Orbital Reports Preliminary Third Quarter 2006 Financial Results.-- Revenues, Operating Profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. and Net Income Rise Significantly -- -- 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. Show Large Increases -- -- Company Provides Preliminary Financial Guidance for 2007 -- -- Company Reports on Status of Voluntary Stock-Based Compensation Review -- DULLES Dul·les , Allen Welsh 1893-1969. American public official. Director of the CIA (1953-1961), he resigned after the failed invasion of the Bay of Pigs. Noun 1. , 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 preliminary financial results for the third quarter and first nine months of 2006. Orbital's third quarter revenues increased 24% to $197.7 million in 2006, compared to $159.3 million in 2005. The company's third quarter 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. rose 25% to $15.3 million in 2006, as compared to $12.2 million in 2005. Third quarter net income increased 27% to $8.6 million in 2006, compared to $6.8 million in 2005, and 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 increased to $0.14, compared to $0.11 in the third quarter of 2005. 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 third quarter 2006 free cash flow* of $21.0 million compared to free cash flow of $10.4 million a year ago. Commenting on Orbital's third quarter 2006 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, "The company generated strong across-the-board financial results this past quarter. Of particular significance were robust revenue growth and profit margin expansion in our satellite business, continued solid free cash flow, and exceptional new orders and contract backlog." For the first nine months of 2006, Orbital reported revenues of $586.8 million, up 16% as compared to $503.9 million in the same period of 2005. The company's operating income for the first nine months of 2006 was $47.7 million, up 22% as compared to $39.2 million in 2005. Net income for the first nine months of 2006 was $27.2 million, or $0.43 per 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. share, compared to $20.5 million, or $0.33 per diluted share, in the first nine months of 2005. Orbital generated $75.2 million of free cash flow in the first nine months of 2006, compared to $32.5 million during the same period of 2005. During the third quarter, Orbital initiated a voluntary review of the company's historical stock-based compensation practices and related accounting. The financial results reported today do not take into account the non-cash adjustments that the company expects to record in connection with the completion of the stock-based compensation review and should be considered preliminary until Orbital files its Form 10-Q Form 10-Q See 10-Q. for the quarter ended September September: see month. 30, 2006. The company currently expects that such adjustments will not be material to the financial results presented in this news release. Financial Highlights Summary financial results for the third quarter of 2006 as compared to the third quarter of 2005 were as follows (in millions, except per share data):
> Third >
> 2006 > 2005
Revenues > $ 197- >
$
159.3
Operating Income > 15.3 >
12.2
Net Income > 8.6 >
6.8
Diluted Net Income per Share > $ 0.14 >
$
0.11
Summary financial results for the first nine months of 2006 as compared to the first nine months of 2005 were as follows (in millions, except per share data):
> First >
> 2006 > 2005
Revenues > $ 586- >
$
503.9
Operating Income > 47.7 >
39.2
Net Income > 27.2 >
20.5
Diluted Net Income per Share > $ 0.43 >
$
0.33
Revenues Revenues by segment for the third quarter were as follows (in millions):
> Third >
> 2006 > 2005
Launch Vehicles > $ 71.2 >
$
79.8
Satellites and Space Systems > 117- >
74.8
Transportation Management Systems > 9.4 >
6.4
Eliminations > (0.- >
(1.7)
Total Revenues > $ 197- >
$
159.3
Orbital's third quarter 2006 revenues were $197.7 million, up 24% over third quarter 2005 revenues of $159.3 million. Continuing the trend from the second quarter of 2006, the third quarter increase was primarily due to a 58% increase in satellites and space systems segment revenues, 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 related to progress on several new satellite contracts awarded in 2005. 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
Revenues by segment for the first nine months were as follows (in millions):
> First >
> 2006 > 2005
Launch Vehicles > $ 230- >
$
247.6
Satellites and Space Systems > 333- >
242.1
Transportation Management Systems > 26.8 >
19.7
Eliminations > (3.- >
(5.5)
Total Revenues > $ 586- >
$
503.9
For the first nine months of 2006, Orbital reported $586.8 million in revenues, up 16% over the same period last year, primarily due to a 38% increase in satellites and space systems segment revenues that was driven by growth in the communications satellites product line. Launch vehicles segment revenues decreased 7% primarily due to lower revenues from the interceptor and target vehicle product lines, partially offset by higher revenues from the space launch vehicle product line. Transportation management systems segment revenues increased 36% largely driven by the work on several new contracts started in 2005 and early 2006. Operating Income Operating income by segment for the third quarter was as follows (in millions):
> Thi- >
> 2006 > 2005
Launch Vehicles > $ 7.6 >
$
8.6
Satellites and Space Systems > 7.1 >
3.1
Transportation Management Systems > 0.6 >
0.5
Total Operating Income > $ 15.3 >
$
12.2
Orbital reported operating income of $15.3 million in the third quarter of 2006, up 25% over the third quarter of 2005. This increase was due to significantly higher operating income in the satellites and space systems segment, primarily as a result of growth in the communications satellites product line related to several new satellite contracts started in 2005. Launch vehicles segment income decreased due to lower interceptor launch vehicle operating income, partially offset by higher operating income from space launch vehicles. Operating income in the transportation management segment also increased slightly. Operating income by segment for the first nine months was as follows (in millions):
> Fir- >
> 2006 > 2005
Launch Vehicles > $ 25.2 >
$
26.3
Satellites and Space Systems > 21.0 >
11.4
Transportation Management Systems > 1.5 >
1.5
Total Operating Income > $ 47.7 >
$
39.2
