EX-99.1 4 y95745exv99w1.txt PRO FORMA CONDENSED CONSOL. FINANCIAL STATEMENTS EXHIBIT 99.1 LORAL SPACE & COMMUNICATIONS LTD. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Based on the events reported in Item 2 of the Current Report on Form 8-K to which these unaudited pro forma condensed consolidated financial statements are an exhibit, the sale of the Sellers' satellites serving the North American market are deemed to be discontinued operations for accounting and reporting purposes. The accompanying unaudited pro forma condensed consolidated statements of continuing operations, present the historical operations of Loral Space & Communications Ltd. ("Loral") for the three years in the period ended December 31, 2003, as if the transactions had occurred on January 1, 2001. Due to certain unsettled contingencies, Loral has deferred the expected gain on the disposition of the satellites on the accompanying pro forma condensed consolidated balance sheet as of December 31, 2003 (see Note 9 below). In accordance with Securities and Exchange Commission ("SEC") guidelines, these pro forma condensed consolidated statements of continuing operations do not assume any additional income on the proceeds from the sale and do not include any adjustments for cost reductions as a result of the sale. The following unaudited pro forma condensed consolidated balance sheet gives effect to the disposition as of December 31, 2003. The pro forma adjustments assume the cash proceeds received on March 17, 2004, were received as of December 31, 2003 and reflect the liabilities for certain transaction costs in connection with the sale, including taxes thereon. These pro forma condensed consolidated financial statements are not indicative of the results that actually would have occurred if the disposition had been completed on the dates indicated. The pro forma condensed consolidated financial statements and notes thereto should be read in conjunction with the historical consolidated financial statements included in Loral's Form 10-K for 2003 as filed with the SEC on March 15, 2004. LORAL SPACE & COMMUNICATIONS LTD. PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET DECEMBER 31, 2003 (IN THOUSANDS) (UNAUDITED)
PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA ----------- ----------- ----------- ASSETS Current assets: Cash and cash equivalents $ 141,644 $ 35,306 (1) $ 176,950 Accounts receivable, net 22,969 15,990 (2) 38,959 Contracts-in-process 62,063 -- 62,063 Inventories 42,456 -- 42,456 Insurance proceeds receivable 122,770 (122,770)(3) -- Other current assets 36,004 (11,713)(3) 24,291 ---------- -------- --------- Total current assets 427,906 (83,187) 344,719 Property, plant and equipment, net 1,828,282 (812,762)(3) 1,015,520 Long-term receivables 70,749 -- 70,749 Investments in affiliates 46,674 -- 46,674 Deposits 9,000 -- 9,000 Other assets 73,130 (32,044)(3)(4) 41,086 ---------- -------- --------- $ 2,455,741 $(927,993) $ 1,527,748 ========== ======== ========= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities not subject to compromise: Current liabilities: Accounts payable $ 50,656 $ 4,132 (5)(6) $ 54,788 Accrued employment costs 23,532 -- 23,532 Customer advances 120,347 45,229 (3)(7) 165,576 Accrued interest and preferred dividends 1,319 (1,319)(6) -- Income taxes payable 269 2,200 (8) 2,469 Deferred gain on sale of assets -- 32,737 (9) 32,737 Other current liabilities 9,870 (78)(3) 9,792 ---------- -------- --------- Total current liabilities 205,993 82,901 288,894 Pension and other postretirement liabilities 10,983 -- 10,983 Long-term liabilities 185,825 (23,776)(3) 162,049 ---------- -------- --------- Total liabilities not subject to compromise 402,801 59,125 461,926 Liabilities subject to compromise 2,906,095 (973,638)(3)(6)(10) 1,932,457 Minority interest 2,515 -- 2,515 Shareholders' deficit: Common stock 4,413 -- 4,413 Paid-in capital 3,392,829 -- 3,392,829 Treasury stock, at cost (3,360) -- (3,360) Unearned compensation (168) -- (168) Retained deficit (4,171,536) (13,480)(4) (4,185,016) Accumulated other comprehensive loss (77,848) -- (77,848) ---------- -------- --------- Total shareholders' deficit (855,670) (13,480) (869,150) ---------- -------- --------- $ 2,455,741 $(927,993) $ 1,527,748 ========== ======== =========
