Welcome to the Q2 2012 Globalstar Inc. Earnings Conference Call. My name is Eric and I’ll be your operator for today’s call. At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session. Please note that this conference is being recorded. I will now turn the call over to Dean Hirasawa, Director of Public and Investor Relations for Globalstar. Mr. Hirasawa, you may begin.

Thank you, operator. Good morning, everyone. Thank you for joining us for today’s conference call to discuss Globalstar’s 3 month results for the period ended June 30, 2012. Before we begin, please note the following. This call may contain forward-looking statements within the meaning of Federal Securities law. Factors that could cause results to differ materially are described in the Safe Harbor section of today’s press release and in Globalstar’s SEC filings including the Quarterly Report on Form 10-Q for the period ended June 30, 2012 which will be filed later today. The press release of this conference call and the associated slide presentation which is available on the Investor Relations page of our company website include discussions of certain non-GAAP financial measures as defined under SEC rules. The press release provides a reconciliation of each of those non-GAAP measures to the most comparable GAAP measure. Please note that the information in this call is accurate only as of today Thursday, August 9, 2012. Today’s press release containing certain financial information is available on the company website at www.globalstar.com. Later today an audio recording of this conference call will also be made available via telephone dial-in and a webcast recording along with the copy of the slide presentation which will also be made available on the company website. Today’s call is being hosted by Jay Monroe, Chairman and CEO of Globalstar Inc; Joining Jay are Corporate Controller, Rebecca Clary; and President of Global Operations, Tony Navarra. Each will be available for questions following their prepared remarks. At this time I would like to turn the call over to Mr. Monroe.

Thanks, Dean, and good morning, everyone. I am pleased to report that Globalstar concluded the second quarter of 2012 by continuing the positive momentum in growth in adjusted EBITDA that we began late last year, with over 42,000 gross activations not only did we had a record number of subs during the quarter but we also continued to improve our coverage and service quality as we deployed additional second generation satellites. Significantly, during the quarter we also reached a settlement with Thales Alenia Space, effectively resolving our differences regarding the purchase and delivery of second generation satellites. Therefore we are back on track to complete the final launch of the new constellation. I’ll discuss these events in more detail shortly, but first, Globalstar’s Corporate Controller Rebecca Clary will lead off with the financial review. I’ll then provide a short operational update for the company and will conclude with a Q&A session in which Rebecca, Tony and I will be available to respond to any questions. I’ll turn it over to Rebecca.

Thank you, Jay, and good morning, everyone. I am pleased to report that in the second quarter of 2012 the company had positive adjusted EBITDA for the third consecutive quarter. The company’s adjusted EBITDA for the second quarter was $2.9 million, an improvement of $4.9 million from the second quarter of 2011. This improvement was due to our combination of increased revenue and a reduction in operating expenses. Our revenue was $20 million in the second quarter of 2012, compared to $19 million in the second quarter of 2011. Service revenue accounted for most of the increase in total revenue while equipment sales grew slightly. The growth in service revenue resulted primarily from a $1.6 million or 33% increase in SPOT service revenue. The continued growth in our average SPOT subscriber base which increased 28% was the primary driver of this increase. The growth in SPOT service revenue was offset by a decrease of $900,000 in Duplex service revenue compared to the second quarter of 2011. This decrease was due to the mix of rate plans our subscribers were enrolled in during the respective periods as well as attrition in our average Duplex subscriber base. Lower rate plans in effect in the second quarter of 2012 were the primary reasons for the ARPU decrease from the second quarter 2011. However, when comparing the second quarter to the first quarter of 2012, there was an increase in both Duplex service revenue and ARPU. We expect this trend to continue as our coverage and call completion rates continue to improve. We expect that these improvements will not only allow us to regain our subscriber base, but also to offer rate plans that are more commensurate with our call quality and dependability. As discussed over the last couple of quarters, the cost saving…

