Orbital Sciences Corporation : ORBITAL ANNOUNCES FOURTH QUARTER AND FULL YEAR 2012 FINANCIAL RESULTS

Thu Feb 14, 2013 6:00am EST

* Reuters is not responsible for the content in this press release.

For best results when printing this announcement, please click on the link below:

http://pdf.reuters.com/htmlnews/8knews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20130214:nHUGcWBh

       


ORBITAL ANNOUNCES FOURTH QUARTER AND FULL YEAR 2012 FINANCIAL RESULTS

- Company Reports Growth in Revenues and Operating Results -

- Orbital Also Updates 2013 Financial Guidance and Operational Outlook -

(Dulles, VA 14 February 2013) - Orbital Sciences Corporation (NYSE: ORB) today reported its fourth
quarter and full year 2012 financial results.  Fourth quarter 2012 revenues were $354.6 million,
up 6% compared to $335.5 million in the fourth quarter of 2011.  Fourth quarter 2012 operating
income was $31.3 million, an increase of 41% compared to $22.2 million in the fourth quarter of
2011.

Adjusted net income* was $17.4 million, or $0.29 adjusted diluted earnings per share*, in the
fourth quarter of 2012, compared to adjusted net income of $16.2 million, or $0.27 adjusted
diluted earnings per share, in the fourth quarter of 2011.  Orbital's free cash flow* in the
fourth quarter of 2012 was positive $0.3 million compared to negative $46.2 million in the fourth
quarter of 2011.

Full year 2012 revenues were $1,436.8 million, up 7% compared to $1,345.9 million in 2011. 
Operating income was $112.6 million in 2012, an increase of 41% compared to $79.8 million in 2011.
 Adjusted net income was $64.5 million, or $1.08 adjusted diluted earnings per share in 2012,
compared to adjusted net income of $54.6 million, or $0.92 adjusted diluted earnings per share in
2011.  Full year free cash flow was negative $34.3 million in 2012, compared to positive $5.3
million in 2011.

Mr. David W. Thompson, Orbital's Chairman and Chief Executive Officer, said, "Orbital's fourth
quarter and full year 2012 financial results reflected continued growth in revenues and operating
income, both of which set new annual records for the company.  Operational activity was also
robust last year, with 23 rocket launches, five satellite deployments and 20 other system
deliveries being carried out in 2012."

________
* "Adjusted net income," "adjusted diluted earnings per share" and "free cash flow" are non-GAAP
financial measures.  For additional details concerning these measures, please refer to the
sections of this press release entitled "Cash Flow" and "Disclosure of Non-GAAP Financial
Measures."

Financial Highlights

                                                                                                                   Fourth Quarter                        Full Year              
 ($ in millions, except per share data)                                                                        2012              2011              2012            2011         
 Revenues                                                                                                      $354.6            $335.5           $1,436.8        $1,345.9      
 Operating Income                                                                                                31.3              22.2              112.6            79.8      
 Net Income                                                                                                      13.9              17.4               61.0            67.4      
 Adjusted Net Income                                                                                             17.4      (1)     16.2      (1)      64.5   (1)      54.6  (1) 
 Diluted Earnings Per Share                                                                                     $0.23             $0.29              $1.02           $1.13      
 Adjusted Diluted Earnings Per Share                                                                             0.29      (1)     0.27      (1)      1.08   (1)      0.92  (1) 
                                                                                                                                                                                
      (1) Adjusted to exclude debt extinguishment expense in 2012 and  favorable income tax adjustments in 2011 and 2012.                                                       


Revenues increased $19.1 million, or 6%, in the fourth quarter of 2012 compared to the fourth
quarter of 2011.  The revenue growth was primarily due to a $4.2 million increase in launch
vehicles segment revenues, a $3.5 million increase in satellites and space systems segment
revenues and a $35.3 million reduction in intersegment revenue eliminations.  These factors were
partially offset by a $23.9 million revenue reduction in the advanced space programs segment.  The
reduction in intersegment revenues was attributable to a lower level of production activity on
Antares launch vehicles for the Commercial Orbital Transportation Services (COTS) research and
development program that is nearing completion.  The revenue growth in the launch vehicles segment
was principally due to increased activity on target launch vehicles and missile defense
interceptors, partially offset by a reduction in space launch vehicle revenues.  The reduction in
space launch vehicle revenues was primarily attributable to decreased production work on Antares
rockets for the COTS program, which was largely offset by an increase in production work on
Antares rockets on the CRS contract.  The revenue growth in the satellites and space systems
segment was primarily due to increased activity on science and remote sensing satellite contracts,
partially offset by decreased activity on communications satellite contracts.  The reduction in
advanced space programs segment revenues was mainly due to decreased activity on national security
satellite contracts.  

Operating income increased $9.1 million, or 41%, in the fourth quarter of 2012 compared to the
fourth quarter of 2011, due to an $8.7 million profit increase in the satellites and space systems
segment and a $2.8 million profit increase in the launch vehicles segment, partially offset by a
profit reduction of $2.4 million in the advanced space program segment.  Satellites and space
systems segment operating income increased mainly due to profit improvements in the communications
satellite product line and a nonrecurring contract settlement charge of $6.5 million that reduced
operating income in the fourth quarter of 2011.  Launch vehicles segment operating income
increased principally due to profit improvements on space launch vehicle contracts. Advanced space
programs segment operating income decreased primarily due to reduced activity on national security
satellite contracts.

Net income in the fourth quarter of 2012 was $13.9 million, or $0.23 diluted earnings per share,
compared to $17.4 million, or $0.29 diluted earnings per share, in the fourth quarter of 2011. 
The company's fourth quarter 2011 financial results included $6.5 million of insurance recoveries
reported in "other income" that offset equal charges reflected in operating income.  
In the fourth quarter of 2012, the company refinanced substantially all of its long-term debt and
recognized $10.3 million of nonrecurring debt extinguishment expenses.  Additionally, in the
fourth quarter of 2012, the company recorded a favorable income tax adjustment of $2.8 million
pertaining to extraterritorial income (ETI) exclusions.  The fourth quarter of 2011 included
federal research and development tax credits of $1.2 million that were not available to the
company in 2012.  Excluding the effect of these transactions, adjusted net income was $17.4
million, or $0.29 adjusted diluted earnings per share, in the fourth quarter of 2012 compared to
$16.2 million, or $0.27 adjusted diluted earnings per share, in the fourth quarter of 2011.

Full year 2012 revenues increased $90.9 million, or 7%, compared to full year 2011, due to revenue
growth in the launch vehicles and the advanced space programs segments partially offset by lower
revenues in the satellites and space systems segment.  Launch vehicles segment revenues grew
principally due to increased activity on target launch vehicles.  Advanced space programs segment
revenues increased primarily due to increased activity on the Commercial Resupply Services (CRS)
cargo delivery contract with NASA.  Satellites and space systems segment revenues decreased mainly
due to lower activity on communications satellite contracts.

Full year 2012 operating income increased $32.8 million, or 41%, compared to full year 2011, due
to higher operating income in all three business segments.  Launch vehicles segment operating
income increased largely due to improved operating income from space launch vehicles that was
primarily attributable to a nonrecurring adjustment related to a launch failure that reduced
operating income by $11.3 million in 2011.  Satellites and space systems segment operating income
increased principally due to profit improvements in the communications satellite product line in
addition to a nonrecurring contract settlement charge that reduced operating income by $6.5
million in 2011.  Advanced space programs segment operating income increased mainly due to
increased activity on the CRS contract and a favorable contract closeout adjustment in 2012.  

Full year 2012 net income was $61.0 million, or $1.02 diluted earnings per share, compared to
$67.4 million, or $1.13 diluted earnings per share in 2011.  The company's full year 2011
financial results included $17.8 million of insurance recoveries reported in "other income" that
offset equal charges reflected in operating income.  The company's full year effective income tax
rates were 33.5% in 2012 and 23.4% in 2011.  

