April 24 /PRNewswire-FirstCall/ — Orbital Sciences
Corporation today announced financial results for the first
quarter of 2003, reporting significant improvements in revenue, operating and
net income, and free cash flow relative to the first quarter of 2002. For the
first quarter of 2003, the company reported revenues of $136.7 million, up 13%
over first quarter 2002 revenues of $120.7 million. Orbital reported first
quarter 2003 operating income of $9.4 million, an increase of 80% over first
quarter 2002 operating income of $5.2 million. The company reported net
income from continuing operations for the first quarter of 2003 of $3.4
million, or $0.07 per diluted share, compared to $2.4 million, or $0.05 per
diluted share, in the first quarter of 2002.
“We are very pleased to begin 2003 with another solid quarter of revenue
growth, margin expansion and strong cash flow, along with continued
operational excellence, as Orbital sustained the momentum the company built in
2002 into the first quarter of this year,” said Mr. David W. Thompson,
Orbital’s Chairman and Chief Executive Officer. “Strong operating results in
our launch vehicle and advanced programs segment, coupled with increased
profitability in our satellite and related space systems segment, propelled
the improvement in our first quarter results.”
Financial Highlights
Summary financial results for the first quarter of 2003 as compared to the
first quarter of 2002 were as follows ($ in millions, except per share data):
Quarter Ended March 31,
2003 2002
Consolidated Revenues $136.7 $120.7
Gross Profit 26.2 19.0
Operating Income 9.4 5.2
Net Income from Continuing 3.4 2.4
Net Income (Loss) 3.4 (11.4)
Net Income from Continuing
Operations per Diluted Share 0.07 0.05
Net Income (Loss) per Diluted Share $0.07 $(0.26)
Revenues
Orbital’s first quarter revenues rose 13%, from $120.7 million in the
first quarter of 2002 to $136.7 million in the first quarter of 2003. The
increase was driven by substantial growth in the company’s launch vehicle and
advanced programs segment, partially offset by decreased revenues in the
satellite and related space systems segment and the electronic systems
segment. The increase in launch vehicle revenues is largely due to Orbital’s
missile defense boost vehicle program under a multi-year contract with The
Boeing Company. The decrease in satellite and related space systems segment
revenues is primarily attributable to decreased revenue in the geosynchronous
(GEO) commercial satellite product line, partially offset by increased
revenues in the low-orbit (LEO) science and technology spacecraft product
line. The decrease in the GEO commercial satellite product line is largely due
to lower revenues on two satellites that were substantially completed in early
2003 and the absence in 2003 of revenues from a satellite that was completed
in mid-2002. The decrease in electronic systems segment revenue is
attributable to lower manufacturing activity on several transportation
management system (TMS) contracts.
Revenues by segment were as follows ($ in millions):
Quarter Ended March 31,
2003 2002
Launch Vehicles and Advanced Programs $80.6 $44.7
Satellites and Related Space Systems 48.5 60.8
Electronic Systems 9.2 16.0
Eliminations (1.6) (0.8)
Total Revenues $136.7 $120.7
Operating Income
Orbital reported operating income of $9.4 million in the first quarter of
2003, a $4.2 million increase over the same period last year. This increase
is primarily attributable to improved operating results in the launch vehicle
and advanced programs segment, largely driven by the missile defense boost
vehicle program, and improved operating results in the satellite and related
space systems segment. The electronic systems segment reported a $1.5 million
operating loss in the first quarter of 2003, due largely to contract cost
increases. These cost increases are attributable in large part to the
suspension of work and revenue recognition on a particular TMS contract
pending the renegotiation of the scope of work and other terms and conditions.
As a result, certain costs that would have been borne by the suspended
contract are currently expected to be charged to other existing TMS contracts.
During the first quarter of 2003, Orbital recorded a $1.0 million charge
in connection with the company’s settlement agreement with ORBIMAGE. The
settlement expense relates to expected delay charges associated with the
OrbView-3 satellite that are provided for in the settlement agreement. As
previously reported, the company expects to record an additional $2.5 million
settlement charge in the second quarter of 2003 upon the launch of the
satellite and the effectiveness of releases of claims from ORBIMAGE, its
bondholders and its preferred stockholders.
