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 2005 Financial Results
— Results Reflect Solid Earnings and Cash Flow —
— Firm Backlog Increases Over 50% on Near-Record New Orders —
— 2005 Financial Guidance Updated; Preliminary Guidance Provided for 2006 —
(Dulles, VA 20 October 2005) — Orbital Sciences Corporation (NYSE: ORB) today announced financial
results for the third quarter of 2005 and first nine months of the year. Orbital reported third
quarter 2005 revenues of $159.3 million compared to third quarter 2004 revenues of $171.7 million.
The company’s third quarter 2005 operating income was $12.2 million as compared to third quarter
2004 operating income of $14.3 million.
Orbital’s net income was $6.8 million, or $0.11 diluted earnings per share, in the third quarter
of 2005, as compared to adjusted net income* of $6.9 million, or $0.11 adjusted diluted earnings
per share*, in the third quarter of 2004. The company also reported free cash flow* of $10.4
million in the third quarter of 2005 and firm backlog of $1.20 billion as of September 30, 2005.
Commenting on the third quarter’s financial results, Orbital’s Chairman and Chief Executive
Officer, Mr. David W. Thompson, said, “In the third quarter, Orbital continued several positive
trends that have characterized our financial results over the last few years. First, our new
business activity in the quarter was outstanding, representing one of the highest three-month
periods for new orders in the company’s 23-year history. Second, Orbital also maintained its
strong free cash flow performance, which we expect to continue into the fourth quarter and
throughout 2006. Building on these foundations, we are quite optimistic for another good year in
2006, with robust revenue growth, improving profit margins and solid free cash flow generation
expected to be achieved next year.”
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* |
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“Adjusted net income,” “adjusted diluted earnings per share” and “free cash flow” are non-GAAP
financial measures discussed throughout this release. For additional details, please refer to the
section of this press release entitled “Disclosure of Non-GAAP Financial Measures.” |
Orbital Reports Third Quarter 2005 Financial Results
Page 2
Financial Highlights
Summary financial results for the third quarter of 2005 as compared to the third quarter of 2004
were as follows:
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Quarter Ended September 30, |
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($ in millions, except per share data) |
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2005 |
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2004 |
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Revenues |
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$ |
159.3 |
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$ |
171.7 |
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Operating Income |
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|
12.2 |
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|
14.3 |
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Net Income |
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6.8 |
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11.4 |
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Adjusted Net Income |
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n/a |
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6.9 |
(1) |
Diluted Earnings Per Share |
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|
0.11 |
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|
0.18 |
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Adjusted Diluted Earnings Per Share |
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$ |
n/a |
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$ |
0.11 |
(1) |
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|
(1) |
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Adjusted in 2004 to include income tax expense the company would have recorded had it
been recording income tax in the same manner as in 2005. |
Summary financial results for the first nine months of 2005 as compared to the first nine
months of 2004 were as follows:
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Nine Months Ended September 30, |
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($ in millions, except per share data) |
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2005 |
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2004 |
|
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Revenues |
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$ |
503.9 |
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$ |
500.8 |
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Operating Income |
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39.2 |
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43.0 |
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Net Income |
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20.5 |
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33.9 |
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Adjusted Net Income |
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n/a |
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20.8 |
(1) |
Diluted Earnings Per Share |
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0.33 |
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|
0.52 |
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Adjusted Diluted Earnings Per Share |
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$ |
n/a |
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$ |
0.32 |
(1) |
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(1) |
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Adjusted in 2004
to include income tax expense the
company would have recorded had it
been recording income tax in the same
manner as in 2005. |
Revenues
Revenues by segment for the third quarter of 2005 were as follows:
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Quarter Ended September 30, |
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($ in millions) |
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2005 |
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2004 |
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Launch Vehicles |
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$ |
79.8 |
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$ |
80.2 |
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Satellites and Related Space Systems |
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74.8 |
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86.5 |
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Transportation Management Systems |
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6.4 |
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7.1 |
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Eliminations |
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(1.7 |
) |
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(2.1 |
) |
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Total Revenues |
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$ |
159.3 |
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$ |
171.7 |
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Orbital Reports Third Quarter 2005 Financial Results
Page 3
Orbital’s third quarter 2005 revenues were $159.3 million, compared to third quarter 2004 revenues
of $171.7 million. This decrease was driven by lower satellites and related space systems segment
revenues related primarily to a decrease in the science, technology and defense satellites product
line, partially offset by higher communications satellites product line revenues. The decline in
science, technology and defense satellites product line revenues was largely due to lower activity
on certain government contracts that are reaching the latter stages of production and are expected
to be substantially complete by year-end. In the company’s launch vehicles segment, revenues
declined marginally due to decreases in the space launch vehicles and target launch vehicles
product lines, largely offset by revenue growth in the interceptor launch vehicles product line.
