G* 10Q is on line
nasdaq.com`&selected=GSTRF
A few high(low) lights:
"Globalstar's service providers are generally not earning revenues sufficient to cover their operating costs. In order to reduce service provider cash requirements
and help sustain service provider operations, Globalstar and its partners agreed on June 25 to defer outstanding gateway purchase and airtime usage payments
due to Globalstar for four months as part of a short term operating plan. As of September 30, 2001, $56.8 million of service provider gateway purchase
receivables, which are secured by gateway assets, $17.0 million of gateway operational costs due under the production gateway purchase agreement and $1.7
million of Globalstar airtime usage receivables due from service providers were outstanding. Globalstar intends to continue the deferral of the gateway purchase
receivables, but has reinitiated collection activity on the outstanding gateway operational costs and airtime usage receivables. In the event that Globalstar is
unable to effectuate a restructuring, cash payment of these obligations would be in doubt. "
"The
projected year end 2001 cash balance assumes no collections from Globalstar service providers for system usage or gateway costs and assume no
disbursements for interest, principal or dividend obligations on outstanding debt and RPPIs. In order to preserve cash, Globalstar has reduced its payments to
Space Systems/Loral, Inc. ("SS/L") and QUALCOMM and is currently overdue on its contractual payment obligations to these vendors. As of September 30,
2001, approximately $14 million of accounts payable and accrued costs were due to QUALCOMM and approximately $9 million of milestone billings and
accrued costs were due to SS/L. The current cash flow projection assumes that these obligations are settled in part during the fourth quarter of 2001 and that
Globalstar remains in arrears with respect to its contractual payment obligations at the end of 2001. Under the agreements, failure to make payments is grounds
for termination. QUALCOMM has issued a notice of termination of the Development Agreement effective November 15, 2001, and Globalstar is in
negotiations with QUALCOMM on this matter. "
"These assets include both user terminals and receivables from service providers associated with the reimbursement of gateway acquisition and deployment
costs previously paid by Globalstar to QUALCOMM. The collection of some of these receivables is delinquent and Globalstar has sent notices of default
where appropriate. If the collection of these payments is unsuccessful, Globalstar will retain title to these gateways. In the quarter ended June 30, 2001,
Globalstar suspended collection on all outstanding production gateway receivables. "
"Ericsson OMC Limited ("Ericsson") has filed two separate demands for arbitration with the American Arbitration Association that seek monetary damages in
the combined amount of $64.0 million with respect to two contracts. Ericsson has taken the position that Globalstar has failed to satisfy minimum purchase
requirements for phones under two contracts, one for the purchase of Fixed Access Units (FAU) and one for the purchase of mobile R290 units (R290).
Globalstar seeks to mitigate these asserted damages and may seek a right of offset to any such damages claimed by Ericsson. Globalstar has responded to both
petitions. The parties are in the process of exchanging discovery. The final arbitration hearings for both matters are expected sometime in the first quarter of
2002. "
"Gross billings per minute of service provided have declined in the three months and nine months ended September
30, 2001 from equivalent periods in 2000 as Globalstar has implemented a revised wholesale pricing scheme, which provides for reduced basic airtime rates
and fewer discounts, in July 2001 and is not recognizing revenue in 2001 from service providers where collection is not reasonably assured. "
" We
have been informed by one service provider that the service provider has decided to terminate services from one of its gateways. The schedule for the
termination of services from this gateway, the coverage area of which can largely be served by remaining gateways, has not been finalized, but it is likely that
services from the subject gateway will be discontinued before the end of 2001. A second service provider, which had not initiated service in its territories in the
Middle East, terminated its relationship with Globalstar on June 30, 2001. We expect other service providers to acquire some or all of these rights. A third
service provider, which has not initiated services in Southern Africa territories due to licensing difficulties, has informed us that it is discontinuing its service
provider operations. " |