The company's full year 2012 financial results included $10.3 million of nonrecurring debt
extinguishment expenses.  In addition, 2012 and 2011 included favorable income tax adjustments of
$2.8 million and $7.7 million, respectively, pertaining to ETI exclusions. Additionally, 2011
included federal research and development tax credits of $5.1 million that were not available to
the company in 2012.  Excluding the effect of these transactions, adjusted net income was $64.5
million, or $1.08 adjusted diluted earnings per share, for full year 2012, compared to adjusted
net income of $54.6 million, or $0.92 adjusted diluted earnings per share, for full year 2011.

Segment Results

Launch Vehicles

                             Fourth Quarter                          Full Year             
 ($ in millions)    2012         2011        % Change     2012        2011       % Change  
 Revenues           $134.2       $130.0         3%        $527.3      $483.2        9%     
 Operating Income      9.9          7.1         39%         36.2        14.2       155%    
 Operating Margin     7.4%         5.5%                     6.9%        2.9%               


Launch vehicles segment revenues increased $4.2 million in the fourth quarter of 2012 compared to
the fourth quarter of 2011 due to increased activity on target launch vehicles and missile defense
interceptors, partially offset by a reduction in space launch vehicle revenues.  The reduction in
space launch vehicle revenues was primarily attributable to decreased production work on Antares
rockets for the COTS program, which is nearing completion, that was largely offset by an increase
in production work on Antares rockets for the CRS contract.

Segment operating income increased $2.8 million in the fourth quarter of 2012 compared to the
fourth quarter of 2011 primarily due to profit improvements on certain space launch vehicle
contracts and increased activity on target launch vehicles.  Segment operating margin increased
principally due to space launch vehicle profit improvement.

Satellites and Space Systems

                             Fourth Quarter                          Full Year             
 ($ in millions)    2012         2011        % Change     2012        2011       % Change  
 Revenues           $125.3       $121.8         3%        $496.2      $553.8       (10%)   
 Operating Income     16.1          7.4        118%         46.2        37.6        23%    
 Operating Margin    12.8%         6.1%                     9.3%        6.8%               


Satellites and space systems segment revenues increased $3.5 million in the fourth quarter of 2012
compared to the fourth quarter of 2011 primarily due to increased activity on science and remote
sensing satellite contracts, partially offset by decreased activity on communications satellite
contracts.

Segment operating income increased $8.7 million in the fourth quarter of 2012 compared to the
fourth quarter of 2011 largely due to the effect of a nonrecurring contract settlement charge that
reduced operating income by $6.5 million in the fourth quarter of 2011.  In addition, segment
operating income was increased by favorable profit adjustments on certain communications satellite
and science and remote sensing satellite contracts that were substantially completed in the fourth
quarter of 2012.  Segment operating margin improved principally due to the favorable profit
adjustments on certain communications satellite and science and remote sensing satellite contracts
and the effect of the contract settlement charge in the fourth quarter of 2011.

Advanced Space Programs

                             Fourth Quarter                          Full Year             
 ($ in millions)    2012         2011        % Change     2012        2011       % Change  
 Revenues           $102.0       $125.9        (19%)      $470.1      $434.0        8%     
 Operating Income      5.3          7.7        (31%)        32.3        28.0        15%    
 Operating Margin     5.2%         6.1%                     6.9%        6.5%               


Advanced space programs segment revenues decreased $23.9 million in the fourth quarter of 2012
compared to the fourth quarter of 2011 mainly due to decreased activity on national security
satellite contracts.  

Segment operating income decreased $2.4 million in the fourth quarter of 2012 compared to the
fourth quarter of 2011 principally due to decreased activity on national security satellite
contracts.  Segment operating margin declined primarily due to a reduction in operating margin on
national security satellite contracts.  