Thanks, Rebecca. As you just heard, we are pleased with the financial momentum that began in the fourth quarter of last year and are encouraged with our progress. These past 3 quarters of positive adjusted EBITDA demonstrate a turnaround for our business and are the result of the hard work of everyone at Globalstar. As I discussed in May, with increased discipline in sales, marketing and product development plus a new constellation offering vastly improved coverage and the return of the industry’s highest quality voice service, we’re laying a strong foundation for the business. Globalstar continues to make the necessary investments and operational improvements to realize the opportunities that lie ahead and we are focused on increasing our revenue and our adjusted EBITDA through the end of this year and beyond. As announced on June 25, we reached a settlement of our prior disputes with Thales and both companies agreed to the principal terms of commercial proposal for the purchase of 6 additional spacecraft. The mutual settlement also provides that Thales will complete their current work and timely deliver the remaining Batch 4 satellites. With the resolution of our disputes now behind us, we continue to plan the fourth and final launch for later this year subject to the delivery of the remaining satellites. All of us at Globalstar as well as our satellite and launch partners Thales and Arianespace are working diligently to make this happen as soon as possible. We will update you with further information once the launch date is finalized. So we’re back on track and just one launch away from restoring full coverage even as we deploy previously launched satellites into the constellation which further improves our call completion rates. Our customers in key markets are already experiencing connection rates of greater than 80% today…

Thank you, Jay. That concludes the prepared portion of the presentation and we will now proceed with the Q&A portion of the call. Operator can you please proceed with the first question?

[Operator Instructions] Our first question comes from Marco Rodriguez from Stonegate Securities.

Had a pretty strong quarter in SPOT and Simplex from a sub basis. I am assuming the SPOT was positively affected by this 6000 order for the U.S. Forest Service. So if we exclude that, is that a kind of a fair assumption as far as what are the normalized number there and can you talk about those Simplex as was there a large one-time order or do you have any pricing promotions in the quarter given the lower ARPU?

It was obviously an exceptional quarter as it relates to our SPOT and Simplex subscriber additions, the forestry service sale obviously helped but it also, seasonality played a role in that as well. We are experiencing strong demand for our products so we expect to continue to see additions. I don’t know if you can expect to see them at the same level as we did this quarter because we had several large sales like you mentioned with forestry service and like I mentioned with seasonality.

Marco to embellish that a little bit, the order with the forest service is one that you still have got to account for over a long period of time. It’s a contract for the first year. Secondly, we are working on a series of opportunities like that globally. And lastly, the commercial Simplex business is growing and will continue to grow. It’s the nature of it is that it can be a little bit lumpy. So I guess you can see things in one month, not see them for a month or 2 and then see big hits again because those are going to operators of large numbers of commercial Simplex units.

Okay, that’s helpful. So on the Simplex side, are you using increased demand there or increased interest, any kind of additional color you can give there on end markets?

Yes, definitely the Simplex units non-SPOTs and not consumer products but commercial Simplex, is a growing marketplace. We’ve developed less and less expenses solutions for people. It’s what I fondly refer to as data heroin, as soon as you give people data and they can acquire that data inexpensively they want more and more of it. And that’s the kind of thing we’re seeing in commercial Simplex market. So people used to be unable to monitor devices because it was expensive or difficult to gather the data. Now they can do that readily and so the enabling technology is Simplex. And the market takes off and people find out more and more about it and as they do, word spreads rapidly and we’re now monitoring things for instance in the oil field which are small, and historically people wouldn’t have cared about them. But there are individual items of high inventory values that are getting monitored today.

Got it. And then kind of shifting gears here to your Duplex services, I believe in your prepared remarks you said that currently you’re at about 80% call completion rates and the expectation is for that to hit 94, I believe you said in September. Is that having all of your satellites that are up in space right now in service or placed in service, can you give a little more color around that?

Tony, I think you can probably do that one best.

Marco, the anticipation is that we will have all of our Batch 3 and those were the 6 satellites that we launched in December of last year, they will all be in service by the end of September. So we’re very pleased, number one, with the performance of satellites and we’re very happy with the amount of service that they are taking, so that’s why we expect to see the services in the number of subscribers really get a better quality of both their calls as well as the SPOT and consumer products that are being served well on the Simplex side.

