Orbital Reports Fourth Quarter and Full Year 2006 Financial Results.Fourth Quarter and Full Year Results Reflect Substantial Increases in Revenues, Operating Income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , Free Cash Flow and Contract Backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. Debt Refinancing Refinancing An extension and/or increase in amount of existing debt. Completed, Interest Expense Significantly Reduced 2007 Financial Guidance Increased DULLES, Va. -- Orbital Sciences Corporation Orbital Sciences Corporation (OSC, though commonly referred to as Orbital) is a Dulles, Virginia company which specializes in satellite launch and manufacture. Its Launch Systems Group is heavily involved with missile defense launch systems. (NYSE NYSE See: New York Stock Exchange : ORB (Object Request Broker) Software that handles the communication of messages from the requesting program (client) to the object as well as any return values from the object back to the calling program. See CORBA and DCOM. See also ORB disk. ) today announced financial results for the fourth quarter and full year 2006. Orbital orbital Mathematical expression, called a wave function, that describes properties characteristic of no more than two electrons near an atomic nucleus or molecule. An orbital can be considered a three-dimensional region in which there is a 95% probability of finding an reported fourth quarter 2006 revenues of $215.8 million, an 8% increase compared to revenues of $199.6 million in the fourth quarter of 2005. The company's fourth quarter 2006 operating income rose 50% to $20.4 million as compared to $13.6 million of operating income in the comparable quarter in 2005. Fourth quarter adjusted net income* was $12.5 million in 2006, compared to net income of $7.5 million in 2005, and adjusted diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of * (EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ) was $0.20, compared to diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. EPS of $0.12 in the fourth quarter of 2005. Orbital reported fourth quarter 2006 free cash flow* of $2.9 million compared to free cash flow of $26.5 million a year ago. For the full year, Orbital reported revenues of $802.8 million in 2006, up 14% as compared to $703.5 million in 2005. Operating income was $67.9 million in 2006, up 29% as compared to $52.5 million in 2005. Adjusted net income was $39.6 million in 2006, or $0.63 adjusted diluted EPS, compared to net income of $27.8 million, or $0.45 diluted EPS, in 2005. Orbital reported $78.5 million of free cash flow for the full year of 2006, compared to $59.1 million in 2005. Commenting on Orbital's financial results, Mr. David W. Thompson Thompson, city, Canada Thompson, city (1991 pop. 14,977), central Man., Canada, on the Burntwood River. A mining town, it developed after large nickel deposits were discovered in the area in 1956. , Chairman and Chief Executive Officer, said, "With exceptionally strong fourth quarter results, Orbital completed an outstanding year in 2006. The company's commercial satellite business generated strong revenue growth and significantly higher operating profit margins Operating profit margin The ratio of operating profit to net sales. as compared to last year. Our missile defense Missile defence is an air defence system, weapon program, or technology involved in the detection, tracking, interception and destruction of attacking missiles. Originally conceived as a defence against nuclear-armed ICBMs, its application has broadened to include shorter-ranged programs also continued to post solid results, as did the other products in our launch vehicles This is a list of space launch vehicles sorted by country/operator in alphabetical order, commercial vehicles are listed under their corresponding country.
Brazil
Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. refinancing late in 2006, enhancing our capital structure and significantly reducing future interest costs. We also expect these positive operational and financial trends to continue in 2007, as we add human space exploration projects as a new contributor to revenue growth and profitability for the company." Financial Highlights Fourth quarter financial results were as follows (in millions, except per share data): [TABLE OMITTED] (1) Adjusted in 2006 to exclude debt extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. expense and a gain from the liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy of an investment, net of tax. Full year financial results were as follows (in millions, except per share data):
> Full >
> 2006 > 2005
Revenues > $ 80- >
$
703.5
Operating Income > 67- >
52.5
Net Income > 34- >
27.8
Adjusted Net Income > 39- (1) >
27.8
Diluted Net Income Per Share > 0.- >
0.45
Adjusted Diluted Earnings Per Share > $ 0.- (1) >
$
0.45
(1) Adjusted in 2006 to exclude debt extinguishment expense and a gain from the liquidation of an investment, net of tax. Revenues Revenues by segment for the fourth quarter were as follows (in millions):
> Four- >
> 2006 > 2005
Launch Vehicles > $ 80.2 >
$
87.7
Satellites and Space Systems > 125- >
106.5
Transportation Management Systems > 11.0 >
6.8
Eliminations > (0.- >
(1.4)
Total Revenues > $ 215- >
$
199.6
Orbital's fourth quarter 2006 revenues were $215.8 million, up 8% over fourth quarter 2005 revenues of $199.6 million. The fourth quarter increase was primarily due to an 18% increase in satellites and space systems segment revenues, driven by increased program activity on certain science and technology satellites and a contract awarded in the third quarter of 2006 to build and test a new Launch Abort System for NASA's Orion Crew Exploration Vehicle
The Crew Exploration Vehicle (or CEV) was the conceptual component of the Vision for Space Exploration that later became known as the Orion spacecraft. . Launch vehicles segment revenues decreased 8% primarily due to lower revenues from the target launch vehicle product line. Transportation management systems segment revenues increased 61% in the quarter, largely driven by work on several new contracts started in late 2005 and early 2006. Revenues by segment for the full year were as follows (in millions):
> Full >
> 2006 > 2005
Launch Vehicles > $ 310- >
