Welcome to the Globalstar Inc. Third Quarter 2014 Earnings Conference Call. My name is Jackie and I will 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 would now like to turn the call over to Jay Monroe. Mr. Monroe, you may begin.

Good afternoon, this is Jay Monroe, Chairman and CEO of Globalstar. Thank you for joining us today. Before we begin, I’m excited to welcome back Rebecca Clary to these calls this time as the company’s newly appointed CFO. Rebecca will kick off the call with a review of the financial results for the quarter. Following Rebecca’s remarks I’ll provide an operational and strategic update. We’ll follow with Q&A and Tim Taylor will join us for that. As we begin, I’d like to note that this call contains forward-looking statements that are intended to fall within the Safe Harbor provided under the securities laws. Factors that could cause results to differ materially are described in the forward-looking statement section of today’s press release and in Globalstar’s SEC filings. I’ll now turn the call over to Rebecca.

Thank you, Jay. Good afternoon everyone. Today our 2014 financial performance has demonstrated significant year-over-year improvement in almost every critical measure. During the last nine months we made significant progress in successfully expanding our duplex business by leveraging our second generation constellations which was completed in the third quarter of 2013. Key metrics from our duplex business experienced material growth on a year-over-year basis. With service revenues up 25%, ARPU up 18%, and growth subscriber additions up 24%. Successes in our SPOT and commercial simplex products and services further supplemented to price growth. Adjusted EBITDA increased over 70% to $13.6 million on a year-to-date basis from 2013 which was driven by a substantial improvement in total revenues. Now focusing on our quarter-over-quarter financial results. As shown on slide 2, our financial performance improved during the third quarter of 2014 compared to the prior year quarter due primarily to growth in duplex service revenue which increased 23%. As previously mentioned we continue to make substantial progress in enhancing our duplex business. This growth has been driven by an increasing subscriber base and higher ARPU levels. Comparing the third quarter of 2014 to the same period in 2013, the number of subscriber activations increased 23% growing ending of subscribers to over 65,000 as of September 30, 2014. Current take rates demonstrate that these subscribers are choosing rate plans that are on average more than 15% higher than our current ARPU level and 29% higher than ARPU in the third quarter of 2013. Our current lineup of rate plans provides a great value for our customers to experience an improved voice quality. In addition growth in our SPOT brand contributed substantially to the increase in total revenue this quarter. This was driven by a combination of increases in both service and equipment revenue.…

Thank Rebecca. I am exceedingly pleased with the company’s continued progress especially with our nearly doubled adjusted EBITDA over the third quarter of 2013. These improving financial results demonstrate Globalstar’s unique value proposition and the successful execution of our strategic and operational initiatives. Quarter-after-quarter we consistently demonstrate the potential of our MSS business and the progress we’ve made after a significant turnaround period. As we look forward we are confident we will achieve substantial revenue, EBITDA, and cash flow growth. These are all functions of our ability to successfully expand our subscriber base since each new customer provides a very high margin contribution. The ability to grow our base is a function of three primary variables, these include one, expanding market share within our existing footprint. Two, expanding our footprint to cover additional territories. And three, introducing new products with increased functionality and at reduced prices. This third point drives the increased relevance of satellite technology and therefore satisfies our customers communication everywhere desire. These three variables are key components of our strategy and operational initiatives and we have made strong progress over the past year. I’d like to reflect on recent performance and provide an overview of our plans for continued growth. The team here is focused on these initiatives and I would like to thank all of our dedicated employees who execute against these key components daily. Every operating decision we make involves driving one or more of these pillars. We committed to increasing market share, expanding into new markets, and developing rolling out new products all with a disciplined capital allocation strategy and we are delivering on those commitments. The United States and Canada had been the company’s core operating territories since the original constellation was launched 15 years ago. We own the service in these areas…

Thank you. (Operator Instructions). And our first question comes from Jim McIlree of Chardan. Please go ahead.

Thank you and good evening everyone. Jay, at the end of your comments you talked about the FCC will adopt the rules that it proposes promptly and I was a little bit confused by what you are saying. Are you saying that there is going, that there is a -– the rules get propagated and then there is a break-in period and you think that break-in period sort of speak is going to be short? Is that what you are trying to say?

No, Jim I’m sorry I was not clear. That’s not the case. What I really meant is that the FCC can issue a final rule almost at anytime. They can do it by circulation or they can do it by posting it at the public meeting and we anticipate that that will happen in the relative near term. I wasn’t implying that there was a two step process.

Okay, great and I’ll try to see if you’ll get more detailed on what you think the relative near-term or promptly means?

