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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 11-K
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ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE YEAR ENDED DECEMBER 31, 2000
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COMMISSION FILE NUMBER 1-14180
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LORAL SAVINGS PLAN
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LORAL SPACE & COMMUNICATIONS LTD.
600 THIRD AVENUE
NEW YORK, NEW YORK 10016
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Savings Committee has duly caused this annual report to be signed by the
undersigned thereunto duly authorized.
LORAL SAVINGS PLAN
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(Plan)
BY: STEPHEN L. JACKSON
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Stephen L. Jackson
Committee Member
Date: June 28, 2001
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LORAL SAVINGS PLAN
TABLE OF CONTENTS
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Report of Independent Accountants......................................... 2
Financial Statements:
Statements of Net Assets Available For Benefits as of
December 31, 2000 and 1999........................................... 3
Statements of Changes in Net Assets Available For Benefits
for the years ended December 31, 2000 and 1999....................... 4
Notes to Financial Statements............................................. 5
Supplemental Schedules:
Schedule of Assets Held for Investment Purposes as of
December 31, 2000.................................................... 10
Schedule of Non-exempt Transactions for the year ended
December 31, 2000.................................................... 11
Exhibit:
Consent of Independent Accountants
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INDEPENDENT ACCOUNTANTS' REPORT
To the Participants and
Plan Administrator of the
Loral Savings Plan
We have audited the accompanying statements of net assets available for
benefits of the Loral Savings Plan (the Plan) as of December 31, 2000 and 1999,
and the related statement of changes in net assets available for benefits for
the years ended December 31, 2000 and 1999. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for benefits of the
Plan as of December 31, 2000 and 1999, and the changes in net assets available
for benefits for the years ended December 31, 2000 and 1999, in conformity with
accounting principles generally accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedules of
"Assets Held for Investment Purposes" and "Non-Exempt Transactions" are
presented for the purpose of additional analysis and are not a required part of
the basic financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. These supplemental
schedules are the responsibility of the Plan's management. The supplemental
schedules have been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
MOHLER, NIXON & WILLIAMS
Accountancy Corporation
Campbell, California
June 19, 2001
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LORAL SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
(IN THOUSANDS)
DECEMBER 31,
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2000 1999
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Assets:
Investments, at fair value:
Participant directed:
Mutual Funds........................ $ 222,570 $ 230,819
Loral Stock Fund.................... 20,895 123,512
Loans...................... 4,413 5,443
Non-participant directed:
Loral Stock Fund.................... 7,825 25,627
Globalstar Stock Fund............... 166 2,310
Associates Stock Fund............... - 8,587
Ford Stock Fund..................... 18,099 32,826
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Total Investments................ 273,968 429,124
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Net assets available for benefits........ $ 273,968 $ 429,124
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The accompanying notes are an integral part of these financial statements.
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LORAL SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
(IN THOUSANDS)
YEARS ENDED
DECEMBER 31,
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2000 1999
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Investment (loss) income:
Net (decrease) increase in fair value
of investments....................... $(164,842) $ 52,025
Interest and dividends ................ 15,268 13,727
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(149,574) 65,752
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Contributions:
Participant ......................... 21,740 20,506
Employer ............................ 6,802 7,003
Rollovers ........................... 1,978 2,252
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30,520 29,761
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Transfer from other plans, net ............. 11 23
Benefits paid to participants .............. (35,990) (35,884)
Administrative expenses .................... (123) (50)
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Net (decrease) increase in net assets ...... (155,156) 59,602
Net assets available for benefits:
Beginning of year ........................ 429,124 369,522
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End of year .............................. $ 273,968 $ 429,124
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The accompanying notes are an integral part of these financial statements.
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LORAL SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. PLAN DESCRIPTION
General
The Loral Savings Plan (the "Plan") was established on April 23, 1996
following the spin-off and formation of Loral Space & Communications Ltd.
