Welcome to the Globalstar Inc. Fourth Quarter 2014 Earnings Conference Call. My name is Janet 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 turn the call over to Jay Monroe. Mr. Monroe, you may begin.

Good afternoon everyone, this is Jay, Chairman and CEO of Globalstar. Thank you for joining us again today. Before I make my comments on the business, Rebecca Clary our CFO will kick off the call with a review of the financial results for 2014. 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 portion. 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 the Globalstar SEC filings. I'll now turn the call over to Rebecca.

Thank you, Jay. Good afternoon everyone. 2014 marked our first full year of operations with our second generation constellation in place. Our financial results showed significant improvement from 2013, driven primarily by successful product launches in sales and marketing efforts which led to 15% growth in our total adjusted subscriber base, as well as increases in both service and equipment revenue, and an almost 50% improvement in adjusted EBITDA. Our Duplex business experienced 18% growth in service revenue in 2014 with ARPU up 9% and end of year Duplex subscribers increasing 17% to over 67,000 both after adjusting for the deactivation of the 26,000 suspended or non-paying Duplex subscribers during the first quarter of 2014. SPOT equipment revenue grew 38% in 2014 and average subscribers increased 8% to over 230,000 as of December 31, 2014. Now focusing on our quarter-over-quarter financial performance. As shown on Slide 2, total revenue increased from $21 million in the fourth quarter of 2013 to $22.1 million in the fourth quarter of 2014. This increase was driven by growth in both service and equipment revenue. We saw expansion in our subscriber base for Duplex, SPOT and Simplex reflecting the volume of units sold during the past several months and driving the increase in service revenue. Service revenue from Duplex, SPOT and Simplex improved $0.9 million or 6% from the fourth quarter of 2013 with SPOT and Simplex contributing $0.8 million of this increase. The growth in SPOT service revenue was due to an 8% increase in average subscribers from the fourth quarter of 2013 to the fourth quarter of 2014 which was driven predominately by the introduction of SPOT Trace in November of 2013. SPOT and Simplex were also the primary contributors to the 17% increase in total equipment revenue. The SPOT space drove nearly…

Thanks Rebecca. I'm pleased with the company's continued financial progress especially with our 47% adjusted EBITDA growth in 2014 versus 2013. These improving results demonstrate Globalstar's value proposition and successful continuing execution of our operational initiatives. We are demonstrating the value of MSS services and making steady progress after a significant turnaround period. Looking forward, we are confident in the continued achievement of substantial revenue, EBITDA, and cash flow growth in future years. These are all functions of our ability to successfully expand our subscriber base. Each new customer provides high margin contribution and therefore we expect EBITDA growth to continue on its current trajectory. The ability to grow our base is a function of our focus on specific business tenants. These include, expanding market share within our existing footprint, expanding our footprint to cover additional territories, introducing new lower price products with enhanced functionality and spending the resources required at quarter bearing sales reps in both our historic territories as well as new geographies. The team here is focused on strategic tenants and I'd like to thank all of our employees who execute against this daily. Our organization is growing as we add new positions in engineering, product development, and of course sales to capitalize on our new constellation while preparing for a second generation ground infrastructure which is nearing completion now. 2014 represented the first full year of operations posted launch of our second generation constellation after many challenging years. Completing the launches enabled us to begin the turnaround from an adjusted EBITDA as low as negative $14 million during the construction period to $17 million today and growing. Our footprint expansion, market share gains, new product launches will continue to expand our revenue base. There were also significant unserved market opportunities in M2M, consumer tracking and voice,…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question comes from Jason Bernstein. Please go ahead.

Hi guys nice quarter. Jay I know you're not going to answer any questions about demonstrations but can you just comment real quickly on - there seems to be some semantic debt issue. You guys filed an outline calling a demonstration and the opposition parties that call them a tech and there is an implication one is sort of suggestive, and one is mandated by the FCC. Can you just answer whether this is a demonstration volunteered by the company or is it an FCC mandated test that is going to go on record?

Jason for sure, this came about as a result of a meeting at the FCC a little bit ago and we offered to do a demonstration for the FCC. And then shortly after that meeting, the FCC and Globalstar spoke again and we decided to do that demonstration within the FCCs technology experience center. So that's the history of it. I think the difference between somebody calling it a test and the FCC and Globalstar referring it to a demonstration is just semantics, I wouldn't read anything into that.

Okay. And if I can get another question, and there seems to be significant momentum around Wi-Fi, we saw a few headlines today, Google announcing their project Nova, which will be heavily Wi-Fi centric and along with HP acquiring Aruba for their Wi-Fi platform. Can you give us any update on where things stand with the quadrants you've outlined in the past around potential POPs interest?

