-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, m8Zq+ZgKiISGTb/jTuujK6cHplhuoyy5plX3KVuISyViKSKTyvCjMDdoloz1hQvv /cWGgRTLSDAZLawxCZujOg== 0000950136-94-000110.txt : 19940610 0000950136-94-000110.hdr.sgml : 19940610 ACCESSION NUMBER: 0000950136-94-000110 CONFORMED SUBMISSION TYPE: 424B2 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19940609 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LORAL CORP /NY/ CENTRAL INDEX KEY: 0000060357 STANDARD INDUSTRIAL CLASSIFICATION: 3812 IRS NUMBER: 131718360 STATE OF INCORPORATION: NY FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 424B2 SEC ACT: 1933 Act SEC FILE NUMBER: 033-53741 FILM NUMBER: 94533619 BUSINESS ADDRESS: STREET 1: 600 THIRD AVE CITY: NEW YORK STATE: NY ZIP: 10016 BUSINESS PHONE: 2126971105 MAIL ADDRESS: STREET 1: 600 THIRD AVENUE CITY: NEW YORK STATE: NY ZIP: 10016 424B2 1 PROSPECTUS SUPPLEMENT Filed Pursuant to Rule 424(b)(2) Registration File No.: 33-53741 PROSPECTUS SUPPLEMENT (TO PROSPECTUS DATED MAY 23, 1994) $650,000,000 LORAL CORPORATION [LOGO] $250,000,000 7 5/8% SENIOR NOTES DUE JUNE 15, 2004 $400,000,000 8 3/8% SENIOR DEBENTURES DUE JUNE 15, 2024 ------------ INTEREST PAYABLE JUNE 15 AND DECEMBER 15 ------------ The 7 5/8% Senior Notes due 2004 (the "Notes") will mature on June 15, 2004 and the 8 3/8% Senior Debentures due 2024 (the "Debentures") will mature on June 15, 2024. The Notes and the Debentures are not redeemable prior to maturity and are not entitled to the benefit of a sinking fund. The Notes and the Debentures will be represented by one or more Global Securities ("Global Securities") registered in the name of The Depository Trust Company (the "Depositary"), as Depositary, or its nominee. Beneficial interests in Global Securities will be shown on, and transfers thereof will be effected only through, records maintained by the Depositary and its participants. Except as described in this Prospectus Supplement, Notes and Debentures in definitive form will not be issued in exchange for Global Securities. The Notes and Debentures will be listed on the New York Stock Exchange. ------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- ------------------------------------------------------------------------------- PRICE TO UNDERWRITING PROCEEDS TO PUBLIC (1) DISCOUNTS (2) COMPANY (1)(3) - ------------------------------------------------------------------------------- Per Note..................... 99.188% .650% 98.538% - ------------------------------------------------------------------------------- Total...................... $247,970,000 $1,625,000 $246,345,000 - ------------------------------------------------------------------------------- Per Debenture................ 99.186% .875% 98.311% - ------------------------------------------------------------------------------- Total...................... $396,744,000 $3,500,000 $393,244,000 - ------------------------------------------------------------------------------- (1) Plus accrued interest, if any, from June 15, 1994 to date of delivery. (2) The Company has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. See "Underwriting." (3) Before deducting expenses payable by the Company estimated at $600,000.
---------------- The Notes and the Debentures offered by this Prospectus Supplement are offered by the Underwriters subject to prior sale, withdrawal, cancellation or modification of the offer without notice, to delivery to and acceptance by the Underwriters and to certain further conditions. It is expected that the Global Securities will be ready for delivery through the facilities of the Depositary in New York, New York, on or about June 15, 1994. ---------------- LEHMAN BROTHERS BEAR, STEARNS & CO. INC. GOLDMAN, SACHS & CO. LAZARD FRERES & CO. J.P. MORGAN SECURITIES INC. June 8, 1994 IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AND THE DEBENTURES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE. SUCH STABILIZATION, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. ---------------- RECENT DEVELOPMENTS Effective January 1, 1994, Loral Corporation ("Loral" or the "Company") acquired Federal Systems Company ("Federal Systems"), a division of International Business Machines Corporation, for $1,503,500,000 in cash, not including acquisition costs. Federal Systems is a leading systems integrator and supplier of advanced information technology products and services to defense and non-defense agencies worldwide. USE OF PROCEEDS The estimated net proceeds of this offering are $638,989,000. Such proceeds will be used by the Company to reduce outstanding commercial paper issued to finance the Federal Systems acquisition. CAPITALIZATION The following table presents the consolidated capitalization of the Company as of March 31, 1994, and as adjusted to give effect to the issuance and sale of the Notes and the Debentures offered hereby, and assumes the net proceeds from the issuance and sale will be used to reduce the Company's outstanding commercial paper borrowings. See "Use of Proceeds."
