View Filing Data

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2012	Apr. 27, 2012
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q1
Trading Symbol	GSAT
Entity Registrant Name	GLOBALSTAR, INC.
Entity Central Index Key	0001366868
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Voting Common Stock
Entity Common Stock, Shares Outstanding		298,583,696
Nonvoting Common Stock
Entity Common Stock, Shares Outstanding		92,563,139

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Revenue:
Service revenues	$ 12,627	$ 14,199
Subscriber equipment sales	4,111	4,055
Total revenue	16,738	18,254
Operating expenses:
Cost of services (exclusive of depreciation, amortization, and accretion shown separately below)	5,360	7,061
Cost of subscriber equipment sales	2,723	2,783
Cost of subscriber equipment sales - reduction in the value of inventory	249	91
Reduction in the value of long-lived assets	79	285
Marketing, general, and administrative	8,522	10,183
Depreciation, amortization, and accretion	14,735	10,611
Total operating expenses	31,668	31,014
Loss from operations	(14,930)	(12,760)
Other income (expense):
Interest income and expense, net of amounts capitalized	(3,050)	(1,212)
Derivative gain (loss)	(6,520)	6,435
Other	132	1,179
Total other income (expense)	(9,438)	6,402
Loss before income taxes	(24,368)	(6,358)
Income tax expense	157	108
Net loss	$ (24,525)	$ (6,466)
Loss per common share:
Basic	$ (0.07)	$ (0.02)
Diluted	$ (0.07)	$ (0.02)
Weighted-average shares outstanding:
Basic	357,418	293,053
Diluted	357,418	293,053
Comprehensive loss	$ (24,066)	$ (6,220)

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 7,735	$ 9,951
Restricted cash	2,500
Accounts receivable, net of allowance of $6,712 and $7,296, respectively	11,976	12,393
Inventory	41,239	41,848
Prepaid expenses and other current assets	5,128	5,281
Total current assets	68,578	69,473
Property and equipment, net	1,232,310	1,217,718
Restricted cash	46,776	46,776
Deferred financing costs	53,642	53,482
Advances for inventory	9,158	9,158
Intangible and other assets, net	14,181	23,798
Total assets	1,424,645	1,420,405
Current liabilities:
Accounts payable, including contractor payables of $21,821 and $32,275, respectively	31,187	47,808
Accrued expenses	34,020	28,806
Payables to affiliates	408	378
Deferred revenue	14,407	14,588
Total current liabilities	80,022	91,580
Long-term debt	732,727	723,888
Employee benefit obligations	7,409	7,407
Derivative liabilities	45,279	38,996
Deferred revenue	7,099	7,295
Other non-current liabilities	18,340	17,444
Total non-current liabilities	810,854	795,030
Commitments and contingences (Notes 8 and 9)
Preferred Stock of $0.0001 par value; 100,000,000 shares authorized and none issued and outstanding at March 31, 2012 and December 31, 2011:
Additional paid-in capital	816,621	792,584
Accumulated other comprehensive loss	(2,641)	(3,100)
Retained deficit	(280,250)	(255,724)
Total stockholders' equity	533,769	533,795
Total liabilities and stockholders' equity	1,424,645	1,420,405
Series A Preferred Convertible Stock
Preferred Stock of $0.0001 par value; 100,000,000 shares authorized and none issued and outstanding at March 31, 2012 and December 31, 2011:
Series A Preferred Convertible Stock of $0.0001 par value, one share authorized and none issued and outstanding at March 31, 2012 and December 31, 2011
Voting Common Stock
Preferred Stock of $0.0001 par value; 100,000,000 shares authorized and none issued and outstanding at March 31, 2012 and December 31, 2011:
Common Stock	30	30
Nonvoting Common Stock
Preferred Stock of $0.0001 par value; 100,000,000 shares authorized and none issued and outstanding at March 31, 2012 and December 31, 2011:
Common Stock	$ 9	$ 5

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2012	Dec. 31, 2011
Accounts receivable, allowance	$ 6,712	$ 7,296
Accounts payable, contractor payables	$ 21,821	$ 32,275
Preferred Stock
Preferred Stock, par value	$ 0.0001	$ 0.0001
Preferred Stock, shares authorized	100,000,000	100,000,000
Preferred Stock, issued
Preferred Stock, outstanding
Series A Preferred Convertible Stock
Preferred Stock, par value	$ 0.0001	$ 0.0001
Preferred Stock, shares authorized	1	1
Preferred Stock, issued
Preferred Stock, outstanding
Voting Common Stock
Common Stock, par value	$ 0.0001	$ 0.0001
Common Stock, shares authorized	865,000,000	865,000,000
Common Stock, shares issued	298,475,751	297,175,777
Common Stock, shares outstanding	298,475,751	297,175,777
Nonvoting Common Stock
Common Stock, par value	$ 0.0001	$ 0.0001
Common Stock, shares authorized	135,000,000	135,000,000
Common Stock, shares issued	92,563,139	55,881,512
Common Stock, shares outstanding	92,563,139	55,881,512

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Cash flows from operating activities:
Net loss	$ (24,525)	$ (6,466)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation, amortization, and accretion	14,735	10,611
Derivative gain (loss)	6,520	(6,435)
Stock-based compensation expense	206	651
Amortization of deferred financing costs	856	913
Contingent reimbursements	40
Loss on equity method investments	105	105
Noncash interest expense	1,191
Foreign currency and other, net	594	(507)
Changes in operating assets and liabilities:
Accounts receivable	386	(2,209)
Inventory	756	879
Prepaid expenses and other current assets	906	476
Other assets	646	28
Accounts payable	(5,674)	1,671
Payables to affiliates	30	(376)
Accrued expenses and employee benefit obligations	162	(737)
Other non-current liabilities	879	(127)
Deferred revenue	(396)	(2,070)
Net cash used in operating activities	(2,583)	(3,593)
Cash flows used in investing activities:
Second-generation satellites, ground and related launch costs	(20,540)	(32,552)
Property and equipment additions	(120)	(802)
Investment in businesses	(150)
Restricted cash	(2,500)
Net cash from investing activities	(23,310)	(33,354)
Cash flows from financing activities:
Borrowings from Facility Agreement	5,008	12,070
Proceeds from contingent equity account	18,500
Proceeds from exercise of warrants and stock options		25
Deferred financing cost payments	(250)
Net cash from financing activities	23,258	12,095
Effect of exchange rate changes on cash	419	89
Net (decrease) increase in cash and cash equivalents	(2,216)	(24,763)
Cash and cash equivalents, beginning of period	9,951	33,017
Cash and cash equivalents, end of period	7,735	8,254
Cash paid for:
Interest	7,375	7,743
Income taxes	16
Supplemental disclosure of non-cash financing and investing activities:
Reduction in accrued second-generation satellites and launch costs	7,492	24,118
Capitalized accrued interest for second-generation satellites and launch costs	1,275	(1,185)
Capitalization of the accretion of debt discount and amortization of prepaid finance costs	2,694	5,945
Payments made in Common Stock	$ 281	$ 774

BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2012

BASIS OF PRESENTATION

1. BASIS OF PRESENTATION

The Company has prepared the accompanying unaudited interim condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information. Certain information and footnote disclosures normally in financial statements have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission; however, management believes the disclosures made are adequate to make the information presented not misleading. These financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in Globalstar Inc.’s Annual Report on Form 10-K for the year ended December 31, 2011 and Management's Discussion and Analysis of Financial Condition and Results of Operations herein.

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company evaluates estimates on an ongoing basis. Significant estimates include the value of derivative instruments, the allowance for doubtful accounts, the net realizable value of inventory, the useful life and value of property and equipment, the value of stock-based compensation, the reserve for product warranties, and income taxes. Actual results could differ from these estimates.

All significant intercompany transactions and balances have been eliminated in the consolidation. In the opinion of management, such information includes all adjustments, consisting of normal recurring adjustments, that are necessary for a fair presentation of the Company’s condensed consolidated statements of operations, condensed consolidated balance sheets, and condensed consolidated statements of cash flows for the periods presented. These unaudited interim condensed consolidated financial statements include the accounts of Globalstar and its majority owned or otherwise controlled subsidiaries. The results of operations for the three months ended March 31, 2012 are not necessarily indicative of the results that may be expected for the full year or any future period.

Recently Issued Accounting Pronouncements

In December 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-12, “Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05.” This ASU defers the changes in ASU 2011-05 that relate to the presentation of reclassification adjustments and supersedes certain pending paragraphs. ASU 2011-12 will be applied retrospectively. ASU 2011-12 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. This adoption has been reflected in the Company’s condensed consolidated financial statements.

In June 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income”. This ASU amends the FASB Accounting Standards Codification (“Codification”) to allow an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. The amendments to the Codification in the ASU do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. ASU 2011-05 will be applied retrospectively. ASU 2011-05 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. This adoption has been reflected in the Company’s condensed consolidated financial statements.

In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The amendments in this ASU generally represent clarification of Topic 820, but also include instances where a particular principle or requirement for measuring fair value or disclosing information about fair value measurements has changed. This update results in common principles and requirements for measuring fair value and for disclosing information about fair value measurements in accordance with GAAP and IFRS. The amendments are effective for interim and annual periods beginning after December 15, 2011 and are to be applied prospectively. This adoption did not have a impact on the Company’s condensed consolidated financial statements.

MANAGEMENT'S PLANS REGARDING FUTURE OPERATIONS

3 Months Ended

Mar. 31, 2012

MANAGEMENT'S PLANS REGARDING FUTURE OPERATIONS

2. MANAGEMENT'S PLANS REGARDING FUTURE OPERATIONS

In each of the last three years, the Company has generated operating losses and negative cash flows from operations, which have adversely affected the Company’s liquidity. These operating results were caused primarily by the deterioration of the Company’s first-generation satellite constellation and delays in the launch and deployment of its second-generation satellites, which in turn reduced its ability to provide reliable Duplex service to its customers. In response to these circumstances, the Company developed a plan to improve operations; complete the launches of the remaining second-generation satellites; complete the construction, deployment and activation of additional second-generation satellites and next-generation ground upgrades; and obtain additional financing.

As further described below, the Company took the following steps pursuant to its plan.

•

Reduced operating expenses by decreasing headcount and streamlining its supply chain and other operations, consolidating its world-wide operations, including the completion of the relocation of its corporate headquarters to Covington, Louisiana, and simplifying its product offerings.

•

Increased revenues by marketing its Simplex and SPOT products targeted to the consumer and enterprise markets.

•

Successfully launched 18 second-generation satellites.

•

Generated cash by issuing $38.0 million in 5.0% Notes and drawing $32.7 million from its contingent equity account.

•

Improved liquidity by deferring principal payments on its senior unsecured facility agreement (the “Facility Agreement”).

