Loral CEO Provides Financial Update Following ViaSat Board Resignation
[Satellite News 02-29-12] Loral Space and Communications CEO Michael Targoff resigned from ViaSat’s board of directors and all positions on ViaSat committees, Loral confirmed in its latest financial results issued Feb. 29.
Targoff had been a member of ViaSat’s board since 2003. His resignation follows a lawsuit that ViaSat filed in February against Space Systems/Loral (SS/L) that accused Loral’s manufacturing wing of stealing intellectual property related to ViaSat’s high-throughput broadband satellites. ViaSat and Loral unsuccessfully attempted to resolve the issue out of court.
Targoff vehemently denied ViaSat’s claims and said the lawsuit made his continued presence on the ViaSat board impractical, though he was not asked to resign.
“Given the dispute, I decided that I should not continue to serve on the ViaSat board of directors and stepped down from that position last week,” said Targoff. “We strongly believe that we have not violated any intellectual property rights of ViaSat. We feel our defenses and counterclaims are valid.”
SS/L President John Celli echoed Targoff’s statement during a Feb. 28 address at the World Space Risk Forum and said that the lawsuit was an attack on the company’s reputation. “We have been in business almost 55 years and we have built some 240 satellites. During all that time, our interest has been to maintain a customer focus, and that includes their intellectual property. We have meritorious defenses against the lawsuit, and counterclaims that we will use,” said Celli said.
Separately, Loral and SS/L reported strong operating performances in its 2011 full-year financial results. Loral ended the year with $197 million in cash, no debt and no drawings against SS/L’s $150 million revolving credit agreement. SS/L booked six satellite orders in 2011 and was selected as supplier for three additional satellites booked in early 2012.
Loral’s full-year revenue and adjusted EBITDA, however, fell from $1.159 billion and $124 million, respectively, in 2010 to $1.107 billion and $120 million. Loral reported net income of $127 million in 2011 compared to last year’s net income of $487 million, which included a $335 million tax benefit in the fourth quarter of 2010.
Loral’s share of satellite operator Telesat’s net income was $106 million for the year, compared to $86 million in 2010. Telesat’s results included a net foreign exchange charge of $30 million and $133 million in benefits received from insurance payouts in the fourth quarter for the Telstar 14R/Estrela do Sul 2 satellite. A solar array anomaly that occurred on the satellite following its launch diminished its power capability and shortened its life, which authorized the Telesat payout.
“With two [Telesat] satellites scheduled to launch in 2012 and ViaSat-1 now in service, we can expect the results to improve throughout the year and into 2013,” said Targoff. “The recent decision to pursue paying Telesat’s shareholders a sizeable distribution reflects our focus on sharing the success of the Telesat acquisition and growth with Loral shareholders by setting a path for delivering value directly to our owners.”
SS/L produced $1.108 billion in 2011 full-year revenue compared with $1.165 billion for the year in 2010. Adjusted EBITDA also fell this year from $143 million in 2010 to $138 million. The company’s backlog stood at $1.426 billion at the end of 2011, compared with $1.625 billion at the end of 2010.
Targoff said that while the company’s 2011 results were relatively flat, operational improvement initiatives allowed Loral to deliver a comparable performance to 2010 despite lower bookings.
“In 2011, we continued to deliver excellent operating performance with EBITDA margins in the 12 percent range,” said Targoff. “On the strategic front, alternatives other than a spin-off for separating SS/L from Loral have taken front stage. As a result, we have decided to defer work on finalizing spin-off terms.”