DULLES, Va., Nov. 9 /PRNewswire/ -- Orbital Sciences Corporation (NYSE: ORB) today announced its third quarter 2000 financial results, reporting a net loss of $44,778,000 (or $1.19 loss per share) excluding ORBCOMM charges and a non-recurring gain. New orders met plans for the quarter, but revenue and operating margins were lower than anticipated for the period. Suspension of ORBCOMM-related space systems production work and cost increases on several satellite programs were the primary factors leading to lower revenues and operating margins. The company also took non-cash charges related to its ORBCOMM affiliate totaling $107,268,000, which were partially offset by a non-recurring gain on the sale of subsidiary stock of $30,724,000. Including the impact of these non-recurring items, the company reported a net loss of $121,322,000 (or $3.23 loss per share) for the quarter.
"While disappointed in our financial results for the quarter, we are aggressively taking the actions necessary to address operating problems in our satellite manufacturing division, including changing management leadership, reducing costs and improving financial and engineering controls," said Mr. David W. Thompson, Orbital's Chairman and Chief Executive Officer. "In a larger sense, we made progress during the quarter in executing our overall strategic plan to sharpen the focus on our core space technology businesses by the successful execution of the sale of certain non-core assets. However, we recognize that there are significant further steps we must take in our plan to fully rebuild shareholder value," he added.
Third Quarter Results and Highlights
Orbital's total enterprise revenue in the third quarter of 2000 (including revenues from unconsolidated affiliates) was $222,676,000, down 7% from third quarter 1999 total enterprise revenue of $239,888,000. Consolidated revenue of $208,052,000 decreased 9% from the comparable period in 1999. The company reported an operating loss (before ORBCOMM charges) of $22,941,000 in the third quarter compared to an operating loss of $1,773,000 in the comparable 1999 quarter. Primarily as a result of non-cash charges related to its ORBCOMM investment, which were partially offset by a gain on the sale of its MDA subsidiary stock, the company reported a net loss of $121,322,000 (or $3.23 per share) in this year's third quarter as compared to a net loss of $39,566,000 (or $1.06 per share) last year. The reported financial results for the quarter are summarized in the table below:
September 30, September 30, Percent
2000 1999 Change
Enterprise Revenue $222,676,000 $239,888,000 -7%
Consolidated Revenue $208,052,000 $228,994,000 -9%
Gross Profit $22,729,000 $44,516,000 -48%
EBITDA ($66,165,000) $14,203,000 N/A
Operating Income (Loss) ($80,642,000) ($1,773,000) N/A
Net Income (Loss) ($121,322,000) ($39,566,000) N/A
Loss Per Share ($3.23) ($1.06) N/A
Firm Backlog $1,338,000,000 $2,177,000,000 -38%
Total Backlog $4,495,000,000 $4,498,000,000 0%
The financial results for this year's third quarter excluding charges related to ORBCOMM and the gain on the sale of subsidiary stock are summarized in the following table:
EBITDA ($9,473,000)
Operating Income (Loss) ($22,941,000)
Net Income (Loss) ($44,778,000)
Significant strategic, operations and new business highlights from recent months were as follows:
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Orbital was selected for $230 million of new space infrastructure systems orders, bringing the company's year-to-date new infrastructure bookings to just under $1.0 billion. As a result, Orbital's total contract backlog (including options, undefinitized orders and indefinite-quantity contracts) stood at approximately $4.5 billion at the end of the third quarter, before taking into account the impact of the Fairchild Defense sale and fourth quarter new orders and contract terminations. In addition, its MDA subsidiary in Canada was awarded an exclusive license in the United Kingdom to provide up to approximately $600 million of on-line land information services over the next seven years, which is not included in infrastructure systems backlog.
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Orbital carried out four successful space missions in the last three months, bringing the company's recent record to 92 consecutive successes in satellite, rocket and space payload operations in the last 45 months.
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During the quarter, the company's MDA subsidiary completed a $63 million initial public stock offering, generating approximately a $31 million one-time gain for Orbital as reported in the third quarter financial results.
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After the quarter closed, Orbital completed the sale of its Fairchild Defense division to a wholly owned subsidiary of Smiths Industries plc for approximately $100 million, which is expected to result in about a $40 million non-recurring gain in the fourth quarter.
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Orbital strengthened its management team with the addition of Mr. Garrett E. Pierce as Executive Vice President and Chief Financial Officer. Orbital also changed senior management at its satellite manufacturing division and its GPS products subsidiary, Magellan Corporation.
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In the third quarter, ORBCOMM filed for voluntary Chapter 11 reorganization, leading Orbital to take non-cash charges totaling $107 million in the quarter to fully reserve for its remaining investment in ORBCOMM, and to write down related receivables and inventory to their estimated realizable value.