The conversations that we are having with third-parties continue. And they are more relaxed as we characterized them before. But I think the more front-end center Wi-Fi first discussion which is now taking place in the media, is something that we suggested even a year ago would soon come to the U.S. shores aggressively. Remember at that time we talked about how it was sweeping Europe already in the predominant carrier and was a cable company, and that company was Liberty Global. Liberty Global has continued to extend their lead in that business over there and within the United States, we've seen devices which now permit Wi-Fi calling most notably the Apple announcements when the iPhone 6 came out and then SEMO talking about it aggressively and in fact even offering it for people as a mechanism to avoid high-cost roaming when they went to Europe. And of course the most recent announcements that you referred to in the case of Google, but those were coming out from various parties almost daily, week or so ago was Cablevision, then the folks from Comcast made comments about it. Legacy pointed out the HP acquisition of Aruba is meant to be an attempt by HP to aggressively participate in the infrastructure side of what they anticipate will be a robust business model. So I think all of it bodes well for our conversations, but I don't think I can comment more completely on any specific talks we are having.

Okay. Thank you.

And our next question comes from Jim McIlree of Chardan Capital. Please go ahead.

Thanks and good evening. So Jay this FCC demo is something of your initiatives and so you're choosing the equipment to handsets the conditions and all of that, is that correct?

Jim, on the demonstration, we can't say anything more about the actual mechanics of the demonstration except for what was released when we put out our demo plan last Thursday, I'm sorry about that.

I was trying any way. And then secondly on the Duplex revenues and ARPU, and the net ads for the quarter, I missed the first part of the call so maybe you run into it but is there a specific reason why ARPU was down sequentially and it seem like net ads were up - it seem like net ads were weak as well?

Net ads are up quarter-over-quarter about 20% or so, but just as it relates to ARPU that's reflecting really the seasonality in our business. So we were seeing more subscribers activate on usage base plans which the revenues recognized under usage base plan and based on usage, as opposed to unlimited plans which would be industry growing revenue recognition, which we've seen in previous years, that's a dynamic there.

And so, Q4 had a - is it dominated by these usage based plans or is that something we're just going to see the ARPU fluctuates from quarter-to-quarter by pretty by delta?

Seasonally strong quarters, again our Q2, Q3 on first quarter and fourth quarter are historically pretty weak for us in terms of usage. So, given the percentage of this subscriber base on these usage base plans, I would really expect service revenue and ARPU levels to trend according to that.

I think in times past, the company has talked about ARPU of $35 to $40 for the Duplex is that still a reasonable expectation?

I think that's a good average for the year and again that shift is going to be weighted more towards that $40 mark in the seasonally high quarters and then on the lower end of that range during quarters.

Understood. Okay, great. Thanks a lot.

And our next question comes from Steve Sweeney of Elevation. Please go ahead.

Hi, thanks for taking the question. I wanted to talk a little bit about aside from the FCC demonstration. Some of the new experimental licensees that have been taken out in some of the markets, the filings that have been made, what is that – if you could talk about that little bit and what does it mean for the interest that potential strategic quarters might have in TLPS?

Steve, across the board, the conversations that we are having with parties eventually leave them want to see a TLPS roll-out in their own environments, and their environments are not only geography which might under live where their businesses are, but also geographies which are explanatory to them for one reason or another. For instance, if you do some sort of series of demonstrations in the market like New York City where Wi-Fi is very congested, the relative impact of TLPS is much greater than if you did it in the middle of a corn field in the Midwest simply because the way that TLPS shines is when everything else is blemished for one reason or another in this case because of interference. And so people want us to operate it in those environments and make those results available to them, that's why you saw expansion of territories in Manhattan which were filed, expansion of territories outside of DC, expansion of territories in the Western United States. And I would foresee a good bit more of that as we get to the point where we do some deployments specifically for the parties we're having discussions with.

Can you talk about whether these new markets or expanded geographies within the existing market we're testing, did it come from potential - did it come from the end keys that are testing already or did it sort of come from you guys saying alright, why don't we test in these markets, I mean which direction did it come from, was it your initiative or with the potential strategic partners that are testing, who asked for it basically?

I think those things are natural, they come up in conversation when people are thinking through what the opportunity looks like. And since we already have the ability with experimental licenses to operate in several of these markets, you can imagine that in conversation they said well, we'd like to look at our larger footprint. Since those cases, but I don't know that it would - I can clearly say that somebody asked versus we asked it's more when you get into these discussions –in depth, things like this just come up and we offer the opportunity to them.

