DULLES, Va., Apr 24, 2003 /PRNewswire-FirstCall via COMTEX/ -- Orbital Sciences Corporation (NYSE: ORB) 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 $0.05 per diluted share, in the first quarter of 2002.
"We are very pleased to begin 2003 with another solid quarter of revenue growth, margin expansion and strong cash flow, along with continued operational excellence, as Orbital sustained the momentum the company built in 2002 into the first quarter of this year," said Mr. David W. Thompson, Orbital's Chairman and Chief Executive Officer. "Strong operating results in our launch vehicle and advanced programs segment, coupled with increased profitability in our satellite and related space systems segment, propelled the improvement in our first quarter results."
Summary financial results for the first quarter of 2003 as compared to the first quarter of 2002 were as follows ($ 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.
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.
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 firstname.lastname@example.org
SOURCE Orbital Sciences Corporation
Barron Beneski, Public and Investor Relations of Orbital Sciences Corporation, +1-703-406-5528 or email@example.com