Company Completes Non-Core Business Divestitures, Reduces Debt and Cuts Operating Costs, and Books Important New Contracts
Orbital Sciences Corporation
today announced financial results for the third quarter of 2001,
reporting net income of $5.6 million, or $0.15 earnings per share, compared to
a third quarter 2000 net loss of $121.3 million, or $3.23 loss per share.
The
company’s third quarter 2001 earnings include a net gain of $21.9 million from
the sale of non-core business units completed in July and September, offset in
part by $13.9 million for excess facility reserves, employee severance and
other nonrecurring charges.
Revenues for the third quarter were $91.0
million, up about 14% from comparable revenues in the same period last year.
“In the third quarter, Orbital accomplished three noteworthy actions in
our ‘back-to-basics’ strategy.
First, the company continued to build higher-
margin contract backlog in its core space technology product lines at a
healthy rate.
In the last few months, we booked several significant new
orders in our two major growth areas, suborbital launch vehicles and small
communications satellites,” said Mr. David W. Thompson, Orbital’s Chairman and
Chief Executive Officer.
“Second, we accelerated our efforts to aggressively reduce operating and
overhead costs, which we expect will translate into improved financial results
in future quarters.
Finally, we completed three major non-core business unit
divestitures, allowing the company to further reduce debt and strengthen its
financial position in the September quarter,” Mr. Thompson added.
Financial Highlights
Summary financial results for the third quarter of 2001 as compared to the
third quarter of 2000 are as follows ($ in millions, except per share data):
Three Months Ended
September 30
2001 2000
Consolidated Revenues $ 91.0 $ 80.1
Operating Income (Loss) (16.9) (82.7)
Net Income (Loss) From Continuing Operations (16.3) (152.0)
Net Income (Loss) 5.6 (121.3)
Net Income (Loss) Per Share 0.15 (3.23)
Revenue
Orbital’s third quarter 2001 revenues were $91.0 million, approximately
14% higher than the $80.1 million recorded in the same period last year.
The
company experienced revenue increases in all operating groups (Space Systems,
Launch Systems and Electronic Systems Groups), with the exception of its
Advanced Programs Group, which saw a revenue decline due to NASA’s termination
for convenience of the X-34 reusable launch vehicle program earlier this year.
Operating Loss
Orbital’s loss from operations for the third quarter of 2001 was $16.9
million, including approximately $13.9 million in nonrecurring charges, as
compared to an operating loss of $82.7 million in the third quarter of 2000.
The third quarter of last year included a one-time $54.8 million charge to
write down the company’s ORBCOMM-related accounts receivable and inventory.
Net Loss From Continuing Operations
The company reported a net loss from continuing operations of $16.3
million, or $0.42 per share, in the third quarter of 2001 as compared to a net
loss of $152.0 million, or $4.05 per share, from continuing operations in the
same period in 2000.
In addition to the $54.8 million charge discussed above,
the third quarter 2000 results included a one-time $50.6 million charge to
write off the company’s remaining investment in ORBCOMM.
Net Income
Orbital’s net income for the third quarter of 2001 was $5.6 million, or
$0.15 per share, as compared to a net loss of $121.3 million, or $3.23 per
share, in the same quarter last year.
Included in this year’s third quarter
net income was a $21.9 million gain on the sale of non-core business units as
compared to a similar $30.7 million gain in the third quarter of 2000.
New Business Highlights
During the third quarter of 2001, Orbital received new firm orders for its
space technology products valued at approximately $142 million.
As a result,
after eliminating backlog associated with its Sensor Systems Division which
was sold in September, the company’s firm contract backlog was approximately
$507 million and its total contract backlog (including options, indefinite-
quantity contracts and undefinitized orders) was about $2.52 billion at the
end of the quarter.
Major new contracts added to backlog during the third quarter included the
following:
* Orbital was selected by BSAT Corporation of Japan to build and launch
its BSAT-2c direct-broadcast satellite, in a contract valued at
approximately $70 million. BSAT awarded this contract to Orbital on a
sole-source basis after its BSAT-2b satellite, also manufactured by
the company, was lost in an Ariane 5 launch vehicle failure in July.* The company was selected by the U.S. Army for a $24 million contract
to develop and produce short-range air-launched target vehicles for
theater missile defense testing, and by the U.S. Air Force for a $9
million addition to an existing contract to build and launch long-
range target vehicles for the national missile defense program.* Orbital was also awarded a $21 million contract by the Army to develop
and test a liquid propellant booster system for future target vehicle
applications.
