SPACEHAB Reports Financial Results for Third Quarter Fiscal Year 2004.Business Editors HOUSTON--(BUSINESS WIRE)--May 11, 2004 Highlights -- Quarterly revenue reported of $14.8 million -- Net income of $0.3 million for the quarter -- Cash plus short-term investments at quarter end of $8.7 million SPACEHAB, Incorporated (NASDAQ/NMS:SPAB SPAB Society for the Protection of Ancient Buildings (UK) SPAB School Pupil Activity Bus SPAB Supply Priorities and Allocations Board SPAB Security Policy Advisory Board SPAB Society for the Preservation of Adolescent Behavior ), a leading provider of commercial space services, today announced financial results for its fiscal year 2004 third quarter and nine months ended March 31, 2004. Third Quarter Results SPACEHAB reported third quarter 2004 net income of $0.3 million, or $0.02 per share ($0.02 per share diluted), on revenue of $14.8 million compared with prior year quarter net loss of $62.7 million, or $5.06 per basic and diluted share, on revenue of $26.4 million. The disparity in earnings is mainly attributed to SPACEHAB's recognition of a non-recurring charge of $50.3 million for the prior year's loss of the Company's Research Double Module (RDM RDM Ring Deutscher Makler (German Realty Association) RDM Red Mage (Final Fantasy, gaming) RDM Remote Device Management (protocol used in theatre lighting equipment) ) that was destroyed in the STS-107 space shuttle space shuttle, reusable U.S. space vehicle. Developed by the National Aeronautics and Space Administration (NASA), it consists of a winged orbiter, two solid-rocket boosters, and an external tank. tragedy and goodwill impairment of $11.9 million recognized upon termination of the Company's Flight Crew System Development contract with NASA NASA: see National Aeronautics and Space Administration. NASA in full National Aeronautics and Space Administration Independent U.S. . Revenue for the third fiscal quarter of 2004 decreased by approximately 44% from the prior year's quarterly revenue of $26.4 million primarily due to the previously announced completion of SPACEHAB Government Services (SGS SGS Société Générale de Surveillance SGS Symantec Gateway Security (appliance) SGS School of Graduate Studies SGS Subgrid Scale SGS Singapore Government Securities SGS Shell Global Solutions ) contracts as well as the continuing postponement of space shuttle missions <onlyinclude> This is a list of missions flown by space shuttles. As of 2006, only the United States has flown human spaceflight shuttle missions, in the Space Shuttle program, while the Soviet Union flew one unmanned flight of the Buran. . NASA has announced that it currently anticipates a return to flight in March of 2005. Interest expense was approximately $2.2 million for the three months ended March 31, 2004 compared to approximately $1.8 million for the three months ended March 31, 2003. The increase in interest expense is primarily due to the termination of the interest rate swap Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. and write-off of debt placement costs from the refinancing of the Company's Florida Spacecraft Processing Facility (SPF (1) (Stateful Packet Firewall) See stateful inspection. (2) (Sender Policy Framework) An e-mail authentication system that verifies that the message came from an authorized mail server. ) mortgage loan on January 29, 2004. Nine Month Results SPACEHAB's nine months earnings were $4.4 million, or $0.35 per share ($0.31 per share diluted), on revenue of $66.5 million compared to a net loss of $61.6 million, or $5.03 per basic and diluted share, on revenue of $81.3 million for first nine months of the prior fiscal year. The prior fiscal year net loss includes a non-recurring charge of $50.3 million for the loss of the RDM and goodwill impairment of $11.9 million. The current fiscal year earnings include goodwill impairment of $8.3 million and investment impairment of $1.8 million which were recorded in the second quarter. Also included in revenue and earnings for the current fiscal year are proceeds of $17.5 million paid by The Boeing Company in termination of certain minimum guarantees under its satellite processing contract with Astrotech. Under the Company's previous contract with NASA, and now under contract with Lockheed Martin For the former company, see . Lockheed Martin (NYSE: LMT) is a leading multinational aerospace manufacturer and advanced technology company formed in 1995 by the merger of Lockheed Corporation with Martin Marietta. Corporation, SPACEHAB received additional payments relative to costs incurred in maintaining the capability and staff for space shuttle operations during the suspension of space shuttle flights and for logistics planning and preparation for future space shuttle missions. As stated, revenue and operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before for the