- Company Completes Two Non-Core Business Unit Sales, Reduces Debt By $150 Million in Last Three Months -Orbital Sciences Corporation (NYSE: ORB) today announced financial results for the second quarter of 2001, reporting net income of $66.6 million, or $1.75 earnings per share, compared to the second quarter 2000 net loss of $42.1 million, or $1.13 loss per share. The company's second quarter 2001 results include a net gain of $90.7 million from the sale of two non-core business units.
During the second quarter of 2001, Orbital sold 16.35 million shares of MacDonald, Dettwiler and Associates Ltd. (MDA) of Canada for approximately $150 million, and in July 2001 the company completed its MDA divestiture with the public sale of its remaining ownership interest of 1.65 million shares for approximately $19 million. Orbital also completed the sale of its Magellan Corporation subsidiary and the company's interest in the Navigation Solutions (NavSol) joint venture in July 2001 for approximately $70 million. The proceeds from these divestitures have been used in part to reduce debt by over $150 million since March.
"In the second quarter, we achieved two significant milestones in executing our plan to restore value for our shareholders. First, we remained on track to improve the basic operating performance of our space technology units, generating good financial results in all core product lines except for a few satellite programs now approaching completion. With the addition of profitable new orders in these areas, our outlook remains positive for their future performance," said Mr. David W. Thompson, Orbital's Chairman and Chief Executive Officer.
"Second, we substantially enhanced the company's financial condition by reducing debt and increasing cash. In less than a year, we have completed three major non-core business unit sales, allowing us to focus full management attention on our core space businesses and raising over $350 million of total proceeds to strengthen our financial position," Mr. Thompson added.
Summarized financial results for the second quarter of 2001 as compared to the second quarter of 2000 are as follows ($ in millions, except per share data):
Three-Months Ended June 30 2001 2000 2000 Actual Actual(1) Adjusted(2) Consolidated Revenues $118.6 $144.7 $128.0 Operating Income/Loss (7.7) (4.4) (6.2) Net Loss From Continuing Operations (24.2) (40.5) (42.3) Net Income/Loss 66.6 (42.1) (43.9) Income/Loss Per Share 1.75 (1.13) (1.17) (1) Adjusted to reflect MDA and Magellan as discontinued operations (2) Adjusted to exclude the results of Fairchild Defense, which was sold in October 2000.Revenue
Orbital's revenues were $118.6 million in the second quarter of 2001, a 7% decrease compared to revenues of $128.0 million for the same period last year (adjusted for the October 2000 sale of the company's Fairchild Defense unit). Several items negatively affected the company's second quarter 2001 revenues as compared to those for the second quarter 2000, including NASA's March 2001 termination for convenience of the X-34 rocketplane contract and the mid-2000 suspension of revenue recognition under the company's procurement agreements with ORBCOMM and ORBIMAGE.
Orbital's second quarter 2001 operating loss was $7.7 million as compared to an operating loss of $6.2 million for the same period last year (adjusted for the October 2000 sale of the company's Fairchild Defense unit). The primary factors contributing to the second quarter 2001 operating loss were continued cost increases on two satellite manufacturing programs that are nearing completion in the third quarter. In addition, second quarter 2001 results include an adjustment of contract revenues associated with the unsuccessful Arianespace S.A. launch of the Orbital-built BSAT-2b satellite. As previously reported, because of an Ariane 5 rocket launch anomaly in mid- July, this satellite did not reach its intended orbit. Orbital believes it has adequate insurance coverage to cover this situation; however, certain amounts anticipated to be recovered under the insurance policy have been excluded from contract revenues, resulting in a reduction of second quarter 2001 revenue and operating income of approximately $3.5 million. Insurance proceeds to be recovered under this policy will be reported as "other income" in the period such proceeds are received.
Net Loss from Continuing Operations
Orbital reported a net loss from continuing operations in the second quarter of 2001 of $24.2 million, a significant improvement over the second quarter 2000 loss from continuing operations of $42.3 million (adjusted for the October 2000 sale of the company's Fairchild Defense unit). This improvement was primarily due to equity losses associated with the company's ORBCOMM satellite communications affiliate and a litigation settlement accrual in the second quarter of 2000, which did not exist in 2001.