ACTUAL AS ADJUSTED ------------ ------------- (IN THOUSANDS) CURRENT PORTION OF DEBT .................................. $ 173,928 $ 380 ---------- ---------- LONG-TERM DEBT: 9 1/8 % Senior Debentures due 2022 ...................... 100,000 100,000 8 3/8 % Senior Debentures due 2023 ...................... 100,000 100,000 7% Senior Debentures due 2023 ........................... 200,000 200,000 Commercial paper ........................................ 1,200,000 734,559 Other ................................................... 24,061 24,061 Notes and Debentures offered hereby ..................... -- 650,000 ---------- ---------- Total long-term debt ................................... 1,624,061 1,808,620 ---------- ---------- Total debt ............................................ 1,797,989 1,809,000 SHAREHOLDERS' EQUITY ..................................... 1,381,306 1,381,306 ---------- ---------- Total capitalization, including current portion of debt ................................................. $3,179,295 $3,190,306 ========== ==========
The Company has a $1,200,000,000 revolving credit facility, expiring February 1999, and a $500,000,000 revolving credit facility, expiring February 1995. These facilities serve to back up the Company's commercial paper borrowings. S-2 SUMMARY CONSOLIDATED FINANCIAL INFORMATION The following table presents summary consolidated financial information of the Company for each of the five years in the period ended March 31, 1994, and has been derived from and should be read in conjunction with the audited financial statements for those years. The pro forma operating data and ratio of earnings to fixed charges give effect to the acquisition of Federal Systems as if it occurred on April 1, 1993, and has been derived from the Unaudited Pro Forma Condensed Consolidated Statement of Income included in the Company's Form 8-K/A dated May 12, 1994. The pro forma balance sheet data gives effect as of March 31, 1994 to the issuance of the Notes and the Debentures offered hereby.
PRO FORMA 1994(A) (UNAUDITED) 1994(B) 1993(C) 1992 1991(D) 1990 ----------- ---------- ---------- ---------- ---------- ---------- (IN MILLIONS, EXCEPT PER SHARE AND RATIO AMOUNTS) OPERATING DATA: Sales ....................................... $5,853.7 $4,008.7 $3,335.4 $2,881.8 $2,126.8 $1,274.3 Operating income ............................ 480.3 401.4 296.3 292.2 215.5 148.7 Income from continuing operations before extraordinary item and cumulative effect of changes in accounting ................... 228.0 228.3 159.1 121.8 90.4 77.5 Net income (loss) ........................... 228.0 228.3 (92.1) 121.8 90.4 78.2 Earnings per share (primary)(e): Income from continuing operations before extraordinary item and cumulative effect of changes in accounting .................. 2.72 2.72 2.06 2.00 1.78 1.54 Net income (loss) .......................... 2.72 2.72 (1.20) 2.00 1.78 1.55 Weighted average shares outstanding (primary)(e) ............................... 83.9 83.9 77.0 61.0 50.9 50.4 CASH FLOW DATA: Cash dividends paid per common share(e) .... $ .545 $ .495 $ .47 $ .43 $ .39 Depreciation and amortization ............... 178.2 154.0 128.6 104.6 78.7 Capital expenditures, net ................... 96.5 89.0 74.1 86.1 59.5 BALANCE SHEET DATA: Total assets ................................ $5,187.2 $5,176.2 $3,228.1 $2,685.5 $2,532.2 $1,544.8 Working capital ............................. 728.0 554.4 610.5 630.0 457.7 312.6 Total debt .................................. 1,809.0 1,798.0 534.0 577.4 821.2 437.6 Shareholders' equity ........................ 1,381.3 1,381.3 1,187.9 997.3 672.0 584.5 Book value per common share(e) .............. $ 16.60 $ 16.60 $ 14.44 $ 15.72 $ 13.14 $ 11.65 RATIO OF EARNINGS TO FIXED CHARGES (UNAUDITED) ................................. 3.37x 6.42x 4.74x 4.22x 3.30x 3.49x - --------------- (a) The pro forma operating data and ratio of earnings to fixed charges give effect to the acquisition of Federal Systems as if it occurred on April 1, 1993. The pro forma balance sheet data gives effect as of March 31, 1994 to the issuance of the Notes and the Debentures offered hereby. (b) Reflects the acquisition of Federal Systems effective January 1, 1994, which had substantial effect on the balance sheet data in 1994. (c) Reflects (i) the acquisition of the missile business of LTV Aerospace and Defense Company effective August 31, 1992 and (ii) the acquisition of the minority partners' equity interest in Loral Aerospace Holdings, Inc. ("LAH"), effective June 1, 1992, through the issuance of 12,313,810 shares of the Company's common stock and 627.3 shares of Series S Preferred Stock of LAH. Effective April 1, 1992, the Company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" ("SFAS 106") and Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." Prior years' results have not been restated to reflect these accounting changes. Net income (loss) includes (i) a non-operating extraordinary charge (loss on extinguishment of debt) of $28.2 million pre-tax, $17.8 million after-tax, or $.23 per share, and (ii) a non-recurring charge of $330.5 million pre-tax, $233.4 million after-tax, or $3.03 per share, as the cumulative effect of the accounting change for SFAS 106. (d) Reflects the acquisition of Ford Aerospace Corporation effective October 1, 1990, which had substantial effect on the operating and balance sheet data in 1991. (e) Adjusted to reflect two-for-one stock split distributed October 7, 1993.