current fiscal year also reflect the previously announced conclusion of certain NASA contracts in the Company's SGS business unit during the first nine months of the current fiscal year. Interest expense was approximately $6.8 million for the nine months ended March 31, 2004 compared to approximately $5.5 million for the nine months ended March 31, 2003. The increase in interest expense is due to write-offs of deferred loan costs upon refinancing the Florida SPF and termination of the interest rate swap. Liquidity Combined cash, cash equivalents, and short-term investments at March 31, 2004 were $8.7 million. As previously reported, SPACEHAB completed restructuring its financing of the Florida SPF in January 2004, reducing the facility mortgage obligation by approximately $11.0 million. The facility mortgage was restructured with a principal balance of $6.1 million, a reduced effective interest rate from 7.87% to a fixed rate of 5.5%, and a shortened maturity date of January 2007. The restructured loan is collateralized by certain contract revenues for operations at the facility. Upon restructuring the facility mortgage, the Company paid approximately $1.3 million to retire an interest rate swap agreement. Deferred revenue as of March 31, 2004 was $7.5 million compared to $16.1 million at June 30, 2003. The decrease is primarily due to the closeout closeout, closure the finalization of a feeding program in a feedlot. The cattle are sold and a balance sheet is struck which includes the costs of feeding and housing or confining them. of the Research And Logistics Mission Support (ReALMS) contract and to a previously billed commercial experiment services contract that was to be flown on an upcoming space shuttle mission. Due to ongoing delays in space shuttle missions, the commercial contract was modified and the services will be provided on multiple Russian Progress missions, the first scheduled for launch in July 2004. Current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. decreased to $19.4 million at March 31, 2004 compared to $27.2 million at June 30, 2003 mainly due to a substantial reduction in accounts payable to strategic partner EADS EADS European Aeronautic Defence and Space Company N.V. EADS Expeditionary Air Defense System (USMC) EADS Extended Air Defense Systems EADS Environmental Assessment Data System EADS Echelons Above Division Study Space Transportation GmbH, the final payment of a shareholder note, and the recognition of the deferred revenue stated above. SPACEHAB continues to pursue its claim with NASA for indemnification of its losses in the amount of $87.7 million from its RDM that was destroyed during the STS-107 space shuttle tragedy. In a notification received from NASA, the Agency stated that after a review and internal audit of the amounts specified, it intends to advise SPACEHAB of its findings on June 24, 2004. Lloyd's of London Not to be confused with Lloyds Bank or Lloyd's Register. Lloyd's of London is a British insurance market. It serves as a meeting place where multiple financial backers or “members”, whether individuals (traditionally known as ("Lloyd's"), the Company's insurer for the RDM has refiled its complaint, previously filed in U.S. District Court, in the Superior Court of the State of Washington. Lloyd's alleges that SPACEHAB breached the contracts of insurance by demanding and receiving the insurance proceeds before NASA had paid, or agreed to pay, the contractually obligated ob·li·gate tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates 1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force. 2. To cause to be grateful or indebted; oblige. $8.0 million indemnification; that SPACEHAB, through its insurance agent, submitted misleading information in obtaining the insurance; and other allegations. SPACEHAB believes that the complaint is without merit and is responding accordingly. SPACEHAB believes it has sufficient cash to fund ongoing operations and support new business initiatives through the end of the fiscal year. However, in certain scenarios, the Company could face liquidity concerns following the fiscal year end. Update of Ongoing Operations Although the grounding of the space shuttle continues to pose challenges for the Company and the industry, SPACEHAB continues to play a key role in NASA's Space Shuttle and International Space Station (ISS ISS See Institutional Shareholder Services (ISS). ) Programs and is exploring new possibilities for supporting the National Space Vision announced in January 2004. "The new U.S. space exploration policy sets a bold course for NASA," observed Michael E. Kearney, President and Chief Executive Officer. "A course that will clearly benefit from new commercial services such as those provided by SPACEHAB." As the impacts of this vision materialize over time, SPACEHAB management will continue to align its business direction to remain a constructive force in the human spaceflight “Space travel” redirects here. For travel in space as a tourist, see Space tourism. A human spaceflight is a spaceflight with a human crew, and possibly passengers. This makes it unlike robotic space probes or remotely-controlled satellites. program. In the long term, management believes that the Company's core competencies A core competency is something that a firm can do well and that meets the following three conditions specified by Hamel and Prahalad (1990):
