SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 2, 1999
CD RADIO INC.
(Exact Name of Registrant as Specified in Charter)
DELAWARE 0-24710 52-1700207
(State or other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
1180 AVENUE OF THE AMERICAS, 14TH FL., NEW YORK, NY 10036
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (212) 899-5000
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act"), the Company is hereby
providing cautionary statements identifying important factors that could cause
the Company's actual results to differ materially from those projected in
forward-looking statements (as such term is defined in the Reform Act) made in
this Current Report on Form 8-K. Any statements that express, or involve
discussions as to, expectations, beliefs, plans, objectives, assumptions or
future events or performance (often, but not always, through the use of words or
phrases such as "will likely result," "are expected to," "will continue," "is
anticipated," "estimated," "intends," "plans," "projection" and "outlook") are
not historical facts and may be forward-looking. Such statements involve
estimates, assumptions and uncertainties that could cause actual results to
differ materially from those expressed in the forward-looking statements.
Accordingly, any such statements are qualified in their entirety by reference to
the factors discussed in the Company's Annual Report on Form 10-K for the year
ended December 31, 1997, and investors should not place undue reliance on any
such forward-looking statements. Among the significant factors that have a
direct bearing on the Company's results of operations are the potential risk of
delay in implementing the Company's business plan; increased costs of
construction and launch of necessary satellites; the Company's dependence on
satellite construction and launch contractors; risk of launch failure; unproven
market and unproven applications of existing technology; unavailability of radio
cards and miniature satellite dish antennas; and the Company's need for
additional financing.
Management cannot assess the impact of each such factor on the
Company's business or the extent to which any factor, or combination of factors,
may cause actual results to differ materially from those contained in any
forward-looking statements. Further, any forward-looking statement speaks only
as of the date on which such statement is made, and the Company undertakes no
obligation to update any forward-looking statement or statements to reflect
events or circumstances after the date on which such statement is made or to
reflect the occurrence of unanticipated events. New factors emerge from time to
time, and it is not possible for management to predict all of such factors.
ITEM 5. OTHER EVENTS.
Space Systems/Loral, Inc. ("Loral"), which is constructing and
arranging the launch of the Company's satellites, has informed the Company that
its three satellites have been scheduled for launch in January, March and May
2000 and scheduled to be in orbit and checked out by June 2000. Previously, the
Company's three satellites were scheduled for launch in November 1999, December
1999 and January 2000 and scheduled to be in orbit and checked out by March
2000. These delays in the launch schedule result primarily from the availability
of Proton launch vehicles.
Separately, on February 2, 1999, the Company entered into an Amended
and Restated Agreement (the "Amended Lucent Agreement") with Lucent
Technologies, Inc.
Pursuant to the Amended Lucent Agreement, Lucent has agreed to use commercially
reasonable efforts to deliver commercial quantities of integrated circuits
("chip sets"), which will be used in consumer electronic devices capable of
receiving CD Radio's broadcasts, by June 2000. The Company has agreed to pay
Lucent the cost of the development work related to the chip sets, currently
estimated to be approximately $27,000,000. Previously, the Company had expected
Lucent to use commercially reasonable efforts to deliver chip sets by December
1999 and expected to pay the costs of the chip set development work, formerly
estimated to be approximately $9,000,000. The design and development of the chip
sets has required more engineering resources than originally estimated. The
additional amounts paid to Lucent under the Amended Lucent Agreement will be
used to pay costs of these additional engineering resources. A copy of the
Amended Lucent Agreement is attached as Exhibit 99.1 to this Report and is
incorporated herein by reference.
As a result, the Company's commercial broadcasts are scheduled to
commence in the fourth quarter of 2000. There can be no assurances that Loral
will be able to deliver the satellites or that Lucent will be able to deliver
chip sets within the time frames described above. Additionally, the cost to the
Company of the development work contemplated by the Amended Lucent Agreement
could exceed $27,000,000.
As a result of the Company's revised schedule, the Company estimates
its pre-operational capital requirement will increase approximately $175 million
to $1.140 billion. This additional $175 million has two principal components --
approximately $130 million of expenses that the Company previously expected to
pay after it commenced commercial operations (consisting of $80 million of
payments due to Loral for the Company's fourth satellite and $50 million in
additional pre-operational operating expenses due to the delay) and the
additional $18 million expected to be paid to Lucent pursuant to the Amended
Lucent Agreement.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
*99.1 Amended and Restated Integrated Circuits Agreement, dated as of
February 1, 1999, between CD Radio Inc. and Lucent Technologies Inc.
- -----------
* Portions of this Exhibit have been omitted pursuant to an Application
for Confidential Treatment filed by the Company with the Securities and
Exchange Commission pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CD RADIO INC.
By: /s/ Patrick L. Donnelly
---------------------------
Patrick L. Donnelly
Executive Vice President,
General Counsel and
Secretary
Dated: February 4, 1999
EXHIBIT INDEX
Pursuant to Item 601 of Regulation S-K
Exhibit No. Description of Exhibit
----------- ----------------------
*99.1 Amended and Restated Integrated Circuits Agreement,
dated as of February 1, 1999, between CD Radio Inc. and
Lucent Technologies Inc.
- -----------
* Portions of this Exhibit have been omitted pursuant to an Application
for Confidential Treatment filed by the Company with the Securities and
Exchange Commission pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended.