Cash Flow and Leverage
As of September 30, 2005, ORBIMAGE had $253.3 million of cash and cash equivalents. Net cash provided by operating activities for the nine months ended September 30, 2005 was $92.1 million. During 2005, ORBIMAGE received approximately $75.6 million of milestone payments from the National Geospatial-Intelligence Agency ("NGA") related to the construction of the OrbView-5 satellite. Net cash used for investing activities were $119.4 million for the first nine months of 2005. Capital expenditures for the first nine months of 2005 were $112.7 million, much of which represents expenditures associated with the OrbView-5 satellite and related systems. ORBIMAGE also used approximately $6.7 million for the initial payment and other acquisition- related costs associated with the purchase of Space Imaging.
Net cash provided by financing activities were $220.0 million for the first nine months of 2005. During the first quarter ORBIMAGE received approximately $74.0 million of proceeds from the exercise of warrants by certain of its investors and from the issuance of shares in conjunction with a subscription rights offering which concluded in March 2005. Approximately $22.2 million of the warrant proceeds were used to redeem the Senior Notes on March 31, 2005 as discussed above. On June 29, 2005, ORBIMAGE Holdings Inc. issued $250 million aggregate principal amount of Senior Secured Floating Rate Notes due 2012 (the "Notes"). The Notes were offered in a private placement to certain qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933. The purpose of the offering was to contribute the proceeds to the capital of its wholly-owned subsidiary, ORBIMAGE Inc., to be used for construction costs for the OrbView-5 satellite, to mandatorily redeem all of the outstanding Senior Subordinated Notes of ORBIMAGE Inc. that were to mature in 2008 and for general working capital purposes. The Notes bear interest at a rate per annum, reset semi-annually, equal to the greater of nine-month LIBOR or three percent, plus a margin of 9.5 percent. ORBIMAGE Holdings entered into an interest rate swap arrangement pursuant to which it has fixed its effective interest rate under the Notes at 13.75 percent through July 1, 2008.
ORBIMAGE HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; 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
Direct expenses 9,685 9,162 27,843 24,997
Gross profit (loss) 1,512 (271) 514 (4,347)
Selling, general and
administrative expenses 3,146 3,293 8,792 7,127
Loss from operations (1,634) (3,564) (8,278) (11,474)
Interest expense, net 5,795 2,576 9,480 7,483
Loss from early
extinguishment of debt 2,119 - 2,758 -
Loss before benefit for
income taxes (9,548) (6,140) (20,516) (18,957)
Benefit for income taxes - - - -
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
ORBIMAGE HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; in thousands, except share data)
ASSETS
September 30, December 31,
2005 2004
Current assets:
Cash and cash equivalents $ 253,318 $ 60,565
Receivables net of allowances of
$127 and $126, respectively 8,444 12,148
Other current assets 3,634 2,612
Total current assets 265,396 75,325
Property, plant and equipment, at cost,
less accumulated depreciation of $6,635
and $3,751, respectively 27,455 18,263
Satellites and related rights, at cost,
less accumulated depreciation and
amortization of $32,687 and $18,142,
respectively 221,483 116,640
Goodwill 28,490 28,490
Other assets 26,092 10,428
Total assets $ 568,916 $ 249,146
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 13,484 $ 3,970
Amounts payable to subcontractors 62,984 47,545
Deferred revenue 1,113 2,234
Other current liabilities 1,561 -
Total current liabilities 79,142 53,749
Long-term debt 245,182 85,018
Deferred revenue, net of current portion 100,791 24,491
Other noncurrent liabilities 3,811 -
Total liabilities 428,926 163,258
Stockholders' equity:
Common stock, par value $0.01;
25,000,000 shares authorized;
17,434,889 shares and 9,917,078 shares
issued and outstanding as of September
30, 2005 and December 31, 2004,
respectively 174 99
Additional paid-in-capital 186,043 112,373
Unearned compensation (765) (1,845)
Accumulated deficit (45,255) (24,739)
Accumulated other comprehensive loss (207) -
Total stockholders' equity 139,990 85,888
Total liabilities and stockholders'
equity $ 568,916 $ 249,146
ORBIMAGE HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in thousands)
Nine Months Ended September 30,
2005 2004
Cash flows from operating activities:
Net loss $ (20,516) $ (18,957)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Depreciation and amortization 18,665 16,090
Interest paid in kind - 7,559
Stock compensation 1,080 2,027
Loss on early extinguishment of debt 2,758 -
Changes in assets and liabilities:
Decrease (increase) in receivables
and other current assets 3,992 (7,277)
Decrease in other assets 992 -
Increase (decrease) in accounts
payable and accrued expenses 9,512 (1,331)
Increase in deferred revenue 75,627 1,295
Net cash provided by (used in) operating
activities 92,110 (594)
Cash flows from investing activities:
Capital expenditures (112,693) (1,060)
Acquisition of Space Imaging (6,688) -
Net cash used in investing activities (119,381) (1,060)
Cash flows from financing activities:
Issuance of long-term debt 245,000 -
Extinguishment of long-term debt (85,016) -
Long-term debt repayment and
issuance costs (13,706) -
Issuance of common stock 73,746 -
Net cash provided by financing
activities 220,024 -
Net increase (decrease) in cash and 192,753 (1,654)
cash equivalents
Cash and cash equivalents, beginning
of period 60,565 14,405
Cash and cash equivalents, end of period $ 253,318 $ 12,751
Supplemental cash flow information:
Interest paid $ 4,295 $ -
Payments made in conjunction
with Chapter 11 reorganization $ - $ 1,040
Non-cash items:
Capital expenditures $ (67,625) $ -
Amounts payable to subcontractors 62,984 -
About ORBIMAGE: 