I guess, here is my overall observation about the process. We think the FCC has done a terrific job in running a thorough process to invite maximum input from other parties over the last year or two. And so we think that they have all of the information they need to make a final decision. Clearly the FCC has a lot of interesting things on its plate right now with mega mergers, a spectrum auction which is taking place shortly, net neutrality, and so forth. And with those things in the pipeline it’s difficult to handicap with any great specificity exactly when something like ours will come out. The truth is though that this Chairman does not allow grass to grow under its feet and he is put a lot of things in motion which were on the back burner at the FCC. I mean he is trying to get those things completed as soon as possible. So we anticipate that ours will be no different. Its moving, it came out right at the beginning of this Chairman's Chairmanship and we know well that he is very, very aware of it. I mean, in the meetings that we have had at the FCC, at all levels in the FCC, we know that bureaus are writing an order. So it will come out in due course but we hope that it will be sooner than later but it will come out as soon as it's ready to come out Jim.

Okay, I thought that’s what I would get from you. The comments had been made recently not only from Kerrisdale but I think Iridium had a couple of comments and IVAS (ph) had a couple of comments, I am saying that one right?

Does that really have an impact at this stage in the process. I mean we’re far past that comments and reply comment period. As far as I can tell it doesn’t seem none of those comments really seem to be adding anything to the record? Am I being a little bit too optimistic in thinking it really doesn’t have a big impact on the proceedings, but we don’t believe that any of those things that you mentioned have an impact on the FCCs thinking. I mean if you go back to order that they put out a while ago in a notice of proposed rulemaking that is their order. They said here is what is the outcome that we would like to see, if you have any information that bears on that outcome then please present it. That process is now almost exactly a year old. The Iridium comments are exactly what you would expect. They are competitive and they relate to a subset of the case. They deal with a slice of spectrum that Globalstar uses every day, that they would like to control so they are tangential to anything on TLPS. We’ve talked a lot about the Kerrisdale comments and I don’t believe the FCC has any concerns based upon what Kerrisdale has filed and IVAS is someone that’s been in this case since the very beginning. They have got a service which has to be respected in certain areas and it is respected on in certain areas. But it’s a service that does not impact us and we do not impact it. I mean in any meaningful measure and so we don’t expect that to be a problem. Even in this case the last comments have been made or more to say, you know, remember us or IVAS and we are still in this case as opposed to providing anything that was substantive against TLPS. So I think overall Jim, we are not worried about it.

Okay and I’ve got a few more questions but I can get back in line if you’d prefer.

That’s fine, we’ll take another question.

Alright I am trying to puzzle through this Brazilian ad that you talked about. I was just trying to do back of the envelope but it seems to me that if Brazil is now 18% of the, I am assuming that’s gross adds, and it was 3% a year ago doesn’t that imply that all other markets, the net adds are about the same that were not growing. That you are not growing the net adds in all other markets on a year-over-year basis?

No, Jim. So the number wasn’t from 3% to 18%, it was a triple. So it is still below 10%.

Okay, excuse me. Alright you said triple and I heard 6 excuse me. Alright, great. So the question I’ll still ask you still have growth in net adds in the other markets?

We do in every market, throughout the U.S., Canada…

And Rebecca couple of things for you. You mentioned something about 400,000 early in your remarks, could you just repeat what that was referring to?

I was referring to the decrease in operating expenses related to the launch of the various SPOT products in 2013 and services that we introduced to the market as well. We had increased advertising expense in the third quarter 2013 by 400,000 relative to the third quarter 2014.

But the service gross margins and the hardware gross margins are both down from Q2 levels, was Q2 unusually high and are these gross margin levels in both service and hardware, are those a normalized gross margin, going forward?

I am sorry, on equipment I have a 23% margin for the quarter and as we’ve discussed that’s just going to trend with product. It’s been Duplex in start, with Duplex having a tighter margin. On the service side I have margin of 58%, unfortunately I don’t have the second quarter margin in front of me.

Jim to follow that up with some more detail in Q2 at least, sequential quarter-over-quarter you had a pretty substantial sale in Q2 for a very high margins Simplex equipment. That margin is significantly greater in Simplex than it is for SPOT or Duplex. We essentially sell Duplex pretty close to cost and obviously the Simplex ARPU is lower. But that significantly inflated the total gross margin for Q2 and we wouldn’t expect that type of inflation on average going forward.

Right but the service gross margin at least the way I calculated it was 60% in Q2 and is that also related to some one time things, I am just trying to peg what’s the more normal -- what’s the better number going forward, is it closer to like that 57% or 58% or closer to the 60%?

I think going forward, you are going to have a slight increase where it could even expand beyond 60% slightly. So I would say between long-term, between 60 and the mid 60s would be the max.

