Exhibit 99
----------
[LOGO OF ORBCOMM]
ORBCOMM REPORTS RESULTS FOR SECOND QUARTER 2009
- Service Revenues of $6.7 million, up 17% -
- Adjusted EBITDA of $1.3 million -
- EBITDA of $1.0 million -
- Total Subscribers Expected To Surpass 500,000 This Week -
Fort Lee, NJ, August 10, 2009 - ORBCOMM Inc. (Nasdaq: ORBC), a global satellite
data communications company focused on two-way Machine-to-Machine (M2M)
communications, today announced financial results for the second quarter ended
June 30, 2009.
The following financial highlights are in thousands of dollars, except per
share.
Three months ended June 30, Six months ended June 30,
2009 2008 2009 2008
Total Revenues $6,770 $6,874 $13,497 $11,719
Service Revenues $6,720 $5,757 $13,342 $10,612
Product Sales $50 $1,117 $155 $1,107
Net Loss attributable to ORBCOMM Inc. $(362) $(979) $(9,497) $(1,513)
Net Loss per Common Share $(0.01) $(0.02) $(0.22) $(0.04)
Average Shares Outstanding (basic and diluted) 42,407,000 41,961,000 42,358,000 41,882,000
EBITDA (1) (3) $960 $(624) $(6,867) $(1,226)
Adjusted EBITDA (2) (3) $1,333 $560 $1,042 $768
(1) EBITDA is defined as earnings attributable to ORBCOMM Inc. before interest
income (expense), provision for income taxes and depreciation and amortization.
(2) Adjusted EBITDA is defined as EBITDA, adjusted for stock-based compensation
expense for continued and discontinued operations, noncontrolling interests and
pre-control earnings of consolidated subsidiary, and impairment charge.
(3) A table presenting EBITDA and Adjusted EBITDA, reconciled to GAAP Net Loss,
is among other financial tables at the end of this release.
Service Revenues for the second quarter of 2009 increased 16.7% to $6.7 million
from the comparable period of 2008 due primarily to an increase in billable
subscriber communicators and revenue from Automatic Identification System (AIS)
service. Total Revenues for the quarter ended June 30, 2009 were $6.8 million.
Total revenues declined 1.5% from the second quarter of 2008, due primarily to a
decline in Product Sales at our Japanese subsidiary of $1.1 million versus the
prior year. The Stellar business is not included in Product Sales as it has been
classified as discontinued operations.
Costs and Expenses in the second quarter of 2009 were $7.9 million, an increase
of $0.2 million compared to the same period in the prior year. Costs and
Expenses, excluding Costs of Product Sales and last year's Gain from Customer
Claims Settlements, increased 5.3% or $0.4 million. The higher costs were driven
by an increase in non-cash items, such as depreciation expense of $0.6 million
due mostly to the Coast Guard satellite and the non-recurring expensing of the
$0.3 million balance of in-orbit insurance costs associated with the Quick
Launch and Coast Guard satellites. Excluding these items, costs and expenses
decreased 8.5% in the second quarter of 2009 compared to the second quarter of
2008.
Operating loss for the second quarter ended June 30, 2009 was $1.1 million
compared to a $0.8 million loss in the second quarter of 2008, largely driven by
higher depreciation expense and in-orbit insurance expense. Income from
discontinued operations of $0.4 million contributed to the year-over-year
improvement in Net Loss during the quarter, versus a Loss from discontinued
operations in the second quarter of 2008 of $0.4 million. Net Loss for the
quarter was $0.4 million versus $1.0 million in the second quarter of 2008.
At June 30, 2009, there were more than 483,000 billable subscriber
communicators, a 14.9% increase over the second quarter of 2008. Net satellite
subscriber additions during the quarter were approximately 10,000, while
terrestrial subscribers decreased by 3,000 due to deactivations by a limited
number of Value Added Resellers (VARs) who have been adversely affected by
economic conditions. During the second quarter Original Equipment Manufacturers
(OEMs)contributed to the vast majority of subscriber growth. This week, ORBCOMM
is scheduled to complete the migration of more than 30,000 net terrestrial
subscribers from GE Asset Intelligence, which more than offsets the terrestrial
declines experienced during 2009. As a result of these new additions, ORBCOMM
expects to surpass 500,000 total billable subscriber communicators.
Since July 31, 2009, the Company has lost communication with two Quick Launch
Satellites. On July 31, 2009, the gateway transmitter on one of the Quick Launch
satellites experienced an anomaly that resulted in the loss of communications
capability between the satellite and the gateway earth stations. ORBCOMM
believes the gateway transmitter will not be recovered resulting in a loss of
communication capability of this satellite. On August 7, 2009, a different Quick
Launch satellite experienced a power system failure resulting in the loss of
communication with this satellite. The Company is continuing its efforts to
recover this satellite. ORBCOMM expects to record a non-cash Impairment Charge
of $7.1 million associated with the loss that occurred on July 31, 2009 in the
quarter ending September 30, 2009 and could record up to $14.2 million if the
second satellite is not recovered. The Company does not expect the loss of these
satellites to have a material adverse effect on current communication service.
The Company had previously filed a $50 million claim under its satellite
in-orbit insurance policy for the five Quick Launch and one Coast Guard
Demonstration satellites. The Company's next generation satellites are under
construction and the first set of six new next generation satellites are
approximately a year away from the contractually scheduled completion date.
"This week ORBCOMM is scheduled to surpass 500,000 total subscribers, which
represents a significant milestone for the Company," said Marc Eisenberg,
ORBCOMM's Chief Executive Officer. "Furthermore, we are pleased with the
continued growth in AIS in the second quarter. Through our distribution
partners, we have seen revenues start to grow among oil and gas companies,
government entities, and others that are expected to generate high margin
Service Revenues in the second half of 2009."
"As we had expected, ORBCOMM returned to generating positive Adjusted EBITDA and
reported our best EBITDA and Adjusted EBITDA results on record," said Robert
Costantini, ORBCOMM's Chief Financial Officer. "Excluding the non-recurring
items during the quarter, Adjusted EBITDA would have been more than $0.5 million
higher on Service Revenue growth of almost 17%, which demonstrates both the
scalability of the business and ORBCOMM's focus on managing costs."
Business Highlights
- -------------------
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Selected recent business highlights include:
o ORBCOMM announced it has reached an agreement to expand
terrestrial and dual-mode wireless services to include CDMA in
addition to its GSM and satellite offerings. This agreement led to
the scheduled migration later this week of more than 30,000 net
terrestrial subscribers from GE Asset Intelligence.
o The number of users of the Company's AIS service continues to grow
as a result of several new annual license agreements directly with
ORBCOMM and multiple new agreements sold through distribution
partners. In April 2009, ORBCOMM entered into an AIS service
distribution agreement with Portvision, a provider of information
solutions for the maritime industry. ORBCOMM continues to enter
into several new test and evaluation agreements. The U.S. Coast
Guard recently exercised its contract option to renew AIS service
at the high data usage level through August 2010.
o Digi International Inc. (NASDAQ: DGII) has entered the market for
satellite subscriber communicators for the ORBCOMM network with
its purchase of MobiApps Holdings Private Limited (MobiApps). The
acquisition of MobiApps by Digi is expected to result in satellite
subscriber communicators that are especially suited to
applications that move across country and continental boundaries,
providing connectivity in remote locations, and providing mission
critical wireless backup solutions when cellular coverage is
insufficient.
Financial Results and Highlights
- --------------------------------
Revenue
Total Revenues for the second quarter of 2009 were $6.8 million, a decrease 1.5%
from the second quarter of 2008. Service Revenues for the second quarter were
$6.7 million, an increase of almost $1.0 million, or 16.7%, over the prior year
due primarily to an increase in billable subscriber communicators and AIS
revenue. Product Sales decreased in the second quarter by $1.1 million due
primarily to a decline in Product Sales at our Japanese subsidiary. The
financial results of the Stellar hardware business have been classified as
discontinued operations.
Billable Subscriber Communicators
As of June 30, 2009, there were more than 483,000 billable subscriber
communicators, compared to more than 420,000 billable subscriber communicators
as of June 30, 2008, an increase of 14.9%.
Costs and Expenses
Costs and Expenses in the second quarter of 2009 were $7.9 million, an increase
of $0.2 million compared to the same period in the prior year. Costs and
Expenses excluding Costs of Product Sales and excluding last year's gain from
customer claims settlements in the second quarter increased 5.3% or $0.4
million. The higher costs are driven by an increase in depreciation expense of
$0.6 million due mostly to the Coast Guard satellite and the expensing of the
final $0.3 million portion of in-orbit insurance costs associated with the Quick
Launch and Coast Guard satellites, a non-cash
3
expense during the quarter. Costs and Expenses were further driven by a
continuation of unusual expenses incurred in the first quarter, which includes
approximately $0.2 million associated with the Company's proxy contest.
Excluding these items, Costs and Expenses decreased by 11.9% in the second
quarter of 2009 compared to the second quarter of 2008, which was assisted by
lower operating expenses, including lower employee costs, facility and travel
expenses.
Net Loss
Net Loss narrowed to $0.4 million for the second quarter 2009 compared to a Net
Loss of $1.0 million in the prior year period. In addition to the increases in
Service Revenues, the improving loss was also aided by Income from Discontinued
Operations, which was driven by the settlement payment from GE Asset
Intelligence received during the quarter
Net Loss per Common Share from continuing operations was $0.02 for the three
months ended June 30, 2009 compared to Net Loss per Common Share from continuing
operations of $0.01 for the prior year quarter. Net Loss attributable to ORBCOMM
Inc. was $0.01 for the three months ended June 30, 2009 compared to Net Loss
attributable to ORBCOMM Inc. of $0.02 for the prior year quarter.
EBITDA and Adjusted EBITDA
EBITDA for the second quarter of 2009 was positive $1.0 million, compared to an
EBITDA of negative $0.6 million in the second quarter of 2008.
Adjusted EBITDA for the second quarter of 2009 was $1.3 million, compared to an
Adjusted EBITDA of $0.6 million in the second quarter of 2008.
EBITDA and Adjusted EBITDA are non-GAAP financial measures used by the Company.
Please see the financial tables at the end of the release for a reconciliation
of EBITDA and Adjusted EBITDA.
Balance Sheet
Cash, Cash Equivalents, and Restricted Cash as of June 30, 2009 decreased $4.0
million to $68.6 million from $72.6 million at March 31, 2009. The decline is
attributable to $7.1 million in capital expenditures mainly related to payments
on the next generation satellite contract, which was partially offset by $3.3
million in positive Cash Flow from Operations during the quarter.
Investment Community Conference Call
- ------------------------------------
ORBCOMM will host a conference call and webcast for the investment community
this morning at 10:30 AM ET. Senior management will review the results, discuss
ORBCOMM's business, and address questions.
Domestic participants should dial 877-941-8609 at least ten minutes prior to the
start of the call. International callers should dial 480-629-9820. The
conference call identification number is 4132400. To hear a live web simulcast
or to listen to the archived webcast following completion of the call, please
visit the Company's web site at www.orbcomm.com, click on investor relations
tab,
4
then select "Presentations and Webcasts," to access the link to the call. To
listen to a telephone replay of the conference call, please dial 800-406-7325
domestically or 303-590-3030 internationally and enter reservation
identification number 4132400. The replay will be available from approximately
12:00 PM ET on Monday, August 10, 2009, through 11:59 PM ET on Monday, August
17, 2009.
Alternatively, to access the live webcast, please visit the Company's website at
www.orbcomm.com, click on "Investor Relations" and select "Presentations and
Webcasts." An archive of the webcast will be available following the call for
one week.
About ORBCOMM Inc.
ORBCOMM is a leading global satellite data communications company, focused on
Machine-to-Machine (M2M) communications. Its customers include Caterpillar Inc.,
Doosan Infracore America, General Electric, Hitachi Construction Machinery,
Hyundai Heavy Industries, Komatsu Ltd., Manitowoc Crane Companies, Inc., and
Volvo Construction Equipment among other industry leaders. By means of a global
network of low-earth orbit (LEO) satellites and accompanying ground
infrastructure, ORBCOMM's low-cost and reliable two-way data communication
services track, monitor and control mobile and fixed assets in four core
markets: commercial transportation; heavy equipment; industrial fixed assets;
and marine/homeland security. ORBCOMM based products are installed on trucks,
containers, marine vessels, locomotives, backhoes, pipelines, oil wells, utility
meters, storage tanks and other assets. ORBCOMM is headquartered in Fort Lee,
New Jersey and has its network control center in Dulles, Virginia. For more
information, visit www.orbcomm.com.
Forward-Looking Statements
Certain statements discussed in this press release constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements generally relate to our plans, objectives
and expectations for future events and include statements about our
expectations, beliefs, plans, objectives, intentions, assumptions and other
statements that are not historical facts. Such forward-looking statements,
including those concerning the Company's expectations, are subject to known and
unknown risks and uncertainties, which could cause actual results to differ
materially from the results, projected, expected or implied by the
forward-looking statements, some of which are beyond the Company's control, that
may cause the Company's actual results, performance or achievements, or industry
results, to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. These
risks and uncertainties include but are not limited to: the impact of global
recession and continued worldwide credit and capital constraints; substantial
losses we have incurred and expect to continue to incur; demand for and market
acceptance of our products and services and the applications developed by our
resellers; loss or decline or slowdown in the growth in business from the Asset
Intelligence division of General Electric Company ("GE" or "General Electric" or
"GEAI"), other value-added resellers or VARs and international value-added
resellers or IVARs; loss or decline or slowdown in growth in business of any of
the specific industry sectors the Company serves, such as transportation, heavy
equipment, fixed assets and maritime; litigation proceedings; technological
changes, pricing pressures and other competitive factors; the inability of our
international resellers to develop markets outside the United States; market
acceptance and success of our AIS business; the in-orbit satellite failure of
the Coast Guard demonstration or the quick-launch satellites, satellite launch
and construction delays and cost overruns and in-orbit satellite failures or
reduced performance; the failure of our system or
5
reductions in levels of service due to technological malfunctions or
deficiencies or other events; our inability to renew or expand our satellite
constellation; political, legal regulatory, government administrative and
economic conditions and developments in the United States and other countriesand
territories in which we operate; and changes in our business strategy; and the
other risks described in our filings with the Securities and Exchange
Commission. Unless required by law, we undertake no obligation to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise. For more detail on these and other risks, please see
our "Risk Factors" section in our annual report on Form 10-K for the year ended
December 31, 2008.
Contacts
Investor Inquiries: Media Inquiries:
Lucas Binder Jennifer Lattif
VP, Business Development and Investor Relations Senior Account Executive
ORBCOMM Inc. The Abernathy MacGregor Group
703-433-6505 212-371-5999
binder.lucas@orbcomm.com jcl@abmac.com
6
ORBCOMM Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share data)
(Unaudited)
June 30, December 31,
2009 2008
----------------- ------------------
ASSETS
Current assets:
Cash and cash equivalents $ 62,934 $ 75,370
Restricted cash 3,000 2,000
Accounts receivable, net of allowances for doubtful accounts of $572 and $101 3,580 3,412
Inventories 116 158
Prepaid expenses and other current assets 3,339 4,140
Current assets held for sale 1,237 1,621
----------------- ------------------
Total current assets 74,206 86,701
Satellite network and other equipment, net 92,505 92,772
Intangible assets, net 3,343 4,086
Restricted cash 2,680 3,680
Other assets 1,321 1,484
Long term assets held for sale 2,496 2,644
----------------- ------------------
Total assets $ 176,551 $ 191,367
================= ==================
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 2,876 $ 8,428
Accrued liabilities 7,157 7,168
Current portion of deferred revenue 3,731 3,543
Current liabilities related to assets held for sale 396 326
----------------- ------------------
Total current liabilities 14,160 19,465
Note payable - related party 1,299 1,244
Deferred revenue, net of current portion 7,223 7,607
----------------- ------------------
Total liabilities 22,682 28,316
----------------- ------------------
Commitments and contingencies
Equity:
ORBCOMM Inc. stockholders' equity:
Common stock, par value $0.001; 250,000,000 shares authorized; 42,423,373 and
42,101,834 shares issued and outstanding 42 42
Additional paid-in capital 229,800 229,001
Accumulated other comprehensive income (loss) (83) 381
Accumulated deficit (77,473) (67,976)
----------------- ------------------
Total ORBCOMM Inc. stockholders' equity 152,286 161,448
Noncontrolling interests in ORBCOMM Japan 1,583 1,603
----------------- ------------------
Total equity 153,869 163,051
----------------- ------------------
Total liabilities and equity $ 176,551 $ 191,367
================= ==================
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ORBCOMM Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
-------------------------------- -----------------------
2009 2008 2009 2008
--------------- -------------- ---------- ----------
Revenues:
Service revenues $ 6,720 $ 5,757 $ 13,342 $ 10,612
Product sales 50 1,117 155 1,107
--------------- -------------- ---------- ----------
Total revenues 6,770 6,874 13,497 11,719
--------------- -------------- ---------- ----------
Costs and expenses (1):
Costs of services 3,292 2,128 6,513 4,162
Costs of product sales 36 568 96 589
Selling, general and administrative 4,398 5,169 9,201 9,595
Product development 152 150 341 271
Gain on customer claims settlements - (367) - (1,243)
Impairment charge-satellite network - - 7,045 -
--------------- -------------- ---------- ----------
Total costs and expenses 7,878 7,648 23,196 13,374
--------------- -------------- ---------- ----------
Loss from operations (1,108) (774) (9,699) (1,655)
Other income (expense):
Interest income 23 356 64 1,122
Other income 388 12 339 23
Interest expense (48) (48) (96) (98)
--------------- -------------- ---------- ----------
Total other income 363 320 307 1,047
--------------- -------------- ---------- ----------
Loss from continuing operations before pre-control
earnings of consolidated subsidiary (745) (454) (9,392) (608)
Less: Pre-control earnings of consolidated subsidiary - 128 - 128
--------------- -------------- ---------- ----------
Loss from continuing operations (745) (582) (9,392) (736)
Income (loss) from discontinued operations 412 (356) (40) (736)
--------------- -------------- ---------- ----------
Net loss (333) (938) (9,432) (1,472)
Less: Net income attributable to the noncontrolling interests 29 41 65 41
--------------- -------------- ---------- ----------
Net loss attributable to ORBCOMM Inc. $ (362) $ (979) $ (9,497) $ (1,513)
=============== ============== ========== ==========
Net loss attributable to ORBCOMM Inc.:
Loss from continuing operations $ (774) $ (623) $ (9,457) $ (777)
Income (loss) from discontinued operations 412 (356) (40) (736)
--------------- -------------- ---------- ----------
Net loss attributable to ORBCOMM Inc. $ (362) $ (979) $ (9,497) $ (1,513)
=============== ============== ========== ==========
Per share information-basic and diluted:
Loss from continuing operations $ (0.02) $ (0.01) $ (0.22) $ (0.02)
Income (loss) from discontinued operations 0.01 (0.01) (0.00) (0.02)
--------------- -------------- ---------- ----------
Net loss attributable to ORBCOMM Inc. $ (0.01) $ (0.02) $ (0.22) $ (0.04)
=============== ============== ========== ==========
Weighted average common shares outstanding:
Basic and diluted 42,407 41,961 42,358 41,882
=============== ============== ========== ==========
(1) Stock-based compensation included in costs and expenses:
Costs of services $ 14 $ 1 $ 34 $ 49
Selling, general and administrative 330 978 757 1,705
Product development - 15 8 30
--------------- -------------- ---------- ----------
$ 344 $ 994 $ 799 $ 1,784
=============== ============== ========== ==========
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ORBCOMM Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Six months ended
June 30,
--------------------------------
2009 2008
--------------- --------------
Cash flows from operating activities:
Net loss $ (9,432) $ (1,472)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Change in allowance for doubtful accounts 452 (159)
Depreciation and amortization 2,580 1,286
Accretion on note payable - related party 66 66
Stock-based compensation 799 1,784
Foreign exchange gains (337) (18)
Non-cash portion of gain on customer claims settlements - (882)
Pre-control earnings of consolidated subsidiary - 128
Expiration of gateway purchase option - (325)
Impairment charge-satellite network 7,045 -
Changes in operating assets and liabilities:
Accounts receivable (513) 255
Inventories 35 222
Prepaid expenses and other assets 886 847
Accounts payable and accrued liabilities (6) 407
Deferred revenue (188) 1,052
--------------- --------------
Net cash provided by operating activities of continuing operations 1,387 3,191
Net cash provided by (used in) operating activities of discontinued
operations 605 (205)
--------------- --------------
Net cash provided by operating activities 1,992 2,986
--------------- --------------
Cash flows from investing activities:
Capital expenditures (14,051) (14,193)
Change in restricted cash - (5,680)
Cash from the step acquisition of subsidiary - 366
--------------- --------------
Net cash used in investing activities of continuing operations (14,051) (19,507)
Net cash used in investing activities of discontinued operations (3) (237)
--------------- --------------
Net cash used in investing activities (14,054) (19,744)
--------------- --------------
Cash flows from financing activities:
Proceeds from exercise of warrants and options - 252
Payment of offering costs in connection with secondary public offering - (40)
--------------- --------------
Net cash provided by financing activities from continuing operations - 212
Net cash provided by financing activities from discontinued operations - -
--------------- --------------
Net cash provided by financing activities - 212
--------------- --------------
Effect of exchange rate changes on cash and cash equivalents (374) (79)
--------------- --------------
Net decrease in cash and cash equivalents (12,436) (16,625)
Cash and cash equivalents:
Beginning of period 75,370 115,587
--------------- --------------
End of period $ 62,934 $ 98,962
=============== ==============
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The following table reconciles our Net Income (Loss) attributable to ORBCOMM
Inc. to EBITDA and Adjusted EBITDA for the periods shown:
Three months ended Six months ended
June 30, June 30,
(in thousands) 2009 2008 2009 2008
-------------- ---- ---- ---- ----
Net Income (Loss) attributable to ORBCOMM
Inc. $(362) $(979) $(9,497) $(1,513)
Net interest (income) expense 25 (308) 32 (1,024)
Provision for income taxes - - - -
Depreciation and amortization 1,297 663 2,598 1,311
------- ------- --------- --------
EBITDA 960 (624) (6,867) (1,226)
------- ------- --------- --------
Stock-based compensation 344 1,015 799 1,825
Impairment Charge - Satellite Network - - 7,045 -
Noncontrolling interests and pre-control
earnings of consolidated subsidiary 29 169 65 169
------- ------- --------- --------
Adjusted EBITDA $1,333 $560 $1,042 $768
------- ------- --------- --------
EBITDA is defined as earnings attributable to ORBCOMM Inc. before interest
income (expense), provision for income taxes and depreciation and amortization.
ORBCOMM believes EBITDA is useful to its management and investors in evaluating
operating performance because it is one of the primary measures used to evaluate
the economic productivity of the Company's operations, including its ability to
obtain and maintain its customers, its ability to operate its business
effectively, the efficiency of its employees and the profitability associated
with their performance. It also helps ORBCOMM's management and investors to
meaningfully evaluate and compare the results of the Company's operations from
period to period on a consistent basis by removing the impact of its financing
transactions and the depreciation and amortization impact of capital investments
from its operating results. In addition, ORBCOMM management uses EBITDA in
presentations to its board of directors to enable it to have the same
measurement of operating performance used by management and for planning
purposes, including the preparation of the annual operating budget. The Company
also believes that EBITDA, adjusted for stock-based compensation expense for
continued and discontinued operations, noncontrolling interests and pre-control
earnings of consolidated subsidiary, and Impairment Charge (Adjusted EBITDA), is
useful to investors to evaluate the Company's core operating results and
financial performance and its capacity to fund capital expenditures, because it
excludes items that are significant non-cash expenses reflected in the Condensed
Consolidated Statements of Operations. EBITDA and Adjusted EBITDA are not
performance measures calculated in accordance with accounting principles
generally accepted in the United States, or GAAP. While ORBCOMM considers EBITDA
and Adjusted EBITDA to be important measures of operating performance, they
should be considered in addition to, and not as a substitute for, or superior
to, Net Loss or other measures of financial performance prepared in accordance
with GAAP and may be different than EBITDA and Adjusted EBITDA measures
presented by other companies. A reconciliation table is presented above.
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