Operational Update
Recent operational events include the following:
* The company’s Taurus rocket failed in its late September launch
attempt to place the Orbital-built OrbView-4 and QuikTOMS satellites
into orbit. An investigation into the cause of the failure is nearing
completion, with launches of other company rockets planned to resume
in December. Orbital has more than 45 space and suborbital launch
vehicles under contract for deliveries through 2004.* In the third quarter, Orbital completed and shipped the NSTAR-c
geosynchronous communications satellite platform, which is currently
scheduled to be launched next spring for NTT DoCoMo of Japan. The
company also made good progress in its design and manufacturing work
on an additional 15 communications, scientific and defense satellites
it currently has under contract.* The company continued its year-long campaign of across-the-board cost
reductions to improve operational efficiency, profit margins and free
cash flow. These measures have reduced its core workforce by about
18% and cut related facility and overhead expenses by nearly 25% since
the fall of 2000, while workforce revenue productivity has increased
more than 23% during the same period.
Fourth Quarter 2001 and Preliminary 2002 Outlook
Commenting on the remainder of 2001, Mr. Thompson added, “With market
interest in our suborbital rockets and smaller GEO satellites at an all-time
high, Orbital aims to add substantial new profitable orders to our backlog in
the fourth quarter.
As a result of the completion of several loss contracts
as well as major cost reductions implemented during the past year, we also
anticipate significant improvements in profit margins in the next three
months, along with healthy increases in revenue in our core space product
lines.”
Looking ahead to 2002, Mr. Thompson indicated that Orbital currently
expects to generate increased revenues and improved operating income compared
to 2001 results.
The company will also continue its efforts to bolster
liquidity and financial flexibility through replacing or refinancing its
remaining debt obligations.
“With a solid higher-margin backlog, a more
efficient cost structure and a strengthened balance sheet, we should be well-
positioned to build shareholder value in 2002 and beyond,” he concluded.
Orbital develops and manufactures affordable space systems, including
satellites, launch vehicles, electronics and advanced space systems.
Orbital
is also involved with satellite-based networks that provide wireless data
communications and high-resolution Earth imagery 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 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/A.
Orbital assumes no obligation to update
any such forward-looking information.
ORBITAL SCIENCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except share data)
For the Quarter Ended
September 30,
2001 2000
Revenues $91,008 $80,073
Costs of goods sold 78,816 84,973
Gross Profit 12,192 (4,900)
Research and development expenses 2,060 2,690
Selling, general and administrative expenses 25,549 18,871
Amortization of goodwill 1,503 1,449
Provision for doubtful ORBCOMM accounts -- 54,750
Loss from operations (16,920) (82,660)
Other income (expense), net 3,683 (27)
Interest expense, net of capitalized interest (3,041) (8,413)
Allocated share of losses of affiliates -- (51,039)
Loss before provision for income taxes (16,278) (142,139)
Provision for income taxes -- 9,886
Loss from continuing operations (16,278) (152,025)
Income from discontinued operations 21,895 30,703
Net income (loss) $5,617 $(121,322)
Net income (loss) per common and dilutive share:
Loss from continuing operations $(0.42) $(4.05)
Income from discontinued operations 0.57 0.82
Net income (loss) $0.15 $(3.23)
ORBITAL SCIENCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except share data)
For the Nine Months Ended
September 30,
2001 2000
Revenues $294,386 $312,657
Costs of goods sold 264,949 289,932
Gross Profit 29,437 22,725
Research and development expenses 6,281 7,520
Selling, general and administrative expenses 48,561 46,766
Amortization of goodwill 4,519 4,348
Provision for doubtful ORBCOMM accounts -- 54,750
Loss from operations (29,924) (90,659)
Other income (expense), net 4,663 2,390
Interest expense, net of capitalized interest (18,851) (18,633)
Allocated share of losses of affiliates (19,995) (94,290)
Litigation settlement -- (11,500)
Loss before provision for income taxes (64,107) (212,692)
Provision for income taxes -- 9,886
Loss from continuing operations (64,107) (222,578)
Income from discontinued operations 114,729 32,602
Net income (loss) $50,622 $(189,976)
Net income (loss) per common and dilutive share:
Loss from continuing operations $(1.68) $(5.94)
Income from discontinued operations 3.01 0.87
Net income (loss) $1.33 $(5.07)
CONTACT:
Barron Beneski Public and Investor Relations of Orbital Sciences
Corporation, +1-703-406-5528, or beneski.barron@orbital.com.