("Loral"). It was established for the benefit of employees of certain affiliates
of Loral (collectively referred to as the "Employer"), and is sponsored by Space
Systems/Loral, Inc. ("SS/L").
The Plan is a defined contribution plan designed to provide eligible
employees with systematic savings and tax-advantaged long-term savings for
retirement. It is subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA"). Regular full-time and regular part-time
employees are eligible to participate in the Plan as of their date of hire.
As of December 31, 2000, there were approximately 4,550 participants in
the Plan. A complete description of the Plan's provisions is contained in the
Plan document.
Non-Participant Directed Investments
Loral Stock Fund -- Funds are primarily invested in Loral Space &
Communications Ltd. Common Stock ("Loral Common Stock"). Assets invested in the
Loral Stock Fund are expressed in units of participation rather than shares of
Loral Common Stock. Such units represent a proportionate interest in all assets
of the Loral Stock Fund, which includes Loral Common Stock and the Fidelity
Short Term Interest Fund. A net asset value per unit of participation is
determined daily for each outstanding unit of the Loral Stock Fund.
The Ford Stock Fund is a carry-over fund resulting from the transfer of
assets from a prior plan. Contributions and reinvestment of dividends into this
fund are not permitted. Dividends received on Ford common stock are invested in
the Fidelity Retirement Money Market Fund. Assets invested in the Ford Stock
Fund are expressed in units of participation rather than shares of Ford common
stock. Such units represent a proportionate interest in all assets of the Ford
Stock Fund, which includes Ford common stock and the Fidelity Short Term
Interest Fund. A net asset value per unit of participation is determined daily
for each outstanding unit of the Ford Stock Fund.
Associates Stock Fund -- Effective November 15, 2000 the Associates
Stock Fund was no longer offered as an investment vehicle, and participants
transfered their existing balance from the fund into any other available
investment option within the Plan. Prior to November 15, 2000 contributions and
reinvestment of dividends into the Associates Stock Fund were not permitted.
Dividends received on Associates First Capital Corporation ("Associates") common
stock were invested in the Fidelity Retirement Money Market Fund. Assets
invested in the Associates Stock Fund are expressed in units of participation
rather than shares of Associates common stock. Such units represent a
proportionate interest in all assets of the Associates Stock Fund, which
includes Associates common stock and the Fidelity Short Term Interest Fund. A
net asset value per unit of participation is determined daily for each
outstanding unit of the Associates Stock Fund.
The Globalstar Stock Fund reflects the value of Employer matching
contributions since August 1, 1997 for employees of Globalstar L.P.
("Globalstar") only. Assets invested in the fund are expressed in units of
participation rather than shares of Globalstar Telecommunications Ltd. common
stock. Such units represent a proportionate interest in all assets of the
Globalstar Stock Fund, which includes Globalstar common stock and the Fidelity
Short Term Interest Fund. Effective February 19, 2001, the Globalstar Stock Fund
no longer accepted contributions. Assets invested as of February 19, 2001, are
directed by participants to any other available investment option offered by the
Plan, except the Loral Stock Fund.
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Participant Accounts
Participants can direct their investments in a number of Mutual Funds
and the Loral Stock Fund. A participant's account is credited with the
participant's contribution; the Employer's matching contribution and an
allocation of Plan earnings or losses, net of certain investment management
fees. Allocations are based on a participant's account balance as a percentage
of the sum of all participants' account balances.
Vesting and Forfeitures
Participants are immediately vested in their contributions plus actual
earnings thereon. Generally, participants vest 100% in Employer contributions
plus actual earnings thereon after completion of five years of service and,
thereafter, vest immediately in all future Employer contributions. On
termination of service due to death, disability, or retirement, participants
become fully vested. Non-vested Employer contributions are forfeited upon
termination or withdrawal and are used for certain Plan administrative expenses
or to reduce future Employer contributions. Forfeitures for the years ended
December 31, 2000 and 1999 were approximately $369,000 and $500,000,
respectively.
