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EXHIBIT 99.1
WILMER, CUTLER & PICKERING
Counsel for Debtors and Debtors-in-Possession
Washington, D.C. 20037-1420
(202) 663-6000
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
IN RE:
Iridium LLC
Iridium Operating LLC Case No. 99-45005-CB
Iridium IP LLC (Jointly Administered)
Iridium Capital Corporation Chapter 11
Iridium Roaming LLC
Iridium (Potomac) LLC
MONTHLY OPERATING STATEMENT
FOR THE PERIOD JANUARY 1, 2000 THROUGH JANUARY 31, 2000
Disbursements: (in thousands)
Iridium LLC $93
--------------------------
Iridium Operating LLC $13,852
--------------------------
Operating Loss: (in thousands) $112,588
--------------------------
THIS OPERATING STATEMENT MUST BE SIGNED BY A REPRESENTATIVE OF THE DEBTORS
The undersigned, having reviewed the attached and being familiar with the
debtors' financial affairs, verifies under the penalty of the perjury, that the
information contained therein is complete, accurate and truthful to the best of
my knowledge.
DATE: FEBRUARY 28, 2000 /s/ DAVID R. GIBSON
---------------------------------------- ----------------------------------------------------------
David R. Gibson, Chief Financial Officer
Indicate if this is an amended statement by checking here:
AMENDED STATEMENT ________
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HEADNOTE
These unaudited consolidated financial statements have been prepared for the
purpose of filing with the United States Bankruptcy Court for the Southern
District of New York. These consolidated financial statements have not been
prepared in accordance with generally accepted accounting principles ("GAAP")
because Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
("SFAS 121") has not been applied, and certain other disclosures required under
GAAP have been omitted. The Company expects that, upon application of SFAS 121,
the carrying amount of its long-lived assets will be written down by a material
amount; however, at this time it is not possible to determine such amount. In
the opinion of management, all other accounting principles applicable to the
Company have been applied in the accompanying consolidated financial statements
and all adjustments necessary for a fair presentation of such information have
been made. However, there could also be year-end audit adjustments and
adjustments as a result of the Company's filing for protection under Chapter 11
of the United States Bankruptcy Code.
IRIDIUM LLC
(DEBTOR-IN-POSSESSION)
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY)
UNAUDITED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
JANUARY 31, 2000
----------------
ASSETS
Current assets:
Cash and cash equivalents (Note 3) $ 6,422
Restricted cash (Note 3) 167,260
Accounts receivable, net of allowance 3,752
Due from Affiliates, net of allowance 1,352
Prepaid expenses and other current assets 16,942
----------------
Total current assets 195,728
Property and equipment, net 2,963,558
Other assets 16,014
----------------
Total assets $ 3,175,300
================
LIABILITIES AND MEMBERS' DEFICIT
Liabilities not subject to compromise
Current liabilities
Accounts payable and accrued expenses $ 16,980
Due to Member 277,385
Due to Affiliates 3,200
Senior Secured Bank Facility 800,000
----------------
Total current liabilities 1,097,565
Deferred liabilities 54,159
Liabilities subject to compromise
Senior Notes A, B, C and D 1,450,000
Senior Subordinated Notes 377,060
Due to Member 1,311,047
Due to Affiliates 605
Pre-petition interest payable 104,601
Pre-petition accounts payable-trade 13,213
Pre-petition accrued liabilities 3,534
Accrued pension liabilities 11,616
----------------
3,271,676
----------------
Total Liabilities 4,423,400
================
Members' Deficit
Class 2 Interests 50,258
Class 1 Interests 2,352,821
Adjustment for minimum pension liability (1,812)
Deficit accumulated during the development stage (3,649,367)
----------------
Total members' deficit (1,248,100)
----------------
Total liabilities and members' deficit $ 3,175,300
================
The accompanying notes are an integral part of the financial statements.
