Orbital Sciences Corporation
today announced its financial results for 2000, reporting
consolidated revenues from continuing operations of $725,669,000, down 5% from
1999 comparable revenues of $766,372,000.
Orbital’s net loss from continuing
operations in 2000 was $228,224,000 (or $6.09 per share), compared to a net
loss of $105,129,000 (or $2.82 per share) in 1999.
The net loss in 2000
included approximately $163,000,000 in non-cash, non-recurring charges, or
approximately 71% of the net loss from continuing operations for the year.
“While our reported losses for 2000 were very substantial, Orbital
actually has made dramatic progress during the past year in strategic
refocusing and financial improvement,” said Mr. David W. Thompson, Orbital’s
Chairman and Chief Executive Officer.
“During the 12-month period ending this
June, the company expects to have completed the divestiture of four non-core
businesses to sharpen our strategic focus, raising about $350 million in total
proceeds.
These funds will allow us to substantially reduce total debt and
more than double cash balances compared to a year ago,” he added.
As a primary part of its financial plan, Orbital yesterday announced that
it recently signed a definitive agreement to sell the company’s interest in
its MacDonald, Dettwiler and Associates Ltd. (MDA) subsidiary for about $163
million.
The MDA transaction is expected to address the company’s liquidity
needs for 2001.
“We are confident that implementation of our overall financial plan will
enable us to satisfy the company’s operating, capital and debt service
requirements,” Mr. Thompson stated.
Certain of the transactions necessary to
ensure the company’s liquidity through the end of the year, most significantly
the sale of the first 12.35 million shares of MDA, had not been finalized as
of the release of Orbital’s December 31, 2000 consolidated financial
statements.
As a consequence, the company’s outside auditors,
PricewaterhouseCoopers LLP, have issued an opinion on the 2000 consolidated
financial statements that raises questions with respect to Orbital’s ability
to continue as a going concern.
“While we are disappointed in this decision,
we remain convinced that management’s financial plans will provide us
sufficient liquidity into 2002,” Mr. Thompson added.
In addition, Orbital indicated that it plans to sell its Magellan
Corporation business unit and its interest in Navigation Solutions LLC
(NavSol) in the next several months, providing additional liquidity for the
company.
These strategic divestitures follow the October 2000 sale of the
company’s Fairchild Defense division for about $100 million and the July 2000
initial public stock offering of MDA in Canada.
Related to the company’s plan to sell its interest in Magellan and NavSol,
Orbital is reporting these two units as discontinued operations for 2000 and
prior periods.
Orbital’s 2000 revenues relating to discontinued operations
were $97,311,000 compared to $108,539,000 in 1999 and its losses were
$49,966,000 in 2000 compared to $16,808,000 in 1999.
Including discontinued
operations, Orbital’s total loss in 2000 was $278,190,000 (or $7.42 per share)
as compared to a loss of $121,937,000 (or $3.27 per share) in 1999.
Full-Year 2000 Results
For the full-year 2000 period, Orbital recorded total enterprise revenues
(including revenues from unconsolidated subsidiaries and affiliates and
discontinued operations) of $869,150,000, compared to $916,414,000 in 1999.
Full-year results are summarized in the following table.
Full Year Full Year Percent
2000* 1999 Change
Enterprise Revenues $869,150,000 $916,414,000 -5%
Consolidated Revenues 725,669,000 766,372,000 -5%
Operating Loss (126,291,000) (43,247,000) NM
Net Loss From Continuing
Operations (228,224,000) (105,129,000) NM
Loss Per Share From
Continuing Ops. (6.09) (2.82) NM
Net Loss (278,190,000) (121,937,000) NM
Loss Per Share ($7.42) ($3.27) NM
*Year 2000 results include only 10 months of Fairchild Defense operations
and a reduction of MDA ownership as compared to 1999.
Orbital continued to experience strong demand for its space and ground
infrastructure systems in 2000, with $1.2 billion in new contracts awarded to
the company, marking the fifth year in a row that the company has received
over $1 billion in new orders.
Orbital finished 2000 with a total contract
backlog of $4.2 billion, of which nearly $950 million was firm backlog and
about $3.2 billion was option/pending backlog.
Not included in the year-end 2000 backlog totals are two significant
satellite contracts that the company was awarded in the first quarter of 2001.
In March, PanAmSat Corporation selected the company to build up to three
geosynchronous communications satellites for approximately $160 million, while
the National Space Program Office of Taiwan awarded the company a $56 million
contract to build six remote sensing satellites.
Final 2000 total backlog
figures were reduced by about $135 million as a result of the October sale of
Orbital’s Fairchild Defense unit.
Fourth Quarter Results
Orbital reported consolidated revenues for the fourth quarter 2000 of
$135,406,000, down 29% as compared to revenues of $191,016,000 for fourth
quarter 1999.
As discussed below, several one-time items and subsequent
events impacted Orbital’s fourth quarter results.