Contributions
The Plan has both a Tax-Efficient Savings ("TES") and a Regular Savings
feature. Under the Plan, and subject to limits imposed by the Internal Revenue
Code ("IRC"), participants, except for Loral Skynet ("Skynet" a division of
Loral) participants, may elect a reduction in eligible salary up to 15% with a
corresponding TES contribution in the same amount made to the Plan by the
Employer on their behalf. Such contributions are excluded from the participant's
taxable income. Subject to limits imposed by the IRC, participants may also
contribute up to 10% of their base salaries to the Regular Savings feature of
the Plan on an after-tax basis. Skynet participants may elect to contribute from
2% to 16% of eligible compensation which can be either on a TES or after-tax
basis.
Participants' contributions are generally matched at a rate of $.60 for
each dollar of TES and/or Regular Savings contributions, up to 6% of a
participant's base salary, unless the Employer determines to make a different
contribution or no contribution. With the exception of Globalstar employees, all
Employer matching contributions are generally invested in the Loral Stock Fund.
For Globalstar employees, the Employer matching contributions were invested in
the Globalstar Stock Fund. Employer matching contributions related to Globalstar
employees may be transferred to any of the participant directed funds. All
Employer matching contributions remaining in the non-participant directed Loral
Stock Fund or the Globalstar Stock Fund are reflected as non-participant
directed in the accompanying financial statements. Participants who are 55 years
old and have 10 years of service may direct their Employer matching
contributions to any available investment option except the Ford Stock Fund, the
Associates Stock Fund and the Globalstar Stock Fund. Effective January 1, 2000
for Loral Cyberstar, Inc. and February 1, 2000 for Cyberstar, L.P., subsidiaries
of Loral, eligible employees began receiving an Employer contribution of between
1% - 2% of base salary, based upon the employees' years of service. The Employer
contribution, which is in addition to any Employer matching contribution, can be
directed by participants to any available investment option except the Ford
Stock Fund, the Associates Stock Fund, and the Globalstar Stock Fund.
Payment of Benefits
Upon termination, participants receive the vested portion of their
account balance as soon as practicable after termination. Terminated
participants who have an account balance in excess of $5,000 may elect to leave
their account balance in the Plan or withdraw it at any time up to age 65.
Assets in a participant's TES account may be withdrawn only for
financial hardship before termination of employment or before reaching age 59
and one-half. Financial hardship is determined pursuant to provisions of the
IRC. Generally, a 10% penalty will be imposed on certain withdrawals of pre-tax
assets made before the participant reaches age 59 and one-half. After age
59-1/2, TES assets may be withdrawn in total or in part at any time.
Assets in a participant's regular savings account may be withdrawn in
total or in part at any time in accordance with the Plan provisions.
Withdrawals of Employer contributions for active participants are
available at the end of the two-year period following the year in which the
Employer contributions were made, if they are vested.
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Payment of Administrative Expenses
Most administrative expenses are paid by the Plan. The Plan permits the
Employer to use forfeitures from participants' non-vested accounts to pay
certain administrative expenses. Expenses not paid by the Plan are the
responsibility of the Employer.
Participant Loans
The Plan permits active participants to borrow from the vested assets in
their TES accounts. The minimum loan amount is $1,000. The maximum loan
permitted is the lesser of: (1) $50,000 minus the highest outstanding loan
balance during the last twelve months, (2) 50% of the vested account balance, or
(3) the assets in the TES Account which are eligible for a loan. The amounts in
(2) and (3) are reduced by any loan balance outstanding. Participants may have
only one outstanding loan at a time. No new loans will be made until all
outstanding loans are repaid. The interest rate for a loan is the prime rate as
defined in the Plan document, and remains the same for the term of the loan.
Interest rates for outstanding loans range from 6% to 10-1/2%.