S-3 BUSINESS GENERAL Loral is a leading supplier of defense electronic systems, components and services to U.S. and allied defense departments. The Company's principal business areas are: electronic combat; training and simulation; command, control, communications and intelligence ("C(3)I")/reconnaissance; tactical weapons; systems integration; and space systems. The Company has achieved an incumbent position on a wide range of existing programs through internal growth and development and a series of acquisitions focused on its core technologies. Loral's business strategy is to emphasize upgrades of existing weapons systems, concentrate on further developing its core of advanced technologies, generate an increasing proportion of its sales from foreign customers and selectively extend the Company's proprietary technologies into non-military applications, such as systems integration, satellite-based telecommunications, medical diagnostic imaging systems, network management, data archiving, and information systems and services. PRODUCTS ELECTRONIC COMBAT Loral is a leading producer of systems that detect, jam and deceive hostile radars and radar and infrared guided weapons and detect and analyze surface and submarine threats. Loral's electronic combat systems are used in the protection of U.S. and allied aircraft and antisubmarine warfare, antisurface warfare, airborne early warning, and for electronic support measures. Loral manufactures the ALR-56 family of advanced, programmable radar warning systems. The ALR-56C and ALR-56M are utilized aboard U.S. Air Force and allied F-15 and F-16 jet fighter aircraft, respectively. Loral has sold its Rapport II and III (ALQ-178) fully integrated airborne radar warning and electronic jamming systems to Israel, Belgium and Turkey for the F-16, and has developed an advanced version called the ALQ-202. Loral supplies the Forward-Looking Infrared (FLIR) targeting and weapon delivery pod aboard U.S. and allied F/A-18 strike jets. This system permits aircrews to deliver smart weapons to selectively identified high value targets through laser rangers and target designators. Loral is the prime contractor for the U.S. Navy's LAMPS MK III helicopter for antisubmarine warfare, antisurface warfare and airborne early warning, and for a similar system, the EH101/Merlin, for the United Kingdom's Ministry of Defence. The Company also produces the Electronic Support Measures system for the U.S. Air Force's B-2 stealth bomber; a day/night adverse weather missions system for the MC-130H Combat Talon II aircraft; and the central computer for the F-15. Loral's AAR-47 uses infrared sensing technologies to warn U.S. Navy and Marine helicopters of hostile missile threats. Loral's ALQ-157, Matador and Challenger infrared countermeasures systems emit infrared energy pulses that counter heat-seeking missiles by directing them away from aircraft, naval vessels and armored ground vehicles. Loral also produces antenna assemblies and systems for airborne warning aboard tactical aircraft, such as the E-2C. TRAINING AND SIMULATION Loral's training systems provide simulated, realistic battlefield environments that assist air, land and sea forces in achieving and maintaining combat readiness as well as aiding in the establishment and validation of requirements for new systems and upgrades. Loral produces a variety of simulators, including weapons systems simulators, virtual reality simulators, and distributed interactive simulators. Loral's operational flight and weapons systems trainers simulate F-15 and F-15E jet aircraft avionics under combat conditions. Loral is also developing a comprehensive family of weapons systems trainers, courseware and mission rehearsal devices for the Special Operations Forces Aircrew Training System (SOF-ATS). The Company has a contract to assess pilot training requirements for the U.S. Air Force's new F-22 fighter. Loral is developing full mission simulators that combine flight weapon systems and mission training for Sweden's JAS-39 multi-role combat aircraft. S-4 Loral's Multiple Integrated Laser Engagement System (MILES) is at the forefront of a family of laser-based training systems, including the Air-to-Ground Engagement System (AGES), the Precision Gunnery Training System (PGTS), Simulated Area Weapons Effect (SAWE), Precision Range Integrated Maneuver Exercise (PRIME) and Mobile Automated INSTRUMENTATION SUITE (MAIS). These systems are used to train and evaluate ground combat troops and military equipment. The equipment simulates the effect of weapons fire through eye-safe, encoded laser beams. Detector cells and electronic decoding systems replicate target vulnerability. Data is transmitted to a central station to allow review of combat performance. Loral is a principal developer of netted simulators for the U.S. Army. Loral operates and maintains simulator networks for ground vehicle and airborne platform training at Fort Knox and Fort Rucker under the Army's Advanced Distributed Simulation Technology Program. These simulators are linked to each other and to combat training ranges, including ranges operated by the Company. Loral's Close Combat Tactical Trainer (CCTT) provides the U.S. Army with a computer-based trainer that simulates vehicles, weapon systems and dismounted infantry in a virtual battlefield environment. The Company is prime contractor for the MATBAT tank gunnery training system to provide realistic battlefield conditions for the Israeli Defense Forces. Loral has developed