exv99w1
Exhibit 99.1
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For Immediate Release
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For More Information Contact: |
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Barron Beneski (703) 406-5528 |
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Public and Investor Relations |
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beneski.barron@orbital.com |
ORBITAL REPORTS THIRD QUARTER 2007 FINANCIAL RESULTS
— Revenues Increase 46%, Net Income Rises 84%, EPS Climbs to $0.26 —
— Company Raises Guidance for 2007, Provides Preliminary Outlook for 2008 —
(Dulles, VA 18 October 2007) — Orbital Sciences Corporation (NYSE: ORB) today announced its
financial results for the third quarter and first nine months of 2007. Orbital’s third quarter
revenues increased 46% to $289.5 million in 2007, compared to $197.8 million in 2006. The
company’s third quarter operating income rose 54% to $23.2 million in 2007, compared to $15.1
million in 2006. Third quarter net income increased 84% to $15.7 million in 2007, compared to $8.5
million in 2006, and diluted earnings per share increased to $0.26, compared to $0.14 in the third
quarter of 2006. Orbital reported third quarter 2007 free cash flow* of $22.4 million compared to
free cash flow of $21.3 million in the third quarter of 2006.
Commenting on Orbital’s third quarter 2007 results, Mr. David W. Thompson, Chairman and Chief
Executive Officer, said, “The company reported strong revenue growth in all three of our business
segments, boosted profit in most product lines, and generated solid free cash flow in the third
quarter. Following the pattern established earlier in the year, communications satellites, human
space systems and missile defense programs drove our revenue growth in the quarter.”
For the first nine months of 2007, Orbital reported revenues of $791.0 million, up 35% compared to
$587.0 million in the first nine months of 2006. The company’s operating income for the first nine
months of 2007 was $62.3 million, up 30% compared to $47.8 million during the same period in 2006.
Net income for the first nine months of 2007 was $41.0 million, or $0.67 diluted earnings per
share, compared to $27.3 million, or $0.44 diluted earnings per share, in the first nine months of
2006. Orbital generated $43.6 million of free cash flow in the first nine months of 2007, compared
to $75.5 million during the same period in 2006.
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* |
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“Free cash flow” is a non-GAAP financial measure discussed in this release. For
additional details, please refer to the sections of this press release entitled “Cash Flow and
Balance Sheet” and “Disclosure of Non-GAAP Financial Measure.” |
Orbital Sciences Corporation s 21839 Atlantic Blvd., Dulles, VA 20166 s 703-406-5000
Orbital Reports Third Quarter 2007 Financial Results
Page 2
Financial Highlights
Summary financial results for the third quarter of 2007 compared to the third quarter of 2006 were
as follows (in millions, except per share data):
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Third Quarter |
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2007 |
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2006 |
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Revenues |
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$ |
289.5 |
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$ |
197.8 |
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Operating Income |
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23.2 |
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|
15.1 |
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Net Income |
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15.7 |
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8.5 |
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Diluted Net Income per Share |
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$ |
0.26 |
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$ |
0.14 |
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Summary financial results for the first nine months of 2007 compared to the first nine months of
2006 were as follows (in millions, except per share data):
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First Nine Months |
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2007 |
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2006 |
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Revenues |
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$ |
791.0 |
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$ |
587.0 |
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Operating Income |
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62.3 |
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47.8 |
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Net Income |
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41.0 |
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27.3 |
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Diluted Net Income per Share |
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$ |
0.67 |
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$ |
0.44 |
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Revenues
Revenues by segment for the third quarter were as follows (in millions):
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Third Quarter |
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2007 |
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2006 |
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Launch Vehicles |
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$ |
100.3 |
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$ |
71.3 |
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Satellites and Space Systems |
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176.0 |
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117.9 |
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Transportation Management Systems |
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13.8 |
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9.4 |
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Eliminations |
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(0.6 |
) |
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(0.8 |
) |
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Total Revenues |
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$ |
289.5 |
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$ |
197.8 |
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Orbital’s third quarter 2007 revenues were $289.5 million, up 46% compared to third quarter 2006
revenues of $197.8 million, due to increased revenues in all business segments. Satellites and
space systems segment revenues increased $58.0 million, or 49%, driven by contract activity on the
Orion human spacecraft program for NASA which began in late 2006, and growth in the communications
satellites product line that was mainly due to activity on recently awarded contracts. Launch
vehicles segment revenues increased $29.0 million, or 41%, principally due to higher target and
interceptor vehicle revenues driven by increased contract activity on several missile defense
programs. Transportation management systems segment revenues increased $4.4
million, or 46%, largely due to an increase in product sales supporting follow-on and replacement
demand for public transit fleet management systems.