But that’s the long-term and that will be something that you glide pass towards?

That’s correct.

Okay, great. The last one,

And just to add little bit of color Jim, we’ve talked about these concepts in the past. The third quarter cost of services was a little bit high compared to second quarter because we had a little bit more gateway work that was kind of seen off and on for the last couple of years in terms of repairs and maintenance at various gateways. So we had that in the third quarter and then in the future we might see an increase in capitalized salaries related to our ground work with Hughes and Ericson which we have a reduction in expenses?

Great and this is my last one, so the marketing and G&A cost were up fairly substantially quarter-to-quarter. I think you were 8.9 million this quarter versus 8.2 million in Q2. When -- does that continue to rise as you continue to enter markets like Brazil, Colombia, Peru or is that to start growing at lower rates at some point?

Various amounts include pretty healthy stock and so you should probably adjust the items that we have on the EBITDA reconciliations page to kind of get a normalized level. So once you do that you’ll see Q2 has MD&A of 7.6 and Q3 with 7.5. That’s probably a better run rate to be looking at.

Okay, great. Thanks a lot and thank you very much and thank you for indulging my litany of questions.

Thank you.

(Operator Instructions). And our next question comes from Jason Bernstein of Odeon Capital. Please go ahead.

Hi, good evening. Just a couple of questions if I can, just wanted to follow-up on the San Carlos testing, will those results be posted to the docket and the FCC is going to wait on that in any way they perform in making their decision?

No and no Jason. Those are tests being run by a third party. We filed the license for them but they are being conducted by a third party, that information will be available to them in their testing but is subject to a confidentiality agreement. And no, the license is not even issued yet and that process with the FCC can take a month or two. So we haven’t even begun the testing in San Carlos yet.

Got it and I saw that the ARPU ticked up on Duplex, what would you guys think is a target where you want to get that back to?

The $40 level at third quarter reflects an increase over second quarter because Edwards, adding subscribers to the network by coming on at our current lineup of rate plans which I mentioned in my previous remarks. On average we are seeing those ARPU levels around $46 just in terms of the blend of what rate plans people are opting for. So it will take a while for that $46 level to kind of filter through the base because we probably have about half on current rate plans and the other half on our legacy plans. So that’s kind of the relationship there and then just keep in mind that 2Q and 3Q are seasonally strong for us. So there is a usage component that needs to be factored in, in terms of forecasting what ARPU would be in the next couple of quarters.

Got it and Jay I am wondering if you can prolong your thermo hat of course for a moment with the level 3 Time Warner Telecom deal closing, are you able to disclose what the cash proceeds from that was to thermo?

Jason, that was largely a stock for stock transaction that also had a cash component. And no, I won’t talk about what that cash component is. So sorry but that’s kind of a different pocket. But generally speaking we have been a committed long-term investor in Globalstar since 2004 and we will do what is in the best interest of our shareholders with respect to continued investment in the company. And whether that comes out of the proceeds of the merger with Level 3 or just our accumulated cash and other investments is a matter of internal decision that we’ll make at thermo. But either way we will continue to be an investor in Globalstar.

Got it, thank you.

Welcome.

And I am showing no further questions at this time.

I see one more.

And we have a question from (inaudible). Please go ahead.

Good afternoon, I had just an anecdote to make. I have been Globalstar phone user for probably 10 or 12 years and in recent years use the call times tool in order to connect when I was in remote locations and I just want to say that this past September I was up in the remote wild of the Northern Maine by the Canadian border and had month for a few days and had my Globalstar phone the old one that’s probably 15 years old now and literally had 100% 24x7 reliability at all times. Man the service was literally was 100% and my question arises with this improved Duplex service as people are aware of it and the service gets used and before the new handsets are available, using the Hughes chipsets, do you have sufficient availability of equipment that will meet growing needs for Duplex service?

Yes Liman (ph) we actually do. It comes in multiple flavors as you know, there are handsets that we have an inventory, that were manufactured for us by QUALCOMM and there seems to be an adequate supply of those before the new handsets are cut over, once the ground infrastructure is completed towards the end of this year. And to extent that we have additional handsets after the gateways are cut over to Hughes based, those additional handsets can be used elsewhere in the world. We also have a supply of Sat-Fi’s utilizing the QUALCOMM 1720 board and that product as well will be available in this market and then ultimately we’ll transition that product into the smaller form factor product using the Hughes chip architecture and the Hughes chips themselves. So we are anxious to make certain net at all times. We have something to sell to our customers and are of course overjoyed that your experience has been as good as it is. Thank you.

Thanks.

And I am showing no further questions at this time.

Okay, thank you all for joining the call today, we appreciate it.