Welcome to the Globalstar Inc. second quarter 2014 earnings conference call. [Operator instructions.] I’d now turn the call over to Kathryn Singer. Ms. Singer, you may begin.

Thank you, operator. Good afternoon, everyone. Thank you for joining us for today’s conference call to discuss Globalstar’s three month results for the period ended June 30, 2014. Before we begin, please note the following. This call may contain forward-looking statements within the meaning of federal securities laws. Factors that could cause results to differ materially are described in the Safe Harbor section of recent press releases and in Globalstar’s SEC filings, including its annual report on Form 10-K and quarterly reports on Form 10-Q. The press release, this conference call, and the associated slide presentation, which are available on the Investor Relations page of Globalstar’s 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, Monday, August 11, 2014. The second quarter 2014 press release that was issued this afternoon is available on the company’s web site at www.globalstar.com. Later today, an audio recording of this conference call will also made available via telephone dial-in and a webcast recording, along with a copy of the slide presentation, will also be made available on the company web site. Today’s call is being presented by Mr. Jay Monroe, chairman and CEO; and Tim Taylor, vice president of finance. Tim is filling in for Rebecca Clary, Globalstar’s chief accounting officer and corporate controller, while she is on maternity leave. We would like to congratulate Rebecca on the birth of her healthy son earlier this quarter. Now, it's my pleasure to turn the call over to Tim.

Thank you, and good afternoon everyone. As we stated on last quarter’s conference call, Q2 represented an important period for the company, since it was the first seasonally favorable quarter following the completion of the second generation satellite network last year. We view the financial results from this quarter as an important test period to demonstrate operating performance resurgence, and I am pleased to report that the results were strong across all principal metrics that drive our business. These results leverage the restoration of two-way communication services and provide a strong indication of continued growth over the coming quarters and years. Total revenue for the second quarter was $24 million, up 21% compared to the second quarter of 2014. Growth was driven by a combination of both service and equipment revenue, as average subscribers, ARPU, and equipment sales experienced strong gains over the prior year period. Consolidated service revenue increased 16%, and total equipment revenue increased 38%. The primary driver of service revenue growth was the 29% increase in Duplex, as paying subscribers and adjusted ARPU increased 17% and 23% respectively over Q2 2013. For the next several quarters, we will continue to present both adjusted subscriber and adjusted ARPU metrics to reflect the deactivation of 26,000 suspended, low-paying, and nonpaying legacy subscribers in March of this year. New additions have become the principal driver of increased service revenue, accounting for approximately 60% of Duplex service growth. The improvement in ARPU was driven by the migration of subscribers to higher-priced plans over the past 12 months, combined with increased [unintelligible] on variable rate plans. The subscriber migration process is winding down and will be complete in the coming quarters. Gross Duplex subscriber additions during the quarter of 5,500 increased 32% over Q2 of last year, and net Duplex subscriber growth…

Thanks, Tim. The second quarter was an important time for the company on so many fronts. We listed the New York Stock Exchange, experienced strong growth across our main financial metrics. We launched the integrated cellular satellite Sat-Fi product, and completed the initial comment and reply comment periods for our TLPS proceeding at the FCC. While we’ve had a very productive first half of 2014, we remain sharply focused on driving future milestones, both operationally and on the regulatory fronts. We’ve reached a critical turning point in the core business, making the transition from construction and stabilization to expansion and growth. As we announced on the last earnings call, our operational focus has transitioned from years devoted to launching a new satellite network to a sales first organization today. This shift in focus helps drive the quarter’s financial results and we’re encouraged that our increased attention to sales and marketing is leading to an increase in market share. When we restored the satellite constellation last year, we knew this quarter would be an important time, allowing us to reassess our positioning in the industry. While we are now the highest-growth company in MSS by several measures, we still need to achieve substantial scale. Quarter after quarter, our scale is building, and we expect to continue to restore market share in North America, develop and deploy our new suite of Duplex, Simplex, and SPOT products; expand into overseas markets where we have existing infrastructure, and to invest in new greenfield markets. For instance, in July of this year, 100 Globalstar satellite handsets were used to provide clear and reliable communications across the U.K. stage of the Tour de France. The handsets were used by members of the organizing team as well as by support and emergency crews. We also provided satellite…

[Operator instructions.] And we have a question from Jim McIlree of Chardan Capital.