These items include charges
due to NASA’s first quarter 2001 decision to terminate for convenience the
X-34 rocketplane contract, the decision to dispose of the company’s Magellan
subsidiary and its interest in NavSol.
Orbital’s net loss from continuing
operations for the fourth quarter of 2000, including the impact of several
unusual items, was $52,113,000 (or $1.40 per share), compared to a net loss of
$24,899,000 (or $0.67 per share) for the same period in 1999.
Including
discontinued operations, Orbital’s total fourth quarter net loss in 2000 was
$88,215,000 (or $2.35 per share) compared to a net loss of $30,136,000
(or $0.81 per share) for the fourth quarter 1999.
Fourth Quarter Fourth Quarter Percent
2000* 1999 Change
Enterprise Revenues $169,834,000 $227,251,000 -25%
Consolidated Revenues 135,406,000 191,016,000 -29%
Operating Loss (60,384,000) (59,646,000) NM
Net Loss From Continuing
Ops. (52,113,000) (24,899,000) NM
Loss Per Share From
Continuing Ops. (1.40) (0.67) NM
Net Loss (88,215,000) (30,136,000) NM
Loss Per Share ($2.35) ($0.81) NM
*Fourth quarter 2000 results include only one month of Fairchild Defense
operations and a reduction of MDA ownership as compared to the same
period in 1999.
More details on Orbital’s 2000 financial results can be found in the
company’s 2000 Annual Report on Form 10-K.
“While disappointed in our reported financial results for the fourth
quarter and full-year 2000, we believe that we have addressed a number of
issues not expected to recur and we look forward to an improved outlook for
2001 and beyond,” said Mr. Garrett E. Pierce, Executive Vice President and
Chief Financial Officer.
“Additionally, we believe that the pending sale of our MDA subsidiary and
the planned sale of our Magellan and NavSol units are further evidence that we
are executing on our strategy to improve the company’s balance sheet and
financial flexibility, while sharpening our focus on and improving the
performance of Orbital’s core space systems manufacturing business.
Our
management team is fully committed to returning our basic business to
sustainable profitability,” he added.
As is more fully described in the 2000 Form 10-K, the company’s fourth
quarter and full-year 2000 financial results include the impact of several
non-recurring gains and charges, as summarized below.
Non-Cash Charges
Of Orbital’s $278 million total losses in 2000, approximately 80% were
attributable to non-core businesses and about 74% were non-cash in nature.
For the full year, the company recorded about $197 million in non-cash
(non-recurring) charges, while in the fourth quarter it reported about $68
million in non-cash charges.
Major non-cash charges impacting financial
results for the year were as follows (with fourth quarter items as noted):
- ORBCOMM:
Following ORBCOMM’s Chapter 11 filing, Orbital wrote off a - total of $113 million, consisting of the remainder of the company’s
- investment in ORBCOMM and related receivables and inventory.
- Magellan/NavSol:
Related to the company’s plan to sell its Magellan - and NavSol units, Orbital is reporting Magellan and NavSol as discontinued
- operations for 2000 and prior years.
As a result, Orbital recorded a - $50 million loss from discontinued operations for 2000, including a
- non-recurring fourth quarter charge of $33 million related to the
- estimated loss on disposal.
- X-34 Program:
In March 2001, NASA terminated for convenience the - contract with Orbital to design, manufacture and test several X-34
- reusable launch vehicles.
The company recorded charges totaling $19 - million in the fourth quarter to write down related assets and receivables
- to their estimated realizable value.
Although Orbital is seeking to - recover a significant portion of these costs from NASA, there can be no
- assurance that such a recovery will be successful.
- Litigation Settlement:
In July 2000, Orbital settled a class-action - lawsuit arising from the company’s restatement of 1999 and prior year
- financial results.
To reflect its contribution to the settlement of $11 - million of stock warrants, Orbital took an $11 million charge in the third
- quarter last year.
Additionally, Orbital recognized equity losses related to ORBIMAGE
totaling $16 million in the fourth quarter of 2000 and $24 million for the
full year.
These charges were partially offset by one-time gains totaling
approximately $73 million for the year, related to MDA’s July 2000 initial
public stock offering in Canada (with a $31 million gain reported in the third
quarter) and the company’s sale of its Fairchild Defense unit in October
(with a $42 million gain reported in the fourth quarter.)
Business Segment Results
Details of Orbital’s financial and operational results in each of its
business segments are provided below for the fourth quarter and full-year 2000
periods.
Space and Ground Infrastructure Systems
The company’s space and ground infrastructure systems sector generated
full-year 2000 revenues of $725,669,000, down 5% from 1999 revenues of
$766,372,000.
Revenues for the three months ended December 31, 2000, were
$135,406,000, down 29% from 1999 revenues of $191,016,000 in the comparable
quarter.
The revenues for fourth quarter and full-year 2000 discussed above
reflect partial-year results from its Fairchild Defense division, which the
company sold in October 2000.