•

Obtained the required licensing to activate its ground stations in North America to send to, and receive call traffic from, its second-generation satellites.

•

Commenced an arbitration with Thales Alenia Space (“Thales”) to resolve key contractual issues regarding, among other things, Thales’ manufacture of additional second-generation satellites.

•

Initiated the development of a software solution intended to resolve the momentum wheel issues with respect to certain of its second-generation satellites.

The Company believes that these actions, combined with additional actions included in its operating plan, will result in improved cash flows from operations. These additional actions include, among other things, the following:

•

Launching six more second-generation satellites during the second half of 2012.

•

Continuing to focus on reducing and controlling operating expenses.

•

Restructuring payment arrangements in its contracts with major service providers.

•

Improving its key business processes and leveraging its information technology platform.

•

Increasing revenue and ARPU through further implementation of its sales and marketing programs designed to take advantage of the anticipated continued expansion of the Company’s Duplex coverage.

The Company believes that cash on hand, improved cash flows from operations, resulting from the successful execution of the Company’s operating plan, coupled with anticipated draws of the remaining $27.3 million in its contingent equity account (as of March 31, 2012) will be sufficient to fund the completion of the fourth launch of second-generation satellites and to satisfy the Company’s existing debt and restructured contractual obligations in the next 12 months without additional external financing. However, substantial uncertainties remain related to the outcome of the arbitration with Thales, the timing and outcome of the fourth launch of the second-generation satellites, the Company’s ability to comply in future periods with one of the Facility’s nonfinancial covenants (see Note 4 for further discussion), reaching a solution to the momentum wheel issues, the remaining useful life of the first-generation satellites still in service and the impact and timing of the Company’s plans to improve operating cash flows and to restructure its contractual obligations. If the resolution of these uncertainties materially and negatively impacts cash and liquidity, the Company’s ability to continue to execute its business plans, without additional external financing, will be adversely affected.

Further, the Company’s longer-term business plan includes purchasing and launching additional second-generation satellites, making major improvements to its ground infrastructure, and releasing new products. To execute these longer-term plans successfully, the Company will need to obtain additional external financing to fund these expenditures. Although the Company is seeking such financing and is continuing to address requirements with contractors, there is no guarantee that these efforts will be successful given the scope, complexity, cost and risk of completing the construction of the space and ground components of its second-generation constellation and the development of marketable new products. Accordingly, the Company is not in a position to estimate when, or if, these longer-term plans will be completed and the effect this will have on the Company’s performance.

PROPERTY AND EQUIPMENT

3 Months Ended

Mar. 31, 2012

PROPERTY AND EQUIPMENT

3. PROPERTY AND EQUIPMENT

Property and equipment consists of the following (in thousands):

	March 31,			December 31,
	2012			2011
Globalstar System:
Space component	$	625,677		$	532,487
Ground component		49,370			49,109
Construction in progress:
Space component		582,538			650,920
Ground component		84,234			80,071
Prepaid long-lead items and other		18,251			18,028
Total Globalstar System		1,360,070			1,330,615
Internally developed and purchased software		13,931			14,052
Equipment		12,441			12,333
Land and buildings		4,195			4,152
Leasehold improvements		1,407			1,402
		1,392,044			1,362,554
Accumulated depreciation and amortization		(159,734	)		(144,836	)
	$	1,232,310		$	1,217,718

Contracts

The following table presents the contract prices for the construction of the Company’s second-generation satellites and ground upgrades (in thousands):

	Contract
	Price
Thales second-generation satellites (Phase 1 and 2) and satellite operations control center	$	638,798
Arianespace launch services		216,000
Launch insurance		39,903
Hughes next-generation ground component		104,597
Ericsson next-generation ground network		29,138
Total	$	1,028,436

As of March 31, 2012, the Company had incurred $963.9 million of costs under these contracts, including contracts payable and accrued expenses of $30.9 million, excluding interest. Of the amounts incurred, the Company had capitalized $958.4 million and expensed $5.5 million of research and development costs.

Second-Generation Satellites

In June 2009, the Company and Thales entered into an amended and restated contract for the construction of the Company’s second-generation low-earth orbit satellites and related services, to incorporate prior amendments and acceleration requests, and to make other non-material changes to the contract entered into in November 2006. The Company has launched 18 of the 24 second-generation satellites and expects to launch the remaining six satellites during the second half of 2012. The Company also has a contract with Thales to construct additional second-generation satellites at a fixed price. The Company is currently in arbitration with Thales to seek enforcement of certain rights under this contract under which the Company has placed an order for additional satellites. See Note 9 for further discussion.

In March 2007, the Company and Thales entered into an agreement for the construction of the Satellite Operations Control Centers, Telemetry Command Units and In Orbit Test Equipment (collectively, the “Control Network Facility”) for the Company’s second-generation satellite constellation. The Control Network Facility achieved its final acceptance milestone in October 2010.

The Company’s second-generation satellites were designed with four momentum wheels each. Each satellite requires three functioning momentum wheels for operation. One momentum wheel is redundant (a non-operating wheel acting as a spare on the satellite). Momentum wheels are flywheels used to provide attitude control and stability on spacecraft. Momentum wheels on certain satellites launched in October 2010 and July 2011 have exhibited anomalous behavior necessitating the removal of such wheels from service. To date, this has not had a significant impact on the Company’s overall service levels. The satellites launched in December 2011 have not experienced any similar behavior associated with their momentum wheels. The Company and Thales are currently working together to develop a software-based solution that the Company plans to upload to certain satellites to permit such satellites to operate on two momentum wheels. Although Thales has successfully conducted computer simulations of the proposed software solution, the Company can provide no assurance that a solution will be developed and implemented successfully. If the Company is unable successfully to develop and implement this solution, or otherwise resolve the anomalous behavior, its investment in certain satellites may be impaired.

In March 2010, the Company and Arianespace entered into an amended and restated contract to incorporate prior amendments to the contract executed in September 2007 for the launch of the Company’s second-generation satellites and certain pre and post-launch services under which Arianespace agreed to make four launches of six satellites each and one optional launch of six satellites. Notwithstanding the one optional launch, the Company may contract separately with Arianespace or another provider of launch services after Arianespace’s firm launch commitments are fulfilled.

Next-Generation Gateways and Other Ground Facilities

In May 2008, the Company and Hughes entered into an agreement under which Hughes agreed to design, supply and implement (a) the Radio Access Network (RAN) ground network equipment and software upgrades for installation at a number of the Company’s satellite gateway ground stations and (b) satellite interface chips to be a part of the User Terminal Subsystem (UTS) in various next-generation Globalstar devices.

The Company and Hughes have amended this agreement extending the performance, revising certain payment milestones and adding new features. The Company has the option to purchase additional RANs and other software and hardware improvements at pre-negotiated prices. The Company and Hughes have also amended their agreement to extend the deadline to make certain scheduled payments previously due under the contract. See Note 8 for further discussion.

In October 2008, the Company entered into an agreement with Ericsson, a leading global provider of technology and services to telecom operators. The Company and Ericsson have amended this contract to increase the Company’s obligations for additional deliverables and features. According to the contract, Ericsson will work with the Company to develop, implement and maintain a ground interface, or core network, system that will be installed at the Company’s satellite gateway ground stations. The Company has the option to purchase additional core networks at pre-negotiated prices. The Company and Ericsson have amended their agreement to extend the deadline to make certain scheduled payments previously due under the contract. See Note 8 for further discussion.

Capitalized Interest and Depreciation Expense

The following tables summarize capitalized interest for the periods indicated below (in thousands):

	As of
	March 31, 2012		December 31, 2011

Total Interest Capitalized	$	189,272	$	176,361

	Three Months Ended
	March 31, 2012		March 31, 2011

Current Period Interest Capitalized	$	12,911	$	12,513

The following table summarizes depreciation expense for the periods indicated below (in thousands):

	Three Months Ended
	March 31, 2012		March 31, 2011

Depreciation Expense	$	14,466	$	9,816

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

+ References + Details

LONG-TERM DEBT

3 Months Ended

Mar. 31, 2012

LONG-TERM DEBT

4. LONG-TERM DEBT

Long-term debt consists of the following (in thousands):

	March 31, 2012				December 31, 2011
	Principal		Carrying		Principal		Carrying
	Amount		Value		Amount		Value

Facility Agreement	$	583,303	$	583,303	$	578,295	$	578,295
Subordinated Loan		48,836		44,818		47,384		43,255
5.0% Convertible Senior Unsecured Notes		38,949		13,468		38,949		13,077
8.00% Convertible Senior Unsecured Notes		47,516		25,604		47,516		25,203
5.75% Convertible Senior Unsecured Notes		71,804		65,534		71,804		64,058
Total debt		790,408		732,727		783,948		723,888
Less: current portion		—		—		—		—
Long-term debt	$	790,408	$	732,727	$	783,948	$	723,888

Facility Agreement

The Company has a $586.3 million Facility Agreement that will mature 84 months after the first repayment date, as amended. Scheduled semi-annual principal repayments will begin on the earlier of eight months after the fourth launch of the second-generation constellation or June 30, 2013. The facility bears interest at a floating LIBOR rate, plus a margin of 2.07% through December 2012, increasing to 2.25% through December 2017 and 2.40% thereafter. Ninety-five percent of the Company’s obligations under the Facility Agreement are guaranteed by COFACE, the French export credit agency. The Company’s obligations under the facility are guaranteed on a senior secured basis by all of its domestic subsidiaries and are secured by a first priority lien on substantially all of the assets of the Company and its domestic subsidiaries (other than their FCC licenses), including patents and trademarks, 100% of the equity of the Company’s domestic subsidiaries and 65% of the equity of certain foreign subsidiaries. The Facility Agreement contains customary events of default and requires that the Company satisfy various financial and nonfinancial covenants.

As of March 31, 2012, the Company was in compliance with all such covenants. However, due to the delays in receiving spacecraft from Thales, the Company may not achieve in-orbit acceptance of the 18 previously-launched second-generation satellites by the date specified in the Facility Agreement. At the time it filed its 2011 Form 10-K, the Company believed this nonfinancial covenant requirement could be met. However, the Company has raised newly launched satellites earlier than originally planned, slowing their orbital speeds. This action reduced the Company’s ability to change the final orbital position of all 18 satellites by the deadline. As a result, the Company may not fully comply with this nonfinancial covenant and is in the process of seeking a waiver. The Company anticipates that it is likely that is can obtain such waiver, or an amendment to the applicable covenant, because as the Company has obtained such an amendment to this covenant in the past. If the Company cannot obtain either a waiver or an amendment, the failure to comply would represent an event of default. An event of default under the Facility Agreement may permit acceleration of indebtedness under other agreements that contain cross-default or cross-acceleration provisions.