See Notes to Condensed Consolidated Financial Statements. LORAL SPACE & COMMUNICATIONS LTD. PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF CONTINUING OPERATIONS YEAR ENDED DECEMBER 31, 2003 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA ---------- ----------- ---------- Revenues from satellite services $ 288,498 $(141,342)(11) $ 147,156 Revenues from satellite manufacturing 244,887 244,887 --------- --------- ---------- Total revenues 533,385 (141,342) 392,043 Costs of satellite services 254,192 (62,203)(11) 191,989 Costs of satellite manufacturing 422,091 422,091 Selling, general and administrative expenses 141,733 (181)(11) 141,552 --------- --------- ---------- Operating loss before reorganization expenses due to bankruptcy (284,631) (78,958) (363,589) Reorganization expenses due to bankruptcy (25,284) -- (25,284) --------- --------- ---------- Operating loss (309,915) (78,958) (388,873) Interest and investment income 15,203 15,203 Interest expense (61,763) 48,899(12) (12,864) Gain on investments 17,900 17,900 --------- --------- ---------- Loss from continuing operations before income taxes, equity in net losses of affiliates and minority interest (338,575) (30,059) (368,634) Income tax (provision) benefit (4,647) 11,079(13) 6,432 --------- --------- ---------- Loss from continuing operations before equity in net losses of affiliates and minority interest (343,222) (18,980) (362,202) Equity in net losses of affiliates, net of tax (51,153) (51,153) Minority interest, net of tax 20 20 --------- --------- ---------- Loss from continuing operations (394,355) (18,980) (413,335) Preferred dividends and accretion (6,719) (6,719) --------- --------- ---------- Loss from continuing operations less preferred dividends and accretion $(401,074) $(18,980) $ (420,054) ========= ========= ========== Basic and Diluted Loss per share: From continuing operations less preferred dividends and accretion $ (9.15) $ (9.59) ========= ========== Weighted average shares outstanding: Basic and diluted 43,819 43,819 ========= ==========
See Notes to Condensed Consolidated Financial Statements. LORAL SPACE & COMMUNICATIONS LTD. PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF CONTINUING OPERATIONS YEAR ENDED DECEMBER 31, 2002 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA ---------- ----------- --------- Revenues from satellite services $ 389,958 $(197,898)(11) $ 192,060 Revenues from satellite manufacturing 708,467 708,467 --------- --------- --------- Total revenues 1,098,425 (197,898) 900,527 Costs of satellite services 271,177 (70,015)(11) 201,162 Costs of satellite manufacturing 759,500 759,500 Selling, general and administrative expenses 149,777 (1,544)(11) 148,233 --------- --------- --------- Operating loss (82,029) (126,339) (208,368) Interest and investment income 12,909 12,909 Interest expense (77,045) 36,153(12) (40,892) Loss on investments (1,189) (1,189) --------- --------- --------- Loss from continuing operations before income taxes, equity in net losses of affiliates and minority interest (147,354) (90,186) (237,540) Income tax (provision) benefit (355,042) 32,620(13) (322,422) --------- --------- --------- Loss from continuing operations before equity in net losses of affiliates and minority interest (502,396) (57,566) (559,962) Equity in net losses of affiliates, net of tax (76,280) (76,280) Minority interest, net of tax (226) (226) --------- --------- --------- Loss from continuing operations (578,902) (57,566) (636,468) Preferred dividends (89,186) (89,186) --------- --------- --------- Loss from continuing operations less preferred dividends $(668,088) $ (57,566) $(725,654) ========= ========= ========= Basic and Diluted Loss per share: From continuing operations less preferred dividends $ (17.92) $ (19.47) ========= ========= Weighted average shares outstanding: Basic and diluted 37,272 37,272 ========= =========