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HEADNOTE
These unaudited consolidated financial statements have been prepared for the
purpose of filing with the United States Bankruptcy Court for the Southern
District of New York. These consolidated financial statements have not been
prepared in accordance with generally accepted accounting principles ("GAAP")
because Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
("SFAS 121") has not been applied, and certain other disclosures required under
GAAP have been omitted. The Company expects that, upon application of SFAS 121,
the carrying amount of its long-lived assets will be written down by a material
amount; however, at this time it is not possible to determine such amount. In
the opinion of management, all other accounting principles applicable to the
Company have been applied in the accompanying consolidated financial statements
and all adjustments necessary for a fair presentation of such information have
been made. However, there could also be year-end audit adjustments and
adjustments as a result of the Company's filing for protection under Chapter 11
of the United States Bankruptcy Code.
IRIDIUM LLC
(DEBTOR-IN-POSSESSION)
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY)
UNAUDITED CONSOLIDATED STATEMENT OF LOSS
(IN THOUSANDS)
PERIOD FROM
JANUARY 1, 2000
THROUGH JANUARY 31, 2000
------------------------
Revenue $ 1,548
Costs and expenses:
Sales, general and administrative 8,009
Operations and maintenance expense 25,209
Depreciation and amortization 68,739
Interest expense 8,574
------------------------
110,531
------------------------
Loss before reorganization items 108,983
------------------------
Reorganization expense items:
Professional fees 2,241
Employee retention costs 2,176
Interest income (812)
------------------------
3,605
------------------------
Net Loss $ 112,588
========================
The accompanying notes are an integral part of the financial statements.
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HEADNOTE
These unaudited consolidated financial statements have been prepared for the
purpose of filing with the United States Bankruptcy Court for the Southern
District of New York. These consolidated financial statements have not been
prepared in accordance with generally accepted accounting principles ("GAAP")
because Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
("SFAS 121") has not been applied, and certain other disclosures required under
GAAP have been omitted. The Company expects that, upon application of SFAS 121,
the carrying amount of its long-lived assets will be written down by a material
amount; however, at this time it is not possible to determine such amount. In
the opinion of management, all other accounting principles applicable to the
Company have been applied in the accompanying consolidated financial statements
and all adjustments necessary for a fair presentation of such information have
been made. However, there could also be year-end audit adjustments and
adjustments as a result of the Company's filing for protection under Chapter 11
of the United States Bankruptcy Code.
IRIDIUM LLC
(DEBTOR-IN-POSSESSION)
(A DEVELOPMENT STAGE LIMITED LIABILITY COMPANY)
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
PERIOD FROM JANUARY 1, 2000
THROUGH JANUARY 31, 2000
---------------------------
Cash flows from operating activities:
Net loss before reorganization items $ (108,983)
Adjustments to reconcile net loss before reorganization items to net cash used:
Depreciation and amortization 68,739
Amortization of financing costs 1,306
Loss on disposal of assets 109
Changes in assets and liabilities:
Increase in accounts receivable (1,348)
Decrease in prepaid expenses and other current assets 1,526
Increase in due to/from affiliates 811
Decrease in other assets 24
Increase in accounts payable and accrued expenses 26,647
Increase in other liabilities 1,751
---------------------------
(9,418)
---------------------------
Net loss from reorganization items (3,605)
Adjustments to reconcile net loss from reorganization items to net cash used:
Changes in assets and liabilities:
Increase in accounts payable and accrued expenses 698
---------------------------
(2,907)
---------------------------
Net cash used in operating activities (12,325)
---------------------------
Cash flows from investing activities:
Purchases of property and equipment (5)
---------------------------
Net cash used in investing activities (5)
---------------------------
Cash flows from financing activities:
Reorganization item:
Proceeds from restricted cash 2,861
---------------------------
Net cash provided by financing activities 2,861
---------------------------
Increase (decrease) in cash and cash equivalents (9,469)
Cash and cash equivalents, beginning of period 15,891
---------------------------
Cash and cash equivalents, end of period $ 6,422
===========================
Supplemental disclosures of cash flow information:
Interest paid 3,937
Cash paid for reorganization items:
Professional fees 382
Workforce reduction costs 31
Employee retention program 3,306
Interest earned on accumulated cash resulting from Chapter 11 proceeding (812)
---------------------------
2,907
The accompanying notes are an integral part of the financial statements.