Details of Orbital's financial results for the third quarter of 2000 are provided below for each of the company's three business sectors:
Space and Ground Infrastructure Systems
Orbital's space and ground infrastructure systems sector, including satellites and other space systems, launch vehicles, electronics and sensors, and ground systems and land information services, reported revenue of $181,932,000 in the third quarter, a decrease of approximately 8% from last year's third quarter revenue of $198,202,000. Infrastructure systems produced an operating loss (after allocation of corporate costs and before non- recurring ORBCOMM charges) of $18,610,000 in the quarter compared to operating income of $3,545,000 this quarter last year.
September 30, September 30,
2000 1999
Revenue $181,932,000 $198,202,000
EBITDA ($9,016,000) $11,700,000
Before Non-recurring Charges
EBITDA ($63,750,000) $11,700,000
After Non-recurring Charges
Operating Income (Loss) ($18,610,000) $3,545,000
Before Non-recurring Charges
Operating Income (Loss) ($73,344,000) $3,545,000
After Non-recurring Charges
Revenue for the quarter declined due to a reduction in sales related to Orbital's suspension of production on ORBCOMM satellites and launch vehicles, as well as the suspension of revenue recognition on the ORBIMAGE contract and revenue deferrals associated with customer-requested delays in launch vehicles. Infrastructure systems margins declined in the quarter due to cost increases on several satellite construction programs and termination costs on a transportation management systems contract.
"Although we achieved 100% space mission success for the 15th consecutive quarter, we continued to struggle with schedule delays and cost increases in our satellite manufacturing division," said Mr. Thompson. "Our infrastructure financial performance clearly fell short of expectations. However, I believe that we now have most of the impact of the satellite costs increases behind us, and our infrastructure operating margins should improve significantly in the fourth quarter and in 2001."
During the last three months, Orbital carried out four more successful space missions, bringing its overall total to 304 rocket launches, satellite deployments and space payload operations since 1982, and boosting its recent record to 92 consecutive successful missions over the past 45 months. Recent missions included two rocket launches and two space robotics missions. During the remainder of 2000, the company is currently planning to conduct two or three additional space missions, for a full-year total of 13 or 14 missions.
Satellite Access Products
Orbital's satellite access products sector, consisting of its Magellan subsidiary's satellite navigation, positioning and communications products, reported revenue of $22,448,000 in the third quarter compared to third quarter 1999 revenue of $26,524,000. This sector reported an operating loss (after allocation of corporate costs and before non-recurring ORBCOMM charges) of $4,925,000 in the third quarter compared to an operating loss of $4,772,000 this time last year.
September 30, September 30,
2000 1999
Revenue $22,448,000 $26,524,000
EBITDA ($405,000) $1,651,000
Before Non-recurring Charges
EBITDA ($3,372,000) $1,651,000
After Non-recurring Charges
Operating Income (Loss) ($4,925,000) ($4,772,000)
Before Non-recurring Charges
Operating Income (Loss) ($7,892,000) ($4,772,000)
After Non-recurring Charges
During the third quarter of 2000, Magellan built and shipped approximately 90,000 consumer and industrial satellite navigation products, bringing its nine-month production total to about 310,000 units. Additionally, the company completed development and began customer shipments of several new GPS-based products, including a new high-precision surveying system, an upgraded handheld mapping product and a navigation accessory for the popular Palm(TM) V organizer that provides location-based data for a variety of mobile applications.
Satellite Services
Orbital's satellite services sector consists of its unconsolidated ORBCOMM and ORBIMAGE affiliates and ORBNAV subsidiary as well as its consolidated RSI subsidiary. Satellite services enterprise revenue, including the revenue of its ORBCOMM and ORBIMAGE affiliates and ORBNAV subsidiary, totaled $18,295,000 in the third quarter compared to revenue of $15,162,000 in the comparable quarter of 1999.
September 30, September 30,
2000 1999
Enterprise Revenue $18,295,000 $15,162,000
Consolidated Revenue $3,671,000 $4,268,000
EBITDA $958,000 $852,000
Operating Income (Loss) $593,000 ($547,000)
As part of a comprehensive plan to restructure its business, ORBCOMM filed for a voluntary Chapter 11 reorganization and has been pursuing new funding sources under a revised business plan. As a result, Orbital took non-cash charges totaling $107,268,000 in the third quarter to fully reserve for its remaining investment in ORBCOMM, and to write down related contract receivables and inventory to their estimated realizable value.
Mr. Thompson said, "While we continue to be strongly supportive of ORBCOMM's efforts to refocus and reorganize its business, we felt that it was appropriate to adopt a conservative approach by taking a non-cash charge reflecting our estimated full financial exposure to ORBCOMM. This adjustment significantly impacted our reported operating results as well as our net income for the quarter."