See Notes to Condensed Consolidated Financial Statements. LORAL SPACE & COMMUNICATIONS LTD. PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF CONTINUING OPERATIONS YEAR ENDED DECEMBER 31, 2001 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA ---------- ----------- --------- Revenues from satellite services ............... $ 455,695 $(223,850)(11) $ 231,845 Revenues from satellite manufacturing .......... 613,880 613,880 ---------- --------- --------- Total revenues ............................... 1,069,575 (223,850) 845,725 Costs of satellite services .................... 303,326 (71,375)(11) 231,951 Costs of satellite manufacturing ............... 580,523 580,523 Selling, general and administrative expenses ... 190,954 890 (11) 191,844 ---------- --------- --------- Operating loss ................................. (5,228) (153,365) (158,593) Interest and investment income ................. 28,885 28,885 Interest expense ............................... (183,931) 49,847 (12) (134,084) Gain on debt exchanges ......................... 33,941 33,941 ---------- --------- --------- Loss from continuing operations before income taxes, equity in net losses of affiliates and minority interest ............................ (126,333) (103,518) (229,851) Income tax (provision) benefit ................ (2,170) 42,266 (13) 40,096 ---------- --------- --------- Loss from continuing operations before equity in net losses of affiliates and minority interest ..................................... (128,503) (61,252) (189,755) Equity in net losses of affiliates, net of tax.................................... (66,677) (66,677) Minority interest, net of tax ................. 461 461 ---------- --------- --------- Loss from continuing operations ............... (194,719) (61,252) (255,971) Preferred dividends ........................... (80,743) (80,743) ---------- --------- --------- Net loss applicable to common stockholders .... $ (275,462) $(61,252) $(336,714) ========== ======== ========= Basic and Diluted Loss per share: From continuing operations less preferred dividends ................................... $ (8.51) $ (10.40) ========== ========= Weighted average shares outstanding: Basic and diluted ............................ 32,379 32,379 ========== =========
See Notes to Condensed Consolidated Financial Statements. LORAL SPACE & COMMUNICATIONS LTD. NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (1) Reflects the net increase in cash from the proceeds of the sale, after repayment of the entire $967 million of Loral's bank debt and other amounts owed to the banks. (2) Reflects the receivable from Intelsat for costs incurred on the construction of a satellite that is due within 30 days of the closing. (3) Reflects the disposition of the assets and liabilities of the Seller's satellites serving the North American market that were sold to Intelsat. (4) Includes the elimination of $13.5 million of deferred financing costs incurred in connection with Loral's bank debt. (5) Includes the accrual of $7.5 million of estimated transaction costs to be incurred in connection with the sale of the assets. (6) Reflects the reduction of other amounts owed in connection with Loral's bank debt. (7) Includes the $50.0 million deposit received from Intelsat for a new satellite to be constructed. (8) Reflects the estimated taxes that would be paid in connection with the gain on sale of the assets to Intelsat. (9) Due to certain unsettled contingencies, Loral has deferred the expected gain on the disposition of the satellites on the accompanying pro forma condensed consolidated balance sheet as of December 31, 2003. The determination of the actual gain on the sale will be finalized based on the resolution of certain contingencies and the closing balance sheet of the satellites serving the North American market as of March 16, 2004, which is currently in process. Accordingly, the actual gain that will ultimately be recognized may be different than the deferred gain reflected herein. (10) Includes the reduction of the $967 million of bank debt paid off with the cash proceeds from the sale to Intelsat. (11) Reflects the elimination of the operations of Loral's satellites serving the North American market. Direct costs eliminated represent depreciation expense, insurance expense and bad debt expense. For purposes of this presentation, none of the indirect costs normally associated with these operations have been eliminated, including telemetry, tracking and control, access control, maintenance and engineering, selling and marketing and general and administrative. (12) Reflects the reduction of interest expense on all of Loral's bank debt as a result of repaying all amounts outstanding with the cash proceeds from the sale to Intelsat. (13) Reflects the allocation of federal and state income taxes to the operations of the assets sold to Intelsat using marginal tax rates.