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Total revenues for the fourth quarter of 2004 were $10.4 million versus fourth quarter 2003 revenues of $5.1 million. Net loss for the fourth quarter of 2004 was $5.8 million versus net earnings of $94.7 million in the same period a year ago. Total revenues for the year ended December 31, 2004 were $31.0 million versus $9.2 million in 2003. Net loss for 2004 was $24.7 million versus net earnings of $84.3 million in 2003. Total revenues in the 2004 periods reflect the commencement of OrbView-3 operations, while net loss in the 2004 periods reflect an increase in operating costs (including depreciation) resulting from the OrbView-3 satellite and from interest expense on the Company's Senior Notes and Senior Subordinated Notes issued on December 31, 2003. Net earnings in the 2003 periods include a gain of $116.1 million which resulted from the discharge of pre-Chapter 11 indebtedness.
"2004 was an extraordinary year for the Company," said ORBIMAGE's President and Chief Executive Officer Matthew O'Connell. "Since the beginning of the year, we emerged from Chapter 11; commenced full OrbView-3 operations; signed the ClearView contract with the National Geospatial-Intelligence Agency (NGA), our largest customer; won the NGA NextView Second Vendor Program satellite procurement; and, during 2004 and 1st quarter 2005 raised over $100 million in additional equity to support our operations and the NextView satellite program. We've achieved our goal of establishing ourselves as an industry leader for providing imagery products and services in the U.S. and abroad. Our continuing focus is on delivering the highest quality imagery products to our customers and expanding our U.S. and international sales penetration. We have also made a number of important additions to our senior management team in order to support the expansion of our operations."
On December 31, 2003 (the "Effective Date"), Orbital Imaging Corporation (the "Predecessor Company") emerged from reorganization proceedings under Chapter 11 of the Federal bankruptcy laws pursuant to the terms of the Plan of Reorganization. Upon reorganization, the Orbital Imaging Corporation changed its name to ORBIMAGE Inc. (the "Successor Company'). As a result of applying Fresh-Start accounting, the reported historical financial statements of the Predecessor Company for periods ended prior to December 31, 2003 generally are not comparable to those of ORBIMAGE Inc. Therefore, comparisons of earnings per share data are not included herein. As referenced within this news release, results of operations for the quarter and year ended December 31, 2003 refer to the Predecessor Company.
Operating Results
The following table presents ORBIMAGE's summary reported results for the fourth quarter and annual periods (in thousands, except share and per share data):
Successor Predecessor Successor Predecessor
Company Company Company Company
Three Months Ended Year Ended
December 31, December 31,
2004 2003 2004 2003
Revenues $10,370 $5,093 $31,020 $9,219
Loss from operations (3,006) (19,812) (14,480) (24,427)
Reorganization items, net - 115,136 - 110,019
Net earnings (loss) (5,782) 94,669 (24,739) 84,289
Diluted earnings (loss) per
common share $(0.74) $1.95 $(3.80) $1.73
Revenues for the three months ended December 31, 2004 were $10.4 million, a significant increase compared to $5.1 million in the same period in 2003. Revenues for the year ended December 31, 2004 were $31.0 million compared to $9.2 million in the same period in 2003. The increase in 2004 revenues was primarily due to the commencement of OrbView-3 operations for the U.S. Government and our major international customers. Revenues generated from OrbView-3 products and services were approximately $8.7 million and $23.2 million for the quarter and year ended December 31, 2004, respectively. Total backlog was $462.1 million at December 31, 2004. This amount includes funded backlog (unfilled firm orders for which funding has been both authorized and appropriated by the customer) of $36.7 million and excludes unexercised options or task orders to be issued under indefinite delivery/indefinite quantity ("IDIQ") type contracts.
Loss from operations was $3.0 million for the fourth quarter of 2004 versus $19.8 million for the fourth quarter of 2003. Loss from operations in the fourth quarter of 2003 included a $18.2 million loss from the sale of the Predecessor Company's RadarSat-2 satellite territorial license. In 2004, ORBIMAGE commenced recording depreciation expense on the OrbView-3 satellite and related ground station assets. Loss from operations includes depreciation expense of $6.5 million and $0.9 million for the fourth quarter of 2004 and 2003, respectively. Additionally, loss from operations in the fourth quarter of 2004 includes $1.5 million of amortization of deferred compensation associated with stock awards granted to employees. Loss from operations was $14.5 million for 2004 and $24.4 million for 2003. Loss from operations includes depreciation expense of $22.6 million and $3.4 million in 2004 and 2003, respectively. Loss from operations in 2004 also includes $3.5 million of amortization of deferred compensation associated with stock awards granted to employees. The remaining variance for both 2004 periods compared to 2003 results principally from the commencement of OrbView-3 revenue activities.
Net loss for the fourth quarter of 2004 was $5.8 million versus a net gain of $94.7 million in the comparable 2003 period. Net loss for the year ended December 31, 2004 was $24.7 million versus net income of $84.3 million in the same period a year ago. Net income in the 2003 periods includes a gain of $104.8 million that was recorded on the discharge of the Predecessor Company's old Senior Notes. ORBIMAGE recorded net interest expense of approximately $2.8 million during the fourth quarter of 2004 and $10.3 million for the year on long-term debt incurred as part of the Chapter 11 restructuring. Net loss for both the quarter and year ended December 31, 2003 includes net interest expense of $0.7 million and $1.3 million on debt incurred in June 2003 to purchase insurance coverage for the combined risk of launch, satellite checkout and on-orbit satellite operations with respect to OrbView-3. This debt was converted to New Senior Notes on the effective date of the emergence from Chapter 11. The Predecessor Company previously had recognized no interest expense on its old Senior Notes because it was operating under bankruptcy protection.
Cash Flow and Leverage
As of December 31, 2004, ORBIMAGE had approximately $60.6 million of cash, cash equivalents and available-for-sale securities. Net cash provided by operating activities for 2004 was $27.5 million. Much of this cash was generated by payments received by NGA in the fourth quarter of 2004 to help fund the NextView program. Net cash used for investing activities in 2004 was $3.5 million, most of which represents internal salary and related costs as well as external costs associated with the in-orbit check-out of OrbView-3 and related systems. Net cash provided by financing activities in 2004 was $22.2 million. In conjunction with the NextView program, ORBIMAGE completed a private placement in which the Company issued investment units composed on 3.25 million shares of common stock and warrants to purchase 4.25 million shares of common stock for a purchase price of $10 per share. At the closing of the private placement, ORBIMAGE received $32.5 million in gross proceeds. Additionally, ORBIMAGE incurred approximately $10.2 million of investment management fees and other professional costs associated with debt offerings that will be executed in 2005 associated with the NextView program.