As a result of the delivery delays discussed in the previous paragraph, the Company also was required to enter into Amendment Letters No. 8 and 9 to the Facility Agreement.

On January 23, 2012, the Company entered into Amendment Letter No. 8 to its Facility Agreement which extended to June 14, 2012 the period in which the Company may draw the remaining funds under the Facility Agreement.

On March 6, 2012, the Company entered into Amendment Letter No. 9 to its Facility Agreement which extends the availability period to December 31, 2012; delays to April 30, 2013 the last date for final in-orbit acceptance of 24 second-generation satellites; delays the first repayment date for principal payments to the earlier of eight months after the fourth launch of second-generation satellites or June 30, 2013; and amended certain covenants including (a) adjusted consolidated EBITDA, (b) debt service coverage ratio and (c) net debt to adjusted consolidated EBITDA.

Contingent Equity Agreement

The Company has a Contingent Equity Agreement with Thermo whereby Thermo agreed to deposit $60 million into a contingent equity account to fulfill a condition precedent for borrowing under the Facility Agreement. Under the terms of the Facility Agreement, the Company has the right to make draws from this account if and to the extent it has an actual or projected deficiency in its ability to meet obligations due within a forward-looking 90-day period. Thermo has pledged the contingent equity account to secure the Company’s obligations under the Facility Agreement.

The Contingent Equity Agreement provides that the Company will pay Thermo an availability fee of 10% per year for maintaining funds in the contingent equity account. This annual fee is payable solely in warrants entitling the holder to purchase shares of the Company’s common stock at $0.01 per share during a five-year exercise period from issuance. The number of shares issuable under the warrants is calculated by taking the outstanding funds available in the contingent equity account multiplied by 10% divided by the lower of the Company’s common stock price on the issuance date or $1.37, whichever is lower, but not to be lower than $0.20. The common stock price is subject to a reset provision on certain valuation dates subsequent to issuance whereby the warrant price used in the calculation will be the lower of the warrant price on the issuance date or the Company’s common stock price on the valuation date. The Company determined that the warrants issued in conjunction with the availability fee are derivatives and records the value of the derivatives as a component of other non-current liabilities, at issuance. The offset is recorded in other assets and is amortized over the one-year availability period.

When the Company draws on the contingent equity account, it issues Thermo a number of shares of common stock calculated using a price per share equal to 80% of the average closing price of the common stock for the 15 trading days immediately preceding the draw. The 20% discount on the value of the shares issued to Thermo is recognized as a deferred financing cost and is amortized over the remaining term of the Facility Agreement. Amounts can only be withdrawn from the account provided that no default has occurred and is continuing under the Facility Agreement. Thermo may withdraw undrawn amounts in the account after December 31, 2014.

The following table summarizes the balance of and the draws on the contingent equity account (dollars in thousands) and the related warrants and shares issued to Thermo since origination of the agreement as of March 31, 2012:

	Available				Warrants		Shares
	Amount		Draws		Issued		Issued
June 19, 2009 (1)	$	60,000	$	—		4,379,562		—
December 31, 2009 (2)		60,000		—		2,516,990		—
June 19, 2010 (1)		60,000		—		4,379,562		—
June 19, 2011 (2)		60,000		—		620,438		—
June 19, 2011 (1), (3)		60,000		—		5,000,000		—
November 4, 2011(4)		54,600		5,400		—		11,376,404
November 30, 2011 (4)		45,800		8,800		—		25,229,358
January 11, 2012 (4)		36,000		9,800		—		22,546,012
March 23, 2012 (4)		27,300		8,700		—		14,135,615
March 31, 2012		27,300	$	32,700		16,896,552		73,287,389

	(1)	Warrants to purchase common stock were issued to Thermo for the annual availability fee pursuant to the terms of the Contingent Equity Agreement.
	(2)	Additional warrants were issued to Thermo due to the reset provisions in the Contingent Equity Agreement.
	(3)	On June 19, 2012, if the closing share price is less than $1.20, the current warrant price, the Company will issue additional warrants.
	(4)	Nonvoting shares of common stock were issued to Thermo with respect to the Company’s draws on the contingent equity account pursuant to the terms of the Contingent Equity Agreement.

On June 19, 2010, the warrants issued on June 19, 2009 and on December 31, 2009 were no longer variable and the related $11.9 million liability was reclassified to equity. On June 19, 2011, the warrants issued on June 19, 2010 were no longer variable and the related $6.0 million liability was reclassified to equity.

As of March 31, 2012, no warrants issued in connection with the Contingent Equity Agreement had been exercised.

No voting common stock is issuable if it would cause Thermo and its affiliates to own more than 70% of the Company’s outstanding voting stock. The Company may issue nonvoting common stock in lieu of common stock to the extent issuing common stock would cause Thermo and its affiliates to exceed this 70% ownership level. The Company issued nonvoting shares to Thermo as a result of the draws made during 2011 and the first quarter of 2012.

Subordinated Loan Agreement

The Company has a Loan Agreement with Thermo whereby Thermo loaned the Company $25 million for the purpose of funding the debt service reserve account required under the Facility Agreement. This loan is subordinated to, and the debt service reserve account is pledged to secure, all of the Company’s obligations under the Facility Agreement. Amounts deposited in the debt service reserve account are restricted to payments due under the Facility Agreement.

The loan accrues interest at 12% per annum, which is capitalized and added to the outstanding principal in lieu of cash payments. The Company will make payments to Thermo only when permitted under the Facility Agreement. The loan becomes due and payable six months after the obligations under the Facility Agreement have been paid in full, the Company has a change in control or any acceleration of the maturity of the loans under the Facility Agreement occurs. As additional consideration for the loan, the Company issued Thermo a warrant to purchase 4,205,608 shares of common stock at $0.01 per share with a five-year exercise period. No voting common stock is issuable upon such exercise if the issuance would cause Thermo and its affiliates to own more than 70% of the Company’s outstanding voting stock. The Company may issue nonvoting common stock in lieu of common stock to the extent issuing common stock would cause Thermo and its affiliates to exceed this 70% ownership level.

The Company determined that the warrant was an equity instrument and recorded it as a part of stockholders’ equity with a corresponding debt discount of $5.2 million, which is netted against the principal amount of the loan. The Company is accreting the debt discount associated with the warrant to interest expense over the term of the loan agreement using an effective interest method. As of March 31, 2012, the remaining debt discount was $4.0 million, and $11.3 million of interest was outstanding; these are included in long-term debt on the Company’s consolidated balance sheet.

In 2009, Thermo borrowed $20 million of the $25 million it loaned to the Company under the Loan Agreement from two Company vendors and also agreed to reimburse another Company vendor if its guarantee of a portion of the debt service reserve account were called. During 2011, this Company vendor funded the debt service reserve account in the amount of $12.5 million, for a total of $37.5 million under the subordinated loan.

Pursuant to the terms of the Facility Agreement, the Company was required to fund a total of $46.8 million in the debt service reserve account. The funds in this account are restricted to making principal and interest payments on the Facility Agreement. The minimum required balance, not to exceed $46.8 million, fluctuates over time based on the timing of principal and interest payment dates. As of March 31, 2012, the entire amount of $46.8 million is recorded in restricted cash.

5.00% Convertible Senior Notes

In 2011, the Company issued $38 million in aggregate principal amount of the 5.0% Convertible Senior Unsecured Notes (the “5.0% Notes”) and warrants (the “5.0% Warrants”) to purchase 15,200,000 shares of voting common stock of the Company at an exercise price of $1.25 per share. The 5.0% Notes are convertible into shares of common stock at an initial conversion price of $1.25 per share of common stock, or 800 shares of the Company’s common stock per $1,000 principal amount of the 5.0% Notes, subject to adjustment in the manner set forth in the Indenture. The 5.0% Notes are guaranteed on a subordinated basis by substantially all of the Company’s domestic subsidiaries (the “Guarantors”), on an unconditional joint and several basis, pursuant to a Guaranty Agreement (the “Guaranty”). The 5.0% Warrants are exercisable until five years after their issuance. The 5.0% Notes and 5.0% Warrants have anti-dilution protection in the event of certain stock splits or extraordinary share distributions, and a reset of the conversion and exercise price on April 15, 2013 if the Company’s common stock is below the initial conversion and exercise price at that time. The 5.0% Notes are senior unsecured debt obligations of the Company and rank pari passu with the Company’s existing 5.75% and 8.00% Convertible Senior Notes and are subordinated to the Company’s obligations pursuant to its Facility Agreement. There is no sinking fund for the 5.0% Notes. The 5.0% Notes will mature at the earlier to occur of (i) December 14, 2021, or (ii) six months following the maturity date of the Facility Agreement and bear interest at a rate of 5.0% per annum. Interest on the Notes will be payable in-kind semi-annually in arrears on June 15 and December 15 of each year. Under certain circumstances, interest on the 5.0% Notes will be payable in cash at the election of the holder if such payments are permitted under the Facility Agreement. The indenture governing the 5.0% Notes contains customary events of default with which the Company was in compliance as of March 31, 2012.

No 5.0% Notes were converted and no 5.0% Warrants were exercised during the first quarter of 2012.

8.00% Convertible Senior Notes

In 2009, the Company issued $55 million in aggregate principal amount of 8.00% Convertible Senior Unsecured Notes (the “8.00% Notes”) and warrants (the “8.00% Warrants”) to purchase shares of the Company’s common stock. The 8.00% Notes mature at the later of the tenth anniversary of closing (June 19, 2019) or six months following the maturity date of the Facility Agreement and bear interest at a rate of 8.00% per annum. Interest on the 8.00% Notes is payable in the form of additional 8.00% Notes or, subject to certain restrictions, in common stock at the option of the holder. Interest is payable semi-annually in arrears on June 15 and December 15 of each year. The 8.00% Notes are subordinated to all of the Company’s obligations under the Facility Agreement. The 8.00% Notes are the Company’s senior unsecured debt obligations and rank pari passu with the Company’s existing 5.0% and 5.75% Notes. The indenture governing the 8.00% Notes contains customary events of default with which the Company was in compliance as of March 31, 2012.

The current exercise price of the 8.00% Warrants is $0.49 and the base conversion price of the 8.00% Notes is $1.61.

No 8.00% Notes were converted during the first quarter of 2012. 8.00% Warrants were exercised during the first quarter of 2012 to purchase approximately 0.3 million common shares with a fair value of approximately $0.2 million.