Operating income by segment is as follows ($ in millions):
Quarter Ended March 31,
2003 2002
Launch Vehicles and Advanced Programs $9.2 $4.2
Satellites and Related Space Systems 2.7 0.1
Electronic Systems (1.5) 1.2
Corporate and Other (1.0) (0.3)
Total Operating Income $9.4 $5.2
Net Income
Orbital’s net income for the first quarter of 2003 was $3.4 million, or
$0.07 per diluted share, compared to net income of $2.4 million before the
cumulative effect of the change in accounting in the first quarter of 2002.
This improvement was primarily due to the significant increase in operating
income discussed above, partially offset by a $3.0 million increase in
interest expense in the first quarter of 2003. The increase in interest
expense is the result of a higher interest rate, higher average borrowings and
increased amortization of debt issuance costs associated with our $135 million
debt refinancing in August 2002.
The first quarter of 2002 included the impact of a $13.8 million goodwill
impairment charge related to the adoption of SFAS No. 142. Net loss for the
first quarter of 2002, after the goodwill impairment charge, was $11.4
million, or $0.26 per diluted share.
Cash Flow and Liquidity Status
As of March 31, 2003, Orbital’s unrestricted cash balance was $54.4
million. The company had positive free cash flow of $11.2 million in the
first quarter of 2003, compared with negative free cash flow of $22.6 million
in the first quarter of 2002.
Orbital defines free cash flow as net cash provided by operating
activities, which includes cash interest, less capital expenditures. Free
cash flow is considered to be an important indicator of the company’s ability
to finance its operations and to service its debt.
The following table provides summary information on the company’s cash
flow and debt position for the first quarter of 2003 ($ in millions):
First Quarter
2003
Net Cash Provided by Operating Activities $12.9
Capital Expenditures (1.7)
Free Cash Flow 11.2
Repayment of Debt (0.5)
Proceeds from Issuance of Common Stock 0.3
Net Increase in Cash 11.0
Beginning Cash Balance 43.4
Ending Cash Balance 54.4
Beginning Total Debt 116.7
Ending Total Debt $117.3
Summary balance sheet data as of March 31, 2003 is as follows ($ in
millions):
Assets Liabilities and Equity
Cash and Equivalents $54.4 Short-Term Debt $1.8
Other Current Assets 162.2 Other Current Liabilities 114.8
Property and Equipment (Net) 86.5 Long-Term Debt 115.4
Goodwill (Net) 95.3 Other Non-Current Liabilities 44.1
Other Assets 16.9 Stockholders' Equity 139.2
Total Assets $415.3 Total Liabilities
and Equity $415.3
New Business Highlights
During the first quarter of 2003, Orbital received approximately $515
million in new orders, including a major contract from the U.S. Air Force for
space launch and missile defense target vehicles with a potential total value
up to $475 million over the next 10 years. At March 31, 2003, the company’s
firm backlog was approximately $730 million and its total backlog (including
options, indefinite-quantity contracts and undefinitized orders) was
approximately $2.68 billion.
Operational Highlights
Orbital carried out four space missions with 100% mission reliability in
the first four months of 2003. These missions included a Pegasus space launch
vehicle that carried the SORCE spacecraft, an Orbital-built scientific
satellite for NASA, into orbit in January. Orbital also completed a successful
flight of the interceptor booster prototype that the company is developing and
testing for Boeing and the U.S. Missile Defense Agency (MDA). More recently,
the first of three GEO communications satellites Orbital is building for
PanAmSat Corporation was successfully launched aboard an Ariane rocket in
early April. Following the launch, the satellite has performed as planned in
the early stages of its expected 15-year design life.
In the second quarter, Orbital expects to carry out seven major space
missions, including the previously discussed launch of the satellite for
PanAmSat. For the remainder of the second quarter, Orbital expects to launch
two Pegasus rockets that will each deliver company-built satellites into
orbit, including GALEX, a scientific satellite for NASA, and OrbView-3, a
commercial high-resolution imaging satellite for ORBIMAGE. Orbital also
expects to deliver for launch the BSAT-2c GEO communications satellite for B-
SAT Corporation of Japan, and to conduct a ballistic missile target vehicle
launch for MDA.
About Orbital
Orbital develops and manufactures small space systems for commercial,
civil government and military customers. The company’s primary products are
spacecraft and launch vehicles, including low-orbit, geostationary and
planetary spacecraft for communications, remote sensing and scientific
missions; ground- and air-launched rockets that deliver satellites into orbit;
and missile defense boosters that are used as interceptor and target vehicles.