The SPACEHAB Flight Services (SFS (1) (Self-certifying File System) A global, network file system sponsored by DARPA that runs under Unix. Providing strong security in an untrusted environment, it enables any client to access any server that supports it. ) business unit continues to support four of the next six ISS missions through its contract with the ISS prime contractor, Boeing, and through its subcontract sub·con·tract n. A contract that assigns some of the obligations of a prior contract to another party. intr. & tr.v. sub·con·tract·ed, sub·con·tract·ing, sub·con·tracts with the ISS Cargo Mission Contractor, Lockheed Martin Corporation. SPACEHAB will be providing an Integrated Cargo Carrier (ICC ICC See: International Chamber of Commerce ) on STS-114, NASA's return-to-flight mission, and is scheduled to provide NASA with an ICC on space shuttle mission STS-121, a Logistics Single Module (LSM LSM Linux Software Map LSM Louisiana State Museum LSM Linux Security Module LSM Living Stream Ministry LSM Laser Scanning Microscopy LSM Legato Storage Manager LSM Land-Surface Model LSM Lutheran Student Movement LSM Logical Storage Manager ) and an ICC on STS-116, and an LSM and an ICC on STS-118. On April 15, 2004, the SFS business unit completed a successful transition of its systems integration and operations capabilities from its subcontract with Boeing to an in-house capability. As a result, SPACEHAB personnel will now perform the end-to-end mission integration, hardware development, and sustaining engineering functions required to support the flight of its existing modules on the space shuttle. This move reduces operating costs operating costs npl → gastos mpl operacionales , increases flexibility in responding quickly to changing customer requirements, and builds upon existing core SPACEHAB capabilities needed to support future logistics and research missions to the ISS. Additionally, the SFS Space Commerce Development team is formulating its May 20, 2004 response to the recently released NASA Exploration Systems Enterprise Request for Information. In SPACEHAB's response, SFS will provide insight to the NASA Office of Exploration regarding SPACEHAB's innovative payload/crew integration and transportation concepts as well as its proven capabilities and processes that could effectively and efficiently support the evolving phases of the nation's vision for completion of the ISS and the exploration of the moon, Mars and the solar system solar system, the sun and the surrounding planets, natural satellites, dwarf planets, asteroids, meteoroids, and comets that are bound by its gravity. The sun is by far the most massive part of the solar system, containing almost 99.9% of the system's total mass. . Although the commercial satellite market is relatively slow, SPACEHAB's Astrotech business unit experienced heavier traffic through both its owned and managed payload (1) Refers to the "actual data" in a packet or file minus all headers attached for transport and minus all descriptive meta-data. In a network packet, headers are appended to the payload for transport and then discarded at their destination. processing facilities. During the third quarter, Astrotech supported the successful launches of three 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 . The Telstar 14/Estrela do Sul 1 satellite lifted off from the Odyssey Launch Platform positioned on the equator in the Pacific Ocean on January 10, 2004 after processing at the Sea Launch Home Port in Long Beach, California Long Beach is a city located in southern Los Angeles County, California, USA, on the Pacific coast. It borders Orange County on its southeast edge. It is about 20 miles (30 km) south of downtown Los Angeles. . February 5 saw the launch of the AMC-10 telecommunications satellite from Cape Canaveral Air Force Station The Cape Canaveral Air Force Station (CCAFS) is the East Coast space launch facility of the United States Department of Defense. Located on Cape Canaveral in the State of Florida, it depends on Patrick Air Force Base, home of the 45th Space Wing. CCAFS is adjacent to the John F. (CCAFS CCAFS Cape Canaveral Air Force Station (Florida) ). The satellite will provide cable television services to all 50 states, Mexico and the Caribbean. An Atlas III The Lockheed Martin Atlas III was an American orbital launch vehicle, used between 2000 and 2005.