5.75% Convertible Senior Notes

In 2008, the Company issued $150.0 million aggregate principal amount of 5.75% Convertible Senior Unsecured Notes (the “5.75% Notes”), which, subject to certain exceptions set forth in the related indenture, are subject to repurchase by the Company for cash at the option of the holders in whole or part (i) on each of April 1, 2013, April 1, 2018 and April 1, 2023 or (ii) upon a fundamental change, both at a purchase price equal to 100% of the principal amount of the 5.75% Notes, plus accrued and unpaid interest, if any. A fundamental change will occur upon certain changes in the ownership of the Company, or certain events relating to the trading of the Company’s common stock. Holders may convert their 5.75% Notes into shares of common stock at their option at any time prior to maturity, subject to the Company’s option to deliver cash in lieu of all or a portion of the shares. The indenture governing the 5.75% Notes contains customary events of default with which the Company was in compliance as of March 31, 2012. The 5.75% Notes are subordinated to all of the Company’s obligations under the Facility Agreement. The 5.75% Notes are the Company’s senior unsecured debt obligations and rank pari passu with the Company’s existing 8.00% and 5.75% Notes. The 5.75% Notes mature on April 1, 2028 and bear interest at a rate of 5.75% per annum. Interest on the 5.75% Notes is payable semi-annually in arrears on April 1 and October 1 of each year. The base conversion price of the 5.75% Notes is $6.02.

No 5.75% Notes were converted during the first quarter of 2012.

Share Lending Agreement

Concurrently with the offering of the 5.75% Notes, the Company entered into a share lending agreement (the “Share Lending Agreement”) with Merrill Lynch International (the “Borrower”), pursuant to which the Company agreed to lend up to 36,144,570 shares of common stock (the “Borrowed Shares”) to the Borrower, subject to certain adjustments, for a period ending on the earliest of (i) at the Company’s option, at any time after the entire principal amount of the 5.75% Notes ceases to be outstanding, (ii) the written agreement of the Company and the Borrower to terminate, (iii) the occurrence of a Borrower default, at the option of Lender, and (iv) the occurrence of a Lender default, at the option of the Borrower. Pursuant to the Share Lending Agreement, upon the termination of the share loan, the Borrower must return the Borrowed Shares to the Company. Upon the conversion of 5.75% Notes (in whole or in part), a number of Borrowed Shares proportional to the conversion rate for such notes must be returned to the Company. At the Company’s election, the Borrower may deliver cash equal to the market value of the corresponding Borrowed Shares instead of returning to the Company the Borrowed Shares otherwise required by conversions of 5.75% Notes.

Pursuant to and upon the terms of the Share Lending Agreement, the Company will issue and lend the Borrowed Shares to the Borrower as a share loan. The Borrowing Agent also is acting as an underwriter with respect to the Borrowed Shares, which are being offered to the public. The Borrowed Shares included approximately 32.0 million shares of common stock initially loaned by the Company to the Borrower on separate occasions, delivered pursuant to the Share Lending Agreement and the Underwriting Agreement, and an additional 4.1 million shares of common stock that, from time to time, may be borrowed from the Company by the Borrower pursuant to the Share Lending Agreement and the Underwriting Agreement and subsequently offered and sold at prevailing market prices at the time of sale or negotiated prices. The Borrowed Shares are free trading shares. At each of March 31, 2012 and December 31, 2011, approximately 17.3 million Borrowed Shares remained outstanding. As of March 31, 2012 and December 31, 2011, the unamortized amount of issuance costs associated with the Share Lending Agreement was $1.9 million and $2.3 million, respectively.

Warrants Outstanding

As a result of the Company’s borrowings described above, as of March 31, 2012 and December 31, 2011 there were warrants outstanding to purchase 76.5 million shares and 76.8 million shares, respectively, of the Company’s common stock as shown in the table below:

	Outstanding Warrants				Strike Price
	March 31, 2012		December 31, 2011		March 31, 2012		December 31, 2011
Contingent Equity Agreement (1)		16,896,552		16,896,552	$	0.01	$	0.01
Subordinated Loan		4,205,608		4,205,608		0.01		0.01
5.0% Notes (2)		15,200,000		15,200,000		1.25		1.25
8.00% Notes (3)		40,216,294		40,486,794		0.49		0.49
5.75% Notes		—		—		—		—
		76,518,454		76,788,954

	(1)	On certain valuation dates, additional warrants may be issued due to reset provisions in the agreement.
	(2)	According to the terms of the 5.0% Notes, the 5.0% Warrants are subject to reset on April 15, 2013, if the price of the Company’s common stock is below the initial conversion and exercise price at that date.
	(3)	According to the terms of the 8.00% Notes, additional 8.00% Warrants may be issued to holders if shares of common stock are issued below the then current warrant reset price ($0.49 at March 31, 2012).

DERIVATIVES

3 Months Ended

Mar. 31, 2012

DERIVATIVES

5. DERIVATIVES

The following tables disclose the fair values and locations of the derivative instruments on the Company’s condensed consolidated balance sheets and condensed consolidated statements of operations (in thousands):

	December 31,
	March 31, 2012			December 31, 2011
Intangible and other assets:
Interest rate cap	$	226		$	255
Total intangible and other assets	$	226		$	255

Derivative liabilities:
Compound embedded conversion option with 8.00% Notes	$	(9,294	)	$	(7,111	)
Warrants issued with 8.00% Notes		(26,945	)		(22,673	)
Warrants issued in conjunction with contingent equity agreement		(6,116	)		(6,155	)
Contingent put feature embedded in the 5.0% Notes		(2,924	)		(3,057	)
Total derivative liabilities	$	(45,279	)	$	(38,996	)

	Three Months Ended
	March 31, 2012			March 31, 2011
Interest rate cap	$	(29	)	$	147
Compound embedded conversion option with 8.00% Notes		(2,183	)		2,736
Warrants issued with 8.00% Notes		(4,480	)		2,539
Warrants issued in conjunction with contingent equity agreement		39			1,013
Contingent put feature embedded in the 5.0% Notes		133			—
Total derivative gain (loss)	$	(6,520	)	$	6,435

None of the derivative instruments is designated as a hedge.

Interest Rate Cap

In June 2009, in connection with entering into the Facility Agreement, which provides for interest at a variable rate, the Company entered into five ten-year interest rate cap agreements. The interest rate cap agreements reflect a variable notional amount ranging from $586.3 million to $14.8 million at interest rates that provide coverage to the Company for exposure resulting from escalating interest rates over the term of the Facility Agreement. The interest rate cap provides limits on the six-month Libor rate (“Base Rate”) used to calculate the coupon interest on outstanding amounts on the Facility Agreement of 4.00% from the date of issuance through December 2012. Thereafter, the Base Rate is capped at 5.50% should the Base Rate not exceed 6.5%. Should the Base Rate exceed 6.5%, the Company’s Base Rate will be 1% less than the then six-month Libor rate. The Company paid an approximately $12.4 million upfront fee for the interest rate cap agreements. The interest rate cap did not qualify for hedge accounting treatment, and changes in the fair value of the agreements are included in the condensed consolidated statement of operations.

Compound Embedded Conversion Option with 8.00% Notes

The Company recorded the conversion rights and features embedded within the 8.00% Notes as a compound embedded derivative liability on its condensed consolidated balance sheet with a corresponding debt discount which is netted against the principal amount of the 8.00% Notes. The Company is accreting the debt discount associated with the compound embedded derivative liability to interest expense over the term of the 8.00% Notes using the effective interest rate method. The fair value of the compound embedded derivative liability is marked-to-market at the end of each reporting period, with any changes in value reported in the condensed consolidated statements of operations. The Company determined the fair value of the compound embedded derivative using a Monte Carlo simulation model.

Warrants Issued with 8.00% Notes

Due to the cash settlement provisions and reset features in the 8.00% Warrants issued with the 8.00% Notes, the Company recorded the 8.00% Warrants as an embedded derivative liability on its condensed consolidated balance sheet with a corresponding debt discount which is netted against the principal amount of the 8.00% Notes. The Company is accreting the debt discount associated with the warrant liability to interest expense over the term of the 8.00% Warrants using the effective interest rate method. The fair value of the warrant liability is marked-to-market at the end of each reporting period, with any changes in value reported in the condensed consolidated statements of operations. The Company determined the fair value of the warrant derivative using a Monte Carlo simulation model.

Warrants Issued in Conjunction with Contingent Equity Agreement

The Company determined that the warrants issued in conjunction with the availability fee for the Contingent Equity Agreement are a liability at issuance. The offset is recorded in other non-current assets and is amortized over the one-year availability period. The fair value of the warrant liability is marked-to-market at the end of each reporting period, with any changes in value reported in the condensed consolidated statements of operations. The Company determined the principal amount of the warrant derivative using a Monte Carlo simulation model.

Contingent put feature embedded in the 5.0% Notes

The Company evaluated the embedded derivative resulting from the contingent put feature within the Indenture for bifurcation from the 5.0% Notes. The contingent put feature was not deemed clearly and closely related to the 5.0% Notes and was bifurcated as a standalone derivative. The Company recorded this embedded derivative liability as a non-current liability on its condensed consolidated balance sheets with a corresponding debt discount which is netted against the principal amount of the 5.0% Notes. The fair value of the contingent put feature liability is marked-to-market at the end of each reporting period. The Company determined the fair value of the contingent put feature derivative using a Monte Carlo simulation model based upon a risk-neutral stock price model.

- Definition

The entire disclosure for the entity's entire derivative instruments and hedging activities. Describes an entity's risk management strategies, derivatives in hedging activities and non-hedging derivative instruments, the assets, obligations, liabilities, revenues and expenses arising therefrom, and the amounts of and methodologies and assumptions used in determining the amounts of such items.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 133
-Paragraph 45
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 133
-Paragraph 44
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 30
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6887037&loc=d3e80784-113994

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=6935481&loc=SL5579245-113959

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4B
-URI http://asc.fasb.org/extlink&oid=6935481&loc=SL5624163-113959

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4C
-URI http://asc.fasb.org/extlink&oid=6935481&loc=SL5624171-113959

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6935481&loc=d3e41638-113959

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 1B
-URI http://asc.fasb.org/extlink&oid=6935481&loc=SL5580258-113959

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6935481&loc=SL5579240-113959

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6935481&loc=d3e41641-113959

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6935481&loc=d3e41620-113959

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 25
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6886632&loc=d3e76258-113986

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4E
-URI http://asc.fasb.org/extlink&oid=6935481&loc=SL5624181-113959

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4A
-URI http://asc.fasb.org/extlink&oid=6935481&loc=SL5618551-113959

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4D
-URI http://asc.fasb.org/extlink&oid=6935481&loc=SL5624177-113959

Reference 16: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 30
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6887037&loc=d3e80748-113994

Reference 17: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4H
-URI http://asc.fasb.org/extlink&oid=6935481&loc=SL5624258-113959

Reference 18: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4K
-URI http://asc.fasb.org/extlink&oid=6935481&loc=SL5708775-113959

Reference 19: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6935481&loc=d3e41635-113959

Reference 20: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(n))
-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

Reference 21: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4J
-URI http://asc.fasb.org/extlink&oid=6935481&loc=SL5708773-113959