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND BUSINESS
Iridium LLC (the "Parent" or the "Company") and its subsidiaries have completed
their efforts to develop and deploy a global wireless personal communication
system (the "Iridium System"). Iridium commenced commercial satellite phone
service on November 1, 1998 and commercial satellite paging service on November
15, 1998. The Parent's transition from a development stage limited liability
company to an operating limited liability company has been adversely affected by
various factors, including much slower than expected subscriber growth. As a
result of these factors, on August 13, 1999, bankruptcy petitions were filed
with respect to the Parent and certain of their affiliates. See Note 3 for a
description of the bankruptcy proceedings.
2. BASIS OF PRESENTATION
The unaudited consolidated financial statements include the accounts of the
Parent and its wholly-owned subsidiaries, Iridium Operating LLC ("Iridium"),
Iridium Geolink LLC, Iridium Promotions Inc. and Iridium Aero Acquisition Sub,
Inc. and Iridium's wholly-owned subsidiaries, Iridium Capital Corporation,
Iridium Roaming LLC, Iridium IP LLC, Iridium (Potomac) LLC, Iridium Facilities
Corporation and Iridium Canada Facilities, Inc. All significant intercompany
transactions have been eliminated.
These unaudited consolidated financial statements have been prepared for the
purpose of filing with the United States Bankruptcy Court for the Southern
District of New York. These consolidated financial statements have not been
prepared in accordance with generally accepted accounting principles ("GAAP")
because Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of"
("SFAS 121") has not been applied, and certain other disclosures required under
GAAP have been omitted.
SFAS 121 requires the Company to evaluate the recoverability of its long-lived
assets whenever events or circumstances indicate that the carrying amount of
such assets may be impaired. If considered impaired, SFAS 121 requires that the
long-lived assets be written down to fair value. The Company's long-lived assets
are comprised of the Iridium Space System and related assets. The Company
expects that, upon application of SFAS 121, the carrying amount of its
long-lived assets will be written down by a material amount; however, at this
time it is not possible to determine such amount. The accompanying unaudited
consolidated financial statements also omit certain disclosures required under
GAAP, including inception-to-date financial information for development stage
enterprises and earnings (loss) per membership interest data.
With the exceptions described above, in the opinion of management, all other
accounting principles applicable to the Company have been applied in the
accompanying unaudited consolidated financial statements and all adjustments
necessary for a fair presentation of such information have been made. However,
there could also be year-end audit adjustments and adjustments to certain other
accounts as a result of the Company's filing for protection under Chapter 11 of
the United States Bankruptcy Code.
In connection with the bankruptcy proceedings the Company has adopted AICPA
Statement of Position 90-7, "Financial Reporting by Entities in Reorganization
Under the Bankruptcy Code" ("SOP 90-7"). SOP 90-7 requires entities in
bankruptcy to present their pre-petition liabilities on the basis of the
expected amount of allowed claims in accordance with Statement of Financial
Accounting Standards No. 5, "Accounting for Contingencies".
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3. BANKRUPTCY FILING
On August 13, 1999 (the "Petition Date"), certain creditors of Iridium and
Iridium Capital Corporation filed involuntary bankruptcy petitions against them
in the United States Bankruptcy Court for the Southern District of New York (the
"Court"). Also, on August 13, 1999, the Parent, Iridium, Iridium Capital
Corporation and Iridium World Communications Ltd. ("IWCL"), a member of the
Parent, filed voluntary petitions in the United States Bankruptcy Court for the
District of Delaware. On August 16, 1999, the Court entered an order, which,
among other things, stayed the Delaware petitions. On September 13, 1999 (the
"Conversion Date"), the Court entered an order granting the Parent, Iridium,
IWCL (whose estate is being separately administered) and Iridium Capital
Corporation relief under Chapter 11 of Title 11 of the US Bankruptcy Code (the
"Bankruptcy Code"). Additionally, on the Conversion Date, three additional
Iridium subsidiaries, Iridium IP LLC, Iridium (Potomac) LLC and Iridium Roaming
LLC and on December 16, 1999 Iridium Promotions, Inc. (together and collectively
with the other companies the "Debtors") filed voluntary petitions for relief
under Chapter 11 of the Bankruptcy Code.