for the U.S. Navy a laser-guided training round, which simulates the operation of the Paveway II bomb, providing live-fire training for A-6 and F/A-18 aircrews at one-fifth the cost of an actual round. Loral operates and maintains the U.S. Navy's and Air Force's primary pilot training ranges and electronic warfare ranges, provides instructors for classroom training, and supplies sophisticated avionics and undersea simulators. Loral's Simulator Device Development Support program is upgrading electronic warfare simulators at the Naval Weapons Center at China Lake. COMMAND, CONTROL, COMMUNICATIONS AND INTELLIGENCE/RECONNAISSANCE Loral offers systems integration, operations management and engineering services, post-deployment systems support, military satellite communication terminals, information processing and display hardware, information management software, secure tactical communications instruments and telemetry equipment to address a broad spectrum of strategic and tactical C(3)I requirements. Loral is the principal technical support contractor for the Space Defense Operations Center at Cheyenne Mountain for the U.S. Space Command, which monitors orbiting space systems to alert the U.S. and its allies to potential attack. Loral is producing the Rapid Execution and Combat Targeting system, which is modernizing the Minuteman missile launch control centers. Loral is also providing engineering support, systems integration, and operations and maintenance for the worldwide Air Force Satellite Control Network. Loral is developing the communications element of the All-Source Analysis System, a tactical intelligence fusion system that will receive, process and display battlefield information to tactical commanders on a near real-time basis. Loral provides hardware support, software maintenance, sustaining engineering and on-site operational services in support of the U.S. Air Force's Global Positioning System. Loral is also responsible for system development, software maintenance, and engineering support for the U.S. Air Force's fixed and mobile Launch Detection System. Loral produces mil-spec and ruggedized general-purpose computers and processors used in military systems, such as ground-launched and sea-launched cruise missiles, the Trident AFLOAT System and the MILSTAR communications programs. Loral also produces the Associative Processor (ASPRO), a parallel processing computer for command and control aboard the E-2C aircraft and for over-the-horizon targeting by U.S. submarines. Loral supplies antisubmarine warfare and combat control systems for submarines and surface ships, including the AN/BSY-1 combat system for the U.S. Navy's SSN 688 class attack submarines and portions of the AN/BSY-2 combat control system for the Navy's SSN-21 attack submarines, the Combat Control System MK3 for the Royal Australian Navy's Type 471 SSK submarines, and elements of the SQQ-89 surface ship ASW combat control system. S-5 Loral's information and graphics display systems provide interactive access to real-time information on ground and shipboard platforms as well as aircraft, such as the E-2C, P-3C, S-3, F-14 and other U.S. Navy aircraft. Loral's EMR and instrumentation telemetry systems include airborne transmitters, receivers, data links, transponders and signal encoders, which are used in tracking, ranging, data acquisition and command and control for operations of space vehicles and missiles. Loral's instrumentation products, primarily the System 500, provide high-speed real-time processing in testing and analyzing data from advanced avionics as well as from missile and satellite sources. Loral's reconnaissance systems utilize advanced electronics imaging, communications and information processing technologies to provide integrated tactical battlefield information and navigation and targeting capability in airborne platforms for the U.S. Air Force, Navy and Marines. Loral employs mercury cadmium telluride, platinum silicide and charge-coupled device technologies required for the infrared ("IR") and electro optical ("EO") focal plane arrays that are at the heart of night vision and all-weather cameras. Loral's sensing and imaging products are a major component of the Advanced Tactical Air Reconnaissance System (ATARS), the Long-Range Oblique Photography System (LOROPS), the F-3050 tactical reconnaissance pod and a tactical reconnaissance system for German Tornado aircraft. Loral also manufactures and sells commercial data and voice recorders, the indestructible "black boxes" mandated by the FAA for commercial and general aviation aircraft. Loral is producing the Medical Diagnostic Imaging System, which extends the Company's high-volume data storage and retrieval technologies into the medical marketplace for DoD, VA and commercial hospitals. TACTICAL WEAPONS Loral produces the Multiple Launch Rocket System (MLRS) for the U.S. Army. This weapon system spreads submunitions over a one kilometer area and was used extensively in Operation Desert Storm. Loral also produces the Army Tactical Missile System (ATACMS). Fired from the MLRS launcher, ATACMS provides a long range tactical missile. Loral will also test a long-range ship-fired version of ATACMS so the U.S. Navy can evaluate the missile for fire support missions. MLRS has substantial international markets, and has been purchased by France, Germany, the United Kingdom, Italy, the Netherlands, Turkey, Bahrain and Japan. The Company also expects an international market for ATACMS. Loral has