Revenues in the transportation management systems segment decreased slightly, impacted by
completion or near-completion of certain contracts partially offset by revenues from several
recently awarded contracts.
Revenues by segment for the first nine months of 2005 were as follows:
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Nine Months Ended September 30, |
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($ in millions) |
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2005 |
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2004 |
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Launch Vehicles |
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$ |
247.6 |
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$ |
243.2 |
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Satellites and Related Space Systems |
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242.1 |
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241.7 |
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Transportation Management Systems |
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19.7 |
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22.4 |
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Eliminations |
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(5.5 |
) |
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(6.5 |
) |
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Total Revenues |
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$ |
503.9 |
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$ |
500.8 |
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For the first nine months of 2005, Orbital reported $503.9 million in revenues, up from $500.8
million for the same period last year, primarily due to revenue increases in the launch vehicles
and satellites and related space systems segments, partially offset by a slight revenue decrease
in the transportation management systems segment. The launch vehicles segment growth was driven
by higher revenues in the interceptor launch vehicles and target launch vehicles product lines,
partially offset by lower revenues from the space launch vehicles product line. The satellites
and related space systems segment growth was driven by higher revenues from science, technology
and defense satellite contracts, offset partially by lower revenues in the company’s
communications satellites product line. Transportation management systems segment revenues
decreased due to the same factors impacting the third quarter results.
Operating Income
Operating income by segment for the third quarter of 2005 was as follows:
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Quarter Ended September 30, |
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($ in millions) |
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2005 |
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2004 |
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Launch Vehicles |
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$ |
8.6 |
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$ |
8.1 |
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Satellites and Related Space Systems |
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3.1 |
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5.9 |
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Transportation Management Systems |
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0.5 |
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0.3 |
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Corporate and Other |
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— |
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— |
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Total Operating Income |
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$ |
12.2 |
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$ |
14.3 |
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Orbital Reports Third Quarter 2005 Financial Results
Page 4
Orbital reported operating income of $12.2 million in the third quarter of 2005, compared to
operating income of $14.3 million in the same quarter of 2004, primarily due to a $2.8 million
decrease in satellites and related space systems segment operating income. This decrease was due
primarily to lower operating results in the communications satellites product line because of cost
growth caused by launch delays on certain contracts. Launch vehicles segment operating income
increased $0.5 million largely due to higher interceptor launch vehicles operating income,
partially offset by lower space launch vehicles and target launch vehicles product lines operating
income.
Operating income by segment for the first nine months of 2005 was as follows:
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Nine Months Ended September 30, |
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($ in millions) |
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2005 |
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2004 |
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Launch Vehicles |
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$ |
26.3 |
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$ |
22.2 |
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Satellites and Related Space Systems |
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11.4 |
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17.4 |
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Transportation Management Systems |
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1.5 |
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0.9 |
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Corporate and Other |
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— |
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2.5 |
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Total Operating Income |
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$ |
39.2 |
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$ |
43.0 |
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Orbital reported operating income of $39.2 million in the first nine months of 2005 compared to
$43.0 million in the same period of 2004. The first half of 2004 included a $2.5 million
non-recurring gain from the sale of notes received from a former affiliate reported in the
corporate and other segment. Income from Orbital’s operating segments, which excludes this
non-recurring gain, decreased $1.3 million period over period, primarily due to a $6.0 million
decrease in the satellites and related space systems segment income, partially offset by a $4.1
million increase in launch vehicles segment income. The operating income decrease in the
satellites and related space systems segment was largely due to cost growth on certain contracts,
partially offset by a $2.7 million favorable operating profit adjustment in 2005 pertaining to a
cash receipt from a customer and former affiliate. The increase in launch vehicles segment income
was largely due to improved operating income in the interceptor launch vehicles product line and
the absence in 2005 of an unfavorable profit adjustment in 2004 on a Taurus space launch vehicle
contract, partially offset by cost growth in 2005 on certain contracts.
Net Income
Net income in the third quarter of 2005 was $6.8 million, or $0.11 diluted earnings per share,
compared to $6.9 million adjusted net income for the third quarter of 2004, or $0.11 adjusted
diluted earnings per share. Net income in the first nine months of 2005 was $20.5 million, or
$0.33 diluted earnings per share, compared to $20.8 million adjusted net income for the first nine
months of 2004, or $0.32 adjusted diluted earnings per share.