Jay, in your comments about the TLPS testing, you mentioned potential international partners. Were you referring to internationally domiciled partners who would be testing in the U.S.? Or are you also testing this now in international locations?

Jim, we are not testing it internationally. The companies that I was referring to could be on the infrastructure side, developing part of the technology for us. As you know, some of those companies are not domiciled in the United States, and some of those people that are testing it currently, which are international tech companies, are domiciled here. But I didn’t want to imply that we were testing it overseas at this point.

And this RFI that you referred to, what’s the next step on that process?

Well, for the moment, we’re compiling the information from everybody who provided information to us. And we’re going back to them and studying opportunities with each of them. As you might imagine, there were some pretty interesting features that came out of that process, which have been interesting for us to work through with those parties. For the moment, many of them are asking what a larger deployment might look like. They’re seeking from us numbers for access points and devices potentially, and though those subjects are interesting, they’re a bit open-ended, because the parties that we would collaborate with in any development of TLPS are not yet known. So I think it’s interesting that everybody we had communications with, that was a substantial company, responded, that they’re excited about it, and we’re excited about working with them. But until we get done with the FCC process, we won’t have the ability to nail anything down with any of them, except with respect to work that we do around the 20,000 access points in support of the [Connect Ed] program.

And are you committed to that Connect Ed program regardless of the decision the FCC makes on TLPS?

No, we’re not. In fact, I don’t honestly believe that we could roll out a broad-based Connect Ed program without approval for TLPS, since you would be forced to roll out individual experimental licenses for each of those locations, which is impractical. But we want to be prepared, as soon as the FCC gives us the authorization to move forward quickly with that, because it represents something that has a social purpose. It represents something that we promised, and it represents a fantastic test environment for us, since the schools are really a mess when it comes to their RF environment, and so what TLPS should provide will be, I think, interesting for other market participants to witness.

And Tim, can you just talk about the ARPU for Duplex going forward, if you’re expecting to see an increase from here, or if this stabilizes at these levels? And on a similar vein, gross adds in Duplex, do you think that’s sustainable at this 5,500 or so level? Or does that increase? And churn as well. Is churn sustainable? Or is that too high or too low in this quarter?

We’ve experienced a pretty substantial increase in adjusted ARPU over the last eight quarters or so. Even looking back to the beginning of 2012, we were below 16 on a blended basis, and today, we’re close to 40. I don’t believe that that number is going to materially increase above $38. I think that long term, we’re going to be in the $35 to $40 range. You know, most of our pricing plans and the new gross adds that are electing those plans are electing plans right around the $40 range, but there’s also additional plans above that are being elected that, over time, may blend that number slightly higher. But in terms of modeling, I wouldn’t feel comfortable with anything much above $40, and I like the $35 to $40 range. Gross adds for the quarter were a little over 5,5000 on the Duplex front. If you look at the company historically, in just North America, we were doing about 40,000 gross adds per year. And of course, the run rate for where we are today is about 20,000 for the year, so half of what we were doing historically, in the pre-20006 period. So I do expect, in North America, long term gross adds are going to ramp up, and we should be able to get back to a 40,000 level or above. But then importantly, what’s going to be the biggest driver over the next five years, is going to be the contribution from the international business, where, I think I said in my script, that long term, we want to make sure that the international base represents about 50% of the total sub base. And that, over time, of course means that it’s going to be 50% of the gross additions as well. So, again, we want to be something like or exceeding 40,000 gross adds in the Duplex business, and about the same number internationally, and I think those are reasonable numbers, and I think there’s still upside to them.

The SG&A you mentioned was up fairly sharply over the last year, so 8.2 right now, is there something special in that for the quarter? Or does that come down? Does it go higher? What’s the trajectory on the SG&A no?