Okay. And if I could have a follow up, I just wanted to ask the liquidity position you laid out pretty well in the press release and in the presentation. I just wanted to get a handle on the use of the cash, if you can just clarify for the debt service is $28 million and the COFACE, I guess principal paydowns are $6 million.

Yes, so Steve for the year 2015, our total CapEx requirements totaled $28.2 million. And then, our principal interest in fees which is the combination of the COFACE interest, COFACE principal and then cash interest on our 8% notes for the year, that totals 25.9. So the total capital obligations as of the end of the year stand at $54.1 million - exactly. And then from a sources perspective, you have $7 million of cash-on-hand at the end of the year, plus 24 million remaining in the Terrapin facility and then obviously your total availability for the full year 2015 depends on operating cash flow which even if we have to assume a run rate of where we are right now, which is between 20 and 25 for total liquidity is in excess of $60 million in -- totally independent of the DSRA which is restricted for principal and interest for the COFACE facility.

Okay. And you drew down $10 million on the Terrapin facility at February, is that right?

That's right. So, 10 million was drawn directly from Terrapin with a modest increase cash balance post at the end of the year.

Okay, great. Thanks a lot. That's very helpful.

And our next question comes from Kevin Roe of Roe Equity Research. Please go ahead.

Thank you. Jay, had a couple of questions. First, you mentioned several of the remarkable developments in the Wi-Fi space since your last call with Comcast, Google, Global Crossing, I don't think you mentioned AWS-3 auction. But Freewheel at Cablevision, everyone was expecting a Wi-Fi first product to come out from them, there is a first U.S. cable operator to do it. But what's interesting to me about their commentary, is how they characterize the product as critical to their strategy. Can you comment the Freewheel products specifically and how these developments in total have influenced your view on value of your spectrum and the timing of any strategic transaction and then I had a follow up?

Kevin obviously what's going on in Freewheel is somewhat to what's going on in the European examples as well as with Comcast and others. And I think there is no question whatever that the view on the part of the cable companies is that these Wi-Fi first services are critical underlined and exclamation points, because they know that in order to compete going forward, they have to offer a bundle of services, they are expected to experience some amount of attrition from their high paying cable bundle customers, and that pressure will come from over the top and so forth. So they are going to have to replace it with something and without a doubt they've got a relationship with you, with your house already, or in your business already, so the add-on a service which they can under price rather dramatically and still make a healthy margin on under price relative to carriers product, is very, very interesting to them. If it was a perfect free market of course, you would say that the value of our spectrum goes up, as a result those forces because the cost of the infrastructure necessary to utilize Globalstar spectrum is so modest compared to the cost of building out a macro or small cell network. So, we think it creates upward pressure post approval from the FCC and it should trend in the direction of the AWS-3 auction numbers but of course it's impossible to predict exactly when that will take place. But we remain very, very bullish about what the opportunity looks like for us using that cable business model.

Thanks Jay. And my other question was on the international side. You mentioned in your prepared comments that post FCC approval that you'd move internationally. Can you share any efforts on the international side since your last call and what markets you’ll initially target for trust real approval?

For sure, I think what we've decided and we've talked about this on calls previously is to not make any substantial move internationally until the rules are finished by the FCC. And therefore we can import to other countries very specific set of rules that we work and with folks that we would want to do business with like the cable companies for instance. And so it's important that we finish in the U.S. first. There are logical places for us to go next. There are lot of places in the world that follow the FCC regime for two giant reasons, either they share a border with the U.S. and therefore they have to coordinate spectrum all of the time, those will be of course Canada and Mexico. And there are other countries around the world that hue very closely to the FCC in terms of how they approve processes and they might do that because they don't have necessarily a large bureaucracy that can handle difficult and complicated technical issues and maybe they just do it because they respect what the FCC does and therefore its relatively speaking easier to take issues like this and just follow the FCC's mandate. There are a lot of countries that fit into that category. And then lastly, there are lot of countries that Globalstar already has very deep relationships with because we operate gateways within their borders, and those countries are countries which we would target as well. And you can just look at our gateway map, and reach a determination of what those countries are. But we are very optimistic that post approval here that we can begin to move into some of those markets within 90-days, not that it will approved within 90 days but we'll move into the markets and begin the process within 90 days.

Understood. Thanks Jay.

I'm showing no further questions at this time. I will now turn the call over back to Jay for closing remarks.

Thank you all for joining today. We certainly appreciate the time everyone spends with us quarterly. Happy about our performance in the last year and very optimistic about what 2015 holds for us post FCC process given the strategic opportunities in front of us. Thank you all for joining today.