New Business Highlights
During the second quarter of 2001, Orbital received new firm orders and options for its space technology products valued at approximately $150 million. As a result, after eliminating backlog associated with MDA, the company's firm contract backlog as of June 30, 2001 was approximately $530 million, and its total contract backlog (including options, undefinitized orders and indefinite-quantity contracts) was approximately $2.94 billion. Additions to total backlog during the second quarter of 2001 included the following:
* Orbital was selected by the National Aeronautics and Space Administration (NASA) for two contracts, totaling approximately $53 million in value, as part of the space agency's Space Launch Initiative (SLI) program. Orbital was selected to design, build and operate the Pegasus-launched Demonstration of Autonomous Rendezvous Technology (DART) space vehicle. In addition, the company was selected to continue its work to develop future space transportation architectures for NASA. * Orbital's Taurus rocket was selected by the Republic of China's National Space Program Office for a $37 million contract to launch the ROCSAT-2 remote sensing satellite. Orbital will use the higher- performance Taurus XL version of its ground-launched rocket for this mission. * Orbital was awarded a contract for $11 million to develop a design concept for a new booster vehicle for the U.S. Government's missile defense initiative. In addition, Orbital will assume the role of primary target vehicle supplier for national missile defense tests using one of its sophisticated suborbital rockets beginning this fall.Operational Highlights
The company carried out 5 space missions in the second quarter and, with several additional operational events in July, has conducted a total of 13 missions so far in 2001. Recent operational highlights include the following:
* After its launch in early March, Orbital's BSAT-2a satellite, the first of two GEO direct-to-home digital television broadcasting platforms built for Japan's Broadcasting Satellite System Corporation (B-SAT), successfully completed its in-orbit testing and was placed into commercial service at the end of April. The spacecraft is currently providing television programming to millions of Japanese households. * Orbital also successfully completed and delivered for launch BSAT-2b, the second of the two B-SAT television broadcasting satellites. Unfortunately, the mid-July launch provided by Arianespace, aboard its Ariane 5 rocket, did not achieve the mission's intended orbit and placed the spacecraft in a non-usable orbit. * The OrbView-4 high-resolution imaging satellite, which Orbital developed and manufactured for ORBIMAGE, completed factory testing in June and was shipped to the mission launch site at Vandenberg Air Force Base, California in July. Orbital also shipped the mission's secondary satellite, the QuikTOMS science spacecraft that the company built for NASA, to Vandenberg in June. Both satellites will be launched aboard the company's Taurus rocket, which is currently scheduled for lift-off in early September. * The NASA-led X-43/Hyper-X Mishap Investigation Board (MIB) is continuing its review of flight data to determine the cause of the failure of the company's Hyper-X launch vehicle that occurred in early June. As a result, NASA has delayed the launch of its HESSI scientific satellite aboard the company's Pegasus rocket, which shares certain systems and technology with the Hyper-X launch vehicle. Once the MIB determines there is no common technical issue between Pegasus and Hyper-X, the HESSI mission will be rescheduled.ORBIMAGE Update
ORBIMAGE is continuing its efforts to restructure its debt, which is non- recourse to Orbital, and to obtain new capital from existing shareholders as well as third parties. Orbital, certain of ORBIMMAGE's other shareholders and its bondholders are currently negotiating terms of a proposed restructuring.
"The back-to-basics strategy that we embarked on 18 months ago was established to increase value for our shareholders by improving core business performance, strengthening our balance sheet and increasing our financial flexibility," said Mr. Thompson. "While significant progress has been made so far this year, we still must complete several critical satellite programs and achieve full cost efficiencies in our core manufacturing businesses to return to the favorable operating margins that we enjoyed in past years," he concluded.
Orbital is one of the world's leading manufacturers of affordable space systems, including satellites, launch vehicles, space sensors and electronics, and advanced 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, 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.
ORBITAL SCIENCES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, in thousands, except share data) For the Quarter Ended June 30, 2001 2000 Revenues $118,648 $144,750 Costs of goods sold 109,345 125,710 Gross Profit 9,303 19,040 Research and development expenses 2,931 2,655 Selling, general and administrative expenses 12,501 19,182 Amortization of goodwill 1,550 1,589 Loss from operations (7,679) (4,386) Other income, net 539 1,535 Interest expense, net of capitalized interest (6,808) (6,264) Equity in losses of affiliates (10,230) (19,907) Litigation settlement -- (11,500) Net loss from continuing operations (24,178) (40,522) Discontinued operations: Loss from operations (6,742) (1,607) Gain on disposal 97,491 -- Income (loss) from discontinued operations 90,749 (1,607) Net income (loss) $66,571 $(42,129) Net income (loss) per common share: Loss from continuing operations $(0.64) $(1.09) Income (loss) from discontinued operations 2.39 (0.04) Net income (loss) $ 1.75 $(1.13) Shares used in computing per share amounts 37,941,317 37,409,264 Net income (loss) per dilutive share: Loss from continuing operations $(0.55) $(0.96) Income (loss) from discontinued operations 2.18 (0.04) Net income (loss) $ 1.63 $(1.00) Shares used in computing per share amounts, assuming dilution 41,525,314 41,053,655 ORBITAL SCIENCES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, in thousands, except share data) For the Six Months Ended June 30, 2001 2000 Revenues $220,673 $282,519 Costs of goods sold 198,826 241,428 Gross Profit 21,847 41,091 Research and development expenses 4,841 5,967 Selling, general and administrative expenses 25,626 34,545 Amortization of goodwill 3,235 3,238 Loss from operations (11,855) (2,659) Other income, net 980 2,418 Interest expense, net of capitalized interest (15,831) (9,502) Equity in losses of affiliates (19,995) (43,251) Litigation settlement -- (11,500) Net loss from continuing operations (46,701) (64,494) Discontinued operations: Loss from operations (5,952) (4,159) Gain on disposal 97,659 -- Income (loss) from discontinued operations 91,707 (4,159) Net income (loss) $45,006 $(68,653) Net income (loss) per common share: Loss from continuing operations $(1.23) $(1.73) Income (loss) from discontinued operations 2.42 (0.11) Net income (loss) $ 1.19 $(1.84) Shares used in computing per share amounts 37,843,923 37,408,382 Net income (loss) per dilutive share: Loss from continuing operations $(1.06) $(1.51) Income (loss) from discontinued operations 2.21 (0.10) Net income (loss) $ 1.14 $(1.61) Shares used in computing per share amounts, assuming dilution 41,516,706 41,157,887 For More Information Contact: Media: Barron Beneski 703-406-5528 firstname.lastname@example.org Investors: Tim Perrott 703-406-5997 email@example.com MAKE YOUR OPINION COUNT - Click Here http://tbutton.prnewswire.com/prn/11690X77777726SOURCE Orbital Sciences Corporation
CONTACT: Media: Barron Beneski, +1-703-406-5528, firstname.lastname@example.org, or Investors: Tim Perrott, +1-703-406-5997, email@example.com, both of Orbital Sciences Corporation