There are a couple of one-time items that in total represent $1 million, in comparison to Q2 of 2013. So in terms of using a good baseline number going forward, a $600,000 increase is appropriate, but $1 million is related to one-time events that we certainly do not expect to repeat. So I think the increase in terms of core recurring number is more like $600,000 as opposed to the $1.6 million or so that’s represented in the financials.

And our next question comes from Jason Bernstein of Odeon Capital.

Jay, could you handicap where the potential partners are coming from? Are they traditional telcos? Or would you characterize them as high tech companies with regard to potential partners for TLPS?

I think of them as in four categories. Let me start with probably the most challenging, or least likely category, is probably the tower companies. The tower companies could take this technology of course and create a neutral hosting environment that I think would underlie a small cell development well. But you know, those guys operate a business which is growing well. It’s got pretty much a formula to it. And so until they reach the conclusion that spectrum is readable, which I believe they could get comfortable with, I don’t think this is their first place to spend money. Then, in no particular order, the next groups that we deal with are cable, the carriers, and the tech companies. Clearly, the cable guys have a reason to move to a channel like this. Their attempts at wifi are challenged by the RF environment. They’re challenged in 5 gigs by the relatively limited propagation of 5 gigs. So this spectrum, for them, is truly Goldilocks spectrum. And I think, for them to take the next step, to develop a wifi first mobile strategy for voice and mobile data, and for them to take products like XFINITY on the road, so that if you really want to use it outside of your house, at a coffee shop, or at your office, or something like that, they need to have a more robust, clean, and a channel that allows them to monitor careful and control over time, so that it’s protected, which of course can’t come about in either 5 gigs or in the balance of wifi. So there’s a real reason for those people to stay very close to us. And they are a group that we spend a lot of time with. Then the carriers, and the carriers benefit in…

We have a question from Steve Sweeney of Elevation.

I just had a quick question on the 1.6 GHz spectrum. I know there’s been a little bit of confusion over the past two weeks or three weeks. I was wondering if you could just clarify your near term and long term strategy for the use of the 1.6 GHz spectrum.

First, I do think there was some confusion that came about as a result of a report written by a law firm, and that circulated pretty broadly. It was followed up shortly thereafter with a clarification, which was helpful, because I think the points that they were making were a little bit misunderstood. So, for clarity, first, we do not believe there are any impediments to Globalstar’s use, on an uplink band basis, for our L band spectrum. It is not, in any way, consistent with the plans for similar spectrum that were developed by LightSquared. It’s the polar opposite of that. There are, always, some questions that have to be answered, but you may or may not recall that many years ago we went through these very questions with the FCC, when we were going to use it for uplink. And they established very strict out of band emissions limits, and because of the low power uplink and the out of band emissions limits, it was still terrific spectrum for someone to use as uplink. So that is definitely our position in terms of the technology. We’ve spent a good bit of time with the GPS industry to make sure that they understood that, and they do, and time will tell how that plays out. But, on the issue of timing, it is also our position that we don’t want to do anything with the spectrum until TLPS is certified and done, nor do we really want to do anything with the spectrum until LightSquared plays itself out and that issue is off the table, because to be associated with that is not a good thing for us. :

We have a question from Jim McIlree of Chardan Capital.

Tim, you went a little bit fast for me on the debt payment schedule for the next few quarters. Could you just go over that again, please?

Sure. In terms of total P&I, I’ll go through it in six-month increments. So, for the second half of 2014, total P&I is $14.2 million. Of course, it’s variable based on six-month LIBOR, but it will certainly be right around $14.2 million for the next six months. For the first half of 2015, that’s actually reduced a bit because of a reduction in the total principal payment, so that will be $13 million. So if you look into the second half of 2015, that number decreases again, slightly, to $12.9 million, again because of a slight reduction in the principal payment, but also a reduction in the interest given the lower balance in the COFACE facility. Those numbers are inclusive of the cash portion of the 8% notes as well.