In Chapter 11 bankruptcy proceedings, certain claims in existence prior to the
order of relief, including pending litigation against the Company are stayed
while the Company continues its business operations as a debtor-in-possession.
These accrued claims are reflected in the balance sheets as "Liabilities Subject
to Compromise". Additional liabilities subject to compromise may arise
subsequent to the filing date resulting from rejection of executory contracts,
including leases, and from the determination by the Court (or agreed to by
parties in interest) of allowed claims for contingencies and other disputed
amounts. Prior to the Conversion Date, the Debtors continued to pay expenses and
claims, including pre-petition claims. The Debtors received approval from the
Bankruptcy Court, effective September 13, 1999, to pay certain of its
pre-petition and pre-conversion obligations, including employee wages and
related taxes and gap period claims (those claims incurred between the Debtors'
Petition Date and the Conversion Date).
The equity and liabilities of Parent as of the Petition Date are subject to
compromise or other treatment as determined by the Court. The ultimate effects
of the bankruptcy proceedings on each of the various constituencies will depend
on a variety of factors, including, without limitation, the amount of proceeds
realized by the Company on the sale of its assets, the validity or perfection of
security interests granted to certain lenders and the amount and relative rank
of each claim among the priorities established by the Bankruptcy Code. The stock
of IWCL was de-listed by NASDAQ on November 19, 1999 and is now trading on the
"pink sheets." Based on the Company's debt level in excess of $4 billion and the
legal priorities in bankruptcy, the Company believes that any reorganization or
liquidation will not result in any value remaining from the bankruptcy estate
for holders of publicly traded equity. The Company currently expects to sell all
or substantially all of its operating assets in a sale under Court supervision;
however, there can be no assurance that any such sale will be consumated.
From the Conversion Date until December 15, 1999, the Debtors' operations were
funded pursuant to cash collateral orders agreed to by the lenders and approved
by the Court. On December 15, 1999, the Court approved an extension of the use
of cash collateral through February 15, 2000, provided, however, that all cash
subject to the bank lien be used only to pay interest to the lenders and certain
other limited expenses. As a result, approximately $167 million of cash subject
to the bank lien has been recognized as restricted cash in the accompanying
financial statements. To fund ongoing operations and restructuring costs,
current investors, led by Motorola, agreed to provide the Company a non-interest
bearing loan of $20 million to continue its operations through February 15,
2000. The loan funded certain expenditures incurred through February 15, 2000.
On February 14, 2000, the loan was extended through February 18, 2000 and on
February 17, 2000 the loan was increased by $5 million and extended through
March 6, 2000. The remaining outstanding portion of the loan will be treated as
a post-petition liability subordinate to other post-petition liabilities and the
$800 million Senior Secured
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Bank Facility. As of January 31, 2000 the loan is classified under Liabilities
Not Subject to Compromise - Due to Member.
In addition to the interim funding of Iridium, Motorola has continued to operate
and maintain the satellite constellation without any cash payment for this
service. Motorola will be under no obligation to provide this service after
March 6, 2000 unless it is paid for the service on a current basis in cash.
4. USE OF ESTIMATES
The preparation of financial statements in accordance with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates.
5. LIABILITIES SUBJECT TO COMPROMISE
Obligations classified in the January 31, 2000 balance sheet as liabilities
subject to compromise are those obligations that were incurred prior to the
Petition Date. The ultimate disposition of such liabilities is not currently
determinable.
