Total revenues for the second quarter of 2005 and 2004 were $8.5 million and $9.7 million, respectively. Total revenues for the six months ended June 30, 2005 and 2004 were $17.2 million and $11.8 million, respectively. Net loss for the second quarter of 2005 was $5.4 million, or $0.32 per share, compared to $4.4 million, or $0.70 per share, for the second quarter of 2004. Net loss for the six months ended June 30, 2005 was $11.0 million, or $0.73 per share, compared to $12.8 million, or $2.02 per share, for the six months ended June 30, 2004.
"Unfortunately our revenues have developed more slowly than we anticipated largely as a result of international customers delaying their purchasing decisions pending the outcome of the consolidation currently underway in our industry," said ORBIMAGE's President and Chief Executive Officer Matthew O'Connell. "We will continue our efforts to manage costs in the mean time. On the positive side, the construction of our OrbView-5 satellite for the National Geospatial-Intelligence Agency's NextView program is progressing on schedule and within budget. We met our debt commitment for NextView in the second quarter by raising $250 million of additional long-term debt to fund the next phase of the program and refinance the debt we incurred when we reorganized at the end of 2003 on more favorable terms."
The following table presents ORBIMAGE's summary reported results (unaudited) for the second quarter and year-to-date periods (in thousands, except share and per share data):
Three Months Six Months Ended June 30, Ended June 30, 2005 2004 2005 2004 Revenues $ 8,501 $ 9,749 $ 17,160 $ 11,759 Loss from operations (3,855) (1,970) (6,644) (7,910) Net loss (5,447) (4,428) (10,968) (12,817) Loss per common share - basic and diluted (0.32) (0.70) (0.73) (2.02) Weighted average shares outstanding - basic and diluted 17,272,528 6,335,243 15,116,985 6,334,118
Revenues for the second quarter of 2005 were $8.5 million as compared to $9.7 million in the same period in 2004. Revenues for the six months ended June 30, 2005 were approximately $17.2 million, compared to $11.8 million for the same period in 2004. The decrease in revenue for the quarter resulted principally from a reduction in contract revenues on an international imagery contract renewed in 2005 at a lower amount and from a surge in production activities that took place during the second quarter of 2004 to compensate for first quarter 2004 delays in receiving source materials from our 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, and the commencement of OrbView-3 operations for international customers in the second quarter of 2004. Revenues generated from OrbView-3 products and services were $6.9 million and $7.2 million for the second quarter of 2005 and 2004, respectively, and $14.4 million and $7.8 million for the six months ended June 30, 2005 and 2004, respectively.
Loss from operations for the second quarter of 2005 was $3.9 million as compared to $2.0 million in the same period in 2004, which is attributable to increased sales and marketing expenditures to pursue business opportunities, increased staffing of sales and administrative functions and increased expenses associated with regulatory compliance. Loss from operations for the six months ended June 30, 2005 was $6.6 million as compared to $7.9 million in 2004. The decrease in this loss from the prior year is principally attributable to depreciation expense on the OrbView-3 satellite and related ground station assets which commenced in February 2004. Total depreciation expense recorded for these assets was $10.5 million in 2005 and $8.6 million in 2004. This increase is offset by the increased selling, general and administrative expenses in 2005 versus 2004 described above.
Net loss for the second quarter of 2005 was $5.5 million versus a net loss of $4.4 million in the same 2004 period. Net loss for the first six months of 2005 was $11.0 million versus a net loss of $12.8 million a year ago. ORBIMAGE recorded net interest expense of $1.6 million and $2.5 million during the three months ended June 30, 2005 and 2004, respectively, and $3.7 million and $4.9 million during the six months ended June 30, 2005 and 2004, respectively. On March 31, 2005, ORBIMAGE repaid its then outstanding Senior Notes due 2008 out of existing cash received pursuant to the exercise of warrants by certain investors during the first quarter of 2005. This payment included an amount representing interest expense that would have been payable through June 30, 2005, the date of the initial interest payment. ORBIMAGE recorded a loss of $0.6 million associated with the early extinguishment of the Senior Notes in the first quarter of 2005.
Cash Flow and Leverage
As of June 30, 2005, ORBIMAGE had $185.4 million of cash and cash equivalents and $126.8 million of restricted cash resulting from the issuance of long-term debt as discussed below.
Net cash provided by operating activities for the six months ended June 30, 2005 was $54.9 million. During 2005, ORBIMAGE received approximately $45.3 million of milestone payments from the National Geospatial-Intelligence Agency ("NGA") related to the construction of the OrbView-5 satellite. Capital expenditures for the first six months of 2005 were $88.4 million, much of which represents expenditures associated with the OrbView-5 satellite and related systems. Net cash provided by financing activities were $158.3 million for the first six 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. In connection with this issuance, on June 29, 2005, ORBIMAGE Holdings entered into a Security Agreement with The Bank of New York ("BONY"), as Collateral Agent, pursuant to which ORBIMAGE Holdings granted a first priority lien on and security interest in substantially all of the assets of ORBIMAGE Holdings. ORBIMAGE Inc. was prohibited from issuing a guarantee of the Notes at the date of issuance due to restrictions in the indenture governing its Senior Subordinated Notes.