Cash Flow and Balance Sheet
As of September 30, 2005, Orbital’s unrestricted cash balance was $146.4 million. The company
generated $10.4 million of free cash flow for the third quarter of 2005 and $32.5 million for the
first nine months of 2005.
Orbital Reports Third Quarter 2005 Financial Results
Page 5
The company’s cash flow was as follows:
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Third |
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First Nine |
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Quarter |
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Months of |
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($ in millions) |
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2005 |
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2005 |
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Net Cash Provided by Operating Activities |
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$ |
13.2 |
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$ |
43.4 |
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Capital Expenditures |
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(2.8 |
) |
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(10.9 |
) |
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Free Cash Flow |
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10.4 |
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32.5 |
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Proceeds from Issuance of Common Stock |
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4.2 |
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5.5 |
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Repurchase of Common Stock |
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— |
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(20.0 |
) |
Other |
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— |
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2.9 |
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Net Increase in Cash |
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14.6 |
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20.9 |
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Beginning Cash Balance |
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131.8 |
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125.5 |
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Ending Cash Balance |
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$ |
146.4 |
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$ |
146.4 |
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Summary balance sheet data as of September 30, 2005 was as follows:
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Assets |
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Liabilities and Equity |
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($ in millions) |
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Cash and Equivalents |
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$ |
146.4 |
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Short-Term Debt |
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$ |
0.1 |
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Other Current Assets |
|
|
186.1 |
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Other Current Liabilities |
|
|
128.2 |
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Property and Equipment |
|
|
82.8 |
|
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Long-Term Debt |
|
|
126.5 |
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Goodwill |
|
|
55.6 |
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Other Non-Current Liabilities |
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|
0.1 |
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Other Assets |
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|
184.2 |
|
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Stockholders’ Equity |
|
|
400.2 |
|
|
|
|
|
|
|
|
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Total Assets |
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$ |
655.1 |
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Total Liabilities and Equity |
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$ |
655.1 |
|
New Business Highlights
During the third quarter of 2005, Orbital booked approximately $195 million in new firm orders and
$260 million in new option orders. In addition, the company received approximately $120 million
of option exercises under existing contracts. As of September 30, 2005, the company’s firm
contract backlog was approximately $1.20 billion, up 52% over its value a year ago. Total
backlog (including options, indefinite-quantity contracts and undefinitized orders) was
approximately $2.96 billion, up 24% compared to the third quarter 2004 level.
Operational Highlights
In the third quarter of 2005, Orbital conducted eight space and missile system operations. These
included four Vandal short-range target vehicles for the U.S. Navy, two medium-range target
vehicles for the U.S. Missile Defense Agency and a Minotaur space launch vehicle for the U.S. Air
Force. The company also launched and deployed the Galaxy 14 commercial communications satellite
for PanAmSat Corporation in the quarter. In addition, Orbital delivered several space and launch
system products for future deployment, including two commercial communications
Orbital Reports Third Quarter 2005 Financial Results
Page 6
satellites, two short-range target vehicles and two cargo transport containers to be used aboard
the International Space Station.
Since the beginning of October, Orbital has completed three operational milestones, including the
first operational flight of the “Coyote” supersonic sea-skimming target vehicle, the launch and
deployment of the Galaxy 15 commercial communications satellite and the delivery of one Orbital
Boost Vehicle (OBV) missile defense interceptor. Including these activities, Orbital expects to
complete a total of ten operational events and major product deliveries in the fourth quarter,
comprising three target vehicle launches, one missile defense interceptor flight test, four OBV
interceptor booster deliveries, one communications satellite launch and deployment, and one
defense satellite delivery.
2005 Financial Guidance Update and 2006 Preliminary Targets
The company has updated its 2005 guidance indicating that it expects full year 2005 revenues to be
in the $690 to $700 million range and operating income margin to be about 7.5%. Diluted earnings
per share are expected to be in the $0.42 to $0.44 range with about 62 million average diluted
shares. Free cash flow is forecast to be in the $50 to $55 million range.
The company also provided its preliminary financial targets for 2006, indicating that it
anticipates full year 2006 revenues to be in the $750 to $770 million range and operating income
margin in the 7.75% to 8.25% range. Diluted earnings per share in 2006 are expected to be in the
$0.50 to $0.55 range, based on 60 to 62 million of average diluted shares. The company expects to
generate $50 to $55 million in free cash flow for 2006. The company plans to update its outlook
for 2006 when it reports fourth quarter and full-year 2005 results early in 2006.
Disclosure of Non-GAAP Financial Measures
The following are provided as definitions of non-GAAP (Generally Accepted Accounting Principles)
financial measures used by the company within this press release. Orbital does not intend for the
information to be considered in isolation or as a substitute for the related GAAP measures. Other
companies may define these measures differently.