—more—
Orbital Reports Third Quarter 2007 Financial Results
Page 3
Revenues by segment for the first nine months were as follows (in millions):
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First Nine Months |
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2007 |
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2006 |
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Launch Vehicles |
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$ |
290.8 |
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$ |
230.4 |
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Satellites and Space Systems |
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466.5 |
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333.4 |
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Transportation Management Systems |
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36.2 |
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26.8 |
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Eliminations |
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(2.5 |
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(3.6 |
) |
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Total Revenues |
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$ |
791.0 |
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$ |
587.0 |
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For the first nine months of 2007, Orbital reported $791.0 million in revenues, up 35% compared to
the same period last year due to increased revenues in all business segments. Satellites and space
systems segment revenues increased $133.1 million, or 40%, driven by contract activity on the Orion
program which began in late 2006 and growth in the communications satellites product line mainly
due to activity on recently awarded contracts. Launch vehicles segment revenues increased $60.4
million, or 26%, primarily due to the same factors that drove the increase in quarterly results,
most notably higher target vehicle product line revenue. Transportation management systems segment
revenues increased $9.4 million, or 35%, primarily due to an increase in product sales supporting
follow-on and replacement demand for fleet management systems.
Operating Income
Operating income by segment for the third quarter was as follows (in millions):
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Third Quarter |
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2007 |
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2006 |
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Launch Vehicles |
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$ |
10.5 |
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$ |
7.4 |
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Satellites and Space Systems |
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11.4 |
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7.1 |
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Transportation Management Systems |
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1.3 |
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0.6 |
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Total Operating Income |
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$ |
23.2 |
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$ |
15.1 |
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Orbital reported operating income of $23.2 million in the third quarter of 2007, up 54% over the
third quarter of 2006. This growth was due to a $4.3 million, or 61%, operating income increase in
the satellites and space systems segment, a $3.1 million, or 38%, operating income increase in the
launch vehicles segment and a $0.7 million, or 115%, operating income increase in the
transportation management systems segment. The increase in operating income in the satellites and
space systems segment was principally due to increased contract activity on the Orion program and
new communications satellite programs. The increase in launch vehicles segment operating income
was primarily due to increased activity levels on target and interceptor vehicle programs. The
growth in the transportation management systems segment was largely attributable to the increase in
product sales mentioned above.
—more—
Orbital Reports Third Quarter 2007 Financial Results
Page 4
Operating income by segment for the first nine months was as follows (in millions):
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First Nine Months |
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2007 |
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2006 |
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Launch Vehicles |
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$ |
28.9 |
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$ |
25.3 |
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Satellites and Space Systems |
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31.1 |
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21.0 |
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Transportation Management Systems |
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2.3 |
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1.5 |
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Total Operating Income |
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$ |
62.3 |
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$ |
47.8 |
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Orbital reported operating income of $62.3 million in the first nine months of 2007, up 30% over
the first nine months of 2006. This increase was due to a $10.1 million, or 48%, increase in the
satellites and space systems segment, a $3.6 million, or 14%, increase in the launch vehicles
segment and a $0.7 million, or 49%, increase in the transportation management systems segment. The
increases in operating income in all three segments were generally attributable to the same factors
described above that drove the improvements in the third quarter results.