Full-Year Full-Year Percent
2000 1999 Change
Revenue $725,669,000 $766,372,000 -5%
Operating Income* (126,291,000) (43,247,000) NM
Total Backlog $4,157,000,000 $4,761,000,000 -13%
Fourth Quarter Fourth Quarter Percent
2000 1999 Change
Revenue $135,406,000 $191,016,000 -29%
Operating Income* (60,384,000) (59,646,000) NM
*Operating income for 2000 was impacted by several one-time items
including a $54 million write down related to ORBCOMM receivables and a
$19 million write down for X-34 assets and receivables.
For the year, Orbital continued its 100% mission success record by
conducting a total of 12 space missions, including satellite deployments,
rocket launches and space payload operations.
Since its inception in 1982,
the company has now conducted over 320 space missions, with an industry-best
101 consecutive successful missions during the 51-month period from January
1997 to March 2001.
During the fourth quarter of 2000, Orbital received new orders for its
space and ground infrastructure systems worth about $260 million, bringing its
total new bookings for the year to approximately $1.2 billion.
As a result,
the company’s firm and total contract backlog for its space and ground
infrastructure systems were about $950 million and $4.2 billion, respectively,
at year-end.
Satellite Access Products
As previously stated, Orbital has formally adopted a plan to sell its
Magellan business unit and its interest in NavSol and, accordingly, will
report the results of its satellite access sector as
discontinued operations
for 2000 and prior periods.
In executing its divestiture plan, Orbital is
targeting to close the sale of these units by the end of the second quarter of
this year.
Financial results for Magellan for the full-year and fourth quarter 2000
periods were as follows:
Full-Year Full-Year Percent
2000 1999 Change
Revenue $97,310,000 $108,539,000 -10%
Operating Income ($14,890,000) ($12,465,000) NM
Fourth Quarter Fourth Quarter Percent
2000 1999 Change
Revenue $24,505,000 $28,245,000 -13%
Operating Income ($1,807,000) ($1,121,000) NM
Satellite Services
The satellite services sector consists of ORBIMAGE, ORBCOMM Global L.P.,
and ORBNAV (NavSol) (which, as described above, is now treated as a
discontinued operation).
Orbital does not consolidate revenues from these
businesses, but uses the equity method of accounting for these investments.
The satellite services sector generated total revenues of $46,171,000 in
2000, up 11% over 1999 revenues of $41,503,000.
In the fourth quarter,
satellite services reported total revenues of $9,922,000, up 24% from the
comparable 1999 period.
ORBIMAGE generated approximately $5,452,000 of revenues during the fourth
quarter of 2000 and $24,123,000 for the full year.
These amounts compare to
$4,999,000 of revenues in the fourth quarter of 1999 and $18,134,000 for the
full 1999 year.
NavSol generated approximately $4,305,000 of revenues in the
fourth quarter and $14,250,000 for the year, compared to $2,423,000 and
$3,140,000 in fourth quarter and full year of 1999.
Liquidity Update
In 2000, the company completed several financial transactions in its
ongoing process to address the liquidity needs of the company.
In July, MDA
completed an initial public stock offering on the Toronto Stock Exchange of
6.6 million shares of common stock, resulting in approximately $18 million in
net proceeds to Orbital and a non-recurring gain of $31 million in the third
quarter.
In October, the company sold its Fairchild Defense electronics
business, generating approximately $100 million in gross proceeds and a
one-time gain of $42 million in the fourth quarter.
As previously stated, Orbital received an opinion from its auditors at the
time the company filed its Annual Report for 2000 on Form 10-K, which raises
questions regarding the company’s ability to continue as a going concern.
Orbital believes that it is addressing this liquidity concern by the
anticipated closing of two pending non-core business unit sales that are
expected to generate approximately $225 million in proceeds.
Additionally,
the company is continuing to pursue opportunities to make its core operations
more efficient in order to improve its cash flow from operations.
Orbital
expects that these actions will generate sufficient additional liquidity to
satisfy the company’s capital needs in 2001, including its full operating,
investment and debt service requirements.
Near-Term Goals
“While 2000 was a financially disappointing year for Orbital and its
shareholders, it also produced a refocused business strategy and an improving
liquidity outlook for the company.
As we look ahead to the remainder of 2001,
Orbital’s management team is determined to complete our financial turnaround
and maximize value in our core space systems business,” concluded Mr.
Thompson.
Orbital is one of the world’s leading manufacturers of low-cost space
systems, including satellites, launch vehicles, space sensors and satellite
ground systems.
Orbital is also involved with satellite-based networks that
provide wireless data communications and high-resolution Earth imagery
services to customers around the world.
More information about Orbital can be found at http://www.orbital.com
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, planned transactions 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 for Orbital and its affiliates, 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.
Orbital assumes no
obligation to update any such forward-looking information.
Contact: (Media) Barron Beneski, 703-406-5528, or
beneski.barron@orbital.com, or (Investors) Timothy Perrott,
703-406-5997, or perrott.tim@orbital.com, both of Orbital
Sciences Corporation