$
335.3
Satellites and Space Systems > 458- >
348.6
Transportation Management Systems > 37.7 >
26.5
Eliminations > (4.- >
(6.9)
Total Revenues > $ 802- >
$
703.5
Orbital's full year revenues were $802.8 million, up 14% over 2005 revenues, primarily due to a 32% increase in satellites and space systems segment revenues that was driven by growth in the communications satellites communications satellite artificial satellite that functions as part of a global radio-communications network. Echo 1, the first communications satellite, launched in 1960, was an instrumented inflatable sphere that passively reflected radio signals back to product line. Launch vehicles segment revenues decreased 7% primarily due to lower revenues from the interceptor and target vehicle product lines due to lower levels of program activity in 2006, partially offset by higher revenues from the space launch vehicle product line. Transportation management systems segment revenues increased 43% largely driven by work on several new contracts started in late 2005 and early 2006. Operating Income Operating income by segment for the fourth quarter was as follows (in millions):
> Fou- >
> 2006 > 2005
Launch Vehicles > $ 8.5 >
$
9.1
Satellites and Space Systems > 10.9 >
4.6
Transportation Management Systems > 1.0 >
0.1
Corporate and Other > - >
(0.2)
Total Operating Income > $ 20.4 >
$
13.6
Orbital reported operating income of $20.4 million in the fourth quarter of 2006, up 50% over the fourth quarter of 2005. This increase was due to substantially higher operating income in the satellites and space systems segment driven by net cost reductions and favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. contract adjustments in the communications satellites product line as well as operating income growth from science and technology satellites and the Launch Abort System contract. Launch vehicles segment income decreased primarily due to lower target vehicle operating income consistent with the revenue reduction in this product line. Operating income in the transportation management systems segment increased largely due to an increased level of contract activity in 2006 on several new contracts. Operating income by segment for the full year was as follows (in millions):
> Full >
> 2006 > 2005
Launch Vehicles > $ 33.7 >
$
35.4
Satellites and Space Systems > 31.9 >
16.0
Transportation Management Systems > 2.5 >
1.5
Corporate and Other > (0.- >
(0.4)
Total Operating Income > $ 67.9 >
$
52.5
Orbital reported operating income of $67.9 million for the full year 2006, up 29% over 2005. This increase was due to significantly higher operating income in the satellites and space systems segment, primarily attributable to higher operating results in the communications satellites product line, driven by substantial growth in contract activity as well as cost reductions and profit margin improvements on certain contracts. Operating income in the launch vehicles segment declined slightly, while transportation management systems segment operating income increased due to an increased level of contract activity in 2006. Net Income In December 2006 the company recorded a $10.4 million pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern debt extinguishment charge ($6.3 million after tax) related to the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of notes payable in connection with the financing transaction described below. In addition, the company recorded a $1.6 million gain (pretax and after tax) in the fourth quarter of 2006 in connection with the liquidation of an investment that had been fully written off several years ago. Net income for the fourth quarter of 2006 including these transactions, was $7.8 million, or $0.12 diluted EPS, and net income for full year 2006 was $34.9 million, or $0.56 diluted EPS. Adjusted net income for the fourth quarter of 2006, which excludes the debt extinguishment charge and the investment gain, was $12.5 million, or $0.20 adjusted diluted EPS, compared to net income of $7.5 million, or $0.12 diluted EPS, in the fourth quarter of 2005. Adjusted net income for full year 2006 was $39.6 million, or $0.63 adjusted diluted EPS, compared to net income of $27.8 million, or $0.45 diluted EPS, in 2005. Cash Flow and Balance Sheet The company reported free cash flow of $2.9 million for the fourth quarter of 2006 and $78.5 million for full year 2006. In December 2006 the company issued $143.8 million of 2.4375% convertible senior subordinated notes due in 2027. The proceeds from the sale of the notes, together with cash on hand, were used to repurchase $125.9 million (or 99.59%) of the previously outstanding principal amount of its 9% senior notes due in 2011 and to repurchase 2.7 million shares of the company's common stock at a price of $18.83 per share, for a total of $50.0 million. As a result of this refinancing transaction, the company will significantly reduce interest expense in future periods. Throughout 2006, Orbital repurchased an additional 1.1 million shares of its common stock for $16.2 million as part of a securities repurchase program. The company's cash flow was as follows (in millions): [TABLE OMITTED] Summary balance sheet data as of December 31, 2006 was as follows (in millions): [TABLE OMITTED] New Business Highlights During the fourth quarter of 2006, Orbital received approximately $120 million in new firm contract bookings and $40 million in new option contract bookings. In addition, the company received approximately $60 million of option exercises under existing contracts. For the full year, Orbital received approximately $1.05 billion in new firm contract bookings, $430 million in new option contract bookings and $310 million of option exercises under existing contracts. As of December 31, 2006, the company's firm contract backlog was approximately $1.79 billion, an increase of 42% compared to its year-end 2005 level. Total backlog (including options, indefinite-quantity contracts and undefinitized orders) was approximately $3.43 billion, up 18% over a year ago. Operational Highlights In the fourth quarter of 2006, Orbital completed three major space missions. In October, the Optus D-1 commercial communications satellite was successfully launched and deployed for Optus