Net Income
Net income for the third quarter of 2007 was $15.7 million, or $0.26 diluted earnings per share, up
from $8.5 million, or $0.14 diluted earnings per share, in the third quarter of 2006. Net income
for the first nine months of 2007 was $41.0 million, or $0.67 diluted earnings per share, compared
to $27.3 million, or $0.44 diluted earnings per share, in the same period of 2006.
Interest expense for the third quarter and first nine months of 2007 decreased to $1.3 million and
$3.6 million, respectively, compared to $3.1 million and $9.3 million, respectively, in the same
periods in 2006. The reduction in interest expense is due to lower interest rates on long-term
debt as a result of Orbital’s December 2006 refinancing transaction.
Diluted weighted-average shares outstanding decreased to 60.9 million in the third quarter of 2007
compared to 62.9 million in the third quarter of 2006 due to share repurchases made by the company.
Diluted weighted-average shares outstanding in the first nine months of 2007 decreased
to 61.0 million compared to 62.6 million in the first nine months of 2006, also driven by company
share repurchases.
—more—
Orbital Reports Third Quarter 2007 Financial Results
Page 5
Cash Flow and Balance Sheet
Orbital reported free cash flow of $22.4 million for the third quarter of 2007. The company
repurchased approximately 700,000 shares of its common stock for $15.0 million in the third quarter
of 2007. This stock repurchase is part of a 12-month, $50 million securities repurchase program
authorized by the company’s Board of Directors in April 2007. Orbital’s unrestricted cash and
marketable securities balances were $197.8 million and $34.5 million, respectively, as of September
30, 2007.
The company’s cash flow was as follows (in millions):
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2007 |
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Third Quarter |
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First Nine Months |
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Net Cash Provided by Operating Activities |
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$ |
26.9 |
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$ |
56.2 |
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Capital Expenditures |
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(4.5 |
) |
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(12.6 |
) |
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Free Cash Flow |
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22.4 |
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43.6 |
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Net Purchases of Marketable Securities |
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(34.5 |
) |
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(34.5 |
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Repurchase of Common Stock |
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(15.0 |
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(25.0 |
) |
Proceeds from Issuance of Common Stock |
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3.2 |
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10.2 |
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Other |
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2.2 |
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3.7 |
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Net Decrease in Cash |
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(21.7 |
) |
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(2.0 |
) |
Beginning Cash Balance |
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219.5 |
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199.8 |
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Ending Cash Balance |
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$ |
197.8 |
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$ |
197.8 |
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Summary balance sheet data as of September 30, 2007 was as follows (in millions):
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Assets |
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Liabilities and Equity |
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Cash |
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$ |
197.8 |
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Current Liabilities |
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$ |
206.4 |
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Other Current Assets |
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312.6 |
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Long-Term Debt |
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143.8 |
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Non-Current Assets |
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268.5 |
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Stockholders’ Equity |
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428.7 |
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Total Assets |
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$ |
778.9 |
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Total Liabilities and Equity |
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$ |
778.9 |
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New Business Highlights
During the third quarter of 2007, Orbital received approximately $420 million in new firm and
option contract bookings. In addition, the company received approximately $35 million of option
exercises under existing contracts. Year-to-date, Orbital received approximately $1.51 billion in
new firm and option contract bookings, and approximately $240 million of option exercises under
existing contracts. As of September 30, 2007, the company’s firm contract backlog was
approximately $1.96 billion and its total backlog (including options, indefinite-quantity contracts
and undefinitized orders) was approximately $4.06 billion.
—more—
Orbital Reports Third Quarter 2007 Financial Results
Page 6
Operational Highlights
The company conducted four spacecraft and launch vehicle missions in the third quarter. These
operational events included the launch and preliminary check-out of Dawn, Orbital’s first
interplanetary spacecraft, developed for NASA’s Jet Propulsion Laboratory. In addition, the
company’s long-range missile interceptor, the Orbital Boost Vehicle, achieved its sixth successful
flight test as part of a Missile Defense Agency (MDA) national missile defense exercise. Orbital
also carried out two MDA target vehicle launches in the third quarter.
During the third quarter, the company also delivered two satellites, two space payloads and five
launch vehicles for future missions, including two OBV interceptors for operational deployments in
California and Alaska.