Cash Flow

                                                                  Fourth Quarter             Full Year       
 ($ in millions)                                                       2012                     2012         
 Net Cash Provided by (Used in) Operating Activities                    $11.7                   $(7.7)       
 Capital Expenditures                                                  (11.4)                   (52.2)       
 Net Proceeds from Disposition of Property                                  -                     25.6       
                             Free Cash Flow                               0.3                   (34.3)       
 Issuance of Debt                                                       148.5                    148.5       
 Repayment of Debt                                                    (145.2)                  (145.2)       
 Other, Net                                                               1.2                      4.1       
                             Net Increase (Decrease) in Cash              4.8                   (26.9)       
 Beginning Cash Balance                                                 227.5                    259.2       
 Ending Cash Balance                                                   $232.3                   $232.3       
                                                                                                             
                                                                                                             


During the fourth quarter of 2012, the company received net cash proceeds of $148.5 million in
connection with a new five-year term loan agreement.  The company used $145.2 million of the
proceeds to repay substantially all of its prior long-term debt.

New Business Highlights

In the fourth quarter of 2012, Orbital recorded approximately $445 million in new firm and option
contract bookings.  In addition, the company recognized approximately $325 million of option
exercises under existing contracts.  For full year 2012, Orbital received approximately $1.44
billion in firm and option bookings and approximately $820 million of option exercises under
existing contracts.  As of December 31, 2012, the company's firm contract backlog was
approximately $2.2 billion and its total backlog (including options, indefinite-quantity contracts
and undefinitized orders) was approximately $5.0 billion.

Operational Highlights

In the fourth quarter of 2012, three Orbital-built commercial communications satellites were
launched and deployed into geosynchronous (GEO) orbit, including the Intelsat 23, Star One C3 and
Mexsat Bicentenario spacecraft.  In addition, the company launched three sounding rockets in
support of NASA science missions.  Orbital also delivered several satellites and target missiles
to be used in future missions.  The company made significant progress on the COTS and CRS programs
with the completion of several critical propellant loading tests of the Antares rocket at the
Wallops Island launch site and the completion of production and environmental testing on the
Cygnus spacecraft to be flown on the first CRS mission scheduled to be launched in 2013.  

For the year as a whole, 2012 was a busy and productive period for the company.  The company
launched four major rockets, deployed five satellites into Earth orbit and carried out 19 smaller
scientific rocket missions.  The rocket launches included a Pegasus space launch vehicle and two
ballistic missile defense-related targets.  Orbital also completed and deployed four commercial
communications spacecraft and the NuSTAR astrophysics satellite.  Additionally, in 2012 the
company achieved numerous milestones in the Antares rocket and the Cygnus cargo logistics
spacecraft development programs.

Looking ahead to 2013, Orbital is planning to carry out approximately 40 operational events,
including approximately 15 launch vehicle missions highlighted by the first three flights of the
Antares medium-class space launch vehicle.  Orbital also expects to deploy six spacecraft,
including the first two Cygnus cargo logistics spacecraft to be launched aboard Antares rockets
for the COTS and CRS programs.  In addition, Orbital is scheduled to carry out about 20 scientific
sounding rocket missions from multiple launch ranges.

2013 Financial Guidance

The company updated its financial guidance for 2013, amending the preliminary outlook for the year
that was first provided last October, as follows:

                                     Current          Previous     
 Revenues ($ in millions)        $1,425 - $1,500  $1,450 - $1,525  
 Operating Income Margin          7.00% - 7.50%    7.25% - 7.75%   
 Diluted Earnings per Share       $1.00 - $1.10    $1.00 - $1.15   
 Free Cash Flow ($ in millions)      $0 - $20           n/a        


The outlook for 2013 is based on a variety of assumptions about future business conditions and
operational events, including new business bookings, U.S. Government budget levels, developmental
and operational schedules and tax policies.  This outlook assumes that the effective income tax
rate will be approximately 38% in 2013.  
Disclosure of Non-GAAP Financial Measures

We define free cash flow as GAAP (U.S. Generally Accepted Accounting Principles) net cash provided
by (used in) operating activities, less capital expenditures for property, plant and equipment,
plus net proceeds from disposition of property.  A reconciliation of free cash flow to net cash
provided by (used in) operating activities is included above in the section entitled "Cash Flow." 
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.