The term of a loan can be up to five years except for loans to purchase
a primary residence, which can have a term of up to 10 years. Loan repayment is
made through payroll deductions. Repayment of the entire loan balance is
permitted at any time. All loan repayments are allocated to the investment funds
elected by a participant for current TES Contributions.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The financial statements of the Plan are prepared under the accrual
method of accounting.
Investment Valuation and Income Recognition
The Plan's investments are stated at fair value.
Investments in the Loral Stock Fund, the Globalstar Stock Fund, the
Associates Stock Fund and the Ford Stock Fund are valued at quoted market prices
and represent the net asset value per unit of participation.
Shares of registered investment company funds are valued at quoted
market prices that represent the net asset value of shares held by the Plan at
year-end.
Loans receivable from participants are valued at cost which approximates
fair value.
The Plan presents in the statements of changes in net assets available
for benefits, the net increase (decrease) in the fair value of its investments
which consists of the realized gains or losses and the unrealized increase
(decrease) of those investments.
Investment transactions are accounted for on a trade date basis.
Dividend income is recorded on the ex-dividend date. Interest income is recorded
when earned.
Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, and the changes therein, and the disclosure of
contingent assets and liabilities. Actual results could differ from estimates.
Risks and Uncertainties
The Plan provides for various investment options in any combination of
stocks, bonds, fixed income securities, mutual funds, and other investment
securities. Investment securities are exposed to various risks, such as interest
rate, market and credit risks. Due to the level of risk associated with certain
investment securities and the level of uncertainty related to changes in the
value of investment securities, it is at least reasonably possible that changes
in risks in the near term would materially affect participants' account balances
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and the amounts reported in the statement of net assets available for benefits
and the statements of changes in net assets available for benefits.
Financial Instruments
Fidelity Management Trust Company ("Fidelity") is the Trustee of the
Plan and may enter into forward foreign currency contracts to protect securities
and related receivables and payables against fluctuations in future foreign
currency rates. A forward contract is an agreement to buy or sell currencies of
different countries on a specified future date at a specified rate. Risks
associated with such contracts include the movement in the value of the foreign
currency relative to the U.S. dollar and the ability of the counterparty to
perform. The market value of the contract will fluctuate with changes in
currency exchange rates.
Fidelity may invest in futures and option contracts solely for the
purpose of managing its exposure to the stock and bond markets and fluctuations
in interest rates. The use of futures and option transactions involves the risk
of imperfect correlation in movements in the price of futures and option
contracts, interest rates and the underlying hedged assets, and the possible
inability of counterparties to meet the term of their contracts. When the
contract is closed, a realized gain or loss is recorded equal to the difference
between the value of the contract at the time it was opened and the value at the
time it was closed.
3. INVESTMENTS
The following presents investments that represent five percent or more
of the Plan's net assets as of December 31, 2000 and 1999 (in thousands):
2000 1999
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Loral Stock Fund*.................................... $ 28,720 $ 149,139
Fidelity Blue Chip Growth Fund....................... 65,933 80,943
Fidelity Growth & Income Portfolio................... 32,019 37,188
Fidelity Retirement Money Market Portfolio........... 57,756 43,438
Fidelity Managed Income Portfolio II................. 18,225 18,603
Fidelity Magellan.................................... 24,322 26,730
Ford Stock Fund...................................... 18,099 32,826
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* Includes both participant directed and non-participant directed amounts.