Got it. And then in terms of marketing the service there, have you started to aggressively turn on the marketing program or is that still kind of being held back a bit until you get to a higher level of call completion?

There is actually a little bit of both. We are reaching out to our historic customers and starting to convert the plans that they are on to higher value plans and make people aware of the increased utility and we will began more aggressive marketing here in the near term for new customers.

Okay. And can you provide any kind of color as far as how that marketing plan is being setup from a strategic standpoint?

Can you elaborate on the question just a little bit Marco?

Yes, just wondering what the approach is, is it trade shows is it going to end customers or any kind of color there, how you’re going to kind of launch that aggressive marketing campaign?

Sure. It comes in a lot of different categories, all of which that you’ve mentioned and then more. We have a ton of dealers, agents and resellers who we have reengaged and those agents and resellers have been on the sidelines for Globalstar over the last couple of years as we have repopulated the constellation. So we’re going back out to all of those. We are absolutely in the trade show business. We were just at the outdoor trade show which is the biggest in the world for the outdoor retailers in Salt Lake City last week and the week before that, we were in Oshkosh for the general aviation show. So both of those are important aspects. We also have a very long customer list of folks who have stuck with us and those are commercial vertical market and government customers and those customers we are recontacting to make certain that they turn on the phones that they have and become paying customers again, and fulfill additional needs by using Globalstar instead of some other solution. So we’re attacking all of those plus a few more.

Got it. And asking you here now to kind of bring out your crystal ball here for fiscal ’13, just kind of wondering with the additional or the aggressive marketing campaign that you will be rolling out here shortly, how are you guys kind of thinking about the Duplex subs, the ending subs or average subs obviously directionally they should be higher. Just kind of trying to understand some of your thinking and any kind of color there would be helpful.

In the short term Marco obviously we expect to have churn that exceeds our gross additions. But once we have the coverage levels to the commercially competitive levels that we expect that’s when we would expect an increase in our subs.

But I think Marco if the question is are we willing to give forward guidance on the anticipated number, that is not something that we have historically done and until the constellation is up and the final launch completed, I don’t think it’s something that we want to do right yet.

Understood. And then you mentioned on the call the financing, you’re looking for equity and debt financing to fully fund your business plan. Is that inclusive of the 5.75% convertible that is puttable in April ’13?

Obviously that is a capital consideration for us and we’re in conversation with the holders of those instruments and we will be.

Okay. So you have had discussions with them in terms of what to do there?

We’re in conversation, it’s small group in number and very important people to us that we have conversations with frequently so we are in discussion about how to resolve those.

Okay, got it. And just a real quick housekeeping item, what was the diluted share count in the quarter?

Great question.

Marco, we don’t have that in front of us.

Okay.

Can we connect after the call?

Yes, that’s it. I’ll look for it a little later.

Our next question comes from Lyman Delano from Beck, Mack & Oliver.

I’ve got a couple of questions but I just thought I’d say one thing anecdotally. I was in a remote part of Iceland last week fishing and I used my Globalstar phone on a number of occasions utilizing the call time tool, but I must say that I was very, very impressed by the call availability as well as the quality and the speed of the calls going through. So I am just trying to say that your call completion rate is already dramatically better than it was 6 or 12 months ago. So that’s great.

We spend a lot of money making that true.

My first question is related to ground operations and I am curious -- I have sort of 3-part question to it, one is sort of the timing and expense of the second generation software upgrades for the gateways around the world. Two, do you have any new gateways planned? And three, could you just sort of update us on the relationship that you have with the IGOs the Independent Gateways Operators? And then I have a follow-up question?

Okay. First of all the IGOs are we’ll take it in reverse order. The IGOs are engaged but they like we have been waiting for a period of time until we get the new constellation up. They are important partners to us in the regions of the countries and world that they operate and that’s really only about half of the world to us. Secondly, for gateways planned, absolutely we’re always looking at additional gateways. We’re looking at gateways specific to the ADS-B opportunity which would handle certain air traffic routes. We’re looking at a number of other things around ADS-B which would broaden the appeal of the already appealing opportunity there. So we’re always looking at gateways to fill in different areas of the world. And lastly, in terms of the ground upgrades that you were talking about. Lyman, was that to see the second generation ground infrastructure holistically, were you asking…

Yes, that’s what I am referring to, just the preparing for the second generation equipment.