Adjusted net income is defined as GAAP net income adjusted to exclude debt extinguishment expense
and favorable income tax adjustments pertaining to extraterritorial income exclusions and federal
research and development tax credits.  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 current and prior period results without the impact of these significant charges and
adjustments.  The reconciliation of the GAAP net income to adjusted net income is a follows:

                                                                                                                                                              
                                                                                                                   Fourth Quarter              Full Year      
 ($ in millions, except per share data)                                                                        2012              2011      2012         2011  
 GAAP Net Income                                                                                                $13.9             $17.4    $61.0        $67.4 
 Adjustments                                                                                                                                                  
          Debt Extinguishment Expense, net of tax                                                                 6.3                 -      6.3            - 
          ETI Tax Adjustments (1)                                                                               (2.8)                 -    (2.8)        (7.7) 
          Research and Development Tax Credit                                                                       -             (1.2)        -        (5.1) 
 Adjusted Net Income                                                                                            $17.4             $16.2    $64.5        $54.6 
 Adjusted Diluted Earnings Per Share                                                                            $0.29             $0.27    $1.08        $0.92 
                                                                                                                                                              
      (1) These favorable income tax adjustments pertain to extraterritorial income (ETI) exclusions.                                                         


Orbital does not intend for the above non-GAAP financial measures to be considered in isolation or
as a substitute for the related GAAP measures.  Other companies may define these measures
differently.

About Orbital 

Orbital develops and manufactures small- and medium-class rockets and space systems for
commercial, military and civil government customers.  The company's primary products are
satellites and launch vehicles, including low-Earth orbit, geosynchronous-Earth orbit and
planetary exploration spacecraft for communications, remote sensing, scientific and defense
missions; human-rated space systems for Earth-orbit, lunar and other missions; ground- and
air-launched rockets that deliver satellites into orbit; and missile defense systems that are used
as interceptor and target vehicles.  Orbital also provides satellite subsystems and space-related
technical services to U.S. Government agencies and laboratories.  More information about Orbital
can be found at http://www.orbital.com.

"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.  These
forward-looking statements include, but are not limited to, those related to our financial
outlook, liquidity, goals, business strategy, projected plans and objectives of management for
future operating results and forecasts of future events.  These statements can be identified by
the fact that they do not relate strictly to historical or current facts.  Forward-looking
statements often include the words "anticipate," "forecast," "expect," "believe," "should,"
"will," "intend," "plan" and words of similar substance.  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, including the impact of potential sequestration under the Budget Control Act of 2011,
new product development programs, the availability of key product components, product performance
and market acceptance of products and technologies, achievement of contractual milestones,
government contract procurement and termination risks and income tax rates, as well as other risk
factors and business considerations described in the company's SEC filings, including its annual
report on Form 10-K, may materially impact Orbital's actual financial  and operational results. 
Orbital assumes no obligation for updating the information contained in this press release.

A transcript of the earnings teleconference call will be available on Orbital's website at
http://www.orbital.com/Investor http://www.orbital.com/Investor .

Contact:   
Barron Beneski (703) 406-5528
Public and Investor Relations
beneski.barron@orbital.com mailto:beneski.barron@orbital.com 

- attachments below -

ORBITAL SCIENCES CORPORATION
Consolidated Income Statements
(in thousands, except per share data)

                                                          Fourth Quarter                   Full Year           
                                                      2012             2011         2012              2011     
                                                                                                               
 Revenues                                            $354,589         $335,451    $1,436,769        $1,345,923 
 Cost of revenues                                     263,852          253,097     1,097,190         1,074,389 
 Research and development expenses                     31,483           35,503       114,205           102,751 
 Selling, general and administrative expenses          27,935           24,648       112,803            88,989 
 Income from operations                                31,319           22,203       112,571            79,794 
 Interest income and other                                 55            6,774           749            19,335 
 Interest expense                                     (2,711)          (2,881)      (11,275)          (11,096) 
 Debt extinguishment expense                         (10,261)                -      (10,261)                 - 
 Income before income taxes                            18,402           26,096        91,784            88,033 
 Income tax provision                                 (4,454)          (8,727)      (30,778)          (20,639) 
 Net income                                           $13,948          $17,369       $61,006           $67,394 
                                                                                                               