Reference 22: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 30
-Section 45
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6441202&loc=d3e80720-113993

+ Details

FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2012

FAIR VALUE MEASUREMENTS

6. FAIR VALUE MEASUREMENTS

The Company follows the authoritative guidance for fair value measurements relating to financial and non-financial assets and liabilities, including presentation of required disclosures herein. This guidance establishes a fair value framework requiring the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets and liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2: Quoted prices in markets that are not active or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

Recurring Fair Value Measurements

The following table provides a summary of the financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2012 and December 31, 2011 (in thousands):

	Fair Value Measurements at March 31, 2012:
	(Level 1)		(Level 2)		(Level 3)			Total Balance
Other assets:
Interest rate cap	$	—	$	226	$	—		$	226
Total other assets measured at fair value	$	—	$	226	$	—		$	226

Other liabilities:
Liability for contingent consideration	$	—	$	—	$	(4,615	)	$	(4,615	)
Compound embedded conversion option with 8.00% Notes		—		—		(9,294	)		(9,294	)
Warrants issued with 8.00% Notes		—		—		(26,945	)		(26,945	)
Warrants issued with contingent equity agreement		—		—		(6,116	)		(6,116	)
Contingent put feature embedded in 5.0% Notes		—		—		(2,924	)		(2,924	)
Total other liabilities measured at fair value	$	—	$	—	$	(49,894	)	$	(49,894	)

	Fair Value Measurements at December 31, 2011:
	(Level 1)		(Level 2)		(Level 3)			Total Balance
Other assets:
Interest rate cap	$	—	$	255	$	—		$	255
Total other assets measured at fair value	$	—	$	255	$	—		$	255

Other liabilities:
Liability for contingent consideration	$	—	$	—	$	(4,963	)	$	(4,963	)
Compound embedded conversion option with 8.00% Notes		—		—		(7,111	)		(7,111	)
Warrants issued with 8.00% Notes		—		—		(22,673	)		(22,673	)
Warrants issued with contingent equity agreement		—		—		(6,155	)		(6,155	)
Contingent put feature embedded in 5.0% Notes		—		—		(3,057	)		(3,057	)
Total other liabilities measured at fair value	$	—	$	—	$	(43,959	)	$	(43,959	)

Interest Rate Cap

The fair value of the interest rate cap is determined using observable pricing inputs including benchmark yields, reported trades, and broker/dealer quotes at the reporting date. See Note 5 for further discussion.

Liability for Contingent Consideration

In connection with the acquisition of Axonn in December 2009, the Company is obligated to pay up to an additional $10.8 million in contingent consideration for earnouts based on sales of existing and new products over a five-year earnout period beginning January 1, 2010. The Company will make earnout payments in stock (not to exceed 10% of the Company’s pre-transaction outstanding common stock), but at its option may make payments in cash after 13 million shares have been issued. The Company’s initial estimate of the total earnout expected to be paid was $10.8 million. Since the earnout period started, the Company has made revisions to this estimate, which is currently $10.0 million. Through March 31, 2012, the Company had made $3.3 million in earnout payments by issuing 9,487,984 shares of voting common stock.

The fair value of the accrued contingent consideration was determined using a probability-weighted discounted cash flow approach at the acquisition date and reporting date. The approach is based on significant inputs that are not observable in the market, which are referred to as Level 3 inputs. The fair value is based on the Company reaching specific performance metrics over the next three years of operations.

The significant unobservable inputs used in the fair value measurement of the Company’s liability for contingent consideration are projected future sales of existing and new products as well as earnout payments made each quarter determined by actual product sales. Decreases in forecasted sales would result in a lower fair value measurement.

Compound Embedded Conversion Options with 8.00% Notes

The derivative liabilities in Level 3 include the compound embedded conversion option in the 8.00% Notes. See Note 5 for further discussion. The Company marks-to-market this liability at each reporting date with the changes in fair value recognized in the Company’s results of operations.

As of March 31, 2012, the Company utilized valuation models that rely exclusively on Level 3 inputs including, among other things: (i) the underlying features of the compound embedded conversion option, including payment in kind interest payments, make whole premiums, automatic conversions, and future equity issuances; (ii) stock price volatility ranges from 35% - 102%; (iii) risk-free interest rates ranges from 0.05% - 2.23%; (iv) base conversion price of $1.61; and (v) market price of common stock at the valuation date of $0.70.

As of December 31, 2011, the Company utilized valuation models that rely exclusively on Level 3 inputs including, among other things: (i) the underlying features of the compound embedded conversion option, including payment in kind interest payments, make whole premiums, automatic conversions, and future equity issuances; (ii) stock price volatility ranges from 35% - 103%; (iii) risk-free interest rates ranges from 0.01% - 1.89%; (iv) base conversion price of $1.61; and (v) market price of common stock at the valuation date of $0.54.

The significant unobservable inputs used in the fair value measurement of the Company’s compound embedded conversion option within the Company’s 8.00% Notes are future equity issuances and expected volatility. In connection with the acquisition of Axonn in December 2009, the Company will make future earnout payments in stock. Certain issuances of common stock may cause the base conversion rate to be adjusted, which will increase the fair value of the conversion option liability. The simulated fair value of this liability is also sensitive to changes in the Company’s expected volatility. Decreases in expected volatility would result in a lower fair value measurement.

Warrants Issued with 8.00% Notes

The derivative liabilities in Level 3 include the 8.00% Warrants issued with the 8.00% Notes. See Note 5 for further discussion. The Company marks-to-market this liability at each reporting date with the changes in fair value recognized in the Company’s results of operations.

As of March 31, 2012, the Company utilized valuation models that rely exclusively on Level 3 inputs including, among other things: (i) the underlying features of the warrants issued, including reset features and future equity issuances; (ii) stock price volatility ranges from 35% - 102%; (iii) risk-free interest rates ranges from 0.05% - 2.23%; (iv) warrant exercise price of $0.49; and (v) market price of common stock at the valuation date of $0.70.

As of December 31, 2011, the Company utilized valuation models that rely exclusively on Level 3 inputs including, among other things: (i) the underlying features of the warrants issued, including reset features and future equity issuances; (ii) stock price volatility ranges from 35% - 103%; (iii) risk-free interest rates ranges from 0.01% - 1.89%; (iv) warrant exercise price of $0.49; and (v) market price of common stock at the valuation date of $0.54.

The significant unobservable inputs used in the fair value measurement of the Company’s 8.00% Notes and Warrants are future equity issuances and expected volatility. In connection with the acquisition of Axonn in December 2009, the Company will make future earnout payments in stock. If the stock price on the issuance date is less than the current exercise price of the outstanding 8.00 % Warrants, additional warrants may be issued, which will increase the fair value of the warrant liability. The simulated fair value of this liability is also sensitive to changes in the Company’s expected volatility. Decreases in expected volatility would result in a lower fair value measurement.

Warrants Issued with Contingent Equity Agreement

The derivative liabilities in Level 3 include the warrants issued with the contingent equity account the 8.00% Notes. See Note 5 for further discussion. The Company marks-to-market this liability at each reporting date with the changes in fair value recognized in the Company’s results of operations.

As of March 31, 2012, the Company utilized valuation models that rely exclusively on Level 3 inputs including, among other things: (i) the underlying features of the warrants issued; (ii) stock price volatility of 107%; (iii) risk-free interest rates ranges from 0.05% - 1.04%; (iv) warrant price of $1.20; and (v) market price of common stock at the valuation date of $0.70.

As of December 31, 2011, the Company utilized valuation models that rely exclusively on Level 3 inputs including, among other things: (i) the underlying features of the warrants issued; (ii) stock price volatility of 108%; (iii) risk-free interest rates ranges from 0.01% - 0.83%; (iv) warrant price of $1.20; and (v) market price of common stock at the valuation date of $0.54.

The significant unobservable inputs used in the fair value measurement of the Company’s warrants issued with the contingent equity agreement are the intrinsic value of the warrants and the Company’s expected volatility. The intrinsic value of the warrants is sensitive to the Company’s stock price on the issuance date, June 19, 2011, and subsequent valuation dates. If the closing stock price on June 19, 2012 is lower than $1.20 per share, the current warrant price, the Company will issue additional warrants. If the stock price is lower than the exercise price of the 8.00% Warrants, the intrinsic value of the warrants decreases. The simulated fair value of this liability is also sensitive to changes in the Company’s expected volatility. Decreases in expected volatility would result in a lower fair value measurement.

Contingent Put Feature Embedded in 5.0% Notes

The derivative liabilities in Level 3 include the contingent put feature embedded in the 5.0% Notes. See Note 5 for further discussion. The Company marks-to-market this liability at each reporting date with the changes in fair value recognized in the Company’s results of operations.

As of March 31, 2012, the Company utilized valuation models that rely exclusively on Level 3 inputs including, among other things: (i) the underlying features of the warrants issued including the probability of change of control of the Company, payment in kind interest and reset features; (ii) stock price volatility ranges from 35% - 102%; (iii) risk-free interest rates ranges from 0.05% - 2.23%; (iv) base conversion price of $1.25; and (v) market price of common stock at the valuation date of $0.70.

As of December 31, 2011, the Company utilized valuation models that rely exclusively on Level 3 inputs including, among other things: (i) the underlying features of the warrants issued including the probability of change of control of the Company, payment in kind interest and reset features; (ii) stock price volatility ranges from 35% - 103%; (iii) risk-free interest rates ranges from 0.01% - 1.89%; (iv) base conversion price of $1.25; and (v) market price of common stock at the valuation date of $0.54.

The significant unobservable inputs used in the fair value measurement of the Company’s contingent put feature embedded in the Company’s 5.0% Notes are the assumed probability of a change of control occurring within each year through maturity of the 5.0% Notes and the Company’s expected volatility. Significant increases or decreases in assumed probability of a change in control would result in a significant change in the fair value measurement. As the probability of change of control increases, the value of the liability also increases. The simulated fair value of this liability is also sensitive to changes in the Company’s expected volatility. Decreases in expected volatility would result in a lower fair value measurement.