Right. As you know, we timed the second generation ground to occur approximately a year or 2 after the satellites are placed in service. I mean there were several different reasons for that. And so we still look at the ground infrastructure as lagging the last launch by somewhere between 1 and 2 years. And so I mean from today you might look at it as a 2 years from now plus or minus.

Okay, fine. My other questions related to ADS-B and you talked about it in the May call and just talked on it briefly here, and as a potentially valuable model for Globalstar. Could you update us particularly in respect to some of the news that we’ve seen coming out of Iridium about their own ADS-B solution which has had a fair amount of publicity and they’ve talked about their joint venture partner NAV Canada, and suppliers Harris and Exelis. I saw in one publication I think it’s the air traffic control newsletter from last week that your counterpart at Iridium had said something to the effect, and I think it’s a quote of his that “Globalstar does not provide real time connectivity over the oceans or poles and never will.” And could you just comment about the competitive aspects and how to make sure that you can provide this question. Could you address his commentary whether you have a solution for that?

Sure. A couple of points. One, our solution is almost exactly real time that the solution that is planned by Iridium just by nature of its constellation is different. So the latency involved in our solution is much more satisfactory and that’s because of the bent pipe architecture. Secondly, I addressed the gateways a couple of strategic gateways allow us to pick up additional aircraft routes and we can place as many or as few of those as are required because gateways as you know are not an expensive undertaking for Globalstar. I mean lastly, there is nothing that prohibits us at all from launching a couple of polar orbiting satellites at our elevation, nothing at all. It’s just a function of the business model. The business model is a good one. We will launch additional satellites to cover the poles. Historically that was not a good business for us because there is relatively little usage but the ADS-B opportunity would change the polar opportunity. So no reason in the world that we would not do that.

Our next question comes from Tony Lodier [ph] from Scarsdale Equity [ph].

First, I would like to congratulate you guys in getting through this difficult period and for the job you’ve done. And really I have 2 questions. The first one is whether you could shed any light on whether as a result of this most recent agreement, Thales has agreed to a date whereby they would deliver to you the remaining 6 satellites. And the second question I have is that given the improvement in the performance of your system and the continuing degradation of Iridium system it seems to me that we’re close to a crossover point where your service shortly is going to become better than Iridium’s even without the launch of the 6 satellites. And given that fact at some point the duplex system should kind of get a -- how should I say, hockey stick type of acceleration boost in revenues from taking business away from Iridium. And I’d like you to comment on how close we might be to that point and how much revenue that might involve?

Tony, why don’t you take the delivery of the satellite issue and I’ll take the other one.

Sure enough, Jay. Thales is working very closely and frankly has been even through the settlement period in getting all of the remaining 6 satellites for delivery to include one additional what we call prototype flight model available by the end of September. We’re doing additional testing to make sure that the momentum wheels are operating properly. We’re making certain that all of the final subsystems are ready for flight worthiness. And their current date is that they will be available at the end of September, which will therefore give us the opportunity to make the final launch for Globalstar second generation satellites in December. Obviously we’re still dependent upon their date that they select for all the satellites to be ready. But the current plan is for them to be done at the end of September which will have us be able to launch the fourth launch in December.