developed the Extended Range Interceptor missile (ERINT), a kinetic energy, high-altitude anti-missile missile that destroys its target through force of impact without explosives. The system has been selected by the U.S. Army for its PAC-3 Theater Missile Defense upgrade of the Patriot Missile System. Loral is also developing the LOSAT missile, a low-cost kinetic energy antitank missile. Loral's EO and IR sensors, processing technologies and advanced algorithms are employed in a wide range of tactical weapons and weapons guidance systems. Loral's IR sensors have been selected for the Theater High-Altitude Area Defense (THAAD) anti-tactical missile detection and interception system. Loral's guidance programs include the Digital Scene Matching Area Correlation (DSMAC) system, which permits Tomahawk cruise missiles to direct themselves for long distances over enemy terrain, complete missile guidance control units for air-defense systems and gyro-optic assemblies for thermal imaging missiles, and air-to-ground weapons. Loral is also a prime contractor for sales to certain U.S. allies of the Chaparral air-defense system, for which it manufactures the entire missile and fire control system. Loral also produces the Sidewinder air-to-air missile; the AIM 9M and the AIM 9P. Loral is under contract from the U.S. Marine Corps to develop a short-range antitank weapon, the Predator, which is a man-portable fire-and-forget weapon system. The Company's Vertical Launch Antisubmarine Rocket (VLA) is in production for the U.S. Navy and Japan. SYSTEMS INTEGRATION Loral is a leading provider of systems integration services focused on integrating complex hardware and software systems. Loral serves the U.S. Department of Defense and a broad range of federal and foreign government organizations, including the Federal Aviation Administration, the U.S. Department of Justice, the Internal Revenue Service and the U.S. Postal Service. S-6 Among Loral's programs is the Advanced Automation System ("AAS"), the next-generation air traffic control system for the Federal Aviation Administration ("FAA"). As part of an ongoing FAA review of the AAS program, the FAA recently announced a scope reduction in the program which will likely reduce Loral's annual revenues on this program from approximately $350 million to approximately $200 million per year over the next five years, absent further revisions to the contract. The program reduction is not expected to have a material adverse effect on the results of operations or financial position of the Company. See Note 8 to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1994. Loral is also under contract to produce a number of systems for non-DoD government agencies, including the Document Processing System that will image and store tax returns and correspondence for the Internal Revenue Service, a bar code-based mail sorting system for the U.S. Postal Service, network and database systems for the administrative offices of the U.S. Courts and an image processing system for the U.S. Environmental Protection Agency to allow its regional offices across the country to convert paper documents into digitized data stored on optical disks. Loral has developed systems for managing and tracking the nationwide real estate inventory of the Resolution Trust Corporation (RTC) and is currently supporting RTC's wide area networks and telecommunications efforts. Loral is the prime contractor for the U.S. Army's Sustaining Base Information Services program, which is a comprehensive information support system that will be used for all Army base management information and administrative processing. This includes personnel management, payroll, financial accounting and control, authorization documentation, supply and services and medical records management. SPACE SYSTEMS Loral and Space Systems/Loral, Inc. ("SS/L"), an unconsolidated affiliate, both participate in various aspects of space technology and systems. Loral provides engineering services supporting mission control systems for both manned and unmanned space flight and develops and manufactures scientific instruments, sensors, cameras and power systems for space systems applications. SS/L produces geosynchronous satellites and subsystems for telecommunications and earth sensing and is the prime contractor for the Globalstar L.P. ("Globalstar") low-earth-orbit mobile telecommunications system. Loral designs, develops and integrates systems for the Space Shuttle's on-board hardware and flight control software. Loral also provides systems engineering, safety engineering, reliability and engineering support to Johnson Space Center, and is modernizing its Mission Systems Control in support of manned space missions, including the Space Shuttle. In space science, Loral is developing the Atmospheric Infrared Sounder (AIRS), a scientific instrument that will fly on NASA's Earth Observing System platform in the next century. At NASA's Goddard Space Flight Center, Loral is developing the computer system to store, archive and distribute data collected from the EOSDIS system. SS/L designs and fabricates geostationary and low-earth-orbiting satellites for space communications and remote earth sensing. SS/L's INTELSAT VII satellite will carry international telephone traffic for the International Telecommunications Satellite consortium. The first of a series of nine satellites was launched in October, 1993. SS/L is the prime contractor for a series of Geostationary Operational Environmental