Orbital reported operating income of $47.7 million in the first nine months of 2006, up 22% over the first nine months of 2005. As was the case for the third quarter results, this increase was due to significantly higher operating income in the satellites and space systems segment. Operating income in the launch vehicles segment declined slightly, while transportation management segment operating income remained constant for the year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. period. Net Income Net income for the third quarter of 2006 was $8.6 million, or $0.14 diluted earnings per share, up from $6.8 million, or $0.11 diluted earnings per share, in the third quarter of 2005. Net income for the first nine months of 2006 was $27.2 million, or $0.43 diluted earnings per share, compared to $20.5 million, or $0.33 diluted earnings per share, in the same period of 2005. Cash Flow and Balance Sheet The company reported free cash flow of $21.0 million for the third quarter of 2006 and $75.2 million for the first nine months of 2006. Orbital's unrestricted cash balance increased to $233.0 million as of September 30, 2006. In the first nine months of 2006, Orbital repurchased 1.1 million shares of its common stock for $16.2 million as part of the company's 12-month, $50 million securities 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. program which began in April 2006. The company's cash flow was as follows (in millions): [TABLE OMITTED] Summary balance sheet data as of September 30, 2006 was as follows (in millions): [TABLE OMITTED] New Business Highlights During the third quarter of 2006, Orbital received approximately $765 million in new firm and option contract bookings. In addition, the company received approximately $20 million of option exercises under existing contracts. Year-to-date, Orbital received approximately $1.32 billion in new firm and option contract bookings, and approximately $250 million of option exercises under existing contracts. As of September 30, 2006, the company's firm contract backlog was approximately $1.85 billion, an increase of 54% compared to this time last year. Total backlog (including options, indefinite-quantity contracts and undefinitized orders) was approximately $3.51 billion, up 19% over a year ago. Operational Highlights Orbital carried out two major space missions during and shortly after the third quarter of 2006, including the successful launch of its Orbital Boost Vehicle (OBV OBV Obviously OBV On Balance Volume (market momentum indicator that relates volume to price change; developed by Joseph Granville) OBV Orbital Boost Vehicle OBV On Board Video OBV Obligated Volunteer ) 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 interceptor in September and the deployment of the Optus D1 commercial communications satellite in October October: see month. . These missions extended Orbital's consecutive successful mission record to 60 over the past five years. In addition to these successful operational events, the company delivered five other space and missile systems, including three OBVs, for future deployment. During the remainder of 2006, Orbital expects to carry out another four or five operational missions and deliver three or four other systems. The company's current operational schedule includes the launch of a Minotaur Minotaur: see Minos. Minotaur In Greek mythology, a monster of Crete with the body of a man and the head of a bull. It was the offspring of Pasiphaë, wife of King Minos, and a snow-white bull sent by Poseidon and intended for sacrifice. space launch vehicle carrying the U.S. Air Force's TacSat-2 satellite, the launch of an OBV missile defense interceptor for the Missile Defense Agency (MDA (1) (Monochrome Display Adapter) The first IBM PC monochrome video display standard for text. Due to its lack of graphics, MDA cards were often replaced with Hercules cards, which provided both text and graphics. See PC display modes and Hercules Graphics. ), and launches of three target vehicles for MDA and the U.S. Navy before the end of the year. Stock-Based Compensation Review In the third quarter, the company's Board of Directors established a special committee to conduct a review of stock option and restricted stock unit grants and related procedures dating from the time of the company's initial public offering in 1990 to the present. The special committee is being assisted by independent legal counsel and accounting consultants. This company-initiated review is substantially complete and the special committee has concluded that there was no fraud or intentional in·ten·tion·al adj. 1. Done deliberately; intended: an intentional slight. See Synonyms at voluntary. 2. Having to do with intention. misconduct MISCONDUCT. Unlawful behaviour by a person entrusted in any degree: with the administration of justice, by which the rights of the parties and the justice of the, case may have been affected. 2. in its past stock-based compensation practices. As a result of the stock-based compensation review, Orbital has determined that incorrect accounting measurement dates were used for a number of grants. Accordingly, the company expects to revise prior period financial statements to record non-cash compensation expenses that should have been recorded with respect to the misdated options. Although no assurance can be given, based on Orbital's current analysis and assessment, the company does not expect that such adjustments will be material to any of its current financial statements for periods subsequent to the year ended December 31, 2000. Since the adjustments to the current financial statements are not expected to be material, the company does not expect to file any amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. Forms 10-Q or Forms 10-K for prior periods. The revised prior period financial statements will be reported when the company files its third quarter 2006 Form 10-Q and 2006 Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. . The company expects to record pre-tax compensation charges of approximately $300,000 in 2006, a total of about $2.5 million in the five-year period 2001 through 2005 and a total of about $11.5 million for all periods prior to 2001. Orbital is in the process of assessing the impact of this matter on its system of internal controls. The company expects to provide further details with respect to the special committee's findings in the third quarter 2006 Form 10-Q which the company expects to file no later than November 14, 2006. 2006 Financial Guidance and 2007 Targets The company confirmed its full-year financial guidance for 2006 and provided its preliminary financial targets for 2007, as summarized in the table below:
> > 2006
2007
Revenues (in millions) > > $780 - 800
$870 - 890
Operating Income Margin > > 7.75 - 8.25%
8.0 - 8.5%
Diluted Earnings Per Share > > $0.56 - 0.60
$0.67 - 0.72
Free Cash Flow (in millions) > > $70 - 75
$45 - 50
The company plans to issue final 2007 guidance when it reports fourth quarter and full-year 2006 results early in 2007. Disclosure of Non-GAAP Financial Measure 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. (*)"Free cash flow" is a non-GAAP financial measure 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 Measure." 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 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 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, the outcome of the review of stock-based compensation by the special committee of the Board of Directors, 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 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. -- attachments below -- [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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