Tony [ph], to the question of the competitive provisioning of Globalstar versus Iridium, clearly Globalstar is back. We have got the least expensive handset by a large margin and it’s a terrific one. We have $40 plans that allow people all they can eat which are unprecedented in this industry. We have voice quality that is unimaginably clear if you haven't used it, it’s almost landline quality. And so those are very significant competitive differences. We have seen some releases by Iridium over time and of course we’re in discussion with many of their customers, and there is no question but that they are experiencing some of the difficulties that we experienced in our constellation or seem to be, and as a result there will be a crossover. We expect that, that crossover is very, very soon and though we’re not testing Iridium system carefully to know exactly what their call completion rates are and their call durations. They are making some announcements about ways that they are ganging satellites together in unique and creative ways in order to solve challenges in their constellation. So we expect a tough competitive environment with them but I believe that history has shown where customers have the choice with 2 constellations operating at similar quality levels, they have traditionally chosen Globalstar in the areas that we serve, which is the land masses where most of the population of the world is.

Your costs are much lower than I would say I would guess, right? At least on an incremental basis.

Well, if you look at the operations of the constellation, I can't speak to that precisely because any number of differences. However, if you look at the total cost of constructing their new constellation against the cost of us constructing ours, theirs will be 3x more expensive. I mean so the cost of the total operating cost inclusive of depreciation will of course be vastly more expensive in their case than it is in ours. If you want to be in the consumer business which is what we want to be in, you have to be the low cost provider of the service. Globalstar has said to anybody who would ever listen that that’s exactly what we intend to be, we want to be in the consumer marketplace which we view as the broadest marketplace and we want to be the low cost provider, and by virtue of our constellation, we will be.

Our last question comes from Jim McIlree from Dominick and Dominick.

It seems that as your constellation improves its coverage you should be able to increase your ARPU. When is it reasonable to expect that to show up in the financials?

As we said in our press release, we expect the coverage levels to reach 90% approximately by the end of the third quarter. That will really allow us to penetrate the market, with our coverage levels at those commercially competitive and acceptable levels. So I would expect increases in revenue subsequent to that.

So there should be an almost immediate increase?

I think so Jim. The way to think of this is on a couple of different prongs. We have customers that have been on inexpensive plans historically. Some of them on plans which don’t require them to pay anything except when they are using the system and those people will be converted to higher plans. That will roll through ARPU. As you sell new plans to people that are not $40 all you can eat plans but something more tailored to a higher quality constellation. If you add a new customer and he is paying you a $60 a month, or $80 a month that rolls through ARPU as well. So I think that ARPU will be a choppy number to look at over the next couple of quarters as those things happen but generally speaking, it will be up into the right as we add new customers.

Is there a significant amount of duplex subscribers who have gotten a deal where they are going to have low prices permanently or for an extended period of time?

No, the extended periods of time have largely run and so those customers are changing plans now.

Brian Davidson from Stark Investments.

I might have missed this during the prepared remarks but how much is left on the contingent equity line?

We had just under $23 million left.

Okay. And you said you expect to withdraw that by the rest of the year?

We do.

With respect to the comment about raising additional equity to fully fund needs of the company, can you give some guidance as to how much that would likely be?

I can't give specific guidance at this point but think about Brian any additional CapEx that we do. It is CapEx that plays out over many years, so it’s not necessary for us to go and do a financing which includes 100% of the whole future. I mean if you think about the use of the term fully funded business plan as we have used it, if you did, a single lump sum financing you would want to do it that way. But the actual needs of the capital are over many years.

Okay. How about in terms of the $23 million that’s left on the equity line that will be drawn through the end of the year. Will any of that be used for CapEx or is that mostly to fund the operations?

Well we do have launched 4 plans before the end of the year. So our operating expenses will be funded by the remaining amount of contingent equity account and then our operating inflows will go to fund the launch. Anything in addition to that we would need external financing.

And you guys have you I’ve assume you’ve retained someone to help you raise the funds?

We’re in conversations with some but we’re not in market right now Brian.

Operator, are there any other questions?

We have no further questions.

Okay. With that, we’ll end the conference call then. Thank you again everyone for joining us. We appreciate your patience at the beginning for the delay and hopefully you didn’t hear too much thunder from a local storm that just went through. Please remind that later in this morning an audio recording of the conference call will become available, a telephone dial in and a webcast recording and the copy of the presentation will also be available on our website. Thank you and good morning.

Thank you, ladies and gentlemen. This concludes today’s conference. Thank you for participating. You may now disconnect.