[1] It was the first member of the Atlas family to feature a "normal" staging method, compared to the previous Atlas family members, which were equipped with jettisonable rocket lifted off from CCAFS on March 13, 2004 to place into orbit the Astrotech-processed MBSAT satellite which will deliver digital multimedia information services See Information Systems. to mobile users throughout Japan and Korea. Astrotech also provided payload processing services in support of several missions to be launched after SPACEHAB's third quarter. The Boeing Satellite Systems Superbird-6, the DirecTV-7S, the environmental monitoring ROCSAT-2, the Space Systems/Loral-built Telstar 18, and the Northrop Grumman-built NASA AURA spacecrafts, as well as the NASA APL (A Programming Language) A high-level mathematical programming language noted for its brevity and matrix generation capabilities. Developed by Kenneth Iverson in the mid-1960s, it runs on micros to mainframes and is often used to develop mathematical models. MESSENGER spacecraft, the first direct NASA contract for Astrotech services in Florida, are all benefiting from Astrotech's facilities and capabilities. In support of the United States Air Force United States Air Force (USAF) Major component of the U.S. military organization, with primary responsibility for air warfare, air defense, and military space research. It also provides air services in coordination with the other military branches. U.S. (USAF) and Boeing, Astrotech is providing processing services for two Global Positioning System Global Positioning System: see navigation satellite. Global Positioning System (GPS) Precise satellite-based navigation and location system originally developed for U.S. military use. (GPS) spacecraft upper stage solid rocket motor assemblies. While the USAF upgrades their existing GPS facility, Astrotech is providing this capability normally managed in government facilities. Additionally, the payload fairings and spacecraft simulator for the Delta IV/USAF Heavy Demonstration mission are in process at Astrotech's Florida facility. Launch is scheduled for no earlier than the first week of July and will represent the first launch of a heavy configuration for the Evolved Expendable Launch Vehicle The Evolved Expendable Launch Vehicle (EELV) program was a United States government, primarily a Department of Defense–sponsored effort to develop at least one family of space launch vehicles, that would meet the long term needs of the military and fulfill commercial (EELV EELV Evolved Expendable Launch Vehicle EELV End-Expiratory Lung Volume EELV Extended Expendable Launch Vehicle ). The Company's SPACEHAB Government Services (SGS) business unit continues its configuration management and product development services in support of NASA's ISS Program at the Johnson Space Center. Through NASA's Program Integration and Control contract, SGS is supporting NASA with the development and implementation of the Agency's fiscal year 2005 ISS Program Operating Plan which becomes part of NASA's overall budget. Conference Call SPACEHAB will host a conference call at 10:00 a.m. Central time following the earnings release. During the call, management will discuss the Company's third quarter financial results as well as other recent and potential future developments relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc SPACEHAB. To participate on the call, please dial 888.532.2976 (domestic calls) or 904.779.4727 (international calls) and ask for the SPACEHAB Earnings Conference. A taped replay will be available following the conference call and accessible via access code 23687926 until 11:59 p.m. Eastern time on May 12, 2004 at 800.252.6030 (domestic calls) or 402.220.2491 (international calls). To hear a replay of the call via the Internet, visit the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of the SPACEHAB website at www.spacehab.com. This audio archived webcast of the conference call will be available on the Company website for 90 days. About SPACEHAB, Incorporated SPACEHAB, Incorporated (www.spacehab.com) is a leading provider of commercial and government space services with three primary business units. The Flight Services business unit develops, owns, and operates habitat and laboratory modules and cargo carriers aboard NASA's Space Shuttles The term Space Shuttles refers to partly or fully reusable launch vehicles for regularly placing payloads into low earth orbit. See:
tr.v. re·sup·plied, re·sup·ply·ing, re·sup·plies To provide with fresh supplies, as of weapons and ammunition. re and research purposes. SPACEHAB's Astrotech subsidiary provides payload processing support services support services Psychology Non-health care-related ancillary services–eg, transportation, financial aid, support groups, homemaker services, respite services, and other services for both commercial and government customers at company-owned facilities in Florida and California. The Company's Government Services business unit supports NASA's Johnson Space Center providing configuration management, product engineering, and support services for both the Space Station and Space Shuttle programs. Additionally, through The Space Store, Space Media provides space merchandise to the public and space enthusiasts worldwide (www.thespacestore.com). The statements in this document may contain "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. " within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in the statements. In addition to those risks and uncertainties discussed herein, such risks and uncertainties include, but are not limited to, whether the Company will fully realize the economic benefits under its U.S. National Aeronautics and Space Administration National Aeronautics and Space Administration (NASA), civilian agency of the U.S. federal government with the mission of conducting research and developing operational programs in the areas of space exploration, artificial satellites (see satellite, artificial), ("NASA") and other customer contracts, whether NASA and other customers will continue to utilize the Company's habitat modules and related commercial space assets, whether plans to complete the International Space Station ("ISS") are fulfilled, continued availability and use of the U.S. Space Shuttle system, technological difficulties, product demand and market acceptance risks, the effect of economic conditions, uncertainty in government funding, the impact of competition, delays and uncertainties in future space shuttle and ISS programs, resolution of the Company's indemnification claim with NASA arising from the loss of the Columbia orbiter and its crew during the STS-107 mission, and other risks described in reports filed by the Company with the Securities and Exchange Commission. The Company assumes no obligation to update these forward-looking statements. Tables follow
SPACEHAB, INCORPORATED AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except share data)
Three Months Nine Months
Ended March 31, Ended March 31,
----------------------- -----------------------
2004 2003 2004 2003
----------- ----------- ----------- -----------
Revenue $14,800 $26,413 $66,466 $81,275
Costs of revenue 9,815 22,123 36,172 66,516
----------- ----------- ----------- -----------
Gross profit 4,985 4,290 30,294 14,759
----------- ----------- ----------- -----------
Operating expenses
Selling, general and
administrative 2,545 3,146 8,880 9,229
Research and
development 7 20 9 105
Nonrecurring charge,
loss of Research
Double Module - 50,268 - 50,268
Goodwill impairment - 11,925 8,274 11,925
Impairment of
investment in Guigne - - 1,800 -
----------- ----------- ----------- -----------
Total operating
expenses 2,552 65,359 18,963 71,527
----------- ----------- ----------- -----------
Income (loss) from
operations 2,433 (61,069) 11,331 (56,768)
Interest expense (2,177) (1,842) (6,776) (5,541)
Interest and other
income (expense), net 22 (26) 97 (56)
----------- ----------- ----------- -----------
Income (loss) before
income taxes 278 (62,937) 4,652 (62,365)
Income tax (expense)
benefit (11) 218 (251) 727
----------- ----------- ----------- -----------
Net income (loss) $267 $(62,719) $4,401 $(61,638)
=========== =========== =========== ===========
Income (loss) per share
Net income (loss) per
share - basic $0.02 $(5.06) $0.35 $(5.03)
=========== =========== =========== ===========
Shares used in
computing net income
(loss) per share -
basic 12,476,342 12,398,775 12,415,977 12,263,426
=========== =========== =========== ===========
Net income (loss) per
share - diluted $0.02 $(5.06) $0.31 $(5.03)
=========== =========== =========== ===========
Shares used in
computing net income
(loss) per share -
diluted 14,264,818 12,398,775 14,039,798 12,263,426
=========== =========== =========== ===========
SPACEHAB, INCORPORATED AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(In thousands)
March 31, June 30,
2004 2003
ASSETS
--------- ----------
Cash and cash equivalents $2,044 $1,301
Short-term investments 6,628 14,047
Accounts receivable, net 5,827 6,780
Prepaid expenses and other current assets 672 343
--------- ----------
Total current assets 15,171 22,471
Property, plant, and equipment, net of accumulated
depreciation and amortization of $51,732 and
$48,700, respectively 80,482 83,689
Other assets, net 4,314 15,196
--------- ----------
Total assets $99,967 $121,356
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities 19,448 27,221
Long-term liabilities 68,815 89,045
Stockholders' equity 11,704 5,090
--------- ----------
Total liabilities and stockholders' equity $99,967 $121,356
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