Satellites (GOES), which are being built to conduct imaging of clouds and the earth's surface and sounding of water vapor fields, and to monitor the space environment, collect data from terrestial sensors and relay aircraft and maritime distress signals. The first GOES satellite was launched in April 1994. SS/L has supplied Japan's Space Communications Corporation with the Superbird communications satellites, and is building two N-STAR satellites for Nippon Telegraph and Telephone of Japan. SS/L also has a contract to supply two direct-to-home broadcast television satellites to TEMPO, a subsidiary of Tele-Communications, Inc. Loral has contracts to supply video systems and provide systems engineering and integration for Space Station Freedom, and SS/L has contracts to supply subsystems and components, including power systems, for Space Station Freedom. S-7 Loral is the managing general partner of Globalstar, an international venture formed to design and operate a global satellite communications system in conjunction with the following strategic partners, who have collectively committed to invest $275 million of initial equity capital toward a total $1.8 billion funding requirement: Alcatel N.V.; Alenia Spazio, S.p.A.; DACOM Corporation; Hyundai Electronics Industries Company; QUALCOMM Incorporated; Vodafone Group; and AirTouch Communications (formerly PacTel). Globalstar will deploy and operate a worldwide, low-earth-orbit mobile satellite-based communications system using CDMA technology. The system, employing a constellation of 48 satellites, subject to receiving local licensing authority such as is pending before the Federal Communications Commission, is expected to be operational in 1998 and will offer low-cost worldwide digital wireless telecommunications services, including voice, data, paging, facsimile and geolocation services, to telephones and data terminals in areas currently underserved or not served by existing telecommunications systems. The system will allow existing cellular carriers to extend and enhance their provision of telecommunications services to new and current users. CUSTOMERS Substantially all of the Company's products are sold to agencies of the United States Government, primarily the Department of Defense, to foreign government agencies or to prime contractors or subcontractors thereof. In fiscal 1994, approximately 90% of the Company's sales was derived directly or indirectly from defense contracts for end use by the United States and foreign governments. Sales to domestic customers represented 86% of total revenue in fiscal 1994 and 1993. Sales to the U.S. Army, Air Force and Navy accounted for 23%, 18% and 11%, respectively, of the Company's consolidated sales for fiscal 1994, and 21%, 22% and 9%, respectively, for fiscal 1993. The majority of the Company's remaining domestic sales were to prime contractors for end use by the U.S. Government and other U.S. Government agencies. For information concerning international programs and sales to foreign governments, see "Foreign Sales" below. BACKLOG Funded backlog at March 31, 1994, including the funded backlog of Federal Systems ($3.2 billion at the effective date of acquisition, January 1, 1994), was approximately $6.5 billion, compared with $3.9 billion at March 31, 1993. Approximately 55% of the backlog at March 31, 1994 is expected to be shipped during fiscal 1995. Of the backlog at March 31, 1994, approximately $3.5 billion was directly or indirectly for defense contracts for end use by the U.S. Government and an additional $530 million for contracts to other U.S. Government agencies. Backlog for the U.S. Army, Air Force and Navy accounted for 17%, 13% and 9%, respectively, of total backlog at March 31, 1994. Approximately $2.5 billion of the backlog consisted of orders by foreign governments and contractors, primarily for defense contracts in various allied nations, representing 38% of total backlog at March 31, 1994. RESEARCH AND DEVELOPMENT The Company employs scientific, engineering and other personnel to improve its existing product lines and to develop new products and technologies in the same or related fields. The largest portion of this work is performed under specific U.S. Government contracts. At March 31, 1994, the Company employed approximately 10,800 engineers (of whom 2,750 held advanced degrees), of which approximately 1,230 (including 360 holding advanced degrees) devote all or part of their effort to Company- sponsored research projects. S-8 The amounts of research and development performed under customer-funded contracts and Company-sponsored research projects, including bid and proposal costs, for the three most recent fiscal years were as follows:
CUSTOMER- COMPANY- FUNDED SPONSORED TOTAL ---------- ----------- ------------ (IN THOUSANDS) 1994 ......................... $843,964 $172,604 $1,016,568 1993 ......................... 488,450 124,718 613,168 1992 ......................... 326,626 122,903 449,529