Level 3 Reconciliation

The following tables present a rollforward for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2012 and 2011 as follows (in thousands):

Balance at December 31, 2011	$	(43,959	)
Derivative adjustment related to conversions and exercises		208
Earnout payments made related to liability for contingent consideration		281
Change in fair value of contingent consideration		67
Unrealized loss, included in derivative gain (loss)		(6,491	)
Balance at March 31, 2012	$	(49,894	)

Balance at December 31, 2010	$	(66,838	)
Derivative adjustment related to conversions and exercises		536
Earnout payments made related to liability for contingent consideration		488
Change in fair value of contingent consideration		(199	)
Unrealized gain, included in derivative gain (loss)		6,288
Balance at March 31, 2011	$	(59,725	)

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 133
-Paragraph 44A, 44B
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15C, 15D
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15A
-Subparagraph a-d
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15B
-Subparagraph a, b
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 3, 10, 14, 15
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 157
-Paragraph 32, 33, 34
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 159
-Paragraph 17-22, 27, 28
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19207-110258

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 21
-URI http://asc.fasb.org/extlink&oid=6947722&loc=d3e13537-108611

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 28
-URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=6947722&loc=d3e13433-108611

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 30
-URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 16
-URI http://asc.fasb.org/extlink&oid=6947722&loc=d3e13504-108611

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19296-110258

+ Details

ACCRUED EXPENSES AND NON-CURRENT LIABILITIES

3 Months Ended

Mar. 31, 2012

ACCRUED EXPENSES AND NON-CURRENT LIABILITIES

7. ACCRUED EXPENSES AND NON-CURRENT LIABILITIES

Accrued expenses consist of the following (in thousands):

	March 31, 2012		December 31, 2011
Accrued interest	$	6,143	$	2,774
Accrued compensation and benefits		3,019		3,567
Accrued property and other taxes		5,347		5,369
Accrued customer liabilities and deposits		2,979		3,176
Accrued professional and other service provider fees		1,466		1,826
Accrued liability for contingent consideration		2,157		2,020
Accrued commissions		615		513
Accrued telecommunications expenses		1,009		1,580
Accrued satellite and ground construction costs		9,133		5,776
Other accrued expenses		2,152		2,205
	$	34,020	$	28,806

Other accrued expenses primarily include outsourced logistics services, storage, inventory in transit, warranty reserve and maintenance.

Non-current liabilities consist of the following (in thousands):

	March 31, 2012		December 31, 2011
Long-term accrued interest	$	1,693	$	242
Asset retirement obligation		943		926
Deferred rent		685		717
Liabilities related to the Cooperative Endeavor Agreement with the State of Louisiana		2,412		2,445
Long-term portion of liability for contingent consideration		2,459		2,944
Uncertain income tax positions		5,648		5,408
Foreign tax contingencies		4,500		4,762
	$	18,340	$	17,444

COMMITMENTS

3 Months Ended

Mar. 31, 2012

COMMITMENTS

8. COMMITMENTS

Contractual Obligations

The Company has purchase commitments with Thales, Arianespace, Ericsson, Hughes and other vendors related to the procurement and deployment of its second-generation constellation and ground infrastructure.

In March 2012, the Company and Hughes entered into an agreement to extend to June 29, 2012 the deadline for the Company to make payments previously due under the contract, provided the Company makes a payment of $0.5 million in April 2012 and $0.5 million in May 2012. The Company has made the April 2012 payment. The deferred payments continue to incur interest at the rate of 10% per annum. As of March 31, 2012, the Company had recorded $21.0 million in accounts payable related to these required payments and has incurred and capitalized $73.1 million of costs related to this contract. The costs are recorded as an asset in property and equipment. If the Company is unable to modify successfully the contract payment terms, the contract may be terminated, and the Company may be required to record an impairment charge. If the contract is terminated for convenience, the Company must make a final payment of $20.0 million in either cash or Company common stock at the Company’s election. If the Company elects to make payment in common stock, Hughes will have the option either to accept the common stock or instruct the Company to complete a block sale of the common stock and deliver the proceeds to Hughes.

In March 2012, the Company entered into an agreement with Ericsson which deferred approximately $5.0 million in milestone payments due under the contract to June 28, 2012. The remaining milestones previously due under the contract in 2012 were deferred to 2013 and beyond. The deferred payments will continue to incur interest at a rate of 6.5% per annum.

In April 2011, the Company and a potential vendor entered into a contingent agreement for services related to the second-generation satellite constellation. This agreement was amended in February 2012 to become effective if and when the Company obtains certain financing commitments prior to May 31, 2012. If the effective date does not occur on or before May 31, 2012, this agreement will terminate and all deposits will be refunded to the Company. If on or before May 31, 2012, the Company obtains a commitment to finance alternative or competing services other than those to be provided by the potential vendor, the vendor will retain the $6.0 million deposit made by the Company.

The Company issued separate purchase orders for additional phone equipment and accessories under the terms of executed commercial agreements with Qualcomm. Within the terms of the commercial agreements, the Company paid Qualcomm approximately 7.5% to 25% of the total order price as advances for inventory. As of March 31, 2012 total advances to Qualcomm for inventory were $9.2 million, and the Company had outstanding commitment balances of $8.8 million for inventory held by Qualcomm. The Company and Qualcomm are interested in terminating the purchase orders and are negotiating to do so. The Company expects to negotiate the termination of this contract in 2012.

CONTINGENCIES

3 Months Ended

Mar. 31, 2012

CONTINGENCIES

9. CONTINGENCIES

Arbitration

On June 3, 2011, the Company filed a demand for arbitration against Thales before the American Arbitration Association to enforce certain rights to order additional satellites under the Amended and Restated Contract for the construction of the Company’s satellites for the second-generation constellation. Specifically, the Company seeks a declaration that Thales is obligated to manufacture and deliver Phase 3 satellites (additional second-generation satellites beyond the first 25 satellites) in amounts timely ordered by the Company at the contract price calculable in accordance with the Amended and Restated Contract, along with additional declaratory relief and specific performance.

Thales claims that the Company is not entitled to the fixed pricing for Phase 3 satellites provided under the Amended and Restated Contract and that the price of any Phase 3 satellites ordered by the Company is subject to equitable adjustment. Thales also claims that the Company has terminated all further rights under the Contract to order additional satellites. Thales delivered to the Company an invoice for termination costs under the contract of €51.5 million. The Company claims that it has previously paid Thales €12.0 million for the procurement of certain Long Lead Items for six of these satellites and prepaid €53.0 million for these satellites, which Thales disputes claiming that the €53.0 prepaid was for the construction of the first 25 second-generation satellites and not Phase 3 satellites. The Company disputes that it has terminated any portion of the contract for convenience and under the unambiguous language of the contract, even if it had terminated any portion of the contract for convenience, management believes the Company would not owe any termination charges as no work has been performed under Phase 3 of the contract. As such, the Company has not recorded any reserve for Thales’ claims. Additionally, the Company has claimed that even if the Company has terminated all rights to order Phase 3 satellites, the Company nevertheless may exercise its option under the contract to order additional spacecraft at the contractually fixed pricing and delivery schedule provided therein. Finally, the Company has claimed up to €395 million would be due to the Company from Thales if the arbitration panel finds that a termination for convenience has occurred.

The Company has requested and received formal assurance from Thales that the arbitration process will not affect any work being performed pursuant to the contract regarding manufacture and delivery of the remaining Phase 2 second-generation satellites.

An evidentiary hearing was held during the last full week of January 2012. The parties filed post-hearing briefs in March 2012. The Company expects to receive a final decision from the Arbitration Panel in the near future. The outcome of the arbitration is unknown, and therefore no adjustments have been made to the financial statements with respect to the arbitration.

Litigation

Due to the nature of the Company's business, the Company is involved, from time to time, in various litigation matters or subject to disputes or routine claims regarding its business activities. Legal costs related to these matters are expensed as incurred. In management's opinion, none of the pending litigation, disputes or claims are expected to have a material adverse effect on the Company's financial condition, results of operations or liquidity.

RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2012

RELATED PARTY TRANSACTIONS

10. RELATED PARTY TRANSACTIONS

Payables to Thermo and other affiliates relate to normal purchase transactions and were $0.4 million at March 31, 2012 and December 31, 2011.

Transactions with Thermo

Thermo incurs certain expenses on behalf of the Company. The table below summarizes the total expense for the periods indicated below (in thousands):

	Three Months Ended March 31,
	2012		2011
General and administrative expenses	$	30	$	30
Non-cash expenses		102		42
Total	$	132	$	72

General and administrative expenses are related to expenses incurred by Thermo on the Company’s behalf which are charged to the Company. Non-cash expenses are related to services provided by executive officers of Thermo (who are also directors of the Company) who receive no cash compensation from the Company which are accounted for as a contribution to capital. The Thermo expense charges are based on actual amounts (with no mark-up) incurred or upon allocated employee time.

Since June 2009, Thermo and its affiliates have also deposited $60.0 million into a contingent equity account to fulfill a condition precedent for borrowing under the Facility Agreement, purchased $20.0 million of the Company’s 5.0% Notes, purchased $11.4 million of the Company's 8.00% Notes, provided a $2.3 million short-term loan to the Company (which was subsequently converted into nonvoting common stock), and loaned $37.5 million to the Company to fund the debt service reserve account.

- Definition

The entire disclosure for related party transactions, including the nature of the relationship(s), a description of the transactions, the amount of the transactions, the effects of any change in the method of establishing the terms of the transaction from the previous period, stated interest rate, expiration date, terms and manner of settlement per the agreement with the related party, and amounts due to or from related parties. If the entity and one or more other entities are under common ownership or management control and this control affects the operating results or financial position, disclosure includes the nature of the control relationship even if there are no transactions between the entities. Disclosure may also include the aggregate amount of current and deferred tax expense for each statement of earnings presented where the entity is a member of a group that files a consolidated tax return, the amount of any tax related balances due to or from affiliates as of the date of each statement of financial position presented, the principal provisions of the method by which the consolidated amount of current and deferred tax expense is allocated to the members of the group and the nature and effect of any changes in that method. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Article 4
-Section 08
-Paragraph k

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Article 3A
-Section 04
-Paragraph b

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 57
-Paragraph 1-4
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 850
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39622-107864

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 850
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 850
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39603-107864

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(k))
-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 850
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39691-107864

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 850
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39678-107864

+ Details

INCOME TAXES

3 Months Ended

Mar. 31, 2012

INCOME TAXES

11. INCOME TAXES

The Company follows authoritative guidance surrounding accounting for uncertainty in income taxes. It is the Company's policy to recognize interest and applicable penalties, if any, related to uncertain tax positions in income tax expense. For the periods ending March 31, 2012 and December 31, 2011, the net deferred tax assets were fully reserved.

A tax authority has previously notified the Company that the Company (formerly known as Globalstar LLC), one of its subsidiaries, and its predecessor, Globalstar L.P., were under audit for the taxable periods ending December 31, 2005, December 31, 2004, and June 29, 2004, respectively. During the taxable years at issue, the Company, its predecessor, and its subsidiary were treated as partnerships for U.S. income tax purposes. In December 2009, the Internal Revenue Service ("IRS") issued Notices of Final Partnership Administrative Adjustments related to each of the taxable years at issue. The Company disagreed with the proposed adjustments, and pursued the matter through applicable IRS and judicial procedures as appropriate.