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IRIDIUM LLC
(DEBTOR-IN-POSSESSION)
SCHEDULE OF TAXES PAID
FOR THE PERIOD FROM JANUARY 1, 2000 THROUGH JANUARY 31, 2000
Pay Period Amount
---------- ------
Gross Wages and Salaries paid 15-Jan-00 $ 4,059,995 (includes $2,894,395 of retention and $23,688 of severance)
31-Jan-00 1,139,328 (includes $2,848 of retention and $5,271 of severance)
--------------------
$ 5,199,323
====================
Payroll Employer
Pay Period Withholding Contribution Amount Date Paid
---------- ----------- ------------ ------ ---------
Payroll Taxes:
Federal Withholding 15-Jan-00 $ 933,791 $ - $ 933,791 15-Jan-00
Federal Withholding 31-Jan-00 206,798 - 206,798 31-Jan-00
State Withholding 15-Jan-00 225,456 - 225,456 15-Jan-00
State Withholding 31-Jan-00 59,993 - 59,993 31-Jan-00
FICA and Medicare 15-Jan-00 305,960 305,960 611,921 15-Jan-00
FICA and Medicare 31-Jan-00 83,179 83,178 166,357 31-Jan-00
Federal Unemployment Taxes 15-Jan-00 - 14,629 14,629 15-Jan-00
Federal Unemployment Taxes 31-Jan-00 - 1,033 1,033 31-Jan-00
State Unemployment Taxes 15-Jan-00 - 53,970 53,970 15-Jan-00
State Unemployment Taxes 31-Jan-00 - 4,806 4,806 31-Jan-00
-------------------------------------------------------------
$ 1,815,176 $ 463,577 $ 2,278,753
=============================================================
Period
Covered Amount Date Paid
------- ------ ---------
Sales, Use and Excise Taxes:
Use Taxes paid -
District of Columbia None
Use Taxes paid - Virginia 12/01 - 12/31 $ 106 1/21/2000
Use Taxes paid - Arizona None
Property Taxes:
District of Columbia None
Virginia None
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IRIDIUM LLC
(DEBTOR-IN-POSSESSION)
SCHEDULE OF PAYMENTS TO PROFESSIONALS UNDER CODE SECTION 327
FOR THE PERIOD FROM JANUARY 1, 2000 THROUGH JANUARY 31, 2000
AMOUNTS PAID
---------------------------------------------------------------
RETAINER
PROFESSIONAL DESCRIPTION OF SERVICES PERIOD COVERED FEES HOLDBACK DEDUCTION
- ------------ ----------------------- -------------- ---- -------- ---------
Donaldson, Lufkin & Jenrette Debtor Financial Advisors 1/1/00 - 1/31/00 $ 200,000 $ - $ -
Young, Conway & Stargatt Debtor Legal Counsel 8/14/99 - 8/31/99 16,940 - (20,649)
------------ ------------- --------------
Total $ 216,940 $ - $ (20,649)
============ ============= ==============
AMOUNTS PAID
---------------------------
PROFESSIONAL DESCRIPTION OF SERVICES EXPENSES TOTAL PAID
- ------------ ----------------------- -------- ----------
Donaldson, Lufkin & Jenrette Debtor Financial Advisors $ 57,379 $ 257,379
Young, Conway & Stargatt Debtor Legal Counsel 3,709 -
------------ ------------
Total $ 61,088 $ 257,379
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IRIDIUM LLC
(DEBTOR-IN-POSSESSION)
CASE NUMBER 99-450005(CB)
INSURANCE
I, David R. Gibson, Chief Financial Officer of Iridium LLC, the debtor and
debtor-in-possession, verify to the best of my knowledge that all insurance
policies are fully paid for the current period, and that amounts for workers
compensation and disability insurance have been paid.
/s/ DAVID R. GIBSON
---------------------------------
DAVID R. GIBSON
CHIEF FINANCIAL OFFICER
DATE: FEBRUARY 28, 2000