 Basic income per share                                 $0.23            $0.29         $1.03             $1.14 
 Diluted income per share                                0.23             0.29          1.02              1.13 
                                                                                                               
 Shares used in computing basic income per share       59,511           58,799        59,165            58,531 
 Shares used in computing diluted income per share     59,762           59,217        59,457            59,127 


ORBITAL SCIENCES CORPORATION
Segment Information
(in millions)

                                   Fourth Quarter               Full Year         
                                2012           2011       2012            2011    
 Revenues:                                                                        
 Launch Vehicles                $134.2         $130.0      $527.3          $483.2 
 Satellites and Space Systems    125.3          121.8       496.2           553.8 
 Advanced Space Programs         102.0          125.9       470.1           434.0 
 Eliminations                    (6.9)         (42.2)      (56.8)         (125.1) 
 Total Revenues                 $354.6         $335.5    $1,436.8        $1,345.9 
                                                                                  
 Income from Operations:                                                          
 Launch Vehicles                  $9.9           $7.1       $36.2           $14.2 
 Satellites and Space Systems     16.1            7.4        46.2            37.6 
 Advanced Space Programs           5.3            7.7        32.3            28.0 
 Corporate and Other                 -              -       (2.1)               - 
 Total Income from Operations    $31.3          $22.2      $112.6           $79.8 
                                                                                  


ORBITAL SCIENCES CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)

                                                                         December 31,              December 31,     
                                                                             2012                      2011         
 Assets                                                                                                             
 Cash                                                                        $232,324                      $259,219 
 Receivables                                                                  499,222                       333,467 
 Inventories, net                                                              61,251                        64,335 
 Deferred income taxes, net                                                    38,216                        51,413 
 Other current assets                                                          17,810                        46,965 
                       Total current assets                                   848,823                       755,399 
 Investments                                                                    9,200                         8,500 
 Property, plant and equipment, net                                           251,360                       259,972 
 Goodwill                                                                      75,261                        75,261 
 Other non-current assets                                                      26,810                        31,668 
                       Total Assets                                        $1,211,454                    $1,130,800 
                                                                                                                    
 Liabilities and Stockholders' Equity                                                                               
 Accounts payable and accrued expenses                                       $257,113                      $234,379 
 Deferred revenues and customer advances                                       62,098                       104,970 
                       Total current liabilities                              319,211                       339,349 
 Long-term debt                                                               150,736                       131,182 
 Other non-current liabilities                                                 27,961                        16,990 
 Total stockholders' equity                                                   713,546                       643,279 
                       Total Liabilities and Stockholders' Equity          $1,211,454                    $1,130,800 
                                                                                                                    


ORBITAL SCIENCES CORPORATION
Condensed Consolidated Statements of Cash Flows
(in thousands)

                                                           Fourth Quarter              Full Year        
                                                                2012                      2012          
                                                                                                        
 Net income                                                     $13,948                   $61,006       
 Depreciation and amortization                                    9,344                    37,339       
 Deferred income taxes                                            2,777                    26,886       
 Debt extinguishment expense                                     10,261                    10,261       
 Changes in assets and liabilities                             (28,020)                 (154,435)       
 Other                                                            3,352                    11,277       
 Net cash provided by (used in) operating activities             11,662                   (7,666)       
 Capital expenditures                                          (11,374)                  (52,175)       
 Net proceeds from disposition of property                            -                    25,589       
 Net cash used in investing activities                         (11,374)                  (26,586)       
 Proceeds from issuance of debt                                 148,534                   148,534       
 Repayment of debt                                            (145,179)                 (145,179)       
 Net proceeds from issuance of common stock                         914                     3,504       
 Other, Net                                                         244                       498       
 Net cash provided by financing activities                        4,513                     7,357       
 Net increase (decrease) in cash                                  4,801                  (26,895)       
 Cash, beginning of period                                      227,523                   259,219       
 Cash, end of period                                           $232,324                  $232,324       
                                                                                                        


# # #


---------------------------------------------------------------------------------------------------

This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients.

The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.

Source: Orbital Sciences Corporation via Thomson Reuters ONE


HUG#1678107

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.