In February 2012, a Closing Agreement was reached with respect to this matter. The position reached in the Closing Agreement had no impact on the cost basis of the assets of the Company or the Company’s net operating loss position. In addition, there is no impact for the Company on deductions in future years. In previous years, the potential outcome of this audit was considered and the gross deferred tax asset before valuation allowance adjusted to a tax position that was thought to be more likely than not to be sustained. The impact of this Closing Agreement was considered in the Company’s analysis at December 31, 2011, and the adjustment to the tax position in previous years was reversed.

In January 2012, the Company’s Canadian subsidiary was notified that its income tax returns for the years ended October 31, 2008 and 2009 had been selected for audit. The Company’s Canadian subsidiary is in the process of collecting the information required by the Canada Revenue Agency.

Except for the audits noted above, neither the Company nor any of its subsidiaries are currently under audit by the IRS or by any state jurisdiction in the United States. The Company's corporate U.S. tax returns for 2008 and subsequent years remain subject to examination by tax authorities. State income tax returns are generally subject to examination for a period of three to five years after filing of the respective return. The state impact of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states.

Through a prior foreign acquisition the Company acquired a tax liability for which the Company has been indemnified by the previous owners. As of March 31, 2012 and December 31, 2011, the Company had recorded a tax liability of $2.2 million to the foreign tax authorities with an offsetting tax receivable from the previous owners.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph h
-Article 4

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 136, 172
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 43, 44, 45, 46, 47, 48, 49
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(h))
-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319

+ Details

ACCUMULATED OTHER COMPREHENSIVE LOSS

3 Months Ended

Mar. 31, 2012

ACCUMULATED OTHER COMPREHENSIVE LOSS

12. ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated other comprehensive loss includes all changes in equity during a period from non-owner sources. The change in accumulated other comprehensive income for all periods presented resulted from foreign currency translation adjustments.

The components of accumulated other comprehensive loss were as follows (in thousands):

	Three months ended
	March 31,
	2012			2011
Accumulated other comprehensive loss, December 31, 2011 and 2010, respectively	$	(3,100	)	$	(268	)
Other comprehensive income :
Foreign currency translation adjustments		459			246
Accumulated other comprehensive loss, March 31, 2012 and 2011, respectively	$	(2,641	)	$	(22	)

STOCK COMPENSATION

3 Months Ended

Mar. 31, 2012

STOCK COMPENSATION

13. STOCK COMPENSATION

The Company’s 2006 Equity Incentive Plan (the “Equity Plan”) provides long-term incentives to the Company’s key employees, including officers, directors, consultants and advisers (“Eligible Participants”) and to align stockholder and employee interests. Under the Equity Plan, the Company may grant incentive stock options, restricted stock awards, restricted stock units, and other stock based awards or any combination thereof to Eligible Participants. The Compensation Committee of the Company’s Board of Directors establishes the terms and conditions of any awards granted under the plans. In January 2012, 5,943,516 shares of the Company’s common stock were added to the shares available for issuance under the Equity Plan.

Grants to Eligible Participants of incentive stock options, restricted stock awards, and restricted stock units during the period are indicated in the table below (in thousands):

	Three Months Ended
	March 31,
	2012		2011
Grants of restricted stock awards and restricted stock units		333		—
Grants of options to purchase common stock		340		429
Total		673		429

Employee Stock Purchase Plan

The Company’s Employee Stock Purchase Plan (the “Plan”) provides eligible employees of the Company and its subsidiaries with an opportunity to acquire shares of its common stock at a discount. The Plan permits eligible employees to purchase shares of common stock during two semi-annual offering periods beginning on June 15 and December 15, unless adjusted by the Board or one of its designated committees (the “Offering Periods”). Eligible employees may purchase shares of up to 15% of their total compensation per pay period, but may purchase no more than the lesser of $25,000 of the fair market value of common stock or 500,000 shares of common stock in any calendar year, as measured as of the first day of each applicable Offering Period. The price an employee pays is 85% of the fair market value of the common stock. Fair market value is equal to the lesser of the closing price of a share of common stock on either the first or last day of the Offering Period.

For the three months ended March 31, 2012 and 2011, the Company recorded expenses of approximately $0.1 million and $0, respectively, which are reflected in marketing, general and administrative expenses. Through March 31, 2012 the Company issued approximately 427,833 shares related to this stock purchase plan.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph 64, 65, A240
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 93-6
-Paragraph 53
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 14

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 50
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 40
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929

+ Details

HEADQUARTERS RELOCATION

3 Months Ended

Mar. 31, 2012

HEADQUARTERS RELOCATION

14. HEADQUARTERS RELOCATION

During 2010 the Company announced the relocation of its corporate headquarters to Covington, Louisiana. In addition, the Company relocated its product development center, international customer care operations, call center and other global business functions including finance, accounting, sales, marketing and corporate communications. The Company completed the relocation in 2011.

In connection with its relocation, the Company entered into a Cooperative Endeavor Agreement with the Louisiana Department of Economic Development (“LED”) whereby the Company would be reimbursed for certain qualified relocation costs and lease expenses. In accordance with the terms of the agreement, these reimbursement costs, not to exceed $8.1 million, will be reimbursed to the Company as incurred provided the Company maintains required annual payroll levels in Louisiana through 2019.

Since announcing its relocation, the Company has incurred qualifying relocation expenses. Under the terms of the agreement, the Company was reimbursed a total of $3.9 million through December 31, 2011 by LED. The Company has not been reimbursed for any expenses in 2012. The Company accounted for these reimbursements as reductions to the relocation expenses incurred. Through December 31, 2011, the Company also incurred $1.3 million for facility improvements and replacement equipment in connection with the relocation. These costs were also reimbursed by LED. Reimbursements related to facility improvements and replacement equipment were recorded as deferred costs and are offset by depreciation expense as the related assets are used in service. LED will also reimburse the Company approximately $352,000 per year through 2019 for certain qualifying lease expenses, provided the Company meets the required payroll levels set forth in the agreement.

If the Company fails to meet the required payroll in any project year, the Company will reimburse LED for a portion of the shortfall not to exceed the total reimbursement received from LED. Due to a recently implemented plan to improve its cost structure by reducing headcount, the Company projected that it would not meet the required payroll levels set forth in the agreement and recorded a liability of $1.6 million at March 31, 2012 for the estimated impact of the payroll shortfall in future years. This liability is included in non-current liabilities in the Company’s condensed consolidated balance sheet.

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

+ References + Details

GEOGRAPHIC INFORMATION

3 Months Ended

Mar. 31, 2012

GEOGRAPHIC INFORMATION

15. GEOGRAPHIC INFORMATION

The Company attributes equipment revenue to various countries based on the location equipment is sold. Service revenue is attributed to the various countries based on where the service is processed. Long-lived assets consist primarily of property and equipment and are attributed to various countries based on the physical location of the asset at a given fiscal year-end, except for the satellites which are included in the long-lived assets of the United States. The Company’s information by geographic area is as follows (in thousands):

	Three months ended March 31,
	2012		2011
Revenues:
Service:
United States	$	8,776	$	9,579
Canada		2,358		2,597
Europe		799		919
Central and South America		614		1,002
Others		80		102
Total service revenue	$	12,627	$	14,199
Subscriber equipment:
United States		2,910		2,448
Canada		622		694
Europe		266		399
Central and South America		284		292
Others		29		222
Total subscriber equipment revenue	$	4,111	$	4,055
Total revenue	$	16,738	$	18,254

	March 31,		December 31,
	2012		2011
Long-lived assets:
United States	$	1,226,392	$	1,211,795
Canada		319		324
Europe		154		155
Central and South America		3,664		3,638
Others		1,781		1,806
Total long-lived assets	$	1,232,310	$	1,217,718

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 131
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 34
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8981-108599

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 35
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8984-108599

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 42
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9054-108599

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 40
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9031-108599

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8924-108599

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8538-108599

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8906-108599

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9038-108599

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 29
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8864-108599

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 33
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8971-108599

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 26
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8844-108599

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8380-108599

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 12
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8595-108599

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8933-108599

+ Details

LOSS PER SHARE

3 Months Ended

Mar. 31, 2012

LOSS PER SHARE

16. LOSS PER SHARE

The Company is required to present basic and diluted earnings per share. Basic earnings per share is computed based on the weighted average number of common shares outstanding during the period. Common stock equivalents are included in the calculation of diluted earnings per share only when the effect of their inclusion would be dilutive.

For the three months ended March 31, 2012 and 2011, diluted net loss per share of common stock were the same as basic net loss per share of common stock, because the effects of potentially dilutive securities are anti-dilutive.

As of March 31, 2012 and 2011, 17.3 million Borrowed Shares related to the Company’s Share Lending Agreement remained outstanding. The Company does not consider the Borrowed Shares to be outstanding for the purposes of computing and reporting its earnings per share.

SUPPLEMENTAL CONSOLIDATING FINANCIAL INFORMATION

3 Months Ended

Mar. 31, 2012

SUPPLEMENTAL CONSOLIDATING FINANCIAL INFORMATION

17. SUPPLEMENTAL CONSOLIDATING FINANCIAL INFORMATION

In connection with the Company’s issuance of the 5.0% Notes and 5.0% Warrants, certain of the Company’s domestic subsidiaries (the “Guarantor Subsidiaries”), fully, unconditionally, jointly, and severally guaranteed the payment obligations under the 5.0% Notes. The following supplemental financial information sets forth, on a consolidating basis, the balance sheets, statements of operations and statements of cash flows for Globalstar, Inc. (“Parent Company”), for the Guarantor Subsidiaries and for the Parent Company’s other subsidiaries (the “Non-Guarantor Subsidiaries”).

The supplemental condensed consolidating financial information has been prepared pursuant to the rules and regulations for condensed financial information and does not include disclosures included in annual financial statements. The principal eliminating entries eliminate investments in subsidiaries, intercompany balances and intercompany revenues and expenses.

Globalstar, Inc.