Free cash flow is defined as GAAP net cash provided by operating activities (the most directly
comparable GAAP financial measure) less capital expenditures for property, plant and equipment.
Management believes that free cash flow provides investors with an important perspective on the
company’s liquidity, financial flexibility and ability to fund operations and service debt.
Adjusted net income is defined as GAAP net income (the most directly comparable GAAP financial
measure) less income tax expense that the company would have recorded had it been recording income
tax expense in the same manner as in 2005. The company records substantially higher income tax
expense in 2005, comprised primarily of non-cash income taxes, as a result of the company’s
reversal of most of its deferred tax valuation allowance in the fourth quarter of 2004. Adjusted
diluted earnings per share is equal to adjusted net income divided by diluted shares. These
measures are provided so investors can more easily compare 2005 net income to
2004 net income since income tax expense in 2004 was not recorded in the same manner as in 2005.
The reconciliation of the reported net income to adjusted net income is as follows:
Orbital Reports Third Quarter 2005 Financial Results
Page 7
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Quarter Ended |
|
Nine Months Ended |
($ in millions, except share data) |
|
September 30, 2004 |
|
September 30, 2004 |
|
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|
|
|
Reported Net Income
|
|
$ |
11.4 |
|
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$ |
33.9 |
|
Less Income Tax Expense
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(4.5 |
) |
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(13.1 |
) |
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Adjusted Net Income
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|
$ |
6.9 |
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$ |
20.8 |
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Adjusted Diluted Earnings Per Share
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|
$ |
0.11 |
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$ |
0.32 |
|
About Orbital
Orbital develops and manufactures small space and rocket 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; 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 technical services to government agencies and develops and builds
satellite-based transportation management systems for public transit agencies and private vehicle
fleet operators.
A transcript of the third quarter earnings teleconference call will be available on Orbital’s
website at http://www.orbital.com/Investor
“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, 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 the 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.
— attachments below —
Orbital Reports Third Quarter 2005 Financial Results
Page 8
ORBITAL SCIENCES CORPORATION
Condensed Consolidated Income Statements
(unaudited)
|
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|
|
|
Quarter Ended September 30, |
|
($ in thousands, except per share data) |
|
2005 |
|
|
2004 |
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
159,324 |
|
|
$ |
171,695 |
|
Costs of goods sold |
|
|
129,211 |
|
|
|
142,458 |
|
|
|
|
|
|
|
|
Gross profit |
|
|
30,113 |
|
|
|
29,237 |
|
Research and development expenses |
|
|
1,077 |
|
|
|
1,457 |
|
Selling, general and administrative expenses |
|
|
16,803 |
|
|
|
13,457 |
|
|
|
|
|
|
|
|
Income from operations |
|
|
12,233 |
|
|
|
14,323 |
|
Other income, net |
|
|
1,443 |
|
|
|
521 |
|
Interest expense |
|
|
(2,961 |
) |
|
|
(2,847 |
) |
Debt extinguishment expense |
|
|
— |
|
|
|
(577 |
) |
|
|
|
|
|
|
|
Income before provision for income taxes |
|
|
10,715 |
|
|
|
11,420 |
|
Provision for income taxes |
|
|
(3,905 |
) |
|
|
(25 |
) |
|
|
|
|
|
|
|
Net income |
|
$ |
6,810 |
|
|
$ |
11,395 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per share |
|
$ |
0.13 |
|
|
$ |
0.23 |
|
|
|
|
|
|
|
|
Diluted net income per share |
|
$ |
0.11 |
|
|
$ |
0.18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing basic net income per share |
|
|
53,843 |
|
|
|
50,358 |
|
Shares used in computing diluted net income per share |
|
|
61,863 |
|
|
|
64,758 |
|
