During the second quarter, Globalstar recorded 1,137,000 minutes of billable service, more than double the usage in the first quarter. Gross service revenue for the quarter was $483,000 versus $177,000 in service revenue in the first quarter, an increase of 173 percent. For the quarter, spending on operations and interest expense was $97 million, an improvement on the company�s projected run-rate of $125 million. Globalstar reported a net loss for the second quarter of $217 million or $3.50 per partnership interest which converts to $0.98 per share of Globalstar Telecommunications Ltd.

For the first half, billable minutes of use totaled 1,687,000 and gross service revenues totaled $660,000. The net loss for the first six months of the year was $433 million or $7.04 per partnership interest which converts to $1.95 per share of Globalstar Telecommunications Ltd.

Revenue from royalties, which are tied to phone sales by manufacturers, totaled $318,000 for the second quarter and $788,000 for the first half of the year. The stronger first quarter royalties resulted from the initial filling of distribution channels by service providers.

During the quarter, the company provided for replacement financing of a $250 million credit facility that expired at the end of June. As a result, on June 30, 2000, Globalstar had $463 million in cash and expects that it will end the year with a cash balance in excess of $100 million.

"The steady month-to-month improvement in system usage combined with the on-schedule start-up of gateways around the world validates the confidence we and all of our partners and service providers have in the Globalstar system," stated Bernard L. Schwartz, Globalstar chairman and chief executive officer. "Our service provider partners continue to add resources to their marketing and sales efforts, tailoring their promotional programs and pricing to address market segments with the strongest potential and, after a slower than hoped for start, are achieving increased success in penetrating those markets."

Vertical market penetration continues to increase. There is continued strong interest and increased purchasing of handsets in vertical markets including the maritime, mining and exploration, government, energy, agribusiness, transportation, and search and rescue industries.

Globalstar telephone production by its three manufacturers � Qualcomm, Ericsson and Telit � continues to meet our requirements. Through June 30, 2000, more than 100,000 mobile and fixed phones � and nearly 10,000 car and marine kits -- have been placed in distribution channels.

At the end of the second quarter, Globalstar had 17 gateways in revenue service and an additional four that had completed the system testing process. This is an increase from the first quarter when 11 gateways were in revenue service. Globalstar currently sells phones and service in 39 countries, up from 25 countries at the end of the last quarter. Calls can be made and received in an additional 36 countries served by existing gateways but where distribution channels are still being established. The company noted that certain regions of the world which it anticipates will provide attractive markets for its service, such as China, have just begun service and others, such as Russia, Saudi Arabia, South Africa and the Caribbean are due for commercial start-up in the months ahead.

Commenting on increased system usage, Mr. Schwartz said: "The most reliable and important indicator of increased momentum this early in the life of the Globalstar system is the month-to-month and week-to-week growth of minutes of use (MOUs) from Globalstar�s mobile phones. The steady upward trend in usage is indicative of both increased mobile subscriptions as well as increases in individual use." Average weekly mobile MOUs for June were up 83 percent over average weekly mobile MOUs in May. The increased momentum was even greater in certain areas such as the United States, Australia and Canada where mobile MOUs tripled in each territory from May to June.

Mobile usage relates directly to phones used on an ongoing basis by new and existing subscribers. Minutes of use on fixed phones also are increasing and adding revenue but this usage is currently a less reliable indicator of progress. Some fixed phones have been sold to customers while many others are used by service providers for system testing. As testing subsides so will the related MOUs. As a result, fixed MOUs as a measure of growth is somewhat erratic.

Commercial data service remains on schedule for introduction in North America this autumn, and in GSM territories (i.e. Europe, Australia, etc.) in early 2001. Advanced testing of Globalstar�s data capability is underway at Globalstar USA�s gateway in Clifton, Texas. Not only will data be available through Globalstar fixed and mobile phones but, in addition, Qualcomm has already developed a new Globalstar data modem device, designed for industrial data-only applications and scheduled for distribution in the fourth quarter of this year. These devices may be used by businesses for the automatic transmission of information including, for example, pipeline pressure and temperature as well as billing information from electric power meters in remote locations.

Several gateways are being upgraded to expand their coverage areas, bringing service to new territories and markets. These include large parts of Alaska, the northern Atlantic sea-lanes between North America and northern Europe, the Caribbean and the Sea of Japan. Expansion in all these areas should be completed by the end of July and, later this year, the operating Globalstar gateway in Beijing will be expanded to cover western China.

Quality of service continues to exceed user expectations and customer satisfaction remains high, with consistent positive reports of superior call completion and retention rates. In the U.S., the "churn rate" (the percentage of customers who cancel their service) is substantially lower than the typical cellular service churn rate.

Globalstar�s 52-satellite constellation continues its trouble-free operation. The satellites, originally designed to provide service for seven-and-a-half years, are now expected to remain on-orbit for at least ten years.