Supplemental Condensed Consolidating Statement of Operations

Three Months Ended March 31, 2012

(Unaudited)

							Non-
	Parent			Guarantor			Guarantor
	Company			Subsidiaries			Subsidiaries			Eliminations			Consolidated
	(In thousands)
Revenues:
Service revenues	$	10,231		$	4,034		$	3,652		$	(5,290	)	$	12,627
Subscriber equipment sales		161			3,072			1,370			(492	)		4,111
Total revenue		10,392			7,106			5,022			(5,782	)		16,738
Operating expenses:
Cost of services (exclusive of depreciation, amortization, and accretion shown separately below)		2,719			239			1,976			426			5,360
Cost of subscriber equipment sales		28			2,241			1,244			(790	)		2,723
Cost of subscriber equipment sales - reduction in the value of inventory		2			247			—			—			249
Reduction in the value of long-lived assets		79			—			—			—			79
Marketing, general and administrative		5,368			1,436			2,820			(1,102	)		8,522
Depreciation, amortization, and accretion		9,185			6,203			3,695			(4,348	)		14,735
Total operating expenses		17,381			10,366			9,735			(5,814	)		31,668
Loss from operations		(6,989	)		(3,260	)		(4,713	)		32			(14,930	)
Other income (expense):
Interest income and expense, net of amounts capitalized		(2,590	)		(2	)		(458	)		—			(3,050	)
Derivative gain (loss)		(6,520	)		—			—			—			(6,520	)
Equity in subsidiary earnings		(8,281	)		1,871			—			6,410			—
Other		(105	)		(131	)		406			(38	)		132
Total other income (expense)		(17,496	)		1,738			(52	)		6,372			(9,438	)
Loss before income taxes		(24,485	)		(1,522	)		(4,765	)		6,404			(24,368	)
Income tax expense		40			8			109			—			157
Net (loss) gain	$	(24,525	)	$	(1,530	)	$	(4,874	)	$	6,404		$	(24,525	)

Comprehensive loss	$	(24,525	)	$	(1,530	)	$	(4,415	)	$	6,404		$	(24,066	)

Globalstar, Inc.

Supplemental Condensed Consolidating Statement of Operations

Three Months Ended March 31, 2011

(Unaudited)

							Non-
	Parent			Guarantor			Guarantor
	Company			Subsidiaries			Subsidiaries			Eliminations			Consolidated
	(In thousands)
Revenues:
Service revenues	$	4,638		$	6,651		$	3,967		$	(1,057	)	$	14,199
Subscriber equipment sales		270			2,959			1,848			(1,022	)		4,055
Total revenue		4,908			9,610			5,815			(2,079	)		18,254
Operating expenses:
Cost of services (exclusive of depreciation, amortization, and accretion shown separately below)		2,317			2,035			2,660			49			7,061
Cost of subscriber equipment sales		261			2,256			1,311			(1,045	)		2,783
Cost of subscriber equipment sales – reduction in the value of inventory		—			91			—			—			91
Reduction in the value of long-lived assets		285			—			—			—			285
Marketing, general and administrative		5,021			2,810			3,405			(1,053	)		10,183
Depreciation, amortization, and accretion		2,924			7,033			784			(130	)		10,611
Total operating expenses		10,808			14,225			8,160			(2,179	)		31,014
Loss from operations		(5,900	)		(4,615	)		(2,345	)		100			(12,760	)
Other income (expense):
Interest income and expense, net of amounts capitalized		(742	)		—			(474	)		4			(1,212	)
Derivative gain (loss)		6,435			—			—			—			6,435
Equity in subsidiary earnings		(6,432	)		1,742			—			4,690			—
Other		198			(181	)		1,262			(100	)		1,179
Total other income (expense)		(541	)		1,561			788			4,594			6,402
Loss before income taxes		(6,441	)		(3,054	)		(1,557	)		4,694			(6,358	)
Income tax expense		25			—			83			—			108
Net (loss) gain	$	(6,466	)	$	(3,054	)	$	(1,640	)	$	4,694		$	(6,466	)

Comprehensive loss
	$	(6,466	)	$	(3,054	)	$	(1,394	)	$	4,694		$	(6,220	)

Globalstar, Inc.

Supplemental Condensed Consolidating Balance Sheet

As of March 31, 2012

(Unaudited)

	Parent Company			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	6,537		$	377		$	821		$	—		$	7,735
Restricted cash		2,500			—			—			—			2,500
Accounts receivable		3,455			3,901			4,620			—			11,976
Intercompany receivables		547,186			359,298			16,579			(923,063	)		—
Inventory		—			4,065			37,174			—			41,239
Prepaid expenses and other current assets		2,559			311			2,258			—			5,128
Total current assets		562,237			367,952			61,452			(923,063	)		68,578

Property and equipment, net		1,090,842			54,533			87,674			(739	)		1,232,310
Restricted cash		46,776			—			—			—			46,776
Intercompany notes receivable		38,729			—			1,800			(40,529	)		—
Investment in subsidiaries		(106,008	)		(16,025	)		—			122,033			—
Deferred financing costs		53,569			—			73			—			53,642
Advances for inventory		9,158			—			—			—			9,158
Intangible and other assets, net		3,388			2,686			8,121			(14	)		14,181
Total assets	$	1,698,691		$	409,146		$	159,120		$	(842,312	)	$	1,424,645

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,460		$	2,053		$	24,674		$	—		$	31,187
Accrued expenses		16,510			7,987			9,523			—			34,020
Intercompany payables		345,799			436,538			179,533			(961,870	)		—
Payables to affiliates		408			—			—			—			408
Deferred revenue		1,468			12,127			812			—			14,407
Total current liabilities		368,645			458,705			214,542			(961,870	)		80,022

Long-term debt		732,727			—			—			—			732,727
Employee benefit obligations		7,409			—			—			—			7,409
Intercompany notes payable		—			—			39,628			(39,628	)		—
Derivative liabilities		45,279			—			—			—			45,279
Deferred revenue		6,616			483			—			—			7,099
Other non-current liabilities		4,246			3,354			10,740			—			18,340
Total non-current liabilities		796,277			3,837			50,368			(39,628	)		810,854
Stockholders’ equity		533,769			(53,396	)		(105,790	)		159,186			533,769
Total liabilities and stockholders’ equity	$	1,698,691		$	409,146		$	159,120		$	(842,312	)	$	1,424,645

Globalstar, Inc.

Supplemental Condensed Consolidating Balance Sheet

As of December 31, 2011

(Audited)

	Parent Company			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	7,343		$	587		$	2,021		$	—		$	9,951
Restricted cash		—			—			—			—			—
Accounts receivable		3,363			4,322			4,708			—			12,393
Intercompany receivables		538,876			351,510			13,923			(904,309	)		—
Inventory		1			4,564			37,283			—			41,848
Prepaid expenses and other current assets		2,846			303			2,132			—			5,281
Total current assets		552,429			361,286			60,067			(904,309	)		69,473

Property and equipment, net		1,070,543			60,872			87,624			(1,321	)		1,217,718
Restricted cash		46,776			—			—			—			46,776
Intercompany notes receivable		40,456			—			1,800			(42,256	)		—
Investment in subsidiaries		(106,377	)		(18,629	)		—			125,006			—
Deferred financing costs		53,409			—			73			—			53,482
Advances for inventory		9,158			—			—			—			9,158
Intangible and other assets, net		12,773			2,988			8,052			(15	)		23,798
Total assets	$	1,679,167		$	406,517		$	157,616		$	(822,895	)	$	1,420,405

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	19,346		$	1,953		$	26,509		$	—		$	47,808
Accrued expenses		11,558			8,459			8,789			—			28,806
Intercompany payables		333,201			427,852			142,966			(904,019	)		—
Payables to affiliates		378			—			—			—			378
Deferred revenue		1,043			12,740			805			—			14,588
Total current liabilities		365,526			451,004			179,069			(904,019	)		91,580

Long-term debt		723,888			—			—			—			723,888
Employee benefit obligations		7,407			—			—			—			7,407
Intercompany notes payable		—			—			41,356			(41,356	)		—
Derivative liabilities		38,996			—			—			—			38,996
Deferred revenue		6,695			600			—			—			7,295
Other non-current liabilities		2,860			3,837			10,747			—			17,444
Total non-current liabilities		779,846			4,437			52,103			(41,356	)		795,030
Stockholders’ equity		533,795			(48,924	)		(73,556	)		122,480			533,795
Total liabilities and stockholders’ equity	$	1,679,167		$	406,517		$	157,616		$	(822,895	)	$	1,420,405

Globalstar, Inc.

Supplemental Condensed Consolidating Statement of Cash Flows

Three Months Ended March 31, 2012

(Unaudited)

							Non-
	Parent			Guarantor			Guarantor
	Company			Subsidiaries			Subsidiaries			Eliminations		Consolidated
	(In thousands)

Net cash provided by (used in) operating activities	$	(847	)	$	(127	)	$	(1,609	)	$	—	$	(2,583	)

Cash flows from investing activities:
Second-generation satellites, ground and related launch costs		(20,540	)		—			—			—		(20,540	)
Property and equipment additions		(27	)		(83	)		(10	)		—		(120	)
Investment in businesses		(150	)		—			—			—		(150	)
Restricted cash		(2,500	)		—			—			—		(2,500	)
Net cash from investing activities		(23,217	)		(83	)		(10	)		—		(23,310	)

Cash flows from financing activities:
Borrowings from Facility Agreement		5,008			—			—			—		5,008
Proceeds from contingent equity agreement		18,500			—			—			—		18,500
Payment of deferred financing costs		(250	)		—			—			—		(250	)
Net cash provided by financing activities		23,258			—			—			—		23,258
Effect of exchange rate changes on cash and cash equivalents		—			—			419			—		419
Net increase (decrease) in cash and cash equivalents		(806	)		(210	)		(1,200	)		—		(2,216	)
Cash and cash equivalents at beginning of period		7,343			587			2,021			—		9,951
Cash and cash equivalents at end of period	$	6,537		$	377		$	821		$	—	$	7,735

Globalstar, Inc.

Supplemental Condensed Consolidating Statement of Cash Flows

Three Months Ended March 31, 2011

(Unaudited)

							Non-
	Parent			Guarantor			Guarantor
	Company			Subsidiaries			Subsidiaries			Eliminations			Consolidated
	(In thousands)

Net cash provided by (used in) operating activities	$	(5,168	)	$	1,869		$	(292	)	$	(2	)	$	(3,593	)

Cash flows from investing activities:
Second-generation satellites, ground and related launch costs		(32,552	)		—			—			—			(32,552	)
Property and equipment additions		—			(698	)		(106	)		2			(802	)

Net cash from investing activities		(32,552	)		(698	)		(106	)		2			(33,354	)

Cash flows from financing activities:
Proceeds from exercise of warrants and stock options		25			—			—			—			25
Borrowings from Facility Agreement		12,070			—			—			—			12,070
Net cash provided by financing activities		12,095			—			—			—			12,095
Effect of exchange rate changes on cash and cash equivalents		—			—			89			—			89
Net increase (decrease) in cash and cash equivalents		(25,625	)		1,171			(309	)		—			(24,763	)
Cash and cash equivalents at beginning of period		32,288			(766	)		1,495			—			33,017
Cash and cash equivalents at end of period	$	6,663		$	405		$	1,186		$	—		$	8,254

- Definition

The entire disclosure for condensed financial information, including the financial position, cash flows, and the results of operations of the registrant (parent company) as of the same dates or for the same periods for which audited consolidated financial statements are being presented. Alternatively, the details of this disclosure can be reported by the specific parent company taxonomy elements, indicating the appropriate date and period contexts in an instance document.

+ References + Details