational cash flows, potential additional financings, and the successful execution of its business plan.
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