In early October, two Orbital-built communications satellites, Intelsat-11 for Intelsat, Ltd. and
Optus D2 for Optus Networks, Pty., were launched and are now undergoing in-orbit commissioning.
During the remainder of 2007, the company expects to carry out one or two additional satellite
launches and three to five additional rocket launches, and to complete and deliver four space
payloads and several more launch vehicles for future missions.
2007 Financial Guidance
Orbital updated its financial guidance for full-year 2007, increasing its forecast for revenues,
earnings per share and free cash flow as follows:
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Current |
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Previous |
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Revenues (in millions)
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~$1,050
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$975 — $1,000 |
Operating Income Margin
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~8.0%
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8.25% — 8.75% |
Diluted Earnings Per Share
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$0.89 — $0.91
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$0.82 — $0.87 |
Free Cash Flow (in millions)
|
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$65 — $70
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$60 — $65 |
—more—
Orbital Reports Third Quarter 2007 Financial Results
Page 7
2008 Preliminary Outlook
The company provided its preliminary financial guidance for 2008, as summarized in the table below:
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2008 |
Revenues (in millions)
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$1,075 — $1,100 |
Operating Income Margin
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8.25% — 8.50% |
Diluted Earnings Per Share
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$0.93 — $0.98 |
Free Cash Flow (in millions)
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$75 — $80 |
Orbital is considering the merits of a major new product development program to increase the
payload capacity of its space launch vehicle platforms to include a medium-capacity rocket called
Taurus II. Orbital believes that this new rocket could substantially expand the company’s space
launch market, yielding significant potential revenue growth in 2009 and beyond. However, the
Taurus II program would entail a substantial development effort, the financial impact of which is
not reflected in the 2008 guidance above. Orbital anticipates that this effort would require a net
$40 million to $45 million use of cash in 2008. In addition, proceeding with the Taurus II program
is expected to result in a revenue increase of up to $25 million and a $0.12 to $0.16 reduction in
diluted earnings per share next year. The company plans to update its 2008 guidance, including its
intentions with respect to the Taurus II program, when it reports fourth quarter and full-year 2007
results early in 2008.
Disclosure of Non-GAAP Financial Measure
Free cash flow is defined as GAAP (Generally Accepted Accounting Principles) net cash provided by
operating activities (the most directly comparable GAAP financial measure) less capital
expenditures for property, plant and equipment. A quantitative reconciliation of free cash flow to
net cash provided by operating activities is included above in the section entitled “Cash Flow and
Balance Sheet.” Management believes that the company’s presentation of free cash flow is useful
because it provides investors with an important perspective on the company’s liquidity, financial
flexibility and ability to fund operations and service debt. Orbital does not intend for this
non-GAAP financial measure to be considered in isolation or as a substitute for the related GAAP
measure. Other companies may define this measure differently.
About Orbital
Orbital develops and manufactures small rockets and space systems for commercial, military and
civil government customers. The company’s primary products are satellites and launch vehicles,
including low-orbit, geosynchronous-orbit and planetary spacecraft for communications, remote
sensing, scientific and defense missions; human-rated space systems for Earth-orbit, lunar and
other missions; ground- and air-launched rockets that deliver satellites into orbit; and missile
defense systems that are used as interceptor and target vehicles. Orbital also offers
space-related
—more—
Orbital Reports Third Quarter 2007 Financial Results
Page 8
technical services to government agencies and develops and builds satellite-based transportation
management systems for public transit agencies and private vehicle fleet operators.
“Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995
Certain statements in this press release may be forward-looking in nature or “forward-looking
statements” as defined in the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are subject to risks, trends and uncertainties that could cause the
actual results or performance of the company to be materially different from the forward-looking
statement. Uncertainty surrounding factors such as continued government support and funding for
key space and defense programs, new product development programs, product performance and market
acceptance of products and technologies, the outcome of the government investigation, as well as
other risk factors and business considerations described in the company’s SEC filings, including
its annual report on Form 10-K, could impact Orbital’s actual financial and operational results.