Orbital Reports Third Quarter 2005 Financial Results
Page 9
ORBITAL SCIENCES CORPORATION
Condensed Consolidated Income Statements
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
($ in thousands, except per share data) |
|
2005 |
|
|
2004 |
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
503,876 |
|
|
$ |
500,751 |
|
Costs of goods sold |
|
|
413,467 |
|
|
|
416,946 |
|
|
|
|
|
|
|
|
Gross profit |
|
|
90,409 |
|
|
|
83,805 |
|
Research and development expenses |
|
|
3,343 |
|
|
|
4,654 |
|
Selling, general and administrative expenses |
|
|
47,910 |
|
|
|
38,653 |
|
Settlement expense (income) |
|
|
— |
|
|
|
(2,538 |
) |
|
|
|
|
|
|
|
Income from operations |
|
|
39,156 |
|
|
|
43,036 |
|
Other income, net |
|
|
2,918 |
|
|
|
1,174 |
|
Interest expense |
|
|
(8,588 |
) |
|
|
(8,645 |
) |
Debt extinguishment expense |
|
|
— |
|
|
|
(1,138 |
) |
|
|
|
|
|
|
|
Income before provision for income taxes |
|
|
33,486 |
|
|
|
34,427 |
|
Provision for income taxes |
|
|
(12,940 |
) |
|
|
(486 |
) |
|
|
|
|
|
|
|
Net income |
|
$ |
20,546 |
|
|
$ |
33,941 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per share |
|
$ |
0.38 |
|
|
$ |
0.69 |
|
|
|
|
|
|
|
|
Diluted net income per share |
|
$ |
0.33 |
|
|
$ |
0.52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing basic net income per share |
|
|
54,684 |
|
|
|
49,060 |
|
Shares used in computing diluted net income per share |
|
|
62,414 |
|
|
|
65,263 |
|
Orbital Reports Third Quarter 2005 Financial Results
Page 10
ORBITAL SCIENCES CORPORATION
Condensed Consolidated Balance Sheets
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
($ in thousands) |
|
2005 |
|
|
2004 |
|
|
Assets |
|
|
|
|
|
|
|
|
Cash |
|
$ |
146,443 |
|
|
$ |
125,504 |
|
Receivables, net |
|
|
131,245 |
|
|
|
149,480 |
|
Inventory |
|
|
17,092 |
|
|
|
13,565 |
|
Deferred income taxes, net |
|
|
25,696 |
|
|
|
26,710 |
|
Other current assets |
|
|
12,000 |
|
|
|
12,195 |
|
|
|
|
|
|
|
|
Total current assets |
|
|
332,476 |
|
|
|
327,454 |
|
Property, plant and equipment, net |
|
|
82,843 |
|
|
|
83,154 |
|
Goodwill |
|
|
55,551 |
|
|
|
55,551 |
|
Deferred income taxes, net |
|
|
174,759 |
|
|
|
185,940 |
|
Other non-current assets |
|
|
9,450 |
|
|
|
11,671 |
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
655,079 |
|
|
$ |
663,770 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
Short-term borrowings |
|
$ |
76 |
|
|
$ |
161 |
|
Accounts payable and accrued expenses |
|
|
99,337 |
|
|
|
121,454 |
|
Deferred revenues |
|
|
28,875 |
|
|
|
19,478 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
128,288 |
|
|
|
141,093 |
|
Long-term debt |
|
|
126,477 |
|
|
|
128,375 |
|
Other non-current liabilities |
|
|
109 |
|
|
|
178 |
|
Total stockholders’ equity |
|
|
400,205 |
|
|
|
394,124 |
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders’ Equity |
|
$ |
655,079 |
|
|
$ |
663,770 |
|
|
|
|
|
|
|
|
Orbital Reports Third Quarter 2005 Financial Results
Page 11
ORBITAL SCIENCES CORPORATION
Condensed Consolidated Statements of Cash Flows
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
|
Nine Months Ended |
|
($ in thousands) |
|
September 30, 2005 |
|
|
September 30, 2005 |
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
6,810 |
|
|
$ |
20,546 |
|
Depreciation and amortization |
|
|
3,392 |
|
|
|
10,536 |
|
Amortization of debt costs |
|
|
153 |
|
|
|
459 |
|
Deferred taxes |
|
|
3,576 |
|
|
|
12,302 |
|
Changes in assets and liabilities |
|
|
(853 |
) |
|
|
(389 |
) |
Other |
|
|
109 |
|
|
|
(84 |
) |
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
13,187 |
|
|
|
43,370 |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(2,769 |
) |
|
|
(10,857 |
) |
Change in cash restricted for letters of credit |
|
|
— |
|
|
|
3,041 |
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(2,769 |
) |
|
|
(7,816 |
) |
|
|
|
|
|
|
|
Repayment of debt and other |
|
|
(20 |
) |
|
|
(114 |
) |
Repurchase of common stock |
|
|
— |
|
|
|
(19,999 |
) |
Net proceeds from issuance of common stock |
|
|
4,212 |
|
|
|
5,498 |
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities |
|
|
4,192 |
|
|
|
(14,615 |
) |
|
|
|
|
|
|
|
Net increase in cash |
|
|
14,610 |
|
|
|
20,939 |
|
Cash, beginning of period |
|
|
131,833 |
|
|
|
125,504 |
|
|
|
|
|
|
|
|
Cash, end of period |
|
$ |
146,443 |
|
|
$ |
146,443 |
|
|
|
|
|
|
|
|