Orbital also offers space-related technical services to government agencies
and develops and builds satellite-based transportation management systems for
public transit agencies and private vehicle fleet operators.
Certain complementary financial and other statistical information as well
as non-GAAP financial measures may be provided by the company during the
earnings conference call. A transcript of the call will be available within
48 hours on Orbital’s website at http://www.orbital.com/Investor
Note: “Safe Harbor” Statement Under the Private Securities Litigation
Reform Act of 1995.
Some of the statements in this release constitute “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act
of 1995. All statements other than those of historical facts included herein,
including those related to the company’s financial outlook, goals, business
strategy, projected plans and objectives of management for future operations,
new order trends and liquidity are forward-looking statements. Such “forward-
looking statements” involve unknown risks and uncertainties that may cause the
actual results, performance or achievements of the company to be materially
different from any future results, performance or achievements, expressed or
implied by such forward-looking statements.
Factors such as general economic and business conditions, availability of
required capital, continued government support and funding for key space and
defense programs, the financial condition of major customers, product
performance, market acceptance of products, services and technologies,
consumer demand, and dependence upon long-term contracts and licensing
agreements with commercial and government customers may impact the company’s
revenues, expenses and profit from period to period. These factors and others
related to the company’s business are described in further detail in the
company’s SEC filings, including its Form 10-K, as amended, for the year ended
December 31, 2002. Orbital assumes no obligation to update any such forward-
looking information.
-- attachments below --
ORBITAL SCIENCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except share data)
For the Quarter Ended
March 31,
2003 2002
Revenues $136,681 $120,712
Costs of goods sold 110,447 101,718
Gross profit 26,234 18,994
Research and development expenses 1,582 755
Selling, general and administrative expenses 14,265 13,038
Settlement expense 1,000 --
Income from operations 9,387 5,201
Other income 117 216
Interest expense (6,068) (3,025)
Income before provision for income taxes 3,436 2,392
Provision for income taxes -- --
Income from continuing operations 3,436 2,392
Cumulative effect of change in accounting -- (13,795)
Net income (loss) $3,436 $(11,403)
Net income (loss) per common share:
Income from continuing operations $0.08 $0.06
Cumulative effect of change in accounting -- (0.33)
Net income (loss) $0.08 $(0.27)
Net income (loss) per dilutive share:
Income from continuing operations $0.07 $0.05
Cumulative effect of change in accounting -- (0.31)
Net income (loss) $0.07 $(0.26)
Shares used in computing net income (loss)
per common share 45,753,000 42,170,000
Shares used in computing net income (loss)
per dilutive share 51,123,000 43,733,000
ORBITAL SCIENCES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, December 31,
2003 2002
ASSETS (Unaudited)
Cash $54,375 $43,440
Receivables, net 125,633 135,176
Inventory 17,608 17,136
Other current assets 18,879 19,065
Total current assets 216,495 214,817
Property, plant and equipment, net 86,523 88,751
Goodwill, net 95,293 95,293
Other non-current assets 16,946 17,449
TOTAL ASSETS $415,257 $416,310
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings $1,844 $1,854
Accounts payable and accrued expenses 89,935 92,519
Deferred revenues 24,735 28,094
Total current liabilities 116,514 122,467
Long-term debt 115,420 114,833
Other non-current liabilities 3,560 3,856
Allocated losses of affiliate 40,586 40,586
Total stockholders' equity 139,177 134,568
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $415,257 $416,310
ORBITAL SCIENCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
For the Quarter For the Quarter
Ended Ended
March 31, 2003 March 31, 2002
Net income from continuing operations $3,436 $2,392
Depreciation and amortization 3,893 3,741
Amortization of debt issuance costs
and debt discount 1,772 283
Changes in assets and liabilities 3,379 (29,623)
Other 380 4,765
Net cash provided by (used in)
operating activities 12,860 (18,442)
Net cash used in investing activities
- capital expenditures (1,660) (4,144)
Repayment of debt and other (491) (2,357)
Net proceeds from issuance of long-
term obligations -- 22,364
Net proceeds from issuance of common stock 226 408
Net cash provided by (used in)
financing activities (265) 20,415
Net increase (decrease) in cash 10,935 (2,171)
Cash, beginning of period 43,440 63,215
Cash, end of period $54,375 61,044
For More Information Contact:
Barron Beneski (703) 406-5528
Public and Investor Relations
beneski.barron@orbital.com