Orbital assumes no obligation for updating the information contained in this press release.
A transcript of the earnings teleconference call will be available on Orbital’s website at
http://www.orbital.com/Investor.
— attachments below —
—more—
Orbital Reports Third Quarter 2007 Financial Results
Page 9
ORBITAL SCIENCES CORPORATION
Condensed Consolidated Income Statements
(in thousands, except per share data)
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Third Quarter |
|
|
|
2007 |
|
|
2006* |
|
|
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|
|
|
|
|
|
|
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Revenues |
|
$ |
289,456 |
|
|
$ |
197,840 |
|
Costs of goods sold |
|
|
241,541 |
|
|
|
159,991 |
|
|
|
|
|
|
|
|
Gross profit |
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|
47,915 |
|
|
|
37,849 |
|
Research and development expenses |
|
|
4,297 |
|
|
|
2,559 |
|
Selling, general and administrative expenses |
|
|
20,382 |
|
|
|
20,177 |
|
|
|
|
|
|
|
|
Income from operations |
|
|
23,236 |
|
|
|
15,113 |
|
Interest expense |
|
|
(1,341 |
) |
|
|
(3,097 |
) |
Interest income and other |
|
|
3,497 |
|
|
|
2,703 |
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
25,392 |
|
|
|
14,719 |
|
Income taxes |
|
|
(9,714 |
) |
|
|
(6,189 |
) |
|
|
|
|
|
|
|
Net income |
|
$ |
15,678 |
|
|
$ |
8,530 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per share |
|
$ |
0.26 |
|
|
$ |
0.14 |
|
|
|
|
|
|
|
|
Diluted net income per share |
|
$ |
0.26 |
|
|
$ |
0.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing basic net income per share |
|
|
59,176 |
|
|
|
60,390 |
|
Shares used in computing diluted net income per share |
|
|
60,874 |
|
|
|
62,861 |
|
|
|
|
* |
|
The company’s 2006 financial statements have been restated as required by a new
accounting standard pertaining to the company’s L-1011 airplane which is used in the Pegasus launch
vehicle program. The effect of the new accounting standard is not material to 2006 or 2007
financial statements. |
—more—
Orbital Reports Third Quarter 2007 Financial Results
Page 10
ORBITAL SCIENCES CORPORATION
Condensed Consolidated Income Statements
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
First Nine Months |
|
|
|
2007 |
|
|
2006* |
|
|
Revenues |
|
$ |
790,951 |
|
|
$ |
587,015 |
|
Costs of goods sold |
|
|
656,835 |
|
|
|
472,891 |
|
|
|
|
|
|
|
|
Gross profit |
|
|
134,116 |
|
|
|
114,124 |
|
Research and development expenses |
|
|
11,723 |
|
|
|
7,261 |
|
Selling, general and administrative expenses |
|
|
60,092 |
|
|
|
59,033 |
|
|
|
|
|
|
|
|
Income from operations |
|
|
62,301 |
|
|
|
47,830 |
|
Interest expense |
|
|
(3,606 |
) |
|
|
(9,287 |
) |
Interest income and other |
|
|
9,563 |
|
|
|
8,329 |
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
68,258 |
|
|
|
46,872 |
|
Income taxes |
|
|
(27,298 |
) |
|
|
(19,586 |
) |
|
|
|
|
|
|
|
|
Net income |
|
$ |
40,960 |
|
|
$ |
27,286 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per share |
|
$ |
0.69 |
|
|
$ |
0.48 |
|
|
|
|
|
|
|
|
Diluted net income per share |
|
$ |
0.67 |
|
|
$ |
0.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing basic net income per share |
|
|
59,249 |
|
|
|
57,272 |
|
Shares used in computing diluted net income per share |
|
|
60,998 |
|
|
|
62,618 |
|
|
|
|
* |
|
The company’s 2006 financial statements have been restated as required by a new