During 2000 and 1999, the Plan's investments, including gains and losses
on investments bought and sold, as well as held during each year (decreased)
increased in value as follows (in thousands):
2000 1999
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Mutual Funds.......................... $ (21,808) $ 18,923
Loral Stock Fund...................... (137,301) 40,258
Globalstar Stock Fund................. (2,712) 1,213
Associates Stock Fund................. 2,411 (4,787)
Ford Stock Fund....................... (5,432) (3,582)
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$ (164,842) $ 52,025
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Information about the significant components of the changes in net
assets relating to the non-participant-directed investments for 2000 and 1999
were (in thousands):
2000 1999
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Contributions........................................ $ 6,802 $ 7,003
Net depreciation..................................... (28,999) (1,006)
Dividends............................................ 1,314 1,408
Benefits paid to participants and withdrawals........ (5,513) (5,933)
Transfers to participant-directed funds.............. (16,842) (2,537)
Loans................................................ (22) (41)
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$ (43,260) $ (1,106)
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4. PLAN TERMINATION
Although the Employer has not expressed an intent to do so, the Employer
can discontinue its contributions at any time and terminate the Plan subject to
the provisions of ERISA. In the event of a discontinuance and/or termination of
the Plan, participants will become 100% vested and the net assets of the Plan
will be allocated among the participants and their beneficiaries in accordance
with the provisions of ERISA.
5. TAX STATUS
On December 21, 2000, the Employer filed for a determination from the
Internal Revenue Service that the Plan and related trust are designed in
accordance with applicable sections of the IRC.
Based upon present applicable laws and regulations, participants will
not be subject to Federal income tax on the TES contributions or Employer
contributions made on their behalf or on the earnings credited to their account
until such time as they are withdrawn.
6. CONCENTRATION OF CREDIT RISK
At December 31, 2000 and 1999, approximately 79% and 52%, respectively,
of the Plan's assets were invested in Fidelity Funds and 11% and 35%,
respectively, in the Loral Stock Fund.
7. RELATED PARTY TRANSACTIONS
Certain Plan investments are mutual funds managed by affiliates of the
Plan trustee, which qualify as party-in-interest transactions. Such transactions
are permitted under the provisions of the Plan and are exempt from the
prohibition of party-in-interest transactions under ERISA and applicable
exemptions promulgated thereunder.
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LORAL SAVINGS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 2000
(IN THOUSANDS)
IDENTITY OF ISSUE, BORROWER, DESCRIPTION OF INVESTMENT INCLUDING MATURITY CURRENT
LESSOR OR SIMILAR PARTY DATE, RATE OF INTEREST, COLLATERAL, PAR OR MATURITY VALUE COST VALUE
(a) (b) (c) (d) (e)
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* Loral Stock Fund Common Stock (12,821,225 shares) $ 116,810 $ 28,720
Ford Stock Fund Common Stock (2,256,769 shares) 7,967 18,099
* Globalstar Stock Fund Common Stock (267,991 shares) 1,637 166
* Fidelity Management Trust
Company Blue Chip Growth Fund 65,933
Growth & Income Fund 32,019
Asset Manager 5,748
Magellan Fund 24,322
Overseas Fund 5,783
Retirement Money Market Portfolio 57,755
Intermediate Bond Fund 3,711
Managed Income Portfolio II 18,225
Puritan Fund 433
Spartan U.S. Equity Index 3,830
Morgan Stanley-Dean Witter Global Equity Portfolio Class B 396
PIMCO Total Return Fund 1,147
Capital Appreciation Fund 984
Mid Cap Growth Fund 1,864
High Yield Fund 420
* Participant Loans Interest rates ranging from 6% to 10 1/2% 4,413
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$273,968
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* Party-in-interest
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LORAL SAVINGS PLAN
SCHEDULE OF NON-EXEMPT TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
(IN THOUSANDS)
IDENTITY OF PARTY INVOLVED RELATIONSHIP DESCRIPTION AMOUNT
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LORAL PLAN SPONSOR DELAYED DEPOSITS * $11
* Due to an administrative oversight, employee contributions for some
participants of one subsidiary were not fully deposited with the Plan Trustee,
from January 2000 to May 2000. By August 2000, the contributions were fully
deposited and participants were credited with the maximum amount of interest
available under the Plan. The Plan Sponsor is completing the necessary filings
with the Department of Labor and the Internal Revenue Service.
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