PERSONNEL At March 31, 1994, the Company employed approximately 32,600 persons. A significant part of its operations is dependent upon professional, technical and engineering personnel whose tenure is not generally secured by employment contracts. The Company has agreements with labor organizations representing certain hourly employees. FOREIGN SALES Loral products currently sold in the international marketplace include the ALQ-178 Rapport, ALR-56C, ALR-56M, FLIR targeting and weapon delivery system for the F/A-18 strike jet, EH 101/Merlin, AAR-47, Challenger, Matador, E-2C displays, shipboard chaff and flare countermeasures, Romeo submarine sonar, Multiple Launch Rocket System, Vertical Launch Antisubmarine Rocket, guidance control systems for the Sidewinder missile, Chaparral air-defense system, F-3050 tactical reconnaissance pod, JAS-39 full mission simulator, MILES, TCM-620 tactical communications system and air traffic control systems. Through SS/L, Loral is also supplying the INTELSAT VII, Superbird and N-Star satellites for the international marketplace. Certain other Loral programs have export potential, including ATACMS, the ASPRO computer, tactical displays, LOROPS and AIRS. Foreign sales accounted for approximately 14% of the Company's sales in fiscal 1994 and 1993. Foreign sales and income are subject to changes in United States and foreign government policies, regulations, embargoes and international hostilities. Foreign sales generally require export licenses granted on a case-by-case basis by the United States Department of State. The exchange risk inherent in foreign contracts not denominated in the U.S. dollars is mitigated by currency hedging where deemed appropriate. Foreign sales comprise the following:
1994 1993 1992 ---------- ---------- ---------- (IN THOUSANDS) Export sales: Asia ................................. $227,312 $190,125 $151,435 Europe ............................... 106,546 128,707 148,295 Middle East .......................... 91,049 119,401 213,473 Other ................................ 28,289 26,733 75,831 -------- -------- -------- 453,196 464,966 589,034 Foreign operations, principally Europe 111,416 12,535 5,779 -------- -------- -------- Total foreign sales ................... $564,612 $477,501 $594,813 ======== ======== ========
S-9 DESCRIPTION OF NOTES AND DEBENTURES The following description of the particular terms of the Notes and the Debentures offered hereby (referred to in the Prospectus as the "Offered Debt Securities") supplements and, to the extent inconsistent therewith, replaces, insofar as such description relates to the Notes and the Debentures, the description of the Debt Securities set forth in the Prospectus, to which description reference is hereby made. GENERAL The Notes and the Debentures are senior, unsecured general obligations of the Company, will rank pari passu with all other unsecured and unsubordinated indebtedness of the Company. The Notes will be limited to $250,000,000 aggregate principal amount and the Debentures to $400,000,000 aggregate principal amount. The Notes will mature on June 15, 2004 and the Debentures on June 15, 2024. The Notes and the Debentures will bear interest at the respective rates per annum shown on the cover page of this Prospectus Supplement (computed on the basis of a 360-day year of twelve 30-day months) from June 15, 1994, payable semi-annually on June 15 and December 15 of each year (each an "Interest Payment Date"), commencing December 15, 1994, to the person in whose name such securities (or any predecessor security) are registered at the close of business on June 1 and December 1, as the case may be, next preceding such Interest Payment Date. The Notes and the Debentures will not be redeemable by the Company prior to their stated maturity and will not be entitled to the benefit of a sinking fund. DEFEASANCE AND DISCHARGE AND COVENANT DEFEASANCE The provisions of the Indenture relating to defeasance and discharge and defeasance of certain covenants as described under "Description of Debt Securities--Defeasance" set forth in the Prospectus will apply to the Notes and the Debentures. GLOBAL SECURITIES The Notes and the Debentures will be issued in the form of one or more Global Securities. The Global Securities will be deposited with, or on behalf of, the Depositary, and registered in the name of the Depositary or a nominee thereof. Unless and until they are exchanged in whole or in part for Notes or Debentures in definitive form, no Global Securities may be transferred except as a whole by the Depositary to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor of such Depositary or a nominee of such successor. The Depositary has advised the Company and the Underwriters as follows: The Depositary is a limited purpose trust company organized under the Banking Law of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of section 17A of the Securities Exchange Act of 1934, as amended. The Depositary was created to hold securities of its participants and to facilitate the clearance and settlement of securities transactions among its participants in such securities through electronic book-entry changes in accounts of the participants, thereby eliminating the need for physical movement of securites certificates. The Depositary's participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations, some of whom (and/or their representatives) own the Depositary. Access to the Depositary's book-entry system is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly. A further description of the Depositary's procedures with respect to Global Securities is set forth in the Prospectus under "Description of Debt Securities--Global Securities." The Depositary has confirmed to the Company, the Underwriter and the Trustee that it intends to follow such procedures. S-10 UNDERWRITING Subject to the terms and conditions of the Underwriting Agreement among the Company, Lehman Brothers Inc., Bear, Stearns & Co. Inc., Goldman, Sachs & Co., Lazard Freres & Co. and J.P. Morgan Securities Inc. (the "Underwriters"), the Company has agreed to sell to the Underwriters, and each of the Underwriters has severally agreed to purchase from the Company, the principal amount of the Notes and the Debentures as set forth opposite its name below:
PRINCIPAL AMOUNT ----------------------------- NOTES DEBENTURES -------------- ------------- Lehman Brothers Inc. ................ $ 50,000,000 $ 80,000,000 Bear, Stearns & Co. Inc. ............ 50,000,000 80,000,000 Goldman, Sachs & Co. ................ 50,000,000 80,000,000 Lazard Freres & Co. ................. 50,000,000 80,000,000 J.P. Morgan Securities Inc. ......... 50,000,000 80,000,000 ------------ ------------ Total .......................... $250,000,000 $400,000,000 ============ ============
The Underwriting Agreement provides that the obligations of the Underwriters thereunder are subject to approval of certain legal matters by counsel and to various other conditions. The Underwriters propose to offer the Notes and the Debentures directly to the public initially at the respective public offering price set forth on the cover page of this Prospectus Supplement and to certain dealers at such price less a concession not in excess of 0.40% of the principal amount of the Notes and 0.50% of the principal amount of the Debentures. The Underwriters may allow and such dealers may reallow a concession not in excess of 0.25% of the principal amount of the Notes and 0.25% of the principal amount of the Debentures to certain other dealers. Afer the initial offering, the offering price and other selling terms may be changed. The Company has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act, and to contribute to payments they may be required to make in respect thereof. The Notes and the Debentures will be listed on the New York Stock Exchange. The Company has been advised by the Underwriters that they currently intend to make a market in the Notes and the Debentures, but that they are not obligated to do so and may discontinue such market making at any time without notice. The Company cannot predict the liquidity of any trading market for the Notes and the Debentures. The Underwriters and their affiliates may engage in transactions with and perform services for the Company and its affiliates in the ordinary course of their respective businesses, including, without limitation, commercial banking and investment banking services. Merchant banking partnerships affiliated with Lehman Brothers Holdings Inc. (the "Lehman Partnerships") own 6,314,960 shares of the Company's common stock, representing approximately 7.6% of the Company's common stock outstanding as of May 1, 1994. The Lehman Partnerships also own 731.85 shares of Series S Preferred Stock of Loral Aerospace Holdings, Inc. ("LAH"), the Company's wholly-owned subsidiary, which represent an indirect 18.3% beneficial interest in the equity of SS/L, LAH's 51%-owned affiliate. If the Lehman Partnerships continue to hold Series S Preferred Stock after January 1, 1998, or after a change in control of Loral, they will have the right to request that the Company purchase their Series S Preferred Stock at an appraised fair market value ("Appraised Value"). In such event, the Company may elect to purchase such Series S Preferred Stock at Appraised Value or, if the Company elects not to purchase the stock, the Lehman Partnerships may require the combined interests of the Company and the Lehman Partnerships in SS/L to be sold to a third party. The Lehman Partnerships also have an aggregate equity interest of approximately 62% in K&F Industries, Inc., a corporation of which Bernard L. Schwartz, Chairman of the Board of Directors and Chief Executive Officer of the Company, is a 35% stockholder, which acquired the Company's Aircraft Braking Systems and Engineered Fabrics divisions in April 1989. S-11 ============================================================ NO DEALER, SALESMAN, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY AGENT OR UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. ------------ TABLE OF CONTENTS PROSPECTUS SUPPLEMENT
Page ---- Recent Developments.................................... S-2 Use of Proceeds........................................ S-2 Capitalization......................................... S-2 Summary Consolidated Financial Information............. S-3 Business............................................... S-4 Description of Notes and Debentures.................... S-10 Underwriting........................................... S-11 PROSPECTUS Available Information.................................... 2 Incorporation of Certain Information by Reference........ 2 The Company.............................................. 3 Use of Proceeds.......................................... 3 Ratio of Earnings to Fixed Charges....................... 3 Description of Securities................................ 3 Plan of Distribution..................................... 22 Legal Opinions........................................... 23 Experts.................................................. 24
$650,000,000 LORAL CORPORATION [LOGO] $250,000,000 7 5/8% SENIOR NOTES DUE JUNE 15, 2004 $400,000,000 8 3/8% SENIOR DEBENTURES DUE JUNE 15, 2024 --------------- PROSPECTUS SUPPLEMENT JUNE 8, 1994 --------------- LEHMAN BROTHERS BEAR, STEARNS & CO. INC. GOLDMAN, SACHS & CO. LAZARD FRERES & CO. J.P. MORGAN SECURITIES INC. ============================================================ -----END PRIVACY-ENHANCED MESSAGE-----