The Notes were issued at a discount of two percent of total principal; consequently, ORBIMAGE Holdings received $245 million of cash proceeds at closing. Concurrently with the closing of the offering, ORBIMAGE Holdings entered into an escrow agreement with BONY as Trustee and Escrow Agent whereby ORBIMAGE Holdings deposited $126.8 million into an escrow account, to remain until such time as ORBIMAGE Inc. could issue a guarantee of the Notes. This amount was classified as restricted cash in the Company's balance sheet as of June 30, 2005. Approximately $8.7 million was used to pay certain transaction-related expenses. The remaining $109.5 million was contributed by ORBIMAGE Holdings to the capital of ORBIMAGE Inc. As a result of this capital contribution, on June 30, 2005, ORBIMAGE Inc. had "Unrestricted Cash" as defined in the indenture governing its existing Senior Subordinated Notes in an amount sufficient to require ORBIMAGE Inc. to redeem the Senior Subordinated Notes pursuant to the mandatory redemption provisions of that indenture. ORBIMAGE Inc. redeemed the Senior Subordinated Notes on July 6, 2005. Upon redemption of the Senior Subordinated Notes, ORBIMAGE Inc. provided its guarantee of the Notes, and the escrow was released to ORBIMAGE Holdings on July 11, 2005. The Notes will bear interest at a rate per annum, reset semi-annually, equal to the greater of six-month LIBOR or three percent, plus a margin of 9.5 percent. ORBIMAGE Holdings has 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 Six Months Ended
June 30, June 30,
2005 2004 2005 2004
Revenues $ 8,501 $ 9,749 $ 17,160 $ 11,759
Direct expenses 9,258 9,528 18,158 15,835
Gross profit (loss) (757) 221 (998) (4,076)
Selling, general and
administrative expenses 3,098 2,191 5,646 3,834
Loss from operations (3,855) (1,970) (6,644) (7,910)
Interest expense, net 1,591 2,458 3,685 4,907
Loss from early
extinguishment of debt - - 639 -
Loss before benefit for
income taxes (5,446) (4,428) (10,968) (12,817)
Benefit for income taxes - - - -
Net loss $(5,446) $(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
ORBIMAGE HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; in thousands, except share data)
ASSETS
Pro Forma June 30, December
June 30, 2005 31,
2005 (a) 2004
Current assets:
Cash and cash equivalents $248,572 $185,380 $60,565
Restricted cash - 126,836 -
Receivables net of allowances of
$131 and $126, respectively 5,603 5,603 12,148
Other current assets 4,549 4,549 2,612
Total current assets 258,724 322,368 75,325
Property, plant and equipment, at cost,
less accumulated depreciation of $5,714
and $3,751, respectively 22,721 22,721 18,263
Satellites and related rights, at cost,
less accumulated depreciation and
amortization of $27,859 and $18,142,
respectively 176,846 176,846 116,640
Goodwill 28,490 28,490 28,490
Other assets 19,849 21,098 10,428
Total assets $506,630 $571,523 $249,146
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
expenses $ 5,536 $ 5,536 $ 3,970
Amounts payable to subcontractors 32,119 32,119 47,545
Deferred revenue 2,102 2,102 2,234
Other current liabilities 1,102 1,102 -
Total current liabilities 40,859 40,859 53,749
Long-term debt 245,002 307,776 85,018
Deferred revenue, net of current portion 69,911 69,911 24,491
Other noncurrent liabilities 6,910 6,910 -
Total liabilities 362,682 425,456 163,258
Stockholders' equity:
Common stock, par value $0.01;
25,000,000 shares authorized;
17,432,033 shares and 9,917,078
shares issued and outstanding
as of June 30, 2005 and
December 31, 2004, respectively 174 174 99
Additional paid-in-capital 186,050 186,050 112,373
Unearned compensation (1,109) (1,109) (1,845)
Accumulated deficit (37,826) (35,707) (24,739)
Accumulated other comprehensive
loss (3,341) (3,341) -
Total stockholders' equity 143,948 146,067 85,888
Total liabilities and stockholders'
equity $506,630 $571,523 $249,146
(a) ORBIMAGE Inc., a wholly owned subsidiary of ORBIMAGE Holdings Inc.,
redeemed its Senior Subordinated Notes on July 6, 2005 with proceeds
obtained through the issuance of $250 million of Senior Secured
Floating Rate Notes on June 29, 2005. Upon redemption of the Senior
Subordinated Notes and the issuance by ORBIMAGE Inc. of a guarantee of
the Notes, $126.8 million of escrow proceeds were released to ORBIMAGE
Holdings on July 11, 2005. The unaudited condensed pro forma balance
sheet is intended to illustrate the effect of the repayment of the
Senior Subordinated Notes and the release of restricted cash from
escrow as if these transactions had occurred on June 30, 2005.
ORBIMAGE HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in thousands)
Six Months Ended June 30,
2005 2004
Cash flows from operating activities:
Net loss $(10,968) $(12,817)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation and amortization 11,951 10,189
Interest paid in kind - 4,954
Stock compensation 736 567
Loss on early extinguishment of
debt 639 -
Changes in assets and liabilities:
Decrease (increase) in
receivables and other current
assets 5,918 (8,707)
Increase in other assets (211) -
Increase (decrease) in accounts
payable and accrued expenses 1,562 (1,597)
Increase in deferred revenue 45,289 659
Net cash provided by (used in) operating
activities 54,916 (6,752)
Cash flows from investing activities:
Capital expenditures (88,408) (495)
Net cash used in investing activities (88,408) (495)
Cash flows from financing activities:
Issuance of long-term debt 245,000 -
Restricted cash held in escrow (126,836) -
Extinguishment of long-term debt (22,244) -
Long-term debt repayment and issuance costs (11,365) -
Issuance of common stock 73,752 -
Net cash provided by financing activities 158,307 -
Net increase (decrease) in cash and cash
equivalents 124,815 (7,247)
Cash and cash equivalents, beginning of period 60,565 14,405
Cash and cash equivalents, end of period $185,380 $ 7,158
Supplemental cash flow information:
Interest paid
$ 4,295 $ -
Non-cash items:
Capital expenditures $(32,119) $ -
Amounts payable to subcontractors 32,119 -
About ORBIMAGE: 