Networks of Australia. Orbital also carried out two successful rocket launches A rocket launch is the first phase of the flight of a rocket. For orbital spaceflights, or for launches into interplanetary space, rockets are launched from a launch pad, which is usually a fixed location on the ground but may also be on a floating platform such as the San Marco , both in December, including a Minotaur 1 vehicle for the U.S. Air Force carrying the TacSat-2 spacecraft spacecraft Vehicle designed to operate, with or without a crew, in a controlled flight pattern above Earth's lower atmosphere. Since streamlining is not needed in the high vacuum of this environment, a spacecraft's shape is designed according to its mission (see and a suborbital suborbital /sub·or·bi·tal/ (sub-or´bi-t'l) infraorbital. sub·or·bit·al adj. Situated on or below the floor of the orbit of the eye. n. target vehicle in support of a Missile Defense Agency mission. "For the year as a whole, Orbital carried out 16 major launch vehicle and space system missions and 18 smaller sounding rocket sounding rocket n. A rocket used to make observations anywhere within the earth's atmosphere. Noun 1. sounding rocket - a research rocket used to obtain information about the atmosphere at various altitudes and missile target launches. The company also delivered 13 additional rockets, satellites and other space systems for future deployments," said Mr. Thompson. "These highly successful operations increased our record to 63 consecutive successful major space missions since 2002 and boosted our record to 149 successes out of 151 major space missions during the past ten years," Mr. Thompson added. Orbital's 2007 operational schedule is expected to be one of the busiest in the company's 25-year history. The company plans to carry out approximately 25 major launch vehicle and spacecraft missions and to complete and deliver an additional 15 or more launch vehicles and satellites for future missions. Included in the operational totals are between 18 and 20 interceptor, space launch and target vehicle missions and the deployment of up to six spacecraft for commercial satellite operators and U.S. government customers. 2007 Financial Guidance The company has revised its preliminary financial guidance for 2007, with increases in revenues, operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: , EPS and free cash flow as summarized in the table below: Full Year 2007 Current > Previous Revenues (in millions) $880 - $900 > $870 - $890 Operating Income Margin 8.25% - 8.75% > 8.0% - 8.5% Diluted Earnings Per Share $0.75 - $0.80 > $0.72 - $0.77 Free Cash Flow (in millions) $55 - $60 > $50 - $55 Disclosure of Non-GAAP Financial Measures Free cash flow is defined as GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). (Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ) 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 en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: "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. Adjusted net income is defined as 2006 GAAP net income (the most directly comparable GAAP financial measure) adjusted to exclude debt extinguishment expense and the gain from the dissolution Act or process of dissolving; termination; winding up. In this sense it is frequently used in the phrase dissolution of a partnership. The dissolution of a contract is its Rescission by the parties themselves or by a court that nullifies its binding force and reinstates each of an investment. 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 2006 results to 2005 results. The reconciliation of the reported net income to adjusted net income is as follows (in millions, except per share data): [TABLE OMITTED] (1) This gain is reported as a return of investment for tax purposes; accordingly, no tax provision was recorded related to the gain. (*)"Adjusted net income," "adjusted diluted earnings per share" and "free cash flow" are non-GAAP financial measures discussed in this release. For additional details, please refer to the sections of this news release entitled "Cash Flow and Balance Sheet" and "Disclosure of Non-GAAP Financial Measures." About Orbital Orbital develops and manufactures small rockets Small Rockets is a small computer game developer founded in 2000 that creates and sells PC computer games online. History Small Rockets was born from the ashes of Fiendish Games, a department of Criterion Games, that was started to test the waters for delivering games 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 plan·e·tar·y adj. 1. Of, relating to, or resembling the physical or orbital characteristics of a planet or the planets. 2. a. spacecraft for communications, remote sensing Deriving digital models of an area on the earth. Using special cameras from airplanes or satellites, either the sun's reflections or the earth's temperature is turned into digital maps of the area. , scientific and defense missions; ground- and air-launched rockets that deliver satellites into orbit; and missile defense systems Noun 1. missile defense system - naval weaponry providing a defense system missile defence system naval weaponry - weaponry for warships 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. "Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " Statement Under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 Certain statements in this press release may be forward-looking in nature or "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " 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 sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. 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 its annual report on Form 10-K/A, could impact Orbital's actual financial and operational results. Orbital assumes no obligation for updating the information contained in this press release. A transcript A generic term for any kind of copy, particularly an official or certified representation of the record of what took place in a court during a trial or other legal proceeding. A transcript of record of the earnings teleconference call will be available on Orbital's website at http://www.orbital.com/Investor. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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