accounting standard pertaining to the company’s L-1011 airplane which is used in the Pegasus launch
vehicle program. The effect of the new accounting standard is not material to 2006 or 2007
financial statements. |
—more—
Orbital Reports Third Quarter 2007 Financial Results
Page 11
ORBITAL SCIENCES CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
|
|
2007 |
|
|
2006* |
|
|
Assets |
|
|
|
|
|
|
|
|
Cash |
|
$ |
197,752 |
|
|
$ |
199,751 |
|
Marketable securities |
|
|
34,500 |
|
|
|
— |
|
Receivables, net |
|
|
189,015 |
|
|
|
165,235 |
|
Inventory |
|
|
30,278 |
|
|
|
30,053 |
|
Deferred income taxes, net |
|
|
48,028 |
|
|
|
42,880 |
|
Other current assets |
|
|
10,797 |
|
|
|
11,794 |
|
|
|
|
|
|
|
|
Total current assets |
|
|
510,370 |
|
|
|
449,713 |
|
Property, plant and equipment, net |
|
|
93,327 |
|
|
|
93,662 |
|
Goodwill |
|
|
55,551 |
|
|
|
55,551 |
|
Deferred income taxes, net |
|
|
109,706 |
|
|
|
135,701 |
|
Other non-current assets |
|
|
9,908 |
|
|
|
9,349 |
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
778,862 |
|
|
$ |
743,976 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
Short-term borrowings |
|
$ |
— |
|
|
$ |
551 |
|
Accounts payable and accrued expenses |
|
|
148,591 |
|
|
|
122,421 |
|
Deferred revenues |
|
|
57,800 |
|
|
|
81,704 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
206,391 |
|
|
|
204,676 |
|
Long-term debt |
|
|
143,750 |
|
|
|
143,750 |
|
Total stockholders’ equity |
|
|
428,721 |
|
|
|
395,550 |
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders’ Equity |
|
$ |
778,862 |
|
|
$ |
743,976 |
|
|
|
|
|
|
|
|
|
|
|
* |
|
The company’s 2006 financial statements have been restated as required by a new
accounting standard pertaining to the company’s L-1011 airplane which is used in the Pegasus launch
vehicle program. The effect of the new accounting standard is not material to 2006 or 2007
financial statements. |
—more—
Orbital Reports Third Quarter 2007 Financial Results
Page 12
ORBITAL SCIENCES CORPORATION
Condensed Consolidated Statements of Cash Flows
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
September 30, 2007 |
|
|
|
Third Quarter |
|
|
Nine Months |
|
|
Net income |
|
$ |
15,678 |
|
|
$ |
40,960 |
|
Depreciation |
|
|
4,472 |
|
|
|
12,580 |
|
Deferred taxes |
|
|
6,785 |
|
|
|
20,847 |
|
Changes in assets and liabilities |
|
|
962 |
|
|
|
(20,977 |
) |
Other |
|
|
(987 |
) |
|
|
2,793 |
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
26,910 |
|
|
|
56,203 |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(4,489 |
) |
|
|
(12,610 |
) |
Net purchases of marketable securities |
|
|
(34,500 |
) |
|
|
(34,500 |
) |
Change in cash restricted for letters of credit, net |
|
|
1,000 |
|
|
|
— |
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(37,989 |
) |
|
|
(47,110 |
) |
|
|
|
|
|
|
|
Repurchase of common stock |
|
|
(15,000 |
) |
|
|
(25,000 |
) |
Net proceeds from issuance of common stock |
|
|
3,202 |
|
|
|
10,241 |
|
Other |
|
|
1,180 |
|
|
|
3,667 |
|
|
|
|
|
|
|
|
Net cash used in financing activities |
|
|
(10,618 |
) |
|
|
(11,092 |
) |
|
|
|
|
|
|
|
Net decrease in cash |
|
|
(21,697 |
) |
|
|
(1,999 |
) |
Cash, beginning of period |
|
|
219,449 |
|
|
|
199,751 |
|
|
|
|
|
|
|
|
Cash, end of period |
|
$ |
197,752 |
|
|
$ |
197,752 |
|
|
|
|
|
|
|
|
# # #