Looking Ahead to the Fourth Quarter
The company also indicated that its preliminary financial outlook for the fourth quarter of 2000 is for results in the following ranges (please note the "safe harbor" statement at the end of the release regarding uncertainties and risks in forward-looking information):
Fourth Quarter 2000 Full Year 2000
Revenue
Total Enterprise $215 to $225 Million $915 to $925 Million
Consolidated $205 to $215 Million $868 to $878 Million
Operating Income (Loss) Breakeven to ($80 to $85 Million)
($5 Million)
Net Income (Loss)/EPS $10 to $15 Million/ ($174 to $179 Million)/
$0.27 to $0.40 ($4.63 to $4.77)
Orbital's year-to-date activity reflects progress in the company's rebuilding campaign after the setbacks experienced in 1999. "Looking ahead, we remain focused on our fundamental plan to build on the strengths in our core space technology businesses and to provide enhanced value to our shareholders," commented Mr. Thompson.
"In implementing this plan, we are concentrating our efforts on the following three priorities:
1. Achieving solid operating results in our core space infrastructure
businesses
2. Spotlighting value in non-core assets through share offerings or
business unit sales
3. Improving our balance sheet and financial flexibility
Executing this plan, and regularly communicating with our shareholders as to our progress along the way, will be key factors in restoring shareholder confidence. We are prepared to do just that as we dedicate our efforts to improving performance and restoring value in our primary space businesses," Mr. Thompson concluded.
Orbital is one of the largest space technology and satellite services companies in the world, with 1999 total enterprise revenues (including revenues from unconsolidated affiliates) of approximately $915 million. The company, headquartered in Dulles, Virginia, employs about 4,500 people at major facilities in the United States, Canada and several overseas locations. Orbital is one of the world's leading manufacturers of low-cost space systems, including satellites, launch vehicles, electronics and sensors, satellite ground systems and related digital infrastructure. Its Magellan subsidiary is a pioneer in satellite-based navigation and communications products for consumer and industrial markets. Through its ORBCOMM and ORBIMAGE affiliates and ORBNAV subsidiary, Orbital is also a major operator of satellite-based networks that provide data communications, high-resolution imagery and automotive information services to customers all 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, and new order trends 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. |
-- Financial Tables Follow --
ORBITAL SCIENCES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except share data)
For the Three Months Ended
September 30,
2000 1999
Consolidated revenues $208,052 $228,994
Costs of goods sold 185,323(a) 184,478
Gross profit 22,729 44,516
Research and development expenses 8,080 10,675
Selling, general and administrative expenses 36,169 31,753
Amortization of goodwill 4,174 3,861
Provision for doubtful accounts 54,948(a) --
Income (loss) from operations (80,642) (1,773)
Net investment income (expense) (10,358) (6,697)
Equity in earnings (losses) of affiliates (51,438)(a) (30,896)
Minority interest 1,531(a) 2,082
Gain on sale of subsidiary stock 30,724(b) --
Loss before provision for income taxes (110,183) (37,284)
Provision for income taxes 11,139 2,282
Net loss $(121,322) $(39,566)
Net loss per share $(3.23) $(1.06)
Shares used in computing
net loss per share 37,518,656 37,384,519
Note (a): The results for the third quarter of 2000 include the following
charges (credits) related to ORBCOMM.
Costs of goods sold $2,753
Provision for doubtful accounts 54,948
Equity in losses of affiliates 50,576
Minority interest (1,009)
$107,268
Note (b): The gain on sale of subsidiary stock relates to the initial
public offering of the company's MDA subsidiary in the third
quarter of 2000.
ORBITAL SCIENCES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except share data)
For the Nine Months Ended
September 30,
2000 1999
Consolidated revenues $663,068 $655,649
Costs of goods sold 554,468(a) 520,829
Gross profit 108,600 134,820
Research and development expenses 24,168 31,375
Selling, general and administrative expenses 97,774 89,189
Amortization of goodwill 11,470 9,960
Provision for doubtful accounts 54,948(a) --
Income (loss) from operations (79,760) 4,296
Net investment income (expense) (22,467) (15,404)
Equity in earnings (losses) of affiliates (95,861)(a) (82,618)
Minority interest 3,088(a) 7,536
Litigation settlement (11,500) --
Gain of sale of subsidiary stock 30,724(b) --
Loss before provision for income taxes (175,776) (86,190)
Provision for income taxes 14,200 5,610
Net loss $(189,976) $(91,800)
Net loss per share $(5.07) $(2.47)
Shares used in computing
net loss per share 37,445,408 37,240,742
Note (a): The results for the third quarter of 2000 include the following
charges (credits) related to ORBCOMM.
Costs of goods sold $2,753
Provision for doubtful accounts 54,948
Equity in losses of affiliates 50,576
Minority interest (1,009)
$107,268
Note (b): The gain on sale of subsidiary stock relates to the initial
public offering of the company's MDA subsidiary in the third
quarter of 2000.
SOURCE Orbital Sciences Corporation
CONTACT: Media: Barron Beneski, 703-406-5000 or beneski.barron@orbital.com; or Investors: Timothy Perrott, 703-406-5997, perrott.timothy@orbital.com, both of Orbital Sciences Corporation/