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Orbital Announces Second Quarter 2011 Financial Results

21 July 2011

Orbital Sciences Corporation reported its financial results for the second quarter of 2011.  Second quarter 2011 revenues were $354.3 million, up 5% compared to $337.7 million in the second quarter of 2010.  Second quarter 2011 operating income was $22.7 million, compared to $12.2 million in the second quarter of 2010.

Net income was $21.2 million, or $0.36 diluted earnings per share, in the second quarter of 2011, compared to net income of $6.3 million, or $0.11 diluted earnings per share, in the second quarter of 2010.  The second quarter 2011 results included a favorable non-recurring income tax adjustment of $7.7 million, or $0.13 diluted earnings per share.  Excluding this favorable income tax adjustment, net income was $13.5 million,* or $0.23 diluted earnings per share.*  Orbital’s free cash flow* in the second quarter of 2011 was positive $24.4 million compared to negative $76.5 million in the second quarter of 2010.

Mr. David W. Thompson, Orbital’s Chairman, President and Chief Executive Officer, said, “Our second quarter 2011 revenues set a new quarterly record on strong growth in the company’s launch vehicles segment, while operating profit margins increased in all business segments.  Operational activity continued at a good pace, with six major rocket launches and space system deployments in addition to eight additional system deliveries in the second quarter.”
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* These adjusted amounts and “free cash flow” are non-GAAP financial measures.  For additional details concerning free cash flow, please refer to the sections of this press release entitled “Cash Flow” and “Disclosure of Non-GAAP Financial Measure.”

Financial Highlights

Summary financial results were as follows:

    
Second Quarter
   
First Six Months
 
($ in millions, except per share data)
 
2011
   
2010
   
2011
   
2010
 
Revenues
  $ 354.3     $ 337.7     $ 672.0     $ 633.9  
Operating Income
    22.7       12.2       32.8       29.6  
Net Income(1)
    21.2       6.3       33.5       15.6  
Diluted Earnings Per Share(1)
  $ 0.36     $ 0.11     $ 0.56     $ 0.27  
                                 
(1)Includes a favorable non-recurring income tax adjustment which increased net income by $7.7 million, or $0.13 diluted
 
earnings per share, in the second quarter of 2011.
 

Revenues increased $16.6 million, or 5%, in the second quarter of 2011 compared to the second quarter of 2010, primarily due to increased activity on national security satellite, space and target launch vehicle and space technical services contracts.  These factors were partially offset by decreased activity on the Orion human spacecraft Launch Abort System (LAS) contract that was terminated for convenience by the customer in the second quarter of 2010, decreased revenues on the International Space Station Commercial Resupply Services (CRS) contract, resulting from a particularly high level of subcontract activity in the second quarter of 2010, and decreased activity on science and remote sensing satellite contracts.

Operating income increased $10.5 million, or 86%, in the second quarter of 2011 compared to the second quarter of 2010 due to improved operating results in all of the company’s business segments.  This improvement was largely attributable to the absence of three factors that lowered operating income in the second quarter of 2010: (i) research and development (R&D) expenses that were not recovered under U.S. Government contracts, (ii) costs pertaining to the successful resolution of the Galaxy 15 satellite anomaly that occurred in early 2010 and (iii) transaction expenses pertaining to the company’s 2010 spacecraft business acquisition.

The company recorded an income tax benefit of $0.5 million in the second quarter of 2011 compared to an income tax provision of $4.0 million in the second quarter of 2010.  The reduction in income taxes was largely due to a favorable non-recurring income tax adjustment of $7.7 million, or $0.13 diluted earnings per share, recorded in the second quarter of 2011 pertaining to the company’s election to claim extraterritorial income (ETI) exclusions related to prior-year export activity.

Net income in the second quarter of 2011 increased to $21.2 million, or $0.36 diluted earnings per share, compared to $6.3 million, or $0.11 diluted earnings per share, in the second quarter of 2010.  Excluding the favorable ETI income tax adjustment noted above, net income was $13.5 million, or $0.23 diluted earnings per share.