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Total revenues for the third quarter of 2005 and 2004 were $11.2 million and $8.9 million, respectively. Total revenues for the nine months ended September 30, 2005 and 2004 were $28.4 million and $20.7 million, respectively. Net loss for the third quarter of 2005 was $9.5 million, or $0.55 per share, compared to $6.1 million, or $0.95 per share, for the third quarter of 2004. Net loss for the nine months ended September 30, 2005 was $20.5 million, or $1.29 per share, compared to $19.0 million, or $2.97 per share, for the nine months ended September 30, 2004.
"While we are pleased that our third quarter 2005 revenues reached a record level, we are disappointed with the pace of our revenue increase this year," said ORBIMAGE's President and Chief Executive Officer Matthew O'Connell. "Our revenues increased substantially on a year to year basis, but they have developed much more slowly than we had anticipated for a number of reasons. The principal delay was in the international arena. Many international customers have delayed purchasing decisions for long term contracts pending the outcome of the industry consolidation that is currently underway. At this point, we believe our annual 2005 revenues will be approximately $40 million, a significant improvement over 2004 but below the $50 million to $60 million range we had anticipated in May. We have been very careful about our spending, however, and have largely mitigated the revenue shortfall through rigorous cost containment. As a result, we believe our operating loss for 2005 will be consistent with our prior guidance, and expect it to be in the range of $(12) million to $(8) million, including approximately $24 million of depreciation and amortization expenses. On the positive side, the construction of our OrbView-5 satellite continues to progress on schedule and within budget. Once the acquisition of Space Imaging is completed, we believe our ability to promote the combined capabilities and product portfolios of the two companies will increase our ability to enter into long-term agreements with potential international customers because of our ability to offer multiple sources of imagery currently and a long term solution once OV-5 is operational. We have met with almost all of the international and domestic customers since the announcement of our acquisition of Space Imaging to present the combined capabilities of ORBIMAGE post acquisition, and we are in discussions with a number of them about upgrading their systems for dual capabilities and extended imagery buys. As a result of those meetings, I am more excited than ever about the long-term prospects of our company and our position as the leader in this important segment of the defense and intelligence industry."
Operating Results
The following table presents ORBIMAGE's summary reported results (unaudited) for the third quarter and year-to-date periods (in thousands, except share and per share data):
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Revenues $ 11,197 $ 8,891 $ 28,357 $ 20,650
Loss from operations (1,634) (3,564) (8,278) (11,474)
Net loss (9,548) (6,140) (20,516) (18,957)
Loss per common share
-- basic and diluted (0.55) (0.95) (1.29) (2.97)
Weighted average
shares outstanding --
basic and diluted 17,291,587 6,497,292 15,849,818 6,388,335
Revenues for the three months ended September 30, 2005 were approximately $11.2 million as compared to $8.9 million in the same period in 2004. Revenues for the nine months ended September 30, 2005 were approximately $28.4 million, compared to $20.6 million for the same period in 2004. Approximately $1.1 million of the increase in third quarter 2005 revenues resulted from the recognition of revenue associated with infrastructure enhancements under the NGA ClearView program that were completed subsequent to the third quarter and are being recognized over the remaining term of the contract. The remaining increase was principally generated from volume increases in value added production services performed on behalf of NGA along with increased subscription sales of SeaStar imagery generated from the OrbView-2 satellite for commercial customers. The increase in 2005 year-to-date revenues as compared to 2004 was primarily due to commencement of OrbView-3 operations for the U.S. Government effective in March 2004 under the NGA ClearView program for imagery and infrastructure enhancements, and in June 2004 for production services. The timing of the commencement of these activities resulted in a $6.8 million increase in 2005 revenues over 2004. The remaining increase resulted from the commencement of OrbView-3 operations for international customers in the second quarter of 2004. The Company recognized revenues generated from OrbView-3 products and services of $9.3 million and $6.7 million for the three months ended September 30, 2005 and 2004, respectively, and $23.7 million and $14.5 million for the nine months ended September 30, 2005 and 2004, respectively.
Loss from operations for the third quarter of 2005 was $1.6 million as compared to $3.6 million in the same period in 2004, which is mainly attributable to increased sales as noted above. Loss from operations for the nine months ended September 30, 2005 was $8.3 million as compared to $11.5 million in 2004. The decrease in this loss from the prior year is attributable to the generation of revenues from the OrbView-3 satellite for a full nine month period in 2005 versus a seven month period in 2004. Total depreciation expense recorded for the OrbView-3 satellite and related ground system assets was $16.1 million in 2005 and $13.6 million in 2004.
Net loss for the third quarter of 2005 was $9.5 million versus a net loss of $6.1 million in the same 2004 period. Net loss for the first nine months of 2005 was $20.5 million versus a net loss of $19.0 million a year ago. ORBIMAGE recorded net interest expense of $5.8 million and $2.6 million during the three months ended September 30, 2005 and 2004, respectively, and $9.5 million and $7.5 million during the nine months ended September 30, 2005 and 2004, respectively. The third quarter 2005 amount principally represents interest expense of $7.0 million incurred on the Company's Senior Floating Rate Notes, offset by interest income of approximately $1.3 million. The 2004 amount represents interest expense incurred on the Company's Senior Notes and Senior Subordinated Notes, both of which were repaid during 2005. The 2005 year-to-date amount principally represents interest expense of $7.0 million incurred on the Senior Floating Rate Notes and interest expense of $3.7 million incurred on the Senior Notes and Senior Subordinated Notes, offset by interest income of approximately $2.3 million. The 2004 amount represents interest expense incurred on the Company's Senior Notes and Senior Subordinated Notes. During the third quarter of 2005, the Company recorded a loss of $2.1 million associated with the early extinguishment of its Senior Subordinated Notes. ORBIMAGE also recorded a loss of $0.6 million associated with the early extinguishment of the Senior Notes in the first quarter of 2005.
